what"s wrong again??, page-2

I've said it before and I'll say it again, the company keeps making these vague nothing statements to the market. The managers need to reassert their credibility, and the best way to do that is to make clear and measurable statements.

"The total sales value achieved of $20.85 million was in line with book value, with $15 million received at settlement. The balance sales proceeds comprise fees for further development works, to be undertaken by Watpac, on part of the land."

I have no idea what this means. Is the book value referred to after the writedowns? does the book value include expenses related to the maintenance and/or financing of the property? it appears the site was sold for $15 million and Watpac will generate $5.85 million in revenue relating to development work, so was the site carried on the books at $15 million or $20.85 million? How much will Watpac accrue in expenses to generate that $5.85 million of fees?

An informative statement for shareholders would read something like:

We used $10 million of shareholder money to purchase a site in 2006. Since 2006, the site has cost shareholders a further $10 million in expenses, whose breakdown reads $2 million in site maintenance and $8 million in executive fees. Today we have sold the site for $15 million. This represents a nominal loss of $5 million on shareholder money, and a real loss (compared to a bank deposit over the same term) of $10 million on shareholder money.
A development fund has selected our company to carry out work for them. The works are expected to be completed this Financial Year for a revenue fee of $5.85 million. To conduct this work, our company expects to expense $5.5 million in direct costs to shareholders. The nominal gain for shareholders for this work undertaken will be $0.35 million, and a real gain of $0.12 million, and a 6.3% return on shareholder money used for this project. But after accounting for company overheads and the bonuses our executives should expect for the extra work in hand, any benefit (if any) for shareholders is likely to be measured in cents.
Today we also bought copies of "Conducting a cost/benefit analysis for dummies" and "A beginners guide to modelling profits from revenues: why increased revenues does not lead to increased wealth" for our executives to read over the weekend. The cost of the books totaled $300, which was expensed to shareholders (of course), but the benefit of knowledge attained from this expenditure will see the best returns for our company in years. Moreso, our property divisions manager was tasked with obtaining the books, it took him only one hour to finish this task, and our shareholders were expensed with $200 for his hourly rate and a further $40 for the cab ride around the corner to the bookstore. I'm sure our shareholders will agree that a result of $240 is much better than the $4,000 per hour our property divisions manager has been losing for our shareholders sitting behind his desk for the past six years.

We'll get back to the top, eventually :)