Preliminary Results and Dividend Jan 2005

THURSDAY 31ST MARCH 2005 S&U PLC Providers of Consumer Credit and Motor Finance RESULTS FOR THE YEAR TO 31ST JANUARY 2005 * PRE-TAX PROFITS £9.8M (£9.0M) UP 8.9% ON BUSINESS TRANSACTED £95.1M (£89.3M) UP 6.5% OPERATING PROFIT £11.1M (£9.7M) UP 14.4% * TOTAL DIVIDEND 31p (29p) UP 6.9%. DIVIDEND GROWTH EVERY YEAR SINCE 1988. 'WE HOPE TO CONTINUE THIS TREND' EARNINGS PER SHARE 56.8p (52.6p) UP 8.0%. * HOME COLLECTED CREDIT HOME COLLECTED CREDIT HAS SHOWN GOOD PROGRESS THROUGHOUT THE YEAR….. ALL THREE SUBSIDIARIES INCREASED BOTH SALES AND PROFITS. * MOTOR CAR FINANCE ....NOW PRODUCING PROFITS RISING TO OVER £2M FOR LAST YEAR, WITH A PROJECTED TARGET OF £2.45M FOR THE YEAR AHEAD. PROSPECTS FOR THE LONGER TERM ARE HEALTHY AND WE ARE CONFIDENT OF FURTHER SIGNIFICANT PROFIT GROWTH. * OUTLOOK 'WE HOPE AND EXPECT THE RESULTS FOR THE COMING YEAR WILL JUSTIFY OUR CONFIDENCE' Issued on behalf of S&U PLC on Thursday 31st March 2005 by Simon Preston, Financial Public Relations Ltd - Tel 020 7353 8906 Enquiries: Derek Coombs, Executive Chairman, S&U PLC } Or } Tel: 020 7353 8906 Anthony Coombs, Managing Director, S&U PLC} THE INTERNATIONAL PRESS CENTRE 76 SHOE LANE LONDON EC4A 5JB TELEPHONE 020-7353 8906 FAX 020-7353 7550 S&U PLC CHAIRMAN'S STATEMENT Results Good news for S&U plc. Business transacted for the year is £95.1m compared to £ 89.3m last year. Profit on ordinary activities before tax for the year ended January 2005 is £9.8m compared to £9.0m for 2004. Earnings per share increased from 52.6p to 56.8p, providing good cover. You will recall that we increased our dividend by 1p for the first half year's trading and we are now very pleased to announce an additional 1p for the second half, making a combined dividend increase of 2p for the year as a whole. The dividend for ordinary shares of 22p per share will be paid on the 3rd June 2005 and the shares will be dealt ex dividend from the 4th May 2005. Excellent dividend growth every year since 1988 is our proud achievement and we hope to continue this trend. Home Collected Credit I am pleased to say that all three home collected credit companies, which include Wilson Tupholme and S.D. Taylor as well as S&U itself, have shown good progress throughout the year. Tight selection and training of new representative personnel is a standard which we must always maintain and which underpins profit growth in this division. Motor Car Finance - Advantage Finance Limited I am very proud of the performance of Advantage Finance Limited, which has only been in existence since 1999, when I introduced it to the S&U group as a start-up business in Grimsby. The management structure is first class. Pre-tax profits have risen in that short period from a predictable trading loss in the first year, to now producing profits rising to over £2 million for last year's trading, with a projected target of £2.45 million for the year ahead. Their trading pattern in recent months validates that ambition. Prospects for the longer term are healthy and the Directors are confident of further significant profit growth. Staff I am very pleased to announce that Guy Thompson is now a full member of the Board, although his prime responsibility is and will remain Advantage Finance. I would like to congratulate all members of staff throughout the group on their positive contribution to the year's results. I would like to pay a special tribute to Jim Coates, who was the MD of our Wilson Tupholme subsidiary for many years. Sadly he died recently and he will be sorely missed. Jim was a man who won the hearts and minds of his staff and we will always remember him. Outlook for the Group as a whole We hope and expect the results for the coming year will justify the confidence expressed in this statement. We would like to thank all Shareholders for their support. Derek M Coombs Chairman 30th March 2005 S&U PLC MANAGING DIRECTOR'S REPORT I am pleased to announce a record set of results for your company which confirm our confidence in the future and an improved economic environment of a year ago. Profits before tax are £9.758m against £9.037m and our operating profits rose by 14.7% against a 10.2% increase last year. We have again slightly exceeded our broker's forecast. Our balance sheet remains strong. Whilst gearing has risen slightly to 63.5%, this reflects further net investment of £2.3m in our