S&U : Trading Statement

10 December 2019

S&U plc

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

TRADING STATEMENT

S&U plc, the specialist motor finance and bridging lender, announces its trading update for the period from the 1 August to 9 December 2019. Trading remains in line with our expectations, despite generally weaker consumer sentiment and a slowing economy. S&U continues to maintain its historical resilience and confidence in future performance.

Motor Finance

The used car finance market in which Advantage Finance ('Advantage'), S&U's motor finance subsidiary, operates is proving robust. The Finance and Leasing Association reports the volume of used car finance agreements in the 12 months to September 2019 was up 2% year on year.

New business at Advantage has benefitted from planned additional investment in cost of sales since the start of this financial year. Advantage new deal advances are up 11% at over £127m to date this year. Advantage now has a record 63,500 customers (31 July 19: 62,000), and over £280m of net receivables (31 July 19: £273.8m).

In addition to the rise in new business, there has been a gradual increase in book quality. Rolling 12-month risk adjusted yield is now around 25.2% of average monthly receivables (July 19: 24.9%). This recent improvement in risk adjusted yield in the period was slightly lower than anticipated due to some additional impairment charges from legacy quality issues and lower used car auction values for our recovered vehicles this year. Overall year to date monthly collections are up 7% on last year on 5% higher receivables.

Advantage's success has always been underpinned by our investment in analytics and information technology. In addition to the continuous refinement of our underwriting, which has helped improve new loan quality, this period has seen closer integration of CRM systems with our broker partners as well as significant enhancements to Advantage's website.

Finally, we are delighted to welcome Graham Wheeler as our new Chief Executive at Advantage. He takes over from the distinguished founding Managing Director, Guy Thompson, who as part of his planned transition to retirement, will be happily available for advice and encouragement in the months ahead.

We therefore remain confident that, despite the somewhat downbeat prognosis for British consumer spending, Advantage will be able to continue the profitable growth which has been its hallmark for over 20 years.

Property bridging finance

Aspen Bridging, our property lending business, is not immune from the prevailing uncertainty and low level of activity it produces in the residential property market. Some borrower exits are still slower than anticipated, due mainly to these subdued property market conditions. Nevertheless, sensible profitable growth continues as the loan book of net receivables now reaches £28 million, against £18m a year ago.

Funding

S&U's conservative treasury policy and medium-term bank facilities of £160m leave significant headroom above current borrowing of £132m for anticipated growth.

Commenting on the Group's performance and outlook, Anthony Coombs, S&U Chairman, said:

'Political vacillation in the UK and slowing economic growth have inevitably been reflected in the motor and property markets in which S&U operates. The country now faces an almost existential choice at the General Election. Whatever the outcome of the current political situation, we expect S&U to continue to exhibit its customary resilience, stability and sensible ambition to the benefit of our shareholders.'

For further information, please contact:

S&U

Anthony Coombs, Chairman 0121 705 7777

Newgate Communications

Bob Huxford, Megan Kovach, Tom Carnegie 020 7653 9848

Peel Hunt

Adrian Trimmings, Andrew Buchanan, Rishi Shah 020 7418 8900