Rural upturn helps Pyne Gould Corp

By Chris Hutching

Friday 24th March 2000

Christchurch-based Pyne Gould Corporation continues to enjoy a dream run, with its latest interim result reflecting the upturn in rural fortunes and internal efficiencies.

Aside from its own financing and rural servicing activities, Pyne Gould Corporation enjoys benefits from half-owned South Eastern Utilities and the rural servicing and property activities of Reid Farmers in which it also owns a half-share.

For the six months to December 31, 1999 Pyne Gould Corporation posted a net surplus after tax and minority interests of $9.3 million compared with $5.7 million for the same period last year.

An accounting change by the financing companies produced a one-off gain but the surplus would have been $7.5 million without this adjustment.

The surplus was achieved on turnover of $106.9 million compared with $122.5 million in the previous period, the fall in turnover reflecting the reduced contribution from South Eastern Utilities, which is a cash box company on the lookout for new acquisitions at the moment.

Managing director Richard Elworthy said the company was enjoying an improved season and better prices for primary products but new efficiencies had also been introduced such as the sale of a former large woolstore in Moorhouse Ave, Christchurch and a move to smaller rented premises in the industrial suburb of Opawa, which was en route to the port of Lyttelton.

The sale of the Moorhouse Ave property to a syndicate of developers provided a gain of $3.5 million.

There was another gain of around $400,000 from the sale of Reid Farmers' Crawford St property in Dunedin into a syndicated investment.

Mr Elworthy said the rural economy remained buoyant with strong retail sales, as shown by the performance of finance companies which provided more loans for vehicles as well as property purchases.

The downturn in the residential property market was less relevant for Pyne's activities, he said.

Total assets of the group are $465 million, including $282 million in finance company receivables. An interim dividend of 7.5c a share will be paid. Net asset backing is $2.89 million.

Mr Elworthy said the balance of the year also looked good for Pynes in spite of a threat from higher interest rates.

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