S&U (SUS) delivered a solid first-half performance, spearheaded by a strong advance in the group's motor finance operation, Advantage. Shareholders were rewarded with a hefty hike in the first of the three dividends paid during the financial year, underpinned by solid cash generation from the home credit business.
Pre-tax profits at Advantage rose by almost half to £5.6m on the back of a 50 per cent rise in motor advances. The unit now has a record 23,000 customers, but solid demand has enabled S&U to maintain a highly selective set of lending rules, so much so that of the 22,000 applications it receives each month it only makes 700 new advances. Moreover, provisions have remained low as an extension of the product range has attracted more and more better quality customers.
On the home credit side, trading under Loansathome4U, the squeeze on disposable income saw receivables down by 2 per cent, although robust collections and the subdued level of advances helped to boost cash generation from £2.6m to £3.1m. However, loan demand is expected to pick up as Christmas approaches, although to some extent this will be offset by a relative lull in demand for motor finance.
Arden Partners expects full-year adjusted pre-tax profits to rise from £14.2m to £16.6m, giving EPS of 108p (up from 92.6p), rising to £17.6m and 116p, respectively, the year after.
| S&U (SUS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,428p | MARKET VALUE: | £169m | |
| TOUCH: | 1,421-1,440p | 12-MONTH HIGH: | 1,440p | LOW: 825p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 543p | NET DEBT: | 39% | |
| Half-year to 31 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 26.8 | 7.32 | 47.1 | 12.0 |
| 2013 | 28.6 | 8.78 | 56.6 | 14.0 |
| % change | +7 | +20 | +20 | +17 |
Ex-div: 16 Oct Payment: 15 Nov | ||||
