Stock Takes: Brash cuts ties with Huljich after seven-month tenure

Don Brash says after turning 70 he has no desire to work in a full-time executive position. Photo / Doug Sherring

After seven months heading up KiwiSaver fund manager Huljich Wealth Management former National Party leader Don Brash is getting out boots and all.

As well as stepping down from the board and the executive Brash will sell his 4.9 per cent share in the company.

Defeated Super City mayoral candidate John Banks became chairman this week and will step on to the executive from November 1 when he is no longer mayor of Auckland city.

But Banks won't be replacing Brash in the role of chief investment officer - that will be filled by the newly recruited Mark Ford.

Brash says the difficulties faced by Huljich, including the ongoing Securities Commission investigation into the company, wasn't behind his decision.

"I think over the last seven months the issues that were of concern have been resolved. I think I will leave the company in a very good shape."

He says the reasons for his departure include turning 70 last month and a desire not to work full-time in an executive position.

The Huljich role would also have conflicted with his directorship at ANZ National Bank which also owns fund manager ING, he says.

However Stock Takes notes this doesn't seem to have caused Brash any concerns in the past.

Brash became a director of ANZ in June 2007 when it already owned 49 per cent of ING. ANZ bought out the rest of ING in September last year.

AN ONGOING CONCERN?

Brent King's Investment Research Group has started trading again after nearly four months of suspension from the stock exchange for failing to file its full year results and annual report on time.

The company has blamed the delay on its auditors. Chairman and former National Party MP Sir William Birch told shareholders this week it had been "a long and unsatisfactory process".

The company made a loss of $2.24 million for the year to March 31 - an improvement on the $3.94 million loss the previous year.

But it seems reliant on its bankers to remain a going concern.

"The directors are confident in the group's ability to continue as a going concern, however, they acknowledge without the ongoing support of the bank and/or shareholder funding and other loan providers, there is significant uncertainty as to whether the group will be able to continue as a going concern," the company states in its financial accounts.

AUDITOR'S OPINION

IRG's auditor Deloitte also appears to have struggled to get enough information out of the company to confirm whether it has complied with acceptable accounting practice or International Financial Reporting Standards and whether the accounts give a true and fair view of its financial position.

Deloitte has queried the way the company has handled a deferred tax asset, the recoverable values of goodwill and customer databases, and value of its investment in subsidiaries and related party receivables, giving a qualified opinion.

But the company's directors have been quick to pour cold water on the auditors. "We note that auditors are required to express their opinion and that is a good thing for the market. It does not mean that their opinion is correct nor does it mean that the company need agree with it," the directors stated in the annual report.

WHO TO TRUST?

IRG's views of its auditors are not unlike that of Allied Farmers after it also received a qualified opinion report from PriceWaterhouseCoopers. Both companies believe their auditors got it wrong.

It seems auditors have definitely toughened their stance on company accounts in the wake of the Feltex court case and finance company collapses.

That's got to be a good thing for shareholders. Stock Takes just hopes investors take account of the independent viewpoint. IRG closed flat on 1.1c yesterday.

CUTTING TIES

It seems remaining small shareholders in New Zealand Farming Systems Uruguay have not been best pleased by the company's decision to cut more ties with PGG Wrightson.

Shares in the agricultural firm dropped 4c to 59c yesterday after Farming Systems said it would not enter a preferred supplier agreement with PGW and would pay the company out of the management contract.

The agreement is still subject to board, bank and bondholder approval but it seems unlikely to be turned down when largest shareholder Olam is keen for it to happen.

Farming Systems also warned at its annual general meeting yesterday that milk volumes were 10 per cent less than its budget in the first quarter and are likely to remain so for the rest of the year. The 6.3 per cent share drop was the biggest in three months, according to Bloomberg.

A LONG WAIT

Market players have been surprised at the time it has taken for receivers McGrath Nicol to appoint advisers for the sale of the South Canterbury Finance assets.

The tender closed off a couple of weeks ago but no one has been appointed as yet. Most of the major investment banks are thought to have thrown their hat in the ring although Cameron Partners, which might have been a likely contender, is understood to have kept out of the process. Talk is that either Deutsche Bank, Goldmans or UBS are in the final running.

First NZ Capital is being seen as too close to businessman and Pyne Gould Corporation director George Kerr whose Torchlight Fund has already benefited from the Government's creditors payout on South Canty.

First NZ is advising PGC about a strategic review to determine the appropriate way to separate its financial services assets.

Questions have also been asked about McGrath Nicol's ability to handle the huge receivership process.

The Auckland-based firm was appointed by SCF trustee Trustees Executors, not the Government, and that came as a surprise at the time. Many had thought the job would go to KordaMentha.

Market players have also been surprised Treasury has not tried to take more control over the receivership given the Government is the biggest creditor.

TALKING CHICKEN

The sale of Kiwi poultry business Tegel has sparked debate on what the deal could be worth in the current environment.

Australian private equity players Pacific Equity Partners (PEP) seem keen to sell the business but obviously want a good price for it.

A figure of $1 billion has been touted - a level which would be 14 x earnings before interest, tax, depreciation and amortisation although sources close to the deal suggest 11 x ebitda or around $880 million is more likely.

New Zealand market players have put a figure of $500 million on the sale. Singapore company Olam International, originally touted as a potential buyer, is understood to have ruled itself out and the South American buyers are also thought to have said no.

Stock Takes wonders whether PEP will go ahead with the sale at all if it can't achieve the price it wants.

STOCK MAN MOVES ON

Macquarie investment adviser Richard Inder has left the firm after three and a half years to join investor relations consultancy Merlin IR.

Inder, a former editor of the Business Herald, joined Macquarie in 2007 - just before the global financial crisis hit full speed.

The former National Business Review Stock Man columnist says he is looking forward to his new role.

Inder joins Annabel Cotton - a current Securities Commission member, and Amanda West.