Carfinco Achieves 32% Increase in Earnings per Fund Unit for 2006



    TSX: CFN.UN

    EDMONTON, March 27 /CNW/ - Carfinco Income Fund, Canada's leading
automotive specialty finance income fund, today announced its results for the
fourth quarter and year ended December 31, 2006.
    For the fourth quarter of 2006, revenues were $6.1 million, an increase
of 30.1% from revenue generated in the fourth quarter of 2005. Net earnings of
$1.7 million for the fourth quarter of 2006 represent an increase of 28.4%
from those posted in the fourth quarter of the previous year.
    Finance receivables grew by 4.0% for the fourth quarter of 2006 to a
total of $76.0. This represents an increase of 24.3% from the fourth quarter
of 2005. Loan originations stood at $12.9 for the final quarter of 2006, an
increase of 11.4% over the same period in 2005.
    Carfinco's 2006 year-end results also confirm the Fund's continuing
growth momentum. Finance receivables of $76.0 million for the year ended
December 31, 2006 represent an increase of 24.3% over those of $61.1 million
recorded in 2005, while expenses during this growth period rose 31.4% to
$15.7 million.
    Net earnings for 2006 increased 39.6% to $6.3 million while earnings per
unit rose 32.0%, from $0.25 per unit in 2005 to $0.33 per unit in 2006. 
Taxable income allocated to unitholders was $6.8 million, 92.8% of which was
distributed in cash, with the balance issued in additional trust units. 
Carfinco's total distribution of $0.357 per unit represents a 25.3% increase
over 2005.
    Return on unitholders' equity remained strong in 2006, at 44.6%.
    "The strong results Carfinco produced in 2006 are indicative of the
overall strength of our organization and the proven strategies that continue
to drive the success of our business model," said Tracy Graf, Chief Executive
Officer of Carfinco Income Fund. "Our leadership position as Canada's largest
independent alternative vehicle financing firm delivered solid returns and
rising value to our unitholders in 2006 and is expected to continue going
forward."
    In 2006, the Fund successfully increased its credit facility with its
primary lenders to $65 million through a syndicate partnership with Bank of
America and the Bank of Scotland (USA). This will enable Carfinco to extend
even more vehicle loans and reflects the Fund's positive relationship with its
banking partners.
    "We have every confidence for continued success in 2007," said Mr. Graf.
"Carfinco now operates in nine provinces, had relationships with 1,174 car
dealerships at year end and our recently activated agreements with online
lending portals is already producing the highest levels of loan applications
the Fund has ever experienced."

    About Carfinco

    A growth-oriented income trust, Carfinco focuses on providing consumer
car 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 units of the Fund trade on the Toronto Stock Exchange under the
symbol "CFN.UN".

    Caution Regarding Forward-Looking Statements - This news release contains
certain forward-looking statements, including statements regarding the
business and anticipated financial performance of the Fund. 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 values, except percentages
     and per fund unit amounts)

                                                   December 31,  December 31,
                                                          2006          2005
                                                  ------------- -------------

    Total revenue                                 $     21,932  $     16,406
    Net earnings                                  $      6,267  $      4,489
    Earnings per fund unit - basic and diluted    $       0.33  $       0.25
    Finance receivables                           $     75,989  $     61,134
    Funds advanced on finance receivables         $     45,208  $     39,533
    Unitholders' equity                           $     16,634  $     11,475
    Fund units outstanding                              20,508        18,579
    Book value per unit                           $       0.81  $       0.62
    Debt to equity ratio                                3.02:1        3.51:1
    Return on unitholders' equity                        44.6%         55.3%
    Return on average finance receivables                 9.1%          8.6%
    Average cost of borrowing                             6.8%          5.9%
    Operating expense ratio                              10.0%          8.7%
    Cash distributions per fund unit              $      0.333  $      0.249



    Consolidated Balance Sheets
    -------------------------------------------------------------------------

                                                   December 31,  December 31,
                                                          2006          2005
                                                  ------------- -------------

    Assets
      Finance receivables                         $ 75,988,710  $ 61,134,129
        Allowance for credit losses                 (3,860,000)   (3,460,450)
        Dealer reserve                              (2,700,751)   (1,619,245)
                                                  ------------- -------------
          Finance receivables - net                 69,427,959    56,054,434
                                                  ------------- -------------

      Cash                                             141,546       251,621
      Other assets                                     102,519        43,210
      Capital assets                                   341,987       227,269
      Deferred costs                                   125,549        62,111
                                                  ------------- -------------
                                                       711,601       584,211
                                                  ------------- -------------
                                                  $ 70,139,560  $ 56,638,645
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------

    Liabilities
      Bank credit facility                        $ 47,392,821  $ 39,059,586
      Accounts payable and accrued liabilities         651,248       737,098
      Deferred administration fees                   2,824,982     2,466,460
      Deferred dealer obligation                     2,448,348     2,324,400
      Deferred gain                                    188,071        76,579
      Long term debt                                         -       500,000
                                                  ------------- -------------
                                                    53,505,470    45,164,123
                                                  ------------- -------------
    Unitholders' Equity
      Unitholders' capital                          18,852,866    13,188,940
      Deficit                                       (2,218,776)   (1,714,418)
                                                  ------------- -------------
                                                    16,634,090    11,474,522
                                                  ------------- -------------

