Time Finance plc (B5D1.F) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Time Finance plc Q3 Trading Update. [Operator Instructions] The company may not be in a position to answer every question it receives in the meeting itself. However, the company can review all the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to CEO, Ed Rimmer. Good afternoon to you, sir.

Good afternoon, everyone, and thank you for joining our Q3 trading update. I'm going to take you through just an update on where we are our current strategy. James will then talk through the numbers, and then I'll talk about our future plans for the next 3-year cycle. So just moving through the slide deck, our standard disclaimer and then introductions really. So I'm Ed Rimmer, Chief Executive of Time Finance. I've been in this role for 4 years. I've spent 30 years lending to small businesses. A good chunk of that time was spent with Bibby Financial Services, 5 years as the U.K. Chief Exec. And yes, over to you, James.

Thanks, Ed, and good afternoon, everybody. I'm James Roberts. I'm the CFO of Time Finance. I've been in -- on the AIM market with various guises now since about 2007 and have got about 25 years in financial services experience. And I've been with Time Finance in this role as CFO for coming up for 8 years now, 8 years in a couple of months.

Thanks, James. So we'll just take cameras off whilst we're going through the main presentation, and then we'll come back on when we take the Q&A at the end. As we go through, it's probably worth just mentioning for people that aren't as familiar with the business. We do have some appendix slides at the back, which gives a little bit more basic information in terms of who we are, what we actually do, our core products and where we sit in the marketplace. If anyone obviously wants further information on those, there's, as I say, some appendix slides at the back. So just in terms of our current strategy, we put this in June 21 as the business was coming out of COVID. And it was a 4-pronged attack. We're obviously coming towards the end of the plan now, and I'll take you through progress to date in the next couple of slides. But the 4 objectives were to double the gross lending book from the starting point of around GBP 110 million in June '21; to get profitability back up to the pre-COVID run rate of 2019; to become a nationally recognized SME funder, that was very much within our core introducer markets; and to strengthen the balance sheet through focusing more on own book lending that the business prior to 2021 was a mixture more of brokerage and own book. So where are we then in terms of our current strategy? Well, as I mentioned, we're well towards the end now really of the plan. And thankfully, we've had a really good 3- to 4-year period, and the business has moved forward significantly. If we look at the first objective, to double the gross lending book, we're at GBP 210 million. James will talk you through the growth over the quarters, but we've seen successive growth really over each quarter for the last 3 years, and that's been driven through Invoice Finance and hard asset. You can see there the significant growth that's been achieved since the launch of the strategy in Invoice Finance, 160% of where we started; and hard asset even more pronounced, 231% of where we started. The run rate profitability objective. While you can see there the 9 months comparisons from where we are this year from where we were at the peak of the profitability in 2019, we've overtaken the comparison figures for both revenue and profitability, which obviously we're really pleased with profitability now stands at GBP 5.9 million compared to the comparative GBP 5.7 million in revenue, further out at GBP 27.3 million versus GBP 23.8 million, which was the previous high. If we look at the other 2 objectives to become a nationally recognized SME lender. People -- some people will know at least that the business was previously known as 1pm plc. It was rebranded at the start of 2021. And that was very much this objective on -- very much on the back of that rebranding. So it was to go and really establish who we were, what we did in our key introducer market, which is where we get most of our business from. We've made really good progress there. We started to measure Trustpilot review ratings in terms of customer feedback against the service levels around 12 months ago, and the feedback there has been really good with an average rating of 4.9 out of 5. We've hired a more established and experienced Head of Marketing, who's helped with this objective. And also, a new Head of Operations role was brought into the business a couple of years ago. We sponsored the National Association of Commercial Finance Brokers in 2024 and '23, the year before. We've won a number of awards. And hot off the press, we decided to go into the Best Companies survey around engagement, employee engagement. This is the business engagement survey that was formerly known as the Time's top 100. And we're really pleased to say that we've got a very good one-star accreditation which is really, really good for all the 160 people who make up our team at Times Finance and something that we're really, really proud of. And that happened a couple of weeks ago. So just another point in time really in terms of the progress that we've made. The final objective around strengthening our balance sheet through own book lending. As I mentioned, the previous business was more geared towards a balance of own book and brokerage lending, and we've focused very much more on our own book. You can see the second bullet point down there. 97% of the business that we've done this year has been on our own book with a small amount still brokered on. That's really enabled the tangible net assets to increase up to a record high of GBP 43 million, which is up by over 50% from the starting point in June '21. And then the 2 points at the bottom really around secured lending. Secured lending is the lending that is really Invoice Finance and hard Asset Finance because there's asset that sit behind those agreements where if all goes wrong, we can recover those assets either through book debts or physical tangible assets that we can resell. And you can see there that now makes up 81% of our total book and actually for the 9 months to February in terms of the new business was 91%. So very much geared towards that secured lending, and that's we set out to achieve at the start of the plan in June '21. Over to James now just to talk you through some numbers before I come on and then talk around the future plan.

