Cynotech profit up 18%; Hawkins sees slowing lending growth

Tuesday 8th July 2008

Cynotech Holdings, the financing, ice-cream cone and satellite phone group whose chairman is 1980s highflier Allan Hawkins, posted an 18% gain in first-half profit on growth in lending.

Net income rose to NZ$1.2 million, or 2.3 cents a share diluted, from NZ$1.04 million, or 2.4 cents a year earlier, the Auckland-based company said in a statement. Revenue from operating activities rose 39% to NZ$7.6 million.

Total assets rose 22% to NZ$31.6 million though Hawkins, former boss of Equiticorp, said asset growth will be constrained by the impact of the global credit squeeze on financial firms. Shares of Cynotech, which trade infrequently, last changed hands at 12.5 cents on July 1, the lowest since October 2006.

"Receivables growth will be constrained for the foreseeable future as we curtail lending until the finance industry sorts itself out," Hawkins said.

"We do not expect a return to any sort of normality with the finance company markets until after the end of calendar 2009 and we believe the flow-on effects of the devastation in the fringe property development sector will continue long after that."

Cynotech will pay a first-half dividend of 5 cents a share, with a record date of August 5, its first such payment to its shareholders.

Hawkins said the company is concentrating on collection of the National Finance and Western Bay loan books it bought and the collection of the bad loans will provide cash flow and profit opportunities for the foreseeable future.

By Jonathan Underhill

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