TIDMOPM
RNS Number : 4337Q
1PM PLC
12 September 2017
12 September 2017
1pm plc
(the "Group" or the "Company")
FINAL RESULTS FOR THE YEARED 31 MAY 2017
A further year of strong organic and strategic growth delivers
record revenues and profits.
Combined Asset and Loans Portfolio of GBP90m at year-end;
Recommended Final Dividend
1pm plc, the AIM listed independent specialist provider of
finance facilities to the SME sector is pleased to announce final
results for the year ended 31 May 2017.
The trading results for the year reflect organic growth in
revenue and profits at Onepm Finance, Academy Leasing and Bradgate
Business Finance and strategic growth from the acquisitions of
Intelligent Financing Limited and Bell Finance Limited towards the
end of the financial year.
The Group has continued to experience strong levels of demand
for finance from the SME sector across the growing range of
products offered. This product range now includes Asset Finance
(finance leasing and hire purchase for 'hard' and 'soft' assets and
vehicles), Loans, and subsequent to the year-end, Commercial
Finance (invoice discounting and factoring).
Financial Highlights:
-- Revenue for the year of GBP16.9m (2016: GBP12.5m), an increase of 35%
-- Profit before tax and exceptional items for the year of GBP4.3m (2016: GBP3.7m), up 17%
-- Basic earnings per share of 6.09 pence (2016: 5.87 pence), up 4%
-- Dividend proposed of 0.5 pence per share on approximately
83.8m shares currently in issue (2016: 0.5 pence per share on
approximately 52.5m shares in issue)
-- Consolidated net assets at 31 May 2017 of GBP28.5m (2016: GBP23.9m), an increase of 19%
The Group's combined gross lending portfolio amounted to
GBP89.5m at 31 May 2017 (2016: GBP67.7m), an increase of 32%.
Included in the value of this gross portfolio is unearned income,
i.e. future revenue, of GBP18.9m (2016: GBP14.6m), an increase of
29%. Portfolio write-offs, net of recoveries of previously written
off receivables, amounted to GBP0.9m, representing approximately
1.0% of the portfolio (2016: GBP0.5m, representing 0.8% of the
portfolio).
Operational Highlights:
-- Combined origination, including acquired entities since their
date of acquisition, amounted to GBP83.0m of new lease, hire and
loan agreements (2016: GBP49.7m), an increase of 67%
-- Combined new business origination on a like-for-like basis increased 23%
-- Finance provided or lending arranged for over 16,150 customers and end-users
-- Funding facilities available of GBP74.5m of which GBP49.0m
utilised as at 31 May 2017 (2016: GBP61.5m of which GBP38.8m
utilised)
-- Blended cost of borrowings fell to approximately 5.3% (2016: 5.8%).
In addition, integration and cross-selling progress at each
entity within the Group following their respective acquisitions is
in line with operational expectations and objectives set by
management.
John Newman, Non-executive Chairman commented:
"We are delighted that the Group's strong financial results,
delivered during another year of strategic change in line with our
stated strategy, continue the trend in recent years of profitable
organic growth. The Board is optimistic in its pursuit of further
growth in the current financial year, is very pleased with the
performance of each of its acquisitions and is committed to
delivering increasing value for its shareholders from the enlarged
group of businesses."
Ian Smith, Chief Executive Officer, commented:
"Each of 1pm's trading subsidiaries has continued to experience
robust levels of demand for finance from across the UK SME sector.
This has enabled the Group to deliver another year of operational
and strategic progress and strong underlying results. The range of
products now offered, plus the flexibility to fund and broke-on,
mean that the Group is well positioned to build value for
shareholders".
For further information,
please contact:
1pm plc
Ian Smith, Chief Executive
Officer 01225 474230
James Roberts, Chief
Financial Officer 01225 474230
Cenkos (NOMAD)
Max Hartley (NOMAD),
Julian Morse (Sales) 0207 397 8900
Walbrook PR 0117 985 8989
Paul Vann 07768 807631
paul.vann@walbrookpr.com
About 1pm:
The Company was admitted to AIM in August 2006.
1pm plc is a group of established independent finance companies
focused on providing SMEs with accessible funding to add value to
their businesses. All customers must have good credit histories and
proven ability to repay their finance commitments.
Mission Statement - 'Helping the UK economy grow by supporting
SMEs'
More information is available on the Company website
www.1pm.co.uk
CHAIRMAN'S STATEMENT
FOR THE YEARED 31 MAY 2017
Performance and dividend
On behalf of the Board of Directors, I am very pleased to report
that our business has delivered another year of strong performance
and growth in what has been an exceptional period of change.
