S & U Share Discussion Threads

[jeffian] 08/6/2024 13:29

OK maybe not "tiny" but certainly still small (PBT £1.45m in the period compared to an impacted £6.9m from Advantage and a more normal £10.5m last year (to which we will hopefully return soon)). At this stage, even stellar growth at Aspen can only marginally offset problems at Advantage which still provides the lion's share of Group profit.

[jeff h] 08/6/2024 13:07

I would not describe Aspen as tiny Ian as last year it made £4.8m profit and is growing fast this year.

[jeffian] 06/6/2024 16:05

A typical honest and open update from Coombs today. It seems that dealing with the regulatory issues are having quite and impact - hopefully temporary as he says - and after an initial dip the market seems to have taken it reasonably well. Aspen (the property lending part of the business) seems to be doing well but of course it's a tiny part of the overall business which is weighted heavily towards the Advantage car finance side. As ever, I will ride this one out.

[gabsterx] 15/4/2024 13:34

Looks like the market saw the dividend cut coming. Still decent though and will keep adding at these levels.

[jeffian] 13/4/2024 11:11

The market will no doubt tar all 'lenders' with the same brush but, as spelt out repeatedly by Coombs in his various reports and presentations, this doesn't affect SUS as they don't pay commissions.

[shanklin] 13/4/2024 07:16

More helpful stuff from the FCA….

[melton john] 09/2/2024 13:30

Indeed Shanklin, the law of unintended consequences seems to control the outcome of everything these days. Common sense isn't very common now.

[saint or sinner?] 09/2/2024 13:19

It would appear that in today's nanny state lenders are only allowed to lend to folk who don't need to borrow. What happened to caveat emptor?

[shanklin] 09/2/2024 12:20

Looks to me like the regulator will force SUS to cease much of its higher risk car lending.

The moronic effect will be that the relevant customer group will have no access to regulated lending forcing them onto public transport, which presumably doesn’t meet their need, or unregulated money lenders, another very unsatisfactory outcome.

[jeffian] 09/2/2024 10:54

OK, I succumbed to temptation and bought a few more, attracted by the unusually tight spread.

[jeffian] 09/2/2024 10:41

Unusual to see a downbeat TU from SUS but I do like the management here and Coombs' style of 'telling it like it is'. I'm already pretty heavily weighted in these but tempted to view this as a buying opportunity for long-termers.

[jeff h] 06/2/2024 23:03

As Centipede mentions above it appears that S&U subsidiary Advantage Finance never got involved in Discretionary Commission Arrangements for its car finance loans and Martin Lewis also stated this on his tv programme tonight.

The information from the programme is on the MSE website, the part relating to Advantage:-

"...Firms that've "never had discretionary commission arrangements"....

A number of firms have told us they never used DCAs so they're not covered by the scope of the investigation. We can't independently verify this, but it'd seem unlikely that regulated firms would make such a blanket statement unless it was true (and if it's not true, we'll formally complain to the FCA about misleading info).

So if your car finance was with any of these firms, while you can still complain, it may not be worth it. The current list is...

Advantage Finance | Billing Finance | First Response Finance | Lombard | Mallard Finance | MoneyBarn | Oodle | Specialist Motor Finance

We will add more firms to this list if we hear of more that didn't have these type of agreements..."

[jeff h] 02/2/2024 15:07

Fevertreeman

I think you should re-read the RNS you seem to be referring to about a sale of shares from Anthony Coombs as it was a transfer into his SIPP ie a sale from one account and a purchase into another and as the RNS states his beneficial holding remains unchanged.

As for the forthcoming trading update they have one of these every year and announce a further interim dividend in it.

[centipede] 02/2/2024 14:25

Just to reiterate what 1tx said,
On their website (hxxps://www.advantage-finance.co.uk/Information/Complaint), Advantage says

IMPORTANT INFORMATION – MOTOR FINANCE COMMISSION
On 11 January 2024 the FCA announced that it was taking action regarding historic motor finance business that included the use of Discretionary Commission Arrangements between the lender and the broker.

This action includes a widescale review of past business arrangements, at some lenders, to establish whether consumers have been disadvantaged by these arrangements. In the meantime, the FCA has introduced a pause to the 8-week deadline normally allowed for firms to deal with complaints where there was a Discretionary Commission Arrangement between the lender and the broker.

Advantage Finance can confirm that it has never used any form of Discretionary Commission Arrangement and has never allowed the broker to influence the interest rate for any potential customer. Therefore, this action being taken by the FCA does not apply to Advantage Finance and any of its past business.

[fevertreeman] 02/2/2024 12:51

Very unusual that Coombes is proposing a TU for 6 week period from 12 Dec 2023 (last TU) - year end 31 Jan 2024. having seen what's happened to CLose Bros after the mad FSA decided to initiate investigation into car financing arrangements (you couldn't make it up!), I wonder what Coombs has to say? The fact that he sold a tranche immediately after the announcement makes me concerned it wont be pretty. Equally, this may be him saying "Its all utter nonsense, and we have very little exposure...etc" so cue share price rally....

[1tx] 23/1/2024 15:24

Advantage Finance which is S&U vehicle finance company states on its website that it has never used discretionary finance arrangements.(Statement in complaints section).