Thanks, Ed. So I'm just going to rattle through some high-level points of the trading update we put out this morning. In our mind, the 4 key takeaways, if you take 4 things away from the numbers, are that the 9 months to the end of February were record revenues and record profit before tax in the history of the company, which was particularly pleasing. That was built on now 15 consecutive quarters of loan book growth. And that growth, the loan book growth, while it's grown, we've managed to control the arrears and the write-offs. There's arguably no point in growing the loan book for the sake of growing the loan book if there's lots of storing up lots of trouble for later down the line with deals that aren't of the best quality. I'll come on to the actual arrears and write-off figures in a sec, but the quality has been maintained while the growth is there. So we've grown the loan book. We've maintained the quality of the credits we're writing, and that's led to these record revenues and profits. And then finally, the balance sheet, I think, is demonstrating how robust and strong it is. It continues to strengthen month-on-month, whether it's macroeconomic storms, and it's in a very strong position. So it's a 9-month performance that we're very pleased with and sets us up well for the final quarter of the year. Looking at those numbers slightly more detail. You can see here, these are the key financial metrics we like to look at. There are others, obviously, but these are probably the key 10 or so. And you can see on the right-hand side of that table, it's all green, which is good and what we want to see. So own book origination is up to GBP 69 million -- just over GBP 69 million. What's own book origination? And why is that important? It's effectively the lifeblood of the business. It's new deals that come across our desk, and we write them. It's not just everything we see. We see many, many millions more than that, but some don't fit our credit policy, et cetera. So we don't write them. But these are the ones we write and we then put on our books. So the fact that it is growing and have the right quality, that will lead to the lending book itself growing. And in turn, again, if that our quality is right, revenue and then profit. And you can see that on the next few lines. So the revenue -- sorry, the own book -- lending book grew to GBP 210 million. That's an all-time high. That's 11% up from the previous figure 12 months earlier. And that led to revenue 14% up on the 12 months earlier of GBP 27.3 million. And probably a figure we're most proud of is the profit before tax. While the revenue and the lending and the origination are all up, you can see there the profit before tax is up 40% on the year before. So that shows the quality of the deals we're putting on our book and also the margin improvements we're making through our business improvement department and the focus on efficiencies, which is leading to much better margins. And you can see there below that, the PBT margin increased from 19% to 21%. So a really good P&L, we think, for those 9 months. Some other areas on the balance sheet. We've got unearned income of GBP 26.4 million. That's 7% up. That figure is important to us because that shows its deferred income on the leases and the loans that will drift through into revenue and profit over the coming months and years, depending on the life -- the length of the lease or the loan. So the bigger that figure, the more visibility of future income we've got, and we can see that's continuing to grow. And perhaps 2 of the most important stats, net deals in arrears and deals in write-off. You can see the deals in arrears at 5%. That's a reduction from a year ago. It's been steady at about 5% now for the last 9 months or so. Deals in arrears aren't necessarily ones that you end up writing off, but it's an early warning indicator, the ones that aren't quite going to plan. And that could be anything from they're just one down, someone's forgotten to make a payment and you phone them up and they pay you straight away all the way through to some that are in the legal process to get our money back. But if that figure is going up, it could lead to bigger write-offs in the past -- in the future, sorry. But as you can see there, it actually fell from a year ago and has now been steady for 9 months or so. At the end of the day, though, some will go wrong and you will not get all of them back, but you can see there the net bad debt write-offs steady at 1%. So with all the macroeconomic noise going on, we're maintaining the credit quality, 1% write-offs year-on-year, which you can never really be pleased with arrears and write-offs. We are pleased, for want of a better word, on those stats. And all that's led through to a much stronger balance sheet. As I touched on, consolidated net tangible assets was GBP 70 million, and perhaps more pertinent, consolidated net tangible assets of GBP 43 million. There's an element of goodwill on the balance sheet from a buy-and-build strategy back in 2014 to 2017. So we tend to focus on net tangible assets. We can see those are up 14% from just under GBP 38 million to GBP 43 million. So a good set of numbers there. Just drawing out some of the key points we think would be -- people would be interested in. Here, we've got a graphic of the arrears, those early warning signs of deals that potentially could go wrong. And then we've also got our write-offs and our provisioning as well because the provisioning levels are probably, I'd imagine, quite interesting for people to see. But if we start with the graph on the left. The purple line is the total group arrears. And then our 2 key growth areas, as Ed mentioned, hard asset and Invoice Finance, the green and the blue, pulled out their arrears as well as you can see. And what you can see from the beginning of the plan, the group arrears were in the low teens, about 13%. They fell rapidly as we came out of COVID, and they've been in the 5% to 6% range, the odd spike every now and again, as you'd expect, month-on-month but pretty much consistent now for 2.5 years or so in that 5% to 6% range. So that reiterates the point I've made that we've grown the book significantly but not at the expense of quality. You can also see the hard assets followed a similar trend, very high coming out of COVID, fell and then it's steadied in the sort of 3% to 4% range, 3% to 5% range. And Invoice Finance, again, fell to a lesser degree, didn't spike as much during COVID but it's settling in the 2% to 4% range. So consistent arrears across our book, giving validation to our such assessment that we're writing the right types of deals for what we want to do. The table on the right just shows the net bad debt write-offs. I touched on the fact that it's 1% now, and you can see it has been for the last year or so. It was a bit higher as we came out of COVID, about 2%. What you can see on the right-hand side there, which is perhaps interesting, is that our provisioning has always been significantly higher than our write-off. So you can see we're providing -- it was about 4% in the COVID days but around about 3% now, and our write-offs have been 1% or 2%. So we've always got bigger provisions than the level of write-offs we've experienced. So we think that's relatively prudent. And then the final slide from me, just to provide a bit of color to the funding that we've got in place. We can only do what we do thanks to our funding partners. We put in roughly 10% equity into every deal, but the other 90% needs to come from somebody else. And you can see here we've got, we think, a significant funding firepower in place to not just complete this medium-term plan to the end of May but also the 3-year plan to the end of May '28, which Ed will come on to now. We've got just under GBP 240 million of funding facilities in place, as you can see there, and over GBP 100 million of headroom, which is a significant amount to grow into. I've also added this slide, for those of you who've seen these presentations a few times, the indicative costs that we pay for our funding on the various types of funding we've got there. I know a number of shareholders have asked to put that in. So I've put that in there. You can see asset block funding, which funds our asset business. We're paying roughly 2.25% to 3.25% over base depending on which funding partner. We use Invoice Finance. We have a big facility with RBSIF in the 1.4% to 1.5% over base depending on the level of gearing we have at that particular time. So we think it's competitive and good funding that we've got in place, and we're well positioned to grow for the next 3 years. And then finally, you can just see there's half a dozen, 7 or 8, funding partners who've been with us for a while and supported our growth and continue to do so. So we think we're well diversified and spread on the funding part. And we're well -- we've got the firepower to see us through to the next 3 years, which Ed will now elaborate on.

