Time Finance (LSE:TIME) — Q3 Trading Update

0:01 Good afternoon and welcome to the TIME FINANCE PLC Q3 Trading Update. Throughout this recorded update, investors will be in listen only mode. Questions are encouraged and they can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives in the meeting itself. However, the company can review all the questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll.

0:28 I'd now like to hand you over to CEO, Ed Rimmer. Good afternoon to you, sir. Good afternoon, everyone, and thank you for joining, our q three trading update. I'm gonna take you through just an update on where we are with our current strategy. James will then talk through the numbers, and then I'll talk about our future plans for the next three year cycle.

0:50 So just moving through the slide deck, our standard disclaimer, and then introductions, really. So I'm Ed Rimmer, chief executive of TIME FINANCE. I've been in this role for four years. I've spent thirty years lending to small businesses. A good chunk of that time was spent with Bibby Financial Services, five years as The UK chief exec.

1:14 And, yeah, over to you, James. Thanks, Ed, and good afternoon, everybody. I'm I'm James Roberts. I'm the CFO of TIME FINANCE. I've been in the on the AIM market with various guys now since about 2007, and I've got about twenty five years in financial services experience. And I've been with TIME FINANCE in this role as CFO for coming up for eight years now, eight years in a couple of months. Thanks, James. So we'll, just take our cameras off whilst we're going through the main, presentation, and then we'll come back on when we take the q and a at the end. As we go through, it's probably worth just mentioning for people that aren't as familiar with the business. We do have some appendix slides at the back, which gives a little bit more basic information in terms of who we are, what what we actually do, our core products, and where we sit it sit in the marketplace. If anyone obviously wants further information on those, there's some, as I say, some appendix slides at the at the back.

2:16 So just in terms of our current strategy, we put this in place in June 21 as the business was coming out of COVID, and it was a four pronged attack. We're obviously coming towards the end of the plan now, and I'll take you through progress to date in the next couple of slides. But the four objectives were to double the gross lending book from the starting point of around a 110,000,000 in in June 21 to get profitability back up to the pre COVID run rate of 2019 to become a nationally recognized SME funder. That was very much within our our core introducer market. And to strengthen the balance sheet through focusing more on own book lending that the business prior to 2021 was a mixture more of brokerage and own book.

3:04 So where are we then in terms of our current strategy? Well well, as I I mentioned, we're well towards the end now really of the of the plan. And and thankfully, we've had a really good three to four year period, and and the business has has moved forward significantly. If we look at the first objective to double the the gross lending book, we're at 210,000,000. James will talk you through the growth over the the quarters, but we've seen successive growth really over each quarter for the last three three years. And that's been driven through invoice finance and hard asset. You can see there the significant growth that's been achieved since the launch of the strategy in invoice finance, a 160% of where we started, and hard asset, even more pronounced, 231% of of where we started.

3:53 The run rate profitability objective, well, you can see there the nine months comparisons from where we are this year from where we were at the peak of the profitability

4:04 in 2019. We've overtaken the comparison figures for both revenue and profitability, which obviously, you know, really, really pleased with. Profitability now stands at 5,900,000 compared to the comparative 5,700,000, and revenue further added 27.3 versus 23 point '8, which was the the previous high. If we look at the other two objectives to become a nationally recognized SME lender, people some people will know at least that the business was previously known as one PM PLC. It was rebranded at the start of 2021, And that was very much this objective on very much on the back of that rebranding. So it was to go and really establish who we were, what we did in our key introducer market, which is where we get most of our business from, and we've made really good progress there. We started to measure trust pilot review ratings in terms of customer feedback against the service levels around twelve months ago, and the feedback there has been really good with an average rating of 4.9 out of five.

5:13 We've been we've we've hired a more established and and experienced head of marketing who's helped us with this objective and also a a new head of mark head of operations role was brought into the business a couple of years ago. We sponsored the National Association of Commercial Finance Brokers in 2024 and and '23, the year before. We've won a number of awards. And hot off the press, we decided to go into the best company survey around engagements, employee engagement. This is the the business engagement survey that was formerly known as the TIME's top 100. And we're really pleased to say that we got a very good one star accreditation, which is really, really good for all the 160 people who make up our team at TIME FINANCE and something that we're really, really proud of, and that that happened a couple of weeks ago. So just another port point in time really in terms of the the progress that we've made.

6:15 The final objective around strengthening our balance sheet through own book lending, as I mentioned, the the previous business was more geared towards a balance of own book and brokerage lending, and we focus very much more on our own book. You can see the second bullet point down there. 97% of the business that we've done this year has been on our own book with a a small amount still brokered on. That's really enabled the tangible net assets to increase up to a a record high of 43,000,000, which is up by over 50% from the starting point in in June 21. And then the two points at the the bottom really around secured lending. Secured lending is is the lending that is really invoice financing, hard asset finance because there's assets that sit behind those agreements where if all goes wrong, we can recover those assets either through book debts or or physical tangible assets that we can resell.

