TIDMOPM
RNS Number : 6516Z
1PM PLC
22 September 2020
22 September 2020
1pm plc
("1pm", the "Group" or the "Company")
FINAL RESULTS FOR THE YEARED 31 MAY 2020
Resilient trading and satisfactory results despite a Covid-19
affected fourth quarter
Strong balance sheet and cash position
Trading activity increasing in the first quarter of the current
financial year
1pm plc (AIM: OPM), the AIM listed independent specialist
provider of finance facilities to UK SMEs, announces final results
for the year ended 31 May 2020, reporting a resilient performance
despite the business impact of Covid-19 in the fourth quarter of
the financial year.
The Company's financial performance for the three quarters to 28
February 2020 was in line with market expectations before being
significantly impacted by the Covid-19 pandemic in the fourth
quarter to 31 May 2020. Despite the impact of Covid-19, the Group
has remained profitable throughout and trading activity in the
current financial year to date is steadily increasing with
financial results for the first quarter ahead of the Group's
internal operating budget.
Commenting on the Group's performance, John Newman,
Non-executive Chairman, said:
"The effect of the coronavirus pandemic in the last quarter of
our financial year interrupted the Group's consistent growth since
2014 in revenue, profit before tax and earnings per share. However,
taking into account the fourth quarter, the results for the year
were satisfactory. The strength of the balance sheet, liquidity and
financial resources give the Board confidence that the Group will
be in a robust position to take advantage of the opportunity our
markets will offer as the economy recovers. It is encouraging that
in the first quarter of the new financial year there has been an
improving trend in business activity."
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 climate 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, such as becoming an
accredited funding partner under the UK Government's Coronavirus
Business Interruption Loan Scheme ("CBILS"), 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 GBP147.0
million (2019: GBP161.0 million), a decrease of 9 per cent. The
year-on-year decrease is entirely attributable to the impact of
Covid-19. Of the total origination, GBP54.5 million (37 per cent.)
was written on 'own-book' and GBP92.5 million (63 per cent.) was
placed for broker commission income.
-- Excluding Vehicle finance deals originated, all of which are
placed with other funders, 56 per cent. of new business was written
on own-book and 44 per cent. placed for broker commission income
(2019: 52 per cent. and 48 per cent., respectively).
-- As at 31 May 2020, the Group had granted forbearance to
existing customers totalling GBP0.9 million 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 enabled this forbearance to be granted
without the Group needing to request similar forbearance from its
own funding partners. This, in turn, enabled the Group to continue
to lend to viable and credit-worthy UK SMEs throughout the Covid-19
affected period.
-- 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
UK Government's temporary Covid-19 financial support schemes. A
decision was taken, however, to increase the bad debt provision as
at 31 May 2020, as noted below, as a prudent governance
measure.
Financial highlights:
-- Revenue for the year of GBP29.2 million (FY 2019: GBP31.8
million), of which 80 per cent. is from lending activities and 20
per cent. from broking activities. The year-on-year decrease in
revenue is wholly attributable to the Covid-19 affected fourth
quarter of the financial year.
-- Profit before tax and exceptional items for the year of
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, representing under 1.0% of the gross lending portfolio, but
provisions prudently increased to 5.2 per cent., or GBP5.1 million
(31 May 2019 1.9 per cent., or GBP2.4 million).
-- Operating expenses of GBP12.8 million (2019: GBP13.3 million), a decrease of 4 per cent.
-- Fully diluted earnings per share of 1.74 pence per share (2019: 6.61 pence per share)
-- Consolidated net assets at 31 May 2020 of GBP55.2 million (31
May 2019: GBP53.8 million) and consolidated net tangible assets of
GBP27.0 million (2019: GBP25.9 million).
-- Borrowing facilities as at 31 May 2020 of GBP174 million (31
May 2019: GBP167 million), of which GBP66.1 million drawn at
year-end (2019: GBP89.3 million drawn). The continued support from
the Group's funding partners through facility renewals and
increases, together with the Group becoming an accredited CBILS
lender, demonstrates the high regard in which the Group is held by
other major financial institutions.
-- Net interest margin and the blended cost of borrowing maintained at approximately 12% and 4% respectively.
-- Good visibility of future revenue already secured with
"unearned income" as at 31 May 2020 of over GBP15.2 million (2019:
GBP17.6 million)
-- Unaudited cash balances of GBP2.3 million as at 31 August
2020, in addition to a currently unutilised overdraft facility of
GBP1.0 million.
The payment of the interim dividend previously due be paid on 12
May 2020 and a decision on the amount and timing of any final
dividend for the financial year ended 31 May 2020 were deferred and
will continue to be deferred until the Group's financial
performance for the first half of the current financial year is
known. At that time, an assessment will also be made as to whether
the Company is in a position to provide forward-looking guidance on
the Group's financial performance for the whole of the current
financial year.
On current trading and prospects, Ian Smith, Chief Executive
Officer, commented:
"Although financial results from trading in the current
financial year have not yet returned to pre-Covid levels, trading
activity is steadily increasing. Results for the first quarter of
the new financial year are ahead of management's expectations. The
recent period of trading impacted by Covid-19 has served to
demonstrate and underline the strength of the Group's
market-position, product offering, operating model and liquidity
position, all of which ensure the Group is well-placed to return to
its planned growth trajectory."
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 Securities plc (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
More information is available on the Company website
www.1pm.co.uk
Chairman's Statement
For the year ended 31 May 2020
Performance and dividend
The coronavirus pandemic has brought turmoil and uncertainty to
economies worldwide and the impact resulted in a significant
downturn in our business activities in the final quarter of our
financial year. Despite this, it is pleasing to report that we
maintained a seamless service throughout, continued to be "open for
business" and successfully moved our staff from six sites to remote
working within a working week. This reflects the commitment and
enthusiasm of all our staff around the UK and the Board is indebted
to them for the "can do" attitude that they have shown.
The effect of the pandemic in the last quarter of our financial
year has interrupted the Group's consistent growth since 2014 in
revenue, profit before tax and earnings per share. However, taking
into account the last quarter, the trading performance for the
whole year was satisfactory. The Group's revenue was GBP29.2m
(2019: GBP31.8m) and Group profit before tax and exceptional items
was GBP3.0m (2019: GBP8.1m). This result was after making an
additional provision of GBP2.1m for potential future credit risk
relating to the effects of the pandemic.
