Time has confirmed the permanent appointment of the highly experienced Ed Rimmer as CEO. He has described an updated strategy as ‘evolution not revolution’. The key elements are a primary focus on organic growth to double the net lending book to more than £200m over four years, with a priority placed on building the ‘own-book’ business over ‘broked on’ business.
Time’s trading update highlighted the solidity of the foundations the re-shaped team have on which to build. While business volumes in FY21 were unsurprisingly depressed as a result of the pandemic (£103m originations vs £147m in FY20), the business has remained profitable with £3.0m adjusted PBT in FY21 (also £3.0m in FY20) and has a solid balance sheet. Net tangible assets stood at £28.3m on 31 May 21 (31 May 20: £26.5m) with cash and equivalents at £8.3m (£1.3m).
Market conditions are rapidly improving and we expect a return to growth. The Finance & Leasing association has reported a strong recovery in new lending business in March and April 21, and the May 21 HM Treasury Forecasts for the UK economy showed upgraded average UK GDP growth forecasts of 6.4% for 2021 and 5.4% for 2022.
Compared to peers Time looks undervalued as its price-to-book ratio of 0.5 is under half the 1.0 of a peer group median. Indeed, if it delivers on its growth ambitions we believe its current fundamental value to be 50p per share.
Full note in pdf below.
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