Q2 2027 S&U PLC Earnings Call

September 29, 2026

Operator: guests will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. Before we begin, I would like to submit the following poll. I would now like to hand you over to Chairman Anthony Coombs. Good afternoon to you, sir.

Speaker #1: Sweet and listen only mode, questions are encouraged and they can be submitted. At any time using the Q&A tab situated on the right-hand corner of your screen.

Speaker #1: Simply type in your questions and press send. Before we begin, I would like to submit the following poll, and I would now like to hand you over to Chairman Anthony Koons.

Speaker #1: Good afternoon to you, sir.

Speaker #2: Good afternoon. Good afternoon, everybody. I'm seeing we very much welcome these opportunities to speak to investors, both retail investors and institutional. And I'm just going to go through the slides.

Anthony Coombs: Good afternoon. Good afternoon, everybody at IMC. We very much welcome these opportunities to speak to investors, both retail investors and institutions. I am just going to go through the slides. You can see that today's speakers, if you go back one there, Harry. We have got myself, my brother Graham, who is Deputy Chairman. We have got Chris Freckelton, who is the Group Finance Director on my left. We have got Karl Werner on my right, who is the Chief Executive of Advantage Finance. On my left, we have got Ed Ahrens, who is the Chief Executive of Aspen Bridging. If we can go on to the first page with the results. We talk about our wonderful customers and staff. We are very proud of that. Our customers are the lifeblood of our business, and we got 4.9 in our Trustpilot scores.

Speaker #2: You can see that today's speakers—if you go back one there, Harry—we've got myself, my brother Graham, who's Deputy Chairman, we've got Chris Brackenstone, who is the Group Finance Director, on my left, and we've got Carl Verma on my right, who is the Chief Executive of Advantage Finance.

Speaker #2: And on my left we've got Ed Aarons, who is the Chief Executive of Asset Bridging. We—if I can go on to the first page of the results—we talk about our wonderful customers and staff.

Speaker #2: We're very proud of that. Our customers are a bright blood of our business, and we've got 4.9 on our trust pilots scores. So what we say about our customers and those wonderful staff we serve them is not just—it's not just profit.

Anthony Coombs: What we say about our customers and those wonderful staff who serve them is not just PR. It is backed up by research that we get from Trustpilot. Okay, let us go on one more page. This H1, we produced some very good and solid results, with the emphasis really on future investment in our business, which is why we are making that further GBP 40 million worth of investment in the H1, another GBP 90 million on the previous year. We are sowing for the future. The way that our business works, it basically means that our profits come about six months to a year after the initial investment. As you will see, we indicate that we are going to grow as a result of the investment we put in, and we will have a look at that in a second. Okay, if we move on.

Speaker #2: It is backed up by research that we get from trust pilots. Okay, let's go on one more page. I mean, this year we've—this half year—we've produced some very good and solid results.

Speaker #2: With the emphasis really on future investment in our business, which is why we're making that further $40 billion worth of investment in the half year, another $90 million on the previous year.

Speaker #2: We're sowing for the future. And the way that our business works, it basically means that our profits come about 6 months to a year after the initial investment.

Speaker #2: And so, as you will see, we indicate that we're going to grow as a result of the investment we put in, and we'll have a look at that in a second.

Speaker #2: Okay, if we move on. And that investment basically is evidenced by our net group receivables, which we've increased by just over $100 million since last year, to $541 million over half a billion for the first time.

Anthony Coombs: That investment basically is evidenced by our net group receivables, which was increased by just over GBP 100 million since last year, to GBP 541 million, over half a billion for the first time. The quality is indicated by our improving impairment charge, which has hardly risen despite that additional investment. The borrowings in order to finance it have gone up to GBP 285 million, which is showing gearing of 114%, which we do not regard as being very high for a finance company. Just looking at those profits means that we can increase our dividend to shareholders, and we like to give dividend to shareholders because we, as executives of the group, are also shareholders, so we share an identity of interest.

Speaker #2: The quality is indicated by our group impairment charge, which is hardly risen despite that additional investment. And the borrowings, in order to finance it, have gone up to is showing gearing at $114%, which we don't regard as being very high for a finance company.

Speaker #2: Just looking at those profits, it means that we can increase our dividend shareholders, and we like to give dividend shareholders because we, as executives of the group, are also shareholders, so we share an identity of interest.

Speaker #2: And that's why—because we believe that the prospects of them are very strong—we've increased the dividend from $35 to $36p, and we anticipate that we'll be able to get that replicated with our two further dividends in the year, so that we can reach a significant increase on the $115p that we played last year.

Anthony Coombs: And that's why, because we believe that the prospects for the group are very strong, we have increased the dividend from 35p to 36p, and we anticipate that we will be able to get that replicated for our two further dividends in the year, so that we can reach a significant increase on the 115p that we paid last year. We will go into the more details about the profit of the individual companies, Advantage and Aspen, later on. But I would say that I think these are extremely good figures, and that if you take out an exceptional profit that we made last year at Aspen as a result of a repayment in the H1, we are about 70% up on group profit before tax this year.

Speaker #2: We'll go into the more details about the profit individual companies—Advantage and Asset—later on, but I would say that I think these are extremely good figures and that if you take out an exceptional profit that we made last year, at Aspen, as a result of a repayment in the half year, we're about 7% profit before tax this year.

Speaker #2: It's a bit better than the 15.6 to 15.7, which justifies the $36p ordinary dividend that we are proposing for the first payment of this year.

Anthony Coombs: It is a bit better than the 15.6 to 15.7, which justifies the 36p ordinary dividend that we are proposing for the first payment of this year. Okay, next one. I am going to hand over now to Chris Freckelton, who is our Group Finance Director, and he will take you through the group financials.

Speaker #2: Okay, so next slide. And I'm going to hand over now to Chris Brackenstone, who's our Group Finance Director, and he will take you through the group financials.

