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

Good morning, and welcome to S&U plc Interim Results Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to Chairman, Anthony Coombs. Good morning to you, sir.

Good morning, and good morning to all very valuable retail investor friends. We find that these webinars are extremely valuable way of keeping in touch with the very important retail investment market. Can I just introduce everybody on the panel. Okay, we go to the next slide please, please Alex. And you'll see that we've got some familiar faces myself and my brother overly familiar with you and Karl Werner, you know who is the Chief Executive of Advantage Finance and has done a wonderful job in reconstituting the company over the last two years. And Ed Ahrens who is driving as CEO of Aspen Bridging the record results of that company as is Jack Coombs, who is -- who is on my right and who has been named Chief Operating Officer of the companies. And that bodes very well in the future of the company. And lines of succession along with his cousin Richard Coombs, who is also involved in the business. And on my left, we have Chris Freckelton, who is the Group CFO, did a wonderful job and is just betting in as a successor of Chris Redford who is with us for many years. So that's the [indiscernible]. Can we move on to the next slide please, Alex. And we concentrate on this because our staff and our customers are basically the lifeblood of our business. And we don't need to regulate really, although obviously they're there. They will be telling us how to deal with our customers, because unless we do with our customers and we've proven that since 1938, we don't get much business, and we don't make money either. So we're very pleased to see the kind of reception we get from customers. Next slide, please. And then the introduction well, I mean this is a very positive outcome of the half year. It was one that we were hoping for and we're probably anticipating to a certain extent. But we recognize that the past two years has seen difficulties in terms of regulation, probably in terms of the economy and the general political climate particularly in terms of regulation through, first of all, [indiscernible], which was part of the old conservative governments initiative, which came through under the FCA in 19 -- sorry, 2023 and then of course, we have the court appeal judgment which caused further confusion with [indiscernible] history or late last year. Well [indiscernible] are now pulling up a rearview mirror. And we'll be saying one or two things about the FCA redress scheme which we think will be entirely benign for Advantage Finance in the next few slides. So very positive backed up by an increase in profits, which we anticipate and an increase in dividend and long may that continue. Next slide, please, Alex. And these were highlights for the six months, which [indiscernible] that increase in profit, at S&U, a record profit at Aspen, recovering profits at Advantage, reduced impairment charge and earnings per share, which obviously improved along with the post-tax profits and also an increase in dividend from 33 to 35 [indiscernible]. We'll explain later the receivables and the borrowings. But overall, again, a very positive picture. And I'm going to pass you now on the next slide, if we could, Alex to Chris Freckleton, who will go through finance.

