News Round Up

Morningstar on BT, Mighty River upgraded, Elders says profit up and more.

Monday, March 29th 2004, 6:47AM

Morningstar says the resignations of Craig Stobo and Andrew South from BT Funds Management are disappointing, but BT’s quick reaction to the executive changes is positive.

The research house acknowledges that BT, under Stobo’s guidance, has developed successfully during a period of significant changes both within the broader funds management industry, and to the ownership and shareholding structure of the BT business itself.

“Stobo has always been a strong advocate for the BT business in New Zealand, and BT has always had a strong team culture. This must be undermined by the departure of the ‘team leader’. It is also not clear whether New Zealand operations will continue to be managed in the same way.

“South had considerable input into BT’s New Zealand equities research and portfolio construction. Inevitably the issue arises as to how much this will change under a replacement,” Morningstar says.

Going forward the appointment of the new chief executive will be a major factor for investors, along with how effectively BT has replenished its pool of senior investment professionals, and their interactions with the respective teams.

Mighty River Power rating raised
Standard & Poor’s Ratings has raised its long-term rating on electricity generator and retailer Mighty River Power to BBB+ from BBB. The outlook is now stable. The A-2 short-term rating was affirmed.

"Mighty River Power's business and financial profiles have improved over the past two years," Standard & Poor’s credit analyst Mark Legge says. "An enhanced balance between generation and retail portfolios and a stronger retail base has strengthened the company's business profile, while an extended debt maturity profile, reduced debt burden, and improved cash flow coverages have benefited its financial position.

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Elders reports strong growth
Elders Finance, which is part of the Hanover Group, says it has increased its total assets 17.6% in the six months to December 31, and that total operating revenue for the period was up 15.7% to $42.0 million.

Elders Finance chairman Mark Hotchin said the strong lending performance by Elders in the six months to December 31 2003, resulted in total assets growing from $549.8 million as at December 31 2002, to $646.9 million for the latest period. He says Elders continued to maintain strong liquidity with cash in the bank and liquid securities of $72.2 million.

“The company experienced good operating cash flow for the six month period of $12.4 million up from $5 million last year, while the number and value of loans impaired and in arrears remained low,” Hotchin said.

While the the property market had remained buoyant the company is “exercising prudent governance policies to ensure the business continues to be well structured.”

This conservative view had extended to the accounting approach for the period which resulted in the operating surplus before tax being down slightly, from $10.8 million to $9.4 million.
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Perpetual Trust rebrand
Perpetual Trust has a new brand and a new look. Based on a Celtic knot, the new logo represents a "Perpetual thread – a never-ending line that represents the endless tapestry of our daily lives and the state of constant change in which we live."

Acting chief executive Richard Elworthy says the new logo is a symbol of the enduring capability of Perpetual advisers to provide professional advice to people seeking to fulfil their financial goals.

Perpetual will also, from next week, have a new chief executive – Peter Baynes, who comes from other leading roles within the financial services industry, including Jacques Martin (New Zealand) Ltd and Tower Trust Services . Established in 1884 under an Act of Parliament, Perpetual Trust is a wholly owned subsidiary of the soon to be listed Pyne Gould Corporation. Perpetual Trust’s range of financial services include financial planning, asset management, investment funds, risk management, trusts, wills and powers of attorney.

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