9 April 2024
S&U plc
("S&U", "the Group" or "the Company")
PRELIMINARY UNAUDITED RESULTS
FOR THE YEAR ENDED 31 JANUARY 2024
S&U plc (LSE: SUS), the motor
finance and specialist lender, today announces its preliminary
results for the year ended 31 January 2024.
Group Key Financials:
· Revenue increased by 12% to £115.4m (2023:
£102.7m)
· Profit
before tax ("PBT"): £33.6m (2023: £41.4m)
· Group
net receivables at year-end increased by 10% to £462.9m (2023:
£420.7m)
· Group
impairment charge of £24.2m (2023: £13.9m) reflecting increased
motor arrears during H2
· Group
net finance costs at £15.0m (2023: £7.5m) on higher borrowings and
increased base rates this year
· Basic
earnings per share:
209.2p (2023: 277.5p)
· Final dividend of 50p per ordinary
share to be paid on 12 July 2024 (2023: 60p)
· Net
Borrowings at £224.4m (2023: £192.4m) - gearing at 95.8% (2023:
85.5%)
Advantage Motor Finance Highlights:
· Revenue increased by 9% to £98.2m (2023: £89.8m)
· PBT:
£28.8m (2023: £37.2m)
· Impairment charge: £23.3m (2023:
£12.9m) reflecting increased arrears during H2
· Live
monthly repayments at 92.1% of due (2023: 93.6%)
· Annual
net advances: £175.9m (2023: £186.6m)
· Net
receivables at year end at £332.5m (2023: £306.8m)
Aspen Bridging Highlights:
· Revenue increased by 34% to £17.3m (2023: £12.9m)
· PBT: £4.8m
(2023: £4.5m)
· Annual
PBT performance underpinned by good advances at sensible Loan to
Values
· Good
repayments this year and impairment charge remains low at £0.9m
(2023: £1.0m)
· Amounts receivable from customers now £130.4m (2023:
£113.9m)
Anthony Coombs, Chairman of S&U plc
stated:
"Enthusiastic
and supportive customers underpin S&U's long success and
guarantee its future. Current trends, both at Advantage and Aspen,
prove that S&U has an abundance of these and trading since our
year-end is encouraging. Of course, challenges remain. As Marcus
Aurelius, a second century Roman Emperor and Stoic philosopher once
said, "sometimes the art of living is more like wrestling than
dancing". Confident in our people, business philosophy and the
markets we serve so well, we wrestle on."
For
further information, please contact:
Anthony Coombs
|
S&U plc
|
c/o SEC Newgate
Communications
|
Bob Huxford, Molly Gretton, Harry
Handyside
|
SEC Newgate
Communications
|
020 7653 9848
|
Andrew Buchanan, Sam
Milford
|
Peel Hunt LLP
|
020 7418 8900
|
A conference call
presentation for analysts will be held on 9th April 2024
at 9.30am
CHAIRMAN'S REVIEW
Introduction
Times of change and contrasting
fortune often bring out the best in people. The past year has been
such a time. After a first half which saw profit before tax ahead
of both 2022/23 and budget, a combination of prolonged and raised
interest rates, a British economy sliding towards recession and,
most of all, a flurry of regulatory activity has seen profits for
the year as a whole at £33.6m against £41.4m (the highest
normalised profit in S&U's history) last year.
Whilst short of the "emerging
opportunities" we foresaw a year ago, the results do not do justice
to the solid underlying trading of the Group, nor to the sterling
efforts of our staff. Working as always together, they will
continue to ensure that we shall overcome short-term challenges
and restore S&U
to its habitual path of steady and sustainable growth.
The strength of
S&U's trading is demonstrated by Group revenue this year
at £115.4m (2023: £102.7m) and record equity of £234.2m (2023:
£224.9m). Customer numbers in both Advantage, our Grimsby-based
motor finance provider, and at Aspen our property financier in
Solihull, are at a record. So are the Group total repayments they
produce of nearly £370m, up 18.5% on 2023. Net receivables for
S&U have now reached a best ever £462.9m, and Aspen has
recently attained the £500m mark for lending over its seven-year
history.
That growth has occurred whilst
preserving sustainable quality. Our repayments are one indicator of
our historically good relations with our valued customers. Thus,
despite what we anticipate to be a temporary hiatus in the last
quarter, Advantage live monthly repayments as percent of due
finished at 92.1% for the year (2023: 93.6%) with bad debt and
voluntary termination write-offs remaining within budget and just
under 10% more than last year. Meanwhile, not only were Aspen's
profits at a record £4.8m (2023: £4.5m) but its total repayments
reached £144.4m for the first time, with just 15 loans beyond term
at year end.
Financial Highlights*
|
2024
|
2023
|
Revenue:
|
£115.4m
|
£102.7m
|
Profit before tax
("PBT"):
|
£33.6m
|
£41.4m
|
Earnings per share
("EPS")
|
209.2p
|
277.5p
|
Group net
assets:
|
£234.2m
|
£224.9m
|
Group
gearing*:
|
95.8%
|
85.5%
|
Group total
repayments*:
|
£369.8m
|
£311.9m
|
Dividend
proposed:
|
120p per ordinary
share
|
133p
|
* key alternative performance
measurement definitions are given in note 2.4 below.
Advantage Finance ("Advantage")
The contrast between the very
creditable trading record mentioned in my introduction and the
results we announce at Advantage can be explained in two ways. The
first is a persistently higher level of borrowing costs as books
have grown and interest rates remained higher than anticipated. As
a result, on Advantage year-end borrowings £18m higher than
last year, interest payable has risen by £4.4m for the year as a
whole.
Second, and even more significant,
there has been an upsurge over the past months in regulatory
activity by the Financial Conduct Authority involving inquiries
into Advantage alongside, we understand, the majority of firms in
the motor lending industry. One such current inquiry is into the
linking of interest rates charged to customers to the level of
commission paid by lenders to broker introducers.
