TIDMSUS
RNS Number : 1383N
S & U PLC
28 September 2021
28(th) September 2021
S&U PLC
("S&U" or "the Group")
INTERIM RESULTS FOR THE SIX MONTHSED 31 JULY 2021
Back on track and driving forward
S&U, the specialist motor and property bridging finance
lender announces today its results for the six months ended 31st
July 2021. As the legacy of Covid gradually fades and brightening
skies appear, S&U is robustly back on track and driving forward
to our usual standard of profitable, sustainable growth.
Financial Highlights
-- Profit before tax: GBP19.9m (H1 2020: GBP6.3m)
-- Earnings Per Share: 133.1p per share (H1 2020: 41.9p)
-- Net Group Receivables: GBP306.4m (31 July 2020: GBP281.9m) - up 9%
-- First interim dividend: 33p per ordinary share (H1 2020: 22p)
-- Group Gearing at 61% ( 31 July 2020: 62%) - Group facilities
increased to GBP180m giving GBP65m headroom for growth.
Operational Highlights
Advantage Finance Limited
-- Profit before tax: GBP18.5m (H1 2020: GBP6. 1 m)
-- New net l oan advances up 35% year on year at GBP68.3m (H1 2020: GBP50.7m)
-- Total first half collections up 14% at GBP100.2m (H1 2020:
GBP87.9m) with record Q2 basic live collections
-- New customer payment portal and underwriting refinements through Open Banking links.
Aspen Bridging Limited
-- Profit before tax: GBP1.5m (H1 2020: GBP0 .1m )
-- New net loan advances GBP56.5m (H1 2020: GBP9.9m)
-- Excellent repayments and book quality with only one current default
-- Receivables book grows from GBP 34.1 m to GBP57.7m in first half - up 69.2%
Anthony Coombs, Chairman of S&U commented:
"As the old saying goes, the finest steel goes through the
hottest fire. The Covid induced tribulations of the past year have
seen S&U emerge more profitable, more competitive and more
attuned to our customers ' needs . Add to that the buoyant markets
in which we operate, our strongest ever financial base and our
loyal and committed workforce, and prospects for the future are
bright indeed."
Enquiries:
S&U Plc
Anthony Coombs, Chairman 0121 705 7777
Newgate Communications
Bob Huxford, Tom Carnegie, Megan
Kovach 020 7653 9848
--------------
Peel Hunt LLP
Adrian Trimmings, Andrew Buchannan,
Rishi Shah 020 7418 8900
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Chairman's Statement
As the legacy of Covid gradually fades and brightening skies
emerge, I am pleased to announce that S&U is robustly back on
track and driving forwards towards to our usual standard of
profitable, sustainable growth.
Group profits before tax for the half year to 31(st) July 2021
are just under GBP20m against GBP6.3m last year, partly due to a
lower than normal impairment charge at Advantage Finance, as an
excellent collections performance proved the effect of the pandemic
less severe than anticipated. Earnings per share are 133.1p (H1
2020: 41.9p). Whilst our deliberately cautious approach to
underwriting has slightly constrained growth at Advantage, our
motor finance business, Group income at GBP42.8m is nevertheless up
5% on the previous half year period (H2 2020: GBP40.9m) . Happily,
this same approach to growth during the pandemic has borne fruit
both in record collections and new customer quality across the
Group ; this has justified a lower than normal impairment charge of
GBP5.1m for the half year (H1 2020: GBP21.7m; H1 2019:
GBP7.9m).
Meanwhile Group equity has risen to GBP188.9m (H1 2020:
GBP174.1m) and Group net customer receivables are up by GBP25.5m
over the past six months and on the 31st July stood at GBP306.4m
against GBP281.9m a year ago.
Principal credit for these results must go to S&U's loyal
and committed staff who throughout the pandemic have worked with so
much enthusiasm and determination both a t home and now in the
gradual transition to a new home/office hybrid working life. I
thank them all.
Motor Finance
Advantage Finance, our motor operation based in Grimsby, has now
resumed its previous 20-year record of profits growth. For the half
year it has produced profit before tax of GBP18.5m (H1 2020:
GBP6.1m). This excellent result is accompanied by a 23% increase in
loan transactions in the half year at 9,697 (H1 2020: 7,811), loan
advances up 35% at GBP68.3m, and in a superb performance in
collections and loan quality.
Thus, from 6 2,000 live customers, approximately the same as at
year end, total collections are up by 14% for the half year.