Fully diluted earnings per share, taking account of shares
issued relating to the successful achievement of acquisition
earn-out targets, were 1.74p (2019: 6.61p).
The onset of the pandemic saw our Senior Management Team having
a clear focus on bringing about the significant changes necessary
for our business to continue to support our customers, many of whom
were experiencing immediate financial hardship as a result of
lockdown.
The strength of the Group's balance sheet and the additional
financial resources referred to in the Chief Financial Officer's
review has enabled the Group to grant forbearance on leases and
loans to those customers with the most pressing financial
difficulties. Each case was dealt with individually and with
compassion and understanding and I am proud of what our staff
achieved in supporting our customers in what were, and continue to
be, exceedingly difficult circumstances.
A significant and positive event for our business was that in
May 2020 the Group received approval as an accredited lending
partner under the Government's Coronavirus Business Interruption
Scheme ("CBILS") initiative. This has enabled the Group to expand
its lending in the form of leases and loans to SME customers across
the UK with the benefit for the Group of a government-backed
guarantee for the loan repayments due from the borrower. The Board
is confident that becoming an accredited lender will have the
potential to make a significant impact on the number of new lending
agreements. At the end of August 2020, the amount of funding
advanced to our customers under the terms of CBILS totalled
approximately GBP4m.
The Group's trading update on 23rd June 2020 referred to the
deferment of the payment of the interim dividend that was due to be
paid on 12 May 2020 and also to the position of any final dividend
for the financial year ended 31 May 2020. The uncertainty in
business conditions referred to in the update remain with us and
the Board, in exercising a prudent approach, has decided to
continue with the deferment of the interim dividend and any
recommendation in respect of a final dividend until January 2021
when the trading results for the first half of the current
financial year will be known.
Our strategy
The Group Strategic Report sets out progress against the Group's
goals and objectives. The focus of the strategy is for the Group to
continue to grow as a well-diversified and risk-mitigated
alternative finance provider, recognised as having a comprehensive
range of business finance products to offer to an expanding base of
UK customers.
The balancing and management of risk is an important
responsibility for the Board at all times but particularly so where
there exists considerable economic uncertainty. This has never been
more acutely felt than in the present Covid-19 environment and it
is likely that businesses, governments and wider society will have
to contend with the economic consequences for the foreseeable
future.
However, the Group's business model, in offering multi-product
financial services to a wide range of business sectors, has
continued to deliver a high degree of commercial resilience. We
remain confident that this resilience and flexibility within the
business model will ensure that the Group can balance its risk
exposure in a prudent manner while maintaining competitive levels
of customer service.
Governance and culture
The business operates in a regulated environment and a key
responsibility for the Board is to ensure that strong and effective
governance operates throughout the Group.
The Board has four sub-committees, namely Audit, Remuneration,
Nominations and Governance and Risk, with membership comprising
either of only, or a majority of, non-executive directors. The
committees meet on a regular basis and their effectiveness in
meeting their responsibilities is assessed annually by the
Board.
The Board will continue to focus on increasing diversity in all
its forms and it is pleasing to note that women now represent 50%
of the Group's senior management positions. This is an important
consideration for the Group where women are almost 60% of our total
workforce
There is a clear emphasis within the Group on maintaining a
corporate culture that adheres to the core values of being
"trusted, flexible, fair and personal". These values underpin
everything that we do across the business and are key in ensuring
responsible attitudes and behaviours are foremost in every member
of our team. It is heartening that these qualities are being so
successfully demonstrated every day by our staff in facing the
difficulties of the Covid-19 pandemic. Further details can be found
in the Group Culture and Governance report.
Our people
During the year the integration of acquired businesses neared
completion and this was accompanied by a change in the management
structure. The role of Chief Operating Officer was combined with
that of the CEO and in April 2020 Ed Rimmer, our COO, stepped down
as a Group director. Ed's contribution to our business operations
is greatly appreciated by the Board and we wish him every success
in the future.
The enormous dedication shown by our colleagues throughout the
Group in adapting to the new operating structure in the face of the
most challenging conditions has been exceptional and on behalf of
the Board, I wish to record our sincere thanks and appreciation for
their hard work and commitment.
Outlook
In the year ahead, we will focus on ensuring the long-term
sustainability of the business in meeting the challenges and
opportunities of a Covid-19 environment. The strength of the
business model and the support of colleagues at every level who
share the Board's vision and determination, give us confidence in
the Group's ability to withstand the difficulties created by
Covid-19. However, the potential impact in the Autumn of the
withdrawal of the Government's initiatives to protect jobs and the
effect this may have on the economy leaves the Board in a position
where providing guidance on the Group's financial performance for
the current year would be inappropriate.
Nevertheless, it is encouraging that in the first quarter of the
current financial year there has been an improving trend in
business activity. The strength of our financial position and
funding resources, the quality of our people and the range of our
product offering give the Board confidence that we will be in a
robust position to take full advantage of the opportunities that
our markets will offer as the economy recovers from the effects of
the pandemic.
In these most difficult of times may I take the opportunity to
wish all our stakeholders and their families a safe and healthy
future.
John Newman
Chairman
22 September 2020
Chief Executive Officer's Review
For the year ended 31 May 2020
Introduction
The 1pm group is a multi-product, speciality finance business
providing funding for UK SMEs as a lender and arranging funding for
both UK SMEs and consumers as a broker. This hybrid lending and
broking model enables the Group to optimally manage credit risk,
capital allocation, revenues and customer service through changing
market and economic conditions. The financial results for the Group
for the year ended 31 May 2020 consolidate the results of the
parent company, 1pm plc, plus each of the trading entities that
form the Group's product divisions and group functions.
The Group comprises four product divisions, namely Asset
Finance, Vehicle Finance, Loan Finance and Invoice Finance. In this
year's financial statements, for the first time, a segmental
analysis is presented in Note 3 to show the trading results,
together with comparative figures, of each of these product
divisions. The divisions are supported by central group functions,
namely Risk, Compliance, Finance, IT, Human Resources and
Marketing.
