Last checked at 27 Sep 2007 08:00
IMMEDIATE RELEASE
S&U PLC Providers of Consumer Credit & Motor Finance RESULTS FOR THE YEAR TO 31st JULY 2007 * HALF YEAR PROFITS ‚£4.61M (‚£4.76M) ON REVENUE ‚£22.86M (‚£19.76M).
* EARNINGS PER SHARE 27.5P (28.4P) - INTERIM DIVIDEND DECLARED 9P UNCHANGED.
* HOME COLLECTED CREDIT - PROFITS ‚£3.38M (‚£3.56M). CUSTOMER NUMBERS UP BY
11,000 YEAR ON YEAR PROVIDES ENHANCED PLATFORM FOR FUTURE PROFITABILITY.
* MOTOR CAR FINANCE - PROFITS ‚£1.23M (‚£1.20M). NEW DEALS UP BY 14% ON SAME
PERIOD LAST YEAR. * GROUP'S PRUDENT POLICIES APPROPRIATE IN CURRENT FINANCIAL MARKETS. * DESPITE TIGHTENED ECONOMIC CONDITIONS GROUP PROSPECTS REMAIN ROBUST. Issued on behalf of S & U plc by Simon Preston 0207 655 0500 OR 07910 825 778Enquiries: Anthony CoombsManaging DirectorS & U PLCTel: 07767 687150
Date of issue: Thursday 27th September 2007
POLHILL COMMUNICATIONS TEL: 0207 655 0500
DOME HOUSE FAX: 0207 655 0501
48 ARTILLERY LANE WWW.POLHILL.COM
LONDON E1 7LS Polwoods Limited
Registration Number 1983318S&U PLCCHAIRMAN'S STATEMENT
The results for the half year ended on the 31st July 2007 show that profit before tax at ‚£4.61m was broadly in line with last year (‚£4.76m). Revenue totalled ‚£22.86 million compared to ‚£19.76 million for the comparable period last year.
Our home collection business still provides the reliable core of group profitsbut the first half year saw significant increases in our revenue offset partlyby continuing initial investment in new journeys but mostly by increasedimpairment charges in one of our subsidiaries. We have reinforced our creditcontrol and collection procedures and changed some of the management at thissubsidiary. We believe that in the second half these actions will lead to lowerlevels of revenue growth but improved and more consistent profits across allour home collected operations.Advantage Finance has achieved profits of ‚£1.23m against ‚£1.20m last year andafter a slower start to the year has increased new deals by 14% in the firsthalf against last year. Whilst collections have slowed slightly on our moremature debts, initial collections on newer debts are currently some of the bestwe have experienced. Overall our motor finance collections remain robust and Iam confident that with continuous enhancement of our underwriting andcollections processes this will continue to be the case.
The proposed interim dividend is unchanged at 9p per share. This will be paid on the 9th November 2007 to Ordinary Shareholders. The shares will go ex dividend on the 10th October 2007.
DM CoombsChairman27 September 2007S&U PLC
MANAGING DIRECTOR'S STATEMENT
The positive outlook I saw at our full year results has been justified in thefirst half by our level of trading but not yet in profitability. Whilstprofitability is ‚£4.61m against ‚£4.76m last year, revenue for the period is ‚£22.9m compared to ‚£19.8m in 2006/2007; current trading should see the Groupmatch its expectations for the full year.Undoubtedly the last benign and very long consumer cycle is coming to an end;consumers are reckoning with their indebtedness and adjusting their spendingaccordingly. Despite the recent and continuing gyrations in the money markets,I believe that this adjustment will generally be controlled and not traumatic;for S&U, indeed, history shows that such trends can lead to an increased demandfor the specialist service the company provides, as consumers seek convenient,flexible and shorter term finance with well established and responsiblelenders.Our current trading tends to support this. Our home credit divisions are 10%ahead on sales for the last half year and collections have risen by 14%.Advantage, our motor finance business, is meeting both its sales budgets andquality targets for the latest batches of new business. Nevertheless, expansionalways risks increased levels of impairment; whilst non-payment levels haverisen in line with turnover across the Group, higher provisions have beennecessary particularly at Wilson Tupholme where our customer and Representativegrowth has been greatest. Necessary management changes have been made tocorrect this. Despite this, the quality of our home credit debt as a whole hasimproved slightly as a trend towards shorter term credit and more cautiousunderwriting bears fruit. Our credit availability is 15% up on last year. A newGroup Call Centre, more experience in dealing with less aggressive debtmanagement and bankruptcy agencies, and, above all, rigorous local managementsupervision should underpin these trends.Changes in our loan documentation have been made to reflect the requirements ofthe Consumer Credit Act 2006 and of the Competition Commission. Data Sharingand the new industry