1pm Share Discussion Threads

[speedsgh] 07/9/2018 07:55

INTERVIEW: 1PM Plc ‘Give credit where it is due’ -

1PM PLC (LON:OPM) is the topic of conversation when Hardman & Co Analyst Mark Thomas joins Directorstalk. Mark talks about the recent article “give credit where it is due” and explains the reason behind the title, discusses IFRS9 accounting and why its important, the impact it will have on 1pm and the business message investors should take from the work.

[joe say] 06/9/2018 09:34

Cheers speedsgh

[speedsgh] 06/9/2018 09:18

Latest Hardman & Co research note...

Give credit where it is due -

1pm’s IFRS9 update highlighted the conservatism in current provisioning, with a minimal impact from adopting the new standard. We have taken the opportunity to review credit and present a range of scenarios (from maintaining current low losses through to a hard recession) and the impact each would have on 1pm’s earnings. The key business message is that, in almost all our scenarios, 2019E profit would be well above the 2017 level...

Valuation: We detailed the assumptions in our valuation approaches in our initiation note, “Financing powerhouse: a lunchtime treat”. The GGM indicates 103p and the DDM 73p (DDM normal payout 81p). The 2019E P/E (6.4x) and P/B (0.8x) appear an anomaly with 1pm’s profitability, growth and downside risk.

Investment summary: 1pm offers strong earnings growth, in an attractive market, where management is tightly controlling risk. Targets to more than double the market capitalisation appear credible, with triggers to a re-rating being both fundamental (delivery of earnings growth, proof of cross-selling) and sentiment-driven (payback for management actively engaging the investor community). Profitable, growing companies generally trade well above NAV...

[masurenguy] 06/9/2018 08:10

Results due next Wednesday. They have already announced that the new IFRS9 accounting standards should have no material impact on the anticipated outcome.

Under IAS 39, provisioning is assessed on a case by case basis with any expected income and cash shortfall provided for on a specific basis. The Group also currently adopts a cautious policy of maintaining and, where deemed appropriate, increasing an additional provision factoring in historical industry wide-data for potential future loss. It is this approach to provisioning that enables the directors to be confident that the result of adopting IFRS 9 will be immaterial to the Group's financial results. Furthermore, the detailed work and analysis undertaken confirms that the impact of moving to a position of recognising a likely impairment at the initiation of any lending transaction is materially equal to both the sensible provisioning policy already adopted in the Group's balance sheet and the charge for impairments being incurred in the Group's profit and loss account. For illustration, as at 31 May 2018, the Group held impairment provisions equal to 1.5% of the entire lending portfolio. The detailed IFRS 9 work indicates that, had IFRS 9 been adopted a provision of 1.6% of the portfolio would have been required, derived from a range of scenarios between 1.3% and 2.8% in the Group's best and worst case scenario and probability modelling.

[the oak tree] 08/8/2018 09:52

Thats me bought into these again.

I say again as the last time was some 7/8 years ago. I sold out but see value in them now. Believe they will make much better profit gains after synchornising there acquisitions than the market has priced in. The financial sector is one of the best at doing this.

It's not often a small company comes out and says they will be increasing their dividends by 30% pa for the next few years. Bodes well......

GLA

[welsheagle] 08/8/2018 09:13

Very positive article in Investors Chronicle this week by Simon Thompson

[melody9999] 07/8/2018 14:40

TU and divi RNS well received. We have good finals to look forward too plus the 0.65p divi in September.

[eagle eye] 06/8/2018 16:02

OPM has woken up at long last at 53.4p/56p.
Far too cheap for far too long.

[mirabeau] 31/7/2018 13:10

My pleasure

[masurenguy] 31/7/2018 13:09

Aha - I wondered what the catalyst was for today's sudden sharp uptick !

[cheshire man] 31/7/2018 13:08

Thanks Mirabeau,,,,,nice reaction :-)

[mirabeau] 31/7/2018 13:02

ST tip in the IC

[glasshalfull] 26/7/2018 15:59

A welcome RNS.

As I tweeted earlier,subtext for me was reiteration on positive trading & forward visibility. Also this will ramp up div yield from 1.5% to 3.3% over the period which brings it onto the radar of income investors.

Salpara makes a point about OPM being swallowed by a bigger player. Personally I think a merger with PCF would be an excellent fit for both. PCF have received a bank licence in the last year & therefore will be in a position to source cheap lending to fund their growth. I put it to both CEOs of OPM & PCF at Mello 2018 (Derby) in April 2018...neither were unduly negative on the idea.

Kind regards
GHF

[salpara111] 26/7/2018 14:54

As someone who has held these for 3 years I keep waiting for break even again!
The market clearly did not like the fundraising/acquisition but they have made a success of it so I am at a loss as to why the share price is languishing where it is particularly after such a positive update in June. I really though that would be the turning point but here we are!
I guess I will hold until September results, there is always a slim possibility that a bigger player may decide to swallow them on the cheap.

[hatfullofsky] 26/7/2018 12:29

Fantastic update ...

As was reported in its trading update on 27 June 2018, the Group's trading remains strong. Given the increased scale and stability of the enlarged Group created by the successful integration of recent acquisitions, forward visibility of earnings, improved margins and lower operational risk, the directors now consider that it will be appropriate to recommend an increased dividend for the year ended 31 May 2018 and progressive increases for each of the years ending 31 May 2019, 2020 and 2021.

