Hanover result impacted by development property market
The rapid deterioration in the commercial property development market, together with requirements under the
International Financial Reporting Standards (IFRS), have impacted heavily on Hanover’s result for the year ended 30 June
2009, says David Henry, Hanover Finance Chairman.
“As we reported to investors in September, property market indicators are still moving in a negative direction. When
Hanover entered into the Debt Restructuring Plan (DRP) last year we anticipated the property market stabilising and
potentially showing signs of recovery in late 2009 early 2010. However, there has been a significant deterioration in
the property development sector resulting in a disconnection between property valuations and the market value of
assets.”
Mr Henry said this had resulted in a larger number of borrowers being unable to repay or refinance their loans as they
fall due.
Directors are attempting to reach an appropriate balance between collecting sufficient funds to meet the repayment
schedule under the DRP, and adding value to those loans and other assets that are expected to yield better value if held
for a period of time. However, given current market conditions, the directors believe the financial result will fall
well short of our previous estimates and the expectations we know our investors have.
“The current forecast indicates we are no longer likely to achieve full repayment to investors under the DRP. Directors
have estimated the return to secured depositors is likely to be approximately 70 cents for Hanover Finance investors.
United Finance investors can expect estimated returns of approximately 90 cents. At this stage, we are unable to
forecast any repayment for subordinated note and bond holders.”
Mr Henry said this repayment estimate will depend upon whether further loan provisioning is required.
“Secured investors have already been paid 6c under the repayment plan.
“Directors, management and staff are disappointed with this forecast repayment . We have written to all investors today
to update them directly regarding this information,” said Mr Henry.
Shareholder Mark Hotchin said, despite this negative development, Hanover remains committed to providing the best
possible result for investors in light of these circumstances.
ENDS