HGH - Heartland Group Holdings

[Red Baron]

The presentation said those NSA receivables were 'excluding provisions'

Zkimming through ze presentations, I could not vind zhis comment.  But eef zhis is true (and I am not zaying eet eez not) ze NSA balance eez 'excluding provisions' because -vhere necessary- all of ze provisioning vas done BEFORE ze assets vhere reclassified as 'Non Strategic Assets' (as Leanne zaid).  IOW as of EOFY2024, no provisioning of ze new NSA class eez required.  The NSAs are valued 'excluding provisions', because zhere aren't any.

RB

[winner (n)]

Zkimming through ze presentations, I could not vind zhis comment.  But eef zhis is true (and I am not zaying eet eez not) ze NSA balance eez 'excluding provisions' because -vhere necessary- all of ze provisioning vas done BEFORE ze assets vhere reclassified as 'Non Strategic Assets' (as Leanne zaid).  IOW as of EOFY2024, no provisioning of ze new NSA class eez required.  The NSAs are valued 'excluding provisions', because zhere aren't any.

RB

Could well be the case but who knows.

Whatever all this stuff is going to avoid a capital raise in near future they say

...which sort of says if they hadn't let the situation develop they wouldn't have had to raise the $200m earlier in the year

[winner (n)]

Last years (2023) AGM our man Greg was up for Re-election

Nearly 10% voted NO ...apparently some proxy advisors weren't happy

Maybe just as well Greg didn't have to get re-elected this year

[winner (n)]

If those NSA receivables had been provisioned then why say when they put a number on them they say excluding provisions

I see some tricky accounting / reporting coming up.

[Basil]

"Tricky accounting" The trend towards normalizing profit for more things, which never used to be a feature of their reporting many years ago, has got noticeably worse in recent years and shows no signs whatsoever of abating in future years.  I think they are really hurting their credibility with all this normalization.   The bad bank thing is a sign that normalization will get worse going forward, not better.  I'm sorry, but I simply don't believe their creative accounting anymore, especially when they hide consumer arrears using specialist tactics like Heartland loan extend.

You can only "cry wolf" so many times about costs being "extraordinary" in nature before people really want to say, please just stop the B.S.  Fletchers is another company that have used up all their remaining shareholder goodwill with so called normalizing of their profits and not by coincidence, their share price is also in the toilet.

[winner (n)]

Runnng 2 small banks and a HQ can be expensive

Like the Directors pool is $2.4m (see we have 3 Boards) ..for the non exec directors

Add in 3 CEOs and heck for an outfit that only makes $75m that's an awful lot of money

[winner (n)]

Big payout for dairy farmers coming ...maybe $10 kg farm gate price

Good post by my mate Rawz elsewhere

That's good for NZs large farm owners, like HGH lol

[Basil]

Interesting article the other day, sorry don't have a link, about the new Govt guaranteed deposit scheme coming in on 1 July 2025.  Deposit guarantee is capped at a pretty pathetic amount of $100K, (Australian scheme by comparison is $250K).

Levies charged to banks will be based on capital ratio and asset quality.  I would think with HGH having 6.5% of all receivables as past due, which is far worse than any other registered bank in N.Z., the RBNZ will charge them a hefty levy to be part of the scheme.

Finance companies will get a concessionary rate for the first three years.
The game is quite simple for people with significant term deposits. Pick the highest rate of any financial institution that is Govt guaranteed and invest the maximum guaranteed amount of $100K.  Rinse and repeat as necessary with other institutions giving as close as possible to the most competitive term deposit rates on offer.

It will be interesting to see what rate the Govt set, which was not disclosed in the article. 

[Relaxed]

Interesting article the other day, sorry don't have a link, about the new Govt guaranteed deposit scheme coming in on 1 July 2025.  Deposit guarantee is capped at a pretty pathetic amount of $100K, (Australian scheme by comparison is $250K).

https://www.nzherald.co.nz/business/nicola-willis-unveils-how-the-new-deposit-compensation-scheme-will-be-funded/TQXQWM2UPJD43CBPADQ7PLO5PI/

but it is premium

[Basil]

Thanks for the link.  As I see it yes, it's a levy the financial institutions have to pay per $100,000 of deposits covered so they will have to factor that into the term deposit rates they offer to the public.

Apologies, my memory isn't what it used to be as a young dog, its credit unions and building societies that get the cut price levy deal for the first 3 years.

Extract for those who can't access this behind the paywall article.
"The levy rate applied to the riskiest cohort of deposit takers will be three times that of the rate applied to the least risky cohort. 
If the risk was entirely priced in, the riskiest group would pay 12 times more".

[winner (n)]

So Heartland put all 'legacy' issues into a thing called Non Strategic Assets ...and say not the same as a 'bad bank' ....and hope they'll get a decent price for them.

Oceania have a lot of 'legacy stuff' as well .....old loss making stuff .....been bundling them up as 'Assets Held For Sale' and hocking off for a loss.

Probably our Greg turns up at Bosrd meetings and asks 'how are the legacy issues going'

At the 'shareholders eye' has got them to focus on clearing the messes up.

Poor Greg .... Might need an excuse to move on.

[Basil]

Neither of Greg's "dogs" are performing at the track.  I'd wager he had a hand in sacking both CEO's and is hoping fresh leadership and a thorough house cleansing will see eventually see a return to form.  I think the common theme here is each dog has deep systemic health issues and even if they can eventually clean house properly. itself a prolonged, painful and grueling exercise, the best you can realistically hope for in the medium term after many years of hard work, is a mid-field finish.  I've done well from these in the past, but I know when the odds are stacked against you and when it's time to bet on something with better form and better prospects going forward.    I don't like backing problematic companies that keep tripping over their own feet.
Just a thought, maybe Greg isn't quite as sharp as he used to be? 

[winner (n)]

Greg's body language and general demeanor suggested he was under a bit of pressure and not happy with things ...just my observation

[Basil]

I think he's a lot happier with his wine business.  Probably making so much money there, Heartland and Oceania are just problems he'd rather not bother with.
NBR rich list reckons he's worth over half a billion, so he probably doesn't care that much that the share price of these two are in the dog box.

[winner (n)]

I think he's a lot happier with his wine business.  Probably making so much money there, Heartland and Oceania are just problems he'd rather not bother with.
NBR rich list reckons he's worth over half a billion, so he probably doesn't care that much that the share price of these two are in the dog box.

Greg's pretty keen on his horses as well ..has a thoroughbred stud