RIFCO Reports Net Income of $390K in Q4 - 149% increase



    RED DEER, AB, July 2 /CNW/ - RIFCO Inc. (TSX.V-RFC) today announced its
Q4 results and filed its audited consolidated financial statements for the
year ended March 31, 2008, and the related management's discussion and
analysis have been filed with Canadian securities authorities. Copies can be
obtained on SEDAR at www.sedar.com.

    Quarterly Results:
    ------------------
    Net income of $390K is being reported compared to $156K in the 4th
quarter of the prior year, an increase of 149%. EPS of $0.02 compares
favorably to $0.01 in the prior year.
    RIFCO's 4th quarter marks the eighth quarter of reported net profits out
of the last nine quarters.
    Loan originations increased 42.3% to $8.04M from $5.65M in the prior
year. Company revenues increased 53.1% to $2.71M from $1.77M in the prior
year. Operating expenses increased to $670K from $646K in the prior year
representing a modest 3.7% increase.

    
    Additional Q4 Highlights over the same quarter of the prior year:

    -   Managed finance receivables increased by 37.5%
    -   Securitization revenue increased 90.7%
    -   Applications processed increased by 47.5%
    -   Operating expense ratio reached a record low 9.40% from 12.14%
    -   Average managed cost of borrowing decreased to 6.90% from 7.59%
    -   Q4 annualized loan loss rate was 4.35%, reducing the annual average
        loss rate to 5.04% for the year
    

    On March 27th, 2008, RIFCO announced that it was discontinuing all repair
financing in favor of a dedicated focus on non-prime auto lending through
selected new and used auto dealers. The November 2007 launch of RIFCO's
on-line application system improved the Company's competitiveness and rapid
growth was experienced.
    RIFCO's repairer network had been established over the past six years. To
partially monetize this investment RIFCO formed a strategic alliance with a
third party provider, with experience as a point-of-sale lender, in exchange
for a referral revenue stream. RIFCO has now been able to redeploy human and
financial capital resources to fuel its focus on its rapidly growing auto
finance business. No unusual charges or gains are being recorded. The Company
expects ongoing improved overall efficiency as a result of its streamlined
focus.

    
    Statements of Income
    For the three months ended March 31                     2008        2007

    Revenue
    Loan Interest                                        562,042     494,788
    Income from Securitized assets                     2,032,270   1,065,573
    Administration and other fees                        117,510     213,759
    -------------------------------------------------------------------------
    Total Revenue                                      2,711,822   1,774,120
    Financing fees & insurance                           314,882     245,375
    Interest                                             175,999     145,100
    -------------------------------------------------------------------------
    Net financing Income                               2,220,941   1,383,645

    Provision for credit & prepayment Losses             919,028     507,615
    Repossession & recovery costs                         35,686      31,411
    -------------------------------------------------------------------------
    Net financing income after provision for losses    1,266,227     844,619

    Operating Expense
    Wages & Benefits                                     453,643     389,902
    Professional Fees                                     67,601      72,597
    Office & General                                     119,459     114,541
    Stock-based compensation                              22,789      59,301
    Amortization                                           6,594       9,735
    -------------------------------------------------------------------------
    Total Operating Expenses                             670,086     646,076

    Income before taxes                                  596,141     198,543
    Income Tax Recovery (expense)                       (206,608)    (42,252)
    -------------------------------------------------------------------------
    Net Income (loss)                                    389,533     156,294

    Earnings per share Basic/Diluted                        0.02        0.01
    


    Annual Results
    --------------
    For the year ending March 31, 2008, the company is reporting revenue of
$7,604,692, an increase of 16.7% from the $6,514,327 in the prior year.
Operating expenses increased by 10.3% to $2,388,649 from $2,165,941 in the
prior year. The Company achieved a net income after taxes of $539,994 compared
to a prior year's net income of $679,948. EPS was reduced to $0.03 from $0.04
in the prior year.
    RIFCO originated more than $24.93M in new finance receivables
corresponding to a 17.0% increase over the prior year originations of $21.30M.
As of March 31, 2008, managed finance receivables increased 37.6% to over
$30.17M compared to $21.92M a year earlier.
    RIFCO saw a reduction in net income from the prior year primarily due to
increased provisions for prepayments during the year.

    
    Other Noteworthy Annual Highlights:

    -   ROE of 8.49% from a prior year comparable of 14.75%
    -   Book value per share increased to $0.36
    -   Applications processed increased by 22.4%
    -   Operating expense ratio reached a record low 9.49% from 12.12%
    -   Efficiency Ratio improved to 50.17% from 53.92%
    -   Annualized Loss rate increased to 5.04% from 4.48%
    -   Average managed cost of borrowing decreased to 7.81% from 8.03%
    -   Delinquency over 30 days increased to 4.55% from 2.42%
    

