Annual Report and Accounts
for the period ended 31 January 2012
Stock code: SUS
2
S&U Plc
Annual Report and Accounts for the period ended 31 January 2012
Stock code: SUS
www.suplc.co.uk
Welcome to S&U
Founded in 1938, S&U plc group has over 140,000 customers and provides work for over 800
people.
Our aim is to provide Britain’s foremost consumer and motor finance service. We continually
strive to achieve that ideal to the benefit of our customers, our employees and of course our
shareholders.
Visit us online
For more information, visit us online at:
www.suplc.co.uk
21309.04 11/04/12 Proof 2 Our Business
Our Performance
Our Business
1 Our Performance
2 Group at a Glance
3 Chairman’s Statement
Our Performance
Revenue
£m
Profit before tax
£m
46.0 46.2 45.8
48.0 51.9
12.2
8.6
8.3
9.0
9.9
08
09
10
11
12
08
09
10
11
12
Our Governance
Revenue
£51.9m
(2011: £48.0m)
+8%
Profit before tax
£12.2m
(2011: £9.9m)
+24%
6 Directors’ Report
8 Directors’ Biographies
9 Officers and Professional Advisers
10 Report of the Board to the Shareholders
on Remuneration Policy
15 Corporate Governance
18 Directors’ Responsibilities Statement
19
Independent Auditor’s Report
Basic EPS
pence
Dividend declared
pence
Our Financials
60.0
55.2
50.8 50.1
76.1
41.0
32.0 32.0
36.0
34.0
08
09
10
11
12
08
09
10
11
12
Earnings per Share
76.1p
(2011: 60.0p)
+27%
Dividend declared
41p
(2011: 36p)
+14%
21 Group Income Statement
21 Statement of Comprehensive Income
22 Balance Sheet
23 Statement of Changes in Equity
24 Cash Flow Statement
25 Notes to the Accounts
47 Five Year Financial Record
Shareholder Information
48 Financial Calendar
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• Record performance by Advantage in motor finance — profit before
tax up 40%
• 12% increase in home credit profit before tax.
• Treasury position strengthened — gearing now at 34% (2011: 43%)
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21309.04 11/04/12 Proof 2
Group at a Glance
Our aim is to provide Britain’s foremost niche consumer and motor finance service. We
have over 140,000 customers and provide work for over 800 people.
Home Credit Consumer
Finance
S&U was founded in Birmingham in 1938
by Clifford Coombs, a charismatic figure
from South Wales.
His secret lay in his ability to charm
and motivate people, whether they
were customers or employees. By
1975, changing customer tastes and
sophistication saw S&U and its sister
company SD Taylor transform their goods
based credit business into a finance and
HP operation. This was successfully taken
forward by Clifford’s sons Derek and Keith
Coombs for the following three decades!
Consistent with this customer focused
home credit operation we now trade as
Loansathome4u.
Loansathome4u provide valued home
credit facilities to customers via 500 agents
across the UK. The emphasis on a personal
relationship between customer and agent is
as central to Loansathome4u’s philosophy
today as it was to Clifford Coombs’
success.
www.loansathome4u.co.uk
% Share of
Group Revenue:
66%
Turnover:
£34.1m
Motor Finance
Set up in 1999, Advantage has grown to be
one of the most progressive and innovative
motor finance companies in the country
and is a member of the Finance and
Leasing Association. Advantage employs
over 70 people and has provided motor
finance for over 45,000 customers across
the UK, growing at the rate of 5,000 per
year.
Operating within the non-prime market
sector, Advantage has built its excellent
reputation and track record on quality as
opposed to quantity. Funding is invested
wisely through a very experienced
management team the majority of whom
have been with the Company since
inception. Low staff turnover and a strong
focus on reward and recognition are
fundamental to the success of Advantage
which has achieved 12 consecutive years
of record profits.
www.advantage-finance.co.uk
% Share of
Group Revenue:
34%
Turnover:
£17.8m
02
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2 Our Business
Chairman’s Statement
Chairman’s Statement
We see significant opportunities to attract customers to
our kind of responsible, carefully underwritten and flexible
finance.
I am pleased to announce an excellent year for S&U. Profits before tax
have climbed to a record £12.2m (2011: £9.9m). Our loyal customers,
both old and new, continue to appreciate the flexibility and value our
services and products provide. In challenging times for many, every
customer at S&U does count and it is this unique relationship which
makes our continued growth both responsible and sustainable. We
look to our future with quiet confidence.
Financial Review
Group profit before tax is £12.2m, an increase of just under a quarter
on last year. Revenue is up 8% at £51.9m. Loansathome4U, our
Home Credit division, produced profits of £6.3m against £5.6m last
year — a very commendable and consistent performance from both
Home Credit companies. Debt quality improved, customer numbers
rose and cash generation has continued healthily. Advantage, our
Motor Finance business, has produced another record year as profits
rose to £5.9m (2011: £4.2m) and all key performance indicators were
not just met but substantially exceeded.
Good lending, as many in the finance industry too often in past years
had forgotten, is generally rewarded with incoming cash. Despite a
growth in customer numbers and transactions in both Home Credit
and Motor Finance, S&U’s net bank borrowings have fallen again by
£2.9m this year. Group Gearing is now just 34% against 43% last
year and 57% in 2010. This trend demonstrates the consistency and
strength of our treasury policy.
Reflecting this strong profitability and cash generation, S&U’s net
assets have risen to £54.9m (2011: £50.1m). Net receivables before
provisions are £113.1m (2011: £108.5m) and total borrowings are
now down at £18.8m (2011: £21.7m). During the year we repaid a
medium term loan from RBS, and our current bank facilities give us
substantial head room for our predicted organic growth and further
acquisitions.
Dividend
Our progressive but responsible approach to business is reflected in
our dividend policy. This year’s performance merits an increase in both
dividends and in cover. The Board therefore proposes to recommend
a final dividend of 18p per ordinary share. This will be paid on 22 June
2012 to ordinary shareholders on the register on 1 June 2012 subject
to shareholder approval at the Annual General Meeting on 24 May
2012.
Taken with the payment of the second interim dividend in March this
year, this will represent a total dividend for the year of 41p (2011: 36p)
per ordinary share. Dividend cover will increase to 1.8 times from 1.67
last year.
Operating Results
Year Ended
Year Ended
31 January
31 January
2012
£m
51.9
17.9
34.0
21.2
12.8
0.6
12.2
2011
£m
48.0
17.1
30.9
20.0
10.9
1.0
9.9
Revenue
Cost of Sales
Gross Profit
Administrative Expenses
Operating Profit
Finance Costs (Net)
Profit before Taxation
Home Credit
• Profits increase by 12% to £6.3m
• 53 weeks Home Credit trading this year versus 52 weeks last year
— like for like profits increase is 7%
• Consistent profits in both Northern and the Southern divisions
Highlights
• Profit before tax up by 24% to £12.2m (2011: £9.9m)
• Customer numbers up by 2%
• Debt quality strengthened
• Gearing reduced to 34% (2011: 43%)
• Earnings per share of 76p (2011: 60p)
• New Branches opening in Glasgow, Swindon and Rotherham
• Acquisition of Home Credit business of Norton Finance post year
• Final Dividend payment of 18p (2011: 16p). Annual total dividend
for the year increased to 41p per ordinary share (2011: 36p)
end
Net Assets
£54.9m Dividend cover
over
£1.8 times
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21309.04 11/04/12 Proof 2
Pam from Warrington
Our customer Pam has been using the Home Credit facilities
of Loansathome4u for over 20 years. In addition to receiving
cash loans Pam has also used the service provided by our
agent to help purchase shopping vouchers and a Cooker.
Three years ago Pam’s husband lost his job and they
had to go on reduced loan repayment terms. Our agent
Sandra helped the customer through this and eventually the
repayments improved and we were able to do business with
her at the important times of the year. Her husband is now
back in work and Pam is full of praise for the goods and
services that we offer; “I have dealt with Loansathome4u for
over 20 years and they have helped me through the bad times
as well as the good, Sandra has always been sympathetic
and helpful and I look to her as a friend, she has watched my
children grow up and they now deal with her!”
Our Home Credit Division, trading as Loansathome4U, had a very
successful year. Profits before tax were £6.3m (2011: £5.6m) an
increase of 12%. At a time when consumers generally are justifiably
cautious, the business increased customer numbers by 2%. Debt
quality has continued to improve, and this is reflected in an increase in
revenue of over 7% on last year and in lower bad debt.
As the availability of consumer credit is likely to remain constrained
over the next five years, we see significant opportunities to attract
customers to our kind of responsible, carefully underwritten and
flexible finance. Although the Internet will be one route to market,
more traditional ways such as customer recommendation and local
contact will remain paramount.
The success in Home Credit depends upon nurturing the weekly and
monthly relationship between representative and the customers. In
times of economic difficulty and uncertainty, customers above all value
this relationship and the understanding, flexibility and convenience it
brings. Our mantra that “every customer counts” to us, is not just an
empty slogan but actually describes the very ethos of our business.
Whilst our products compete on price, it is the consequent level of
service to customers throughout the loan term that really distinguishes
Home Credit from more remote lending.
We are therefore very confident that the current reviews by the Office
of Fair Trading into higher cost credit and into the possible imposition
of total charge for credit caps, will recognise the unique and beneficial
place Home Credit has in providing responsible finance to over
four million people throughout the UK. We also anticipate that the
Competition Commissions review of its 2006 remedies on competition
and on transparency and price comparison will be similarly benign.
A strong Home Credit service is a local service, which is why we
have opened another two branches, in Glasgow and Swindon this
year. Following our acquisition of the Home Credit business of Norton
Finance recently, we plan to open another branch in Rotherham which
will be a springboard to a stronger presence in Yorkshire generally.
We have therefore continued to develop our management training
programmes, revised our Training Manuals for representatives and
now plan to introduce the new government’s re-skill qualifications for
our employed and administrative staff.
As a result, the level of professionalism and commitment of our self-
employed agents and of our staff and management is, in my view at
its highest for a generation. That, above all gives us a strong base for
the expansion and continued success of our Home Credit Division.
Motor Finance
• Record profits of £5.9m (2011: £4.2m) for the twelfth successive
year
• Record collections quality as monthly repayments near £2.5m
• Record transaction and customer numbers
• Extended broker network and new products for franchised
dealers
For the twelfth consecutive year, Advantage Finance our motor
finance business based in Grimsby, has produced record profits. This
year profits before tax were £5.9m (2011: £4.2m) an increase of 40%.
Net cash from operating
activities
£7.9m
Gearing
34%
04
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2
Our Business
Chairman’s Statement
Mr & Mrs B from Burnley.
As a staff nurse, Mrs B often needed to be at work during
unsociable hours and therefore a reliable car was very
important. Their existing car was showing signs of age and
needed updating. They chose a suitable vehicle at a nearby
motor dealer and their application for finance was forwarded
to Advantage who were able to approve the application within
minutes. After agreeing part-exchange terms with the dealer,
and loan terms with Advantage’s telephone adviser, Mr & Mrs
B were able to sign up for their new car and collect it later the
same day. When contacted by Advantage shortly afterwards
to confirm safe delivery of their new car, Mr B commented “I
cannot fault Advantage, they provided a brilliant service”.
Our Community
S&U, whilst maintaining focus on the service to customers and
wealth creation which are the bedrock of our business, have involved
themselves in fundraising and community activities for those less
fortunate than themselves. Amongst the organisations supported are
Marie Curie Cancer Care, who are building a hospice in Solihull, The
Foundation for Conduction Education which treats people with motor
disabilities and, more recently, The Princes Trust, which provides
opportunities for local youngsters in training and employment. These
and other activities, and the fun and fund raising involved, are a
great credit to the people involved and reflect S&U’s progressive and
responsible approach to business built up over nearly 75 years.
Current Trading and Outlook
Predictions for growth, consumer spending and the labour market
remain subdued for the year to come and the recent fall in High Street
Sales reflects this. However, the Group’s trading remains encouraging
and, together with the long term market opportunities mentioned
above, and the professionalism and focus of our people at S&U, we
face the future with confidence.
I pay tribute to the commitment and enthusiasm of all at S&U, to the
support of our Board, and most of all to the loyalty of our customers.
Together we will work hard to continue the progress of this year.
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Anthony Coombs
Chairman
28 March 2012
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Revenues are up by 11% and applications continue at around 13,000
per month of which Advantage write around 400.
In an era when the supply of speciality and non prime finance is
restricted, and likely to remain so, we foresee significant opportunities.
