Continuous Disclosure: New Talisman CEO still under eye of regulator, what the power companies will pay out

More than six months after it was reported, the market regulator is still looking into a complaint that the chief executive of an NZX-listed firm commented anonymously about the company in a sharemarket chatroom .

In July Matt Hill, chief executive of listed gold explorer New Talisman Gold Mines, was banned from the “Sharetrader” internet chatroom for not declaring his position with the company, according to the website’s administrator.

The administrator of the popular investment web forum alleged Hill had been commenting under pseudonyms “Bullish” and “Epithermal” for several years despite the site’s terms clearly stating that persons working for a listed company must clearly identify themselves as such.

Yesterday a spokesman for the Financial Markets Authority said it expected to conclude its enquiries soon but would not give further explanation on when that might be or why it had taken so long to look into the complaint.

“We cannot comment further at this time.”

Asked about its own investigations, New Talisman company secretary Jane Bell referred the Herald to a statement on page 7 of its June 30 quarterly activities report, published on July 31.

“Following on from the company’s announcement on 6 July 2020, the New Talisman chairman arranged for a third party to review the comments publicly available, alleged by sharetrader.co.nz as being made by the company’s CEO on the sharetrader.co.nz site.

“Following that review, the company is satisfied that the poster has not disclosed any material information not already generally available to the market.”

Bell said the company had no further comment.

New Talisman Gold Mines is developing the historic Talisman Mine in the Karangahake Gorge near Waihi.

Its shares last traded at 0.5c each.

Powering up

Three of the four power generator/retailers are expected to announce higher earnings this results season, but dividends are predicted to be more mixed.

Forsyth Barr analysts are forecasting Genesis Energy to see the biggest rise in its earnings before interest, tax, depreciation, amortisation and fair value adjustments (EBITDAF), with a rise of 24 per cent to $207 million.

Contact Energy, which is the first major company to kick off the New Zealand earnings season on Monday, is expected to see a rise of 11 per cent to $246m, while Mercury is forecast to have a 5 per cent earnings rise to $268m.

Meridian Energy, the biggest of the four, is expected to have lower earnings at $422m, down 9 per cent on its 2020 first-half result.

Analysts Andrew Harvey-Green and Scott Anderson said given its track record of strong earnings growth, it was unusual for Meridian to be the only one of the four where it expected lower earnings.

“That said, Meridian Energy is lapping a record 1H20 result and our 1H21 EBITDAF forecast is the second highest on record, +8 per cent better than 1H19.”

Across the sector, earnings are expected to be up 3.2 per cent to $1.143 billion, driven by increased retail margins thanks to ongoing elevated wholesale electricity prices.

The sector has been bolstered in recent weeks by news of an agreement to extend the Tiwai aluminium smelter’s operations and by the Climate Change Commission’s emphasis on the need for more electricity use to decarbonise the country.

But Harvey-Green and Anderson warn that one consequence of the New Zealand Aluminium Smelter agreement is a discounted electricity price and likely decline in dividends.

Across the sector they are forecasting a dividend fall of 13 per cent – mainly due to Meridian Energy no longer paying a special dividend.

“Special dividends have been a feature of generator/retailers’ shareholder returns in recent years, as the companies return surplus capital to shareholders.

“Looking ahead, we do not foresee special dividends being common as the generator/retailers look to reinvest capital into new generation projects.”

New projects

The ForBarr analysts expect at least two projects will get the green light from the gentailers, with Contact Energy’s Tauhara geothermal project the most likely to be approved.

“[Meridian Energy’s] Harapaki wind farm is also a strong chance to go ahead.” Genesis may also announce a new project, given that it needed to build 1350GWh of renewable energy to meet its 2025 pledge, they said.

Harvey-Green and Anderson expect Meridian to cut its dividend 30 per cent from 8.14cps to 5.7cps for the half, while they forecast Contact’s to be cut from 16cps to 15cps.

For Genesis, they expect it to rise from 8.525 to 8.65cps and for Mercury a rise from 6.4cps to 6.8cps.

Takeover over

US investment manager Ares Management has dropped its takeover bid for AMP- the dual-listed Australasian financial service company which is a major KiwiSaver provider.

Ares told AMP on Wednesday night that it no longer wanted to proceed with its A$1.85 per share offer but is still interested in AMP Capital – the investment arm of AMP.

That won’t go down well with AMP shareholders, who had been hoping for a white knight after struggling in the wake of fallout from the Australian Royal Commission into misconduct in the banking and financial services industry.

AMP also confirmed that it had concluded the strategic review of AMP Australia and its New Zealand Wealth Management arm. The NZ business has been on and off the market for some time and a separate listing was touted at one point.

Instead, the Kiwi arm has wound down two legacy products and will cut costs by moving to low-fee investment manager BlackRock Investment Management by midway through this year.

AMP’s underlying net profit dropped by nearly a third (32.8 per cent) in its 2020 financial year, falling from A$439m to A$295m. The New Zealand wealth management arm saw its underlying NPAT drop 18.2 per cent from A$44m to A$36m.

Blair Vernon, AMP NZWM chief executive, described the result as a “solid performance”.

The drop in earnings was put down to the closure of two legacy schemes and softer investment markets in the first half of 2020 due to Covid-19.

Assets under management increased 4 per cent to $13.3b.

Third Age's NZX debut

NZX debutant Third Age Health, a medical service provider for the aged residential care sector, plans to use its compliance listing yesterday to fund future acquisitions.

While the listing did not involve raising fresh capital, chief executive Michael Haskell said the move would open the door to raise funds for future purchases, although the company does not have an acquisition immediately in mind.

Third Age, which serves the aged residential care sector, including private geriatric hospitals and secure dementia facilities, has a reference price of $2.15.

Haskell, together with chairman and founder Bevan Walsh, have a majority shareholding in the company.

Ryman Healthcare Chairman David Kerr was on the Third Age board for about five months before resigning late last year.

Haskell said extra work entailed in the listing was taking up a lot of Kerr’s time so he stepped aside. Kerr remains an adviser.

Norah Barlow, the chief executive of Heritage Life Care (NZ) and a former chief executive of NZX-listed Summerset, is on the board.

Haskell said the company has about a 10 per cent market share nationally.

“We are only10 per cent of the existing market and our market is growingas well, so we think that there is a quite a bit of upside there for us,” he said.

The company undertook a $2m capital raising at the $2.15 reference price in October and November last year, bringing in 40 or so wholesale investors and high net worth individuals, as well as some small funds.

Haskell said the business is cashflow-positive every month.

“We are able to make small acquisitions from existing cashflow but we aim to make larger acquisitions and there is nothing that is right in front of us right now,” he said.

“If we did make a major acquisition, we would need to tap into the debt or equity markets and as a private company, it’s just that much harder to do.

“Now that we are listed, we will be able to access equity and debt through the NZX much faster, and on far more favourable terms than we would have it we were a private company.”

Haskell said the sector is growing at about 3 to 5 per cent a year.

“We have historically grown faster than that,” he said, adding that the company is aiming for 15 per cent a year earnings growth.

Haskell, who comes from a business background, has been in the healthcare industry since 2007.

Third Age has a market capitalisation of $20 million.

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