Time Finance (LSE:TIME) — Rebranding & Trading Performance Investor Presentation

0:02 Good afternoon, ladies and gentlemen, and welcome to the TIME FINANCE PLC, formerly 1PM Investor Presentation. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. These will be available via

0:33 your Investor Meet company dashboard, and we will send you an e mail when they are ready for you to review. I would like to also remind you that this presentation is being recorded. Before we begin, we would like to submit the following now like to hand over to Ian Smith, CEO and James Roberts, CFO of TIME FINANCE PLC. Good afternoon to you both. Good afternoon, Mark, and good afternoon to everybody, and welcome to our very first investor presentation as TIME FINANCE. So as you see, my name is Ian Smith. I'm the CEO of TIME FINANCE. And shortly, James Roberts, the CFO, will present an update on our trading activities. So having issued both a trading update last week and completed our rebranding, we wanted to provide you with some bit more information and some more color on those two events. So we'll talk through those with you today.

1:32 It's a short presentation. There will be plenty of opportunity for questions and answers towards the end of the presentation. What I'd like to do though is to start with a brief overview of the business. Apologies those of you who are familiar with the old one PM business, but I think it's always helpful to provide a brief overview and background as to the shape and size of the business and to our activities. So I'll I'll begin with a brief overview. So here on this slide, we have the three of the four key elements that under underpin our business. We are a nonbank alternative finance provider. We focus on supporting UK SMEs, and we operate what we call a hybrid model. I'll just cover those three bullet points in a bit more detail.

2:19 So firstly, we're a nonbank alternative finance provider. Just to put that in context, in the year 03/02/2020, obviously, pre COVID, there was a £138,000,000,000 worth of finance provided to UK businesses and consumers, of which 44,000,000,000, so 32%, was provided by nonbank financial companies. So we're very much part of that nonbank financial landscape, albeit a small player in that field, but it's a significant part of The UK lending landscape. Our particular focus is in being a nonbank lender is on business lending. We are not regulated as a nonbank provider by the Prudential Regulation Authority, the PRA, but we are regulated, of course, by the Financial Conduct Authority.

3:10 And around 19%, just under 20% of our deals are regulated by the FCA. But we operate all of our business in accordance with the principles and guidelines set out by the FCA. And, of course, in addition, we abide by the codes of conduct of the Finance and Leasing Association and UK Finance. And, clearly, we follow government corporate governance principles as a listed entity too. So a relatively highly regulated business even though we're we're not a bank. Our lending is predominantly focused on the s in SME, so the smaller end of the lending spectrum in The UK. And one thing that we know from experience is that lending to the smaller end of the SME spectrum spread is incredibly important, and we lend to many, many different UK business sectors and deal with many, many small deals. That in itself, spread, is a risk mitigating factor in what we do.

4:09 And then the third point here is that further risk mitigating factor is we operate what we call a hybrid model. So that means we have the ability to fund the business on our own balance sheet or to broker business onto other funders. And the business that we write on our balance sheet is to UK companies that meet our credit criteria. Those that we broke on are either outside our credit criteria or our consumer finance business. So all the lending on our own balance sheet is to UK businesses. And the fourth key point in in the key element of group is that we have deliberately set our stall out to be a multi finance product multi product finance provider to UK businesses.

4:54 So that's asset finance, invoice finance, loans, and vehicle finance. And our aim as TIME FINANCE is to become a nationally recognized business providing that specialist finance, that range of specialist finance to UK SMEs. And we'll go into a bit more detail about each of these product divisions, which is how we organize ourselves internally in a moment. But just to provide a further snapshot into the shape and size of the business, we're now dealing with something at the order of 20,000 borrowers, either UK businesses or arranging finance for UK consumers. We have a 170 employees around the country operating from six offices, three in the North, three in the South. Although, obviously, at present, employees are working remotely.

5:42 But those are our six locations. And it's always good to have some validation and some justification for what we do by winning some awards. So just very briefly on those, you'll see the first logo there is the business leader finalist award. In fact, it was for employer of the of the year, and on Friday, we heard that we'd actually won that award. So we are the business leader employer of the year. And the second logo there, we're included in the list of 1,000 companies. A lot a lot of companies, but we're included in the stock exchange list of companies to Inspire Britain. So always good to have that external validation. As I mentioned, I'd now like to go into a little bit more detail about the four product divisions and our multiproduct financing solutions. So this is a a bit of a busy slide, so just bear with me as I go through the key points here.

6:30 But as I mentioned, it's asset finance, invoice finance, loans, and vehicle finance. Within the asset finance division, over the years, we've become expert at both soft asset finance leases and hard asset leasing. And you may well already know the distinction between the two here, but soft asset leasing is for business critical equipment where there is no real value in the asset after a period of use. So it might be something as simple as catering equipment or tables and chairs for a restaurant. There's no particular value in those assets after they've been rented for a period of three years. So our decision to lend to a business for that kind of equipment is purely based on or essentially based on affordability, so the ability of the company to repay.

