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Dorchester Pacific [NZX: DPC], the finance company whose shares have more than doubled since a capital restructure in 2010, posted full-year earnings growth that met last month's guidance and declared its first dividend in seven years.
Net profit jumped to $8.21 million for the year ended March 31, from $1.72 million a year earlier, and included a $1.67 million,interest prepayment relating to its convertible notes and a $3.23 million gain to bring tax losses onto the balance sheet, the Auckland-based company said in a statement. Sales increased 63 percent to $31.3 million.
Dorchester has turned itself around since convincing investors in 2010 to agree to a complex debt-for-equity swap, allowing the company to avoid the financial sector collapse that wiped out many of its rivals in the wake of the global financial crisis. Since then it has attracted shareholders such as the Business Bakery, whose principals were behind success stories such as 42 Below vodka, and added business including car loans and debt collection. The shares jumped 6.7 percent to 24 cents on the NZX today, up from about 12 cents at the end of 2010. The stock was as high as 36 cents in early 2013.
"The results reflect a completely transformed business with a strong, conservatively geared balance sheet and sustainable and growing trading profits," said chief executive Paul Byrnes, who directly owns 6.7 percent of the company, making him the third-largest investor after Hugh Green Investments and the Business Bakery.
Shareholders will receive a final dividend of 0.5 cents a share, amounting to, $2.5 million, or about 40 percent of Dorchester's underlying profit of $6.7 million.
Revenue from debt collection services, the biggest source of sales, jumped 120 percent to $17 million, reflecting the contribution from EC Credit, which was acquired in 2012. Revenue from its finance arm rose 31 percent to $6.87 million and insurance sales barely budged at $4.98 million.
The finance company owns the DPL Insurance and EC Credit brands and is chasing growth through acquisitions, buying Oxford Finance in March and boosting its stake in Turners Auctions last year. Dorchester reiterated its target of achieving annual pretax earnings of $15 million over the next two years.