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Preliminary Final Report

Document date:  Wed 04 Nov 1998
Published:  Wed 04 Nov 1998 00:00:00
Document No:  142712
Document part:  S
Market Flag:  Y
Classification: 

HOMEX - Melbourne                                                     

+++++++++++++++++++++++++
PROVISIONS FOR DOUBTFUL DEBTS

                                 As at         As at           As at
                                Sep 98        Mar 98          Sep 97
                                  $M            $M              $M

Specific provision balance

Australia                         297            324            315
International markets             489            269            118
Total specific provision          819            611            453
doubtful debts                  2,220          2,062          1,883

                                 Full           Half           Full
                                 year           year           year
                                Sep 98         Mar 98         Sep 97
                                  $M             $M             $M

General provision

Balance at start of period      1,430          1,430            709
Restatement to recognise 
deferred tax asset                  -              -            399
Adjustment for exchange rate 
fluctuations                       (4)             -              8
Recoveries                         37             21             49
Specific provision

Balance at start of period        453            453            509

Adjustment for exchange 
rate fluctuations                  38              5              8
Bad debts written off            (221)           (84)          (199)
Transfer from general provision   549            237            135
                                  819            611            453
Total provisions for
doubtful debts                  2,220          2,062          1,883


Provision movement analysis

New and increased provisions 
(by exposure)

Australia                         239            124            213
New Zealand                        41             11             20
Asia                              263            159             16
Other international               127              8             31 
Provision releases               (121)           (65)          (145)  
                                  549            237            135
Recoveries of amounts previously 
written off                       (37)           (21)           (49)
Net specific provisions           512            216             86
Net (debit)credit to 
general provision                 (25)            21            314 
Charge to profit and loss         487            237            400 

Effective from 1 October 1997, the Group's annual debt provision
charge represents the expected average annual loss on principal over
the economic cycle for the lending portfolio, referred to as
"Economic Loss Provisions" (ELP). This is considered a more
meaningful measure of prospective loss inherent in the portfolio. In
1997 an additional general provision charge was taken to approximate
the impact of this change in measurement approach.

The debt provision charge is credited to the general provision. The
specific provision requirement (representing new and increased
specific provisions less specific provision releases) is transferred
from the general provision to the specific provision. Recoveries,
representing excess transfers to the specific provision, are credited
to the general provision. The general provision charge is no longer
treated as a permanent difference and the tax effect of any deferred
tax asset or liability is recognised in the profit and loss account.

On initial application of this measurement approach, at 1 October
1997, a future income tax benefit of $512 million was recognised and
the general provision grossed up accordingly, with both changes
effected through the balance sheet. This had no impact on the profit
account.

Comparative figures have been amended to reflect the change in
measurement approach.


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