TIDMSUS
RNS Number : 9704I
S & U PLC
08 December 2022
8 December 2022
S&U plc
("S&U" or "the Group")
TRADING STATEME NT
S&U plc (LSE: SUS), the specialist motor finance and
property lender, announces its trading update for the period from
1(st) August 2022 to 7(th) December 2022.
S&U continues to trade well despite a period of economic and
political chaos unprecedented in most of our lifetimes. A change of
government and of economic strategy, rising inflation, taxation and
interest rates and an incipient recession is not exactly the ideal
economic landscape for any business.
Nevertheless, trading is very good, focusing on the excellent
quality of our customer relationships and the receivables which we
derive from them. These receivables have now reached a net
cGBP404m, against GBP370m at the half year end with continued good
collections and profitability during the period.
S&U expects that, allowing for the usual Christmas
seasonality, these trends may continue for the remainder of the
financial year supported by the consistent quality of collections
at Advantage Finance ("Advantage"), our motor finance business ,
and at Aspen Bridging ("Aspen"), our property lending arm.
MOTOR FINANCE
Advantage's steady growth continues with net receivables rising
to cGBP296m at the end of the period. Profitability remained good
and in line with expectations, as higher revenue was partly offset
by higher funding costs and increased customer servicing and
collection costs , designed both to protect customer collections
quality and to retain staff as living costs rise.
The results in terms of credit quality are impressive.
Collections total led a record GBP72.8m in the period, up just
under 5% on last year o n live accounts which are 3.5% higher at
64,500. Live cash collections in the period were at an excellent
93.7% of due and the actual number of bad debts and voluntary
terminations continued below budget.
Nevertheless, cost of living increases , particularly in
utilities , are bound to affect our customers' disposable incomes
and Advantage continues to aim f or clear and consistent
communication s with its customers and to remain understanding of
their circumstances. It works constantly to ensure that
affordability buffers and customer payment headroom are realistic,
and therefore continually refines its underwriting criteria and its
scorecard.
This period has seen preparations for the FCA's new Consumer
Duty regulations which move from a rules-based approach to one
based on consumer outcomes. These are specifically related to
product design, pricing value, customer understanding and customer
support and will be mandatory from July next year. Advantage has
significant strengths in all these areas and has produced a
comprehensive implementation plan to further embed them in to its
business operations. As a result, the new Consumer Du ty regime
will not only reinforce Advantage's customer relations -
particularly when some may be under cost-of-living pressures - but
should provide the business with a competitive advantage in
identifying potential new customers and designing products for
them.
This will also sustain Advantage's receivables which have been
consistently above budget during the period. This, and Advantage's
strong credit quality, will provide a solid foundation for further
steady and sustainable growth next year.
Aspen Bridging Finance
Aspen Bridging, our Solihull-based property lender , continues
to make excellent progress despite a slight slowing of the
residential property market. Profit before tax in the period was a
record high and net receivables have now reached cGBP108m against
GBP90m at the half year end.
Aspen's 'pipeline' of new business remains above budget ,
despite the extraordinary ill-coordinated approach to the provision
of housing by the current government. Nevertheless, demand for
finance, especially in the bespoke higher quality sector in which
Aspen operates, remains good with net issuance in the period above
budget.
Credit quality at Aspen is strong, although refinance
arrangements and legal processes are taking longer than usual. The
extend ed beyond term list remains small and there are only 7
technically defaulted accounts as customer repayments during the
period have been good.
Higher bank rate and interest costs mean that lo an rate
increases have been made to protect Aspen's margins. The rate card
is regularly reviewed with broker partners and updated where
necessary.
Aspen's growing industry experience, its attention to detail and
ability to work closely with customers on a bespoke basis and to be
fast a nd flexible in responding to market trends are enhancing its
reputation, as evidenced by its winning the New Product of the Year
at this autumn's Bridging and Commercial industry awards. These
qualities are the bedrock of its present and future success .
Funding
S&U's confidence in the sustainable growth of both of its
businesses, and reflected in its consistent dividend policy, has
been matched by significant investment this year. New growth at
Advantage has meant further investment of GBP24m in the year to
date , whilst Aspen has received a further GBP43m in funding since
January. As a result, current Group borrowings stand at just over
GBP180m, against GBP130m at year end. This has been accommodated by
increasing committed Group facilities in the period by GBP30m , a t
sensible rates , to GBP210m, while our low level of gearing, strong
credit quality and cash generation will facilitate additional
facilities as required.
Outlook
Commenting on the Group's performance and outlook, Anthony
Coombs, S&U Chairman, said:
"Current pessimism about the UK 's economic prospects , standard
of living and consumer confidence may have been overdone. However,
S&U's 80 years plus of experience makes it wise to tread
carefully in managing its growth. Whilst more optimistic than many
, we will continue to do so until greater stability returns, and
the economic skies brighten."
For further information, please contact:
Enquiries S&U plc c/o SEC Newgate
Anthony Coombs
Financial Public Relations
Bob Huxford, Molly Gretton, Harry
Handyside 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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