REG - Time Finance PLC - Final Results
25/09/2024 07:00
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RNS Number : 4939F Time Finance PLC 25 September 2024
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25 September 2024
Time Finance plc
("Time Finance", the "Group" or the "Company")
Final Results for the year ended 31 May 2024
Significant increases in Revenue, Profit Before Tax and Earnings Per Share
Own-Book origination and Lending continue to grow as Net Arrears fall
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
2024.
Commenting on the results, Tanya Raynes, Non-executive Chair, said:
"The Group's financial performance, over the third year of our four-year
strategy, was particularly strong. Despite wider macro-economic headwinds,
revenue, profit and earnings per share all saw double-digit growth, with
revenue and profit ahead of market expectations. At the same time, the Group's
Balance Sheet has continued to strengthen with the lending book and Net
Tangible Assets hitting record highs at 31 May 2024 and growing further still
through the current financial year. As a result, we remain confident in
achieving the targets we set in our 2021 strategic plan."
Financial Highlights:
• Revenue of £33.2m (FY2223: £27.6m), an increase of 20%
• Profit Before Tax ("PBT") of £5.9m (FY2223: £4.2m), an increase of 41%
· Earnings per share ("EPS") (fully diluted) of 4.8pps (FY2223: 3.7pps), an
increase of 30%
• Own-Book deal origination of £91.6m (FY2223: £73.4m), an increase of 25%
• Lending book of £201.2m at 31 May 2024 (31 May 2023: £170.1m), an
increase of 18%
• Consolidated Net Assets at 31 May 2024 of £66.1m (31 May 2023: £61.7m),
an increase of 7%
• Consolidated Net Tangible Assets at 31 May 2024 of £38.6m (31 May 2023:
£34.2m), an increase of 13%
• Future visibility of earnings with unearned income of £25.4m (31 May
2023: £21.2m), an increase of 20%
• Net deals in arrears at 31 May 2024 of 5% (31 May 2023: 6%), a reduction
of 1%
• Net Bad Debt Write-Offs equal to 1% of the average lending book (31 May
2023: 2%), a reduction of 1%
Operational Highlights:
• Ratio of own-book lending to broked-on lending improved to 97% vs 3%
during the year (96% vs 4% in the prior year)
· Strong lending growth within both the Invoice Finance division (up 16% to
£65m YoY) and in the Hard Asset offering within the Asset Finance division
(up 37% to £85m YoY)
• Supportive funding partners with available lending headroom at 31 May 2024
of over £65m
• Approved as an accredited lending partner under the UK Government's Growth
Guarantee Scheme
Ed Rimmer, Chief Executive Officer, added:
"Both from a financial and operational perspective I am very pleased with the
performance of the Group. Great strides forwards have been taken in both of
our core divisions - Asset Finance and Invoice Finance - which have seen
significant increases in their lending books while, crucially, adhering to
strong portfolio management and control. Our brand has continued to grow and
be enhanced within our key introducer base and the focus on recruiting
high-calibre staff has continued. The Group, therefore, remains very well
positioned and there is real optimism in our ability to continue to increase
shareholder value."
Outlook
The Board continues to expect the Group's trading for the current financial
year ending 31 May 2025 to be at least in line with market expectations.
Notice of Investor Presentation
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) .
For further information, please contact:
Time Finance plc
Ed Rimmer, Chief Executive Officer 01225 474230
James Roberts, Chief Financial Officer 01225 474230
Cavendish Capital Markets (NOMAD and Broker) 0207 220 0500
Ben Jeynes / Dan Hodkinson (Corporate Finance)
Michael Johnson / George Budd / Charlie Combe (Sales and ECM)
Walbrook PR 0207 933 8780
Nick Rome / Joe Walker Timefinance@walbrookpr.com
About Time Finance:
Time Finance's purpose is to help UK businesses thrive and survive through the
provision of flexible funding facilities. It offers a multi-product range for
SMEs concentrating on Asset, Loan and Invoice Finance. While focussed on being
an 'own-book' lender, the Group does retain the ability to broke-on deals
where appropriate, 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 2024
Performance and dividend
The macroeconomic and political headwinds continue to create an uncertain and
evolving environment for the UK and globally. Whilst there has been a slowing
of inflation in recent months, energy prices continue to be high, interest
rates remain at pre-2008 levels, and it has been another period shaped by the
cost-of-living challenges. It has also been a year of election campaigns so
far in 2024, including the call for a general election in the UK resulting in
a change to the party in power.
