Continuous Disclosure: Decoding the results jargon, Masfen ups stake in Metroglass and UDC sale inches closer

Metroglass shares have hit a new low. Photo/File.

De-coding company results

Reporting season always produces a lot of hard data for analysts and journalists to pore over but sometimes it's the words which have to be analysed a little closer.

Castle Point's Stephen Bennie says corporate executives have a tendency to use set phrases that are code words for what is really going on.

"One of my favourites is when they talk about a "Platform for Growth", which is code for earnings have just dropped quite a bit."

Bennie says seldom has this been better deployed than by Sky TV last week which saw them talk about a "Platform for Growth" on the second page of its presentation, just as they reported a 42 per cent drop in earnings versus last year.

Another corporate executive trait is to play down the importance of divisions that are underperforming, he says.

"Sky City Entertainment Group gets up to a bit of this with regard to its VIP high roller division, it's proven to be quite a volatile earner, due to the variable visitation and fluctuating win rate. When it does well it's all good but when it does badly, like now, it can feel like it's a division of another company, not one that is owned and run by Sky City."

Metroglass hits new low

Out of favour stock Metro Performance Glass has continued its downward spiral with its shares hitting a fresh low of 24.5c a share last week.

The glass processor had a rough end to 2019 after it down-graded its profit forecast after a weak half year result.

Forsyth Barr's Matt Henry said there hadn't been any new news since that down-grade but there was a lot of uncertainty around the stock.

"The biggest uncertainty around Metroglass is the change in structure of the New Zealand glass industry." APL - NZ's largest aluminium window and door maker is building a new glass processing factory which is set to come on stream this year.

"It is far from certain how that plays out over the next few years."

The share price weakness has seen at least one shareholder up its stake.

Masfen Securities, the investment vehicle of rich-lister Peter Masfen, now has 13 per cent of the company, up from 10 per cent.

Conversely Australian fund manager Schroders has exited its investment selling its 6 per cent stake.

Henry said he couldn't speak to the motivation for Masfen's move but Schroder's exit would be small in terms of its overall investment portfolios.

Asked if the Australian bushfires could provide some boost with replacement house-building Henry said it was unlikely to have an impact given only around 2000 houses were being rebuilt and Australia typically constructed around 170,000 to 200,000 houses a year.

ANZ's sale of UDC finance, which lends money for machinery, appears to be inching closer. Photo/File.

UDC sale closer?

It seems the sale of ANZ's finance division UDC could be creeping closer.

The Australian Financial Review is reporting that two US investment companies are thought to be preparing bids for UDC in a process being managed by Morgan Stanley.

Apollo Global Management TPG Capital manage billions of dollars between them and are said to be getting offers lined up for next month's deadline.

ANZ has previously said it does not comment on speculation.

ANZ came close to selling UDC - which specialises in providing finance for the transport, forestry, agriculture and manufacturing industries - to China's HNA for $660 million in 2017 before the Overseas Investment Office rejected its application.

At the time, HNA was China's largest non-bank leasing company operating one of the world's largest aviation finance businesses as well as one of the world's largest container leasing businesses.

The planned UDC purchase was one of several big acquisitions undertaken by HNA around the world, including a big stake in Hilton Worldwide Holdings and Deutsche Bank.

Mounting debt later saw HNA embark on a widespread asset sales programme.

In addition to its debt woes, HNA chairman Wang Jian died during a business trip to France in July 2018 in what appeared to be an accidental fall while posing for a photograph.

ANZ bought UDC in 1980.

Better late than never for Vital

Vital Healthcare Property Trust produced a big jump in profit with lower management fees but the timing of Wednesday's announcement wasn't exactly ideal, perhaps taking the gloss off for some local investors.

The company posted its first-half profit result at 5.01pm on Wednesday, leaving little time for unitholders to digest the detail before market close while making life tough for business journalists running up against deadline.

Vital's fund manager, Aaron Hockly, says the timing was down to a few factors, including the company's manager and 24.9 per cent unitholder, Northwest Healthcare, being based in Canada while About 75 per cent of Vital's assets are in Australia.

Vital Healthcare Property Trust produced a big jump in profit. Photo / Getty Images

"As we hold our board meetings at 9am (this time is only time that works for Canada and Melbourne) we don't get accounts signed off until during the day and don't want to release during the day," he told the Herald.

"We wanted to release [Thursday morning] but that conflicted with Precinct's release and we are keen to upset as few people as possible. Appreciate that it isn't helpful from your end."

At the end of the day the units closed down 1c at $2.91, still some 38 per cent higher than a year ago.

Vital announced that its net profit for the six months to December 31 climbed 22.2 per cent to $57.2 million with normalised distributable income up 14.6 per cent.

The value of its properties rose by $42.6m, up 2.3 per cent from June last year, to $1.93 billion pushing net tangible assets per unit up to $2.36 from $2.24 in December 2018.
After the interim balance date, the company bought three Australian aged care assets for $60.1m, all subject to legal and technical due diligence.

Unitholders who voted for a new management structure in late 2018 would have noted the lower fees charged in the latest reporting period.

For the first half Northwest charged management fees of $9.5m, down 21 per cent on the same period last year. That included a 37 per cent decrease in incentive fees to $3.2m.