Time Finance (LSE:TIME) — Interim Results

0:00 Good afternoon, and welcome to the TIME FINANCE PLC Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated on 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 received during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll.

0:30 I would now like to hand you over to CEO, Ed Rimmer. Good afternoon, sir. Thank you, and good afternoon, everybody. And thanks for joining the the most recent update from TIME FINANCE. I'm gonna take you through an update on the business in terms of the strategic progress we've made over the last half of our year, first half of the the financial year, and then James is going to take you through the the numbers for for h one. I'll come back in at the end just as a as a summary. We found that the last presentation that we did in terms of some of the slides by way of detailed background on what we do, who we are, the products we do,

1:09 It was better to put those as an appendix at the end, so we've done that again for this presentation. So if people do want to have a bit more detail on that, it is at the end of the the presentation and will be will be available after, but we aren't gonna go through that in in great detail.

1:26 So just by way of introduction, I'm Ed Rimmer, chief executive. I've spent just over twenty five years in and around the financial services market lending mainly to SMEs. I spent a a small amount of time within that period within Bibby Lines Group shipping business. And I spent twenty two years overall with with Bibby, seventeen years in the financial services business, and five years of that time as UK chief executive. I I rejoined TIME FINANCE about eighteen months ago in June 2021. James? Thanks, Ed, and good afternoon, everybody. I'm James Roberts. I'm the CFO. I've had about twenty years in financial services of which nine or ten have been in the lending game. I've been with TIME FINANCE, now as the CFO since May 17, so just coming up to six years.

2:26 Back to you, Ed. Thanks, James. So I think we're gonna switch our cameras off now, just to enable us to concentrate a little bit more on the slides. Thank you. So I'll take you through the the next few slides, and then James will come back on with the the numbers. So just a a recap of our medium term strategy that was put in place eighteen months ago when I returned to the business. What did we set out to achieve? Well, become a nationally recognized SME funder. That was very much on the back of the business previously being called one PM PLC and a collection of different brands. So we set ourselves a target to become more well known in our core introducer market as TIME FINANCE. The second objective was to more than double our our gross lending book to 250,000,000.

3:13 Third is to achieve profits organically in excess of where we were pre COVID. And then finally, to significantly strengthen our balance sheet predominantly by focusing on on own book lending. So what have we achieved in terms of the first half year to November 22? Of course, that should say apologies. There's a slight typo there. Well, I'm pleased to say that the the last six months has really been great progress testimony to the work that we we did prior to that in terms of the changes we made to the business. As you can see there, the gross lending bookers for the first time surpassed a 150,000,000 up to a 153,000,000 at the end of November, and that's a 32% increase from where we started off eighteen months ago and a 12% increase alone just in the first half of the year. So really pleased and and good progress there.

4:09 That growth has been driven predominantly by hard asset finance and invoice finance, as you can see. Hard asset, we started off with a book of 32,000,000 eighteen months ago. That's now up to 50,000,000, and it's increased from 40,000,000 since the start of the financial year. And invoice finance had some significant growth since the lockdowns ended. We had a number of clients who kept their facilities in place but didn't utilize the the money. Once the government funding started to end, those clients started to draw money down again. So we've seen a big increase from the low, that we had mid 20,000,000 at the height of COVID, and that's nearly doubled back up to just under 50,000,000 as you can see over the last eighteen months.

4:57 And we've seen a 14% growth just in terms of the first half of the year. So so some really good growth in the the lending books, which we're we're pleased with. And some other points just to note are unearned income. So that's the income we book as part of arranging leases and loans. It gives us future visibility, which is important, obviously, in terms of how income is going to fall into the profit and loss accounts. As you can see there, that's increased from 32, by 32% from 14,300,000 up to just an just under 19,000,000 at the end of November and from 16,800,000 from the start of the financial year. The net tangible assets as well have grown pleasingly, obviously, on the balance sheet, the results of that increased profitability, just under £4,000,000 increase from the start of the plan, which is is is great to see. And pleasingly as well, the growth has not been at the expense of increased net arrears.

5:59 You'll see there that the net arrears have actually reduced. We started off 14,200,000 at the start of this current plan, and we've actually seen just under a 40% reduction. And and pleasingly, again, even with the difficult economic climate that we've had in the first half of the year, we have still seen a slight reduction in the arrears from 9,300,000 at the start of the financial year. So that's another really positive marker that we're we're pleased to see. How has this all been achieved? So this is not an exclusive list. It's some key points that I've picked out to to share today. So the focus has been very much on the core business. So that's the the the four key lending divisions sorry, the three key lending divisions, asset finance, loan finance, and invoice finance from four key locations. So we're now located in Manchester and Warrington in the North and Reading and Bath in the South.

