(PCF) Private & Commercial Finance

Well, it's says pretty much the same to me too. Have increased my stake here of recent time and expect positive movement after the results.
TT

Is this share about to rocket?????

Given that :-
the market cap is currently £3.8m
the PE ratio is 7.9, and
if they truly are saving half a million a year and this is dropping to the bottom line on their new accounting system, the impact would be to have 100% increase in the share price (assuming this is not factored in).

Seems logical. Any nay sayers?

Thanks to automated processes and clear performance visibility, the London-based vehicle and equipment finance business is able to make smarter decisions and service a growing business with eight fewer collections agents

London, May 13th, 2013 - Sopra Banking Software, a world leader in banking software, solutions and services, today announced that London-based Private & Commercial Finance Group plc (PCF) is saving £500,000 a year in reduced write-offs alone since deploying Sopra Banking Lending - Asset Finance solution. The business, which provides finance for vehicles, plant and equipment to consumers and businesses, has also seen a five-fold increase in revenues from existing customers thanks to the advanced management information provided by the solution.

PCF, which celebrates 20 years in business this year, has a finance portfolio of over £100 million and almost 14,000 customers. The group implemented the Sopra Banking Lending component in 2009 to gain greater visibility and control over its credit control activities. Although it already had an asset finance management system, this was very old, had limited collections functionality, and was very weak on reporting, according to PCF’s information systems manager Andrew Barber.

As the UK continued to dip in and out of recession PCF wanted to be able to concentrate its resources more productively, both within its credit control operations and in other areas of the business. “We had limited automation in our collection processes and were keen to improve on this when choosing a new contract administration package,” Andrew says. “We wanted to establish more of a workflow-based environment to gain a greater level of control of the performance of our portfolio at any stage in the month. This would allow us to react accordingly and focus on the important agreements.” The group also wanted to provide management information from collections to the business development team. Although traditionally the vast majority of PCF’s business originates via brokers, the group has an opportunity to sell further finance to existing customers as their contracts come up for renewal. “With a large portfolio of customers we weren’t in a position to remarket our databases effectively if we couldn’t determine who the good customers are,” Andrew notes.

PCF chose Sopra Banking Software from a long-list of 8 possible suppliers. It wanted a system that was workflow-driven and would provide a high level of process automation - yet with the flexibility to enable internal teams to reset parameters without having to go back to the software vendor. “Sopra Banking Lending – Asset Finance solution is very easy to use, and extremely configurable,” Andrew comments. “We can set up new products on the system and amend system configuration easily.”

Since using the system, PCF has been able to handle its credit collection activities with almost 50% less staff. Before the solution was deployed, the credit control team was 20-strong; within two years the group had been able to reduce this number by eight. Agent effort is better targeted; the quality of the portfolio has improved, reducing the level of chasing that is required; and routine processes such as account alerts and follow-up actions are managed automatically.

Another advantage of the software is the extensive range of interfaces it provides to other systems. An SMS facility, for example, allows the credit control team to issue automated text prompts to customers in arrears. Other interfaces let staff process credit or debit card payments, verify customers’ addresses and validate bank details from within the system, Andrew adds. “The result is a very slick end-to-end process.”

PCF is saving £500,000 a year in reduced write-offs, because the new system is so efficient in recouping missed payments at an early stage, and because it can automate the monitoring of payment plans - where customers have asked for help with amounts owing. Repeat b

http://www.sourcewire.com/news/77682/sopra-banking-software-saves-private-commercial-finance-group-a-year

What to Monitise and PCF have in common?

...and I expect the same again in the next 6 months as the new strategy continues to build profits.

This minnow has every potential to beat the market given how low it fell (with bloated costs and most of it's business via brokers) and now with a far better plan of action to make decent profits.

Just keep nailing the simple things!

TT,

Given the very low market cap and the very real potential for expansion in this market (e.g. S&U plc; Provident etc, Wonga, MoneyBarn) given the very low amount of total funds available to credit challenged businesses and people, the opportunity to make great returns is absolutely there now.

Without overstating it, these guys could produce a 1000% increase in share price over the medium term by focusing on asset backed lending at higher APR's than they are currently charging.

