Accolades and brickbats for 2024

The infamous underarm bowling incident in 1981. Source: AP

For my last column for 2024, I'm handing out an assortment of accolades and brickbats to NZX-listed companies that caught my attention this year. It's not at all scientific, just my idiosyncratic impressions.

Bye, bye Chappell's tactics award

Shades of the infamous underarm incident, Vista wasn't having it when Aussie private equity firm, Potentia, tried to strongarm its way onto the board. While Potentia had snared a 19.9% stake, it was always obvious it didn't have the wherewithal to mount a takeover bid, so it tried to topple chair Susan Peterson, who is overseeing a promising transformation from on-premises software solutions for cinema owners to a software-as-a-service subscription model, and Kirk Senior, a global cinema industry expert. Potentia wanted to replace the pair with its own nominees, but first one withdrew and then Potenia saw the writing on the wall when a couple of Vista's other major shareholders came out against Potentia – Vista said a survey of shareholders had shown more than 51% were opposed. It was never obvious what Potentia's nominees had to offer the company. But Potentia did itself and all other shareholders a huge favour by shining a light on the value emerging from Vista's strategy. Potentia paid $2.10 per share for its stake at a time when the shares were trading at $1.84 and they have since shot up to $3.12, having gained nearly 90% year-to-date.

Sunlight award for candour

This one goes to Ryman Healthcare and its chair, Dean Hamilton, for telling shareholders the awful truth that it wasn't going to become cash flow positive until 2026 – it had been aiming for 2025. When the market has lost faith in a company, as it did with Ryman when it learnt the company had been hiding the fact that it had been cash flow-negative for years, the only way back into the market's good graces is by owning up and being transparent about the steps you're taking to clean up the mess. The good news for Ryman is that while investors had lost confidence in the company, the residents of its retirement villages continue to hold a high opinion of it. Dean stepped back from his executive role in late November when he handed the top job over to new CEO Naomi James. He certainly handed her a much cleaner slate than Hamilton inherited when he took on the executive role in April.

We are the champions award

This has to go to Summerset Holdings because, while the other listed companies in the retirement village sector struggled amid the housing market slump, it was onwards and upwards for Summerset. It was able to report an 11% rise in September quarter sales as well as completing two of the buildings at its St Johns village in Auckland. Summerset also added to its land bank, announcing the purchase of four new sites earlier this month, two of which will be extensions of existing villages. The company also became the largest listed retirement village operator with its market capitalisation of $3.08 billion having overtaken Ryman's at $2.96 billion. Summerset's share price has risen nearly 27% year-to-date while Ryman's have fallen more than 27%. The question is whether Summerset can keep its crown. It has 39 villages either completed or under construction across New Zealand and two villages under construction in Victoria, where it owns another five sites, while Ryman has 49 villages, nine of which are still under construction, and another 10 sites, five of them in Australia, where it has nine other villages open.

Worst chair award

This one has to go to Fletcher Building acting chair Barbara Chapman. Her one job after former chair Bruce Hassall stepped down on March 4 was to appoint her successor. More than nine months later, she still hasn't been able to do that. Instead, she's made a raft of appointments she isn't qualified to make and should have left to her successor, including appointing a new chief executive. Her behaviour mirrors that of her mentor, Sir Ralph Norris, who presided over Fletcher's more than $1 billion high-rise losses and refused to go until he had chosen the next chief executive – Ross Taylor, who stepped down in late March – and also left a poison pill behind him in the form of Chapman, who joined Fletcher's board the day Norris left.

Who cares about cash award

This one goes to phone company Spark for paying out annual dividends of $507 million when its annual free cash flow was just $330 million. Even so, its shares were down more than 44% year-to-date as of Monday as the market frets about its continuing loss of market share and its profit guidance downgrade in late October continues to weigh on sentiment. The news on Dec 12 that Spark had sold its remaining stake in Connexa, the outfit that now owns its mobile towers, for $314 million, a whopping 34 times earnings before interest, tax, depreciation and amortisation (ebitda), barely interrupted the downward slide.

Lazarus award

No prizes for guessing Synlait Milk wins this one. The company survived a shareholders' vote in June to allow it to fight another day and continued navigating rocky shoals, including meeting bank repayment deadlines as well as repaying its $180 million of NZX-listed bonds in November and December after raising $217.8 million from its two largest shareholders – China's Bright Dairy increased its shareholding to 65.3% from 39% while A2 Milk was able to maintain its 19.8% stake and avoid being diluted. Having pulled off the near-term rescue plan, chief executive Grant Watson decided he'd had enough in October and the company is still looking for a permanent replacement.

Synlait reported a $182.1 million net loss for the year ended July 31 and still faces a number of challenges, not least what to do with its under-used factory at Pokeno and convincing farmers to continue supplying it with milk. A majority of farmers had given notice to quit in two years time. While the company wrote off $115 million of Pokeno's value, it continues to operate at a significant loss.

