Thanks Colin, I think you might be right. In that case the gross asset management fee is:
(0.015)($72.4m)= $1.09m (1) -as before.
And the share performance bonus fee would be:
0.2[$1.50-$1.10]x169.6m = $13.6m (2)
That gives a total performance fee of:
$13.6m+$1.09m=$14.8m, or $10.4m after tax. That is higher than the $8m that PGW are claiming. But it could be that the 'management fee' is accounted for somewhere else in the finance division and is not part of the 'performance fee', and it may be that tax is payable at the old company rate of 33%, not 30%. Make those adjustments and the performance fee payable is:
0.67 x $13.6m= $9.1m
That is getting closer. There may be some write offs carried forward from previous years, and Uruguayan taxes that cannot be offset that reduce the true figure to the $8m estimated. If that sounds like a windfall, don't forget that PGW also faced the cash call on the full payment of their partly paid NZS shares during the year, which amounted to $12.8m. Even taking into account all the fees scraped in by PGW, on a cashflow basis PGW are down for the year. Heavily down when you consider the performance fee will be taken as paid in new NZS shares.
As it happens, I think PGW are underestimating their bonus payment because NZS shares are doing much better than was predicted six months ago. If the volume weighted average price is closer to the $1.75 that I estimate, then the 'bonus fee' goes up like this:
0.2[$1.75-$1.10] x 170.9m= $22.2m
Plus there will also be a contribution from the December non-renouncable bonus issue, which was made at $1.50 (and hence wouldn't have qualified for the PGW bonus if the shares were only worth $1.50 over the valuation period.)
1/2 x0.2[$1.75-$1.65] x 73.33m= $1.5m
Add those up and you get a 'bonus payment' of $23.7m, or $15.9m after tax. That is $6.8m more than the $9.1m I calculated before on the same basis. So with any luck we PGW shareholders are in for an 'extra bonus' of $6.8m.
Adding that $6.8m to the $8m that PGW has forecast gives a total bonus of $14.8m. Based on NZS shares being worth $1.90 at the time the bonus is earned, that means PGW shareholders can expect an extra 7.8m NZS shares. That would raise the total number of NZS shares owned by PGW to something over 25m, only just shy of 15% of the company. That is nice for we PGW shareholders, but not so good for the existing holders of NZS.
SNOOPY
discl: hold PGW, NZS