UK economic growth remains sluggish, compounded by supply chain issues across
the globe, which creates a particularly challenging environment for our
customers against the backdrop of rapidly increasing costs. We are focused on
how we can best provide flexible funding solutions to enable our customers to
thrive and survive through these times.
This financial year concluded the third full year of our four-year strategy,
and it is very pleasing to report Revenue of £33.2m (2023: £27.6m) with
Profit Before Tax of £5.9m (2023: £4.2m). Fully diluted Earnings Per Share
were 4.80p (2023: 3.73p). Our balance sheet was further strengthened during
the year with Net Tangible Assets rising to £38.6m (2023: £34.2m). At the
same time, net deal arrears remained broadly consistent in the 5% to 6% of
gross exposure range. This demonstrates the continued effectiveness of our
credit risk policy, which seeks to appropriately balance the needs of both our
customers and our business.
Our strong financial performance reflects the strategic decision to pursue
growth through aggressive own book lending targets. This is facilitated by
utilising our available cash resources to leverage our funding facilities to
maximum effect. Our lending objectives remain focused on the growth of
shareholder value rather than dividend distribution. Hence, we continue to
view cash resources as being best deployed to support lending growth rather
than being used for dividend payments. This will be kept under review.
Our strategy
Time Finance is recognised as an alternative finance provider offering highly
relevant and flexible business finance products for a diverse and expanding
base of UK SMEs. Our core products are primarily Asset Finance and Invoice
Finance.
Our Purpose is to "help UK businesses to thrive and survive" and it is at the
centre of everything we do, underpinning our aspiration to support the needs
and ambitions of UK businesses.
A revised four-year strategy was rolled out just over three years ago and it
has been another pleasing year of strong delivery against targets, both
financially and operationally. Work has commenced on the strategic planning
for the next cycle and we shall look forward to sharing this with our
stakeholders in due course.
I am delighted to confirm that renewed and extended funding facilities were
successfully secured during the financial year, and these will now support
ambitious growth into the medium term which provides a solid platform for our
next cycle of strategic planning
Our current strategy is built around the core objective of significantly
growing our secured own-book lending, and the momentum has continued with
own-book origination of £91.6m during the financial year (2023: £73.4m).
This focus is key as it produces a compounding pipeline of future income and
is hence significant in driving the underlying value of the Company.
In a world that presents such a complex and uncertain environment (political,
economic, technological, environmental), we are clear about remaining
completely focused on our strategic objectives that will enable us, quite
simply, to keep driving growth and value for our stakeholders.
As we develop and roll out our next three-year plan, you can expect this to
include objectives with respect to cost to income efficiencies, as this is
another significant lever in driving company value as we continue to
scale.
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 '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 utmost importance to us and our values
represent a cohesive and relevant statement of who we are and what we stand
for. This is important as these values 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
Our colleagues throughout the business comprise a highly skilled, resourceful,
driven, and committed team, whose efforts and achievements serve to mutually
benefit our customers and investors. On behalf of the Board, I wish to express
our sincere appreciation and admiration for their dedication and results.
Last year significant effort went into identifying and rolling out an
authentic set of values that truly define the organisation and its culture. I
am very pleased to be able to report that these values drive a culture within
Time that is central to sustainable growth and profitability. We conducted an
Employee Engagement Survey during this year and the results confirmed that
great progress has been made over the last couple of years in terms of Time
being a rewarding place to work and our colleagues feeling valued. The survey
highlighted that we could focus more on the development of our people and
there is a clear plan in place to harness this opportunity. An event was held
in the spring for all colleagues to enjoy a much deserved coming together for
a day of fun and celebration of their hard work and success over the year.
It is important to note that the team at Time Finance continue to demonstrate
such remarkable commitment to charity work and the wider community, and I
remain truly humbled at what is achieved by so many of our colleagues.
Tracy Watkinson and Paul Hird were welcomed to the Board as Non-Executive
Directors in September 2023 and they have brought a wealth of skills, insight
and valuable contribution in their roles to date. I look forward to continuing
to work with them during the year ahead.