wide price comparison web site should be accommodatedsmoothly over the next nine months. Such an environment should see improvedhome credit results in the second half of the year.Our motor finance business at Advantage has performed creditably in a slowerused car market. Overall profit is ahead of last year and almost on budget, andcollections levels, particularly on business written in the last two years,have been maintained. Greater competition has seen some impact on margins,particularly in insurance, but these have been offset by increased interestincome generated by larger and slightly longer-term products. As a result, ‚£2madditional investment has been made in Advantage in the first half and I expectgrowth and greater cash generation over the next six months.S&U has always been jealous of its reputation for financial stability and itsvery conservative approach to borrowing. As investment has been made inAdvantage this has been offset by our generally cash generative home creditdivision allowing gearing to remain at 79%-80%. Such prudence is particularlyappropriate in the current financial markets. These considerations dictated theclosure, in June, of our Communitas second mortgage book to new business.Whilst its quality was, and remains satisfactory, the level of new business wasnot. Moreover little prescience was required to see that second mortgage assetvalues were falling and were likely to fall further. We will continue to reviewthe future of this book.For the Group overall, although economic conditions have tightened, prospectsremain robust. Group receivables are over 10% above last year, the trendmatched in the first half by both sales and collections. Further refinements inour underwriting and in credit control will build on this and enable S&U to meetthe challenges and opportunities of the next six months.Anthony Coombs27 September 2007S&U PLCINTERIM MANAGEMENT REPORTTo the members of S&U plcThis interim management report has been prepared solely to provide additionalinformation to shareholders as a body to assess the company's strategies andshould not be relied on by any other party or for any other purpose. Thisinterim management report contains forward-looking statements which;
* have been made by the directors in good faith based on the information
available to them up to the time of their approval of this report; and
* should be treated with caution due to the inherent uncertainties, including
both economic and business risk factors, underlying such forward looking
information.
This interim management report has been prepared for the group as a whole andtherefore gives greater emphasis to those matters which are significant to S&Uplc and its subsidiaries when viewed as a whole.
ACTIVITIES
The principal activity of the group continues to be that of consumer credit and car finance throughout England, Wales and Scotland.
BUSINESS REVIEW, RESULTS AND DIVIDENDS
A review of developments during the six months together with key performanceindicators and future prospects is given in the chairman's statement on page 1and the managing director's statement on page 2. Our strategy continues to beto develop and increase mutually beneficial customer relationships in the nicheconsumer and motor finance markets. At the end of July, we have increasedcustomer numbers by over 11,000 year on year and whilst growth has slowed as weconsolidate our progress, this still provides an enhanced platform for futureprofitability.There are no significant post balance sheet events to report. The second halfof our financial year typically sees an increase in our loan advances due toseasonal Christmas lending, most of the revenue from which is earned in thefirst half of the next financial year. Trade creditor days for the group forthe six months ended 31 July 2007 were 54 days (for the period ended 31 July2006 - 48 days and for the year ended 31 January 2007 - 50 days).The group's profit on ordinary activities after taxation was ‚£3,228,000 (2006 -‚£3,332,000). Dividends of ‚£2,706,000 (2006 - ‚£2,582,000) were paid during theyear.
The directors recommend an interim dividend, subject to shareholders approval of 9.0p per share (2006 - 9.0p).
RELATED PARTY TRANSACTIONS
Related party transactions are disclosed in note 11 of these financial statements.
CHANGES IN ACCOUNTING POLICIES
In the current financial year, the group will adopt International FinancialReporting Standard 7 "Financial instruments: Disclosures" IFRS7 for the firsttime. As IFRS7 is a disclosure standard there is no impact of that change inaccounting policies on the half-yearly financial report. Full details will bedisclosed in our annual report for the year ended 31 January 2008.
