‘ Helping the UK economy grow by providing finance to SMEs’ Corporate Presentation
Introduction • An independent financier to the UK SME market • Trading since 2000, floated on AIM in 2006 • Raw material is cash. Sourced through equity, bank & HNW borrowings and excess receivables • Six years of strong organic growth based on sound procedures and controls • Opportunity to further increase value through new products and M&A Revenue and PBT Revenue (CAGR 27% ) £6,000,000 £2,000,000 £6,000,000 £5,000,000 £1,500,000 £5,000,000 £4,000,000 £4,000,000 £1,000,000 £3,000,000 £3,000,000 £500,000 £2,000,000 £2,000,000 £0 £1,000,000 £1,000,000 £0 -£500,000 £0 May 10 May 11 May 12 May 13 May 14 May 15 Revenue Revenue Profit/Loss Before Tax 2
Group Structure 1pm plc First acquisition (AIM listed) completed in August 2015 – Academy Leasing Limited 1pm (UK) Ltd MH Holdings Bath (100%) (100%) 30 employees Speakertone (100%) Unique leasing Academy Warrington (100% & Leasing (100%) 42 employees Dormant) Harrogate (100% & Dormant) 3
Shareholder information Shareholder information Principal shareholders: • Market: AIM • • Ron Russell (HNW) 19.4% Ticker: OPM • • Share price 18/2/16: 62p Henderson 18.6% • Mkt Cap: £32m • Charles Stanley 14.7% • Shares in issue 52,534,463 • Mike Nolan (Academy) 5.1% • NOMAD: WH Ireland • Hargreaves Lansdown 3.1% • Financial PR: Walbrook PR 60.9% • Auditors: Moore Stephens • Legal advisors: Simmons & Simmons 4
Board & Management John Newman Chairman Main Board: Julian Telling Ian Smith Junior Board: CEO Ron Russell Hazel Jacques Mike Nolan Helen Walker Sales & Strategy & Risk Finance Marketing Academy 1pm Fin. Academy Under- 1pm Comp- HR Supplier Broker Control Ops. writing Ops. liance Sales Sales 5
Overview What 1pm and Academy do … • Provide ‘soft asset’ and loan finance to UK SMEs • Broad range of equipment sectors (e.g. catering, health, garages) • Lend between £1,000 and £50,000, on Terms from 3 to 60 months • Products comprise commercial lease finance, hire purchase, business loans and broking of vehicles (approx. 28% is regulated business) • Strict underwriting procedures and strong credit management policy And what we do not do … • Consumer finance or short-term ‘pay - day’ lending • ‘Big ticket’ capital assets • Sub-prime lending • Peer to peer lending ( … although partnering is a strategic option under review) 6
The market • Non-bank loan financing to UK SMEs 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 sales finance distribution channel and the broker-introduced channel • The non-bank asset finance tends to be for smaller, riskier lends Business Aircraft, ships, Broker equipment rolling stock introduced Plant & finance 2% finance Machinery Car finance 8% Direct finance finance 18% 34% 50% 22% IT equipment finance Sales finance 9% 32% Commercial Vehicle finance 25% 7
Business Model 1pm Academy • • Broker introduced proposals Equipment supplier introduced proposals • Circa 190 brokers • Aim to satisfy all supplier • 80:20 rule applies to brokers introductions • Funder only • Fund those that meet criteria; • Fund those proposals that meet broke-on others for commission, criteria thus managing cash flow and risk • Leases and loans • Cross-sell vehicles • Typically higher risk; higher price • Manage fleets 8