7:14 And you can see there that now makes up 81% of our total book. And actually for the nine months to February in terms of the the the new business was 91%. So very much geared towards that secured lending, and and that's what we set out to to achieve at the start of the plan in in June 21. Over to to James now just to talk you through some numbers before I come on and and then talk around the the future plan. Thanks, Ed. So I'm just gonna rattle through some high level points of the trading update we put out this morning. In our mind, the four key takeaways, if you take four things away from the from the numbers, are that the the the nine months to the end of February were record revenues and record profit before tax in the history of the company, which is which was particularly pleasing.

8:09 That was built on now fifteen consecutive quarters of loan book growth. And

8:16 that that grow the loan book growth well, it's grown. We've managed to control the arrears and the write offs. There's arguably no point in growing the loan book for the sake of growing the loan book if there's lots storing up lots of trouble for later down the line with deals that aren't of the best quality. I'll come on to the actual arrears and write off figures in a sec, but the quality has been maintained while the growth is there. So we've grown the loan book. We've maintained the quality of the credits we're writing, and that has led to these record revenues and profits. And then finally, the balance sheet, I think, is demonstrating how robust and strong it is. It continues to strengthen month on month. It weathers macroeconomic storms, and and it's in a very strong position. So it's a it's a nine month performance that we're we're very pleased with, and sets us up, well for the final quarter of the year.

9:04 Looking at those numbers in slightly more detail, you can see here, these are the key financial metrics we like to look at. There there are others, obviously, but these are probably the key key 10 or so. And you can see on the right hand right hand side of that table, it's all green, which is which is good and what we wanna see. So own book origination is up to 69,000,000, just over 69,000,000. What's own book origination? Why that why is that important? It's effectively the lifeblood of the business. It's new deals that come across our desks, and we write them. It's not just everything we see. We see many, many millions more than that, but some don't fit our credit policy, etcetera. So we we don't write them. But these are the ones we write and we then put in our book. So if that figure is growing and of the right quality, that will lead to the lending book itself growing. And in turn, again, if that that quality is right, revenue and and and then profit. And you can see that on the next few lines. So the revenue sorry. The the own book lending lending book grew to 210,000,000.

9:58 That's an all time high. That's 11% up on the previous figure twelve months earlier. And that led to revenue 14% up on the twelve months earlier to have 27,300,000. And probably a figure we're most proud of is is the profit before tax. Well, the revenue and the lending, the origination are all up. You can see there the the profit before tax is up 40% on the year before. So that shows the quality of the the deals we're putting on our book and also the margin improvements we're making through our business improvement department and the focus on efficiencies, which is leading to much better margins. And you can see there below that the PBT margin increased from 19% to 21%. So a really good p and l, we think, for those nine months.

10:44 Some other areas on the balance sheet, we've got unearned income of 26,400,000. That's 7% up. That figure's important to us because that shows it's deferred income on the leases and the loans that will drip through into revenue and profit over the coming months and years depending on the life, the length of the lease or the or the loan. So the bigger that figure, the more visibility of future income we've got, and we can see that's that's continuing to grow. And perhaps two of the most important stats next, deals in arrears and deals in write off. You can see the deals in arrears at at 5%. That's a reduction from a year ago. It's been steady at about 5% now for the for the last nine months or so. Deals in arrears aren't necessarily ones that you end up writing off, but it's an early warning indicator of ones that aren't quite going to plan. And that could be anything from they're just one down, someone's forgotten to make a payment and you and you phone them up and they pay you straight away, all the way through to some that are in in in the legal process to get our money back. But if that figure is going up, it could lead to bigger write offs in the past in the future. Sorry.

11:44 But as you can see there, it actually fell from a year ago and has now been steady for nine months or so. And the and the end of the day, though, some will go wrong and you will not get all of them back, but you can see there the net bad debt write offs steady at 1%. So with all the macroeconomic noise going on, we're maintaining the credit quality 1% write offs year on year, which we can never really be pleased with arrears and write offs. We are, you know, pleased, for one of a better word, on on those stats. And all that's led through to a much stronger balance sheet as I touched on, consolidated net tangible net tangible assets of 70,000,000, and perhaps more pertinent consolidated net tangible assets of 43,000,000. There's an element of goodwill on the balance sheet from a buy and build strategy back in 2014 to 2017.

12:29 So we tend to focus on net tangible assets. We can see those are up 14% from just under 38,000,000 to £43,000,000. So a good set of numbers there. Just drawing out some other key points we think would would be people would be interested in. Here, we've got a a a graphic of the arrears, those early warning signs of deals that potentially could go wrong. And then we've also got our write offs and our provisioning as well because the provisioning levels are probably, I'd imagine, quite interesting for people to see. But if we start with the graph on the left, the purple line is the total group arrears, and then our two key growth areas, as Ed mentioned, hard asset and invoice finance, the green, and the blue, I've pulled out their arrears as well as you can see. And what you can see from the beginning of the plan, the group arrears were in the low teens, about thirteen percent.

