Allied Farmers posts grim looking $77.6 million loss
Allied Farmers has reported an unaudited net loss of $77.6 million for the year to June, 121.4% worse than the $34.2 million loss recorded in 2009.
The result included a $21.4 million goodwill write off in its investment in subsidiary Allied Nationwide Finance, which collapsed into receivership in late August triggering a $137 million payout under the Crown retail deposit scheme.
Net tangible assets per share has been calculated at 2.2c a share, compared with 57c at the previous reporting period.
Allied shares last traded at 3.4c.
Group bank borrowings amount to $62.36 million as at June 30, including $44.3 million on property assets. At the same time last year group bank borrowings were approximately $24 million.
Allied’s cash balance at the end of the period was just $646,000, taking into account debts to Allied Nationwide of approximately $10 million.
Since balance date, Allied has settled the sale of its Five Mile property, which it took over as part of the purchase of Hanover Finance late last year, and has realised some investments in the US.
This should reduce its senior debt facility with Westpac from $16.5 million to approximately $2 million, the company said today.
During the period Allied Farmers took further impairment losses of $20.2 million on the Hanover-acquired assets relating to “events after” tits purchase of the assets last December.
Acquisition costs of $5.98 million were also included in expenses although the company has previously said it is challenging a payment of $5 million to Hanover shareholders Mark Hotchin and Eric Watson.
Allied Nationwide’s contribution to the result was a $19.33 million loss, which has been consolidated in the Allied Group accounts.
Allied Farmers managing director Rob Alloway, who is stepping down in December, said the receivership of Allied Nationwide Finance and the fair value assessment of the Hanover and United Finance assets was disappointing.
“In a number of cases, the combined effect of reduced liquidity in the financial sector and reduced demand for property has severely diminished the security value which backs these assets,” Mr Alloway said in a statement.
“Many had been valued based on assumptions that were subsequently found to be unrealistic. Our fair value assessment process was designed from the outset to be fair, taking into account parameters such as security value, prior charges, borrower risk, guarantor risk and country risk – and has delivered what we believe to be a realistic representation of the value, as it stands today.”
When Allied took over the Hanover loan book, exchanging Hanover’s fixed interest investors’ debt for shares in Allied, the assets were deemed to be worth $396 million.
The assets were revalued at $175 million as at December 31 and are now worth just $95 million.
Since the December statement there have been $85.748 million of additional impairments recorded, $65.545 million of which has been attributed against the fair value of the assets acquired as at acquisition date of 18 December 2009.
Meanwhile, Allied's rural services division posted a $757,000 loss, compared to a profit of $2.05 million last year.
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Comments and questions24
Result as expected.
Having senior debt down to $2 million from $25 million at the start of the year shows promise. I still think this is probably a better outcome than a receiver would have got for the Hanover debentureholders. Asset valuations highlight intriguing issue. How did KPMG Hanovers auditors ever sign off on the audit values for Eric and Mark at around $376 million last October ?
When will the public realize Hotchin and Alloway are good mates and the deal was a set up from the beginning. Alloway stepped in, exited Hotchin from the balance of the Hanover risk now he will exit with cash under the table from the two biggest crooks in this country. What's more the public made it happen.
i doubt Rob has ever spoken to eric ever in his life.
Robs a total opposite character to E & M in every way, Thank God for that! Rob - honorable, highly respected business man. 1000 times more than man, than bottom dewelling, slandering bloggers with no substance.
Many of the NBR comments seem to ignore, or be so uninformed, that they dont realise that Alloway has severely rodgered mark and eric leaving a sting in the tail for these overseas ex Kiwi's. Alloway 40 - eric and mark 15 - Alloway serving for game, set and match. Uninformed crowd dont understand the scoreboard
Maybe Rob Alloway is off to join fellow legends Brian Fitzgerald and Marc Lindale at Triumph Capital.
They have been kind enough to fund Victoria Park market for David Henerson - following on from funding Henderson on Proncess Wharf and most of his other deals - he is only an employee though - yeah right.
Alloway could join the third incarnation of Brian Fitzgerald, the entrepreneur - Equiticorp followed by Strategci Finance and now the new version Triumph Capital. I wonder how many investors have followed him on his journey or he may be the ultimate entrpreneur and attrack a new batch of investors on each cycle of his life.
Rob Alloway could replace Jock Hobbs( Strategic Finance ) this time and look after the funding for the company. What an impressive bunch with so much honesty and integrity.
And Rob wants resign as CEO to become chairman of AF. A bit like putting Hotchin as Securities Commission boss
Rob and Mark are mates and he would have been paid to do this deal and i guess thats why hes leaving in Dec. Rob should be taken for fraud and he has now left a great old Taranaki company is a big mess. HIGHLY RESPECTED BUSINESSMAN WOT A JOKE!!
NZ's biggest fraud ever??
How does Rob sleep at night? It amazes me these corrupt scumbags dont get shot down in the street!!
I've never had much faith in Alloway having much nous; ever since I saw him scratch his head, trying to work out how to couple a suction cup to a cow's teat.
Any truth to the rumour that Allied Nationwide Finance was originally brought from Hotchin interests prior to the Hanover debuncle ???
Can someone help with this
You are absolutely correct Allied purchased the finance Company from Hanover on 1st May 2007
Refer the Companies Office
Now everybody some constuctive answers here to the Allied / Hotchen relationship ?
Fishy dealings indeed
Yep
Aliied Nationwide finance used to be called Nationwide Finance and owned by Hanover then was sold to Allied in 2007
All a set up ?