[holiday6] 24/7/2018 16:01

Very Good underlying business - ref the profit progress, but profligate use of equity by management last year means the business is massively undervalued as investors scared that they will do it again.

[hatfullofsky] 24/7/2018 14:15

... hear opinions

[hatfullofsky] 24/7/2018 14:15

Newbie here, started buying yesterday, looks fairly undervalued. I like the numbers and prospects. I am a little concerned their strategy is to get to £100M MCAP, would prefer a EPS number or Profit target.As a contrarian and value investor, I'm not too fussed about the 3Y downtrend but I would like to here opinions.

[cheshire man] 23/7/2018 07:31

Positive news :-)

[p1nkfish] 23/7/2018 07:18

Update reads well.

[masurenguy] 17/7/2018 12:44

Nice to see a bit of blue here today. The shareprice has been stagnant over the past month and I suspect that this is largely due to the overhang of 4.4m shares that Nolan still held when his retirement was announced a month ago. In the 4 weeks since then the share volume has been 7m, which is twice the average normal monthly level of 3.5m over the past 6 months.

[masurenguy] 28/6/2018 07:53

1pm forecasts substantial jump in annual earnings, revenue
BFN News| 27 June, 2018

Finance provider to small businesses 1pm said it expected to post a large boost in annual revenue, while increasing earnings per share. Revenue for the year through March was expected to jump by more than 75% to £30.0m. Basic earnings per share would increase 'by more than 20% notwithstanding the increase in shares in issue in June 2017 to fund acquisitions', the company said.

"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."said chief executive Ian Smith.

At 2:35pm: (LON:OPM) 1pm PLC share price was 46.5p.
Story provided by StockMarketWire.com

NB: As previously mentioned, there could be a bit of an overhang impacting the shareprice going forward if retiring director Mike Nolan is planning liquidate his complete holding in the market. Hopefully he will find an institution or other investor to take the bulk of them in one shot !

[maiken] 27/6/2018 09:21

I agree it's very good value.Mgmt seem to be delivering on their strategy.Short term maybe we just have to wait on the removal of the probable stock overhang from the retiring director Mike Nolan.He's sold 1 million shares but has 4.4m left .

[brownie69] 27/6/2018 08:59

Great results. Just topped up this am.

Cant help but think this is really primed for growth now and this update highlights that the business is largely derisked.

The share price will surely respond over coming days as its looking ridiculously cheap now.

[masurenguy] 27/6/2018 07:43

Should stem the recent slow drift down in the shareprice.

RNS Number : 6810S
27 June 2018
Trading update

Final results will show record year on year increase in revenue and profit. Earnings per share increase in excess of 20%

1pm plc, the AIM listed alternative finance provider to the SME sector is delighted to announce the following strong trading update ahead of the publication of its final audited results for the financial year ended 31 May 2018, which are 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.

Highlights*

-- Deal origination for the year in excess of £140 million, an increase of 70%, of which 44% was funded on balance sheet and 56% broked-on, a similar mix to the prior year
-- Revenue for the year expected to be £30.0 million, an increase in excess of 75%, of which over 30% is organic growth
-- Over 50% of revenue for the current year to 31 May 2019 is already secured as "unearned income"
-- Basic earnings per share expected to increase by more than 20% notwithstanding the increase in shares in issue in June 2017 to fund acquisitions
-- Own-book portfolio as at 31 May 2018 expected to be in excess of £130 million, up 50%, of which 10% is organic growth
-- Aggregate borrowing facilities, i.e. wholesale funding to deploy, in excess of £160 million, an increase of more than 2 times over the prior year
-- Blended cost of borrowing reduced to less than 4.0% (2017: approximately 5.3%) and will reduce further as the facility with British Business Bank is utilized
--Improved Net Interest Margin compared with prior year
-- Net write-off experience in the year in line with the prior year, reflecting the Group's cautious approach to underwriting and provisioning

*unaudited

Strategy~

1pm's strategy is to focus on providing or arranging the finance which UK SMEs require to fund their businesses. The SME market continues to provide substantial scope for organic growth for the Group's multi-product range, which includes asset, vehicle, loan and invoice finance facilities. An operational synergy arising from being a multi-product provider is the opportunity to cross-sell among the various trading entities in the Group. A cross-selling culture is being embedded at all sites and the rate of deal origination from cross-selling is increasing month on month. The Group operates a "hybrid" lending and broking model, which is fundamental to the Group's cautious risk management strategy and which enables it to optimize business levels through market and economic cycles.

Borrowing facilities

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 GBP160 million (2017: GBP74.5 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 4.0% (2017: approximately 5.3%) and was therefore able to record an increase in Net Interest Margin.

Integration

The Group has successfully completed 7 acquisitions in the past 3 years. Whilst new business origination activities at each acquired company have deliberately not been changed other than the cross-selling initiative, the Company 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 harmonizing 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.

Management

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. The Group is now better placed than ever to benefit from further organic growth and the operating synergies that flow from being a multi-product provider of finance to the resilient UK SME sector. We look forward to continuing to build value for our shareholders."