Profit before tax at Private & Commercial Finance Group (PCFG) rose to £829,000 for the year ended 31 March 2013, up by 8.94% on the previous year, according to company results submitted to the Stock Exchange.
Profit after tax at the London-based independent lender, and therefore attributable to equity holders, was likewise up, by 19.83%, to £574,000, while new business originations rose by 3.43% to £39.2m.
The financial result comes despite falls in Group turnover (down 20.47% to £41.37m), revenue (reported as gross profit, down 19.17% to £12.13m) and operating profit (down 16.05% to £4.96m) as costs reduced at PCFG.
Similarly, net assets were up 6.28% to £9.32m as total liabilities (down 6.26% to £75.62m) fell at a greater rate than total assets (down 5.03% to £84.95m).
Excluding a one-off profit of £131,486 from the sale of part of the Group’s leasing portfolio in 2012, like-for-like profit was 30% above the level for 2011/12 and return on average assets increased by 53%, according to the statement accompanying the report by David Anthony, chairman of PCFG.
The company also highlighted its raising of £5.9m in fundraising through convertible loan notes in November 2012. Although at the time the company had hoped to raise up to £10m, its reported committed debt facilities now stand at £95.3m, allowing it to increase its ‘headroom’ to fund growth from £19m in November 2012 to £20.5m at the end of March 2013. A further £3m of convertible loan notes will be available to repay the 2003 and 2009 loan notes which will become due in September 2013.
In his statement accompanying the results, Scott Maybury, chief executive of PCFG, said: "The last year has seen a number of significant successes."
The "positive results" of 2012/13 followed "a period of readjustment amidst the difficult trading conditions of the last few years" and reflected "the improving quality and size of our portfolio."
The PCFG portfolio at year-end stood at £80m, according to Maybury, down from £83m in November although the company intends to raise this to £100m. The book was split between £46m in consumer motor finance and £34m in business asset finance receivables.
The company reported a year-on-year 27% increase in new business volume in the final quarter of the year, with new business volumes already recorded in FY 2013/14 being "better than budgeted," said Maybury.
Consumer and business
Commenting on the two divisions of PCFG funding, Maybury said there was a "clear niche" for the company in consumer motor finance where it was "not constrained by a credit score model, can correctly price for risk and provide flexibility on terms," which was demonstrated by its level of customer retention.
In business asset finance, Maybury reported "increased competition", particularly from ‘challenger’ banks.
"Notwithstanding ING Lease’s exit from the market, lending to SMEs remains rate sensitive and our success in this market requires an ability to understand the customer’s finance requirements, structure the financial product accordingly and concentrate on assets with strong collateral characteristics," said Maybury. "We expect to see strong growth in this division as the economy improves and small businesses start to invest again in business critical assets."
Further data and analysis of the PCFG results will be published in the July issue of Motor Finance magazine.