Carfinco Announces Year-End Results



    TSX: CFN.UN

    - Geographic and Online Expansion Leads to Record Loan Originations -

    EDMONTON, March 25 /CNW/ - Carfinco, Canada's leading automotive
specialty finance income fund, today announced financial results for the
fourth quarter and year ended December 31, 2007.

    
    Highlights:
      -  Achieved record performance in loan originations, revenues and
         finance receivables
      -  Expanded auto dealer network to 1,357 in nine provinces
      -  Successful web portal launch on Curomax (January) and
         DealerAccess (October)
      -  Increased senior debt facility to $85 million (further diversified
         facility with the addition of Bank of Montreal to the syndicate)
      -  Distributed 32.4 cents per unit to unitholders
    

    "2007 provided some of the biggest and most significant achievements in
Carfinco's history, due to the successful execution of our geographic and
online expansion strategy," said Tracy Graf, CEO of Carfinco. "As a result, we
are on schedule to reach the important target of $100 million in finance
receivables early in 2008."
    For the year 2007, Carfinco achieved record loan originations of
$72.1 million, up 34.3% versus last year. Revenues for the year were $26.0
million compared to $21.9 million one year ago, an increase of 18.7%. Finance
receivables grew $18.4 million, bringing the portfolio total at year end to
$94.4 million, a 24.2% year-over-year increase.
    Carfinco's impressive growth in finance receivables is having a positive
impact on revenues; however, the impact of non-cash contributions to the
allowance for credit losses is having a short-term negative impact on
accounting earnings. Although the Fund's Regular Program (under which most of
the new loans fall) incurs the lowest losses of all its programs, there is a
requirement to increase the Fund's Allowance for Credit Losses, which is a
component of the Provision for Credit Losses. This was a non-cash expense of
$2.6 million for 2007. Accounting earnings were also affected by two swap
agreements, which Carfinco entered into to effectively lock the interest rate
on $20 million of its debt facility. This was a prudent move operationally,
but resulted in a non-cash expense entry of $440,294 for 2007. As a result of
these two non-cash expenses, as well as increased G&A expenses related to the
increased volume of applications through the portals, net earnings for the
year were $3.9 million or 18 cents per unit, compared to $6.3 million or
33 cents per unit in 2006. Prior to the two non-cash expenses, net earnings
were $6.9 million compared with $6.7 million one year ago.
    For the fourth quarter, loan originations were $19.1 million, up 48.4%
versus the same quarter of 2006. Fourth quarter revenues were $6.7 million, up
9.6% compared to the fourth quarter of 2006. Prior to non-cash expenses,
earnings for the quarter were $1.9 compared to $1.8 for the fourth quarter of
2006. Net loss after non-cash expenses was $38,559 for the fourth quarter of
2007.
    Throughout 2007, Carfinco continued its monthly distribution of 2.7 cents
per unit for total distributions to unitholders of 32.4 cents for the year.
The Fund distributed 98.2% of its calculated distributable cash for 2007
compared to 94.0% in 2006. Return on unitholders' equity for 2007 was 18.9%.

    Activities During the Year

    Carfinco continued to expand its auto dealership network throughout 2007
with Ontario (532) and Atlantic Canada (275) passing Alberta (268) in terms of
number of dealerships. At year end, the total number of dealer relationships
stood at 1,357, up 15.6% from one year earlier. This growth reflects
increasing business from the online portals Curomax and DealerAccess, which
Carfinco joined during the first and third quarters, respectively.
    In June 2007, Carfinco completed an equity offering at $4.15 per unit for
gross proceeds of $11.5 million. The net proceeds of the offering were used to
repay a portion of the senior indebtedness of the Fund. In the normal course
of business, the equity and senior indebtedness provides the availability of
capital for the Fund to grow its finance receivables.
    Subsequent to year end, the Fund successfully increased its credit
facility to $85 million, with Bank of Montreal joining the syndicate
partnership with Bank of America N.A. and BoS (USA). This further diversifies
the Fund's capital sources and is an important vote of confidence that
reflects the differences between Carfinco's business of Canadian non-prime
automotive loans and the US sub-prime housing market.
    "Expanded credit capacity, continued market demand, and a much broader
geographic reach support our ambitious but achievable plans for 2008," added
Graf. "We will continue to focus on finance receivables growth, expansion of
our dealer network and accelerated momentum in our first full year with two
powerful online portals."