Including acquisitions, the Group's profit before tax and
non-recurring exceptional costs was GBP4.3m (2016: GBP3.7m), an
increase of 17%.
Earnings per share, taking account of the issue of shares during
the year relating to acquisitions, amounted to 6.09p (2016: 5.87p),
an increase of 4% and as at 31 May 2017, net assets stood at
GBP28.5m (2016: GBP23.9m), an increase of 19%. The Group's after
tax return on equity was 11.6% (2016: 12.0%) a marginal decrease
attributable to the timing of the acquisitions and accounting for
their associated goodwill in the final quarter of the year.
The continued success in delivering sustainable growth from the
Group's business model with its clear strategic focus on
operational performance and value enhancing acquisitions, has once
again been noteworthy for the Group during the last year. This
success has enabled the Board, subject to Shareholder approval at
the Annual General Meeting on 9 October 2017, to propose a dividend
for the year. The total dividend we propose to pay is GBP419,000 up
60% from GBP262,000 in 2016. This reflects our balancing the
significant opportunities to deploy capital across our businesses
with increasing the near-term pay-out to shareholders. Given the
rise in shares in issue after the year end this dividend equates to
0.5p per share (2016: 0.5p).
Our strategy
The Group Strategic Report which follows the Chief Executive
Officer's Review sets out in detail our goals and objectives. The
focus of our strategy is for our Group to be recognised as a
leading provider of a comprehensive range of business finance
products to UK based SMEs.
In moving towards this goal we completed two acquisitions in the
last quarter of the financial year, namely Intelligent Financing
Limited in March and Bell Finance Limited in April. Our strategic
acquisitions continued after the year end and two further
businesses, Gener8 Finance Limited and Positive Cashflow Finance
Limited joined the Group in June.
As a result of these acquisitions, from June 2017, the Group now
comprises three divisions: Asset Finance, Loans and Commercial
(Invoice) Finance. Within these divisions the individual
businesses, led by skilled and experienced managers, operate
semi-autonomously, but with a strong emphasis on collaboration with
other Group companies to build on opportunities to provide the full
range of our finance products to our expanding customer base.
The innovative changes being brought about in the financial
services sector by the development of digital capability and
financial technology represent both opportunity and challenge. In
our own business we have established a team, including specialist
advisers, to ensure that our operating model uses all available
financial data for the benefit of customer engagement and service.
The focus for our business lies in the development of systems that
can provide a common platform for data sharing and rapid
decision-making by all the companies within the Group.
Board changes and Governance
There have been a number of Board changes during the financial
year. Hazel Jacques, who joined the Board following the acquisition
of Academy Leasing in August 2015, left the Group in March this
year to pursue personal business interests and the Board wishes her
well for the future. In June 2016 Helen Walker advised the Board
that she would be stepping down from her role as CFO with effect
from the end of May this year. The Board was appreciative of this
long notice period as it allowed for an orderly programme to
recruit a replacement and for a handover period with the new CFO,
James Roberts, who joined the Group at the beginning of May.
Helen has left with the Board's thanks and gratitude for the
contribution she made to the success of the business in recent
years. James is a chartered accountant and brings extensive
financial and commercial experience to the Group having held senior
management positions and directorships within the financial
services sector.
Following the announcement on 8 June 2017 of the successful
completion of the acquisition of Gener8 Finance Limited, Ed Rimmer
joined the Group as Managing Director of the newly formed
Commercial Finance Division and joined the 1pm plc Board. Ed has
over twenty years' experience in invoice financing and now also has
responsibility for Positive Cashflow Finance Limited following its
acquisition on 29 June 2017.
As well as continuing in his role as Chief Risk Officer for the
Group, Mike Nolan now also carries out the role of Managing
Director of the Asset Finance Division.
I welcome both James and Ed to the Board and wish them and Mike
every success in their new roles within our enlarged Group. The
Board now comprises four executive and three non-executive
directors.
The four Board committees, namely Audit, Remuneration,
Governance and Risk and Nominations, which were re-structured in
2016 with membership comprising either of only, or a majority of,
non-executive directors, meet on a regular basis. This has been a
particularly busy period for the Remuneration Committee in
reviewing and then recommending executive directors' pay structures
that are commensurate with the increased level of responsibilities
arising from the significant extension of the Group's business
activities. In addition, the Committee recommended the introduction
of a Long Term Incentive Plan to start in the new financial year
and this was approved by shareholders at the General Meeting held
on 7 June 2017. Further details are included in the Notes to the
Consolidated Financial Statements.
