TNR v HBL Head to Head Round 2 (Relative Profitability)
Quote:
Originally Posted by
Snoopy
Calculations backing up the above table entry are as follows:
Heartland:
$48.163m +0.72($12.105m) /( 1/2( $480.125m + $452.622m)) = 12.2%
Turners:
2x ($7.432m- $0.046m) /( 1/2 x( $125.810 + $121.002)) = 12.0%
From the above, Heartland NPAT for FY2015 with annual impairment charge removed was:
$48.163m +0.72($12.105m)= $56.879m
The annual interest charge, already taken out of the above figure is $43.515m (from Note 2, AR2015).
This represents: $43.515m/ $56.879m = 77% of NPAT
From the above, Turners NPAT (half year,no tax payable at operational level) for HY2016 with half yearly annual impairment charge (revaluation in this case) removed was:
($7.432m- $0.046m) = $7.386m
The annual interest charge, already taken out of the above figure, was $5.772m. This represents
$5.772m/ $7.386m = 78% of NPAT
Very interestingly, in percentage terms,there is almost no difference between the two.
However, Heartland faced an operational tax bill of $16.170m, for which there was no Turners Finance Equivalent.
$16.170m/$56.879m = 28% of NPAT
So despite ROE being close for Heartland and Turners over our comparison, we might expect Turners relative performance in ROE to decline, once they start paying full tax.
Conclusion: Heartland win round two of our head to head contest.
SNOOPY