    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, 2007   December 31, 2006
                                      ------------------- -------------------
    Total revenue                        $        26,034     $        21,932
    Net earnings                         $         3,846     $         6,267
    Earnings per fund unit - basic
     and diluted                         $          0.18     $          0.33
    Finance receivables                  $        94,383     $        75,989
    Funds advanced on finance
     receivables                         $        64,532     $        45,208
    Unitholders' equity                  $        24,099     $        16,634
    Fund units outstanding                        23,306              20,508
    Book value per unit                  $          1.03     $          0.81
    Debt to equity ratio                          2.57:1              3.02:1
    Return on unitholders' equity                  18.9%               44.6%
    Return on average finance
     receivables                                    4.5%                9.1%
    Average cost of borrowing                       6.5%                6.8%
    Operating expense ratio                         9.5%               10.0%
    Cash distributions per fund unit     $         0.324     $         0.333



    Consolidated Balance Sheets
    -------------------------------------------------------------------------
                                       December 31, 2007   December 31, 2006
                                      ------------------- -------------------
    Assets
      Finance receivables                $    94,383,395     $    75,988,710
        Allowance for credit losses           (6,470,000)         (3,860,000)
        Dealer reserve                        (2,405,864)         (2,700,751)
                                      ------------------- -------------------
          Finance receivables - net           85,507,531          69,427,959
                                      ------------------- -------------------
      Cash                                             -             141,546
      Other assets                               637,569             102,519
      Capital assets                             366,952             341,987
      Deferred costs                                   -             125,549
      Future income taxes                         51,393                   -
                                      ------------------- -------------------
                                               1,055,914             711,601
                                      ------------------- -------------------
                                         $    86,563,445     $    70,139,560
                                      ------------------- -------------------
                                      ------------------- -------------------
    -------------------------------------------------------------------------
    Liabilities
      Bank credit facility               $    58,213,096     $    47,392,821
      Bank overdraft                             165,886                   -
      Accounts payable and accrued
       liabilities                             1,454,430             651,248
      Deferred administration fees                     -           2,824,982
      Deferred dealer obligation               2,190,247           2,448,348
      Deferred gain                                    -             188,071
      Derivatives                                440,294                   -
                                      ------------------- -------------------
                                              62,463,953          53,505,470
                                      ------------------- -------------------
    Unitholders' Equity
      Unitholders' capital                    29,583,190          18,852,866
      Deficit                                 (5,483,698)         (2,218,776)
                                      ------------------- -------------------
                                              24,099,492          16,634,090
                                      ------------------- -------------------
                                         $    86,563,445     $    70,139,560
                                      ------------------- -------------------
                                      ------------------- -------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Earnings, Comprehensive Income and Deficit
    -------------------------------------------------------------------------

    For the years ended                December 31, 2007   December 31, 2006
                                      ------------------- -------------------
    Revenues
      Interest income                    $    24,507,455     $    17,902,261
      Administration fees                      1,527,019           4,029,327
                                      ------------------- -------------------
                                              26,034,474          21,931,588
                                      ------------------- -------------------
    Expenses
      Interest                                 3,532,626           3,028,800
      Loss on derivatives                        440,294                   -
      Provision for credit losses             10,091,788           5,806,770
      Amortization of capital assets             110,457              84,253
      General and administrative               8,013,574           6,744,646
                                      ------------------- -------------------
                                              22,188,739          15,664,469
                                      ------------------- -------------------
    Net earnings and comprehensive
     income                              $     3,845,735     $     6,267,119
                                      ------------------- -------------------
                                      ------------------- -------------------
    -------------------------------------------------------------------------
    Deficit, beginning of year           $    (2,218,776)    $    (1,714,418)
      Net earnings                             3,845,735           6,267,119
      Unit distributions on fund unit
       equity                                          -            (490,384)
      Cash distributions on fund unit
       equity                                 (7,110,657)         (6,281,093)
                                      ------------------- -------------------
    Deficit, end of year                 $    (5,483,698)    $    (2,218,776)
                                      ------------------- -------------------
                                      ------------------- -------------------
    -------------------------------------------------------------------------
    Earnings per fund unit - basic
     and diluted                         $          0.18     $          0.33
                                      ------------------- -------------------
                                      ------------------- -------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Earnings, Comprehensive Income and Deficit
    -------------------------------------------------------------------------

