Time Finance – totally the right time to get in

For patient investors there is always a good buying opportunity when companies reorganise themselves and then rebrand their business. And that is just what is happening now at what used to be called 1pm. 

Now renamed Time Finance (LON:TIME), this independent specialist finance provider is beginning to rebuild its lending books after Covid-19 inflicted pain upon its business.

Number of acquisitions over the last few years

After a series of small acquisitions, the 1pm group had gradually increased its revenues, almost doubling from £16.9m in 2017 to £29.2m for the year to end-May 2020.

On 19 January we shall get the group’s interim results for the six months to end-November. They will not show any fancy instant recovery, but I do feel that the accompanying statement with those figures will spell out the group’s ‘rebound’ plans and its potential going forward.

Buying and building

I have followed this non-bank alternative finance provider over the last couple of decades and now reckon that its shares are ready for an excellent uplift within the next two years or so.

The company was set up way back in late 1998, then went on to the AIM market in August 2006.

Over the subsequent three or four years it suffered, like we all did, from the collapse of the financial markets. By 2015 it was strong enough to acquire Academy Leasing, then seven months later it acquired Bradgate Business Finance, in March 2016.

A year later it bought Intelligent Loans, then in June that year both Gener8 Finance and Positive Cashflow Finance came into the growing fold. In December 2017 CarFinance2U was taken over.

Time to sort out the bundle

The bundling together of these small operations, which offered such a range of commercial and personal finance facilities, was inevitable – and that is just what is underway right now as the group totally rebrands under the Time Finance name.

Over the last five years the group has been on an ambitious journey. It has grown from just one site in Bath employing a dozen staff to a nationwide group spread across six sites and with over 170 employees.

Today it is able to provide its customers with asset finance, invoice finance, pure loans, vehicle finance and physical asset-based lending.

It has the ability to help some 20,000 UK businesses on its books, with the finance they require to achieve their goals.

It can provide and arrange up to £150m of funding each year.

Covid-19 gave it the ability for a clear out

Due to Covid-19, dealing through intermediaries in the last year has not been as positive as operating its own books of business.

In fact, the number of redemptions has been very evident as cheaper funding or even grants became available from Government sources. 

Net lending in the first half year saw a reduction of the loan book from £125m to £95m by the end of June this year. Interestingly, that has taken a mass of lesser quality lending off its books, which helps to de-risk while making available additional funds for more selective redeployment.

Now getting positive again

Since July the net lending has risen back up to around £105m, with a positive effect on the group’s month-to-month revenue and profit growth.

We are now in the second half-year which should show a much more positive return to the group in overall performance.

The group has 90.37m shares in issue, none of which are held in Treasury.

Larger shareholders include Cloverleaf 374 (20.0%), GPIM (15%), director Ron Russell (12.3%) and Aeternitas Imperium Privatstiftung (4.0%). Other directors of the group hold a total of less than 1% of the equity.

Rebranding offers big opportunities

Following this reorganisation and rebranding exercise it becomes very clear that Time Finance aims to become a nationally recognised business and the preferred funder of choice by providing specialist finance to the UK SME market.

I expect the group to start a series of investor roadshows after it has reinstated its revenue and profits guidance for this year and next when it reports next month.

The group, which now has net tangible assets of around £28m, is valued at just £19.4m. To my way of thinking its shares at just 21.5p could easily double.

Cautiously, I now set a target price of 30p.