7:02 We've exited the loss making secondhand vehicle broken business in April last year that was based in in in the Northwest. And we've also divested of the consumer mortgage business that was based in Cardiff in October last year. And and more latterly in December, just gone, we've exited the unsecured loans market, the the small loans that were secured solely by personal guarantees,

7:31 and competing with a number of volume players who don't make an awful lot of money, and we've decided to to exit that. So the the focus has been very much on core business, asset finance, invoice finance, and and loan finance. And to a a large extent, that plan has now been been been completed and delivered for us to move forward with those three key divisions. We've also invested in some proven industry leaders. I've mentioned this in the past. We took on Steve Nichols to head up the asset finance business just over twelve months ago now. Steve's made a a really good impact in the business and the asset finance division. As you can see, particularly the hard asset finance is is going well. We took on Paul Seddon in the middle of last year, a very experienced risk professional in asset finance.

8:22 That's a really important role because it's not just about signing off files. It's very much around structuring deals in conjunction with the sales guys and the brokers, and that enables us to take on a little bit more larger deals through Paul's experience. And we've taken on more recently Louise Icomedes in September in a business improvement role. So this is focused very much on the operational and efficiency and systems side of the business. We recognize we need to make some improvements there. And until we really took on some dedicated resource, it wasn't going to have the focus it needed. So three three to four months in, Louise is is doing well, and we've got a a short term plan of areas that we need to improve on between now and the end of our financial year. And as part of our budgeting process, we're we're looking to put some further investments into the business as as as part of the budgets for next year.

9:19 We further developed our product offerings. So we've developed an asset based lending product, which was launched in November. So that's very much knitting together our core offerings of asset, loan, and invoice finances as one so that we can sell more products to the same customer and keep customers for longer and appeals with slightly different market, and we're looking to push on with that over the next year or two. We've developed our secured offering as part of moving away from the unsecured loans market. We very much see the future of that product being in the secured markets. We were only really able to provide capital and interest repayment, amortizing loans in the normal three to five year standard loans. What we will now be able to do through the results of some changes in some funding is offer short term secured loans, anything from three months up to twelve months, and that's very much taken us into the bridging market and short term cash flow needs, all secured against property charges. So we're looking to move on with that when we launch it in in February.

10:22 And the soft asset finance, which is still a part of the business, it provides us with a a natural hedge. It's smaller deals, higher higher rates. And we launched the fast track offering, was to progress deals quicker through the pipeline because there's more there's more of them, and and that's performed well. We've just undertaken a review since that product was launched in April last year. I'm pleased to say that it's relatively early days, but the risk reward balance is is working. So that's developed quite quite nicely as well. And in terms of our brand, we've definitely increased our profile. We've decided to take a sponsorship opportunity to, be a sponsor of the National Association of Commercial Finance Brokers where a lot of our members, are part of during 2023.

11:11 We've been shortlisted for a number of awards through business money facts and the the NACFP, we were ranked joint first in the business money intermediary index for the invoice finance business during last year. So the TIME FINANCE name and brand recognition has definitely improved since the the days of of 1PM.

11:36 I think at that point, it's time for me to hand over to James. Thanks, Ed. That's great. Yes. I'm just gonna do a whistle stop tour of the interim numbers, on a few key metrics, and and try and bring a few of the the the numbers to life. So at a high level, and this is this is very similar to the r and s that went out this morning if you if you've had a chance to look at that. At At a a high high level, all our key fundamentals in terms of the numbers have moved in the right direction during the the first six months of this financial year. You'll see the the the right hand side of the slide there all all with nice ticks next to them, which is which is great to see. Our own book origination, very much part of our strategy as Ed's alluded to to focus on own book lending.

12:25 So the origination of sourcing of those deals in effect has increased by 27%, And coincidentally, that has resulted in the lending book itself increasing by 26 7% as well from the year before. So we stand at just under a 153,000,000 now, up from a 120.5 twelve months earlier. As Ed Ed touched on on some of his slides, the unearned income, that's future interest that will drop into our p and l over the coming months and years, assuming deals perform well, has hit a record high, 18,900,000. That's 32% up on a year before. So we've got a a record lending book, and we've got a record unearned income as at the November 30. So that's that's particularly pleasing. Again, as Ed touched on, it's arguably easy to lend money. It's harder perhaps to get it back.