Good morning, everyone. So starting with the income statement and profit before tax for the period is GBP 15.6 million against, 12.8 million last year, so a 22% increase year-on-year. At the bottom of the slide, you saw the divisional profits. So Advantage has increased 15% to GBP 10.8 million. and Aspen has increased significantly by 47% to GBP 5 million. In terms of some of the key movements on a consolidated basis. So revenue, you have seen has dropped by 14% year-on-year, is previously due to the contraction in the loan book, particularly in Advantage and to a lesser extent as well some of the low-margin deals have been right in the first half due to our cautious spending approach. Impairment has reduced substantially by 57%. So in fact normal levels, reflecting better repayments and Advantage as we're now at 90% of [indiscernible] repayments as a percentage of June within 87% this time last year. And also excellent recoveries in collections in Aspen. So in the first half, we collected GBP 130 million, which is significantly up on the GBP 72.8 million we collected in the last year and half. And in terms of a couple of other areas, so I know it is the question in regards to admin expenses, so those have increased year-on-year due to additional compliance costs an Advantage, which we have looked to abate in the second half. Now the CMC charging structure is in place and also heightened professional fees, which, again, we expect to abate in the second half. And then finally, I just want to [ discuss ] on finance costs. So you've seen those have reduced by 31% and that's just the case of the contraction in the loan book and obviously, the lowest on rates that we've seen in the first half as well this year. If we then turn on to the next slide, please. So this is the group balance sheet. So it's a relatively simple balance sheet with amounts receivable, borrowings and equity. As we've alluded to, Advantages had a period of consolidation, so that the loan book has reduced by 14% from GBP 326 million to GBP 279 million. Aspen on the other hand, we have had a minor reduction despite very strong lending during half one, and that's due to the aforementioned excellent collections and recoveries. So we've seen a slight reduction from EUR 149 million to GBP 148 million. And then borrowings have reduced 23% year-on-year, and that's just following the contraction in the loan book. I also just wanted to point out, we have GBP 3.5 million of cash at the period end in other assets in this breakdown, which means together with our borrowings of GBP 183.5 million mean our net borrowings of EUR 180 million as at the period end. Can we move on the next slide, please. So this is the group cash flow, and it helps to show if we're aware of all the money is gone and also provide a bit more color around the movements in the balance sheet positions. If we start on the left-hand side of the slide, you will see we had an overall reduction in net borrowings of GBP 12.3 million from GBP 192 million to EUR 180 million. And that's reflecting the better collections and repayments performance across the two businesses, offset by GBP 8.5 million of dividends that we've paid in the first half. You'll note that gearing has reduced year-on-year from 103% to 75%, and from year-end, where it was around about 81%. If we then look at the divisional cash flows, so looking at Advantage in the middle, that has reduced by GBP 13.9 million in the first half. And one of the key movements there is the dividends. So in the first half, we didn't ask Advantage to contribute with great dividends and with the ongoing uncertainty around the Supreme Court decision. Now that has clarified to Anthony's point that the skies are brighter. We have resumed paying dividends from Advantage to the group in the second half. And then finally, just on Aspen to that. On the right-hand side, had had a reduction in funding requirement of GBP 5.8 million during the period despite, as I mentioned, with good balances, you will see there advanced GBP 106.4 million in comparison to GBP 93.5 million last year. However, those settlement repayments and repayments beyond term and really improves the cash position in the first half. If we move on to the next slide, please, around treasury and funding. So as I mentioned, our net borrowings of GBP 180 million sit comfortably within our committed facilities of GBP 280 million. There's been no change on those during the first half and obviously provides us significant headroom for future growth. And I just wanted to point out rather since the period end, both businesses have had an increase in funding requirements with advantageous lending volumes increasing, and we actually had a record lending month in September. And equally absent lending has also been improving significantly those excellent collections and recoveries have started to fall more in line with year-to-date expectations, which is helping to build the books as well. I'll now hand you over to Jack Coombs, COO; and he will talk you through our funding.

Good morning. Thank you very much, Chris. I think it's just important, obviously, to okay. We're obviously in a position where receivables have come down over a relatively substantial period of time across the group. And I think that the reality is that, that doesn't reflect the momentum that the business currently has. And just to put a little bit of flavor behind what Chris was mentioning in terms of September, Aspen lent over GBP 20 million and Advantage wrote over 2,200 deals. Obviously, we are open to the opportunities that are ahead of us. I think in terms of lease markets. And I think, obviously, just looking at the Aspen numbers very briefly we've got slightly longer terms coming through into our business, and we will see -- we increased the lending run rate during this half year by 15%. We have a lot of repayments at slightly higher level than we had expected. And I think ultimately, as people can't repay us twice, we will be seeing a slightly slower level of repayment in H2, and that will -- and already is driving the growth in the business. So with both businesses having a positive outlook and as Anthony said, being geared for growth in the sense that we are actually low geared. There are opportunities ahead of us. We are exploring the funding, as Chris mentioned, and we will be looking for a more efficient and more cost-effective option. And that will certainly be helping us to deliver both our benefits to the bottom line, which I'm sure all of our shareholders would appreciate and also the capacity to take opportunities as they arise for the group, and we're very much certain that, that will be the case over the coming months and years. So with that, I'll hand over now to Karl for Advantage.

