Diversified Dorchester reaps benefits

By Duncan Bridgeman

Friday 20th August 2004

Finance company Dorchester is back on the podium after a four-year absence.

The comeback is based on an impressive 71.9% return to shareholders last year and a three-year return of 45.6%.

"The years of restructure are starting to bear fruit," managing director Brent King said.

With a market capitalisation of about $58 million, Dorchester Pacific is still a market minor but its controlled growth formula has been delivering for shareholders.

The company reported a net profit of $6 million for the year to March 31, up from $4 million the previous year.

Over the past four years net earnings have grown at an average annual 39% to $3.7 million this March year. Dividends over the same period have risen from 2.05c to 6.6c.

The company is pursuing a strategy of diversification, organic growth and growth by acquisition but it has been careful to ensure each step is profitable and doesn't stretch the balance sheet.

Operating cashflows have been strongly positive.

It now operates in three divisions: consulting, including sharebroking (Direct Broking), financial planning and immigration consulting; finance, mainly to the commercial sector; and insurance (Save and Invest Group).

This gives the company diversified income streams from fees, interest margins and premiums.

"We've now got to a critical mass where every increase in volume basically flows through to the bottom line," King said.

The company was now focusing on organic growth, although King was keen to point out the financial services sector is ripe for takeover activity.

"We believe we will be a significant player in rationalisation as time goes by."

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