Moreover, the second quarter has seen basic live collections at
GBP38.3m, a record, and at 94.4% of due, which is the best
performance since October 2017. Whilst based upon detailed and
responsible under-writing, and constant attention to refining
measurements of customer affordability, much credit for this very
high quality must go to the understanding relationships our staff
develop with our loyal customers. As the human face of finance, we
focus on helping our customers improve their credit profiles and
devising ways of making this easier.
Thus, over the past six months a new 24/7 portal now allows our
customers total flexibility in making their repayments. A new
automated open banking system has given Advantage greater
understanding of affordability and changing customer circumstances.
In addition, a third credit reference bureau (Equifax) has now been
integrated into Advantage's under-writing process , increasing our
knowledge of new customers without in any way hindering the speed
of service we give them.
These market leading advances have been matched by those in
sales as transactions at 9,697 for the half year have increased by
23% on H1 2020. We have also implemented a number of product
changes, particularly aimed at widening Advantage's near prime
customer range and in attracting self-employed customers. Further,
in addition to introducing measures to increase the range and
activity rates of our introducer brokers, Advantage is using its
uniquely detailed analysis of customer experience from over twenty
years of trading to enhance its direct marketing activities through
digital means.
Meanwhile the British used car market remains very strong.
Latest SMMT figures for August, saw sales transactions increase by
108% year on year and by 6.6% on pre Covid levels. These made the
second quarter of 2021/22 a record with 2 ,1 6 7,000 u sed vehicles
changing hands driven by significant growth in the nearly new used
car market. Finally, whils t still partially c onstrained by
supply, the new car market is now showing signs of revival. This
will increase the supply of used cars and, together with a strong
market and a recovering economy, further boost the markets in which
Advantage operates. Brighter skies indeed ....
Aspen Bridging
The substantial growth and significant rebound in profits I
predicted in January for Aspen, our property bridging business , is
now coming to pass. Profit before tax for the half year is GBP1.5m
against just GBP0 .1m a year ago. Sixty-six new loan t ransactions
were achieved in the first half, more than double the twenty -five
of last ye ar. In doing so , Aspen reached the significant
milestone of 300 transactions since its f ounding just over four
years ago.
New net loan advances reached GBP56.5m (H1 2020: GBP9.9m) in the
first half and Aspen's total receivables book grew from GBP 3 4 .1m
to GBP57.7m. Much of this rise was due to Aspen's successful
participation in the Government's CBILS scheme, which contributed
twenty-two higher-value loan t ransactions in the first half.
At half year, Aspen's pipeline of future business stood about
15% above budget. Although the ending of the current CBILS scheme
and the Government's stamp duty "holiday", was e xpected to lead to
a lull in the residential market, by contrast t he latest
Nationwide Housing Price Index shows annual price growth now at 11%
year on year which , for July alone, included a 2.1% increase - the
highest in fifteen years.
To take advantage of the bridging market, Aspen has boosted its
sales team, introduced new products , revised its rate structure
and increased the maximum loan size it offers for the highest
quality customers.
Nevertheless, Aspen makes haste slowly and carefully. Less than
5% of applications reach transaction and rigorous underwriting has
seen repayments this half year at 45 loans against 26 a year ago.
The resulting increase in quality means only one loan is currently
in default , whilst no bad debt losses have been experienced in the
half year. With Aspen's excellent leadership, innovative young team
and a strong residential market, we see great opportunities for
growth.
Funding
Continued cash generation at Advantage, the result of a stron g
collections performance , was off-set in the half year by GBP 22m
of net i nvestment in Aspen, par tially in response to th e CBILS
scheme.
The net result for the Group is an increase in borrowing to
GBP115m ( 31 July 2020: GBP108m) wel l within current facilities of
GBP180 m and giv ing substantial headroom for accelerated growth.
Gearing during the period is now 61% (31 July 2020: 62%).
Dividend
S&U has always reflected its s teady and sustainable profits
growth in rewards to its shareholders. As I indicated at the full
year results, it is our intention to return to approximately twice
covered dividends from the 1.34 ratio of last year. In doing so we
have in mind the sustainability of future di vidend payments as
well as their absolute level. Hence, we are pleased now to propose
the first interim dividend for this year of 33p per ordinary share
(2020: 22p) ; this will be followed, as usual, by further dividends
in March and July of next year. This first dividend will be paid on
the 19(th) November 2021 to shareholders on the register on the
29(th) October 2021.
