FMA looking into Pyne Gould's 2014 'profit' 2 Feb 2015
Related articles
- NZ consumers grow more upbeat, may resume spending Business
- Knowles quits as CEO of KiwiBank Business
- NZ migration bolstered by British invasion Migration
- NZ manufacturing activity reaches highest since 04 Business
- NZ dollar hits 22-month high vs euro Business
- OceanaGold finds new gold deposits at Fraser mine Business
- Transpower gets go-ahead for $170m SI upgrade Business
- NZ home sales creep up in March, still subdued Property
- NZ economy expands at fastest pace in two years Business
- New Zealand food prices fall in February Business
FMA looking into Pyne Gould's accounts after company says most of 2014 profit wasn't received
By Jonathan Underhill
Feb. 2 (BusinessDesk) - Pyne Gould Corp's 2014 accounts are being looked into by the Financial Markets Authority after the asset management firm controlled by managing director George Kerr recognised $22 million as profit, the bulk of earnings for the year, which it never received.
The company reported profit of $26.6 million for the year ended June 30, 2014. Notes to its accounts, which were released more than a month late on Nov. 3 resulting in the shares being temporarily suspended, show that the profit was largely the result of a $22 million gain on the sale of Perpetual Trust which was apparently due once new owner Bath Street Capital listed the business on the NZX. That hasn't happened.
"FMA has been engaging with PGC concerning its continuous disclosure and querying the treatment of an asset in their accounts," the regulator said in a statement. "We were pleased to see PGC updating the market on Friday about the accounting treatment of this particular asset (previously valued at $22 million). We continue to engage with PGC about these matters"
A spokeswoman for NZX said the market operator was aware the FMA was looking at PGC's treatment of an item in its accounts and declined to make further comment.
In its 2014 accounts, PGC said the one-time gain "could be materially lower" if market conditions at the time of an initial public offering "dictate that the price earnings multiple is not reflective of market expectations at the time of completion" of the sale deed. Still, the directors "consider $22 million an appropriate carrying amount for this receivable" given Bath Street has "contractual obligations which meet the conditions for this receivable to be recognised within this financial period."
On Friday, PGC said it planned to pursue Bath Street and its owner Andrew Barnes for the outstanding amount, including potentially through a lawsuit.
In the meantime, the $22 million will be reclassified as an "available for sale financial asset" in the company's first-half accounts and would have the 'asset' revalued by an independent valuer.
"The impact of this on PGC's NPAT for the year to 30 June 2014 will be reported once the valuation is complete," it said.
Accounting firm PwC signed off on the 2014 accounts, with a rider that the basis of its qualified opinion including accepting the carrying value of Torchlight Fund, of $52.3 million, held by a PGC subsidiary, Torchlight Group, which itself was carried at just $43.4 million. PwC noted it was unable to obtain sufficient information about Torchlight as its audited accounts weren't available. No specific mention was made of the Perpetual gain.
PGC shares fell 4.8 percent to 40 cents on the NZX today, valuing the company at $83 million. The stock soared 17 percent to 42 cents after the announcement on Friday, when there were six trades amounting to about 27,000 shares.
Kerr fell short of his target when he attempted to take PGC private in 2012. At the time of his offer he had warned that the company wouldn't contemplate paying dividends as it sold assets and that retail investors could face a bumpy road as he took PGC in directions that wouldn't necessarily generate quick profits. He retains David Lewis, a one-time adviser to Prime Minister Helen Clark, to handle his public relations.
The business is characterised by complex agreements between related parties and associates, which attracted the attention of the FMA in 2012, the year KPMG resigned as auditor, citing "unresolved differences" over the treatment of some transactions, and concerns about "adequacy of governance and management of financial reporting."
Kerr became involved in Pyne Gould in 2009, taking a cornerstone stake after the company faced large writedowns on the value of its Marac finance unit's property loan book, which has since been divested.
In the past 12 months, PGC has twice been publicly censured by the NZ Markets Disciplinary Tribunal - once for the overdue 2014 annual report and once for failing to comply with rules to have two directors resident in New Zealand. The company completed its relocation to Guernsey from New Zealand in February last year.
In his comments issued with the 2014 annual results, Kerr said that after a five-year transformation PGC's main investments were "at their core, large and valuable real estate businesses" and that the improving position of the group mean it may be able to restore regular dividends "within the next year."
(BusinessDesk)
News
Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students
29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more
New Zealand reaffirms support for Flight MH17 judicial process
7 Mar 2020 News
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more
Business
NZ Government's Economic package to fight COVID-19
17 Mar 2020 Business News
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more
NZ Government announces aviation relief package
19 Mar 2020 Business News
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more
Living
Diversity was Key at New Zealand Trade Tasting in London
6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall.
It was the first... more
Kiwi author stuns Behind the Butterfly Gate
12 Jan 2022 Arts
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...
New Zealand writer Merryn Corcoran’s... more
Property
Fairer rules for tenants and landlords
17 Nov 2019 Property
17 NOVEMBER 2019
The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more
New Zealand Government will not implement a Capital Gains Tax
17 Apr 2019 Property
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more
Migration
Boosting border security with electronic travel authority – now over 500,000 issued
19 Nov 2019 Migration
19 NOVEMBER 2019
We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more
Christchurch reinstated as refugee settlement location
18 Aug 2018 Migration
18 AUGUST 2018
HON IAIN LEES-GALLOWAY
The announcement that Christchurch can once again be a settlement location for refugees... more
Travel
Gallipoli Anzac Day services cancelled
19 Mar 2020 Travel & Tourism
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more
New Zealanders advised not to travel overseas
19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas
more
Sport
The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners
27 Oct 2019 Cricket
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more
PREVIEW: All Blacks v England semi-final
26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more
Columns
Gordon Campbell on the Gareth Morgan crusade
11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade
First published on Werewolf
The ghastly likes of Marine Le Pen in France and Geert ... more
Gordon Campbell on the US election outcome
10 Nov 2016 Opinion
Column - Gordon Campbell
Gordon Campbell on the US election outcome
Well um.. on the bright side, there (probably)... more
Kiwi Success
Congratulations to Loder Cup winner
26 Sep 2018 People
25 SEPTEMBER 2018
The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more
Appointments to New Zealand National Commission for UNESCO
16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO
HON JENNY SALESA
Associate Education Minister Jenny Salesa is... more
Recruitment
Historic pay equity settlement for education support workers
14 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more
Historic pay equity settlement for education support workers
22 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more