TIDMSUS
RNS Number : 7086A
S & U PLC
27 September 2022
27 September 2022
S&U PLC
("S&U" or "the Group")
INTERIM RESULTS FOR THE SIX MONTHSED 31 JULY 2022
S&U, the specialist motor and property bridging finance
lender today announced its results for the six months ended 31 July
2022. Although announcing excellent results for the first half year
of 2022/23, and confident as to future trends for the business, the
current pessimistic outlook for the UK economy as a whole
inevitably tempers our usual optimism with cautio n.
Financial Highlights
-- Profit before tax: GBP20.9m (H1 2021: GBP19.9m)
-- Earnings Per Share: 140.7p per share (H1 2021: 133.1p)
-- Net Group Receivables: GBP370.1m (31 July 2021: GBP306.4m)
-- Revenue GBP49.4m (H1:2021 GBP42.8m)
-- First interim dividend: 35p per ordinary share (H1 2021: 33p)
-- Group Gearing at 73% ( 31 July 2021: 61%)
-- Group funding facilities increased to GBP210m from GBP180m post half year
Operational Highlights
Advantage Finance Limited
-- Profit before tax: GBP19.0m (H1 2021: GBP18.5m)
-- Net Receivables: GBP279.9m (31 July 2021: GBP248.8m)
-- New deal transaction numbers: 11,800 (22% up on H1 2021)
-- Collection rate: 94.3% of due (H1 2021: 92.4%)
Aspen Bridging Limited
-- Profit before tax: GBP2.0m (H1 2021: GBP1.5 m )
-- Net receivables: GBP90.2m (H1 2021: GBP57.7m)
-- Record interest and fee income and good repayments
-- Winner of Specialist Product of the Year at Bridging & Commercial industry awards
Anthony Coombs, Chairman of S&U commented:
"Current trading in both of S&U's businesses is very
encouraging. We are of course aware that we live in troubled times
. Current economic and political conditions pose potential
challenges to overcome, but also opportunities to grasp. As Frankl
in D. Roosevelt declared at the outset of a much more profound
recession 90 years ago, "all we have to fear is fear itself."
Whilst rightly more cautious in a less promising economic climate,
S&U i s equipped with the ambition, experience and
determination to prosper."
Enquiries:
S&U Plc
Anthony Coombs, Chairman 0121 705 7777
Newgate Communications
Bob Huxford, Molly Gretton,
Max Richardson 020 7653 9848
--------------
Peel Hunt LLP
Andrew Buchanan, Adrian Trimmings,
Sam Milford 020 7418 8900
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Chairman's Statement
Rarely in S&U's 84-year history has the strength of our
current trading and first half performance contrasted so starkly
with the current frenzy of pessimism and gloom surrounding the UK's
economic, energy and political prospects. For the half year, I am
pleased to announce profits before tax of GBP20.9m (H1 2021:
GBP19.9m) on Group receivables at GBP370.1m against GBP306.4m last
year and with Group collections strong and consistent.
We are, of course alive to the darkening economic picture in the
UK as rising inflation, falling consumer confidence and the
prospect of recession put pressures on consumer confidence and
their disposable incomes. However, S&U's long experience and
understanding of its loyal customers' circumstances and needs, will
allow the Group to weather any future economic storm.
Meanwhile, this year's profit increase of just over 5% is struck
against last year's results which we reported as inflated by "a
lower than normal impairment charge at Advantage Finance." The
latter resulted from excellent collections offsetting pandemic-era
provisions. Interim Group revenue this year is up 15% at a record
GBP49.4m, and Group net receivables have increased by 21% as both
our businesses have achieved just over GBP30m of book debt growth
in the last 12 months. Most importantly, credit quality, measured
by both bad debt and default levels and by collections against due,
continues to be strong and improving. However, anticipating a more
challenging collections environment ahead, S&U's balance sheet
provisions remain at GBP95m.
Equity in the Group of GBP212.5m is 11% higher than last year,
and earnings per share have reached a record 140p.
Whilst paying tribute to the loyalty of our customers, these
results have only been made possible by the hard work, enthusiasm
and energy of our staff and those in management who guide them. Not
only have they adapted superbly to a gradual move to hybrid
office/home working, but many also face cost of living challenges
themselves. We have and will continue to address these, but I doff
my metaphorical hat to their magnificent efforts.
Motor Finance
Based in Grimsby, Advantage Finance, our motor finance business
continues its 20-year plus record of growth. Profit before tax for
the half year was a record at just under GBP19m as revenue rose to
GBP43.6m, 13% ahead of 2021. New deals transacted in the first half
were 11,800, an increase of 22% on last year. As a result,
Advantage net receivables now stand at GBP279.9m, an increase of
13% on a year ago.