Thank you Jack. Turning the page, we'll get straight to lending. And you'll see there are strong recovery, more customers, higher volumes, better quality, lending now more closely aligned to our risk appetite, based I'm pleased to say upon a new scorecard, a major project that was delivered successfully in Q2 of this year and the very latest affordability tool set, which has made a significant positive difference following the 166 engagement, which mostly embed in the first half of this year. Average advance is improving through what we see is sort of market norms. It adds easily accessible scale to our business as well as absorb a higher rate fixed cost. I'm pleased that we've delivered in H1, the performance we promised and forecast at the year-end 6 months ago. And as Chris rightly referenced, and Jack also the run revenue is accelerating through the end of Q2, especially to help with those year-on-year comparisons and especially as we get into H2, which will show a little more favorable picture one out as we progress through the second half of the year. I'm also pleased to highlight an improvement upon already very strong Trustpilot score that's compiled of a great many reviews, over 5, so now sort of to continue to be industry-leading at 4.9 out of 5, which demonstrates the value that we represent to our customers and to wider society. If we turn the page now and look to the other part of the business, which is managing customers in life through the [ arrears ] journey if they experience that, also a much improved picture, well, I'm sure we'll all appreciate improvements obviously take a little longer to materialize in the world of repayments, but we're better in terms of repayment percentages, write-off customers and arrears. You'll see some slides a little later on. They'll actually show you a 6-month comparison for injuries category, which is very positive, averaging a 10% improvement across the board. Have we done that? The right to resourcing, investment in our people some very significant technological investments that made us much more efficient and much more productive. And we see a team growing in confidence and experience in the certainly paying dividends. I'll reference any of -- couple of graphs that you see in front of you. On your top left, that is the amount that we expect in repayments per month than what we received. You'll see a large draw on that as we went through the 166 for the last 18 months or so. And then successfully concluding that satisfactory has enabled us persistent with a slightly better and improving quality focus time goes on to achieving those expectations. And also in the bottom end, I'm pleased, even though again, you can see a peak bubble, if you like, of write-offs post 166, which we always expected, we're now under budget in that regard for most of H1. If we turn the page on regulation matters. Obviously, there is awful lot happening in our space especially in the last sort of 24, 48 hours. I won't get into the weeks necessarily of that maybe to echo what you've heard already from Chris and Anthony that we're in -- but I would add we're in a very good position thanks to the longevity of our business that the first requirement from our regulators is to have control over your customer records going back to 2007, we're in a great position there. Secondly, to be able to manipulate data to and the different scenarios and potential [indiscernible] packages. So we're in a great position there, thanks to the hard work of our team back at head office in the credit risk and risk departments have done an exemplary job, which we shared with the regulator, is met with a number of compliments. And early analysis suggests that we have reasons to be confident and optimistic. But we will, of course, but by the wishes of the regulator in the market to engage widely in the consultation process. So it'd be worth for those inquiring minds, I'm happy to answer questions, but the picture won't really be that much clearer until being the new year. Turning to our customers, which are actually what it's all about, of course, we had a really busy period of investments and delivering some innovation, probably delivered more major changes over the last 6 months, than -- therefore, some considerable period of time. Some of the highlights I would reference there is the upgraded self-service for our customers, which went live and had very high levels of engagement, a whole new tool step for credit risk, scorecard and affordability, new premises, which expanded our capacity rate of 30%. And we're seeing all translate into better outcomes, hence, the Trustpilot score, and you'll see shortly on the other slide also our complaint measurement. I think it's wise words said look after your people, they look after your customers. We're certainly seeing that can come through. And then on the next slide, my final slide, I think, is just a quick reference of those product launches, 4 major ones in the first half, more to follow in H2. We're really pleased with how successful they've been, whether it be the self-employed product accessibility and engagement with the portal and others, changes to our website have been especially well received. And also worth noting we have more in regards to broadening distribution and give us broader market access and better optionality for where we source our business in the future and also dipping our time with a very sensible test project in the world of AI, which is focused in 2 specific areas to improve customer servicing. So we're excited about that, and we look forward to writing an even stronger story in H2. And with that, I'll hand back over to Chris.

