Might as well start a thread for Geneva Finance. They are a small cap lender on mostly vehicles, plus insurance with a sprinkling of minor income from other sources. Extremely low liquidity so it is not everyone's cup of tea.
They recently announced the latest HY result ended Sept 2023 will be down around 20% on last year. This is due to higher borrowing costs from depositors and the cost of relocating their office. The risks of lending long and borrowing short....
Source: https://www.nzx.com/announcements/420808
And they also announced today an EGM to approve expanding borrowings from a major shareholder. This requires shareholder approval given it qualifies as a significant transaction. Whilst the headline maximum rate of 15% per annum appears eye watering, it is a maximum rate and the actual interest rate is expected to be in line with current rates from their major financier, Westpac, who provide a securitisation facility. The reason for the additional funding is due to constraints on how much Westpac will fund and GFL wish to pursue growth opportunities. A capital raise was considered but is parked for now.
Source: https://www.nzx.com/announcements/420892
They are investing for growth and are experiencing growing pains. No ESG nonsense. Some indicators heading in the right direction. GFL earns more from their insurance arm, Quest, than from lending. However, Quest hit a road bump recently with the Reserve Bank regarding solvency and statutory fund requirements:
https://www.nzx.com/announcements/418928
Last annual report is here: https://www.nzx.com/announcements/414058
And:
https://www.genevafinance.co.nz/stakeholders
https://blog.genevafinance.co.nz/who-is-geneva-finance
Be very careful with this one folks. Lenders of last resort don't do well with loan delinquencies in tougher economic times.
Quote from: Basil on Nov 02, 2023, 10:52 AMBe very careful with this one folks. Lenders of last resort don't do well with loan delinquencies in tougher economic times.
I'm not giving any advice on this one and I would trust our learned readers saw the qualifications and concerns I posted. A major impediment for me is the low liquidity.....it's almost zero.
Fair comment about "lender of last resort"....but in defence of GFL they survived the GFC when many others did not. I was more concerned about losses from car insurance given recent cyclone/weather events. I trust they are correctly provisioning for IBNR claims.
Disclosure: no longer hold but curious at the right price.
Fair enough Ferg and yeah they did survive the GFC with the help of deposit holders who were forced to convert some of their deposits into shares that subsequently tanked.
Liquidity in the shares has always been a problem and we got stuck with a lot of them in the above process.
They never seem to have been very good at provisioning their loans for more difficult economic times. Provisioning as you know is based on modelling...it just that it's very difficult, (actually impossible really), to model delinquency rates for highly adverse cost of living crisis conditions. Worth noting, they have over $20m of unsecured loans too. I'd never go there again but each to their own.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GFL/418983/403911.pdf
Their agm presentation above covers most items.
I found it interesting the very high growth their Quest insurance division is achieving,and they survived the floods and cyclone.Increasing their premiums should help..I do not know where they invest their insurance reserves..NB TRA invest in Turners sites.
Westpac is increasing their lending to GFL by $20mil to $100 mil and their major shareholder is also lending them more,subject to shareholder approval.
Used to be higher interest rates improved lenders margins.Has not been the case with GFL,GEN, or TRA,[and others] recently.
Never owned GFL shares.Doubts remain.
https://www.nzx.com/announcements/422642
As per other Finance companies higher interest rates have affected NIM.
Their insurance business Quest is performing extremely well.
Quest Insurance Group Limited (Quest) reported a pretax profit of $3.2m, up 27.1% on the prior period. The good result was driven by continuing the prior year's premium growth momentum. Premiums were up $3.5m (+18.5%) for the period. The higher interest rates benefited investment income of $0.9m, up $0.7m on last year. Quest operating costs including direct costs were up $1.3m mainly due to investment in staff and IT.
Thanks lorraina. Certainly growth is coming from the insurance arm. And as you noted the increased insurance float earns additional interest and is available for lending at no cost to GFL, subject to regulatory restrictions.
Insurance revenues for H1 are 61% of the total insurance revenues for LY so a straight annualised figure with no growth has insurance revenues beating last year by 22%. However, the last 3 HYs have insurance revenues of $14.5m, $16.3m & $18.9m respectively - so running a ruler through that suggests H2 could be say $21m giving FY24 insurance revenue of ~$40m. Underwriting profit is stable at 43% versus LY, so the extra insurance sales could deliver an additional ~$4m in underwriting profits over last year assuming that ratio is maintained.
With the $20m extension to the Westpac facility and 100% shareholder approval (https://www.nzx.com/announcements/422659) for the new $10m related party loan, they are gearing up the lending side of the business for growth. I note there were objections to the maximum interest rate payable and this was reduced from 15% to 10%.
