S & U Regulatory News (SUS)

Immediate Release

23 March 2011

S&U plc ("S&U" or "the Group")

Preliminary results for the year ended 31 January 2011

S&U, Britain's foremost niche home credit and motor finance provider, today announces its preliminary results for the year ended 31 January 2011.

Key Financials:

·; Profit before taxation up 10% at £9.9m (2010: £9.0m)

·; Earnings per share up 9% at 60.0p (2010: 55.2p)

·; Revenues up 5% at £48.0m (2010: £45.8m)

·; Proposed final dividend of 16p (2010: 10p); total dividend in respect of the year increased to 36p (2010: 34p) up 6%

·; Strong balance sheet:

o Net assets increased by 7% to £50.1m (2010: £46.8m)

o Group gearing reduced to 43% (2010: 57%)

o Repaid £6m of medium term borrowings during year and net borrowings reduced to £21.7m at year end (2010: £26.6m)

·; Divisional highlights:

o Motor Finance excellent profit before taxation up 35% to £4.2m (2010: £3.1m); volumes of new loans up 17% on record application numbers

o Home Credit consistent profit before taxation of £5.6m (2010: £5.9m); gross loan sales up 2% with excellent cash generation again this year

Operational Highlights:

·; Group annual collections up over £5m on prior year

·; Increased customer numbers in both Home Credit and Motor Finance

·; Opportunities for sensible expansion in both businesses

Anthony Coombs, Chairman of S&U commented:

"Once again I am pleased to announce a strong set of results. I am confident that our uniquely close customer relationships, constant search for growth and a prudent approach to funding, will ensure further good performance for the Group in future".

Enquiries:

Anthony Coombs - S&U 07767 687 150

Smithfield - Media and Investor Relations

Will Swan / Rebecca Whitehead 020 7903 0638

Arden Partners - Broker and Financial Adviser

Richard Day / Adrian Trimmings 020 7614 5900

CHAIRMAN'S STATEMENT

Once again I am pleased to report a strong set of results for S&U. Profit before tax for 2010/11 is £9.9m (2010: £9.0m), customer numbers in both home credit and motor finance divisions are up, debt quality continues to improve and our treasury position to strengthen. All this has been achieved in an economy still bearing the scars of the irresponsible Government and banking excesses of the last decade. By contrast, for us at S&U "Every Customer Counts" and I am confident that our uniquely close customer relationships, constant search for growth and a prudent approach to funding, will ensure further good performance for the Group in future.

Financial Review

Profit before tax rose to £9.9m from £9.0m last year, on revenue for the year of £48.0m (2010: £45.8m). Our home credit division produced an appropriately solid performance, generating cash as sales were constrained by customer caution. S D Taylor, our northern and Scottish business performed particularly well. Advantage Finance, our motor finance operation, produced a stellar performance growing market share and seeing profit rise by over a third to £4.2m.

As the wider financial community has discovered, the best time to save money is when you have some. Hence S&U's traditionally conservative treasury policy. This year has seen Group gearing fall for the fourth consecutive year from 57% to 43% whilst bank borrowing has fallen by nearly £5m to under £22m. Our home credit business generated a further £2.9m cash, whilst the quality of its collections saw Advantage combine record transactions growth with £1.8m of cash generation.

Reflecting this growth in profitability, S&U's net assets rose to £50.1m (2010: £46.8m). Net receivables before provisions are £108.5m and borrowing fell to just 20% of this (2010: 27%). Throughout the year no less than £6m of medium term loans have been repaid with consequent interest savings; our remaining facilities still give very substantial headroom for continuing acquisitions in home credit and organic growth across the Group.

Highlights

§ Profit before tax £9.9m (2010: £9.0m)

§ Group gearing 43% (2010: 57%)

§ Earnings per share of 60.0p (2010: 55.2p)

§ Final Dividend proposed of 16p (2010: 10p) ;annual total dividend in respect of year increased to 36p per Ordinary share (2010: 34p)

Dividend

Our prudent approach to financial management has been mirrored by a progressive but sustainable dividend policy. This year the Board proposed to recommend a final dividend of 16p per Ordinary share. This will be paid on 10 June 2011 to Ordinary Shareholders on the register on 20 May 2011 subject to shareholder approval at the Annual General Meeting on 13 May 2011.

