S&u Plc · LSE:SUS
S&u — H1 2016 Earnings Presentation
21 slides from S&u's earnings presentation, September 2016
Slide 1: Half Year Results to 31 July 2016
: Bin 4 $é&U pic Half Year Results to 31 JULY 2016
Slide 2: Financial Highlights: 6 Months to 31 July 2016
FINANCIAL HIGHLIGHTS 6 MONTHS TO 31 JULY 2016 Continuing Operations - Revenue up 39% to £28.3m (2015: £20.4m) - Profit before tax up 35% to £11.9m (2015: £8.8m) - Basic earnings per share up 36% to 79.2p (2015: 58.3p) Further net investment in motor finance of £23.3m in 6 months with new advance
Slide 3: Group Income Statement
GROUP INCOME STATEMENT CONTINUING OPERATIONS 6 MONTHS TO JULY 2016 Revenue up 39% driven by growth in book. Cost of Sales up £m Jul 16 Jul 15 Change % 72% on advances 54% up on prior year – higher increase in Revenue 28.3 20.4 +39% cost of sales expected and Cost of Sales -6.6 -3.8 +72% reflecting
Slide 4: Group Balance Sheet 31 July 2016
GROUP BALANCE SHEET 31 JULY 16 £m July 16 July 15 Change Comment % Fixed Assets 1.2 1.1 Amounts Receivable Motor Finance 173.9 122.4 +42% Strong book growth in last 12mths Other Assets 1.1 83.1 Includes disposal proceeds H1 15 Total Assets 176.2 206.6 -15% Current Bank Overdrafts and Loans -2.0 -2.6
Slide 5: Treasury & Funding
TREASURY & FUNDING Committed funding facilities now £85m, comprising £30m term loans and £55m revolving credit facilities (also £5m overdraft facilities) New £40m revolving credit facility until March 2021 replacing previous £25m facility Group gearing at 31 July 2016 is 29% (2015: 45%) Good
Slide 6: Cash Flow: 6 Months to 31 July 2016
CASH FLOW: 6 MONTHS TO 31 JULY 2016 Group Cash Flow for 6 months Motor Finance Strong H2 15 motor finance advance 54% increase in advances in H1 16 against growth continues in H1 16 slower H1 15 Comparative to 31 July 2015 includes Monthly Collections up 34% on last year positive seasonal ho
Slide 7: Return on Capital versus Impairment Graph
MOTOR FINANCE RETURN ON CAPITAL VERSUS IMPAIRMENT GRAPH Motor Finance - Return % on Capital Employed v Impairment % to Revenue 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 % Return on capital employed before finance c
Slide 8: Motor Finance Status of Book Debts
MOTOR FINANCE STATUS OF BOOK DEBTS Position at end July 2016 Position at end July 2015 Account Arrears Status Percentage of Live Percentage of Live Volume of Accounts Volume of Accounts Receivable Receivable Up to Date 34337 89.70% 25206 92.25% 0.01 – 1 mthly payments 2063 5.55% 1338 4.63% 1.01 – 2
Slide 9: Loan Profile by Year of Origination
MOTOR FINANCE LOAN PROFILE BY YEAR OF ORIGINATION Average Year to Year to Year to Year to Year to 6 months Loan profile Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 July 16 Number of loans 4,736 6,118 8,460 11,941 15,131 10,363 Advance £5,012 £5,309 £5,715 £6,079 £6,121 £6,071 Interest rate flat per 16.5% 16.
Slide 10: Consumer Motor Finance Market
CONSUMER MOTOR FINANCE MARKET Opportunity for growth Motor Finance Market – SMMT reports 4,181,042 used car transactions in first half 2016 up 8% on H1 15 and first time there have been over 4m in a half year Motor Finance Market – FLA report 10% increase in number of point of sale consumer used
Slide 11: Bridging Finance Proposed Pilot
BRIDGING FINANCE PROPOSED PILOT Secured property bridging market is circa £5bn per annum in England and Wales It is a fragmented market – around 100 generally small players – estimated to grow to £8.8bn by 2020 (Mintel) Part will be confined to the non-regulated market (65%+) serving the growi
Slide 12: Outlook
OUTLOOK Economy – The Brexit process may cause some temporary uncertainty but UK economic fundamentals are sound and 89% of consumers in the September 2016 Auto Trader market report survey thought the Brexit result would not affect their car buying intentions Motor Finance - further organic grow
Slide 13: Appendices
APPENDICES 12
Slide 14: 5 Year History
GROUP INCOME STATEMENT 5 YEAR HISTORY FOR CONTINUING BUSINESS £m Year to Year to Year to Year to Year to Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Revenue 17.9 20.9 26.2 36.1 45.2 Cost of Sales -2.7 -3.6 -4.8 -6.7 -9.0 Impairment -5.9 -5.3 -5.1 -5.9 -7.6 Admin Expenses -4.6 -5.1 -6.1 -7.0 -7.3 Finance Cost
Slide 15: Steady sustainable growth
Steady sustainable growth 14
Slide 16: Motor Finance: Our Business
MOTOR FINANCE OUR BUSINESS Used car finance on hire purchase – 85% sourced through brokers – 5% refinances for previous customers – 10% direct from dealers 100,000th new deal transaction milestone reached this year c1700 deals per month underwritten and collected centrally – direct debit is th
Slide 17: Credit and Risk Management
MOTOR FINANCE CREDIT AND RISK MANAGEMENT Approval rate approximately 30% of applications, of which about 10% is converted – nearly 500,000 applications last year resulting in 15131 deals Automated decision from bespoke scorecard system returned within 10 seconds on 97% of all applications receiv
Slide 18: Average new customer income and headroom levels
MOTOR FINANCE Average new customer income and headroom levels August 15 to July 16 Income over Calculated Expenditure £2,500.00 £2,000.00 £1,500.00 £1,000.00 £500.00 £0.00 August September October November December January February March April May June July Excess Headroom Average Income per month o
Slide 19: Example Customers
MOTOR FINANCE EXAMPLE CUSTOMERS Example 1 (from 2016) • Credit controller for national waste disposal firm • Listed on voters roll 2003 onwards • Earns £1684 net a month giving around £700 “headroom” • 3 x credit defaults from 2010/11 all fully settled, active up to date bank account and no CCJs Pur
Slide 20: Example Customers
MOTOR FINANCE EXAMPLE CUSTOMERS Example 2 (from 2016) • Account manager for HR company • Listed on voters roll 05 onwards • Earns £3038 net a month giving around £1700 “headroom” • Active A paid credit – no CCJs and historic defaults no longer showing plus fully A paid to Advantage from 2010 to 2014
Slide 21: 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