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Revenue and earnings fall as 1pm talks up its 'resilience'
15th Jan 2020 09:13
(Sharecast News) - Specialist finance provider 1pm announced its interim results on Wednesday, reporting a 7% improvement in deal origination to £87.8m, 65% of which was brokered to other lenders for commissions, up from 60% year-on-year.
The AIM-traded firm said group revenue fell to £15.6m in the six months ended 30 November, from £16m a year earlier, which it put down to a "slight change" in its product mix.
Group operating profit before exceptional items fell to £3.2m from £4.1m, while fully-diluted earnings per share totalled 2.7p per share, compared to 3.14p a year earlier.
Net assets rose 4% to £56.1m as at 30 November, while the company's 'own-book' lending portfolio increased 1% to £143.5m on the same date.
Funding facilities were up to £170.7m at period-end, from £167.1m at the end of May, while the blended cost of borrowings was 3.9%, compared to 4.0% in the year through May.
Bad debt provisions increased to 2.2%, or £2.7m, of the total net portfolio, up from 1.9% or £2.4m at the start of the period.
The firm declared an interim dividend of 0.36p per share, which was an increase of 29% over the prior year's half-year distribution.
Its board also said it had made a "significant" investment in senior personnel and business functions in line with its strategy, with integration progressing as planned.
The directors said the interim figures reflected continued demand for finance from UK small to medium enterprises and consumers, across the "comprehensive" range of products it offered.
It said the results were underpinned by its "prudent" underwriting and provisioning policies, which were continuously under review, given the extended period of uncertainty being experienced in the wider macro-economic environment.
The board said 1pm remained "resilient and profitable" thanks to its ability to offer a complete range of finance products to UK SMEs, its "flexible" business model which enabled it to act as either a funder or a broker in order to maintain margins and manage credit risk, and its current focus on increasing group synergies and operational efficiencies.
"Given the macro-economic and political uncertainty experienced in the UK throughout 2019, including the run-up to December's general election, which clearly dampened business activity levels, we are satisfied with the trading momentum maintained across the group during the first half," said non-executive chairman John Newman.
"The board believes that the group's strategy of being a multi-product provider of finance to UK SMEs and consumers, allied to the flexibility of our 'hybrid' operating model of either funding or broking-on new business origination remains sound and will facilitate future growth as well as mitigating the risks associated with any future economic downturn."
Newman said that had enabled 1pm to generate "robust" levels of demand while being able to maintain margin, control credit and spread risk.
"As a result, the group remains strategically and operationally well positioned to deliver future growth."
At 0911 GMT, shares in 1pm were down 6.7% at 34.99p.
The AIM-traded firm said group revenue fell to £15.6m in the six months ended 30 November, from £16m a year earlier, which it put down to a "slight change" in its product mix.
Group operating profit before exceptional items fell to £3.2m from £4.1m, while fully-diluted earnings per share totalled 2.7p per share, compared to 3.14p a year earlier.
Net assets rose 4% to £56.1m as at 30 November, while the company's 'own-book' lending portfolio increased 1% to £143.5m on the same date.
Funding facilities were up to £170.7m at period-end, from £167.1m at the end of May, while the blended cost of borrowings was 3.9%, compared to 4.0% in the year through May.
Bad debt provisions increased to 2.2%, or £2.7m, of the total net portfolio, up from 1.9% or £2.4m at the start of the period.
The firm declared an interim dividend of 0.36p per share, which was an increase of 29% over the prior year's half-year distribution.
Its board also said it had made a "significant" investment in senior personnel and business functions in line with its strategy, with integration progressing as planned.
The directors said the interim figures reflected continued demand for finance from UK small to medium enterprises and consumers, across the "comprehensive" range of products it offered.
It said the results were underpinned by its "prudent" underwriting and provisioning policies, which were continuously under review, given the extended period of uncertainty being experienced in the wider macro-economic environment.
The board said 1pm remained "resilient and profitable" thanks to its ability to offer a complete range of finance products to UK SMEs, its "flexible" business model which enabled it to act as either a funder or a broker in order to maintain margins and manage credit risk, and its current focus on increasing group synergies and operational efficiencies.
"Given the macro-economic and political uncertainty experienced in the UK throughout 2019, including the run-up to December's general election, which clearly dampened business activity levels, we are satisfied with the trading momentum maintained across the group during the first half," said non-executive chairman John Newman.
"The board believes that the group's strategy of being a multi-product provider of finance to UK SMEs and consumers, allied to the flexibility of our 'hybrid' operating model of either funding or broking-on new business origination remains sound and will facilitate future growth as well as mitigating the risks associated with any future economic downturn."
Newman said that had enabled 1pm to generate "robust" levels of demand while being able to maintain margin, control credit and spread risk.
"As a result, the group remains strategically and operationally well positioned to deliver future growth."
At 0911 GMT, shares in 1pm were down 6.7% at 34.99p.