Happily, Advantage
is not involved since it has never engaged in this practice which would cut across its
long-standing model of matching rate to risk.
However, another FCA inquiry focusing on
affordability, forbearance and vulnerable customers has been
initiated by the FCA across the industry to ease the perceived
burden of a prolonged period of cost-of-living increases. This FCA
inquiry has increased Advantage's costs and inhibited both the
range of products we offer our customers, and our ability to
sensibly help them maintain their loan repayments - which bolsters
their future credit rating.
These inquiries should not detract
from the underlying strength of Advantage's results and business
model. Receivables have reached a record £332.5m (2023: £306.8m)
and revenue is up to a record £98.2m (2023: £89.8m). Total new deal
numbers were over 21,500, which was on budget. Live monthly
repayments were a record £172.1m representing 92.1% of due for the
year (2023: 93.6%). Total deal numbers written off to bad debt were
3717 of a total c. 65,000 on the books, under budget, but up 540 on
a year ago and 74% of customers were up to date at year end,
against 77.6% a year ago.
Those fundamental strengths were not
reflected in Advantage's PBT of £28.8m for two reasons. The first
is that provisions prudently made on an IFRS9 estimate of future
cash flows have increased by £8.2m on last year. Whether these
prove overcautious or otherwise will be evident as the year
progresses. The second relates to additional costs incurred as a
result of the FCA's inquiries in "professional fees" as well as an
increase in base rate driving extra finance costs in Advantage of
over £4m on last year. Both are not expected to persist.
More widely than just at Advantage,
on an industry wide basis, this recent upsurge in regulation has a
number of important characteristics and implications.
Before delving into the specifics,
it's essential to acknowledge that S&U endorses the FCA's
objectives aimed at enhancing the consumer experience, safeguarding
customers from the infrequent but possible negligence within the
finance sector and assisting individuals in navigating challenges
that may arise during the tenure of their loan. We have
consistently maintained that lending is not a win-lose scenario,
and believe that transparent, straightforward, and mutually
agreed-upon regulations serve the best interests of both the
customer and the lender. This perspective aligns with the FCA's
additional responsibilities to uphold the integrity of the UK's
financial system and to foster competitive practices that benefit
consumers. By fulfilling these roles, the FCA, along with other
regulatory bodies, can more effectively meet its broader mandate to
support the international competitiveness and growth of the UK
economy.
This includes efforts to broaden
access to credit for all consumer segments, particularly those
often categorized as non-prime by traditional financial standards.
Such initiatives can stimulate consumption, which constitutes a
significant portion of overall demand, thereby driving economic
expansion.
In recent years, a notable trend has
emerged contrary to expectations. The workforce of the FCA has
expanded to 4,289 employees, an increase of 1,100 in the last year,
paralleled by a substantial contraction in credit availability. A
February report by Clearscore, a data provider and credit scorer,
in collaboration with Ernst and Young, highlights a marked decrease
in the availability of debt products for non-standard customers
over the last twelve years. Specifically, the non-prime market has
seen a reduction of more than 30% since 2019. Consequently,
Clearscore/E&Y estimates indicate that the number of people
whose credit needs are not met has risen from 12 to 13 million in
2018 to 16 to 17 million. This has led to a greater reliance on
illegal money lending.
The report by Clearscore and E&Y
also notes the inherent challenges in regulation, which must
consider the 'fairness' of outcomes for customers in diverse
situations. This has been reflected in the FCA's continuous
issuance of guidance, including the recent introduction of an
outcome-based consumer duty. This approach, often based on
retrospective assessment, introduces a degree of uncertainty
regarding customer relationships, which in the case of Advantage,
have been established and refined over 25 years. Unintended
consequences may include a dampening effect on innovation and the
introduction of new products. Furthermore, there has been a notable
decrease in industry capital, with Ernst & Young estimating a
reduction of £2 billion in recent years, as funders grow cautious
due to concerns about repayment reliability.
Additionally, imposing restrictions
on customers' ability to address their arrears, in pursuit of
comprehensive and sometimes intrusive affordability assessments,
may inadvertently lead to a preventable worsening of their credit
scores.
Central to ensuring consistent and
equitable outcomes for customers is the precise definition of terms
such as 'affordability' and 'vulnerability', which are inherently
subjective and fluctuate over time, particularly in an inflationary
environment where the lines between 'essential' and 'discretionary'
spending may become indistinct.
In efforts to clarify these critical
issues, Advantage actively collaborates with regulators,
prioritizing the long-term interests of its customers. The company
takes pride in its high customer satisfaction ratings, evidenced by
a 4.7 out of 5 score on FEEFO and Trustpilot, and remains committed
to offering a spectrum of forbearance options to assist customers
facing payment challenges, ensuring they can continue to use their
vehicles whenever feasible.
Advantage's strap line for new
customers is "We see more than your score" an initial assessment
which goes alongside Advantage's traditional aim to improve a
customer's credit rating following the successful repayment of
their loan. Since a typical 'non-prime' customer has experience of
credit arrears and often default in the years prior to application,
this is an approach many customers find comforting and valuable as
Advantage testimonials show. Almost all can improve their credit
score following successful repayment of an Advantage
loan.
Preparations for the Consumer Duty
at Advantage last summer were thorough. Readiness for the new Duty
was overseen by independent legal advisers and then reviewed by
RSM, S&U's internal auditors. Moreover, a previous FCA review
of affordability at Advantage had been deemed
satisfactory.
In response to ongoing concerns
regarding the cost of living and its declared objective to "deliver
quantifiable consumer benefits," the FCA has launched comprehensive
inquiries across the industry, affecting approximately two-thirds
of non-prime motor finance companies. In anticipation of the
findings, Advantage has consented to specific limitations on its
repayment processes. These modifications have temporarily
influenced monthly repayments and recovery efforts. However,
following constructive dialogues with the regulatory body, these
measures are being thoughtfully adjusted to ensure flexibility and
effectiveness.