Provisions for credit losses are sitting at 16% of receivables, which is comparable to the end of last FY. I calculate NIM for the last 3 half years as 5.8%, 5.4% and 5.5% (based on net interest income / nett finance receivables).
What is interesting in the P&L is that all financial metrics are up for the HY, but it was asset impairments of $0.8m that made NPBT lower. I would like to understand that more and if this is anything to do with the one off costs incurred in moving offices.
No word on a dividend, yet. No obvious red flags based on that HY result.
GFL have appointed a Director to replace the recent departure. Seems to be well experienced being ex Rank Group / Whitcoulls.
https://www.nzx.com/announcements/426037
GFL have resumed paying an interim dividend, ex date 22 March:
https://www.nzx.com/announcements/428159
And their NPAT guidance for the current fiscal has been reaffirmed as a reduction of 24% YoY:
https://www.nzx.com/announcements/428158
They also announced they will exit 2 non-core business divisions to focus on lending & insurance.
Divie is a surprise.
"to exit the invoice factoring
and debt litigation operations. "
Makes sense to me.
So, Stellar Collections in name but not in performance, there's a big surprise, (NOT).
Ha ha,,,,,,yes.....Whoops...... No........lol
Upcoming vote for Geneva Finance as to whether or not they move to the USX:
https://www.nzx.com/announcements/433323
And in other news they have shut down the loss making activities of Stellar Collections, debt litigation & debt factoring to focus on the core activities of lending and insurance. FY24 result was to expectation with a couple of one-offs negatively impacting NPAT for the year:
https://www.nzx.com/announcements/432076
Interesting to see insurance is jumping ahead of lending in leaps and bounds. I am picking 8c NPAT contribution just from insurance in FY25; FY24 was impacted by a one-off tax subvention payment to utilise tax losses from the business units being closed.
Add that to the other initiatives over the past 12 months and at 20c this is trading on a forecast P/E of under 2. Throw in a dividend policy of 35% and the forward yield also looks good.
Quote from: Basil on Nov 06, 2023, 02:28 PMThey never seem to have been very good at provisioning their loans for more difficult economic times. Provisioning as you know is based on modelling...it just that it's very difficult, (actually impossible really), to model delinquency rates for highly adverse cost of living crisis conditions. Worth noting, they have over $20m of unsecured loans too. I'd never go there again but each to their own.
Note this warning from November 2023 when the shares were ~ double what they are today.
I shudder when I think about how many bad debts they are now incurring. Some economists think the present situation for households is worse than the GFC which is when the wheels came off for Geneva finance last time. Maybe they will survive again, or perhaps its curtains this time?
I am starting to see some real financial pressure on some of my clients. For people who borrow from lenders like Geneva, I'd imagine many of their customers are doing things really really hard at present.
Quote from: Basil on Jun 25, 2024, 04:04 PMNote this warning from November 2023 when the shares were ~ double what they are today.
I shudder when I think about how many bad debts they are now incurring. Some economists think the present situation for households is worse than the GFC which is when the wheels came off for Geneva finance last time. Maybe they will survive again, or perhaps its curtains this time?
I am starting to see some real financial pressure on some of my clients. For people who borrow from lenders like Geneva, I'd imagine many of their customers are doing things really really hard at present.
"It's different this time."......lol.
Their move to USX has seen the share price collapse.
Yet the business is now in great shape.
I have been helping out the destressed sellers.Doing my community service.Here to help...
I'm not sure comparisons to the GFC 16 years ago are relevant given the number of changes at Geneva since then. So maybe it is "different this time"....lol.
The growth for Geneva is from insurance - they have in excess of 100k policies. This also provides a buffer / earnings base against the ups and downs of lending. Check out the growth rates on that since 2018. EPS for insurance alone should be 8c a share in FY25.
GFL are a different company compared to 16 years ago. Loans are secured against property and motor vehicles. GFL are no longer reliant on subordinated note holders at a cost of 13.25% p.a. and they are no longer reliant on the Bank of Scotland. Instead Westpac recently increased their wholesale facility from $75m to $80m and increased it again to $100m in the past 12 months.
FWIW some stats on Geneva's loans:
- finance receivables have grown from $64m nett in 2017 to $100m nett in 2024 (8% CAGR)
- gross finance receivables are 82% secured and 18% unsecured (AR2023)
- whilst there were $20m gross unsecured receivables as at FY23, there were also loan provisions of $20m
- average loan size is around $12k with approx. 10k borrowers
In the FY24 result the directors stated:
"The current challenging economic environment has led to an increase in receivables arrears, necessitating additional provisioning. The directors have assessed the year-end provisioning levels and consider them to be adequate."
