Time Finance plc share price, company news, analysis and interviews

Time Finance plc CEO Ed Rimmer discusses positive performance, economic challenges, and long-term goals in an exclusive interview with DirectorsTalk.

In an exclusive interview, Time Finance plc CEO Ed Rimmer discusses the company’s progress, key differentiators, and outlook for the financial year.

Time Finance plc (LON:TIME) Chief Executive Officer Ed Rimmer caught up with DirectorsTalk to discuss who they are & what the company does, trading & strategic update for the last financial year, doubling the lender book by May ’25 and achieving growth.

Q1: Ed, if we can kick off with, who are Time Finance, and what do you do?

A1: The company is an AIM listed provider of finance to small businesses in the UK. The company has been trading for just over 20 years in the UK market and, up until the end of last year, it was known as 1PM PLC.

In simple terms, we borrow money, and we lend it on two small businesses at a margin Amongst that we provide various services for which we charge additional fees and then we obviously have costs to cover in terms of people, processes, systems, premises, and crucially management of risk through minimizing bad debts. And at the end of that, we hope to make a profit.

That’s in simple terms, what we do. We’re not a tier one funder, we’re not a deposit taker so we obviously have to go to the deposits takers, which are the banks in the main, to negotiate the best rates possible, and then lend those out in our chosen markets. They are invoice finance, asset finance, loan finance, and a combination, hopefully, of those products, which I’ll come on to talk about.

In a nutshell, that’s what we do, we lend money on our own balance sheets, and we also broker on some of the deals we get that don’t fit within our credit policy.

Q2: Now, you’ve published your trading and strategic update for the last financial year. Given the wider impact of COVID over the last 15 months or so, it seems the business has navigated that period pretty well and is in robust shape?

A2: I think we have. It’s been a tough journey for the team, particularly the credit and risk team, who I have to say have done a fantastic job, particularly through the first lockdown where forbearance levels, this time last year reached £25 million. I’m pleased to say that at the end of our financial year, just gone, to at the end of May, the forbearance levels have reduced down to just than £1 million pounds so a fantastic achievement in terms of managing that credit risk.

The level of arrears have also reduced significantly. They peaked at around £25 million as well, this time last year, they’re now back down to £15 million, which is actually lower than they were when we went into the pandemic.

So, all things considered, it’s obviously been a lot difficult, a lot of difficult times, we have seen volumes a lot lower, but they’re starting to pick back up again. I think the businesses, all things taken into account, is in reasonable position.

Q3: Just talking of growth, you’ve set a medium-term vision to more than double the lender book by May ’25. What are the key objectives behind this plan?

A3: We’ve set our four-year medium-term plan out to take the lending book from around £100 million, where we are today, to £250 million so slightly more than doubling the size of the lending book.

The key metric behind that as well, in terms of profitability and bottom-line return, is to try and get the business back up to pre-COVID levels around £6 million, as soon as possible. And with that, double the size of the balance sheet in terms of the net assets, they currently stand at around £28 million, and our plan is to get that up to £50 million in the four-year plan.

So, there are our three key financial metrics and then obviously behind that is a plan of how we’re going to do that.

Q4: Doubling the book will involve significant scaling up so how will you achieve that growth?

A4: Yes, so there’s a number of key things.

I think that the main thing is really focusing on core business. When 1PM, as the business was called, started to expand probably from around 2015, a number of acquisitions were completed, the business expanded predominantly through acquisitions.

We completed seven acquisitions in the space of three years and that, for anyone’s experience in acquisitions, is challenging. Some of the deals that were completed worked really well, some of them didn’t quite work as well and I think amongst that time, the business got a little bit muddled, if I’m honest. We did business to business acquisitions in terms of small business lending, but we also did some business to consumer acquisitions that were highly regulated and not necessarily in keeping with the business-to-business strategy.

So, I think the key parts of the plan moving forward is to refocus the business on what I would call our core products and that is asset finance, invoice finance, and loan finance, which are predominantly secured lending products to small businesses in the UK market and not necessarily focusing on our broking activities too much into the consumer space.

