TIDMTIME
RNS Number : 6552N
Time Finance PLC
26 September 2023
26 September 2023
Time Finance plc
("Time Finance", the "Group" or the "Company")
Final Results for the year ended 31 May 2023
Strong growth in Revenue, PBT and EPS
Own-Book origination and lending portfolio significantly
increase
Time Finance plc (AIM: TIME), the AIM listed independent
specialist finance provider, is pleased to announce its final
results for the year ended 31 May 2023.
Commenting on the results, Tanya Raynes, Non-executive Chair,
said:
"The Group's strong financial performance over the past year
further strengthens our confidence in the strategic plan and the
capability of our team to deliver it. Revenue and profits increased
strongly during the period with the lending book and Net Tangible
Assets both standing at record highs; cash reserves remain solid
and arrears have remained static and are well below pre-pandemic
levels, notwithstanding the significant and ongoing growth in the
lending book. With the balance sheet further strengthened through
this organic growth the delivery of our strategic plan remains well
on track."
Financial Highlights:
-- Revenue of GBP27.6m (2022: GBP23.6m), an increase of 17%
-- Profit Before Tax ("PBT") of GBP4.2m (2022: GBP1.1m), an
increase of 281%
-- Earnings per share ("EPS") (fully diluted) of 3.7pps (2022:
1.0pps)
-- Own-Book deal origination of GBP73.4m (2022: GBP64.4m), an
increase of 14%
-- Lending book of GBP170.1m at 31 May 2023 (2022: GBP136.8m),
an increase of 24%
-- Consolidated Net Assets at 31 May 2023 of GBP61.7m (2022:
GBP58.1m), an increase of 15%
-- Consolidated Net Tangible Assets at 31 May 2023 of GBP34.2m
(2022: GBP30.5m), an increase of 12%
-- Future visibility of earnings with unearned income of
GBP21.2m (2022: GBP16.7m), an increase of 27%
-- Net deals in arrears at 31 May 2021 of 6% (31 May 2022: 7%),
an improvement of 1%
Operational Highlights:
-- Ratio of own-book lending to broked-on lending increased to
96% vs 4% during the year (up from 87% vs 13% in the prior
year)
-- Strong growth within both Invoice Finance division (lending
increased 30% over previous year to GBP56m) and in the "Hard Asset"
offering within the Asset Finance division (up 55% to GBP62m)
-- Business streamlining completed with divestment of non-core,
consumer mortgage brokerage
-- Supportive funding partners with unused lending headroom of
approximately GBP50m
Ed Rimmer, Chief Executive Officer, added:
" The financial year to 31 May 2023 marked the halfway point in
our four-year, medium-term strategic plan through to the end of May
2025. Our performance to date and the steps taken throughout the
year suggest we are well on track to achieve our stated
targets.
The Group remains very well positioned to take advantage of the
opportunities that the market presents, whilst our gathering
trading momentum provides real optimism in our ability to increase
shareholder value through the delivery of our stated four-year
strategy."
The Board continues to expect the Group's trading for the
current financial year to 31 May 2024 to be in line with market
expectations.
Chief Executive Officer, Ed Rimmer, and Chief Financial Officer,
James Roberts, will deliver a live presentation relating to these
audited annual results and the simultaneously released Q1 trading
update via the Investor Meet Company platform at 1.00pm BST today.
The presentation is open to all existing and potential shareholders
and questions can be submitted at any time during the live
presentation via the Investor Meet Company dashboard. Investors can
sign up to Investor Meet Company for free and add to meet Time
Finance plc via:
https://www.investormeetcompany.com/time-finance-plc/register-investor
.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 (as amended), which forms
part of domestic UK law pursuant to the European Union (Withdrawal)
Act 2018. Upon publication of this announcement via a Regulatory
Information Service, this inside information is now considered to
be in the public domain.
For further information, please
contact:
Time Finance plc
Ed Rimmer, Chief Executive Officer 01225 474230
James Roberts, Chief Financial Officer 01225 474230
C avendish Securities plc (NOMAD
and Broker) 0207 2 20 0500
Ben Jeynes / Charlie Combe (Corporate
Finance)
Michael Johnson / George Budd (Sales)
Walbrook PR 0207 933 8780
Paul Vann / Joe Walker 07768 807631
Timefinance@walbrookpr.com
About Time Finance:
Time Finance's core strategy is to focus on providing the
finance UK SMEs require to fund their businesses. It offers a
multi-product range for SMEs including asset, loan, invoice and
vehicle finance. While primarily an 'own-book' lender the Group
does operates a 'hybrid' lending and broking model enabling it to
optimize business levels through market and economic cycles.
More information is available on the Company website
www.timefinance.com .
Chair's Report
For the year ended 31 May 2023
Performance and dividend
This was another year where the macroeconomic backdrop remained
significantly challenging. The war in Ukraine and global supply
chain issues persisted. In the UK, the various changes in
government during September and October 2022 created political and
economic turmoil. The steep rise in energy and commodity prices,
combined with wage rise pressures in a tight UK labour market,
resulted in a high inflation economy and the Bank of England
responded with sharp interest rate rises. The combined effect has
been a cost-of-living crisis that looks set to continue for some
time to come.
While these economic headwinds present very real challenges for
UK businesses, we remain focused on continuing to provide an
essential lifeline of working capital to our SME customers,
alongside growth enabling investment for those customers who are
finding opportunity in these disrupted markets. Our Purpose is to
"help UK businesses to thrive and survive" and is at the centre of
everything we do, underpinning our aspiration to support the needs
and ambitions of UK businesses.