13:19 They fell rapidly as we came out of COVID, and they've been in the five to six percent range, the odd spike every now and again as you'd expect month on month, but pretty much consistent now for two and a half years or so in that five to six percent range. So that reiterates the point I've made that we've grown the book significantly, but not at the expense of quality.

13:38 You can also see there hard assets followed a similar trend, very high coming out of COVID fell, and then it's it's steadied in the sort of three to 4% range, three to 5% range. And invoice finance, again, fell to a lesser degree, didn't spike as much during COVID, but it sits settling in the two to four percent range. So consistent arrears across our book,

14:00 giving validation to the our assumption assessment that we're writing the right types of deals for where we what we want to do. The table on the right just shows the net bad debt write offs. I touched on the fact it it's one percent now, and you can see it has been for the last year or so. It it was a bit higher as we came out of COVID about two percent. What you can see on the right hand side there, which is perhaps interesting, is that our provisioning has always been significantly higher than our write off. So you can see we're providing. It was about four percent in the COVID days, but around about three percent now, and our write offs have been one or two percent. So we've always got bigger provisions than the level of write offs we've experienced. So, we think that's relatively prudent. And then the final slide from me just to, provide a bit of color to the, funding that we've got in place. We can only do what we do thanks to our funding partners.

14:51 We put in roughly 10% equity into every deal, but the other 90% needs to come come from somebody else. And you can see here we've got, we think, significant funding firepower in place to not just complete this medium term plan to the end of May, but also the the three year plan to the end of May twenty eight, which Ed will come on to now. We've got just under 240,000,000 of funding facilities in place, as you can see there, and over a 100,000,000 of headroom, which is a significant amount to to grow into. I've also added this time for those who've who've seen these presentations a few times, the indicative cost that we pay for our funding on on the various types of funding we've got there. I know a number of shareholders had asked to put that in. So I put that in there. You can see asset for block funding, which funds our asset business. We're paying roughly 2 and a quarter to 3 and a quarter over base depending on which funding partner we use. INVISE FINANCE, we have a big facility with RBSIF, and they're 1.4 to 1.5% over base depending on the level of gearing we have at that particular time. So we think it's it's competitive and good funding we've got in place, and we're well positioned to grow for the next three years. And then finally, you can just see there's half a dozen, seven or eight funding partners who've been with us for a while and supported our growth and continue to do so. So we think we're well diversified and spread on the funding part, and and we're well we've got the firepower to see us through to the next three years, which Ed will now elaborate on.

16:18 Yeah. Thanks, James. So as we come to the end of our current four year cycle, attention turn to the next three years, we've been working on where we should position the business, what we should do, and this is a brief summary of where where we've landed. So I think the key point to make here is this is very much evolution of the current work we've been doing. It's not revolution. We're not looking to go and do something completely outrageous and and bet the ranch, if you like, to what we've been doing over the last three three years.

16:51 And it's it's it's a lot of it's more of the same, but there are some areas we believe we can grow, and there's definitely a focus on operational efficiency, which I'll I'll come on to now. So it's a it's a four pronged attack. It's continued lending book growth. I'll expand on these points in the next slide. It's resilient lending, so sticking to the knitting as James has mentioned. Operational leverage, again, that James mentioned in the numbers in in terms of building that margin.

17:19 And all of that should ultimately add up to increase return on equity for for shareholders. So just to put some more detail around those four points. The lending book growth, we believe we can take the the new sort of milestone target up to £300,000,000 plus by the end of May twenty twenty eight. So that's a challenging target, but we think it's achievable. How are we going to do it? Well, there's there's four areas there that we believe growth can come from. The invoice finance business has got certainly more room for growth. We have some geographical gaps in The UK within which we can locate business development managers. For example, London and the Southeast, we only have one person there at the moment, and that's obviously a big area of the country where we think we can get further further leverage. And there's a couple of other areas as well where they're on where we're underrepresented.

18:12 Product development is another area, specifically our asset based lending products, which is targeted at the the SME space of ABL. It's only really been going for the last twelve months. It's probably got to what I would refer to as first base, and there's there's more that we can do there. And that's effectively joining up our product offerings, so invoice, assets,

18:36 and and loans, secured loans, where we can offer a combination of those or all three to the same the same client. The third one is a direct to market strategy. So most of our business comes from third party introducers at the moment. We started in in the last six to nine months in the asset business to get some business from the direct market. So that's utilizing a a slightly different sort of

19:03 business development person to manage customer relationships directly rather than through brokers. And we're looking to replicate that in the invoice finance side of the business as well. There's there's a number of reasons for that, but, obviously, one of the main reasons is to diversify the the the concentration of just getting business indirectly through introducers and, hopefully, over time, reduce the cost of acquisition in terms of commissions that we we have to pay. And the final one is acquisitions. So this would be focused very much on our core offerings of invoice finance and hard asset finance and and would likely be bolt on acquisitions to what we now class as core core business. We're not looking to do acquisitions outside of those and and take us back to where we were sort of ten years ago when we were looking to get into different products, and and some of the deals that were acquired worked better than others.

