Measured
Momentum
Annual Report and Accounts
for the Year ended 31 January 2023
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Welcome
Our values
Founded in 1938, S&U’s mission
is to provide Britain’s foremost
motor, property bridging and
specialist finance service.
Since 1999 our Advantage motor
subsidiary has provided finance
for over 250,000 customers.
In just six years, Aspen our new
property bridging business
has transacted over £350m in
secured loans.
S&U Mission Statement
In the complex, and ever changing, world of
financial services, over the past eighty years S&U’s
customers have relied on the company for one
quality above all - TRUST. Trust is the golden seam
which runs through everything we do.
In practice it means:
T
EAMWORK
In any business the guardians of integrity are its
people, and their common pursuit of the highest
standards.
R
ESPECT
Loving your neighbour is not simply at the core
of Christian values, but transcends our behaviour
towards everyone whatever their race, gender,
religion or personality.
U
NDERSTANDING
Valuing every customer must be grounded in a
clear understanding of their needs, wishes and
circumstances; this guides the service we offer
them.
S
ERVICE
This is both the product and the proof of our
understanding and respect for our customers, each
other and our neighbours.
T
RUTH
Honesty, integrity and transparency are the best
guarantees of the way we treat all with whom we
do business. If people trust S&U they will have
confidence in the services we provide. The good
business which results is our justified reward.
Making the customer
the heart of our business.
Respect for every
customer and always
treating customers fairly.
Conservative approach to
underwriting and collections
to enable sustainable growth.
Our businesses
Motor Finance
Hire purchase motor
finance for over 250,000
customers since 1999.
Property Bridging
Finance
Launched in early 2017
and growing steadily after
successful pilot phase.
S&U Plc Annual Report and Accounts 2023 Financial highlights
Contents
Revenue (£m)
2019
2020
79.8
83.0
2021
89.9
2022
87.9
2023
102.7
Average for 2 pandemic years
Basic EPS (p)
2019
233.2
2020
239.6
2021
120.7
2022
312.8
2023
277.5
Average for 2 pandemic years
Profit before tax (£m)
2019
34.6
2020
35.1
2021
18.1
2022
47.0
2023
41.4
Average for 2 pandemic years
Dividend Declared (p)
2019
118.0
2020
120.0
2021
90.0
2022
126.0
2023
133.0
Average for 2 pandemic years
216.8
32.6
88.9
108.0
Find us online at
www.suplc.co.uk
Strategic Report
Group at a Glance
A1 Chairman’s Statement
A2 Strategic Report and Section 172
Statement
A2.1 Strategic Review
A2.2 Business Review
A2.3 Funding Review
A2.4 Principal Risks and Uncertainties
A3 Statements of Viability and
Going Concern
A4 Corporate Social Responsibility
A4.1 Employees
A4.2 Community
A4.3 Health and Safety and Diversity
Policy
A4.4 Climate Change
A5 Section 172 Statement
A6 Approval of Strategic Report
Corporate Governance
B1 Board of Directors
B2 Directors’ Remuneration Report
B2.1 Report of the Board to the
Shareholders on
Remuneration Policy
B2.2 Annual Remuneration Report
B3 Governance
B3.1 Audit Committee Report
B3.2 Corporate Governance
B3.3 Compliance Statement
B4 Directors’ Report
B5 Directors’ Responsibilities Statement
C
Independent Auditor’s Report to the
Members of S&U plc
The Accounts
D1 The Accounts
D1.1 Group Income Statement
and Statement of
Comprehensive Income
D1.2 Balance Sheet
D1.3 Statement of Changes
in Equity
D1.4 Cash Flow Statement
D2 Notes to the Accounts
Five Year Financial Record
Other Information
Financial Calendar
Officers and Professional Advisers
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www.suplc.co.uk ― Stock Code: SUSStrategic Report
Strategic Report
In this section
Group at a Glance
A1
A2
Chairman’s Statement
Strategic Report and Section
172 Statement
A2.1 Strategic Review
A2.2 Business Review
A2.3 Funding Review
A2.4 Principal Risks and
Uncertainties
Statements of Viability and
Going Concern
Corporate Social Responsibility
A4.1 Employees
A4.2 Community
A4.3 Health and Safety and
Diversity Policy
A4.4 Climate Change
Section 172 Statement
Approval of Strategic Report
A3
A4
A5
A6
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S&U Plc Annual Report and Accounts 2023
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www.suplc.co.uk ― Stock Code: SUS
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Strategic Report
Group at a glance
Founded in 1938, S&U’s mission is to provide Britain’s foremost
motor, property bridging and specialist finance service. We
now have over 65,000 customers and over 200 loyal and
valued staff and plans for continued sustainable growth.
Motor Finance
Property Bridging Finance
Advantage Finance has grown into one of the most
progressive and innovative motor finance companies
in the country. As active members of the Finance and
Leasing Association (FLA), and with representation on the
FLA Board, deputy chair of the Motor Finance Division,
and chair of the Credit Risk Committee, we punch above
our weight in terms of shaping our industry.
Based in Grimsby, Advantage employs over 200 people,
and working closely with most of the UK’s motor finance
Brokers, we have provided hire purchase finance for
over 250,000 customers across our great country. We
operate within the non-prime sector and have built an
outstanding reputation and track record in terms of
service to our business partners and customers alike.
Funding is invested wisely through a hugely experienced
and skilled management team, the majority of whom
have been with the company since its inception
23 years ago.
The response to firstly the Covid-19 pandemic and
subsequently the Cost of Living crisis by Advantage
has been remarkable. Advantage has thrived as
we have focussed on modernising our business,
mitigating our market risk, and developing our
systems, processes and market appeal. We firmly
believe that despite the enormous successes of
Advantage’s past, that the true success story for
Advantage is in its future. We are stronger now than
we have ever been, and are well placed to seize
opportunities to continue the success story of our
business.”
Graham Wheeler
Chief Executive
Aspen Bridging is now entering its 7th year in the property
bridging finance market having successfully established a
strong reputation for service excellence in the delivery of
quality lending products. Aspen has developed an appealing
range of bridging loan products that has a good reach
across the market for residential and commercial property
as well as sectors such as refinancing, capital raising and
refurbishment loans. Aspen can lend up to £10m per deal
with an average loan size of circa £900,000. Aspen has
continued to strengthen broker relationships, appealing to
them as a one-stop shop for their customer bridging loan
needs and positioning ourselves as a key lender to turn
to in the bridging market. As members of the ASTL and
FIBA along with promoting our lending propositions at key
industry events, Aspen has won its third industry award
at the Bridging and Commercial awards with a product of
the year. Aspen has continued to develop the team of 23
with highly skilled and experienced staff. During the year,
Aspen has successfully expanded the customer acquisition
channels via new broker networks, added to the dedicated
broker development team and returned, post the pandemic,
to the key industry forums and financial showcasing
events supporting continued expansion of the business.
Aspen continues on its journey towards being a significant
contributor to the future of the Group.
2022 has seen Aspen go from strength to strength with
our customer and broker relationships. In evolving
and testing new niche products we are reaching a
wider borrower audience and strengthening our
customer and broker relationships. We continue to
focus on delivering a fast, consistent and reliable
service for both new and returning customers which
is a great testament to the team. We will remain
vigilant as always, tuned in to where the bridging
and wider market is in 2023 but take quality lending
opportunities when they are there. With the talent
that we have in the Aspen team, the right product
appeal in the market and a focused determination to
succeed we believe that Aspen will continue to build a
successful bridging lending business.’’
Ed Ahrens
Managing Director
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S&U Plc Annual Report and Accounts 2023 A1 Chairman’s Statement
I am confident that our focus, our expertise and our
experienced team will enable us to take advantage of
the emerging opportunities that this year will bring.”
Anthony Coombs
Chairman
years. Staff numbers continue to grow;
we are proud to have Gold Investor in
People status at Advantage Finance, have
become a Real Living Wage employer and
have taken steps to ameliorate current
cost of living pressures on our staff.
Service to our customers is reflected
both in their number – a record 65,200 -
and in the longstanding relationships we
enjoy with them.
Financial Highlights**
Profit before tax (“PBT”):
Revenue:
Earnings per share (“EPS”)
Group net assets:
Group gearing:
Group total collections:
Dividend proposed:
£41.4m
£102.7m
277.5p
(2022: £47.0m*)
(2022: £87.9m)
(2022: 312.8p*)
£224.9m (2022: £206.7m)
(2022: 54.9%)
£311.9m (2022: £294.3m)
(2022: 126p)
85.5%
133p per ordinary share
* The profit for 2021/2022 was enhanced by a lower than normal loan loss provision charge which reflected
the lower use of impairment provisions made in the previous Covid-affected financial year. The average
annual profit before tax in the two pandemic years to 31 January 2022 was £32.6m and earnings per share
averaged 216.8p.
** key alternative performance measurement definitions are given in note 1.13 below.
The results we are reporting are all the
more creditable given the UK’s current
economic performance and its still
gloomy, although possibly brightening,
economic outlook. UK GDP continues
to teeter on recession. There was no
growth in the fourth quarter of 2022
and, almost uniquely in Europe, the
UK economy is still smaller than it was
before the Covid pandemic. As has
been evident over the past 12 years,
productivity is feeble in the UK and is
unlikely to increase substantially since
the current government lacks a clear
and robust growth strategy. Recent
governments have vacillated between
the fiscal incontinence of last year and
the hair shirt philosophy of the current
administration. None have espoused
the regulatory, public sector and tax
simplification reforms so essential for
rebooting the economy.
Nevertheless, despite all this, S&U has
recently seen very strong demand for
its products particularly at Advantage.
Indeed, UK economic prospects may be
brightening as, although from historically
low levels, consumer confidence is
improving. Some commentators have
reduced their forecast for inflation from
18% in 2022 to just 2.8% by November.
Public finances have recently seen a
£30 billion improvement whilst the
government surplus in January alone
was £5 billion. More pragmatic voices
on the Bank of England monetary policy
committee are arguing that the declining
energy price shock and the lag effects
of recent interest rate rises might mean
current monetary policy could be more
effective in bringing down inflation
than expected.
05
£41.4m
Profit before tax (“PBT”)
(2022: £47.0m)
£102.7m
Revenue
(2022: £87.9m)
I am very pleased to report that my
optimism of last year and my then “quiet
but determined confidence” in S&U’s
future has been vindicated by this year’s
excellent results. Despite the maelstrom
of a European war, political upheaval in
Britain and rising inflation, taxation and
interest rates, S&U has produced profit
before tax of £41.4m, fully 27% up on the
average of the last two pandemic years,
and the highest ‘normalised’ profit in its
over eighty-year history.
Revenue for the year was £102.7m
(2022: £87.9m) and group equity has
grown by 9% to a record £224.9m. At
31 January 2023, group total assets
reached £428m for the first time, up
by just over £100m in the year and by
nearly 40% on pre-pandemic levels. As
I predicted a year ago, S&U is indeed
“primed for a new era of profitable
growth”.
Although conscious of its wider societal
obligations, S&U’s primary obligations
are to our shareholders, our staff and
our customers. For shareholders, this
is reflected this year in basic earnings
per share this year of 277.5p, which is
22% up on the average of the past four
www.suplc.co.uk ― Stock Code: SUSStrategic Report A1 Chairman’s Statement
CONTINUED
This optimism is evident in the sectors
in which S&U operates. Despite low
consumer confidence generally, and
although still constrained by supply, the
used car market remains robust. Whilst
prices rose year on year by 11% to
mid-2022, as supply increased this rise
is now around 3% per annum. Indeed
the average price of a used car has risen
from £9,000 in 2011 to £17,600 in 2022.
Whilst not overstating current consumer
confidence, customers are reacting to
cost of living pressures pragmatically and
in ways which favour the products
S&U offers.
Thus, whilst in 2012 just 23% of used
car sales were on finance, this is now
45% (Autotrader). The number of people
searching for online finance is up 28%
on pre-pandemic levels. Although
transactions in 2022 have not yet
reached pre-Covid levels, the market
remains buoyant. This is most graphically
illustrated at Advantage where loan
applications have reached over 2.5m for
the first time this year.
These trends have enabled Advantage to
attract high-quality customers and larger
average loan sizes (£7,800 now against
£6,400 three years ago). Moreover, as
was seen in 2007–2009 in the “Great
Financial Crisis”, near prime customers
are being rationed and restricted
by “mainstream” finance providers,
enabling Advantage to attract them at
sensible rates of return.
The housing market upon which Aspen
depends both for transaction volumes
and loan security, continues to be
stronger than anticipated, despite rising
borrowing costs and the upheaval in the
money markets of last autumn. Whilst
house prices have fallen slightly over
the past six months this appears now to
be stabilising. Indeed ONS statistics for
December show annual price growth still
10% against a peak of 12% earlier in the
year. Even allowing for an average 5%
price deflation predicted for 2023, this
would imply a cumulative increase over
two years of just under 5% which further
underpins Aspen’s conservatively written
collateral. This conservatism gives S&U
the confidence to continue to invest in
Aspen’s new receivables book.
In sum, the relative buoyancy of the
markets which S&U serves, coupled
with careful, experienced and watchful
underwriting has allowed us to continue
to build our customer base and
The relative buoyancy of the markets
which S&U serves, coupled with
careful, experienced and watchful
underwriting has allowed us to
continue to build our customer base
and receivables books.”
Anthony Coombs
Chairman
06
receivables books. This has been done
in a responsible and sustainable way,
storing up future profits whilst guarding
against any further economic downturn
in an uncertain world.
Advantage Finance
(“Advantage”)
Advantage Finance, our motor finance
business proudly based in Grimsby, has
again produced near record results. Profit
before tax is at £37.2m which is not only
22% above the last two years’ Covid
average, but is the highest ‘normalised’
profit ever. Advantage’s future prospects
are grounded in a record number of new
transactions in the year at just under
24,000; net receivables have therefore
now reached over £300m for the first
time. Advantage now serves a record
65,200 customers.
Prudence and commercial logic both
dictate that Advantage use the very
significant demand for its products
to focus on excellent customers who,
buttressed by careful underwriting, good
payment headroom and responsive
customer relations, will ensure good
repayments even in more uncertain
times. Hence this year, particularly in the
second half, has seen the introduction
of slightly larger, longer term and
competitively priced loans which have
attracted near prime customers new to
Advantage, which we anticipate will have
benefits for Advantage’s already enviable
book quality.
Quality was also boosted by Advantage’s
habitually conservative Credit Committee
and its underwriting. The business has
sensibly adjusted its affordability buffers
throughout the year in line with the
rising cost of living, as well as its interest
margins to account for rising operating
and finance costs.
Nevertheless, attracting good customers
in ever larger numbers is not simply
a matter of price. It also depends on
accurately targeted marketing. Here the
Advantage team has been substantially
strengthened by new advisors, by
in-house recruitment and by a
rebranding project which, directly and
digitally, will improve every aspect of
Advantage’s communication with existing
and new customers.
S&U Plc Annual Report and Accounts 2023 £102.7m
Group Revenue
(2022: £87.9m)
£224.9m
Group Net Assets
(2022: £206.7)
financial difficulty. Advantage is proud
of its near 25-year history of customer
service and has responded by certifying
a development plan and by embarking
upon a 41 point action list, which will
also be monitored by S&U’s internal
auditors and by its Audit Committee.
Although some may argue that the
new Consumer Duty attempts to lay on
lenders’ responsibilities for future events
inevitably beyond their control, and
which, to an extent, replicates existing
statutory duties of care to customers,
S&U endorses the Duty for ethical and
competitive reasons. Undoubtedly, those
financial firms which best communicate
their methods and products to their
customers will gain their trust, their
loyalty and their commitment – all values
intrinsic to S&U‘s Mission Statement. As I
have consistently pointed out, ultimately
good business is always good business.
As a consequence, Advantage has
always maintained regular and cordial
relations with the FCA. This year this
is particularly focused on making
sure that assessments of both credit
worthiness and affordability are robust
in an inflationary climate. Advantage
anticipated these trends by regular
reviews of its underwriting throughout
the year. Indeed, it is this monitoring
and maintaining of the subtle balance
between prudent underwriting and
competitively pricing products which has
been the bedrock of Advantage’s success
over the past 25 years.
This is also why Advantage sees the
Consumer Duty giving a significant
competitive advantage to businesses
which maintain the very high standards
of which they have been so rightly proud
over the past 25 years.
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IT improvements are reinforcing this.
Voice analytics, specialist vehicle
valuations, a new direct customer
repayment portal, an improved website
and a smoother e-signature onboarding
process, are just some of the initiatives
the ever restless and perfectionist
Advantage teams are working on.
Of course, the ultimate arbiter of well-
designed products and responsible credit
policies is the quality of collections and
customer satisfaction. On these two
metrics Advantage scores very highly. In
collections Advantage had an excellent
year producing live repayments at
a record £161.8m (2022: £152.7m).
Advantage’s collections as a percentage
of due reached 93.6% which beat both
budget and last year.
Moreover, on record net receivables of
nearly £307m, bad debts and voluntary
terminations were actually significantly
under budget.
On customer satisfaction, Advantage’s
ratings on Trust Pilot reached a record
4.7 out of 5.
Both these achievements are testament
to responsible underwriting, and more
particularly to Advantage’s understanding
and fair treatment of its customers and
its embracing of its duty of care to its
customers, well before it is mandated
to do so later this year by the Financial
Conduct Authority.
Whilst enjoying close links with our
Regulators, both directly and through the
Finance and Leasing Association where
Advantage’s CEO, Graham Wheeler,
plays a prominent role, Advantage does
operate in a highly – and increasingly –
regulated industry. The formal Consumer
Duty introduced later this year for all
financial services companies focuses on
actual, rather than anticipated, customer
outcomes, particularly for borrowers in
www.suplc.co.uk ― Stock Code: SUSStrategic Report A1 Chairman’s Statement
CONTINUED
expected to insulate the business against
wider market fluctuations. Over the past
year Aspen has prudently increased its
interest rates, tightened further already
conservative valuations and reduced
LTVs. In mid-year the average gross LTV
for new business was 74%; it is now 66%.
This conservative approach is
also reflected in Aspen’s loan loss
provisioning charges which increased to
£1.0m this year (2022: £0.3m), although
the business only incurred one actual
loss during the year of £80,000. Each
loan underwritten in Aspen involves
secondary independent assessment and
a rigorous valuation exercise including
a physical inspection of the property by
Aspen staff – something which is rare in
the industry.
A strong loan book also depends upon
providing products which are tailored to
individual customers. Aspen is able to
provide a bespoke service to borrowers
as well as being fleet of foot in the
service it offers. Quarterly reviews of
staff productivity are held and new
products considered. For instance, this
year saw Aspen’s Bridge to Let product
win new product of the year at the
Bridging and Commercial awards. It
went on to comprise £22.8m of Aspen’s
£134m advances this year.
Aspen runs a tight ship but a growing
business requires more and properly
trained staff. Remuneration costs
therefore rose this year by 26%
compared to a 44% rise in revenue.
Staff numbers are now 21 against 18
a year ago. All new staff members are
expected to undertake CPD training and
several have now obtained RICS and
legal qualifications. Fortunately, the local
universities, particularly Aston University,
Birmingham, provide a regular supply of
highly talented and motivated individuals
from a diverse local community.
Aspen’s small team is characterised
by hard work, growing experience and
imagination and these qualities together
with a strong track record provide the
background for S&U’s investment of a
further £50m in the business this year. I
am confident that this will be reflected in
continually improving returns for
the Group.
In sum, a winning combination of a
healthy market, intelligent underwriting,
efficient processes and empathetic
customer relations have been rewarded
at Advantage by very good financial
results. They are outlined in the business
review within my strategic report below.
Finally, the credit for this outstanding
performance must go to all those who
work so hard and conscientiously at
Advantage. Whilst adapting to hybrid
working, many have inevitably faced
personal and financial challenges and
I pay tribute to them all. Particular
mention must go to a dynamic and
enthusiastic board of directors, brilliantly
led by Graham Wheeler whose talents
are recognised both at Advantage and
throughout the motor finance industry.
It is in the commitment and energy of
them all, that I place my confidence in
Advantage’s exciting and enduring future.
Aspen Bridging
Aspen, our property bridging finance
business based now in expanded
office space in Solihull, has produced
a sparkling set of results. Profit before
tax is up no less than 31% to £4.46m,
a record, and net receivables have
increased by £50m to £113.9m. Whilst
transaction numbers rose by a more
modest 10% this was the result of
a deliberate move towards larger,
higher quality loans with experienced
borrowers. Thus, the average loan size
rose by 11% and average blended yields
were above budget.
The housing market against which
95% of Aspen’s collateral is secured,
is undoubtedly slowing both due to
Base Rate increases from 0.25% to
4% in the year, and also to wider cost
of living pressures. Whilst the recent
Bank of England Mortgage and Lending
Report reveals more households than
ever in Britain having significant equity
in their properties, house prices are
expected to fall an average 5% this
year, whilst transaction numbers may
reduce further. However, Aspen has
repositioned towards higher quality, less
mortgage-dependent borrowers and
towards higher value properties. This is
08
S&U Plc Annual Report and Accounts 2023 Dividends
Whilst acknowledging our responsibilities
to wider stakeholders, S&U has always
felt a primary responsibility to its
shareholders. We fulfil this by regular
engagement, and by distributing the
rewards of the company success with
them; this implies our normal practice
of a 50% distribution of post-tax profits
in dividends. This year the vacillations of
our government over future corporation
tax rates have clouded these decisions.
Therefore, in the light of an EPS of
277.5p per share the board proposes
to recommend, subject to the approval
of our shareholders at our AGM on the
25 May 2023, a final dividend of 60p
(2022: 57p) per Ordinary Share. This final
dividend will be paid on 7 July 2023 to
shareholders on the register on 16 June
2023. This will mean that total dividends
this year will be 133p per share
(2022: 126p).
Funding and Treasury
A successful and growing business
requires significant investment.
Over the past year excellent lending
opportunities amongst good quality
customers have augmented Advantage’s
and Aspen’s natural growth: S&U has
therefore invested just under £79m in
net borrowings to finance a receivables
book which has grown by £98m. Net
group borrowings therefore now stand
at £192m. Group medium-term facilities
were increased in the autumn from
£180m to £210m and, as previously usual,
more will be arranged as the business
develops. A rapidly increased Bank Rate
has been budgeted for, not only in our
usual budgets but in our longer-term
projections. Current signs hint that such a
view might happily prove conservative.
Nevertheless S&U plans to maintain a
prudent Treasury policy. Gearing still
stands at 86% (2022:55%), well within
covenanted levels. The experience and
expertise of Chris Redford, our Group
Finance Director, and the finance teams
at Advantage and Aspen will ensure that
this remains so.
Governance and Regulation
I will not repeat my concerns of a year
ago on the importance of financial
regulation being proportionate, clear and
not inhibiting a vigorous and competitive
free enterprise system. By harnessing
the basic instincts of communities and
individuals to improve themselves and
their families, it is this free enterprise
system – not one based on state
control and intervention – which has
transformed living standards over the
entire period of S&U’s existence.
But today too often this is taken for
granted. New regulations, Codes of
Practice and “guidance” are never
ceasing. Moreover, the government
spends at least half of the country’s
resources. Taxation is at its highest level
since 1946. Such is the suspicion of the
profit motive that detailed regulation of
every customer transaction is deemed
essential both ab initio and throughout
the customer relationship.
Tragically, the gyrations and misfortunes
of the current government have done
nothing to reverse these trends. There
are three serious consequences. First
it destroys incentives - not just for the
wealthy but for the aspirational and
much maligned middle-class who find
themselves paying higher rates of tax on
the same real income.
Second, regulation can inhibit innovation.
The financial services industry,
Advantage included, needs to be careful
that this year’s mandated focus on the
new Consumer Duty regime does not
lead to postponement of new products
and innovation which would have also
benefited customers.
Third, intervention and regulation
enfeeble the economy and restricts
economic growth. Last year a further
£74bn was “invested” in the ever-
growing public sector where productivity
is both significantly less than in the
private sector, and may even in some
areas be negative. Public sector output is
still 7.4% below pre-pandemic levels. This
is a significant cause of Britain’s decades-
long decline in productivity.
On a day to day level however, S&U
and Advantage in particular continue
to enjoy positive relations with their
regulators. Advantage’s preparations for
the Consumer Duty are well advanced,
as is its Development Plan. Meanwhile,
Advantage’s industry body, the Finance
and Leasing Association upon which two
of our executives sit, continues to lobby
for a more consistent and coordinated
legislative and regulatory regime.
More broadly, S&U continues to engage
closely with the Environmental, Social
and Governance (ESG) agenda which
arguably encapsulates much of the
suspicion of free enterprise to which I
referred earlier. However, S&U is formally
adopting policies which both common
sense and our company values require of
any good citizen. These, as the relevant
sections of our strategy report show, will
concentrate in particular on targets to
minimise or mitigate our CO2 emissions.
Of course, good citizenship involves more
than just ‘green issues’. S&U has a vibrant
community and charity programme
through the KC Trust which over its 10-
year history has contributed nearly am
pounds to smaller charities, which are
reliant on their own voluntary fundraising
and mainly work with children and young
adults with both physical and learning
disabilities. Above all, we give where it
will really make a difference.
Finally, it gives me great pleasure to
welcome Ed Ahrens, managing director
of Aspen Bridging, to the S&U board. Ed
has a wealth of experience in the banking
and credit card sectors, joined us in
2015 and has since been instrumental in
creating and leading the team which is
making Aspen Bridging such a success. His
appointment is just reward for his wise
and energetic contribution to the Group.
Current Trading and Outlook
“In a world still full of uncertainty,
change and cloying pessimism, clarity
of purpose and vision is more crucial
than ever. A former Chairman of Jaguar
Motors put it succinctly: “the absolute
fundamental aim is to make money out
of satisfying customers”. Current trading
is good and I am confident that our
focus, our expertise and our experienced
team will enable us to take advantage of
the emerging opportunities that this year
will bring.”
Anthony Coombs
Chairman
6 April 2023
09
www.suplc.co.uk ― Stock Code: SUSStrategic Report A2 Strategic Report
OVERVIEW
The directors are required to publish a
Section 172(i) statement showing how
they have fulfilled their duties under the
Companies Act 2006.
How S&U’s directors do this is set out
below in our Strategic and Business
Review (A2), our Corporate Social
Responsibility Review (A4), our
Chairman’s Statement (A1) and our
Governance Section (B3). The Board has
reviewed these documents, how they
describe the company’s decision-making
processes and the issues which most
inform S&U’s business strategy. Specific
examples of how the process works have
been provided. As a result, the Directors
are confident firstly, that the report fully
covers areas of relevant disclosure such
as on Strategy, Employees, Stakeholders,
Suppliers, Customers, Community and
Ethics and secondly, that the extent of
these disclosures is consistent with the
size and complexity of the business.
A2.1 Strategic Review
S&U’s purpose and vision is to maximise
profit and returns to its shareholders in
a sustainable and responsible way. This
provides security for our employees,
fairness for our customers, credibility
for our financial and other partners and,
ultimately, the ability to enhance the
communities and environment in which
we live, and therefore fulfil our ESG
responsibilities. S&U have set up an ESG
committee under my chairmanship to
progress these important matters.