13:16 And so the deals in arrears continuing to reduce while the book grows is particularly pleasing for us. So we had 8,700,000 of of deals in arrears at the end of November. November. Now that's not to say they're gonna be written off by any stretch of the imagination. We get pretty good recoveries, particularly on soft assets around 70% of those.

13:35 We will recover, and and the hard assets, we we can sell the assets and recover there. So it's it's just ones that aren't perhaps paying as we'd expected. But at 8,700,000, that's the lowest figure we've had since January 2019, so four years ago or so. And that's a 17% reduction while the book increased by 27%. So that that's particularly pleasing for us. Again, Ed touched on it, but the balance sheet has continued to strengthen. Tangible assets now just shy of 60,000,000 at 59,700,000. That's 3% up on a year before. Probably more important or more focus is net tangible assets because of the historic buy and build. There is some goodwill in the balance sheet, but the the net tangible assets now at 32,100,000. That's 8% up on the period the figure twelve months earlier.

14:23 And the p and l is moving in the right direction as well. Revenue for the period, 13,200,000. That's 12% up on the six months from the year before, and PBT, up to 2,000,000, from 1,200,000. So a 67% increase. And all of that's reflected in the earnings per share, which are 62% up at 1.73p per share. So numbers wise, in terms of deal flow coming in, strength of the balance sheet, deals going wrong, and the p and l all pleasing for those first six months. If we look at the balance sheet in a little bit more more detail, the two tables on the left are more takeaways showing how the tangible net tangible assets have increased and the and the gross lending book has increased. The The graphic on the right hopefully brings to life the arrears position.

15:13 As I've said, it is is key for us in an area of great focus. But if I split this graphic from January 2019 through to November 22 down down into three parts. They tell three distinct stories. The the first third on the left hand side is effectively the the traditional arrears run rate pre pandemic. Remember, we're lending to UK SMEs. There always be some deals that that go into arrears, and and some in the end may be written off. As I've said, these these don't necessarily result in write offs, but they're an early indicator. We can see there for that period pre pandemic, we we were running along at roundabout on average 15,000,000. It It was was about about 1010% of the book back back in the day. We then had COVID hit, and you can see the big spike in in in the twenty twenties.

15:59 As you'd expect, there was an increase in traditional arrears, which is the purple bar. And also, we agreed with some clients to give them forbearance, maybe an interest payment holiday or or or just a complete payment holiday or or whatever on a case by case basis. And you can see that green addition to the bars there was the forbearance during COVID. Then we move on to the final third of the graph, and we can see for pretty much the last twelve months, the the forbearance has completely gone in relation to COVID, which is which is particularly pleasing. But also, more important is the underlying arrears now are consistently below 10,000,000. They're about 6% of the book now and have been for a number of months. So we can see that although the book has grown significantly, the arrears are, as we've touched on, far lower than even pre pandemic levels, and it gives us confidence that the underwriting and the quality of the

16:51 book is is better, and that sets us in better stead, we believe, moving forward. Final slide from me before handing back to Ed is just to, again, graphically show show the book. We've we've said already that the own book lending is key to our strategy. It's a key driver of revenue and profits moving forward, and and it has a compound effect to to a degree in terms of profit. So over time, so the the bigger the the own book lending book is assuming you've done good quality deals, the the more your profit will grow as we move forward.

17:26 So this here, we can see we were around about a 145,000,000 back pre COVID. Various lockdowns hit and the book fell, moved around a bit. But at the end of lockdown three, which as you can see is around about July 21, we've had pretty much uninterrupted growth in that book month on month, every month through to now being just shy of a hundred and fifty five million. And fingers crossed, we don't see anything to

17:52 on the horizon to stop that growth, continuing. So, really pleased with how the book's gone. It shows, people are getting the message of what we what we offer and how we can help UK SMEs. And then finally, some very other quick, other metrics that are part of the strategy for us. We wanted to increase our average deal size, excuse me,

18:14 to move into perhaps better quality, slightly larger ticket ticket deals. And we can see that when we started the the medium term plan in June '21, the average deal size across the group was about £14,000. It's now up to £27,000. Now we don't wanna completely change it and have an average deal size of hundreds and hundreds and thousands, but we wanna tick it up a little bit bigger as we move forward, but it's certainly going in the right direction. So that's that's pleasing. At the same time, we've continued to focus on spread. Risk diversification is absolutely key to to us as a business, and we can see that the top 10 sectors by value remained less than 30%, which they have historically been, and the largest sector by value is less than 10%, which again it's historically been. So we're we're not focusing just purely on one sector. We're we're spreading the risk across multiple multiple industries.

