RESIMAC GROUP LTD — Interim / Quarterly Report 2012

Feb 26, 2012

Homeloans Limited

Appendix 4D (Rule 4.2A)
Half Year report – Period ending 31 December	2011	2010
	$000’s	**$000’s Change **
Results for announcement made to market
Revenues from ordinary activities	34,441	39,676 (13.2%)
Profit from ordinary activities after tax attributable to members	3,813	4,397 (13.3%)
Net profit for the half-year attributable to members	3,813	4,397 (13.3%)
Dividends
Interim dividend – 100% franked (2010: 100% franked) (cents per share)	2.5	2.5 n/a
Record date for determining entitlements to the dividend	19 March	2012
Last date for receipt of election notices for Dividend Reinvestment Plan	19 March	2012
Payment date for dividend	30 March	2012

The Company’s Dividend Reinvestment Plan will apply to this dividend payment. The allocation price for shares under the Plan will be calculated as the average of the daily volume weighted average price of Homeloans Limited ordinary shares traded on the ASX during the 5 day trading period before the record date and the record date of 19 March 2012. The shares will be issued at a discount of 5%. Dividend election forms will be forwarded to all shareholders on 2 March 2012.

Details of entities over which control was gained or lost during the period

N/A Details of associates and joint ventures As at 31 December 2011 National Mortgage Brokers Pty Ltd. Net tangible assets per security	N/A Details of associates and joint ventures As at 31 December 2011 National Mortgage Brokers Pty Ltd. Net tangible assets per security	Ownership interest held 26.5%
**Description **	31 December 2011	31 December 2010
Net tangible assetsper security	25.93 cents	21.86 cents

This report is based on the consolidated half-year financial report which has been subject to a review by our auditors, Ernst & Young.

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Timothy Holmes Executive Chairman 24 February 2012

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MEDIA RELEASE 24 February 2012

Homeloans maintains agile approach with improved operating efficiencies Sound HY result in challenging environment Statutory earnings of $3.8m

Mortgage lender Homeloans Limited (ASX:HOM) has today announced a sound interim financial result in line with expectations, reflecting the Company’s enhanced operating efficiencies in the challenging mortgage lending and credit market.

Highlights for the six months to 31 December 2011

• Statutory Net Profit After Tax was $3.8m compared with the previous corresponding period result of $4.4m, or $4.2m after adjusting for the interest income foregone as a result of the capital return made in September 2010. The interim result was higher than the comparable $3.7m result achieved over the second half of FY2011, demonstrating a stabilisation of earnings performance during the period.

• In an operating environment characterised by subdued housing credit growth and intense competition, lending volumes of Homeloans-branded product have been resilient, increasing 2% versus the second half of FY2011. Lending volumes in the current period are down 18% compared with the previous corresponding period, reflecting the significant downturn in housing credit growth over the past 12 months.

• Homeloans has continued to grow its own branded loan book, achieving annualised growth of 3.3% since June 2011.

• Continued improvement in operating efficiencies and a realignment of cost structures has resulted in significant cost savings with operating expenses reducing 15% compared with the previous corresponding period from $9.3m to $7.9m.

• The cost savings largely offset the impact of lower revenue and net fee and commission income caused by reduced lending volumes when compared against the previous corresponding period. Total revenue reduced 13% whilst net fee and commission income was also down by 13% compared with the previous corresponding period.

• Net tangible asset backing per share stood at 25.93 cents, up 4% from 24.96 cents as at June 2011.

• Basic earnings per share stood at 3.63 cents compared to 4.33 cents per share for the previous corresponding period.

• The Board has declared a fully franked interim dividend of 2.5 cents per share, consistent with the previous corresponding period.

Homeloans’ Executive Chairman Tim Holmes said: “These are sound results achieved in an environment where housing credit growth is at 30-year lows, consumer confidence continues to

be dampened by the ongoing financial turmoil in Europe and the competition amongst the banks is aggressive.

“Despite these factors, which have defined the market for over 12 months, Homeloans has continued to deliver solid financial results, underpinned by a strategy focused on establishing a more productive and efficient operating model.”

The Company has continued to focus on streamlining its operating model in order to generate efficiencies. During the half year period, Homeloans undertook a strategic review of its business structure which resulted in some positive changes and contributed towards further rationalising of the cost base.