Our business operates in a regulated environment and in ensuring
that the highest standards are maintained everyone in the Group is
required to complete an extensive, module based course of
compliance training. This is further enhanced by an annual training
allowance that is available to every employee to spend on
continuing professional development.
Our people
The Group has grown significantly over the last two years and
the demands placed on our staff in delivering excellent results and
also dealing with the challenges of post-acquisition integration
have been considerable. It is a reflection of the quality of the
people within our Group that they have met these challenges in such
a positive manner and this has played a vital part in the success
that is being attained within the enlarged Group. On behalf of the
Board I wish to record our thanks and appreciation for their hard
work and commitment.
Outlook
The widening range of the financial products we are able to
offer our customers was accelerated by the acquisitions completed
towards the end of the financial year and at the start of the
current trading year. Although it is early days in the current
financial year the Board is encouraged by the level of demand that
is being experienced across all three business divisions.
Following this period of acquisitions, the executive team is now
focussed on the opportunities for further organic growth, both from
cross-selling its products into an enlarged customer base, which
now amounts to over 16,150 customers of which 10,450 are "live" or
"own book" accounts, and from new business origination.
The establishment of a clear divisional operating structure
offering a comprehensive range of financial products within our
market has been a key milestone in our corporate strategy. The
Board is confident that this structure provides the platform for
sustainable profitable growth for this year and beyond.
John Newman
Chairman
12 September 2017
CHIEF EXECUTIVE OFFICER'S REVIEW
FOR THE YEARED 31 MAY 2017
Introduction
As at 31 May 2017, in addition to 1pm plc, which is the AIM
listed holding company, the 1pm plc Group ("the Group") comprised
the following trading entities, each separately accredited by the
Financial Conduct Authority:
-- 1pm (UK) Limited, trading as Onepm Finance ("Onepm")
-- Academy Leasing Limited ("Academy"), acquired in August 2015
-- Bradgate Business Finance Limited ("Bradgate"), acquired in March 2016
-- Bell Finance Limited ("Bell"), acquired in April 2017 and now
operationally merged into Bradgate
-- Intelligent Financing Limited, trading as iLoans ("iLoans"), acquired in March 2017
The consolidated financial results of the Group for the year
ended 31 May 2017 therefore consist of the aggregated results of
each of these entities, either for the year, or for the period
since the date of acquisition, as applicable.
Subsequent to the year-end, the Group also completed the
purchases of the respective holding companies of Gener8 Finance
Limited and Positive Cashflow Finance Limited, entities which now
form the Commercial Finance division within the Group. The
financial results of these entities will be consolidated into the
Group in the current financial year ending on 31 May 2018.
Financial results
I am delighted to be able to report both strong organic growth
over the year to 31 May 2017 and further strategic growth as a
result of the acquisitions towards the end of the year.
Revenue amounted to GBP16.9m (2016: GBP12.5m) an increase of
35%. This reflects organic growth at Onepm Finance, the original
company in the Group, a full year's contribution from Academy and
Bradgate, compared with periods of nine months and two months since
their respective acquisitions in the prior year to 31 May 2016, and
initial contributions from Bell and iLoans, both acquired towards
the end of the financial year. Revenue comprises interest and
related income from the companies' portfolios of 'own-book' lease
and loan deals, plus commission income from deals 'broked-on' to
other funders. Within total revenue, commission income amounted to
GBP2.2m (2015: GBP1.4m) an increase of 57%.
Profit before tax and non-recurring exceptional items amounted
to GBP4.3m (2016: GBP3.7m) an increase of 17%. Exceptional items
principally comprised costs related to acquisitions and amounted to
GBP0.3m (2016: GBP0.4m). Profit before tax after exceptional items
was, therefore, GBP4.1m (2016; GBP3.3m) an increase of 24%.
At 31 May 2017, consolidated net assets stood at GBP28.5m (2016:
GBP23.9m) an increase of 19%. Profit after tax and attributable to
shareholders for the financial year of GBP3.3m (2016: GBP2.9m)
results in a return on net assets of 11.6% (2016: 12.0%), a
marginal decrease as explained in the Chairman's Statement.
At 31 May 2017, there were 54,940,215 shares in issue (2016:
52,534,463). During the year, 1pm plc issued 2,405,752 new ordinary
shares in respect of acquisitions in the year, earn-out
arrangements relating to acquisitions in the prior year and the
exercise of options under the employee share scheme. Earnings per
share amounted to 6.09p (2016: 5.87p) an increase of 4%.
