S & U PLC Trading Update and Notice of Results (4619V)
August 10 2022 - 2:00AM
UK Regulatory
TIDMSUS
RNS Number : 4619V
S & U PLC
10 August 2022
10 August 2022
S&U plc
("S&U" or "the Group")
Trading Update and Notice of Results
S&U plc, the specialist motor and property bridging lender,
today issues its trading update for the period from its AGM
Statement of 26 May 2022 to 31 July 2022. It will announce its
half-year results on 27 September 2022.
Although it is only just over two months since our last trading
update, S&U is pleased to report that both its motor and
property bridging divisions continue to outperform its
expectations, both in transactions growth, and in the quality of
its book and the new business it is writing. Current Group
receivables now stand at approximately GBP370m against GBP340m in
May, and profitability exceeds that of H1 last year. Debt quality
is reflected in strong collection rates and supported by low levels
of default at Advantage, our motor finance business, and at Aspen,
our property bridging lender.
However, these results do not mean that S&U has become
either hubristic or Panglossian. Current political instability and
differing views on fiscal policy, together with persistent UK
economic headwinds do not allow for any complacency. We recognise
that a potentially shrinking economy, higher inflation and interest
rates, historically low levels of consumer confidence and a
possible technical recession in the UK, have all contributed to a
manically depressed view of the future, particularly in the UK
equity markets.
Hence, although growth currently exceeds budget and
expectations, we judge it sensible in light of current uncertainty
about economic prospects, to temper optimism with caution,
particularly in our underwriting policy. Recent adjustments are
designed to continue to ensure that our customers have sufficient
comfort and headroom to withstand any pressure on their household
disposable incomes, which might be felt later in the financial
year. These will help protect our credit quality throughout the
Group, whilst in the case of motor finance, anticipating the new
outcome-based Duty of Care to customers, to be introduced by the
Financial Conduct Authority in one year's time.
Advantage Finance
Advantage Finance, our motor business based in Grimsby,
continues its excellent post-pandemic progress to historic levels
of growth and credit quality. Applications for motor loans remain
robust in a buoyant used car market. This has meant growth in
transactions of nearly a quarter on last year and an increase in
net receivables to approximately GBP280m in July against GBP268m in
May and GBP249m in July 2021. Credit quality remains high, measured
by higher collections against due and by the lower incidence of
voluntary terminations and bad debts. In addition, a revised
scorecard and the introduction of further credit reference
information, as well as strengthened buffers on customer
affordability, are designed to ensure that it remains so.
What is prudent for our customers also applies to our own
excellent, loyal and expert staff. Whilst administrative costs
remain well controlled and within budget, provision is being made
to help those lower paid individuals who may be feeling cost of
living pressures more acutely. This will bolster Advantage's
excellent staff morale and minimise staff turnover.
Aspen
Despite some doomsayers and "cliff-edge" addicts who have
commentated on the UK's residential property market, the real world
has allowed Aspen to continue its growth in serving its niche
developer and investor market. Net receivables in the period have
now reached approximately GBP90m in July against GBP72m in May and
GBP58m in July 2021. Aspen's growing reputation and the
introduction of new products mean that it is attracting more
experienced and expert borrowers, which have seen average gross
loan size increase to around GBP875,000 so far this year, helping
both the receivables and revenue growth.
This trend towards higher quality and more seasoned borrowers
has seen a slight reduction in blended book yield on last year,
although above budget, coupled with excellent repayments and
continued good credit quality.
All this gives a very strong and stable base for further
progress in what is likely to remain, despite increased costs of
borrowing, a strong residential property market.
Treasury
S&U's continued investment in book growth at both Advantage
and Aspen, in addition to the payment of our final dividend has
seen Group net borrowings rise to GBP154m in July against GBP125m
in May and GBP115m in July 2021. Our medium-term facilities are
GBP180m giving us ample headroom for further growth, whilst our low
level of gearing, our strong credit quality and cash generation
will facilitate additional facilities as required.
Commenting on S&U's trading outlook, Anthony Coombs, S&U
chairman, said:
"I am very pleased and encouraged by S&U's trading this
year. However, like many in the financial services sector,
S&U's performance and its prudently planned prospects for the
future, are inadequately reflected in stock market commentary and
valuations dominated by uncertainty and pessimism. That pessimism
is not shared by S&U. We believe that realistic underwriting,
good products, and supportive and sensitive customer relations will
enable us to make further significant and sustainable progress in
the markets which we serve."
Enquiries S&U plc c/o SEC Newgate
Anthony Coombs
Financial Public Relations
Bob Huxford, Molly Gretton SEC Newgate 020 7653 9848
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Broker
Andrew Buchanan, Adrian Trimmings,
Sam Milford Peel Hunt LLP 020 7418 8900
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