Havent been a big fan of this one over the last 18 months as I have always felt that the business model where it had to keep issuing new shares to support the loan book was holding the share price back,but thats been put to bed this morning by an annoucement from the company that it has secured a far bigger and better deal with its bankers Barclays. I really do beleive this one now will start to show an increase in it share price and I expect a share price of 60p short term and a much higher price in the long term .

It is listed on OFEX as BFH.

Please DYOR.

cheers GF.

An excelent item from the OFEX stalwart himself thirdeye. I just happen to think this is probably the best write up/summary of any company I have seen.................

Ok, bear with me before you shoot or stick the knives in & at least listen to the reasoning & please give sensible constructive negative or even positive.


First of all, I got shot down in flames for mentioning this share at 10p on here, but I feel I have earned another write up as it has progressed circa 270% & now stands at 37p, and indeed has been stagnant for almost a year, which is why I think it is in the value zone again.


Ok it was on Ofex with one market maker, but now it has four market makers & indeed more than one institution has invested in the share & furthermore is very likely to move to AIM maybe within 1 year at most.(I think much less)


The share is in the financial sector & lends out money to people who simply cannot otherwise get credit to buy motor vehicles. Now because they charge a decent rate for this, some argue they overcharge, but my take is if you are taking a damn site more extra risk, should you charge a low risk rate of say 9.9%? My answer is absolutely not, you charge what the market can charge, within reason, and nothing that is obviously a rip off such as say an average of 50%+pa. Personally I see an average lending rate of about 30% as the outer limit for much higher than normal risks, and this company just about hits that charging an average of 31%. Indeed the market is competitive, so they aren't going to be able to charge what they want.


Their record is impressive:

The record so far:

Turnover
2000 687,000
2001 1,248,304
2002 1,664,531
2003 2,466,679
2004 3,692,683

Pre-tax profit
2000 67,631
2001 107,502
2002 179,063
2003 308,979
2004 746,792

Portfolio
2000 182,000
2001 709,000
2002 2,200,000
2003 5,300,000
2004 11,100,000

Earnings per share*
2000 0.3p
2001 0.5p
2002 0.8p
2003 1.5p
2004 2.8p

Years 2000-3 estimated eps using relevant tax charge & number of shares in issue at float.


Now as well as lending out the cash they insure circa 70% of their business thus insuring their bad debt risk is heavily reduced & indeed they make money on the insurance policies as well. Furthermore vehicles can be recovered for any other debtors who shoud default.


Ok lending to the highest risk clients, you surely have to have a high bad debt rate, YES car credit just announced circa 17% bad debts and indeed made impressive profits, so surely lending at this end of the market to even higher risk clients this company should be what at about 20% bad debts?

Erm actually no, they (as far as I know) have the best bad debt record in the industry by a long way, Yes car Credit 17% as I have mentioned & Cattles I think have somewhere near 8%, so what does this company have? Well at the results announced last month their bad debt rate was 1.5%.


The MD tells us in July the prospects are excellent. They have indeed just invested in a new web based computer system I quote from the Annual report:

WEB-BASED COMPUTER SYSTEM
The Group has invested in a web-based state of the art computer system. We
believe that the motor finance market place is an inefficient market. The
company intends to exploit the inefficiencies within the market by providing an
unrivalled car funding solution. The new system allows the introducer to input
the credit application details via the Internet, and check the progress of the
application. The system links automatically to Experian and Car Data check and
returns the consumer search, vehicle details and vehicle valuation. The result
will be vastly improved proposal response times and increased capacity in both
the Instalment Credit and Brokerage Divisions. The speed of decision making on
proposals is of key importance to both our existing introducers, and to
potential new introducers. Our belief is that by providing a faster, more
efficient service the potential for growth in this market place is vast.


Furthermore, the company's costs are largely fixed & now the portfolio has reached 12m, turnover will largely feed through to the bottom line as this company has much spare capacity & unlike for example YES car credit doesn't have many branches to operate or indeed need capital expenditure to expand the network, but operates from one central office with plenty of spare capacity.


It also has a brokerage division for the clients it doesn't wish to lend money to, becoming a "one stop shop" the beauty of this is, this company now writes the "cream" business in house & brokerages out the business it doesn't want for a decent fee to other motor finance companies. Maybe the bad debt ratio, becomes more understandable now.