Of crucial importance in these frenetic times is the quality of
the loan book and the sustainability of the collections it yields.
The half year saw collections against due at 94.3%, well above both
budget and last year. This robust performance was reflected in the
second quarter's monthly collections which reached GBP40.4m for the
first time.
These results reflect the vital work Advantage continues to do
in monitoring the circumstances and needs of its customers, and the
affordability of their repayments. Nearly a quarter of a century's
data and a broader range in our panel of credit reference agencies,
have allowed Advantage to expand its new customers range, improve
average yield rates and maintain excellent collections quality.
Advantage constantly studies customer payment patterns and
refines the data surrounding them. It can then adjust affordability
calculations and extrapolate future cost of living trends with some
accuracy. This not only reinforces future credit quality but
provides greater efficiency in identifying good future customers.
Integral to attracting good future customers is ensuring that
Advantage has a balanced and stable introducer broker base. The
success in ensuring this balance lies in the fact that the top
three introducers now account for 34% of new transactions against
44% two years ago.
Advantage's first half performance has vindicated its
long-standing attention to detail and continuous improvement in
customer engagement, underwriting, responsible lending and most
recently in marketing and resolicitation. Whilst used-car values
remain high, reflecting supply constraints, choppy waters ahead
will undoubtedly test the resilience of Advantage's policies and
procedures. I am confident Advantage will once again prove
resilient and I pay tribute to the skills and dedication of our
loyal staff in achieving these excellent half year results.
Aspen Bridging
Aspen, our Solihull based bridging and property finance
business, has produced an excellent first half by building its loan
book, its industry reputation and its young and enthusiastic team.
Profit before tax for the period has reached a record GBP2.0m
(2021: GBP1.5m) and net receivables now stand at GBP90.2m against
GBP57.7m last year.
Revenue for the half year grew by 35% in 2022 to GBP5.7m. This
resulted from a 10% rise in new deal transactions, higher interest
and larger-than-anticipated loan advances. Operating profit also
benefited from a strong collections performance, reaching 47
repayments in the half year, leaving 128 live loan facilities and
no long-standing defaults.
Whilst priding itself on the bespoke service it offers its
customers, Aspen has also speeded up its processing and continues
to develop its website and digital capability. It has also
developed new products, including a Bridge-to-Let Loan, designed to
appeal to smaller developers and refurbishers seeking security for
their project refinancing. We were very pleased to see this product
awarded the Specialist Product of the Year award at the recent
Bridging & Commercial awards.
Aspen's pipeline has remained consistently above budget,
although seasonal factors, higher interest rates and a slightly
slowing residential market has shown a recent return to budget.
Whether this augurs a cooling of the housing market depends upon
the future path of interest rates and the continuing strength of
the UK's labour market. At present, house price growth has slowed,
according to Nationwide, to an annual rate of 11%, although the
last three months only saw 1.2%, according to the latest Savills'
survey. Further slowing is likely, although housing values in
absolute terms remain underpinned by chronic under supply and, for
Aspen customers, a strong demand for well-located improvable
stock.
Funding
The growth in loan books at Aspen and Advantage has seen the
Group invest GBP25.5m net of dividend and tax payments during the
first half year. As a result, bank borrowings at half year were
GBP154.4m, well within the Group's current GBP180m medium term
facilities. Nevertheless, to accommodate expected future growth in
both our businesses in a timely way, a further GBP30m facility has
been agreed with our banking partners since half year end. Gearing
for the Group is currently 73% (H1 2021: 61%).
Dividend
S&U's long-standing dividend policy is to ensure that
dividends are covered twice by post tax earnings and are
sustainable given anticipated trading conditions. In this light we
are proposing a first interim dividend of 35p (2021: 33p) followed,
as usual by further payments to shareholders in March and July
2023. This first dividend will be paid on 25 November 2022 to
shareholders on the register on 4 November 2022.
Current Trading and Outlook
Current trading in both of S&U's businesses is very
encouraging. We are of course aware that we live in troubled times
. Current economic and political conditions pose potential
challenges to overcome, but also opportunities to grasp. As Frankl
in D. Roosevelt declared at the outset of a much more profound
recession 90 years ago, "all we have to fear is fear itself."
Whilst rightly more cautious in a less promising economic climate,
S&U i s equipped with the ambition, experience and
determination to prosper."
Anthony Coombs
Chairman
26 September 2022
INTERIM MANAGEMENT REPORT
This interim management report has been prepared for the Group
as a whole and therefore gives greater emphasis to those matters
which are significant to S&U plc and its subsidiaries when
viewed as a whole.
