In a previous blog post titled "Has the Philippine Real Estate Bubble Already Burst?", we wrote on a little known factoid buried deep within the bowels of the financial statements of 8990 Holdings, Inc. (otherwise known through its stock ticker "HOUSE"), that HOUSE's level of Installment Contract Receivables (ICRs) that are over 90 days past due jumped 500% in the nine months from December 31, 2012 to September 30, 2013.
| 8990 Holdings Inc. | |||
| Installment Contract Receivables, Past Due but Not Impaired | |||
| In Php | |||
| Audited | Unaudited | ||
| December 31, 2012 | September 30, 2013 | % Change | |
| Less than 30 days | 76,438,532 | 102,996,723 | 34.74% |
| 31 - 60 days | 31,128,884 | 30,426,033 | -2.26% |
| 61 -90 days | 26,930,290 | 10,163,708 | -62.26% |
| Over 90 days | 39,365,086 | 236,008,574 | 499.54% |
| Total | 173,862,792 | 379,595,038 | 118.33% |
These figures were taken from HOUSE's interim financial statements as of September 30, 2013 which contained audited figures for December 31, 2012 and interim figures for the nine months since then. The document can be found here and also on the website of the Philippine Stock Exchange. The Annual Report can be found here and here.
Today, those figures are very much gone or reduced. The level of past due ICRs were reduced by almost 80% for the very same figures that were audited as of December 31, 2012.
8990 Holdings Inc. |
||||
| Installment Contract Receivables, Past Due but Not Impaired | ||||
| In Php | ||||
| Interim Report | Annual Report | |||
| Audited | Audited | |||
| December 31, 2012 | December 31, 2012 | Variance | % Variance | |
| Less than 30 days | 76,438,532 | 18,426,966 | -58,011,566 | -75.89% |
| 31 - 60 days | 31,128,884 | 5,049,846 | -26,079,038 | -83.78% |
| 61 -90 days | 26,930,290 | 5,910,360 | -21,019,930 | -78.05% |
| Over 90 days | 39,365,086 | 6,357,158 | -33,007,928 | -83.85% |
| Total | 173,862,792 | 35,744,330 | -138,118,462 | -79.44% |
Despite an almost 40% jump in sales, the level of past due ICRs were even lower at year end 2013 than they were at year end 2012.
| 8990 Holdings Inc. | ||||
| Installment Contract Receivables, Past Due but Not Impaired | ||||
| In Php | ||||
| Interim Report | Annual Report | |||
| Audited | Unaudited | Audited | Audited | |
| December 31, 2012 | September 30, 2013 | December 31, 2012 | December 31, 2013 | |
| Less than 30 days | 76,438,532 | 102,996,723 | 18,426,966 | 3,824,739 |
| 31 - 60 days | 31,128,884 | 30,426,033 | 5,049,846 | 2,403,551 |
| 61 -90 days | 26,930,290 | 10,163,708 | 5,910,360 | 2,177,276 |
| Over 90 days | 39,365,086 | 236,008,574 | 6,357,158 | 15,993,266 |
| Total | 173,862,792 | 379,595,038 | 35,744,330 | 24,398,832 |
HOUSE dependence on ICRs to fuel sales has only increased since December 31, 2012.
| 8990 Holdings Inc. | ||||
| Installment Contract Receivables/Sales | ||||
| In Php | ||||
| Audited | Unaudited | Audited | Audited | |
| December 31, 2012 | September 30, 2013 | December 31, 2012 | December 31, 2013 | |
| Installment Contract Receivables | 4,672,109,197 | 8,165,199,990 | 4,672,109,197 | 9,777,920,990 |
| Sales | 2,888,596,423 | 4,367,429,533 | 3,830,644,048 | 5,356,098,815 |
| Days Sales | 437 | 505 | 329 | 493 |
So has the risk to its stockholders.
| 8990 Holdings Inc. | ||||
| Installment Contract Receivables/Stockholders Equity | ||||
| In Php | ||||
| Audited | Unaudited | Audited | Audited | |
| December 31, 2012 | September 30, 2013 | December 31, 2012 | December 31, 2013 | |
| Installment Contract Receivables | 4,672,109,197 | 8,165,199,990 | 4,672,109,197 | 9,777,920,990 |
| Stockholders Equity | 3,948,015,021 | 6,049,131,256 | 3,948,015,021 | 6,595,847,184 |
| Installment Contract Receivables/Stockholders Equity | 118.34% | 134.98% | 118.34% | 148.24% |
| 8990 Holdings Inc. | ||||
| Real Estate/Stockholders Equity | ||||
| In Php | ||||
| Audited | Unaudited | Audited | Audited | |
| December 31, 2012 | September 30, 2013 | December 31, 2012 | December 31, 2013 | |
| Real Estate Inventories | 2,040,532,596 | 2,081,143,259 | 2,040,532,596 | 2,243,559,834 |
| Land held for Future Development | 1,010,474,241 | 3,605,811,050 | 1,010,474,241 | 3,784,727,576 |
| Investment Properties | 142,365,067 | 140,860,631 | 142,365,067 | 141,928,584 |
| Total Real Estate | 3,193,371,904 | 5,827,814,940 | 3,193,371,904 | 6,170,215,994 |
| Stockholders Equity | 3,948,015,021 | 6,049,131,256 | 3,948,015,021 | 6,595,847,184 |
| Real Estate/Stockholders Equity | 80.89% | 96.34% | 80.89% | 93.55% |
| 8990 Holdings Inc. | ||||
| ICRs & Real Estate/Stockholders Equity | ||||
| In Php | ||||
| Audited | Unaudited | Audited | Audited | |
| December 31, 2012 | September 30, 2013 | December 31, 2012 | December 31, 2013 | |
| Installment Contract Receivables | 4,672,109,197 | 8,165,199,990 | 4,672,109,197 | 9,777,920,990 |
| Real Estate | 3,193,371,904 | 5,827,814,940 | 3,193,371,904 | 6,170,215,994 |
| Total | 7,865,481,101 | 13,993,014,930 | 7,865,481,101 | 15,948,136,984 |
| 10% Losss | 786,548,110 | 1,399,301,493 | 786,548,110 | 1,594,813,698 |
| Stockholder's Equity | 3,948,015,021 | 6,049,131,256 | 3,948,015,021 | 6,595,847,184 |
| Impact of 10% Loss | 19.92% | 23.13% | 19.92% | 24.18% |
Impairment Losses
Based on its Annual Report, the company has now made provisions for impairment losses of Php 2,795,106 as of December 31, 2013, whereas they recognized none in the years before. This is a step in the right direction.
Meanwhile, what happened to all those past due ICRs?
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