S&U plc (SUS) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the S&U plc interim results for the 6-month period ending the 31st of July 2021 investor presentation. [Operator Instructions] I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll. And if you would give out your kind attention, we would be very grateful. And I'd now like to hand over from me to Anthony Coombs, Chairman from S&U.

Thank you, Mark, and welcome to everybody. I must say that we are very great fans of Investor Meet. And we find it a very, very good way of communicating effectively with our shareholders, particularly retail shareholders. And I hope you're all pleased with the results that we've announced for this half year, and we're going to be giving you an opportunity to ask questions and hopefully, we'll provide answers for you, which will be very satisfactory. Can I just say that I think that the half year has proved that S&U as a company is back on track, that we are very soundly placed now to take advantage of the increased opportunities for growth that we anticipate in both our businesses for the second half of the year and obviously years subsequent to that? Our people have coped quite magnificently with COVID, and it's to them that I would like to pay tribute, every single one of our colleagues and indeed our customers, but particularly our colleagues. Some of them are working at quite difficult conditions. I think they've coped quite magnificently. I'd like to put that on the record. We are very firmly based in terms of our finances, thanks to the very good work of Chris Redford, our Finance Director, who has put in place the synergies during the half year, which give us significant headroom for further growth. And the quality of our debt, both in Advantage and in Aspen, our bridging finance business, is absolutely superb. And I'm going to pay tribute there both to Graham Wheeler and his team, particularly on the collection side in Advantage and also to Ed Ahrens, who has collected an increasing -- in fact, a record amount of business in the second half of the year for Aspen. And don't forget, we always say that it's good finance and being a good finance business, it's not only about sales and about transactions, it's about being able to collect and having good relations with your customers as a result. And I think that when we come to it, you'll see that our Trustpilot scores, particularly at Advantage, show that we score very highly on that. So without further ado, I'd like to hand over to Chris Redford, who will introduce the highlights for the half year. And if we could just change 2 slides. The next one, please. That's it. Thank you.

Thank you very much, indeed, Anthony. Good afternoon, everybody. What are the financial highlights in our half year results? So profit before tax, we're very pleased with. Group profit before tax GBP 19.9 million against the COVID-affected GBP 6.3 million last year. We'll give you more details on that as we go through the presentation. Similarly, earnings per share up against the COVID-affected results last year. And you'll be pleased to hear we've proposed the first interim dividend for this year, which is 50% up on last year, reflecting some of those results. So what has driven this great profit result? Well, in Advantage, it's mainly excellent collections and lower than normal bad debt attrition. There's an economic factor behind that, but there's also very much some excellent work from Graham Wheeler and the team at Advantage in collections over the last 4 months, but also continuing into August and September. New loan volumes have also increased month by month, particularly since the dealerships reopened in April, and the profit before tax for the half year for Advantage was an excellent GBP 18.5 million against last year, which was affected by extra impairment provisions. In Aspen, they had a very good second half last year when book debt grew from GBP 18 million up to GBP 34 million. And this year, they've continued that with growth up to GBP 57 million in book debt, and that's obviously created more profit. Their profit of GBP 1.5 million is actually more than they've ever made in a year before, and that's just in a half year this year, so well done to the Aspen team, too. Moving on. What are the highlights in the income statement? Well, you can see against the COVID affected last year, we're quite level on revenue. It's actually a 5% increase on the second half last year. So we've got the book and the income moving in the right direction now. Impairments, very big figure. Last year, GBP 21.7 million. So that's not a very good comparative because that was COVID affected. If you go back 2 half years to July 2019, the figure then was GBP 7.9 million, and that's a pre-pandemic figure. So against that figure on similar-sized book debt, impairment is GBP 2.8 million better than that figure, which reflects the excellent collections in Advantage in particular. Other highlights in the income statement. Cost of sales is up, but that more reflects increasing new deal volumes this year versus the lockdown last year. And admin expenses, well, last year, obviously, people weren't earning their bonuses. We also had a bit of help from a one-off VAT refund. So admin expenses are up a bit this year, but there's good reasons behind that. So you can see the profit before tax for the group as it was on the first slide, GBP 19.9 million against GBP 6.3 million last year. Moving on. The balance sheet is nice and simple, so even accountants can cope with it. You've got amounts receivable motor finance, that's down on this time last year. But as I say, in the half year, it's actually gone up slightly since January 2021. Property bridging, obviously, that's a very big increase, but it has been gradual. It went from GBP 18 million at this time, July 20, sorry, up to GBP 34 million at the year-end and now GBP 57.7 million. Ed, the CEO of Aspen, will kindly say a bit more about that growth in his session later. The other side of the balance sheet, how are we financing it? Well, we've got good group equity still and you can see that's gone to GBP 189 million from GBP 174 million last year, and the borrowings haven't gone up that much, i.e., the investment -- extra investment we've made in Aspen has been compensated for by good cash generation at Advantage. And if we could give you some detail on that cash flow, moving on to the next slide. This is the where-has-all-the-money-gone slide. So you can see on the right-hand side, there's 2 sections: motor finance cash flow. So you can see how we've spent your money last year in the first half year and this year in the first half year. And similarly for Aspen Property Bridging, you can see how we spent our money in the first half of the year this year against last year. And you can see, therefore, in Aspen, it's mostly extra advances, but quite a lot of extra collections as well. The book is very clean at the moment. In motor finance cash flow, again, an increase in Advantage, but very good, what we call basic monthly live collections. And Graham Wheeler, the CEO of Advantage, will go on to say more about that in his presentation. Group cash flow, therefore, has moved so that at the end of the period, it's GBP 115.1 million against the GBP 108 million at the half year last year. Moving on to the next slide. Treasury and funding. Anthony actually mentioned this in his introduction, we've actually put in place extra maturity in extra facilities. So now our total committed facilities are GBP 180 million. So if our borrowings are GBP 115 million as per the previous slide, we've got about GBP 65 million worth of headroom. This is anticipation of our growth plans going forward. Group cash outflow in the 6 months, that also reflects dividends as well as the trading outflows that I mentioned. Next slide, please. I'll hand over now to Graham Wheeler, who some of you will have heard from before, and he will talk about operations and direction at Advantage.