S&U operates in two areas of specialist
finance. The first and most established
is Advantage Finance, based in Grimsby
and engaged for the past two decades
in the non-prime sector of the motor
finance business. During those 23 years
the remarkable success of Advantage
in producing competitive finance
products, lent responsibly with excellent
customer service has been reflected,
in a near perfect (two covid years
apart) record of consistently increased
annual profits. This long experience has
enabled Advantage to gain a significant
understanding of the kind of simple hire
purchase motor finance suitable for
customers in lower and middle-income
groups. Although decent, hardworking
and well intentioned, some of these
customers may have impaired credit
records, which have seen them in the
past unable to access rigid and inflexible
“mainstream” finance products.
Advantage provides transparency,
simplicity, clarity and suitability to
both service and product, which these
customers require.
As a result, Advantage currently now
receives over 2m unique applications
a year and has written over 230,000
customer loans since starting trading
in 1999. The loans have an average
original term of just under 5 years. This
year the Financial Conduct Authority
produces one of the biggest overhauls of
its regulatory approach to the financial
services industry for many years. In
addition to the now aged Consumer
Credit Act, a raft of secondary legislation
and regulatory controls over the past 20
years have now all been encapsulated in
the new Consumer Duty regime.
This “paradigm shift” represents a major
part of the FCA’s 2022 – 2025 strategy
and extends the principle of consumer
protection from their initial treatment,
including underwriting, communication
and product design, to a wider
concern with “good outcomes for retail
customers”. At present these outcomes
are inevitably undefined and, given the
longevity of some finance agreements,
will be difficult to both interpret and
monitor in the future.
However, Advantage will responsibly
embrace the new Consumer Duty.
First, because it is right to do so and
second, since it will give well organised
companies like Advantage a commercial
advantage over those who are not.
The success of Advantage, our motor
financier, depends as ever upon three
fundamental strengths. First, is the
enduring reliability of the UK motor
market. Enduring does not mean
unchanging, since 2022 actually saw
used car sales fall in the UK by 13%
compared to 2021, the year the market
was bouncing back from Covid.
New car registrations in early 2022 also
restricted the used cars available for
sale. However, the market seems to be
rebounding. Used car sales so far in 2023
have increased by 8% on last year with
prices rising by 2.7% year on year so far.
Longer term, recent Auto Trader figures
recorded consumer demand for the
independence and flexibility of car
ownership unhindered by a perceived
decline in the quality of public transport,
as being the strongest for 4 years.
10
S&U Plc Annual Report and Accounts 2023 Nevertheless the used car market is not
homogeneous, The Government set
ambitious targets for a ban on the sale of
new internal combustion engine cars by
2030, to be replaced by electric vehicles
and hybrids. Although Advantage agrees
that the proportion of electric vehicles
in the UK “car parc” is expected to reach
30% by 2030, electric vehicle sales have
recently been weaker than expected.
Whilst supply has grown, used EV prices
have fallen for 5 consecutive months
as demand, concerned at the paucity
and efficiency of public charging points,
has slowed. For these reasons and for
reasons of affordability, electric vehicles
do not currently fit well with their
customer demographic, although this will
change as the used EV market evolves.
Advantage’s second strength is its
experienced, sensitive and sophisticated
under-writing. Backed by ever more
customer historical information;
Advantage uses this forensically to
analyse the likely circumstances of actual
and potential customers. This year it
has added a third Credit Reference
Agency and obtained even more granular
household information which it will be
using to improve its already sophisticated
customer affordability process.
Advantage’s third great strength is
to recognise that supplying the right
product to reach the customer at the
right time is just part of its service. It
also collects its payments responsibly.
Advantage has always regarded its
relationship with its customers as a
partnership. This involves understanding
the more sensitive and frequently
changing circumstances of those in
the non-prime sector. Whilst the UK
labour market remains strong, rising
cost of living pressures mean that well
intentioned customers occasionally
require knowledgeable assistance,
particularly should their financial buffers
reduce. Collectors at Advantage produce
excellent results by being trained
and empathetic to the needs of their
customers. Collecting and default figures
demonstrate this and underpin our
responsibility under Consumer Duty and
are integral to Advantage’s commercial
success.
Whilst lending is on a fully secured
basis, debt quality at Aspen, our
property bridging lender also relies
on the experience and reliability
of the borrower as much as on the
value of the property being financed.
Notwithstanding this, under pressure
from the cost of living and rising interest
rates the housing market in the UK has
undoubtedly slowed over the past year. A
Midland Estate Agent recently reported
that whilst in the summer of 2022 it took
12 weeks for the average house sale, that
figure is now nearer 50. National house
prices have fallen over the past 5 months
and the consensus for 2023 is a fall of
5%.
Aspen values its security properties very
conservatively and keeps gross LTV’s to
an average 70% and the business now
only considers experienced borrowers
from the top three quality bands. Such
caution is justified. Refinances are slower
and mortgage lenders are more risk
adverse; these make borrower exits more
A2.2 Business Review
Operating Results
drawn out. Aspen has therefore sensibly
allowed for slightly more subdued
lending levels for the first few months of
the year as the market stabilised.
“Mainstream” banks, including the
newer “challengers”, continue to lack the
speed, flexibility and appetite to furnish
the smaller, short-term loans in which
Aspen specialises. Recent consolidation
and instability in the challenger banking
sector is evidence of this and again
shows that, technology, speed and a
quality bespoke service – as well as price
– are what give smaller entrants like
Aspen their competitive edge.
An over-arching factor in the success of
our business over 80 years and through
three family generations of management
is our business philosophy. The identity
of interest between management and
shareholders has fused our ambition for
growth with a conservative approach to
both credit quality and funding.
Revenue
Cost of Sales – Impairment
Cost of Sales – Other
Gross Profit
Administrative Expenses
Operating Profit
Finance Costs (Net)
Profit before Taxation
Taxation (note 10 in the accounts)
Profit after Taxation
Year ended
31 January
2023
£m
Year ended
31 January
2022
£m
102.7
(13.9)
(23.6)
65.2
(16.3)
48.9
(7.5)
41.4
(7.7)
33.7
87.9
(4.1)
(18.8)
65.0
(14.2)
50.8
(3.8)
47.0
(9.0)
38.0
Please note the businesses use financial
and other key performance indicators
such as new deal volumes and other
alternative performance measures set
out in A2.1 and A2.2 within this Strategic
Report – definitions for the alternative
performance measures are given in note
1.13 to the financial statements.
Advantage Motor Finance
• PBT £37.2m (2022: £43.7m and 2021:
£17.2m).
• New transactions increased to 23,922
(2022: 19,747) at £7,799 average
advance (2022: £7,138)
• Revenue up 14% to £89.8m (2022:
£78.9m)
11
www.suplc.co.uk ― Stock Code: SUSStrategic Report
A2 Strategic Report
CONTINUED
• Impairment at £12.9m (2022: £3.8m
and 2021: £36.0m) continued good
quality after increase and decrease of
two pandemic years
• Administrative expenses increased by
17% including increased variable and
fixed rewards for staff facing cost of
living increases
• Net receivables at yearend up 18% to
£306.8m (2022: £259.0m)
• ROCE at 15.7% (2022: 19.4% and 2021:
8.6%) (note 1.13)
Amidst the travails of UK economic
performance, Advantage again proved
the resilience of its business model
and the quality of its loan book and
customer relations by achieving a profit
before tax of £37.2m up 22% on the
average result for the two previous
years. Receivables grew strongly during
the year as the business continued
to attract high quality customers and
larger average loan sizes. Collections
continued to perform well and bad debts
and voluntary terminations were fewer
than anticipated leading to impairment
charges for the year which were also
lower than anticipated.
Alongside this excellent trading
performance, Advantage have prepared
thoroughly for the formal consumer
duty to be introduced later this year and
have made suitable changes to their
affordability buffers in line with the rising
cost of living. The business has continued
to improve its IT capabilities and has
improved its marketing which has been
bolstered by new advisers, in house
recruitment and rebranding to improve
our communication with existing and
new customers.
Aspen Property Bridging
Finance
• PBT at £4.5m (2022: £3.4m)
• 148 new transactions (2022: 135) at
£905k average gross advance (2022:
£812k)
• Revenue up 44% to £12.9m (2022:
£9.0m)
• Tightened valuations and reduced loan
to values anticipating forecast 5% house
price fall in 2023
• Net receivables at yearend up to
£113.9m (2022: £63.9m).
• Book quality good and only one actual
loss of £80,000 during year
Aspen’s sparkling set of results
benefitted from Aspen’s deliberate move
towards larger, higher quality loans with
experienced borrowers. Aspen continued
to develop their broker network and
their products during the year and were
pleased that their Bridge to let product
won new product of the year at the
Bridging and Commercial Awards.
Aspen further widened its range of
increasingly supportive and loyal brokers,
further tightened its valuation and
underwriting processes and still insists
that every property upon which Aspen
lends for security is personally visited by
a member of the team.
Aspen has also accommodated its
growing workforce by expanding into
custom designed offices next to S&U’s
Head Quarters in Solihull.
A2.3 Funding and Balance
Sheet Review
S&U has a strong balance sheet which
has facilitated the group total assets
growing during the year from £327.2m to
£428.2m to take advantage of excellent
lending opportunities. As a result,
gearing increased from 55% to 86%
which is still low for a financial services
group. S&U net group borrowings are
£192m within S&U’s medium-term
facilities in place of £210m with its
excellent, loyal and constructive banking
partners. These were augmented by
£30m in Autumn 2022. It is anticipated
that as growth trends become clearer,
in what is still a very uncertain macro-
economic climate, then these facilities
will be further augmented.
A2.4 Principal Risks and
Uncertainties
Whilst Corporate Governance guidelines,
and the loan loss provisioning insisted
upon by International Financial Reporting
Standards require macro-economic
forecasts, both Covid, the recovery
from it, current inflationary trends
and a continuing war in Europe make
this a virtually impossible task. For
instance, last year the Office for Budget
Responsibility expected the British
economy to grow by over 7% in 2022; in
fact growth only reached 4% that year.
For 2023 the consensus is that Britain
teeters on recession with GDP growth
for the year predicted at less than 0.5%.
Against such an uncertain background,
S&U has maintained its historically
cautious attitude in its three-year
forecasts.
A2.4.1 Consumer and Economic risks
The Group is involved in the provision of
consumer credit and it is considered that
the key material risk to which the Group
is exposed is the credit risk inherent in
amounts receivable from customers.
This risk is principally controlled through
our credit control policies supported
by ongoing reviews for impairment.
The value of amounts receivable from
customers may also be subject to the
risk of a severe downturn in the UK
economy which might affect the ability of
customers to repay.
The impact of Covid, uncertainty
regarding the evolution of Brexit and
now a war in Ukraine have adversely
impacted the economy during the past
two years and projected higher levels
of unemployment and cost of living
inflation including energy and fuel
costs may lead to more motor finance
repayment delinquency. However, both
of our businesses operate solely in
the UK and Advantage historically has
been resilient through adverse macro-
economic conditions and so we currently
believe these risks are limited.
The Group is particularly exposed to
the non-prime motor sector and within
that to the market risk of the values of
used vehicles which are used as security.
This risk is controlled through our credit
control policies including loan to value
limits for the security and through
ongoing monitoring and evaluation. Loan
to values are also controlled within our
property bridging business although
historically impairment rates in that
market are low, mainly because loan
to value calculations are conservative,
interest is retained upfront and loan
periods average around one year.
12
S&U Plc Annual Report and Accounts 2023 A2.4.2 Funding and Liquidity Risk
Funding and Liquidity risk relates to
the availability of sufficient borrowing
facilities for the Group to meet its
liabilities as they fall due. This risk is
managed by ensuring that the Group
has a variety of funding sources and by
managing the maturity of borrowing
facilities such that sufficient funding
is available for the medium term.
Compliance with banking covenants
is monitored closely so that facilities
remain available at all times. The Group
is aware of current less stable banking
markets but due to its facility maturities
and low gearing should be relatively
unaffected by this. 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- the Group has no
such interest rate derivative contracts
currently. However, current interest rate
levels have prudently been expected
to continue throughout this year in our
budgeting assumptions.
A2.4.3 Legal, Regulatory and
Conduct Risk
The Group is subject to legislation
including consumer credit legislation
which contains very detailed and highly
technical requirements. To fulfil its
responsibilities in this area, the Group
has procedures in place and employs
dedicated compliance resource and
specialist legal advisers to ensure
compliance with this legislation.
Advantage directors are prominent
members of the Finance and Leasing
Association’s committees and, through
them, regularly liaise with the FCA.
Advantage also engages in regular “face
to face” liaisons with the FCA and the
relationship is excellent.
Regulatory Risk at Advantage is
addressed by a strong compliance
function and by the constant review
and monitoring of Advantage’s internal
controls and processes, overseen by
RSM, S&U’s internal auditors. This
process is buttressed by specific advice
from Trade and other organisations, by
RSM and by Shoosmiths, Advantage’s
specialist lawyers.
Alan Tuplin is Chief Risk Officer of
Advantage and plays a key role in
managing and mitigating legal, regulatory
and conduct risk within Advantage. Alan
has over 20 years of experience in non-
prime motor finance and chairs the Risk
Committee at the Finance and Leasing
Association, the industry’s trade body.
This year Advantage has prepared for the
Consumer Duty regime by setting up a
small executive working party charged
with an Implementation Plan which
was agreed by the Advantage Board in
November 2022.
To comply with the Duty by the 31st July
2023, the plan must be monitored and
its outcomes managed. To this end the
plan’s operation will be overseen by a
new Consumer Experience Manager who
will ensure that it is reviewed regularly,
and upper most in the minds of all
committees throughout Advantage.
The Consumer Experience Manager will
in turn report to Alan Tuplin, Chief Risk
Officer.
Finally it is hoped that, as pointed out
in The Chairman’s Statement, that the
interpretation by the FCA of its powers
under the new duty is proportionate and
promotes innovation and enterprise.
In turn, this should recognise that the
moral and commercial interest of firms
in creating and maintaining good and
responsible long term relationships
with their customers are identical. The
bedrock for this relationship lies in the
rigour of Advantage’s underwriting.
This emphasises product design, credit
worthiness assessments which are
continually updated – particularly
during the current pressures on the
cost of living – good affordability and in
particularly Advantage’s obligation to
the small minority who are occasionally
Borrowers in Financial Difficulty. The
latter is currently rightly a focus for
the FCA.
13
www.suplc.co.uk ― Stock Code: SUSStrategic Report A2 Strategic Report
CONTINUED
Advantage’s very strong record on these
matters is clearly and comprehensively
set out in the “Fair Value Assessment” of
its HP products and their value for our
customers, which will be submitted to
the FCA as part of the Consumer Duty
preparations.
Given Advantage’s compliance record
and the detailed operations above it
is to be hoped that, in turn, the FCA
will ensure an absolute consistency of
purpose and interpretation between
itself and other regulators, particularly
the Financial Ombudsman Service. Fair
and effective regulation does require co-
ordination and consistency.
Whilst engaged in the un-regulated
sector, Aspen Bridging has adopted
procedures which are similar to those
required in the regulated sector. This
provides both commercial discipline and
a platform for standards should Aspen
widen its products into the regulated
field.
The Group is also exposed to conduct
risk in that it could fail to deliver fair
outcomes to its customers which in turn
could impact the reputation and financial
performance of the Group. The Group
principally manages this risk through
Group staff training and motivation
(Advantage is an Investor in People) and
through detailed monthly monitoring of
customer outcomes for compliance and
treating customers fairly.
The Group is very proud of its excellent
underwriting and fraud deterrence
processes which it continues to develop.
Advantage’s underwriting capability,
already state of the art in the motor
finance industry, is being further refined
through work with open-banking
providers which will give an even more
comprehensive overview of customer
circumstances, affordability and their
income and expenditure.
A2.4.4 Operational Risk
The Group is also exposed to operational
risk including the risk of not maintaining
effective internal systems, organisation
and staffing. Increased use of technology
and excellent application by our staff has
helped the management of this systems
risk and the Company has Cybersecurity
measures in place which are regularly
tested. As part of Advantage’s IT
14
governance framework, a real time
monitoring suite for quality assurance
is being evolved. This will both provide
absolute assurance in line with IT’s
second line risk enterprise and offer still
greater regulatory transparency.
S&U’s external and internal auditors.
These concern the effectiveness of the
risk management and internal control
systems, which during the year were
determined by the Audit Committee to
be operating effectively.
A2.4.5 Risk Management
Under Provision 28 of the 2018 UK
Corporate Governance Code, the Board
is expected to establish procedures to
manage risk, identify the principal risks
the Company takes in order to achieve
its strategic objectives and to oversee an
effective internal control framework. In
addition, the FRC now expects Boards to
assess emerging risks to the company’s
strategy, although what is precisely
meant by these has yet to be clearly
defined.
As outlined above, the Audit Committee
oversees the work of RSM, S&U’s Internal
Auditors. The Committee meets regularly
to receive specific reports on RSM’s
work, which includes Cyber Security,
GDPR oversight and Cash Management
Procedures amongst many other areas.
The Committee also recently received
and approved a report on Governance
at Advantage. All Senior Management
Regime designations include S&U Board
executive directors who serve on the
Advantage board.
Although compliance with the Code
is the responsibility of the Board as a
whole, risk in particular is independently
assessed by members of the Audit
Committee. They receive regular reports,
both from the management of Advantage
Finance and Aspen Bridging and from
Finally, Advantage’s Chief Executive and
main Board member, Graham Wheeler
sits as Vice-Chairman of the Executive
Committee of the FLA and is regularly
requested by the Government on advice
on regulatory matters, particularly in the
environmental field.
S&U Plc Annual Report and Accounts 2023 A3 Statement of Viability and 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, borrowing facilities, legal and
regulatory risk position are set out in
the financial statements and Strategic
Report.
Statement of Viability
In assessing the viability of the Group
as required by the UK Corporate
Governance Code, the directors
considered funding, business planning,
financial forecasting and risk evaluation
cycles and concluded that a three-year
period was appropriate for viability
assessment. The three-year period is
consistent with the Group planning
horizons.
The directors therefore considered
the three-year period commencing
1 February 2023 and assessed the
prospects of the company considering:
• the Group’s current position as set out
in these financial statements;
• the principal risks facing the Group as
set out in A2.4;
• information regarding the current
prospects of the Group; and
• current information regarding the
economy and the markets the Group is
involved in.
The directors then considered the
same three-year period commencing 1
February 2023 to consider as required if
they had a reasonable expectation that
the Group will be able to continue in
operation and meet its liabilities as they
fall due over the three-year period taking
into account:
• the impacts of different macroeconomic
scenarios and whether any severe
shock could threaten the Group’s future
performance, solvency or liquidity;
• funding and financial forecasts for this
period and the underlying assumptions
by considering the potential impact of
the principal risks facing the Group, as
set out in A2.4.
• analysis of key sensitivities which could
affect profitability during the viability
period; Assumptions made are clearly
stated and additional scenarios are
modelled to demonstrate the potential
impact of risks and uncertainties on
profitability and funding; and
• information regarding mitigating actions
which can be taken.
Having considered all relevant
information, the directors confirm
that they have robustly assessed the
principal risks facing S&U plc. From
this assessment, the directors have a
reasonable expectation that the Group
will be able to continue in operation and
meet its liabilities as they fall due over
the three-year period commencing 1
February 2023.
Statement of Going Concern
In assessing the appropriateness of the
going concern assumption, the directors
are mindful of the need to effectively
manage the Group’s risks and internal
controls. Details of the Group’s financial
risk management objectives, its financial
instruments, and its exposures to credit
risk, market risk, liquidity risk and
economic risk are set out in the notes
to the financial statements and in the
principal risks and uncertainties noted
in A2.4 above. The Group’s objectives,
policies and processes for managing its
capital are described in the notes to the
financial statements.
In considering all of the above the
directors believe that the Group is
well placed and has sufficient financial
resources to manage its business
risks successfully despite the current
uncertain economic outlook.
After making enquiries, the directors
have a reasonable expectation that
the Group has adequate resources to
continue in operational existence for the
foreseeable future. Accordingly, they
continue to adopt the going concern
basis in preparing the Annual Report and
Accounts.
15
www.suplc.co.uk ― Stock Code: SUSStrategic Report CASE STUDY
Our Customers
Mr F
Mr F is a 55 year-old homeowner,
working for the government for 32 years.
Mr F currently takes home £1862 each
month.
We received an application from Mr F as
an existing customer requesting finance
for the purchase of an Audi Q5. We were
able to provide an offer of finance within
48 hours of receiving the application.
The assessment included a full appraisal
of the customer’s existing credit and a
separate affordability assessment which
confirmed the loan was affordable.
Mr F kindly took the time to review his
purchasing experience through an online
review site and was clearly happy with
the service he received from Advantage,
leaving the following comments as part
of a 5-star review:
I can’t believe I got this level
of professionalism from the
person who helped me within
this organisation. Thank you
for your friendly approach and
understanding from the team
member who helped me thank
you very much you’re a real
professional.”
16
S&U Plc Annual Report and Accounts 2023 CASE STUDY
Our Customers
Mrs G
We received an application for finance
from Mrs G a homeowner of 27 years,
who works in the retail industry. Mrs G
was a previous customer of Advantage,
settling her account in August 2022
and her take home pay was £1059 per
month. Mrs G requested finance to
purchase a Citroen Berlingo van.
Mrs G’s application was subjected to
our creditworthiness and affordability
assessments resulting in an offer of
finance being provided subject to a
satisfactory review of her payslips and
work contract. We carried out the review,
then our assessment on the vehicle at
which point we were able to offer her
the finance she requested.
Mrs M agreed a price of £9588 with a
deposit of £3148 leaving the sum of
£6450 to be financed over 60 months
at a payment of £186.83, which was
considered comfortably within her
monthly budget.
We received some very positive
feedback from Mrs G, describing her
positive experience with Advantage
acknowledging the improvement in her
credit file. The following comments are
part of a 5 star review:
The only thing I have to say
about Ellie and the team is
that they were very helpful,
informative, processed my
application extremely quickly
and most of all very friendly
which made things easy to
sort and I will definitely deal
with your company in the
future, many thanks”.
17
www.suplc.co.uk ― Stock Code: SUSStrategic Report CASE STUDY
Our Customers
Mr D
We received an application for finance
through one of our broker partners for
an existing Advantage customer who was
looking to upgrade his current vehicle.
Mr D had two previous agreements with
Advantage which were paid without
fault.
Mr D was employed as a Class 1 HGV
driver and was living as a private tenant.
Mr D was looking to purchase a Vauxhall
Insignia and trading his existing vehicle.
Although we carried out our usual credit
assessment and affordability checks
and enabled him to pursue his financial
objectives by offering the full finance
required on the replacement car and the
settlement of the previous one. Mr D
was happy with the offer of finance
which allowed him to pay the instalments
over 60 months at an affordable £300
per month.
Mr D was very pleased with the
service and took the time to post a
complimentary 5-star review on an
online platform.
Ellie was outstanding. So much
knowledge and extremely
easy to talk to. Makes
understanding the process
very easy. And her execution
of the finalising the deal was
exemplary. Makes you feel as
if you are talking to a mate
rather than just someone over
the phone. She’s a credit to
Advantage. Thanks very much.
Love the car.”
18
S&U Plc Annual Report and Accounts 2023 CASE STUDY
Our Customers
Aspen vastly exceeded
expectations regarding speed,
flexibility and responsiveness.
Very impressed all round,
we’ll certainly work with
them again.”
Borrower feedback
A last-minute change of security properties and a deadline
to refinance during postal strikes did not stop Aspen Bridging
completing a £2.1m Bridge-To-Let (BTL) loan within
three weeks.
The developer was nearing the end of their current
Development Finance deal and the client sought a bridging
solution to complete the finishing touches and sell the newly-
built detached six-bedroom house in Twickenham, London for
maximum value.
19
www.suplc.co.uk ― Stock Code: SUSStrategic Report CASE STUDY
Our Customers
We found dealing with
Aspen and the underwriting
team to be a refreshingly
straightforward process. The
lender worked with us to meet
our client’s requirements, both
in providing the level of funds
needed and also comfort with
the options to exit. We were
delighted to meet our client’s
expectations; nothing was too
much trouble for Aspen and
we would happily consider
working with them again.”
Broker feedback
Aspen Bridging has completed a £1.5m Development Exit loan
which will allow a property developer extra time to complete
their latest project.
The newbuild, which comprises of eight apartments in Windsor,
Berkshire, was substantially delayed during the Covid pandemic
and, despite best efforts, remained behind schedule.
The bridge took just 17 days from application to completion
and was over a 12-month term.
20
S&U Plc Annual Report and Accounts 2023 A4 Corporate Social Responsibility
A4.1 Employees
The challenges caused by the Covid
pandemic and the magnificent way our
staff throughout the Group have adapted
to this, reflect the loyalty and “family
ethos” at S&U of which we have always
been proud. Those colleagues who feel in
need of further support and counselling
are able to access mental health services
the S&U health scheme provides.
We ensure that all staff receive
appropriate initial training and regular
re-training in the field and in areas of
specialism. We encourage employees to
gain professional qualifications where
appropriate. For instance, at Aspen this
year we saw two staff members gain
MRICS and legal qualifications. External
management training is also undertaken
in the motor finance division. As required
by legislation, we confirm that as an
organisation, we respect and recognise
human rights in all aspects of our
business.
At Advantage in addition to regular
external management and specialist
training, significant use is made of
the Government’s apprenticeship
schemes. At present 8 staff members
are so engaged. Four at level 3 business
administration and digital support and
four member at Level 5 leadership and
Management. Last year one person
broke local records by completing every
exam and assessment with distinction!
Formal reviews of performance take
place annually and all operations are
reviewed on a monthly basis. We
encourage staff to make suggestions for
constructive change within the Group.
The FCA Regulatory regime is now
centred on our duty to the Customer.
All employees within the Group are
required to demonstrate appropriate
knowledge and skills particularly in
customer facing roles. Annual appraisals
highlight areas of training needs for all
employees. Advantage Finance is also an
accredited Silver Investor in People.
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. It goes without saying
that a Group based on a family ethos
has no truck with discrimination of any
kind – except of course on the basis
of performance. Further equality and
diversity information is contained in the
corporate governance report on page 47.
People prosper and are promoted within
S&U purely on merit.
A4.2 Community
S&U does not exist in a vacuum. Our
success depends upon our understanding
the customers we serve. Where this may
not be the case, we have well established
policies for any who may wish to
complain, routed to our Complaints
Department in Grimsby or to our head
office in Solihull. We are proud to enjoy
high levels of customer satisfaction. Last
year our FIFO rating was 4.7 out of 5.
In 2022 67 out of 86 complaints were
decided by the Financial Ombudsman
Service in Advantage’s favour. In the year
to 31 January 2023 73% of complaints
which reached and were decided by
the Financial Ombudsman Service were
related to the satisfactory quality of
the vehicle (2022: 57%) and therefore
not related to operational issues within
Advantage.
S&U supports its wider community
through charitable giving and activities
relating to fundraising. Whilst staff
are regularly involved in their own
21
www.suplc.co.uk ― Stock Code: SUSStrategic Report charitable activities, S&U plc channels
its philanthropic activities through The
Keith Coombs Trust which this year
celebrates its 11th anniversary. The
Trust which Anthony Coombs chairs,
but which has a Board of independent
trustees, mainly gives to charities helping
children with disabilities. Amongst other
causes, last year the Company supported
The National Institute for Conductive
Education, which deals with adults and
children with cerebral palsy, strokes
and head injuries. It is also working
with Whizz-Kidz to provide equipment
for disabled children and to offer
employment opportunities to wheelchair
users. The Trust also supports the Marie
Curie Hospice which is close to its
Solihull HQ, by sponsoring the Hospice’s
costs for the 10th January every year –
Keith Coombs birthday. During the past
year the KCT Trust donated a total of
£109,500 to these charities. In total, the
past 11 years will have seen donations of
over £1m to charity.
