Some thoughts on latest JLs statement of 15.2.2010

Some thoughts on JLs update issued on 15.2.2010 (for data up to 31.1.2010)

Hi Folks,

Back again with some thoughts on returns etc, based on the latest update from the JLs on 15.2.2010. On information up to 31.1.2010 for the loan book and Cash at Bank including foreign currency holdings.

Although the info is very limited regarding the entire situation, the monthly updates (hopefully they continue) are helpful and within that info they do give latest figures of what is still due back, by year, and what is due back by currency.

I have already said in a reply to ‘lostinspace’ & ‘grapow’ that I would be doing an update on these figures as I find them interesting but also worrying. There appear to be one or two points that are important to us and affect us all.

1.Maturity Ladder

a. If you go to the Maturity Ladder Table of the Loan book as at 31.1.2010 it also gives figures for 31.12.2009 & 30.11.2009. I then just add back on the previous updates for similar data dated – 9.9.2009, 19.8.2009 and 22.7.2009, to allow me to get back and compare with previous figures.
b. You will see from this that cash still owing has come down by almost £4.5m between 31.12.2009 and 31.1.2010. Looks good if you take an even spread of loan book returns over 2010, as 12 x £4.5 = £54m, and we had almost £51m due at end of December 2009. But most of that £4.5m came back early from years 2011-2016 (£3.5m), with £2.5m coming from 2012. Only £1m came from 2010, therefore only 1/50th came back in the 1st month, albeit the JL whom I spoke to in mid Jan said there was no even distribution of returns from the loan book as it was very lumpy.
c. Worth mentioning here also, that according to my calcs £23.632m was put back from 2009 to 2010 by the JLs. When I asked for confirmation on this I was told ‘it appears logical’. To be totally fair, by my calcs also, the JLs brought £48.018m back in on 2009 from years 2010-2016 – which is excellent as it shows they are working hard to get loan clients to move to other banks to obtain new loans and therefore pay back what they owe to KSFIOM Bank Liquidators. They also appear to have managed to move £12m of loans due in 2016 forward to 2013, which again is excellent. The problem I have is we have probably managed to get money back from clients who saw the benefits of moving and whom could get other options. But as time goes by I think less of these loan clients may be able to make that kind of move. If you look at the various movements of loans due by year since the July 2009 figures the following can be seen:
· 2009 = -£23.6m pushed back from loans due to 2010
· 2010 = +£6m prior to Jan 2010
· 2011 = + £25m prior to Jan 2010
· 2012 = + £2m prior to
· 2013 = + £13m prior to Dec2009 when a further £12m added from 2016
· 2014 = + £1m prior to Jan 2010
· 2015 = Zero due back from 2015
· 2016 = Nothing back prior to Jan 2010, but virtually all £12m moved forward in Dec 2009 to 2013.

We now see £2.5m back in Jan 2010 from 2012 so perhaps the JLs honed in on 2011 last year but will now concentrate on 2012 this year. I feel we hopefully will see more returns coming back earlier for later years this year, but may then see a tailing off in that trend and see even more being pushed back to later years. Perhaps the saving grace is that 2015 at present is Zero but it may take a backlog from earlier years as time goes by. But because it is starting from Zero it may take up slack and come back on track then. It would be nice to know the details of agreements made with clients who the JLs agreed to move back from 2009 to 2010. Is it a one-year move only, or is there more to come. It will be interesting to see how much the loans due in 2010 come down over the next 6/7 months?

1. Overall Summary – Loan Book

a. Interesting to note in this summary that the 31.12.2009 cash back has moved up by £3.5m from Dec 2009 as against the Maturity Ladder new totals of £4.5m. A £1m difference somewhere.
b. Set-off still £10.9m
c. Write –offs’ still £2.6m. So you assume the 4 loans causing concern on update of 5.11.2009 COI minutes are still in the same category. I think you have to assume that the balances due on these loans were moved back from 2009 to 2010.
d. FX Fluctuation gains down from a peak of £18.5m on 31.10.2009 to £14.9m on 30.11.2009, then £15.9m on 31.12.2009 and now sits at £14.9m as at 31.1.2010.
e. Loans by currency - Other than GBP there is two slightly downward movements in USDs & Euros (perhaps due to returns or currency movements of £451k). No movements in other currency totals.

1. Summary of Cash at Bank on 31.1.2010

a. There is an increase of £3,446,583.19 in the RBS accounts from that of 31.12.2009 and a very slight increase in cash held in other Banks of £23,019.15. Although the JLs have moved just over half of that held in the ‘Wachovia Bank’ £5m to ‘Svenska Handelsanken’ for what ever reason between 31.12.2009 and 31.1.2010.
b. The Dividend accounts held in HSBC and RBSI have gone down by £504.5k less the £23.0k = net £481.5k.
c. Assume this £481.5k was used for bills/costs etc or for some late dividend payments, just do not know.
d. The most concerning aspect in this sheet is the total of £133,388,263.95 as against the 31.12.2009 figure of £130,420,691.08 = a difference of + £2,967,572.87. Sounds good until you say the loan book cash due back came down by £4.5m in the same time band, and even allowing for the £0.5m out due to costs etc where did the other £1.054m go to? That concerns me as it has gone somewhere or has become part of something else? I would like to know where?
So although this update has been helpful, as have others it continues to raise questions, as we do not get all the information that we need to make a complete picture. That is my view anyway.

I wanted to share my views with you all once again, and understand some or many of you may not agree with me and that is totally understandable. But we know that the sources of definite returns to us are now three: KSFIOM loan book, KSFIOM Loan Book interest and KSFUK unsecured loans due back to KSFIOM (currently based on 60% of £229m). So every bit of cash spent on litigation, ‘Parental Guarantee’ and Bank staff & Liquidators costs and expenses becomes more important, and we are not getting enough clear info on that side. I have said to my mind we may have spent £8m on costs between Oct 2008 and Sept 2009 (1year) and the JLs have conservatively allowed for £15m overall. I have raised my thoughts in my calcs to £21.3m (may still be too low). So it would be nice to hear from the JLs on costs so far, how many of them have been paid and if they have thoughts of raising their estimate on final costs.

Hope the above provokes some thoughts and answers from the JLs and our 4 Reps on the COI and that we or I might get some replies. As said before I have had some contact with one of the JLs and it has been most helpful to me, but far short of what I wished. I have personally had no feedback from any of our 4 reps and I find that very disappointing, as they must have some room for manoeuvre.

If any of you hold sway with any of these people and you agree with what I am saying please do all you can to help get answers to the above and my questions sent in January.

Once again take care,

And God bless to all,

Gordon 45