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Mike Pero Mortgages reports strong result

20 April 2006

NOTICE TO NEW ZEALAND STOCK EXCHANGE AND MEDIA RELEASE

Mike Pero Mortgages reports strong result

Net Surplus after Taxation $1,413,767

Final Dividend of 1 cent per share with full imputation credits attached

Mike Pero Mortgages today announced an audited net surplus after taxation of $1,413,767 for the nine months ended 31 March 2006. The result is for a nine month period due to a change in balance date from 30 June to 31 March to match the balance date of the company’s new major shareholder, New Zealand Finance Holdings Limited.

2006: 9 months / 2005 12 months
Total operating revenue 13,502,748 13,208,655

Earnings before interest, taxation and depreciation 2,326,847 2,669,394
Depreciation and amortisation (80,265) (81,731)

Earnings before interest and taxation 2,246,582 2,587,663
Interest expense (178,094) (262,950)
Interest income 39,966 41,431

Net interest (138,128) (221,519)

Net surplus before taxation 2,108,454 2,366,144

Taxation (712,984) (749,624)

Net surplus before minority interests 1,395,470 1,616,520

Net deficit attributable to minority interests (18,297) -

Net surplus 1,413,767 1,616,520


Announcing the result Chief Executive Jeff Staniland said that the company had performed very well in the last nine months. On an annualised basis this would imply earnings of $1.9 million compared to the full year result to June 2005 of $1.6 million giving an 18% increase in earnings. The implied full year result is consistent with the forecast made to the market in December 2005.

“Mike Pero Mortgages has continued to demonstrate growth even in the face of a slowing economy and housing market. For the nine months to March 2006 our people arranged $1.2 billion of mortgages, another record for the company. Annualised that equates to $1.5 billion which is 16% up on last year. This on-going growth shows how well the Mike Pero model is performing,” Mr. Staniland said.

He said that the number of franchisees increased by three to forty four while the total number of mortgage brokers increased by six to fifty seven.

The company continued to increase its national coverage with a new franchise established in Timaru.

Mike Pero Insurances operations have also continued to grow. Revenue from risk insurance was up 70% on the same period last year. During the last nine months the Mike Pero Insurances brand was launched to the public with radio advertising having commenced recently. Mike Pero Insurances also purchased a 51% stake in a fire and general brokerage as part of its insurance growth strategy.

Financial Position as at 31 March 2006

The company’s financial position remained strong over the nine months to 31 March 2006.

Shareholders’ equity was $11,847,158 as at 31 March 2006. Equity as a percentage of total assets of $18,281,234 was 65% as at 31 March 2006.

Cash Flows During the Nine Months to 31 March 2006

Operating cash flows were $1,747,376 for the nine month period. Investing cash flows were ($462,857) and financing cash flows were ($1,230,730) for the period. After paying a final and interim dividend of 3 cents per share or $1,500,000 our net cash position increased slightly from last balance date to $313,581.

Dividend

Directors have declared a final dividend of 1 cent per share, fully imputed for taxation purposes.

The final dividend of 1 cent per share will be paid to shareholders on 21 July 2006 to all shareholders registered on 14 July 2006.

The Directors note that while the dividend is lower than that paid in previous periods this reflects their desire to reinvest profits in the company to promote further growth and profitability.

Prospects

“The company has continued to grow despite a slowdown in the economy and housing market. While the future of the economy is uncertain and these external factors may act as a drag on growth, we believe there is still capacity for further growth from a number of facets of our business model. The Board and Management will be focused on working with our staff and business owners to maximise these opportunities over the coming year,” Mr. Staniland said.

ENDS

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