Property magazine's circulation was not audited

By JENNY RUTH

The Momentum Magazine Group's investment statement wrongly claimed the circulation of its magazine Kiwi Property Investor had been audited by the Audit Bureau of Circulations (ABC).

The company was seeking $2.5 million from the public in an offer that was due to close last Friday.

Magazine Publishers Association executive director John McClintock, who administers the ABC survey, said the magazine had never participated in an ABC audit.

The Business Herald could not reach Momentum director David Hows for comment.

The investment statement presented the magazine's circulation figures in a table headed: "In the latest ABC circulation per issue audit, Jan-Jun 2004, the top business and real estate magazines are ... "

The figure for Kiwi Property was "12,000 est", with an asterisk referring to the bottom of the table which says: "Kiwi Property has audited readership of 42,000 and a print run of 14,500 per issue."

Elsewhere, the investment statement attributes the readership figures to research house ACNielsen.

The table ranked Kiwi Property as the best-selling magazine in its category.

The figures provided for the other two magazines, Espy and Her Business, were correct.

McClintock said KPI's publisher had applied to be audited, been advised of the formal requirements but was yet to reply.

Momentum's claim, reported in the Business Herald on Friday, "has already called into disrepute the value attached to ABC circulation measurement", he said.


Kathryn Rogers, associate counsel at the Securities Commission, said the commission was not able to comment, but investment statements and prospectuses should not contain false or misleading statements.

The commission has the power to suspend a public offer without notice for up to 14 days, but is barred by law from saying whether it has exercised that power.

The Momentum offer attracted comment and criticism for forecasting 1750 per cent growth in revenue over three years.

The stated aim is to expand three New Zealand-based publications to a total of 16 in New Zealand, Australia and the United States.

Momentum is forecasting revenue for the second half of this financial year of $1 million, rising to $11.8 million in the next and to $33.8 million the year after.

Cashflow after tax is forecast to go from $700,000 in 2004-05 down to $100,000 in 2005-06 and then jump to $6.8 million in 2006-07.

Using the unusual measure of EAIDBT - which Hows said stood for earnings after interest and depreciation but before tax - it said its margins would be 28 per cent of revenue by the fourth quarter of the 2006-07 financial year.

The people behind Momentum include chairman Brad Sugars, who is heavily promoted as a "global investor and multimillionaire".