v2 Report - Additional Information Supplement

LOM Lombard Group Limited

IPOs and Investment Opportunities

Press releases

LOM - Compliance with continuous Disclosure - Lombard Group Limited Response: 

24 August 2007

New Zealand Stock Exchange Limited
PO Box 2959
WELLINGTON

By Email: announce@nzx.com

Lombard Group Limited (LOM) - Compliance with continuous Disclosure

We are responding in this letter to NZX's general inquiry of listed finance companies as to compliance with the obligation under Listing Rule 10.1.1 for continuous disclosure.

Lombard Group strongly supports the requirements of NZX for continuous disclosure of material information, as it is this transparency that differentiates listed companies and should engender investor confidence in the investment market. Lombard's Board takes this requirement very seriously and reflects on it at board meetings on a regular basis. The Board confirms that it has disclosed all material matters and will continue to do so.

The recent failures in the finance industry have unfortunately affected many Mum and Dad investors and so we are happy to take this further opportunity to clearly set out the type of business that our finance company subsidiary Lombard Finance & Investments Limited carries out.

Lombard Finance primarily lends money which is secured against property. Our property lending risk is diversified in that it is spread by borrower, over various types of property exposure and over various geographic locations. After considering the risk profile, the mortgage security held and the location and nature of each secured property, the directors of Lombard Finance remain comfortable with the risk profile as disclosed in our annual accounts to 31 March 2007. Since balance date, there has been a slight improvement in these risk measurements. The Board remains confidant that Lombard Finance can meet all its obligations to depositors.

We also believe the following two policies are important for investor safety:

o Local Lending policy: We lend only within New Zealand as we believe that foreign market risks or foreign political risks are not in the best interests of our investors.

o No related party lending policy: We have no related party lending, as we believe one of the key aspects of lending money is that every transaction should be carried out after considered assessment of the risk, which cannot occur if you sit on both sides of the transaction.

Lombard Group's AGM was held on 25 July 2007, covering its audited results for the financial year to 31 March 2007. I commented at that meeting that the company had suspected Bridgecorp was fragile and, in anticipation of a general market reaction, the company had increased its cash holding to $35 million to ensure it was well prepared for any tightening in the market.

We acknowledge that the recent failures in the finance industry and the impact of this on investor confidence have had the very result that we anticipated, with a resulting tightening in the investment market. While these issues are beyond our control, we have factored this change into our cash management policy. The company continues to hold cash at levels higher than our and the industry's historical norms. The holding of large amounts of cash comes at a cost in terms of returns to shareholders, but in view of prudent liquidity needs this is a cost which is appropriate to bear. Lombard Finance continues to enjoy good support from its depositor base. Reinvestment rates are satisfactory and the company only receives a small portion of its deposits from an adviser network

Since releasing our year end results we can confirm to date that the major factors being liquidity, equity and quality of assets have continued to improve. Going forward, the actual and opportunity costs of holding additional cash will mean that the environment is challenging and requires calmness and resolve.

Review of Operations at 31 March 2007 (as previously announced)

Lombard Group's consolidated net profit before tax was $7.7 million ($4 million March 2006) and net profit after tax was $4.9 million ($2.3 million March 2006).

The marketplace in which Lombard Group's main business, Lombard Finance & Investments Limited operates, remained competitive. It is pleasing to note that in this competitive environment that company's net profit after tax increased to $5.8 million from $3.2 million in March 2006.

While achieving this result our Group Shareholders' equity increased $7.9 million to $30.6 million ($25.1 million net of intangible assets). Loans and advances remained stable at $161.2 million ($163.8 million March 2006) and cash at bank remained strong at $19.7 million ($21.8 million March 2006).

Lombard is fortunate to have a strong and loyal client base which has contributed to the sound profit result.

Yours sincerely
LOMBARD GROUP LIMITED

Michael Reeves
CEO - Director

 

Lombard Group Limited LOM 7 Jun, 2007, 16:29 GENERAL Lombard launches online insurance and