Following a six-year period of sustained organic and inorganic
growth, during which the recent "buy and build" phase of the
Group's strategic expansion was successfully executed, the final
quarter of the financial year ended on 31 May 2020, saw another
successful year of trading interrupted by the impact of the
Covid-19 pandemic. Despite this interruption, the financial
performance and results for the financial year as a whole were
satisfactory, demonstrating the Group's resilience.
The results achieved are due to the commitment, hard work and
sense of purpose consistently shown by all colleagues in the Group,
both during 'normal' working and trading conditions and in the
'crisis-management mode' called for by Covid-19. It is a privilege
to lead such a talented management team and such an enthusiastic
group of colleagues, now consisting of 179 personnel and I
congratulate and extend my thanks to all fellow employees for
delivering this performance in unprecedented circumstances.
Sustainable, robust business model
In addition to the hybrid commercial model of being a lender and
a broker, which is important in mitigating risk, the Group has
maintained sound operational principles designed to develop a
sustainable, robust business. These principles include spread,
security and margin as core features of the Group's operating
policies.
Spread is maintained in all of the Group's lending activities,
across new business introduction channels, asset types and
categories, lending products, SME business sectors, geography, deal
size and deal quality. The Group's lending portfolios comprise
multiple asset, loan and invoice finance arrangements, with no
major concentrations. Spread and diversity are also maintained in
respect of the Group's own borrowing and funding facilities, which
are sourced from a range of wholesale funding providers and high
net worth investors.
Security is always taken, ranging from company debentures,
charges on property and assets, title to assets and, for
lower-value lending, personal guarantees from directors and
proprietors. Where receivables become impaired, the Group has a
strong track record of recovering value through its security
arrangements, in particular following up on personal guarantees,
which has proven to be a successful recovery instrument for
lower-value exposures.
Margin is maintained through appropriate risk pricing for the
type of lending entered into and a continuous focus on the cost of
borrowing as the Group scales-up. The blended net interest margin
achieved in the year to 31 May 2020 was approximately 12% (2019:
12%). The Board's policy is not to reduce prices or relax credit
rules in the face of competition in order to chase top-line growth,
but rather to maintain interest rates charged and credit
quality.
Further important features of the Group's operating policies are
that fixed interest rates are charged for the lending term;
interest rates incurred on borrowings drawn down are equally fixed
for the term and the Group's policy is, where ever possible, to
match the term of borrowings drawn to the term of lending
provided.
These core operating policies are supported by underwriting
carried out by people as opposed to automated algorithms for credit
decisions. Although an essential element of the Group's development
continues to be the deployment of greater digital capability, for
example to assist with underwriting processes, it is considered
essential for the lending markets in which the Group operates that
credit decisions are taken by people.
The final core principle is a cautious approach to provisioning.
The net write-off rate (the gross value of receivables written-off
less recoveries) in the year to 31 May 2020 was approximately 0.9%
of the year end gross lending portfolio, a similar level to 2019
and previous years. During the Covid-19 affected fourth quarter of
the financial year the write-off rate did not increase
significantly, due in part to the forbearance afforded to borrowers
and the existence of government-backed financial support for UK
businesses. In line with the Board's cautious approach to
provisioning, the Board decided, however, to record an additional
GBP2.1m of credit risk provision (more commonly known as bad debt
provision) for potential future write-offs arising from the effects
of the pandemic. Consequently, the total credit risk provisions
carried in the balance sheet at 31 May 2020 amounted to GBP5.1m,
representing 4.8% of the net lending portfolio, compared with
GBP2.4m, representing 1.9% of the net lending portfolio on 31 May
2019.
These factors taken together - the lending and broking model,
the focus on spread, security and margin, fixed interest rates,
matched term borrowing, human underwriting and a cautious approach
to growth and provisioning - all combine to form a sustainable,
robust business that is proving to be effective and resilient in
these uncertain economic times.
Market positioning and new business origination
The Group is positioned as a provider of all the main finance
products that smaller UK SMEs require, namely cash for operations
and expansion in the form of assets and vehicles, loans and invoice
finance facilities, the latter often replacing the traditional and
formerly common-place bank overdraft. For those SME borrowers, the
funding required is often for business-critical assets without
which a small business would not function and, as such, repayments
tend to be prioritised, leading generally to a higher level of
'borrower resilience' in this sector than might otherwise be
expected.
The Group's market positioning as a multi-product provider of
business-critical finance for UK SMEs has proven effective and
demand was steady during the financial year prior to the Covid-19
related "lockdown" and is steadily increasing again as lockdown
measures are eased. New business origination in the year to 31 May
2020 amounted to GBP147m, a decrease of 9% over the previous
financial year, the reduction being totally attributable to the
Covid-19 affected fourth quarter.
Of this origination 37% was funded on balance sheet and 63% was
broked-on, compared with 35% and 65% respectively in the prior
year. The Group's policy is to not carry residual balance sheet
risk in respect of light commercial vehicles and cars and so 100%
of all finance deals originated for such assets were broked-on.
Excluding vehicle finance origination, 56% of new business was
funded on balance sheet and 44% broked-on, compared with 52% and
48% respectively in the prior year.
An operational synergy arising from being a multi-product
provider is the opportunity to originate deals from cross-selling
among the various trading entities in the Group. Cross-selling
continued steadily during the year and approximately GBP3.7m of
deals originated and written during the year were internally
generated, compared with GBP4.8m in the prior year.
Covid-19 impact management
The financial year ended 31 May 2020 was affected like no other
year in the Group's history, by the two external factors of a
generally subdued economy due to Brexit uncertainty and the
significant business impact of the Covid-19 pandemic. The latter
called for a crisis management approach consisting of establishing
an Incident Management Team, which met weekly to assess the
unfolding situation, to take decisive action and to instigate a set
of guiding principles by which to operate. Those guiding principles
were, firstly, to ensure the health, safety and well-being of all
colleagues; secondly, to maintain a seamless service for all
customers, borrowers and intermediaries while remote working;
thirdly, to support existing borrowers by granting forbearance
where required to help them manage their way through the crisis;
and, fourthly, to stay "open for business" in order to continue to
lend to UK SMEs in need of financial support. It is pleasing to
report that the Group has successfully adhered to all these
principles throughout the period since lockdown began in March 2020
proving its operational resilience and commercial
responsiveness.
