S&U PLC (LSE:SUS), the specialist motor and property finance group, has reported signs of recovery at Advantage Finance and record growth at Aspen Bridging, painting a more optimistic outlook for the year ahead.
At Advantage Finance, which provides car finance, transaction volumes have started to pick up after a tough period, the company said in a trading update.
Restrictions imposed by a regulatory investigation into alleged mis-selling have now eased, and new deals rose to over 900 in January.
"Adversity can sometimes provide opportunity and a spur to greater efficiency and customer service," investors were told.
Advantage has embraced such a programme, which has already seen recent signs of improvement in both collection rates and new advance volumes."
Loan collections are also showing improvement, with recent figures reaching 87%, up from a cumulative 85%, S&U said in a statement covering its performance over the final seven weeks of its financial year.
Advantage has also launched a new MyAdvantage web app, aimed at enhancing customer communication and engagement.
While challenges remain, including outstanding non-paying customer cases, the company is working on digital improvements and stronger customer outreach to get operations back on track.
Meanwhile, Aspen Bridging, S&U’s property finance division, has delivered a record-breaking year.
Net receivables grew 17% to £152 million, while loan repayments and recoveries jumped 25%.
Transaction volumes were 16% higher than last year, with an average deal size exceeding £900,000. With demand for residential properties up 13% from a year ago and interest rates gradually easing, Aspen is well-positioned for another strong year ahead.
S&U’s overall borrowing has decreased, falling to £192 million, down from £206 million in December. This remains well within the company’s funding capacity of £280 million, ensuring room for future growth.
Despite challenges at Advantage, the company expects profitability to recover in the next financial year as transaction volumes and collections continue to strengthen. Aspen’s continued success further supports the group's outlook.
S&U also announced it would pay a 30p per share dividend down from 35p last year.
Chairman Anthony Coombs said: "Over the past year, macroeconomic and regulatory pressures on the business have severely tested S&U's historic experience, expertise and resilience.
"Despite these, we maintain our faith and confidence in the service we are proud to give to our loyal customers.
"I pay tribute to all who work at S&U to make this possible. As a more pro-growth national agenda develops and the regulatory frenzy eases, then this provides a solid base for a return to more normal levels of profitability, growth and returns for our shareholders."