I extend my thanks to Ed Rimmer, our CEO, and James Roberts, our CFO, for
their ongoing leadership and execution, ensuring delivery of our strategic
plan for the year.
Outlook
Amidst the turmoil of the external economic and political environment, our
financial results for the year to 31 May 2024 are above our initial
expectations and we head into this next financial year feeling confident that
the team will deliver another strong outcome.
The main pillars of focus remain unchanged. We look after our customers' needs
in a responsible and agile way, 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.
With the range of financial products and spread of lending across multiple
business sectors, we are confident Time Finance has no overweight dependence
on any specific business category. Our balance sheet continues to strengthen,
and we have recently secured enhanced funding facilities, providing access to
cash resources sufficient for our growth plans. Hence, we feel very positive
about the future performance of the business.
To conclude, I remain grateful to all of our stakeholders for their continued
support and look forward to another year of Time Finance playing a key role
within the vital community of UK SMEs.
Tanya Raynes
Chair - 25 September 2024
Chief Executive Officer's Report
For the year ended 31 May 2024
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-on 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
combines all these product offerings.
The trading period was the third year of our four-year strategic plan put in
place when I was appointed as CEO in June 2021. Good progress has continued
to be made which is reflected in our financial results. The changing market
conditions outlined in the Chair's Report have provided many challenges for
SMEs but also good opportunities for independent lenders such as Time Finance,
who provide the flexibility that can be needed due to the differing needs of
small businesses across a wide range of sectors. With a clear focus on
providing exceptional levels of service to our clients, customers and
introducers, we have been able to position the business as a leading player in
the "Tier 2", non-bank market.
The positive results achieved are due to the commitment and hard work shown by
all our colleagues across the business. We have carried out significant work
in embedding our cultural values outlined below, and these are all very much
apparent in the day-to-day workings of the business rather than simply being
words nicely displayed on office walls. The colleague engagement survey
conducted in November 2023 showed some very positive results, along with
useful feedback of where improvements could be made. As a result, we have
launched a training & development plan to invest in our people and it was
very rewarding to bring all our 150 or so colleagues together in May 2024 for
our Spring Conference. Fundamentally, we are a "people" business which SME
clients, customers and introducers continue to value highly.
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 for
both the Asset Finance and Loan product offerings. 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 given the
further increase in interest rates seen at the start of our trading period.
- underwriting is carried out by people as opposed to automated
systems for credit decisions. Although an essential element of the business'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 with total provisions carried
in the balance sheet at 31 May 2024 amounting to £4.7m, representing
approximately 3% of the net lending portfolio. A detailed internal review of
provisioning is undertaken on a quarterly basis, led by our Group Risk
Director 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 in 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 higher 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 2024 amounted to
£91.6m, 25% up on the £73.4m achieved the previous year. 97% of all
origination was funded on our own balance sheet with only 3% broked-on which
emphasises the delivery of one of our key strategic objectives.
Financial results
Revenue for the year to 31 May 2024 was £33.2m, an increase of £5.6m (20%)
year-on-year. Profit before tax was £5.9m, a significant increase on the
previous year (£4.2m). Total gross receivables stood at £201.2m, a record
level, compared with £170.1m on 31 May 2023, reflecting a 18% increase and a
key part of our strategy to grow own-book lending. Total active borrowing
facilities as at 31 May 2024 amounted to £196m (2023: £148m), of which
£130m was drawn (2023: £98m). Consolidated Net Tangible Assets stood at
£38.6m (2023: £34.2m), an increase of 13%. Net cash and cash equivalents
held at 31 May 2024 was £1.6m (2023: £3.8m), an expected reduction as our
lending book grows.
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 2024 saw further progress made with respect to our
four-year strategic plan. Our focus on secured, Business-to-Business lending
has continued with strong growth coming from both the Invoice Finance division
(lending up 16% on the previous year to £65m) and the "Hard Asset" offering
within the Asset Finance division (up 37% to £85m). Over the last three years
we have accelerated the transition from the business historically being a soft
asset, unsecured small ticket lender to a secured lender providing mainly Hard
Asset and Invoice Finance. At the start of the plan in June 2021, 49% of our
lending book related to these two products. This has increased to 75% by 31
May 2024. We also took the decision in January 2024 to exit the regulated
market for new deals; the amount of origination that fell into this side of
the business had continued to decline over the last three years to a level
where it was no longer viable given the increased amount of administration
required to operate in this market.