Advantage’s state of the art underwriting and scoring systems,
developed over a decade of customer service, allow it to predict
future payment accurately and to select customers accordingly. As a
result, debt quality has never been better, provisioning charges have
fallen on last year and collections now approach £2.5m per month.
Consequently, Advantage has been able to combine healthy growth
with continuing cash generation, this year of £0.5m. In 2013,
significant opportunities for growth, and the quality of our loan book,
merit a net investment into Advantage of around £4m. This will be
funded from our own resources.
Communitas, our second mortgage operation, continues its orderly
run off. Total outstanding net book debt is now just £462,000 (2011:
£654,000) and the trading loss has halved again to £60,000 from
£126,000 last year.
Funding
• Gearing reduced to 34% (2011: 43%)
• Net cash inflow from operating activities of £8m
• Group borrowings reduced by £2.9m
• Significant headroom for acquisitions and organic growth
Our excellent relationships with our banking partners have continued
over the past year in new medium term and other facilities. We have
significant medium term headroom for new business opportunities,
organic growth and Home Credit acquisitions.
34%
21309.04 11/04/12 Proof 2
Directors’ Report
The directors present their annual report and the audited financial statements for the year
ended 31 January 2012.
Principal activities
The principal activity of the S&U plc Group (the “Group”) continues to
Directors and their interests
The directors of the Company during and after the year and the
be that of consumer credit and motor finance throughout England,
beneficial interests of the directors at the year end and their immediate
Wales and Scotland. The principal activity of S&U plc Company (the
families in the ordinary shares of the Company are set out below:
“Company”) continues to be that of consumer credit.
Business review, results and dividends
A review of developments during the year together with key
performance indicators and future prospects is given in the Chairman’s
Statement on page 3. The results for the 2012 year include 53 weeks
of trading for the consumer credit business (2011: 52 weeks) and
52 weeks (2011: 52 weeks) for the motor finance business. There
were no significant events after the balance sheet date other than the
acquisition of the home credit business of Norton Finance (£0.75m of
gross assets).
The Group’s profit on ordinary activities after taxation was £8,935,000
(2011: £7,043,000). Dividends of £4,355,000 (2011: £4,074,000)
were paid during the year.
AMV Coombs
GDC Coombs
KR Smith
D Markou
F Coombs
JG Thompson
CH Redford
MJ Mullins
MJ Thompson
At 31 January
At 31 January
2012
2011
727,330
787,970
26,600
4,500
33,550
2,000
1,000
–
–
526,330
587,970
26,600
4,500
33,550
–
–
–
–
There were no changes to the directors’ interests shown above
between 31 January 2012 and 28 March 2012.
After the year end a second interim dividend for the financial year of
12.0p per ordinary share (2011: 10.0p) was paid to shareholders on
23 March 2012.
Mr MJ Thompson was appointed as a director on 23 March 2011 and
has no beneficial interests in the ordinary shares of the Company.
The directors now recommend a final dividend, subject to shareholders
approval of 18.0p per share (2011: 16.0p). This, together with the
interim dividends of 23.0p per share (2011: 20.0p) already paid, makes
a total dividend for the year of 41.0p per share (2011: 36.0p).
In addition, Grevayne Properties Limited, a Company of which Messrs
GDC and AMV Coombs are directors and shareholders, owned
298,048 ordinary shares in the Company at 31 January 2012 (2011:
298,048). During the year the Company obtained supplies at market
rates amounting to £4,730 (2011: £4,753) from Grevayne Properties
Limited. The amount due to Grevayne Properties Limited at the year
end was £nil (2011: £nil).
The directors had no interests in the Company’s preference shares or
in the shares of its subsidiaries.
In accordance with the Company’s Articles of Association Messrs
AMV Coombs, MJ Mullins and D Markou being eligible, offer
themselves for re-election.
No director had any interest in any material contract during the year
relating to the business of the Group.
06
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2
Our Governance
Directors Report
Details of directors share options are provided in the report of the
processes for managing its capital are described in the notes to the
Board to the Shareholders on Remuneration Policy on page 10.
financial statements. Details of the Group’s financial risk management
Auditor
Each of the persons who is a director at the date of approval of the
exposures to credit risk, market risk and liquidity risk are also set out
in the notes to the financial statements. In considering all of the above
annual report confirms that; so far as each director is aware, there
the directors believe that the Group is well placed and has sufficient
is no relevant audit information of which the Company’s auditor is
financial resources to manage its business risks successfully despite
unaware; each director has taken all the steps that he ought to have
the current uncertain economic outlook.
objectives, its financial instruments and hedging activities; and its
taken as a director in order to make himself aware of any relevant
audit information and to establish that the Company’s auditor is
After making enquiries, the directors have a reasonable expectation
aware of that information. This confirmation is given and should be
that the Group has adequate resources to continue in operational
interpreted in accordance with the provisions of section 418 of the
existence for the foreseeable future. Accordingly, they continue to
Companies Act 2006.
adopt the going concern basis in preparing the annual report and
Substantial shareholdings
At 28 March 2012, the Company had been notified of the following
interests of 3% or more in its issued ordinary share capital (excluding
Environment
The Group recognises the importance of its environmental
those of the directors disclosed above):
responsibilities and designs and implements policies to reduce any
accounts.
Shareholder
DM Coombs
Wiseheights Limited
Mrs CMG Coombs
No of shares
3,039,032
2,420,000
1,587,795
% of share
capital
25.9%
20.6%
13.5%
Employees
The Group’s policy is to give full and fair consideration to applications
for employment by disabled persons, having regard to the nature of
their employment. Suitable opportunities and training are offered to
disabled persons in order to provide their career development.
damage that might be caused by the Group’s activities.
Political and charitable contributions
During the year the Company and the Group made contributions to
a number of local charities of £16,640 (2011: £4,171). No political
contributions were made.
Creditor payment policy
The Group and the Company do not follow any published code of
practice but agrees terms and conditions with its suppliers. Payment
is then made on the terms agreed, subject to the appropriate terms
and conditions being met by the supplier. Trade creditor days for the
Group for the year ended 31 January 2012 were 44 days (2011: 41
The Group also recognises the need to communicate with employees.
days), and trade creditor days for the Company were 45 days (2011:
Regular updates are sent out to each employee to keep employees
34 days), calculated in accordance with the requirements set down
informed of the progress of the business as well as regular memos to
in the Companies Act 2006. This represents the ratio, expressed in
the branches in respect of new initiatives.
Principal risks and uncertainties
The Group is involved in the provision of consumer credit and a key
risk for the Group is the credit risk inherent in amounts receivable from
customers which is principally controlled through our credit control
days, between the amounts invoiced to the Group and the Company
by their suppliers in the year and the amount due, at the year end, to
trade creditors within one year.
Auditor
Deloitte LLP have expressed their willingness to continue in office as
policies supported by ongoing reviews for impairment. The Group is also
auditor and a resolution to reappoint them will be proposed at the
subject to legislative and regulatory change within the consumer credit
forthcoming Annual General Meeting.
sector and this is managed through internal compliance procedures
and close involvement with trade organisations such as the Consumer
Approved by the Board of Directors and signed on behalf of the Board
Credit Association and the Finance and Leasing Association. The Group’s
activities expose it to the financial risks of changes in interest rates and
where appropriate the Group uses interest rate derivative contracts to
hedge these exposures in bank borrowings. More detail of the Group’s
financial risk management policies is included in note 22.
Statement of going concern
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 financial statements
and Chairman’s Statement. The Group’s objectives, policies and
C Redford
Secretary
28 March 2012
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21309.04 11/04/12 Proof 2
Directors and Advisers
Anthony Coombs MA (Oxon)
Chairman, Aged 59
Nominations Committee
Graham Coombs (Oxon)
MSc (Lon)
Deputy Chairman, Aged 59
Joined S&U after graduating from London
Business School in 1976. He is responsible
for the subsidiary, S D Taylor Limited and for
property matters. He was appointed Deputy
Chairman in 2008.
Joined S&U in 1975 and was appointed
Managing Director in 1999 and then Chairman
in 2008. Between 1987 and 1997 served as a
Member of Parliament and was a member of
the Government. Serves on the Executive of
the Consumer Credit Association and chairs its
Public Relations Committee and is a director of
a number of companies and charities including
chairing the trustees of the National Institute for
Conductive Education.
Chris Redford ACA
Group Finance Director, Aged 47
A Chartered Accountant with over 10 years
business experience in the Fast Moving
Consumer Goods, food and travel sectors
prior to his appointment as Finance Director
of Advantage Finance in 1999. Following a
successful start up period for Advantage he
was appointed as Group Finance Director
with effect from 1 March 2004.
Demetrios Markou MBE FCA
Non-executive, Aged 68
Keith Smith TD FCIM
Non-executive, Aged 73
Fiann Coombs BA (Lon) MSc (Lon)
Non-executive, Aged 43
Nominations, Audit and Renumeration
Committees
A Chartered Accountant with over 35 years
experience in public practice in Birmingham
and director of many private companies.
He has extensive commercial and political
experience.
08
Nominations, Audit and Renumeration
An economic analyst with wide-ranging
Committees
A former member of the London Stock
Exchange and Fellow of the Securities
Institute, he has been a principal in
stockbroking firms for more than thirty years,
specialising in corporate finance. He is the
senior non-executive director.
professional and commercial skills and
experience, Fiann has brought these skills to
the considerable benefit of the S&U Group
since his appointment to the Board in 2002.
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2 Our Governance
Directors and Advisers
Guy Thompson
Aged 56
Mike Mullins
Aged 54
Guy joined the Group in 1999 as Managing
Mike joined S&U in 1997 and started out as
Director of Advantage Finance and has
an agent in the then Newton Abbot branch
overseen an excellent performance in their
covering Torbay, after 9 months taking over as
first 12 years. Guy has a strong track record
branch manager of the same branch. He then
in the finance and motor sectors and since his
moved through the ranks of management and
appointment brings these skills to the Board
in September 2009 assumed overall control of
of S&U plc.
our Group Home Credit operations.
Mike Thompson DMS FIoD
Aged 48
First joined the Group in 1985 as an SD
Taylor representative in the Warrington and
Widnes areas and has had wide Home Credit
experience with Provident and Shopacheck.
Rejoined the Group as a manager in 1994,
and was appointed SD Taylor Managing
Director in 2000 since when Mike has
successfully overseen significant growth in our
northern Home Credit operation.
Stockbrokers
Arden Partners
125 Old Broad Street
London
EC2 1AR
Secretary
C Redford ACA
Registered Office
Royal House
Prince’s Gate
Homer Road
Solihull
West Midlands
B91 3QQ
Tel: 0121 705 7777
Bankers
HSBC Bank plc
130 New Street
Birmingham
B2 4JU
Royal Bank of Scotland
5th Floor
2 St Philips Place
Birmingham
B3 2RB
Solicitors
DLA
Victoria Square
Birmingham
B2 4DL
Auditors
Deloitte LLP
Statutory Auditors
Birmingham
Registrars
Capita IRG plc
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Tel: 020 8639 3039
Media and Investor
Relations
Smithfield Financial Ltd
10 Aldersgate Street
London
EC1A 4HJ
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09
21309.04 11/04/12 Proof 2
Report of the Board to the Shareholders
on Remuneration Policy
Introduction
This report has been prepared in accordance with Schedule 8 of the Accounting Regulations under the Companies Act 2006. The report also
meets the relevant requirements of the Listing Rules of the Financial Services Authority and describes how the board has applied the principles
relating to directors’ remuneration in the Combined Code. As required by the Act, a resolution to approve the report will be proposed at the
Annual General Meeting of the Company at which the financial statements will be approved.
The Act requires the auditor to report to the Company’s members on certain parts of the Directors’ Remuneration Report and to state whether
in their opinion those parts of the report have been properly prepared in accordance with the Accounting Regulations. The report has therefore
been divided into separate sections for audited and unaudited information.
UNAUDITED INFORMATION
Remuneration committee
The Company has established a Remuneration Committee which is constituted in accordance with the recommendations of the Combined
Code. The members of the committee are Mr D Markou and Mr K Smith, who are both independent non-executive directors. The committee is
chaired by Mr K Smith.
None of the Committee has any personal financial interest (other than as shareholders), conflicts of interest arising from cross-directorship
or day-to-day involvement in running the business. The committee makes recommendations to the board. No director plays a part in any
discussions about their own remuneration.
Remuneration Policy
The performance measurement of the executive directors and key members of senior management and the determination of their annual
remuneration package are undertaken by the Committee and are assessed annually for the following financial period. The remuneration of the
non-executive directors is determined by the board within limits set out in the Articles of Association.
