S&u Plc · LSE:SUS
S&u — H1 2023 Earnings Presentation
31 slides from S&u's earnings presentation, July 2023
Slide 1: Our Half Year Results to 31 July 2023
Our Half Year Results to 31 July 2023
Slide 2: Today's speakers
www.suplc.co.uk Today’s speakers Anthony Coombs Graham Coombs Chris Redford Graham Wheeler Ed Ahrens Chairman Deputy Chairman Group Finance Director CEO Advantage Finance CEO Aspen Bridging 1
Slide 3: Introduction
www.suplc.co.uk Introduction “S&U continues to trade well, and with a strong and experienced team is well placed to weather current economic uncertainty. With sensible economic management, the potential for the motor and property markets in which we operate remains significant. As always, we continu
Slide 4: Highlights for the six months to July 2023
www.suplc.co.uk Highlights for the six months to 31 July 2023 S&U Group Profit before tax (“PBT”) £21.4m (H1 2022: £20.9m) Earnings per share 133.2p (H1 2022: 140.7p) – affected by an increase in corporation tax rate this year Group net receivables £417.3m (31 July 2022: £370.1m) – more cautio
Slide 5: Group financials
www.suplc.co.uk Group financials Revenue increased in H1 mainly reflecting strong receivables growth in H2 last year Our Income Statement – 6 months to July 2023 Group Income Statement £m July 23 July 22 Change % Despite cost of living increases, impairment charge continues to be lower than usual, a
Slide 6: Group financials: Balance Sheet
www.suplc.co.uk Group financials Group Balance Sheet – 31 July 2023 £m July 23 July 22 Change % Comment Fixed Assets and Right of Use Assets 2.5 2.4 No major expenditure in H1 23 Amounts Receivable Motor Finance 313.0 279.9 +12% Steady book growth in H1 23 Amounts Receivable Property Bridging 104.3
Slide 7: Group financials: Cash Flow
www.suplc.co.uk Group financials Cash Flow – 6 months to 31 July 2023 Group Cash Flow Advantage Cash Flow Aspen Cash Flow £8.2m cash inflow reflecting lower receivables Advances 11% lower, driven by cautious underwriting Gross advances slightly lower in H1 23 driven by growth and including pay
Slide 8: Treasury and funding
www.suplc.co.uk Group financials Treasury and funding New 3-year club £230m revolving credit facility added in May 2023 repaying existing £160m bilateral revolving credit facilities Committed facilities now total £280m. These comprise 2 x £25m term loan facilities maturing in 2028 and 2029, and
Slide 9: Advantage Finance Business Update
www.suplc.co.uk Advantage Finance Business Update
Slide 10: New business and the market
www.suplc.co.uk New business and the market • Consistent volumes and Tier Mix in HY1, growing during Q2 • Culminating in 10,072 actual new deals v 10,394 budget, and advances £80.978m actual v £79.949m budget • Maintained stable tier mix and average customer score, with a focus on growth of mid-qual
Slide 11: Customer payment update
www.suplc.co.uk Customer payment update % of Due consistent against budget Strong Live Customer payment performance Bad debts cases under control against budget VT Cases substantially better than budget 10
Slide 12: Regulatory update
www.suplc.co.uk Regulatory update Significant Increase In Regulator Activity Successfully completed • Consumer Duty Changes Readiness Forbearance • Affordability Enquiry Collections Processes Market • Financial Resilience Reporting Review Study Work in progress • Collection process review • Forbeara
Slide 13: Projects delivered 2022/23
www.suplc.co.uk Projects delivered 2022/23 Digital I&Es Charges Holidays Website Rebrand Mar Oct May Designed, developed and launched Integrated Equifax’s Account Score Built new OA functionality for 2022 2022 Collections to provide customers with 2023 the new Advantage website and system with Open
Slide 14: Projects roadmap 2023/24
www.suplc.co.uk Projects roadmap 2023/24 E-Sign Affordability Scorecard 2024 Sep Q4 Q1 Developed and migrate our Improve loan affordability calculations, Develop and implement the new 2023 2023 2024 customer e-sign journey from whilst adding a dynamic method to Advantage Scorecard which drives Dealf
Slide 15: New customer portal in development
www.suplc.co.uk New customer portal in development 14
Slide 16: Our quality loan book
www.suplc.co.uk Our quality loan book Average Loan profile Year to Year to Year to Year to 6 months to Jan 20 Jan 21 Jan 22 Jan 23 July 23 Number of loans 23,334 15,589 19,747 23,922 10,072 Advance £6,385 £6,581 £7,138 £7,799 £8,040 Cost of Sales £824 £872 £874 £907 £967 Interest rate flat per annum
