Taking Stock

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Taking Stock 9 December 2021

Johnny Lee writes:

Land development company Winton Land Limited has lodged its Product Disclosure Statement to raise money from the public, as it seeks to fund its next phase of growth.

It will list on the 17th of this month on both the NZX and the ASX.

Winton is a developer of large-scale residential projects, almost entirely focused within New Zealand. One of its future projects is the well-known Sunfield development.

Shares are being offered at a fixed price of $3.887. Clients interested must respond by 2PM today with their expressions of interest.

The PDS offer document can be found on our website, and advised clients can locate a research article on the private area of our website.

Chris Lee writes:

IF you don't know where you are going, or have no plan of how to get there, do not be surprised if you discover that you are lost.

This old cliché is often cited in business as the imperative for good planning, beginning with aspirational but achievable objectives; deep thinking about the means of solving problems and executing the plan, after acknowledging the hurdles that will need to be overcome.

Years ago I was in Belgium, having gate-crashed a business lunch with some smart European bankers. One of them in a few seconds delivered his view on why New Zealand had so many opportunities that it merited no favoured treatment.

His analysis might have easily been a feature of any plan that a smart New Zealand politician might have presented, a blue print designed to win support from all New Zealanders.

Last week when New Zealand finally discovered it had a real leader of its opposition, a clever analytical, strategic man with high standards, it struck me that he should have been at that lunch, not me.

He might have gained the energy to develop a detailed plan, publish it, be judged by it, and seek support so he could execute it. May I be permitted to offer him some energy.

Dear Christopher Luxon,

I attach the bones of a plan and invite you, with all the diverse resources available to you, to embellish the plan, add to it, delete ideas you dislike, publish it, and see if it can empower you so you can get the plan executed, for the benefit of all New Zealanders.

May I politely suggest you have far better skills and standards than most. You are in a different league from any of your predecessors.

Write the plan, obtain buy-in from your party, publish it, discover New Zealand is serious about lifting the country to a higher, aspirational level, and if you win that support, execute the plan.

Get it done with the flair and wisdom you displayed at Unilever and Air New Zealand, where your successes greatly exceeded those of any business person who has sought political leadership roles in New Zealand. You are genuinely multi-skilled.

So, here's a draft of the plan for you to improve.

Objective: To harness the cooperative advantages of New Zealand, thus lifting productivity, lifting living standards for all New Zealanders, using debt wisely to build New Zealand's society in an inclusive, sustainable way.


NZ's Comparative Advantage

- Temperate climate, reliable rainfall, rich top soil.

- Diverse multi-cultural society, embracing a wide range of skills.

- Space. Under populated. Room for ruminants and forestry and more tourists.

- Uses the international language of English.

- Westminster-based version of democracy, requiring transparency of debate. Minimal political corruption.

- Independent public service (at least by design).

- Judiciary with history of very low corruption.

- Mineral wealth.

- High level of renewable energy including hydro, wind, and geothermal.

- Easily protected border (little illegal immigration).

- Distant from belligerent neighbours (little money spent on defence).

- Brand respect (food, technology, sport, wine).

- Relatively low debt levels (amongst lowest in OECD).

- History of a socialised health and education system, available to all.

- Strong banking sector (supported by Australia).

- Police force largely free of corruption, usually not relying on guns.

- Close relationship with similar democracies (UK, Canada, Australia, Singapore).

- High levels of social support for the needy. High minimum wage.

- Ample potable water storage capacity (but not used).

- Wide access to ultra-fast broadband

- Excellent domestic airline, sufficient deep water ports.

- Capacity to attract tourists to share natural spaces.

- Growing capacity in technology.

- Growing capacity to provide premium food and wine to wealthy countries, based on innovation & science.

- Immense fishing resource.

- Transparent, simple tax system, centred on GST & low levels of tax.

- Universal pension scheme.


- Failure to maintain standards of waterways (wadeable rivers!).

- Housing costs are extreme and building standards have been inconsistent.

- Poor political leadership for several decades resulting in growing inequality, growing family violence and low productivity.

- Health facilities have not been maintained.

- Education system is not aligned to the needs of a multi-cultural country and not aligned to sustainable employment opportunities.

- Prison reform has failed to rehabilitate offenders.

