Proactiveinvestors United Kingdom S & U Plc newswires

S & U making good progress across motor and home credit divisions

Thu, 24 May 2012 08:54:00 +0100

Niche money lender S & U (LON:SUS) said its home credit division Loansathome4U continues to trade well and its motor finance business Advantage is also making very good progress.

The group issued a trading statement covering the period from February 1 to May 23 2012 ahead of today’s AGM, saying that customer numbers for Loansathome4U are up just under 4 per cent on last year.

Collections are up over 7 per cent on last year and credit availability is now at a record level.

S & U’s new acquisition Norton Finance has been successfully integrated into the business and the group continues to pursue acquisitions of similar quality.

In a slightly more competitive market, Advantage continues its outstanding progress, S & U said, with transactions, revenues and collections all above budget and productivity per employee at a record level.

Gross receivables are 11 per cent higher than last year and they are of better quality than ever.

The group’s treasury position remains strong as borrowings have fallen to £18.2 million from £20.2 million in late May 2011.

Home Credit remains strongly cash generative whilst, as anticipated, further funds are being invested in the continued growth of the Advantage Motor Finance book.

Chairman Anthony Coombs said: “Whilst current trends for the group's trading are encouraging, the wider macroeconomic environment is not. Hence our optimism is tempered with caution. Nevertheless, continuing to work closely with every home credit and motor finance customer, we are confident of the year ahead.”

S & U reports another strong full-year performance

Thu, 29 Mar 2012 07:35:00 +0100

Niche money lender S & U (LON:SUS) has reported another strong full-year performance, with revenue up 8 per cent in the twelve months to January 31 and pre-tax profits up 24 per cent.

The home credit and motor finance group made a pre-tax profit of £12.2 million, up from £9.9 million a year earlier, while revenue rose to £51.9 million from £48.0 million.

It has decided to increase the final dividend by 2 pence to 18 pence, making for a total dividend of 41 pence, up 14 per cent on the previous year.

Chairman Anthony Coombs said: "I am pleased to announce an excellent year for S&U. In challenging times for many, every customer at S&U does count and it is this unique relationship which makes our continued growth both responsible and sustainable. We look to our future with quiet confidence."

The Home Credit Division, trading as Loansathome4U, had a very successful year, with pre-tax profits rising 12 per cent to £6.3 million.

Debt quality has continued to improve, and this is reflected in an increase in revenue of over 7 per cent on last year, and in lower bad debt, the company said.

S & U has opened another two Home Credit branches this year, in Glasgow and Swindon. Following the acquisition of the Home Credit business of Norton Finance recently, it plans to open another branch in Rotherham.

Its Grimsby-based Motor Finance Division, trading as Advantage Finance, has produced record profits for the twelfth consecutive year. Pre-tax profits rose 40 per cent from a year earlier to £5.9 million and revenues were up 11 per cent.

Applications continue at around 13,000 per month, of which Advantage writes around 400.

Debt quality has never been better, provisioning charges have fallen on last year and collections now approach £2.5 million per month, S & U said.

“Predictions for growth, consumer spending and the labour market remain subdued for the year to come and the recent fall in High Street Sales reflects this. However, the group's trading remains encouraging and, together with the long term market opportunities mentioned above…, we face the future with confidence,” chairman Coombs added.

S&U shrugs off downturn as customers rise - Update

Fri, 09 Dec 2011 15:24:00 +0000

- adds broker comment

S&U (LON:SUS) is showing good strength in the downturn says broker Arden after a trading update today from the credit provider.

Management is concentrating on tighter controls given the difficult economic environment but home credit still continues to grow modestly, with motor finance growing faster and at good payment rates.

The broker expects profits for the full year to January to rise from £9.9 million to £10.8 million, which drops the earnings multiple from 10 to nine at 598p.

The shares also yield a prospective 6.4% and the good trading strength coupled with the yield bode well for the share price suggests Arden, which has a buy rating.

In its trading update, S&U said current trading is strong despite the problems affecting the wider economy.

Both its home credit arm Loansathome4u and motor finance business Advantage saw customer numbers rise in the four months to December 8.

In home credit, customers rose by just under 2% compared to this time last year. Debt quality improved, the firm said, with the group also confident about the Christmas season.

In motor finance, customer numbers rose by 12% on last year and despite some lenders returning to the market, sales growth is strong and margins have improved, S&U said.

It added that Advantage's debt quality is at its highest level ever, while monthly customer repayments now average a regular £2.5 million and impairment rates continue to fall.

Overall, group borrowing fell in the quarter with good collections and cost control enabling it to repay a medium term loan ahead of schedule.

Chairman Anthony Coombs said: "Whilst it would be unwise in the current economic climate to take Christmas sales and collections for granted, current trading is strong and underpinned by a solid financial base. Expectations and group morale are high."

Loansathome4u provides home credit via 500 agents across the UK, while Advantage employs over 70 people and has provided motor finance for over 40,000 customers across the country.

