DORCHESTER PACIFIC ANNOUNCES HALF YEAR RESULTS

30 November 2008

Dorchester Pacific Limited (Dorchester) today posted its unaudited interim results for the 6 month period to 30 September 2008, reporting a Net Loss after Tax of $35.0 million (2007: $3.1 million profit).

Pending the outcome of the meeting of investors to approve the Deferred Repayment Plan the company has prepared its accounts on a going concern basis which includes the assumption that the deferred tax asset can be carried forward.  If the Deferred Repayment Plan is not approved then the going concern basis for Dorchester Pacific would be brought into question as it is likely that the Trustee for the Debenture Stockholders would place Dorchester Finance into receivership or the Trustee for Noteholders would initiate a winding up action and appointment of a liquidator.  Approval of the Deferred Repayment Plan would result in an improvement in shareholders funds from the current level.  The accounts of the finance group are subject to audit completion.

The loss for the 6 month period includes a $21.3 million write down of the investment in St Laurence Limited and additional provisioning of $11.5 million.

St Laurence

As announced on the 11th of November Dorchester has negotiated and secured an option to participate in the Recapitalisation Plan of St Laurence Limited. The option is exercisable at any time within 3 years of St Laurence investors approving that company’s Recapitalisation Plan.

Given the present circumstances of the companies and the uncertainty of future projections for St Laurence, Dorchester’s Directors have decided to write-down the investment in St Laurence to a nil carrying value.

Dorchester Finance

Net revenue for the 6 months of $16.1 million (2007 $28.9 million) reflects the ongoing wind down of the finance receivables book, a reduction in interest income as a consequence of an increase in the level of impaired property loans and no new lending.

The increase in provisions for the 6 months of $11.5 million mostly reflects the drop in property asset values and the estimated length of time required to realise property positions in the current market. The timing of property realisations presents a significant uncertainty.

Senate Finance continues to return cash to the finance group from the collection of motor vehicle receivables.

Dorchester Life

Dorchester Life achieved an operating profit of $0.9 million for the 6 months and continues to maintain its presence in the savings and reverse mortgage markets.

Dorchester Pacific Group

Chairman, Barry Graham commented: “Over the last 12 months we have experienced a constant deterioration in economic conditions including an unprecedented loss in investor support for finance companies and more recently a substantial fall in the value of property finance assets.

Our focus has been on preparing the Deferred Repayment Plan which if accepted by investors will provide the company with an opportunity to recapitalise and re-establish those businesses which are likely to be profitable in the future.”

The group Shareholders’ Equity has decreased significantly from $41.7 million at 31 March 2008 to $6.6 million at 30 September 2008 as a result of the requirement for additional provisions and the write down of the investment in St Laurence.

Management Update

As part of the restructuring of the management team Mr Lobb has agreed to step down from his role as Chief Financial Officer and Company Secretary but will continue to offer Dorchester his assistance in the coming months. The company would like to thank Mr Lobb for his significant contribution over this challenging period.

Interim Dividend

The Directors confirm that an interim dividend will not be payable.

DORCHESTER PACIFIC LIMITED - Results for announcement to the market
Reporting Period: 6 months to 30 September 2008
Previous Reporting Period: 6 months to 30 September 2007
 

*Please Note: Pending the outcome of the meeting of investors to approve the Deferred Repayment Plan the company has prepared its accounts on a going concern basis which includes the assumption that the deferred tax asset can be carried forward.  If the Deferred Repayment Plan is not approved then the going concern basis for Dorchester Pacific would be brought into question as it is likely that the Trustee for the Debenture Stockholders would place Dorchester Finance into receivership or the Trustee for Noteholders would initiate a winding up action and appointment of a liquidator.  Approval of the Deferred Repayment Plan would result in an improvement in shareholders funds from the current level.  The accounts of the finance group are subject to audit completion.

ENDS