"eps accretive" is the key term.
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If they deliver strong earnings growth I have no objection to senior executives being paid well. I am reminded at this time of the very interesting approach towards diversity and one particular culture...you need to pay millions to come up with brilliant strategies like that so he's an absolute "bargain" at $2.8m :rolleyes:
Proof of ‘Troughing’ from the Annual Report
CEO remuneration as a multiple of staff remuneration
The CEO’s salary as a multiple of the staff average is 10.11 times (FY18: 10.5 times), and his total remuneration as a multiple of the staff average is 19.77 times (FY18: 19 times
No wonder he thanks staff for all their hard work and greatness at the ASM ...greedy bugger
The board, which includes Greg Tomlinson who owns 58,392,997 HGH shares would not employ a "Stupid bastard."
Actually - you might be right related to HGH, but I don't think I would generalize your statement - LOL.
I could think about a number of boards with huge personal holdings who (in hindsight) employed either greedy or stupid (or potentially just incompetent) hmm - subjects. Couldn't you?
To be honest - I have never seen a statistical analysis providing evidence that boards with large holdings acting less greedy or stupid. Do you?
But anyway - lesser risk to employ - say "undesirable" board members - does not mean it does not happen. And we all know that it actually does.
The way corporate excesses are heading and the outrageous salaries management get together with the power corporates have over the world we are probably heading for a revolution of sorts one day soon.
Pity movements like ‘Occupy Wall Street’ faded away but they will re-emerge - the world is getting sick and tired of excesses and corporatocracy
Board and management holdings;
Over 50 years investing it is one of the first things i check before investing.
Always exceptions,but they a usually fraudsters,and with knowledge you know to avoid them.
I note the directors/management in my three largest holdings, have a great deal of skin on the line.
I like it like that.!
HGH shareholders can relax, at least our man is delivering some growth for his $2.83m.
Other far more worrying salary packages noted in the Herald included :-
Theo Spierings of Fonterror $4.7m for his part year and his replacement Miles Hurrell $2.2m for part year, (gosh hasn't that company done "well" !).
Ross Taylor at Fletchers "earning' $5.3m not too shabby when he has "101" other senior executives to help him preside over such poor performance
Marko Bogolevski of Infratil "earning" $1.9m despite the payment of over $100m in management fees to Morrison and Co for actually managing their investments !!
Mike Bennetts of ZEL got the tidy sum of $2.2m in 2017, not too shabby for running a bunch of petrol stations and other sundry assets, although just lately there's be no short term or long term incentive fees so he's down to a "miserable" $860Kin 2019.
Chris Luxon did alright for himself on over $4m too and delivered the lowest profit in the last 5 years despite jet fuel costs being around the average of the last 10 years.
With directors holding such big personnel holdings ie Greg Tomlinson holding 58,392,997 HGH shares,you can not call any of them stupid.
Far from it.
May pay to reread the start of this thread where people had doubts about HGH succeeding.and ask yourself why HGH has.
Has not been a case of paying peanuts to monkeys.
And looks to me as though the best is yet to come.
Yes I see what you're saying. Just under $3m is a LOT for a company making well under $100m and quite possibly is leading the pack on that basis.
Similar sized level of profit was SUM and our man Julian Cook only just "scraped by" on just over $1m and made more money with vastly higher growth !
I think its an industry problem. The real issue is you have these Australian bank CEO's earning far more (despite presiding over extremely dodgy activities), so when the executive remuneration committee meets they have GREED as their only relative measure in the sector.
No no Beagle - Julian’s company made over $200m for his just over $1m pay
Jeff’s company made under $80m for his just under $3m pay
Bankers world wide are a greedy lot ..maybe even unconscionable.
Maybe I should have said the Board made a stupid decision instead of implying the individuals were stupid.
This chart from AR justifying the huge amounts paid out under the incentive schemes.
Suppose does deserve some little reward ...but not totally awesome performance ....a bit up and down eh ...hope that’s not indicating a bit of down relative to NZX50 coming up
They need to the National guys in to teach them how to make things look really awesome instead of so so
If you want to see what Aussie bankers do for their money, read "A Wunch of Bankers" by Daniel Ziffer.
So - how good are the forecasts of our stockmarket analysts?
Here is the overview of my wee researchtask:
https://www.sharetrader.co.nz/showth...arket-analysts
Looking today at
Stock: HGH
Prediction month: January 2019
Forecast month: January 2020
Share price (peak) in January 2019 $1.43 Consensus forecast for January 2020 $1.58 actual shareprice (peak) in January 2020 $1.87 Share price did rise, as predicted, but instead of the predicted 10.5% it actually did rise by 30.8%; according to the rules this is a failed prediction, which might be a bit harsh. Need to think about this consensus recommendation in January 2019 outperform (6,25/10) actual 12 month growth vs NZX50 outperformed NZX50 by 10% PREDICTION PASS
Rating of the analysts so far:
6 stocks checked (checking for each consensus and buy recommendation);
Consensus shareprice forecasts correct: 1/6; analyst hitrate: 17%
Consensus recommendation vs NZX50 correct: 2/6; analyst hitrate: 33%
Half yearly report out tomorrow. Thoughts? Predictions? Expectations?