Lombard launches online insurance and mortgage agency: www.maestro.co.nz  The website is a breakthrough in the sale of insurance and home loans in New Zealand 7 June 2007 - Financial services provider Lombard Group Limited (Lombard Group; NZX: LOM) today launched an online insurance and mortgage facilitation business, Maestro Commerce Limited. The website delivers the convenience and transparency of being able to compare and apply for a wide range of insurance cover and home loans from leading New Zealand providers in a single location. Among the providers on board are TOWER, Asteron, FidelityLife and ASB Bank, while agency agreements with a number of other significant companies are in the final stages of negotiation. Lombard Group Chief Executive Officer Michael Reeves describes Maestro as a truly independent, consumer-focused service that will meet the needs of large numbers of web users. "We believe the time has come for this service. Huge advances in online technology in recent years now allow powerful web solutions to be developed cost effectively. At the same time the web is increasingly becoming the hub around which people manage their daily lives," Mr Reeves said. The launch comes a week after Lombard announced it had doubled its after tax annual profit to $4.86 million and entered into an agreement to acquire Tasman Mortgage Group, a securitised mortgage arranger and mortgage broking subsidiary of Australian Stock Exchange-listed Australasian residential investment company Blue Chip Financial Solutions Limited. "The Tasman acquisition and now Maestro's launch underpins Lombard's strategy of developing and acquiring businesses that deliver synergies, efficiencies and multiple revenue streams to the company. "Tasman's intellectual capital and strong relationships with the lending community will be of immediate benefit to Maestro's mortgage broking business," Mr Reeves said. While Maestro currently provides services in the complementary product areas of insurance and mortgages, a third service is under development: the ability to compare, apply for and track the performance of investment products, such as Kiwisaver funds. "Maestro is a single site for managing the financial products New Zealanders are most exposed to and it will evolve to meet the ever changing environment," Mr Reeves said. Maestro's market is the 1.1 million New Zealanders between 25 and 44 years of age, especially the 240,000 classified by researchers as 'professional, executive or self employed.' Nielsen Media Research in December 2006 showed over 80 percent of that 'professional' group had been using the internet for over three years but 43 percent of them had no life insurance, 56 percent had no health insurance and 77 percent had no income protection cover. The Nielsen figures for all 25-44 year olds showed even higher levels of under-insurance, with 54 percent without life insurance, 69 percent without health insurance and 87 percent without income protection. "Life insurance, health insurance and income protection are all part of a prudent insurance portfolio and with so many uninsured high income earners it is clear New Zealanders need better access to these products and support on the internet, which is the media they are increasingly familiar with," Mr Reeves said. "Many New Zealanders' initial exposure to buying insurance comes with the purchase of their first home, so the convenience for the consumer of combining home-loan and insurance applications on the same site makes sense," he added. Delivery of a simple, convenient, comprehensive and transparent service has underpinned Maestro's development. "Having compared insurance and mortgage options at their leisure, applied online and received insurance or a loan, the client's records are available to them in a secure form, at any time from anywhere in the world, just like an online filing cabinet," Mr Reeves said. Current Business Model Insurance The site uses what is known as an aggregator model which delivers a quick and easily understood comparison of both risk (life, trauma and income protection) and health insurance from leading providers TOWER, Asteron and FidelityLife. This model, which has become popular in overseas markets, allows visitors to the site to compare price and cover, choosing the option that best suits their needs and budget, and then apply online. Plain-English explanations and answers to common questions about insurance products can be found on the site, and Maestro's trained customer service team is available to answer consumer inquiries by phone or online. Maestro will introduce more insurance partners and products over time. Mortgages Maestro's mortgage service provides an online application form, the support of experienced bankers and access to leading home loan providers. Learning about loan options and preparing to apply is aided by mortgage content and calculators from the Retirement Commission's popular online financial services website www.sorted.org.nz, which have been transferred in their entirety onto Maestro. (Sorted does not endorse any of the products or services offered on the Maestro website). Home loans on Maestro are currently available from ASB Bank, Asteron, FidelityLife and Guardian Trust. Broker agreements with a number of other lenders are in the final stages of negotiation. About Lombard Group Lombard Group Limited listed on the New Zealand Stock Exchange (NZX) main board in December 2005 following the takeover of a NZX-listed company. Lombard's principal business is Lombard Finance & Investments Limited, a specialist property financier. Lombard plans to grow its footprint across the financial services market through organic growth and by acquisition as opportunities arise. Lombard Group is online at www.lombardgroup.co.nz For more information contact: Michael Reeves Nick Bryant Chief Executive General Manager Lombard Group Limited or Maestro Commerce Limited Office: 04 499 5522 Office: 09 309 7642 Mobile: 021 779 977 Mobile: 021 566 453 Peter Morpeth Board Secretary Disclosure Officer 7 June 2007

 

Lombard Group Limited LOM 31 May, 2007, 12:06 Lombard acquires Tasman Mortgage Group

