PGC 0.00% 20.0¢ pyne gould corporation limited

Ann: FLLYR: PGC: Preliminary Annual Results to 30 June 2014

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    • Release Date: 29/08/14 14:22
    • Summary: FLLYR: PGC: Preliminary Annual Results to 30 June 2014
    • Price Sensitive: No
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    					PGC
    29/08/2014 14:22
    FLLYR
    
    REL: 1422 HRS Pyne Gould Corporation Limited
    
    FLLYR: PGC: Preliminary Annual Results to 30 June 2014
    
    Friday 29th August 2014
    
    Pyne Gould Corporation - Preliminary Annual Results to 30 June 2014
    
    Pyne Gould Corporation (PGC) recorded an (unaudited) Net Profit After Tax
    (NPAT) of $20.1m (9.5 cents per share) in the year to June 30, 2014. The
    result is in line with previous guidance and reflects a 16% gain in Net
    Tangible Assets (NTA) from 64 cents per share ($137m) to 74 cents per share
    ($153m).
    
    Commentary
    
    Consistent with previous commentary, PGC's focus over the year to June 30,
    2014 was to further simplify the group by selling non-core assets and
    reinvesting in the core business in Australia and the United Kingdom.
    
    The combination of a profitable core fund management business and a
    substantial gain on the exit from financial services created NPAT of $20.8m
    after significant one-off costs.
    
    Torchlight contributed $5.8m before non-cash foreign exchange accounting
    adjustments, which reduced this to $3.1m. The full NPAT results were largely
    attributable to the positive one-off impact from the sale of Perpetual, and
    reduced by the legal and other costs associated with transactions, regulatory
    compliance and migration.
    
    The balance sheet continues to strengthen and simplify.
    
    The 16% gain in NTA per share to 74 cents ($154m) follows a 48% gain in the
    previous financial year.
    
    At June 30 PGC held total assets of $159.8m and total liabilities of $5.9m,
    with a net position of $153.9m. PGC has no bank debt.
    
    Current assets are $49.3m (up from $42.1m last year) with $5.9m current
    liabilities (down from $14.1m last year) giving net current assets of $43.4m
    (up from $29.3m last year).
    
    PGC held long-term assets of $110.4m and no long-term liabilities.
    
    Consistent with our previously announced strategy, PGC continued to grow its
    cornerstone holding in Torchlight Fund LP and as of June 30, 2014, held $59m
    of Limited Partnership interests and $33m of co-investments.
    
    Over the course of the financial year, Torchlight Fund LP acquired ownership
    of almost 100% of the assets of residential land investor and developer
    Residential Communities Limited (RCL). Melbourne-based RCL holds a land bank
    of about 6000 sites on a consolidated basis spread across 17 projects, and
    develops and sells approximately 10% of these in any single year.
    
    Torchlight Fund LP is also the cornerstone shareholder of ASX-listed Lantern
    Hotel Group. Lantern is a major Sydney-based freehold hotel group with NTA of
    more than AUD100m. Torchlight supports Lantern's strategy of creating
    long-term value by acquiring and operating freehold pubs and buying back
    shares below NTA.
    
    Torchlight Fund LP's other assets include an 11% stake in United Kingdom
    newspaper group Local World. This was acquired in 2012 for AUD12m (or
    GBP7.5m) and since then the UK economy, the newspaper sector and pound
    sterling have recovered strongly, leading to a positive outlook for the
    investment. Local World is creating value through both cost cutting and
    growth in digital advertising.
    
    PGC's other long-term assets include an $18m stake in Equity Partners
    Infrastructure Company No.1 Limited (EPIC) (42m shares, or 26.9%).  EPIC owns
    around 17% of Moto, the largest motorway service area owner and operator in
    the UK. We have a positive long-term view of this investment.
    
    London Listing
    
    Over the course of the year PGC completed the migration from New Zealand to
    Guernsey. This was an important step as it reflected an appropriate
    jurisdiction to prepare for a listing on the London Stock Exchange. PGC is
    now reviewing its timetable for listing in London and expects to make an
    announcement at the time of its annual report, which is to be distributed by
    the end of September 2014.
    
    Share Buybacks
    
    The group bought back about 4% of the shares on issue over the course of the
    year. This was executed at a cost of $3.85m and PGC believes it is a rational
    strategy to acquire shares when they trade at a discount to NTA. Since
    migration to Guernsey, PGC has announced it will continue to buy back shares
    with a current target of a little over 30m shares, or 15% of the stock on
    issue.
    
    Final Comment
    
    With this simplification process nearing completion, it is important to
    recognise how PGC has evolved after five years of transformation. With the
    exception of Local World, the principal direct and indirect investments are
    all, at their core, large and valuable real estate businesses. Each has a
    strong real estate-based business model and a high quality management team.
    
    In Australia, Torchlight's RCL has a significant land bank that is being
    continuously developed, sold and restocked. The investment -- made via
    distressed debt, consolidated and converted into equity ownership -- has
    become a material engine for free cash flow. Similarly, the cornerstone
    shareholding in Lantern Hotel Group was built up in distressed market
    conditions and now has strong earnings prospects from a large freehold pub
    portfolio nearing the end of a major refurbishment cycle.  In the UK, EPIC
    initially invested in Moto at a distressed market valuation during the depths
    of the global financial crisis in 2009. This investment requires particular
    patience and discipline to unlock the quality cash earnings from owning and
    operating a substantial real estate portfolio of Motorway Service Areas. Like
    RCL and Lantern, Moto is expected to create significant long-term shareholder
    value.
    
    PGC is well ahead of its restructuring objectives and is highly confident in
    both the financial strength and strategic direction of the company. As a
    consequence, PGC is considering the restoration of a policy of regular
    dividend payments within the next year.  This topic will be addressed in the
    annual report.
    
    George Kerr, Managing Director, Pyne Gould Corporation
    
    For more information, please contact: David Lewis +64 21 976 119
    End CA:00254604 For:PGC    Type:FLLYR      Time:2014-08-29 14:22:06
    				
 
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