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.

PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Luis Suarez looks towards the crowd during the 2-1 victory over England
sport
Life and Style
Cheesecake frozen yoghurt by Constance and Mathilde Lorenzi
food + drinkThink outside the cool box for this summer’s frozen treats
News
John Barrowman kisses his male “bride” at a mock Gretna Green during the Commonwealth Games opening ceremony
peopleBarrowman's opening ceremony message to Commonwealth countries where he would be sent to prison for being gay
Sport
Sir Bradley Wiggins removes his silver medal after the podium ceremony for the men’s 4,000m team pursuit in Glasgow yesterday
Commonwealth games Disappointment for Sir Bradley in team pursuit final as England are forced to settle for silver
Sport
Alistair Brownlee (right) celebrates with his gold medal after winning the men’s triathlon alongside brother Jonny (left), who got silver
England's Jodie Stimpson won the women’s triathlon in the morning
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

Junior Research Analyst - Recruitment Resourcer

£18000 - £20000 per annum + OTE £25K: SThree: SThree Group has been well estab...

Senior Analyst - Financial Modelling

competitive: Progressive Recruitment: This really is a fantastic chance to joi...

Associate CXL Consultant

£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

Business Anaylst

£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

Day In a Page

Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform