Recently Danks Holding, a long established Australian hardware distributor and retailer has announced its results for financial year ending 30 June 2007. Because I did cover Danks’ results form last financial year I will now jump right into the deep end here. If you need some background on this company you may find it helpful to read my previous article first.

Analysis of the latest financial results (to 30 June 2007):

• Market Cap: Depending on the daily stock price the market cap of this company, the market capitalization is now at around $55mil. over the same amount of issued shares as last year ie. 6.5mil
• Shareholders Equity: $59.7mil making the stock’s book value approx. $9.18 per share (9.6% growth on FY2006). From that about $45.8mil. ($7.04 per share) is available working capital. That is about $6.4 mil decrease in total working capital (in other words about $1 per share).
• Earnings per share: $0.60 making the average EPS growth in last 3 years about -6%
• Return on Equity: 6.5%, averaging about 6.9%pa in last 3 years
• Balance Sheet: Working capital of $45.8mil versus total debt of $13mil

Sharemaket’s valuation:
Average DKS’s Price to Earnings ratio of 13 suggests the share price around $7.8 ($0.60 EPS x 13 P/E)

VALUE STOCK:
Return: At the end of August 2007 at share price of sub $9 levels this company is now already trading at about 22% premium to its working capital and at about par with its newly reported 2007 book value.

Pros and cons:
+++ Strong balance sheet
+++ Long established company with about 49% management ownership
+++ Not issuing new shares
— Products for cyclical markets
— Low ROE => don’t hold for growth

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I am sure that most of the value focused investors in Australia is familiar with one of the better investing magazines on the topic available, Intelligent Investor. Even though not always fully agreeing with their takes on things, I too count myself amongst their keen followers. Looking at their approach in retrospect I realized that two major issues I have with this media are first their ridiculously high subscription fees and lately somehow more and more of those “we told you so�? type of articles.

The pricing
One thing to clarify right from the start – I am not and have never been paying subscriber of the Intelligent Investor however I have read a large number of their trial editions, free articles etc. Hence may obvious bias as I may be missing on some of the additional perks a paying subscriber could have been receiving.

So looking at their subscription fees on their official subscription site one is presented with following:

• 6 Months (12 issues): online version $345 / postal version $375
• 1 Year (24 issues): $545 / $595
• 2 Years (48 issues): $995 / $1095

Keep in mind however, that, to may best knowledge, Intelligent Investor is still not one of your regular “over the counter�? magazines you could pop up into your local newsagent for. The only way you can become a regular reader is to become a subscriber. Now, say you have all the available cash on hand, decide to go for the most value for your money and pay $995 for 2 years subscription of their online version. Each issue will than cost you more than $20. Try to compare that to few of the similar Australian printed magazines within same category:

• Money Magazine:
  over the counter $6.50 / discounted 24 months subscription (22 issues) $99
• Australian Property Investor:
  over the counter $8.95 / discounted 24 months subscription (24 issues) $139
• Financial Review’s Smart Investor:
  over the counter $7.95 / discounted 24 months subscription (24 issues) $155
• Investor Weekly:
  over the counter $10.30 / discounted 12 months subscription (48 issues) $495

(all the above information sourced from isubscribe.com.au)

So the Intelligent Investor’s least attractive design and quality of print will set you back at least twice as much money any of the others, above mentioned investing magazines would have. Yes sure you may argue that their “news hole�? is the biggest one amongst the listed (ie. not including any adds in the magazine) and that their value focused reporting/tips may bring you, arguably, the highest investing returns. Well, I think that few medium sized adds in order to lower the sales price per issue would not hurt. And as to the value creation to its readership: perhaps the jury is still “out there�?. I know of no reliable comparison tool which measures such value making claim between different media outlets.

The “we told you so�? style reporting
Again fairly subjective and biased judgement of mine is somehow telling me, that in this highly competitive part of the media industry, “blowing one’s own horn�? in order to keep and/or increase the readership numbers may be necessary. To me, this factor became even more obvious in the recent reports covering the latest volatile pricing movements on the Australian and world share markets. Somehow it seems that the guys over at Intelligent Investor’s Bondi Junction offices had known it all before ahead and if you are one of the few naughty readers not acting on their advice and hence losing some of your money than, of course, you have only yourself to blame.

All and all though, the occasional free report coming out in the regular Intelligent Investor’s newsletter will definitely rank highly on my reading schedule. While I still do consider it one of the Australia’s best, I am not so certain that its subscription pricing makes them a true value pick of the Graham/Buffett style.

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As I mentioned in my previous article on the topic of personal taxes Another financial year is over, I have been gathering all the necessary details for my last financial year’s tax return. Since establishing myself in Thailand about a year ago, my tax situation changed dramatically and whole Australian tax return situation become a little trickier.

For example, since I have not spent the required minimum of 180 days in Australia during the financial year in question, the income tax brackets applying to my circumstances the ones Australian Tax Office has for “non-residents�? (ie. significantly higher than your regular “tax resident�? rates). By my rough estimates, for my last year income the difference between paying “residential�? and “non-residential�? rates comes to about A$10,000 to A$15,000.

As a “tax non-resident�? I will need to pay a flat income tax rate currently around 29% (ie. I believe this is in line with Australian corporate rates) whereas “tax non-residents�? are eligible to tax their income in progressive level based on the actual amount earned and are also rightfully allowed for various tax breaks and tax benefits beyond the legal reach of “tax non-residents�?. For tax brackets currently applying to the “tax resident’s�? income look into Another financial year is over, for all the other ins and outs about Aussie taxes use the ATO web.

Another important fact related to paying one’s income tax in Australia is the date by which your tax return must be lodged with the Tax Office: 31 October. If you wish to lodge your taxes after this day without being penalized, you need to ask the ATO for an extension.

All and all, I think the Australian tax system is pretty fair: If you live in the country make and spend most of your income there during the tax time you are being looked upon more favorably than folks, who take most of their Australian income out of the country. So while living overseas may provide you with a number of monetary benefits on the income and cost fronts it will not work in your favor should you need to pay Aussie income tax.

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