New Business Origination
Including broked-on business, in aggregate, the entities in the
Group originated GBP83.0m of new lease, hire and loan agreements
(2016: GBP49.7m) an increase of 67%. On a like-for-like basis,
excluding the acquisitions of Bell and iLoans completed towards the
end of the financial year and assuming Academy and Bradgate were
part of the Group for the entire prior year to 31 May 2016, the
organic increase would have been 23%.
Within the aggregate total of new business originated, GBP40.2m,
48%, was written on 'own-book' and GBP42.8m, 52%, was broked-on to
other funders to generate cash commissions (2016: GBP31.3m, 63%,
own-book and GBP18.4m, 37%, broked-on). The broked-on total
consists of GBP18.0m, of Asset Finance origination (2016: GBP7.5m),
GBP16.6m of Vehicles origination (2016: GBP10.9m) and GBP8.2m of
property-backed Loan origination (2016: GBPnil). 100% of Vehicles
deals originated are broked-on; as a policy the Group does not
carry residual value risk in Vehicles.
The decision to either add to own-book, or broke-on is based on
a range of underwriting factors including risk, price, quantum,
existing exposure to the customer and nature of the asset. This
intrinsic flexibility in business model allows a balance to be
achieved between future profits built-in to own-book deals and
short term cash generation from broker commissions.
Within the aggregate total of GBP40.2m of own-book new business,
Onepm originated GBP9.9m of loans to SMEs for working capital
purposes (2016: GBP10.1m) a decrease of 2.4%. This decrease
reflects a risk-based decision to restrict working capital loans as
a proportion of the Group's total lease and loan portfolio.
Although such loans attract a higher interest rate than an
asset-backed lease and although personal guarantees are obtained
from the directors of the SMEs seeking to borrow, these loans are
not secured on either a business-critical asset or a property and
as such represent a higher risk element of the Group's portfolio.
In the current financial year, it is the Group's ambition to
increase the Loans division own-book portfolio again, but with any
such growth arising through the origination and funding of secured
property-backed loans.
Portfolio performance
At 31 May 2017, the Group's combined asset and loans portfolio
stood at a value of GBP89.5m (2016: GBP67.7m) an increase of 32%.
The portfolio value included GBP18.9m (2016: GBP14.6m) of deferred
income, i.e. future revenue. As at 31 May 2017, GBP2.5m of the
portfolio value, representing 2.9% (2016: GBP2.9m, representing
4.3%) was in arrears, but not impaired. This is considered to be a
normal level of arrears. In addition to the 'live' portfolio, Onepm
carried a value of GBP2.4m (2016: GBP1.7m) of impaired trade
receivables over which guarantees and charging orders are held and
which are being collected over time.
In the year to 31 May 2017, impairments to trade receivables,
less recoveries against previously written-off receivables through
guarantees, charging orders and payment plans, resulted in a net
charge to profits in the year of GBP0.9m, representing 1.0% of the
portfolio (2016: GBP0.5m, representing 0.8%).
As at 31 May 2017, the Group carried GBP1.2m of bad debt
provision against the aggregate total of the 'live' portfolio and
impaired receivables, representing a 1.6% provision (2016: GBP0.8m,
representing a 1.3% provision). Whilst this portfolio performance
is strong and the Group's bad debt experience is within accepted
industry norms, current economic uncertainties call for continual
review of the incidence of arrears, impairments and provisioning
policy in order to ensure the overall level of provision continues
to be adequate as economic conditions evolve.
Funding
In order to provide finance to UK SMEs, the Group borrows
primarily from banks, but also from high net-worth individuals. As
at 31 May 2017, the Group's aggregate facilities at 31 May 2017
amounted to GBP74.5m (2016: GBP61.5m), an increase of 21%, of which
GBP49.0m was being utilised (2016: GBP38.8m), an increase of 26%.
The utilisation represented 70% of the capital value of receivables
(2016: 73%) and gearing of 3.6 times the consolidated net assets of
the Group, excluding intangible assets (2016: 2.9 times).
The blended cost of the Group's borrowings was approximately
5.3% (2016: 5.8%). The Group continues to seek additional
cost-effective funding sources and to reduce the cost of borrowing
in order to facilitate writing more own-book business (i.e. to
profitably gear-up) to meet the demand for finance from SMEs.
