Time Finance PLC

Interim Results

RNS Number : 0247Z
Time Finance PLC
20 January 2022
 

 

 

                                                                                                                 20 January 2022

 

Time Finance plc

(the "Group" or the "Company")

 

HALF YEAR RESULTS FOR SIX MONTHS ENDED 30 NOVEMBER 2021

 

Time Finance plc, the AIM listed independent specialist finance provider, today announces its unaudited interim results for the six-months ended 30 November 2021 ("Results" or "Interims").

 

Financial Highlights :

· Origination up 3% to £58.1m (H1 2020/21: £56.6m).

· Revenue* up 1% to £11.8m (H1 2020/21: £11.7m)

· Gross profit* up 3% to £7.6m (H1 2020/21: £7.4m)

· Profit before tax* up 1% to £1.2m (H1 2020/21: £1.2m)

· Blended cost of borrowings maintained at approximately 4% (year to 31 May 2021: 4%)

· Gross lending portfolio increased to £120.5m as at 30 November 2021 (31 May 2021: £115.7m)

· Net Assets increased to £58.2m as at 30 November 2021 (31 May 2021: £57.1m)

· Net Tangible Assets increased to £29.6m as at 30 November 2021 (31 May 2021: £28.4m)

·     Net deals in arrears as at 30 November 2021 reduced by 26% representing 9% of the gross lending book (31 May 2021: 12%)

· Nil net deals in forbearance as at 30 November 2021 (31 May 2021: £0.8m)

* Excluding furlough Other Income of £0.165m in H1 2020/21.

Operational Highlights:

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

· £50m Invoice Finance three-year funding facility agreed with the Group's corporate bankers

· Investment made in sales resource across Asset, Invoice Finance and Commercial Loans

· Lending portfolio performance better than pre-pandemic levels and continues to improve

· UK SMEs have remained resilient during pandemic with borrowers missing payments reducing

· Strong cash position with £9.6m of cash, cash equivalents and convertible 'paper' at period end, leaving the business well placed to capitalise on future opportunities

 

Commenting on the Interim Results, Tanya Raynes, Non-Executive Chairman, said:

 

"Given the continued impact of the Covid-19 pandemic on our business sector and the wider UK economy, it is pleasing that momentum is again building in our core product offerings and that our loan book is also growing. This gives us confidence in our strategy for the medium-term. The balance sheet continues to demonstrate its resilience and it is particularly encouraging to see deals in arrears at their lowest level since late 2018. Lending to smaller SMEs will always mean there are deals in arrears. This is to be expected, and risk is priced into our model, however we are delighted to see the levels both lower than anticipated and continuing to fall. The Board continue to assess the impact of the current wave of the pandemic but remain confident the fundamentals of the business are secure, that the Group remains well placed to capture the opportunities ahead of us, and that the medium-term strategy will deliver significant growth."

 

This announcement contains inside information for the purposes of article 7 of Regulation (EU) No 596/2014.

 

 

For further information, please contact :

 

Time Finance plc

Ed Rimmer, Chief Executive Officer                                                                       01225 474230

James Roberts, Chief Financial Officer                                                                  01225 474230

 

Cenkos (NOMAD)

Ben Jeynes / Mac Gould (NOMAD)                                                                       0207 3978900

Julian Morse (Sales)

 

Walbrook PR                                                                                                          0207 9338780

Paul Vann / Nicholas Johnson                                                                                07768 807631

[email protected]

 

 

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 PERIOD ENDED 30 NOVEMBER 2021

 

Introduction

Time Finance plc is a multi-product speciality finance provider to UK SMEs. It is primarily a lender for the working capital requirements of UK businesses but can also act as a broker in arranging funding where appropriate.

 

The Group comprises three core own-book divisions - Asset Finance, Loan Finance and Invoice Finance - as well as a Broking division which primarily arranges vehicle and property finance for consumers. Lending proposals are originated through a variety of channels, sourced from national and regional finance brokers, other intermediaries such as professional firms, equipment vendors, suppliers and dealers, and direct from borrowers. This is both via field sales personnel and also direct online. Funds are advanced to borrowers using a mix of the Group's own reserves and operational debt facilities provided by a range of wholesale funding partners.

 

Financial Results

The various waves of the Covid-19 pandemic mean its effects on trading activity is still being felt and normal business has yet to be fully resumed. The impact of the pandemic continues to fall primarily on the Group's non-core brokerage arms and particularly in the vehicles arena exacerbated by the well-publicised delays in sourcing vehicles. Despite the dampening effect of the brokerages, the Group has delivered a solid interim set of financial results.

 

Deal origination is a key performance indicator for the Group. Pleasingly, in the six-month period to 30 November, deal origination amounted to £58.1m, the highest level since the start of the pandemic and an increase of more than 24% when compared to £46.7m in the preceding six-month period to 31 May 2021. This increase has resulted in the Group's gross lending book growing to £120.5m as at 30 November 2021 compared to £115.7m at 31 May 2021. An increasing own-book lending portfolio underpins the Group's future income generation and, in turn, profitability. Crucially, the Group's own-book lending portfolio has continued to grow since the half-year period end.

