Shares in 1pm, the Bath-based specialist small business lender, fell by more than 8% today despite it saying it had bounced back strongly from the earlier impact of the coronavirus pandemic on the business.
In a trading update issued ahead of its AGM yesterday, the firm said it had ‘de-risked’ its lending book over the past few months while enjoying continued revenue growth. It had also increased its profits every month since its year-end on May 31.
The firm's shares closed up 5.67% yesterday after investors warmed to the statement – but they fell back this morning and by lunchtime were 8.19% lower at 16.25.
Established in 2006, 1pm provides a range of finance facilities to the SME sector spanning asset finance, commercial loans and vehicle finance through to invoice finance.
In May it said it had worked hard from the beginning of the crisis to help its customers through its different lending activities, including asset finance, loan finance and invoice finance.
It also helped impacted customers by providing tailored support on a case-by-case basis, including restructuring payments, and had developed new products to help businesses that need to provide services during the lockdown, including a package to finance vital equipment small firms might need.
Today, it said the first four months of its current financial year – ending May 31, 2021 – had continue to be in line with its internal budget expectations.
This demonstrated “continuing positive trading momentum and an improving trend in business activity” since the downturn caused by the impact of Covid-19 in the period through to the end of May 2020, it said.
Since that point, it went on to say, it had experienced strong new business origination, continued revenue growth month on month and had generated increasing profits in each of the four months as it continued to gradually return to pre Covid-19 trading levels.
It added that in the current economic environment the performance of its lending book and the resilience of its balance sheet were paramount.
Arrears had been reduced by more than £5m since year-end while the rate of new arrears had continued to reduce month on month, trending back towards the pre Covid-19 levels from the peak experienced at May 31, it said.
The level of write-offs remained “relatively static”, it added, and the historical rate of recoveries on amounts previously written-off had been maintained at 70-80% of the impaired value.
It said its balance sheet continued to demonstrate its resilience with both net tangible assets (NTA) and cash having increased from year-end levels with unaudited NTA on September 30 more than £28m and unaudited cash balances on the same date above £2m.
“While the economic outlook is extremely difficult to predict at the moment this continued de-risking of the lending book and steady progress back towards historic levels of performance is considered grounds for cautious optimism by the board,” 1pm said.
