Property Finance loss bigger than previously expected

Property Finance Group made a NZ$6.56 million loss for the year ended 31 March 2008 largely due to the receivership costs of its subsidiary Property Finance Securities Limited (PFSL). In April 2008, the group had announced the figure would be a NZ$3.54 million loss. The higher loss was attributed mainly to unaudited figures of NZ$1.9 million in loan impairment provisions for first mortgage loans, NZ$1.2 million in receivership related costs of PFSL, and NZ$1.1 million in downsizing costs. The group's finance subsidiary, PFSL, had been placed in receivership in August 2007, then removed from receivership in February 2008. PFSL is currently being wound down by its directors over a three year term. The group's total assets at 31 March 2008 were NZ$126 million, down from NZ$533 million at 31 March 2007.

Its balance sheet shows that it held assets of NZ$92.7 million of mortgage backed securities at 31 March 2008. Of this, NZ$38.5 million was in commercial mortgages and NZ$54.2 million was in residential. The group had NZ$19.1 million worth of loans receivable. Commercial loans receivable stood at NZ$18.5 million at 31 March. The Christchurch based group had 72% of its loans receivable in the Auckland area and 18% in Wellington/Hawkes Bay. The receivership of PFSL incurred costs of NZ$1.2 million, the group said in its annual report. These included receiver's costs and substantial legal and other advisor related costs. Downsizing cost the group NZ$1.1 million. Costs included staff redundancies, surrendering premise leases, mortgage broker commission settlements and write downs of fixed assets.