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Marac Finance Profit Up, But Says `Impaired Assets' Over 11pc

Fuseworks Media
Fuseworks Media

Wellington, Aug 26 NZPA - Pyne Gould Corporation (PGC) finance company Marac Finance Ltd says its net operating income rose 17 percent to $70.2m in the year to June 30.

It today posted a net profit after tax of $25.9m, an increase of 5 percent.

The company's parent, PGC, earlier today reported separately on the wider Marac group of companies, which includes not only Marac Finance, but other ventures such as insurance. The Marac group notched up a 6 percent lift in profit, to $27.9m.

Marac Finance managing director Brian Jolliffe said the result was particularly pleasing against a backdrop of finance company failures and the global credit squeeze.

"While investors generally have become more reluctant to invest in finance company offerings, Marac's re-investment rate was maintained at normal historical levels of around 63 percent," Mr Joliffe said.

On the lending side, total financial receivables rose 8 percent to $1.3 billion -- a slower growth rate than in previous years and all in the first half of the financial year. The company said up 1.4 percent of this money was in debts which may not be collected in full.

"In the second half of the year Marac focused on meeting the needs of existing clients and foregoing some growth opportunities," Mr Joliffe said.

Finance receivables were well spread both regionally and also by the type of asset financed.

Collectively, impaired assets, which are assets with an increased risk on collection, increased from 8.1 percent to 11.7 percent of total finance receivables.

Individually, impaired assets, "being those which the company believes will not be collected in full" amount to 1.6 percent of total finance receivables and were fully provided for.

"Impaired asset" expense was $5.7m for the year, compared to a low $1m in the corresponding period last year.

Marac had acquired a new funding facility of $300m and a new syndicated bank facility of $480m with all of New Zealand's major banks was finalised, an increase of $80m on previous individual facilities.

After balance date on June 30, a five year secured bond programme raised $104.2m, providing greater diversification and increasing liquidity.

At July 31 Marac's liquidity was $250m.

This was "a much higher level than the company traditionally helds but in the current difficult market environment is considered a prudent step, Mr Jolliffe said.

Another PGC subsidiary, Perpetual Trust, turned in a stronger performance, with revenue up by more than 10 percent to $16.9m.

Operating expenses also increased by 9 percent giving an overall net profit after tax of $3.7 m, up 26 percent on last year.

The company's corporate trust division had a 15 percent increase in revenue for the year, with significant growth in the managed funds sector and in the retirement village sector, especially from multi-village operators.

Total funds under advice through Perpetual Trust increased 11 percent in 2008 to $980m at year end. Superannuation savings in the Pegasus Investment Fund recorded strong growth, up by more than $6m.

The personal wealth management division experienced growth across all seven offices, with record numbers of wills written, new trusts being established and trustee appointments as well as a record number of personal asset management appointments.

The number of estates administered remained constant, but the investment advisory part of the business saw a net 23 percent growth in client numbers.

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