Wednesday, 28 July 2010

Carfinco - WOW!

Carfinco Income Fund (TSX:CFN.UN) Units issued: 23.9 million
Units fully diluted: 24 million
Current monthly distribution: $0.02
Q1/2010 special distribution: $0.04
Q2/2010 special distribution: $0.10

Carfinco has done it again! The Income Trust set a new earnings record with the release of its Q2 numbers. This is the fifth record quarter in a row for the Fund.

Highlights include:

- Net earnings for the quarter were $4.3 million, up 144.0% from the $1.8 million for the second quarter of 2009;
- Earnings per fund unit for the quarter were 18 cents, or 72 cents on an annualized basis;
- Return on unitholder's equity for the quarter on an annualized basis was 69.2%;
- Total cash distributions to unitholders for the quarter were 16 cents per fund unit;
- Loan originations were $25.1 million, a 50.6% increase from the second quarter of 2009;
- Finance receivables were $125.5 million, increasing by 6.5% during the quarter;
- 31+ days delinquent accounts for the quarter were 3.3% a decrease of 32.7% from 4.9% at the end of the second quarter of 2009.

Finance receivables have grown more than management's stated goal of 15% to 20% this year as the first six months of 2010 grew 10.8% or 21.6% annualized.

During the first six months of 2010 the Fund has paid out 25.5 cents in cash distributions per fund unit held. Combining the monthly distributions with the special distributions, the Fund distributed an average of 4.25 cents per month for the first six months of 2010.This represents an 82.6% payout ratio of the distributable cash earned for the period and a payout ratio of 77.2% of the net earnings for the first six months of 2010.

Based on this, Carfinco believes it is well positioned to maintain its current monthly distribution of 2 cents per unit to Unitholders after it becomes taxable in 2011. 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.

See full news release here...............