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Pyne Gould first-half profit gains on Wilaci settlement

Friday 23rd February 2018

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Pyne Gould Corp more than tripled first-half profit as the investment firm settled litigation with Australian businessman John Grills' Wilaci unit, offsetting an operating loss on smaller investment gains and skinnier land development margins. 

The NZX-listed, Guernsey, UK-based company reported a profit attributable to shareholders of 7.9 million British pounds, or 3.82 pence per share, in the six months ended Dec. 31, up from 2.3 million pounds, or 1.09 pence, a year earlier, it said in a statement. Of that, 2.9 million pounds came from the Wilaci settlement. 

That masked a 14.3 million pound loss to non-controlling interests that saw the group report a loss of 6.4 million pounds, due to unrealised foreign exchange movements, ongoing costs stemming from Torchlight Fund LP's ongoing litigation, and an 18 percent increase in selling and administration costs to 8.8 million pounds.

"While it might seem a long journey since PGC's restructuring and the establishment of the Torchlight business, we are grateful to shareholders for the patience and understanding you are demonstrating," managing director George Kerr said. "We still have challenges ahead but we have made good progress on a number of fronts over the past year and the company is well poised to deliver value to shareholders over the coming years as our long-term investment strategy approaches maturity." 

Pyne Gould has targeted distressed assets through its Torchlight Fund LP, a division it set up in 2009 to house toxic Marac Finance property loans that needed a longer timeframe for value to be realised as part of the recapitalisation of the finance company. Those investments include a cornerstone stake in ASX-listed Lantern Hotel Group and 100 percent of residential land investor RCL, which has a land-bank of 4,000 sites across Australia and New Zealand.

Kerr said RCL's biggest project is Hanley Farm in Queenstown where it's developing more than 1,700 sites, of which 256 have been sold through progressive leases. Still, that income slowed in the period, with net revenue from development and resale dropping 80 percent to 1.5 million pounds at a margin of 17.2 percent, compared to 37.8 percent a year earlier. 

The Lantern investment's assets have been sold by a new manager, and Pyne Gould said a final distribution is expected during the 2018 financial year. 

Pyne Gould reported an operating loss of 49,000 pounds in the half, compared to a profit of 9.8 million pounds a year earlier. 

Total assets shrank to 135.5 million pounds from 164.5 million pounds a year earlier, while liabilities shrank to 58.9 million pounds from 79 million pounds. Total equity attributable to equity holds was 42.4 million pounds as at Dec. 31 from 36.1 million pounds a year earlier, while non-controlling interests held 34.2 million pounds, down from 49.4 million pounds. Net tangible assets were 20.46 pence per share, up from 17.39 pence a year earlier. 

The NZX-listed shares, of which Kerr owns about 80 percent, last traded at 26.5 cents. 


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