Pcf Share Discussion Threads

[123davidgwilym] 04/6/2022 20:57:17

The worst thing is the going concern qualification from the new auditors; that, and the new chairman calling himself a chair.

[hopespr1ngseternal] 04/6/2022 20:10:34

I have been trying to elicit from the 2021 Annual Report what it is that has changed since the publication of the 2020 Annual Report. It is not an easy task whether by design or not. My starting point is the Chair's Statement on page 6 which refers to three factors namely remediation costs, reduced interest margin and capital which have between them 'resulted in projected regulatory capital constraints' which will limit the amount of new lending which is 'not a satisfactory position and prevents us from generating sufficient profits to grow capital organically'. He then goes on to say that 'as a result of all these factors we have updated our short term plan' which I think is a euphemistic way of stating that they have reduced their expectations for the performance of the business in the short term. This 'has led to revisions on certain key accounting judgments and additional losses that have impacted our full year loss and capital position'. The accounting judgments are set out in the report of the Board Audit Committee on page 43, the most important of which appears to be the derecognition of deferred tax and a 1.2m pound reduction in the carrying value of goodwill. Underlying these accounting judgments is a concern that if the group fails to raise adequate capital, it may in the medium term be unable to continue as a going concern.

[cc2014] 04/6/2022 10:12:14

Significantly greater losses for this financial year with remedial costs similar to last year... meaning the extra losses are from underling items.

Cost of capital at 1.3% for 2021. Now rising based on current retail deposit rates leading to compression of NIM. Helped in the short term the BOE TFS ends which ends 4 years from drawdown of cash.

[graham1ty] 04/6/2022 08:24:43

All the optimism earlier in the year seems to have evaporated by the RNS last week. I am sure we could cherry pick bullish statements, but I thought, overall, the tone was very negative…̷0;

[hopespr1ngseternal] 03/6/2022 21:33:58

The point is that absent a compelling offer from Castle, if 10m pounds is enough to avoid capital constraints it is obviously in the interest of minority shareholders as a group to support the OO in the expectation that PCF will become profitable again in a few years. Of course as individual shareholders we face the problem of collective action. But given the optimism of management in the 2021 Annual Report it would seem illogical to sell the company cheaply if capital can be raised. That said as others have pointed out Somers who call the shots may just want out at any price.

[hopespr1ngseternal] 03/6/2022 21:14:05

Because the alternative may be worse. That said until we know more about the Castle offer and can put a value on the combined group it is premature to speculate whether the value of the small minority holding will be more or less than the equivalent of 5p per PcF share. The RNS clearly contemplates that it will be more otherwise why the concern to give minority shareholders catch up rights. Absent an offer from Castle my two conditions must be met before I will support the OO.

[topvest] 03/6/2022 18:57:39

"Under the terms of the Possible Offer, it is expected that PCF shareholders would have a small minority position in the combined group." Thise sentence implies further massive dilution - minority position is c25%. Small minority position is c10%? It implies that there will be massive share diliution after the fundraise. If that's the case, why would you support the fundraise?

[hopespr1ngseternal] 03/6/2022 13:29:55

The underlying question is whether this is a business worth saving. Personally I might well be persuaded to support the OO but only if I am satisfied of two things. First is that the OO will be adequately supported to a point at which the business avoids imminent capital constraints and secondly that the medium term plan is credible and rigorous and offers a strong probability of consistent profit by the end of the term. In other words the Circular supporting the OO will have to tell a very good story. Not impossible. After all the Group did make an adjusted profit before tax in 2021. Ps also need senior management and board members to put their money where their mouths are.

[cc2014] 03/6/2022 12:09:51

"This is now just a nuisance for them. Even if the share price got back to 14p ( or a bid came in at 14p) the overall effect on their performance would be negligible. PCF just does not matter to them any more. If it was a larger % of their portfolio, they would fight to protect it. Now it is just a time consuming embarrassment."

I agree. But worse that it just being an embarrassment they are being forced to put more capital in to keep the liquidity ratios ok and given it any chance of surviving.
I don't know how it works for you guys but from time to time I've ended up with a share which hasn't gone to plan, it soaks up too much of my energy and distracts me from what I should be doing. Eventually, I move on and suddenly find it easier to think straight. I suspect Somers would be happy to move on. If you are over in Bermuda looking at this you've got a non-exec who didn't seem to spot what was going on and regardless of whether he's had a good or bad influence on the Board the investment is just pants.

[cc2014] 03/6/2022 12:02:02

Somers currently hold 161.6m shares out of 251m 64.4%

When they put in the £4.2m they get an extra 84.5m shares

So, if no-one subscribes to the OO then:
Somers would own 246.1m shares out of 335.5m 73.3%

If the OO is fully taken up another 137m shares are issued and we then get:
Somers owning 246.1m shares out of 472.5m 52.0%


That would be quite a dilution for Somers.