7:19 And often our experience is that as we're lending for business critical equipment, the proprietors and the managers of those businesses prioritize their payments to us because without that business critical equipment, they wouldn't have a business. So we have a very strong track record of low level of write offs for soft asset lending, and we always lend against that affordability criteria by taking a personal guarantee. And we found over the years that if a deal does go bad, being able to claim against a personal guarantee is a is a very effective tool for lower amounts of lending. So $5.10, or £15,000, for example, which is typically where we lend for soft assets.

8:00 Contrast to that is hard assets. Hard assets, the lending decision is really about the intrinsic value of the assets. Hard assets are where there is a recognized secondhand value for an asset. So if we were to finance, for example, a JCB digger, we know what that digger would be worth in three years' time after a period of use, and our lending decision is more about, as I say, the value of the asset rather than the ability of the company to repay. So we've built up expertise in both soft and hard asset finance. Introduction channels where we get our business from, it comes from finance brokers, from equipment suppliers, and equipment vendors, and increasingly, we'll be doing more business direct from borrowers themselves. Our deal sizes range from £1,000 up to 500,000,000, but our average deal size, our sweet spot, spot, if you like, for soft asset lending is around £10,000 in multiple small deals, and for hard asset lending is around £50,000.

8:58 And our pricing is a wide range too. So if we were doing £500,000 worth of plant and machinery, we could go as low as 8 percent as a financing charge. If we're doing £1,000 for a coffee machine, for example, it could be 18% with an average of around 15% within asset finance. For all of our financing asset financing deals, we will put some cash into the deal. So typically 15 or 20% of our own cash would go into providing finance to a company, and the rest of the finance would come from our wholesale block finance providers. So this is the likes of Oldhamore, Siemens, Hampshire Trust, Hitachi, Investec, and others with whom we have credit facilities to be able to lend and provide asset finance.

9:47 So that's asset finance. If you contrast that with invoice finance, invoice finance is a very different product. So with invoice finance, we're advancing cash to a client against the value of their sales invoices, so the invoices they're raising to their customers. And that could be on a fully disclosed basis, so essentially factoring, or it could be on a confidential invoice discounting basis. The introduction channels, that business comes to us via insolvency practitioners, from professional firms, accountancy firms, lawyers, and from corporate finance companies. The facility size there is ranges anything from £50,000 up to a million pounds. In a couple of instances, it goes beyond a million pounds in our book now with an average facility size of around £250,000 and up to £500,000.

10:38 The pricing in invoice finance is a very different model, so the interest rates will be a lot lower, typically around four to 5%. But we charge fees for running a customer sales ledger and fees for providing the the facility in the first place. And, typically, that overall yield in invoice finance can be around 13%, which is not dissimilar to the 15% we see in in asset finance. Again, with invoice finance, we have a back to back facility from a high street bank, RBS invoice finance. So we're putting cash into every facility, but we're also borrowing from our wholesale funding provider to in order to provide those facilities to to small business. In our loans division, on our own book, we will provide commercial loans, so working capital loans to small businesses, typically against a personal guarantee or indeed against security of an asset.

11:32 And we also provide on our own book coronavirus business interruption loans. Very early on in the COVID nineteen crisis, we applied to the British Business Bank to become an accredited lender under the government backed CBILLS scheme, and that's been a very productive product for us over the last few months. We've been able to advance a number of significant CBILLS loans to companies that are deserving of additional finance to help them through the COVID crisis. So CBILLS forms part of our own book lending in the loans division. We also arrange on a broking basis property loans. So bridging second charge and commercial property loans for buy to let landlords, for example, but that's not on our own balance sheet. As I say, that's all broke on.

12:18 That business comes from finance brokers and from mortgage brokers and indeed, again, from professional firms. On our own book, the deal size could be anything up to £250,000, but there's no limit on the deals that we broke on. Our average deal size on civils is around a £100,000. And on our own book, commercial loans, working capital loans will be around £20,000. On average, our pricing is around 16% with loans. And, again, we finance those loans through our wholesale block lending lines and indeed through a high net worth loan note program. And then finally, in terms of vehicle finance, we're providing commercial fleet finance and then finance for new cars and secondhand cars.

13:06 And the introduction channels there are from, as you'd expect, new and used car dealers and indeed direct from borrowers. I think it's important though to sort of return to and to stress this hybrid model. So just looking at those four product divisions in asset finance, typically around 80% of asset finance deals will be on our own balance sheet where we have the opportunity to break some on. In invoice finance, it's a 100% on our own book. In loans, it's probably fifty fifty in terms of the value of deals that we put on our own book and those that we broke on. And in vehicle finance, it's a 100% broke on. So we carry no residual value risk for for motor vehicles on our own balance sheet. And that's how we flex the lending and broking within our business. And that, as I mentioned, is a very key risk mitigating dynamic that we're able to use depending on economic conditions, depending on risk, and depending on pricing. And I think that's one particular aspect of our business that sets us apart from others in the market as well as being a multiproduct provider.

