The Age Business McDonalds McOz burger in the shape of Australia. 25th Jan 2012

A big bite: McDonald's is still making a healthy profit.

FAST-FOOD chain McDonald's had its Australian earnings fried by tax in 2011, although its reduced $184 million profit could still buy everyone in Australia a Big Mac meal each, plus change.

Prior to applying tax, McDonald's Australia's earnings were up a comparatively modest $4 million (1.5 per cent) to $260.88 million on $1.54 billion of revenue.

The revenue gain was more than 5 per cent and the results consistent with comments by its incoming global chief executive Donald Thompson last month that the Australian operations have been suffering from the ''tightening'' of market conditions.

Costs were up significantly in the year, chewing away at the sales performance - including the unrelenting ''service fee'' that gets paid back to its US-listed parent McDonald's Corporation, and equates to about 21.8 per cent of total revenue, or $336.5 million in 2011. Just under $1 billion of McDonald's revenue came from flogging its patented two-all-beef-patties-special-sauce-lettuce-cheese-pickles-onions-on-a-sesame-seed-bun and other products.

Another $335 million was rental income from its franchisees, who also paid close to $140 million in service and licence fees.

Whatever views you might have on the nutritional value of the restaurant chain's food offerings, its Australian boardroom puts pretty much every other public company in this country to shame - it has, shock horror, a majority of women.

Four out of six directors in the multibillion-dollar business are women, including of course managing director Catriona Noble and chief operating officer Helen Nash. Dang those Americans and their progressive ideas.

Fund perks up

COMMONWEALTH Property Office Fund's units have hit their best levels in more than three years as the elevator rumour mill continues to guess at Dexus Property Group trying to prise control from Colonial First State.

Speculation that Dexus' recently appointed, ex-Colonial, chief Darren Steinberg might try to liberate the fund from his former employer has been running for some time. Conspiracy theorists might like to ponder that Steinberg even nicked Colonial First State's investor relations man, David Yates, last month.

In sharemarket terms Dexus is just under twice the size of the Commonwealth fund, which has a market worth of $2.5 billion based on its $1.04 unit price, but a takeover would be a big bite.

As with all such gossip, it is often hard to separate the wishful thinking of under-employed investment bankers, who always have a package of bright ideas for new chief executives like Steinberg, from a company's own acquisition ambitions.

Property funds have been sought by investors keen on reasonably reliable, but certainly not spectacular, yields. Both Dexus and Commonwealth are now showing gross yields of about 5.5 per cent, reflecting their rising unit prices and flat payouts over the past five years.

Perhaps Steinberg will instead return to his retail roots and opt instead to pick up a loose Centro shopping mall, or two.

Kagara loses its shine

SMALL surprise, but no joy, to see Queensland miner Kagara calling in the insolvency specialists yesterday after last week suspending mining operations. The appointment of voluntary administrators comes after some two years of what to Insider's mind appear to be ill-conceived corporate strategies - most all of them falling into the category of company management batting well out of its league in spending shareholder money.

Last financial year, when Kagara posted a loss of almost $33 million, almost $4 million went into the pockets of directors and management for their services. There is one easily saleable asset, its 62 per cent stake in Mungana Goldmines, although even that dropped 13 per cent in value on the news of Kagara's filing yesterday as the market repriced the shares on uncertainty and the stock overhang.

A few days back Kagara were saying its Mungana holding, already being marketed, was worth $45 million, although it is now priced at less than $40 million - and the question is whether such a large slice of the company will or can go in one lump without a discount.

Aurora pipped at post

HOW retro: Aurora Oil and Gas yesterday launched a takeover the old-fashioned way, offering to buy shares on-market in rival US shale play Eureka Energy.

Broker Euroz was instructed to pay 45¢ to all-comers, or a 36 per cent premium to Friday's closing price of 33¢, valuing Eureka at $107 million.

Only problem? Euroz did not get a single share because Eureka opened at 47.5¢, peaked at 48¢, traded down to 46.5¢, and closed again at 47.5¢ - on big volumes with 7 per cent of the stock changing hands, most likely hedge funds punting on a revised price.

Bell Potter's Johan Hedstrom - who doesn't cover either stock, but was an interested observer - pondered whether Aurora had meant to copy Beach Energy's aggressive $94 million cash bid for Adelaide Energy, announced in November and done and dusted in January.

Hedstrom tips that Aurora will come up short, noting Eureka was undervalued, strategically attractive and ''most takeover offers are done at bigger premiums''.

insider@fairfaxmedia.com.au