8990 Holdings, Inc.: The Case of the Disappearing Past Due Installment Contract Receivables

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%

* Excludes Proceeds from Follow-on Offering

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?