Strategic Finance’’s B1 credit rating

Strategic Finance’’s B1 credit rating from Rapid Ratings re-confirmed

Rapid Ratings’ credit rating for Strategic Finance Limited (SFL) has been re-confirmed as B1 indicating that the company is operating at between 75 – 80% of its potential.

This rating is at 27 November 2003, and remains in place for 12 months unless there is a material change in the company.2

A Credit Rating of B1 suggests that, with respect to the risk of non-payment of corporate debts and/or the degree of risk of insolvency, the company is a moderate to low risk and somewhat subject to fluctuations in market conditions.

A Credit Rating of B1 also suggests that the business of Strategic Finance Limited is very good quality and that the company is investment grade. A rating below B3 is considered subinvestment grade.

This is the first re-rating for Strategic Finance Limited and confirms the rating issued in November 2002.

1 NBFC = Non- Bank Finance Company - Disclaimer: This report does not represent an offer or recommendation to trade in securities. It is a reference source and not a substitute for individual judgment. As far as we are aware, this report is based on reliable data and information, but we have not verified this or obtained an independent verification to this effect. We provide no guarantee with respect to accuracy or completeness of the data relied upon, and therefore the conclusions derived from the data. This report has been prepared at the request of, and for the purpose of, our client only and neither we nor any of our employees or contractors accept any responsibility on any ground whatsoever, including liability in negligence, to any other person. Finally, neither we nor any of our employees or contractors accept any liability whatsoever to any party for any indirect, direct or consequential loss of any kind arising from the use of the information contained in this document in any way whatsoever, unless (in respect only to our client) we are negligent in misinterpreting or manipulating the data. In that case, our maximum liability to our client is the amount of our fee for the report.

2 The rating may be reviewed, revised or withdrawn at any time by Rapid Ratings, if in the opinion of Rapid Ratings, there has been a material change in the financial performance or other risks of the company or its subsidiaries. Media Release: Strategic Finance Ltd’s B1 credit rating from Rapid Ratings is confirmed for a further year – December 2003

In the past year SFL has initiated a programme to implement recommendations for improvement made by Rapid Ratings in its 2002 report.

SFL continues to have a strong culture of corporate governance and continuous improvement in its management and operations Strategic Finance Limited is a private finance company that operates in New Zealand and Australia. Its principal activity is property lending including lending for various stages of property development.

This Credit Rating is based on a combination of (1) a software-based quantitative rating of B1 derived from running the financials of SFL through Rapid Ratings’ global corporate credit rating web service and (2) an extensive qualitative credit assessment process. No adjustment was required to the quantitative rating to reflect the additional assessment undertaken during the qualitative3 credit assessment. Thus, the qualitative performance of the company is on a par with its financial performance and position. In both the quantitative and qualitative areas, SFL is a moderate to low risk.

Rapid Ratings is a subsidiary of ASX listed Collection House Limited (CLH) in Australia. Rapid Ratings, which has offices in Wellington, Auckland, Brisbane, Sydney and Munich rates companies in Australia, Canada, China, Japan, Germany, New Zealand, the UK and the US. *For comparisons with ratings systems of other agencies, see tables 1 and 2 below.

Further Information: Strategic Finance Limited continues to demonstrate a strong financial performance, recording excellent profits in the past financial year with a good balance between interest revenue and fee income. The company continues to maintain conservative liquidity profile and has a sound asset/liability maturity profile. It is clear that SFL has taken a conservative position both in terms of liquidity and equity in the interests of providing extra security for investors.

SFL’s investments are primarily loans to the property development sector, that are generally considered higher risk, but SFL manages its risks well through sound management systems and procedures, a very good investment screening process and well-developed exit strategies. SFL has recently purchased commercial lending assets from an institutional lender that have the effect of broadening its asset base and strengthening monthly cash flows from loans, without any adverse impact on its funding.

SFL continues to benefit from excellent leadership from the CEO, a highly experienced and committed Board, very good corporate governance values and systems, and very good operational risk management.

Following its first 3 The Qualitative Credit Assessment is based on an assessment of the quality of the organisation at the time the review is undertaken. The assessment is based on an on-site discussion between the management of the organisation and Rapid Ratings personnel and on other information provided by the organisation or the market. The assessment incorporates an examination of governance risk (transparency, accountability and performance measurement) and operational risk (industry, market, compliance and regulatory, business continuity and financial.)

rating in November 2002 SFL responded to weaknesses identified in its business by instituting a programme of change to rectify those weaknesses and implement recommendations for improvement made by Rapid Ratings.

That programme is ongoing and demonstrates the company’s commitment to continuous improvement.

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