19:06 We feel we've got a sensible approach to provisioning. Bad debt provision is about 3% of the of the book, and and all other things being equal continue to be at about that level. So we feel that's a a good solid, approach to to provisioning. And we have managed to pass on most of the recent interest rises to our clients with an average of about 2% increase in the rates we've charged recently over the the last few months. So invoice finance for for those of you who who aren't aware is is a variable rate funding and variable rate funding in and funding out. So the interest rates are automatically passed on. Asset and loan funding is fixed in in us drawing our funding. So our back book is completely fixed both on what we on the rates we brought we brought in, but it's also fixed in lending to our clients.

19:54 So as we draw down new funding or new lens, our our funding costs have marginally increased. But as this shows, we have managed to pass the bulk of that those increases onto our clients main so maintaining our net interest margin. So in summary, we think it's a really good first six months numbers. It has resulted us being able to uplift our market expectations for the full financial year, which is in the current environment we're very pleased to do. And we think the foundations and the building blocks are there to continue the growth for the rest of the medium term plan. And with that, I'll hand back to Ed. Thanks, James. So just to take you through the the final slide before we open the floor to any questions. In terms of a summary of the first half of this year, we've exited the noncore businesses now, and that's that that exercise is complete.

20:49 We believe that we've tidied up the business for one of a better word and positioned the business as the way that we set out to do so. So that is now done. The key hires that we took on are embedded in the in the core parts of the business. We don't envisage that there will be any senior additional hires this year. Of course, we will look to increase the staff as we grow the business, but in terms of the leadership team, that is now complete. The multiproduct offering has expanded, as I as I mentioned, with the launch of our ABL products and the moving away from the brokerage businesses to be purely focused on on own book lending. As as the the following point says, that's mainly in hard asset and invoice finance, but also with our our smaller soft asset product to provide us with a spread of deals and also increased rates at that end of the market.

21:46 And as James said, we have focused heavily on maintaining our net interest margin as we've seen interest rates increase. And I'm pleased to say that that so far has has been done largely through passing on the the rates to the customers. And we've been very pleased with the the TIME FINANCE name being more recognized in the market, particularly in our core broker market and our introducer markets, and we are getting now further recognition. We're able to put more material into the market from deals that we've done, and and I think that's going in the in the right direction. So in terms of outlook, how do we see things? Well, very much continuing on the focus of our core strategy. We're eighteen months into a four year plan plenty still to achieve, but I think we're broadly on track as to where we set out to be. The market conditions clearly remain challenging. They're very difficult to forecast.

22:42 The last six months of of the calendar year that we've just gone through. Who could have thought the things that businesses would have had to focus on on the back of coming out of COVID? So

22:55 I've probably, as I said before to someone when we were talking, given up on on actually trying to forecast too accurately how things will pan out in the future. And and challenging is probably the right word, but clearly, this presents opportunities for businesses like ours. Alternative financiers have always done well, certainly in my experience, through times of boom and bust. And, clearly, we have a situation at the moment where government funding is no longer available to the extent that it was for small businesses, and therefore, external funding will be required, and that's where that's where we feel we're well positioned. So our medium term aims remain the same. We've got some positive momentum. And as James mentioned, we do now expect to exceed the original market guidance that we put into the market of 2,800,000, and that has been repositioned at 3,200,000 for the the time being.

23:53 Yes. That that could be called slightly cautious based on our our current run rates, but one of the things that I wanted to do when I came back into the business and the board supported was to build credibility and confidence back for TIME FINANCE, certainly as a result of the COVID reductions in our volumes. And and I think that's what we're focused on doing. So, hopefully, we will continue the momentum through the second half of the year and deliver, you know, what we think we can we can achieve as a minimum now for the full year.

24:29 Okay. Thank you. Ed, James, that's great. And thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please continue to submit your questions using the Q and A tab situated on the top right corner of your screen. But just while the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. James, as you can see, we have received a number of questions throughout today's presentation, and thank you to all investors for submitting their questions. James, if I could just ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you both at the end. Thank you. Yes. Thank you. Yeah. So I'll I'll steer the ship through this and then bring Ed in on on the questions for him if that's okay.

25:16 So the first question from Jake, and it's it's probably one for you, Ed, if that's alright, is, hi. When do you think you will be paying a dividend next? Yes. So this has been a a frequently asked question and and also a frequently debated subject within our board. We are still making the decision to not pay a dividend. We have paid small dividends in in years gone by. We believe that the money is better spent and better used investing in in the current business, and this is very much seen as an investment growth stock at the moment. That may change. We're certainly keeping it under discussion at the board. But But for the time being, we believe that the the the dividends that if we did pay them would be so small anyway.