This financial year concluded the second full year of our
four-year strategy, and it is very pleasing to report Revenue of
GBP27.6m (2022: GBP23.6m) with Profit Before Tax of GBP4.2m (2022:
GBP1.1m). Fully diluted Earnings Per Share were 3.73p (2022:
1.00p). Our balance sheet was further strengthened during the year
with Net Tangible Assets rising to GBP34.2m (2022: GBP30.5m). At
the same time, net deal arrears remained relatively consistent at
6% of the gross exposure (2022: 7%), demonstrating the continued
effectiveness of our credit risk policy, which seeks to
appropriately balance the needs of both our customers and our
business.
Our business strategy continues to pursue aggressive growth
targets for own book lending. This requires application of our
available cash resources into leveraging our funding facilities to
maximum effect. Our lending objectives remain focussed on the
growth of shareholder value rather than dividend distribution.
Hence, we continue to view cash resources as being best deployed to
support business growth and, for the time being, not used for
dividend payments. This will be kept under review.
Our strategy
Time Finance is positioned as a risk-mitigated alternative
finance provider, recognised as having a highly relevant and
flexible offering of business finance products for a
well-diversified and expanding base of UK businesses. Our core
products are primarily Asset Finance and Invoice Finance augmented
by Commercial Loans and our recently launched Asset Based Lending
product.
There has been significant financial and operational progress
made since rolling-out the revised four-year strategy just over two
years ago. In addition, the robustness of the planning process has
itself been substantially improved, ensuring the actions and
resources required to meet key objectives are well understood
across the business, with clear performance measures and
accountability for outcomes.
A key pillar of our current strategy is the focus on
significantly growing our secured own-book lending, and there has
been continued traction against this goal with own-book origination
of GBP73.4m during the financial year (2022: GBP64.4m). This
produces a compounding pipeline of future unearned income and is
hence significant in driving the underlying value of the
Company.
We have recognised for some time the importance to our strategy
of internal system improvements in order to support our customer
experience and business efficiencies. I am pleased to report that
there has been tangible progress during this financial year, the
benefits of which have been directly enjoyed by both our customers
and colleagues. There remains, however, a significant task ahead of
us with respect to system improvements and how we use technology to
transform outcomes. You can expect further updates as we continue
on this journey.
Governance and culture
The business operates in a regulated environment and a key
responsibility for the Board is to ensure that strong and effective
governance operates throughout the Group. The Board has four
sub-committees, namely 'Audit', 'Remuneration', 'Nomination', and
'Governance and Risk'. Membership comprises only of non-executive
directors with the committees meeting on a regular basis and, as
and when appropriate, inviting members of the senior management
team to enable well informed discussion and decision making, as
well as gaining appropriate levels of assurance.
The culture within Time Finance is of paramount importance to
us. A key objective as we went into this financial year was to
refresh our values. Across the business we challenged ourselves to
ensure that our values represent a cohesive and relevant statement
of who we are and what we stand for. This is important as our
values are what we use to guide our behaviours and decisions as we
go about our daily business of helping UK businesses. Our values -
putting People First, being Bold, being Flexible, and being Genuine
- set a clear framework to enable us to deliver excellent outcomes
for our customers. They enable us to be responsive and agile,
whilst also ensuring highly responsible attitudes and behaviours in
every member of our team.
We continue to embed Environmental, Social and Governance
("ESG") as part of our business strategy. The themes of our ESG
approach include a good working environment for our colleagues,
doing great work within our local communities, addressing our
carbon footprint impact, and investment in systems and training -
with the benefits being long-term sustainable growth, improved
service levels and enhanced operational resilience.
Our people
The depth of experience and understanding within the business of
the needs, challenges and aspirations of UK SMEs positions us to
navigate a challenging marketplace for the mutual success of the
business and our customers. Our colleagues throughout the business
are highly resourceful, driven, and committed, and on behalf of the
Board, I wish to record our sincere gratitude for all their efforts
and results.
Aside from excellent financial and operational performance by
our dedicated and capable colleagues, highlights for this year have
included an all-employee conference held in March, delivery of a
refreshed set of values, and the ongoing charity work by the team.
I remain in awe of the commitment to charity work by so many of our
colleagues; it is genuinely humbling and inspiring.
I would like to express my thanks to Ed Rimmer, our CEO, and
James Roberts, our CFO, for their leadership and execution in what
has been a significant year for the business. I am also delighted
to welcome both Tracy Watkinson and Paul Hird to the Board as
Non-Executive Directors. Both Tracy and Paul bring new skills and
insight and will offer fresh challenges to the Executive team. At
the same time, I would like to extend my sincere thanks to Julian
Telling and Ron Russell who will be standing down following the
Annual General Meeting in early November. Both Julian and Ron have
been integral to the development of the business over many years
and their experience, insight and humour will be missed.
Outlook
Whilst the economic and political environment is uncertain and
challenging, the financial performance for the year supports our
confidence in our strategic plan and the capability of our team to
deliver it. The main pillars of focus remain looking after our
customers' needs in a responsible and agile way, and supporting and
empowering our people to be the best they can be, in order to
achieve strong and sustainable growth of the business, for the
benefit of all our stakeholders.
Time Finance continues to benefit from being a provider of a
range of financial products across multiple business sectors and
has no overweight dependence on any specific business category. The
continued strengthening of our balance sheet, and access to the
required cash resources for the planned growth, leaves us positive
about the future performance of the business.
In my second statement as Chair, I would like to extend my
thanks to all of our stakeholders for their continued support.
