S&U PLC (LSE:SUS, FRA:97V) reported a strong first half with profits boosted by record collections and a lower-than-normal impairment charge.
The specialist motor and property bridging finance lender said pre-tax profits came in at £19.9mln in the six months to 31 July 2021, up from £6.3mln in the same period last year, with earnings per share rising to 133.1p from 41.9p.
Group income increased 5% to £42.8mln and net group receivables were 9% higher at £306.4mln.
Record collections and new customer quality led to a lower-than-normal impairment charge of £5.1mln, compared with £21.7mln in the first half of 2020 and £7.9mln in the same period in 2019.
“As the legacy of Covid gradually fades and brightening skies appear, S&U is robustly back on track and driving forward to our usual standard of profitable, sustainable growth,” the company said in its earnings release.
It declared an interim dividend of 33p, up from 22p in the first half last year.
The motor finance business Advantage Finance saw pre-tax interim profits grow to £18.5mln from £6.1mln, resuming its previous 20-year record of profits growth, S&U said.
The unit’s loan transactions soared 23% to 9,697, while loan advances shot up 35% to £68.3mln.
Total collections rose 14% to £100.2mln the first six months and in the second quarter live collections reached a record £38.3mln.
Looking ahead, S&U highlighted the strong used car market in the UK and the signs of revival in the new car market.
"This will increase the supply of used cars and, together with a strong market and a recovering economy, further boost the markets in which Advantage operates," the group said.
The property bridging business Aspen Bridging saw a rebound in the first half, as pre-tax profits rose to £1.5mln from £0.1mln, on the back of "excellent repayments and book quality".
The business achieved 66 new loan transactions in the first half, more than double the 25 of last year, taking the total number of transactions since its founding four years ago to 300.
New net loan advances rose to £56.5mln from £9.9mln and Aspen's total receivables book grew to £57.7mln from £34.1mln, mainly due to the company’s participation in the UK government's Coronavirus business interruption loan scheme (CBILS), which contributed 22 higher-value loan transactions in the first half.
S&U noted that although the end of the CBILS scheme and the stamp duty holiday were expected to lead to a lull in the residential property market, house prices are still rising.
Aspen's pipeline of future business stood about 15% above budget at the end of the first half.
The company said group borrowing increased to £115mln from £108mln, well within current facilities of £180m and giving substantial headroom for accelerated growth. Gearing at end-July was 61% compared with 62% a year ago.
Commenting on the outlook, S&U chairman Anthony Coombs said: “As the old saying goes, the finest steel goes through the hottest fire. The Covid induced tribulations of the past year have seen S&U emerge more profitable, more competitive and more attuned to our customers' needs than ever before. Add to that the buoyant markets in which we operate, our strongest ever financial base and our loyal committed workforce, and prospects for the future are bright indeed.”