S&u Plc · LSE:SUS
S&u — FY2024 Earnings Presentation
35 slides from S&u's earnings presentation, April 2024
Slide 1: Resolute and Resilient: Our Full Year Results to 31 January 2024
Resolute and Resilient Our Full Year Results to 31 January 2024 April 2024
Slide 2: Today's speakers
www.suplc.co.uk Today’s speakers Anthony Coombs Graham Coombs Chris Redford Karl Werner Ed Ahrens Chairman Deputy Chairman Group Finance Director CEO Advantage Finance CEO Aspen Bridging 1
Slide 3: Our wonderful customers and staff
www.suplc.co.uk Our wonderful customers and staff Support is amazing - My car was illegally Advantage Finance have honestly been - Phoebe is fantastic - I have refinanced clamped whilst on finance and Jenny amazing throughout my whole experience, with Advantage Finance and had the contacted them on
Slide 4: Introduction
www.suplc.co.uk Introduction “Enthusiastic and supportive customers underpin S&U’s long success and guarantee its future. Current trends, both at Advantage and Aspen, prove that S&U has an abundance of these and trading since our year-end is encouraging. Of course, challenges remain. As Marcus Aurel
Slide 5: Highlights for the year to 31 January 2024
www.suplc.co.uk Highlights for the year to 31 January 2024 S&U ⚫ Revenue increased by 12% to £115.4m (2023: £102.7m) ⚫ Group Profit before tax (“PBT”) £33.6m (2023: £41.4m) - higher impairment and increased variable funding costs ⚫ Group impairment charge of £24.2m (2023: £13.9m) reflecting increase
Slide 6: Group financials
www.suplc.co.uk Group financials Our Income Statement – Full Year to January 2024 Revenue continued to increase in H2 as motor and bridging receivables grew Group Income Statement £m Jan 24 Jan 23 Change % Revenue 115.4 102.7 +12% Impairment charge higher than normal this Impairment -24.2 -13.9 +74%
Slide 7: Group financials: Balance Sheet
www.suplc.co.uk Group financials Group Balance Sheet – 31 January 2024 £m Jan 24 Jan 23 Change % Comment Fixed Assets and Right of Use Assets 2.3 2.6 No major expenditure Amounts Receivable Motor Finance 332.5 306.8 +8% Good advances in buoyant market Amounts Receivable Property Bridging 130.4 113.9
Slide 8: Group financials: Cash Flow
www.suplc.co.uk Group financials Cash Flow – Full Year to 31 January 2024 Group Cash Flow Advantage Cash Flow Aspen Cash Flow ⚫ £32.0m cash outflow reflecting book debt growth ⚫ Advance values reduced by 6% from record last year ⚫ Gross advances 8% up driven by good broker and including payment of £
Slide 9: Treasury and funding
www.suplc.co.uk Group financials Treasury and funding ⚫ Additional £70m revolving credit facilities added in May 2023 resulting in total committed funding facilities of £280m. These comprise 2 x £25m term loan facilities maturing in 2028 and 2029, and £230m revolving credit club loan facility with m
Slide 10: Advantage Finance Business Update
www.suplc.co.uk Advantage Finance Business Update
Slide 11: New business and the market
www.suplc.co.uk New business and the market • Strong final quarter for volumes and average advances • Moderate increase in credit risk appetite in 2023 whilst maintaining average customer score, a revised focus on higher quality customers in 2024 • Excellent customer service reflected in Trustpilot
Slide 12: Collections quality
www.suplc.co.uk Collections quality % of Due below expectations as AFL apply an abundance of caution during a Live cash collected below budget from H2 challenging environment Less Bad Debt accounts than expected illustrating our credit risk expertise VT cases substantially better than budget support
Slide 13: Regulatory update
www.suplc.co.uk Regulatory update Maintaining class leading complaints performance (last 6 months) Continuing Regulatory Focus Firm Name New Cases Uphold Rate Advantage Finance Ltd 366 15% Discretionary BIFD Market First Response Finance Ltd 172 20% Commissions * Study Specialist Motor Finance Ltd 1
Slide 14: Consumer Duty
www.suplc.co.uk Consumer Duty An opportunity to make our renowned service for customers even better ACTIVITY TIMELINE • Voice analytics records and documents every single call to customers AFL’s Implementation plan finalised, scrutinised and signed 31st October 2022 off by the Board • Introduction o
Slide 15: 2024 developments and opportunities
www.suplc.co.uk 2024 developments and opportunities • A year of consolidation and investment to grow capabilities • Leveraging Consumer Duty to enhance the customer experience and improve efficiencies • Refinement in Credit Risk and a revised approach in simplified and dynamic pricing capabilities t
