Untitled

S&U Plc Annual Report and Accounts 2022

Robust and

Resilient

Annual Report and Accounts

for the Year ended 31 January 2022

Visit our website at www.suplc.co.uk

Welcome to

the S&U 2022

Annual Report

Founded in 1938, S&U’s mission is

to provide Britain’s foremost motor,

property bridging and specialist finance

service.

Since 1999 our Advantage motor subsidiary has

provided finance for over 200,000 customers. In

just four years, Aspen our new property bridging

business has transacted over £200m in secured

loans.

OUR VALUES

Making the

customer the heart

of our business.

Respect for every

customer and

always treating

customers fairly.

Conservative

approach to

underwriting and

collections to enable

sustainable growth.

MOTOR FINANCE

Hire purchase motor finance

for over 200,000 customers

since 1999.

PROPERTY BRIDGING

FINANCE

Launched in early 2017

and growing steadily after

successful pilot phase.

Our Businesses

Financial Highlights

Revenue (£m) Basic EPS (p)

79.818

89.920

83.019

83.821

22 87.9

AVERAGE for the last 2 years 85.9

203.818

239.620

233.219

120.721

22 312.8

AVERAGE for the last 2 years 216.7

Profit Before Tax (£m) Dividend Declared (p)

30.218

35.120

34.619

18.121

22 47.0

AVERAGE for the last 2 years 32.6

105.018

120.020

118.019

90.021

22 126.0

AVERAGE for the last 2 years 108.0

CONTENTS

Strategic Report

Group at a Glance 04

A1 Chairman’s Statement 05

A2 Strategic Report and Secon

172 Statement 11

A2.1 Strategic Review 11

A2.2 Business Review 12

A2.3 Funding Review 14

A2.4 Principal Risks and

Uncertainties 14

A3 Statements of Viability and

Going Concern 17

A4 Corporate Social Responsibility 21

A4.1 Employees 21

A4.2 Community 21

A4.3 Health and Safety and

Diversity Policy 22

A4.4 Climate Change 22

A5 Section 172 Statement 25

A6 Approval of Strategic Report 25

Corporate Governance

B1 Board of Directors 28

B2 Directors’ Remuneraon

Report 30

B2.1 Report of the Board to

the Shareholders on

Remuneration Policy 30

B2.2 Annual Remuneration

Report 33

B3 Governance 43

B3.1 Audit Committee Report 43

B3.2 Corporate Governance 44

B3.3 Compliance Statement 48

B4 Directors’ Report 49

B5 Directors’ Responsibilies

Statement 51

C Independent Auditor’s Report

to the Members of S&U plc 52

The Accounts

D1 D1.1 Group Income Statement

and Statement of

Comprehensive Income 62

D1.2 Balance Sheet 63

D1.3 Statement of Changes

in Equity 64

D1.4 Cash Flow Statement 65

D2 Notes to the Accounts 66

Five Year Financial Record 91

Other information

Financial Calendar 92

Ocers and Professional Advisers 93

S&U Mission Statement

In the complex, and ever changing, world of financial

services, over the past eighty years S&U’s customers have

relied on the company for one quality above all – TRUST.

Trust is the golden seam which runs through everything we

do. In practice it means:

T EAMWORK. – in any business the guardians of integrity are its people,

and their common pursuit of the highest standards.

R ESPECT. – loving your neighbour is not simply at the core of Christian

values, but transcends our behaviour towards everyone whatever their

race, gender, religion or personality.

U NDERSTANDING. – valuing every customer must be grounded in a

clear understanding of their needs, wishes and circumstances; this guides

the service we offer them.

S ERVICE. – this is both the product and the proof of our understanding

and respect for our customers, each other and our neighbours.

T RUTH. – honesty, integrity and transparency are the best guarantees of

the way we treat all with whom we do business. If people trust S&U they

will have confidence in the services we provide. The good business which

results is our justified reward.

www.suplc.co.uk Stock Code: SUS

STRATEGIC REPORT

Strategic

Report

CONTENTS

Group at a Glance 04

A1 Chairman’s Statement 05

A2 Strategic Report and Secon

172 Statement 11

A2.1 Strategic Review 11

A2.2 Business Review 12

A2.3 Funding Review 14

A2.4 Principal Risks and

Uncertainties 14

A3 Statements of Viability and

Going Concern 17

A4 Corporate Social Responsibility 21

A4.1 Employees 21

A4.2 Community 21

A4.3 Health and Safety and

Diversity Policy 22

A4.4 Climate Change 22

A5 Section 172 Statement 25

A6 Approval of Strategic Report 25

S&U Plc Annual Report and Accounts 2022

Stock Code: SUSwww.suplc.co.uk

Motor Finance Property Bridging Finance

Advantage Finance has grown into one of the most

progressive and innovative motor finance companies

in the country. Through chairing the Credit and Risk

Committee and being active members of the Motor

Finance Management Committee of the Finance

and Leasing Association (FLA), we have been helping

to shape the industry, as the nation has worked to

respond to the challenges of the Covid-19 pandemic.

Based in Grimsby, Advantage employ around 180

people, and working closely with most of the motor

finance Brokers across the country, we have provided

hire purchase finance for over 200,000 customers

throughout the UK. Advantage operates within the

non-prime market sector and has built an outstanding

reputation and track record in terms of service to

our business partners and our customers. Funding

is invested wisely through a hugely experienced

management team, the majority of whom have been

with the company since its inception

22 years ago.

The response to the Covid-19 pandemic by

Advantage Finance has been remarkable. Far

from being victims, Advantage has thrived as

we have focussed on mitigating our market risk,

and by developing our systems, processes and

market appeal. The experience and quality of the

management team and loyal colleagues has shone

through in difficult external circumstances, and we

are well placed to drive Advantage as the country

re-awakens from the effects of Covid-19 and to

continue the success story of our business.”

Graham Wheeler

Chief Executive

Aspen Bridging is now entering its 6th year in the property

bridging finance market having successfully established

a strong reputation for service excellence in the delivery

of quality lending products. Aspen has developed an

appealing range of bridging loans that has a reach across

the market spanning residential and commercial property

as well as sectors such as refinancing, capital raising and

refurbishment loans. Aspen can lend up to £10m per deal

with an average loan size of circa £700,000. These factors

have enabled Aspen to strengthen broker relationships,

appealing to them as a one-stop shop for their customer

bridging loan needs and positioning ourselves as a key

lender in the market. As members of the ASTL and FIBA

along with showcasing our lending propositions at key

industry events, Aspen maintains a high profile and

contributes to discussions aimed at improving, developing

and shaping the bridging the market. Aspen has continued

to expand and develop the team in line with our growth

with a team of 23 highly skilled and experienced staff.

During the year, Aspen has successfully added to our new

customer acquisition channels via new broker networks,

a dedicated broker development team and we gained

accreditation by the British Business Bank to provide

business loans on behalf of the UK Government under

the CBILS loan scheme. Aspen continues to successfully

develop the bridging business and with its future significant

contribution to the Group.

Developing our offering as we have during 2021

has enabled Aspen to reach a wider market and

strengthened our customer and broker relationships.

We take enormous pride in delivering a fast, consistent

and reliable service and we are now seeing repeat

customers coming back for more of the same!

With the talent that we have in the Aspen team,

the right product appeal in the market and a steely

determination to succeed we have here the compelling

reasons why we believe that Aspen will continue to

evolve a successful bridging lending business.’’

Ed Ahrens

Managing Director

Founded in 1938, S&U’s mission is to provide Britain’s

foremost motor, property bridging and specialist finance

service. We now have over 62,000 customers and over

200 loyal and valued staff and plans for continued

sustainable growth.

Group at a glance

S&U Plc Annual Report and Accounts 2022

ANTHONY COOMBS

This year’s resounding results clearly show our,

and most important our loyal people’s, ability to

adapt to the economic, political and regulatory

environment and their work in preparing and

priming the Group for both the opportunities and

challenges now facing all of us, gives me a quiet but

determined confidence in S&U’s future.”

Anthony Coombs

Chairman

A1 Chairman’s Statement

£47.0m

Profit before tax (“PBT”)

(2021: £18.1m)

£87.9m

Revenue

(2021: £83.8m)

In times scarred by the global

pandemic, looming environmental

disaster and now a war in Ukraine,

anyone claiming to see the future

with any certainty risks appearing a

charlatan or a fool. Hence, without

possessing any supernatural powers

of foresight, I am at least pleased

to see that my prediction last year

of “a return to S&U’s habitual levels

of success” in 2021 has indeed

now come to pass. Profit before tax

for S&U plc this year is at £47.0m

(2021: £18.1m) on Group revenue

of £87.9m (2021: £83.8m). Group

net assets now stand at a record,

£206.7m against £181.0m last year.

This excellent performance sees

earnings per share this year at

312.8p per ordinary share (2021:

120.7p) the best in S&U’s 84-year

history. The Group’s traditional

financial strength, excellent

collections performance and

receivables quality, mean Group

Gearing remains at just 54.9% (2021:

54.6%). Despite the unprecedented

economic and social turmoil of the

past two years, first through Covid,

secondly its economic aftermath

and rising inflation, and third, from

the as yet unknown consequences

of the Ukrainian War, these results

show that S&U plc has emerged

stronger than ever and primed for a

new era of profitable growth.

FINANCIAL HIGHLIGHTS*

• Profit before tax (“PBT”): £47.0m

(2021: £18.1m)

• Revenue: £87.9m

(2021: £83.8m)

• Earnings per share (“EPS”): 312.8p

2021: 120.7p)

• Group net assets: £206.7m

(2021: £181.0m)

• Group gearing: 54.9%

(2021: 54.6%)

• Group Treasury: £180m of

medium-term funding against

£113.6m borrowings

• Group total collections: £294.3m

(2021: £214.3m)

• Dividend proposed: 126p per

ordinary share (2021: 90p)

* key alternative performance measurement

definitions are given in note 1.12 below

At Advantage, our Grimsby based

motor finance business, the

resilience of the business and the

strength of its relationships with its

customers is evidenced by a lower

than normal loan loss provisioning

charge for the year of £3.8m (2021:

£36.0m; 2020: £16.5m) reflecting

good collections and less utilisation

of the impairment provisions made

in the dark days of January 2021.

Thus, over the past two years of

Covid, Advantage has been able to

produce an average of over £30m

annual profit, quite remarkably just

less than 10% lower than in the

previous two years. This, despite a

20% fall in new car production and

sales over the past two years, which

has constrained supply in both

the new and used car markets and

hence constrained loan transactions.

At Aspen, our five-year-old property

bridging operation, profits have

surged ahead strongly over the past

year. Transaction numbers have

risen by nearly 70% and book quality

is at its best level ever. The reward is

a record profit for the year of £3.4m

(2021: £0.8m).

S&U’s remarkable ability to produce

consistent and long-term growth

rests on three pillars. The first is the

tenacity, hard work, imagination

and ambition of our remarkable

colleagues. All have adapted to

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STRATEGIC REPORT

As the world reels from one crisis to

another, it is apt to remember the words

of Winston Churchill, our greatest war

leader: “I’m an optimist - it does not seem

too much use to be anything else”.

Anthony Coombs

Chairman

Covid’s disruption by using flexible

and hybrid working to their

advantage. Around two-thirds of

them have now returned to normal

routines of office work, and all have

embraced the real opportunities for

uninterrupted concentration and

focus that hybrid working can bring.

As Manchester City FC has so ably

demonstrated, our staff may not

always share the same pitch, but the

whole squad can interchange for the

benefit of all.

Second, they have used the

pandemic period to set in place a

raft of operational improvements

which are making both Advantage

and Aspen more competitive than

ever. New finance products have

been introduced, sales channels

diversified, both brand and digital

marketing embraced, and customer

communication automated and

made more efficient. All these and

more are proof of the vitality and

imagination of our staff, to whom,

more than ever, I pay profound and

respectful tribute.

Third, long experience has proved to

us that successful lending businesses

do not exist in a vacuum. Both the

attraction and affordability of all our

products depend not only upon the

financial health of our customers

but on prevailing economic

conditions. In turn, these depend

upon health of the British economy

and in particular the motor and

housing markets which we serve.

Currently, to put it mildly, the runes

are mixed. Whilst the labour market

remains reasonably strong with low

unemployment and rising wage

rates, high utility prices, inflation

and direct and indirect taxation

undoubtedly threaten standards of

living.

In the used car market, in which

Advantage has so successfully

operated for over twenty years, the

dichotomy is seen in the 20% fall in

new car production and sales over

the past two years, contrasted to a

robust 10% increase (at 1.361m) in

the number of used cars financed

at the point of sale (Finance and

Leasing Association). The fall in new

car sales means that residual values

for used cars remain very strong and

has resulted in a steady 9% recovery

in the used car finance market over

the past year. Happily, Advantage

has out-performed the market, with

the value of new loan advances

up 37% this year and new loan

transaction numbers up 26%.

In the housing market, of interest

to Aspen Bridging, although market

transaction numbers have remained

subdued, house prices generally

have risen over 10% over the last

year. Although the market is now

A1 Chairman’s Statement CONTINUED

S&U Plc Annual Report and Accounts 2022

cooling slightly as interest rates rise

to counter inflation and to finance

two trillion pounds of government

debt, their effect on dampening

demand will be offset by the

fundamental imbalance between

housing demand and supply in

most parts of the UK. Happily, like

Advantage, Aspen has been able to

outperform the market seeing new

loan facility numbers increase by

69% over the past year.

In sum, current trends in both our

businesses remain very encouraging

with current new loans this financial

year already beating budget. It was

our anticipation of this accelerating

growth that S&U put in place an

additional £50m of medium-term

facilities last year. These now total

£180m on borrowings of £113.6m

and may be augmented within the

next financial year as further growth

occurs, and the macroeconomic

landscape becomes clearer.

ADVANTAGE FINANCE

(“ADVANTAGE”)

Following a first ever dip in profits

last year, as Covid stormed the

economy, Advantage Finance,

our motor finance business, has

produced a stunning come back

performance. Profits this year of

£43.7m are against just £17.2m

in 2021. New loan transaction

numbers, even in a market

constrained by the supply of used

cars is up by 26% on 2021. On

revenue of £78.9m, ROCE for the

business was 19.4%. Whilst it is true

that these results have benefitted

from a much lower than normal

impairment charge, this partly

reflected a superb performance

in collections as our loyal and

conscientious customers both

maintained and improved their

repayments. Monthly live collections

receipts reached a record £152.7m,

10% up on 2021. These collections

represented an average 93.21% of

due (2021: 83.26%) and the year

finished on a remarkable 98.25%

of due in January. They were made

possible by Advantage’s close and

harmonious customer relations,

responsible lending, the success

of a new customer payment portal

introduced last summer and, last

but not least, by the professionalism

and empathy of our customer

facing teams.

Receivables quality was also

bolstered by the strong used

car values; this meant that both

voluntary termination and bad debt

numbers, and the losses arising

from them were much lower than

anticipated back in January 2021.

Although Advantage expects that

new loan transactions will continue

to grow this year, much will depend

upon consumer confidence generally

and the economic fall-out from the

current crisis in Eastern Europe.

Their prognosis has therefore been

sensibly prudent with a return

to increased growth forecast for

the final third of this financial

year, when used car availability is

expected to have gradually returned

to more normal levels.

£87.9m

Group Revenue

(2021: £83.8m)

£206.7m

Group Net Assets

(2021: £181.0)

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STRATEGIC REPORT

A1 Chairman’s Statement CONTINUED

For the longer term, a number of

marketing and branding initiatives

have been introduced. They will

broaden the funnel of our new

business, develop new affinity and

consolidated partnerships and open

direct channels to future customers.

Refining its renowned underwriting

ability, Advantage continues to help

customers improve their credit

ratings and to serve them with the

kind of finance product which helps

them do so. To this end Advantage

has welcomed new credit reference

providers and has partnered

with digital specialists, as well

as recruiting in-house marketing

expertise.

Again, with an eye to the future,

Advantage has this year increased its

financing of electric cars. Although

electric vehicles currently only

comprise about 3.5% of the UK car

parc, the market is growing strongly.

Indeed 28% of new vehicles sold

this year were either electric or plug

in self-charge hybrids. A working

group has been set up to track the

development of this market and we

expect to be able to introduce more

of our customers to it over the next

few years.

Aspen Bridging

Aspen, our property bridging

business set up in 2017, has

produced record results and is

fulfilling our ambitions for it.

Profit before Tax is a record £3.4m

(2021: £0.8m) and year end net

receivables have grown to £63.9m

(2021: £34.1m). New loan facility

numbers in the year rose from 80

to 135 on gross maximum LTVs at

a conservative 66% average. Loans

written were £112m this year (2021:

£43m) well above budget. Credit

quality remains good. 102 loans

were repaid last year, generating

£77m of cash (2021: £29m).

Defaults are at their lowest ever

and no actual realised losses have

been incurred this year on the loan

book. This is a testament to Aspen’s

thorough, painstaking and rigorous

approach to underwriting involving

a personal visit to every property

financed.

As the business develops, new

products have been introduced.

Loans now range up to £5m

per deal as, in the absence

of flexible mainstream bank

support, the refurbishment

and small development market

expands. Last year saw Aspen

trade very successfully within the

Government’s Coronavirus Business

Interruption Loan Scheme (CBILS).

The burgeoning Buy-to-Let market

has seen Aspen introduce a ‘Bridge

to Let’ product which is proving

attractive to smaller developers and

investors. Aspen anticipates further

lending growth this year.

Considerable investment has

been made in staff development

and recruitment. New business

development managers and Aspen’s

growing credibility within the broker

community helped produce a

record £27m gross loans in the final

quarter of 2021/22. As the business

grows, so will staff numbers and

their experience and professional

qualifications.

This year, although possibly muted

in the light of macro-economic

conditions, we expect the UK

housing market to continue to grow

both in value and in transaction

numbers. In the long term the

continued mismatch between

the demand for affordably priced

housing and a relative dearth of

supply will see that it remains so.

Aspen’s budgets and aspirations

responsibly reflect this.

Dividends

Together with Warren Buffett, the

legendary American investor, we

believe that shareholders’ rewards

should reflect the long-term view of

the cash thrown off by the profits

of the businesses they own. We

have reflected this at S&U in a

longstanding dividend approach

which aims at seeing dividends

twice covered. Taking the past two

years as a whole earnings per share

have averaged just over 216p thus

implying a total dividend of 126p per

ordinary share this year (2021: 90p).

Subject therefore to the approval of

shareholders at our AGM on 26 May

2022, we propose a final dividend of

57p per share (2021: 43p). This final

dividend will be paid on 8 July to

shareholders on the register on 17

June 2022.

S&U Plc Annual Report and Accounts 2022

Funding Review

At £113.6m at year end, net

borrowings are well within our

medium-term facilities of £180m.

Whilst Advantage’s excellent debt

quality and cautious underwriting

saw it again generate cash last year,

Aspen’s growth absorbed nearly

£30m of additional funds. We

anticipate that current facilities will

give sufficient headroom for the

anticipated organic growth in both

businesses in the next year. As usual

these will be increased as required.

Governance and Regulaon

The past 85 years of S&U’s existence

have obviously seen profound

changes in the financial services

industry. Whilst technological

change has been at the forefront,

the most profound change has

been philosophical, and one which

could threaten the flexibility,

development and success of the

industry. Previously widely accepted

notions regarding the success of the

free enterprise system in harnessing

the energy, motivation and multiple

decisions of millions of consumers

and producers for the benefit of

all, are no longer widely held. As

Milton Friedman, and even the great

Adam Smith, lauded the ability of

markets, flexibly regulated to benefit

the common good and improve

standards of living generally,

current trends are increasingly

more interventionalist, judgemental

and even “woke”. As Lord David

Frost recently pointed out on his

resignation from the government,

this has resulted in the mistaken and

dangerous assumption that profit-

making inevitably risks being at the

expense of consumers, and not for

their benefit.

All this has resulted in a tsunami

of regulation, sometimes ill-

coordinated and even contradictory,

apparently designed to remove all

risk for consumers irrespective of

circumstances. This has two serious

consequences.

First, it restricts innovation, robust

competition and therefore economic

growth. As Professor Tim Congdon

recently pointed out it is unlikely to

be a coincidence that the UK growth

rate of 3% per annum in the more

lightly regulated 1960’s, has given

way to a feeble 0.9% per annum rate

between 2019 and 2020 in these

more consumerist times.

Second, waves of new regulation,

often without any parliamentary

or even ministerial scrutiny or

oversight, have led to complication

and uncertainty. The Consumer

Credit Act, the principal legislation

for the financial services industry,

is now over 50 years old and has

been constantly overlaid with

statutory instruments, codes of

conduct and new consumer duties.

In the words of the Finance and

Leasing Association, these have

ceded control over regulation to

the regulators themselves. The

industry’s policemen have effectively

become its law makers. Now this

process risks even further confusion

by the proposed introduction of a

new Consumer Duty, which (whilst

laudably aiming for good customer

outcomes) is so subjective that it

risks, according to the Finance and

Leasing Association, giving “no

certainty on what good compliance

looks like from the outset.”

www.suplc.co.uk Stock Code: SUS

STRATEGIC REPORT

A1 Chairman’s Statement CONTINUED

S&U has always put customers’

interests first. This is not only

morally good business but is

commercially vital in nurturing long-

term customer relationships and the

earnings derived from them. Indeed

S&U’s Mission Statement – “TRUST”

– encapsulates this. Fortunately,

Advantage Finance enjoys an

excellent and mutually respectful

relationship with the Financial

Conduct Authority; building on this

will necessitate a greater certainty

and clarity over what constitutes

good conduct and compliance.

More widely, S&U’s habitual

responsibilities for the world around

it are itemised in its Environmental,

Social and Governance

Responsibilities (“ESG”). How we

fulfil these, are detailed, without any

virtue signalling, in later sections

on S&U’s Corporate and Social

Responsibility and in our Section

172 Statement. Nevertheless, we

maintain our conviction that our

principal responsibilities are to

our customers, our staff and our

shareholders. This coincides with a

recent survey by Henley Strategy,

reported in the Times, which

showed that 74% of the British

public now felt that prioritising

staff and customers should take

precedence over a focus on wider

social and environmental issues.

Our pragmatic approach means that

the last year has seen recruitment

at Aspen fully reflect the ethnic

diversity of its West Midlands base;

a selection process for a new main

Board Director which involved

a majority female shortlist; the

formation of a new Group wide

working party on Eco-strategy to

oversee our response to becoming

carbon neutral by 2030, including

the promotion of Advantage’s offer

for electric vehicles. As evidence

of intent, many of the Board of

Advantage now either possess or

have ordered an electric vehicle.

Most of all, in these turbulent

and ever-changing times, we will

continue to insist that our ESG

agenda is driven by common sense

and not political fashion.

Finally, it gives me great pleasure

to welcome to our Board this year

two new members. The first is my

cousin Jack who replaces Fiann

Coombs, whom I warmly thank for

the wise contribution he has made

to our proceedings over the past

decade. As evidenced by his work

at Aspen, Jack thoroughly deserves

this recognition, will continue the

founding Coombs family’s deep

involvement with S&U and add

boundless energy and, dare I say it,

youth to our Board deliberations.

The second, and latest appointee

to the Board is Jeremy Maxwell,

whom we were delighted to appoint

earlier this year after an exhaustive

and very thorough process, and who

brings considerable talent, wisdom

and experience in marketing,

particularly in the Business to

Consumer field, at Wolseley UK,

Carpetright, B&Q, Screwfix and

Mothercare.