14:11 A lot of information there to digest, so apologies for for running through that pace, but that's a takeaway to to to be able to get a picture and a snapshot of our business, and, hopefully, that provides you with a helpful overview as to what TIME FINANCE is. And against that background, I'll now hand over to James who will talk to you about our trading activity and indeed our balance sheet position. James? Thank you, Ian, and good afternoon, everybody. Yes. I'll just provide a a quick update on the first six months of trading. So we'll talk briefly about the balance sheet, we'll talk briefly about the P and L and hopefully coming out of that we'll have shown you that we believe we've got a pretty resilient model here.

14:58 Given the wider macroeconomic backdrop, we've got we've had Brexit and we've had obviously COVID. We feel the first six months numbers are are pretty pleasing, especially given the the low points of the sort of late June through to sorry, late March through to June period, which really was the height of the COVID impact for us as a business. So we're we're quietly pleased with the with the numbers we we were able to highlight earlier in earlier last week. We've seen strengthening balance sheet as I mentioned. We've seen increasing profits month on month and we believe this shows the strength, the robust nature and the resilience of our model. And just driving into delving into a little bit more detail on some of those there. This slide here, we'll we'll talk primarily about the balance sheet itself. As primarily a known book lender, the balance sheet obviously is key for us.

15:50 It it is the bulk of our business. We do, as Ian alluded to, we we do broke on vehicles and a a sizable

15:57 amount of assets and loan business as well. But but but our bread and butter is a a known book lender, so the balance sheet is absolutely key for us. And the four key indicators we've drawn out here have all moved in the right direction during this sort of the COVID period again, which is which is pleasing to us. As you can see on the left hand side, the net tangible assets have grown to just under $28,000,000 as at the November 30, up from $26,500,000 in May and we can see going back to May 2019 and May 2018, our net tangible assets continue to grow every period and that's particularly pleasing given this wider macroeconomic environment we're facing at the moment that that continues to be the trend and we think it validates the strength of the diversified model that we have.

16:47 Cash has also increased quite significantly from May. As I mentioned, the sort of March to June period was the low point for us in terms of COVID and the cash as you can see has increased from just over 1,000,000 to about 3,500,000 as at the end of November. That's a combination of both the derisking of the book. A number of clients settled early. Part of that was driven by ourselves in in terms of pushing some of the riskier clients out to take advantage of of government backed schemes elsewhere, primarily the bounce back loans. Now, well, that led to a smaller book, it has derisked it. So we feel the quality of our book is is much better than it was maybe a year or two ago, which good for the longer term. And secondly, there has been a very conscious decision by the board for cash conservation as you'd expect Given the uncertainty we were entering in March, we did focus on cash conservation and that's now leaves us with a very healthy cash balance, the highest it's been in that sort of two, three year period and the highest it's been which primes us for growth as things move back to more normality.

18:03 The next two graphs show the arrears and forbearance and these are particularly key because they are indicators of potential issues further down the road and pleasingly both of them are significantly better than they were only five or six months ago. If we look at arrears, we've been driving down our arrears consciously as best we can over the last few years, obviously COVID hit us and what this table here shows in the period from November to nineteen to May 20, that six month period h two of last financial year, our arrears went up by 9,100,000, which was obviously a huge increase and that's driven by purely by COVID. But the effort the credit and the risk teams have made in the six months since then is to bring those arrears back down by 6,500,000.

18:52 So we're not quite back down to the pre COVID levels of arrears, but we have made significant inroads into getting that book back down to the the levels they were before. So that's a particularly comforting stat for us and and a pleasing reward for the efforts the the credit team have made over the last six months and crucially, those arrears have come down every month and continue to do so. So we'd hope that trend will continue. A new graph on the right is that of forbearance. In the old world pre COVID, forbearance wasn't something we we typically or ever gave to our clients. Obviously, in late March when COVID hit and and the goalpost moved significantly, a number of our clients came to us asking for some form of help in managing their their debt with us and we dealt with them on a case by case basis.

19:46 We didn't have a one rule fits all. Some people were chancing their arm and we'd say no, other people were in genuine trouble and needed help. And so by forbearance, what we mean here is a range of measures. It could be anything from they were given three months where they didn't have to pay capital or interest, that would be sort of the most generous form of forbearance we could we could we would offer through to just having maybe a month of off interest or 50% of interest payments for for two two months or something like that. So a marginal form of forbearance. But in total, as you can see on this graph, in the May June period, we had around about 25,000,000 of our book was in a some form of forbearance. So either not paying anything or paying less than they should have done. And crucially, what's happened since that high point in May and June through to November is that we now have less than 3,000,000 of our book in some form of forbearance.

20:39 So we are almost through that forbearance piece.

