Company Profile

NZF Group Limited Company Profile

Company History

NZF Money Limited (previously known as New Zealand Finance Limited) has been in operation since 1997. The founding Directors and Shareholders; John Callaghan (CEO), Mark Thornton (Executive Director) and Pat O’Connor (Non-Executive Director) have grown and remain with the company.

The company has an impressive track record of sustainable growth. It is a niche provider of financial services with its core activity being a diversified range of services including; investment, lending, insurance and mortgage broking.

Growth has been achieved by increasing market share and acquisition. Looking forward the Group will continue with this strategy.

Summary of history as follows:

1999 Established New Zealand Mortgage Finance – principal activities are insurance and mortgage broking
2003 Acquired Loan Plan Group – principal activities are insurance and mortgage broking
2004 Listed New Zealand Finance Holdings Limited on the New Zealand Stock exchange
2005 Acquired Approved Mortgage Brokers – principal activities are insurance and mortgage broking
2005 Acquired Property Pack (Wellington) – principal activity is mortgage broking
2006 Acquired Mike Pero Mortgages (50/50 Joint Venture with Liberty Financial of Australia) – principal activities are insurance and mortgage broking
2006 Raised $20,050,000 in capital notes issue
2007 Acquired Finance Direct – principal activities are consumer finance and finance broking
2008 Company changes name to NZF Group Limited and one of its subsidaries New Zealand Finance Limited is renamed as NZF Money Limited.

Company Structure

NZF Group Limited (previously known as New Zealand Finance Holdings Limited) was listed on the New Zealand Stock Exchange on the 6th of October 2004. Due to listing, organic growth and acquisition of several subsidiaries, expansion has accelerated through the efforts of a talented management team, staff, network of professional brokers and advisors and loyal investors.

The current structure and holdings are as follows:

Company Directors

Directors and Chief Executive of NZF Group Limited are as follows:

R.A. (Richard) Waddel BCom FCA – Chairman of Directors
J.A. (John) Callaghan BBS – Managing Director
M.H. (Mark) Thornton – Director
J.A. (Jeff) Barkwill FCA, DipCM – Independent Director
P.R. (Pat) O’Connor – Non-Executive Director
P.K.C. (Peter) Huljich BCom, (Int. Bus/Mgmt), Dip. NZX, SA Fin. - Non-Executive Director

Key Highlights for NZF Group Limited

Raised $20 million in a capital notes issue.
Increased funding lines with Westpac to $225 million.
Formed a 50/50 joint venture company with Liberty Financial to jointly own Mike Pero Mortgages.
Total Assets increased by 54.12% to $199 million.
Net Profit after tax increased by 76.83% to $6.7 million.
Total Equity increased by $2.6 million to $21.2 million.
Total Operating Revenues increased by 78.26% to $43.1 million.

NZF Money Limited *

While the finance industry has been hardest hit by the demise of some high profile finance companies, their funding, activities and structure were quite different to our own. Understandably however, it has resulted in a period of uncertainty as we waited to see how investors reacted.

We are very pleased to advise that we saw the continued support of our investors. Our deposit book increased by 29% to a total of $80 million.

We have seen opportunities to broaden the product range for deposits on long and short term products and these will continue to be developed. We have a good re-attraction rate and the number of new deposits has grown to $32 million. Our reinvestment rates tell us that investors are doing their homework and recognising quality.

We have had another year of continued growth with the loan book increasing from $70 million to $96 million.

Our home loan product has grown from $26 million to $75 million in 2 months. Technology reinvestment will assist us in becoming a bigger key player in residential mortgages and related financial products.

We are very proud that our continued tight control of credit has resulted in us being one of the very few financial institutions able to boast that we have had no bad debt write-offs.

In this business unit you will continue to see the most spent on technology and also in terms of how we are perceived. This is where clients too, will notice the greatest change as we evolve and develop to ensure our continued growth and progress.

We are also conscious that banks are taking a long hard look at the dent which finance companies like ourselves have made on their business. Increasingly we believe we will see finance companies exploring ways of competing further with banks.

