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

Good afternoon, and welcome to the S&U plc investor presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to Anthony Coombs, Chairman. Good afternoon to you, sir.

And good afternoon, and good afternoon, everybody, and many thanks to IMC for making it much easier and more convenient for our retail investors to talk to us. We value these opportunities a great deal. Can I, before I begin 1 or 2 comments on our results, introduce the team here, which I think you can see on the screen? On my left, immediately on my left is Karl Werner, who's the new Chief Executive of Advantage Finance. We're delighted to have him on the team. He's made a flying start to his tenure as Chief Executive. On his left is Graham Coombs, who's my -- the Deputy Chairman and my brother. On my right is Ed Ahrens, who is the very successful Chief Executive of Aspen Finance, which is our bridging finance, which is doing very well indeed. And on his right is Chris Redford, who is our Finance Director and in charge of making sure that the ship of state, if you like, in terms of S&U is traveling smoothly, steadily and upright. So with that, I'd just like to say 1 or 2 things to investors about our results, which you will see in front of you on Page 4. We have been on Page 4 -- by the way, on Page 3, we've included this year, a number of testimonials from our very happy and satisfied customers. We don't forget the customers, together with the staff that serve them, are what makes the business successful over the long term rather than just over the short term, and we very much value what they do. Right. Without further ado, moving to the highlights of this year. You will see that there has been a hiatus in the steady sustainable growth of profitability in the group. And that is despite the fact that the group continues to trade, I believe, very well in both of its motor finance and probably bridging finance divisions, Advantage and Aspen, and despite the fact that the markets in which they serve are actually both improving and robust at the moment. But the reason why there has been a hiatus in profit growth is twofold. First of all is that the inflationary climate in this country was both more and deep-seated and led to higher levels of longer-term interest rates than was originally anticipated. I'm not making any political comments on that, but you can draw your own conclusions as to my view of the competence of the current government. The second reason was the introduction in the middle of July of the new Consumer Duty, which came with it a whole series of investigations from the Financial Conduct Authority into the motor finance industry. This wasn't just Advantage in the motor finance industry. We believe the vast majority of our competitors have been subject to very similar investigation by the FCA. And that focused on forbearance. It focused on affordability. It focused on vulnerable customers. It focused basically on that area of our business, on which we've been most proud, which is the relations that we've had with our customers over what this year will be our 25th anniversary. So we've got a lot of experience in this business in dealing with the customers who we value so, so much. However, because of the investigation, the FCA did set certain preconditions on how we interact and collect from our customers. And these have had an effect in the closing operations in the second half of the year. Hence, the prudent provisions that we've made against that and also, hence, higher cost in compliance, which, although necessary, we don't anticipate will be there permanently, although part of them, obviously, will be part of our new compliance network. So that's the reason why there has been this hiatus in profits. We don't anticipate that being in any way permanent and that we will resume our habitual sustainable growth path in profitability next year. And that's why we've maintained our dividend, so far as it is sensible to do so, at about 120p per share despite a drop, as I said, temporary, in the earnings per share. And we anticipate that we'll bring our dividends back to normal over the next couple of years. So without that, that's the highlights. And I'd like to take the first question, please.

Yes. I'm sorry. I apologize. The -- well, that's the first question. You ask the first question.

So the first question we have is from [ Ash ] who has asked do you expect one to take a redress exercise? And what is your view of the overall costs?

I'll speak on that one up. It's probably a little early as we go through this process in a similar lockstep to many other lenders to answer that question too much in the affirmative at this early stage. In the wider part of that question, which is around overall cost, whilst the cost of operating in this modern market never seems to reduce too much, there is, I think, an awful lot of opportunities to improve efficiencies across the firm going forward. So a balanced answer to that question.

And we have another question from [indiscernible]. Will the BiFD review and will see the increase to -- an increased headcount as with the head costs.

BiFD, you mean Consumer Duty, just to fill up for people. And BiFD review is borrowers in financial difficulty. That's the acronym given to by the FCA. So over to you, Karl.

Yes. We're not envisaging significant further increase. Consumer Duty is approaching, in the months ahead, its first anniversary. Obviously, all firms would've invested in preparation and embedding that, but it's an evolving piece of legislation that, with ever-improving MI and review, enables us to look at products and services differently and, hopefully, pipes in some innovation going forward. There may be some temporary increases as we move through the regulatory engagement and take up other opportunities before returning more to the norm, but nothing out of the ordinary would be the view as of today.

