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Friday 09 February, 2018


Trading Statement

RNS Number : 3799E
09 February 2018

 9th February 2018


S&U plc

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




S&U plc, the motor finance and property bridging lender, today issues a trading update for the period from its trading statement of 7 December 2017 to the Group's year-end on 31 January 2018.


Group trading remains strong and in line with expectations; demand for Advantage's motor finance has seen a record 24,500 transactions in the year, defying recent reports of a slowing car market.  Aspen Bridging has lent over £10m and early repayments are in line with expectations.  S&U's final results will be announced on 27 March 2018.


Advantage Finance

Our record-breaking motor finance business continues to do precisely that.  Customer numbers have reached 54,000 against 43,000 a year ago and new transactions exceeded last year by 22% at 24,500, reflecting strong demand for our products.  We continue to further refine our underwriting, underpinning future debt quality and resulting in even tighter approval rates.


Whilst this has led to improvements in initial customer quality scores, Advantage's new industry leading Dealflo system, fully rolled out in the period, has led to a significant improvement in transaction-to-approval rates. We expect this in turn to lead to further growth in high quality business, margin improvement and a gradual reversal in the recent, and historically small, uptick in impairment-to-revenue.


Furthermore, early signs are that the recent fall in new car sales is likely to buttress used car values, whilst the economic advantages of diesel vehicles remain widely appreciated in Advantage's non-prime sector of the market.


Aspen Bridging

Aspen, our Solihull based, property bridging pilot continues to justify its launch last year.  Over £10m of loans have now been issued, many into the buoyant residential refurbishment market for starter family housing.  Costs have been controlled and lending margins and LTVs maintained to budget.  We have already seen a number of repayments come through and we are increasingly confident in the long-term viability and prospects for this business.



From 1 February 2018 and for our accounts for the forthcoming year ending 31 January 2019, IFRS9 "Financial Instruments" replaces IAS 39 for the way we value and measure our financial assets. In particular, IFRS9 requires the impairment of our customer receivables to be recognised through an expected loss model rather than IAS 39's emphasis on historical impairment triggers.  Good progress has been made on the new methodology and its effect on our accounting policies and receivable values. For illustration, the estimated impact of IFRS9 would have been a reduction of reported receivables by between 0.5% and 2.5% as at January 2017.  As this is an accounting adjustment, there is no impact on either the Group's cash flows or on the underlying profitability of its loans.



A healthy market and our confidence in lending quality has seen combined investment in Advantage and Aspen this year reach a record £53m.  As a result, Group borrowings are now at £105m and, although this rate of investment is expected to slow next year, we expect further funding facilities to be concluded shortly which will bring total committed facilities to £135m. This will provide sensible headroom for growth whilst maintaining gearing at S&U's historically conservative levels.



The Group's profit performance and prospects have led the Board to approve a second interim dividend this year of 32p per ordinary share (2016: 28p). This will be payable on 16 March 2018 to shareholders on the share register on 23 February 2018.  This means that our first two dividends this year, including the 28p per share paid in November, will total 60p against 52p a year ago, 43p in 2016 and 36p three years ago.  These measures are consistent with our aim of returning to twice covered dividends in the near future.


Commenting on the Group trading and outlook, Anthony Coombs, Chairman of S&U said:

"Whilst the political and economic uncertainties inherent in both the Brexit negotiations and a slowing economy remain, S&U continues to demonstrate its historic ability to produce excellent results and strong, sustainable growth. We are confident that will continue."


Our preliminary results for the year ended 31 January 2018 will be announced on 27 March 2018.

For further information, please contact:


S&U plc 

Anthony Coombs, Chairman                                                                                         0121 705 7777


Peel Hunt

Adrian Trimmings/Rishi Shah                                                                                        020 7418 8900


Media and Investor Relations - Smithfield

Ged Brumby                                                                                                                      020 3047 2527



This information is provided by RNS
The company news service from the London Stock Exchange

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