Last close As at 05/08/2026
GBP19.60
▲ 20.00 (1.03%)
Market capitalisation
GBP239m
Research: Financials
S&U’s year-end trading update confirmed that trading for both Advantage motor finance and Aspen property bridging has remained excellent since its last update in December. Full-year results, due on 28 March, are expected to meet expectations and be above budget. The economic background and tightened lending criteria are likely to have an impact in FY24, but there is still scope for more measured, responsible growth in S&U’s areas of specialist lending expertise.
Written by
S&U |
FY23 results set to meet expectations |
Q423 update |
Financial services |
10 February 2023 |
Share price performance
Business description
Next events
Analysts
S&U is a research client of Edison Investment Research Limited |
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S&U’s year-end trading update confirmed that trading for both Advantage motor finance and Aspen property bridging has remained excellent since its last update in December. Full-year results, due on 28 March, are expected to meet expectations and be above budget. The economic background and tightened lending criteria are likely to have an impact in FY24, but there is still scope for more measured, responsible growth in S&U’s areas of specialist lending expertise.
Year end |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
01/21 |
83.8 |
18.1 |
120.7 |
90.0 |
17.4 |
4.3 |
01/22 |
87.9 |
47.0 |
312.7 |
126.0 |
6.7 |
6.0 |
01/23e |
102.6 |
41.2 |
276.2 |
132.0 |
7.6 |
6.3 |
01/24e |
121.0 |
42.5 |
265.6 |
133.0 |
7.9 |
6.3 |
Note: *PBT and EPS are reported. EPS are diluted.
Strong end to FY23 and credit quality remains good
Year-end group net receivables were c £420m, up 13% from H123 and a 30% increase over the year. At Advantage, transactions reached nearly 24,000, with volume unaffected by the normal seasonal slowdown in December. Tighter credit criteria and a shift to nearer prime customers have resulted in a higher average loan value (+9% to £7,800), longer average loan term and marginally lower average interest rate. Collections remain strong and above budget (94% of due), while bad debts and voluntary terminations are below budget. Aspen has continued to make progress, but S&U notes a slowing in the housing market, which has prompted increases in Aspen interest rates and loan to value requirements. Repayment quality is good and out of 141 bridging loans there is only one in repossession and four that are more than 60 days overdue.
Dividend, funding and outlook
The second interim dividend is set at 38p (versus 36p). Year net-debt reached £192m (£180m in December) and gearing c 86%. S&U expects to add to its loan facilities of £210m in H124 to allow for further growth, with gearing set to remain within a range the board is comfortable with. Looking ahead, S&U acknowledges the likely low levels of consumer confidence and spending this year in the UK, but still sees good opportunities for responsible lending against this background. Our forecasts are unchanged at this point and already factor in more modest loan growth, increased interest costs and further normalisation of loan loss provisioning for FY24.
Valuation
The shares trade on prospective P/E multiples of 7.6x and 7.9x for FY23 and FY24 respectively, with FY24 earnings reflecting the increase in the corporation tax rate to 25%. The yield is 6%. An ROE/COE model suggests the current share price is consistent with a return on equity (ROE) of 11.6%, which compares with the FY18–22 average of 15.8%, suggesting that the price makes a significant allowance for the uncertain macroeconomic background.
Background indicators
In this section we update the charts we use to provide background indicators for Advantage and Aspen.
Since February 2022 the Treasury-collected compilation of GDP forecasts for 2023 have followed a downward trend (Exhibit 1), but the readings in the last three months have been essentially stable, with the expectation of a shallow recession (GDP down c 0.8%). Average annual inflation (CPI) expectations rose from 2.3% to 5.0%, but, again, have stabilised at this level. Medium-term forecasts published previously pointed to inflation moderating to below 3% by 2025. The forecast for annual average unemployment has risen modestly to 4.5%, underlining the relatively benign expected impact of the contraction this year.
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Exhibit 1: Independent economic forecasts for the UK in 2023 |
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Source: HM Treasury |
Exhibit 2 shows how consumer confidence has fluctuated since 2019. Confidence recovered strongly following the onset of the pandemic, before falling sharply again through a combination of the arrival of the Omicron wave, growing concern over the cost of living and the war in Ukraine. Confidence was sapped further in the second half of 2022 as inflation hit harder and interest rates rose. Although above its recent low point, the confidence reading remains low and pressures on consumers, including Advantage customers, remain elevated. S&U has previously noted in mitigation that wages are likely to adjust and that its customers tend to depend on their vehicles for transport to work. Advantage continues to make allowance for the rise in inflation within its affordability calculations and to fine-tune its credit criteria.