As an independent charity, The Keith
Coombs Trust also makes financial
contributions to the arts, to sport
and in supporting the Christian faith.
It was the initial sponsor of the new
“Ballet Now,” an initiative at the
Birmingham Royal Ballet that encourages
young choreographers, designers
and composers. It sponsors youth
development at a local cricket club and
also supports the “Leap of Faith” project
which assists the wider UK Church in
adapting to a digital future.
This year S&U plans to involve more staff
within the Group in active volunteering;
Aspen are currently investigating
the development of a “volunteer”
programme with Marie Curie cancer care
both in Solihull and more widely.
Finally, S&U is pleased to announce its
support for the Tax Payers Alliance, a
non-political charitable organisation
committed to ensuring efficient and
effective government in the tax payers
interest.
A4.3 Health and Safety and
Diversity Policy
Although we recognise that current
thinking means that diversity reporting
should be based around a statistical
analysis of our staff’s racial origin, given
our above long-standing policies, we
consider that this can too often itself be
divisive and potentially discriminatory.
By recruiting the best people for the
job, both enhance their self-esteem,
irrespective of their background, racial
or socio economic, and at the same time
create an esprit de corps unmarked by
tokenism.
S&U takes its responsibilities towards
the health, safety and good working
environment of its employees very
seriously. However, in the finance
field it is not engaged in the kind of
processes which compromise health
and safety for either our staff or our
visitors. Nevertheless, it seeks to
provide a congenial and productive
working environment. In the past year
a new building has been refurbished
for employees at Advantage which
will improve and maximise space,
ensure Covid safety and provide better
break out areas. S&U’s Head Office,
which also houses Aspen, provides
up to date, spacious and high-quality
accommodation. In addition this year
all staff working at Head Office will be
offered a professional Red Cross First Aid
Course.
It therefore goes without saying that
in a Company where family values are
so prized, and where staff turnover is
so low, that workers are always treated
fairly without any form of discrimination.
Recruitment and promotion decisions,
whilst reflecting the social and racial
makeup of the areas in which we
operate, are always based on ability and
aptitude, not according to any racial or
gender stereotypes.
A4.4 Climate Change
Like any group of people who cherish
our environment both for our own sakes
and for those of succeeding generations,
S&U supports the Government’s Green
Finance Strategy and is taking measures
to reduce our carbon footprint and
minimise and then eliminate carbon
emissions so far as we are able directly
to control them.
This means that, particularly so far
as Advantage Finance, our motor
business and Head Office in Solihull are
concerned, we need to monitor and
reduce those areas of emissions which
we can most directly control in order to
achieve net zero status by 2030.
Both for commercial and climate change
reasons, the Board monitors the type,
age and stated emissions of the vehicles
Advantage finances. Currently about
half of customers opt for diesel vehicles,
whilst the proportion of fully electric
vehicles, principally on the grounds
of their significant cost, is at present
negligible. These proportions will change
over the next twenty years as the market
changes.
Our ability to influence our customers
environmental decisions at Aspen
Bridging is equally constrained.
Nevertheless, statutory requirements to
publish Energy Performance Certificates
for residential properties to let, as well
as building regulation requirements
for substantial refurbishments, will
increasingly reflect our customers
environmental responsibilities.
The Company is pleased to present its
second climate change report under the
framework provided by the Task Force
on Climate Related Financial disclosures
(‘TCFD’).
A4.4a Governance
An ESG and climate change committee
chaired by the Chairman Anthony
Coombs and consisting of senior
executives and the Chairman of the audit
committee meets on a quarterly basis
to review the identification, assessment
and management of climate change
risks within the Group. The Managing
Directors of both Advantage and Aspen
serve on this committee. The Committee
reports to the Board of directors of S&U
plc which has overall oversight of the
Group’s work on climate change and this
is now a regular Board agenda item.
A4.4b Strategy
The Group will continue to identify
opportunities to manage its scope 1,
scope 2 and scope 3 business travel
emissions and will continue to seek to
directly reduce its contribution in these
areas to climate change.
In addition in order to off-set those
scope 1, scope 2 and scope 3 business
travel emissions, which we are not at
present able to reduce to zero, S&U
plc group have for the year 1.2.22 to
22
S&U Plc Annual Report and Accounts 2023 A4 Corporate Social Responsibility
CONTINUED
31.1.23 engaged Carbon Neutral Britain
to measure, calculate and offset the
organisation’s carbon footprint. Our
group emissions for the year in scope,
1, scope 2 and scope 3 business travel
emissions are 114t CO2e as shown in the
table in A4.4d below. These emissions
have been offset with Carbon Neutral
Britain via their Woodland fund which
supports Climate Fund, Reforestation,
Deforestation Prevention and Woodland
Management Projects, with a strong
focus on having a positive impact on the
local wildlife, ecology and biodiversity.
The Group has also made progress in
identifying opportunities to manage
other indirect scope 3 emissions
associated with the loan assets we
finance for our customers. In our
motor finance business the average
CO2 emissions of the cars and vans we
finance reduced from 131CO2 g/km
last year to 129 CO2 g/km this year and
by working with customers and other
companies in our supply chain we are
looking to accelerate this reduction. We
are also monitoring the requirements of
TCFD as it is adapted to comply with the
International Sustainability Standards
Board (ISSB) who announced in October
2022 that they will require and also
provide further guidance for companies
to consistently apply these other indirect
scope 3 requirements.
In order to assess the resilience of the
Group’s strategy, we have identified 2
climate scenarios being:
1. the global temperature increase is kept
to below 2 degrees, or
2. climate change mitigation is slower and
the global temperature increases by 2
to 4 degrees.
The Group has considered the risks
relevant to each of these climate
scenarios over the short, medium and
long term, being the next year, the next
3 years and the next 5 years and beyond
respectively.
Scenario 1
The risks the Group has identified under
this climate scenario are mainly indirect
over the long term, where stricter
regulations and taxes to help keep
global temperatures lower are applied
in the UK and affect the used vehicle
and property finance products which
can be supplied to our customers and/
or our customers’ affordable use and
enjoyment of those products. The UK
Government is committed to banning
the sale of new diesel and petrol cars
from 2030 with an opt out for some
plug-in hybrids and we will continue to
monitor this commitment and associated
developments ahead of this date
alongside the availability and affordability
of used electric vehicles, in order to
refine our strategy in a sustainable way
for our customers.
Scenario 2
The risks the Group has identified under
this climate scenario include the indirect
risks over the long term mentioned for
Scenario 1 as the UK makes change but
global temperatures still rise further.
Scenario 2 also includes more medium
and long term direct risks too such as
the increased flood and weather risk to
our office buildings and to properties
financed – these risks are mitigated by
insurance and wider operational risk
is mitigated by the business continuity
plans we have in place.
The Group has assessed its strategy
as resilient for the likely risk events
arising under these two scenarios,
with a minimal expected impact on the
business.
A4.4c Risk Management
The Group identifies climate change risks
through the climate change committee
and the wider executive teams including
the risk management teams of both
our operating businesses, Advantage
Finance Limited and Aspen Bridging
Limited. Our biggest business Advantage
Finance reports to the climate change
committee through its Chief Risk Officer
Alan Tuplin who also expertly advises
on the Group’s climate change activity.
Underwriting policies and procedures
consider climate risk factors particularly
in our property bridging business where
consideration is taken of the potential for
flood and subsidence with a requirement
for appropriate insurance. Climate risk
is an emerging risk but it is not currently
considered a significant risk for the
Group.
All our underlying global energy use is
UK based and during the year we have
and will continue to take action in order
to reduce these emissions and where
that is not fully possible offset them.
Solar panels on our office buildings in
Grimsby and electric company vehicles
are examples of where we have managed
to reduce energy usage this year.
23
www.suplc.co.uk ― Stock Code: SUSStrategic Report For the year ending 31 January 2023
we achieved the target of below 1.8
normalised tonnes per £m turnover.
For the year ending 31 January 2024
we are targeting below 1.3 normalised
tonnes per £m turnover.
The methodology used to calculate our
emissions is based on the “Environmental
Reporting Guidelines: including
mandatory greenhouse gas emissions
reporting guidance” (June 2013) issued
by the Department for Environment,
Food & Rural Affairs (“DEFRA”) and
updated HM Government SECR guidance
dated March 2019. We have also
utilised DEFRA’S 2022 conversion factors
within our reporting methodology. The
emissions for year ended 31.1.23 were
verified by Carbon Neutral Britain.
The 2013 data forms the baseline
data for subsequent periods. In order
to express our annual emissions in
absolute and relative terms, we have
used turnover in our intensity ratio
calculation, as this is the most relevant
indication of our growth and provides for
a good comparative measure over time.
The Directors confirm that under
listing rule 9.8.6R (8) (a) we have
included in the above report disclosures
consistent with the 2017 Final TCFD
Recommendations and Recommended
Disclosures.
The Group is keen to progress further opportunities to manage and reduce its
impact on climate change over shorter term, medium term and longer-term planning
horizons being the next year, the next 3 years and the next 5 years and beyond
respectively. The climate related risks and opportunities we have identified as
potentially having a material financial impact on the Group are as follows:
Risks with potential material
financial impact
1. Potential for increased UK
regulation and taxes affecting
motor vehicles and their
affordability for our loan
customers
Related Opportunity
Planning Horizon
Medium and Long
Term
Continue to align our products
in advance to meet evolving
customer preferences and
affordability in the light of
planned regulatory and tax
changes
2. Potential for increased UK
adverse weather events or
natural disasters affecting
operations and properties
Continue to maintain and
improve appropriate insurance
and business continuity
procedures
Short, Medium and
Long term
The potential financial impact of these risks and opportunities on the group would be
reflected in the potential for reduced revenue or increased expenditure.
A4.4d Metrics and Targets
S&U’s own direct environmental footprint is reported in the following table:
Greenhouse gas emissions data
For period 1 February 2022 to 31 January 2023
Scope 1 (Direct emissions)
Combustion of fuel – Petrol & diesel used by
company cars
Gas consumption
Scope 2 (Energy indirect emissions)
Purchased electricity (location based)
Electric vehicle energy usage
Total Scope 1 and 2
Scope 3 (Other indirect emissions)
Business travel not using owned/leased vehicles
Water consumption
Waste
Total Scope 1,2 and 3 (business travel)
Company’s chosen intensity measurement:
Normalised tonnes scope 1, 2 and 3 CO2e per £m
turnover
Tonnes CO2
Year ended
31 Jan 2023
Year ended
31 Jan 2022
27
15
37
5
84
30
–
–
114
51
21
48
–
120
–
1
2
123
1.1
1.4
24
S&U Plc Annual Report and Accounts 2023 In assessing the Group’s engagements
within our 6 stakeholder areas above,
the directors have also ensured such
engagements reflect the Group’s values,
business model, key performance
indicators and principal risks as set out in
the strategic report above.
A6. APPROVAL OF STRATEGIC
REPORT
Section A of this Annual Report
comprises a Strategic Report prepared
for the Group as a whole in accordance
with the Companies Act 2006 (Strategic
Report and Directors’ Report)
Regulations 2013.
Approved by the Board of Directors and
signed on behalf of the Board.
Anthony Coombs
Chairman
6 April 2023
A5 Section 172 Statement
The Directors confirm they have
considered their obligations under S172
of the Companies Act 2006 including
their duty to promote the success of the
company and how they have engaged
with the following key stakeholders in the
business:
1. Our Customers
S&U focuses on:
i) making the customer the heart of our
business; and
ii) having respect for every customer and
always treating customers fairly.
Key actions taken demonstrating how
we do this are set out in section A2.1
above. The outcomes of this customer
engagement are reflected in high
customer satisfaction ratings (Trustpilot),
low levels of complaints and above all
the Group’s success over the last two
decades.
2. Our Employees
S&U maintains a family ethos for all
those who work within it.
Key actions taken demonstrating
how we do this are set out in section
A4.1 above. The outcomes of this
employee engagement are reflected in
a streamlined management structure,
high staff retention rates, high skill
levels, positive reward and recognition
and a strong culture of continuous
improvement.
3. Our Business Partners
S&U continuously seeks to nurture and
improve key business relationships with
our key introducing brokers, dealers and
key suppliers.
Key actions taken demonstrating how
we do this are set out in our strategic
report above. The outcomes of these
key actions are reflected in the positive
feedback and high retention rates for our
partners and in the steady, sustainable
and successful growth of the Group in
the past two decades.
4. Our Investors and Funding
Partners
S&U’s significant family management
shareholdings means an identity of
interest between shareholders and
the management of the company and
together with help from trusted advisers
maintains close relationships with
investors, analysts and also with long
term funding partners.
Key actions taken demonstrating how
we do this are set out in section B3.2 of
our corporate governance report and in
section A2.3 of our strategic report. The
outcomes of this investor engagement
help underpin the total shareholder
return graph on page 39. The outcomes
of this funder engagement help the
strong balance sheet and treasury
position outlined in this annual report
and accounts.
5. Our regulators and other
statutory bodies
S&U has a strong compliance culture
which is overseen by management and
the audit committee with help from our
internal auditors RSM.
Key actions demonstrating how we do
this are set out in section B3.1 of our
audit committee report. The outcomes
of these actions has led to positive
feedback from regulatory and other
statutory bodies of which the Group is
proud.
6. Our Community and Our
Environment
S&U does not exist in a vacuum and
prides itself on supporting the wider
community and looking after its
environment.
Key actions demonstrating how we
do this are set out in section A4 of
the strategic report. The outcomes
of these key actions has led to a low
environmental footprint and the
community and charity support set out in
section A4.2 above.
25
www.suplc.co.uk ― Stock Code: SUSStrategic Report Corporate Governance
In this section
B1
B2
B3
B4
B5
C
Board of Directors
Directors’ Remuneration Report
B2.1 Report of the Board to
the Shareholders on
Remuneration Policy
B2.2 Annual Remuneration
Report
Governance
B3.1 Audit Committee Report
B3.2 Corporate Governance
B3.3 Compliance Statement
Directors’ Report
Directors’ Responsibilities
Statement
Independent Auditor’s Report
to the Members of S&U plc
28
30
30
33
43
43
44
48
49
51
52
2626
S&U Plc Annual Report and Accounts 2023
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a
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27
www.suplc.co.uk ― Stock Code: SUS
B1 Board of Directors
Anthony Coombs
MA (OXON)
Graham Coombs
MA (OXON) MSC (LON)
Jack Coombs
MA (OXON) ACA
Deputy Chairman
Joined S&U after graduating from London
Business School in 1976.
Chairman
Joined S&U in 1975 and was appointed
Managing Director in 1999 and then
Chairman in 2008 served as a Member
of Parliament and was a member of the
Government. Anthony is a director and
trustee of a number of companies and
charities.
N
Executive
Co-founder of Aspen Bridging. Joined
S&U in 2016 as Group Development
Executive having previously worked in
PwC’s Valuations team and qualified
there as a Chartered Accountant.
Member of the Lender Committee for
the Financial Intermediary and Broker
Association (FIBA) industry body. Jack
is also an avid supporter of charity and
swam the Channel from England to
France in 2011 in 13 hrs and 46 mins to
raise funds for Alzheimer’s Research &
Mondo Challenge.
Chris Redford
ACA
Group Finance Director
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 Chris was
appointed as Group Finance Director
with effect from 1 March 2004.
Graham Wheeler
Ed Ahrens
CEO Advantage Finance
Graham brings over 40 years experience
in motor finance across consumer and
business lending, much of it in a senior
leadership role. He developed through
blue chip Companies like GM, Barclays, GE
Capital, and Volkswagen FS, where he held
the post of UK CEO for 11 years. Graham
joined S&U Plc board in September 2020
and is now in his fourth year of leading
its successful motor finance subsidiary
Advantage Finance. Graham also
influences the industry as a Director of
the FLA, and as the Deputy Chairman of
the FLAs’s Motor Finance Division.
CEO Aspen Bridging
Ed has been in banking and speciality
finance for over 30 years having started
his career at Abbey National and working
in senior roles for Barclays, AIB and
being a founding executive director of
Vanquis Bank. Ed joined the S&U Group
in 2014 then became Group Strategic
Development Director before leading
the development of Aspen Bridging as
Managing Director since the launch of
the business in 2017.
2828
S&U Plc Annual Report and Accounts 2023 Tarek Khlat MBE
Graham Pedersen
Jeremy Maxwell
Non-Executive
Graham joined the Board of S&U in early
2015 and brings enormous experience
as a regulator at the Bank of England,
Financial Services Authority and
Prudential Regulation Authority and as
a banker with detailed knowledge and
involvement in the speciality finance
sector.
RAN
Non-Executive
Jeremy brings broad expertise in digital
innovation, marketing, commercial
development and customer experience
from over 25 years in the retail and B2B
distribution industries. In addition to
other NED and advisory roles, he has
held senior customer-facing executive
positions at Carpetright, Wolseley UK,
Mothercare, Screwfix and B&Q.
RAN
Key
N Nominations committee
A Audit committee
R Remuneration committee
Non-Executive
Tarek has over 25 years of experience
in financial services and he co-founded
Crossbridge Capital, where he is currently
Group CEO leading the firm’s businesses
that serve the wealth management needs
of high-net-worth clients globally. Prior
to this he held leading roles in financial
services with Credit Suisse and JP Morgan
and in journalism with CNN and Fox News.
Tarek holds a BA degree in Economics
from Georgetown University and an MBA
degree from Harvard Business School.
He is a Trustee and Patron of the NSPCC.
Tarek was awarded an MBE by her
Majesty Queen Elizabeth II in 2021.
RAN
Demetrios Markou
FCA MBE
Non-Executive
A Chartered Accountant with over 40
years’ experience in public practice in
Birmingham and director of many private
companies. Demetrios has extensive
commercial, professional and political
experience.
RAN
29
www.suplc.co.uk ― Stock Code: SUSCorporate Governance B2 Directors’ Remuneration Report
This report has been prepared to comply with Schedule 8 of The Large
and Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2008, the Companies (Miscellaneous
Reporting) Regulations 2018, as well as the Companies Act 2006 and
other related regulations.
B2.1 REPORT OF THE BOARD
TO THE SHAREHOLDERS ON
REMUNERATION POLICY
Introduction
On behalf of your Board, I am pleased
to present our Directors’ Remuneration
Report for the year ended 31 January
2023.
S&U continues to trade well despite
a period of economic and political
chaos, unprecedented in most of our
lifetimes. A change of governments and
of economic strategy, rising inflation,
taxation and interest rates and a nascent
recession is not exactly the ideal
economic landscape for any business.
Nevertheless, trading has been very good
at Advantage, focussing on the excellent
quality of customer relationships and
the receivables which are derived from
them, together with further expansion of
Aspen, all underpin the good year for the
company during these uncertain times.
As a result Group profit before tax is
£41.4m for the year ended
31 January 2023 which is 6% up on
budget and compares to an average
during the 2 previous pandemic years of
£32.6m group profit before tax (2020/21:
£18.1m; 2021/22: £47.0m).
This year’s annual Directors’
Remuneration Report sets out how
the Remuneration Policy was applied
during the year ended 31 January
2023 and provides details of amounts
earned in respect of the year ended
31 January 2023. It also sets out how
the Remuneration Committee has
decided the Remuneration Policy will
be operated for the year commencing 1
February 2023. The Remuneration Policy
is planned to be updated at least every
3 years and was last updated in 2021
and published in full in the 2021 Annual
Report. A copy of the Remuneration
Policy can be found in the About us
Governance section on our website at
www.suplc.co.uk
2022/23 key decisions and pay
outcomes
The aim of the Company’s Remuneration
Policy is to deliver simple and fair
remuneration packages which are
linked to both Group and personal
performance, retention focussed
and appropriate for the Company, its
Shareholders and the directors.
Group profit before tax moved from
an average of £32.6m in the two main
pandemic years to an impressive £41.4m
this year (2020/21: £18.1m; 2021/22:
£47.0m). This result derives from good
collections and strong receivables
growth in both companies during the
year, partly offset by increased funding
costs and inflation – related overhead
increases. The Committee noted that
this result would not have been possible
without the hard work, leadership, focus
and strength of the executive team at
S&U as well as the overall resilience of
the Company. We have taken this into
account in the decisions taken regarding
salaries and bonuses, whilst at the same
time maintaining good discipline in our
policies on remuneration.
Against a backdrop of a continued
shortage of used cars, Advantage
advanced 23,922 new motor finance
agreements (2022: 19,747). As last year,
our collections team have continued to
work diligently to support customers
and overall collections performed
strongly during the year ended 31.1.23.
Looking forward, due to potential future
impacts from inflation and used car
price correction, we remain optimistic
but cautious in our outlook and adopt
our normal conservative approach to
impairment provisions.
In its sixth year of operation, Aspen
Bridging made 148 new loan facilities
lending nearly £134m. From the 517 new
loan facilities made since its inception
in 2017, Aspen has so far received 376
repayments and of the 141 bridging
loans still live at 31.1.23 only 4 were
>60 days overdue and only 1 was in
repossession. Whilst political and
economic uncertainties have and will
continue to affect S&U, the Company
has continued to demonstrate its historic
ability to produce robust and resilient
results.
Anthony Coombs, Graham
Coombs and Chris Redford
Based on the underlying profit
performance of the Group and
Return on Capital Employed (“ROCE”
– see definition in note 1.13), the
Remuneration Committee judged
the level at which the annual bonus
payments should be made. Group Profit
Before Tax (“PBT”) for the year increased
by 27% on the average of the 2 previous
years to £41.4m and ROCE was 13%.
This was significantly above the PBT
target level of £39.0m. Therefore, the
Remuneration Committee determined
that for the financial year 2022/23
bonuses equivalent to the maximum
target annual bonus opportunity of
£50,000 each would be awarded to
Anthony Coombs and Graham Coombs
and £50,000 to Chris Redford which
represented target performance but was
below the maximum potential annual
bonus for Chris Redford of £75,000, given
the stretch bonus target of £42.9m group
PBT was not reached.
The Remuneration Committee therefore
considers these annual bonus awards
to be fair and reasonable and reflective
of each director’s achievement against
performance targets set during the year.
3030
S&U Plc Annual Report and Accounts 2023 In May 2022 Chris Redford was granted
6,000 shadow share options under the
2021 LTIP, as disclosed in last year’s
Directors Remuneration Report. The
Remuneration Committee determined
that 6,000 of these shadow share options
vested with reference to performance
during the year ended 31 January 2023
based on group PBT being above the
group PBT stretch target level for shadow
share options of £40.95m.
Graham Wheeler
The Committee have considered
Graham’s management of the Advantage
Finance team in light of the significant
challenges in consumer motor finance
arising from the political and economic
environment, and the excellent
Advantage PBT result of £37.2m for
the year ended 31 January 2023. The
Committee judged the level at which the
annual bonus payment should be made.
For the financial year 2022/23 a bonus
of £75,000 was awarded to Graham
Wheeler for achieving stretch targets.
In May 2022 Graham Wheeler was
granted 6,000 shadow share options
under the new LTIP, as disclosed in
last year’s Directors Remuneration
Report. The Remuneration Committee
determined that 6,000 of these shadow
share options vested with reference
to performance during the year ended
31 January 2023 with reference to
the underlying profit performance of
Advantage and achievement against the
stretch PBT and ROCE based targets set
for that year.
Jack Coombs
The Committee have considered Jack’s
significant contribution to the continued
growth of Aspen Bridging, including
excellent growth during the year ended
31 January 2023, helping Aspen Bridging
achieve a record profit before tax of
£4.5m. The Committee judged the level
at which the annual bonus payment
should be made. For the financial
year 2022/23 a bonus of £25,000 was
awarded to Jack Coombs.
Key remuneration decisions
and related matters for the
year ending 31 January 2024
Salary increases, annual bonus
and LTIP
After company profits were significantly
impacted by Covid, salaries for executive
directors for the yearend ended
31 January 2022 were frozen at the
same level as year ended 31 January
2021 and for the year ended 31 January
2023 salary increases were in the range
3.75% to 5.5% except where exceptional
circumstances merited a higher increase.
This was in line with pay review decisions
for the wider workforce during these
periods. The Remuneration Committee
has now agreed salary increases for the
year ended 31 January 2024 in the range
1.3% to 3.3% except where exceptional
circumstances merited a higher increase,
as noted below. This is below the average
increases given to the wider workforce
which averaged 9.0% in a difficult
inflationary cost of living environment for
our employees. After a review of market
comparables, and after his excellent
performance as an executive director of
our growing Aspen Bridging subsidiary,
it was decided to award Jack Coombs a
salary increase of 9% for the year ended
31 January 2024.
For the year ending 31 January 2024,
where the targets levels of performance
set are achieved, the annual bonus
has been set at £60,000 for Anthony
Coombs and Graham Coombs, £50,000
for Graham Wheeler and Chris Redford
and £30,000 for Ed Ahrens* and Jack
Coombs. Where the performance targets
set are exceeded, the Remuneration
Committee has the discretion to pay an
increased annual bonus based on stretch
performance targets to each of Graham
Wheeler, Ed Ahrens and Chris Redford
and the maximum amount payable will
not exceed the maximum limits stated
in the Remuneration Policy. The annual
bonuses will continue to be assessed
against stretching divisional and group
Profit Before Tax (PBT) targets and Return
on Capital Employed (ROCE). In order
for the bonuses to be paid in full, these
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CONTINUED
factoring in externalities linked to the
overall strategy. Environmental, Social
and Governance factors have become
critical to good business practice and
are tied to the success and long term
sustainability of organisations across all
sectors. As a result, the Remuneration
Committee is considering how best
these can be incorporated, measured
and linked to the overall strategy and
purpose of the Company. Members of
the Remuneration Committee are part
of the newly formed Environmental,
Social and Governance Committee
(ESG Committee) within the Company,
whose purpose is to support the
Company’s ongoing commitment to
environmental stewardship, health and
safety, corporate social responsibility,
corporate governance and sustainability
as relevant to the company. The
Remuneration Committee, alongside
the ESG Committee, will therefore
consider how the Company can most
appropriately link an element of the
executive remuneration to such goals
in a way that is clear and measurable
going forwards to ensure executives are
incentivised to ensure the Company is
committed to achieving its long term
sustainability goals.
The Remuneration Committee continues
to welcome Shareholder feedback on
remuneration decisions or on any issue
related to executive remuneration. I
commend this report to Shareholders
and ask that you support the resolution
to approve the Company’s Annual
Remuneration Report at the Company’s
AGM on 25 May 2023.
Tarek Khlat
Chairman of the Remuneration
Committee
6 April 2023
stretching performance targets must
be achieved and, if not fully met, the
Remuneration Committee will determine
the level of any reduced annual bonus
payment.
The Committee intends to grant 5,000
shadow share options under the 2021
LTIP to Graham Wheeler, subject to
achieving certain stretch Advantage PBT
and ROCE targets for the year ending 31
January 2024. The Committee intends to
grant 3,000 shadow share options under
the 2021 LTIP to Ed Ahrens*, subject to
achieving certain threshold Aspen PBT
and ROCE targets for the year ending
31 January 2024.The Committee also
intends to grant 5,000 shadow share
options under the 2021 LTIP to Chris
Redford, subject to achieving certain
stretch group PBT targets for the year
ending 31 January 2024.