19:56 And I think that the business is probably set up now where we can look at these acquisitions, and and the market is arguably more conducive to opportunities coming our way than it was in the in the previous cycle of of strategy. The next objective is very much around that resilient lending. So focusing on the secured lending side of the business, which we've already drummed home to to people, and that's the invoice finance and hard asset side, which will account for 90% of the lending book if this strategy is delivered. So of that 300,000,000, we we we want to target 90% being within invoice finance stroke asset based lending and and hard assets.

20:43 We've recently strengthened our risk team in in anticipation of that. We've brought in a dedicated head of risk for the invoice finance division, and we'll look to further strengthen the risk team as the progress is achieved through the the the new plan. And we're also looking to enhance the systems through so there's a current strategy at the moment, which is on on being undertaken to replace the front office system for asset finance, and there's other

21:13 plans in the melting pot to look at all the systems around the the invoice finance and the hard asset division in terms of the back office platforms that we we can improve to maximize our efficiencies and improve our procedures. And all that really leads into the next point, which is operational leverage. So this is a really big part of the business moving forward. It's effectively leading on from what James was talking about where we saw those in increasing margins over the last

21:42 nine months and and obviously the last four year cycle, and we think we can achieve further margin gains to achieve mid mid 20% PBT margin by the end of the plan. And if we can do that for an independent lender, then we'll we'll we'll be up towards the top players in the market in terms of PBT margin. How are we gonna do that? Well, we've we've invested in a small business improvement team. A lady called Fazia Ria joined the business nine months ago. She's got some really relevant experience in terms of this whole area, but also really quite uniquely within our key markets of asset and invoice finance. We've added a couple more people into that team as well. We don't envisage that that's gonna be a massive team, but we do acknowledge that we need a small team of probably between three to five people to help with those projects and achieve those efficiencies and those system improvements and those those data improvements that we're starting to to make.

22:45 And, yeah, I think it's a big part of what we'll be doing over the next next three years. And getting the balance right ultimately across the lending growth, the resilient risk side of things, and and the efficiencies through the operational leverage really will ultimately deliver the the endpoint, which is increased return on equity. We believe we can increase that to the mid teens by the end of the the plan through balancing, though, those three key points. So just in terms of a summary and then the investment case summary, then the next slide. So just to to tie up really what we've been saying, it's record nine months revenue and profits. The the the robust and strengthening balance sheet is is evidence as we retain most of our profits and build the tangible net assets that sit within the balance sheet.

23:40 The plan to May 25 is is on track to be delivered. We now have an exciting plan to take us forward over the next three years, which should see more material growth and and success delivered. And we've had multiple upgrades over the last couple of years. We had one fairly recently, which took the PBT forecast up from 7.2 to 7.5, and we believe we have favorable market conditions, which I'll I'll come on to in a moment. In terms of the investment case, well, in terms of the q three results, I won't repeat what I've I've just said. The strategy we've talked about. So, really, the the investment case in terms of why should you invest in this business. Well, we help thousands of UK businesses to thrive and survive, and and that's very much about growth, but it's also about survival. Lots of businesses that we help with financial facilities, you know, aren't growing all the time, and they may just be about surviving, paying the wages. They may be family businesses that have been around for a long time. They go through ups and downs, and we're there to help them with their fixed asset investments and their cash flow financing investments or their secured loan requirements.

24:59 So it's very much about helping businesses grow, but also recognizing that our our our facilities help businesses survive as well. We have a growing lending book, and we've had 54 consecutive quarterly increases now. So that trend is on an upward curve, and and we see no reason why that won't be maintained with the plans that we have for the future. We have increasing profitability. You can see from the presentation that we've achieved record profits, and we've got that back up to where the high was pre COVID. We've had a number of upgrades. I've just mentioned the the last one in terms of the PBT upgrade that we put out a couple of weeks ago. We have a strong and robust balance sheet with the net tangible assets increasing month on month as we retain our profits.

25:46 And favorable market conditions is is probably the main thing to leave you with, really. As we've said before time and again, boom and bust suits alternative lenders like ourselves. The banks tend to regress tight tightening credits. Opportunities come out into the market. Businesses need to borrow money. And independent lenders who are a little bit more flexible, little bit more quicker to market than have experienced people in the businesses who understand the requirements of small small businesses and entrepreneurs tend to do well. And and we are certainly seeing those those conditions at the moment. And I think that's favoring our our business, and that's a big reason why we've done pretty well over the last few years, and we we think we'll continue to do do well over the next three years.

26:39 So that's that's it. That concludes our presentation. The next three slides are what I referred to at the start of the presentation in terms of just some appendix, who we are, what we do, our core products, and and why we stand out from from the crowd. But I'll leave people to refer to those if they if they want to in their own time. And now, obviously, turn to any any questions. Perfect, Ed James. Thank you very much for your presentation. What I'll do is I'll just bring your cameras up to full screen now. Ladies and gentlemen, please do continue to submit your questions, and you can do so just by using the q and a tab that's situated on the top right hand corner of your screen. You did receive a number of presubmitted questions, and a number have come through live as well. James, at this point, I'll hand over to you to chair the q and a, and I'll pick up from you at the end. Thanks, Alessandro.

