S&u Plc · LSE:SUS
S&u — H1 2022 Earnings Presentation
33 slides from S&u's earnings presentation, September 2022
Slide 1: Our Half Year Results to 31 July 2022
Our Half Year Results to 31 July 2022 September 2022
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 “Current trading in both of S&U’s businesses is very encouraging, We are of course aware that we live in troubled times. Current economic and political conditions pose potential challenges to overcome, but also opportunities to grasp. As Franklin D. Roosevelt declared at
Slide 4: Highlights for the six months to 31 July 2022
www.suplc.co.uk Highlights for the six months to 31 July 2022 S&U ⚫ Group Profit before tax £20.9m (H1 2021 : £19.9m) ⚫ Earnings per share 140.7p (H1 2021: 133.1p) ⚫ Net Group Receivables: £370.1m (31 July 2021: £306.4m) ⚫ S&U proposes a first interim dividend for 2022/23 of 35p (H1 2021/22: 33p) ⚫
Slide 5: S&U Five Year Record
www.suplc.co.uk S&U Five Year Record Our five year record Year to Year to Year to Year to Year to 6 months to £m Jan 18 Jan 19 Jan 20 Jan 21 Jan 22 July 22 Revenue 79.7 83.0 89.9 83.8 87.9 49.4 Cost of Sales -17.3 -15.7 -19.9 -14.3 -18.8 -11.4 Impairment -19.5 -17.0 -17.2 -36.7 -4.1 -6.5 Admin Expen
Slide 6: Group Financials: Income Statement
www.suplc.co.uk Group Financials Our Income Statement – Half Year to July 2022 • Revenue continued to increase in H1 as motor and Group Income Statement £m July 22 July 21 Change % bridging receivables grew Revenue 49.4 42.8 +15% • Lower than normal half year Advantage impairment Impairment -6.5 -5.
Slide 7: Group Balance Sheet – July 2022
www.suplc.co.uk Group Financials Group Balance Sheet – 31 July 2022 £m July 22 July 21 Change % Comment Fixed Assets and Right of Use Assets 2.4 2.6 No major expenditure in H1 Amounts Receivable Motor Finance 279.9 248.8 +13% Good advances in H1 2022 Amounts Receivable Property Bridging 90.2 57.7 +5
Slide 8: Cash Flow – Half Year to July 2022
www.suplc.co.uk Group Financials Cash Flow – Half Year to 31 July 2022 Group Cash Flow Motor Finance Cash Flow Property Bridging Cash Flow ⚫ £40.8m cash outflow reflecting strong book debt ⚫ Advances 33% up on Covid affected H1 2021 and ⚫ Similar advances to H1 2021 which was helped by growth and in
Slide 9: Treasury and funding
www.suplc.co.uk Group Financials Treasury and funding ⚫ Additional £30m revolving credit facilities added post H1 2022 resulting in total committed funding facilities of £210m. These comprise 2 x £25m term loan facilities maturing in 2028 and 2029, and £160m revolving credit facilities with maturiti
Slide 10: Advantage Finance Business Update
www.suplc.co.uk Advantage Finance Business Update
Slide 11: Advantage Current Situation
www.suplc.co.uk Advantage Current Situation Sales ⚫ Strong growing sales performance during H1 2022 ⚫ Sales performance at 105% of budget ⚫ Tier mix consistently well balanced between risk and reward Sales Volume and Mix 2500 2000 1500 1000 500 0 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb M
Slide 12: Sales and Marketing Update
www.suplc.co.uk Advantage Sales and Marketing Update Commercial Strategy Developments Phase One Phase Two Re-engineer our API to create multi- ✓ Delivered Integrate with HD Decisions black box ✓ In Progress channel offer ✓ Delivered Expand Aggregator website market ✓ In Progress Implement New Scorec
Slide 13: Live Cash Collections
www.suplc.co.uk Advantage Live Cash Collections Consistently strong live cash collections performance during H1 2022 Bad debts and VTs at 93.8% of H1 2021 performance Average loss per bad debt (£) at 80.9% of H1 2021 performance All delivering strong overall financial performance in H1 2022 Live Cas
Slide 14: Cost of Living Impacts
www.suplc.co.uk Advantage Cost of Living Impacts How Advantage is adapting to Cost of Living crisis Real wages fall by 1.0% in 3 months to Jan 2022 Household expenditure grew by 6.1% in 2021 Unemployment rate and earnings growth Consumer price index Advantage Actions: 10 12 months % change 6 Househo
Slide 15: Regulatory Update
www.suplc.co.uk Advantage Regulatory Update Three current FCA market concerns: Cost of Living crisis Commission Disclosure New Consumer Duty • Focus on responsible lending • FCA and FLA considering move towards • FCA release of Consumer Duty guidance in full open commission disclosure July, with a 1
Slide 16: Advantage – Our Quality Loan Book
www.suplc.co.uk Advantage – Our Quality Loan Book Year to Year to Year to Year to 6 months to Average Loan profile Jan 19 Jan 20 Jan 21 Jan 22 July 22 Number of loans 21,053 23,334 15,589 19,747 11,800 Advance £6,136 £6,385 £6,581 £7,138 £7,702 Cost of Sales £727 £824 £872 £874 £883 Interest rate fl
Slide 17: Advantage – First Repayment Quality
