Z Energy has released analysis that questions the Commerce Commission's basic arithmetic, use of economic concepts and choice of the formula it used to conclude the New Zealand transport fuel sector is uncompetitive.
"Z has discovered a number of inaccuracies in the draft findings on profitability, including a misrepresentation of Z's 2016-2018 rate of return as about 22 per cent, around double Z's independently reviewed calculations of about 11 per cent," said Z chief executive Mike Bennetts in a statement accompanying the company's submission on the first 'market study' of its kind undertaken by the government's competition watchdog under new law beefing up its investigation powers.
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"The Commerce Commission's fuel study draft has material inaccuracies that need to be rectified," the statement is headlined.
The study had also used the wrong number of shares that Z had on issue, inflating the company's market value by $181.5 million, had ignored $158 million of goodwill booked at the time Z bought the Caltex fuel distribution business from Chevron NZ, used the wrong concept for assessing depreciation, and a deferred tax liability had been accounted for in a way unsupported by the relevant literature, a report from Victoria-based consultancy Incenta said.