S&U plc · LSE:SUS
S&U — FY2018 Earnings Presentation
28 slides from S&U's earnings presentation, April 2018
Slide 1: Full Year Results To 31 January 2018
Full Year Results To 31 January 2018
Slide 2: Today's Speakers
TODAY’S SPEAKERS Anthony Graham Chris Redford Coombs Coombs Group Finance Director Chairman Deputy Chairman 1
Slide 3: Highlights for the Year to 31 January 2018
HIGHLIGHTS FOR THE YEAR TO 31 JANUARY 2018 18th consecutive year of increasing profits from Advantage Motor Finance Launch of Aspen Property Bridging Finance pilot gaining traction Group Revenue increased by 32% to £79.8m on receivables up 35% Group Profit before tax £30.2m up 20% on last ye
Slide 4: Profits & Dividend Record Over Last Years
PROFITS & DIVIDEND RECORD OVER LAST 5 YEARS 200 35 180 30.2 30 Profit before tax from continuing operations £m 160 25.2 Dividends declared pence per share 140 25 120 19.5 20 100 14.8 105 15 80 91 60 9.5 76 10 66 40 54 5 20 0 0 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Dividends declared pence per share Pro
Slide 5: Our Profit & Loss
OUR PROFIT & LOSS 12 MONTHS TO JANUARY 2018 Group Income Statement £m Jan 18 Jan 17 Change % Revenue up 32% driven mainly by Revenue 79.8 60.5 +32% growth in motor finance book Impairment -19.6 -12.2 +61% Impairment up 61% with rolling 12 ------- ------- ------- Risk adjusted gross yield RAY mon
Slide 6: Group Balance Sheet
GROUP BALANCE SHEET 31 JANUARY 2018 £m Jan 18 Jan 17 Change Comment % Fixed Assets 1.9 1.2 Larger Building Purchase £0.6m Amounts Receivable Motor Finance 251.2 193.5 +30% Strong book growth in last 12 mths Amounts Receivable Property Bridging 10.8 - New pilot this year Other Assets 1.2 1.1 Total As
Slide 7: Treasury and Funding
TREASURY AND FUNDING Committed funding facilities increased post year end to £135m, comprising £50m term loans and £85m revolving credit facilities £5m overdraft facilities New £10m term loan until April 2021 and £10m term loan until April 2022 adding to existing term loan facilities Group g
Slide 8: Cash Flow: 12 Months to 31 January 2018
CASH FLOW: 12 MONTHS TO 31 JANUARY 2018 Group Cash Flow for 12 months Motor Finance Cash Flow Good motor finance advance growth helped by 25% increase in value of advances in 2017/18 Dealflo launch late 2017 helped by broker partnerships and service Other outflow in H2 17 includes acceleration
Slide 9: Advantage Motor Finance Overview
ADVANTAGE MOTOR FINANCE OVERVIEW 18th successive year of profit growth at Advantage – record PBT at £30.2m Advantage offers Hire Purchase products - no Personal Contract Plans Average loan only £6,200 (used vehicle) - minimal depreciation. Residual value movements reduced. FCA motor finance
Slide 10: Motor Finance 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 Year to Year to Loan profile Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Number of loans 4,736 6,118 8,460 11,941 15,131 20,042 24,518 Advance £5,012 £5,309 £5,715 £6,079 £6,121 £6,068 £6,207 Cost
Slide 11: Motor Finance: Return on Capital versus Impairment
MOTOR FINANCE RETURN ON CAPITAL VERSUS IMPAIRMENT GRAPH Product mix effect has increased impairment to revenue % in recent years, together with recent pressures on real income for some customers this year; credit assessment and affordability criteria now adjusted Recent reductions in ROCE reflec
Slide 12: Motor Finance: Collections Graph
MOTOR FINANCE COLLECTIONS GRAPH Years 2016, 2017 and 2018 average advance and deal acquisition cost higher and being collected over longer original terms 11
Slide 13: Motor Finance Receivables
MOTOR FINANCE RECEIVABLES Position at end January 2018 Position at end January 2017 Account Arrears Status Percentage of Live Percentage of Live Volume of Accounts Volume of Accounts Receivable Receivable Up to Date 45668 83.31% 37447 86.75% 0.01 – 1 mthly payments 4020 7.87% 2754 6.74% 1.01 – 2 184
Slide 14: Motor Finance Regulation
MOTOR FINANCE REGULATION FCA WORK ON MOTOR FINANCE MARKET FCA issued interim report in March 2018 – the review is expected to be completed in September 2018 The FCA work is focussed on four areas where Advantage has good existing procedures: i) Responsible lending – Advantage has proven credit r
