http://www.pcfg.co.uk

Trading at a significant discount to current NAV. Recently put 4M in the bank. Two brokers notes out from August for BUY and ACCUMULATE.

Company also pays a dividend.

Seems to have been forgotten so maybe now is the time to BUY.

SP 38p

NAV 50p

Market cap 5.6M

Turnover 31M

Would have been in profit for the tenth year in a row if NIG hadn't come along. Recouped 4M from NIG and hoping to get costs back.

Growing

Paying a divi

Liked by the city.

2 broker notes both suggesting to buy.

This was taken from the SUS results released 16th Sept ;

Advantage Finance, our motor car finance subsidiary, which I launched from scratch some five years ago in July 1999, made a significant advance in profit before tax for the half year from #768,000 to #1,096,000. Advantage has proved outstandingly successful and is trading ahead of budget which is very encouraging indeed. In addition, Advantage has increased its deferred revenue from #8.0m to #10.4m.
Advantage, our motor finance business, goes from strength to strength. With turnover up over 20%, the company produced record profits at half-year up 40% and slightly above budget. It is encouraging that most of this increase in business comes from deepened relationships with our key dealers which impacts both upon efficiency and the subsequent quality of our revenue. Indeed for the first time ever Advantage achieved over #1m of collections (excluding settlements) every month this year. New products have been introduced, brokerage income increased and insurance accreditation obtained so as to improve still further the overall finance package we offer our dealers. I anticipate further growth in the second half of the year.

Now it is really worth looking at the financials of SUS in comparison with PCF. I am not an accountant but the turnover and shares in issue are very similar to PCF. The market cap of PCF is 5.6M compared to SUS which is ....wait for it.....66M ! However SUS are making a profit of 9M compared to the usual profit of PCF of 1.3M (2002) and -1.56M in 2003 but only due to the NIG problem which has been rectified in favour of the company. Share in SUS were trading at....over a fiva ! This shows the potential upside of PCF.

So with PCF's results,which have been bought forward, due on 30th Sept. I am certainly looking for a significant mark-up in the share price.

Results comming up Thursday.Keep it on your monitor

Nice start to the day.

If this company has great potential why has the price dropped consistently. There are no buyers today (or sellers) according to money am. Won't the increase in interet rate make things worse for this company?

Happy1 - Have you tried to understand why SUS is on a different rating, rather than just use its figures as a ramp??

This statement of yours, comparing the market caps and shareprices of SUS and PCF, is extremely underhanded and practically a con IMO:

Now it is really worth looking at the financials of SUS in comparison with PCF. I am not an accountant but the turnover and shares in issue are very similar to PCF. The market cap of PCF is 5.6M compared to SUS which is ....wait for it.....66M ! However SUS are making a profit of 9M compared to the usual profit of PCF of 1.3M (2002) and -1.56M in 2003 but only due to the NIG problem which has been rectified in favour of the company. Share in SUS were trading at....over a fiva ! This shows the potential upside of PCF.


Firstly, the two companies' turnovers may be in the same ballpark but the profit generated by simlar turnover levels are extremely different due to many factors but especially gearing:

The turnover of SUS is roughly equivelant to its assets, so it isn't paying out a massive proportion of its gross profit in interest to a third party.

PCF turnover is many times its assets and is effectively reloaning out money that it has borrowed. It therefore pays out enormous amounts of interest, greatly reducing any profit made on the financing.

The figures therefore suggest that SUS is operating a higher margin, safer business and potentially has more growth potential, if they choose to increase their book with additional gearing, in a similar fashion to PCF.

SUS post tax profit is approximately 6.3mln per year and growing. With 11.7mln shares this gives a rough PE of 10.

Working backwards, a PE of 10 applied to PCF's current sp implies that PCF needs to make a profit of approx 550k to justify its current price.

Here is estimated profit after tax for the next two years from the Seymour Pierce broker note:

2004E 2005E
-518k 557k

As you can see PE is irrelevant for this FY as a loss is expected again.
PE for 2005 is 10, comparable to SUS.
Should PCF really be on a similar rating, with its dependance on massive levels of borrowing?
What happens after 2005? Well there is clearly risk associated with PCF's new ventures, so we'll wait and see how they get on shall we?

