helping the uk economy grow by providing finance to smes’€¦ · results presentation: year to...
TRANSCRIPT
‘Helping the UK economy grow by
providing finance to SMEs’
Results presentation: year to 31 May 2016
• Provide, or arrange, commercial lease finance, business loansor vehicle finance (approx. 20% FCA regulated)
• For business-critical equipment required by SMEs
• Broad range of sectors (e.g. catering, retail, health & beauty,garages, small manufacturing, construction, recycling)
• Lend from £1,000 to £200,000, on Terms from 3 to 60 months
• Strict Underwriting and Credit Control are paramount
What we do not do…
• Consumer finance products, e.g. personal loans or short-term ‘pay-day’ lending
• ‘Big ticket’ capital assets, which are typically lower-risk and lower-rate
• Sub-prime lending, (i.e. we always take security as part of underwriting a deal)
• Peer to peer facilitation (…although partnering with a platform operator is an option)
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What we do
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Deal examples
‘High Street’ SMEs:
• Loan: New Vision Coffee Europe Limited (t/a Starbucks) - £50k loan for
business expansion to open a new site
• Lease: Urban Retreats Limited - £50k of furniture into a private salon
within Harrods
• Lease: A Tasty Experience Ltd (T/A Subway) - £46k to open a new store
Asset funding and broking:
• Millcliffe Limited – 32 Burger King outlets fit-out: £180k on own-
book; £432k broked-on for £31k commission; 10 vehicles supplied
for £19k commission
• Crystal Palace FC - £1.2m broked-on to Investec, McQuarrie and
SocGen for floodlights, PA system and turnstiles
Hard asset funding and broking:
• Blue Machinery Ltd, market leader in aggregate recycling
equipment referred A&R Recycling Ltd (Wigan) to Bradgate in
2007; customer leases two or three assets a year, ranging from
£20k, which Bradgate funds on own book, to £100k broked-on.
• Non-bank loan financing to UK SMEs is approx. £64bn, of which asset finance market is £28bn, and of that £10bn is plant, machinery & equipment
• Served by banks and smaller funders in the vendor-finance distribution channel
and the broker-introduced channel
• The non-bank asset finance tends to be for smaller, riskier lending
Car finance34%
Commercial Vehicle finance
25%
IT equipment finance
9%
Plant & Machinery
finance22%
Business equipment
finance8%
Aircraft, ships, rolling stock
2%Direct finance
50%
Sales finance32%
Broker introduced
finance18%
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The Market
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New Business Origination
• Annualised origination rate: approx. £70m
• Approx 50% of lease business originated by Academy and
Bradgate is ‘broked-on’ for commission• Rate of increase in loans will decrease as the portfolio matures
• Vehicles are all broked-on; no funding risk taken on own-book
months 2015 2016 change Deals # Ave. £
LEASES £m: Onepm 12 11.6 13.6 17% 1,571 8,657
Academy 9 12.9 1,095 11,781
Bradgate 2 2.2 37 59,459
11.6 28.7 2,703 10,618
LOANS £m: Onepm 12 4.5 10.1 124% 305 33,115
VEHICLES £m: Academy 9 10.9 703 15,505
16.1 49.7 3,711 13,393
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Financial results - P&L
• Academy and Bradgate revenue includes £1.39m of commission income – new revenue stream
• Adjusted PBT is stated before the exceptional items, which
comprise severance and acquisition costs
months 2015 2016 change
REVENUE £m: Onepm 12 5.53 8.00 45%
Academy 9 4.31
Bradgate 2 0.24
5.53 12.55
PBT £m: Onepm 12 1.62 2.19 35%
(adjusted): Academy 9 1.50
Bradgate 2 0.02
1.62 3.71
Exceptional items £m -0.37
PBT £m: 1.62 3.34 106%
Earnings per share (p): 3.72 5.87 58%
Dividend per share (p): 0.35 0.5 43%
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KPIs
Gross months 2015 2016 change
Margin: Onepm 12 53% 55% 4%
Academy 9 80%
Bradgate 2 65%
Blended 53% 64% 21%
2015 2016 change
Consolidated Net Assets £m 12.4 23.9 93%
Return on Net Assets % 10.3% 11.1% 8%
NIM: 2015 2016 change
Average rate: Onepm 19.3% 18.8% -3%
Academy 14.4%
Bradgate 14.8%
Blended 19.3% 17.7% -8%
Cost of funds: 6.3% 5.7% -10%
Net interest margin: 13.0% 12.0% -8%
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Funding
• Funding is in the form of Block Discount facilities from 12 banks, plus (in onepm’s case) 7 HNW lenders and 1
corporate lender
• Annual facilities, secured by lease and loan paper –typically 1.20 to 1.25 x cover
2015 2016 change
PORTFOLIO £m: Onepm 30.1 41.8 39%
Academy 20.1
Bradgate 4.6
30.1 66.5 121%
FUNDING £m: Onepm 12.4 30.3 144%
Academy 13.5
Bradgate 2.5
12.4 46.3 273%
% of portfolio 41% 70%
TOTAL FACILITIES £m: 27.0 62.2 130%
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Portfolio – analysis & performance
Recycling48%
Construction21%
Haulage18%
Prestige cars7%
Other4%
Farming2%
BRADGATEGross bad months 2015 2016
debts £k: Onepm 12 256 517
Academy 9 110
Bradgate 2 3
256 630
Recoveries £k: -130
Net write-offs & provisions £k 500
% of averaged portfolio 0.90% 0.80%
Track record -
Organic compound annual growth rate (CAGR) over six years: 33%
10-fold increase in Profit Before Tax
Provided the platform for Strategic growth
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Strategic expansion in FY16
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1pm plc
(AIM listed)
1pm (UK) Ltd (100%)
Academy Leasing (100%)
Bradgate Business Finance (100%)
• Acquired 25 August 2015 (9 months post-acq)• £9m cash and shares, plus £3m shares, contingent
• 43 employees. Warrington.
