TIDMOPM
RNS Number : 7194Q
1PM PLC
23 June 2020
23 June 2020
1pm plc
("1pm", the "Group" or the "Company")
Trading update for the year ended 31 May 2020;
New term loan funding of GBP3.1 million for operations; and
Further new and reallocated funding of GBP6.3 million for CBILS
lending
1pm plc (AIM: OPM), the AIM listed independent specialist
provider of finance facilities to UK SMEs, provides the following
trading update for the financial year ended 31 May 2020. The
Company is also pleased to announce that it has obtained additional
funding of GBP3.1 million for its own business operations and has
arranged new and reallocated funding facilities of GBP6.3 million
to deploy as a lending partner under the Government's Coronavirus
Business Interruption Loan Scheme ("CBILS").
Trading update
The Group provides the following trading update ahead of the
publication of its final results for the financial year ended 31
May 2020, which are scheduled to be announced on 22 September
2020.
During the year, the Group experienced three quarters of
'normal' trading activity and one quarter, 1 March to 31 May 2020,
impacted by the effects of the COVID-19 pandemic.
The Group reports a satisfactory trading performance for the
financial year as a whole in spite of the significant interruption
to normal trading activities in the fourth quarter caused by the
COVID-19 crisis and its financial implications.
Business Highlights:
-- The inherent strengths of the Group's strategic market
position as a multi-product finance provider to UK SMEs, comprising
Asset, Vehicle, Loan and Invoice finance, to a very broad range of
business sectors, combined with the risk-mitigating model of being
both a lender and a broker, have come to the fore in the current
economic conditions and have proven the Group's commercial
resilience.
-- Effective business continuity plans have also attested to the
Group's operational resilience and have underpinned the
continuation of a seamless service for the Group's customers.
-- The Group's ability to develop new lending opportunities
despite the business impact of COVID-19 has demonstrated the
Group's commercial responsiveness and agility as a non-bank,
specialist finance provider, focused on personal customer service
and tailored lending solutions.
-- New business origination for the financial year was
approximately GBP147.0 million of which approximately GBP54.5
million (37 per cent.) was written on 'own-book' and GBP92.5
million (63 per cent.) was placed for broker commission income.
-- As at 31 May 2020, the Group had granted forbearance
totalling GBP0.9 million to customers in respect of leases and loan
deals with a portfolio value of GBP24.9 million, representing 20
per cent of the Group's receivables. The strength of the Group's
balance sheet, which has now been further bolstered by additional
funding in the form of a term loan, as set out below, has enabled
this forbearance to be granted without the Group needing to request
similar forbearance from its own funding partners. This has enabled
the Group to stay open for new business throughout the period.
-- Ongoing support from funding partners, plus the spread and
size of funding facilities available to it has resulted in the
Group being well-equipped to maximise the opportunities that will
be presented as the economy recovers.
-- No material increase in bad debt write-offs had occurred as a
result of COVID-19 as at 31 May 2020 due to large numbers of UK
SMEs being able to access funding through the availability of the
Government's temporary COVID-19 financial support schemes. A
decision has been taken, however, to increase the bad debt
provision as at 31 May 2020, as set out below, as a prudent
governance measure.
-- As a further consequence of UK SMEs accessing funding through
the availability of the Government's support schemes, over the past
eight weeks the Group has received approximately GBP1.0 million
from the early settlement of outstanding lease and loan agreements,
which has added to the Group's cash resources available to redeploy
for further lending, in particular under the Group's accreditation
as a CBILS funding partner.
Financial highlights*
-- Revenue for the year expected to be GBP29.1 million (FY 2019:
GBP31.8 million) of which approximately 80% is from lending
activities and 20 per cent from broking activities.
-- PBTE for the year expected to be approximately GBP3.0 million
(FY 2019: GBP8.1 million), stated after a 'one-off' increase in the
bad debt provision of GBP2.1 million recorded in the fourth quarter
of the financial year to mitigate any potential bad debts that may
arise in the future from the impact of COVID-19.
-- A similar level of net portfolio write-offs to the prior year
was incurred, representing under 2.0% of the net lending portfolio,
but provisions have been prudently increased to approximately 5.2%
or GBP5.1 million (31 May 2019 1.9% or GBP2.4m).
-- Net assets at 31 May 2020 were in excess of GBP55.0 million (31 May 2019: GBP53.8 million).
-- Borrowing facilities as at 31 May 2020 were in excess of
GBP180 million (31 May 2019: GBP167 million) with the blended cost
of borrowing maintained at approximately 4%.
-- Good visibility of future revenue already secured with
"unearned income" as at 31 May 2020 of over GBP15 million.
-- Cash balances, including the proceeds of new term loan
funding, of GBP4.2 million as at 22 June 2020. In addition the
Group has a currently unutilised overdraft facility of GBP1.0
million.
