Pyne Gould Corporation
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Pyne Gould Corporation Limited (PGC) | 9:27 am, Tuesday 26 August 2008 | PGC | 3.200 |
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Pyne Gould Corporation net profit up 22% to a record $44.8m
All three of Pyne Gould Corporation businesses
achieved increased profits for the year
- Pyne Gould Corporation today reported that net profit after tax for the
year
ended 30 June 2008 was up 22% to a record $44.8m. This compares to
$36.7m achieved last year.
- MARAC, up 6% at $27.9m, Perpetual Trust up 26% at $3.7m, and PGG
Wrightson contribution up 75% at $15.8m, all produced record results.
"The significant improvement in profitability achieved by all of our
businesses in the
current environment is a testament to the way the company does business" said
Sam
Maling, PGC's Chairman. "The merits of a prudent business strategy and
strong
corporate governance supported by experienced boards and management have
been well demonstrated again this year" he said.
The directors have declared a fully imputed final dividend of 13 cents per
share. This
will be paid on 3 October 2008. Following the interim dividend of 10 cents
paid in
March this takes the annual dividend to 23 cents per share, an increase of 2
cents.
The group result was determined under International Financial Reporting
Standards
(IFRS) for the first time. Last years comparative figures have been
restated.
MARAC: strong performance despite finance sector and wider credit market
issues.
The MARAC Finance group achieved a net profit after tax of $27.9m, an
increase of
6%. Net operating income rose 17% to $73.5m. Operating costs to net
operating
income at 36% were down marginally on last year.
"MARAC's result was particularly pleasing against a backdrop of the wider
finance
sector performance and global and local credit market conditions" said Brian
Jolliffe,
Managing Director.
On the funding side the focus was on continuing to strengthen and diversify
MARAC's funding sources and increase liquidity:
- MARAC's investment grade credit rating from Standard & Poor's was
reconfirmed;
- While investors generally have become more reluctant to invest in finance
company offerings, MARAC's reinvestment rate was maintained at normal
historical levels of around 63% in the year under review;
- The securitisation programme which commenced in August 2007 has
provided a new funding facility of $300m;
- A new syndicated bank facility of $480m with all of New Zealand's major
banks was finalised, an increase of $80m on previous individual facilities;
- After balance date a 5 year secured bond program raised $104.2m providing
greater diversification and increasing liquidity further.
"MARAC's liquidity was $260m at 31 July 2008. This is a much higher level
than the
company traditionally holds but in the current difficult market environment
is
considered to be a prudent step" Jolliffe said.
On the lending side, total financial receivables rose 8% to $1.4bn. This is a
slower
growth rate than in previous years and all occurred in the first half. In
the second half
of the year MARAC focussed on meeting the needs of existing clients and
foregoing
some growth opportunities. Finance receivables continue to be well spread
both
regionally and also by the type of asset financed.
Instalment loan arrears to total receivables remained relatively constant at
0.5%.
Collectively impaired assets, which are assets with an increased risk on
collection,
increased from 7.4% to 11.8% of total finance receivables. Individually
impaired
assets, being those which the company believes will not be collected in full,
amount
to 1.4% of total finance receivables and are fully provided for.
Impaired asset expense was $5.7m in the current year compared to the
historically
low $1.1m in the corresponding period last year.
Perpetual Trust: another strong performance
Revenue grew by over 10% to $16.9m. Operating expenses also increased by 9%
giving an overall net profit after tax of $3.7 m, up 26% on last year.
The company's corporate trust division continued its strong performance with
a 15%
increase in revenue for the year. While the issues facing the finance sector
contributed to higher than normal revenue in that area, there was also
significant
revenue growth in the managed funds sector and in the retirement village
sector,
especially from multi-village operators.
Total funds under advice through Perpetual Trust increased 11% in 2008 to
$980m at
year end. The Pegasus Investment Fund (a superannuation fund) which offers a
tax
efficient retirement savings vehicle recorded strong growth, up by over $6m
during
the year.
The personal wealth management division experienced growth across all seven
offices, with record numbers of wills written, new trusts being established
and trustee
appointments as well as a record number of personal asset management
appointments. The number of estates administered has remained constant.
