TIDMSUS
RNS Number : 3711N
S & U PLC
24 September 2019
24 September 2019
S&U PLC
("S&U" or "the Group")
INTERIM RESULTS FOR THE SIX MONTHSED 31 JULY 2019
Another six months of steady sustainable growth
S&U, the specialist motor finance and bridging lender today
announces its results for the six months ending 31st July 2019.
Profits have again been increased at both Advantage Finance Limited
("Advantage"), founded in July 1999 and now in its twentieth
successive year of profit growth, and at Aspen Bridging Limited
("Aspen") founded in 2017. These reflect the Group's ability to
continue to produce consistent and sustainable growth, despite the
current challenging economic and political environment.
Financial Highlights
-- PBT: GBP17.1m - up 3% and in line with expectations (H1:2018: GBP16.7m)
-- Group revenue: GBP47.7m - up 7% (H1:2018: GBP44.5m)
-- Earnings per share: 116.5p - up 3% (H1:2018: 112.6p)
-- Group net receivables: GBP298.5m - up 7% (H1:2018: GBP279.8m)
-- Group gearing and headroom: GBP125m borrowing and GBP160m
facilities - gearing at 74% (July 2018: 78%)
-- Interim dividend: up 6% to 34p per ordinary share (H1: 2018: 32p)
Operational Highlights
Advantage Finance Limited
-- 20th anniversary and 20th successive year of profits growth
-- Increased customer numbers at 62,000 (July 2018: 58,000)
-- Increased applications producing new agreements 8% ahead of budget
-- Improving debt quality reflected in GBP72.1m of increased
monthly collections (H1:2018: GBP67.7m)
-- 12 month rolling Risk adjusted yield now 24.9% against 24.6% at year end
-- Graham Wheeler, previous CEO of VW Financial Services UK, to
succeed retiring founder Guy Thompson as CEO
Aspen Bridging Limited
-- Half year profit of GBP502k (H1:2018: GBP279k)
-- Net receivables up by 52% at GBP24.7m (H1:2018: GBP16.3m) and
deal pipeline growing steadily
-- Appointment of Manjeet Bhogal as Aspen FD strengthens growing business
Anthony Coombs, Chairman of S&U, commented:
"These results clearly demonstrate the resilience and dynamism
of our business, and our ability to perform irrespective of the
unprecedented uncertainty surrounding the British economy and
consumer markets. These strong and well-established foundations
give me every confidence for a resumption of usual rates of growth,
whatever the outcome of the current maelstrom in Westminster."
Enquiries:
S&U plc
Anthony Coombs, Chairman 0121 705 7777
Newgate Communications 020 7653 9848
Bob Huxford, Tom Carnegie, Megan Kovach
Peel Hunt LLP 020 7418 8900
Adrian Trimmings, Andrew Buchanan, Rishi Shah,
Chairman's Statement
In announcing yet another set of improved results in
challenging, even febrile economic circumstances, I pay tribute to
the resilience, adaptability and determination of all working in
our Group. It is said that the "finest steel goes through the
hottest fire" and Group profit of GBP17.1m (H1:2018: GBP16.7m)
provide a solid platform for the resumption of recent levels of
growth. Fortunately, the smaller non-prime sector of used car and
property markets we serve has been partly shielded from the malaise
currently affecting the new car and residential markets in the UK.
Our skills and energy will enable us to profit from the
opportunities this presents.
Motor Finance
Advantage Finance Limited recently celebrated the 20th
anniversary of its founding in 1999 by a team led by Guy Thompson
the charismatic MD, and most of that original management is still
involved with the company. This first half year's profit of
GBP16.6m, net receivables of GBP273.8m and customer numbers of
62,000 are all the highest ever.
Sales across the new car market were down 3.4% for the year to
date. Fortunately, the used car market upon which Advantage solely
focuses has been relatively immune from the challenging economic
environment which has impacted new car sales. Used car sales year
to date are down just 1.7% on last year's second highest recorded
figure, in a total market estimated to be worth GBP43.4bn.
According to the latest Finance and Leasing Association statistics,
used car sales on finance via dealerships to consumers were 3% up
year on year in the 12 months to July 2019.
