Two sets of account later
Accounts for the group as a whole and the banking group look OK to me.
Should survive another year in reasonable circumstances. :)
Quite a dramatic shift with the reduction in the non-core property and the Sentinel acquisitions.
No plans to buy any more or sell any at the moment except for the dividend recycling.
Best Wishes
Paper Tiger
Underlying Gearing Ratio FY2014
Quote:
Originally Posted by
Snoopy
An update from the previous reporting period, FY2013.
The underlying debt of the company according to the HY2014 statement of financial position is: $32.612m
To calculate the total underlying company assets we have to (at least) subtract the finance receivables from the total company assets. I would argue that you should also subtract the problem 'Investment Properties' and the unspecified 'Investments' from that total:
$2,492.090m - ($1,905.850m +$61.481m + $255.427m) = $269.332m
We are then asked to remove the intangible assets from the equation as well:
$269.332m - $22.891m = $246.441m
Now we have the information needed to calculate the underlying company debt net of all their lending activities:
$32.612m/$246.441m= 13.2% < 90%
Result: PASS TEST
This means the position has improved usefully over the latest half year.
The underlying debt of the company (borrowings removed) according to the full year statement of financial position is: $39.375m + $0.431m = $39.806m
To calculate the total underlying company assets we have to (at least) subtract the finance receivables from the total company assets. I would argue that you should also subtract the problem 'Investment Properties' and the unspecified 'Investments' from that total:
$3,016.888m - ($2,607.393m +$24.888m + $238.859m) = $145.748m
We are then asked to remove the intangible assets from the equation as well:
$145.798m - $47.421m = $98.327m
Now we have the information needed to calculate the underlying company debt net of all their lending activities:
$39.806m/$98.327m= 40.5% < 90%
Result: PASS TEST
SNOOPY
EBIT to Interest Expense Ratio FY2014
Quote:
Originally Posted by
Snoopy
Results are out for HY2014 so time to update.
Updating for the half year result HY2014. The EBIT figure is not in the financial statements. So I will use 'interest income' as an indicator for EBIT, once I have taken out the selling and administration costs
EBIT (high estimate) = $100.500m-$32.417m= $68.083m
Interest expense is listed as $48.114m.
So (EBIT)/(Interest Expense)= ($68.083)/($48.114)= 1.42 > 1.20
Result: PASS TEST, a significant improvement from the FY2013 position. Perhaps that drop in interest being paid to debenture holders as a result of becoming a bank is starting to come through?
Updating for the full year result FY2014:
The EBIT figure is not in the financial statements. So I will use 'interest income' as an indicator for EBIT, once I have taken out the selling and administration costs
EBIT (high estimate) = $210.297m - $64.739m= $145.558m
Interest expense is listed as $101.221m.
So (EBIT)/(Interest Expense)= ($145.558)/($101.221)= 1.44 > 1.20
Result: PASS TEST, a significant improvement from the FY2013 position, which confirms the improvement reported during HY2014.
SNOOPY
Tier1 and Tier 2 Lending ratio FY2014
Quote:
Originally Posted by
Snoopy
Once again there is no mention of Tier 1 or Tier 2 in the Heartland HY2013 report.
The 'best case' scenario is that all loans are Tier 1. $2,097.553m of loans are outstanding. 20% of that figure is:
0.2 x $2,076.968m = $415.4m
Heartland has total equity of $382.5m which is still below the 20% of loan target no matter what the tier classification of the loans.
Result: FAIL TEST
Once again there is no mention of Tier 1 or Tier 2 in the Heartland FY2014 report.
The 'best case' scenario is that all loans are Tier 1. $2,564.266m of loans are outstanding. 20% of that figure is:
0.2 x $2,564.266m = $512.9m
Heartland has total equity of $452.6m which is still below the 20% of loan target no matter what the tier classification of the loans.
Result: FAIL TEST
PS Other posters have protested at my 20% of equity to back up the loan measuring stick in the past. 20% is not too far away from the 17% which by implication is judged acceptable by management under the watchful eye of Reserve Bank chairman Graeme Wheeler. The Reserve Bank further qualifies their views that a company of Heartlands credit rating still has a 1 in 30 chance of going broke in any year. I prefer to think in business cycles and 30 years will contain around five of those. So you could restate the Reserve Bank's view as saying that HNZ has a one in five chance of going broke at the bottom of the business cycle.
For me that investment risk is too high. So I am sticking to my 20% equity requirement, even if the Reserve Bank will settle for less.
SNOOPY