I appear to have been a bit eager to get to the interactive part of the presentation. And in one sense, I think that can be welcomed by participants and investors. But I do think it's important that we present to you the financials and go through, quite speedily, the presentation that we prepared beforehand, which actually I understand that investors have in front of them on the screen. So without further ado, could I ask Chris Redford, our Finance Director, to address the Page 5 of the group financials.

Thanks, Anthony, and good afternoon, everybody. The income statement which some of you might have picked up from our outcomes this morning, but I'll just give you some highlights. The revenue was up 12%. That's slightly better than the average book debt increase during the year. Well, it's slightly better because we've reached interest rates resurrection, not quite as much as other interest rates, but there has been some progress there. Impairment, Anthony touched on in the highlights, 74% up on the previous year. Aspen is a nearly 0 impartment model. So this is mostly about our motor finance business. Why has it gone up? Well, we talked in the highlights about an increase in arrears and lower customer repayments in the second half of the year as we navigate through the cost of living crisis and also the regulatory fees that Karl will be happy to talk about later. We expect that to come back a little and repayments to improve. If repayments improves, then the impairment figure should be more normalized. It is up against quite a low comparative for last year. So that was a lower-than-normal impairment number where this year's number is slightly higher than normal. On the admin expenses, you can see a 22% increase on this slide. So what's behind that? What's the story? We have had extra regulatory costs, about GBP 1 million in skilled person and [indiscernible] cost arising from the current restrictions with regulators that borrowers in financial difficulty, forbearance, that we're still engaged with now. That's quite a conservative figure, that GBP 1 million, because it's kind of estimating the whole cost of the exercise, some of which is still ahead of us. If we get further into the exercise during '24, '25, there may be some more costs. But we think we should improve the bulk a bit behind that admin expenses there. The other thing to say about the admin expenses this year because it is quite a big increase is that some of you who follow us more closely may remember we gave our staff a couple of pay rises last year when inflation was doing something weird and wonderful in terms of accelerating away, both as a reward and to retain our staff. And to help them with their own cost of living, we give them a bigger pay rise. So that part of the admin expenses is probably more baked in. Finance costs, Anthony mentioned, they've doubled GBP 7.5 million to GBP 15 million. Remember, we're quite a low-geared finance company. So yes, that's painful for us in the P&L this year, but it doesn't kill us. We may benefit a bit if interest rates do start to come down. In terms of our own businesses, it's easier to reprice some of that finance costs into our shorter-term book at Aspen, but obviously, it's quite a lot more difficult with the HP product at Advantage, which is over 4, 5 years, and we've also got to bear in mind competition. But that's the story behind that line. And bottom line is we made GBP 33.6 million profit before tax as a group versus GBP 41.4 million last year. The split is at the bottom. We've talked a bit about the relevant headwinds at Advantage that decreased their profit before tax this year. Aspen, I'm happy to say, continued their part of increasing profits, GBP 4.4 million there to GBP 4.8 million. We have proposed a final dividend of 50p. That's down a bit on last year's 60p. As Anthony mentioned, we are slightly less a bit on positive this year, but we think that's the right approach and reflects our confidence of the future. Could we move to the balance sheet, please? The balance sheet, as ever for our business, is quite a simple balance sheet. It comprises in the main: receivables, borrowings and equity. So what's happened on the 2 receivables book? Well, I show you there, motor finance of 8%, property bridging, the smaller of our 2 businesses, up 15%. And borrowings of 14% have gone from GBP 195 million to GBP 223 million. That's within total committed facilities of GBP 280 million, so a bit headroom there. And in terms of the equity, that's still -- even in a more difficult profit year, that still moved in the right direction, 4%, so the bottom figure, last year. If we can move to the slide on cash flow. This is the where-has-all-the-money-gone slide. So it's a bit -- [indiscernible] you've got the movements in cash flow on the left-hand side and what we hope are more useful presentations of the cash flow in each business: in the middle, for our main business Advantage; and on the right-hand side, for Aspen. So that you don't just see the movement be booked at on this cash flow. What we're showing you is how that is comprised by how cash flow gone in a particular way by reasons of what's happened on advances or reasons of repayments, which we break down into the different segments. So hopefully, that's useful to investors and attendees today. In terms of picking out some highlights. Advantage, advances were down from GBP 186 million to GBP 175 million, but that was actually the second highest ever, so still a good story on Advantage and we're still investing in the business that way. In terms of the corporation tax number, you'll see on Advantage, even though we've made less profit, we paid a bit more corporation tax. In the background, you may be aware that the rates went from 19% to 25%. This year, we've paid a blended rate of about 24%, being 2 months of 19% and 10 months of 25%. So we will get the full impact, unfortunately, the 25% next year, and that affects this cash flow figure, but it also affects things like EPS. On the right-hand side, in Aspen, one thing to comment on year-on-year, there was a big increase in both repayments and repayments beyond term. We think that's a good indicator in that it proves that people are getting exits and it help the Aspen reduce the [ whole ]. So we're pretty pleased with those numbers. On the left-hand side, I've split down why has the overall borrowings, which included both, have moved from GBP 192 million to GBP 224 million. Well, there's an GBP 18 million outflow at motor finance. But please remember, they pay most of to the dividend. So you see in the middle chart that Advantage paid GBP 15 million of the dividend, which is passed on to investors by [indiscernible]. And then on property bridging, we invested GBP 14 million on that business, and we picked up [indiscernible] steady growth for that bridging business. So hopefully, that picks out my highlights in the cash flow. On treasury and funding, following the business, you may recall, in May '23, we sourced an extra GBP 70 million, which funded -- so our total facilities now are GBP 280 million, which I mentioned when we looked at the balance sheet, there's some maturities there. Our gearing has gotten up 10% in the year, but is still quite light for a finance company. So although we have some bit of pay with interest costs this year, we're not overly exposed to interest because more than half of the book debt is actually financed [indiscernible]. Thank you for listening to summary of group financials, and I'll now hand over to Karl Werner, who is the CEO of Advantage Finance. Over to you, Karl.