Rgds
dell

P.S. PCF's results were only brought forward as the original announced date was in contravention of AIM rules(require interims to be published within 3 months of period end). Such a c*ck-up hardly inspires confidence in the FD or NomAd IMO..

dell as I have already answered your question on ADVFN regarding the sector and the growth factor for PCF I will not answer again.Someone told me you are a shorter dell !! Back to MT. with you

Angi the reason for the drop was due to the NIG problem which has now been remedied with PCF winning 4M + costs. Angi please also read the broker notes of the PCF website.

I see today that they buying has picked up a little.

Happy1 - If I was shorting this(I think the mkt cap is too small anyhow), I'd be happy to tell you.

I'm not.

Your answer on ADVFN was nonsense IMO. I hoped you might do better over here.

Anyway, I think your belief that PCF turnover dropped purely because of the NIG case is simply naive.

There is much media reporting on the fact that internet loan providers are squeezing POS car finance lenders.

PCF's venture into new areas suggests that they are concerned about the prospects of growth with their existing model. You don't mess with a successful formula...

As for the suggestion that the fall in turnover was solely due to the NIG case:

1)Rank and file at PCF would have been unaffected by the NIG case and they are the ones who generate the turnover. It fell significantly.

2)There has also been the argument put forward that NIG reduced lending because the possibility of losing the case constrained their cash. I don't see that as credible, bearing in mind that they recently increased their bank facility to 75mln.

3) If the NIG case really was such a distraction, won't launching a new business be similarly distracting??

Rgds
dell

All IMO, DYOR

dell

As the broker notes state the drop in SP was due to NIG and the management having to re-route funds,as a precaution,and concentrate on the case. Subsequently they won and the money is in the bank.

Now the management have time on their hands they can certainly look at new ventures such as Karma where they,the company,and the brokers see a good growth potential.

What do you expect them to do sit on their hands and maintain a constant turnover ?

As you may have read they will have two businesses. One will be lease hire where they will also finance the deals and then at the end of the lease period the cars will be sold through Karma thus generating additional revenue and also the possibility of further finance.

Online prices coninue to move higher so expect a move with a few further buys.

A BLUE DAY !

Results tomorrow. ;-)

Keep your eye's on this one tomorrow.

Overview:

* Resumption of strong organic growth with over 20% rise in sales in the third
quarter
* New Karma Cars site open
* Loss for the first half, as previously advised
* Interim dividend of 0.25p per share

Chief Executive Tony Nelson said: "It's great to be back on our customary growth
track. Both our new businesses are up and running and our established divisions
grew sales strongly in the third quarter.

Visitors to our first Karma Cars superstore which opens in Watford today
(30 September), will see a superb site in an excellent location.

The business model, which combines the sale of the car with the provision of the
finance, is compelling for a number of reasons not least of which is the extra
depth of the customer relationship and vastly increased potential for recurring
business."

A couple of quotes from today's results:


During the 18 months of the NIG case it was necessary for us, as a matter of
prudence, in case the decision went against us, to conserve cash by reining back new business growth and allowing our portfolio of finance receivables to decline.

Does this seem reasonable when they previously reported significantly increasing their loan facility?
Indeed, they refer to this in today's results:

Our larger banking facility has provided us with the capacity
to take on more business and has put us in a position to continue this growth.



The Group is moving progressively back towards profit although we still expect the second half to produce a loss.

The above statement doesn't fit well with their previous outlook suggesting that they hoped to near breakeven for the year.....

There's a lot of positive spin in these results but IMO, we need to see FY results before we can be sure that these guys are delivering.

Rgds
dell

dell what should be looked at is the 20% growth in core divisions and the opening of Karma which will now have a, hopefully, positive impact on year end figures. AS they said they can now concentrate of the way ahead after NIG I will tuck these away for a while. Divi of .25 as an interim covers the cost's of holding these presently.

Looking back this is the first interim dividend that the company is paying. A sign of what the future may bring I hope.

I think what will be interesting,given time, is how the car supermarket performs. As stated today this is now open and hopefully money shall start to roll in which will give a much better figure in months to come in terms of turnover and profit. This will be a model for further markets throughout the UK if this model works.

It was good to see that now the management can concentrate on the business in hand that it has grown 20%. Forward looking in these area's, which can be deemed PCFG's core area, are also growing and again will help them move back to profitability.

All good for the future and interim divi too. This shows faith to the shareholders and is also available in scrip form. It will be good to see any revised broker notes following the interims. If we hold longer term then final is alot nicer ;-)

Nice to see a blue start. Spread much better.Let's hope that it is the start of the turnaround.