Tanya Raynes
Chair - 26 September 2002
Chief Executive Officer's Report
For the year ended 31 May 2023
Introduction
Time Finance is a multi-product, alternative finance provider to
UK SMEs, predominantly funding transactions on its own book, but
with the ability to broke-out business that falls outside of its
credit policy. The business offers two core products, Asset Finance
and Invoice Finance, and, to a smaller degree, Commercial Loans
along with an Asset Based Lending solution that was launched during
the year. The financial results for the business for the year ended
31 May 2023 consolidate the results of the two trading divisions
along with a central cost centre.
The post Covid-19 recovery that started to positively impact the
business in the early part of 2022 continued to provide
opportunities for alternative finance providers. With the various
government funding schemes largely coming to an end, and
significant challenges facing SMEs in the shape of rising costs,
supply chain disruptions and spiralling interest rates, access to
finance became of vital importance again to small businesses.
Having made good progress with our strategic plan that was put in
place in June 2021, we were in a good position to capitalise on
these developments, and I am pleased with the overall performance
and financial results for the year.
The positive results achieved are due to the commitment and hard
work shown by all our colleagues across the business. Like all
businesses, a lot of disruption was evident during the pandemic and
significant resilience was shown by our entire team. A sensible
balance has now been achieved in terms of providing flexible
working and this is now a permanent feature of the business. Whilst
this enables people to work from home if their role allows,
creating a vibrant atmosphere in the office is still an important
part of Time Finance being a "people" business. Our SME clients and
customers value a high degree of human interaction and providing
flexibility to them is therefore a key part of the proposition.
Sustainable, robust business model
Time Finance has maintained sound operational principles
designed to develop a robust business including:
- a widely spread lending book with security taken to support
lending facilities and a suitable margin achieved on each deal to
justify the risk taken.
- fixed interest rates are charged for the term of the lending
in both the Asset and Loan divisions. Interest rates incurred on
borrowings drawn down are also fixed for the term in these
divisions. Our policy is, wherever possible, to match the term of
borrowings drawn to the term of lending provided and this has been
of utmost importance over the trading period given the significant
increase in interest rates.
- underwriting is carried out by people as opposed to automated
systems for credit decisions. Although an essential element of the
business' development continues to be the deployment of IT systems
and improved efficiencies, it is essential that the end credit
decisions are taken by people given the markets we operate in.
- a realistic approach to provisioning with total provisions
carried in the balance sheet at 31 May 2023 amounting to GBP4.2m,
representing approximately 3% of the net lending portfolio. A
detailed internal review of provisioning is undertaken on a
quarterly basis, led by our Director of Risk and our CFO and the
recommendations made are presented to the Board for approval.
Market positioning and new business origination
Time Finance provides the main finance products that UK SMEs
require for their day-to-day working capital requirements and fixed
asset investments in order to grow their businesses over the longer
term. Since the Global Financial Crisis of 2008, the lending market
has transformed with the traditional banks no longer being the
automatic port of call for small business finance. Many alternative
finance providers have emerged in the form of challenger banks,
fin-tech lenders and independent providers such as Time Finance,
who generally offer more flexibility and a high level of focus on
customer service. As we are not a retail deposit taker, wholesale
funding facilities are utilised at competitive rates. In order to
make an acceptable margin on lending, the business chooses to
operate in the "Tier 2" market segment, therefore serving SMEs
typically at the smaller end of the market.
New business own-book origination for the year to 31 May 2023
amounted to GBP73.4m, 14% up on the GBP64.4m achieved the previous
year. 96% of all origination was funded on our own balance sheet
with only 4% broked-on, in line with our strategy.
Financial results
Revenue for the year to 31 May 2023 was GBP27.6m, an increase of
GBP4.0m (17%) year-on-year. Profit before tax was GBP4.2m, a
significant increase on the previous year (GBP1.1m). Total gross
receivables stood at GBP170.1m, a record level, compared with
GBP136.8m on 31 May 2022, a 24% increase and a key part of our
strategy to grow own-book lending. Total active borrowing
facilities as at 31 May 2023 amounted to GBP148m (2022: GBP148m),
of which GBP98m was drawn (2022: GBP78m). Consolidated Net Tangible
Assets stood at GBP34.2m (2022: GBP30.5m), an increase of 12%. Net
cash and cash equivalents held at 31 May 2023 was GBP3.8m (2022:
GBP2.9m).
The strength of the balance sheet, together with its liquidity
in the form of available operational debt facilities for lending
and cash held, ensure we are well-placed to take advantage of
future opportunities over the short to medium term.
Operational progress
The year to 31 May 2023 saw good progress made with respect to
our four-year strategic plan. The move away from "non-core"
activities was completed with the divestment of the consumer loans
brokerage in October 2022 and also the exiting of the wider
unsecured loans market in December 2022. This has allowed the
business to fully focus on secured Business-to-Business lending
with strong growth coming from both the Invoice Finance division
(lending up 30% on the previous year to GBP56m) and the "Hard
Asset" offering within the Asset Finance division (up 55% to
GBP62m). Lending across these two core products equated to
approximately 70% of total advances at year-end and is very much
where we see the majority of future growth coming from. As a
result, the new business effort was further scaled-up to support
this strategy and I look forward to seeing the results of this over
the next twelve months.
As part of our multi-product offering, we launched an Asset
Based Lending ("ABL") proposition in April 2023. This was targeted
at the smaller end of this market where there is less competition
and less pressure on margins. As well as providing the customer
with a wider range of funding solutions, it also allows the
business to retain client and customer relationships for a longer
period. These facilities tend to be fewer in number but larger in
value; getting a regular flow of business during the new year is
therefore a key objective.