The compound profit growth is 85% over the last four years & 75% for earnings per share growth. Of course with costs now covered some are expecting good growth this year in excess of last. What if they could hit as still a small company only capitalised at 7.5m decent compound growth the next 5 years, is it really impossible?


Who knows, but just out of intrest I worked out the figures, I remember Bodyshop on the USM & Fisher Karpark Electrics performing superbly for me & fantastic compound growth, however I think this company is better & the growth more sustainable. Some may think it's a fantasy model, but lets see what happens if we give the eps & shareprice in kilter growth of 90% (2.5% better than last year) this year reducing 10% each year down to 50% in year five.

Well this is what happens and with the share price being circa 37p for almost a year now, it hardly has an inflated platform share price to start it off.

37p year 1 becomes 70.3p & 5.32p eps (90% growth)
70.3p year 2 becomes 126.5p & 9.57p eps (80% growth)
126.5p year 3 becomes 215p & 16.27p eps (70% growth)
215p year 4 becomes 344p & 26.03p eps (60% growth)
344p year 5 becomes 516p & 39.04p eps (50% growth - p/e 13)


Not easy of course, but I think possible, it will only be acheiving in fact less than it has just acheived overall.



This share does have some warrants & options at 10p, so to accomodate these the figures in year 5 become:

30.69p fully diluted & pro-rata share price 399p.


Ok many won't agree but at least it demonstrates growth & at least I am not using figures (other than the 2.5% increase in growth this year) that the company hasn't acheived before. Also I accept growth gets harder as years go by, but this company is still young & indeed enters a phase where at least short term growth should actually improve on past years as central costs are covered & turnover feeds through to profits as previously mentioned. Futhermore I accept it has hoops to jump through & it's much easier to write down impressive figures than acheive them, but it does give a flavour of what is possible & indeed even the most conservative folk I would hope agree their is plenty of scope for the shareprice even if it hits growth much more modestly.




The share has 4 market makers, it's market cap is 7.5m it has 20,395,250 shares in issue. Directors hold 53.5% & indeed some shares were sold to pay off the MD's mortgage many months ago. Ruegg the corporate advisor has assured Unquoted Analyst these sales are now finished & indeed the company has delivered first class results since the sales.


Finally money has been raised at the following prices by institutions & it is thought that no more money may be required to fund the growth, although we now await the new lending facility to be announced with Barclay's.

Float Money raised @ 10p
Further funds @ 15p
Further funds @ 24p
Further funds @ 26p
Further funds @ 36p



If you are still interested after all that here is a link to the name of the company & the most recent results & Chairman's statement:

http://www.ofex.com/cgi-bin/news.cgi?action=CoStory&ISIN=GB0031884421&NewsID=19826

cheers GF.

And heres this mornings excelent news refering to the new loan book.

The shares already up over 5% please dont miss the boat on this one......

Britannia Finance Holdings plc - Re - Bank Facility
Britannia Finance Holdings plc Newstrack Announcements 25/08/2004

BRITANNIA FINANCE HOLDINGS PLC
BUSINESS: NICHE FINANCE



RE - BANK FACILITY

The Directors are pleased to announce that the Company has entered into a new
facility agreement with Barclays Bank. The key terms are as follows :-

* Facility Size
The facility size has been increased from GBP10 million to GBP20 million. The
increased facility will allow for the continued expansion of the loan
portfolio over the next 12 months.

* Rate
The current premium over LIBOR has been reduced from 2.0% to 1.65% .

* Advance Level
The advance rate has been substantially increased as a proportion of the
facility. An improved advance rate, means that for an expanding loan portfolio,
the required contribution by shareholders to the development of that loan
portfolio is reduced.

* Warrant
In return, prior to the 21st September 2004 Barclays will be granted a warrant
over 5% of the issued share capital as at 24th August 2004, exercisable at any
time from the date of granting until the third anniversary of such date at
Barclays' option at a price of 37.5p.


Commenting on the new facility arrangements, Mark Burgess, Managing Director
commented:

"I AM DELIGHTED THAT FOLLOWING A COMPREHENSIVE REVIEW OF OUR UNDERWRITING
POLICIES THAT BARCLAYS HAVE AGREED TO A SIGNIFICANT INCREASE IN THE FACILITY
SIZE AND ADVANCE LEVEL. THE TERMS AND STRUCTURE OF THE NEW AGREEMENT WILL ALLOW
BRITANNIA TO CONTINUE TO GROW THE LOAN PORTFOLIO OVER THE NEXT 12 MONTHS."


