S&U plc · LSE:SUS
S&U — H1 2015 Earnings Presentation
20 slides from S&U's earnings presentation, September 2015
Slide 1: S&U plc Half Year Results 31 July 2015
S&U plc The Credit You Deserve Serving the U.K.’s non-standard finance market HALF YEAR RESULTS 31 JULY 2015
Slide 2: Financial Highlights: 6 Months to 31 July 2015
FINANCIAL HIGHLIGHTS 6 MONTHS TO 31 JULY 2015 Continuing Operations - Revenue up 20% to £20.4m (2014: £17.0m) - Profit before tax up 32% to £8.8m (2014: £6.7m) - Basic earnings per share up 32% to 58.3p (2014: 44.3p) Proceeds for disposal of home credit operation of £82.5m received on August 4th
Slide 3: Group Income Statement: Continuing Operations
GROUP INCOME STATEMENT CONTINUING OPERATIONS 6 MONTHS TO JULY 2015 Revenue up 20% driven by £m July 15 July 14 Change % growth in book. Cost of Sales stable on half year advances 3% Revenue 20.4 17.0 +20% down on a record H1 14 Cost of Sales -3.8 -3.8 +1% Impairment charge up 33% v Impairment -3
Slide 4: Impairment Graph
IMPAIRMENT GRAPH Rolling 12 months percentage impairment to revenue 45.0% 40.0% 35.0% 30.0% 25.0% home credit 20.0% motor finance 15.0% 10.0% 5.0% 0.0% 3
Slide 5: Motor Finance Status of Book Debts
MOTOR FINANCE STATUS OF BOOK DEBTS Position at end July 2015 Position at end July 2014 Account Arrears Status Percentage of Live Percentage of Live Volume of Accounts Volume of Accounts Receivable Receivable Up to Date 25206 92.25% 20600 93.50% 0.01 – 1 1338 4.63% 957 3.63% 1.01 – 2 478 1.49% 367 1.
Slide 6: Motor Finance Regulation
MOTOR FINANCE REGULATION Advantage Finance currently operate under interim permission from the FCA and the window for applying for full permission is December 2015 to February 2016 Preparations for Advantage Finance Limited application are well underway and have been helped by previous preparati
Slide 7: Disposal of Home Credit Business
DISPOSAL OF HOME CREDIT BUSINESS Group profit after tax reported for six months to 31 July 15 includes profit on disposal of home credit division of £50.5m being difference between disposal proceeds of £82.5m and the carrying value of the disposed home credit assets less anticipated transaction co
Slide 8: Use of Disposal Proceeds
USE OF DISPOSAL PROCEEDS Extend Advantage activities into SME vehicle lending market Explore other similar high growth areas of speciality finance Shareholders to receive exceptional dividend of £1.25 per share Opportunity for further and faster growth of Advantage Finance in consumer motor
Slide 9: Consumer Motor Finance Market: Opportunity for Growth
CONSUMER MOTOR FINANCE MARKET Opportunity for growth Motor Finance Market – UK new car registrations reached 10 year high in 2014 and demand for good used cars also remains buoyant. FLA members issued 1,046,000 consumer motor finance contracts in 2014 (2013: 915,000) 34% of UK full-time employed
Slide 10: Group Balance Sheet 31 July 15
GROUP BALANCE SHEET 31 JULY 15 £m July 15 July 14 Change Comment % Fixed Assets 1.1 2.4 Home credit disposal Amounts Receivable Consumer Credit 0.0 32.6 Home credit disposal Amounts Receivable Motor Finance 122.4 98.1 +25% Continued book growth Other Assets 83.1 1.4 Includes disposal proceeds H1 15
Slide 11: Cash Flow: 6 Months to 31 July
CASH FLOW: 6 MONTHS TO 31 JULY Group Cash Flow for 6 months Motor Finance Collections good in both divisions £40.8m advances value for six months down Advances slightly down against record 3% against record performance in H1 14 H1 14 for both divisions Monthly Collections up 30% on last year
Slide 12: Treasury & Funding
TREASURY & FUNDING Receipt of over £82m disposal proceeds and retention of existing borrowing facilities provide headroom for growth £30m term loan and £40m revolving credit facilities both retained although revolving credit facilities are undrawn currently Short term deposits of over £40m ari
Slide 13: Outlook
OUTLOOK Economy – UK better growth prospects now certainty is returning post General Election but effects of any world economic slowdown still uncertain Motor Finance - further organic growth opportunity in Motor Finance market but will also continue to focus on the loan book quality which has d
Slide 14: Appendices
APPENDICES 13
Slide 15: 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 c1100 deals per month underwritten and collected centrally Customers typically borrow only once – loan of about £6,000 advance with £10,80
Slide 16: Motor Finance: Credit and Risk Management
MOTOR FINANCE CREDIT AND RISK MANAGEMENT Approval rate approximately 28% of applications, of which about 10% is converted Automated decision from bespoke scorecard system returned within 10 seconds on 97% of all applications received Well established audit procedures, monthly distribution of c
Slide 17: Motor Finance Example Customers
MOTOR FINANCE EXAMPLE CUSTOMERS Example 1 (from H1 2015) • Full time Property Manager • Listed on voters roll 2013 onwards • Earns £1700 net a month giving around £700 “headroom” • 1 x mail order default £643 2012 with current balance £39 4 other active A paid credit accounts and no ccjs Purchased 3
Slide 18: Motor Finance Example Customers
MOTOR FINANCE EXAMPLE CUSTOMERS Example 2 (H1 2015) • Full time fork lift driver • Listed on voters roll 04 onwards • Earns £1754 net a month giving around £500 “headroom” • 1 bank default settled, 1 communications default settled, 1 cc defaults reducing and 3 A paid loan accounts plus A paid to Adv
Slide 19: Group Income Statement 5 Year History
GROUP INCOME STATEMENT 5 YEAR HISTORY FOR CONTINUING BUSINESS £m Year to Year to Year to Year to Year to Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Revenue 16.2 17.9 20.9 26.2 36.1 Cost of Sales -2.3 -2.7 -3.6 -4.8 -6.7 Impairment -6.1 -5.9 -5.3 -5.1 -5.9 Admin Expenses -4.2 -4.6 -5.1 -6.1 -7.0 Finance Cost
Slide 20: 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