Member Info for Megpricing

So, let me get this right. The CEO has disclosed to an individual that there will no interim results due to an election ? Sounds more like a corner shop than a plc.

Hi. Agreed that the ECL needs to be maintained throughout the life of the agreement, but once an agreement is terminated and linked to a sellable “hard asset”, then once it’s sold the proceeds go towards the o/s balance. Any remaining debt should be written off and then brought back in if and when any further monies are recovered - I’ve checked with other finance houses and this is standard industry practice.
If the debt is not secured against directly against a tangible asset for which the loan was provided - IE a “soft asset” or a loan, then the hit should be taken at point of termination.
The idea that you carry the provision on the balance sheet and never write it off just because you hold a PG, just wouldn’t work.
IE; you could hold a charge on a property and the courts decide that it can’t be enforced until the property is sold as there is a family living in it. Therefore you could wait years to recover your debt.
For this reason, once an agreement is terminated, the hit should be taken immediately and only upon receipt of any proceeds should the debt be credited.
If they aren’t adopting this standard policy, investors should be made aware and the full extent and age of the 90+ Day debt should be declared. There could be a potential large bad debt that’s not been realised and for one would like to know to what extent this is as its possibly one of the most potential threats that could hit a finance company..

Thanks for the detailed response and passing on the CFOs comments. Glad you’ve also done the calculations and I’m not the only one with a few concerns over the Y-on-Y changes.
One point I would also pick up on from the CFOs response is regarding when to take the hit on writing off bad debt;
“Once an agreement is effectively ‘terminated,’ you shouldn’t hang out for a potential payment from other means (ie PGs, other charges etc.) The bad debt should be taken at the point of termination and taken from the provision pot - thus taking an immediate hit in the P&L. If you then recover all/part of the o/s funds from those terminated agreements, this then filters back into the business as profit.
If you do not treat bad debt in this manner, you could effectively say that all terminated agreements that are supported by a PG etc are going to be recovered and never get written off and run the risk of having to declare a greater bad debt in the future. Thus not providing an accurate picture of the companies real state. If this is what’s happening, it is bad practice and begs the question as to how many of these agreements sit in the provision pot when they should be declared as bad debt?”
Maybe I need to email him to ask this question as it would never be evident in the accounts from this practice...

Why after adopting IFRS9 for performing debt should the provision fall from £1.235m in 2018 to £660k in 2019 ?
Provisions for non performing debt have gone up by £768k yet the total provision only increased by £196k. Something just doesn’t add up to me..

So I’m not alone in my calculations. Not sure if I’ve read it right, but the provisions appear to be undervalued. Is this why the market is uncertain
...?

I do think many people look past the top and bottom line in the accounts. The big question mark to me is page 30 - the 90 days in arrears looks awful. Also the figures don’t appear to add up when you recalculate the provisions. Could be a big shock if a recession hits...

Surprised the stack of recent “buys” hasn’t pushed it up more. It’s a very similar SP performance comparison to Funding Circle - also in the SME non prime lending arena. I doubt many stock holders wish to sell atm - unless you invested some time ago, most of us will have paid considerably more than the current value. So it’s hold out for 4 weeks - all will be revealed...!

I hope so.. last thing I want is for us to be done up like a couple of kippers, I always wanted to go to Benidorm...

Meant Stock - not stick

Whats not to like ? The current SP that most people will have paid considerably more to hold their stick... The low PE shows lack of confidence, not a bargain..

Amongst everything else that’s been discussed, main factors remain;
- Talk of a recession
- Brexit uncertainty
- Sub prime finance companies are currently out of flavour
- No statement from the Board ?!
All the good news and hype has never boomed this stock. In a few weeks once the results are launched, it’ll either recover or continue to be perceived as undervalued, but a poor bet.. .
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Ehh - yes, think that’s been noticed...

Is that the same Bango share that dropped 15% in a week ?!? :/

Yes put like that - aimed at you. Just picking up on your comment that the Bango share has some comparison. You state that the Broker made a mistake and is now fired, I asked if it’s a mistake or the RNS that’s shrank the SP. up to you how you answer..

So are you saying that the Broker has made a mistake and it’s not the recent RNS and market sector nervousness?

Could it be a good time to top up ? RNS has a few negatives but still very robust..

Who knows what’s best on this one. I’ve stuck with mine atm. I do believe a finance hit recession will hit them hard, as a lot of small non-prime lenders.
I can’t see a main steam bank buying this, it’s too diverse and is too small/wide spread in its funding offerings.
I can however see a challenger maybe taking a punt. But more so another non-prime lender wanting to expand its portfolio. A privateer could be attracted and then strip some of it and collect cash to grow in one sector. All IMO.

Possibly FRS guideline increase. That’ll need to be maintained though and not used. Any other bad debt is on top of that provision. Fingers crossed they’re ok...

Great statement ! It’s bad debt that cripples this sector and 2008 gets soon forgotten They had very low provisions in last years accounts. Time will tell...

This sector runs at nearer 3% not 1% bad debt. They haven’t upped their provisions. Why don’t you see it increasing ?