Operations
The trading entities in the Group source their business from a
network of brokers and introducers, from equipment vendors and
suppliers and direct from end users and borrowers, all of whom
constitute the Group's customer base which now amounts to over
16,150 broked and own-book accounts. Good customer service in each
Group entity and location means the conversion of incoming
proposals into an underwriting decision and then a paid-out, or
broked-on, deal on an efficient and timely basis. This operational
service, while strictly adhering to the Group's credit policies, is
paramount. The Group continues to invest in the systems and
personnel to generate new business and to deliver improved customer
service. The Group now employs 152 personnel (109 at 31 May 2017
and 83 at 31 May 2016).
Business conditions
The demand for cash from UK SMEs is strong and there is ample
availability in the wholesale funding market to be able to supply
it. As a result, there is a real opportunity for lenders to grow.
These conditions are attracting new entrants to the market,
especially for loans and are causing some price competition. At the
same time, there are economic uncertainties suggesting a more
cautious approach to growth is merited. The Group is pleased with
the growth and financial results delivered in the year to 31 May
2017, but has taken a conscious decision to maintain a cautious and
prudent approach to top-line growth, credit risk-taking, the spread
of sectors to which it lends, the range of products offered,
security obtained and provisioning policies adopted.
Stakeholders
I congratulate all those involved with the 1pm plc Group on a
further successful year of trading and another year of significant
strategic development. I would like to thank the Group's customers,
brokers and introducers for the business provided, our staff at
each location for their hard work, dedication and commitment, our
debt funders for their continued provision of facilities to each
business and our shareholders for their continued support of the
Group's growth plans. As referred to in the Chairman's statement, a
dividend in line with the Group's policy will be declared.
Ian Smith
Chief Executive Officer
12 September 2017
GROUP STRATEGIC REPORT
FOR THE YEARED 31 MAY 2017
Goal and Objectives
The stated goal of the Group's current strategic plan formulated
in late 2014 is unchanged and is to achieve a market capitalisation
of GBP100m. The objectives that will enable this goal to be
achieved and that shape the strategic plan are:
-- building scale through operating a model of distributed separate subsidiary entities
-- having a multi-channel and multi-product offering for business lending to SMEs
-- maintaining risk mitigation through funding and broking capability
-- being 'digitally capable'
-- strictly adhering to underwriting policies and credit control procedures
-- being geared appropriately with cost-effective funding facilities
The Board is pleased with the further strategic progress made in
the year to 31 May 2017 and reports on each of the above objectives
as follows:
Distributed model
The Group now comprises six trading subsidiaries (four as at 31
May 2017 year-end with two acquired post year-end) operating from
seven sites in the UK with 152 employees serving circa 16,150 SME
businesses. Each of the businesses acquired has a distinct product
offering, introducer channel, customer base and industry position
and each of the entity management teams has a growth-oriented
business plan to execute. As such, the Group's operating model is
to enable each entity to pursue its own business plan whilst
simultaneously providing efficiency benefits in such matters as
funding, IT systems and infrastructure, compliance, marketing,
finance and HR integration. Furthermore, management believes that
enhanced organic growth can be delivered from cross-selling the
Group's products through each of its trading entities.
Multi-channel and multi-product
As well as sourcing business from multiple channels; brokers,
vendors, suppliers and introducers, a stated strategic aim is to
provide multiple finance products to SMEs. This has been achieved
through the acquisition of Intelligent Financing Limited during the
year, which provides secured second-charge, bridging and commercial
property loans and through the acquisitions post year-end of both
Gener8 Finance Limited and Positive Cashflow Finance Limited, which
offer invoice discounting and factoring, and now form the Group's
Commercial Finance division. As a result, from June 2017, the Group
now operates three divisions; Asset Finance, Loans and Commercial
Finance.
Funding and broking capability
Maintaining flexibility to both fund lease and loan deals on the
Group's own-book and to broke-on to other funders is an essential
risk, profit and cash management capability. The Group is
well-placed to optimise profitable organic growth as a result of
this flexibility and has continued to grow both commission-earning
and interest-generating business during the year.
Digital capability
IT improvement is now a clear operational focus and is captured
in the Group's "Platform1" project, which covers a broad range of
initiatives including improvements in process automation, data
capture and management, customer interface and management
information reporting as well as the use of "FinTech" capability
such as artificial intelligence and pattern recognition
applications. The Group has formed a "FinTech committee" including
external advisers and "thinking partners" to steer developments in
this critical project.