Yes. Thanks, Chris. Yes, I've got a few slides just to update people on operationally how we're managing and develop the business in Advantage over the last 6 months. I wanted to start with our people. Anthony mentioned earlier on that our team have -- take through previously difficult times and are currently back into the group of business again now. And we've adopted a hybrid working model similar to many other businesses. Of the 180 staff, we've got a maximum number of people in the office at any one time of 120, but that averages itself out somewhere about 100 to 105 every day of the week. And that's given us that kind of hybrid working model. It's something that we'll adopt pretty much forever more because it's really working for us very, very well. As we've transitioned into the -- from home into the office environment, we took the opportunity to be assessed by Investors in People. It's something Advantage have done historically in the past. We took the opportunity in the middle of all that to assess ourselves again, and we were delighted that we were awarded the Silver status in Advantage Investors in People, which is an upgrade from the previous year, and one very small item that stopped us getting the Gold, which we're now currently working on. We are confident next time then we'll move into the Gold as we adjust our business according to the report. That maybe gives our people -- a feel for the way that our people feel about Advantage in the same way that we feel about them and have given us a great response. If you move on to the next slide, please. Should I click this on? Yes. Okay. Thank you. So the big issue in terms of what's going on in the market sales, since the release from lock down on April 12, what we've seen a slow but gradual increase in demand. We kind of expected a big boom, but that didn't happen because as I -- actually after the [indiscernible], you will probably all remember that the government released sections of society piece per piece. And that had an effect in terms of the car market and the car finance market. And we've also been affected by the microchip shortage in terms of new cars, and people have seen that there's been lots of delays, 20% of the market in terms of new cars. It's 20% down based on even last year, and that's had a knock-on effect in terms of the focus on nearly new cars and used car finance. And people have shifted out of new cars. In fact, some used cars now at the moment are actually more expensive than the brand new price of that car. And because the market has been focused on satisfying demand in the new and used car sector, actually used cars and the sector that we trade in, which is the slightly older, higher-mileage vehicles, have fallen by the wayside a little bit. And the stock is significantly reduced in the marketplace just now for the types of vehicles that we normally finance. Anecdotally, one of our dealer partners has operated currently with 150 vehicles in stock when they would normally have 600 vehicles in stock, and that gives you a feel for the lack of quality new car stock that's in the sector that we currently operate in. That has driven volumes up a little bit and deliveries down, and that's created a bit more competition because there are still the same finance companies about, but a lot less deals that are there just now. But regardless of the competition in there, we've done really well. Our sales volumes have gradually increased demand per month, almost in a linear fashion there during the course of this year. And we're taking the opportunity to adjust our business mix, which has had a knock-on effect in terms of our average rate and margin. We've done that by -- of course we're focused on improving the quality of business from -- moving from our risk reduction [indiscernible] in the middle of last year to managing risk position now. We control the commissions we're paying to our retailers. We [ haven't ] increased the amount of commissions at all, and that's -- and by also applying more aggressively in terms of the better quality business, which has been compensated for in terms of the volumes of business that we hired at the other end of the scale. And I'll just click on to that the next chart, which kind of brings that into focus a little bit. The chart on the left-hand side shows the increase in volume month-by-month and also shows that during the course of the last, I guess, the last 2 or 3 months, we've seen an increase in our levels of tiers D and E, which is our lower quality business for higher rates business. That's been done by design because we adjusted our scorecard a little bit in terms of tiers D and E, and it's given us the confidence to move back into that marketplace that we have stepped away from and then we got last year in the middle of the pandemic. So great news from that point of view. It has a knock on effect in a number of areas. Firstly, as we've adjusted the mix of the business, our average rates in terms of lending has been up during the course of the first 6 months. And because of the increasing value of cars, we're able to finance a little bit more on the cars as well. So effectively, the average value of the loans has gone from [ 6.5% ] to just over [ 7% ]. So it's a perfect situation of growing volumes, better mix, increase the level of average rate applied to a higher average lens and that all bodes well for the future of the business as that mix has continued. And actually, that mix has continued into the first 2 months of this quarter as well. So we are, from that point of view, we're making some good progress on sales and we've got some ideas in terms of how we can grow our business, which I'll talk about in a couple of seconds. In terms of our customers, they're still given us great feedback. We -- the approach we've taken in terms of our employees is to provide that human trust to our customers. And some of the feedback we're getting is first class even from those -- some of those customers who have had really difficult times financially and from a social point of view, and have commented on us being the best customer service in the U.K. and recommended Advantage Finance. Those are great comments, which scored really well, but that kind of relationship with our customers is the basis of the success that we have applied to our collections processes. And I just wanted to just talk about briefly where we are in terms of collections because that's the thing that's driving the increased level of profitability within Advantage. The chart on the right shows the percentage of live cash received in the business. And we -- if you go back to October 20, we were collecting about 87% of live cash. That's gradually improved into this year. We're averaging in excess of 94% which is actually a record for Advantage Finance in terms of that live cash collection position. And how do we do that? Well, we identified the customers coming up with payment holidays, many of them 6-month payment holidays, had to be coaxed back into the process or the habit of repaying us again after having 6 months off. So we kind of would strictly approach this. They've actually -- rather than chasing them for -- all of a sudden chasing them for a full monthly payment, in many cases, our focus was on just getting customers back into the habit of paying again. So we changed the bonus structure of our collections team so that they -- we rewarded the collections team on arranging sustainable -- or having a certain -- sustainable payment arrangements with customers rather than pure cash collected. And that has had a really significant effect in amount of live cash. So we're getting -- we may not be getting full monthly payments from every single customer, but the fact that we're getting money from almost every single customer has driven that live cash received at over 94%. We successfully applied our self-developed payment portal to customers so that when they do [indiscernible] read there, but we immediately send them a link to say kind of, "Oops. We noticed you're missing [indiscernible] there, but here's our payment link to make a -- to make your payment on a mobile phone." And that has really worked for us as well as we've taken lots of nice healthy cash in from customers through the payment portal. And at the other end, we set our sights 2 or 3 of our most experienced and talented collectors and set our intensive care service for customers who were having some real serious problems with their finances. The purpose of that was to keep customers in their cars, try and help them to work their way through the problems they've got and get them back into making some sort of payment towards us. And the net effect of all those things has been, as well as the increased level of live cash being received, is also reduced the number of bad debts with just a number of voluntary terminations, which is having a very significant impact on -- a positive impact on the financials of the business. So from that point of view, that's the story behind our collection performance and our financial performance. I just wanted to touch briefly on further growth for the future. We've got a number of projects that are kind of all technology based and digital based. We've been spending a lot of time and effort working on our digital marketing proposition. We've kind of reworked and redesigned our website over the course of the last few months, which has had -- created a threefold increase in the number of direct web visits from customers who are searching out finance from our type of offering, and that has had an impact on the volumes of direct business, which has grown significantly as well during that last 6-month period as well. And we've got a plan in place over the course of the next few months to take that into another level, too. So great stuff from the digital marketing perspective. We're working -- we set up, I guess, just over a year ago, a link to another finance company who are more of a prime organization, and we've got a link between their system and our system so that we can take and have a look at some of the deals that they then fancy according to their risk appetite. And actually, that's actually generating about 90 deals a month through that section just now, which is going really well. But we're in discussions with another, much larger opportunity. We are -- we can link our system to a prime finance company. In fact, we have a kind of partnership agreement in place with them. And that potentially could create a lot more volume for us in the future. And hopefully, we will be able to tell you more about that in a bit more detail maybe next time we get together. And then lastly, from an aggregator website, the aggregator websites like Confused.com, Compare.com, Moneysupermarket.com, are all beginning to move into motor finance as a price comparison position, and we are working behind the scenes to get involved in that with 1 or 2 of our broker partners. And again, that is -- that's got a big potential for us as well, and we'll continue to work on that over the course of the next couple of months. Lastly, because of the payment portal has been so successful, we're developing that further into other online tool services for customers to be able to digitize their relationship with us for those that want to gather more information from us, and that should free our resources up for our great people up to provide even more of a human touch for those people who need it most. So it's been, [indiscernible] somebody from an Advantage point of view, the last 6 months have been [indiscernible] from a collections point of view, growing opportunity and growing performance from a sales point of view. And we've not been resting our laurels on that. We've been developing our business behind the scenes to be able to create opportunities for further growth and further volume and further customer services in the future. So that's pretty much where we are with Advantage, and time for me to pass back on to Chris Redford.