S&U upbeat as customer numbers rise

Fri, 09 Dec 2011 07:31:00 +0000

Credit provider S&U (LON:SUS) said today current trading is strong despite the problems affecting the wider economy.

Both its home credit arm Loansathome4u and motor finance business Advantage saw customer numbers rise in the four months to December 8.

In home credit, customers rose by just under 2% compared to this time last year. Debt quality also continues to improve, the firm said, with the group confident about the Christmas season.

In motor finance, customer numbers are over 12% up on last year and despite some lenders returning to the market, sales growth is strong and margins have improved S&U said.

It added that Advantage's debt quality is at its highest level ever, while monthly customer repayments now average a regular £2.5 million and impairment rates continue to fall.

Overall, group borrowing fell in the quarter with good collections and cost control enabling it to repay a medium term loan ahead of schedule.

Chairman Anthony Coombs, said: "Whilst it would be unwise in the current economic climate to take Christmas sales and collections for granted, current trading is strong and underpinned by a solid financial base. Expectations and group morale are high."

Loansathome4u provides home credit via 500 agents across the UK, while Advantage employs over 70 people and has provided motor finance for over 40,000 customers across the country.

S & U says it is optimistic for future as reveals "stellar" performance in motor finance division

Thu, 22 Sep 2011 07:32:00 +0100

Niche money lender S&U (LON:SUS) says it is optimistic about future growth after releasing interims, which saw revenue up 5 percent to £24.8million.

Despite the "faltering" UK economic recovery, the firm reported growth in both its home credit and motor finance divisions, with record advances here - giving it a firm platform for the future.

It also said it proposes a first interim dividend of 11 pence per share (2010: 10 pence) which will be paid on November 11, and intends to make further dividend payments in both March and June next year.

The company said that pre-tax profit increased to £6.4 million compared to £5.4 million in the same period last year.

Operationally, in the home credit side, the company said it saw 4 per cent growth in revenue compared to the H1 2010 and the credit quality had improved with 6 percent lower impairment charge in the first six months compared with 2010.

Its new branch in Derby has made a promising start, it added.

Meanwhile, it saw record advances in the motor finance side of the business with revenue up 7 per cent compared to last year, with highest ever loan transactions, collections and pre-tax profits.

It said the quality of the debt was "excellent" with a record 84 per cent of live receivables up to date as at July 31 compared to 81 percent last year.

Chairman Anthony Coombs said: "These encouraging results reflect the excellent relationships we have with a growing number of customers in both our Home Credit and Motor Finance businesses.

"They also demonstrate how much our customers value our service, particularly in times of continuing economic uncertainty."

"Earnings per share are 39.9p against 33.2p for the six month period last year. Group revenues are up 5.1 percent on last year to £24.8mln (2010: £23.6mln). After allowing for the accelerated first half remuneration costs last year, profit before tax increased by 2 percent in our more mature Home Credit Division and increased by a stellar 26 percent in our faster growing Advantage Motor Finance business."

Coombs added that while the firm's overall customer numbers continued to grow at a sensible and sustainable pace, the faltering UK recovery demanded that the firm continued to focus upon the quality of its debt, its collections and consequent cash flow.

"Collections are 5 percent ahead of last year on capital receivables up by 3 percent. Again, our cash position continues to strengthen. Group gearing is now 38 percent against 43 percent at year end and 51 percent a year ago," he said.

UPDATE: S & U anticipates further progress throughout the year

Wed, 10 Aug 2011 10:37:00 +0100

Adds comments from broker Collins Stewart.....

The niche money-lending firm S&U (LON:SUS) said today that trading for the first six months of the year had been "in line with market expectations".

The home credit business had maintained momentum and increased revenue by 3 percent in the period compared to last year, while Advantage, the motor finance division has continued the impressive start it made to the year, said the company.

Advantage saw the number of new advances in the period climb more than six percent compared to the first six months of 2010.

"At a time of great economic uncertainty and a faltering recovery, our home credit and motor finance customers are clearly demonstrating the value they place upon the convenient, responsible and understanding service we provide," said S & U.

Chairman Anthony Coombs added: "By continually nurturing these relationships we anticipate sensibly and confidently, further progress throughout the year."

The firm also revealed it had opened a new branch of its home credit business in Derby and was exploring further ways to expand the home division called Loansathome4u.

Collections remained satisfactory, increasing by 1 percent on slightly lower book debt and the company said the three positive trends it reported in May had continued - namely, the slight shortening of the loan profile, the improvement in impairment and the strong credit available to existing customers.

In motor finance, it said the quality of collections remained excellent as did the quality of new customers, reflected in the fact that the average net car advance has increased from £4,500 to £5,000.

"We see Advantage going from strength to strength," said the firm.

The six months has seen the company pay off £2million of loans and reduced its borrowings and gearing to 40 percent against 51 percent last year.

It has also put in place a flexible bank funding facility to cover core borrowing, which will mature in April 2016, it said.

