Augusta Capital first-half profit falls 28% on higher tax, property costs

Thursday 24th November 2016

Augusta Capital posted a 28 percent drop in first-half profit as the listed property investor and fund manager paid more tax, faced higher costs due to the sale of its Auckland Finance Centre, and wrote down the value of its stake in listed property investor NPT.

Profit fell to $5.2 million in the six months ended Sept. 30, from $7.2 million in the year-earlier period, the Auckland-based company said in a statement. Its tax expense lifted to $1.3 million from $500,000 a year earlier, it booked $1.38 million of costs linked to the $96 million sale of the Finance Centre, and it wrote down the value of its 9.3 percent investment in NPT by $675,000 to $10.3 million.

Augusta has been rejigging its business, diversifying into funds management last year when it bought KCL Property and Investment Property Titles. Since then it has been focusing on property syndication to grow that funds management business, which it sees as less demanding on capital than direct property investment, and it now manages 135 property vehicles worth more than $1.51 billion. It bought the stake in NPT as part of a plan to get NPT to buy three buildings worth $329 million, with Augusta buying the management contract.

Augusta is seeking a special meeting of NPT shareholders where it wants to put forward its proposal and is also seeking to oust NPT chairman John Anderson and directors Jim Sherwin and Tony Sewell, replacing them with its own chairman, Paul Duffy, and independents Bruce Cotterill and Allen Bollard. The meeting is planned for February next year, but Augusta said today that it's trying to push for an earlier date.

In the latest first-half period, Augusta's revenue rose 25 percent to $13 million, mostly due to the performance of the funds management business, party offset by lower rental income, the company said.

In the funds management unit, revenue from recurring fees increased 82 percent to $2.93 million, while deal fees rose 58 percent to $4.67 million. Revenue from the investment property portfolio slipped 8.7 percent to $3.05 million.

The company booked a $3.22 million gain in the value of its investment properties, compared with a $3.78 million gain in the year-earlier period.

Augusta's weighted average lease term for its directly owned property at Sept. 30 fell to 5.7 years from 6.3 years at March 31, and its portfolio occupancy was unchanged at 97 percent, it said.

The company expects its annual dividend for the year to total 5.5 cents per share, up from 5 cents the previous year.

Its shares gained 2 percent to $1.02.

BusinessDesk.co.nz

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