Thanks very much, Graham. Some really exciting developments in Advantage there, and I'm sure people are interested to hear about them. On statistics, we always try and be very transparent in what's happening within both our businesses and on motor finance, the main business. We haven't shown you this slide, so I've updated it again at the half year. And you can see this is the -- showing the profile of new deals over the last 6.5 years. You can see on the top line what number of new loans we've done. Graham referred to a higher average advance in the 6 months, so hopefully, you can see that GBP 7,050. But also it's worth commenting here that the interest rate flat over the last year has been a bit lower, but that reflects the average customer score that you see just below that, which is much higher quality. Can you see? We used to be about 860 and now we're about 900, 905 and that really is also part of the reason why early repayments are so good. This is another slide that we've updated. It's a very complicated slide, but I'll do my best to explain it. What this slide does is show you the correlation between the way Advantage customers make their first repayments and the end outcome in terms of how many go to bad debt in 5 years' time. So the blue line is the way customers make that first repayment. And you can see on the left-hand scale that between 90% and 100% make their first repayment over the years since 2003 through to the current date. And then the red line is the inverse scale on the right-hand side, which is the level of bad debt. And you can see over the years how closely they've been correlated. And just to talk a bit more about recent trends on this chart, you can see that after a slight blip in March 2020, can you see when the blue line went down? That was when COVID hit and a few people who've just taken car loans out, a few more people than normal, panicked and canceled the direct debit. So we had to work hard to get them back on track. But then in line with Graham's strategy on quality, the quality has shot back up since then to be about 98%, 98.9%. In the last couple of months, it's gone down slightly, but that -- all that reflects is Graham's previous chart, where we're moving more back into tier D and E, which was more of our normal areas for writing good Advantage business. And that's had a slight impact on early repayment, but still very high. The reason the red line after about 5 years ago is dotted is obviously, we haven't had those results yet. But if we could rely on how it was up to 2016, that would be great because there is a strong correlation between the way customers make their first repayments and the end outcome after 5 years, and that obviously helps the business, because it means we can see any problems coming very early on and try and react to them. The reason the red dotted line is slightly below the blue line going forward is just we think cautiously that there will be some impact post pandemic from some of the economic factors, increased inflation, a bit more pressure maybe on disposable incomes for certain of our customers. And that's feeding into those forecasts, but we obviously hope they're back up near at the blue line if they can be. Moving on. This one is also a slide that we've shown before. It's quite a complicated slide. I'll do my best to explain it. It's a balance sheet slide. So what it shows you is the status of our book of net receivables at the end of July 2021 versus the position at the end of January 2021. So you can see that at the end of July 2021, 41,034 of our customers were up to date out of the total of live accounts of 61,914. And that's an improvement since the end of January when there were 39,411 accounts up to date out of the total of 62,651 (sic) [ 62,751 ]. And if you want to spend time looking at how far they were in arrears, you can also see that 0 to 1 arrears, 6.01+, they may still be good customers. It may be that, that's a 48 months deal. We're 36 months into it, and they've only made 30 payments, so 6 are in arrears. And what we're measuring on here is original contractor arrears so that we can see where the cash has gone. And obviously, when dealing with the customer as required by the FCA, we treat payment holidays as arrears. But on this slide, we wanted to show you as it is if we were measuring against the original contract. The 3 columns in the middle are quite interesting, I think. We've only got 48 accounts at the end of July. We were on payment holiday, and you can see the profile of where those accounts sit in contract arrears. But that is now nil. So that column is now nil. 16,209 live accounts have had a payment holiday. They obviously need a bit more intensive care that Graham alluded to in his slides earlier. And then you've got the nonpayment holiday accounts where -- there hasn't been a payment holiday, and can you see 90% of those are up to date? So I hope that's of interest. Just below those 2 columns, you can also see that as a measure of collections, 96% of nonpayment holiday accounts due were paid in July and 88% of post payment holiday accounts, as I say, they need a bit more intensive care, but they're paying very well at the moment. If we can move on to the next slide, please. And I'll introduce the CEO of Aspen Bridging, Ed Ahrens, and he will talk about developments in our growing bridging business. Thanks, Ed.