There are four main elements of the remuneration package for executive directors and senior management:
• Basic annual salary (including directors fees);
• Taxable benefits in kind, which in the main include company car plus related expenses and medical insurance;
• Performance related bonus payments incorporating longer term share option incentives; and
• Pension arrangements.
The Remuneration Committee believe that it is important to offer long term incentives to executive directors, and during 2010 a long-term
incentive plan (the “LTIP”) was put in place. The LTIP allows for the grant of awards in the form of nil-priced or nominal-priced share options
over shares worth up to a maximum of 50 per cent of salary in any year. The participants are not entitled to exercise their options for a period
determined by the Committee which is generally no earlier than three years from the date of award. The vesting of awards at the end of the
performance period will be subject to the relevant participant remaining in employment and the achievement of specified stretching performance
conditions based on EPS and share price performance. The LTIP offers greater flexibility than the previously existing S&U plc 2008 Discretionary
Share Option Plan (“DSOP”). The two schemes are being run in parallel for the benefit of the Directors and senior employees. However, there
is an annual maximum level which restricts the total number of awards that could be made under both the DSOP and the LTIP in any one year
to 100 per cent of salary. In exceptional circumstances, (including, but without limitation, in the year of recruitment) this annual limit may be
increased to 150 per cent of annual salary at the absolute discretion of the Committee.
10
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2 Our Governance
Report of the Board to the Shareholders
on Remuneration Policy
Basic Salary
An executive director’s basic salary is determined by the Committee prior to the beginning of each year and when an individual changes position
or responsibility. In deciding appropriate levels, the Committee considers the Group as a whole and comparable positions in the financial sector.
Annual Bonus Payments
The Committee establishes the objectives that must be met for each financial year if a bonus in cash or in share options is to be awarded.
In setting appropriate bonus parameters the Committee considers the Group’s pre tax profit performance for the year and the appropriate
percentage of basic salary to be awarded for each executive. The Committee believes that any incentive compensation awarded should be
tied to the interests of the Company’s shareholders and that the principal measure of those interests is in total shareholder return. The strategic
objectives, control system and indicators are also aligned to total shareholder return. The executive directors were awarded bonuses in respect
of the year ended January 2011 totalling £130,000 as detailed in last year’s report. The bonuses payable to executive directors in respect of the
year ended January 2012 total £217,000 as shown in the table of directors’ emoluments below.
Pension arrangements
The Company makes contributions to a defined contribution pension scheme in respect of AMV Coombs, GDC Coombs, JG Thompson, MJ
Mullins, MJ Thompson and CH Redford. None of the directors has accrued benefits under the defined benefit scheme.
Performance graph
The following graph shows the Company’s performance, measured by total shareholder return, compared with the performance of the FTSE
Speciality and Other Financial Services Index also measured by total shareholder return. The performance has also been benchmarked against
Provident Financial, a leading competitor. These comparators have been selected since they illustrate S&U’s relative performance within their
sector.
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5 Year Return index for FTSE Speciality and other Financial Services Sector at 31 January 2012
5 Year Return index for FTSE Speciality and other Financial Services Sector at 31 January 2012
180
160
140
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Provident Financial
FTSE Sector
S&U Plc
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The market price of the ordinary shares at 31 January 2012 was 612.5p and the range during the year was 547.5p to 705p.
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21309.04 11/04/12 Proof 2
Report of the Board to the Shareholders
on Remuneration Policy continued
Directors’ contracts
It is the Company’s policy that executive directors should have contracts with an indefinite term providing for a maximum of one year’s notice.
AMV Coombs and GDC Coombs have rolling 12 month contracts. In the event of early termination, the directors’ contracts provide for
compensation up to a maximum of basic salary for the notice period.
Executive director’s contracts of service will be available for inspection at the Annual General Meeting (“AGM”).
Non-executive directors
It is Company policy that non-executive directors are not granted service contracts. All non-executive directors have specific terms of
engagement and their remuneration is determined by the board based on independent surveys of fees paid to non-executive directors of similar
companies. The basic fee paid to each non-executive director in the year was £24,000. Non-executives are not eligible to join the Company’s
pension scheme.
AUDITED INFORMATION
Aggregate directors’ remuneration
The total amounts for directors’ remuneration were as follows:
2012
£000
1,393
146
1,539
Total
2012
£000
310
283
178
251
170
129
–
22
26
24
1,393
2011
£000
1,213
130
1,343
Total
2011
£000
317
264
161
241
140
–
20
22
25
23
1,213
Fees
£000
Salaries
£000
Bonus
£000
228
208
108
154
110
80
45
45
27
50
27
23
Benefits
in kind
£000
16
6
19
23
9
5
24
24
24
24
24
21
–
22
26
24
213
885
217
78
Emoluments
Money purchase pension contributions
Directors’ emoluments
Executive directors
AMV Coombs
GDC Coombs
CH Redford
JG Thompson
MJ Mullins
MJ Thompson (appointed March 11)
Non-executive directors
MF Hepplewhite (retired May 10)
D Markou
KR Smith
F Coombs
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S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2
Our Governance
Report of the Board to the Shareholders
on Remuneration Policy
Directors’ pension entitlements
6 directors are members of money purchase schemes (2011: 5). Total contributions paid by the Company in respect of such directors are shown
in aggregate above.
Share option plan 2008 (DSOP)
Further to shareholder approval at the AGM in May 2008, the Company introduced the S&U plc 2008 Discretionary Share Option Plan. Under
the plan, annual awards of share options may be granted with an exercise price equal to the market value of the shares at the date of grant.
The Plan allows for the grant of options over shares worth up to a maximum of twenty-five (25) per cent of salary in any year (although grants
under the UK Approved Addendum will be subject to the relevant statutory limit of £30,000). In exceptional circumstances the Board may, at its
discretion, grant higher awards of up to fifty (50) per cent of base salary. It is expected that options will be granted on an annual basis but will
only be granted if performance conditions based on the Company’s and individual performance have been satisfied. The performance conditions
that will apply to the grant of options are determined by the Company on an annual basis and will be regularly reviewed to determine whether
they are appropriate for the Company. The participants will not be entitled to exercise their options for a period determined by the Committee
which is generally no earlier than three years from the date of award. The vesting of awards at the end of the three year period will not be subject
to further performance conditions but will be subject to the relevant participant remaining in employment.
Awards held by the directors under the S&U plc 2008 Discretionary Share Option Plan are as follows:
CH Redford
JG Thompson
M Mullins
Awards: Number of
Share Options held at
Exercise
Earliest
Date of Grant
31.1.2012
Price
Vesting Date
26.5.2009
24.5.2010
26.5.2009
24.5.2010
26.5.2009
24.5.2010
1,000
1,995
1,500
202
2,000
2,500
9,197
397.5p
537.5p
397.5p
537.5p
397.5p
537.5p
26.5.2012
24.5.2013
26.5.2012
24.5.2013
26.5.2012
24.5.2013
Expiry
Date
26.5.2019
24.5.2020
26.5.2019
24.5.2020
26.5.2019
24.5.2020
At 31 January 2011 a total of 19,197 DSOP options were held. A total of 10,000 DSOP share options were exercised during the year (detailed
below) resulting in 9,197 share options still held as above at 31 January 2012.
On 2 November 2011 JG Thompson exercised 6,000 share options at an exercise price of 382.5p and CH Redford exercised 4,000 share
options also at an exercise price of 382.5p — the average share price on that day was 615p.
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21309.04 11/04/12 Proof 2
Report to the Board to the Shareholders
on Remuneration Policy continued
Long Term Incentive Plan (LTIP 2010)
Further to shareholder approval at the AGM in May 2010, the Company introduced the S&U plc 2010 Long Term Incentive Plan. The LTIP allows
for the grant of awards in the form of nil-priced or nominal-priced share options over shares worth up to a maximum of 50 per cent of salary
in any year. The participants are not entitled to exercise their options for a period determined by the Committee which is generally no earlier
than three years from the date of award. The vesting of awards at the end of the performance period will be subject to the relevant participant
remaining in employment and the achievement of specified stretching performance conditions based on EPS and share price performance.
The LTIP offers greater flexibility than the previously existing S&U plc 2008 Discretionary Share Option Plan (“DSOP”). The two schemes are
being run in parallel for the benefit of the Directors and senior employees. However, there is an annual maximum level which restricts the total
number of awards that could be made under both the DSOP and proposed new LTIP in any one year to 100 per cent of salary. In exceptional
circumstances, (including, but without limitation, in the year of recruitment) this annual limit may be increased to 150 per cent of annual salary at
the absolute discretion of the Committee.
Awards held by the directors under the S&U plc 2010 Long Term Incentive Plan are as follows:
AMV Coombs
GDC Coombs
CH Redford
JG Thompson
M Mullins
MJ Thompson
Awards: Number of
Share Options held at
Exercise
Earliest
Date of Grant
31.1.2012
Price
Vesting Date
24.5.2010
27.5.2011
24.5.2010
27.5.2011
24.5.2010
24.9.2010
27.5.2011
24.5.2010
24.9.2010
24.9.2010
27.5.2011
24.5.2010
27.5.2011
27.5.2011
10,000
10,000
10,000
10,000
5,500
2,500
3,500
10,000
30,000
7,500
7,500
5,000
4,000
2,500
118,000
12.5p
12.5p
12.5p
12.5p
12.5p
12.5p
12.5p
12.5p
12.5p
12.5p
12.5p
12.5p
12.5p
12.5p
24.5.2013
27.5.2014
24.5.2013
27.5.2014
24.5.2013
24.9.2013
27.5.2014
24.5.2013
24.9.2013
24.9.2013
27.5.2014
24.5.2013
27.5.2014
27.5.2014
Expiry
Date
24.5.2020
27.5.2021
24.5.2020
27.5.2021
24.5.2020
24.9.2020
27.5.2021
24.5.2020
24.9.2020
24.9.2020
27.5.2021
24.5.2020
27.5.2021
27.5.2021
At 31 January 2011 a total of 83,000 LTIP share options were held by the directors and 2,500 LTIP share options held by M Mullins lapsed
during the year. On 27 May 2011, when the share price was 640p per share, a total of 37,500 LTIP share options were issued resulting in
118,000 share options still held as above at 31 January 2012. Under the terms of the LTIP two exceptional awards of 10,000 options each were
made to AMV Coombs and GDC Coombs in recognition of their exceptional management of the group in a difficult economic climate over the
past year – other non-exceptional awards are subject to the achievement of stretching performance targets and all awards are subject to the
standard terms and conditions of the LTIP.
Approval
This report was approved by the Board of Directors on 28 March 2012 and signed on its behalf by:
Keith Smith
Chairman of the Remuneration Committee
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S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2
Our Governance
Corporate Governance
Corporate Governance
In July 2003 the FRC Combined Code (the “Code”) was issued by the London Stock Exchange and was updated in June 2010. The Code
sets out Provisions for Good Corporate Governance along with a series of supporting principles. Section 1 of the Code is applicable to listed
companies.
A narrative statement on how the Company has applied the provisions and a statement explaining the extent to which the provisions of the
Code have been complied with, appear below.
Narrative statement
The Code establishes 14 Code Provisions, which are split into three areas in this report, “Directors”, “Relations with Shareholders” and
“Accountability and Audit”. The current position of the Company in each area is described below.
Directors
During the period under review, the Company was controlled through the Board of Directors which comprised six executive and three non-
executive directors. The Chairman is mainly responsible for the running of the Board, he has to ensure that all directors receive sufficient relevant
information on financial, business and corporate issues prior to meetings. He is also responsible for co-ordinating the Company’s business
and implementing Group strategy. The Chairman and Deputy Chairman are jointly responsible for acquisitions outside the traditional business,
the development of the business into new areas, and relations with the investing community, public and media. All directors are able to take
independent professional advice in the furtherance of their duties if necessary.
The Board has a formal schedule of matters reserved to it and meets at least three times a year with monthly circulation of papers. It is
responsible for overall Group strategy, acquisition and divestment policy, approval of major capital expenditure projects and consideration of
significant financing matters. It monitors the exposure to key business risks and reviews the strategic direction of individual trading subsidiaries,
their codes of conduct, their annual budgets, their progress towards achievement of those budgets and their capital expenditure programmes.
The Board also considers environmental and employee issues and key appointments. It also ensures that all directors receive appropriate
training on appointment and then subsequently as appropriate. All directors, in accordance with the Code, will submit themselves for re-
election at least once every three years. The Board considers the performance of the directors and committees on an ongoing basis, and the
contributions of individuals to their roles.