20:44 As an example of how much better the forbearance requests are when COVID hit in March, we had about 1,200 requests in the first couple of weeks for some form of forbearance. In lockdown two, it was just under a 100, requests came in. So lockdown two was a completely different kettle of fish to lockdown one. And I think that showed that the businesses out there, were in a much better position to ride it through and that's been shown in our numbers. So as we can see, our net tangible assets have grown, our arrears have reduced significantly, our cash is much higher and our forbearance is a fraction of what it was back in May and June. So from a balance sheet point of view, we're very pleased with where we sit at the thirty first thirtieth, sorry, of November.

21:31 Looking at the P and L at a high level, the numbers we announced last week show revenue of at least £11,600,000 and profit of at least £1,200,000 for the period we're looking at. Obviously, compared to pre COVID world, which I suppose on this graph here in the middle is is is the November 19 comparative, revenues are down and profit. So 15.6 down to 11.6 for revenue and and 3,000,000 profit down to 1.2 from a year ago, six months. However, it isn't comparing like for like because of the COVID impact and more apt is probably to look at H2 and we had a loss of £1,000,000 in H2 in the last financial year. So to move to a profit of at least 1,200,000 is particularly pleasing.

22:21 The other thing to draw out on the left hand side is the importance of the book size and apologies if I'm teaching people to suck eggs here, but this is this is quite a key thing for us as a balance sheet lender. In that there is a lag between the size of your book and the revenues and in turn profit. So our book fell from approximately 125,000,000 a year ago at the end of November nineteen down to a low point of about 95,000,000. Now if you just took that at a high level, a book of 125,000,000 would earn us a year of roughly £19,000,000 If it was 95,000,000 for a whole year, it would earn roughly £14,000,000 of revenue. So the fact the book fell would led to lower revenues and that's why our revenues primarily are lower than a year ago.

23:07 Crucially though, the book has started growing since that low point in June again. We've written better quality and new deals and it's grown from 95,000,000 to a 105,000,000. That revenue will come through over the next three years so that will drive that 1,200,000 profit should begin incrementally increasing month on month as we go forward. So that's quite a key point to to draw out is the is the lag on the book size. So as we mentioned earlier, the book has shrunk but that was part of it was conscious

23:34 to de risk it and now it's growing again with what we believe a good quality deals in time that revenue will generate over the next three years. Some other highlights, I've mentioned the profit before tax. We are profitable and growing every month back up to at least 1,200,000 for the first six months. We haven't released any bad debt provision in that time. We've maintained it at the year end position of 5.1 and that's despite the arrears improving and despite the forbearance levels falling off. So we feel we are prudently provided, which is good. We've seen in this same six month period, the write off levels have remained in line with historic trends. Ian touched on that earlier. Also crucially, the recovery of deals that do go wrong is still maintaining in the 70 to 80% bracket. And that's a key part of our model is where deals do go wrong because we have a personal guarantee because they are usually of a small size in nature. We're able to recover a lot of those monies owed to us and that has remained very static in the 70 to 80 range during this six month period. That was a source of uncertainty for us. We didn't know how in the new world the strength of the PG would hold up, but very pleasingly it has remained as robust as it ever was and that's a particular highlight for us.

24:52 And then finally, I think we just wanted to draw out the spread again of our book and what this graph here has, it shows the 10 largest sectors that we lend into just as a graphic, it doesn't go into which ones they are, but you can see our largest sector exposure is 6% and when you get down to the tenth biggest sector and obviously there's a huge tail going on of different sectors after that, we're already down to 2%. So, Ian touched on it, the spread and diversification of our book is key to riding out any peaks and troughs and our book is incredibly and remains incredibly well diversified and spread which we think is a key point of the model. So, that was a snapshot of what's happened over the last six months, what's coming up in the next month or two. We are publishing our interim results on the January 19 and we'll have the, I'm sure another one of these investor meet presentations and other investor road shows.

25:52 We expect around that time, maybe the same day or or very similar same week or something, we expect to be able to reinstate some market guidance through to the end of this financial year, which is the 05/30/2021 and hopefully through to the 05/31/2022

26:08 as well. So we'd hope to reinstate market guidance around that period in in January. And we'd also like to we expect to be able to update everybody about our dividend program, which was put on hold since COVID with with the uncertainty, but we hope to be able to, around the time of their interims, confirm our latest plans for the dividend policy. So that's what's coming up in the month or so. And with that, I will hand back to Ian. Thank you very much, James. The other announcement that we put out last week was in connection with our rebranding. Mean, clearly, this is of most importance for our commercial markets, and I'm very pleased to say that our commercial markets have received our rebranding extremely well.

26:55 But I did want to just explain some of the thinking to you all in terms of the decision to rebrand and in particular why do why to do it now. The purpose of the rebranding is clearly to exemplify the fact that we are now one company and that we're operating under one brand and operating going forward as TIME FINANCE. It's a natural step in our evolution. You know, we have been, on a journey over the past few years in putting our platform of businesses together. We've been through a transitional phase in the last couple of years in integrating our businesses, and it's, as I say, a natural step now to come under one brand. I suppose the new name came about partly as a nod to the past. I mean, one PM was never actually about the time.

