TIDMTIME
RNS Number : 2149A
Time Finance PLC
22 September 2022
22 September 2022
Time Finance plc
("Time Finance", the "Group" or the "Company")
Final Results for the year ended 31 May 2022
Strategic plan gaining traction;
Own-Book origination and lending portfolio both up
significantly;
Net arrears reduced; Balance Sheet further strengthened
Time Finance plc (AIM: TIME), the AIM listed independent
specialist finance provider, announces its final results for the
year ended 31 May 2022.
Commenting on the results, Tanya Raynes, Non-executive Chair,
said:
" Very pleasing progress has been made against the Group's
medium-term strategic plan that was launched in June 2021 and I am
very positive about the delivery of strong and sustained results
over the next few years. During the year the Group's balance sheet
strengthened further with Net Tangible Assets rising to GBP30.5m at
the year-end. At the same time, net deal arrears fell by
approximately 35% over the course of the financial year,
demonstrating the effectiveness of our credit risk policy, which
seeks to appropriately balance the needs of both our customers and
our business."
Financial Highlights:
-- Revenue of GBP23.6m (2021: GBP24.2m), a decrease of 2%. Level
in respect of continuing operations
-- Adjusted PBTE [1] of GBP3.0m (2021: GBP3.1m), a decrease of
3%. Level in respect of continuing operations
-- Own-Book deal origination of GBP64.4m (2021: GBP47.2m), an
increase of 36%
-- Lending book of GBP136.8m at 31 May 2022 (2021: GBP115.7m),
an increase of 18%
-- Consolidated Net Assets at 31 May 2022 of GBP58.1m (2021:
GBP57.1m), an increase of 2%
-- Consolidated Net Tangible Assets at 31 May 2021 of GBP30.5m
(2021: GBP28.4m), an increase of 7%
-- Future visibility of earnings with unearned income of
GBP16.7m (2021: GBP14.9m), an increase of 12%
-- Blended cost of borrowings maintained at approximately 4%
(2021: 4%)
-- Net deals in arrears at 31 May 2021 of GBP9.3m (31 May 2021:
GBP14.2m), a decrease of 35%
-- Nil deals in forbearance at 31 May 2021 (31 May 2021:
GBP0.8m)
Operational Highlights:
-- Proposition and structure simplified with divestment of
non-core, consumer vehicle brokerage
-- Supportive funding partners with unused lending headroom in
excess of GBP70m at year-end
-- Senior management team restructured and strengthened with the
appointments of a Director of Asset and a Director of Loans
-- Investment in sales with enlarged team of Business
Development Managers for the Invoice Finance and Hard Asset
divisions
-- Ongoing government-backed accreditation from The British
Business Bank to provide Recovery Loan Scheme ("RLS") to UK
SMEs
Ed Rimmer, Chief Executive Officer, added:
" The financial year to May 2022 was the first in our four-year,
medium-term strategic plan, and the results are satisfactory.
Despite the significant macroeconomic challenges, when the
discontinued operations are removed, PBTE is on a par with the
prior year at GBP3.1m. It is particularly pleasing to see the
significant progress made during the period against the plan. The
Group is now well positioned to take advantage of the opportunities
that the market will present, and moves into the new financial year
with increased momentum and optimism"
The Board continues to expect the Group's trading for the full
year to be in line with market expectations.
The Company will deliver a live presentation relating to these
results and the simultaneously released Q1 2022/23 trading update
via the Investor Meet Company platform at 12.00pm BST today.
Existing and potential shareholders can sign up to Investor Meet
Company for free and add to meet Time Finance plc via:
https://www.investormeetcompany.com/time-finance-plc/registerinvestor
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 (as amended), which forms
part of domestic UK law pursuant to the European Union (Withdrawal)
Act 2018. Upon publication of this announcement via a Regulatory
Information Service, this inside information is now considered to
be in the public domain.
For further information,
please contact:
Time Finance plc
Ed Rimmer, Chief Executive
Officer 01225 474230
James Roberts, Chief Financial
Officer 01225 474230
Cenkos Securities plc (NOMAD)
Ben Jeynes / Max Gould (C
orporate Finance )
Julian Morse (Sales) 0207 397 8900
Walbrook PR 0207 933 8780
Paul Vann / Joe Walker 07768 807631
timefinance@walbrookpr.com
About Time Finance:
Time Finance's core strategy is to focus on providing the
finance UK SMEs require to fund their businesses. It offers a
multi-product range for SMEs including asset, loan, invoice and
vehicle 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 .
Chair's Report
For the year ended 31 May 2022
Performance and dividend
Whilst Covid-19 restrictions were largely lifted during this
financial year, we continued to experience the effects of the
pandemic, especially in terms of consumer confidence, supply chain
delays and government funding support to businesses. This was
alongside other significant emerging macroeconomic factors: the
cost-of-living crisis, inflationary pressures, the war in Ukraine,
energy shortages, and UK political turmoil. The global economic
landscape is relatively unprecedented. Times of disruption
represent both significant challenges and opportunities for our
business and our customers. As always, our key focus is to ensure
that we continue to provide an essential lifeline of working
capital to our SME customers.
Alongside the external headwinds, it has been a period of
relative disruption internally as we have needed to reassess the
cost base of the business within the context of a slower recovery
from the Covid-19 pandemic than was originally anticipated. Whilst
we supported the full workforce through the pandemic, it became
apparent in the second quarter of this financial year that the
return to pre-pandemic levels of sales and profit was going to be
much delayed from previous assumptions. As a result, the difficult
decision was taken to right-scale the operation for a revised
pathway of recovery and financial results. This was obviously
unsettling for our colleagues across the Group but, amidst all of
this difficult change, their commitment and achievements remained
outstanding, and the Board extends enormous gratitude.
