analysis of annual report discussion

Hi All,

I read the annual report on the weekend and just wanted to share my findings. I would really appreciate any discussion on the results as in my opinion, things are looking very good.

Full year earnings of 24c/share.
14 cents first half including 4c one off
10 cents 2nd half earnings.
10 cent dividend declared.

Run off rate 25% last year and forecasted another 25% for the coming year. This will reduce earnings by about 12.5% assuming that the 25% run's off at a constant rate through the year.

Dividend paid 79c/share and was earning interest at 5%. So we will lose about 2.8c/share after tax in interest.

Funding maturity is as follows:

6mths <, 6-12mths, 1-2 years, 2-5 years, >5 years
$2,316,941 $270,459 $434,412 $741,598 $645,976

Loan book maturity
$991,875 due in the next year
$2,821,302 due > 1 year

Cash at bank and in hand $65.9mil
deposits at call and commercial paper $200.5mil
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Total cash or cash equivalents $266.3mil, or 87c/share

Retained Earnings of $136.4mil or 44.4c/share

Profit forcasts for the next two years of 26.5c.
breakdown:
1st year - 20c annual earnings (less the one off) -2.7c lost interest income * 0.875 = 15.13c/share
2nd year - 20c annual earnings (less one off) -2.7c lost interest income * 0.75 * 0.875 = 11.35c/share

That would give retained earnings on 71c/share in 2 years.
That franked up gives you $1.01 with still some residual value.

Risks are that the warehouse funding cannot be rolled forward.

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Is there anything stopping RHG from paying out its 44.4c/share retained earnings which is 63c of value without even factoring in the loan book.

BUY BUY BUY!!! Please let me know why it is not a buy.

My opinion only. DYOR.