Yes. Thanks, James. So as we come to the end of our current 4-year cycle, attention turns to the next 3 years. We've been working on where we should position the business, what we should do. And this is a brief summary of where we've landed. So I think the key point to make here is this is very much an evolution of the current work we've been doing. It's not a revolution. We're not looking to go and do something completely outrageous and bet the ranch, if you like, to what we've been doing over the last 3 years. And it's -- a lot of it's more of the same, but there are some areas we believe we can grow. And there's definitely a focus on operational efficiency, which I'll come on to you now. So it's a 4-pronged attack. It's continued lending book growth. I'll expand on these points on the next slide. It's resilient lending. So sticking to the knitting, as James has mentioned. Operational leverage, again, that James mentioned in the numbers in terms of building that margin. And all of that should ultimately add up to increased return on equity for shareholders. So just to put some more detail around those 4 points. The lending book growth, we believe, we can take the new sort of milestone target up to GBP 300 million plus by the end of May 2028. So that's a challenging target, but we think it's achievable. How are we going to do it? Well, there's 4 areas there that we believe growth can come from. The Invoice Finance business has got certainly more room for growth. We have some geographical gaps in the U.K. within which we can locate business development managers. For example, London and the Southeast, we only have one person there at the moment, and that's obviously a big area of the country where we think we can get further leverage. And there's a couple of other areas as well where we're underrepresented. Product development is another area, specifically our asset-based lending products, which is targeted at the SME space of ABL, has only really been going for the last 12 months. It's probably got to what I would refer to as first base, and there's more that we can do there. And that's effectively joining up our product offerings, so invoice assets and loan -- secured loans where we can offer a combination of those or all 3 to the same client. The third one is the direct-to-market strategy. So most of our business comes from third-party introducers at the moment. We started in the last 6 to 9 months in the asset business to get some business from the direct market. So that's utilizing a slightly different sort of business development person to manage customer relationships directly rather than through brokers. And we're looking to replicate that in the Invoice Finance side of the business as well. There's a number of reasons for that. But obviously, one of the main reasons is to diversify the concentration of just getting business indirectly through introducers and hopefully, over time, reduce the cost of acquisition in terms of commissions that we have to pay. And the final one is acquisitions. So this would be focused very much on our core offerings of Invoice Finance and hard Asset Finance and would likely be bolt-on acquisitions to what we now class as core business. We're not looking to do acquisitions outside of those and take us back to where we were sort of 10 years ago when we were looking to get into different products and some of the deals that were acquired worked better than others. And I think that the business is probably set up now where we can look at these acquisitions and the market is arguably more conducive to opportunities coming our way than it was in the previous cycle of strategy. The next objective is very much around that resilient lending. So focusing on the secured lending side of the business, which we've already drummed home to people. And that's the Invoice Finance and hard asset side, which will account for 90% of the lending book if this strategy is delivered. So of that GBP 300 million, we want to target 90% being within Invoice Finance/asset-based lending and hard asset. We've recently strengthened our risk team in anticipation of that. We've brought in a dedicated Head of Risk for the Invoice Finance division, and we'll look to further strengthen the risk team as the progress is achieved through the new plan. And we're also looking to enhance the systems. So there's the current strategy at the moment, which has been undertaken to replace the front office system for Asset Finance. And there's other plans in the melting pot to look at other systems around the Invoice Finance and the hard asset division in terms of the back-office platforms that we can improve to maximize our efficiencies and improve our procedures. And all that really leads into the next point, which is operational leverage. So this is a really big part of the