The Invoice Finance division had a particularly successful year,
benefiting from increasing interest rates where the rises can be
immediately passed on to clients through the variable rate
agreements in place. Record new business volumes were seen with
some larger facilities taken on, including a GBP2m facility in
December 2022 which represented the single largest new facility put
in place. Client attrition was also lower than anticipated, which
contributed to the growth in the lending book.
We have continued to invest in our people with some important
additions made to the team during the year. In July 2022 a new role
was created, Head of Credit, and we were delighted to recruit a
high-calibre individual with appropriate skills and experience to
enable the business to take on larger and more complex asset
finance business. Overall, within the Hard Asset section of the
Asset Finance division, the average deal size increased from GBP22k
to GBP36k between May 2022 and May 2023. There has also been an
increase over the same timeframe in the single customer exposure
limit from GBP500k to GBP750k. Another key focus of recruitment was
around Business Improvement and our efforts to drive efficiency and
focus on enhancing the customer journey. A number of key benefits
have been delivered over the last twelve months in this regard,
including significant improvements to our core Asset Finance
operating system; introducing electronic document signing in the
Invoice Finance division; and the launch of a new HR system
allowing us to automate our employee appraisal and performance
management process.
There has been a concerted effort to support teams across the
business given the pressure on cost-of-living expenses, and this
has been positively received. Communication has also been improved
through the provision of regular webinars and in person "Team
Talks" at our four office locations in Bath, Reading, Manchester
and Warrington, with the objective of maximising engagement across
the business. The entire team was also brought together for the
first time since the pandemic at an all-staff conference held in
March 2023. This proved to be a highly successful event which we
will be looking to repeat in the future. We will also be measuring
the level of engagement through a formal colleague survey due to
take place in the Autumn of 2023.
Tanya Raynes's first full year in the Chair role has also been a
significant benefit and I am grateful for her support and guidance
during the year.
Culture, compliance and governance
Time Finance is a customer focused business, and its purpose is
"to help UK businesses thrive and survive". During the later part
of the financial year, we took the opportunity to refresh and
relaunch our cultural values, and these are shown below.
-- We Put People First - We are a "people business", empowering
all our colleagues to make a difference
-- We Are Bold - We have the courage to do things differently
and make the most of our opportunities
-- We Are Flexible - We have a can-do attitude and take a commercial approach to business
-- We Are Genuine - Integrity and transparency are at the heart
of how we build trust and foster great relationships
A plan has been agreed as to how these values will be embedded
into the day-to-day business and this is a key priority for the new
financial year.
We continue to have high standards for compliance and governance
for all our activities, referenced to the principles and guidelines
of the Financial Conduct Authority and the codes of conduct of the
relevant industry bodies. All colleagues are required to act in
accordance with our cultural values to uphold the following:
-- To act with integrity, due skill, care and diligence
-- To be open and cooperative with regulators
-- To pay due regard to the interests of customers and clients and treat them fairly
Outlook
Given the significant challenges faced by SMEs in the shape of
increased interest rates and inflationary costs, the provision of
finance will be more important than ever over the coming twelve
months. This presents both opportunities and threats to alternative
lenders such as Time Finance and getting the balance right in how
these are managed will determine the level of success we can
achieve. With the senior management team we now have in place and
the work that has been undertaken over the last two years to
re-engineer the business, I believe we are well placed to succeed
and continue to grow in a responsible manner.
Ed Rimmer
Chief Executive Officer - 26 September 2002
Group Strategic Priorities
For year ended 31 May 2023
Time Finance continues to be an alternative provider of finance
to the high-street and challenger banks, serving predominantly SMEs
with finance requirements ranging from GBP5,000 to GBP2.5m. The
Group primarily provides Invoice Finance and Asset Finance and, to
a lesser degree, Commercial Loans. It lends mainly from its own
balance sheet but with the ability to broker-on business that does
not meet lending parameters. This would mainly be due to the size
of a transaction, pricing or credit quality.
In June 2021, a new, four-year strategic plan was put in place.
At the time, the UK economy was still recovering from the Covid-19
pandemic, with all businesses facing significant uncertainty. As
mentioned in the previous sections, this uncertainty has increased
over the last two years, however, SMEs have proved to be extremely
resilient. This is in part due to the support provided by
alternative lenders such as ourselves and we are proud to play our
part in helping UK businesses thrive and survive.
Strategic Objectives
The key objectives of the four-year plan to 31 May 2025 are
to:
-- More than double the Group's gross lending book from GBP115m as at June 2021
-- Achieve revenue and PBTE levels in excess of GBP30m and GBP7m respectively
This was to be achieved through the following strategic
initiatives:
-- Focusing on core own-book lending products
-- Predominantly focusing on secured lending with an increasing average deal size
-- Investing in key people
-- Continuing to reposition the brand and invest in marketing
-- Bringing further liquidity into the business as and when required
Good progress has been made in delivering the plan during the
year and summaries on each of the above initiatives are set out
below.
Focus on core own-book lending products
The remaining "non-core" division, the consumer bridging loans
business in Cardiff, was divested in October 2022. This was the
last remaining consumer finance business after the rationalisation
plan embarked on in the previous financial year and left the Group
with a clear market position; being an alternative lender to
small-medium sized businesses, offering two core products: Asset
and Invoice Finance. Although a smaller part of the proposition, we
continue to offer Commercial Loans as developing our multi-product
offering remains a key objective. In April 2023, we also launched
an Asset Based Lending ("ABL") proposition aimed at businesses who
need to raise finance against a wider range of assets, including
debtors, plant & machinery, property and stock. This has been
well received in the market with our first transaction completed in
May. During the year we increased our gross lending book by 24% to
GBP170m and we expect this trend is to continue over the course of
our medium-term plan.
