REG - S & U PLC - Trading Update and Notice of Results

S&UAnnouncement

11/02/2025 07:15

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RNS Number : 5864W  S & U PLC  11 February 2025

 

 

11th February 2025

 

S&U plc

    ("S&U" or "the Group")

 

TRADING STATEMENT AND NOTICE OF RESULTS

 

S&U PLC, the specialist motor and property financier, today issues its
trading update for the period from its statement of 11 December 2024 to the
Group year-end on 31 January 2025. S&U's full year results will be
announced on 15 April 2025.

 

While trading at Advantage in the period since S&U's last trading
statement in December continues to reflect the challenges experienced in 2024,
as expected, the broader outlook for the Group remains positive, supported by
encouraging performance in other areas of the business.

 

At Advantage, these partly reflect an easing of regulatory restrictions as the
section 166 investigation (the "s166") of last year draws to a close.
Adversity can sometimes provide opportunity and a spur to greater efficiency
and customer service. Advantage has embraced such a programme, which has
already seen recent signs of improvement in both collections rates and new
advance volumes.

 

Equally important for our future prospects is the indication of a more
balanced and pragmatic approach to government regulation and policy. Recent
shifts suggest a reassessment of previous consumer-focused measures,
addressing concerns about potential constraints on economic growth.

Recent calls by the Prime Minister and the Chancellor for a deregulatory and
growth-focused agenda, and their demands from every regulator for specific
proposals for these, offer the prospect of a stable and pragmatic framework
for financial services. The new zeitgeist is in fact exemplified in the
current edition of The Economist magazine where the front cover splashes 'the
revolt against regulation'. As a result, the past two months have seen a
number of representations from UK Finance, the Finance and Leasing Association
("FLA") and from S&U to both Government and Parliament designed to ensure
a robust and predictable regulatory framework.  The FLA, Advantage's trade
body, is preparing further suggestions for reform to which we will
contribute.

 

The question does remain as to whether this new encouragement of responsible
risk-taking will extend to the Supreme Court, when it reviews last October's
Court of Appeal decision on commission disclosure which has so disrupted the
entire motor finance market. Again, the signs are cautiously encouraging. The
speed with which the Supreme Court is considering the matter and their
sanctioning direct representations from the Treasury, the FLA, and the
Financial Conduct Authority, speak to a common-sense approach. My view is that
even should the Supreme Court uphold the lower courts' decision in principle,
any 'harm' found to have been suffered by consumers will be so marginal as to
make demands for redress minimal.

 

The continuing headwinds at Advantage will be reflected in its profits for the
second half year (July 24-Jan 25), but as a result of the improving trends
mentioned above in advances and collection rates, we anticipate a recovery in
profitability during the next financial year.

 

An even more positive picture for the future can be painted for Aspen,
S&U's property finance lender. Aspen has enjoyed a record year on net
receivables up c.17% on last year at c.£152m (2024: £130m). Collections are
up 25% at £157m. Moreover, profits are likely to rise by a remarkable 50% on
last year, testament to improving yield and transaction volumes alongside
sensible cost control. With demand for residential properties up 13% on a year
ago according to Zoopla and with interest rates falling slowly, the stage is
set for another very good year.

 

 

Advantage Finance

The past two months have inevitably seen consolidation at Advantage. Net
receivables now stand at c.£283m (2024: £332m), as transaction volumes
remain subdued. However, following the lifting of the restrictions under the
s166, transactions have recovered to over 900 monthly deals in January.

 

Collections also remain in recovery, as staff and customers continue to adapt
to a more flexible and robust post s166 regime. Thus, against a cumulative
collection rate of 85% so far this year, recent results have seen an
improvement to 87%. Much remains still to be done, particularly in dealing
with a regulatory-driven backlog of non-paying customers and vehicle
recoveries. To this end, a comprehensive programme of improvements includes a
review of customer contact methods, digital improvements including a new
telephone system and tighter productivity measures and reporting. Most
encouraging of all is the recent introduction of the new MyAdvantage web
application which will greatly enhance customer communications and engagement.

 

Aspen Bridging

A steady, if not yet a buoyant housing market, with mortgage approvals at a
year's high of 66,000 in December, provide a stable backdrop for Aspen's
growth in its niche refurbishment and minor development sector. Transactions
rose this year by 16% on 2023/24 on deal sizes averaging over £900k. This
rate of growth is being accompanied by a sustained improvement in loan yields
as well as by strong debt quality. Thus, repayment and recovery collections
are up 25% on last year whilst defaults are stable on a larger book. All
reasons to be very cheerful about Aspen's prospects for 2025 and beyond.

 

Funding

Seasonally quieter lending at Aspen and consolidation at Advantage have seen
net group borrowings fall over the period to £192m from £206m in December.
These are of course well within the current facilities of £280m, which
accommodate anticipated growth in the Group for next year. As usual, we keep
the Group's funding facilities under continuous review.

 

Dividend

S&U's dividend policy has always had three aims. First, the close
alignment of interest between management and shareholders, reflecting
sustainable growth and a conservative approach to gearing. Second, we satisfy
shareholders' appetite for yield in a narrow trading market. Third, we take a
sensible but ambitious view of S&U's prospects. Thus, despite this year's
hiatus in profit growth, we propose that the second interim dividend should be
30p per share (2024: 35p), payable on 7 March 2025 to shareholders on the
register on 17 February 2025.

 

Governance

After over 25 years of service to the Group including the founding of
Advantage Finance, Chris Redford, S&U's finance director, has confirmed
his long-standing intention to retire in June. Chris has made an enormously
valuable contribution to both the growth and stability of S&U and
recognition of this will be made at the appropriate time. However, we are very
pleased to announce that, following a thorough recruitment process, Chris
Freckelton is to join the group as CFO. Chris is a senior auditor at Deloitte
and has great experience of the motor and specialist finance industries. We
look forward to welcoming Chris at the beginning of April. It is intended that
following a settling in period, Chris will be invited to join the S&U
Board.

 

 

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

"Over the past year, macroeconomic and regulatory pressures on the business
have severely tested S&U's historic experience, expertise and resilience.
Despite these, we maintain our faith and confidence in the service we are
proud to give to our loyal customers. I pay tribute to all who work at S&U
to make this possible. As a more pro-growth national agenda develops and the
regulatory frenzy eases, then this provides a solid base for a return to more
normal levels of profitability, growth and returns for our shareholders."

 

For further information, please contact:

 

 
 

 Enquiries                                     S&U plc        c/o SEC Newgate

 Anthony Coombs

 Financial Public Relations                    SEC Newgate    020 7653 9848

 Bob Huxford, Molly Gretton, Harry Handyside

 Broker                                        Peel Hunt LLP  020 7418 8900

 Andrew Buchanan, Oliver Jackson

 

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