26:03 As I say, the money is better put to better use by keeping it in the business and investing, supporting the balance sheet, and supporting the the debt lines that we have to grow the business. So that's the current stance that we're taking. Thanks, Ed. The next question from Colin is actually four questions. So I'll I'll take them one at a time if if that's alright. I think most of them are aimed at you, Ed, but just going through them. Question one, now that you virtually don't use brokerage lending and recruited your own sales heads, where did TIME get their leads from? Well, we do we do use brokers, and we do use intermediaries. So that's our that's our core channel to market. The sales guys are basically tasked with forming relationships with those intermediaries and getting business from them.

26:56 It works slightly differently in the in the in the in the different products. So the asset finance brokers do package a lot of the deals, but they still need managing in terms of our proposition, the business that we want, the business that we don't want, and really having a deep understanding of how we underwrite business. So that's the broker manager's job. In the invoice finance world, the broker doesn't necessarily package the deal as such. That's the sales the sales person's responsibility to do in conjunction with our our audit teams. So and we are still using introducers. We absolutely value our intermediary relationships, and that's key to our our growth. So we don't see any change there in the in the immediate future.

27:43 Thanks, Ed. And Colin's second question was, do you advertise or attend trade shows? I've never seen a TIME advert.

27:51 Well, that that's a good question because we haven't put an awful lot of investments and time into trade shows. We felt that we had enough coverage through our salespeople and the core relationships to get the business moving again, and I think we've did we've done that. We have attended the the NAC Fab show at the NEC in Birmingham for the last two years. We've had a a great stand there. That generally sees upwards of 500 people come through the doors in the in the single day that it's done in in June. So we have been present at that key industry event, but there's more that we could do there. And that is part of our our plan for the marketing budget when we look to put it in place for the next financial year, which obviously starts on the June 1. So we'll be putting the planning into that as we travel through the spring.

28:45 So, hopefully, you'll see us a little bit more recognition in some trade shows. And the third question from Colin was existing customers are are less costly to get. What are your retention rates?

29:00 So the retention rates, I'm pleased to say, are really good. With the asset finance business, businesses generally stay for the term of the agreement. So you put in place a three a three year lease. They they stay for the the period of that time. And, obviously, within that time, we hope to get other assets that we fund as well for through the broker relationships that we have. Sometimes the relationships pay up early because they have a change of circumstances, they refinance, whole numerous reasons, but that's not a core part of what we do. The invoice finance relationships can move around, but we have one of the highest retention rates in the industry. So our average client life is around four and a half to five years in the invoice finance market.

29:55 When I was in Bibi, the average retention was around two years. Slightly different market then, but that gives you a a very broad overview of where we sit, and and we put a lot of emphasis on retaining existing clients. It's a core part of of what we do. It costs an awful lot to get a client, so we want to keep it as long as we can. Thanks, Ed. Last couple of questions from Colin before we move on. His fourth one is, what are the cross selling rates? I'm not sure if that's I I assume that's how much we've made from cross selling rather than the rates we're charging. Yeah. Well, I I can just talk about that. So the the cross sell opportunity is is there in this business, and we have put quite a lot of emphasis around it. We put a scheme in place, actually, prior to COVID called Excel, but it it it inevitably died a bit of a death during COVID.

30:53 We relaunched it when we came out of COVID as part of our our relaunch strategy, and we have had somebody within the business that's been responsible for developing Excel. We do regular staff forums. We do regular training sessions in terms of product development and the offerings and how they change. We've got an an all staff conference coming up in March where we're gonna be doing some more on on Excel. And it is a key part of the future plans for the business in terms of our multiproduct offering. We have had some success with with the with the program. We've done around 40 transactions from existing clients onto other products since we started it. That's in the last eighteen months. And we're monitoring the lifetime income that we get from those clients and the conversion rates and where we get business and where it goes to in the various the various divisions. So, yeah, it it's an initiative that's that's, I would say, going okay.

31:55 It could go better with a bit more emphasis behind it, and that's one of our our our objectives for the next twelve months. Thanks, Ed. Final question from Colin. Do we exclude SMEs by size, say turnover too large for us or too small for us? We do. We typically look at the minimum rate sorry, the minimum value that we will lend, and this is this is not not normal, but it's it's it's occasional at the small end of the soft asset market as as low as a thousand pounds. At the top end of the market, it's 2,500,000. That's our our self imposed limit that the board have agreed to and that our back to back providers in the invoice finance division where that limit applies have agreed to as well.

