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08:06
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Originally posted by richardwth
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I agree with tamz and grimloq. It could have been,as RJ resigned on 9 May 23. Normalised cash profit was first used in HUM’s 1H23 results in Feb 23. I never liked this change and I’m pleased they have dropped it. Even if it was RJ’s idea the Board endorsed it, and they shouldn’t have done. HUM has too much tendency to emphasise good results and play down or not even mention bad points, which is annoying, although many cos are guilty of this. 1H23 presentationsaid “Management (and presumably the Board) consider that [the new] normalised cash profitis the best indicator of ongoing performance for HUM and reflects significant movementin noncash items including movement of AASB9 provision (for credit losses) to accountfor growth, and depreciation versus pcp” What they did NOT say was that that they also removed costs and losses from suspended products out of the cash profit into a normalisation adjustment category, even though they are cash items and are recurring This was a clumsy attempt to distract attention from the losses from suspended products and UK. These were huge in FY22 and FY23 and still big in FY24. There was no justification for doing this, especially as they were cash losses, not merely accounting adjustments, and they were kidding themselves (and shareholders) by saying they were non-recurring. I thought it was OK to normalise for the AASB9 movement, because AASB9 does cause much volatility- although unsurprisingly HUM decided to adjust for this in a year when AASB9 gave HUM a big negative rather than positive movement. The decision to add back deprecation was illegitimate- if they were going to add back depreciation HUM should have subtracted actual cash cost of capex and IT etc, which would have roughly nullified that change. The removal of suspended products was not justifiable- just a blatant attempt to make the results look much better. The suspended products losses were very large and not a one off “freak” –they have bled for 3 years or more.
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Thanks @richardwth for your valuable insights. There seemed to be very little commentary on the BNPL side of the business. Do you believe these losses have now largely been incurred and from here we are back to 'normal' reporting? I have some renewed confidence that the worst is behind HUM now and with interest rates likely to fall we have some much needed tailwinds. Only caveat is that while AA is at the helm anything could happen - I am not confident at all that AA has shareholders' best interests at heart!
(20min delay)