PCF Group PLC (LON:PCF) said an independent review of its financial controls has found errors in reporting the bank’s lending exposure to its media subsidiary Azule, but no evidence that any money has gone missing.
As a result of the errors, the review says that PCF potentially breached its large exposure limits with regulator the PRA and also overstated its Common Equity Tier 1 ratio by one percentage point at 18.1%, when it should have been 17.1%.
Based on the findings of the Independent Review, the board said it believes that these matters may be driven by possible collusion by some members of the finance team, under-resourcing, an inadequate level of skill and experience within the finance team, technological limitations and a poor culture in the finance team.
The statement added: “The Board is very disappointed and concerned by these findings and is determined to ensure that the PCF Group adheres fully to the high standards of financial control and reporting expected by it and also by its regulators, shareholders and other key stakeholders.”
As a result, the Senior Leadership Team led is being restructured led by Garry Stran, the interim CEO, together with Caroline Richardson, the CFO, including the appointment of a new and experienced Chief Risk Officer and a General Counsel
Scott Maybury stepped down as chief executive in May.
PCF added it also intends to commission an independent forensic review of the PCF Group's accounting records.
As a result of the additional work, the filing of its annual report and accounts for the financial year ended 30 September 2020 will be delayed and PCF shares will remain suspended.
Trading currently is as normal, PCF added, with inflows as expected while it is managing its loan originations, capital and liquidity position.
Covid-related payment deferral levels continue to reduce and the performance of its lending portfolio is in line with expectations, noted the statement.
The revised preliminary profits estimate for the year to 30 September 2020 issued on 11 March 2021 also remains valid, subject to additional audit costs.
Tim Franklin, chairman added: "The Board acknowledges the significant deficiencies identified in the PCF Group's financial control and reporting environment and is determined to devote the time and resources required to remediate these failings.
“In addition, the Board wishes to reassure shareholders that the Board has, and will continue to, authorise actions which are required to protect shareholder value including where appropriate and legally possible the invocation of its contractual and legal rights in respect of the recovery of remuneration-related payments and any other consequential losses suffered as a result of these matters.”