Following the payment of a second interim dividend in March this year, this will represent a total dividend for the year of 36p (2010: 34p) per Ordinary share. Dividend cover will nevertheless increase slightly to 1.67 times. This reflects both our historical performance and our trading prospects for the current financial year.

Home Credit

§ Consistent and high levels of profitability

§ Customer numbers up by 2,000

§ Increasing cash generation

§ Good performance by northern division

§ Two new offices opened in Norfolk and Glasgow

§ Selective acquisitions made

Profit before tax for our home credit division was £5.6m (2010: £5.9m) on revenues broadly similar to last year at £32.0m (2010: £31.6m). This consistency of performance in unsettled economic times reflects the close relationships and mutual trust we enjoy with our customers. Whilst we continue to see some migration to us by customers denied credit elsewhere, levels of activity with our existing customers inevitably reflect the general caution seen in recent surveys of consumer confidence.

We have adapted to this in a number of ways. First, the profile of our loan products has become shorter, allowing customers more access to regular finance for a given repayment level. Second, our traditionally rigorous underwriting standards have been refocused to ensure that our customers enjoy repayment headroom both to meet the requirements of the new Consumer Credit Directive and to protect debt quality. The result has been that, although an up tick in provisioning was evident in the third quarter, this trend has been reversed and overall collections quality has improved throughout the year.

These trends, combined with increasing fuel costs and inclement weather, have seen a shift in emphasis towards trading with existing customers more intensively under our "Every Customer Counts" initiative. Our customer literature has been simplified and our loansathome4u website updated and made more accessible. In addition, during this year we have revalidated our Investors in People status and expanded our management training initiatives. This will have a positive impact upon the productivity of our excellent Representatives and broaden the range of our loyal customers with whom we regularly do business.

Our relationships with industry regulators, both directly and through the Consumer Credit Association, remain excellent. We were pleased to welcome Gordon Ramsey, the OFT's Director of Licensing, to our Group Conference in Solihull last September and were reassured to hear his view that "home credit was in a good place" - primarily due to the transparency of our product and our flexible customer relationships. Irrespective of the occasional posturing of politicians, too often ignorant of our industry and careless of the facts, the conclusions of the Competition Commission's Remedies Review of its 2006 investigation and of the OFT's Higher Cost Credit Review are both balanced and benign for responsible home credit lenders.

This kind of stability has led us to grow our customer numbers, both organically and by small acquisition. We continue to search for larger purchases but insist that these must reflect good quality debt and realistic prices, thus enabling us to maintain our proven record on acquisitions and our requirements for achieving a return on capital employed. We have opened two new offices in the year in Norfolk and Glasgow.

Motor Finance

§ Record profits of £4.2m (2010: £3.1m) for the 11th successive year

§ 14% increase in customer numbers (2010: 7% increase)

§ Broadened product range attracting new near-prime customers

§ Record collections now exceeding £2.0m per month

Once again, Advantage Finance, our motor finance business based in Grimsby and founded in 1999, has produced stellar results. For the 11th consecutive year profits before tax are at a record, this year at £4.2m (2010: £3.1m), whilst new loans rose by 17% on record applications. During the year Advantage has both increased its share of the non-standard motor finance market, and augmented this with new products for near-prime customers as other providers have withdrawn from this market. The heartening result has been Advantage's best ever quality of debt as customer repayments have set records at over £2.0m per month.

These results derive from careful planning, industry leading efficiency and sensitivity to our market. Customer analysis, in co-operation with Experian, has enabled underwriters to focus Advantage's non-standard marketing as required by the Consumer Credit Directive's responsible lending criteria, whilst simultaneously extending the company's reach amongst selected near-prime customers. Although excellent links with introducers produce record application numbers, Advantage's instantaneous underwriting minimises waste, speeds transactions times and produces excellent quality customers at sustainable margins.

The result has been that, despite lower early settlements than 3 years ago, and higher lending volumes, cash generated this year is £1.8m and the quality of our existing customer debt means an excellent potential future harvest of collections and revenue. The Advantage team are undoubtedly one of the leaders in the industry and all deserve our congratulations.

Despite the travails of the housing market, the orderly withdrawal from our Communitas second mortgage book continues as planned. Outstanding book debt now stands at £654,000 (2010: £948,000) and the trading loss has been halved to £126,000 from £233,000 a year ago. Further, following the repayments of Communitas' bank loans last year, its small overdraft of £500,000 has now been cleared.