Thank you, Chris. I'll speak through mindful of lots of questions coming in. First of all, I just want to extend my thanks to everyone, the Chairman and everyone else in S&U and Advantage for a very, very warm welcome. I was in the role from the first of February, where they joined the business to have observed and learned til just before Christmas. I'm delighted to be part of a business that has such a clear and rich heritage, huge experience and expertise and, finally, that business with a really strong, empowering and safe culture and supportive with a true commitment to customers and where customers have real visibility across everywhere within the business. Turning our attention briefly to the results. This first slide is around new business momentum. The strong volumes and growth in average advance demonstrates that we continue, after a generation of building it, the support of the market, many thousands of customers and our intermediaries. That enables us, as we look to improve our written credit quality in the future, to leverage that commercial momentum, which is so overpowering, to sharpen our capabilities with a future view to improve returns. And I'll touch on it a little bit later in a couple of areas, but we've talked about already the regulatory engagement across all of the market, as well as here at Advantage, as that came to pass, really, from H2 onwards. I can certainly say that we're embracing that engagement for the greater good, but it does come at a cost. Turning to the next slide, which looks at our collections results from H2. A few things are happening here in the top 2, which is around the cash collected and the adherence to monthly payments. We're seeing widely publicized number of challenging macros increasingly biting. Expansion of our risk appetite earlier in the year and beyond, much was learned as far as our credit risk [indiscernible] is concerned, but we look to amend those a little going forward, as I say, right, higher-quality business. And an abundance of caution whilst we operate and focus and engage with our regulator, which we do so, but also under some minor and, as I say, already easing minor restrictions. The bottom 2 graphs illustrate both our credit risk expertise and cautionary approach to lending with lower loan to values, hence, why you see actual case number of bad debts and VTs well within budget. Turning our attention to the next slide, which touches further upon regulatory engagement in our sector. You've heard already that there's an engagement that's across probably more than 50% of the market, even more so for those of us striving to support the underserved. The most commonly quoted headlines are around discretionary commissions, which Advantage is not exposed to. We maintain a watching brief. If we look to the summary of that engagement on the left of the slide, as I say, a watching brief for the discretionary commissions, but unexpected to represent too much by way of cost or effort within AFL. The BiFD, the market study Anthony referenced earlier, is well progressed. The industry expects that to draw to a close towards the end of the calendar year. We're making good progress, but I wouldn't commit to a date for that to be concluded at this early stage. Consumer Duty, as I've mentioned before, sorry, Graham, is evolving, and we're well progressed and engaged with everything else to do with the access to credit and financial resilience. One great thing to highlight is actually what happens on the front end when it comes to customers who have cause to complain. And as you'll see from that table across the industry, Advantage have the lowest uphold rate, which demonstrates the efforts we put in on the front end. To the next slide, a very brief summary of our efforts on Consumer Duty, a very engaged and highly invested process leading up to the rollout as it continues as we get towards the first anniversary. Good examples there in the pack, for your information, as to some of the efforts made thus far, not to mention direct quotes from our customers as to the value that we add to them and to society as a whole. And then on to the last slide, the messages I'd highlight here would be we utilize challenges when it's time to wrestle. We do so by way to build better muscle for the future. We're refining and building upon very well-established and strong foundations. A year of consolidation, yes, but one in which it bodes well for our future opportunities. Once we're through that, more internally focused on consolidation phase. I'll pass back to Chris to unpack for you in a little bit more detail the financials for AFL, specifically.

