S & U PLC - AGM Statement and Trading Update
("S&U" or "the Group")
AGM Statement and Trading Update
S&U, the motor finance and property bridging lender, issues a trading update for the period
In our Chairman's Statement of 8th April, the Group withdrew future market guidance due to the uncertainty regarding Covid-19's future impact.
The current economic recession brought about by the Covid-19 lockdown and the uncertain path out of it confirms our decision on future guidance, although we aim to update the market further in our trading update on 11th
What is clear, however, is that S&U has been able to protect the safety and morale of our employees and the operations which depend upon them. All are safe and have adapted very well to working from home, so that we are proudly amongst only a fifth of firms in the
Thus, at Advantage, our motor finance operation, sales initially fell to just 15% of normal levels as car dealers and broker introducers closed, deliveries ceased and car usage plummeted. In addition, Advantage sensibly restricted the categories of customer it was prepared to approve, restrictions which are likely to remain in place given the current uncertainties regarding employment and the labour market. Nevertheless, transactions have now steadily recovered to just over nearly 40% of normal. This improvement is expected gradually to continue as car sales outlets re-opened last week.
Similarly, collections have been affected by both lower consumer confidence and by the
Whilst these trends have yet to have their expected effect upon either bad debt or voluntary terminations, future collections and hence our provisioning for book debt impairment will largely be determined by the speed of economic recovery; in turn this will depend upon the extent of the labour market shake out after furlough measures come to an end. In the meantime, additional impairment provisions are being made which will inevitably have a significant effect on Advantage results this year.
Better sentiment has also seen regular collections beating budget, whilst a longer "tail" of late or defaulted cases has also recently shown a promising reduction. Nevertheless, we remain sensibly cautious in our new business approach.
The operational sustainability of our business continues to be reflected in our strong treasury position. As predicted, recent cash generation has seen group borrowings fall to
Commenting on S&U's trading outlook,
"Given the challenges surrounding the economy and the future direction of the labour market, it would be unwise to attempt specific predictions. S&U's conservative style of management, its strong treasury position and most of all the dedication and flexibility of our people and their relationship with our customers, will now pay dividends, both literally and figuratively. Despite the current uncertainties we face the future with our usual confidence and determination."
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Market Cap: £329.14 m
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