Manx Financial Share Discussion Threads

[ayl30] 24/9/2024 06:17

Veiled threat of a profit warning in the outlook section?

[lennonsalive] 24/9/2024 06:16

Whilst Bank of England interest rate reductions will provide some level of stimulus, the overall position will be less positive than that experienced in the first half of the year, and we expect that will be reflected in our full year financial performance.

[tongostl] 24/9/2024 06:13

Not bad. Not bad at all.

Still baffled as to why this is not trading over 40p+

[smithie6] 20/9/2024 16:37

...this is an old debate/discussion

(& if you look at the accounts they agree with me. ;-)

a PBT number is given, in the MFX group accounts

and a PAT number including all of PA Ltd

but then a deduction is made for profit allocated to "minority interests" which is mostly or all the profit due to the holders of 49.9% of PA Ltd. This produces a lower PAT for MFX. (note the change from PBT to PAT). That lower resulting value of PAT for MFX is also used for the eps calc. for MFX,

so, yes, it is the correct number for PAT for MFX according to accounting rules.

(so, in the 2023 AR, the MFX PBT number includes 100% of the profit of PA Ltd while the PAT 'after' adjustment for minority interests includes 50.1% of the PAT of PA Ltd)

[stewy_18] 20/9/2024 15:15

I'm not sure you are right about that Smithie, this was discussed with management, but I'd happily take it, if that was not correct.

[clocktower] 20/9/2024 15:08

It's a puzzel for sure.

[smithie6] 20/9/2024 13:58

stewy_18

"My understanding was when we took over 50.1% of PAL we took 100% of its costs costs."

no.
when you buy 50.1% of something you get 50.1% of it !
not 33%, not 75%, nor 100% (however much the MFX chairman might say it, it ain't true !)

(ok, you have to give some numbers as if you owned 100% but then you have to adjust & give true numbers...for owning 50.1%)

[smithie6] 20/9/2024 09:21

Tiger wrote
"There is also the chance that MFX board were unhappy with the direction and speed that PAL was going"

that is possible, however the agreement could always been adjusted if the 2 parties agreed, without acquiring the 2nd half 2.75 years early.

my posts show that I expected some modification or early acquisition. logical.
once the founding dirs of PA Ltd got the PAT to hit most of the target of averaged £2.5m/year they had no incentive to push to achieve any more growth, ie. the agreement gave a disincentive once the target was hit. So, I expected some change if that were to happen. Hopefully this acquisition is that change, early acquisition due to already having achieved the target. And not due to underperformance. We wait to see more info, hopefully in the H1 results text.

----

And the structure while owning 50.1% also had some risks. Such as lending tens of millions to a 3rd party (PA Ltd ) located in a different place & where the lender is not involved hands on, imo, in the day to day management/supervision of the loans/money made by that 3rd party. The level of bad debts at that 3rd party is of course super important.
As 100% the risks are much reduced imo for MFX.

----

if I was MFX plc I think I would/could reduce the tax bill paid by the whole MFX group for the operations involving PA Ltd. (which also involves MFX since it provides the money that is lent out). (The IoM banking tax rate is 10% versus 25% in the UK). (15% of £2.3m pbt vs 25% of £2.3m is +£345k.
;-)

[stewy_18] 20/9/2024 08:51

Smithie,

I think all the points are valid. Regarding the figures for PAL I hope we can get some more clarity about its growth.

Short term there should be some uplift in profits as we are not paying the PAL directors anymore. My understanding was when we took over 50.1% of PAL we took 100% of its costs costs.

The two main concerns for me:-

1. Have the MFX board got got the experience, talent and ambition to grow PAL at the same rate it has been growing ?
2. Will the regulators inhibit growth in some way?

Gustimates tell me the PAL grew 66% last year. I don't expect the same sort of growth going forward, but if I do some modeling with PAL growing at 30-40% the PAT figure..... well your probably looking at a £100/200 million valuation in 5 years time just for PAL.

So surely MFX will focus on the high growth high margin part of their operation right? Let's wait and see. Interims should not be too far away now.

[castleford tiger] 20/9/2024 08:42

I dont expect much this first half for a couple of reasons.

The regulators are all over this form of debt.
They dont want people getting in too far...........even at no interest costs.

