Archive | Gainz

Steel & Tube ebit slips at year-end

Steel & Tube NZ Ltd said on Friday it expected its full-year ebit (earnings before interest & tax) to fall 10-15% of the 2016 figure.

When the company issued its half-year results in February, it indicated that the full-year result would be consistent with last year’s.

However, chief executive Dave Taylor said on Friday the second half proved more challenging in the final weeks: “We have faced multiple construction & infrastructure project challenges and delays which have been out of our control, coupled with intense competition in the market, leading to tighter margins, particularly in the construction sector.”

Despite falling short overall, however, Mr Taylor said that, excluding last year’s $6.2 million of gains on the sale of property, underlying ebit for the year to June would be 2.5-8% higher.

Attribution: Company release.

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Precinct gets 4.5% revaluation gain with more expected

Precinct Properties NZ Ltd said on Friday its $89 million valuation gain in the year to June had lifted the portfolio value over the $2 billion mark.

The 2017 valuation gain was up 4.5% on the $81 million last year.

The valuations were carried out by independent valuers, are subject to final audit, finalisation of year end book values and will be confirmed in the financial results for the year ending 30 June 2017, to be announced 17 August.

Chief executive Scott Pritchard said that, excluding Deloitte House in Wellington, the overall portfolio valuations were up 5.3% on forecast book values.

The Auckland portfolio gained 6.8%, Wellington 1.5%. Mr Pritchard said those increases were mainly attributable to continued compression in capitalisation rates, together with market rental growth. Deloitte House’s valuation declined by $14 million, with further work completed on remediating & seismically improving the building following the November 2016 Kaikoura earthquake.

“Precinct’s active development pipeline has contributed strongly to the value uplift. Commercial Bay (Auckland) & Bowen Campus (Wellington) ‘on completion’ values have increased by around $94 million to $1.176 billion.

“This was mainly due to an increase in the value on completion of Commercial Bay of $88 million to $941 million. Forecast net profit from both developments combined has increased to be around $250 million, of which about $160 million as at 30 June 2017 has yet to be recognised.”

Attribution: Company release.

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Listed shell NZF becomes Blackwell on Monday

NZX-listed NZF Group Ltd has finally succeeded in transforming itself from a listed shell into a company with a future. It will change its name on Monday to Blackwell Global Group Ltd.

On Friday, NZF issued 313.8 million new shares to Blackwell Global Group, its managing director, Taiwanese wholesale investor Chai Kaw Sing (Michael Chai), and local associate James Law, raising $2.5 million. It also issued $500,000 of convertible notes to Blackwell.

Mr Chai, real estate agency owner Mr Law & lawyer Ewe Leong Lim have become directors, director Mark Thornton reverts to his role as chief executive and the 2 directors who’ve worked on keeping NZF alive, chair Sean Joyce & lawyer Craig Alexander, will stay on as independent directors.

As Blackwell, NZF will launch a new finance company operation, acquire assets related to a derivative trading operation and launch a new derivatives trading operation.

NZF listed as NZ Finance Holdings Ltd in 2004, with Huljich family interests in a cornerstone role. Its business was focused on mortgage lending. It struggled through the global financial crisis. Then, at the end of 2010, its affairs began to unravel. For more on the background, click on the 9 June story below.

Earlier stories:
23 June 2017: NZF passes resolutions to become Blackwell
9 June 2017: Listed shell NZF calls meeting on future as Blackwell finance & derivatives business

Attribution: Company release.

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Vector to repay consumers after acknowledging breach

Vector has reached a settlement with the Commerce Commission for an unintended breach of its regulated price path.

The breach arose in April 2013 when Vector restructured its prices to enable residential consumers to benefit from either a low user fixed charge or standard user tariffs.

Vector chief financial officer Dan Molloy said on Friday: “While Vector was legally prevented from unilaterally switching consumers onto the optimal tariff for their usage pattern, it relied on electricity retailers to identify & proactively request Vector to switch those consumers who would benefit from a low use fixed charge tariff.

“Vector assumed that competition in the electricity retail market would ensure retailers selected the most beneficial tariffs for their customers. This did not occur. The Commerce Commission noted that this has highlighted the need for consumers to check that, if eligible, the low use tariff is being used as it could save households up to $200/year.”

Mr Molloy said Vector would return $13.9 million to Auckland electricity consumers by reducing the amount of revenue it recovers over 2 regulatory years starting in April 2018. In the 2018 financial year, Vector’s electricity revenues (& ebitda) will be $900,000 lower than they would otherwise have been, and the rest will be spread across the 2019 & 2020 financial years. The $13.9 million to be returned to consumers also includes accumulated interest of $3.8 million.

Attribution: Company release.

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Super fund explains tilting strategy

The Guardians of NZ Superannuation, the Crown entity that manages the NZ Super Fund, has published a paper on its strategic tilting programme for investment – how it works, how it aligns with the fund’s endowments & investment beliefs, and the performance to date.

