TSX: CFN
EDMONTON, March 18, 2013 /CNW/ - Carfinco Financial Group Inc. ("Carfinco" or the "Company") announces financial results for the fourth quarter and year ended December 31, 2012.
2012 was another strong year for Carfinco. Net earnings for 2012 were $20.6 million, an increase of $3.5 million from $17.1 million for 2011. The change in net earnings is mainly due to the increase in the finance receivables balance of $32.4 million in 2012 versus an increase of $25.2 million in 2011. Carfinco achieved its growth objectives with finance receivables increasing 21.5% during the year.
Return on shareholders' equity for 2012 was 52.2%, compared to return on fund unit equity of 55.5% in 2011.
HIGHLIGHTS
- Earnings per share for 2012 of 84 cents;
- Dividends to shareholders of 47 cents per share during 2012;
- Return on shareholder's equity for the year of 52.2%;
- Record loan originations of $149.6 million for 2012;
- Record principal balance of finance receivables at the end of 2012 of $201.5 million;
- 31+ day delinquent accounts for the fourth quarter of 2012 were 3.2%.
Revenues of $71.8 million for 2012, increased 20.5% from the revenues of $59.6 million for 2011. Revenues of $19.2 million for the fourth quarter of 2012 represent an increase of 5.3% from the $18.2 million for the third quarter of 2012 and a 16.1% increase from the $16.5 million for the fourth quarter of 2011.
Loan originations for 2012 were $149.6 million, a 28.6% increase from $116.3 million in 2011. Loan originations of $40.1 million for the fourth quarter of 2012 was a 0.8% decrease from the $40.4 million in loan originations for the third quarter of 2012 and an increase of 24.4% from the $32.2 million in the fourth quarter of 2011.
Finance receivables at the end of 2012 were $182.8 million, an increase of 21.5% from $150.5 million for 2011.
For the fourth quarter of 2012 earnings were $5.0 million, versus $5.6 million in the third quarter of 2012 and $4.4 million in the fourth quarter of 2011. Loan originations remained steady at $40.1 million in the fourth quarter, with the decline in vehicles being financed during the holiday season, versus $40.4 million in the third quarter. The annualized loss rate on the finance receivables increased 2.3% from 12.8% to 15.1% during the fourth quarter. Management continues to evaluate loan losses on a geographical basis and program level and has implemented modifications to our credit and collection policies where required.
31+ days delinquent accounts for the fourth quarter of 2012 were 3.2% versus 2.7% for the third quarter of 2012 and 2.9% for the fourth quarter of 2011.
On January 1, 2012, Carfinco Income Fund converted from an income fund to a public corporation with the name changed to Carfinco Financial Group Inc. The shares were listed on the TSX on January 3, 2012 under the symbol "CFN."
During 2012, Carfinco distributed $11.6 million to shareholders, or 47 cents per share, this represents 51.5% of distributable cash. Carfinco continues to maintain a dividend to its shareholders, currently set at 4.0 cents per share per month.
Management continues to target growth of the finance receivables while focusing on maintaining acceptable levels of delinquencies and credit losses.
About Carfinco Financial Group Inc.
Carfinco focuses on providing consumer vehicle loans to borrowers unable to obtain financing through traditional lending sources. A network of select independent and franchise dealerships offer Carfinco's payment plan to their customers who must, along with the vehicle, meet Carfinco's underwriting guidelines. The shares of the company trade on The Toronto Stock Exchange under the symbol "CFN".
Caution Regarding Forward-Looking Statements - This news release contains certain forward-looking statements, including statements regarding the business and anticipated financial performance of the company. These statements are subject to a number of risks and uncertainties. Actual results may differ materially from results contemplated by the forward-looking statements. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and should not place undue reliance on such forward-looking statements.
