I look forward to shouting you an evening of free beer at Trevinos if you are right.!!!
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Please guys don't put the voodoo spell on these shares I hope they stay where they are,because they seldom do when i say that.
But buyers seem to be looking a bit further ahead now and with the big pluses of medium PE and growth through aquisition prospects,starting to continue the slow but steady trend upwards.
Under the impairment section of the interim report for 31st December 2012 we learn.
"Net impaired,restructured and past due loans over 90 days were $80.2m (or 3.9% of net finance receivables – Net Impairment Ratio) as at 31 December 2012 – down from $90.5m (or 4.4% of net finance receivables) as at 30 June 2012. The level of impaired, restructured and past due loans are primarily due to the legacy non-core property book and are expected to continue to reduce as a percentage of total assets as lending in the core business grows and the non-core property book runs down."
It is interesting to see that the historical bad debt situation of 31st December 2011 has been revised upwards (from 4.2% to 4.4%) with the benefit of hindsight.
"The Net Impairment Ratio on the core business (excluding the non-core property book) was 1.7% as at 31 December 2012, compared to 1.8% as at 30 June 2012"
A new thing for Heartland here in quoting the bad debts only for their 'core' business. I am always suspicious when businesses introduce new metrics like this. In this case the motive is obvious - trying to convince shareholders old bad property debt is a legacy issue. The problem is closing one eye to make half the debt go away, doesn't actually cause half the bad debt to go away.
SNOOPY
New tactics for the HY2014 report. The word 'impairment' isn't even mentioned in the text, which is I suppose another way to make any impaired loans go away.
In the table on page 4 there is at least a nod to 'impaired asset expense' down to $3.3m (HY2014, ended 31st December 2013) from $5.3m in the corresponding prior period (HY2013) and $22.5m in the full year to 30th June 2013. By simple subtraction the bad debt expense for the period 1st January 2013 to 30th June 2013 ( 2HY2013 ) was $22.5m - $5.3m = $17.2m.
'Impaired Asset Expense' is code for having lost all hope. Almost no chance of getting the money back. 'Restructured' and 'past due loans' do not fall under that category. So comparisom with the previous comparable period are - deliberately? - difficult to make.
SNOOPY
On page 5 of the interim report there is a note (iv) to this effect:
"Total non-core property assets reduced by 19% in the six months up to 31st December 2013. As at this date, non-core property assets comparised net receivables of $25.6m and investment properties of $61.5m. We remain confident that future earnings will not be affected by these assets."
From the Interim Balance Sheet (p9) 'Finance Receivables' were $1,905.89m.
So "problem property assets" represent:
($25.6m+ $61.5m) / $1,905.89m = 4.6% of total finance receivables.
This is the worst result in two years for Heartland in its current form, topping the 4.4% from 31st December 2011. But that figure also included 'restructured ' and 'past due' loans.
Go to note 11 of the HY2014 report and you will find restructured assets of $3.994m on the books, together with past due loans of $19.518m. Now we can work out the total "Net impaired,restructured and past due loans over 90 days" at the last balance date:
($25.6m+ $61.5m) + $3.994m + $19.518m = $110.612m
Divide that by balance sheet receivables and you get the total doubtful debt ratio.
$110.612m / $1,905.89m = 5.8%
Not a pretty figure. No wonder HNZ changed their reporting metrics so they didn't have to tell you shareholders about it.
SNOOPY
"Total non-core property assets reduced by 19% in the six months up to 31st December 2013. As at this date, non-core property assets comparised net receivables of $25.6m and investment properties of $61.5m. We remain confident that future earnings will not be affected by these assets."
Speaks for itself. You either believe the Directors or you don't and in the latter case you probably wouldn't own the shares.
Disc Happy to hold, every Bank has a few fleas in the closet.
Nice try Snoopy,
There are invalid assumptions, lack of understanding of what the figures represent, and general adding up of the wrong things in your posts.
Fortunately putting the wrong data in results in the wrong answer coming out, and they are doing a lot better than you [are determined to] believe.
Best Wishes
Paper Tiger
I don't know if any of you guys watch family guy, but Paper Tiger and Snoopy remind me of Peter Griffin and the chicken.
Ha, I was just coming to edit that post to make it clear I had no idea who was Peter and who was the chicken. I guess I'll leave that for you two to fight it out :)
So it suddenly occurred to me that I had not actually checked the Mar-14 disclosure statement for the Bank (which was most of HNZ).
How remiss of me. :mellow:
Anyway that number of $80M2 (3.92%) from Dec-12 which was actually $42M4 (2.22%) at Dec-13 has blown back out to $44M6 (2.35%) at Mar.
On the old Capital Adequacy ratios the important one is Total Capital which stood at 14.71% against the minimum requirement of 12.00%
Their required buffer ratio remains at 0.00%. (Look it up for yourself if you do not believe me).
Otherwise profit at 3/4 time stands at $26M4.
Best Wishes
Paper Tiger
Just checking some of these calculated results supplied by Heartland.
(1/2)AR2013 note 11 shows $2072.27m of gross financial receivables, less a $27.477m allowance for impairment gives total financial recivables of $2044.793m.
Go to note 17a to get the quality of financial receivables and we find:
At least 90 days past due $49.173m
Individually impaired $49.418m
Restructured assets $9.069m
That sums to $107.66m. Take off the allowance of $27.277m for impairment and I get $80.383m. That is close enough to the $80.2m quoted for me.
$80.383m / $2044.793m = 3.93%
That within rounding error is the same as the 3.9% quoted. So far so good.
SNOOPY
The 'Finance Receivables' on the balance sheet have already had a $34.214m provision for impairment taken off them. From note 11 'Gross Finance Receivables' were $1,940.064m
Rexamining note 11, I may have double counted some of those problem property assets. The note says:Quote:
This is the worst result in two years for Heartland in its current form, topping the 4.4% from 31st December 2011. But that figure also included 'restructured ' and 'past due' loans.
Go to note 11 of the HY2014 report and you will find restructured assets of $3.994m on the books, together with past due loans of $19.518m. Now we can work out the total "Net impaired,restructured and past due loans over 90 days" at the last balance date:
($25.6m+ $61.5m) + $3.994m + $19.518m = $110.612m
At least 90 days past due $19.518m
Individually impaired $53.1m
Restructured assets $3.994m
That sums to $76.712m. Take off a provision for impairment of $34.214m and I get $42.498m.
However that $76.712m does not correspond to the:
"non-core property assets comprised net receivables of $25.6m and investment properties of $61.5m." (page 5 in same report)
which sum to $87.1m. Anyone know why the difference?
$42.498m / $1,905.85 = 2.2%Quote:
Divide that by balance sheet receivables and you get the total doubtful debt ratio.
$110.612m / $1,905.85m = 5.8%
Not a pretty figure. No wonder HNZ changed their reporting metrics so they didn't have to tell you shareholders about it.
A much less worrying result. Apologies to all those Heratland shareholders that suffered a heart attack yesterday as a result of my calculations. I wonder why HNZ chose to stop measuring bad debts this way?
SNOOPY
Sorry... I had to break your 3-post streak!