S&U reports interim profit advance despite weaker top line

(Alliance News) - S&U PLC on Thursday said its interim performance serves as "clear evidence" of its recovery, as it posted earnings gains across both its Advantage Finance and Aspen Bridging businesses.

The Solihull, England-based lender, which is focused on motor finance and property bridging, reported pretax profit of GBP15.6 million for the six months that ended August 5, up 21% from GBP12.8 million a year earlier.

Revenue, however, fell 14% to GBP51.8 million from GBP60.4 million, with the improved earnings driven by a reduction in impairment charges, with lower finance costs also supporting bottom-line gains.

Advantage Finance revenue fell 20% to GBP39.3 million from GBP49.1 million, while Aspen Bridging revenue improved 12% to GBP12.5 million from GBP11.2 million.

"As forecast, the first half saw consolidation in the group's activities as Advantage its motor finance subsidiary has adjusted to new regulatory demands, focused on credit quality and upon further improvements to its historically good customer relations," said S&U.

Pretax profit advanced in both businesses. For Advantage Finance, earnings improved to GBP10.8 million from GBP9.4 million, despite the weaker top line. For Aspen, pretax profit improved to GBP5.0 million from GBP3.4 million.

S&U recorded a GBP8.1 million impairment charge, down 57% from GBP18.9 million a year earlier. More specifically, the company's loan loss provisioning charge for motor finance fell to GBP7.8 million from GBP18.1 million and for property bridging finance it dropped to GBP156,000 from GBP783,000.

Finance costs further bolstered the bottom line as they fell 31% to GBP6.6 million from GBP9.6 million.

Shares in the company rose 1.9% to 1,743.24 pence on Thursday afternoon in London.

S&U declared a first interim dividend of 35p, up 17% from 30p a year prior.

Chair Anthony Coombs said: "These results provide clear evidence that S&U's recovery from the challenges of the past two years is now underway. Current trading at both Aspen and especially Advantage is strong, albeit still subject to the fluctuations in consumer confidence caused by the upcoming budget and feeble economic growth. Overall, however, the skies are brightening and this, allied to the usual determination and excellent morale within the group, should be reflected in S&U's full year results."

By Christopher Ward, Alliance News reporter

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