One of our key differentiators is our multi-product offering, and the newest
part of this, our Asset Based Lending ("ABL") proposition which launched in
April 2023, delivered positive results with a number of large transactions
completed. This offering is targeted at the smaller end of the 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.
The Invoice Finance division had a highly successful year, benefiting from
increasing interest rates. Record new business volumes were seen with a number
of larger facilities taken on, including a £3.5m facility in November 2023
for a temporary recruitment business, which represented the single largest
facility put in place. The Asset Finance division also had a successful year,
delivering record new business origination and increasing the average hard
asset deal size from £36,000 to £45,000, in line with our strategic plan.
There has also been an increase over the same timeframe in the single customer
exposure limit from £750,000 to £1,000,000.
Business Improvement remained a key focus during the year. As we continue to
expand, it is important we do so with a lower cost:income ratio, and hence
bring efficiencies into the business through the use of technology, process
improvements and changes in the way we do things which is key to enhancing the
customer journey. A number of benefits have been delivered over the last
twelve months in this regard including the launch of an electronic
identification and verification system to better combat fraud, online document
signing, and a number of upgrades to our core Asset Finance operating system.
At the end of the year, a new Head of Business Improvement was recruited who
has significant experience in this area and within our core markets, so
further progress will be made in this important aspect of the business over
the new financial year.
One of the highlights of the year was the fantastic range of charity events
our team delivered. More than £7,000 was raised for our chosen charity,
Tommys, which supports families who have lost babies though miscarriage, still
birth and premature birth. The commitment and enthusiasm of all colleagues
in supporting such causes is truly inspiring.
As mentioned in the Chair's Report, the composition of our board evolved
during the year with two new Non-Executive Directors appointed. We have a
highly effective board in place, and I am grateful for the support and
challenge they provide.
Culture, compliance and governance
Our purpose is "to help UK businesses thrive and survive" and we utilise our
cultural values to ensure effective delivery of this. These values were
launched in May 2023 and are as follows:
· 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
As mentioned above, we are very focused on demonstrating these values through
our day-to-day work and behaviours, so it was highly fitting to recognise a
number of examples with awards for "living our values" at our Spring
Conference in May.
Regardless of our decision to exit the writing of new regulated business, 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
SMEs continue to face a number of significant challenges, and this presents
both opportunities and threats to alternative lenders such as Time Finance.
Getting the balance right in how these are managed will significantly impact
our financial performance and future success. With the changes made over the
last three years to the business, including the people tasked with delivering
our strategy, and the work we are doing to deliver growth in a more efficient
way, I am confident we will continue to see the business deliver shareholder
value.
Ed Rimmer
Chief Executive Officer - 25 September 2024
Group Strategic Priorities
For year ended 31 May 2024
Time Finance is an independent alternative provider of finance to the
high-street and challenger banks, serving predominantly SMEs with finance
requirements ranging from £5,000 to £5,000,000. The Group provides Invoice
Finance and Asset Finance, Commercial Loans and an Asset Based Lending
solution that combines these product offerings. 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. Whilst in general there has been a
significant recovery from the pandemic, businesses have continued to face many
challenges over the last three years with high inflation, wage growth, supply
chain difficulties and increasing interest rates. SMEs however have proved
to be extremely resilient though this period, in part due to the support
provided by lenders such as Time Finance 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:
· Double the Group's gross lending book from £115m as at June 2021
· Achieve Revenue and PBTE levels in excess of the pre pandemic levels
of £30m and £7m respectively
This is 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 continued to be 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 value of the gross receivables increased during the year by 18% to
£201m. This was driven by a clear focus to expand Hard Asset Finance which
grew by 37% to £85m, and Invoice Finance which grew by 16% to £65m.
