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South Canterbury skirts meltdown, lifts profit

Monday 25th August 2008

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South Canterbury Finance Group posted a 75% gain in annual profit after selling a stake in a dairy farm investor and benefiting from the demise of rival finance companies.

Profit rose to $82.7 million in the 12 months ended June 30, including a $40 million gain from the sale of the company's 13% stake of Dairy Holdings, it said in a statement today.

South Canterbury, which a BBB- credit rating, had a reinvestment rate of 63.7% last year as it weathered a slump in finance company liquidity that caused more than 20 rivals to fail or suspend payments. Pretax earnings may fall 43% this year to NZ$47 million, it said today.

Market conditions "remain difficult," said chief executive Lachie McLeod. Still, "we are enjoying the strongest inflows of new investment funds" for two years, he said.

The company has some NZ$400 million in cash and undrawn banking lines and expects to retain "strong cash reserves" in the current year, he said.

By Jonathan Underhill

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