The Board has established a Nominations Committee, an Audit Committee and a Remuneration Committee. Each committee operates within
defined terms of reference. Trading companies are managed by separate boards of directors. The minutes of their meetings and of the standing
committees will be circulated to and reviewed by the Board of Directors. Terms of reference for the committees are available from S&U plc head
office and on our website www.suplc.co.uk.
Mr KR Smith and Mr D Markou have served as non-executive directors on the Board for over 9 years. Notwithstanding this length of service
the Board considers them to be independent owing to their robust judgement and character. In addition their financial, business and stock
market training and experience are considered invaluable to the Board at this stage of the Group’s development. The Board has designated
Mr KR Smith as Senior Independent Director. The Board has considered the balance between the independent and non-independent directors
and considers it to be satisfactory. The Board has and will consider the composition of committees on an ongoing basis. The Nominations
Committee is composed of Mr KR Smith who also chairs this committee, together with the other independent non-executive director and Mr
AMV Coombs. The Audit Committee is composed of the two independent non-executive directors. The Remuneration Committee is composed
of the same two independent non-executive directors. Chairmen of these committees are appointed from among the members. The Chairman
of the Audit Committee is Mr D Markou and the Chairman of the Remuneration Committee is Mr KR Smith.
The work of the Nominations Committee is to regularly review the size, structure and composition of the Board and make recommendations to
the Board with regard to any adjustments that are deemed necessary, including the process and advertising in respect of Board appointments.
Mr AMV Coombs, Mr MJ Mullins and Mr D Markou are proposed for re-election at the next Annual General Meeting. Mr D Markou is a non-
executive director and the Chairman has determined Mr D Markou’s performance to be both effective and committed.
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21309.04 11/04/12 Proof 2
Corporate Governance continued
Meeting Attendance
Number of meetings
AMV Coombs
GDC Coombs
KR Smith
D Markou
F Coombs
JG Thompson
MJ Mullins
MJ Thompson
CH Redford
Board
Nominations Remuneration
Audit
5
5
5
5
5
5
5
5
4
5
1
1
na
1
1
na
na
na
na
na
3
na
na
3
3
na
na
na
na
na
2
na
na
2
2
na
na
na
na
na
Relations with Shareholders
The Company continues to communicate with both institutional and private investors and responds quickly to all queries received verbally or in
writing. All shareholders have at least twenty working days notice of the Annual General Meeting at which all directors are introduced and are
available for questions.
The Board is aware of the importance of maintaining close relations with investors and analysts for the Group’s market rating. Positive steps are
being taken to enhance these relationships and the members of the Board obtain regular feedback from major shareholders and discuss this at
Board meetings.
Accountability and Audit
Financial Reporting
Reviews of the performance and financial position of the Group are included in the Chairman’s Report. The Board uses this, together with the
Chairman’s Statement and the Directors’ Report within pages 3 to 7, to present a balanced and understandable assessment of the Company’s
position and prospects. The Directors’ responsibilities in respect of the financial statements are described on page 18 and those of the auditor
on page 19.
Internal Control
The Board acknowledges that it is responsible for the Group’s system of internal control and for reviewing its effectiveness. Such a system is
designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute
assurance against material misstatement or loss.
The Group’s internal control systems are reviewed regularly with the aim of continuous improvement. Whilst the Board acknowledges its overall
responsibility for internal control, it believes strongly that senior management within the Group’s operating businesses should also contribute in
a substantial way and this has been built into the process. The Board does not consider there is a need for a formal independent internal audit
function due to the size of the Group.
There is an ongoing process for identifying, evaluating and managing the significant risks faced by the Company. The process has been in place
for the year under review and up to the date of approval of the report and financial statements. The process is regularly reviewed by the Board
and accords with the revised guidance in the Combined Code.
The Board intends to keep its risk control procedures under constant review particularly as regards the need to embed internal control and risk
management procedures further into the operations of the business and to deal with areas of improvement which come to management’s and
the Board’s attention.
16
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2 Our Governance
Corporate Governance
As might be expected in a Group of this size, a key control procedure is the day to day supervision of the business by the executive directors,
supported by the managers with responsibility for operating units and the central support functions of finance, information systems and human
resources.
The executive directors are involved in the budget setting process, constantly monitor key statistics and review management accounts on a
monthly basis, noting and investigating major variances. All significant capital expenditure decisions are approved by the Board as a whole.
The executive directors receive reports setting out key performance and risk indicators and consider possible control issues brought to their
attention by early warning mechanisms, which are embedded within the operational units and reinforced by risk awareness training. The
executive directors also receive regular reports from the credit control and health and safety functions, which include recommendations for
improvement. The Audit Committee’s role in this area is confined to a high level review of the arrangements.
Relationship with Auditor
The Audit Committee has specific terms of reference which deal with its authority and duties. It meets at least twice a year with the external
auditor attending by invitation in order that the Committee can review the external audit process and results. The Committee overviews the
monitoring of the adequacy of the Group’s internal controls and whistleblowing procedures, accounting policies and financial reporting and
provides a forum through which the Group’s external auditor reports to the non-executive directors. The Committee assists the Board in
discharging its duties to ensure the financial statements meet legal requirements, and also reviews the independence of the external auditor.
Independence of the external auditor has been assessed through examination of the nature and value of non-audit services performed
during the year. The value of non-audit services is disclosed on page 30 and all non-audit service requirements are considered fully before an
appointment is made. The non-audit services provided were corporate finance and tax compliance services.The objectivity and independence of
the auditor has been safeguarded by all work being completed by partners and staff who, whilst having specialist knowledge of the sector, have
no involvement in the audit of the financial statements.
Equality and Diversity
The Group is committed to ensuring that existing members of staff, job applicants, or workers are treated fairly in an environment which is work-
focussed and free from any form of discrimination. The Group will always wish to ensure appointments reflect the best skills available for the job.
Currently 31% of senior management positions are held by women.
COMPLIANCE STATEMENT
Throughout the year ended 31 January 2012 the Company has been in compliance with the Code Provisions set out in the June 2010 FRC
Combined Code on Corporate Governance except for the following matters:
Section A.2 of the Code requires that the roles of Chairman and Chief Executive should not be exercised by the same individual and that a
Chief Executive should not go on to be Chairman of the same Company. In May 2008, Mr AMV Coombs previously Chief Executive of the
Company was appointed Chairman upon the retirement of Mr DM Coombs. After careful consideration of this option and other options for this
appointment and after consultation with the major shareholders, the Nomination Committee and the Board considered that this appointment
was the best option given the size, nature and structure of the Company.
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21309.04 11/04/12 Proof 2
Directors’ Responsibilities Statement
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors are required to prepare
the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU)
and Article 4 of the IAS Regulation and have also chosen to prepare the Parent Company financial statements under IFRSs as adopted by the
EU. Under company law the directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, International Accounting
Standard 1 requires that directors:
• properly select and apply accounting policies;
• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
• provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the
impact of particular transactions, other events and conditions on the entity’s financial position and financial performance; and
• make an assessment of the Company’s ability to continue as a going concern.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and
disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
•
the financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
•
the management report, which is incorporated into the directors’ report, includes a fair review of the development and performance of the
business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description
of the principal risks and uncertainties that they face.
By order of the Board
Anthony Coombs
Chairman
28 March 2012
Chris Redford
Group Finance Director
28 March 2012
18
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2 Our Governance
Independent Auditor’s Report
to the Members of S&U Plc
Independent Auditor’s Report to the
Members of S&U Plc
We have audited the financial statements of S&U plc for the year ended 31 January 2012 which comprise the Group Income Statement and the
Group and Company Statements of Comprehensive Income, the Group and Company Balance Sheets, the Group and Company Cash Flow
Statements, the Group and Company Statements of Changes in Equity and the related notes 1 to 26. The financial reporting framework that has
been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union
and, as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an
auditor’s 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 and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in
accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that
the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the
accounting policies are appropriate to the Group’s and the Parent Company’s circumstances and have been consistently applied and adequately
disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.
In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial
statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
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Opinion on financial statements
In our opinion:
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 January 2012 and
of the Group’s profit for the year then ended;
•
•
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as
applied in accordance with the provisions of the Companies Act 2006; and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group
financial statements, Article 4 of the IAS Regulation.
Separate opinion in relation to IFRSs as issued by the IASB
As explained in note 1 to the Group financial statements, the Group in addition to complying with its legal obligation to apply IFRSs as adopted
by the European Union, has also applied IFRSs as issued by the International Accounting Standards Board (IASB).
In our opinion the Group financial statements comply with IFRSs as issued by the IASB.
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21309.04 11/04/12 Proof 2
Independent Auditor’s Report to the
Members of S&U Plc continued
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
•
•
the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and
the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the
financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from
branches not visited by us; or
•
the Parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review:
•
•
the directors’ statement, contained on page 7, in relation to going concern;
the part of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of the UK Corporate
Governance Code specified for our review; and
• certain elements of the report to shareholders by the Board on directors’ remuneration.
Peter Birch (Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
Birmingham, United Kingdom
28 March 2012
20
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2
Group Income Statement
Year ended 31 January 2012
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Finance costs (net)
Profit before taxation
Taxation
Profit for the year
Earnings per share basic
Earnings per share diluted
Our Financials
Group Income Statement
Note
3
4
6
7
2
9
11
11
2012
£000
51,919
(17,870)
34,049
(21,237)
12,812
(596)
12,216
(3,281)
8,935
76.1p
75.1p
2011
£000
48,016
(17,146)
30,870
(19,937)
10,933
(1,074)
9,859
(2,816)
7,043
60.0p
59.5p
All activities derive from continuing operations.
Statement of Comprehensive Income
Profit for the year
Gain on cash flow hedge
Actuarial loss on defined benefit pension scheme
Credit for cost of future share based payments
Tax credit/charge on items taken directly to equity
Total Comprehensive Income for the year
Group
2012
£000
8,935
-
(15)
176
16
9,112
Group
Company
Company
2011
£000
7,043
325
(18)
62
(91)
7,321
2012
£000
5,396
-
(15)
88
16
5,485
2011
£000
4,599
325
(18)
33
(91)
4,848
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21309.04 11/04/12 Proof 2
Balance Sheet
31 January 2012
Assets
Non current assets
Property, plant and equipment
Investments
Amounts receivable from customers
Retirement benefit asset
Deferred tax assets
Current assets
Inventories
Amounts receivable from customers
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Bank overdrafts and loans
Trade and other payables
Current tax liabilities
Accruals and deferred income
Non current liabilities
Bank loans
Financial liabilities
Total liabilities
Net assets
Equity
Called up share capital
Share premium account
Profit and loss account
Total equity
Group
2012
£000
Group
Company
Company
2011
£000
2012
£000
2011
£000
Note
12
13
14
26
19
15
14
16
17
18
17
21
20
1,625
—
27,726
20
64
29,435
129
49,774
394
17
50,314
79,749
(806)
(1,606)
(2,101)
(1,924)
(6,437)
(18,000)
(450)
(18,450)
(24,887)
54,862
1,668
2,173
51,021
54,862
1,446
—
25,705
15
3
27,169
134
49,013
392
292
49,831
77,000
—
(1,677)
(1,658)
(1,148)
(4,483)
(22,000)
(450)
(22,450)
(26,933)
50,067
1,667
2,136
46,264
50,067
929
2,432
132
20
52
3,565
129
17,832
29,122
17
47,100
50,665
(695)
(927)
(549)
(728)
(2,899)
(18,000)
(450)
(18,450)
(21,349)
29,316
1,668
2,173
25,475
29,316
748
2,432
149
15
24
3,368
134
17,467
30,591
880
49,072
52,440
—
(1,021)
(358)
(463)
(1,842)
(22,000)
(450)
(22,450)
(24,292)
28,148
1,667
2,136
24,345
28,148
These financial statements were approved by the Board of Directors on 28 March 2012.