We expect these benign trends in used cars to continue,
particularly in the non-prime space served by Advantage. The
consolidation of, and considerable investment in the modernisation
of used car dealerships confirms this. The customers they cater for
are in employment and looking for affordable value for money, low
depreciation and reliability in cars they use for work and the
school run.
All this explains the record 680,000 applications Advantage
received this half year. However balancing a return to normal
growth rates with maintaining sustainable improvements in debt
quality in the current economic environment has kept the ratio of
transaction rates to applications to 1.8% over the period, compared
to 2.3% last year. As anticipated, this prudent approach is seeing
a gradual but discernible improvement in debt quality.
Collections have risen by 7% in the half year to an average of
GBP12m per month on net receivables which were on average 3% higher
during H1 19. This also means that Advantage's rolling risk
adjusted yield has risen slightly from 24.6% at year-end in January
to 24.9% now.
This gives Advantage firm foundations for a resumption of recent
levels of growth in the second half-with its concomitant effect on
profitability.
As mentioned above, much of the credit for the creation from
scratch in 1999 of a business now making over GBP30m profits every
year, goes to Guy Thompson, Advantage's distinguished leader. There
is, however, a tide in the affairs of man which means that Guy will
retire next year. His will be a hard act to follow, but in Graham
Wheeler we believe we have found a worthy successor as CEO of
Advantage.
Graham has extensive experience in the motor finance industry.
He spent over 12 years to 2016 at VW Financial Services, which he
developed into Britain's largest motor finance business with over
GBP6bn annual advances and 1,000 employees. A Glaswegian by birth,
Graham is relishing the challenge of taking the Advantage family to
even greater heights.
Aspen Bridging Limited
In residential markets in the UK where activity remains
relatively subdued, Aspen Bridging Limited, our fledgling property
lending business, continues to make solid progress. Profit before
tax for the period was GBP0.5 million, up from GBP0.3 million a
year ago and net loan receivables have grown to GBP24.7m, an
increase of just over GBP8m on 2018.
Loan enquiries and the current deal pipeline significantly
exceed those of a year ago, but competition and a prudent approach
to valuations have resulted in transactions, although 60% above
last year, being slightly short of expectations.
Aspen's overall loan book remains at a good quality. Since
business inception to the end of July 2019, 73 loan facilities out
of 137 advanced in total have now been fully repaid. At the end of
July there were 9 loans where borrower exits have been slower than
expected, due mainly to slower property market conditions. We are
confident of sensible outcomes on those loans, which are well
provided and are the focus of our collections activity. Aspen has
still only had one crystallised loss so far which was a loss of
some default interest rather than of capital.
Underlying demand for homes in Britain's historically
undersupplied housing market remains strong. The current pipeline
augurs a good second half, and a significant contribution by Aspen
to Group profits in the next two years.
Funding
We continue to invest in the growth of both of our businesses
and in rewarding shareholders. At the half year Group borrowing
stood at GBP125m, up from GBP108m on 31 January 2019 and compared
to GBP121m at the same stage last year. Our traditionally
conservative approach to gearing saw this fall to 74% as at 31 July
2019 from 78% last year, well within our funding covenants.
Nevertheless, current facilities of GBP160m give us ample headroom
for growth.
Dividend
In deciding rewards for shareholders, we balance our
conservative treasury approach with a realistically positive
evaluation of the future. We therefore propose to pay a first
interim dividend this year of 34p per ordinary share (2018: 32p).
This will be paid on the 15th November 2019 to shareholders on the
register on the 25th October.
As usual, our second and final dividends will be paid on the
13th March and 10th July 2020 respectively.
Current Trading and Outlook
The apparent meltdown in Westminster, and the economic paranoia
and uncertainty it is creating, is unprecedented in my forty odd
years in business and politics. It is a real testament to the
resilience and experience of all at S&U, that despite this, I
believe the prospects for continued sustainable growth for the
Group are still more encouraging than they were a year ago.
Anthony Coombs
Chairman
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 GBP14,017,000 (H1 18: GBP13,507,000).
Dividends of GBP10,362,000 (H1 18: GBP9,245,000) were paid during
the period.
The Directors recommend a first interim dividend of 34.0p per
share (2018: 32.0p). The dividend will be paid on 15 November 2019
to shareholders on the register on 25 October 2019.
