Tuesday, September 2, 2003

Daily Planet looks for some 'sinergies'

For a lot of the time it could have been just about any company holding a meeting at the stock exchange theatrette yesterday.

The chairman and the managing director in their pinstripe suits got up and spoke to the 50 or so shareholders and the address was peppered with references to due diligence, dividend growth, return on investment and an expressed hesitancy to join "other public companies who jump overseas too quickly before being property capitalised." That was not the end of the conservatism. The managing director told the assembled throng that he and the chairman were "adverse to leased premises."

The gathering was the first shareholders' meeting of The Daily Planet, the owner of the Elsternwick property that houses the brothel that goes by the same name.

But being in that sort of game meant that mention had to be made of things that don't usually pop up at your normal shareholder get togethers. Such as managing director Andrew Harris's update to shareholders on the progress of The Daily Planet's investigations of the whorehouse scene in Nevada. In one instance, he confided to shareholders, negotiations were conducted with one gentleman who had a six-shooter "sitting next to him."

"Both John (Daily Planet executive chairman John Trimble) and myself attended Nevada and investigated a number of brothels in that location' as well as small out-of-town casinos," he reported.

"We have a handshake arrangement at this stage with the operator of one brothel (but) I can assure shareholders these investigations will be long-winded.

"They will continue for at least 12 months at minimum expense as we wish to consolidate our position in Melbourne and make sure you are receiving the full benefits of dividends and the full benefits of businesses that are operating before we take an overseas step."

That vicarious Nevada adventure for Daily Planet shareholders gathered at the stock exchange was a sideshow to the main business at hand. That was getting shareholder approval for the $7.4 million acquisition of the real estate and business of King Street strip-joint, Showgirls Bar 20, described euphemistically in the documents and just about everywhere else as a "table-top dancing' venue.

As noted here previously, Showgirls is a lovely little business that returned $960,673 pre-tax on sales of $2,385,760 for the nine months to March 31.

Apart from noting that Daily Planet shares had doubled since listing in May, from 50c to yesterday's $1.03, managing director Harris urged shareholders to have a look at the King Street premises.

"It's a magnificent building," he told them. "It's worth a look through and if you're not adverse to naked girls, you're welcome to walk though any time you like."

Folk who have had a good look at the Bar 20 business include The Daily Planet's auditors, Alexander & Spencer".

At one point yesterday, a representative of the accountancy concern got to his feet and solemnly assured everyone that his firm had "undertaken detailed due diligence of Bar 20" and with planned changes to the place it was likely "those profits will increase".

Meanwhile, Andrew Harris sounded like many other company directors when he complained about "amazing restraints of trade" when it came to the bordello industry.

"If you're a publican you can buy 10 pubs. But we are currently prohibited from letting our shareholders invest in the business of The Daily Planet, they can only own the building. "So we are getting into lengthy discussions with the Attorney-General and the Planning Minister over those very issues," he said.

Meanwhile, after the meeting he discussed what The Daily Planet becoming a public company had meant. "I think being a listed company completely changed the dynamics of what we do. We've definitely got our message across that the (company's) income is derived from room rentals.

"We've got over that obstacle, which is a psychological obstacle. they don't want to invest in anybody who takes money off prostitutes, so we don't. "We simply rent out rooms and we have for 28 years. "People do have the message very clearly … you saw the round of applause at the meeting when I said, 'we do not take money off prostitutes'.

As for the public listing? "It's opened the door. All of a sudden, banks are now lending us money at 6 per cent rather than as a brothel operator at 16 per cent. "The institutional approach to us is completely different "They're treating us like the professional businessmen I think we've always been. "We've got a listed company structure. "Our go-forward mentality is solid and well structured. "For the National Australia Bank to say, 'yes, we will lend you that money, we delivered a very solid business plan, worked out how exactly we were going forward, how we were covering debt "They loved the due diligence we did on Showgirls Bar 20. "(The public offering) opened a lot of doors that were closed to us before," he said.

Meanwhile, after the meeting there were the inevitable jokes, including one from an older shareholder who asked about shareholder discounts. "You better take some Viagra," managing director Harris told him.

Meanwhile, was that a Freudian slip in Harris's printed address? He spoke of the "sinergies" of putting Bar 20 and The Daily Planet together.

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Created: November 29, 2003
Last modified: January 15, 2004
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