PRINCIPAL RISKS AND UNCERTAINTIES
The group is involved in the provision of consumer credit and a key risk forthe group is the credit risk inherent in amounts receivable from customerswhich is principally controlled through our credit control and collectionactivities supported by ongoing reviews for impairment. The group is alsosubject to legislative and regulatory change within the consumer credit sector.The group's activities expose it to the financial risks of changes in interestrates and the Group uses interest rate derivative contracts to hedge theseexposures in bank borrowings.Anthony MV CoombsManaging DirectorS&U PLCRESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
a. the set of financial statements has been prepared in accordance with IAS
34;
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 BoardC RedfordSecretary27 September 2007
INDEPENDENT REVIEW REPORT TO S&U PLC
Introduction
We have been instructed by the company to review the financial information forthe six months ended 31 July 2007 which comprise the income statement, thebalance sheet, the statement of recognised income and expense, the cash flowstatement and related notes 1 to 12. We have read the other informationcontained in the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information.This report is made solely to the company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone otherthan the company, for our review work, for this report, or for the conclusionswe have formed.Directors' responsibilities
The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority and the requirements of IAS34 whichrequire that the accounting policies and presentation applied to the interimfigures are consistent with those applied in preparing the preceding annualaccounts except where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management andapplying analytical procedures to the financial information and underlyingfinancial data and, based thereon, assessing whether the accounting policiesand presentation have been consistently applied unless otherwise disclosed. Areview excludes audit procedures such as tests of controls and verification ofassets, liabilities and transactions. It is substantially less in scope than anaudit performed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 July 2007.Deloitte & Touche LLPChartered AccountantsBirmingham27 September 2007S&U PLCCONSOLIDATED INCOME STATEMENTSix months ended 31 July 2007 Note Unaudited Unaudited Audited Six Months Six Months Financial ended ended year ended 31.7.07 31.7.06 31.1.07 ‚£000 ‚£000 ‚£000 Revenue 2 22,859 19,758 42,795 Cost of sales 3 (7,666) (5,583) (14,146) Gross profit 15,193 14,175 28,649 Administrative expenses (9,625) (8,614) (18,180) Operating profit 5,568 5,561 10,469 Finance costs (960) (801) (1,539) Profit before taxation 2 4,608 4,760 8,930 Taxation 4 (1,380) (1,428) (2,691) Profit for the period 3,228 3,332 6,239 Earnings per share basic and 5 27.5p 28.4p 53.2pdiluted
All activities and earnings per share derive from continuing operations.
STATEMENT OF RECOGNISED INCOME AND EXPENSE
Unaudited Unaudited Audited Six Months Six Months Financial ended ended year ended 31.7.07 31.7.06 31.1.07 ‚£000 ‚£000 ‚£000 Profit for the Period 3,228 3,332 6,239 Actuarial gain on defined benefit - - 22pension scheme Total recognised income and expense for the period attributable to equity holders of 3,228 3,332 6,261the parent S&U PLCCONSOLIDATED BALANCE SHEET
Six months ended 31 July 2007
Note Unaudited Unaudited Audited 31.7.07 31.7.06 31.1.07 ‚£000 ‚£000 ‚£000 ASSETS Non current assets Property, plant and 2,278 2,320 2,280 equipment Amounts receivable from 7 23,972 20,931 22,495 customers Derivative financial 173 40 93instrument Retirement benefit asset 40 - 40 Deferred tax asset - 27 - 26,463 23,318 24,908 Current assets Inventories 144 120 176 Amounts receivable from 7 49,367 44,896 49,526 customers Trade and other 825 846 784 receivables Cash and cash 6 18 5 equivalents 50,342 45,880 50,491 Total assets 76,805 69,198 75,399 LIABILITIES Current liabilities Bank overdrafts and (11,897) (8,074) (11,647) loans Trade and other payables (981) (863) (978) Tax liabilities (1,526) (225) (867) Accruals and deferred (1,195) (1,343) (1,223) income (15,599) (10,505) (14,715) Non current liabilities Bank loans (20,000) (20,000) (20,000) Deferred tax liabilities (130) - (130) Financial liabilities (450) (450) (450) (20,580) (20,450) (20,580) Total liabilities (36,179) (30,955) (35,295) NET ASSETS 40,626 38,243 40,104 Equity Called up share capital 1,667 1,667 1,667 Share premium account 2,136 2,136 2,136 Profit and loss account 36,823 34,440 36,301 TOTAL EQUITY 8 40,626 38,243 40,104