PERFORMANCE MEASUREMENTS DEFINITIONS
Within our interim results we refer to the following performance
measurements:
I) Risk adjusted yield as % 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
During the six months, under the S&U Plc 2010 Long-Term
Incentive Plan ("LTIP"), 12,500 options were awarded and no options
lapsed. 51,000 options were exercised during the six months. 95,334
share options are still held under this plan as at 31 July 2019 (31
July 2018: 145,001 options and 31 January 2019: 133,834
options).
In the six months to 31 July 2019 the charge for these future
share-based payments was GBP65,000 (H1 18: GBP110,000).
During the six months no shadow share options were exercised
under the LTIP scheme. As anticipated in the 2018/19 Remuneration
Report, on 1(st) August 2019, 12,000 shadow share options were
granted to Guy Thompson.
Guy Thompson holds a total of 21,000 vested and unvested shadow
share options under the LTIP, of which 6,000 (vested) shadow
options shall normally vest in August 2021 and 15,000 (unvested)
shadow options shall normally vest, subject to the satisfaction of
PBT and ROCE based conditions measured over the financial year
ending 31 January 2020, in August 2022.
Guy Thompson also currently holds 50,000 S&U ordinary share
options under the LTIP, which are fully vested and currently
capable of exercise.
Following 20 years of distinguished sservice to the Group, Guy
Thompson is in the process of arranging the smooth ttransition of
his responsibilities as Managing Director of Advantage Finance to
Graham Wheeler. Guy has indicated to the Board that he currently
intends to retire during 2020. Guy will be treated as a 'good
leaver' under the LTIP if he ceases to be an officer and employee
of any Group company by reason of retirement (evidenced to the
satisfaction of the Board) on or after 28 August 2020. In these
circumstances, Guy's shadow options shall continue to vest in
August 2021 (over 6,000 vested shadow options) and August 2022 (up
to 15,000 shadow options), subject to the satisfaction of any
performance conditions and as determined by the Remuneration
Committee in accordance with the rules of the LTIP and the
Directors' Remuneration Policy.
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 2019.
STATEMENT OF GOING CONCERN
After making enquiries and considering the principal risks and
uncertainties set out below, 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
There have been no material changes in the principal risks and
uncertainties since 31 January 2019.
Consumer and Economic risks including the value of security
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
customer ability to repay.
The current lack of clarity around Brexit makes it very
difficult to anticipate the effects of Brexit on the environment
generally or on our customers. We have considered the position
carefully and as the Group exclusively operates in the UK market,
we believe the main Brexit risk posed for our Group is indirect and
could be the potential for adverse economic conditions and higher
levels of unemployment leading to more repayment delinquency.
However, despite the ongoing Brexit uncertainty, recent UK
employment figures are good and Advantage historically have not
suffered greatly through previous economic downturns. We therefore
believe the risks currently posed to the Group by Brexit are
limited.
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.
These 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 in a heavily under
supplied housing market.
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 would consider
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. As a
regulated lender Advantage Finance Limited applied for and was
granted Consumer Credit Permission from the FCA as the new
regulator in 2016. 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 controls and
processes. This process is buttressed by specific advice from Trade
and other organisations and by the work of our internal
auditors.
Whilst engaged in the un-regulated sector, during its pilot
stage 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.
Other Operational Risks
Other operational risks are endemic to any finance business.
Rigorous procedures, detailed recovery plans and, above all, sound
experience and commercial common sense provides Advantage and the
Group with appropriate protection. In particular recent work has
been focused on Cyber Security. Although breaches are rare, a
review has been completed internally and monitored by RSM, our
internal auditors. This will be an ongoing process overseen by the
Audit Committee. In anticipation of the SMCR regime and to
strengthen its control environment, Advantage has appointed Alan
Tuplin as its chief risk officer (CRO).
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 the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 July 2019 which comprises 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 half-yearly financial report and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial
statements.