Advantage motor finance business and in purchasing good quality debt for our home collected division as we take advantage of further consolidation within that industry. It is encouraging that our performance was broad based across all our companies. Home credit improved profit by about 9% with every company contributing. Following the problems of 2 years ago the performance of the S & U (southern) subsidiaries was particularly encouraging. Advantage Finance, our motor finance business, again increased turnover by 21.0% and profits by nearly 32% as it continues to develop its niche market in providing finance and administrative support to small and medium sized dealers within the sub-prime market. The quality of our principal asset, our book debt, remains good. Bad debt in both divisions, particularly in our larger home credit business, was almost exactly on budget - a not inconsiderable achievement given the recent unwarranted changes in bankruptcy legislation and the growth in the 'money advice' and debt consolidation industry. Again Group expenses reflect our usual prudent approach as well as investment in new home credit branches and the Advantage sales operation. As always, in anticipating the current financial year I temper optimism with realism. Undoubtedly the recent fall in consumer confidence and mixed fortunes in the high street have been reflected in our recent trading. Progress in the second half was slower than in the first; lower economic growth, an impending General Election, new regulations and the current Competition Commission Inquiry into the home credit industry all urge caution this year. Whilst reflecting this, our business plans nevertheless provide for further advances in both profitability and returns to shareholders in the current financial year. Operating Results Year Ended Year Ended 31st January 31st January 2005 2004 £m £m Business Transacted 95.1 89.3 Gross Profit 33.3 30.9 Operating Expenses (16.7) (16.3) Doubtful Debt (5.5) (4.9) Operating Profit 11.1 9.7 Interest (1.3) (1.0) Profit on the sale of fixed - 0.3 assets Profit before Taxation 9.8 9.0 Home Credit This division produced a creditable and consistent performance. With sales rising slightly faster than inflation, bad debt almost exactly on budget and call numbers rising in two of three companies, we are able to grow our Representative force for the first time in a decade. Operating profit against business transacted therefore improved to over 11%, with operating profit itself improving from £7.3m to £8.0m. In an industry recognised as mature and from which in the past year Morses have disappeared and other major players gradually withdrawn, this is an encouraging performance. We continue to seek opportunities from industry consolidation by purchasing good quality book debt. We have broadened our product range by the introduction of the ARGOS retail voucher and maintain our roll out of new technology which should reap benefits in terms of customer analysis and Representative support in the near future. New regulations have required slight changes in advertising and documentation as well as the replacement of our insurance offer to customers. Further legislation increasing rebates for early settlement will have little impact on gross margins. More difficult to predict will be the long term effect on the industry of the spate of Government and consumerist initiatives I mentioned in our Interim Results in the summer. Assuming the Consumer Credit Bill survives pre-election Parliamentary bargaining, the industry will need reassurance that the new Alternative Dispute Resolution procedures, allied to a new definition of 'unfair credit transactions' will be sensibly applied so as to allow responsible licensed lenders to maintain a supply of credit to the sub-prime sector. Unfortunately, the industry's quest for certainty has been further hindered by the current Competition Commission Inquiry. Hopefully a more rigorous and objective investigation than that by the National Consumer Council (which brought it about), it nevertheless requires considerable management and legal resources at a time when other changes and regulations are complicating the task of serving our valued and loyal customers. We must hope that common-sense will guide the Commission's findings and that these will recognise the enormously important role the industry plays in providing