RIFCO INC.
TSX VENTURE : RFC

RIFCO INC.

June 27, 2005 09:00 ET

RIFCO Achieves First Annual Profit on Record Revenues

RED DEER, ALBERTA--(CCNMatthews - June 27, 2005) - RIFCO Inc. (TSX VENTURE:RFC) is pleased to announce net income of $336,246 on $3,818,123 of revenue for the fiscal year ending on March 31, 2005.

Annual revenue was up 171% from $1.41 million a year earlier. Net Income was up from a loss of $304 thousand in the prior year. Earnings per share were $0.03 as compared to a loss of $0.03 in the prior year. This is RIFCO's first annual profit and it is primarily attributable to its recently completed securitization transaction.

During the year, RIFCO originated more than $9.7 million in new finance receivables corresponding to a 105% increase over the prior year originations of $4.8 million. As of March 31, 2005, managed finance receivables increased to over $9.0 million compared to $4.1 million a year earlier. The enrolled locations increased by 43% to over 1,500 in the last year. This will continue as we gain larger footholds in existing provinces, especially in Ontario.

"I am certainly pleased to report RIFCO's strong 19% plus return on shareholder equity this year," said Bill Graham President and CEO. "This year's return on equity is indeed a result of our accelerated revenue in the fourth quarter due to securitization. RIFCO is committed to consistently accruing returns on equity."

Annual results were positively affected by the fourth quarter. Revenue increased to $1.8 million in the fourth quarter compared to $400 thousand in the same quarter of the prior fiscal year correlating to 330% increase. Results include over $1 million of gains from the Company's first loan securitization.

For the fourth quarter, net income was $560 thousand versus a loss of $105 thousand a year earlier. Positive earnings were achieved on a quarterly basis for the first time as $0.05 per share was recorded compared to a loss of $0.01 per share in the same quarter of the prior year.

For the fourth quarter ended March 31, 2005, RIFCO originated $2.6 million in loans, up 73% from $1.5 million a year earlier.

Securitization

On March 31, 2005, RIFCO completed the company's first ever loan securitization with a sale of $4.7 million in finance receivables. The average portfolio yield of the receivables sold was 22.52% and the contracted cost of funds for the transaction was 6.96%. Securitization will be used by the company to finance its future growth as it is non-dilutive and provides a structurally reliable source of funds.



Statements of Income
For the year ended March 31 2005 2004

Revenue
Loan Interest 1,687,591 728,367
Income from Securitized assets 1,077,741
Administration and other fees 1,052,791 681,631
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Total Revenue 3,818,123 1,409,998

Financing fees & insurance 502,473 287,887
Interest 483,511 263,865
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Net financing Income 985,984 551,752

Provision for credit Losses 712,845 255,672
Repossession & recovery costs 39,779 17,067
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Net financing income after provision for losses 2,079,515 585,507

Operating Expense
Wages & Benefits 810,959 556,365
Professional Fees 307,356 102,310
Office & General 400,206 346,980
Amortization 28,069 21,306
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Total Operating Expenses 1,546,590 1,026,961

Income before taxes 532,925 (441,454)
Income Tax Recovery (expense) (196,679) 137,000
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Net Income (loss) 336,246 (304,454)

Earnings per share Basic/Diluted 0.03 -0.03

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Statements of Income
For the three months ended March 31 2005 2004

Revenue
Loan Interest 478,518 225,207
Income from Securitized assets 1,077,741 -
Administration and other fees 264,111 196,436
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Total Revenue 1,820,370 421,643

Financing fees & insurance 129,030 85,180
Interest 143,243 89,342
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Net financing Income 1,548,097 247,121

Provision for credit Losses 322,543 63,784
Repossession & recovery costs 16,160 8,180
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Net financing income after provision for losses 1,209,394 175,157

Operating Expense
Wages & Benefits 215,598 169,559
Professional Fees 86,340 41,559
Office & General 100,256 100,034
Amortization 7,347 7,407
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Total Operating Expenses 409,541 318,559

Income before taxes 799,853 (143,402)
Income Tax Recovery (expense) (239,679) 38,000
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Net Income (loss) 560,174 (105,402)

Earnings per share Basic/Diluted 0.05 -0.01

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About RIFCO Inc

RIFCO Inc. (TSXV: RFC) operates through its wholly owned subsidiary Repair Industry Finance Corporation. RIFCO is a specialty consumer finance corporation with a current focus on the automotive aftermarket industry. RIFCO provides Automotive & Commercial Repair Financing, and Vehicle Purchase Financing ("Convenient Payment Plan") to mid-market/non-prime motorists through a growing network of licensed repair facilities and select used vehicle retailers. RIFCO's customers benefit by being able to convert major repair or purchase costs into affordable monthly payments.

RIFCO is committed to continuing growth. Key strategies for achieving this growth include the expansion of its network, ever-increasing leverage of this network, excellence in credit and collections processes, and exceptional service to its network members and its customers.

The common shares of RIFCO INC. are traded on the TSX Venture Exchange under the symbol "RFC". RIFCO INC. has 13.93 million shares issued and outstanding.

NOTE: RFC would like to remind shareholders and interested parties that regular commentary on the Company's activities is available by registering for the Free Insight Newsletter, issued electronically by of The Howard Group, www.howardgroupinc.com.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release

Contact Information

  • RIFCO INC.
    Lance A. Kadatz
    Vice President and Chief Financial Officer
    1-888-303-2001
    1-888-303-2181 (FAX)
    Email: kadatz@rifco.net
    Website: www.rifco.net
    or
    The Howard Group Inc.
    Grant Howard
    1-888-221-0915
    or
    The Howard Group Inc.
    David Gordon
    1-888-221-0915
    or
    The Howard Group Inc.
    Peter Weichler
    1-888-221-0915
    1-888-237-8387 (FAX)
    Email: info@howardgroupinc.com
    Website: www.howardgroupinc.com