Current Trading and Outlook

As the world reels from one crisis

to another, it is apt to remember

the words of Winston Churchill,

our greatest war leader: “I’m an

optimist - it does not seem too much

use to be anything else”. Like all

successful businesses with a long

history, S&U recognises that it must

tailor its products and services

and trim its operational tack to its

economic, political and regulatory

environment, over which it may

have little control but to which it can

nevertheless adapt and therefore

thrive. Whilst this year’s resounding

results clearly show our, and most

important our loyal people’s, ability

to do this, their work in preparing

and priming the Group for both

the opportunities and challenges

now facing all of us, gives me a

quiet but determined confidence in

S&U’s future.

Anthony Coombs

Chairman

1 April 2022

S&U Plc Annual Report and Accounts 2022

A2 Strategic Report

OVERVIEW

The directors are required to publish

a Section 172(i) statement showing

how they have fulfilled their duties

under the Companies Act 2006.

How S&U’s directors do this is set

out below in our Strategic and

Business Review (A2), our Corporate

Social Responsibility Review (A4),

our Chairman’s Statement (A1)

and our Governance Section (B3).

The Board has reviewed these

documents, how they describe

the company’s decision-making

processes and the issues which most

inform S&U’s business strategy.

Specific examples of how the

process works have been provided.

As a result, the Directors are

confident that first, the report fully

covers areas of relevant disclosure

such as on Strategy, Employees,

Stakeholders, Suppliers, Customers,

Community and Ethics. Secondly,

that the extent of these disclosures

is consistent with the size and

complexity of the business.

A2.1 Strategic Review

S&U’s purpose and vision is to

maximise profit and returns to its

shareholders in a sustainable and

responsible way. This provides

security for our employees, fairness

for our customers, credibility for our

financial and other partners and,

ultimately, the ability to enhance

the communities and environment

in which we live, and therefore fulfil

our ESG responsibilities.

S&U operates in two areas of

specialist finance. The first and most

established is Advantage Finance,

based in Grimsby and engaged for

the past two decades in the non-

prime sector of the motor finance

business. During those 20 years the

remarkable success of Advantage

in producing competitive finance

products, lent responsibly with

excellent customer service has been

reflected, with the sole exception

of the Covid affected 2020/21, in a

record of 21 years of consistently

increasing profits.

This long experience has enabled

Advantage to gain a significant

understanding of the kind of simple

hire purchase motor finance suitable

for customers in lower- and middle-

income groups. Although decent,

hardworking and well intentioned,

some of these customers may

have impaired credit records,

which have seen them in the past

unable to access rigid and inflexible

“mainstream” finance products.

Advantage provides transparency,

simplicity, clarity and suitability to

both service and product, which

these customers require.

As a result, Advantage currently

now receives nearly 1.5m unique

applications a year and has written

over 210,000 customer loans since

starting trading in 1999. The loans

have an average original term of just

over 4 years and this medium-term

loan cycle means that motor finance

profits are normally earned over a

much longer period than just the

year of origination.

Of course, Advantage serves an

evolving motor market. Covid

related lockdowns saw new car

sales fall from 2.3m in 2019 to 1.6m

in 2020, although this recovered

slightly to 1.65m in 2021.

Overlying this have been

environmental concerns and the

Government’s Green Agenda, which

last year saw it announce a ban on

the sales of new internal combustion

engines (“ICE”) accelerated from

2035 to 2030.

The year also saw a further decline

in the public’s appetite for new

diesel engines. Sales have fallen

from 50% of all new passenger cars

in 2014 to less than 15% now. On

the other hand, sales of petrol new

vehicles rose to 58% of the total

market last year. Electric and hybrid

vehicles sold a record 440,000 cars

in 2021 up 75% on a year earlier

and now comprise a quarter of

new registrations. Undoubtedly

these trends will continue, although

the shape of the UK’s total “car

parc” will change more slowly. EV

sales will undoubtedly rise as they

become more affordable, battery

life improves and infrastructure for

charging is upgraded. Advantage’s

current estimates predict that by

2030 new registrations of petrol

vehicles will constitute about 20% of

the market, diesel will be negligible

whilst hybrid and electric sales will

take 80% of the market, 30% of

which will be EV.

However, these trends will have a

less effect on the make-up of the

UK’s car parc over the next decade.

This is estimated to reach about

50m vehicles of which 30% will be

EV. Although at present the older

and higher income profile of EV

buyers does not match that of the

Advantage customer, as EVs enter

the used car market over the next

five years, Advantage sees significant

opportunities in electric vehicle

finance. Indeed, Advantage is

developing products for this market

and has already financed some used

electric vehicles.

The first and fundamental factor in

Advantage’s success is the relative

buoyancy and resilience of the used

car market in which it operates.

Thus, although the UK’s new car

market at just 1.65m registrations

last year is down about 30% on the

levels pre-pandemic, the used car

market in which Advantage operates

has been more buoyant. Thus, in

2021 it saw 7.53m used car sales

up 11.5% on the previous year. The

second factor in Advantage’s success

relates to its own commitment

to excellence. The quality of our

relationship with introducing

brokers, dealers and our customers

is based upon a continuous and

relentless search for product and

service improvement. Successful

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A2 Strategic Report CONTINUED

business is the result of a thousand

small improvements rather than

a very few revolutionary ones.

In recognising the importance

of its statutory obligations and

relationship with the FCA in ensuring

that customers are treated fairly,

Advantage’s care for its customers

has historically been central to

its success. Thus, this year saw

continued refinement of its already

sophisticated underwriting scoring

and affordability processes. A

new customer service portal was

launched in 2021 this is proved

very successful in improving

communications between Advantage

and its customers and also enabling

them to make on-line payments.

Our commitment to our customers

is summed up in Anita Roddick’s

phrase – “good business really is

good business.”

The third pillar of Advantage’s

success depends upon its proven

ability to adapt to a changing

economy and labour market and

the impact they may have on our

customers. Particularly during the

Covid Pandemic and the various

associated employment, expense

and payment “holiday” impacts this

has brought, non-prime customers

can find that their disposable

incomes are more unpredictable.

Advantage’s under-writing model

has been constantly refined in the

light of over 20 years of customer

service. We appreciate that the

customers life journey evolves over

their loan term. This demands that

responsible lenders continually

analyse repayment behaviour, and

then use it, within the collections

department, in dealing with and

supporting our 62,000 customers.

Whilst lending is on a fully secured

basis, debt quality at Aspen, our

property bridging lender does rely

on the experience and reliability

of the borrower as much as on

the value of the property being

financed. After a very strong mid-

year when new mortgage advances

rose to £159.8bn nationally (FCA),

as buyers chose to take advantage

of the Government’s stamp duty

holiday, the residential lending

market has cooled slightly, although

overall total lending is back to pre-

pandemic levels. The long-term

confidence in the UK housing market

which Aspen serves is further

evidenced by a 11% house price

increase in the UK during 2021.

These trends are reflected in Aspen’s

volume of loans written which

nearly trebled to £130m throughout

the year – and also in the quality

of the loan book. Pent up demand

for home ownership stimulated

by the Government’s low deposit

home ownership schemes, as well

as refurbishment opportunities

within Britain’s environmentally sub-

standard housing stock, lead us to

predict a very exciting future for our

Aspen Bridging business.

“Mainstream” banks, including

the newer “challengers”, continue

to lack the speed, flexibility and

appetite to furnish the smaller,

short-term loans in which Aspen

specialises. Recent consolidation

in the challenger banking sector is

evidence of this and again shows

that, technology, speed and a

quality bespoke service – as well

as price – are what give smaller

entrants like Aspen their competitive

edge. Our over-arching factor in

the success of our business over

80 years and through three family

generations of management is our

business philosophy. The identity of

interest between management and

shareholders has fused our ambition

for growth with a conservative

approach to both credit quality

and funding.

A2.2 BUSINESS REVIEW

Operang Results

Year ended

31 January

2022

£m

Year ended

31 January

2021

£m

Revenue 87.9 83.8

Cost of Sales – Impairment (4.1) (36.7)

Cost of Sales - Other (18.8) (14.3)

Gross Profit 65.0 32.8

Administrative Expenses (14.2) (11.1)

Operating Profit 50.8 21.7

Finance Costs (Net) (3.8) (3.6)

Profit before Taxation 47.0 18.1

Taxation (note 9 in the accounts) (9.0) (3.5)

Profit after Taxation 38.0 14.6

Please note the businesses use financial and other key performance indicators such as new deal volumes and

other alternative performance measures set out in A2.1 and A2.2 within this Strategic Report – definitions for

the alternative performance measures are given in note 1.12 to the financial statements.

S&U Plc Annual Report and Accounts 2022

Advantage Motor Finance

− PBT £43.7m (2021: £17.2m

despite pandemic).

− New transactions at 19,747

(2021: 15,600) on record

application numbers.

− Monthly Collection receipts

at a record £152.7m – 10% up

on 2021.

− Impairment at £3.8m (2021:

£36.0m) reflecting much higher

than expected post Covid loan

quality.

− Administrative expenses

increased by 32% due to salary

and variable pay increases this

year which were low last year.

Last year also contained a historic

one-off vat refund of £0.9m.

− Excellent collections at Advantage

see borrowings reduce by £14m

despite transactions growth.

− ROCE at 19.4% (2021: 8.6%)

(note 1.12).

Advantage proved the resilience of

its business model and the quality of

its loan book and customer relations

by a rebound in profitability in the

year from £17.2m to £43.7m. This

result benefitted from a collections

performance which justified a write

back of loan loss provisions made

during the Covid lock down last year.

This recovery has been startling. Of

the 21,221 customers taking Covid

related payment “holidays” last year

just 1709 have so far been classified

as “bad debt”, representing just

1.3% of Advantage’s overall book. In

total there are 13218 post payment

holiday customers still on our live

book at the end of January 2022 and

these customers paid a remarkable

97.01% of due in January.

Alongside this excellent trading

performance, Advantage prepared

for recovery by making a number

of significant innovations and

improvements to the business. Staff

welfare was at the heart of this.

Hybrid working for those who wish

it, at two to three office days per

week has seen productivity increase

still further. No redundancies or

short-time working have been

necessary and the Company, as

well as S&U plc generally, is pleased

not to have taken a penny in

Government subsidy.

Besides the collection improvements

mentioned above, a major drive on

widening Advantage’s channels to

its market and making them more

effective has been taking place.

This has included new third-party

relationships, the recruitment of

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A2 Strategic Report CONTINUED

marketing expertise as well as

further refinements in customer

data analytics.

Aspen Property Bridging

Finance

• PBT at £3.4m (2021: £0.8m).

• 135 deals (2021: 80) and a record

final quarter.

• Net receivables up to a record

£63.9m (2021: £34.1m).

• Book quality excellent with only 2

current default cases.

• Loan repayments of £77m

(2021: 29m).

• Gross advances at record £112m

(2021: £43m).

Aspen’s sparkling set of results,

record transactions and best ever

debt quality were delivered in a

housing market which defied the

predictions of gloom by recording

an 11% house price increase in the

year. During the first half of the

year both advances and collections

benefited from Aspen’s successful

participation in the Government’s

CBILS Covid Business Interruption

Loan Scheme, whilst the second half

saw record new loan transactions

for the period. Both loans written

throughout the year at £112m

(2021: £43m) and loans repaid

£77m (2021: £29m) were a record

for Aspen.

Aspen widened its range of

increasingly supportive and loyal

brokers, reshaped its range of loan

products and introduced a new

Bridge to Let product, designed for

the builder refurbisher with a mind

to later transition to investment.

In order to achieve and further

bolster this progress, Aspen

recruited experienced business

development managers, tightened

its processes to ensure even

stronger more robust underwriting

and still insists that every property

upon which Aspen lends for security

is personally visited by a member of

the team.

A2.3 Funding and Balance

Sheet Review

The strength of S&U’s balance sheet

is reflected in the fact that the last

year saw Group total assets grow

from £284.8m to £329.7m whilst

net liabilities to our bankers rose

by just £14.7m. As a result, gearing

remained at its customary low level

of just under 55%. Current net

borrowings of £113.6m contrasts

with S&U’s medium-term facilities

in place of £180m with its excellent,

loyal and constructive banking

partners. These were augmented

by £50m over the past financial

year and it is anticipated that with

current rates of growth these will

prove sufficient for the coming

year. As usual, as growth trends, in

what is still a very uncertain macro-

economic climate, become clearer

then facilities can be adjusted and

hopefully augmented in order to

take account of this.

A2.4 Principal Risks and

Uncertaines

Whilst Corporate Governance

guidelines, and the provisioning

insisted upon by the Financial

Reporting Council require macro-

economic forecasts, both Covid, the

recovery from it, current inflationary

trends and now a war in Europe

make this a virtually impossible

task. For instance, last year the

Office for Budget Responsibility

expected the British economy to

grow by over 7% in 2022. Current

projections for growth this year

are now just 4.8%. Current trends

in interest rates, although upward,

are in our view unlikely to be very

significant particularly since inflation

is unlikely to persist at more than

4% throughout the year. More

encouraging are the trends in the

labour market where unemployment

at 4% seems happily likely to persist.

Against such an uncertain

background, S&U has maintained its

historically cautious attitude in its

four-year budget forecasts.

A2.4.1 Consumer and Economic risks

The Group is involved in the

provision of consumer credit and it

is considered that the key material

risk to which the Group is exposed is

the credit risk inherent in amounts

receivable from customers. This risk

is principally controlled through our

credit control policies supported by

ongoing reviews for impairment. The

value of amounts receivable from

customers may also be subject to

the risk of a severe downturn in the

UK economy which might affect the

S&U Plc Annual Report and Accounts 2022

ability of customers to repay.

The impact of Covid, uncertainty

regarding the evolution of Brexit and

now a war in Ukraine have adversely

impacted the economy during the

past two years and projected higher

levels of unemployment and cost of

living inflation including energy and

fuel costs may lead to more motor

finance repayment delinquency.

However, Advantage historically

has been resilient through adverse

macro-economic conditions and

so we currently believe these risks

are limited.

The Group is particularly exposed

to the non-prime motor sector and

within that to the market risk of

the values of used vehicles which

are used as security. This risk is

principally controlled through our

credit control policies including

loan to value limits for the security

and through ongoing monitoring

and evaluation. Loan to values

are also controlled within our

property bridging business although

historically impairment rates in

that market are low, principally

because loan to value calculations

are conservative, interest is retained

upfront and loan periods average

around one year.

A2.4.2 Funding and Liquidity Risk

Funding and Liquidity risk relates

to the availability of sufficient

borrowing facilities for the Group to

meet its liabilities as they fall due.

This risk is managed by ensuring that

the Group has a variety of funding

sources and by managing the

maturity of borrowing facilities such

that sufficient funding is available

for the medium term. Compliance

with banking covenants is monitored

closely so that facilities remain

available at all times. The Group’s

activities expose it to the financial

risks of changes in interest rates and

where appropriate the Group uses

interest rate derivative contracts

to hedge these exposures in bank

borrowings- the Group has no such

interest rate derivative contracts

currently.

A2.4.3 Legal, Regulatory and Conduct

Risk

In terms of legal risk, the Group

is subject to legislation including

consumer credit legislation which

contains very detailed and highly

technical requirements. The Group

has procedures in place and employs

dedicated compliance resource and

specialist legal advisers to ensure

compliance with this legislation.

Advantage directors are prominent

members of the Finance and Leasing

Association’s committees and,

through them, regularly liaise with

the FCA. Advantage also engages

in regular “face to face” liaisons

with the FCA and the relationship is

excellent.

Regulatory Risk is addressed by a

strong compliance function and by

the constant review and monitoring

of Advantage’s internal controls and

processes, overseen by RSM, S&U’s

internal auditors. This process is

buttressed by specific advice from

Trade and other organisations and

by RSM.

Alan Tuplin, formerly Head of Credit,

is Chief Risk Officer of Advantage

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and plays a key role in managing

and mitigating legal, regulatory and

conduct risk within Advantage. Alan

has over 20 years of experience

in non-prime motor finance and

chairs the Risk Committee at the

Finance and Leasing Association, the

industry’s trade body.

Whilst engaged in the un-regulated

sector, Aspen Bridging has

adopted procedures which are

similar to those required in the

regulated sector. This provides both

commercial discipline and a platform

for standards should Aspen widen its

products into the regulated field.

The Group is also exposed to

conduct risk in that it could fail

to deliver fair outcomes to its

customers which in turn could

impact the reputation and financial

performance of the Group. The

Group principally manages this risk

through Group staff training and

motivation (Advantage is an Investor

in People) and through detailed

monthly monitoring of customer

outcomes for compliance and

treating customers fairly.

The Group is very proud of its

excellent underwriting and fraud

deterrence processes which it

continues to develop. Advantage’s

underwriting capability, already

state of the art in the motor finance

industry, is being further refined

through work with open-banking

providers which will give an even

more comprehensive overview

of customer circumstances,

affordability and their income and

expenditure.

A2.4.4 Operaonal Risk

The Group is also exposed to

operational risk including the

risk of not maintaining effective

internal systems, organisation and

staffing. During Covid increased

use of technology and excellent

application by our staff has

helped the management of this

systems risk and the Company has

Cybersecurity measures in place

which are regularly tested. As

part of Advantage’s IT governance

framework, a real time monitoring

suite for quality assurance is being

evolved. This will both provide

absolute assurance in line with IT’s

second line risk enterprise and offer

still greater regulatory transparency.

A2.4.5 Risk Management

Under Provision 28 of the 2018

UK Corporate Governance Code,

the Board is expected to establish

procedures to manage risk, identify

the principal risks the Company

takes in order to achieve its strategic

objectives and to oversee an

effective internal control framework.

In addition, the FRC now expects

Boards to assess emerging risks to

the company’s strategy, although

what is precisely meant by these has

yet to be clearly defined.

Although compliance with the

Code is the responsibility of the

Board as a whole, risk in particular

is independently assessed by

members of the Audit Committee.

They receive regular reports,

both from the management of

Advantage Finance and Aspen

Bridging and from S&U’s external

and internal auditors. These

concern the effectiveness of the risk

management and internal control

systems.

As outlined above, the Audit

Committee oversees the work

of RSM, S&U’s Internal Auditors.

The Committee meets regularly

to receive specific reports on

RSM’s work, which includes Cyber

Security, GDPR oversight and Cash

Management Procedures amongst

many other areas. The Committee

also recently received and approved

a report on Governance at

Advantage. All Senior Management

Regime designations include S&U

Board executive directors who serve

on the Advantage board.

Finally, Advantage’s Chief Executive

and main Board member, Graham

Wheeler sits on the Executive

Committee of the FLA and is

regularly requested by the

Government on advice on regulatory

matters, particularly in the

environmental field.

A2 Strategic Report CONTINUED

S&U Plc Annual Report and Accounts 2022

A3 Statement of Viability and

Going Concern

The Group’s business activities

together with the factors likely

to affect its future development,

performance and position are set

out above. The financial position of

the Group, its cash flows, liquidity

position, borrowing facilities, legal

and regulatory risk position are set

out in the financial statements and

Strategic Report.

STATEMENT OF VIABILITY

In assessing the viability of the

Group as required by the UK

Corporate Governance Code, the

directors considered funding,

business planning, financial

forecasting and risk evaluation

cycles and concluded that a three-

year period was appropriate for

viability assessment. The three-year

period is consistent with the Group

planning horizons.

The directors therefore considered

the three-year period commencing

1 February 2022 and assessed

the prospects of the company

considering:

• the Group’s current position

as set out in these financial

statements;

• the principal risks facing the

Group as set out in A2.4;

• information regarding the current

prospects of the Group; and

• current information regarding the

economy and the markets the

Group is involved in.

The directors then considered the

same three-year period commencing

1 February 2022 to consider as

required if they had a reasonable

expectation that the company will

be able to continue in operation and

meet its liabilities as they fall due

over the three-year period taking

into account:

• the impacts of different

macroeconomic scenarios

and whether any severe shock

could threaten the Group’s

future performance, solvency or

liquidity;

• funding and financial forecasts

for this period and the underlying

assumptions by considering the

potential impact of the principal

risks facing the Group, as set out

in A2.4.

• analysis of key sensitivities which

could affect profitability during

the viability period; Assumptions

made are clearly stated and

additional scenarios are modelled

to demonstrate the potential

impact of risks and uncertainties

on profitability and funding; and

• information regarding mitigating

actions which can be taken.

Having considered all relevant

information, the directors confirm

that they have robustly assessed

the principal risks facing S&U plc.

From this assessment, the directors

have a reasonable expectation

that the Group will be able to

continue in operation and meet its

liabilities as they fall due over the

three-year period commencing 1

February 2022.

STATEMENT OF GOING

CONCERN

In assessing the appropriateness

of the going concern assumption,

the directors are mindful of the

need to effectively manage the

Group’s risks and internal controls.

Details of the Group’s financial risk

management objectives, its financial

instruments, and its exposures to

credit risk, market risk, liquidity risk

and economic risk are set out in the

notes to the financial statements

and in the principal risks and

uncertainties noted in A2.4 above.

The Group’s objectives, policies and

processes for managing its capital

are described in the notes to the

financial statements.

In considering all of the above the

directors believe that the Group

is well placed and has sufficient

financial resources to manage its

business risks successfully despite

the current uncertain economic

outlook.

After making enquiries, the directors

have a reasonable expectation

that the Group has adequate

resources to continue in operational

existence for the foreseeable future.

Accordingly, they continue to adopt

the going concern basis in preparing

the Annual Report and Accounts.

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CASE STUDIES

Helen was fantastic, nothing

was too much trouble,

friendly and professional,

She kept us updated every

step of the way. A very

smooth, quick service.

Thank you Helen”

Our Customers

CASE STUDIES

MR C

Mr C lives in Hampshire with

his partner and is a Mechanical

Manager. He takes home

approximately £4416 per month and

was looking for a vehicle to provide

him transport requirements in

January 2022.

Mr C was referred to us by an

existing Account Holder Mr S under

our “Refer a Friend” scheme. Mr C’s

credit profile was assessed as part

of the application, together with

his overall income and outgoings to

ensure that the proposed loan was

appropriate and affordable for his

circumstances.

Mr C’s application was approved and

after being given an indication of his

credit limit, settled on a Land Rover

Sport from a dealer of his choice.

The purchase price was £17,490

and Advantage arranged a loan

of £15,000 to be repaid over 60

months at monthly repayments well

suited to Mr C’s budget.

Once the terms had been agreed,

Advantage were able to progress

the transaction very quickly

using its new electronic signature

system which meant that Mr C was

able to complete all the relevant

documentation and purchase the

vehicle without any delay.

Mr C took the time to review his

experience on an online review site

was clearly happy with the service

he received from Advantage, leaving

a 5-star review.

S&U Plc Annual Report and Accounts 2022

I have had a really

pleasant experience with

Advantage. Our consultant

was extremely helpful,

polite and professional

throughout. Was kept up to

date and left fully informed

at all times. A pleasure to

do business with.”

MR V

Mr V lives in Hampshire with his

partner and works in construction.

He first took out finance with

Advantage in February 2015 and

2018 with the loans being paid off

at the end of their respective term.

In November 2022 Mr V was again

looking for financial support to allow

the purchase of a car and made a

direct approach to Advantage in

order to enquire about assistance

for his motor finance requirements,

and dealt with one of our customer

advisors working as part of the

Advantage new business team.

