TSX: CFN.UN
EDMONTON, March 16 /CNW/ - Carfinco Income Fund ("Carfinco" or the "Fund") announces financial results for the fourth quarter and year ended December 31, 2009.
We are proud to present the 2009 annual financial results. Carfinco reached $7.3 million in net earnings, the highest in our history, surpassing the previous record of $6.3 million set in 2006. The net earnings of $1.8 million, $2.2 million and $2.6 million respectively for each of the last three quarters of 2009 represented record net earnings each quarter.
On an annualized basis the Fund's fourth quarter of 2009 produced $10.4 million in net earnings, earnings per unit of 44 cents and a 43.7% Return on Unitholders' Equity.
HIGHLIGHTS: - Net Earnings were $7.3 million in 2009 versus a loss of $2.0 million in 2008. - Total distributions to Unitholders equaled 24.4 cents per unit in 2009 versus 8.1 cents per unit in 2008. - Return on Unitholders equity was 33.6% for 2009. - Debt to Equity ratio was 2.66:1 (well under the bank covenant maximum of 3.75:1) - 31+ days delinquent accounts decreased by 35.2% year over year to 4.6% of the finance receivables in 2009. - 91+ days past due dollar amount of the finance receivables was nil in 2009 versus $2.1 million in 2008.
The year 2009 can best be described as the "comeback" year for Carfinco, surviving the economic turmoil, which started in late 2007 and continued into 2009. Management and the Board of Trustees reacted quickly, implementing operational policies and procedures in 2008 to reflect the economic downturn and more specifically the deterioration of the credit environment in which the Fund conducts business.
As mentioned, the Fund recorded the highest quarterly net earnings in the Fund's history during the fourth quarter of 2009. The $2.6 million in net earnings represents an increase of $3.2 million over the net loss of $0.6 million recorded for the fourth quarter of 2008. Earnings of 11 cents per unit were recorded for the fourth quarter of 2009 versus a loss of 2 cents per unit for the fourth quarter of 2008. Total revenues of $8.6 million for the fourth quarter of 2009 are 6.6% higher than the total revenues of $8.0 million for the fourth quarter of 2008. Loan originations of $17.8 million during the fourth quarter of 2009 represents an increase of 18.4% over the loan originations of $15.0 million for the fourth quarter of 2008. G&A expenses for the fourth quarter of 2009 were $2.2 million, no change from the $2.2 million recorded for the fourth quarter of 2008.
During the economic downturn management's focus shifted from growth to operational efficiencies and performance of the finance receivables as evidenced by the following results:
- Loan Originations decreased 8.7% to $67.8 million in 2009 from $74.3 million in 2008. - Finance Receivables increased a modest 4.8% year over year to $113.2 million in 2009 from $108.0 million in 2008. - Revenues increased 3.1% to $32.6 million for 2009 from $31.6 million in 2008. - Operating expenses decreased by 24.2% to $8.1 million for 2009 from $10.7 million in 2008. - Operating expense ratio on portfolio assets decreased to 8.1% for 2009 from 9.0% in 2008, representing the lowest operating expense ratio in the Fund's history. - 31+ days delinquent accounts decreased by 35.2% to 4.6% of finance receivables for 2009 from 7.1% of finance receivables for 2008.
Growth will again become a focus in 2010. We are targeting growth of 15% to 20% in 2010 versus the 4.8% in 2009. Carfinco is well positioned for this growth as the capital required is available from profits and current debt facility.
Looking forward, Carfinco believes it is well positioned to maintain its current monthly distribution of 2 cents per unit to Unitholders through 2011 and beyond, despite becoming a taxable entity. It is also important to note that once Carfinco becomes a taxable entity in 2011, cash distributions to Unitholders will receive a more favorable personal tax treatment than is currently the case. Distributions paid after January 1, 2011 will be treated as eligible Canadian dividends for tax purposes, resulting in a lower effective tax rate in the hands of a taxable investor. As per the Fund's Deed of Trust, all taxable income for 2010 will be distributed to Unitholders. To the extent that the Fund generates taxable income in excess of the 2 cents per unit monthly cash distributions for any quarter, all or a portion of the excess taxable income will be distributed to Unitholders in the form of quarterly special distributions of either cash or shares.