- Coastal shipping has been replaced by largely diesel fuelled trucks.

- Topography ill-suited to rail.

- Short terms of government, resulting in ad hoc political decisions, based on election cycle, rather than on any long-term strategic plan.

- Coastal towns threatened by rising seas (climate change).

- Minimal use made of solar energy.

- Underfunded technical education.

- Inadequate level of social housing.

- Inconsistent immigration policy.

- Inability to add value to our timber products.

- Mental health grossly underfunded.

- Unsolved problem with illegal drugs (amphetamines etc).

- Narrow tax base.

- Relatively high (per person) carbon and methane emissions.

- Vacillating political leadership on historical matters such as colonisation, and indigenous people's justifiable claims of unfair Crown behaviour.

- Unmaintained and inadequate infrastructure (water, safe roads, hospitals, schools).

- Pension scheme not reviewed.

- Concentration of industry in Auckland leading to inadequate focus on building new towns or cities with modern facilities.

- Weak media, reliant on government funding, threatening the media's core value (independence).

- Aid to Iwi not transparent, outcome not adequately measured, resulting in uneven distribution.

- NZ is over-supplied with retail shops, cafes, liquor outlets, and adventure sports operators, too dependent on unsustainable levels of tourists.

- NZ sits on the ring of fire. Earthquake emergencies are inevitable.


- To address carbon and methane emissions with forestry, and new partnerships with productive land owners (farmers e.g.).

- Government intervention in social housing and affordable housing.

- Better and faster resource consent processes, better processes for re-zoning, better town planning.

- Re-alignment of education curriculum, aimed at embracing all cultures and aimed at preparing all students for available and sustainable employment. (Trade education starting at year 8). National focus on reading, writing and arithmetic as the core of early education.

- Use of debt to rebuild hospitals and fully fund Pharmac.

- Broader tax base to address debt servicing (and inequality).

- Incentivise renewable energy projects (solar farms etc) and build more water storage.

- Involvement of marae-based leadership in Maori health, employment, housing, education and tourism.

- Align immigration to skill shortages.

- Government involvement in coastal shipping, aimed at offsetting road and rail inefficiencies.

- Incentivise the restoration of timber processing. Promote timber ahead of cement.

- Establish and build a national roading network that is safer for tourists and will cater for new-era transport (electricity, hydrogen, whatever).

- Cancel the policy of funding the media; maintain independent state-funded national radio and television channel, with impenetrable protections against political pressure.

- Liaise with like countries to formulate effective mental health programmes (housing, poverty, unemployment all relevant).

- Legalise and provide drugs, to challenge the current profit-based underworld distribution system.

- Increase police numbers.

- Retrain defence force to act as civil defence staff during all emergencies.

- Technology, specifically robotic technology, may reduce low paid jobs (i.e. fruit picking).

- Invest in science and technology.

- Abolish student fees and reinstate the practice of bonding graduates.


- Inadequate leadership. Has the Higher Salaries Commission produced wages for politicians that encourages mediocre people to enter politics as their ''main chance'' rather than to serve the country? (You, Christopher, did not enter politics to make money!).

- Pandemic highlights the inadequate planning of our health facilities, and their dependence on goodwill of their staff.

- Central intervention in rural sector highlights the divide between a productive, innovative, hard-working sector and a city based academic leadership.

- China's ability to print and distribute money may erode the strength of our rural sector.

- Immigration eligibility for ''wealthy people'' may have unintended consequences.

- Narrow tax base makes debt-servicing difficult if inflation leads to significant interest rate rises.

- Climate change carbon taxes may disrupt international travel.

- Inequality, poverty, family violence, mental health and illegal drugs threaten social cohesion and social order.

- Low reproduction rates of university graduates is changing the gene base of NZ.

- Shortage of tradespeople results in over reliance on immigrants, exacerbating housing problems.

- Modern trend of one-parent family places pressure on social housing and affordable housing.

- White collar crime and corporate corruption is increasing.

- NZ's ''safe'' image is threatened by rising petty crime, and by the unsupervised lifestyles of those expelled from Australia.

- Focus on Te reo risks alienating various demographics and thus needs to be managed sensitively.

- Public sector appears to be at risk of being politicised, evolving more into a US model than a UK model.