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Exhibit 2: GfK UK consumer confidence indicator |
Exhibit 3: UK redundancies and unemployment |
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Source: Refinitiv (last value January 2023) |
Source: ONS (last value November 2022) |
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Exhibit 2: GfK UK consumer confidence indicator |
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Source: Refinitiv (last value January 2023) |
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Exhibit 3: UK redundancies and unemployment |
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Source: ONS (last value November 2022) |
In Exhibit 3 we can see that, after an increase in 2020, the unemployment rate moved below prior levels and remains at a relatively low rate. The level of redundancies, a more immediate measure, saw a very sharp spike as the pandemic took hold, but then fell rapidly and, although there have been increases in the last six-monthly readings, it is still only just approaching pre-pandemic levels.
Next, we look at data on used car transactions and used car finance. Exhibit 4 compares the monthly sales pattern in the four years from 2019–22. This highlights the sharp drop in used car transactions in April 2020, but volume recovered very well following the initial lockdown. From April 2021, activity was close to pre-pandemic levels, as represented here by the 2019 monthly figures, although supply limitations resulting from constraints on new car production tempered volumes. This remained a feature in 2022 and the monthly rate of transactions stayed below the 2019 levels. Exhibit 5 shows a similar pattern in used car finance, with seasonal dips evident in addition to lockdown impacts. There were year-on-year increases in the value of loans in each month in 2022 until November, which saw a 6% decline.
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Exhibit 4: Monthly used car transactions 2019–22 |
Exhibit 5: Used car finance through dealerships |
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Source: SMMT (last value September 2022) |
Source: Finance and Leasing Association (last value Nov 2022) |
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Exhibit 4: Monthly used car transactions 2019–22 |
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Source: SMMT (last value September 2022) |
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Exhibit 5: Used car finance through dealerships |
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Source: Finance and Leasing Association (last value Nov 2022) |
Used car prices (see Exhibit 6) experienced a very sharp increase from mid-2021, with strong consumer demand and reduced supply pushing prices up. From February 2022, the index showed small month-on-month decreases (see Exhibit 7), suggesting a slight softening of demand and/or easing of supply constraints. However, this is not clear from the fluctuations seen in more recent months and prices remain at a historically high level. At the margin, an eventual fall in auction prices, prompted by reduced demand or greater supply, would be a negative for Advantage, but its exposure here through repossessed car sales is moderated by the relatively low value of the vehicles it finances.
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Exhibit 6: Second-hand car price index |
Exhibit 7: Monthly change in second-hand car prices |
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Source: ONS CPI Index (last value December 2022) |
Source: ONS CPI Index. Note: Month-on-month % change. |
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Exhibit 6: Second-hand car price index |
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Source: ONS CPI Index (last value December 2022) |
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Exhibit 7: Monthly change in second-hand car prices |
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Source: ONS CPI Index. Note: Month-on-month % change. |
Turning to the background for Aspen Bridging, Exhibit 8 shows the number of UK non-residential and residential transactions, with residential being most relevant for Aspen. Both saw sustained improvement following the initial lockdown in 2020, with residential data fluctuating sharply as buyers sought to take advantage of the temporary increase in the stamp duty land tax nil rate band. This is also evident in the number of mortgage approvals (Exhibit 9). The transaction data does not yet capture a slowdown, but mortgage approvals have slowed sharply. Aspen itself expects higher interest rates and more restricted transaction activity to continue during 2023. This has prompted it to increase its own rates and tighten loan to value criteria. On a longer view, S&U continues to see an imbalance between supply and demand for good-quality homes as a favourable backdrop for its customers who are refurbishing and developing properties. As a small business, Aspen offers a bespoke service and has scope for measured expansion now that it is more established in the market.
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Exhibit 8: UK property transactions |
Exhibit 9: Monthly number of mortgage approvals |
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Source: HM Revenue & Customs. Note: Seasonally adjusted, to December 2022. |
Source: Bank of England. Note: Seasonally adjusted, to December 2022. |
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Exhibit 8: UK property transactions |