27:41 It was derived from one payment monthly. But nonetheless, TIME FINANCE is not to the past. But more importantly, it's really the two key elements that we see time and time again in providing finance to small businesses. TIME is all about enabling business owners to focus on growing their business, so working on their businesses as opposed to working in them. And finance, of course, is having the access to finance is key to running businesses successfully. So the the the phrase that captures it for me is freedom to grow is what both TIME and FINANCE enable. For those that are interested in in marketing and branding, there is some inspiration for our logo. The logo is a an hourglass, which is reflective of time sensitivity. One of our internal mantras is time is money. The top part of the logo reflects a shield, so that's trustworthiness.

28:29 And, again, one of our internal mantras is integrity integrity always. If you turn the logo on its side, it resembles the infinity symbol, which is supposed to reflect endless opportunities, proactivity, flexibility, agility. And then the triangle symbol at the bottom reflects upward growth, so a direction of growth. So we felt that the inspiration for the logo and the name were absolutely relevant to what we are doing as a business and what we exist to do, which is to help businesses to grow through providing the finance they need. I suppose most importantly, why now? As I mentioned, we've been been on our buy and build journey over the past few years. We've grown from one site of a dozen employees now to a 170 employees, as I mentioned. We were operating under the seven brands as a result of the various acquisitions we've made. And to some extent, there was some confusion, I suppose, in our commercial markets around those different brands, and we felt it was the right thing to do to pull the business together under one brand, especially as internally, we're now operating much more centrally. So we have a group credit function. We have a group finance function, HR, IT. All those things are being done on a group basis. And now is the time, therefore, to signal our intent to move forward as one business.

29:48 So the the signaling is that it's a simplified message and a simplified story for our commercial markets. It strengthens our own internal sense of group. It does give us the opportunity for further cost savings and synergies as we go forward and indeed enhancing our already existing cross selling potential. We want to increase that further. And as we look at introducing new products potentially to our range of products, possibly even further acquisitions when conditions allow in the future, it'll be easier to fold those into our new single brand as as TIME FINANCE. So that was the background and the reasoning for the change of our branding. Now, as as I say, pleased that that's gone down well in our commercial markets. So I suppose to conclude our presentation today, in summary and as an outlook, we have now a crisp, a clean, and a fresh new look as the group enters our new phase of growth post COVID, hopefully, next year.

30:45 It does add to our simplicity as a business and our strength as one business. We've proven the resilience of our business over the past few months in dealing with COVID, and we maintained our liquidity throughout that period. As James explained, our new deal origination, our profits are increasing, and our arrears and our arrears and our forbearance are reducing, so we have a stronger balance sheet. And I genuinely believe we're very well positioned and well primed for strong growth as The UK economy improves and emerges from the COVID pandemic pandemic in due course. So thank you very much for listening. I appreciate your time and attention. We have opportunity for questions and answers. So at this point, I'll hand back to Mark for the preset questions. Perfect. Thank you very much indeed to both Ian and James. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of the screen. But just while the company take a few moments to review the questions that have been submitted today, I'd like to remind you that immediately after this presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations and would be much appreciated if you could allocate a little bit of time for that.

32:00 Obviously, Ian, James, investors had the ability to submit questions. And I did notice that I think Martin has also equally inputted them into the live Q and A. So I've taken them out there. And I thought I'd start off the Q and A with those two questions from Martin. The first one being, can you please comment on how the new share option scheme is intended to incentivize senior management? Yes. Thank you, Mark. I'll take that one. And I think the question went on to say that that there are two conditions. One is continuing employment within the group, and one is recovery of the share price to tangible tangible net asset value. And the fact that those conditions don't seem to be tied to generating additional cash flow growth. I can comment on this as a member of the remuneration committee, but, of course, I'm not a voting member on that committee since it a conflict of interest in terms of my own incentive package.

32:55 But I think the key issue that we've faced over the past two to three years as a business has been the chronic sort of undervaluation of our business and our shares on the market. And I think the short term incentive that's been set is to focus our minds very clearly on doing everything we can possibly do as a management team to at least get us back to tangible net asset value before share ownership kicks in. And know that my senior management team colleagues are incentivized by that. We feel we've delivered everything we said we're going to deliver over the past two years, but still our market capitalization hasn't caught up with our performance, and we're very focused now on making sure that happens. But to all of us, that isn't the end game. That's just the first step. So having share ownership at tangible tangible net asset values is the starting point. We're all incentivized by the fact that those shares would then grow subsequently by us continuing to deliver growth of the business, and that's where the additional cash generation comes in. If we grow our origination, the value of deals that we originate, that'll grow our revenues

34:03 almost as a matter of formula. As James explained earlier, the bigger the book is, the bigger the revenues become, the bigger the profits become, and therefore, the more cash we generate for onward lending. So we're all very incentivized just, you know, beyond the first step, which is to get back to tangible net asset value. And then the final point I'd make is that, obviously, the share scheme is only one element of the remuneration package. We do have a cash bonus scheme that is based on about growth of the business, which is generating profits and cash. So I believe that our incentives as a whole do include the incentive and the motivation to generate additional future cash flows. Thank you very much, Ian. Exploit the fact that we have actually, we see no obvious competitor in terms of the range of products that we provide as a nonbank finance provider and also as a provider of funding on our own balance sheet and a broker. Though those distinguishing features are genuinely things that set us apart. Now clearly, we have a number of different competitors in our various different product sectors.

