Investment: No Pain, No Gain: Our Man's Portfolio - Coombs clan opens up S & U

INVESTOR RELATIONS have never been high on the agenda at money lender S&U. The company's failure to communicate adequately with its shareholders and the City - it once issued a one-line trading statement - is undoubtedly a major factor in the low rating accorded its shares.

With around only 30 per cent of its capital constituting a free market and the continuing dominance of the Coombs family it is not surprising that S&U shares, at 292.5p, yield 8.7 per cent and sell on 8.7 times last year's earnings.

Similar groups enjoy more exotic ratings. For example, Cattles sells on 27 times earnings and offers a paltry 1.7 per cent yield. But S&U appears to have got the message. Long standing shareholders were surprised by the last report and accounts and what amounted to an admission that investor relations needed improvement.

Another sign that S&U has woken up is the decision to split the top job although the Coombs name remains to the fore. Veteran Derek Coombs is the chairman with his nephew Anthony as managing director. It would appear to be the younger Coombs who is keen to give the company a higher investment profile.

There is even talk the Coombs will reduce their shareholding, thought to reach 50 per cent. Whether they are thinking of an acquisition for shares or placing stock in the stock market is not clear.

With the publicity-shy property-owning Berger family accounting for a further 20 per cent there is little for institutions to go for. Consequently, S&U, capitalised at only pounds 34m, is something of an investment outcast.

I am banking on S&U's more high-profile approach being accompanied by much stronger trading. With the tempting dividend yield and the prospect of capital appreciation the shares are an obvious addition to the no pain, no gain portfolio.

Old fashioned money-lending is not an attractive industry. But it provides a much-used and obviously needed service. S&U and its competitors do not regard themselves as money-lenders. They prefer "personal" or "consumer" credit agencies.

The Coombs empire specialises in relatively small loans to low earners and has an army of agents collecting repayments. The old tallyman business is not without risk. Loans are unsecured and customers can prove awkward.

Still in these low interest rate days interest charges are often breathtaking, providing adequate compensation.

The money lenders are also scoring from the reluctance of banks to accommodate the less reliable members of society and the improving economy. The chairman, Mr Coombs says: "Demand for credit from existing and new customers remains strong as they continue to value the convenient, quick and straightforward service in their homes." But competition is tough, and vague Government threats to clamp down on high interest charges is a negative influence.

S&U's recent profits have failed to inspire. The company has appeared to limp behind rivals such as Provident Financial and Cattles. Last year an pounds 800,000 doubtful debt provision took its toll. With the previous year's figures inflated by a property sale the pounds 5.9m produced looked decidedly sedate. In the past five years profits have been disappointing, a sharp contrast to earlier years when shares touched 456p.

They should have a chance of returning to such levels. A year's profit of, say pounds 7m, some corporate activity and more public awareness by the Coombs clan could set S&U on the path to reducing a yawning ratings gap which has opened up with its major rivals.

Start your day with The Independent, sign up for daily news emails
News
Young Winstone: His ‘tough-guy’ image is a misconception
people
Sport
Adnan Januzaj and Gareth Bale
footballManchester United set to loan out Januzaj to make room for Bale - if a move for the Welshman firms up
Arts and Entertainment
Ellie Levenson’s The Election book demystifies politics for children
bookNew children's book primes the next generation for politics
News
Outspoken: Alexander Fury, John Rentoul, Ellen E Jones and Katy Guest
newsFrom the Scottish referendum to the Ice Bucket Challenge, our writers voice their opinions
PROMOTED VIDEO
Arts and Entertainment
Pharrell Williams' “Happy” was the most searched-for song lyric of 2014
musicThe power of song never greater, according to our internet searches
News
i100
Sport
Tim Sherwood raises his hand after the 1-0 victory over Stoke
footballFormer Tottenham boss leads list of candidates to replace Neil Warnock
Arts and Entertainment
L to R: Hawkeye (Jeremy Renner), Captain America (Chris Evans) & Black Widow (Scarlett Johansson) in Avengers Assemble
film
News
Nigel Farage celebrates with a pint after early local election results in the Hoy and Helmet pub in South Benfleet in Essex
peopleHe has shaped British politics 'for good or ill'
Sport
Yaya Sanogo, Mats Hummels, Troy Deeney and Adnan Januzaj
footballMost Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Sink the Pink's 2013 New Year's Eve party
musicFour of Britain's top DJs give their verdict on how to party into 2015
Voices
Strictly Come Dancing was watched by 6.9m viewers
voicesIt has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Arts and Entertainment
Roffey says: 'All of us carry shame and taboo around about our sexuality. But I was determined not to let shame stop me writing my memoir.'
books
News
i100
News
Caplan says of Jacobs: 'She is a very collaborative director, and gives actors a lot of freedom. She makes things happen.'
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?
Finally, a diet that works: Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced

Finally, a diet that works

Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced
Say it with... lyrics: The power of song was never greater, according to our internet searches

Say it with... lyrics

The power of song was never greater, according to our internet searches
Professor Danielle George: On a mission to bring back the art of 'thinkering'

The joys of 'thinkering'

Professor Danielle George on why we have to nurture tomorrow's scientists today
Monique Roffey: The author on father figures, the nation's narcissism and New Year reflections

Monique Roffey interview

The author on father figures, the nation's narcissism and New Year reflections
Introducing my anti-heroes of 2014

Introducing my anti-heroes of 2014

Their outrageousness and originality makes the world a bit more interesting, says Ellen E Jones
DJ Taylor: Good taste? It's all a matter of timing...

Good taste? It's all a matter of timing...

It has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Olivia Jacobs & Ben Caplan: 'Ben thought the play was called 'Christian Love'. It was 'Christie in Love' - about a necrophiliac serial killer'

How we met

Olivia Jacobs and Ben Caplan
Bill Granger recipes: Our chef's breakfasts will revitalise you in time for the New Year

Bill Granger's healthy breakfasts

Our chef's healthy recipes are perfect if you've overindulged during the festive season
Transfer guide: From Arsenal to West Ham - what does your club need in the January transfer window?

Who does your club need in the transfer window?

Most Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
The Last Word: From aliens at FA to yak’s milk in the Tour, here’s to 2015

Michael Calvin's Last Word

From aliens at FA to yak’s milk in the Tour, here’s to 2015