27:25 Yeah. I'll just run through the questions and then probably farm most of them off to Ed. But let's go through them and see what we we had. So Mark has asked, with the potential headwinds in the economy over the next couple of years and the potential for banks and lenders to be more selective on who they lend to, does this scenario provide an ideal opportunity for TIME to fill this potential gap in the market? And there's a secondary point to that, Ed. And how would you stand out from your peers and appeal to businesses in the market looking for finance in this scenario. Over to you. Okay. Well, that that sort of leads on quite nicely from the summary, doesn't it, in terms of the investment case and around the con sort of conducive market conditions, how we differ from the banks, and and why people might choose us over other lenders. So I I won't completely repeat what I I just said.

28:16 But I I think there's there's there's probably three things that I would I would just mention. I one is definitely the the market conditions. You know, you can't get away from the fact that we are very much driven by market conditions, and our performance is relative to market conditions. And I think, you know, the market conditions have been pretty good, although you do have to manage the the balance between growth and and risk, and we've done that really well. So the market conditions are favorable for us at the moment, and I don't see that changing any anytime soon. I think the other point, though, is the positioning of the business. You know, everything that I I've mentioned in terms of the the current four year strategy that's coming to an end has been very much around positioning this business to maximize the opportunity. The the opportunity may be there, but if you can't position yourself and you haven't got the people and the experience and the products to go and take advantage of that, then, obviously, you don't you don't you don't do very well. And I think that's the other thing that we shouldn't undersell is the the way we've we've positioned the business to take advantage of those opportunities, not not just now, but in the future as well. So I think with the building of our name, with the focusing on our products, with the focusing on secured lending, with the people that were brought into the business, with the changes in systems and and our challenge around being more efficient, yeah, I think I think we're in a good position, and not every business is out there in a good position. So, you know, I'm I'm quite pleased with where we are, and I think we're in a good position to take

29:46 further advantage of those market conditions. And and I suppose the final point is that we've done what we said we would do. You know, we like to, I think, over over what's what's the we we like to under promise and over deliver. We're a bit more cautious, I suppose, than where we were pre COVID, and and I think that very much suits the the culture of the business, me, James, the board. We like to go and deliver before we shout from the rooftops. And I think that's a, you know, a a good culture to have. And we've we've demonstrated that over, you know, the last three to four years. We've done what we said we would do, and we've delivered some upgrades. And and we we want to continue to do that in the future as well. So I think that's really why this business is a little bit different than others, notwithstanding the fact that you do need market conditions to to help you along the way.

30:49 Thanks, Ed. The second question is assuming that TIME FINANCE continues to grow and your ambitions for the next three years are met, what's the ultimate goal for the company, e g a sale to become the largest independent lender in The UK, etcetera? It's a good question. Look. I'm you know, I I've got as much interest in that as anyone. You know, I I'm a shareholder in the business as is James. Some of our nonexecs are shareholders as well. So, obviously, we all want a return on our investments. How is that going to be done? Well, ultimately, you know, I I I'm very interested in making sure that we can do what we can impact, and that is delivering the numbers, delivering the strategy, and the success of the business will look after itself if we do that. That's really the view that the board take.

31:41 Having said that, clearly, there's opportunities in the future that we think will maximize that. One of one may be a sale. You know? One, maybe we start to be able to pay a dividend at some point in the future, and we and we turn to to to some rewards that way. You know, who who who knows what the future is for the business in terms of realizing that investment? But what we're focused on is is delivering the numbers, delivering the strategy, and the future will look after itself as long as we continue to do that. Thanks, Ed. The net well, there are a couple of questions actually that I'll I'll sort of run through because they cover the same thing. I'm not sure you whether you wanna take them or or or you want me to, Ed. But Keith said, why were we alarmed by the recent 20% fall in the share price? And was there any obvious reason? And there was a second question on the same thing. I appreciate the share price is out of your control.

32:39 But do you have any explanation for the recent drop since mid January? Are any of the largest shareholders reducing their holdings? So two very similar questions. Yeah. Well, I'll I'll give my view on that. I mean, the the share the the share price isn't out of our control, is it? And and that's a point that people many people make. What's in our control is is to do exactly what we've just said, which is deliver the numbers and deliver the strategy and make sure this business is successful. Now I appreciate that when you do that and then you get some drops in share price, that that's probably out of our control. So what's in our control is what we should focus on. When things happen that aren't in our control, it is really frustrating, and it's obviously disappointing for everyone because, actually, we're sat there thinking, you know, the business is doing really well.

