PCF.L Regulatory News (PCF)

Private & Commercial Finance Group plc

("Private & Commercial Finance", "PCF" or the "Group")

Interim Results for the twelve month period ended 31 March 2016

Private & Commercial Finance (AIM: PCF), the AIM-quoted finance house, today announces its interim results for the twelve months ended 31 March 2016. These interim results constitute the second interim period in an eighteen month accounting period to 30 September 2016.

Financial Highlights:

· Adjusted profits before tax were up 67% to £3.5 million (2015 - £2.1 million)

· Fully diluted earnings per share up 38% to 1.8p (2015 - 1.3p)

· Return on average assets ('ROAA') increased by 41% to 3.1% (2015 - 2.2%)

· Fully diluted after tax return on equity ('ROE') up 36% to 13.9% (2015 - 10.2%)

· £26.5 million (2015 - £23.6 million) of unearned finance charges to contribute to earnings in future years

Business Highlights:

· 13% increase in new business volumes to £63 million (2015 - £56 million)

· Portfolio growth of 12% to £112 million (2015 - £100 million)

· 14% of new business originations from direct channels and existing customers (2015 - 12%)

· Growth in business finance lending of 24% (2015 - 11%)

· Portfolio quality delivered a record low level of impairments at 1.1% (2015 - 1.6%)

· A formal application for a banking licence was lodged with the PRA/FCA on 13 May 2016, following an extensive consultation period

· Committed debt facilities of £117 million (2015 - £112 million) with headroom of £25 million (2015 - £23 million) to fund portfolio growth

· A dividend will be recommended based on the final results to 30 September 2016

Commenting on the results Scott Maybury, Chief Executive of PCF, said:

"We are very pleased to deliver another strong set of results as we prepare the Group for the operational and governance requirements of becoming a bank. Profits reached record levels, our portfolio continues to perform excellently and we have exceeded our key targets for ROAA and ROE."

"We are focussed on the key strategic objective of obtaining a banking licence. In conjunction with the submission of our application we have provided the Regulator with a mobilisation plan which assumes the granting of the licence, subject to mobilisation, by the end of 2016. Up to that point and during that mobilisation phase the quality of our portfolio, the prudence of our existing business model and the availability of adequate facility headroom will enable us to continue to deliver further organic portfolio growth and profitability gains."

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For further information, please visit www.pcfg.co.uk or contact:

Enquiries:

Private & Commercial Finance Group plc Tel: +44 (0) 20 7222 2426

Scott Maybury, Chief Executive Officer

Robert Murray, Managing Director

David Bull, Finance Director

Panmure Gordon (UK) Limited Tel: +44 (0) 20 7886 2500

Fred Walsh / Peter Steel / Atholl Tweedie

Stockdale Securities Limited Tel: +44 (0) 20 7601 6100

Henry Willcocks

Tavistock Communications Tel: +44 (0) 20 7920 3150

Jos Simson / Niall Walsh

About Private & Commercial Finance Group plc

Established in 1994, Private & Commercial Finance Group plc is an AIM-quoted finance house which has two main operating divisions:

· Consumer Finance which provides finance for motor vehicles to consumers; and

· Business Finance which provides finance for vehicles, plant and equipment to SMEs.

The Group has a highly efficient and scalable business model, utilising its specially developed internet-based proposal system to service national networks of brokers and suppliers.

Chairman's statement

Our profits have grown for the fifth year in succession since we reported a pre-tax profit of £455,000 in 2011 and impairments have reduced every year. Profit before tax increased by 57% to £3.3 million (2015 - £2.1 million) and profit after tax increased by 63% to £2.6 million (2015 - £1.6 million). These improvements in profitability are the result of further operational gearing following a 12% increase in the portfolio to £112 million (2015 - £100 million), containment of administrative expenses and a further reduction in impairment charge. As a result, our operating profit margin increased to 16.1% (2015 - 14.9%).

Adjusted profit before tax for the twelve months ended 31 March 2016 increased by 67% to £3.5 million (2015 - £2.1 million). Adjusted profit before tax is reported after adding back £224,100 of costs relating to our banking licence application (2015 - £nil). In March we changed our Accounting Reference Date from 31 March to 30 September in order to align it with that of our majority shareholder Bermuda Commercial Bank. These results therefore represent the second set of interim results in an eighteen month period which will end on 30 September 2016.

