Blue Chip seeks tax ruling

By Duncan Bridgeman

Friday 8th October 2004

Listed housing specialist Blue Chip New Zealand has yet to obtain a binding ruling from Inland Revenue on a unique tax structure the company uses to attract investors.

Managing director Mark Bryers said the company made its final application late last year and was hoping for an early decision from the IRD.

"As I understand it, we have fulfilled all the process requirements that they were seeking."

Blue Chip, which gained NZX listing earlier this year via a reverse takeover of ex telecommunications company Newcall, promotes residential investment to investors who have paid off part or all of their mortgages. The company holds seminars, finds tenants and manages the housing portfolios.

One of the advantages the company claims it has over competitors is its tax structure.

However, neither Bryers nor new chairman Jock Irvine would disclose details of the system for fear of giving away valuable intellectual property.

"Having said that, every client who goes into the investment we give them full disclosure in these areas and we give full disclosure to their advisers."

Asked what effect a negative ruling would have on the financial position of clients already taken on, Bryers said: "If unexpectedly we got a negative ruling ... we would end up where the benefits to our clients would still be substantial, although obviously not as strong as that which we projected but still leaving them in the positive cashflow representation that we've made to them."

Blue Chip has over 600 properties under management and expects investors will own up to 1000 by January.

Bryers, who co-founded the company with Bob Bangerter, stepped in as managing director three weeks ago, when former chief executive Nick Wevers resigned after just four months.

Last week, Irvine, a former partner of Simpson Grierson and chairman of the Sky City Community Trust Board, was appointed as chairman. Irvine replaced John Walters, who resigned to act as general counsel for the company.

According to Companies Office records, Bryers owns 75.4% of Blue Chip, with the shares held by Walters Trustees and Lowther Nominees.

Irvine said he would be looking at providing greater transparency for the company's shareholders. He said he was asked to join Blue Chip as an independent director and chairman, having met Bryers' brother Stephen Bryers through his involvement in the Sky City Community Trust.

"I made my own enquiries and indicated that I was happy to come on board. I think Mark has a good vision for what is a relatively new product and one that has a capacity to deliver very good returns and security for investors."

Blue Chip reported a net profit for the six months to June of $1.9 million. The result reflected Newcall Group operations up to April 1.

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