REG - Time Finance PLC - Final Results for the year ended 31 May 2022
22/09/2022 07:01
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220922:nRSV2149Aa&default-theme=true
RNS Number : 2149A Time Finance PLC 22 September 2022
22 September 2022
Time Finance plc
("Time Finance", the "Group" or the "Company")
Final Results for the year ended 31 May 2022
Strategic plan gaining traction;
Own-Book origination and lending portfolio both up significantly;
Net arrears reduced; Balance Sheet further strengthened
Time Finance plc (AIM: TIME), the AIM listed independent specialist finance
provider, announces its final results for the year ended 31 May 2022.
Commenting on the results, Tanya Raynes, Non-executive Chair, said:
"Very pleasing progress has been made against the Group's medium-term
strategic plan that was launched in June 2021 and I am very positive about the
delivery of strong and sustained results over the next few years. During the
year the Group's balance sheet strengthened further with Net Tangible Assets
rising to £30.5m at the year-end. At the same time, net deal arrears fell by
approximately 35% over the course of the financial year, demonstrating the
effectiveness of our credit risk policy, which seeks to appropriately balance
the needs of both our customers and our business."
Financial Highlights:
• Revenue of £23.6m (2021: £24.2m), a decrease of 2%. Level in respect of
continuing operations
• Adjusted PBTE 1 (#_ftn1) of £3.0m (2021: £3.1m), a decrease of 3%.
Level in respect of continuing operations
• Own-Book deal origination of £64.4m (2021: £47.2m), an increase of 36%
• Lending book of £136.8m at 31 May 2022 (2021: £115.7m), an increase of
18%
• Consolidated Net Assets at 31 May 2022 of £58.1m (2021: £57.1m), an
increase of 2%
• Consolidated Net Tangible Assets at 31 May 2021 of £30.5m (2021:
£28.4m), an increase of 7%
• Future visibility of earnings with unearned income of £16.7m (2021:
£14.9m), an increase of 12%
• Blended cost of borrowings maintained at approximately 4% (2021: 4%)
• Net deals in arrears at 31 May 2021 of £9.3m (31 May 2021: £14.2m), a
decrease of 35%
• Nil deals in forbearance at 31 May 2021 (31 May 2021: £0.8m)
Operational Highlights:
• Proposition and structure simplified with divestment of non-core, consumer
vehicle brokerage
• Supportive funding partners with unused lending headroom in excess of
£70m at year-end
• Senior management team restructured and strengthened with the appointments
of a Director of Asset and a Director of Loans
• Investment in sales with enlarged team of Business Development Managers
for the Invoice Finance and Hard Asset divisions
• Ongoing government-backed accreditation from The British Business Bank to
provide Recovery Loan Scheme ("RLS") to UK SMEs
Ed Rimmer, Chief Executive Officer, added:
"The financial year to May 2022 was the first in our four-year, medium-term
strategic plan, and the results are satisfactory. Despite the significant
macroeconomic challenges, when the discontinued operations are removed, PBTE
is on a par with the prior year at £3.1m. It is particularly pleasing to
see the significant progress made during the period against the plan. The
Group is now well positioned to take advantage of the opportunities that the
market will present, and moves into the new financial year with increased
momentum and optimism"
The Board continues to expect the Group's trading for the full year to be in
line with market expectations.
The Company will deliver a live presentation relating to these results and the
simultaneously released Q1 2022/23 trading update via the Investor Meet
Company platform at 12.00pm BST today. Existing and potential shareholders can
sign up to Investor Meet Company for free and add to meet Time Finance plc
via: https://www.investormeetcompany.com/time-finance-plc/registerinvestor
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
Cenkos Securities plc (NOMAD)
Ben Jeynes / Max Gould (Corporate Finance) 0207 397 8900
Julian Morse (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
(http://www.timefinance.com) .
Chair's Report
For the year ended 31 May 2022
Performance and dividend
Whilst Covid-19 restrictions were largely lifted during this financial year,
we continued to experience the effects of the pandemic, especially in terms of
consumer confidence, supply chain delays and government funding support to
businesses. This was alongside other significant emerging macroeconomic
factors: the cost-of-living crisis, inflationary pressures, the war in
Ukraine, energy shortages, and UK political turmoil. The global economic
landscape is relatively unprecedented. Times of disruption represent both
significant challenges and opportunities for our business and our customers.
As always, our key focus is to ensure that we continue to provide an essential
lifeline of working capital to our SME customers.