Thank you very much, Karl. We showed -- again, we're showing some slides on the metrics every half year and every year. So I'm just going to, very briefly, go through those, pick out a couple of highlights. So the first slide here is the quality of the loan book and the new deals that we're putting on each year. So we've got last 5 years there. So you can see the trends in terms of number of loans, average advance continuing to go up, cost of sales, GBP 961 in the latest year, for information, about GBP 700 of that is introduced commission. So it's a variable cost that goes straight to the broker. Some of the other costs [indiscernible] as well. So [indiscernible] things like consumer credit referencing costs, data costs and also some of the frontline staff costs in terms of underwriters, salespeople, et cetera. So hopefully, that gives you a guidance on that particular line. You will note that the interest rate went up to 16.9%. So that was a nudge in the right direction this year in terms of trying to reprice what is a fairly long-term book in terms of its profile. And that interest rate was averaging against an [indiscernible] sort of internal measure of quality that stayed reasonably stable. If we could just move to the next slide, please. This is a very interesting slide in my view. So the left-hand scale and blue line show the percent of customers that pay their first payment on time. So can you see over the years, from 2003 to 2024, that has paid somewhere between 90% and a peak 99% of customers paying their first payment on time. So the trends are quite interesting. In the early days, we have manual underwriting. So the first payments were not as good, so 90% to 95%. As we gradually automated and got more skilled at the credit risk side of things, it went up. 2013, 2014, we were attracting [ closed ] credit tranche, a lot of very high-quality customers that have paid not just their first payment on time, but continued to pay very well. Then we got a bit more competitive with the rise in internet brokers and other lenders coming into the market. So it has settled over the last few years. Can people see the blue line? About 97% of customers paying their first payment on time. You will note, towards the right of the chart, we've got a couple of blips. The first flip was just at the start of the pandemic when people panicked a bit and didn't pay their first payment on time. We've also had a blip at Christmas this year, which, happily for us, is we covered a bit in January. But we'll continue to monitor that as we go forward. The chart gets more interesting when you look at how it correlates, again now it come after 5 years, which is the red line. And there is quite a good correlation there between the weight of [ customers ] who make their first payments and the end outcome in terms of the setup of bad debt after 5 years, which is the inverse scale on the right-hand side. So that's varied between about 10% and about 30% over the years. We've only got firm figures for that. That's between 5 years ago, inherently by definition, so 2019. It still seems to be correlating up to that point. And the dotted red line is a forecast, which is less certain as it gets to the right of the chart. But we still think there's a good degree of correlation between first payments and early repayments and the way these accounts end up after 5 years. If we could move on, please. This is a simple payback chart we show you every year. So the blue lines are the investments we made or have made each year between January '15 up to Jan '24 in not just advances but also the initial cost of sales or new loans put on in that year. And you can see what I referred to earlier that Jan '24 was the second biggest after Jan '23 in terms of our overall investment. The green lines show -- the more exciting thing is that finance director is getting the money in. We obviously have mainly finished reflecting on Jan '15 through to Jan '19. So they're mainly finished. But the others, as we move up through Jan 20 up to Jan '24, they're all forecast. And we'll see whether those end outcome estimates manifest themselves or not. If we can move to the next chart, please. The final metric chart that we're showing you is the receivables position. So this is a analysis of the book at the end of January 2024 versus a similar analysis at the end of January 2023. So the 66,702 accounts on our live book in Jan '24, 47,622 are up to date, and you've got that as a percent of live receivables as well. Legal and debt recovery is just follow-up debt, where basically we have the car back but we may still be discussing with the customer making additional payments. The value of that, what you can see, is only GBP 5 million versus the live, which is the bulk of our asset in the balance sheet at GBP 327 million. I'll now hand over to the CEO of Aspen Bridging, Ed Ahrens, and he'll take you through what's been happening in that business and where the focus is this year for the future.