Regarding the firm's possible move to the AIM market from the Official List, it said it had completed consultations with shareholders and it will remain on the Official List, where it had traded for 50 years.

"Our recent growth in shareholder value, if not our liquidity, has merited a move from the fledgling to small cap sector and we anticipate still further progress," it said.

The company intends to issue its interim results on September 22 this year.

Broker Collins Stewart recommends a "buy" for the stock and targets a price of 750 pence (share price: 547.5 pence). It says that today's statement included a number of encouraging comments which suggest that interim results will reveal strong collections, sensible loan growth and a credible increase in earnings.

Analyst Robin Savage added that the trading statement supported the broker's view, stated in a previous note, that S & U should double shareholder value over three years.

S & U anticipates further progress throughout the year

Wed, 10 Aug 2011 07:41:00 +0100

The niche money-lending firm S&U (LON:SUS) said today that trading for the first six months of the year had been "in line with market expectations".

The home credit business had maintained momentum and increased revenue by 3 percent in the period compared to last year, while Advantage, the motor finance division has continued the impressive start it made to the year, said the company.

Advantage saw the number of new advances in the period climb more than six percent compared to the first six months of 2010.

"At a time of great economic uncertainty and a faltering recovery, our home credit and motor finance customers are clearly demonstrating the value they place upon the convenient, responsible and understanding service we provide," said S & U.

Chairman Anthony Coombs added: "By continually nurturing these relationships we anticipate sensibly and confidently, further progress throughout the year."

The firm also revealed it had opened a new branch of its home credit business in Derby and was exploring further ways to expand the home division called Loansathome4u.

Collections remained satisfactory, increasing by 1 percent on slightly lower book debt and the company said the three positive trends it reported in May had continued - namely, the slight shortening of the loan profile, the improvement in impairment and the strong credit available to existing customers.

In motor finance, it said the quality of collections remained excellent as did the quality of new customers, reflected in the fact that the average net car advance has increased from £4,500 to £5,000.

"We see Advantage going from strength to strength," said the firm.

The six months has seen the company pay off £2million of loans and reduced its borrowings and gearing to 40 percent against 51 percent last year.

It has also put in place a flexible bank funding facility to cover core borrowing, which will mature in April 2016, it said.

Regarding the firm's possible move to the AIM market from the Official List, it said it had completed consultations with shareholders and it will remain on the Official List, where it had traded for 50 years.

"Our recent growth in shareholder value, if not our liquidity, has merited a move from the fledgling to small cap sector and we anticipate still further progress," it said.

The company intends to issue its interim results on September 22 this year.

S & U trading in line with expectations amid uncertain economic recovery

Fri, 13 May 2011 08:06:00 +0100

Ahead of this afternoon’s AGM, niche money lender S & U Plc (LON:SUS) said that even as the economic recovery appears uncertain, the group’s conservative business approach sees it trading in line with expectations.

It said that profitability was up for the 4 months between since 1 February. Revenues increased by 2 percent in the home credit business compared with last year and customer numbers increased by a similar margin.

The lender said that collections remain satisfactory and its loan profile continues to shorten.

"S&U has once again demonstrated that resilience and responsibility in uncertain times bring their own reward,” chairman Anthony Coombs said.

"The company's current performance, and outlook for the year ahead, justifies my cautious optimism."

It highlighted that customers gravitate towards S&U products, like Loansathome4u, in uncertain times because they give them more frequent access to finance and thus sensibly limiting their overall commitment.

According to S&U this has resulted in an overall improved impairment performance and, equally important, has seen credit availability at a record level for this time of year.

"S&U's financial position is strong and becoming stronger,” the company added.

It has paid down almost £6 million in debt since the start of the year, reducing group borrowings to £20.2 million.

Cannacord raises S&U price target after strong 2010 results

Thu, 24 Mar 2011 10:27:00 +0000

Cannacord Genuity has responded to S & U’s (LON:SUS) full year results to January 31 2011 by raising its price target for the stock from 685 pence to 695 pence.

However, the broker lowered its recommendation for the stock from “buy” to “hold” purely on valuation grounds.

The small cap home credit and motor finance provider’s 2010 pre-tax profit of £9.9 million was ahead of Cannacord’s estimates by 4 percent, also topping a slightly higher Bloomberg consensus of £9.7 million. Revenues were about in line with expectations and impairments and interest costs were £0.5 million lower than what was anticipated by the broker.

The report noted strong growth in the motor finance business with Cannacord expecting to see further growth.

To reflect the tailwind going into the current financial year, the broker’s pre-tax profit estimates for full financial year 2012 were upped by 2 percent with no change to 2013.

“We expect both the Home Credit and Motor Finance businesses to benefit from the tailwind that a strong end to the last financial year will bring. We also note the references to consumer confidence and the prudent approach of S&U's agents as well as natural caution from its Home Credit customers,” said Cannacord.

