Manx Financial Share Discussion Threads

[tongostl] 16/5/2024 14:00

Please may I draw peoples attention to AGFX. This is not a plug or recommendation. I simply respect some of the posters on here would like to get their thoughts if they have the time.

Many thanks.

[tim000] 16/5/2024 12:57

True, maybe I used the wrong words. I meant that nowadays, nearly all retail deposits are either made electronically or by cheque - people don’t carry around thousands of pounds in cash to deposit in a new account. So banks’ matching supply and demand for cash is not challenging. In that situation, minor variations in daily inflows of cash don’t affect their operations significantly. The fact that some banks are moving entirely to e-banking while high street branch networks are being scaled back by the majors, is an indicator that cash is no longer that significant.

[smithie6] 16/5/2024 12:53

...assuming that the notable amount invested in IT in the last 2 financial years produces a reduction in admin. costs (as a % of the income) at PA Ltd, as planned, in 2024..
...& new deposits are taken in the UK to help fund the growth at PA Ltd, with a notably higher % on the money

we should see an increase in the profit from PA Ltd.

[smithie6] 16/5/2024 12:45

...there is a lot of difference imo

receiving, storing, moving physical cash is a lot more costly imo that doing the same with electronic cash.

...hence imo MFX UK will surely only be taking deposits electronically....& no physical cash. imo.

[tim000] 15/5/2024 21:22

Smithie, there’s not much difference. In practice banks hold only as much cash as will be demanded by its customers, since cash bears no interest for the bank. But I’m sure you know this.

[smithie6] 15/5/2024 19:55

...but...it will be electronic money, no, rather than physical cash, yes ?

[castleford tiger] 15/5/2024 16:42

checking systems to start taking cash very soon.

Regulators need to see robust systems in place.

almost there

tiger

[smithie6] 15/5/2024 10:24

...a buy gone thru' for £8.8k @ 21.7p

[smithie6] 15/5/2024 08:43

anyone watching the company/subsidiary websites, have they started taking deposits in the UK, (on-line) ?

if not, then the moment must be close.

------
(UK operations.
...being able to take deposits without needing to operate branches (as done in the IoM) & pay all the branch staff (& the costs for managing real physical notes & coins & not electronic money) ....& then lending that money at a notably higher % via PA Ltd should increase the margins & hence the bottom line PAT, but it will take X amount of time)

[lennonsalive] 10/5/2024 11:14

If this drifts below 18p again, I'm in

[castleford tiger] 30/4/2024 19:09

The power they have.
I completely agree

[kaos3] 30/4/2024 05:29

True about regulators.

They can block ownership.
They can block transactions.

They can persuade big bank has to buy bankrupt (word comes from bank and corrupt btw) bank

They can change rules for a stress test and send bank down the tube- just for a certain region and time period

Etc etc

Big boys rule as they wish. New kid on the block has to be very careful

Seen all the above in real life plus much nore

[castleford tiger] 29/4/2024 21:24

The latter

[smithie6] 29/4/2024 09:29

..."an update soon"

??

from someone that was at the AGM or from the company ?

[castleford tiger] 29/4/2024 09:23

Some good stuff apparently came out of the AGM with good contacts made. There should be an update soon. Whilst clearly this cannot give new information the plan is more of a deep dive into what has been said and detailed explanations.

I think this is good news

Tiger

[smithie6] 29/4/2024 08:45

reminder of the growth at PA Ltd

Loans at end Dec. : annual profit
(note. data taken from accounts for MFX & *2 PA Ltd, & MFX H1 2023 presentation, & *3 acquisition RNS)

2021 £21m : £0.8m ? ("£1.1m profit" but PBT or PAT ?)

2022 £24m + £11m *2 = £36m (x2 !): £0.645mx3 (for 12 months)
= £1.9m PAT (??, check, higher than 2023 ??)

2023. ~£113m (2xH1, then /1.2)(£67.6m loans in H1. 10 month average loan) :
£1.7m PAT

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I think I am one of the few PIs that is digging thru the PA accounts, data buried in MFX presentations....

yet I can not get a grip on the data for PA Ltd.
Between 2022 & 2023 the size of the loan book at end Dec. seems to have increased from £36m to £113m (let us say x3, x3 !!!, 'if' true) yet the profit is very similar or perhaps slightly smaller, from £1.9m to £1.7m.

& since the 2021 results the loan book has increased >x5 (in just 24 months !! WOW !!) but the profit has only doubled. (& some of that profit increase comes only from reducing some costs at PA Ltd, such as getting rid of leased cars (for dirs I assume) & reducing office lease costs (perhaps closing an office ?).
Why has the profit also not gone x5 ??

some reduction in profit due to page rises due to inflation,
and perhaps a smaller margin if MFX has increased the cost of lending to PA Ltd, if PA Ltd has kept its customer loan interest rate unchanged (to help growth).
I assume that the main % reduction in profitability comes from cost of investment in IT, to try to automise more of the process, which should increase the profitability once in use.