Thank you, Chris, and a warm hello from me. Aspen Bridging has had a strong first half of '21 with some record transactions up at 66 for the first half of the year. And this largely also follows the momentum that we were building at the end of 2020, following the reopening of the property market at the midyear point last year. Net lending of GBP 56 million is also a record. And as Chris mentioned, PBT is GBP 1.529 million for the year. Just in terms of quality, we made some changes in 2020 that we benefited from in 2020, but that's also continued this year. We've got really what we're calling the best quality book that we've had. We've only actually got 1 loan in default, to put that into some context. So with net receivables at GBP 57.7 million, we benefited a bit from that from accreditation to the CBILS government scheme. That scheme has actually closed and we're back focusing on our prime core bridging propositions. Anticipating growth for this year, we've made some early recruitment, bolstered the team. And we've also worked a hybrid model. In fact, the Aspen team have been capable of remote working since we launched as part of our day-to-day. That enabled us to continue to operate smoothly through the troubles that we had certainly at the end of 2020 from the COVID and lockdown as well as the early part of 2021. We're always keeping our eye very close on our competition and what's happening in the marketplace. And we continue to tweak and represent ourselves on a product basis whilst ensuring we take the right approach to risk, rigorous underwriting standards as always. Just from a more holistic point of view, we've -- since launch, we've issued out 300 new loans over the 4.5 years and 210 of those have repaid. And I think we -- the message is, overall, it reinforces what we believe is our opportunity to grow progressively with quality lending. I'll hand over to Anthony.

