Time Finance Plc (LON:TIME) Chief Executive Officer Ed Rimmer caught up with DirectorsTalk to discuss record revenue & profit growth in FY 2024/25, and the launch of a new three-year growth plan.
Q1: Time Finance have just published a trading update for the year ending 31 May 2025. Could you take us through the financial highlights?
A1: So, the end of our current financial year has just gone through to May, and it actually coincided with the end of our current full year strategy as well that was put in place back in June 2021, as we were coming out of lockdown.
I’m pleased to say that the full year plan has gone very well and the last financial year in particular was strong. We saw revenue up 11% to a new high of £37 million, profit followed that with a really strong year, profit before tax was up 34% to just under £8 million, £7.9 million for the year. Our net tangible assets in terms of our balance sheet also increased to £44.1 million at the end of May and our lending book increased by a further 8% to a new high of £217 million.
I’m pleased to say that the growth and the progress and the good financial results that we’ve achieved haven’t been at the expense of increasing credit risk. So, our net arrears were unchanged at 5% and our net bad debt write-offs were also unchanged at 1%.
So, we’ve grown the business, grown profit, and revenue, but not at the expense of taking on additional risk, which was really pleasing.
Q2: Now, you mentioned that you’ve seen the end of the full-year strategy, which you started back in June 2021. How successful do you think that was?
A2: I think as we were coming out of lockdown; cast our minds back to June 2021 when we put this in place, it was as I came back into the business, I’d had some time away and I came back in as Chief Executive. There was obviously a lot of uncertainty still in terms of how things were going to recover and certainly how small businesses were going to perform.
So, I think the fact that we’ve achieved pretty much everything we set out to is really, really positive.
I think one of the key things that we’ve done is we’ve transitioned the book from what was more biased towards soft assets and unsecured loans much more towards the secured lending side of small business funding, more towards the hard elements of asset finance and invoice finance, which was a direct, deliberate strategy.
If we look at the volume of hard asset finance and invoice finance that we did in the last 12 months, it was 90% of our new lending volume, and 83% of the lending book is now hard asset and invoice finance, which is a significant improvement from where we were when we started the plan, which was just around 50%.
So, we’ve transitioned the book as well as achieving those results so that we’re now more secured in terms of our lending and as I say, that was a deliberate strategy.
Q3: You’re now starting a three-year growth plan through to May 2028, can you tell us more about that?
A3: It’s very much continuation of what we’ve done so far. There are still some new elements and some challenges for us, but we’re not about to go and take the business into some new, weird, and wonderful ways of lending. It’s very much focusing still on hard asset finance, invoice finance and asset-based lending.
So, there’s four elements to the plan. The first is to continue to grow the lending book. Our objective there is to increase the book to £300 million plus by the end of the three-year plan.
We’re looking to continue with the resilient lending theme, very much focus still on the secured lending that I’ve just talked about, so focusing primarily on invoice finance and hard asset finance as well as asset-based lending. So, that’s a combination of those products plus secured loans that we’re able to offer as well.
Continuing to increase our operational efficiencies and ultimately, the plan there is to increase the profit before tax margin up to the mid-20s from the low-20s where we are now. So, very much focusing on leveraging our brand, getting the name more understood in terms of the broker community and the introducers who we get business from, but also our internal brand so very much focused on our cultural values.
We were recently awarded a One Star accreditation in the Best Companies engagement score, so we’ve got some further challenges there to try and push that higher and also looking to improve relations that we have with our investors. We have some really good relations, but we’ve just launched a new specific Investor Relations hub on the web. So much more focused towards interaction with our investors.
So, there’s a lot going on, I think if I go back to the core theme, which is continuing to grow the business, we’ve got some specific parts of that.
One of them is expanding the Invoice Finance sales team and the geographical coverage, we do have some gaps still in the country which is good because it obviously offers some opportunity to grow. One of the gaps is actually in London and the Southeast so we only have one salesperson there at the moment. So, there’s clearly more that we can so there.
We’re looking to challenge ourselves to do some slightly bigger deals as well. So, we’ve recently increased our maximum funding facility for any client from £3.5 million to £5 million.
We’re looking to very much focus on the multi-product offering so the asset-based lending very much at the smaller end of the market is underserved, and that’s something we think we can focus on more and grow the book through.
A direct to market strategy as well we’re looking at. So, we very much rely on introducers to get our business at the moment which will definitely continue, that’s a key part of our future. We’re looking if we can originate some business more directly, and obviously over time that will help to increase the brand, and it will reduce the cost of acquisition of new business. It will also provide an opportunity for younger salespeople to come through the sales learning curve in terms of learning how to originate business directly because that’s every different than originating through introducers.
So, lots of exciting things in the pipeline and fundamentally it’s about more of the same; growing the business, focusing on the core parts of the product range that we want to make sure are resilient, improving efficiencies and leveraging our brand.
Put those things together and hopefully we’ll have another good set of results at the end of the three-year period.