As the motor finance industry
transitions to new modes of regulation and evolving assurance of
fair customer outcomes, it is to be expected that the mutual
learning and understanding between firms and regulator will cause
some temporary disruption. In future however, Advantage expects
that its long-term experience and humane approach to every
customer, irrespective of their background, as evidenced by its
industry-leading customer satisfaction and Ombudsman "uphold"
rates, will be vindicated and rightly bear fruit.
Finally, I have great pleasure in
welcoming Karl Werner as the new Chief Executive of Advantage. Karl
has impressed enormously in the few months he has been with us, and
his long experience of the finance industry and its regulation,
particularly at MotoNovo and Aldermore Bank will make him a
distinguished successor to Graham Wheeler.
Aspen Bridging
Aspen has continued its impressive
progress. Despite an increase in finance costs of £3.6m, profit
this year has reached a record £4.8 m (2023: £4.5m) on revenues of
£17.3 m (2023: £12.9m). Net receivables are now £130.4 m (2023:
£113.9m) following record deal numbers in the year. As Aspens'
reputation amongst the finance broking community grows, so does the
quality of deal and customer it attracts. As we foresaw last year,
this has meant a continuation of last year's higher £0.9m average
loan size, whilst average Loan to Values were under 70%, a small
reduction on last year. This reflects high quality security and the
more experienced developer/investor customers Aspen now
attracts.
This is welcome, given the
uncertainty surrounding the housing market, which continues to
mirror the wider economic issues of the past two years. Annual UK
residential transactions last year were 1 million, about 15% down
on the year before. However, as mortgage approvals recover, this is
expected to reach 1.1 million transactions next year. Average
prices for residential properties, which are Aspens' main security,
fell slightly last year but have shown recent signs of recovery.
Predictions for the current year range from a 3% average rise at
Knight Frank to a 3% price fall from Halifax. Given the prospects
for a further fall in mortgage rates and a healthy labour
market feeding latent demand, our view is that house prices will
rise up to 5% on average this year, and possibly more in the south
east, where most bridging activity occurs.
These trends are also reflected in
the refinance market which has seen average falls of nearly one
percent in both interest and stress test rates over the past six
months. All this is reflected in total repayments in the year by
Aspen of a record £144.4m (2023: £96.1m). A growing book requires
expert supervision, and Aspen has strengthened its risk and
recoveries department by recruiting further experience in that
area. The capital receivables book of c£133 million is high
quality. Of 163 current loans, just 15 are beyond term, up just one
on last year. Only four properties were in repossession at year
end, for which recovery is in progress and adequate provision has
been made.
The team at Aspen, based in Solihull
in newly expanded offices, has grown to 25 from 21 two years ago.
Since Aspen's live book debt has roughly doubled to £130.4m in that
period, productivity has substantially increased.
Efficiency measures are carried out
quarterly; current trends on all measures are impressive and will
be maintained.
Staff are encouraged into CPD;
partly as a result, staff turnover has remained low and morale
high. Aspen runs a female-managed football team, predictably 'Aspen
Villa', promoted last season. Regular staff excursions and
celebrations occur, most recently to mark £500m of lending.
Momentum is being maintained with current lending at over £15m per
month. Since its launch in 2017, Aspen has more than met S&U's
expectations, and great things are expected of it in the
future.
Dividends
Whilst recognising its primary
responsibilities to its shareholders, S&U has always sought to
balance the interests of all its stakeholders. This year's fall in
profit together with our wish to protect our loyal staff from
recent increases in the cost of living has made this a particularly
delicate one this year.
Thus, except for senior directors,
average salaries this year have matched the rate of inflation, with
more for living wage earners. Higher base interest rates have cost
the Group an additional £8m this year, and our incoherent
Government have raised the rate of corporation tax by nearly a
third.
Taking all this into account,
subject to the approval of shareholders at our AGM on 6 June, the
board proposes a final dividend of 50p per ordinary share (2023:
60p). This will be paid on 12 July 2024 to the shareholders on the
register on 21 June 2024. Total dividends for the year will then be
120p per share (2023: 133p).
Funding and Treasury
Our confidence in S&U's business
strategy, in our customers and the market we serve has been
reflected in the additional £32m invested in our businesses over
the past year. Net borrowings at year-end was £224.4m (2023:
£192.4m). Current Group gearing therefore stands at 95.8%, well
within banking covenants and S&U's traditionally conservative
risk appetite. The first half of the year saw Group funding
facilities increase by £70m, excluding overdrafts, to £280m from
our funding partners, comfortably in excess of our anticipated
requirements until 2026. In the meantime, we budget for the current
Bank rate, but hope for speedy reductions and a more
growth-friendly approach from the Bank of England.
Governance and Regulation
The recent period of modest economic
growth, alongside political uncertainties, has heightened awareness
of the critical role that corporate sustainability and
profitability play in any functioning free-market system. This
shift in focus has even led figures like Larry Fink, who was once a
staunch advocate for corporations in the United States, to
reconsider the overriding importance of the Environmental, Social,
and Governance (ESG) agenda.
S&U's extensive experience in
engaging with respectable individuals, who may not have flawless
credit histories, predates the establishment of the FCA by
seventy-five years. While acknowledging that the commercial
landscape evolves, my stance has been consistent on two
fronts.
Firstly, I believe that in
organizations where Christian and family values are at the core,
such as S&U, there is a natural alignment between commercial
pursuits and consumer protection. History has shown that a
well-regulated free-market system is unparalleled in enhancing
welfare and living standards.
Secondly, S&U has always been a
proponent of the critical role the FCA plays in ensuring fair
treatment for consumers. Nonetheless, for the markets serving these
consumers to remain stable and competitive, ensuring access is
paramount. Without this, numerous vulnerable consumers might find
themselves resorting to unregulated, and potentially illicit,
lending options-a scenario diametrically opposed to the
expectations of a civilized society.
S&U's commitment to such a
society is evidenced in part by the community activities in which
our employees are involved. At Group level this year saw the tenth
anniversary of the Keith Coombs Trust, named for my father and former chairman.