Thank you. Thank you, Ed. Thank you for all those who have contributed. I think you've heard what I was mentioning in the beginning in that we've been a very firm base for taking advantage of very, very significant opportunities in growth. And I think you'll also be hopefully impressed by the hard work that our people have been doing during COVID in actually preparing the ways in which we can increase our market reach and increase our market share, and that's certainly our intention.

Now without any further ado, I'm going to go on to questions. We've got a nice balance of questions. And the first one is -- my brother will deal with, it's from Mark D -- sorry, [ Michael D ]. I do apologize, Michael. And over to Graham.

We're doing a very musical chairs here because one more -- right. The question is -- great results, well done from Michael D. Very nice for you to say so. Do you see this momentum continuing? Or would you see M&A [indiscernible] part of your growth? Well, I think the momentum element has been dealt with by other speakers in large part. And we do think that momentum is going to be maintained. In fact, if anything, increase largely a result of what we perceive to be increasingly, hopefully, a long-term market trends and also because of innovations, which we're making in our distribution networks. The point about the M&A. Well, [indiscernible] logically, we haven't got any aversion to buying other businesses, but there's just 2 points [indiscernible] make. First of all, buying other businesses as a whole doesn't seem -- historically, it's never been a terribly successful activity. Certainly 1 in 3, I reckon, acquisitions actually lends itself to an increase in intangible value of the acquirer. And so obviously, we have to be very selective if we were to undertake any acquisitions. And secondly, we'd probably only undertake acquisitions if it enables us to do something which, in-house, we couldn't do ourselves. And there may be instances where that's the case. But we'd have to be very selective again in identifying these kind of opportunities. Does that answer the question?

Yes. Okay. That's great. And thank you, Graham. I mean we're obviously open to offers on potential acquisition opportunities, but we do set quite high standards, as my brother has just said in terms of what we are prepared to look at. But if there's very good businesses around, we will have a look at them. The next one is from [ Javier R ] -- I hope that I pronounced that right, Javier. And the question is -- and I don't know if Chris can see it, but I'd like Chris to answer if you could, our Finance Director. It's about the historical ROE. Over to you, Chris.

Thanks, Anthony. Would S&U able to maintain its historical ROE in the future? And would Aspen affect this figure in a positive or negative way? Thanks very much for the question, Javier. Obviously, I think we're probably referring to historical ROE before last year when we had a bit of a blip due to COVID. And yes, I think we can. I think there's some excellent developments going on in the business, in both sides of the business that lead me to say that. Aspen is a bit more capital intensive. So yes, if we moved more of the capital into Aspen, then the returns would come down slightly, but it is quite marginal. And I think there's a good return on equity going forward given the developments in the business. I hope that answers the question.