That is one of the reasons why in coming years we will continue to reinvest large sums in systems and technology. We believe it is technology that is going to be the key to our ongoing success. One only has to look at the way people have adapted their banking behaviour in recent years. We have seen how easy it is for people to manage and move their money around without ever stepping near a branch. We don’t see trends slowing. The future of managing money will continue to get easier.

Mike Pero Mortgages *

During the year we announced that we entered into a 50/50 joint venture with Liberty Financial to make a takeover offer for all the equity securities in Mike Pero Mortgages. At the time NZF owned 74.7 % and Liberty 9.9 %. Liberty Financial is Australasia’s leading independent speciality finance group. We formed a new entity MPMH Limited with Liberty with 50/50 ownership. We also entered into a business co-operation agreement to establish a securitization vehicle so that Mike Pero branded mortgages and other Mike Pero branded financial products could be marketed through the existing franchise network.

We are confident that the joint venture with Liberty will mean we can work together to strengthen the brand and reputation of MPM. The skills we both bring to the company will assist in accelerating the Mike Pero brand and enhance its reputation.

Says Sandra Pigram, Chief Executive Officer of MPM, “The additional Mike Pero branded products will be significant for our product offering. We are also making a huge investment in technology advances to enable our team to make available electronic loan products. While this isn’t online yet, when it is, we believe it will make a valuable point of difference for our people and enable us to better serve our customers.”

“There is no doubt that the joint venture is accelerating the continued growth of the Mike Pero network. NZF brings extensive local experience while Liberty brings world-class risk management and technology skills. These combined strengths will see Mike Pero’s reputation as the champion of consumer choice be enhanced and it will accelerate our growth,” ended Mr Staniland.

After the major banks, MPM is the most trusted mortgage broker to provide home loan advice. It is the largest and most recognised mortgage distribution brand in the country. 97% of respondents surveyed had heard of the name and 60% knew the nature of the business and the brand. Until NZF and Liberty came along MPM had investors. Now as owners, we are both committed to supporting its expansion.

We share the same vision for Mike Pero Mortgages and can see the potential to increase the value of the business by developing a much broader financial services product range. NZF is looking forward to working with the team at Liberty to make MPM one of the most powerful brands in New Zealand.

New Zealand Mortgage Finance and Approved Mortgage Brokers *

The last year has seen the consolidation of the back office and management of Approved Mortgage Brokers and New Zealand Mortgage Finance. Each brand remains separate to ensure that they continue to identify with and focus on their respective parts of the mortgage market. Approved’s customer base has traditionally been the premium/mainstream part of the market: the traditional mum and dad; people with clean credit and property investor types. The enquiry level in this market has remained high and we have noticed a rise in volumes.

Our senior brokers have had a very good year and a number of new brokers who started with us have also achieved high quality results.

September 2006 saw us launch a mortgage broking software programme to our New Zealand Mortgage Finance brand brokers. This enables them to have up to the minute information on lenders and analyse loan data quickly and easily for clients.

New Zealand Mortgage Finance has traditionally found its business in the non prime market. In recent years a lot of brokers have entered this market.

Development in the mortgage origination market over the year has seen some consolidation of lenders. There has also been significant growth in niche lenders who are producing differing products to offer brokers to accommodate more client needs.

Finance Direct *

Finance Direct of which NZF acquired a 51 % controlling interest in April 2007 was established in 1999 and is a well established consumer lending organization. The co-founders, Murray Greig and Wayne Croad have solid and lengthy experience in the finance and banking sector and have an in-depth knowledge of lending and credit risk.

Finance Direct has developed flexible and innovative methods of borrowing for people wanting to buy property, consumer goods/debt consolidation or marine, something until now NZF didn’t offer its customers.

The company is well-skilled in matching its client’s needs to appropriate lenders. It has a reputation for adopting a conservative approach to lending and any loans that don’t meet its criteria are brokered to a more appropriate lender to minimize the Company’s risk.

The company was a good acquisition for NZF as it operates in a different market. Finance Direct also offers the NZF broker network with a cost effective and flexible option for providing its existing clients with consumer finance, for example car, boat and consumer purchases. Further, Finance Direct also expands the diversification of NZF’s income streams.

* Comments for year ending 31 March 2007.