Interim Results to 31.07.00

S & U PLC 19 September 2000 HALF-YEAR PROFITS UP 28% TO £3.2m (£2.5m) ON TURNOVER £25M (£31M) INTERIM DIVIDEND UP 20% EARNINGS PER SHARE 18.6p (14.3p) ADVANTAGE FINANCE, THE NEW START-UP MOTOR FINANCE SUBSIDIARY, CONTRIBUTED PROFITS OF £403,000 ON £2.2M TURNOVER ALL PARTS OF THE HOME COLLECTED CREDIT BUSINESS SHOWED IMPROVEMENT 'STEADY PROGRESS' EXPECTED IN SECOND HALF, INCLUDING A SUBSTANTIALLY INCREASED CONTRIBUTION FROM ADVANTAGE. BEYOND THAT 'GOOD REASON FOR CONFIDENCE' Enquiries: Derek Coombs or Anthony Coombs Executive Chairman Managing Director S&U PLC S&U PLC Tel: 020 7353 8906 Chairman's Statement I am pleased to report that the pre-tax profits for the six months ended 31st July 2000 are up 28.2% at £3,223,000, as against £2,514,000 for the comparative period last year. Sales for the period are £35,102,000 compared to £31,197,000. The profits include £113,000 from the sale of a property, but stripping this out the profits are still up by 23.7%. The earnings per share for the half year have increased to 18.6p compared with 14.3p. In the home collected credit business during this first half of the year, all geographical areas showed improvement on the comparative period, with the north-east recovered from its poor showing in the first half of last year. Costs have been held in line with expansion. Advantage Finance, formed round the concept and the team of outstanding executives that I introduced to the group, has now traded for a full twelve months, providing hire purchase finance for motor vehicles in the sub-prime market. It has fulfilled our expectations, contributing £2,193,000 to turnover and £403,000 to profit for the half year. In addition it has £5,000,000 of revenue deferred to future periods in respect of advances already made. The interim dividend for the period is raised to 6p per ordinary share compared with 5p at this time last year. This will be paid on 14th November 2000 to ordinary shareholders on the register at 13th October. The shares will go ex dividend 9th October. In the second half of the year we expect steady progress from the home collected credit side and a substantially increased contribution to profits from Advantage. Beyond that we have good reason for confidence. Derek M. Coombs Chairman Managing Director's Statement In my report on S & U's full year trading to January, I remarked upon the Group's encouraging prospects for growth in profits and shareholder value; the results for the first half of the year, provide evidence of this. Group operating profits have improved to £3.22m against £2.5m last year whilst, total revenues at £35.1m show an increase of 12.5% on last year and slightly exceed budget. Our Home Collected Credit Division shows increased profits and turnover. Turnover has grown by just over 6%. Gross margins have increased, partly due to better bad debt results and partly to finance and HP product changes. Expenses have been contained to budget. The strength of this business depends upon the quality of its book debt and it is therefore significant that collections for the first half of the year showed improvements in all three home collected subsidiaries. I particularly commend the performance of our North East subsidiary which, on the introduction of new management has grown profits by over a third. Our North West subsidiary maintains a high rate of profitability. Whilst this division has increased its representative numbers, profitability crucially also depends upon productivity. Through better training, via Investors in People, and with more professional supervision and security, I intend that the current improvement in both sales and profitability per Representative continues. Advantage Finance, our motor finance subsidiary, has recently completed a very satisfactory first year of trading. This period has produced over 2,500 contracts, steady margins and collections and profits on budget. The reported fall in used car prices has had negligible impact upon the quality of Advantage's debt. Strict underwriting and debt collection standards will reinforce