Ann: FLLYR: PGC: Preliminary Annual Results to 30 June 2014

• Release Date: 29/08/14 14:22
• Summary: FLLYR: PGC: Preliminary Annual Results to 30 June 2014
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					PGC
29/08/2014 14:22
FLLYR

REL: 1422 HRS Pyne Gould Corporation Limited

FLLYR: PGC: Preliminary Annual Results to 30 June 2014

Friday 29th August 2014

Pyne Gould Corporation - Preliminary Annual Results to 30 June 2014

Pyne Gould Corporation (PGC) recorded an (unaudited) Net Profit After Tax
(NPAT) of $20.1m (9.5 cents per share) in the year to June 30, 2014. The
result is in line with previous guidance and reflects a 16% gain in Net
Tangible Assets (NTA) from 64 cents per share ($137m) to 74 cents per share
($153m).

Commentary

Consistent with previous commentary, PGC's focus over the year to June 30,
2014 was to further simplify the group by selling non-core assets and
reinvesting in the core business in Australia and the United Kingdom.

The combination of a profitable core fund management business and a
substantial gain on the exit from financial services created NPAT of $20.8m
after significant one-off costs.

Torchlight contributed $5.8m before non-cash foreign exchange accounting
adjustments, which reduced this to $3.1m. The full NPAT results were largely
attributable to the positive one-off impact from the sale of Perpetual, and
reduced by the legal and other costs associated with transactions, regulatory
compliance and migration.

The balance sheet continues to strengthen and simplify.

The 16% gain in NTA per share to 74 cents ($154m) follows a 48% gain in the
previous financial year.

At June 30 PGC held total assets of $159.8m and total liabilities of $5.9m,
with a net position of $153.9m. PGC has no bank debt.

Current assets are $49.3m (up from $42.1m last year) with $5.9m current
liabilities (down from $14.1m last year) giving net current assets of $43.4m
(up from $29.3m last year).

PGC held long-term assets of $110.4m and no long-term liabilities.

Consistent with our previously announced strategy, PGC continued to grow its
cornerstone holding in Torchlight Fund LP and as of June 30, 2014, held $59m
of Limited Partnership interests and $33m of co-investments.

Over the course of the financial year, Torchlight Fund LP acquired ownership
of almost 100% of the assets of residential land investor and developer
Residential Communities Limited (RCL). Melbourne-based RCL holds a land bank
of about 6000 sites on a consolidated basis spread across 17 projects, and
develops and sells approximately 10% of these in any single year.

Torchlight Fund LP is also the cornerstone shareholder of ASX-listed Lantern
Hotel Group. Lantern is a major Sydney-based freehold hotel group with NTA of
more than AUD100m. Torchlight supports Lantern's strategy of creating
long-term value by acquiring and operating freehold pubs and buying back
shares below NTA.

Torchlight Fund LP's other assets include an 11% stake in United Kingdom
newspaper group Local World. This was acquired in 2012 for AUD12m (or
GBP7.5m) and since then the UK economy, the newspaper sector and pound
sterling have recovered strongly, leading to a positive outlook for the
investment. Local World is creating value through both cost cutting and
growth in digital advertising.

PGC's other long-term assets include an $18m stake in Equity Partners
Infrastructure Company No.1 Limited (EPIC) (42m shares, or 26.9%).  EPIC owns
around 17% of Moto, the largest motorway service area owner and operator in
the UK. We have a positive long-term view of this investment.

London Listing

Over the course of the year PGC completed the migration from New Zealand to
Guernsey. This was an important step as it reflected an appropriate
jurisdiction to prepare for a listing on the London Stock Exchange. PGC is
now reviewing its timetable for listing in London and expects to make an
announcement at the time of its annual report, which is to be distributed by
the end of September 2014.

Share Buybacks

The group bought back about 4% of the shares on issue over the course of the
year. This was executed at a cost of $3.85m and PGC believes it is a rational
strategy to acquire shares when they trade at a discount to NTA. Since
migration to Guernsey, PGC has announced it will continue to buy back shares
with a current target of a little over 30m shares, or 15% of the stock on
issue.

Final Comment

With this simplification process nearing completion, it is important to
recognise how PGC has evolved after five years of transformation. With the
exception of Local World, the principal direct and indirect investments are
all, at their core, large and valuable real estate businesses. Each has a
strong real estate-based business model and a high quality management team.

In Australia, Torchlight's RCL has a significant land bank that is being
continuously developed, sold and restocked. The investment -- made via
distressed debt, consolidated and converted into equity ownership -- has
become a material engine for free cash flow. Similarly, the cornerstone
shareholding in Lantern Hotel Group was built up in distressed market
conditions and now has strong earnings prospects from a large freehold pub
portfolio nearing the end of a major refurbishment cycle.  In the UK, EPIC
initially invested in Moto at a distressed market valuation during the depths
of the global financial crisis in 2009. This investment requires particular
patience and discipline to unlock the quality cash earnings from owning and
operating a substantial real estate portfolio of Motorway Service Areas. Like
RCL and Lantern, Moto is expected to create significant long-term shareholder
value.

PGC is well ahead of its restructuring objectives and is highly confident in
both the financial strength and strategic direction of the company. As a
consequence, PGC is considering the restoration of a policy of regular
dividend payments within the next year.  This topic will be addressed in the
annual report.

George Kerr, Managing Director, Pyne Gould Corporation

For more information, please contact: David Lewis +64 21 976 119
End CA:00254604 For:PGC    Type:FLLYR      Time:2014-08-29 14:22:06