Pyne Gould avoids suspension with full-year results one day late

Tuesday 30th August 2016

Pyne Gould Corp, the investment group that plans to target 'distressed assets', has avoided being suspended from the NZX after filing its annual results a day late, revealing a drop in income and a narrower full-year loss.

Income and fees from continuing operations fell 14 percent to 1.3 million British pounds in the 12 months to June 30, while its loss from continuing operations narrowed to 7,000 pounds from 6.3 million pounds a year earlier.

One of the biggest items in its financial statements is a change in foreign currency translation reserves, which recorded an unrealised gain of $8.9 million, from a year-earlier unrealised loss of $15 million. That led the company to record total comprehensive income of 8.8 million pounds in 2016 from a year-earlier loss of 22.2 million pounds.

Pyne Gould first listed in 2004 but is now an offshore company based in Guernsey, a British dependency and tax haven in the Channel Islands. The business is controlled by Queenstown-based managing director George Kerr, who was left in control of a listed Pyne Gould in 2012 when he failed to take the company private in a full takeover attempt.

The company missed the deadline for filing its annual results for the third year running and had been issued a warning earlier today from the NZX that its shares would be suspended if it failed to deliver the report by Sept. 5. In 2015, Pyne Gould's shares were suspended from October after its earnings were delayed. Pyne Gould first signalled the 2015 accounts would be late in September that year, blaming a slow handover of information from its previous auditor PwC to Grant Thornton. The company eventually delivered the report in May 2016, and the shares resumed trading in June after it filed its earnings for the first half of 2016.

The company's delayed 2014 annual report was 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.

"PGC remains focused on patiently executing on its long-term strategy of exiting non-core assets and building a long term business from distressed assets," the company said in a statement today, adding that its exit of non-core assets was "largely complete" and its commitment to the Torchlight Fund was expected to deliver long-term value.

The firm set up the Torchlight unit to buy distressed assets after the collapse of New Zealand's second-tier finance lending sector in the late 2000s 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 has been involved in what it described as "a number of large and complex litigations over the course of the financial year." These include an application to wind up the Torchlight fund in the Cayman Islands, a disputed penalty fee on a A$37 million loan from Australian businessman John Grill, and claims and counter-claims over Pyne Gould's sale of Perpetual Trust to Bath Street Capital.

"This is an unwelcome, but necessary, requirement of defending the balance sheet of PGC," the company said. "We devote considerable resources to this part of the business and fully expect our position to be validated by the courts in all cases. We will only comment on particular proceedings as the results are made available."

The shares last traded at 22 cents, and have fallen 10.2 percent this year.

BusinessDesk.co.nz

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