Mike Bristow CEO Q&A Livestream (CP)

I'd urge all CP investors to watch the recording of the above livestream. It contained some detailed information on the overdue loan situation that hadn't been made public before. It's about 70 minutes long, and the meat is in the middle, but still well worth watching IMO. It's been very reassuring to quite a few CP investors that I've talked to. Like my posts, it is a bit verbose in places, Mike does like to repeatedly tell us how brilliant CP are, but his enthusiasm for making it work is obvious and infectious.

Thanks to Mike for fronting up, and thanks to Laurence for arranging this and many others.

For those that are interested, but not interested enough to watch a 70 minute livestream, here are some notes that I made for a couple of people that asked for a brief synopsis on the subject of overdue loans, expected losses, and likely returns: (Mostly my own interpretation of the data presented)

The data was as of 22/1/2023, when the total lent was £270m, with £152m repaid. So £118m in active loans. More up-to-date figures are available on CP's stats page.

Of the £152m of capital lent that has already been repaid: just under half repaid early; just over half repaid late. The was no loss of interest or capital. So, late loans have not been a strong indicator of likely losses.

Of the £118m of capital outstanding in active loans:

• 93.6% are considered to be performing (i.e. no expected loss of interest or capital).
• 4.8% are expected to suffer a loss of some interest, but no loss of capital.
• 1.6% are expected to suffer a loss of some capital.

No loans were expected to lose more than 20% of capital. That's not to say that there were loans expecting a 20% loss. It's just that the presented data wasn't granular enough to determine the maximum expected loss, just that it was below 20%. To further put that data in perspective, total current expected losses are 0.11% of capital lent to date, so 0.25% of currently outstanding capital.

Taking all of the above into account, assuming an equal amount invested in each loan, and ignoring cash drag:

• The annualised return to investors from all repaid loans is 8.15%. 
• The expected annualised return to investors from currently active loans is 7.19% (reduction is due to expected losses and lower rates).
• The expected annualised return to investors from future loans is 7.73% (extrapolated from current loss stats plus increased rates).

So, CP are doing much better than their stated anticipated losses of 1%.

Obviously, the more diversified ones portfolio is the closer ones personal returns are likely to be to the above averages.

Looking at my personal loanbook, I would need to suffer a full interest loss and a 12.7% capital loss on ALL of my 174 current loans to wipe out my paid returns to date. I'm willing to bet large against that.

I guess the issue is that the information shared by Mike, if accurate, would suggest that CP are currently in a fairly good place but this is a rapidly changing picture and his ability to predict the future is probably limited. Late projects are around 39% of the current loan book (e.g. excluding repaid projects) but this could quickly increase and/or switch to non performing and the resources to manage this becomes onerous. Also each investor will likely have a different experience. > 70% of my loanbook is late and probably 40% is in non performing.