James Sackett, Relationship Director for Barclays Financial Markets Team
commented:

"BARCLAYS ARE PLEASED TO BE ABLE TO OFFER AN INCREASED FACILITY TO BRITANNIA ON
SIGNIFICANTLY IMPROVED TERMS. BARCLAYS FINANCIAL MARKETS TEAM ARE A
SPECIALISED FUNDER OF UK CONSUMER RECEIVABLES AND ARE HAPPY TO BRING OUR SKILLS
AND KNOWLEDGE TO ASSIST BRITANNIA, A FAST GROWING AND SUCCESSFUL BUSINESS. WE
LOOK FORWARD TO CONTINUING AND GROWING THIS RELATIONSHIP OVER THE COMING YEARS"


- Ends -

The directors of the issuer accept responsibility for this announcement.


ENQUIRIES:

BRITANNIA FINANCE HOLDINGS PLC Tel: 0151 639 7666
Mark Burgess/Andy Holliday

RUEGG & CO LTD Tel: 020 7584 3663
Brett Miller

MIDAS INVESTMENT MANAGEMENT LTD Tel: 0870 121 1445
Mark Sheppard


cheers GF.

Getting ready for the next upleg I would say.




cheers GF.

Should be some good write ups by tip sheets and sites over the next few days pushing this ones price along.

cheers GF.

When did you change your mind ?

Berkeley Morgan profit after tax 991k, market cap 8.6 million, No dilution; eps 8.4p p/e under 9. Cash 1.9 million. Shares 75p to buy.


Britannia after tax 535k, market cap 11 million, (diluted); eps 2p. p/e over 20.
Cash 400k. Shares 41p to buy.

If you want into this sector britannia is a very expensive choice trading way above its peers, yet facing a host of worries.

Here are just a few of the concerns:

Beg to differ GF on this one. Too many IFs: IF they achieve this IF they achieve that IF, IF............
Here's just a few of my worries, having examined this Ofex stock recently with a view to investing:

I found:

) FSA approval is weighing heavily on these shares. It has NOT been achieved and time is now running out. Without it this company will be toothless.

2) Ferocious competiton from mature companies that charge far lower rates, eg SUS, PCF and a host of tv ad cos offering lower rates has not been addressed.

3) 31% is their almost immoral loan rate imho (sure to mean they get bad risk clients, something that will be reflected over coming years imho).

4) No mention of the 25% dilution and application for yet more shares to be issued after the AGM. This is due it seems to a cashflow crisis, only c.400k at bank despite numerous previous fundraisings.

5 Hundreds of thousands of shares sold and still no announcement from the seller. Despite this morning's small uptick this still seems to be a problem.

6) Worth comparing with my own Ofex financial preference in the same sector (see above).

Know which I prefer.

7) 500p. (I saw the post and that is the future fair value he was "claiming" lol!!!!). That would put it on a p/e of somewhere in the region of 225. For a financial when most competitors trade in single figures. Please!!!!

Strange your about turn since the weekend despite NO CHANGE in the fundamentals since you posted AGAINST this company at the weekend as Dil points out.

Perhaps you have been convinced by Third Eye's arguments, but they are as I have displayed above flimsy indeed.

Fair value looks closer to 25-30p imho. Historically this company has performed well but is now prone to any economic downturn, given that its peers (apart from Cattles) have much lower p/e ratings.

Not for me but good luck with your investment.

Risky, with more downside risk than upside to say the least!

Listed by the Company Eye site, a respected and specialist Ofex analysis site as "REQUIRING IMMINENT FUNDING" (quite possibly to survive imho).

Given the current premium rating, can't afford for anything atall, however slight, to go awry. Only for the real punter ONLY.

He changed it last night, before the announcement was made.

Sunday and then yes Monday night was convinced, dilbert.

Of course hawick as a personal agenda but all his points can now be put down easily.

Grow up you scotish sherbet dab.

cheers GF.

From Monish at UQ analyst.................

