The comment: "Debtor finance, even if it were to be considered,...

The comment:
"Debtor finance, even if it were to be considered, would come in at 600bp or higher as against the current 2.17 - 2.49% range",
was meant in absolute, not plus add terms. Thank you for alerting this.

So, the current interest debt range is 2.17 - 2.49% which, if replaced with debtor finance, would likely see the new debt finance rate being 6.0%+. It certainly wouldn't be (2.17 - 2.49%) + 6.0%.

That said, the debtor quality is currently a bit of a mystery given that SGS /PSD comprised the substantial block of debtors at Jun30. Also, a significant portion of the Jun30 then existing debtors concerned disbursement values portion of which had previously been funded by ASK, etc (whose rates were typically >10%).

As for the composition of the debtors, this can broadly be broken down into the following categories (there may be more):
*) owed by insurers
*) owed by the other side (not necessarily insurers)
*) owed by clients (GEL matters)
*) owed by clients (PIL matters) - ie: solicitor /client costs
*) owed by clients (disbursement costs)
*) owed by others (sometimes but not always recovered /reimbursed by TAC, VWC etc)

The risk of impairment however is an issue which likely would also influence the debtor finance rates.

At Jun30, Trade Debtors stood at $373M, of which $76M (or 20%) was impaired, for a net value of $317M. In 2014, the impairment rate was 7.8%, so clearly, there was an issue in 2015 with the quality of the debtor book acquired through various of the acquisitions.

Similarly, disbursements stood at $362M at Jun30, of which $45m was impaired (12.4%), for a net balance of $317m. In 2014, the impairment rate was <2%. So, again, there was an issue with the quality of the disbursements (or of the clients) acquired via acquisition. It really should never be the case that disbursements are impaired. That is, where there remains a corresponding obligation to pay out the disbursement as a legal creditor, but the ability of then recovering this from the client is impaired.

In total, with (gross) debtors at Jun30 standing at $735m, a total of $121m was impaired, whether as to fees, or as to disbursements. In contrast, the gross position at Jun14 was $194m, of which $10m was impaired.

Given the obvious issues regarding either the quality of what was acquired, performed, arranged or maintained during 2015, any debtor financier would consider this with an appropriate risk weighting applied. So, if indeed provided, likely the debtor finance would be charged at >6% overall, for a lower level of covered debtor values (ie: significantly increased buffer).

The quality might have been there in 2014, but it wasn't in 2015 (whether acquired or perhaps even organic).