GFL
31/07/2015 10:20
ANNREP
NOT PRICE SENSITIVE
REL: 1020 HRS GFNZ Group Limited
ANNREP: GFL: GFNZ Group Limited Annual Report - MARCH 2015
MANAGING DIRECTOR'S REPORT
Financial Result (12 months to 31st March 2015)
The after tax financial result for the year was a profit of $2.2m vs a loss
of $4.2m in 2014.
Business Performance:
The group reported an after tax profit for the year of $2.2m (2014: $4.2m
loss). Net profit before tax amounted to $1.5m (2014: $4.2m loss)
All trading operating segments of the group reported profits and performed as
follows:
Geneva Financial Services (New Business Lending):
March 15 pretax profit $1.5m (March 14 $0.6m). The improved profit
performance +$0.9m (+50%) was primarily attributable to both increased
lending volumes which were 61% up on the prior year and the continued focus
on asset quality. The increased lending delivered a 43% growth in the
receivables ledger. This growth was funded by a combination of the
Securitisation facility established in August 2013, and the group's own cash
resources. Maintaining lending growth and asset quality remains the key
management focus.
Quest Insurance Group (Insurance):
March 15 pretax profit $0.5m (March 14 $0.5m). The insurance business result
is satisfactory, given Quest is currently classified as a small insurer,
restricting the amount of annual premium it can write to $1.5m p.a. As a
consequence, premium originations of approximately $0.7m provided to Geneva
Financial services' customers were insured by other insurers. This impacted
Quest's performance for the year and the financial restructuring necessary to
remove this restriction was completed in June 15.
Stellar Collections (Old Business Ledgers):
March 15 pretax profit $0.6m (March 14 $5.5m loss). The profit achieved for
the year is a direct result of maintaining cash collections on these ledgers.
This is a pleasing result. Changes made to collection processes during the
year, contributed to this result and in conjunction with increased funding
availability, have positioned the company to actively explore new debt
business opportunities.
Pacific Rise (Property):
March 15 pretax profit $0.3m (March 14 $0.3m). The returns received from the
Company's shares in a property investment company were better than expected
due to an additional dividend received during the year.
Parent Company (GFNZ Group, Corporate):
March 15 pretax loss $0.1m (March 14 $0.2m loss): The Group has
approximately $9.0m (tax effected) of tax losses available and as a
consequence of the Group returning to profit in March 15 and forecasting a
profit for the next financial year the directors have determined that it is
appropriate to recognize a deferred tax of $0.6m on the Group's balance
sheet. The Parent Company result also includes a reduction of $0.6m
provision against a subsidiary loan which eliminates on consolidation.
Corporate and governance costs are carried by the Parent Company.
Revenues:
After four years of declining revenues the company grew revenue in the March
15 year by 2.8%. Operating revenues showed higher increases, with interest
from Receivables ledgers of $6.5m up $0.9m (+17%) on last year and insurance
premium income of $1.4m up $0.2m (+13%) on last year. These were offset by
reductions in other income which was down $0.8m (-29%) on last year. March 14
other income included a one of, non trading gain of $1.0m relating to debt
refinancing in August 2013.
Operating Costs:
Group's total operating costs reduced by 21%. The majority of this decrease
is related to establishment costs incurred and expensed in the prior year
setting up the securitization facility.
Balance Sheet:
The net receivables ledger increased to $41.8m. as a result of the increased
lending. Term debt increased to $26.9m, to fund the increase in the
receivables ledger. The group's equity to assets ratio increased to 31.6%, a
direct result of the rights issue settling in May 2014 and the current year
profit.
Rights Issue:
The rights issue settled in full in May 2014. This was fully underwritten by
Federal Pacific Group (cornerstone shareholder) and after taking up the
rights not taken up by existing shareholders their shareholding increased to
57.4%. The company shares on issue increased to 483m.
Funding:
The securitization facility's annual review was completed in June 2014 and
the facility was extended through to July 2016. The $30m facility was drawn
to $27m at balance date. Since year end this facility has been increased to
$35m. to accommodate planned growth of the receivables ledger.
Other Borrowings comprise funding sourced from eligible professional
investors. Since year end these have been refinanced at a lower interest cost
to the company.
An additional 2 year evergreen banking term loan of $3.4m was secured shortly
after year end from a major trading bank. This further diversifies the groups
funding and offers the opportunity for further expansion of the core business
activities.
Strategic Direction:
The main objective of 2015 was to get the group back into profitability.
Having achieved this the focus is now growth orientated, with the initial
concentration being in the core Lending, Insurance and debt collection
activities.
Summary and outlook:
The company returned to profit in the March 15 year and is forecasting an
improvement on this year's result next year. Growing and expanding our market
share, optimizing the insurance business potential and sourcing new debt
business are key to achieving this.
Yours sincerely,
David O'Connell
Managing Director
End CA:00267765 For:GFL Type:ANNREP Time:2015-07-31 10:20:46
(20min delay)