Evryone going to sit on the side and watch this go to 50p in the autumn rally then ?

Looks like it even though the divi will be paid to holders on the 8th which would cover your dealing costs ;-)

Nice to see another move up today. Chart wise looks good with indicators positive .

She's on the road to recovery !

Seems like the 12K buy moved this 2.6% today ! No stock around !

what happened to aql?

Sitting and waiting ateeq

Private & Commercial Finance Group's new division, Karma Vehicle Contracts has been launched.

The division complements the group's existing finance activities specialising in contract hire and contract purchase facilities to small and medium-sized businesses.

The typical customer is expected to be a small business that is not considered attractive by mainstream funders. To differentiate itself from other contract hire providers, KVC will finance new and used vehicles. A nationwide network of carefully selected brokers will market Karma's product range.

Robert Murray, managing director of the group's business finance division, said "we believe that now is the right time to expand our portfolio of products to include contract hire and that our ten years' experience of successful underwriting in the SME sector will enable us to write business for customers that other finance companies might choose to decline."

Karma has recruited a team with considerable industry experience, headed by general manager Jon Gilbert, who has worked in the leasing industry for fifteen years.

At the heart of the business is the IDSFleetware system, which allows brokers to generate instant contract hire quotes over the internet and manage proposals through to documentation.

Gilbert explained the rationale for choosing the Fleetware system. "It gives us an amazing amount of functionality but above all, its web-based Quotes Browser is perfect for our market. It gives our brokers the ability to produce a quote for any vehicle on any of our products quickly and efficiently and process a deal with minimum fuss."

The Karma-branded Fleetware system is currently being rolled out to KVC's brokers who have been extremely positive about its speed and ease of use. When Private & Commercial's first car supermarket opens later this year, KVC will be able to offer contract hire and contract purchase on stock vehicles, while benefiting from a strong retail sales channel for remarketing ex-lease cars.

Blue again. Continuing with the recovery. Anyone joing in ?

T1ps.com - 4th October 2004, PCF interims/ webcast alert


Private & Commercial Finance* (PCF) reported its interim numbers on Thursday. I am aware that my colleague Bill Johnston on WatsHot.com advised his readers to sell. Though I read and like Bill's analysis I shall not be following his advice on this occasion. In fact I shall be taking up the scrip alternative to the dividend within my SIPP to add to my holding. So too will CEO Tony Nelson with who I had a very enjoyable chat this afternoon. At 38.5p my stance remains "buy."

The figures, as had already been flagged, were not very good with a loss at the pre-tax level. However, now that the case with NIG is settled in Private and Commercial's favour - the company was awarded 4 million - P&C seems to be back growing the business. And in that regard there are some positive features. Turnover was down 6.6% to 15 million; gross profit down 7.6% to 4.8 million and operating profit down 64% to 0.8 million. So at the operational level there company was still in profit. There was a pre-tax profit loss of .731,000 and an attributable net loss of 482,000 after a tax credit of 249,000.

For fear of losing the action with NIG the company management went in to a defensive cost control mode. No doubt for that reason, the balance sheet looks reassuring. There were current assets of 53.7 million (including 2.0 million cash) to cover short term liabilities of 43.9 million. Shareholder funds stood at 7.0 million.

Business has now returned to strong organic growth with Q3 sales up 20%. An early priority has been to rebuild the Consumer Finance Division with the help of an excellent internet proposal system. The Karma car sale finance business is now operating from a site on the M1and should start to make a significant contribution to profits from next April while a second car showroom will open in January 2006. The Business Finance unit saw a 20% increase in sales volume in Q3 over Q1.The company now looks to be on the mend but says that it will have a loss in the second half. So calendar 2004 numbers won't impress. I would however expect a final dividend of 0.25p.

But in 2005 there is no reason why earnings per share could not hit 4p as the growth in the loan book seen since June starts to impact the bottom line and as the car supermarkets business starts to kick in. That sort of recovery would imply a significantly higher payout in 2005 while in 2006 I would be disappointed if earnings did not head back to c5p.