The broker reduced its recommendation for the stock on valuation grounds, noting that shares in the group have rallied 23 percent since December 2010. S & U is trading on 10.9 times Cannacord’s new calendarised 2011 estimates and yields 5.3 percent.

It’s noteworthy that HB Markets analyst Amisha Chohan also reduced the recommendation from “buy” to “hold” late last year when the stock was worth 600 pence. It has since surged to 700 pence.

S & U aims to contnue topping expectations after profits and revenues rise in 2010

Wed, 23 Mar 2011 09:50:00 +0000

Niche home credit and motor finance provider S & U PLC (LON:SUS) announced its 2010 results today, reporting that collections rose by over £5 million.

The company's pre-tax profits surged 10 percent in the 12 months to 31 January 2011 to £9.9 million as revenues climbed 5 percent to £48 million.

S & U has also managed to increase customer numbers in both its divisions, home credit and motor finance.

Investors welcomed the full year report, sending shares in the company up 4 percent in early deals.

The motor finance division achieved a 35 percent increase in profits to £4.2 million, while profits at the home credit division inched lower from £5.9 million to £5.6 million.

“Once again I am pleased to announce a strong set of results. I am confident that our uniquely close customer relationships, constant search for growth and a prudent approach to funding, will ensure further good performance for the group in future,” said chairman of S & U Anthony Coombs.

The company has also managed to slash borrowings from £26.6 million to £21.7 million after repaying £6 million.

S & U decided to up the final dividend from 10 pence to 16 pence, taking the total dividend for the year to 36 pence, up 6 percent year on year. Earnings per share rose 9 percent to 60 pence in 2010.

The full year report offered an upbeat outlook, while acknowledging that markets remain “cautious”.

“Whilst we therefore budget cautiously, we like to meet and beat expectations and are confident we will continue to do so,” said Coombs.

S & U simultaneously announced the appointment of Mike Thompson to the main board of S & U. In 2000, Thompson was appointed managing director of S D Taylor, the company’s home credit subsidiary and its largest business by profitability.

Late last year, HB Markets analyst Amisha Chohan called S&U's business is well‐established, profitable and cash generative. HB Markets tipped the stock as a “buy” in its Thoughts for 2010 when the company was trading at 447.5 pence. It has since surged to 710 pence.

S & U trading strongly, to pay 2nd interim and final dividend

Fri, 11 Feb 2011 07:34:00 +0000

Niche home credit and motor finance provider S & U PLC (LON:SUS) said it is trading well and that results for the year to end-January 2011 are in line with market expectations.

Group borrowings have been reduced by £5 million compared to the previous year-end, which means gearing is now below 50 percent against 72 percent two years ago.

In view of the trading performance and strong treasury position, S & U confirms it will pay a second interim dividend of 10 pence, as flagged in its interim results statement. It also plans, barring unforeseen circumstances, to pay a final dividend on June 10 2011 of not less than 15p for the year under review.

Despite the cold and the difficult consumer confidence situation, the home credit division traded well over Christmas and January.

Whilst debt quality continues to strengthen and home credit remains highly cash generative, S & U is putting in place measures to further extend the range of its customers with whom it regularly does business, thus driving the productivity of its long-serving representatives.

At a time of year traditionally associated with a lull in the used car market, S & U’s motor finance division Advantage again bucked the trend to produce two months of trading more than matching the exceptional results it has achieved the previous year, the group said.

Chairman Anthony Coombs said: "Both our current trading and plans for the future confirm my "cautious confidence" of two months ago. The current performance of the group augurs well for S&U's future profitability and the returns we continue to make to our much valued shareholders."

Audio Interview Transcript with Anthony Coombs, Chairman of S & U Plc

Mon, 17 Jan 2011 09:19:00 +0000

Interviewer: Hello, this is Harry Norman for Proactive Investors and welcome to another Proactive audio interview. Today is the 22nd of December 2010, and I’m talking with Anthony Coombs, Chairman of S & U Plc, listed on the AIM market, financial services sector. Stock ticker SUS. Share price 585 pence. Market Cap £69.6 million Sterling. Web address www.suplc.co.uk. Thank you very much for joining us for this interview, Anthony.

Anthony Coombs: Hi Harry. Thanks very much for inviting me.

You have described S & U as Britain’s foremost niche home credit and motor finance provider. What is S & U’s business strategy, and what differentiates S & U from its peers?

One of the strengths of S & U is that we’re a family company; we’ve been in business since 1938 and, unlike many other companies, we actually have our monies invested in the business. And that means that we take a very responsible attitude to both lending, our staff relations and to the general direction of the business. And that applies to both our home credit and motor finance businesses.
In home credit we set a premium by ensuring that we provide excellent service to our customers and, almost uniquely, our directors do go out and see the customers on a regular basis, so that we can keep in close touch. And that has meant that the Home Credit Division has been cash generative and profitable over a very long period of time.
So far as our motor finance business is concerned, it’s now cash generative. We’ve invested a lot of money in it, but we’ve done it on the same principles in that we want to make sure that it’s being profitable but it’s grown in such a way that it can be sustainably profitable. And that’s happened over the last 10 years—as our motor finance business has grown and increased its profits every single year during those 10 years.
So our business strategy is one based on responsibility, it’s one based on responsible lending, and it’s one based upon increasing profits over the long term, and sustainably.

