1pm records year on year increase in revenue and profit27/06/2018
1pm plc (also referred to as “the Group”), the AIM listed alternative finance provider to the SME sector, has announced the following strong trading update ahead of the publication of its final audited results for the financial year ended 31 May 2018, scheduled to be announced in early September 2018.
The unaudited trading results for the year demonstrated further strong growth in both revenue and profits compared with the prior year. Group revenue was slightly ahead of market expectations with profits in line following further investment in operations.
Deal origination for the year was in excess of £140 million (note that figures in the following two paragraphs are unaudited). This figure represents an increase of 70pct, of which 44pct was funded on balance sheet and 56pct broked-on, a similar mix to the prior year. Revenue for the year expected to be £30.0 million, an increase in excess of 75pct, of which over 30pct is organic growth. Over 50pct of revenue for the current year to 31 May 2019 is already secured as “unearned income”
The Group says that basic earnings per share are expected to increase by more than 20pct notwithstanding the increase in shares in issue in June 2017 to fund acquisitions. Own-book portfolio as at 31 May 2018 is expected to be in excess of £130 million, up 50pct, of which 10pct is organic growth. Aggregate borrowing facilities, i.e. wholesale funding to deploy, are in excess of £160 million, an increase of more than 2 times over the prior year. The blended cost of borrowing reduced to less than 4.0pct (2017: approximately 5.3pct) and will reduce further as the facility with British Business Bank is utilised
The Group’s raw material is cash. The Group is pleased to report continuing and increasing support from the providers of wholesale funding facilities and debt investors. As at 31 May 2018, total borrowing facilities stood in excess of £160 million (2017: £74.5 million), an increase of over 2 times. With these facilities in place the Group has the headroom it requires to fund its planned growth over the next 12 to 24 months. The Group saw a reduced cost of borrowing in the year to less than 4.0pct (2017: approximately 5.3pct) and was therefore able to record an increase in Net Interest Margin.
1pm has successfully completed seven acquisitions in the past 3 years, and has integrated all the business support functions including marketing, underwriting, compliance, funding and treasury, accounting, and human resources, which are now operated on a group-wide basis. The Group is currently implementing its “Platform1” systems project aimed at harmonising its digital capability across all of the Group’s entities and harnessing the benefits of ‘FinTech’ to enhance service for customers. This project will be completed during the current calendar year.
Given the evolving integration and development of the Group, with effect from the start of the current financial year, 1 June 2018, Ed Rimmer has taken on an expanded role as Chief Operating Officer for the Group encompassing his existing role as Managing Director of the Commercial Finance Division. Also with effect from 1 June 2018 and in accordance with the planned succession in the Asset Finance Division, Mike Nolan has stepped down from his day-to-day duties pending his previously announced retirement in December 2018.
Ian Smith, Chief Executive Officer, commented, “The preliminary results for the year ended 31 May 2018 mark the successful culmination and implementation of the buy-and-build strategy pursued over the past three years, the strength of our operating model of being both a funder and a broker and our cautious approach to risk. These results reflect both the organic growth we anticipated and the expected growth from our strategic acquisitions and have produced a strong uplift in earnings per share.”