Some thoughts on the JLs Sept figures

  • Gordon 45
  • 22/10/08 n/a (free)
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Posted: Fri, 19/10/2012 - 13:55

Hi Folks,

Now posting my thoughts on the Sept figures after the minimal movements shown within them. and it will come as no surprise to see my eventual estimated outcome from August of 99.63p/£ stays exactly the same.

Cover Note to go with thoughts on September 2012 Figures

January to September figures saw a return of £28.529m. There was a net movement in September of £0.351m. The JLs have said the split this year is heavily weighted towards December. Actual returns so far are 55.537%. And I suppose based on the JLs weighting factor towards loans coming back in December, that we are still doing well and can probably expect another lean month in October – need to wait and see. All my data is based on GBP, my apologies to all my DAG Colleagues who invested in other currencies.

I will do a short separate summary of my thoughts on the COI minutes dated 13.7.2012 along with the monthly data.

As said before, the ongoing situation within the Euro Zone including Spain could have a further detrimental effect on our eventual dividends. Spanish Property has taken another large hit, and around 50% of our property loans were from overseas clients as at the JLs July 2012 Progress Report update. Based on the split by currency – shown later in this cover note, almost 70% of loans still due come from USD, Euros and Swiss Francs. And within that 70%, Euros account for 65.289%. In essence loans in Euros account for circa 45.542% of all loans outstanding. That suggests to me anyway, that overseas properties are mainly in the Euro Zone, and possibly in Spain. I did a recalc on my thoughts in April, on expected returns overall from the Liquidation based on the updated Euro Zone situation, and now update that every month.

Still getting 99.63% as a lower estimate in returns by December 2014; based on 90.79% by the JLs from our loan book plus my own thoughts on returns during 2012/2014, and an 82.5% return on unsecured creditors loans from E&Y (KSFUK). All allowed for in my figures and Table 12, 10th Draft

We are still waiting to hear, about the final appeal by Elle McPherson and date of the appeal by the Privy Council.

  1. Figures for cash ‘pulled in’ early from 2013/2014 is £5.006m (18.859%), based on a figure of £26.544m.

In respect of the remaining 10 large loans, I’m still guessing a figure of around £46m (84.258%) of the remaining £54.594m still due back from the loan book, at end of September 2012. Based on answers to questions asked of the JLs it became apparent that the £27.82m, (based on the JLs Progress Report of 9.7.12) now covers ‘two loan arrangements’ both with more than one loan. And one of these two arrangements contains the balance of £6.609m (the one loan still due in 2014). The loans within these ‘two loan arrangements’ also cover different repayment dates, different currencies and different repayment profiles. So in my view, it is not about two very large loans within the 27 still to come, but, the fact that this information lessens the chance of defaults occurring within the £27.82m that originally appeared to cover the two largest loans. So repayment of these ‘two loan arrangements’ obviously covers from 2012-2014.

2a. My thoughts on the September 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 12 (10th draft) has been updated to allow for September 2012 Data. I now get 99.63p/£ return overall. The figure due for unresolved claims is I think £11.300m at end of September and unclaimed still at £1.5m = £12.800m. I have also revamped my Table 12 to take full account of all cash received so far up to 30.9.2012 and I have revamped 2012 to 2014 to show the new totals due back from loans.

2b. I have again taken note of estimated interest the JLs expect to receive of between £0.5m and £0.7m (Progress Report 9.7.2012) over the balance of the Liquidation. I have allocated all of the higher estimate of £0.7m against July/Dec 2012. So based on a return of £0.2m interest in July and £0.1m in August and £0.0m in September. There is still £0.4m to come.