33:25 We we we've we've got another quarter of growth. Everything that you, you know, you've just heard, and and then you see the share price. That's obviously what we can't control, and and that is frustrating. So why did why did that happen? There was some misinformation out there on some some bulletin boards. There was a a misquote of of a a profit figure that was taken. It was wrong. That's very frustrating, and and we we seek to put those mistakes right by correcting them. But we unfortunately can't control what people necessarily say about the the business. And then you get, you know, various things that that happen through trends and and and the way that we all communicate these days on social media. So, yeah, things like that are disappointing, but, you know, we can only do what we can do, and and we're doing, you know, what I think is a is a good job.

34:21 So that that will hopefully continue. And the long term share price the long term share price will continue to go in the right direction. Thanks, Ed. We've got two or three questions here again, which I'll lump together if that's okay. They seem to relate to acquisitions. So just bear with me while I read them all out. Keith has said, has any consideration be given to growing by acquisitions? Colin has said good results. On the in the last online meeting, however, you were positive on m and a. This concerns me as it was the downfall of one PM and your first tasks were disposed of add ons. Why are you now positive on m and a? And then another one says, would you consider any further acquisitions in the next three years? So three questions there, Ed, all on Yeah. Positions.

35:11 No. Again, good questions, and it's it's it's important to get real clarity around that because otherwise, it can sound like mixed messages, can't it? The the clarity really is around the the the the alignment with our current strategy in terms of acquisitions. And as I mentioned in the presentation, if we looked at any, they would be focused on the core products, invoice finance, and or hard asset finance. The the the strategy of acquisitions that James referred to from 2015 to 2019, I think it was, where there were seven businesses acquired in, I think, three to four years. It was much more wider ranging than that. There was some brokerages. There was some consumer finance related businesses. There was also some business to business, lending businesses. So it was much more wider ranging and not aligned really to the current strategy.

36:04 So I think, yes, we will be looking at acquisitions, but they'll be very much focused on bolt ons, as I say, for what we now class as core business. Thanks, Ed. The next question was, can you please explain how low or high interest rates affect the company's finances and which is preferred by the company? Shall I take that one, Ed? Yeah. I'll give my voice a rest, James. Then we're we're back to you soon, I'm sure. So just just very briefly, it's somewhat somewhat of a relatively flippant answer. It's not meant to be an unelaborate a bit more. We're relatively agnostic about interest rates. And the reason being is interest rates rising benefits our invoice finance business, which I'll explain why in a sec.

36:51 But on the flip side, interest rates falling arguably benefits our asset finance business, and they're both about the same size. So whatever happens, one of they're they're a natural hedge against each other, if that makes sense. Let let me elaborate if if you will. Invoice finance, any interest rate rise is passed on to our clients, and we tend to lend more than we borrow. So we make a little bit of an increase, a little bit of a margin there when the interest rates go up. Asset finance, however, is fixed at on funds out the door. But on new business, if the interest rates go up, we have to make it commercial decision given the competition and everything. Do we pass those rates on for new business, or do we shrink our margins slightly to to maintain volumes and things like that? They tend to counter each other out, and so we're not that impacted by interest rates across the group. Although, as I say, there are nuances between the the various two divisions.

37:52 Hopefully, that answers that one. The next question. With the current number of staff and offices, are you in a position to manage further growth, or will further staff and offices be required? Probably back to you, Ed. Yeah. Well, well, again, in terms of where we've got to now over the last three and a half, three and a quarter, three and three quarter years, we're we're set up to deliver that three year plan as we currently stand. So in terms of the infrastructure, yes, we will need a few more people, but they will be lower in amounts in terms of the percentage increase of of of revenue. That's all around increasing margins. In terms of infrastructure, we don't need any more offices. Our four offices in Manchester and Warrington and Reading and Bath, we're not looking to increase offices at all. We don't need to, you know, have more rents in the p and l and and and things like that.

38:45 But we are we are looking to grow our our presence around the country, and that will be salespeople that typically work from home and come into the office, you know, once or twice a week because they're out on the road meeting customers and brokers and introducers. So broadly speaking, the business is set up to deliver what it needs to deliver over the next three years, both from a infrastructure perspective, a funding perspective, and with a few a few more add ons of people as we go through the plan broadly in terms of the people as well. Thanks, Ed. Next question. How many competitors do you have in The UK market? Do you constantly monitor them to see what deals they are offering, and how do you stay one step ahead of them, or is it something that doesn't concern the company?

39:33 It definitely concerns us. It's always been something that I've personally been interested in ever since I started as to what everyone's doing and, you know, how we compare and and how we can be better and maybe where we're missing opportunities and where we shouldn't focus as well because, you know, some competitors have just got completely different business models and, you know, let them let them get on with it. You know, we can't replicate everyone in the market. So it's something we're definitely interested in. We have around 50 invoice finance providers in the marketplace, and they range from the big banks who still provide these these products more towards the the bigger SMEs now through invoice discounting facilities. And then smaller independents who are owner managed entrepreneurial businesses, you know, not dissimilar to to the SMEs out there as well.

