Pyne Gould to restate 2014 accounts with lower profit, assets after Torchlight audit

Pyne Gould Corp [NZX: PGC], the asset management firm controlled by managing director George Kerr, will restate its 2014 accounts, reducing profit and net assets by £7 million, after receiving the audited accounts of associate Torchlight Fund LP.

The Guernsey-based firm was fined and censured by the NZ Markets Disciplinary Tribunal in January over the delayed release of its annual report, which had been tagged by auditor PwC, over the firm's inability to obtain sufficient information about Pyne Gould's investment in Torchlight Group and Torchlight Fund. The audit of Torchlight's annual accounts for the 12 months ended March 31 has been completed and Pyne Gould will restate the comparatives for 2014 in its 2015 financial statements, reducing net assets and profit, it said in a statement.

The company reported a profit of $26.6 million for the year ended June 30, 2014. Notes to its accounts were released more than a month late on November 3, resulting in the shares being temporarily suspended, and show that the profit was largely derived from 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.

In February, the FMA said it was looking into the company's 2014 accounts over the Perpetual Trust gain, while in May, Bath Street Capital rejected a $22 million demand from Pyne Gould over the Perpetual Trust acquisition, saying no price was fixed in the deal and the agreement was for Pyne Gould to be paid if the shares of a subsidiary company were listed on the stock market.

In February, the asset management firm reported a loss of £3.36 million in the six months ended December 31, unchanged from a year earlier. That included a £1 million loss on foreign exchange, a £445,000 impairment of a loan receivable, and a £393,000 loss incurred from its share of subsidiaries' income. Total fees and other income sank 25% to £1.16 million.

In November, it was publicly censured and fined $8000, plus tribunal costs and $3200 toward NZX costs, after the resignation of director Michael Carolan on July 7 left the company short of a listing rule requirement of two New Zealand resident directors, which it failed to advise NZX.

Mr 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.

Pyne Gould shares were unchanged at 34c.

(BusinessDesk)