Even with no change, I can foresee at least 100% upside in 2013 for this little gem.

Roundish

I estimate that the real asset value here is around 12p/share, but with strong cash flows over the past three years and the large reduction in debt, things are starting to look very positive for PCF. This looks to have the potential to be a multi-bagger within the mid-term (3+ years) if company performance continues in this vein, and have bought in with a small holding today.

TT

Motor Finance online mag did an interview with the PCFG Board who have stated they are looking for a "quality" £10m acquisition from their £19m of funds.

Good to hear them talking about positive actions to secure profitable growth. The only thing which surprises me is that they feel they need to buy another business when they have the cash to lend and there are many, many, many people/businesses looking for credit.

I would prefer to see them expand core business at this point (unless it is a very, very good opportunity - perhaps a cash starved sub-prime lender - not payday though given regulatory crack down).

The RNS shows progress with cost reduction and improvement of margins.

Also good to see the renewal of the Barclays loan for greater than 3 years.

What needs to happen now is to quickly access new funds to fill the gap arising as a result of the ING exit.

There are a few big lenders out their willing to put money into play so now is the time to crank it up when the rest of the market is retreating.

Expecting to start rising soon

A bunch of new loan notes at 6% is a good move given they charge out at a multiple of 6%. This is a good return for punters and cheap debt for the company hence a win/win.

0.5% from a bank or 6% from a corporate. Simply, the math works.

On Monday, the company bought back £150k of 2013 dated loan notes at a discount of 85p.

Although the transaction was not large, it clearly shows that the company believes the market has incorrectly priced the loan notes, i.e. the company would have had to buy these back for 100p next year as well as pay 8% interest accrued to date on the loans.

The negative sentiment relating to this company is overdone and overdue for change. The simple reality is that the Directors have reduced broker fees; increased direct business; shaved costs; moved head office and secured new lines of credit.

Warren Buffett I am not, but this is not a screaming buy based on fundamentals.

If there is something I have completely missed, please fill me in but based on public data, I cannot see a flaw with my argument.

Roundish

All pretty sensible. Good to see they are increasing the use of their potential for directly sourcing new customers and harvesting more from previous customers.

Westhouse Securities note: Private & Commercial Finance group a Strong Buy


http://www.pcfg.co.uk/pdfs/Westhouse_Securities_13_July_2012.pdf

The most useful piece of data for me was that the average term of borrowing has gone up from 0.8 to over 2 years. This is a key indication of improved financial strength.

With more costs coming out; a better business model (direct); and charging more for finance to increase their margins, they must be well on track back to their "target" margin.

The price target of 14p is not unreasonable given the NAV of over 16p.

Bring it on!

http://www.pcfg.co.uk/pdfs/PCF_27_June_12.pdf

http://www.pcfg.co.uk/pdfs/Westhouse_Securities_26_June_2012.pdf

I have been following this company for 2 years.

This company has been through a tough period and I was highly critical of it. The mood of long term shareholders is has been highly negative and disbelieving of any green shoots.

I am however now convinced that this company has turned around, not least because the new Directors have joined the Board in the last year with no other purpose than to improve the profitability of the business. Winks (per his website) in particular is someone who made his reputation as a turn-around guy and although he is not in the CEO chair, his reputation is on the line.

Turning to the facts.

The reality is that the business has moved in a positive direction as is evidenced by the reduction in administration costs; the move towards direct sales rather than broker sales only; the commitment to raise £8m of convertibles (at 8.5p per share) from an existing shareholder (which gives other lenders more comfort since such convertibles fall behind secured lenders such as RBS/Barc/Singers) and profits are increasing because they are increasing their margins on funds lent.

In essence, £19m of new funding would not have been provided on any basis other than that the lenders considered it to be a highly secure investment.

Lastly, the net asset value per share is 16.6p when the current purchase price is 5p.

You do the math!

Risks remain - Libor; Eurozone; etc etc, however, of the things that can be controlled, they are doing a far better job and helping to improve the stability and profitability of the company IMHO.

Roundish

I am prepared to be more positive.

The sale of these assets did create a minor profit after costs. Not great but at the same time the gearing is reduced, we are told.