I think with that comes a repositioning of one of our products as well, which is the soft asset business, which was the original 1P, small ticket, soft asset business down in Bath. We’re looking to increase the minimum ticket size to a minimum of £5K, previously we’ve had a lot of very, very small ticket businesses that we’ve funded £1000, £2000, £3000 pounds and that creates an awful lot of work at the very small end of the market. Lots of volume and lots of work attached to that do we’re looking to become more efficient and reduce the number of proposals that we’re get in and complete in return to doing slightly higher.

We should still see around 60% of the business that we did previously, but it’s making the business more efficient and taking the deal size up a little bit in that soft assets side. So, that’s really the first core strategy.

The other things really just to focus on, the multi products offering of 1PM as it was, and now TIME is, I think, a real differentiator for us. We have lots of competition in the market from the mainstream banks to the new challenger banks, FinTech companies, other listed businesses, and also smaller regional privately-owned businesses. Each of them has their markets and their advantages but I think there’s a much smaller pool of providers of finance to the UK SMEs that have all our product offerings, as well as being flexible, as well as being agile, and as well as providing a really personal approach to our customers and clients.

So, I think it’s that product mix that we’re going to focus on being more than just a one trick pony, if you like, we can take our multiple products out to market, provide those to one client, become a one-stop shop, even if it’s for clients that don’t necessarily need those other products now, at least if they understand what we can provide, how we can provide it, they can come back to us at a later day without having to look to other alternative providers.

So, that’s a key part of the plan. We’ve already started the development of that internally through internal cross selling to market our other products to existing clients. That’s something that we had going in the business previously, but it stalled during the pandemic, understandably, there was other priorities and we’ve started a plan and a project to relaunch that.

I’m pleased to say that we’ve got somebody joining to head up the development of an asset-based lending product at the beginning of September, and that will take the joined-up products out to market as well as trying to promote them internally to existing clients. So that’s another key part of our strategy, moving forward.

A couple of other things. Really repositioning the business now that we are TIME, 1PM historically, I think, was associated with the original 1PM business in Bath, which was small ticket leasing. All the acquisitions that were completed, the brand names were really left as they were so again, the business was a little bit complicated in terms of who did what and knowing that actually we had other parts of the business that were all part of the same group.

So now that we’re all Time Finance, we’re looking to invest some money in marketing, move towards more digital and online marketing as well, and really get the message out to market in terms of what we are, who we are, where we’re looking to play in the market so that ideally when we are talking to introduce as a business, customers, and clients, then they’ve already heard of us.

That’s probably not the case at the moment, because it’s a relatively new name in the market but I think over the course of this plan, it’s very much achievable. It won’t be easy, it’ll take time, but I think with the right level of marketing, support, investment, and messaging to the market, we can achieve that. So, it’s really getting that message out and positioning the company in the markets that we want to be known for.

The other key point is investing in some additional sales, talents, and sales resource. There’s been a lot of change in the market through the pandemic, actually, not just because of the pandemic, a lot of the lenders, the banks particularly, have decided that they prefer to lend to the small business end of the market, through people like ourselves providing wholesale funding, and that’s creating opportunities.

There’s been some change in the market with other independent providers as well, in terms of ownership and different strategies, and it’s created an opportunity to acquire some salespeople who ordinarily may not have been looking and may not have been in the market.

Investing in that sales talent to deliver our plan is something that we’ve acknowledged, and the Board have agreed to. That may mean some additional cost comes into the business before the returns are seen, but that’s part of investing in the future.

So, those are the key parts of the strategy moving forward.

Q5: On a personal note, Ed, how are you finding having come back into the business over the past three months?

A5: It’s been really good. I didn’t entirely know how things would have panned out through the pandemic, and I have to say, that as I mentioned earlier, it’s not been without its challenges, but I think the businesses has ridden the storm, if you like, really well so I think we’re now primed for that next stage of our growth.