I received an email from a subscriber last week asking whether it was time to sell in our star stock, Britannia Finance. The stock has fallen from our tip price of 41p to 36.5p. I am borrowing the following compound growth figure calculations from a well known Ofex supporter - Britannia has delivered an 85% compound growth in profits in the last four years. In the finals to April 2004 it exceeded our cautious estimates and with its increased credit facility for the next three years, it looks set to deliver on our forecasts. Which brings me back to that subscriber's email. For most Ofex stocks it is a case of invest now and forget about it till 2010. It would be foolish to value a stock on marginal increases in price, or attempt short term trading on OFEX. Especially with a stock like Britannia. So the answer to people worried about a drop in BFH price is No. Hang on for dear life as we see this stock doing superbly on a three to five year view.

cheers GF.

5 years before you get much return?? By which time my Ofex preference GSC should have a nav of approaching 500p+ (shares 110p).

britannia is all yours!

Ok Jock. Ill be richer than I am now in a few months time, Ill invite you down to my garden party where thirdeye will be the guest of honour, you'l be on a table with the surfs, or is that smurfs LOL LOL LOL LOL LOL LOL .

cheers GF.

LOL!! Is it a Mickey Duff production!

Lets face it joko you were a match for thirdeye/outsider, but you are no match for me.

I see you have had to sign up for the new/dopey board (dick head sharebums site), good luck pal.

Mind a thick git like you will make plenty of money I guess.

HOW COME YOU WERENT INVITED ON THIRDEYES NEW BOARD???????????????? LOL.

They are pros on there and I feel I will get an invite. You know how sickened you were for two months after they did the dirty on you LOL LOL LOL LOL LOL LOPL LOL LOL LOL LOl

cheers GF. PS normal board members please remember this bust up is a one between 2 members.




cheers GF.

Jim Bowen told me that all you'll get back from investing in this stock is BFH..... that's 'Bus Fare Home'.....

Lets face it joko you were a match for thirdeye/outsider, but you are no match for me.

I see you have had to sign up for the new/dopey board (dick head sharebums site), good luck pal.

Mind a thick git like you will make plenty of money I guess.

HOW COME YOU WERENT INVITED ON THIRDEYES NEW BOARD???????????????? LOL.

They are pros on there and I feel I will get an invite. You know how sickened you were for two months after they did the dirty on you LOL LOL LOL LOL LOL LOPL LOL LOL LOL LOl

cheers GF. PS normal board members please remember this bust up is a one between 2 members.




cheers GF.

FinFoEx.com welcomes Mark Burgess to the hot seat. Firstly Mark, there are quite a few members that would like to congratulate you on what they consider to be an excellent set of full year figures. As I am sure you have read on the various OFEX focussed bulletin boards, there are some bears of the stock as well needless to say these investors have not passed on their congratulations.

Thanks should be given to all investors who haven taken the time to consider Britannia as an investment opportunity, and congratulations from those who have invested are much appreciated. However, personally, I feel my attention is better focussed on further enhancing shareholder value than spending too much time reviewing bulletin boards.

1. Mark We will jump right in at the deep end. Please can you explain the 400,000 increase in administration expenses?

Most fast growing companies, and I certainly class Britannia in that category with 141% increase in PBT, will incur certain incremental costs each year. Incremental costs for Britannia largely stem from the servicing/controlling of our increasing loan portfolio. My job is to ensure that costs as a proportion of income, do not increase disproportionately. To this effect, administration as a proportion of income fell from 49% to 44%.

2. The introduction of a new high tech system sounds exciting, however could you perhaps explain what it does and how it will work. Also could you give an overview of the costs of this system and how much it will cost to maintain?

The Group has invested in a web-based state of the art computer system. We believe that the motor finance market is an inefficient market. The company intends to exploit the inefficiencies within the market by providing an unrivalled car funding solution. The new system will allow the introducer to input the credit application details via the Internet, and check the progress of their application.

The system links automatically to Experian and Car Data check and returns the consumer search, vehicle details and valuation.

The result will be vastly improved proposal response times, and increased capacity in both the Instalment Credit and Brokerage Divisions. The speed of decision making on proposals is of key importance to both our existing introducers, and to potential new introducers. Our belief is that by providing a faster, more efficient service the potential for growth in this market place is vast.

