TIDMTIME
RNS Number : 0987M
Time Finance PLC
19 January 2021
19 January 2021
Time Finance plc
(the "Group" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHSED 30 NOVEMBER 2020
Positive trading momentum continues; Balance Sheet further
strengthened
Time Finance plc (formerly '1pm plc'), the AIM listed
independent specialist finance provider, is pleased to announce its
unaudited interim results for the six-month period ended 30
November 2020 ("Results" or "Interims").
The Results reflect increasing demand for finance,
month-on-month, from UK SMEs and consumers as the Group continues
to deal with the impact of the Covid-19 pandemic. The Group's
balance sheet and lending book have both remained robust,
demonstrating their resilience and reflecting the Group's prudent
underwriting policies. These policies are kept under regular review
given the uncertainty that currently exists in the wider
macro-economic environment. The Group's ability to continue to
generate profits during the period highlights the strength of its
multi-product offering of Asset Finance, Vehicle Finance, Loans and
Invoice Finance. The flexibility afforded by the Group's 'hybrid'
business model enables the Group to act as both a funder and a
broker in order to maintain both margins and manage credit risk
throughout the economic cycle.
Operational Highlights:
-- Completion of group-wide rebrand to Time Finance plc to
consolidate and strengthen the Group's offering under a single
nationally recognized, market-facing name
-- Accreditation from the British Business Bank to provide
Coronavirus Business Interruption Loan Scheme ("CBILS") loans to UK
SMEs
-- Continued focus on diversification and spread of risk, with
largest sector exposure accounting for less than 4% and top ten
sectors less than 24% of the total lending book
-- Agility to switch provision of finance to buoyant sectors during the Covid-19 pandemic
-- "Employer of the Year 2020" Business Leader award winner and
included in the London Stock Exchange plc's 2020 "1000 Companies to
Inspire Britain" report
Financial Highlights
-- Own Book origination up to GBP29.6m from GBP23.9m in H2 2019/20 (H1 2019/20: GBP30.6m)
-- Broked-on origination down to GBP27.0m from GBP35.2m in H2
2019/20 (H1 2019/20: GBP57.3m), due to the impact on trading
activity of the pandemic
-- Group revenue of GBP11.9m (H2 2019/20: GBP13.7m; H1 2019/20: GBP15.6m)
-- Group operating profit before tax of GBP1.4m, up from a
GBP1.0m loss in H2 2019/20 due to Covid-19, (H1 2019/20: GBP3.0m
profit)
-- Fully diluted earnings per share of 1.20 pence (full year 2019/20: 1.74 pence per share)
-- Blended cost of borrowings maintained at approximately 4% (year to 31 May 2020: 4%)
-- Good visibility of future revenue with "unearned income" as
at 30 November 2020 of GBP16.5m (31 May 2020: GBP15.2m)
-- Net 'own-book' lending portfolio increased to GBP105.6m as at
30 November 2020 (31 May 2020: GBP98.2m)
-- Funding facilities of GBP170m available as at 30 November
2020 with headroom of GBP97m to leverage own cash generation for
future organic growth (31 May 2020: GBP174m with headroom of
GBP108m)
-- Credit risk provisions maintained at GBP5.1m or approximately 5% of the net lending book
-- Deal value in forbearance significantly reduced to GBP2.6m (31 May 2020: GBP24.9m)
-- Deal arrears reduced by GBP6.1m as at 30 November 2020 from 31 May 2020 levels
-- Net Assets increased to GBP56.6m as at 30 November 2020 (31 May 2020: GBP55.2m)
-- Net Tangible Assets increased to GBP27.8m as at 30 November 2020 (31 May 2020: GBP26.5m)
Commenting on the Interim Results, John Newman, Non-Executive
Chairman, said:
" Given the impact of the Covid-19 pandemic on our business
sector and the wider UK economy it is pleasing not only to have
seen a steady and maintained improvement in trading during the
six-month period to 30 November 2020, but also to report results
that were ahead of our internal budget expectations for the period.
The Group's strategy of being a multi-product provider of finance
to UK SMEs and consumers, spread across multiple business sectors,
with the ability to act as both a funder and a broker, provides the
Group with the resilience to withstand the challenges of difficult
business environments. The Group has a strong balance sheet and
liquidity and is well-positioned to deliver future growth and
shareholder value as the economy recovers from the effects of the
pandemic.
The Board has reassessed its dividend policy taking account of
the potential impact of the latest national lockdown restrictions
and also the uncertainty in business conditions and has taken the
prudent decision to continue with the deferment of dividend
payments until the outcome for the financial year ending 31 May
2021 is known."