About Carfinco Income Fund
Carfinco focuses on providing consumer vehicle 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 value, except percentages and per fund unit amounts) December 31, December 31, 2009 2008 -------------- -------------- Total revenue $ 32,631 $ 31,649 Net (loss) earnings $ 7,341 $ (1,988) Earnings (loss) per fund unit - basic and diluted $ 0.31 $ (0.08) Loan originations $ 67,820 $ 74,279 Unitholders' equity $ 23,467 $ 20,222 Fund units outstanding 23,934 23,323 Book value per unit $ 0.98 $ 0.87 Cash distributions per fund unit $ 0.180 $ 0.081 Financial leverage ratio 2.66:1 2.86:1 Return on average unitholders' equity 33.6% (9.0)% Return on average finance receivables 6.6% (2.0)% Average cost of borrowing 6.0% 7.3% Operating expense ratio on portfolio assets 8.1% 9.0% Operating expense ratio on financial revenue 27.5% 28.9% Consolidated Balance Sheets ------------------------------------------------------------------------- December 31, December 31, 2009 2008 -------------- -------------- Assets Finance receivables $ 113,222,303 $ 108,016,961 Allowance for credit losses (12,400,000) (12,190,000) Dealer reserve (5,237,091) (2,454,715) -------------- -------------- Finance receivables - net 95,585,212 93,372,246 -------------- -------------- Cash 467,674 29,162 Other assets 1,093,006 633,178 Equipment 373,433 456,841 Future income taxes 167,361 - -------------- -------------- 2,101,474 1,119,181 -------------- -------------- $ 97,686,686 $ 94,491,427 -------------- -------------- -------------- -------------- ------------------------------------------------------------------------- Liabilities Bank credit facility $ 68,438,145 $ 67,878,411 Accounts payable and accrued liabilities 694,519 502,989 Deferred dealer obligation 1,847,863 1,604,385 Derivatives 1,096,128 1,983,486 Subordinated debentures 2,143,000 2,300,000 -------------- -------------- 74,219,655 74,269,271 -------------- -------------- Unitholders' Equity Unitholders' capital 31,186,595 29,583,463 Deficit (7,719,564) (9,361,307) -------------- -------------- 23,467,031 20,222,156 -------------- -------------- $ 97,686,686 $ 94,491,427 -------------- -------------- -------------- -------------- Consolidated Statements of Earnings (Loss), Comprehensive Income (Loss) ------------------------------------------------------------------------- December 31, December 31, 2009 2008 -------------- -------------- Financial Revenue Interest revenue $ 30,480,877 $ 29,666,447 Administration fees 2,149,964 1,982,663 -------------- -------------- 32,630,841 31,649,110 Financial Expenses Interest expense 4,190,830 4,689,214 -------------- -------------- Net financial income before provision for credit losses 28,440,011 26,959,896 Provision for credit losses 13,114,756 18,262,438 -------------- -------------- Net financial income before operating expenses and income taxes 15,325,255 8,697,458 -------------- -------------- Operating Expenses General and administrative 8,803,418 9,004,718 Gain (loss) on derivatives (887,358) 1,543,192 Amortization of equipment 183,198 137,111 -------------- -------------- 8,099,258 10,685,021 -------------- -------------- Net earnings (loss) before income taxes 7,225,997 (1,987,563) -------------- -------------- Income Taxes Current - - Future (recovery) (115,050) - -------------- -------------- (115,050) - Net earnings (loss) and comprehensive income (loss) $ 7,341,047 $ (1,987,563) -------------- -------------- -------------- -------------- ------------------------------------------------------------------------- Weighted average fund units basic and diluted 23,932,316 23,918,055 -------------- -------------- -------------- -------------- Earnings (loss) per fund unit basic and diluted $ 0.31 $ (0.08) -------------- -------------- -------------- -------------- ------------------------------------------------------------------------- Consolidated Statements of Deficit ------------------------------------------------------------------------- December 31, December 31, 2009 2008 -------------- -------------- Deficit, beginning of year $ (9,361,307) $ (5,483,698) Net earnings (loss) 7,341,047 (1,987,563) Unit distributions on fund equity (1,499,078) - Cash distributions on fund unit equity (4,200,226) (1,890,046) -------------- -------------- Deficit, end of year $ (7,719,564) $ (9,361,307) -------------- -------------- -------------- -------------- ------------------------------------------------------------------------- Consolidated Statements of Cash Flows December 31, December 31, 2009 2008 -------------- -------------- Increase (decrease) in cash Operating activities Net earnings (loss) $ 7,341,047 $ (1,987,563) Items not affecting cash: Provision for credit losses 13,114,756 18,262,438 Amortization of equipment 183,198 137,111 Amortization of deferred transaction costs 247,535 249,955 Gain (loss) on derivatives (887,358) 1,543,192 Future income taxes (115,050) 51,393 Unit based compensation expense 4,600 - Changes in non-cash balances related to operations 1,572,331 101,721 -------------- -------------- Net cash provided by operating activities 21,461,059 18,358,247 -------------- -------------- Investing Activities Funds advanced on finance receivables (54,522,337) (64,939,145) Principal collections on finance receivables 42,760,615 43,038,541 Change in finance receivables reserves and transaction costs (5,163,151) (5,861,182) Purchase of equipment (99,790) (227,000) -------------- -------------- Net cash used in investing activities (17,024,663) (27,988,786) -------------- -------------- Financing Activities Advances on bank credit facility 7,037,913 20,059,716 Repayments on bank credit facility (6,700,000) (10,100,000) Deferred transaction costs (25,714) (544,356) Issuance of subordinated debentures - 2,300,000 Repayments on subordinated debentures (157,000) - Proceeds on unit purchase financing 51,666 51,666 Fund unit issue costs (4,523) (51,393) Fund unit cash distributions (4,200,226) (1,890,046) -------------- -------------- Net cash (used in) provided by financing activities (3,997,884) 9,825,587 -------------- -------------- Net increase in cash 438,512 195,048 Cash, beginning of year 29,162 (165,886) -------------- -------------- Cash, end of year $ 467,674 $ 29,162 -------------- -------------- -------------- -------------- ------------------------------------------------------------------------- Supplemental cash flow information: Interest paid $ 3,943,316 $ 4,426,908 -------------- -------------- -------------- -------------- -------------------------------------------------------------------------
%SEDAR: 00019164E
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: [email protected] OR The Howard Group Inc., Jeff Walker, Dave Burwell, Investor Relations, Telephone: 1-888-221-0915, E-mail: [email protected], Website: www.howardgroupinc.com
Share this article