    For the three months ended         December 31, 2007   December 31, 2006
                                      ------------------- -------------------
    Revenues
      Interest income                    $     8,582,377     $     4,999,896
      Administration fees                     (1,910,902)          1,088,336
                                      ------------------- -------------------
                                               6,671,475           6,088,232
                                      ------------------- -------------------
    Expenses
      Interest                                   998,490             872,405
      Loss on derivatives                        189,524                   -
      Provision for credit losses              3,881,889           1,638,704
      Amortization of capital assets              29,673              24,197
      General and administrative               1,610,458           1,877,610
                                      ------------------- -------------------
                                               6,710,034           4,412,916
                                      ------------------- -------------------
    Net earnings and comprehensive
     income                              $       (38,559)    $     1,675,316
                                      ------------------- -------------------
                                      ------------------- -------------------
    -------------------------------------------------------------------------
    Earnings per fund unit - basic
     and diluted                         $             -     $          0.09
                                      ------------------- -------------------
                                      ------------------- -------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows
    -------------------------------------------------------------------------
    For the years ended                December 31, 2007   December 31, 2006
                                      ------------------- -------------------
    Increase (decrease) in cash and
     cash equivalents

    Operating
      Net earnings                       $     3,845,735     $     6,267,119
      Adjustments to reconcile net
       earnings to net cash from
       operations:
        Provision for credit losses           10,091,788           5,806,770
        Amortization of capital assets           110,457              84,253
        Accrued interest                        (410,796)           (331,327)
        Administration fees receivable                 -          (2,629,568)
        Deferred administration fees          (2,824,982)            358,522
        Deferred costs                           125,549             (63,438)
        Deferred gain                           (188,071)            111,492
        Deferred dealer obligation               600,000             405,000
        Derivatives                              440,294                   -
        Accounts payables and accrued
         liabilities                             803,182             (85,850)
        Other assets                            (535,050)            (59,309)
                                      ------------------- -------------------
                                              12,058,106           9,863,664
                                      ------------------- -------------------
    Investing
      Funds advanced on finance
       receivables                           (64,531,592)        (45,208,374)
      Principal collections on finance
       receivables                            37,912,927          28,707,922
      Purchase of capital assets                (135,422)           (198,971)
                                      ------------------- -------------------
                                             (26,754,087)        (16,699,423)
                                      ------------------- -------------------
    Financing
      Advances on bank credit facility        26,220,275          13,633,235
      Repayments on bank credit facility     (15,400,000)         (5,300,000)
      Issuance of long term debt                       -           2,200,000
      Repayment of long term debt                      -          (2,700,000)
      Repayments (advances) on unit
       purchase financing                         82,666            (186,000)
      Fund units issued on public
       offering                               11,500,065           6,000,150
      Fund unit issue costs                     (903,800)           (640,608)
      Fund unit cash distribution             (7,100,657)         (6,281,093)
                                      ------------------- -------------------
                                              14,388,549           6,725,684
                                      ------------------- -------------------
    Net decrease in cash and cash
     equivalents                                (307,432)           (110,075)
    Cash and cash equivalents
      Beginning of year                          141,546             251,621
                                      ------------------- -------------------
      End of year                        $      (165,886)    $       141,546
                                      ------------------- -------------------
                                      ------------------- -------------------
    -------------------------------------------------------------------------
    Supplemental cash flow information
      Interest paid                      $     3,442,010     $     2,948,872
                                      ------------------- -------------------
                                      ------------------- -------------------
    -------------------------------------------------------------------------
    

    %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.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890