Car market buoys motor finance provider S&U

THE buoyant UK car market is continuing to benefit Solihull finance provider S&U, its shareholders will be told today.

However, the company has yet to earmark any suitable acquisitions to replace its home credit business, which was sold in an £80m deal last year.

In a trading update ahead of its AGM, the firm said trading since the end of its financial year in March had been “very good”.

“In fact, despite a generally more restrained recent economic outlook in the UK, Advantage Finance has recently seen an acceleration in its already impressive motor finance transactions growth rate,” it said.

“Customer numbers are now at an all-time high of 35,600, an increase of 3,000 since year-end and net receivables exceed £160m (£145m at the year-end).  Debt quality remains excellent whilst collections, profit margins and average loan sizes are all on budget.”

The firm said its existing bank and finance facilities could comfortably accommodate its current rate of investment in Advantage of around £4m per month.  Gearing has risen from 9% at year end to 19% now and its current projections suggest that it will not exceed 55% over the next four years as the business matures.  

Regarding new additions, it added: “Further funding will also be made available for suitable acquisitions and new initiatives as and when they are identified.”

The sale of its home credit arm, Loansathome4u, in August last year generated a one-off profit of £50.1m during the last financial year.

The net proceeds from the £80m disposal were re-invested into the motor finance business.