TIDMPCF
RNS Number : 8777K
PCF Group PLC
27 April 2020
27 April 2020
PCF Group plc
("PCF", the "Company" or the "Group")
Trading Update
Further to market updates on 6 March and 7 April 2020, the Group
today reports a trading update for the period from 1 October 2019
to 31 March 2020 and an update on the early impact of Covid-19 on
the Group. Our priority through this challenging period is to
support and protect our customers, employees, capital and the
long-term value of our business for all stakeholders.
Highlights
-- Business continuity plans have proved resilient and PCF
remains open for business to support consumers and SMEs
-- Limited impact of Covid-19 on upcoming Interim Results due
to the timing of the crisis, however we anticipate future
impacts which are currently uncertain
-- New business volumes down significantly for March and April
and customer forbearance requests have increased
-- Short- and medium-term operating income expected to be strong
- with GBP75m of future unearned finance income on the balance
sheet
-- Strong balance sheet, resilient business model, diversified
and well secured lending portfolio, and experienced management
will help ameliorate the effects of Covid-19 on the Group
-- Further update will be made on the release of the Interim
Results in June
Operational measures
Our staff are currently remote working and their well-being is
our primary concern as they continue to offer a 'business as usual'
service. Our ability to do this is testament to the dedication and
quality of our employees who have quickly adjusted to the current
environment. For a number of staff, we have utilised the
government's furlough scheme, and are currently applying a full
'top up' of their salaries to 100%. PCF Bank is proud of a culture
where past and present financial success is shared across the
organisation to support staff and avoid hardship at the most
difficult of times.
Our customers have also needed our support, with requests of
forbearance and, in some cases, new lending to either honour
commitments, take advantage of opportunity, or replace critical
assets. We remain open for business to support consumers and SME
customers.
Business impact
Prior to any Covid-19 related events, the business had operated
in line with the Board's expectations for the period from 1 October
2019 to 31 March 2020, with strong balance sheet growth and
increasing profitability. New business origination in the six-month
period to 31 March 2020 was 26% ahead of the comparative period
last year at GBP153m (2019: GBP121m). We are also pleased to report
that the quality of originations has been maintained with over 80%
(2019: 76%) of originations being in our prime credit grades. The
lending portfolio has grown by 45% to over GBP400m as at 31 March
2020 (2019: GBP276m) and this is supported by retail deposits of
GBP340m (2019: GBP204m). The Covid-19 disruption had a minimal
effect on this trading period. However, it is anticipated there
will be a material effect in respect of a revised outlook for
impairment modelling. These economic and probability of default
assumptions will be detailed in our Interim Results.
As with all banks, the Covid-19 crisis has had an immediate
downward impact on the demand for lending in our product segments
and we have seen a significant increase in the number of requests
for payment forbearance by our customers. New business originations
were 26% down against target in March and with a limited pipeline,
are trending to be 65% down on target in April. The broadcast,
entertainment and transport sectors have seen the sharpest decline.
Approximately 25% of our customers have made forbearance requests
which represents 32% of our portfolio by value.
The Group has the resources, processes and most importantly the
experience to deal with the Covid-19 crisis and all government and
regulatory advice to assist customers is being adhered to including
reduced payments and payment holidays of up to 3 months. The
quality, spread of risk and collateral-backed nature of the
portfolio will mitigate these business impacts but it is still too
early to quantify the effect on the Group's performance in H2 and
the medium-term effect on the business.
Balance sheet strength and business model
PCF entered this crisis in a strong financial position. The
Group has access to the retail deposit market, wholesale debt
markets and Bank of England funding mechanisms such as the new Term
Funding Scheme. In addition, the Group reports a strong capital
ratio of 17% as at 31 March 2020 and has headroom available on its
Tier 2 capital facility.
We have built a diversified lending portfolio of GBP400 million,
consisting of receivables focussed on prime credit quality, which
continues to generate cashflow and income. The balance sheet
contains GBP75 million of future unearned finance charges providing
quality of operating income in short to medium-term.
Commenting on current events, Chairman Tim Franklin said:
"The short-term trading and economic environment is very
uncertain. While there will be challenges ahead, we have an
experienced management team, strong capital base and high levels of
liquidity which position us well. As a prudent business, we
continually assess the risks and sensitivities of adverse economic
corrections as part of business risk planning. This was partly
behind our decision to become a bank and focus on prime lending
markets following the challenges posed at the time of the last
financial crisis. This decision has provided us with improved
resilience and strong growth which will stand us in good stead
throughout this current period and beyond.
"I would like to express my thanks to all staff for their
considerable effort in difficult circumstances as they have worked
tirelessly to support our customers and safeguard our business.
"We will further update the market at the time of our Interim
Results in early June when more will be known on performance and
outlook."
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
ENDS
For further information, please contact:
PCF Group plc Tel: +44 (0) 20 7222
Scott Maybury, Chief Executive Officer 2426
Robert Murray, Managing Director
David Bull, Finance Director
Tavistock Communications Tel: +44 (0) 20 7920
Simon Hudson / Edward Lee / Tim Pearson 3150
Panmure Gordon (Nominated Advisor and Tel: +44 (0) 20 7886
Joint Broker) 2500
Atholl Tweedie / Joanna Langley - Corporate
Finance
Charles Leigh-Pemberton - Corporate Broking
Shore Capital (Joint Broker) Tel: +44 (0) 20 7408
Henry Willcocks - Corporate Broking 4080
About PCF Group plc ( www.pcf.bank )
Established in 1994, PCF Group plc is the AIM-quoted parent of
the specialist bank, PCF Bank Limited. Since commencing operations
as a bank in 2017, the Group has increased its lending portfolio
significantly from GBP146 million to GBP400 million. The Group will
retain its focus on portfolio quality and has the capability to
lend increasingly to prime segments of its existing finance
markets. The Group has also recently diversified its lending
products and asset classes through acquisition and by setting up
new organic operations.
PCF Bank currently offers retail savings products for
individuals and then deploys those funds through its four lending
divisions:
-- Business Finance which provides finance for vehicles,
plant and equipment to SMEs;
-- Consumer Finance which provides finance for motor vehicles
to consumers;
-- Azule Limited which provides finance to the broadcast
and media industry; and
-- Bridging Property Finance which provides loans to companies
and sole traders investing in residential property.
The Group has a track record of strong financial performance and
an efficient and scalable business model, with significant room to
grow. Utilising its technologically advanced platform, the Bank
provides both depositors and borrowers with a high level of service
and a straightforward, simple range of products tailored to suit
their needs.
For media enquiries please contact media@pcf.bank
Recently recorded video profiles of PCF's Bridging Finance,
Azule Broadcast Equipment Finance, and Savings divisions are
available at the Company's profile page on the London Stock
Exchange website:
https://profile.lsegissuerservices.com/PCFGroup/overview.
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END
TSTKZGZDZKLGGZM
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April 27, 2020 02:12 ET (06:12 GMT)
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