8th December 2016
("S&U"or "the Group")
· Group continues to trade in line with management expectations.
· Advantage Finance live customer numbers are up 34% on last year and now approach 42,000
· Monthly collections at record levels and now exceed £8m per month.
· Business well financed for next phase of growth
S&U plc, the motor finance and specialist lender, announces its trading update for the period from 1st August to the 7th December 2016.
Advantage Finance, our Grimsby based specialist car finance provider, has continued to grow to record levels of profitability and customer volume. Applications are at near record levels - testament both to a robust labour market and to increasingly close interaction with our broker introducers.
Live customer numbers are up 34% on last year and now approach 42,000. Net receivables at Advantage are now over £189m, and transaction numbers show a 16% increase on the comparative period last year.
Monthly collections are at record levels and now exceed £8m per month. Although the rolling 12 months impairment to revenue ratio has increased from 17.7% to 18.5% during the period, this is still in line both with the same ratio measured over the last 5 years of 19.1%, and with our own expectations.
Crucially for long term sustainable growth, Advantage continues to develop its industry leading underwriting systems, and also the speed and flexibility of its customer service systems with its broker partners. Following the introduction of the new FCA Licencing Regime, Advantage have recently been granted their full Consumer Credit Permission.
Having obtained a further £15m of bank facilities during the period, the Group now has facilities of £85m, sufficient for the growth anticipated at Advantage Finance over the next year, and for the launch in January of Aspen Finance, our pilot bridging finance business.
We anticipate concluding further loan facilities as our businesses require.
Aspen Bridging Finance
The current dearth of supply in the housing market and long term unmet residential demand, provide secure and profitable opportunities for property backed bridging lending. The UK bridging market grew from c.£2 billion in 2012 to £5billion now, and is forecast to reach nearly £10billion by 2020.
We continue to believe that this presents a very good opportunity for S&U plc to diversify its revenue streams and preparations for the launch of our previously announced and rigorous pilot, Aspen Bridging Finance are now well advanced.
Commenting on the Group's performance and outlook, Anthony Coombs, S&U Chairman, said:
"Despite widespread assumptions of "post Brexit gloom", consumer appetite for credit, partially reflecting a robust labour market, continues unabated. This apparent contradiction has been recently reflected, for both S&U and for others in the speciality finance sector, in what I view as an unjustified decoupling of S&U's performance and prospects and our stock market valuation.
"I am confident that our ambition and constant striving for the highest standards of service for our customers will be reflected in the growth, performance and value of the Group."
For further information, please contact:
S&U plc: www.suplc.co.uk
Anthony Coombs, Chairman 0121 705 7777
Financial Advisers, Sponsors and Brokers
Chris Hardie Arden Partners 0207 614 5929
Media and Investor Relations
Ged Brumby Smithfield 0207 360 4900
Notes to Editors
Founded in 1938 and floated on the London Stock Exchange in 1961, S&U plc is one of the UK's leading motor finance and specialist lending providers.
Since 1999, S&U plc's Advantage Finance business has grown to be one of the most progressive and innovative motor finance companies in the country and is a member of the Finance and Leasing Association. Advantage employs over 100 people and since 1999 has provided motor finance for over 100,000 customers across the UK, growing at the rate of 20,000 per year.
S&U disposed of its Loansathome4u home credit business in August 2015.