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Results presentation
year ended 31 May 2018
September 2018
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
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September 2018
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
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
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2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000
10,000 15,000 20,000 25,000 30,000 35,000 2013 2014 2015 2016 2017 2018
Track Record
One pm Academy Bradgate iloans Gener8 Positive CF2U PBT £k
✓ 7 successful acquisitions since 2015 delivering to plan ✓ 70% 4-year CAGR in profits ✓ 31% organic growth in FY18 ✓ 24% increase in EPS ✓ Substantial increase in dividend with a progressive policy ✓ Good visibility of income for FY19 ✓ A strong start to FY19 with growth meeting management’s targets
Organic growth in all businesses as well as acquisitions
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Income £000 PBT £000
A group based on core values of being “Fair, Flexible, Trusted, Personal”
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broke-on to other lenders – hedge against market cycles
Asset Finance and Vehicles Broking Asset secured and PG-backed Loans Commercial (i.e. invoice) Finance
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180 employees, 7 sites, dealing with circa 20,000 borrowers
Pizza house - Edinburgh Edge 3240 Gas base oven & catering equipment £20,994 over 36 months at 15.2% Proprietor PG taken Own book Repeat customer
JCB Loadall for aggregates recycling £34k HP over 60 months at 16.0% yield 65% LTV. Own book Director PG taken Systems for Assistive Learning Disclosed receivables finance £700,000 facility for 12 months 2.95% over base + fees of 0.5% of sales (£28k p.a.). Own book
Second charge loan for home improvements £60,000 over 20 years at 4.58% Total commission and fees £6.2k Broked to Optimum Credit
Used car loan £6,427 over 60 months 14.65% APR £570 commission Broked to Motonovo Scottish Premier Football Club £292k for turf lights for pitch maintenance 48 months at 14%. Own book Broked on a repeat order for commercial laundry equipment.
Rigid criteria – robust processes – risk/reward pricing
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…all leads to high quality of earnings
Banks
HSBs lend to SMEs, but no longer structured to support smaller businesses
Banks Challenger Banks Alternative finance platforms Quoted companies Private companies Flexibility
X X
Speed of service
X
Personal approach
X X X
Range of products
X X X
✓ ✓ ✓ ✓
✓
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Fragmented sector - few at scale in small-ticket lending
Challenger Banks
Also lessors, but do not
end of the market. Lend to us wholesale.
Alternative finance platforms
Growing sector, but comparatively small (rate of growth slowing)
Quoted companies
Tend to be single product focused, or banks e.g. PCF, Orchard
Private companies
Quantum Finance (Investec) and multiple regional players
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Strong performance. Positive trends across all key metrics
£142.9m from £83.0m £30.0m up from £16.9m £7.9m up from £4.1m £48.1m up from £28.5m 7.57 pence per share up from 6.09 4.1% down from 5.3% £62.9m up from £39.8m £162.6m up from £74.5m 1.2% of net portfolio unchanged +72% +78% +93% +69% +24%
+58% x 2.2
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Note: Comparisons taken from reported statutory accounts
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Increasing demand, flexibility, cross-sell opportunities
Asset Finance
relationship
broked-on asset deals (4 current)
Vehicles broking
uses invoice finance through RBS
Invoice finance
“Xsell”: how it is working
already ‘secured’
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Organic and acquisitive growth
By Product (£m) 2018 2017 +/- Own book Lease 15.2 12.1 26% Own book Loan 3.1 2.6 19% Own book invoice finance 6.5 0.0 n/a Commission Income 5.2 2.2 136% Total 30.0 16.9 78%
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Reducing cost of funding outstripping rate pressures
Strong growth despite share issue to fund acquisitions
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Reducing rates and significant headroom for growth
continued reduction in ‘Block’ rates due to treasury ‘bulk buying’
Key Funding Lines - £m Facility Usage at 31 May 18 Headroom Bank Overdraft 1.0 1.0 Block Funding lines (no non-utilisation fees) 112.6 59.3 53.3 Secured Loan Note & other HNW loans 12.0 6.1 5.9 Back to back facilities 37.0 30.7 6.3 Total Funding Facilities 162.6 96.1 66.5
Balance Sheet as at 31 May £’m Cash Generative Group £’m
31/5/18 31/5/17 An indicative month…… Assets Operational cash flow Non-Current Assets 81 67 Monthly receipts c£5.5m Current Assets 78 26 General outgoings c£0.9m Total Assets 159 93 Funder repayments c£3.2m Cash generation c£1.4m Equity Retained Earnings 15 9 Other cash flows Share capital & premium 33 20 Deferred consideration c£0.2m Total Equity 48 29 Cash to utilise in new deals c£1.2m Liabilities New deals (leverage) Non-Current Liabilities 37 35 Cash in deals (20%) c£0.8m Current Liabilities 74 30 Commissions c£0.4m Total Liabilities 111 65 Funding drawdown c£3.2m Total Equity and Liabilities 159 93 Deals paid-out c£4.0m
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Strengthening and cash generative
✓ ✓ ✓
c£1.2m
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Increasing own-book, bad debts under control
Less than £0.5m over 10 years of trading – currently generating nearly £7m p.a. of revenue. Bad Debt Provision £m Net Portfolio Provision % Asset 70.7 1.2 1.6% Loan 15.3 0.3 2.0% Invoice Finance 36.8 0.3 1.0% Group 122.8 1.8 1.5%
*Gross portfolio means total receivable including unearned interest. **Net portfolio, means total receivables less unearned interest income. ***Net bad debts or write-offs means bad debt expense less recoveries.
