South Canterbury Finance is signalling it will make an adjustment to its previously reported audited accounts for the year to June 30, 2009 when it reports an interim loss for the six months to December 31 in coming weeks.
The company is signalling further provisioning in its interim accounts but says new chief executive Sandy Maier has carried out a thorough review of the business and is confident the company can meet current and future challenges.
The business of South Canterbury Finance was cash-flow positive and retained the confidence of its investors, financial intermediaries and its shareholder, the company said today.
It was now clear that further provisioning would be required for assets previously identified as impaired.
The interim result would also be affected by the early redemption of derivative instruments associated with the United States private placement facility and fair value adjustments on investments.
Adjustments may be required to the valuation and reporting of certain items in the June 30, 2009 audited financial statements.
The company had recently became aware that the valuation used at June 30, 2009 for its preference share investment in South Island Farm Holdings Ltd (SIFHL) should have been recorded at fair value rather than cost.
An independent valuation of the SIFHL preference shares at the date of their acquisition was currently being undertaken. "It is noted that any difference in value arising will be reversed in the current financial year as the preference shares have since been redeemed for their issue price.
"The company is currently reviewing the extent of potential prior period adjustments and at this stage believes that they may not have a material impact on the current position of the company." The company has new auditors.
It expects to report a loss for the six months to December 31.
The business of is cash-flow positive and retains the confidence of its investors, financial intermediaries and its shareholder, the company said today. South Canterbury Finance experienced an encouraging inflow of funds from investors.
The company has averaged in excess of $1.7 million of new investment money per day for January and its retention rate of existing investors lifted to more traditional levels.
Investment bank Forsyth Barr has been mandated to source funding to strengthen the balance sheet of South Canterbury Finance.