“The cost rationalisation achieved by Homeloans in recent times has been critical in maintaining our earnings profile and improving operating effectiveness amidst numerous external challenges,” Holmes said. “Our efforts to streamline key business processes are also critical in ensuring we remain nimble and customer oriented – a quality which strengthens our position as a true alternative to the major banks for home finance.”

Growth and expansion strategy

Homeloans is well placed and will continue to explore opportunities for acquisition, in addition to seeking opportunities to grow its lending volumes via strategic relationships with its wholesale funders and expansion of the group’s product offering.

“Product innovation is also critical, particularly in the current environment, and we expect to make further progress in this area over the year ahead,” Holmes added.

Consolidation within the market will also provide further opportunities, Holmes said.

“We expect to see further consolidation within the second tier and non-bank sector and, as such, Homeloans is actively looking for acquisition opportunities. We are well placed to act on this should an opportunity arise that is a good fit with our business and, indeed, our business model,” he said.

“Homeloans is now the largest remaining publicly-listed non-bank in Australia, and with continued consolidation and fewer brands in the market, this further shores up our position as a serious alternative to the major banks.

“Our scalability, access to diversified funding, strong brand, effective distribution channels and dedicated people provide us with a strong platform from which to grow the business and make the most of opportunities once market conditions improve.”

Outlook for the next six months to 30 June 2012

Homeloans expects trading conditions to remain challenging over the next six months with housing credit growth forecast to remain around the 5% level. The Company is, however, pleased with recent performance and expects to further consolidate its position over the second

half of the financial year. Homeloans will focus on realising further cost savings and further developing its product range and funding base in order to maximise new lending activity.

“Homeloans is very well placed to take full advantage of improved operating conditions and other opportunities as they arise,” Holmes added.

ENDS

About Homeloans Ltd

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 and 2010, 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. www.homeloans.com.au

For further information:

Tim Holmes

Executive Chairman Homeloans Limited 0419 384 775

Cameron Matthews

CFO Homeloans Limited (02) 8267 2005

Lisa Llewellyn

Principal Llewellyn Communications 0419 401 362

HOMELOANS LIMITED

A.B.N. 55 095 034 003

HALF-YEAR REPORT

FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

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Corporate Information

ABN 55 095 034 003

This half-year report covers the Group comprising Homeloans Limited and the entities that it controlled during the financial period. The Group’s functional and presentation currency is AUD ($).

A description of the consolidated operations and of its principal activities is included in the review of the operations and activities in the directors’ report on page 3. The directors’ report does not form part of the financial report.

Directors

Timothy Holmes (Executive Chairman) Brian Benari (Non-Executive Director – resigned on 17 February 2012) Robert Salmon (Non-Executive Director) Robert Scott (Non -Executive Director) Andrew Hall (Non-Executive Director) Gavin Buchanan (Non-Executive Director – appointed on 17 February 2012)

Company Secretary

Jennifer Murray

Registered Office

Level 9, The Quadrant 1 William Street Perth WA 6000 Phone: (08) 9327 1777 Facsimile: (08) 9327 1778

Corporate Office

Level 16, 68 Pitt Street Sydney NSW 2000 Phone: (02) 8267 2007 Facsimile: (02) 8267 2045

National Office

Level 2, The Atrium 168 St George’s Terrace Perth WA 6000 Phone: (08) 9261 7000 Facsimile: (08) 9261 7079 Web site: www.homeloans.com.au

Postal Address

PO Box 7216 Cloisters Square Perth WA 6850

Share Registry

Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building 45 St George’s Terrace Perth WA 6000 Telephone: (08) 9323 2000 Facsimile: (08) 9323 2033

Bankers

Westpac Banking Corporation Westpac Place, Kent Tower 275 Kent Street Sydney NSW 2000

Auditors

Ernst & Young 11 Mounts Bay Road Perth WA 6000

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Directors’ Report

Your directors submit their report for the half-year ended 31 December 2011.

DIRECTORS

The names of the company’s directors in office during the half-year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated.

Timothy Alastair Holmes (Executive Chairman)

Brian Roland Benari (Non-Executive Director – resigned on 17 February 2012)

Robert Peter Salmon (Non-Executive Director)

Robert Norman Scott (Non-Executive Director)

Andrew Loddington Hall (Non-Executive Director)

Gavin James Buchanan (Non-Executive Director – appointed on 17 February 2012)

REVIEW AND RESULTS OF OPERATIONS

Statutory net profit after tax for the half-year was $3,813,000, down from the previous corresponding period result of $4,397,000, or $4,198,000 after adjusting for the interest income forgone as a result of the capital return made in September 2010. The current period result is higher than the net profit after tax result, adjusted for non-cash items as disclosed previously, of $3,679,000 achieved over the second half of the 2011 financial year.

