Pcf Share Discussion Threads

[graham1ty] 28/6/2021 11:05

Audit Committee:
Christine Higgins. Chartered Accountant. Appointed 2017. Chair of the Audit Committee. So, responsible for failure to spot these problems.

David Morgan. Appointed 2012. Non Exec Director of Somers. Also Chair of Harlequins, so perhaps had eye on a different ball. Congratulations, anyway. 35 years banking experience, mainly at Standard Chartered.

Marian Martin, appointed 2019. Chartered Accountant. Chief Risk Officer at Virgin Money for 11 years. “A background in risk management and audit”. Time to fall on your sword ?

All three Audit Committee members are “old team”. All have been there throughout this period.

One other note: Tim Franklin was non Exec Director of The Post Office for nine years until 2019. Has he been mentioned in regard to the Horizon system problems ?

[graham1ty] 28/6/2021 10:36

I note the irony in the last sentence in the statement: “wishes to reaffirm its commitment to provide updates in a timely, transparent and comprehensive manner”

Really ??? That statement needs auditing.......

[cc2014] 28/6/2021 10:13

I am struggling to understand why they can't issue their 2020 accounts?

The accounting errors occured in the 2019 accounts such that they were wrong at the subsidiary level but correct at the group level. The errors are understood and there is no implication they are wrong in the 2020 accounts.

With regard to the regulatory reporting framework again the errors are understood.

The errors aren't even that complex to explain, understand or put right.


I get why the shares have to remain suspended as the Board need to assure the PRA and they can't do that, but this is a much higher level of assurance than the materiality limit for auditors.


I'm a little puzzled. I'm surprised it takes 6 weeks to get to this far. The Azule intercompany transaction thing is the sort of the thing the FD could sit down and look at personally in less than a day. As for the adding of unaudited profits to the CET ratio, I can see that could be easily done by an inexperienced team but again it would take as little as a couple of hours for the FD to get to the bottom of that one.


My most burning question is whether the PRA move to formal enforcement on 1st July and constrain lending. Surely it can't be right that banks can continue to merrily trade away as if nothing has happenned if they can't get their accounts done on time? I guess I will find out later in the week, but I'll not be surprised if the PRA take no action.

[seasidehippo] 28/6/2021 09:46

Excellent News IMO. A "Full drains up" review highly appropriate given the circumstances. Company will bounce back from a strong base to greater things in the medium term IMO.

[the millipede] 28/6/2021 09:32

Well certainly this is an improvement on my six-month-suspension-leading-to-delisting theory.

Let’s see what transpires once the review is over. Clearly it is good they have unearthed this now and can fix it. Sounds like with current finance team the board can’t have full confidence in the numbers.

[graham1ty] 28/6/2021 08:59

CC have DMd you

[dandigirl] 28/6/2021 08:04

Yes, Franklin and his Board out of his/their depth. Large Exposures are not difficult. The Board asleep on the job and we will have to pay for their failures.

[joe say] 28/6/2021 07:57

The board have responsibility for governance collectively and it can't all be pinned to the CFO/FD.

remember that when casting your AGM votes

[cc2014] 28/6/2021 07:54

I'll post later but what puzzles me most is why this would hold up publication of Sept 2020 accounts.

On the surface of it though, the best outcome possible for shareholders as they appear to be saying profitability is not affected, just their ability to work out the capital ratios.

Which brings me back to why can't they get the Sept 2020 accounts published?

[graham1ty] 28/6/2021 07:36

Still not sure why it has taken nine months ( since the year end) to find this out. Or why five weeks since suspension..........

Yes, a complicated task, but one that a competent ( and expensive) auditor would do relatively quickly. If the main exposure is via Azule, that makes the required work even less.......

Still a bit puzzled.......

[geraldus] 28/6/2021 07:34

I wasn't far out on Azule.Post 2968.

[che7win] 28/6/2021 07:30

Really, it looks like an overreaction to me.

[dandigirl] 28/6/2021 07:26

My first reaction to today’ RNS is to wonder if Franklin has over reacted in order to get rid of SM. No losses as such but huge accounting costs incurred by Franklin. Surely this could have been addressed more discretely.

