Public Transparency Vital to Finance Industry

Public Transparency Vital to Finance Industry

New Zealand must adopt a comprehensive and credible system of assessing finance companies according to one of the country’s longest established lenders.

Richard de Lautour, Chief Executive of Instant Finance, with more than 25 years’ industry experience, called for a rating system to be universally adopted by the more than 40 finance companies now trading in New Zealand.

Instant Finance has a B3 "Investment Grade" rating from Rapid Ratings Pty Ltd. According to Rapid Ratings, Instant Finance is one of only four of the fifteen New Zealand finance companies it assessed which publicly discloses its rating.

Presenting Instant Finance’s audited 2006 figures to investors, Richard de Lautour said: ‘Instant Finance has been in business for 35 years. Over the years we have developed prudent management systems and transparent communications with our investors. Due to Rapid Ratings’ withdrawal from the New Zealand market there is an urgent need to develop a methodology or system for assessing industry participants in order to reassure investors that their money is in responsible hands.’

`Many investors are rightly concerned about the difficulties being faced by some operators in the finance sector, particularly those involved with the financing of motor vehicles through retail motor vehicle dealers. As Instant Finance manages customer loans personally via its branch network and does not rely on referrals from a dealer network or third party originators, it is not unduly exposed to loans secured over motor vehicles sold at retail.’

Making public the 31 March 2006 financial statements following audit clearance from PricewaterhouseCoopers, Richard de Lautour announced that Instant Finance’s operating surplus before tax for the year was $7.028 million. This is marginally less than the record operating surplus of $7.6 million achieved in 2005, but it is nevertheless a very strong result. Instant Finance continues to maintain strong liquidity reserves. Total assets at 31 March 2006 were approximately $90 million (2005 $68 million). During the year, Shareholders equity increased by 29% from $12.44 million to $16.04 million which is comparatively high by industry standards. The Company continues to maintain a sound liquidity position with a positive liquidity profile and current cash reserves in excess of $9.0 million.

Richard de Lautour added: `We anticipate our operating surplus for the year ended 31 March 2007 will be below the 2006 result, due to lower loan activity resulting from a continued conservative lending approach in what is expected to remain a less buoyant business cycle. However, we have no doubt that the strength of our balance sheet combined with an experienced management team will provide Instant Finance with opportunities for growth over the medium term.’

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