The investment advisory part of the business has seen a net 23% growth in
client
numbers. "These results set the business up well for future years" commented
Jolliffe.
PGG Wrightson: contribution up 75% on last year
PGG Wrightson (PGW) made a net profit after tax of $73.2m, compared to $40.6m
in
the same period last year. This resulted in a contribution to PGC of $15.8m,
compared to $9.0m last year.
On a more comparative basis, excluding capital gains, other one off items and
the
earnings from NZ Farming Systems Uruguay, net profit after tax was $39.2m, up
35% on last year. The company's performance shows the benefits of the merger
coming through, notwithstanding trading conditions were not entirely
favourable
during the year.
In July 2008 PGW announced a proposal to acquire a 50% shareholding in Silver
Ferns Farms (formerly PPCS). The proposal is essentially a partnership
between
PGW's livestock procurement business and Silver Fern Farms processing and
marketing business, resulting in an integrated supply chain model that will
be able to
deliver enhanced returns to farmers. Pyne Gould Corporation supports the
proposal
and believes it will add value to our investment in PGW.
New Director for Pyne Gould Corporation
George Kerr has today been appointed a director of Pyne Gould Corporation
Limited
and its subsidiary companies MARAC and Perpetual Trust.
Commenting on the appointment, Chairman Sam Maling said "The board had been
keen to acquire specific skills in the broader financial services area and
George
clearly fits those criteria. In addition he has a real affinity with the
business through
family association and is also the corporation's major shareholder."
Summary and Outlook:
The merits of a focused business model, strong corporate governance and
experienced management was aptly demonstrated during the year. Despite a
difficult operating environment, PGC's businesses continued to thrive and
delivered
improved results for shareholders.
"The support given to our businesses - from our shareholders, investors in
MARAC,
bankers, suppliers and service providers, is greatly appreciated" said Sam
Maling.
The company has weathered the storm that engulfed many during the year and
came
through virtually unscathed. We have a strong financial position and
experienced
management in place. The difficult environment continues and is likely to
have some
effect on profitability in the short term. We have a robust but conservative
strategy in
place and still expect to be able to report a result in line with last year.
26 August 2008
Sam Maling Brian
Jolliffe
Chairman Managing
Director
For further information please contact
Brian Jolliffe
Managing Director
Pyne Gould Corporation
Telephone 09 539 9702
Mobile 027 446 6066
Alan Williams
Chief Financial Officer
Pyne Gould Corporation
Telephone 09 539 9763
Mobile 027 477 3189
Additional information about Pyne Gould Corporation Limited
Pyne Gould Corporation is a holding company for three separate businesses:
MARAC and Perpetual Trust, which are 100% owned subsidiaries, and PGG
Wrightson, a 22% owned associate. Pyne Gould Corporation also owns its head
office building in Christchurch.
MARAC Finance Group consists of:
- MARAC Financial Services Ltd, which is the umbrella company for all the
MARAC group companies:
- MARAC Finance Ltd;
- a Consumer division consisting of motor vehicle, marine and
leisure financing and motor vehicle leasing;
- a Business division consisting of plant & equipment and
business financing, property financing and Ascend Finance ;
- MARAC Securities Ltd - an arranger of structured finance solutions;
- MARAC Investments Ltd - a specialised niche investment company;
- MARAC Insurance Ltd - a provider of insurance products to MARAC
clients;
- Nissan Finance New Zealand Ltd - a lender to the Nissan dealer network.
Perpetual Trust consists of:
- A Corporate Trust business. This division provides trustee services for
investment products, including unit trusts, securitisation structures, group
investment funds, superannuation schemes, debt securities and local
authority funding. They also act as statutory supervisor for retirement
villages
and forestry partnerships;
- A Personal Client Services business. This division provides trust, estate
planning, investment advice and asset management services to individuals
and their families;
- A Funds Management business. This division provides a range of managed
investment products for Perpetual Trust clients and to external investors.
PGG Wrightson consists of:
- A Rural Services business. This division consists of livestock, wool,
rural
supplies, Fruitfed supplies and irrigation & pumping services;
- A Financial Services business. This division consists of finance, real
estate,
insurance and funds management services;
- A Technology Services business. This division consists of seeds & grain,
nutrition, animal health, training and consultancy, South America.
