GFL
28/01/2016 14:33
INTERIM
NOT PRICE SENSITIVE
REL: 1433 HRS GFNZ Group Limited
INTERIM: GFL: GFNZ - Half Year Report - 30 Sep 15
EXECUTIVE SUMMARY
Report from the Managing Director
GFNZ Group Limited reported an after tax profit of $1.5m vs a profit of $0.3m
in 2014.
Business Performance:
All trading entities reported profits before group overheads. The trading
operations generated a before tax profit of $1.99m less group overheads of
$0.98m resulting in a group before tax profit of $0.9m for the six months. A
deferred tax asset of $0.5m was also recognized during the period, resulting
in an after tax profit of $1.5m for the period.
The lending business, Geneva Financial Services (GFSL), delivered lending
growth in excess of 40% above last year. Operating costs were controlled and
Asset Quality was maintained, and as a consequence this business segment
delivered a satisfying $1.2m (138% up on last year) profit before tax and
group overheads.
Quest Insurance Group Limited (Quest): Total premiums sold by this operation
were 42% up on last year. Operating costs were controlled and the outcome was
a $0.3m profit (105% up on last year) before group overheads.
Stellar Collections (Stellar) continues to make steady progress. During the
year the period Stellar initiated its distressed debt acquisition strategy.
For the six months Stellar produced a profit of $0.4m (48% up on last year)
before group overheads
Pacific Rise Limited (PRL) produced a $0.1m profit before group overheads.
Balance Sheet:
The group's total asset increased by 37% to $60m. This is largely
attributable to the receivables ledger increasing as a result of higher
lending during the period. The company's equity to total assets ratio amounts
to 29.3%
Revenues:
The 31% increase in revenues was primarily attributable to the lending growth
in the GFSL with the consequential impact on interest income, insurance sales
and fee income.
Operating Costs:
In comparison the group's operating costs increased by 9% to 3.2m, a $0.3m
increase. The largest portion of this increase being the direct costs
associated with the 40%+ increase in lending volumes.
Funding:
The group has three components to its funding:
a. Geneva's receivables securitisation facility limit was increased to $35m
during the period. The facility was drawn to $31m at period end, a $10m
increase from prior period.
b. Stellar secured a $3.4m two year evergreen facility from one of the main
trading banks, which assisted to lower its cost of funds.
c. During the period Stellar also settled it's $5m professional investor debt
funding facility. The majority of these investors ($4.8m in value) reinvested
with GFNZ Group Limited. These funds will be applied to capitalize the
insurance operation (Quest) so it can exit the small insurer regime with the
balance utilized to further expand the trading operations. This debt funding
included loans from two directors.
Credit Rating:
The company does not currently have a financial credit rating but Quest
Insurance Group Limited is in the process of obtaining a rating from AM Best
to be in place by March 2016 financial year end. This in conjunction with the
recapitalization of Quest, referred to below, will position this company to
exit the small insurer regime and expand premium sales.
Strategic Direction:
The group remains committed to the core lending, insurance and debt
collections operations. From the lending perspective the focus is on building
on the momentum gained from the 40%+ growth on lending over the last six
month. Insurance premium sales will benefit from further lending growth but
there is also an opportunity to expand third party premium sales. The debt
collection company has a solid base and good cash flows and is actively
looking to expand. In addition now, the group has returned to profitability,
the group with its conservative balance sheet, is able to actively look for
acquisition opportunities.
Summary and outlook:
The $1.5m after tax profit is a satisfying result improving on the two prior
periods reported results. All the business segments were profitable and the
Group's equity ratio at 29% is conservative. The group is now actively
looking for expansion opportunities and the board remains committed to
further increasing shareholders wealth.
David O'Connell
Managing Director
End CA:00276924 For:GFL Type:INTERIM Time:2016-01-28 14:33:08
(20min delay)