The Timaru-based national company yesterday reported an $82.7 million net pre-tax profit in the year to June 30, including a $40 million one-off gain from the sale of its 12.75% share in Dairy Holdings, while net assets grew 22% from $1.6 billion to $2 billion.
This year's net profit before tax compared to $50.6 million a year earlier and assets of $1.6 billion.
The slight decline in normalised net pre-tax profit was due to additional holding costs for keeping large cash reserves and a conservative increase in provisions to compensate for a declining finance market.
Chief executive Lachie McLeod said South Canterbury Finance had 70% of its loans in the South Island provinces, which were outperforming the larger urban centres.
He said that lending policy had paid dividends, with its subsidiaries Canterbury Finance and Southland Finance, in particular, performing strongly on the back of new investment in dairying and cropping and associated industries.
"They're not big loans, $3 million to $5 million, but they're well located, with very good security, and the opportunity is there because we have got a presence in the provinces," he said in an interview.
Mr McLeod said it was important to inject some confidence and that while there had been several finance company crashes, some of the bigger, more established businesses, such as South Canterbury Finance, were performing strongly.
More then 25 finance companies have collapsed or frozen funds during the last two years, taking with them more than $3.5 billion in investor finds.
Because of that negativity, the company intends building on the 82-year tradition and reputation of the South Canterbury Finance by rebranding its nine regional subsidiaries, including Otago Finance and Southland Finance.
Details were still to be finalised, but Mr McLeod said regional subsidiaries such as Otago Finance would be rebranded South Canterbury Finance Otago Region, showing the company was wholly-owned by South Canterbury Finance.
"South Canterbury Finance has a very good name. It is something we have been talking about for a year or so and now the time is right."
Mr McLeod said 2008 was the year the company established itself as a market leader, assisted by continued support by domestic and international investors and the finance community.
Reinvestment rates in the last year have averaged 63.7% along with new investment flows averaging $4.7 million a week during 2008, the highest in two years.
During the year South Canterbury Finance made two successful approaches to the listed bond market, along with a new $525 million funding line from the United States private placement market.
Mr McLeod said his company still had more than $400 million in cash and undrawn banking lines.
Loans and leases rose 11% from $1.35 billion to $1.456 billion, while provision for bad debts was also up from 0.83% of total receivables in 2006-07, to 1.38%.
Another highlight was Standard and Poors affirming the company's investment credit rating at BBB-.
While he expected current market conditions to remain difficult, Mr McLeod said the company had a positive budget outlook, with net profit before tax for the current financial year expected between $47 million and $50 million.
Mr McLeod said cash reserves would be maintained and it would continue to focus on lending to provincial areas.
"This will be achieved through prudent lending in the heartland areas of New Zealand where were are well resourced," he said.
