HGH - Heartland Group Holdings

[percy]

They fooled S&P.

If only if it wasn't for that dog, they would have got away with it.

Just remember on this thread Snoopy's record has been 100% wrong.
S&P carry more weight with me.[and the market]
Disclosure.I own HNZ shares.Snoopy does not.
Further disclosure.I no longer read Snoopy's posts on this thread .

[nextbigthing]

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.

[Snow Leopard]

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.

Just Googled "family guy peter griffin and the chicken" so I think I know where your coming from but...
which character am I supposed to be?

Best Wishes
Paper Tiger

[nextbigthing]

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

[Snow Leopard]

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."...

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.

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

[Cool Bear]

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.

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

Hi PT, thanks for making me read the disclosure statement. You had me worried for a moment with the 0.00%.

[Snoopy]

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 "

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

[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 comprised 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.

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

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

Rexamining note 11, I may have double counted some of those problem property assets. The note says:

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?

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.

$42.498m / $1,905.85 = 2.2%

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

[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.

Quite right Roger. I made no comment on the upcoming profit and have no reason to believe targets will not be met. I was highlighting the risk being taken to make the profit, an entirely different issue.

SNOOPY

[vorno]

Sorry... I had to break your 3-post streak!