|
|
Post by meledor on Oct 13, 2016 8:14:09 GMT
2015 accounts now available at Companies House website.
£774k retained profit for the year and that was after establishing a £1193k provision for liabilities.
|
|
|
|
Post by justdabbling on Oct 13, 2016 10:42:42 GMT
And they gained £862K in tangible assets. I am no expert and these are only abbreviated accounts but I cannot see anything to worry about.
|
|
jonah
Member of DD Central
Posts: 2,031
Likes: 1,113
|
Post by jonah on Oct 13, 2016 20:26:35 GMT
2015 accounts now available at Companies House website.
£774k retained profit for the year and that was after establishing a £1193k provision for liabilities. What sort of liabilities could be covered by that 1.1m ?
|
|
gibmike
Member of DD Central
What is a cynic? A man who knows the price of everything and the value of nothing.
Posts: 256 
Likes: 160
|
Post by gibmike on Oct 13, 2016 20:41:44 GMT
As far as I am aware meledor the P2P platforms are currently "adhering" to FSC guidelines for bad debt which is 2x/3x what they expect to lose in a year. Maybe it is this, 350k of bad debt covered by 3x this. PS: I am no expert... |
|
mikes1531
Member of DD Central
Posts: 6,453
Likes: 2,320
|
Post by mikes1531 on Oct 14, 2016 1:53:24 GMT
2015 accounts now available at Companies House website.
£774k retained profit for the year and that was after establishing a £1193k provision for liabilities. What sort of liabilities could be covered by that 1.1m ? Couldn't that simply be the PF? (That might be about how big it was at the end of 2015.)
|
|
|
|
Post by savingstream on Oct 14, 2016 8:59:58 GMT
That is our contribution to the Provision Fund for that year. The accountants agreed to consider it a 'cost'. We only pay the tax on that element when it is returned to the company after repayment of a loan which can be in the following tax year.
|
|
nick
Member of DD Central
Posts: 1,056
Likes: 825
|
Post by nick on Oct 14, 2016 9:00:14 GMT
I'm surprised by the size of Lendy's balance sheet, ie the gross debtor figure of $63.1m and creditor figure of $66.1m given that under the current structure they are not principle to the loans. I assume the balances reflect old structure loans where they are principal to the loan, ie they are the lenders and we are creditors to them, and that the gross values will run-off in future years.
I suspect the provision for liabilities of £1.1m relate to the provision fund. Whilst they do not have a legal obligation to fund the provision fund, there is a constructive obligation which would require them to book the liability on their balance sheet under UK GAAP. However, they have always given the impression that the provision fund was funded in cash and I had assumed that this cash would be in the provision fund vehicle, Lendy Provision Reserve Ltd and therefore not on Lendy's balance sheet (as they would have transferred the cash across to this entity). This would not appear to be the case - we will need to wait until LPRL publish their accounts due later this month.
|
|
toffeeboy
Member of DD Central
Posts: 538
Likes: 385
|
Post by toffeeboy on Oct 14, 2016 11:59:41 GMT
I'm surprised by the size of Lendy's balance sheet, ie the gross debtor figure of $63.1m and creditor figure of $66.1m given that under the current structure they are not principle to the loans. I assume the balances reflect old structure loans where they are principal to the loan, ie they are the lenders and we are creditors to them, and that the gross values will run-off in future years. I suspect the provision for liabilities of £1.1m relate to the provision fund. Whilst they do not have a legal obligation to fund the provision fund, there is a constructive obligation which would require them to book the liability on their balance sheet under UK GAAP. However, they have always given the impression that the provision fund was funded in cash and I had assumed that this cash would be in the provision fund vehicle, Lendy Provision Reserve Ltd and therefore not on Lendy's balance sheet (as they would have transferred the cash across to this entity). This would not appear to be the case - we will need to wait until LPRL publish their accounts due later this month. I have the thoughts about everything you have said, the concerning thing is if we are right and the PF is funded by an accrual and not by cash. Would you be prepared to provide a bit more detail on the provision for liability from the accounts savingstream
From a previous post they have agreed with their accountant that the funding of the provision fund is a valid business expense so is right to be included in the accounts and it will move up and down depending on the size of the loan book as loans are made and repaid with Saving Stream only making their extra 2.5% when a loan does repay.
