Thursday 28th July 2011 1 Comment
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Geneva Finance says its restructuring and the repositioning of its new business is generating sustainable profits, but maintaining the new business depends on the availability of ongoing sustainable funding.
Filing its annual report today for the year to March, the company said its board and management were pursuing funding alternatives and if those were successful the proposed strategy for the company remained the way forward.
If those alternatives were not successful it would be necessary to reconfigure business operations so the company continued to operate within its available cash flows and funding facilities.
On March 31, 11 sub-note holders had converted their debt to equity generating $4.4 million of new equity.
While that had been valuable, the company needed ongoing sustainable debt funding to expand its new ledger business and continue to repay investors as set out in the company's debt repayment schedule.
By March 31, the company had repaid 60 percent of the publicly held debenture principal outstanding when it went into moratorium in November 2007. It had also paid all investors their full contractual interest each month, Geneva said.
Including interest, $79.6m had been repaid to public debenture holders, which was 80 percent of the total owed to public debenture holders in November 2007.
A formal restructure of the Geneva business was approved on March 31, dividing the company into four trading divisions including a new business model which has a tighter lending criteria to that before the moratorium.
For the year to March, Geneva reported an after tax loss of $8.6m, which was a bigger loss than the $5m in 2010.
The latest figure included a non cash write-off of $2.4m of deferred tax asset, which Geneva said remained available to be brought to profit in future periods to the extent future taxable profits were earned.
The new business model showed an after tax profit of $600,000, insurance operations made $200,000, and Geneva's property business showed a $400,000 profit, while the old business model had a loss of $7.4m.
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