this during the company's formative years. Advantage has already made a significant contribution to the Group's results, from a standing start in June 1999. I confidently expect this trend to continue for the full year. A E Holt, our hosiery manufacturing business, has reasonably satisfactory results in a market characterised recently by closures amongst its domestic competitors. Cost control remains tight. Supply agreements have been made with low cost volume producers in India and the Baltic States. Irrespective of the current euro/£ exchange rate, I anticipate a sound profit contribution from this small subsidiary in the current year. Despite our continuing investment in Advantage, S & U remains very conservatively financed with gearing at 49% of net assets: between a half and a quarter of that of our direct competitors. Finance is in place to fund the development of Advantage and the steady expansion of our Home Collected Division. Together with the Group's encouraging profit performance, this should commend S & U to the investing community. All this should help the 'satisfactory growth in both profitability and shareholder value' I anticipated a year ago. A M V Coombs Managing Director CONSOLIDATED PROFIT & LOSS ACCOUNTS Six Months ended 31 July 2000 Six Six Financial months Months Year ended ended ended 31.7.00 31.7.99 31.1.00 Note £000 £000 £000 Turnover 35,102 31,197 68,535 ====== ====== ====== Group operating profit 2 3,541 2,648 6,188 Profit on sale of fixed assets 113 - - Net interest payable (431) (134) (181) ----- ----- ----- Profit on ordinary activities before taxation 3,223 2,514 6,007 Tax on profit on ordinary activities (966) (762) (1,758) ----- ----- ------- Profit on ordinary activities after taxation being profit for the financial period 2,257 1,752 4,249 Preference dividends paid On 6% (formerly 4.2%) cumulative shares (6) (4) (11) On 31.5% cumulative shares (71) (71) (142) ----- ----- ----- Profit after preference dividends 2,180 1,677 4,096 Dividend on ordinary shares (704) (587) (2,466) ----- ----- ------- Retained profit for the financial period 1,476 1,090 1,630 ===== ===== ===== Earnings per ordinary share 3 18.6p 14.3p 34.9p ===== ===== ====== Dividends per ordinary share 6.0p 5.0p 21.0p ===== ===== ====== There have been no recognised gains or losses other than the profit for current and preceding periods. All activities derive from continuing operations. CONSOLIDATED BALANCE SHEETS 31 July 2000 31.7.00 31.7.99 31.1.00 Note £000 £000 £000 Fixed assets Tangible assets 3,079 3,014 2,980 ----- ----- ----- Current assets Amounts receivable from customers 43,518 30,512 38,471 Stocks 541 439 476 Debtors 734 851 1,023 Cash at bank and in hand 159 1 82 ---- ---- ---- 44,952 31,803 40,052 Creditors: amounts falling due within one year (18,752) (7,554) (15,229) ------ ------ ------ Net current assets 26,200 24,249 24,823 ------ ------ ------ Total net assets 2 29,279 27,263 27,803 ====== ====== ====== Capital and reserves Called up share capital 2,117 2,117 2,117 Share premium account 2,136 2,136 2,136 Revaluation reserve 629 631 629 Profit and loss account 24,397 22,379 22,921 ------ ------ ------ Total shareholders' funds 29,279 27,263 27,803 ====== ====== ====== Attributable to equity shareholders 28,629 26,613 27,153 Attributable to non-equity shareholders 650 650 650 ------ ------ ------ 29,279 27,263 27,803 ====== ====== ====== These interim statements were approved by the Board of Directors on 18th September 2000 Signed on behalf of the Board of Directors D M COOMBS A M V COOMBS Directors CONSOLIDATED CASH FLOW STATEMENT Six months ended 31 July 2000 Six Six Financial months Months Year ended ended ended 31.7.00 31.7.99 31.1.00 Note £000 £000 £000 Cash flow from operating activities 4 (1,251) 2,953 (956) Returns on investments and servicing of finance (510) (211) (258) Taxation (433) (18) (965) Capital expenditure and financial investment (291) (395) (702) Equity dividends paid (1,876) (1,761) (2,339) ------ ------ ------ Decrease) / increase in cash in the period (4,361) 568 (5,220) ====== ====== ====== Reconciliation