Category: london capital and finance

London Capital & Finance delays filing accounts

London Capital & Finance logo
~ Phoenix ~ 1 Comment

London Capital & Finance has delayed filing its accounts for the period ending April 2018 by using a well-known (among accountants) loophole in the Companies Act.

Traditionally, public limited companies are supposed to file their annual accounts within six months of their accounting end date. This means London Capital & Finance’s April 2018 accounts would have been due for filing by the end of October 2018.

However, less than a couple of weeks before this deadline expired, London Capital & Finance shortened its accounting reference date by a day, which under UK companies law gives it a further three months to file its accounts, i.e. 17 January 2019.

London Capital & Finance previously used this loophole twice to put off filing its April 2017 accounts, shortening its accounting period in October 2017 and then again in January 2018. The April 2017 accounts were eventually filed in February 2018.

London Capital & Finance is one of the most well known issuers of unregulated bonds directly to high-net-worth and sophisticated investors. As at April 2017 it had raised £60.8 million from investors, of which £11.3 million was paid out in unamortised costs (which covers commission, accounting fees, printing costs, etc), leaving it with £49.5 million on the balance sheet. At the same date it had £50.6 million in total assets (mostly representing its secured loans business) and its net assets were £299,000. As at October 2018, LC&F’s website says that it has raised £214 million to date.

Why it has again needed to put off filing its accounts is not known.

London Capital & Finance

London Capital & Finance logo
~ Phoenix ~ 97 Comments

Link: All our articles on London Capital and Finance

Update 2.1.19 – London Capital & Finance is under investigation by the FCA. Its bank accounts have been frozen while the investigation continues, along with all payments of interest and capital to investors.

Update 16.1.19: An action group has been set up on Facebook for LCF investors wishing to share information and explore possible action. It can be found at https://www.facebook.com/groups/londoncapitalfinanceaction.

There is a second group for LCF investors which I will not be linking to due to concerns over the way it is being moderated.

We are not in a position to advise investors what to do next, and linking to the action group is not an endorsement of any particular course of action (legal or otherwise) that investors may be invited to follow. Our purpose in linking to the action group is to help investors access information, and reduce the risk of them being targeted by the unscrupulous.

Our original review, which was written on 15 December 2017, follows below. [update ends]

London Capital & Finance offers unregulated corporate bonds paying 3.9%pa for 1 year, 6.5% for 2 years and 8% for 3 years.

Who are London Capital and Finance?

There is no information on the website on who the directors or owners of the company are.

Companies House shows that Michael Thomson is the sole owner and one of the directors.

Other directors are Floris Huisamen, Kevin Maddison and Katherine Simpson at time of writing.

Is London Capital & Finance a safe investment?

This is an unregulated corporate bond and if London Capital and Finance defaults you risk losing 100% of your money.

London Capital & Finance lends your money to UK companies. If these other companies default on their loans from LC&F, LC&F may become unable to pay you your interest and capital.

The London Capital and Finance website confirms that the bond is not covered by the Financial Services Compensation Scheme.

The London Capital and Finance website says that “Investors’ funds are secured by a charge over the assets of LC&F and over the assets of borrowing companies”. However, if for whatever reason LC&F is unable to sell the assets your bond is secured on for enough money to cover its obligations, investors still risk losing up to 100% of their money.

A company called “Global Security Trustees Limited” is listed as the Security Trustee. Global Security Trustees Limited is according to Companies House a dormant company with no assets.

Should I invest with London Capital and Finance?

As with any unregulated corporate bond, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

 This particular bond is advertised as asset-backed. Before putting any reliance on the security backing the bond, investors should undertake professional due diligence to ensure that a) the security exists b) in the event of default, the security could be easily sold and would raise enough money to cover all investors’ money c) the charge over the security has been properly and legally recorded.

Before investing investors should ask themselves:

  • How would I feel if the investment defaulted and I lost 100% of my money?
  • Do I have a sufficiently large investment portfolio that the loss of 100% of this investment would not damage me financially?
  • Have I conducted sufficient due diligence to ensure the asset-backed security can be relied on?

If you are looking for a “secure” or “guaranteed” investment, you should not invest in unregulated products with a risk of 100% capital loss.