32
ASHBURTON GUARDIAN, Saturday, March 16, 2013
Business
www.guardianONLINE.co.nz
End nigh for Capital + Merchant By Hamish Fletcher Yesterday was the beginning of the end for the Capital + Merchant Finance prosecutions as one former director of the failed firm was handed an extra year in prison and two others sentenced to home detention and community work. Former C+M chief executive Owen Tallentire and directors Robert Sutherland and Colin
Ryan pleaded guilty earlier this year to two charges of making an untrue statement in a registered prospectus and one charge of distributing advertisements which included an untrue statement. The untrue statements were included in two prospectuses one in 2006 and the other in 2007 - and were about relatedparty lending, and loans being actively monitored when this was not happening.
The 2007 prospectus also said that none of C+M’s loans were impaired when a number were. In the High Court at Auckland yesterday Justice Geoffrey Venning said it should have been clear to the directors that cashflow at the company was unsustainable from the middle of 2007. Tallentire, 65, is already serving a sentence of five years’ imprisonment for theft by a person in a special relationship
charges in a C+M case brought by the Serious Fraud Office. His lawyer Nathan Gedye said an uplift in sentence of no more than four to six months was appropriate and would still push Tallentire’s “distant release date” further out. Given he was in prison and unable to work, Tallentire could not offer any reparations, Gedye said. However, Justice Venning gave Tallentire an extra year in jail - the sentence which Crown law-
yer Nicholas Davidson QC had pushed for. Justice Venning said Tallentire was in a different position to Ryan and Sutherland and must have known certain statements were false. While these two directors had an honest belief that the untrue statements were correct, the judge said this belief was not reasonably held and characterised their offending as close to gross-negligence. -APNZ
Investing in the fast food sector I
photo tetsuro mitomo140313-TM-053
Driving instructor David Leadly goes over some theory with learner driver Allain Smith, before they take to the Ashburton roads.
Former salesman keeps drivers on right track By Gabrielle Stuart New driving instructor David Leadley has taken to the roads to help Ashburton drivers hone their techniques. Mr Leadley finished his driving instructor endorsement in January after four months of training for his NZTA qualification as an instructor, clocking plenty of hours on the road as he travelled to Christchurch for assessments. “I went through the whole thing. Teaching, car control,
testing from advanced driver assessments right to the basics of talking a driver through the whole process.” Mr Leadley said driving lessons aren’t just for young people sitting their licence tests. He also plans to teach defensive driving techniques, help people re-sitting their licences due to age restrictions and work with local businesses. “There’s a lot of scope for driver assessments at firms where they spend a lot of hours on the road. Often insurance can be cheaper if the drivers have done
courses, and I can let the firms know that everything’s up to standard, or where there’s room for improvement.” The Ashburton man began looking into teaching driving skills about a year ago, after health issues meant he could no longer work full-time in sales and marketing. “I clocked a lot of driving hours in my role in sales, and always considered myself a good, careful driver. And I feel I relate to people, young people especially. It just seemed like a good fit. It’s been a nice change of pace.”
f you had invested in McDonald’s 10 years ago you’d be patting yourself on your well rounded tummy. The shares have risen from around $US$13 in 2003 to $US$97 today. A 747 per cent return over 10 years is quite nice. McDonald’s is the largest and most well recognised fast food franchiser in the world. Another that you may not have heard of is Yum Brands, however you will know the major brands it owns; Kentucky Fried Chicken, Pizza Hut and Taco Bell. Both McDonald’s and Yum Brands are stock exchange listed and are headquartered in the United States. In fact Yum Brands is based in Louisville, Kentucky – the home of Kentucky Fried and Colonel Sanders. The Colonel is a man of legend and his is an interesting story. He first started cooking what he called “home meal replacement” way back in 1930 at a service station he operated in Corbin, Kentucky. His target market was busy, time-strapped families, and he called his food “Sunday Dinner, Seven Days a Week”. In 1935 he was made a Colonel of Kentucky for his contribution to the state’s cuisine and in 1955 he started franchising the business, increasing franchises to over 600 within just 10 years. PepsiCo bought the company in 1986 and then sold off their combined restaurant assets KFC, Pizza Hut and Taco Bell as Tricon Global Restaurants in 1997, before changing name to Yum Brands in 2002. If you ever wondered why you can’t buy a Coke at KFC or Pizza Hut, it’s because PepsiCo has a lifetime supply contract with the majority of Yum Brands’ franchises. You’d be forgiven for thinking that Yum would be the larger of the two companies, and so it is, based purely on the number of restaurants they operate. Yum has 38,000 whereas McDonald’s ‘only’ has 34,000 restaurants. But Yum’s market capitalisation is around $US$30 billion and in 2011 they pulled in revenue of $US12 billion. McDonald’s on the other hand is worth around $US97 billion and reported global revenue in 2012 of $US27 billion.
Ian Lennie and Selwyn Sloan MONEY MATTERS
Whilst Yum is smaller than McDonald’s in financial terms, it’s arguably a more diverse company, not only in its businesses and product range, but also geographically. Some 14,000 of McDonald’s restaurants are located within the United States, whereas Yum Brands has over 4000 restaurants in China alone and these contribute to nearly half of Yum’s total operating profit. The key here is that the vast majority of the Chinese restaurants are not franchises, but are owned and operated directly by Yum. Within New Zealand, Restaurant Brands owns the local KFC and Pizza Hut restaurants which were spun out of PepsiCo in 1997. Restaurant Brands also owns Starbucks New Zealand restaurants. Restaurant Brands has made a dramatic turnaround from its post Global Financial Crisis low of 57c and now sits around $2.80 just five years later. And then of course there is Burger Fuel which listed at one dollar in 2007 and has since climbed to around $1.70 today. There are plenty of options for investors to consider in the fast food business, but your decision to invest should never be a fast one. It’s important to understand not only the profitability of each, but also their model of operation and growth potential. Hopefully I’ve given you a little something to chew over. Ian Lennie and Selwyn Sloan are Authorised Financial Advisers with Forsyth Barr in Ashburton. To arrange a meeting to discuss your investment objectives in confidence, please call (03) 307 9540 or e-mail ian.lennie@forsythbarr.co.nz or selwyn.sloan@forsythbarr. co.nz. To find out more about Forsyth Barr visit www.forsythbarr.co.nz. This column is general in nature and should not be regarded as personalised investment advice. Disclosure Statements are available on request and free of charge.