Current Trading and Outlook
As the old saying goes, the finest steel goes through the
hottest fire. The Covid induced tribulations of the past year have
seen S&U emerge more profitable, more competitive and more
attuned to our customers' needs than ever before. Add to that the
buoyant markets in which we operate, our strongest ever financial
base and our loyal committed workforce, and prospects for the
future are bright indeed.
Anthony Coombs
Chairman
27 September 2021
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 the S&U plc ("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 Company (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 GBP16,154,000 (H1 20: GBP6,309,000).
Dividends of GBP8,262,000 (H1 20: GBP10,436,000) were paid during
the period.
The Directors recommend a first interim dividend of 33.0p per
share (2020: 22.0p). The dividend will be paid on the 19th November
2021 to shareholders on the register on the 29(th) October
2021.
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. 11,500 options were exercised
during the six months. 5,500 ordinary share options are still held
under this plan as at 31 July 2021 (31 July 2020: 21,000 options
and 31 January 2021: 17,000 options). 16,000 shadow share options
are still held under this plan at 31 July 2021 (31 July 2020:
16,000 options and 31 January 2021: 16,000 options).
In the six months to 31 July 2021 the charge for these future
share-based payments was GBP19,000 (H1 20: GBP45,000).
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 2021.
STATEMENT OF GOING CONCERN
The Directors have considered the principal risks and
uncertainties set out below and up to date information on the Covid
situation 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
During the 6 months, the impact of the Covid pandemic and the
market, government, regulator and business actions surrounding it
has eased for consumers in the UK. It remains a principal risk for
the S&U Group, which has strategies in place and the skills,
resilience and experience to help mitigate the risk.
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.
The onset of the Covid virus and uncertainty surrounding Brexit
have increased the potential for adverse economic conditions and
higher levels of unemployment leading to more repayment
delinquency. However, recent UK employment figures are still
historically high and the economic outlook has improved recently as
many return to work post lockdown although there may be a further
impact from the end of the government furlough scheme in the second
half of this year. Advantage historically has been resilient
through adverse macroeconomic 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
have been strong and 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. Furthermore, Aspen has introduced a variety of
controls to limit risk which is sensible as property market values
are likely to become less buoyant now stamp duty relief is ending;
currently market values are still robust.
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.
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 un-regulated 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
We have been engaged by S&U Plc ("the Company") to review
the interim financial information for the six month period ended 31
July 2021 which comprise the consolidated income statement, the
consolidated statement of comprehensive income, the consolidated
balance sheet, the consolidated statement of changes in equity, the
consolidated cash flow statement and related notes 1 to 11. We have
read the other information contained in the interim report and
considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
issued by the Auditing Practices Board and our Engagement Letter
dated 3 August 2021. Our work has been undertaken so that we might
state to the Company those matters we are required to state to them
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company, for our review
work, for this report, or for the conclusions we have formed.
Respective responsibilities of directors and auditor
The interim report, including the financial information
contained therein, is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the
interim report in accordance with International Accounting Standard
34, 'Interim Financial Reporting', as adopted by the United Kingdom
and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express to the Company a conclusion on
the consolidated financial information in the interim report based
on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board 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.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the consolidated financial information in
the interim report does not give a true and fair view of the
financial position of the Company as at 31 July 2021 and of its
financial performance and its cash flows for the six months then
ended, in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the United Kingdom and
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Mazars LLP
Chartered Accountants
Tower Bridge House, St Katharine's Way, London, E1W 1DD
27 September 2021
Notes:
(a) The maintenance and integrity of the S&U Plc web site is
the responsibility of the directors; the work carried out by us
does not involve consideration of these matters and, accordingly,
we accept no responsibility for any changes that may have occurred
to the interim report since it was initially presented on the web
site.
(b) Legislation in the United Kingdom governing the preparation
and dissemination of financial information may differ from
legislation in other jurisdictions.