Shakespeare
"Something smells ......"
All wrong, when Allied Farmers Finance Ltd purchased Nationwide Finance Ltd Alloway was not the CEO. This deal was done by John Mallon and David Bale The CEO of Allied Farmers Ltd. Alloway had not been heard of at that time.
Great old Taranaki company my ass. The board of that great old Taranaki company had sold the silverware several times over long before they sucked Alloway into the fray. Bet he regrets the day he ever got involved....
Above reply directed towards the Co op Guy
Hanover investors weren't even happy the loan book was $394 million when it was stated at that.
If they were happy with that they might have jumped out of their shares right at the start.
No, no, no seems majority don't like crystallising a loss ever. They liked flashy ramped up values dished out to them in years prior. Truth never hurts anyone! They now have the truth on factual market values. Had it gone into Liquidation, result likely would have a way lower value, as buyers would take full advantage. Liquidators would just fire sale it all with little care than to be sweepers.
Sad, but facts are Hanover investors went for 3 percent or more p/a higher than banks at the time - simply came done to human greed (I am sorry to say). Higher rates equal greater risks. Everyone knows that!
Now to hear some investors think they can reject 'their own asset values' & reverse matters. Go back to what? - their own assets that they already have shares in. Seems smarter they go the Trustees & Directors who didn't write down bad loans as they went in real time. The same guys who glossed it all up to banks, investors & Allied. I think their gusto is best pointed at the Board & Directors at the helm of HMS Hanover. Their huge salaries were paid to them to work for the good of Hanover Investors, but in fact seems they were gladly telling porkies & not at all working in the investors best interests.
Seems HMS Hanover only had a fleet of it's life rafts left floating to salvage. That was after E & M sunk (or shrunk) the big ship a long time ago. Naturally E & M stripped the gold out of it years ago, & yes I'm guessing even down to the gold plated bathroom taps. lol
Cant see in the above comments prior to your statement about Alloway and the Nationwide purchase.
They state Allied and the Nationwide purchase.
So are you saying that Allied did not purchase the finance coy off Hanover ???????
Allied never purchased it's finance company off Hanover.
Allied purchased Nationwide, Spears etc... way before Alloway’s time at the Helm. That was certainly done by John Mallon & David Bale - CEO of Allied at the time. Driven by Chairman John Loughlin & Mallon. Newspaper article back in August 2010 states Loughlin accepted full responsibility for where Allied Nationwide Finance ended up. I see Loughlin was in there for years, when I reviewed the company annual reports. Alloway was never a director of Allied Nationwide Finance, nor did he sit on their boards.
The one i feel sorry for in fact is Alloway, he only stepped in only just near end of last year to help sure it up & get rural business back to it’s grass roots, which after 23 million debt reduction reported & loans way down to managable level he has done far more good than anyone gives him credit for. Lat year att the time both companies went to vote, the two companies needed strength from each other. Hanover had assets but no income/Allied had rural business income but was short of assets verses debt. Allied had been over extended by the long standing boards for years. Alloway just simply was the new MD who wanted the Allied rural business to survive, while giving Hanover investors a way to cash out if they wished to, or wanted money immediately. Which some did & got a not to be scoffed at 68 to 73 or 75 cents in the dollar back in December when they were all free to sell their newly acquired Allied Farmers shares (not to be confused with Allied Nationwide Finance which Hanover investors never got shares in & the Allied business is a better business without the Finance business now). Trust that answers it for any non informed.
The only connection Allied had with Hanover was the very public votes by investors that saw both company investors last year in November or December join forces & Hanover was ditched by it’s investors for the share swap. The option went out to the shareholders of AF & the mostly 'unsecured Hanover debenture holders. This was a type of merger of both investors I guess you could say. All parties voted on it, it had to reach over 75% of investors voting in favor. The ones presently out of pocket in the merger turned out to be the patient Allied Investors as Hanover investors got way too many shares for their over valued assets & loan book represented at the time. However, the deal catered fairly for this & had a rebalancing ‘bonus share’ attachment to existing Allied shares. [Allied shares had traded so high up till December due to the fact the turn over & sales volume of ALF shares was so small it really wasn’t finding it’s true feet by daily volume trading. In the very open market it performed differently & slide downwards as Hanover was taking it down as was the higher volume open market.] Lawyers & Professionals got involved with all to work out a way to keep it fair to all the investors. Allied shareholders prior to Hanover vote were protected with bonus shares, that get dished out to them in mid 2011. The patient Allied Shareholders have had to wait rebalance happens. This was clear in the voting information at the time. It allowed for the realisation of the Hanover loan book & assets over time, which is what has been happening. The Hanover assets were not mixed up into the Allied Nationwide Finance. It was carefully managed & kept separate from the finance subsidiary that since thank god has been cut loose from the parent.
Anyone know why Wattie and Hottie still getting away with greatest train robbery? I hear Cadbury are hot on the trail as they are looking for the new Milky bar kids.
They better not
large volumes of shares go through day after day by wide range of buyers. fans and supporters of smaller companies often mean these companies stocks are held tightly by their supporters. Can show little change over time. it's business as usual; they don't have huge volumes going through that can drive them one way or another. those smaller companies’ investors know their values within a coo’ee. AF was like that I guess untill hanover deal was announced and tabled, then it dived slowly.
have to give Allied it's due, they have not simply ignored the facts. been damn upfront about it all really.
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