‘Pleasing’ 22% profit jump
The chairman and managing director of Geneva Finance Ltd describes the company’s 22 per cent increase in net profit before tax (NPBT) for the past financial year as “pleasing”.
Robin King and David O’Connell say the $1.5 million jump to $8.2m in NPBT is a record for the group.
They add the company has a solid balance for the 2022/23 year, “including a well-performing and well-provisioned loan book”.
“The group has sufficient funding to support its expected growth, and also expects the insurance business to continue its upward revenue and profit growth.”
Total group assets increased by nine per cent to $156m and group equity came in at $37.8m, up 10 per cent. The company’s equity to total assets ratio for 2021/22 was 24.6 per cent compared to 24 per cent in 2020/21.
The after-tax audited financial result for the period was a profit of $5.9m, down by 10 per cent and $700,000. The after-tax profit attributable to Geneva shareholders was $5.5m, which was also a $700,000 drop. Revenue totalled $42.7m for an increase of $7.9m of 23 per cent.
Operating costs climbed by 17 per cent to $19.5m. “The increase primarily relates to increased commissions paid to introducers in lending business as the company moved into a more competitive market, and to introducers from Quest‘s increased insurance premiums volumes,” say King and O’Connell in their annual report.
“The lending and invoice financing businesses are funded via a securitisation facility of $75m, currently drawn to $65.8m. Stellar’s banking facility remained unchanged at $3.4m. The facility’s term was renewed and extended July 31, 2025. The facility will be repaid in equal repayments commencing July 31, 2023. Professional investor debt funding increased to $14.2m and includes loans from directors.”
The annual report explains that Geneva’s loans are originated through three distribution channels – direct, broker and dealer, and processed by its central sales desk and administered through a national operations centre in Mount Wellington, Auckland.
Geneva has two principal activities. One is provision of finance to individuals to assist them in purchasing a motor vehicle.
About 90 per cent of lending is for this purpose with a further 10 per cent being unsecured personal loans. The finance products offered comprise hire-purchase finance and personal loans secured by registered security interests over personal assets.
As of March 31, 2022, the New Zealand receivables ledger was $105.3m spread over 9,504 loans with an average loan size of $10,700. The $105.3m was prior to provisions for deferred revenue and doubtful debts and includes receivables held by the Geneva Warehouse A Trust and Prime Asset Trust gross receivables.
The Tongan operations receivable ledger was NZ$4.7m prior to provisions spread over around 1,462 loans with an average balance of NZ$3,200. This represents a wide spread of risk due to the large number and relatively small size of each loan.
The combined net book value, including the invoice factoring business as of March 31 after provisions for deferred revenue and doubtful debts was $93.2m.
Geneva also provides motor-vehicle insurance products to individuals irrespective of whether it has provided the finance, the largest by volume of which are comprehensive motor vehicle insurance and mechanical breakdown insurance.
During the year, premiums written totalled $30.1m and as at March 31 there were some 70,900 active policies.
In addition to the above, the group also provides invoice financing, debt collection and debt litigation services to New Zealand-based commercial businesses.
The invoice-factoring ledger balance was $9.4m by the end of March.
