Archive | Instant Finance

Instant Finance doubles profit

Published 21 December 2007

Instant Finance NZ Ltd (founder, chairman & major shareholder Nigel Nausbaum), one of New Zealand’s longest-established personal loan providers, has doubled its profit for the September half to a $2.45 million net surplus after tax.

 

Chief executive Richard de Lautour said the performance for this half-year “shows that profitability has been restored in line with historical levels.

 

“The profit result was driven by strong lending activity, made possible by Instant Finance’s access to substantial wholesale funding resources and confidence in the ongoing level of investor support. A marked decrease in impaired-asset expense was also a contributing factor.

 

“Unfortunately further industry failures over recent months have had an adverse impact on investor confidence and, as a result, Instant Finance intends to conservatively manage its lending activities in the second half of the year. While this policy will have some impact on profit, the full-year profit performance is expected to be significantly up on the March 2007 result.”

 

The company has been in business for 35 years and Mr de Lautour said it continued to maintain a strong balance sheet, with shareholders’ equity of $17.47 million representing 20.7% of total assets.  Loan receivables were up 3.6% from $67.39 million to $69.84 million. Total liabilities amounted to $66.8 million.

 

Instant Finance operates 18 branches throughout the North Island, has over 19,000 active loans and employs 125 staff.

 

Mr de Lautour explained a key difference between Instant and others in the finance industry which were struggling: “Unlike some in the industry, and particularly property financiers, Instant Finance’s loan portfolio generates significant weekly inwards cashflows, as all the loans are for relatively short terms and on a full principal-&-interest repayment basis.  Over the next 12 months, forecast cash inflows are $59.4 million while outflows are $45.6 million.

 

‘Whilst all key internal performance indicators are positive, it is particularly frustrating that a lack of investor confidence in the finance sector prevents the company from taking advantage of the considerable organic & acquisition growth opportunities presently available.”

 

Instant Finance has a B3 investment grade rating from Axis Ratings Ltd, which it has maintained since 2004. The company has a committed 3-year $30 million facility from Fortress Credit Corp, which can be extended to $50 million for a further 2 years at the company’s option.

 

Instant Finance also announced yesterday it had appointed John Bishop as a second independent director on 1 November. Mr Bishop is a qualified chartered accountant with extensive industry experience and was general manager of commercial & business banking at ASB Bank until 2003.

 

Earlier stories:

10 April 2007: Instant Finance gets $50 million acquisitions fund from Fortress

29 October 2006: Instance Finance renews B3 rating

 

Want to comment? Click on The new BD Central Forum or email [email protected].

 

Attribution: Company release, story written by Bob Dey for this website.

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Instant Finance gets $50 million acquisitions fund from Fortress

Published 10 April 2007


Personal loan provider Instant Finance NZ Ltd (founder, chairman & major shareholder Nigel Nausbaum) has acquisitions in mind after negotiating a $50 million facility from Fortress Credit Corp of New York.


Instant Finance signed a 3-year deal for $30 million with Fortress’ Australian branch on 30 March, with an option to increase that to $50 million for 5 years, and said today it had taken up the longer term.


Fortress Credit is a subsidiary of New York-listed fund manager Fortress Investment Group LLC. 87.4% of Instant Finance’s shares are held by interests associated with the families of Mr Nausbaum & fellow director Peter Mitchell.


Instant Finance chief executive Richard de Lautour said: “Instant Finance sees the availability of this facility principally as a resource to enable expansion by way of acquisition. We are aware of the potential for consolidation in the industry and this agreement will allow us to continue to pursue any quality opportunities that may present themselves…..


“We hope, over the next 3-4 months, some of these things will become apparent.”


Under the agreement, tranches of loan receivables will be securitised at face value via a separate entity, IF Receivables Ltd. Instant Finance will continue to manage the loans in the normal course of business and will retain the residual cashflows that arise from those loans. IF Receivables is owned by the IF Receivables Trust, for which NZ Guardian Trust acts as trustee.


Instant Finance provides personal loans to the public through 17 retail branches spread from Kaikohe in the north to Newtown, Porirua & Lower Hutt in the south, including 10 branches in greater Auckland. Its senior management & investment team is based in Greenlane.


Mr Nausbaum founded a predecessor, Manhattan Finance Ltd, in Panmure in 1971. In 2001 he amalgamated the 8 finance companies of the Instant Finance Group into Instant Finance NZ.


The bulk of its lending is personal loans between $200-$20,000, secured over household chattels, personal effects, vehicles or a combination of these items. It also issues mortgages supported by caveats as collateral security. In 2004, Instant Finance set up a business finance arm, lending $5-50,000 for business purposes.


The corporate profile says: “From an investor perspective the Instant Finance brand has strengthened significantly over the last 2 years,” adding an acknowledgment: “A small number of investors choose not to invest in debenture stock as they view Instant Finance as an unconscionable lender.”


