Earnings lift strengthens confidence

A 25 per cent increase in profits has left finance company Dorchester Pacific confident it is in a strong position to weather the tightening economy over the next year.

Following the high-profile failure of National Finance this month, concerns have been raised that some other finance companies will struggle to survive an economic slowdown.

Acting chief executive Mark Simpson said Dorchester - which reported a profit of $8.14 million in the year to March 31 - had taken a conservative approach to lending and now had cash reserves of about $70 million. Unlike many of its rivals, it had been around for nearly 18 years and had seen the ups and downs of the economic cycle. "We recognise things will get tougher during the year and have positioned ourselves for that."

This year's improved profit had also been achieved in a relatively difficult environment and included about $2.3 million gains on the sale of Direct Broking. Although that sale was announced only this month, the process had been ongoing for about four months, allowing it to be booked in the 2006 accounts.

That one-off gain was offset by several one-off expenses relating to management and board changes and some additional provisioning.

Simpson said the net effect was that the bottom-line results represented a fair indication of the company's operating performance.

Total operating revenue was up 18.8 per cent to $103.2 million.

The company did not release forecasts for the 2007 year but was confident it could continue with its steady profit growth.