ACTIVITIES
The principal activity of S&U plc and its subsidiaries ("the
Group") continues to be that of specialist finance and in
particular secured hire purchase motor finance throughout England,
Wales and Scotland and secured property bridging finance throughout
England and Wales. The principal activity of S&U plc (the
"Company") is as holding company of the Group.
BUSINESS REVIEW, RESULTS AND DIVIDS
A review of developments during the six months together with key
performance indicators and future prospects is detailed in the
Chairman's Statement.
There are no significant post balance sheet events to
report.
The Group's profit on ordinary activities after taxation from
continuing operations was GBP17,089,000 (H1 21: GBP16,154,000).
Dividends of GBP11,304,000 (H1 21: GBP8,262,000) were paid during
the period.
The Directors recommend a first interim dividend of 35.0p per
share (2021: 33.0p). The dividend will be paid on 25 November 2022
to shareholders on the register on 4 November 2022.
PERFORMANCE MEASUREMENTS DEFINITIONS
Within our interim results we refer to the following performance
measurements:
i) Risk adjusted yield as percentage of average monthly
receivables is the gross yield for the period (revenue minus
impairment) divided by the average monthly net receivables for the
period.
ii) Return on average capital employed before cost of funds is
calculated as the Operating Profit divided by the average capital
employed (total equity plus Bank Overdrafts plus Borrowings less
cash and cash equivalents).
iii) Dividend cover is the basic earnings per ordinary share
declared for the financial year divided by the dividend per
ordinary share declared for the same financial year.
iv) Group gearing is calculated as the sum of Bank Overdrafts
plus Borrowings less cash and cash equivalents divided by total
equity.
RELATED PARTY TRANSACTIONS
Related party transactions are disclosed in note 10 of these
financial statements.
SHARE OPTION SCHEMES
The 2010 Long Term Incentive Plan ("LTIP") share option scheme
is now over 10 years old and no further grants can be or have been
made under that LTIP.
During the six months, no new options were awarded therefore
under the LTIP and no options lapsed. 5,500 options were exercised
during the six months. Nil ordinary share options are still held
under this plan as at 31 July 2022 (31 July 2021: 5,500 options and
31 January 2022: 5,500 options). In the six months to 31 July 2022
the charge for these future share-based payments was GBP6,000 (H1
21: GBP19,000). 10,000 shadow share options are still also held
under this plan at 31 July 2022 (31 July 2021: 16,000 options and
31 January 2022: 12,000 options).
Further to a review by the Remuneration Committee, a new
Long-term incentive plan allowing shadow share options which can
only be cash settled and therefore do not dilute current
shareholders, was approved at the AGM in May 2021. Share-based
awards are now being made only under that cash settled shadow share
option scheme.
CHANGES IN ACCOUNTING POLICIES
There have been no changes in accounting policies during the
period.
At the date of authorisation of this interim report the
directors anticipate that the adoption in future periods of any
other accounting standards and interpretations which are in issue
but not yet effective will have no material impact on the financial
statements of the Group.
CHANGES IN CONTINGENCIES
There have been no significant changes in contingent assets or
liabilities since 31 January 2022.
STATEMENT OF GOING CONCERN
The Directors have considered the principal risks and
uncertainties set out below and have a reasonable expectation that
the Group is well placed and has sufficient financial resources to
manage its business risks successfully despite the uncertain
economic outlook. After making enquiries, the directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing these financial statements.
PRINCIPAL RISKS AND UNCERTAINTIES
Whilst recovery from the Covid pandemic has continued during the
past six months, significant inflationary pressure on real incomes
and political uncertainty in UK and Europe have seen falls in
consumer and business confidence. S&U recognises these as
principal risks for the Group but has the strategy in place and the
skills, resilience and experience to mitigate them.
Consumer and Economic risks
The Group is involved in the provision of consumer credit and it
is considered that the key material risk to which the Group is
exposed is the credit risk inherent in amounts receivable from
customers. This risk is principally controlled through our credit
control policies supported by ongoing reviews for impairment. The
value of amounts receivable from customers may also be subject to
the risk of a severe downturn in the UK economy which might affect
the ability of customers to repay.
Although the UK labour market employment levels remain strong,
pressure on incomes from utility and general price increases partly
arising as an indirect impact of the war in Ukraine may have an
impact upon customers' repayment performance - particularly at
Advantage Finance. Advantage historically has been resilient
through adverse macro-economic conditions.
The Group is particularly exposed to the non-prime motor finance
sector and within that to the values of used vehicles which are
used as security. These credit, economic and concentration risks
are principally controlled through our credit control policies
including loan to value limits for the security and through ongoing
monitoring and evaluation. Recent trends for used vehicles values
remain strong but may come under pressure in particular as the
supply situation for new vehicles improves.