This is a sound financial result in line with expectations and achieved amidst what continues to be a very challenging mortgage lending and credit market. Whilst the net profit after tax result has reduced marginally compared to the previous corresponding period, the improved performance compared to the second half of the 2011 year demonstrates a stabilisation of earnings performance during the period. The key drivers of the results are:

• In an operating environment characterised by subdued housing credit growth and intense competition, lending volumes of Homeloans branded product have been resilient, increasing 2% versus the second half of the 2011 financial year. Lending volumes in the current period are down 18% compared with the previous corresponding period, reflecting the significant downturn in housing credit growth over the past 12 months.

• Homeloans has continued to grow its own branded loan book, achieving annualised growth of 3.3% since June 2011 compared to overall market growth of around 5%.

• Continued improvement in operating efficiencies and a realignment of cost structures has resulted in significant cost savings with total operating expenses reducing 15% compared with the previous corresponding period from $9,314,000 to $7,874,000.

• The cost savings largely offset the impact of lower revenue and net fee and commission income caused by reduced lending volumes. Total revenue reduced 13% whilst net fee and commission income was also down by 13% compared with the previous corresponding period.

The Group has continued to focus on establishing a more productive and efficient operating model during a period of subdued credit growth, which is currently tracking at over 30 year lows, and intense competition. These efforts have yielded significant cost savings which has been critical in maintaining the Company’s earnings profile. The focus on streamlining key business processes is also critical in ensuring the Company remains nimble and customer oriented – a quality which strengthens Homeloans’ position as a true alternative to the major banks for home finance.

Homeloans will continue to explore opportunities for acquisition in addition to seeking opportunities to grow its lending volumes via strategic relationships with its wholesale funders and expansion of the Group’s product offering. The Company expects further consolidation within the second tier and non-bank mortgage lending sector and is well placed to act on opportunities that arise and which are a good fit for the business. The Company has strong levels of cash reserves and continues to generate strong operating cashflow.

The Company expects trading conditions to remain challenging over the second half of the financial year with housing credit growth forecast to remain around the 5% level. The Company is, however, pleased with recent performance and expects to further consolidate its position over the second half of the year by focussing on realising further cost savings and further developing its product range and funding base in order to maximise new lending activity. This places Homeloans in a strong position to take full advantage of improved operating conditions as they arise.

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Rounding

The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the company under ASIC Class Order 98/0100. The company is an entity to which the Class order applies.

Auditor's Independence Declaration

We have obtained an independence declaration from our auditors, Ernst & Young, shown at page 19, which forms part of the directors’ report.

Signed in accordance with a resolution of the directors.

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T.A.Holmes Executive Chairman Perth 24 February 2012

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HOMELOANS L IMITED —H ALF-Y EAR R EPORT

Consolidated Statement of Financial Position

AS AT 31 DECEMBER 2011 Notes	CONSOLIDATED As at 31 DECEMBER 2011 As at 30 JUNE 2011 $’000 $’000
ASSETS Cash and cash equivalents Receivables Loans and advances to customers 8 Other financial assets Investment in associate Plant and equipment Goodwill TOTAL ASSETS LIABILITIES Payables Interest-bearing liabilities Other financial liabilities Derivative financial liabilities Lease incentives Deferred income tax liabilities Provisions TOTAL LIABLILITIES NET ASSETS EQUITY Issued capital 6 Reserves Accumulated losses TOTAL EQUITY	25,678 20,960 4,070 5,501 325,501 370,579 39,549 37,212 278 351 794 887 12,565 12,565
	408,435 448,055
	5,909 6,437 339,957 383,008 16,459 259 14,588 206 135 176 5,107 4,764 449 409
	368,275 409,588
	40,160 38,467
	65,990 64,481 816 816 (26,646) (26,830)
	40,160 38,467

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Consolidated Statement of Comprehensive Income