Predominantly focus on secured lending with an increasing
average deal size
In the majority of cases, tangible security is taken to underpin
our lending. This involves taking title to professionally valued
fixed assets or book debts, supported by registering debentures
and/or property charges. A key aim over the last twelve months was
to increase the average ticket size of the 'Hard' asset business
which reduced significantly during the pandemic when market demand
led to smaller assets being funded. I am pleased to report that
this has been achieved with the average deal size increasing from
GBP22k in FY21/22 to GBP36k in FY22/23 and during Q4 this increased
further to GBP40k. The maximum limit to any one customer within the
Hard Asset division also increased from GBP500k to GBP750k. In
addition, we took the decision to exit the unsecured loans market
where most of the business was sub GBP25k and not secured by a
tangible asset. The one exception to this overall trend, is the
'soft' asset strategy where the Group has a niche position in
funding smaller transactions that provide a wide spread of risk at
higher yields, funding business critical assets.
During the year we repositioned this offering, targeting mainly
lends up to GBP15k with an auto approval system implemented to
improve efficiencies. The majority of future growth, however, will
continue to come from the Hard Asset and Invoice Finance
businesses, along with the ABL offering.
Investment in key resources
In order to grow the business, the Group has continued to invest
in a number of key recruits. We appointed a Head of Credit in June
2022 and his skills and experience have been crucial in supporting
the move to increase the hard asset deal size and maximum customer
limit. The sales teams within both Asset and Invoice Finance have
been expanded further and by the end of September 2023 the overall
New Business team will have doubled in size since inception of our
current plan. We also invested in Business Improvement, focusing on
improving efficiencies and ultimately the customer journey. A
number of projects have been successfully delivered over the last
twelve months, including enhancements to our operating system in
the Asset Finance division, the introduction of electronic
signatures for executing legal documents in our Invoice Finance
division and a new Group-wide HR platform that has allowed us to
digitalise the employee appraisal process.
Reposition the brand and investment in marketing
Since the Group was rebranded to Time Finance at the end of
2020, we have worked hard to reposition the business in line with
our strategy and this has delivered some pleasing results over the
past twelve months. Our PR strategy, promoting our core business
news and client case studies and testimonials, led to a 26%
increase in media coverage achieved across key industry titles in
the regional and national press. We also invested in our digital
presence and SEO efforts which complemented our traditional
marketing channels, achieving a 201% increase in website traffic.
We continue to invest in our in-house marketing team, combined with
external agency partnerships, to further strengthen the Time
Finance brand within the commercial finance market and we are
pleased that these efforts were recognised through being awarded
'Asset Finance Provider of the Year' at the 2023 Asset Finance
Connect awards ceremony.
Bring further liquidity into the business as and when
required
During the financial year, a healthy liquidity position was
maintained with sufficient cash resources in place to deliver our
current plan. As the growth accelerates further, however, we will
likely need to review the current funding strategy. Finding
suitable long-term liquidity at sensible pricing is therefore a key
focus over the course of the next twenty four months.
Key performance indicators
The Board and the Senior Management Team regularly review and
monitor key metrics in assessing the performance of the Group. Some
of these key metrics used to track the Group's meaningful progress
are detailed below.
-- Continuing Operations Revenue - GBP27.0m (prior year GBP22.5m)
-- Continuing Operations Gross Profit margin - 59% (prior year 64%)
-- Continuing Operations Profit Before Tax- GBP4.1m (prior year GBP1.4m)
-- Continuing Operations Diluted Earnings Per Share - 3.63p (prior year 1.38p)
-- Own-Book New Business Origination - GBP73.4m (prior year GBP64.4m)
-- Core business own book vs broked-on ratios - 96/4 (prior year 87/13)
Refreshed Strategy
During the second half of the financial year, we took the
opportunity to refresh the current strategy along with our purpose,
values and key objectives. This process proved to be highly
beneficial, providing a more robust linkage with our financial
budgets and forecasts for the next two years. A summary of the
refreshed plan is shown below.
Our Purpose
"To help UK businesses to thrive and survive"
Our Objectives
-- Ambitious growth in our target markets
-- Improve customer experience and productivity
-- Prepare our people for the future
-- Build strong foundations
Each of the above have a number of initiatives in place in order
to deliver the set targets and I look forward to reporting on
progress as we travel through the year.
Principal risks and uncertainties
'Principal risks' are defined as a risk or a combination of
risks that, given the Group's current position, could seriously
affect its performance, future prospects or reputation. These risks
could potentially materially threaten the business model,
performance, solvency or liquidity, or prevent the delivery of the
strategic objectives outlined above. The Board has overall
responsibility for ensuring that risk is appropriately managed
across the Group and, through the Governance and Risk Committee,
has established the Group's appetite to risk; approved its
structure, methodologies and policies; and management roles and
responsibilities.
As well as regular external reviews and audits from the Group's
statutory auditors and the quarterly audits from a number of its
funding partners, the Group has numerous internal checks and
balances. Initial responsibility rests with the Senior Management
Team which manages the business divisions and functions with line
managers responsible for identifying and managing risks arising in
their business areas. This is augmented by the Group's central and
independent Compliance, Finance and Risk functions with
responsibility for reporting to the Board. The Group has a Director
of Risk who reviews all significant credit exposures and a Head of
Compliance who reviews all significant operating risks and
adherence to regulatory requirements.