Mr V’s credit profile was assessed

as part of the application,

together with his overall income

and outgoings to ensure that

the proposed loan was again

appropriate and affordable for his

circumstances. Of course, Mr V’s

previous Advantage loans were also

present which both had excellent

payment history.

Mr V’s application was approved

and after being given an indication

of his credit limit, settled on a

vehicle from a dealer of his choice.

Advantage provided a £8,690 loan

to be repaid over 60 months at

monthly repayments well suited to

Mr V’s budget and around the same

as those payments made on his

previous agreement.

Once the terms had been agreed,

Advantage were able to progress

the transaction very quickly

using its new electronic signature

system which meant that Mr V was

able to complete all the relevant

documentation and purchase the

vehicle without any delay.

Mr V took the time to review his

experience on an online review

site and was clearly happy with the

service he received from Advantage,

leaving a 5-star review.

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Our Customers

CASE STUDY

Aspen has managed to bring together

the best of both worlds; they make

sure they look after the client,

take a commercial view on the

deal and more importantly at very

competitive rate."

Broker feedback

There are hundreds of firms to

choose from for finance, however

Aspen is head and shoulders above

them all. Their efficiency and resolve

to deal with each case with care and

professionalism ensures success. You

couldn’t find a better group.”

Customer feedback

DEVELOPER SECURES INVESTMENT

PROPERTY AFTER £3,637,500 BRIDGE

• A £3,637,500 bridge at 75% LTV from Aspen has

enabled a developer to secure a desirable investment

property in Henley-on-Thames.

• The residential property was in high demand due to its

location, meaning a quick completion was required to

stay ahead of other interested parties.

ASPEN COMPLETES COMPLEX 80% LTV

FINISH & EXIT BRIDGE OF £1,260,000

• Aspen has completed a complex 80% LTV Finish & Exit

bridge of £1,260,000, comprising £960,000 to clear

an existing facility and £300,000 to finish works, on

a substantial Grade 2 listed property in Lincolnshire

undergoing heavy works.

• Comprising seven part built high-end apartments, the

case involved substantial due diligence within a very

short timeframe, including the renovation of a listed

property.

S&U Plc Annual Report and Accounts 2022

A4.1 EMPLOYEES

The challenges caused by the Covid

pandemic and the magnificent way

our staff throughout the Group have

adapted to this, reflect the loyalty

and “family ethos” at S&U of which

we have always been proud. This

loyalty has been reciprocated by

S&U by avoiding redundancy and the

Government’s furlough schemes.

This year has also seen the setting

up of staff chat rooms for those

who may feel isolated at home.

Those colleagues who feel in need

of further support and counselling

are able to access mental health

services the S&U health scheme

provides.

We ensure that all staff receive

appropriate initial training and

regular re-training in the field and in

areas of specialism. We encourage

employees to gain professional

qualifications where appropriate.

For instance, at Aspen this year

we will see the two staff members

gain MRICS and LLB qualifications.

External management training is also

undertaken in the motor finance

division. As required by legislation,

we confirm that as an organisation,

we respect and recognise human

rights in all aspects of our business.

The FCA Regulatory regime is

centred on Treating Customers

Fairly. All employees within the

Group are required to demonstrate

appropriate knowledge and skills.

Annual appraisals highlight areas of

training needs for all employees and

Advantage Finance is an accredited

investor in people.

The Group’s policy is to give full and

fair consideration to applications for

employment by disabled persons,

having regard to the nature of their

employment. Suitable opportunities

and training are offered to disabled

persons in order to provide their

career development. It goes

without saying that a Group based

on a family ethos has no truck

with discrimination of any kind –

except of course on the basis of

performance. Further equality and

diversity information is contained

in the corporate governance report

on page 47. People prosper and are

promoted within S&U purely on

merit.

Formal reviews of performance take

place annually and all operations are

reviewed on a monthly basis. We

encourage staff to make suggestions

for constructive change within

the Group.

A4.2 COMMUNITY

S&U does not exist in a vacuum.

Our success depends upon our

understanding the customers we

serve. Where this may not be the

case, we have well established

policies for any who may wish to

complain, routed to our Complaints

Department in Grimsby or to our

head office in Solihull. Our records

demonstrate we enjoy high levels of

customer satisfaction and 67 of only

86 complaints which reached the

Financial Ombudsman Service in the

year were decided in the Group’s

favour (2021: 44 of 74 complaints

were decided in the Group’s favour).

In the year to 31 January 2022 57%

of complaints which reached the

Financial Ombudsman Service were

related to the satisfactory quality

of the vehicle (2021: 74%) and

therefore not related to operational

issues within Advantage.

S&U supports its wider community

through charitable giving and

activities relating to fundraising.

Whilst staff are regularly involved

in their own charitable activities,

A4 Corporate Social Responsibility

www.suplc.co.uk Stock Code: SUS

STRATEGIC REPORT

A4 Corporate Social Responsibility CONTINUED

S&U plc channels its philanthropic

activities through The Keith Coombs

Trust which this year celebrates

its 10th anniversary. The Trust

which Anthony Coombs chairs, but

which has a Board of independent

trustees, mainly gives to charities

helping children with disabilities.

Amongst other causes, last year the

Company supported The National

Institute for Conductive Education,

which deals with adults and children

with cerebral palsy, strokes and

head injuries. It is also working with

Whizz-Kidz to provide equipment

for disabled children and to offer

employment opportunities to

wheelchair users. The Trust also

supports the Marie Curie Hospice

which is close to its Solihull HQ, by

sponsoring the Hospice’s costs for

the 10th January every year – Keith

Coombs birthday. During the past

year the KCT Trust donated a total

of £102,000 to these charities and,

to mark its 10th anniversary, S&U

is making a special donation of

£100,000 to support longer term

charitable aims in these areas.

As an independent charity, The Keith

Coombs Trust also makes financial

contributions to the arts, to sport

and in supporting the Christian

faith. It was the initial sponsor of

the new “Ballet Now,” an initiative

at the Birmingham Royal Ballet that

encourages young choreographers,

designers and composers. It

sponsors youth development at a

local cricket club and also supports

the “Leap of Faith” project which

assists the wider UK Church in

adapting to a digital future.

A4.3 HEALTH AND SAFETY

AND DIVERSITY POLICY

Although we recognise that current

thinking means that diversity

reporting should be based around

a statistical analysis of our staff’s

racial origin, given our above long-

standing policies, we consider that

this can too often itself be divisive

and potentially discriminatory.

By recruiting the best people

for the job, we both enhance

their self-esteem, irrespective of

their background, racial or socio

economic, and at the same time

create an esprit de corps unmarked

by tokenism.

S&U takes its responsibilities

towards the health, safety and

good working environment of its

employees very seriously. However,

in the finance field it is not engaged

in the kind of processes which

compromise health and safety

for either our staff or our visitors.

Nevertheless, it seeks to provide a

congenial and productive working

environment. In the past year a new

building has been refurbished for

employees at Advantage which will

improve and maximise space, ensure

Covid safety and provide better

break out areas. S&U’s Head Office,

which also houses Aspen, provides

up to date, spacious and high-quality

accommodation.

It therefore goes without saying

that in a Company where family

values are so prized, and where staff

turnover is so low, that workers are

always treated fairly without any

form of discrimination. Recruitment

and promotion decisions, whilst

reflecting the social and racial

makeup of the areas in which we

operate, are always based on ability

and aptitude, not according to any

racial or gender stereotypes.

A4.4 CLIMATE CHANGE

Like any group of people who

cherish our environment both

for our own sakes and for those

of succeeding generations, S&U

supports the Government’s Green

Finance Strategy and is taking

measures to reduce our carbon

footprint and minimise and then

eliminate carbon emissions so far as

we are able directly to control them.

This means that, particularly so far

as Advantage Finance, our motor

business and Head Office in Solihull

are concerned, we need to monitor

and reduce those areas of emissions

which we can most directly control

in order to achieve net zero status

by 2030.

Both for commercial and climate

change reasons, the Board monitors

the type and age of the vehicles

Advantage finances. However, it

has no direct control, nor should it

have, over the customer’s choice of

vehicle and the view on economy,

efficiency and the environment this

choice implies. Currently about half

of customers opt for diesel vehicles,

whilst the proportion of fully electric

vehicles, principally on the grounds

of their significant cost, is at present

negligible. These proportions will

change over the next thirty years as

we detail in our comments on the

market in our Strategic Review.

Our ability to influence our

customers environmental decisions

at Aspen Bridging is equally

constrained. Nevertheless, statutory

requirements to publish Energy

Performance Certificates for

residential properties to let, as well

as building regulation requirements

for substantial refurbishments, do

reflect our customers environmental

responsibilities.

The Company is pleased to present

its initial climate change report

under the framework provided by

the Task Force on Climate Related

Financial disclosures (‘TCFD’).

S&U Plc Annual Report and Accounts 2022

A4.4A GOVERNANCE

A climate change committee chaired

by the Chairman Anthony Coombs

and consisting of senior executives

and the Chairman of the audit

committee meets on a quarterly

basis to review the identification,

assessment and management of

climate change risks within the

Group. The Managing Directors of

both Advantage and Aspen serve

on this committee. The Committee

reports to the Board of directors of

S&U plc which has overall oversight

of the Group’s work on climate

change and this is now a regular

Board agenda item.

A4.4B STRATEGY

The Group will continue to identify

opportunities to manage its scope

1 and scope 2 emissions and will

continue to seek to directly reduce

its contribution in these areas to

climate change.

In addition in order to off-set those

Scope one and two emissions,

which we are not at present able

to reduce to zero, we propose a

range of measures including tree

planting. We are currently costing

planting schemes which will be both

cost effective, significantly reduce

our scope one and two emissions

and, equally important, produce

an environment in the areas where

they are planted of semi-mature

trees which significantly enhance

our landscape.

The Group is also keen to properly

identify opportunities to manage

indirect scope 3 emissions. We are

therefore investigating the best

means of measuring and attributing

our indirect scope 3 emissions

since this involves liaison with our

suppliers up and down the value

chain and changes to the emission

qualities of buildings and vehicles

that not only S&U occupies but also

that Aspen and Advantage finance.

The Group is keen to progress

these opportunities to manage and

reduce its impact on climate change

over shorter term, medium term

and longer-term planning horizons

being the next year, the next 3 years

and the next 5 years and beyond

respectively.

A4.4C RISK MANAGEMENT

The Group identifies climate

change risks through the climate

change committee and the wider

executive teams including the risk

management teams of both our

operating businesses, Advantage

Finance Limited and Aspen Bridging

Limited. Our biggest business

Advantage Finance reports to

the climate change committee

through its Chief Risk Officer Alan

Tuplin who also expertly advises

on the Group’s climate change

activity. Underwriting policies

and procedures consider climate

risk factors particularly in our

property bridging business where

consideration is taken of the

potential for flood and subsidence

with a requirement for appropriate

insurance.

All our underlying global energy

use is UK based and during the year

we have and will continue to take

action in order to reduce these

emissions. For instance, substantial

changes have been made to our

buildings in Grimsby which will

reduce energy usage and make them

more environmentally responsible,

we will install solar panels to reduce

physical energy use where we are

able to do so and where this would

be consistent with maintaining

a good visual environment. As

we have stated above we are

encouraging employees to switch

their company vehicles, where

they possess them, to electric and

many Advantage directors were

early to switch to electric vehicles.

Again, as we state above, one in

four of our employees are working

at least in part from home. This

has been monitored by our HR

departments and has significantly

reduced commuting and the carbon

emissions for which it is responsible.

At Aspen, we monitor the changes in

EPC category that the refurbishment

schemes we finance bring about,

although of course we have no

direct control over them since this is

a matter for building regulation and

for the customer themselves.

In order to off-set those Scope one

and two emissions, which we are not

at present able to reduce to zero,

we propose a range of measures

including the tree planting measures

outlined above.

www.suplc.co.uk Stock Code: SUS

STRATEGIC REPORT

A4.4D METRICS AND TARGETS

S&U’s own direct environmental footprint is reported in the following table:

GREENHOUSE GAS EMISSIONS DATA

For period 1 February 2021 to 31 January 2022

Tonnes CO

Year ended

31 January

2022

Year ended

31 January

2021

Scope 1 (Direct emissions)

Combustion of fuel – Petrol & diesel used by

company cars 51 49

Gas consumption 21 11

Scope 2 (Energy indirect emissions)

Purchased electricity (location based) 48 53

Total scope 1 and 2 120 113

Scope 3 (Other indirect emissions)

Water consumption 1 1

Waste 2 3

Total scope 1, 2 and 3 123 117

Company’s chosen intensity measurement:

Normalised tonnes scope 1, 2 and 3 CO

e per £m

turnover 1.4 1.5

For the year ending 31.1.22 we achieved the target of below 2.2 normalised

tonnes per £m turnover.

For the year ending 31.1.23 we are targeting below 1.8 normalised tonnes

per £m turnover.

Obviously, what is in our more direct control is scope one direct emissions

from petrol and diesel used by company cars, gas consumption and air

conditioning and boiler systems.

More difficult to both analyse and

monitor are our indirect emissions

particularly those caused by

companies for whom we buy energy

such as our electricity and gas

supplies. Finally, we are investigating

the best means of measuring and

attributing our indirect scope 3

emissions since this involves liaison

with our suppliers up and down

the value chain and changes to the

emission qualities of buildings and

vehicles that not only S&U occupies

but also that Aspen and Advantage

finance.

The methodology used to

calculate our emissions is based

on the “Environmental Reporting

Guidelines: including mandatory

greenhouse gas emissions reporting

guidance” (June 2013) issued by

the Department for Environment,

Food & Rural Affairs (“DEFRA”) and

updated HM Government SECR

guidance dated March 2019. We

have also utilised DEFRA’S 2020

conversion factors within our

reporting methodology.

The 2013 data forms the baseline

data for subsequent periods.

In order to express our annual

emissions in absolute and relative

terms, we have used turnover in our

intensity ratio calculation, as this

is the most relevant indication of

our growth and provides for a good

comparative measure over time.

A4 Corporate Social Responsibility CONTINUED

S&U Plc Annual Report and Accounts 2022

A5 Section 172 Statement

The Directors confirm they have

considered their obligations under

S172 of the Companies Act 2006

including their duty to promote

the success of the company and

how they have engaged with the

following key stakeholders in the

business:

1. OUR CUSTOMERS

S&U focuses on:

i) making the customer the heart of

our business; and

ii) having respect for every customer

and always treating customers

fairly.

Key actions taken demonstrating

how we do this are set out in section

A2.1 above. The outcomes of this

customer engagement are reflected

in high customer satisfaction ratings

(Trustpilot), low levels of complaints

and above all the Group’s success

over the last two decades.

2. OUR EMPLOYEES

S&U maintains a family ethos for all

those who work within it.

Key actions taken demonstrating

how we do this are set out in section

A4.1 above. The outcomes of this

employee engagement are reflected

in a streamlined management

structure, high staff retention rates,

high skill levels, positive reward and

recognition and a strong culture of

continuous improvement.

3. OUR BUSINESS PARTNERS

S&U continuously seeks to

nurture and improve key business

relationships with our key

introducing brokers, dealers and

key suppliers.

Key actions taken demonstrating

how we do this are set out in

our strategic report above. The

outcomes of these key actions are

reflected in the positive feedback

and high retention rates for

our partners and in the steady,

sustainable and successful growth of

the Group in the past two decades.

4. OUR INVESTORS AND

FUNDING PARTNERS

S&U’s significant family management

shareholdings means an identity of

interest between shareholders and

the management of the company

and together with help from

trusted advisers maintains close

relationships with investors, analysts

and also with long term funding

partners.

Key actions taken demonstrating

how we do this are set out in

section B3.2 of our corporate

governance report and in section

A2.3 of our strategic report.

The outcomes of this investor

engagement help underpin the total

shareholder return graph on page

39. The outcomes of this funder

engagement help the strong balance

sheet and treasury position outlined

in this annual report and accounts.

5. OUR REGULATORS AND

OTHER STATUTORY BODIES

S&U has a strong compliance culture

which is overseen by management

and the audit committee with help

from our internal auditors RSM.

Key actions demonstrating how we

do this are set out in section B3.1

of our audit committee report. The

outcomes of these actions has led

to positive feedback from regulatory

and other statutory bodies of which

the Group is proud.

6. OUR COMMUNITY AND

OUR ENVIRONMENT

S&U does not exist in a vacuum and

prides itself on supporting the wider

community and looking after its

environment.

Key actions demonstrating how we

do this are set out in section A4 of

the strategic report. The outcomes

of these key actions has led to a low

environmental footprint and the

community and charity support set

out in section A4.2 above.

In assessing the Group’s

engagements within our 6

stakeholder areas above, the

directors have also ensured such

engagements reflect the Group’s

values, business model, key

performance indicators and principal

risks as set out in the strategic

report above.

A6. APPROVAL OF

STRATEGIC REPORT

Section A of this Annual Report

comprises a Strategic Report

prepared for the Group as a whole

in accordance with the Companies

Act 2006 (Strategic Report and

Directors’ Report) Regulations 2013.

Approved by the Board of Directors

and signed on behalf of the Board.

Anthony Coombs

Chairman

1 April 2022

www.suplc.co.uk Stock Code: SUS

STRATEGIC REPORT

CONTENTS

B1 Board of Directors 28

B2 Directors’ Remuneraon Report 30

B2.1 Report of the Board to the

Shareholders Board on

Remuneration Policy 30

B2.2 Annual Remuneration

Report 33

B3 Governance 43

B3.1 Audit Commiee Report 43

B3.2 Corporate Governance 44

B3.3 Compliance Statement 48

B4 Directors’ Report 49

B5 Directors’ Responsibilities

Statement 51

C Independent Auditor’s Report to

the Members of S&U plc 52

Corporate

governance

S&U Plc Annual Report and Accounts 2022

Stock Code: SUSwww.suplc.co.ukwww.suplc.co.uk Stock Code: SUS

CORPORATE GOVERNANCE

Stock Code: SUSwww.suplc.co.uk

B1 Board of Directors

CHAIRMAN DEPUTY CHAIRMAN GROUP FINANCE DIRECTOR

Joined S&U in 1975 and was appointed

Managing Director in 1999 and then

Chairman in 2008 served as a Member

of Parliament and was a member of the

Government. He is a director and trustee

of a number of companies and charities.

Joined S&U after graduating from

London Business School in 1976.

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.

CEO ADVANTAGE FINANCE (EXECUTIVE)

Graham brings over 35 years experience

in motor finance across consumer and

business lending, much of it in a senior

leadership roles. He developed through

blue chip Companies like GM, Barclays,

GE Capital, and Volkswagen FS, where

he held the post of UK CEO for 11

years. Graham joined S&U Plc board in

September 2020 and is now in his third

year of leading its successful motor

finance subsidiary Advantage Finance.

Co-founder of Aspen Bridging. Joined

S&U in 2016 as Group Development

Executive having previously worked in

PWC’s Valuations team and qualified there

as a Chartered Accountant. Member of

the Lender Committee for the Financial

Intermediary and Broker Association

(FIBA) industry body. Jack is also an

avid supporter of charity and swam the

Channel from England to France in 2011

in 13 hrs and 46 mins to raise funds for

Alzheimer’s Research & Mondo Challenge.

S&U Plc Annual Report and Accounts 2022

ANTHONY COOMBS

MA (OXON)

GRAHAM

WHEELER

JACK COOMBS

MA (OXON) ACA

GRAHAM COOMBS MA

(OXON) MSC (LON)

CHRIS REDFORD

ACA

(NON-EXECUTIVE) (NON-EXECUTIVE) (NON-EXECUTIVE)

N A R N A R N A R

Tarek has over 25 years of experience

in financial services and he co founded

Crossbridge Capital where he is currently

Group CEO. Prior to this he held leading

roles in financial services with Credit

Suisse and JP Morgan and in journalism

with CNN and Fox. Tarek holds a BA

degree in Economics from Georgetown

University and an MBA degree from

Harvard Business School. He is a trustee

and patron of the NSPCC. Tarek was

awarded an MBE by her Majesty the

Queen in 2021.

Graham joined the Board of S&U in early

2015 and brings enormous experience

as a regulator at the Bank of England,

Financial Services Authority and

Prudential Regulation Authority and as

a banker with detailed knowledge and

involvement in the speciality finance

sector.

Jeremy brings broad expertise in digital

innovation, marketing, commercial

development and customer experience

from over 25 years in the retail and B2B

distribution industries. In addition to

other NED and advisory roles, he has

held senior customer-facing executive

positions at Carpetright, Wolseley UK,

Mothercare, Screwfix and B&Q.

KEY

Nominations committee

Audit committee

Remuneration committee

(NON-EXECUTIVE)

N A R

A Chartered Accountant with over 40

years’ experience in public practice

in Birmingham and director of many

private companies. He has extensive

commercial, professional and political

experience.

www.suplc.co.uk Stock Code: SUS

CORPORATE GOVERNANCE

DEMETRIOS MARKOU

FCA MBE

TAREK

KHLAT

GRAHAM

PEDERSEN

JEREMY

MAXWELL

B2 Directors’ Remuneration Report

This report has been prepared to comply with Schedule 8 of The Large and Medium-

sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2008,

the Companies (Miscellaneous Reporting) Regulations 2018, as well as the Companies

Act 2006 and other related regulations.

the Remuneration Policy was applied

during the year ended 31 January

2022 and provides details of

amounts earned in respect of the

year ended 31 January 2022. It also

sets out how the Remuneration

Committee has decided the

Remuneration Policy will be

operated for the year commencing

1 February 2022.

2021/22 key decisions and pay

outcomes

The aim of the Company’s

Remuneration Policy is to deliver

simple and fair remuneration

packages which are linked to both

Group and personal performance,

retention focussed and appropriate

for the Company, its Shareholders

and the directors.

Consumer motor finance, property

bridging markets and our customers

were significantly impacted by the

Covid pandemic and the associated

remedial actions of government,

regulators, customer employers and

business partners. Therefore, the

group profit before tax had reduced

from £35.1m to £18.1m during the

year to 31.1.21, due mainly to a

higher than normal covid-related

impairment charge. During the year

to 31.1.22, the adverse impacts of

the Covid pandemic have proven

less than anticipated thanks partly

to a more benign economy and

also due to the resilience of the

company, the hard work and

diligence of the Advantage and

Aspen teams and the leadership

of the executive team. This has

resulted in better than anticipated

collections and a much lower

than normal impairment charge

this year resulting in group profit

before tax increasing from £18.1m

to an exceptional £47.0m and

we are delighted with this result.

Loan advances, collections, early

repayment indicators and profits all

improved further during the year in

both Advantage and Aspen to help

deliver this annual profit.

Against a backdrop of a shortage of

used cars, Advantage saw 19,747

new motor finance agreements with

good early repayment patterns.

After being affected by Covid

forbearance and FCA mandated

payment holidays last year, our

collections team have continued to

work diligently to support customers

affected by the pandemic and

overall collections have recovered

to perform very strongly during the

year ended 31.1.22. Collections

have also been helped by a more

benign economy than anticipated.

Looking forward due to potential

future impacts from inflation and

used car price correction, we

remain optimistic but cautious

in our outlook and adopt our

normal conservative approach to

impairment provisions.

In its fifth year of operation, Aspen

Bridging made 135 new loan

facilities lending over £111m. From

the 369 new loan facilities made

since its inception in 2017, Aspen

has so far received 267 repayments

and of the 102 bridging loans still

live at 31.1.22 only 2 were in default.