Our well tried and tested methods will be equally important in
limiting risk at Aspen Bridging. Historically impairment rates in
this market are extremely low, principally because loan to value
calculations are conservative, interest is retained up front, and
loan periods are a maximum of one year. The property market in
which Aspen operates, although slowing, has seen values continue to
rise. Aspen keeps its lending criteria under constant review, to
minimise risk and maintain its risk-adjusted yield.
Funding and Liquidity Risk
Funding and Liquidity risk relates to the availability of
sufficient borrowing facilities for the Group to meet its
liabilities as they fall due. This risk is managed by ensuring that
the Group has a variety of funding sources and by managing the
maturity of borrowing facilities such that sufficient funding is
available for the medium term. Compliance with banking covenants is
monitored closely so that facilities remain available at all times.
The Group's activities expose it to the financial risks of changes
in interest rates and where appropriate the Group considers using
interest rate derivative contracts to hedge these exposures in bank
borrowings. The Group has no such interest rate derivative
contracts currently.
Legal, Regulatory and Conduct Risk
In terms of legal risk, the Group is subject to legislation
including consumer credit legislation which contains very detailed
and highly technical requirements. The Group has procedures in
place and employs dedicated compliance resource and specialist
legal advisers to ensure compliance with this legislation.
Advantage directors are prominent members of the Finance and
Leasing Association's committees and, through them, regularly
liaise with the FCA. Regulatory Risk is addressed by the constant
review and monitoring of Advantage 's internal control s and
processes. T his process is buttressed by speci fic advice from
trade and other organisations and by the work of our internal
auditors.
Whilst engaged in the unregulated sector, Aspen Bridging has
adopted procedures which are consistent with those required in the
regulated sector. This provides both commercial discipline and
provides a platform for standards should Aspen widen its products
into the regulated field.
The Group is also exposed to conduct risk in that it could fail
to deliver fair outcomes to its customers which in turn could
impact the reputation and financial performance of the Group. The
Group principally manages this risk through Group staff training
and motivation (Advantage is an Investor in People) and through
detailed monthly monitoring of customer outcomes for compliance and
treating customers fairly.
Risk Management
Under Principle 28 of the 2018 UK Corporate Governance Code, the
Board is expected to establish procedures to manage risk, identify
the principal risks the Company takes in order to achieve its
strategic objectives and to oversee an effective internal control
framework. In addition, the FRC now expects Boards to assess
emerging risks to the Company's strategy.
Although compliance with the Code is the responsibility of the
Board as a whole, risk in particular is independently assessed by
members of the Audit Committee. They receive regular reports, both
from the management of Advantage Finance and Aspen Bridging and
from S&U's external and internal auditors. These concern the
effectiveness of the risk management and internal control systems.
Executive changes are regularly made to re-enforce these
procedures. The Audit Committee oversees the work of RSM, S&U's
Internal Auditors. The Committee meets regularly to receive
specific reports on RSM's work, which includes cyber security, GDPR
oversight and cash management procedures amongst many other
areas.
Anthony Coombs, Chairman
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
a) the condensed set of financial statements has been prepared
in accordance with the applicable set of accounting standards,
gives a true and fair view of the assets, liabilities, financial
position and profit of S&U plc as required by DTR 4.2.4R;
b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related party
transactions and changes therein).
By order of the Board
Chris Redford, Company Secretary
INDEPENT REVIEW REPORT TO S&U PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the interim results for the six months
ended 31 July 2022 which comprise the condensed consolidated income
statement, the condensed consolidated statement of comprehensive
income, the condensed consolidated balance sheet, the condensed
consolidated statement of cash flows, the condensed consolidated
statement of changes in equity and related notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the interim results for the six months ended 31 July 2022 is not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34 and the Disclosure Guidance
and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 (Revised), "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued for use in the United Kingdom. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 1.2, the annual financial statements of the
company are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in the half year report has been prepared in accordance
with UK adopted International Accounting Standard 34, "Interim
Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis of Conclusion
section of this report, nothing has come to our attention to
suggest that management have inappropriately adopted the going
concern basis of accounting or that management have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410 (Revised), however future events or
conditions may cause the Company to cease to continue as a going
concern.
