Hi Folks,
Thoughts on August 2013 figures from JLs + Return Estimates.
1. Returns for Jan/Aug were £9.529m net, plus a gain in FX of £2.1m for the same period. I have done a recalc on expected returns from the KSFIOM loan book based on each sector within that book after the July 2013 Progress Report – Property (London, Other UK and Overseas), Yachts, Aircraft, Unsecured and Portfolio. In doing this after the January 2013 Progress Report I got a return of 93.931% return on the loan book. I now get 93.804% after the July Progress Report, but I will stick with my end of December 2012 report figure of 93.769% - totally my own thoughts only. Now a slow haul in recoveries (unless big loans come in) over the next year perhaps eighteen months. The good news was the £6.1m loan ‘pushed back’ from 2013 into 2014 is due back by April 2014. So no worse than before. As always all my data is based on GBP, my apologies to all my DAG Colleagues who invested in other currencies.
· Still have the problems re the Euro Zone, Spain (property) and more so the loans on the 3 yachts still outstanding. Based on currency, 79.529% of loans due, come from USD, Euros and Swiss Francs. Within that 79.529%, Euros now account for 68.972% and they total circa 54.951% of all loans due.
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· FX Returns over January/Aug 2013 show a gain of £1.9m. The above is based on a starting figure of +£13.2m as at 31.12.2012.The figure for 31.12.2011 was +£15.0m.
· The JLs now estimate a return of 91.94% lower estimate and 92.59% higher estimate from the KSFIOM loan book over the full Liquidation. As at end of Aug 2013, the Capital Repaid within Overall Summary Table is 90.6%, but if you go by the Overall Total in the Summary Table we have an equivalent of 91.5% back, taking into account all factors. So returns are heading towards the JLs new lower estimate of 91.94%.
· If you take the JLs cash balance in July 2013 of £19.955m plus the Aug intake of £0.719m, less the loss in FX of £0.8m, less expenses of £0.075m, then add interest of £0.000m, less back payments of £0.025m, you get £19.774m, almost the same as the JLs Aug 2013 cash total of £19.857m. Note, JLs generally show expenses and ‘catch up’ distributions under one total. I now allocate 75% to expenses and 25% to Distributions each month unless totals are shown separately.
2. Other points that I think are worth noting;
· Still think that E&Y could move their lower estimate of 84.0% of £246.1m up towards their higher estimate of 86.5%. They retained these estimates in their Progress Report dated 7.4.2013. My thoughts are based on their 79% return so far and their hope of another dividend by the end of 2013. Although any increase depends on returns from their loan books and any returns from their claim against Kaupthing hf.
· The increase by the JLs in their estimates for the loan book do not affect the figures in my Table 13 as they are based on my thoughts of 93.769% returns. The ‘push backs’ by the JLs of c£27.5m from 2012 into 2013, and the c£6.1m ‘push back by the JLs in July, from 2013 into 2014 probably cover 4-5 loans/loan arrangements that are to some degree in Spanish Properties and the 3 Aircraft, I think the majority of these loans due are in Euros and some USD.
· The ‘set off’ situation is currently £15.2m. The date for Elle McPherson’s final appeal through the Privy Council is 9.10.2013, so hopefully the outcome will have an effect in lowering any outstanding unresolved claims situations. But to all intents’ set off’ is now negated.
· The JLs have raised their estimate for Liquidation costs by £1m up to £24.31m. I currently use a figure of £25m and will continue to use that figure for present. Hopefully my figure may come down slightly.
3. In conclusion, the JLs have done very well with recoveries, but had a very poor Aug, and I keep thinking higher ‘write offs’ must start soon.
We have received 95.8% by 28.6.2012.
· If we take the estimated return of 86.5% on the KSFUK unsecured loans we could perhaps see the following;
· Take the difference between;
· £246.1m x 86.5% = £212.876m
· £246.1m x 84.0% = £206.724m
· Difference of = £ 6.152m x 100 Divide by £905.0m = 0.6797p/£
· Taking into account the recovery from the KSFIOM loan book, the JLs now higher figure of 92.59%, my higher return estimate, then allowing for future ‘write – offs’ (my guesses), ‘set off’ etc and losses/gains through FX from the remainder due from the KSFIOM loan book (based on the data within the JLs July 13 Progress Report) I get an increased extra gain of 0.237p/£. But feel I should disregard this at present due to the ever-tightening situation re getting loans back. So, will still monitor this but disregard for present and show nil below.