The overall cost of the system will be approximately 250,000, which will be depreciated in accordance with Company accounting policies. The funding of the system in the main is financed via a commercial loan. We hope that this investment will mean that in future years our administration costs as a percentage of income will fall even further.

3. Britannia has achieved remarkable year-on-year growth. Could you perhaps provide an overview of this growth in sales and profits and then comment on how you see the company performing going forward. Will it be possible to maintain the current rate of growth?

The company has achieved year on year growth in sales and profitability since floatation on Ofex. My focus remains on attracting and developing our business in niche markets where we can attract prime customers at premium rates. However, Britannia remains a tiny minnow in a 12 billion market, and I believe that by providing a first class service to our introducers, Britannia has scope for substantial growth.

4. In the past there has been talk of moving to AIM. More recently you told Unquoted-Analyst.com that you would be staying put for the time being. Bearing in mind the markets somewhat disappointing reaction to your figures, some members have suggested that it might be preferable to move to AIM sooner rather than later please comment.

A move to AIM is under consideration, and is seen as a potential opportunity to attracting Institutional investors as well as providing greater share liquidity, and hopefully improved shareholder value long term. When and if we make this decision we will issue an announcement in the normal way.

5. You sold a large quantity of stock a while back; rumours in the market were that the sales were to pay off your mortgage. Have you now done this and if so, can you reassure investors that you wont be selling any further shares for the time being? What is your personal exit strategy for your remaining holding?

I sold a very small proportion of shares in relation to my entire holding, and this was to clear certain personal financial commitments. That share disposal does not in any way reflect my confidence about the future of Britannia. I believe that shareholder value will best be created by building strong sales and profits as an independent company over the next five years.

However, should we receive another bid approach the Board of Directors will of course give the terms due consideration.

6. Now that Britannia has institutional backing, is there a possibility that a brokers report will be published at some stage. If so, when? would this be conditional on a move to AIM ?

I cannot commit to a time frame on this; however I do hope a broker will produce a research note at some point in the future.

7. In the statement that accompanied your full year figures you stated that Britannia would now require FSA approval. Could you elaborate on what division/divisions FSA approval is being sought and could you also comment on whether or not the fact that Britannia sells loans at more than 30% will negatively impact the companys ability to gain authorisation?

The FSA will regulate the sale and administration of general insurance from 14th January 2005. We have conducted a thorough review of our policies and procedures and have submitted an application to the FSA to become a fully authorised firm. We have received a positive response from the FSA indicating that they are minded to approve Britannia for full authorisation and we expect to receive final confirmation by the end of November.

The approval by the FSA has no bearing on the provision of our core business, motor finance.

8. In a recent announcement you indicate that Barclays have increased the size of the debt facility from 10 million to 20 million, reduced the interest rate and increased the amount lent against the portfolio. How will this affect your ability to grow the portfolio?

The new facility allows Britannia to be able to grow the portfolio size with a lower contribution required from shareholders. The interest rate charged to Britannia has been reduced by 0.35%. In return the Bank negotiated warrants over 5% of the issued share capital exercisable at 37.5p over the next 3 years.

I consider this to be a superb deal, for both Britannia and Barclays. My view is that the Bank recognised the potential upside against the current market price, and hence cleverly negotiated a significant stake in the business. From my perspective, we are delighted that Barclays will share in the success of the company. More importantly, Barclays now have a vested interest in supporting the continued business growth, particularly when we come to future bank facility negotiations.

9. Britannia closed its full year statement saying, The Companys prospects are excellent and we expect to report another record year of growth. Clearly things are going well. What is your own, personal opinion of the current market value of your company bearing in mind the historic growth and future potential?

I was surprised that the share price did not react more positively to the full year results. However, short term price movements are of little consequence. The important factor is the long term financial performance of the business. As long as we continue to produce the results, the valuation will eventually catch up.

cheers GF

GF,

What's Thirdeye's new site called please?

Might take a peek if I can.

Hi andy just seen you posting on the other big site, think it was you on the toledo thread anyway.

Here it is.................

http://www.finfoex.com/forum/index.php

cheers GF

GF,

Thanks, will take a look.

Interesting to note that S@U have been re rated upwards.

Cattles were re rated upwards aswell a couple of weeks back in fact the frequent trader Robbie Burns as this as one of his stock picks.

Feel BFH now offer better value than either of these by a considerable margin.

cheers GF