Responsibilities of directors
The directors are responsible for preparing the half year report
in accordance with the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the company a conclusion on the condensed set of
financial statement in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Mazars LLP
Chartered Accountants
30 Old Bailey
London
E1W 1DD
Date: 26(th) September 2022
S&U PLC GROUP
CONSOLIDATED INCOME STATEMENT
Six months ended 31 July 2022 Note Unaudited Unaudited Audited
Six months Six months Financial
year
ended ended ended
31.7.22 31.7.21 31.1.22
GBP'000 GBP'000 GBP'000
Revenue 2 49,352 42,813 87,889
Cost of Sales 3 (17,911) (14,216) (22,891)
Gross Profit 31,441 28,597 64,998
Administrative expenses (7,954) (6,875) (14,208)
Operating profit 23,487 21,722 50,790
Finance costs (net) (2,597) (1,778) (3,772)
Profit before taxation 2 20,890 19,944 47,018
Taxation 4 (3,801) (3,790) (9,036)
Profit for the period attributable
to equity holders 17,089 16,154 37,982
================== ================== ==================
Earnings per share
Basic 5 140.7p 133.1p 312.8p
Diluted 5 140.7p 133.0p 312.7p
================== ================== ==================
All activities derive from
continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Financial
year
ended ended ended
31.7.22 31.7.21 31.1.22
GBP'000 GBP'000 GBP'000
Profit for the year 17,089 16,154 37,982
Other comprehensive income:
Actuarial loss on defined benefit
pension scheme - - (6)
Total Comprehensive Income
for the period 17,089 16,154 37,976
------------------ ------------------ ------------------
Items above will not be reclassified subsequently
to the Income Statement
CONSOLIDATED BALANCE
SHEET
As at 31 July 2022 Note Unaudited Unaudited Audited
31.7.22 31.7.21 31.1.22
GBP'000 GBP'000 GBP'000
ASSETS
Non current assets
Property, plant and equipment 2,415 2,597 2,455
Amounts receivable from
customers 7 197,859 174,489 181,614
Deferred tax assets 90 102 120
200,364 177,188 184,189
---------------- ------------------ ------------------
Current assets
Amounts receivable from
customers 7 172,221 131,928 141,301
Trade and other receivables 1,322 1,977 1,739
Cash and cash equivalents 1,142 1 0
174,685 133,906 143,040
---------------- ------------------ ------------------
Total assets 375,049 311,094 327,229
---------------- ------------------ ------------------
LIABILITIES
Current liabilities
Bank overdrafts and loans - (1,567) (2,568)
Trade and other payables (4,087) (3,721) (4,347)
Tax liabilities (965) (1,778) (926)
Lease liabilities (158) (174) (174)
Accruals (1,213) (687) (774)
(6,423) (7,927) (8,789)
---------------- ------------------ ------------------
Non current liabilities
Borrowings 9 (155,500) (113,500) (111,000)
Lease liabilities (165) (294) (243)
Financial liabilities (450) (450) (450)
(156,115) (114,244) (111,693)
---------------- ------------------ ------------------
Total liabilities (162,538) (122,171) (120,482)
---------------- ------------------ ------------------
NET ASSETS 212,511 188,923 206,747
================ ================== ==================
Equity
Called up share capital 1,719 1,718 1,718
Share premium account 2,301 2,301 2,301
Profit and loss account 208,491 184,904 202,728
TOTAL EQUITY 212,511 188,923 206,747
================ ================== ==================
These interim condensed financial statements were approved
on behalf of the Board of Directors.
Signed on behalf of the
Board of Directors
Anthony Coombs Chris Redford Directors
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months ended 31 July 2022
Unaudited Unaudited Unaudited
Called
up Share Profit Unaudited
share premium and loss Total
capital account account equity
GBP'000 GBP'000 GBP'000 GBP'000
At 1 February 2021 1,717 2,301 177,011 181,029
--------------- ----------------- ---------------- ----------------
Profit for six month period - - 16,154 16,154
Other comprehensive income
for six month period - - - 0
--------------- ----------------- ---------------- ----------------
Total comprehensive income
for six month period - - 16,154 16,154
Issue of new shares in year 1 - - 1
Cost of future share based
payments - - 19 19
Tax charge on equity items - - (18) (18)
Dividends - - (8,262) (8,262)
At 31 July 2021 1,718 2,301 184,904 188,923
--------------- ----------------- ---------------- ----------------
Profit for six month period - - 21,828 21,828
Other comprehensive income
for six month period - - (6) (6)
--------------- ----------------- ---------------- ----------------
Total comprehensive income
for six month period - - 21,822 21,822
Issue of new shares in year - - - 0
Cost of future share based
payments - - 20 20
Tax charge on equity items - - (17) (17)
Dividends - - (4,001) (4,001)
At 31 January 2022 1,718 2,301 202,728 206,747
--------------- ----------------- ---------------- ----------------
Profit for six month period - - 17,089 17,089
Other comprehensive income
for six month period - - - 0
--------------- ----------------- ---------------- ----------------
Total comprehensive income
for six month period - - 17,089 17,089
Issue of new shares in year 1 - - 1
Cost of future share based
payments - - 6 6
Tax charge on equity items - - (28) (28)
Dividends - - (11,304) (11,304)