Speaker #3: Thanks, Anthony, and good afternoon, everyone. So starting with the income statement, our profit before tax for the period is 15.7 million, against 15.6 million last year, so a 1% increase.

Chris Freckelton: Thanks, Anthony, and good afternoon, everyone. Starting with the income statement, profit before tax for the period is GBP 15.7 million against GBP 15.6 million last year, so a 1% increase. As Anthony has mentioned, the Aspen profit before tax figure last year was boosted by a large unexpected recovery, and therefore, on a like-for-like basis, we have observed a 7% increase in PBT year on year. Delving down into some of the key movements in the profit and loss statement, revenue was up 11% period on period due to the higher average receivables and also some higher margin deals that we are writing in the H1 at Advantage following our rebalancing of the book to our more traditional customer base. The impairment charge was steady, as Anthony mentioned, at GBP 8.2 million, reflecting a couple of items.

Speaker #3: As Anthony has mentioned, the Aspen profit before tax figure last year was boosted by a large unexpected recovery. And therefore, on a like-for-like basis, we are—we have observed a 7% increase in PBT year on year.

Speaker #3: Delving down into some of the key movements in the profit and loss statement, revenue was up 11% period on period due to the higher average receivables and also some higher margin deals that we're writing in the first half in Advantage.

Speaker #3: Following our rebalancing of the book to our more traditional customer base, the impairment charge was steady as Anthony mentioned at 8.2 million pounds, reflecting a couple of items.

Speaker #3: Obviously, Advantage repayments continue to improve, so we were up at 92% of due versus 90% last year. And also, that was alongside lower write-offs than we'd assumed in our budget.

Chris Freckelton: Obviously, Advantage repayments continued to improve, so we were up at 92% of due versus 90% last year. That was alongside lower write-offs than we had assumed in our budget, and also improving the book quality at Aspen. The key metric we use to measure that is the number. The balance sheet date which has reduced year on year to being 17 out of 259 live loans. I guess that is all in the context of a significant increase in receivables that we will also see in the period. Just focusing on the costs. Costs of sales have increased 32%. That is predominantly following a return in higher Advantage volumes that relates to the broker commission paid on those deals. Admin costs were well controlled and, unsurprisingly, finance costs increased around about 30%, which was alongside the growth in borrowings. Moving on to the group balance sheet.

Speaker #3: And also improving the book quality at Aspen and a key metric we use to measure that is the number of loans that have past-term at the balance sheet date, which has reduced year on year to be 17 out of 259 live loans.

Speaker #3: And I guess that's all in the context of a significant increase in receivables that we've also seen in the period. Then just focusing on the costs.

Speaker #3: So cost of sales have increased 32%. That's predominantly following a return in higher Advantage volumes. That relates to the broker commission paid. On those deals, admin costs were well controlled, and unsurprisingly, finance costs increased around about 30%, which was alongside the growth of the borrowings.

Speaker #3: So then move on to the group balance sheet. So it's a relatively simple balance sheet focused on accounts receivable, borrowings, and equity. At Advantage, the net receivables have increased 22% to $341.1 million.

Chris Freckelton: So it is a relatively simple balance sheet focused on accounts receivable, borrowings, and equity. At Advantage, the net receivables have increased 22% to GBP 341.1 million, following strong lending and better repayments, meaning also lower provision requirements. At Aspen, net receivables have increased 35% following strong lending, but also to do with slower repayment patterns. So two factors for that, one of which operating in quite a challenging UK property market at the moment, and also we were expecting a slower repayment profile as we have moved to longer term products, as we have mentioned before. Then just focusing on borrowings, so they have increased in line with the growth of the loan books and with the GBP 4.6 million of overdrafts that we have in the middle of the slide, results in net borrowings of GBP 285.1 million at 5 August. Then moving on to the cash flow statement.

Speaker #3: Following strong lending and better repayments, meaning also lower provision requirements. At Aspen, net receivables have increased 35%, following strong lending but also to do with slower repayment patterns.

Speaker #3: So two factors for that, one of which operating in quite a challenging UK property market at the moment, and also we were expecting a slower repayment profile as we've moved to longer-term products as we've mentioned before.

Speaker #3: Then just focusing on borrowings. So they have increased in line with the growth of the loan books, and with the 4.6 million of overdrafts that we have in the middle of the slide, results in net borrowings of $285.1 million at the 5th of August.

Speaker #3: Then move on to the cash flow statements. This tries to sort of break down the movements in the balance sheet positions by division. Obviously, on a cash basis, overall, we've had an investment of $43.3 million in the group in terms of net borrowing since the year end.

Chris Freckelton: This tries to sort of break down the movements in the balance sheet positions by division, obviously on a cash basis. Overall, we have had an investment of GBP 43.3 million in the group in terms of net borrowings since the year end. As mentioned, that is reflecting strong advances in Advantage, which have increased 49% from GBP 70.6 million to GBP 105 million in the table in the middle on the slide. Similar lending in Aspen, we are at GBP 102.8 million versus GBP 106.4 million last year, offset by better collections performance in Advantage and also the slower repayment profile I mentioned in Aspen, alongside GBP 9.7 million of dividend payments made in the H1 as well. That has ultimately led, as Anthony mentioned, to group gearing increasing over the period, so it increased from 97% to 114% as at 5 August. Then just moving on to treasury and funding.

Speaker #3: And as mentioned, that's reflecting strong Advantage in Advantage, which has increased 49% from 70.6 million to 105 million. And the table in the middle on the slide.

Speaker #3: And similar lending in Aspen, we're at 102.8 versus 106.4 last year. Offset by better collections performance in Advantage and also the slower repayment profile I mentioned in Aspen.

Speaker #3: Alongside, 9.7 million of dividend payments made in the first half as well. That has ultimately led, as Anthony mentioned, to group gearing increasing over the period.

