Pcf Share Discussion Threads

[hopespr1ngseternal] 07/11/2021 14:27

Sorry Millipede. What you are suggesting implies that the directors are prepared to act unlawfully. Nice little bit of litigation: PCF minority shareholders versus Franklin and and ors. Won’t happen.

[the millipede] 07/11/2021 14:13

On the cheap? AFAICT this can be taken private by default in two weeks. Potentially we all remain shareholders, but unable to trade our shares. That won't cost anyone a penny.

[hopespr1ngseternal] 07/11/2021 13:48

Dandi: impairment due to defaulted receivables was 6m. If they got pennies in the pound bv of defaulted receivables not significantly greater than 6m. If (say) 50p in the pound bv of defaulted receivables = 12m and inflow of 6m cash. So either small hit to receivables on the the balance sheet or significant cash generation. One or t’other. PS June RNS states that inflows were normal. Withdrawal from deposit market broadly coincided with October RNS announcing impairment of defaulted receivables. Straws in the wind.

[hopespr1ngseternal] 07/11/2021 13:35

Millipede: the risk remains that Somers will exploit the situation to take the company private on the cheap. En garde!

[hopespr1ngseternal] 07/11/2021 13:29

CC; Further impairments? After a process that lasted six months and is described in an RNS as ‘exhaustive217;?

[the millipede] 07/11/2021 12:41

I think the possibility of a fund raising should cheer us all up, as it suggests they will prioritise keeping the AIM listing.

Maybe they will finalise something before the 19th after all.

I honestly don't see why Somers would care if this company has a listing or not. They are very long term investors here not traders.

[cc2014] 07/11/2021 09:27

Graham1TY

"One small point. I assume there will be a circular, beyond just the accounts. Something to explain what has happened. Probably with a vote: and EGM to approve the accounts, if nothing else. There might be new Directors to be approved, or a fund raising to bolster the balance sheet."

Sadly Graham I don't think you'll ever get much of this Board than the minimum they can get away with.

To my mind what's happenned is something like the following.
The business model they had 5-7 years ago lending to sub-prime was only turning a profit in the good years. Scott knew they were very exposed to defaults on a downturn so turned PCF into a bank which reduced their borrowing costs and enabled them to improve their default risk.

I'm certain when Scott spoke about their customer base being 70% prime, it was worst than that but nevertheless every year the new customers were being brought in at a higher prime rate than those falling off the end.

Given enough time, I believe PCF would have ended up in a very good place and shareholders would have been rewarded. I think it would have worked too had they done the accounts a little more conservatively, and paid more attention to the regulatory requirements.


Where are we now? The PRA are runnning the show, whether informally or formally or just because the directors need to do everything in their power to evidence they are protecting PCF's regulatory capital requirements, so as to avoid personal liability.

I am sure there are more losses to come, else the accounts would have been published, but regardless the easier way to improve the capital position is to stop lending or to shift the lending to the items which are less regulatory capital intensive. An example of this is Manchester Building Society.


Dandigirl summarises it very well "In summary, we now need to know the amounts and consequences for the balance sheet." My best guess is that there are further impairments to come. It has been discovered that the tail of the loan book where loans have defaulted is worse than thought. It seems sensible to suggest that the risks in the undefaulted book are also higher than provided for else we shouldn't end up with a horrible tail, but we can't guess this amount.


Something to think about. Retail deposits £342m at end Feb 2021. If we assume the average savings deposit is two years then cash is leaving at the rate of £14m.

And it's always best to end on a positive. Maybe the appointment of Caroline Richardson to PCF Bank Ltd on 30/10 shows someone is reviewing the accounts enough that they may shortly be published

[dandigirl] 07/11/2021 08:56

hopes: When I reflect a little, as I sometimes do, I had the thought that SOMERS, too, must be ticked off by all this. After all, their investment has been diminished by these matters. They will not be happy with the Board in general and young Morgan in particular who was supposed to look after their interest. Should SOMERS be blamed for Franklin’s bad stewardship?

Assuming that there is a viable business to be resurrected, would it be such a bad thing? Everyone should now be paying attention to the detail. The bank will have staffed up including having a cracking CFO! The books will be clean. Their chosen markets are still doing ok.

However, much depends on the announcement and the scale of the damage. Let us not pre-judge. My ire is directed at Franklin for allowing these issues to occur under his chairmanship and for handling them in the way he has.

12 days to go.

[hopespr1ngseternal] 07/11/2021 00:40

A rights issue underwritten by Somers is liable to leave them with 75%+. Would you participate on that supposition? Count me out.

[dandigirl] 06/11/2021 19:16

Don’t we know what has happened?

It seems to me there are 2 main issues: regulatory reporting and the treatment of delinquent accounts. Both important, not life threatening though.

Regulatory reporting. Reporting accurately and to time are big issues for regulators. Fail with that then confidence will be lost followed by greater scrutiny. It should be an easy fix, however. A couple of competent people and appropriate software. Not too costly – an extra £400k or so p.a. – however, there may be the possibility of a fine mitigated by ‘fessing up. How much? Who knows? but there could be consequences for capital.

Just to say that it appears that it was this that led to Scott’s departure. Anybody involved with misreporting deliberately will probably have a squeaky bottom. Personal liability is now built in.

A consequence of this could be to shine a light on the Azule purchase. Maybe it wasn’t such a great deal. Seemed odd to me at the time. Maybe a write-down will be undertaken with another bite out of capital.

