25th Sep 2013 08:20
LONDON (Alliance News) - S&U PLC said Wednesday its half-yearly pretax profits rose, buoyed by a strong performance by its motor finance division.
The motor finance and sub-prime home credit provider said it made an GBP8.8 million pretax profit for the six months to July 31, compared with GBP7.3 million for the corresponding period last year. Its revenues increased 7% to GBP28.6 million.
S&U declared an interim dividend of 14 pence, up from 12p, on the back of the strong results.
Car finance business, Advantage Finance, accounted for GBP5.6 million, up from last half-year's GBP3.8 million, of the pretax profit, after it saw revenues increase 25% from its near 23,000 customers. S&U said Advantage Finance collected more loan repayments on last year, up 23%, because it extended its product range to attract customers more likely to pay back loans. It invested GBP7 million in Advantage Finance in order to fund the motor business's expansion.
However, S&U described the performance of Loansathome4U, its home credit business, as "solid rather than spectacular", after it saw declining profitability, making 12% less in pretax profits, at GBP2.3 million. S&U blamed government measures that make it easier for people to declare personal bankruptcy for its own writing off of bad loans, but said that it expects an improvement in this area as the economy recovers.
"Restraints on real incomes and a paucity of available credit are likely to persist over the next few years. We therefore see significant opportunities for both our Motor Finance and Home Credit businesses as well as in related fields in which we possess experience and expertise," Chairman, Anthony Coombs, said in a statement.
Despite improving cash generation in its home credit business, which generated GBP3.1 million, ahead of last half-year's GBP2.6 million, S&U said that cash generation was below expectations, as anticipated, because of the extra investments in the motor finance business.
S&U shares were Wednesday quoted at 1,430.75 pence, up 50.75 pence, or 3.7%.
By Samuel Agini; [email protected]; @samuelagini
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