Expecting a modest increase in profit and no change in dividend.
the question is UDC
Nice policy change with REL's where you can equity release on investment properties. I think this is very astute
Announcement day ...but be patient as bankers aren’t early starters
I'm trying to find where I saw it yesterday...
Think I will leave others to enjoy reading about their endless do-good politically correct social welfare policies today and stick strictly to the numbers. Stomach not feeling that strong today...
hat they don't release the results in a timely manner so people can do their analysis before market open is disappointing.
I'm bored already.
I get it mate. They want to be the Maori employer of choice for young Maori so they can get them off the streets and gainfully employed instead of joining gangs and causing chaos. That's good and its good for everyone. Good on them.
Where's the numbers ?
Maybe they’ll get a public censure like Cooks Food for not reporting in a timely manner
It’s out ...main points
.Significant progress made on implementing Heartland’s workplan to address improvements across conduct and culture.
• 47% of employees were aged 35 years and under.
• 35 interns joined Heartland Bank’s Manawa Ako internship programme – 10 more interns than last year’s intake.
And that’s a story that leads to profit up 20%
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 anybody notice - interim dividend up to 4.5 cents (from 3.5 cents)! Not bad ...
And leaving upgrading FY guidance for another day
Clever ploy
There’s so many good numbers I don’t think we’ll hear from beagle for a while ...lot of good stuff to digest and he hasnt installed the upgrade to his abacus yet
Good headline figures - especially coming after ASB's result.
Aussie REL's continue showing strong annual growth of 20% and are up to and now up to $ 887 million, raising market share to 26%. Interesting to see very fast growth (from a low base) for Harmoney in Australia. Divie increased by 1c which was a bit of a surprise. Nothing too negative in there except operating costs are significantly higher but not unexpected.
From first read this seems to be another great result.
An incredible result.
Strong growth in the sectors they want.
Reduced lending in areas of low margin.
NPAT up 20% yes 20% to $39.9mil.
ROE well up to 11.7%.
And wait there's more .An INCREASED fully imputate divie of 4.5 cents per share payable on 11th March.Gross yield 8.3%.
No mention of UDC.
“47% of employees were aged 35 years and under. “
Is this a good or bad thing ? My immediate feeling is that it is bad, banking, lending, etc needs older experienced people.
FY NPAT expectation is $77M - $80M
or 4.6% to 8.7% increase
less on an EPS basis
or 2H flat to down on 1H
Not so flash then; unless we get a good upgrade.
Great result, market loves it.
Impairments down and very low and strong growth in lending across most divisions.
I knew I received something in my hundreds of emails yesterday!
We are excited to announce Heartland Bank is now offering Reverse Mortgages against investment properties and holiday homes with our new feature, Secondary Property Loans.
A Secondary Property Loan allows people aged 60 years and over to enjoy a more comfortable retirement by accessing equity from their secondary property, rather than their primary residence.
Like our regular Reverse Mortgage, Heartland’s Secondary Property Loan can be used for a variety of different purposes including home improvements, debt consolidation, travel or just taking the stress out of everyday bills.
The Secondary Property Loan may suit those who do not want a mortgage against their primary residence or those living in a retirement village who still own a property.
We continue to offer the protection of a Heartland Reverse Mortgage, including our three promises:
· Lifetime Occupancy Guarantee – your home will remain the place you live in for as long as you choose
· No Negative Equity Guarantee – the amount required to repay your loan will never exceed the net sale proceeds of the property
· Loan Repayment Guarantee – there is no requirement to make any loan repayment until the end of your loan, although you may do so at any time without penalty costs.
The interest rate for a Secondary Property Loan is the same as a Heartland Reverse Mortgage, with a floating rate of 6.95% p.a.
The loan is due to be repaid when the borrower sells their investment property or holiday home, or when they move permanently from their primary residence.
Yes, understand. But nevertheless. Especially in a bank that does not a lot of physical branches with customer facing tellers.
Personally over the moon with the result, only bad thing is it could again blow out the % of my portfolio that it occupies...good problem and I may address it if the price goes to > $2.10ish....love the dividend increase.
Yahoo !
Full year forecast looks extremely conservative ($77 - $80m) relative to the result just achieved ($39.9m) and suggests they think impairments will go up in 2H even if nobody on here thinks so. Maybe they think this new virus might affect the economy materially and people and some business's ability to service their loans ? Maybe they're right to be conservative in the circumstances ?
I for one am not getting carried away and see fair value at present as $1.89. I suppose you could pay up to $1.935 inclusive of the pending 4.5 cent fully imputed dividend.
Hey Winner - I worked these numbers out with my old steam powered slightly rusty abacus...not bad for a motley old mutt, and it seems the market agrees.
They are just doing what they say they will do
https://www.youtube.com/watch?v=957Zr2Pre2s
Aye percy ?.
I reckon the institutions will set the tone this afternoon once they have had time to digest and set their strategy. This mornings flurry will have been Mum & Dad's. Volume to come with the battleground @ 1.90 I think. Once it breaks through that on volume it will be onwards and upwards.
