Winner, the equity transferred to get the HER business was $86.140m (note 40). Assuming an ROE of 10% that equates to an after tax profit increment of $8.614m.
The business was acquired on 1st April, so one quarter of that incremental gain is already in this years profit figure. So teh three quarters Heartland can expect in FY2015 amounts to
0.75 x $8.614 = $6.5m
On my normalised profit of $41m for FY2014 this means a profit of $47.5m for FY2015. So maybe a reduction in the interest margin explains the difference?
SNOOPY
So a guidance of $42m plus maybe a bit more more is not very good then?
I think I have sussed the secret formula as to how Heartland arrive at their guidance figures.
So how did they get $45m for next year. The thinking is -
1 - We made $36m last year.
2 - NPAT has been steadily increasing by about $3m each half year for a while
3 - But our business )exc HER) is reaching maturity and growth will slow
4 - So lets say that for FY15 we will increase NPAT by $2m each half year.
5 - Still pretty respectable (and that guy percy will be ok with this)
6 - So that's means H1 of $21.3 and H2 of $23.3m
7 - Hey that's just under $45m for the full year. Good
8 - Analysts will be happy (esp Forbar)
9 - So we can play it safe in case something goes wrong and say $42m-$45m
Easy peasy eh.
And No 10 - of course nobody is expecting us to make any money out of home equity stuff (even an accountant on Sharetrader says so). We'll keep that up our sleeves eh
As Buffett says .... 'the rearview mirror is always clearer than the windshield'
The rear view mirror sure is clear but heck the windscreen has got many dirty streaks over it and when I squirt the washer button the blades sure do make it even murkier. Hope no sun strike.
I think I have sussed the secret formula as to how Heartland arrive at their guidance figures.
So how did they get $45m for next year. The thinking is -
1 - We made $36m last year.
2 - NPAT has been steadily increasing by about $3m each half year for a while
3 - But our business )exc HER) is reaching maturity and growth will slow
4 - So lets say that for FY15 we will increase NPAT by $2m each half year.
5 - Still pretty respectable (and that guy percy will be ok with this)
6 - So that's means H1 of $21.3 and H2 of $23.3m
7 - Hey that's just under $45m for the full year. Good
8 - Analysts will be happy (esp Forbar)
9 - So we can play it safe in case something goes wrong and say $42m-$45m
Easy peasy eh.
And No 10 - of course nobody is expecting us to make any money out of home equity stuff (even an accountant on Sharetrader says so). We'll keep that up our sleeves eh
As Buffett says .... 'the rearview mirror is always clearer than the windshield'
The rear view mirror sure is clear but heck the windscreen has got many dirty streaks over it and when I squirt the washer button the blades sure do make it even murkier. Hope no sun strike.
Anyway what my theory looks like in picture form
LOL. No9 should read The Dairy prices are in freefall so we'd better allow some provisioning in there just in case some of our customers in that sector end up in the shyte.
Regarding said standing ovation, I think I'm on safe ground, no profit upgrade this early in the financial year...too much uncertainly down on the farm.
I promise to have a drink or two to put a dent in their AGM entertainment budget though
I sense I am going to get banned from this thread .... or even worse be put on the Ignore list like Snoopy is.
Jeez if you read the Annual Accounts thoroughly and read between the lines in the presentations and talk to a nice lady in their Wellington office you can really glean a lot. Even the man from Coop is quite complementary about Heartland and willing to share insights.
I think I know heaps about Heartland now - except their Diversity Policy
I don't know about others but I don't mind a good satirical post with good humour. I suspect your musings about profit projections aren't too far from the truth.
I can't help myself I bought more today. Has anyone got a good remedy for dividend fever
An interesting article in this morning's The Press, page B4 headed ,"Reverse mortgages have their place."
"Quite frankly there's not a lot of personal downside."
Good to see a well balanced informative article.
An interesting article in this morning's The Press, page B4 headed ,"Reverse mortgages have their place."
"Quite frankly there's not a lot of personal downside."
Good to see a well balanced informative article.
This months Consumer has an article about these products.
They write-off the TSB product because no guarantee of staying in the house and if the outstanding amount at the end of the day is more than the sale price the difference needs to be paid.
They say these products have fish hooks and other options are available but the only realistic one is to borrow from the children using the house as collateral (all legally drawn up of course)
At the end of the day if the old folk want some cash just trot down (or use the old motorised buggy) to Heartland and they will sort something out for you
An interesting article in this morning's The Press, page B4 headed ,"Reverse mortgages have their place."
"Quite frankly there's not a lot of personal downside."
Good to see a well balanced informative article.
Was it one of those advertorial pieces or a genuine bit of financial reporting.
Hope Heartland are encouraging more media to do bits on this.
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