Allied Farmers takes further impairment on Hanover assets, adding to 1H loss

Friday 1st March 2013 1 Comment

Allied Farmers has taken a further $4.1 million impairment on its ex-Hanover Finance assets, inflating its first-half loss, which still narrowed from a year earlier.

The Hawera-based company posted a loss of $5.5 million in the six months ended Dec. 31, from a loss of $8.3 million a year earlier. Revenue rose to $22.6 million from $9.6 million.

The company is trying to rebuild itself after its disastrous acquisition of financial assets from Hanover and United Finance for $394 million in 2009. It has ring-fenced what's left of the assets in its Allied Farmers Investments unit, which had assets of $25.7 million, according to its first-half accounts.

Its other business is Allied Farmers Rural, which provides livestock and real estate services to rural customers. Its assets were listed at $6.98 million.

The asset management business recorded first-half earnings of $300,000 before impairments though that turned to a loss with the writedown, of which $3.75 million was over one loan asset, suggesting it has been written down to zero.

The rural division reported a loss of $800,000, down from a loss of $1.5 million a year earlier and said it expects to be profitable in the second half, when it gets most of its earnings.

The company said it made significant progress in the first half selling non-core asset to repay secured debt, which fell to $7.5 million from $23 million.

"Further reductions are expected in the next six months as the focus continues to be on debt reduction and growing continuing business activity," it said.

The company's ability to keep trading may be tested as soon as Monday, when the first of two statutory demands from two creditors totalling $4.2 million comes due. The second expires on March 15.

Shares of Allied Finance last traded at 1.9 cents, valuing the company at $1.36 million.

BusinessDesk.co.nz

Comments from our readers

On 2 March 2013 at 1:48 pm Ivan said:

My Hanover term deposit now goes towards paying off Allied's debt, not to mention the massive salaries of the CEO and directors of this company. Can anyone tell me, as an ex- Hanover investor what I get out of the Allied-Hanover deal ? A big fat 0. Only in NZ would this be happening,anywhere else these guys would be doing time.