Dorchester Half Year Trading Tracks Ahead
Dorchester Half Year Trading Continues to Track Ahead of Forecasts
Dorchester Pacific Limited (DPC) today posted its unaudited interim results for the 6 month period to 30 September 2010 reporting a Net Profit after Tax of $15.7million (2009 $8.5 million loss).
The major item contributing to the profit was the Fair Value Adjustment arising from the Capital Reconstruction Plan approved by investors in June 2010. The restructuring involved a complex set of transactions to effect forgiveness of Debenture liabilities, issue of 4 securities (Property Trust Units, 2013 Notes, Shares and Options), a buy-back of the Subordinated Notes and a $10.3 million capital raising.
Executive Director & CEO Paul Byrnes commented;
“The transactions that were part of our capital restructuring plan have now all been successfully completed with all costs written off. As at 30 September 2010, we have a clean balance sheet with positive Shareholder Funds of more than $25 million, which is slightly ahead of forecast.
In the last three months our focus has turned to business growth and the operating performance of our Dorchester Finance and Dorchester Life businesses and this is helping to drive our improved performance”.
Dorchester’s 5 Year Prospective Financial Statements prepared as part of the Capital Reconstruction Plan showed an operating loss before Fair Value Adjustment of some $3 million after tax in the first year to March 2011 followed by a slightly better than break-even result for year 2 and a profit above $4 million in Year 3.
Byrnes added: “At the AGM in early September we were able to advise that we were trading ahead of budget by $500,000 after the first quarter. It is pleasing to note that this reported half year operating result of $921,000 loss is ahead of budget by more than $1 million.
Dorchester Finance and Dorchester Life contributed equally to the better than expected interim group result. Dorchester Finance cash collections and bad debts recovered on
the legacy Senate motor vehicle book have consistently been ahead of forecast and new lending demand has been stronger than expected from the business sector.
We now expect close to 50% of the new lending receivables book to be commercial loans with the balance being our more traditional motor vehicle lending.
Dorchester Life has begun to expand its sales agent force, including establishing a new team in Christchurch. The business also launched a new Group Life Insurance product in October, with further products expected to launch as the Company looks for additional growth opportunities in the sector. Within its existing portfolio of products, SuperLife Savings and Insurance sales activity is expected to further pick up in the run up to Christmas”.
Byrnes concluded: “Looking ahead, while we wouldn’t at this stage promise to beat the forecast 2nd half operating result by the same margin, we do anticipate at least holding on to the first half gains. We will continue to look for prudent growth and M & A opportunities for the business in order to drive value for our shareholders. With positive developments such as the new senior appointments we have made and our increased focus on marketing the business, we are confident that we can continue the business rebuilding and growth momentum”.