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Additional $125 million funding, record result

Media release, 27 February 2008

South Canterbury Finance secures additional $125 million funding and reports record result

South Canterbury Finance Group has secured an additional $125 million of funding from the United States Private Placement market.

CEO, Lachie McLeod, advised "No New Zealand finance company has ever obtained seven year Private Placement Funds. South Canterbury Finance Limited has achieved this in a tough market and is testament to our strong performance, management and Standard & Poors investment grade rating. These Private Placement funds will bolster South Canterbury Finance's cash reserves and when combined with our undrawn bank line, will total $450 million of available funding. This liquidity position puts South Canterbury Finance in an enviable cash position amongst New Zealand finance companies.

“The team at South Canterbury Finance has worked extremely hard to bolster our liquidity. These funds will be used cautiously over the next 18 months, to keep South Canterbury Finance in a very strong position. Our sound liquidity will allow South Canterbury Finance to continue selected lending, service existing loyal clients and 'ride through the credit crunch'."

South Canterbury Finance Limited also announced a record profit for the December first half of $70.8 million ($26.1 million December 2006).

Highlights of the December first half included:
- A record pre tax profit of $70.8 million ($26.1 million)
- NPAT of $64.4 million ($17.4 million)
- Core Business pre tax profit up to $30.4 million ($26.1 million)
- Total Assets $1.85 billion
- Additional $25 million of new ordinary capital was introduced by shareholders. This gives total equity of $270.8 million
- Strong earnings from all 13 regional finance companies and operating expenses for the six month period remained static
- Successful raising of a $125 million Secured Bond in December 2007
- Cash on hand at 31 December of $272 million ($131 million June 2007)
- Syndicated Bank facilities of $150 million remain undrawn
- Bad debt write offs and provision were stable at 0.3% of total receivables
- Debenture reinvestment rate for the six month period ended 31 December of 72.48%
- Sale of our 32% shareholding in Dairy Holdings, realising a profit of $40.5 million

McLeod advised that "Strong management, a strengthened balance sheet, diversified lending, and our BBB- Standard & Poors investment grade rating has enabled South Canterbury Finance to diversify its funding base by over $400 million in the past six months. This has been achieved by secured bonds ($125 million), US Private Placement ($125 million) and banking facilities ($150 million)."

Chairman Allan Hubbard advised that "South Canterbury Finance Limited was established in Timaru in 1926. It has survived the worst economic depression of 1929-1936 that the world has ever known, the Second World War (1939-1945) and all the subsequent credit crises in the New Zealand economy. Our expertise has enabled the Company to avoid many of the mistakes of our northern neighbours. Our diversification and strength of our management will enable us to look forward with confidence to our centenary year of 2026.

“In appreciation of results achieved the Company has donated $500,000 from our 2008 year profit to Child Cancer and the South Canterbury Hospice.

“South Canterbury Finance Limited is owned by Southbury Group Limited, an investment company with substantial other investments and which is committed to supporting South Canterbury Finance Limited. One third of the shares of Southbury Group Limited are owned by a large Charitable Trust, which makes grants anonymously to many charitable causes throughout New Zealand.

"South Canterbury Finance is still well on target to produce a budgeted pre tax profit for the June 2008 year, in excess of $90 million."


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