I believe that the current management are reacting to shareholder and funder demands to lift their profitability. I am hence strongly of the view that these guys will over deliver against current fairly negative expectations. On £100m of borrowings, the opportunity to beat expectations must be significant once they get a handle of costs. They already showed lower admin costs. If they reduce broker commissions (which is easy to do given the lack of credit available for near prime lending), they should be able to move things quite quickly in the right direction over the next 18 months.

Roundish

shuffle,

all fair points, but with RSI/MACD @ 100% oversold for last 6mths and trading ahead of expecations i feel this is a worthwhile short trade

Hold on a minute. They sell 10%ish of their book and only make a profit of £150k on it? It makes me wonder what kind of business they were/are doing? That implies that if they sold the whole book it would only be worth £1.5m to the shareholders - so why the market cap at £3m?

In any event, PCF is now a smaller company, with fewer facilities and an overhead that is unchanged as far as I can tell and the same management who have accumulated net losses since inception.

The sale of the receivables accelerates a profit that would have otherwise been attributed to future accounting periods. A profit, net of fees, of £151,500 arising from the sale will be recognised in the current financial year and will result in profits exceeding market expectation

i bought in today

The sale of the Leasing book to Aldermore will "reduce gearing".

This can only be a good thing since it will alleviate some of the financial pressure on the business and give it a little more breathing room.

The fact that they only advanced £150k of profit on the sale after costs of disposal tells me that this was not a very profitable part of their business and given their overheads generally, I would hope that there will also be the associated removal of costs which supported this business line. Shame they didn't say so in the RNS.

Tentative steps in the right direction. I am cautiously optimistic that this business will start to gain in popularity on the back of improving results from the core business.

Still want to hear that they have cut out broker costs or substantially reduced them!

DYOR

Roundish

The business has a market cap of £3.2m.

The market has lifted for specialist finance companies albeit that PCF has so far been left behind. See S&U plc results for example.

My view is that with a continued focus on costs and margins (which appears to be the case from what the management have evidenced), the opportunity to lift profits from £450k to £1m plus is quite real. Also, the deferred tax asset means that tax payable should be zero over the next couple of years hence, back in. Lastly, access to wholesale funding has eased a little as evidenced by the £15m of new funding, however, access generally to funding is still quite tight and hence there are still decent margins available.

Still not happy with management for allowing the company to get into a state in the first place and still think they should move to a more direct business model rather than via brokers (who add nothing other than cost) however, even with a less than perfect approach, I believe that this share has a significant chance of bouncing back from this low ebb, given the opportunities open to it.

If they do make £1m, I expect the market cap to move rather above the current £3.2m and hence ... back in.

Roundish

Time to accept defeat! This was recommended to me amongst other shares by Bridgehall, so far 2 companies recommended have gone bust!! & the others are struggling because I bought too early on their recommendation. So which side of the fence are they sitting on? The client or the company!!

Come off it mate...the fundamentals haven't changed. If it only took a new website.....

Very strong rise on the back of good volume. New website looks good as well. Could well be a strong riser this coming week.

Allowing for double counting that is still well over 10% of the share capital changing hands today. We must await some enlightenment from rns.

trying hard avoint, but I'm afraid we don't buy it. Even the recent directorate changes can't get over the fact that this company makes no money on its lending book - everything goes in admin because their risk/reward balance is all wrong. No one will take them over while the "poison pill" of the loan stock is there, and car finance is a bad business unless you know what you're doing or are huge - massive gearing too - any wobble in arrears and these guys are in a spot of bother. better to buy S&U.

AGM should yield some positive discussion and further increases in the stock.

http://www.pcfg.co.uk/uploadDocuments/590_d_Westhouse%20Securities%20-%2028%20July%202011.pdf

Some nice news flow recently which has not reflected in the price due to the market turmoil. Can hardly buy any online as it seems Bermuda Commercial Bank have picked up a fair chunk and there has also been a recent Director buy. Last reported trade paid a premium of .25. Let the games begin.

With a P/E of 58 today compared to a sector average of roughly one fifth of that, why do Daniels Stewart think it should be on a P/E of 100 (TP 10p)???

The reality is that this is currently way over valued at £3.2m based on historic performance.

