GFNZ (Geneva Finance) narrows annual loss

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GFNZ Group, formerly Geneva Finance, has narrowed its annual loss as losses from its old ledgers diminished and profits from its new business model doubled.

Thursday, June 14th 2012, 12:06PM

by Jenny Ruth

The company made a $1.6 million net loss in the year ended March compared with a $8.6 million loss last year.

The net loss from its old ledgers fell to $2.6 million compared with $9.7 million the previous year while net profit from its new business rose to $0.9 million from $0.45 million. Profit from its insurance business rose to $0.268 million from $0.226 million.

"The new business model is established, the ledger now has four years of seasoning and the profit performance of this business is pleasing," the company says.

"The insurance business continues to be profitable and is well positioned t continue to deliver positive returns as the new business model expands," it says.

The old ledgers' relevance is reducing as they are realised but they will continue to be costly to collect, it says.

GFNZ says it complies with all covenants and capital adequacy requirements under its banking facilities, Reserve Bank requirements and its debenture trust deed.

The company ran into hot water a year ago after breaching one of its banking covenants when new lending fell short of target and the Financial Markets Authority ordered it to stop issuing debentures. GFNZ says this covenant was removed in November last year.

Earlier this month, managing director David O'Connell said the company should have a new prospectus out within a couple of weeks - it hasn't been published yet.

"The group is committed to the consumer finance and insurance market with the primary focus being on the automotive sector," the company says.

"Over the last four years, there has been considerable rationalisation and increasing barriers to enter into this sector." It sees an opportunity to expand this business as the economy improves but says ongoing sustainable funding will be the key to capitalising on the opportunity.

In February, GFNZ gained a new 20% shareholder, Federal Pacific Group, which paid $1.2 million for its stake and has promised to commit $3 million in additional funding by June 30 and a further $3 million in September secured by GFNZ receiveables and with GFNZ providing a 20% equity buffer.

FedPac operates throughout the Pacific and has ties to Ireland's Fexco.

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