S&u Plc · LSE:SUS
S&u — FY2011 Earnings Presentation
22 slides from S&u's earnings presentation, Apr 19, 2011
Slide 1: S&U plc Full Year Results to 31 January 2011
“Customers have enjoyed our valued home credit service since 1938” S&U plc The Credit you Deserve Serving the U.K.’s “We have over 30 branches and provide work for nearly 800 people” non--standard finance market non FULL YEAR RESULTS TO 31 JANUARY 2011 “We have provided motor finance for 1 over 40,0
Slide 2: Financial Highlights
FINANCIAL HIGHLIGHTS Revenue up 5% to £48.0m (2010: £45.8m) PBT up 10% at £9.9m (2010: £9.0m) EPS up 9% at 60.0p (2010: 55.2p) Strong cash generation; net borrowings reduced by £4.9m Gearing reduced to 43% (2010: 57%) and funding in place to cover all core borrowing Total Proposed Dividend up by 6%
Slide 3: Our Businesses
OUR BUSINESSES Home Credit 500 Agents, 130,000 customers, lending and receiving payments 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 weekly
Slide 4: Operational Highlights
OPERATIONAL HIGHLIGHTS Robust profit performance in home credit – profit in motor finance 35% up on last year – rewards for tightened underwriting criteria in the last three years Group annual collections up over £5m Home Credit good last quarter on sales and overall sales and collections growth ver
Slide 5: Home Credit: 12 Months to January 2011
HOME CREDIT: 12 MONTHS TO JANUARY 2011 £m Jan 11 Jan 10 Change Revenue small increase was % 0.4% in H2 versus 2% in H1 - reflects slowdown in Q3 - Revenue 32.0 31.6 +1.3 better Christmas and Q4 sales Cost of Sales -1.6 -1.3 +23.1 Collections up 2.3% and impairment stable at <23% of Impairment -7.3 -
Slide 6: Home Credit Website
HOME CREDIT WEBSITE 6
Slide 7: Home Credit
HOME CREDIT Gross sales up 1.7% reflects steady organic growth Revenue lower increase of 1.3% reflecting sales made later in the year 23 week loan launched at start of financial year being gradually introduced – greater use of 41 week loan means average term unchanged at c38 weeks Impairment 22.8% o
Slide 8: Motor Finance: 12 Months to January 2011
MOTOR FINANCE: 12 MONTHS TO JANUARY 2011 13% growth in revenue – taking £m Jan 11 Jan 10 Change advantage of withdrawal of % non prime competitors Continued slower early Revenue 16.0 14.2 +12.7 redemptions due to customers trading on less often Cost of Sales -2.3 -2.1 +9.5 81% up to date reflecting
Slide 9: Motor Finance Website
FINANCE WEBSITE advantages) sp. IN FINANCE LIMITED e\ \ q Home Customers Dealers Corporate Credit Where It's Due! Welcome to the home of Advantage Finance Ltd. We are a leading supplier of specialist finance facilities. via motor dealers throughout the UK, that dealers facilitate the purchase of new
Slide 10: Motor Finance
MOTOR FINANCE Loan applications during year averaged at 13,000 per month in year to of which 365 transacted. Strong growth towards end of year with record deal numbers in January and in the normally quiet December Automated underwriting hurdles have continued to control new business growth and impro
Slide 11: Group Cash Flow
GROUP CASH FLOW Six months to Jan 2011: Group borrowing from £24.5m to £21.7m £m Jan 11 Jan 10 Both HC and Motor Finance Balance b/f -26.6 -31.3 divisions cash generative Cash inflow +4.9 +4.7 Twelve months to Jan 2011: Balance c/f -21.7 -26.6 Stable and cash generative HC Cash generative motor fina
Slide 12: Cash Flow: 12 Months to 31 January by Division
CASH FLOW: 12 MONTHS TO 31 JANUARY BY DIVISION Home Credit Motor Finance Stable advances Advances up 17% Customers more cautious about Early redemptions and debt recovery borrowing – sales fell later in the year income slowed further on a bigger book Collections up 2% on lower book debt Collections
Slide 13: Balance Sheet and Financing
BALANCE SHEET AND FINANCING Gearing at 43% (2010: 57%) and falling £20m of current net borrowing (reduced from £21.7m at yearend) £8m of facilities headroom for acquisitions and organic growth Stable and conservative dividend cover Net assets up 6.9% 13
Slide 14: The Market
THE MARKET Datamonitor – non- standard market has been increasing since 2006 and forecast to continue to increase until 2014 Traditional markets benefiting from “trickle-down” of non-prime customers denied finance – has led to growth in our new customer numbers Sensible organic growth in Home Credit
Slide 15: Regulation
REGULATION High rates of customer satisfaction with home credit reported by Rowntree Trust Survey Visit of Gordon Ramsay Director of Licencing and Enforcement at OFT to our management conference confirmed “Home Credit is in a good place” Competition Commissions Remedies Review confirmed original con
Slide 16: Outlook
OUTLOOK Current trading encouraging and up on last year Improving debt quality in both divisions despite economic difficulties as customers return to traditional borrowing Strong opportunities in motor finance market “Relationship” lending provides platform for growth in continuing times of uncertai
Slide 17: Summary
SUMMARY Revenue growth in both non-standard credit businesses Solid earnings and financial position with potential for selective further growth EPS 60.0p (2010: 55.2p) –dividend increased to 36p and platform for future increases Cash generative Group Well-placed for controlled growth given market op
Slide 18: Appendices
APPENDICES S&U plc v General Financial v FTSE Fledgling 18
Slide 19: Home Credit Target Customer
HOME CREDIT TARGET 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 society acc
Slide 20: Credit and Risk Management
CREDIT AND RISK MANAGEMENT All underwriting in home credit sanctioned by independent credit controllers Audit letter system operated and controlled from Head Office Regular physical security checks required and monitored for all customer rounds Minimum income and maximum repayment requirements tight
Slide 21: Impairment Graphs
IMPAIRMENT GRAPHS Annual percentage impairment to revenue 43 38 33 Percentage Advantage Finance 28 Home Credit 23 18 2006 2007 2008 2009 2010 2011 Year 21
Slide 22: 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