These interim statements were approved by the Board of Directors on 27 September 2007. Signed on behalf of the Board of Directors
D M COOMBS AMV COOMBS Directors
S&U PLC
CONSOLIDATED CASH FLOW STATEMENT
Six months ended 31 July 2007
Note Unaudited Unaudited Audited Six Months Six Months Financial ended ended year ended 31.7.07 31.7.06 31.1.07 ‚£000 ‚£000 ‚£000 Net cash from operating 9 2,696 3,023 715 activities Cash flows from investing activities Proceeds on disposal of property, 44 38 162 plant and equipment Purchases of property, plant and (283) (332) (666) equipment Net cash used in investing (239) (294) (504) activities Cash flows from financing activities Dividends paid (2,706) (2,582) (3,650) Net (decrease)/increase in 250 (140) 3,433 overdraft Net cash used in financing (2,456) (2,722) (217) activities Net increase/(decrease) in cash 1 7 (6) and cash equivalents Cash and cash equivalents at the 5 11 11 beginning of the period
Cash and cash equivalents at the 6 18 5
end of the period Cash and cash equivalents comprise Cash 6 18 5 S&U PLC
NOTES TO THE INTERIM STATEMENTS
Six months ended 31 July 20071. ACCOUNTING POLICIES1.1 General Information
S&U plc is a company incorporated in the United Kingdom under the Companies Act1985. The address of the registered office is given in note 12 which is alsothe group's principal business address. All operations are situated in theUnited 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 IAS34 `Interim Financial Reporting'.
The same accounting policies, presentation and methods of computation arefollowed in the financial statements as applied in the Group's latest annualaudited financial statements. The consolidated financial statements incorporatethe financial statements of the company and all its subsidiaries for the sixmonths ended 31st July 2007. The financial information contained in thisinterim financial report does not constitute a set of statutory accounts and isunaudited, but subject to a review opinion.
Change in accounting policies
In the current financial year, the group will adopt International FinancialReporting Standard 7 "Financial instruments: Disclosures" IFRS7 for the firsttime. As IFRS7 is a disclosure standard there is no impact of that change inaccounting policies on the half-yearly financial report. Full details will bedisclosed in our annual report for the year ended 31 January 2008.
2. ANALYSES OF REVENUE AND PROFIT BEFORE TAXATION
All operations are situated in the United Kingdom. Analyses by class of business of revenue and profit before taxation are stated below:
Six Six Financial months months year ended ended ended 31.7.07 31.7.06 31.1.07 Class of business Consumer credit, rentals and other retail 16,472 13,871 31,120 trading Car finance 6,387 5,887 11,675 22,859 19,758 42,795 Six Six Financial months months year ended ended ended 31.7.07 31.7.06 31.1.07 ‚£000 ‚£000 ‚£000 Class of business Consumer credit, rentals and other retail 3,381 3,560 6,618 trading Car finance 1,227 1,200 2,312 4,608 4,760 8,930 3. COST OF SALES Six Six Financial months months year ended ended ended 31.7.07 31.7.06 31.1.07 ‚£000 ‚£000 ‚£000 Loan loss provisioning charge 5,865 4,205 10,442 Other cost of sales 1,801 1,378 3,704 7,666 5,583 14,146 4. TAXATION
The actual tax charge for the period has been calculated by applying the estimated effective tax rate for the year of 30.0% (31st July 2006 and 31st January 2007 30.0%) 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 of ‚£3,228,000 (for the period ended 31 July 2006 - ‚£3,332,000 and the year ended 31 January 2007 - ‚£6,239,000).
The number of shares used in the calculation is the average number of shares inissue during the period of 11,737,228 (for the period ended 31 July 2006 andthe year ended 31 January 2007 - 11,737,228).
Diluted earnings per share is the same as basic earnings per share as there are no dilutive shares.