Combined, these two offerings now make up £150m (75%) of our lending book; a
significant increase from the comparative 49% at the start of the plan in June
2021. 97% of all new business origination was placed onto our own book with
the 3% balance broked-on to other lenders. The Asset Based Lending ("ABL")
proposition launched in April 2023 delivered some larger facilities that we
otherwise would not have won without our multi product offering. This is
aimed at businesses who need to raise finance against a wider range of assets,
including debtors, plant & machinery, property and stock and has been well
received in the market.
Predominantly focus on secured lending with an increasing average deal size
In the vast 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 since the start of our plan 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 £36,000 in
FY 2022/23 to £45,000 in FY 2023/24 which represents a doubling from the
£22,000 in June 2021 at the start of our strategic plan. The maximum limit to
any one customer within the Hard Asset division also increased from £750,000
to £1,000,000. In addition, we took the decision to exit the regulated
business market which mainly included smaller, soft asset deals. There had
been a gradual reduction in this business over the last three years and the
move away from this sector was consistent with our strategic plan. The one
exception to the increasing average deal size is the 'soft' asset subdivision
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. This area targets lends up to £15,000 with an auto-decline system
implemented to improve efficiencies and is badged as our "Fastrack" product
offering. The overall financial contribution in relation to the risk and
workload attached to operating in this market continues to be attractive with
regular analysis conducted to ensure this remains the case. 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
The Group has invested in a number of key recruits since the start of our
current strategy in June 2021. We appointed a new HR Manager in August 2023
who has been instrumental in moving forwards our increased focus on training
& development as a result of the feedback obtained from our engagement
survey undertaken in November 2023. At the end of the trading period, we also
appointed a new Head of Business Improvement, focusing on improving
efficiencies and the customer experience with the overall objective of growing
the business in conjunction with reducing the cost:income ratio.
Reposition the brand and investment in marketing
Further progress was made during the year to position the Time Finance brand
at the forefront of our target markets. Key to this are the introducer
partners we work with having a clear understanding of our market offerings and
where we can add value. We therefore operate a targeted PR strategy designed
to promote client case studies, testimonials and our core business news to the
commercial finance world with the aim of increasing our profile, the
understanding of what we do and ultimately the amount of business we write. We
continue to invest in our in-house marketing team, combined with external PR
and digital agency partnerships, to further strengthen the Time Finance brand
within the commercial finance market.
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. Two
independent funding reviews were undertaken during the year to assess the
market, benchmark our facilities and provide recommendations of where
improvements could be made. The findings confirmed that our current funding
structure is optimized for a business of our size to deliver the current
strategy. As further growth is achieved, we will continue to review the market
to ensure long-term liquidity is in place at sensible pricing.
Key performance indicators
The Board and the Executive Committee 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 - £33m (prior year £27m)
· Continuing Operations Gross Profit margin - 58% (prior year 59%)
· Continuing Operations Profit Before Tax- £5.9m (prior year £4.1m)
· Continuing Operations Diluted Earnings Per Share - 4.80p (prior year
3.63p)
· Own-Book New Business Origination - £91.6m (prior year £73.4m)
· Core business own book vs broked-on ratios - 97:3 (prior year 96:4)
Refreshed Strategy
As we enter the final year of our current four-year plan, the process to
formulate a refreshed strategic plan started towards the end of the trading
period. Further work will be done to agree and finalise this as we travel
through the new financial year, in order to communicate this to our
stakeholders. The underlying theme of the next cycle will though still be
focused on growing the business in order to maximize value to our
shareholders.
Principal risks and uncertainties
'Principal risks' are defined as a risk or a combination of risks that, given
the Group's current position, could potentially materially affect the business
model, reputation, 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 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 Executive Committee and Senior Management Team which manage 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 Senior
Compliance Manager who ensures 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 with ample headroom to meet its growth targets for the medium
future. As detailed elsewhere, 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
Senior Compliance Manager with oversight from the Group CFO and further
support from external advisors. The compliance 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. Whilst the decision was taken during the
trading period to move away from writing new regulated business, there is
still a relatively small proportion of the book that is regulated business
which requires the Group to retain suitable permissions from the FCA and
adhere to their required standards.
Summary
The business remains on track to deliver the strategic objectives set out in
our four-year plan and the transition from being a provider of small, soft
asset finance to a leading independent provider of Hard Asset and Invoice
Finance. Whilst SMEs continue to face significant challenges, access to
finance is more important than ever in order for them to function and grow.