The key risks identified and which the Board has reasonable
expectation are appropriately mitigated are:
-- Credit Risk
The risk of default, potential write-off, disruption to cash
flow and increased recovery costs on a debt that is either not
repaid individually or if there is a wider market deterioration.
This is mitigated by the Group adopting prescribed lending policies
and adhering to strict credit and underwriting criteria
specifically tailored to each business area. The Group also has the
ability to 'broke-on' certain business rather than write it on its
own-book if it is deemed necessary to manage risk.
-- Funding Risk
The risk of the Group not being able to meet its current and
future financial obligations over time, specifically that funding
is not available to meet the Group's growth targets. The Group has
funding facilities across Block Discounting, a Secured Loan Note
programme and Back-to-Back invoice finance facilities, aggregating
to GBP148m with ample headroom to meet its growth targets for the
medium future. As detailed previously, should the opportunity arise
to grow considerably faster than the medium-term plan anticipates,
then the Group could decide to augment its funding with additional
liquidity.
-- Regulatory Risk
The risk of legal or regulatory action resulting in fines,
penalties and sanctions that could arise from the Group's failure
to identify and adhere to regulatory requirements in the UK. In
addition, there is the risk that new or enhanced regulations could
adversely impact the Group. The Group employs a Head of Compliance,
who manages an independent compliance department with access to
external advisors. The department looks both internally at the
Group ensuring its practices are appropriate and externally at
future developments to ensure the Group is prepared to adopt any
changes in regulation as and when they arise.
Summary
SMEs continue to face significant challenges with increasing
interest rates, high inflation, disrupted supply chains and, in
many sectors, a shortage of labour. Access to finance in order to
provide the vital working capital for businesses to function and
grow is therefore increasing in importance and this provides
significant opportunities to alternative lenders like Time Finance.
We have a clear strategy to not only maximise these opportunities,
but ensure growth is achieved in a sensible and robust way, given
the risks the economic environment also poses.
Ed Rimmer
Chief Executive Officer
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 MAY 2023
Continuing Discontinued Continuing Discontinued
Operations Operations Total Operations Operations Total
2023 2023 2023 2022 2022 2022
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------------ ------------- ---------- ------------ ------------- ----------
Revenue 26,968 602 27,570 22,488 1,123 23,611
Other Income - - - 22 7 29
-------------------------- ------------ ------------- ---------- ------------ ------------- ----------
Total Revenue 26,968 602 27,570 22,510 1,130 23,640
-------------------------- ------------ ------------- ---------- ------------ ------------- ----------
Cost of Sales (11,172) (227) (11,399) (8,061) (587) (8,648)
-------------------------- ------------ ------------- ---------- ------------ ------------- ----------
GROSS PROFIT 15,796 375 16,171 14,449 543 14,992
Administrative
expenses (11,371) (277) (11,648) (11,059) (712) (11,771)
Exceptional Items (70) (10) (80) (1,685) (184) (1,869)
Share-based payments (125) - (125) (43) - (43)
-------------------------- ------------ ------------- ---------- ------------ ------------- ----------
OPERATING PROFIT 4,230 88 4,318 1,662 (353) 1,309
Finance costs (152) - (152) (255) - (255)
Finance income 1 - 1 1 - 1
-------------------------- ------------ ------------- ---------- ------------ ------------- ----------
PROFIT BEFORE
INCOME TAX 4,079 88 4,167 1,408 (353) 1,055
Adjusted earnings
before tax, exceptional
items and share-based
payments 4,274 98 4,372 3,136 (169) 2,967
Exceptional items (70) (10) (80) (1,685) (184) (1,869)
Share-based payments (125) - (125) (43) - (43)
-------------------------- ------------ ------------- ---------- ------------ ------------- ----------
PROFIT BEFORE
INCOME TAX 4,079 88 4,167 1,408 (353) 1,055
-------------------------- ------------ ------------- ---------- ------------ ------------- ----------
Income tax (720) - (720) (134) - (134)
-------------------------- ------------ ------------- ---------- ------------ ------------- ----------
PROFIT FOR THE
YEAR 3,359 88 3,447 1,274 (353) 921
-------------------------- ------------ ------------- ---------- ------------ ------------- ----------
Profit attributable
to: Owners of the
parent company 3,359 88 3,447 1,274 (353) 921
-------------------------- ------------ ------------- ---------- ------------ ------------- ----------
Earnings per share
expressed in pence
per share
Basic 3.63 0.10 3.73 1.38 (0.38) 1.00
Diluted 3.63 0.10 3.73 1.38 (0.38) 1.00
-------------------------- ------------ ------------- ---------- ------------ ------------- ----------
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 MAY 2023
PROFIT FOR THE
YEAR 3,359 88 3,447 1,274 (353) 921
-------------------------- ------------ ------------- ---------- ------------ ------------- ----------
OTHER COMPREHENSIVE - - - - - -
INCOME
-------------------------- ------------ ------------- ---------- ------------ ------------- ----------
TOTAL COMPREHENSIVE
INCOME FOR THE
YEAR 3,359 88 3,447 1,274 (353) 921
-------------------------- ------------ ------------- ---------- ------------ ------------- ----------
Total comprehensive
income attributable
to: Owners of the
parent company 3,359 88 3,447 1,274 (353) 921
-------------------------- ------------ ------------- ---------- ------------ ------------- ----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 MAY 2023
2023 2022
GBP'000 GBP'000
ASSETS
NON-CURRENT ASSETS
Goodwill 27,263 27,263
