GFL - Geneva Finance

[lorraina]

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.

"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...

[Ferg]

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.

[Ferg]

I have been helping out the destressed sellers.Doing my community service.Here to help...

Too late for that honours list lorraina.....maybe next year.

[Basil]

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.

[lorraina]

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

[Basil]

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.

[lorraina]

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..

[lorraina]

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."

[Basil]

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.

[lorraina]

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.

[lorraina]

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.

[Basil]

Group Pretax Profit of $2.4 million,

Quest 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.

[Ferg]

That'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!

[lorraina]

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

[lorraina]

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.