40:22 The asset finance market is a bit bit larger in terms of players. There's there's there's over a 100 players in the market, but they, again, range from the big banks who typically will chase the the better quality businesses and and the finer margin business because they take, obviously, deposits, and they can lend them out at cheaper rates than we can, To the the middle players, so so, you know, merchant banks, some foreign challenger banks, and then, again, some smaller players. Sometimes they operate as brokers with a small lending book as well. Sometimes they operate as lenders but broke broke out a smaller amount. So it's across the piece. So, yeah, that gives you a a little bit of a a a context of of who we compete with. But it's it's, yeah, it's banks, building societies, challenger banks, and independent players and and fintech businesses as well.

41:16 Thanks, Ed. For those who are not shareholders, what three reasons could you give as to why they should invest? Well, I think I sort of covered that really in the first the first question that we answered, didn't we, around the sort of market conditions, the way that we've positioned the business, and and what we've said in terms of you know, we've said what we would do. So I think just reiterating those three points really are what I would I would sort of summarize. You know, the market's conducive to what we do. We've we've set the business up to maximize those those opportunities, and we've delivered what we've said we were gonna do, and and that should, you know, hopefully continue. Thanks, Ed. Again, we've got two vaguely similar questions, which I'll I'll add together if that's alright, and I'm happy to take them if you want or or you. But Peter and Edward have both alluded to the fact that so far this year, PBT is 5,900,000.

42:16 The forecast is 7,500,000. So q four is only 1,600,000 PBT if in line with recently upgraded market guidance. Why should this not be taken as a profit warning as Q4 will be down on Q3? Are you happy for me to say that, Ed? Do you want to No. Go for it, James. Okay. Okay. Well, firstly, I don't think we're anywhere near profit warning status. We came out at the beginning of the year, said we'd do GBP 6,900,000 PBT. We upgraded it in November or December, I can't quite remember when, to 7,200,000, and we upgraded that forecast to 7,500,000 at the end of at the end of February. So we've had two upgrades.

43:01 And we and when we said in our most recent announcement today, we said we will be at least in line with the 7,500,000 that's published. So I would argue there's I can't see it at all how that could be construed as a profit warning territory as we are at least in line with that. The reason q four's profit itself in the quarter might not be as big as it has been in previous months is purely due to the cyclical nature of how we account for things. Our q four is usually slightly slowed down because we begin if we've had a good year like we had, we begin accruing for things like dividends and oh, not dividends. Sorry. Bonuses and the like and things like that in the final quarter to a to a big bigger degree. So that's that's probably what's dampening it down slightly.

43:49 And as I say, we are cautiously optimistic that we will be at least in line with the year end market guidance that's out there. And, obviously, there's further growth in the FY twenty six year that's out there as well. So it's it's not going backwards by any stretch of the imagination. Hopefully, that answers that one. How do you how do you explain, Philip asks, Ed, how do you explain the reluctance of investors to buy shares in TIME? That's a very good question. I think, yeah, we we speak to a lot of people. We speak to obviously, we speak to our brokers. We speak to, you know, fund funds as well as retail.

44:37 We do presentations in person as well as the the the online sessions that we do through IMC, but also through other forums as well. And we get a lot of feedback from people. And and one of the things that, yeah, people always ask and and a bit a bit wary about is SME lending. You know? Well, you know, SMEs, you know, that that that that they've not got a lot of money. You know? They've not got a lot of cash. They they they go bust. They could create lots of bad debts. And and I think there's an underlying understandable, you know, concern around businesses that lend money to SMEs, how much risk they take on. And that's that's probably one of the slight reluctances of people to invest in TIME FINANCE. I mean, we're not we're not one of lots of independent lenders that are listed for a start off.

45:31 So, yeah, that's that's a good you know, that's a good thing and a bad thing, I suppose, depending on which way way you you you sort of look at it. But I suppose that there's no there's no comparative peer group as such in terms of, you know, how how's an investment in another business that does what we do performing. There's there's sort of there's there's other businesses that do lend to SMEs, but not do what we do that are listed. So what can I say about that? You know, SMEs are really, really robust businesses. Yes. They go bust. Some businesses go bust. You know, unfortunately, we we have customers and clients that do go out of business every month. We get our money back because more so we're focusing on that secured lending side. So if we lend against a a tractor unit, a trailer, a digger, a construction piece of equipment like a crane, they've got underlying value, and we can sell them for what we're generally owed.

46:25 And the same goes for invoice discounts in Invoices are raised. We fund them. We keep a margin back because we only invoice generally eighty eighty. So we we only advance generally 80 or 85% of the invoices, and then we collect our money back if a business goes out of out of business. And then we we lend again to the business if it starts again. So I think one of the key things that we haven't mentioned at all in this presentation, but we do mention in in a lot of the presentations we do is the is the natural spread of risk that we have in this business. So we lend to thousands of businesses. We don't have any one concentration that is is more than five percent in terms of any one lend. In fact, the the the largest lend at the moment in the in the group is is currently about one and a half percent.