Fully diluted earnings per share increased by 38% to 1.8p (2015 - 1.3p) leading to a fully diluted after tax Return on Equity ('ROE') of 13.9% (2015 - 10.2%). Our other key performance measure of Return on Average Assets ('ROAA') exceeded internal targets, increasing by almost 50% to 3.1% (2015 - 2.2%). In the short-term we have reset these targets at 12.5% and 2.5% respectively as we add infrastructure costs, staff resource and capital to our business in preparation for becoming a bank.

The Group has continued to make good progress during the current financial period, with our portfolio providing strong profitability gains. The financial results achieved for the twelve months ended 31 March 2016 give cause for optimism for the future.

Funding and banking licence application

We were invited to submit our formal application for a banking licence to the regulatory authorities on 13 May 2016 following extensive consultation with them. The application is currently being evaluated for completeness and we expect a response imminently. A complete application is then subject to assessment and a decision within a statutory deadline period of six months from the date of submission. Once the licence is granted, we will enter a mobilisation phase when the Group will put in place the operational infrastructure, risk and governance framework and balance sheet which we outlined in our application. Some of the mobilisation work can be done in advance of the licence being granted and, in particular, work has already commenced on the technology platform. This mobilisation phase is a detailed project plan covering a period up to summer 2017. We will provide regular updates on our progress as we move towards achieving this key strategic objective.

The Group has £117 million (2015 - £112 million) of committed borrowing facilities, of which 21% (2015 - 22%) is committed headroom, available for new business origination and further portfolio growth. This headroom is sufficient to deliver our budgeted organic growth plans up to completion of the mobilisation phase of the banking project.

Portfolio and balance sheet

New business originations increased by 13% to £63 million (2015 - £56 million) with 14% of those originations coming from direct sources, up from 12% in the previous period. New business growth was ahead of the previous period and, most importantly, was achieved without a weakening of our underwriting criteria or portfolio quality. Growth in business finance lending increased by 24% (2015 - 11%) and outperformed consumer lending growth of 5% (2015 - 16%). This is consistent with sector research which shows that SMEs are increasingly turning to asset finance as an alternative to high street bank lending due to the speed of service, flexibility and the experience offered by a specialist lender.

In January 2016 all three Group subsidiaries received their full permissions from the Financial Conduct Authority to conduct consumer credit related activities.

Our portfolio of receivables increased by 12% to £112 million (2015 - £100 million) in the period and is comprised of over 11,000 customers, highlighting a wide and diverse spread of risk. Our largest customer accounted for only 0.5% of the total portfolio.

Portfolio quality continues to improve. The performance of the portfolio is ahead of internal targets with the loan loss provisioning charge falling to £1.2 million (2015 - £1.5 million), which represents a charge-off rate of 1.1% (2015 - 1.6%). With the quality of originations being maintained, the portfolio should continue to perform well, not least because we now have £26.5 million (2015 - £23.6 million) of unearned finance income on the balance sheet, which provides a certainty of earnings for future periods.

Balance sheet gearing continues to fall and now stands at 3.8x (2015 - 7.4x). This trend will continue as the remaining £1 million of convertible unsecured loan notes are expected to convert to equity on the final maturity date of 30 September 2016. The fully diluted net asset value per share increased to 14.3p (2015 - 12.8p) and the net assets of the Group increased to £22.9 million (2015 - £11.8 million) following the conversion last September of all loan notes held by Bermuda Commercial Bank Limited.

In the period, the Share Premium Account and Capital Reserve were reclassified to distributable profits which completed our preparations to pay a dividend. The Board is committed to returning to the dividend list and, following the change in our Accounting Reference Date, a final dividend will be recommended based on the results for the financial period ending 30 September 2016.

Staffing

We are fortunate to have committed and highly skilled staff. The average tenure is 7½ years and this experience will be of great benefit as we add new staff with the creation of the bank. I would like to thank them for their continued effort over the period.

