I wish you and all your fellow shareholders all the very best.
I am intrigued by MFX - I wish I had more time to review last year's financials, especially the assets.
I shall be watching as you make your fortune.
P.S. and those short term loans do not qualify as being part of the ""regulatory capital"". Smiley face here!
Furthermore should 2018 show NO growth the pre tax may well be 3.8m
The first half last year was 900k and 1.9 in the second half.
So just a flat year gets me to the above year.
However I think that there is another 20% growth so I am going for 2 million in the first half.
TBH the 25p target price could arrive sooner than I thought.
Some big trades yesterday and the shares are so hard to buy
Just looked at the 5yr Monthly chart on iii focusing on early 2014 after 14p broke it quickly moved within a 15-17 price range with quite a bit of congestion around 16p.
Would agree with your earlier comments that the company has moved into a better position now to then. I last sold some at 18p in Feb 14 and will be keen to watch if we ever see those highs taken out again.
So unable to answer.
Firstly my quote this must be worth 25p ?
Clearly this stimulated some comments.
My 25 p was based on
10x eps which may well be circa 2.5p this year possibly higher.
The company has a strong asset base and is the no 1 in the IOM
Someone paid a large premium for a stake the price has since climbed back to that level.
Buying the shares is hard as they are tightly held but in my opinion they are still undervalued as the market cap was lower than NAV
That leaves thebusiness valued at zero.
Over the last few years the company has turned a corner and as can be seen today the price is now moving.
Yes the BOD need to share these to all holders and not just the directors.
I did put a ? After my statement but I do feel we are heading there.
Been in these years and its time we got a reward.
As ever its my view and I am a declared holder
I'd agree with Dandigirl here, too many related party transactions - which divert gains over to the key players while leaving the risks disproportionately with the shareholders.
- And why would they want to take over the company when they can collect the gain without having to take on the downside risk? - until those profits are safely in the bag and they are ready to collect (at 8p a share!)
- Reminds me too much of one of the 'Chinese' companies!
Don't follow this all the time but I think the bank is now offering a greater return on savings than a short time ago? 2.75 v 1.75 if I remember correctly. If it already had excess liquidity, re Annual report, then they must really be ramping up amounts going into the new business.
I can understand the plaything and jobs for the boys thing but they have had years to take it over if that was the way they felt. There are really only two loans that are to the main shareholders and they have been on the books for a long time, from when they injected capital into the bank and saved it.
The fact that the group gives the bank subordinated loans will be one, a way of increasing capital and two a method to extract profit back up to the group. My understanding is that banks pay 10pct tax in IOM the group probably pays none.
The Group made 2.5m profit so its not doing that badly, the problem is and has been its growing faster than the internal rate of capital increase. Its needs external capital to shift gears, the latest purchase in the UK and the terms of that purchase make the capital raise a priority.
Its not going to be a whizz bang share price rise but steady gains over the next 5 years will be OK by me.
Interesting - and MFX is an intriguing set up. With nearly 70% held by 5 names and given some of the loans to and from, it is hard for me to escape the feeling that it is a bit of a plaything for some.
Its tough making a profit on a capital of only £17m. Servicing these loans, remuneration packages at the top and the costs of regulation and compliance make it more difficult. Who pays for all this, some higher risk assets on the other side, I suggest.
I would also suggest that before allowing another capital raising, their regulator will want those convertibles addressed. What a pity for the holders if they are required to convert as a pre-condition! (Smiley face here). Mellon and Co can hand on heart say conversion was a regulatory stipulation. Of course, conversion increases the 70% figure..
More than likely, MFX is a nightmare for both regulators and auditors. NB the Key Audit Matters in the annual report.
I shall watch with interest as to the actions the board takes in the coming weeks. But heres wishing you and Castleford Tiger good luck with your holdings.
The loans in question (only the two) now convert on the whim of the bank, though I agree there is a good chance the non exec turkeys are not going to vote for Christmas.
The warrants converted at 6p this year (nice six figure earner for the Doc) and the price did not flicker. Would I have liked the convertable loans to disappear too, Yes, as they only add to this discussion about dilution. Which we seem to be having again :-)
I have close to 1m shares here and although progress is (seems to be) snail like I have a 40 pct gain and have only the worries of only 40pct shares in private hands. Risks are being taken to promote growth and you cannot have one without the other.
Mike. Thanks. Like you I am trying to help out. It is plain wrong for it to be asserted that the sp should be 25p without any substantiation whatsoever. I do not have a share holding nor do I intend to. There are just too many things to try to understand.
The treatment of debt - all debt - for regulatory capital purposes has changed in recent times. It has to meet certain criteria - too long to post here - and these loans don't and, again, if there is to be off-set asset against liability that too has to meet strict criteria if capital allocation is to be avoided.
I think that you are reading the wording in a way that some would like it to be read.
However, if we could see a recent ICAAP that should settle it.
Just to add though it is all very well for the Chairman to indicate that additional equity is required on a non-dilutive basis against the background of a bunch of loans convertible at prices way below existing. I look forward to MFX raising additional capital on this basis. Should be interesting.
The paragraph starts and end about Capital, its logical to assume the bit in the middle is about captital, even for those who have not followed the company history.
From 2015 Annual report
The two outstanding Convertible Loan Notes ("Notes") that were otherwise due for maturity on 26 February 2015 (see note 23) have been extended by five years. The Notes together total £1.71 million, of which Jim Mellon, the Group's Executive Chairman, holds £1.25 million and Rock Holdings Limited (subsequently assigned to Southern Rock Insurance Limited), a company connected with John Banks, a non-executive Director of the Group, holds £0.46 million.
