Ann: HALFYR: MTF: MTF reports profit for half-yea

• Release Date: 04/05/12 19:23
• Summary: HALFYR: MTF: MTF reports profit for half-year ended 31 March 2012
• Price Sensitive: No
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MTF
04/05/2012 17:23
HALFYR

REL: 1723 HRS Motor Trade Finances Limited

HALFYR: MTF: MTF reports profit for half-year ended 31 March 2012

Motor Trade Finances Limited (MTFHC)

MTF reports half-year profit of $2.4 million

Profit after tax is $2.4 million (last year: $2.9 million).

Profit before commission and other gains (losses) is up 9% to $17.9m,
resulting from strong interest margin and funding efficiencies.  Commission
paid to shareholder originators increased by an equivalent 9%.

Unrealised losses on the fair value of financial instruments totalled $0.85m,
against a gain of $0.2m a year ago, and has driven profit after tax down to
$2.4m, compared to $2.9m last year.  Fair value revaluation is a point in
time accounting exercise, at the date of valuation, disclosing losses that
would occur only in the event of liquidation.  The revaluation has no impact
on cash flow or on future profits, since all assets and liabilities are
settled at face value.

Sales are tracking marginally ahead of last year and in recent months have
shown encouraging signs of continuing improvement.  Business and consumer
confidence remains fickle and demand for credit is likely to remain
inconsistent for some considerable time.  Market share, measured by PPSR
registrations, was 12.5% for March, an improvement on a previously steady
10%.

Total assets sit at $404.9m, down just 0.1% on 30 September 2011.  The
decline in finance receivables has slowed, with total finance receivables
down only 2.8% since September 2011.  Finance receivables consist of credit
contract and lease, with the operating lease book in run off since we
withdrew the product from the market in 2009.  The credit contract book has
been growing solidly since September 2011, with both credit quality and
income indicators meeting performance targets. Net interest income as a
percentage of finance receivables remains healthy at 10.1%, up from 8.6% a
year ago.

Capital at 31 March 2012, at 17.4% of total assets, is sufficient to underpin
projected growth over the near term.

The focus on credit quality in recent years has continued to produce
excellent results.  31+ day arrears continue to improve, and at the reporting
date stood at 0.93% (2011: 1.85%).  This has been achieved through a
systematic review of origination procedures to ensure quality, well
documented lending, to desirable customers, and through improved reporting
and active management.

Provisions total 1.3% of net receivables and are considered by management and
the board as adequate, given continuing economic uncertainty and actual
experience.

The global financial crisis prompted businesses to review everything and we
have made the necessary adjustments to most things we do to ensure we are
well placed to manage through the still uncertain times ahead.

Increasing regulation, a tough credit environment and the need to completely
rebuild our funding platform, at a time when volumes of new business have
been significantly less than previously experienced, have meant that
resources have been stretched and sometimes unable to meet all expectations.
Since 2007, staff numbers have been constant, operating expense maintained at
the same level, and yet we have continued to deliver improved returns, as
measured by return on assets and return on equity.

The AA(sf) rated bank warehouse structure, implemented in 2010, provides a
base from which to enter securitisation markets as they become more
accessible.  The work involved in putting this structure together has been
significant and the fact that our bankers have been more than willing to
provide support throughout the GFC, and in setting up the new funding
structure, is a reflection of the quality of the company and all its
stakeholders.

MTF is probably in a better position than it has ever been to face the
future.

With the funding issues of recent years behind us, the board and management
can now concentrate on executing growth strategies and looking for further
opportunities to improve performance and increase returns to shareholders.

Visit us at www.mtf.co.nz

For further information, please contact:

Angus Bradshaw
Managing Director
Motor Trade Finances Limited
phone: 03 467 7988,
email: [email protected]
End CA:00222576 For:MTF    Type:HALFYR     Time:2012-05-04 17:23:23