6. DIVIDENDSA final dividend of 23p per ordinary share for the financial year ended 31stJanuary 2007 (22p for the financial year 31st January 2006) was paid during the6 months period to 31st July 2007 (31st July 2006). This compares to a finaldividend of 22p per ordinary share for the financial year ended 31st January2006 and an interim dividend of 9p which were both paid during the 12 months to31st January 2007. These distributions are shown in note 8 of this interimfinancial information.The directors have also declared an interim dividend of 9p per share (2006: 9pper share). The dividend, which amounts to approximately ‚£1,056,000 (July 2006:‚£1,056,000), will be paid on 9 November 2007 to shareholders on the register at12 October 2007. The shares will be quoted ex dividend on 10 October 2007. Theinterim financial information does not include this proposed dividend as it wasdeclared after the balance sheet date.
7. ANALYSIS OF AMOUNTS RECEIVABLE FROM CUSTOMERS
All operations are situated in the United Kingdom.
Class of business Six Six Financial months months year ended ended ended 31.7.07 31.7.06 31.1.07 ‚£000 ‚£000 ‚£000 Consumer credit, rentals and other retail 54,675 48,424 55,622 trading Car finance 44,673 40,159 40,894 99,348 88,583 96,516 Less: Loan loss provision for consumer (15,854) (14,089) (15,459) credit Less: Loan loss provision for car (10,155) (8,667) (9,036) finance 73,339 65,827 72,021 Analysed as:- due within one year 49,367 44,896 49,526 - due in more than one year 23,972 20,931 22,495 73,339 65,827 72,021
8. ANALYSIS OF CHANGES IN TOTAL EQUITY
Six Six Financial months months year ended ended ended 31.7.07 31.7.06 31.1.07 ‚£000 ‚£000 ‚£000 Total recognised income and expense for the 3,228 3,332 6,261 period Dividends paid (2,706) (2,582) (3,650) Net addition to total equity 522 750 2,611 Opening total equity 40,104 37,493 37,493 Closing total equity 40,626 38,243 40,104 9. RECONCILIATION OF PROFIT BEFORE TAX TO CASH FLOW FROM OPERATING ACTIVITIES Six Six Financial months months year ended ended ended 31.7.07 31.7.06 31.1.07 ‚£000 ‚£000 ‚£000 Operating Profit 5,568 5,561 10,469 Finance costs paid (1040) (860) (1,732) Finance income received - - 81 Tax paid (721) - (438)
Depreciation on plant, property and 234 245
478 equipment
Loss on disposal on plant, property 7 12
29 and equipment (Increase) in amounts receivable (1318) (1,645) (7,839) from customers
(Increase)/decrease in inventories 32 (39)
(95)
(Increase)/decrease in trade and (41) (227) (165) other receivables (Decrease) in trade and other 3 (64) 25 payables
Increase in accruals and deferred (28) 40
(80) income
(Decrease) in retirement benefit - -
(18) obligations
Cash flow from operating activities 2,696 3,023
715 10. BANK OVERDRAFTS AND LOANS
There were no changes in our bank facilities during the period and movements in the overdrafts for the respective periods are shown in the cash flow statement.
11. RELATED PARTY TRANSACTIONS
Transactions between the company and its subsidiaries, which are relatedparties have been eliminated on consolidation and are not disclosed in thisreport. During the six months the group obtained supplies amounting to ‚£5,882(6 months to July 2006 ‚£4,112; year to Jan 2007 ‚£12,130) from GrevayneProperties Limited a company which is a related party because Messrs G D C andA M V Coombs are directors and shareholders. The amount due to GrevayneProperties Limited at the half year end was ‚£nil (July 2006 ‚£nil; Jan 2007 ‚£nil).12. INTERIM REPORT
The figures for the year ended 31 January 2007 do not constitute statutoryaccounts and are extracted from the audited accounts for that period, on whichthe auditors to the group have issued an unqualified audit report which did notcontain a statement under section 237 (2) or (3) of the Companies Act 1985 andwhich have now been delivered to the Registrar of Companies.
A copy of this Interim Report will be posted to all shareholders and will be made available to the public on our website at www.suplc.co.uk and at the Company's registered office at Royal House, Prince's Gate, Solihull,B91 3QQ.
S & U PLC