MTF prepares for ‘very different future’
MTF Finance is reviewing its business because it doubts sales activity will return to pre-Covid-19 levels “for some time” and it is bracing for a “very different future”.
In a shareholder update, chief executive Glen Todd reveals sales levels at the end of May were about 75 per cent of last year’s figures.
This followed a rapid decline in business during the alert level four lockdown when sales volumes in April dropped by 90 per cent from March 2020.
Todd says a shake-up of the company’s operational budgets during this period delivered “significant savings” as the company tries to weather the crisis.
“We’ve experienced a gradual recovery through level three and into level two, with May ending at around 75 per cent of last year’s levels,” he explains. “While this is encouraging, uncertainty remains. We do not anticipate a return to pre Covid-19 business levels for some time and are busy reviewing our business to align with a very different future.”
His June 3 update says the company aims to soon have most staff back in its Dunedin support office.
Todd adds that MTF has undertaken a number of actions to help protect staff, originators and their customers from the immediate effects of the coronavirus outbreak.
“The immediate response was focused on the safety of our people while ensuring they could continue to provide support and assistance to the customers and originators who were seeking help and guidance,” he says.
“This was followed closely by providing our originators the tools they would need to restart lending operations in the coming weeks, including software so we can provide digital identification and contactless disclosure.
“We have been closely monitoring originator activity – particularly those who have significant exposure to industry sectors at higher risk of economic deterioration and have already provided advice and support to assist affected customers. We will continue to refine and improve these solutions to help rehabilitate our affected customers.”
Todd tells shareholders that work to strengthen MTF after the global financial crisis has put the business in a “good position to face the coming challenges”. He says most of the executive team that helped steer the company through that period are still on board.
MTF remains confident about its liquidity levels and funding capacity and Todd explains that its strong capital position has allowed it to provide additional credit enhancement to long-term investment partners.
“A review of our operational budgets resulted in significant savings which means the impact on returns to originators over the lockdown period and into level two will be kept as low as possible,” he adds.
“Part of this cost reduction included our staff accepting reductions in remuneration and the incentive scheme has been cancelled for 2020. It is imperative that we protect the team we have built, to the extent that we can, so that the business is in good shape to grow and thrive when the inevitable recovery comes.”
Todd says supporting MTF’s originators, customers and the communities it operates in, remains the priority. T
“The value of our company is directly linked to the success of our originators, so it is in the best interests of the company that we support our originators through this once-in-a-lifetime event.
“We will be looking at further ways in which we can do this over the coming weeks and months.”
The company has suspended dividend distributions to ordinary shareholders because of uncertainty created by Covid-19 and will review the matter at the end of the 2020 financial year.
The impact of the virus also means MTF is delaying issuing its half-year report until June 22.