Strict adherence to underwriting policies and credit control
procedures
The Group's objective is to be a responsible lender and to
follow strict policy guidelines with regard to treating customers
fairly and assessing affordability. The Group adheres to strict
lending criteria, thereby minimising the risk of defaults, whilst
aiming to flexibly meet each individual customer's needs through a
personalised underwriting process. Strict adherence to these
policies and procedures will continue to be a key part of the
governance of the Group's growth aspirations. In current benign
credit conditions, the board has taken a conscious decision,
despite the potential to realise additional top-line growth, not to
relax credit criteria.
Funding facilities and managing capital
The Group's objective when managing capital is to maintain a
strong capital base to support its current operations and planned
growth as well maintaining an optimal capital structure to reduce
the cost of capital to provide returns for shareholders and
benefits for other stakeholders.
To meet these objectives the Group has adopted a policy of
sourcing different funding instruments appropriate to each of the
financial products it provides:
-- In respect of Asset Finance, the Group is continuing to
increase its block discount facilities and to pursue complementary
credit instruments that will reduce the overall cost of
borrowing.
-- In respect of Loans, the Group utilises block discount
facilities and, during the year, established a Secured Loan Note
facility, comprising loans from high net-worth individuals.
-- In respect of Commercial Finance, the Group utilises
'back-to-back' bank facilities for lending against client
receivables.
In each case security is provided to each lender in the form of
an assignment of the underlying lease, loan or invoice
receivables.
In order to successfully manage the increased funding lines and
capital requirements the Group is implementing a centralised
Treasury function. This aims to ensure adequate cash is readily
available to fuel expected growth, gearing ratios associated with
its funding are met and the cost of capital of the Group continues
to reduce. This approach has ensured all funding covenants have
been met and are expected to continue to be met and that the
Group's aggregate funding facilities provide sufficient headroom to
ensure the Group is well-placed to deliver further organic
growth.
The Group is not subject to any external regulatory capital
requirements and only provides funds to UK SMEs. As such it does
not operate in, nor have significant exposure to, currencies other
than sterling.
Key performance indicators
The Board and senior management regularly review and monitor key
metrics in assessing the performance of the Group. Some of these
key metrics to help gauge the Group's meaningful progress are
detailed below.
-- Revenue - increased 35% to GBP16.9m (prior year GBP12.6m)
-- Profit Before Tax and Exceptional Items - increased 17% to GBP4.3m (prior year GBP3.7m)
-- Earnings Per Share - increased 4% to 6.09p (prior year 5.87p)
-- New Business Origination - increased 67% to GBP83.0m (prior year GBP49.7m)
-- Number of 'live' accounts in own-book portfolio - increased
10% to 10,450 (prior year 9,500)
-- Funding interest rate - reduced to a range from 4.5% to 8.8% (prior year 4.8% to 12%).
Principal risks and uncertainties
Principal Risks are a risk or a combination of risks that, given
the Group's current position, could seriously affect the
performance, future prospects or reputation of the Group. These
risks could potentially materially threaten the business model,
performance, solvency or liquidity, or prevent the delivery of the
strategic objectives. The Board has overall responsibility for
ensuring that risk is appropriately managed across the Group and,
through the Risk Committee, has established the Group's appetite to
risk and approved its structure, methodologies, policies, and
management roles and responsibilities.
As well as regular external reviews and audits from the Group's
statutory auditors and the quarterly audits from its various
funding partners, the Group has numerous internal checks and
balances. Initial responsibility rests with the business divisions
and functions with line managers responsible for identifying and
managing risks arising in their business areas. This is augmented
by the Group's central and independent compliance and finance
functions with responsibility for reporting to the Board. The Group
has a Chief Risk Officer who reviews all significant Group credit
exposures.
The key risks identified and which the Board has reasonable
expectation are appropriately mitigated are:
-- Credit Risk - the risk of default, potential write off,
disruption to cashflow and increased recovery costs on a debt that
is not repaid individually or if there is a wider market
deterioration. This is mitigated by the Group adopting prescribed
lending policies and adhering to strict credit and underwriting
criteria specifically tailored to each business area. The Group
also has the capacity to 'broke-on' business rather than write it
on its own book. As such, any market deterioration impact can be
reduced by broking on prospective deals.
-- Funding Risk - the risk of the Group not being able to meet
its current and future financial obligations over time,
specifically that funding is not available to meet the Group's
growth targets. The Group currently has funding facilities, across
Block discounting, the Secured Loan Note programme and back-to-back
invoice finance facilities, in excess of GBP120m with ample
headroom to meet the growth targets for the foreseeable future. The
Board is also actively engaged in securing additional facilities to
enable it exploit any further business opportunities in the
future.