The focus has very much been on credit and risk, and as we come out of the various lockdowns and opportunities start to come about, we are in a good position to take those opportunities and I’m looking forward to moving the business forward during, hopefully, another growth phase of the economic cycle.

I think there’ll be further ups and downs. I think we obviously need to see the government support, people moving away from that government support so I think that will start in earnest when the furlough scheme finishes in September, if it does finish in September.

There’s obviously the other government funding initiatives that are still in place, but I think the key thing is the furlough scheme, and then, ultimately small businesses will always need finance to help them grow and help them run their day-to-day activities through working capital. That’s when businesses like ours will start to grow ourselves again, and there will be opportunities in the market.

So, I’m looking forward to taking those opportunities and making sure that the company is in the best possible situation to maximize those opportunities.

Time Finance plc (LON:TIME) Chief Executive Officer Ian Smith caught up with DirectorsTalk for an exclusive interview to discuss their rebranding, further development and integration, how business has fared during COVID-19, the impact on the lending portfolio, expected revenue and profit figures and the longer term outlook for the company.

Q1: Now, you’ve rebranded to Time Finance, why have you chosen to do this now?

A1: We set out the intention to invest in marketing and in our branding some two years ago now and we’ve been working on that project over that time period in-house really. There have been a couple of delays that are Brexit-related and COVID-related but we felt that now was the time to rebrand for two reasons really.

I think first because we’ve completed the buy and build journey that we’ve been on over the last five or six years now, acquiring six companies to put the platform of core products together. So, essentially that part of the development of the group has been done so we thought that now was the right time to signal the completion of that process and the start of the next phase of growth.

I think the second reason is that the business model has fared well and stood us in good stead during this COVID period and that’s given us the confidence really to, as I say, signal the second phase of growth, having come through this COVID effected period very well as a group.

Q2:  Can you tell us about the name, its meaning, and the reasons behind the new branding?

A2: It’s a bit of a nod to the past in the sense that 1pm was the old name, not that that was ever to do with the time, that was more derived from one payment monthly but I think time and finance to us are the two things, perhaps the two elements, that are the most elusive assets, if you like, for small businesses as they grow and freedom to grow is what both time and finance enable. So, we felt that it just sort of captured the essence of what we’re all about as a business.

The inspiration, I suppose, for the logo that we’ve used comes from a number of factors and our values as a business so it’s a kind of an hourglass logo so it reflects the fact that time is money. The top part of the logo is kind of a shield symbol which reflects trust and integrity and the lower part of the symbol is an upward arrow, reflecting growth and direction.

If you put the whole logo on its side it reflects the infinity symbol which sort of conveys endless possibilities and agility and flexibility and creativity.

So, putting all those things together, we felt the logo, the look, the feel, and the name itself captured everything that we as a business are trying to do, which is to be totally committed to the growth of small businesses in the UK.

Q3: So, what will the new brand signal for further development and integration of the group?

A3: I think in terms of development, it’s very important for all of our stakeholders, our introducers, and our customers to be able to see that all of the products that we’re providing for small businesses are available under one roof. By coming to us as the primary source of finance for small business, they’re going to be able to get the solution that they require for themselves or for their customers. So, I think what it signals is the ability to be able to provide all of our core products under one roof and potentially new products.

In terms of integration, I think it does help us as a business in terms of aligning our various processes from the businesses that we’ve acquired over the years and to operate as one. So, I think, the change to the new brand is important internally as well as externally for both groups of people. All of our stakeholders externally can see that we’re the place to come to for finance and all of our employees internally can see that we now operate as one business.

Q4: You’ve also issued a half year trading update, how has the business faired through the last six months of COVID?

A4: Very well, actually, so our last year-end was 31st of May which was probably the low point in terms of the impact of COVID on our business, each month since then the business has grown and as the trading update says, it is in line with what we internally expected in terms of the budgets that we’ve set. All of our budgets have been set to get us back to pre-COVID levels of activities as soon as we were able to and certainly during this financial year.