business moving forward. It's effectively leading on from what James was talking about, where we saw those increasing margins over the last 9 months and obviously the last 4-year cycle. And we think we can achieve further margin gains to achieve mid-20% PBT margin by the end of the plan. And if we can do that for an independent lender, then we'll be up towards the top players in the market in terms of PBT margin. How are we going to do that? Well, we've invested in a small business improvement team. A lady called Fozia Riaz joined the business 9 months ago. She's got some really relevant experience in terms of this whole area but also really quite uniquely within our key markets of asset and Invoice Finance. We've added a couple more people into that team as well. We don't envisage that that's going to be a massive team, but we do acknowledge that we need a small team of probably between 3 to 5 people to help with those projects and achieve those efficiencies and those system improvements and those data improvements that we're starting to make. And yes, I think it's a big part of what we'll be doing over the next 3 years. Getting the balance right ultimately across the lending growth, the resilient risk side of things and the efficiencies through the operational leverage really will ultimately deliver the endpoint, which is increased return on equity. And we believe we can increase that to the mid-teens by the end of the plan through balancing those 3 key points. So just in terms of a summary and then the investment case summary on the next slide. So just to tie up really what we've been saying. It's record 9 months revenue and profit. The robust and strengthening balance sheet is evident as we retain most of our profits and build the tangible net assets that sit within the balance sheet. The plan to May '25 is on track to be delivered. We now have an exciting plan to take us forward over the next 3 years, which should see more material growth and success delivered. And we've had multiple upgrades over the last couple of years. We had one fairly recently, which took the PBT forecast up from GBP 7.2 million to GBP 7.5 million. And we believe we have favorable market conditions, which I'll come on to in a moment. In terms of the investment case, well, in terms of the Q3 results, I won't repeat what I've just said. The strategy, we've talked about. So really, the investment case in terms of why should you invest in this business. Well, we help thousands of U.K. businesses to thrive and survive. And that's very much about growth, but it's also about survival. Lots of businesses that we help with financial facilities aren't growing all the time. And they may just be about surviving, paying the wages. They may be family businesses that have been around for a long time. They go through ups and downs. And we're there to help them with fixed asset investments and their cash flow financing investments or their secured loan requirements. So it's very much about helping businesses grow but also recognizing that our facilities help businesses survive as well. We have a growing lending book, and we've had 54 consecutive quarterly increases now. So that trend is on an upward curve, and we see no reason why that won't be maintained with the plans that we have for the future. We have increasing profitability. You can see from the presentation that we've achieved record profits, and we've got that back up to where the high was pre-COVID. We've had a number of upgrades. I've just mentioned the last one in terms of the PBT upgrade that we put out a couple of weeks ago. We have a strong and robust balance sheet with the net tangible assets increasing month-on-month as we retain our profits. And favorable market conditions is probably the main thing to leave you with really. As we've said before, time and again, boom and bust suits alternative lenders like ourselves. The banks tend to regress tightening credit. Opportunities come out into the market. Businesses need to borrow money. And independent lenders who are a little bit more flexible, a little bit more quicker to market and then have experienced people in the businesses who understand the requirements of small businesses and entrepreneurs tend to do well. And we are certainly seeing those conditions at the moment. And I think that's favoring our business, and that's the big reason why we've done pretty well over the last few years, and we think we'll continue to do well over the next 3 years. So that's it. That concludes our presentation. The next 3 slides are what I referred to at the start of the presentation in terms of just an appendix, who we are, what we do, our core products and why we stand out from the crowd. But I'll leave people to refer to those if they want to in their own time. And now obviously turn to any questions.

