Heartland New Zealand's June 30 financial results were solid and on forecast but the market will still be looking for the company to gain its banking licence.
The financial services group yesterday reported an operating profit of $30.8 million for the period, up 20% on the $25.7 million reported in the previous corresponding period.
Revenue was up 35% at $94.9 million and the reported profit of $24.2 million, helped by a tax credit of nearly $3 million, was well up on the $7.74 million reported in the pcp.
One of the features of the balance sheet was the reduction in impaired asset expenses, down 58% to $5.6 million from $13.3 million.
"It's a good result, no doubt about that," Craigs Investment Partners broker Chris Timms said.
"Heartland is working through a strict set of steps and this is another one they have completed."
The balance sheet grew through the PGG Wrightson acquisition. Cash had reduced but Heartland had held a lot of cash previously as the wind-up of the government guarantee scheme was completed, he said.
The financial statements showed cash held reduced from $267.2 million in the pcp to $89.7 million at balance date.
Net tangible assets (NTA) increased in the period to $343.7 million from $270.1 million, following the capital raising and PGGW Finance acquisition. On a per share base, NTA was 88 cents at balance date compared with 90c last year.
The shares traded yesterday at 56c.
Mr Timms said the company was focusing on its business and rural finance books, with the business book rising $64 million in value to $540.2 million. The rural book was up substantially on the pcp following the acquisition of PGGW Finance.
Heartland was using the PGGW Finance arm to provide traditional seasonal finance to farmers previously provided by stock and station companies.
Banks had traditionally taken security over property while the stock and station companies had taken a charge over the stock, he said.
"Farmers paid off the seasonal finance with their wool cheque. Heartland seems comfortable holding stock as the security. For farmers, if you don't have stock, you don't have income."
The banking licence was still on the agenda but the company provided no new information, Mr Timms said. At the last update, it was hoping the licence would come by the end of the year.