of net cash flow to movement in net debt Six Six Financial months Months Year ended ended ended 31.7.00 31.7.99 31.1.00 Note £000 £000 £000 (Decrease) / increase in cash in the period (4,361) 568 (5,220) ------ ---- ------- Movement in net debt in the period (4,361) 568 (5,220) Net debt at start of period (9,941) (4,721) (4,721) ------ ------ ------ Net debt at end of period (14,302) (4,153) (9,941) ======= ====== ====== NOTES TO THE INTERIM STATEMENTS Six Months ended 31 July 2000 1. ACCOUNTING POLICIES The financial information within the interim report has been prepared in accordance with applicable accounting standards. Since the preparation of the previous financial statements, the group has adopted the recommendations set out in Financial Reporting Standard ('FRS') 15 and FRS 16. There is no effect on the current and prior periods from adopting these new accounting standards, fixed assets that have been previously revalued will be frozen at modified historic cost. 2. ANALYSES OF TURNOVER, OPERATING PROFIT / (LOSS) AND NET ASSETS / (LIABILITIES) All operations are situated in the United Kingdom. Analyses by class of business of turnover, operating profit/(loss) and net assets/(liabilities) are stated below: Turnover Six Six Financial months Months Year ended ended ended 31.7.00 31.7.99 31.1.00 Class of business £000 £000 £000 Consumer credit, rentals and other retail trading 32,287 30,440 65,976 Car finance 2,193 95 1,239 Manufacturing 622 662 1,320 ------ ------ ------ 35,102 31,197 68,535 ====== ====== ====== Operating profit/(loss) Six Six Financial months Months Year ended ended ended 31.7.00 31.7.99 31.1.00 Class of business £000 £000 £000 Consumer credit, rentals and other retail trading 2,864 2,716 6,278 Car finance 635 (105) (151) Manufacturing 42 37 61 ----- ----- ----- 3,541 2,648 6,188 ===== ===== ===== Net assets/(liabilities) Six Six Financial months Months Year ended ended ended 31.7.00 31.7.99 31.1.00 Class of business £000 £000 £000 Consumer credit, rentals and other retail trading 28,716 26,935 27,546 Car finance 128 (75) (150) Manufacturing 435 403 407 ------ ------ ------ 29,279 27,263 27,803 ====== ====== ====== 3. EARNINGS PER ORDINARY SHARE The calculation of earnings per Ordinary share is based on profit after tax of £2,257,000 (for the period ended 31 July 1999 - £1,752,000, and the year ended 31 January 2000 - £4,249,000) from which is deducted Preference dividends of £77,000 (for the period ended 31 July 1999 - £75,000, and the year ended 31 January 2000 - £153,000) giving earnings of £2,180,000 (for the period ended 31 July 1999 - £1,677,000 and the year ended 31 January 2000 - £4,096,000). The number of shares used in the calculation is the average number of shares in issue during the year of 11,737,228 (for the period ended 31 July 1999 and the year ended 31 January 2000 11,737,228). Diluted earnings per share is the same as basic earnings per share as there are no dilutive securities 4. RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW FROM OPERATING ACTIVITIES Six Six Financial months Months Year ended ended ended 31.7.00 31.7.99 31.1.00 £000 £000 £000 Operating profit 3,541 2,648 6,188 Depreciation 313 260 595 (Profit) / loss on sale of fixed assets (10) 12 18 Increase in stocks (65) (17) (54) (Increase)/decrease in amounts receivable from customers (5,046) 117 (7,842) Decrease/(increase) in debtors 118 (180) (202) (Decrease)/Increase in creditors (102) 113 341 ------ ------ ----- Net cash (outflow) / inflow from operating activities (1,251) 2,953 (956) ====== ===== ===== 5. INTERIM REPORT The abridged figures in respect of the financial year ended 31 January 2000 are not full accounts as defined by the Companies Act 1985. Full group accounts for that period have been delivered to the Registrar of Companies with an unqualified audit report. A copy of this Interim Report will be posted to all shareholders and will be made available to the public at the Company's registered office at Royal House, Prince's Gate, Solihull, B91 3QQ.

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