This will continue to provide good opportunities for Time Finance. We are now
well positioned to take advantage of these and continue the successful journey
the business has been on for the last three years.
Ed Rimmer
Chief Executive Officer - 25 September 2024
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MAY 2024
Continuing Operations Discontinued Operations Continuing Operations Discontinued Operations 2023
2024 2024 Total 2023 £'000 Total
£'000 £'000 2024 £'000 2023
£'000 £'000
Revenue 33,180 - 33,180 26,968 602 27,570
Other Income 50 - 50 - - -
Total Revenue 33,230 - 33,230 26,968 602 27,570
Cost of Sales (14,000) - (14,000) (11,172) (227) (11,399)
GROSS PROFIT 19,230 - 19,230 15,796 375 16,171
Administrative expenses (13,185) - (13,185) (11,371) (277) (11,648)
Exceptional Items - - - (70) (10) (80)
Share-based payments (61) - (61) (125) - (125)
OPERATING PROFIT 5,984 - 5,984 4,230 88 4,318
Finance costs (145) - (145) (152) - (152)
Finance income 96 - 96 1 - 1
PROFIT BEFORE INCOME TAX 5,935 - 5,935 4,079 88 4,167
Adjusted earnings before tax, exceptional items and share-based payments 5,996 - 5,996 4,274 98 4,372
Exceptional items - - - (70) (10) (80)
Share-based payments (61) - (61) (125) - (125)
PROFIT BEFORE INCOME TAX 5,935 - 5,935 4,079 88 4,167
Income tax (1,491) - (1,491) (720) - (720)
PROFIT FOR THE YEAR 4,444 - 4,444 3,359 88 3,447
Profit attributable to: Owners of the parent company 4,444 - 4,444 3,359 88 3,447
Earnings per share expressed in pence per share
Basic 4.80 - 4.80 3.63 0.10 3.73
Diluted 4.80 - 4.80 3.63 0.10 3.73
PROFIT FOR THE YEAR 4,444 - 4,444 3,359 88 3,447
OTHER COMPREHENSIVE INCOME - - - - - -
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 4,444 - 4,444 3,359 88 3,447
Total comprehensive income attributable to: Owners of the parent company 4,444 - 4,444 3,359 88 3,447
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 MAY 2024
ASSETS 2024 2023
NON-CURRENT ASSETS £'000 £'000
Goodwill 27,263 27,263
Intangible assets 226 231
Property, plant and equipment 286 238
Right-of-use property, plant and equipment 552 573
Trade and other receivables 70,015 58,530
Deferred tax 1,418 1,236
99,760 88,071
CURRENT ASSETS
Trade and other receivables 108,389 91,847
Cash and cash equivalents 1,590 3,772
109,979 95,619
TOTAL ASSETS 209,739 183,690
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 9,252 9,252
Share premium 25,543 25,543
Employee shares 292 231
Treasury shares (815) (770)
Retained earnings 31,863 27,419
66,135 61,675
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 62,973 52,822
Financial liabilities - borrowings 294 1,319
Lease liability 363 428
63,630 54,569
CURRENT LIABILITIES
Trade and other payables 78,303 65,207
Financial liabilities - borrowings 1,025 1,625
Tax payable 288 423
Provisions 173 -
Lease liability 185 191
79,974 67,446
TOTAL LIABILITIES 143,604 122,015
TOTAL EQUITY AND LIABILITIES 209,739 183,690
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2024
Called up share capital Retained Earnings Share Premium Treasury Shares Employee Shares Total Equity
£'000 £'000 £'000 £'000 £'000 £'000
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
Total comprehensive income - 4,444 - - - 4,444
Transactions with owners
Sale of treasury shares - - - (45) - (45)
Value of employee services - - - - 61 61
Balance at 31 May 2024 9,252 31,863 25,543 (815) 292 66,135
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MAY 2024
Continuing Operations Discontinued Operations Continuing Operations Discontinued Operations
2024 2024 Total 2023 2023 Total
£'000 £'000 2024 £'000 £'000 2023
£'000 £'000
Cash generated from operations
Profit before tax 5,935 - 5,935 4,079 88 4,167
Depreciation & amortisation charges 434 - 434 422 1 423
Finance costs 145 - 145 152 - 152
Finance income (96) - (96) (1) - (1)
Loss on disposal of property, plant and equipment 2 - 2 17 - 17
(Increase)/decrease in trade and other receivables (28,027) - (28,027) (29,201) 20 (29,181)
Increase/(decrease) in trade and other payables 23,247 - 23,247 27,056 (16) 27,040
