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- Release Date: 29/08/13 14:29
- Summary: FLLYR: PGC: Pyne Gould Corporation Annual Result to 30 June 2013
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PGC
29/08/2013 12:29
FLLYR
REL: 1229 HRS Pyne Gould Corporation Limited
FLLYR: PGC: Pyne Gould Corporation Annual Result to 30 June 2013
29 August 2013
Pyne Gould Corporation Annual Result to 30 June 2013
PGC recorded a better than expected (unaudited) Net Profit After Tax
attributable to PGC shareholders (NPAT) of $44.4m to June 30 2013. The result
drovea 41% gain in shareholder funds from $97.5m (43 cents a share) to
$137.7m (64 cents a share).
Profit Commentary
Operating Earnings
Of the $44.4m NPAT, the operating profit (excludingcapital gains from
property and discontinued operations) was $19.4m (or 9 cents a share)and up
sharply from last year's result.Torchlight gained both from investment
returns and greater funds under management as it deployed capital in
Australia and the United Kingdom.
PGC's operating NPAT represents a very healthy 19.9% return on opening
shareholders' funds.
Non-Operating Earnings
PGC recorded a profit of $25m on the exit of non-core assets.
The property group contributed a $7.7m gain, which is attributable to the
negotiated termination of the Real Estate Credit Limited arrangements.
A gain of $17.3m is attributed to PGC's exit of retail financial services -
van Eyk in Australia, and Perpetual Group and Perpetual Trust in New Zealand.
The sale of Perpetual Trust is now confirmed and due to complete settlement
on or prior to 8 December. Control passed on 24 April and has, therefore,
been deconsolidated from PGC. The gain from the sale of Perpetual was after
accounting for sharply higher legal and compliance costs incurred as a result
of its 2012 engagement with the regulator.
Balance Sheet
PGC shareholder funds grew 41% from $97.5m to $137.7m over the 12 months to
30 June 2013.
The balance sheet reflects the strategy of divesting non-core assets and
growing Torchlight in Australia and the UK. Our focus is to build
shareholders' funds by redeploying proceeds from non-core asset sales into
growth in the core business and driving growth in operating earnings.
We hold our assets in two groups: PGC itself and PGC's 100% subsidiary, the
Torchlight Group. Neither group has any debt.
PGC holds around $23m of net current assets and assets held for sale, plus
$17m of securities.
The net current assets reflect proceeds and receivables from non-core asset
sales. The securities are 42m shares (or 26.9% of the shares) in Equity
Partners Infrastructure Company No.1 Limited (EPIC) - which in turn owns
around 17% of Moto, the largest motorway service area in the UK.
Moto itself owns around GBP900m of largely real estate assets. Its debt sits
at circa 54% of assets and it generates circa GBP80m of EBITDA a year. EPIC
acquired its stake in Moto in the last days of the global financial crisis in
July 2009 at a distressed market valuation and has since made follow-on
investments to protect and grow its investment. EPIC shareholders have just
voted 96% in favour of EPIC changing its incorporation to Bermuda ahead of a
planned listing on the AIM Market of the London Stock Exchange. We have a
positive long-term view of this investment and are fully supportive of EPIC's
path forward.
Torchlight Group holds around $100m of assets - being net current assets of
$20m, $46.3m of Torchlight Fund LP interests and $32.1m of direct
co-investments.
Torchlight Fund LP haswell in excess of $300m of assets and, after a
successful capital raising in the UK and Australia, has been actively
investing in both countries.
In the UK, it acquired 11% of Local World Media, which owns 110 regional
newspapers in the UK. Local World is expected to make GBP36m EBIT in 2013
and then grow through cost cutting and growth in digital advertising to
offset any decline in print advertising.
In Australia, the fund lifted its interest in two existing Australian real
estate investments -the ASX listed Lantern Hotel Group and Residential
Communities Limited (RCL). Lantern Hotel Group is a freehold hotel group
with AUD100m of NTA. It is seeking to grow by acquisition and use operating
cash-flow to buy back stock. RCL holds a land bank of over 7000 sites spread
across 17 major projects. Torchlight has recently received Australian
Government Foreign Investment Review Board approval to acquire the assets of
RCL in exchange for the debt.
Share Buybacks and Listing Options
We have previously advised we will consider returning capital from the sale
of Perpetual Group to shareholders. That remains the intention and we expect
to implement this via an on -market share buyback program. This is the most
rational approach to returning capital on the basis that the price the shares
are bought back at is below our assessment of intrinsic value. We have the
ability under NZX rules to acquire on market as opportunities arise.
We advised last year on completion of the restructure that we would review
PGC's domicile and listing in the light of the operational strategy. This
far the focus has been on execution of the strategy, but with a successful
outcome to 30 June 2013 we are reviewing which jurisdiction and which
financial market is optimal for shareholders' long-term value.
Once we complete our work in that area we will seek shareholder approval
accordingly.
George Kerr
Managing Director
Pyne Gould Corporation
RECONCILIATION TO GAAP PROFIT
For media enquiry contact David Lewis +64-21-976 119
End CA:00240390 For:PGC Type:FLLYR Time:2013-08-29 12:29:02