Signed on behalf of the Board of Directors
A M V Coombs
G D C Coombs
22
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2 Our Financials
Statement of Changes in Equity
Statement of Changes in Equity
31 January 2012
Group
At 1 February 2010
Profit for year
Other comprehensive income for year
Total comprehensive income for year
Dividends
At 31 January 2011
Profit for year
Other comprehensive income for year
Total comprehensive income for year
Issue of new shares in year
Dividends
At 31 January 2012
Company
At 1 February 2010
Profit for year
Other comprehensive income for year
Total comprehensive income for year
Dividends
At 31 January 2011
Profit for year
Other comprehensive income for year
Total comprehensive income for year
Issue of new shares in year
Dividends
At 31 January 2012
Share
Called up
premium
Profit and
share capital
account
loss account
£000
1,667
–
–
–
–
1,667
–
–
–
1
–
1,668
£000
1,667
–
–
–
–
1,667
–
–
–
1
–
1,668
£000
2,136
–
–
–
–
2,136
–
–
–
37
–
2,173
£000
2,136
–
–
–
–
2,136
–
–
–
37
–
2,173
£000
43,017
7,043
278
7,321
(4,074)
46,264
8,935
177
9,112
–
(4,355)
51,021
£000
23,571
4,599
249
4,848
(4,074)
24,345
5,396
89
5,485
–
(4,355)
25,475
Total
equity
£000
46,820
7,043
278
7,321
(4,074)
50,067
8,935
177
9,112
38
(4,355)
54,862
£000
27,374
4,599
249
4,848
(4,074)
28,148
5,396
89
5,485
38
(4,355)
29,316
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21309.04 11/04/12 Proof 2
Cash Flow Statement
Year ended 31 January 2012
Net cash from operating activities
Cash flows used in investing activities
Proceeds on disposal of property, plant and equipment
Purchases of property, plant and equipment
Net cash used in investing activities
Cash flows (used in)/from financing activities
Dividends paid
Issue of new shares
Issue of new borrowings
Repayment of borrowings
Net increase/(decrease) in overdraft
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of period
Cash and cash equivalents comprise
Cash and cash in bank
Note
23
Group
2012
£000
7,896
65
(725)
(660)
(4,355)
38
18,000
(22,000)
806
(7,511)
(275)
292
17
Group
2011
£000
9,347
48
(408)
(360)
(4,074)
–
–
(6,000)
(12)
(10,086)
(1,099)
1,391
292
Company
Company
2012
£000
7,252
52
(545)
(493)
(4,355)
38
18,000
(22,000)
695
(7,622)
(863)
880
17
2011
£000
7,324
17
(192)
(175)
(4,074)
–
–
(6,000)
(1)
(10,075)
(2,926)
3,806
880
17
292
17
880
There are no cash and cash equivalent balances which are not available for use by either the Group or the Company (2011: £nil).
24
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2 Our Financials
Notes to the Accounts
Notes to the Accounts
Year ended 31 January 2012
1. Accounting Policies
1.1 General Information
S&U plc is a Company incorporated in the United Kingdom under the Companies Act. The address of the registered office is given on page
9 which is also the Group’s principal business address. All operations are situated in the United Kingdom.
1.2 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. We have also prepared our S&U plc Company financial statements in accordance with IFRS endorsed by the European Union.
These financial statements have been prepared under the historical cost convention as modified by the revaluation of derivative financial
instruments to fair value. The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries
for the year ended 31 January 2012. As discussed in the directors’ report, 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 annual report and accounts.
In the current year and in accordance with IFRS requirements, certain new and revised Standards and Interpretations have been adopted
but these have had no significant effect on the amounts reported in these financial statements. At the date of authorisation of these financial
statements the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet
effective:
IFRS 7 (amended Oct 2010 and Dec 2011)
Disclosures — Offsetting Financial Assets and Liabilities
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IFRS 9 (part issued)
Financial Instruments
IFRS 10
IFRS 12
Consolidated Financial Statements
Disclosure of Interests in Other Entities
IAS 1 (revised May 2011)
Separate Financial Statements
IAS 12 (amended Dec 2010)
Deferred Tax: Recover of Underlying Assets
IAS 19 (revised June 2011)
Employee Benefits
IAS 27 (revised May 2011)
Separate Financial Statements
IAS 32 (amended Dec 2011)
Offsetting Financial Assets and Liabilities
The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the
financial statements of the Group other than the adoption of IFRS 9 which may have a material impact on the financial assets reported by
the Group. It is not practical to provide a reasonable estimate of the effect of IFRS 9 until more detailed guidance becomes available nearer
the date and a more detailed review is undertaken.
1.3 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.
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21309.04 11/04/12 Proof 2
Notes to the Accounts continued
Year ended 31 January 2012
1. Accounting Policies continued
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.
1.4 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. For all accounts which are not impaired, a
further incurred but not reported provision (IBNR) is calculated and charged to the income statement based on management’s estimates of
the propensity of these accounts to default from conditions which existed at the balance sheet date.
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.
1.5 Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation. Certain freehold property is held at previous revalued
amounts less accumulated depreciation as the Group has elected to use these amounts as the deemed cost as at the date of transition to
IFRS under the transitional arrangements of IFRS 1.
Depreciation is provided on the cost or valuation of property, plant and equipment in order to write such cost or valuation over the expected
useful lives as follows:
Freehold Buildings
2% per annum straight line
Computers
20% per annum straight line
Fixtures and Fittings
10% per annum straight line or 20% per annum reducing balance
Motor Vehicles
25% per annum reducing balance
Freehold Land is not depreciated.
1.6 Inventories
Inventories are stated at the lower of cost or net realisable value.
1.7 Taxation
Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively
enacted at the balance sheet date.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the financial statements. Deferred tax is determined using tax rates and laws that have been enacted or
substantively enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred
tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against
which the temporary differences can be utilised.
26
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2
Our Financials
Notes to the Accounts
1. Accounting Policies continued
1.8 Preference shares
The issued 31.5% preference share capital is carried in the balance sheet at amortised cost and shown as a financial liability. The issued
6% preference share capital is valued at par and shown as called up share capital.
1.9 Pensions
The Group contributes to a defined benefit pension scheme. The defined benefit pension asset at the balance sheet date is calculated
as the fair value of the plan assets less the present value of the defined benefit obligation. Actuarial gains and losses are recognised
immediately in the financial statements.
The Group also operates several defined contribution pension schemes and the pension charge represents the amount payable by the
Company for the financial period.
1.10 Share based payments
The Company issues share-based payments under the S&U plc 2008 Discretionary Share Option Plan and the S&U plc 2010 Long Term
Incentive Plan. The cost of these share based payments is based on the fair value of options granted as required by IFRS2. This cost
is then charged to the income statement over the three year vesting period of the related share options with a corresponding credit to
reserves. When any share options are exercised, the proceeds received are credited to share capital and share premium.
1.11 Leases
Rental costs under operating leases are charged to the income statement on a straight line basis.
1.12 Investments
Investments held as fixed assets are stated at cost less provision for any impairment.
1.13 Derivative financial instruments
The Group’s activities expose it to the financial risks of changes in interest rates and the Group uses interest rate derivative contracts
where appropriate to hedge these exposures. The Group does not use derivative financial instruments for speculative purposes. The use of
financial derivatives is governed by the Group’s policies approved by the Board of Directors which provides written principles on the use of
financial derivatives.
Changes in the fair value of derivative financial instruments that are designated as effective hedges of future cash flows are directly
recognised in equity and the ineffective portion is recognised immediately in the income statement. If the cash flow hedge of a firm
commitment or forecasted transaction results in the recognition of an asset or liability then at the time the asset or liability is recognised
the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of
the asset or liability. For hedges that do not result in the recognition of an asset or liability, amounts deferred in equity are recognised in the
income statement in the same period in which the hedged item affects profit or loss.
Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the income statement
as they arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised or no longer qualifies for hedge
accounting. At that time any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted
transaction occurs. If a hedged transaction is no longer expected to occur the net cumulative gain or loss is recognised in equity is
transferred to net profit or loss for the period.
1.14 Critical accounting judgements and key sources of estimation uncertainty
The key accounting judgements which the directors have made in the process of applying the Group’s accounting policies and which have
the most significant effect on the amounts recognised in the financial statements are the judgements relating to revenue recognition and
impairment in 1.3 and 1.4 above. The Directors consider that there are no key sources of estimation uncertainty other than those inherent in
the consumer credit market in which we operate.
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21309.04 11/04/12 Proof 2
Notes to the Accounts continued
Year ended 31 January 2012
2. Segmental analysis
Analyses by class of business of revenue and profit before taxation are stated below:
Revenue
Profit before taxation
Class of business
Consumer credit, rentals and other retail trading
Motor finance
Analyses by class of business of assets and liabilities are stated below:
Class of business
Consumer credit, rentals and other retail trading
Motor finance
Year
ended
31.1.12
£000
34,137
17,782
51,919
Year
ended
31.1.11
£000
31,967
16,049
48,016
Year
ended
31.1.12
£000
6,310
5,906
12,216
Assets
Liabilities
Year
ended
31.1.12
£000
37,087
42,662
79,749
Year
ended
31.1.11
£000
37,407
39,593
77,000
Year
ended
31.1.12
£000
5,922
(30,809)
(24,887)
Year
ended
31.1.11
£000
5,632
4,227
9,859
Year
ended
31.1.11
£000
3,718
(30,651)
(26,933)
Depreciation of assets for consumer credit was £381,000 (2011: £363,000) and for motor finance was £72,000 (2011: £60,000). Fixed
asset additions for consumer credit were £545,000 (2011: £320,000) and for motor finance were £180,000 (2011: £88,000).
The net finance credit for consumer credit was £96,000 (2011: £69,000) and for motor finance was a cost of £692,000 (2011: £1,143,000).
The tax charge for consumer credit was £1,720,000 (2011: £1,632,000) and for motor finance was £1,561,000 (2011: £1,184,000).
The significant products in consumer credit, rentals and other retail are unsecured home credit loans. The significant products in motor
finance are car loans secured under hire purchase agreements.
The assets and liabilities of the parent Company are classified as consumer credit, rentals and other retail trading.
No geographical analysis is presented because all operations are situated in the United Kingdom.
3. Revenue
Interest income
Insurance and other commissions and fees
Total revenue
28
2012
£000
48,591
3,328
51,919
2011
£000
44,743
3,273
48,016
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2
Our Financials
Notes to the Accounts
4. Cost of sales
Loan loss provisioning charge — consumer credit
Loan loss provisioning charge — motor finance
Total loan loss provisioning charge
Other cost of sales
Total cost of sales
5. Information regarding employees
The average number of persons employed by the Group in the year was:
Consumer credit, rentals and other retail trading
Motor finance
Staff costs during the year (including directors):
Wages and salaries
Social security costs
Pension costs for money purchase scheme
Directors’ remuneration is disclosed in the audited section of the Directors’ Remuneration Report.
6. Operating Profit
Operating profit is after charging/(crediting):
Depreciation and amortisation:
Owned assets
Staff costs
Cost of future share based payments
Rentals under operating leases:
Hire of plant and machinery
Other operating leases
Loss on sale of fixed assets
Rentals received/receivable under operating leases
2012
£000
7,043
5,750
12,793
5,077
17,870
2012
No.
301
74
375
2012
£000
9,150
1,001
271
10,422
2011
£000
7,275
5,883
13,158
3,988
17,146
2011
No.
296
68
364
2011
£000
8,723
909
243
9,875
2012
£000
2011
£000
453
10,422
176
5
412
58
(121)
423
9,875
–
5
401
36
(116)
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21309.04 11/04/12 Proof 2
Notes to the Accounts continued
Year ended 31 January 2012
6. Operating Profit continued
The analysis of auditor’s remuneration is as follows:
Fees payable to the Group’s auditor for the audit of the Company’s annual accounts
Fees payable to the Group’s auditor for other services to the Group
The audit of Company’s subsidiaries
Total audit fees
Audit related assurance services
Taxation compliance services
Corporate Finance services
Other services
Total non-audit fees
Total
7. Finance costs (net)
31.5% cumulative preference dividend
Bank loan and overdraft
Other interest payable
Interest payable and similar charges
Interest receivable
2012
£000
45
37
82
22
20
80
–
122
204
2012
£000
142
453
2
597
(1)
596
2011
£000
43
37
80
22
15
–
12
49
129
2011
£000
142
935
2
1,079
(5)
1,074
8. Profit of parent Company
As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the parent Company is not presented as part of
these accounts. The parent Company’s profit for the financial year after taxation amounted to £5,396,000 (2011: £4,599,000).
9. Tax on profit before taxation
Corporation tax at 26.3% (2011: 28%) based on the profit for the year
Adjustment in respect of prior years
Deferred tax (timing differences — origination and reversal)
2012
£000
3,343
(17)
3,326
(45)
3,281
2011
£000
2,827
(45)
2,782
34
2,816
The actual tax charge for the current and the previous year exceeds the standard rate for the reasons set out in the following reconciliation.
