Quote Originally Posted by Snoopy View Post

The 'profit before tax' is listed as $59.664m (p35). But this includes a provision for credit impairment of $7.123m which I would remove to get the picture of ongoing operational performance. So I get EBT of $66.787m.

Now go to note 4 (p43) on interest expense. There is underlying interest over and above what is due to debenture holders of $16.623m.

So total underlying EBIT = $66.787m + $16.623m = $83.07m

Now turn to page 45 (note 8) and you will see total loans and advances of: $2,065.117m

So the operating margin based on the end of year loan balance book is:

$83.07/$2065.11 = 4.02%

That is almost twice the margin of the underlying ANZ bank in NZ, which is not what I was expecting. I will have to consider.

1/ whether I have made a mistake.
2/ what all this means for the likes of the potential of Heartland.
The above is from the December 2013 prospectus. From that document the figures are also supplied for the previous year (FY2012) for comparative purposes. So time to crunch those numbers too.

The 'profit before tax' is listed as $52.445m (p35). But this includes a provision for credit impairment of $6.031m which I would remove to get the picture of ongoing operational performance. So I get EBT of $58.476m.

Now go to note 4 (p43) on interest expense. There is underlying interest over and above what is due to debenture holders of $19.529m.

So total underlying EBIT = $58.476m + $19.529m = $78.01m

Now turn to page 45 (note 8) and you will see total loans and advances of: $2,014.473m

So the operating margin based on the end of year loan balance book is:

$78.01/$2014.47 = 3.87%

No quite as good as FY2013, but not bad.

SNOOPY