* Ed Ahrens was appointed a director of S&U plc
on 14 February 2023 (after the 31 January 2023
yearend).
For the year ending 31 January 2024,
the Remuneration Committee considers
that the significant shareholding held by
Anthony Coombs, Graham Coombs and
Jack Coombs similarly provides adequate
alignment to shareholders.
Fees for the non-executive directors
have now been increased by 2.7% to
£38,000 and for the senior non-executive
director increased by 2.5% to £40,000
for the year ended 31 January 2024.
Fees had previously been frozen for the
year ended 31 January 2022 at the same
level as for year ended 31 January 2021
and for the year ended 31 January 2023
had been increased by 4.2% for the
non-executive directors and 4.0% for the
senior non-executive director.
The Remuneration Committee believes
that an element of the executive
remuneration should be linked to
non-financial KPIs that align with the
Company’s purpose and long-term
strategy, particularly around the
Company’s governance structures and
environmental impact. The Company
is in the process of developing and
implementing its sustainability strategy
and the Remuneration Committee
will continue to develop clear and
measurable non-financial KPIs to be
included in executive remuneration,
3232
S&U Plc Annual Report and Accounts 2023 Advisors to the Remuneration
Committee
The Remuneration Committee is assisted
in its work by the Chairman, Deputy
Chairman and the Group Finance
Director. The Chairman is consulted on
the remuneration of those who report
directly to him and also of other senior
executives. No executive director or
employee is present or takes part in
discussions in respect of matters relating
directly to their own remuneration.
During the year, the Remuneration
Committee was also assisted in its work
by KPMG LLP who provide advice and
guidance on remuneration matters. The
Remuneration Committee is comfortable
that the KPMG team which provided
advice to the Remuneration Committee
was and is independent and that they did
not have any connections with S&U plc
that may have impaired their objectivity.
The total fees paid to KPMG for the
provision of independent advice during
the year ended 31 January 2023 was
£10,800. KPMG also provide taxation
compliance and advisory services to the
Group.
Attendance at meetings
Details of the number of Remuneration
Committee meetings held during the
year and attendance at those meetings
is set out in the Governance section on
page 47 of this Annual Report.
Single Figure Tables (this section is
subject to audit)
B2.2 ANNUAL REMUNERATION
REPORT
This section covers how the
remuneration policy was implemented in
the year ending 31 January 2023. Certain
elements of the Annual Remuneration
Report are subject to audit and this has
been highlighted at the start of each
section.
Remuneration Committee
(this section is not subject
to audit)
The Company has established a
Remuneration Committee which is
constituted in accordance with the
recommendations of the Combined
Code. The members of the Remuneration
Committee are Mr Graham Pedersen,
Mr Demetrios Markou, Mr Jeremy
Maxwell and Mr Tarek Khlat, who are all
independent non-executive directors.
Biographical details of these directors
are set out on pages 28 and 29. The
Remuneration Committee is chaired by
Mr Tarek Khlat.
None of the Remuneration 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 Remuneration Committee
makes recommendations to the Board.
The Remuneration Committee is
responsible within the authority
delegated by the Board for determining,
implementing and operating the
Remuneration Policy and for determining
the specific remuneration packages
for each of the executive directors. In
particular, the Remuneration Committee
has the following key responsibilities:
• determining and setting variable and
performance-related pay, and the
assessment of performance targets for
executive directors;
• reviewing and approving the
remuneration arrangements and fees
for each individual director;
• reviewing and approving the
remuneration arrangements and any
payments for loss of office or severance
packages for new directors and
those stepping down as a director or
ceasing to be a member of the senior
management team; and
• reviewing and having regard to the
general remuneration pay practices
and polices across the wider workforce
when setting executive pay.
In its role to implement and operate the
Remuneration Policy for directors the
Remuneration Committee considers;
• the need to attract, retain and motivate
high quality individuals to optimise
Group performance;
• the need for an uncomplicated link and
clear line of sight between performance
and rewards;
• the need for an appropriate
balance between fixed and variable
remuneration and short term and
long-term rewards and alignment with
shareholder interests;
• best practice and remuneration trends
within the Company and the financial
services industry;
• the requirements of the UK Corporate
Governance Code and existing director
contracts; and
• previous shareholder feedback and the
interests of other relevant stakeholders
and employees.
The Remuneration Committee’s terms of
reference were reviewed during the year
and are available on our website www.
suplc.co.uk.
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CONTINUED
Single Figure Tables (this section is subject to audit)
The table below sets out in a single figure the total amount of remuneration including each component received by each of the
directors for the year ended 31 January 2023, together with comparative figures for the year ended 31 January 2022:
Anthony Coombs
£000
Graham Coombs
£000
Chris Redford
£000
Graham Wheeler
£000
Jack Coombs*
£000
Executive Directors
2022/23
2021/22
2022/23
2021/22
2022/23
2021/22
2022/23
2021/22
2022/23
2021/22
Salaries and fees
Allowances and
benefits
Pension Contribution
Total Fixed
Bonus
Shadow Share
Incentive
Total Variable
Total
374
82
0
456
50
0
50
506
360
79
0
439
30
0
30
469
358
34
0
392
50
0
50
442
345
35
0
380
30
0
30
410
245
22
36
303
50
128
178
481
232
22
34
288
50
137
187
475
300
13
30
343
75
128
203
546
250
16
25
291
50
137
187
478
110
1
16
127
25
0
25
152
80
1
12
93
10
0
10
103
* Jack Coombs was appointed a director of S&U plc on 14 April 2021 so only a part year remuneration is shown in the single figure table for 2021/22.
** Ed Ahrens was appointed a director of S&U plc on 14 February 2023 (after the 31 January 2023 yearend) and so no remuneration is shown in the single figure table.
Demetrios Markou
£000
Graham Pedersen
£000
Tarek Khlat
£000
Jeremy Maxwell*
£000
Fiann Coombs**
£000
Non-executive
Directors
Salaries and fees
Total
2022/23
2021/22
2022/23
2021/22
2022/23
2021/22
2022/23
2021/22
2022/23
2021/22
39.0
39.0
37.5
37.5
37.0
37.0
35.5
35.5
37.0
37.0
35.5
35.5
37.0
37.0
1.4
1.4
0
0
11.8
11.8
* Jeremy Maxwell was appointed a non-executive director of S&U Plc on 17 January 2022, and so only a part year remuneration is shown in the single figure table
for 2021/22.
** Fiann Coombs resigned as a non-executive director of S&U plc on 20 May 2021. No remuneration was paid for 2022/23.
3434
S&U Plc Annual Report and Accounts 2023 Salaries & fees
The amount of salary / fees received in the period.
Allowances and
benefits
The taxable value of benefits received in the period. These are company car or allowance, private fuel, life
insurance and private medical insurance.
Pension
Annual Bonus
The pension figure represents the cash value of pension contributions received by the executive directors.
This includes the Company’s contributions to the defined contribution pension scheme and any salary
supplement in lieu of a Company pension contribution.
Annual bonus is the value of the cash bonus earned in respect of the year. A description of the performance
targets against which the bonus pay-out was determined is provided on pages 30 and 31. The Remuneration
Committee determined that no part of any bonus paid for the year ended 31 January 2023 would be
deferred.
Share incentive
plans ( LTIP)
For the year ended 31 January 2023 figures for the value of nil cost options vesting in respect of
performance under the share incentive plans have been calculated as follows:
• Stretch PBT and ROCE based performance targets for the year to 31 January 2023 were met in full;
accordingly, the Remuneration Committee determined that 100% of the 6,000 LTIP shadow share options
granted to Graham Wheeler vested in respect of achieving stretch performance targets in the year to 31
January 2023 and 100% of the 6,000 shadow share options granted to Chris Redford vested in respect of
achieving stretch performance targets in the year to 31 January 2023. Both these vested shadow share
options are subject to continued employment until May 2025 and will not normally be exercisable until May
2025. The minimum amount of these shadow share options which could have vested is nil.
Although both the above LTIP options are subject to continued employment, the value of the shares vesting
by reference to performance to 31 January 2023 is shown above based on the three-month average share
price to 31 January 2023 (£21.28).
In accordance with the Companies (Miscellaneous Reporting) Regulations 2018, it is estimated that 0% of
the value of the LTIP value which will vest at the end of the period closing 31 January 2023 is attributable
to share price growth over the period starting on the date of grant and ending on 31 January 2023. This is
calculated based on 2 awards totalling 12,000 potential shadow share options which were granted at a face
value at the date of grant of £278,400 (£23.20 share price) and at 31.1.23 had a face value of £247,200
(£20.60 share price).
We intend to grant further shadow share options in May 2023 based on the value of a total of 13,000 shares
in S&U. These awards will be subject to a performance period which will commence on 1 February 2023
and will end on 31 January 2024. The share price at the start of the performance period was £20.60; if the
share price were to increase by a further 50% between May 2023 and May 2026, then the share price of the
awards would have increased to £30.90, representing an increase in the face value of Graham Wheeler’s
award of £51,500, an increase in the face value of Chris Redford’s award of £51,500 and an increase in the
face value of Ed Ahrens’ award of £30,900.
For the year ending 31 January 2022 comparative figures:
5,000 shadow share options were granted to Graham Wheeler in that year of which 100% vested in respect
of achieving stretch performance targets in that year. 5,000 shadow share options were granted to Chris
Redford in that year of which 100% vested in respect of achieving stretch performance targets in that year.
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CONTINUED
Individual elements of remuneration
(this section is subject to audit
apart from the application of the
Remuneration Policy to the individual
elements of remuneration for the year
ending 31 January 2023).
Base salary and fees
Base salaries for individual executive
directors are reviewed annually by
the Remuneration Committee and
are set with reference to individual
performance, experience and
responsibilities within the Group as
well as with reference to similar roles in
comparable companies. Non-executive
directors will continue to receive
directors’ fees in line with market
practice. As disclosed in the Annual
Report on Remuneration last year, for
the year ending 31 January 2023, the
base salaries of the executive directors
were increased in the range 3.75%
to 5.5%, except where exceptional
circumstances merited a higher increase.
For the year ending 31 January 2024,
the Remuneration Committee has now
The table below shows the base salary increases awarded for next year:
agreed salary increases in the range
1.3% to 3.3% except where exceptional
circumstances merited a higher increase,
as noted below. This was below the
increases given to the wider workforce.
After a review of market comparables,
and after his excellent performance as
an executive director of our growing
Aspen Bridging subsidiary, it was decided
to award Jack Coombs a salary increase
of 9% for year ended 31 January 2024.
Executive director
Anthony Coombs
Graham Coombs
Chris Redford
Graham Wheeler
Jack Coombs
Ed Ahrens*
Base salary as at
31 January 2023
£000
Base salary for year to
31 January 2024
£000
373.5
358
245
300
110
n/a
378.5
363
252.5
310
120
207.5
Increase
%
1.3
1.3
3.1
3.3
9.1
n/a
* Ed Ahrens was appointed a director of S&U plc on 14 February 2023, after the 31 January 2023 yearend, and so no remuneration is shown in the table for base salary
as at 31 January 2023.
Non-Executive Directors
The remuneration policy for non-executive directors is determined by the Board. Fees reflect the responsibilities and duties placed
upon non-executive directors whilst also having regard to market practice. The basic non-executive director fee was increased
by 2.7% to £38,000 with effect from 1 February 2023. The basic senior non-executive fee was increased by 5.3% to £40,000 with
effect from 1 February 2023. The non-executive directors do not participate in any of the Company’s share incentive plans nor do
they receive any benefits, bonus or pension contributions.
Non-executive director fees
Basic fee
Additional fee for Demetrios Markou as Senior Independent Non-executive Director
2021/22
£000
35.5
2
2022/23
£000
2023/24
£000
37
2
38
2
3636
S&U Plc Annual Report and Accounts 2023 Annual bonus
For the year ending 31 January 2023, annual bonuses for the executive directors were based on stretching Group or divisional PBT
targets. The table below sets out the maximum bonus opportunity that each of the executive directors could earn for the year
ending 31 January 2023 together with the Group PBT targets and details of the actual bonus earned.
Anthony Coombs
Graham Coombs
Chris Redford
Graham Wheeler
Jack Coombs
Performance targets
Group PBT target
(£39m)
Advantage Finance PBT
and ROCE target*
Aspen Bridging PBT
and ROCE target*
Maximum annual bonus
opportunity year ending
31 January 2023
£000
Bonus pay-out %
of maximum
%
Actual bonus earned
for the year ending
31 January 2023
£000
50
50
75
100
40
100
100
67
75
62
50
50
50
75
25
* Whilst the Remuneration Committee is aware that some shareholders wish to see detailed retrospective disclosure of bonus targets, it considers this inappropriate for
the divisional PBT and Group and Divisional targets given that such targets are based on commercially sensitive information that the Board believes could negatively
impact the Group’s competitive position by providing our competitors with insight into our business plans and expectations, resulting in significant risk to future
profitability and shareholder value. We will review annually this commercial sensitivity and consequent non-disclosure of the historic divisional PBT and Group and
Divisional ROCE targets. However, we are committed to providing as much information as we are able to, in order to assist our investors in understanding how our
incentive pay-outs relate to performance delivered. Details of the Group PBT targets are disclosed above.
Based on the achievement of target
performance levels in the year ended
31 January 2023 bonuses of £50,000
each were deemed payable to Anthony
Coombs, Graham Coombs and Chris
Redford and a bonus of £25,000 was
deemed payable to Jack Coombs.
Based on the achievement of stretch
Advantage PBT and ROCE targets, a
bonus of £75,000 was deemed payable
to Graham Wheeler. The Committee
considered the extent to which both
financial and individual performance
targets had been met in determining
these bonuses.
Annual bonus in 2023/24
For the year ending 31 January 2024,
where the threshold performance
targets set are achieved, the annual
bonus has been set at £60,000 for
Anthony Coombs and Graham Coombs,
£50,000 for Graham Wheeler and Chris
Redford and £30,000 for Ed Ahrens and
Jack Coombs. Where the target levels
of performance set are exceeded, then
based on stretch performance targets
the Remuneration Committee has the
discretion to pay an increased annual
bonus to each of Graham Wheeler,
Ed Ahrens and Chris Redford and the
maximum amount payable will not
exceed the maximum limits stated in the
Remuneration Policy. The annual bonus
will continue to be assessed against
stretching Group and divisional PBT and
ROCE targets.
The Remuneration Committee considers
that the actual annual bonus targets
are commercially sensitive and should
therefore remain confidential to the
Company. They provide our competitors
with insight into our business plans,
expectations and our strategic actions.
However, the Remuneration Committee
will continue to disclose how the bonus
pay-out delivered relates to performance
against the Group PBT targets on a
retrospective basis.
Long Term Incentives – Long
Term Incentive Plan (LTIP)
2021
Awards granted during the
period
Graham Wheeler was awarded 6,000
nil cost shadow share options under
the 2021 LTIP in May 2022 at a notional
nil exercise price, subject to achieving
specified stretch Advantage PBT and
ROCE targets for the year ended 31
January 2023.
Chris Redford was awarded 6,000 nil
cost shadow share options under the
2021 LTIP in May 2022 at a notional
nil exercise price, subject to achieving
specified stretch Group PBT targets for
the year ended 31 January 2023.
No other shadow share options were
envisaged to be granted to S&U
directors and none were granted during
the year ended 31 January 2023.
Awards vesting based on
performance in respect the
year ended 31 January 2023
Details of awards vesting on
performance in respect of the year
ended 31 January 2023 have been
included in the notes to the single figure
tables on page 34.
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CONTINUED
Awards for 2023/24
The Committee intends to grant 5,000
nil cost shadow share options under the
2021 LTIP to Graham Wheeler, subject to
achieving certain stretch Advantage PBT
and ROCE targets for the year ending
31 January 2024. The Committee also
intends to grant 3,000 nil cost shadow
share options under the 2021 LTIP to
Ed Ahrens, subject to achieving certain
threshold group PBT and ROCE targets
for the year ending 31 January 2024. The
Committee also intends to grant 5,000
nil cost shadow share options under
the 2021 LTIP to Chris Redford, subject
to achieving certain stretch group PBT
targets for the year ending 31 January
2024.
The LTIPs will normally become
exercisable three years from grant,
subject to the satisfaction of the
performance conditions and the
director remaining in employment. The
Remuneration Committee considers
that the targets are commercially
sensitive and should therefore remain
confidential to the Company. They
provide our competitors with insight
into our business plans, expectations
and our strategic actions. However, the
Remuneration Committee will continue
to disclose how the LTIP vesting relates
to performance against the Group PBT
targets on a retrospective basis.
Anthony Coombs
Bonus
Shadow share options
Graham Coombs
Bonus
Shadow share options
Chris Redford
Bonus
Shadow share options
Graham Wheeler
Bonus
Jack Coombs
Bonus
Shadow share options
Shadow share options
Ed Ahrens*
Bonus
Shadow share options
Vesting schedule
2023
2024
£50,000
£60,000
–
–
£50,000
£60,000
–
£50,000
6,000
£75,000
6,000
£25,000
–
n/a
n/a
–
£50,000
5,000
£50,000
5,000
£30,000
–
£30,000
3,000
* Ed Ahrens was appointed a director of S&U plc on 14 February 2023, after the 31 January 2023 yearend, and so no remuneration is shown in the table for 2023.
For the year ending 31 January 2023, the Remuneration Committee considers that the significant shareholding held by Anthony
Coombs, Graham Coombs and Jack Coombs provides adequate alignment to shareholders. No shareholding guideline applies to
any of the other directors of the Company.
Total pension entitlements in 2022/23 (this section is subject to audit)
During the year the Group made contributions into a defined contribution scheme on behalf of Graham Wheeler, Jack Coombs
and Chris Redford (or pays a salary supplement in lieu). None of the directors have accrued benefits under the defined benefit
scheme.
Defined contribution
or salary supplement
in lieu
£000
Percentage
of Salary
%
36
30
16
14.5
10.0
15.0
Director
Chris Redford
Graham Wheeler
Jack Coombs
3838
S&U Plc Annual Report and Accounts 2023 Company performance – shareholder return graph (this section is not subject to audit)
The following graph shows the Company’s Shareholder Return performance, compared with the performance of the FTSE Small
Cap, over the past ten years. This comparator has been selected since it illustrates S&U’s relative performance within their sector.
S&U PLC
FTSE SMALL CAP
900
800
700
600
500
400
300
200
100
0
x
e
d
n
I
n
r
u
t
e
R
3
1
0
2
/
1
0
/
0
3
4
1
0
2
/
1
0
/
0
3
5
1
0
2
/
1
0
/
0
3
6
1
0
2
/
1
0
/
0
3
7
1
0
2
/
1
0
/
0
3
8
1
0
2
/
1
0
/
0
3
9
1
0
2
/
1
0
/
0
3
0
2
0
2
/
1
0
/
0
3
1
2
0
2
/
1
0
/
0
3
2
2
0
2
/
1
0
/
0
3
3
2
0
2
/
1
0
/
0
3
Executive Chairman Remuneration for the previous ten years (this section is not subject to audit)
The Group does not have a CEO, but the table below shows the detail required by the regulations for our executive chairman Mr
Anthony Coombs:
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
Single figure of
remuneration
£000
Annual bonus (% of
maximum opportunity
for the year)
%
Long term incentive
(% of maximum number
of shares for the year)
%
506
469
450
427
412
387
402
394
390
370
100
100
20
33
40
0
50
100
100
100
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
39
www.suplc.co.uk ― Stock Code: SUSCorporate Governance
B2 Directors’ Remuneration Report
CONTINUED
Percentage change in Executive Directors’ Remuneration (this section is not subject to audit)
The table below sets out in relation to salary, taxable benefits and annual bonus the percentage increase in remuneration for
executive directors and the wider workforce for the years ended 31 January 2023, 31 January 2022 and 31 January 2021 .
Element
Year to 31.1.23
Base salary
Allowances and benefits
Bonus
Year to 31.1.22
Base salary
Allowances and benefits
Bonus
Year to 31.1.21
Base salary
Allowances and benefits
Bonus
Anthony
Coombs
%
Graham
Coombs
%
Chris
Redford
%
Graham
Wheeler*
%
3.8
3.8
66.7
0.0
5.3
100.0
1.4
60.0
(40.0)
3.8
(2.9)
66.7
0.0
0.0
100.0
1.5
0.0
(40.0)
5.4
0.0
0.0
0.0
(15.4)
100.0
3.1
(10.3)
(19.4)
20.0
(18.8)
50.0
0.0
n/a
100.0
n/a
n/a
n/a
Jack
Coombs
%
10.0
0.0
150.0
n/a
n/a
n/a
n/a
n/a
n/a
Wider
Workforce
%
9.0
n/a
6.6
3.0
n/a
186.9
6.1
n/a
(42.0)
* Graham Wheeler was appointed a director of S&U plc on 29 September 2020, so no comparative data is available for the year to 31.1.21.
** Jack Coombs was appointed a director of S&U plc on 14 April 2021, so no comparative data is available for the year to 31.1.21 or the year to 31.1.22.
Anthony Coombs received benefits and
allowances of £82,000 in the year ending
31 January 2023 and £79,000 in the
year ending 31 January 2022. Anthony
Coombs earned a bonus of £50,000 for
the year ending 31 January 2023 and
earned a bonus of £30,000 for the year
ending 31 January 2022.
Chris Redford received benefits and
allowances of £22,000 in the year ending
31 January 2023 and £22,000 in the year
ending 31 January 2022. Chris Redford
earned a bonus of £50,000 for the year
ending 31 January 2023 and earned a
bonus of £50,000 for the year ending 31
January 2022.
Graham Coombs received benefits and
allowances of £34,000 in the year ending
31 January 2023 and £35,000 in the
year ending 31 January 2022. Graham
Coombs earned a bonus of £50,000 for
the year ending 31 January 2023 and
earned a bonus of £30,000 for the year
ending 31 January 2022.
Graham Wheeler received benefits and
allowances of £13,000 in the year ending
31 January 2023 and £16,000 in the
year ending 31 January 2022. Graham
Wheeler earned a bonus of £75,000 for
the year ending 31 January 2023 and
earned a bonus of £50,000 for the year
ending 31 January 2022.
In accordance with the Companies
(Miscellaneous Reporting) Regulations
2018, the average total number of UK
employees within the S&U plc group
for the relevant year was less than
250; accordingly, the Company is not
currently required to report on the ratio
of the Chairman’s single total figure of
remuneration relative to the Company’s
UK employees across the group. The
Remuneration Committee shall continue
to review and monitor its disclosure
obligations under the Companies
(Miscellaneous Reporting) Regulations
2018.
4040
S&U Plc Annual Report and Accounts 2023 Relative Importance of Spend on Pay (this section is not subject to audit)
The graph below shows the relative importance of spend on pay against other cash outflows of the Group for the years ending 31
January 2022 and 31 January 2023. Given the nature of the Group’s business, the other significant outflows for the Group are loan
advances and dividends payable.
2022
2023
350
300
250
200
150
100
50
0
Wages and salaries
Loan advances
Dividends paid
Payments for loss of office (this section is not subject to audit) and to past directors
There were no loss of office payments made during the year ended 31 January 2023.
Statement of directors’ shareholding and share interests
The table below details the beneficial shareholdings and share interests of the directors as at 31 January 2023.
Anthony Coombs
Graham Coombs
Chris Redford
Graham Wheeler
Jack Coombs
Non-executive directors
Demetrios Markou
Graham Pedersen
Tarek Khlat
Jeremy Maxwell
Total at
31 January
2023
1,277,609
1,635,457
16,300
–
1,677,147
4,500
–
–
–
Type
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
In addition to the above holdings, Grevayne Properties Limited, a Company beneficially controlled by Anthony Coombs and
Graham Coombs, holds 328,323 Ordinary Shares.
Ed Ahrens was appointed an executive director of S&U plc after the 31.1.23 yearend, on 14.2.23, and at that date he held 4,500
S&U plc ordinary shares.
There are no share options held under the old LTIP 2010 scheme – there are no direct share interests arising under the new LTIP
2021 scheme agreed by shareholders at the AGM in 2021 as options which are granted under this new scheme are shadow share
options only.
There are no specific shareholding requirements for directors and there have been no changes to the above shareholdings and
share interests between 31 January 2023 and the date of this report.
41
www.suplc.co.uk ― Stock Code: SUSCorporate Governance B2 Directors’ Remuneration Report
CONTINUED
Shareholder vote on the 2022 Remuneration Report and 2021 Remuneration Policy (this section
is not subject to audit)
The table below shows the voting outcome at the 26 May 2022 AGM for the 2022 Directors Remuneration Report (advisory) and
the voting outcome at the 20 May 2021 AGM for the 2021 Remuneration Policy:
Number
of votes
“For” and
“Discretion”
Annual Report on Remuneration 2022
Remuneration Policy 2021
5,578,161
5,672,786
% of votes
cast
93.23
96.46
Number
of votes
“Against”
405,272
208,467
% of votes
cast
6.77
3.54
Total
Number of
votes cast
5,983,433
5,881,253
Number
of votes
“withheld”
79
228
The Remuneration Committee welcomed the passing of the resolutions and the support shown by those Shareholders who voted
in favour and the Remuneration Committee has taken steps wherever practicable to understand Shareholder concerns when
withholding their support.
Approval
This report section B2 of the Annual Report and Accounts including The Annual Remuneration Report was approved by the Board
of Directors on 6 April 2023 and signed on its behalf by:
Tarek Khlat
Chairman of the Remuneration Committee
6 April 2023
4242
S&U Plc Annual Report and Accounts 2023 B3 Governance
B3.1 AUDIT COMMITTEE
REPORT
Role and Responsibilities
The Audit Committee is a committee
of the Board of Directors, made up of
independent non-executive directors.
Its main role is to assist the Board and
protect the interests of shareholders
by reviewing the integrity and
appropriateness of the Group’s financial
information, the systems of internal
controls and risk management and
the audit process, both internal and
external. The Committee continues to
monitor developments in other areas
in this regard, to ensure that its role is
properly and appropriately applied and
performed. The Committee is cognisant
of the evolving audit landscape for listed
companies and is helping the company
develop and embed its evolving response
to climate change including the work
for the task force on climate related
disclosures (TCFD). Two members of
the audit committee also serve on
the Group’s ESG and climate change
committee.
Composition of the Committee
and Meetings
The Company has established an Audit
Committee which is constituted in
accordance with the recommendations
of the UK Corporate Governance Code.
The members of the Committee are
Mr G Pedersen, Mr J Maxwell, Mr D
Markou and Mr T Khlat, who are all
independent non-executive directors.
Biographical details of these directors
are set out on pages 28 and 29. The
Committee is chaired by Mr D Markou.
Meetings are held not less than twice a
year and generally three times a year in
conjunction with the interim and full year
financial reports issued in September
and March and an audit planning
meeting in January. The external auditors
or individual members of the Audit
Committee may request a meeting if
they consider one is necessary and the
Committee ensure that discussions are
held with the external auditors without
executive Board members present.
During the year ending 31 January 2023
three meetings were held including Audit
planning meetings.
