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Dorchester Pacific full year net loss $19.1m

Fuseworks Media
Fuseworks Media

Wellington, May 31 NZPA - Financial services company Dorchester Pacific, which has been operating under a deferred repayment plan since late 2008, today reported a full year net loss of $19.1 million.

That result for the year to March compared with a loss of $25.4m for the previous year.

Dorchester said auditors Staples Rodway had noted fundamental uncertainties regarding realisation of property loans and positions and the validity of the going concern basis of the accounts should investors not approve a proposed capital reconstruction plan.

Under the reconstruction plan, to be put to debenture stockholders in June, Dorchester Finance debenture stockholders will be offered four types of securities in exchange for their outstanding debenture stock.

If approved by investors, the reconstruction plan will be conditional on a $10m capital raising through a rights issue.

Dorchester previously said that if the plan was approved it would be out of moratorium by July.

Today it said the main contribution to the loss for the year was a $16m reversal of a fair value adjustment that arose from the deferred repayment plan.

The result also included provisioning of $1m for the Erceg loan exposure announced in February and an additional $1.9m provision against the residual loans and property positions.

Chairman Barry Graham said the additional $1.9m provisioning was a judgment call, with the board wishing to ensure all residual positions were fully provided for.

That would mean any future realisations after the reconstruction plan was approved and after the capital raising were in line with carrying values.

Executive director Paul Byrnes said the operating loss for the year, excluding the fair value adjustment and provisioning, was about $200,000.

In the Dorchester Finance business, both collections and bad debts recovered from the residual Senate motor vehicle finance book had continued to track ahead of forecast, Mr Byrnes said.

New lending on vehicles, as allowed under the deferred repayment plan, had started during the year. While the new lending was a modest $6m at March 31, the results in terms of loan quality, average interest rate and loan margin were encouraging, Mr Byrnes said.

Dorchester Life's insurance, savings and reverse mortgage businesses together had an operating profit before tax of $1.8m. That was more than double the profit budgeted, and compared to $1.2m the year before.

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