HGH - Heartland Group Holdings

[Snow Leopard]

PT, the numerator of your second two ratios 'Worst Case 6 months' and 'Worst Case 12 months' does not contain the $42.29m 'undrawn committed bank facilities'. However you did include this $42.29m in your 'Worst Case on Demand' ratio. Is there a reason for treating the 'Worst Case on Demand' ratio differently in this respect?

SNOOPY

Because it is repayable within the year. [Says so]

As I said before the On Demand is really the only meaniful number.

BW
Paper Tiger

[Snow Leopard]

I think that I will continue to follow the advice of the first PT, and not the second PT. That means I take the printed 'contacted' figures and transform them into 'expected' figures. Whether that is using 'fairyland numbers' is a matter of opinion.

But since note 14 also says:
"The banking group does not manage its liquidity risk on a contractual liquidity basis."

I would argue there is a good case for transforming the contracted figures into something else.

SNOOPY

The 'first' PT was advising you that you were using the numbers incorrectly,

and

the 'second' PT Iis advising you that you are [still] using the numbers incorrectly,

and the 'first' and 'second' are actually the 'I have lost count' and 'I have lost count plus one'

Perhaps if you paid attention to what is actually written and made sensible deductions this thread would have less posts on it.

If the bank managed their liquidity risk on a contractual basis they would have about $800M of cash & equivalents On Demand (jokingly known as Shoe Box banking).

Heave Ho.
Paper Tiger

[Snow Leopard]

...I wonder what the explanation for that little inconsistency is?

SNOOPY

No comment

Release the lines, haul in the sheets, and avoid that tanker.

Till the next port
Paper Tiger

[percy]

No comment

Release the lines, haul in the sheets, and avoid that tanker.

Till the next port
Paper Tiger

I don't think he has made the first port yet.
Still lost at sea.?

[Snoopy]

No comment

Release the lines, haul in the sheets, and avoid that tanker.

Till the next port
Paper Tiger

'B'anker is spelt with a 'B'. And you shouldn't be drinking on the job either. :-)

SNOOPY

[Snoopy]

If the bank managed their liquidity risk on a contractual basis they would have about $800M of cash & equivalents On Demand (jokingly known as Shoe Box banking).

Heartland HY2017 Liquidity 'On Demand' (Contractual): Refer Note 14
Cash & Cash Equivalents	$69.655m
plus Unrecognised loan commitments	$99.061m
less Borrowings	($754.583m)
add Undrawn Committed Banking Facilities	$49.294m
Net Cashflow	($576.573m)

Looks like a shortage of cash to me. However, it is all moot because as we know:

"The banking group does not manage its liquidity risk on a contractual liquidity basis." (The 'expected demand' is the figure that banks use).

SNOOPY

[Snoopy]

Because it is repayable within the year. [Says so]

One year from balance date is 30th June 2017. From note 14:

"Undrawn committed bank facilities of $49.3 million are available to be drawn down on demand via the ABCP Trust. To the extent drawn, $49.3 million is contractually repayable in 6-12 months' time upon facility expiry."

Yet we also know that (note 7):

"The banking group has securitised bank facilities of $350 million (December 2015: $350 million; June 2016: $350 million) {$350m - $276.696m = $73.304m undrawn loan headroom remaining} drawn on in relation to the ABCP Trust, which matures on 3 August 2017."

So it would seem that although 'loan reference 1' and 'loan reference 2' are both drawn on the ABCP trust, they are both different loans because the borrowing capacities are different and the maturity dates are different. Could that 'securitized loan' have been shuffled off balance sheet?

SNOOPY

[Snow Leopard]

Heartland HY2017 Liquidity 'On Demand' (Contractual): Refer Note 14
Cash & Cash Equivalents	$69.655m
plus Unrecognised loan commitments	$99.061m
less Borrowings	($754.583m)
add Undrawn Committed Banking Facilities	$49.294m
Net Cashflow	($576.573m)

...

I am completely baffled that despite these numbers being 'grouped' correctly for you by your friendly local Tiger you then go and re-arrange them in an apparently random manner and come up with a complete load of utter junk as a result.

The loan commitments and borrowings live together. Think about the cashflow (as you term it) and it is obvious.

By the way, Cash & equivalents and the Undrawn Committed also live together on the other side of the statement, in case you are tempted to do something novel with your creative accounts.


Best Wishes
Paper Tiger

[Snow Leopard]

One year from balance date is 30th June 2017. From note 14:

"Undrawn committed bank facilities of $49.3 million are available to be drawn down on demand via the ABCP Trust. To the extent drawn, $49.3 million is contractually repayable in 6-12 months' time upon facility expiry."

Yet we also know that (note 7):

"The banking group has securitised bank facilities of $350 million (December 2015: $350 million; June 2016: $350 million) {$350m - $276.696m = $73.304m undrawn loan headroom remaining} drawn on in relation to the ABCP Trust, which matures on 3 August 2017."

So it would seem that although 'loan reference 1' and 'loan reference 2' are both drawn on the ABCP trust, they are both different loans because the borrowing capacities are different and the maturity dates are different. Could that 'securitized loan' have been shuffled off balance sheet?

SNOOPY

My bafflement continues.

There are a number of Snoopositions [Snoopy suppositions] here.
If you can cure yourself of those, there may be hope for you.


Best Wishes
Paper Tiger

[Hint: Think carefully about the ABCP Trust financials]

[Snoopy]

I am completely baffled that despite these numbers being 'grouped' correctly for you by your friendly local Tiger

I see your three ratios with 'On Demand', '0-6 months', '0-12 months' ratios between 'contracted' receivables maturing' and contracted 'debenture equivalents' set to be repaid. However, I do not understand the objective of grouping the data in this way (because 'contracted cashflows' are not used by the bank in their own liquidity assessments - the bank uses 'expected cashflows'). Therefore I can make no assessment as to the 'correctness' of these ratios.

you then go and re-arrange them in an apparently random manner and come up with a complete load of utter junk as a result.

Hardly random. My "Heartland HY2017 Liquidity 'On Demand' (Contractual)" table is just a reproduction of the 'On Demand' column in Note 14 of IFR2017 on Liquidity quoted line by line.

Perhaps the slightly 'dodgy bit' is my treatment of the on call borrowing headroom. This money facility could be used to pay out debenture holders who want their money back (this is what I have assumed in my table). But the same money could also be used to support the establishment of new financial receivables. In that instance the $49.294m would turn into a negative number in my table. However on a contractual basis, with money due to be returned to debenture holders grossly exceeding the maturity of the financial receivables, I think using that facility to pay out debenture holders is the more likely possibility.

The loan commitments and borrowings live together. Think about the cashflow (as you term it) and it is obvious.

That point I can fully agree with

By the way, Cash & equivalents and the Undrawn Committed also live together on the other side of the statement, in case you are tempted to do something novel with your creative accounts.

So you are saying that I am 'double counting' in my addition because the 'Cash & Cash Equivalents' includes the 'Undrawn Committed Bank Facilities"?

SNOOPY