Product Guide LEASE HIRE PURCHASE • • All legal entities, ALL of UK Non-regulated business only, All of UK • • £1,000 - £25,000 new start £1,000 - £25,000 new start • • £1,000 - £50,000 established (2+ years trading) £1,000 - £50,000 established (2+ years trading) • • Tenants considered (2+ years trading) Tenants considered (2+ years trading) • • Rates from 13% to 18% Rates from 13% • • Doc fee £150 ex vat Doc fee £150 ex vat • • 12-60 months 12-60 months SHORT TERM LOAN (UNDER 2 YEARS) LONG TERM LOAN (OVER 2 YEARS) • • Non-regulated business only, All of UK Non-regulated business only, All of UK • • £1,000 - £50,000 ltd, plc, and partnerships of 4 or more £1,000 - £50,000 ltd, plc, and partnerships of 4 or more • • £25,001 - £50,000 as above plus sole traders and £25,001 - £50,000 as above plus sole traders and partnerships of 3 or less partnerships of 3 or less • • Homeowners only Homeowners only • • 2 years + trading 2 years + trading • • Rates from 20% to 26% Rates from 18% • • Doc fee variable Doc fee variable • • 3-23 months 24-60 months 9
SME sectors 4% 5% 26% 8% 10% 11% 10% 10
Process Leasing spreads the cost of equipment and is repayable in fixed monthly instalments. By leasing the customer keeps its other credit lines available Monitoring Company Leasing 1PM Lease of lease wishes to Broker undertakes Agreement and purchase contacts assessment activated repayment equipment 1PM with of and financing opportunity financing proposal completed Constant Focus on Broker Credit Funding arrears and small ticket relationships criteria is sourced legal follow leasing periodically consistently from “block up market reviewed for applied and discount” quality periodically facilities control reviewed purposes 11
Interim Results: P&L H1 2015/16 H1 2014/15 Change Revenue £5.25m £2.56m x 2.0 Gross Margin 64.8% 54.6% + 19% Profit Before Tax £1.66m £0.76m x 2.2 Earnings per Share 2.91p 1.91p + 52% Bad debt write-offs y-t-d £0.16m (0.28% of £0.11m (0.46% of + 45% (-39% re portfolio) portfolio) portfolio) Bad Debt as a % of total Portfolio … comprise 1pm’s results for six 6.00% months and Academy for three 5.00% months from 25 th August (date of 4.00% acquisition) to 30 November 2015. 3.00% 2.00% 1.00% 0.00% 12 May 10 May 11 May 12 May 13 May 14 May 15
Interim Results: New Business Origination … comprise 1pm’s results for six months and Academy for three months from 25 th August (date of acquisition) to 30 November 2015. H1 2015/16 H1 2014/15 Change New lease & HP contracts £9.7m £5.8m x 1.6 New loan contracts £6.1m £1.0m x 6 Commission income £0.45m - n/a Own book v broked-on 80 : 20 100 : 0 Total Portfolio £57.0m £24.3m x 2.3 13
Interim Results: Block funding & Net Assets 1pm Academy …plus, significant unencumbered paper. Facilities £25.4m £19.3m Portfolio & Debt Borrowing £17.5m £11.9m £35,000,000 Headroom £7.9m £5.8m £30,000,000 £25,000,000 £20,000,000 Gearing £15,000,000 (re total 44% 68% £10,000,000 portfolio) £5,000,000 £0 May 10 May 11 May 12 May 13 May 14 May 15 Total Portfolio Funding H1 2015/16 H1 2014/15 Change Net assets £25.2m £11.7m x 2.1 14
Growth plan The Group’s continuing financial strength provides Banking the platform for three- license ??? year strategy of organic Second Acquisition and M&A growth ‘Fintech’ platform ? Market Cap target £100m “Adjacent” products Acquisition : Market Cap first target £50m Academy Leasing Investment in resources Market Cap May 2015 £25m 16
Outlook • Asset Finance is £28.5b (45%) of £64b non-bank loan SME financing market • Competition increasing – e.g. PE interest in specialty finance • ‘Fintech’ trend (72 platforms) and ‘specialty’ banks (Aldermore, Shawbrook, Metro) all providing new sources of finance to our customer base - nevertheless the Directors are confident for the future because: • New business origination shows no signs of slow-down • Track-record of both businesses is attracting increased interest from banks; raw material (cash) is available to borrow • Fragmented sector with opportunities to acquire scale and broaden offering; hence strategic growth plan • Supportive and growing institutional shareholder base 17
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