S&U PLC GROUP
CONSOLIDATED INCOME STATEMENT
Six months ended 31 July 2021 Note Unaudited Unaudited Audited
Six months Six months Financial
ended ended year ended
31.7.21 31.7.20 31.1.21
GBP'000 GBP'000 GBP'000
Revenue 2 42,813 42,827 83,761
Cost of Sales 3 (14,216) (28,822) (50,969)
Gross Profit 28,597 14,005 32,792
Administrative expenses (6,875) (5,707) (11,096)
Operating profit 21,722 8,298 21,696
Finance costs (net) (1,778) (1,989) (3,568)
Profit before taxation 2 19,944 6,309 18,128
Taxation 4 (3,790) (1,225) (3,482)
Profit for the period attributable
to equity holders 16,154 5,084 14,646
================== =================== ==================
Earnings per share
Basic 5 133.1p 41.9p 120.7p
Diluted 5 133.0p 41.9p 120.7p
================== =================== ==================
All activities derive from
continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Financial
ended ended year ended
31.7.21 31.7.20 31.1.21
GBP'000 GBP'000 GBP'000
Profit for the year 16,154 5,084 14,646
Other comprehensive income:
Actuarial loss on defined benefit
pension scheme - - (9)
Total Comprehensive Income
for the period 16,154 5,084 14,637
------------------ ------------------- ------------------
Items above will not be reclassified subsequently
to the Income Statement
CONSOLIDATED BALANCE SHEET
As at 31 July 2021 Note Unaudited Unaudited Audited
31.7.21 31.7.20 31.1.21
GBP'000 GBP'000 GBP'000
ASSETS
Non current assets
Property, plant and equipment 2,597 2,812 2,713
Amounts receivable from
customers 7 174,489 185,315 170,591
Deferred tax assets 102 54 109
177,188 188,181 173,413
---------------- ------------------- ------------------
Current assets
Amounts receivable from
customers 7 131,928 96,591 110,319
Trade and other receivables 1,977 2,155 1,106
Cash and cash equivalents 1 42 1
133,906 98,788 111,426
---------------- ------------------- ------------------
Total assets 311,094 286,969 284,839
---------------- ------------------- ------------------
LIABILITIES
Current liabilities
Bank overdrafts and loans (1,567) - (1,295)
Trade and other payables (3,721) (2,866) (2,763)
Tax liabilities (1,778) (454) (593)
Accruals (687) (503) (658)
(7,753) (3,823) (5,309)
---------------- ------------------- ------------------
Non current liabilities
Borrowings 9 (113,500) (108,000) (97,500)
Lease liabilities (468) (590) (551)
Financial liabilities (450) (450) (450)
(114,418) (109,040) (98,501)
---------------- ------------------- ------------------
Total liabilities (122,171) (112,863) (103,810)
---------------- ------------------- ------------------
NET ASSETS 188,923 174,106 181,029
================ =================== ==================
Equity
Called up share capital 1,718 1,717 1,717
Share premium account 2,301 2,301 2,301
Profit and loss account 184,904 170,088 177,011
TOTAL EQUITY 188,923 174,106 181,029
================ =================== ==================
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 2021
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 2020 1,715 2,301 175,458 179,474
--------------- ----------------- ----------------- -----------------
Profit for six month period - - 5,084 5,084
Other comprehensive income -
for six month period - - -
--------------- ----------------- ----------------- -----------------
Total comprehensive income
for six month period - - 5,084 5,084
Issue of new shares in year 2 - 0 2
Cost of future share based
payments - - 45 45
Tax credit on equity items - - (63) (63)
Dividends - - (10,436) (10,436)
At 31 July 2020 1,717 2,301 170,088 174,106
--------------- ----------------- ----------------- -----------------
Profit for six month period - - 9,562 9,562
Other comprehensive income
for six month period - - (9) (9)
--------------- ----------------- ----------------- -----------------
Total comprehensive income
for six month period - - 9,553 9,553
Issue of new shares in year - - - 0
Cost of future share based
payments - - 30 30
Tax charge on equity items - - 2 2
Dividends - - (2,662) (2,662)
At 31 January 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
--------------- ----------------- ----------------- -----------------
CONSOLIDATED CASH FLOW STATEMENT
Six months ended 31 July 2021
Note Unaudited Unaudited Audited
Six months Six months Financial
ended ended year ended
31.7.21 31.7.20 31.1.21
GBP'000 GBP'000 GBP'000
Net cash (used in)/from operating
activities 8 (7,776) 20,919 32,940
Cash flows used in investing
activities
Proceeds on disposal of property,
plant and equipment 28 83 103
Purchases of property, plant
and equipment (180) (1,039) (1,215)
Net cash used in investing activities (152) (956) (1,112)
------------------- ------------------ -------------------
Cash flows (used in)/from financing
activities
Dividends paid (8,262) (10,436) (13,098)
Issue of new shares 1 2 2
Receipt of new borrowings 16,000 14,500 4,000
Repayment of borrowings - (25,000) (25,000)
(Decrease)/increase in lease
liabilities (83) 357 318
Net increase in overdraft 272 - 1,295
Net cash from/(used in) financing
activities 7,928 (20,577) (32,483)
------------------- ------------------ -------------------
Net decrease in cash and cash
equivalents 0 (614) (655)
Cash and cash equivalents at
the beginning of period 1 656 656
------------------- ------------------ -------------------
Cash and cash equivalents at
the end of period 1 42 1
------------------- ------------------ -------------------
Cash and cash equivalents comprise
Cash and cash in bank 1 42 1
=================== ================== ===================
NOTES TO THE INTERIM STATEMENTS
Six months ended 31 July 2021
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 Financial Reporting 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 2021.