The half year reflects the breadth of what we do in terms of lending into many, many different sectors, some of which are performing well during this COVID-impacted period and it also shows the operational resilience of the business. At 30th November, which is the half year that we’re reporting on, we had more cash in the bank than we did at the end of May so £3.5 million compared to £1.3 million and a net tangible assets had increase to £28 million from £26.5.

So, generated cash during this last six month period and we’ve been profitable so I think at this point, we say that we’re fairing very well.

Q5: Now, there’s presumably been an impact on your lending portfolio, what are the main impacts that you’ve seen?

A5: Yeah, certainly, there are some different dynamics going on as far as the lending book is concerned. At 31st of May, which is the last year and the net lending book, the principle that we lend was about £125 million and that fell to around £95 million during the COVID-impacted period for a couple of reasons really.

One and the first is that we were writing less business during that time as one would expect but secondly, quite a number of our borrowers took the advantage of government-backed funding, bounce back loans and CBILS loans to effectively settle early their obligations with us. Whilst on the one hand that reduces our lending book, and obviously it’s the lending book that creates the interest income which becomes our revenues, that’s not a good thing if our book reduces but on the other hand, it de-risks the book in the sense that these businesses that were able to take funding from the government have been able to pay off their obligations to us and we don’t therefore have a collections issue going forward.

So, as I say, I know the book became smaller as a result of COVID, actually I think the quality of our book is now higher and since that low point of £95 million, the book has been increasing month on month during the last six months as we’ve originated new business and it’s back to around £105 million as at the 30th November. So, we’re pleased with how that’s tracking.

There have been arrears in the portfolio but we’ve been able to reduce those steadily over the last six months, we have given forbearance to some customer, some customers have requested payment holidays, for example, for a period of time and at one point there was around £25 million of our portfolio that was under some form of forbearance. That’s now down to around £3 million so most of those deals have come back on track.

So, I think the portfolio, albeit slightly smaller at the end of November, is actually a higher quality portfolio and better place to generate interest income as we go forward.

Q6: With that in mind then, what are the expected revenue and profit figures for the half-year and what does this suggest for the rest of the financial year?

A6: So, the revenue that we’ll generate from that portfolio, let me take a step back, so in terms of our total revenue, 80% is interest income from our lending, around 20% is commissioning come from broking. That total revenue for the half year will be not less than £11.6 million for the half-year period and that is lower than the same period last year, of course, because it’s still COVID affected and obviously the portfolio is lower, as I’ve just explained. We’re pleased with that level of revenue for the six-month period and what that will generate is profits are not less than £1.2 million for the six month period which is a lot better than the previous six months which were clearly in the most heavily COVID-impacted periods.

So, in the last six months before the start of this financial year, it was actually a loss of around £1 million so we’ve now turned that to a profit of £1.2 million and again, that trajectory is improving month on month so we’re pleased with trading performance.

For the rest of the financial year, what we’ve said is that what we’ll do when we publish the full interim results on the 19th January, we’ll make a reassessment then as to whether we’ve got the visibility to be able to reinstate market guidance for the full year. Assuming that we continue with the trend that we’re seeing for the first six months then we will be able to give guidance for the full year at that point.

Q7: With 2021 fast approaching, what do you see as the longer term outlook for Time Finance over the next year to 18 months?

A7: I think we are cautiously optimistic at this point, if not perhaps a little bit bullish about what we think could happen as the economy improves, clearly were all buoyed up by the news around vaccines at the moment. So, there is the prospect, I suppose, that in 2021 we’re going to get back to some level of normality from a business perspective.

Given our market position, which is all about spread and lending to many, many different sectors and, as I say, many of those are performing very well and given the trend that we’ve seen over the last six months, for the half year results that we’re reporting on, we are cautiously optimistic about that continuing for the second half of the financial year and indeed beyond.

The whole point about our rebranding, as I said earlier, is to signal the next phase of growth so we’re cautiously optimistic about our position and what we can do in the UK economy as that improves over the next 12 to 18 months.