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 Year to Jan 20 Jan 21 Jan 22 Jan 23 Jan 24 Number of loans 23,334 15,589 19,747 23,922 21,565 Advance £6,385 £6,581 £7,138 £7,799 £8,158 Cost of Sales £824 £872 £874 £907 £961 Interest rate flat per annum 17.7
Slide 17: First repayment quality
www.suplc.co.uk First repayment quality ⚫ Strong historic correlation between early repayments and end outcomes ⚫ Reduction in first payment success at start of pandemic and more recently for Christmas 2023 –now recovered 16
Slide 18: Repayments % of upfront investment
www.suplc.co.uk Repayments % of upfront investment 17
Slide 19: Receivables
www.suplc.co.uk Receivables Position at end January 2024 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 47622 74.00% 46864 76.22% 0.01 – 1 mthly payments 6032 9.46% 5356 8.65% 1.01 –
Slide 20: Aspen Bridging
www.suplc.co.uk Aspen Bridging
Slide 21: Summary of the year
www.suplc.co.uk Summary of the year ⚫ Record PBT for year: £4.8m against £4.5m last year ⚫ H2 trends showed positive progress with steady underpinned by continuing good quality on bigger growth in new loans and an improving housing book market ⚫ Record year for new loan facilities of 164 up from ⚫ B
Slide 22: Our quality loan book
www.suplc.co.uk Our quality loan book Year to Year to Year to Year to Year to Year to Year to Average Loan profile Jan 18 Jan 19 Jan 20 Jan 21 Jan 22* Jan 23 Jan 24 Number of new loans 35 62 57 80 111 148 164 Gross Advance £386k £377k £539k £543k £618k £905k £881k Cost of Sales (% of gross 2.3% 1.9%
Slide 23: Focus for 2024/25
www.suplc.co.uk Focus for 2024/25 ⚫ Quality: Maintaining focus on both the credit quality of ⚫ IT systems: Continuing to simplify processes and borrowers and the quality of the property projects we eliminating manual tasks through 30 key projects planned finance for the year ⚫ Experienced property d
Slide 24: Our future
www.suplc.co.uk Our future Opportunities abound to consolidate upon our long-established experience – cautiously optimistic for future prospects ⚫ Opportunities for profit growth increase as we invest in improved capabilities and competencies ⚫ Expansive distribution capabilities can be leveraged wi
Slide 25: Appendices
www.suplc.co.uk Appendices 24
Slide 26: 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 250,000 loans since business started in 1999 ⚫ Deals underwritten and collected centrally – direct debit
Slide 27: Our loyal customers
www.suplc.co.uk Our loyal customers CASE STUDY Mr H works as an HGV driver for a large logistics firm and is currently living with parents. This agreement was a replacement for the previous agreement Mr H had for a different vehicle. Mr H raised a complaint when he found the previous vehicle to be o
Slide 28: Our loyal customers
www.suplc.co.uk Our loyal customers CASE STUDY Mrs G is a home owner of 5 years currently working as an Advisory Teacher. The agreement is joint with her partner who is currently working as a driver and they have a confirmed joint income of £3221. Mrs G was an existing customer of Advantage Finance.
Slide 29: Our business
www.suplc.co.uk Our business ⚫ Aspen started trading in February 2017 and provide a “fast, flexible, friendly and fair” service to customers with property bridging loan requirements ⚫ 681 secured property bridging loan facilities have been provided to customers to date with an average gross loan fac
Slide 30: Case study
www.suplc.co.uk Case study 80% LTV, Dev-Exit, 72-hours, 20 days, Stepped, Returning Customer Aspen Bridging again evidenced their commitment to speed and service by completing on a Development Exit bridge at nearly 80% LTV for a client only 72 hours after offer acceptance. The developer, a returning
Slide 31: Case study
www.suplc.co.uk Case study Finish and Exit, 12 days Aspen Bridging beat a rival lender after the developer had become frustrated with the deluge of unreasonable questions and slow process experienced elsewhere. Aspen took a pragmatic approach by taking no search indemnity allowing them to move in to
Slide 32: Our five year record
www.suplc.co.uk Our five year record Two Pandemic Years Year to Year to Year to Year to Year to £m Jan 20 Jan 21 Jan 22 Jan 23 Jan 24 Revenue 89.9 83.8 87.9 102.7 115.4 Cost of Sales -19.9 -14.3 -18.8 -23.7 -22.8 Impairment -17.2 -36.7 -4.1 -13.9 -24.2 Admin Expenses -12.8 -11.1 -14.2 -16.2 -19.8 Fi
Slide 33: Our five year record
www.suplc.co.uk Our five year record 32
Slide 34: Historic returns and risk adjusted yield
www.suplc.co.uk Historic returns and risk adjusted yield 33
Slide 35: 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