The Trust focuses its work on children and young people with all
kinds of disability - mental, physical and emotional. Through
charities in Birmingham, London, Kidderminster and in Africa and
India, it funds and promotes work for those who are unable to help
themselves.
Finally, in challenging times we
should remind ourselves that sustainable success depends upon happy
and satisfied customers and the people who serve them. The past six
months have not been easy and I pay tribute to all of them; and
also, to Graham Wheeler who, over the past four years has led
Advantage through COVID, a cost of living
crisis and regulatory change. On his retirement, I am pleased that
he has now agreed to join S&U's board in a non-executive
capacity.
Current Trading and Outlook
Enthusiastic and supportive
customers underpin S&U's long success and guarantee its future.
Current trends, both at Advantage and Aspen, prove that S&U has
an abundance of these and trading since our year end is
encouraging. Of course, challenges remain. As Marcus Aurelius, a
second century Roman Emperor and Stoic philosopher once said,
"sometimes the art of living is more like wrestling than dancing".
Confident in our people, business philosophy and the markets we
serve so well, we wrestle on.
Anthony Coombs
Chairman
8
April 2024
CONSOLIDATED INCOME STATEMENT
|
|
|
|
|
|
Year ended 31 January 2024
|
Note
|
|
|
|
|
|
|
|
2024
|
|
2023
|
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
Revenue
|
3
|
|
115,437
|
|
102,714
|
|
|
|
|
|
|
Cost of Sales
|
4
|
|
(22,821)
|
|
(23,676)
|
|
|
|
|
|
|
Impairment charge
|
5
|
|
(24,203)
|
|
(13,877)
|
|
|
|
|
|
|
Gross Profit
|
|
|
68,413
|
|
65,161
|
|
|
|
|
|
|
Administrative expenses
|
6
|
|
(19,767)
|
|
(16,256)
|
|
|
|
|
|
|
Operating profit
|
|
|
48,646
|
|
48,905
|
|
|
|
|
|
|
Finance costs
|
7
|
|
(15,062)
|
|
(7,495)
|
|
|
|
|
|
|
Profit before taxation
|
|
|
33,584
|
|
41,410
|
|
|
|
|
|
|
Taxation
|
|
|
(8,147)
|
|
(7,692)
|
|
|
|
|
|
|
Profit for the year attributable to equity
holders
|
|
|
25,437
|
|
33,718
|
|
|
|
|
|
|
Earnings per share basic
|
9
|
|
209.2p
|
|
277.5p
|
Earnings per share
diluted
|
9
|
|
209.2p
|
|
277.5p
|
|
|
|
|
|
|
Dividends per share
|
|
|
|
|
|
- Proposed Final Dividend
|
|
|
50.0p
|
|
60.0p
|
- Interim dividends in respect of
the year
|
|
|
70.0p
|
|
73.0p
|
- Total dividend in respect of the
year
|
|
|
120.0p
|
|
133.0p
|
- Paid in the year
|
|
|
133.0p
|
|
128.0p
|
|
|
|
|
|
|
All activities derive from
continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
2024
|
|
2023
|
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
Profit for the year attributable to equity
holders
|
|
|
25,437
|
|
33,718
|
|
|
|
|
|
|
Actuarial loss on defined benefit
pension scheme
|
|
|
(6)
|
|
(13)
|
|
|
|
|
|
|
Total Comprehensive Income for the
year
|
|
|
25,431
|
|
33,705
|
|
|
|
|
|
|
Items above will not be reclassified
subsequently to the Income Statement
|
|
|
CONSOLIDATED BALANCE SHEET
|
|
|
|
|
31
January 2024
|
Note
|
|
|
|
|
|
|
|
2024
|
|
2023
|
|
|
|
£'000
|
|
£'000
|
ASSETS
|
|
|
|
|
|
Non
current assets
|
|
|
|
|
|
Property, plant and equipment
including right of use assets
|
|
|
2,310
|
|
2,616
|
Amounts receivable from
customers
|
8
|
|
241,985
|
|
219,305
|
Deferred tax assets
|
|
|
155
|
|
110
|
|
|
|
|
|
|
|
|
|
244,450
|
|
222,031
|
Current Assets
|
|
|
|
|
|
Amounts receivable from
customers
|
8
|
|
220,953
|
|
201,405
|
Trade and other
receivables
|
|
|
1,442
|
|
1,601
|
Cash and cash equivalents
|
|
|
1
|
|
3,137
|
|
|
|
|
|
|
|
|
|
222,396
|
|
206,143
|
|
|
|
|
|
|
Total Assets
|
|
|
466,846
|
|
428,174
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Bank overdrafts and loans
|
|
|
(881)
|
|
-
|
Trade and other payables
|
|
|
(4,897)
|
|
(4,602)
|
Tax Liabilities
|
|
|
(564)
|
|
(888)
|
Lease Liabilities
|
|
|
(170)
|
|
(166)
|
Accruals and deferred
income
|
|
|
(1,971)
|
|
(1,262)
|
|
|
|
|
|
|
|
|
|
(8,483)
|
|
(6,918)
|
Non
current liabilities
|
|
|
|
|
|
Borrowings
|
|
|
(223,500)
|
|
(195,500)
|
Lease Liabilities
|
|
|
(251)
|
|
(421)
|
Financial Liabilities
|
|
|
(450)
|
|
(450)
|
|
|
|
|
|
|
|
|
|
(224,201)
|
|
(196,371)
|
|
|
|
|
|
|
Total liabilities
|
|
|
(232,684)
|
|
(203,289)
|
|
|
|
|
|
|
NET
ASSETS
|
|
|
234,162
|
|
224,885
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Called up share capital
|
|
|
1,719
|
|
1,719
|
Share premium account
|
|
|
2,301
|
|
2,301
|
Profit and loss account
|
|
|
230,142
|
|
220,865
|
|
|
|
|
|
|
Total equity
|
|
|
234,162
|
|
224,885
|
|
|
|
|
|
|
|
|
|
|
|
|
STATEMENT OF CHANGES IN EQUITY
|
|
|
|
|
|
|
Year ended 31 January 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Called up
|
|
Share
|
|
Profit
|
|
|
|
|
|
share
|
|
premium
|
|
and loss
|
|
Total
|
|
|
|
capital
|
|
account
|
|
account
|
|
equity
|
|
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
|
|
At 1 February 2022
|
|
1,718
|
|
2,301
|
|
202,728
|
|
206,747
|
|
|
|
|
|
|
|
|
|
|
Profit for year
|
|
|
-
|
|
-
|
|
33,718
|
|