This report is made solely to the company 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 Financial
Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it
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.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial 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 Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, 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 condensed set of financial statements
in the half-yearly financial report for the six months ended 31
July 2019 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
Birmingham, UK
24 September 2019
S&U PLC GROUP
CONSOLIDATED INCOME STATEMENT
Six months ended 31 July 2019
Note Unaudited Unaudited Audited
Six months Six months Financial
ended 31.7.19 ended 31.7.18 year ended
GBP'000 GBP'000 31.1.19
GBP'000
Revenue 2 47,659 44,460 89,215
Cost of sales 3 (21,642) (20,005) (38,937)
Gross profit 26,017 24,455 50,278
Administrative expenses (6,607) (5,642) (11,177)
Operating profit 19,410 18,813 39,101
Finance costs (net) (2,272) (2,139) (4,541)
Profit before taxation 2 17,138 16,674 34,560
Taxation 4 (3,121) (3,167) (6,571)
Profit for the period 14,017 13,507 27,989
Earnings per share
Basic 5 116.5p 112.6p 233.2p
Diluted 5 116.1p 111.8p 232.0p
All activities and earnings per share derive from continuing
operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Financial
ended 31.7.19 ended year ended
GBP000 31.7.18 31.1.19
GBP000 GBP000
Profit for the period 14,017 13,507 27,989
Other comprehensive income:
Actuarial loss on defined benefit
pension scheme - - (15)
Total Comprehensive Income for
the period 14,017 13,507 27,974
Items above will not be reclassified subsequently to the Income
Statement.
CONSOLIDATED BALANCE SHEET
As at 31 July 2019
Note Unaudited Unaudited Audited
31.7.19 31.7.18 31.1.19
GBP'000 GBP'000 GBP'000
ASSETS
Non current assets
Property, plant and equipment 2,262 2,308 2,296
Amounts receivable from customers 7 192,720 187,375 182,689
Deferred tax assets 361 487 398
195,343 190,170 185,383
Current assets
Amounts receivable from customers 7 105,741 92,407 94,374
Trade and other receivables 1,256 936 1,055
Cash and cash equivalents 2 1 1
106,999 93,344 95,430
Total assets 302,342 283,514 280,813
LIABILITIES
Current liabilities
Bank overdrafts and loans (153) (417) (38)
Trade and other payables (3,135) (2,648) (2,139)
Current tax liabilities (3,914) (3,382) (3,995)
Accruals and deferred income (436) (626) (550)
(7,638) (7,073) (6,722)
Non current liabilities
Borrowings (125,000) (121,000) (108,000)
Lease Liabilities (251) (260) (274)
Financial liabilities (450) (450) (450)
(125,701) (121,710) (108,724)
Total liabilities (133,339) (128,783) (115,446)
NET ASSETS 169,003 154,731 165,367
Equity
Called up share capital 1,708 1,700 1,701
Share premium account 2,301 2,301 2,301
Profit and loss account 164,994 150,730 161,365
TOTAL EQUITY 169,003 154,731 165,367
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 2019
Unaudited Unaudited Unaudited Unaudited
Called Share premium Profit Total equity
up share account and loss
capital account
GBP'000 GBP'000 GBP'000 GBP'000
At 1 February 2018 1,699 2,289 148,828 152,816
Profit for six month period - - 13,507 13,507
Other comprehensive income for - - - -
period
Total comprehensive income for
period - - 13,507 13,507
Issue of new shares 1 12 - 13
Cost of future share based payments - - 110 110
IFRS9 receivables adjustment - - (3,050) (3,050)
Tax charge on equity items - - 580 580
Dividends - - (9,245) (9,245)
At 31 July 2018 1,700 2,301 150,730 154,731
Profit for six month period - - 14,482 14,482
Other comprehensive income for
period - - (15) (15)
Total comprehensive income for
period - - 14,467 14,467
Issue of new shares 1 - - 1
Cost of future share based payments - - 93 93
Tax charge on equity items - - (90) (90)
Dividends - - (3,835) (3,835)
At 31 January 2019 1,701 2,301 161,365 165,367
Profit for six month period - - 14,017 14,017
Other comprehensive income for - - - -
period
Total comprehensive income for
period - - 14,017 14,017
Issue of new shares 7 - - 7
Cost of future share based payments - - 65 65
Tax charge on equity items - - (91) (91)
Dividends - - (10,362) (10,362)
At 31 July 2019 1,708 2,301 164,994 169,003
CONSOLIDATED CASH FLOW STATEMENT
Six months ended 31 July 2019
Note Unaudited Unaudited Audited
Six months Six months Financial
ended 31.7.19 ended 31.7.18 Year ended
GBP'000 GBP'000 31.1.19
GBP'000