35:21 So there are a number of quoted and private banks who, obviously, have a banking license, so they're they're different to us. There are a number of private leasing companies and a number of private invoice finance companies who we compete with on a relatively regular basis. But there there aren't any particular competitors

35:38 that have our range of products as a nonbank finance provider that we come across on a day to day basis lending to the smaller end of the SME market. So we do feel we have a competitive advantage in providing the full range of products and the market and and the position in the market that we focus on. And that's why we think that the rebranding is an important thing to do to try, as I say, exploit that market position. Thank you, Ian. Okay. Well, that deals with the pre submitted questions. If I could ask you both just to have a look at the Q and A tab. If I could ask you to start at the top, perhaps read out who the question is from and the question and of course a response where it's appropriate to do so and then I'll pick up at the end. Thanks, Mark. I'll pick those up as Ian's been talking and Ian can pick up any if I missed the odd one or he wants to elaborate on it. The first question we we had was from Nick Jay.

36:36 Why do introduction channels push business through TIME FINANCE as opposed to other competitors? What differentiates you? Ian's Ian's touched on that to a degree with with with one of the other ones, but a couple of other other points are, I think I think we've learned considerable goodwill from the likes of brokers and and everybody in the in the last six months. A number of lenders on the I can't remember the exact date now, but around about the March 20 literally just shut up shut shut up shop. They stopped lending and that left a lot of sort of UK businesses and and brokers with in difficulty. We, for the right deals, have remained open throughout this. And and I think that does set us apart considerably from a number of competitors out there and and the brokers and the introducers do have long memories and and are very grateful for that. So I think we've benefited from our stance of of really trying to remain open for business for the right type of deals and help UK businesses.

37:38 I think we also benefit from a we believe and and our our feedback we get from everyone is excellent customer service, certainly on speed of turnaround. If it's a no, we'll tell you it's a no pretty much straight away, so at least you've got the opportunity to move on. If it's a yes, we'll work with you to get it over the line as quickly as possible. So so those two things I think do set us apart from a number of competitors out there. And as as as we've mentioned, it's shown by the the origination that's coming our way. We we really are in demand at the moment, which is which is great. Second part to to Nick's question, cheekily threw two in one there. Second question, what do you see is the greatest risk of the business moving forward and what keeps you up at night? Please don't take this as me being flippant, but genuinely, I think we've got through the thing that kept me would keep me up at night and that was a black swan event with business sort of ending on what immediately one day, funders getting very nervous, you know, and that's what COVID did.

38:41 That black swan event appeared and I'm delighted. I think we've we've very professionally navigated our way through it and come out of it stronger at the other side. So what keeps me up at night at the moment, it's not meant as a flippant answer, it's a genuine truth is not much. I'm sleeping a lot better than I was six months ago, but as we said, the balance sheet stronger, we think we're well provided, business levels are coming through well. So genuinely, there's light at the end of the tunnel and hopefully the next six months, next eighteen months, twenty four months, etcetera will bear the fruit of that. Next question is Michael S, car financed to you, it's not been included in the rebrand, two directors have resigned, is it a strategic sale?

39:33 Just I'm not going to go into too much detail on strategic sales and things like that, but just on the first two points in that if I may, wasn't included in the rebrand and two directors resigned. Firstly, on the two directors resigning, those were the founding directors who started the business many years ago. They joined us when we acquired Car Finance to use two and a half years ago. It was always the plan that after integrating the business, they would move on. Their resignation on the November 25, they'd actually had had were were on their notice period for many months before that, so they didn't didn't leave three weeks ago or whatever. That was a a well planned out and telegraphed succession plan and it's been handled handed over very well. In terms of the rebrand, as Ian has said, we wanted to get one clean brand across our core businesses. Car Finance to you is slightly different. It's a consumer secondhand car brokerage.

40:32 It's very different than the rest of the group. And actually, its name in terms of them generating business direct through Google and and and and such like, Car Finance To You works very well for them. So actually, it would have been slightly cutting their nose off despite their face had we rebranded them as TIME FINANCE. So I don't think there's any underhand things going on there and perhaps reading into those things, can see why Michael's come up with that thought on the sale. But it is genuinely different brands because it's completely different non core business and the directors was a long term strategic succession plan. Thank you, James. I'll pick up on a couple of other questions to give you a break. There's one question from Gavin in relation to the invoice finance business. What percentage of revenue and PBT comes from discounting and what from factoring?