32:42 The asset finance maximum exposure that will go up to 21 clients is 750 k, and that's a fairly recent uplift from 500 k that we had in place prior to that. Secured lending on the loan side is is 500 k as a as a as a minimum. So that gives you some parameters that we're working to. It's typically lending to businesses that turn over up to 5,000,000 in the SME space. Thanks, Ed. So question from Mark. Do you believe it's inevitable that nonperforming loans will increase given the economic environment? What sectors are likely to concern you the most in the next twelve months? Well, I think I'll I'll take that one, James. I think it's inevitable that we will have bad debts. It's inevitable for every financier that lends to small businesses and and and actually any anyone that lends money. At some point, we'll have bad debts. The key is to control those to a manageable level, and that's where we believe we have not a not a competitive advantage because there's other businesses that have very good people working for them, but we very much rely on the experience and knowledge of our of our people, and that's a key part when you're lending to SMEs. Systems can only go so far. We're looking to improve our systems. Clearly, we need to make some improvements in efficiencies.

34:04 We have had some inherent different systems from the acquisitions that were done in the one PM days that we we have made some progress with, and we need to make some further progress with. But the fundamental difference for this and similar businesses in alternative lending is the people and having the right experience, credibility, people that they can call on as contacts as well in the support sector. So insolvency practitioners, turnaround consultants, solicitors, That's really all important when we go into times of difficulty. And I think we will take bad debts inevitably. It's the way that we control those and, of course, the opportunities that we can take at the front end. And the key is to make sure that you take make the most of the opportunities, and and that outweighs the the likely increase in in in bad debts that you'll have during difficult times.

35:00 Thanks, Ed. Sam asks is said, sorry, it's great to see full year trading will be ahead of market expectations. How have our competitors fared? Well, we have very few competitors in the listed listed space that that do the same as us. So there's there's there's one or two, but there's very few in the listed space that do all the products we do. So there there may be some listed businesses that do asset finance, but there's very few that do the combination of products that we do. So it's sometimes difficult to compare against in terms of the availability of of of data. We monitor the industry stats for the invoice finance market through UK Finance who publish stats every quarter, and we monitor our stats for asset finance through the Finance and Leasing Association who also issue their stats every quarter. But there's there's there's very different segments of those markets, and they're quite wide ranging.

36:05 We've just done some data against a couple of our key competitors, I'm pleased to say that they're they're they're fairly favorable. In fact, we've outperformed some of our key competitors in the alternative lending space as independent businesses. But I would I would caveat that, you know, we are coming from a a lower base, not not significantly lower. We're not comparing ourselves, you know, with billion pound balance sheet businesses. We're trying to compare ourselves with businesses that we're aspiring to be like. And we've outperformed those those businesses in the last the last twelve months, but we are coming from a slightly lower lower base. That's why I think there's an opportunity for this business because we don't need to take over the world. We can take a, you know, a relatively small part of the markets that we're in and still grow this business.

36:57 So, yeah, I think that's an attractive part of the growth plan that we've got. Thanks, Ed. Peter asks, do you think the trend in net arrears can continue to reduce given the macroeconomic background? Or to put it another way, do you think we've reached a steady state? Take that one, James, and give me a a break from talking? Okay. Yeah. Yeah. No worries. Yeah. Think it's a it's it's it's a very good question. I think Ed alluded it to it earlier. We we you know, we're in the lending game. There will be bad debts. There will will be deals that go wrong. The macroeconomic environment is is is tough as we know. So I I suspect the arrears falling in in pounds and pence is in quantum.

37:44 I I think we've probably bottomed out. There'll always be a level of arrears we have as a business. Our challenge will be to keep those arrears in a in a in a range we think is is reasonable. It's about 6% now. If if they stay at about six or 7% as the book grows, I think that would be a good result. The other thing as well is is that I touched on right at the beginning, arrears don't necessarily mean write offs. They're an early indicator, but we have a a very experienced and skilled collections team, recovery team, and we have a pretty good track record of getting a a fair amount of our our deals either back on track or our funds recovered. So, yeah, we're we're watching this all the time, but I don't think if you look at the the stats, you know, it's fallen from 14,000,000 to just under 9,000,000 in a year. I don't I'd be delighted, but I don't think we'll be turning around in a in a year's time and saying we're now at 4 or 5,000,000. I I think that would be unrealistic.