Selected Annual Information and Key Financial Ratios
($000's for stated value, except percentages, shares (fund units) outstanding and per share (fund unit) amounts)
December 31, 2012 | December 31, 2011 | |||
Total revenue | $ | 71,809 | $ | 59,584 |
Net earnings and comprehensive income | $ | 20,591 | $ | 17,122 |
Normalized earnings before taxes | $ | 27,883 | $ | 23,335 |
Earnings per share (fund unit) - basic and diluted | $ | 0.84 | $ | 0.70 |
Loan originations | $ | 149,613 | $ | 116,322 |
Shareholders' equity (Unitholders' equity) | $ | 43,968 | $ | 34,960 |
Shares (fund units) outstanding | 24,645,230 | 24,645,230 | ||
Book value per share (fund unit) | $ | 1.78 | $ | 1.42 |
Dividends per share (fund unit) | $ | 0.470 | $ | 0.360 |
Financial leverage ratio | 2.97:1 | 3.15:1 | ||
Return on shareholders' equity (unitholders' equity) | 52.2% | 55.5% | ||
Average portfolio yield | 43.1% | 43.2% | ||
Annualized loss rate | 12.9% | 12.9% | ||
Return on portfolio assets | 12.4% | 12.4% | ||
Pre-tax return on portfolio assets | 16.6% | 16.8% | ||
Average cost of borrowing | 5.2% | 5.2% | ||
Operating and other expense ratio on portfolio assets | 8.6% | 8.9% |
Consolidated Statements of Financial Position | |||||||||
December 31, | December 31, | ||||||||
2012 | 2011 | ||||||||
Assets | |||||||||
Finance receivable | $ | 182,842,663 | $ | 150,463,909 | |||||
Allowance for credit losses | (9,250,000) | (7,150,000) | |||||||
Finance receivables - net | 173,592,663 | 143,313,909 | |||||||
Cash | 459,498 | 937,994 | |||||||
Inventories | 313,014 | 239,453 | |||||||
Other assets | 1,172,998 | 1,167,268 | |||||||
Equipment | 550,261 | 344,736 | |||||||
Deferred tax assets | 453,340 | 264,702 | |||||||
2,949,111 | 2,954,153 | ||||||||
$ | 176,541,774 | $ | 146,268,062 | ||||||
Liabilities | |||||||||
Bank credit facility | $ | 126,787,937 | $ | 102,675,941 | |||||
Accounts payable and accrued liabilities | 697,672 | 1,205,892 | |||||||
Taxes payable | 2,363,670 | 5,106,667 | |||||||
Deferred dealer obligation | 2,076,396 | 2,068,762 | |||||||
Interest rate swaps | 484,665 | 250,317 | |||||||
Deferred lease inducement | 163,590 | - | |||||||
132,573,930 | 111,307,579 | ||||||||
Shareholders' / Unitholders' Equity | |||||||||
Share capital | 35,119,425 | - | |||||||
Fund unit equity | - | 35,119,425 | |||||||
Retained earnings (deficit) | 8,848,419 | (158,942) | |||||||
43,967,844 | 34,960,483 | ||||||||
$ | 176,541,774 | $ | 146,268,062 |
Consolidated Statements of Earnings, and Comprehensive Income | |||||
December 31, | December 31, | ||||
For the years ended | 2012 | 2011 | |||
Financial revenue | |||||
Interest revenue | $ | 66,193,874 | $ | 55,663,538 | |
Fee and servicing income | 5,614,878 | 3,920,297 | |||
Total revenue | 71,808,752 | 59,583,835 | |||
Financial expenses | |||||
Interest expense | 5,917,276 | 5,052,664 | |||
Provision for credit losses | 23,651,197 | 19,486,096 | |||
Loss (gain) on interest rate swaps | 234,348 | (298,279) | |||
Total financial expense | 29,802,821 | 24,240,481 | |||
Net financial income before operating and other expenses and taxes | 42,005,931 | 35,343,354 | |||
Operating and other expenses | |||||
General and administrative | 14,182,284 | 11,506,221 | |||