47:24 One and a half percent is the current largest lend in the group. The largest concentration in industry is around 13%, and that is into the logistics and haulage transport warehousing industry. So the the business is really well spread. Yeah. We don't bet the ranch. I like to have that spread in the business. We don't chase massive deals. We like to have a a good core spread of business, and that's what we get from doing 80 hard asset deals a month, around a dozen invoice finance deals a month, and and around sort of 50 to 60 soft asset deals a month. It's all it's all very well spread lending.

48:12 The key is to make sure that we have the efficiencies and the systems and the people that can manage that effectively. And we've reduced the number of deals deliberately over the last four years and increased the average size of the deals deliberately to get that balance better. But the average ticket size in hard asset is still only about 60, and in invoice finance, it's about a 150. So it it's still well spread. We take debentures. We take personal guarantees. We take secondary security on on larger deals by way of second charges on properties or ABL deals where we're lending against other asset classes. And we're, you know, we're pretty good at what we do. So that's, I think, where people I suppose we our job is to get people over that over that cusp of thinking that, oh, what we do is really risky because we lend to small businesses and and help them understand.

49:12 Well, actually, small businesses are pretty robust. And, actually, the way the business is set up and the risk procedures and the policies and our lending matrix that we have in place, all all that adds to the robustness of the business, and that's why we've delivered the results. Thanks, Ed. I think you've partly answered this next question that Colin asks, but just to just to go over it. With write offs, this implies there were other creditors who were higher in the pecking order than TIME's. Our no hard assets offers a security in lending. Well, whenever we lend money against an asset, we have first charge over that asset. So whether that is invoices or or hard assets, they effectively belong to us in terms of the lending. So if they go wrong, we are first right over those those assets.

50:07 Thanks, Ed. I'm just conscious of time, so I'll probably just do two more if that's alright. Giving it then give us time to to to wrap up. Gavin has asked, you mentioned data improvements. Does this involve AI? That's a good question. So we we do we do use AI in a very, very small way in the business already in terms of marketing. So it helps us get lots of marketing stories out in in into our agency partners to help with all that branding on that side of the business. We don't use it in in our in our credit assessment side of the business yet, both at the new business side and ongoing client management. But it it is something that we're looking at, but at very, very early stages, so it'd be wrong to say anything further than than that.

51:01 The the improvement in efficiencies is is much more around challenging ourselves. Are there systems out there that can do things better that are already off the shelf? So we're not looking to go and invest, you know, hundreds of thousands of pounds in building our own systems or, you know, thinking that we know better than what's already out there. That's not that's not really what we we do and who we are. But what we are looking to do is challenge our providers of those systems to get up the pecking order more, to provide us with better sis service, and to develop those existing services along the lines that we want them developed. That's how we see the the improvements being made and just having more expertise and resource managing managing those systems. Thanks, Ed. And as I said, I'd probably take one more question given the time.

51:49 Edward has sent this one through twice, so he's clearly keen to have us answer it. So let's do it. So Edward's asked, how does your margins and returns in invoice finance in particular compare to the rest of the market? Do you see yourself as having any sort of competitive edge within the IF market? Well, why don't you take the the point about about margins, James, and I'll give my view on the market. Okay. Yeah. Invoice finance is, as as as we've said, is one of our key growth areas. We've seen the book grow by, over a 150% over the the last few years. It's also got very, very good good margins. Gross profit margin, invoice finance is about 75% gross profit margin.

52:36 And at a PBT margin, it's it's in the high 30%. So it's a a high margin part of our business, quite secured, and and that's why it's one of the key the key growth areas that we focus we focused on for the last four years, and we'll continue to do ever more over the next three years. So, yeah, a a high margin part of the group. I think in terms of our our our competitors, the the banks have finer margins in invoice finance because they're they're targeting tier one credits, and they get their money obviously cheaper through retail deposits. We don't. And but I think in terms of our independent competitors, we're we're definitely in the upper echelons of of margin returns, and we do compare those against businesses that we're able to in terms of, you know, getting hold of those numbers.

53:31 So, yeah, we we've got improvements that we can make, and we've definitely got improvements across the whole business that we can make. But in invoice finance, we've got pretty good margins already and and certainly in the the higher quartile of our of our independent competitors. Perfect. Ed James, I'll just jump in there, and thank you very much for answering those questions from investors. Of course, the company can review the questions submitted today and we will publish those responses out in the Investor Me company platform. Just before redirecting investors, provide you with their feedback, which is important to the company. Ed, could I just ask you for a few closing comments? Well, yeah, thank you everyone for joining and listening. Hopefully, it's been a useful session. We've covered a lot of ground. The business continues to go in the right direction.

54:19 The the market is conducive for for TIME FINANCE. As I've said, we've positioned our business to take advantage of that, and I look forward to sort of getting the the ticks achieved for the current plan when we get to to to to May and then cracking on with our our new cycle of three year plan from the first of June and and, you know, see no reasons why we can't achieve our objectives and goals that we've set out. Perfect. Ed James, thank you once again for updating investors today. Can I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order the management team can better understand your views and expectations? On behalf of the management team of TIME FINANCE PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.