The finances of investment company Pyne Gould Corporation are back in black with a $10.1 million interim after-tax net profit which was hit by allowing for a one-off $3.3 million provision for an irregular loan.
Strong results from Marac Finance, which increased lending for motor vehicles by 27%, and Perpetual Asset Management, underpinned the performance to December 31, in which Pyne Gould Corporation (PGC), turned around a $17 million loss for the previous corresponding period (pcp).
The result was ahead of budget and chairman Sam Maling yesterday said the company was on track to report a $21 million full-year net profit, including a $4.1 million one-off contribution from the sale of a Christchurch building.
Chief executive Jeff Greenslade said group net operating income of $49.6 million was ahead of both budget and the pcp of $41 million, but the operating profit of $12.6 million included higher-than-budget impaired asset expenses of $12.5 million due to the irregular loan.
Mr Greenslade said he was unable to give specifics about the irregular loan due to pending court action and legal remedies the company was pursuing, but investigation revealed it was a one-off incident and processes have been put in place to prevent a recurrence, he said.
Marac earnings were hit by that provision at $8.2 million, $10 million pcp, while Perpetual Group earnings were $3.7 million, $2.4 million pcp.
Restructuring of PGG Wrightson shareholding saw PGC's stake fall from 20.7% to 18.3%, but its earnings' contribution for the period under review was $400,000 ($200,000 pcp) and earnings from corporate and minor entities were $1 million ($1 million loss pcp).
Growing motor vehicle market share, balance sheet growth and steady margins underpinned Marac's performance.
Lending to small and medium enterprises remained subdued due to little capital investment until late last year, when there was a noticeable improvement.
The company has also been exiting deals considered risky and carefully managing and winding back its property portfolio from $374 million at June 30 last year to $177 million at December 31, although $175 million has been transferred to a subsidiary company.
Perpetual Trust increased revenue 3% along with its customer base, but was tracking behind budget.
That performance was compensated for by a strong result by Perpetual Asset Management.
Mr Greenslade said the company planned to expand Perpetual Portfolio Management advisory services.
PGC has completed the first phase of its strategy of recapitalising, recruiting specialist people and returning the company to profit with the next phase getting a banking licence, managing wealth and improving the quality of earnings.
Mr Maling said the growing complexity of the business has encouraged the split of the business into three entities, each with its own board: PGC, to act as a holding company, Marac and Perpetual Group.
He reiterated earlier notice that no dividend was expected to be paid this financial year.
