Ann: Injection of funds in PFSUK safeguarding accounts, page-19

Feels like they are doing a fine-tooth comb over PFS as part of the CBI work and this has fallen out the backside.

The announcement suggests PFS interpreted the relevant accounting rules in a way that allowed them to access breakage earlier than EML's interpretation of how these rules should be applied. It is important to note that breakage is a complex accounting matter, and one open to alternative interpretations. It is reasonable to assume that PFS received professional advice on this, and had the treatment audited when they completed their books. EML disagrees, and treats its own breakage in a different way, so it required to 'step up' the approach previously put in place.

EML has made provisions for the absolute worst case that none of this breakage actually lands, which clearly is not going to be the case. For any amount that is claimed by card holders, EML has the right to claw this back from PFS. This will be a fraction of the 26.6 million headline figure mentioned, but frustratingly it's a lazy use of the balance sheet.

Clearly the way PFS operated was far faster and looser than EML's approach, which perhaps is not surprising consider the relative immaturity and fast growth approach taken by the former PFS management team. Despite this (and more critically the CBI issue) I still think Tom got a good deal on the business, albeit it's taking some time to bed things down.

Results will be interesting next month...