S&U plc · LSE:SUS
S&U — H1 2012 Earnings Presentation
17 slides from S&U's earnings presentation, July 2012
Slide 1: S&U plc Half Year Results to 31st July 2012
S&U plc “Customers have enjoyed our valued home credit service since 1938” The Credit You Deserve Serving the U.K.’s non-standard finance market “We have provided motor finance for over 45,000 customers in the UK.” HALF YEAR RESULTS TO 31ST JULY 2012 1 “We have over 30 branches and provide work for
Slide 2: Financial Highlights
FINANCIAL HIGHLIGHTS z Revenue up 8% to £26.8m (2011: £24.8m) z PBT up 14% to £7.3m (2011: £6.4m) z EPS up 18% to 47.1p (2011: 39.9p) z Strong cash generation ‐ Group six month collections up over £4m on same 6 months last year z Net borrowings £18.7m (2011: £19.7m) despite 23% increase in motor adv
Slide 3: Group Income Statement 6 Months to July 2012
GROUP INCOME STATEMENT 6 MONTHS TO JULY 2012 £m Jul 12 Jul 11 Change z Revenue increase of 8% % driven by bigger motor Revenue 26.8 24.7 +8% finance book z Cost of sales up 24% Cost of Sales -2.6 -2.1 +24% reflecting higher motor Impairment -5.7 -5.7 -1% finance advances Admin Exp -10.9 -10.2 +7% z
Slide 4: Home Credit: 6 Months to July 2012
HOME CREDIT: 6 MONTHS TO JULY 2012 z Revenue increase of 5% (1% due to acquisition) ‐ slower Q2 than £m Jul 12 Jul 11 Change Q1 % z Impairment charge increased by Revenue 16.8 16.0 +5% £300k on good H1 last year Cost of Sales -0.8 -0.7 z Overall collections still robust ‐ Impairment -3.2 -2.9 +11% u
Slide 5: Motor Finance: 6 Months to July 2012
MOTOR FINANCE: 6 MONTHS TO JULY 2012 z 14% growth in revenue as book increases taking advantage of £m Jul 12 Jul 11 Change % withdrawal of non prime competitors Revenue 9.9 8.7 +14% z Impairment charge lower on bigger book as credit quality Cost of Sales -1.8 -1.4 +26% improvements since 2008 feed t
Slide 6: Impairment Graphs
IMPAIRMENT GRAPHS Annualised 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% Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 6
Slide 7: Group Balance Sheet 31 July 2012
GROUP BALANCE SHEET 31 JULY 2012 £m Jul 12 Jul 11 Change Comment % Fixed Assets 1.8 1.6 Car additions Amounts Receivable Consumer Credit 33.0 34.0 -3% Lower Q212 hp promotion Amounts Receivable Motor Finance 47.0 41.5 +13% Strong book growth Other Assets 0.6 1.0 Total Assets 82.5 78.1 +6% Current Ba
Slide 8: Group Cash Flow 6 Months to July 2012
GROUP CASH FLOW 6 MONTHS TO JULY 12 Six months to July 2012: z Group borrowing from £18.8m £m Jul 12 Jul 11 to £18.7m Balance b/f -18.8 -21.7 z Stable and cash generative Cash inflow +0.1 +2.0 Home Credit Balance c/f -18.7 -19.7 z Increased advances, good collections and low early Analysis redemptio
Slide 9: Cash Flow 6 Months to 31 July by Division
CASH FLOW 6 MONTHS TO 31 JULY BY DIVISION Home Credit Motor Finance z Good collections and sales in Q1 following on z Advances up 23% from good Xmas sales z Early redemptions and debt recovery income z Lower sales and collection growth in Q2 still at historically low levels z Expense payments higher
Slide 10: Environment
ENVIRONMENT z Economy – business has been historically recession resistant but customer repayments and impairment are still subject to increased unemployment and inflation z Regulation – high cost credit update from BIS is due in late summer z Competition – home credit market is mature – key competi
Slide 11: Outlook
OUTLOOK z Good current trading underpins positive group outlook z Continuing significant market opportunities in non prime finance z Organic growth opportunity likely to continue in Motor Finance z Cash generative group with medium term finance facilities for further expansion in both credit divisio
Slide 12: Appendices
APPENDICES 12
Slide 13: Our Businesses
OUR BUSINESSES Home Credit z 520 Agents, lending and receiving payments in the home z Agents attend branches twice weekly for scrutiny and review with managers who also go out on dual visits to help develop customer relationships z Customers typically borrow two or three unsecured weekly repayment l
Slide 14: Motor Finance Example Customers
MOTOR FINANCE EXAMPLE CUSTOMERS Example 1 - 27 year old male - 7 years in address as private tenant - 10 years as industrial coating specialist - Earns £1300 net a month giving around £400 “headroom” - No County Court Judgements or defaults - 7 pieces of other credit, telco, utility and bank Purchas
Slide 15: Motor Finance Example Customers
MOTOR FINANCE EXAMPLE CUSTOMERS Example 2 - 47 year old female - 20 years at address as council tenant - 10 years as credit controller - Earns £1100 net a month giving around £300 “headroom” - No CCJs, communications default from 2 years ago balance reduced by 35% since default Purchased 6 yr old Va
Slide 16: Credit and Risk Management
CREDIT AND RISK MANAGEMENT z All underwriting in Home Credit sanctioned by independent credit controllers z Audit letter/statement system operated and controlled from Head Office z Regular physical security checks required and monitored for all customer rounds z Minimum income and maximum repayment
Slide 17: 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