MTF reports half year profit of $4.7 million

Embargoed until 16:00 10 May 2013

MTF reports half year profit of $4.7 million

Profit after tax was $4.7m (31 March 2012: $2.4m)

New loan originations have continued to improve and are 12.2% ahead of last year.

Profit before commission and other gain (loss) is up 6% to $19.1m, resulting from strong interest margin, asset growth and funding efficiencies. Commission paid to shareholder originators increased 4% to $14.2m.

Operating expense, excluding bad debt, is up 21% on last year. Administration includes legal fees incurred in defence of High Court proceedings brought by the Commerce Commission. The court proceedings finished in November 2012, with judgement not delivered at the date of this report.

Depreciation and amortisation has increased 48%, in line with expectations, as a number of technology projects have been brought into production.

Total assets grew by $12.4m to $420.5m in the six months to 31 March 2013, with finance receivables up $11.4m on the back of steady sales. The success of the franchise network has aided in this turnaround, while dealer finance is still subdued but steady.

MTF is funded by a combination of committed bank facilities and securitisation. Securitised borrowings increased $14.0m to $334.2m, to fund growth in finance receivables. Securitisation facilities were increased $33.4m to $375.5m, with $41.3m undrawn at the end of the period. MTF has committed bank facilities of $37.0m, undrawn at 31 March 2013.

Capital, including preference shares, of $74.9m (17.8% of total assets) at 31 March 2013 provides a solid base for projected growth over the medium term.

MTF is a pioneer in a number of areas and the focus will continue to be on improving the customer and originator experience. For the customer, online access to account information is available through the MTF website, through the originating dealer website and on smartphone and tablet. For originators, a full suite of management reports is updated overnight and available online each day. Online origination provides an immediate answer, without a wait for ‘head office’ approval, which is beneficial to both customer and originator. Rapid 2, an upgrade to the loan origination system, is in pilot with a number of originators, who are providing useful feedback, based on actual operating conditions. Although there are some user refinements required, we are satisfied that the system provides the required regulatory and prudential controls, without compromising convenience and flexibility.

Sales have continued to grow steadily, as the momentum from the last half of 2012 has continued into 2013. Despite business and consumer confidence improving, pessimists continue to outnumber optimists, and until the level of confidence improves materially, demand for credit is likely to remain subdued.

The board and management are confident that the effort in implementing new funding programmes and system improvements place MTF in a position to turn challenge into opportunity.

ENDS

Visit us at www.mtf.co.nz

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