Thank you, Chris. So the next one is from [ Chris R ]. It's not our Chris R., who is our Finance Director. Actually, I'm sorry, I do apologize. Before we get to that one, there is one from [ Daniel C ]. And I'm going to ask Graham Wheeler to deal with that one.

Yes. Thanks, Anthony. So the question is, do you think the increases in used car prices are temporary? And if so, how do you manage the risk of potential lending against an overvalued collateral? Which, of course is a great couple of questions. I think the new car prices are probably quite cyclical, but they're always cyclical, but all of the analysts tell us that because the lack of stock is likely to have an impact for some time yet, and the feedback we're getting from people like [indiscernible] just saying that the current situation will probably last until probably the spring, early summer of next year. So that's where we are with that. So by that time, I think we're going to see some reductions in terms of used car values. The question then is how do you manage the risk? Well, I guess, a couple of things. Firstly, we maintain our -- look at some rules around what we're lending against vehicles. And what we've actually seen is [indiscernible] a reduction in what we call our loan to value from [ 90% to 88% ] over the course of the last 6 months. But much more importantly than that is we do a very detailed affordability calculation for our customers to make sure that they've got the headroom and the finance to be able to afford the car. And it's that affordability calculation that we set a limit on the amount we're prepared to lend, at the way we're prepared to lend, that will have a controlling factor in terms of -- or mitigating factor in terms of potential risk of overvaluation of cars. So those 2 things together make us feel a bit more confident that we are somewhat protected by drops in value. And I have to say, given the fact that in the marketplace, we then -- we were looking at cars at GBP 6,500 to GBP 7,000, our percentage increase on that type of valuation certainly does have -- that doesn't have the same effect as the same percentage of plan itself to a [indiscernible] new car at GBP 30,000 to GBP 40,000. So I think we're somewhat protected in terms of the market we're operating in as well.

We've got a lot of very good questions now. The next one is from Chris R. And that one -- this one is for you as well, Graham, on the new car side.

Yes. [indiscernible] Yes. The question from Chris is, do you see the current momentum in used car sales continuing? And if so, is anything restricting your growth? I think that our own current momentum is continuing, and it's doing what we were moved into the third quarter and doing very well from that point of view. We -- all the statistics are saying that during the course of 2022, there's an expectation of about a 10% to 11% increase in terms of used car sales volumes. So that hopefully will be a bigger opportunity for us into next year. But I think the growth factor for us will be the diversification of our sales channels, and I think we're very hopeful that those will create further opportunities for us, too. So do we see the current momentum? I think actually, if we get all this right, there's actually further momentum in terms of our used car financials. Is anything restricting our growth? Not really. The issue is the very -- I think the very well-managed pricing versus quality, which we maintain very rigorously within our business. And theoretically, we could write a lot more business at a lot lower wage, but that's not the business advantage, and we're working to maximize returns to the best of our ability. And from that point of view, there's really nothing to hold us back.

Good. Thank you so much, Graham. And the next one, I think, is yours as well, from [ Simon C ].

Yes. Thanks. You guys are making me work. Thank you very much for that. Simon's question is, as furloughs end, and do you see this as a catalyst for bad debt to increase? Obviously, we're in regular contact with our customers, and then we believe that there is a limited impact of furlough ending within our existing customer base. The thing that we're just conscious of is with increases in national insurance and increases in inflation in terms of fuel and motor insurance and living costs, that's actually probably -- for us, it's probably got more of a risk for us over the course of the next 3 to 6 months as we head towards Christmas and people trying to find money for holidays and trying to make a bigger part in terms of Christmas this year compared to last. That's the potential of having a -- more of an impact on us, but we're ready for it. We're prepared for it, and we're looking forward to helping our customers through those challenges at the same time. So hopefully that's answered that question. Furlough is an issue, but I think it's limited -- it's more of our limit -- it less of an issue than maybe for some of the other issues that floats around in our society, [indiscernible].

Thank you, Graham. And the next one is for Ed Ahrens of Aspen from [ Jamie S. ] Ed?

Thank you. Yes. The question is, to what extent was the Aspen business boosted in H1 by a rush to beat stamp duty holiday deadline? Good question. I mean, now, our volumes in the first half of '21 really have built on the momentum that we built up at the end of 2020. We had the benefit of the CBILS program, which has added to receivables. But actually, the stamp duty is our target audience is mainly developers. Really the impact of that was really on their own sales, and therefore, increasing the repayment volume as opposed to increasing the new lending volume. So we'd see that as basically moving back more to normal and as we have a strong pipeline for the rest of the year.