Alongside the external headwinds, it has been a period of relative disruption
internally as we have needed to reassess the cost base of the business within
the context of a slower recovery from the Covid-19 pandemic than was
originally anticipated. Whilst we supported the full workforce through the
pandemic, it became apparent in the second quarter of this financial year that
the return to pre-pandemic levels of sales and profit was going to be much
delayed from previous assumptions. As a result, the difficult decision was
taken to right-scale the operation for a revised pathway of recovery and
financial results. This was obviously unsettling for our colleagues across the
Group but, amidst all of this difficult change, their commitment and
achievements remained outstanding, and the Board extends enormous gratitude.
It is pleasing to report that despite the continuing effect of the pandemic,
and the additional external market shocks, the Group's revenue was £23.6m
(2021: £24.2m) with profit before tax and exceptional items of £3.0m (2021:
£3.1m). Fully diluted earnings per share were 1.00p (2021: 1.85p). The
Group's balance sheet was yet again strengthened during the year with Net
Tangible Assets rising to £30.5m (2021: £28.4m). At the same time deal
arrears fell by approximately 35% during the financial year, demonstrating the
effectiveness of our credit risk policy, which seeks to appropriately balance
the needs of both our customers and our business.
The Group's business strategy has an aggressive target for the lending book
over the next few years. This will require the application of the Group's
available cash resources into leveraging our funding facilities to maximum
effect. Our lending objectives are focussed on the growth of shareholder value
rather than dividend distribution. Hence, the Board continues 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
At the start of the financial year a new four-year strategy was launched.
There has been very pleasing progress made during the first full year since
rolling out this updated strategy, as set out in the Group Strategic
Priorities. The Group is positioned as a risk-mitigated alternative finance
provider, recognised as having a comprehensive range of business finance
products to offer to a well-diversified and expanding base of UK businesses.
Our core products are Asset Finance, Invoice Finance and Commercial Loans. The
focus is on significantly growing the secured own-book lending and own-book
originations increased to £64.4m during the financial year, up from £47.2m
in the prior year. This demonstrates significant traction against a key
strategic goal. Whilst we remain flexible to act as a broker where
appropriate, we took the strategic decision to move away from the non-core,
consumer brokerages, and the disposal of those elements of the business is now
well progressed.
Following the rebrand in December 2020, Time Finance is now well established
as a brand which, through our business development and marketing efforts,
serves to support our strategic aims.
The critical importance to our strategy of internal systems improvements to
support customer experience and business efficiencies is well recognised by
the Board. We are delighted to have successfully secured an appointment for
the newly created role of Head of Business Improvement, which we fully expect
to enable more significant strides forward in this area.
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, Nominations, and Governance and Risk. Membership comprises only
of non-executive directors. The committees meet on a regular basis and invite
members of the senior management team, as appropriate, to enable well informed
discussion and decision making, as well as gain appropriate levels of
assurance.
The Board will continue to focus on increasing diversity in all its forms and
it is pleasing to note that women now represent 50% of the Group's leadership
team. This is an important consideration for the Group where women are 56% of
our total workforce.
The culture within Time Finance is of paramount importance to us, and our core
values of being Genuine, acting with Integrity and demonstrating Agility are
what enable us to deliver good outcomes for our customers. These values are
embedded across the business and are key in being responsive and flexible for
our customers, whilst also ensuring highly responsible attitudes and
behaviours in every member of our team. During the year, we continued to
formulate our approach to our Environmental, Social and Governance ("ESG")
responsibilities and to embed ESG as an integrated part of our core business
strategy. The themes of our ESG approach include a good working environment
for our colleagues, addressing our carbon footprint impact, and investment in
systems and training - with the outcome for the Group being long term
sustainable growth, improved service levels and enhanced operational
resilience.
Our people
On 1(st) June 2021 it was announced that Ed Rimmer was to be appointed as
permanent CEO, after a period as interim CEO from February 2021. Ed's
extensive experience within the financial services sector, along with his
specific knowledge of the Group from his time as Group COO between 2017 to
2020, enabled him to take up the CEO responsibilities quickly and effectively.
In line with our strategy, we have made excellent progress during the year
with hiring key recruits to support our increased origination growth plan, and
we should continue to see the positive impact of this in the Group's results
going forward. We recognise that our staff are our greatest asset and so, as
we move forward, we shall look to better measure employee engagement and
address any gaps that may be identified by introducing an employee survey in
the second half of this calendar year and annually thereafter.
This financial year has yet again been a period of significant and challenging
change across many aspects of the business, and the executive leadership of
the Group has been key to navigating this journey - my thanks go out to Ed
Rimmer (CEO) and James Roberts (CFO) for both their boldness and steadying
hand in managing the way forward.
I was delighted to join the Board in March 2021 as a Non-Executive Director,
and to assume the role of Non-Executive Chair in October 2021. After a period
of necessary focus on internal strategy and restructure, I look forward to the
opportunity to engage more externally, specifically with our investors and
other key stakeholders.
