HGH - Heartland Group Holdings

[teabag]

I was going to call them on Monday with that question.

If you do, please advise the answer here, was wondering that myself.

[Kelvin]

Hi all, I successfully opened a 2nd Direct Call account with the shareholder special. Went through the mobile app

[Soolaimon]

Actually, I am wondering if it is worth the trouble for 2 .5 months at .2% extra. Cause the way I understand it will revert back to .75% 1st Jan.

[winner69]

Actually, I am wondering if it is worth the trouble for 2 .5 months at .2% extra. Cause the way I understand it will revert back to .75% 1st Jan.

The 0.2% is a premium to the current rate

If Heartland decide to change the 0.75% next week to say 0.5% you’ll only be getting 0.7% from the date of any change

And the Dec 31 is when the offer ends ...open by then and you get the premium (for as long as they take it away)

That’s how I read it anyway

[Snoopy]

Cheers - although I'm not sure if such a nomination is a good or a bad thing!

If it's any consolation, I've been sharpening the point on my own head this weekend.

Snoopy wrote
"I have been puzzled why the 'Right of Use Assets' did not automatically equal the 'Lease Liabilities' "

A good question which, sadly, forced me to read up on IFRS16. I too assumed the ROU asset would equal the liability at inception...until I read a PWC guide on it. The liability is calculated using the net present value of future cash flows which is pretty standard stuff. But here comes the interesting part, although IFRS16 can never be described as interesting of itself,...

The ROU asset is the ROU liability plus and minus a bunch of adjustments. Quote from PWC : "the right-of-use asset is initially recognised at the commencement day and measured at cost, consisting of the amount of the initial measurement of the lease liability, plus any lease payments made to the lessor at or before the commencement date less any lease incentives received, the initial estimate of restoration costs and any initial direct costs incurred by the lessee." (bold emphasis added by me). Source = p10 of https://www.pwc.com/pg/en/publicatio...pth-ifrs16.pdf

Ah that clears up a lot, thanks. Knowing that the 'Right of Use Assets' did not automatically equal the 'Lease Liabilities' lead me to think that the discounting of future lease payments would mean that the 'Right of Use' assets would always exceed the 'Lease Liabilities', on paper, on balance date. So I was extra surprised to see that the reverse was true in the Heartland case. I know about the ubiquity of 'lease incentives' to get tenants to sign up. But I hadn't considered that such arrangements are probably now the norm rather than anything unusual. Nor had I considered how much equivalent 'forgiven rent' these deals represent.

I started reading that IFRS16 PWC wrap up you posted as part of my weekend 'head sharpening' to improve pointiness. From page 1

"IFRS 16 will also influence the income statement, because an entity now has to recognise interest expense on the lease liability (obligation to make lease payments) and depreciation on the ‘right-of-use’ asset (that is, the asset that reflects the right to use the leased asset)."

That seems very odd jargon. I would call paying off some of my lease liability a 'lease payment' or a 'lease installment payment'. Calling it an "interest expense on the lease liability" has quite a different connotation to me. Can 'paying your rent' really be described as 'paying a class of interest'? I find that very confusing.

Later on p1 another surprising comment.

"The new guidance will also change the cash flow statement. Lease payments that relate to contracts that have previously been classified as operating leases are no longer presented as operating cash flows in full. Only the part of the lease payments that reflects interest on the lease liability can be presented as an operating cash flow (depending on the entity’s accounting policy regarding interest payments). Cash payments for the principal portion of the lease liability are classified within financing activities."

Now I get the idea of a 'finance lease' where your company might buy a car (for example) and expect to gain ownership of it at the end of the 'finance lease'. The treatment of a finance lease does not change under IFRS16 because the car, in this instance, is on the company's books that are using that car all along. Such a finance lease would have both an interest and capital repayment component. But what the paragraph I quote above above seems to be saying is that an 'operating lease' also has a capital and an interest repayment component. Huh? I thought the whole definition of an 'operating lease' as distinct from a 'finance lease' implied that the company that used the asset, like a rental premises, never intended to own it. So I had a clear expectation that capital repayments played no part in any operating lease contracts. It appears my understanding of lease matters is very poor! Can anyone sort me out?

TIA

SNOOPY

[winner69]

Snoops -have you caught up that in response to the COVID-19 pandemic the International Accounting Standards Board has issued amendments to IFRS 16
Leases to allow lessees not to account for rent concessions as lease modifications if they are a direct consequence of COVID-
19 and meet certain conditions.

Maybe that complicated matters as well

[Soolaimon]

I called them this morning and can confirm that the offer only applies to new accounts and the 0.2% premium expires 31 Dec. I guess if one had a mil or so it would be worth the effort, otherwise.....

[Greekwatchdog]

New Mortgage Rates...

https://www.nzx.com/announcements/361329

[Norwest]

Wow, they are amazingly good value mortgage rates.

[sb9]

Jeff sounds pretty excited..

https://www.interest.co.nz/personal-...e-offers-today

“Digitalisation means a low cost of onboarding, which can be passed on to borrowers. It also means speed – an answer can be given in minutes, so customers don’t have to endure the lengthy processes of mainstream banks. Moreover, Heartland’s group structure provides it with broad funding flexibility,” said Heartland Group CEO Jeff Greenslade.