At 31 July 2022 1,719 2,301 208,491 212,511
--------------- ----------------- ---------------- ----------------
CONSOLIDATED CASH FLOW STATEMENT
Six months ended 31 July
2022
Note Unaudited Unaudited Audited
Six months Six months Financial
year
ended ended ended
31.7.22 31.7.21 31.1.22
GBP'000 GBP'000 GBP'000
Net cash used in operating
activities 8 (29,180) (7,776) (2,094)
Cash flows (used in)/from
investing activities
Proceeds on disposal of property,
plant and equipment 42 28 93
Purchases of property, plant
and equipment (256) (180) (377)
Net cash used in investing
activities (214) (152) (284)
----------------------- ------------------------ ----------------------
Cash flows (used in)/from
financing activities
Dividends paid (11,304) (8,262) (12,263)
Issue of new shares 1 1 1
Receipt of new borrowings 44,500 16,000 25,000
Repayment of borrowings - - (11,500)
(Decrease)/increase in lease
liabilities (94) (83) (134)
Net (decrease)/increase in
overdraft (2,568) 272 1,273
Net cash from financing
activities 30,535 7,928 2,377
----------------------- ------------------------ ----------------------
Net decrease in cash and
cash
equivalents 1,141 0 (1)
Cash and cash equivalents at
the beginning of period 1 1 1
----------------------- ------------------------ ----------------------
Cash and cash equivalents
at the end of period 1,142 1 -
----------------------- ------------------------ ----------------------
Cash and cash equivalents
comprise
Cash and cash in bank 1,142 1 -
======================= ======================== ======================
NOTES TO THE INTERIM STATEMENTS
Six months ended 31 July 2022
1. PREPARATION AND KEY ACCOUNTING POLICIES
1.1 General Information
S&U plc is a public limited company incorporated in the
United Kingdom under the Companies Act 2006. The address of the
registered office is given in note 11 which is also the Group's
principal business address. All operations are situated in the
United Kingdom.
1.2 Basis of preparation and accounting policies
The financial statements have been prepared in accordance with
UK-adopted international accounting standards.
The same accounting policies, presentation and methods of
computation are followed in the financial statements as applied in
the Group's latest annual audited financial statements. The
consolidated financial statements incorporate the financial
statements of the Company and all its subsidiaries for the six
months ended 31 July 2022.
There is no valuation of S&U's defined benefit pension
scheme fund at half year and so no movements are reported in the
statement of comprehensive income - such movements are not material
due to the small size of the fund which was in surplus at the
latest valuation date.
After making enquiries, the directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. In arriving at
this reasonable expectation, the directors have considered the
current situation in respect of inflation and cost of living
pressures and, in particular, the potential for increased customer
repayment difficulties and temporary challenges with asset recovery
and realisation at potentially lower residual values as well as
operational challenges. Increased repayment difficulties relate to
potentially worse customer employment and/or financial situations,
potentially mitigated by government support which lowers customer
outgoings, as well as being mitigated by the forbearance and
experience of our skilled staff. The directors have concluded that
the Group has reasonable resources to continue in operational
existence for the foreseeable future. Accordingly, they continue to
adopt the going concern basis in preparing these financial
statements.
There are no significant new and amended standards and
interpretations which have been adopted in these financial
statements.
There have been no changes in accounting policies during the
period.
At the date of authorisation of this interim report the
directors anticipate that the adoption in future periods of any
other accounting standards and interpretations which are in issue
but not yet effective will have no material impact on the financial
statements of the Group.
1.3 Revenue Recognition
Interest income is recognised in the income statement for all
loans and receivables measured at amortised cost using the constant
periodic rate of return on the net investment in the loans, which
is akin to an effective interest rate (EIR) method. The EIR is the
rate that exactly discounts estimated future cash flows of the loan
back to the present value of the advance and hire purchase interest
income is then recognised using the EIR. Acceptance fees charged to
customers and any direct transaction cost are included in the
calculation of the EIR. For hire purchase agreements in Advantage
Finance which are classified as credit impaired (ie stage 3 assets
under IFRS9), the group recognises revenue 'net' of the impairment
provision to align the accounting treatment under IFRS 16 with the
requirements of IFRS 9 and also with the treatment for similar
assets in Aspen. Revenue starts to be recognised from the date of
completion of their loan - after completion hire purchase customers
have a 14-day cooling off period during which they can cancel their
loan.
