London Capital and Finance

Malthusian

Sledger wrote: »

Re assets I have asked this before I fail to understand that mega chunk of assets 284in the last audited 2017 accounts by Ernst Young as it is almost 5 fold of the bond value of 60 million. Page 1.

Pretty straightforward. And totally irrelevant. £285 million is the amount that LCF claims its underlying borrowers have in assets, on which LCF has a claim should those borrowers default.

The reason this is irrelevant is as follows: if, hypothetically, I take £100 million from investors, pay £25 million to the unregulated introducer that referred them, then loan the reminaining £75 million to borrowers in secured loans with a 50% loan to value, I can go on about "£150 million in secured assets" all I like but I don't own £150 million in assets, my borrowers do. I can't touch their £150 million in assets unless they default. And even if they default, I can't take more than they owe me, which is £75 million.

If I borrow £20,000 from my mortgage lender against my £200,000 gaff and then run out of income to service it, they can make me sell my house but they can't take the whole £200,000.

What is of far more consequence to investors is that, following the payment of 25% commission to my unregulated introducer Misleading Ads R Us Ltd, my starting position is £75 million in loan securities at book value and £100 million in liabilities, i.e. £25 million net in the red.

To pay back all my investors in full I need to generate a 33% return on my lending activities plus the interest I offered. So if I've promised them 8% a year over three years, in simple terms that's a 65% return I need to make in 3 years in a near-zero interest rate environment. (124k / 75k = 165%.)

But never mind that, look over there! £150 million in secured assets! Clearly as safe as houses. On Cape Verde.

Note that the bond value of £60 million is from April 2017. LCF recently claimed that the current total stands at around £214m, with the irrelevant "secured assets" figure at £685m.

Note that I have not even addressed the question of the accuracy of the secured assets figure, but others have.

jimjames

Malthusian wrote: »

To pay back all my investors in full I need to generate a 33% return on my lending activities plus the interest I offered. So if I've promised them 8% a year over three years, in simple terms that's a 65% return I need to make in 3 years in a near-zero interest rate environment. (124k / 75k = 165%.).

There were some other calcs as it also assumes that the money is deployed and getting a return immediately it is handed over by the investor. According to LCF one of their bond issues took 7 months to be sold. Even on a lower figure of 3 months to get sufficient funds to lend out it would increase the return required especially for shorter term bonds of a year .

These also don't include the money spent by LCF on other activities so for every pound that is spent on sponsoring horse racing or corporate entertainment the returns need to be increased proportionately more to get money back for the investor.

To have a return of that magnitude that is guaranteed is just not possible, there are too many variables that mean it could go wrong.

Malthusian wrote: »

Note that I have not even addressed the question of the accuracy of the secured assets figure, but others have.

It's impossible to know what the actual security is for the loans made without sight of the agreements but I suspect that there is a chance that the subsidiary network that LCF lent to means it's possible that the same assets could be double counted.

If I lend to company A that owns company B and company B also owns company C then is it possible that they can use each the subsidiary's shares as assets to support borrowing?

masonic

jimjames wrote: »

If I lend to company A that owns company B and company B also owns company C then is it possible that they can use each the subsidiary's shares as assets to support borrowing?

Or just a good old cross-corporate guarantee

Also, since the charges registered in favour of LCF or GST were debentures over general business assets, it's certainly within the realms of possibility that there are higher ranking loans from other lenders taken out against some or all of the assets.

Sledger

One of LFC Companies House listed people is CAA Registers Ltd at a common address {text removed by MSE Forum Team}. You open CAA and up pop 21 appointments which are other Companies mostly registered in an European Economic Area but all using the same drop off {text removed by MSE Forum Team} address. . One of these companies Honeyhill music was formed in 1968 before {text removed by MSE Forum Team} was born so looks +
Anybody know why and what Role CAA registers play

https://beta.companieshouse.gov.uk/officers/upT4f2LKB6yjq9ryZf0tlSwI5k8/appointments

jimjames

Another article highlighting what we'd said here 3 years ago. Shame it takes the FCA so long to catch up!

https://www.standard.co.uk/business/watchdog-slams-highrisk-bond-for-controversial-website-ads-a4048846.html

jimjames

Sledger wrote: »

Anybody know why and what Role CAA registers play

https://beta.companieshouse.gov.uk/officers/upT4f2LKB6yjq9ryZf0tlSwI5k8/appointments

Nothing untoward by the looks of it. They're just company secretary to multiple companies. You might want to ask them why LCF hasn't filed accounts but that's outside their control

Sledger

Whats happening here I was looking for some LCF PDF brochures posted by jelli and Cant find them but think it was on her post 668. Why on earth would they be removed as they were public knowledge available on line and issued to the Bondholders so what basis is there to remove them and more importantly WHY???? Luckily I made copies of most

Jelli

Sledger, I've sent you the links but they're on page 32 near the bottom.

masonic

Sledger wrote: »

Whats happening here I was looking for some LCF PDF brochures posted by jelli and Cant find them but think it was on her post 668. Why on earth would they be removed as they were public knowledge available on line and issued to the Bondholders so what basis is there to remove them and more importantly WHY???? Luckily I made copies of most

They haven't been deleted: https://forums.moneysavingexpert.com/discussion/comment/75323262#Comment_75323262

Jelli

lol masonic, I should of checked first before responding.