Pyne Gould annual profit beats forecast by 48 percent on asset sales, Torchlight returns

Thursday 29th August 2013

Pyne Gould Corp, the asset management firm controlled by George Kerr, returned to profit this year and beat its June forecast by 48 percent as it reaped $25 million from asset sales and generated bigger returns from its Torchlight unit.

The Auckland-based company reported a net profit of $44.4 million, or 20.5 cents per share, in the 12 months ended June 30, from a loss of $47.7 million, or 22 cents, a year earlier, it said in a statement. That beat forecast profit of $30 million, when the agreed to terminate its management contact of distressed properties owned by lender Heartland New Zealand.

The bottom line was boosted by the sale of its Perpetual financial services and trustee units and stake in Australian research house van Eyk, and a payment by Heartland for an early end to their relationship.

The firm plans to return capital from the sale of the Perpetual assets via an on-market share buyback programme.

"This is the most rational approach to returning capital on the basis that the price the shares are bought back at is below our assessment of intrinsic value," said managing director Kerr, who owns about three-quarters of the company.

The shares were unchanged at 30 cents today, having gained 15 percent this year.

The board didn't declare a dividend, in line with Kerr's guidance when he bought the controlling stake that shareholders shouldn't expect annual returns.

The company made an operating profit of $20.3 million, turning from a loss of $46.4 million a year earlier, as revenue climbed 27 percent to $52.9 million. Management and trustee fee revenue almost doubled to $18.7 million in the period.

Pyne Gould still owns a 27 percent stake in Equity Partners Infrastructure Co No. 1, which owns a 17 percent stake in UK motorway services company Moto, and its Torchlight subsidiary holds about $100 million of assets.

Kerr said the company is still trying to work out where to domicile and list, having previously flagged an intention to quit New Zealand.

BusinessDesk.co.nz

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