S&U’s Advantage motor finance business lends on a simple HP basis to lower- and middle-income groups that may have impaired credit records restricting access to mainstream products. It has c 65,000 customers. The Aspen property bridging business has been developing since its launch in 2017.
Finance applications at Advantage remain robust, but loan advances in the period were 7% lower than last year as management exercises caution in its lending approach. Advantage announced that its relationship with the FCA, regarding its industry-wide review into customer forbearance and affordability, has deepened. It has since made preventative changes to its collection and repossession processes. Positively, the FCA has approved the appointment of Karl Werner as CEO of Advantage, succeeding Graham Wheeler.
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Outlook
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Anthony Coombs
Executive Chairman of the Board
Chris Redford
FD
Forecast net cash (£m)
268.5
Forecast gearing ratio (%)
N/A
% | 1M | 3M | 12M |
---|---|---|---|
Actual | 3.2 | (7.4) | (20.7) |
Relative | 1.3 | (12.8) | (23.1) |
52 week high/low | 2570.0p/1800.0p |
S&U reported FY24 PBT of £33.6m, down from £41.4m in FY23 on higher funding and regulatory costs and higher impairments in Advantage in H2. PBT was 2% ahead of our forecast as stronger revenues – up 12% to £115.4m – and better costs offset higher-than-expected impairments. Net receivables grew to a record at both Advantage and Aspen and management noted particular strength in Q4 and a good trading environment in the current year. Having absorbed a significant rise in funding cost as well as additional regulatory cost, the company looks well positioned to deliver steady growth from here on, especially if interest rates fall in the latter half of 2024.
Y/E Jan | Revenue (£m) | EBITDA (£m) | PBT (£m) | EPS (fd) (p) | P/E (x) | P/CF (x) |
---|---|---|---|---|---|---|
2023A | 102.7 | 49.4 | 41.4 | 277.5 | 7.0 | N/A |
2024A | 115.4 | 49.2 | 33.6 | 209.3 | 9.2 | N/A |
2025E | 133.2 | 57.8 | 37.3 | 230.0 | 8.4 | N/A |
2026E | 145.7 | 65.7 | 42.6 | 263.0 | 7.4 | N/A |