Buoyant car markets help credit firm achieve 20% profit hike

Buoyant UK car markets have continued to boost performance at Solihull motor finance provider, S&U.

In its interim results for the six months ended July 31, the company revealed a 20% rise in pre-tax profits – a performance which reflects 17 years of consecutive increasing profits.

Pre-tax profit for the period was £14.3m (H1 2016: £11.9m), a rise of 20%, while earnings per share rose 21% to 96p (H1 2016: 79.2p).

Revenue increased by 33% to £37.6m on receivables up 31% to £228.6m. Gearing at July 17 was 56% (July 2016: 29%) as £32m was invested since the end of the year.

The company has declared an interim dividend of 28p per share (2016: 24p).

Anthony Coombs, chairman of S&U, said: “In contrast to the reported hiatus in both the used car market and in economic growth generally, S&U continues to experience robust and good quality demand and our current trading is in line with our expectations. In uncertain times, we are very confident of our prospects for further steady and sustainable growth.”

The firm’s motor finance arm, Advantage, saw a 21% hike in new agreements during the first half to 12,542, with the initial quality score up on last year.

The transaction rate was put at a conservative 3% of more than 440,000 applications.

The company said it had also seen an increase in its 12-month rolling impairment to 22.7% from 20.1% at year end, primarily due to a strong portfolio product mix.

July was a record month for the Advantage business, with collections of £10m.

Away from motor finance, the new Aspen Bridging pilot was launched during the period and the firm said it was now gaining traction and credibility.

Since the end of the period, committed funding facilities have been increased to £115m from £95m.