1.4 Impairment and measurement of amounts receivable from
customers
There are 3 classification stages under IFRS 9 for the
impairment of amounts receivable from customers:
Stage 1: Not credit impaired and no significant increase in
credit risk since initial recognition
Stage 2: Not credit impaired and a significant increase in
credit risk since initial recognition
Stage 3: Credit impaired
For all loans in stages 2 and 3 a provision equal to the
lifetime expected credit loss is taken. In addition, in accordance
with the provisions of IFRS 9 a collective provision for 12 months
expected credit losses ("ECL") is recognised for the remainder of
the loan book. In our Motor Finance business, all loans 1 month or
more in arrears are deemed credit impaired and are therefore
included in IFRS 9 stage 3. The expected credit loss ("ECL") is the
probability weighted estimate of credit losses.
2. ANALYSIS OF REVENUE AND PROFIT BEFORE TAXATION
All revenue is generated in the United Kingdom.
Analysis by class of business
of revenue and profit before taxation
are stated below:
Revenue
Six months Six months Financial
ended ended year ended
Class of business 31.7.22 31.7.21 31.1.22
GBP'000 GBP'000 GBP'000
Motor finance 43,641 38,583 78,898
Property Bridging finance 5,711 4,230 8,991
Revenue 49,352 42,813 87,889
----------- ----------- -----------
Profit before taxation
Six months Six months Financial
ended ended year ended
Class of business 31.7.22 31.7.21 31.1.22
GBP'000 GBP'000 GBP'000
Motor finance 18,984 18,455 43,682
Property Bridging finance 2,016 1,529 3,414
Central costs income (110) (40) (78)
Profit before taxation 20,890 19,944 47,018
----------- ----------- -----------
3. COST OF SALES
Six months Six months Financial
year
ended ended ended
31.7.22 31.7.21 31.1.22
GBP'000 GBP'000 GBP'000
Loan loss provisioning charge
- motor finance 6,069 4,868 3,805
Loan loss provisioning charge -
property bridging finance 423 223 315
Total loan loss provisioning charge 6,492 5,091 4,120
Other cost of sales - motor finance 10,419 8,345 17,266
Other cost of sales - property
bridging finance 1,000 780 1,505
Total cost of sales 17,911 14,216 22,891
===================== ===================== =====================
4. TAXATION
The tax charge for the period has been calculated by applying
the estimated effective tax rate for the period of 18.2% (31 July
2021: 19.0% and 31 January 2022: 19.2%) to the profit before
taxation for the six months.
5. EARNINGS PER ORDINARY SHARE
The calculation of earnings per ordinary share is based on
profit for the period from continuing operations of GBP17,089,000
(period ended 31 July 2021: GBP16,154,000 and year ended 31 January
2022: GBP37,982,000).
The number of shares used in the basic calculation is the
average number of ordinary shares in issue during the period of
12,147,624 (period ended 31 July 2021: 12,140,558 and year ended 31
January 2022: 12,142,928).
For diluted earnings per share the average number of ordinary
shares in issue has historically been adjusted to assume conversion
of all dilutive potential ordinary shares relating to our share
option scheme awards. There are currently no such dilutive awards
as all share option scheme awards are now cash settled and so the
diluted eps is equal to the basic eps.
6. DIVIDS
A second interim dividend of 36.0p per ordinary share and a
final dividend of 57.0p per ordinary share for the financial year
ended 31 January 2022 were paid during the six month period to 31
July 2022 (total of 93.0p per ordinary share). This compares to a
second interim dividend of 25.0p per ordinary share and a final
dividend of 43.0p per ordinary share for the financial year ended
31 January 2021 which were paid during the 6 months period to 31
July 2021 (total of 68.0p per ordinary share). During the twelve
months to 31 January 2022 total dividends of 101.0p per ordinary
share were paid. These distributions are shown in the consolidated
statement of changes in equity in this interim financial
information.
The directors have also declared a first interim dividend of
35.0p per share (2021: 33.0p per share). The first interim
dividend, which amounts to approximately GBP4,253,000 (2021:
GBP4,008,000), will be paid on 25 November 2022 to shareholders on
the register at 4 November 2022. The shares will be quoted ex
dividend on 3 November 2022. The interim financial information does
not include this proposed dividend as it was declared after the
balance sheet date and there was no legal liability to pay it at 31
July 2022.
7. ANALYSIS AMOUNTS RECEIVABLE FROM CUSTOMERS
All operations are situated in
the United Kingdom.
