Motor finance company S & U PLC (LON:SUS) kept its foot on the accelerator in the first half of the year, showing impressive growth.
Profit before tax shot up 35% to £11.9mln from £8.8mln in the corresponding period of 2015 on the back of a 39% increase in revenue to £28.3mln from £20.4mln the year before.
The half-year saw record amounts of motor finance loans at Advantage Finance, with advances to vehicle purchasers up 54% year-on-year.
Motor finance collections and debt quality continue at near historical highs, the group revealed.
Read the investment case for S & U
Watch chairman Anthony Coombs talk about the full-year results
The group's strong treasury position has enabled it to invest a further £23.3mln in its Grimsby-based motor finance unit, Advantage Finance, where capital receivables from customers have reached £200mln for the first time.
Despite this investment, group gearing remains at a historically low 29%, thus leaving significant headroom both to finance record levels of Advantage transaction growth, and the planned piloting of a new venture in the specialist property finance sector, as flagged up in the company’s most recent financial year-end statement.
The company clearly has the cash to spare to reward shareholders, also, as it announced a whopping 20% increase in the interim dividend to 24p from 20p the year before.
"A further half-year's successful trading and a robust financial position, provide a solid springboard for sustained growth in the year ahead," said Anthony Coombs, chairman of S & U.
Coombs has little time for doomsayers predicting (metaphorically speaking) the end of days following the UK’s decision to leave the European Union.
“Recent figures on the manufacturing and service sectors, economic growth generally and consumer confidence provide grounds for optimism. In particular, a buoyant new car market reflects a robust labour market and has resulted in excellent levels of demand for used vehicles,” the company interim results statement declared.
Backing up this assertion S & U said Advantage has seen a record level of applications, up 58% on last year, while August saw Advantage achieve the remarkable milestone of 100,000 finance deals throughout its history, indicating that the second half of the year has seen first half trends continue.
Live customer numbers today exceed 40,000, over a third higher than last year. S & U expects these trends will feed through to profit growth as collections quality continues at high levels.
“Whilst our rolling 12 months impairment to revenue percentage has increased from 16.9% at 31 July 2015 to 17.7% at 31 July 2016, this slightly higher percentage is still consistent with the excellent quality we have experienced post-2008 and is within our expected outcomes,” the group said.
Shares in S & U rose 2.7% to 2,501.25 in early deals. The shares fell as low as 2,180p in the week following the Brexit vote but have been recovering steadily since.