Lending volumes were helped in

the early part of the year by Aspen

B2.1 REPORT OF THE BOARD

TO THE SHAREHOLDERS ON

REMUNERATION POLICY

Introducon

On behalf of your Board, I am

pleased to present our Directors’

Remuneration Report for the year

ended 31 January 2022.

What a year it has been for S&U!

Accelerating lending volumes,

exceptional collections and strong

impairments performance in motor

finance, together with further

expansion of Aspen, all underpin

the incredible year for the company

during continued Covid-related

uncertain times.

Against a backdrop of a shortage of

used cars, Advantage has increased

advances by 37% and within a

competitive bridging market Aspen

has increased the annual number

of new lending facilities by 69%

and has a record lending pipeline at

the start of the new financial year.

As a result, Group profit before

tax is £46.7m for the year ended

31 January 2022 (2021: £18.1m).

The Company’s current forward-

looking Remuneration Policy was

approved with a binding vote at the

AGM on 20 May 2021 and a copy of

our full Remuneration Policy Report

is available on our website www.

suplc.co.uk. An updated long-term

incentive plan was also approved

with a binding vote at the AGM on

20 May 2021.

This year’s annual Directors’

Remuneration Report sets out how

S&U Plc Annual Report and Accounts 2022

successfully participating in the

government CBILS scheme and

latterly by steady growth in normal

bridging business which underpins

the further growth planned for year

end ending 31 January 2023.

Whilst political and economic

uncertainties have and will continue

to affect S&U, the Company has

continued to demonstrate its

historic ability to produce robust and

resilient results.

Anthony Coombs, Graham Coombs

and Chris Redford

Based on the underlying profit

performance of the Group and

Return on Capital Employed

(“ROCE”), the Remuneration

Committee judged the level at

which the annual bonus payments

should be made. Group PBT for the

year increased by 159% to £47.0m

and ROCE was 17%. This was

significantly above the ROCE target

and the PBT stretch target level

of £25.5m (equivalent to annual

growth of 41%) for which 100% of

bonus would be payable. Therefore,

the Remuneration Committee

determined that for the financial

year 2021/22 bonuses equivalent

to the maximum annual bonus

opportunity of £30,000 each would

be awarded to Anthony Coombs and

Graham Coombs and £50,000 to

Chris Redford.

It was noted by members of the

committee that the excellent

group PBT number actually

achieved during the year was a

major accomplishment during

such unprecedented times and

was a testament to the hard work,

leadership, focus and strength of

the individuals themselves, the

executive team as a whole as well

as the overall resilience of the

Company.

It is also the view of the committee

that these, and other non-financial

aspects of the company which

the individuals also contributed

to during the year, such as overall

customer satisfaction with company

products and regulatory compliance,

although more intangible,

nevertheless affect the potential

value of the company and should be

recognised.

The Remuneration Committee

therefore considers these annual

bonus awards to be fair and

reasonable and reflective of each

director’s achievement against

performance targets set during

the year.

In May 2021 Chris Redford was

granted 5,000 shadow share options

under the new LTIP, as disclosed in

last year’s Directors Remuneration

Report. The Remuneration

Committee determined that 5,000 of

these shadow share options vested

with reference to performance

during the year ended 31 January

2022 based on group PBT and ROCE

performance being significantly

above the PBT stretch target level of

£25.5m.

Graham Wheeler

Graham was appointed to the Board

on 29 September 2020 after a

year as CEO of our main operating

subsidiary company Advantage

Finance Limited.

The Committee have considered

Graham’s management of the

Advantage Finance team in light

of the significant challenges in

consumer motor finance arising

from Covid and the associated

environment, and the outstanding

Advantage profit result of £43.7m

for the year ended 31 January 2022.

The Committee judged the level at

which the annual bonus payment

should be made. For the financial

year 2021/22 a bonus of £50,000

was awarded to Graham Wheeler.

In May 2021 Graham Wheeler was

granted 5,000 shadow share options

under the new LTIP, as disclosed in

last year’s Directors Remuneration

Report. The Remuneration

Committee determined that

5,000 of these shadow share

options vested with reference to

performance during the year ended

31 January 2022 with reference to

the underlying profit performance of

Advantage and achievement against

the profit and ROCE based targets

set for that year.

Jack Coombs

The Remuneration Committee

welcomes Jack Coombs to the

S&U Board. Jack was appointed to

the Board on 14 April 2021 after

4 years as an executive director of

our growing operating subsidiary

company Aspen Bridging Limited.

Jack is a major shareholder in

S&U plc.

The Committee have considered

Jack’s significant contribution to

the successful start-up and sensible

growth of Aspen Bridging including

excellent growth during the year

ended 31 January 2022 helping

Aspen Bridging achieve a record

profit before tax of £3.4m. The

Committee judged the level at which

the annual bonus payment should

be made. For the financial year

2021/22 a bonus of £10,000 was

awarded to Jack Coombs.

www.suplc.co.uk Stock Code: SUS

CORPORATE GOVERNANCE

B2 Directors’ Remuneration Report CONTINUED

Key remuneraon decisions

and related maers for the

year ending 31 January 2023

Salary increases, annual bonus

and LTIP

After company profits were

significantly impacted by Covid,

salaries for executive directors

for the yearend ended 31 January

2022 were frozen at the same level

as year ended 31 January 2021.

This was in line with pay review

decisions for the wider workforce.

The Remuneration Committee has

now agreed salary increases for

the year ended 31 January 2023

in the range 3.75% to 5.5% except

where exceptional circumstances

merited a higher increase, as

noted below. After a review of

market comparables and after his

exceptional performance in his first

two full years as CEO of Advantage

Finance, two years which coincided

with the Covid pandemic, it was

decided to award Graham Wheeler

a salary increase of 20% for year

ended 31 January 2023. After

his excellent performance as an

executive director of our growing

Aspen Bridging subsidiary and

their record recent performance

and profitability, it was decided to

award Jack Coombs a salary increase

of 10% for the year ended 31

January 2023.

For the year ending 31 January

2023, where the performance

targets set are achieved, the annual

bonus has been set at £50,000 for

Anthony Coombs, Graham Coombs,

Graham Wheeler and Chris Redford

and has been set at £25,000 for Jack

Coombs. Where the performance

targets set are exceeded, the

Remuneration Committee has

the discretion to pay an increased

annual bonus and the maximum

amount payable will not exceed

the maximum limits stated in the

Remuneration Policy. The annual

bonuses will continue to be assessed

against stretching divisional and

group Profit Before Tax (PBT) targets

and Return on Capital Employed

(ROCE). In order for the bonuses

to be paid in full, these stretching

performance targets must be

achieved and, if not fully met, the

Remuneration Committee will

determine the level of any reduced

annual bonus payment.

The Committee intends to grant

6,000 shadow share options under

the new LTIP to Graham Wheeler,

subject to achieving certain

Advantage PBT and ROCE targets for

the year ending 31 January 2023.

The Committee also intends to

grant 6,000 shadow share options

under the new LTIP to Chris Redford,

subject to achieving certain group

PBT and ROCE targets for the year

ending 31 January 2023.

The combined incentive potential

between the annual bonus and LTIP

(including shadow share options)

for each director will not exceed

the exceptional circumstances limit

of 200% of salary as set out in the

Remuneration Policy.

For the year ending 31 January

2023, the Remuneration Committee

considers that the significant

shareholding held by Anthony

Coombs, Graham Coombs and Jack

Coombs similarly provides adequate

alignment to shareholders.

Fees for the non-executive directors

have now been increased by 4.2%

to £37,000 and for the senior non-

executive director increased by 4%

to £39,000 for the year ended 31

January 2023. Fees had previously

been frozen for the year ended 31

January 2022 at the same level as

for year ended 31 January 2021.

The Remuneration Committee

believes that an element of the

executive remuneration should be

linked to non-financial KPI’s that

align with the Company’s purpose

and long-term strategy, particularly

around the Company’s governance

structures and environmental

impact. As a first step in the process

of developing such a strategy, the

Company has prepared a Company

Mission Statement, which is

published at page 1. which describes

the organization’s values and its

overall intention and serves to

communicate purpose and direction

to employees, customers, vendors

and shareholders. The Remuneration

Committee is now considering how,

for the year ending 31 January

2024 and beyond, the Company

can link a material element of the

executive remuneration to such

non-financial goals in a way that

is clear and measurable. Ensuring

clear line of sight between the

company’s activities and its

company mission, we believe, will

help employees develop ownership

and accountability and develop

a culture which rewards not only

the achieving of financial targets

but also related to the company’s

corporate purpose.

The Remuneration Committee

continues to welcome Shareholder

feedback on remuneration decisions

or on any issue related to executive

remuneration. I commend this

report to Shareholders and ask

that you support the resolution

to approve the Company’s Annual

Remuneration Report at the

Company’s AGM on 26 May 2022.

Tarek Khlat

Chairman of the Remuneration

Committee

1 April 2022

S&U Plc Annual Report and Accounts 2022

B2.2 ANNUAL

REMUNERATION REPORT

This section covers how the

remuneration policy was

implemented in the year ending 31

January 2022. Certain elements of

the Annual Remuneration Report

are subject to audit and this has

been highlighted at the start of each

section.

Remuneraon Commiee (this

secon is not subject to audit)

The Company has established a

Remuneration Committee which

is constituted in accordance with

the recommendations of the

Combined Code. The members of

the Remuneration Committee are

Mr Graham Pedersen, Mr Demetrios

Markou, Mr Jeremy Maxwell and Mr

Tarek Khlat, who are all independent

non-executive directors. Biographical

details of these directors are

set out on pages 28 and 29. The

Remuneration Committee is chaired

by Mr Tarek Khlat.

None of the Remuneration

Committee has any personal

financial interest (other than as

Shareholders), conflicts of interest

arising from cross-directorship or

day-to-day involvement in running

the business. The Remuneration

Committee makes recommendations

to the Board.

The Remuneration Committee is

responsible within the authority

delegated by the Board for

determining, implementing and

operating the Remuneration Policy

and for determining the specific

remuneration packages for each of

the executive directors. In particular,

the Remuneration Committee has

the following key responsibilities:

• determining and setting variable

and performance-related pay, and

the assessment of performance

targets for executive directors;

• reviewing and approving the

remuneration arrangements and

fees for each individual director;

• reviewing and approving the

remuneration arrangements and

any payments for loss of office

or severance packages for new

directors and those stepping

down as a director or ceasing

to be a member of the senior

management team; and

• reviewing and having regard to

the general remuneration pay

practices and polices across the

wider workforce when setting

executive pay.

In its role to implement and

operate the Remuneration Policy

for directors the Remuneration

Committee considers;

• the need to attract, retain and

motivate high quality individuals

to optimise Group performance;

• the need for an uncomplicated

link and clear line of sight

between performance and

rewards;

• the need for an appropriate

balance between fixed and

variable remuneration and short

term and long-term rewards

and alignment with shareholder

interests;

• best practice and remuneration

trends within the company and

the financial services industry;

• the requirements of the UK

Corporate Governance Code and

existing director contracts; and

• previous shareholder feedback

and the interests of other relevant

stakeholders and employees.

The Remuneration Committee’s

terms of reference were reviewed

during the year and are available on

our website www.suplc.co.uk.

Advisors to the Remuneraon

Commiee

The Remuneration Committee is

assisted in its work by the Chairman,

Deputy Chairman and the Group

Finance Director. The Chairman

is consulted on the remuneration

of those who report directly to

him and also of other senior

executives. No executive director

or employee is present or takes

part in discussions in respect of

matters relating directly to their

own remuneration. During the

year, the Remuneration Committee

was also assisted in its work by

KPMG LLP who provide advice and

guidance on remuneration matters.

The Remuneration Committee is

comfortable that the KPMG team

which provided advice to the

Remuneration Committee was

and is independent and that they

did not have any connections with

S&U plc that may have impaired

their objectivity. The total fees

paid to KPMG for the provision of

independent advice during the year

ended 31 January 2022 was £43,200

charged on a time and materials

basis including guidance on the

2021 remuneration policy and new

LTIP. KPMG also provide taxation

compliance and advisory services to

the Group.

Aendance at meengs

Details of the number of

Remuneration Committee meetings

held during the year and attendance

at those meetings is set out in the

Governance section on page 48 of

this Annual Report.

www.suplc.co.uk Stock Code: SUS

CORPORATE GOVERNANCE

B2 Directors’ Remuneration Report CONTINUED

Single Figure Tables (this secon is subject to audit)

The table below sets out in a single figure the total amount of remuneration including each component received by

each of the directors for the year ended 31 January 2022, together with comparative figures for the year ended 31

January 2021:

Anthony Coombs

£000

Graham Coombs

£000

Chris Redford

£000

Graham Wheeler*

£000

Jack Coombs*

£000

Executive Directors 2021/22 2020/21 2021/22 2020/21 2021/22 2020/21 2021/22 2020/21 2021/22 2020/21

Salaries and fees 360 360 345 345 232 232 250 83 80 0

Allowances and

benefits 79 75 35 35 22 26 16 7 1 0

Pension Contribution 0 0 0 0 34 34 25 8 12 0

Total Fixed 439 435 380 380 288 292 291 98 93 0

Bonus 30 15 30 15 50 25 50 25 10 0

Shadow Share

Incentive 0 0 0 0 137 0 137 0 0 0

Total Variable 30 15 30 15 187 25 187 25 10 0

Total 469 450 410 395 475 317 478 123 103 0

* Graham Wheeler was appointed a director of S&U Plc on 29 September 2020, and so only a part year remuneration is shown in the single figure table for 2020/21.

Jack Coombs was appointed a director of S&U plc on 14 April 2021 so only a part year remuneration is shown in the single figure table for 2021/22.

Demetrios Markou

£000

Fiann Coombs

£000

Graham Pedersen

£000

Tarek Khlat

£000

Jeremy Maxwell*

£000

Non-executive

Directors 2021/22 2020/21 2021/22 2020/21 2021/22 2020/21 2021/22 2020/21 2021/22 2020/21

Salaries and fees 37.5 37.5 11.8 35.5 35.5 35.5 35.5 35.5 1.4 0

Total 37.5 37.5 11.8 35.5 35.5 35.5 35.5 35.5 1.4 0

* Jeremy Maxwell was appointed a director of S&U Plc on 17 January 2022, and so only a part year remuneration is shown in the single figure table for 2021/22.

S&U Plc Annual Report and Accounts 2022

Salaries & fees The amount of salary / fees received in the period.

Allowances and

benefits

The taxable value of benefits received in the period. These are company car or allowance,

private fuel, life insurance and private medical insurance.

Pension The pension figure represents the cash value of pension contributions received by the executive

directors. This includes the Company’s contributions to the defined contribution pension

scheme and any salary supplement in lieu of a Company pension contribution.

Annual Bonus Annual bonus is the value of the cash bonus earned in respect of the year. A description of the

performance targets against which the bonus pay-out was determined is provided on page 31.

The Remuneration Committee determined that no part of any bonus paid for the year ended 31

January 2022 would be deferred.

Share incentive

plans ( LTIP)

For the year ended 31 January 2022 figures for the value of options vesting under the share

incentive plans have been calculated as follows:

• Stretch PBT and ROCE based performance targets for the year to 31 January 2022 were met

in full; accordingly, the Remuneration Committee determined that 100% of the 5,000 LTIP

shadow share options granted to Graham Wheeler vested in respect of performance in the

year to 31 January 2022 and 100% of the 5,000 shadow share options granted to Chris Redford

vested in respect of performance in the year to 31 January 2022. Both these vested shadow

share options are subject to continued employment until May 2024 and will not normally be

exercisable until May 2024. The minimum amount of these shadow share options which could

have vested is nil.

Although both the above LTIP options are subject to continued employment, the value of the

shares vesting by reference to performance to 31 January 2022 is shown above based on the

three-month average share price to 31 January 2022 (£27.38).

In accordance with the Companies (Miscellaneous Reporting) Regulations 2018, it is estimated

that 1% of the value of the LTIP value which will vest at the end of the period closing 31

January 2022 is attributable to share price growth over the period starting on the date of

grant and ending on 31 January 2022. This is calculated based on an award of 5,000 potential

shadow share options which were each granted at a face value at date of grant of £134,000

(£26.80 share price) and at 31.1.22 had a face value of £135,000 (£27.00 share price).

We intend to grant further shadow share options in May 2022 based on the value of 5,000

shares in S&U. These awards will be subject to a performance period which will commence

on 1 February 2022 and will end on 31 January 2023 and the earliest they can be exercised

is three years from date of grant. The share price at the start of the performance period was

£27.00; if the share price were to increase by a further 50% between May 2022 and May 2025,

then the share price of the award would have increased to £40.50, representing an increase in

the face value of the award of £67,500, based on 5,000 S&U shares.

For the year ending 31 January 2021 comparative figures:

No share options or shadow share options were granted in this year. In the first quarter of

the financial year, Chris Redford waived his right to the 7,500 LTIP share options disclosed in

last year’s Directors’ Remuneration Report and so these 7,500 LTIP share options were not

granted. These share options would have been subject to usual employment and performance

conditions and those performance conditions for the year ended 31 January 2021 would not

have been met.

Individual elements of remuneration (this section is subject to audit apart from the application of the Remuneration

Policy to the individual elements of remuneration for the year ending 31 January 2022).

www.suplc.co.uk Stock Code: SUS

CORPORATE GOVERNANCE

B2 Directors’ Remuneration Report CONTINUED

Base salary and fees

Base salaries for individual executive directors are reviewed annually by the Remuneration Committee and are set

with reference to individual performance, experience and responsibilities within the Group as well as with reference

to similar roles in comparable companies. Non-executive directors will continue to receive directors’ fees in line with

market practice. As disclosed in the Annual Report on Remuneration last year, for the year ending 31 January 2022,

the base salaries of Anthony Coombs, Graham Coombs, Graham Wheeler and Chris Redford were frozen at the same

level as year ended 31 January 2021, effective from 1 February 2021.

For the year ending 31 January 2023, the Remuneration Committee has now agreed salary increases in the range

3.75% to 5.5% except where exceptional circumstances merited a higher increase, as noted below. This was in line

with the wider workforce. After a review of market comparables and after his exceptional performance in his first two

full years as CEO of Advantage Finance, two years which coincided with the Covid pandemic, it was decided to award

Graham Wheeler a salary increase of 20% for year ended 31 January 2023. After his excellent performance as an

executive director of our growing Aspen Bridging subsidiary and their record recent performance and profitability, it

was decided to award Jack Coombs a salary increase of 10% for the year ended 31 January 2023.

The table below shows the base salary increases awarded in the year:

Executive director

Base salary as at

31 January 2022

£000

Base salary for year to

31 January 2023

£000

Increase

Anthony Coombs 360 373.5 3.8

Graham Coombs 345 358 3.8

Chris Redford 232.5 245 5.4

Graham Wheeler 250 300 20.0

Jack Coombs* 100 110 10.0

* Jack Coombs was appointed a director of S&U plc on 14 April 2021 so only a part year’s remuneration is shown in the single figure table.

Non-Execuve Directors

The remuneration policy for non-executive directors is determined by the Board. Fees reflect the responsibilities and

duties placed upon non-executive directors whilst also having regard to market practice. The basic non-executive

director fee was increased by 4.2% to £37,000 with effect from 1 February 2022. The basic senior non-executive fee

was increased by 4.0% to £39,000 with effect from 1 February 2022. The non-executive directors do not participate in

any of the Company’s share incentive plans nor do they receive any benefits, bonus or pension contributions.

Non-executive director fees

2020/21

£000

2021/22

£000

2022/23

£000

Basic fee 35.5 35.5 37

Additional fee for Demetrios Markou as Senior Independent Non-executive director 2 2 2

S&U Plc Annual Report and Accounts 2022

Annual bonus

For the year ending 31 January 2022, annual bonuses for the executive directors were based on stretching Group or

divisional PBT targets. The table below sets out the maximum bonus opportunity that each of the executive directors

could earn for the year ending 31 January 2022 together with the Group PBT targets and details of the actual bonus

earned.

Performance targets

Maximum annual bonus

opportunity year ending

31 January 2022

£000

Bonus pay-out % of

maximum

Actual bonus earned for

the year ending

31 January 2022

£000

Anthony Coombs Group PBT target

(£22.9m) and ROCE

target

30 100 30

Graham Coombs 30 100 30

Chris Redford 50 100 50

Graham Wheeler Advantage Finance PBT

and ROCE target*

50 N/A 50

Jack Coombs Aspen Bridging PBT

and ROCE target*

N/A N/A 10

* Whilst the Remuneration Committee is aware that some shareholders wish to see detailed retrospective disclosure of bonus targets, it considers this inappropriate for

the divisional PBT and Group and Divisional targets given that such targets are based on commercially sensitive information that the Board believes could negatively

impact the Group’s competitive position by providing our competitors with insight into our business plans and expectations, resulting in significant risk to future

profitability and shareholder value. We will review annually this commercial sensitivity and consequent non-disclosure of the historic divisional PBT and Group and

Divisional ROCE targets. However, we are committed to providing as much information as we are able to, in order to assist our investors in understanding how our

incentive pay-outs relate to performance delivered. Details of the Group PBT targets are disclosed above.

Based on performance in the year ended 31 January 2022 bonuses of £30,000 each were deemed payable to

Anthony Coombs and Graham Coombs, bonuses of £50,000 each to Graham Wheeler and Chris Redford and a

bonus of £10,000. Actual Group, Advantage and Aspen PBT and ROCE were well above the stretch targets and the

committee also considered the extent to which both financial and individual performance targets had been met and

in determining these bonuses.

Annual bonus in 2022/23

For the year ending 31 January 2023, where the performance targets set are achieved, the annual bonus has been

set at £50,000 for Anthony Coombs, Graham Coombs, Graham Wheeler and Chris Redford and set at £25,000 for

Jack Coombs. Where the performance targets set are exceeded, the Remuneration Committee has the discretion

to pay an increased annual bonus and the maximum amount payable will not exceed the maximum limits stated in

the Remuneration Policy. The annual bonus will continue to be assessed against stretching Group and divisional PBT

targets.

The Remuneration Committee considers that the actual annual bonus targets are commercially sensitive and should

therefore remain confidential to the Company. They provide our competitors with insight into our business plans,

expectations and our strategic actions. However, the Remuneration Committee will continue to disclose how the

bonus pay-out delivered relates to performance against the Group PBT targets on a retrospective basis.

Long Term Incenves – Long Term Incenve Plan (LTIP) 2021

Awards granted during the period

Graham Wheeler was awarded 5,000 shadow share options under the 2021 LTIP in May 2021 at a notional nil

exercise price, subject to achieving specified Advantage PBT and ROCE targets for the year ended 31 January 2022.

Chris Redford was awarded 5,000 shadow share options under the 2021 LTIP in May 2021 at a notional nil exercise

price, subject to achieving specified Group PBT and ROCE targets for the year ended 31 January 2022.

No other shadow share options were envisaged to be granted to S&U directors and none were granted during the

year ended 31 January 2022.

www.suplc.co.uk Stock Code: SUS

CORPORATE GOVERNANCE

B2 Directors’ Remuneration Report CONTINUED

Awards vesng based on performance in respect the year ended 31 January 2022

Details of awards vesting on performance in respect of the year ended 31 January 2022 have been included in the

notes to the single figure tables on page 34.