Our colleagues throughout the Group continue to demonstrate exceptional
dedication, commitment and ability, and on behalf of the Board, I wish to
record our sincere thanks and appreciation.
Outlook
The Group has made substantial progress during this financial year against the
updated strategy. This is creating significant momentum as well as a robust
platform for our future growth plans, and so I am very positive about the
delivery of strong and sustained results over the next few years.
Whilst the economic and political environment is uncertain and challenging,
the Group continues to benefit from being a provider of a wide range of
financial products to SMEs across multiple business sectors and has no
overweight dependence on any specific business category. The continued
strengthening of the Group's balance sheet, and access to the required cash
resources for the planned growth, leaves the Board confident about the future
of the Group.
In my first statement as Chair, I would like to express how pleased I am to be
on the Board of a company with so much potential and a team that has the
ability to deliver. I would also like to thank all of our stakeholders for
their continued support, and I look forward to reporting on our continued
progress as we move forward with our strategy.
Tanya Raynes
Chair - 22 September 2022
Chief Executive Officer's Report
For the year ended 31 May 2022
Introduction
Time Finance is a multi-product, specialist finance provider to UK SMEs,
predominantly funding transactions on its own book, but with the ability to
broker-out transactions that fall outside its credit policy. The business now
comprises of three core product divisions: Asset Finance, Invoice Finance and
Commercial Loans. Each is headed by a senior manager with significant
experience in the small business lending sector. The financial results for the
Group for the year ended 31 May 2022 consolidate the results of these
divisions along with the trading entities that we no longer consider to be
core business; further detail behind this strategy is shown in the Group
Strategic Priorities.
The Covid-19 pandemic continued to disrupt the wider small business lending
market during the period under review, specifically the first quarter's
trading between June and August 2021. Customers, clients and our own
business were impacted by high staff absence and an overhang of businesses
still using various government pandemic funding schemes. Market conditions
started to improve in the later part of 2021 and more significantly through
the final quarter of the financial year from March to May. Despite the
challenges, we made good progress with the strategic plan that we set out at
the start of the financial year, and the overall numbers delivered were
satisfactory. We therefore moved into the new financial year in June with
increased momentum and optimism for the year ahead, despite the growing
economic and geopolitical challenges that are summarised in the Chair's
Report.
The results achieved are due to the commitment and hard work shown by all
colleagues across the Group. As government restrictions continued to ease
during the Autumn of 2021, our staff began to spend more time working back in
the office and a sensible balance was achieved in terms of providing flexible
working. Whilst this enables people to work from home if their role allows, we
have seen a return of a more vibrant atmosphere in the offices which is an
important part of being a "people" business. Our SME clients and customers
still want a high degree of human interaction and providing flexibility to
them is therefore a key part of our proposition.
Sustainable, robust business model
The Group 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 suitable margin achieved on each deal
to justify the risk taken.
- fixed interest rates are charged for the term of the
lending in the Asset and Loans divisions, with interest rates incurred on
borrowings drawn down equally being fixed for the term. The Group's policy is,
wherever possible, to match the term of borrowings drawn to the term of
lending provided.
- underwriting is carried out by people as opposed to
automated systems for credit decisions. Although an essential element of the
Group's 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. The total
provisions carried in the balance sheet at 31 May 2022 amounted to £3.6m,
representing approximately 3% of the net lending portfolio. A detailed
internal review of provisioning is undertaken on a quarterly basis, led by the
Director of Risk in conjunction with the CFO and the recommendations made are
presented to the Board for approval.
Market positioning and new business origination
The Group provides the main finance products that SMEs require for day to day
working capital requirements and 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 point 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 the Group is not a retail deposit
taker, wholesale funding facilities are utilised at competitive rates. In
order to make an acceptable margin on lending, the Group chooses to operate in
the "Tier 2" market segment, therefore serving SMEs typically at the smaller
end of the market.
New business origination in the core Asset, Commercial Loan and Invoice
Finance divisions for the year to 31 May 2022 amounted to £70.8m, 33% up on
the £53.1m achieved the previous year. Of this origination 91% was funded on
balance sheet and 9% was broked-on, compared with 88% and 12% respectively in
the prior year. The move towards an increase in own-book lending is consistent
with our strategy and commented on further in the Group Strategic Priorities.