As a result, and having considered other methods of raising capital, the independent Directors have resolved, following negotiations with the lenders, to extend the two Notes for a further five years to 26 February 2020 at a reduced interest rate of 6.5%, down from the previous 9.0%. All other terms remain as those announced on 2 March 2010
Its part of the Tier 2 capital of the bank, there are more references but if you don't think so thats fine, just trying to help out.
Maintaining and increasing our equity is fundamental in ensuring future growth to provide additional profitability. During the course of the year, I and my interests agreed to extend certain loans, at terms negotiated on an arms-length basis, that became due for repayment. As a result, both the coupon and conversion price for these loans have been changed in line with the market to 5% and 7.5 pence respectively (previously 7% and 4 pence). The Group will, however, require further regulatory capital to support the Banks planned expansion and the executive is currently considering a number of ways in which we can expand this capital, but with the proviso that this will be only on a non-dilutive basis.
Not all the loans are used as part of capital requirement, many appear to be matched against a particular block / customer. Borrow at 5 lend at 7 etc.
The two convertable loans to Banks / Mellon can be classed as Tier 2 capital and can only represent up to 25pct of capital requirement (Basel III), so these are for regulatory capital purposes. Its stated by the company in their Annual Report.
They are obviously looking at issuing a convertable bank bond or equivalent to increase the capital base to cover a surge of growth greater than present capital base can support.
I also suggest that you set out the basis on which you consider these shares are worth 25p? On reading past posts, you claim to own 2m shares? And you want 30p per share? Hmm! Are you trying to get some more mugs to join you on the shareholder register, are you?
CT: No need. Suggest you take a little time to understand what constitutes regulatory capital and read the annual report where you will observe that these loans do not constitute part of the equity and are above the line with all the other liabilities.
Hello CT, the loans do help expansion but I am not sure you are correct in stating that they provide regulatory capital. It is my understanding that those days have gone for loans such as those provided in this case. All are short term in nature.
It caught my eye that their interest rates are 5% and more with conversion rights of 7.5p and 9.0p. Incidentally capital is roughly £17m. Loan notes total £9m, over 50%!
One can only imagine the rates of interest, etc. charged to their borrowers in order to be able to pay for these loans.
The Chairman indicates that additional capital is to be sought on a non- dilutive basis! Hmm.
Just tried to deal to see what the buy price was. Could buy only a small amount online at 12.45p. Anything much bigger would require a phone call which would suggest high illiquidity. Let us see where MFX goes in the coming days.
FOR IMMEDIATE RELEASE 7.00am 28 March 2018
Manx Financial Group PLC (the 'Group')
Acquisition of the entire issued share capital of Blue Star Business Solutions Limited
Manx Financial Group PLC announces that Bradburn Limited, its wholly owned subsidiary, has entered into a binding agreement to acquire the entire issued share capital of Blue Star Business Solutions Limited ("BBSL") subject only to Financial Conduct Authority ("FCA") approval of the proposed change of control. An application to the FCA has been submitted and completion is expected to occur within 30 days.
BBSL was formed in 2004 and is based in Hampshire and regulated by the FCA and holds Credit Broking Authorisations. The two co-founders of BBSL, Marcus Gregory and Mark Hayman, have developed a niche brokerage which focuses on delivering excellent customer service to small and medium sized businesses in the UK that require funding for IT equipment amongst other assets. For its financial year to the end of March 2018, BBSL will fund in excess of GBP9 million of loan proposals and as at 31 March 2017 reported an unaudited profit of GBP101,252 after tax. Post-acquisition the Group will invest in BBSL to allow it to grow profitably by gaining market share and through its banking subsidiary, Conister Bank Limited, write the majority of its funding requests.
The board of directors of BBSL will be strengthened by the appointment of Douglas Grant, the Group's Finance Director, and Denham Eke, the Group's Chief Executive Officer.
The main terms of the transaction are as follows:
-- An initial payment of GBP1,500,000 in cash at completion;
-- 50% of the enlarged earnings before interest, tax, depreciation and amortisation ("EBITDA") in BBSL for 3 years post completion arising from ongoing trading of the BBSL following completion of the acquisition; together with
-- 50% of the incremental net profit that the Bank realises as a result of it taking up BBSL loan proposals post completion until the third anniversary of the transaction. This will be paid annually with a final payment in year 4 for the unrealised discounted tail of the portion;
-- The maximum aggregate consideration payable by Bradburn (including earn-out consideration) is capped at GBP4,000,000.
* net profit is defined as the amount of income earned (less costs) realised by the Bank arising from new lending which has been originated by BBSL
This acquisition is part of the Group's strategy to increase its distribution in the UK broker market.
Douglas Grant, Group Finance Director, commented: "The asset backed finance market in the UK recorded its seventh year of successive growth last year, led by the broker finance market which grew 14% year on year. This is a market Conister Bank is active within and indeed wrote more than GBP16 million of business last year. This acquisition will bolster our presence in this attractive market sector and act as a catalyst for future growth. Both Marcus and Mark have great experience in the UK broker market and are keen to grow the business with our assistance and I am equally keen to work with them to achieve this goal."
Admittedly it was a very quick looksee following some weekend comment but I noticed lots of debt from connected parties at nice rates of interest for the lender and convertible at prices way below todays share price. Couldnt be bothered to work out the effects of dilution but I saw enough not to want to bother. You may? Good luck.
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