Most significantly, the strength of the Group's cash position
and balance sheet enabled the Group to grant forbearance to
existing borrowers without resorting to making requests for similar
forbearance from the Group's wholesale funders, a crucial factor in
maintaining the ability to continue to advance new lending. As at
31 August 2020, the Group had granted temporary forbearance of
approximately GBP1.1m to customers in respect of lease and loan
agreements with an aggregate value of approximately GBP30.7m,
representing 29% of the Group's receivables.
Although the granting of forbearance represents a temporary
shortfall in cash receipts from borrowers, the Group has benefitted
from a similar amount of cash inflow from other borrowers settling
their obligations early. This is largely as a result of those
borrowers receiving government-backed funding, such as through the
Bounce Back Loan Scheme and CBILS.
The Group welcomed the introduction of those government-backed
schemes and, as noted in the Chairman's Statement, in May 2020 the
Group successfully became accredited as a lending partner under
CBILS, adding a further significant origination channel to continue
to lend to UK SMEs with the benefit of a government-backed
guarantee in the event of borrower default.
Significant uncertainty persists in relation to the further
impact of Covid-19 on the UK economy when government-backed
financial support schemes expire. To manage this uncertainty and
the potential effect on the Group's lending portfolio, the Board
decided to record a one-off credit risk provision in the fourth
quarter of the financial year, as noted above.
The impact of Covid-19 in the fourth quarter of the financial
year and managing the potential future effect on the Group's
receivables are reflected in the reported financial results set out
in more detail below.
Financial results
Total revenue for the year to 31 May 2020 was GBP29.2m, a
decrease of 8% year-on year, the decrease being attributable to the
Covid-19 affected fourth quarter. Revenue comprises, firstly,
interest and other income (such as facility fees, document fees and
asset assurance income) of GBP23.4m from own-book lending (2019:
GBP25.4m) and, secondly, commission income of GBP5.8m from broking
activities (2019: GBP6.4m). Interest and other income from lending
therefore accounts for 80% and commission income from broking
accounts for 20% of total revenues, which is consistent with the
prior year.
The business enjoys good visibility of future revenue in that
'unearned income' (i.e. future interest income from 'own-book'
deals already written on the Group's balance sheet) as at 31 May
2020 amounted to GBP15.2m (2019: GBP17.6m).
The Group's profit before tax and exceptional items for the year
ended 31 May 2020 was GBP3.0m, compared with GBP8.1m in the prior
year, the decrease attributable to the lower revenue generated in
the fourth quarter and to the credit risk provision which is
anticipated to be one-off. Profit before tax was GBP2.0m (2019:
GBP7.9m), and profit after tax GBP1.6m (2019: GBP6.4m).
At 31 May 2020, there were 88,985,316 shares in issue (2019:
87,596,428). The increase during the year consisted of 1,388,888
shares issued in relation to earn-out arrangements for previous
acquisitions. Given these issues of shares, earnings per share were
1.76 pence (2019: 7.30 pence), and on a fully diluted basis were
1.74 pence (2019: 6.61 pence).
At 31 May 2020, the Group's total gross receivables stood at
GBP123m, compared with GBP142m on 31 May 2019, the reduction
attributable principally to trading in the fourth quarter of the
year and early settlements towards the year-end. Total borrowing
facilities at 31 May 2020 amounted to GBP174m (2019: GBP167m), of
which GBP66m was drawn.
Also, at 31 May 2020, consolidated net assets stood at GBP55.2m
(2019: GBP53.8m), an increase of 3%. The return on capital employed
was therefore 3% (2019: 12%) and the return on net tangible assets
(excluding goodwill held in the balance sheet) was 6% (2019:
24%).
Cash held at 31 May 2020 was GBP1.3m. Following the drawing of a
five year term loan from the Group's principal bank subsequent to
the year-end and the steadily increasing trading activity in the
first quarter of the new financial year, cash held at close of
business on 31 August 2020 was GBP2.3m. The strength of the Group's
balance sheet together with its liquidity in the form of available
operational debt facilities for lending and cash held, ensure the
Group is well-placed to continue to trade successfully as business
activity in the UK SME sector increases towards pre-Covid-19
levels.
Operational progress
The year to 31 May 2020 continued the evolution from a
collection of individual companies assembled in the buy-and-build
phase of expansion, towards a more integrated group, with the
transition process essentially completed by the end of the third
quarter of the financial year, just prior to the impact of
Covid-19. Instrumental in the success of the transition was the
contribution of Ed Rimmer in the role of Chief Operating Officer
for the Group and I would like to thank him for his central
leadership role in delivering the changes. The final two earn-out
arrangements that accompanied the buy and build phase of expansion
came to a successful conclusion during the year and, in parallel,
all plans for management succession have been successfully
implemented.
Central to development of the Group has been the further
evolution of the four customer-focused product divisions, Asset
Finance, Invoice Finance, Loan Finance and Vehicle Finance. In the
Asset Finance division, the internal organisation has been migrated
to run along business introduction channels, which, even in these
Covid-19 affected times, is beginning to increase deal origination
and improve customer service. In the Invoice Finance division, an
internal project is nearing completion to more closely integrate
and align the two separate northern and southern entities, which
will deliver a range of operational efficiencies. In the Loan
Finance Division, the process of providing CBILS loans to
businesses affected by Covid-19 and in need of financial support
has been successfully introduced and integrated and, in Vehicle
Finance, new management has renewed the focus on key accounts and
business vehicle fleet opportunities. The financial performance of
each division is disclosed in the segmental analysis note to the
financial statements.
The product divisions are supported by the core business
functions of Risk, Finance, Compliance, Human Resources, IT and
Marketing, all of which have also evolved to operate across the
Group to deliver improved operational efficiency.
A key step towards completion of the Group's evolution will be
the rebranding of the business into a single, nationally recognised
business. Although this project has been delayed due to the
business impact of Covid-19, the project is nearing completion and
will be an important element of progress in the current financial
year. In addition, further operational integration will include IT
improvements, systems developments and digital capability
enhancements at the customer interface, in middle-office and
back-office processing, all under the "Platform1" project being
progressed with the Group's chosen automation and software
partners.
