1pm

Micro-cap companies bear risk, but investors looking for a turnaround situation twinned with a timely credit crunch story should examine asset finance minnow 1pm.

Under a new management team led by industry mover and shaker Mike Johnson, 1pm, brought to AIM in 2006, exited the sub-prime market early last year, turning its strategic attentions instead to the small-ticket leasing market.

A return to profit for the half to November – profits of £24,000 were made from a top-line £396,000 – demonstrated the success of the new business, namely the provision of funding for small companies needing to purchase business-critical equipment or machinery. More recent figures for the year to May were equally encouraging, showing a swing from losses of £224,000 to pre-tax profits of almost £80,000, on revenues of £848,000 (2007: £872,000). The numbers reflected rising levels of new business as well as the strict and clearly defined new underwriting policy by which 1pm now abides.

Johnson, chairman, eyes opportunity in the £5bn small-ticket leasing market, with restricted credit and consolidation among banks driving significant market opportunities for 1pm, since the banks are tightening up on lending terms (if they are lending at all), leaving SMEs without a consistent funding source.

Players such as 1pm, which raised £645,000 net through a placing in October and has successfully beefed up its funding facilities with four major partners, are stepping in to fill the gap. With the credit crunch accelerating growth, new business volumes building and management minimising bad debts, shares in 1pm should appreciate in value over time.

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