1pm (LON:OPM)
Share Price 60p Bid/Offer 58p - 62p
Market Cap €37 million Normal Market Size 2,000 shares
About the Company
1pm established in 2006 is an independent provider of finance facilities to the SME sector. The company can be divided into three divisions which includes onepm finance, Academy Leasing, and Broadgate Business Finance. All businesses serve different segments of the market but they do in part support each other with referrals.
One pm finance provide Lease Finance, Hire Purchase, and Business Loans to small and medium sized enterprises (SME’s) up to £50,000.
Academy Leasing provide equipment, vehicle and invoice ?nance. They have their own funds as well as strong partnerships with a panel of external funders. Acquired 2015.
Bradgate Business Finance are a leading provider of Asset & Invoice finance for the Construction, Recycling & Haulage Industry including finance for plant, business equipment, trucks and vehicles. Acquired 2016.
Trading Update Headlines on 19th January 2017
*Revenue increased 52%
*Profit before tax increased 23%
*Earnings Per Share up 5.8%
*Positive Outlook for Rest of Year
Market Reaction
Sell first and ask questions later. The shares fell on the news, as investors eyes were drawn between the discrepancy between the revenue up 52% and the profit before tax increase of only 23%. Worst of all earnings per share were up only 5.8%.
The answer lies in the large number of shares that were issued to pay for acquisitions in previous years. Also additional shares were issued as the companies had met earn out expectations.
When the company was dependent on brokers paid on commission to supply the company with clients, the company had a higher p/e. Now the company is less riskier with a more diversified earnings, the company is stuck being lowly rated.
Dividend Policy
The company wants institutional support and some institutions will not buy stocks unless they pay a dividend. Therefore a token dividend of 10% of earnings is being paid out as a dividend.
Growth Strategy
Previous acquisitions had been on a p/e of around 8 with payment in cash and shares plus further issue of shares on an earn out basis. One acquisition in 2015 and another in 2016. Another one or two acquisitions expected in 2017.
Targets are being sought adjacent products areas like invoice discounting and the leasing …
