www.suplc.co.uk
S&U PLC is the United Kingdom's foremost niche consumer and motor finance provider.
Based in Solihull in the West Midlands it has operations throughout the United Kingdom from Edinburgh to London to Grimsby to Falmouth in Cornwall. It provides work for nearly 800 people and is proud to provide 140,000 people throughout the country with their consumer and motor finance requirements.
S & U 's motto is to provide Britain's "foremost consumer and motor finance service for its customers". We continually strive to achieve that ideal and the results are benefiting our customers, our employees and of course our shareholders.
S&U seeks expansion through organic growth and acquisitions
Niche money lender S&U (LON:SUS) will expand through "sensible organic growth" along with acquisitions, chairman Anthony Coombs told Proactive Investors today.
In an interview, following this morning's interim results, Coombs revealed that the firm had been looking for acquisition possibilities on the home credit side in the last six months and that the search was continuing.
This morning's encouraging results, for the six months ended June 30, showed a 5 percent increase in group revenue to £24.8 million and a "stellar" performance in its motor finance division.
This side of the firm boasted an impressive 26 percent increase in profits for the six months to June 30 this year compared to 2010.
S & U was founded in 1938 and operates two main divisions - home credit (known as Loansathome4U) and motor finance (called Advantage Finance).
Describing itself as "optimistic" about the future, the firm said both divisions had seen growth - despite the "faltering" UK economic recovery.
Operationally, on the home credit side, the company 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.
In this morning's statement, Coombs said the firm continued to investigate significant acquisitions and that it will purchase where the "price, debt quality and customer culture is right".
The results showed 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.
"Both the quality and quantity of customer applications generated by our loyal broker network increase and, the constant refinement of Advantage's underwriting and collections expertise has seen collections rise 13 percent against a 7 percent increase on last year's capital receivables," it said.
Combs had said: "S&U's strong customer relationships, firm underwriting, strong cash generation and financial position give us a firm base for that growth and for the group's further development."
When asked about plans for the expansion of both divisions, he said that in home credit the firm was looking for "sensible organic growth" - increasing the number of customers.
"And we are always looking for acquisitions," he added. "In fact, we've been actively doing so in the last six months and we will continue to do so."
He added however: "We mainly want to increase our profitability by increasing productivity."
In motor finance, he said there was a "huge amount of potential given the number of transactions that we write compared to the amount of applications we get in terms of expanding the book".
He added that he saw the existing trends at Advantage continuing - "probably even improving".
In a note, broker Collins Stewart flags up the fact that strong cash flow has enabled S & U to repay £2mln of medium term borrowing, cutting debt gearing from 51 percent last year to 38 percent.
"Revenue and profit growth is helpful, but increase in collections on lower book debt is more important; strong cash generation and repayment of medium term debt is most encouraging," analyst Robin Savage said.
The broker rates the stock a "buy" and has a target price of 750 pence (current price: 630 pence).