 

When reviewing the Profit and Loss account, it is important to note that the prior half-year comparatives and the full year to 31 May 2021 include significant 'other income' from government grants in the form of the Coronavirus Job Retention Scheme which the Group no longer has access to. These historical grants equated to £0.2m in the six-month period to 31 May 2021 and a further £0.2m in the six-month period to 30 November 2020. As such, the true comparison in performance is to compare the results without this pandemic 'other income' stream as detailed in the table below:

 

£'m

6m to 30/11/21

6m to 31/05/21

6m to 30/11/20

Revenue

11.8

12.1

11.7

Gross Profit

7.6

7.0

7.4

Profit before Tax

1.2

0.4

1.2

It is therefore encouraging to see that both Gross Profit and Profit Before Tax have grown significantly from the preceding six-month period despite the ongoing dampening effect of the slow recovery of the Group's non-core brokerage arms. This demonstrates the strength of the core own-book lending businesses.

 

With regards to the Group's Balance Sheet, the lending portfolio itself is another key performance indicator. It is extremely pleasing to report a continuing reduction in the value of portfolio arrears. As at 30 November 2021, net arrears were down a further £3.8m from year end, equating to 9% of the period end gross lending book (31 May 2021: 12%; 30 November 2020: 14%). It is also encouraging to report that at the period end there were no longer any deals in forbearance resulting from the impact of the pandemic. This compares to £0.8m as at 31 May 21, £2.2m as at 30 November 2020 and a pandemic-high of £20.5m as at 31 May 2020.

 

The Group's increasing level of deal origination, lending portfolio management and continued support from external funders have all combined to further strengthen the Group's balance sheet and to generate an increase in Net Assets to £58.2m and in Net Tangible Assets to £29.6m as at 30 November 2021. This compares with £57.1m and £28.4m as at 31 May 2021 and 30 November 2020 respectively.

 

Strategy and Outlook

The Group remains committed to its medium-term strategy which it firmly believes will lead to increased shareholder value over time. The focus on our key initiatives - core product own-book lending, investing in key sales resources to grow the business and maximising our multi-product offering - continues apace.

 

Given the continued, somewhat unpredictable waves of the pandemic and their impact on trading conditions the Board is satisfied with the financial results and pleased with the operational progress made during the first half of the current financial year with the overall strategic plan set out at the start of the current financial year being broadly on track. The Group has continually shown its operational resilience, balance sheet strength and liquidity throughout the pandemic and the Board remains optimistic of a return to significant organic growth in due course whilst remaining vigilant and cautious as to the potential impact that further economic uncertainty or additional government restrictions could have on the Group.

 

 

Ed Rimmer

Chief Executive Officer, Time Finance plc

 

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

 

 

FOR THE SIX MONTHS TO 30 NOVEMBER 2021

 

 

 

 

 

 

 

 

 

 

Unaudited

6 months to

30 November

2021

£'000

 

 

Unaudited

6 months to 30 November 2020

£'000

 

 

Audited 12 months to

31 May 2021

£'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 share

 

Pence per share

 

Pence per share

- basic

6

1.07

 

1.21

 

1.98

- diluted

6

0.99

 

1.20

 

1.85

 

 

 

 

 

All of the above amounts are in respect of continuing operations.

 

 

 

 

          

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

FOR THE SIX MONTHS TO 30 NOVEMBER 2021

 

 

 

 

 

 

 

Unaudited

6 months to 

30 November

2021

 

 

 

Audited 12 months to

31 May

2021

 

 

NON-CURRENT ASSETS

 

£'000

 

 

£'000

 

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

6 months to

30 November

 

Unaudited

6 months to

30 November

 

 

 

 

2021

 

 

2020

 

 

 

 

 

£'000

 

£'000

 

 

Cash generated from operations

 

 

 

 

 

 

Profit before tax

 

1,201

 

1,351

 

 

Depreciation and amortisation charges

 

203

 

380

 

 

Finance costs

 

95

 

179

 

 

Finance income

 

-

 

-

 

 

(Increase)/Decrease in trade and other receivables

 

(6,095)

 

(384)

 

 

Increase/(Decrease) in trade and other payables

 

3,495

 

(833)

 

 

Movement in other non-cash items

 

(374)

 

933

 

 

 

 

(1,475)

 

1,626

 

 

Cash flows from operating activities

 

 

 

 

 

 

Interest paid

 

(95)

 

(179)

 

 

Tax paid

 

(258)

 

(368)

 

 

 

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

 

 

2,642

 

 

           

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS TO 30 NOVEMBER 2021

 

 

 

Share Capital

 

Share

Premium

 

Retained

Earnings

 

Treasury

Shares

 

Employee Shares

 

Total Equity

 

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

  £'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 May 2021

9,252

 

25,543

 

23,051

 

(790)

 

63

 

57,119

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

-

 

-

 

973

 

-

 

-

 

973

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sale of treasury shares

 

Dividends

 

Issue of share capital

 