Speaker #3: So we've increased from 97% to 114% as of the 5th of August. And then just moving on to treasury and funding. So net borrowings of $285 million sit comfortably within our 330 million of committed facilities currently.

Chris Freckelton: Then just moving on to treasury and funding.

Chris Freckelton: Net borrowings of GBP 285 million sit comfortably within our GBP 330 million of committed facilities currently. Since the period end, Advantage has required additional funding to support growth, whereas Aspen has remained fairly neutral following a catch-up in those expected repayments. Obviously, we expect the growth observed during the period to continue alongside our mantra of strong, sustainable growth, and therefore, we are in the latter stages of our securitization project. So we have put an update here of essentially we have substantially concluded the legal process on two new three-year private warehouses, one for each of Advantage and Aspen, which alongside a small RCF facility would increase our funding capacity from GBP 337 million to GBP 650 million, giving us the room to grow the business as we want, whilst also having the added benefit of reducing the overall finance cost to the group.

Speaker #3: Since the period end, Advantage has required additional funding to support growth, whereas Aspen has remained fairly neutral following a catch-up in those expected repayments.

Speaker #3: Obviously, we expect the growth observed during the period to continue, alongside our mantra of strong sustainable growth. And therefore, we are in the latter stages of our securitization project.

Speaker #3: So we've put an update here of essentially we've substantially concluded the legal process on two new three-year private warehouses: one for each of Advantage and Aspen, which alongside a small RCF facility would increase our funding capacity from 337 million to 650 million giving us the room to grow the business as we want.

Speaker #3: Whilst also having the added benefit of reducing the overall finance cost to the group. We hope to sign and draw down on these facilities in October.

Chris Freckelton: We hope to sign and draw down on each facility in October. So I will now hand over to Karl to talk through Advantage.

Speaker #3: So I'll now hand over to Carl to talk through Advantage.

Speaker #4: Thanks, Chris. On the first slide, you'll see some awards there. There's really good to see these. Peer judged by senior managers across the industry.

Karl Werner: Thanks, Chris. On the first slide, you will see some awards there. It is really good to see these peer judged by senior managers across the industry. That means a lot, as does the recognition it gives to our entire team. We are highlighting there the best response to market conditions, which the category for that was meant to measure those that respond to difficult macros as well as all the regulatory change we have seen over the last couple of years. That is a real, gives the opportunity to give credit to our risk and our operations teams. The second one, best technology provider against 30 something other competing firms, many of the biggest names in our industry and financial services generally. That is a huge kudos to our collections and IT teams.

Speaker #4: So that means a lot as does the recognition it gives to our entire team. We're highlighting there the best response to market conditions, which the category for that was meant to measure those that respond to difficult macros as well as all the regulatory change we've seen over the last couple of years.

Speaker #4: So that's a real opportunity to give credit to our risk and our operations teams. The second one, best technology provider, against 30-something other competing firms, many of the biggest names in our industry.

Speaker #4: And financial services generally. So that's huge kudos to our collections and IT teams and then in the world of motor finance against all others to be named car finance provider of the year across the whole market was especially pleasing.

Karl Werner: In the world of motor finance against all others to be named Car Finance Provider of the Year across the whole market is especially pleasing.

Speaker #2: Could I just jump in there? Spur your blushes, but the one award that I extremely impressed about was for motor finance chief executive of the year.

Anthony Coombs: Could I just jump in there, Karl? Spare your blushes, but the one award that I was extremely impressed by was for Motor Finance Chief Executive of the Year, but it was not just motor finance, chief executive. That was won by Karl himself, so he is too modest to say that, but very well deserved. The brilliant job he is doing.

Speaker #2: That wasn't just motor finance, it was chief executive of the year. And that was won by Carl himself. So he's too modest to say that, but very well deserved for a brilliant job he's doing.

Speaker #4: Thank you. You've said that just as we rehearsed it, so.

Karl Werner: Thank you. You said that just as we rehearsed it. Perfection. If we turn to lending, thanks. We see a trend continue of sustainable, profitable growth. We illustrate for you the credit mix by risk, augmented by a huge upgrade in our credit risk capabilities and machinery in November of last year. We see month-on-month increase in lending in a difficult market from the macros, but we are into our 60-month strategy, executing it to plan to significantly grow our market share to a point to which it would represent a doubling of market share by the end of that five-year period, and we are halfway through year 1 of that plan. There is strong demand out there that we can grow into whilst maintaining rate and return, and we will do that.

Speaker #2: Perfect.

Speaker #4: If we turn to lending, thank you. We see a trend continuing a sustainable, profitable growth. We illustrate for you the credit mix by risk.

Speaker #4: Augmented by huge upgrade in our credit risk capabilities and machinery in November of last year. We see month-on-month increase in lending in a difficult market from the macros, but we are getting up to 10 months into our 60-month strategy, executing it to plan to significantly grow our market share to a point at which it would represent a doubling of market share by the end of that five-year period.

Speaker #4: And we're halfway through year one of that plan. There is strong demand out there that we can grow into whilst maintaining rate and return and we will do that.

Speaker #4: Our right to win is based not only on our longevity and the quality of our team back in Lincolnshire, but especially our innovative plan to expand our origination channels into other areas where motor finance is originated.

Karl Werner: Our right to win is based not only on our longevity and the quality of our team back in Lincolnshire, but especially our innovative plan to expand our origination channels into other areas where motor finance is originated. As you will see with the award from AI and other things I will mention on the tech front, a strong culture of innovation and fueled by the funding that Chris spoke about moments ago. If we turn to the other side of the business, the collecting side, tracking broadly in line to budget for H1. Again, some difficult macros out there, and you will see the broader trends across all motor finance, if not financial services markets that deal with that. I am especially pleased to see two things. One, that the VTS continue to be volatile as they are in their reporting cycle, but where we expect them to be, if not slightly below.

Speaker #4: As you'll see with the award from AI and other things I'll mention on the tech front, a strong culture of innovation and fueled by the funding that Chris spoke about a moment ago.