Depreciation of equipment | 175,451 | 203,954 | |||
Conversion costs | 35,789 | 652,845 | |||
Gain on unit based payment obligation | - | (143,604) | |||
Total operating and other expenses | 14,393,524 | 12,219,416 | |||
Earnings before taxes | 27,612,407 | 23,123,938 | |||
Taxes | |||||
Current | 7,210,426 | 5,106,667 | |||
Deferred (recovery) | (188,638) | 895,651 | |||
Total taxes | 7,021,788 | 6,002,318 | |||
Net earnings and comprehensive income | $ | 20,590,619 | $ | 17,121,620 | |
Earnings per share / fund unit | |||||
Basic and diluted | $ | 0.84 | $ | 0.70 |
Consolidated Statements of Changes in Equity | |||||||||
Retained | |||||||||
earnings | |||||||||
Fund unit equity | Share capital | (deficit) | Total | ||||||
Balance, January 1, 2011 | $ | 35,119,425 | $ | - | $ | (8,416,613) | $ | 26,702,812 | |
Net earnings | - | - | 17,121,620 | 17,121,620 | |||||
Cash distributions on fund unit equity | - | - | (8,863,949) | (8,863,949) | |||||
Balance, December 31, 2011 | 35,119,425 | - | (158,942) | 34,960,483 | |||||
Conversion under plan of | |||||||||
arrangement | (35,119,425) | 35,119,425 | - | - | |||||
Net earnings | - | - | 20,590,619 | 20,590,619 | |||||
Cash dividends on shares | - | - | (11,583,258) | (11,583,258) | |||||
Balance, December 31, 2012 | $ | - | $ | 35,119,425 | $ | 8,848,419 | $ | 43,967,844 |
Consolidated Statements of Cash Flows | |||||||||
December 31, | December 31, | ||||||||
For the years ended | 2012 | 2011 | |||||||
Increase (decrease) in cash | |||||||||
Operating activities | |||||||||
Net earnings | $ | 20,590,619 | $ | 17,121,620 | |||||
Non-cash items included in net earnings | (29,193,814) | (25,360,389) | |||||||
Changes in operating assets and liabilities | (34,327,000) | (26,164,461) | |||||||
Interest received | 46,147,154 | 38,989,139 | |||||||
Interest paid | (5,729,732) | (4,887,279) | |||||||
Income taxes paid | (9,953,422) | - | |||||||
Net cash used in operating activities | (12,466,195) | (301,370) | |||||||
Investing activities | |||||||||
Purchase of equipment | (380,976) | (196,283) | |||||||
Net cash used in investing activities | (380,976) | (196,283) | |||||||
Financing activities | |||||||||
Advances on bank credit facility | 32,290,954 | 14,956,601 | |||||||
Repayments on bank credit facility | (8,050,000) | (5,400,000) | |||||||
Deferred transaction costs | (289,021) | (163,293) | |||||||
Cash dividends to shareholders | (11,583,258) | - | |||||||
Fund unit cash distributions | - | (8,863,949) | |||||||
Proceeds on exercise of fund unit options | - | 66,668 | |||||||
Net cash provided by financing activities | 12,368,675 | 596,027 | |||||||
Net (decrease) increase in cash | (478,496) | 98,374 | |||||||
Cash, beginning of year | 937,994 | 839,620 | |||||||
Cash, end of year | $ | 459,498 | $ | 937,994 |
SOURCE: Carfinco Financial Group Inc.
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Mr. Tracy A. Graf
CEO & Director of Carfinco Financial Group Inc.
Telephone: 1-888-486-4356
Facsimile: 1-888-486-7456
E-mail: [email protected]
Web site: www.carfinco.com
The Howard Group Inc.
Jeff Walker
Investor Relations
Telephone: 1-888-221-0915
E-mail: [email protected]
Web site: www.howardgroupinc.com
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