In a statement released ahead of the company’s virtual annual general meeting, the company’s chairman, Anthony Coombs pledged that the company’s conservative style of management, its strong treasury position and its relationship with its customers “will now pay dividends, both literally and figuratively”.
He noted that the group's Advantage Finance car loan business was heavily affected by the coronavirus outbreak and subsequent lockdown in the UK, with sales initially falling to 15% of normal levels. Transactions have now recovered to slightly more than 40% of normal levels and given that car showrooms reopened for business last week, this improvement is expected to continue.
However, repayment collections have been affected by lower consumer confidence and measures put in place by the Financial Conduct Authority at the end of April that offered borrowers a repayment “holiday” of up to three months.
Monthly collections fell in May by about 20% year-on-year, while since February 1 – the start of the company’s fiscal year – collections are down by about 9% on last year. Applications for repayment “holidays”, which are responsible for virtually all of the year-on-year decline in collections, are now dwindling, S & U said.
The lender said these trends have yet to have their expected effect upon either bad debt or voluntary terminations but the company has taken the precaution of making additional impairment provisions that will “inevitably have a significant effect on Advantage results this year”.
The Aspen Bridging loan business has similarly been hit by the lockdown, which came just as confidence in the property market was growing following the decisive UK general election result late last year.
Transaction numbers in the current fiscal year have been under a quarter of those budgeted for but recent applications have been robust allowing a good quality pipeline to increase, the lender said.
S & U said its treasury position remains strong and, against the recent trend, it has decided to repay £25mln of borrowing facilities early. It is also “proudly amongst only a fifth of firms in the UK who have not relied upon Government support during the epidemic”.
“Despite the current uncertainties we face the future with our usual confidence and determination,” Coombs concluded in the statement.