Thanks, Karl. So the next 3 slides take a closer look at Advantage book performance. This focuses on originations during the period. You'll see that we've written just over 7,100 deals with higher average advances, as Karl mentioned, of GBP 9,916, the better quality customers, and that's demonstrated by the better customer score at 929 for this period, but also the lower interest rate flat per annum reducing to 13%. So following the introduction of the new store, as Karl mentioned, in a pricing review, we expect some movement back towards our traditional customer base in the second half, which hopefully reverse some of that margin reduction we've seen in H1 obviously supporting the higher volumes that we've seen in August and September. And I just wanted to comment on cost of sales. So there has been an increase on cost of sales during this period on these deals and that predominately to broker commissions with some of our brokers receiving higher commissions of better quality or higher advanced lending. Then turn over the page on to first repayment quality. So we've historically presented this as there's been a strong correlation between first payments made by customers and the bad debt and outcomes after 5 years. So the blue line and blue axis is first payments made and then the red line and axis is bad debts with the dotted line being expected that bad debt and the old line being mentioned, following the regulatory engagement, we're seeing first repayments continuing to recover. And with this alongside the quality of the originations we've written over the period, our expectations of bad debt and outcomes are starting to improve as you can see in the far right-hand side of the graphic with the dotted red line trailing up towards lower bad debts expected going forward. If we go to the next slide, please. So this is an analysis of the book debt at the period end versus the year-end based on a [indiscernible] and for the reasons already discussed around better collections performance and improving lending to higher-quality customers, we have more debt up to date at the period end at 68.9% versus 64.5% at year-end. And we also have fewer accounts in 6-plus arrears at 7.6% of the book versus 9.3% last year-end. And we expect this to continue improving in the second half of the year. I'll now pass you on to Ed, CEO of Aspen to discuss the H1 performance.

Thanks, Chris, and good morning to everybody. So in terms of Aspen, been a very good start to the year. That has been said, record profits for the half year, underpinned by quality loans and projects that we've been at funding and especially strong repayments and recoveries in H1. So record lending has also been mentioned. But in terms of the number of loans, for the half year, that's up 28% on the previous year. Net receivables of GBP 147.8 million, but obviously, we started H3 strongly, and we've grown since, and we expect that to continue the rest of the year. Record repayments, which is leading to overall turnover and profits are up significantly half years year-on-year. And like I said before, it's always good to see that in a lending business that you're actually getting your funds back. It's a good sign that our borrowers are able to refinance and also sell, which are the two key exit strategies that they have. So overall trends, stable environments, U.K. property transactions are up, and it always helps to have slightly lower interest rates, particularly when people are looking to refinance, and we see that continuing this year. Good quality book stable with only 14 loans overdue at the half year period. And I think really the main message from an outlook perspective is that the bridging market is large, relative to us -- our size, and we've got plenty of opportunity, and we expect that to continue to grow. So over to the next slide, please. So I'd like to just sort of highlight any point right at the top, and this really speaks overall to the quality of the book over time and our historic book as well as current book. So since the launch in 2017, we've lent out GBP 730 million of capital of which only 0.02% or less than GBP 150,000 we've experienced with actual capital loss. And I think that sends a very strong message to both our capability and our quality. So looking at some more of the other trends, you can see that we mentioned a number of new loans for the half year to half year up 28%, average gross advances are slightly down. I think that's really more of a market situation, but we expect that we'll continue to monitor that through the rest of this year. Gross receivables for 151, as Jeff mentioned, we've grown strongly, and Chris said in the most recent months, and we expect to continue to grow that for the rest of the year. Cost of sales, we're in control of that. You can see that it's been pretty stable over the last few years. Historically, when we first started, it was about 2%. But obviously, as our reputations we've got better known, got lots more broker relationships, we've managed to keep control of those costs. Steady on the LTVs and also on the blended yields, I mean, they've come down certainly compared to the full year last year, but that reflects the environment in terms of the lower rates, the BOE rates and us maintaining a strategic positioning but also protecting our margin in the market. And just to draw your attention to the average term in terms of months, you can see the effect of our new products that we'll come on to shortly having in terms of extending our loan average terms length, and that will help us grow the book over time. So turning to the next slide, please. So yes, a year of progress, good progress, but there's still a lot to do. We continue to focus on credit quality as we always have done and focusing on good quality borrowers as well as good projects and 21% of our loans have come from existing customers, which is very good. We're always looking to expand our channels, and we'll continue to progress that through the rest of this year to take on more opportunities, potentially more brokers and more loans. And we've always got oversight in terms of market risk managements, including obviously property values, what's going on from -- in the market relative to refinance rates and fraud prevention. In terms of investments, we've done a lot -- delivered a lot of projects. There are a lot more to go. But obviously, our focus is on speed of delivery, improving our capability of doing more products at the same time and also making it more efficient from a consumer perspective. And last, but certainly not least is our investment in our staff -- we obviously provide and offer the opportunity for vocational professional qualifications. We think it's important to upskill our employees. And pleased to say that 17 out of our staff have actually qualified already now and/or are about to qualify, and we will continue to make that investment this year and in the years to come. And on that note, I'd like to hand you across to Jack, I'd like to say a few more things about that slide.

