Interesting question - Winner:
Whilst I'm accumulating HGH particularly at current levels - I can't help but notice that the Reverse Mortgage
component of the business will long continue to be a draw on working capital being sent into that sector.
Sure retained earnings goes a certain extent towards funding it, further borrowings & Notes etc a further extent.
Obviously with no fixed date on realising the said Reverse Loans & Interest capitalised presumably to Loans
over their likely life -- this undoubtedly provides some interesting working capital balancing exercises for the very
capable & experienced HGH team working at the cliff face in this area.
Potential Loss Exposure in this sector I would imagine be very low.
I've looked at Snoopy's figure and compared to recent HGH Reports summarising the Loan exposures by sector
We look at "Growth" all too often
In Reverse Mortgages, and I guess with Developmental Margins in the Rest Homes Sector - we see growth
& Surpluses reported. But what is sometimes not always easily separated is the "Real Realised Growth"
ie - not locked in, realised - fluid & sitting in Current Assets / Working Capital, available to be spent or otherwise.
The Bean Counters of today's world (I'm probably one) have really not done everyone any favours by throwing yet another
puzzle into the equation with term lease payables, Lease Assets (hopefully more or less balancing out the other side)
notional interest factors on the said Lease equations etc
At the end of the day on a winding up these mysterious mythical figments of Bean Counter's imaginations will evaporate
into thin air - in the meantime the enterprises Assets & Liabilities are reported Grossly overstated by these imaginative
judgements of future asset & liability.
For goodness sake - a lease is a lease is a lease generally only payable periodically if there are assets sitting in kitty to do so
By similar token - an internally doctored up (or down) revaluation is just that - is it a gain, a profit (ie sale to outsiders) in the Property Accumulating & Developing Rest Home empires ?
This explains to all why most if not all Rest Homes pay little 'real tax', do not have Imputation credits to attach to dividends,
which means where one of these beasts decides to throw out a dividend, those on receiving end are likely to get wacked with the full 33% Dividend With holding tax to be passed to IRD
No wonder many (not used to certain bean counter creativity at work) get so confused with some of today's mysterious
accounting reporting by companies they are looking at .. ;)