-- Acquisition Risk - the risk that the Group's acquisition
programme does not deliver value, overstretches resource beyond its
capacity or has failed to identify problems within the acquired
businesses. The Group has paid appropriate consideration for its
acquired businesses with post synergy price to earnings multiples
expected to be circa six times. It has also spent considerable time
and effort, and will continue to do so, to bolster its central
resources and infrastructure to assist in integrating and
generating synergies from the acquisitions. Finally, the Group has
conducted thorough and detailed internal and external due diligence
on all acquisitions, ensured appropriate warranties, indemnities
and lock-in periods are included in the purchase agreements and has
purchased well established businesses with successful and respected
management teams.
-- Regulatory Risk - the risk of legal or regulatory action
resulting in fines, penalties and sanctions that could arise from
the Group's failure to identify and adhere to regulatory
requirements in the UK. In addition, there is the risk that new or
enhanced regulations could adversely impact the Group. The Group
has a well-established and independent compliance department with
appropriate resources and access to external advisors. The
department looks both internally at the Group ensuring its
practices are appropriate and externally at future developments to
ensure the Group is prepared to adopt any changes in regulation as
and when they arise.
Summary
The Board remains confident that it is maintaining its
commitment to provide a range of finance solutions to support the
UK SME sector, whilst also pursuing growth plans to deliver
increased shareholder value.
ON BEHALF OF THE BOARD:
Ian Smith
Chief Executive Officer
12 September 2017
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 MAY 2017
2017 2016
GBP'000 GBP'000
CONTINUING OPERATIONS
Revenue 16,944 12,554
Cost of sales (6,094) (4,480)
-------- -----------
GROSS PROFIT 10,850 8,074
Other operating income 3 2
Administrative expenses (6,469) (4,290)
Exceptional Items (263) (368)
-------- -----------
OPERATING PROFIT 4,121 3,418
Finance costs (82) (74)
Finance income 41 2
-------- -----------
PROFIT BEFORE INCOME
TAX 4,080 3,346
Income Tax (794) (480)
-------- -----------
PROFIT FOR THE YEAR 3,286 2,866
======== ===========
Profit attributable
to:
Owners of the parent 3,286 2,866
======== ===========
Profit per share attributable
to the equity holders
of the company during
the Period
Earnings Per Share expressed
in pence per share
Basic 6.09 5.87
======== ===========
Diluted 5.69 5.51
======== ===========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 MAY 2017
2017 2016
GBP'000 GBP'000
ASSETS
NON-CURRENT ASSETS
Goodwill 14,908 10,289
Intangible assets 84 -
Property, plant and equipment 1,744 1,251
Trade and other receivables 49,966 33,166
Deferred tax 411 208
-------- --------
67,113 44,914
-------- --------
CURRENT ASSETS
Inventories 135 81
Trade and other receivables 23,989 22,895
Cash and cash equivalents 2,078 910
-------- --------
26,202 23,886
-------- --------
TOTAL ASSETS 93,315 68,800
======== ========
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 5,494 5,253
Share premium account 14,170 13,077
Employee shares 91 90
Retained earnings 8,755 5,469
-------- --------
TOTAL EQUITY 28,510 23,889
-------- --------
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 32,097 19,664
Financial liabilities -
borrowings: 250 399
Provisions 2,300 1,833
-------- --------
34,647 21,896
-------- --------
CURRENT LIABILITIES
Trade and other payables 26,533 19,979
Financial liabilities -
borrowings:
* Bank overdrafts - 519
* Interest bearing loans and borrowings 949 729
Tax payable 943 543
Provisions 1,733 1,245
-------- --------
30,158 23,015
-------- --------
TOTAL LIABILITIES 64,805 44,911
-------- --------
TOTAL EQUITY AND LIABILITIES 93,315 68,800
======== ========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2017
Called Retained Share Employee Total
up Share Earnings Premium Shares Equity
Capital
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
June 2015 3,685 2,994 5,606 83 12,368
Transactions
with owners
Dividends - (391) - - (391)
Value of employee
services - - - 7 7
Total comprehensive
income - 2,866 - - 2,866
Changes in equity
Issue of share
capital 1,568 - 7,471 - 9,039
Balance at 31
May 2016 5,253 5,469 13,077 90 23,889
========== ========== ========= ========= =========
Transactions
with owners
Dividends - - - - -
Value of employee
services - - - 1 1
Total comprehensive
income - 3,286 - - 3,286
Changes in equity
Issue of share
capital 241 - 1,093 - 1,334
Balance at 31
May 2017 5,494 8,755 14,170 91 28,510
