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6 February 2019
("S&U" or "the Group")
TRADING STATEMENT AND NOTICE OF RESULTS
S&U plc, the specialist motor finance and property bridging lender, today issues a trading update for the period from its trading statement of 7 December 2018 to the Group's year end on 31 January 2019.
Trading remains satisfactory and full year results are in line with consensus expectations, despite current political and consumer uncertainties.
S&U's final results will be announced on the 26 March 2019.
Advantage Finance, our motor finance subsidiary continues to produce record profits despite greater competitive conditions and the seasonal slowdown in the motor finance market being more pronounced than usual this year. The number of new Advantage finance agreements for the financial year are still at their second highest ever level and applications for motor finance remain strong. Debt quality is consistent with, and beginning to respond to, the underwriting changes made earlier in the year and monthly collections in January exceeded £12m for the first time. Following the slower recent transaction levels, net motor finance receivables at year end were c.4% up on last year whilst total "live" accounts are up 9% on last year at just over 59,000.
Used car values and volumes, including those of modern diesel vehicles, continue to outperform the new market both in the franchise dealer and independent retailer sectors. This, coupled with further investment in Advantage products and distribution systems, should provide a firm base of demand for renewed growth in transactions for Advantage in the coming year.
Aspen, our new Solihull based property bridging operation, continues to make good progress. Aspen bridging loan net receivables currently stand at just over £18.0m against £11.2m last year, and the current flow of illustrations is very encouraging. Equally as important, an updated suite of products and resulting payment profile have seen new agreement gross margins slightly higher than budget, without any impact on LTVs. Aspen's repayment record is also creditable with 43 repayments so far from the 97 loan facilities underwritten to date.
As a result, Aspen is expected to make a useful contribution to Group profits this year and justify the investment planned for it.
The pause in the previously rapid rate of growth at Advantage combined with budgeted expansion at Aspen has seen Group borrowing reduce from £118m to £108m during this period, compared to £105m last year. S&U's current facilities of £135m provide sensible headroom for expected growth and additional facilities will be put in place as required.
The Group's consistent profit record and a prudent view of the future have led the Board to approve a second interim dividend this year of 35p per ordinary share (2017:32p). This will be payable on the 15 March 2019 to shareholders on the share register on 22 February 2019. Including the 32p per share paid in November, our first two dividends of the year will therefore total 67p against 60p last year and 36p four years ago. This steady and sustainable approach to rewarding shareholders is underpinned by an anticipated return to twice dividend cover for the full year.
Commenting on the Group's performance and outlook, Anthony Coombs, S&U Chairman, said:
"Over the past 25 years, S&U has consistently demonstrated its ability to adapt to the kinds of economic and political uncertainty we all currently face. I am therefore confident that this sound experience, our strong financial base and the skills of those who work for us will serve to underpin the Group's success in the future."
For further information, please contact:
Anthony Coombs, Chairman 0121 705 7777
Bob Huxford, Imogen Humphreys, Tom Carnegie 020 7653 9848
Adrian Trimmings, Andrew Buchanan, Rishi Shah 020 7418 8900
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