Strong auto market generates record profits for Solihull credit provider

SOLIHULL-based motor finance and home credit group S & U has said it is confident of the year ahead after announcing record profits in what was its 75th year of trading.

In its full-year results, the company said pre-tax profit increased by 21% to £17.3m (2013: £14.2m), while revenue was up 11% at £60.8m (2013: £55m). Earnings per share were 113.2p (2013: 92.6p) and the board has recommended a final dividend of 24p (2013: 20p), taking the total for the year to 54p per share (2013: 46p).

Much of the company’s success was due to the performance of its motor finance arm, Advantage Finance.

The operation now contributes around two thirds of group profit.  The past year saw Advantage produce another record year achieving pre-tax profit of £11.5m (2013: £8.1m), an increase of 42%.

Deal numbers reached a record 8,460 (2013: 6,118) and the group said prospects for growth in a market estimated at potentially 4.5m customers in the UK were significant – particularly as the economy continues to recover.

S & U said Advantage would continue to develop products to ensure the momentum was sustained, while at the same time ensuring that debt quality remained at its current best ever levels.

Its home credit business, Loansathome4U, did not fare so well, with pre-tax profits dipping slightly to £5.8m (2013: £6.1m). The company has blamed this on its customers feeling the impact of utility price increases and, to a lesser extent, the threat of benefit changes, particularly early in the year.

However, it said recent trends on both sales and cash had been promising, particularly in the peak Christmas trading period when sales increased by just under 10%.

Chairman Anthony Coombs said the success was proof of the enduring qualities of the business.

Looking ahead, he said: “Notwithstanding this winter’s appalling weather and the doom saying of the OECD, IMF and elsewhere of only nine months ago, both the British economy and consumer confidence are returning to unmistakeable, if not yet robust, health.  This is evident in our current trading and prompts our confidence for the coming year.

“But, S&U’s ability to prosper from such a climate is not axiomatic.  We never take progress for granted.  That depends upon the dedication, energy and commitment of all those who work with us.  Both within the Company and to the outside world, S&U has always portrayed itself as a family business.  We make no apologies for this.  It has been the bedrock and impulse for our growth over 75 years of trading. It will ensure even greater progress in the future.”