At this stage the company is not offering the sort of guidance which lends itself to exact forecasts. That should come next week when PCF takes a select group of analysts to its Watford showroom. Tony Nelson has invited me on the trip but though a trip to the outskirts of Watford is the sort of glamorous adventure that first attracted me to this business more than a decade ago I fear that I have a prior engagement. However I have arranged to meet up on Wednesday 20th to record a webcast with Tony so if you have any questions for PCF email them to tom@tisl.co.uk by midnight on 19th of October.

At 38.54p the rating is hardly demanding - a 2005 PE of just over 10 falling to less than 8. This is an industry where consolidation is the dynamic and I do not expect PCF to be independent in five years and it won't go out for less than three figures. If it stays independent a re-rating will take time but the growth prospects will drive a re-rating none the less. Still a "buy."

28500 share bought for over a 7% increase. This moves very rapidly and i mean very. It will have alerted some technical traders now and the recent tip should underpin the SP for further rises.

Still time to get in tomorrow for the divi.

Would have hoped a few of you guys would have sniffed money here after yesterdays rise.

44.5 online to buy so seems as the stock shortage continues. Should tick up with a couple more buys.

Must be a stock shortage.

Everyone going to sit and watch it go up again then ?

10K stock pushing this up 4%+.

What happens when the serious buying starts. If IC give it a buy rating tomorrow then yippee !

No sellers ? Seems most holders are in higher up.

Taken from an old broker note but very pertinent with the recent rise in interest rates;

An anticipated hike in UK interest rates over the medium term and freeing up of market share by the withdrawal of some competitors from the market are favourable to Private & Commercial's business model, Davies pointed out.

We have had how many interest rate hikes !!

This could add a little more sparkle to th price. Taken from the T1ps.com note ;

At this stage the company is not offering the sort of guidance which lends itself to exact forecasts. That should come next week when PCF takes a select group of analysts to its Watford showroom. Tony Nelson has invited me on the trip but though a trip to the outskirts of Watford is the sort of glamorous adventure that first attracted me to this business more than a decade ago I fear that I have a prior engagement. However I have arranged to meet up on Wednesday 20th to record a webcast with Tony so if you have any questions for PCF email them to tom@tisl.co.uk by midnight on 19th of October.

Anyone going to take the last few at under 47p ?

Come on lurkers. When they see the bid move they will follow.

Little information here with a circa 30M T/O

http://www.digitallook.com/cgi-bin/digital/security.cgi?username=&id=13088&ac=

Just seen this one

This is Money, 30th September 2004


And following the half-time results from Private & Commercial Finance showing a small loss, James Hollins, from the same stable, says the shares are a 'buy' at 38p with the company 'well funded to drive organic growth and profitability from its consumer and finance operations, as well as expanding its two new division'.

Just found the actual article which seems to imply that the Broker Daniel Stewart has a BUY rating.

http://www.thisismoney.com/20040930/si83054.html

This was the last note that they had out on PCF

Trading update Private & Commercial Finance Plc
Research Alex Davies 020 7847 0359 alex.davies@danielstewart.co.uk Roger Tejwani 020 7847 0380 roger.tejwani@danielstewart.co.uk Sales Tom Jenkins 020 7847 0370 tom.jenkins@danielstewart.co.uk Daniel Willmott 020 7847 0364 daniel.willmott@danielstewart.co.uk Sebastian Wykeham 020 7847 0362 sebastian.wykeham@danielstewart.co.uk Daniel Stewart & Company Plc 48 Bishopsgate London EC2N 4AJ Tel: 020 7374 6789 Fax: 020 7374 6742 www.danielstewart.co.uk
Private and Commercial Finance Plc (PCF.L), has this afternoon issued a trading statement. The key points of this are:
Motor and Equipment finance divisions maintain their trends from the interim period. As described in our note dated 30/10/03, there had been a long, industry-wide period of decline in both absolute prices and in margins. At the interim period we noted that car prices in Europe had grown for the first time in six years, and that prices in the UK had bottomed out. That these trends have continued, and that the UK market has subsequently improved illustrates the sustainability of this recovery, despite a firming in UK interest rates. This remains a highly competitive environment, and one in which PCF.L has refused to chase volume at unsustainable margins. Further increases in UK interest rates will actively help PCF.L, as any upward movement will help close the pricing gap between PCF.L and the competition. PCF.L will also derive considerable margin benefit from the integrated model which we now anticipate to commence in April 2004, both increasing the internal margin, whilst allowing more aggressive pricing and aiding the competitive positioning of the group.
The inaugural car supermarket site has been identified, and is due to open in April 2004. Although this is later than expected we consider that there is sufficient slack in our forecasts to accommodate this and we are not reducing our forecasts at this stage. We would however highlight that any continuing delay in other planned sites will have a deleterious effect on our sales forecasts, although with no significant bottom line contribution forecast until FY2005, the net effect on earnings for FY2004 is negligible.
Contract hire is progressing well, with new staff appointed and systems currently being installed. This is sstrongly complementary revenue stream to the car supermarkets, generating purchasing economies and offering an instant route to market at the end of the contract hire period. We are strongly encouraged that this division is demonstrating stand-alone growth.
Legal action against NIG is proceeding, although the hearing date has been postponed until April 2004. Whilst we see any delay as unfortunate, management has taken leading counselsadvice, and is confident of the merits of the case. A realistic worst-case scenario would be a net cost of 1.5m, which, whilst heavily impacting profits in the forthcoming financial year, would still leave an underlying profit.
We retain our current forecasts. On a FY04 PE multiple of 5.9x, PCF.L is trading at both a marked discount to its peer group, and to our assessment of fair value of 85p. With a compelling growth story, and strong fundamentals delivering a profitable earnings figure we retain our positive recommendation. BUY