Lombard acquires Tasman Mortgage Group The acquisition marks the first step in Lombard Group's strategy of growing its financial services operations 31 May 2007 - Lombard Group Limited (Lombard Group, NZX: LOM) is pleased to announce it has entered into an agreement to acquire Tasman Mortgage Group, a securitised mortgage arranger and mortgage broking subsidiary of ASX-listed Australasian residential investment company Blue Chip Financial Solutions Limited (ASX: BCF). Settlement of the transaction will occur as soon as certain third party consents are obtained. The announcement comes a day after Lombard Group posted a net profit after tax for the year to 31 March 2007 of $4.86 million, up from $2.34 million in the previous year. Lombard Group chief executive Michael Reeves said the acquisition of financial services businesses like Tasman was a natural extension of the company's business. "We believe significant synergies and efficiencies can be achieved for Lombard by owning financial services and intermediary businesses like Tasman," Mr Reeves said. Since its launch in 2000 Tasman Mortgage Group has arranged mortgage finance for more than 1500 New Zealanders purchasing investment properties and family homes. Under the terms of the deal Tasman will retain recommended broker status for all of its significant existing clients, including Blue Chip, and strategies will be put in place to grow the business further. The transaction, the details of which is confidential but includes an earn-out component, has been approved by both the Lombard Group and the Blue Chip boards. Ends About Lombard Group Lombard Group Limited listed on the NZX main board in December 2005 following the takeover of a NZX-listed company. Lombard's principle business is wholly-owned subsidiary Lombard Finance & Investments Limited, a specialist property, plant and equipment financier. Lombard plans to grow its footprint across the financial services market through organic growth and acquisition as opportunities arise. For more information contact: Michael Reeves Chief Executive Officer Lombard Group Limited Office: 04 499 5566 Mobile: 021 779 977 Peter Morpeth Board Secretary Disclosure Officer 31 May 2007

Business Report

Lombard Finance & Investments Limited

Lombard Group’s primary business is investment in a portfolio of mortgage secured loan advances and other advances. This is carried out through its principal subsidiary, Lombard Finance & Investments Limited (Lombard Finance). Lombard Finance provides property finance to selected customers. Our lending within this sector is secured by property and includes lending for residential and commercial property investment, property development, bridging loans and mezzanine finance.

Lombard Asset Finance Limited provides loans to business customers including hire purchase, lease finance and general business funding. Lombard Finance has recognised the importance of developing its own funding database and now raises over 95% of its funding from its own investor database with the remainder through brokers. This allows us to directly control our funding requirements as needed. We value our investor funding and strive to ensure the safety of these funds.

LOMBARD FINANCE:

• Adopts through its Board an open and rigorous governance programme;

• Our governance and management team, bring together considerable experience in the various disciplines required to effectively manage the funds entrusted to us by the investors. Our philosophy aligns performance and risk management considerations;

• Operates under a Trust deed which is supervised by its trustee, Perpetual Trust Limited;

• Is subject to annual audit by KPMG;

• Files its accounts publicly; and

• In the year ended 31 March 2007 Lombard Finance generated

Net Profit Before Tax of $8.7 million and Net Profit After Tax of $5.8 million; the consolidated operating earnings were $32.7 million. As at 31 March 2007, assets under management for Lombard Finance totalled $188.6 million. The majority of our loan portfolio at year-end was secured with mortgages against property comprising 88% of the loan book. Cash at bank remains strong at $19.0 million. 

Our net equity increased over the period to 12.5% of tangible assets, creating a financial buffer which is now at the upper end of those in the finance sector proportionate to our loan book. Lombard Finance’s lending is also well diversified, with loans primarily secured by mortgages in a good spread of industry sectors and locations.

Maestro Commerce Limited www.maestro.co.nz 

Lombard Group Limited recently launched an online insurance and mortgage facilitation business, Maestro Commerce Limited. We consider the website to be a breakthrough in the sale of insurance and home loans in New Zealand. It delivers the convenience and transparency of being able to compare and apply for a wide range of insurance cover and home loans from leading New Zealand providers in a single location.

Among the providers on Board are TOWER, Asteron, FidelityLife and ASB Bank, while agency agreements with a number of other significant companies are in the final stages of negotiation. While Maestro currently provides services in the complementary product areas of insurance and mortgages, a third service is under development: the ability to compare, apply for and track the performance of investment products, such as Kiwisaver funds.

Tasman Mortgage Group

Lombard Group Limited recently announced that it had entered into a conditional agreement to acquire Tasman Mortgage Group (Tasman), a securitised mortgage lender and mortgage broking subsidiary. This acquisition marks the first step in Lombard Group’s strategy of growing its financial services operations. The acquisition of financial services businesses like Tasman is a natural extension of the company’s business. 

By owning such financial services and intermediary businesses, Lombard intends to achieve significant synergies and efficiencies. Since its launch in 2000 Tasman has arranged mortgage finance for more than 1500 New Zealanders purchasing investment properties and family homes. Under the terms of the deal Tasman will retain recommended broker status for all of its significant existing clients and strategies will be put in place to grow the business further.