Some thoughts on JLs July figures

  • Gordon 45
  • 22/10/08 n/a (free)
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Posted: Thu, 11/08/2011 - 20:41

Hi Folks,

Cover Note to go with thoughts on July 2011 Figures. I had intended waiting on the Progress Rport to include data from that before issuing my thoughts. but it has not been issued yet, so posting my data on the July figures and will update where required and re-issue when I include any pertinent facts from that report.,

We were back to reality in May, bit better in June thanks to the FX gains and a great deal better in July even allowing for the FX losses. But we have to realise that returns this year still total an average of £15.416m per month – still great by any standards. So although that cannot continue at that level I still think we will get a dividend later in the year of between 6-8p/£. Especially with the (at least) 5p/£ (£12.305m) back from E&Y (KSFUK) w/c 3.10.2011. That is worth 1.36p/£ to us. If you add that onto the current net cash available for dividends as at end of July (allowing for Liquidation costs and unresolved/unclaimed creditors – my figures) you get 6.289p/£ by week commencing 3.10.2011.

  1. Again re our dependence so far on ‘pulling in cash’ from later years to subsidise shortfalls as occurred in 2009 and 2010.

· In 2009 approx £48m was brought in early from later years I.e. 2010/2016, giving a return of £13.33%
· In 2010 approx £53.029m was brought in early from later years I.e. 2011/2016, giving a return of between 17.032% and 19.003%.
· So for 2011 the picture regarding bringing in cash from later years looks like this – Cash due back 2012/2016 is £113.704m and at 13.33% = £15.157m, the JLs have already brought back £29.093m (43.86%) by July, thus surpassing the percentage of that achieved in 2009 and 2010. The JLs have brought back in overall £107.916m in 7 months Inc £29.093m from later years. So the £114.735m (84.95%) appears to be well within reach this year. Note I’m saying the £114.735m appears well within reach this year – but that includes the cash in early from later years and all interest received in this year. I do not think we will get £114.735m back from the £135.062m due back from loans in 2011 alone.

  1. In respect of the 10 large original loans and the 10 ‘new set’ large loans we can see the following, based on the JLs info in the March figures update and further info since then;

· We now know the 2nd set of 10 large loans were split; 3(2011), 4 (2012), 2 (2013) and 1 (2014).
· Still need to be careful re returns from the 2nd and now the 3rd set of ‘rolling’ 10 large loans, as defaulting is still a concern. Although a large loan from 2012 worth £12.351m was repaid in July from the current 10 largest loans. Hopefully the Progress Report will give us more info on the latest 10 largest loans, including overall value and the years they are due for repayment.
· The capital due on this 2nd list was £113m (66% of loan book)
· The capital due on the original 10 last July was £189.5m (61% of loan book)
· The capital due on the original 10 at October 2008 was £216m (52% of loan book)
· 66% is high and appears worrying, but each loan was on average worth £11.3m as against the average £18.95m last July and the £21.6m in October 2008.

·With the return of one large loan in April, followed by one in July the total value of the latest 10 largest loans could now be between £90 - £100m (but only guessing, just don’t know). So in % terms against the outstanding £140.8m still probably around the 64% - 69% for the latest 10 large loans.
My thoughts on the July figures and updates on estimates are all contained in the attachment with this cover note – again to try and retain the format of the layout.

My Table 11 has been updated to allow for the July figures. I now get 96.034p/£ return overall. I think the £15m for unresolved has again been lowered slightly due to payments in May, June & July (JLs informed me in April, to one of my questions, that all outstanding back money was up to date at that point). I have also revamped my Table 11 to take full account of all cash received so far up to 31.7.2011 and down dated what is still due in 2011 (based on 84.95%) on receipts so far. Also revamped down what is still due in value from following years based on excellent early recoveries so far this year. Also revamped interest downward that is still due in 2011 based on receipts so far in 2011. And have also increased recoveries from E&Y (KSFUK) to their new increased estimated lower 78%. (£7.383m to us).