Thank you very much, Ed. Next question is a pre-submitted question, not the one that we've had today. And over to you, Graham. Sorry for the overwork. We're very [indiscernible].

Thanks, Anthony. No problem at all. Yes, this is a question around sales volumes. It said that could you give us some info about the sales volumes and the progression in August and September? Is the outlook for the sales in the next months expected continue improving as in H1? And could you give us which amount of the sales volume we'd be comfortable for 2022? And so I think there's 3 questions on in there. The answer for August and September is that we have continued to grow our volumes in August and September, not quite at the same rate as between June and July. So then we are -- I think the track of that, I saw this morning, was shown about [ 1,900 ] for the month. So we're seeing continuous improvement month and month from a sales perspective. As the outlook for sales, the next one is expected to continue. I think it's probably going to tail off because of the lack of stock that's available, and we're planning for that within our budgets. And in terms of 2022, I think I've touched upon this earlier on about growth potential. We're certainly planning for an increase in terms of our natural sales volumes for June 2020, up towards 25,000 units, which would be, I guess, about a [ 15% ] increase in terms of our sales compared to this. And we're quite confident that's going to be achievable.

Thank you, Graham. Our next question is from [ Maynard P. ] Over to you, Chris, for this one.

Thanks, Anthony. And the question is, results revealed a lower than normal impairment charge of GBP 5 million for Advantage. What is management's best guess at a normal impairment rate for Advantage post pandemic as a proportion of motor receivables and/or revenue? So that's quite a challenging question post pandemic impairment rates. But what I tried to do is give investors a clue in the half year announcement by also comparing to the July 2019 figures. And if I look at the last pre-pandemic year as a whole, Advantage had impairment as a percentage of revenue of roughly 19%. Graham has been keeping the quality high as we've seen on previous slides. So normally, I'd say, well, I hope to beat that. But obviously, with the pandemic in mind and some of the factors that we've talked about in terms of inflation, increasing national insurance and a bit more pressure on disposable income, I would tend to say a normal rate might be around that 19%.

Thank you, Chris. Next one is from [ Robert G. ] I'll take this one. Why did you sell the personal lending business a few years ago? Well, very simple, Robert. First of all, we had a very good offer. And secondly, although we're a great fan to the home credit business and we think that it's been unnecessarily criticized, mainly by certain middle class establishment who we don't seem to understand the way in which many of our very good customers traded with us for over 70 years, we were concerned at the increasing tide of regulation, which actually was being imposed on what is essentially a very informal and trust-based business. So those are the reasons why we sold. And we think it was exactly the right decision to take. We've since obviously reinvested the proceeds in Advantage and also in establishing Aspen Bridging. Next one is [ Robert G. ] I'll take this one as well. Do you have plans in place for when senior owner directors retire? Well, given the fact, Robert, that I'm going to be living to 150, I can't really see if that's anything else but hypothetical. But actually slightly more seriously, yes, of course, we have plans in place, and we do cultivate people within the business who can step up, and they're already actually working in the business. My -- one of them is my first cousin, who is a Director of the main Board and also a Director of Aspen Bridging. Very talented; very, very, very amenable; very, very decent; and very able, very able executive. But I'm sure that you will be hearing a lot from him in the future. Next one is to [ Jamie S. ], which, again, I will deal with. Can you have any -- give any guidance on dividends as current forecast for a 9% increase for the full year, when you increased the first interim dividend by a very welcome 50%. Reason for the increase in the first interim dividend was that the profits increased, so we've always tried to keep a broad relationship. We'd like to be twice covered on our dividends between profits and dividends we pay out to our loyal shareholders. And let me tell you that we're very confident about the future. We've got plenty of leeway where we wish to pay dividends. We think the profits will continue to increase. And as a result, without giving anything away at the moment, my own view is -- and obviously, it's up to the Board and ultimately shareholders for the final dividend. My view is that is that the expectations in the market for our dividends are a little or even more than a little on the conservative side. So next is [ Peter C. ], and that's over to you, Graham.