33,718
|
Other comprehensive income for
year
|
|
-
|
|
-
|
|
(13)
|
|
(13)
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for
year
|
|
-
|
|
-
|
|
33,705
|
|
33,705
|
Issue of new shares in
year
|
|
1
|
|
-
|
|
-
|
|
1
|
Cost of future share based
payments
|
|
-
|
|
-
|
|
6
|
|
6
|
Tax credit on equity
items
|
|
-
|
|
-
|
|
(28)
|
|
(28)
|
Dividends
|
|
|
-
|
|
-
|
|
(15,546)
|
|
(15,546)
|
|
|
|
|
|
|
|
|
|
|
At 31 January 2023
|
|
1,719
|
|
2,301
|
|
220,865
|
|
224,885
|
|
|
|
|
|
|
|
|
|
|
Profit for year
|
|
|
-
|
|
-
|
|
25,437
|
|
25,437
|
Other comprehensive income for
year
|
|
-
|
|
-
|
|
(6)
|
|
(6)
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for
year
|
|
-
|
|
-
|
|
25,431
|
|
25,431
|
Dividends
|
|
|
-
|
|
-
|
|
(16,154)
|
|
(16,154)
|
|
|
|
|
|
|
|
|
|
|
At 31 January 2024
|
|
1,719
|
|
2,301
|
|
230,142
|
|
234,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED CASH FLOW STATEMENT
|
|
|
|
|
|
|
Year ended 31 January 2024
|
|
|
|
|
|
|
|
Note
|
|
|
|
|
|
|
|
|
2024
|
|
2023
|
|
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
Net
cash used in operating activities
|
11
|
|
(446)
|
|
(55,265)
|
|
|
|
|
|
|
|
|
Cash flows used in investing activities
|
|
|
|
|
|
|
Proceeds on disposal of property,
plant and equipment
|
|
|
76
|
|
166
|
|
Purchases of property, plant and
equipment
|
|
|
(265)
|
|
(826)
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities
|
|
|
(189)
|
|
(660)
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
Dividends paid
|
|
|
(16,154)
|
|
(15,546)
|
|
Finance cost paid
|
|
|
(15,062)
|
|
(7,495)
|
|
Issue of new shares
|
|
|
-
|
|
1
|
|
Receipt of new borrowings
|
|
|
173,500
|
|
84,500
|
|
Repayment of borrowings
|
|
|
(145,500)
|
|
-
|
|
Increase/(decrease) in lease
liabilities
|
|
|
(166)
|
|
170
|
|
Net increase/(decrease) in
overdraft
|
|
|
881
|
|
(2,568)
|
|
|
|
|
|
|
|
|
Net cash generated from financing
activities
|
|
|
(2,501)
|
|
59,062
|
|
|
|
|
|
|
|
|
Net
increase/(decrease) in cash and cash equivalents
|
|
|
(3,136)
|
|
3,137
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of
year
|
|
|
3,137
|
|
-
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of year
|
|
|
1
|
|
3,137
|
|
|
|
|
|
|
|
|
Cash and cash equivalents comprise
|
|
|
|
|
|
|
Cash and cash in bank
|
|
|
1
|
|
3,137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There are no cash and cash
equivalent balances which are not available for use by the Group
(2023: £nil).
|
1.
SHAREHOLDER INFORMATION
1.1 Preliminary
Announcement
The figures shown for the year ended
31 January 2024 are not statutory accounts within the meaning of
section 435 of the Companies Act 2006. The unaudited preliminary announcement was approved by the Board
of directors on 8 April 2024. The Company's Annual Report will be
finalised subsequent to this preliminary unaudited results
announcement. The figures shown for the year ended 31 January 2023
are not statutory accounts. A copy of the statutory accounts has
been delivered to the Registrar of Companies, contained an unqualified audit report and did not contain an
adverse statement under section 498(2) or 498(3) of the Companies
Act 2006. This announcement has been agreed
with the Company's auditors for release. A copy of this unaudited
preliminary announcement will be published on the website
www.suplc.co.uk. The Directors are
responsible for the maintenance and integrity of the Company
website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements differ from
legislation in other jurisdictions.
1.2 Annual
General Meeting
The Annual General Meeting will be held on 6
June 2024 and further details of arrangements will be published in
the AGM notice.
1.3
Dividend
If approved at the Annual General Meeting a
final dividend of 50p per Ordinary Share is proposed, payable on 12
July 2024 with a record date of 21 June 2024.
1.4 Annual
Report
The 2024 Annual Report and Financial Statements
and AGM notice will be displayed in full on our website
www.suplc.co.uk in due course and also posted to those Shareholders
who have still opted to receive a hardcopy. Copies of this
announcement are available from the Company Secretary, S & U
plc, 2 Stratford Court, Cranmore Boulevard, Solihull B90
4QT.
2.
KEY ACCOUNTING POLICIES
The 2024 financial statements have been prepared
in accordance with applicable accounting standards and accounting
policies - these key accounting policies are a subset of the full
accounting policies.
2.1 Basis
of preparation
As a listed Group we are required to prepare our
consolidated financial statements in accordance with UK-adopted
international accounting standards. 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 2024. 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 foreseeable
future. 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.
At the date of authorisation of this
preliminary announcement 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.
2.2
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.
