S & U PLC, the specialist motor finance and property bridging lender, said profit for the year just ended should top current market expectations.
The company remains cautious about political and economic uncertainty and acknowledged the supply shortages that are affecting the used car market but management nevertheless expressed confidence that 2022 would see a gradual recovery to “normal motor sales conditions”.
In the group’s Advantage motor finance division, annualised live collection rates in the year to the end of January were 93% of due, which was ahead of internal budget projections and up 9% year-on-year.
The business ended the financial year with a storming performance in January, with a live collection rate of 98%.
Lower bad debts and voluntary terminations than anticipated mean S & U expects a much lower than normal impairment charge this year. This will see profit before tax more than double last year's £17.2mln when the Covid-related impairment charge was much higher than normal.
Looking back on close to two years of living with the pandemic, S & U noted that Advantage's profit over the past two years is anticipated to be only slightly below its “excellent pre-Covid level”.
Advantage made net loan advances totalling more than £140mln in fiscal 2022, up from £102.6mln the year before.
The group’s relatively new property bridging loan business, Aspen Bridging, is benefiting from a thriving UK property market and the growing expertise & experience of the division’s employees, S & U said.
Credit quality remains strong with continued low levels of default; most customers are settling within the normal term of the loan or just beyond it.
Aspen’s current net receivables loan book of around £64mln is the highest ever and its record profitability this year has greatly exceeded expectations, management revealed.
“We anticipate further record results in the year to come,” the company added.
The group’s own borrowing at the end of the financial year stood at £114mln, up from £99mln a year earlier and well below the group’s agreed debt ceiling of £180mln.
In view of the strong performance, the board has recommended the payment of a second interim dividend of 36p, up from 25p last year.
“Although exceptional factors have benefited the group's profitability this year, in the years to come the ongoing quality of our customer lending, the strength of our finances and our investment in the growth of our routes to market will underpin S&U's return to the levels and rates of profit growth experienced before the pandemic. I, therefore, remain very confident in our future prospects,” declared Anthony Coombs, the chairman of S & U.
Shares in S & U were up 4.9% at 2,850p in early deals.