What are your thoughts on the performance of S & U’s Home Credit Division in the quarter ending 9th December 2010, Anthony?

Obviously, and in common with the vast majority of the consumer finance industry, we have experienced greater customer caution. And I think that’s probably, in the long term, something that is to be welcomed. We’ve always taken, as I’ve just mentioned, a responsible attitude towards lending, and this is obviously being reflected in the results in the last quarter. We anticipate that, overall, we will have a very satisfactory year in our Home Credit Division, but that result will be based upon solidity of collections, keeping control of bad debt, rather than any stellar increase in balances or in sales. And I think, to be fair, in the current economic climate that’s the right way to be actually trading.

In your review of the quarter ending 9th December, you said that the company’s Motor Finance Division was heading for a record year. What are the salient points of the Motor Finance Division’s performance, and how come it’s doing so well?

Well I think it’s doing well for a number of reasons. First of all it is being able to benefit from the withdrawal of some competitors from the market, and that meant that we are able to pick and choose our customers in a way that’s not been possible before. So that we have round about 12,000 applications a month, and we write a maximum of 400 into transaction.
Secondly, some of those customers come from the non-prime rather than sub-prime market and therefore we see, right across our book, very high levels of repayment. And the new debt we’re putting on is even of greater quality than ever before.
So for those reasons, the debt quality has risen, we’ve got a buoyant level of sales, although again we’re not ramping up the book in a way that might not be sustainable over the long term. The business is still generating excellent cash, we’re keeping the costs under control.
And all of those matters, basically, has seen record profits this year. And I would anticipate that that would continue. Why? Because this is a three or four-year business and the quality of debt that you write in one year does actually have an influence well beyond the current year’s profit performance. So we are very confident about the future in our Motor Finance Division and we anticipate that we can continue to get market share in a market where some of our competitors are reluctant to lend, in our view mistakenly.

What can you say about how the Christmas season and the inclement weather that we are currently experiencing could affect S & U’s home credit and motor finance trade, Anthony?

Well our home credit people have responded magnificently. Obviously it’s more difficult to get about and see our customers if the weather is as it has been. But they have responded very well, our sales have been excellent, our collections have also been excellent, and we anticipate that we will be able to produce good, solid results despite the inclement weather.
In motor finance, obviously people stay off forecourts when the weather’s very bad, that has an indirect effect on applications. But anyway Christmas is not a big time of year for the motor finance business, and so we see that its effect on overall trading has been minimal.

S & U has been able to reduce borrowing to its lowest level since 2001 on the back of a strong trading position and prudent financial management. Where does this leave the company’s financial situation going forward, Anthony?

Well our gearing has dropped from about 74% three years ago to about 42% now, may go up a little bit as we do our Christmas trade, as you’d expect it to. But it goes back to what I was saying about our very conservative approach to running the company—we have got very good relationships with our bankers, we’ve got good headroom and we anticipate that we’ve got the level of gearing that we want to run our existing business, and to leave some space for organic growth and acquisitions. So, unlike many companies that overstretch themselves, there is absolutely no chance of this happening for S & U.

Do you still have your eye on the home credit company Shopacheck and are you interested in other possible acquisitions or routes to growth?

Yes we are, but on a sensible basis. We’re not making acquisitions for the sake of saying that we’ve made acquisitions and that we’re growing the ‘top line’, as the Americanism has it. We only want to buy businesses where we can see good value which will fit into our existing business. That’ll mainly be in home credit, we’ve continued to make some small purchases throughout the year.
So far as Shopacheck is concerned, well it would be an excellent target. We’ve gone on record as saying that we’re interested but we’ll obviously only be interested at the right price, and provided that it comes on the market and also provided that what we see when we do our due diligence meets up to our expectations. So there’s a lot of hurdles to be jumped, but we do have our eye on it.

Would you consider issuing shares for S & U to make an acquisition?

Yes we would. I mean we regard increasing our liquidity as being important anyway, and obviously issuing shares for another acquisition would allow us to address that particular issue. But, in the main, we anticipate that the vast majority of funds for an acquisition is going to be coming from borrowing.

S & U increased its interim dividend to 10p a share this year, which was paid on the 5th of November. What is S & U’s current dividend policy?

Well given the fact that there’s an identity of interest between shareholders and managers we obviously want, sensibly, to increase dividends over a period of time. But obviously in line with profits. At the moment we’re covered I think about 1.6 times and we think that is a responsible level of cover. It’s historically in line with what we’ve always done. And as we are able to we’ll increase our dividends. And also that’ll depend on the profitability of the company.

What can investors expect from S & U over the next 12 to 18 months?

