Time Finance raises expectations after strong third quarter
Time Finance reported impressive growth in profits and revenues for the first nine months of its financial year in an update on Wednesday.
The AIM-traded company, which provides independent specialist finance to UK businesses, said it had streamlined its operations to focus on core, own-book lending, resulting in increased lending book, revenues, and profits.
It said own-book lending origination rose by 34% to £52.9m in the third quarter ended 28 February, up from £39.5m year-on-year.
Revenue increased 28% to £20m, while profit before tax surged 172% to £3m, from a previous £1.1m.
Time Finance also reported strong visibility of future earnings, with unearned income up 30% to £19.4m as of 28 February, compared to £14.9m on the same date last year.
The firm’s gross lending book grew 26% to £157.2m, while net arrears reduced to 6% of the gross lending book, down from 8% in the same period a year ago.
Net tangible assets also rose, by 12% to £33.0m.
The company said the positive trading momentum in the third quarter had given its board further confidence that trading for the full year would be ahead of the latest market expectations, with profit before tax expected to be at least £3.6m.
It said the increase in revenue was primarily driven by growth in both the invoice finance division and the 'hard asset' subset of the asset division.
Both growth areas were operating in the larger-ticket, more secured lending arena, which was reflective of Time’s previously-stated strategic focus on increasing the group's average deal size and, where appropriate, taking greater security on lending.
“I am delighted to report that the group's ongoing trading performance during the third quarter has enabled the board to confirm that the expected results for the full-year to 31 May are being further uplifted,” said chief executive officer Ed Rimmer.
“This is the second time since the start of the calendar year that these have been raised, bearing testament to the successful implementation of our medium-term strategy.”
Rimmer said that despite well-publicised wider macroeconomic “headwinds”, the group had continued to grow at a faster rate than expected, demonstrating that demand for finance from UK businesses was robust.
“The group's multi-product tailored offering to UK SMEs, its own-book lending strategy and its quality of service have become ever more appreciated by our introducers and I am confident that we can deliver increasing value for our shareholders.”
Time Finance said it would update the market on trading for the full year ending 31 May in late June.
At 1149 GMT, shares in Time Finance were up 17.04% at 26.1p.
Reporting by Josh White for Sharecast.com.