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
Ian Smith, Chief Executive Officer 01225 474 230
James Roberts, Chief Financial Officer 01225 474 230
Cenkos (NOMAD)
Max Hartley / Ben Jeynes (NOMAD) 0207 397 8900
Julian Morse (Sales)
Walbrook PR 0207 933 8780
Paul Vann 07768 807631
About Time Finance:
Time Finance's strategy is to focus on providing or arranging
the finance UK SMEs require to fund their businesses and arranging
vehicle and property-backed finance for consumers. The
multi-product range for SMEs includes asset, vehicle, loan and
invoice finance facilities. The Group 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
CHIEF EXECUTIVE OFFICER'S STATEMENT
FOR THE SIX-MONTH PERIODED 30 NOVEMBER 2020
Introduction
Time Finance plc (formerly '1pm plc') is a multi-product
speciality finance business providing funding for UK SMEs as a
lender and arranging funding for both UK SMEs and consumers as a
broker.
The Group comprises four operating divisions, namely Asset
Finance (predominantly own-book lending with the ability to
broke-on), Loan Finance (own-book lending, such as CBILS, and
broking of property finance), Invoice Finance (own-book lending
only) and Vehicle Finance (broking only).
Lending proposals are originated through a range of channels,
sourced from national and regional finance brokers, other
intermediaries such as professional firms, equipment vendors,
suppliers and dealers, and direct from borrowers, both via field
sales personnel and online.
Time Finance advances funds to borrowers using a mix of its own
cash and operational debt facilities provided by a range of
wholesale funding providers.
Financial Results
The impact on trading activity of the Covid-19 pandemic was felt
most sharply in the fourth quarter of the previous financial year,
which ended on 31 May 2020. Since then, the Group has seen a steady
month-on-month increase in trading activity, yielding financial
results ahead of management's internal budget expectations for the
period. It is therefore pleasing to report satisfactory interim
financial results for the six-month period to 30 November 2020,
which show a marked profit improvement compared with the prior
six-month period.
In the six-month period to 30 November, deal origination
amounted to GBP56.6m compared with GBP59.1m in the previous six
months to 31 May 2020. Within this total, however, there was a
notable change in mix, with own-book origination of GBP29.6m (52%)
compared with GBP23.9m (40%) in the previous six months. This
reflects two key factors; firstly, the agility of the Group to be
able to pivot its lending into sectors trading buoyantly during the
pandemic, such as national and local delivery businesses, equipment
for local convenience stores and local retailers, and personal
protective equipment manufacturers; and, secondly, the ongoing
support of the Group's wholesale funding providers, all of whom
have either maintained or increased their funding facilities as the
Group has stood by its commitment to continue to lend to
credit-worthy SMEs during this period. Whilst it is a crucial
risk-mitigating factor in the Group's operating model to be able to
broker business on to other lenders, a growing own-book portfolio
underpins the Group's future income generation and profits. It is
therefore important to note that the gross own-book lending
portfolio as at 30 November 2020 was GBP122.1m compared with
GBP113.4m at 31 May 2020 and it is continuing to grow. Included in
this figure is unearned interest income, i.e. future revenue, of
GBP16.5m which compares with GBP15.2m as at 30 May 2020.
The Results show revenue for the period of GBP11.9m compared
with GBP13.7m in the prior six months, the reduction being due to
the impact of Covid-19, primarily in relation to broking
activities. In the Results, approximately 85% of revenues is
interest income and related income from lending activities and 15%
from broking activities.
The Group's profit before tax for the six-month period was
GBP1.4m compared with a loss of GBP1.0m in the prior six-month
period. The prior period included a one-off provision for potential
future impairments, which took the credit risk provision to GBP5.1m
as at 31 May 2020. This provision has been maintained at GBP5.1m,
demonstrating that the Group has seen neither a significant
increase in credit risk write-offs in the six-months to 30 November
2020, nor the need to make additional significant provisions in the
period. Furthermore, in relation to performance of the lending
portfolio, it is pleasing to report a significant reduction in both
the value of the portfolio in arrears and the value of deals where
some form of repayment forbearance had been granted. This is not
only testament to the Group's collection processes and the
outstanding efforts of collections personnel in working with
borrowers through this challenging period, but also to the quality
of the lending decision-making policies adopted by the Group's
credit and risk function.
The Group's risk-mitigated operating model, continued level of
deal origination, sound credit decision-making, lending portfolio
management and support from external funders have all combined to
further strengthen the Group's balance sheet and to generate an
increase in Net Assets to GBP56.6m and Net Tangible Assets to
GBP27.8m as at 30 November 2020, compared with GBP55.2m and
GBP26.5m as at 31 May 2020, respectively.