    RIFCO is very pleased to report a second consecutive year with solid
profitability and that it is entering the 2009 fiscal year with strong growth
momentum.
    RIFCO entered the first half of the 2008 fiscal year with flat
quarter-over-quarter loan originations. This was strongly influenced by a very
competitive marketplace. RIFCO has reported that at that time, the Canadian
non-prime auto lending niche was predisposed to unsustainable risk pricing &
underwriting standards. In the second half of the year, we have seen an
overall tightening of credit standards, an increasing risk premium and a
desire by our international competitors to reduce their lending activities in
Canada. The competitive landscape in the Company's lending niche has become
more favorable.
    RIFCO has been able to capitalize on reduced competitive pressures.
Strong growth rates have been enjoyed within RIFCO's pricing and credit
underwriting standards. This, coupled with the success of its on-line loan
application solution, helped the Company achieve a 31% increase in loan
originations in the second half of the year vs. the first half of the year. We
see this strong growth momentum continuing as we increase our dealer base at a
measured rate.
    Progress in key quarterly metrics is clearly evident through the year.

    
    -------------------------------------------------------------------------
    ($000's except percentages)       Q4          Q3          Q2          Q1
    -------------------------------------------------------------------------
    Loans originated               8,040       6,102       5,152       5,640
    Total revenue                  2,712       1,763       1,634       1,496
    Average loss rate              5.04%       5.33%       5.20%       5.33%
    Net income                       390         176          57         (83)
    EPS                             0.02        0.01           -           -
    -------------------------------------------------------------------------
    

    It has been RIFCO's strategy over the last number of years to modify its
underwriting in order to focus on loans representing improved credit quality.
In the competitive auto loan marketplace, higher credit quality mix typically
results in reduced interest rate yield but provides improved operating
efficiencies and reduced loan losses. We have seen our interest rate yield
reduce to 20.75% from 22.44% in the prior year. Loan losses remain in the low
end of the Company's target range of its average loss rate of 5.0-6.0%.
    RIFCO's liquidity position remains good and sufficient to meet our near
term growth targets. RIFCO has experienced no interruptions to its financing
solutions since the ABCP issues became significant in August 2007. The Company
maintains a $7.5M senior debt facility from BMO Bank of Montreal for the build
up of finance receivables prior to loan securitization.
    On June 4th, 2007, RIFCO announced that it had obtained an additional
annual securitization facility of $30 million from Community Credit Union Ltd.
This facility was not used during the year as the Company worked through a
software integration work plan. Subsequent to year end this work plan was
completed and on May 30th, 2008 a first tranche of finance receivables was
sold into the facility.
    RIFCO continues to have two $30 million annual securitization facilities
available for a total capital available under securitization annually of
$60 million. Access to increasing amounts of low cost capital is important to
the Company's continuing growth aspirations.

    
    Statements of Income
    For the year ended March 31                             2008        2007

    Revenue
    Loan Interest                                      2,199,625   1,633,560
    Income from Securitized assets                     4,816,674   3,962,736
    Administration and other fees                        588,393     918,031
    -------------------------------------------------------------------------
    Total Revenue                                      7,604,692   6,514,327

    Financing fees & insurance                         1,053,529     912,556
    Interest                                             616,603     513,526
    -------------------------------------------------------------------------
    Net financing Income                               5,934,560   5,088,245

    Provision for credit & Prepayment Losses           2,584,044   1,677,830

    Repossession & recovery costs                        132,165      94,026
    -------------------------------------------------------------------------
    Net financing income after provision for losses    3,218,351   3,316,389

    Operating Expense
    Wages & Benefits                                   1,525,178   1,262,736
    Professional Fees                                    175,716     170,867
    Office & General                                     540,368     513,599
    Stock-based compensation                             110,593     182,109
    Amortization                                          36,794      36,630
    -------------------------------------------------------------------------
    Total Operating Expenses                           2,388,649   2,165,941

    Income before taxes                                  829,702   1,150,448
    Income Tax (expense) recovery - current             (214,208)   (293,500)
    Income Tax (expense) recovery - future               (75,500)   (177,000)
    -------------------------------------------------------------------------
    Net Income (loss)                                    539,994     679,948

    Earnings per share Basic/Diluted                        0.03        0.04

    Issued and Outstanding Shares                     19,229,598  19,229,598
    Fully Diluted Basis                               22,106,652  25,268,510
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    


    RIFCO's Annual Shareholders meeting will be held on September 10, 2008 at
3:00PM at the Red Deer Lodge, 4311 - 49th Avenue, Red Deer, Alberta. We look
forward to meeting with our shareholders and interested parties to share our
vision for the future.

    About RIFCO Inc.
    ----------------
    RIFCO is an auto purchase finance Company currently providing motorists
with near-prime/non-prime financing through a growing network of selected new
and used vehicle dealers operating in all provinces except Saskatchewan and
Quebec. RIFCO Inc. operates through its wholly owned subsidiary Repair
Industry Finance Corporation. The common shares of RIFCO INC. are traded on
the TSX Venture Exchange under the symbol "RFC". RIFCO Inc. has 19.23 million
shares outstanding.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release





For further information:

For further information: RIFCO INC., Lance A. Kadatz, Vice President and
Chief Financial Officer, Telephone: (403) 314-1214 Ext 111, Fax: (403)
314-1132, Email: kadatz@rifco.net, Website: www.rifco.net

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