It is pleasing to report that despite the continuing effect of
the pandemic, and the additional external market shocks, the
Group's revenue was GBP23.6m (2021: GBP24.2m) with profit before
tax and exceptional items of GBP3.0m (2021: GBP3.1m). Fully diluted
earnings per share were 1.00p (2021: 1.85p). The Group's balance
sheet was yet again strengthened during the year with Net Tangible
Assets rising to GBP30.5m (2021: GBP28.4m). At the same time deal
arrears fell by approximately 35% during the financial year,
demonstrating the effectiveness of our credit risk policy, which
seeks to appropriately balance the needs of both our customers and
our business.
The Group's business strategy has an aggressive target for the
lending book over the next few years. This will require the
application of the Group's available cash resources into leveraging
our funding facilities to maximum effect. Our lending objectives
are focussed on the growth of shareholder value rather than
dividend distribution. Hence, the Board continues to view cash
resources as being best deployed to support business growth and,
for the time being, not used for dividend payments. This will be
kept under review.
Our strategy
At the start of the financial year a new four-year strategy was
launched. There has been very pleasing progress made during the
first full year since rolling out this updated strategy, as set out
in the Group Strategic Priorities. The Group is positioned as a
risk-mitigated alternative finance provider, recognised as having a
comprehensive range of business finance products to offer to a
well-diversified and expanding base of UK businesses. Our core
products are Asset Finance, Invoice Finance and Commercial Loans.
The focus is on significantly growing the secured own-book lending
and own-book originations increased to GBP64.4m during the
financial year, up from GBP47.2m in the prior year. This
demonstrates significant traction against a key strategic goal.
Whilst we remain flexible to act as a broker where appropriate, we
took the strategic decision to move away from the non-core,
consumer brokerages, and the disposal of those elements of the
business is now well progressed.
Following the rebrand in December 2020, Time Finance is now well
established as a brand which, through our business development and
marketing efforts, serves to support our strategic aims.
The critical importance to our strategy of internal systems
improvements to support customer experience and business
efficiencies is well recognised by the Board. We are delighted to
have successfully secured an appointment for the newly created role
of Head of Business Improvement, which we fully expect to enable
more significant strides forward in this area.
Governance and culture
The business operates in a regulated environment and a key
responsibility for the Board is to ensure that strong and effective
governance operates throughout the Group. The Board has four
sub-committees, namely Audit, Remuneration, Nominations, and
Governance and Risk. Membership comprises only of non-executive
directors. The committees meet on a regular basis and invite
members of the senior management team, as appropriate, to enable
well informed discussion and decision making, as well as gain
appropriate levels of assurance.
The Board will continue to focus on increasing diversity in all
its forms and it is pleasing to note that women now represent 50%
of the Group's leadership team. This is an important consideration
for the Group where women are 56% of our total workforce.
The culture within Time Finance is of paramount importance to
us, and our core values of being Genuine, acting with Integrity and
demonstrating Agility are what enable us to deliver good outcomes
for our customers. These values are embedded across the business
and are key in being responsive and flexible for our customers,
whilst also ensuring highly responsible attitudes and behaviours in
every member of our team. During the year, we continued to
formulate our approach to our Environmental, Social and Governance
("ESG") responsibilities and to embed ESG as an integrated part of
our core business strategy. The themes of our ESG approach include
a good working environment for our colleagues, addressing our
carbon footprint impact, and investment in systems and training -
with the outcome for the Group being long term sustainable growth,
improved service levels and enhanced operational resilience.
Our people
On 1(st) June 2021 it was announced that Ed Rimmer was to be
appointed as permanent CEO, after a period as interim CEO from
February 2021. Ed's extensive experience within the financial
services sector, along with his specific knowledge of the Group
from his time as Group COO between 2017 to 2020, enabled him to
take up the CEO responsibilities quickly and effectively.
In line with our strategy, we have made excellent progress
during the year with hiring key recruits to support our increased
origination growth plan, and we should continue to see the positive
impact of this in the Group's results going forward. We recognise
that our staff are our greatest asset and so, as we move forward,
we shall look to better measure employee engagement and address any
gaps that may be identified by introducing an employee survey in
the second half of this calendar year and annually thereafter.
This financial year has yet again been a period of significant
and challenging change across many aspects of the business, and the
executive leadership of the Group has been key to navigating this
journey - my thanks go out to Ed Rimmer (CEO) and James Roberts
(CFO) for both their boldness and steadying hand in managing the
way forward.
I was delighted to join the Board in March 2021 as a
Non-Executive Director, and to assume the role of Non-Executive
Chair in October 2021. After a period of necessary focus on
internal strategy and restructure, I look forward to the
opportunity to engage more externally, specifically with our
investors and other key stakeholders.
Our colleagues throughout the Group continue to demonstrate
exceptional dedication, commitment and ability, and on behalf of
the Board, I wish to record our sincere thanks and
appreciation.
Outlook
The Group has made substantial progress during this financial
year against the updated strategy. This is creating significant
momentum as well as a robust platform for our future growth plans,
and so I am very positive about the delivery of strong and
sustained results over the next few years.
Whilst the economic and political environment is uncertain and
challenging, the Group continues to benefit from being a provider
of a wide range of financial products to SMEs across multiple
business sectors and has no overweight dependence on any specific
business category. The continued strengthening of the Group's
balance sheet, and access to the required cash resources for the
planned growth, leaves the Board confident about the future of the
Group.
