PCF Group PLC (AIM:PCF) has reviewed its financial controls and said it would take an additional £6mln impairment charge in its restated 2020 results.
Taking that impairment charge into account, along with other adjustments (principally from the financial controls review and the increased cost of the full year 2020 audit), the new revised reduction to the preliminary result for profit before impairment of goodwill and tax for the year ended 30 September 2020 will now be about £7mln.
This will bring the statutory loss before tax for the period to roughly £5mln, the specialist bank said.
The group still has headroom above its regulatory capital requirements, including Pillar 2 buffers, it assured investors.
The impairment charge is primarily related to receivables that were either seriously in arrears or assets that were acting as security on loans that had been sold.
PCF has sold the majority of these defaulted receivables to a specialist debt purchaser. Henceforth, PCF expects to make periodic smaller sales of defaulted receivables to give certainty to the valuation of this category of assets, and to enable operating efficiencies for the group by reducing the operational time and costs that managing such defaulted receivables involves.
More generally, the extensive work being undertaken as part of the review of the group's financial statements, completion of the annual report and accounts for the year ended 30 September 2020 and the investigative review of the group's financial controls and reporting processes has been exhaustive and is now well progressed.
Trading in PCF shares is currently suspended, pending the publication of its results for fiscal 2019/20.