Slide 15: Aspen Bridging
ASPEN BRIDGING Secured property bridging market is circa £5bn per annum in England and Wales. Estimated to grow to £8.8bn by 2020 (Mintel) Cautious under-writing approach has meant slower earlier business but increasing as credibility with brokers improves Small first year loss of £0.3m caused
Slide 16: Outlook
OUTLOOK 18th successive year of profit growth in motor finance – “success breeds success” and 2018 has started well Substantial receivables book of £262.0m providing future revenue visibility £135m committed facilities gives headroom for continued growth Brexit negotiations and a slowing eco
Slide 17: Appendices
APPENDICES 16
Slide 18: Motor Finance: Our Business
MOTOR FINANCE OUR BUSINESS Used car finance on hire purchase – 90% sourced through brokers – 5% refinances for previous customers – 5% direct from dealers 130,000th new deal transaction milestone reached this year C2,000 deals per month underwritten and collected centrally – direct debit is th
Slide 19: Motor Finance: Customer Loan Journey
MOTOR FINANCE customer loan journey Customer chooses car at motor dealer Dealer/Broker AFL undertakes AFL undertakes Application looks for a lender creditworthiness affordability submitted to AFL match assessment* assessment** Customer applies for finance via internet Pre-contractual Customer choose
Slide 20: Motor Finance: Credit and Risk Management
MOTOR FINANCE credit and risk management Approval rate approximately 29% of applications, of which about 9% is converted – over 860,000 applications last year resulting in 24,518 deals Automated decision from bespoke scorecard system returned within 10 seconds on 95% of all applications received
Slide 21: Motor Finance: Our Loyal Customers
MOTOR FINANCE OUR LOYAL CUSTOMERS Example 1 (from 2017) Support worker with previous Advantage agreement taken out in January 2012 which was paid off at the end of its term in 2016 – in late 2017 looking for a change of vehicle Earns £1254 net a month “A” paid to Advantage previously with no o
Slide 22: Motor Finance: Our Loyal Customers
MOTOR FINANCE OUR LOYAL CUSTOMERS Example 2 (from 2017) HGV driver living with partner looking for a newer car. Earns £2600 net a month and pays all bills on time Active up to date bank account utilities and communications. No other outstanding credit. 1 historic County Court Judgement from
Slide 23: Motor Finance: Customer Testimonials
MOTOR FINANCE CUSTOMER TESTIMONIALS “5 star services – could not start better 2018 than buying a car through you guys. Very friendly helpful customer service. I love My Mazda Thank you!” “Great company, had a spell in hospital and had to get my wife to cancel all my direct debits, once I got home, p
Slide 24: Property Bridging Finance: Our Business
PROPERTY BRIDGING FINANCE OUR BUSINESS Aspen started trading in February 2017 and provide a “fast, flexible, friendly and fair” service to customers with property bridging loan requirements 35 secured property bridging loan facilities have been provided to customers during the first year with an
Slide 25: Aspen Bridging Process
ASPEN BRIDGING PROCESS Broker confirms Broker gets Customer contacts Broker looks for a Aspen issues that confident to exclusivity from broker lender match illustrative quote place with Aspen. customer On approval Aspen **Broker returns Client provides Broker submits for *Aspen Underwrite instructs
Slide 26: Property Bridging Finance: Customer Feedback
PROPERTY BRIDGING FINANCE CUSTOMER FEEDBACK Customer Feedback 22nd March 2018 “Just a note to confirm the successful completion of the house purchase today. Obviously I’m delighted to complete, and impressed with how incredibly quickly you agreed and provided funds. However my real amazement is for
Slide 27: Group Income Statement: Our Five Year Record
GROUP INCOME STATEMENT OUR FIVE YEAR RECORD Continuing Business £m Year to Year to Year to Year to Year to Jan 14 Jan 15 Jan 16 Jan 17 Jan 18 Revenue 26.2 36.1 45.2 60.5 79.8 Cost of Sales -4.8 -6.7 -9.0 -12.8 -17.3 Impairment -5.1 -5.9 -7.6 -12.2 -19.6 Admin Expenses -6.1 -7.0 -7.3 -8.6 -9.9 Financ
Slide 28: 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