FY21 results (to 31 May) are in line with expectations. While business volumes and revenue were hit by the pandemic slowdown, TIME stayed profitable (unlike many other lenders) with cost cutting measures actually boosting margins, and the balance sheet remaining strong. New CEO Ed Rimmer has already started to lay the foundations for a return to growth, and is looking to double the size of the lending book over four years through organic growth.
Despite lower trading volumes, profit before tax, exceptional items and share-based payments (PBTE - probably the best measure of core trading performance) was £3.1m (FY20: £3.0m). PBTE margin increased from 10.1% to 13.0%.
TIME looks well positioned to grow both the top and bottom line as: economic tailwinds favour of a return to growth; the credit environment is improving, suggesting a potential boost to profitability; and the business itself looks robust to us.
We think the business is undervalued. Our core value is 50p per share, almost double the current share price. Moreover, its market-to-book ratio is 0.41 compared to a peer median of 1.36
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