S&u Plc · LSE:SUS
S&u — H1 2015 Earnings Presentation
20 slides from S&u's earnings presentation, September 2014
Slide 1: Half Year Results to 31st July 2014
S&U plc “We have provided motor finance for over 60,000 customers in the UK.” UK.” The Credit You Deserve Serving the U.K.’s non-standard finance market “We have over 35 branches and provide work for over 800 people” people” HALF HALF YEAR YEAR RESULTS RESULTS TO 31ST TO 31 ST JULY JULY 2014 2014 St
Slide 2: Financial Highlights
FINANCIAL FINANCIAL HIGHLIGHTS HIGHLIGHTS PBT up 28% to £11.3m (2013: £8.8m) EPS up 33% to 75.0p (2013: 56.6p) Revenue up 21% to £34.7m (2013: £28.6m) Strong cash generation - Group collections in the six months up over £10m on last year with record collections and early quality indicators in motor
Slide 3: Group Income Statement 6 Months to July 2014
GROUP GROUP INCOME INCOME STATEMENT STATEMENT 6 6 MONTHS MONTHS TO TO JULY JULY 2014 2014 Revenue increase of 21% reflects £m July 14 July 13 Change % growth and improved quality of motor finance book Revenue 34.7 28.6 +21% Improvement in motor finance Cost of Sales -4.1 -2.8 +46% impairment and sta
Slide 4: Group Balance Sheet 31 July 2014
GROUP GROUP BALANCE BALANCE SHEET SHEET 31 31 JULY JULY 2014 2014 £m July 14 July 13 Change Comment % Fixed Assets 2.4 1.9 Building purchase £0.4m Amounts Receivable Consumer Credit 32.6 31.3 +4% Advances up 16% (incl acquisition) Amounts Receivable Motor Finance 98.1 62.9 +56% Continued book growth
Slide 5: Motor Finance: 6 Months to July 2014
MOTOR MOTOR FINANCE: FINANCE: 6 6 MONTHS MONTHS TO TO JULY JULY 2014 2014 38% growth in revenue as book £m July 14 July 13 Change increases taking advantage of % good broker relationships and fewer lenders in the nonprime Revenue 17.0 12.3 +38% market Cost of Sales -3.8 -2.2 +74% Impairment charge l
Slide 6: Home Credit: 6 Months to July 2014
HOME HOME CREDIT: CREDIT: 6 6 MONTHS MONTHS TO TO JULY JULY 2014 2014 Revenue growth reflects good £m July 14 July 13 Change % Xmas 13 and H1 sales growth Revenue 17.7 16.3 +9% Quality and impairment stable – collections up 10% in H1 providing Cost of Sales -0.3 -0.6 platform for continued growth in
Slide 7: Impairment Graphs
IMPAIRMENT GRAPHS Rolling 12 months percentage impairment to revenue 7
Slide 8: Credit and Risk Management
CREDIT CREDIT AND AND RISK RISK MANAGEMENT MANAGEMENT Motor Finance Approval rate approximately 25% of applications, of which about 20% is converted Bespoke / Experian underwriting and scoring system and regular batch quality testing State of the art collections/customer relations/diary and monitori
Slide 9: Motor Finance Graph: First Payment Success vs Eventual Write Off
MOTOR FINANCE GRAPH FIRST PAYMENT SUCCESS VS EVENTUAL WRITE OFF 9
Slide 10: Motor Finance Status of Current Book Debts
MOTOR FINANCE STATUS OF CURRENT BOOK DEBTS Position at end July 2014 Position at end July 2013 Account Arrears Status Percentage of Live Percentage of Live Volume of Accounts Volume of Accounts Receivable Receivable Up to Date 20600 93.50% 14248 91.14% 0.01 – 1 957 3.63% 893 4.25% 1.01 – 2 367 1.19%
Slide 11: Group Cash Flow 6 Months to July 2014
GROUP GROUP CASH CASH FLOW FLOW 6 6 MONTHS MONTHS TO TO JULY JULY 2014 2014 Group borrowing from £32.4m to £m July 14 July 13 £51.5m Balance b/f -32.4 -20.6 Home Credit – 16% growth in Total Collections 73.2 60.9 advances and improved collections Advances/other outflows -92.3 -65.0 Motor Finance – 8
Slide 12: Cash Flow: 6 Months to July by Division
CASH CASH FLOW: FLOW: 6 6 MONTHS MONTHS TOTO 31 31 JULY JULY BY BY DIVISION DIVISION Home Credit Motor Finance Advances up 16% for H1 including acquisitions - Advances value for H1 up 82% - after good q4 building on strong Xmas 13 Early redemptions still at historically low Collections up 10% for H1
Slide 13: Environment
ENVIRONMENT ENVIRONMENT Economy –gradual recovery in UK economy with a distinct improvement in consumer confidence Regulation – FCA regime provides good opportunity to further improve our high level of customer satisfaction. Window for application is spring 2015 for home credit and late 2015/early 2
Slide 14: Outlook
OUTLOOK OUTLOOK Motor Finance strong current trading - record new lending volumes and initial collection quality Further organic growth opportunity in Motor Finance market Home Credit H1 2014/15 good advance and collections growth helped by good demand and repositioning of key competitor New long te
Slide 15: Appendices
APPENDICES APPENDICES 15
Slide 16: Our Businesses
OUR OUR BUSINESSES BUSINESSES Motor Finance Advantage Finance – 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 a
Slide 17: Motor Finance Example Customers
MOTOR MOTOR FINANCE FINANCE EXAMPLE EXAMPLE CUSTOMERS CUSTOMERS Example 1 •41 year old male •10 years at address as home owner •3 years as delivery driver •Earns £2000 net a month giving around £1000 “headroom” •Historic £400 CCJ from 2008, previously settled hp account that ran perfectly for 4 year
Slide 18: Motor Finance Example Customers
MOTOR MOTOR FINANCE FINANCE EXAMPLE EXAMPLE CUSTOMERS CUSTOMERS Example 2 •41 year old female •14 years in private healthcare as SRN sister •3.5 years into hire purchase agreement with another lender looking to part exchange •Earns £2000 net a month giving around £1000 “headroom” •No defaults or CCJ
Slide 19: Home Credit Typical Customers
HOME HOME CREDIT CREDIT TYPICAL TYPICAL CUSTOMERS CUSTOMERS •45 year old female – partner plus 2 teenagers •Council house with 5 years at address •Part-time cleaning work with local school •Partner of 10 years – warehouseman at £18k per annum •1CCJ in 2011 for communications bill - £50 •Borrows for
Slide 20: Disclaimer
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 distributi