38:43 Mark asks, can you give more color on how you fund fund the books and if this will change in the future? So probably another one for me here, Ed. Yeah. So we've we've we've two very distinct funding lines lines for each of our key divisions. So invoice finance is funded by a back to back facility with RBSIF, who are one of the biggest, if not the biggest, players in the market. That's a a 42,000,000 facility with an an 8,000,000 accordion, and that is variable funding. So the funding we draw down is variable, but also the funding we provide to our clients is variable as well. So the rates, he says somewhat flippantly, are largely irrelevant for us because we just pass on any any rate increases.

39:29 It's slightly different in asset. They're funded by block funders, which are wholesale lenders. We've got a a panel of about six of those, half dozen or so, the likes of Oldhamore and Investec and Siemens who have ten to twenty million facilities with us, and the government backed British business bank as well are one of our funders. Those rates sorry. Those those funds are fixed. So when we we we fix our deals, we then bring the funding in who will fund 80 to 90% of those deals so that the the rate we charge is fixed as is the funding we we draw down at the point we draw it down. Obviously, as rates have increased, our back book then is not exposed to the interest rate rises, but future funding is. So our our typical rate is about three and a half or so, 4% above base is what we'd draw our funding down.

40:19 So as rates go up, that that obviously goes up, but it's about three and a half to 4% above base. We obviously charge on a much higher margin to our clients. And as I said, I think earlier, we've we've managed to pass on around about 2% on average of the of the rate increases to our clients. We don't wanna become uncompetitive and pass on too much. At the same time, we don't wanna, stop pricing in risk and reward appropriately. Paul asks, please outline how you can safely maximize your available balance sheet cash to support own book growth lending and not hit a low growth ceiling? That's probably a third one in a row for me, Ed, if if that's alright. Yeah. So that that's a very good question. And, finally, we enough, we spent a long time at our board meeting earlier in the week talking about cash and and how we use it.

41:11 We we've touched Ed's touched on we we we're we're currently not proposing a dividend because we want to use our cash resources to grow the business. The medium term plan, which goes to May 25, we think we can get there or thereabouts with our existing funders or or maybe one or two new ones in and our own cash reserves. We certainly don't think for the next twelve to eighteen months, there would be an issue. I think if we grew super fast, it could put a strain on the cash because, obviously, we have to fund that 10 or 15% equity slug. If we go grow steadily and securely as we have done for the last eighteen months and carry on that for the next two and a half years, we will have the resources and the cash juggling it around and stuff to to hit our medium term plan. So it's all about the speed we grow at, and the the speed we're growing at at the moment is is very much within our means.

42:08 Another question from Paul. Following on from the above, how is the search for suitable long term liquidity at sensible pricing over the course of the next twelve to twenty four months stated in the financial year '22 report going? Yeah. So so so I've sort of answered that. Yes. We very much have been looking at that. We're always talking to funders, variety of funders from RCFs to mezzanine and everything else out there, seeing what best suits us. At the moment, we're doing better than we thought on certain cash flow assumptions, you know, less less deals in arrears, etcetera, etcetera. So we've got more cash to play with. So we we're constantly talking to people, but it's less, I suppose, of a pressing need than it was, maybe six six, twelve months ago.

42:55 Another question from Paul. This one's probably probably one for you, Ed. How is morale holding up given so much upheaval? COVID and then changing corporate goals style will have created some discombobulation. It's a word I've not heard for a while. Yeah. And and and that's yeah. I think that's a good question. We mentioned it actually on the last presentation that we were intending on putting quite a lot more focus around our our people and colleagues around the business, and we've we've done just that. I think we started off the year by having a an assessment objectives of what we wanted to achieve, and one of those things was actually getting the teams together. A lot of people have been working from home. Most people had come back into the offices by way of flexible working, which we've carried on, which seems to work for our business, and it it seems to work for our colleagues.

43:49 And we wanted to get everybody together. So I think I mentioned earlier in the presentation, we have got a date booked in for everyone to come together in March in the in the Midlands, which will be, the first time we've done that in three years. And that will be a real opportunity to get key messages across to people, but also engage with the the staff and hear what they think and and and the ideas for the future. So we're looking forward to to that. We've done a lot of work around communication. We have regular town halls with the teams. Obviously, things have changed now where people can jump on things like like this, webinars, and make it easier to communicate and ask questions. We've spent more time trying to push out the results and how we're doing because lots of people heard about things in the business, but not necessarily how we were actually performing financially. So we're doing that more.