We will get two returns this year, already had one of 12.5p (8.4.2011) giving an overall total of 73.60% and can now expect another of between 6-8p/£ that will give us, I think, at least 80% by Dec 2011. Plus the possibility of another 5p/£ in June 2012 and 5p/£ in Dec 2012 = 10p/£ giving a grand total by Dec 2012 of at least 90%. As said previously I’m currently staying with the 84.95% all the way through and also the 78% (from E&Y - KSFUK) all the way through until any changes are notified by the JLs or E&Y.

  1. Also said previously I will still ignore any return from ‘Parental Guarantee’ until JLs give definite figures on what to expect on any return from Iceland or give a definitive value on agreed claim plus data on the value of interest due. I might then update my Tables to include some form of return and timespan involved. Until then we should ignore it totally. I do think we have a better chance of a return, at present, through E&Y (KSFUK) claim against Kaupthing hf. Their claim has been accepted although the value has still to be agreed. But it could see returns for their unsecured creditors (includes us) move up nearer what our JLs hope to recover from the KSFIOM loan book.

It would therefore appear to leave any other litigation as the outstanding way of getting cash back. Perhaps the JLs 9.7.2011 Progress Report, due out anytime now will comment further on this.

So, we should feel buoyant at the July figures. Lets see what updates we get in the JLs July Progress Report (hope that is buoyant also) and see how things go over the next three to four months. We are on target for a good year partially thanks to the repayments of some of the larger loans from 2011 & later years and hopefully both our JLs and E&Y (KSFUK) meet their lower estimated returns at least. – but who knows.

As always,

Take Care, and God Bless,

Gordon 45

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@ thoughts on July figures

  • IceCrusher
  • 14/10/08 25/10/11
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  • Sun, 14/08/2011 - 21:12

I don’t disagree with what Gordon says above, but would just like to emphasise/clarify a couple of points. At the end of 2010, the JLs predicted that £135.1m was due for repayment during 2011 with a further £113.1m due from 2012 and beyond – a total of £248.8m was outstanding as of 1st Jan 2011.

Of the £135.1m due this year, £77.8m (57.6%) has so far been repaid in the last seven months, which together with the additional £30.1m having been repaid early from 2012-2016, brings the combined total repaid by July 2011 to £107.918m. The sum of £30.1m repaid early this year forms part of the overall total of £75.2m repaid ahead of time since the beginning of the liquidation.

£57.24m remains to be repaid over the next five months (42.4%) but over the course of the liquidation, the JLs are predicting a return of just 84.95% of the initial Loan Book value: £416m x 84.95% = £353.4 If their worse case were to come true it would represent a capital loss of £62.6m. Thus far, we have not accounted for an 84.95% loss on the return; in fact it currently stands at just minus 0.34%. If we were to assume that the £273.752m already repaid represented 84.95% of what should have been returned thus far, then 100% would be £322.521m and £48.499m (£322,521 minus £273.752) would have been forfeited already (ignoring any positive forex contribution). Debts repaid early amount to an overall £75.2m – clearly exceeding the £48.5m stated above and effectively obscuring any bad debt. We cannot know if deferred debts will finally be repaid in the future or will ultimately be written-off; all we can do is be aware that rolled-over debt may look as though its ‘still in the game’ but may just be keeping up the numbers until the very end.

I expect a higher roll-over this year than in 2009 and 2010, but hope that it doesn’t exceed £30m. This is not to say that such write-offs will definitely occur, but at this juncture the JLs must have a good idea of the loan situation given that there are now only 62 mortgagors left in play; that being so, why have they not upped their lower limit to better than 84.95%? Sticking with this number after £275.75m (66.3% gross) has already been repaid for an apparent aggregated net loss of £1.4m (-0.34%) appears that they still anticipate the possibility of £62.6m being written-off. I think Gordon 45 is prudent to consider 90% as an appropriate guess of the final return, but 84.95% from the JLs does seem remarkably conservative.