========== ========== ========= ========= =========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MAY 2017
2017 2016
GBP'000 GBP'000
Cash generated from operations
Profit before tax 4,080 3,346
Depreciation and amortisation
charges 544 354
Finance costs 82 74
Finance income (41) (3)
(Increase) in trade and
other receivables (9,134) (12.649)
Increase in trade and
other payables 11,476 11,996
-------- ---------
7,007 3,118
Cash flows from operating
activities
Interest Paid (82) (74)
Tax paid (615) (637)
-------- ---------
Net cash generated from
operating activities 6,310 (2,407)
-------- ---------
Cash flows from investing
activities
Acquisition of subsidiaries (3,141) (7,588)
Purchase of software,
property, plant and equipment (1,089) (547)
Interest received 41 3
-------- ---------
(4,189) (8,132)
-------- ---------
Cash flows from financing
activities
Loan repayments in year (422) (179)
Loans issued in year 400 -
Share issue net of costs (150) 6,769
Equity dividends paid (262) (129)
-------- ---------
Net cash generated from
financing activities (434) 6,461
-------- ---------
Increase in cash and
cash equivalents 1,687 736
Cash and cash equivalents
at beginning of year 391 (345)
-------- ---------
Cash and cash equivalents
at the end of the period 2,078 391
======== =========
1. ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards (as adopted by the
European Union) and IFRIC interpretations and with those parts of
the Companies Act 2006 applicable to companies reporting under
IFRS. The financial statements have been prepared under the
historical cost convention.
2. SEGMENTAL REPORTING
The company has one business segment to which all revenue,
expenditure, assets and liabilities relate. The directors expect
the Group to operate with three distinct business units - Asset
Finance, Loan and Commercial Finance - from 1 June 2017.
3. PROFIT BEFORE INCOME TAX
The profit before income tax is stated after charging:
2017 2016
GBP'000 GBP'000
Depreciation - owned
assets 529 462
Computer software amortisation 15 -
Auditors' remuneration 40 19
Other non-audit services 20 34
======== ========
4. DIVIDENDS
2017 2016
GBP'000 GBP'000
Ordinary shares GBP0.10
each
Final - 391
========== =========
Subject to shareholder approval at the Group's Annual General
Meeting on 9 October 2017, the Board is recommending the payment of
a dividend of 0.5p per share.
5. EARNINGS PER SHARE
Earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the year. For diluted
earnings per share, the weighted average number of shares is
adjusted to assume conversion of all dilutive potential ordinary
shares.
2017
Weighted
average Per-share
Earnings number amount
GBP'000 of shares pence
Basic
EPS
Earnings attributable
to ordinary shareholders 3,286 53,939,771 6.09
Effect of dilutive
securities - 3,819,210 (0.40)
Diluted EPS
Adjusted earnings 3,286 57,758,981 5.69
========= =========== ==========
2016
Weighted
average Per-share
Earnings number amount
GBP'000 of shares pence
Basic
EPS
Earnings attributable
to ordinary shareholders 2,866 48,850,117 5.87
Effect of dilutive
securities - 3,152,098 (0.36)
Diluted EPS
Adjusted earnings 2,866 52,002,215 5.51
========= =========== ==========
Subsequent to the year end, on 8 June 2017 the company issued
28,861,117 Ordinary GBP0.10 shares in order to fund acquisitions.
Had this transaction occurred before the end of the reporting
period it would have significantly changed the number of ordinary
shares used for the purpose of these calculations.
6. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information set out in this announcement does not
comprise the Group's statutory accounts for the years ended 31 May
2017 and 31 May 2016. The financial information has been extracted
from the statutory accounts of the Group for the years ended 31 May
2017 and 31 May 2016.
The auditors' opinion on those accounts was unmodified and did
not contain a statement under section 498 (1) or 498 (3) Companies
Act 2006 and did not included references to any matters to which
the auditor drew attention by the way of emphasis.
The statutory accounts for the year ended 31 May 2016 have been
delivered to the Registrar of Companies, whereas those for the year
ended 31 May 2017 will be delivered to the Registrar of Companies
following the Company's Annual General Meeting.
7. ANNUAL REPORT AND ANNUAL GENERAL MEETING
The Annual Report will be available from the Company's website,
www.1pm.co.uk, from 12 September 2017 and will be posted to
shareholders on that date. The Annual Report contains notice of the
Annual General Meeting of the Company which will be held at Cenkos
Securities plc, 6 7 8 Tokenhouse Yard, London, EC2R 7AS on 9
October 2017 at 1pm.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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