Results presentation year ended 31 May 2018 September 2018 1 - PowerPoint PPT Presentation

Results presentation year ended 31 May 2018 September 2018 1

Disclaimer This presentation ("Presentation") has been prepared by 1pm plc (the "Company") and is confidential and is only directed at persons who fall within the exemptions contained in Articles 19 and 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (such as persons who are authorised or exempt persons within the meaning of the Financial Services and Markets Act 2000 and certain other investment professionals, high net worth companies, unincorporated associations or partnerships and the trustees of high value trusts) and persons who are otherwise permitted by law to receive it. This Presentation is directed only at persons having professional experience in matters relating to investments and any investment or investment activity to which this Presentation relates is only available to such persons. Persons of any other description, including those who do not have professional experience in matters relating to investments, should not rely on this Presentation or act upon its contents. This Presentation does not constitute or form part of any offer for sale or subscription or any solicitation for any offer to buy or subscribe for any securities nor shall it or any part of it form the basis of or be relied upon in connection with any contract or commitment whatsoever. Any decision in connection with any proposed purchase of shares in the Company must be made solely on the basis of the information contained in the admission document to be published by the Company. While all reasonable care has been taken to ensure that the facts stated in this Presentation are accurate and that any forecasts, opinions and expectations contained herein are fair and reasonable, this Presentation has not been verified and no reliance whatsoever should be placed on them. Accordingly, no representation or warranty express or implied is made to the fairness, accuracy, completeness or correctness of this Presentation or the opinions contained herein and each recipient of this Presentation must make its own investigation and assessment of the matters contained herein. In particular, but without prejudice to the generality of the foregoing, no representation or warranty is given, and no responsibility or liability is accepted, as to the achievement or reasonableness of any future projections or the assumptions underlying them, or any forecasts, estimates, or statements as to prospects contained or referred to in this Presentation. Save in the case of fraud, no responsibility or liability whatsoever is accepted by any person for any loss howsoever arising from any use of, or in connection with, this Presentation or its contents or otherwise arising in connection therewith. In issuing this Presentation, the Company does not undertake any obligation to update or to correct any inaccuracies which may become apparent in this Presentation. This Presentation is being supplied to you for your own information and may not be distributed, published, reproduced or otherwise made available to any other person, in whole or in part, for any purposes whatsoever. In particular, this Presentation should not be distributed to or otherwise made available to persons with addresses in Canada, Australia, Japan, the Republic of Ireland, South Africa or the United States, its territories or possessions or in any other country outside the United Kingdom where such distribution or availability may lead to a breach of any law or regulatory requirements. 2

Track record of delivery Organic growth in all businesses as well as acquisitions ✓ 7 successful acquisitions since 2015 delivering to plan Track Record Income PBT £000 £000 ✓ 70% 4-year CAGR in profits 35,000 9,000 8,000 30,000 ✓ 31% organic growth in FY18 7,000 25,000 6,000 ✓ 24% increase in EPS 20,000 5,000 4,000 15,000 ✓ Substantial increase in dividend 3,000 with a progressive policy 10,000 2,000 5,000 1,000 ✓ Good visibility of income for - - FY19 2013 2014 2015 2016 2017 2018 ✓ A strong start to FY19 with One pm Academy Bradgate iloans growth meeting management’s Gener8 Positive CF2U PBT £k targets 3

Who we are A group based on core values of being “Fair, Flexible, Trusted, Personal” 1pm is a non-bank , alternative finance provider • We operate a hybrid model; flexibility to either fund on own balance sheet, or to • broke-on to other lenders – hedge against market cycles Own balance sheet is purely lending to UK SMEs ; we broke-on business lending • outside our credit criteria and all consumer finance Multi-product - tailored solutions from the full range of finance products SMEs require • Cautious underwriting (net write-offs of 1.2% of net portfolio) • Conservative provisioning (bad debt provision of 1.5% of the net portfolio) • Robust quality of earnings as well as strong growth • 4

Three operating divisions 180 employees, 7 sites, dealing with circa 20,000 borrowers Asset secured and Commercial (i.e. Asset Finance and PG-backed Loans invoice) Finance Vehicles Broking 5

