S&U - PBT ahead, encouraging volume trends

S&U reported FY24 PBT of £33.6m, down from £41.4m in FY23 on higher funding and regulatory costs and higher impairments in Advantage in H2. PBT was 2% ahead of our forecast as stronger revenues – up 12% to £115.4m – and better costs offset higher-than-expected impairments. Net receivables grew to a record at both Advantage and Aspen and management noted particular strength in Q4 and a good trading environment in the current year. Having absorbed a significant rise in funding cost as well as additional regulatory cost, the company looks well positioned to deliver steady growth from here on, especially if interest rates fall in the latter half of 2024 (which we have not included in our model). Diluted EPS was 209.3p (FY23: 277.5p) and DPS was 120p (FY23:133p). We have raised FY25e EPS estimate by 2.4% to 230p and introduced FY26e EPS at 263p.