2019 Interim Results

                                                                                                   16 January 2019

1pm plc

(the "Group" or the "Company")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 NOVEMBER 2018

Strong trading momentum from continued organic growth;

Record half-year deal origination, revenues and profits;

First interim dividend declared

1pm plc, the AIM listed independent specialist finance provider of funding facilities to UK SMEs and consumers, is pleased to announce its financial results for the six-month period ended 30 November 2018 ("Results" or "Interims").

The Interims reflect continued strong demand for finance from UK SMEs and consumers across the wide range of products offered, fulfilled through commercial underwriting and underpinned by cautious provisioning policies. The strong trading results are a product of the increased scale of the Group's activities following the successful integration of multiple acquisitions over the past three years; the strategy of being a multi-product provider of finance (asset, vehicles, loan and invoice finance); the effective, flexible business model of being able to act as both a funder and a broker; and increasing Group synergies and efficiencies. Own-book funding continues to be solely for UK SME finance with the Group acting as a broker for consumer and vehicle finance.

Financial Highlights:

·    New business origination increased 10% to £82.3m (H1 2017/18: £74.9m)

·    Group revenue increased 15% to £16.0m (H1 2017/18: £13.9m)

·    Group operating profit before exceptional items increased 14% to £4.1m (H1 2017/18: £3.6m)

·    Basic earnings per share increased 12% to 3.62 pence (H1 2017/18: 3.23 pence)

·    Net Assets at 30 November 2018 increased 6% to £51.0m (31 May 2018: £47.9m)

·    Net bad debt write-offs in the period were £0.5m (H1 2017/18: £0.7m)

·    At period end, total bad debt provisions were £2.4m representing 2.0% of the total net portfolio (30 November 2017: £2.1m representing 1.8% of the total net portfolio)

Operational Highlights:

·  Flexible operating model of either funding on 'own-book' or generating broking commissions resulted in approximately 60% of all origination being brokered on to other lenders for commissions (H1 2017/18: 58%)

·   Combined 'own-book' assets, loans and invoice finance portfolio increased 9% to £142.1m (30 November 2017: £130.1m)

·    Funding facilities available to the Group as at 30 November 2018 stood at £169.5m (31 May 2018: £162.6m)

·    Blended cost of borrowings in the period was 4.0% (year to 31 May 2018: 4.1%)

·   Integration of business functions continues to accelerate with origination of new leads from cross-selling the Group's products progressing in line with management expectations

In line with the positive background of these Results, and the Group's enhanced and progressive dividend policy announced on 26 July 2018, the Board is pleased to declare an interim dividend for the first time of 0.28p per share for the half year period ended 30 November 2018 to be paid on 1 May 2019 to shareholders on the register at 1 April 2019.

Commenting on the Interim Results, John Newman, Non-Executive Chairman, said:

"We are pleased these Interims show that the recent focus on organic growth has delivered another set of strong results. This is particularly encouraging given continuing economic and political uncertainties. Furthermore, this performance demonstrates the effectiveness of our strategy of being a multi-product provider of finance to UK SMEs and consumers, allied to the flexibility of either own-book funding or broking on. This strategic and market positioning has enabled the Group to generate robust levels of demand whilst being able to maintain margin, control credit and spread risk. The Group is strategically and operationally well positioned to deliver further growth."

A video detailing further comments and insights on the Interim Results from Ian Smith and James Roberts can be viewed by following this link: http://bit.ly/OPM_H1_19

About 1pm:

The Company was admitted to AIM in August 2006.

1pm plc is a group of established independent finance companies focused on providing SMEs with accessible funding to add value to their businesses.  All customers must have good credit histories and proven ability to repay their finance commitments.

1pm plc's purpose is "to grow together" and its goal is to be "the specialist finance provider of choice".

More information is available on the Company website www.1pm.co.uk

CHIEF EXECUTIVE OFFICER'S STATEMENT

FOR THE SIX MONTH PERIOD ENDED 30 NOVEMBER 2018

Financial Results

I am delighted to report that the Group has continued to make good progress in the first half of the current financial year, delivering in line with our expectations.

Our focus over the past 12 months, spanning the second half of the financial year ended 31 May 2018 and the first half of the current financial year, has been on driving organic growth, delivering synergies and transitioning to a fully-fledged group, whilst continuing to increase investment for the future in key areas. While this transition process continues, it is a pleasing and noteworthy performance that, against the well-publicised backdrop of current economic and political uncertainty, new business origination increased in the half-year to 30 November 2018 to £82.3m, compared with £74.9m for the same period in the prior year.