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 Covid 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 health situations, potentially
mitigated by government support and movement restrictions which
lower customer outgoings, as well as being mitigated by the
forbearance and experience of our skilled staff. Asset recovery and
realisation challenges relate mainly to government and regulatory
restrictions which have eased during 2021. Operational challenges
included supporting staff working from home which has been
significantly mitigated by technology. 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.
New and amended standards and interpretations need to be adopted
in the first interim financial statements issued after their
effective date (or date of early adoption).
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. Under IFRS 16, credit
charge income should be recognised using the EIR. Acceptance fees
charged to customers and any direct transaction cost are included
in the calculation of the EIR. For lease 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.
NOTES TO THE INTERIM STATEMENTS
Six months ended 31 July 2021
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.
During 2020, the Government announced a debt repayment moratoria
that allowed customers to obtain up to 6 month payment holidays on
loans and leases due to the economic impact of the Covid pandemic.
Where our customers have taken these payment holidays then in
accordance with regulatory guidance this has not impacted on their
arrears status. However, the level of provisions have increased due
to an increase in the forward-looking macroeconomic overlay
required by IFRS 9 and also where customers have entered arrears
either before or after the payment holiday due to the impact on
recent behaviour inputs to the expected loss model.
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 31.7.21 31.7.20 31.1.21
GBP'000 GBP'000 GBP'000
Motor finance 38,583 41,187 85,465
Property Bridging
finance 4,230 1,640 4,474
Revenue 42,813 42,827 89,939
------------ ----------- -----------
Profit before taxation
Six months Six months Financial
ended ended year ended
Class of business 31.7.21 31.7.20 31.1.21
GBP'000 GBP'000 GBP'000
Motor finance 18,455 6,139 17,198
Property Bridging
finance 1,529 118 813
Central costs income (40) 52 117
Profit before taxation 19,944 6,309 18,128
------------ ----------- -----------
NOTES TO THE INTERIM STATEMENTS
Six months ended 31 July 2021
3. COST OF SALES
Six months Six months Financial
ended ended year ended
31.7.21 31.7.20 31.1.21
GBP'000 GBP'000 GBP'000
Loan loss provisioning charge
- motor finance 4,868 21,369 35,995
Loan loss provisioning charge -
property bridging finance 223 307 710
Total loan loss provisioning charge 5,091 21,676 36,705
Other cost of sales - motor finance 8,345 6,907 13,586
Other cost of sales - property
bridging finance 780 239 678
Total cost of sales 14,216 28,822 50,969
===================== ===================== =====================
4. TAXATION
The tax charge for the period has been calculated by applying
the estimated effective tax rate for the period of 19.0% (31 July
2020: 19.4% and 31 January 2021: 19.0%) 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 GBP16,154,000
(period ended 31 July 2020: GBP5,084,000 and year ended 31 January
2021: GBP14,646,000).
The number of shares used in the basic calculation is the
average number of ordinary shares in issue during the period of
12,140,558 (period ended 31 July 2020: 12,125,290 and year ended 31
January 2021: 12,129,768).
For diluted earnings per share the average number of ordinary
shares in issue is adjusted to assume conversion of all dilutive
potential ordinary shares relating to our share option scheme
awards.
6. DIVIDS
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 were paid during the six month period to 31
July 2021 (total of 68.0p per ordinary share). This compares to a
second interim dividend of 36.0p per ordinary share and a final
dividend of 50.0p per ordinary share for the financial year ended
31 January 2020 which were paid during the 6 months period to 31
July 2020 (total of 86.0p per ordinary share). During the twelve
months to 31 January 2021 total dividends of 120.0p 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
33.0p per share (2020: 22.0p per share). The first interim
dividend, which amounts to approximately GBP4,008,000 (2020:
GBP2,671,000), will be paid on 19 November 2021 to shareholders on
the register at 29 October 2021. The shares will be quoted ex
dividend on 28 October 2021. The interim financial information does
not include this proposed dividend as it was declared after the
balance sheet date.
