Strategic Finance announced after 5pm on Friday that it had made a loss for the financial year to June 30 of NZ$15.7 million, in line with a warning it gave on August 20.

The statement below from Strategic Finance did not detail its cash position, the size of the asset writedowns, the auditors notes, the amount of assets past due or the amount of shareholder equity left. We're' trying to get a full set of accounts. Please detail any queries you'd like answered in the comments below.

Strategic, which has frozen withdrawals on NZ$300 million of investor funds but is still paying interest, revealed its delayed repayment proposal to financial advisors last month and is finalising a recapitalisation proposal with its bank BOS International (Halifax Bank of Scotland).

The financial statements for the year ended 30 June 2008, which were recently indicated to the New Zealand Stock Exchange, have been confirmed today by the Board of Strategic Finance.

These are the first annual financial statements prepared under NZIFRS and audited by KPMG. The change in auditors was to align the Company's provider with the parent company to facilitate a more efficient audit.

The Audited result for the year ended 30 June 2008 was a net loss after tax of $15.7m (compared to net profit after tax to 30 June 2007 of $29.4m). The audit report was unqualified(1).

Net operating income increased by 20% from $60.6m in 2007 to $72.4m in 2008 however, due to current market conditions there has been a considerable increase in the allowance for credit impairment and Bad debts written off(2).

The loan book of the Company was extensively reviewed by KPMG as part of the audit of the financial statements, and a prudent position has been taken on the expected recoverability of the loans. Assets of $533m still outweigh liabilities of $459m, and the company's gearing ratio is almost 14% (compared to the industry-leading high of 17% last year).

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Strategic Finance

Kerry Finnigan, Chief Executive of Strategic Finance, said this was a very disappointing result and it had been an extremely difficult year.

"Our company has been caught between investor flight caused by the collapse of finance companies and other investment funds, and the bottom dropping out of the property development market.

"Nervousness and uncertainty about the property market has turned into pessimism. The result is infectious - we have accordingly had to take a prudent view of the value of our loans to the sector."