responsible and flexible credit to 3 million people in Britain. Advantage Finance Our motor finance subsidiary, based in Grimsby but with a broadening geographical reach across the UK, goes from strength to strength. Profits before tax have exceeded £2m for the first time, on transactions over 10% higher than last year. Current assets have risen by £4.1m whilst the quality of our recent deal tranches is higher than ever. Collections are at record levels and add-on penetration close to budget. Sales and marketing teams have been reorganised to emphasise the paramount importance of our relationship with our key dealers. This process has been, ironically, strengthened by recent changes to insurance regulations with has enabled Advantage to capitalise upon these long standing partnerships. This is a market niche inadequately served by the larger sub-prime players and which particularly suits Advantage's emphasis on speed and reliability of service, consistency of underwriting and finance broking. Our confidence in the business has been rewarded by a further increase in the return on capital invested - some £2.3m last year. It is also reflected in the promotion of its Managing Director, Guy Thompson, to the S & U main Board and his organisational and marketing skills will benefit both Advantage and S & U as a whole in the years to come. Group Profit, Dividend and Earnings Per Share Year 6 months 6 months Year 6 months 6 months ended ended ended ended ended ended 31.1.2005 31.1. 2005 31.7. 2004 31.1.2004 31.1. 2004 31.7. 2003 £m £m £m £m £m £m Profit before 9.8 4.9 4.9 9.0 4.8 4.2 tax Profit after 6.8 3.4 3.4 6.3 3.4 2.9 tax Earnings per 56.8p 28.1p 28.7p 52.6p 28.1p 24.5p share Dividends per 31.0p 22.0p 9.0p 29.0p 21.0p 8.0p share These figures reflect a slowing in profits and turnover growth across the Group in the second half of the year as consumer confidence weakened. Nevertheless the levels of growth we anticipate in the coming year justify, allowing for a slightly improved level of cover, an increase in dividend of 1p for every Ordinary Share making a final payment of 22p (2004 - 21p) and a total of 31p (2004 - 29p) for the year. Capital Structure, Liquidity and Treasury S & U's balance sheet and financing arrangements are strong, and conservative compared to our peers within the finance industry. Our current gearing at 63.5% is less than our gearing 2 years ago; our cash generative home credit businesses have financed a net investment of £3.5m in Advantage Finance and over £0.5m of home credit acquisitions during this period. Our current bank facilities fully support further budgeted investment on an organic basis. Further facilities are available for new ventures if required. Meanwhile, the current interest rate climate appears benign in historical terms. The financial markets have consistently overstated the potential for increases in interest rates and therefore, although we remain ready to do so, we have not yet put hedging agreements in place until pricing is more realistic. The Future Despite the current regulatory review, we remain confident in the health of the sub-prime finance sector and our ability to service it. Our management team is focused on both improving the efficiency of our existing operations and finding ways of augmenting them with new products and new businesses. To this end, we investigate the potential for a third leg to support and complement our established home credit and faster growth motor finance operation. Undoubtedly current initiatives will continue to bring changes in the environment in which we work. We will use these changes as the impetus for further improvements in efficiency and even greater focus on the needs of our customers. We prosper not least because of the lasting loyalty and commitment of our staff - to whom I pay tribute. In particular, we remember the life and work of Jim Coates, Managing Director of Wilson Tupholme for 20 years, who died suddenly in February. It is upon people like Jim, and the hard work and energy of everyone at S &U that the current record results, and the future progress of which I am confident, depend. Anthony M V Coombs Managing Director 30th March 2005 S&U PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT 31ST JANUARY 2005 2005 2004 £000 £000 BUSINESS TRANSACTED (Note 1) 95,089 89,260 TURNOVER 36,363 33,929 Cost of sales (3,067) (3,063) Gross profit 33,296 