2.3
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
historic 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 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
2024 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. An overlay for
used vehicle prices was also included at 31 January 2023 as we
assumed at that point that these prices would fall by 13.5% after a
large increase in the previous 12 months. As at 31 January 2024, we
have not included an overlay for used vehicle prices as we assume
that used vehicle prices will now remain stable after the
anticipated large decrease in the previous 12 months.
Further sensitivity over this estimation
uncertainty is provided in note 2.5.
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 or repaid 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.
2.4
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 is calculated as the Operating Profit
divided by the average capital employed (total equity plus Bank
Overdrafts plus Borrowings less cash and cash
equivalents)
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 Overdrafts plus Borrowings less cash and cash
equivalents divided by total equity.
vi) Group total repayments are the
total live monthly repayments, settlement proceeds and recovery
collections in motor finance added to the total amount retained
from advances, customer redemptions and recovery collections in
property bridging.
2.5
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 2.3 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.
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
|
Upside
|
Downside
|
Severe
|
Weighted
|
|
|
|
|
(30%
decrease)
|
(30 %
increase)
|
(50%
increase)
|
|
|
Weighting
|
|
50%
|
10%
|
35%
|
5%
|
|
|
Q1
2024
|
|
4.40%
|
3.08%
|
5.72%
|
6.60%
|
4.84%
|
|
Q1
2025
|
|
4.70%
|
3.29%
|
6.11%
|
7.05%
|
5.17%
|
|
Q1
2026
|
|
4.90%
|
3.43%
|
6.37%
|
7.35%
|
5.39%
|
|
Q1
2027
|
|
4.90%
|
3.43%
|
6.37%
|
7.35%
|
5.39%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Inflation rates were not previously 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 and to a lesser
extent at 31 January 2024. The Group considers four
probability-weighted scenarios in relation to inflation rate: base,
upside, downside and severe scenarios as follows:
|
|
Base
|
Upside
|
Downside
|
Severe
|
Weighted
|
|
|
|
(30%
decrease)
|
(30 %
increase)
|
(50%
increase)
|
|
Weighting
|
|
50%
|
10%
|
35%
|
5%
|
|
Q1
2024
|
|
9.70%
|
6.79%
|
12.61%
|
14.55%
|
10.96%
|
Q1
2025
|
|
3.00%
|
2.10%
|
3.90%
|
4.50%
|
3.39%
|
Q1
2026
|
|
1.00%
|
0.70%
|
1.30%
|
1.50%
|
1.13%
|
Q1
2027
|
|
0.40%
|
0.28%
|
0.52%
|
0.60%
|
0.45%
|
An increase by 0.5% in the weighted
average unemployment rate would result in an increase in loan loss
provisions by £1.1m. A decrease by 0.5% would result in a decrease
in loan loss provisions by £1,108,644. An increase by 0.5% in the
weighted average inflation rate would result in an increase in loan
loss provisions by £0.5m. A decrease by 0.5% would result in a
decrease in loan loss provisions by £0.5m.
Used vehicle
price overlay and sensitivity for our motor finance
business
At the year ended 31 January 2024, we have
assumed that used vehicle prices will remain stable after a period
when used vehicle prices increased during years ended 31 January
2022 and 31 January 2023 and then decreased during year ended 31
January 2024. This assumption as at 31 January 2024 has been made
after considering market trends and expectations but is uncertain.
If used car prices were assumed to fall by 5% instead, then this
would result in an increase in loan loss provisions of £3.0m. If
used vehicle prices were assumed to increase by 5% instead, then
this would result in a decrease in loan loss provisions of
£3.0m.
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
£0.3m. 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 £0.3m.
3.
SEGMENTAL ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Analyses by class of business of revenue and profit before
taxation from continuing operations
|
are
stated below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
Profit before
taxation
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Year
|
|
Year
|
|
Year
|
|
|
ended
|
|
ended
|
|
ended
|
|
ended
|
|
|
31.1.24
|
|
31.1.23
|
|
31.1.24
|
|
31.1.23
|
|
Class of business
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
|
|
Motor finance
|
98,177
|
|
89,801
|
|
28,810
|
|
37,171
|
|
|
|
|
|
|
|
|
|
|
Property Bridging finance
|
17,260
|
|
12,913
|
|
4,803
|
|
4,457
|
|
|
|
|
|
|
|
|
|
|
Central costs net of
central
|
-
|
|
-
|
|
(29)
|
|
(218)
|
|
finance income
|
|
|
|
|
|
|
|
|
|
115,437
|
|
102,714
|
|
33,584
|
|
41,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Analyses by class of business of assets and liabilities are
stated below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
Liabilities
|
|
|
Year
|
|
Year
|
|
Year
|
|
Year
|
|
|
ended
|
|
ended
|
|
ended
|
|
ended
|
|
|
31.1.24
|
|
31.1.23
|
|
31.1.24
|
|
31.1.23
|
|
Class of business
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
|
|
Motor finance
|
335,502
|
|
311,168
|
|
(181,944)
|
|
(164,452)
|
|
|
|
|
|
|
|
|
|
|
Property Bridging finance
|
130,808
|
|
116,714
|
|
(121,431)
|
|
(109,485)
|
|
|
|
|
|
|
|
|
|
|
Central
|
536
|
|
292
|
|
70,691
|
|
70,648
|
|
|
|
|
|
|
|
|
|
|
|
466,846
|
|
428,174
|
|
(232,684)
|
|
(203,289)
|
|
|
|
|
|
|
|
|
|
|
Depreciation of assets for motor finance was
£399,000 (2023: £425,000), for property bridging finance was
£14,000 (2023: £15,000) and for central was £97,000 (2023:
£85,000). Fixed asset additions for motor finance were £218,000
(2023: £394,000), for property bridging finance were £20,000 (2023:
£13,000) and for central were £27,000 (2023: £419,000).