Knowing - you should be locked up IMO for highlighting ancient forecasts to ramp stocks.
Would you like to update readers with current forecasts for FY04 and tell them what the real PE based on those figures is??

Rgds
dell

Mr Trotter,

As was explained to you on ADVFN you don't really understand the whole scenario but I will spell it out for you here;

From the This is Money article it transpires that Daniel Stewart have issued a BUY note however this note is not in the publicc domain. As the last note was also a BUY I thought it interesting to post up that note so that perspective investors could read the information to hand.

If you have the new note then please paste it up or P*ss off !

Knowing - you should be locked up IMO for highlighting ancient forecasts to ramp stocks.
Would you like to update readers with current forecasts for FY04 and tell them what the real PE based on those figures is??

I'm still waiting for you to quote current FY04 forecasts and PE and give them equal prominence to the out of date misleading forecast that you have highlighted in red...

Rgds
dell

dell if I post that information you would probably constru it as a ramp.

Looking very cheap now. NAV 50p buy for under 30p.

Watching for a pick up in interest.

any views on results mid March - more bad news and another lurch down? Karma needs to turn round quick or discount to NAV may get worse. anyone aware of what discount ot nav PCF has usually traded at historically? am watching and waiting. does anyone thinkl the dividend is under any threat?

any life out there?

Trouble is this is a desperate sector to be in. Ads from Yescar and the other major players offering competitive rates, fears that the likes of Tesco may be on the verge of joining in and too many companies chasing too little business. A sector to avoid imho, sorry, though on the plus side PCF are cheap, even factoring in all that.

hawick the car sales business is a very small part of a very profitable company which is very diversified.

I see that buyers started to appear today and I am considering a few at this level as it is on a 40% discount to NAV !

Maybe time to add a few this week.

A very profitable company??
Perhaps you missed this and it explains the ongoing collapse in the shares:
Dated 16th December.
"(AFX) - Private & Commercial Finance Group PLC warned it will report deeper than expected losses for the current year because sales at its new Karma Cars division are falling short of forecasts."

no respite in falls - are we going broke? any views as to how bad things are - dividend to be paid? market appears to fear the worst.

I have been saying for sometime that you all should be very careful with this company. INHO the venture into Karma will be a disater and drag the company further down. The people running this business are not taking the company in thee right direction. the jewel in the business is the leasing book which contributes much more and I suspect m,aybe sold off at some time to prop up the company.

Well Karma has gone...thank god.

Now , maybe they can concentrate on what they really understand.

Ticked up a little and very few sells now. Could be the bottom. NAV at 28p so plenty of upside here ].

City Confidential - 1 May 2005
PRIVATE & COMMERCIAL FINANCE-17p AIM
This specialist finance group, which provides both consumer and business finance, has decided to close down its Karma Cars car supermarket business in the light of continuing losses caused by the downturn in the UK car market. This is holding back the group's return to profitability. The closure will result in an exceptional charge of around 0.5m in the current year, but should allow management to focus once again on the core business. The shares are a SPECULATIVE BUY.


http://www.pcfg.co.uk/investors/pressComment_details.jsp?page_id=325

Well starting to creep back up. Little volume moving it too so looks like the MMs know the NAV is around the 30p level.