In my first statement as Chair, I would like to express how
pleased I am to be on the Board of a company with so much potential
and a team that has the ability to deliver. I would also like to
thank all of our stakeholders for their continued support, and I
look forward to reporting on our continued progress as we move
forward with our strategy.
Tanya Raynes
Chair - 22 September 2022
Chief Executive Officer's Report
For the year ended 31 May 2022
Introduction
Time Finance is a multi-product, specialist finance provider to
UK SMEs, predominantly funding transactions on its own book, but
with the ability to broker-out transactions that fall outside its
credit policy. The business now comprises of three core product
divisions: Asset Finance, Invoice Finance and Commercial Loans.
Each is headed by a senior manager with significant experience in
the small business lending sector. The financial results for the
Group for the year ended 31 May 2022 consolidate the results of
these divisions along with the trading entities that we no longer
consider to be core business; further detail behind this strategy
is shown in the Group Strategic Priorities.
The Covid-19 pandemic continued to disrupt the wider small
business lending market during the period under review,
specifically the first quarter's trading between June and August
2021. Customers, clients and our own business were impacted by high
staff absence and an overhang of businesses still using various
government pandemic funding schemes. Market conditions started to
improve in the later part of 2021 and more significantly through
the final quarter of the financial year from March to May. Despite
the challenges, we made good progress with the strategic plan that
we set out at the start of the financial year, and the overall
numbers delivered were satisfactory. We therefore moved into the
new financial year in June with increased momentum and optimism for
the year ahead, despite the growing economic and geopolitical
challenges that are summarised in the Chair's Report.
The results achieved are due to the commitment and hard work
shown by all colleagues across the Group. As government
restrictions continued to ease during the Autumn of 2021, our staff
began to spend more time working back in the office and a sensible
balance was achieved in terms of providing flexible working. Whilst
this enables people to work from home if their role allows, we have
seen a return of a more vibrant atmosphere in the offices which is
an important part of being a "people" business. Our SME clients and
customers still want a high degree of human interaction and
providing flexibility to them is therefore a key part of our
proposition.
Sustainable, robust business model
The Group has maintained sound operational principles designed
to develop a robust business including:
- a widely spread lending book with security taken to support
lending facilities and suitable margin
achieved on each deal to justify the risk taken.
- fixed interest rates are charged for the term of the lending
in the Asset and Loans divisions, with interest rates incurred on
borrowings drawn down equally being fixed for the term. The Group's
policy is, wherever possible, to match the term of borrowings drawn
to the term of lending provided.
- underwriting is carried out by people as opposed to automated
systems for credit decisions. Although an essential element of the
Group's development continues to be the deployment of IT systems
and improved efficiencies, it is essential that the end credit
decisions are taken by people given the markets we operate in.
- a realistic approach to provisioning . The total provisions
carried in the balance sheet at 31 May 2022 amounted to GBP3.6m,
representing approximately 3% of the net lending portfolio. A
detailed internal review of provisioning is undertaken on a
quarterly basis, led by the Director of Risk in conjunction with
the CFO and the recommendations made are presented to the Board for
approval.
Market positioning and new business origination
The Group provides the main finance products that SMEs require
for day to day working capital requirements and to grow their
businesses over the longer term. Since the Global Financial Crisis
of 2008, the lending market has transformed with the traditional
banks no longer being the automatic point of call for small
business finance. Many alternative finance providers have emerged
in the form of challenger banks, fin-tech lenders and independent
providers such as Time Finance who generally offer more flexibility
and a high level of focus on customer service. As the Group is not
a retail deposit taker, wholesale funding facilities are utilised
at competitive rates. In order to make an acceptable margin on
lending, the Group chooses to operate in the "Tier 2" market
segment, therefore serving SMEs typically at the smaller end of the
market.
New business origination in the core Asset, Commercial Loan and
Invoice Finance divisions for the year to 31 May 2022 amounted to
GBP70.8m, 33% up on the GBP53.1m achieved the previous year. Of
this origination 91% was funded on balance sheet and 9% was
broked-on, compared with 88% and 12% respectively in the prior
year. The move towards an increase in own-book lending is
consistent with our strategy and commented on further in the Group
Strategic Priorities.
Financial results
Total revenue for the year to 31 May 2022 was GBP23.6m, a
decrease of GBP0.6m year-on year. Revenue comprises interest and
other income (such as facility fees, document fees and asset
assurance income) of GBP20.6m from own-book lending (2021:
GBP20.4m) and commission income of GBP3.0m from broking activities
(2021: GBP3.6m). Interest and other income from lending therefore
accounted for 87% (2021: 84%) and commission income from broking
accounted for 13% (2021: 15%) of total revenues. The business
enjoys good visibility of future revenue from 'unearned income'
(i.e. future interest income from 'own-book' deals already written
on the Group's balance sheet) which at 31 May 2022 amounted to
GBP16.7m (2021: GBP14.9m). The Group's profit before tax and
exceptional items for the year ended 31 May 2022 was GBP3.0m,
compared with GBP3.1m in the prior year. Profit before tax was
GBP1.1m (2021: GBP2.0m), and profit after tax GBP0.9m (2021:
GBP1.8m). This is driven by one-off costs associated with the
closure of the non-core vehicles brokerage and subsequent write-off
of the goodwill associated with that historic acquisition. Further
details are provided in the Group Strategic Priorities.