Financial results
Total revenue for the year to 31 May 2022 was £23.6m, a decrease of £0.6m
year-on year. Revenue comprises interest and other income (such as facility
fees, document fees and asset assurance income) of £20.6m from own-book
lending (2021: £20.4m) and commission income of £3.0m from broking
activities (2021: £3.6m). Interest and other income from lending therefore
accounted for 87% (2021: 84%) and commission income from broking accounted for
13% (2021: 15%) of total revenues. The business enjoys good visibility of
future revenue from 'unearned income' (i.e. future interest income from
'own-book' deals already written on the Group's balance sheet) which at 31 May
2022 amounted to £16.7m (2021: £14.9m). The Group's profit before tax and
exceptional items for the year ended 31 May 2022 was £3.0m, compared with
£3.1m in the prior year. Profit before tax was £1.1m (2021: £2.0m), and
profit after tax £0.9m (2021: £1.8m). This is driven by one-off costs
associated with the closure of the non-core vehicles brokerage and subsequent
write-off of the goodwill associated with that historic acquisition. Further
details are provided in the Group Strategic Priorities.
At 31 May 2022, the Group's total gross receivables stood at £137m, compared
with £116m on 31 May 2021, an 18% increase and again as part of our strategy
to increase own-book lending. Total active borrowing facilities as at 31 May
2022 amounted to £148m (2021: £162m), of which £78m was drawn (2021:
£58m). Consolidated net assets stood at £58.1m (2021: £57.1m), an increase
of 2%. Consolidated Net Tangible Assets stood at £30.5m (2021: £28.4m), an
increase of 7%. Net cash and cash equivalents held at 31 May 2022 was £2.9m
(2021: £7.7m). The reduction was down to the increase in own-book lending
origination with an element of cash required to support each new lease or loan
agreement that is put in place. The strength of the Group's balance sheet,
together with its liquidity in the form of available operational debt
facilities for lending and cash held, ensure the Group is well-placed to take
advantage of future opportunities over the short to medium term.
At 31 May 2022, there were 92,512,704 shares in issue (2021: 92,512,704). It
is expected that, wherever possible, all current share options will be
fulfilled from the Group's Employee Benefit Trust, resulting in little or no
dilution to shareholders. Given these share numbers, earnings per share were
1.00 pence (2021: 1.76 pence) with an identical number when calculated on a
fully diluted basis.
Operational progress
The year to 31 May 2022 saw much change but, ultimately, good progress in
ensuring the business is set-up to achieve the significant growth over the
4-year period set out in the strategic plan. I was appointed as full-time CEO
on 1(st) June and at the time, like the wider business community, hoped that
the worst of the lockdown restrictions were behind us. This, unfortunately,
proved not to be the case with a difficult summer period experienced in 2021
although, as previously mentioned, trading conditions improved significantly
as the year progressed. As commented in the Chair's Report, with the elongated
recovery, we made the difficult decision to reduce overheads through a
redundancy programme which saw headcount reduce by approximately 15%. This
understandably caused a lot of disruption with additional workloads falling on
colleagues across the business and I like would like to reiterate my sincere
gratitude to the professionalism and commitment shown by our team. The
retirement of John Newman as Chair was also another significant change;
however, Tanya Raynes's appointment provided the Group with fresh impetus and
I am grateful for her support and guidance during the year.
Alongside this significant change to the business, much progress has been
made. The Asset Finance division saw strong demand for 'hard' asset finance
with the own-book new business target exceeded by 20%. Whilst our business
overall was impacted by the ease of access to cash through the various
government fundings schemes, our Loans division benefited from becoming an
accredited lender under the Recovery Loan Scheme providing it with much needed
momentum. The Invoice Finance division had a very successful year, benefiting
from lower than expected client attrition and record new business levels in
the second half of the year. The division's lending book increased by 80%
during the year from the post-pandemic low point. Both the Asset and Invoice
Finance divisions have continued to show further growth post year-end.
A lot of focus was placed on reorganising the business during the financial
year which was unsettling for our colleagues. A number of people went above
and beyond day-to-day expectations and we recognise the need to improve
communication and measure employee engagement more regularly, enabling timely
feedback and a process to deliver continuous improvements. This will be a key
priority for the new financial year ahead.
Culture, compliance and governance
Time Finance is a customer focused business priding ourselves on being
Genuine, Agile and acting with Integrity. To this end we have a strong focus
on:
· Being Easy to Deal With
· Doing Things Quickly
· Having a Commercial and Flexible approach to decision
making
· Doing the Right Thing for all our Stakeholders
The Group has high standards for compliance and governance for all its
activities, referenced to the principles and guidelines of the Financial
Conduct Authority and the codes of conduct of the relevant industry bodies.
All staff are required to act in accordance with our cultural values and
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
Each of our offices has a "culture champion" to ensure that the required
behaviours are evident on a day-to-day basis and this also provides a regular
flow of communication back to the Board, including any areas where corrective
action is required.