- Lack of police in the community threatens the respectful relationship with many demographics. Uninvestigated crime hastens this loss of respect.

Christopher Luxon, the above one-liners of course do not make a compelling, complete plan, as you will know.

A plan must demand support and buy-in by proving the dimensions of the issues it wants to tackle. It must describe the strategies and tactics that will produce the desired results and can be executed.

You may potentially be the only Prime Minister in my lifetime whose business background implies the level of skill, wisdom, and energy that could add details to my on-liners, delete those with which you disagree, and add those I have overlooked.

You will produce a costed, credible financial budget, a time budget and a resource budget that would spell out priorities and would attract a commitment to get the plan executed.

The goal must be to create a New Zealand that has higher sustainable living standards for all those who want higher standards and that is inclusive of all demographics and cultures.

It should be affordable and achievable under your leadership.

Are you the man to mobilise New Zealand?

If I read correctly your life story (to date), I figure you are our best hope, for many decades.

Before we vote in 2023, please show us your plan.

 _ _ _ _ _ _ _ _ _ _ _ _

THE rich pickings available when companies seek to list their shares on the NZX used to be the preserve, at least predominantly, of the investment banker.

Globally the likes of JPMorgan and Goldman Sachs made, and still make, billions from their supervisory role in new listings, as well as in mergers and acquisitions. In NZ even modest sharebroking talent has attracted some of these rich pickings.

The lush pasture in their paddocks now attracts others, like the major law and accounting firms, which seem to have a growing role in the easier deals.

Lush paddocks excite those with big appetites.

The result of this growing number in the paddock creates a new urgency to find where the pickings are easier.

That quest for easy money will finish up in the funds management sector, whose fees are so obscene they might attract the interest of the Commission for Financial Capability, which displays a fascination with the private sector's income levels.

It should not just be the fees that attract fascination. The bonuses are where the crude fees convert into unrefined obscenity.

Fees plus bonuses convert to extreme wealth for people who vary from skilled investment managers to vulgar car salesmen, like NZ Funds, which trades its investors' money in crypto currencies and claims a bonus ($50 million) when the accounting period coincides with the theoretical gains of such speculation.

As this new search for easy money becomes frenetic, more will enter the game, the latest being Forsyth Barr which, ironically, was an early funds management participant with its ''Thinking About Tomorrow'' product of the 1990s, and its ''Summer'' KiwiSaver attempt.

Those offerings attracted minimal interest, rightly so in my opinion.

Forsyth Barr, Dunedin-based, sought scale by inviting its clients to hand over management of their money, sometime before the global financial crisis, before Feltex, Credit Sails and finance company subordinated notes tested investor appetite.

It has achieved surprising success in persuading its clients and now has more money under the control of its internal people than all bar a tiny number of fund managers, raking in hundreds of millions in annual fees, deducted each year from client accounts.

Perhaps it seeks a wider audience for it has formed a fund, named it Octagon, and will now embark on a programme to test the public's taste for the Dunedin business.

I think it missed a trick by not naming the fund the “Edgar'' fund, in memory of the late Eoin Edgar, whose appetite for wealth is what drove Forsyth Barr from its tiny Dunedin base into an operation that controls tens of billions of other people's money.

The ''Edgar'' fund would have bestowed a sustainable moniker on the ambitious new fund, which will be anxious to prove it is not another ''Thinking About Tomorrow'' or ''Summer'' variant.

Does NZ need yet another ''me too'' fund?

My guess is that the investing public is hurriedly discovering that value has to be added, to offset any fee at all.

Octagon, one assumes, will seek to be judged for value-add over a long period.

The year of 2022 could be a year when value is added by not losing money.

 _ _ _ _ _ _ _ _ _ _ _ _

Erratum: Last week I recorded that Zany Zeus had its cheeses made in Pokeno. In fact, the organic milk is processed in Pokeno but the cheeses are made in a tiny facility in Moera, Lower Hutt, after the processed milk is transported there.

Season's Greetings

Next week Johnny Lee will summarise the calendar year, discussing the challenges of a difficult year, finishing as it does on the brink of a period of ugly inflation.

May I extend season's greetings to all readers of Taking Stock and a final wish for good health for us all, in 2022.

Thank you for reading Taking Stock!

Chris Lee

Managing Director

Chris Lee & Partners Limited

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