Syscap, now acquired by Wesleyan Bank, was one of the UK’s leading independent finance providers, announceing its results for the year ended 31st March 2014 (“FY14”).
- 12% increase in new business volume to £140 million
- 6% EBITDA growth to £1.8 million
- 5% growth in origination income to £5.7 million
- Productivity (volume per head) up 12%
- Average deal size up 9% to £36k
Philip White said:
“FY14 was another good year in which we made considerable progress on multiple fronts, which has left the Company well placed for the future. I am pleased to report that the investments we have made in expanding our online capabilities have yielded significant results. This has enabled us to launch new products, improve our position in the legal sector, secure a key new affinity partnership with the ICAEW and cement our place as the pre-eminent supplier of Vendor Finance to the IT channel. As we approach our 25th anniversary we remain well positioned for long term, profitable growth based on our core sales, marketing, credit and portfolio management competencies and our overall innovative approach to business.”
John R Allbrook, Chairman
The company has continued to make good progress over the last twelve months and in FY14 has delivered a further improved trading performance.
Market conditions have marginally improved in line with the overall UK economy and the Broker finance sector, according to data provided by the Finance and Leasing Association, grew by 4% over the course of the year. Against this backdrop, the growth in the Company’s new business volumes has outperformed the market threefold and over the last four years has more than doubled. This has been achieved by a keen focus on meeting the needs of our customers in our core markets.
The Vendor division, which focuses on providing vendor finance predominantly in the IT sector, continued to produce strong results. Our focus in FY14 has been on improving lease penetration across our major vendors. Additionally, we have launched new products and made investments in extra sales resources, which will drive further profitable growth in FY15.
In the Professions sector the Company’s exclusive affinity programme with the Law Society goes from strength to strength. Our flagship Practising Certificate programme for law firms, now in its eighth year, generated a record number of applicants with 96% (FY13: 73%) of all applications being received online. The improvements made to the online portal and marketing of this programme drove an improvement in total finance volume of 3%, with an unprecedented 1,760 UK law firms choosing to finance their regulatory fees with our business. In recognition of the progress being made and the exciting plans going forward, the Law Society decided to extend its exclusive affinity agreement with the Company.
Additionally, we have been able to grow our business volumes across our portfolio of short term loan products (e.g. Tax, Professional Indemnity Insurance, VAT), as well as launching a new short term business loan product for non-professions SME clients. This new product delivered impressive new business volume of more than £4m across 59 deals in FY14 and has excellent growth prospects in the future.
In November the Company signed an exclusive affinity agreement with the ICAEW, which will help increase penetration in the Accountancy sector. By the end of FY14 originated volumes had already exceeded £4 million and we look forward to strong growth in this sector in FY14.
Our leading brand and market position were once again recognised within the industry through a number of awards including:
- Leasing World – Vendor Finance Lessor of the Year 2013; and
- Leasing World – Professions Finance Provider of the Year 2013
The growth in origination income and vigilant control of operating expenses enabled the Company to post improved financial results in FY14. EBITDA grew by 6 per cent to £1.8 million and the continued focus on operational efficiency yielded an increase in EBITDA margin from 20 per cent to 21 per cent.
Adopting a hybrid funding model to not only provide customers with appropriate access to finance at competitive rates but also to enable it to provide a broad range of products. In FY14 the total portfolio continued to perform comfortably within our range of expectations, with arrears and write-offs remaining well below market levels. This reflects well on the quality of credit decisions made and on our approach to portfolio management, which are critically important to the future aspirations of the business.
By the end of FY14 the Company had further repaid its senior debt position with the Royal Bank of Scotland to £3.9 million. Additionally, since year end the Company has repaid a further £500,000 of senior debt reducing the EBITDA multiple to below two times. The company also renewed its revolving credit facility of £10.75 million with the Royal Bank of Scotland.
Relationships with the bank and key funding partners have never been stronger and the Company continues to have access to sufficient funding from which to meet its growth projections for the year ending 31st March 2015 (“FY15”) and beyond. The management team works closely with all key funders to develop long term, transparent and mutually profitable relationships and would like to express its thanks to our partners for their continued support, which has been critical in helping the Company to deliver improved results in FY14.
The quality, skill and endeavour of all employees we have played a fundamental role in the improved results reported today. On behalf of the Board, I would like to take this opportunity to thank them all for their invaluable contribution.
Operating in the £170 billion UK SME financing market, providing innovative financing solutions to niche markets in the form of IT leases and short term business loans. As the UK economic recovery accelerates it is reasonable to expect an increasing demand for its products and services. We continue to selectively pursue profitable growth opportunities within its target markets, while maintaining the highest standards in credit and portfolio management. Our outlook remains positive and the Board is confident of the Company’s future prospects.