Deal examples Repeat customer Mr. S. Systems for Mr. B. Pizza house - Scottish Premier - Midlands Assistive Football Club Edinburgh Second charge Used car loan Learning JCB Loadall for loan for home £6,427 over 60 £292k for turf Edge 3240 Gas aggregates improvements Disclosed months base oven & lights for pitch recycling receivables maintenance catering £60,000 over 20 14.65% APR finance equipment £34k HP over 60 years at 4.58% 48 months at £570 months at 16.0% £700,000 facility £20,994 over 36 14%. Own book Total commission yield for 12 months months at 15.2% commission and Broked on a Broked to 65% LTV. Own fees £6.2k 2.95% over base Proprietor PG repeat order for Motonovo book + fees of 0.5% of commercial taken Broked to sales (£28k p.a.). laundry Director PG Optimum Credit Own book equipment. taken Own book

Core competence - underwriting Rigid criteria – robust processes – risk/reward pricing Spread is fundamental in SME lending and creates a natural hedge: • Largest sector by value only 5% of portfolio and by no. of deals only 6% • Multiple SIC codes – top 10 sectors account for only 1/3rd of the portfolio • Largest lease c. £300k. Average deal size £15k. Largest IF facility c. £1.0m. Average £150k. • LTV advance on hard assets, typically 60-70%; on IF facilities, typically 55% of sales ledger • Security is paramount and timely follow-up essential: • Personal guarantees from the directors/proprietors of each SME; all soft asset leases and all loans • Assiduous follow-up on arrears and impairments, turning impaired deals into Charging Orders • Strong track-record in collections; 75% of impaired value recovered over the past 10 years • Margin is risk-priced to facilitate robust growth: • Policy decision not to relax price or credit criteria to chase aggressive top-line growth • …all leads to high quality of earnings 7

Competition Fragmented sector - few at scale in small-ticket lending Alternative finance Banks Challenger Banks Quoted companies Private companies platforms HSBs lend to SMEs, but Also lessors, but do not Tend to be single Quantum Finance Growing sector, but no longer structured to operate in the smaller comparatively small product focused, or (Investec) and multiple support smaller end of the market. (rate of growth banks e.g. PCF, Orchard regional players businesses Lend to us wholesale. slowing) Alternative finance Banks Challenger Banks Quoted companies Private companies platforms ✓ ✓ ✓ ✓ Flexibility X X ✓ ✓ ✓ ✓ ✓ Speed of service X ✓ ✓ ✓ Personal approach X X X ✓ ✓ ✓ Range of products X X X 8

Financial Highlights Strong performance. Positive trends across all key metrics • Total deal origination £142.9m from £83.0m +72% ✓ • Revenue £30.0m up from £16.9m +78% ✓ ✓ • Profit before tax £7.9m up from £4.1m +93% ✓ • Net assets £48.1m up from £28.5m +69% ✓ • Earnings per share 7.57 pence per share up from 6.09 +24% ✓ • Blended cost of borrowing 4.1% down from 5.3% -23% ✓ • Own-book element of total origination £62.9m up from £39.8m +58% ✓ • Funding facilities £162.6m up from £74.5m x 2.2 ✓ • Net write-offs 1.2% of net portfolio unchanged - Note: Comparisons taken from reported statutory accounts 9

Deal origination Increasing demand, flexibility, cross-sell opportunities “ Xsell ”: how it is working • Continuing high demand for 1pm products : • £1.5m turnover UK SME • introduced via Academy supplier - new business origination up 72% to £142.9m relationship Asset • Combination of 6 own book and - 31% organic like for like broked-on asset deals (4 current) Finance • Flexible ‘own -book ’/‘ broked- on’ model: - 44% written on own book, 56% broked-on • Lead passed internally to Vehicles • Now manage the 13 van fleet - ability to adapt to cycles in the sector and economy • Identified internally that client Vehicles - all vehicle business broked on. No own-book residual risk uses invoice finance through RBS broking • Cross-selling growth: - unique range of products available to UK SMEs • Positive Cashflow introduced - £13m of lead generation in last quarter of financial year • £100k IF facility being prepared Invoice - cross sell becoming embedded within the group - higher margins; minimal client acquisition cost finance 10