Awards for 2022/23

The Committee intends to grant 6,000 shadow share options under the 2021 LTIP to Graham Wheeler, subject to

achieving certain Advantage PBT and ROCE targets for the year ending 31 January 2023. The Committee also intends

to grant 6,000 shadow share options under the 2021 LTIP to Chris Redford, subject to achieving certain group PBT

and ROCE targets for the year ending 31 January 2023.

The LTIPs will normally become exercisable three years from grant, subject to the satisfaction of the performance

conditions and the director remaining in employment. The Remuneration Committee considers that the targets are

commercially sensitive and should therefore remain confidential to the Company. They provide our competitors

with insight into our business plans, expectations and our strategic actions. However, the Remuneration Committee

will continue to disclose how the LTIP vesting relates to performance against the Group PBT targets on a

retrospective basis.

Vesting schedule

2022 2023

Anthony Coombs Bonus £30,000 £50,000

Shadow share options – –

Graham Coombs Bonus £30,000 £50,000

Shadow share options – –

Chris Redford Bonus £50,000 £50,000

Shadow share options 5,000 6,000

Graham Wheeler Bonus £50,000 £50,000

Shadow share options 5,000 6,000

Jack Coombs* Bonus £10,000 £25,000

Shadow share options – –

* Jack Coombs was appointed a director of S&U plc on 14 April 2021 and so only a part year’s remuneration is shown in the single figure table.

For the year ending 31 January 2022, the Remuneration Committee considers that the significant shareholding

held by Anthony Coombs, Graham Coombs and Jack Coombs provides adequate alignment to shareholders. No

shareholding guideline applies to any of the other directors of the Company.

Total pension entlements in 2021/22 (this secon is subject to audit)

During the year the Group made contributions into a defined contribution scheme on behalf of Graham Wheeler

and Chris Redford or pays a salary supplement in lieu. None of the directors have accrued benefits under the defined

benefit scheme.

Director

Defined contribution

or salary supplement

in lieu

£000

Percentage

of Salary

Chris Redford 34 14.5

Graham Wheeler 25 10.0

Jack Coombs* 12 15.0

* Jack Coombs was appointed a director of S&U plc on 14 April 2021 and so only a part year’s remuneration is shown in this table.

S&U Plc Annual Report and Accounts 2022

Company performance – shareholder return graph (this secon is not subject to audit)

The following graph shows the Company’s Shareholder Return performance, compared with the performance of

the FTSE Small Cap, over the past ten years. This comparator has been selected since it illustrates S&U’s relative

performance within their sector.

S&U PLC

FTSE SMALL CAP

Return Index

31/01/2012

31/01/2013

31/01/2014

31/01/2015

31/01/2016

31/01/2017

31/01/2018

31/01/2019

31/01/2020

31/01/2021

31/01/2022

100

200

300

400

500

600

700

800

900

Execuve Chairman Remuneraon for the previous ten years (this secon is not subject to audit)

The Group does not have a CEO but the table below shows the detail required by the regulations for our executive

chairman Mr Anthony Coombs:

Single figure of

remuneration

£000

Annual bonus (% of

maximum opportunity

for the year)

Long term incentive (%

of maximum number of

shares for the year)

2022 450 100 n/a

2021 450 20 n/a

2020 427 33 n/a

2019 412 40 n/a

2018 387 0 n/a

2017 402 50 n/a

2016 394 100 n/a

2015 390 100 n/a

2014 370 100 n/a

2013 445 50 71

www.suplc.co.uk Stock Code: SUS

CORPORATE GOVERNANCE

B2 Directors’ Remuneration Report CONTINUED

Percentage change in Execuve Directors’ Remuneraon (this secon is not subject to audit)

The table below sets out in relation to salary, taxable benefits and annual bonus the percentage increase in pay for

executive directors for the year ended 31 January 2022 compared to the wider workforce.

Element

Anthony

Coombs

Graham

Coombs

Chris

Redford

Graham

Wheeler

Jack

Coombs

Wider

Workforce

Year to 31.1.22 % % % % % %

Base salary 0.0 0.0 0.0 0.0 n/a 3.0

Allowances and benefits 5.3 0.0 (15.4) n/a n/a n/a

Bonus 100.0 100.0 100.0 100.0 n/a 186.9

Year to 31.1.21

Base salary 1.4 1.5 3.1 n/a n/a 6.1

Allowances and benefits 60.0 0.0 (10.3) n/a n/a n/a

Bonus (40.0) (40.0) (19.4) n/a n/a (42.0)

Anthony Coombs received benefits and allowances of £79,000 in the year ending 31 January 2022 and £75,000 in the

year ending 31 January 2021. Anthony Coombs earned a bonus of £30,000 for the year ending 31 January 2022 and

earned a bonus of £15,000 for the year ending 31 January 2021.

Graham Coombs received benefits and allowances of £35,000 in the year ending 31 January 2022 and £35,000 in the

year ending 31 January 2021. Graham Coombs earned a bonus of £30,000 for the year ending 31 January 2022 and

earned a bonus of £15,000 for the year ending 31 January 2021.

Chris Redford received benefits and allowances of £22,000 in the year ending 31 January 2022 and £26,000 in the

year ending 31 January 2021. Chris Redford earned a bonus of £50,000 for the year ending 31 January 2022 and

earned a bonus of £25,000 for the year ending 31 January 2021.

Graham Wheeler was appointed a director of S&U plc on 29 September 2020 and so remuneration data is only

available, in part, for the year ending 31 January 2021.

Jack Coombs was appointed a director of S&U plc on 14 April 2021 and so remuneration data is only available, in part,

for the year ending 31 January 2022.

In accordance with the Companies (Miscellaneous Reporting) Regulations 2018, the average total number of UK

employees within the S&U plc group for the relevant year was less than 250; accordingly, the Company is not

currently required to report on the ratio of the Chairman’s single total figure of remuneration relative to the

Company’s UK employees across the group. The Remuneration Committee shall continue to review and monitor its

disclosure obligations under the Companies (Miscellaneous Reporting) Regulations 2018.

S&U Plc Annual Report and Accounts 2022

Relave Importance of Spend on Pay (this secon is not subject to audit)

The graph below shows the relative importance of spend on pay against other cash outflows of the Group for the

years ending 31 January 2021 and 31 January 2022. Given the nature of the Group’s business, the other significant

outflows for the Group are loan advances and dividends payable.

2021

2022

300

250

200

150

100

Wages and salaries Loan advances Dividends paid

Payments for loss of oce (this secon is not subject to audit) and to past directors

There were no loss of office payments made during the year ended 31 January 2022.

Statement of directors’ shareholding and share interests

The table below details the beneficial shareholdings and share interests of the directors as at 31 January 2022.

Type

Owned

Outright

Unvested

subject to

performance

conditions

Unvested

not subject

to further

performance

conditions

Vested but

unexercised

Total at

31 January

2022

Anthony Coombs Shares

LTIP

1,277,609 –

–

1,277,609

–

Graham Coombs Shares

LTIP

1,635,457 –

–

1,635,457

–

Chris Redford Shares

LTIP

14,000 –

–

3,500

–

14,000

3,500

Graham Wheeler Shares

LTIP

– –

–

Jack Coombs Shares

LTIP

1,677,147 –

–

1,677,147

–

Non- executive directors

Demetrios Markou Shares 4,500 – – – 4,500

Graham Pedersen Shares – – – – –

Tarek Khlat Shares – – – – –

Jeremy Maxwell Shares – – – – –

In addition to the above holdings, Grevayne Properties Limited, a Company beneficially controlled by Anthony

Coombs and Graham Coombs, hold 318,323 Ordinary Shares.

The 3,500 share options referred to above are held under the old LTIP scheme – there are no direct share interests

arising under the new LTIP scheme agreed by shareholders at the AGM in 2021 as options which are granted under

this new scheme are shadow share options only.

There are no specific shareholding requirements for directors and there have been no changes to the above

shareholdings and share interests between 31 January 2022 and the date of this report.

www.suplc.co.uk Stock Code: SUS

CORPORATE GOVERNANCE

B2 Directors’ Remuneration Report CONTINUED

Shareholder vote on the 2021 Remuneraon Report and 2021 Remuneraon Policy (this secon is

not subject to audit)

The table below shows the voting outcome at the 20 May 2021 AGM for the 2021 Directors Remuneration Report

(advisory) and the voting outcome at the 20 May 2021 AGM for the 2021 Remuneration Policy:

Number

of votes

“For” and

“Discretion”

% of votes

cast

Number

of votes

“Against”

% of votes

cast

Total Number

of votes cast

Number

of votes

“withheld”

Annual Report on Remuneration 2021 5,676,346 96.52 204,907 3.48 5,881,253 228

Remuneration Policy 2021 5,672,786 96.46 208,467 3.54 5,881,253 228

The Remuneration Committee welcomed the passing of the resolutions and the support shown by those

Shareholders who voted in favour and the Remuneration Committee has taken steps wherever practicable to

understand Shareholder concerns when withholding their support.

Approval

This report section B2 of the Annual Report and Accounts including The Annual Remuneration Report was approved

by the Board of Directors on 1 April 2022 and signed on its behalf by:

Tarek Khlat

Chairman of the Remuneration Committee

1 April 2022

S&U Plc Annual Report and Accounts 2022

In assessing the adequacy of the

Motor Finance impairment provision

the Audit Committee considers,

reviews and challenges;

a) The work performed by

management and by Mazars in

validating the data used and their

challenge of the assumptions

used by management; and

b) The findings in light of current

trading performance and

expected future trading

performance.

Revenue Recognion – Motor

Finance - see also accounng policy

1.3 on page 66

Interest income is recognised in the

income statement for all loans and

receivables measured at amortised

cost using the constant period rate

of return on the net investment in

the loan which is akin to an effective

interest rate method (EIR). The EIR

is the rate that exactly discounts the

expected future cash flows of the

loan back to present value being the

amount advanced to the customer

and hire purchase interest income

is then recognised using the EIR.

Acceptance fees and any direct

transaction cost are included in the

calculation of EIR.

In assessing the appropriateness

of revenue recognition the Audit

Committee considers;

c) The work performed by

management and by Mazars

as part of their external audit,

including their challenge of

the assumptions used by

management; and

d) The findings in light of current

trading experience and expected

future trading experience.

As our Property Bridging Finance

business is currently less material

there were no issues and areas of

judgement considered significant by

the Committee in relation to Aspen

Bridging.

B3 Governance

B3.1 AUDIT COMMITTEE

REPORT

Role and Responsibilies

The Audit Committee is a committee

of the Board of Directors. Its main

role is to assist the Board and

protect the interests of shareholders

by reviewing the integrity and

appropriateness of the Group’s

financial information, the systems

of internal controls and risk

management and the audit process,

both internal and external. The

Committee continues to monitor

developments in other areas in this

regard, to ensure that its role is

properly and appropriately applied

and performed. The Committee

is cognisant of the evolving audit

landscape for listed companies and

is helping the company develop

and embed its evolving response to

climate change including the work

for the task force on climate related

disclosures (TCFD).

Composion of the Commiee

and Meengs

The Company has established

an Audit Committee which is

constituted in accordance with

the recommendations of the UK

Corporate Governance Code. The

members of the Committee are

Mr G Pedersen, Mr J Maxwell, Mr

D Markou and Mr T Khlat, who

are all independent non-executive

directors. Biographical details of

these directors are set out on pages

28 and 29. The Committee is chaired

by Mr D Markou. Meetings are held

not less than twice a year normally

in conjunction with the interim and

full year financial reports issued in

September and March. The external

auditors or individual members of

the Audit Committee may request

a meeting if they consider one

is necessary and the Committee

ensure that discussions are held

with the external auditors without

executive Board members present.

During the year ending 31 January

2022 three meetings were held

including Audit planning meetings.

Signicant Maers related to

the nancial statements

The significant matters and areas of

judgement considered by the Audit

Committee in relation to the January

2022 Financial Statements were as

follows:

Impairment of receivables – Motor

Finance – see also accounng policy

1.4 on page 66

Receivables are impaired in Motor

Finance based on the overall

contractual arrears status and

also the number of cumulative

contractual monthly payments that

have been missed in the last six

months. Impairment is calculated

using models which use historical

payment performance and amounts

recovered from security realisation

to generate the estimated amount

and timing of future cash flows from

each arrears stage. In addition and

in accordance with the provisions of

IFRS9 a collective provision is made

for expected credit losses in the next

12 months in the remainder of the

loan book which again references

historical payment performance and

amounts recovered.

Judgement is applied as to the

appropriate point at which

receivables are impaired and the

level of cash flows that are expected

to be recovered from impaired

customers.

In order to assess the appropriateness

of the judgements applied, an exercise

is performed to assess the most

recent performance of customers,

including the cash collection and

recovery performance of impaired

customers. This is used to help

forecast expected cash collections

which are then discounted at the

effective interest rate and compared

to the carrying value of receivables at

the yearend with the difference being

the impairment provision.

www.suplc.co.uk Stock Code: SUS

CORPORATE GOVERNANCE

B3 Governance CONTINUED

External Audit

The Committee formally reviews

the effectiveness of the external

auditors, Mazars LLP, and the

Group’s relationship with them. The

review consists of a list of relevant

questions, which it discusses with

the Group Finance Director, before

discussing them with external

auditors.

As a result, the Committee

concluded that the external audit

process during Mazars LLP’s first

year as our auditors was effective

this year. After a rigorous tender

process Mazars LLP were formally

appointed as group auditors at the

AGM in May 2021, taking over from

Deloitte LLP who had been Group

Auditors since 2000.

The Audit Committee and Mazars

have put in place safeguards to

ensure that the independence and

objectivity of the external auditor

is maintained including governing

the external auditors’ engagement

for non-audit services. In line with

rules for public interest entities

the provision of tax compliance

services was placed with KPMG

with effect from 1 February 2017

and we also now use KPMG for

guidance on directors remuneration

and reporting matters. Fees paid to

the external auditor are shown in

note 6 to the accounts. Overall the

fees paid to the external auditor for

non-audit services were £25,000

(2021: £25,000) and this was for

the half year review of interim

results. The audit committee have

continued to monitor the quality

of service they provided and their

continuing independence. They

examined Mazars transparency

report which demonstrates how

audit quality is maintained in line

with the “Audit Quality Framework”

issued by the professional oversight

board of the Financial Reporting

Council. They also considered

Mazars’ understanding of S&U plc’s

business, their access to appropriate

specialists, and their understanding

of the financial sector in which the

Group operates.

In accordance with this policy

the Audit Committee ensured no

external service provided by the

auditors involved it in management

of functions or decision making

or in influencing managements

view on the adequacy of internal

controls or financial reporting. If it

were to be material to the Group,

any Corporate Finance or other

advice that Mazars provided during

the year would be reviewed by the

Audit Committee to ensure that they

did not compromise the auditing

function of Mazars in any way.

Internal Audit

During the year, RSM have continued

to provide internal audit services for

the Group. An agreement, overseen

by the Audit Committee, has been

entered into with RSM who will

be responsible for regular internal

audits of the Group’s Regulatory

Controls, Customer Compliance, Risk

Management and Governance Policy

and Procedures.

The Committee considers that

the Annual Report and Accounts,

taken as a whole, is fair, balanced

and understandable and provides

the information necessary for

shareholders to assess the Group’s

performance, business model and

strategy.

Demetrios Markou

Chairman of the Audit Committee

1 April 2022

B3.2 CORPORATE

GOVERNANCE

2018 saw the revision by the FRC

(Financial Reporting Council) of

the UK Corporate Governance

Code, together with the issue of an

accompanying Guidance on Board

Effectiveness. These update the

Provisions of the Code and the way

in which they should be applied in

supporting the code’s Principles.

Narrave Statement

The way in which we comply with

the Code’s Provisions, or explain

where we do not is described

below in the five areas of “Board

Leadership and Company Purpose,

Divisions of Responsibilities,

Composition, succession and

evaluation, Audit risk and internal

control and Remuneration.” In

addition, our Chairman’s Statement

provides guidance as to how we

interpret the revised codes more

flexible approach in giving clear

reasons for any non-compliance

within the provisions. The rationale

for this includes a “Company’s

particular circumstances based on a

range of factors, including the size,

complexity, history and ownership

structure.”

In S&U’s case this has always

meant an identity of interest

between major shareholders and

the executive management of

the Company. The requirement

of the Code of Principles for

Board’s to “promote the long-

term sustainability or success of

the Company, generating value for

shareholders and contributing to

wider society” is sustained by this

and by our consistent mantra of

“steady, sustainable growth.” Our

mission statement is published

on page 1. Family investment and

management has over the past 84

years been reflected in ambition

for growth and for new markets

buttressed by a conservative

approach to risk, to treasury

S&U Plc Annual Report and Accounts 2022

activities and to return on capital

employed. The same culture is

seen in “work force engagements”

through employment stability, good

communications and a streamlined,

non-bureaucratic, management

structure, as a staple of S&U well

before the Governance Code even

existed.

This has inevitably meant some

departure from the detailed

Provisions of the Code which

primarily focusses on larger

companies, a more formal approach

to employee relations, a shorter

history to establish a proven

responsible culture, and a divorce

between equity and management.

We have carefully explained the

reasons for any departures and

will hopefully, as the revised code

requires, now see these considered

by investors and their representatives

“thoughtfully” and not evaluated in

“a mechanistic way”.

Leadership

During the year the Company

was controlled through the Board

of Directors which at 31 January

2022 comprised five executive and

four non-executive directors. The

Chairman is responsible for the

running of the Board. He has to

ensure that all directors receive

sufficient relevant information on

financial, business and corporate

issues prior to meetings. He is

also responsible for co-ordinating

the Company’s business and

implementing Group strategy. The

Chairman and Deputy Chairman are

jointly responsible for acquisitions

outside the traditional business, the

development of the business into

new areas, and relations with the

investing community, public and

media.

Under Provision 9 of the Code

it is recommended that the

Chairman should be independent

on appointment and should not

have previously served as Chief

Executive of the Company and

under Provision 19 of the Code it is

recommended that the Chairman

should not remain in post beyond

nine years from the date of their

first appointment to the Board. Mr.

Anthony Coombs was appointed

Chairman in 2008 as part of

an established succession plan

reflecting the Coombs family’s

significant holding in S&U, the

identity of interest between

management and shareholders and

the consequence success of the

Company. As explained above this

has been (and is perceived by the

investing community) as a significant

strength in the responsible, long-

term strategic approach to S&U’s

development.

Mr. Coombs now serves as Executive

Chairman and his responsibilities

as Managing Director have been

transferred to the Chief Executive

of Advantage Finance and the

Managing Director of Aspen

Bridging.

The Board has a formal schedule

of matters reserved to it and

meets at least four times a year

with monthly circulation of

papers. It is responsible for overall

Group strategy, acquisition and

divestment policy, approval of

major capital expenditure projects

and consideration of significant

financing matters. It monitors the

exposure to key business risks and

reviews the strategic direction of

the business. This includes its code

of conduct, its annual budgets,

its progress towards achievement

of those budgets and its capital

expenditure programmes. The

Board also considers environmental

and employee issues and key

appointments. It also ensures that

all directors receive appropriate

training on appointment and then

subsequently as appropriate.

The Board has established a

Nominations Committee, an Audit

Committee and a Remuneration

Committee. Each Committee

operates within defined terms of

reference. Advantage Finance and

Aspen Bridging are each managed

by a separate board of directors.

The minutes of the standing

Committees will be circulated

to and reviewed by the Board of

Directors. Terms of reference for the

Committees are available from S&U

plc head office and on our website

www.suplc.co.uk.

Demetrios Markou has served as a

non-executive director on the Board

for over nine years. Notwithstanding

this length of service, the Board

considers him to be independent

due to his robust judgement and

character and the invaluable

balance and experience he has

brought to the Board’s deliberations.

This experience as a Chartered

Accountant is particularly important

during the adoption of evolving

accounting standards in TCFD and

other areas and as the company

consolidates its recent growth.

Graham Pedersen was appointed

to the Board in February 2015 and

brings a wealth of experience to the

S&U Board both as a regulator and a

banker. In March 2016, Tarek Khlat,

a Banker, FCA Approved Person and

Wealth Manager of great experience

and expertise was appointed to

the Board. In January 2022, Jeremy

Maxwell was appointed to the Board

and brings broad expertise in digital

innovation, marketing, commercial

development and customer

experience from over 25 years

in the retail and B2B distribution

industries.

It is noteworthy that the

appointment of Jeremy Maxwell

was conducted in a professional and

robust manner with the engagement

of a recruitment company searching

extensively a range of potential

applicants for the newly created

role to oversee the Group’s digital

marketing initiatives. This exercise

www.suplc.co.uk Stock Code: SUS

CORPORATE GOVERNANCE

B3 Governance CONTINUED

resulted in a final selection of five

potential candidates: three females

and two males. One female and one

male candidate were invited to an

orientation visit to the operations

of Advantage Finance in Grimsby

and Jeremy Maxwell was ultimately

considered the most engaged

and appropriate candidate for

appointment. Through the robust

nature of this recruitment process

it is demonstrable that the S&U

Group is fully committed to ensuring

that gender balance on the Board

is achieved wherever possible

while adhering to the core business

principles of appointing the right

person for the role.

The appointment of Jack Coombs,

as an Executive Director, was

considered appropriate given both

his significant family shareholding

and the additional business and

accounting skills – he is a chartered

accountant -that he brings to the

Board. Jack’s brother Fiann Coombs

retired from the Board in May 2021

having served 19 years as a director

of S&U plc.

The Nominations Committee,

chaired by Mr. G Pedersen,

comprises the independent non-

executive directors and Anthony

Coombs, Group Chairman. Audit and

Remuneration Committees are made

up of the four independent non-

executive directors and chaired by

Demetrios Markou and Tarek Khlat

respectively.

Eecveness

Our executive directors are

appraised annually by the

Chairman, the Deputy Chairman

and the independent non-

executives. The Chairman and the

Deputy Chairman are appraised

annually by the independent non-

executives. The results of these

appraisals are considered by the

Remuneration Committee for the

determination of their remuneration

recommendations. During the year

there was no external evaluation

of the Board but the performance

of the Board and each of the

Board Committees was reviewed

by the Board with regard to the

performance and achievements

during the year. The performance of

the Board and all three committees

was self-assessed by the Board to be

effective.

Our non-executive directors

receive full updates on Company

progress and relevant issues and

bring their experience and sound

judgement to bear on matters

arising. The Chairman considers the

effectiveness of each non-executive

director annually.

Directors have both the time

and experience to fulfil their

responsibilities and none sit on

other PLC boards. The Nomination

Committee advises the Board

on refreshment and succession

planning, whilst independent

recruitment consultants are used for

important executive roles. During

the current year the Nomination

Committee played a significant

role in the appointment of Jack

Coombs and Jeremy Maxwell

to the Board, both of which

appointments enhance the relevant

skills and experience of the Board

and help succession planning.

The Nomination Committee

will continue to monitor the

availability of relevant skills and

experience alongside its corporate

governance responsibilities, in

its further succession planning

and when considering any future

appointments to the Board. Whilst

the Board notes the Code’s focus

on diversity, both Board and

executive appointments are made

purely on the basis of ability and

temperament, irrespective of race,

gender or sexual orientation.

Messrs Anthony Coombs, Graham

Coombs, Chris Redford, Graham

Wheeler, Jack Coombs, Graham

Pedersen, Tarek Khlat and

Demetrios Markou being eligible

offer themselves for re-election at

the next Annual General Meeting.