30
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2
Our Financials
Notes to the Accounts
9. Tax on profit before taxation continued
Profit on ordinary activities before tax
2012
£000
12,216
2011
£000
9,859
Tax on profit on ordinary activities at standard rate of 26.3% (2011: 28%)
3,216
2,761
Factors affecting charge for the period:
Expenses not deductible for tax purposes
Effects of other tax rates
Prior period adjustments
Total actual amount of tax
85
(3)
(17)
95
5
(45)
3,281
2,816
The corporation tax rate was reduced from 28% to 26% with effect from 1 April 2011, therefore the tax rate applicable to the current period
is a blended rate of 26.3%.
The Government announced in the Budget on 21 March 2012 that it intends to enact a reduction in the corporation tax rate to 24% with
effect from 1 April 2012, with future annual reductions of 1% to 22% from 1 April 2014. The effect of these proposed tax rate reductions
will be reflected in future periods depending on when they are substantively enacted.
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10. Dividends
2nd Interim paid for the year ended 31/1/2011 – 10.0p per Ord share (10.0p)
Final paid for the year ended 31/1/2011 – 16.0p per Ordinary share (15.0p)
1st Interim paid for the year ended 31/1/2012 – 11.0p per Ord share (10.0p)
Total ordinary dividends paid
6% cumulative preference dividend paid March and September
Credit for unpresented dividend payments over 12 years old
Total dividends paid
2012
£000
1,174
1,878
1,291
4,343
12
–
4,355
2011
£000
1,174
1,760
1,174
4,108
12
(46)
4,074
A second interim dividend of 12.0p per ordinary share for the year ended 31 January 2012 was paid on 23 March 2012 and the directors
are proposing a final dividend for the year ended 31 January 2012 of 18.0p per ordinary share. The final dividend will be paid on 22 June
2012 to shareholders on the register at close of business on 1 June 2012 subject to approval by shareholders at the Annual General
Meeting on Thursday 24 May 2012.
11. Earnings per ordinary share
The calculation of earnings per ordinary share is based on profit after tax of £8,935,000 (2011: £7,043,000).
The number of shares used in the basic eps calculation is the average number of shares in issue during the year of 11,739,721 (2011:
11,737,228). There are a total of 156,197 dilutive share options in issue (2011: 102,197). The number of shares used in the diluted eps
calculation is 11,892,430 (2011: 11,837,009).
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21309.04 11/04/12 Proof 2
Notes to the Accounts continued
Year ended 31 January 2012
12. Property, plant and equipment
Group
Cost or valuation
At 1 February 2010
Additions
Disposals
At 31 January 2011
Additions
Disposals
At 31 January 2012
Accumulated depreciation
At 1 February 2010
Charge for the year
Eliminated on disposals
At 31 January 2011
Charge for the year
Eliminated on disposals
At 31 January 2012
Net book value
At 31 January 2012
At 31 January 2011
Freehold
land and
buildings
£000
Motor
vehicles
£000
Fixtures and
Fittings
£000
397
2
–
399
30
–
429
129
9
–
138
10
–
148
281
261
2,247
321
(274)
2,294
496
(322)
2,468
1,254
307
(190)
1,371
333
(229)
1,475
993
923
1,412
85
(6)
1,491
199
(8)
1,682
1,128
107
(6)
1,229
110
(8)
1,331
351
262
Included in the above is land at a cost or valuation of £60,000 (2011: £60,000) which is not depreciated.
Company
Cost or valuation
At 1 February 2010
Additions
Disposals
At 31 January 2011
Additions
Disposals
At 31 January 2012
Accumulated depreciation
At 1 February 2010
Charge for the year
Eliminated on disposals
At 31 January 2011
Charge for the year
Eliminated on disposals
At 31 January 2012
Net book value
At 31 January 2012
At 31 January 2011
Freehold
land and
buildings
£000
Motor
vehicles
£000
Fixtures and
Fittings
£000
80
–
–
80
–
–
80
23
1
–
24
1
–
25
55
56
1,340
158
(133)
1,365
443
(277)
1,531
707
196
(101)
802
235
(207)
830
701
563
812
34
–
846
102
–
948
663
54
–
717
58
–
775
173
129
Included in the above is land at cost of £22,000 (2011: £22,000) which is not depreciated.
32
Total
£000
4,056
408
(280)
4,184
725
(330)
4,579
2,511
423
(196)
2,738
453
(237)
2,954
1,625
1,446
Total
£000
2,232
192
(133)
2,291
545
(277)
2,559
1,393
251
(101)
1,543
294
(207)
1,630
929
748
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2 Our Financials
Notes to the Accounts
12. Property, plant and equipment continued
The net book value of tangible fixed assets leased out under operating leases was:
13. Investments and related party transactions
Company
Shares in subsidiary companies
At historic cost less impairment
Group
2012
£000
211
Group
2011
£000
203
Company
Company
2012
£000
90
2011
£000
88
2012
£000
2011
£000
2,432
2,432
Interests in subsidiaries
The principal subsidiaries of the Company, all of which are wholly owned directly by the Company, operate in Great Britain and are
incorporated in England and Wales.
Subsidiary
S D Taylor Limited
Principal activity
Consumer credit, rentals and other retail trading
Advantage Finance Limited
Motor finance
Related party transactions
Group
Transactions between the Company and its subsidiaries, which are related parties have been eliminated on consolidation and are not
disclosed in this note. During the year the Group obtained supplies at market rates amounting to £4,730 (2011: £4,753) from Grevayne
Properties Limited a Company which is a related party because Messrs G D C and A M V Coombs are directors and shareholders. The
amount due to Grevayne Properties Limited at the year end was £nil (2011: £nil). During the year the company sold a car to Mr A Coombs
for £39,486 being a fair estimate of its market value. During the year, by order of the Board and in view of his 50 year service to the
Company without company pension contribution the former Chairman Mr DM Coombs received a discretionary payment for the year of
£120,000 (2011: £120,000). The Board will carefully review this discretionary payment in succeeding years, but do not anticipate that such
payments will ever exceed this amount. All related party transactions were settled in full.
Company
The Company received dividends from other Group undertakings totalling £4,200,000 (2011: £3,700,000). During the year the Company
recharged other Group undertakings for various administrative expenses incurred on their behalf. The Company also received administrative
cost recharges from other Group undertakings. At 31 January 2012 the Company was owed £28,832,942 (2011: £30,334,331) by other
Group undertakings and owed £nil (2011: £nil). All related party transactions were settled in full.
33
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21309.04 11/04/12 Proof 2
Notes to the Accounts continued
Year ended 31 January 2012
14. Amounts receivable from customers
Consumer credit, rentals and other retail trading
Motor finance hire purchase
Less: Loan loss provision consumer credit, rentals and other retail trading
Less: Loan loss provision motor finance
Amounts receivable from customers
Analysis by future date due
- due within one year
- due in more than one year
Amounts receivable from customers
Analysis of security
Loans secured on vehicles under hire purchase agreements
Loans secured on residential property under 2nd mortgage agreements
Other Loans (unsecured)
Amounts receivable from customers
Analysis of overdue
Not impaired
Neither past due nor impaired
Past due up to 3 months but not impaired
Past due over 3 months but not impaired
Impaired
Past due up to 3 months
Past due over 3 months and up to 6 months
Past due over 6 months or default
Amounts receivable from customers
Group
2012
£000
52,849
60,338
113,187
(17,604)
(18,083)
77,500
49,774
27,726
77,500
Group
2012
£000
41,587
462
35,451
77,500
54,272
9,137
7,029
3,568
1,297
2,197
77,500
Group
2011
£000
52,982
55,564
108,546
(17,553)
(16,275)
74,718
49,013
25,705
74,718
Group
2011
£000
38,221
654
35,843
74,718
49,432
9,228
7,197
4,255
1,959
2,647
74,718
Company
Company
2012
£000
26,739
–
26,739
(8,775)
–
17,964
17,832
132
17,964
2011
£000
26,630
–
26,630
(9,014)
–
17,616
17,467
149
17,616
Company
Company
2012
£000
–
–
17,964
17,964
8,927
4,677
3,630
541
133
55
17,964
2011
£000
–
–
17,616
17,616
8,323
4,623
3,646
623
297
104
17,616
The credit risk inherent in amounts receivable from customers is reviewed under impairment as per note 1.4 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 (2011: £nil).
34
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2
Our Financials
Notes to the Accounts
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Consumer
credit, rentals
and other
trading
£000
17,036
7,275
(4,044)
(2,714)
17,553
7,043
(4,241)
(2,751)
17,604
£000
9,404
3,645
(2,666)
(1,369)
9,014
3,502
(2,361)
(1,380)
8,775
Motor
finance
£000
12,779
5,883
(976)
(1,411)
16,275
5,750
(2,126)
(1,816)
18,083
£000
–
–
–
–
–
–
–
–
–
Total
Group
£000
29,815
13,158
(5,020)
(4,125)
33,828
12,793
(6,367)
(4,567)
35,687
£000
9,404
3,645
(2,666)
(1,369
9,014
3,502
(2,361)
(1,380)
8,775
14. Amounts receivable from customers continued
Analysis of movements on loan loss provisions
Group
At 1 February 2010
Charge for year
Amounts written off during year
Unwind of discount
At 31 January 2011
Charge for year
Amounts written off during year
Unwind of discount
At 31 January 2012
Company
At 1 February 2010
Charge for year
Amounts written off during year
Unwind of discount
At 31 January 2011
Charge for year
Amounts written off during year
Unwind of discount
At 31 January 2012
There has been no material change in the average discount rate used for either consumer credit or motor finance during the years to
31 January 2011 and 31 January 2012.
15. Inventories
Goods for resale
The carrying value of inventories is not materially different to the fair value.
Group
2012
£000
129
Group
2011
£000
134
Company
Company
2012
£000
129
2011
£000
134
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21309.04 11/04/12 Proof 2
Notes to the Accounts continued
Year ended 31 January 2012
16. Trade and other receivables
Amounts owed by subsidiary undertakings
Other debtors
Prepayments and accrued income
Group
2012
£000
–
38
356
394
Group
2011
£000
–
37
355
392
Company
Company
2012
£000
28,833
30
259
29,122
2011
£000
30,334
27
230
30,591
All the above amounts fall due within one year. The amounts owed by subsidiary undertakings in the Company’s balance sheet are stated
net of impairment. Under IFRS7 there are no amounts included in trade and other receivables which are past due but not impaired. The
carrying value of trade and other receivables is not materially different to their fair value.
17. Bank overdrafts and loans
Bank overdrafts and loans — due within one year
Bank loan — due in more than one year
Group
2012
£000
806
18,000
18,806
Group
2011
£000
–
22,000
22,000
Company
Company
2012
£000
695
18,000
18,695
2011
£000
–
22,000
22,000
The carrying value of bank overdrafts and loans is not materially different to the fair value.
S&U plc had the following overdraft facilities available at 31 January 2012:
— a facility for £6 million (2011: £6m) which is subject to annual review in April 2012.
— a facility for £2 million (2011: £2m) which is subject to annual review in April 2012.
— a facility for £0.1 million (2011: £0.1m) which is subject to annual review in April 2012.
Total drawdowns of these overdraft facilities at 31 January 2012 were £806,000 (2011: £nil).
The bank overdraft and loans are secured over the assets of the Group under a multilateral guarantee.
The Company is part of the Group overdraft facility and at 31 January 2012 was £694,863 overdrawn (2011: £nil).
A maturity analysis of the above borrowings is given in note 22.
36
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2
Our Financials
Notes to the Accounts
18. Trade and other payables
Trade creditors
Other creditors
Group
2012
£000
784
822
1,606
Group
2011
£000
589
1,088
1,677
Company
Company
2012
£000
469
458
927
2011
£000
284
737
1,021
The carrying value of trade and other payables is not materially different to the fair value.
19. Deferred tax
Group
At 1 February 2010
(Debit)/credit to income
(Debit) to equity
At 31 January 2011
(Debit)/credit to income
Credit to equity
At 31 January 2012
Company
At 1 February 2010
(Debit) to income
(Debit) to equity
At 31 January 2011
(Debit)/credit to income
Credit to equity
At 31 January 2012
Accelerated
Derivative
Retirement
tax
Revaluation
Share based
financial
benefit
depreciation
of property
payments
instrument
obligations
£000
53
(11)
–
42
(18)
–
24
£000
(42)
7
–
(35)
3
–
(32)
£000
–
–
–
–
61
16
77
£000
£000
£000
35
(7)
–
28
(8)
–
20
–
–
–
–
–
–
–
–
–
–
–
21
16
37
£000
121
(30)
(91)
–
–
–
–
£000
121
(30)
(91)
–
–
–
–
£000
(4)
–
–
(4)
(1)
–
(5)
Total
£000
128
(34)
(91)
3
45
16
64
£000
£000
(4)
–
–
(4)
(1)
–
(5)
152
(37)
(91)
24
12
16
52
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The Group and the Company have assessed that all the deferred tax assets and liabilities shown above should be offset for financial
reporting purposes.