The authors of the paper, the fund’s head of asset allocation, David Iverson, & strategic tilting manager Alex Bacchus, say the strategy has performed above expectations since inception on 1 April 2009 through to 30 April this year, returning about 1.2%/year (or about $2 billion): “This exceeds our expectations of 0.4%/year return (estimated since inception).

“Tilting returns have been uncorrelated with the reference portfolio returns since we began, and the strategy has only marginally increased the fund’s realised risk during this period. However, we acknowledge that the 8 years since inception is a relatively short timeframe for performance evaluation of a long-term strategy.”

NZ Super Fund, 3 July 2017: How we invest white paper: Strategic tilting

Attribution: Fund release & paper.

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Argosy sells Napier warehouse

Argosy Property Ltd said on Monday it had sold the mostly vacant property at 1 Pandora Rd in Napier to an owner-occupier for $7.7 million.

Chief executive Peter Mence said this was a premium to the current book value of $7.5 million. Settlement was expected in August.

Mr Mence said the property had been partially occupied on monthly tenancies, yielding only a 1.2% return. The sale was in accordance with Argosy’s strategy of divesting non-core properties.

The medium-stud warehouse has a net lettable area of 18,269m². Fonterra Group was using part of it as a milk powder distribution facility.

Attribution: Company release.

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Augusta closes Mercury HQ syndication 34% short, underwrites balance

Augusta Funds Management Ltd closed its $83.5 million syndication of Mercury Energy Ltd’s new headquarters in Newmarket 34% short on Friday, but subscribed for the balance itself and expects to reduce the shortfall to 26% by the end of July.

Augusta is funding its own underwrite with an ASB Bank debt facility.

Managing director Mark Francis said the $83.5 million target for the 33 Broadway, Newmarket, syndication was Augusta’s largest capital-raising and drew $61.8 million of applications.

Of that total:

  • Applicants for $55.15 million had completed all anti-money laundering requirements before the closing
  • Applications for a further $2.4 million were complete but funds hadn’t been received by Friday. Mr Francis said Augusta would transfer units to these investors on Monday, immediately reducing the underwrite by $2.4 million
  • A further $4.25 million of applications were from investors who either needed to complete final anti-money laundering requirements or didn’t have funds available until July. Mr Francis said Augusta would subscribe for these units and transfer as funds became available.

Accordingly, Mr Francis said, Augusta subscribed on Friday for $28.35 million of units funded by the debt facility, reducing this to $25.95 million on Monday and anticipating a reduction to no more than $21.7 million by the end of July.

“Those units remain available for sale and inquiry remains strong,” he said.

Earlier stories:
28 March 2017: Augusta unconditional as second tenant signed for Broadway development
20 February 2017: Augusta launches Mercury syndication
22 December 2016:  Augusta takes new step in syndication

Attribution: Company release.

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PFI settles internalisation

NZX-listed Property for Industry Ltd said on Friday it had settled the internalisation of the company’s management, which shareholders overwhelmingly approved at the annual meeting on 22 June.

Shareholders agreed at the annual meeting to pay the existing external management team $42 million (at a net after-tax cost to PFI of $30.3 million) for the contract. The company will employ the same team to run the business on internal contracts.

The company will release its interim results on Wednesday 9 August and said it would give more details about the changed management structure then.

Earlier story:
23 June 2017: PFI vote strongly in favour of internalisation, and building sale settles

Attribution: Company release.

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Meridian cuts space but signs new Customhouse Quay lease

Meridian Energy Ltd will cut the office space it leases at 33 Customhouse Quay, Wellington, by a third from September 2019, but has agreed to a new long-term lease on the balance.

Meridian occupies 4419m² but will cut back to 2933m² under the new 12-year lease that building owner Stride Property Ltd has agreed to.

Stride chief executive Philip Littlewood said both landlord & tenant would look for a new tenant for the 1486m² of level 1 space being vacated.

Attribution: Company release.

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Commission rules on Juken J-frame labelling

The Commerce Commission has made 3 determinations regarding labelling of J‐frame laminated veneer lumber manufactured by Juken NZ Ltd.

The commission said this week Juken’s J-frame lumber:

  • didn’t meet the requirements of NZS 3640
  • was incorrectly labelled as H1.2, and
  • may not have complied with AS/NZS 1604.4 because it doesn’t carry an “E” label signifying that it’s an envelope treatment.

The commission said its decision was about labelling and it made no judgment about the durability & performance characteristics of Juken’s J‐frame product or whether it was fit for purpose.

The commission added: “J‐Frame has a BRANZ appraisal and a CodeMark certificate. These are unaffected by the Commerce Commission decision. This means that J‐Frame can be used as an alternative solution where the H1.2 hazard class applies. If J‐Frame is specified in plans for a use in situations where the H1.2 hazard class applies, then a building consent authority is obliged to accept this, on the basis of the CodeMark certificate.

“If consented plans specify ‘H1.2’ and a code compliance certificate has not yet been issued, then a consent variation will be needed if the builder uses (or proposes to use) J‐frame.”

Attribution: Commission release.

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