REG - Time Finance PLC - Interim Results
20/01/2022 07:05
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RNS Number : 0247Z Time Finance PLC 20 January 2022
20 January 2022
Time Finance plc
(the "Group" or the "Company")
HALF YEAR RESULTS FOR SIX MONTHS ENDED 30 NOVEMBER 2021
Time Finance plc, the AIM listed independent specialist finance provider,
today announces its unaudited interim results for the six-months ended 30
November 2021 ("Results" or "Interims").
Financial Highlights:
· Origination up 3% to £58.1m (H1 2020/21: £56.6m).
· Revenue* up 1% to £11.8m (H1 2020/21: £11.7m)
· Gross profit* up 3% to £7.6m (H1 2020/21: £7.4m)
· Profit before tax* up 1% to £1.2m (H1 2020/21: £1.2m)
· Blended cost of borrowings maintained at approximately 4% (year
to 31 May 2021: 4%)
· Gross lending portfolio increased to £120.5m as at 30 November
2021 (31 May 2021: £115.7m)
· Net Assets increased to £58.2m as at 30 November 2021 (31 May
2021: £57.1m)
· Net Tangible Assets increased to £29.6m as at 30 November 2021
(31 May 2021: £28.4m)
· Net deals in arrears as at 30 November 2021 reduced by 26%
representing 9% of the gross lending book (31 May 2021: 12%)
· Nil net deals in forbearance as at 30 November 2021 (31 May 2021:
£0.8m)
* Excluding furlough Other Income of £0.165m in H1 2020/21.
Operational Highlights:
· Accreditation from the British Business Bank to provide the
Recovery Loan Scheme ("RLS") to SMEs
· £50m Invoice Finance three-year funding facility agreed with the
Group's corporate bankers
· Investment made in sales resource across Asset, Invoice Finance
and Commercial Loans
· Lending portfolio performance better than pre-pandemic levels and
continues to improve
· UK SMEs have remained resilient during pandemic with borrowers
missing payments reducing
· Strong cash position with £9.6m of cash, cash equivalents and
convertible 'paper' at period end, leaving the business well placed to
capitalise on future opportunities
Commenting on the Interim Results, Tanya Raynes, Non-Executive Chairman, said:
"Given the continued impact of the Covid-19 pandemic on our business sector
and the wider UK economy, it is pleasing that momentum is again building in
our core product offerings and that our loan book is also growing. This gives
us confidence in our strategy for the medium-term. The balance sheet continues
to demonstrate its resilience and it is particularly encouraging to see deals
in arrears at their lowest level since late 2018. Lending to smaller SMEs will
always mean there are deals in arrears. This is to be expected, and risk is
priced into our model, however we are delighted to see the levels both lower
than anticipated and continuing to fall. The Board continue to assess the
impact of the current wave of the pandemic but remain confident the
fundamentals of the business are secure, that the Group remains well placed to
capture the opportunities ahead of us, and that the medium-term strategy will
deliver significant growth."
This announcement contains inside information for the purposes of article 7 of
Regulation (EU) No 596/2014.
For further information, please contact:
Time Finance plc
Ed Rimmer, Chief Executive Officer
01225 474230
James Roberts, Chief Financial Officer
01225 474230
Cenkos (NOMAD)
Ben Jeynes / Mac Gould (NOMAD)
0207 3978900
Julian Morse (Sales)
Walbrook PR
0207 9338780
Paul Vann / Nicholas Johnson
07768
807631
paul.vann@walbrookpr.com
About Time Finance:
Time Finance's core strategy is to focus on providing or arranging the finance
UK SMEs require to fund their businesses. It offers a multi-product range for
SMEs including asset, vehicle, loan and invoice 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)
CHIEF EXECUTIVE OFFICER'S STATEMENT
FOR THE SIX-MONTH PERIOD ENDED 30 NOVEMBER 2021
Introduction
Time Finance plc is a multi-product speciality finance provider to UK SMEs. It
is primarily a lender for the working capital requirements of UK businesses
but can also act as a broker in arranging funding where appropriate.
The Group comprises three core own-book divisions - Asset Finance, Loan
Finance and Invoice Finance - as well as a Broking division which primarily
arranges vehicle and property finance for consumers. Lending proposals are
originated through a variety of channels, sourced from national and regional
finance brokers, other intermediaries such as professional firms, equipment
vendors, suppliers and dealers, and direct from borrowers. This is both via
field sales personnel and also direct online. Funds are advanced to borrowers
using a mix of the Group's own reserves and operational debt facilities
provided by a range of wholesale funding partners.