At 31 May 2022, the Group's total gross receivables stood at
GBP137m, compared with GBP116m on 31 May 2021, an 18% increase and
again as part of our strategy to increase own-book lending. Total
active borrowing facilities as at 31 May 2022 amounted to GBP148m
(2021: GBP162m), of which GBP78m was drawn (2021: GBP58m).
Consolidated net assets stood at GBP58.1m (2021: GBP57.1m), an
increase of 2%. Consolidated Net Tangible Assets stood at GBP30.5m
(2021: GBP28.4m), an increase of 7%. Net cash and cash equivalents
held at 31 May 2022 was GBP2.9m (2021: GBP7.7m). The reduction was
down to the increase in own-book lending origination with an
element of cash required to support each new lease or loan
agreement that is put in place. The strength of the Group's balance
sheet, together with its liquidity in the form of available
operational debt facilities for lending and cash held, ensure the
Group is well-placed to take advantage of future opportunities over
the short to medium term.
At 31 May 2022, there were 92,512,704 shares in issue (2021:
92,512,704). It is expected that, wherever possible, all current
share options will be fulfilled from the Group's Employee Benefit
Trust, resulting in little or no dilution to shareholders. Given
these share numbers, earnings per share were 1.00 pence (2021: 1.76
pence) with an identical number when calculated on a fully diluted
basis.
Operational progress
The year to 31 May 2022 saw much change but, ultimately, good
progress in ensuring the business is set-up to achieve the
significant growth over the 4-year period set out in the strategic
plan. I was appointed as full-time CEO on 1(st) June and at the
time, like the wider business community, hoped that the worst of
the lockdown restrictions were behind us. This, unfortunately,
proved not to be the case with a difficult summer period
experienced in 2021 although, as previously mentioned, trading
conditions improved significantly as the year progressed. As
commented in the Chair's Report, with the elongated recovery, we
made the difficult decision to reduce overheads through a
redundancy programme which saw headcount reduce by approximately
15%. This understandably caused a lot of disruption with additional
workloads falling on colleagues across the business and I like
would like to reiterate my sincere gratitude to the professionalism
and commitment shown by our team. The retirement of John Newman as
Chair was also another significant change; however, Tanya Raynes's
appointment provided the Group with fresh impetus and I am grateful
for her support and guidance during the year.
Alongside this significant change to the business, much progress
has been made. The Asset Finance division saw strong demand for
'hard' asset finance with the own-book new business target exceeded
by 20%. Whilst our business overall was impacted by the ease of
access to cash through the various government fundings schemes, our
Loans division benefited from becoming an accredited lender under
the Recovery Loan Scheme providing it with much needed momentum.
The Invoice Finance division had a very successful year, benefiting
from lower than expected client attrition and record new business
levels in the second half of the year. The division's lending book
increased by 80% during the year from the post-pandemic low point.
Both the Asset and Invoice Finance divisions have continued to show
further growth post year-end.
A lot of focus was placed on reorganising the business during
the financial year which was unsettling for our colleagues. A
number of people went above and beyond day-to-day expectations and
we recognise the need to improve communication and measure employee
engagement more regularly, enabling timely feedback and a process
to deliver continuous improvements. This will be a key priority for
the new financial year ahead.
Culture, compliance and governance
Time Finance is a customer focused business priding ourselves on
being Genuine, Agile and acting with Integrity. To this end we have
a strong focus on:
-- Being Easy to Deal With
-- Doing Things Quickly
-- Having a Commercial and Flexible approach to decision making
-- Doing the Right Thing for all our Stakeholders
The Group has high standards for compliance and governance for
all its activities, referenced to the principles and guidelines of
the Financial Conduct Authority and the codes of conduct of the
relevant industry bodies. All staff are required to act in
accordance with our cultural values and uphold the following;
-- To act with integrity, due skill, care and diligence
-- To be open and cooperative with regulators
-- To pay due regard to the interests of customers and clients and treat them fairly
Each of our offices has a "culture champion" to ensure that the
required behaviours are evident on a day-to-day basis and this also
provides a regular flow of communication back to the Board,
including any areas where corrective action is required.
Outlook
SMEs are currently facing an unprecedented number of challenges,
with increasing costs of operating through spiralling inflation,
interest rate rises and geopolitical instability. Small businesses,
however, will always need access to finance in order to provide the
necessary working capital to operate and expand. With the changes
made during the financial year, particularly the restructuring of
the senior management team and the focus on developing our
strategic plan, we are in a good position to take advantage of the
opportunities that the market will present.
Ed Rimmer
Chief Executive Officer - 22 September 2002
Group Strategic Priorities
For year ended 31 May
Time Finance continues to be an alternative provider of finance
to the high-street and challenger banks, serving SMEs predominantly
with finance requirements ranging from GBP5,000 to GBP2.5m. The
Group primarily provides Invoice Finance, Asset Finance and Loan
Finance. It lends from its own balance sheet or through
brokering-on business that does not meet its lending parameters,
which would mainly be due to the size of a transaction, pricing or
credit quality.
From 2015, via acquisition, the business set about diversifying
to a multi-product group offering an increased product portfolio to
an enlarged target market and mitigating risk through a wider
spread of lending. The Group was rebranded in December 2020 with
the launch of Time Finance. The new name recognised two critical
aspects of running a small business - Time and Money. Positioning
the Group as a credible partner to SMEs and helping them to achieve
their growth ambitions is a key part of the Group's strategy.
