Licensed Post Office for sale

[boods99]

The trading and bluffing of lease terms with the "calibre of the name" would also occur with bank leases if I'm not mistaken.

There were many sell-off's over the past decade on leaseback's and being retail type premises the banks' of whatever franchise ran the show with the lease.

With the Leases for the banks, as the tenant is a publicly listed company (or a subsidiary of one) they are able to signed up to a commercial Lease rather a retail Lease. Of course the banks will try to insist on the retail Lease for obvious reasons. Most mum and dad investors would probably just accept what the bank was telling them and play nicely.

Boods

 

[Dazz]

Of course the banks will try to insist on the retail Lease for obvious reasons. Most mum and dad investors would probably just accept what the bank was telling them and play nicely.

When they are the seller Boods, they can do what they like. The Lease wording is presented as part of the package. It's non-negotiable. Don't like the Lease the Bank is offering as a leaseback situation - no problems, don't bid for it.

They are in the controlling seat all the way. At no point as a Buyer do you even get a look in.....just the way they like it. And why not - if I was a Director of the Bank, that's exactly the way I'd run it too.

The Leasing bit is just the minor tiddly stuff. The big main game is the Sale, and they make sure they dictate everything in that game, sowing everything up just the way they want it, before kick off of the minor game starts. Too easy.

 

[WinstonWolfe]

They are in the controlling seat all the way. At no point as a Buyer do you even get a look in.....just the way they like it. And why not - if I was a Director of the Bank, that's exactly the way I'd run it too.

Might explain how the bank lease I looked at got to be 20% below my impression of market value....discussed on High Equity's Buying a Bank thread.

 

[FormerLurker]

http://www.news.com.au/business/australia-post-in-profit-plunge/story-e6frfm1i-1225939195988

Looks like it was wise to give the post office a miss - only going down hill from here (startrek teleporters are just around the corner - Sheldon from BigBang theory told me so in a dream).

 

[Dazz]

Thanks for the link, interesting reading. Didn't understand the numbers though, maybe an accountant can help...


1. Australia Post is a wholly owned Govt instrumentality.

2. Revenue of 4,856m.

3. Pre-tax profit of 103m.

4. Annual Nett Profit of 89.5m. I presume that means they paid 13.5m, or 13.1% on the 103m profit.

5. They "returned" 79.1m to the Govt.


Questions ;

1. Why do they pay tax ??

2. Why only 13.1% tax rate ??

3. What happened to the 10.4m between 89.5 and 79.1m ??

4. Why does the journalist reckon a 100m profit is "disasterous" ??

 

[dan c]

Thanks for the link, interesting reading. Didn't understand the numbers though, maybe an accountant can help...


1. Australia Post is a wholly owned Govt instrumentality.

2. Revenue of 4,856m.

3. Pre-tax profit of 103m.

4. Annual Nett Profit of 89.5m. I presume that means they paid 13.5m, or 13.1% on the 103m profit.

5. They "returned" 79.1m to the Govt.


Questions ;

1. Why do they pay tax ??

2. Why only 13.1% tax rate ??

3. What happened to the 10.4m between 89.5 and 79.1m ??

4. Why does the journalist reckon a 100m profit is "disasterous" ??

http://auspost.com.au/annualreport2010/assets/docs/AP-financial-and-statutory-reports-0910.pdf

Here's the anunal financials, if you are having difficulty getting to sleep.

They pay tax at 30%, but the pretax profit of $103m is not all taxable. An adjustment is made for non-taxable income, so the effective tax rate on all income works out at 13.1%

As for the payment to the governmet, Aus Post is required to pay 75% of its profit to the government as a dividend. I suppose they can keep the rest, I'm not sure. The $79.1m is and interim payment based on the estimated full year profits for next year.

As for the journalist, I'd say he's looked at the 60% drop in profit only. The drop in revenue is only a couple of percent, and expenses include $150m, of restructuring costs, which I assume would be a one-off charge to the accounts.

 

[Dazz]

Here's the annual financials, if you are having difficulty getting to sleep.

Thanks Dan.

Yes it is a little difficult....keep thinking about that horrific Federal Labor party in bed with the greens.....enough to give any sane person nightmares.

I know you sleep easy.

 

[Kenster]

A family member of mine had a LPO business for around 3 years.

We learnt not all LPO's are the same: some are in decline, but some are still thriving.

True that snail mail service is in decline but is offset by parcels (due to online trading), ie. Gross taking still grows. Not at fantastic rate, but acceptable.

Best LPO's are those in small shopping catchment where it can earn multiple streams of income, therefore higher earning, with no fear of competition.

In these areas, the LPO provides services for:

- Traditional mailings (stamps, envelops, registered services...)
- Parcels (Boxes, stamps...)
- Mail boxes
- Newspaper + mags distribution
- Banking services
- Bill payments
- Money orders
- Faxes, Photocopy
- Souvenirs, special occassion gifts, gift wrappings, cards
- Passport, driver license applications

Banking services is, surprisingly, still doing well. This is to allow people to check balances and withdraw money over counter with the old bank books. This service is particularly doing well in areas with older population. (I have seen 40 something people still using bank books )

Bill payment is also ok as the older generation still believes in cash transactions. Tradies and small business operators also pay bills and ATO installment with cash, at LPO's.

As a whole, LPO is not a great income machine, but it is a great capital gain machine if you buy well. There are many, many old school job retirees with a big handsome golden handshake willing to buy a business such as these. Once they love the idea, money flows

 

[moyjos]

Hi Winston,
I have been involved with selling product to LPO's for the past 5 years or so.

I have not read in depth all the above threads, but is the most they are reasonably correct. There are some pockets of LPO's that are doing quite well.
You mention the decline of snail mail, this is true, but the better LPO's seem to be in older population areas where a lot of the oldies still like to pay things over the counter, and send birthday cards, christmas ards and actual letters
banyo fits the older demographic.

To get some TRUE helpful advise give Ian at POAAL a call.
http://poaal.com.au/

POAAL is the association that looks after the LPO's They actually have a love-hate relationship with AP (bordering much closer to the hate side )

POAAL will tell you all about how to minimise the AusPost's control over YOUR business. (Some LPO's have given over 100% of their floor space to AusPost and then complain when AP tells them what to sell (or not to sell) 100% floor space is NOT compulsory)

Good luck

 

[Sunfish]

I haven't read the whole thread, but clicked on the Russell Is link and it is the freehold for sale, not the business. That may have been corrected since.

Wouldn't bill payment be the growth area? Our council now puts a surcharge on CC payments but helpfully says they doubt the PO does. If I want to make a (cheque only) payment into my Macquarie account I do that at the PO. There must be hundreds of city only institutions using them.

 

[Kenster]

Wouldn't bill payment be the growth area? Our council now puts a surcharge on CC payments but helpfully says they doubt the PO does. If I want to make a (cheque only) payment into my Macquarie account I do that at the PO. There must be hundreds of city only institutions using them.

Hi SF,

I don't know if bill payment is growing.

As LPO's is paid a flat processing rate per bill (regardless of bill amount), this income can only grow with increased volume. The volume is, in turn, dependent on (1) number of bill paying customers and (2) the average number of bills paid by each customer.

(1) is dictated by people habit and (2) by number of bills they get. Both are likely to be static with small fluctuation around an average.

==> Not much room for growth.

Having said that, there is a small window for change when customers choose to pay by EFTPOS.