The net finance credit for central
costs was £2,904,000 (2023: £2,507,000), for motor finance was a
cost of £11,018,000 (2023: £6,619,000) and for property bridging
finance was a cost of £6,948,000 (2023: £3,383,000). The tax charge
for central costs was £25,000 (2023: £58,000 credit), for motor
finance was a tax charge of £6,967,000 (2023: £6,901,000) and for
property bridging finance was a tax charge of £1,155,000 (2023:
£848,000).
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
4.
COST OF SALES
|
|
|
|
|
|
|
2024
|
|
2023
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
Cost of sales - motor
finance
|
|
20,726
|
|
21,687
|
Cost of sales - property bridging
finance
|
|
2,095
|
|
1,989
|
Total cost of sales
|
|
22,821
|
|
23,676
|
|
|
|
|
|
|
|
|
|
|
5.
IMPAIRMENT CHARGE
|
|
|
|
|
|
|
2024
|
|
2023
|
|
|
£'000
|
|
£'000
|
Loan loss provisioning charge
|
|
|
|
|
Loan loss provisioning charge -
motor finance
|
|
23,280
|
|
12,885
|
Loan loss provisioning charge -
property bridging finance
|
|
923
|
|
992
|
Total impairment charge
|
|
24,203
|
|
13,877
|
|
|
|
|
|
|
|
|
|
|
6.
ADMINISTRATIVE EXPENSES
|
|
|
|
|
|
|
2024
|
|
2023
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
Administrative expenses - motor
finance
|
|
14,343
|
|
11,439
|
Administrative expenses - property
bridging
|
|
2,491
|
|
2,092
|
Administrative expenses -
central
|
|
2,933
|
|
2,752
|
Total administrative
expenses
|
|
19,767
|
|
16,283
|
|
|
|
|
|
|
|
|
|
|
7.
FINANCE COSTS
|
|
|
|
|
|
|
2024
|
|
2023
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
31.5% cumulative preference
dividend
|
|
141
|
|
141
|
Lease liabilities
interest
|
|
16
|
|
12
|
Bank loan and overdraft interest
payable
|
|
14,905
|
|
7,342
|
Total finance costs
|
|
15,062
|
|
7,495
|
8.
AMOUNTS RECEIVABLE FROM CUSTOMERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024
|
|
2023
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
Motor finance hire
purchase
|
|
437,181
|
|
403,282
|
Less: Loan loss provision motor
finance
|
|
(104,685)
|
|
(96,465)
|
|
|
|
|
|
Amounts receivable from customers
motor finance
|
|
332,496
|
|
306,817
|
|
|
|
|
|
Property bridging finance
loans
|
|
132,746
|
|
115,451
|
Less: Loan loss provision property
bridging finance
|
|
(2,304)
|
|
(1,558)
|
|
|
|
|
|
Amounts receivable from customers
property bridging finance
|
|
130,442
|
|
113,893
|
|
|
|
|
|
Amounts receivable from
customers
|
|
462,938
|
|
420,710
|
|
|
|
|
|
Analysis of future due date
due
|
|
|
|
|
|
|
|
|
|
- Due within one
year
|
|
220,953
|
|
201,405
|
- Due in more than
one year
|
|
241,985
|
|
219,305
|
|
|
|
|
|
Amounts receivable from
customers
|
|
462,938
|
|
420,710
|
|
|
|
|
|
Analysis of Security
|
|
|
|
|
|
|
|
|
|
Loans secured on vehicles under hire
purchase agreements
|
|
327,485
|
|
302,159
|
Loans secured on property
|
|
130,442
|
|
113,893
|
Other loans not secured - motor
finance where security no longer present
|
|
5,011
|
|
4,658
|
|
|
|
|
|
Amounts receivable from
customers
|
|
462,938
|
|
420,710
|
8.
AMOUNTS RECEIVABLE FROM CUSTOMERS (CONTINUED)
|
Analysis of loan loss provision and amounts
receivable from customers (capital)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not credit
|
|
Not credit
|
|
Credit
|
|
|
|
|
|
Impaired
|
|
Impaired
|
|
Impaired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage 1:
|
|
Stage 2:
|
|
Stage 3:
|
|
|
|
|
|
Subject to
|
|
Subject to
|
|
Subject to
|
|
|
|
|
|
12 months
|
|
lifetime
|
|
lifetime
|
|
Total
|
As
at 31 January 2024
|
|
|
ECL
|
|
ECL
|
|
ECL
|
|
|
|
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
Amounts receivable
(capital)
|
|
|
|
|
|
|
|
|
|
Motor finance
|
|
|
291,566
|
|
5,125
|
|
140,490
|
|
437,181
|
Property bridging finance
|
|
|
121,908
|
|
-
|
|
10,838
|
|
132,746
|
Total
|
|
|
413,474
|
|
5,125
|
|
151,328
|
|
569,927
|
|
|
|
|
|
|
|
|
|
|
Loan loss provisions
|
|
|
|
|
|
|
|
|
|
Motor finance
|
|
|
(21,315)
|
|
(1,323)
|
|
(82,047)
|
|
(104,685)
|
Property bridging finance
|
|
|
(914)
|
|
-
|
|
(1,390)
|
|
(2,304)
|
Total
|
|
|
(22,229)
|
|
(1,323)
|
|
(83,437)
|
|
(106,989)
|
|
|
|
|
|
|
|
|
|
|
Amounts receivable (net)
|
|
|
|
|
|
|
|
|
|
Motor finance
|
|
|
270,251
|
|
3,802
|
|
58,443
|
|
332,496
|
Property bridging finance
|
|
|
120,994
|
|
-
|
|
9,448
|
|
130,442
|
Total
|
|
|
391,245
|
|
3,802
|
|
67,891
|
|
462,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage 1:
|
|
Stage 2:
|
|
Stage 3:
|
|
|
|
|
|
Subject to
|
|
Subject to
|
|
Subject to
|
|
|
|
|
|
12 months
|
|
lifetime
|
|
lifetime
|
|
Total
|
As
at 31 January 2023
|
|
|
ECL
|
|
ECL
|
|
ECL
|
|
|
|
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
Amounts receivable
(capital)
|
|
|
|
|
|
|
|
|
|
Motor finance
|
|
|
285,050
|
|
2,236
|
|
115,996
|
|
403,282
|
Property bridging finance
|
|
|
108,378
|
|
-
|
|
7,073
|
|
115,451
|
Total
|
|
|
393,428
|
|
2,236
|
|
123,069
|
|
518,733
|
|
|
|
|
|
|
|
|
|
|
Loan loss provisions
|
|
|
|
|
|
|
|
|
|
Motor finance
|
|
|
(26,640)
|
|
(662)
|
|
(69,163)
|
|
(96,465)
|
Property bridging finance
|
|
|
(1,116)
|
|
-
|
|
(442)
|
|
(1,558)
|
Total
|
|
|
(27,756)
|
|
(662)
|
|
(69,605)
|
|
(98,023)
|
|
|
|
|
|
|
|
|
|
|
Amounts receivable (net)
|
|
|
|
|
|
|
|
|
|
Motor finance
|
|
|
258,410
|
|
1,574
|
|
46,833
|
|
306,817
|
Property bridging finance
|
|
|
107,262
|
|
-
|
|
6,631
|
|
113,893
|
Total
|
|
|
365,672
|
|
1,574
|
|
53,464
|
|
420,710
|
8.