Best transformation award

Vista was a contender for this one, but since its transformation is less than complete, Channel Infrastructure takes this one out. The company used to be Refining NZ and operated the country's only oil refinery, but its profitability had been extremely volatile, as you'd expect if you followed the vagaries of oil prices. It has now transformed itself into a storage facility for fuels and related products, with much more reliable earnings, and is investigating potential third-party users of its 120 hectares of land near Whangarei. Channel has just completed a $50 million capital raising that provides a masterclass for other listed companies in how to treat shareholders fairly. Channel chose an accelerated renounceable entitlement offer, or areo, which delivered non-participating shareholders some compensation for being diluted. Given that even with the additional capital, Channel shares are up nearly 30% year-to-date, it's fair to say shareholders are happy with the company's current strategy.

Treat retail shareholders badly award

By contrast, Auckland International Airport gave everybody a masterclass in how to treat retail shareholders badly while bullshitting them about supposed fairness. It wasn't the only company, by any means, to do so – Fletcher's $700 million capital raising was also grossly unfair, but then Fletcher would be a contender for just about all brickbats going, it's such a poor performer. The airport chose to raise $1.2 billion from a placement to institutional shareholders, including those which weren't already shareholders, and another $200 million via a share purchase plan, which was oversubscribed by $23 million. In keeping with NZX's new rules, which require companies to publish some sort of explanation when they choose to treat shareholders unfairly, they usually present, as the airport did, a piece of boilerplate gobbledegook. The airport said the structure of its cap raise “is designed to achieve the objective of providing nearly all existing shareholders the opportunity to subscribe for at least their pro rata portion of the equity raise.” As I said at the time, that's just nuts; why would you choose an inherently unfair process in the first place if you were truly interested in providing shareholders with a pro-rata outcome.

Best NZX-listed retailer but worst communicator award

Hallenstein Glasson Holdings could probably be a contender for the worst communicator brickbat every single year, but there's never been any doubt over decades that it knows how to be a clothing retailer and this year was no exception. It's no secret that retailers of all types have been doing it tough with NZ retail sales having fallen in nine of the last 10 quarters. Earlier this month, Hallenstein told the annual shareholders' meeting that turnover was up 10.1% in the first 18 weeks of its 2025 financial year, although it warned the crucial Christmas trading period meant this “shouldn't be taken as indicative of the full season.” For the year ended Aug 1, the company reported a 6.3% increase in sales to $435.6 million and a 14.7% rise in pre-tax profit to $52.1 million, and though a non-cash deferred tax expense dragged down its bottom line, net profit of $34.5 million was still ahead of the previous year's $32 million. Remarkably, given the environment, Hallenstein managed to grow gross margin to 59.4% in the latest year from 57.3% the previous year. It explained this as being “due to a focus of onboarding new suppliers, an improvement in freight costs, and most significantly well-controlled stock levels resulting in more full-price sales and lower discounting. This is despite a challenging foreign exchange rate for inventory purchases, which was lower than the prior corresponding period.”

Worst NZX-listed retailer award

This one has to go to The Warehouse which continues to perform poorly, with its share price down nearly 35% year-to-date. Its latest trading update in November said sales for the 13 weeks ended Oct 27 were down 2.5% compared with the 2024 full year but were an improvement on the fourth quarter of the previous year's 5.9% decline. The retailer is also experiencing a decline in online sales, which were down nearly 13% in those 13 weeks. Average selling prices were also down nearly 8%, although the number of units sold was up 6.4%. But selling more stuff for a lot less isn't going to get the Red Sheds out of the mire. Founder Sir Stephen Tindall did attempt to take the company private again by backing a bid by Australia-based private equity firm Adamantem Capital, but it fell through after failing to gain sufficient shareholder support. The price being talked about had been between $1.50 and $1.70 per share compared with Monday's close at $1.05. The highest the shares have reached this year was $1.64 in January and they are down 35% year-to-date.

Know your value award, or do you?

In late 2023, Sky Network Television refused to entertain a “highly conditional” non-binding indicative takeover offer from an unnamed party, rumoured to be “an obscure US private equity firm,” that The Australian newspaper said had been priced at $3.70 per share, which was about a 50% premium to where the shares had been trading. Sky has never confirmed that price but it ended discussions with the potential acquirer in early November 2023 and then resumed the share buyback that had been in train since March 2023. As of June 4, 2024, when the company paused the buyback for the blackout period ahead of its results announcement for the year ended June 30, Sky said it had spent $21.4 million buying nearly 7.9 million of its own shares. I make that $2.71 per share, which casts a curious light on why Sky's board had considered that takeover offer insufficient.

I'll be taking a break through to early February but will repost and make free to all to read some of my most popular columns published this year through January.

Substack does provide some excellent analytics and I have to say it's very obvious that many more people read each column than the number of my paying subscribers.

I don't want to discourage reader-sharing, but you might want to gently remind non-subscribers that I am trying to make a living from my work.