Why haven't the major shareholders done something to change this picture???????

This could be a great business if managed better.

28 July 2011 Private & Commercial* PCF (FTSE AIM All Share) 6p BUY (TP - 10p)
Company: Daniel Stewart
http://bit.ly/pGVe6F


Completion of acquisition of £6m loan portfolio
? Private & Commercial Finance, the AIM quoted finance house, has this morning announced that it has completed the acquisition of a £6m loan portfolio from North Herts Credit Company Limited for £4.5m.
? This deal was flagged at the time of the final results in June - the group signalled that it had signed Heads of Agreement – the size of the loan book was disclosed but no indication of the consideration was given.
? The loan book comprises 2,300 consumer finance loans for motor vehicles.
? The acquisition increases PCF’s loan book to £110m from £106m at 31st March.
? The deal is expected to be earnings enhancing in the current financial year.
? Scott Maybury, CEO of PCF commented: ‘This transaction, which is earnings-enhancing, is another step in our strategy to actively grow the Group’s portfolio. We are on the lookout for future acquisitions and ideally these would be of a comparable size and for leasing or hire purchase assets for our business finance division.’
? With the final results, the group announced a new funding facility of £7m and also that it was in negotiations with existing and new lenders for additional facilities of £8m. This deal has been funded by an existing lender so the £7m line and, potentially, the further £8m would be available to fund the acquisition of business finance books.
? Forecasts: will be updated at the Interims in December to reflect Group’s actual trading for H1 and the additional £2.4m contribution this acquisition will make to turnover in the FY 2012.
? View: on an historical Price/NAV of 0.4x, the stock looks cheap and we retain our Buy recommendation and Target Price of 10p.

26 JUL 2011 Private & Commercial* PCF (FTSE AIM All Share) 6p BUY (TP - 10p)
http://www.angelnews.co.uk/angelnews-newssite/article.jsf?articleId=12037


Company: Daniel Stewart
PCF is well-placed to take advantage of an attractive lending environment, characterised by improved margins and reduced competition. After a period of loan book contraction, the announcement of a new £7m lending facility with a new lender is most welcome.
Though pre-tax profit fell in the year to 31st March, profit as a % of the loan book improved and the contraction of the loan book looks to have bottomed out, helped by new business of £40m for the year at good margins and asset quality continues to improve.
PCF has agreed terms for the acquisition of a £6m loan book which will be immediately earnings enhancing and it continues to look to acquire further books.
Valuation is undemanding at these levels, with the share price around 0.4x tangible NAV

This note is laughable. So the chairman, who was chief exec until recently, is still trying to work out how they can make 105m book pay. And this is worth how much? Good grief.

Thanks for the post Spikey.

I presume it is an exact copy?

The reason I ask is that I seem to remember that Daniel Stewart made silly little mistakes last time they wrote a note on these guys. Clearly they need to improve their quality control procedures if this is a true copy since they have done the same this time.

They say in the top line "BUY (TP-15p) " and yet in the detail they say

"...we retain our Buy recommendation and, though we have cut the Target Price to 10p (was 15p), this is well underpinned by the NAV of 15p."

The reality is that this business has upside potential in the right hands. It is clear that outside the Directors and their advisors that there is little support for this company because of the poor and declining results.

It would be good to see that change but this is the current reality.

It appears that one strategy to improve their business is to start selling insurance products as well as the loans. This is a tried and tested model, however, as has recently been proven, one needs to be very careful not to sell a customer the wrong product since it is pretty expensive when it goes wrong as the major banks have just discovered.

Secondly, if they are intent on selling insurance products to customers with imperfect credit reports, this adds to the expense of the loan to the customer and hence makes it less likely that the customer will be able to repay the loan. This was what Welcome did (Cattles) and a number of others, some of whom are still in existence (eg S&U). The biggest impact is to up the rate of bad debt/delinquency because insurance costs are ignored when it comes to measuring "affordability" in the context of "responsible lending" for the Consumer Credit Directive and wholly ignored for selling to corporates.

It could work for them, however, these guys lack the capital backing if they end up with a "miss-selling" legal case in the future, however, I am sure the executive have fully considered the risk/reward.

It is good that they have reduced costs.