Six months Six months Financial
ended ended year ended
31.7.22 31.7.21 31.1.22
GBP'000 GBP'000 GBP'000
Motor Finance
Amounts receivable from customers
(capital) 373,931 341,736 350,517
Less: Loan loss provision for motor
finance (94,001) (92,985) (91,481)
Motor Finance net amounts receivable
from customers 279,930 248,751 259,036
=================== ================== ====================
Property Bridging Finance
Amounts receivable from customers
(capital) 91,139 58,220 64,525
Less: Loan loss provision for property
bridging (989) (554) (646)
Property bridging net amounts receivable
from customers 90,150 57,666 63,879
=================== ================== ====================
Total net amounts receivable from
customers 370,080 306,417 322,915
=================== ================== ====================
Analysed as - due within one year 172,221 131,928 141,301
- due in more than one year 197,859 174,489 181,614
Amounts receivable from customers
(net) 370,080 306,417 322,915
=================== ================== ====================
Analysis of loan loss provision and amounts receivable from
customers (capital)
Not credit Impaired Credit Impaired
Stage Stage
1: 2: Stage 3:
Subject Subject
to to Subject to Total Amounts
12 months lifetime lifetime Provision Receivable
ECL ECL ECL
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 31 July
2022
Motor finance (29,194) (576) (64,231) (94,001) 373,931
Property bridging
finance (720) - (269) (989) 91,139
Total (29,914) (576) (64,500) (94,990) 465,070
=========== ========= ================ ========== ===========
As at 31 July
2021
Motor finance (18,282) (11,065) (63,638) (92,985) 341,736
Property bridging
finance (498) - (56) (554) 58,220
Total (18,780) (11,065) (63,694) (93,539) 399,956
=========== ========= ================ ========== ===========
As at 31 January
2022
Motor finance (22,129) (2,769) (66,583) (91,481) 350,517
Property bridging
finance (446) - (200) (646) 64,525
Total (22,575) (2,769) (66,783) (92,127) 415,042
=========== ========= ================ ========== ===========
8. RECONCILIATION OF OPERATING PROFIT TO NET CASH FROM OPERATING
ACTIVITIES
Six months Six months Financial
year
ended ended ended
31.7.22 31.7.21 31.1.22
GBP'000 GBP'000 GBP'000
Operating Profit 23,487 21,722 50,790
Finance costs paid (2,597) (1,778) (3,772)
Tax paid (3,761) (2,616) (8,749)
Depreciation on plant, property and
equipment 254 268 529
Loss on disposal of plant, property
and equipment 0 0 13
Increase in amounts receivable from
customers (47,165) (25,507) (42,005)
Decrease/(increase) in trade and
other receivables 417 (871) (633)
(Decrease)/increase in trade and
other payables (260) 958 1,584
Increase in accruals and deferred
income 439 29 116
Increase in cost of future share
based payments 6 19 39
Movement in retirement benefit asset/obligations - - (6)
Net cash (used in)/from operating
activities (29,180) (7,776) (2,094)
=========== =========== ==========
9. BORROWINGS
Movements in our loans and overdrafts for the respective periods
are shown in the consolidated cash flow statement. The period end
borrowings have increased to GBP155m. Committed borrowing
facilities were GBP180m at 31 July 2022 (31 July 2021: GBP180m and
31 January 2022: GBP180m) plus at 31 July 2022 we had GBP7m in
overdraft facilities. After the period end total committed
borrowing facilities have been increased to GBP210m.
10. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are
related parties have been eliminated on consolidation and are not
disclosed in this report. During the six months the Group made
charitable donations amounting to GBP60,000 (6 months to July 2021:
GBP51,000; year to January 2022: GBP102,000) via the Keith Coombs
Trust which is a related party because Messrs GDC Coombs, AMV
Coombs, D Markou and CH Redford are trustees. The amount owed to
the Keith Coombs Trust at the half year end was GBPnil (July 2021:
GBPnil; January 2022 GBPnil). During the six months the Group
obtained supplies amounting to GBP4,008 (6 months to July 2021:
GBP3,913; year to January 2022: GBP3,508) from Grevayne Properties
Limited, a company which is a related party because Messrs GDC and
AMV Coombs are directors and shareholders. The amount owed to
Grevayne Properties Limited at the half year end was GBPnil (July
2020: GBPnil; January 2021 GBPnil). All related party transactions
were settled in full.
11. INTERIM REPORT
The information for the year ended 31 January 2022 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditor's
report on those accounts was not qualified, did not include a
reference to any matters to which the auditors drew attention by
way of emphasis without qualifying the report and did not contain
statements under section 498(2) or (3) of the Companies Act 2006. A
copy of this Interim Report will be made available to all our
shareholders and to the public on our website at www.suplc.co.uk
and at the Company's registered office at 2 Stratford Court,
Cranmore Boulevard, Solihull B90 4QT.
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END
IR FLFVDAEIRFIF
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