8th February 2013
("S&U", "the Company" or "the Group")
YEAR END TRADING UPDATE
S&U, Britain's foremost home credit and motor finance provider, today issues a trading update for the period from its most recent IMS on 6th December 2012 to the Company's Year End on 31st January 2013. The Company is pleased to confirm that current Group trading is satisfactory and that it expects once again to meet market expectations.
S&U will announce its results for the year ending 31st January 2013 on 26th March 2013.
Our loyal customers continue to appreciate the flexible and convenient weekly service we offer to them. However, as predicted, current economic uncertainty, benefit changes and a preference for shorter term borrowing have combined to constrain home credit sales in comparison to the record figures of last year. Trading in January was good.
Debt quality remains strong and, following encouraging results in pilot areas, new products are being introduced which will extend the appeal of home credit to a broader customer base.
Advantage, our motor finance business, has rounded off a record year by producing its best ever transactions and collections figures during the normally more subdued final quarter. Current live customer numbers are now close to 15,000, net receivables over £50m and collections and debt quality stronger than ever. We anticipate continued growth.
Funding and Treasury
As the Group continues to grow, we continue to balance investment in our debtor and customer base with our usual probity in financing this. Thus we have continued to invest in motor finance, whilst benefiting from good cash generation in home credit.
As a result, although borrowings are higher than last year, our financial position remains strong. Market opportunities enabled us to write an extra 400 motor finance deals over our expected demand and group gearing has therefore remained stable at around 34% (2012: 34.3%).
This gearing reflects an additional net investment of around £5m in Advantage during the year compared to the £4m planned which we outlined in our 2012 Annual Report.
The strength of the Group's current trading and its treasury position leads the Board to the view that it will be appropriate to approve the payment of a second interim dividend of 14p per ordinary share on the 12th April 2013 to holders on the share register on the 22nd March 2013. This is an overall increase in first and second interim dividends of 13% on last year. It is also the Company's intention, subject to any unforeseen circumstances, to recommend the payment of a final dividend on 12th July 2013 of at least 18p per ordinary share for the year ending 31st January 2013. Subject to shareholders approval the total dividend for the year would therefore be at least 44p against 41p last year.
Commenting on the Group trading and outlook, Anthony Coombs, Chairman of S&U plc said:
"The continued success of our business during subdued, even recessionary times should not be taken for granted. S&U's achievement is due both to the hard work, dedication and commitment to customer service of our staff, and the long term, responsible and sustainable approach of our board which includes family shareholders. We approach our 75th anniversary with confidence".
For further information, please contact:
S&U plc www.suplc.co.uk
Anthony Coombs, Chairman 0121 705 7777
Financial Advisers, Sponsors and Brokers
Adrian Trimmings / Jamie Cameron Arden Partners 0207 614 5917
Media and Investor Relations
Will Swan/ Rebecca Hunt Smithfield 0207 360 4900