Earnings per share for the six-month period to 30 November 2020
were 1.20 pence, compared with 1.74 pence for the full year ended
31 May 2020.
Market guidance and dividend
The Board has reassessed the reinstatement of market guidance in
the light of trading momentum in the first half of the current
financial year, the potential impact of the current further
national lockdown restrictions, and the prospects for a return to
more normal economic activity later in the calendar year. The Board
has concluded that due to these prevailing uncertainties and their
potential duration, it is not possible to quantify their impact on
the Company's financial performance in the second half of the
financial year. Consequently, guidance on expectations for the
Company's financial performance for the year ending 31 May 2021 and
the year ending 31 May 2022 continues to be withdrawn.
In addition, the Board has reassessed its dividend policy in the
light of the same uncertainties and has decided to continue to
postpone further dividend payments until the outcome for the
financial year ending 31 May 2021 and prospects for the year ending
31 May 2022 can be assessed with greater certainty.
Strategy and Outlook
The Group remains committed to providing a comprehensive range
of finance solutions to support the UK SME sector and UK consumers
whilst aiming to deliver profitable growth to increase shareholder
value. Given the unpredictable trading conditions that have
prevailed since the initial impact of the Covid-19 pandemic, the
Board is pleased with the financial results and progress made
during the first half of the current financial year. The management
of the Group through the impact on its business activities of the
Covid-19 pandemic has proven to be highly effective, attesting to
the Group's operational resilience, balance sheet strength,
liquidity and relevant market positioning. The Board is optimistic
of further organic growth and a return to strategic growth when
economic conditions allow.
Ian Smith
Chief Executive Officer, Time Finance plc
TIME FINANCE PLC (FORMERLY 1PM PLC)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS TO 30 NOVEMBER
2020
Unaudited Unaudited Audited
6 months to 6 months 12 months
30 November to 30 November to
2020 2019 31 May
GBP'000 GBP'000 2020
GBP'000
Note
Revenue 11,698 15,570 29,062
Other income 165 - 182
-------------- ----------------- ------------
TOTAL REVENUE 11,863 15,570 29,244
Cost of sales (4,315) (5,537) (13,319)
-------------- ----------------- ------------
GROSS PROFIT 7,548 10,033 15,925
Administrative expenses (5,794) (6,794) (12,793)
Exceptional items (224) (122) (909)
Share-based payments - (51) (31)
-------------- ----------------- ------------
OPERATING PROFIT 1,530 3,066 2,192
Finance income 0 2 9
Finance expense (179) (58) (181)
-------------- ----------------- ------------
PROFIT BEFORE INCOME TAX 1,351 3,010 2,020
Adjusted earnings before interest,
tax, exceptional items and
share-based payments 1,575 3,183 2,960
Exceptional items (224) (122) (909)
Share-based payments - (51) (31)
-------------- ----------------- ------------
PROFIT BEFORE INCOME TAX 1,351 3,010 2,020
-------------------------------------------------- ------- -------------- ----------------- ------------
Income Tax (257) (572) (465)
-------------- ----------------- ------------
PROFIT AND TOTAL COMPREHENSIVE
INCOME FOR THE YEAR 1,094 2,438 1,555
============== ================= ============
Attributable to:
Owners of the parent company 1,094 2,438 1,555
============== ================= ============
Pence per Pence per Pence per
share share share
- basic 6 1.21 2.76 1.76
============== ================= ============
- diluted 6 1.20 2.70 1.74
============== ================= ============
All of the above amounts are in respect of continuing
operations.
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
FOR THE SIX MONTHS TO 30 NOVEMBER 2020
Unaudited Audited
6 months to 12 months
30 November to
2020 31 May
2020
GBP'000 GBP'000
NON-CURRENT ASSETS
Goodwill 28,241 28,241
Intangible assets 507 526
Property, plant and equipment 570 767
Right-of-use property, plant & equipment 338 428
Trade and other receivables 49,397 46,157
Deferred tax 953 944
------------- -----------
80,006 77,063
------------- -----------
CURRENT ASSETS
Trade and other receivables 57,182 60,038
Cash and cash equivalents 3,085 1,304
Tax receivable - 185
60,267 61,527
------------- -----------
TOTAL ASSETS 140,273 138,590
============= ===========
EQUITY
Called up share capital 9,037 8,899
Share premium 25,543 25,360
Treasury Shares (390) (310)
Retained earnings 22,368 21,274
------------- -----------
TOTAL EQUITY 56,558 55,223
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 24,657 28,639
Lease liability 151 238
------------- -----------
24,808 28,877
------------- -----------
CURRENT LIABILITIES
Trade and other payables 54,202 51,052
Interest bearing loans and borrowings 3,900 1,235
Overdrafts 443 1,172
Tax payable 176 287
Provisions - 546
Lease liability 186 198
------------- -----------
58,907 54,490
------------- -----------
TOTAL LIABILITIES 83,715 83,367
------------- -----------
TOTAL EQUITY AND LIABILITIES 140,273 138,590
============= ===========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS TO 30 NOVEMBER 2020