Thank you, Chris, and good afternoon to all. It's been a good result for Aspen this year, particularly in the second half of the year, strong and balanced growth. Beginning of the year was a little bit stickier. But overall, we got to the end of the year where we wanted to get to with record number of loans out in the year and also record number of repayments, which, as Chris said earlier, is a good thing for the business. It just shows that our borrowers can actually refinance their loans and also selling properties. We've maintained the quality with only 15 of the loans beyond term out of the 163 at the year-end. And we remain very positive about the bridging market for us and for our prospects for this year. Looking into -- just looking at the trends in the business over the years. You could see we've made a lot of progress on the cost of sales as we've become more known in the market and with a broader base of brokers. So we're in control of the cost of sales. We're in control of the LTVs that were out there, and this are based on conservative valuations. We've made some progress also on the blended yields, where we've been moving up the interest rates, not quite in line with the Bank of England movements, but we pass on as much as we can sensibly and reasonably and remain competitive in the market. Otherwise, the terms remain unchanged, and we expect the outcomes to be positive all around. So just moving on to the next one, thinking about '24, '25 and just to set the context in terms of the marketplace. We expect the bridging market to grow by about 5% this year on the back of 4.2% last year. We expect that to be a good opportunity for us to continue to contribute growth and to the group. Otherwise, you can see that we're investing, trying to make sure that our profile remains strong in the market, expanding some network distribution and investing in our systems and also, very importantly, in our people in terms of upskilling them to be able to support the level of growth that we want and the quality of the business that we want. I'll now hand you back over to Anthony.

Thank you very much indeed to all the participants. I'm not going to repeat what I said at the beginning, which -- I'll only go on to questions. But I must say that the markets in which we operate and the way that we address those markets are extremely healthy at the moment. And although we have some short-term challenges in terms of regulation in one of our businesses, along with everybody else in the industry, we expect to overcome those in a very constructive way, work closely with the FCA and resume our growth marks -- growth path in profits. So that's the good news as far as the -- our investors are concerned.

I've just been looking at some of the questions that have been coming in as well as ones that have been resubmitted. There are 3 on gearing and on borrowing, one from [ Daniel G. ], one from [ Javier B. ] and one from [ John G ]. So we've got Daniel G. Could you read that one out first of all?

Yes. From [ Daniel ], we have when you're assessing the company's leverage, how different do you view the leverage from Advantage versus the leverage from Aspen? Do you have one common measure of company's overall leverage or 2 separate categories in terms of debt capacity and risk?

Chris, would you like to address that one?

Yes. Thank you very much for the question, [ Daniel ]. So we try to maintain a bit of flexibility, actually, in terms of where we allocate group funds. So we don't separate them or view them too differently in terms of where we are actually employing the company's debt. And if there is a better opportunity in one asset area, then we reallocate to that or we would raise extra funds according to what we wanted to do. So I hope that answers the question.

Good. Thank you. The next one is [ Javier B. ]

So are high provisions in Advantage related to economic environment? Or does it have more to do with the FCA regulatory issues?

I can take that, if that's all right, Anthony. So these are impairment provisions. We fully have gone up when we looked at the income statement by 74% this year. The higher provisions, in a way, related to both these features because they relate to higher levels of arrears and lower levels of repayments in the second half of the year, as we described. So why do I say it relates to those? Well, they -- the lower levels of repayments relate both to the macroeconomic environment, in terms of a few customers be modest and struggling with the cost of living crisis towards the end of the year, but it also can relate to FCA regulatory issues, where it's a counterstrike. We are being quite cautious in terms of our interpretation of the new Consumer Duty rules and also where we are in these issues with the regulators on borrowers with financial difficulty. So both those 2 things play their part, I think, in the increase in our impairment charge this year.