Financial Results
The various waves of the Covid-19 pandemic mean its effects on trading
activity is still being felt and normal business has yet to be fully resumed.
The impact of the pandemic continues to fall primarily on the Group's non-core
brokerage arms and particularly in the vehicles arena exacerbated by the
well-publicised delays in sourcing vehicles. Despite the dampening effect of
the brokerages, the Group has delivered a solid interim set of financial
results.
Deal origination is a key performance indicator for the Group. Pleasingly, in
the six-month period to 30 November, deal origination amounted to £58.1m, the
highest level since the start of the pandemic and an increase of more than 24%
when compared to £46.7m in the preceding six-month period to 31 May 2021.
This increase has resulted in the Group's gross lending book growing to
£120.5m as at 30 November 2021 compared to £115.7m at 31 May 2021. An
increasing own-book lending portfolio underpins the Group's future income
generation and, in turn, profitability. Crucially, the Group's own-book
lending portfolio has continued to grow since the half-year period end.
When reviewing the Profit and Loss account, it is important to note that the
prior half-year comparatives and the full year to 31 May 2021 include
significant 'other income' from government grants in the form of the
Coronavirus Job Retention Scheme which the Group no longer has access to.
These historical grants equated to £0.2m in the six-month period to 31 May
2021 and a further £0.2m in the six-month period to 30 November 2020. As
such, the true comparison in performance is to compare the results without
this pandemic 'other income' stream as detailed in the table below:
£'m 6m to 30/11/21 6m to 31/05/21 6m to 30/11/20
Revenue 11.8 12.1 11.7
Gross Profit 7.6 7.0 7.4
Profit before Tax 1.2 0.4 1.2
It is therefore encouraging to see that both Gross Profit and Profit Before
Tax have grown significantly from the preceding six-month period despite the
ongoing dampening effect of the slow recovery of the Group's non-core
brokerage arms. This demonstrates the strength of the core own-book lending
businesses.
With regards to the Group's Balance Sheet, the lending portfolio itself is
another key performance indicator. It is extremely pleasing to report a
continuing reduction in the value of portfolio arrears. As at 30 November
2021, net arrears were down a further £3.8m from year end, equating to 9% of
the period end gross lending book (31 May 2021: 12%; 30 November 2020: 14%).
It is also encouraging to report that at the period end there were no longer
any deals in forbearance resulting from the impact of the pandemic. This
compares to £0.8m as at 31 May 21, £2.2m as at 30 November 2020 and a
pandemic-high of £20.5m as at 31 May 2020.
The Group's increasing level of deal origination, lending portfolio management
and continued support from external funders have all combined to further
strengthen the Group's balance sheet and to generate an increase in Net Assets
to £58.2m and in Net Tangible Assets to £29.6m as at 30 November 2021. This
compares with £57.1m and £28.4m as at 31 May 2021 and 30 November 2020
respectively.
Strategy and Outlook
The Group remains committed to its medium-term strategy which it firmly
believes will lead to increased shareholder value over time. The focus on our
key initiatives - core product own-book lending, investing in key sales
resources to grow the business and maximising our multi-product offering -
continues apace.
Given the continued, somewhat unpredictable waves of the pandemic and their
impact on trading conditions the Board is satisfied with the financial results
and pleased with the operational progress made during the first half of the
current financial year with the overall strategic plan set out at the start of
the current financial year being broadly on track. The Group has continually
shown its operational resilience, balance sheet strength and liquidity
throughout the pandemic and the Board remains optimistic of a return to
significant organic growth in due course whilst remaining vigilant and
cautious as to the potential impact that further economic uncertainty or
additional government restrictions could have on the Group.