FOR THE HALF-YEAR ENDED 31 DECEMBER 2011 Notes	CONSOLIDATED Half-year ended 31 DECEMBER 2011 Half-year ended 31 DECEMBER 2010 $’000 $’000
Interest Income 3 Interest Expense 3 Net Interest Income Fee and Commission income 3 Fee and Commission expense 3 Other operating income 3 Reversal of impairment allowance 3 General administrative expenses 3 Employee benefits 3 Other operating expenses 3 Share of profit of associate 3 Profit before income tax expense Income tax expense 4 Net profit after tax for the period TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO THE MEMBERS OF HOMELOANS LIMITED Earnings per share Basic earnings per share (cents per share) Diluted earnings per share (cents per share)	17,311 21,255 (11,830) (14,902)
	5,481 6,353
	16,622 17,926 (9,400) (9,596) 508 495 25 390 (2,922) (3,966) (4,903) (5,295) (49) (53) 161 98
	5,523 6,352 (1,710) (1,955)
	3,813 4,397
	3,813 4,397
	3.63 4.33 3.63 4.32

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Consolidated Statement of Cash Flows

Consolidated Statement of Cash Flows
FOR THE HALF-YEAR ENDED 31 DECEMBER 2011 Notes	CONSOLIDATED Half-year ended 31 DECEMBER 2011 Half-year ended 31 DECEMBER 2010 $’000 $’000
CASH FLOWS FROM OPERATING ACTIVITIES Interest received Interest paid Loan fees and other income Commissions, salaries and other expenses Income taxes paid Repayments from / Net loans (advanced) from borrowers (Repayments of) / Proceeds from warehouse facility (Repayments to) / Proceeds from bondholders NET CASH FLOWS FROM OPERATING ACTIVITIES (A) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of plant and equipment NET CASH FLOWS USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Share buy back Proceeds from borrowings Repayment of borrowings Return of capital Payment of dividends NET CASH FLOWS USED IN FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH HELD Add: Opening cash brought forward CLOSING CASH CARRIED FORWARD 7	17,505 21,471 (12,287) (13,149) 18,312 16,157 (17,582) (18,328) (927) (2,613) 44,961 67,414 (32,971) (36,775) (10,255) (29,763)
	6,756 4,414 (89) (157)
	(89) (157) 21 485 (82) - 958 597 (784) (920) - (35,670) (2,062) (3,567)
	(1,949) (39,075) 4,718 (34,818) 20,960 57,592
	25,678 22,774

(A) – 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 Group’s operating cash flows. These cash flows are not available for the use of shareholders. The RMT SPV’s had operating cashflows of $1,851,000 (2010: operating cashflows of $2,208,000) during the half year period. Therefore, if RMT had not been consolidated, total Group operating cashflow would have been $4,905,000 (2010:$ 2,206,000).

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Consolidated Statement of Changes in Equity

FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

CONSOLIDATED	Issued Capital Accumulated Losses Employee Option Reserve Total $’000 $’000 $’000 $’000
At 1 July 2010 Profit for the period Total comprehensive income Equity Transactions: Shares issued Return of capital * Equity dividends At 31 December 2010	98,283 (29,876) 816 69,223 - 4,397 - 4,397
	- 4,397 - 4,397 485 - - 485 (35,670) - - (35,670) - (3,567) - (3,567)
	63,098 (29,046) 816 34,868

* A return of capital of 35 cents per share was made to shareholders during the half year period ended 31 December 2010.

FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

CONSOLIDATED	Issued Capital Accumulated Losses Employee Option Reserve Total $’000 $’000 $’000 $’000
At 1 July 2011 Profit for the period Total comprehensive income Equity Transactions: Shares issued Share buy back Dividend reinvestment plan Equity dividends At 31 December 2011	64,481 (26,830) 816 38,467 - 3,813 - 3,813
	- 3,813 - 3,813 21 - - 21 (82) - - (82) 1,570 - - 1,570 - (3,629) - (3,629)
	65,990 (26,646) 816 40,160

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Notes to the Consolidated Half-Year Financial Statements

FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

1. CORPORATE INFORMATION

The half-year consolidated financial report of Homeloans Limited and its controlled entities (‘the Group’) for the half-year ended 31 December 2011 was authorised for issue in accordance with a resolution of the directors on 24 February 2012. Homeloans Limited is a company incorporated and domiciled in Australia and limited by shares, which are publicly traded on the Australian Securities Exchange.

The nature of the operations and principal activities of the Group are described in Note 11.

2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

The half-year consolidated financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Group as the full financial report.

The half-year consolidated financial report should be read in conjunction with the Annual Financial Report of Homeloans Limited as at 30 June 2011.