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Source: HM Revenue & Customs. Note: Seasonally adjusted, to December 2022. |
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Exhibit 9: Monthly number of mortgage approvals |
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Source: Bank of England. Note: Seasonally adjusted, to December 2022. |
Exhibit 10: Financial summary
£'000s |
2018 |
2019 |
2020 |
2021 |
2022 |
2023e |
2024e |
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Year end 31 January |
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PROFIT & LOSS |
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Revenue |
|
|
79,781 |
82,970 |
89,939 |
83,761 |
87,889 |
102,587 |
121,014 |
Impairments |
(19,596) |
(16,941) |
(17,220) |
(36,705) |
(4,120) |
(15,305) |
(21,697) |
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Other cost of sales |
(17,284) |
(15,751) |
(19,872) |
(14,264) |
(18,771) |
(22,904) |
(24,253) |
||
Administration expenses |
(9,629) |
(10,763) |
(12,413) |
(10,576) |
(13,679) |
(15,153) |
(16,942) |
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EBITDA |
|
|
33,272 |
39,515 |
40,434 |
22,216 |
51,319 |
49,224 |
58,122 |
Depreciation |
|
|
(294) |
(414) |
(450) |
(520) |
(529) |
(496) |
(458) |
Op. profit (incl. share-based payouts pre-except.) |
|
|
32,978 |
39,101 |
39,984 |
21,696 |
50,790 |
48,729 |
57,664 |
Exceptionals |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Non recurring items |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Investment revenues / finance expense |
(2,818) |
(4,541) |
(4,850) |
(3,568) |
(3,772) |
(7,515) |
(15,172) |
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Profit before tax |
|
|
30,160 |
34,560 |
35,134 |
18,128 |
47,018 |
41,214 |
42,492 |
Tax |
(5,746) |
(6,571) |
(6,252) |
(3,482) |
(9,036) |
(7,663) |
(10,233) |
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Profit after tax |
|
|
24,414 |
27,989 |
28,882 |
14,646 |
37,982 |
33,551 |
32,259 |
Average Number of Shares Outstanding (m) |
12.1 |
12.1 |
12.1 |
12.1 |
12.1 |
12.1 |
12.1 |
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Diluted EPS (p) |
|
|
202.4 |
232.0 |
239.4 |
120.7 |
312.7 |
276.2 |
265.6 |
EPS - basic (p) |
|
|
203.8 |
233.2 |
239.6 |
120.7 |
312.8 |
276.2 |
265.6 |
Dividend per share (p) |
105.0 |
118.0 |
120.0 |
90.0 |
126.0 |
132.0 |
133.0 |
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EBITDA margin (%) |
41.7% |
47.6% |
45.0% |
26.5% |
58.4% |
48.0% |
48.0% |
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Operating margin (before GW and except.) (%) |
41.3% |
47.1% |
44.5% |
25.9% |
57.8% |
47.5% |
47.7% |
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Return on equity |
16.7% |
17.6% |
16.8% |
8.1% |
19.6% |
15.6% |
13.9% |
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BALANCE SHEET |
|||||||||
Non-current assets |
|
|
181,015 |
185,383 |
197,806 |
173,413 |
184,189 |
223,424 |
240,668 |
Current assets |
|
|
84,178 |
95,430 |
108,275 |
111,426 |
143,040 |
194,569 |
209,209 |
Total assets |
|
|
265,193 |
280,813 |
306,081 |
284,839 |
327,229 |
417,993 |
449,877 |
Current liabilities |
|
|
(7,927) |
(6,722) |
(7,424) |
(5,309) |
(8,789) |
(6,745) |
(7,459) |
Non current liabilities inc pref |
(104,450) |
(108,724) |
(119,183) |
(98,501) |
(111,693) |
(186,521) |
(201,333) |
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Net assets |
|
|
152,816 |
165,367 |
179,474 |
181,029 |
206,747 |
224,728 |
241,085 |
NAV per share (p) |
1,276 |
1,375 |
1,493 |
1,490 |
1,704 |
1,852 |
1,987 |
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CASH FLOW |
|||||||||
Operating cash flow |
|
|
(43,418) |
10,530 |
4,946 |
32,940 |
(2,094) |
(55,546) |
681 |
Net cash from investing activities |
(1,040) |
(785) |
(265) |
(1,112) |
(284) |
(369) |
(310) |
||
Dividends paid |
(11,377) |
(13,080) |
(14,461) |
(13,098) |
(12,263) |
(15,556) |
(15,913) |
||
Other financing (excluding change in borrowing) |
12 |
14 |
14 |
2 |
1 |
2 |
0 |
||
Net cash flow |
|
|
(55,823) |
(3,321) |
(9,766) |
18,732 |
(14,640) |
(71,469) |
(15,542) |
Opening net (debt)/cash |
|
|
(49,167) |
(104,990) |
(108,311) |
(118,077) |
(99,345) |
(113,985) |
(185,454) |
Closing net (debt)/cash |
|
|
(104,990) |
(108,311) |
(118,077) |
(99,345) |
(113,985) |
(185,454) |
(200,996) |
Source: S&U accounts, Edison Investment Research. Note: EPS on a reported basis.
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Research: Healthcare
Immix Biopharma has announced interim response rate data from its newly formed subsidiary, Nexcella, concerning the BCMA-targeting cell therapy NXC-201 in multiple myeloma and AL amyloidosis. The data, presented at the 5th European CAR T-cell Meeting, shows a 90% overall response rate (ORR) in 29 patients (of 42 total enrolled) treated with NXC-201 at the recommended Phase II dose (RP2D). This result is comparable to approved BCMA-targeting cell therapies. Importantly, cytokine release syndrome was manageable, and no neurotoxicity was observed at the RP2D (800m cells). In our view, NXC-201’s potential main point of differentiation is its favorable safety profile, which we believe the latest data supports. Immix will continue to investigate NXC-201 as the first potential outpatient CAR T-cell therapy. This announcement follows the recent initiation of patient enrolment in a new Phase Ib/IIa clinical trial, investigating the use of Immix’s lead asset, IMX-110, in combination with tislelizumab (BeiGene/Novartis’s anti-PD-1 antibody) for the treatment of advanced solid tumors.