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PCF Pcf Group Plc

0.95
0.00 (0.00%)
24 May 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Pcf Group Plc LSE:PCF London Ordinary Share GB0004189378 ORD 5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 0.95 0.60 1.30 - 0.00 01:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Pcf Share Discussion Threads

Showing 5151 to 5173 of 5625 messages
Chat Pages: Latest  213  212  211  210  209  208  207  206  205  204  203  202  Older
DateSubjectAuthorDiscuss
06/6/2022
12:37
#4022.

Sad to say as an ex-shareholder and someone who would like to see PCF do well, I'm struggling over the future.

We now have reported losses in 2020 & 2021 and losses in 2022 are going to be significantly higher than 2021.

If I'm brutal I have to question whether if the business can't make money over a three year period in which we've seen the value of the security behind those assets be the most bullish in memory (second hand car prices rising so you can sell a car for more than you bought it), then is there a viable business at all. Of course others make money from lending of this type so there's no reason PCF can't but PCF can't seem to.
It's my view we are at the top of the bubble with asset prices and going forward PCF's impairments are going to have to deal with falling assets prices as security.

I also worry about their NIM. They've borrowed £60m from the BOE at some crazy low interest rate. I don't know what it is but my guess is lower than 0.5%, perhaps as low as 0.1% and that will have to be repaid in due course but definitely by 4 years after the loan was taken out. If they have to replace that with say borrowing at 2.5% from savers, that isn't going to help. A rise in the base rate to say 2.5% at the BOE isn't going to help either as they have to pass that on to borrowers and will this affect impairments.

If you take a very broad view that PCF have requested £4m from Somers for regulatory capital purposes but their losses are significantly higher than that reported in 2021, how long is the injection of cash going to last? The loss in 2021 is £3.1m and it's going to be significantly higher. Let's guess. Say £5-10m. And probably followed by a loss in the next year.

The issue is that if Somers don't tip in the £4m capital, PCF loses money year after year as it doesn't have critical mass and then it's a vicious circle as their lending is constrained by shrinking regulatory capital. If Somers do tip the capital in, it's roll the dice time and take a view of how much you believe in the management team, how much of the remediation costs go away over time and your view of the resilience of borrowers to keep paying in a higher inflationary and interest rate environment.

Let's see what the interims say which I assume will have to be published before the capital raise at the end of June. If we are looking at a full year loss of say £5m that's bad but kind of not too bad. I can see a path back to profitabily over 2 years. If we are looking at a full year loss of £10m things look bleak indeed. The thing is if the loss were only £5m for this year and then say £2m for next year I don't think Somers would be tipping the £4m in.

cc2014
06/6/2022
11:53
Thank you, cc. Very interesting.

What figures did you arrive at as a fair current price per share and in say the next year please?

dandigirl
06/6/2022
09:45
~4017

The market does not value banks on the basis of their net assets. It values banks on the basis of their future profit streams.

Very broadly net assets provide the regulatory capital which enables the profit streams and without suitable regulatory capital as we have now banks lending is constrained.


On another note if you consider the current published capital ratios and the requirement for more capital and take a guess at the new larger loan book you can broadly get some insight into PCF's ongoing losses.

cc2014
06/6/2022
08:31
Good morning hopes: Thought Somers are okay at 73% or thereabouts. Of course this likely would reduce below 70 after the OO. Thought 80 was the magic number?

Looks like Castle approached PCF/Somers who put out the RNS “without the approval of Castle”.

dandigirl
05/6/2022
22:28
Agreed Dandi with one reservation. Unless there is a reverse takeover (which does not appear to be what is being proposed) difficult to see how the listing can be maintained as PCF Group PLC will be a wholly owned subsidiary of an unlisted parent company.
hopespr1ngseternal
05/6/2022
19:28
Golly gosh. I tune out for a couple of days to enjoy the Jubilee and come back to read doom and gloom!

Allow me to try to lift the mood for while I agree this may be an embarrassment for SOMERS [and the rest of us] and maybe a nuisance too, both SOMERS and CASTLE [of the Flowers Group] will be relishing this situation in a funny sort of way.

