RESIMAC GROUP LTD — Annual Report 2012

Aug 26, 2012

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Homeloans Limited-Appendix 4E

Results for Announcement to Market

Homeloans Ltd Appendix 4E Preliminary Final Report Year ended 30 June 2012

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Homeloans Limited-Appendix 4E

Reporting period and previous corresponding period details Reporting period: 30 June 2012 Previous corresponding reporting period: 30 June 2011

Results for announcement to the market

Results for announcement to the market
Financial Report for the year ended 30 June 2012	$’000s
Revenue from continuing activities	Down 13% from $74,078 to $64,709
Profit after tax attributable to members	Down 12% from $9,162 to $8,110
Net profit after tax for the year attributable to members	Down 12% from $9,162 to $8,110
Dividends
Interim dividend–fully franked (cents per share)	2.5
Proposed final dividend–fully franked (cents per share)	3.5
Total dividends per share for the year (cents per share)	6.0
Record date for determining entitlements to the final dividend to be paid	17 September 2012
Last date for receipt of election notices for Dividend Reinvestment Plan	17 September 2012
Payment date for final dividend	2 October 2012

Dividend Reinvestment Plan

The Company’s Dividend Reinvestment Plan will apply to the final dividend payment. The allocation price for shares under the Plan will be calculated at the average of the daily volume weighted average price of Homeloans Limited ordinary shares traded on the ASX over the 6 day trading period comprising the 5 trading days before the record date and the record date itself of 17 September 2012. The shares will be issued at a discount of 5%. Dividend election notices will be posted out to shareholders on 3 September 2012.

Refer Appendix 1 ASX Appendix 4E on page 12 for disclosures required under ASX Listing Rules.

This report should be read in conjunction with any public announcements made in the period by the Group in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX listing rules.

This report is based on the Annual Financial Report which is in the process of being audited. The report covers Homeloans Limited (the Company) and its controlled entities (the Group).

Except where otherwise stated, all figures relate to the full year ended 30 June 2012 and comparatives to the full year ended 30 June 2011.

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Timothy Holmes Executive Chairman 27 August 2012

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Homeloans Limited-Appendix 4E

Preliminary Final Report

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2012

			CONSOLIDATED
	Note	2012 $’000	2011 $’000
ASSETS
Cash and cash equivalents	5	20,084	20,960
Receivables		4,331	5,501
Loans and advances to customers		288,800	370,579
Other financial assets		46,345	37,212
Non-current asset held for sale		383	-
Investment in associate		-	351
Plant and equipment		726	887
Goodwill		13,554	12,565
TOTAL ASSETS		374,223	448,055
LIABILITIES
Payables		3,897	6,437
Interest-bearing liabilities		301,842	383,008
Other financial liabilities		18,966	14,588
Derivative financial liabilities		201	206
Lease incentives		95	176
Deferred income tax liabilities		6,793	4,764
Provisions		507	409
TOTAL LIABILITIES		332,301	409,588
NET ASSETS		41,922	38,467
EQUITY
Issued capital		66,114	64,481
Reserves		816	816
Accumulated losses		(25,008)	(26,830)
TOTAL EQUITY		41,922	38,467

Homeloans Limited-Appendix 4E

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Preliminary Final Report

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2012

CONSOLIDATED Note 2012 $’000 2011 $’000	CONSOLIDATED Note 2012 $’000 2011 $’000
Interest income 2.1 Interest expense 2.3 Net interest income Fees and commission income 2.1 Fees and commission expense 2.3 Operating expenses 2.3 Other operating income 2.1 Share of profit of associate 2.2 Impairment (loss)/gain 2.4 Writeback on loans and advances recognised at amortised cost 2.2 Profit before tax Income tax expense Total comprehensive income for the year attributable to members of Homeloans Limited Earnings per share for profit attributable to the ordinary equity holders of the parent Basic earnings per share (cents per share) 3 Diluted earnings per share (cents per share) 3 Fully franked interim dividend (cents per share) 4 Proposed fully franked final dividend (cents per share) 4	31,904 40,157 (21,446) (28,171)
	10,458 11,986 31,791 32,940 (16,738) (16,857) (15,544) (17,982) 1,014 981 310 182 (167) 533 416 594
	11,540 12,377 (3,430) (3,215)
	8,110 9,162
	7.67 8.96 7.67 8.95 2.5 2.5 3.5 3.5