Intangible assets 231 298
Property, plant and equipment 238 320
Right-of-use property, plant &
equipment 573 30
Trade and other receivables 58,530 50,344
Deferred tax 1,236 1,036
-------- --------
88,071 79,291
-------- --------
CURRENT ASSETS
Trade and other receivables 91,847 70,852
Cash and cash equivalents 3,772 3,170
-------- --------
95,619 74,022
-------- --------
TOTAL ASSETS 183,690 153,313
======== ========
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 9,252 9,252
Share premium 25,543 25,543
Employee shares 231 106
Treasury shares (770) (820)
Retained earnings 27,419 23,972
-------- --------
TOTAL EQUITY 61,675 58,053
-------- --------
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 52,822 39,033
Financial liabilities - borrowings 1,319 2,344
Lease Liability 428 -
-------- --------
54,569 41,377
-------- --------
CURRENT LIABILITIES
Trade and other payables 65,207 51,956
Financial liabilities - borrowings 1,625 1,879
Tax payable 423 28
Lease Liability 191 20
-------- --------
67,446 53,883
-------- --------
TOTAL LIABILITIES 122,015 95,260
-------- --------
TOTAL EQUITY AND LIABILITIES 183,690 153,313
======== ========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 MAY 2023
Called Retained Share Treasury Employee Total
up Share Earnings Premium Shares Shares Equity
Capital
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 May
2021 9,252 23,051 23,543 (790) 63 57,119
Total comprehensive
income - 921 - - - 921
Transactions with
owners
Purchase of treasury
shares - - - (30) - (30)
Value of employee
services - - - - 43 43
Balance at 31 May
2022 9,252 23,972 25,543 (820) 106 58,053
========== ========== ========= ========= ========= =========
Total comprehensive
income - 3,447 - - - 3,447
Transactions with
owners
Sale of treasury shares - - - 50 - 50
Value of employee
services - - - - 125 125
Balance at 31 May
2023 9,252 27,419 25,543 (770) 231 61,675
========== ========== ========= ========= ========= =========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 MAY 2023
Continuing Discontinued Continuing Discontinued
Operations Operations Total Operations Operations Total
2023 2023 2023 2022 2022 2022
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash generated from
operations
Profit before tax 4,079 88 4,167 1,401 (346) 1,055
Depreciation &
amortisation
charges 422 1 423 571 40 611
Finance costs 152 - 152 236 - 236
Finance income (1) - (1) (1) - (1)
(Gain)/loss on disposal
of
property, plant and
equipment 17 - 17 12 134 146
(Increase) / Decrease in
trade and other
receivables (29,201) 20 (29,181) (22,147) 359 (21,788)
Increase / (Decrease) in
trade and other payables 27,056 (16) 27,040 15,632 (84) 15,548
Movement in other
non-cash
items 944 (435) 509 1,288 (46) 1,242
-------------------------- ---------------------- ------------- ---------- ------------ ------------- ----------
Cash flows from 3,468 (342) 3,126 (3,008) 57 (2,951)
operating
activities
Interest paid (152) - (152) (236) - (236)
Tax paid (541) - (541) (430) - (430)
-------------------------- ---------------------- ------------- ---------- ------------ ------------- ----------
Net cash from operating
activities 2,755 (342) 2,433 (3,674) 57 (3,617)
-------------------------- ---------------------- ------------- ---------- ------------ ------------- ----------
Cash flows from investing
activities
Purchase of software,
property,
plant & equipment (129) - (129) (149) (5) (154)
Interest received 1 - 1 1 - 1
-------------------------- ---------------------- ------------- ---------- ------------ ------------- ----------
Net cash from investing
activities (128) - (128) (148) (5) (153)
-------------------------- ---------------------- ------------- ---------- ------------ ------------- ----------
Cash flows from financing
activities
Payment of lease
liabilities (170) - (170) (178) (21) (199)
Loan repayments in year (1,025) - (1,025) (731) - (731)
Changes in overdrafts (254) - (254) (40) (9) (49)
Net cash from financing
activities (1,449) - (1,449) (949) (30) (979)
-------------------------- ---------------------- ------------- ------------ ------------- ----------
(Decrease)/increase in
net
cash and cash
equivalents 1,198 (342) 856 (4,771) 22 (4,749)
Net cash and cash
equivalents
at beginning of year 2,574 342 2,916 7,674 (9) 7,665
Net cash and cash
equivalents
at end of year 3,772 - 3,772 2,903 13 2,916
-------------------------- ---------------------- ------------- ---------- ------------ ------------- ----------
A CCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IRFS") as adopted in
the United Kingdom and by the International Financial Reporting
Interpretations Committee ("IFRIC") interpretations and with those
parts of the Companies Act 2006 applicable to companies reporting
under IFRS. The financial statements have been prepared under the
historical cost convention.
1. SEGMENTAL REPORTING
The Group provides a range of financial services and product
offerings throughout the UK. This financial year has seen the Group
has amend its reporting on a segmental basis to more accurately
reflect the fact it has only two core trading divisions, namely:
Asset Finance and Invoice Finance. The Group's ancillary product
offerings, Commercial Loans and Vehicles fleet brokering are
included within the Asset Finance segment as they operate under the
same management team, office locations and with the same
back-office teams.
The operating segments, therefore, reflect the Group's
organisational and management structures. The Group reports
internally on these segments in order to assess performance and
allocate resources. The segments are differentiated by the type of
products provided.
The segmental results and comparatives are presented with
intergroup charges allocated to each division based on actual
revenues generated. Intergroup expenses are recharged at cost and
largely comprise; plc Board and listing costs, Marketing,
Compliance, IT and Human Resource costs.