It is also recommended that the half-year consolidated financial report be considered together with any public announcements made by Homeloans Limited and its controlled entities during the half-year ended 31 December 2011 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.

(a) Basis of preparation

The half-year consolidated financial report is a general purpose condensed financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 and AASB 134 Interim Financial Reporting .

The half-year consolidated financial report has been prepared on a historical cost basis, except for derivative financial instruments that have been measured at fair value.

For the purpose of preparing the half-year consolidated financial report, the half-year has been treated as a discrete reporting period.

(b) Significant accounting policies

The accounting policies and methods of computation are the same as those adopted in the most recent annual financial statements.

New and amended Accounting Standards and Interpretations

From 1 July 2011, the Group has adopted the Standards and Interpretations, mandatory for annual periods beginning on or after 1 July 2011. Adoption of these standards and interpretations did not have any effect on the financial position or performance of the Group.

The Group has not elected to early adopt any new standards or amendments.

(c) Basis of consolidation

The half-year consolidated financial statements comprise the financial statements of Homeloans Limited and its subsidiaries as at 31 December 2011 (‘the Group’).

(d) Comparatives

Certain figures in the prior year have been re-classified to conform with the current year presentation.

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Notes to the Consolidated Half-Year Financial Statements

FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

FOR THE HALF-YEAR ENDED 31 DECEMBER 2011
	CONSOLIDATED
	Half-year ended	Half-year ended
	31 DECEMBER 2011	31 DECEMBER 2010
	$’000	$’000
3. REVENUE, INCOME AND EXPENSES
(a) Specific Items
Operating profits before income tax expense includes the following revenues and expenses
whose disclosure is relevant in explaining the financial performance of the Group:
(i)Revenues
Interest received – other person/corporations	17,311	21,255
Mortgage origination income	5,046	6,224
Loan management fees	11,576	11,702
Other operating income	508	495
(ii)Other income
Share of profit of associate	161	98
Reversal of impairment allowance	25	390
(iii)Expenses
Interest on financial liabilities	979	901
Interest expense of securitisation trust	10,851	14,001
Mortgage origination expense	4,051	4,486
Loan management fee expense	5,349	5,110
Depreciation	181	210
Occupancy costs	955	985
Other administration expenses	1,786	2,771
Employee benefits	4,903	5,295
Borrowing costs and bank fees	49	53

(b) Change in accounting estimate

The Group receives trailing commissions from lenders on settled loans over the life of the loan based on the loan book balance outstanding to which the Group is entitled. The Group also makes trailing commission payments to introducers based on the loan book balance outstanding.

The fair value of trailing commissions receivable and the corresponding payable to introducers is determined by using the discounted cash flow valuation technique. These calculations require the use of assumptions. The key assumptions underlying the fair value calculation of trailing commissions receivable and the corresponding payable to introducers during the period include the prepayment rate and the discount rate. These assumptions are determined by management as follows:

	Period ended 31 December 2011 Year ended 30 June 2011
Prepayment rate Discount rate	Ranging from 10.08 % to 56.10% depending on the age of the loans Ranging from 10.08% to 56.10% depending on the age of the loans 12.0% 12.0%

Some changes were made to the prepayment rates during the period to reflect actual experience. If these changes had not been made, the net profit before tax result would have been lower by $1,212,000.

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Notes to the Consolidated Half-Year Financial Statements

(b) Change in accounting estimate (continued)

A re-measurement of all assets and liabilities using the discounted cash flow valuation technique occurs periodically, usually quarterly but must be completed at each reporting date.

There are a number of parameters that affect these calculations:

• Loan balance

• Prepayment rate

Each of these parameters can change over time and therefore regular revaluations are required, incorporating up to date assumptions for these parameters, to reflect the true value of the discounted assets and liabilities.

(c) Seasonality of Operations

There is no significant variance in mortgage origination volumes generated by the Group between the first half or the second half of the financial year.

4. INCOME TAX EXPENSE

On 25 November 2011, the Assistant Treasurer, via a media release, announced proposed amendments to the tax consolidation rules that were enacted on 12 May 2010. This follows the Assistant Treasurer initiating a review of the tax consolidation rules, to be undertaken by the Board of Taxation, on 30 March 2011, less than 12 months after changes were enacted.

As previously reported, following changes to the tax consolidation legislation in May 2010, Homeloans realised benefits in its financial results for the years ended 30 June 2010 and 2011 totalling $3,128,000. At this stage, there is a lack of clarity regarding the precise nature of the proposed changes and the Company is awaiting the release of an Exposure Draft in order to determine what implications (if any) this may have for the Company.

