Specialist lender S&U confident for remainder of 2010, H1 seen in line

Ahead of its half-yearly interim results, scheduled for September 2010, specialist British finance group S & U (LON:SUS)said it is trading in line with expectations, it has a stable and expanding customer base and consequently it is optimistic for the rest of the year.

S&U specialises in providing consumer credit and car finance in the UK to sub-prime and non-prime customers. The company has two key divisions: motor finance and home credit which are sold through ‘Advantage Finance’ and ‘Loansathome4u’ respectively.

The results for the six months ending 31 July are scheduled for 23 September 2010.
In this morning’s update, S&U highlighted that its motor finance business had an “excellent start” to the year, with revenues up almost 25%. Furthermore, S&U said that margins continue to improve and the quality of its order-book is “encouraging”.

Additionally, S&U told investors that the home credit business also continues to make progress, with a 2% increase in H1’s year-on-year revenue, and it has also added a further 4,000 customers since this time last year.

S&U emphasised that its financial position, with strong cash-flow, reflects the strong trading performance. In the six-month period, the company paid off debts

of £4m, and reduced its overall borrowings from the first half of 2009.

The company highlighted that its gearing has fallen below 53%, and it has increased its headroom for organic expansion and acquisitions, as well as shareholder returns.

S&U chairman Anthony Coombs alluded to the fact that the specialist nature of the business was one of the key drivers for the positive start to the year: "Particularly in these uncertain times, attention to detail and close relationships with our loyal customers bring their own reward."

The company niche approach to sub-prime and non-prime financing employs a conservative lending policy and strong emphasis on knowing its customers.

“Improving standards and our current trading both inspire confidence for the future," Coombs added.

The company said it is confident that its tradition of tightly controlled expenses and its “cautious approach” to underwriting “will now prove their worth in more austere times”.

“Our current trading, stable and expanding customer base and a stable regulatory environment under a new government, as well as a balanced and benign OFT High Cost Credit Review, all make for optimism for the current year's outturn,” S&U stated.