Picture sets 50,000 customer target

Friday Apr 27, 2007

WELSH start-up secured lender Picture Financial is focusing on driving active customer levels towards the 50,000 mark across the UK over the next year.

Established in October 2004 by Neville Allport, the Newport- based business operates in the UK's secured loan market, where customers' debts are consolidated into one repayment method, with homes acting as security.

In its current financial year to the end of March 2008, its share of the UK secured lending market, based on value of active loans, is forecast to rise to 15%. It currently stands at around 13%.

Picture, in which venture capital firm Apax Partners has an equity stake of around 67%, will see its receivables increase by 78% on last year to £1.8bn.

Its active customer base of 25,000 is also on target to reach 45,000 by March next year.

The company last year generated income of just over £100m. Around a quarter was derived from non-interest payments, including that accrued from customers settling loans early.

However, the vast majority of Picture's income is invested back into the business, including in staff development and its UK-wide advertising campaign.

This year Picture is projected to realise profits of around £5m. However, over the next few years - as it move out of start-up status with its associated costs - it says it expects profit levels to rise significantly.

Geographically its customers are spread in line with UK population dynamics, with Wales accounting for around 5%. However around 12% of its customers are in Scotland, which is proportionally high compared with the country's population as a percentage of the UK.

As part of its expansion strategy Picture is looking at moving into the Northern Ireland market with the view of having a presence by the autumn.

On potential expansion into Europe, chief executive Mr Allport, who is the former chief executive of Cardiff-based secured lender Firstplus, said, "I would say my business philosophy is stick to the knitting and make sure you have got it right.

"We have been trading for only two and a half years, which is virtually no time at all. We need to get it right, but I think there are opportunities on the continent of Europe, certainly in Holland and Spain and perhaps Italy. It's an ambition, but I would give it a couple of years yet. We also need to grow our staff [currently 207]. When I say grow I don't mean necessarily in numbers, but in ability. We have training to build confidence and awareness in our people. Customers feel it when they talk to us. That is what gives us an edge most the time."

Picture customers pay an average annual percentage rate of 7.9%. Its rates range from 6.9% to 11.9%. Sixty per cent of customers are at 7.9% APR.

Cheshire-born Mr Allport said the driving force behind the business was a team ethic.

"The management team, who were mostly together at Firstplus, were the ones who encouraged me and said OK let's do it [start the business]," he said.

"They are all here enjoying themselves and having fun and being successful. It is not just me, it takes an awful lot of people to create a business of this nature."

On Apax Partners exit timing he said, "They are in no rush and are enjoying the relationship as I believe are all of our bankers - Merrill Lynch and Deutsche Bank.

"At some stage in the next five years there will be some kind of decision made, but we are not being pushed at all."

This could come in the form of a trade sale, or a possible flotation of the business. Over the next five years the company's aim is to become the UK's number one secured loans provider.

News Source:
http://icwales.icnetwork.co.uk