Geneva Finance Reports Six Monthly Profit

Media Release June 2009

Geneva Finance Reports Six Monthly Profit

Following eighteen months of repositioning, and after exiting a moratorium in April 2008 NZAX-listed Geneva Finance is seeing the fruits of its new strategy and business model, in the form of a $636,000 six-month pre-tax profit.

The upturn comes at the end of a 12-month period in which the company reported a $7 million after tax loss as the result of a debt write-off, arising from the asset quality review announced to the market in October 2008.

Company spokesman, Kruger Venter, advised “The repositioning process has seen Geneva completely overhaul it’s business model. This has involved five distinct strategies:

• A change in the target customer market. We have moved higher up the food chain, more and more we are now going head to head against the recognized mainstream lenders, the likes of UDC, Marac and GE.

• A move to a single site operation. This required the closure of all 22 branches and the consolidation of operations to the company owned site in Mt Wellington.

• A reduction in staff numbers from approximately 280 to just over 40;

• A reduction in operating overheads. Over the last year overheads have reduced by $12.7m per annum. However over the period of the repositioning process the annualized savings are closer to $19.0m per annum.

• The ongoing collection of the old residual ledger which was the subject of the asset quality review referred above.”

In addition to the above, the group position has been strengthened by the acquisitions of both the credit management and debt collection company, “Stellar Collections Ltd” and the captive insurance company, “Quest Insurance Group Limited”. These acquisitions were signaled in the April 2008 capital reconstruction.

The company exited its moratorium nearly 14 months ago, when the capital reconstruction plan was accepted by investors in April 2008. Since that time Geneva has repaid $48.0 million in principal and in addition has paid all interest (approximating $7.0m) to stockholders as it fell due.

In April 2009 Geneva’s banker BOS reaffirmed the company’s NZ$35m funding line through to 30 April 2011.

About the future, Mr. Venter advises the company remains positive but cautious, “Yes we have made good progress, our staff have been fantastic, and the feed back from all stakeholders is encouraging, but we are operating in a very difficult economic environment. For us the goal is very simple, each day we need to lift our game.”

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