Treatment of delinquents: The sales looks ok, in principle. What we don’t know was what the book value was and what percentage was received on sale. My guess: PFG have taken a relatively big percentage hit here with consequences for capital. On the one-hand a write down, on the other some capital has been freed up. Net effect negative, however.

Another point: The bank appears to have withdrawn from the savings market. My guess is that there has been capital shrinkage thereby reducing the amount of new business that can be written and hence the need for deposits.

Another consequence could be an increase in the fee to the FSCS given the greater apparent risk.

All this points to the possibility of needing additional capital.

In retrospect, it seems that the Board as a group was not sufficiently experienced to start the running of a new bank. The size of large exposures and the treatment of delinquents are basic things that the Audit Committee should require ahead of reporting such to the Board.

Then there is the role of auditors, internal and external. What were they up to I wonder. Let's not go there just now.

In summary, we now need to know the amounts and consequences for the balance sheet.
My money is on a rights issue probably underwritten by SOMERS and it is issues concerning this that are taking much time, including discussions with regulators and probably a lot of professional fees.

I am still of the view that these issues could have been handled so much better, in-house, and with much less, well, drama and cost but we are where we are.

13 days to go!

I, too, would prefer an after market closure on Friday RNS.

[graham1ty] 06/11/2021 08:33

I am beyond speculating, and my fingers have been crossed too long.

One small point. I assume there will be a circular, beyond just the accounts. Something to explain what has happened. Probably with a vote: and EGM to approve the accounts, if nothing else. There might be new Directors to be approved, or a fund raising to bolster the balance sheet.

All in all, quite an announcement. I do hope they give enough time to read it. So, a 7am Circular, seen by only those awake, will give negligible time to digest. I would prefer a 4.31pm RNS so that analysts, shareholders, fund managers, market makers can read, assess and so that when the suspension is lifted ( difficult to type with fingers crossed) it is a vaguely orderly market......

[rmillaree] 05/11/2021 21:42

Cjd190573 - I presume you mean to sell rather than buy ?
I guess how well current trading is going if we get news before relisting ( hmmm that’s a big presumption) may have a bearing on how bad the initial hit will be.

[rmillaree] 05/11/2021 21:37

CC2014

I think you are confusing pcf bank limited and pcf group plc.
The dates you have quoted are for pcf bank and not the main plc company where the dates are 5th October as per he rns.
This being the case everything looks in order to me with your concerns being misplaced.
Would you agree with this assessment?

[hopespr1ngseternal] 05/11/2021 18:06

CC: I am no expert but even if there is a delay in registering the appointment I assume there is a box on the form to record the date of appointment.

[hopespr1ngseternal] 05/11/2021 18:03

Interestingly if you look up Garry Stran’s personal entry the date is indeed recorded as 5th October. Ho hum!

[cc2014] 05/11/2021 16:39

I'll reply more fully over the weekend but in the meantime I would offer other possible explanations each of them concerning.

a) the company secretary forgot to do it.
b) the company secretary didn't realise she wasn't already a director because she's been in the role for 6 months/Gary Strann was already a director

It's basic corporate governance. It should just happen.

[hopespr1ngseternal] 05/11/2021 16:08

CC: May I politely suggest that it is inconceivable that the company would have announced Caroline Richardson’s appointment to the Board without her prior express consent. Is it possible that you are talking the company down because you hope to buy in cheaply after the suspension is lifted? For someone who has clearly stated that he will not invest in the company you seem very focused on small details.

[cc2014] 05/11/2021 13:22

I am puzzled. Again!

The RNS on 5th October says Garry Stran and Caroline Richardson have been appointed to the Board effectively immediately

This would appear to be a different thing than being appointed a director through companies house because the dates do not match. I am very unclear on this as if you are an exec on the Board surely you are a director?

Anyways companies house says Caroline Richardson only become a director on 30/10. That's a long gap between 5th Oct and 30th Oct. One might wonder if whilst the Board were happy to appoint her whether she needed time to decide whether to accept or not. Or perhaps other stuff had to be put in place to limit her personal liability.

On the other hand companies house think Gary Stran was a director all along, as far back as 30th May.


Something just isn't quite right about this company I'm sad to say. One would think from the RNS on the updated losses that this was the end of the matter, certainly there's no reference to significant outstanding issues, yet no accounts have appeared. And if no accounts have appeared there must still be issues.

[seasidehippo] 05/11/2021 11:44

I can hear the fat lady clearing her throat.

[georgelees] 05/11/2021 11:15

So two Mondays left. Hopefully they wont go down to the wire, needless risk... I am actually quite hopeful they will have a good story to tell a line drawn etc.

[the millipede] 02/11/2021 20:52

"Please stop scaremongering.The company will not be delisted."

Glad to hear I have misunderstood the Aim rule book which states, "The Exchange will cancel the admission of AIM securities where these have been suspended from trading for six months." (Page 15.)

[hopespr1ngseternal] 02/11/2021 16:54

From the pictures I have seen I don’t think Caroline Richardson is fat.

[seasidehippo] 02/11/2021 16:14

I hope you are correct but as i've said before nothing is over until the fat lady sings

[hopespr1ngseternal] 02/11/2021 15:35

Please stop scaremongering.The company will not be delisted. If there were any likelihood it would have been mentioned in the last RNS and the directors would be exposed to serious breach of duty claims. Remember the TEMPORARY suspension is something that the company requested on the advice of its broker. The company can request the lifting of the suspension at any time and is bound to do so within the next two weeks (having reconstituted its finance team and after announcing the 2020 results with revised impairment numbers and 2021 prelim results). If Somers want to take the company private there is a mechanism for doing so but that is another matter entirely.