Pcf Share Discussion Threads

[cc2014] 08/6/2022 14:28

Also with the share price now 10% below the OO price, one wonders how much money will flow in through the OO.

The interim accounts may change people's views, but right now the market is showing a lack of confidence.

[che7win] 08/6/2022 14:06

Somers now down another 10% on their subscription

[che7win] 08/6/2022 07:27

If they can't even get Somers weighting correctly, no wonder they can't run a bank

[123davidgwilym] 07/6/2022 21:19

If I remember correctly, any proposal will have to be endorsed by a majority of the minority shareholders.

[hopespr1ngseternal] 07/6/2022 20:46

Topvest: of course the bottom feeders are circling. Let’s hope that PCF’s business prospects are good enough that Somers rejects any lowball offer. We will have a clearer idea of how the business is doing after release of 2022 interims later this month.

[topvest] 07/6/2022 19:43

Apologies in advance for banging on about the same thing, but the RNS said this:

"The Board of PCF Group plc ("PCF" or the "Company") announces that it is in early-stage discussions with Castle Trust Capital plc ("Castle"), in relation to a possible all share offer for the entire issued and to be issued shares of the Company (the "Possible Offer"). Under the terms of the Possible Offer, it is expected that PCF shareholders would have a small minority position in the combined group."

This implies that they are in discussions with Castle which would result in Castle being worth several multiples of PCF. There is no material upside in such a situation surely as its a rescue bid and priced accordingly? Read the RNS which talks about "a small minority position". Such situations don't normally end well.

[dandigirl] 07/6/2022 17:59

hopes: of course. It is the listing that is an attraction if not the attraction for Castle.

Still of the view though that a deal will not proceed as the price will not be acceptable to Somers. It would be like selling at the bottom.

[dandigirl] 07/6/2022 17:53

Thank you CC. Your thoughts appreciated greatly.

[hopespr1ngseternal] 07/6/2022 13:18

Agree with Solarno. A reverse takeover is much more appealing to minority shareholders than selling to an unlisted entity. And it is obviously good news that there is now more than one interested party.

[zxie] 07/6/2022 11:57

INSP shares jump soon

[cc2014] 07/6/2022 09:47

#4036.

My post from the weekend below. I make it 1.5 new for 1 current if shareholders other than Somers are required to fully take up the open offer.




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] 07/6/2022 09:42

Dandi - Post 4028

"It might help if you could give an idea of what you consider a fair current price and how you arrive at it please? Where I am coming from is to ask whether or not 5p is a reasonable number? Are Somers paying sufficient?"

I may write a longer reponse another time but the sun is out today for the first time in what seems like ages so shares seem less of a priority.

Is 5p fair? Put simply we can't say because we haven't seen sight of the interims. Somers no doubt will have seen sight of the monthly management accounts.

What we do know is that Somers are tipping in money today through the Sandbox rather than doing it all in one process with the OO. My guess is this is because they need to prop up the capital ratios for the end of the quarter and it can't wait. I could be wrong but that's my guess. On this basis PCF's losses must be not insigificant. Unfortunately I can't work out the number precisely because the Pillar3 document does not reveal the exact amount of capital required by the PRA.

What I'm left with though is that if PCF continue running losses of say £7m a year for 2022, 2023 and 2024 then PCF is worth a penny or two, because there will be more diluting capital raises to come to keep the regulatory capital in order.

If it's say £7m in 2022, £5m in 2023, £3m in 2024 I think it depends how well this OO is supported. My guess is that it won't be well supported. Too many red flags for the institutions plus PCF is no so small it won't be worth the analysts time. If PCF get £5m including Somers I'd say the shares are worth 3p. If they get £10m say 4p.

If I could be persuaded that the numbers look like £7m in 2022, £2m loss in 2023 and a £1m profit in 2024, I'd say 5p is fair enough.


I could flex the numbers anywhere from there. We need to see the interims. I can't understand what's holding them up. The finals have been published. Push the button on the computer to update the year end and then run the half year. All the accounting treatments were no doubt agreed with the auditors weeks or months ago and the interims don't require auditing. If they want the OO done by the end of the month and want to give two or three weeks for investors to apply to maximise the takeup then I'd expect the interims by the end of the week.

[dandigirl] 07/6/2022 09:36

Looks like around 1 new for 5 current then.

[graham1ty] 07/6/2022 07:36

Under what authority have these shares been issued ? Surely a non preemptive placing needs shareholder approval ? It is also Class 4 ( with a related party) that should also require an EGM ? The announcement of a few days ago says merely that the independent non execs think it is best for the Company.

The same non Execs ( roughly) as have presided over this car crash…..

Good that a third party enters the fray. However, PCF could not pay cash obviously.So any merger would have to be for shares, and the other party would have to accept grillionsnof shares in a loss making combination. And massive dilution for existing shareholders.