Outlook
SMEs are currently facing an unprecedented number of challenges, with
increasing costs of operating through spiralling inflation, interest rate
rises and geopolitical instability. Small businesses, however, will always
need access to finance in order to provide the necessary working capital to
operate and expand. With the changes made during the financial year,
particularly the restructuring of the senior management team and the focus on
developing our strategic plan, we are in a good position to take advantage of
the opportunities that the market will present.
Ed Rimmer
Chief Executive Officer - 22 September 2002
Group Strategic Priorities
For year ended 31 May
Time Finance continues to be an alternative provider of finance to the
high-street and challenger banks, serving SMEs predominantly with finance
requirements ranging from £5,000 to £2.5m. The Group primarily provides
Invoice Finance, Asset Finance and Loan Finance. It lends from its own balance
sheet or through brokering-on business that does not meet its lending
parameters, which would mainly be due to the size of a transaction, pricing or
credit quality.
From 2015, via acquisition, the business set about diversifying to a
multi-product group offering an increased product portfolio to an enlarged
target market and mitigating risk through a wider spread of lending. The Group
was rebranded in December 2020 with the launch of Time Finance. The new name
recognised two critical aspects of running a small business - Time and Money.
Positioning the Group as a credible partner to SMEs and helping them to
achieve their growth ambitions is a key part of the Group's strategy.
Strategic Objectives
The Group's change of CEO in the first half of 2021, and the subsequent easing
of lockdown restrictions on the back of the government's rapid vaccination
roll out, led to a new medium-term strategy being developed. This was launched
at the start of the financial year in June 2021. The key objectives over the 4
year period to 31 May 2025 are to:
· Double the Group's gross lending book organically to
approximately £250m
· Achieve revenue and PBTE levels in excess of the 2019
pre-Covid levels of over £30m and £8m respectively
This will be achieved through the following strategic initiatives:
· Focusing on core own-book lending products: Asset,
Invoice and Loan finance
· Predominantly focusing on secured lending with an
increasing average deal size
· Investing in key sales resources
· 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 a difficult year
given the market conditions. Summaries on each of the above initiatives are
set out below.
Focus on core own-book lending products
The previous strategy saw the Group expand into consumer finance brokerages as
well as business lending. These businesses operated in the second-hand vehicle
finance and residential mortgage markets. Both sectors were significantly
affected by the Covid-19 pandemic. They were also very reliant on the founding
directors, consumed a disproportionate amount of management time for the size
of the businesses and the future opportunities to scale them required
significant investment, as well as also being more heavily burdened by
regulation and by the very nature of being brokerages, were not building
balance sheets of value consistent with being an own-book lender. The decision
was therefore taken to exit these businesses. CarFinance2U was closed towards
the end of the financial year and it is expected that the Cardiff based,
consumer brokerage will be divested before the end of the calendar year.
Moving forwards, the Group has a clear market position, that of being an
alternative lender to small businesses, offering three core products: Asset,
Invoice and Loan finance. As the market continues to recover post the
government funding schemes, there should be good opportunities for alternative
finance providers to grow. With the Group's own lending book increasing, so
will the size of its balance sheet and with it the inherent value of the
business. During the year we increased our own-book, new business origination
to £64.4m, a 36% increase on the previous year. This trend is expected to
continue over the course of our medium-term plan.
Predominantly focus on secured lending with an increasing average deal size
Where appropriate the Group will seek to obtain tangible security to underpin
lending. This involves taking title to professionally valued fixed assets or
book debts, supported by registering debentures and/or property charges. At
the same time, the Group will increase the average ticket size of the 'hard'
asset business which reduced significantly during the pandemic when market
demand led to smaller assets (e.g. Delivery Vans) being funded. The one
exception to this, 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. The faster growth will therefore come from the Hard Asset and
Invoice Finance businesses and, over time, this should help reduce the
delinquent debt levels and increase efficiencies through dealing with a lower
number of enquiries from more established businesses.
Investment in key sales resources
In order to grow the business, the Group invested in a number of high-quality
salespeople during the financial year. Sharon Bryden joined the business in
August 2021 to lead the Loans division with part of her remit being to develop
a new Asset Based Lending product; good progress has been made and this will
be launched during the first half of the new financial year. A new head of
Asset Finance, Steve Nicholls, joined in January 2022. My thanks go to Carol
Roberts for so capably overseeing the division over the last 3 years during
such a challenging time. A new Head of Broker Sales for Hard Asset was
subsequently appointed in May 2022. We also recruited a new Southern Head of
Sales for Invoice Finance in August 2021, along with a number of additional
Business Development Managers to expand that business. The core products are
now set up to deliver the growth strategy.