Homeloans Limited-Appendix 4E

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Preliminary Final Report

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2012

Attributable to equity holders of the parent Issued Capital $’000 Accumulated Losses $’000 Employee Option Reserve Total $’000 98,283 (29,876) 816 69,223 - 9,162 - 9,162 - 9,162 - 9,162 485 - - 485 1,383 - - 1,383 (35,670) - - (35,670) - (6,116) - (6,116) 64,481 (26,830) 816 38,467 - 8,110 - 8,110 - 8,110 - 8,110 21 - - 21 (139) - - (139) 1,751 - - 1,751 - (6,288) - (6,288) 66,114 (25,008) 816 41,922

CONSOLIDATED At 1 July 2010 Profit after tax for the year Total comprehensive income Transactions with owners in their capacity as owners: Exercise of options Dividend reinvestment plan Return of capital Equity dividends At 1 July 2011 Profit after tax for the year Total comprehensive income Transactions with owners in their capacity as owners: Exercise of options Share buyback Dividend reinvestment plan Equity dividends At 30 June 2012

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Homeloans Limited-Appendix 4E

Preliminary Final Report

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2012

Note	CONSOLIDATED 2012 $’000 2011 $’000
Cash flows from operating activities Interest received Interest paid Loan fees and other income Salaries and other expenses (Repayments to)/proceeds from warehouse facility(i) (Repayments to)/proceeds from bondholders(i) Net loans repaid/(advancements) from borrowers(i) Income taxes paid Net cash flows from operating activities Cash flows from investing activities Purchase of plant and equipment Acquisition of assets of Refund Home Loans Pty Ltd 6 Net cash flows used in investing activities Cash flows from financing activities Proceeds from issue of shares Share buy back program Proceeds from borrowings Repayment of borrowings Return of capital Payment of dividends Net cash flows used in financing activities Net decrease in cash and cash equivalents Add: Opening cash and cash equivalents Closing cash and cash equivalents 5	32,530 40,888 (23,774) (27,022) 29,882 31,082 (30,302) (34,042) (65,333) (81,380) (16,201) (41,210) 81,704 119,429 (1,958) (3,593)
	6,548 4,152
	(183) (299) (2,950) -
	(3,133) (299)
	21 485 (139) - 1,926 967 (1,562) (1,534) - (35,670) (4,537) (4,733)
	(4,291) (40,485)
	(876) (36,632)
	20,960 57,592
	20,084 20,960

– (i) The cash flows of the group include those arising within the RMT special purpose vehicles (SPVs) and have a significant effect on the interpretation of the consolidated entity’s operating cash flows. These cash flows are not available for the use of shareholders. The RMT SPV’s generated negative cashflows of $1,720,000 (2011: negative cash flows of $2,627,000) during the financial year. Therefore, if RMT had not been consolidated, total Group operating cash inflows would have been $8,268,000 (2011: $6,779,000.)

Homeloans Limited-Appendix 4E

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Preliminary Final Report

Notes to Appendix 4E

1. OPERATING SEGMENTS

The following tables present revenue and profit information and certain asset and liability information regarding operating segments for the years ended 30 June 2012 and 30 June 2011.

Year	ended 30 June 2012	Origination and Management Securitisation of Mortgages Total $’000 $’000 $’000	Origination and Management Securitisation of Mortgages Total $’000 $’000 $’000
	Revenue Interest Income Fee and commission income Other operating income Total segment revenue from external Inter-segment revenue Total segment revenue Inter-segment elimination Total consolidated revenue Result Segment results before impairment Impairment loss Writeback of loans and advances recognised at amortised cost Finance costs Profit before income tax Income tax expense Net profit for the year Assets and liabilities Segment assets(i) Total assets Segment liabilities(i) Unallocated liabilities (tax balances) Total liabilities	4,883 27,021 31,904 30,835 956 31,791 1,014 - 1,014
		36,732 27,977 64,709 2,461 - 2,461
		39,193 27,977 67,170
		(2,461) 64,709 6,080 5,433 11,513 - (167) (167) - 416 416 (222) - (222)	(2,461)
			64,709
		5,858 5,682 11,540 (3,430) 8,110
			8,110
		77,650 296,573 374,223
			374,223
		25,404 299,616 325,020
			7,281
			332,301

(i) The net assets for the Securitisation of Mortgages segment do not reflect the inherent value of the residential loan balances within the SPV’s represented by future income streams, being net interest margin and fee income.

