KEY POINTS:
Dorchester Pacific has plunged to a half year net loss of $35 million, as it wrote down its investment in St Laurence and increased provisioning.
The result for the six months to the end of September compared with a $3.1m net profit a year earlier, while revenues were down 51 per cent from the previous corresponding period to $18.5m.
The company proposed a deferred repayment plan last week under which Dorchester Finance investors would get 12 payments of principal, with the first before Christmas.
Investors are to vote on the plan on December 17. The finance unit of Dorchester Pacific owes 7200 debenture holders $168m after it and related company St Laurence froze funds in June.
Dorchester has a 25 per cent holding in St Laurence, and has secured an option to take part in St Laurence's recapitalisation plan.
Today, Dorchester said its loss for the half year included a $21.3m write-down of the St Laurence investment and additional provisioning of $11.5m.
Dorchester Pacific group chairman Barry Graham said that during the past year the company had experienced a constant deterioration in economic conditions including an unprecedented loss in investor support for finance companies and more recently a substantial fall in the value of property finance assets.
The focus had been on preparing the deferred repayment plan, which if accepted by investors would provide the company with an opportunity to recapitalise and re-establish those businesses likely to be profitable in the future, Mr Graham said
Group shareholders' equity had decreased significantly from $41.7m at March 31 to $6.6m at September 30, due to the need for additional provisions and the write down of the investment in St Laurence.
Dorchester Finance had net revenue for the six months of $16.1m, compared to $28.9m a year earlier, the company said.
The fall in revenue reflected the wind down of the finance receivables book, a reduction in interest income as a consequence of an increase in the level of impaired property loans and no new lending.
The increase in provisions for the six months of $11.5m mostly reflected a drop in property asset values and the estimated length of time required to realise property positions in the current market.
The timing of property realisations presented a significant uncertainty, Dorchester said.
The Senate Finance unit continued to return cash to the finance group from the collection of vehicle receivables.
Dorchester Life made an operating profit of $900,000 for the six months and continued to maintain its presence in the savings and reverse mortgage markets.
- NZPA