Reposition the brand and investment in marketing
The rebrand to Time Finance at the end of 2020 provided the Group with an
excellent opportunity to reposition the business in line with our key
strategic aims. I am very pleased with the progress made during the last 12
months. The introducer market in particular has a better understanding of what
we are trying to deliver to market and the types of deals we want. Testimony
to this was Time Finance being ranked Number 1 in the Business Money
Intermediary Index, having previously not made it into the top 10. During the
year, Kate Brown was promoted to Head of Marketing, and this has significantly
contributed to the progress made. Moving forwards, we are increasing our
digital presence as well as continuing to focus on the more traditional
marketing channels, both to our introducers and directly to our clients and
customers.
Bring further liquidity into the Business as and when required
During the financial year, the liquidity position of the Group was healthy and
the board feels there are sufficient cash resources to deliver the short-term
objectives. As the growth plan starts to accelerate, however, we will likely
need to review the current funding strategy. Finding suitable long-term
liquidity at sensible pricing is therefore a focus over the course of the next
12-24 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
to help gauge the Group's meaningful progress are detailed below.
o Continuing Operations Revenue - £22.5m (prior year £22.5m)
o Continuing Operations Gross Profit margin- 64% (prior year 62%)
o Continuing Operations Profit Before Tax and Exceptional items - £3.1m
(prior year £3.1m)
o Continuing Operations Diluted Earnings Per Share - 1.38p (prior year
1.96p)
o Own-Book New Business Origination - £64.4m (prior year £47.2m)
o Core business own book vs broked-on ratios - 87/13 (prior year 84/16
o Funding interest rate - a blended rate of 4% (prior year 4%)
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 the performance, future
prospects or reputation of the Group. 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, 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 Operating Board 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 Group
credit exposures and a Head of Compliance who reviews all significant Group
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 still 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 £89.6m 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
With the significant government support packages no longer in place
post-Covid, and with the ever-increasing economic challenges facing small
businesses, access to finance will be a key priority for SMEs over the coming
months and years. This should present the Group with many opportunities,
whilst acknowledging the potential threats that also will undoubtedly come our
way through potential increased default and delinquent debt. SMEs will always
need access to finance to provide working capital and to grow their
businesses; having an independent, credible and flexible alternative to the
banks with conducive markets presents significant opportunity for the Group.
Ed Rimmer
Chief Executive Officer
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MAY 20212
Notes Continuing Operations Discontinued Operations Continuing Operations Discontinued Operations 2021
2022 2022 Total 2021 £'000 Total
£'000 £'000 2022 £'000 2021
£'000 £'000
Revenue 22,488 1,123 23,611 22,159 1,640 23,799
Other Income 8 22 7 29 321 104 425
Total Revenue 22,510 1,130 23,640 22,480 1,744 24,224
Cost of Sales (8,061) (587) (8,648) (8,557) (805) (9,362)
GROSS PROFIT 14,449 543 14,992 13,923 939 14,862
Administrative expenses (11,059) (712) (11,771) (10,531) (944) (11,475)
Exceptional Items 11 (1,685) (184) (1,869) (746) (97) (843)
Share-based payments 27 (43) - (43) (277) - (277)
OPERATING PROFIT 1,662 (353) 1,309 2,369 (102) 2,267
Finance costs 5 (255) - (255) (248) (2) (250)
Finance income 5 1 - 1 3 - 3
PROFIT BEFORE INCOME TAX 6 1,408 (353) 1,055 2,124 (104) 2,020
Adjusted earnings before tax, exceptional items and share-based payments 3,136 (169) 2,967 3,147 (7) 3,140
Exceptional items 11 (1,685) (184) (1,869) (746) (97) (843)
Share-based payments 27 (43) - (43) (277) - (277)
PROFIT BEFORE INCOME TAX 1,408 (353) 1,055 2,124 (104) 2,020
Income tax 7 (134) - (134) (245) 2 (243)
PROFIT FOR THE YEAR 1,274 (353) 921 1,879 (102) 1,777
