The 'Shortage of Capital' Continues
Quote:
Originally Posted by
BlackPeter
Well, looks like diversification really works.
Anyway - pretty happy about the numbers.
NPAT of $39.9 million, up 20.4% ($6.7 million).
Gross finance receivables (Receivables) of $4.6 billion, up $177 million (8% annualised growth) since June 2019.
Did you shareholders look at the cashflow statement? Profit may have been $39.865m. But operating cashflow for the same period was 'minus' $59.655m. So around $20m of cash lost over the last six month! Granted this is better than the net $45m of negative operating cashflow over the comparative half year last year. But look at the comparative dollars used to pay tax half year on half year.
HY2019: $1,944m + $0.381m = $2.325m (c.f. 28% tax on half year profit = $9.272m)
HY2018: $9.624 + $4.630m = $14.254m (c.f. 28% tax on half year profit = $11.162m)
Tax is always a timing issue. But it does look like the normalised current half year tax actually paid was around $7.0m light, and last year was $3m too heavy.
I see the payment to suppliers and employees was down by $10m too - another timing issue? That doesn't seem sustainable for a growing company. So add in both of these correction factors ( A sum of -$20m, which changes Operating Cashflow for FY2019 to -$80m) and underlying operating cashflow does not seem to have improved. This isn't surprising because one of the core growth areas, reverse mortgages are strongly cashflow negative while the business is being grown. This does suggest that more cash from some source to fund this negative operating cashflow growth is required.
Fortunately Heartland has found this cash with a net $103,167m raised in subordinated notes last November 2019. But this will not be the last cash raised by Heartland, that is for sure. IMO more money will need to be raised over the next six months and we still haven't got over the problem of borrowing medium term capital to finance longer term loans. Let's hope Jeff is still working on this. But it is disappointing that nothing more as regards matching long term funding to long term loans has been announced.
On a positive note It is good to see the 'collectively impaired asst expense' down so much, by $4m. That means the small guys are getting better at paying their loans back right?
Quote:
Did anybody notice - interim dividend up to 4.5 cents (from 3.5 cents)! Not bad ...
Looks like Heartland will be borrowing to pay that dividend.
SNOOPY