Current trading and outlook

These results represent a strong performance over the last twelve months and are well ahead of market expectations set at the beginning of the period. Competitive pressures exist in both our markets but new business originations remain robust and we are determined to maintain our standards in relation to collateral, risk and terms of business.

We do not expect the forecasted lower economic growth and political uncertainty over EU membership to undermine our strategy over the remainder of this financial period and remain well placed to deliver continued growth in our portfolio and profits. It is, however, the opportunities of becoming a bank that present excellent long-term growth prospects for the Group and we look to the future with confidence.

David G Anthony

Chairman

9 June 2016

INDEPENDENT REVIEW REPORT TO PRIVATE & COMMERCIAL FINANCE GROUP PLC

Introduction

We have been engaged by the Company to review the condensed set of Financial Statements in the Interim Report for the twelve months ended 31 March 2016 which comprises the Group Income Statement, Group Statement of Comprehensive Income, Group Balance Sheet, Group Statement of Changes in Equity, Group Statement of Cash Flows and Related Notes 1 to 10. We have read the other information contained in the Interim Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of Financial Statements.

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The Interim Report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Report in accordance with International Accounting Standards 34, "Interim Financial Reporting", as adopted by the European Union.

As disclosed in note 2, the annual Financial Statements of the Company are prepared in accordance with IFRSs, as adopted by the European Union. The condensed set of Financial Statements included in this Interim Report has been prepared in accordance with International Accounting Standards 34, "Interim Financial Reporting", as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of Financial Statements in the Interim Report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of Financial Statements in the Interim Report for the 12 months ended 31 March 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34, as adopted by the European Union.

Ernst & Young LLP

London

GROUP INCOME STATEMENT

GROUP STATEMENT OF COMPREHENSIVE INCOME

GROUP BALANCE SHEET

GROUP STATEMENT OF CHANGES IN EQUITY

GROUP STATEMENT OF CASH FLOWS

NOTES TO THE INTERIM REPORT

1. The interim results are unaudited and do not constitute statutory accounts as defined by section 434 of the Companies Act 2006. The comparative figures for the year ended 31 March 2015 are based on the statutory accounts of the Group for that period and have been reported on by the Group's auditor and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section 498 of the Companies Act 2006.

2. The interim results have been prepared on the basis of the accounting policies set out in the Annual Report & Financial Statements for the 12 months ended 31 March 2015.

3. These interim consolidated financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting', as adopted by the European Union.

4. The Group's turnover represents gross rentals and instalments from the hire, financing and sale of equipment, and the provision of related fee-based services, stated net of Value Added Tax.

5. The Group operates in the principal areas of consumer finance for motor vehicles and business finance for vehicles, plant and equipment. All revenue is generated in the United Kingdom.

Turnover, profit on ordinary activities before taxation, and loan loss provisioning charge are detailed below:

The central cost reported in previous years have been absorbed into the business units and the previous year has been restated.

6. The income tax rate is 20%, representing the best estimate of the annual effective tax rate applied to operating profit before tax for the twelve months period.

7. The calculation of basic earnings per ordinary share is based on a profit of £2,633,234 for the period on 106,739,647 ordinary shares, being the weighted average number of ordinary shares in issue during the period.

The calculation of diluted earnings per ordinary share is based on profit of £3,001,750 for the period, before deducting interest on the convertible loan notes of £368,516, on 170,378,202 ordinary shares, being the dilutive weighted average number of ordinary shares in issue during the period.

8. The Group's loans and receivables portfolio of £112,270,416 is reported net of unearned future finance income of £26,464,337.

9. On 18 November 2015, following the resolutions passed at the Annual General Meeting, the Company transferred £7,934,590 from the Share Premium Account and £3,873,467 from the Capital Reserve Account to Profit and Loss Account. The legal mechanism to reclassify the share premium account and capital reserve to distributable profits was approved by the court, which completed the preparations necessary to pay a dividend.

10. The 2016 Interim Report will be posted to all shareholders and convertible loan note holders on 13 June 2016. Further copies can be obtained from the Company Secretary at Pinners Hall, 105-108 Old Broad Street, London EC2N 1ER or can be downloaded from our website, www.pcfg.co.uk.