Record motor financing deals boost credit provider

SOLIHULL-based home credit and motor finance provider S&U, has said it continues to enjoy strong trading and has forecast end of year results will be in line with expectations.

In a trading update covering the period from December 11 to the end of January, the company said its motor finance arm, Advantage Finance, continued to trade at record levels.  

It said that despite evidence of further competition in the specialist motor finance market, Advantage’s sales and transactions remained robust and advances for the year were 48% up on last year.  Credit quality is at its best ever level and live customer numbers have increased by over a third in comparison to last year.  

With its under-writing model being continually updated to ensure debt quality is maintained in a growing market, it said it anticipated another record year.
Substantial progress is also being made in its home credit division, Loansathome4u.  Turnover, customer numbers and its representatives have all increased by just under 10% on last year.  

It said weekly collections were up by 12% and, more importantly, its credit availability is ahead by 20% on a year ago.

The current year is said to have begun well. In addition, the significant steps taken in strengthening its compliance function have given the firm confidence as it approaches the Financial Conduct Authority’s authorisation process later this year.

It said the quality of the group’s debt both in motor finance and home credit was reflected in increased trading and in strong cash generation.  As a result, group gearing has fallen slightly to 67% and current facilities provide sufficient headroom for anticipated growth this year.

The longer term policy of diversifying funding sources will see the introduction of further new facilities and the board said it was considering an application for Deposit Taking status with the Prudential Regulation Authority and FCA in the first half of this year.

It said these increased facilities would accommodate the expansion it anticipated in both of its businesses over the next few years.

The strength of the group’s current trading and profitability will see the board approve the payment of a second interim dividend of 19p per ordinary share  (2014: 16p) on April10,  2015 to all shareholders registered by March 13. This means that first and second interim dividends this year will increase by 20%.

Anthony Coombs, chairman of S&U plc said: “As real incomes at last begin to match improving consumer confidence, we see significant opportunities for sensible and responsible growth both in our motor finance and home credit divisions.

“On the assumption that the British political environment remains stable, and that regulation is therefore consistent and proportionate, we see every reason to believe that our commitment to treating our customers fairly across the group and to giving them the best standards of service, will continue to reap appropriate rewards.”