30,866 Other expenses (16,679) (16,240) Provision for doubtful debt (5,495) (4,933) Total administrative expenses (22,174) (21,173) OPERATING PROFIT 11,122 9,693 Profit on sale of fixed assets - 312 Net interest payable (1,364) (968) PROFIT ON ORDINARY ACTIVITIES 9,758 9,037 BEFORE TAXATION Tax on profit on ordinary (2,936) (2,711) activities PROFIT ON ORDINARY ACTIVITIES 6,822 6,326 AFTER TAXATION BEING PROFIT FOR THE FINANCIAL YEAR Dividends paid and proposed - (3,792) (3,558) including amounts in respect of non equity shares RETAINED PROFIT FOR THE 3,030 2,768 FINANCIAL YEAR Basic and Diluted Earnings per 56.8p 52.6p Ordinary share Dividends per Ordinary share 31.0p 29.0p There have been no recognised gains or losses other than the profit for the current and preceding years. All activities derive from continuing operations. S&U PLC CONSOLIDATED BALANCE SHEET 31ST JANUARY 2005 2005 2004 £000 £000 FIXED ASSETS Tangible assets 2,357 2,474 CURRENT ASSETS Amounts receivable from customers 70,557 64,526 (including £16,758,000 falling due after one year (2004: £14,520,000)) Stocks 91 105 Debtors 840 948 Cash at bank and in hand 14 10 71,502 65,589 CREDITORS: amounts falling due within one (12,598) (29,832) year NET CURRENT ASSETS 58,904 35,757 TOTAL ASSETS LESS CURRENT LIABILITIES 61,261 38,231 CREDITORS: amounts falling due after more (20,000) - than one year NET ASSETS 41,261 38,231 CAPITAL AND RESERVES 41,261 38,231 Statistics 31-Jan-05 31-Jan-04 Operating Profit/Business Transacted 11.7% 10.9% Profit Before Taxation/Net Assets 23.6% 23.6% Net Borrowing/Equity Shareholders Funds 63.5% 62.8% S&U PLC CONSOLIDATED CASH FLOW STATEMENT 31ST JANUARY 2005 2005 2004 £000 £000 £000 £000 Net cash inflow from operating 6,091 7,115 activities Returns on investments and servicing of finance Interest received - 2 Interest paid (1,343) (992) Preference dividends paid (154) (154) Net cash outflow from returns (1,497) (1,144) on investments and servicing of finance Taxation (2,815) (2,516) Capital expenditure and financial investment Purchase of tangible fixed (567) (760) assets Proceeds of sale of fixed 133 676 assets Net cash outflow for capital (434) (84) expenditure and financial investment Equity dividends paid (3,521) (3,289) Cash (outflow)/inflow before (2,176) 82 financing Financing Repayment of secured loan (15,000) - New secured loans 20,000 - Net cash inflow from financing 5,000 - Increase in cash in the year 2,824 82 S&U PLC NOTES TO THE PRELIMINARY ANNOUNCEMENT Year ended 31st January 2005 1. The financial information has been prepared using the same accounting policies as were used in preparing the statutory accounts of the Group for the year to 31 January 2004. As for that year, the directors have included a memorandum figure at the top of the profit and loss account, `Business Transacted'. This represents the total amount that the customer has contracted to pay subject to the deferral of revenue attributable to a later period and VAT. 2. The figures shown for the year ended 31 January 2005 are not statutory accounts within the meaning of section 240 of the Companies Act 1985. The statutory accounts for the year ended 31 January 2005 on which the auditors have given an unqualified report and did not contain an adverse statement under section 237(2) or 237(3) of the Companies Act 1985 will be delivered to the Registrar of Companies after the Annual General Meeting. 3. The financial information within this report has been prepared in accordance with applicable accounting standards. 4. The number of shares used in the calculation of earnings per share is the average number of shares in issue during the year of 11,737,228 (2004: 11,737,228). There are no dilutive shares. 5. If approved at the Annual General Meeting a final dividend of 22.0p per Ordinary Share is proposed, payable on 3 June 2005, with a record date of 6 May 2005. 6. The Annual General Meeting will be held on 20 May 2005. 7. The figures shown for the year ended 31 January 2004 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 237 (2) or 237 (3) of the Companies Act 1985. 8. The 2005 Annual Report and Financial Statements will be posted to shareholders in due course. Copies of this announcement are available from the Company Secretary, S&U plc, Royal House, Prince's Gate, Homer Road, Solihull, West Midlands, B91 3QQ.

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