Net cash used in operating activities 8 (6,541) (6,892) 10,530
Cash flows used in investing activities
Proceeds on disposal of property,
plant and equipment 14 18 45
Purchases of property, plant and
equipment (209) (312) (830)
Net cash used in investing activities (195) (294) (785)
Cash flows from financing activities
Dividends paid (10,362) (9,245) (13,080)
Issue of new shares 7 13 14
Receipt of new borrowings 17,000 17,000 4,274
Repayment of borrowings - - -
Repayment of lease liabilities (23) (8) -
Increase/(decrease) in overdraft 115 (574) (953)
Net cash from financing activities 6,737 7,186 (9,745)
Net decrease in cash and cash equivalents 1 - -
Cash and cash equivalents at the
beginning of the period 1 1 1
Cash and cash equivalents at the
end of the period 2 1 1
Cash and cash equivalents comprise
Cash and cash in bank 2 1 1
NOTES TO THE INTERIM STATEMENTS
Six months ended 31 July 2019
1. 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
These financial statements have been prepared using accounting
policies consistent with International Financial Reporting
Standards (IFRS) and in accordance with IAS 34 'Interim Financial
Reporting' as adopted by the European Union.
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 2019.
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. 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 Impairment and measurement of amounts receivable from
customers
There are 3 classification stages under IFRS9 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 IFRS9 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 contractual arrears are deemed credit impaired and are
therefore included in IFRS9 stage 3. The expected credit loss
("ECL") is the probability weighted estimate of credit losses.
2. ANALYSES OF REVENUE AND PROFIT BEFORE TAXATION
All revenue is generated in the United Kingdom. Analyses by
class of business of revenue and profit before taxation are stated
below:
Revenue
Class of business Six months Six months Financial
ended 31.7.19 ended 31.7.18 year ended
GBP'000 GBP'000 31.1.19
GBP'000
Motor finance 45,586 43,270 86,372
Property bridging finance 2,073 1,190 2,843
Revenue 47,659 44,460 89,215
Profit before taxation
Class of business Six months Six months Financial
ended 31.7.19 ended 31.7.18 year ended
GBP'000 GBP'000 31.1.19
GBP'000
Motor finance 16,622 16,306 33,640
Property bridging finance 502 279 838
Central costs/income 14 89 82
Profit before taxation 17,138 16,674 34,560
3. COST OF SALES
Six months Six months Financial
ended ended 31.7.18 year ended
31.7.19 GBP'000 31.1.19
GBP'000 GBP'000
Loan loss provisioning charge - motor
finance 11,075 11,320 22,980
Loan loss provisioning charge - property
bridging finance 318 98 206
Total loan loss provisioning charge 11,393 11,418 23,186
Other cost of sales - motor finance 9,927 8,390 15,298
Other cost of sales - property bridging
finance 322 197 453
Cost of sales 21,642 20,005 38,937
4. TAXATION
The tax charge for the period has been calculated by applying
the estimated effective tax rate for the year of 18.2% (31 July
2018: 19.0% and 31 January 2019: 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 GBP14,017,000
(period ended 31 July 2018: GBP13,507,000 and year ended 31 January
2019: GBP27,989,000).
The number of shares used in the basic calculation is the
average number of ordinary shares in issue during the period of
12,032,091 (period ended 31 July 2018: 11,996,479 and year ended 31
January 2019: 12,003,051).
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 35.0p per ordinary share and a
final dividend of 51.0p per ordinary share for the financial year
ended 31 January 2019 were paid during the six month period to 31
July 2019 (total of 86.0p per ordinary share). This compares to a
second interim dividend of 32.0p per ordinary share and a final
dividend of 45.0p per ordinary share for the financial year ended
31 January 2018 which were paid during the 6 months period to 31
July 2018 (total of 77.0p per ordinary share). During the twelve
months to 31 January 2019 total dividends of 109.0p 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
34.0p per share (2018: 32.0p per share). The first interim
dividend, which amounts to approximately GBP4,102,000 (2018:
GBP3,841,000), will be paid on 15 November 2019 to shareholders on
the register at 25 October 2019. The shares will be quoted ex
dividend on 24 October 2019. The interim financial information does
not include this proposed dividend as it was declared after the
balance sheet date.
