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Elders Finance Continues To Improve On Performance


Elders Finance Continues To Improve On Performance

Leading financial services company, Elders Finance, has today released its charging group annual results for the year ended 30 June 2004 and has delivered a solid after-tax profit of $22 million, up from $19.6 million the previous year.

The announcement of the company's annual results was delayed while it incorporated new disclosure recommendations from the Securities Commission.

Commenting on the favourable result, Elders Finance Chairman Mark Hotchin said the company favoured a stable, consistent and prudent growth curve.

"Elders Finance has been around for a long time and we expect our conservative approach to ensure we will always be writing good business regardless of the state of the economy," he said.

The company paid out more than $46.2 million in interest to investors in secured deposits and capital bonds in the last financial year.

Operating revenue was $86.3 million, up 14.7 percent from $75.2 million the previous year. Total assets grew from $579 million to $691 million as at 30 June 2004. Total liabilities in the same period grew from $536 million to $645 million.

Mr Hotchin said the company's consistently strong growth record was attributable to investor appeal, prudent management and strong lending.

"Elders has focused on consolidation, efficiency and quality of loans to keep it on a path of solid profitability," said Mr Hotchin.

Liquidity has been maintained at a favourable level within the company. Elders finished the year with $82.5 million in the bank and $10.2 million in 'A' rated registered bank and corporate bonds.

Asset quality also improved, with impaired assets down to $3.3 million, from $18.5 million in 2003, and past due assets just $1.5 million, against a loan book of nearly $500 million principally secured over property assets.

Mr Hotchin said that related party loans, down at year-end to 10.45 percent of total assets, were all disclosed and had been conducted at arm's length.

He said the company continued to work on its programme of corporate governance improvements, in the last year having developed the powers and responsibilities of the Audit and Risk Committee.

"The Audit and Risk Committee improves our direct scrutiny of internal controls and policies and provides greater accountability," he said.

"We were also pleased to welcome Sir Tipene O'Regan onto the Board during 2004. He is a respected academic and business leader with a political, business and governance background. His board experience in the tourism, agricultural and natural resources sectors make him well-prepared to represent the interests of both shareholders and investors," said Mr Hotchin.

Mr Hotchin said the business outlook for Elders Finance going in to 2005 was very positive, with the current stable economic environment stimulating strong levels of lending activity.

"Industry is responding to favourable market conditions by investing heavily in development. We aim to attract the lion's share of the best quality financing contracts around," he said.

The company has been involved in a number of high profile loans, including a five-star hotel development in Queenstown, a bulk retail centre in Tauranga, a number of residential subdivisions and farming interests in the South Island.

Mr Hotchin said the market continues to be buoyant for both lending and investing, in line with wider economic forecasts. Recent business confidence surveys show that more than 80 percent of firms expect their own businesses to improve or continue as is for the coming year.

"We have not yet seen an ease in the market and continue to assess far more loan opportunities than we choose to take up," he said.

Elders Finance ranks in the top five financial services companies in New Zealand (by total assets) and is part of the Hanover Financial Services Group, New Zealand's largest privately owned financial services group.

A copy of Elders Finance's investment statement is available on request from the company. The securities offered are secured first ranking debenture stock (ranking is subject to prior permissible charges), unsecured and subordinated capital bonds. The offer of secured first ranking debenture stock is guaranteed by EFL Australia Pty Ltd (a wholly-owned subsidiary of Elders Finance Limited). Elders Finance is the sole issuer of the securities. No other member of the Hanover Financial Services Group guarantees the securities offered.

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