There is also the chance that MFX board were unhappy with the direction and speed that PAL was going.

Always a concern with such a lengthy ,long stop that was agreed.

We are now in control and subject to the regulator not getting to heavy the growth can continue

tiger

[smithie6] 20/9/2024 07:16

btw
the PBT for all of PA Ltd in 2023 was £2.3m
The max purchase price of the 2nd half of PA Ltd was fixed 2 x averaged PAT over 3 years, with a max of £5m (ie. an averaged PAT of >= £2.5m).

MFX have done the acquisition early, with the agreement of the sellers.

1) Does that mean that the PAT of PA ltd has increased & is set to be >=£2.5m for 2024 ?

(this is imo a major risk reduction for MFX, owning 100% gives more power than owning 50.1%; all & any conditions or restrictions or obligations that applied to MFX (wrt the owners of 49.9%) have now all gone !)

2) by reducing the number of directors that are not part of the buyer, MFX, is it fair to assume that the cost of dirs (+ pensions, + any private health care, + any car costs) at PA Ltd has surely reduced
....& that surely makes PA Ltd more profitable
...& also more valueable.

3) the risk for MFX shares has now imo notably reduced, by adding complete ownership of a company with an established track record & a very large distribution base. (if lose 1 individual garage as a client it has no impact on MFX because it is just 1 out of a large number).

4) MFX wanted PA Ltd because the nett margin on money loaned was/is much higher than its other lending.
And MFX has obtained a UK banking licence, with the aim of getting deposits at a good % rate for MFX.
Take that deposit money & lend some of it out via PA Ltd.

The pieces of the strategy are all in place. MFX now needs to succesfully exploit/operate (& hopefully grow) the opportunity/strategy.

----
There are risks/rewards for all shares, but imo the mkt has not noted the reduction in risk, imo, for MFX shares. While yes, the low number of existing investors at MFX have noticed & have been buying the shares that some big holder has been selling, mostly before the RNS for PA Ltd.
Without that seller the share price would imo be notably higher.

----

(& as someone posted.....there is a good chance that just the value of PA Ltd is higher than the cap. value of MFX....we have to wait to see what the H1 profit of PA Ltd was to get a better view).

[nakedmolerat] 19/9/2024 18:34

so who is it from the list?

hxxps://www.marketscreener.com/quote/stock/MANX-FINANCIAL-GROUP-PLC-4007820/company-shareholders/

[castleford tiger] 19/9/2024 16:34

another 500k sold

[devonlad] 19/9/2024 08:33

yup, have we finally cleared that seller, way more than 3% gone through imho. Decent buying today and an upward movement suggests we MAY have cleared the seller.

[smithie6] 19/9/2024 07:15

nice to see 17.0p now as the quoted price to sell when just days ago it was 15.0p !

[devonlad] 18/9/2024 20:46

How many more can they have?

[castleford tiger] 18/9/2024 20:40

Above bid which is a good sign.

[smithie6] 18/9/2024 19:09

...after the mkt closed

reporting of a trade of 500k (@ 16.625p: official mkt price to sell was 16.5p)....which was surely a sell

[stewy_18] 18/9/2024 14:18

They are mostly buys going through so that seller should be cleared this week I reckon.

[devonlad] 18/9/2024 14:15

That 50k took it back up quickly, probably the overhang from yesterday gone now.

[smithie6] 18/9/2024 10:44

15.5p official bid, again.

pah.

[stewy_18] 18/9/2024 08:39

Look on the brightside, at least liquidity is improving.

[smithie6] 18/9/2024 08:29

..need one of the big shareholders (or a group of them) to buy the seller's shares in 1 go

but perhaps their internal rules don't allow them to do that just days before some co. results are announced.

[devonlad] 18/9/2024 08:23

Makes sense, I reckon the mm's needed about 900k in shares to cover the buying so back to square one. The seller has sold well over 3% of the company though by my reckoning, looks like a bit distressed to me tbh. Just means more cheap shares, sellers come to an end eventually.

[smithie6] 18/9/2024 06:51

...my guess is that one is from a day or two earlier, when the price was lower.

A big sale at 14.5p was also reported a few days ago.

Recently the RNS news has generated share buyers (incl me) & higher price....which leads to the 16.75p trade.