Strategic Objectives
The Group's change of CEO in the first half of 2021, and the
subsequent easing of lockdown restrictions on the back of the
government's rapid vaccination roll out, led to a new medium-term
strategy being developed. This was launched at the start of the
financial year in June 2021. The key objectives over the 4 year
period to 31 May 2025 are to:
-- Double the Group's gross lending book organically to approximately GBP250m
-- Achieve revenue and PBTE levels in excess of the 2019
pre-Covid levels of over GBP30m and GBP8m respectively
This will be achieved through the following strategic
initiatives:
-- Focusing on core own-book lending products: Asset, Invoice and Loan finance
-- Predominantly focusing on secured lending with an increasing average deal size
-- Investing in key sales resources
-- Continuing to reposition the brand and invest in marketing
-- Bringing further liquidity into the Business as and when required
Good progress has been made in delivering the plan during a
difficult year given the market conditions. Summaries on each of
the above initiatives are set out below.
Focus on core own-book lending products
The previous strategy saw the Group expand into consumer finance
brokerages as well as business lending. These businesses operated
in the second-hand vehicle finance and residential mortgage
markets. Both sectors were significantly affected by the Covid-19
pandemic. They were also very reliant on the founding directors,
consumed a disproportionate amount of management time for the size
of the businesses and the future opportunities to scale them
required significant investment, as well as also being more heavily
burdened by regulation and by the very nature of being brokerages,
were not building balance sheets of value consistent with being an
own-book lender. The decision was therefore taken to exit these
businesses. CarFinance2U was closed towards the end of the
financial year and it is expected that the Cardiff based, consumer
brokerage will be divested before the end of the calendar year.
Moving forwards, the Group has a clear market position, that of
being an alternative lender to small businesses, offering three
core products: Asset, Invoice and Loan finance. As the market
continues to recover post the government funding schemes, there
should be good opportunities for alternative finance providers to
grow. With the Group's own lending book increasing, so will the
size of its balance sheet and with it the inherent value of the
business. During the year we increased our own-book, new business
origination to GBP64.4m, a 36% increase on the previous year. This
trend is expected to continue over the course of our medium-term
plan.
Predominantly focus on secured lending with an increasing
average deal size
Where appropriate the Group will seek to obtain tangible
security to underpin lending. This involves taking title to
professionally valued fixed assets or book debts, supported by
registering debentures and/or property charges. At the same time,
the Group will increase the average ticket size of the 'hard' asset
business which reduced significantly during the pandemic when
market demand led to smaller assets (e.g. Delivery Vans) being
funded. The one exception to this, is the 'soft' asset strategy
where the Group has a niche position in funding smaller
transactions that provide a wide spread of risk at higher yields.
The faster growth will therefore come from the Hard Asset and
Invoice Finance businesses and, over time, this should help reduce
the delinquent debt levels and increase efficiencies through
dealing with a lower number of enquiries from more established
businesses.
Investment in key sales resources
In order to grow the business, the Group invested in a number of
high-quality salespeople during the financial year. Sharon Bryden
joined the business in August 2021 to lead the Loans division with
part of her remit being to develop a new Asset Based Lending
product; good progress has been made and this will be launched
during the first half of the new financial year. A new head of
Asset Finance, Steve Nicholls, joined in January 2022. My thanks go
to Carol Roberts for so capably overseeing the division over the
last 3 years during such a challenging time. A new Head of Broker
Sales for Hard Asset was subsequently appointed in May 2022. We
also recruited a new Southern Head of Sales for Invoice Finance in
August 2021, along with a number of additional Business Development
Managers to expand that business. The core products are now set up
to deliver the growth strategy.
Reposition the brand and investment in marketing
The rebrand to Time Finance at the end of 2020 provided the
Group with an excellent opportunity to reposition the business in
line with our key strategic aims. I am very pleased with the
progress made during the last 12 months. The introducer market in
particular has a better understanding of what we are trying to
deliver to market and the types of deals we want. Testimony to this
was Time Finance being ranked Number 1 in the Business Money
Intermediary Index, having previously not made it into the top 10.
During the year, Kate Brown was promoted to Head of Marketing, and
this has significantly contributed to the progress made. Moving
forwards, we are increasing our digital presence as well as
continuing to focus on the more traditional marketing channels,
both to our introducers and directly to our clients and
customers.
Bring further liquidity into the Business as and when
required
During the financial year, the liquidity position of the Group
was healthy and the board feels there are sufficient cash resources
to deliver the short-term objectives. As the growth plan starts to
accelerate, however, we will likely need to review the current
funding strategy. Finding suitable long-term liquidity at sensible
pricing is therefore a focus over the course of the next 12-24
months.
Key performance indicators
The Board and the Senior Management Team regularly review and
monitor key metrics in assessing the performance of the Group. Some
of these key metrics to help gauge the Group's meaningful progress
are detailed below.
o Continuing Operations Revenue - GBP22.5m (prior year GBP22.5m)
o Continuing Operations Gross Profit margin- 64% (prior year 62%)
o Continuing Operations Profit Before Tax and Exceptional items - GBP3.1m (prior year GBP3.1m)
o Continuing Operations Diluted Earnings Per Share - 1.38p (prior year 1.96p)
o Own-Book New Business Origination - GBP64.4m (prior year GBP47.2m)
o Core business own book vs broked-on ratios - 87/13 (prior year 84/16
o Funding interest rate - a blended rate of 4% (prior year 4%)
Principal risks and uncertainties
'Principal risks' are defined as a risk or a combination of
risks that, given the Group's current position, could seriously
affect the performance, future prospects or reputation of the
Group. These risks could potentially materially threaten the
business model, performance, solvency or liquidity, or prevent the
delivery of the strategic objectives outlined above. The Board has
overall responsibility for ensuring that risk is appropriately
managed across the Group and, through the Governance and Risk
Committee, has established the Group's appetite to risk, approved
its structure, methodologies, policies, and management roles and
responsibilities.