Slide 17: First repayment quality
www.suplc.co.uk First repayment quality Strong historic correlation between early repayments and end outcome Advantage concentrated more on lower risk tiers during pandemic 16
Slide 18: Receivables
www.suplc.co.uk Receivables Position at end July 2023 Position at end January 2023 Original Contract Arrears Volume of Accounts Percentage of Live Receivable Volume of Accounts Percentage of Live Receivable Up to Date 48184 78.60% 46864 76.22% 0.01 – 1 monthly payments 5093 8.10% 5356 8.65% 1.01 – 2
Slide 19: Aspen Bridging
www.suplc.co.uk Aspen Bridging
Slide 20: Summary of the half year
www.suplc.co.uk Summary of the half year Record PBT for half year: £2.4m against £2.0m Net receivables of £104.3m: is a £9.6m in H1 22 underpinned by good quality on reduction since January 2023 reflecting bigger book tightened lending criteria and higher repayments from good quality book – lend
Slide 21: Our quality loan book
www.suplc.co.uk Our quality loan book Year to Year to Year to Year to Year to Year to 6 Months to Average Loan profile Jan 18 Jan 19 Jan 20 Jan 21 Jan 22* Jan 23 Jul 23 Number of new loans 35 62 57 80 111 148 65 Gross Advance £386k £377k £539k £543k £618k £905k £875k Cost of Sales (% of gross advanc
Slide 22: Focus for 2023/24
www.suplc.co.uk Focus for 2023/24 Quality: Maintaining focus on both the credit quality IT systems: Continuing our development programme of borrowers and the success of the property project of efficiency - simplifying processes and eliminating types with our improved analytics developed over man
Slide 23: Our future
www.suplc.co.uk Our future Both of S&U’s businesses continue to trade well in a fluctuating economic environment. Caution and sensible growth are our watchwords Migration of near prime customers into our sector provides a sensible opportunity New marketing and brand image to underpin growth Co
Slide 24: Appendices
www.suplc.co.uk Appendices 23
Slide 25: Our business
www.suplc.co.uk Our business Used car finance on hire purchase – 90% sourced through brokers – 5% refinances for previous customers – 5% direct from dealers Advantage have now transacted over 240,000 loans since business started in 1999 Deals underwritten and collected centrally – direct debit
Slide 26: Our loyal customers
www.suplc.co.uk Our loyal customers CASE STUDY Miss H, has been working in the Care industry for the last 8 years and is an existing customer of Advantage, and she approached us when she wanted to upgrade her car. Miss H had been with Advantage since June 2020 and paid her agreement without fault. H
Slide 27: Our loyal customers
www.suplc.co.uk Our loyal customers CASE STUDY Mr Y, is a 50-year-old HGV Driver and has worked for the same firm for 7 years. Mr Y was an existing customer of Advantage, he was paying his instalments on time but had decided to part exchange his motorcycle for an upgrade. He was settling off the rem
Slide 28: Our business
www.suplc.co.uk Our business Aspen started trading in February 2017 and provides a “fast, flexible, friendly and fair” service to customers with a bespoke property bridging loan 582 secured property bridging loan facilities have been provided to customers to date with an average gross loan facil
Slide 29: Case study
www.suplc.co.uk Case study Development Exit – South London The client had recently finished their development and the properties had just been put on the market. They required an exit on their current development finance loan so came to Aspen for a quick decision and we assisted in providing them a
Slide 30: Our five year annual record
www.suplc.co.uk Our five year annual record Two Pandemic Years Year to Year to Year to Year to Year to £m Jan 19 Jan 20 Jan 21 Jan 22 Jan 23 Revenue 83.0 89.9 83.8 87.9 102.7 Cost of Sales -15.7 -19.9 -14.3 -18.8 -23.7 Impairment -17.0 -17.2 -36.7 -4.1 -13.9 Admin Expenses -11.2 -12.8 -11.1 -14.2 -1
Slide 31: Disclaimer
www.suplc.co.uk Disclaimer This document and its contents do not constitute or form part of a prospectus or any offer or invitation to sell or to issue, or any solicitation of any offer to buy or subscribe for any ordinary shares in the Company nor shall it or any part of it or the fact of its distr