PGC posts 85 per cent profit rise after merger

Pyne Gould Corp (PGC) today posted an 85 per cent first-half profit gain, as it booked the proceeds of a merger between the rural services firms Pyne Gould Guinness and Reid Farmers.

The Christchurch-based financial services firm, whose investments include Marac Finance Ltd and Perpetual Trust, and a 22 per cent stake in the newly merged PGG Wrightson business, reported a net after-tax profit of $26.5 million for six months to December 31, compared with $14.3 million for the same period a year earlier.

PGC declared an interim dividend of 9c per share, including a one cent special dividend from the merger of PGG and Wrightson in October.

PGC said the result was buoyed by record profits for both Marac and Perpetual, plus an abnormal gain of $14.1m from the PGG/Reid Farmers merger in 2001, which could now be brought into account.

Marac posted an operating profit of $11.4m, up 8 per cent, while Perpetual's operating profit rose 38 per cent to $1.7m.

The standout performer was Marac's commercial division, which finances plant and equipment to New Zealand businesses.

The division recorded finance receivable growth of 13 per cent following a decision to invest in regions outside its traditional business.

The motor vehicle market slowed during the period, and although Marac grew its lease business, the overall market was subdued.

Major areas of revenue growth for Perpetual included its corporate trust and asset management divisions, where revenue grew 13 per cent and 22 per cent, respectively.

PGG Wrightson contributed $1.8m to the first-half result.

"From a PGC perspective, good progress has been made and the merger is on track," PGG chairman Sam Maling said.

"For the merged company to forecast a full-year result in line with its projections at the time of the merger, notwithstanding more difficult conditions in the market, speaks for itself," he said.

Looking ahead, Mr Maling said the PGC was in "good heart".

"While the current economic conditions will likely have some impact on the company's future growth and performance, at this time the directors remain confident of being able to report a further improvement in operating performance and annual dividend for the full year to June 2006."

PGC said today that Peter Baynes, chief executive of Perpetual Trust, would step down at the end of the financial year.

Shares in PGC last traded yesterday at $4.05, against a year high of $5.40 and a low of $2.58.

- NZPA