As well as regular external reviews and audits from the Group's
statutory auditors and the quarterly audits from a number of its
funding partners, the Group has numerous internal checks and
balances. Initial responsibility rests with the Operating Board
which manages the business divisions and functions with line
managers responsible for identifying and managing risks arising in
their business areas. This is augmented by the Group's central and
independent Compliance, Finance and Risk functions with
responsibility for reporting to the Board. The Group has a Director
of Risk who reviews all significant Group credit exposures and a
Head of Compliance who reviews all significant Group operating
risks and adherence to regulatory requirements.
The key risks identified and which the Board has reasonable
expectation are appropriately mitigated are:
-- Credit Risk
The risk of default, potential write-off, disruption to cash
flow and increased recovery costs on a debt that is either not
repaid individually or if there is a wider market deterioration.
This is mitigated by the Group adopting prescribed lending policies
and adhering to strict credit and underwriting criteria
specifically tailored to each business area. The Group also has
still the ability to 'broke-on' certain business rather than write
it on its own-book if it is deemed necessary to manage risk.
-- Funding Risk
The risk of the Group not being able to meet its current and
future financial obligations over time, specifically that funding
is not available to meet the Group's growth targets. The Group has
funding facilities across Block Discounting, a Secured Loan Note
programme and Back-to-Back invoice finance facilities, aggregating
to GBP89.6m with ample headroom to meet its growth targets for the
medium future. As detailed previously, should the opportunity arise
to grow considerably faster than the medium-term plan anticipates,
then the Group could decide to augment its funding with additional
liquidity.
-- Regulatory Risk
The risk of legal or regulatory action resulting in fines,
penalties and sanctions that could arise from the Group's failure
to identify and adhere to regulatory requirements in the UK. In
addition, there is the risk that new or enhanced regulations could
adversely impact the Group. The Group employs a Head of Compliance,
who manages an independent compliance department with access to
external advisors. The department looks both internally at the
Group ensuring its practices are appropriate and externally at
future developments to ensure the Group is prepared to adopt any
changes in regulation as and when they arise.
Summary
With the significant government support packages no longer in
place post-Covid, and with the ever-increasing economic challenges
facing small businesses, access to finance will be a key priority
for SMEs over the coming months and years. This should present the
Group with many opportunities, whilst acknowledging the potential
threats that also will undoubtedly come our way through potential
increased default and delinquent debt. SMEs will always need access
to finance to provide working capital and to grow their businesses;
having an independent, credible and flexible alternative to the
banks with conducive markets presents significant opportunity for
the Group.
Ed Rimmer
Chief Executive Officer
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 MAY 20212
Notes Continuing Discontinued Continuing Discontinued
Operations Operations Total Operations Operations Total
2022 2022 2022 2021 2021 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------ ------------ ------------- ---------- ------------ ------------- ----------
Revenue 22,488 1,123 23,611 22,159 1,640 23,799
Other Income 8 22 7 29 321 104 425
-------------------------- ------ ------------ ------------- ---------- ------------ ------------- ----------
Total Revenue 22,510 1,130 23,640 22,480 1,744 24,224
-------------------------- ------ ------------ ------------- ---------- ------------ ------------- ----------
Cost of Sales (8,061) (587) (8,648) (8,557) (805) (9,362)
-------------------------- ------ ------------ ------------- ---------- ------------ ------------- ----------
GROSS PROFIT 14,449 543 14,992 13,923 939 14,862
Administrative expenses (11,059) (712) (11,771) (10,531) (944) (11,475)
Exceptional Items 11 (1,685) (184) (1,869) (746) (97) (843)
Share-based payments 27 (43) - (43) (277) - (277)
-------------------------- ------ ------------ ------------- ---------- ------------ ------------- ----------
OPERATING PROFIT 1,662 (353) 1,309 2,369 (102) 2,267
Finance costs 5 (255) - (255) (248) (2) (250)
Finance income 5 1 - 1 3 - 3
-------------------------- ------ ------------ ------------- ---------- ------------ ------------- ----------
PROFIT BEFORE INCOME
TAX 6 1,408 (353) 1,055 2,124 (104) 2,020
Adjusted earnings
before tax, exceptional
items and share-based
payments 3,136 (169) 2,967 3,147 (7) 3,140
Exceptional items 11 (1,685) (184) (1,869) (746) (97) (843)
Share-based payments 27 (43) - (43) (277) - (277)
-------------------------- ------ ------------ ------------- ---------- ------------ ------------- ----------
PROFIT BEFORE INCOME
TAX 1,408 (353) 1,055 2,124 (104) 2,020
-------------------------- ------ ------------ ------------- ---------- ------------ ------------- ----------
Income tax 7 (134) - (134) (245) 2 (243)
-------------------------- ------ ------------ ------------- ---------- ------------ ------------- ----------
PROFIT FOR THE
YEAR 1,274 (353) 921 1,879 (102) 1,777
-------------------------- ------ ------------ ------------- ---------- ------------ ------------- ----------
Profit attributable
to: Owners of the