-----
..'if' ~£1m of the MFX IT investment in 2023 was spent at PA Ltd then the underlying PAT was perhaps £0.75m higher (£1m- 25% uk tax), if so, the PAT would have been (if no expenditure on IT)
£1.7 + 0.75m
= £2.45m

'if' the IT investment was a logical investment then it will produce a return, if we assume a return of 33% on the cost then one expects an increase in profit of ~£330k
then
£2.45 + 0.33m
= ~£2.8m

& that is without any growth in the lending book from 2023 to 2024, which one assumes will happen since the lending has been increasing rapidly every year.

(if value PA Ltd at a p/e of just x10 then that is £28m, higher than the current cap. value of MFX !, £24m)

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*1. this excludes debts/credit for subsidiaries of PA Ltd, seems valid since roughly cancels in '21 & '22.

[smithie6] 25/4/2024 17:44

...well, we got a reduction in the cost of the bod.

(but ~£900k....too expensive imo...too many superfluos people imo)
-----

imo the numbers in the RNS for "before correction" are not correct, but hey, what can you do. :-(

( the RNS says the total renumeration of the bod in 2022 was £819k, while the 2023 AR says it was £797k in 2022 (on page 36) !!
They really are struggling to get it together !!)

bit dissapointing that they can't get the accounts correct. especially when the job of the directors & managers is correctly manipulating/supervising financial numbers....and most of the directors are trained & qualified in understanding/manipulating/supervising financial numbers.

[smithie6] 24/4/2024 06:45

btw ...the AGM is tomorrow...

[smithie6] 22/4/2024 10:30

I dont understand the concerns.
We all know that banks are geared & lend out most of the money that is deposited. The actual ratios for liquidity etc have to meet the regulations, as always.

Gearing, as we know can produce bigger gains, or bigger losses.

...the big increase in deposits (created by providing high % rates) was/is used to fund the rapid increase in lending

as far as I know there is no limit on the growth rate in deposits or lending as long as the other regulations are complied with, including % liquidity etc.
( for liquidity, recall that at the end of Dec. '23 £70-75m was held in Govt treasuries; a big increase on the year before).

-------

MFX's attributable PAT of £5.3m helps it for ratios, liquidity % & funding increased lending.

[castleford tiger] 22/4/2024 06:16

Tim
I think it’s the rapid expansion the regulator might have an interest in ( as a % of the overall business )
My contact is Yorkshire then Clydesdale and now Virgin.
He says they are not immune to regulators looking at sections of their business.
Some of the big insurers ( legal and G and Aviva ) do they DIY IT or use a 3 rd party provider?

[tim000] 21/4/2024 21:35

It’s certainly true that all banks have to pass stringent stress tests, to ensure they are viable in recessions and when house prices fall sharply. Metro bank struggled to pass such a test last year and thus had to raise new equity at an enormous discount to book value. I don’t know whether acquiring the remainder of PA would currently be vetoed by the regulator (PRA) on these grounds; if there were any such risk then MFX would delay the acquisition until the consolidated business had a sufficiently robust balance sheet. I imagine this would be the main concern of the PRA.

[castleford tiger] 21/4/2024 20:49

The one thing you all forget is the regulators.
They call the shots ( unbelievably ) on what can and can’t be done.
It’s the most regulated sector.
I don’t fully understand the powers that they have but it’s not so easy as to grow a division as the board may wish.
I am unsure how they control it but my banking friends tell me they can.
More so in the smaller companies.

Best Tiger

[smithie6] 21/4/2024 12:36

noted.

but, we dont know for sure...
...there is also the topic of conversion of loan notes...which I guess is a bit of an unknown since I think the rules perhaps prohibit conversion if it would mean the concert party (= JM + Gregory Bailey) increasing its % holding. If so then the concert party would need to announce a deal offloading the concerted shares at the same moment.
...(although I have little knowledge of the rules for this type of stuff.)

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let us think laterally for a moment
...if MFX wanted to do a significant expansion of PA Ltd or significant change of direction ....or a change that needed a notable investment....the 49.9% holders might see it as too risky & unneccesary for them to do to hit targets & get paid the £5m for the remaining 49.9%....

or if MFX wanted to bring in a third party to own a % of PA Ltd for entire A, B, C....

and for these cases the 49.9% might be opposed & the terms of the JV (it is a JV, a team) might allow them to block such a significant change in operation of the co.

...in which case, imo, MFX might be interested to do the aquisition in advance, to remove the opposition/blockage.
One never knows what the future might bring.

[stewy_18] 21/4/2024 06:54

I don't think anything will happen before 2027 Smithie. Just my opinion.

[smithie6] 20/4/2024 21:21

...yes, some way off...
...during 2027

(however, nothing stopping it happening at any moment between now & month X in 2027 if the 2 sides were to agree, which would not happen if it was detrimental to either side)