Last year it was pointed out H119 relatively poor result was impacted by ~$2m of non-recurring studd related to restructure. Explained why 6% growth wasn’t too bad
No mention this time around as 20% plus is amazing
On the good old ‘normalised’ basis earnings growth H120 was only about 10%
Still pretty good but not amazing
I think it is great. Imagine someone with a rental property who needs to do some desperately needed maintenance. Spend 50k and increase rent $100 a week. The interest cost is compounded to the loan and the increased rent is pocketed - win win and if the owner occupied home is sold this rental REL is required to be repaid. Safe as houses? Safer I'd say
Full year guidance is for $77 - $80m which does seem strange for a growing bank with $39.9m already booked at the half year. Clearly they think second half is going to be $37.1m - $40.1m but at the bottom end of that range implies a 37.1m / 39.9m = 0.93, up to 7% reduction in 2H profit compared to 1H profit and best case profit is flat ? What are we to make of this ? Maybe they think a recession could be just around the corner like the BNZ do ? https://www.nzherald.co.nz/business/...ectid=12309233
Battle lines drawn @ 1.90. Let's see if they go at it.
Something weird going on.
FY19 release said the $73.6m reported F19 NPAT was actually $77.1m if you excluded the one off ‘Corporate Restructure and ASX’ (all clearly displayed in a table on page 3 http://nzx-prod-s7fsd7f98s.s3-websit...193/305400.pdf )
So continuing to say F20 NPAT is going to be $77m to $80m means in reality F20 is a pretty poor year .....only 3%/4% earnings growth at best
Not very good is it.
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?
Looks like Heartland will be borrowing to pay that dividend.Quote:
Did anybody notice - interim dividend up to 4.5 cents (from 3.5 cents)! Not bad ...
SNOOPY
From June19 to Dec19 Heartland Equity (Book Value) up $12m. (Book Value never goes up much from period to period because so much of the profits are paid out as dividends)
Market cap since June19 up $150m
That’s some market rerating ...the market just loves Heartland
DRP will reduce the cash needed eh Snoopy (about a third took it up last time)
Another question Snoops - ROI pretty impressive ....seems this is a result of higher leverage to me.....what say you?
Would mean return on total invested capital is down ..too much marketing spend
Isn't this how banks operate? Banks typically do borrow money from third parties to lend it out to other people and they make money by charging a higher interest rate than they pay.
Banks are not supposed to lend out only their own money or money they first earned ....
If Heartland need to borrow more money to lend more money out, than this is how you recognize a successful bank :):
Yes, but some banks (by that I mean all banks other than Heartland) collect interest payments from their mortgage customers on a regular basis. They can then pocket these interest payments as 'cash' and use them as part of their own capital base to use to support future lending. There is no regular cashflow from a Heartland reverse mortgage. So if Heartland want to expand their (reverse) mortgage book, cash has to be raised by issuing new shares (or new debt instruments) at a rate incrementally higher than other banks. If you compare the operating cashflow for FY2019 for Heartland vs the operating cashflow for their 'parent' bank Westpac for FY2019 you will see a very different cashflow pattern.
Heartland FY2019 Westpac FY2019 Net cashflows from operating activities before changes to operating assets and liabilities $63.433m $8,396m Net cashflows from operating activities ($49.912m) $7,104m
Only one of these banks generates cash from their operating activities. The other is at the perpetual mercy of their wholesale funders.
SNOOPY
On the Heartland balance sheet there is an item 'Finance Receivables - Reverse Mortgages'. There is no 'discount' applied to that asset on the balance sheet because it is not readily cashable at short notice. The whole asset class of 'Finance Receivables - Reverse Mortgages' represents a 'deferred profit' asset class.
On the Cashflow statement, which is the statement I was talking about, there is an entry 'Capitalised net interest income'. That is the interest income that Heartland have booked as a profit on reverse mortgages but have not yet received in cash. You won't find 'Capitalised net interest income' on the cashflow statements of other banks, apart from legacy loans that are being wound down. In the case of Westpac who do have some legacy reverse mortgage business it is so inconsequential to the Westpac group, I can find no mention of these loans in the annual report.
SNOOPY
Snoops ...that ‘Capitalised net interest income’ doesn’t form part of Operating Cash Flows on the ‘Statement of Cash Flows’ (because as you say they haven’t got that cash yet)
The $24,859 does show as an item on the reconciliation between Profit and Operating Cash Flow .....as a non cash item.
Fair enough - but actually, there is a regular cash flow, it is just a bit slower than with other banks.
Cash flows every time a REL is paid back ... and I think (from memory) the average length of a REL mortgage is something like 7 years (could be less, but not sure).
It sounds like you have a fundamental problem with REL's. If you do, you should not invest into companies which offer REL's. Easy as that.
I don't see an issue as long as they make sure that the security is good enough to cover the loan, but yes, cash needs longer before it flows back. Not a problem in my view as long as the increased interest rates are sufficient to pay for the increased risk ... but you are right to point tho the increased risks. Just one of these things ... if you don't like risk, better invest into government bonds ...