Small listed commercial property owner NPT Ltd increased its gross rental income by 1% in the year to March, but saw its net after-tax profit plunge by 63% through costs associated with the battle for its future.
Control of the company shifted post-balance date to listed funds management specialist Augusta Capital Ltd.
At a special meeting in April, NPT shareholders voted to hand the company’s management contract to Augusta, defeating a proposal for Kiwi Property Group Ltd to take over.
Augusta lifted its NPT stake to 18.85% before the meeting, and won the vote with the support of associates.
Former Ngai Tau Property Ltd director Tony Sewell had taken over the chair at NPT from Sir John Anderson in March, but was ousted in April and the new chair is Bruce Cotterill. Augusta chair Paul Duffy and former Tramco Group Ltd chief executive Allen Bollard also joined the NPT board, Jim Sherwin was voted out and the one director to stay on is Carol Campbell.
Mr Cotterill said on Wednesday the new board was undertaking a thorough analysis of the 2018 financial year’s business plan before confirming guidance on the cash dividend for the year, and was also working on a plan to take NPT forward. He expected to release an update before the annual meeting in August.
Mr Cotterill said NPT’s results for the financial year just ended were negatively impacted by the costs associated with the Kiwi Property proposal that didn’t proceed and assessing other proposals, primarily for legal fees, due diligence, financial analysis and holding the April special meeting. The total cost incurred in the 2017 financial year was $1.339 million and a further $348,000 has been incurred in the 2018 financial year.
“There are still a number of challenges ahead of us that are mostly a consequence of a lack of scale. The board is committed to improving returns to shareholders and is focused on advancing the necessary steps in support of this goal as quickly as practical. Once a plan for NPT’s future is sufficiently developed, the board looks forward to engaging with shareholders to seek their views before moving forward with any significant course of action.”
Key financial performance points (2016 figures in brackets):
- Gross rental income up 1% to $17.15 million ($16.98 million)
- Net profit after tax down 63.1% to $3.1 million ($8.4 million)
- Distributable profit before tax down 1.4% to $7.2 million ($7.3 million)
- Distributable profit after tax down 0.2% to $6.1 million ($6.1 million) or 3.78c/share (3.79c/share)
- Loan:value ratio 33.2% (28.2%)
- Net tangible asset backing 72c (74c)
- Cash dividend maintained at 3.6c/share for the full year, 0.9c/share for fourth quarter
Property portfolio update
NPT undertook several substantial capital investment projects during the year, and chief executive Tony Osborne said some of that contributed to an increase in rental revenue, particularly at Eastgate & 22 Stoddard Rd: “Further gains will be realised as vacant space at Eastgate & the AA Centre is leased.”
- Net rental income up 2.6%
- Increased valuations at Eastgate, 22 Stoddard Rd & AA Centre, offset by reduction in valuations at Print Place & Heinz Watties; overall loss of $1.7 million after taking capital expenditure into account
- Occupancy at 96.0% (97.1%)
- Weighted average lease term 4.6 years (5.4 years)
- 22 Stoddard Rd back to 100% occupancy
- Refurbishment of AA Centre level 8 nearing completion.
Attribution: Company release.