parent company 1,274 (353) 921 1,879 (102) 1,777
-------------------------- ------ ------------ ------------- ---------- ------------ ------------- ----------
Earnings per share
expressed in pence
per share 10
Basic 1.38 (0.38) 1.00 2.10 (0.11) 1.98
Diluted 1.38 (0.38) 1.00 1.96 (0.11) 1.85
-------------------------- ------ ------------ ------------- ---------- ------------ ------------- ----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 MAY 2022
2022 2021
GBP'000 GBP'000
ASSETS
NON-CURRENT ASSETS
Goodwill 27,263 28,241
Intangible assets 298 476
Property, plant and equipment 320 551
Right-of-use property, plant &
equipment 30 224
Trade and other receivables 50,344 44,335
Deferred tax 1,036 806
-------- --------
79,291 74,633
-------- --------
CURRENT ASSETS
Trade and other receivables 70,852 55,073
Tax receivable - 113
Cash and cash equivalents 3,170 7,969
-------- --------
74,022 63,155
-------- --------
TOTAL ASSETS 153,313 137,788
======== ========
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 9,252 9,252
Share premium 25,543 25,543
Employee shares 106 63
Treasury shares (820) (790)
Retained earnings 23,972 23,051
-------- --------
TOTAL EQUITY 58,053 57,119
-------- --------
LIABILITIES
NON-CURRENT LIABILITIES
Trade and other payables 39,033 33,749
Financial liabilities - borrowings 2,344 3,369
Lease Liability - 44
-------- --------
41,377 37,162
-------- --------
CURRENT LIABILITIES
Trade and other payables 51,956 41,692
Financial liabilities - borrowings 1,879 1,634
Tax payable 28 -
Lease Liability 20 181
-------- --------
53,883 43,507
-------- --------
TOTAL LIABILITIES 95,260 80,669
-------- --------
TOTAL EQUITY AND LIABILITIES 153,313 137,788
======== ========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 MAY 2022
Called Retained Share Treasury Employee Total
up Share Earnings Premium Shares Shares Equity
Capital
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 May
2020 8,899 21,274 25,360 (310) - 55,223
Total comprehensive
income - 1,777 - - - 1,777
Transactions with
owners
Purchase of treasury
shares - - - (480) - (480)
Issue of share capital 353 - 183 - - 536
Value of employee
services - - - - 63 63
Balance at 31 May
2021 9,252 23,051 25,543 (790) 63 57,119
========== ========== ========= ========= ========= =========
Total comprehensive
income - 921 - - - 921
Transactions with
owners
Purchase of treasury
shares - - - (30) - (30)
Value of employee
services - - - - 43 43
Balance at 31 May
2022 9,252 23,972 25,543 (820) 106 58,053
========== ========== ========= ========= ========= =========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 MAY 2022
Notes Continuing Discontinued Continuing Discontinued
Operations Operations Total Operations Operations Total
2022 2022 2022 2021 2021 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash generated from
operations
Profit before tax 1,401 (346) 1,055 2,124 (104) 2,020
Depreciation & amortisation
charges 571 40 611 718 36 754
Finance costs 236 - 236 163 2 165
Finance income (1) - (1) (3) - (3)
(Gain)/loss on disposal
of property, plant & equipment 12 134 146 (6) 6 -
Decrease in inventory - - - - - -
Decrease in trade and other
receivables (22,147) 359 (21,788) 6,723 64 6,787
(Decrease) in trade and
other payables 15,632 (84) 15,548 (4,246) (2) (4,248)
Movement in other non-cash
items 1,288 (46) 1,242 699 46 745
(3,008) 57 (2,951) 6,172 48 6,220
Cash flows from operating
activities
Interest paid (236) - (236) (163) (2) (165)
Tax paid (430) - (430) (397) - (397)
Net cash from operating
activities (3,674) 57 (3,617) 5,612 46 5,658
Cash flows from investing
activities
Acquisition of - - - - -
subsidiaries
Purchase of software, property,
plant & equipment (149) (5) (154) (314) - (314)
Proceeds from sale of - - - - - -
tangible
fixed assets
Contingent consideration
paid - - - (197) - (197)
Interest received 1 - 1 3 - 3
Net cash from investing
activities (148) (5) (153) (508) - (508)
Cash flows from financing
activities
Payment of lease liabilities (178) (21) (199) (190) (23) (213)
Loan repayments in year (731) - (731) (635) - (635)
Loans issued in year - - - 4,100 - 4,100
Changes in overdrafts (40) (9) (49) (845) (24) (869)
Equity dividends paid - - - - - -
Net cash from financing
activities (949) (30) (979) 2,430 (47) 2,383
(Decrease)/increase in
net cash and cash equivalents (4,771) 22 (4,749) 7,534 (1) 7,533
Net cash and cash equivalents
at beginning of year 7,674 (9) 7,665 140 (8) 132
Net cash and cash equivalents
at end of year 2,903 13 2,916 7,674 (9) 7,665
1. ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IRFS") as adopted in
the United Kingdom and by the International Financial Reporting
Interpretations Committee ("IFRIC") interpretations and with those
parts of the Companies Act 2006 applicable to companies reporting
under IFRS. The financial statements have been prepared under the
historical cost convention.
2. SEGMENTAL REPORTING
The Group provides a range of financial services and product
offerings throughout the UK. The Group has introduced reporting on
a segmental basis as this accurately reflects the four trading
divisions, namely: Asset Finance, Vehicle Finance, Loan Finance and
Invoice Finance.
The operating segments also reflect its organisational and
management structures. The Group reports internally on these
segments in order to assess performance and allocate resources. The
segments are differentiated by the types of products provided.
The segmental results and comparatives are presented with
intergroup charges allocated to each division based on actual
revenues generated. Intergroup expenses are recharged at costs and
largely comprise; Marketing, Compliance, IT and Human Resources
costs.
