South Canterbury Finance achieves unaudited breakeven trading result for March 2010 quarter

South Canterbury Finance Limited is pleased to announce that a breakeven trading result has been achieved in the three months to 31 March 2010.

The unaudited operating profit for the quarter totalled $4.0 million and included a positive net interest margin of $1.4 million. The operating result is before one-off expenses for investment losses of $3 million, impairment losses of $1.7 million and foreign exchange losses of $0.5 million.

South Canterbury Finance Chief Executive Officer Sandy Maier says the March quarter performance was a substantial turnaround from the South Canterbury Finance Charging Group’s audited $198.6 million net loss after tax for the six months to 31 December 2009 and represents a turning point from the losses recorded by the Company over the previous 18 months.

“This is a heartening outcome with many positive aspects for the future of the business. The Company’s cash position has steadily improved through loan repayments and non-core asset realisations and is now $80 million. Impaired loans are being realised generally in line with carrying values, and no further provisions have been required, but these will of course be re-assessed at year end.”

Realisations of past due and non-core assets have generated cash of $202 million since 1 January 2010.

“The core business of South Canterbury Finance is again making a positive contribution that should boost the confidence of all stakeholders including eligible investors who have the additional benefit of the Crown’s extended retail deposit guarantee until December 2011,” Mr Maier says.

“Trading conditions are becoming more favourable with improvements in the current economic environment bringing forward excellent prospective lending opportunities in the business and consumer sectors.”

The unaudited trading result for the March quarter excludes contributions from Helicopters NZ and 80 per cent owned Scales Corporation both of which were acquired by South Canterbury Finance on 28 February 2010.

“As the core finance business continues to improve, we expect that the consolidation of the results of Helicopters NZ and Scales Corporation will deliver a significant improvement in the overall financial performance of South Canterbury Finance.”

South Canterbury Finance’s unaudited total assets at 31 March 2010 were $2,084 million and equity was $203 million. Equity will increase by $37.5 million as a result of the commitment by Southbury Corporation Limited as announced yesterday (20 May 2010).