Thanks very much, Ed. I think in Bridging, obviously, the benefit of writing a very good clean business is obviously seen in terms of the impact on quality of debt. It also brings a challenge. And the challenge is the level of repayment that you receive and the rate at which the money that you've comes back to the best customers pay back swiftly. So what we have identified in our new products, the opportunities where we can work with that high quality of customer that we've focused on Aspen on in longer-term products. And we have fortunately won the Bridging and Commercial award for Product of the Year for our new Bridge-to-let and buy-to-let products. And obviously, in Aspen, everything is preceded by Bridge. That is fundamental to the way we run our business, and that's very much going to remain our focus. And one of the benefits to yourselves as investors of that is that we are always lending our funds, retaining our interest, which means that we're charging on the gross loan and we're paying on the debt which means that there's always a good rate of return. That also in turn, creates an opportunity for us to work with customers on longer-term solutions whilst not compromising rates of return. And that has been one of the driving factors behind where the growth will be coming from in the business. So alongside that, we've also moved into dual representation with having recently appointed 2 additional firms to our list of panel. So we're very excited about the direction of travel, and we are certain that Aspen will be delivering good results both this year and the coming years. And with that, I'll hand over to Graham.

Good morning, well I think the -- to add little more to what Karl and Ed and Jack said, is last year, there is no [ deniable ] in establishing new initiatives and changes to the business to make us more competitive, but offer better quality service and hopefully to improve our profitability as a consequence. Aspen is in a business which has got lot of potential growth, it was traditionally really part of the flipping market, which is basically offering short-term loans to people who needed money quickly, this was out of [indiscernible] for example. That's now being [indiscernible] into the sphere where people exporting capital from other parts of world and short-term funding to facilitate that. [indiscernible]. In terms of Advantage [indiscernible] period as a result of intervention and obviously inhibited the ability to change or improve that business. That's now is [indiscernible] and in the past and [indiscernible] and has made changes which is going to improve our competitiveness dramatically, first of all in terms of the underwriting and the quality of underwriting and secondly in terms of [indiscernible] offering to the market and also in terms of our ability to collect debt whether we improve the product of the collecting departments or improve [indiscernible] or the ability of the customers themselves to interact independently of us. So all these things speak well for enhanced business and more profitable business.

Excellent. Well, thank you very much to all our speakers. I hope that's been helpful to our investors and our audience. But we're now going to move on to the questions that have been submitted. I think they are extremely good questions and ones we want to address. The first one is from Mr. J. Martin, who is a shareholder. Thank you very much for your kind words on getting through the markets and regulatory turmoil kind of. Our view of distribution strategy probably remains the same, although Karl, I think is going to have 1 or 2 things to say about expanding the distribution strategy of Advantage. And I think he's also going to talk about some the competition in the market because obviously, there are certain players who have withdrawn we take Advantage of that. So over to you Karl on that.

Great question. Thank you for it. So I'll deal with it in distribution strategy is to broaden it and there are lots of places that people in our marketplace seek vehicles and the funding that they need for that. We've been a single channel, single product and it's worked well, and we'll continue to make sure that channel that we have and the product that we offer is always evolves and fit for purpose while broadening out into other channels, including the sort of the dealership retail markets and the aggregators. Obviously, the world is evolving and changing, and we should be rightly represented where the customer is seeking our services. So that's probably the best way to answer that part of it can be broader and we will be -- are we better placed than our competitors? Well, yes, I could certainly have a guesstimate as to Supreme Court. But fundamentally, motor finance is a large and has been proven itself immensely consistently sustainable. So the short, but correct answer to that question is, yes, we are well placed to win greater share and boost the value to shareholders, we just want to make sure that we plot that course carefully to ensure that it's sustainable over the longer term. So certainly, I think the market is coming to us and following the SA consultation, all I'll say on that is those in the none will probably be feeling more optimistic today than they were prior to the publication of that consultation. But there's much still to engage with, as I mentioned earlier.

