Listed finance company Strategic Finance has signalled 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 on Wednesday 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.