For the year ended 31 May Asset Invoice Other TOTAL
2023 Finance Finance GBP'000 GBP'000
GBP'000 GBP'000
Revenue 16,540 10,679 351 27,570
Cost of sales (8,389) (2,784) (226) (11,399)
------------------------------------ --------- --------- --------- ---------
GROSS PROFIT 8,151 7,895 125 16,171
Administrative expenses (6,009) (4,040) (1,599) (11,648)
Exceptional items - (34) (46) (80)
Share-based payments (26) (11) (88) (125)
------------------------------------ --------- --------- --------- ---------
OPERATING PROFIT 2,116 3,810 (1,608) 4,318
Finance costs (75) (14) (63) (152)
Finance income 1 - - 1
PROFIT BEFORE INCOME TAX 2,042 3,796 (1,671) 4,167
Intra-group recharges (855) (816) 1,671 -
PROFIT BEFORE INCOME TAX 1,187 2,980 - 4,167
Adjusted earnings before
interest, tax,
exceptional items and share-based
payments 2,068 3,841 (1,534) 4,372
Exceptional items - (34) (46) (80)
Share-based payments (26) (11) (88) (125)
------------------------------------ --------- --------- --------- ---------
PROFIT BEFORE INCOME TAX 2,042 3,796 (1,671) 4,167
------------------------------------ --------- --------- --------- ---------
For the year ended 31 May Asset Invoice Other TOTAL
2022 (restated) Finance Finance GBP'000 GBP'000
GBP'000 GBP'000
Revenue 15,810 7,809 21 23,640
Cost of sales (7,380) (1,268) - (8,648)
GROSS PROFIT 8,430 6,541 21 14,992
Administrative expenses (5,997) (3,078) (2,696) (11,771)
Exceptional items (1,308) (76) (485) (1,869)
Share-based payments - (5) (38) (43)
OPERATING PROFIT 1,125 3,382 (3,198) 1,309
Finance costs (192) (3) (60) (255)
Finance income 1 - - 1
PROFIT BEFORE INCOME TAX 934 3,379 (3,258) 1,055
Intra-group recharges (2,181) (1,077) 3,258 -
PROFIT BEFORE INCOME TAX (1,247) 2,302 - 1,055
Adjusted earnings before
interest, tax,
exceptional items and share-based
payments 2,242 3,460 (2,735) 2,967
Exceptional items (1,308) (76) (485) (1,869)
Share-based payments - (5) (38) (43)
------------------------------------ --------- --------- --------- ---------
PROFIT BEFORE INCOME TAX 934 3,379 (3,258) 1,055
------------------------------------ --------- --------- --------- ---------
2. PROFIT BEFORE INCOME TAX
The profit before income tax is stated after charging:
2023 2022
GBP'000 GBP'000
Depreciation - owned assets 289 388
Amortisation - computer software 134 223
Net credit loss charge 2,437 930
Funding facility interest charges 4,547 2,515
Introducer commissions 2,868 3,014
Fees payable to the Company's auditor
for audit of Company's subsidiaries 68 72
Fees payable to the Company's auditor
for the audit of the Company 16 14
3. DIVIDS
2023 2022
GBP'000 GBP'000
Ordinary shares GBP0.10 each
Final - -
Interim - -
============ ============
Total - -
============ ============
The Directors do not propose a final dividend relating to this
financial period (2022: 0.0p per share). Future dividends will be
kept under review.
4. EARNINGS PER SHARE
Earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the year. For diluted
earnings per share, the weighted average number of shares is
adjusted to assume conversion of all dilutive potential ordinary
shares.
There are no dilutive items impacting the Group and, as such,
the Basic EPS and Diluted EPS are identical. Any share options that
are vested are fully expected to be met from the Group's Employee
Benefit Trust. Therefore, issuance of new shares is not expected to
be required and as a result, there is no associated dilution.
2023
Weighted
average Per-share
Earnings number of amount
GBP'000 shares pence
Basic
EPS
Earnings attributable to ordinary
shareholders 3,447 92,512,704 3.73
Diluted EPS
Adjusted earnings 3,447 92,512,704 3.73
========= =========== ==========
2022
Weighted
average Per-share
Earnings number of amount
GBP'000 shares pence
Basic
EPS
Earnings attributable to ordinary
shareholders 921 92,512,704 1.00
Diluted EPS
Adjusted earnings 921 912,512,704 1.00
========= ============ ==========
5. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information set out in this announcement does not
comprise the Group's statutory accounts for the years ended 31 May
2023 and 31 May 2022. The financial information has been extracted
from the statutory accounts of the Group for the years ended 31 May
2023 and 31 May 2022. The auditors' opinion on those accounts was
unmodified and did not contain a statement under section 498 (1) or
498 (3) Companies Act 2006 and did not include references to any
matters to which the auditor drew attention by the way of emphasis.
The statutory accounts for the year ended 31 May 2022 have been
delivered to the Registrar of Companies. Those for the year ended
31 May 2023 will be delivered to the Registrar of Companies
following the Company's Annual General Meeting.
6. ANNUAL REPORT AND ANNUAL GENERAL MEETING
The Annual Report and Accounts will be available from the
Company's website, www.timefinance.com , from 26 September 2023.
Notice of the Annual General Meeting, which will be held at the
Apex Hotel, Bath, BA1 2DA on 7 November 2023 at 10am, will be
communicated electronically or posted to Shareholders.
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END
FR LFMITMTATMIJ
(END) Dow Jones Newswires
September 26, 2023 02:00 ET (06:00 GMT)
Time Finance (LSE:TIME)
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