Property company will pay dividend despite downturn, lockdown sees takeaway food sales drop for Restaurant Brands and another tech business eyes the ASX
Stride Property maintains its dividend
Stride Property provided investors with some much-needed reassurance yesterday confirming it will maintain its dividend at 9.91 cents a share for the current financial year, despite the financial impacts of Covid-19 which it said could undermine profits by as much as $5.1 million this year. However, CEO Philip Littlewood said the impact could be partially offset by activity-based income resulting in additional distributable profits in a range between $2.2 million and $3.6 million.
Littlewood told shareholders at yesterday’s AGM the listed property group seemed to be through the worst of the pandemic but warned distributable profits could be expected to be impacted by between $2.9 million and $5.12 million. In terms of dividends, chair Tim Storey said while the outlook remained uncertain, the board remained committed to paying quarterly dividends and expects the combined cash dividends to remain in line with its policy of paying out “between 95 percent and 100 percent of distributable profit.”
Currently, Stride Property’s portfolio is made up of $186 million in office assets, $302 million of retail shopping, $132 million of large format retail assets and $376 million of industrial assets.
Restaurant Brands reveals Q2 revenue hit
Restaurant Brands has revealed its Q2 sales were materially impacted by the government-mandated lockdown that meant all its stores were closed for a month between March 25 and April 28 and only open for delivery and drive through until May 14.
Total sales for the three months to June 30 were $183.3 million, down 11 percent on the year. The impact on NZ was more dramatic due to the severity of the lockdown requirements with Q2 sales down 29 percent on the year. Australia, where takeaway businesses were permitted to operate during the lockdown, saw second quarter sales fall just 0.6 percent at A$45.7 million while in the US they were up 8 percent at US$35.6 million.
In the US, a small downturn in Taco Bell sales arising from the ongoing unavailability of instore dining was more than offset by strong Pizza Hut sales which benefited from newly enhanced web order and delivery functions, it said. Year-to-date sales were down 3.2 percent on the year to $383.4 million. Restaurant Brands shares closed down 0.4 percent at $12.15 having recovered from a low of $11.22 two weeks ago.
Another NZX listing considering a move to the ASX
Mobile engagement software company Plexure Group looks set to follow Xero’s lead and move its primary listing to Australia’s ASX. In a statement, the company said it will require significant capital for the next phase of its growth, and is investigating a move to the ASX based on increased capital availability and broader support for technology companies. Plexure said it would remain headquartered in Auckland and domiciled in New Zealand.
It was also considering the option of re-classifying as an NZX foreign exempt listing, which would allow its shares to continue to be quoted on the NZX. Plexure’s software is used by brands such as McDonalds, 7 Eleven and Ikea to engage consumers on mobile devices and drive them to stores with a range of personalised offers and loyalty incentives. The company has more than 191 million end-users in 60 countries. Plexure Group shares rallied on the news jumping 9 percent to $1.32.
MyRepublic gets offside with Commerce Commission – again
The Commerce Commission has penalised MyRepublic for a second time after the Singapore-based internet provider failed to supply annual accounts used to calculate its share of the Telecommunications Development Levy. Under the Telecommunications Act, companies must provide financial information to help set the levy used to pay for unprofitable infrastructure including services for the hearing-impaired and broadband for rural areas.
MyRepublic failed to provide the required information by the due date and only did so after being pursued for several months, the commission said. However the breach will cost the company just $2000 and a written warning, though a third offence could see it fined up to $300,000. Telecommunications Commissioner Tristan Gilbertson signalled future non-compliance from any company would be met with tougher responses.
Hotel group admits to being in survival mode
In its half year earnings update, hotel group Millennium Copthorne says government support and revenue from its property portfolio have kept it afloat, but it described the hotel industry as being in “survival mode”. Government tax credits, the wage subsidy and managed isolation contracts have been keeping the company in business while higher yielding tourism revenues have dried up as result of the border closure.
The company said the first round of the government wage subsidy provided the hotelier with $6.7 million towards its employees’ salaries while the subsidy extension added a further $1.8 million. Despite that, the company said it was forced to make hundreds of staff redundant across its 13 New Zealand properties while other staff took pay cuts, or had their hours reduced.
However, a $20 million tax credit as a result of the government reintroducing the ability to depreciate non-residential buildings from the 2020/21 income year as part of the covid-19 Business Continuity Package had provided an unexpected bonus. This one-off credit inflated the group’s half-year after-tax profit, which rose 43 percent to $34.1 million. But on an adjusted basis, profit plunged 80 percent year on year to just $3.7 million. The company added that predictions of a ‘new normal’ seem premature given the uncertainty that still pervades the sector. Millennium and Copthorne shares closed down 1.6 percent at $1.81.
Titans of tech square off with US Congress
In one of the most widely anticipated hearings on Washington’s Capitol Hill, the four CEOs of America’s largest companies Apple, Amazon, Alphabet (Google) and Facebook have appeared before Congress to defend accusations they have abused their power and dominance in the online marketplace.
The four ‘Titans of Tech’ as they’ve been dubbed testified before lawmakers in the biggest hearing of its kind since Microsoft’s Bill Gates appeared before Congress in 1998 at the peak of the company’s market dominance. While most of the executives have appeared before Congress previously, they’ve never faced a situation quite like this one. All four testified alongside one another but virtually, via video conferencing.
Facebook CEO Mark Zuckerberg was confronted about internal company emails he sent in 2012 about buying Instagram. In one email, Zuckerberg said Instagram could be “very disruptive” to Facebook. An email from Facebook’s CFO referenced neutralizing a potential competitor, which Zuckerberg replied was part of the motivation,
Meanhile, Amazon’s Jeff Bezos responded to claims that Amazon uses third-party seller data to advantage itself, a potential antitrust concern for the e-commerce company.
The hearing continues today and we will have more in tomorrow’s 8 Things.
Tencent surpasses Facebook in market cap
Tencent, one of China’s leading social media companies, has seen its market capitalisation surpass Facebook’s following a huge rally in the company’s shares this year. The total value of publicly traded shares of the Chinese gaming and social media giant stood at HK$5.15 trillion (NZ$1.02 trillion) yesterday compared with Facebook’s market cap of NZ$1 trillion.
Tencent is known for its popular mobile games but also for running WeChat — China’s most popular messaging app which has more than one billion users. WeChat has a social media feature called Moments where users can post pictures, videos and links and Tencent makes money from advertising through Moments.
Tencent shares have rallied around 43 percent year-to-date, compared with just over 12 percent for Facebook. That rally has added around HK$1.56 trillion (NZ$309 billion) to Tencent’s value.