Home credit and motor finance specialist S&U has reduced its net debt as the recession has pushed people towards home credit.
The Solihull firm, which owns niche home credit company Loansathome4u and motor finance arm Advantage Finance, told investors in a trading statement it had reduced net borrowings to £27 million between August and December 1, compared to £33 million at this stage last year.
The group said its home credit operations, which account for two thirds of group profits, had prospered as credit available within the economy has tightened.
It added: “As a result, trading in the second half thus far has been encouraging, with both revenues and profits in line with our expectations.
“Debt quality is improving, impairment levels have improved compared to last year, and the profile of our debt has led to increased levels of credit availability for our customers right across the business. As a result, levels of cash generation have remained very good, and we anticipate a successful Christmas period.”
S&U also said that Advantage had adapted to a more challenging non standard market by raising underwriting hurdles and improving the quality of its debt.
Its trading performance is in line with budget, reflecting a five per cent increase in live accounts compared to last year.
“Despite lower levels of customer early redemption, collection rates are driving strong monthly cash generation and impairment levels are stable,” the group added.
Group chairman Anthony Coombs said: “The group is trading in line with market expectations for the year as whole and, as a result of continued prudent management, it is in good shape to exploit the opportunities made available by recent industry consolidation.
“Whilst we take nothing for granted, we are confident of being able to deliver a sustainable improvement in trading performance both in the current year and early in the new decade.”