Funding

§ Gearing reduced to 43% (2010: 57%)

§ Net cash inflow from Operating Activities of £9.3m (2010: £8.6m)

§ Net borrowing reduction of £4.9m (2010: reduction of £4.7m)

§ Significant headroom for organic and acquisitive growth

As befits a business which is cash generative, prudently geared and increasingly profitable, our relationships with our funders - even in these febrile times - are excellent and of long standing. Despite repaying over £6m of medium term borrowing, our facilities headroom has barely changed at over £6m; it more than meets our foreseeable requirements for home credit acquisitions and overall organic growth.

Current Trading and Outlook

In nearly 75 years in business, S&U has experienced and prospered in economic conditions at least as volatile as those of the past three years. Whilst we therefore budget cautiously, we like to meet and beat expectations and are confident we will continue to do so.

Our twin pillars upon which the business prospers are, first, our long-standing and close relationships with our customers, both motor and home credit, and our obsession with the service we provide them. Second, are the equally lasting relationships we enjoy with our staff and the spirit and loyalty these evoke.

No-one epitomised this more than my father, Keith Coombs, our former Chairman who literally dedicated his life to our business and who passed away last year. He is sadly missed.

Yet, S&U's success and longevity learns from the past but looks to the future. We are therefore very pleased to announce the appointment to the main Board of Mike Thompson, Managing Director of S D Taylor, our northern Home Credit subsidiary and, by profitability, still our largest business. Mike shares the enthusiasm and dedication of all who work in Home Credit and at Advantage; I thank them for their efforts.

Our current trading, albeit in cautious markets, reflects this hard work and I am confident will continue to do so. By ensuring that "Every Customer Counts", your Board and myself aim to ensure that S&U remains Britain's Best Home Credit and Motor Finance Provider. Greater rewards for shareholders will naturally follow.

Anthony Coombs

Chairman

23 March 2011

INCOME STATEMENT

Year ended 31 January 2011

All activities derive from continuing operations.

STATEMENT OF COMPREHENSIVE INCOME

BALANCE SHEET31 January 2011

STATEMENT OF CHANGES IN EQUITY

Year ended 31 January 2011

CASH FLOW STATEMENT

Year ended 31 January 2011

There are no cash and cash equivalent balances which are not available for use by the Group (2010: £nil).

1. SHAREHOLDER INFORMATION

1.1 Preliminary Announcement

The figures shown for the year ended 31 January 2011 are not statutory accounts within the meaning of section 435 of the Companies Act 2006. The statutory accounts for the year ended 31 January 2011 on which the auditors have given an unqualified audit report and did not contain an adverse statement under section 498(2) or 498(3) of the Companies Act 2006 will be delivered to the Registrar of Companies after the Annual General Meeting. The figures shown for the year ended 31 January 2010 are not statutory accounts. A copy of the statutory accounts has been delivered to the Registrar of Companies, contained an unqualified audit report and did not contain an adverse statement under section 498(2) or 498(3) of the Companies Act 2006. This announcement has been agreed with the Company's auditors for release. A copy of this preliminary announcement will be published on the website www.suplc.co.uk. The Directors are responsible for the maintenance and integrity of the Company website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements differ from legislation in other jurisdictions.

1.2 Annual General Meeting

The Annual General Meeting will be held on 13 May 2011.

1.3 Dividend

If approved at the Annual General Meeting a final dividend of 16.0p per Ordinary Share is proposed, payable on 10 June 2011 with a record date of 20 May 2011.

1.4 Annual Report

The 2011 Annual Report and Financial Statements and AGM notice will be displayed in full on our website www.suplc.co.uk in due course and also posted to those Shareholders who have still opted to receive a hardcopy. Copies of this announcement are available from the Company Secretary, S & U plc, Royal House, Prince's Gate, Homer Road, Solihull, West Midlands B91 3QQ.

2. KEY ACCOUNTING POLICIES

The 2011 financial statements have been prepared in accordance with applicable accounting standards and accounting policies - these key accounting policies are a subset of the full accounting policies.

2.1 Basis of preparation

As a listed Company we are required to prepare our consolidated financial statements in accordance with international financial reporting standards (IFRS) adopted by the European Union and therefore the Group financial statements comply with Article 4 of the EU IAS Regulation. The financial information included in this preliminary announcement does not include all the disclosures required for IFRS or the Companies Act 2006.

Both the consolidated financial statements and the financial information included in this preliminary announcement have been prepared under the historical cost convention as modified by the revaluation of derivative financial instruments to fair value.

