Stock Takes: Disclosure a muddy area

NZ Refining's burst pipeline is expected to cause more financial pain for its customers than the company itself. Photo/supplied.

It could be months before investors know the outcome of a complaint made to the NZX over the timing of NZ Refining's announcement to the market about its burst pipeline.

The refining company released its announcement before the market opened on Monday morning - days after the pipeline burst last Thursday.

NZ Refining says it made the announcement as soon as it understood that the pipeline would be out of operation for more than a few days, which only became apparent over the weekend.

The NZX says it is continuing to consider the complaint lodged and will follow the process for investigations as set out in its enforcement policy.

Under that policy the NZX says it aims to handle matters that do not go to its disciplinary tribunal within three months of starting an enquiry and will notify a company within four months if it is going to the tribunal.

Apart from one disgruntled investor others seem to be less concerned.

Shareholders Association chief executive Michael Midgley says he does not have any specific thoughts on the issue.

"I think at this point the facts are not clearly enough known."

It is quite understandable that the company had to scramble to deal with the problem first, Midgley says.

But he agrees that continuous disclosure generally could be an area that needs some work.

"It's clearly a muddy area."

In particular Midgley says there seems to be a divergence of opinion over the timing of releasing material information, such as when a deal is signed between companies.

"Is it when it has been inked or when the handshake took place?"

Tightly held
NZ Refining is a tightly held company with a large part of it owned by the oil majors.

Mobil is the largest shareholder at 17 per cent, Z Energy owns 15 per cent and BP has 10 per cent after reducing its stake from 21 per cent in March this year.

Its shares have risen about 2 per cent in the last year. Yesterday the shares closed on $2.43, down 5c on last Friday's closing price of $2.48 - showing little damage has been done as a result of the burst pipeline.

Jonathan Windust, a fund manager at Milford Asset Management, which owns shares in the company, says the expected revenue impact of $10 million to $15m is less than 1 per cent of the company's market capitalisation.

"It is not a massive issue."

Windust says it is potentially NZ Refining's customers that will feel more financial pain.
The airlines and oil companies have been careful to say they haven't worked out the cost impact yet and are focused on dealing with the crisis at hand.

Air New Zealand has said based on information available at this stage it believes the fuel supply issue is unlikely to have a material impact on its 2018 full year result.

Vector black-out
Vector is persisting with a long-standing policy of banning media at its annual meeting from recording the event. The meeting - usually well attended - will be held at the Ellerslie Events Centre next Tuesday afternoon.

A spokesman said there were plenty of opportunities for media to put the spotlight on the company.

The webcast is published online, the addresses are published to the NZX and media can interview chief executive Simon Mackenzie on the record afterwards.

"Media get good access, but our view is that the proceedings of the meeting itself is for shareholders and we want to respect that."

The company posted a 0.3 per cent increase in annual underlying earnings to $474.4m in the 12 months ended June 30 as revenue from its traditional gas and electricity continues to flatten. The meeting will likely hear more about its moves to diversify income streams by entering the new technology areas of metering and battery storage.

Vodafone advancing
Stock Takes understands the Vodafone initial public offer is continuing apace with investment bankers expected to be visiting fund managers next week to talk up the offer.

The company is said to be keen to get the float done before the end of the year - a tight timetable given there are less than four months left.