Speaker #4: If we turn to the other side of the business, the collecting side, tracking broadly in line to budget for H1, again, some difficult macros out there and that you'll see the broader trends across all motor finances not financial services markets that deal with that.

Speaker #4: I'm especially pleased to see two things. One that the VTs consider to continue to be volatile as they are in their reporting cycle, but where we expect them to be, if not slightly below.

Karl Werner: One, that the VTS continue to be volatile as they are in their reporting cycle, but where we expect them to be, if not slightly below.

Speaker #4: And also the crystallized bad debt, which is not management of earlier years, but our recoveries from later years is tracking to be well within budget.

Karl Werner: And also the crystallized bad debt, which is not management of early arrears, but our recoveries from late arrears is tracking to be well within budget. Turning mainly then to our customers. On this slide is really just a quick summary of some of those change highlights. It really has been a half year of innovation and some significant investment in change. It says on the front sheet, "Gearing for growth." Our augmentation of credit risk capabilities are ongoing. We are being very successful with scaling our AI investment. We have AI engineering expertise recruited and in-house. We have built three products, and we will be releasing another fourth this side of Christmas. Not to mention the difference building out a new treasury function represents to our future growth. So a high level of satisfaction. Our growth underpinned by channels, capabilities, people, and the opportunities that exist in the market.

Speaker #4: Turning mainly then to our customers on this slide, is really just a quick summary of some of those change highlights. It really has been a half year of innovation and some significant investment in change.

Speaker #4: It says on the front sheet, gearing for growth. Our augmentation of credit risk capabilities are ongoing. We are being very successful with scaling our AI investment.

Speaker #4: We have AI engineering expertise in recruited and in-house. We've built three products and we'll be releasing another fourth this side of Christmas. Not to mention the difference building out a new treasury function represents to our future growth.

Speaker #4: So a high level of satisfaction our growth underpinned by channels, capabilities, people, and the opportunities that exist in the market. My final slide is just a quick regulatory touch base.

Karl Werner: My final slide is just a quick regulatory touch base. We have what we need in place to manage the last elements of the Financial Conduct Authority commission issue. As you will recall from our earlier announcements, we are mainly required to administer complaints rather than remediate customers, and we are tracking well with that with a dedicated remediation team in place. We have very good, healthy, proactive, and positive engagements with our regulators. And in terms of a great measure of how we look after our customers has always been this COS lead table, and we are pleased to continue to be in the top tier. And with that, I will hand over to Chris.

Speaker #4: We have what we need in place to manage the last elements of the FCA Commission issue. As you'll recall from our earlier announcements, we are mainly required to administer complaints rather than remediate customers.

Speaker #4: And we're tracking well with that with a dedicated remediation team in place. We have very good, healthy practice and positive engagements with our regulators.

Speaker #4: And in terms of great measure of how we look after our customers has always been this cause lead table. And we're pleased to continue to be in the top tier.

Speaker #4: And with that, I will hand over to Chris.

Speaker #3: Thanks, Carl. So the next three slides will be familiar to most, but take a closer look at Advantage book debt performance. So during the period, we originated 10,660 deals on a slightly lower average amount of 9,848.

Chris Freckelton: Thanks, Karl. The next three slides will be familiar to most, but take a closer look at our Advantage book debt performance. During the period, we originated 10,660 deals on a slightly lower average of balance of GBP 9,848, and a slightly lower customer score down at 890, which has also given us the opportunity to increase the flat interest rate per annum to 14.8% from its low last year of 13.5%. Cost of sales have improved on last year as well, having reduced in part alongside the reduction in the average advance. If we then move on to first repayment quality, historically, there has been a strong correlation between first payments made by customers and bad debt end outcomes after five years. The blue line in axis is first payments made, red line in axis is bad debts, and the dotted line is expected bad debts.

Speaker #3: And a slightly lower customer score down at 890, which has also given us the opportunity to increase the flat interest rate per annum to 14.8% from its low last year of 13.5.

Speaker #3: Cost of sales have improved on last year as well. Having reduced in part alongside the reduction in the average advance. If we then move on to first repayment quality, so historically there's been a strong correlation between first payments made by customers and bad debt end outcomes after five years.

Speaker #3: So the blue line and axis is first payments made. Red line and axis is bad debts. And the dotted line is expected bad debts.

Speaker #3: So following the rebalancing of our book, I mentioned earlier, from Q3 25 onwards, we've seen first payments decline from recent highs. Albeit they're well within our recent history over the last 10 years.

Chris Freckelton: Following the rebalancing of our book I mentioned earlier, from Q3 '25 onwards, we have seen first payments decline from recent highs, albeit they are well within our recent history over the last 10 years. Happily, we have seen the bad debt end outcomes expected, or the dotted line, continue to improve, reflecting our improving collections performance as Karl has mentioned. Then finally, just in terms of book debt performance at 5 August versus year-end based on arrears status, for the reasons already mentioned around collections performance, we have more of the debt in the up-to-date category at 73.1% versus 71.8% at year-end. We also have fewer accounts in the six-plus arrears category at 4.4% versus 5.7% at year-end. That has continued to improve post period end as well. I will now hand over to Ed to talk you through Aspen.

Speaker #3: And happily, we've seen the bad debt end outcomes expected, while the dotted line continue to improve reflecting our improving collections performance as Carl has mentioned.

Speaker #3: And then finally, just in terms of book debt performance at the 5th of August versus year-end based on arrears status, for the reasons already mentioned around collections performance, we have more of the debt in the up-to-date category.

Speaker #3: That's 73.1% versus 71.8% at year-end. And we also have fewer accounts in the six-plus arrears category, at 4.4% versus 5.7% at year-end. And that has continued to improve post-period end as well.

Speaker #3: On that, hand over to Ed to talk you through Aspert.