Significant Matters related to
the financial statements
The significant matters and areas of
judgement considered by the Audit
Committee in relation to the January
2023 Financial Statements were as
follows:
Impairment of receivables
– Motor Finance – see also
accounting policy 1.5 on
page 65
Receivables are impaired in Motor
Finance based on the overall contractual
arrears status and also the number
of cumulative contractual monthly
payments that have been missed in the
last six months. Impairment is calculated
using models which use historical
payment performance and amounts
recovered from security realisation
to generate the estimated amount
and timing of future cash flows from
each arrears stage. In addition and in
accordance with the provisions of IFRS9 a
collective provision is made for expected
credit losses in the next 12 months in
the remainder of the loan book which
again references historical payment
performance and amounts recovered.
Judgement is applied as to the
appropriate point at which receivables
are impaired and the level of cash flows
that are expected to be recovered from
impaired customers.
In order to assess the appropriateness
of the judgements applied, an exercise
is performed to assess the most recent
performance of customers, including
the cash collection and recovery
performance of impaired customers. This
is used to help forecast expected cash
collections which are then discounted at
the effective interest rate and compared
to the carrying value of receivables at the
yearend with the difference being the
impairment provision.
In assessing the adequacy of the Motor
Finance impairment provision the Audit
Committee considers, reviews and
challenges;
a) The work performed by management
and by Mazars in validating the data
used and their challenge of the
assumptions used by management; and
b) The findings in light of current trading
performance and expected future
trading performance.
Revenue Recognition – Motor
Finance - see also accounting
policy 1.4 on page 64
Interest income is recognised in the
income statement for all loans and
receivables measured at amortised
cost using the constant period rate of
return on the net investment in the loan
which is akin to an effective interest rate
method (EIR). The EIR is the rate that
exactly discounts the expected future
cash flows of the loan back to present
value being the amount advanced to
the customer and hire purchase interest
income is then recognised using the
EIR. Acceptance fees and any direct
transaction cost are included in the
calculation of EIR.
In assessing the appropriateness
of revenue recognition the Audit
Committee considers;
a) The work performed by management
and by Mazars as part of their external
audit, including their challenge of the
assumptions used by management; and
b) The findings in light of current trading
experience and expected future trading
experience.
The Committee also reviewed the
impairment, revenue recognition
and strong receivables growth of our
Property Bridging Finance business which
is currently less material than motor
finance. There were no issues and areas
of judgement considered significant
by the Committee in relation to Aspen
Bridging.
43
www.suplc.co.uk ― Stock Code: SUSCorporate Governance B3 Governance
CONTINUED
Regulatory Correspondence
FRC request for information
The Company received a request for
information from the Financial Reporting
Council (FRC), who regularly review
listed company accounts, in respect of
disclosures around the net increase in
overdraft, expected credit losses and
collateral in S&U’s accounts to 31 January
2022. The company has provided further
information to the FRC and agreed to
amend a narrative comparative figure for
the net overdraft and to further enhance
disclosures in the areas of expected
credit losses and collateral in its accounts
to 31 January 2023. The company is
grateful to the FRC for its helpful and
constructive observations and the FRC
have confirmed that their review is
now closed.
An FRC review provides no assurance
that the S&U annual report was correct
in all material respects; the FRC’s role is
not to verify the information provided
but to consider compliance with
reporting requirements. Its letters are
written on the basis that the FRC (which
includes the FRC’s officers, employees
and agents) accepts no reliability for
reliance on them by the company or any
third party including but not limited to
investors and shareholders.
External Audit
The Committee formally reviews the
effectiveness of the external auditors,
Mazars LLP, and the Group’s relationship
with them. The review consists of a list
of relevant questions, which it discusses
with the Group Finance Director, before
discussing them with external auditors.
As a result, the Committee concluded
that the external audit process during
Mazars LLP’s second year as our auditors
was effective this year. After a rigorous
tender process Mazars LLP were formally
appointed as group auditors at the AGM
in May 2021, taking over from Deloitte
LLP who had been Group Auditors
since 2000.
The Audit Committee and Mazars have
put in place safeguards to ensure that
the independence and objectivity of the
external auditor is maintained including
governing the external auditors’
engagement for non-audit services. In
line with rules for public interest entities
the provision of tax compliance services
was placed with KPMG with effect
from 1 February 2017 and we also now
use KPMG for guidance on directors
remuneration and reporting matters.
Fees paid to the external auditor are
shown in note 7 to the accounts. Overall
the fees paid to the external auditor for
non-audit services were £25,000 (2021:
£25,000) and this was for the half year
review of interim results. The audit
committee have continued to monitor
the quality of service they provided and
their continuing independence. They
examined Mazars transparency report
which demonstrates how audit quality is
maintained in line with the “Audit Quality
Framework” issued by the professional
oversight board of the Financial
Reporting Council. They also considered
Mazars’ understanding of S&U Plc’s
business, their access to appropriate
specialists, and their understanding of
the financial sector in which the Group
operates.
In accordance with this policy the Audit
Committee ensured no external service
provided by the auditors involved it in
management of functions or decision
making or in influencing managements
view on the adequacy of internal controls
or financial reporting. If it were to be
material to the Group, any Corporate
Finance or other advice that Mazars
provided during the year would be
reviewed by the Audit Committee to
ensure that they did not compromise the
auditing function of Mazars in any way.
Internal Audit
During the year, RSM have continued
to provide internal audit services for
the Group. An agreement, overseen by
the Audit Committee, has been entered
into with RSM who will be responsible
for regular internal audits of the
Group’s Regulatory Controls, Customer
Compliance, Risk Management and
Governance Policy and Procedures.
The Committee considers that the
Annual Report and Accounts, taken
as a whole, is fair, balanced and
understandable and provides the
information necessary for shareholders
to assess the Group’s performance,
business model and strategy.
Demetrios Markou
Chairman of the Audit Committee
6 April 2023
B3.2 CORPORATE
GOVERNANCE
2018 saw the revision by the FRC
(Financial Reporting Council) of the UK
Corporate Governance Code, together
with the issue of an accompanying
Guidance on Board Effectiveness. These
update the Provisions of the Code and
the way in which they should be applied
in supporting the code’s Principles.
NARRATIVE STATEMENT
The way in which we comply with the
Code’s Provisions, or explain where we
do not is described below in the five
areas of “Board Leadership and Company
Purpose, Divisions of Responsibilities,
Composition, succession and evaluation,
Audit risk and internal control and
Remuneration.” In addition, our
Chairman’s Statement provides guidance
as to how we interpret the revised
codes more flexible approach in giving
clear reasons for any non-compliance
within the provisions. The rationale for
this includes a “Company’s particular
circumstances based on a range of
factors, including the size, complexity,
history and ownership structure.”
In S&U’s case this has always meant
an identity of interest between major
shareholders and the executive
management of the Company. The
requirement of the Code of Principles
for Board’s to “promote the long-term
sustainability or success of the Company,
generating value for shareholders
and contributing to wider society” is
sustained by this and by our consistent
mantra of “steady, sustainable growth.”
Our mission statement is published on
the inside front cover. Family investment
4444
S&U Plc Annual Report and Accounts 2023 and management has over the past 85
years been reflected in ambition for
growth and for new markets buttressed
by a conservative approach to risk, to
treasury activities and to return on
capital employed. The same culture
is seen in “work force engagements”
through employment stability, good
communications and a streamlined, non-
bureaucratic, management structure,
as a staple of S&U well before the
Governance Code even existed.
This has inevitably meant some
departure from the detailed Provisions
of the Code which primarily focusses
on larger companies, a more formal
approach to employee relations, a
shorter history to establish a proven
responsible culture, and a divorce
between equity and management. We
have carefully explained the reasons
for any departures and will hopefully,
as the revised code requires, now see
these considered by investors and their
representatives “thoughtfully” and not
evaluated in “a mechanistic way”.
Leadership
During the year the Company was
controlled through the Board of Directors
which at 31 January 2023 comprised
five executive and four non-executive
directors. The Chairman is 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.
Under Provision 9 of the Code it is
recommended that the Chairman should
be independent on appointment and
should not have previously served as
Chief Executive of the Company and
under Provision 19 of the Code it is
recommended that the Chairman should
not remain in post beyond nine years
from the date of their first appointment
to the Board. Mr. Anthony Coombs was
appointed Chairman in 2008 as part of
an established succession plan reflecting
the Coombs family’s significant holding
in S&U, the identity of interest between
management and shareholders and the
consequent success of the Company. As
explained above this has been (and is
perceived by the investing community) as
a significant strength in the responsible,
long-term strategic approach to S&U’s
development.
Mr. Coombs now serves as Executive
Chairman and his responsibilities as
Managing Director have been transferred
to the Chief Executive of Advantage
Finance and the Chief Executive of Aspen
Bridging.
The Board has a formal schedule of
matters reserved to it and meets at
least four 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 the business. This includes
its code of conduct, its annual budgets,
its progress towards achievement of
those budgets and its 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. The Board has established
a Nominations Committee, an Audit
Committee and a Remuneration
Committee. Each Committee operates
within defined terms of reference.
Advantage Finance and Aspen Bridging
are each managed by a separate board
of directors. The minutes 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.
Demetrios Markou has served as a
non-executive director on the Board for
over nine years. Notwithstanding this
length of service, the Board considers
him to be independent due to his robust
judgement and character and the
invaluable balance and experience he has
brought to the Board’s deliberations. This
experience as a Chartered Accountant
is particularly important during the
adoption of evolving accounting
standards in TCFD and other areas and
as the company consolidates its recent
growth.
Graham Pedersen was appointed to the
Board in February 2015 and brings a
wealth of experience to the S&U Board
both as a regulator and a banker. In
March 2016, Tarek Khlat, a Banker, FCA
Approved Person and Wealth Manager
of great experience and expertise was
appointed to the Board. In January 2022,
Jeremy Maxwell was appointed to the
Board and brings broad expertise in
digital innovation, marketing, commercial
development and customer experience
from over 25 years in the retail and B2B
distribution industries.
In February 2023, after the end of
the financial year, Ed Ahrens the CEO
of Aspen Bridging was appointed to
the Board of S&U plc as an Executive
Director. This was considered appropriate
given his prudent and controlled
leadership of our growing property
bridging business and the wide range of
skills and experience from his banking
background which enhance the overall
Board management of the Group.
The Nominations Committee, chaired
by Mr. G Pedersen, comprises the
independent non-executive directors
and Anthony Coombs, Group Chairman.
Audit and Remuneration Committees
are made up of the four independent
non-executive directors and chaired
by Demetrios Markou and Tarek Khlat
respectively.
Effectiveness
Our executive directors are appraised
annually by the Chairman, the Deputy
Chairman and the independent non-
executives. The Chairman and the
Deputy Chairman are appraised annually
by the independent non-executives. The
results of these appraisals are considered
by the Remuneration Committee for the
45
www.suplc.co.uk ― Stock Code: SUSCorporate Governance B3 Governance
CONTINUED
determination of their remuneration
recommendations. During the year
there was no external evaluation of the
Board but the performance of the Board
and each of the Board Committees was
reviewed by the Board with regard to
the performance and achievements
during the year. The performance of the
Board and all three committees was self-
assessed by the Board to be effective.
Our non-executive directors receive
full updates on Company progress
and relevant issues and bring their
experience and sound judgement to
bear on matters arising. The Chairman
considers the effectiveness of each non-
executive director annually.
Directors have both the time and
experience to fulfil their responsibilities
and none sit on other PLC boards. The
Nomination Committee advises the
Board on refreshment and succession
planning, whilst independent
recruitment consultants are used for
important executive roles. There were
no Board appointments during the
current year, but after the year end
the Nomination Committee played a
significant role in the appointment of Ed
Ahrens, an appointment which enhances
the relevant skills and experience of
the Board. The Nomination Committee
will continue to monitor the availability
of relevant skills and experience
alongside its corporate governance
responsibilities, in its further succession
planning and when considering any
future appointments to the Board.
Whilst the Board notes the Code’s focus
on diversity, both Board and executive
appointments are made purely on
the basis of ability and temperament,
irrespective of race, gender or sexual
orientation.
Messrs Anthony Coombs, Graham
Coombs, Chris Redford, Graham
Wheeler, Jack Coombs, Graham
Pedersen, Tarek Khlat, Jeremy Maxwell
and Demetrios Markou being eligible
offer themselves for re-election at the
next Annual General Meeting. Tarek
Khlat, Graham Pedersen, and Demetrios
Markou are non-executive directors
and the Chairman has determined their
performance to be both effective and
committed. Ed Ahrens was appointed
to the Board on 14 February 2023 and
offers himself for election at the next
Annual General Meeting.
The Senior Independent Director
Demetrios Markou provides a sounding
Board and objective support for the
Chairman and serves as an intermediary
for the other directors when necessary.
The Company Secretary Chris Redford is
available to provide advice and services
to all Board members and is responsible
for ensuring Board procedures are
followed. All directors are also able to
take independent advice in furtherance
of their duties if necessary.
Accountability
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 Strategic Report within
pages 10 to 25, 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 51 and those of the auditor on
page 56.
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 by management
and by our independent internal
auditors RSM 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 Audit Committee overviews
the monitoring of the adequacy of
the Group’s internal controls and
whistleblowing procedures.
There is an ongoing process for
identifying, evaluating and managing
the significant risks faced by the Group.
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 including a review
during the reporting period and accords
with the guidance in the UK Corporate
Governance 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.
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
4646
S&U Plc Annual Report and Accounts 2023 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 and RSM as a regular attendee
in order that the Committee can review
the external and internal 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.
This is 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 71 and all non-audit service
requirements are considered by the
Group before an appointment is made.
The non-audit services provided were
audit related assurance.
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 free from
any form of discrimination. The Group
will always wish to ensure appointments
reflect the best skills available for the
role. Currently 14 women hold 33%
of senior management positions and
women hold 62% of other employee
positions and during the year no female
directors served on the Board. Currently
28 men hold 67% of senior management
positions and men hold 38% of other
employee positions and during the year
nine male directors served on the Board.
The Company had 11 employees of
which two are women and nine are men
including seven S&U plc Directors.
Board and Committee attendance
The attendance of individual directors at the regular meetings of the Board and its Committees during the year ended 31 January
2023 is shown in the table below:
Meeting Attendance
Number of meetings
AMV Coombs
GDC Coombs
D Markou
G Pedersen
T Khlat
JP Maxwell
J EC Coombs
TG Wheeler
CH Redford
Board
Nominations
Remuneration
Audit
5
5
5
5
5
5
5
5
5
5
1
1
n/a
1
1
1
1
n/a
n/a
n/a
1
n/a
n/a
1
1
1
1
n/a
n/a
n/a
3
n/a
n/a
3
3
3
3
n/a
n/a
n/a
Ed Ahrens was appointed to the Board
on 14 February 2023 and therefore there
were no Board meetings during the year
ended 31 January 2023 which he could
have attended.
Remuneration
The Remuneration Committee has
specific terms of reference which
deal with its authority and duties and
these, together with details of how
the Company has complied with the
Remuneration provisions of the UK
Corporate Governance Code, are detailed
in the Directors Remuneration Report on
page 30.
Relations with Stakeholders
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 have been
taken in recent years to enhance these
relationships. Twice yearly road shows
are conducted by the Chairman and
senior directors when the performance
and future strategy of the company
is discussed with larger shareholders.
Queries from all shareholders are dealt
with personally by the Chairman.
Members of the Board including
the Chairman meet frequently with
shareholders and conduct regular
roadshows throughout the UK to
present to current and future investors.
Shareholder and Investor relations are
managed in tandem with our Stockbroker
Peel Hunt who issue regular reports on
these activities.
47
www.suplc.co.uk ― Stock Code: SUSCorporate Governance B3 Governance
CONTINUED
Mutual commitment and loyalty between
Company and its employees has under-
pinned S&U’s 85-year history. Both its
size, with currently over 190 employees
in Grimsby and over 20 in Solihull and its
family ethos ensure that the “employee
voice” is heard and heeded. Regular
appraisals and feedback meetings
are held and internal promotion is
encouraged. As a result, staff retention
rates are very high. Whistle-blower
Policies are in place at Advantage.
Although, the S&U Group does not
have a formal mechanism of staff
engagement with the Board, staff in the
major operating subsidiary, Advantage
Finance, do actively participate in regular
“cascade” meetings where business
developments and resourcing levels are
discussed. It is felt that such practices
do allow proper workforce engagement
to take place without the specific need
to create a formal “Staff Consultative”
committee structure.
The size, history and culture of the
company encourage participation of
all directors and senior management
and employee relations and make
designated board members or workforce
committees unnecessary.
B3.3 COMPLIANCE STATEMENT
Throughout the year ended 31 January
2023 the company has discharged
and met its responsibilities under the
Principles and Provisions of the 2018 UK
Corporate Governance Code and under
the guidance attached to it. Where it
has not followed provisions 9 and 19 of
the code with its appointment of the
Chairman in 2008 and service thereafter,
“a clear rationale for the action” is also
set out above.
Graham Pedersen
Chairman of the Nominations Committee
6 April 2023
4848
S&U Plc Annual Report and Accounts 2023 B4 Directors’ Report
The directors present their Annual
Report and the audited financial
statements for the year ended 31
January 2023 and for the period up to
the date of signing these accounts on
6 April 2023.
The names of all of the directors who
served during the year and up to the
date of signing the accounts are shown
in the directors’ biographies on pages
28 and 29. The CEO of our growing
Aspen Bridging business Ed Ahrens was
appointed to the Board on 14 February
2023 after the financial year end. Ed has
shown prudent and controlled leadership
of our growing property bridging
business and brings with him a wealth
of skills and expertise from his banking
background. All the other 9 directors
served for the full year to 31 January
2023.
No political donations were made during
the year (2022: £nil).
Dividends
Dividends of £15,546,000 (2022
£12,263,000) were paid during the year.
After the year end a second interim
dividend for the financial year of
£4,617,000 being 38.0p per ordinary
share (2022: 36.0p) was paid to
shareholders on 10 March 2023.
The directors now recommend a final
dividend, subject to shareholders
approval of 60.0p per share (2022:
57.0p). This, together with the interim
dividends totalling 73.0p per share
(2022: 69.0p) already paid, makes a total
dividend for the year of 133.0p per share
(2022: 126.0p).
Substantial shareholdings
At 6 April 2023, the Company had been
notified of the following interests of
3% or more in its issued ordinary share
capital (excluding those of the directors
disclosed in the Directors’ Remuneration
Report above):-
No of
ordinary
shares
% of
Ordinary
share
capital
Shareholder
461,885
Jennifer Coombs
Wiseheights Limited 2,420,000
3.8%
19.9%
Capital structure
Details of the issued share capital,
together with details of the movements
in the Company’s issued shared capital
during the year are shown in note 20.
The Company has one class of ordinary
shares which carry no right to fixed
income. Each ordinary share carries the
right to one vote at general meetings of
the Company. The cumulative preference
shares carry 6% interest but do not carry
voting rights.
There are no specific restrictions on
the size of a holding nor on the transfer
of shares, which are both governed by
the general provisions of the Articles of
Association and prevailing legislation.
The directors are not aware of any
agreements between holders of the
Company’s shares that may result in
restrictions on the transfer of securities
or on voting rights.
Changes in accounting policies
There were no significant changes in
accounting policies this year.
AUDITOR
Each of the persons who is a director at
the date of approval of the annual report
confirms that; so far as each director
is aware, there is no relevant audit
information of which the Company’s
auditor is unaware; each director has
taken all the steps that he ought to
have taken as a director in order to
make himself aware of any relevant
audit information and to establish that
the Company’s auditor is aware of that
information. This confirmation is given
and should be interpreted in accordance
with the provisions of section 418 of the
Companies Act 2006.
Mazars LLP have expressed their
willingness to continue in office as
auditor and a resolution to reappoint
them will be proposed at the
forthcoming Annual General Meeting.
Post balance sheet events
There are no significant post balance
sheet events to report.
49
www.suplc.co.uk ― Stock Code: SUSCorporate Governance B4 Directors’ Report
CONTINUED
Directors
Under article 154 of the Company’s
articles of association, the Company
has qualifying third party indemnity
provisions for the benefit of its directors
and those of subsidiary company
directors which remain in force at the
date of this report. The two matters to
report under the disclosure requirements
of the Large and Medium-sized
Companies and Groups (Report and
Accounts) Regulations 2008, are that;
1. The Board may appoint a director
during the year and until the dissolution
of the next AGM as long as the
maximum number of 10 directors is not
exceeded.
2. The Board have the power to issue
and allot up to 10% of the ordinary
share capital of the company and
to buy back up to 3,598,506 31.5%
preference shares and up to 200,000
6% preference shares of the company.
The two matters required to report
under listing rule 9.8.4R are as follows:
1. The Company has a long term incentive
scheme (LTIP 2021) with awards of
shadow share options which can only
be cash settled. Details of awards under
this scheme to directors are shown in
section B2.2.
2. Under the old long term incentive
scheme (LTIP 2010) 5,500 ordinary
shares were issued during the year as
per note 26 to the accounts. These
5,500 were the last shares which could
be issued under this LTIP 2010.
Information presented in
other sections
Certain information required to be
included in the Director’s report can be
found in other sections of the Annual
Report and Accounts as described below.
All the information presented in these
sections is incorporated by reference into
this Director’s report and is deemed to
form part of this report.
• Information surrounding future
developments is given in the Strategic
Report and Chairman’s Statement.
• Information surrounding engagement
with customers, business partners and
others is given in the Strategic Report
and S172 Statement.
• Disclosures concerning greenhouse gas
emissions are given in Section A4.4 in
the Strategic Report.
• Information about the Group’s use of
financial instruments is given in the
note to the accounts 22.
The Board confirms that the Annual
Report and accounts, taken as a whole,
is fair, balanced and understandable
and provides the information necessary
for shareholders to assess the Group’s
performance, business model and
strategy.
Approved by the Board of Directors and
signed on behalf of the Board
Chris Redford
Company Secretary
6 April 2023
5050
S&U Plc Annual Report and Accounts 2023
B5 Directors’ Responsibilities Statement
The directors are responsible for
preparing the Annual Report and the
financial statements in accordance with
applicable law and regulations.
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
company will continue in business.
The directors are responsible for keeping
adequate accounting records that
are sufficient to show and explain the
company’s and group’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 group 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.
Company law requires the directors
to prepare financial statements for
each financial year. Under that law the
directors are required to prepare the
parent company (the “company”) and
Group financial statements in accordance
with UK-adopted international
accounting standards. 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 and the
Group for that period. In preparing these
financial statements, the directors are
required to:
• properly select suitable accounting
policies and then apply them
consistently;
• make judgements and accounting
estimates that are reasonable and
prudent;
• state whether applicable UK-adopted
international accounting have been
followed, subject to any material
departures disclosed and explained in
the financial statements; and
Responsibility statement
We confirm that to the best of our
knowledge:
• the financial statements, prepared
in accordance with UK-adopted
international accounting standards
give a true and fair view of the assets,
liabilities, financial position and profit
of the company and the undertakings
included in the consolidation taken as
a whole;
• the strategic 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; and
• the annual report and financial
statements, taken as a whole, are fair,
balanced and understandable and
provide the information necessary for
shareholders to assess the company’s
performance, business model and
strategy.
By order of the Board
Anthony Coombs
Chairman
6 April 2023
Chris Redford
Group Finance Director
6 April 2023
51
www.suplc.co.uk ― Stock Code: SUSCorporate Governance C Independent Auditor’s Report
to the Members of S&U Plc
Opinion
We have audited the financial
statements of S&U plc (the ‘parent
company’) and its subsidiaries (the
‘group’) for the year ended 31 January
2023 which comprise the group income
statement, the group and parent
company statements of comprehensive
income, the group and parent company
balance sheets, the group and parent
company statements of changes in
equity, the group and parent company
cash flow statements, and notes to
the financial statements, including
a summary of significant accounting
policies.
The financial reporting framework that
has been applied in their preparation
is applicable law and UK-adopted
international accounting standards and,
as regards the parent company financial
statements, as applied in accordance
with the provisions of the Companies
Act 2006.
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 2023
and of the group’s profit for the year
then ended;
• have been properly prepared
in accordance with UK-adopted
international accounting standards
and, as regards the parent company
financial statements, as applied in
accordance with the provisions of the
Companies Act 2006; and
• have been prepared in accordance with
the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance
with International Standards on Auditing
(UK) (‘ISAs (UK)’) and applicable law. Our
responsibilities under those standards
are further described in the “Auditor’s
responsibilities for the audit of the
financial statements” section of our
report. We are independent of the group
and the parent company in accordance
with the ethical requirements that are
relevant to our audit of the financial
statements in the UK, including the
Financial Reporting Council’s (‘FRC’)
Ethical Standard as applied to listed
and public interest entities and we have
fulfilled our other ethical responsibilities
in accordance with these requirements.
We believe that the audit evidence
we have obtained is sufficient and
appropriate to provide a basis for our
opinion.
Conclusions relating to going
concern
In auditing the financial statements, we
have concluded that the directors’ use
of the going concern basis of accounting
in the preparation of the financial
statements is appropriate.
Our audit procedures to evaluate the
directors’ assessment of the group’s
and the parent company’s ability to
continue to adopt the going concern
basis of accounting included but were
not limited to:
• Undertaking an initial assessment
at the planning stage of the audit to
identify events or conditions that may
cast significant doubt on the group’s
and the parent company’s ability to
continue as a going concern;
• Obtaining an understanding of the
relevant controls relating to the
directors’ going concern assessment;
• Making enquiries of the directors to
understand the period of assessment
considered by them, the assumptions
they considered and the implication of
those when assessing the group’s and
the parent company’s future financial
performance;
• Challenging the appropriateness of the
directors’ key assumptions in their cash
flow forecasts by reviewing supporting
and contradictory evidence in relation
to these key assumptions. This included
assessing the viability of mitigating
actions within the directors’ control;
• Testing the accuracy and functionality
of the model used to prepare the
directors’ forecasts;
• Assessing the historical accuracy of
forecasts prepared by the directors;
• Engaging in regular discussions with
the directors regarding the status
of negotiations in respect of new
financing options;
• Reviewing regulatory correspondence,
minutes of meetings of the Audit
Committee and the Board of Directors,
and post balance sheet events to
identify events of conditions that may
impact the group’s and the parent
company’s ability to continue as a
going concern;
• Considering the consistency of the
directors’ forecasts with other areas of
the financial statements and our audit;
and
• Evaluating the appropriateness of the
directors’ disclosures in the financial
statements on going concern.
Based on the work we have performed,
we have not identified any material
uncertainties relating to events
or conditions that, individually or
collectively, may cast significant doubt
on the group’s and the parent company’s
ability to continue as a going concern
for a period of at least twelve months
from when the financial statements are
authorised for issue.
Our responsibilities and the
responsibilities of the directors with
respect to going concern are described
in the relevant sections of this report.
In relation to S&U Plc’s reporting on
how it has applied the UK Corporate
Governance Code, we have nothing
material to add or draw attention to in
relation to the directors’ statement in
the financial statements about whether
the director’s considered it appropriate
to adopt the going concern basis of
accounting.
5252
S&U Plc Annual Report and Accounts 2023 Key audit matters
Key audit matters are those matters
that, in our professional judgement,
were of most significance in our audit of
the financial statements of the current
period and include the most significant
assessed risks of material misstatement
(whether or not due to fraud) we
identified, including those which had
the greatest effect on: the overall audit
strategy; the allocation of resources in
the audit; and directing the efforts of the
engagement team. These matters were
addressed in the context of our audit of
the financial statements as a whole, and
in forming our opinion thereon, and we
do not provide a separate opinion on
these matters.
