17 March 2010

$84m 'Deferred taxation' Potentially Worthless to South Canterbury Finance

I've added the following to my growing list of items of concern on South Canterbury Finance's balance sheet:

As at 31 Dec 2009, the company now has $84m in Deferred Taxation asset, in its balance sheet. In note 2 of the 30 June 2009 accounts the company states 'Future income tax benefits attributable to temporary differences are recognised in the financial statements to the extent that it is probable there will be future taxable profit to utilise these differences.' If the receivers were called in, the company would be likely to end up with tax losses that cannot be used. Put another way, should the company (or the user of the company's financial statements) conclude that the company is not likely to make profits in the future, this $84m on the balance sheet would be written off (or considered written off).

This brings the total to about $280m.

See here for the updated list:

Growing List of Uncertainties for South Canterbury Finance

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