Speaker #2: Thank you, Chris. So at Aspen, we continue our growth journey in what's been a subdued market so far this year. We've talked about the PBT and the comparison impact of a larger recovery last year.

Ed Ahrens: Thank you, Chris. At Aspen, we continue our growth journey, in what has been a subdued market so far this year. We have talked about the PBT and the comparison impact of a larger recovery last year. But we have grown the receivables to a record level of 199.9. This is largely to do with our longer-term bridge and buy-to-let offerings. Those also come with a slightly longer, later profit profile, as mentioned earlier. So we are obviously investing in there. Our lending is broadly the same as it was last year. Although our repayments have been lower, this is primarily due to the success of the longer-term product.

Speaker #2: But we've grown the receivables to a record level of 1,99.9. This is largely to do with our longer-term bridge and buy-to-let offerings. And those also come with a slightly longer later profit profile.

Speaker #2: As mentioned earlier, so we're obviously investing in there. Our lending has broadly the same as it was last year. And although our repayments have been lower, this is primarily due to the success of the longer-term products.

Speaker #2: And also, customers just using more of the term to the end of term before repaying. Despite all of that, our quality remains strong. Levels of overdue numbers are similar to last year, but proportionately much lower, given the larger book that we have today.

Ed Ahrens: Also customers just using more of the term to the end of term before repaying. Despite all of that, our quality remains strong. Levels of overdue numbers are similar to last year, but proportionately much lower given the larger book that we have today. Over a number of years now, we have managed to achieve an annual growth of 16%, and we believe in our ability to continue this progress in the future. Next slide, thank you. Just opening up, we have shown you this slide before, so we continue the story of how the portfolio has been developing. But I think it is important to just hover over the first perspective, which is we have had an intense focus on quality and always have done.

Speaker #2: And over a number of years now, we've managed to achieve an annual growth of 16%. And we believe in our ability to continue this progress in the future.

Speaker #3: Next slide, thank you. Just opening up, we've shown you this slide before, so we continue the story of how the portfolio has been developing.

Speaker #3: But I think it's important to just hover over the first perspective, which is we've had an intense focus on quality and always have done.

Speaker #3: And it's pleasing to see that we've continued with that 897 million of capital deployed with only 0.03% of capital losses. Which is obviously extremely good and good for the business.

Ed Ahrens: It is pleasing to see that we have continued with that GBP 897 million of capital deployed with only 0.03% of capital losses, which is obviously extremely good and good for business. Just picking out some of the other items on that slide, a slight uptick in the average loan size where it had been coming down last year. Slightly higher on the cost of sales where it is a competitive market. Being a tough market, we are paying a little bit more away in terms of commission. Holding strong on the LTV and just on the blended original blended yield rates, you will see that really, if you look at what has happened to that rate over the last few years, it largely follows what has happened with the base rate, which is predominantly where rates are pitched for bridging in this market.

Speaker #3: So just picking out some of the other items on that slide, a slight uptick in the average loan size, where it had been coming down last year.

Speaker #3: Slightly higher on the cost of sales, where it's a competitive market. And been a tough market, we were paying a little bit more away in terms of commission.

Speaker #3: Holding strong on the LTV. And just on the blended original lended yield rates, you'll see that really, if you look at what's happened to that rate over the last few years, it largely follows what's happened with the base rate.

Speaker #3: Which is predominantly where rates are pitched for bridging in this market. On the next line, you can see the impact of the average terms, where they've been lengthening.

Ed Ahrens: On the next slide, you can see the impact of the average terms where they have been lengthening, and as discussed, what that does to help us both on growth, but obviously longer term. I think it is worth also reflecting that thinking back over time in 2018, 2019, we had GBP 22 million worth of lending and GBP 0.8 million of profit, and we have come a long way since then. Just on my last slide, a few key points to draw out from this. We continue to progress with our longer term products that are serving us well in this market, and are attracting investors. Also investing from an IT perspective. We are starting our own AI journey this quarter starting in October, following in some of the footsteps of Advantage to help us improve our efficiency and prepare ourselves and support future growth.

Speaker #3: And as discussed, what that does to help us both on growth, but obviously the longer term. I think it's worth also reflecting that thinking back over time in 1819, we had 22 million pounds worth of lending and 0.8 million of profit.

Speaker #3: And we've come a long way since then. Just on my last slide, a few key points to draw out from this. So we continue to progress with our longer-term products.

Speaker #3: That are serving us well in this market. And attracting investors and also investing from an IT perspective. We're starting our own AI journey. This quarter, starting in October, following in some of the footsteps of advantage.

Speaker #3: To help us improve our efficiency and prepare ourselves and support future growth. And lastly, and definitely not least, is the investment we continue to make in our staff, in training and skills.

Ed Ahrens: Lastly, and definitely not least, is the investment we continue to make in our staff in training and skills. They are the backbone of our success. I will now hand back over to Anthony.

Speaker #3: They are the backbone of our success. And I'll now hand back over to Edson.

Speaker #4: Thank you. Well, I hope that you've seen that and that's impressed you. In particular, before we get to questions, there are obviously quite a lot of questions on our new securitization funding.

Anthony Coombs: Well, I hope that you have seen that and that has impressed you. In particular, before we get to questions, there are obviously quite a lot of questions on our new securitization funding. Before I get that, I would like to make the point that we have not arranged GBP 600 million worth of securitization facilities against the current levels of GBP 330 million just for fun, although it has been an interesting exercise. It is because this is how we anticipate growing the business in the next few years. But I think the point that I would like to, or the slide I would like to draw your attention to is the last point on Advantage, where it says that exceptional customer demand. We have about 300,000 applications for finance per month. Okay, probably about 180, 200 of those are serious. We do 2,000 of those. There is a huge amount of potential growth.

Speaker #4: Before I get there, I'd like to just make haven't arranged 600 million pounds worth of securitization facilities against the current level of 330 million.