Ed Rimmer
Chief Executive Officer, Time Finance plc
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS TO 30 NOVEMBER 2021
Unaudited Unaudited Audited 12 months to
6 months to 6 months to 30 November 2020 31 May 2021
30 November £'000 £'000
2021
£'000
Note
11,774 11,698 23,799
Revenue
Other income 8 165 425
TOTAL REVENUE 11,782 11,863 24,224
Cost of sales (4,196) (4,315) (9,362)
GROSS PROFIT 7,586 7,548 14,862
Administrative expenses (6,210) (5,794) (11,475)
Exceptional items (47) (224) (843)
Share-based payments (33) - (277)
OPERATING PROFIT 1,296 1,530 2,267
Finance income - - 3
Finance expense (95) (179) (250)
PROFIT BEFORE INCOME TAX 1,201 1,351 2,020
(228) (257) (243)
Income Tax
PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR 973 1,094 1,777
Attributable to: 973 1,094 1,777
Owners of the parent company
Pence per share Pence per share Pence per share
- basic 6 1.07 1.21 1.98
- diluted 6 0.99 1.20 1.85
All of the above amounts are in respect of continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE SIX MONTHS TO 30 NOVEMBER 2021
Unaudited Audited 12 months to
6 months to 31 May
30 November 2021
2021
£'000 £'000
NON-CURRENT ASSETS
Goodwill 28,241 28,241
Intangible assets 358 476
Property, plant and equipment 839 551
Right-of-use property, plant & equipment 137 224
Trade and other receivables 43,012 44,335
Deferred tax 884 806
73,471 74,633
CURRENT ASSETS
Trade and other receivables 62,492 55,073
Cash and cash equivalents 5,905 7,969
Tax receivable 160 113
68,557 63,155
TOTAL ASSETS 142,028 137,788
EQUITY
Called up share capital 9,252 9,252
Share premium 25,543 25,543
Employee Shares 96 63
Treasury Shares (749) (790)
Retained earnings 24,024 23,051
TOTAL EQUITY 58,166 57,119
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 33,320 33,749
Financial liabilities - borrowings 2,877 3,369
Lease liability 3 44
36,200 37,162
CURRENT LIABILITIES
Trade and other payables 45,615 41,692
Financial liabilities - borrowings 1,500 1,331
Overdrafts 421 303
Lease liability 126 181
47,662 43,507
TOTAL LIABILITIES 83,862 80,669
TOTAL EQUITY AND LIABILITIES 142,028 137,788
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS TO 30 NOVEMBER 2021
Unaudited Unaudited
6 months to 6 months to
30 November 30 November
2021 2020
£'000 £'000
Cash generated from operations
Profit before tax 1,201 1,351
Depreciation and amortisation charges 203 380
Finance costs 95 179
Finance income - -
(Increase)/Decrease in trade and other receivables (6,095) (384)
Increase/(Decrease) in trade and other payables 3,495 (833)
Movement in other non-cash items (374) 933
(1,475) 1,626
Cash flows from operating activities
Interest paid (95) (179)
Tax paid (258) (368)
(1,828) 1,079
Net cash generated from operating activities
Cash flows from investing activities
Contingent consideration paid - (197)
Purchase of software, property, plant & equipment (45) (119)
(45) (316)
Net cash generated from investing activities
Cash flows from financing activities
Payment of lease liabilities (103) (109)
Loan repayments in period (323) (435)
Loans issued in period - 3,100
Change in overdrafts 118 779
Purchase of own shares in EBT - (80)
(308) 1,747
Net cash generated from financing activities
(2,181) 2,510
(Decrease)/Increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period 7,665 132
Cash and cash equivalents at the end of the period 5,484 2,642
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS TO 30 NOVEMBER 2021
Share Capital Share Retained Treasury Employee Shares Total Equity
Premium Earnings Shares
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 May 2021 9,252 25,543 23,051 (790) 63 57,119
Total comprehensive income - - 973 - - 973
Transactions with owners
Sale of treasury shares - - - 41 - 41
Dividends - - - - - -
Issue of share capital - - - - - -
Value of employee services - - - - 33 33
Balance at 30 November 2021 9,252 25,543 24,024 (749) 96 58,166
Share Capital Share Retained Treasury Employee Shares Total Equity
Premium Earnings Shares
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 May 2020 8,899 25,360 21,274 (310) - 55,223
Total comprehensive income - - 1,094 - - 1,094
Transactions with owners
Purchase of treasury shares - - - (80) - (80)
Dividends - - - - - -
Issue of share capital 138 183 - - - 321
Balance at 30 November 2020 9,037 25,543 22,368 (390) - 56,558
1 BASIS OF
PREPARATION
The financial information set out in the interim report does not constitute
statutory accounts as defined in section 434(3) and 435(3) of the Companies
Act 2006. The Group's statutory financial statements for the year ended 31
May 2021 prepared in accordance with IFRS as adopted by the European Union and
with the Companies Act 2006 have been filed with the Registrar of Companies.