E&Y (KSFUK) have now indicated that they will pay a 9th dividend by 17.12.2012 to our JLs. Hopefully it will be 5p/£ (£12.305m) and as said previously I then thought we might get another dividend from our JLs by Dec12/Feb13 of another 5p/£ to us. Based on the JLs saying that a large part of the remaining loans due this year are not due until December I think it is prudent to say that we will not probably receive another dividend until between February/June 2013 now. That would bring us up to 96%. Also assuming the Euro Zone situation and the impact in Spain, including property, does not have any more dramatic effect. I also think now, that E&Y (KSFUK) are paying out in December, that they could raise their lower estimate of 82.5% based on £246.1m up towards their higher estimate of 86%. Perhaps their ‘6 monthly progress report’ due date of 7.10.2012 (probably out any day now) will give us some info on this.

If we get a dividend around February/June 2013 of 5p/£, I think based on my spreadsheet we could then see another final payout by December 2014 of a further 3.63p/£, which would bring our returns up to 99.63%.

So, having said the above, my thoughts still allow no gains from ‘Parental Guarantee’, (perhaps even slightly worse looking now, based on COI Minutes of 13.7.2012- Point 4). But as said there has been slight gains from E&Y’s claim against Kaupthing hf (based on E&Y website report on 21.6.2012. I think there could be a further 0.2163p/£ from E&Y (KSFUK) if the £185m unagreed figure with the WuC of Kaupthing hf is agreed at the 60%, as was the £510m (£302m agreed). Still see nothing from litigation. So I see no point in including hoped for cash back at this point. Must always take note of the ongoing and Euro Zone and World situations.

  1. As said, I will ignore any return from ‘Parental Guarantee’ until JLs give definite figures on what to expect on any return from Iceland. If we get a definitive answer I will then update my Tables to include some form of return and timespan involved. Until then we should ignore it totally.

  2. Another major point worth mentioning again, is, the split of loans by currency still due at this time. Loans due back in GBP are around 30% of all loans due back based on currency. GBP £16.586m, the approximate amount in foreign currencies is - USD in equiv GBP equal £11.025m, Euros in equiv GBP is £24.974m and Swiss Francs £2.252m. So approx 70% in foreign currencies. And in total loans, Euros account for approx 45.542%.

  3. My latest figure at end of September of cash held back to cover the unresolved/unclaimed and balance of cash for liquidation costs is £12.800m + £1.784m = £ 14.584m. The JLs cash figure in hand at end of September is £25.332m. I had asked the JLs again if it is the ‘Lighthouse/Elle McPherson situation that is holding up further movement in the unresolved claims. No real answer to my question.

  4. The JLs have said last month that expenses should be ‘significantly lower’ now, as last of Bank staff gone, moved out of premises and the smaller number of loans to manage. So hopefully the £1.784m allowed for will cover the balance of costs – just need to wait and see.

So, having said all of the above, we have 91% back as at 15.6.2012. Hopefully with the moves made by the European Central Bank (ECB) regarding bonds issued to Italy and Spain with lower interest rates, our JLs and E&Y can withstand the Euro Zone and World situations and still deliver on their 90.79% from the loan book plus my own thoughts (that are still slightly higher), and the 82.5% of E&Y lower estimations. Let’s see how things continue to ‘pan out’ over the balance of 2012. As said above, could still be on target to get 99.63p/£ back, according to my updated calculations – but who knows.

As always,

Take Care, and God Bless,

Gordon 45

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  • cottesmore
  • 21/10/08 16/07/12
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  • Sun, 28/10/2012 - 19:06

Can anyone enlighten this mere mortal as to why our administration costs are so high now? Surely we dont need two liquidators? Surely now, our affairs are not complicated as in the early days? We are now just running a loan book out and not much in the way of 'man' hours is required! This is not shown in the high costs month on month for less work.Who the hell challenges these costs? This is just a cash cow now for Simpson and Co for the Xmas bonus me thinks!!!!

To Cottesmore

  • Gordon 45
  • 22/10/08 n/a (free)
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  • Sun, 28/10/2012 - 21:20

Hi There Cottesmore,

Yes you are correct in asking why our JLs and PwC are taking far more pro rata than E&Y (KSFUK) are taking.