Good bargain at this price.

Had to dip my feet in earlier. Should go higher tomorrow after the coverage it may get in the press.

Private & Commercial Fin Group Plc
16 June 2005



PRIVATE & COMMERCIAL FINANCE GROUP PLC
STATEMENT RE. SHARE PRICE MOVEMENT
16th JUNE 2005

The Directors of Private & Commercial Finance Group plc ('PCFG' or the
'Company') note the rise in the Company's share price today. The Directors have
received a tentative approach which might or might not lead to an offer for the
Company. It should be emphasised that no substantive discussions have yet taken
place.

In line with its usual practice, the Company intends to release a pre-close
period trading update before the end of June.

A further announcement will be made in due course if appropriate.



Dealing Disclosure Requirements

Under the provisions of Rule 8.3 of the City Code on Takeovers and Mergers (the
'City Code'), any person who, alone or acting together with any other person(s)
pursuant to an agreement or understanding (whether formal or informal) to
acquire or control relevant securities of PCFG, owns or controls, or becomes the
owner or controller, directly or indirectly, of one per cent. or more of any
class of securities of PCFG is required to disclose, by not later than 12.00
noon (London time) on the London business day following the date of the relevant
transaction, dealings in such securities of that company (or in any option in
respect of, or derivative referenced to, any such securities) during the period
to the date on which the offer becomes or is declared unconditional as to
acceptances or lapses or is otherwise withdrawn.

If you are in any doubt as to the application of Rule 8 to you, please contact
an independent financial adviser authorised under the Financial Services and
Markets Act 2000, consult the Panel's website at
www.thetakeoverpanel.org.uk

wilbs

Have you seen the two very very positive broker notes released today on the PCFG website ?

http://pcfg.co.uk

Look at the expectations and this could be trading nearer to a pound then 30p. People are just starting to wake up as this news has put PCF on many peoples radars.

I am hoping for good press coverage tomorrow to bolster the price further.

Bargain still at this price as no multiple to NAV ! Adding tomorrow as this could easily move to 50p+ in a very short time.

15M shares in issue and many now being held firm. This means more illiquidity and sharper moves.

Having watched PCF for many years there was not alot of stock sold on the way down from 45p to 22p and subsequently strong buying will move the price rapidly. Watch the shakes along the way as the MMs will be needing stock for sure.

Remember that people have already said that this will be taken out for over a pound.

Market cap 53m

Net assets as at 31st March 27.4m
Fund-raise in April 10.5m
Total net assets as at end April 2017 37.5m

Profit for 6 months end March 1.7m. Add back 0.5m one-off bank set up costs = underlying profit 2.2m. So, underlying profit for year 4.4m assuming no growth.

So assuming no growth, no value to the bank and no reduction in NIM due to taking retail deposits we get the market cap = net assets + 3 years profits.


So, a few quick sums. Retail deposits reduce interest bill by £1.5m, so underlying profit = £6m based on current portfolio of £128m.

If you assume 5 year portfolio growth to £750m from current £128m as stated by directors, that's a factor of six, would give a profit of £36m a year.

I have bought a reasonable quantity. Price appears to have pulled back due to competitor in trouble with regulator over PCP, but PCF have no exposure to PCP finance.

Directors say will not offer any banking products outside current portfolio but I believe there's a value to the bank too, which will become apparent over time.

First post on this stock in 10 years so let's see how we go

Interim presentation and 3 research notes on company website. Article in IC as well last week although I haven't read it.

Finally usual warning about Brexit sensitivity although one would have though soft Brexit would help rather than hinder

Ticking along nicely since I bought in July

An update from me. I still hold and will continue to do so as the strategy plays out over the next five years.

PCF has two areas of business split roughly 50/50:
1. Lending to consumers for cars
2. Lending to business for vehicles, plant and equipment

It has historically funded the lending through the wholesale market and retained earnings but around March became a bank and since then is shifting from the wholesale market towards retail deposits on fixed rate bonds. This significantly reduces its costs long term (or improves NIM – net interest margin) but this has not yet showed up in the finance figures as it’s only been a few months and there have been set up costs to becoming a bank.