Profit attributable to: Owners of the parent company 1,274 (353) 921 1,879 (102) 1,777
Earnings per share expressed in pence per share 10
Basic 1.38 (0.38) 1.00 2.10 (0.11) 1.98
Diluted 1.38 (0.38) 1.00 1.96 (0.11) 1.85
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 MAY 2022
2022 2021
£'000 £'000
ASSETS
NON-CURRENT ASSETS
Goodwill 27,263 28,241
Intangible assets 298 476
Property, plant and equipment 320 551
Right-of-use property, plant & equipment 30 224
Trade and other receivables 50,344 44,335
Deferred tax 1,036 806
79,291 74,633
CURRENT ASSETS
Trade and other receivables 70,852 55,073
Tax receivable - 113
Cash and cash equivalents 3,170 7,969
74,022 63,155
TOTAL ASSETS 153,313 137,788
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 9,252 9,252
Share premium 25,543 25,543
Employee shares 106 63
Treasury shares (820) (790)
Retained earnings 23,972 23,051
TOTAL EQUITY 58,053 57,119
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 39,033 33,749
Financial liabilities - borrowings 2,344 3,369
Lease Liability - 44
41,377 37,162
CURRENT LIABILITIES
Trade and other payables 51,956 41,692
Financial liabilities - borrowings 1,879 1,634
Tax payable 28 -
Lease Liability 20 181
53,883 43,507
TOTAL LIABILITIES 95,260 80,669
TOTAL EQUITY AND LIABILITIES 153,313 137,788
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2022
Called up Share Capital Retained Earnings Share Premium Treasury Employee Total Equity
Shares Shares
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 May 2020 8,899 21,274 25,360 (310) - 55,223
Total comprehensive income - 1,777 - - - 1,777
Transactions with owners
Purchase of treasury shares - - - (480) - (480)
Issue of share capital 353 - 183 - - 536
Value of employee services - - - - 63 63
Balance at 31 May 2021 9,252 23,051 25,543 (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
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MAY 2022
Notes Continuing Operations Discontinued Operations Continuing Operations Discontinued Operations 2021
2022 2022 Total 2021 £'000 Total
£'000 £'000 2022 £'000 2021
£'000 £'000
Cash generated from operations
Profit before tax 1,401 (346) 1,055 2,124 (104) 2,020
Depreciation & amortisation charges 571 40 611 718 36 754
Finance costs 236 - 236 163 2 165
Finance income (1) - (1) (3) - (3)
(Gain)/loss on disposal of property, plant & equipment 12 134 146 (6) 6 -
Decrease in inventory - - - - - -
Decrease in trade and other receivables (22,147) 359 (21,788) 6,723 64 6,787
(Decrease) in trade and other payables 15,632 (84) 15,548 (4,246) (2) (4,248)
Movement in other non-cash items 1,288 (46) 1,242 699 46 745
(3,008) 57 (2,951) 6,172 48 6,220
Cash flows from operating activities
Interest paid (236) - (236) (163) (2) (165)
Tax paid (430) - (430) (397) - (397)
Net cash from operating activities (3,674) 57 (3,617) 5,612 46 5,658
Cash flows from investing activities
Acquisition of subsidiaries - - - - -
Purchase of software, property, plant & equipment (149) (5) (154) (314) - (314)
Proceeds from sale of tangible fixed assets - - - - - -
Contingent consideration paid - - - (197) - (197)
Interest received 1 - 1 3 - 3
Net cash from investing activities (148) (5) (153) (508) - (508)
Cash flows from financing activities
Payment of lease liabilities (178) (21) (199) (190) (23) (213)
Loan repayments in year (731) - (731) (635) - (635)
Loans issued in year - - - 4,100 - 4,100
Changes in overdrafts (40) (9) (49) (845) (24) (869)
Equity dividends paid - - - - - -
Net cash from financing activities (949) (30) (979) 2,430 (47) 2,383
(Decrease)/increase in net cash and cash equivalents (4,771) 22 (4,749) 7,534 (1) 7,533
Net cash and cash equivalents at beginning of year 7,674 (9) 7,665 140 (8) 132
Net cash and cash equivalents at end of year 2,903 13 2,916 7,674 (9) 7,665
1. ACCOUNTING 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.
2. SEGMENTAL REPORTING
The Group provides a range of financial services and product offerings
throughout the UK. The Group has introduced reporting on a segmental basis as
this accurately reflects the four trading divisions, namely: Asset Finance,
Vehicle Finance, Loan Finance and Invoice Finance.
The operating segments also reflect its 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
types 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 costs and largely comprise; Marketing, Compliance,
IT and Human Resources costs.