[Operator Instructions] James, at this point, I'll hand over to you to chair the Q&A, and I'll pick up from you at the end.

Thanks, Alexandre. Yes, I'll just run through the questions and then probably farm most of them off to Ed. But let's go through them and see what we have. So [ Mark ] has asked, with the potential headwinds in the economy over the next couple of years and the potential for banks and lenders to be more selective on who they lend to, does this scenario provide an ideal opportunity for Time to fill this potential gap in the market? And there's a secondary point to that, Ed. And how would you stand out from your peers and appeal to businesses in the market looking for finance in this scenario? Over to you.

Okay. Well, that sort of leads on quite nicely from the summary, doesn't it, in terms of the investment case and around the sort of conducive market conditions, how we differ from the banks and why people might choose us over other lenders. So I won't completely repeat what I just said. But I think there's probably 3 things that I would just mention. I mean one is definitely the market conditions. You can't get away from the fact that we are very much driven by market conditions, and our performance is relative to market conditions. And I think the market conditions have been pretty good, although you do have to manage the balance between growth risk, and we've done that really well. So the market conditions are favorable for us at the moment, and I don't see that changing anytime soon. I think the other point, though, is the positioning of the business. Everything that I mentioned in terms of the current 4-year strategy that's come into an end has been very much around positioning this business to maximize the opportunity. The opportunity may be there, but if you can't position yourself and you haven't got the people and the experience and products to go and take advantage of that, then obviously, you don't do very well. And I think that's the other thing that we shouldn't undersell, is the way that we've positioned the business to take advantage of those opportunities not just now but in the future as well. So I think with the building of our name, with the focusing on our products, with the focusing on secured lending, with the people that were brought into the business, with the changes in systems and our challenge around being more efficient, I think we're in a good position. And not every business is out there in a good position. So I'm quite pleased with where we are. And I think we're in a good position to take further advantage of those market conditions. And I suppose the final point is that we've done what we said we would do. We like to, I think, over what's the -- we like to underpromise and overdeliver. We're a bit more cautious, I suppose, than where we were pre-COVID. And I think that very much suits the culture of the business. Me, James, the Board, we like to go and deliver before we shout from the rooftops. And I think that's a good culture to have. And we've demonstrated that over the last 3 to 4 years. We've done what we said we would do, and we've delivered some upgrades, and we want to continue to do that in the future as well. So I think that's really why this business is a little bit different than others, notwithstanding the fact that you do need market conditions to help you along the way.

Thanks, Ed. The second question is assuming that Time Finance continues to grow and your ambitions for the next 3 years are met, what's the ultimate goal for the company, e.g. a sale to become the largest independent lender in the U.K., et cetera?

That's a good question. Look, I've got as much interest in that as anyone. I'm a shareholder in the business, as is James. Some of our non-execs are shareholders as well. So obviously, we all want a return on our investments. How is that going to be done? Well, ultimately, I am very interested in making sure that we can do what we can impact, and that is delivering the numbers, delivering the strategy, and the success of the business will look after itself if we do that. That's really the view that the Board take. Having said that, clearly, there's opportunities in the future that we think will maximize that. One may be a sale. One may be we start to be able to pay a dividend at some point in the future, and we turn to some rewards that way. Who knows what the future is for the business in terms of realizing that investment? But what we're focused on is delivering the numbers, delivering the strategy, and the future will look at for itself as long as we continue to do that.

Thanks, Ed. There are a couple of questions actually that I'll sort of run through because they cover the same thing. I'm not sure whether you want to take them or you want me to, Ed. [ Keith ] said, why -- were we alarmed by the recent 20% fall in the share price? And was there any obvious reason? And there was a second question on the same thing. I appreciate the share price is out of your control, but do you have any explanation for the recent drop since mid-January? Or are any of the larger shareholders reducing their holdings? So 2 very similar questions.

Well, I'll give my view on that. I mean the share price isn't out of our control, is it? And that's the point that many people make. What's in our control is to do exactly what we've just said, which is deliver the numbers and deliver the strategy and make sure this business is successful. Now I appreciate that when you do that and then you get some drops in share price, that's probably out of our control. So what's in our control is focus on. When things happen that aren't in our control, it is really frustrating. And it's obviously disappointing for everyone because actually we start there thinking, well, the business is doing really well. We've got another quarter of growth, everything that you've just heard, and then you see the share price. That's obviously what we can't control, and that is frustrating. So why did that happen? There was some misinformation out there on some bulletin boards. There was a misquote of a profit figure that was taken. It was wrong. That's very frustrating, and we seek to put those mistakes right by correcting them. But we unfortunately can't control what people necessarily say about the business. And then you get various things that's happened through trends and the way that we all communicate these days on social media. So yes, things like that are disappointing, but we can only do what we can do, and we're doing what I think is a good job. So that will hopefully continue. And the long-term share price, the long-term share price will continue to go in the right direction.

