10 August 2021

S&U plc

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

Trading Update and Notice of Results

S&U plc, the motor and property finance specialist, today issues its trading update for the period from its AGM Statement of the 20th May to the 31st July. It will announce half year results on the 28th September 2021.

Trading

S&U continues to trade well, ahead of expectations in terms of profitability, collections and book debt quality. Despite recent inconsistency and incoherence in the Government's path out of Covid lockdown, particularly in the travel sector, consumer appetite and business confidence is gradually returning, amid expectations of a 7% UK growth rate in GDP for the year.

At S&U, this has been reflected in strong Advantage motor finance applications and for Aspen in the strength of the residential property market- although both slightly constrained by a present lack of supply of both used vehicles and homes for sale. This lack of supply will gradually be corrected  as the economic recovery gathers pace. Coupled with very strong cash collections, rigorous and realistic underwriting and the Group's habitual financial strength, S&U's return to sustainable and robust growth promises a successful performance this year.

Advantage Finance

The period has seen Advantage enjoy a profitable, controlled and cash generative recovery as it continues to gradually increase, month by month, to nearer normal levels of new business. Whilst continued sensibly cautious underwriting, and a lack of supply, have seen transaction numbers slightly under an ambitious budget, this has been more than offset by a superb collections performance with related bad debt attrition and impairment more benign than anticipated. As a result, net receivables are stable versus the previous year-end, risk adjusted yield is ahead of budget, and operational cost is well within budget.

The result will be a significant increase in Advantage's half year profit, comfortably beating budget, and a gradual return towards its habitual levels of ROCE.

This return will be buttressed by the continuous stream of improvements that our excellent team in Grimsby and its Chief Executive, Graham Wheeler, are making to the business. More detail will be provided at half year and these include refinements to the scope and range of its customer offering; new simple access for customers to make online payments; new arrangements with industry partners to boost our dealership capability, and improvements to make our social media marketing more effective.

In addition, Advantage continues to prepare for what will be a significant opportunity in the financing of hybrid and electric used cars. Whilst Covid, initial pricing and the currently inadequate charging network have so far restrained growth, ultimately this new market will provide benefits for our customers, protection for the environment and profitable growth for S&U.

Aspen

Over the past two months, Aspen, our property bridging business, has continued the encouraging trends reported in May. Net receivables are now at just under £58 million against £18.5 million a year ago, and book quality and repayments continue to be very good.

Much of this net receivables growth has been due to Aspen's successful offer of Government backed CBILS loans to larger and more established developer customers. Whilst the original CBILS scheme is being wound down, the additional contacts Aspen have made has boosted its market credibility and introducer reach. To consolidate this, Aspen has sharpened its product offering, and its competitive loan to value offer, and, at the same time, strengthened its underwriting team to ensure a speedy and bespoke service to all areas of the property bridging market.

The result is a good half year's performance and a sound basis for further progress.

Treasury

Following the increase in overall Group funding facilities in the first quarter to £180m, current borrowings levels of £116m (up from £110m in the period) give substantial headroom for growth.

Commenting on S&U's trading outlook, Anthony Coombs, S&U chairman, said:

"As Britain gradually emerges from the effects of Covid, S&U is demonstrating by its debt quality, collections performance, customer service and product improvements, the inherent strength and potential future profitability of the Group. The challenge now is to grasp these opportunities for new growth. I am confident that we will do so."