Ahead of next Tuesday’s Interim Results announcement Mark Watson-Mitchell takes a very positive view on the future prospects for Time Finance, shares now 64p, while broker have 112p Price Aim

24.01.2025

Based in Bath, this £58.5m capitalised finance company will be announcing its Interim Results for the six months to the end of last November.

This group offers vendor finance, hire purchase, finance leasing, asset-based lending, and invoice finance; secured business loans; and vehicle finance solutions, as well as commercial loans.

I believe that the results will show a very positive array of figures, with a record set of revenues, profits and growth in its lending book.

The Business

Time Finance (LON:TIME) provides financial products and services to consumers and businesses in the UK.

The company operates through Asset Finance and Invoice Finance segments.

Its offerings include Asset Finance and Invoice Finance with lending proposals originated through various channels, such as finance brokers and other professional firms, equipment vendors, suppliers and dealers, and direct from borrowers.

Asset Finance enables investment in vital equipment or refinancing existing assets, its business products consist of hire purchase, finance lease, and asset-based lending.

Invoice Finance helps in improving the cashflow of the customer's business, it provides funding and offers an optional credit control service, where it manages a tailored collections process on the customer's behalf.

It offers business loans secured against collateral and secured loans on a short or long-term basis, with monthly repayments, while it also offers commercial loans.

While focussed on being an 'own-book' lender, the Group does retain the ability to broke-on deals where appropriate, enabling it to optimise business levels through market and economic cycles.

Recent Trading Update

Late last year, on Thursday 19th December, the group issued an Interim Trading Update for the six months to end-November.

It highlighted that the first half-year saw revenues up 16% at £18.2m (£15.7m), pre-tax profits were 44% up at £3.9m (£2.7m), with greatly increased margins of 21%, 4% better than the previous 17%.

The gross lending book was £209.4m (£188.6m), with stable net arrears of just 5% of that book, while net bad debt write-offs remained steady at just 1% of the book.

Management Outlook

CEO Ed Rimmer stated that:

"The Board are very encouraged by the performance in the first half of the current financial year. In line with our strategy, we have continued to increase the size of our lending book and, crucially, have done so without compromising on credit quality.

This is borne out by the stable nature of both our arrears and our write-offs.

This approach, combined with a renewed focus on margins, has led to significant increases in both revenues and profitability, both of which are record figures for the first half of a financial year.

We have real confidence that the Group is well placed to continue on this growth trajectory, building long-term value for our shareholders, and I look forward to updating our shareholders on our future strategy through to May 2028 in Q1 of 2025."

A Broker’s View

Analyst Andrew Renton, at Cavendish Capital Markets, has a Price Objective of 112p on the group’s shares.

For the year to end-May 2025 he estimates that the group’s revenues will increase to £35.1m (£33.2m), with adjusted pre-tax profits of £7.5m (£6.0m), generating earnings of 6.1p (4.9p) per share.

His coming year estimates for 2026 are for £37.0m revenues, £8.3m profits and 6.8p per share in earnings.

His note on the group highlights a continuation of its strong performance.

The Equity

There are some 92.5m shares in issue.

The larger holders include Arena Investors (19.92%), GPIM Ltd (17.97%), Hargreaves Lansdown Asset Management (8.88%), Lombard Odier Asset Management (3.30%), and IG Markets (2.16%).

My View

I really like this little group because its arithmetic progression is impressive while its prospects are excellent.

And yet its shares, now 64p, are seriously undervalued if you take on board its broker’s 112p Price Objective.

I look forward to next Tuesday’s Interim Results announcement, anticipating a good reactive increase in its share price.

(Profile 23.12.20 @ 21.50p set a Target Price of 30p*)

(Profile 07.01.22 @ 23.50p set a Target Price of 30p*)

(Profile 20.11.23 @ 32.50p set a Target Price of 40p*)

(Asterisks * denote that Target Prices have been achieved since Profile publication.)

Set and Match Ltd MBO funded by Time Finance