The auditor's report on those financial statements was unqualified and did not
contain a statement under Section 498(2) of the Companies Act 2006. These
interim financial statements have been prepared under the historical cost
convention.
These interim financial statements have been prepared in accordance with the
accounting policies set out in the most recently available public information,
which are based on the recognition and measurement principles of IFRS in issue
as adopted by the European Union (EU) and are effective at 31 May 2021. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34 'Interim Financial Reporting', as adopted by the European Union.
The financial information for the six months ended 30 November 2020 and the
six-month period to 30 November 2021 are unaudited and do not constitute the
Group's statutory financial statements for these periods. The accounting
policies have been applied consistently throughout the Group for the purposes
of preparation of these interim financial statements.
Going Concern
While the Covid-19 pandemic continues to have an impact on the business, the
directors are satisfied that the Group has sufficient resources to continue in
operation for the foreseeable future, a period of not less than 12 months from
the date of this report. Accordingly, they continue to adopt the going concern
basis in preparing the condensed financial statements.
2 SEGMENTAL REPORTING
The Group has four trading divisions which reflect its organisational and
management structures, and these are differentiated by the type of finance
products provided. Asset, Loans and Invoice Finance represent the core
products. Other represents central overheads related to being listed and
running a group of Companies. The Group reports internally on these segments
in order to assess performance and allocate resources.
6 months to 30 November 2021
£'000 Asset Loans Invoice Finance Brokerage Other TOTAL
Revenue 5,520 964 3,772 1,526 - 11,782
Profit before Tax 934 244 1,767 (122) (1,622) 1,201
6 months to 30 November 2020
£'000 Asset Loans Invoice Finance Brokerage Other TOTAL
Revenue 6,254 640 3,308 1,651 10 11,863
Profit before Tax 1,463 60 1,374 (75) (1,471) 1,351
6 months to 30 November 2020
£'000 Asset Loans Invoice Finance Brokerage Other TOTAL
Revenue 6,254 640 3,308 1,651 10 11,863
Profit before Tax 1,463 60 1,374 (75) (1,471) 1,351
3 BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries). Control
is achieved where the Company has the power to govern the financial and
operating policies of an entity so as to obtain benefit from its activities.
All intra-Group transactions, balances, income and expenses are eliminated on
consolidation.
4
TAXATION
Taxation charged for the period ended 30 November 2021 is calculated by
applying the Directors' best estimate of the annual tax rate to the result for
the period.
5 SHARE
CAPITAL
The Articles of Association of the company state that there is an unlimited
authorised share capital.
Each share carries the entitlement to one
vote.
6 EARNINGS PER ORDINARY SHARE
The earnings per ordinary share have been calculated using the profit for the
period and the weighted number of ordinary shares in issue during the period.
For diluted earnings per share, the weighted average number of shares is
adjusted to assume conversion of all dilutive potential ordinary shares.
6 months to 6 months to 12 months to
30 Nov 2021 30 Nov 2020 31 May 2021
£'000 £'000 £'000
Earnings attributable to ordinary shareholders 973 1,094 1,777
Basic EPS
Weighted average number of shares 90,806,852 90,374,204 89,481,386
Per-share amount pence 1.07 1.21 1.98
Adjusted earnings 912 1,094 1,696
Diluted EPS
Weighted average number of shares 91,621,519 90,739,365 91,685,404
Per-share amount pence 0.99 1.20 1.85
7 DIVIDENDS
Dividends were not paid during the pandemic due to cash preservation in an
uncertain time. At the current time, under the strategy published in June
2020, cash reserves are being deployed for business growth. Future dividends
will be kept under review.
8 SHARE-BASED PAYMENT TRANSACTIONS
On 1 October 2021, the Group announced that following the achievement of
time-based criteria in relation to the Company's Unapproved Share Option
Scheme, a total of 305,500 previously awarded nil cost options over ordinary
shares of 10 pence each in the capital of the Company vested. These vested
options may be exercised at any time prior to an expiry date of 30 September
2022 being 12 months from the vesting date.
The terms of the scheme were previously announced by the Group on 29 October
2020.
9 COPIES OF THE INTERIM
REPORT
Copies of the Interim Report are available from www.timefinance.com and the
Company Secretary at the registered office: Time Finance plc, St James House,
The Square, Lower Bristol Road, Bath, BA2 3BH.
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