1 July 2005
Pacific Retail Finance Welcomes International Credit Ratings
Leading consumer finance company Pacific Retail Finance Limited (PRF) has received credit ratings by two international
agencies in response to a growing demand by intermediaries and investors for finance companies to be rated.
PRF received a B3 rating from Rapid Ratings and a BB- rating from Standard & Poor's. The ratings agencies commented on PRF's solid earnings record and strong revenue and asset growth.
PRF recently reported a record $13.7 million pre-tax profit for the year to 31 March 2005, building on its track record
of sustained performance and growth with an impressive increase on the $8.7 million pre-tax profit for the previous
financial year to 31 March 2004.
Rapid Ratings noted in its ratings report that "overall, PRF has been achieving very good financial results. It has a
good record of profitability and is performing at a high level of financial efficiency". It also reported that PRF,
which is the fifth finance company to publicise its rating from Rapid Ratings, operates as a stand-alone entity without
the reliance on cash flow from other members of the Pacific Retail Group.
Standard & Poor's said that its rating was based on PRF's acceptable risk-based capitalisation, solid earnings record and
reasonable geographic diversification. Moderating that was the relatively small size of the New Zealand market and the
potential impact on PRF of any possible economic downturn. However, Standard & Poor's noted that PRF was "a viable business with some resilience likely to any weakening of the economic environment".
PRF Chief Executive Greg Cathcart says PRF is satisfied with its ratings, which provide a benchmark for intermediaries
and investors to evaluate the company. PRF is projecting continued strong growth in both market share and underlying
profitability and, as it continues to grow, it will be working to further improve its ratings.
Cathcart notes the current lack of New Zealand finance companies with ratings, and a lack of consumer understanding
about what individual ratings mean, can make it difficult to compare like-with-like. "However this is changing as
intermediaries and investors look to ratings to help them differentiate between finance companies. It is now inevitable
that finance companies will have to go through the ratings process in the near future in order to remain competitive,"
Cathcart says.
"In this climate, it is also going to become increasingly important that ratings agencies are able to explain to the
consumer market what the individual ratings mean."
Cathcart says he believes any institution raising public money, regardless of whether they are a finance company,
building society, credit union or some other form of financier, should have a publicly disclosed rating.
"The Securities Commission's recent report into finance company disclosure makes it very clear that it considers a
rating is material information that should be in the public domain. We endorse this approach as we believe that the
increasing disclosure of ratings will allow more transparent and meaningful comparison between industry participants,"
Cathcart says.
ENDS