We summarise below the key audit
matters in forming our opinion above,
together with an overview of the
principal audit procedures performed
to address each matter and our key
observations arising from those
procedures.
These matters, together with our
findings, were communicated to those
charged with governance through our
Audit Completion Report.
Key Audit Matter
How our scope addressed this matter
Measurement of loan impairments on loans and advances
to customers (Group and Advantage) (2023: £96.5m, 2022:
£92.1m)
Refer to note 1.4 for the accounting policy, note 1.13 for details
of the key sources of estimation uncertainty and note 15 for
relevant disclosures.
The estimation of expected credit losses (ECL) on loans and
advances to customers is complex and inherently judgemental.
The models require probabilities of default (PD), loss given
default (LGD) and exposures at default (EAD) to be determined,
as well as significant increase in credit risk (SICR) triggers,
that are altogether adjusted to take into account probability
weighted forward looking economic scenarios.
In the financial year, this has been made all the more
challenging by inflation hitting 11% and the cost of living crisis
putting additional financial pressure on household finances
and their ability to service debt. The unprecedented economic
environment is making modelling even more challenging,
resulting in the Group applying post model adjustments to its
macroeconomic scenarios.
The ECL model is most sensitive to:
• Identification of SICR and the resulting staging of loans,
• The core PD and LGD assumptions, and
• The post model adjustments.
The range of reasonable outcomes could be greater than
materiality for the financial statements as a whole.
Our audit procedures included, but were not limited to:
• Understanding and evaluating the control environment over
the ECL model;
• Challenging the key assumptions of the PD, LGD and significant
increases in credit risk (SICR) and the staging applied and
forward-looking assumptions and weighting;
• Critically assessing the methodology for determining the
SICR criteria and independently test a sample of loans for
appropriateness of staging;
• Assessing the integrity of data used in the calibration of the PD
and LGD;
• Critically challenging and recalculating the post model
adjustments applied to take account of the impact of inflation
on customers’ ability to service their financing;
• Performing a stand back assessment of the resulting ECL
estimates to assess its appropriateness; and
• Assessing the adequacy of the Group’s disclosures in relation
to ECL.
Our observations
Based on the audit procedures performed, we found the
resulting estimate of the loan impairment provision as of
31 January 2023 and the approach taken in respect of ECL
are consistent with the requirements of IFRS 9 and that the
judgements made were reasonable.
53
www.suplc.co.uk ― Stock Code: SUSCorporate Governance C Independent Auditor’s Report
to the Members of S&U Plc
CONTINUED
Key Audit Matter
Revenue recognition – Constant periodic rate of return
assessment as per IFRS 16 (Group) (2023: £102.7m, 2022:
£87.9m)
Refer to note 1.4 for the accounting policy and note 3 for
relevant disclosures.
Recognising income under IFRS 16 for leases on a constant yield
basis is a complex area that involves judgement.
The majority of revenue is system generated but to convert
that to a constant yield basis requires management judgement
in relation to the inclusion of directly attributable costs/fees
and associated cash flows that require to be spread over the
life of the products, with accounting entries generated using
complex spreadsheets models.
Given the degree of judgement involved in relation to
fees directly attributable to each customer agreement, we
identified that there is a potential risk of fraud through possible
manipulation of this balance.
How our scope addressed this matter
Our audit procedures included, but were not limited to:
• Assessing the design and implementation and test the
operating effectiveness of key controls over the constant
periodic rate of return on leases;
• Testing the accuracy and completeness of data inputs such
as interest rates, outstanding loan balances and directly
attributable cost/income; and
• Reviewing and challenging key accounting judgement on the
recognition of directly attributable fees and costs.
Our observations
Based on the audit procedures performed, we found the
resulting estimate of revenue recognition on a constant yield
basis to be reasonable for the year ended 31 January 2023 and
consistent with the requirements of IFRS 16.
Our application of materiality and an overview of the scope of our audit
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and on the financial statements as a whole. Based on our professional judgement, we determined
materiality for the financial statements as a whole as follows:
Group materiality
Overall materiality
How we determined it
Rationale for benchmark applied We determined materiality using PBT as we considered this to be the most appropriate
£2.1m (2022: £2.4m)
5% of profit before tax (PBT) (2022: 5% of PBT)
measure to assess the performance of this profit-focused group.
Performance materiality
Reporting threshold
Performance materiality is set to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements in the financial statements exceeds
materiality for the financial statements as a whole.
We set performance materiality at £1.3m (2022: £1.4m), which represents 65% (2022: 60%) of
overall materiality.
In determining the performance materiality, we considered a number of factors, including the
effectiveness of internal controls and the history of misstatements, and concluded that an
amount toward the upper end of our normal range was appropriate.
We agreed with the directors that we would report to them misstatements identified during
our audit above £62,000 (2022: £71,000) as well as misstatements below that amount that, in
our view, warranted reporting for qualitative reasons.
5454
S&U Plc Annual Report and Accounts 2023 Parent company materiality
Overall materiality
£0.7m (2022: £0.7m)
How we determined it
Rationale for benchmark applied Net assets are used as the basis for materiality because the parent company is primarily a
1% net assets (2022: 1% net assets)
Performance materiality
Reporting threshold
holding company for the trading components of the group, as such we consider net assets to
reflect its holding activities.
Performance materiality is set to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements in the financial statements exceeds
materiality for the financial statements as a whole.
We set performance materiality at £0.5m (2022: £0.4m), which represents 65% (2022: 60%) of
overall materiality.
In determining the performance materiality, we considered a number of factors, including the
effectiveness of internal controls and the history of misstatements, and concluded that an
amount toward the upper end of our normal range was appropriate.
We agreed with the directors that we would report to them misstatements identified during
our audit above £21,000 (2022: £22,000) as well as misstatements below that amount that, in
our view, warranted reporting for qualitative reasons.
As part of designing our audit,
we assessed the risk of material
misstatement in the financial statements,
whether due to fraud or error, and
then designed and performed audit
procedures responsive to those risks.
In particular, we looked at where the
directors made subjective judgements,
such as assumptions on significant
accounting estimates.
We tailored the scope of our audit to
ensure that we performed sufficient
work to be able to give an opinion on
the financial statements as a whole. We
used the outputs of our risk assessment,
our understanding of the group and the
parent company, their environment,
controls, and critical business processes,
to consider qualitative factors to ensure
that we obtained sufficient coverage
across all financial statement line items.
Our group audit scope included an
audit of the group and the parent
company financial statements. Based
on our risk assessment, the two trading
components, Advantage Finance Limited
and Aspen Bridging Limited, together
with the parent company, were subject
to full scope audit performed by the
group audit team. This provided 100%
coverage of group revenue, PBT, total
assets and net assets.
At the parent company level, the group
audit team also tested the consolidation
process and carried out analytical
procedures to confirm our conclusion
that there were no significant risks of
material misstatement of the aggregated
financial information.
Other information
The other information comprises the
information included in the Report and
Financial Statements other than the
financial statements and our auditor’s
report thereon. The directors are
responsible for the other information.
Our opinion on the financial statements
does not cover the other information
and, except to the extent otherwise
explicitly stated in our report, we do not
express any form of assurance conclusion
thereon.
Our responsibility is to read the other
information and, in doing so, consider
whether the other information is
materially inconsistent with the financial
statements or our knowledge obtained in
the course of audit or otherwise appears
to be materially misstated. If we identify
such material inconsistencies or apparent
material misstatements, we are required
to determine whether this gives rise to
a material misstatement in the financial
statements themselves. If, based on the
work we have performed, we conclude
that there is a material misstatement of
this other information, we are required
to report that fact.
We have nothing to report in this regard.
Opinions 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.
In our opinion, based on the work
undertaken in the course of the audit:
• the information given in the strategic
report and the directors’ report for the
financial year for which the financial
statements are prepared is consistent
with the financial statements and
those reports have been prepared
in accordance with applicable legal
requirements;
• the information about internal control
and risk management systems in
relation to financial reporting processes
and about share capital structures,
given in compliance with rules 7.2.5 and
7.2.6 in the Disclosure Guidance and
Transparency Rules sourcebook made
by the Financial Conduct Authority
(the FCA Rules), is consistent with the
financial statements and has been
prepared in accordance with applicable
legal requirements; and
• information about the parent
company’s corporate governance
code and practices and about
its administrative, management
and supervisory bodies and their
committees complies with rules 7.2.2,
7.2.3 and 7.2.7 of the
55
www.suplc.co.uk ― Stock Code: SUSCorporate Governance C Independent Auditor’s Report
to the Members of S&U Plc
CONTINUED
FCA Rules.
Matters on which we
are required to report by
exception
In light of the knowledge and
understanding of the group and the
parent company and their environment
obtained in the course of the audit,
we have not identified material
misstatements in the:
• strategic report or the directors’ report;
or
• information about internal control and
risk management systems in relation
to financial reporting processes and
about share capital structures, given in
compliance with rules 7.2.5 and 7.2.6 of
the FCA Rules.
We have nothing to report in respect of
the following matters in relation to which
the Companies Act 2006 requires us 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; or
• a corporate governance statement
has not been prepared by the parent
company.
Corporate governance
statement
The Listing Rules require us to review
the directors’ statement in relation to
going concern, longer-term viability and
that part of the Corporate Governance
Statement relating to S&U Plc’s
compliance with the provisions of the UK
Corporate Governance Code specified for
our review.
Based on the work undertaken as part
of our audit, we have concluded that
each of the following elements of the
Corporate Governance Statement is
materially consistent with the financial
statements or our knowledge obtained
during the audit:
• Directors’ statement with regards the
appropriateness of adopting the going
concern basis of accounting and any
material uncertainties identified, set
out on page 15;
• Directors’ explanation as to its
assessment of the entity’s prospects,
the period this assessment covers and
why they period is appropriate, set out
on page 15;
• Directors’ statement on fair,
balanced and understandable, set
out on page 50;
• Board’s confirmation that it has
Auditor’s responsibilities
for the audit of the financial
statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud or error, and to issue an auditor’s
report that includes our opinion.
Reasonable assurance is a high level
of assurance but is not a guarantee
that an audit conducted in accordance
with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud
or error and are considered material
if, individually or in the aggregate,
they could reasonably be expected
to influence the economic decisions
of users taken on the basis of these
financial statements.
carried out a robust assessment of the
e-merging and principal risks, set out on
page 15;
The extent to which our procedures
are capable of detecting irregularities,
including fraud is detailed below.
Irregularities, including fraud, are
instances of non-compliance with laws
and regulations. We design procedures
in line with our responsibilities, outlined
above, to detect material misstatements
in respect of irregularities, including
fraud.
Based on our understanding of the
group and the parent company and
their industry, we considered that non-
compliance with the following laws and
regulations might have a material effect
on the financial statements: Financial
Conduct Authority (‘FCA’) regulations
and the Listing Rules.
To help us identify instances of
non-compliance with these laws
and regulations, and in identifying
and assessing the risks of material
misstatement in respect to non-
compliance, our procedures included,
but were not limited to:
• The section of the annual report that
describes the review of effectiveness of
risk management and internal control
systems, set out on page 46; and;
• The section describing the work of the
audit committee, set out on page 43.
Responsibilities of Directors
As explained more fully in the directors’
responsibilities statement set out on
page 51, the directors are responsible
for the preparation of the financial
statements and for being satisfied that
they give a true and fair view, and for
such internal control as the directors
determine is necessary to enable the
preparation of financial statements that
are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the
directors are responsible for assessing
the group’s and the parent company’s
ability to continue as a going concern,
disclosing, as applicable, matters related
to going concern and using the going
concern basis of accounting unless the
directors either intend to liquidate the
group or the parent company or to
cease operations, or have no realistic
alternative but to do so.
5656
S&U Plc Annual Report and Accounts 2023 The non-audit services prohibited by the
FRC’s Ethical Standard were not provided
to the group or the parent company and
we remain independent of the group and
the parent company in conducting our
audit.
Our audit opinion is consistent with
our additional report to the Audit
Committee.
Use of the audit report
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.
David Allen (Senior Statutory Auditor)
for and on behalf of Mazars LLP
Chartered Accountants and Statutory
Auditor
30 Old Bailey, London, EC4M 7AU
6 April 2023
• Gaining an understanding of the legal
and regulatory framework applicable to
the group and the parent company, the
industry in which they operate, and the
structure of the group, and considering
the risk of acts by the group and the
parent company which were contrary
to the applicable laws and regulations,
including fraud;
• Inquiring of the directors, management
and, where appropriate, those charged
with governance, as to whether the
group and the parent company are in
compliance with laws and regulations,
and discussing their policies and
procedures regarding compliance with
laws and regulations;
• Inspecting correspondence with
relevant licensing or regulatory
authorities, including the FCA;
• Reviewing minutes of meetings of
the Board of Directors and the Audit
Committee held during the year; and
• Discussing amongst the engagement
team the laws and regulations listed
above, and remaining alert to any
indications of non-compliance.
We also considered those laws and
regulations that have a direct effect
on the preparation of the financial
statements, such as tax legislation,
pension legislation and the Companies
Act 2006.
In addition, we evaluated the directors’
and management’s incentives
and opportunities for fraudulent
manipulation of the financial statements,
including the risk of management
override of controls, and determined
that the principal risks related to posting
manual journal entries to manipulate
financial performance, management bias
through judgements and assumptions
in significant accounting estimates, in
particular in relation to IFRS 16 constant
yield revenue recognition (which we
pinpointed to the existence and accuracy
assertions as described in the “Key
audit matters” section of our report),
and significant one-off or unusual
transactions.
Our procedures in relation to fraud
included but were not limited to:
• Making enquiries of the directors and
management on whether they had
knowledge of any actual, suspected or
alleged fraud;
• Gaining an understanding of the
internal controls established to mitigate
risks related to fraud;
• Discussing amongst the engagement
team the risks of fraud; and
• Addressing the risks of fraud through
management override of controls by
performing journal entry testing.
The primary responsibility for
the prevention and detection of
irregularities, including fraud, rests with
both those charged with governance
and management. As with any audit,
there remained a risk of non-detection
of irregularities, as these may involve
collusion, forgery, intentional omissions,
misrepresentations or the override of
internal controls.
The risks of material misstatement that
had the greatest effect on our audit are
discussed in the “Key audit matters”
section of this report.
A further description of our
responsibilities is available on the
Financial Reporting Council’s website at
www.frc.org.uk/auditorsresponsibilities.
This description forms part of our
auditor’s report.
Other matters which we are
required to address
Following the recommendation of the
Audit Committee, we were appointed
by the Audit Committee on 4 August
2021 to audit the financial statements
for the year ending 31 January 2022 and
subsequent financial periods. The period
of total uninterrupted engagement is
two years, covering the years ended 31
January 2022 and 31 January 2023.
57
www.suplc.co.uk ― Stock Code: SUSCorporate Governance The Accounts
In this section
D1 D1.1 Group Income Statement
and Statement of
Comprehensive Income
D1.2 Balance Sheet
D1.3 Statement of Changes
in Equity
D1.4 Cash Flow Statement
D2 Notes to the Accounts
Five Year Financial Record
60
61
62
63
64
89
5858
S&U Plc Annual Report and Accounts 2023
D2 Notes to the Accounts CONTINUEDYear ended 31 January 2023 s
t
n
u
o
c
c
A
e
h
T
59
www.suplc.co.uk ― Stock Code: SUS
The Accounts
D1 The Accounts
D1.1 Group income Statement
For the year ended 31 January 2023
From continuing operations
Revenue
Cost of sales
Impairment charge
Gross profit
Administrative expenses
Operating profit
Finance costs (net)
Profit before taxation
Taxation
Profit for the year attributable to equity holders
Earnings per share
Basic
Diluted
Notes
3
4
5
7
8
2
10
12
12
2023
£000
102,714
(23,676)
(13,877)
65,161
(16,256)
48,905
(7,495)
41,410
(7,692)
33,718
277.5p
277.5p
2022
£000
87,889
(18,771)
(4,120)
64,998
(14,208)
50,790
(3,772)
47,018
(9,036)
37,982
312.8p
312.7p
Statement of
Comprehensive Income
Profit for the year attributable to equity holders
Actuarial loss on defined benefit pension scheme
Total Comprehensive Income for the year
Note
27
Group
2023
£000
33,718
(13)
33,705
Group
2022
£000
37,982
(6)
37,976
Company
2023
£000
16,039
(13)
16,026
Company
2022
£000
10,113
(6)
10,107
Items above will not be reclassified subsequently to the Income Statement.
6060
S&U Plc Annual Report and Accounts 2023 D1.2 Balance Sheet
AS AT 31 JANUARY 2023
Company Registration No: 0342025
ASSETS
Non-current assets
Property, plant and equipment
Investments
Amounts receivable from customers
Trade and other receivables
Deferred tax assets
Current assets
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
Lease liabilities
Accruals
Non-current liabilities
Borrowings
Lease liabilities
Financial liabilities
Total liabilities
NET ASSETS
Equity
Called up share capital
Share premium account
Profit and loss account
Total equity
Notes
13
14
15
16
19
15
16
17
18
17
21
20
Group
2023
£000
2,616
–
219,305
–
110
222,031
201,405
1,601
3,137
206,143
428,174
–
(4,602)
(888)
(166)
(1,262)
(6,918)
(195,500)
(421)
(450)
(196,371)
(203,289)
224,885
1,719
2,301
220,865
224,885
Group
2022
£000
Company
2023
£000
Company
2022
£000
2,455
–
181,614
–
120
184,189
141,301
1,739
–
143,040
327,229
(2,568)
(4,347)
(926)
(174)
(774)
(8,789)
(111,000)
(243)
(450)
(111,693)
(120,482)
206,747
1,718
2,301
202,728
206,747
446
1
–
210,000
15
210,462
–
57,833
–
57,833
268,295
(273)
(711)
(69)
(51)
(225)
(1,329)
(195,500)
(292)
(450)
(196,242)
(197,571)
70,724
1,719
2,301
66,704
70,724
199
1
–
152,000
35
152,235
–
33,701
–
33,701
185,936
(3,147)
(654)
(116)
(66)
(221)
(4,204)
(111,000)
(17)
(450)
(111,467)
(115,671)
70,265
1,718
2,301
66,246
70,265
The parent company’s profit for the financial year after taxation amounted to £16,039,000 (2022: £10,113,000)
These financial statements were approved by the Board of Directors on 6 April 2023.
Signed on behalf of the Board of Directors
AMV Coombs
Chairman
C Redford
Group Finance Director
61
www.suplc.co.uk ― Stock Code: SUSThe Accounts D1.3 Statement of Changes In Equity
FOR THE YEAR ENDED 31 JANUARY 2023
Called up
share capital
£000
Notes
Share
premium
account
£000
1,717
–
–
–
1
–
–
–
1,718
–
–
–
1
–
–
–
1,719
2,301
–
–
–
–
–
–
–
2,301
–
–
–
–
–
–
–
2,301
20
26
19
11
20
26
19
11
Called up
share capital
£000
Notes
Share
premium
account
£000
9
20
26
19
11
9
20
26
19
11
1,717
–
–
–
1
–
–
–
1,718
–
–
–
1
–
–
–
1,719
2,301
–
–
–
–
–
–
–
2,301
–
–
–
–
–
–
–
2,301
Profit
and loss
account
£000
177,011
37,982
(6)
37,976
–
39
(35)
(12,263)
202,728
33,718
(13)
33,705
–
6
(28)
(15,546)
220,865
Profit
and loss
account
£000
68,398
10,113
(6)
10,107
–
39
(35)
(12,263)
66,246
16,039
(13)
16,026
–
6
(28)
(15,546)
66,704
Total
equity
£000
181,029
37,982
(6)
37,976
1
39
(35)
(12,263)
206,747
33,718
(13)
33,705
1
6
(28)
(15,546)
224,885
Total
equity
£000
72,416
10,113
(6)
10,107
1
39
(35)
(12,263)
70,265
16,039
(13)
16,026
1
6
(28)
(15,546)
70,724
Group
At 1 February 2021
Profit for year
Other comprehensive income for year
Total comprehensive income for year
Issue of new shares in year
Cost of future share-based payments
Tax charge on equity items
Dividends
At 31 January 2022
Profit for year
Other comprehensive income for year
Total comprehensive income for year
Issue of new shares in year
Cost of future share-based payments
Tax charge on equity items
Dividends
At 31 January 2023
Company
At 1 February 2021
Profit for year
Other comprehensive income for year
Total comprehensive income for year
Issue of new shares in year
Cost of future share-based payments
Tax charge on equity items
Dividends
At 31 January 2022
Profit for year
Other comprehensive income for year
Total comprehensive income for year
Issue of new shares in year
Cost of future share-based payments
Tax charge on equity items
Dividends
At 31 January 2023
6262
S&U Plc Annual Report and Accounts 2023 D1.4 Cash Flow Statement
FOR THE YEAR ENDED 31 JANUARY 2023
Net cash used in 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 from financing activities
Dividends paid
Issue of new shares
Decrease in investments in dormant companies
Receipt of new borrowings
Repayment of borrowings
Increase/(decrease) in lease liabilities
Net (decrease)/increase in overdraft
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of year
Cash and cash equivalents at the end of year
Cash and cash equivalents comprise
Cash and cash in bank
Notes
23
13
11
Group
2023
£000
(62,760)
166
(826)
(660)
(15,546)
1
–
84,500
–
170
(2,568)
66,557
3,137
–
3,137
Group
2022
£000
(2,094)
93
(377)
(284)
(12,263)
1
–
25,000
(11,500)
(134)
1,273
2,377
(1)
1
–
Company
2023
£000
Company
2022
£000
(66,010)
(4,047)
88
(419)
(331)
(15,546)
1
–
84,500
–
260
(2,874)
66,341
–
–
–
–
(24)
(24)
(12,263)
1
531
25,000
(11,500)
(63)
2,364
4,070
(1)
1
–
3,137
–
–
–
There are no cash and cash equivalent balances which are not available for use by either the Group or the Company (2022: £nil).
63
www.suplc.co.uk ― Stock Code: SUSThe Accounts D2 Notes to the Accounts
Year ended 31 January 2023
1. ACCOUNTING POLICIES
1.1 General Information
S&U plc is a Company incorporated in England and Wales under the Companies Act and is a public company limited by shares.
The address of the registered office is given on page 91 which is also the Group’s principal business address. All operations
are situated in the United Kingdom. S&U plc is the parent and the ultimate parent company of the group. S&U plc is a listed
holding company and within the group the main operations are motor finance and property bridging finance.
1.2 Basis of preparation and consolidation
As a listed Group we are required to prepare our consolidated financial statements in accordance with international
accounting standards in conformity with the requirements of the Companies Act 2006 and UK-adopted international
accounting standards. We have also prepared our S&U plc Company financial statements in conformity with the requirements
of the Companies Act 2006 and UK-adopted international accounting standards. Under S404 of the Companies Act 2006, the
parent company S&U plc has taken exemption from reporting its own profit and loss. These financial statements have been
prepared under the historical cost convention. The consolidated financial statements incorporate the financial statements of
the Company and all its subsidiaries for the year ended 31 January 2023. As discussed in the strategic report, the directors
have a reasonable expectation that the Group has adequate resources to continue in operational existence for the next three
years, which the directors have concluded is appropriate for the Group’s viability assessment. Accordingly, they continue to
adopt the going concern basis in preparing the annual report and accounts.
There are no new standards which have been adopted by the group this year which have a material impact on the financial
statements of the Group.
All companies within the Group are 100% owned and consolidated and the assets, liabilities, costs and revenues are fully
consolidated. All intercompany balances and transactions are eliminated on consolidation.
At the date of authorisation of these financial statements the directors anticipate that the adoption in future periods of any
other Standards and interpretations which are in issue but not yet effective, will have no material impact on the financial
statements of the Group.
1.3 Financial assets and financial liabilities accounting policy
When initially recognising a financial asset it is classified into one of the following three categories based on the group’s
business model for managing that asset and the asset’s contractual cash flow characteristics:
i)
ii)
iii)
Amortised cost – a financial asset is measured at amortised cost if both of the following conditions are met:
a)
The asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows;
and
b)
The contractual terms of the financial asset give rise on specified dates to cash flows that are payments of principal and
interest on the principal amount outstanding.
Fair value through other comprehensive income – financial assets are classified and measured at fair value through other
comprehensive income if they are held in a business model whose objective is achieved by both collecting contractual cash
flows and selling financial assets.
Fair value through profit or loss – any financial assets that are not held in one of the two business models mentioned are
measured at fair value through profit or loss.
The group has classified its financial assets and its financial liabilities as measured at amortised cost.
1.4 Revenue recognition
Interest income is recognised in the income statement for all loans and receivables measured at amortised cost using the
constant periodic rate of return on the net investment in the loans, which is akin to an effective interest rate (EIR) method.
The EIR is the rate that exactly discounts estimated future cash flows of the loan back to the present value of the advance
and hire purchase interest income is then recognised using the EIR. Acceptance fees charged to customers and any direct
transaction costs are included in the calculation of the EIR. For hire purchase agreements in Advantage Finance which are
classified as credit impaired (i.e. stage 3 assets under IFRS 9), the group recognises revenue ‘net’ of the impairment provision
to align the accounting treatment under IFRS 16 with the requirements of IFRS 9 and also with the treatment adopted for
similar assets in Aspen. Revenue starts to be recognised from the date of completion of the loan – after completion hire
purchase customers have a 14 day cooling off period during which they can cancel their loan.
6464
S&U Plc Annual Report and Accounts 2023 1. ACCOUNTING POLICIES (CONTINUED)
1.5 Impairment and measurement of amounts receivable from customers
All customer receivables are initially recognised as the amount loaned to the customer plus direct transaction costs. After
initial recognition the amounts receivable from customers are subsequently measured at amortised cost.
Amortised cost includes a deduction for loan loss impairment provisions for expected credit losses (“ECL”) assessed by the
directors in accordance with the requirements of IFRS9.
There are 3 classification stages under IFRS9 for the impairment of amounts receivable from customers:
Stage 1: Not credit impaired and no significant increase in credit risk since initial recognition
Stage 2: Not credit impaired and a significant increase in credit risk since initial recognition
Stage 3: Credit impaired
The directors assess whether there is objective evidence that a loan asset or group of loan assets is credit impaired and
should be classified as stage 3. A loan asset or a group of loan assets is credit impaired only if there is objective evidence of
credit 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 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. Under IFRS 9 for all stage 1 accounts which are not credit impaired, a further collective provision for
expected credit losses in the next 12 months is calculated and charged to the income statement.
Key assumptions in ascertaining whether a loan asset or group of loan assets is credit impaired include information regarding
the probability of any account going into default (PD) and information regarding the likely eventual loss including recoveries
(LGD). These assumptions and assumptions for estimating future cash flows are based upon observed historical data and
updated to reflect current and future conditions. As required under IFRS9, all assumptions are reviewed regularly to take
account of differences between previously estimated cash flows on impaired debt and the eventual losses.
For all loans in stages 2 and 3 a provision equal to the lifetime expected credit loss is taken. In addition and in accordance
with the provisions of IFRS9 a collective provision for 12 months expected credit losses (“ECL”) is recognised for the remainder
of the loan book which is Stage 1. 12-month ECL is the portion of lifetime ECL that results from default events on a financial
asset that are possible within 12 months after the reporting date.
