Geneva’s profit jumps 22%
Geneva Finance has announced an unaudited pre-tax profit of $8.2 million for the year to the end of March 2022, an increase of $1.5m, or 22 per cent, from the year prior.
The group, which has been operating for 20 years, described it as a “pleasing performance in a difficult year” and predicts further growth in the current financial year.
Geneva notes the lift in pre-tax profit was largely driven by improved contributions from the insurance and lending business, up 47 per cent and 12 per cent, respectively.
Total group assets increased by nine per cent to $156m, its revenue of $42.7m was up $7.9m, or 23 per cent, and operating costs grew by 17 per cent to $19.5m.
The company’s lending business, Geneva Financial Services, delivered a pre-tax profit of $5.4m, which was $600,000 higher than last year.
David O’Connell, managing director, notes lending started strongly before Covid-19 lockdowns and restrictions cut in, hampering the receivables ledger growth.
“Positive changes to the lending mix continued to show improvements in asset quality, delivering lower provisioning levels. The receivables ledger closed at $77.4m, up 2.7 per cent on last year,” he adds.
Quest Insurance Group Ltd’s pre-tax profit climbed by $1.5m to $4.7m, with the result largely driven by increases in gross written premium, which at $30.1m was 40 per cent up on last year.
Cash on hand increased to $24.8m from $15.8m, and as at March 2022 Quest’s solvency surplus increased to $4.02m above the minimum $5m requirement.
Federal Pacific Tonga, which is 60 per cent owned by Geneva, reported a four per cent increase in pre-tax profit to $1.5m.
O’Connell says: “This business was impacted by Covid and the recent earthquake and tsunami in the form of lower demand for lending.
“The full impact of these will be felt in the coming financial year. Once Tonga recovers from these events it is expected that lending volumes will return to normal trading patterns.”
Meanwhile, Stellar Collections, including the group’s debt litigation business, bore the brunt of Covid and its $200,000 profit was $160,000 lower than the previous year.
The uncertain environment created by the pandemic resulted in reductions of new business, compounded by periods of the courts being closed, explains O’Connell. However, he adds it is starting to rebound following the return to normal business conditions.
Geneva Capital, responsible for invoice factoring, had a $200,000 loss for the period, down $300,000 year-on-year. “The loss is largely attributable to a bad debt write-off and increased provisioning. The board is committed to ensuring that recent changes made will return the business to sustainable profit growth.”
Geneva’s after-tax unaudited financial result for the 2022 financial year was a profit of $5.9m, down $700,000 or 10 per cent, due to an increased tax charge for the year.
Covid and the future
O’Connell says, in commentary to the results released to the NZX on May 30, that Covid-19 impacted the business on two fronts.
“First through lower than budgeted lending, insurance and debt litigation volumes, and second in operational areas – court closures – and, to a lesser extent, receivables arrears, where while there was an increase in hardship requests, they were well managed and relative to our total client base, the impact was not significant.
“As a consequence, as signalled in last year’s report, the board has concluded to release just over half of the Covid provision taken up in March 2020.”
He adds Geneva remains focused on its core lending, insurance and collections businesses.
“For the immediate future, there will be an increased focus on improving our IT systems, in particular building on the established platforms to enhance new business originations,” he adds.
“We enter the coming year with a solid balance sheet including a well performing and well provisioned loan book.
“The group has sufficient funding to support its expected growth in the coming financial year and also expects the insurance business to continue its upward revenue and profit growth.”