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Credit risk – no major concentrations by region or sector
2.9% 1.8% 1.6% 1.8% 1.5% 1.5% 2.0% 1.4% 1.9% 1.5% Top 10 by deal number
LONDON Essex Staffordshire CC Hertfordshire Birmingham Aberdeen City and Aberdeenshire SCOTLAND Barnsley, Doncaster and Rotherham Tyneside Leeds
4.1% 3.4% 3.0% 2.5% 2.4% 1.9% 1.8% 1.7% 1.7% 1.5%
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5
£m Top 10 by Principal o/s (leases, loans, HP) & credit facility (invoice financing) 5.8% 4.3% 4.2% 3.9% 3.6% 2.9% 2.4% 2.2% 2.2% 2.0% Top 10 by deal number
Unlicensed restaurants Maintenance & repair of vehicles Hairdressing & beauty Licensed restaurants Public houses & bars Business support services Freight transport by road Take away food Specialised construction activities Retail sale in food, beverages or tobacco
5.0% 3.6% 3.4% 3.0% 2.9% 2.9% 2.8% 1.7% 1.7% 1.6%
1 2 3 4 5 6
£ M's Top 10 by Principal o/s (leases, loans, HP) & credit facility (invoice financing)
Asset Finance and Vehicles Broking Asset Secured and PG- backed Loans Commercial (invoice) Finance
Risk-adjusted yields, conservative underwriting and provisioning
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Origination: Own book (net): Funding facilities: Headroom: Blended interest rate: Blended interest cost: Deal term: Impairments: Impairment provision:
Objectives
Investment in Onepm resources 2014 Acquisition: Academy 2015 Adjacent products: iLoans Gener8 Positive “Platform1” automation & Fintech project Acquisition: Bradgate 2016 Bell 2017 Further bolt-on M&A CF2U 2017 Market Cap May 2015 £25m Market Cap target £100m (for this phase)
Currently circa £45m
2014 to 2018 successfully implemented
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2018
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Organic growth in each group entity
Maintain focus on lending to smaller UK SMEs Operate a hybrid model, broking-on consumer business Origination currently in line with plan
Operational synergies
Drive benefits from operating as a Group Deliver synergies from “Platform1” project Pursue access to lower-cost and longer-term funding
Further strategic expansion
Fragmented sector - potential for further acquisitions “Bolt-on” books of receivables, or smaller entities Plus ‘transformational’ deals, given the right conditions
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scale in a fragmented sector
market share, so significant potential
earnings and future visibility
planned annual 30% increases for next 3 years
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23.24% 20,035,065 100.00% 86,207,540
Fund Manager
% Holdings % (Prev) 31 Aug 2018 86,207,540 £45,689,996 Lombard Odier Asset Management (Europe) Limited 22.84% (22.84%) 19,691,352 Sapia Partners LLP 13.59% (12.66%) 11,714,510 Russell R Esq 12.25% (12.25%) 10,557,224 Hargreaves Lansdown 7.56% (6.62%) 6,518,088 Nolan M F Esq 5.14% (6.30%) 4,432,969 Interactive Investor Trading Limited 4.80% (4.15%) 4,140,409 Charles Stanley & Co 3.44% (3.53%) 2,964,381 Barclays Stockbrokers Limited 2.79% (2.32%) 2,407,885 Jacques H Ms 2.18% (2.18%) 1,876,749 Halifax Share Dealing 2.17% (1.60%) 1,868,908 Total 76.76% (74.44%) 66,172,475 Other Grand total
Non Execs: John Newman (Chair), Julian Telling, Ron Russell James Roberts CFO Ed Rimmer COO
Mark Burgess Vehicles Peter Nolan Head of Credit & Fintech Richard Arnold GM Bradgate Michaela Dodd Marketing & GM Academy
Ian Smith CEO
Holly Parker Head of HR Jen Bodey Compliance & Governance Alun Winter Loans David Smith CF Division (Positive) 23
Operating Board Plc Board
Tansy Battson CF Division (G8)
UK SMEs require access to funds to grow their businesses. Market underserved by HSBs and Challengers moving upscale into bigger ticket deals. 1pm meets the need by providing the finance products SMEs require:
either by providing the cash direct or broking-
1pm’s strict credit criteria.
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Aug 2006
Onepm admitted to AIM raising £1.3m
Feb 2014
Ian Smith (CEO) joins the Group, initially as Non- exec Chairman
Aug 2015
Academy acquired and £7.3m raised via a placing. Mike Nolan (MD Asset Finance) joins the Group
March 2016
Bradgate Acquired
March 2017
iLoans Acquired
May 2017
James Roberts (CFO) joins the Group
June 2017
Gener8 acquired and £13.0m raised via a placing. Ed Rimmer (MD Commercial Finance) joins the Group
July 2017
Positive acquired
Dec 2017
CarFinance 2U Acquired
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