Good. Thank you, Chris. [ Javier R. ], he also asked a question about gearing and borrowing. Could you read that one out, please?

So from the outside, it seems like your -- you've increased your leverage at the worst time. Given the returns come lower than expected, are you still comfortable with your current gearing level?

Well, obviously -- sure, I'll answer that, and then Chris can come in as you want to. Yes, we are. Otherwise, we wouldn't do -- we wouldn't have gone there. It's well below our current bank funding and longer-term funding covenants. We always believe that a business such as ours is dependent on its collections, and that is a very good measure of its success. And with the exception of maybe recent collections in Advantage, which I've explained to investors, our collections history is very strong indeed, has rebounded slightly earlier this year. So yes, I'm happy with the level of gearing. Obviously, our gearing is only there to support either the investment in the business, and we do that because we see good opportunities, or rewards for our shareholders in terms of dividends. And those are rewards that are well-earned and, hopefully, appreciated and will continue. Chris, do you want to add anything there?

No, I totally agree. We try and look at the gearing and the borrowings level that is following the asset opportunity. Now in this case, as [ Javier ] mentioned, returns have come lower than expected. So yes, we did expect slightly higher returns when we decided to push the level of borrowings and gearing upwards during the year, but we're still comfortable with the current gearing level. And as I said earlier, I think it's relatively ready for finance.

Thank you. Thank you. There was a question, which is presubmitted, on algorithms and their use in underwriting, which I thought was an interesting question. It's obvious I don't know the name.

It's towards the top.

So this one is from [ Jane ]. So given recent advances in AI, do you see algorithms being used to underwrite car loans?

Yes. We already do. Many vendors do. And as I say, it's early days my time within the business. But it's capabilities that have been built in-house and, quite deep and extensive, do use a high degree of automation from what some may term as AI. But if anything, this serves the customer quicker, widens access, it's going to be embraced, and AI is one of those. So there's a number of initiatives, both specifically within Advantage and across the industry, that will make much more of that. But as I say, we are already highly automated from a credit risk perspective already.

I think I will just expand a bit on the return on capital employed query. Obviously, that's pretty critical, as you say, when we're increasing our capital investment. We don't really -- we weren't too explicit on that. We are constantly putting to improve our capital -- return on capital employed, impairments and other kind of interventions line. And we are conscious, particularly at Aspen, that we're looking for a capital -- return on capital employed certainly well in excess of 10%. And that's actually improving year-on-year. And in Advantage, that we'd like to return capital employed of over 20% in the [ housing ] days. But fortunately, competition seems to have stopped that. And now we'll be looking for a minimum of 13% and, hopefully, heading north of that.

Actually -- we actually addressed that because I think they put on return on equity, but then we've answered the gearing point as well. So I think we've covered that, but thanks, Graham, for that. We also have an interesting question from [ Dominic C. ] on forbearance, which I think we ought to address. And that's over to you, Karl. If you want to read that one out.

Does the increase in forbearance -- you mean you're simply not collecting from some overdue loans where you previously have negotiated and reduced payments at, which then impacts on borrower's credit record. If so, are these ones more likely to fail, hence, the increase in provisions?

I mean, the short answer to that is no. We're not doing that. But the increase in forbearance is again going back to both time, effort, information and engagement. So there are a broader list of things that constitute good forbearance, broader opportunities, sometimes over perhaps a slightly longer period of time than previously. And I'm talking as an industry here, not specifically in regards to Advantage. The clear outcome is to make sure that there's the right outcome for both the lender and the customer in equal measure. So I don't see the negative in anything sort of referred to within that question.

And could we also address [ Damian's ] -- sorry to have read [Dominic ], [ Damian ], it's my writing -- Damian's other question, which is just below it there.

With the reduction in products that you're willing to sell at current FCA buy bans, is this likely to then talk about that change, which reduces your addressable market to the most [indiscernible]?

