In a rare letter to investors, SCF chairman Allan Hubbard said "recent events" required comment and he outlined how the success of businesses hinged on cash flow.
"I have always been focused on the liquidity of the company and we have always retained more cash than some experts consider necessary," Mr Hubbard said in the letter.
For many other New Zealand finance companies, their lack of cash, confidence and diminishing reinvestment has sparked a rash of problems, with more than 25 either going to the wall or placing a moratorium or freeze on funds - estimated to be worth more than $4.5 billion.
Mr Hubbard said for the year to June, and including the proceeds from yesterday's sale of its 12.75% stake in Dairy Holdings Ltd to Southbury Group for $42 million, SCF profit was "likely to be around" $85 million before tax, when the company reports in a few weeks.
The forecast for the year to June 2009 was "in the vicinity" of $50 million-$60 million before tax.
Southbury Group is a separate, stand-alone company of which Hubbard interests are the majority shareholders.
"At June 30, we [SCF] had $334 million in the bank, along with a further $150 million of undrawn bank facilities. This money protects your investment," Mr Hubbard told investors.
ABN Amro Craigs broker Peter McIntyre said Mr Hubbard had invested a "significant" amount of money from his own company back into SCF.
He said "to some degree" Mr Hubbard had "pre-empted the global credit crunch" by SCF having a BBB- Standard & Poors rating and having successfully issued two equal tranches of secured bonds since December last year, raising a total $250 million.
"SCF have been able to capitalise themselves well and had not run out of funds. They also have the undrawn bank facilities available for liquidity," he said when contacted yesterday.
Several factors, including the 82-year-old SCF brand, loyalty to Mr Hubbard, strong investor reinvestment rate and a "hugely diverse" portfolio over several lending sectors had helped spread SCF's risk, Mr McIntyre said.
Before the finance sector turmoil, reinvestment rates were often around 60%-70% for many companies but had fallen to less than 15% for some, while SCF remained above 70% reinvestment.
The Southbury Group, which bought the Dairy Holdings stake, is to inject a further $25 million of new capital into SCF.
Mr McIntyre predicted the increasing "war chest" of funds for SCF meant there would be a number of acquisition opportunities during the tougher economic times of the next 12 to 18 months.
Mr Hubbard said SCF's loans were spread across rural, business, property, plant and equipment, and only 15% of loans were to Auckland or Wellington borrowers, meaning the company was not dependent on those city economies.
Mr McIntyre said the Dairy Holdings sale and Southbury capital injection would boost shareholders' equity in SCF by $65 million.