Group revenue in the half year amounted to £16.0m (H1 2017/18: £13.9m) an increase of 15%, of which 80% is interest and other lending related income and 20% is commission income from broking. The £12.9m (H1 2017/18: £11.6m) of interest and other income from direct lending activities represented an increase of 11% and the £3.1m (H1 2017/18: £2.3m) of commission income from broking activities, an increase of 35% over the previous year.

Cost of sales, which principally comprise funding costs, introducer commissions paid out and bad debt costs, amounted to £5.2m (H1 2017/18: £4.8m) an increase of 8%. The result was an increase in Gross Profit and Gross Margin for the period to £10.7m and 67.2% respectively (H1 2017/18: £9.3m and 65.6% respectively).

Operating and Administrative costs, principally comprising staff and premises costs, amounted to £6.6m (H1 2017/18: £5.5m) an increase of 20%, which reflects investment in our capability in Group functions, such as Compliance and Governance, Marketing, HR, Finance and the 'Platform 1' systems project.

Profit before tax increased to £3.9m (H1 2017/18: £3.5m), an increase of 11%. Profit after tax in the period rose to £3.1m (H1 2017/18: £2.7m), whilst earnings per share ("EPS") increased 12% to 3.62p (H1 2017/18: 3.23p). EPS has been calculated on a weighted average basis. At the period end, a total of 87,596,428 ordinary shares were in issue.

The Board is pleased to declare an interim dividend for the first time of 0.28p per share for the half year ended 30 November 2018 to be paid on 1 May 2019 to shareholders on the register at 1 April 2019. The Group paid a single final dividend in respect of the financial year ended 31 May 2018 of 0.65p per share.

At the period end, the Group's consolidated net assets stood at £51.0m (31 May 2018: £47.9m), an increase of 6%.

Strategy

The board is pleased with the progress made to date in delivering its strategic objectives. Those set out in the Group's buy-and-build plan devised in 2014 are complete with the exception of the 'Platform1' systems integration project, which is planned to be completed during this calendar year. Plans have now been developed and are being specified for the next phase of the Group's strategic growth for the period through to the financial year ended 31 May 2023. In the next phase of development, the Group's overall goal is to become "the speciality finance provider of choice". To achieve this goal, the Group's objectives are to:

·     Continue to add scale through both organic growth and carefully selected acquisitions with a view to building a lending portfolio of approximately £350m

·     Continue to reduce the cost of borrowing through optimising the size, term, cost and mix of funding facilities

·     Increase the amount of new business origination funded on balance sheet while maintaining the flexibility to act as a broker to other lenders

·     Invest in marketing, branding, business intelligence, innovation and systems to further enhance the use of FinTech and our digital capability

·      Invest in key hires, training and succession

·    Exploit the leverage available to the Group from its multi-product offering, cross-selling and operational synergies

·      Consider new products and additional territories for further expansion

The Group now comprises four product divisions, namely Asset Finance, Vehicles, Loan and Commercial Finance, operating from 7 sites in the UK with 185 employees serving over 20,000 SME businesses and consumers.

The Board is confident that the Group is maintaining its commitment to provide a range of finance solutions to support the UK SME sector and UK consumers whilst delivering growth in order to increase shareholder value.

Funding

The Group's capital management objective is to maintain a strong capital base to support its current operations and planned growth through to 2023 whilst continuing to reduce the cost of capital in order to provide returns for shareholders and benefits for other stakeholders. To meet these objectives, the Group has implemented a centralised Treasury function and adopted a policy of sourcing different funding instruments appropriate to each of the financial products it provides:

·    In respect of Asset Finance, the Group is continuing to increase its block discount facilities, such as the £35m facility with British Business Bank and to pursue complementary credit instruments that will reduce the overall cost of borrowing.

·   In respect of Loans, the Group utilises block discount facilities and a Secured Loan Note facility, comprising loans from high net worth individuals.

·   In respect of Commercial Finance, the Group utilises 'back-to-back' bank facilities for lending against clients' receivables.

In each case, security is provided to each lender in the form of an assignment of the underlying lease, loan or invoice receivables.

Outlook

Demand for business-critical asset, loan and invoice finance from UK SMEs and cost-effective vehicle and property finance for consumers continues to be robust. This level of demand is encouraging given an increasingly competitive market for bank and alternative finance and against the current background of political and economic uncertainty. The Board continues to see opportunities for further organic and strategic growth and, with trading in line with Board expectations, looks forward with optimism to the continued success of the business.

Ian Smith

Chief Executive Officer, 1pm plc