It does not. I mean you're quite right, [ Damian ]. You would've seen some product sales from other providers. The most recent ban, but yet sort of 1-month extension currently, for GAP sales, but that -- it impacts both lenders and intermediaries as a good example of further reduction in products. It may well be in other areas. Their list of closed products is growing. We are -- it's a very large market. We are very good at motivating applications within it. So I don't -- and we have a singular product, really, in higher purchase currently. So I don't think the direction of travel is a further reduction in product, I think quite the opposite in the years ahead.

Just to make it plain, [ Damian ], we didn't actually, or not recently, offer GAP product. We, I think, used to, but that was roughly 10 years ago.

Yes. We finished doing that in 2015.

Yes. So we haven't really reduced our product range in that regard, and we don't intend to. And indeed, we intend to maintain our addressable market forward to finance across the piece. There may well be a small contraction, first of all, for regulatory reasons. We want to make sure that the way that we're dealing with customers, who may be seen as more vulnerable, is as it should be, and I'm actually certain it is, but then we want to demonstrate that to the FCA. But we still want to offer the full suite of products to the full breadth of our customer base in the longer term. So I hope that answers [ Damian C.'s ] question. There's another question that I saw come up on electric vehicles, which I thought was interesting. It was presubmitted questions. Sorry, I don't know who's it from.

Yes. This one is from [ Roger ], and it says how potential continued reduction in the value of EVs have fallen currently.

It's a great question. Obviously, a lot of people interested in this space. I think all vehicle values, over the multiyear viewpoint, can appear quite volatile. Over the more recent times, we've seen more volatility in used car prices for EVs, but that will tend to, as always, bottom out and level out over the longer period. It's going to be a good long time until the used car part becomes EV to a point of being interested in having an impact on any lender with an average age of vehicles of 6 or 7 years old at the point of execution. So very little is the short answer on that. But I would say also the volatility in pricing will even out over the longer term anyway. So I don't think the volatile price reduction for used EVs will have a negative impact for anybody. We are much less exposed to that because that's not our market currently with where the used car park is today.

And can I ask next go to a presubmitted question, which is that one, yes, the one about Aspen.

Yes. Given the success of Aspen since its founding in 2017, what are your views on its long-term contribution to the group?

What are your view as far...

Obviously, from an Aspen perspective, we see a great opportunity to continue to provide to the group a diversified product and additional stream of business in a market that is expected to grow in which we currently hold a smaller share of a relatively large market, not compared to the mainstream mortgage market, certainly in the bridging market. And also the bridging market and that type of lending and borrowing is not provided by mainstream lenders. We don't see that changing anytime soon. And therefore, we continue to do what we're doing and bringing on quality customers and quality projects. We see a great long-term future contributing to the group.

Yes. I mean, I would just take the opportunity in general, my brother wants to say something, but that we're very pleased indeed with the progress that's been made at Aspen since we founded it in 2017, and we think it's got a great potential. While we're pleased that, obviously, profitability grows every year, we also injected quite a lot of capital into it. And my brother has already mentioned, the return on capital employed and we want to see that improve, but it will improve as the business grows and economies of scale become more acceptable. Secondly, we were very pleased about the environment business that they're generating and the kind of credibility they're generating in the broker market, which is mainly broker-led. We're also very pleased, however, that there are more Aspen directors, we call it, introductions into the business, which obviously mean that we are getting to repeat customers. And repeat customers only come back to you if you're developing an excellent reputation. And the final thing I would say we're pleased about is the improvement in efficiency because we do monitor, on a quarterly basis, productivity, you know deals per number of staff, dealers per particular part of the business, the underwriting business, the collections business and so on. And those are improving all the time. And I think we've really got a very serious business in prospect for Aspen. They're doing very well indeed. Right. I'm trying to see the next one we ought to be looking at. Keep going. Keep going. Apologies, everybody, I'm looking at this from the screen. Keep on going. Yes.

From that [indiscernible] and return, #8, to 5 years.

I think we've already covered that. I mean, are there any new questions that are coming along from anyone.

The last one was from John about gearing. So it's one of the...

Yes, which is one we've already covered, I think. So I think, actually, we've covered all the questions. I'm just answering questions that haven't been asked. This is meant to be an interactive forum. That's precisely what we are making it. Trying to say -- [indiscernible] very valuable, I suppose, where we're concerned and, hopefully, valuable so far as your -- viewers and listeners are concerned.

Perfect. And thank you very much for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order for the management team can 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, and good afternoon to you all.