S&U revenue up, profitability a challenge in first half

8th Oct 2024 10:53

(Sharecast News) - Motor and property finance specialist S&U reported a mixed first-half financial performance on Tuesday, after group revenue increased 9% year-on-year to £60.4m.

The London-listed company said profit before tax fell to £12.8m, from £21.4m in the prior year, partly driven by a £2.8m rise in finance costs, reflecting higher borrowings and increased interest rates.

Its net receivables grew to £475.4m, up from £417.3m a year earlier, while group equity increased marginally to £233.4m.

S&U announced a first interim dividend of 30p per share, down from 35p in the first six months of the 2023 financial year, and reported a rise in group gearing to 103%, up from 80% the previous year.

Advantage Finance, S&U's motor finance arm, saw revenue rise to £49.1m, but profit before tax dropped significantly to £9.4m from £19.1m a year ago.

That was largely due to an increase in impairment charges, which surged to £18.1m from £6.8m, while its collection rate fell to 87% from 94% in the prior period.

Net receivables for Advantage Finance stood at £326.2m, largely stable compared to earlier periods.

Aspen Bridging, the group's property finance division, reported strong revenue growth, reaching £11.2m, up from £7.9m in the first half of 2023.

Profit before tax for Aspen rose to £3.4m from £2.4m in the same period last year.

Net receivables grew to £149.3m, up from £104.3m a year earlier, supported by collection repayments and recoveries of £72.8m.

Overall, while S&U's revenues increased, the group faced profitability challenges in its motor finance business, impacted by rising impairment charges and higher finance costs, offset by a solid performance from its property finance division.

"Half-year results for Advantage reflect a temporary adjustment to shifting market dynamics and evolving regulatory expectations," said chairman Anthony Coombs.

"Nevertheless, the resulting internal reforms should provide greater certainty for renewed success.

"Meanwhile, in the more dynamic bridging sector, Aspen continues to perform strongly.

"We embrace the future with our usual cautious optimism."

At 1038 BST, shares in S&U were up 5.71% at 1,754.75p.

Reporting by Josh White for Sharecast.com.