Thank you, Karl. I think that answers the question from Matt on the deal to trust from the move clients, how does actually effect our business. I have you also answers the question number three, from Eduardo, on our view of the competitive pricing environment and on the regulatory pressure on the section on discretionary commissions, and how they eliminated or our competitors or Karl may have something to say on that one. I think I'd like to move evolves for the questions that are being raised relating to the funding review. One is from Paul, who has asked on that. And also Matt wants to talk about that, particularly in relation to the fixed rate debt and the like of continued rise in bond yields. And I know that I think Eduardo in interested in that as well. So what I'm going to do is ask Chris, first of all, and then our Chief Operating Officer, Jack, to comment on that funding review.

Fantastic, good question. So yes, we currently have a revolving credit facility, which is linked to [indiscernible]. So we are beholden to how that moves. We don't have any hedging in place and so it directly impacts our finance charge. In terms of the funding review, we're clearly looking at different structures of finance other than revolving credit facilities. And hopefully, on slightly better terms in terms of those finance charges. And therefore, we are hoping to see an improvement in terms of the finance cost line and then also through to the bottom line as well. But we're hoping to conduct that review during the second half of this year and then be able to come back to the market with a view on funding structure may look like going forward maybe to improve the profitability and cost side of our current funding, but also support the growth ambitions across the group as well.

I think. Yes. Just adding to that, I think ultimately, as I mentioned before, we are in a low-geared position, which is excellent. We're also in a declining base rate environment. As Chris said, that's currently costing truly on our existing structures. Obviously, there is opportunity to reduce cost of funds through exploring our performance of funding. And that's certainly something that we are committed doing to generate the savings that we believe will put us in the best position, but to maintain a good net interest margin and also to put us in the best position to opportunities as they arise. I think certainly means we will be generating some results in this direction, which is -- that is our right. So I think we're pretty determined in that side. I think in terms of I think [ Martin ] has also mentioned fixed rates I think, as we've mentioned, we're not currently fixed on our funding. I think anything that we did in that direction in the future would obviously be looking carefully to match it to whatever lending we are doing. So -- and that's the approach that will be taking.

And we obviously do better on fixed rate debt than we are currently on existing percentage, hopefully in the exercise and that appreciates. What I want to move on to now is the very important questions and Jack mentioned net interest margins, which mainly relate, I suspect to Advantage on margins and portfolio mix. And this is something that's been raised by a number of investors. First of all, the Eduardo mentioned how do you think the shift in the portfolio mix between -- towards credit and longer loan durations will affect ROCE. And secondly, looking ahead, do you feel more comfortable with this new mix? And third, how does cost pressures we've seen on low sales from brokers claim processing costs, how do we see that going forward? And what measures are you to offset these pressures without in any way preempting what is saying, I think it's important that Eduardo knows and the other investors who have asked about this what our general position is on margins and on client mix. I mean we recognize the market does evolve. We think it's important that we step back into the market vis-a-vis a lower margin products possibly on a temporary basis how temporary that will be, well time will tell. We do recognize that our comparative advantage finance business is indeed with people who may be less in terms of their credit ratings. And as a result, we look at what advantage always called the golden nuggets in terms of people who have been badly credit rated by the industry and therefore are actually better than some of the credit ratings would -- so we're very much wanting to see a slight shift back towards our more traditional customer base, whilst at the same time maintaining the kind of excellent progress we're making in terms of new business at Advantage. So in a sense, we want a bit of our cake and eat it. We want to make sure that we do that. So that's the point of the review that we are having shortly with Advantage. And we're sure that it will actually produce increasing business at the same time the kind of margins and the kind of ROCE, I think Eduardo quite rightly refers to in his first question. But having said all that, without preempting too much what Karl said, over to you Karl.

