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