Bath-headquartered alternative funder Time Finance has made “significant progress” in the first year of its four-year transformation plan, its CEO said, despite economic challenge pushing down both annual profits and revenues.
However, the group, which specialises in asset, loan and invoice finance products, also said the momentum it achieved at the end of its last financial year continued into the first quarter of the new financial year with its lending book growing and arrears continuing to fall.
Adjusted profits declined by 3% to £3m in the 12 months to the end of May on revenues down 2% at £23.6m.
However, own-book deal origination – on which the group has been concentrating – was up by 36% to £64.4m during the year while its total lending book had strengthened by 18% to £136.8m by 31 May.
During the year the group’s board adopted a medium-term strategy to significantly increase own-book deal origination and commercial lending and plan for the divestment of its non-core, consumer-focussed brokerage businesses.
These included its second-hand vehicle brokerage business which, despite concerted efforts, had made a loss since the start of the pandemic.
CEO Ed Rimmer, pictured, described the results as “satisfactory”, adding that despite the significant macroeconomic challenges, when discontinued operations were removed, pre-tax profits were on a par with the prior year.
“It is particularly pleasing to see the significant progress made during the period against the plan,” he added.
“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.”
During the year the group, which had grown rapidly before the pandemic through a string of acquisitions, restructured and strengthened its senior management team with new directors of asset and loans as well as investing in sales with enlarged team of business development managers for the invoice finance and hard asset divisions.
In a separate trading update to the London Stock Exchange, AIM-listed Time Finance said during the first quarter its own-book lending origination had continued to rise – up by 26% to £15.7m – while revenues were up 12% to £6.3m and pre-tax profit up 125% to £900,000.
The group said the increase in revenue was driven by “solid growth” in the lending book, particularly in the invoice finance division and the ‘hard’ part of the asset division.
Both areas operated very much in the secured lending arena, it said, which reflected the strategic desire for the group to increase its average deal size and, where appropriate, take additional security on its lending.
Mr Rimmer added: “The first three months of the new financial year have seen the group continue to experience growing levels of demand for finance from across the UK SME sector. This continued the momentum seen in the final quarter of the last financial year to 31 May 2022.
“The trend shows that the own-book lending strategy is becoming embedded within the group, understood by our introducers and valued by UK businesses.
“The first quarter’s unaudited results give the Board confidence that the group is well positioned to build value for its shareholders.”