|
|
|
|
Post by savingstream on Oct 14, 2016 13:45:00 GMT
The PF is funded with actual cash.
|
|
nick
Member of DD Central
Posts: 1,056
Likes: 825
|
Post by nick on Oct 14, 2016 14:29:01 GMT
The PF is funded with actual cash. I believe there is a bit of confusion over who is actually holding the cash. If the PF (and by the PF I refer to Lendy Provision Reserve Ltd and not Lendy Ltd) has been funded by cash, then there would not be a liability on Lendy Ltd's balance sheet (as it would have been settled in cash). What I suspect is actually the case is that cash has not been transferred to the PF, but is being held on Lendy Ltd's balance sheet and hence it is showing a corresponding liability. Maybe savingstream can clarify this point. I don't believe this is necessarily an issue. It does mean that as at 31 Dec 15, the 'cash' behind the PF is not segregated and fire-walled in a separate legal entity and would be at risk in the event of Lendy Ltd's insolvency. However, as the PF is only discretionary in nature, whether Lendy or Lendy Provision Reserve holds the cash probably doesn't really matter.
|
|
|
|
Post by meledor on Oct 14, 2016 17:00:56 GMT
The PF is funded with actual cash. I believe there is a bit of confusion over who is actually holding the cash. If the PF (and by the PF I refer to Lendy Provision Reserve Ltd and not Lendy Ltd) has been funded by cash, then there would not be a liability on Lendy Ltd's balance sheet (as it would have been settled in cash). What I suspect is actually the case is that cash has not been transferred to the PF, but is being held on Lendy Ltd's balance sheet and hence it is showing a corresponding liability. Maybe savingstream can clarify this point. I don't believe this is necessarily an issue. It does mean that as at 31 Dec 15, the 'cash' behind the PF is not segregated and fire-walled in a separate legal entity and would be at risk in the event of Lendy Ltd's insolvency. However, as the PF is only discretionary in nature, whether Lendy or Lendy Provision Reserve holds the cash probably doesn't really matter. I would be surprised if Lendy Provision Reserve Ltd (LPRL) was not holding the cash - for 2 reasons.
On the website the Provision Fund is equated with the separate legal entity LPRL - "The Directors of Lendy Ltd are also the directors of the Provision fund; a UK based company called Lendy Provision Reserve Ltd. Saving Stream investors can make an application to the Provision Fund for compensation if their initial investment cannot be fully repaid due to a shortfall in the sale of the security." So when savingstream state "The PF is funded with actual cash" in terms of consistency it has to mean LPRL.
Secondly if LPRL does not have the cash what was the point of SS setting it up and highlighting its existence?
I was initially surprised by the statement that the accountant had treated the provision fund contributions as a cost, but what I think has happened is this - Lendy Ltd has paid 2% of loans on inception as cash over to LPRL and has a debtor in its books for the same amount (LPRL will pay Lendy back when/if the loan is repaid). The treatment of the 2015 contributions as a cost however has to imply that this debtor is not in fact expected to be received. And rather than reducing the debtor amount a separate provision has been shown.
But as you point out we will know more in a couple of weeks when we see the LPRL accounts
|
|
nick
Member of DD Central
Posts: 1,056
Likes: 825
|
Post by nick on Oct 14, 2016 18:10:15 GMT
I believe there is a bit of confusion over who is actually holding the cash. If the PF (and by the PF I refer to Lendy Provision Reserve Ltd and not Lendy Ltd) has been funded by cash, then there would not be a liability on Lendy Ltd's balance sheet (as it would have been settled in cash). What I suspect is actually the case is that cash has not been transferred to the PF, but is being held on Lendy Ltd's balance sheet and hence it is showing a corresponding liability. Maybe savingstream can clarify this point. I don't believe this is necessarily an issue. It does mean that as at 31 Dec 15, the 'cash' behind the PF is not segregated and fire-walled in a separate legal entity and would be at risk in the event of Lendy Ltd's insolvency. However, as the PF is only discretionary in nature, whether Lendy or Lendy Provision Reserve holds the cash probably doesn't really matter. I would be surprised if Lendy Provision Reserve Ltd (LPRL) was not holding the cash - for 2 reasons.
