TIDMTIME

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 MONTHSED 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 GBP58.1m (H1 2020/21: GBP56.6m). 
   --      Revenue* up 1% to GBP11.8m (H1 2020/21: GBP11.7m) 
   --      Gross profit* up 3% to GBP7.6m (H1 2020/21: GBP7.4m) 
   --      Profit before tax* up 1% to GBP1.2m (H1 2020/21: GBP1.2m) 
   --      Blended cost of borrowings maintained at approximately 4% (year to 31 May 2021: 4%) 

-- Gross lending portfolio increased to GBP120.5m as at 30 November 2021 (31 May 2021: GBP115.7m)

   --      Net Assets increased to GBP58.2m as at 30 November 2021 (31 May 2021: GBP57.1m) 
   --      Net Tangible Assets increased to GBP29.6m as at 30 November 2021 (31 May 2021: GBP28.4m) 

-- 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: GBP0.8m) 

* Excluding furlough Other Income of GBP0.165m in H1 2020/21.

Operational Highlights:

-- Accreditation from the British Business Bank to provide the Recovery Loan Scheme ("RLS") to SMEs

-- GBP50m 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 GBP9.6m 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

CHIEF EXECUTIVE OFFICER'S STATEMENT

FOR THE SIX-MONTH PERIODED 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 GBP58.1m, the highest level since the start of the pandemic and an increase of more than 24% when compared to GBP46.7m in the preceding six-month period to 31 May 2021. This increase has resulted in the Group's gross lending book growing to GBP120.5m as at 30 November 2021 compared to GBP115.7m 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 GBP0.2m in the six-month period to 31 May 2021 and a further GBP0.2m 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:

 
 GBP'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 GBP3.8m 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 GBP0.8m as at 31 May 21, GBP2.2m as at 30 November 2020 and a pandemic-high of GBP20.5m 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 GBP58.2m and in Net Tangible Assets to GBP29.6m as at 30 November 2021. This compares with GBP57.1m and GBP28.4m 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 
                                                                6 months to           6 months     12 months 
                                                                30 November     to 30 November            to 
                                                                       2021               2020        31 May 
                                                                    GBP'000            GBP'000          2021 
                                                                                                     GBP'000 
                                                     Note 
 
   Revenue                                                           11,774             11,698        23,799 
 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 
 
   Income Tax                                                         (228)              (257)         (243) 
                                                             --------------  -----------------  ------------ 
 
 PROFIT AND TOTAL COMPREHENSIVE 
  INCOME FOR THE YEAR                                                   973              1,094         1,777 
                                                             ==============  =================  ============ 
 
 Attributable to: 
  Owners of the parent company                                          973              1,094         1,777 
                                                             ==============  =================  ============ 
 
                                                                  Pence per          Pence per     Pence per 
                                                                      share              share         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 
                                               6 months to    12 months 
                                               30 November           to 
                                                      2021       31 May 
                                                                   2021 
                                                   GBP'000      GBP'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       6 months 
                                                         to             to 
                                                30 November    30 November 
                                                       2021           2020 
                                                    GBP'000        GBP'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) 
                                              -------------  ------------- 
 
   Net cash generated from operating 
   activities                                       (1,828)          1,079 
                                              -------------  ------------- 
 
 Cash flows from investing activities 
 Contingent consideration paid                            -          (197) 
 Purchase of software, property, plant 
  & equipment                                          (45)          (119) 
                                              -------------  ------------- 
 
   Net cash generated from investing 
   activities                                          (45)          (316) 
                                              -------------  ------------- 
 
 
  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) 
 
   Net cash generated from financing 
   activities                                         (308)          1,747 
                                              -------------  ------------- 
 
 
  (Decrease)/Increase in cash and cash 
  equivalents                                       (2,181)          2,510 
 
 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           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 
    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           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 
                     ================      ==========      ===========      ===========       =========      ========== 
 
   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 GBP'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 GBP'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     6 months    12 months 
                                                 to           to           to 
                                                          30 Nov       31 May 
                                        30 Nov 2021         2020         2021 
                                            GBP'000      GBP'000      GBP'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    DIVIDS 

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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