[jeffian] 12/1/2024 10:36

The market wields a very broad brush when dealing with 'sectoral' news and will mark down (or up) whole swathes of companies, often with only the slightest involvement or even none at all. (For years, Whitbread used to be impacted by news about 'brewers' decades after it ceased to be one). As the issue of 'car finance' mis-selling has raised its head again, I can see that we are in for another period of volatility. Last time, it was all about dealers' PCP schemes - in which SUS had no involvement at all - and now it has been widened to include all loans where commission has been paid to a broker. I would need to go back to previous company reports/presentations, but my understanding is that SUS already had a clean bill of health about openness/transparency in this area. If I hadn't got so many already, I might see this as a buying opportunity coming up!

[melton john] 12/12/2023 10:32

Agree CWA1, not great news after experience with JIM. The work seems to expand to fill the time available. I assume when the market picks up all the skilled persons doing consultancy work for the FCA will go back to doing the things the FCA might be trying to stop namely making money for themselves rather than clients. Am I too cynical.

[cwa1] 12/12/2023 07:57

Hmmmm. Cautionary TS...



...and this, which I really don't like...

Following the FCA's special focus on Borrowers in Financial Difficulty (BiFD) in non-prime motor finance, the "review of Advantage's, collecting processes, procedures and policies" we noted at half year, has developed into a more formal interaction with the FCA. Along with many other lenders in our market segment, Advantage has appointed a Skilled Person. They are tasked, where necessary, to advise and guide Advantage in delivering, these regulatory requirements. This may be a lengthy and costly process, but it should prove valuable in providing assurance on our longstanding methods of serving our customers, and ensuring, that our products continue to meet their differing needs. These methods have been validated by Advantage's excellent record with the Financial Ombudsman Service which at an uphold rate of just 15% is, by some margin, the best in the motor finance industry.

This will provide both challenges and opportunities and, in paying tribute to the professionalism, patience and fortitude of our people at Advantage and to the leadership of Graham Wheeler, our retiring CEO, it gives me the opportunity to welcome his successor, Karl Werner, at an important and ultimately rewarding time.

From previous experience these can indeed be lengthy and expensive and occosionally open a can of worms that you'd rather not have seen disturbed. Not great news IMHO

[mortimer7] 02/10/2023 14:47

Looking perky ahead of interims day tomorrow.

[pugugly] 10/8/2023 07:10

As usual - Sleep easy in the Coombs family safe hands - Just love his "Tell it how it is" format.

[cwa1] 10/8/2023 06:25

Trading Update...



The group continues to trade well. It does so carefully due to the current economic headwinds impacting consumer confidence, disposable incomes, taxation and interest rates. Although the past two months have seen an uptick in transactions and the new customer pipeline, current economic policies in the UK, reduce consumer confidence and create barriers to our usual rate of sustainable growth.

Tiny pop at our hapless Governmnent...

Whilst the Chancellor of the Exchequer may make heroic pleas that "declinism about Britain is just wrong", the past decade has seen persistent government policies which act against a climate of entrepreneurial activity, enterprise, and growth. More recently record levels of taxation, steeply rising interest rates, massive government borrowing, and a failure to stem the tide of incessant regulation, especially in the financial services industry, have all contributed to this. The result has been 10 years of sluggish growth in the UK averaging just half a percent per annum- and a lack of faith in the free enterprise culture.

[exv] 07/8/2023 16:14

Indeed, Advantage have made a point of not using the variable commission products which are now in the press after this legal action. This has been a bit of a ticking time bomb. It is in my view a scummy move to incentivise introducers (whom many believe to be impartial) through higher commissions if they jack up interest rates. I'm glad Advantage never partook.

[jeffian] 07/8/2023 16:01

Although the market was down generally on "interest rate worries", I suspect SUS' larger-than-average fall may be linked across to a story in today's press saying that Lloyds may be hit by a substantial penalty for selling overpriced 'car finance'. As with the PCP scare, the market doesn't differentiate between different forms of car finance and all in the sector get tarred with the same brush. Nothing to worry about for SUS, I believe.

[exv] 28/6/2023 12:24

Went ex-div a couple of weeks ago. The current downward drift is on thin volume and with a wide spread: I would say people are just worrying about the implications of higher rates. Mechanically they reduce S&U's profits - they have floating rate borrowings - and, if you are the panicky sort, you might also be concerned what it means for their borrowers.

I think it's perfectly reasonable to be concerned about the property side of things. It's ramped up significantly and hasn't been through a proper downturn. If their underwriting is good they'll be fine. Defaults spiking isn't a surprise at all as property volumes fall, as if the borrower hasn't managed to sell or refinance, they will obviously fall into default. The question is whether the borrowing is sufficiently prudent such that they the unit in question gets sold eventually, at a price sufficient to pay back principal & interest & late fees. If their borrowers are solid, the personal guarantee has some value, and the LTV is low enough such that the borrower still has sufficient equity to 'fight' for, they'll be fine. I think we'll only find out on the other side.

Personally, I have no concerns about Advantage. It's an amazingly well-seasoned business through many downturns. They managed through the GFC, COVID and the cost of living 'crisis' with enviable ease.

And, in the medium term, without sounding like a cheerleader, I don't think higher rates are as bad as the market thinks. Of course it is bad for short-term earnings. But what was really bad for the business itself was a low rate environment which incentivised poor quality lenders to join the market with loads of capital, and pushed up broker commissions. S&U had the best quality lending book in the industry. They also have far less debt than most of their peers. In a more challenging environment, they are the winner, even if we have headwinds.