In summary, although operations in the fourth quarter of the
financial year were necessarily focused on managing the impact of
Covid-19 and in particular supporting the considerable increase in
collections activity within the Risk function, I am pleased to
report this operational progress and the Group's state of readiness
for further growth as the UK economy returns to pre-Covid-19 levels
of business activity. This is due to the very capable, committed
and stable Senior Management Team in the Group, which forms the
Operations Board and I thank its members for their support,
leadership, resilience and creativity during a challenging
year.
Culture, compliance and governance
The Group's stated purpose continues to be "to grow together"
and our core values of being "flexible, fair, trusted and personal"
form the basis of a distinct culture, which has matured during the
year as the separate entities within the business have continued to
operate more closely together as an enlarged group. The successful
transition to a group has been particularly evident in recent
months through the management of the Covid-19 crisis, during which
time the teamwork, dedication and effort of all personnel have been
exceptional. The business is customer outcome-led and sets its
compliance and governance standards for all its lending and broking
activities by reference to the principles and guidelines of the
Financial Conduct Authority and the codes of conduct of relevant
industry bodies.
Strategic development
The platform for further strategic growth of the Group through
to the year 2024 has been re-set to align with an expected recovery
in macro-economic and business conditions. The next phase of growth
will consist of adhering to the core principles and policies that
form the foundations of our sustainable, robust business model and
then adding scale to each of our product divisions in order to
deliver further growth in revenue, profits and shareholder
returns.
Outlook
Although the business impact of Covid-19 in the fourth quarter
of the financial year was a significant interruption to the Group's
continuing track record of growth, this particular period of
challenge has served to demonstrate and underline the strength of
the Group's market position, multi-product offering, robust
operating model, sustainable risk and provisioning policies,
liquidity and balance sheet reserves. Whilst substantial
uncertainties prevail, in particular the effect on UK businesses of
the expiry of the current government-backed financial support
schemes, we are confident that the Group is well-placed to benefit
from a return to pre-Covid-19 levels of business activity and can
return to its planned growth trajectory. Steadily improving trading
activity in the first quarter of the new financial year underpins
this confidence.
The prevailing substantial uncertainties mean, however, that it
would be inappropriate for forward-looking guidance to be provided
on the Group's financial performance in the current financial year
and, as noted in the Chairman's statement, any dividend
considerations will be further deferred until the Group's financial
performance for the first half of the current financial year is
known.
Ian Smith
Chief Executive Officer
22 September 2020
Group Strategic Report
For the year ended 31 May 2020
Strategic Objectives
The 1pm group was formerly a single-product company relying on
broker-introduced business. In recent years it has been transformed
into a well-diversified and risk-mitigated alternative finance
provider, with multiple introducer channels, now providing the full
range of finance products that smaller UK SMEs require.
During the previous financial year, plans were specified for the
next phase of the Group's strategic growth through to the financial
year ended 31 May 2024. The Group's overall goal is to build on the
market position attained in order to become the non-bank,
speciality finance provider of choice for UK SME lending. To
achieve this goal, the Group's stated strategic objectives were
to:
- Continue to add scale through both organic growth and
carefully selected acquisitions with a view to building a lending
portfolio of approximately GBP350m by 2024.
- Continue to reduce the cost of borrowing through optimising
the size, term, cost and mix of funding facilities
- Increase the amount of new business origination funded on
balance sheet while maintaining the flexibility to act as a broker
to other lenders
- Invest in marketing, branding, business intelligence,
innovation and systems to further enhance our digital capability
and the use of 'FinTech'
- Invest in key hires, training and succession
- Exploit the leverage available to the Group from its
multi-product offering, cross-selling and operational synergies
- In due course, consider new products and additional territories for further expansion.
Although these stated strategic objectives remain the same, the
financial year ended 31 May 2020 was shaped by two external factors
outside of the Company's control, namely a generally subdued
economy due to Brexit uncertainty, followed by the significant
business impact of the Covid-19 pandemic, which abruptly
interrupted progress in the fourth quarter of the financial year.
Whilst these factors have restricted the Group's pursuit and
achievement of its growth objectives, the Board is nonetheless
pleased with progress on internal operational development. Comments
on each of the strategic objectives are as follows:
Adding scale
The Board has invested in additional sales personnel in each
division and has reorganised the Asset Finance and Loans divisions
by business introduction channels with a view to increasing organic
new business origination for all its products. In addition, the
Group succeeded in becoming an accredited lender as part of the
government-backed CBILS initiative, which has enabled increased
origination of loans to viable UK SMEs affected by the Covid-19
pandemic in the current financial year. As the industry sectors in
which the Group operates continue to be fragmented, opportunities
to add scale through carefully selected acquisitions will arise and
the Board will continue to evaluate such opportunities.
Optimising borrowing facilities
The Group's raw material is cash to lend and its cash management
objective is to maintain a strong capital base to support its
current operations and planned growth whilst continuing to reduce
the cost of capital in order to provide increasing returns for
shareholders. The total borrowing facilities now in place provide
the headroom the Group requires to meet organic growth targets for
the foreseeable future. The Group operates a centralised Treasury
function and a policy of sourcing different funding instruments
appropriate to each of the financial products it provides. Security
is provided to each lender in the form of an assignment of the
underlying lease, loan or invoice receivables. As the Group only
provides funds to UK SMEs, it neither operates in, nor has
significant exposure to, currencies other than sterling.
As at 31 May 2020, the Group's gearing ratio was 3.4 times its
Net Tangible Assets, which was comfortably within the most
stringent funder covenant of 6.0 times. The Group is not subject to
any external regulatory capital requirements.
Increase own-book lending whilst maintaining flexibility from
broking
Lending on the Group's balance sheet is more profitable than
broking over the term of a lease, loan or invoice finance facility.
With available headroom in the Group's funding facilities, more new
business origination is being funded on balance sheet and will
continue to increase, provided market conditions allow our pricing,
margin and credit quality to be maintained. It continues to be the
Group's policy to broke-on consumer finance deals, such as for
bridging and second charge property loans and for all vehicle
financing.
Investing in operational capability
The Group will complete the rebranding of each of the Group's
trading entities under one nationally recognised name in the
current financial year and will continue to enhance digital
capability and automation of processes under the "Platform1" IT and
Systems project. Progress on these key projects is in line with
management expectations as to costs in spite of timing delays
during the year ended 31 May 2020.