[cjd190573] 25/6/2021 17:05

Hi Hippo, I was actually thinking in terms of reducing the provision, by verifying assets, assuming that PCF (and others) have perhaps been a bit too soft of late.

[seasidehippo] 25/6/2021 16:44

If it was that bad we would have known long before now as you dont get many Horse boxes to the square inch!!!!

[cjd190573] 25/6/2021 14:55

Wonder too, if they have taken this six week window to conduct a world wide hunt for horse boxes, motor homes, photocopiers/printers, franking machines etc and checking a) if they still exist and b) the serial numbers match up. Now that would be substantiation and a half to their ‘asset- backed’ impairment provision.

[cc2014] 25/6/2021 11:22

It's my view that PCF have until cop on 30th June to get their annual accounts agreed by the auditors else they will be subject to enforcement action by the PRA.

Effectively I imagine this would mean PCF being restricted from making new loans, thereby winding down the loan book over time.

In addition PCF also have to publish their interims by cop on 30th June too, although these do not require auditing. Again if they don't publish they would be subject to enforcement action by the PRA


To be completely open with everyone I am no expert in this at all. It's just my view that if PCF are unable to do their accounts, it is then not possible to calculate the capital ratios and on that basis enforcement follows. There are lots of other reasons enforcement might take place if you read the PRA guidance but I have no real insight into how fast the PRA move on these matters. I do have insight on the ability of building socities to get out of the enforcement framework once it's been applied and that is extremely challenging.


Also, under AIM rules if PCF fail to do the accounts by June 30th, AIM will suspend them, or rather in this circumstance will not allow un-suspension until the accounts are done.


For, all the above reason I see it as highly likely both the finals and interims will pop up soon, even if the auditors qualify the report. Because at the end of the day, the only reason the audit cannot be completed is if PCF fail to provide substantiation (because the systems are so poor)

I'll expand on this a little. Let's say you are in a debate with the auditors of sustantianting a £1m accrual and the auditors think it isn't justified and should be £0.5m. At this late stage, whether you think the auditors are right or wrong you just roll over and agree to their figure.

You could continue this line of thought across nearly everything. Let's say there's disagreement over the impairment value and the amount in dispute is £5m. Whtether you agree or not again you roll over and accept the auditors demands because the damage to the accounts is less than the damage of PRA enforcement.

I think you can pretty much run this argument over even the most dire situations. The numbers might be horrible but better to explain horrible numbers than PRA enforcement.


The other reason I think something will pop up in the next few days is that if they fail to do the accounts on time, soon after the media will notice.

[dandigirl] 25/6/2021 11:11

Millipede: I don't think it will take that long.

The 30th of June continues to be the crunch date IMV. If accounts are not made available to the regulators by that date, I think licence suspension will follow. Franklin and Somers will have been warned. Having incurred costs obtaining the authority, I think they will want to keep it if only for flexibility.

Just my musings.

[the millipede] 25/6/2021 10:38

Good question CC2014. Following my previous posts, the longer this goes on, with no very plausible explanation, the more likely it seems to me that the ultimate plan is delisting. This is the default after six months suspension - the company doesn't actually need to do anything. Clearly I hope I am wrong.

[geraldus] 24/6/2021 12:19

TIck,bloody tock.

[seasidehippo] 24/6/2021 11:50

Incompetence?

[cc2014] 24/6/2021 11:43

5 weeks now. What sort of issue takes 5 weeks to sort out?

[dandigirl] 21/6/2021 14:58

I agree CC. 30/06 is a crunch date. But given this BoDs behaviour so far, an extension would not surprise me.

[seasidehippo] 21/6/2021 14:51

They are probably still working out something to tell us!! Anyway chin up no news is good news or so the saying goes and the Bank is still open.

[cc2014] 21/6/2021 10:12

I trust the Board have a very good reason for not updating investors. There surely must be one as for an experienced set of NED's this is not a usual strategy.


I suggest the lack of a Monday morning RNS means nothing now. The crunch point is 30th June. I sincerely hope the Board do not leave it to the last day.