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Homeloans Limited-Appendix 4E

Preliminary Final Report

Notes to Appendix 4E

1. OPERATING SEGMENTS (continued)

Year ended 30 June 2011

ended 30 June 2011
	Origination and Management Securitisation of Mortgages Total $’000 $’000 $’000
Revenue Interest Income Fee and commission income Other operating income Total segment revenue from external Inter-segment revenue Total segment revenue Inter-segment elimination Total consolidated revenue Result Segment results before impairment Impairment gain Writeback of loans and advances recognised at amortised cost Finance costs Profit before income tax Income tax expense Net profit for the year Assets and liabilities Segment assets(i) Total assets Segment liabilities(i) Unallocated liabilities (tax balances) Total liabilities	4,724 35,433 40,157 31,095 1,845 32,940 981 - 981
	36,800 37,278 74,078 3,228 - 3,228
	40,028 37,278 77,306
	(3,228) 74,078 4,462 7,004 11,466 - 533 533 - 594 594 (216) - (216)	(3,228)
		74,078
	4,246 8,131 12,377 (3,215) 9,162
		9,162
	69,724 378,331 448,055
		448,055
	21,286 383,242 404,528
		5,060
		409,588

(i) The net assets for the Securitisation of Mortgages segment do not reflect the inherent value of the residential loan balances within the SPV’s represented by future income streams, being net interest margin and fee income.

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Homeloans Limited-Appendix 4E

Preliminary Final Report

Notes to Appendix 4E

2. DETAILS OF REVENUES AND EXPENSES

2.1 Revenue Interest Income Mortgage Origination Income Loan Management Fees Other Operating Income Total Revenue 2.2 Other income Share of Profit of Associate Writeback on loans and advances recognised at amortised cost Total 2.3 Expenses Interest expense Sales related expenses Mortgage Origination Expense Loan Management Expense Total sales related expenses Operating expenses Employee Benefits General Administrative Expenses Acquisition-related costs Total operating expenses 2.4 Impairment (loss)/gain	Year ended 30 June 2012 $'000	Year ended 30 June 2011 $'000
	31,904 9,734 22,057 1,014 64,709 310 416 65,435 21,446 7,787 8,951 16,738 9,236 6,016 292 15,544 (167)	40,157 11,094 21,846 981 74,078 182 594 74,854 28,171 8,138 8,719 16,857 10,224 7,758 - 17,982 533

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Homeloans Limited-Appendix 4E

Preliminary Final Report

Notes to Appendix 4E

3. EARNINGS PER SHARE

The following reflects the income and share data used in the basic and diluted earnings per share computations:

	CONSOLIDATED Year ended Year ended 30 June 2012 $'000 30 June 2011 $'000 8,110 9,162 8,110 9,162 No. of shares No. of shares 30 June 2012 30 June 2011 105,778,058 102,244,033 - 90,774 105,778,058 102,334,807
Net profit attributable to ordinary equity holders of the parent Net profit attributable to ordinary equity holders used in the calculation of basic and diluted EPS
Weighted average number of ordinary shares for basic earnings per share Effect of dilution: Share options Weighted average number of ordinary shares adjusted for the effect of dilution used in calculation of diluted EPS

4. DIVIDENDS PAID AND PROPOSED

	CONSOLIDATED Year ended 30 June 2012 $'000 Year ended 30 June 2011 $'000
Declared and paid during the year: Franked dividends: Fully franked final dividend on ordinary shares for 2011 - 3.5 cents per share (2010–3.5 cents) Fully franked interim dividend on ordinary shares for 2012–2.5 cents per share (2011: 2.5 cents) Proposed and not recognised Dividends on ordinary shares: Final fully franked dividend for 2012–3.5 cents (2011: 3.5 cents)	3,628 3,566 2,660 2,550
	6,288 6,116
	3,733 3,633

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Homeloans Limited-Appendix 4E

Preliminary Final Report

Notes to Appendix 4E

5. RECONCILIATION OF CASH

5. RECONCILIATION OF CASH
	CONSOLIDATED 2012 $’000 2011 $’000 8,620 7,776 9,751 11,010 1,713 2,174 20,084 20,960
Cash and cash equivalents comprise the following; Cash at bank and in hand RMT Cash Collections Account(i) Restricted Cash(ii)

(i) RMT Cash Collections Account includes monies held in the RMT Special Purpose Vehicles on behalf of investors in those Trusts and is not available to Homeloans Limited.