Movement in other non-cash items 38 - 38 944 (435) 509
1,678 - 1,678 3,468 (342) 3,126
Cash flows from operating activities
Interest paid
(145) - (145) (152) - (152)
Tax paid (1,703) - (1,703) (541) - (541)
Net cash from operating activities (170) - (170) 2,775 (342) 2,433
Cash flows from investing activities
Purchase of software, property, plant & equipment (250) - (250) (129) - (129)
Interest received 96 - 96 1 - 1
Net cash from investing activities (154) - (154) (128) - (128)
Cash flows from financing activities
Payment of lease liabilities (233) - (233) (170) - (170)
Loan repayments in year (1,625) - (1,625) (1,025) - (1,025)
Changes in overdrafts - - - (254) - (254)
Net cash from financing activities (1,858) - (1,858) (1,449) - (1,449)
(Decrease)/increase in net cash and cash equivalents (2,182) - (2,182) 1,198 (342) 856
Net cash and cash equivalents at beginning of year
3,772 - 3,772 2,574 342 2,916
Net cash and cash equivalents at end of year
1,590 - 1,590 3,772 - 3,772
ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with UK-adopted
International Financial Reporting Standards ("IFRS") 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 and has 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. Asset Based Lending is included within the Invoice
Finance segment for the same reason.
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 2024 Asset Invoice Finance Other £'000 TOTAL £'000
Finance £'000 £'000
Revenue 18,783 14,339 108 33,230
Cost of sales (10,456) (3,387) (157) (14,000)
GROSS PROFIT 8,327 10,952 (49) 19,230
Administrative expenses (5,935) (5,466) (1,784) (13,185)
Share-based payments (12) (5) (44) (61)
OPERATING PROFIT 2,380 5,481 (1,877) 5,984
Finance costs (31) (22) (92) (145)
Finance income 1 95 - 96
PROFIT BEFORE INCOME TAX 2,350 5,554 (1,969) 5,935
Intra-group recharges (1,051) (918) 1,969 -
PROFIT BEFORE INCOME TAX 1,299 4,636 - 5,935
Adjusted earnings before interest, tax, 2,362 5,559 (1,925) 5,996
exceptional items and share-based payments
Share-based payments (12) (5) (44) (61)
PROFIT BEFORE INCOME TAX 2,350 5,554 (1,969) 5,935
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 (1,537) 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
2. PROFIT BEFORE INCOME TAX
The profit before income tax is stated after charging:
2024 2023
£'000 £'000
Depreciation - owned assets 298 289
Amortisation - computer software 136 134
Net credit loss charge 2,194 2,437
Funding facility interest charges 7,490 4,547
Introducer commissions 3,416 2,868
Fees payable to the Company's auditor for audit of Company's subsidiaries 71 68
Fees payable to the Company's auditor for the audit of the Company 19 16
3. DIVIDENDS
2024 2023
£'000 £'000
Ordinary shares £0.10 each
Final - -
Interim - -
Total - -
The Directors do not propose a final dividend relating to this financial
period (2023: 0.0p per share). Future dividends will be kept under review with
the next review expected at the time of the Interim results.
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.
2024
Earnings Weighted average number of shares Per-share amount
£'000 pence
Basic EPS
Earnings attributable to ordinary shareholders 4,444 92,512,704 4.80
Diluted EPS
Adjusted earnings 4,444 92,512,704 4.80
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
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 2024 and 31 May 2023.
The financial information has been extracted from the statutory accounts of
the Group for the years ended 31 May 2024 and 31 May 2023. 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 2023 have been delivered to the
Registrar of Companies. Those for the year ended 31 May 2024 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 25 September 2024.
Notice of the Annual General Meeting, which will be held at the Hilton
Manchester Deansgate, 303 Deansgate, Manchester M3 4LQ on 5 November 2024 at
10.30am will be communicated electronically or posted to Shareholders.
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