Rangatira, which bought a cornerstone stake in beer company Tuatara Brewing this year, reported a tenfold surge in first-half profit after selling its stake in engineering service firm Contract Resources and its direct holding in accounting software developer Xero.
Net profit jumped to $30.8 million in the six months ended Sept. 30 from $3 million a year earlier, the Wellington-based investment firm said in a statement. Of that, it reaped $29.7 million from asset sales. Operating earnings slumped 45 percent to $1.8 million after the exit from Contract Resources and an initial loss on from its Rainbow's End investment.
Chairman David Pilkington said operating earnings are expected to recover in the second half, due to the seasonal nature of several of Rangatira's investments, though they will likely be 20 percent to 30 percent lower than the $9.8 million reported in 2013, due to the Contract Resources exit.
"Apart from the reduction in operating earnings from Contract Resources, the earnings from the remainder of our contributing companies has been much in line with last year," he said in a statement. "We expect a good performance in the second half due to the seasonal nature of our unlisted investments, such as Hellers, Polynesian Spa, Ranbow's End, and Tuatara Brewing Company."
Rangatira took a 35 percent stake in Tuatara and a 12 percent share of magnetic resonance imaging and nuclear magnetic resonance device manufacturer Magritek this year, and still has at least $50 million for new investments in the coming year.
The board declared an interim dividend of 20 cents per share, up from 18 cents a year earlier, payable on Dec. 1, shedding the rights to the dividend on Dec. 9.
The company intends embarking on a share buyback early next year, with the directors "concerned at the considerable discount in prices bid compared with our assessed asset backing and the low liquidity in Rangatira shares."
Rangatira has two classes of shares that trade on the Unlisted platform, with 67 percent held as class 'A' shares and 33 percent held in class 'B' shares to differentiate between charitable and non-charitable shareholders. The 'A' shares last traded at $9 and the 'B' shares at $8.50, a discount to the $10.55 value ascribed by the board on a net asset basis.