by Jenny Ruth
The loss compares with the previous year's $5 million net loss and compares with the $1 million net profit forecast in last year's repayment plan.
GFNZ says the shortfall reflects $3.9 million more in write-offs than then projected and "a shortfall in projected income from new lending and third party debt collection activities" of $3.2 million, offset by $1.9 million in operating cost savings.
"While exiting these ledgers is proving costly, unlike the new business model, where there is an opportunity to expand profitability, the old business model ledgers have a finite and reducing cost of exit."
The company says its auditors have raised a fundamental uncertainty over the value of its $2.3 million deferred tax asset. "The company and the group have concluded that it is probable that they will utilise the value of this asset, based on future earnings forecasts. If these forecasts are not achieved, it may be necessary to make further (non-cash) write down(s) of this asset."
At March 31, GFNZ had repaid 60%, or $112.3 million, of the debentures outstanding at November 2007.
GFNZ says while it complies with its debenture trust deed and Reserve Bank covenants and capital adequacy requirements, it is in breach of one of its covenants with BOS International Australia relating to minimum new lending.
At March 31, GFNZ was $0.4 million or about 32 loans short of its required new lending under this covenant, which was developed to measure the sustainability of its medium to long-term profitability forecasts.
"Compliance with this covenant could have been achieved had the board been prepared to lower its asset quality standards," GFNZ says. It has requested a waiver of the covenant and
GFNZ also warns it will need further debt funding over the current year.
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