Allied still has future says MD Alloway

Allied Farmers managing director Rob Alloway. Photo / Dean Purcell

Allied Farmers' managing director, Rob Alloway, says he accepts the opinion of its auditors but believes the company does have a future despite concerns over its ability to continue operating.

In audited accounts filed to the stock exchange late on Thursday night, PricewaterhouseCoopers gave a qualified opinion and said it could not verify assumptions made in the report that the business could continue as a "going concern".

"We have been unable to obtain sufficient audit evidence upon which to form an opinion whether application of the going concern assumption remains appropriate," the auditors' report stated.

The auditors were also concerned valuations made on assets did not include any provisions should they be negatively affected by the tough environment for credit and borrowers.

"These financial statements do not include any adjustments that may need to be made to reflect the situation should the directors' estimates of the amount and timing of the cash flows from loans and advances, inventory - property and investment property prove to be inaccurate."

The auditors said they could not confirm the company's accounts were a true and fair view of its financial position after the collapse of its finance company Allied Nationwide.

Allied Nationwide was placed into receivership on August 20, just 10 days before the accounts were to be posted on the stock exchange.

"The pro-forma financial information is not prepared in accordance with generally accepted accounting practice. It has been prepared to quantify the impact of a non-adjusting subsequent event and is subject to the assumptions adopted by the directors, and the disclosures contained within the pro-forma financial information should be read in the context."

Alloway said of the criticism: "That is their opinion and we need to work with that. The directors are confident in the forecasts and have signed off on the accounts on that basis."

The auditors said the going concern assumption was based on the ability of the company to generate sufficient cashflow from initiatives in the report.

Those plans include raising new capital, finding an alternative funder for its rural services business and recouping $5 million in revolving credit facilities from its rural services business.

Allied Farmers had planned to raise up to $19 million in new capital but pulled it because of concerns expressed by the trustee over Allied Nationwide Finance.

Alloway said now that the finance business was no longer part of the company it would make it easier to raise capital.

"The capping of exposure to Allied Nationwide is only a good thing."

Shareholders Association chairman John Hawkins said the report was another blow to former Hanover investors. "The chances of them seeing any return on their investment is decreasing by the day."

Allied shares closed down 0.2c at 2.5c yesterday.

ALLIED'S SURVIVAL PLAN

* Raise new capital.
* Find an alternative financier for debt factoring for Allied Farmers Rural.
* Collection of $5 million of revolving credit debt.
* Sell more former Hanover loans and property assets.
* Repay its debt to collapsed subsidiary Allied Nationwide.