These sorts of deals are their stock in trade. It’s in their DNA. The amounts are not significant for either group but significant enough to be more than a nuisance to be written-off by Somers. They and Castle will be loving it. This is clearly opportunistic by Castle but Somers are in the driving seat and need not do any deal if it is not to their advantage – and I don’t see how it can be. What is good for Somers will, hopefully, be good for the minority shareholders. We can but wait and see.

I am still of the view that the listing is one of Castle’s motivations and, hence, we will not be looking at an unquoted investment whatever happens.

I think we can be sure of one thing though; that the current Board will play it by the book. I expect full transparency as Moore, in particular, has a reputation to protect.

I have written that I, too, wonder if all this drama was really necessary but the past is the past. Remediation has, however, cost a lot of money, will continue to cost a lot of money for at least another year and left PCF with significantly greater overhead on-going. It will be much harder to get a decent return on equity. Just one comment, though. I do think the Board should think carefully about the costs of legal action to attempt recoveries and whether the action and costs can be justified on any basis.

But to current matters, in calculating the NAVPS figure of around 10p, I used the 306m figure. Subscribing at 5p appears rather a good deal for Somers and allows for some further expected losses. I don’t believe that Somers will want to get out at any price. Fair do’s – they have supported PCF all the time we have been shareholders including, I seem to remember, converting high interest prefs to ords to facilitate the bank listing.

My view is pretty much in line with hopes posts #4005 and #4017 including the Board, especially Stran and Richardson, demonstrating support by investing significantly. Morgan with 500,000 shares, Brown with 200,000 and Titmuss with 50,000 will already be nursing losses like the rest of us; they should continue to show support by participating in whatever transpires. Like hopes, I, too, would not wish to sell at a low price but in reality the minority shareholders would not get a say with Somers at over 73%. However, I don’t think that a deal with Castle will be done. Why would Somers off-load now at a silly price?

Anyway, for those like hippo* who want to depart the scene, they can now do so. For our part, we will be hanging around awhile longer to see what transpires. I believe there is more upside than downside but it will take time. Interesting times.

*hippo: bet you can’t resist peaking in here for a looksee from time to time.

dandigirl
05/6/2022
13:01
Topvest: why express a view on a takeover that may not happen by a company about which we know next to nothing offering an unknown quantity of its own shares?. The decision whether to support the OO in these circumstances will be a decision to invest in the combined group not in PCF. And I don’t agree that there will be no premium. Current PCf stock price is driven by technical factors and is not a useful guide to the value of the bank which the Board assesses at no less than 32m pounds. I doubt Somers will sell for 6p a share unless they want out. at any price. I will tcerainky not accept 6p in respect of my own shares
hopespr1ngseternal
05/6/2022
09:21
Looks better to exit whilst you can in my view, for what its worth. The upside looks constrained versus the downside. Putting more money in looks highly questionable. Castle won't be offering a premium - why would they?
topvest
04/6/2022
22:39
No, Graham. The bottom line has not yet been written.
hopespr1ngseternal
04/6/2022
22:37
No, Graham. The bottom line has not yet been written.
hopespr1ngseternal
04/6/2022
21:47
The accounts had to be qualified, as last years were qualified. So there was no “starting point” that this year’s auditors could measure against. Therefore, they had to be qualified.

We, Somers, shareholders, have lost about 90% of our money ( from 45p high)

That is the bottom line

graham1ty
04/6/2022
20:57
The worst thing is the going concern qualification from the new auditors; that, and the new chairman calling himself a chair.
123davidgwilym
04/6/2022
20:10
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.
hopespr1ngseternal
04/6/2022
10:12
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.

cc2014
04/6/2022
08:24
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;
graham1ty
03/6/2022
21:33
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
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.
hopespr1ngseternal
03/6/2022
18:57
"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?
topvest
03/6/2022
13:29
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.
hopespr1ngseternal
03/6/2022
12:09
"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
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.

cc2014
03/6/2022
09:55
Thanks Graham useful information
solarno lopez
03/6/2022
09:12
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.

graham1ty
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