41:25 Internally, we don't actually monitor that as a as a KPI. For us, yes, they are two different products, but we don't split it. I mean, the the annual report last year and going forward each year will have separate segmental analysis by different divisions, but we won't go into a split between the factoring and invoice discounting. Off the top of my head, the factoring element is the smaller part of what we do. It's essentially disclosed and confidential invoice discounting that is the core product in that in that division. So I can't give you any more detail than that, Gavin, on that point. A question from Paul and indeed, I think, from others in relation to Sibyls. Are we able to disclose the size of the Sibyls loan book? We are are not actually at liberty to be public about the amount of allocation that the business business British Business Bank has given to us in terms of the amount of civils lending that we can do, But that the allocation that we have has actually come from us in any event in terms of the amount that we think that we should be able to do given the shape and size of our business. And we're clearly very, very much on track in terms of the amount of civils lending that we're able to do.

42:38 The book size of present approximately is around about 8 to £9,000,000 and and increasing. What I would say about civils is that although it's a great product for us, there are many, many companies who are looking for SIBILs funding and government supported funding. The quality that we've seen with the proposals that have been brought to us has, if I'm honest, been a little bit variable. We've been very picky. We've made sure that every single civils loan that we've done, meets our own credit criteria and that we're able to, take come from the fact that they are businesses that we would have lent to, pre COVID and genuinely need the funding just to take them through this COVID period. So we've been incredibly selective. It's not a massive part of our loan book, but it's a very important part, and that's and that's still ongoing and still increasing.

43:27 So, hopefully, that gives some background to our CBILS product. If I could just pick up on further questions here. Question from e n c. Can you explain why other than Ron Russell, the director's own shareholding levels are extremely low? Well, yes. I mean, we're employees. We're not founders of the business. We haven't bought in through, you know, external investment. We're employed. We have taken the opportunity on a few occasions to buy shares ourselves, most recently about a month ago. So that is the reason why the majority of the directors are not large shareholders. Ron has been an investor and someone that has lent money to the business over many, many years going back to the early days of the company, which is why his shareholding is a significant proportion.

44:23 What is the main driver why you want to reinstate the dividend program? Well, the the main driver is that we had a progressive dividend policy, and we thought that was the right thing to do at that time to introduce a modest level of dividend, but a progressive dividend policy nonetheless. We felt it was right to reward our shareholders even though a number of our shareholders take the view that we could invest our cash more profitably by lending it. But I think it is important to try and demonstrate reward for shareholders through a modest dividend, and we'd like to get back to that once conditions allow. At the moment, of course, we're very focused on the strength of the balance sheet, on cost containment and cash conservation, but we'd like to revisit the reinstatement of the dividend program as soon as we feel able to and we've got good visibility going forward. And as James mentioned, we'll reconsider that around the time of our interim results.

45:20 Can you update us on the level of cross selling in the business? The level of cross selling is there's there's a regular flow of proposals between the divisions within the group on a on a month to month basis. We have we're converting probably around 10 to 15% of the proposals that that we generate internally ourselves. That's probably of the order of a few million pounds worth of origination. So it's not it's not huge, but it is important. And I think with the rebranding, as I mentioned, we've got a much greater opportunity to do that going forward. What's interesting with cross selling is it isn't about our sales guys out there in the field spotting cross selling opportunities. It often comes from those people that are internally working within the business. So for example, if someone in our invite invoice finance division is managing the sales ledger for a company, they have access to all their bank statements.

46:11 They see what's going on in a particular borrower's business, and they can see whether that business is taking other forms of finance. So it's often internal people that generate the the cross selling opportunities. Are there any regional differences and variations in the businesses? Not not particularly. I mean, clearly, with with the businesses that are focused on the North, they have a strong hinterland around their physical location of operation, the same in the South. But we have lending across the whole of The UK, and there is no particular regional variation to speak of. As we mentioned in terms of our portfolio and the diversity and the spread of business across many, many different business sectors, we're also spread geographically very well across The UK as well. What are the realistic cross cycle returns on equity for your four businesses?

47:05 Our returns on equity are broadly similar across our lending businesses. As I mentioned earlier, the yield that we receive from Invoice Finance, for example, is very similar to the yield on loans and asset finance. We would expect returns on equity to be consistent and stable as we go forward. Historically, pre COVID, they were between 2025% return on net tangible assets, and we would expect that to continue and to grow going forward. A further question from Martin. Can you comment on the magnitude of the advantage of having such a broad product spectrum, e g origination, cross selling, and financing? Well, the magnitude of the advantage is is that it's much simpler for a an introducer of a piece of business, whether it be a broker or a professional services firm, to be able to bring opportunities from their borrowers and their clients to us without having to effectively filter them and decide who to approach as a lender for a particular product. So the core advantage is that it's, I mean, it's an old fashioned phrase, but it's almost a one stop shop for the broker to be able to bring their financing opportunities to us. So that that's a key advantage, and we are seeing that happening now.

