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Dorchester Says To Report Full Year Loss Around $25m

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Fuseworks Media
Fuseworks Media

Wellington, May 12 NZPA - Dorchester Pacific says it will report a loss of around $25 million for the year to the end of March, compared to a first half loss of $35 million.

Shareholders funds at the end of March would be about $15m.

Today the company said the full year result would include a $30m gain from fair value adjustments, but that accounting adjustment would reverse over the term of the deferred repayment plan backed by debenture and note holders in December.

Other adjustments to its accounts for the year to March included a tax write-off of $13m, additional loan provisions of $7m, additional consumer loan provisions of $1.2m, and a $500,000 write-down after exiting the Energy Direct Metering business.

The property loan provisions were based on independent valuations updated at the end of March, and were being made over 10 loans. The provisions included a $2m provision in recognition of the time needed to realise property positions.

Executive director Paul Byrnes said the additional property loan provisions reflected a more negative view taken by independent valuers of the current market.

But he pointed out that one of the main aims of the deferred repayment plan was to carry out an orderly realisation during the three year term of the plan, rather than conduct fire sales.

"This approach is likely to produce a significantly better result," he said.

The fair value adjustment was mandatory under current accounting standards.

While it supported positive shareholder funds in the meantime, it did not create sustainable value for shareholders in the long term because of its reversal over the term of the plan.

Good progress had been made on Dorchester's three hotel property exposures and there was also some interest in a couple of other property loans at above carrying value, Mr Byrnes said.

Collections from vehicle and consumer loan books were tracking as forecast and the company's cash position was just on $20m.

As soon as the annual accounts were completed and audited, Dorchester would be writing to investors to confirm the company was on track to make repayments under the payment plan due on June 30 and September 30.

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