DORCHESTER PACIFIC ANTICIPATES INCREASED PROVISIONING
1 May 2008
The board of Dorchester Pacific today advised that the previous profit guidance of $3 to $4 million for the financial year ended 31 March 2008 will not be achieved as a result of trading conditions in a difficult finance market and a lower than anticipated contribution from St Laurence Limited.
The directors also advised that given a recent deterioration in the property market which they believe is significant and unlikely to improve in the short term, they have determined to take additional provisions on property loans. This provisioning takes into account the longer time it is now expected to take to realise some property positions. A review is also underway of the carrying value of investments, including the 25% holding in St Laurence Limited which may further impact the FY08 profit.
Chairman of Dorchester Pacific, Mr Barry Graham, said:
“There has been a deterioration in property asset values against which lending is secured and we anticipate this could result in an increase in provisioning of around $5 million after tax. The review of the value of St Laurence may result in a non-operating impact to shareholder’s equity.
“Cash holdings continue to remain consistently above $30 million and we maintain positive matching between our debenture obligations and incoming cash from the repayment of loan receivables. We are therefore currently comfortable in our ability to repay debenture obligations as they fall due. We have maintained a diversified loan book, with our top five loans accounting for only around 25% of our total receivables with none of these being inter-related parties.”
The company also today announced that CEO Andrew Walker has resigned to take up a role at Auguste Holdings Limited. Auguste Holdings holds a substantial majority of the shares in Auguste Finance Limited, which is the majority shareholder in St Laurence Limited and a substantial shareholder in Dorchester Pacific. Dorchester Pacific holds a 25% stake in St Laurence.
Mr Andrew Walker said:
“Having set the path forward for Dorchester in a difficult finance market I feel that the time is right for me to move on and to take on a new challenge. I am proud to be leaving the company in a strong and liquid position.
Mr Graham said:
“Andrew’s services will be available to Dorchester through his new role at Auguste Holdings which will ensure continuity while new management arrangements are put in place.
“Going forward we will continue to simplify the business and reduce costs. We will de-emphasise capital intensive activities and focus on new business opportunities which leverage the company’s existing expertise and infrastructure.
“On behalf of Dorchester, I would like to thank Andrew for his leadership over a period of major market upheaval and uncertainty. He has contributed significantly to re-engineering Dorchester Pacific for a changed market environment.”
ENDS