Company Announcements

9th December 2021

S&U plc

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

TRADING STATEMENT

S&U, the specialist motor finance and property bridging lender, today announces its trading update for the period from 1st August 2021 to 8th December 2021.  The Group continues its growth rebound and is trading strongly, as the economy tentatively returns to normal despite the continuing uncertainty over the course of the Covid pandemic.  Growth is accelerating in both businesses, despite a relative lack of used car supply and a quieter housing transaction market over the past quarter.  Credit quality has returned to pre-pandemic highs and remains under close scrutiny.  As a result, S&U has laid the trading and financial foundations for a return to its historical levels of significant, sustainable and profitable growth.

MOTOR FINANCE

Advantage Finance ("Advantage"), our motor finance subsidiary, is rebounding vigorously both in profitability and in new business transactions.  After the record basic live collections in the second quarter of £38.3m, Advantage collections improved further in the third quarter to £39.1m. This superb collections performance, along with continued associated lower than expected impairment provisions, are the main drivers of improved profitability so far this year.

New business transactions have also grown, increasing by over 30% in the period versus the same period last year.  This increase is despite a dearth of supply in the used car market this year, which, according to SMMT figures, has seen a fall in used car sales of 6.2% in the latest quarter and a market still 2% short of pre-pandemic sales levels.  In contrast, Advantage currently anticipates making increased net loan advances totalling over £140m in our financial year to 31st January 2022 (year to 31^st January 2021: £102.6m).

Collection rates are better than ever, as the result of our tightened underwriting over the Covid period and industry-leading customer relations, which are reflected in Advantage's Trust Pilot rating of 4.7 out of 5.  This means that customers are repaying at record levels.  Those who never took a Covid related payment "holiday" are at 97% of due, whilst even those who did are now back to nearly 94% of due.

Opportunities abound.  As Advantage gears up for further growth, work intensifies on customer service and underwriting refinements and a significant investment in digital marketing.  New automated payments, open banking and a self-service customer portal help make the customer's journey ever more simple and smooth.  Brand and website improvements, multi-channel API and new affinity partnerships are attracting more customers to make their finance journey with us.

As a result, with the foundations of over 22 years of excellent profits and operational efficiency, Advantage is positioned for the great opportunities a fast-changing motor finance market presents.

Aspen Bridging Finance

Less than five years after its founding, Aspen continues its development as a dynamic and substantial property bridging business.  Its receivables book has now reached over £60m, more than double last year, and transaction numbers to date are 38% up on a year ago.  Maintaining margins in a competitive market, alongside robust quality control has resulted in an excellent Aspen profit increase in the period versus the same period last year, building on the excellent Aspen profit increase in H1 21.

Reflecting and underpinning this growth, Aspen's current paid pipeline of deals has doubled over the period to a record level, and a new Bridge to Let product has been introduced.  Aspen's strong credit quality is reflected in continued low levels of default and most Aspen customers settling within or just beyond the normal term of the loan.

Aspen's market reputation and credible partnerships with its introducer brokers are demonstrated by the volume of business now being introduced, and by a significantly improved transaction to approval ratio.  This augurs well for the significant expansion planned over the next three years.

Funding

As usual, S&U's strong underwriting and collections record has produced current borrowings of £113m against £103m last year and £115m at 31^st July 2021.  We have appropriate and ample headroom within our banking facilities for the accelerated growth we anticipate next year.

Outlook

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

"S&U is in very fine form.  Credit for this goes to our great people who have not only maintained an excellent service to customers, whatever the personal depredations or uncertainties of Covid, but are also continuously monitoring, planning and adapting within rapidly evolving finance markets.  Much of this effort focusses on marketing and product development to attract new customers to enjoy our traditional offer of finance with a human face.  That makes for an exciting and profitable future."

For further information, please contact:

S&U                                                                                                                      

Anthony Coombs, Chairman                                                                                   0121 705 7777

Newgate Communications

Bob Huxford, Megan Kovach, Tom Carnegie                                                        020 7653 9848

Peel Hunt

Adrian Trimmings, Andrew Buchanan, Rishi Shah                                               020 7418 8900