Also in my opinion,
Putting £11m cash into something with a current market cap of £17m seems a bit desperate.
Current shareholders excluding Somers are 90m shares or around £4.5m. Asking these to put £6.85m or one and a half times the value of their current isn't going to happen. Thus the OO.

[solarno lopez] 03/6/2022 09:55:26

Thanks Graham useful information

[graham1ty] 03/6/2022 09:12:58

Looking at the Somers results statements, as at 1Q they state they had written down PCF to 14p. In the 2Q ( published May 20 for period to March 31), they comment on the January restart to trading, and the 43% fall in the share price, however, there is no comment on any further write down.

However, they also state that PCF is only 2.9% of their portfolio. If that is based on 14p, the book value, then that will have fallen to c1.2% at 5.5p.

This is now just a nuisance for them. Even if the share price got back to 14p ( or a bid came in at 14p) the overall effect on their performance would be negligible. PCF just does not matter to them any more. If it was a larger % of their portfolio, they would fight to protect it. Now it is just a time consuming embarrassment.

[hopespr1ngseternal] 02/6/2022 23:10:36

Castle and PCF look like complementary businesses and the combination offers significant synergies. It does feel a bit as though PcF is being fattened up for slaughter but take some comfort from the fact that Somers’ interest is largely coincident with ours except that Somers are liable to be more comfortable than individual investors with an unlisted investment. If the Castle deal does not materialize big question is whether minority shareholders will support the Open Offer. Will we be throwing good money after bad? And someone made the excellent point that Somers appear content to suffer dilution if the Open Offer of 6m pounds is taken up in full.

[hopespr1ngseternal] 02/6/2022 22:59:42

As of 30th September 2021 total equity was just under 50m pounds and there were about 250m shares in issue = NAVPS of about 20p. Current share price is heavily influenced by the gravitational pull of the 5p Open Offer IMV and/or the prospect of being acquired cheaply by a private equity owned unlisted entity thereby eliminating any liquidity premium.

[dandigirl] 02/6/2022 22:31:21

hopes: Any thoughts on NAVPS? I make it around 10p now.

...and good spot re Marian Martin. Maybe Castle has had an interest for some months now given that she resigned last December and the now straight-up people at PCF thought they ought to say something lest it leak out.

[hopespr1ngseternal] 02/6/2022 12:41:16

FWIW Marian Martin is a director of Castle Trust Capital

[hopespr1ngseternal] 01/6/2022 22:09:07

The Report of the Board Audit Committee states that PCF Bank is deemed to be worth no less than 32m pounds being its carrying value in the books of the parent company

[davidosh] 01/6/2022 11:19:06

Money can leave the company in so many ways if you are controlling the bank whilst the processes or governance are lacking.

The simple fact that large bonuses were paid out based on targets that in reality were never met means money left the company that should not have done.

It troubles me that a banking licence was achieved which in itself means huge numbers of eyes were checking and double checking everything that is needed for financial regulatory purposes and yet months later the bank collapses into a heap of a mess that cannot be explained to the owners.

Should shareholders be questioning whether it should ever have received a banking licence?

[cc2014] 01/6/2022 10:31:00

#there's the rub David. The directors walked away from this when they decided to let the auditor IIRC offer no opinion on the financial statements. They appear at least from the outside unable to evidence either way whether there was fraud or manipulation of numbers. They've even gone so far as to say they don't believe any money left the company although again how they evidence that I don't know.

[davidosh] 01/6/2022 10:14:18

the Group has authorised the commencement of recovery action (where it is commercially sensible and legally feasible to instigate such action) to recover previously paid remuneration (and consequential losses) from individuals in the context of certain findings


I would go further....shareholders have lost millions and so if there has been any manipulation of the accounts to achieve bonuses or any suggestion of fraud then legal action should commence not just recovery....Without any action and justice this will happen regularly and shareholders are always the losers.

[cc2014] 01/6/2022 09:44:05

"In light of the delays in the Financial Statements 2020, the Group has authorised the commencement of recovery action (where it is commercially sensible and legally feasible to instigate such action) to recover previously paid remuneration (and consequential losses) from individuals in the context of certain findings
of the various investigations undertaken by the Group. RemCo is overseeing such recovery actions.

Hmm

[georgelees] 31/5/2022 15:41:44

Well if a bunch of private capital people want to buy, it must be a steal. So it can only go up from the depths the accountants and management had dragged it. Think it is actually still a good business once its clear of this.

[seasidehippo] 31/5/2022 15:27:56

Sold my last few.
Over and out
GLA