In our Motor Finance business, all loans 1 month or more in contractual arrears are deemed credit impaired and are therefore
included in IFRS9 stage 3. This results in more of our net receivables being in stage 3 and the associated stage 3 loan loss
provisions being higher than if we adopted a more prime customer receivables approach of 3 months or more in arrears. Our
approach of 1 month or more in contractual arrears is based on our historical observation of subsequent loan performance
after our customers fall 1 month or more in contractual arrears within our non-prime motor finance customer receivables
book. The expected credit loss (“ECL”) is the probability weighted estimate of credit losses.
A PD/LGD model was developed by our Motor Finance business, Advantage Finance, to calculate the expected loss
impairment provisions in accordance with IFRS9. Stage 1 expected losses are recognised on inception/initial recognition of a
loan based on the probability of a customer defaulting in the next 12 months. This is determined with reference to historical
data updated for current and future conditions. If a motor finance loan falls one month or more in contractual arrears, then
this is deemed credit impaired and included in IFRS9 Stage 3. There are some motor finance loans which are up to date with
payments but the customer is in some form of forbearance and we deem this to be a significant increase in credit risk and
so these loans are included in Stage 2. As a result of the uncertainty over the performance of customers who were granted
a payment holiday as part of the Government and FCA support measures as a result of the Covid pandemic and have also
either requested a second payment holiday or have had a previous payment delinquency, we have assessed these customers
to have a significant increase in credit risk and they were therefore included in Stage 2 until they re-established a successful
post holiday payment records. There are no payment holiday customers left in stage 2 at 31 January 2023 as at that date all
such customers are either correctly classified in another stage or their agreement has finished. This is why the volume of
customers in Stage 2 decreased at 31 January 2023.
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As required under IFRS9 the expected impact of movements in the macroeconomy is also reflected in the expected loss
model calculations. For motor finance, assessments are made to identify the correlation of the level of impairment provision
with forward looking external data regarding forecast future levels of employment, inflation, interest rates and used car
values which may affect the customers’ future propensity to repay their loan. The macroeconomic overlay assessments for
31 January 2023 reflect that further to considering such external macroeconomic forecast data, management have judged
that there is currently a more heightened risk of an adverse economic environment for our customers and the value of our
motor finance security. To factor in such uncertainties, management has included an overlay for certain groups of assets to
reflect this macroeconomic outlook, based on estimated unemployment, inflation and used vehicle price levels in future
periods. Further sensitivity over this estimation uncertainty is provided in note 1.13.
Other than the changes to the approach mentioned above, there were no significant changes to estimation techniques
applied to the calculations used at 31 January 2023 and those used at 31 January 2022.
PD/LGD calculations for expected loss impairment provisions were also developed for our Property Bridging business Aspen
Bridging in accordance with IFRS9. Stage 1 expected losses are recognised on inception/initial recognition of a loan based
on the probability of a customer becoming impaired in the next 12 months. The Bridging product has a single repayment
scheduled for the end of the loan term and if a bridging loan is not granted an extension and is still outstanding beyond the
end of the loan term then this is deemed credit impaired and included in IFRS9 Stage 3. Due mainly to the high values of
property security attached to bridging loans, the bridging sector typically has lower credit risk and lower impairment than
other credit sectors.
Assets in both our secured loan businesses are written off once the asset has been repossessed and sold and there is no
prospect of further legal or other debt recovery action. Where enforcement action is still taking place, loans are not written
off. In motor finance where the asset is no longer present then another indicator used to determine whether the loan should
be written off is the lack of any receipt for 12 months from that customer.
1.6 Impairment of amounts owed by subsidiary companies to the parent company
These are initially recognised as the amount loaned to the subsidiary company. After initial recognition amounts owed by
subsidiary companies to the parent company are subsequently measured at amortised cost. Amortised costs includes any
deduction for loan loss impairment provisions for expected credit losses in accordance with the requirements of IFRS9.
Management consider that there is a low probability of default on these loans and there has been no significant increase
in credit risk or credit impairment since these loans were first recognised. Therefore the loans continued to be held at the
amount loaned.
1.7 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
Fixtures and Fittings – Computers
Fixtures and Fittings – Other
Motor Vehicles
Right to Use Assets
Freehold Land is not depreciated.
2% per annum straight line
20% per annum straight line
10% per annum straight line or 20% per annum reducing balance
25% per annum reducing balance
Straight line over the normal term of the lease
1.8 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.
6666
D2 Notes to the Accounts CONTINUEDYear ended 31 January 2023S&U Plc Annual Report and Accounts 2023 1. ACCOUNTING POLICIES (CONTINUED)
1.9 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.
1.10 Pensions
The Group contributes as required 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. The
scheme is currently in surplus but as the group has no ability to access this asset the surplus is capped at £nil. 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 year.
1.11 Share-based payments
The Company issued share options under 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.
1.12 Investments
Investments in subsidiaries held as non-current assets are stated at cost less provision for any impairment.
1.13 Critical accounting judgements and key sources of estimation uncertainty
In preparing these financial statements, the Company has made judgements, estimates and assumptions which affect the
reported amounts within the current and next financial year. Actual results may differ from these estimates.
Estimates and judgements are regularly reviewed based on past experience, expectations of future events and other factors.
Critical accounting judgements
The following are the critical accounting judgements, apart from those involving estimations (which are dealt with separately
below), that the Directors have made in the process of applying the Company’s accounting policies and that have the most
significant effect on the amounts recognised in the financial statements.
Significant increase in credit risk for classification in Stage 2
The Company’s transfer criteria determine what constitutes a significant increase in credit risk, which results in a customer
being moved from Stage 1 to Stage 2. Stage 2 currently includes customers who have a good payment record but have been
identified as vulnerable by trained staff. Vulnerability can be driven by factors including health, life events, resilience or
capability. All customer facing staff are trained to help recognise characteristics of vulnerability. Stage 2 previously included
some pandemic payment holiday customers but these customers have all now had 12 months to re-establish their post
holiday payment track record and are therefore now either correctly included in another stage or their agreement has
finished.
Key sources of estimation uncertainty
The directors consider that the sources of estimation uncertainty which have the most significant effect on the amounts
recognised in the financial statements are those inherent in the consumer credit markets in which we operate relating to
impairment as outlined in 1.5 above. In particular, the Group’s impairment provision is dependent on estimation uncertainty
in forward-looking on areas such as employment rates, inflation rates and used car and property prices.
The Group implemented IFRS 9 from 1 February 2018 by developing models to calculate expected credit losses in a range of
economic scenarios. These models involve setting modelling assumptions, weighting of economic scenarios, the criteria of
determining significant deterioration in credit quality and the application of adjustments to model outputs. We have outlined
assumptions in our expected credit loss model in the current year. Reasonable movement in these assumptions might have a
material impact on the impairment provision value.
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www.suplc.co.uk ― Stock Code: SUSThe Accounts 1. ACCOUNTING POLICIES (CONTINUED)
Macroeconomic overlay for our motor finance business
For this overlay, the Group considers four probability-weighted scenarios in relation to unemployment rate: base, upside,
downside and severe scenarios as follows:
Unemployment
Weighting
Q1 2023
Q1 2024
Q1 2025
Q1 2026
Upside
(30% decrease)
Downside
(30 % increase)
Severe
(50% increase)
Weighted
5%
2.66%
3.08%
3.50%
3.71%
40%
4.94%
5.72%
6.50%
6.89%
5%
5.70%
6.60%
7.50%
7.95%
4.29%
4.97%
5.65%
5.99%
Base
50%
3.80%
4.40%
5.00%
5.30%
Inflation rates were not previously been factored into the macroeconomic overlay prior to 31 January 2022 when we
included them due to the extraordinary increases forecast for the following 12 months period and the potential impact on
our customers and their repayments – high inflation and forecast inflation were still present at 31 January 2023. The Group
considers four probability-weighted scenarios in relation to inflation rate: base, upside, downside and severe scenarios as
follows:
Inflation
Weighting
Q1 2023
Q1 2024
Q1 2025
Q1 2026
Upside
(30% decrease)
Downside
(30 % increase)
Severe
(50% increase)
Weighted
5%
6.79%
2.10%
0.70%
0.28%
40%
12.61%
3.90%
1.30%
0.52%
5%
14.55%
4.50%
1.50%
0.60%
10.96%
3.39%
1.13%
0.45%
Base
50%
9.70%
3.00%
1.00%
0.40%
An increase by 0.5% in the weighted average unemployment rate would result in an increase in loan loss provisions by
£1,044,494. A decrease by 0.5% would result in a decrease in loan loss provisions by £1,044,494. An increase by 0.5% in the
weighted average inflation rate would result in an increase in loan loss provisions by £474,770. A decrease by 0.5% would
result in a decrease in loan loss provisions by £474,770.
Used vehicle price overlay and sensitivity for our motor finance business
Our used vehicle price overlay is based on used vehicle guide price information and the mileage and condition of each vehicle
is estimated which is uncertain. It is also based on an uncertain assumption at 31.1.23 that used car prices which increased
significantly in 2021 and 2022 will fall by 13.5%. This used vehicle price overlay has increased loan loss provisions at 31.1.23
by £6,656,000 (2022: increased provisions by £4,552,000). If used car prices were only assumed to fall by 8.5% instead, then
this would result in a decrease in loan loss provisions of £2,815,718. If used car prices were assumed to fall by 18.5% instead,
then this would result in a further increase in loan loss provisions of £2,717,750.
Expected loss sensitivity for our property bridging business
The PD/LGD expected loss impairment provision model calculations developed for our Aspen bridging business have been
based on extrapolating an inherently low volume sample of historic defaults and losses to reflect the current receivables
and current market conditions. If the probability of default were assessed to be 10% higher than these calculations then this
would result in an increase in loan loss provisions of £290,727. If the probability of default were assessed to be 10% lower
than these calculations then this would result in a decrease in loan loss provisions of £290,727.
1.14 Alternative Performance Measurements
i) Risk adjusted yield as % of average monthly receivables is the gross yield for the period (revenue minus impairment) divided
by the average amounts receivable from customers for the period.
ii) Rolling 12-month impairment to revenue % is the impairment charged in the income statement during the 12 months
prior to the reporting date divided by the revenue for the same 12-month period. Historic comparisons using this measure
were affected by the adoption of new accounting standards IFRS9 and IFRS16 and risk adjusted yield is considered a more
historically comparable guide to receivables performance.
iii) Return on average capital employed before cost of funds (ROCE) is calculated as the Operating Profit divided by the average
capital employed (total equity plus Bank Overdrafts plus Borrowings less cash and cash equivalents)
6868
D2 Notes to the Accounts CONTINUEDYear ended 31 January 2023S&U Plc Annual Report and Accounts 2023 1. ACCOUNTING POLICIES (CONTINUED)
iv) Dividend cover is the basic earnings per ordinary share for the financial year divided by the dividend per ordinary share
declared for the same financial year.
v) Group gearing is calculated as the sum of Bank Loans and Overdrafts less cash and cash equivalents divided by total equity.
vi) Group collections are the total monthly collections, settlement proceeds and recovery collections in motor finance added to
the total amount retained from advances, customer redemptions and recovery collections in property bridging.
2. SEGMENTAL ANALYSIS
Analyses by class of business of revenue and profit before taxation from continuing operations are stated below:
Class of business
Motor finance
Property bridging finance
Central costs net of central finance income
Revenue
Profit before taxation
Year ended
31.1.23
£000
Year ended
31.1.22
£000
Year ended
31.1.23
£000
Year ended
31.1.22
£000
89,801
12,913
–
102,714
78,898
8,991
–
87,889
37,171
4,457
(218)
41,410
43,682
3,414
(78)
47,018
Analyses by class of business of assets and liabilities are stated below:
Class of business
Motor finance
Property bridging finance
Central
Assets
Liabilities
Year ended
31.1.23
£000
Year ended
31.1.22
£000
Year ended
31.1.23
£000
Year ended
31.1.22
£000
311,168
116,714
292
428,174
262,458
64,426
345
327,229
(164,452)
(109,485)
70,648
(203,289)
(131,012)
(59,606)
70,136
(120,482)
Depreciation of assets for motor finance was £425,000 (2022: £427,000), for property bridging finance was £15,000 (2022:
£21,000) and for central was £85,000 (2022: £81,000). Fixed asset additions for motor finance were £394,000 (2022:
£337,000), for property bridging finance were £13,000 (2022: £16,000) and for central were £419,000 (2022: £24,000).
The net finance credit for central costs was £2,507,000 (2022: £2,506,000), for motor finance was a cost of £6,619,000 (2022:
£4,394,000) and for property bridging finance was a cost of £3,383,000 (2022: £1,884,000). The tax credit for central costs
was £58,000 (2022: £24,000), for motor finance was a tax charge of £6,901,000 (2022: £8,408,000) and for property bridging
finance was a tax charge of £848,000 (2022: £652,000).
The significant products in motor finance are car and other vehicle loans secured under hire purchase agreements.
The significant products in property bridging finance are bridging loans secured on property.
The assets and liabilities of the Parent Company are classified as Central.
No geographical analysis is presented because all operations are situated in the United Kingdom.
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www.suplc.co.uk ― Stock Code: SUSThe Accounts 3. REVENUE
Interest and other income from motor finance hire purchase loans
Interest and other income from property bridging loans
Total revenue
4. COST OF SALES
Cost of sales – motor finance
Cost of sales – property bridging finance
Total Cost of sales
5.
IMPAIRMENT CHARGE
Loan loss provisioning charge
Loan loss provisioning charge – motor finance
Loan loss provisioning charge – property bridging finance
Total impairment charge
2023
£000
89,801
12,913
102,714
2023
£000
21,687
1,989
23,676
2023
£000
12,885
992
13,877
2022
£000
78,898
8,991
87,889
2022
£000
17,266
1,505
18,771
2022
£000
3,805
315
4,120
Note – motor finance loan loss provisions in 2022 were lower than normal as £36.0m loan loss provisions charged during the
pandemic year ended 31.1.21 were not utilised as much as anticipated.
6.
INFORMATION REGARDING EMPLOYEES
The monthly average number of persons employed by the Group
in the year was:
Motor finance
Property bridging finance
Central
Total Group average number of employees
The monthly average employed by the Company was 11 (2022: 10)
Staff costs during the year (including directors):
Wages and salaries
Social security costs
Pension costs for defined contribution scheme
Total Staff Costs
Group
2023
No.
192
21
11
224
2023
£000
10,522
1,186
456
12,164
Group
2022
No.
Company
2023
No.
Company
2022
No.
173
17
10
200
2022
£000
9,133
928
391
10,452
–
–
11
11
2023
£000
1,535
209
38
1,782
–
–
10
10
2022
£000
1,402
209
37
1,648
Directors’ remuneration and details of the highest paid director are disclosed in the audited section of the Directors’
Remuneration Report. No director or current employee is a member of the small historical defined benefit pension plan the
details of which are contained in note 27 of these notes to the accounts.
7070
D2 Notes to the Accounts CONTINUEDYear ended 31 January 2023S&U Plc Annual Report and Accounts 2023 7. OPERATING PROFIT
Operating profit from continuing operations is after charging:
Depreciation and amortisation:
Owned and Right to` Use assets
Staff costs
Cost of future share-based payments
(Profit)/Loss on sale of fixed assets
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 the Company’s subsidiaries
Total audit fees
Audit related assurance services
Other services
Total non-audit fees
Total
8. FINANCE COSTS (NET)
31.5% cumulative preference dividend
Lease Liabilities
Bank loan and overdraft interest payable
Total Finance Costs (net)
9. PROFIT OF PARENT COMPANY
2023
£000
2022
£000
525
12,164
6
(1)
2023
£000
30
133
163
25
–
25
188
2023
£000
141
12
7,342
7,495
529
10,441
39
13
2022
£000
30
128
158
25
–
25
183
2022
£000
142
17
3,613
3,772
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 £16,039,000 (2022:
£10,113,000).
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www.suplc.co.uk ― Stock Code: SUSThe Accounts 10. TAX ON PROFIT BEFORE TAXATION
Continuing Operations
Corporation tax at 19.0% (2022: 19.0%) based on profit for the year
Adjustment in respect of prior years
Deferred tax (temporary differences – origination and reversal)
2023
£000
7,894
(184)
7,710
(18)
7,692
2022
£000
9,129
(47)
9,082
(46)
9,036
The actual tax charge for the current and the previous year from continuing operations varies to the standard rate for the
reasons set out in the following reconciliation.
Profit on ordinary activities before tax from continuing operations
Tax on profit on ordinary activities at standard rate of 19.0% (2021: 19.0%)
Factors affecting charge for the period:
Expenses not deductible for tax purposes
Effects of other tax rates and permanent differences
Prior period adjustments
Total actual amount of tax
2023
£000
41,410
7,868
41
(33)
(184)
7,692
2022
£000
47,018
8,933
56
94
(47)
9,036
The Finance Act 2021 confirms an increase of UK corporation tax rate from 19% to 25% with effect from 1 April 2023 and this
was substantively enacted by the statement of financial position date and therefore included in these financial statements.
11. DIVIDENDS
2nd Interim dividend paid for the year ended 31/1/2022 – 36.0p per Ordinary share (25.0p)
Final dividend paid for the year ended 31/1/2022– 57.0p per Ordinary share (43.0p)
1st Interim dividend paid for the year ended 31/1/2023 – 35.0p per Ordinary share (33.0p)
Total ordinary dividends paid
6% cumulative preference dividend paid March and September
Credit for unpresented dividend payments over 12 years old
Total dividends paid
2023
£000
4,372
6,926
4,253
15,551
12
(17)
15,546
2022
£000
3,033
5,222
4,008
12,263
12
(12)
12,263
A second interim dividend of 36.0p per ordinary share for the year ended 31 January 2023 was paid on 10 March 2023
totalling £4.6m and the directors are proposing a final dividend for the year ended 31 January 2023 of 60p per ordinary share
totalling £7.3m. The final dividend will be paid on 7 July 2023 to shareholders on the register at close of business on 16 June
2023 subject to approval by shareholders at the Annual General Meeting on Thursday 25 May 2023.
12. EARNINGS PER ORDINARY SHARE
The calculation of earnings per ordinary share (“eps”) from continuing operations is based on profit after tax of £33,718,000
(2022: £37,982,000).
The number of shares used in the basic eps calculation is the weighted average number of shares in issue during the year of
12,149,205 (2022: 12,142,928). There are a total of nil dilutive share options in issue (2022: 5,500) and taking into account
the appropriate proportion of these dilutive options the number of shares used in the diluted eps calculation is 12,149,205
(2022: 12,145,096).
7272
D2 Notes to the Accounts CONTINUEDYear ended 31 January 2023S&U Plc Annual Report and Accounts 2023 13. PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 February 2021
Additions
Disposals
At 31 January 2022
Additions
Disposals
At 31 January 2023
Accumulated depreciation
At 1 February 2021
Charge for the year
Eliminated on disposals
At 31 January 2022
Charge for the year
Eliminated on disposals
At 31 January 2023
Net book value
At 31 January 2023
At 31 January 2022
Land and
buildings
£000
Motor
vehicles
£000
Fixtures and
Fittings
£000
Right to
Use
£000
1,753
76
–
1,829
61
(4)
1,886
285
109
–
394
115
(4)
505
1,381
1,435
496
71
(154)
413
192
(224)
381
235
66
(86)
215
68
(106)
177
204
198
1,563
192
(152)
1,603
210
(17)
1,796
1,081
195
(114)
1,162
178
(17)
1,323
473
441
735
38
–
773
363
(251)
885
233
159
–
392
164
(229)
327
558
381
Total
£000
4,547
377
(306)
4,618
826
(496)
4,948
1,834
529
(200)
2,163
525
(356)
2,332
2,616
2,455
Included in the above is land at a cost of £22,000 (2022: £22,000) which is not depreciated.
Included in Right to Use assets above, are leases now capitalised under IFRS16 which are depreciated over the normal term of
the lease. The total cash outflow for these leases during the year to 31.1.23 was £ 173,000 (2022: £ 190,000 ).
Company
Cost
At 1 February 2021
Additions
Disposals
At 31 January 2022
Additions
Disposals
At 31 January 2023
Accumulated depreciation
At 1 February 2021
Charge for the year
Eliminated on disposals
At 31 January 2022
Charge for the year
Eliminated on disposals
At 31 January 2023
Net book value
At 31 January 2023
At 31 January 2022
Land and
Buildings
£000
Motor
vehicles
£000
Fixtures and
Fittings
£000
Right to
Use
£000
42
–
–
42
–
–
42
12
–
–
12
–
–
12
30
30
79
–
–
79
75
(101)
53
58
5
–
63
6
(36)
33
20
16
244
24
–
268
1
–
269
156
26
–
182
22
–
204
65
86
251
–
–
251
343
(251)
343
134
50
–
184
57
(229)
12
331
67
Total
£000
616
24
–
640
419
(352)
707
360
81
–
441
85
(265)
261
446
199
Included in the above is land at cost of £22,000 (2022: £22,000) which is not depreciated.
Included in Right to Use assets above, are leases now capitalised under IFRS16 which are depreciated over the normal term of
the lease. The total cash outflow for these leases during the year to 31.1.23 was £51,000 (2022: £ 68,000).
73
www.suplc.co.uk ― Stock Code: SUSThe Accounts 14. INVESTMENTS AND RELATED PARTY TRANSACTIONS
Company
Shares in subsidiary companies
At historical cost less impairment
2023
£000
1
2022
£000
1
Interests in subsidiaries
The principal subsidiaries of the Company, which are wholly owned directly by the Company, operate in Great Britain and are
incorporated in England and Wales.
Subsidiary and Registered Number
Advantage Finance Limited (03773673)
Aspen Bridging Limited (10270026)
Principal activity
Motor finance
Property bridging finance
The following are wholly owned dormant subsidiaries of the group which take advantage of exemptions provided under s394a
and s448a and do not prepare, file or have audited individual company accounts;
Advantage Motor Finance Limited (03773678), Advantage4u Limited (06691669), Advantage Direct Finance Limited
(07037684), Advantage Partner Finance Limited (07036720), Advantage Asset Finance Limited (06691598), S&U Stores
Limited (00448884) and Cash Kangaroo Limited (08435795).
All dormant subsidiaries are directly owned by S&U plc with the exception of Advantage Motor Finance Limited which is
indirectly wholly owned via Advantage Finance Limited.
All companies in the Group have their registered office at 2 Stratford Court, Cranmore Boulevard, Solihull B90 4QT.
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. Transactions with the Company’s pension scheme are disclosed in note 26. During the year
the Group made charitable donations amounting of £109,500 (2022: £102,000) via the Keith Coombs Trust which is a related
party because Messrs GDC Coombs, AMV Coombs, D Markou and CH Redford are trustees. The amount owed to the Keith
Coombs Trust at the year-end was £nil (2022: £nil). During the year the Group obtained supplies at market rates amounting to
£4,123 (2022: £3,508) 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. All related party transactions were settled in full when due.
Company
The Company received dividends from other Group undertakings totalling £16,200,000 (2022: £10,000,000). 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 2023 the Company was owed
£267,945,745 (2022: £185,807,050) by other Group undertakings as part of an intercompany loan facility and owed £217,119
to a dormant group company (2022: £217,119). All related party transactions were settled in full when due. Key management
personnel compensation is disclosed on page 34 in the Directors Remuneration Report.
7474
D2 Notes to the Accounts CONTINUEDYear ended 31 January 2023S&U Plc Annual Report and Accounts 2023 15. AMOUNTS RECEIVABLE FROM CUSTOMERS
Motor finance hire purchase
Less: Loan loss provision motor finance
Amounts receivable from customers motor finance
Property bridging finance loans
Less: Loan loss provision property bridging finance
Amounts receivable from customers property bridging finance
Amounts receivable from customers total
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 property
Other loans not secured (motor finance where security no longer present)
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
2023
£000
403,282
(96,465)
306,817
115,451
(1,558)
113,893
420,710
201,405
219,305
420,710
302,159
113,893
4,658
420,710
367,245
–
–
40,249
4,772
8,444
420,710
2022
£000
350,517
(91,481)
259,036
64,525
(646)
63,879
322,915
141,301
181,614
322,915
254,933
63,879
4,103
322,915
285,892
–
–
25,137
3,943
7,943
322,915
The credit risk inherent in amounts receivable from customers is reviewed as per note 1.5 and under this review the credit
quality of assets which are neither past due nor impaired was considered to be good with the exception of 473 vulnerable or
Covid impacted payment deferral customers who although not in arrears at 31.1.23 were assessed from a review of internal
data to have a significant increase in credit risk (2022: 1,688). Under IFRS9 therefore these customers although not in arrears
are included in stage 2 at 31.1.23 with an increased impairment provision.
75
www.suplc.co.uk ― Stock Code: SUSThe Accounts 15. AMOUNTS RECEIVABLE FROM CUSTOMERS (CONTINUED)
Analysis of loan loss provision and amounts receivable from customers (capital)
As at 31 January 2023
Amounts receivable (capital)
Motor finance
Property bridging finance
Total
Loan loss provisions
Motor finance
Property bridging finance
Total
Amounts receivable (net)
Motor finance
Property bridging finance
Total
As at 31 January 2022
Amounts receivable (capital)
Motor finance
Property bridging finance
Total
Loan loss provisions
Motor finance
Property bridging finance
Total
Amounts receivable (net)
Motor finance
Property bridging finance
Total
Stage 1:
Subject to 12
months ECL
£’000
Stage 2:
Subject to
lifetime ECL
£’000
Stage 3:
Subject to
lifetime ECL
£’000
285,050
108,378
393,428
(26,640)
(1,116)
(27,756)
258,410
107,262
365,672
2,236
–
2,236
(662)
–
(662)
1,574
–
1,574
115,996
7,073
123,069
(69,163)
(442)
(69,605)
46,833
6,631
53,464
Stage 1:
Subject to 12
months ECL
£’000
Stage 2:
Subject to
lifetime ECL
£’000
Stage 3:
Subject to
lifetime ECL
£’000
240,588
63,145
303,733
(22,129)
(446)
(22,575)
218,459
62,699
281,158
7,503
–
7,503
(2,769)
–
(2,769)
4,734
–
4,734
102,426
1,380
103,806
(66,583)
(200)
(66,783)
35,843
1,180
37,023
Total
£’000
403,282
115,451
518,733
(96,465)
(1,558)
(98,023)
306,817
113,893
420,710
Total
£’000
350,517
64,525
415,042
(91,481)
(646)
(92,127)
259,036
63,879
322,915
Collateral held
Motor finance – except for loans valued at £4.658m (2022: £4.103m), where we are aware the security is no longer present,
security is held on a used vehicle for each hire purchase motor finance agreement. As stated in note 1.13 above, valuing these
used vehicles secured under our hire purchase agreements is uncertain as the condition and mileage of the used vehicle are
unknown. We estimate the trade value of collateral held at 31.1.23 for motor finance loans currently in stage 3 was £64.5m
(2022: £59.0m) – these estimated values are stated before taking into account recovery and disposal costs.
Property bridging finance – the estimated value of first charge secured properties held under our bridging loan facility
agreements at 31.1.23 is £184.7m (2022: £107.0m). This includes £13.4m estimated value of properties secured which is held
for loan agreements currently in Stage 3 (2022: £1.5m).
Advances in both our motor finance business and our property bridging business are only made with collateral security and
this is important in both these markets for the collectability of these loans – there have been no significant changes in the
quality of collateral held during the year.