                                                  $ 70,139,560  $ 56,638,545
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------



    Consolidated Statements of Earnings and Deficit
    -------------------------------------------------------------------------

    For the years ended                            December 31,  December 31,
                                                          2006          2005
                                                  ------------- -------------
    Revenues
      Interest income                             $ 17,902,261  $ 14,287,438
      Administration fees                            4,029,327     2,118,944
                                                  ------------- -------------
                                                    21,931,588    16,406,382
                                                  ------------- -------------
    Expenses
      Interest                                       2,945,229     2,110,581
      Financing fees                                    83,571        50,878
      Provision for credit losses                    5,806,770     5,259,105
      Amortization of capital assets                    84,253        79,763
      General and administrative                     6,744,646     4,417,242
                                                  ------------- -------------
                                                    15,664,469    11,917,569
                                                  ------------- -------------
    Net earnings                                  $  6,267,119  $  4,488,813
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------
    Deficit, beginning of year                    $ (1,714,418) $   (972,701)
      Net earnings                                   6,267,119     4,488,813
      Unit distributions on fund unit equity          (490,384)     (661,958)
      Cash distributions on fund unit equity        (6,281,093)   (4,568,572)
                                                  ------------- -------------
    Deficit, end of year                          $ (2,218,776) $ (1,714,418)
                                                  ------------- -------------
                                                  ------------- -------------

    Earnings per fund unit - basic and diluted    $       0.33  $       0.25
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------



    Consolidated Statements of Earnings
    -------------------------------------------------------------------------

    For the three months ended                     December 31,  December 31,
                                                          2006          2005
                                                  ------------- -------------

    Revenues
      Interest income                             $  4,999,896  $  4,014,299
      Administration fees                            1,088,336       663,980
                                                  ------------- -------------
                                                     6,088,232     4,678,279
                                                  ------------- -------------
    Expenses
      Interest                                         843,213       650,508
      Financing fees                                    29,192        20,530
      Provision for credit losses                    1,638,704     1,411,084
      Amortization of capital assets                    24,197        17,646
      General and administrative                     1,877,610     1,273,908
                                                  ------------- -------------
                                                     4,412,916     3,373,676
                                                  ------------- -------------
    Net earnings                                  $  1,675,316  $  1,304,603
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------
    Earnings per fund unit - basic and diluted    $       0.09  $       0.07
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows
    -------------------------------------------------------------------------

    For the years ended                            December 31,  December 31,
                                                          2006          2005
                                                  ------------- -------------
    Increase (decrease) in cash and cash
     equivalents

    Operating
      Net earnings                                $  6,267,119  $  4,488,813
      Adjustments to reconcile net earnings to
       net cash from operations:
        Provision for credit losses                  5,806,770     5,259,105
        Amortization of capital assets                  84,253        79,763
        Accrued interest                              (331,327)     (232,629)
        Administration fees receivable              (2,629,568)   (2,352,932)
        Deferred administration fees                   358,522     1,266,956
        Deferred costs                                 (63,438)      (24,807)
        Deferred gain                                  111,492       (53,733)
        Deferred dealer obligation                     405,000             -
        Accounts payables and accrued liabilities      (85,850)      225,838
        Other assets                                   (59,309)        9,482
                                                  ------------- -------------
                                                     9,863,664     8,665,856
                                                  ------------- -------------
    Investing
      Funds advanced on finance receivables        (45,208,374)  (39,533,058)
      Principal collections on finance
       receivables                                  28,707,922    20,604,895
      Purchase of capital assets                      (198,971)     (143,136)
                                                  ------------- -------------
                                                   (16,699,423)  (19,071,299)
                                                  ------------- -------------
    Financing
      Advances on bank credit facility              13,633,235    12,998,262
      Repayments on bank credit facility            (5,300,000)   (1,600,000)
      Issuance of long term debt                     2,200,000       750,000
      Repayment of long term debt                   (2,700,000)   (4,175,000)
      Advances on unit purchase financing             (186,000)            -
      Repayments of share purchase financing                 -        36,282
      Fund units issued on private placement                 -     7,168,660
      Fund units issued on public offering           6,000,150             -
      Fund unit issue costs                           (640,608)     (406,247)
      Fund unit cash distribution                   (6,281,093)   (4,568,572)
                                                  ------------- -------------
                                                     6,725,684    10,203,385
                                                  ------------- -------------

    Net decrease in cash and cash equivalents         (110,075)     (202,058)

    Cash and cash equivalents
      Beginning of year                                251,621       453,679
                                                  ------------- -------------
      End of year                                 $    141,546  $    251,621
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------
    Supplemental cash flow information:
      Interest paid                               $  2,948,872  $  2,042,623
                                                  ------------- -------------
                                                  ------------- -------------

    -------------------------------------------------------------------------
    

    %SEDAR: 00019164E




For further information:

For further information: Mr. Tracy A. Graf, CEO & Trustee of Carfinco
Income Fund, Telephone: 1-888-486-4356, Facsimile: 1-888-486-7456, E-mail:
tgraf@carfinco.com

Organization Profile

Carfinco Financial Group Inc.

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