RNS Number : 0987M

Time Finance PLC

19 January 2021

19 January 2021

Time Finance plc

(the "Group" or the "Company")


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




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

                                                                  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 
 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) 
                                                             --------------  -----------------  ------------ 
  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 
                                                 Unaudited      Audited 
                                               6 months to    12 months 
                                               30 November           to 
                                                      2020       31 May 
                                                   GBP'000      GBP'000 
 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 
                                             -------------  ----------- 
 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 
                                             =============  =========== 
 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 
 Trade and other payables                           24,657       28,639 
 Lease liability                                       151          238 
                                             -------------  ----------- 
                                                    24,808       28,877 
                                             -------------  ----------- 
 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 
                                             =============  =========== 
                                                 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 
                                             =============  ============= 
                              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 
     Purchase of treasury 
                                  -          -           -        (80)           -       (80) 
                                  -          -           -           -           -          - 
      Issue of share 
      capital                   138        183           -           -           -        321 
     Balance at 30 
      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 
                                  -          -       (498)           -           -      (498) 
      Issue of share 
      capital                   139        226           -           -           -        365 
     Balance at 30 
      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 
                                              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. 
     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. 
     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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