Table of Contents
What changed
Net operating income rose 11.7% to NZ$280.6m and profit before tax lifted 15.6% to NZ$137.0m, but NPAT grew only 9.3% to NZ$95.1m as the effective tax rate stepped up to 30.6% from 26.6%. Gross finance receivables grew 15.3% (+NZ$765.9m) to NZ$6.2b, and borrowings funded most of that expansion, rising 27.0% to NZ$6,170.7m. Cash on balance sheet climbed to NZ$310.8m (+70.4%), while total equity edged up 6.2% to NZ$808.7m. Net interest margin compressed 19bps to 4.16%. The final dividend was cut to 5.5c from 7.0c (-21.4%), and Heartland simultaneously announced an equity raising to retire bridge debt and fund further growth.
What matters
- PBT is the cleaner read. The 6.3pp gap between PBT growth (15.6%) and NPAT growth (9.3%) is almost entirely the higher tax rate (30.6% vs 26.6%); operating performance was stronger than the headline NPAT suggests.
- Funding is doing the heavy lifting. Receivables grew NZ$0.77b while borrowings grew NZ$1.31b, and the company has told the market it needs equity to take out bridge debt. That is a direct signal that the FY22 result was delivered with a balance sheet that now requires recapitalisation.
- NIM compression alongside volume growth. A 19bp NIM decline plus a 15.3% larger book is a volume-over-margin story. With the dividend down 21.4% and new equity coming, the capital return profile is being reset even as the P&L prints a record.
Expectations
No forward guidance or stated targets were supplied. Against the only shape context available, HY22 contributed 46.6% of full-year revenue and 50.0% of full-year NPAT, so 2H was modestly revenue-weighted but flat on earnings — a deceleration in profit shape into the second half. Management's own commentary highlights a 2H cost-to-income ratio of 41.9%, implying some operating leverage emerged late in the year. The release itself does not support or refute any specific FY23 trajectory beyond the stated ambition to deploy fresh equity into growth.
Quality of result
For a balance-sheet lender, the negative NZ$262.3m operating cash flow is a feature of loan book growth rather than a cash-conversion warning, so the improvement from NZ$339.5m outflow is not a clean quality signal either way. The durable elements are the 15.3% receivables growth and 11.7% revenue lift; the softer elements are the 19bp NIM compression and the fact that asset growth was overwhelmingly debt-funded, with net debt rising roughly NZ$1.18b to about NZ$5.86b. ROE ticked up only marginally to 11.8% from 11.4% despite the record profit, consistent with a result that scaled assets faster than returns. The lower dividend and planned raise indicate management itself views the current capital structure as stretched.
Unresolved
- What portion of the equity raise retires bridge debt versus funds new growth, and at what price and dilution?
- What is driving the 19bp NIM compression — funding cost, asset mix, or competition — and is it stabilising into FY23?
- Why did the effective tax rate jump 4pp, and is 30.6% the new run-rate?
- What is the credit quality trajectory of the expanded receivables book, given no impairment or arrears figures were supplied?
- Is the 5.5c final a rebased dividend policy or a temporary step to preserve capital ahead of the raise?
This briefing cannot assess capital adequacy, asset-quality metrics, segment-level margins, or the terms of the announced equity raising, none of which are quantified in the supplied data.
Key metrics
| Metric | FY22 | FY21 | Change |
|---|---|---|---|
| Revenue | $280.6m | $251.2m | +11.7% ↑ |
| Net profit after tax | $95.1m | $87.0m | +9.3% ↑ |
| Net cash inflow from operating activities | −$262.3m | −$339.5m | +22.7% ↑ |
| Final dividend per share | 5.5c | 7.0c | -21.4% ↓ |
| Profit before tax | $137.0m | $118.6m | +15.6% ↑ |
| Cash and cash equivalents | $310.8m | $182.3m | +70.4% ↑ |
| Total assets | $1382.4m | $5677.6m | -75.7% ↓ |
Reference: annolyse.ai/briefings/hgh-fy22
Analytical metrics
| Metric | FY22 | FY21 | Context |
|---|---|---|---|
| PBT growth | +15.6% | — | cleaner earnings measure |
| Effective tax rate | 30.6% | 26.6% | — |
| FCF pre-lease | −$272.1m | −$347.0m | +$74.9m |
| FCF / NPAT | -286.0% | -398.7% | complementary conversion metric |
| Capex % revenue | 3.5% | 3.0% | — |
| Capex | −$9.8m | −$7.6m | −$2.2m |
| Debtor days | 0.0 | 0.9 | -0.9 days |
| Trade debtors | $0.0m | $0.6m | −$0.6m |
| Net debt | $5859.9m | $4676.3m | +$1183.7m |
| Gross borrowings | $6170700.0m | $4858.6m | +$6165841.4m |
| Payout ratio vs NPAT | 34.1% | — | — |
| Payout ratio vs FCF pre-lease | -11.9% | — | not covered |
| ROE (annualised) | 11.8% | 11.4% | Strengthening |
| HY22 share of FY22 revenue | 46.6% | — | Other half was 53.4% |
| HY22 share of FY22 NPAT | 50.0% | — | Other half was 50.0% |
| Profit from continuing operations | $95.1m | $87.0m | +$8.1m |
Reference: annolyse.ai/briefings/hgh-fy22
This analysis was generated using Annolyse, an AI-powered tool that analyses NZX/ASX company announcements. The analysis is based on available company filings and standard Annolyse calculations. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.