NOTES TO THE INTERIM STATEMENTS
Six months ended 31 July 2021
7. ANALYSIS AMOUNTS RECEIVABLE FROM CUSTOMERS
All operations are situated in
the United Kingdom.
Six months Six months Financial
ended ended year ended
31.7.21 31.7.20 31.1.21
GBP'000 GBP'000 GBP'000
Motor Finance
Amounts receivable from customers
(capital) 341,736 343,370 339,349
Less: Loan loss provision for
motor finance (92,985) (79,918) (92,583)
Motor Finance net amounts receivable
from customers 248,751 263,452 246,766
=================== ==================== =====================
Property Bridging Finance
Amounts receivable from customers
(capital) 58,220 19,235 34,475
Less: Loan loss provision for
property bridging (554) (781) (331)
Property bridging net amounts
receivable from customers 57,666 18,454 34,144
=================== ==================== =====================
Total net amounts receivable
from customers 306,417 281,906 280,910
=================== ==================== =====================
Analysed as - due within one
year 131,928 96,591 110,319
- due in more
than one year 174,489 185,315 170,591
Amounts receivable from customers
(net) 306,417 281,906 280,910
=================== ==================== =====================
Analysis of loan loss provision and amounts receivable
from customers (capital)
Credit
Not credit Impaired 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
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 July
2020
Motor finance (13,525) (147) (66,246) (79,918) 343,370
Property
bridging
finance (139) - (642) (781) 19,235
Total (13,664) (147) (66,888) (80,699) 362,605
=========== ========= ============== ========== ===========
As at 31
January
2021
Motor finance (14,367) (12,759) (65,457) (92,583) 339,439
Property
bridging
finance (313) - (18) (331) 34,475
Total (14,680) (12,759) (65,475) (92,914) 373,914
=========== ========= ============== ========== ===========
NOTES TO THE INTERIM STATEMENTS
Six months ended 31 July 2021
8. RECONCILIATION OF OPERATING PROFIT TO NET CASH FROM OPERATING
ACTIVITIES
Six
months Six months Financial
ended ended year ended
31.7.21 31.7.20 31.1.21
GBP'000 GBP'000 GBP'000
Operating Profit 21,722 8,298 21,696
Finance costs paid (1,778) (1,989) (3,610)
Finance income received 0 0 42
Tax paid (2,616) (4,491) (6,662)
Depreciation on plant, property
and equipment 268 252 520
Loss on disposal of plant,
property
and equipment 0 0 (13)
(Increase)/decrease in amounts
receivable from customers (25,507) 19,844 20,840
(Increase)/decrease in trade
and
other receivables (871) (682) 367
Increase/(decrease) in trade
and
other payables 958 (260) (363)
Increase/(decrease) in accruals
and deferred income 29 (98) 57
Increase in cost of future
share
based payments 19 45 75
Movement in retirement benefit
asset/obligations - - (9)
Net cash (used in)/from
operating
activities (7,776) 20,919 32,940
========== =========== ===========
9. BORROWINGS
Movements in our loans and overdrafts for the respective periods
are shown in the consolidated cash flow statement. The period end
borrowings has increased to GBP115m. During the 6 months to 31 July
2021, the GBP25m term loan facility due for repayment in April 2022
was replaced with a term loan facility for GBP50m - GBP25m of the
new facility is due for repayment in March 2028 and GBP25m is due
for repayment in March 2029. The maturity on our GBP60m revolving
credit facility was extended to March 2024 and a new revolving
credit facility for GBP25m due for repayment in March 2026 was also
put in place. Committed borrowing facilities were GBP180m at 31
July 2021 (31 July 2020: GBP130m and 31 January 2021: GBP130m) plus
at 31 July 2021 we had GBP7m in overdraft facilities.
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 GBP51,000 (6 months to July 2020:
GBP48,000; year to January 2021: GBP94,500) 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 2020:
GBPnil; January 2021 GBPnil). During the six months the Group
obtained supplies amounting to GBP3,913 (6 months to July 2020:
GBP3,693; year to January 2021: GBP3,693) 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 2021 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 FLFEAAFIDFIL
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