Carfinco Announces 2007 Second Quarter Results



    TSX: CFN.UN

    EDMONTON, Aug. 8 /CNW/ - Carfinco Income Fund, Canada's leading
automotive specialty finance income fund, today announced its results for the
second quarter of 2007.

    
    Highlights:

    -   Impressive growth in finance receivables
    -   Higher revenue over Q1 2007
    -   Stable cash distributions
    -   Completed a bought deal to repay a portion of the senior indebtedness
    

    "Carfinco's second quarter was extremely active, especially for loan
originations, which were at their highest level ever, thanks to business
coming in through Curomax, an online portal," said Tracy Graf, President and
CEO of Carfinco. "With a second portal, DealerAccess, anticipated to pilot
this month, we've invested in infrastructure to meet the volume of loans we
administer. These investments will be beneficial to the Fund and our
Unitholders in the long term."
    At $19.3 million, loan originations increased 26% in Q2 2007 from
$15.3 million during the second quarter of 2006, and increased 52% or
$6.6 million over the first quarter of 2007. This reflects both the impact of
the Curomax portal and increased application volume compared to the
traditionally slower first quarter.
    Most of the Fund's other key areas grew in the second quarter of 2007.
Finance receivables were $83.5 million, a year-over-year increase of 22% from
$68.7 million for the second quarter of 2006 and higher than $76.3 million in
the first quarter of 2007. Revenues stood at $6.4 million, a 21% increase from
$5.3 million recorded revenue for the second quarter of 2006, and higher than
Q1 2007 revenue of $6.0 million. Correspondingly, Carfinco's net earnings were
$1.5 million in the quarter, equal to the amount posted in the second quarter
of 2006, but slightly below $1.6 million stated for the first quarter of 2006.
    The lower net earnings figure comes as a result of the surge in
Carfinco's loan originations. 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 for
these loans, as there is no Dealer Reserve contribution on the Regular
Program. This appears as a non-cash expense on the statement of earnings,
through the provision for credit losses. A second factor affecting net
earnings is higher loan administration and salary and benefits expenses as
Carfinco augments personnel and resources to manage the larger loan portfolio.
    Earnings per unit stood at $0.07, basic and diluted.
    Through the first quarter of 2007 monthly cash distributions to
Unitholders remained consistent with the first quarter of 2007, at $0.027 per
trust unit. The Fund's plan is to maintain the current level of cash
distributions until earnings growth exceeds the non-cash contribution to the
Allowance for Credit Losses, cited above. The total year-to-date cash
distribution per unit, as at June 30, 2007, stood at $0.162.
    Carfinco will launch a pilot program with a second online portal,
DealerAccess, in the third quarter of 2007. This portal will become fully
operational in the coming months and is expected to have a positive impact on
loan originations, as has Carfinco's relationship with Curomax.
    In order to ensure the availability of capital to grow finance
receivables, the Fund repaid a portion of its senior indebtedness from the
proceeds of a bought deal financing. The deal, which successfully closed at
$4.15 per Unit on June 21, 2007, generated gross proceeds of $11.5 million.
    "Carfinco's business performed well in the second quarter and we
anticipate strong application volume in the third quarter," said Mr. Graf.
"The Fund has made the investments necessary to make sure that our current
volume of business is managed well and that we can successfully integrate new
loans as they come in, for the benefit of our customers, employees and
Unitholders."

    About Carfinco Income Fund

    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.


    
    -------------------------------------------------------------------------
    Carfinco Income Fund
    Consolidated Balance Sheets
    -------------------------------------------------------------------------

                                            June      December          June
                                        30, 2007      31, 2006      30, 2006
                                    ------------- ------------- -------------
                                      (unaudited)     (audited)   (unaudited)

    Assets
      Finance receivables           $ 83,539,696  $ 75,988,710  $ 68,676,130
        Allowance for credit
         losses                       (3,895,500)   (3,860,000)   (3,610,000)
        Dealer reserve                (2,256,866)   (2,700,751)   (2,668,172)
                                    ------------- ------------- -------------
          Finance receivables
           - net                      77,387,330    69,427,959    62,397,958
                                    ------------- ------------- -------------

      Cash                                77,247       141,546       120,509
      Other assets                       645,340       102,519       123,430
      Capital assets                     392,899       341,987       258,901
      Deferred costs                      67,768       125,549        54,882
      Future income taxes                 51,393             -             -
                                    ------------- ------------- -------------
                                       1,234,647       711,601       557,722
                                    ------------- ------------- -------------

                                    $ 78,621,977  $ 70,139,560  $ 62,955,680
                                    ------------- ------------- -------------
                                    ------------- ------------- -------------
    -------------------------------------------------------------------------

    Liabilities
      Bank credit facility          $ 44,553,759  $ 47,392,821  $ 43,878,258
      Accounts payable and
       accrued liabilities             1,006,585       651,248       958,031
      Deferred administration fees     3,195,483     2,824,982     2,628,418
      Deferred dealer obligation       2,585,144     2,448,348     2,339,132
      Deferred gain                      117,185       188,071        49,714
      Long term debt                           -             -     1,600,000
                                    ------------- ------------- -------------
                                      51,458,156    53,505,470    51,453,553
                                    ------------- ------------- -------------

    Unitholders' Equity
      Unitholders' capital            29,583,190    18,852,866    13,002,940
      Deficit                         (2,419,369)   (2,218,776)   (1,500,813)
                                    ------------- ------------- -------------
                                      27,163,821    16,634,090    11,502,127
                                    ------------- ------------- -------------

                                    $ 78,621,977  $ 70,139,560  $ 62,955,680
                                    ------------- ------------- -------------
                                    ------------- ------------- -------------
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
    Carfinco Income Fund
    Consolidated Statements of Earnings and Deficit
    -------------------------------------------------------------------------

