NZF Group posts $16.2 m annual loss

Embattled NZF Group has posted a $16.2 million annual loss, reflecting its finance company's receivership, the sale of its home loans division to Resimac and ongoing net losses from continuing operations.

Wednesday, May 30th 2012, 9:47PM 1 Comment

by Jenny Ruth

The loss for the year ended March 31 compares with the $4.8 million loss it posted the previous year.

NZF Money's receivership and the home loans division sale contributed $13.3 million to the loss, comprising the $10.1 million write-off of NZF Money, a $2.1 million loss from the sale and the remaining $1.1 million from trading losses made by those two businesses during the year.

NZF says the net loss from continuing operations rose to $2.8 million from $1.7 million the previous year.

At March 31, NZF had $2.5 million in cash compared with $5.7 million a year earlier.

The company's net equity sank to negative $4.7 million at March 31 from positive $10.3 million a year earlier. That's treating NZF's $18 million of capital notes as debt.

NZF reiterated it is considering coverting the notes to ordinary shares. If converted at the current share price, 0.3 cents, the resulting 6 billion shares would swamp holders of the existing 110 million shares on issue.

NZF is embroiled in litigation brought by NZF Money's receivers who allege the directors, who were the same people in respect of both companies at the time, transferred part of the home loans division from NZF Money to the parent company at less than its true worth.

As a result of a High Court freeze of its assets until a hearing on the substantive complaint, NZF is unable to pay $270,000 in interest due on the capital notes next month. NZF says it doesn't expect a hearing date before September “at the very earliest.”

Its joint-venture partner in Mike Pero Mortgages, Australia-based Liberty Financial, is also suing NZF, alleging NZF has breached the joint-venture agreement. NZF reiterated it believes this action is “an unwarranted attempt to force NZF to compulsorily transfer” its 50% interest in Mike Pero to Liberty.

NZF's 50% share of Mike Pero's earnings turned to a $263,157 million profit in the year ended March 31 from a $4,000 loss the previous year.

The preliminary report didn't provide a separate valuation for the Mike Pero business but the value of the financial services distribution businesses rose to $10.2 million from $10 million a year earlier. As well the Mike Pero licensed real estate business' value rose to $245,000 from $43,000.

NZF is also being investigated by the Serious Fraud Office and the Financial Markets Authority.

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