Ann: HALFYR: PGC: Pyne Gould Corporation Half Year Report 2015

• Release Date: 13/06/16 08:30
• Summary: HALFYR: PGC: Pyne Gould Corporation Half Year Report 2015
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					PGC                                                                           
13/06/2016 08:30                                                              
HALFYR                                                                        
PRICE SENSITIVE                                                               
REL: 0830 HRS Pyne Gould Corporation Limited                                  
                                                                              
HALFYR: PGC: Pyne Gould Corporation Half Year Report 2015                     
                                                                              
10 June 2016                                                                  
                                                                              
PGC Interim Financial Results to 31 December 2015                             
                                                                              
Operating Performance                                                         
                                                                              
Pyne Gould Corporation ("PGC") delivered a cash operating profit of GBP1.596  
million for the six months to 31 December 2015. This compares with a cash     
operating loss of GBP5.0 million for the same period last year.               
                                                                              
A four-fold increase in investment income to GBP8.430m (GBP2.131m last year)  
together with lower sales and administration expenses of GBP4.516m (GBP5.56m  
last year) saw operating income rise to GBP5.187m (GBP1.715m last year).      
After allowing for non cash items, principally a foreign exchange loss of     
GBP2.906m (gain of GBP0.176m last year), the company reported an after tax    
loss for the period of GBP1.546m (last year a loss of GBP5.323m).  This is    
equal to 0.51 pence per share (last year 2.4 pence per share).                
                                                                              
Statement of Financial Position                                               
                                                                              
Foreign exchange movements also had a negative impact on the consolidated     
Statement of Financial Position. As at 31 December 2015, PGC had GBP50.805m   
of net assets (30 June 2015: GBP55.199m). The reduction of GBP4.394m is after 
a total of GBP5.301m of non cash foreign exchange adjustments.                
                                                                              
On a per share basis, the NTA per share is 24.49 pence per share (30 June     
2015: 26.61 pence per share).                                                 
                                                                              
Foreign exchange movements affected the accounts in two ways. Firstly, there  
was a non cash adjustment of GBP2.906m in the profit and loss referred to     
above. Secondly, there was a GBP2.395m adjustment to the balance sheet. This  
is because the accounts are presented in GBP and a non cash adjustment must   
be made on translation to presentation currency.  In the year to 31 December  
2015, this is negative adjustment of GBP2.395m (31 December 2014: GBP2.836m). 
                                                                              
Current Assets                                                                
                                                                              
PGC Group held consolidated current assets of GBP67.849m (30 June 2015:       
GBP61.407m) as at 31 December 2015.                                           
                                                                              
Group cash balances lifted by GBP20.643m over the six month period, from      
GBP10.937m to GBP31.58m.                                                      
                                                                              
The very strong cash performance was principally generated by Torchlight Fund 
LP ("TFLP"). Specifically, cash was generated through a strong sales period   
for RCL in its Victorian residential real estate book, and the sale of Local  
World to Trinity Mirror.                                                      
                                                                              
RCL recorded GBP28.033m of residential site sales over the period. After      
GBP8.864m of development costs, this generated cash of GBP19.169m. After      
allowing for interest on borrowings of GBP4.428m the cash contribution pre    
sales and administration expenses was GBP15.773m.                             
                                                                              
The exit of Local World in the period was at 4x initial investment.  This     
outcome was achieved in less than 3 years and delivered GBP13.606m of cash as 
well as GBP5m of Trinity Mirror shares and GBP1.318m of deferred cash         
(subject to warranties under the sale and purchase contract). The details of  
this transaction have been provided in prior announcements.                   
PGC Group holds GBP27.124m (30 June 2015: GBP24.614m) in real estate          
inventories classed as current assets. These inventories represent blocks of  
land being developed into residential sites for sale over the coming 12 month 
period. The cash generated from these sales will be at a substantial premium  
to cost and will be reflected in group profit next year. The cash is budgeted 
to amortise bridge and working capital finance at RCL.                        
                                                                              
Current Liabilities                                                           
                                                                              
As at 31 December 2015, PGC Group had GBP58.557m (30 June 2015: GBP66.458m)   
of consolidated liabilities, down by GBP7.901m over the period.               
                                                                              
Current assets of GBP67.849m comfortably exceed all consolidated liabilities  
of GBP58.557m.                                                                
                                                                              
The liabilities principally represent working capital finance and acquisition 
finance taken on at the time of the RCL credit bid in 2014 and is being       
amortised over the course of this year.  As noted above, this marks the end   
of the restructuring period of RCL and means RCL has the financial capacity   
to internally fund working capital and consider both internal and external    
funding options for growth looking forward. This allows greater reinvestment  
in the land bank and consequently greater long run value for investors.       
                                                                              
PGC has no long run borrowings.                                               
                                                                              
Non Current Assets                                                            
                                                                              
PGC Group holds consolidated non current assets of GBP87.245m (30 June 2015:  
GBP99.991m) with GBP73.910m (30 June 2015: GBP86.508m) in core assets and     
GBP13.335m (30 June 2015: GBP12.241m) of legacy non core assets in process of 
divestment.                                                                   
                                                                              
Non current inventories at GBP23.697m (30 June 2015: GBP38.394m) are large    
blocks of land that will not be developed in the coming 12 month period. As   
time progresses these inventories move incrementally into current assets for  
development and sale. The long run cashflow from these inventories is         
substantially in excess of book value.                                        
                                                                              
Loans and receivables of GBP22.811m (30 June 2015: GBP23.014m) are            
predominantly expected to convert to ownership of underlying real estate      
assets and increase inventories for long term profitable development. The     
exception is GBP1.318m which is an escrowed cash amount following the sale of 
Local World which will be held in a cash escrow for 2 years pending           
settlement adjustments.                                                       
                                                                              
Investments of GBP27.402m (30 June 2015: GBP24.560m) include securities and   
receivables, the largest of which is the TFLP shareholding in Lantern Hotel   
Group which represents GBP16.596m at market price as at 31 December 2015.     
Non core assets have a book value of GBP13.335m.                              
                                                                              
The largest non core asset is a receivable independently valued at NZD21.2m   
(GBP9.801m ) This receivable represents the consideration PGC is due for      
agreeing to exit its carried interest in the owner of Perpetual Trust. PGC    
has commenced legal proceedings to recover this receivable plus interest and  
costs.                                                                        
                                                                              
The balance is made up of small real estate assets. These include a           
residential real estate project in Tauranga acquired as a distressed asset    
from Marac at the time of the restructuring and 2009 rights issue. This is    
valued at NZD5.8m (GBP2.8m) and will gradually be worked through to cash over 
the next 5 to 7 years.                                                        
                                                                              
Non-Controlling Interests                                                     
                                                                              
As previously described, PGC controls and is required to consolidate TFLP.    
In order to fairly calculate NTA, the accounts must make adjustments and      
allow for non-controlling interests in its accounts. As at 31 December 2015,  
PGC held 42.3% of TFLP. Non-controlling interests represent the balance which 
is GBP45.732 (30 June 2015: GBP39.741m).                                      
                                                                              
The full financial accounts for the six month to 31 December 2015 will be     
available on the PGC website - www.pgc.co.nz                                  
                                                                              
For more information, please contact: David Lewis +64 21 976 119              
End CA:00283877 For:PGC    Type:HALFYR     Time:2016-06-13 08:30:10