Unaudited Unaudited
6 months 6 months
to to
30 November 30 November
2020 2019
GBP'000 GBP'000
Cash generated from operations
Profit before tax 1,351 3,010
Depreciation and amortisation charges 380 364
Finance costs 179 58
Finance income - (2)
Decrease/(Increase) in trade and
other receivables (384) (5,748)
(Decrease)/Increase in trade and
other payables (833) 4,711
Movement in other non-cash items 933 15
------------- -------------
1,626 2,408
Cash flows from operating activities
Interest paid (179) (58)
Tax paid (368) (913)
------------- -------------
Net cash generated from operating
activities 1,079 1,437
------------- -------------
Cash flows from investing activities
Interest received - 2
Contingent consideration paid (197) (367)
Purchase of software, property, plant
& equipment (119) (261)
------------- -------------
Net cash generated from investing
activities (316) (626)
------------- -------------
Cash flows from financing activities
Payment of lease liabilities (109) -
Loan repayments in period (435) (621)
Loans issued in period 3,100 348
Change in overdrafts (729) (48)
Purchase of own shares in EBT (80) -
Net cash generated from financing
activities 1,747 (321)
------------- -------------
(Decrease)/Increase in cash and cash
equivalents 2,510 490
Cash and cash equivalents at the
beginning of the period 132 331
------------- -------------
Cash and cash equivalents at the
end of the period 2,642 821
============= =============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS TO 30 NOVEMBER 2020
Share Share Retained Treasury Employee Total
Capital Premium Earnings Shares Shares Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
======== ======== ========= ========= ========= ========
Share Share Retained Treasury Employee Total
Capital Premium Earnings Shares Shares Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 May
2019 8,760 25,134 19,888 (300) 298 53,780
Total comprehensive
income - - 2,438 - - 2,438
Transactions with
owners
Dividends
- - (498) - - (498)
Issue of share
capital 139 226 - - - 365
Balance at 30
November
2019 8,899 25,360 21,828 (300) 298 56,085
======== ======== ========= ========= ========= ========
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 2019 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 2020. 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
2019 and the six-month period to 30 November 2020 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
Covid-19 has continued to have a significant impact on the business.
However, due to the nature of the Group's trading, the Directors
do not have any concerns over the key assumptions concerning the
future and do not consider there to be any key sources of estimation
uncertainty. The Group has ample headroom in its funding facilities
and as such, the Directors are confident that the Group will continue
to operate as a going concern.
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.
GBP'000 Asset Vehicle Loan Invoice Finance TOTAL
Revenue 6,254 1,360 941 3,308 11,863
Profit before
Tax 580 (216) 34 953 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 2020 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.
On 10 June 2020, the Company issued 1,388,888 Ordinary GBP0.10
shares at GBP0.2320 per share, being the final deferred consideration
due to the vendors of Positive Cashflow (Holdings) Limited, as
part of the Share Purchase Agreement entered into on 29 June 2017.
6 EARNINGS PER ORDINARY SHARE
The earnings per ordinary share has 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 6 months 12 months
to to to
30 Nov 31 May
30 Nov 2020 2019 2020
GBP'000 GBP'000 GBP'000
Earnings attributable to ordinary
shareholders 1,094 2,438 1,555
Basic EPS
Weighted average number of shares 90,374,204 88,264,309 88,627,630
Per-share amount pence 1.21 2.76 1.76
Diluted EPS
Weighted average number of shares 90,739,365 90,375,095 89,343,232
Per-share amount pence 1.20 2.70 1.74
7 DIVIDENDS
6 months 6 months 12 months
to to to
30 Nov 31 May
30 Nov 2020 2019 2020
GBP'000 GBP'000 GBP'000
Ordinary shares of GBP0.10 each
Final - 498 498
Interim - - -
-------------------------------------- --------------- ----------- ----------
Total - 498 498
Due to the ongoing impact of Covid-19, any recommendation in respect
of a final dividend for the financial year ended 31 May 2020 has
been deferred. No dividends were therefore paid during the period.
GBP498,317 was paid by the company on 12 December 2019 being 0.56
pence per share for the financial year ending 31 May 2019.
8 SHARE-BASED PAYMENT TRANSACTIONS
In October 2020, the Group established an Unapproved Share Option
Scheme to replace the Long-Term Incentive Plan ("LTIP") which expired
on 7 June 2020. Under the new scheme, 4,290,000 share options may
be awarded to directors and senior employees. The vesting of these
options is subject to service-based and market-based conditions with
30% awarded to each recipient in three equal annual tranches on 1
October 2021, 1 October 2022 and 1 October 2023, and 70% awarded
to each recipient based on the quoted share price of the Company
reaching 31 pence per share.
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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