Tarek Khlat, Graham Pedersen,

and Demetrios Markou are non-

executive directors and the

Chairman has determined their

performance to be both effective

and committed. Jeremy Maxwell

was appointed to the Board on 17

January 2022 and offers himself for

election at the next Annual General

Meeting.

The Company Secretary Chris

Redford is available to provide

advice and services to all Board

members and is responsible for

ensuring Board procedures are

followed. All directors are also

able to take independent advice

in furtherance of their duties if

necessary.

Accountability

Financial Reporng

Reviews of the performance and

financial position of the Group are

included in the Chairman’s Report.

The Board uses this, together with

the Strategic Report within pages

11 to 25, to present a balanced and

understandable assessment of the

Company’s position and prospects.

The Directors’ responsibilities in

respect of the financial statements

are described on page 51 and those

of the auditor on page 58.

Internal Control

The Board acknowledges that it is

responsible for the Group’s system

of internal control and for reviewing

its effectiveness. Such a system is

designed to manage rather than

eliminate the risk of failure to

achieve business objectives and can

only provide reasonable and not

absolute assurance against material

misstatement or loss.

S&U Plc Annual Report and Accounts 2022

The Group’s internal control

systems are reviewed regularly

by management and by our

independent internal auditors

RSM with the aim of continuous

improvement. Whilst the

Board acknowledges its overall

responsibility for internal control,

it believes strongly that senior

management within the Group’s

operating businesses should also

contribute in a substantial way and

this has been built into the process.

The Audit Committee overviews

the monitoring of the adequacy of

the Group’s internal controls and

whistleblowing procedures.

There is an ongoing process for

identifying, evaluating and managing

the significant risks faced by the

Group. The process has been in

place for the year under review and

up to the date of approval of the

report and financial statements. The

process is regularly reviewed by the

Board including a review during the

reporting period and accords with

the guidance in the UK Corporate

Governance Code.

The Board intends to keep its risk

control procedures under constant

review, particularly as regards the

need to embed internal control

and risk management procedures

further into the operations of the

business and to deal with areas

of improvement which come to

management’s and the Board’s

attention.

As might be expected in a Group of

this size, a key control procedure

is the day to day supervision of the

business by the executive directors,

supported by the managers with

responsibility for operating units

and the central support functions

of finance, information systems and

human resources.

The executive directors are involved

in the budget setting process,

constantly monitor key statistics

and review management accounts

on a monthly basis, noting and

investigating major variances. All

significant capital expenditure

decisions are approved by the Board

as a whole.

The executive directors receive

reports setting out key performance

and risk indicators and consider

possible control issues brought to

their attention by early warning

mechanisms, which are embedded

within the operational units and

reinforced by risk awareness

training. The executive directors

also receive regular reports from

the credit control and health and

safety functions, which include

recommendations for improvement.

The Audit Committee’s role in this

area is confined to a high-level

review of the arrangements.

Relaonship with Auditor

The Audit Committee has specific

terms of reference which deal with

its authority and duties. It meets at

least twice a year with the external

auditor attending by invitation and

RSM as a regular attendee in order

that the Committee can review

the external and internal audit

process and results. The Committee

overviews the monitoring of the

adequacy of the Group’s internal

controls and whistleblowing

procedures, accounting policies and

financial reporting and provides a

forum through which the Group’s

external auditor reports to the non-

executive directors. The Committee

assists the Board in discharging

its duties to ensure the financial

statements meet legal requirements,

and also reviews the independence

of the external auditor. This is

assessed through examination of

the nature and value of non-audit

services performed during the year.

The value of non-audit services is

disclosed on page 73 and all non-

audit service requirements are

considered by the Group before an

appointment is made. The non-audit

services provided were audit related

assurance.

Equality and Diversity

The Group is committed to ensuring

that existing members of staff, job

applicants, or workers are treated

fairly in an environment which is

free from any form of discrimination.

The Group will always wish to

ensure appointments reflect the

best skills available for the role.

Currently 12 women hold 33% of

senior management positions and

women hold 64% of other employee

positions and during the year no

female directors served on the

Board. Currently 24 men hold 67%

of senior management positions and

men hold 36% of other employee

positions and during the year eight

male directors served on the Board.

The Company had 10 employees of

which two are women and eight are

men including six S&U plc Directors.

www.suplc.co.uk Stock Code: SUS

CORPORATE GOVERNANCE

B3 Governance CONTINUED

Board and Commiee aendance

The attendance of individual directors at the regular meetings of the Board

and its Committees during the year ended 31 January 2022 is shown in the

table below:

Meeting Attendance Board Nominations Remuneration Audit

Number of meetings 6 2 1 3

AMV Coombs 6 2 n/a n/a

GDC Coombs 6 n/a n/a n/a

D Markou 6 2 1 3

G Pedersen 6 2 1 3

T Khlat 6 2 1 3

JP Maxwell (appointed 17.1.22) n/a n/a n/a 1

F Coombs (retired 20.5.21) 3 n/a n/a n/a

J EC Coombs (appointed 14.4.21) 4 n/a n/a n/a

TG Wheeler 6 n/a n/a n/a

CH Redford 6 n/a n/a n/a

Fiann Coombs and Jack Coombs had full Board attendance in their part

year as S&U Board Directors. Jeremy Maxwell was appointed on 17 January

2022 and therefore there were no Board meetings during the year ended

31 January 2022 which he could have attended and only one committee

meeting which he did attend.

Remuneraon

The Remuneration Committee has specific terms of reference which deal

with its authority and duties and these, together with details of how

the Company has complied with the Remuneration provisions of the UK

Corporate Governance Code, are detailed in the Directors Remuneration

Report on page 30.

Relaons with Stakeholders

The Company continues to communicate with both institutional and private

investors and responds quickly to all queries received verbally or in writing.

All shareholders have at least twenty working days’ notice of the Annual

General Meeting at which all directors are introduced and are available for

questions.

The Board is aware of the importance of maintaining close relations with

investors and analysts for the Group’s market rating. Positive steps have

been taken in recent years to enhance these relationships. Twice yearly

road shows are conducted by the Chairman and senior directors when the

performance and future strategy of the company is discussed with larger

shareholders. Queries from all shareholders are dealt with personally by the

Chairman.

Members of the Board meet frequently with shareholders and conduct

regular roadshows throughout the UK to present to current and future

investors. Shareholder and Investor relations are managed in tandem with

our Stockbroker Peel Hunt who issue regular reports on these activities.

Mutual commitment and loyalty between Company and its employees has

under-pinned S&U’s 84-year history. Both its size, with currently over 180

employees in Grimsby and over 20 in

Solihull and its family ethos ensure

that the “employee voice” is heard

and heeded. Regular appraisals and

feedback meetings are held and

internal promotion is encouraged.

As a result, staff retention rates are

very high. Whistle-blower Policies

are in place at Advantage.

The size, history and culture of the

company encourage participation of

all directors and senior management

and employee relations and make

designated board members or

workforce committees unnecessary.

Although, the S&U Group does

not have a formal mechanism

of staff engagement with the

Board, staff in the major operating

subsidiary, Advantage Finance,

do actively participate in regular

“cascade” meetings where business

developments and resourcing levels

are discussed. It is felt that such

practices do allow proper workforce

engagement to take place without

the specific need to create a formal

“Staff Consultative” committee

structure.

B3.3 COMPLIANCE

STATEMENT

Throughout the year ended

31 January 2022 the company

has discharged and met its

responsibilities under the Principles

and Provisions of the 2018 UK

Corporate Governance Code and

under the guidance attached to it.

Where it has not followed provision

9 of the code with its appointment

of the Chairman in 2008, “a clear

rationale for the action” is also set

out above.

Graham Pedersen

Chairman of the Nominations

Committee

1 April 2022

S&U Plc Annual Report and Accounts 2022

B4 Directors’ Report

The directors present their Annual

Report and the audited financial

statements for the year ended 31

January 2022 and for the period up

to the date of signing these accounts

on 1 April 2022.

The names of 9 of the directors who

served during the year and up to

the date of signing the accounts are

shown in the directors’ biographies

on page 28. After 19 years of

excellent service, Fiann Coombs

did not put himself forward for

re-election for the AGM on 20 May

2021 and retired from the Board

on that date. Jack Coombs, one of

the two founding directors of Aspen

Bridging and a major shareholder

in S&U plc was appointed to the

Board on 14 April 2021. Jeremy

Maxwell was appointed to the

Board as a non executive director

on 17 January 2022. Jeremy brings

broad expertise in digital innovation,

marketing, commercial development

and customer experience from

over 25 years in the retail and B2B

distribution industries. All other

directors served for the full year to

31 January 2022.

No political donations were made

during the year (2021: £nil).

DIVIDENDS

Dividends of £12,263,000

(2021: £13,098,000) were paid

during the year.

After the year end a second interim

dividend for the financial year of

£4,372,000 being 36.0p per ordinary

share (2021: 25.0p) was paid to

shareholders on 11 March 2022.

The directors now recommend

a final dividend, subject to

shareholders approval of 57.0p per

share (2021: 43.0p). This, together

with the interim dividends totalling

69.0p per share (2021: 47.0p)

already paid, makes a total dividend

for the year of 126.0p per share

(2021: 90.0p).

SUBSTANTIAL

SHAREHOLDINGS

At 1 April 2022, the Company had

been notified of the following

interests of 3% or more in its issued

ordinary share capital (excluding

those of the directors disclosed

in the Directors’ Remuneration

Report above):

Shareholder

No of

ordinary

% of

Ordinary

capital

Jennifer Coombs 461,885 3.8%

Wiseheights Limited 2,420,000 19.9%

CAPITAL STRUCTURE

Details of the issued share capital,

together with details of the

movements in the Company’s issued

shared capital during the year are

shown in note 19. The Company has

one class of ordinary shares which

carry no right to fixed income. Each

ordinary share carries the right

to one vote at general meetings

of the Company. The cumulative

preference shares carry 6% interest

but do not carry voting rights.

There are no specific restrictions

on the size of a holding nor on the

transfer of shares, which are both

governed by the general provisions

of the Articles of Association and

prevailing legislation. The directors

are not aware of any agreements

between holders of the Company’s

shares that may result in restrictions

on the transfer of securities or on

voting rights.

CHANGES IN ACCOUNTING

POLICIES

There were no significant changes in

accounting policies this year.

AUDITOR

Each of the persons who is a

director at the date of approval of

the annual report confirms that; so

far as each director is aware, there

is no relevant audit information

of which the Company’s auditor is

unaware; each director has taken

all the steps that he ought to have

taken as a director in order to make

himself aware of any relevant audit

information and to establish that

the Company’s auditor is aware of

that information. This confirmation

is given and should be interpreted

in accordance with the provisions

of section 418 of the Companies

Act 2006.

After the required tender process,

Mazars were appointed as auditors

to the group and the company at

the AGM in May 2021 to replace

Deloitte LLP who resigned as

planned at the end of their term.

We thank Deloitte for their excellent

service and welcome David Allen

and Mazars LLP as our external

auditors.

www.suplc.co.uk Stock Code: SUS

CORPORATE GOVERNANCE

B4 Directors’ Report CONTINUED

POST BALANCE SHEET

EVENTS

There are no significant post balance

sheet events to report.

DIRECTORS

Under article 154 of the Company’s

articles of association, the Company

has qualifying third party indemnity

provisions for the benefit of its

directors and those of subsidiary

company directors which remain in

force at the date of this report.

INFORMATION PRESENTED

IN OTHER SECTIONS

Certain information required to be

included in the Director’s report

can be found in other sections of

the Annual Report and Accounts as

described below. All the information

presented in these sections is

incorporated by reference into this

Director’s report and is deemed to

form part of this report.

• Information surrounding future

developments is given in the

Strategic Report and Chairman’s

Statement.

• Information surrounding

engagement with customers,

business partners and others is

given in the Strategic Report and

S172 Statement.

• Disclosures concerning

greenhouse gas emissions are

given in Section A4.4 in the

Strategic Report.

• Information about the Group’s

use of financial instruments

is given in the note to the

accounts 21.

The Board confirms that the

Annual Report and accounts,

taken as a whole, is fair, balanced

and understandable and provides

the information necessary for

shareholders to assess the Group’s

performance, business model and

strategy.

Approved by the Board of Directors

and signed on behalf of the Board

Chris Redford

Company Secretary

1 April 2022

S&U Plc Annual Report and Accounts 2022

B5 Directors’ Responsibilities Statement

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 accounting standards

in conformity with the requirements

of the Companies Act 2006 and

International Financial Reporting

Standards (IFRSs) adopted pursuant

to Regulation (EC) No 1606/2002

as it applies in the European

Union. The financial statements

also comply with International

Financial Reporting Standards

as issued by the IASB. 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:

• properly select and apply

accounting policies;

• present information, including

accounting policies, in a manner

that provides relevant, reliable,

comparable and understandable

information;

• provide additional disclosures

when compliance with the

specific requirements in IFRSs

are insufficient to enable users

to understand the impact of

particular transactions, other

events and conditions on the

entity’s financial position and

financial performance; and

• assess the company’s ability to

continue as a going concern.

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.

RESPONSIBILITY

STATEMENT

We confirm that to the best of our

knowledge:

• the financial statements,

prepared in accordance with

International Financial Reporting

Standards, give a true and fair

view of the assets, liabilities,

financial position and profit of the

company and the undertakings

included in the consolidation

taken as a whole;

• the strategic report includes a fair

review of the development and

performance of the business and

the position of the company and

the undertakings included in the

consolidation taken as a whole,

together with a description of the

principal risks and uncertainties

that they face; and

• the annual report and financial

statements, taken as a whole, are

fair, balanced and understandable

and provide the information

necessary for shareholders to

assess the company’s performance,

business model and strategy.

By order of the Board

Anthony Coombs

Chairman

Chris Redford

Group Finance Director

1 April 2022

www.suplc.co.uk Stock Code: SUS

CORPORATE GOVERNANCE

C Independent Auditor’s Report to the

Members of S&U Plc

OPINION

We have audited the financial statements of S&U plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the

year ended 31 January 2022 which comprise the group income statement, the group and parent company statements

of comprehensive income, the group and parent company balance sheets, the group and parent company statements

of changes in equity, the group and parent company cash flow statements, and notes to the financial statements,

including a summary of significant accounting policies.

The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted

international accounting standards and, as regards the parent company financial statements, as applied in

accordance with the provisions of the Companies Act 2006.

In our opinion, the financial statements:

• give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 January 2022 and of

the group’s profit for the year then ended;

• have been properly prepared in accordance with UK-adopted international accounting standards and, as regards the

parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.

Our responsibilities under those standards are further described in the “Auditor’s responsibilities for the audit of the

financial statements” section of our report. We are independent of the group and the parent company in accordance

with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s

Ethical Standard as applied to listed entities and we have fulfilled our other ethical responsibilities in accordance with

these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our opinion.

CONCLUSIONS RELATING TO GOING CONCERN

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of

accounting in the preparation of the financial statements is appropriate.

Our audit procedures to evaluate the directors’ assessment of the group’s and the parent company’s ability to

continue to adopt the going concern basis of accounting included but were not limited to:

• Undertaking an initial assessment at the planning stage of the audit to identify events or conditions that may cast

significant doubt on the group’s and the parent company’s ability to continue as a going concern;

• Obtaining an understanding of the relevant controls relating to the directors’ going concern assessment;

• Making enquiries of the directors to understand the period of assessment considered by them, the assumptions

they considered and the implication of those when assessing the group’s and the parent company’s future financial

performance;

• Challenging the appropriateness of the directors’ key assumptions in their cash flow forecasts, as described on

page 17, by reviewing supporting and contradictory evidence in relation to these key assumptions and assessing the

directors’ consideration of severe but plausible scenarios. This included assessing the viability of mitigating actions

within the directors’ control;

• Testing the accuracy and functionality of the model used to prepare the directors’ forecasts;

• Assessing the historical accuracy of forecasts prepared by the directors;

• Engaging in regular discussions with the directors regarding the status of negotiations in respect of new financing

options;

S&U Plc Annual Report and Accounts 2022

• Reviewing regulatory correspondence, minutes of meetings of the Audit Committee and the Board of Directors, and

post balance sheet events to identify events of conditions that may impact the group’s and the parent company’s

ability to continue as a going concern;

• Assessing and challenging key assumptions and mitigating actions put in place in response to the impact of the

Covid-19 pandemic;

• Considering the consistency of the directors’ forecasts with other areas of the financial statements and our

audit; and

• Evaluating the appropriateness of the directors’ disclosures in the financial statements on going concern.

Based on the work we have performed, we have not identified any material uncertainties relating to events or

conditions that, individually or collectively, may cast significant doubt on the group’s and the parent company’s

ability to continue as a going concern for a period of at least twelve months from when the financial statements are

authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the

relevant sections of this report.

In relation to S&U plc’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material

to add or draw attention to in relation to the directors’ statement in the financial statements about whether the

director’s considered it appropriate to adopt the going concern basis of accounting.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the

financial statements of the current period and include the most significant assessed risks of material misstatement

(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit

strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters

were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion

thereon, and we do not provide a separate opinion on these matters.

We summarise below the key audit matters in forming our opinion above, together with an overview of the principal

audit procedures performed to address each matter and our key observations arising from those procedures.

These matters, together with our findings, were communicated to those charged with governance through our Audit

Completion Report.

www.suplc.co.uk Stock Code: SUS

CORPORATE GOVERNANCE

C Independent Auditor’s Report to the

Members of S&U Plc CONTINUED

Key Audit Matter How our scope addressed this matter

Impairment of amounts receivable from customers

(Advantage Finance Limited and Aspen Bridging

Limited) (2022: £92.1m, 2021: £92.9m)

Refer to note 1.4 for the accounting policy, note 1.11 for

details of the key sources of estimation uncertainty and

note 14 for relevant disclosures.

The estimation of expected credit losses (‘ECL’) on

amounts receivable from customers is complex and

inherently judgmental due to the use of subjective

assumptions and a high degree of estimation.

The most significant areas where we identified greater

levels of management judgement are:

• Staging of loans and the identification of Significant

Increase in Credit Risk;

• Key assumptions in the model including probability

of default (“PD”) and loss given default (“LGD”)

including the present value of future cash flows from

collateral; and

• Use of macro-economic variables reflecting a range

of future scenarios.

The continuation of the COVID-19 pandemic in the UK

during the year under audit, and the accompanying

government interventions including furlough, payment

holidays and changes to the ability to repossess vehicles,

together with the strengthening of the used car market

during the pandemic have resulted in post model

adjustments being applied to the Advantage Finance

Limited (‘Advantage’) ECL modelling. The government’s

interventions had ended by the Group’s financial year

end but the full effect of them coming to an end was

not considered by the Group to have been observed and

fully understood resulting in the continued use for post

model adjustments.

In addition, Aspen Bridging Limited (‘Aspen’) has

participated in the Coronavirus Business Interruption

Loan Scheme (‘CBILS’) to provide financial support to

smaller businesses in the UK. This represents a new

lending category for the Group on which to assess ECL

requirements. CBILS loans should, however, be covered

up to the first 80% of any loss by the British Business

Bank under the terms of the scheme.

The range of reasonable outcomes could be greater than

materiality for the financial statements as a whole.

Our audit procedures included, but were not limited to:

• Understanding and evaluating the control environment

over the ECL model;

• Testing and challenging the key assumptions of the PD,

LGD and SICR and the staging applied and forward-

looking assumptions and probability weighting;

• Critically assessing the methodology for determining

the SICR criteria and independently testing a sample of

loans for appropriateness of staging;

• Independently challenging the macroeconomic

variables, economic scenarios and their probability

weighting. We involved our in-house economist in this

process;

• Assessing the integrity of the data used in the

calibration of the PD and LGD;

• Critically challenging the appropriateness and

reasonableness of the post model adjustments,

and independently recalculating the post model

adjustments applied to take account of the impact of

the COVID-19 pandemic on the ECL; and

• Testing and challenging the key assumptions and

application of ECL loss modelling used for CBILS loans.

Our observations

Based on the audit procedures performed, we found the

resulting estimate of the loan impairment provision to be

reasonable.

S&U Plc Annual Report and Accounts 2022

Key Audit Matter How our scope addressed this matter

Revenue recognition – Constant periodic rate of return

assessment as per IFRS 16 / effective interest rate

assessment as per IFRS 9 (Advantage and Aspen) (2022:

£87.9m, 2021: £83.8m)

Refer to note 1.3 for the accounting policy and note 3 for

relevant disclosures.

Recognising income under IFRS 16 for leases on a

constant yield basis and IFRS 9 for loans on an effective

interest rate (EIR) basis are complex areas that involve

judgement.

The majority of revenue is system generated but to

convert that to a constant yield / EIR basis requires

management judgement in relation to the inclusion of

directly attributable costs/fees and associated cash flows

that require to be spread over the life of the products,

with accounting entries generated using complex

spreadsheets models.

Given the degree of judgement involved in relation to

fees directly attributable to each customer agreement

we identified that there is a potential fraud through

possible manipulation of this balance.

Our audit procedures included, but were not limited to:

• Assessing the design and implementation and testing

the operating effectiveness of key controls over the

constant periodic rate of return on the net investment

calculations and over the effective interest rate

calculations, including changes to the models and

where applicable spreadsheet controls;

• Where interest models are automated, testing the

related general IT controls and the data input feeds

and source systems;

• Where interest models are manual, testing the

effective interest rate computation for the full

portfolio;

• Testing the accuracy and completeness of data inputs,

including interest rates, outstanding loan balances

and directly attributable cost/income by agreeing

them to the underlying documentation and source

systems; and

• Testing and challenging key accounting judgement on

the recognition of directly attributable fees and costs.

Our observations

Based on the audit procedures performed, we found the

resulting estimate of revenue recognition on a constant

yield and effective interest rate basis to be reasonable

and consistent with the requirements of IFRS 9 and

IFRS 16.

www.suplc.co.uk Stock Code: SUS

CORPORATE GOVERNANCE

C Independent Auditor’s Report to the

Members of S&U Plc CONTINUED

OUR APPLICATION OF MATERIALITY AND AN OVERVIEW OF THE SCOPE OF OUR AUDIT

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for

materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the

nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and

in evaluating the effect of misstatements, both individually and on the financial statements as a whole. Based on our

professional judgement, we determined materiality for the financial statements as a whole as follows:

GROUP MATERIALITY

Overall materiality

£2.4m

How we determined it

5% of profit before tax (‘PBT’)

Rationale for benchmark

applied

We determined materiality using PBT as we considered this to be the most appropriate measure to

assess the performance of this profit focused group.

Performance materiality

Performance materiality is set to reduce to an appropriately low level the probability that the

aggregate of uncorrected and undetected misstatements in the financial statements exceeds

materiality for the financial statements as a whole.

We set performance materiality at £1.4m, which represents 60% of overall materiality.

Reporting threshold We agreed with the directors that we would report to them misstatements identified

during our audit above £71,000 as well as misstatements below that amount that, in

our view, warranted reporting for qualitative reasons.

PARENT COMPANY MATERIALITY

Overall materiality £0.7m

How we determined it 1% net assets

Rationale for benchmark

applied

Net assets are used as the basis for materiality because the parent company is primarily

a holding company for the trading components of the Group, as such we consider net

assets to reflect its holding activities.

Performance materiality Performance materiality is set to reduce to an appropriately low level the probability

that the aggregate of uncorrected and undetected misstatements in the financial

statements exceeds materiality for the financial statements as a whole.

We set performance materiality at £0.4m, which represents 60% of overall materiality.

