Results for H1 to end Nov ‘20 show Time’s recovery is well underway from an industry-wide, Covid-induced slump in good quality lending demand and spike in bad debt provisions. This coincides with a Group rebrand, which consolidates 5 years of buy-&-build success and offers a range of new competitive advantages.
The loan book is growing again, reaching £106m on 30 Nov 20 (Nov 19: £125m; June 20: £95m); loans in arrears reduced by £6.1m during H1 after jumping £9.1m in the prior 6m; and the value of loans in forbearance has dropped from a peak of £25m in May 20 to £2.6m in November 20. Impressively, Time recorded a PBT of £1.4m in H1, compared to a loss of £1.0m in H2 20.
At a market level, light at the end of the Covid-19 tunnel brought about by the start of vaccine rollouts, coupled with a more clearly defined post-Brexit UK-EU relationship, should provide a platform for further recovery. While at a competitive level, Time’s established market position; advantages gained from the rebrand (simpler messaging, cross selling opportunities, cost synergies); and financial headroom – it has £97m of ‘available’ funding facilities and a strong balance sheet with net tangible assets of £27.8m (£26.5m on 31 May 20) – gives it a strong chance of gaining market share.
The share price of 25p is 30% below pre-pandemic levels, with valuation multiples suggesting that Time looks significantly undervalued in relation to peers.
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