7676
D2 Notes to the Accounts CONTINUEDYear ended 31 January 2023S&U Plc Annual Report and Accounts 2023 15. AMOUNTS RECEIVABLE FROM CUSTOMERS (CONTINUED)
Loan loss provisions
At 1 February 2021
Net transfers and changes in credit risk restated
New loans originated
Total impairment charge to income statement
Amounts netted off revenue for stage 3 assets
Utilised provision on write-offs
At 31 January 2022
Net transfers and changes in credit risk
New loans originated
Total impairment charge to income statement
Amounts netted off revenue for stage 3 assets
Utilised provision on write-offs
At 31 January 2023
Stage 1:
Subject to 12
months ECL
£’000
Stage 2:
Subject to
lifetime ECL
£’000
Stage 3:
Subject to
lifetime ECL
£’000
14,680
(3,144)
11,212
8,068
–
(173)
22,575
(10,020)
15,599
5,579
–
(398)
27,756
12,759
(7,462)
112
(7,350)
–
(2,640)
2,769
(1,905)
148
(1,757)
–
(350)
662
65,475
(2,775)
6,177
3,402
10,197
(12,291)
66,783
(1,710)
11,765
10,055
8,893
(16,126)
69,605
Total
Provision
£’000
92,914
(13,381)
17,501
4,120
10,197
(15,104)
92,127
(13,635)
27,512
13,877
8,893
(16,874)
98,023
There were no significant changes in the capital carrying value of amounts receivable from customers this year which
contributed to changes in the loan loss provisions other than growth in new loans originated.
16. TRADE AND OTHER RECEIVABLES
Amounts owed by subsidiary undertakings
Other debtors
Prepayments and accrued income
Group
Company
2023
£000
–
55
1,546
1,601
2022
£000
–
300
1,439
1,739
2023
£000
267,729
10
94
267,833
2022
£000
185,590
11
100
185,701
The amounts owed by subsidiary undertakings in the Company’s balance sheet are stated net of nil impairment and, other
than £130.0m of intercompany receivables from Advantage Finance Limited (2022: £127.0m) and £80.0m of intercompany
receivables from Aspen Bridging Limited (2022: £25.0m), which are due after more than one year, the amounts owed
by subsidiary undertakings have no fixed maturity date. Under IFRS7 there are no amounts included in trade and other
receivables which are past due but not impaired and no amounts which are impaired or have a significant increase in credit
risk. The carrying value of trade and other receivables is not materially different to their fair value.
77
www.suplc.co.uk ― Stock Code: SUSThe Accounts 17. BORROWINGS INCLUDING BANK OVERDRAFTS AND LOANS
Bank overdrafts and loans – due within one year
Bank and other loans – due in more than one year
Group
2023
£000
–
195,500
195,500
2022
£000
2,568
111,000
113,568
Company
2023
£000
273
195,500
195,773
2022
£000
3,147
111,000
114,147
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 2023:
− a facility for £ 5 million (2022: £5m) which is subject to annual review in June 2023.
− a facility for £2 million (2022: £2m) which has no annual review date.
Total drawdowns of these overdraft facilities at 31 January 2023 were £nil (2022: £2,568,684).
S&U plc had the following revolving credit facilities available at 31 January 2023:
− a facility for £60 million (2022: £60m) which is due for repayment in March 2026.
− a facility for £20 million (2022: £20m) which is due for repayment in March 2025.
− a facility for £80 million (2022: £50m) - £25m of which is due for repayment in April 2026 and £55m of which is due for
repayment in March 2027.
S&U plc had the following term loan facilities available at 31 January 2023:
− a facility for £50 million (2022: £50m) - £25m of which is due for repayment in March 2028 and £25m is due for repayment in
March 2029.
The bank overdraft and loans are secured under a multilateral guarantee provided by S&U plc and its operating subsidiaries
Advantage Finance Ltd and Aspen Bridging Ltd.
The Company is part of the Group overdraft facility and at 31 January 2023 was £273,163 overdrawn (2022: £3,147,713). A
maturity analysis of the above borrowings is given in note 22.
18. TRADE AND OTHER PAYABLES
Trade creditors
Other creditors including commissions and remuneration payable
Group
Company
2023
£000
617
3,985
4,602
2022
£000
641
3,706
4,347
2023
£000
67
644
711
2022
£000
151
503
654
The carrying value of trade and other payables is not materially different to the fair value.
7878
D2 Notes to the Accounts CONTINUEDYear ended 31 January 2023S&U Plc Annual Report and Accounts 2023 19. DEFERRED TAX
Group
At 1 February 2021
Credit/(debit) to income
Credit to equity
At 31 January 2022
Credit/(charge) to income
Charge to equity
At 31 January 2023
Company
At 1 February 2021
Credit to income
Charge to equity
At 31 January 2022
(Charge)/credit to income
Charge to equity
At 31 January 2023
Accelerated
tax
depreciation
£000
Share based
payments
£000
Shadow
Share
Options
£000
(86)
(47)
–
(133)
24
–
(109)
58
4
(35)
27
1
(28)
–
137
89
–
226
(7)
–
219
Total
£000
109
46
(35)
120
18
(28)
110
£000
£000
£000
£000
(9)
11
–
2
(9)
–
(7)
58
4
(35)
27
1
(28)
–
–
6
–
6
16
–
22
49
21
(35)
35
8
(28)
15
Shadow share options are long term share based incentive instruments which will be settled in cash when exercised based
on future share price and require achieving certain performance targets and are subject to continued employment conditions.
The Finance Act 2021 confirms an increase of UK corporation tax rate from 19% to 25% with effect from 1 April 2023 and this
was substantively enacted by the statement of financial position date and therefore included in these financial statements.
20. CALLED UP SHARE CAPITAL AND PREFERENCE SHARES
Called up, allotted and fully paid
12,150,760 Ordinary shares of 12.5p each (2022: 12,145,260)
200,000 6.0% Cumulative preference shares of £1 each
Called up share capital
2023
£000
1,519
200
1,719
2022
£000
1,518
200
1,718
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.
The 5,500 shares issued during the year relate to issues under the Company’s historic LTIP 2010 scheme – see also note 26.
79
www.suplc.co.uk ― Stock Code: SUSThe Accounts 21. FINANCIAL LIABILITIES
Preference Share Capital
Called up, allotted and fully paid
3,598,506 31.5% Cumulative preference shares of 12.5p each (2021 3,598,506)
2023
£000
450
2022
£000
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 twice the capital (2 lots of 12.5p) 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 motor finance hire purchase debts
are secured by the financed vehicle. All financial assets are held at amortised cost.
As at 31 January 2023 the Group’s indebtedness amounted to £192,363,000 (2022: £113,568,000) and the Company’s
indebtedness amounted to £195,773,000 (2022: £114,417,000). The Group gearing was 85.5% (2022: 54.9%), being
calculated as borrowings net of cash 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 on page 82 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 committed borrowing facilities at 31 January 2023 of £14.5m (2022: £65.0m). The preference share
capital financial liability of £450,000 has no maturity date and is classified as more than five years.
The average effective interest rate on financial assets of the Group at 31 January 2023 was estimated to be 25% (2022: 25%).
The average effective interest rate of financial liabilities of the Group at 31 January 2023 was estimated to be 6% (2022: 4%).
The average effective interest rate on financial liabilities of the Company at 31 January 2023 was estimated to be 6% (2022:
4%).
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. The credit risk is also mitigated in the bridging property finance segment of our business by ensuring that the
valuation of the security at origination of the loan is rigorously assessed and is within loan to value limits. As confirmation
required under IFRS 8, no individual customer contributes more than 10% of the revenue for the Group. 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.
8080
D2 Notes to the Accounts CONTINUEDYear ended 31 January 2023S&U Plc Annual Report and Accounts 2023 22. FINANCIAL INSTRUMENTS (CONTINUED)
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. There are no interest rate derivative contracts
held at 31 January 2023 (2022: none held). 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 at the balance sheet date. The
Group has low gearing for its sector and the directors consider a 1% and a 2% movement in interest rates to reflect the UK
interest rate environment and to be appropriate for sensitivity analyses. 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 1% higher/lower and all other variables were held constant, the Group’s;
• profit for the year ended 31 January 2023 would decrease/increase by £1.3 million (2022: decrease/increase by £0.9million).
This is mainly attributable to the Group’s exposure on its variable rate borrowings.
• total equity would decrease/increase by £1.3million (2022: decrease/increase by £0.9million). This is mainly attributable to the
Group’s exposure on its variable rate borrowings.
If interest rates had been 2% higher/lower and all other variables were held constant, the Group’s;
• profit for the year ended 31 January 2023 would decrease/increase by £2.6million (2022: decrease/increase by £1.7million).
This is mainly attributable to the Group’s exposure on its variable rate borrowings.
• total equity would decrease/increase by £2.6million (2022: decrease/increase by £1.7million). This is mainly attributable to the
Group’s exposure on its variable rate borrowings.
Capital risk management
The Board of Directors assess the capital needs of the Group on an ongoing basis and approve all material 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 2023 the Group gearing level was 85.5% (2021: 54.9%) which the directors consider to have met their
objective.
Although Advantage have not sold insurance products in recent years, they are required to hold a regulatory minimum
capital figure of £5000 in this regard. 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 (2022: £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. The fair value hierarchy is derived from Level 2
inputs in accordance with IFRS13.
81
www.suplc.co.uk ― Stock Code: SUSThe Accounts 22. FINANCIAL INSTRUMENTS (CONTINUED)
Liquidity risk
The Group’s liquidity risk is shown in the following tables which measure the cumulative liquidity gap. Management review
and manage the maturity of borrowing facilities appropriately. Most of the Group’s financial assets are repayable anyway
within two years which together with net gearing of around 85.5% results in a positive liquidity position.
Group
At 31 January 2023
Financial assets
Other assets
Cash at bank and in hand
Total assets
Shareholders’ funds
Bank overdrafts and loans
Lease liabilities
Financial liabilities
Other liabilities
Total liabilities and shareholders’
funds
Cumulative gap
Group
At 31 January 2022
Financial assets
Other assets
Cash at bank and in hand
Total assets
Shareholders’ funds
Bank overdrafts and loans
Lease liabilities
Financial liabilities
Other liabilities
Total liabilities and shareholders’
funds
Cumulative gap
More than
1 year but
not more
than 2 years
£’000
More than
2 years but
not more
than 5 years
£’000
67,476
–
–
67,476
–
–
(169)
–
–
151,829
–
–
151,829
–
(145,500)
(252)
–
–
More than
5 years
£’000
–
–
–
–
–
(50,000)
–
(450)
–
No fixed
maturity
date
£’000
–
4,327
–
4,327
(224,885)
–
–
–
(6,752)
Total
£’000
420,710
4,327
3,137
428,174
(224,885)
(195,500)
(587)
(450)
(6,752)
(169)
271,683
(145,752)
277,760
(50,450)
227,310
(231,637)
–
(428,174)
–
More than
1 year but
not more
than 2 years
£’000
More than
2 years but
not more
than 5 years
£’000
57,566
–
–
57,566
–
–
(128)
–
–
(128)
195,997
124,048
–
–
124,048
–
(61,000)
(115)
–
–
(61,115)
258,930
More than
5 years
£’000
–
–
–
–
–
(50,000)
–
(450)
–
No fixed
maturity
date
£’000
–
4,314
–
4,314
(206,747)
–
–
–
(6,047)
Total
£’000
322,915
4,314
–
327,229
(206,747)
(113,568)
(417)
(450)
(6,047)
(50,450)
208,480
(212,794)
–
(327,229)
–
Less than
1 year
£’000
201,405
–
3,137
204,542
–
–
(166)
–
–
(166)
204,376
Less than
1 year
£’000
141,301
–
–
141,301
–
(2,568)
(174)
–
–
(2,742)
138,559
8282
D2 Notes to the Accounts CONTINUEDYear ended 31 January 2023S&U Plc Annual Report and Accounts 2023 22. FINANCIAL INSTRUMENTS (CONTINUED)
Company
At 31 January 2023
Other assets
Cash at bank and in hand
Total assets
Shareholders’ funds
Bank overdrafts and loans
Financial liabilities
Lease liabilities
Other liabilities
Contingent liabilities
Total liabilities and shareholders’
funds
Cumulative gap
Company
At 31 January 2022
Other assets
Cash at bank and in hand
Total assets
Shareholders’ funds
Bank overdrafts and loans
Financial liabilities
Lease liabilities
Other liabilities
Contingent liabilities
Total liabilities and shareholders’
funds
Cumulative gap
More than
1 year but
not more
than 2 years
£’000
More than
2 years but
not more
than 5 years
£’000
Less than
1 year
£’000
More than
5 years
£’000
–
–
–
–
(273)
–
(51)
–
–
(324)
(324)
–
–
–
–
–
–
(71)
–
–
160,000
–
160,000
–
(145,500)
–
(221)
–
–
(71)
(395)
(145,721)
13,884
50,000
–
50,000
–
(50,000)
(450)
–
–
–
(50,450)
13,434
More than
1 year but
not more
than 2 years
£’000
More than
2 years but
not more
than 5 years
£’000
Less than
1 year
£’000
More than
5 years
£’000
–
–
–
–
(3,147)
–
(66)
–
–
(3,213)
(3,213)
–
–
–
–
–
–
(17)
–
–
(17)
(3,230)
102,000
–
102,000
–
(61,000)
–
–
–
–
(61,000)
37,770
50,000
–
50,000
–
(50,000)
(450)
–
–
–
(50,450)
37,320
No fixed
maturity
date
£’000
58,295
–
58,295
(70,724)
–
–
–
(1,005)
–
(71,729)
–
No fixed
maturity
date
£’000
33,936
–
33,936
(70,265)
–
–
–
(991)
–
(71,256)
–
Total
£’000
268,295
–
268,295
(70,724)
(195,773)
(450)
(343)
(1,005)
–
(268,295)
–
Total
£’000
185,936
–
185,936
(70,265)
(114,147)
(450)
(83)
(991)
–
(185,936)
–
83
www.suplc.co.uk ― Stock Code: SUSThe Accounts 22. FINANCIAL INSTRUMENTS (CONTINUED)
The cash flows payable under financial liabilities are analysed as follows:
Group
At 31 January 2023
Bank overdrafts and loans
Trade and other payables
Tax liabilities
Accruals and deferred income
Borrowings
Lease liabilities
Financial liabilities
At 31 January 2023
Group
At 31 January 2022
Bank overdrafts and loans
Trade and other payables
Tax liabilities
Accruals and deferred income
Borrowings
Lease liabilities
Financial liabilities
At 31 January 2022
Company
At 31 January 2023
Bank overdrafts and loans
Trade and other payables
Tax liabilities
Accruals and deferred income
Borrowings
Lease liabilities
Financial liabilities
At 31 January 2023
Repayable
on Demand
£’000
Less than
1 year
£’000
More than
1 year but
not more
than 2 years
£’000
More than
2 years but
not more
than 5 years
£’000
–
–
–
–
–
–
–
–
–
4,602
888
1,262
–
166
–
6,918
–
–
–
–
–
169
–
169
–
–
–
–
145,500
252
–
145,752
Repayable
on Demand
£’000
Less than
1 year
£’000
More than
1 year but
not more
than 2 years
£’000
More than
2 years but
not more
than 5 years
£’000
2,568
–
–
–
–
–
–
2,568
–
4,347
926
774
–
174
–
6,221
–
–
–
–
–
128
–
128
–
–
–
–
61,000
115
–
61,115
Repayable
on Demand
£’000
Less than
1 year
£’000
More than
1 year but
not more
than 2 years
£’000
More than
2 years but
not more
than 5 years
£’000
273
–
–
–
–
–
–
273
–
711
69
225
–
51
–
1,056
–
–
–
–
–
71
–
71
–
–
–
–
145,500
221
–
145,721
More than
5 years
£’000
–
–
–
–
50,000
–
450
50,450
More than
5 years
£’000
–
–
–
–
50,000
–
450
50,450
More than
5 years
£’000
–
–
–
–
50,000
–
450
50,450
Total
£’000
–
4,602
888
1,262
195,500
587
450
203,289
Total
£’000
2,568
4,347
926
774
111,000
417
450
120,482
Total
£’000
273
711
69
225
195,500
343
450
197,571
8484
D2 Notes to the Accounts CONTINUEDYear ended 31 January 2023S&U Plc Annual Report and Accounts 2023 22. FINANCIAL INSTRUMENTS (CONTINUED)
Company
At 31 January 2022
Bank overdrafts and loans
Trade and other payables
Tax liabilities
Accruals and deferred income
Borrowings
Lease liabilities
Financial liabilities
At 31 January 2022
Repayable on
Demand
£’000
Less than
1 year
£’000
More than
1 year but
not more
than 2 years
£’000
More than
2 years but
not more
than 5 years
£’000
3,147
–
–
–
–
–
–
3,147
–
654
116
221
–
66
–
1,057
–
–
–
–
–
17
–
17
–
–
–
–
61,000
–
–
61,000
More than
5 years
£’000
–
–
–
–
50,000
–
450
50,450
Total
£’000
3,147
654
116
221
111,000
83
450
115,671
23. RECONCILIATION OF OPERATING PROFIT TO NET CASH FROM OPERATING ACTIVITIES
Operating Profit
Finance costs paid
Finance income received
Tax (paid)/received
Depreciation on plant, property and equipment
(Profit)/loss on disposal of plant, property and equipment
Increase in amounts receivable from customers
Decrease/(increase) in trade and other receivables
Increase in trade and other payables
Increase in accruals
Increase in cost of future share based payments
Movement in retirement benefit asset/obligations
Net cash used in operating activities
24. FINANCIAL COMMITMENTS
Group
2023
£000
48,905
(7,495)
–
(7,748)
525
(26)
(97,795)
138
255
488
6
(13)
(62,760)
Group
2022
£000
50,790
(3,772)
–
(8,749)
529
13
(42,005)
(633)
1,584
116
39
(6)
(2,094)
Company
2023
£000
Company
2022
£000
13,475
(142)
2,648
3
85
(1)
–
(82,132)
57
4
6
(13)
(66,010)
7,584
(146)
2,652
(93)
81
–
–
(14,622)
449
15
39
(6)
(4,047)
Capital commitments
At 31 January 2023 the Group had £nil capital commitments contracted but not provided for (2022: £122,707). At 31 January
2023, the Company had no capital commitments contracted but not provided for (2022: £nil).
25. 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 2023 was £nil (2022: £nil).
85
www.suplc.co.uk ― Stock Code: SUSThe Accounts 26. SHARE BASED PAYMENTS
The Company operated a Long Term Incentive Plan (LTIP 2010) and full details of the share options outstanding during the
year are shown below:
LTIP 2010
Outstanding at beginning of year
Granted during the year
Lapsed during the year
Exercised during the year
Expired during the year
Outstanding at end of year
Exercisable at end of year
Number
Of Share
Options
2023
5,500
–
–
(5,500)
–
–
–
Number
Of Share
Options
2022
17,000
–
–
(11,500)
–
5,500
–
All share options issued under the LTIP are exercisable at the ordinary share nominal value 12.5p.
The weighted average share price for share options exercised during the year was £24.00 (2022: £23.56).
The weighted average remaining contractual life of the outstanding share options is not applicable as there are no
outstanding share options remaining (2022: 2 months).
The Group recognised total share-based payment expenses for LTIP of £6,000 in the year to 31 January 2023 (2022: £39,000).
LTIP 2010 is now over 10 years old and no further grants can be made under that LTIP. Further to a review by the
Remuneration Committee a new LTIP allowing shadow share options, which can only be cash settled and therefore do not
dilute current shareholders, was approved by the AGM in May 2021(LTIP 2021).
27. 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 2022. At that valuation it was
assumed that the appropriate post retirement discount rate was 1.95% and pension increases would be 3.6% per annum.
The valuation results have been updated on the advice of a qualified actuary to take account of the requirements of IAS19 in
order to assess the liabilities of the scheme as at 31 January 2023. 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 2024 is £nil.
The scheme is run by Trustees who are responsible for the affairs of the scheme. Trustees during the year were Mr GDC
Coombs and Mr CH Redford who are also directors of S&U plc. The scheme is closed to new members. The Trustees discuss
the affairs of the scheme and deal with discretionary matters regarding benefits. The trustees have employed Barclays Wealth
as investment managers. S&U plc has power, under the Trust Deed and Rules which govern the operation of the Fund, to
remove Trustees from office, to accept their resignations, and to appoint new or additional Trustees. The directors of S&U plc
consider all these arrangements to be appropriate, having noted that the scheme has been closed to new members for over
40 years, the scheme continues to have a significant surplus and the scheme’s defined benefit obligations are not material in
the context of the group.
8686
D2 Notes to the Accounts CONTINUEDYear ended 31 January 2023S&U Plc Annual Report and Accounts 2023 27. RETIREMENT BENEFIT OBLIGATIONS (CONTINUED)
Disclosures made in accordance with IAS 19
A full actuarial valuation was carried out at 31 March 2022 and updated to 31 January 2023 by a qualified independent
actuary. The valuation method used was the projected unit method. The major assumptions used by the actuary were (in
nominal terms):
Rate of increase in salaries
Pension increases:
Pre-97 Pension
Post 97 Pension
Discount rate
At year end
31 January
2023
At year end
31 January
2022
n/a
0.0%
3.1%
4.2%
n/a
0.0%
4.0%
2.1%
Mortality assumption for 31 January 2023 comes from the S3PA tables with CMI-2021 1.25% long term trend and for 31
January 2022 mortality assumption was from the S2PA tables with CMI-2020 1.25% long term trend.
The analysis of the scheme assets and the expected rate of return at the balance sheet date were as follows:
Equities
Bonds
Cash/Other
Total market value of assets
Proportion
held at
31 January
2023 £000
Proportion
held at
31 January
2022 £000
66%
21%
13%
100%
62%
22%
16%
100%
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
Surplus before restriction
Restriction on Surplus
Pension asset
The amount recognised in the income statements during the year
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)
Jan 23
£000
1,092
(342)
750
(750)
0
Jan 23
£000
–
11
(24)
(13)
–
(13)
–
13
0
Jan 22
£000
1,141
(483)
658
(658)
0
Jan 22
£000
–
6
(12)
(6)
–
(6)
–
6
0
87
www.suplc.co.uk ― Stock Code: SUSThe Accounts 27. RETIREMENT BENEFIT OBLIGATIONS (CONTINUED)
The expense credit in both years is shown within administrative expenses.
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 – assumptions
Actuarial (gain)/loss on obligation – experience
Present value of obligation at 31 January
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 gain/(loss) on plan assets
Fair value of plan assets at 31 January
Experience adjustment on assets
Actuarial (gain)/loss as percentage of scheme assets
Jan 23
£000
Jan 22
£000
483
10
–
(38)
(96)
(17)
342
(33%)
1,141
24
–
(38)
(35)
1,092
(3%)
536
6
–
(41)
(28)
10
483
(4%)
1,100
12
–
(41)
70
1,141
6%
8888
D2 Notes to the Accounts CONTINUEDYear ended 31 January 2023S&U Plc Annual Report and Accounts 2023 Five Year Record (Unaudited)
Continuing Operations Only
Revenue
Cost of Sales
Impairment
Administrative Expenses
Operating profit
Finance Costs (net)
Profit before taxation
Taxation
Profit for the year
Assets employed in all operations
Fixed assets
Amounts receivable and other assets
Liabilities
Total equity
Earnings per Ordinary share
Dividends declared per Ordinary share
Group gearing
2019
£000
2020
£000
2021
£000
2022
£000
82,970
(15,751)
(16,941)
(11,177)
39,101
(4,541)
34,560
(6,571)
27,989
2,062
278,751
280,813
(115,446)
165,367
233.2p
118.0p
65.3%
89,939
(19,872)
(17,220)
(12,863)
39,984
(4,850)
35,134
(6,252)
28,882
2,108
303,973
306,081
(126,607)
179,474
239.6p
120.0p
65.7%
83,761
(14,264)
(36,705)
(11,096)
21,696
(3,568)
18,128
(3,482)
14,646
2,713
282,126
284,839
(103,810)
181,029
120.7p
90.0p
54.6%
87,889
(18,771)
(4,120)
(14,208)
50,790
(3,772)
47,018
(9,036)
37,982
2,455
324,774
327,229
(120,482)
206,747
312.8p
122.0p
54.9%
2023
£000
102,714
(23,676)
(13,877)
(16,256)
48,905
(7,495)
41,410
(7,692)
33,718
2,616
425,558
428,174
(203,289)
224,885
277.5p
133.0p
85.5%
“Group Gearing” is calculated as the sum of Bank Overdrafts plus Borrowings less Cash and Cash Equivalents divided by
Total Equity.
89
www.suplc.co.uk ― Stock Code: SUSThe Accounts Financial Calendar
Annual General Meeting
Announcement of Results
Half year ending 31 July 2023
Year ending 31 January 2024
Payment of Dividends
6% Cumulative Preference Shares
25 May 2023
3 October 2023
April 2024
30 September 2023 &
31 March 2024
31.5% Cumulative Preference Shares
31 July 2023 & 31 January 2024
Ordinary Shares – 2022/23 final
8 July 2023
– Ex dividend date
16 June 2023
– Record date
17 June 2023
– 2022/23 first interim
November 2023
– 2022/23 second interim March 2024
Annual General Meeting Arrangements
The Annual General Meeting will take place on 25 May 2023 – further details of arrangements are contained in the Notice of
Annual General Meeting sent to shareholders and on the company website at www.suplc.co.uk
9090
S&U Plc Annual Report and Accounts 2023 Officers and Professional Advisors
Directors
A M V Coombs MA (Oxon)
G D C Coombs MA (Oxon) MSc (Lon)
J E C Coombs MA (Oxon) ACA
C H Redford ACA
T G Wheeler
E H Ahrens
D Markou MBE FCA
G Pedersen
T Khlat MBE
J P Maxwell
(Chairman)
(Deputy Chairman)
(Director)
(Group Finance Director)
(CEO Advantage Finance)
(CEO Aspen Bridging)
(Non-executive)
(Non-executive)
(Non-executive)
(Non-executive)
Secretary
C H Redford ACA
Registered office
2 Stratford Court
Cranmore Boulevard
Solihull
West Midlands
B90 4QT
Tel: 0121 705 7777
Bankers
HSBC Bank plc
130 New Street
Birmingham
B2 4JU
Natwest Bank
250 Bishopsgate
London
EC2M 4AA
Auditor
Mazars LLP
Statutory Auditor
30 Old Bailey
London
EC4M 7AU
Registrars
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Shareholders can contact Link Group on:
0871 664 0300 (calls cost 10p per minute plus network costs).
Financial Public Relations
SEC Newgate Communications
14 Greville Street,
London
EC1N 8 SB
Solicitors
DLA
Victoria Square
Birmingham
B2 4DL
Stockbrokers
Peel Hunt LLP
7th Floor
100 Liverpool Street
London
EC2M 2AT
Internal Auditor
RSM Risk Assurance Services LLP
6th Floor 25 Farringdon Street
London
EC4A 4AB
91
www.suplc.co.uk ― Stock Code: SUSOther Information S
&
U
P
l
c
A
n
n
u
a
l
R
e
p
o
r
t
a
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d
A
c
c
o
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n
t
s
2
0
2
3
2 Stratford Court
Cranmore Boulevard
Shirley
Solihull
West Midlands
B90 4QT
T: 0121 705 7777
Registered in England No. 342025
www.suplc.co.uk