RE: Q1 PBT up 44% to £1.3m29 Sep 2023 14:56
HTtps://www.investorschampion.com/channel/blog/bonkers-bargains-1pm
Results for the year ending 31 May 2023 (28/09/23)
Revenue for the year ending 31 May 2023 climbed 17% to £27.6m while profit before tax soared 281% to £4.2m with earnings per share up similarly to 3.7 pence.
Own-Book deal origination increased 14% to £73.4m lifting the period end Lending book to £170.1m, an increase of 24%. This lifted the ratio of own-book lending to broked-on lending to 96% vs 4% during the year, up from 87% vs 13% in the prior year.
The Invoice Finance division saw lending increase 30% over the previous year to £56m and the "Hard Asset" offering within the Asset Finance division was up 55% to £62m.
The non-core consumer mortgage brokerage was offloaded in the period.
The Group closed the period with unused lending headroom of approximately £50m.
Net Tangible Assets at 31 May 2023 were up 12% to £34.2m.
Trading update for 1st quarter
Own-Book lending origination in the first quarter of the current year rose 29% to £20.2m helping to lift revenue 21% to £7.6m. Profit before Tax was 44% higher at £1.3m.
The lending-book has increased 3% to £175.8m since the May 2023 year-end with net arrears remaining stable at 6% of the gross lending book.
Net Tangible Assets also continue to increase; up 3% since year-end to £35.2m and up 13% from 12 months prior.
Broker forecasts
For the year ending May 2024 updated forecasts are for revenue of £30.1m, pre-tax profit of £5.0m (+19%) and adjusted earnings per share of 4.0 pence (+14%).
For May 2025 forecasts have been upgraded to revenue of £33.1m, pre-tax profit to £6.3m with adjusted earnings per share 5.1 pence (+27%).
As anticipated Time Finance appears to have ridden out the Covid storm through its multi-product lending offering and the flexibility of its business model.
With the significant government support packages no longer in place post-Covid, and with the ever-increasing economic challenges facing small businesses, access to finance will be a key priority for SMEs over the coming months and years.
At the current share price of 28p (previously 17p) the market capitalisation is still a lowly c£26.4m, a c25% discount to net tangible assets at 31 August 2023, which has also been subjected to meaningful provisions. Despite the strong share price performance over the past 12 months the PE multiple is a lowly 7x forecast earnings for the year to May 2024. Prior to the pandemic impacting returns, which pulled down earnings per share to 2.6p for the year ending May 2020, this business consistently delivered earnings of more than 6p and 6.8p in 2019 - net income of £6.35m. This equates to a normalised price earnings multiple of 4.7x.
While the shares have had a good run in 2023 to date, they remain well down on previous highs and this business continues to look ridiculously cheap on many levels. The Group's multi-product tailored offering to UK SMEs, its o
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