Therefore after taking into account the JLs August 2013 figures, and all other information, plus my own thoughts, the estimated return could be 99.674p/£ + perhaps another 0.6797p/£ = 100.353/£ + another 0.000p/£ = 100.353p/£.
· The above means a dividend figure of 99.674p/£. If I use the higher JLs estimated return of 92.59% from the KSFIOM loan book. Based on 92.59% return on the KSFIOM loan book that would allow a ‘write off’ of £30.826m. If we then take off the current ‘write off’ total of £3.4m you then get a figure of £27.426m to cover any future ‘write offs’. If you take the £27.426m as a % of the remaining cash due back from the KSFIOM loan book of £35.431m it would allow a loss of 77.406% and the JLs would still get a return of 92.59% on the KSFIOM loan book.
· I think the 7 large loans have a figure of around £33.424m (94.335%) of the remaining £35.431m still due back from the loan book, at end of Aug 2013. I think these loans are made up of around 5 totalling approx £29.9m, 2 totalling around £3.524m = £33.424m approx and 8 totalling approx £2.007m. These loans/loan relationships’ also comprise different currencies, repayment dates and repayment profiles. These larger loans cover mainly the 3 Aircraft and Overseas Properties. They are probably mainly in Euros and some in USD. I think we should now take losses at 56% across the board on all remaining loans, in an effort to hopefully underplay rather than overplay returns. If we do that it would mean losses of £19.841m, based on loans still due of £35.431m. If you add current ‘write offs’ of £3.4m to the £19.841m you get £23.241m in losses, thus giving us a return on the loan book of 94.413%. I’ll stick with the 93.769% return figure I reached at end of Dec2012, based on my own thoughts at that time. Returns now depend on the £1m+ loans to see any further significant intake to the cashbook.
· Now have a recovery of 95.8%. JLs hope to pay out another 2% by June 2014. I think we could then see another payout at the end of the Liquidation of around a further 1.874p/£, which would bring returns up to 99.674%, based on the JLs data, my own thoughts and the 84.0% return from E&Y (KSFUK).
· If we only get the £12.305m (5%) from E&Y (KSFUK) to make the 84% and nothing else we would have 1.3596p/£, plus the free cash in our current cash balance, after allowing for balance of expenses and unresolved/unclaimed. Thus giving us a total of 2.066p/£ to add to the 95.8p/£ already returned to us. This would give us a return of 97.866p/£. And that is not another penny coming back from our loan book (currently £35.431m) – but who knows.
· We have 95.8%, even assuming a low return of 44% from all loans still due (£35.431m = £15.589m), plus the 5.0% still due from E&Y (KSFUK = £12.305m) to reach their 84.0% lower estimate, less £12.334m (95.8%) for unresolved/unclaimed, less £1.125m) for balance of Liquidation costs, I arrive at a return of 99.589p/£ - that’s my thoughts anyway.
But all the above figures assumes no change in the current FX Fluctuation gains of plus £15.1m, and no change in ‘set off’ and ‘write offs’ (other than what I am allowing for). I am continuing to ignore any returns from ‘Parental Guarantee’, not allowing for any more increase from E&Y (KSFUK) due to their Kaupthing hf claim and ignoring any Litigation until we hear something concrete on actual returns from the JLs and E&Y. And we are now almost at, the lower loan book returns estimate of 91.94%.
And as always, I must also stress that the above figures, assumptions and guesses, partly based on JLs figures with my interpretations, plus my guesses are mine only and could still be wrong, with regard to the final total we receive. And let’s not forget the ongoing Euro Zone situation including Spain (property), the 3 Aircraft loans in our calcs (that now cover more than half the loans still due back) and the fact that all future returns now virtually depend upon returns from the larger loans in our loan book (circa £33.4m).
As always take care,
And God Bless,
Gordon 45