KEY POINTS:
Listed finance company Strategic Finance said today it will report a disappointing but appropriate operating loss this year while talks continue to decide its future.
Strategic has previously suspended redemptions, affecting 15,000 investors with $325 million of funds and its owners are trying to sell the business.
The company said today that additional provisions for bad debts, bad debt write-offs and one-off adjustments are expected to result in a net operating loss for the year to June 30 in the vicinity of $15.5m.
The company is still working on its financial statements for the year and has employed KordaMentha to review its loan book.
The company's auditor KPMG has also been reviewing the level of provisioning for the loan portfolio.
"Strategic, along with all participants in the property finance sector, has been affected by loan defaults and there are likely to be further loan defaults due to the continuing slowdown in the New Zealand economy and in particular the property development sector," the company said.
Provisioning will be significantly higher in the financial statements for the year to June 30.
The final amount will be known once KPMG has completed its audit work.
"This is a disappointing result but it is considered appropriate in the current economic environment to adopt a conservative view on the realisation and underlying security value of Strategic's loan book and further increase the company's collective provision to reflect the inherent uncertainties that currently exist."
After making allowance for these bad debts and provisions, total shareholders' funds as at June 30 are expected to be reported about $73m.
Strategic expects to report on August 29.
Strategic is owned by Australian investment company Allco HIT, which has been in talks with a consortium since July to buy out the business with support from the Australian arm of the Halifax Bank of Scotland (HBOS).
Strategic has said the purchasing consortium, which includes senior executives and former All Black Jock Hobbs, and Allco had entered into a revised non-binding term sheet for the sale.
- NZPA
