Tuesday 24th May 2016
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Pyne Gould Corp, whose NZX-listed shares have been suspended from trading since October, has lodged its 2015 annual report after a lengthy delay which has been blamed on switching auditors.
The Guernsey-based long-term investor's portfolio lost value last year due to fluctuations in the kiwi dollar and the impact of consolidating its Torchlight Fund LP unit into the accounts, the long-delayed report shows. As at June 30, Pyne Gould's net tangible assets were 55.2 million British pounds, down from 71.1 million pounds a year earlier, with its 100 percent stake in land banker and developer RCL its biggest single investment.
Pyne Gould first signalled the 2015 accounts would be late in September last year, blaming a slow handover of information from its previous auditor PwC to Grant Thornton. It ultimately missed the NZX's deadline to file the accounts, resulting in the suspension of trading in its shares, the second year in a row it's been censured for a late annual report.
The company's delayed 2014 annual report had been tagged by auditor PwC because of the firm's inability to obtain sufficient information about Pyne Gould's investment in Torchlight Group and Torchlight Fund.
LIkewise, Grant Thornton tagged the latest accounts, saying a petition to wind up the Torchlight Fund by some of its partners created "a material uncertainty that may cast significant doubt about the partnership's and potentially the group's, ability to continue as a going concern and therefore the group may be unable to realise its assets and discharge its liabilities in the normal course of business."
The auditor also said Pyne Gould hadn't complied with New Zealand law by missing the deadline to complete and file financial statements within four months of the balance date and that balance dates of some subsidiaries differed from the rest of the group.
The latest report offers far greater financial disclosure than previous annual reports.
Grant Thornton racked up audit fees of 485,000 pounds in the 2015 year, while previous auditor PwC was paid 92,000 pounds in the period and 239,000 pounds in 2014. Pyne Gould paid audit fees of NZ$396,000 in 2013 and $367,000 in 2012, the year KPMG quit as auditor over "unresolved differences as to whether certain transactions should be disclosed as related party transactions, and concerns over the adequacy of governance and management of financial reporting."
Pyne Gould has been locked in litigation on several fronts, with the Torchlight action in the Cayman Islands, a disputed penalty fee on a A$37 million loan from Australian businessman John Grill, and damages claims and counter-claims over Pyne Gould's sale of Perpetual Trust to Bath Street Capital.
The firm set up the Torchlight unit to buy distressed assets after the collapse of New Zealand's finance sector, as a way to house bad loans as part of the recapitalisation of Marac Finance, which was later sold into the Heartland Bank merger.
Pyne Gould today said its board was confident the 10-year plan was on track and would show up as the Torchlight Fund's investments mature towards their potential value.
"This style of value investing requires patience that is not generally the focus of other listed companies," it said. "We have, however, been consistent in the explanation of this so that shareholders and other investors will not be misled into believing there may be early value and liquidity opportunities."
Pyne Gould reiterated its intention to list on the London Stock Exchange, and will update shareholders at the annual meeting in July.
The firm also announced the appointment of London-based Paul Dudley as a new independent director.
Director Russell Naylor paid tribute to chairman Bryan Mogridge who unexpectedly resigned in November, saying he had steered the group through the global financial crisis when it was on the verge of bankruptcy.
Before their suspension, Pyne Gould's shares traded at 24.5 cents, valuing the firm at $50.8 million.
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