www.suplc.co.uk Advantage – First Repayment Quality ⚫ Strong historic correlation between early repayments and end outcomes with lower adverse impact of Covid-19 now forecast ⚫ Advantage concentrated more on lower risk tiers during pandemic but is now underwriting all risk tiers again 16
Slide 18: Advantage Receivables
www.suplc.co.uk Advantage Receivables Position at end July 2022 Position at end January 2022 Original Contract Arrears Percentage of Live Post payment holiday accts Non payment holiday accts Percentage of Live Volume of Accounts Volume of Accounts Receivable % of live receivable % of live receivable
Slide 19: Aspen Bridging
www.suplc.co.uk Aspen Bridging
Slide 20: Aspen Bridging
www.suplc.co.uk Aspen Bridging ⚫ Record PBT for half year: £2.0m against £1.5m last year underpinned by good quality on bigger book ⚫ Record year first half year for new loan facilities with 73, up from previous record of 66 set in H1 21 ⚫ Record net receivables of £90.2m, an increase of £26.3m in t
Slide 21: Aspen Bridging – Our Quality Loan Book
www.suplc.co.uk Aspen Bridging – Our Quality Loan Book 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* July 22 Number of new loans 35 62 57 80 111 73 Gross Advance £386k £377k £539k £543k £618k £873k Cost of Sales (% of gross advance) 2.3%
Slide 22: Our Future
www.suplc.co.uk Our Future Strong current trading and first half performance contrasts starkly with the pessimism surrounding the UK’s economic prospects. ⚫ Long-standing underwriting skills ⚫ Bridging book continues to grow from cautious base ⚫ Excellent collections reflect post Covid book quality
Slide 23: Appendices
www.suplc.co.uk Appendices 22
Slide 24: Advantage Finance: Our business
www.suplc.co.uk Advantage Finance 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 200,000 loans since business started in 1999 ⚫ Deals underwritten and collected centra
Slide 25: Advantage Finance: Credit and risk management
www.suplc.co.uk Advantage Finance Credit and risk management ⚫ Automated approve/decline decision from bespoke scorecard system returned within 10 seconds on 95% of all applications received – over 150,000 applications received each month ⚫ Well established compliance procedures supported by outside
Slide 26: Advantage Finance: Our loyal customers
www.suplc.co.uk Advantage Finance Our loyal customers CASE STUDY Miss J lives in Basingstoke and works full time as a recruitment consultant with a well known firm for the last two years. Miss J currently takes home £1796 each month and in July 2022 she started to look for finance to purchase her ne
Slide 27: Advantage Finance: Our loyal customers
www.suplc.co.uk Advantage Finance Our loyal customers CASE STUDY Mr V a single 40 year old lives in Bradford in his parent’s family home and has worked as a supervisor for a stair lift company for the last 7 years. He first took out finance with Advantage in September 2018 to purchase a Ford Fiesta
Slide 28: Advantage Finance: Our happy customers
www.suplc.co.uk Advantage Finance Our happy customers “Advantage Finance. I would recommend to everyone. They “Great experience, Communication from Ellie was fantastic. have been absolutely fantastic over the pandemic. All I can say Car dealership contacted Ellie Tuesday morning and by is Thank you
Slide 29: Aspen Bridging: Our business
www.suplc.co.uk Aspen Bridging Our business ⚫ Aspen started trading in February 2017 and provide a “fast, flexible, friendly and fair” service to customers with property bridging loan requirements ⚫ 442 secured property bridging loan facilities have been provided to customers to date with an average
Slide 30: Aspen Bridging Case study: Development Exit Loan
www.suplc.co.uk Aspen Bridging Case study Development Exit Loan, Berkshire - £1.5m The developer used a property consisting of eight newbuild apartments in Windsor, Berkshire. The project was substantially delayed during the Covid pandemic and , despite best efforts, remained behind schedule. The As
Slide 31: Aspen Bridging Case study: Auction Purchase Bridging Loan
www.suplc.co.uk Aspen Bridging Case study Essex – Auction Purchase Bridging Loan We recently completed a £480k bridging loan on a four bedroomed detached property. The client used the Flat Rate product at 0.84% per month over a 12 month term with a 70% gross loan to value. Head of Aspen Sales Ian Mi
Slide 32: Aspen Bridging: Our happy customers
www.suplc.co.uk Aspen Bridging Our happy customers “When I first discussed this deal with Ian Miller-Hawes and Jack Coombs there was an enthusiasm to understand the client and the structure and how they could assist with the purchase. We arranged “Aspen vastly exceeded expectations regarding speed,
Slide 33: 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