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Dorchester returns to 1H profit, delays resuming dividends

Dorchester returns to 1H profit, delays resuming dividend payments on acquisition opportunities

Nov. 11 (BusinessDesk) - Dorchester Pacific, which avoided failure in 2010 by convincing investors to accept a debt-for-equity swap, returned to first-half profit as revenue almost tripled, though the firm has put off a return to making dividend payments amid potential acquisition opportunities.

The Auckland-based firm made a net profit of $1.79 million, or 0.6 cents per share, in the six months ended Sept. 30, turning from a loss of $87,000 a year earlier, it said in a statement. That included a $1.67 million interest payment to allow for the conversion of convertible notes, and came as revenue soared 190 percent to $15.7 million.

“The higher trading profit has been achieved in market conditions that have remained more subdued than most expected,” chief executive Paul Byrnes said. “With fixed operating costs now covered, these business units will benefit from the continuing organic growth and from M&A activity.”

The board decided to delay resuming dividends with an interim payment, due to “a number of merger and acquisition opportunities under consideration,” the company said. The firm had previously indicated it would start paying dividends, having suspended them five years ago when it convinced debenture holders to accept a moratorium on interest payments.

The shares were unchanged at 23 cents today, and have shed 30 percent this year, though that period includes the conversion of options and convertible notes which has more than doubled the shares on issue.

The company’s finance unit lifted earnings 14 percent to $1.4 million on a 33 percent increase in revenue to $3.2 million, and its insurance arm reported a 26 percent slide in segment profit to $581,000 on an 8 percent fall in revenue to $2.3 million.

Its debt collection unit made a segment profit of $2.4 million on sales of $9.1 million.

Dorchester affirmed annual guidance of a $6 million trading profit in the 12 months ending March 31, 2014.


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