What they need to do is make more money from their core activity without adding more risk in my view.

DYOR

New facility for Private & Commercial http://bit.ly/lLK8Pr Private & Commercial Finance (PCF)

28/06/2011 Robert Tyerman

Private & Commercial Finance (PCF) has clinched a £7 million funding facility and hopes to buy a £6 million receivables portfolio. The AIM-quoted company, which finances equipment, plant and vehicles for small and medium-sized companies and cars for private individuals, argues these developments mark the beginning of an upturn in its business after a 13.5 per cent fall in pre-tax profits to £455,336 in the year to March on turnover down 3.8 per cent to £57.9 million
28/06/2011 Robert Tyerman

Reduce text size
Increase text size
Print article
Share this article
Email article to a friend



Private & Commercial Finance (PCF) has clinched a £7 million funding facility and hopes to buy a £6 million receivables portfolio. The AIM-quoted company, which finances equipment, plant and vehicles for small and medium-sized companies and cars for private individuals, argues these developments mark the beginning of an upturn in its business after a 13.5 per cent fall in pre-tax profits to £455,336 in the year to March on turnover down 3.8 per cent to £57.9 million
28/06/2011 Robert Tyerman

Reduce text size
Increase text size
Print article
Share this article
Email article to a friend



Private & Commercial Finance (PCF) has clinched a £7 million funding facility and hopes to buy a £6 million receivables portfolio. The AIM-quoted company, which finances equipment, plant and vehicles for small and medium-sized companies and cars for private individuals, argues these developments mark the beginning of an upturn in its business after a 13.5 per cent fall in pre-tax profits to £455,336 in the year to March on turnover down 3.8 per cent to £57.9 million

http://bit.ly/lLK8Pr

28 June 2011 - Private & Commercial* (6p) BUY (TP - 15p)
Company: Daniel Stewart
Encouraging final results
http://bit.ly/lNLcU9


�� Private & Commercial Finance Group, the AIM-quoted finance house, has announced this morning its final results for the 12 months to 31st March.
�� Profit before tax was £0.455m, in line with the trading update of May 3rd though this was 14% lower than the previous year due to turnover slipping to £57.9m from £60.2m as the loan book continued its post credit crunch
contraction. This was also slightly below our forecast of £0.5m which we did not adjust at the time of the May trading update.
�� The loan book continued to shrink to £106.0m at 31st March from £121.9m a year earlier but profit as a % of loans improved to 0.4% from 0.3%.
�� New business advances were £40.8m in the full year vs £43.4m. New business has continued to come at attractive margins and, though it slowed in H2, there are clear signs that the decline in the loan book seen post
crisis is abating which augurs well looking forward.
�� The quality of the portfolio continues to improve, with the level of overdue accounts improving every month in the year to date. Consequently the loan loss charge has seen a significant improvement from 4.0% to 3.5%.
�� New funding lines: post-crisis, the group, like the industry, has been constrained by the limited availability of new funding. The group reports that the availability of new funding for the sector has finally started to improve and it has announced two new funding opportunities, a three year facility of £7m which is now in place and it is in negotiations with existing and new lenders for additional facilities of £8m.
�� Acquisition of loan book: the group has agreed terms to buy a £6m loan which will be immediately earnings enhancing and it continues to look to acquire further books.
�� Strategy review: PCF has undertaken a strategy review with a view to improving profitability. As result, the group is to look at new routes to market and insurance products to boost other income as well as continuing to look at improved funding options and the acquisition of portfolios.
�� Forecasts: Looking ahead, PCF is well positioned, with fewer competitors allowing increased margins on new business. Though there are now some signs of competition emerging on the business finance side, we expect the
loan book to stabilise this year with the help of the new facilities which, with the strategic initiatives, should allow profits to move forward. For FY’12 we have reduced our adjusted pre-tax forecast to £0.65m from £0.7m to reflect
the portfolio contraction seen last year (growth of 43% from last year).
�� View: on an historical Price/Book of 0.3x, the stock looks cheap and we retain our Buy recommendation and, though we have cut the Target Price to 10p (was 15p), this is well underpinned by the NAV of 15p.
*Daniel Stewart acts as Broker to Private & Commercial