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Notes to the Consolidated Half-Year Financial Statements

FOR THE HALF-YEAR ENDED 31 DECEMBER 2011	CONSOLIDATED	CONSOLIDATED
	Half-year ended	Half-year ended
	31 DECEMBER 2011	31 DECEMBER 2010
	$’000	$’000
5.DIVIDENDS PAID OR PROPOSED ON ORDINARY SHARES
(a)Dividends declared and paid during the half-year
Franked
Final 100% franked ordinary share dividend for financial year 30 June 2011: 3.5 cents	3,629	3,567
(2010: 3.5 cents)
(b)Dividends proposed and not recognised as a liability
Interim 100% franked ordinary share dividends for half- year ended 31 December 2011:	2,660	2,550
2.5 cents (2010: 2.5 cents)

As a consequence of amendments to the Corporations Act 2001 on the 28 June 2010 relating to the payment of dividends, the Commissioner of Taxation informally expressed a preliminary view in an ATO Draft Fact Sheet dated 21 June 2011 which stated that ‘where a company’s net assets are less than its share capital and the company debits a dividend to an account such as accumulated losses, a dividend will be sourced indirectly from share capital and will be unfrankable’. The Draft Fact Sheet did not address the circumstances where a company is paying a dividend from current period profits.

Homeloans, as indicated in its full year financial statements for the year ended 30 June 2011, sought a private ruling from the ATO on this matter. A favourable ruling was received on 25 January 2012 which deemed dividends already paid by Homeloans since 1 July 2010 as well as any dividends paid up to 31 December 2012 frankable under the Income Tax Assessment Act 1997.

On 3 February 2012, the ATO released a public ruling on this matter, Draft Taxation Ruling TR 2011/D8. This ruling provided confirmation that a dividend paid out of current trading profits will be frankable even if the company has unrecouped prior year accounting losses or has lost part of its share capital. The ruling was consistent with the private ruling obtained by Homeloans.

6.ISSUED CAPITAL (a) Issued and paid up capital Ordinary shares fully paid	As at 31 DECEMBER 2011 As at 30 JUNE 2011 $’000 $’000
	65,990 64,481 65,990 64,481 Half-year ended 31 December 2011 No. of shares‘000 $’000 103,788 2,762 (138) 64,481 1,591 (82) 106,412 65,990
(b) Movements in shares on issue Ordinary shares At 1 July 2011 Shares issued during the period Shares bought back during the period

(c) Movements in share options on issue At 1 July 2011 Exercised during the half-year Expired during the half-year Exercisable at the end of the half year **	No. of options Weighted average exercise price $
	125,000 (100,000) 0.21 0.21
	(25,000) 0.21
	- -

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Notes to the Consolidated Half-Year Financial Statements

FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

FOR THE HALF-YEAR ENDED 31 DECEMBER 2011
	CONSOLIDATED As at 31 DECEMBER 2011 As at 31 DECEMBER 2010 $’000 $’000
7.RECONCILIATION OF CASH For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise the following; Cash at bank and in hand RMT Cash Collections Account Restricted Cash 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. ** Cash held in trust as collateral for the Warehouse facility with Westpac Banking Corporation.	10,645 4,752 13,092 15,534 1,941 2,488
	25,678 22,774

8. LOANS AND ADVANCES TO CUSTOMERS

8. LOANS AND ADVANCES TO CUSTOMERS
	CONSOLIDATED As at 31 DECEMBER 2011 As at 30 JUNE 2011 $’000 $’000
Gross loans and advances Less: Allowance for impairment loss *	327,484 372,690 (1,983) (2,111)
	325,501 370,579

• An allowance for impairment is maintained against the mortgage loan receivables within the RMT Special Purpose Vehicles. The allowance for impairment loss is measured as the difference between the carrying amount of the loan and the value of expected future cash flows, adjusted for insurance recoveries.

The Group did not originate any new loans into its securitised vehicle during the half-year period. Therefore, the decrease in the balance of loans and advances to customers reflects the underlying run-off of this loan book.

9. CONTINGENT ASSETS AND LIABILITIES

Since the last annual reporting date, there has been no material change of any contingent liabilities or contingent assets.

10. SUBSEQUENT EVENTS

On 24 February 2012, the directors announced an interim 100% franked dividend of 2.5 cents per share (2010: interim 100% franked dividend of 2.5 cents per share) payable on all shares.

