S & U Plc - Final Results to January 2014.

This small family run home collected credit and car finance company which I have written on before, has reported some more excellent results today. The Turnover was slightly ahead of forecasts at £60.8 million v £60 million (F) as were earnings and dividends which came in at 113.2 pence (+22%) v 110 pence (F) and 54 pence (+17%) v 52 pence (F) respectively. On the dividend policy they said "Our dividend policy has always been characterised by its sustainability. Our habitual emphasis on both growth and stability has seen dividends per share grow since 2009 by 69%, whilst cover over that period has increased from 1.56 to over 2."

 Net Assets increased by 14% to £69.4 million while borrowings increased slightly to fund the growth to leave gearing at a relatively conservative (for a finance company) of 46.6% up from 33.7%. Motor Finance continued to be the main driver of growth with profits form this division being up by 42% to £11.5 million on 26% revenue growth. Transaction numbers increased by 38% and net receivables were a record £73.0 million (2013: £52.5 million) as live customer numbers rose to 18,000. The payment performance of new customers is also improving, and collections measuring the quality of recent business and the whole book are at record levels.

 While the home collected credit side continued to struggle with profits down by £0.3 million to £5.8 million although they suggested that the second half had seen an improvement in performance with fourth quarter advances up by 8%. They also opened two new branches in the year and since the year end they have opened a further three branches and made a small acquisition in Scotland. They are also rolling out a pre paid debit card product to their existing customers who want to purchase goods and services on-line. They are also planning, like Provident Financial, further investment in I.T. for home credit to improve productivity and customer service and are on the look out for further add on acquisitions.

I'm still happy to run with this one (run your winners) even though the yield is now only around 3% as it is growing strongly and the Company seem to be reasonably upbeat about current trading and the outlook. Talking of which I'll leave you with the Chairman's comments on this:

"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."

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