S&u Plc · LSE:SUS
S&u — H1 2010 Earnings Presentation
20 slides from S&u's earnings presentation, September 2010
Slide 1: S&U plc Interim Results to 31st July 2010
S&U plc The Credit you Deserve Serving the UK’s non-standard finance market Interim Results to 31st July 2010 1
Slide 2: Financial Highlights
Financial Highlights Revenues up 7% to £23.6m (H109: £22.1m) Profit before tax up 8% at £5.4m (H109: £5.0m) EPS at 33.2p (H109: 30.5p) Interim dividend increased to 10p (H109:9p) Gearing reduced to 51% (H109: 65%) and net borrowings reduced by £2.1m to £24.5m Net assets up 7% versus July 2009 2
Slide 3: Our Businesses
Our Businesses Home Credit 500 agents, 130,000 customers, lending and receiving repayments in the Home Agents attend branches twice weekly for scrutiny and review with managers who also go out on dual visits to help develop customer relationship Customers typically borrow two or three unsecured week
Slide 4: Home Credit: 6 Months to 31 July 2010
Home Credit: 6 Months to 31 July 2010 Customer numbers up 3% and revenue up 2% £m Jul 10 Jul 09 Change % Collections up 3% and impairment stable Revenue 15.4 15.1 +2.0 H1 expenses up by £0.5m Cost of Sales -0.3 -0.4 - 25 includes £0.35m remuneration timing which Impairment -3.1 -3.1 0 should benefit
Slide 5: Home Credit
Home Credit H1 2010 saw launch of 23 week loan being gradually introduced to complement our main 32, 41 and 52 week products. 41 week is our most popular H1 2010 IVAs, Bankruptcies and the newer debt relief orders all increased from a low base – these now account for c15% of our impairment charge H2
Slide 6: Motor Finance: 6 Months to 31 July 2010
Motor Finance: 6 Months to 31 July 2010 Customers up 18% and revenue up 17% £m Jul 10 Jul 09 Change Early redemptions 8% lower % than six months to July 09 due to customers trading on less Revenue 8.1 6.9 +17.3 often and 31% increase in accounts running full term Cost of Sales -1.2 -1.0 +19.1 Record
Slide 7: Motor Finance
Motor Finance Loan applications at 14,500 per month (H109: 10,400) of which about 390 transacted (H109: 300) Automated underwriting hurdles have continued to control new business growth and improve recent quality of loans 81% of live receivables up to date (2009: 71%) – this reflects high quality cu
Slide 8: Our Balance Sheet and Financing
Our Balance Sheet and Financing Gearing at 51% (2009: 65%) and falling £24m of medium-term facilities £24.5m of current net borrowing Further £2m of medium-term facilities repaid after period end Stable and conservative dividend cover Net assets up 7.1% 8
Slide 9: Group Cash Flow
Group Cash Flow Six months to Jul 2010: £m Jul 10 Jul 09 Group net borrowing from Balance b/f -26.6 -31.3 £26.6m to £24.5m Cash inflow/(outflow) +2.1 +3.4 Increased advances and good Balance c/f -24.5 -27.9 collections Six months to Jul 2009: Analysis Lower advances, stable HCC +6.0 +3.3 collections
Slide 10: Cash Flow 6 months to 31 July by Division
Cash Flow 6 months to 31 July by Division HCC Motor Finance Advances 3% higher than last year 2329 deals at £4.5k average advance (2009: 1784 deals at £4.5k) Collections also up 3% Early redemptions slowed further Customers slower to renew loans where credit available Collections strong and up 19% o
Slide 11: Economic and Regulatory Backdrop
Economic and Regulatory Backdrop We believe the effect of recent guidance on irresponsible lending and high cost credit is relatively benign but may encourage more activity from claims companies We believe Coalition Government’s forthcoming review of consumer credit will endorse the important role o
Slide 12: Our Markets
Our Markets Home Credit Restriction of other credit sources and difficulties of managing unsecured direct repayment products in non-standard has increased opportunities for home credit Customers are cautious – reflecting current and perceived future economic outlook Trend towards shorter term produc
Slide 13: Our Opportunities to grow revenue
Our Opportunities to grow revenue Home Credit Develop new home credit relationships with more non-standard customers who want to be in our market and who face restrictions on more centralised credit Use recommendation, advertising, website and canvass leads and sales promotions Opportunistic acquisi
Slide 14: Summary
Summary Group gearing reduced to 51% as net borrowing reduced by £2.1m Revenue up 7% and profit before tax up 8% in H1 2010 EPS up 9% in H1 2010 and first interim dividend increased to 10p (H109: 9p) Strong customer relationships, firm underwriting, strong cash generation and financial position all
Slide 15: Disclaimer
Disclaimer This document and its contents do not constitute or form part of a prospectus or any offer or invitation to sell or to issue, or any solicitation of any offer to buy or subscribe for any ordinary shares in the Company nor shall it or any part of it or the fact of its distribution form the
Slide 16: Appendices
Appendices 16
Slide 17: Appendix 1 Annual Group Profits
Appendix 1 Annual Group Profits £m Jan 08 Jan 09 Jan 10 Stable revenue – tightened underwriting criteria offset by growth in live customers Lower cost of sales reflecting lower Revenue 46.0 46.2 45.8 motor finance deal acquisition costs (more automation) Cost of Sales -3.8 -3.6 -3.4 Stable impairmen
Slide 18: Appendix 2 Annual Group Cash Flow
Appendix 2 Annual Group Cash Flow Home credit advances and collections stable – tighter £m Jan 08 Jan 09 Jan 10 underwriting and customer caution offsetting growth in customer Balance b/f -31.6 -31.3 -31.3 numbers Advances -66.2 -66.0 -63.3 Collections 71.7 73.8 76.4 Motor finance – lower advances l
Slide 19: Appendix 3 Annual Impairment Graph
Appendix 3 Annual Impairment Graph Annual percentage impairment to revenue 38 36 34 32 30 Percentage 28 Advantage Finance Home Credit 26 24 22 20 18 2006 2007 2008 2009 Year 19
Slide 20: Appendix 4 Target Home Credit Customer
Appendix 4 Target Home Credit Customer We aim for good quality, stable, family business Every home credit loan is individually sanctioned by independent credit controllers Householder – usually with family – and over 21 Stable address on voters role Employed or stable self-employed Bank or building