Additional provisions were booked in FY24.
There is no doubt this carries some degree of risk. That goes for any investment. In addition, the interest rates charged on their loans also reflect the risk they are taking with their borrowers. That said, the vote of confidence from Westpac provides some assurance that people smarter than us are not going to throw away $100m.
Quote from: lorraina on Jun 25, 2024, 05:25 PMI have been helping out the destressed sellers.Doing my community service.Here (https://service.here/) to help...
Too late for that honours list lorraina.....maybe next year.
It's different this time is the most dangerous cliche in the investment lexicon lol. I own more than enough shares in a downtrend already lol.
Inadequate loan provisioning in a severe downturn is given. It's never enough.
Buyers lining up...
Buyers
Buy Quantity
Prices
1 31,617 $0.235
1 7,393 $0.230
1 30,000 $0.220
1 56,401 $0.200
1 2,255 $0.189
1 5,405 $0.185
1 20,000 $0.180
1 12,000 $0.160
8 165,071
Prices
Sell Quantity
Sellers
$0.235 402 1
$0.240 2,120 1
$0.250 4,199 1
$0.260 1,943 1
$0.265 104 1
$0.270 30 2
$0.280 504 4
$0.290 29,073 1
$0.300 410 1
$0.315 3,485 1
42,270 14
The reality for many families. Paywalled. https://www.nzherald.co.nz/nz/cost-of-living-bay-of-plenty-middle-income-families-describe-struggle-to-make-ends-meet/HHCF5YZYZ5B6VPXQ4NFDY767ZU/
Third tier lenders are going to get monkey hammered with bad debts.
Basil.
You keep missing GFL's "the jewel in the crown",Quest Insurance..
From Ferg's post;
"The growth for Geneva is from insurance - they have in excess of 100k policies. This also provides a buffer / earnings base against the ups and downs of lending. Check out the growth rates on that since 2018. EPS for insurance alone should be 8c a share in FY25."
8 cents per share earnings from insurance alone..
From today's annual report.
I always feel "comfortable" ie "well positioned" with positive outlooks.
"The Board remains positive that the strategic refocus will provide a clearer direction for
the lending business and as a result its performance should improve even under the
current economic conditions. Lastly, Quests continued growth prospects and enhanced
liquidity position provides a positive outlook for the coming year."
I've heard it all and seen it all with Geneva finance before. The lack of credibility that underpins their assumptions and statements has always been truly dreadful and woefully unreliable and they no longer have long serving David Oconnel to try and keep the ship afloat. Current economic conditions are almost identical to the GFC which is what lead to vast numbers of loan defaults last time. Just as well history never repeats. (sarcasm)
I am sure their current funders are just as confident as the bank of Scotland were. Enough said from me on this and good luck, you'll need it.
At Geneva Finance Limited's special meeting, held today, shareholders were asked to vote on 2
resolutions, which were supported by the Board.
As required by NZX Listing Rule 6.1, all voting was conducted by a poll.
The resolutions passed by shareholders were:
• Delisting from the NZX Main Board: That the delisting of the Company from the NZX Main
Board is approved and the directors of GFL are authorised to undertake all actions and enter into
any agreements and other documents necessary to give effect to this Resolution.
• List on the Unlisted Securities Exchange (USX): Subject to Resolution 1 being approved, that
the Company list on the Unlisted Securities Exchange and the directors are authorised to
undertake all actions and enter into any agreements and other documents necessary to give
effect to this Resolution.
Details of the total number of votes cast in person or by a proxy holder are:
Resolution For Against Abstain
Delisting from the NZX Main Board:
That the delisting of the Company from
the NZX Main Board is approved and the
directors of GFL are authorised to
undertake all actions and enter into any
agreements and other documents
necessary to give effect to this Resolution.
9,165,026
57.01%
6,912,053
42.99%
97
List on the Unlisted Securities
Exchange (USX): Subject to Resolution 1
being approved, that the Company list on
the Unlisted Securities Exchange and the
directors are authorised to undertake all
actions and enter into any agreements
and other documents necessary to give
effect to this Resolution.
55,851,877
89.18%
6,775,393
10.82%
7,923
Both resolutions passed.
NB.
15th July.Trading halt at close of business on NZX.
17th July.GFL delisted from NZX.
18t July GFL shares start trading on USX Unlisted Market.