Yes. Thanks, Anthony. Peter, yes. The question is what might be the effects of electric vehicles? So obviously, we're in the middle of that transition from -- of petrol and diesel engines and to electric vehicles in the U.K. market, in fact across the world just now. The effect will be opportunity, in my view, as we transition towards more older mileage electric vehicles. We're not in that market yet because the majority of the long-range electric vehicles haven't hit the 5-, 6-year-old rate that we -- age of vehicles that we currently operate within. So the average price of a used electric vehicle just now is in excess of GBP 20,000, and it's closer to GBP 25,000. And that's kind of about a reach just now. So what we are doing is we're preparing for electric vehicles. We've got a specialist page on our website that specifically deals with electric vehicle financing and gets customers some help and guidance for what to look out for as they are looking to take an electric vehicle on. And we've done a lot of research in a lot of research to see how we can help customers through the management of electric vehicles moving forward. So for example, we've identified that each of the batteries are made up of lots of individual single cells to make up the overall battery [indiscernible] situation. And we've identified that there's an aftermarket developing in that marketplace just now when a battery begins to degrade, it's usually going to be 1 or 2 cells within the overall pack, and those can be accessed and repaired relatively easy. So that gives us the confidence for finance and managing the higher level of electric vehicles into the future. We'll have to say that volumes at the moment are very, very small, almost nothing in the [indiscernible] we are. Last thing I'd say is we're in the process of changing all of our company cars in Advantage Finance to electric vehicles as well. Our [indiscernible] order is coming at the end of this year, and the view was that if we're going to move to electric vehicles in the marketplace, we take a step ahead of everybody else and learn what it's like to manage electric vehicles ourselves so that when it comes to interaction with customers, we can give the customers the best advice. So our [indiscernible] BMW i4 on the way with 366 miles on the clock, and I'm looking forward to having that and being able to -- and the rest of the directors were able to speak to customers about what it's like to manage electric vehicles in the future and piece together a fancier chart about what it's like to do that. Delighted to speak to you about that.

Great. That's -- sorry. Great. That's lovely. And thank you, Graham. Next 3 slides are for Chris, who I think from Maynard P. and from Javier R. again. I think Chris probably has replied to a couple. Anyway, Chris?

Thank you, Anthony, and thank you, Maynard, for the question. Presentation slide shows 16,000 accounts. So this is Slide 16, if we can just flip to that one -- 16. That one, yes. So there's a figure in the middle there, 16,209 accounts were on payment holiday, but have now come off payment holiday. And if you calculate that, that's about 26% of the live accounts. And the question is what level of the receivables do those accounts represent well, because they're slightly older accounts, the ones that took the payment holidays, and they've also got big bigger provisions against them. It only represents just under 20% of our net receivables. The next question is from Javier R. For how long should we expect lower than normal loan loss provisioning charges in motor finance? Great question, Javier. I'd like to think it would be a long time, but realistically, I think it's more of a this-year feature. So this year, obviously, we're working our way through and trying to work with customers post payment holidays. And as Graham alluded to earlier, keeping them in cars. And so if we're successful in that and the collections are maintained, then we do expect lower-than-normal loan loss provisioning charges in H2 as well. But then I would expect that they would normalize more as per my other answer to the question on impairment as a percent of revenue might normalize at, say, 19%. That's not a guarantee. It was a management guess as requested. Next question, [indiscernible] from Maynard P. Results show stage 1 noted provisions of GBP 18 million, up GBP 4 million or so on the corresponding GBP 13 million, GBP 14 million stated for the previous 24 months. Can management explain this $4 million increase? It seems that stage 1 provisions have increased, given the commentary on the improved quality of new loans. So this has to do with the ratio of loans that are in those different categories. So stage 3 has gone down a bit. Stage 2 has gone down a bit, but stage 1 has gone up. And that's good news and reflects some of the excellent collection work as things get back up to date in certain cases. And therefore, it's a stage 1 provision rather than a stage 2 or stage 3 provisions, which have both gone down a bit.

Anthony, Chris, Graham and Ed, thank you so much. And I think for every question that's come in, you've given a response. So thank you for that, and thank you to the investors for submitting questions. And perfect timing, with 2 minutes before the close, so that's great. I know Anthony, that investor feedback is important to you and the company, which shortly redirect investors to provide you with their thoughts and expectations, but I guess perhaps before doing so, I could just perhaps turn to you for a few closing comments.

Well, first of all, thank you, and most important of all, the investors who are coming on the call. We find these occasions, both with investors and with institutional investors and analysts extremely useful in terms of getting new ideas, seeing the reaction to the current trends of the business and enabling us to stand back and have a look at the business with obviously refreshed eyes, and this afternoon has been no exception to that. It's been extremely valuable. Thank you so much for everybody taking the time and trouble to come and contribute. And thanks very much, Mark and Investor Meet Company, for making it possible. Thank you.

No problem. Thank you indeed to Anthony and the rest of the management team from S&U. Can I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the management team could better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of S&U plc, we'd like to thank you for attending today's presentation. That now concludes today's session, and good afternoon to you all.