S&U Update Note - Steadily Upwards

The interim results from S & U confirmed the trends highlighted in the trading update in

August. The core Advantage non-prime motor finance business is now into its 20th

consecutive year, out of 20 in existence, of profit growth. This was achieved despite

headwinds from a slightly weaker used car market (though it’s performing better than

the new car market) and the continued impact of Advantage’s decision to impose stricter

underwriting criteria.

Aspen is still a very early stage business, and despite the slightly disappointing news that

9 loans are now in arrears, management clearly re-iterated that there is no expectation of

capital loss due to the structure of the loans and the restricted LTVs on offer.

Following these results we don’t believe a material reforecast is required, though we have

adjusted certain of our assumptions as detailed below. Overall the business has

performed in line with our expectations.

The backdrop remains challenging, but both Advantage and Aspen continue to show

resilience and potential for ongoing growth in defiance of the broader market.

Read the full note here.