Thanks, Ed. We've got questions 2 or 3 questions here, again, which I'll lump together, if that's okay. They seem to relate to acquisitions. So just bear with me while I read them all out. [ Keith ] has said, has any consideration been given to growing via acquisitions? [ Colin ] has said, good results. In the last online meeting, however, you are positive on M&A. This concerns me was the downfall of 1pm and your first tasks were dispose of add-ons. Why are you now positive on M&A? And then another one says, would you consider any further acquisitions in the next 3 years? So 3 questions there, Ed, all on acquisitions.

Again, good questions. And it's important to get real clarity around that because otherwise, it can sound like mixed messages, can't it? The clarity really is around the alignment with our current strategy in terms of acquisitions. And as I mentioned in the presentation, if we looked at any, they would be focused on the core products, Invoice Finance and/or hard Asset Finance. The strategy of acquisitions that James referred to from 2015 to 2019, I think it was, where there were 7 businesses acquired in, I think, 3 to 4 years, it was much more wider ranging than that. There were some brokerages. There were some consumer finance-related businesses. There was also some business-to-business lending businesses. So it was much more wider ranging and not aligned really to the current strategy. So I think yes, we will be looking at acquisitions, but they'll be very much focused on bolt-ons, as I say, for what we now class as core business.

Thanks, Ed. The next question was, can you please explain how low or high interest rates affect the company's finances? And which is preferred by the company? Should I take that one, Ed?

Yes. I'll give my voice a rest, James.

Then we'll be back to you soon, I'm sure. So just very briefly, it's somewhat of a relatively flippant answer. It's not meant to be, and I'll elaborate a bit more. We're relatively agnostic about interest rates, and the reason being is interest rates rising benefits our Invoice Finance business, which I'll explain why in a sec. But on the flip side, interest rates falling arguably benefits our Asset Finance business. And they're both about the same size. So whatever happens, one-offs, they're a natural hedge against each other, if that makes sense. Let me elaborate, if you will. Invoice Finance, any interest rate rise is passed on to our clients, and we tend to lend more than we borrow. So we make a little bit of an increase, a little bit of a margin there when the interest rates go up. Asset Finance, however, is fixed funds out the door. But on new business, if the interest rates go up, we have to make a commercial decision given the competition and everything, do we pass those rates on for new business or do we shrink our margins slightly to maintain volumes and things like that. They tend to cancel each other out. And so we're not that impacted by interest rates across the group, although as I say, there are nuances between the various 2 divisions. Hopefully, that answers that one. The next question. With the current number of staff and offices, are you in a position to manage further growth? Or will further staff and offices be required? Probably back to you, Ed.

Yes. Well, again, in terms of where we've got to now over the last 3.5, 3.25 -- 3.75 years, we're set up to deliver that 3-year plan as we currently stand. So in terms of the infrastructure, yes, we will need a few more people, but they will be lowering amounts in terms of the percentage increase of revenue. That's all around increase in margins. In terms of infrastructure, we don't need any more offices. Our 4 offices in Manchester and Warrington and Reading and Bath. We're not looking to increase offices at all. We don't need to have more rent in the P&L and things like that. But we are looking to grow our presence around the country. And that will be salespeople that typically work from home and come into the office once or twice a week because they're out on the road meeting customers and brokers and introducers. So broadly speaking, the business is set up to deliver what it needs to deliver over the next 3 years, both from an infrastructure perspective, a funding perspective and with a few more add-ons of people as we go through the plan broadly in terms of the people as well.

Thanks, Ed. Next question. How many competitors do you have in the U.K. market? Do you constantly monitor them to see what deals they are offering? And how do you stay one step ahead of them? Or is it something that doesn't concern the company?

That definitely concerns us. It's always been something that I've personally been interested in ever since I started as to what everyone is doing and how we compare and how we can be better and maybe where we're missing opportunities and where we shouldn't focus as well because some competitors have just got completely different business models and let them get on with it. We can't replicate everyone in the market. So it's something we're definitely interested in. We have around 50 Invoice Finance providers in the marketplace, and they range from the big banks who still provide these products more towards the bigger SMEs now through invoice discounting facilities and then smaller independents who are owner-managed entrepreneurial businesses, not dissimilar to the SMEs out there as well. The Asset Finance market is a bit larger in terms of players. There's over 100 players in the market. But they, again, range from the big banks who typically will chase the better-quality businesses and the finer-margin business because they take obviously deposits and they can lend them out at cheaper rates than we can to the middle players. So merchant banks, some foreign challenger banks and then, again, some smaller players. Sometimes they operate as brokers with a small lending book as well. Sometimes they operate as lenders but broke out a smaller amount. So it's across the piece. So that gives you a little bit of a context of who we compete with, but it's banks, building societies, challenger banks and independent players and fintech businesses as well.

