Yet more bad debt charges - mostly on property loans - mean Allan Hubbard's South Canterbury Finance, which had hoped to move back into the black this year, will report a loss for the six months to December 31.
However, new chief executive Sandy Maier says the company retains the confidence and support of retail investors and he is "confident the company can meet current and future challenges".
The Timaru-based company posted a loss of $50.4 million for the year to June 2009 as $122.9 million in losses and provisions on loans and investments overwhelmed an underlying trading profit of $32.3 million.
The company had hoped to be back in the black to the tune of $18-22 million in the 2010 year but, yesterday, Maier indicated that was now unlikely.
"It is now clear that further provisioning will be required in respect of assets previously identified as impaired," he said in a statement.
"As well as fairly representing the company's current view of the value of these assets, the further provisioning will ensure, as far as possible, that the company's results for future periods are not distorted. As a result of the further impairments and adjustments the company anticipates it will report a loss for the six months to 31 December 2009."
The company will report its first half numbers in "coming weeks".
"The results for the first six months of the year will not be representative of the historical achievements of the company's business nor of the strength of its future performance," said Maier, who told the Business Herald the provisions were mainly on property loans.
He would not rule out the prospect of further big provisions. That would depend, he said, on whether the operating environment improved or not.
South Canterbury also said investment bank Forsyth Barr had been mandated to source funding to strengthen its balance sheet.
"As we've said all along there's a second step to capital raising and that capital is required to offset whatever the loss is and we're engaged in that process," Maier said.
In numerous public statements, South Canterbury has said an initial public offer is one of the capital raising options being considered.
During January the company received net inflow of retail funding as new investments and rollovers exceeded repayments.
The company believed the renewed investor confidence stemmed from parent company Southbury Corporation's successful recent capital raising, the confirmation of South Canterbury's BB+ credit rating and its removal from CreditWatch Negative and also the appointment of Maier who is highly regarded as a fix-it man.
The company also confirmed it had applied for coverage under the extended Retail Deposit Scheme, which takes effect in October.
Bad loans blamed for South Canterbury loss
South Canterbury Finance's new CEO Sandy Maier says the company retains the confidence and support of retail investors. Photo / Supplied
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