Today's update;
USX ANNOUNCEMENT GENEVA FINANCE
Quarterly trading update: June 2024 (Q1, 31 March 2025 financial year)
Group Financial Performance
Group Pretax Profit of $2.4 million, was up $0.98 million (+71.4%) compared to the June 2023
quarter.
NZ Lending Operations
Formerly reported as separate operations (GFSL, Parent company, Stellar Collections, MFL,
Geneva Capital Limited).
Reported a $0.6 million loss, but this represents a $0.1 million improvement over the previous
year and includes NZX delisting costs of $0.2 million incurred to date. Cost of funds were up
$0.3m on Q1 prior year as the Group's overall cost of funding remains high.
Q1 lending volume decreased by 21% compared to last year, despite an increase in lending
inquiries. Although asset quality is being maintained, the current challenging economic
environment is having an impact as additional provisioning was absorbed in the current quarter.
This is an area that is being monitored closely. Net Receivables Ledger amounts to $101.6 million,
up $1.5 million from the previous year.
The debt litigation and invoice factoring businesses have been exited, with efforts ongoing to
collect the remaining outstanding receivables.
Quest Insurance
The Insurance Business contributed a $2.5 million Q1 profit, being a $0.9 million increase on the
previous year quarter. Gross written premiums for the quarter increased by 18.1% to $14.0m.
Tonga Lending operations (FPF Tonga)
Pretax profit: $0.5m, equal to the Jun 2023 quarter.
Funding
Westpac Funding: $82.1m up $5.8m on last year.
Kiwi Bank: $1.9m, down 1.5m on last year as this facility is being repaid.
Wholesale investors: $17.0m, up $1.7m on last year.
Summary
The performance for Q1 2025, demonstrates an improvement in profitability, primarily driven by
strong performance from our insurance business.
NZ Lending Operations volumes are still recovering from previous challenges mainly due to
disruptions in sub-note funding (our contribution to the Westpac securitization facility)
experienced in Q3 and Q4 of the previous year for which a November 2023 3 EGM was needed.
Loan book quality remains stable amid a tough economic environment.
Quote from: lorraina on Aug 12, 2024, 11:52 AMGroup Pretax Profit of $2.4 million,
Quote from: lorraina on Aug 12, 2024, 11:52 AMQuest Insurance
The Insurance Business contributed a $2.5 million Q1 profit,
That's quite a "quest" they're on and where all the profit is.
Quote from: Basil on Aug 12, 2024, 12:11 PMThat's quite a "quest" they're on and where all the profit is.
Exactly. Much more stellar than 'Stellar'.
At an estimated 2.3c per share for the quarter, GFL are on track for my prediction of 8c per share from just insurance.
People can make predictions.....
....but whether they are right or not is another story!
Geneva Finance March 2024 Final Dividend payment
15 August 2024 Dividend Announcement
Security: GFL
The Geneva board has resolved to declare a 1 cent per share final dividend for the March 2024 financial year payable on 23 August 2024.
Ex-dividend date is 16 August 2024
Record Date is 19 August 2024
Documents:
24 08 - Dividend.pdf
24 08 15 - Final Dividend March 24.pdf
Notice is hereby given that the Annual Meeting of shareholders of Geneva Finance Limited will be held at the Waipuna Hotel & Conference Centre, Exhibition Hall, Mt Wellington on Thursday, 26 September 2024 commencing at 2:00pm.
From today's Just Life Group Annual Report..
Just Life Group delisted from NZX and are now on Unlisted.
I would guess GFL will achieve similar savings;
As part of the delisting exercise there was estimated back-office savings of between $400,000 and
$450,000 to be realised. We are pleased to advise that we are on track with realising these savings
going forward.
Today's agm presentation;
https://prod-trade.usx.co.nz/api/file/66f4ec53021c4d08b0816500.pdf
I do love a company that pays a divie before Christmas.
Well done GFL;
https://prod-trade.usx.co.nz/api/fil...396f07ba99.pdf
Media Release 0B11 December 2024
March 2025 FY Interim Dividend payment
Geneva Finance announces an interim dividend for the 31 March 2025 financial year.
The board has resolved to declare a 1 cent per share interim dividend for the March 2025 financial
year.
The dividend will be paid on 20 December 2024. The ex-dividend date will be 17 December 2024, and
the record date will be 18 December 2024.
Geneva reports a pretax profit of $5.9 million for the nine months to 31 December 2024, up $2.9
million (97%) over the same period last year.
https://prod-trade.usx.co.nz/api/file/67ad792132437ae3299f6182.pdf