REG - Time Finance PLC - Final Results
26/09/2023 07:00
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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 £27.6m (2022: £23.6m), an increase of 17%
• Profit Before Tax ("PBT") of £4.2m (2022: £1.1m), an increase of 281%
· Earnings per share ("EPS") (fully diluted) of 3.7pps (2022: 1.0pps)
• Own-Book deal origination of £73.4m (2022: £64.4m), an increase of 14%
• Lending book of £170.1m at 31 May 2023 (2022: £136.8m), an increase of
24%
• Consolidated Net Assets at 31 May 2023 of £61.7m (2022: £58.1m), an
increase of 15%
• Consolidated Net Tangible Assets at 31 May 2023 of £34.2m (2022:
£30.5m), an increase of 12%
• Future visibility of earnings with unearned income of £21.2m (2022:
£16.7m), 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 £56m) and in the "Hard Asset" offering within the Asset
Finance division (up 55% to £62m)
• Business streamlining completed with divestment of non-core, consumer
mortgage brokerage
• Supportive funding partners with unused lending headroom of approximately
£50m
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
(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
Cavendish Securities plc (NOMAD and Broker) 0207 220 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
(http://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 £27.6m (2022: £23.6m) with
Profit Before Tax of £4.2m (2022: £1.1m). 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 £34.2m (2022: £30.5m). 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 £73.4m during the financial year (2022:
£64.4m). 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 £4.2m, 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
£73.4m, 14% up on the £64.4m 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 £27.6m, an increase of £4.0m (17%)
year-on-year. Profit before tax was £4.2m, a significant increase on the
previous year (£1.1m). Total gross receivables stood at £170.1m, a record
level, compared with £136.8m 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 £148m (2022: £148m), of which £98m was drawn (2022:
£78m). Consolidated Net Tangible Assets stood at £34.2m (2022: £30.5m), an
increase of 12%. Net cash and cash equivalents held at 31 May 2023 was £3.8m
(2022: £2.9m).
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 £56m) and the "Hard Asset" offering within the Asset
Finance division (up 55% to £62m). 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 £2m
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 £22k to
£36k between May 2022 and May 2023. There has also been an increase over the
same timeframe in the single customer exposure limit from £500k to £750k.
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 £5,000 to £2.5m. 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 £115m as at
June 2021
· Achieve revenue and PBTE levels in excess of £30m and £7m
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 £170m 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 £22k in
FY21/22 to £36k in FY22/23 and during Q4 this increased further to £40k. The
maximum limit to any one customer within the Hard Asset division also
increased from £500k to £750k. In addition, we took the decision to exit the
unsecured loans market where most of the business was sub £25k 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 £15k 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 - £27.0m (prior year £22.5m)
· Continuing Operations Gross Profit margin - 59% (prior year 64%)
· Continuing Operations Profit Before Tax- £4.1m (prior year £1.4m)
· Continuing Operations Diluted Earnings Per Share - 3.63p (prior year
1.38p)
· Own-Book New Business Origination - £73.4m (prior year £64.4m)
· 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 £148m 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 YEAR ENDED 31 MAY 2023
Continuing Operations Discontinued Operations Continuing Operations Discontinued Operations 2022
2023 2023 Total 2022 £'000 Total
£'000 £'000 2023 £'000 2022
£'000 £'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 YEAR ENDED 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
£'000 £'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 YEAR ENDED 31 MAY 2023
Called up Share Capital Retained Earnings Share Premium Treasury Employee Total Equity
Shares Shares
£'000 £'000 £'000 £'000 £'000 £'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 YEAR ENDED 31 MAY 2023
Continuing Operations Discontinued Operations Continuing Operations Discontinued Operations 2022
2023 2023 Total 2022 £'000 Total
£'000 £'000 2023 £'000 2022
£'000 £'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
3,468 (342) 3,126 (3,008) 57 (2,951)
Cash flows from 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
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.
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 2023 Asset Invoice Finance Other £'000 TOTAL £'000
Finance £'000 £'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, 2,068 3,841 (1,534) 4,372
exceptional items and share-based payments
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 2022 (restated) Asset Invoice Finance Other £'000 TOTAL £'000
Finance £'000 £'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, 2,242 3,460 (2,735) 2,967
exceptional items and share-based payments
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
£'000 £'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. DIVIDENDS
2023 2022
£'000 £'000
Ordinary shares £0.10 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
Earnings Weighted average number of shares Per-share amount
£'000 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
Earnings Weighted average number of shares Per-share amount
£'000 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 (http://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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