REG - S & U PLC - Trading Statement

S&UAnnouncement

09/12/2021 07:00

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RNS Number : 0343V  S & U PLC  09 December 2021

9th December 2021

 

S&U plc

("S&U" or the "Group")

 

TRADING STATEMENT

 

S&U, the specialist motor finance and property bridging lender, today
announces its trading update for the period from 1st August 2021 to 8th
December 2021.  The Group continues its growth rebound and is trading
strongly, as the economy tentatively returns to normal despite the continuing
uncertainty over the course of the Covid pandemic.  Growth is accelerating in
both businesses, despite a relative lack of used car supply and a quieter
housing transaction market over the past quarter.  Credit quality has
returned to pre-pandemic highs and remains under close scrutiny.  As a
result, S&U has laid the trading and financial foundations for a return to
its historical levels of significant, sustainable and profitable growth.

 

MOTOR FINANCE

 

Advantage Finance ("Advantage"), our motor finance subsidiary, is rebounding
vigorously both in profitability and in new business transactions.  After the
record basic live collections in the second quarter of £38.3m, Advantage
collections improved further in the third quarter to £39.1m. This superb
collections performance, along with continued associated lower than expected
impairment provisions, are the main drivers of improved profitability so far
this year.

 

New business transactions have also grown, increasing by over 30% in the
period versus the same period last year.  This increase is despite a dearth
of supply in the used car market this year, which, according to SMMT figures,
has seen a fall in used car sales of 6.2% in the latest quarter and a market
still 2% short of pre-pandemic sales levels.  In contrast, Advantage
currently anticipates making increased net loan advances totalling over £140m
in our financial year to 31st January 2022 (year to 31(st) January 2021:
£102.6m).

 

Collection rates are better than ever, as the result of our tightened
underwriting over the Covid period and industry-leading customer relations,
which are reflected in Advantage's Trust Pilot rating of 4.7 out of 5.  This
means that customers are repaying at record levels.  Those who never took a
Covid related payment "holiday" are at 97% of due, whilst even those who did
are now back to nearly 94% of due.

 

Opportunities abound.  As Advantage gears up for further growth, work
intensifies on customer service and underwriting refinements and a significant
investment in digital marketing.  New automated payments, open banking and a
self-service customer portal help make the customer's journey ever more simple
and smooth.  Brand and website improvements, multi-channel API and new
affinity partnerships are attracting more customers to make their finance
journey with us.

 

As a result, with the foundations of over 22 years of excellent profits and
operational efficiency, Advantage is positioned for the great opportunities a
fast-changing motor finance market presents.

 

Aspen Bridging Finance

 

Less than five years after its founding, Aspen continues its development as a
dynamic and substantial property bridging business.  Its receivables book has
now reached over £60m, more than double last year, and transaction numbers to
date are 38% up on a year ago.  Maintaining margins in a competitive market,
alongside robust quality control has resulted in an excellent Aspen profit
increase in the period versus the same period last year, building on the
excellent Aspen profit increase in H1 21.

 

Reflecting and underpinning this growth, Aspen's current paid pipeline of
deals has doubled over the period to a record level, and a new Bridge to Let
product has been introduced.  Aspen's strong credit quality is reflected in
continued low levels of default and most Aspen customers settling within or
just beyond the normal term of the loan.

 

Aspen's market reputation and credible partnerships with its introducer
brokers are demonstrated by the volume of business now being introduced, and
by a significantly improved transaction to approval ratio.  This augurs well
for the significant expansion planned over the next three years.

 

Funding

 

As usual, S&U's strong underwriting and collections record has produced
current borrowings of £113m against £103m last year and £115m at 31(st)
July 2021.  We have appropriate and ample headroom within our banking
facilities for the accelerated growth we anticipate next year.

 

Outlook

 

Commenting on the Group's performance and outlook, Anthony Coombs, S&U
Chairman, said:

 

"S&U is in very fine form.  Credit for this goes to our great people who
have not only maintained an excellent service to customers, whatever the
personal depredations or uncertainties of Covid, but are also continuously
monitoring, planning and adapting within rapidly evolving finance markets.
Much of this effort focusses on marketing and product development to attract
new customers to enjoy our traditional offer of finance with a human face.
That makes for an exciting and profitable future."

 

 

 

For further information, please contact:

 

S&U

Anthony Coombs, Chairman
                                               0121
705 7777

 

Newgate Communications

Bob Huxford, Megan Kovach, Tom
Carnegie
                                020 7653 9848

 

Peel Hunt

Adrian Trimmings, Andrew Buchanan, Rishi Shah
                         020 7418 8900

 

 

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