South Canterbury Finance Breaks $1.5 Billion

Media Release
1 March 2007

South Canterbury Finance Breaks $1.5 Billion Total Assets

South Canterbury Finance Group has increased assets to more than $1.5 billion after a strong first half to 31 December 2006, booking a $7.6 million (39 percent) increase in net profit before tax on the same period last year to $27.2 million.

Chief Executive Lachie McLeod said that the record asset level was even more pleasing than the increase in profit, as it created a good platform for maintaining the momentum for the remainder of the year. “We are very comfortable with the current trading climate. Even though the market has now flattened out, we are on target to achieve a full year NPBT of $45 million, an increase of $5.7 million on last years $39.3 million.”

Highlights of the December first half included:
• Total assets at $1.5 billion, up 28 percent from $1.15 billion in December 2005
• Loan and leasing receivables up 34 percent from $926 million in December 2005 to $1.240 billion
• NPAT of $17.7 million (up 35 percent from $13.2 million)
• Bad debt write offs and provision stable at 0.045 percent of Total Receivables
• Debenture book grew $220 million or 20% on 31 December 2005 with an average retention rate of 80 percent
• Equity increased by 70 percent to $197 million

Mr McLeod said the increase in equity was a milestone for the industry. “We issued $65 million in the six months to 31 December 2006 with the majority of our existing Perpetual Preference Shareholders converting to the new Perpetual Preference Shares issued in November. This is a great vote of confidence in the company. Our investors recognise the credibility that comes with 80 years in business and a strong record of performance that South Canterbury Finance has achieved throughout its history.

“The growth in the debenture book of $220 million over the same time last year was testament to the confidence investors have in our business coupled with a very strong financial intermediary network. This is despite difficulties many finance companies had in attracting new funding”.

He says another big achievement was being assigned an investment grade rating by Standard & Poor’s in December. “The rating recognises our ongoing focus on managing risk and the quality of our historical and forecast earnings. We have high quality assets and no problem with arrears,” he says.

“All areas of the business contributed to the result. Business lending in Canterbury Finance, Palmerston North Finance, South Canterbury Finance (Timaru), plant and equipment lending division Face Finance and Tasman Bay Finance, which has had an impressive maiden result after opening in Nelson in the middle of last year, all had a strong first six months.”

ENDS

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