It currently has a portfolio size of £146m, which grew by 20% last year and plans to increase this to £350m by 2020 and £750m by 2022. The banking license and being able to take retail deposits is the trigger for this.

PCF currently has a market cap of £59.4m based on a share price of 28p per share, Net assets of £39.6m. If you run the P/E calculation based on underlying profits of £5m, corporation tax rate of 19% it gives a P/E of 14.7. The P/E calculation takes no account of assets though so it would seem better to look at this based on a multiple of future earnings.
On this basis the market capitalisation exceeds the net assets by £59.4m-£39.6m= £19.8m which is only 4.9 years profits after tax.


In summary my belief in this trade is based on:
1. The market cap is only 4.9 times current profits once existing assets are allowed for.

2. The 4.9 multiple is based on current profits. If the portfolio grows fivefold at an improved NIM then it’s clear the market cap will be higher than £59m. One could make an estimate of this. (Speculate a five bagger minimum?)

3. Although PCF have stated they have no plans to cross sell other products as a bank, they do have a banking licence. There is a thought in the back of my head that 5 years down the line, their ambitions will be different than they are today. The success of Shawbrook, Aldermore, OSB, PAG and the other challenger banks is bound to start to look attractive at some point in the future as the balance sheet strengthens.


But maybe there’s a reason the share price is so low? I’ve checked the following:
1. Are the directors credible? Who knows but I’ve met Scott Maybury the Chief Executive present at an investors evening and he seemed sensible enough to me. All the directors and non-execs have been buying shares over the last year which is always a good sign

2. Is the business plan any good? Rather unusually for AIM it’s set out and available on line in this documentation pages 7-11: https://pcf.bank/media/1430/preliminary-results-presentation-december-2017.pdf

3. Maybe there will be a load of bad debts in the future? You can assess this yourself on page 12 in the above link. The bad debt write off charge has dropped from 5% in 2009 to 0.5% today and given high levels of employment I see no reason for this to worsen anytime soon. PCF only loan to prime credit customers and don’t do PCP and continue to pursue this policy and the percentage of business within the top 4 credit grades increased to 63% from 57% all year.

4.Maybe the government are going to investigate them for inappropriate lending? PCF are at the complete opposite end of the market to PFG only doing prime and no sub-prime but yet I suspect PFG is dragging down PCF share price by association.

5. Maybe the balance sheet hides a load of issues? Page 18 of the presentation is pretty clear. Of their £172m of assets, there is £2.7m of intangibles. I’m always suspicious of intangibles. In this case I suspect it’s the investment in the new banking software but whatever it is, it doesn’t really matter. Even if the £2.7m is actually worth nothing, it doesn’t affect anything as it’s negligible in size to the market capitalisation and future profits


I can’t find any skeletons in the cupboard other than general Brexit scaremongering. I will be holding long term. The presentations set out the strategy and gives me a high level of conviction this will be a multi-bagger, even thought it's already multi-bagged if you bought back in 2011

Statement contains the words asset diversification which I assume to mean that in due course they will diversify away from car finance. Great news as this is the first time I've seen this.


"The Board is pleased to report that trading in the first five months of the current financial year has been strong, in line with management's expectations.

"We can report that new business originations in the five-month period to 28 February 2018 were 93% ahead of the comparative period last year at £54.5m (2017: £28.2m). We are also pleased to report that the quality of originations has been maintained. The lending portfolio has grown to approximately £172m compared to £127m at this time last year. Our medium-term targets for the Group remain unchanged at 12.5% return on equity and a lending portfolio of £350m by September 2020, while asset diversification remains a goal and will follow in due course.

"The successes in new business origination in the short time since the July launch of our banking operations reinforces the Board's strategy to utilise retail deposits, with their lower interest cost, to fund growth in our existing markets. The launch of new prime terms for our existing products has been enthusiastically received by our brokers and customers alike. We have also delivered significant IT enhancements in consumer motor finance to restore origination growth to this division and support our reputation for excellent customer service.

"Following our success in achieving the Savings Champion Award for 2018 Best New Provider, we have seen retail deposits increase to £81m at 28 February 2018. The Group has made good progress in its treasury strategy by replacing a proportion of its more expensive wholesale debt with retail deposits and by gaining membership to the Term Funding Scheme at the Bank of England.

Apparently was well received at Mello which is not surprising as the share price is ridiculous. Long term hold for me.

Trying to get through resistance today.

Breakout. Going like a train today