Thanks, Ed. For those who are not shareholders, what are 3 reasons could you give us to why they should invest?

Well, I think I've sort of covered that really in the first question that we answered around the sort of market conditions, the way that we've positioned the business and what we've said in terms of we've said what we would do. So I think just reiterating those 3 points really, what I would sort of summarize, the market is conducive to what we do. We've set the business up to maximize those opportunities, and we've delivered said we were going to do, and that should hopefully continue.

Thank, Ed. Again, we've got 2 vaguely similar questions, which I'll add together, if that's all right. And I'm happy to take them if you want, or you. But [ Peter ] and [ Edward ] have both alluded to the fact that so far this year, PBT is GBP 5.9 million. The forecast is GBP 7.5 million. So Q4 is only GBP 1.6 million PBT, if in line with recently upgraded market guidance. Why should this not be taken as a profit warning as Q4 will be down on Q3? Are you happy for me to say that, Ed? Or do you want to...

Go for it, James.

Okay. Okay. Well, firstly, I don't think we're anywhere near profit warning status. We came out at the beginning of the year, said we'd do GBP 6.9 million PBT. We upgraded it in this -- in November or December, I can't quite remember when, to GBP 7.2 million. And we upgraded that forecast to GBP 7.5 million at the end of February. So we've had 2 upgrades. And what we've said in our most recent announcement today, we said we will be at least in line with the GBP 7.5 million that's published. So I would argue there's -- I can't see it at all how that could be construed as profit warning territory as we are at least in line with that. The reason Q4's profit itself in the quarter may not be as big as it has been in previous months is purely due to the cyclical nature of how we account for things. Our Q4 is usually slightly slowed down because we begin -- if we've had a good year like we had, we begin accruing for things like dividends and -- not dividends, sorry, bonuses and the like and things like that in the final quarter to a bigger degree. So that's probably what's dampening it down slightly. And as I say, we are cautiously optimistic that we will be at least in line with the year-end market guidance that's out there. And obviously, there's further growth in the FY '26 year that's out there as well. So it's not going backwards by any stretch of the imagination. Hopefully, that answers that one. How do you explain -- [ Philip ] asks, Ed, how do you expect the reluctance of investors to buy shares in time?

That's a very good question. I think, yes, when we speak to a lot of people, we speak to -- obviously, we speak to our brokers. We speak to funds as well as retail. We do presentations in person as well as the online sessions that we do through IMC but also through other forums as well. And we get a lot of feedback from people. And one of the things that people always ask and a bit wary about is SME lending. SMEs, they've not got a lot of money. They've not got a lot of cash. They go bust. They could create lots of bad debts. And I think there's an underlying understandable concern around businesses that lend money to SMEs, how much risk they take on. And that's probably one of the slight reluctances of people to invest in Time Finance. I mean we're not one of lots of independent lenders that are listed for a start off. That's a good thing and a bad thing, I suppose, depending on which way you sort of look at it. But I suppose that there's no comparative peer group as such in terms of how is an investment in another business that does what we do perform. And there's sort of -- there's other businesses that do lend to SMEs but not do what we do that are listed. So what can I say about that? SMEs are really, really robust businesses. Yes, they go bust. Some businesses go bust. Unfortunately, we have customers and clients that do go out of business every month. We get our money back because more so we're focusing on that secured lending side. So if we lend against a tractor unit, a trailer, a digger, a construction piece of equipment like a crane, they've got underlying value, and we can sell them for what we're generally owed. And the same goes for invoice discounting. Invoices are raised. We fund them. We keep the margin back because we only invoice generally 80, 80. So we only advance generally 80% or 85% of the invoices. And then we collect our money back if a business goes out of business. And then we lend again to the business if it starts again. So I think one of the key things that we haven't mentioned at all in this presentation but we do mention in a lot of the presentations we do is the natural spread of risk that we have in this business. So we lend to thousands of businesses. We don't have any one concentration that is more than 5% in terms of any one lend. In fact, the largest lend at the moment in the group is currently about 1.5%. 1.5% is the current largest lend in the group. The largest concentration in industry is around 13%, and that is into the logistics and haulage, transport, warehousing industry. So the business is really well spread. We don't bet the ranch. I like to have that spread in the business. We don't chase massive deals. We like to have a good core spread of business. And that's what we get from doing 80 hard asset deals a month, around a dozen Invoice Finance deals a month and around sort of 50 to 60 soft asset deals. It's all very well spread lending. The key is to make sure that we have the efficiencies in the systems and the people that can manage that effectively. And we've reduced the number of deals deliberately over the last 4 years and increased the average size of the deals deliberately to get that balance better. But the average ticket size in hard asset is still only about GBP 60,000 and in Invoice Finance is about GBP 150,000. So it's still well spread. We take debentures. We take personal guarantees. We take secondary security on larger deals by way of second charges on properties or ABL deals where we're lending against other asset classes. And we're pretty good at what we do. So that's, I think, where people -- I suppose our job is to get people over that cusp of thinking that what we do is really risky because we lend to small businesses and help them understand, well, actually small businesses are pretty robust. And actually, the way the business is set up and the risk procedures and the policies and our lending matrix that we have in place, all that adds to the robustness of the business. And that's why we've delivered the results.