With effect from 17 February 2012, Brian Benari resigned as a director of Homeloans Limited and was replaced by Gavin Buchanan.

No other matters or events have arisen since the end of the interim period which have significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial periods.

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Notes to the Consolidated Half-Year Financial Statements

11. OPERATING SEGMENTS

Identification of reportable segments

The Group has identified its operating segments based on the internal management reports that are reviewed and used by the Board of Directors (the chief operating decision makers) in assessing performance and in determining the allocation of resources.

The operating segments are identified by the Board of Directors, in conjunction with management, based on the nature of the products and services provided, the nature in which they are organised and managed and the markets to which they serve.

Types of products and services

Origination and management

The origination and management segment originates residential mortgages through external mortgage brokers, satellite offices and internal consultants. The funding for these mortgages is supplied by a pool of funders, with the origination and management segment continuing the ongoing management of the loans after they are processed and settled.

Securitisation of mortgages

The securitisation of mortgages segment is the Group’s own funding source. Using a series of mortgage trusts, this segment packages groups of mortgages and sells the income stream via a securitised mortgage trust.

The following tables present revenue and profit information for reportable segments for the half years ended 31 December 2011 and 31 December 2010. For the comparative period the segment assets are shown as at the last annual reporting date being the 30[th] June 2011.

CONSOLIDATED		Origination and Management Securitisation of Mortgages $’000 $’000	Total $’000 17,311 16,622 508 34,441 1,315 35,756 (1,315) 34,441 5,606 25 5,631 (108) 5,523 (1,710) 3,813 408,435
Half-year ended 31 December 2011 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 reversal of impairment allowance Reversal of impairment allowance Profit before tax and finance costs Finance costs Profit before income tax Income tax expense Net profit for the half-year Assets Segment assets Total assets		2,444 14,867 16,068 554 508 -
		19,020 15,421 1,315 -
		20,335 15,421
		2,663 2,943 - 25
		2,663 2,968 67,796 340,639
			408,435

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HOMELOANS L IMITED —H ALF-Y EAR R EPORT

Notes to the Consolidated Half-Year Financial Statements

11. OPERATING SEGMENTS (CONTINUED) CONSOLIDATED	Origination and Management Securitisation of Mortgages $’000 $’000	Total $’000 21,255 17,926 495 39,676 1,632 41,308 (1,632) 39,676 6,075 390 6,465 (113) 6,352 (1,955) 4,397 448,055
Half-year ended 31 December 2010 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 Reversal of impairment allowance Profit before tax and finance costs Finance costs Profit before income tax Income tax expense Net profit for the half-year As at 30 June 2011 Assets Segment assets Total assets	2,529 18,726 16,810 1,116 495 -
	19,834 19,842 1,632 -
	21,466 19,842
	2,225 3,850 - 390
	2,225 4,240 69,724 378,331
		448,055

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Directors’ Declaration

In accordance with a resolution of the directors of Homeloans Limited, I state that:

In the opinion of the directors:

• (a) the financial statements and notes of the Group:

• (i) give a true and fair view of the financial position as at 31 December 2011 and the performance for the half-year ended on that date of the Group; and

• (ii) comply with Accounting Standard AASB 134 “Interim Financial Reporting” and the Corporations Regulations 2001; and

• (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

On behalf of the Board

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T.A.Holmes Executive Chairman

Perth 24 February 2012

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To the members of Homeloans Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Homeloans Limited, which comprises the statement of financial position as at 31 December 2011, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date and other explanatory information and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the half-year.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of Interim and Other Financial Reports Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2011 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Homeloans Limited and the entities it controlled during the half-year. ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the Directors’ Report.

Liability limited by a scheme approved under Professional Standards Legislation

TD:SS:HLL:085

2

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Homeloans Limited is not in accordance with the Corporations Act 2001 , including:

• i) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2011 and of its performance for the half-year ended on that date; and

• ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

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Ernst & Young

T G Dachs Partner Perth 24 February 2012

TD:SS:HLL:085

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Auditor's Independence Declaration to the Directors of Homeloans Limited

In relation to our review of the consolidated financial report of Homeloans Limited and its controlled entities for the half-year ended 31 December 2011, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

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Ernst & Young

T G Dachs Partner Perth 24 February 2012

Liability limited by a scheme approved under Professional Standards Legislation

TD:SS:HLL:084