• Acquired 22 March 2016 (2 months post-acq)• £2.2m cash, plus £0.55m shares, contingent
• 5 employees. Lutterworth, Leics.
Transformation
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• All Supplier-introduced business
• Also ‘soft’ assets, but
typically lower-risk, lower-priced
• Broker and Funder –
typically 50:50• Vehicles brokerage
• Supplier-introduced business
• ‘Hard’ assets focus –
i.e. higher residuals• Broker with small
own-book but
growth capacity; 75:25
• All Broker-introduced business
• ‘Soft’ assets leasing,
typically high-risk and higher price
• Business loans
• Funder only
MAY ’16: Added ‘hard’ assets.
Group now larger, flexible offering and risk-resilient
NOV ‘15: Added vendor channel, broking, vehicles
and management
MAY ‘15: 1pm operationally
sound, but funder only & inherently
risky
Investment in resources
Acquisition:
Academy Leasing
“Adjacent” products
‘Fintech’ platform ?
Acquisition:
BBFL
FurtherM&A ?
Market Cap May 2015 £25m
Market Cap first target £50m
Market Cap target £100m
Strategic growth plan
Goal –• £100m market capitalisation
Objectives -• Building scale through a model of distributed separate entities
• Having a multi-channel, multi-product offering to SMEs
• Maintaining risk mitigation through funding and broking• Being digitally capable (e.g. fintech)
• Strictly adhering to underwriting and credit control policies
• Being appropriately geared with cost-effective funding
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Focus in FY17
ONEPM FINANCE
Business loans offering to
Bradgate ‘hard’ asset customers
BRADGATE
Referral of ‘soft’ asset lease leads to Academy
ACADEMY
Vehicles and fleet management
product to 1pm brokers
1. Organic growth from CROSS-SELLING – intention
to deliver benefits from the
multi-channel, multi-product offering created
and to exploit the 10,000-
strong live accounts across three companies. CMO to
lead.
2. Further STRATEGIC GROWTH
through (a) carefully
selected acquisitions that fit the current model – ability
to scale profitably; and (b)
introduction of ‘adjacent’ products where there is
clear cross-sell ing synergy.
CEO, CSO to lead.
Cross-selling opportunities
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Summary & Outlook
Proud to be providing finance to help UK SMEs5m SMEs employing 15m people accounting for 50% of the UK economy
A significant market – asset finance is £28bn (45%) of £64bn SME financing
but competition is increasing – e.g. PE interest in alternative finance providers
Our track-record is attracting increased interest from banks; raw material (cash) is readily available to borrow
but ‘Specialty’ banks (Aldermore, Shawbrook, Metro) all providing finance to our customer base too
Alternative Finance becoming more mainstream
but must monitor/harness the ‘fintech’ trend
No discernible slow-down in New Business Origination
but certain sectors and economic uncertainties being monitored
Still a fragmented sector with opportunities to acquire scale and broaden offering
but must be selective
Well-placed due to supportive and growing institutional shareholder base
but institutional shareholder baseneeds to be broadened further
Julian Telling
Ron Russell
John NewmanChairman
Mike NolanStrategy & Risk
Hazel JacquesSales &
Marketing
Helen WalkerFinance
Ian Smith
CEO
Academy & Bradgate
Sales
1pm Broker Sales & Ops
Under-writing
Academy Ops.
Compliance & Training
Human Resources
Financial Control
Main Board:
Junior Board:
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Principal shareholders:
• Ron Russell (HNW) 19.4%
• Henderson funds 18.6%
• Charles Stanley 14.7%
• Mike Nolan (Academy) 5.1%
• Hargreaves Lansdown 3.1%
60.9%
Ownership & Management
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