Thanks, Ed. I think you've partly answered this next question that [ Colin ] asks, but just to get over it. With write-offs, this implies there were creditors who are higher in the pecking order than Time's. Are no hard assets offers of security and lending?

Well, whenever we lend money against an asset, we have first charge over that asset. So whether that is invoices or hard assets, they effectively belong to us in terms of the lending. So if they go wrong, we are first right over those assets.

Thanks, Ed. I'm just conscious of time. So I'll probably just do 2 more, if that's all right, giving us time to wrap up. [ Gavin ] has asked, you mentioned data improvements. Does this involve AI?

That's a good question. So we do use AI in a very, very small way in the business already in terms of marketing. So it helps us get lots of marketing stories out into our agency partners to help with all that branding on that side of the business. We don't use it in our credit assessment side of the business yet, both at the new business side and ongoing client management. But it is something that we're looking at but at very, very early stages. So it'd be wrong to say anything further than that. The improvement in efficiencies is much more around challenging ourselves, are there systems out there that can do things better that are already off the shelf. So we're not looking to go and invest hundreds of thousands of pounds in building our own systems or thinking that we know better than what's already out there. That's not really what we do and who we are. But what we are looking to do is challenge our providers of those systems to get up the pecking order more, to provide us with better service and to develop those existing services along the lines that we want them developed. That's how we see the improvements being made and just having more expertise and resource managing those systems.

Thanks, Ed. And as I said, I'll probably take one question given the time. [ Edward ] has sent this one through twice. So he's clearly keen to have us answer it. So let's do it. [ Edward ] has asked, how does your margins and returns in Invoice Finance in particular compared to the rest of the market? Do you see yourself as having any sort of competitive edge within the IF market?

Well, why don't you take the point about margins, James? And I'll give my view on the market.

Okay. Yes, Invoice Finance, as we've said, is one of our key growth areas. We've seen the book grow by over 150% over the last few years. It's also got very, very good margins. Gross profit margin, Invoice Finance is about 75% gross profit margin. And on the PBT margin, it's in the high 30%. So it's a high-margin part of our business, quite secured. And that's why it's one of the key growth areas that we focused on for the last 4 years, and we'll continue to do ever more over the next 3 years. So yes, a high margin part of the group.

In terms of our competitors, the banks have finer margins in Invoice Finance because they're targeting Tier 1 credits. And they get their money, obviously, cheaper through retail deposits. We don't. But I think in terms of our independent competitors, we're definitely in the upper echelons of margin returns. And we do compare those against businesses that we're able to in terms of getting hold of those numbers. So yes, we've got improvements that we can make, and we've definitely got improvements across the whole business that we can make. But in Invoice Finance, we've got pretty good margins already and certainly in the higher quartile of our independent competitors.

Perfect. Ed, James, I'll just jump in there and thank you very much for answering those questions from investors. Of course, the company can review the questions submitted today, and we will publish those responses out on the Investor Meet Company platform. Just before redirecting investors to provide with their feedback, which is particularly important to the company, Ed, could I just ask you for a few closing comments?

Well, yes. Thank you, everyone, for joining and listening. And hopefully, it's been a useful session. We've covered a lot of ground. The business continues to go in the right direction. The market is conducive for Time Finance. As I've said, we've positioned our business to take advantage of that. And I look forward to sort of getting the ticks achieved for the current plan when we get to May and then cracking on with our new cycle of 3-year plan from the 1st of June and see no reasons why we can't achieve our objectives and goals that we've set out.

Perfect. Ed, James, thank you once again for updating investors today. Can I please ask investors not to close the session as you'd now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? On behalf of the management team of Time Finance plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.