Profit upgrade for Time Finance

Small business finance provider Time Finance (LON: TIME) is trading well ahead of previous expectations for this year and this has sparked a profit upgrade. The momentum suggests that there could be further upgrades to come for next year. Time Finance continues to be valued at a large discount to its net tangible assets.

In the six months to November 2022, revenues were 12% ahead at £13.2m, while pre-tax profit was two-thirds higher at £2m. This shows the operational gearing of the business, with admin expenses reducing year on year. Most of the increase in interest rates is being passed onto clients.

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Non-core businesses have been sold and the unsecured loan book is being run down. This enables management to focus on the invoice discounting, asset finance and secured loans businesses, while adding selected products to expand the range offered to small businesses.


In the past six months, the gross lending book has risen from £136.8m to £152.7m. The average deal size has risen to £27,000 and management would like it to be higher. Year-on-year net deals in arrears have fallen from £10.5m to £8.7m, despite that increase in the lending book.

A good spread of sectors means that the company is not dependent on any area. In tough economic times there is likely to be increasing demand from small businesses for the types of finance provided by the company.

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There is £40m of headroom in Time Finance’s loan facilities with potential for £15m to be added. This should provide adequate funding well into 2024.

Net tangible assets are £32.1m. At 23.2p, the market capitalisation is £21.5m.


Time Finance has guided pre-tax profit estimates upwards from £2.8m to £3.2m on a 3% upgrade in revenues. Management is still cautious and will know more about the market after February. That is why the second half growth expectation is currently modest in relation to the interim outcome.

The shares are trading on eight times prospective 2022-23 earnings. Cenkos has not changed 2023-24 forecasts, but they already indicate significant growth with a pre-tax profit estimate of £4.6m on a 13% improvement in revenues.

Time Finance share price has been on a downward trajectory for years. There have been short-term upticks, but the latest improvement since September last year appears to be gaining momentum suggesting that there should be further to go.

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