Speaker #4: Just for fun, or it has been an interesting exercise. It's because this is how we anticipate growing the business. And in the next few years, but I think the point that I would like to, in the slide I'd like to draw your attention to, is the last point on advantage.

Speaker #4: Where it says that exceptional customer demand and we have about 300,000 applications for finance per month. Okay, probably about 180, 200 of those are serious.

Speaker #4: We do 2,000 of those. There's a huge amount of potential growth. But that's why Carl is actually right to target to double our size of our book.

Anthony Coombs: That is why Karl is absolutely right to target to double the size of our book in the next five years. We do that on a very firm basis. We have got excellent customer relations, very good relationships with the regulator, the Financial Conduct Authority, and plans for new distribution partners, channels, to add to our existing broker channels, which I think will enable us to achieve that kind of growth. Aspen Bridging is going through choppier waters at the moment, for the very simple reason that the residential housing market is not as buoyant as any of us would like it. We hope that the new Help to Buy scheme introduced or announced yesterday by the government is going to do something to help that. Possibly, interest rates will follow a slightly more benign path than is currently anticipated.

Speaker #4: In the next five years. And we do that on a very firm basis. We've got excellent customer relations. Very good relationships with the regulator, the finance conduct authority.

Speaker #4: And plans for new distribution plans channels client to our existing broker channels. Which I think will enable us to achieve that kind of growth.

Speaker #4: Aspen is going through choppier waters at the moment. For the very simple reason that the residential housing market is not as buoyant as any of us would like it.

Speaker #4: We hope that the new help to buy scheme introduced or announced yesterday by the government is going to do something to help that. Possibly interest rates will follow a slightly more benign path than is currently anticipated.

Speaker #4: And we hope that the budget will recognize sensible growth in the economy, as well as for people's housing needs. But we're confident that we're in a market generally which is going to mean that we can improve Britain's currently rather underpowered housing stock, as well as the amount of housing stock in the country.

Anthony Coombs: We hope that the budget will recognize sensible growth in the housing market as being important for the general economy as well as people's housing needs. We are confident that we are in a market generally which is going to mean that we can improve Britain's currently rather under par housing stock as well as the amount of housing stock in the country. In a growing population, we need more of it, and we need it to be better. The kind of people that we serve are actually doing both building and refurbishing. Just finally, S&U, although we have got these new initiatives and we are growth orientated and we are ambitious, we do that on the basis that we have always aimed for steady, sustainable growth. It is terribly easy to grow a book in the finance business and not be sustainable.

Speaker #4: In a growing population, we need more of it. And we need it to be better. And the kind of people that we serve at Aspen are doing both.

Speaker #4: Both building and refurbishing. And just finally, the S & U and the low we've got these new initiatives as we growth orientated and we're ambitious.

Speaker #4: But we do that on the basis that we've always aimed for steady sustainable growth. It's terribly easy to grow a book in the finance business and not be sustainable.

Speaker #4: And anybody can lend money. It's actually getting it back in a sensible and sustainable and responsible way. And we've got about 88 years of doing that at S & U.

Anthony Coombs: Anybody who can lend money, it is actually getting it back in a sensible and sustainable and responsible way. We have got about 88 years of doing that at S&U. We have got the management team, which has got that level of experience. When I say 88 years, I am not quite that old. Nevertheless, we have got a continuity of management and a very clear business philosophy. We believe that obviously securitization will transform our ability to grow the business, and we anticipate that will produce profit and dividends in the next few years. With that, guys, thank you for your attendance, and now move on to questions from, we have got Simon, Ian, James, Chloe, and Jamie all asking questions. I think I am going to move to the first one, which is Simon. A lot of them are about securitization.

Speaker #4: We've got the management team which is got that level of experience. I'm not saying 88 years. I'm not quite that old. But nevertheless, we've got a continuity of management and a very clear business philosophy.

Speaker #4: And we believe that obviously securitization will transform our ability to grow the business. And we anticipate that that will produce profit and dividends in the next few years.

Speaker #4: So with that, can I thank you for your attendance. And now move on to questions. From we've got Simon, Ian, James, Jorge, and Jamie.

Speaker #4: All asking questions. And I think I'm going to move to the first one, which is Simon. A lot of them are about securitization. And Simon asks, what proportion of each pool are the two banks funding versus S & U's own retained junior interest?

Anthony Coombs: Simon asks, "What proportion of each pool are the two banks funding versus S&U's own retained junior interest? Zeus' own note pegs this at 20% to 25% for a private deal. Can you confirm the actual structure falls in that range?" I am going to ask Chris to do this. Because the deal is not yet quite concluded, we anticipate that in the next week, I think we have got to be a little bit careful about what we reveal, but I think we can give a general tone. Chris?

Speaker #4: Zeus own note pegs this at 2025% for a private deal. Can you confirm the actual structure falls in that range? I'm going to ask Chris to do this.

Speaker #4: But because the deal is not yet quite concluded, we anticipate that in the next week. I think we've got to be a little bit careful about what we reveal.

Speaker #4: But I think you can give a general token, Chris.

Speaker #2: Yes. Yeah, absolutely. I mean, thinking short, the answer is yes. We are in the range that Zeus provided between 20 and 25%. And my understanding, that's quite typical in a private warehouse deal.

Chris Freckelton: Yes. Yeah, absolutely. I think in short the answer is yes. We are in the range that Zeus provided at between 20% and 25%. My understanding, that is quite typical in a private warehouse deal. Obviously, as we get further down the path and hopefully at the end of this deal, potentially move to a public securitization deal for Advantage, we would expect that sort of junior interest element to reduce. No, that Zeus predictive range is accurate.

Speaker #2: Obviously, as we get further down the path and hopefully at the end of this deal, potentially move to a public securitization deal for advantage with expect that sort of junior interest element to reduce.

Speaker #2: But no, that Zeus predicted range is accurate.