Legislation to reduce the tax rate to 25% from 1 April 2012 was substantively enacted on 5 July 2011. The prevailing rate of corporation tax
at the balance sheet date at which the deferred tax balance is expected to reverse is therefore 25% and this has been applied to calculate
the deferred tax position at 31 January 2012 (2011: 27%).
The Government announced in the Budget on 21 March 2012 that it intends to enact a reduction in the corporation tax rate to 24% with
effect from 1 April 2012, with future annual reductions of 1% to 22% from 1 April 2014. These future tax rate reductions are expected to
have a similar impact on the financial statements as disclosed in the current period, however the actual impact will be dependent on the
group’s deferred tax position at that time.
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21309.04 11/04/12 Proof 2
Notes to the Accounts continued
Year ended 31 January 2012
20. Called Up Share Capital And Preference Shares
Called up, allotted and fully paid
11,747,228 Ordinary shares of 12.5p each (2011:11,737,228)
200,000 6.0% Cumulative preference shares of £1 each
Called up share capital
2012
£000
1,468
200
1,668
2011
£000
1,467
200
1,667
The 6.0% cumulative preference shares enable the holder to receive a cumulative preferential dividend at the rate of 6.0% on paid up
capital and the right to a return of capital plus a premium of 10p per share at either a winding up or a repayment of capital. The 6.0%
cumulative preference shares do not carry voting rights so long as the dividends are not in arrears.
21. Financial liabilities
Preference Share Capital
Called up, allotted and fully paid
2012
£000
2011
£000
3,599,106 31.5% Cumulative preference shares of 12.5p each (2011: 3,599,106)
450
450
The 31.5% cumulative preference shares entitle the holder to receive a cumulative preference dividend of 31.5% plus associated tax credit
and the right to a return of capital plus a premium of 22.5p per share on either a winding up or a repayment of capital. The rights of the
holders of these shares to dividends and returns of capital are subordinated to those of the holders of the 6.0% cumulative preference
shares. The 31.5% cumulative preference shares do not carry voting rights so long as the dividends are not in arrears.
22. Financial instruments
The Group and the Company’s principal financial instruments are amounts receivable from customers, cash, preference share capital, bank
overdrafts and bank loans.
The Group and the Company’s business objectives rely on maintaining a well spread customer base of carefully controlled quality by
applying strong emphasis on good credit management, both through strict lending criteria at the time of underwriting a new credit facility
and continuous monitoring of the collection process. The home credit hire purchase debts are secured by the goods. The motor finance
hire purchase debts are secured by the financed vehicle.
As at 31 January 2012 the Group’s indebtedness amounted to £18,806,000 (2011: £22,000,000) and the Company’s indebtedness
amounted to £18,695,000 (2011: £22,000,000). The Group gearing was 34.3% (2011: 43.4%), being calculated as net borrowings as a
percentage of total equity. The Board is of the view that the gearing level remains conservative, especially for a lending organisation. The
table below analyses the Group and Company assets and liabilities into relevant maturity groupings based on the remaining period at the
balance sheet date (to contractual maturity).
S&U plc has unused borrowing facilities at 31 January 2012 of £7.3 million (2011: £8.1m). The preference share capital financial liability of
£450,000 has no maturity date and is classified as more than five years.
38
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2
Our Financials
Notes to the Accounts
22. Financial instruments continued
The average effective interest rate on financial assets of the Group at 31 January 2012 was estimated to be 43% (2011: 41%). The average
effective interest rate on financial assets of the Company was estimated to be 66% (2011: 62%). The average effective interest rate of
financial liabilities of the Group at 31 January 2012 was estimated to be 4% (2011: 5%). The average effective interest rate on financial
liabilities of the Company at 31 January 2011 was estimated to be 4% (2011: 5%).
Derivative financial instruments
The Group’s activities expose it to the financial risks of changes in interest rates and the Group uses interest rate derivative contracts to
hedge these exposures where appropriate in accordance with the accounting policy noted in 1.13 above. This risk of change in interest
rates was lower for the Group in 2011 and 2012 due to the reduced level of borrowings. Previously a 5 year hedge contract on £20m of the
Group’s borrowings was entered into on 20 September 2005 and matured on 20 September 2010.
Currency and credit risk
The Group has no material exposure to foreign currency risk. The credit risk inherent in amounts receivable from customers is reviewed
under impairment as per note 1.4. It should be noted that the credit risk at the individual customer level is limited by strict adherence to
credit control rules which are regularly reviewed. The credit risk is also mitigated in the motor finance segment of our business by ensuring
that the valuation of the security at origination of the loan is within glasses guide and cap limits. Group trade and other receivables and cash
are considered to have no material credit risk as all material balances are due from highly rated banking counterparties.
Interest rate risk
The Group’s activities expose it to the financial risks of changes in interest rates and the Group uses interest rate derivative contracts
where appropriate to hedge these exposures in bank borrowings in accordance with the accounting policy noted in 1.13 above. There is
considered to be no material interest rate risk in cash, trade and other receivables, preference shares and trade and other payables.
The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative
instruments at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the liability outstanding at the balance
sheet date was outstanding for the whole year.
If interest rates had been 0.5% higher/lower and all other variables were held constant, the Group’s;
— profit for the year ended 31 January 2012 would decrease/increase by £0.1 million (2011: decrease/increase by £0.1 million). This is
mainly attributable to the Group’s exposure on its variable rate borrowings.
— total equity would decrease/increase by £0.1 million (2011: decrease/increase by £0.1 million). This is mainly attributable to the Group’s
exposure on its variable rate borrowings.
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If interest rates had been 1% higher/lower and all other variables were held constant, the Group’s;
— profit for the year ended 31 January 2012 would decrease/increase by £0.2 million (2011: decrease by £0.1 million or increase by £0.2
million). This is mainly attributable to the Group’s exposure on its variable rate borrowings.
— total equity would decrease/increase by £0.2 million (2011: decrease by £0.1 million or increase by £0.2 million). This is mainly
attributable to the Group’s exposure on its variable rate borrowings.
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21309.04 11/04/12 Proof 2
Notes to the Accounts continued
Year ended 31 January 2012
22. Financial instruments continued
Capital risk management
The Board of Directors assess the capital needs of the Group on an ongoing basis and approve all capital transactions. The Group’s
objective in respect of capital risk management is to maintain a conservative “Group Gearing” level with respect to market conditions, whilst
taking account of business growth opportunities in a capital efficient manner. “Group Gearing” is calculated as the sum of Bank Overdrafts
plus Bank Loans less Cash and Cash Equivalents divided by Total Equity. At 31 January 2012 the Group gearing level was 34.3% (2011:
43.4%) which the directors consider to have met their objective.
External capital requirements are imposed by the FSA on Advantage Finance. Throughout the year this Company has maintained a capital
base greater than this requirement.
Fair values of financial assets and liabilities
The fair values of amounts receivable from customers, bank loans and overdrafts and other assets and liabilities with the exception of
the junior preference share capital are considered to be not materially different from their book values. The junior preference share capital
classified as a financial liability is estimated to have a fair value of £1.9m (2011: £1.9m) but is considered more appropriate under IFRS
to be included in the balance sheet at amortised cost. Fair values which are recognised or disclosed in these financial statements are
determined in whole or in part using a valuation technique based on assumptions that are supported by prices from observable current
market transactions in the same instrument (i.e. without modification or repackaging) and based on available observable market data.
Liquidity risk
The Group’s liquidity risk is shown in the following tables which measure the cumulative liquidity gap. Most of the Group’s financial assets
are repayable within one year which together with gearing of less than 50% results in a positive liquidity position.
Group
Less than
more than
more than
More than
More than
More than
1 year
but not
2 years
but not
At 31 January 2012
Financial assets
Other assets
Cash at bank and in hand
Total assets
Shareholders’ funds
Bank overdrafts and loans
Financial liabilities
Other liabilities
Total liabilities and shareholders’ funds
1 year
£000
2 years
£000
5 years
£000
5 years
£000
49,774
12,234
15,380
–
17
–
–
–
–
49,791
12,234
15,380
–
–
–
–
–
–
–
–
–
–
–
(18,806)
–
–
(18,806)
58,599
112
–
–
112
–
–
(450)
–
(450)
58,261
Cumulative gap
49,791
62,025
40
Non-
interest
bearing
£000
–
2,232
–
2,232
(54,862)
–
–
(5,631)
(60,493)
–
Total
£000
77,500
2,232
17
79,749
(54,862)
(18,806)
(450)
(5,631)
(79,749)
–
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2
22. Financial instruments continued
More than
More than
1 year
but not
2 years
but not
Group
Less than
more than
more than
More than
At 31 January 2011
Financial assets
Other assets
Cash at bank and in hand
Total assets
Shareholders’ funds
Bank overdrafts and loans
Financial liabilities
Other liabilities
Total liabilities and shareholders’ funds
Cumulative gap
49,305
1 year
£000
2 years
£000
5 years
£000
5 years
£000
49,013
11,504
13,939
–
292
–
–
–
–
49,305
11,504
13,939
–
–
–
–
–
–
–
(6,000)
(16,000)
–
–
(6,000)
54,809
–
–
(16,000)
52,748
More than
More than
1 year
but not
2 years
but not
262
–
–
262
–
–
(450)
–
(450)
52,560
1 year
£000
2 years
£000
5 years
£000
5 years
£000
17,832
–
17
17,849
–
–
–
–
(111)
(111)
132
–
–
132
–
–
–
–
–
–
–
–
–
–
–
(18,695)
–
–
–
(18,695)
(825)
–
–
–
–
–
–
(450)
–
–
(450)
(1,275)
Company
Less than
more than
more than
More than
At 31 January 2012
Financial assets
Other assets
Cash at bank and in hand
Total assets
Shareholders’ funds
Bank overdrafts and loans
Financial liabilities
Other liabilities
Contingent liabilities
Total liabilities and shareholders’ funds
Cumulative gap
17,738
17,870
Our Financials
Notes to the Accounts
Non-
interest
bearing
£000
–
1,990
–
1,990
(50,067)
–
–
(4,483)
(54,550)
–
Non-
interest
bearing
£000
–
32,684
–
32,684
(29,316)
–
–
(2,204)
–
(31,520)
(111)
Total
£000
74,718
1,990
292
77,000
(50,067)
(22,000)
(450)
(4,483)
(77,000)
–
Total
£000
17,964
32,684
17
50,665
(29,316)
(18,695)
(450)
(2,204)
(111)
(50,776)
(111)
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21309.04 11/04/12 Proof 2
Notes to the Accounts continued
Year ended 31 January 2012
22. Financial instruments continued
More than
More than
1 year
but not
2 years
but not
Company
Less than
more than
more than
More than
At 31 January 2011
Financial assets
Other assets
Cash at bank and in hand
Total assets
Shareholders’ funds
Bank overdrafts and loans
Financial liabilities
Other liabilities
Contingent liabilities
Total liabilities and shareholders’ funds
Cumulative gap
1 year
£000
2 years
£000
5 years
£000
5 years
£000
17,318
–
880
18,198
–
–
–
–
(597)
(597)
17,601
149
–
–
149
–
–
–
–
–
–
(6,000)
(16,000)
–
–
–
–
–
–
(6,000)
11,750
(16,000)
(4,250)
–
–
–
–
–
–
(450)
–
–
(450)
(4,700)
The gross contractual cash flows payable under financial liabilities are analysed as follows:
Non-
interest
bearing
£000
–
34,093
–
34,093
(28,148)
–
–
(1,842)
–
(29,990)
(597)
Group
Repayable
Less than
more than
more than
More than
More than
More than
1 year
but not
2 years
but not
1 year
£000
2 years
£000
5 years
£000
5 years
£000
At 31 January 2012
Bank overdrafts and loans
Trade and other payables
Tax liabilities
Accruals and deferred income
Bank loans
Financial liabilities
At 31 January 2012
on Demand
£000
806
–
–
–
–
–
–
1,606
2,101
1,924
–
–
806
5,631
–
–
–
–
–
–
–
–
–
–
–
18,000
–
18,000
–
–
–
–
–
450
450
More than
More than
1 year
but not
2 years
but not
Group
Repayable
Less than
more than
more than
More than
At 31 January 2011
Bank overdrafts and loans
Trade and other payables
Tax liabilities
Accruals and deferred income
Bank loans
Financial liabilities
At 31 January 2011
on Demand
£000
1 year
£000
2 years
£000
5 years
£000
5 years
£000
–
–
–
–
–
–
–
–
1,677
1,658
1,148
–
–
4,483
–
–
–
–
6,000
–
6,000
–
–
–
–
16,000
–
16,000
–
–
–
–
–
450
450
42
Total
£000
17,467
34,093
880
52,440
(28,148)
(22,000)
(450)
(1,842)
(597)
(53,037)
(597)
Total
£000
806
1,606
2,101
1,924
18,000
450
24,887
Total
£000
–
1,677
1,658
1,148
22,000
450
26,933
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2
Our Financials
Notes to the Accounts
22. Financial instruments continued
More than
More than
1 year
but not
2 years
but not
Company
Repayable
Less than
more than
more than
More than
At 31 January 2012
Bank overdrafts and loans
Trade and other payables
Tax liabilities
Accruals and deferred income
Bank loans
Deferred tax liabilities
Financial liabilities
At 31 January 2012
on Demand
£000
695
–
–
–
–
–
–
695
2,204
1 year
£000
2 years
£000
5 years
£000
5 years
£000
–
927
549
728
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
18,000
–
–
18,000
–
–
–
–
–
–
450
450
More than
More than
1 year
but not
2 years
but not
Company
Repayable
Less than
more than
more than
More than
At 31 January 2011
Bank overdrafts and loans
Trade and other payables
Tax liabilities
Accruals and deferred income
Bank loans
Deferred tax liabilities
Financial liabilities
At 31 January 2011
on Demand
£000
1 year
£000
2 years
£000
5 years
£000
5 years
£000
–
–
–
–
–
–
–
–
–
1,021
358
463
–
–
–
–
–
–
–
–
–
–
–
6,000
16,000
–
–
–
–
1,842
6,000
16,000
–
–
–
–
–
–
450
450
Total
£000
695
927
549
728
18,000
–
450
21,349
Total
£000
–
1,021
358
463
22,000
–
450
24,292
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21309.04 11/04/12 Proof 2
Notes to the Accounts continued
Year ended 31 January 2012
23. Reconciliation of operating profit to net cash from operating activities
Operating Profit
Finance costs paid
Finance income received
Tax paid
Depreciation on plant, property and equipment
Loss on disposal of plant, property and equipment
(Increase)/decrease in amounts receivable from customers
Decrease in inventories
(Increase)/decrease in trade and other receivables
(Decrease) in trade and other payables
Increase in accruals and deferred income
Increase in cost of future share based payments
Movement in retirement benefit asset/obligations
Net cash from operating activities
Group
2012
£000
12,812
(597)
1
(2,883)
453
28
(2,782)
5
(2)
(71)
776
176
(20)
7,896
Group
2011
£000
10,933
(1,191)
5
(2,679)
423
36
1,718
2
175
(212)
93
62
(18)
9,347
Company
Company
2012
£000
5,755
(205)
384
(359)
294
18
(348)
5
1,469
(94)
265
88
(20)
7,252
2011
£000
4,908
(264)
316
(612)
251
15
2,134
2
729
(351)
181
33
(18)
7,324
24. Financial commitments
Capital commitments
At 31 January 2012 and 31 January 2011, the Group and Company had no capital commitments contracted but not provided for.
