Afterpay is progressing in its work with Austrac, saying it has given the regulator details of three candidates to undertake its external audit and was “taking the audit very seriously”. In an update to the market, Afterpay said a board sub-commitee has been established for the oversight of the audit and Austrac engagement, and that its co-founders were still fully committed in the business and would not sell any further shares over the next financial year. The Austrac issue, which wiped as much as 20 per cent off its share price two weeks ago, has prompted the company to defer its $30 million share purchase plan, initially slated for early this month. The share purchase plan will now be deferred until the company has considered the final audit report and its recommendations.
AMCOR (AMC):
Shares in newly merged packaging giant Amcor are higher by 3 per cent in the second hour of trade after the company announced plans to sell three former Bemis plants in UK and Ireland. The company has entered into a binding agreement with Kohlberg and Company, valuing the three plants at $US394 million ($566m). “Collectively, these three plants generate annual sales of approximately $US170m from the sale of flexible packaging for certain healthcare products,” the company told the market. The divestment was required by the European Commission as part of its approval for the merger and is expected to close in the coming weeks.
AMP Limited (AMP):
A class action representing more than two million Australians has been filed against AMP for gouging customers with excessive fees on their superannuation accounts. The case alleges that trustees AMP Super and NM Super paid too much to related AMP entities for administration services and alleges they failed to secure an appropriate return on cash-only investment options. “Superannuation members trusted that AMP would act in their best interests at when managing their retirement savings. Instead, they charged exorbitant fees,” Slater and Gordon senior associate Nathan Rapoport said. “Both AMP Super and NM Super, as trustees of the funds, should have taken steps to secure the best deal for members on a commercial arms-length basis.”
ARQ Group Ltd (ARQ):
IT services group, Arq, formerly Melbourne IT, has dropped by 38 per cent in Wednesday’s trade after flagging a full year earnings drop and canning its interim dividend. The company is forecasting underlying earnings of between $22 million and $25.5m at year’s end, versus $37.6m in FY18 and consequently said it would not be declaring an interim dividend. It said its small business division was exceeding expectations but that its enterprise division had fallen short of expectations due to execution issues and unexpected delays in new contracts. “This is a temporary challenge. The recovery plan is well advanced for Melbourne and we are seeing the first signs of improving performance. In addition, revenue from delayed contracts will shortly start coming online,” the company said.
Cromwell Group (CMW):
The Cromwell Property Group has launched a $375 million institutional placement it looks to expand its global funds empire with moves afoot locally and in Europe. The group is tapping the market at a fixed issue price of $1.15 per share and will also offer a $30m security purchase plan. Cromwell said it had identified a number of “strategic” growth opportunities across both its indirect and direct property investment segments that will be funded by the equity raising, recycling of existing capital and introduction of new capital partners. The group saId this included more than $1 billion of acquisition opportunities that are either in exclusive due diligence or advanced negotiations. The proceeds, along with recycled capital from asset sales, will give the group certainty of funding for more than $1 billion of value-add development opportunities across its existing Australian core-plus and active real estate portfolio. Cromwell said that after the proceeds were invested it expects gearing to move to within its revised target gearing range of 30-40 per cent through the cycle.
CSR Ltd (CSR):
CSR shares have dropped by 2.8 per cent in early trading ahead of the company’s AGM where chair John Gillam is set to outline his optimistic view on the housing market. In text of his speech released to the market this morning, Mr Gillam said the company was “well placed” despite the tough conditions given cuts to interest rates and better credit availability. The company says volumes for the first two months of the financial year were broadly consistent with the same quarter last year.
DEXUS Property Group (DXS):
Dexus has announced a $250 million valuation uplift in the majority of its assets. It said an external valuation on 109 of its 114 assets had resulted in a total estimated 1.6 per cent increase on prior book values for the six months to June 30. As a result, Dexus’s net tangible asset backing per security is expected to increase 23 cents. “Investment demand for quality office and industrial properties combined with a lower for longer interest rate environment continues to flow through to the capital values of our properties. Pleasingly we have seen two-thirds of the office portfolio uplift driven by rental growth, with strong market fundamentals in Sydney and Melbourne being reflected in our valuations,” chief Darren Steinberg said. Flagship Sydney office block 1 Farrer Place, gained $37.7 million thanks to a boost in market rents and 385 Bourke St in Melbourne gained $24.5m.
Sandfire Resources NL (SFR):
Sandfire Resources was up by 5 per cent after upgrades from both JPMorgan and Morgans. The stock is rebounding in early trade after finishing yesterday’s session as the worst performer on the index. The company unveiled its upgraded bid for MOD Resources, and was punished by shareholders - wiping $120 million off its market value. JPMorgan said the deal could add as much as $1 per share to its net present value estimate and gives Sandfire the opportunity to maintain a business with similar production levels to its DeGrussa mine. “The market reaction to the announcement, with the stock falling 11pc, looks overdone to us. We can see a pathway to value creation through the potential deal. Investors will likely become more comfortable with the asset over time as knowledge of T3 and the exploration prospects improves,” it said. Meanwhile, Morgans upgrade is more to do with yesterday’s share price weakness, the broker saying the acquisition will significantly change the miners risk profile.
(Source: AIMS)
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