The COI minutes mention that an independent assessor has been brought in to look at some of the expenses raised by our JLs. Presumably that means the COI have raised questions about PwC's costs.

The ongoing costs per month have come down as Bank staff have gone, and since July it would appear that PwC staff have taken on fully the roles covered previously by Bank staff. Costs appeared to come down to around £100k per month. but last month when I was expecting another fall as Bank staff had all gone we saw a combined expenses/ 'back payments' amount for £0.4m. The JLs have on occasion shown these costs separately and on other occasions 'lumped' them together and unless they start showing them again as separate items within the monthly updates we will not be able to get accurate figures until the next '6 monthly' update in January 2013. I have asked the JLs to go back to showing the two items separately in the monthly updates - no reply to me so far - just have to wait until the Oct figures come out.

Not trying to defend the JLs in any way, but I do not know if you can take all these things separately. If we maintain a return from our loan book of say around 90% on £416m in comparison to the the 82.5% lower estimate from E&Y on the £246.1m it means a substantial difference in returns. I.e £374.4m as against the £203.0m. Or to keep it totally pro rata if you take a return of 82.5% against 90% on £416m it would give you £343.2m against £374.4m or if you take 82.5% against 90% on £246.1m you get £203.0m against £221.49m. So although our JLs costs to Sept total around £21.416m approx, against E&Y's £51m up to April 2012 I think you would have to also take into account returns achieved on our behalf. It would also be fair to say, I think, that economies of scale will come into effect on a Bank with book resources of around £7bn as against ours of around £1bn, when it comes to costs.

That is why our Reps on the COI have a part to play including asking questions on ongoing costs - and it would appear they are doing that. Having said the above I have also stated that I do not think the approx balance of £1.784m from the amount of £23.3m that our JLs estimate for costs, will now cover the full Liquidation. and I have also said that I am thinking of raising my estimated costs back up to £25m where I had it before.

But must also say we have 91% back, I think we will have sufficient for another 2p/£ once we get our approx 3p/£ back from E&Y (£7.383m) on 31.10.2012. That means we have cash available to take us up to 93p/£ with certainly more to come. And unless something happens to affect our JLs and E&Y's lower estimated forecasts we should see a return of around 97-99%. And as I have said for months now even if we only recover 50% of the remaining balance due from our KSFIOM loan book and the 82.5% lower estimate from E&Y, along with no other adverse changes we should still achieve around 98%. No one thought that was possible 4 years ago, or even 2 years ago. so although costs are important to us, what they come to is of far less significance than the returns from our loan books. £23.3m or £25m is substantial, but at a return of around 98%, even allowing for £23.3m-£25m in costs, I know what I prefer. Perhaps you differ, and rightly so if that is what you think.

Keep it all in perspective and by all means ask questions, as I keep doing also.

Take care,

Gordon 45

For Gordon

  • Anonymous
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  • Sun, 28/10/2012 - 15:26

Thanks so much for this summary Gordon. When should we expect the next dividened to come to us? Thanks.

To Ohdear

  • Gordon 45
  • 22/10/08 n/a (free)
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  • Sun, 28/10/2012 - 16:32

Hi Ohdear,

Thanks for your kind words.

Re our next dividend. Once we were informed by the JLs that the return of loans for 2012 was 'backloaded' to December I changed my thoughts on our next dividend now coming between Feb - June 2013 (hopefully 5% - although our JLs hope for a 3% return during 2013 based on their July Progress Report). I still think we can get 5% during 2013.

With the return from E&Y (KSFUK) to our JLs on 31.10.2012 being disappointingly below 5% - 'at least 3%' - that only adds weight to no dividend to us before Feb 2013 at earliest. Even then it would take a really good return from our Dec or Nov/Dec loans to achieve a 5% return. So at present , I think, still looking at between Feb - June 2013.