Well skip the introduction -- thank you. Great question, Eduardo. I can see them on the screen. I'm going to take them in order, but be pretty brief without just sort of repeating everything that Anthony mentioned. So your first one is around the shift in the portfolio mix and affecting return. So I have nothing more to add than what Anthony said as far as our returns strategy and plans for the medium to longer term. What I would add is we define our mix and share it with you, whether it be tier mix or otherwise according to our definition. So when we change that as we have done this year with a new scorecard, it remains the definition. So to give you an example, what you would have seen in the old mix as a lower tier, higher risk new scorecards because you get a lot of slots when you change scorecards with better data. I won't get too into the weeds of how this works. We will actually now actually that lower risk score that would have suggested we would have written with a fairly high risk appetite was actually Tier A. So my point on when investors are trying to read what is this firm's risk appetite is a complicated picture and you need to understand where they are with rating their own cohorts. The mix, arguably, we were overweight 3 or 4 years ago in the highest post performing quality tiers. The adjustment for that is only 20%. So it's not a whole scale shift to the top of the scorecard and it's a scorecard that is defined by us is what I would add. Looking ahead, are we comfortable with this new mix? It's pretty early. It's a few months old. The analysis that we do, and we have exceptional analytical tools from a financial perspective suggests that it's going to make a healthy return. So on that basis, yes, but there are, as always, with a forward-looking and proactive business such as ours, a desire to do better. How do I view the competitive pricing environment? I think it's going to be quite volatile. Our competitor area in the specialist market. People like it. It's of a size of in excess of GBP 2.5 billion studied by the likes of Deloitte and others say it's only going to get larger. And post consultation, you will have people now that, that's settled show eager interest. So the names of the competitors may change, but the number of them will probably increase in the months and years ahead. Has the regulatory pressure and sanctions on discretionary commissions eliminated many competitors? Yes, a quick answer to that. But this early in the consultation, it's very difficult to be more specific on that. And then lastly, and as Anthony mentioned, the question around sort of cost pressures, mainly emanating from claim processing costs. For us, one takeaway I would have is the Advantage story was one really of 2023 and 2024 affordability in [indiscernible]. And we have baked in and deal with some of those costs, which Chris referenced earlier. Maybe at the risk of being overly optimistic and reading quickly the consultation exercise, our traffic of complaints relating to commission, which is where it is now and less so affordability is likely to drop off, especially as the regulator continues to make concerted efforts in regards to the activities of CMCs. So that's still present in H1. I think the -- is turning in our favor in H2 and beyond. So the short answer would be I don't foresee any additional cost pressure in regard to sales costs or anything relating to processing costs from a regulatory perspective. I hope that was helpful.

Thank you, Karl. I think that actually addresses the point by Mr. presubmitted that is which is presubmitted, about administrative expenses. I mean we are very conscious, let me just make it absolutely clear, return on capital employed, which obviously has a time aspect as well as a margin aspect. Because it is related to [indiscernible]. And you can take it that. We're continually looking at expenses and it is a very important part [indiscernible] return on capital employed. So I think with that relatively general, general admission, I think we can deal with that particular question. Are there any more questions there, Alex?

No, you have addressed all the questions. Thank you very much to you all for addressing all these questions. And of course, we will publish these responses on the Investor Meet company platform post meeting. Anthony before I redirect investors to provide you with a feedback, which is particularly important for the company. Can I just please ask you for your closing comments.

Well, I think my closing comments would be that in 2 ways. First of all, we're confident about the future. I think that these results are evidence that we're going to deliver what we're confident about. And the second point I would make is that the reason for that is related just to the market and possibly some of the trends that we've been talking about where in Aspen and Advantage. But many thoughts work we are doing ourselves internally. And I must take my hat off to the gentlemen around the table who run these businesses. They've not been in any way pulled off by regulatory pressures in actually improving the operational functioning of the businesses. Whether we talk about Myadvantage, the new portal changes direction process, continuing reviews of products and exactly the same thing as Jack said in Aspen where we won new product of the year. We're training our staff better quality staff than we had before. All these things don't just happen. They have been worked out very hard indeed. And I'm delighted with what we've been doing in that area. And I'm absolute certain that the more you put in, the more you get out and that will be reflected in our results in the future. So thanks very much indeed for coming. We really do appreciate these opportunities to talk to our retail investors and many thanks indeed.

That's great. Thank you all once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the Board can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of S&U plc, we would like to thank you for attending today's presentation, and good morning.