PS I wrote the above prior to the JLs Creditors Report for July 2011 being issued and before Gordon calculated the new LOWER figure given by the JLs of 84.83% This seems to confirm that even at this juncture, the JLs have their concerns about the final sum of monies that may come back to the Loan Book. G45 says this change in the lower figure is minimal (and I’m bound to agree) £50k is hardly going to make a shred’s worth of difference, but it is the fact that the JLs have bothered to adjust downwards that concerns me. Contemplating a worst-case loss of £63m at this stage is a bit worrisome...


Thanks for that.

  • peter and louise
  • 18/10/08 01/09/09
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  • Fri, 12/08/2011 - 07:24

Thanks Gordon, as always, much appreciated. (could you explain please what "22% excess based on book values" actually means? Our loan book apparently has a "7% excess based on book values" but I don't understand what an 'excess value' is, where it comes from, nor the significance/connection between the two book values. Thanks a lot.

To Peter & Louise

  • Gordon 45
  • 22/10/08 n/a (free)
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  • Mon, 15/08/2011 - 20:52

Hi There Folks,

  1. Re our KSFIOM Bank. The 7% was the original excess the bank had based on the book valuation at the time of the collapse in Oct 2008 and what was actually owed to creditors at the time of collapse.

The Prov Liquidator issued a balance statement in early Feb 2009 that showed the following:

Book value of assets said

Total Assets £982.1m,

Liabilities £906.2m

Net excess Assets, based on Boook value was £76.9m. The actual difference was 75.9m. If you take the 982.1m as a % of 906.2m you get an excess of 8.37%.. That is where the 7 or 8% comes from.

  1. IOM Today printed on 16.12.2008 an article on the KSFUK situation. They said based on the Bank's 'Statement of Affairs' (reflecting Book values) that there was an excess of £1,368m over what creditors were due. And quoted the total book value at £8,128m. then said secured creditors due £1,080m and unsecured creditors due £5262m. If you add what was owed to both groups of creditors you get a total of £6,342m. If you then add on the £1,368m quoted as excess by the IOMToday you get £7,710m. Near enough the £8,128m. I then took the lower figure of £7,710m and worked out the excess in relation to the the £6,342 and you get 21.57%, which I took as 22%.

So that is how I came by the excess in book values for KSFIOM & KSFUK. I made the connection between these two excess values; the 7% and the 22%. And I just saw it as a very rough comparison to say we might see the returns from KSFUK come up nearer our own JLs thoughts on returns from the KSFIOM Bank.

So nothing scientific Peter & Louise, only me atempting to put forward perhaps why we might see the returns from KSFUK go higher than shown so far.

The connection was my own way and I plead guilty, because it may or may not work out. But if and when E&Y (KSFUK) agree the amount due with the Kaupthing hf 'winding up Committee' and it could be substabtial (E&Y say they are due a net £700m) and they have priority as far as I know. Then the returns based on unsecured loans of around £4.9b would mean an increase to us of around 14%. And if that was based on the £246.1m it would mean another £34.45m to us and that would be another 3.8058p/£ - substantial, but all hypothesis at present, but it would bring the lower returns from KSFUK up to around 82p/£. And more in line with our own 84.83% But pure conjecture on my part and it may never come to pass.

Hope the above helps you to understand where I was coming from,


Gordon 45

It does Gordon

  • peter and louise
  • 18/10/08 01/09/09
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  • Tue, 16/08/2011 - 09:37

And I thank you Gordon for all of that. Thank you for taking the time to explain. Your clear, yet simple explanation is just what I needed! These days, I seem to leap-frog through the year, landing firstly when the monthly figures come in and then again when the 6 monthly progress report comes in. (sad really) The figures though mean a lot more now than they ever did. Thank goodness you (and Ice too, of course) are in our team and batting for us. Kind regards, P&L

Thoughts on JLs July report

  • Gordon 45
  • 22/10/08 n/a (free)
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  • Thu, 11/08/2011 - 20:46

Sorry Folks back again.

% figure on early returns of £29.093m is 25.586% not 43.86% as I stated.

Gordon 45