I think the short answer is steady, sustainable growth. I think the next 18 months is going to be very difficult for the economy overall. I don’t think we’ve seen anywhere near the fallout in the real economy that the events of 2007, and the reaction to them, stored up. We’ve got huge borrowing in both the corporate and the governmental, and indeed the personal sectors. That’s all got to work out. We’ve got increasing taxation and I think that that will have a dampening effect on the growth rate of the economy. And obviously no business is going to be immune from that.
But I think that given the fact that our customers are probably protected from that to a greater extent than, for instance, the middle and the upper echelons of society, then I think that we’re in a position, sensibly, to perform well over the next 18 months. And I think that that kind of performance will be well rewarded by stock market valuation.

S&U says motor finance operation is headed for a record year

Fri, 10 Dec 2010 07:36:00 +0000

Consumer credit specialist S&U (LON:SUS) has enjoyed what chairman Anthony Coombs described as “solid” trading in the period from August 1 to December 9 2010.

The company, which owns loansathome4u and Advantage Finance, said its motor finance operation is heading for a record year.

The debt quality of the business is strong and the number of “live accounts” rose by 12 percent.

“Additions to our panel of high quality brokers have seen an increase in our market share and position us well for continued progress next year,” the company said in an interim management statement (IMS).

The home credit arm, while resilient against a tough economic backdrop, was not immune to the unfolding problems affecting consumers.

The impairment level in the year to date was at 23.4 percent of revenues compared with 22.1 percent for 2009.

At the same time the group reported “greater borrowing caution” and a preference of borrowers for shorter term loans, though collections increased by 2 percent year-on-year in the period reviewed in the IMS.

The performance of the home credit operation will be dictated to some degree by the needs and attitudes of customers as S&U heads into the festive period, it said.

"Whilst acknowledging the challenges posed by an uncertain economic recovery, and by the current chilly meteorological and consumer confidence climate, the group continues to trade in line with market expectations,” Coombs said.

“As always, at this period, much will depend upon Christmas and its aftermath, but our solid trading and financial base give every cause for cautious confidence.”

S&U’s borrowings dropped by £2 million in the period to their lowest level since 2001. In its half yearly report issued in September, the company said total liabilities, including a bank loan of £24 million, were £29.7 million.

The next trading statement, covering the crucial Christmas period, will be released on February 11.

HB Markets analyst Amisha Chohan said that S&U's business is well‐established, profitable and cash generative.

“We believe the group will grow organically and via acquisitions,” Chohan said.

“The group is trading in line with current market expectations for the fiscal year ending January 2011.”

The analyst added: “S&U continues to be a yield play (prospective 2011: 6.1%) underpinned by stability of earnings.”

“We tipped S&U as a buy in our Thoughts for 2010 when the share price was 447.5p,

“The share price has almost reached our target price of 600p. We therefore adjust our recommendation to a ‘Hold’, but remind investors of the compelling and sustainable yield.”

S&U Says Motor Finance Operations Drive First Half Growth

Thu, 23 Sep 2010 08:05:00 +0100

Home credit specialist S&U (LON:SUS) reported an 8 per cent rise in first-half earnings, driven by a stellar performance from the motor finance operations.

Pretax profits advanced £400,000 to £5.4 million in the six months to July 31 on revenues that were up 7 per cent at £23.6 million.

Gearing for the period reduced to 51 per cent from 65 per cent as net borrowing was cut by £2.1 million.

S&U said loan transactions, collections and profits from the car loans business were at their highest levels ever in the period under review.

The home credit operation, meanwhile, made more modest progress with revenues up 2 per cent on the back of a 3 per cent advance in collections. Customer numbers grew by 3 per cent to 130,000.

At the same time debt quality is improving with the company reporting a record 81 per cent of “live receivables up to date” – a full ten percentage points improvement on the same period last year.

S&U said its strong cash generation and financial position “augur well for the company’s development” and added that there was “significant scope for sensible growth”.

Chairman Anthony Coombs said: “Despite a febrile and wavering economy and some customer caution, S&U’s business proposition of responsible lending to carefully selected customers with whom we have close relationships continues to bear fruit.

“Whilst remaining constantly vigilant we are confident of further improvement in shareholder returns and value.”

Underpinning its confidence in the future, S&U is paying a 10p a share dividend, up 1p on the same period last year.

Specialist lender S&U confident for remainder of 2010, H1 seen in line

Wed, 11 Aug 2010 08:47:00 +0100

Ahead of its half-yearly interim results, scheduled for September 2010, specialist British finance group S & U (LON:SUS) said it is trading in line with expectations, it has a stable and expanding customer base and consequently it is optimistic for the rest of the year.

S&U specialises in providing consumer credit and car finance in the UK to sub-prime and non-prime customers. The company has two key divisions: motor finance and home credit which are sold through ‘Advantage Finance’ and ‘Loansathome4u’ respectively.

