Northington Partners Assessment Point 1
I now move to the PGW documentation relating to the sale of PGF which was discussed at the PGW special general meeting of FY2011
Northington Partners suggested that investors should look for a few more signs of improvement. One of these is a reduction in bad debts. In the HY2012 commentary we learn:
"New impaired and past due loans over 90 days were $88m which was 4.2% of net finance receivables as at 31st December 2011. This is down from $101m and 5.0% of debts as at 30th June 2011."
Bad debts were at least going in the right direction.
SNOOPY
Northington Partners Assessment Point 2
Northington asks us to look out for the reinvestment rates of existing deposits. There is no direct information in HNZ HY2012 about that. However, if we look in Note 11 we can see that total deposits from NZ total $1,664.9m as at 31st December 2011, up from $1,556.6m as at 30th June 2011. Overall Heartland has more money on deposit at the end of the half-year than six month previously, and that has to be good.
But didn't the merger with PGG Finance occur after the 30th June 2011 balance date? I am not sure what the value of PGGW Finance term deposits were transferred over. But if it was less than $108.3m, then pre merger Heartland went backwards over the last reported half year. On this evidence, I think it is too early to say that Heartland has the confidence of the retail deposit market.
A quote from p2 of the Heartland HY2012 commentary backs this up:
"Cash and cash equivalents reduced to $120m from $267m at 30th June 2011 as excess liquidity held in the lead up to the expiry of the crown guarantee was utilized as planned."
Translation: Term deposit holders have pulled a net $147m out of the company in the last six months.
SNOOPY