AMOUNTS RECEIVABLE FROM CUSTOMERS (CONTINUED)
|
Analysis of loan loss provision and amounts
receivable from customers (capital)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stage 1:
|
|
Stage 2:
|
|
Stage 3:
|
|
|
|
|
|
Subject to
|
|
Subject to
|
|
Subject to
|
|
Total
|
|
|
|
12 months
|
|
lifetime
|
|
lifetime
|
|
Provision
|
Analysis of Loan loss provisions
|
|
ECL
|
|
ECL
|
|
ECL
|
|
|
|
|
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
|
|
|
|
At 1 February 2022
|
|
|
22,575
|
|
2,769
|
|
66,783
|
|
92,127
|
|
|
|
|
|
|
|
|
|
|
Net transfers and changes in credit
risk
|
|
|
(10,020)
|
|
(1,905)
|
|
(1,710)
|
|
(13,635)
|
New loans originated
|
|
|
15,599
|
|
148
|
|
11,765
|
|
27,512
|
Total impairment charge to income
statement
|
5,579
|
|
(1,757)
|
|
10,055
|
|
13,877
|
Amount netted off revenue for stage
3 assets
|
|
-
|
|
-
|
|
8,893
|
|
8,893
|
Utilised provision on
write-offs
|
|
(398)
|
|
(350)
|
|
(16,126)
|
|
(16,874)
|
At 31 January 2023
|
|
|
27,756
|
|
662
|
|
69,605
|
|
98,023
|
|
|
|
|
|
|
|
|
|
|
Net transfers and changes in credit
risk
|
|
|
(14,755)
|
|
565
|
|
12,331
|
|
(1,859)
|
New loans originated
|
|
|
11,863
|
|
354
|
|
13,845
|
|
26,062
|
Total impairment charge to income
statement
|
|
(2,892)
|
|
919
|
|
26,176
|
|
24,203
|
Amount netted off revenue for stage
3 assets
|
|
-
|
|
-
|
|
9,162
|
|
9,162
|
Utilised provision on
write-offs
|
|
|
(2,635)
|
|
(258)
|
|
(21,506)
|
|
(24,399)
|
|
|
|
|
|
|
|
|
|
|
At 31 January 2024
|
|
|
22,229
|
|
1,323
|
|
83,437
|
|
106,989
|
|
|
|
|
|
|
|
|
|
|
9.
EARNINGS PER ORDINARY SHARE
The calculation of earnings per
ordinary share ("eps") from continuing operations is based on
profit after tax of £25,437,000 (2023: £33,718,000).
The number of shares used in the
basic eps calculation is the weighted average number of shares in
issue during the year of 12,150,760 (2023: 12,149,205). There
are a total of nil dilutive share options in issue (2023: nil) and
taking into account the appropriate proportion of these dilutive
options the number of shares used in the diluted eps calculation is
12,150,760 (2023: 12,149,205).
10. CONTINGENT LIABILITIES
Our motor finance subsidiary Advantage was
included in the FCA's multi-firm Cost of Living Forbearance
Outcomes review in 2023 and as a result the FCA concluded that
enhancements may be required to Advantage's approach to arrears
management and the application of forbearance. Advantage and
the FCA have been in correspondence throughout 2023/24 to discuss
and agree the necessary steps and Advantage will carry out an
assessment of whether any customers were adversely affected by its
practices. Where this is found to be the case Advantage will
seek to redress any detriment.
The financial effect of any customer redress
cannot be reliably assessed at this early stage of the
review. This ongoing assessment is expected to be in advanced
stages in Summer 2024, with any redress being made after
that.
11.
RECONCILIATION OF OPERATING PROFIT TO NET CASH FROM OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
2024
|
|
2023
|
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
Operating Profit
|
|
|
48,646
|
|
48,905
|
Tax paid
|
|
|
(8,515)
|
|
(7,748)
|
Depreciation on plant, property and
equipment
|
|
|
510
|
|
525
|
(Profit)/loss on disposal of plant,
property and equipment
|
|
(16)
|
|
(26)
|
Increase in amounts receivable from
customers
|
|
|
(42,228)
|
|
(97,795)
|
Decrease/increase in trade and other
receivables
|
|
|
159
|
|
138
|
Increase in trade and other
payables
|
|
|
295
|
|
255
|
Increase in accruals and deferred
income
|
|
|
709
|
|
488
|
Equity-settled future share-based
payments addback
|
|
|
-
|
|
6
|
Movement in retirement benefit
asset/obligations
|
|
|
(6)
|
|
(13)
|
|
|
|
|
|
|
Net
cash used in operating activities
|
|
|
(446)
|
|
(55,265)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|