FNFC slides to 35m pounds loss in property crisis

FURTHER provisions against First National Finance Corporation's property portfolio have pushed the company to a retained loss of pounds 35m in the six months to 30 April, worse than for the whole of last year.

FNFC, a provider of second mortgages and home improvement loans, arrived at its pounds 16.9m property write-off on the basis of the offers it has received for its sites - even those which Tom Wrigley, FNFC's chief executive, described as ludicrous.

The company has taken this approach because of the problems valuers face in determining reliable values in the current stagnant property market.

Mr Wrigley said offers, even those too ludicrous for FNFC to accept, provided a more concrete basis than valuers could offer. He agreed this meant there might eventually be a writeback of part of the provisions.

FNFC is left with property valued at about pounds 58m. The group has decided to sell its undeveloped sites, rather than incur the costs of developing.

Both the consumer credit and commercial lending divisions again suffered losses because of bad and doubtful debts. Consumer credit lost pounds 12.8m, against pounds 13.7m in the previous half and pounds 6.5m in the same half last year.

Commercial lending losses came down sharply to pounds 5.5m from pounds 11.9m in the previous half. This business made a pounds 3.9m profit in the first half last year.

After central interest costs, this left FNFC with a pre-tax loss of pounds 22.6m, a deterioration from last year's pounds 6.2m but an improvement from the previous half's loss of pounds 27.5m.

Mr Wrigley said the group had seen a turnaround on the consumer credit side and had broken even in May. 'That's a big difference after a pounds 2m a month loss,' he said.

FNFC believes the new business it is writing 'is of excellent quality and should be very profitable'.

The commercial lending - loans secured against small and medium-sized business properties - is more dependent on the economy for improved results.

The company is not paying an interim dividend and is unlikely to make more than a nominal payment at the end of its year.