44:42 And I think probably most importantly, we have supported our our colleagues with cost of living increases outside of the annual annual appraisal and reviews. So with all the all the pressure that people have had, fuel fuel bills going up, obviously, heating bills going up, inflation. We decided to provide some support to the most, I suppose, the most needy in the business, those people that weren't paid the executive salaries. So it's been very much concentrated at at at the slightly lower end of the the workforce. But that's actually encompassed a large chunk of the the people that we've got when we we employ now a 130 people. And we've done that in two stages. The first one was through the autumn, and we decided to carry that on through through the winter, and that's been really well received. So, yeah, we've we've worked really hard on making sure that morale has improved from where it was because we had to make some redundancies twelve months ago.

45:50 And since then, gradually, things have improved. And I think I've certainly spent a lot of time making sure that we understand changes that we need to make and improvements that we need to make with with our communications. And I think we're on the right track there. So, you know, lots still lots still to do, but it's it's a good question, and and we're I think we're in a better place than we were. Thanks, Ed. I'm just conscious of time. We've we've we've got a couple of minutes before we'll have to start wrapping up and summarizing. So just another one probably for you here, Ed. Could you comment in a bit more detail on what is driving growth in the main two products, asset and invoice? Given economic conditions have been so weak, has it been particular sectors that are growing and driving demand for loans, maybe replacement government schemes, or is growth more a function of you taking market share?

46:41 Yeah. Again, good good question. Mentioned a couple of key points there. So firstly, let's let's be honest. The government funding schemes migrate in a way has helped all all alternative financiers like our ourselves. So that's been one key thing. There has been some sector nuances. So construction did pretty pretty well all the way through COVID, and it had a really good run through most of last year. It slowed down more laterally, but we benefited significantly through the hard asset division, through the construction market being buoyant. Obviously, we fund a lot of yellow plants construction equipment, crushers, and the likes, and that's that's benefited it. And we also funded a lot of wheeled assets where, see, through the back of COVID, people were moving more towards funding wagons and and and delivery vans and smaller LGVs, obviously, for the home delivery market. So we've benefited through things like like that.

47:45 I think the two divisions have made the most of those times, but they've also made the most of the opportunities through our people and engaging with the broker market and actually getting the TIME TIME FINANCE name into the markets that weren't necessarily understood clearly before then. So we have done some some bigger ticket deals that people wouldn't necessarily have associated us with, and we've proved that we can play in that turnaround market. So it's a combination of things really, but I think it comes down to fundamentally the market and and our people. Thanks, Ed. I think we've probably got time for one one last one, and apologies for not having the time to answer them all. But John has asked if the segment the segmental analysis shows weaker PBT margins for the three core businesses compared to the previous half year, particularly in IF. Comments, please. I think if if I take that one, Ed, if that's okay. Sure. I think, John, that's probably due to a different recharge approach.

48:51 In the past, we had a lot of what you could class central services, HR, marketing, IT were held within our sort of central cost base and didn't sit within the individual entities, invoice finance, asset finance, loan finance. This financial year, we have decided to put the cost base in those businesses. So they they actually are paying for services they receive, which I think is probably the the correct thing to do. So it shows their true profitability. So that has dampened the margins this year. It's not quite apples with apples. It's a very good question, though, and maybe we need to think about restating in the full year accounts, the the segmentals to enable a better comparison.

49:36 But that's what it is. We've basically put IT, HR, marketing into the three divisions, whereas previously, they were they were held within the other bucket, if if that that makes sense. And I think I think that's all we've time for on the questions, if that's okay. That's that's great, James. And, Ed, thank you thank you so much for taking the time to address all the questions you can from investors this afternoon. And, Ed, before redirecting investors to provide you with a feedback, which I know is particularly important to the company, could I please ask you for a few closing comments? Yes. Sure. Well, thank thanks again to everyone for joining and and hearing what we've had to say. I think it's been a pleasing period. We did a lot of hard work, in the first year that I came back into the business, and it's always nice to see the the the results coming through.

50:24 The the the plan is by no means finished. We still believe there's a lot to do and a lot of opportunities for us this year and and into the future. We're eighteen months into our four year plan. But so far, so good. And as long as the market opportunities are there, I believe that we're in a great position to to take take them. And so, you know, that's really, I think, the summary to to leave you with. You know, we're we're well set hopefully for the the future with with a slight bit of cautious optimism around, obviously, the the uncertain market. Ed and James, thank you once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the man management team could better understand your views and expectations.

51:17 This will only take a few moments to complete, and I am sure will be greatly valued by the company. On behalf of the management team of TIME FINANCE PLC, we would like to thank you for attending today's presentation. Good afternoon to you all.