S & U's (LON:SUS) FY17 results showed continued strong growth in motor finance receivables with an increase of 33%. Competition has had some effect on cost of sales and mix change has been reflected in an expected increase in impairments but pre-tax profit growth was still above 20% and the outlook remains encouraging. The Aspen Bridging finance pilot may provide another avenue for growth while it is reassuring that management is taking a prudent approach in this new area.
FY17 results
The one-third increase in customer receivables for the year took the five-year compound annual growth rate to 36% and revenue growth in FY17 was 34%. Competition has put some upward pressure on commissions paid to brokers who originate business, while modest adjustments to underwriting criteria to address customers with lower credit scores has helped support the revenue yield on receivables but resulted in an increase in impairments, as expected. Earnings per share increased by 27% and the full year dividend was 91p, up 20%.
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