Will Palmer, co-founder and chief executive of Movio.
Continuous Disclosure is a market news column, including analysis and opinion. Edited by Duncan Bridgeman, Tamsyn Parker and Jamie Gray. In today's edition:
• Metlifecare investors miffed
• AMP hits new lows
• Sanford share sale
As the Vista Group share price tanked on Wednesday following a revenue growth downgrade, one key executive was buying.
Movio chief executive William Palmer topped up his holding in the cinema and movies software company – purchasing 125,000 shares at about $3.90 each, according to a shareholder disclosure notice posted on the NZX.
The stock had started the day at $5.42 but tumbled 29 per cent to close at $3.85 after the company scaled back its projections for revenue growth and reported a 23 per cent slide in net profit.
Palmer co-founded Movio, a cloud-based data analytics business that forms a central part of Vista's growth plans. An associated trust shelled out $487,618 for the share parcel, according to the NZX notice.
Vista shares held their ground today and recently traded up 4.16 per cent at $4.01.
Palmer now holds 298,199 shares in Vista. He had previously decreased his holding in May this year when he sold 214,000 shares held in an associated trust at $5.15 for a total consideration of $1.1 million.
Vista shocked the market Wednesday when it downgraded expected annual revenue growth from its core Vista Cinema and Movio businesses to 14-18 per cent from previous guidance of 20 per cent as revenue from several large projects slip into the next financial year.
Overall group revenue growth is expected to be 10-12 per cent for calendar 2019, the company said.
The downgrade followed five consecutive years of 20 per cent-plus revenue growth and the 23 per cent growth achieved in 2018.
Investors are disappointed Metlifecare isn't pursuing a share buy-back.
The retirement village operator reported a solid result on Monday with revenue rising from $114m to $141m and underlying profit before tax up 4 per cent to $90m.
But it share price performance has been lacklustre falling by more than 30 per cent in the last year.
Craig Tyson, head of Australasian listed property at the ANZ which has a 12.1 per cent stake in Metlifecare said the recent share price performance of Metlifecare had been disappointing.
"Metlifecare trades at a significant discount to underlying asset value and has had the worst share price performance in the retirement sector over the last year, down 32 per cent despite having one of the best-located retirement village portfolios in the market, a strong balance sheet and some great developments planned and underway."
Tyson said he believed the main reason for the performance was the negative Auckland housing market sentiment where 14 of its 24 retirement villages are located and all four of its greenfield development sites.
"While housing in Auckland has been softer than the rest of the country over the last couple of years (median price was actually flat in the 12m to the end of July), we think that longer-term the best places to have retirement villages are in the high population growth locations such as Auckland and Tauranga where 80 per cent of Metlifecare villages are located.
"The fall in mortgage rates and the improvement in auction clearance rates indicates the housing market in Auckland is stabilising and some economic commentators are forecasting an increase in Auckland house prices next year."
Tyson said Metlifecare had a solid operating result which was in line with expectations and 4 per cent ahead of last year despite the weaker environment.
"However, we were disappointed that the company did not take the opportunity to announce a buy-back at its result on Monday given its strong balance sheet, where the share price is trading relative to underlying book value and the current cheap cost of debt funding."
Mark Brown, chief investment officer at Devon Funds Management, said there was an under current of enthusiasm for some form of buy-back given the discount it was trading at to its net asset value.
"It makes sense to do that." Brown said it would be value accretive and give the company a sentiment boost.
He said the company indicated they had been considering a buy-back but for now it had been shelved.
The performance will also be a disappointment to the New Zealand Superannuation Fund which owns around 22 per cent of the shares.
The woes for Australasian financial services company AMP seem to be compounding with its share price hitting a new record low this week and a down-grade in its credit rating from S&P.
Shares in the dual-listed company hit $1.72 on the NZX on Monday and have more than halved in value over the last year. They have since restored some ground and recently traded up 2.8 per cent at $1.81.
S&P down-graded AMP's rating from A- to BBB+ on Tuesday and said the outlook was negative with the credit rating likely to fall another one or two notches after it sells its life insurance business.
"The downgrade of AMP reflects our view of its weakened group credit profile, with lower expected diversification with the pending divestment of AMP Life and the reliance on lower-rated operating subsidiaries," S&P said in its rating downgrade statement.
Earlier this month AMP reported a net loss of A$2.3 billion for its half year to June 30 after writing down the goodwill in its wealth management and AMP life businesses.
It plans to sell its AMP Life businesss, which includes the NZ arm, to Resolution Life in a revised deal worth A$3 billion - down from the original sale price of A$3.3b.
That amount will include A$2.5b in cash and $500m in equity with the sale expected to be completed in the first half its 2020 financial year.
S&P said with the divestment of AMP Life, AMP group's primary operating activities would comprise global and Australian investment management, wealth management, and domestic banking activities. AMP group will also hold a minority interest in Resolution Life Australia.
"Absent the stronger credit profile of the prudentially regulated life insurer, we consider the group credit profile of the remaining AMP group to be weaker.
"AMP's group credit profile, post-divestment of AMP Life, is likely to be one or more notches lower than the current level."
AMP said in a statement to the stock exchange that the changes were not material to the operations of AMP Limited.
"AMP continues to have a strong balance sheet and capital position, with its Level 3 eligible capital above minimum regulatory requirements of A$1.7 billion at 30 June 2019."
Roy Davidson, a research analyst at Craigs Investment Partners, said a credit down-grade was never good.
"It just makes it more expensive to borrow."
Davidson said the negative outlook reflected the sale of the life insurance business which would leave AMP with wealth management which was seen as a "bit more risky" and a big turnaround job.
AMP is investing over a billion in its wealth management arm while cutting back on its adviser network in Australia.
"They have got their hands full," Davidson said.
Amalgamated Dairies, the investment vehicle for National Party' President Peter Goodfellow's family interests, has raised $65 million through the sale of a 10 million shares in seafood company, Sanford.
The sale takes Amalgamated's holding down to 11.9 per cent from 22.6 per cent, according to a notice filed with the NZX.
Amalgamated has been reducing its stake Sanford over the last few years.
In a separate notice, Harbour Asset Management said it held 7.8 per cent of Sanford's shares.
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