Investing in key hires, training and succession
The Board is pleased with the addition of skills, capabilities
and experience through key hires in each of the product divisions
and has concluded succession plans at certain of the Group's
subsidiary undertakings where acquisition earn-out objectives have
been successfully achieved.
Exploiting leverage and synergies
Following the completion of earn-out arrangements and the
reorganisation of sales teams and support functions, progress has
been made in delivering integration synergies. This includes the
reduction of three sites to two in the Asset Finance division, the
central operation of the underwriting function and standardisation
of operations in the two Invoice Finance subsidiaries. New business
origination from cross-selling continues with a mix of both
customer-facing and office-based personnel identifying
cross-selling opportunities for follow-up.
New products and territories
The introduction of new products will be actively considered in
the current financial year in order to augment growth given that
the Group has obtained appropriate regulatory permissions for
broking certain additional complementary consumer finance products.
Operating in additional geographical territories in not yet under
active consideration.
Key performance indicators
The Board and the Senior Management Team regularly review and
monitor key metrics in assessing the performance of the Group. Some
of these key metrics to help gauge the Group's meaningful progress
are detailed below.
- Revenue - decreased 8% to GBP29.2m (prior year GBP31.8m)
- Profit Before Tax - decreased 75% to GBP2.0m (prior year GBP7.9m)
- Diluted Earnings Per Share - decreased 74% to 1.74p (prior year 6.61p)
- New Business Origination - decreased 9% to GBP147m (prior year GBP161m)
- Number of 'live' accounts - decreased 6% to 19,900 (prior year 21,100)
- Funding interest rate - maintained at a blended rate of 4% (prior year 4%)
- Net interest margin - maintained at 12% (prior year 12%)
Principal risks and uncertainties
'Principal risks' are defined as a risk or a combination of
risks that, given the Group's current position, could seriously
affect the performance, future prospects or reputation of the
Group. These risks could potentially materially threaten the
business model, performance, solvency or liquidity, or prevent the
delivery of the strategic objectives. The Board has overall
responsibility for ensuring that risk is appropriately managed
across the Group and, through the Risk Committee, has established
the Group's appetite to risk, approved its structure,
methodologies, policies, and management roles and
responsibilities.
As well as regular external reviews and audits from the Group's
statutory auditors and the quarterly audits from its various
funding partners, the Group has numerous internal checks and
balances. Initial responsibility rests with the Operating Board
which manages the business divisions and functions with line
managers responsible for identifying and managing risks arising in
their business areas. This is augmented by the Group's central and
independent Compliance, Finance and Human Resources functions with
responsibility for reporting to the Board. The Group has a Head of
Risk who reviews all significant Group credit exposures and a Head
of Governance and Compliance who reviews all significant Group
operating risks and adherence to regulatory requirements.
The key risks identified and which the Board has reasonable
expectation are appropriately mitigated are:
Credit Risk - the risk of default, potential write off,
disruption to cash flow and increased recovery costs on a debt that
is either not repaid individually or if there is a wider market
deterioration. This is mitigated by the Group adopting prescribed
lending policies and adhering to strict credit and underwriting
criteria specifically tailored to each business area. The Group
also has the ability to 'broke-on' business rather than write it on
its own book. As such, any market deterioration impact can be
reduced by broking-on prospective deals.
Funding Risk - the risk of the Group not being able to meet its
current and future financial obligations over time, specifically
that funding is not available to meet the Group's growth targets.
The Group has funding facilities across Block discounting, the
Secured Loan Note programme and back-to-back invoice finance
facilities, aggregating to GBP174m with ample headroom to meet its
growth targets for the foreseeable future.
Acquisition Risk - the risk that the Group's acquisition
programme does not deliver value, overstretches resource beyond its
capacity or has failed to identify problems within the acquired
businesses. The Group has paid appropriate consideration for its
acquired businesses with post synergy price-to-earnings multiples
in the range 5.5 to 6.5 times. It has also spent considerable time
and effort to bolster its central resources and infrastructure to
assist in integrating and generating synergies from the
acquisitions. The Group has conducted thorough and detailed
internal and external due diligence on all acquisitions, ensured
appropriate warranties, indemnities and lock-in periods are
included in the purchase agreements and has purchased
well-established businesses with successful and respected
management teams.
Regulatory Risk - the risk of legal or regulatory action
resulting in fines, penalties and sanctions that could arise from
the Group's failure to identify and adhere to regulatory
requirements in the UK. In addition, there is the risk that new or
enhanced regulations could adversely impact the Group. The Group
employs a Head of Governance and Compliance, who reports to the
Board and who manages a well-established and independent compliance
department with appropriate resources and access to external
advisors. The department looks both internally at the Group
ensuring its practices are appropriate and externally at future
developments to ensure the Group is prepared to adopt any changes
in regulation as and when they arise.
Section 172 Statement
Section 172 of the Companies Act 2006 requires a director of a
company to act in the way he or she considers, in good faith, would
most likely promote the success of the company for the benefits of
its members as a whole. In doing this s.172 requires a director to
have regard, amongst other matters, to the:
- Likely consequences of any decisions in the long term;
- Interests of the company's employees;
- Need to foster the company's business relationships with suppliers, customers and others;
- Impact of the company's operations on the community and environment;
- Desirability of the company maintaining a reputation for high
standards of business conduct; and
- Need to act fairly as between members of the company.
The Board receives regular training on their obligations as
Directors from advisors and on an ongoing basis from the Company
Secretary. Board Papers are prepared with section 172 duties in
mind, to ensure Directors have all the relevant information
required to enable them to properly reflect and consider the
factors set out above in their decision making. The Board
recognises that each decision made will not always result in a
positive outcome for each of the Company's stakeholders. However,
by having good governance procedures in place for decision making,
the Board does aim to make sure that its decisions maintain a high
standard of business conduct.
Future Strategy
The Group intends to maintain its focus on lending to UK SMEs,
providing all the key finance products they require, whilst
broking-on consumer business to other lenders. In pursuing organic
growth, the Group will aim to secure further cost-effective
wholesale borrowing facilities and will focus on driving other
economies of scale and integration benefits from the enlarged scope
of its operations and entities.