Asset Vehicle Loan Invoice Other Total
For the year ended Finance Finance Finance Finance
31 May 2022
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
CONTINUING OPERATIONS
Revenue 11,111 1,730 2,969 7,809 21 23,640
Cost of sales (5,201) (612) (1,567) (1,268) - (8,648)
GROSS PROFIT 5,910 1,118 1,402 6,541 21 14,992
Administrative expenses (3,639) (1,434) (924) (3,078) (2,696) (11,771)
Exceptional items (1,113) (195) - (76) (485) (1,869)
Share-based payments - - - (5) (38) (43)
OPERATING PROFIT 1,158 (511) 478 3,382 (3,198) 1,309
Finance costs (171) (14) (7) (3) (60) (255)
Finance income 1 - - - 1
PROFIT BEFORE INCOME
TAX 988 (525) 471 3,379 (3,258) 1,055
Intra-group recharges (1,534) (238) (409) (1,077) 3,258 -
PROFIT BEFORE INCOME
TAX (546) (763) 62 2,302 - 1,055
-------- -------- -------- -------- -------- ---------
Adjusted earnings before interest, tax, exception items
and share-based payments 2,102 (331) 471 3,460 (2,735) 2,967
Exceptional items (1,114) (194) - (76) (485) (1,869)
Share-based payments - - 471 (5) (38) (43)
PROFIT BEFORE INCOME
TAX 988 (525) 471 3,379 (3,258) 1,055
-------------------------- -------- -------- -------- -------- -------- ---------
Asset Vehicle Loan Invoice Other Total
For the year ended Finance Finance Finance Finance
31 May 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
CONTINUING OPERATIONS
Revenue 12,822 2,582 2,223 6,488 109 24,224
Cost of sales (6,331) (829) (1,039) (1,163) - (9,362)
GROSS PROFIT 6,491 1,753 1,184 5,325 109 14,862
Administrative expenses (3,394) (1,922) (795) (2,590) (2,774) (11,475)
Exceptional items (44) (128) (8) (128) (535) (843)
Share-based payments - - (22) (43) (212) (277)
OPERATING PROFIT 3,053 (297) 359 2,564 (3,412) 2,267
Finance costs (124) (27) - (6) (93) (250)
Finance income 2 - - 1 3
PROFIT BEFORE INCOME
TAX 2,931 (324) 359 2,559 (3,505) 2,020
Intra-group recharges (1,864) (375) (323) (943) 3,505 -
PROFIT BEFORE INCOME
TAX 1,067 (699) 36 1,616 - 2,020
-------- -------- -------- -------- -------- ---------
Adjusted earnings before interest, tax, exception items
and share-based payments 2,975 (196) 389 2,730 (2,758) 3,140
Exceptional items (44) (128) (8) (128) (535) (843)
Share-based payments - - (22) (43) (212) (277)
PROFIT BEFORE INCOME
TAX 2,931 (324) 359 2,559 (3,505) 2,020
-------------------------- -------- -------- -------- -------- -------- ---------
3. PROFIT BEFORE INCOME TAX
The profit before income tax is stated after charging:
2022 2021
GBP'000 GBP'000
Depreciation - owned assets 388 530
Amortisation - computer software 223 224
Net credit loss charge 930 1,733
Funding facility interest charges 2,515 2,777
Introducer commissions 3,014 2,881
Fees payable to the Company's
auditor for audit of Company's
subsidiaries 72 72
Fees payable to the Company's
auditor for the audit of the
Company 14 13
4. DIVIDENDS
2022 2021
GBP'000 GBP'000
Ordinary shares GBP0.10 each
Final - -
Interim - -
================ ===============
Total - -
================ ===============
The Directors do not propose a final dividend relating to this
financial period (2021: 0.0p per share). Future dividends will be
kept under review.
5. EARNINGS PER SHARE
Earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the year. For diluted
earnings per share, the weighted average number of shares is
adjusted to assume conversion of all dilutive potential ordinary
shares.
2022
Weighted
average Per-share
Earnings number of amount
GBP'000 shares pence
Basic
EPS
Earnings attributable to ordinary
shareholders 921 92,512,704 1.00
Effect of dilutive securities
Share Options - - -
Diluted EPS
Adjusted earnings 921 92,512,704 1.00
========= =========== ==========
2021
Weighted
average Per-share
Earnings number of amount
GBP'000 shares pence
Basic
EPS
Earnings attributable to ordinary
shareholders 1,777 89,481,386 1.98
Effect of dilutive securities
Contingent consideration 81 2,204,018 (0.13)
Diluted EPS
Adjusted earnings 1,696 91,685,404 1.85
========= =========== ==========
6. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information set out in this announcement does not
comprise the Group's statutory accounts for the years ended 31 May
2022 and 31 May 2021. The financial information has been extracted
from the statutory accounts of the Group for the years ended 31 May
2022 and 31 May 2021.
The auditors' opinion on those accounts was unmodified and did
not contain a statement under section 498 (1) or 498 (3) Companies
Act 2006 and did not include references to any matters to which the
auditor drew attention by the way of emphasis.
The statutory accounts for the year ended 31 May 2021 have been
delivered to the Registrar of Companies. Those for the year ended
31 May 2022 will be delivered to the Registrar of Companies
following the Company's Annual General Meeting.
7. ANNUAL REPORT AND ANNUAL GENERAL MEETING
The Annual Report and Accounts will be available from the
Company's website, www.timefinance.com , from 22 September 2021.
Notice of the Annual General Meeting, which will be held at the
Hilton Manchester Deansgate, M3 4LQ on 31 October 2022 at 1pm, will
be posted to Shareholders.
[1] Profit Before Tax, Exceptional Items and Share-Based
Payments
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