The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
How do you work that out? The whole point of equity is that they rank after creditors when it comes to dishing out company value. If claimants only get 42%, equity holders should get nothing.
The point is broadly correct though. Doorstep lending is expensive and difficult to collect, so relatively quickly it's easier to write it off than collect. They did the same in Ireland back in June.
What Provi did do was put in £50m from the parent company into the doorstep arm -- effectively the eqivalent of a rights issue, which you could argue that they didn't need to do, which would have helped with the Courts and FCA.
Spot on. The point is that Amigo is effectively insolvent, with redress liabilities in excess of not just its assets, but also their run-off value... the shares **should ** be worth nothing. That's why the FCA takes a pretty dim view of any SoA which would negotiate the redress down while leaving any value with shareholders. Hence the big dilution that's been flagged since the back end of last year.
Maria is and always been a non-exec only, not sure why people on this board were expecting her to be involved in the business day to day. The only exec members of the board (excluding the Company Secretary) are/were Gary J and Mike C. FWIW non-execs earn 60-80k a year.
Some might say that having an MD focused on personal encrichment while not utilising the services of outside specialists because he thought he could do it all better himself might have been be a negative sign of things to come
They stopped lending about 2 years ago. They lent up to 5 year terms.
I imagine the presentation will be pretty similar to the presentation that they do at every results announcement.
The FCA and FOS's interest has never been in the APR per se, more in the total interest payable -- both in terms of how they "cap" rates, and when they get concerned from the compliants side about whether affordabilty has been done properly. The other drivers of their extra focus on guarantor lending is the relatively large sums potentially involved, and the fact that a third party is involved (the Guarantor). They will however be of the view that if some people are only lendable at 99% solo, or 49% with a guarantor, that, in of itself, is an indicator that they will be more likely to find a loan unaffordable in practice, so extra checks needed to be made. Bottom-line is they expect bank statement checks to have been done on pretty much all borrowers in this space (and self-certification not to be trusted), whereas most lenders did it by exception.
That's not the Amigo office, but lets not get facts get in the way.
However, there's a guy in the background who looks like he's the sort of person who might work at Amigo, and he looks a bit sad. I wonder what that might mean.
I would be extremely suprised if the CEO was on 65k base. That's what non-exec's are on.
"Jimmyg56
You made the following statement:
"James Benamor has put the figure at over £1 billion - Amigo is offering peanuts even with the 15%)"
Do you have any calculations for the figure of £1bn?
Do you have a breakdown of this figure?
You have advised where the figure came from but must agree with this so please substantiate?"
From memory Benamor's £1bn figure was based on theoretical run off value of the book (at that point). It didn't deduct the debt or the complaints liability. It was one of his justifications for why he rejected the 20p offer (the orginal being what a terrible state of affairs it would be if the then board got to choose their succesors).
"The simpliest way I can think of to show you that you are adding gross and net figures together and getting the wrong numbers is as follows.
The provision at 31/3/20 is 106.8 add the 18.9 = 125.7M BUT the provision at the 31/6/20 is 98.1M. Under your methodolgy of adding net and gross numbers together wheres the 27.6M? Note 9, page 27. Your not accounting for the utilisation of the provision account with write-offs attributing everything to principal repayments."
I'm literally reading the figures off the cash flow in the management presentation.
"wrong, the 53M is negative in the cashflow because the cashflow starts from net profit which includes the credit of 61.7M from interest pre the PV provision. The 52.5M is taken out of the cashflow because it isn't received but added to the loan balance you can see this clearly in the cashflow. Your loan book calcs are totally wrong as you start from net loan balance at FY take off the increased prov, add the accrued interest, take off the principal element of collections which is P+I and then take off the write offs to reconcile to the Q1 net number. Your calcs are totally wrong, 100%"
The 52.5m is not the accrued interest. It's the actual interest received.
I don't start with a loan balance, I start with a loan book decrease, of 93.4m. 18.5m of this decrease is accounted for by impairments, £6.5m of other loan book movements, offset by 0.4m of new loans. 93.4m-18.5m-6.5m+0.4m=68.8m, which is therefore the principal repayment.
There are 121.3m of collections. 121.3m-68.8m (the principal)= 52.5m, which is the interest collected. It's clearer in the cashflow in the mangement presentation on page 14.
A figure that might be of interest that is a little buried is that there were only £400k of new loans issued in Q1, so the loans given to essential workers is tiny.
"Thanks Robespierre, can you flesh that out for us? I can't tell whether that's positive or not"
It's not as negative as I understood that Senator was saying. His was that of the 120m collections, only 9 was interest, hence 111m was principal repayment. Instead it's 52m of interest, and 68m on principal repayment. Regardless, the point remains that a substantial proportion of 96m net operating cashflow is principal repayment, not revenue.
"Interest charged on loan book: £52.5m in the cashflow in the statement can't be an outstanding accural.. as the corresponding y/e figure is £305m. If you look at page 14 in the management presentation, you can see that the 120m collections splits into the 52.5m and a loan book reduction of (90.30-18.5-6.5+0.4)=68.4."
The calc actually works the other way, they've collected more in interest (52) than they've put through the revenue account (49).
"Interest Booked: 48.8M (P&L)
Add: PV provision: 12.9M (notes)
Total pre provision interest=61.7M (maths)
Interest accrued and not paid 53M (always in the cflo statement), cash received in Q from interest 8.7M. Don't listen to that other idiot, he is clueless"
Interest charged on loan book: £52.5m in the cashflow in the statement can't be an outstanding accural.. as the corresponding y/e figure is £305m. If you look at page 14 in the management presentation, you can see that the 120m collections splits into the 52.5m and a loan book reduction of (90.30-18.5-6.5+0.4)=68.4.
"Totally wrong, Cash Revenue as you call it was £9M because they accrued most of the interest booked"..
... can you point me to where you are seeing the interest accrual?
"Either they've massively over-provisioned for complaints or there's something hidden they're not sharing. Not sure which it is?"
There's a big mismatch between provision level and payout rate. Goodbody fluffed the question a bit though.
"Did I hear that right Nayan just confirmed Provision covers expectation for all future complaints?"
It should be all reasonably forecastable from historic lending.