PGC
29/02/2012 15:59
HALFYR
REL: 1559 HRS Pyne Gould Corporation Limited
HALFYR: PGC: Half year results for six months ended 31 December 2011
PYNE GOULD CORPORATION LIMITED
Results Announcement to the Market
29 February 2012
Reporting Period - Six months to 31 December 2011
Previous Reporting Period - Six months to 31 December 2010
Amount
$'000 Percentage
Change
Net operating income from ordinary activities 17,360 47.1%
Profit (Loss) after tax from continuing activities attributable to
shareholders (27,106) 35.9%
Net Profit (Loss) after tax attributable to shareholders (27,106) 24.1%
Interim Dividend: The Company does not propose to pay an interim dividend.
Commentary for Pyne Gould Corporation Limited's six month's result to 31
December 2011
Based on a trading profit of $2.7m after tax and accounting losses of $29.8m,
Pyne Gould Corporation Limited today announced a loss of $27.1m after tax for
the first six months of the fiscal year to 30 June 2012.
The trading profit is pleasing and shows progress in the stabilisation and
development of the firm, and while this result is some $7m better than last
year, it bears little comparison as PGC was a very different business during
that time.
The accounting losses of $29.8m were from: adjustment to market of publically
held shares in Heartland New Zealand Limited (minus $5.3m); and PGG Wrightson
Limited (minus $7.2m); revaluation of EPIC shares and management contract
(minus $6.5m); provisions against the MARAC Property Management Agreement of
$8.8m; and property revaluations at minus $1.2m accounting for most of the
remainder.
The net tangible assets backing per-share has decreased from 60 cents
per-share at 30 June 2011 to 50 cents as at 31 December 2011.
Operations:
PGC is now operating as three fundamental areas of activity: Wealth
Management, Real Assets, and Liquidity and Securities.
Wealth Management: This area comprises Perpetual Group and an associate
Australian investment research firm, van Eyk. The combined result for the
period was an after-tax loss of $0.35m. We do not regard this performance
over the first six months as satisfactory and there is a refocusing of effort
in order to generate better returns in the next 6 months and beyond. Growth
will come from the purchase of advisory businesses within New Zealand, which
has begun, and the enhanced performance of the existing team. The total funds
under management and advice in both Australia and New Zealand is $2 billion.
Real Assets: This area consists of property, PGC's holding in EPIC (15
million shares), PGC's 10% holding in the Torchlight Fund No 1 LP
("Torchlight Fund"), and Torchlight (GP) 1 Limited ("Torchlight GP"), which
is the general partner for Torchlight Fund. This area made a profit after tax
of $3.4m. The property group actively manages a comprehensive portfolio and
during the period sold $5.7m of property not required. EPIC sold its holding
in Thames Water and repaid the PGC loan of $14m. Also, as a subsequent event,
EPIC has cancelled the Equity Partners Infrastructure Management Limited
("EPIM") management contract and awarded a performance fee to EPIM seeing PGC
receive $8.9m which will either be paid in EPIC shares or cash or a
combination of both. Torchlight GP earns good management fees from Torchlight
Fund and has potential to receive a performance fee upon the winding up of
Torchlight Fund. A review of the operations of Torchlight GP in December
identified fees that had been received early ($4.98m); these were returned to
Torchlight Fund but retained as working capital in PGC's accounts. During
this review process the board also decided to increase the capital of
Torchlight GP in order that it can build on the good results to date and seek
modest investments beyond Torchlight Fund. Torchlight GP made several new
investments; one of which was a seedling investment of $7.5m into an
unrelated offshore equities fund. The nature of the investments and
commercial sensitivity precludes comment except to say that at this early
stage their potential is considered promising.
Liquidity and Securities: The intention is that on 30 May 2012 PGC's banking
facility, which is due for repayment, will be repaid and no further debt will
be held at the PGC level. The securities held under this area are HNZ (6.02%)
and PGGW (9.56%). Both of these companies have built solid foundations for
the future from difficult pasts but are currently under-performing in our
view. Given the relative importance of each firm, we intend to seek improved
results from both businesses. Our position is to hold the shares in both
these companies, as we believe in their market offerings and the
opportunities that they each have; they now need to get on with the job of
enhancing their businesses.
PGC Parent Company: Independent director Bruce Irvine resigned on 31 January
2012 and PGC received a waiver from the NZSX to be able to continue with only
one independent director until the end of April 2012, as opposed to the two
independents required by NZSX listing rule 3.3.1(c). The net loss after tax
for the parent company was $1.3m. This is lower than previously and there are
plans in place to reduce costs further.
The Future: With PGC under takeover offer from Australasian Equity Partners
Fund No. 1 LP Ltd ("AEP") the future of PGC as a listed entity is still
uncertain. The offer from AEP remains open to PGC shareholders until March
30, 2012. During that time AEP could move from its current PGC shareholding
of 70.5% to 90% and at that point compulsorily acquire the remaining 10% and
delist the company. This may or may not occur.
The profit performance of the company at year end is dependent upon the
trading performance of the company and the accounting adjustments. The
trading profit is anticipated to improve from its current level but not
double. The accounting adjustments will depend predominantly upon market
movements of the listed securities held and the provisions within the MARAC
Property Management Agreement. Consequently, it is too early to give any
solid indication of a final result.
For further information please contact
Bryan Mogridge
Chairman PGC
Phone: 021 931 355
End CA:00220193 For:PGC Type:HALFYR Time:2012-02-29 15:59:43