(ii) Cash held in trust as collateral for the borrowing facilities with Westpac Institutional Bank.

6. BUSINESS COMBINATION

On 8[th] June 2012, the Group acquired the rights to the loan book and the exclusive right to own and maintain the intellectual property and copies of all records of the business of Refund Home Loans Pty Ltd (Administrator Appointed) (“Refund Home Loans”).

The fair value of the identifiable assets and liabilities of Refund Home Loans as at the date of acquisition were:

Other financial assets - trailing commissions receivable Other financial liabilities - trailing commissions payable Deferred tax liability Fair value of identifiable net assets acquired	2012 $000 5,374 (2,572) (840)
	1,962

Goodwill

Provisional Goodwill was recognised as a result of the acquisition as follows:

Purchase consideration transferred Fair value of identifiable net assets acquired Provisional Goodwill arising on acquisition	$’000 2,950 (1,962)
	988

Acquisition-related costs

Acquisition costs of $292,000 related to external success fees and legal and other administration fees included under Operating expenses in the Statement of Comprehensive Income.

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Homeloans Limited-Appendix 4E

Preliminary Final Report

– Appendix 1 ASX Appendix 4E

Other Disclosures

Dividend reinvestment plan

The Company’s dividend reinvestment plan was in operation for the interim dividend and will also apply for the final dividend payment.

Details of entities over which control has been gained or lost during the year

Refer to ‘Other significant information’

Details of associates and joint ventures As at 30 June 2012 National Mortgage Brokers Pty Limited

Ownership interest held 26.5%

Other significant information

On 8[th] June 2012, the Group acquired the rights to the loan book and the exclusive right to own and maintain the intellectual property and copies of all records of the business of Refund Home Loans Pty Ltd (Administrator Appointed) (“Refund Home Loans”).

Post balance date events

On 27[th] August 2012, the Directors of the Company declared a final dividend in respect of the year ended 30 June 2012 of 3.5 cents per share, fully franked.

On 18[th] July 2012, the Group disposed of its 26.5% holding in National Mortgage Brokers Pty Limited

Foreign Entities

Not applicable

Net tangible assets per security

Description	30 June 2012 $	30 June 2011 $
Net assets	41,922,457	38,466,685
Net tangible assets	28,369,072	25,902,171
Ordinaryshares	106,643,896	103,788,903
Net assetsper security	0.3931	0.3706
Net tangible assetsper security	0.2660	0.2496

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MEDIA RELEASE 27 AUGUST 2012

Homeloans maintains nimble approach, reports resilient FY results Refund acquisition in line with expansion strategy Statutory earnings of $8.1m Normalised earnings of $8.0m

Non-bank mortgage provider Homeloans Limited (ASX:HOM) has today announced a resilient full year financial result in the face of a challenging mortgage market. Despite a subdued economic environment and a highly competitive market, Homeloans focused on growing its business with the acquisition in June 2012 of Refund Home Loans* and the addition of 54 new brokers to the Homeloans network. This acquisition also increased the Group’s funds under administration to $7.8 billion.

Highlights for the 12 months to 30 June 2012

• Normalised net profit after tax after adjusting for one off costs associated with the acquisition of Refund and non cash adjustments was $8.0m which was in line with the normalised net profit after tax for 30 June 2011 of $8.1m.

• Statutory Net Profit After Tax was $8.1 million, down from the previous corresponding period of $9.2 million which included a positive tax benefit and non cash adjustments of $1.1m.

• Net cash flow from operating activities increased 57.7% for the period from $4.2m to $6.5m.

• The Board has declared a fully franked final dividend of 3.5 cents per share taking the full year dividend to 6 cents per share which is in line with the previous year.

