Member Info for bumpylane

Morgan Sindall's regeneration division wins big development scheme in Stevenage.

https://www.constructionnews.co.uk/contracts/muse-signs-agreement-for-redevelopment-of-stevenage-station-area-13-01-2026/

SlownSteady - I think describing Kernow as 'teenage scribblers' is a bit harsh!

It looks to me like quite an interesting firm. Still small but ambitious. Their niche is value investments and contrarian plays. They have obviously denied that Saga is still very cheap. That's good news. It should give other fund managers, who are always sheep-like, the confidence to take small positions here.

It's interesting reading the last few posts.

In my experience, this kind of hyper-negative sentiment for a company from long-term shareholders presents an opportunity.

What's happened with SAGA is that long term holders have moved over 5 years or so from being Bulls to Stale Bulls to what they are now, which is very angry long-term holders. Their anger at the company and the losses it has inflicted on them seems to blind them to any positive future story.

That's a mistake. This a decent business that is worth alot more than than the current market cap or enterprise value.

Slownsteady - great posts.

Interesting to hear that LAH is now in administration. So now NSF is Everyday Loans, which should be a viable business but the balance needs to be improved.
We should now see NSF results for 2021, and proposals for re-financing of Everyday Loans.
Is a 10-1 RIghts Issue here going to work? I'm sceptical. It would be easier for Alchemy to take it private.

I reckon that Alchemy will just take out the other shareholders here.

Total Market Cap is now only £6m. Alchemy own 30% of that. So let's say they offer a slight premium, and for something in the range £5-£7m they can take it private, de-list and will be free to re-finance without all the expensive hassle of a Rights Issue.

What might they offer? Something from 3p to 4p? would be my guess. 5p if they are feeling generous.

LaH is reasonably small compared to EL. It has a Loan book of 27m approx, as opposed to EL's £172m

So hopefully EL is big enough and profitable enough to be standalone business.

Nostra - I don't think the FCA need a rationale for behaving like this (i.e. moving as slowly as possible). But if you are looking for a motive, it's that the FCA doesn't like this sector and wants to make life difficult for it.
To announce an enquiry into NSF's guarantor loans division right in the middle a pandemic, and then take 18 months (?) to agree a resolution package puts the company under huge pressure. NSF can't raise any money until the FCA agrees a deal.

I don't think NSF is obliged to publish results for the period to 31/12/21 until the end of June.
But are we expecting a trading statement at some point soon?
It seems a long time since we heard anything. I guess the FCA is moving as slowly as possible, to put them under the maximum financial stress.

K3 - Pleased to hear that you are impressed by these results. What do you like?

The balance sheet position is pretty much where I expected it to be. But revenues from Everyday
Loans is disappointing at £40m. However, you have to remember that for two of the six months we were in lockdown.

Nostra - it's good to read your positive take on things at NSF.
You are definitely right that Everyday Loans has a good record of responsible lending, which makes the NSF's current treatment by the FCA over the Guarantor Loans division so surprising. Why has it taken the FCA over a year to complete its review of the GL division and tell the company how much it's going to have to pay in compensation? It's a brutal way to treat any company. Particularly a company like NSF with a very weak balance sheet, because NSF hasn't been able to raise any money while the investigation is ongoing.
I haven't been following the situation at Amigo. But I follow Morses Club, which is doing pretty well. Also IPF, but that is outside the UK.

dh 243 - I think they will make rather gloomy reading, unfortunately.

On the balance sheet, I’d expect to see total assets around £330m (we know that cash was £101m at 31/5 and the loan book has probably reduced from £258m at 31/12/20 to maybe £225m now as the GL is in run-off. It would be a nice surprise if total assets were over £330m as that is the number for the company’s long-term borrowings.

On the P/L side of things, I’d hope to hear that Everyday Loans is doing well and increasing its loan book and maybe even showing a small profit. EL revenue should be around £45m - £50m for the 6 months Jan-June. But Jan & Feb were lockdown months and this probably had an impact.

It would be nice to see a recovery in Home Credit which decreased sharply in 2020. Hopefully we will see H1 Revenue of c.£25m

Hopefully the run-off of Guarantor Loans is going well with moderate impairments and there should be some income from outstanding loans.

So total H1 revenue of maybe £50m+£25+£10m = £85m
But costs will be at least that (impairments will be -£30m, Admin costs will be c -£45m, Finance costs will be -£15m) so I think a loss is inevitable, but hopefully not too big.

I hope they can give some news re. the interminable discussions with the FCA. But they can’t set the timetable on this.

I’d be very interested to hear what anyone else here thinks.

Scottlee - I agree. JVK's record at NSF is not that good. The bid for PFG was seriously over-ambitious and blew up in his face. He definitely overpaid for the current businesses, though I suppose he wasn't to know how quickly the regulatory situation would turn and reduce their value.
On the positive side, he has built a pretty good business with Everyday Loans.
But I reckon it's a good thing that he's moving on and that we have a new CEO.

AW - My view is that the £17m allocated is essentially a guess by the company. They know the market wants a number and they have produced one. But we still have no idea whether the FCA agrees with this figure. Hopefully the company has prudently over-budgeted, but until we see a response from the FCA we don't know.

AW - we are all still in the dark on this.
In the meantime, the FCA seems to be trying to put the company under the maximum possible financial stress by taking as long as it can over the redress issue. There is nothing the company can do about this. The Regulator is in a position of total power.
Personally I hope that the Regulator accepts partial redress to be paid over several years. This will mean no dividends for shareholders over that time, which will please the FCA.

Nice to see a small recovery in NSF today.
We could get a decent bounce if/when we get definite news of a settlement with the FCA and then definite news of what is going to be a very complicated Placing and Offer.

Mariog - how do you see the £80m Placing being structured?

It's good to see that the cash in May 2021 was £101m. The loan book has fallen to £258m. But that gives total assets of £359m (before FCA provision) against borrowings of £330m
The report loss at £35m is a bit higher than I was expecting.
Otherwise no huge surprises here, but I have only skimmed results and will read through in more detail when I have time.

FY 2020 results tomorrow.
NSF is a complicated business and 2020 was a massively complicated year. We are going to see a big Statutory loss as they write off any remaining goodwill and intangibles. £50m loss?
It's probably best to focus on 2 things - (1) what is the tangible NAV? (total tangible assets minus the borrowings) and (2) what was the cashflow?
My expectation:
Total assets - cash balances circa £80m + Loan book of c. £290m = total c£370m (but we might see some heavy write-downs on the GL loan book).
Total borrowing - Term loan (-£285m + RBS facility (-45m) = £330m
NAV = £40m? (before FCA redress provision of £16m)

Cashflow (Revenue minus admin expenses + finance costs). Hopefully positive.
Revenue £165m minus Admin costs c £100m + finance costs c£30m.

All just my own back of a fag-packet jottings. Happy to be corrected.

I think the best we can hope for is a deal that allows PIs to buy new shares at the same price as Alchemy.
I'm not sure whether the company is obliged to do this.
As another poster wrote yesterday, it will be something like Alchemy's complicated deal for Countrywide. But Alchemy are probably in a stronger position here.