High Street Commercial Finance, which has issued a series of bonds paying typical rates of 12% per year to the public via unregulated introducers, has finally filed its accounts for December 2017, nine months overdue.
High Street Commercial Finance Limited is the arm of the High Street Group which borrows money from investors.
The company was so tardy with its 2017 accounts that it will be overdue again in a mere three months, the 2018 accounting period having closed six months ago.
High Street Group took advantage of small company exemptions and did not have the accounts audited or file a profit and loss account.
The accounts show net assets of £13.5 million, comprising £57.3 million of assets and £43.8 million of liabilities. £37.5 million of those liabilities represented loan investors, with the remainder comprising trade creditors, loans from other High Street Group companies and “other”.
The assets include £19.8 million of money loaned to other High Street Group companies and £34.2 million of subsidiaries, associated and jointly controlled entities, valued at “fair value”.
As the accounts were unaudited, the valuation of High Street Group’s assets is the word of the directors.
Over the past year investors in High Street Group have reported that the company has for certain investors exercised a right to delay repayment for six months, and for others offered to swap the debt for shares. A debt-equity swap means High Street Group is no longer responsible for returning investors’ money and they have to find a buyer for their shares to realise their investment.
While the company withheld their profit and loss account, it is clear from what they have filed that the company was loss-making in 2017. The “profit and loss account” on the balance sheet sank from an already negative balance of minus £8.9 million to minus £20.6 million.
To put it another way, over 2017 High Street Group borrowed an additional £22.1 million (£16.3 million from loan investors and £4.5 million from other High Street Group companies) but net assets increased by only £1.0 million.
These heavy losses do not mean that High Street Group is insolvent; at time of writing it continues to trade and its 2017 accounts state that it had sufficient assets to pay all liabilities. This however depends on the unaudited valuations of its subsidiary companies and loans to other group companies being accurate.
High Street Group is currently reported to be offering bonds paying 12% per year, with additional bonuses for investing for longer than 1 year. To successfully repay investors with interest of over 12% per year, along with meeting the costs of paying commission to unregulated introducers (which are not specifically disclosed in the accounts), it will clearly have to find a way to reverse its heavy losses at some point.
According to charges filed with Companies House in March 2019, High Street Group has recently borrowed money from bridging loan provider Fortwell Capital and the Bank of London and the Middle East, with fixed charges.