The alternative finance sector generally and in particular, the
leasing, loans and invoice finance segments in the UK, are
fragmented, which presents opportunities for further acquisition
activity. The Board will continue to consider such opportunities as
they arise and as circumstances allow.
Summary
In spite of interruption to the Group's track record of growth
as a result of the business impact of the Covid-19 pandemic, the
Directors remain confident of continuing to provide a range of
relevant finance solutions to support the UK SME sector as the
economy recovers and, therefore, in the Group's pursuit of
controlled organic and strategic growth in order to deliver
increased shareholder value.
Ian Smith
Chief Executive Officer
22 September 2020
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 MAY 2020
2020 2019
GBP'000 GBP'000
CONTINUING OPERATIONS
Revenue 29,062 31,814
Other income 182 -
--------- ---------
Total Revenue 29,244 31,844
Cost of sales (13,319) (10,271)
--------- ---------
GROSS PROFIT 15,925 21,543
Administrative expenses (12,793) (13,292)
Exceptional items (909) (221)
Share-based payments (31) (3)
--------- ---------
OPERATING PROFIT 2,192 8,027
Finance costs (181) (218)
Finance income 9 67
--------- ---------
PROFIT BEFORE INCOME TAX 2,020 7,876
Adjusted earnings before interest,
tax
exceptional items and share-based
payments 2,960 8,100
Exceptional items (909) (221)
Share-based payments (31) (3)
PROFIT BEFORE INCOME TAX 2,020 7,876
------------------------------------- --------- ---------
Income Tax (465) (1,524)
--------- ---------
PROFIT FOR THE YEAR 1,555 6,352
========= =========
Profit attributable to:
Owners of the parent 1,555 6,352
========= =========
Earnings per share expressed
in pence per share
Basic 1.76 7.30
========= =========
Diluted 1.74 6.61
========= =========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 MAY 2020
2020 2019
GBP'000 GBP'000
ASSETS
NON-CURRENT ASSETS
Goodwill 28,241 27,847
Intangible assets 526 493
Property, plant and equipment 767 1,418
Right-of-use property, plant &
equipment 428 -
Trade and other receivables 46,157 50,710
Deferred tax 944 945
-------- --------
77,063 81,413
-------- --------
CURRENT ASSETS
Trade and other receivables 60,038 74,432
Tax receivable 185 -
Cash and cash equivalents 1,304 1,851
-------- --------
61,527 76,283
-------- --------
TOTAL ASSETS 138,590 157,696
======== ========
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 8,899 8,760
Share premium 25,360 25,134
Employee shares - 298
Treasury shares (310) (300)
Retained earnings 21,274 19,888
-------- --------
TOTAL EQUITY 55,223 53,780
-------- --------
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 28,639 29,805
Financial liabilities - borrowings - 469
Provisions - 801
Lease Liability 238 -
-------- --------
28,877 31,075
-------- --------
CURRENT LIABILITIES
Trade and other payables 51,052 67,563
Financial liabilities - borrowings 2,407 3,278
Tax payable 287 1,309
Provisions 546 691
Lease Liability 198 -
-------- --------
54,490 72,841
-------- --------
TOTAL LIABILITIES 83,367 103,916
-------- --------
TOTAL EQUITY AND LIABILITIES 138,590 157,696
======== ========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 MAY 2020
Called Retained Share Treasury Employee Total
up Share Earnings Premium Shares Shares Equity
Capital
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 June
2018 8,621 14,342 24,721 (300) 295 47,679
Total comprehensive
income - 6,352 - - - 6,352
Transactions with
owners
Dividends - (806) - - - (806)
Issue of share capital 139 - 413 - - 552
Value of employee
services - - - - 3 3
Balance at 31 May
2019 8,760 19,888 25,134 (300) 298 53,780
========== ========== ========= ========= ========= =========
Total comprehensive
income - 1,555 - - - 1,555
Transactions with
owners
Purchase of treasury
shares - - - (10) - (10)
Dividends - (498) - - - (498)
Issue of share capital 139 - 226 - - 365
Value of employee
services - - - - 31 31
Reclassification of
Employee Shares - 329 - - (329) -
Balance at 31 May
2020 8,899 21,274 25,360 (310) - 55,223
========== ========== ========= ========= ========= =========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 MAY 2020
2020 2019
Cash generated from operations GBP'000 GBP'000
Profit before tax 2,020 7,876
Depreciation & amortisation charges 883 778
Finance costs 181 218
Finance income (9) (67)
Decrease in inventory - 365
Decrease in trade and other receivables 18,947 531
(Decrease) in trade and other
payables (17,677) (5,286)
Movement in other non-cash items 612 (1,131)
--------- --------
4,957 3,284
Cash flows from operating activities
Interest Paid (181) (218)
Tax paid (1,488) (1,510)
--------- --------
Net cash from operating activities 3,288 (1,556)
--------- --------
Cash flows from investing activities
Acquisition of subsidiaries (500) -
Purchase of software, property,
plant & equipment (375) (778)
Contingent consideration paid (565) (533)
Interest received 9 67
--------- --------
Net cash from investing activities (1,431) (1,244)
--------- --------
Cash flows from financing activities
Payment of lease liabilities (218) -
Loan repayments in year (991) (1,237)
Loans issued in year - 756
Change in overdrafts (Invoice
Finance) (349) -
Equity dividends paid (498) (806)
--------- --------
Net cash from financing activities (2,056) (1,287)
--------- --------
(Decrease)/increase in cash and
cash equivalents (199) (975)
Cash and cash equivalents at beginning
of year 331 1,306
--------- --------
Cash and cash equivalents at the
end of the year 132 331
========= ========
1. ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IRFS") as adopted by
the European Union and International Reporting Interpretations
Committee ("IFRIC") interpretations and with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements have been prepared under the historical
cost convention.
2. SEGMENTAL REPORTING
The Group provides a range of financial services and product
offerings throughout the UK. The Group has introduced reporting on
a segmental basis as this accurately reflects the four trading
divisions, namely: Asset Finance Vehicle Finance, Loan Finance and
Invoice Finance.
The operating segments also reflect its organisational and
management structures. The Group reports internally on these
segments in order to assess performance and allocate resources. The
segments are differentiated by the types of products provided.