The results for the six months ending 31 July are scheduled for 23 September 2010.

In this morning’s update, S&U highlighted that its motor finance business had an “excellent start” to the year, with revenues up almost 25%. Furthermore, S&U said that margins continue to improve and the quality of its order-book is “encouraging”.

Additionally, S&U told investors that the home credit business also continues to make progress, with a 2% increase in H1’s year-on-year revenue, and it has also added a further 4,000 customers since this time last year.

S&U emphasised that its financial position, with strong cash-flow, reflects the strong trading performance. In the six-month period, the company paid off debts of £4m, and reduced its overall borrowings from the first half of 2009.

The company highlighted that its gearing has fallen below 53%, and it has increased its headroom for organic expansion and acquisitions, as well as shareholder returns.

S&U chairman Anthony Coombs alluded to the fact that the specialist nature of the business was one of the key drivers for the positive start to the year: "Particularly in these uncertain times, attention to detail and close relationships with our loyal customers bring their own reward."

The company niche approach to sub-prime and non-prime financing employs a conservative lending policy and strong emphasis on knowing its customers.

“Improving standards and our current trading both inspire confidence for the future," Coombs added.

The company said it is confident that its tradition of tightly controlled expenses and its “cautious approach” to underwriting “will now prove their worth in more austere times”.

“Our current trading, stable and expanding customer base and a stable regulatory environment under a new government, as well as a balanced and benign OFT High Cost Credit Review, all make for optimism for the current year's outturn,” S&U stated.

S & U trading in line in yr-to-date, ‘cautiously optimistic’ about outlook

Fri, 21 May 2010 07:57:00 +0100

S & U PLC (AIM: SUS) said it is cautiously optimistic about the outlook and is trading in line with its expectations for the year to date. Its financial position remains strong and borrowings should be reduced further in the second quarter.

S&U specialises in providing consumer credit and car finance in the UK to sub-prime and non-prime customers. The company has two key divisions: motor finance and home credit which are sold through ‘Advantage Finance’ and ‘Loansathome4u’ respectively. The business is continuing to be resilient in the face of a market in distress, largely thanks to a conservative lending policy and strong emphasis on knowing its customers.

In interim management statement covering the period from February 1 to May 20 2010, the group said Loansathome4u has increased revenues by 2percent in this period versus the same period last year which reflects a 4 percent growth in customer numbers offset by continued customer borrowing caution in the current economic climate.

Collections have remained robust, being up by over 3 percent on last year with impairment charges being reduced by 2 percent. These results are testimony to the well-established and mutually beneficial relationships our representatives have with our customers. Administrative expenses are stable but will reflect an extra £350,000 charge in the first half year due to accelerated remuneration payments made before tax legislation changes at the end of March 2010. This £350,000 charge will reverse in the second half year.

Advantage Finance has followed up on a strong finish to the last financial year with an excellent start to this financial year,, S & U said. In a less competitive market, new business written is up over 40 percent on the same period last year and initial repayment quality continues to be higher in line with recent trends.

Revenues are up over 20 percent on the same period last year, whilst impairment charges have only risen by 11 percent and overall collections are good. Early redemptions continue to be lower than last year and current levels of profitability are encouraging.

The group’s financial position is strong and becoming stronger. Since the year-end, group borrowings have been reduced to £26.1 million, compared with £27.6 million in May 2009, as the trading cash generated has more than funded good motor finance growth and covered £2.4 million of accelerated dividend and remuneration payments made in the first quarter. “We anticipate that group borrowings should reduce further in the second quarter, increasing the likely headroom available for further organic growth and acquisition,” it said.

Chairman Anthony Coombs commented: “Whilst economic conditions will take time to become more certain, the resilience of our own performance and current positive trading trends give cause for continued cautious optimism.”

Brokerlink comments on S&U full-year results

Mon, 29 Mar 2010 14:14:00 +0100

In a note on S&U (AIM: SUS), Brokerlink said that the company has demonstrated its resilience with its full-year results for 2009, announced last week. The niche personal-finance company reported a 9% increase in profitability and 10% earnings per share growth in the year to 31 January 2010.

S&U specialises in providing consumer credit and car finance in the UK to sub-prime and non-prime customers. The company has two key divisions: motor finance and home credit which are sold through ‘Loansathome4u’ and ‘Advantage Finance'.

The company offers loans between £150 and £2,000 with an average loan of £400-£450. These loans are repaid on a weekly basis, with one of the S&U’s agents calling round to the borrower’s home to collect the repayment.

According to the research note, the S&U looks set for another good year, helped by the relationships it has established with its customers over time. This has helped the group in the bad times and should help it prosper as the economy improves, Brokerlink stated.

Furthermore, Brokerlink also noted that each of the trading divisions has increased both profits and customer numbers during the year, and the researcher believes that this trend is set to continue as the Home Credit business opens new branches and the Motor Finance business gains market share.

