Rangatira profit falls 32% on lower return from asset sales

BUSINESSDESK: Rangatira posted a 32% decline in net profit reflecting lower returns from asset sales and forecast little earnings growth for the coming year amid a "weak and unstable global outlook".

Net profit after tax fell to $8.8 million in the 12 months ended March 31 from $12.9 million a year earlier, the Wellington-based investment company said in a statement.

Operating earnings decreased 21% to $7.7 million, while earnings from continued private equity investments rose 10%.

The decline reflects a loss of earnings from Rangatira's recently sold bed and furniture manufacturer Dunlop Living and Tecpak Industries. Total shareholder return was 0.2% in the latest year, down from 18.5% in 2011.

The company has so far reinvested about $5 million from asset sales in high-growth ventures, including online accounting software provider Xero, Valar Ventures and the New Zealand Growth Fund.

"Operating earnings and total shareholder return will be maintained and could improve a little in the coming year," the company said. "The weak and unstable global outlook means there is considerably more uncertainty about achieving that outcome."

Rangatira derives the biggest portion of its operating earnings from its 50%-owned Hellers small goods business and its half-owned Contract Resources, an engineering maintenance and industrial cleaning business.

Chief executive Ian Frame said Rangitira is “certainty looking for junior Heller's or Contract Resources” type firms it could buy, though “generally speaking, people are getting more cautious at the moment so we have to look at earlier growth stage" businesses.

The Wellington-based company will pay a fully imputed final dividend of 21 cents, taking the year's total payout to 39 cents, down from 40 cents in 2011. It will be paid on June 25.

Rangatira has two classes of shares that trade on the Unlisted platform, with 67% held as class A shares and 33% in class B shares to differentiate between charitable and non-charitable shareholders.

The A shares last traded on June 6 at $6 while, the B shares last traded on August 22 last year at $5.80.