Underlying Gearing Ratio HY2018 (Period Ending 31/12/2017)
Quote:
Originally Posted by
Snoopy
An update from last years equivalent reporting period, HY2016.
The underlying debt of the company according to the HY2017 statement of financial position is:
$39.138m + $5.986m = $45.116m
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:
$3,820.147m - ($3,394.800m +$6.827m + $298.519m) = $119.991m
We are then asked to remove the intangible assets from the equation as well:
$119.991m - $65.584mm = $54.407m
Now we have the information needed to calculate the underlying company debt net of all their lending activities:
$45.116m/$54.407m= 82.9% < 90%
This compares unfavourably with the comparatuve half year period figure of 56.0%, and even less favourably with the more recent 37.4% figure from FY2016 date (30th June 2016). The rapid deterioration in this statistic means we shoudl keep watching it. But being comfotably within covenant boundaries, there is no casue for medium term concern.
Result: PASS TEST
An update from last years equivalent reporting period, HY2017.
The underlying debt of the company according to the HY2018 statement of financial position is:
$26.020m + $6.722m = $32.742m
(Note: there seems to have been some change in policy that has allowed Heartland to substantially understate these underlying liabilities in comparison with the previous half year comparative period).
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:
$4,307.484m - ($3,783.091m +$1.724m + $294.297m) = $228.372m
We are then asked to remove the intangible assets from the equation as well:
$228.372m - $71.365mm = $157.007m
Now we have the information needed to calculate the underlying company debt net of all their lending activities:
$32.742m /$157.007m= 20.9% < 90%
This compares very favourably with the comparatuve half year period figure of 82.9%, and even favourably with the more recent very good 37.6% figure from FY2017 date (30th June 2017). If there was a hint of things going off the rails last comparable half year, it looks like it has all been brought back.
Result: PASS TEST
SNOOPY
EBIT to Interest Expense ratio HY2018 (Period ended 31/12/2017)
Quote:
Originally Posted by
Snoopy
Updating for the half year result HY2017. 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) = $135.789m-$35.966m= $99.823m
Interest expense is listed as $56.828m.
So (EBIT)/(Interest Expense)= ($99.823m)/($56.828m)= 1.79 > 1.20
Result: PASS TEST, an improvement from the HY2016 (1.55) position. And also an improvement on the full year position as of 6 months ago FY2016 (1.65)
Updating for the half year result HY2018. 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) = $152.471m-$40.248m= $112.223m
Interest expense is listed as $62.377m.
So (EBIT)/(Interest Expense)= ($112.223m)/($62.377m)= 1.80 > 1.20
Result: PASS TEST, near identical to the HY2017 (1.79) position. And also almost identical the full year position as of 6 months ago FY2017 (1.79). Has HBL found its own 'sweet spot' with this statistic?
SNOOPY