Asset Vehicle Loan Invoice Other Total
For the year ended 31 May 2022 Finance Finance Finance Finance
£'000 £'000 £'000 £'000 £'000 £'000
CONTINUING OPERATIONS
Revenue 11,111 1,730 2,969 7,809 21 23,640
Cost of sales (5,201) (612) (1,567) (1,268) - (8,648)
GROSS PROFIT 5,910 1,118 1,402 6,541 21 14,992
Administrative expenses (3,639) (1,434) (924) (3,078) (2,696) (11,771)
Exceptional items (1,113) (195) - (76) (485) (1,869)
Share-based payments - - - (5) (38) (43)
OPERATING PROFIT 1,158 (511) 478 3,382 (3,198) 1,309
Finance costs (171) (14) (7) (3) (60) (255)
Finance income 1 - - - 1
PROFIT BEFORE INCOME TAX 988 (525) 471 3,379 (3,258) 1,055
Intra-group recharges (1,534) (238) (409) (1,077) 3,258 -
PROFIT BEFORE INCOME TAX (546) (763) 62 2,302 - 1,055
Adjusted earnings before interest, tax, exception items
and share-based payments 2,102 (331) 471 3,460 (2,735) 2,967
Exceptional items (1,114) (194) - (76) (485) (1,869)
Share-based payments - - 471 (5) (38) (43)
PROFIT BEFORE INCOME TAX 988 (525) 471 3,379 (3,258) 1,055
Asset Vehicle Loan Invoice Other Total
For the year ended 31 May 2021 Finance Finance Finance Finance
£'000 £'000 £'000 £'000 £'000 £'000
CONTINUING OPERATIONS
Revenue 12,822 2,582 2,223 6,488 109 24,224
Cost of sales (6,331) (829) (1,039) (1,163) - (9,362)
GROSS PROFIT 6,491 1,753 1,184 5,325 109 14,862
Administrative expenses (3,394) (1,922) (795) (2,590) (2,774) (11,475)
Exceptional items (44) (128) (8) (128) (535) (843)
Share-based payments - - (22) (43) (212) (277)
OPERATING PROFIT 3,053 (297) 359 2,564 (3,412) 2,267
Finance costs (124) (27) - (6) (93) (250)
Finance income 2 - - 1 3
PROFIT BEFORE INCOME TAX 2,931 (324) 359 2,559 (3,505) 2,020
Intra-group recharges (1,864) (375) (323) (943) 3,505 -
PROFIT BEFORE INCOME TAX 1,067 (699) 36 1,616 - 2,020
Adjusted earnings before interest, tax, exception items
and share-based payments 2,975 (196) 389 2,730 (2,758) 3,140
Exceptional items (44) (128) (8) (128) (535) (843)
Share-based payments - - (22) (43) (212) (277)
PROFIT BEFORE INCOME TAX 2,931 (324) 359 2,559 (3,505) 2,020
3. PROFIT BEFORE INCOME TAX
The profit before income tax is stated after charging:
2022 2021
£'000 £'000
Depreciation - owned assets 388 530
Amortisation - computer software 223 224
Net credit loss charge 930 1,733
Funding facility interest charges 2,515 2,777
Introducer commissions 3,014 2,881
Fees payable to the Company's auditor for audit of Company's subsidiaries 72 72
Fees payable to the Company's auditor for the audit of the Company 14 13
4. DIVIDENDS
2022 2021
£'000 £'000
Ordinary shares £0.10 each
Final - -
Interim - -
Total - -
The Directors do not propose a final dividend relating to this financial
period (2021: 0.0p per share). Future dividends will be kept under review.
5. 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.
2022
Earnings Weighted average number of shares Per-share amount
£'000 pence
Basic EPS
Earnings attributable to ordinary shareholders 921 92,512,704 1.00
Effect of dilutive securities
Share Options - - -
Diluted EPS
Adjusted earnings 921 92,512,704 1.00
2021
Earnings Weighted average number of shares Per-share amount
£'000 pence
Basic EPS
Earnings attributable to ordinary shareholders 1,777 89,481,386 1.98
Effect of dilutive securities
Contingent consideration 81 2,204,018 (0.13)
Diluted EPS
Adjusted earnings 1,696 91,685,404 1.85
6. 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 2022 and 31 May 2021.
The financial information has been extracted from the statutory accounts of
the Group for the years ended 31 May 2022 and 31 May 2021.
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 2021 have been delivered to
the Registrar of Companies. Those for the year ended 31 May 2022 will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting.
7. ANNUAL REPORT AND ANNUAL GENERAL MEETING
The Annual Report and Accounts will be available from the Company's website,
www.timefinance.com (http://www.timefinance.com) , from 22 September 2021.
Notice of the Annual General Meeting, which will be held at the Hilton
Manchester Deansgate, M3 4LQ on 31 October 2022 at 1pm, will be posted to
Shareholders.
1 (#_ftnref1) Profit Before Tax, Exceptional Items and Share-Based Payments
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR LBMFTMTATBJTRecent news on Time Finance
See all newsREG - Time Finance PLC - Launch of New Investor Hub
AnnouncementREG - Time Finance PLC - Notice of Q4 Trading Update and of Final Results
AnnouncementREG - Time Finance PLC - Q3 Trading Update
AnnouncementREG - Time Finance PLC - Notice of Investor Presentation
AnnouncementREG - Time Finance PLC - Director/PDMR Shareholding
Announcement