Not to say that our eventual estimated returns will be lower than anticipated, unless either the JLs or E&Y lower their expectations over the balance of the Liquidation and/or administration.

That is why we await the issue of the E&Y '6 monthly Progress Report as at 7.10.2012, that I hoped would be posted by now, but it should not be much longer. That might give us some clues as to what E&Y (KSFUK) expect might happen over the next 2 years. At least we could look at figures and make some assumptions/guesses. And we also expect our JLs October monthly data in the not to distant future - again it might be quite poor, in line with Sept. We will undoubtedly know more come Jan/Feb next year when we see the returns on the KSFIOM loan book for 2012.

Once we get the E&Y Report out I will be able to guess once more at what we might expect from them.

Hope the above helps you slightly.

Take care,

Gordon 45

Thanks Gordon, much

  • Anonymous
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  • Sun, 28/10/2012 - 18:22

Thanks Gordon, much appreciated for coming back so quickly.

The news is a bit more disappointing than say 6 months ago but as you say our eventual estimate is still on track, so that's something to hang on to for now.

Once again thanks for all your good work/comments.


thank you

  • sunny1
  • 16/10/08 30/05/14
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  • Sat, 27/10/2012 - 11:17

Thank you Gordon, good to hear from you. Sunny1

KSFUK not so good

  • sambururob
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  • Thu, 25/10/2012 - 15:21

Thanks Gordon for your analysis.
It would seem that KSFUK 3% payout on 31 October is not quite as good as we hoped.
Rob & Wendy

That's a fact,but

  • Jean-Charles Marlier
  • 10/10/08 31/05/09
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  • Thu, 25/10/2012 - 17:06

That's a fact,but hopefully,we should know the reasons why soon.


To Rob & Wendy

  • Gordon 45
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  • Thu, 25/10/2012 - 16:56

Hi There,

Not quite as good as we hoped for, and maybe signs of things to come - like a slowing up of cash back in, or perhaps as already said, just 'humps and bumps' due to uneven return of loans based on when the loans were given. But better 3% than no %.

Based on my figures the loss of 2% at this stage makes no difference as I allow for 5% back every 6 months from KSFUK. So, assuming that the return of 82.5% is still what E&Y expect, it only means an extension beyond June 2013. If we had received 5% back from E&Y on 31.10.2012, then I had already allowed for the balance of 4.5% next June. What it means now is I will now allow for 5% next June and then allow for the last 1.5% (based on a return of 82.5%) around Dec 2013.

And as I already allow for cash back from the KSFIOM loan book up until Dec 2014 it means the balane of 1.5% would still come in on time for our last payment by Dec 2014.

So no great concern just now as long as both Liquidators and Administrators of KSFIOM and KSFUK stick by their lower estimated returns from their loan books. Probs will occur if either of the two parties lowers their lower estimate at some point.

We need E&Y's '6 monthly' Progress Report to analyse data further. But as said in my previous post we have 91% and once we get the (at least) 3% from E&Y of £7.383m that means, once we allow for the 91% 'hold back' to cover unresolved/undisclosed + balance allowed to cover Liquidation costs ( although I think once more it might be insufficient to cover balance of these costs) we have at least another 2p/£ ready for JLs to give out, thus giving us 93%.

So, still looking good. Just need this progress report to allow further deeper analysis.

Thanks again for your kind words,

And take care,

Gordon 45

Gordon's Sept Report

  • Anonymous
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  • Wed, 24/10/2012 - 23:59

Thanks Gordon .

As always

  • Anonymous
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  • Tue, 23/10/2012 - 15:45

Thanks > are a star...

Latest Figures

  • Blades
  • 19/10/08 n/a (free)
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  • Tue, 23/10/2012 - 00:24

Thank you once again Gordon.
Your thoughts are so much appreciated.


  • mikepapa
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  • Mon, 22/10/2012 - 16:07

Dear Gordon,

As always, thanks for your thoughtful insight for us less able mortals!

Kind regards,