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out above. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are set out in the preliminary announcement along with the Group's objectives, policies and processes for managing its capital. The details of the Group's financial risk management objectives, its financial instruments and hedging activities; and its exposures to credit risk, market risk and liquidity risk are set out in detail within the audited financial statements. The directors believe that the Group is well placed and has sufficient financial resources to manage its business risks successfully despite the current 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 the preliminary announcement.

2.2 Revenue recognition

Credit charges are recognised in the income statement for all loans and receivables measured at amortised cost using the effective interest rate method (EIR). The EIR is the rate that exactly discounts estimated future cash flows of the loan back to the present value of the advance. Acceptance fees charged to customers and any direct transaction cost are included in the calculation of the EIR. Under IAS 39 credit charges on loan products continue to accrue at the EIR on all impaired capital balances throughout the life of the agreement irrespective of the terms of the loan and whether the customer is actually being charged arrears interest. This is referred to as the gross up adjustment to revenue and is offset by a corresponding gross up adjustment to the loan loss provisioning charge to reflect the fact that this additional revenue is not collectable.

Commission received from third party insurers for brokering the sale of insurance products, for which the Group does not bear any underlying insurance risk is recognised and credited to the income statement when the brokerage service has been provided.

Sales of goods are recognised in the income statement when the product has been supplied.

2.3 Amounts receivable from customers

All customer receivables are initially recognised at the amount loaned to the customer plus direct transaction costs. After initial recognition the amounts receivable from customers are subsequently measured at amortised cost.

The directors assess on an ongoing basis whether there is objective evidence that a loan asset or group of loan assets is impaired and requires a deduction for impairment. A loan asset or a group of loan assets is impaired only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the loan. Objective evidence may include evidence that a borrower or group of borrowers is experiencing financial difficulty, default or delinquency in repayments. Impairment is then calculated by estimating the future cash flows for such impaired loans, discounting the flows to a present value using the original EIR and comparing this figure with the balance sheet carrying value. All such impairments are charged to the income statement.

Key assumptions in ascertaining whether a loan asset or group of loan assets is impaired include information regarding the probability of any account going into default and information regarding the likely eventual loss including recoveries. These assumptions and assumptions for estimating future cash flows are based upon observed historical data and updated as management considers appropriate to reflect current and future conditions. All assumptions are reviewed regularly to take account of differences between previously estimated cash flows on impaired debt and the eventual losses.

3. SEGMENTAL ANALYSIS

Analyses by class of business of revenue and profit before taxation are stated below:

Analyses by class of business of assets and liabilities are stated below:

Depreciation of assets for consumer credit was £363,000 (2010: £401,000) and for car finance was £60,000 (2010: £51,000) Fixed asset additions for consumer credit were £320,000 (2010: £425,000) and for car finance were £88,000 (2010: £55,000).

The net finance credit for consumer credit was £69,000 (2010: cost £69,000) and for car finance was a cost of £1,143,000 (2010: cost £1,365,000).The tax charge for consumer credit was £1,632,000 (2010: £1,632,000) and for car finance was £1,184,000 (2010: £890,000).

The significant products in consumer credit, rentals and other retail are unsecured home collected credit loans. The significant products in car finance are car loans secured under hire purchase agreements.

No geographical analysis is presented because all operations are situated in the United Kingdom.

4. COST OF SALES

5. FINANCE COSTS (NET)

6. EARNINGS PER ORDINARY SHARE

The calculation of earnings per Ordinary share is based on profit after tax of £7,043,000 (2010: £6,481,000).

The number of shares used in the basic eps calculation is the average number of shares in issue during the year of 11,737,228 (2010: 11,737,228). There are a total of 102,197 dilutive share options in issue (2010: 14,500). The number of shares used in the diluted eps calculation is 11,837,009 (2010: 11,737,228).

7. AMOUNTS RECEIVABLE FROM CUSTOMERS

The credit risk inherent in amounts receivable from customers is reviewed as per note 2.3 and under this review the credit quality of assets which are neither past due nor impaired was considered to be good. The above analysis of when loans are due is based upon original contract terms which are not rescheduled - the carrying amount of amounts receivable from customers whose terms have been renegotiated that would otherwise be past due or impaired is therefore £nil (2010: £nil).

8. RECONCILIATION OF OPERATING PROFIT TO NET CASH FROM OPERATING ACTIVITIES