7. ANALYSIS OF AMOUNTS RECEIVABLE FROM CUSTOMERS
All operations are situated in the United Kingdom.
Six months Six months Financial
ended ended year ended
31.7.19 31.7.18 31.1.19
GBP'000 GBP'000 GBP'000
Motor Finance
Amounts receivable from customers (capital) 332,914 315,627 316,655
Less: Loan loss provision for motor
finance (59,143) (52,172) (57,845)
Motor Finance net amounts receivable
from customers 273,771 263,455 258,810
Property Bridging Finance
Amounts receivable from customers (capital) 25,293 16,562 18,621
Less: Loan loss provision for property
bridging (603) (235) (368)
Property Bridging net amounts receivable
from customers 24,690 16,327 18,253
Total net amounts receivable from customers 298,461 279,782 277,063
Analysed as:- due within one year 105,741 92,407 94,374
* due in more than one year 192,720 187,375 182,689
Amounts receivable from customers (net) 298,461 279,782 277,063
Analysis of loan loss provision and amounts receivable from
customers (capital)
Not Credit Impaired Credit impaired
Stage 1: Stage 2: Stage 3: Total Provision Amounts
Subject to Subject Subject GBP'000 Receivable
12 months to to lifetime GBP'000
ECL lifetime ECL
GBP'000 ECL GBP'000
GBP'000
As at 31 July 2019
Motor finance (14,395) (12) (45,089) (59,143) 332,914
Property bridging finance (238) - (365) (603) 25,293
Total (14,633) (12) (45,454) (59,746) 358,207
As at 31 July 2018
Motor finance (12,884) (32) (39,256) (52,172) 315,627
Property bridging finance (120) - (115) (235) 16,562
Total (13,004) (32) (39,371) (52,407) 332,189
As at January 2019
Motor finance (12,685) (71) (45,089) (57,845) 316,655
Property bridging finance (131) - (237) (368) 18,621
Total (12,816) (71) (45,326) (58,213) 335,276
8. RECONCILIATION OF OPERATING PROFIT TO CASH FLOW USED IN OPERATING ACTIVITIES
Six months Six months Financial
ended ended year ended
31.7.19 31.7.18 31.1.19
GBP'000 GBP'000 GBP'000
Operating Profit 19,410 18,813 39,101
Finance costs paid (2,272) (2,139) (4,541)
Tax paid (3,256) (2,805) (5,597)
Depreciation on property, plant
and equipment 226 185 414
Loss on disposal on property,
plant and equipment 3 - 6
Increase in amounts receivable
from customers (21,398) (20,776) (18,057)
Increase in trade and other receivables (201) (218) (337)
(Decrease)/increase in trade
and other payables 996 99 (410)
Decrease in accruals and deferred
income (114) (161) (237)
Increase in cost of future share
based payments 65 110 203
Decrease in retirement benefit
obligations - - (15)
Cash flow used in operating activities (6,541) (6,892) 10,530
9. BORROWINGS
Movements in our loans and overdrafts for the respective periods
are shown in the consolidated cash flow statement. The period end
borrowings were GBP125m. As referred to in our annual report, an
additional revolving credit facility of GBP25m was put in place
early this financial year and so committed borrowing facilities
were higher at GBP160m at 31 July 2019 (31 July 2018 and 31 January
2019: GBP135m) plus at 31 July 2019 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 GBP44,000 (6 months to July 2018:
GBP48,000; year to January 2019: GBP87,000) 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 2018:
GBPnil; January 2019 GBPnil). During the six months the Group
obtained supplies amounting to GBP5,668 (6 months to July 2018:
GBP5,580; year to January 2019: GBP5,713) 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 GBP5,668 (July
2018: GBPnil; January 2019 GBPnil). All related party transactions
were settled in full.
11. INTERIM REPORT
The information for the year ended 31 January 2019 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LLFITAAIVFIA
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