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Ann: GENERAL: PGC: PGC market clarification and correction

    • Release Date: 02/02/15 12:50
    • Summary: GENERAL: PGC: PGC market clarification and correction
    • Price Sensitive: No
    • Download Document  3.14KB
    02/02/2015 12:50
    REL: 1250 HRS Pyne Gould Corporation Limited
    GENERAL: PGC: PGC market clarification and correction
    2 February 2015
    PGC market clarification and correction
    In its announcement to NZX dated 29 January 2015, Pyne Gould Corporation
    ("PGC") advised that further consideration due to PGC from last year's sale
    of Perpetual Trust Limited ("PTL") is being re-categorised in the upcoming
    accounts for the six months ending 31 December 2014.
    This led to media reporting that PGC's sale of PTL had failed. This is
    completely incorrect and could not be attributed to any comments by PGC or
    PTL.  The transfer of PTL was completed over a year ago, as advised on 16
    January 2014.  Accordingly, PTL is not an asset of PGC.  PTL is a wholly
    owned subsidiary of Complectus Limited, an entity ultimately owned and
    controlled by Andrew Barnes.
    In addition to other consideration received by PGC at completion in January
    2014 (which was detailed in PGC's NZX announcement of 16 January 2014), the
    sale agreement provided for further consideration payable to PGC on the
    occurrence of certain corporate events.  There was no floor and no cap on
    this further amount.
    In April 2014, PGC and the new owners of PTL agreed a variation providing
    that in consideration for a payment by the new owners of PTL to PGC of $22m
    (or lower if the company's price earnings multiple is below an agreed floor
    on NZX listing) then the further consideration obligation to PGC under the
    previous arrangements would be extinguished.  The precise timing of the
    receipt of the payment to PGC was not possible to determine, as it occurs
    upon a corporate event. However, at the time of PGC's NZX announcement of 7
    April 2014, PGC reasonably anticipated it would receive payment by
    approximately 31 December 2014.
    As PGC said in its announcement to NZX dated 29 January 2015, the payment has
    not yet been received by PGC.  PGC remains confident that it will in the
    future receive the payment. However, due to uncertainty around the timing,
    PGC needs to re-categorise the consideration (for accounting purposes) from a
    "receivable" to "an available for sale financial asset".  As such it will be
    measured at fair value by an independent valuer. The impact of this
    revaluation on PGC's NPAT for the six months to 31 December 2014 will be
    reported in PGC's interim financial results for the period ended 31 December
    2014, to be released in February.
    Last Thursday's announcement led some to wrongly believe that this could have
    an impact on PGC's NPAT for the year to 30 June 2014. This was not intended.
    Both PGC and auditor PwC say it will have no impact on the NPAT for the year
    ending 30 June 2014 because it was correctly categorised as a receivable at
    that time.
    There was also media reporting that Thursday's announcement revealed a $22
    million "gap" or "hole" in PGC's accounts which is incorrect, as it assumes
    that the receivable has no current value or has already been written down.
    That is not the case - the revaluation process has not been completed.
    For more information, please contact: David Lewis  +64 21 976 119
    End CA:00260227 For:PGC    Type:GENERAL    Time:2015-02-02 12:50:46

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