Reporting threshold We agreed with the directors that we would report to them misstatements identified

during our audit above £22,000 as well as misstatements below that amount that, in

our view, warranted reporting for qualitative reasons.

As part of designing our audit, we assessed the risk of material misstatement in the financial statements, whether

due to fraud or error, and then designed and performed audit procedures responsive to those risks. In particular, we

looked at where the directors made subjective judgements, such as assumptions on significant accounting estimates.

We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the

financial statements as a whole. We used the outputs of our risk assessment, our understanding of the group and the

parent company, their environment, controls, and critical business processes, to consider qualitative factors to ensure

that we obtained sufficient coverage across all financial statement line items.

Our group audit scope included an audit of the group and the parent company financial statements. Based on our risk

assessment, the two trading components, Advantage and Aspen, together with the parent company, were subject to

full scope audit performed by the group audit team. This provided 100% coverage of group revenue, PBT, total assets

and net assets.

S&U Plc Annual Report and Accounts 2022

At the parent company level, the group audit team also tested the consolidation process and carried out analytical

procedures to confirm our conclusion that there were no significant risks of material misstatement of the aggregated

financial information.

OTHER INFORMATION

The other information comprises the information included in the Report and Financial Statements other than the

financial statements and our auditor’s report thereon. The directors are responsible for the other information.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise

explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is

materially inconsistent with the financial statements or our knowledge obtained in the course of audit or otherwise

appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements,

we are required to determine whether this gives rise to a material misstatement in the financial statements

themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this

other information, we are required to report that fact.

We have nothing to report in this regard.

OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006

In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in

accordance with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the directors’ report for the financial year for which the financial

statements are prepared is consistent with the financial statements and those reports have been prepared in

accordance with applicable legal requirements;

• the information about internal control and risk management systems in relation to financial reporting processes

and about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Guidance and

Transparency Rules sourcebook made by the Financial Conduct Authority (the FCA Rules), is consistent with the

financial statements and has been prepared in accordance with applicable legal requirements; and

• information about the parent company’s corporate governance code and practices and about its administrative,

management and supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the

FCA Rules.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION

In light of the knowledge and understanding of the group and the parent company and their environment obtained in

the course of the audit, we have not identified material misstatements in the:

• strategic report or the directors’ report; or

• information about internal control and risk management systems in relation to financial reporting processes and

about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 of the FCA Rules.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires

us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not

been received from branches not visited by us; or

• the parent company financial statements and the part of the directors’ remuneration report to be audited are not in

agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit; or

• a corporate governance statement has not been prepared by the parent company.

www.suplc.co.uk Stock Code: SUS

CORPORATE GOVERNANCE

C Independent Auditor’s Report to the

Members of S&U Plc CONTINUED

CORPORATE GOVERNANCE STATEMENT

The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and

that part of the Corporate Governance Statement relating to S&U plc’s compliance with the provisions of the UK

Corporate Governance Statement specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the

Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained

during the audit:

• Directors’ statement with regards the appropriateness of adopting the going concern basis of accounting and any

material uncertainties identified, set out on page 17;

• Directors’ explanation as to its assessment of the entity’s prospects, the period this assessment covers and why they

period is appropriate, set out on page 17;

• Directors’ statement on fair, balanced and understandable, set out on page 50;

• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks, set out on

page 17;

• The section of the annual report that describes the review of effectiveness of risk management and internal control

systems, set out on page 46; and;

• The section describing the work of the audit committee, set out on page 43.

RESPONSIBILITIES OF DIRECTORS

As explained more fully in the directors’ responsibilities statement set out on page 51, the directors are responsible

for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such

internal control as the directors determine is necessary to enable the preparation of financial statements that are

free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group’s and the parent

company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and

using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent

company or to cease operations, or have no realistic alternative but to do so.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with

ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error

and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures

in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities,

including fraud.

Based on our understanding of the group and the parent company and their industry, we considered that non-

compliance with the following laws and regulations might have a material effect on the financial statements: Financial

Conduct Authority (‘FCA’) regulations and Listing Rules.

To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the

risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to:

• Gaining an understanding of the legal and regulatory framework applicable to the group and the parent company,

the industry in which they operate, and the structure of the group, and considering the risk of acts by the group and

the parent company which were contrary to the applicable laws and regulations, including fraud;

S&U Plc Annual Report and Accounts 2022

• Inquiring of the directors, management and, where appropriate, those charged with governance, as to whether

the group and the parent company is in compliance with laws and regulations, and discussing their policies and

procedures regarding compliance with laws and regulations;

• Inspecting correspondence with relevant licensing or regulatory authorities, including the FCA;

• Reviewing minutes of meetings of the Board of Directors and the Audit Committee held during the year; and

• Discussing amongst the engagement team the laws and regulations listed above, and remaining alert to any

indications of non-compliance.

We also considered those laws and regulations that have a direct effect on the preparation of the financial

statements, such as tax legislation, pension legislation and the Companies Act 2006.

In addition, we evaluated the directors’ and management’s incentives and opportunities for fraudulent manipulation

of the financial statements, including the risk of management override of controls, and determined that the principal

risks related to posting manual journal entries to manipulate financial performance, management bias through

judgements and assumptions in significant accounting estimates, in particular in relation to revenue recognition

(which we pinpointed to the existence and accuracy assertions), and significant one-off or unusual transactions.

Our procedures in relation to fraud included but were not limited to:

• Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or

alleged fraud;

• Gaining an understanding of the internal controls established to mitigate risks related to fraud;

• Discussing amongst the engagement team the risks of fraud; and

• Addressing the risks of fraud through management override of controls by performing journal entry testing.

The primary responsibility for the prevention and detection of irregularities, including fraud, rests with both

those charged with governance and management. As with any audit, there remained a risk of non-detection of

irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of

internal controls.

The risks of material misstatement that had the greatest effect on our audit are discussed in the “Key audit matters”

section of this report.

A further description of our responsibilities is available on the Financial Reporting Council’s website at www.frc.org.

uk/auditorsresponsibilities. This description forms part of our auditor’s report.

OTHER MATTERS WHICH WE ARE REQUIRED TO ADDRESS

Following the recommendation of the Audit Committee, we were appointed by the audit committee on 4 August

2021 to audit the financial statements for the year ending 31 January 2022 and subsequent financial periods. The

period of total uninterrupted engagement is one year, covering the year ended 31 January 2022.

The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent

company and we remain independent of the group and the parent company in conducting our audit.

Our audit opinion is consistent with our additional report to the Audit Committee.

USE OF THE AUDIT REPORT

This report is made solely to the company’s members as a body in accordance with Chapter 3 of Part 16 of the

Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those

matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent

permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s

members as a body for our audit work, for this report, or for the opinions we have formed.

David Allen (Senior Statutory Auditor) for and on behalf of Mazars LLP

Chartered Accountants and Statutory Auditor

Tower Bridge House, St Katharine’s Way, London, E1W 1DD

1 April 2022

www.suplc.co.uk Stock Code: SUS

CORPORATE GOVERNANCE

CONTENTS

D1 D1.1 Group Income Statement

and Statement of

Comprehensive Income 62

D1.2 Balance Sheet 63

D1.3 Statement of Changes in

Equity 64

D1.4 Cash Flow Statement 65

D2 Notes to the Accounts 66

Five Year Financial Record 91

Financial Calendar 92

Ocers and Professional

Advisors 93

The

accounts

S&U Plc Annual Report and Accounts 2022

Stock Code: SUSwww.suplc.co.uk

www.suplc.co.uk Stock Code: SUS

From continuing operations Notes

2022

£000

2021

£000

Revenue 3 87,889 83,761

Cost of sales 4 (22,891) (50,969)

Gross profit 64,998 32,792

Administrative expenses (14,208) (11,096)

Operating profit 6 50,790 21,696

Finance costs (net) 7 (3,772) (3,568)

Profit before taxation 2 47,018 18,128

Taxation 9 (9,036) (3,482)

Profit for the year attributable to equity holders 37,982 14,646

Earnings per share

Basic 11 312.8p 120.7p

Diluted 11 312.7p 120.7p

Statement of

Comprehensive Income

Note

Group

2022

£000

Group

2021

£000

Company

2022

£000

Company

2021

£000

Profit for the year attributable to equity holders 37,982 14,646 10,113 12,719

Actuarial loss on defined benefit pension scheme 26 (6) (9) (6) (9)

Total Comprehensive Income for the year 37,976 14,637 10,107 12,710

Items above will not be reclassified subsequently to the Income Statement.

D1 The Accounts

D1.1 Group income Statement

For the year ended 31 January 2022

S&U Plc Annual Report and Accounts 2022

Notes

Group

2022

£000

Group

2021

£000

Company

2021

£000

Company

2021

£000

ASSETS

Non-current assets

Property, plant and equipment 12 2,455 2,713 199 256

Investments 13 – – 1 533

Amounts receivable from customers 14 181,614 170,591 – –

Trade and other receivables 15 – – 152,000 130,000

Deferred tax assets 18 120 109 35 49

184,189 173,413 152,235 130,838

Current assets

Amounts receivable from customers 14 141,301 110,319 – –

Trade and other receivables 15 1,739 1,106 33,701 41,079

Cash and cash equivalents – 1 – 1

143,040 111,426 33,701 41,080

Total assets 327,229 284,839 185,936 171,918

LIABILITIES

Current liabilities

Bank overdrafts and loans 16 (2,568) (1,295) (3,147) (783)

Trade and other payables 17 (4,347) (2,763) (654) (205)

Current tax liabilities (926) (593) (116) (212)

Lease liabilities (174) (169) (66) (63)

Accruals (774) (658) (221) (206)

(8,789) (5,478) (4,204) (1,469)

Non-current liabilities

Borrowings 16 (111,000) (97,500) (111,000) (97,500)

Lease liabilities (243) (382) (17) (83)

Financial liabilities 20 (450) (450) (450) (450)

(111,693) (98,332) (111,467) (98,033)

Total liabilities (120,482) (103,810) (115,671) (99,502)

NET ASSETS 206,747 181,029 70,265 72,416

Equity

Called up share capital 19 1,718 1,717 1,718 1,717

Share premium account 2,301 2,301 2,301 2,301

Profit and loss account 202,728 177,011 66,246 68,398

Total equity 206,747 181,029 70,265 72,416

The parent company’s profit for the financial year after taxation amounted to £10,113,000 (2021: £12,719,000)

These financial statements were approved by the Board of Directors on 1 April 2022.

Signed on behalf of the Board of Directors

AMV Coombs C Redford

Chairman Group Finance Director

D1.2 Balance Sheet

As at 31 January 2022

Company Registration No: 0342025

www.suplc.co.uk Stock Code: SUS

THE ACCOUNTS

D1.3 Statement of Changes In Equity

For the year ended 31 January 2022

Group Notes

Called up

share capital

£000

premium

account

£000

Profit

and loss

account

£000

Total

equity

£000

At 1 February 2020 1,715 2,301 175,458 179,474

Profit for year – – 14,646 14,646

Other comprehensive income for year – – (9) (9)

Total comprehensive income for year – – 14,637 14,637

Issue of new shares in year 2 – – 2

Cost of future share-based payments – – 75 75

Tax charge on equity items – – (61) (61)

Dividends – – (13,098) (13,098)

At 31 January 2021 1,717 2,301 177,011 181,029

Profit for year – – 37,982 37,982

Other comprehensive income for year – – (6) (6)

Total comprehensive income for year – – 37,976 37,976

Issue of new shares in year 19 1 – – 1

Cost of future share-based payments 25 – – 39 39

Tax charge on equity items 18 – – (35) (35)

Dividends 10 – – (12,263) (12,263)

At 31 January 2022 1,718 2,301 202,728 206,747

Company Notes

Called up

share capital

£000

premium

account

£000

Profit

and loss

account

£000

Total

equity

£000

At 1 February 2020 1,715 2,301 68,720 72,736

Profit for year – – 12,719 12,719

Other comprehensive income for year – – (9) (9)

Total comprehensive income for year – – 12,710 12,710

Issue of new shares in year 2 – – 2

Cost of future share-based payments – – 72 72

Tax charge on equity items – – (6) (6)

Dividends – – (13,098) (13,098)

At 31 January 2021 1,717 2,301 68,398 72,416

Profit for year 8 – – 10,113 10,113

Other comprehensive income for year – – (6) (6)

Total comprehensive income for year – – 10,107 10,107

Issue of new shares in year 1 – – 1

Cost of future share-based payments – – 39 39

Tax charge on equity items – – (35) (35)

Dividends – – (12,263) (12,263)

At 31 January 2022 1,718 2,301 66,246 70,265

S&U Plc Annual Report and Accounts 2022

D1.4 Cash Flow Statement

For the year ended 31 January 2022

Notes

Group

2022

£000

Group

2021

£000

Company

2022

£000

Company

2021

£000

Net cash (used in)/generated from operating activities 22 (2,094) 32,940 (4,047) 32,561

Cash flows (used in)/from investing activities

Proceeds on disposal of property, plant and equipment 93 103 – 9

Purchases of property, plant and equipment (377) (1,215) (24) (3)

Net cash (used in)/from investing activities (284) (1,112) (24) 6

Cash flows from/(used in) financing activities

Dividends paid (12,263) (13,098) (12,263) (13,098)

Issue of new shares

Decrease in investments in dormant companies

Receipt of new borrowings

–

25,000

–

4,000

531

25,000

–

4,000

Repayment of borrowings (11,500) (25,000) (11,500) (25,000)

(Decrease)/increase in lease liabilities (134) 318 (63) (54)

Net increase in overdraft 1,273 1,295 2,364 783

Net cash generated from/(used in) financing activities 2,377 (32,483) 4,070 (33,367)

Net increase/(decrease) in cash and cash equivalents (1) (655) (1) (800)

Cash and cash equivalents at the beginning of year 1 656 1 801

Cash and cash equivalents at the end of year – 1 – 1

Cash and cash equivalents comprise

Cash and cash in bank – 1 – 1

There are no cash and cash equivalent balances which are not available for use by either the Group or the Company

(2021: £nil).

www.suplc.co.uk Stock Code: SUS

THE ACCOUNTS

D2 Notes to the Accounts

Year ended 31 January 2022

1. ACCOUNTING POLICIES

1.1 General Informaon

S&U plc is a Company incorporated in England and Wales under the Companies Act and is a public company

limited by shares. The address of the registered office is given on the back cover which is also the Group’s

principal business address. All operations are situated in the United Kingdom. S&U plc is the parent and the

ultimate parent company of the group. S&U plc is a listed holding company and within the group the main

operations are motor finance and property bridging finance.

1.2 Basis of preparaon

As a listed Company we are required to prepare our consolidated financial statements in accordance with

international accounting standards in conformity with the requirements of the Companies Act 2006 and

International Financial Reporting Standards (IFRS) as adopted by the United Kingdom. We have also prepared

our S&U plc Company financial statements in conformity with the requirements of the Companies Act 2006 and

International Financial Reporting Standards (IFRS) as adopted by the United Kingdom. The financial statements

have also been prepared in accordance with International Financial Reporting Standards as issued by the IASB.

These financial statements have been prepared under the historical cost convention. The consolidated financial

statements incorporate the financial statements of the Company and all its subsidiaries for the year ended 31

January 2022. As discussed in the strategic report, the directors have a reasonable expectation that the Group

has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they

continue to adopt the going concern basis in preparing the annual report and accounts.

There are no new standards which have been adopted by the group this year which have a material impact on

the financial statements of the Group.

At the date of authorisation of these financial statements the directors anticipate that the adoption in future

periods of any other Standards and interpretations which are in issue but not yet effective, will have no material

impact on the financial statements of the Group.

1.3 Revenue recognion

Interest income is recognised in the income statement for all loans and receivables measured at amortised cost

using the constant periodic rate of return on the net investment in the loans, which is akin to an effective interest

rate (EIR) method. The EIR is the rate that exactly discounts estimated future cash flows of the loan back to the

present value of the advance and hire purchase interest income is then recognised using the EIR. Acceptance

fees charged to customers and any direct transaction costs are included in the calculation of the EIR. For hire

purchase agreements in Advantage Finance which are classified as credit impaired (i.e. stage 3 assets under IFRS

9), the group recognises revenue ‘net’ of the impairment provision to align the accounting treatment under IFRS

16 with the requirements of IFRS 9 and also with the treatment adopted for similar assets in Aspen. Revenue

starts to be recognised from the date of completion of the loan – after completion hire purchase customers have

a 14 day cooling off period during which they can cancel their loan.

1.4 Impairment and measurement of amounts receivable from customers

All customer receivables are initially recognised as the amount loaned to the customer plus direct transaction

costs. After initial recognition the amounts receivable from customers are subsequently measured at

amortised cost.

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 credit impairment as a result of one or more events that occurred after the

initial recognition of the loan. Objective evidence may include evidence that a borrower or group of borrowers

is experiencing financial difficulty or delinquency in repayments. Impairment is then calculated by estimating

the future cash flows for such impaired loans, discounting the flows to a present value using the original EIR and

comparing this figure with the balance sheet carrying value. All such impairments are charged to the income

statement. Under IFRS 9 for all stage 1 accounts which are not credit impaired, a further collective provision for

expected credit losses in the next 12 months is calculated and charged to the income statement.

S&U Plc Annual Report and Accounts 2022

1. ACCOUNTING POLICIES (CONTINUED)

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 (PD) and information regarding the likely eventual

loss including recoveries (LGD). These assumptions and assumptions for estimating future cash flows are based

upon observed historical data and updated to reflect current and future conditions. As required under IFRS9, all

assumptions are reviewed regularly to take account of differences between previously estimated cash flows on

impaired debt and the eventual losses.

There are 3 classification stages under IFRS9 for the impairment of amounts receivable from customers:

Stage 1: Not credit impaired and no significant increase in credit risk since initial recognition

Stage 2: Not credit impaired and a significant increase in credit risk since initial recognition

Stage 3: Credit impaired

For all loans in stages 2 and 3 a provision equal to the lifetime expected credit loss is taken. In addition and in

accordance with the provisions of IFRS9 a collective provision for 12 months expected credit losses (“ECL”) is

recognised for the remainder of the loan book. 12-month ECL is the portion of lifetime ECL that results from

default events on a financial asset that are possible within 12 months after the reporting date.

In our Motor Finance business, all loans 1 month or more in contractual arrears are deemed credit impaired

and are therefore included in IFRS9 stage 3. This results in more of our net receivables being in stage 3 and the

associated stage 3 loan loss provisions being higher than if we adopted a more prime customer receivables

approach of 3 months or more in arrears. Our approach of 1 month or more in contractual arrears is based on

our historic observation of subsequent loan performance after our customers fall 1 month or more in contractual

arrears within our non-prime motor finance customer receivables book. The expected credit loss (“ECL”) is the

probability weighted estimate of credit losses.

A PD/LGD model was developed by our Motor Finance business, Advantage Finance, to calculate the expected

loss impairment provisions in accordance with IFRS9. Stage 1 expected losses are recognised on inception/

initial recognition of a loan based on the probability of a customer defaulting in the next 12 months. This is

determined with reference to historical data updated for current and future conditions. If a motor finance loan

falls one month or more in contractual arrears, then this is deemed credit impaired and included in IFRS9 Stage

3. There are some motor finance loans which are up to date with payments but the customer is in some form of

forbearance and we deem this to be a significant increase in credit risk and so these loans are included in Stage

2. As a result of the uncertainty over the performance of customers who were granted a payment holiday as part

of the Government and FCA support measures as a result of the Covid pandemic and have also either requested

a second payment holiday or have had a previous payment delinquency, we have assessed these customers to

have a significant increase in credit risk and they are therefore included in Stage 2. This is why the volume of

customers in Stage 2 increased at 31 January 2021. However, if a customer’s payment holiday finished more than

12 months ago and they are unimpaired 12 months later then an account will not be in stage 2 as the customer’s

post payment holiday record now indicates low risk at the reporting date. This is why the volume of customers

in stage 2 reduced at 31 January 2022. As we do not have historical data for such customers, we made an

assumption on the loss rates associated with such customers by reference to relevant Stage 3 loss rates. Further

sensitivity over this estimation uncertainty is provided in note 1.11.

As required under IFRS9 the expected impact of movements in the macroeconomy is also reflected in the

expected loss model calculations. For motor finance, assessments are made to identify the correlation of the

level of impairment provision with forward looking external data regarding forecast future levels of employment,

inflation, interest rates and used car values which may affect the customers’ future propensity to repay their

loan. The macroeconomic overlay assessments for 31 January 2022 reflect that further to considering such

external macroeconomic forecast data, management have judged that there is currently a more heightened

risk of an adverse economic environment for our customers and the value of our motor finance security. To

factor in such uncertainties, management has included an overlay for certain groups of assets to reflect this

macroeconomic outlook, based on estimated unemployment, inflation and used vehicle price levels in future

periods. Further sensitivity over this estimation uncertainty is provided in note 1.11.

www.suplc.co.uk Stock Code: SUS

THE ACCOUNTS

D2 Notes to the Accounts CONTINUED

Year ended 31 January 2022

1. ACCOUNTING POLICIES (CONTINUED)

Other than the changes to the approach mentioned above, there were no significant changes to estimation

techniques applied to the calculations used at 31 January 2022 and those used at 31 January 2021.

PD/LGD calculations for expected loss impairment provisions were also developed for our Property Bridging

business Aspen Bridging in accordance with IFRS9. Stage 1 expected losses are recognised on inception/

initial recognition of a loan based on the probability of a customer becoming impaired in the next 12 months.

The Bridging product has a single repayment scheduled for the end of the loan term and if a bridging loan is

not granted an extension or repaid beyond the end of the loan term then this is deemed credit impaired and

included in IFRS9 Stage 3. Due mainly to the high values of property security attached to bridging loans, the

bridging sector typically has lower credit risk and lower impairment than other credit sectors.

Assets in both our secured loan businesses are written off once the asset has been repossessed and sold and

there is no prospect of further legal or other debt recovery action. Where enforcement action is still taking place,

loans are not written off. In motor finance where the asset is no longer present then another indicator used to

determine whether the loan should be written off is the lack of any receipt for 12 months from that customer.

1.5 Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation. Certain freehold property is held

at previous revalued amounts less accumulated depreciation as the Group has elected to use these amounts as

the deemed cost as at the date of transition to IFRS under the transitional arrangements of IFRS 1.

Depreciation is provided on the cost or valuation of property, plant and equipment in order to write such cost or

valuation over the expected useful lives as follows;

Freehold Buildings 2% per annum straight line

Fixtures and Fittings -Computers 20% per annum straight line

Fixtures and Fittings - Other 10% per annum straight line or 20% per annum reducing balance

Motor Vehicles 25% per annum reducing balance

Freehold Land is not depreciated.

1.6 Taxaon

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.

1.7 Preference shares

The issued 31.5% preference share capital is carried in the balance sheet at amortised cost and shown as a

financial liability. The issued 6% preference share capital is valued at par and shown as called up share capital.

1.8 Pensions

The Group contributes as required to a defined benefit pension scheme. The defined benefit pension asset at the

balance sheet date is calculated as the fair value of the plan assets less the present value of the defined benefit

obligation. Actuarial gains and losses are recognised immediately in the financial statements.

The Group also operates several defined contribution pension schemes and the pension charge represents the

amount payable by the Company for the financial year.