The segmental results and comparatives are presented with
intergroup charges allocated to each division based on budgeted
profits generated. Intergroup expenses are recharged at costs and
largely comprise; Marketing, Compliance, IT and Human Resources
costs.
The financial year ended 31 May 2020 was significantly impacted
by Covid-19 and the Credit Risk Provision (CRP) was materially
increased by GBP2.7m during the period of which GBP2.1m related to
Covid-19. This reflected management's view that Covid-19 could
impact the future recovery of debts due. The segmental results are
presented after taking into account this increased expected CRP
which was heavily allocated towards the asset finance division
(Asset Finance: GBP1.8m, Loan Finance: GBP0.1m), Invoice Finance:
GBP0.2m). This increase in the CRP materially distorts the true
underlying performance of the divisions and should be factored into
assessments of the performance of each division.
Asset Vehicle Loan Invoice
For the year ended 31 Finance Finance Finance Finance Total
May 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
CONTINUING OPERATIONS
Revenue 14,541 3,953 2,484 8,266 29,244
Cost of sales (8,479) (1,460) (1,520) (1,860) (13,319)
GROSS PROFIT 6,062 2,493 964 6,406 15,925
Administrative expenses (5,530) (2,551) (834) (3,878) (12,793)
Exceptional items (667) (10) (66) (166) (909)
Share-based payments (31) - - - (31)
OPERATING PROFIT (166) (68) 64 2,362 2,192
Finance costs (169) (4) - (8) (181)
Finance income 7 - - 2 9
PROFIT BEFORE INCOME
TAX (328) (72) 64 2,356 2,020
Adjusted earnings before
interest, tax
exceptional items and
share-based payments 370 (62) 130 2,522 2,960
Exceptional items (667) (10) (66) (166) (909)
Share-based payments (31) - - - (31)
PROFIT BEFORE INCOME
TAX (328) (72) 64 2,356 2,020
-------------------------- -------- -------- -------- -------- ---------
Asset Vehicle Loan Invoice
For the year ended 31 Finance Finance Finance Finance Total
May 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
CONTINUING OPERATIONS
Revenue 18,819 2,812 2,536 7,647 31,814
Cost of sales (6,347) (952) (1,286) (1,686) (10,271)
GROSS PROFIT 12,474 1,860 1,250 5,961 21,543
Administrative expenses (7,827) (1,342) (994) (3,129) (13,292)
Exceptional items (221) - - - (221)
Share-based payments (3) - - - (3)
OPERATING PROFIT 4,421 518 256 2,832 8,027
Finance costs (218) - - - (218)
Finance income 67 - - - 67
PROFIT BEFORE INCOME
TAX 4,270 518 256 2,832 7,876
Adjusted earnings before
interest, tax
exceptional items and
share-based payments 4,494 518 256 2,832 8,100
Exceptional items (221) - - - (221)
Share-based payments (3) - - - (3)
PROFIT BEFORE INCOME
TAX 4,270 518 256 2,832 7,876
-------------------------- -------- -------- -------- -------- ---------
3. PROFIT BEFORE INCOME TAX
The profit before income tax is stated after charging:
2020 2019
GBP'000 GBP'000
Depreciation - owned assets 684 610
Amortisation - computer software 199 168
Net credit loss charge 3,777 553
Funding facility interest charges 3,828 4,457
Introducer commissions 3,884 3,767
Fees payable to the Company's
auditor for audit of company's
subsidiaries 71 70
Fees payable to the Company's
auditor for the company's annual
accounts 13 13
Fees payable to the Company's
auditor for non-audit services 23 -
Fees payable to the Company's
auditor as associate on valuation
work 6 -
======== ========
4. DIVIDS
2020 2019
GBP'000 GBP'000
Ordinary shares GBP0.10 each
Final 498 561
Interim - 245
================ =============
Total 498 806
================ =============
The company paid a final dividend in December 2019 of GBP498,317
being 0.56 pence per Ordinary GBP0.10 share relating to the
financial year ending 31 May 2019.
Due to the impact of Covid-19, the payment of the interim
dividend that was due to be paid on 12 May 2020 was and remains
deferred. Due to the ongoing impact of Covid-19, the Directors
continue to adopt a prudent approach to dividends and any
recommendation in respect of a final dividend for the financial
year ended 31 May 2020 has also been deferred until January 2021
when the trading results for the first half of the current
financial year will be known.
5. EARNINGS PER SHARE
Earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the year. For diluted
earnings per share, the weighted average number of shares is
adjusted to assume conversion of all dilutive potential ordinary
shares.
2020
Weighted
average Per-share
Earnings number of amount
GBP'000 shares pence
Basic EPS
Earnings attributable to ordinary
shareholders 1,555 88,627,630 1.76
Effect of dilutive securities
Contingent consideration - 715,602 (0.02)
Diluted EPS
Adjusted earnings 1,555 89,343,232 1.74
========= =========== ==========
2019
Weighted
average Per-share
Earnings number of amount
GBP'000 shares pence
Basic EPS
Earnings attributable to ordinary
shareholders 6,352 87,048,483 7.30
Effect of dilutive securities
LTIP options and contingent
consideration - 9,009,945 (0.68)
Diluted EPS
Adjusted earnings 6,352 96,058,428 6.61
========= =========== ==========
6. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information set out in this announcement does not
comprise the Group's statutory accounts for the years ended 31 May
2020 and 31 May 2019. The financial information has been extracted
from the statutory accounts of the Group for the years ended 31 May
2020 and 31 May 2019.
The auditors' opinion on those accounts was unmodified and did
not contain a statement under section 498 (1) or 498 (3) Companies
Act 2006 and did not include references to any matters to which the
auditor drew attention by the way of emphasis.
The statutory accounts for the year ended 31 May 2019 have been
delivered to the Registrar of Companies. Those for the year ended
31 May 2020 will be delivered to the Registrar of Companies
following the Company's Annual General Meeting.
7. ANNUAL REPORT AND ANNUAL GENERAL MEETING
The Annual Report and Accounts will be available from the
Company's website, www.1pm.co.uk , from 22 September 2020 and will
be posted to shareholders on that date. The Annual Report contains
notice of the Annual General Meeting of the Company which will be
held in accordance with the Corporate Insolvency and Governance Act
2020, as at closed meeting at 10.00 a.m. on 22 October 2020.
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