Speaker #4: Good. Thank you. And I'm going to move on now. I'm going to stay with securitization. James has asked a question. With the new securitization funding strategy, is it currently visage that you will issue public ABS for institutional investors currently?

Anthony Coombs: Good. Thank you. I am going to move on now. I am going to stay with securitization. James has asked a question, "With the new securitization funding strategy, is it currently envisaged that you will issue public ABS to institutional investors currently? Securitization can naturally offer higher gearing than is currently the case with bank financing. Do you think the gearing in Advantage will increase going forward?" I am going to ask you that, Chris.

Speaker #4: Securitization, can naturally offer higher gearing than is currently the case with bank financing. Do you think the gearing and advantage will increase going forward?

Speaker #4: I'm going to ask you that, Chris.

Speaker #2: Yeah. Thanks, Anthony. So yeah, exactly. Exactly that. We've done or we're in the process of agreeing to private securitizations. The public securitization for advantage would be something we'd look at at the end of this current deal.

Chris Freckelton: Yeah. Thanks, Anthony. So yeah, exactly that. We have done or we are in the process of agreeing two private securitizations. The public securitization for Advantage would be something we would look at the end of this current deal. You are absolutely right that the securitization does offer higher gearing, and we are expecting to take advantage of that, pardon the pun, in the years to come. Obviously, once the securitization is embedded, we will be doing another reforecasting exercise to provide a bit more surety on that going forward.

Speaker #2: You're absolutely right that the securitization does offer higher gearing and we're expecting to take advantage of that. Pardon the pun. In the years to come.

Speaker #2: Obviously, once the securitization is embedded, we'll be doing another reforecasting exercise to provide a bit more surety on that going forward.

Speaker #4: And we've got another question from GES on funding. We've got to be a little bit careful about what we say here. We don't normally give this kind of information on positive, Chris.

Anthony Coombs: We have got another question from Judy S. on funding. We have got to be a little bit careful about what we say here. We do not normally give this kind of information, of course, but Chris will answer in the appropriate way. Is your RCF priced off of LIBOR, price of LIBOR? If so, what is the margin you pay over that? How does the cost of securitization compare to that in terms of equivalent interest cost? Chris.

Speaker #4: We'll answer in the appropriate way. Is your RCF priced off of Libor? Price of Libor. And if so, what is the margin you pay over that?

Speaker #4: How does the cost of securitization compare to that in terms of equivalent interest cost?

Speaker #2: Thanks, Anthony. So we pay off Sonya. And that will be the case under the current RCF, but also the securitization. So it's a margin over and above Sonya.

Chris Freckelton: Thanks, Anthony. We pay off SONIA, and that will be the case under the current RCF, but also the securitization, so it is a margin over and above SONIA. In terms of cost, to Anthony's point, I would like to get the securitizations over the line. We do think there will be a saving, but obviously we need to quantify that when the ink is dry on the deals themselves.

Speaker #2: In terms of cost to Anthony's point, I'd like to get the securitizations over the line. We do think there will be a saving, but obviously we need to quantify that when the ink is dry on the deals themselves.

Speaker #4: Well, well said. Well said. And then that's I think really that answers Matt G's question about what is the coupon on your new facilities.

Anthony Coombs: Well said. I think really that answers Matt G's question about what is the coupon on your new facilities. We are not able to give you details of that yet, but we will be presenting to investors, both retail and institutional investors, as soon as the securitization deal is completed, which we anticipate, again, as I said, in the very near future. Ian has asked two questions, or sorry, has asked a question on what is the cost of, why has the cost of sales commission and motor finance increased by almost 40%? Over to you, Karl.

Speaker #4: We're not able to give you details on that yet. But we will be presenting to investors those retail and institutional investors as soon as the securitization deal is completed.

Speaker #4: Which we anticipate again, as I said, in the very near future. Ian has asked two questions or sorry, has asked a question on what is the cost of why has the cost of sales commission and modifying its increase by almost 40% over the year coming?

Speaker #3: It's just a pure outcome of volume year on year. The actual pound note figure per deal is all in cost as what the apportion to a cost of a sale of a case is down, I think, 46 pounds.

Karl Werner: It is just a pure outcome of volume year on year. The actual pound note figure per deal is all in cost as what the apportion to a cost of a sale of a case is down, I think GBP 46 year on year. But it is the fact that we are 49% up that means that the gross is therefore higher.

Speaker #3: Year on year, but it's the fact that we're sort of 49% up that means that the gross is therefore higher.

Speaker #4: Thank you. Thank you. And finally, Jorge, I'm not even sure that we're able to say this, but I'm going to ask I mean, Graham, do you want to say something about this?

Anthony Coombs: Thank you. Finally, Hollage, I am not even sure that we are able to say this, but I am going to ask you. Graham, do you want to say something about this? What is your medium-term ROAE target?

Speaker #4: What is your medium-term rookie target?

Speaker #5: Well, very conscious. As if we're having additional facilities. If the margin you make on these additional facilities is not as you can require it to be, I think one's fight to say that we're very conscious of this.

[Company Representative] (S&U): We are very conscious that if we are having additional facilities, if the margin we make on these additional facilities is not as you would require it to be. I think one is suffice to say that we are very conscious of this. We are very concerned that we get operational gearing advantages, and as a consequence, the bigger volume that we hold our margins, and so we make it worthwhile exposing ourselves to more financial risk. Let us not pretend any different. Bigger gearing means more financial risk. Then we hope we get a commensurate return as a consequence.

Speaker #5: We're very concerned that we get operational gearing advantages. And as a consequence, a bigger volume that we hold our margins. And so we make it worthwhile exposing ourselves to more financial risk with let's not pretend any different bigger gearing means more financial risk.

Speaker #5: That we hope we get a commensurate return. As a consequence.

Speaker #4: Absolutely right. I mean, the first thing we look at, just to reassure investors, is the P&L. At the bottom line. Second, we look at is the cash flow.