The PCF farce continues

[solarno lopez] 07/6/2022 07:06

A much more appropriate deal announced with PCF being the lead vehicle guaranteeing its listing

[carcosa] 07/6/2022 04:24

"...Holding shares in a standalone loss-making lender is an unappealing prospect, too, as the UK cost of living crisis impacts delinquency rates. In the circumstances, I downgrade my advice from hold to sell."

[hopespr1ngseternal] 06/6/2022 18:10

As to BVPS or NAV please note that the derecognition of deferred tax is a significant number which will be written back once PCF has secured its future as a going concern.

[hopespr1ngseternal] 06/6/2022 18:02

Dandi: 5p represents a significant discount to the suspension price or whatever other metric you use to calculate an appropriate per share price for the business - which is why minority shareholders are being given the right to subscribe on the same terms to avoid dilution and are being given catch up rights in the event of an offer from Castle. The Open Offer is broadly equivalent to a discounted rights issue except that rights are not transferable.

[dandigirl] 06/6/2022 17:42

P.S. I have looked through PCF's recent releases and they don't appear to give a NAV PS figure. I guess because it is so awful. I had hoped that trading would resume in the 10 to 15p range but the costs have taken and are taking a heavy toll.

[dandigirl] 06/6/2022 17:36

hopes: I must stop this for here I am agreeing with you again.

Consequently CC, I, too, beg to differ. NAV PS is one of the first numbers I look for.

To use your example LLOY; it has had a figure mostly between 50 and 60p these past several years. Failure to grow this figure was one of Horta-Osario's many failures. Indeed, I seem to remember it fell for three years at a time when he was supposed to be growing the business. At the same time LLOY share price has not risen above the NAVPS figure for years.

I have just checked and the year end figure is 57.5p. Current share price 46p.

No account is being taken of the future profitability [or otherwise] of LLOY even now.

I think your measures while having merit are old fashioned. Their days are long gone as are the days when banks could lend multiples of capital using wholesale funding. Similarly, it seems the days of 50% cost/income ratios again are a few years away as the costs of regulation are now very significant. Aim is for 2026 for LLOY.

STAN has a NAV PS above £12. share price £6.50 ish. Cost/income 76% but aiming for 60% next year.

It might help if you could give an idea of what you consider a fair current price and how you arrive at it please? Where I am coming from is to ask whether or not 5p is a reasonable number? Are Somers paying sufficient?

Just to add, my reading of the RNS is that the £2.7m has been injected as of today.

Lastly, PCF has to provide projections for the business as part of the OO. I happen to think PCF's markets are robust. We can take a view of the future when asked but currently PCF's peers are doing okay.

[hopespr1ngseternal] 06/6/2022 15:59

I suspect if you ask Garry he would say that he is right sizing the cost base which is why they have to grow the business.

[cc2014] 06/6/2022 15:41

With regard to the net asset value thing let's take a look at Lloyds.
It's net asset value is £53.2b but it's market cap is £32b.
It made a profit last year of £6.9b and pays a dividend.

Sure the net assets are important but it isn't a good metric as we can see with Lloyds the net assets are £53.2b but this does not provides a floor to the share price.


In relation to 2020 the impairment was high but I see this as due to PCF publishing profits which weren't there from previous periods (and thus the attempts to consider clawing back directors bonus payments). My view of course and others are welcome to see it differently.

With regard to 2021, the abnormally high cost/income ratio is true, but given the remedial costs are going to be the same in 2022 and 2021 and the loss is going to be significantly higher this I think the abnormally high cost/income ratio is going to be significantly worse in 2022. An uber abnormal high cost/income ratio if you like and this despite Garry informing us that they are removing cost by making the approval process for loans less dependent on people. At what point is the abnormal ratio more like business as usual? because the solution seems to be to grow the business to get economies of scale rather than right size the cost base to the current loan book size. It's important to note of course that in time the remedial costs will fall away. But will the remedial costs just be replaced with other costs? I read in the annual report there is no workforce director. I was a bit shocked given all the issues around culture and health and happyness of the workforce.


Somers are between a rock and a hard place. Without the addition funding, lending is constrained and PCF can't get the economies of scale it needs to get out of this mess.

[hopespr1ngseternal] 06/6/2022 15:30

I wonder how much a purchaser would pay for the PCF loan portfolio. Any ideas?

[hopespr1ngseternal] 06/6/2022 14:41

I disagree with cc on a number of points. First tangible book value is an important metric in valuing banks. Secondly I do not think one can draw any very firm conclusion about the viability of the business from 2020 where the loss was wholly attributable to a 14.4m one off impairment charge or from 2021 where there was an adjusted pretax profit despite an abnormally high cost/income ratio. We have to wait for 2022 to have any feel for underlying profitability going forward. Finally CC’s last sentence is distinctly odd. Somers are much more likely to be investing because the business is viable than because it is not.