Time Finance (TIME) , a specialist finance provider to UK SMEs, announced final results for the year ended May 31 2023 (FY23).
Time Finance reported revenues of £27.6m, a 17% increase from last year's £23.6m. Profit before tax nearly quadrupled to £4.2m from £1.1m in FY22, and earnings per share were up to 3.7 pps from 1.0 pps a year ago.
Net assets increased 15% to £61.7m on May 31 2023, with net tangible assets up 12% to £34.2m. Own-book deal origination increased 14% to £73.4m, and lending book stood at £170.1m, up 24% from last year.
Operationally, Time Finance's ratio of own-book lending to broked-on lending increased to 96% vs 4% during the year (up from 87% vs 13% in the previous year). The company saw strong growth within its Invoice Finance division where lending increased 30% year-on-year to £56m, and in the "Hard Asset" offering within its Asset Finance division, up 55% to £62m.
Time Finance divested its non-core consumer mortgage brokerage during the period. The company ended the year with net cash held on 31 May 2023 of £3.8m, up from £2.9m a year ago, and £50m of lending headroom.
View from Vox
A positive set of results from Time Finance showing a robust balance sheet as the company marked the halfway point of its 2021 four-year medium term strategy that aims to double its gross lending book to £230m and achieve revenue and PBTE levels in excess of £30m and £7m respectively.
So far, Time Finance is executing on its 4-year plan, with strong revenue, pre-tax profit, and EPS growth, as well as material increase in net tangible assets. At the same time, net deal arrears remained consistent at 6% of gross exposure, demonstrating the continued effectiveness of the company's credit risk policy. There is good future visibility of earnings with unearned income of £21.2m, up 27% from last year's £16.7m. A healthy cash position and access to £50m in lending leaves Time Finance with plenty of room for growth.
Markets continue to be bullish on TIME given its positive growth momentum, sending TIME shares 35% higher this year and 67% higher over the past 12 months. SMEs continue to face significant challenges with increasing interest rates, high inflation, disrupted supply chains and, in many sectors, a shortage of labour. Alternative lenders like Time Finance have capitalised on new opportunities arising from these headwinds. As the sector continues to grow, we recommend investors interested in small and medium-cap finance TIME and other companies in the space.