Rangatira produces solid result, signals interest in additional investments
30 November 2012
Wellington investment company Rangatira today announced its interim result for the six months to 30 September 2011. In what the company termed a challenging and volatile market, Operating Earnings were $4.4 million, 2% ahead of the same period last year.
Based on market values for listed equities and the mid-point of Directors’ assessment of the value of unlisted companies, the net asset value of Rangatira’s shares at 30 September 2011 was $8.51 ($9.15 at 31 March 2011).
A fully imputed dividend of 18 cents per share (last year 18 cents per share) will be paid on
12 December 2011.
Chairman Murray Gough said, “Economic turmoil continues in Europe and elsewhere, and is having a negative impact on investment markets and the outlook for global growth. Despite the difficult economic situation the performance and value of our unlisted companies has been maintained overall, but the value of our listed equities has fallen by 20% after adjusting for dividends.
Of the larger unlisted investments, Contract Resources performed well, particularly in Australia where the oil & gas industry continues to provide opportunities for expansion. Hellers’ result was down on last year due largely to fluctuating raw material prices. Rangatira’s result this year did not include a contribution from Tecpak Industries due to its sale in December 2010, and included only four months trading for Dunlop Living following sale of that business in July.”
Mr Gough noted that the first half is not fully representative of Rangatira’s earnings for the full year as Hellers’ and Polynesian Spa’s business activities are seasonal and generate more income over the summer period - offset to a degree by Contract Resources where the first half is usually the busiest.
Directors consider the half year result more reassuring than their previous guidance assumed, and now expect Operating Earnings for the full year to be similar to last year and possibly a little better.
Rangatira has around $100 million invested in privately held unlisted New Zealand companies. It also has listed equity investments of about $40 million and is currently holding over $10 million in cash ear-marked for new investments. The unlisted holdings are mostly in mid-sized enterprises with sound growth potential. Rangatira is actively involved with these investments to help develop each company’s potential.
Last year, Rangatira sold three investments it had held for many years - Dunlop Living, Tecpak Industries and Te Kairanga Wines.
Chief Executive Ian Frame said, “Looking forward, it is our intention to make additional unlisted New Zealand investments to replace the ones we have sold. To this end, over the next 12 months, we are looking to invest in up to three mid-sized companies that have good growth opportunities and require additional capital to take them to the next stage.”
Rangatira has a longer investment timeframe than many private equity funds and prefers to be a cornerstone investor, co-investing with business owners and management. In some cases, it will do this alongside other like-minded investment companies and institutions. Its portfolio currently includes Auckland Packaging Company (since 1999, 100% owned); Contract Resources Holdings (since 2004, 50% owned); Greenfield Rural Opportunities (since 2008, 16% owned); Hellers (since 2004, 50% owned); Polynesian Spa (since 1972, 51% owned); and Precision Dispensing Systems (since 1999, 80% owned).
“Rangatira’s core investment strategy remains unchanged, “investing in business for growth”. That strategy has produced good and sustained returns over many years due to a diversified portfolio, conservative gearing and the active involvement of our directors and management in the governance of the companies in which we invest. We are now looking to expand our portfolio of New Zealand business holdings, to the mutual benefit of those companies and Rangatira,” Mr Frame said.
Rangatira’s shares are listed on the Unlisted platform, and will trade ex-dividend from Monday, 5 December 2011.