In pursuit of its investment ambitions, Instant Finance got a review of its business operations & financial performance by Rapid Ratings Pty Ltd in 2004. The B3 investment-grade rating it got that year was confirmed in 2005 before Rapid Ratings withdrew from the New Zealand market. A new company, Risk Analysis Ltd, was established to continue performing credit ratings using Rapid Ratings’ rating systems, methodologies & templates.  Risk Analysis’ September 2006 review reconfirmed the B3 rating through to October 2007.


The company said its 2004 decision to seek a formal rating was part of a strategy to:

minimise the risks of exposure to funding constraints that might arise as a result of a New Zealand finance company failure and consequent lack of investor confidence
develop a broker network capable of producing consistent funding streams
reduce funding costs over the medium to long term, and
enhance the profile of the business from a banking perspective.

“Recent Securities Commission pronouncements suggest there will be increasing requirements for investment advisors to utilise credit-rating tools when making investment recommendations.”


Instant Finance’s performance figures for the March 2006 year included:

Net profit after tax:average net assets fell from 50% to 51%, but was well above the industry average of 27% given in KPMG’s annual financial institutions performance survey
Net profit after tax:average total assets fell from 8.2% to 6%, but was also well above the industry average, 4.4%
Net interest income:average total assets fell from 21% to 18.8%, compared to the industry average of just over 5%
Provision for doubtful debts:net loans rose from 3% to 3.1%, compared to the industry average of 0.9%
Net assets:total assets fell from 16.5% to 13.6%, compared to the industry average of 9.9%
asset backing:$100 of debenture stock fell from $108.41 to $107.84
Net finance receivables rose from $62.7 million to $71.7 million (average $3093/loan account, rising to $3313).

The September 2006 prospectus was for $75 million in debenture stock to develop & expand the business. At March 2006 it had $67.8 million of debenture stock borrowed at 9.24%, no bank facilities. It was earning 7.3% on a $9.3 million short-term bank deposit and had an effective interest rate of 28.27% on receivables.


The half-year accounts to September 2006 showed total operating income down from $14.1 million to $11.85 million and an after-tax surplus down from $2.5 million to $1.27 million. Equity was held at $16.15 million, including $8 million of retained earnings. Loan receivables were down marginally to $71.3 million, loans (through debenture stock to the company) were up from $60.2 million to $68.5 million.


Mr de Lautour said the debt ledger shrank slightly in 2006: “We pretty much took our foot off the accelerator.”


With “an absolute mistrust of banks,” Mr de Lautour said Instant Finance had switched early last year from a small – and unused – bank facility to holding about $8-11 million in cash in the bank.


Website: Instant Finance


 


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Attribution: Company release, accounts, new profile, phone interview, story written by Bob Dey for this website.

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Instance Finance renews B3 rating

Published 29 October 2006


Instant Finance NZ Ltd (Nigel Nausbaum) has been given a B3 investment grade rating by Risk Analysis Ltd (Ron Keene, Carterton), the local successor to global corporate credit rating agency Rapid Ratings.



That’s the same rating as Instant Finance held from Rapid Ratings, which expired at the end of August. Rapid Ratings decided to pull out of the New Zealand market this year because of a lack of demand for its services. However, after requests from Instant Finance & other finance companies, Risk Analysis Ltd resumed the service under licence.


Instant Finance chief executive Richard de Lautour said, when launching the company’s new prospectus recently, he believed it was important to invite the financial ratings experts to assess Instant Finance: “This is all about transparency and giving the everyday investor an opportunity to have an independent viewpoint about the quality of the investment opportunity. Being entrusted with people’s hard-earned money is a significant responsibility. At Instant Finance we recognise that investment involves a huge element of trust.


“At Instant Finance there is a separation of shareholder interest from the day-to-day management of the company. Management manage the business first & foremost, with the best interests of investors at heart.


“This assessment system involves a minimum of 125 hours’ analysing the company, including non-public data & interviews with all our key executives, and has produced a comprehensive report on our financial health. We are more than pleased to welcome this ratings system back to New Zealand and without a doubt it should be universally adopted in order to reassure investors that their money is in responsible hands.”


Mr Keene said: “What we provide is a true credit rating, not just a ranking, globally benchmarked against the industry and against global standards of ‘best practice’. Our rating scale also identifies the investment grade threshold recognised by the market. Instant Finance’s B3 credit rating suggests that the business of the company is of reasonably good quality. We noted that it has achieved a very good set of financial results, has a good record of profitability and is performing at a high level of financial efficiency.”


According to Rapid Ratings, Instant Finance was one of only 4 of the 15 New Zealand finance companies it assessed which publicly disclosed its rating.


Instant Finance made just over $7 million before tax for the March 2006 year, down from $7.6 million in 2005. It increased total assets from $68 million to $90 million and increased shareholders’ equity by 29%, from $12.4 million to $16 million, and held $9 million of cash reserves.


Mr de Lautour said Instant Finance managed customer loans personally through its network of 17 branches and didn’t rely on referrals from a dealer network or third party originators. “It is not unduly exposed to loans secured over motor vehicles sold at retail.”


Website: Instant Finance



 


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Attribution: Company release, story written by Bob Dey for this website.

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