The research note also highlighted that the Coombs’s family shareholding provides some re-assurance on the company’s dividend policy. For the twelve-month period the total dividend was increased by 6.2% to 34 pence - a dividend yield of 6.7%.

Daniel Stewart and Charles Stanley reiterate 'buy' after S&U trading update

Tue, 09 Feb 2010 12:33:00 +0000

Brokers Daniel Stewart and Charles Stanley followed up S&U’s (LSE: SUS) positive trading update this morning with reiterated 'buy' recommendations and respective price targets of 575p and 550, the latter raised from a previous 500p.

S&U shares climbed were up nearly 7 percent at midday, trading at around 480p on the LSE.

Earlier this morning in a statement ahead of FY results, the home credit and motor finance specialist said it is trading well and that results are expected to be in line with market expectations. In light of the company’s performance and the upcoming tax changes in April 2010, S&U has approved a second interim dividend of 15p and it intends to pay a final dividend of no less than 8p in June.

Daniel Stewart said the update provides them with comfort in their existing earnings forecasts. According to the analyst note from Daniel Stewart, S&U has shown its resilience during particularly difficult lending markets and the company stands to benefit from a significant reduction in market competition given the failure of former sector-rivals LSB and Cattles. The 575p target price would reflect earnings multiple of 9.8x, which would still reflect a 30% discount to sector peer Provident Financial (LSE: PFG), Daniel Stewart said.

Similarly Charles Stanley believes that S&U’s strong balance sheet, credit rationing and limited competition provide good medium term growth potential, as such it has increased the target price from 500p to 550p per share. Charles Stanley expects the company’s expansion will continue to be cautious in the near term.

S&U sees full-year results in line with market expectations, to pay 2nd interim div

Tue, 09 Feb 2010 08:24:00 +0000

In a year-end update ahead of its full year results, home credit and motor finance specialist S&U (LSE: SUS) said it is trading well and that results are expected in line with market expectations.

In light of the company’s performance and the upcoming tax changes in April 2010, S&U has approved a second interim dividend of 15p and it intends to pay a final dividend of no less than 8p in June.

In the period from 8 December 2009 to 31 January 2010, the Home Credit division exceeded expectations with trading and profitability reported to be very satisfactory. During the same period in the Motor Finance division, the Advantage unit returned very buoyant sales compared to the previous year.

"Despite the uncertain economic and political outlook, S&U's consistency of approach both strategically and in its relationship with its customers, bodes well for continued progress throughout the group”, S&U Chairman Anthony Coombs said, “Current trading in both our home credit and motor finance divisions reflects these promising trends. In addition, we are actively pursuing expansion within our existing markets this year through acquisitions. These efforts will be reflected in both S&U's profitability and in the returns we make to shareholders".

S&U said its balance sheet continues to strengthen as group borrowings reduced by £5m since the end of last year despite the seasonal funding trends, which required increased financing to fund customer loans in the Christmas period. The company’s gearing continues to be lower against comparatives and is currently 57% against 74% two years ago.

According to S&U, the Home Credit business exceeded expectations with sales of both loans and vouchers driving a very satisfactory period. The company also expanded its product range recently and it has a strong platform to make further progress in the current financial year.

The Advantage motor finance business contributes approximately 30% of overall group revenue and during the final two months of the year its buoyant sales performance led S&U to believe that transaction growth will return to growth in 2010. In addition to its sub-prime business, Advantage has now extended its product range into non-prime lending and the company said its enlarged product range has been successful. Furthermore, the operating division maintained margins and according to S&U the initial cash returns look extremely promising.

S&U will announce its results for the year ending 31 January 2010 on 24 March 2010.

S & U trading update prompts upbeat notes from Daniel Stewart & Co and Charles Stanley Secs

Thu, 10 Dec 2009 12:54:00 +0000

Brokers Charles Stanley Securities and Daniel Stewart & Co issued upbeat notes on S & U PLC (LSE: SUS) in response to the group’s trading statement yesterday, reiterating their respective ‘buy’ ratings for the home credit and motor finance specialist.

S & U said it was trading in line with market expectations for the full year to the end of January as both of its businesses performed well and continued generating cash.

The group’s home credit operations have been performing in line with expectations as debt quality and impairment levels are improving. The division currently accounts for two thirds of S&U’s profits. Debt quality has also improved at the group’s motor finance business Advantage, where trading performance has also been in line with budget.

Daniel Stewart said the trading statement gives the broker comfort in its full-year 2010 forecasts. It reiterated its 575 pence price target, which gives an upside of around 31 percent.

It continues to like S&U for its long track-record of resilient trading, the improving opportunity in the non-standard lending market and for its high dividend yield, the broker added. “We keep forecasts and target price unchanged for now and await the update in early February 2010, which will provide guidance on the crucial Christmas trading period.”

Charles Stanley reiterated its 500p target price, noting that S & U is continuing to perform well. “With more cautious underwriting and an emphasis on credit quality, cash generation has been strong, while S&U is well placed for when economic conditions improve,” it said.