On the website the Provision Fund is equated with the separate legal entity LPRL - "The Directors of Lendy Ltd are also the directors of the Provision fund; a UK based company called Lendy Provision Reserve Ltd. Saving Stream investors can make an application to the Provision Fund for compensation if their initial investment cannot be fully repaid due to a shortfall in the sale of the security." So when savingstream state "The PF is funded with actual cash" in terms of consistency it has to mean LPRL.
Secondly if LPRL does not have the cash what was the point of SS setting it up and highlighting its existence?
I was initially surprised by the statement that the accountant had treated the provision fund contributions as a cost, but what I think has happened is this - Lendy Ltd has paid 2% of loans on inception as cash over to LPRL and has a debtor in its books for the same amount (LPRL will pay Lendy back when/if the loan is repaid). The treatment of the 2015 contributions as a cost however has to imply that this debtor is not in fact expected to be received. And rather than reducing the debtor amount a separate provision has been shown.
But as you point out we will know more in a couple of weeks when we see the LPRL accounts
If that were the case, there wouldn't be a provision on Lendy Ltd's balance sheet. The fact they have stated that they have expensed the cost through the P&L makes me believe the entries they have booked so far are debit P&L & credit provisions on the balance sheet. The next stage would be for them to actually pay the cash across to the separate provision fund entity which be debit provisions (eliminating the liability from the balance sheet & credit cash.
|
|
mikes1531
Member of DD Central
Posts: 6,453
Likes: 2,320
|
Post by mikes1531 on Oct 14, 2016 18:29:02 GMT
Isn't LPRL a wholly-owned subsidiary of Lendy? Is there a chance that the Lendy accounts are 'consolidated' accounts and include LPRL?
Also, AIUI, banks always have made loss provisions when they made loans, and were allowed to classify those provisions as expenses, with adjustments made in later years to reflect whether the provisions actually were needed or not. Banks with a lending track record can base their reserve provisions on their past performance. Lendy don't have enough history, so they decided that 2% was reasonable and used that to set their provision amount.
Is my understanding anywhere close to correct?
|
|
|
|
Post by meledor on Oct 14, 2016 18:59:01 GMT
Isn't LPRL a wholly-owned subsidiary of Lendy? Is there a chance that the Lendy accounts are 'consolidated' accounts and include LPRL? Not according to LPRL's annual return. Lendy Ltd does not hold any of LPRL's shares. The directors are the same for the two companies but the one is not a subsidiary of the other. And inany case consolidated accounts would need to be stated that they are such and Lendy's accounts make no refernce to consolidation.
|
|
|
|
Post by meledor on Oct 14, 2016 19:06:24 GMT
I would be surprised if Lendy Provision Reserve Ltd (LPRL) was not holding the cash - for 2 reasons.
On the website the Provision Fund is equated with the separate legal entity LPRL - "The Directors of Lendy Ltd are also the directors of the Provision fund; a UK based company called Lendy Provision Reserve Ltd. Saving Stream investors can make an application to the Provision Fund for compensation if their initial investment cannot be fully repaid due to a shortfall in the sale of the security." So when savingstream state "The PF is funded with actual cash" in terms of consistency it has to mean LPRL.
Secondly if LPRL does not have the cash what was the point of SS setting it up and highlighting its existence?
I was initially surprised by the statement that the accountant had treated the provision fund contributions as a cost, but what I think has happened is this - Lendy Ltd has paid 2% of loans on inception as cash over to LPRL and has a debtor in its books for the same amount (LPRL will pay Lendy back when/if the loan is repaid). The treatment of the 2015 contributions as a cost however has to imply that this debtor is not in fact expected to be received. And rather than reducing the debtor amount a separate provision has been shown.
But as you point out we will know more in a couple of weeks when we see the LPRL accounts
If that were the case, there wouldn't be a provision on Lendy Ltd's balance sheet. I do not see why not - as per my explanation above.
Debit - Debtor (receivable from LPRL) Credit - Bank (cash paid to LPRL) Debit - Cost of provision fund contribution Credit - Provision for liabilities
|
|
