Rangatira ends first half with $40m cash after making no new investments

Rangatira Investments, whose diversified investments include Hellers, the Rainbow's End theme park, and laboratory instruments distributor Bio-Strategy, lifted its cash holdings to $40 million in the first half after making no new investments.

Wellington-based Rangatira added $9.8 million to its cash holdings by selling holdings in listed companies, according to its first-half report. Its equity portfolio fell to $28.8 million as at Sept. 30 from $31.6 million at March 31.

Over the period it looked at a broad range of investment opportunities, trying to find mid-market businesses which will become the next iconic New Zealand business, says chairman David Pilkington.

"Finding businesses where we can co-invest with capable owners and managers is an important criteria for our search," he says. Its preference is for companies with $10-100 million in annual revenue and $2 milion or greater in operating earnings.

Rangatira's own operating earnings fell to $2.4 million in the first half from $4 million a year earlier, although net profit rose to $8.8 million from $5.9 million, reflecting $7.1 million in gains from investments compared with a $1.9 million gain in the same period last year.

Mr Pilkington says full-year operating earnings would be similar to 2017's $11.7 million, with Hellers, Rotorua's Polynesian Spa and Rainbow's End being seasonal businesses that earn more in the second half.

Auckland Packaging (APC) and Polynesian Spa "performed well" in the first half, with APC expanding into new categories and the Rotorua resort benefitting from tourism growth, the company said. Bio-Strategy, Hellers and Rainbow's End reported lower earnings in the first half, it said. Bio-Strategy was hurt by a downturn in Australia, although there have since been signs of recovery, while wet weather dented demand for Hellers products and visitor numbers at Rainbow's End.

The company sold its investment in Tuatara Brewing to DB Breweries in January. In today's announcement, it confirmed it is still in dispute with former shareholders of the brewery over an earnout payment. While the High Court had rejected a claim from the former shareholders, they were appealing the decision "and Rangatira is defending its position."

Rangatira declared an interim dividend of 24 cents a share, up from 22 cents a year ago, payable on Dec. 11. The asset backing of its shares was lifted to $13.23 a share from $12.99 as at March 31.

Its A Class shares last traded at $10.75 and the B Class shares were last at $10.55.

(BusinessDesk)