48:22 Literally, in the last few days from having rebranded, we've had introducers phoning us up and saying, I may have only bought you invoice finance opportunities in the past, but I can see now that I should be talking to you about asset finance and loans. So I think the there is a major advantage in in having a broad spectrum offered as a single product to introduce us, and that's what we intend to exploit going forward. So, Martin, that answers the question. A question from Edward. As there is a large range of products and broker services for customers, is there a potential to move towards a strategy that leverages more long term relationships with a range of businesses? Well, I think if I understand and interpret that question, Edward, we do have long term relationships with our brokers and our introducers and where we put in place facilities for lending such as invoice finance facilities. Those do tend to be long term facilities. So the average length of time of that an invoice finance customer is with us is typically four to five years.

49:29 So we do have long term relationships with our borrowers, and it will be similar in terms of the length of time that we work with brokers. So if I've understood your question correctly, yes, we we do like to foster strong relationships. Relationship management is a key part of what we do. We're not a we're not a business that just makes decisions based on computer algorithms. We are involved on a day to day basis with our customers, and that's what fosters long term relationships. And then another question from Edward. Organic growth has been generally quite lethargic even before the pandemic. What has been done to improve this? I'm not sure that I would agree with the description of it being lethargic, if I'm honest. I think growth our organic growth has always been in line with the growth that we've seen from statistics from the finance and leasing authority association and from UK Finance. So we have certainly been in line with the market trends in The UK.

50:25 Can we do better than that? Well, I think we can. Yes. And and and and to your point then, we can improve on that. And, again, I come back to rebranding, messaging, having one one brand and one company providing all of our products to the SMB space, I think, gives us the opportunity to hopefully outperform the level of organic growth that the industry has seen in terms of the products that we provide. And a question from Gavin. Do you see Funding Circle as a threat to the business? So Funding Circle provided CBILS, for example, a low interest rate in TIME FINANCE is because TIME FINANCE provides to higher risk customers than the likes of Funding Circle. I can't comment on Funding Circle's risk pricing decisions, the the pricing that they put into the market.

51:17 That's that's a matter for them. We feel that we are risk pricing all of our lending, including civils at an appropriate level and appropriate rate. As I say, we're being very selective. I I do think there are some providers of civils loans that have done a lot of high volume with scale being their main objective. That that's not what we do. We would rather we would rather forego some scale and some top line revenue to ensure that we're lending sensibly and that we will get all of our money returned at a sensible price in the future. So do I see Funding Circle as a threat? No. I think I I don't see them as a threat. I think there's a place in the market for the likes of Funding Circle. We actually broke some business into them, and we've had some opportunities from them. So as with many of our competitors, there's also you know, there's a multifaceted relationship in that we lend we broke business into some as well as compete with them from time to time.

52:13 Ian, can Can I add add one point on that that Funding Circle point, if that's okay? Go ahead, Jojo. Yeah. Just just very quickly, I think one thing to draw out on on the CBILS offering is we view our CBILS offering as a little bit different than some of other others out there in that it could be argued some others are storing problems later down the line. We have maintained our credit policy robustly for CBILLS lending and crucially, we make people pay their first day payment on day one. So if we've got it wrong initially, we'll know very very quickly. A lot of other lenders out there are allowing people a full year before they make any repayments on their c bills. Now a lot can happen in a year and it could be that some others and and Funding Circle maybe one of those could find that in twelve months those repayments don't start kicking in. So we are we've very consciously made it that we want to have very clear visibility of how our CBILLS customers are doing And that's why we've structured our CBILLS products so that the the first repayment is due in month one in line with our standard products. So as Ian said, we're not doing the volume play there. We're doing a very healthy level of CBILLS in our view, but it's not a huge huge volume, But we think it is appropriately factoring in risk and reward and we don't think we're storing up problems later down the line. So I just wanted to highlight that point. Yeah. Good point, James.

53:42 Thanks. I think Ian and James, you'll see from the Q and A tab that I've marked them as answered. I think you've taken onboard every question that's been thrown at you and done so very timely within the hour as well. Of course, if any other questions do come in from investors, we'll make those available to you. Ian, perhaps I could just hand back to you for a few words to wrap up, and I know investor feedback is important to you. As usual, we will redirect investors to provide you feedback after you've concluded. Yes. Well, we'd certainly appreciate all your feedback, and thank you very much for all of your questions, your insightful questions. It's always helpful to get your perspective as shareholders and investors. I think my final comment is to repeat concluding comments and that I feel that we've shown great resilience as a business, and we've maintained our liquidity. So I generally feel we're very well placed to take advantage of the market and the economy as it improves, hopefully, during the course of 2021 and beyond. And we appreciate your your further support. Thank you. Ian James, thank you once again for updating investors today.

54:47 I discussed if I could ask please investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback. If you access this meeting from our website, the feedback page will appear. Alternatively, if you access via this link sent to you by email, then you'll be simply asked to log in to submit your feedback, and it is highly valuable to the company to understand your views and expectations. On behalf of the management team of TIME FINANCE PLC, we'd like to thank you very much for attending today's presentation. That now concludes the session. Good afternoon to you all.