MANAGING DIRECTOR''S REPORT
Financial Result (12 months to 31st March 2016)
The after tax financial result for the year was a profit of $3.5m vs $2.2m in
2015.
Business Performance:
The group reported an after tax profit for the year of $3.5m (2015: $2.2m).
Net profit before tax amounted to $2.4m (2015: $1.5m)
All trading operating segments of the group reported profits and performed as
follows:
Geneva Financial Services (New Business Lending):
The improved profit (100% up from prior year) is a combined result of the
growing receivables ledger book and maintaining good asset quality during the
period. Lending increased by 26% on prior year volumes, resulted in the net
receivable ledger growing to $48.8m, an increase of $13.3m (37%) on the prior
year.
Quest Insurance Group (Insurance):
During February 16 this operation obtained an Issuer credit rating BB
(outlook stable) from AM Best and was recapitalized to qualify as a full
insurer. This has allowed Quest to exit the small insurer regime and the
maximum $1.5m annual premium limit no longer applies. Consequently during the
year the Company wrote $2.6m of premiums compared to $1.4m the prior year.
Quest is now ideally placed to focus on premium growth for the coming year
both externally and from within the Group.
Stellar Collections (Old Business Ledgers):
The Company reported a similar profit than the previous year. Though the key
focus continues to focus on collecting the old receivables ledger previously
owned by the parent, the Company is now actively pursuing third party
distressed ledgers to add to its portfolio.
Pacific Rise (Property):
During the period the property investment was transferred to the insurance
company (Quest) resulting in reduced dividend income earned by the Company
for the period.
Parent Company (Geneva Finance, Corporate):
The Group has approximately $8.0m (tax effected) of tax losses available and
has recognized additional $1.2m of deferred tax this period. Corporate and
governance costs continued to be carried by the Parent Company.
Revenues:
Operating revenues comprise interest from receivables ledgers of $9.2m up
$2.7m (+42%) on last year. Net insurance premium income of $1.4m down $0.1m
(-8%) on last year reflects the accounting treatment where the higher
premiums written referred to above are taken to profit over the life on the
policy, not the month of origination. Other income of $1.7m down $0.3m (-14%)
on last year is primarily a consequence of a lower dividend from the Groups
investment in a property operation.
Operating Costs:
Group''s total operating costs increased by 11% as a direct result of the
growth in the lending activity, e.g. Commissions paid to introducers of the
Group''s lending and insurance products, during the year.
Balance Sheet:
The net receivables ledger increased to $55.3m (+30%) as a result of the
increased lending. Term debt increased to $40.4m and includes an additional
$3.4m facility secured from a major trading bank. The Group''s equity to
assets ratio which decreased to 29.1% from 31.6% in the prior year still
remains conservative and positions the Group for further growth.
Executive share scheme:
During March 2016 all of the executive team exercised their share options
issued in August 2015. A total of 10,000,000 new shares were issued.
Funding:
The securitization facility''s annual review was completed in June 2015 and
the facility was extended through to July 2017.
Other Borrowings comprise funding sourced from eligible professional
investors and a 2 year banking term loan of $3.4m from a major trading bank.
Strategic Direction:
The Group remains committed to its core lending, insurance and debt
collection activities, with the primary focus on the motor vehicle and
consumer space. The profit improvement and conservative balance sheet ensures
the Group is ideally placed for further growth opportunities, both
organically or by way of acquisitions.
Summary and outlook:
This has been a pleasing year for the Group and we are highly satisfied with
the results, which position us well for the future. The company is now
delivering sustainable profits, and the outlook for the future is positive.
The key focus is to maintain and build on the growth achieved to date to
further enhance shareholder value."
Yours sincerely,
David O''Connell
Managing Director
End CA:00286478 For:GFL Type:ANNREP Time:2016-07-29 17:23:00