• In an operating environment characterised by subdued housing credit growth and intense competition, lending volumes were slightly down (4%), although loan balances under administration by the Group (excluding the securitised loan portfolio and the Refund loan portfolio) increased 5.8% on the previous financial year and ahead of system growth.

• Homeloans has continued to grow its own branded loan book, achieving annualised growth of 6.3% on June 2011, reflecting ongoing focus on providing a competitive offering and on retention activities.

• Total funds under administration was $7.8 billion, up from $5.6 billion.

• Continued improvement in operating efficiencies has resulted in significant cost savings with operating expenses reducing 15% to $15.3m (excluding one off acquisition costs of $0.3m).

• The cost savings largely offset the impact of lower net fee and commission income flowing from reduced lending volumes when compared against the previous corresponding period and the reduced revenue contribution from the securitised loan portfolio.

• Net tangible asset backing per share stood at 26.60 cents, up 7% from 24.96 cents as at June 2011.

• Basic earnings per share on a statutory basis stood at 7.67 cents.

• Solid return on equity of 20.2% versus 20.9% for the previous corresponding period.

Growth and expansion strategy

Homeloans’ Executive Chairman Tim Holmes said: “These results are in line with expectations and are encouraging in what was a tough market.”

“In a year that was defined by historically low housing credit growth due to global and local economic factors and subdued consumer confidence, not to mention intense competition in home lending, Homeloans has had an unwavering strategic growth focus. The Refund acquisition is testament to this. Indeed, acquiring the Refund business has provided an excellent platform for taking Homeloans to the next level.”

As part of the acquisition, Homeloans acquired trail income and expense rights to Refund’s $1.9 billion loan book. In addition, 54 former Refund brokers entered into agreements to become Homeloans-branded brokers.

“It enhances our broker network by almost 80 per cent around Australia – particularly on the eastern seaboard. In turn, this will significantly expand Homeloans’ branded distribution,” Holmes added.

“Our core tenets remain unchanged; we are focused on expanding our business via acquisitions and organic growth, increasing lending volumes through strategic relationships with our wholesale funders and enhancing our product offering. This has underpinned Homeloans’ performance over the past 12 months and helped differentiate the Group from its competitors.”

Homeloans has also continued to focus on improving operating efficiencies in order to offset lending volume and margin pressures in the market. During the financial year, underlying operating expenses reduced 15% from $18 million to $15 million.

“This is a very pleasing result and reflects Homeloans’ continued focus on improving operating efficiencies to offset lending volume and margin pressures in the market,” Holmes said.

“This will continue to be a key area of focus for the year ahead. It enables Homeloans to be more agile and customer orientated and to continue to define the Group as a true and trusted alternative to the big four banks for home finance.”

Outlook

While the Group is well positioned going into the financial year 2013, general market conditions remain subdued, and Homeloans expects that these conditions will continue at least into the first half of the new financial year.

“However, we believe the current environment will present further opportunities for Homeloans to continue to grow,” Holmes said. “A key driver will be the expansion of the Group’s national distribution footprint as a result of the Refund transaction, in addition to the continued growth and refinement of Homeloans’ product offering.”

ENDS

*Refund Home Loans Pty Ltd (Administrators appointed)

About Homeloans Ltd – www.homeloans.com.au

Founded in 1985 and listed on the Australian Stock Exchange in 2001, Homeloans Ltd (ASX:HOM) specialises in home loans, and has a wide range of products to meet the needs of all types of customers, from first home buyers to investors.

With an Australia-wide presence, Homeloans provides a refreshing alternative to the banks for home finance. The mortgage provider has a clear focus on customer service, and has won a number of industry accolades including the Mortgage and Finance Association of Australia (MFAA) Mortgage Manager of the Year Excellence Award 2009, 2010 and 2012, and Best Non-Bank Lender at the 2011 Australian Lending Awards.

Homeloans offers a generous customer benefits program and is proud to support Carbon Conscious, planting a tree for every Homeloans loan settled.

For further information:

Tim Holmes Ian Parkes Executive Chairman CFO Homeloans Limited Homeloans Limited 0419 384 775 (02) 8267 2005

Lisa Llewellyn Principal Llewellyn Communications 0419 401 362