KEY POINTS:
It's getting tougher at the top at Air New Zealand where profits plunged in the second half of the past financial year.
The airline's chief executive Rob Fyfe said the 13-member executive had seen their pay fall by around 18 per cent in the past year and he had taken a cut of more than 20 per cent in the 12 months to June.
Figures in accounts released this week show the highest paid, presumably Fyfe, saw total remuneration earned fall from between $2.94 million and $2.95 million to between $2.25 million and $2.26 million.
New international financial reporting standards impose many new disclosure obligations but more explicit detail on who earns exactly what is not among them.
The pay drop, plus a freeze among the top executive team announced in July, does send a strong signal to the market and 11,000 employees.
Around 1500 other salaried staff will get increases only if they are met by productivity gains.
There's only so much an airline can do about the price of jet fuel but Fyfe says it's only fair that as the business performance goes down, so does pay.
The decision to put pay on ice was welcomed by unions here who have seen their own members do it tough during the airline's transformation.
Their response was much warmer here than from one Qantas union, which, on hearing news of similar freezes by that airline's top brass, said, "the smallest violin in the world is about to play".
THE LETTER C
Noticeably absent from management commentary at Contact Energy's result this week was any direct mention of the Otahuhu C power station.
Contact obtained consents to build the gas-fired combined cycle plant before the Government's moratorium on thermal base load generation and the company appeared to use the prospect that it would build the plant to get leverage to secure a "call in" - or fast-tracked consenting process for a number of its renewable projects.
Contact got its call in for the Te Mihi geothermal project last year and this week got one for its Hauauru ma raki wind farm.
While there was no direct mention of Otahuhu C until asked about it, chief executive David Baldwin did obliquely refer to it in his presentation.
The company had recently sought to acquire gas for long-term supply from 2014 to test the thesis for a new base load gas-fired plant.
"The responses did not provide sufficient insight into the long-term pricing of gas to support an investment in a new combined cycle gas-fired turbine," said Baldwin.
In other words, even if the Government's moratorium on thermal electricity generation was reversed, the economics were not encouraging.
Contact has also done work with Genesis on the potential for importing LNG to supply gas fired plants. One of the criticisms of that plan has been that international LNG prices are subject to the same volatility as those for oil.
LNG prices have risen along with oil prices over the last year or so. Contact could not import LNG at economic prices now, let alone at what they might be in the future.
Contact believed geothermal plant offered the best way forward for base load generation for the near to medium term, with further development of hydro capacity on rivers already supporting generation a strong prospect over the longer term. Contact shares closed 4c lower at $8.35 yesterday.
TWEED'S ABOUT
Meanwhile, BG Group is not the only party interested in acquiring shares in Contact's 51 per cent owner Origin Energy.
Notorious Australian bottom-feeder David Tweed and his outfit Colonial Capital have been writing to some New Zealand based Origin shareholders offering them about a third of what the shares are trading at.
A local broker said it appeared Tweed was using the company's share register to identify investors who might be older and who have not been active in taking up rights issues, dividend reinvestment opportunities and the like. This is Tweed's usual MO and while it is a dirty trick it is not actually illegal.
In the past, Tweed has targeted shareholders in AMP, AXA Asia Pacific, Rio Tinto and Tower.
PFG DOWNGRADED
Christchurch based Property Finance Group, which was placed in receivership a year ago after its mortgage securitisation programme was derailed by the credit crunch, provided some welcome good news in the sector when it began trading again in February.
It was observed at the time that the company's restructuring proposal was largely dependent on favourable market conditions. Hmmm ...
Since then, its shares have been suspended twice, once in April for filing its results late and again this month for failing to file its annual report.
In its last update to the market two weeks back the company said the report was "in its final draft format" but awaiting "a number of 31 March balances" from a third party.
"This information is expected to be at hand shortly and the annual report will be filed thereafter."
In the meantime, however, rating firm Fitch has downgraded its rating on $18.85 million worth of PFG's mortgage-backed securities.
Fitch downgraded the CM 2006-1 notes from BBB to BBB- and assigned them "negative outlook".
They are still "investment grade" - but only just.
Fitch said the downgrade was because of "deterioration in the performance of the underlying commercial mortgages" and it continues to monitor them.
PFG has well over half a billion dollars in mortgage-backed securities on issue and it owes just under $80 million to about 4000 debenture holders. It plans to return $15 million to them at the end of this year and again at the end of next year with the balance - just under $50 million - to be repaid at the end of 2010.
Interest will continue to accrue and will be repaid with the final instalment of principal.
Chairman Barney Sundstrom told Stock Takes this week the Fitch downgrade was "not a huge thing" and the company is on track to meet its principal repayment this year.
PFG shares last traded at 10c.
SAFER THAN HOUSES
ANZ National took the unusual step of giving its third quarter General Disclosure Statement a bit of a push to the media yesterday.
Banks don't usually make a big deal of these documents which the Reserve Bank requires them to produce so their customers can, in theory, monitor them for signs of trouble.
However, what with that bit of bother on Wall St and the media asking "how safe are our banks?" it seems ANZ National wanted to take the opportunity to reassure us it is doing just fine.
You'll be relieved to learn that ANZ National looks very likely to achieve at least a $1 billion profit this year, having already hit $960 million for the first nine months or $870 million excluding one offs like its $85 million Visa IPO gain.
As reported, ANZ National's charges for bad loans continue to rise but are still at relatively low levels historically speaking.
ANZ National chief executive Graham Hodges told Stock Takes he didn't believe the fallout for his bank would see bad debt charges reach the levels seen during the Australasian commercial property meltdown in the early nineties.
Hodges believed predictions of 30 per cent falls in house prices were over the top, but if his customers do find themselves owing the bank more than their home is worth, ANZ National won't be turfing them out unless they can't continue to service the loan.
Hodges also pointed out that our Reserve Bank's capital adequacy requirements were much more stringent than those in Australia, which were in turn tougher than those in the UK.
PUSHING THE BOAT ON
While he's planning to step down as Guinness Peat Group chairman in a couple of years' time, Sir Ron Brierley was this week downplaying the prospect that it was pipe and slippers time, saying he wasn't a great believer in retiring.
What does seem likely though, is that he will be spending a fair bit of time on board his new boat which Stock Takes understands is under construction and is of suitably impressive dimensions for a man of Sir Ron's standing.
Since this week's announcement of his plan to leave GPG in 2010 at the same time as a "substantial release of value" to shareholders, Stock Takes understands there is considerable speculation among brokers that GPG might be wound up following the sale of its assets.
Key to this of course is threadmaker Coats which some analysts estimate may now account for in excess of 40 per cent of GPG's net asset value.
GPG still has some work to do with Coats and the turnaround has been taking longer than anticipated, Gary Weiss told Stock Takes a couple of months ago.
One or two analysts have drawn parallels between Coats and BIL's bete noire - Thistle Hotels - suggesting the threadmaker is, like the hotel chain, too big and difficult to turn around. Sir Ron wasn't having any of that though.
"The irony is that Thistle Hotels was and is a wonderful business. The BIL management of the 90s made a complete mess of it. Thistle was a good company and Coats is a good company. I think it's improving all the time." So far investors don't appear to be too positive. GPG shares have fallen 9c to $1.39 since.
