Forum Archive Index - November 2000

["P Maiden" <pmaiden@xtra.co.nz>]

Derek

 

Interesting report from  a companies I wouldn't  normally look at - but pretty bad year for them and their shareholders.

 

Answer to your question is that basically on the face of it they have more money to lend - that's why they say  'Assets, net of unearned income and debt provisioning, rose from $117.5million at the start of the year to $189.0million at 31 March 2000 .....'

 

What wasn't said is that the increase is all borrowed money - reading between the lines from banks. The amount of borrowed money obviously has gone up as well.  Note latter on that  'At 31 March 2000 the net tangible asset value of each ordinary share on issue was 59.4 cents (59.9 cents at 31 March 1999).'  - ie no increase in the NTA per share. Assuming no increase in the number of shares no increase in the value of net tangible assets.

 

Income (net of borrowing costs) rose from $9.4M to $12.2M but operating costs and tax rose from $7.7M to $11.8M - mainly as a result of $4M of increased bad debts 

 

Real high level of bad debt. Hope that Frontline is a not a lender of last resort? If so high levels of bad debt will be continuing and they don't charge high enough levels of interest to offset the risk.

 

Hope this helps

 

Peter.