*unaudited
The start of the current financial year has been overshadowed by
the continuing impact of COVID-19 on the Group's business
activities and, as the path out of the current economic recession
and the time it will take continue to be highly uncertain, the
Board is currently not in a position to provide guidance on
performance for the current financial year.
The payment of the interim dividend previously due be paid on 12
May 2020 to shareholders on the register at 17 April 2020 and a
decision on the amount and timing of any final dividend for the
financial year ended 31 May 2020 will continue to be deferred until
the business impacts of the COVID-19 pandemic become clearer.
Ian Smith, Chief Executive Officer, commented:
"The strength of our market positioning, multi-product offering,
sector spread and the flexibility to either fund on our own balance
sheet or broke on, have all stood us in good stead throughout the
financial year and have certainly come to the fore with the recent
challenges posed by COVID-19.
"As a result of the available and welcomed Government-backed
business support schemes, the Group has not seen a significant
increase in borrower insolvencies and resulting portfolio
write-offs. In accordance with the Group's cautious policies the
Board has, however, decided to account for an additional bad debt
provision as at 31 May 2020 as a prudent measure. This additional
charge has reduced profit before tax for the financial year, but is
considered an appropriate step to take in the current uncertain
economic circumstances.
"The Group is well-funded and supported, well-resourced with an
experienced management team and strategically well-placed to not
only withstand the business impact of the pandemic, but also to
return to strong and stable growth. I would like to thank all our
stakeholders for their support and in particular all 1pm personnel
for adapting so well in these challenging times."
Additional funding for operations
The Group is pleased to announce that it has agreed a GBP3.1
million five year term loan with its principal bank, NatWest (the
"Term Loan"). The proceeds of the Term Loan will supplement the
Group's existing cash resources and will provide significant
additional liquidity for the Group in offsetting the impact of
COVID-19 on its business operations. New business origination,
particularly that generated from the Group's consumer finance
broking activities and which has historically accounted for
approximately 20 per cent of the Group's revenues, significantly
reduced in late March and throughout April, before starting to
recover during May 2020. The Term Loan ensures that the Group has
the funding it needs to maintain its operational capability and
capacity in its broking activities and will enable a return to
strong organic growth as the recovery in new business origination
levels continues.
CBILS lending and funding facilities
On 5 May 2020, the Company announced that British Business Bank
had approved 1pm Finance (UK) Ltd, a wholly-owned subsidiary of the
Company, as an accredited participating lender under CBILS. With
this accreditation, the Group is able to expand its lending in the
form of CBILS leases and loans advanced by the Group to small
business customers across the UK impacted by the COVID-19 pandemic.
In making loans under CBILS, the Group benefits from a
government-backed guarantee for the loan repayments due from
borrowers. Following a period of mobilisation during May, CBILS
lending commenced in June and the Group is now processing a
substantial pipeline of business loan and lease proposals from a
range of UK small business borrowers.
To ensure that the Group is able to capitalise on the existing
substantial pipeline and to maximise the potential to originate new
CBILS business, the Group is pleased to announce that it has
secured new and/or reallocated existing facilities in respect of an
additional GBP6.3 million to lend to UK SMEs in the form of CBILS
loans and leases (the "Additional CBILS Funding"). Of the
Additional CBILS Funding, GBP2.8 million relates to new funding
facilities for lending in the form of a new block finance facility
of GBP2.5 million specifically for CBILS lending and a further
issue under the Group's existing Secured Medium Term Note Programme
of GBP0.3 million. The remaining GBP3.5 million relates to new
arrangements with certain of the Group's existing block finance
facility providers enabling a partial allocation of those existing
facilities specifically for CBILS lending.
James Roberts, Chief Financial Officer, commented:
"I am delighted that the strength of our group and funding
partner relationships has enabled us to raise both a term loan to
provide the Group with significant additional liquidity to offset
the cash flow effects of COVID-19 on our own business operations
while at the same time arranging new or redeployed facilities for
lending to UK SMEs, in turn enabling them to withstand the business
impact of the pandemic. One of the Group's guiding principles from
the start of COVID-19 was to stay open for new business to support
UK SMEs and we are pleased to be able to confirm 1pm's ongoing
commitment and ability to deliver on that promise."
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
For further information,
please contact:
1pm plc
Ian Smith, Chief Executive
Officer 07768 394162
James Roberts, Chief Financial
Officer 01225 474230
Cenkos (NOMAD)
Max Hartley / Ben Jeynes
(Nomad)
Julian Morse (Sales) 0207 397 8900
Walbrook PR 0207 933 8780
Paul Vann 07768 807631
paul.vann@walbrookpr.com
About 1pm:
1pm's strategy is to focus on providing or arranging the finance
UK SMEs require to fund their businesses and arranging vehicle and
property-backed finance for consumers. The multi-product range for
SMEs includes asset, vehicle, loan and invoice finance facilities.
The Group operates a "hybrid" lending and broking model enabling it
to optimize business levels through market and economic cycles.
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END
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