Broadlands Finance, the auto-financier whose credit rating was cut to CCC- in January, had its 2013 accounts tagged by the auditor over the lender's need for shareholder Tony Radisich's continued support to keep afloat.
Auditor Grant Thornton gave an unqualified opinion on Broadlands' accounts, while raising an emphasis of matter on its ability to continue as a going concern. Broadlands' directors decided the lender could continue as a going concern after shareholders agreed to continue providing financial support to pay debts as they fall due.
"In the event that the group does not continue to receive the financial support of the shareholders, the going concern basis used in the preparation of the financial statements would not be appropriate," the company says.
The Auckland-based finance company narrowed its loss to $4.07 million in the 12 months ended March 31 from $5.38 million a year earlier, taking a $4.82 million impairment charge on bad loans, up from $3.7 million.
That chewed up operating income, which more than doubled to $5.48 million in the year, primarily from higher interest revenue. The lender held net finance contract receivables of $15.89 million as at March 31, compared to $20.34 million a year earlier, and had $7.04 million of debenture stock outstanding, down from $12.03 million in 2012.
Standard & Poor's cut Broadlands' rating and left it on a negative outlook after delays to the lender registering a new debenture prospectus. That created a strained funding profile and liquidity position, leaving Broadlands reliant on shareholder support.
The finance company took a $50,000 provision to cover potential fines and legal costs from a Reserve Bank prosecution over Broadlands not having enough independent directors on its board. Broadlands pleaded guilty at a hearing last month and will be sentenced on July 16.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- ‘We’re failing to consider these people are entitled to due process’ – Damien Grant on state’s ‘pernicious’ assets seizures
- Vector CEO Simon Mackenzie on what’s wrong with the transmission price review
- Paul Goldsmith says it’s hard to argue against stronger rules for the insolvency industry
- ASB's Nathan Penny says milk prices will continue to lift, following today's 50c increase to Fonterra's milk price forecast
- Methven's David Banfield talks market share and profitability