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Harvey Norman: Debt Up Share Value Down, Questions Over Directors Pay, AGM Set To Be A Circus

Goldman Sachs Group who recently went back to reporting on Harvey Norman has issued a sell rating on the stock ahead of this month’s AGM which is set to be a feisty event.

Over the past year the big retailer has ramped up its debt from AU$721m to AU$925m – this includes both the current and long-term debt.

With this rise in debt, HVN’s cash and short-term investments stands at AU$202m which analysts such as Simply Wall Street claims is “enough” to run the business based on current cash flow others have raised questions about the long term viability of Harvey Norman in light of a major downturn in housing in Australia.

The retailer who has seen their shares slump in recent weeks generated AU$454m in operating cash flow during the same period of time, leading to an operating cash to total debt ratio of 49%.

Current liabilities at the Company are running at AU$830m, and the business which has in the past been funding their franchise network as well as taking liabilities for the poor performance and failures of their franchise partners is set to face questions about the viability of their franchise network in light of investigations by the Australian Securities and Investment Commission.

Questions are also set to be raised at the AGM about payments to directors and CEO Katie Page, her compensation is AU$3m an increase of 8.2% above last year.

SWS said that Harvey Norman Holdings Limited has generated a total shareholder return of 1.2% over three years, and that shareholders probably don’t want to see the CEO paid more than is normal for companies around the same size.

The Australian Shareholders Association as set to question payments to directors and senior executives.

Recently Harvey Norman chairman Gerry Harvey said a “sum total of an awful lot of things” are to blame for a slowdown in business in recent months as the sector prepares for a competitive Christmas.

A downturn in the housing market and ongoing pressure on consumer wallets has tempered expectations for homewares and appliances retailers in the second half of 2018 he claims’ Hi Fi has a different view.

Harvey, who has been trading in the category for 57 years, told SmartCompany market growth has slowed.

Goldman Sachs Group who recently went back to reporting on Harvey Norman has issued a sell rating on the stock ahead of this month’s AGM which is set to be a feisty event.

Over the past year the big retailer has ramped up its debt from AU$721m to AU$925m – this includes both the current and long-term debt.

With this rise in debt, HVN’s cash and short-term investments stands at AU$202m which analysts such as Simply Wall Street claims is “enough” to run the business based on current cash flow.

The retailer who has seen their shares slump in recent weeks generated AU$454m in operating cash flow during the same period of time, leading to an operating cash to total debt ratio of 49%.

Katie Page

Current liabilities at the Company are running at AU$830m, and the business which has in the past been funding their franchise network as well as taking liabilities for the poor performance and failures of their franchise partners is set to face questions about the viability of their franchise network in light of investigations by the Australian Securities and Investment Commission.

Questions are also set to be raised at the AGM about payments to directors and CEO Katie Page, her compensation is AU$3m an increase of 8.2% above last year.

SWS said that Harvey Norman Holdings Limited has generated a total shareholder return of 1.2% over three years, and that shareholders probably don’t want to see the CEO paid more than is normal for companies around the same size.

The Australian Shareholders Association as set to question payments to directors and senior executives, Chairman Gerry Harvey has dismissed calls for more independent directors.

The ASA plans to vote against Harvey Norman’s remuneration report at its upcoming Annual General Meeting in November, which could present a first strike risk after a protest vote in 2017 delivered a near miss.

The association has criticised Harvey for disclosure relating to franchisee loans, investments in non-retail businesses and the independence of board directors.

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