                      Three months ended June 30    Six months ended June 30
                              2007          2006          2007          2006
                      ------------- ------------- ------------- -------------
                        (unaudited)   (unaudited)   (unaudited)   (unaudited)

    Revenues
      Interest
       income         $  5,270,750  $  4,292,307  $ 10,173,417  $  8,153,052
      Administration
       fees              1,126,951       998,120     2,211,887     1,952,757
                      ------------- ------------- ------------- -------------
                         6,397,701     5,290,427    12,385,304    10,105,809
                      ------------- ------------- ------------- -------------

    Expenses
      Interest             839,426       666,340     1,624,794     1,275,403
      Financing fees        28,891        19,371        57,781        35,398
      Provision for
       credit losses     1,859,657     1,365,874     3,470,446     2,666,094
      Amortization of
       capital assets       26,479        18,788        52,641        35,957
      General and
       administrative    2,136,867     1,673,036     4,049,670     3,149,891
                      ------------- ------------- ------------- -------------
                         4,891,320     3,743,409     9,255,332     7,162,743
                      ------------- ------------- ------------- -------------

    Net earnings      $  1,506,381  $  1,547,018  $  3,129,972  $  2,943,066
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------
    -------------------------------------------------------------------------

    Deficit, beginning
     of period       $  (2,260,285) $ (1,655,246) $ (2,218,776) $ (1,714,418)
      Net earnings       1,506,381     1,547,018     3,129,972     2,943,066
      Cash
       distribution
       of fund unit
       equity           (1,665,465)   (1,392,585)   (3,330,565)   (2,729,461)
                      ------------- ------------- ------------- -------------
    Deficit, end
     of period        $ (2,419,369) $ (1,500,813) $ (2,419,369) $ (1,500,813)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------
    -------------------------------------------------------------------------

    Earnings per
     Fund Unit
      Basic and
       diluted        $       0.07  $       0.08  $       0.15  $       0.15
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
    Carfinco Income Fund
    Consolidated Statements of Cash Flows
    -------------------------------------------------------------------------

                      Three months ended June 30    Six months ended June 30
                              2007          2006          2007          2006
                      ------------- ------------- ------------- -------------
                        (unaudited)   (unaudited)   (unaudited)   (unaudited)

    Increase
     (decrease) in
     cash and cash
     equivalents

    Operating
      Net earnings    $  1,506,381  $  1,547,018  $  3,129,972  $  2,943,066

      Adjustments to
       reconcile net
       earnings to
       net cash from
       operations:
        Provision
         for credit
         losses          1,859,657     1,365,874     3,470,446     2,666,094
        Amortization
         of capital
         assets             26,479        18,788        52,641        35,957
        Accrued
         interest          (46,048)      (16,331)      134,914        (7,611)
        Administra-
         tion fees
         receivable     (1,066,002)     (830,680)   (1,859,330)   (1,547,257)
        Deferred
         administra-
         tion fees         313,287       162,156       370,501       161,958
        Deferred
         costs              28,890        (8,643)       57,781         7,229
        Deferred gain      (35,443)      (13,433)      (70,886)      (26,865)
        Deferred
         dealer
         obligation         75,000        75,000       150,000       255,000
        Accounts
         payable and
         accrued
         liabilities       139,540       343,792       355,337       220,933
        Other assets      (164,583)        9,652      (542,821)      (80,220)
        Future income
         taxes             (51,393)            -       (51,393)            -
                      ------------- ------------- ------------- -------------
                         2,585,765     2,653,193     5,197,162     4,628,284
                      ------------- ------------- ------------- -------------

    Investing
      Funds advanced
       on finance
       receivables     (16,950,910)  (12,668,053)  (28,293,088)  (21,836,000)
      Principal
       collections
       on finance
       receivables       9,093,977     7,122,859    18,574,483    14,140,982
      Purchase of
       capital assets       (5,651)      (12,613)     (103,553)      (67,589)
                      ------------- ------------- ------------- -------------
                        (7,862,584)   (5,557,807)   (9,822,158)   (7,762,607)
                      ------------- ------------- ------------- -------------

    Financing
      Advances on
       bank credit
       facility          5,440,127     3,308,908     7,760,938     5,418,672
      Repayments on
       bank credit
       facility         (9,200,000)     (300,000)  (10,600,000)     (600,000)
      Issuance of
       long term debt            -     1,200,000             -     1,200,000
      Repayment of
       long term debt            -      (100,000)            -      (100,000)
      Repayments
       (advances) on
       unit purchase
       financing           20,666              -        82,666      (186,000)
      Fund units
       issued on
       public
       offering        11,500,065              -    11,500,065             -
      Fund unit issue
       costs             (852,407)             -      (852,407)            -
      Fund unit cash
       distribution    (1,665,465)    (1,392,585)   (3,330,565)   (2,729,461)
                      ------------- ------------- ------------- -------------
                        5,242,986      2,716,323     4,560,697     3,003,211
                      ------------- ------------- ------------- -------------

    Net decrease in
     cash and cash
     equivalents          (33,833)      (188,291)      (64,299)     (131,112)

    Cash and cash
     equivalents
      Beginning of
       period             111,080        308,800       141,546       251,621
                      ------------- ------------- ------------- -------------

      End of period   $    77,247   $    120,509  $     77,247  $    120,509
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------
    -------------------------------------------------------------------------

    Supplemental
     cash flow
     information:

      Interest paid   $    839,426  $    658,937  $  1,624,794  $  1,268,000
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------
    -------------------------------------------------------------------------
    

    %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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