Value of employee services

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

41

 

-

 

-

 

-

 

-

 

-

 

-

 

33

 

41

 

-

 

-

 

33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 November 2021

9,252

 

25,543

 

24,024

 

(749)

 

96

 

58,166

 

 

 

 

 

 

 

 

 

 

 

 

 

 

             

 

Share Capital

 

Share

Premium

 

Retained

Earnings

 

Treasury

Shares

 

Employee Shares

 

Total Equity

 

 

£'000

 

£'000

 

£'000

 

£'000

 

£'000

 

  £'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 May 2020

8,899

 

25,360

 

21,274

 

(310)

 

-

 

55,223

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

-

 

-

 

1,094

 

-

 

-

 

1,094

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of treasury shares

-

 

-

 

-

 

(80)

 

-

 

(80)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends

 

Issue of share capital

-

 

138

 

-

 

183

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

321

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 November 2020

9,037

 

25,543

 

22,368

 

(390)

 

-

 

56,558

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                     

 

1  BASIS OF PREPARATION 

   

The financial information set out in the interim report does not constitute statutory accounts as defined in section 434(3) and 435(3) of the Companies Act 2006.  The Group's statutory financial statements for the year ended 31 May 2021 prepared in accordance with IFRS as adopted by the European Union and with the Companies Act 2006 have been filed with the Registrar of Companies.  The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498(2) of the Companies Act 2006.  These interim financial statements have been prepared under the historical cost convention.

 

These interim financial statements have been prepared in accordance with the accounting policies set out in the most recently available public information, which are based on the recognition and measurement principles of IFRS in issue as adopted by the European Union (EU) and are effective at 31 May 2021.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union.

 

The financial information for the six months ended 30 November 2020 and the six-month period to 30 November 2021 are unaudited and do not constitute the Group's statutory financial statements for these periods.  The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these interim financial statements.

 

Going Concern

While the Covid-19 pandemic continues to have an impact on the business, the directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.

 

 

SEGMENTAL REPORTING

 

The Group has four trading divisions which reflect its organisational and management structures, and these are differentiated by the type of finance products provided.  Asset, Loans and Invoice Finance represent the core products. Other represents central overheads related to being listed and running a group of Companies.  The Group reports internally on these segments in order to assess performance and allocate resources.

 

  6 months to 30 November 2021

  £'000

Asset

Loans

Invoice Finance

Brokerage

Other

TOTAL

  Revenue

5,520

  964

3,772

1,526

-

11,782

 

 

 

 

 

 

 

  Profit before Tax

934

244

1,767

(122)

(1,622)

1,201

 

 

 

 

 

 

 

 

   6 months to 30 November 2020

   '000

Asset

Loans

Invoice Finance

Brokerage

Other

TOTAL

   Revenue

6,254

640

3,308

1,651

10

11,863

 

 

 

 

 

 

 

   Profit before Tax

1,463

60

1,374

(75)

(1,471)

1,351

 

3  BASIS OF CONSOLIDATION

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefit from its activities.

 

All intra-Group transactions, balances, income and expenses are eliminated on consolidation.

 

 

4  TAXATION             

Taxation charged for the period ended 30 November 2021 is calculated by applying the Directors' best estimate of the annual tax rate to the result for the period.

 

 

5  SHARE CAPITAL                 

The Articles of Association of the company state that there is an unlimited authorised share capital.

 

Each share carries the entitlement to one vote.   

 

           

6  EARNINGS PER ORDINARY SHARE 

 

The earnings per ordinary share have been calculated using the profit for the period and the weighted number of ordinary shares in issue during the period. For diluted earnings per share, the weighted average number of shares is adjusted to assume conversion of all dilutive potential ordinary shares.

 

 

 

 

6 months to

 

 6 months to

 

12 months to

 

 

 

30 Nov 2021

 

  30 Nov 2020

 

31 May 2021

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

Earnings attributable to ordinary shareholders

973

 

1,094

 

1,777

 

 

 

 

 

 

 

 

Basic EPS

 

 

 

 

 

 

 

Weighted average number of shares

90,806,852

 

90,374,204

 

89,481,386

Per-share amount pence

1.07

 

1.21

 

1.98

 

 

 

 

 

 

Adjusted earnings

912

 

1,094

 

1,696

 

 

 

 

 

 

Diluted EPS

 

 

 

 

 

Weighted average number of shares

91,621,519

 

90,739,365

 

91,685,404

Per-share amount pence

0.99

 

1.20

 

1.85

 

 

7  DIVIDENDS  

 

Dividends were not paid during the pandemic due to cash preservation in an uncertain time. At the current time, under the strategy published in June 2020, cash reserves are being deployed for business growth. Future dividends will be kept under review.

 

 

8  SHARE-BASED PAYMENT TRANSACTIONS     

 

On 1 October 2021, the Group announced that following the achievement of time-based criteria in relation to the Company's Unapproved Share Option Scheme, a total of 305,500 previously awarded nil cost options over ordinary shares of 10 pence each in the capital of the Company vestedThese 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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