Operating lease commitments
At 31 January 2012 and 31 January 2011, the Group and Company had annual commitments under non-cancellable other operating
leases as set out below:
Group
2012
£000
Group
2011
£000
Company
Company
2012
£000
2011
£000
97
216
38
351
1
–
–
1
31
258
14
303
1
–
–
1
83
109
10
202
–
–
–
–
23
151
9
183
–
–
–
–
Land and buildings
Leases which expire:
Within one year
Within two to five years
After five years
Other
Leases which expire:
Within one year
Within two to five years
After five years
44
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2
Our Financials
Notes to the Accounts
25. Contingent liabilities
In respect of the Group, the Directors are not aware of any contingent liabilities. The Company has entered into cross-guarantee
arrangements with respect to the bank overdrafts of certain of its subsidiaries. The maximum exposure under this arrangement at
31 January 2012 was £111,000 (2011: £597,000).
26. Retirement benefit obligations
The Company operates a defined benefit scheme in the UK. The plan is funded by payment of contributions to a separate trustee
administered fund. The pension cost relating to the scheme is assessed in accordance with the advice of a qualified independent actuary
using the attained age method. The last formal valuation was at 31 March 2010. At that valuation it was assumed that future investment
returns would be 4.0%, salary increases for active members would be 3.5% per annum and inflation would be 3.5% per annum. The
valuation results have been updated on the advice of a qualified actuary to take account of the requirements of IAS 19 in order to assess
the liabilities of the scheme as at 31 January 2012. The last actuarial valuation highlighted that the scheme was in surplus on an ongoing
basis with the value of assets being sufficient to cover the actuarial value of accrued liabilities. No contributions are therefore being paid to
the scheme at the present time and the estimated amount of contributions expected to be paid into the scheme during the year to
31 January 2013 is £nil.
Disclosures made in accordance with IAS 19
A full actuarial valuation was carried out at 31 March 2010 and updated to 31 January 2012 by a qualified independent actuary. The
valuation method used was the attained age method. The major assumptions used by the actuary were (in nominal terms):
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Rate of increase in salaries
Rate of increase in pensions in payment
Discount rate
Inflation assumption
The analysis of the scheme assets and the expected rate of return at the balance sheet date were as follows:
At year end
At year end
31 January
31 January
2012
4.0%
2.5%
4.6%
2.5%
2011
4.9%
3.4%
5.6%
3.4%
Equities
Bonds
Cash
Total market value of assets
Expected
rate of
return at
Fair value at
31 January
Expected rate
of return at
Fair value at
31 January
31 January
2012
2012
£000
31 January
2011
7.0%
4.6%
0.5%
769
185
98
1,052
6.9%
5.6%
0.5%
2012
£000
812
197
91
1,100
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The amount included in the balance sheet arising from the Group’s obligations in respect of its defined benefit schemes is as follows:
Fair value of plan assets
Present value of defined benefit obligations
Pension asset
2012
£000
1,052
(1,032)
20
2011
£000
1,100
(1,085)
15
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21309.04 11/04/12 Proof 2
Notes to the Accounts continued
Year ended 31 January 2012
26. Retirement benefit obligations continued
Current service cost
Interest on obligation
Expected return on plan assets
Expense recognised in the income statement
Opening net (asset)
Expense
Contributions paid
Actuarial loss
Closing net (asset)
The expense credit in both years is shown within administrative expenses.
History of experience adjustments
Expected return on plan assets
Actuarial gain/(loss) on plan assets
Actual return on plan assets
Movement in present value of obligation
Present value of obligation at 1 February
Interest cost
Current service cost
Benefits paid
Actuarial (gain)/loss on obligation
2012
£000
67
(76)
(9)
1,085
43
4
(39)
(61)
2011
£000
64
90
154
975
43
3
(44)
108
Present value of obligation at 31 January
1,032
1,085
2012
£000
2011
£000
4
43
(67)
(20)
(15)
(20)
–
15
(20)
2009
£000
79
(234)
(155)
999
53
7
(55)
(210)
794
3
43
(64)
(18)
(15)
(18)
–
18
(15)
2008
£000
78
(49)
29
1,055
52
8
(85)
(31)
999
2010
£000
57
157
214
794
46
3
(53)
185
975
Experience adjustment on scheme liabilities
Actuarial (gain)/loss as percentage of scheme liabilities
Movement in fair value of plan assets
Fair value of plan assets at 1 February
Expected return on plan assets
Contributions
Benefits paid
Actuarial (loss)/gain on plan assets
Fair value of plan assets at 31 January
Experience adjustment on scheme assets
Actuarial (loss)/gain as percentage of scheme assets
6%
10%
19%
26%
3%
1,100
67
–
(39)
(76)
990
64
–
(44)
90
1,052
1,100
829
57
–
(53)
157
990
1,039
1,095
79
–
(55)
(234)
829
78
–
(85)
(49)
1,039
7%
8%
16%
28%
5%
46
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2
Our Financials
Five Year Financial Record
Five Year Financial Record
Revenue
Operating profit
Profit before taxation
Taxation
Profit for the year
Assets employed
Fixed assets
Amounts receivable and other assets
Liabilities
Total equity
2008
£000
45,978
10,876
8,578
(2,613)
5,965
2,233
75,763
77,996
(35,713)
42,283
2009
£000
46,182
10,131
8,263
(2,388)
5,875
1,889
78,171
80,060
(36,278)
43,782
2010
£000
45,795
10,437
9,003
(2,522)
6,481
1,545
78,673
80,218
(33,398)
46,820
2011
£000
48,016
10,933
9,859
(2,816)
7,043
1,446
75,554
77,000
(26,933)
50,067
2012
£000
51,919
12,812
12,216
(3,281)
8,935
1,625
78,124
79,749
(24,887)
54,862
Earnings per Ordinary share
50.8p
50.1p
55.2p
60.0p
76.1p
Dividends declared per Ordinary share
32.0p
32.0p
34.0p
36.0p
41.0p
Key ratios
Return on capital employed
14.8%
13.5%
13.9%
15.1%
17.3%
Group gearing
74.0%
71.6%
56.9%
43.4%
34.3%
Key ratios have been calculated as follows:
“Return on capital employed” is calculated as Operating Profit divided by the sum of Total Equity plus Bank Overdrafts and Loans in Current
Liabilities plus Bank Loans and Financial Liabilities (both as disclosed within Non Current Liabilities).
“Group Gearing” is calculated as the sum of Bank Overdrafts plus Bank Loans less Cash and Cash Equivalents divided by Total Equity.
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21309.04 11/04/12 Proof 2
Financial Calendar
Annual General Meeting
Announcement of results
Half year ending 31 July 2012
Year ending 31 January 2013
24 May 2012
September 2012
March 2013
Payment of dividends
6% Cumulative preference shares
30 September 2012 & 31 March 2013
31.5% Cumulative preference shares
31 July 2012 & 31 January 2013
Ordinary shares — 2011/2012 Final
Ex-dividend Date
Record Date
22 June 2012
30 May 2012
1 June 2012
— 2012/2013 First interim
November 2012
— 2012/2013 Second interim
March 2013
Directions to our AGM
Annual General Meeting, Nuthurst Grange Country House Hotel, 24 May 2012 at 11.30am
From M42
Leave the M42 at junction 4 (signed
Henley-in-Arden and A3400)
Join the A3400 (Stratford Road),
following signs from Hockley Heath and
Henley-in-Arden.
Continue on the A3400 for 2.5 miles until
the junction with Nuthurst Grange Road.
Turn right onto Nuthurst Grange Road.
The entrance to the hotel is on the
left-hand side (see map)
From M40 Southbound
Leave the M40 at junction 16 (signed
Henley-in-Arden and A3400).
Join the A3400 (Stratford Road), following
signs to Hockley Heath.
Turn left onto Nuthurst Grange Road.
The entrance to the hotel is on the
left-hand side (see map)
From M40 Northbound
Follow M40 to its conclusion then
join the M42 towards Birmingham
international Airport.
Leave the M42 at junction 4 (signed
Henley-in-Arden and A3400).
Follow directions above “From M42”.
48
Nuthurst Grange Country House Hotel
Hockley Heath, Warwickshire, B94 5NL
Telephone: 01564 783972
Nuthurst Grange
Country House Hotel
S&U Plc Annual Report and Accounts for the period ended 31 January 2012Stock code: SUSwww.suplc.co.uk21309.04 11/04/12 Proof 2
Locations
ALDERSHOT
BACUP
BARTON
BIRMINGHAM
BRISTOL
CARLISLE
DEESIDE
DISS
EDINBURGH
EXETER
FALMOUTH
GLASGOW
GRIMSBY
HEREFORD
KILMARNOCK
LANARK
LEEDS
LONDON
MILTON KEYNES
NEATH
NEWCASTLE-UPON-TYNE
NOTTINGHAM
PENMAENMAWR
PETERBOROUGH
ROTHERHAM
SHEFFIELD
SOUTHAMPTON
STOKE-ON-TRENT
STOCKTON
SWINDON
ULVERSTON
WARRINGTON
WEST BROMWICH
4
21309.04 11/04/12 Proof 2 Royal House, Prince’s Gate, Homer Road,
Solihull, West Midlands, B91 3QQ
T: 0121 705 7777 F: 0121 705 7878
Registered in England No. 342025
www.suplc.co.uk
1
21309.04 11/04/12 Proof 2