Anthony Coombs: Absolutely right. The first thing we look at, just to reassure investors, is the PBT at the bottom line. Second, we look at is the cash flow, because it decides the financial health of the company. The third thing we look at is the balance sheet. The balance sheet amplitudes everything else, but it is not quite as important as the first two. With that, are there any further questions that investors would like to ask? We have two more, or one more rather, from Matt Jeeves. Could you discuss the new scorecard and Advantage, please? Over to you, Karl.

Speaker #4: Because that's what is it decides the financial health of the authority of the company. And the third thing we look at is the balance sheet.

Speaker #4: Because the balance sheet averages everything else, but it's not quite as important as the first one. So with that, are there any further questions that investors would like to ask?

Speaker #4: we have two more. Or one more, rather. From Matt G. Could you discuss the new scorecarded advantage, please? Over the year coming.

Speaker #3: Okay. Give it a go. It's built within a new framework where it's partnered with Experian. We have obviously a pretty rich data set. So in round terms, it has a demographic element, which is people's age and lifestyle and where they live, et cetera, et cetera.

Karl Werner: Okay. Give it a go. It is built within a new framework where it is partnered with Experian. We have obviously a pretty rich data set. In round terms, it has a demographic element, which is people's age and lifestyle and where they live, et cetera, et cetera, plus asset, plus history. So it is taking the latest approach from data sets from our partners, and it is deliberately enabling us to get our risk mix in better shape, especially in our core market areas, which has gallantly served so long. So it is built to be good in those sectors. Secondly to that is an expenditure engine, which we have built partnership with all the usual agencies, ONS, et cetera, and benefited from some good input from our regulator and others during the times of BIFID 2 and a half odd years ago.

Speaker #3: Plus asset, plus history. So it is taking the latest approach and data sets from our partners. And it is deliberately enabling us to get our risk mix in better shape, especially in our core market areas.

Speaker #3: Which is so gallantly served so long. So it is built to be good in those sectors. Secondly to that is an expenditure engine which we have built partly with all the usual agencies, ONS, et cetera.

Speaker #3: And benefited from some good input from our regulator and others during the times of BIFID two and a half odd years ago. And then thirdly, a much upgraded affordability engine, which has proven statistically much more reliable and successful in seeing applicants' income a lot clearer.

Karl Werner: Thirdly, a much upgraded affordability engine, which has proven statistically much more reliable and successful in seeing applicants' income a lot clearer. So, I hope that helps. I am not a credit risk guru, but we do have those on the payroll, thankfully, who will do a much better job of explaining it probably than I could, but.

Speaker #3: So I hope that helps. I'm not a credit risk guru. But we do have those on the payroll, thankfully, who will do a much better job of explaining it probably than I could, but.

Speaker #4: Thanks. Thanks. Okay. Well, thank you, Carl. And thank you, everybody, for those questions we've been asked. And obviously after you more for answering them, hopefully in a comprehensive and coherent way.

Anthony Coombs: Excellent. Okay, well, thank you, Karl, and thank you everybody for those questions being asked, and obviously our team for answering them, hopefully in a comprehensive and coherent way. Are there any further questions? Okay, well, if there are not, I am going to hand back to IMC and conclude the meeting.

Speaker #4: Are there any further questions? Okay. Well, if they're not, I'm going to hand over back to hand back to IMC and conclude the meeting.

Speaker #1: Fantastic. Thank you very much, Elide, for addressing all those questions. Actually, we just received one. Would you like to address it there, Anthony? Go ahead.

Operator: Fantastic. Thank you very much indeed for addressing all those questions. Actually, we just received one. Would you like to address it there, Anthony?

Anthony Coombs: Yes.

Operator: Go ahead.

Speaker #4: Oh, it's quite an easy answer. Simon Ellis asked, is the interest rate hedging being extended to the assets? Yes. No, sorry.

Anthony Coombs: It's quite an easy answer. Simon Ells asked, is the interest rate hedging being extended to Aspen Bridging? The answer is yes.

[Company Representative] (S&U): No.

Anthony Coombs: No?

[Company Representative] (S&U): Yeah.

Speaker #5: No, we're not hedging it.

Anthony Coombs: No, sorry.

Karl Werner: No, we are not hedging it.

Speaker #4: Sorry. I understood. Hedging, no. No, sorry, Malcolm. I thought you meant the securitization is good.

Anthony Coombs: Sorry. I misunderstood what you said. Hedging, no. No, sorry about that. I thought, isn't it that the securitizations bit?

Speaker #5: Yes.

[Company Representative] (S&U): Yes.

Anthony Coombs: It is hedging, no.

Speaker #4: Is hedging not?

Speaker #1: Perfect, guys. Well, look, if that's all the questions from investors today. Anthony, could I just ask you for a few closing comments to wrap up?

Operator: Well, look, if that is all the questions from investors today, Anthony, could I just ask you for a few closing comments to wrap up?

Speaker #4: Well, I mean, I think we've covered the waterfront pretty well. I mean, I hope that the investors agree. And that we're we look forward to some further good results in the next half year for the year.

Anthony Coombs: Well, I think we've covered the waterfront pretty well. I think that the investors agree, and we look forward to some firmly good results in the next half year or 3 years. The kind of growth that we anticipate in the company, we will do so in a responsible way and in the interests of every shareholder. Thank you to you, attendees.

Speaker #4: And to the kind of growth that we anticipate in the company. We will do so in a responsible way. And in the interests of every shareholder.

Speaker #4: And thank you for your attendance.

Speaker #1: Fantastic. Thank you all once again for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback, which helps the company better understand your views and expectations.

Operator: Fantastic. Thank you all once again for updating investors today. Could I please ask investors not to close this session, as you will now be automatically redirected to provide your feedback, which helps the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good afternoon to you all.

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Q2 2027 S&U PLC Earnings Call

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