S&U Plc Annual Report and Accounts 2022

1. ACCOUNTING POLICIES (CONTINUED)

1.9 Share-based payments

The Company issued share options under the S&U plc 2010 Long Term Incentive Plan. The cost of these share-

based payments is based on the fair value of options granted as required by IFRS2. This cost is then charged to

the income statement over the three-year vesting period of the related share options with a corresponding credit

to reserves. When any share options are exercised, the proceeds received are credited to share capital.

1.10 Investments

Investments in subsidiaries held as non-current assets are stated at cost less provision for any impairment.

1.11 Crical accounng judgements and key sources of esmaon uncertainty

In preparing these financial statements, the Company has made judgements, estimates and assumptions which

affect the reported amounts within the current and next financial year. Actual results may differ from these

estimates.

Estimates and judgements are regularly reviewed based on past experience, expectations of future events and

other factors.

Crical accounng judgements

The following are the critical accounting judgements, apart from those involving estimations (which are dealt

with separately below), that the Directors have made in the process of applying the Company’s accounting

policies and that have the most significant effect on the amounts recognised in the financial statements.

Significant increase in credit risk for classification in Stage 2

The Company’s transfer criteria determine what constitutes a significant increase in credit risk, which results in a

customer being moved from Stage 1 to Stage 2. As a result of the uncertainty over the performance of customers

who were granted a payment holiday as part of the Government and FCA support measures and have also either

requested a second payment holiday or have had a previous payment delinquency, we have assessed these

customers to have a significant increase in credit risk and they are therefore included in Stage 2. However, if a

customer’s payment holiday finished more than 12 months ago and they are unimpaired 12 months later then an

account will not be in Stage 2 as the customer’s post holiday payment record now indicates low credit risk at the

reporting date.

Key sources of esmaon uncertainty

The directors consider that the sources of estimation uncertainty which have the most significant effect on the

amounts recognised in the financial statements are those inherent in the consumer credit markets in which

we operate relating to impairment as outlined in 1.4 above. In particular, the Group’s impairment provision is

dependent on estimation uncertainty in forward-looking on areas such as employment rates, inflation rates and

used car and property prices.

The Group implemented IFRS 9 from 1 February 2018 by developing models to calculate expected credit losses

in a range of economic scenarios. These models involve setting modelling assumptions, weighting of economic

scenarios, the criteria of determining significant deterioration in credit quality and the application of adjustments

to model outputs. We have outlined assumptions in our expected credit loss model in the current year.

Reasonable movement in these assumptions might have a material impact on the impairment provision value.

www.suplc.co.uk Stock Code: SUS

THE ACCOUNTS

D2 Notes to the Accounts CONTINUED

Year ended 31 January 2022

1. ACCOUNTING POLICIES (CONTINUED)

Macroeconomic overlay for our motor finance business

For this overlay, the Group considers four probability-weighted scenarios in relation to unemployment rate: base,

upside, downside and severe scenarios as follows:

Base

Upside

(30%

increase)

Downside

(30 %

decrease)

Severe

(50%

increase) Weighted

Weighting 50% 5% 40% 5%

Q1 2022 3.80% 2.66% 4.94% 5.70% 4.29%

Q1 2023 4.20% 2.94% 5.46% 6.30% 4.75%

Q1 2024 4.60% 3.22% 5.98% 6.90% 5.20%

Q1 2025 5.00% 3.50% 6.50% 7.50% 5.65%

Inflation rates have not previously been factored into the macroeconomic overlay but at 31 January 2022 we

have included them due to the extraordinary increases currently forecast for the next 12 months period and

the potential impact on our customers and their repayments. The Group considers four probability-weighted

scenarios in relation to inflation rate: base, upside, downside and severe scenarios as follows:

Base

Upside

(30%

increase)

Downside

(30 %

decrease)

Severe

(50%

increase) Weighted

Weighting 50% 5% 40% 5%

Q1 2022 5.70% 3.99% 7.41% 8.55% 6.44%

Q1 2023 5.20% 3.64% 6.76% 7.80% 5.88%

Q1 2024 2.10% 1.47% 2.73% 3.15% 2.37%

Q1 2025 1.60% 1.12% 2.08% 2.40% 1.81%

An increase by 0.5% in the weighted average unemployment rate would result in an increase in the impairment

loss by £856,687. A decrease by 0.5% would result in a decrease in the impairment loss by £856,687. An increase

by 0.5% in the weighted average inflation rate would result in an increase in the impairment loss by £401,572. A

decrease by 0.5% would result in a decrease in the impairment loss by £401,572.

1.12 Alternave Performance Measurements

i) Risk adjusted yield as % of average monthly receivables is the gross yield for the period (revenue minus

impairment) divided by the average amounts receivable from customers for the period.

ii) Rolling 12-month impairment to revenue % is the impairment charged in the income statement during

the 12 months prior to the reporting date divided by the revenue for the same 12-month period. Historic

comparisons using this measure were affected by the adoption of new accounting standards IFRS9 and IFRS16

and risk adjusted yield is considered a more historically comparable guide to receivables performance.

iii) Return on average capital employed before cost of funds (ROCE) is calculated as the Operating Profit divided by

the average capital employed (total equity plus Bank Overdrafts plus Borrowings less cash and cash equivalents)

iv) Dividend cover is the basic earnings per ordinary share declared for the financial year dividend by the dividend

per ordinary share declared for the same financial year.

v) Group gearing is calculated as the sum of Bank Overdrafts plus Borrowings less cash and cash equivalents

divided by total equity.

vi) Group collections are the total monthly collections, settlement proceeds and recovery collections in motor

finance added to the total amount retained from advances, customer redemptions and recovery collections in

property bridging.

S&U Plc Annual Report and Accounts 2022

2. SEGMENTAL ANALYSIS

Analyses by class of business of revenue and profit before taxation from continuing operations are stated below:

Revenue Profit before taxation

Class of business

Year ended

31.1.22

£000

Year

ended

31.1.21

£000

Year ended

31.1.22

£000

Year

ended

31.1.21

£000

Motor finance 78,898 79,553 43,682 17,198

Property bridging finance 8,991 4,208 3,414 813

Central costs net of central finance income – – (78) 117

87,889 83,761 47,018 18,128

Analyses by class of business of assets and liabilities are stated below:

Assets Liabilities

Class of business

Year ended

31.1.22

£000

Year ended

31.1.21

£000

Year ended

31.1.22

£000

Year ended

31.1.21

£000

Motor finance 262,458 250,207 (131,012) (144,036)

Property bridging finance 64,426 34,271 (59,606) (32,213)

Central 345 361 70,136 72,439

327,229 284,839 (120,482) (103,810)

Depreciation of assets for motor finance was £427,000 (2021: £417,000), for property bridging finance was

£21,000 (2021: £18,000) and for central was £81,000 (2021: £86,000). Fixed asset additions for motor finance

were £337,000 (2021: £1,198,000), for property bridging finance were £16,000 (2021: £14,000) and for central

were £24,000 (2021: £3,000).

The net finance credit for central costs was £2,506,000 (2021: £2,577,000), for motor finance was a cost of

£4,394,000 (2021: £5,381,000) and for property bridging finance was a cost of £1,884,000 (2021: £764,000).

The tax credit for central costs was £24,000 (2021: £48,000), for motor finance was a tax charge of £8,408,000

(2021: £3,265,000) and for property bridging finance was a tax charge of £652,000 (2021: £169,000).

The significant products in motor finance are car and other vehicle loans secured under hire purchase

agreements.

The significant products in property bridging finance are bridging loans secured on property.

The assets and liabilities of the Parent Company are classified as Central.

No geographical analysis is presented because all operations are situated in the United Kingdom.

www.suplc.co.uk Stock Code: SUS

THE ACCOUNTS

D2 Notes to the Accounts CONTINUED

Year ended 31 January 2022

3. REVENUE

2022

£000

2021

£000

Interest and other income from motor finance hire purchase loans 78,898 79,553

Interest and other income from property bridging loans 8,991 4,208

Total revenue 87,889 83,761

All Group revenue relates to revenue with external customers.

4. COST OF SALES

2022

£000

2021

£000

Loan loss provisioning charge – motor finance 3,805 35,995

Loan loss provisioning charge – property bridging finance 315 710

Total loan loss provisioning charge 4,120 36,705

Other cost of sales – motor finance 17,266 13,586

Other cost of sales – property bridging finance 1,505 678

Total cost of sales 22,891 50,969

5. INFORMATION REGARDING EMPLOYEES

Group

2022

No.

Group

2021

No.

Company

2022

No.

Company

2021

No.

The monthly average number of persons employed by the Group

in the year was:

Motor finance 173 166 – –

Property bridging finance 17 13 – –

Central 10 11 10 11

Total Group average number of employees 200 190 10 11

The monthly average employed by the Company was 10 (2021: 11).

Group

2022

£000

Group

2021

£000

Company

2022

£000

Company

2021

£000

Staff costs during the year (including directors):

Wages and salaries 9,133 7,626 1,402 1,280

Social security costs 928 866 209 205

Pension costs for defined contribution scheme 391 361 37 37

Total Staff Costs 10,452 8,853 1,648 1,522

Directors’ remuneration and details of the highest paid director are disclosed in the audited section of the

Directors’ Remuneration Report. No director or current employee is a member of the small historic defined

benefit pension plan the details of which are contained in note 26 of these notes to the accounts.

S&U Plc Annual Report and Accounts 2022

6. OPERATING PROFIT

2022

£000

2021

£000

Operating profit from continuing operations is after charging:

Depreciation and amortisation:

Owned assets 529 520

Staff costs

Cost of future share-based payments

10,441

8,853

(Profit)/Loss on sale of fixed assets 13 (13)

The analysis of auditor’s remuneration is as follows:

2022

£000

2021

£000

Fees payable to the Group’s auditor for the audit of the Company’s annual accounts

Fees payable to the Group’s auditor for other services to the Group 30 30

The audit of the Company’s subsidiaries 128 115

Total audit fees 158 145

Audit related assurance services 25 25

Other services – –

Total non-audit fees 25 25

Total 183 170

7. FINANCE COSTS (NET)

2022

£000

2021

£000

31.5% cumulative preference dividend 142 142

Lease Liabilities 17 13

Bank loan and overdraft 3,613 3,455

Interest payable and similar charges 3,772 3,610

Interest receivable – (42)

Total Finance Costs (net) 3,772 3,568

8. PROFIT OF PARENT COMPANY

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 £10,113,000 (2021: £12,719,000).

www.suplc.co.uk Stock Code: SUS

THE ACCOUNTS

D2 Notes to the Accounts CONTINUED

Year ended 31 January 2022

9. TAX ON PROFIT BEFORE TAXATION

2022

£000

2021

£000

Continuing Operations

Corporation tax at 19.0% (2021: 19.0%) based on profit for the year 9,129 3,523

Adjustment in respect of prior years (47) 35

9,082 3,558

Deferred tax (temporary differences - origination and reversal) (46) (76)

9,036 3,482

The actual tax charge for the current and the previous year from continuing operations varies to the standard

rate for the reasons set out in the following reconciliation.

2022

£000

2021

£000

Profit on ordinary activities before tax from continuing operations 47,018 18,128

Tax on profit on ordinary activities at standard rate of 19.0% (2021: 19.0%) 8,933 3,444

Factors affecting charge for the period:

Expenses not deductible for tax purposes 56 42

Effects of other tax rates and temporary differences 94 (39)

Prior period adjustments (47) 35

Total actual amount of tax 9,036 3,482

The Finance Act 2016 included legislation to reduce the main rate of UK corporation tax from 20% to 19% from

1 April 2017 and to 17% from 1 April 2020. The rate reduction to 17% was subsequently reversed by the Finance

Act 2020, such that the main rate of UK corporation tax remains at 19%. The Finance Act 2021 confirms an

increase of UK corporation tax rate from 19% to 25% with effect from 1 April 2023 and this was substantively

enacted by the statement of financial position date and therefore included in these financial statements.

10. DIVIDENDS

2022

£000

2021

£000

2nd Interim dividend paid for the year ended 31/1/2021 – 25.0p per Ordinary share (36.0p) 3,033 4,363

Final dividend paid for the year ended 31/1/2021– 43.0p per Ordinary share (50.0p) 5,222 6,067

1st Interim dividend paid for the year ended 31/1/2022 – 33.0p per Ordinary share (22.0p) 4,008 2,669

Total ordinary dividends paid 12,263 13,100

6% cumulative preference dividend paid March and September 12 12

Credit for unpresented dividend payments over 12 years old (12) (14)

Total dividends paid 12,263 13,098

A second interim dividend of 36.0p per ordinary share for the year ended 31 January 2022 was paid on 11 March

2022 totalling £4.4m and the directors are proposing a final dividend for the year ended 31 January 2022 of

57p per ordinary share totalling £6.9m. The final dividend will be paid on 8 July 2022 to shareholders on the

on Thursday 26 May 2022.

S&U Plc Annual Report and Accounts 2022

11. EARNINGS PER ORDINARY SHARE

The calculation of earnings per ordinary share from continuing operations is based on profit after tax of

£37,982,000 (2021: £14,646,000).

The number of shares used in the basic eps calculation is the weighted average number of shares in issue

during the year of 12,142,928 (2021: 12,129,768). There are a total of 5,500 dilutive share options in issue

(2021: 17,000) and taking into account the appropriate proportion of these dilutive options the number of

shares used in the diluted eps calculation is 12,145,096 (2021: 12,134,619).

12. PROPERTY, PLANT AND EQUIPMENT

Group

Freehold

land and

buildings

£000

Motor

vehicles

£000

Fixtures and

Fittings

£000

Right to

Use

£000

Total

£000

Cost

At 1 February 2020 1,299 507 1,581 308 3,695

Additions 454 187 147 427 1,215

Disposals – (198) (165) – (363)

At 31 January 2021 1,753 496 1,563 735 4,547

Additions 76 71 192 38 377

Disposals – (154) (152) – (306)

At 31 January 2022 1,829 413 1,603 773 4,618

Accumulated depreciation

At 1 February 2020 199 256 1,026 106 1,587

Charge for the year 86 88 219 127 520

Eliminated on disposals – (109) (164) – (273)

At 31 January 2021 285 235 1,081 233 1,834

Charge for the year 109 66 195 159 529

Eliminated on disposals – (86) (114) – (200)

At 31 January 2022 394 215 1,162 392 2,163

Net book value

At 31 January 2022 1,435 198 441 381 2,455

At 31 January 2021 1,468 261 482 502 2,713

Included in the above is land at a cost of £22,000 (2021: £22,000) which is not depreciated.

Included in Right to Use assets above, are leases now capitalised under IFRS16 which are depreciated over the

normal term of the lease.

www.suplc.co.uk Stock Code: SUS

THE ACCOUNTS

D2 Notes to the Accounts CONTINUED

Year ended 31 January 2022

12. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Company

Freehold

land and

buildings

£000

Motor

vehicles

£000

Fixtures and

Fittings

£000

Right to

Use

£000

Total

£000

Cost

At 1 February 2020 42 120 241 251 654

Additions – – 3 – 3

Disposals – (41) – – (41)

At 31 January 2021 42 79 244 251 616

Additions – – 24 – 24

Disposals – – – – –

At 31 January 2022 42 79 268 251 640

Accumulated depreciation

At 1 February 2020 11 86 129 84 310

Charge for the year 1 8 27 50 86

Eliminated on disposals – (36) – – (36)

At 31 January 2021 12 58 156 134 360

Charge for the year – 5 26 50 81

Eliminated on disposals – – – – –

At 31 January 2022 12 63 182 184 441

Net book value

At 31 January 2022 30 16 86 67 199

At 31 January 2021 30 21 88 117 256

Included in the above is land at cost of £22,000 (2021: £22,000) which is not depreciated.

S&U Plc Annual Report and Accounts 2022

13. INVESTMENTS AND RELATED PARTY TRANSACTIONS

Company

2022

£000

2021

£000

Shares in subsidiary companies

At historic cost less impairment 1 533

Interests in subsidiaries

The principal subsidiaries of the Company, which are wholly owned directly by the Company, operate in Great

Britain and are incorporated in England and Wales.

Subsidiary and Registered Number Principal activity

Advantage Finance Limited (03773673) Motor finance

Aspen Bridging Limited (10270026) Property bridging finance

The following are wholly owned dormant subsidiaries of the group which take advantage of exemptions provided

under s394a and s448a and do not prepare, file or have audited individual company accounts;

Advantage Motor Finance Limited (03773678), Advantage4u Limited (06691669), Advantage Direct Finance

Limited (07037684), Advantage Partner Finance Limited (07036720), Advantage Asset Finance Limited

(06691598), S&U Stores Limited (00448884), Cash Kangaroo Limited (08435795) and Wilson Tupholme Limited

(00101451).

All dormant subsidiaries are directly owned by S&U plc with the exception of Advantage Motor Finance Limited

which is indirectly wholly owned via Advantage Finance Limited.

All companies in the Group have their registered office at 2 Stratford Court, Cranmore Boulevard, Solihull

B90 4QT.

Related party transacons

Group

Transactions between the Company and its subsidiaries, which are related parties have been eliminated on

consolidation and are not disclosed in this note. Transactions with the Company’s pension scheme are disclosed

in note 26. During the year the Group made charitable donations amounting of £102,000 (2021: £94,500) via

the Keith Coombs Trust which is a related party because Messrs GDC Coombs, AMV Coombs, D Markou and

CH Redford are trustees. The amount owed to the Keith Coombs Trust at the year-end was £nil (2021: £nil).

During the year the Group obtained supplies at market rates amounting to £3,508 (2021: £3,693) from Grevayne

Properties Limited a Company which is a related party because Messrs G D C and A M V Coombs are directors

and shareholders. All related party transactions were settled in full when due.

Company

The Company received dividends from other Group undertakings totalling £10,000,000 (2021: £12,650,000).

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 2022 the Company was owed £185,589,931 (2021: £171,025,884) by other Group undertakings as

part of an intercompany loan facility and owed £nil (2021: £nil). All related party transactions were settled in full

when due.

www.suplc.co.uk Stock Code: SUS

THE ACCOUNTS

D2 Notes to the Accounts CONTINUED

Year ended 31 January 2022

14. AMOUNTS RECEIVABLE FROM CUSTOMERS

Group

2022

£000

2021

£000

Motor finance hire purchase 350,517 339,349

Less: Loan loss provision motor finance (91,481) (92,583)

Amounts receivable from customers motor finance 259,036 246,766

Property bridging finance loans 64,525 34,475

Less: Loan loss provision property bridging finance (646) (331)

Amounts receivable from customers property bridging finance 63,879 34,144

Amounts receivable from customers total 322,915 280,910

Analysis by future date due

– Due within one year 141,301 110,319

– Due in more than one year 181,614 170,591

Amounts receivable from customers 322,915 280,910

Analysis of security

Loans secured on vehicles under hire purchase agreements 254,933 242,039

Loans secured on property 63,879 34,144

Other loans not secured (motor finance where security no longer present) 4,103 4,727

Amounts receivable from customers 322,915 280,910

Analysis of overdue

Not impaired

Neither past due nor impaired 285,892 236,602

Past due up to 3 months but not impaired – –

Past due over 3 months but not impaired – –

Impaired

Past due up to 3 months 25,137 30,312

Past due over 3 months and up to 6 months 3,943 5,717

Past due over 6 months or default 7,943 8,279

Amounts receivable from customers 322,915 280,910

The credit risk inherent in amounts receivable from customers is reviewed 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 with the

exception of 1,688 vulnerable or Covid impacted payment deferral customers who although not in arrears at

31 January 2022 were assessed from a review of internal data to have a significant increase in credit risk (2021:

6,298). Under IFRS9 therefore these customers although not in arrears are included in Stage 2 at 31 January 2022

with an increased impairment provision.

S&U Plc Annual Report and Accounts 2022

14. AMOUNTS RECEIVABLE FROM CUSTOMERS (CONTINUED)

Analysis of loan loss provision and amounts receivable from customers (capital)

As at 31 January 2022

Not credit impaired

Credit

impaired

Stage 1:

Subject to 12

months ECL

£’000

Stage 2:

Subject to

lifetime ECL

£’000

Stage 3:

Subject to

lifetime ECL

£’000

Total

Provision

£’000

Amounts

Receivable

£’000

Motor finance (22,129) (2,769) (66,583) (91,481) 350,517

Property bridging finance (446) – (200) (646) 64,525

Total (22,575) (2,769) (66,783) (92,127) 415,042

As at 31 January 2021

Not credit impaired

Credit

impaired

Stage 1:

Subject to 12

months ECL

£’000

Stage 2:

Subject to

lifetime ECL

£’000

Stage 3:

Subject to

lifetime ECL

£’000

Total

Provision

£’000

Amounts

Receivable

£’000

Motor finance (14,367) (12,759) (65,457) (92,583) 339,349

Property bridging finance (313) – (18) (331) 34,475

Total (14,680) (12,759) (65,475) (92,914) 373,824

Loan loss provisions

Stage 1:

Subject to 12

months ECL

£’000

Stage 2:

Subject to

lifetime ECL

£’000

Stage 3:

Subject to

lifetime ECL

£’000

Total

Provision

£’000

At 1 February 2020 13,603 51 50,676 64,330

Net transfers and changes in credit risk restated (5,051) 11,502 17,014 23,465

New loans originated 6,302 1,219 5,719 13,240

Total impairment charge to income statement 1,251 12,721 22,733 36,705

Amounts netted off revenue for stage 3 assets – – 8,891 8,891

Utilised provision on write-offs (174) (13) (16,825) (17,012)

At 31 January 2021 14,680 12,759 65,475 92,914

Net transfers and changes in credit risk (3,144) (7,462) (2,775) (13,381)

New loans originated 11,212 112 6,177 17,501

Total impairment charge to income statement 8,068 (7,350) 3,402 4,120

Amounts netted off revenue for stage 3 assets – – 10,197 10,197

Utilised provision on write-offs (173) (2,640) (12,291) (15,104)

At 31 January 2022 22,575 2,769 66,783 92,127

www.suplc.co.uk Stock Code: SUS

THE ACCOUNTS

D2 Notes to the Accounts CONTINUED

Year ended 31 January 2022

15. TRADE AND OTHER RECEIVABLES

Group Company

2022

£000

2021

£000

2022

£000

2021

£000

Amounts owed by subsidiary undertakings – – 185,590 171,025

Other debtors 300 168 11 5

Prepayments and accrued income 1,439 938 100 49

1,739 1,106 185,701 171,079

The amounts owed by subsidiary undertakings in the Company’s balance sheet are stated net of impairment and,

other than £127.0m of intercompany receivables from Advantage Finance Limited (2021: £130.0m) and £25.0m

of intercompany receivables from Aspen Bridging Limited (2021: £nil), which are due after more than one year,

the amounts owed by subsidiary undertakings have no fixed maturity date. Under IFRS7 there are no amounts

included in trade and other receivables which are past due but not impaired. The carrying value of trade and

other receivables is not materially different to their fair value.

16. BORROWINGS INCLUDING BANK OVERDRAFTS AND LOANS

Group Company

2022

£000

2021

£000

2022

£000

2021

£000

Bank overdrafts and loans – due within one year 2,568 1,295 3,147 783

Bank and other loans – due in more than one year 111,000 97,500 111,000 97,500

113,568 98,795 114,147 98,283

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 2022:

– a facility for £5 million (2021: £5m) which is subject to annual review in June 2022.

– a facility for £2 million (2021: £2m) which is subject to annual review in March 2022.

Total drawdowns of these overdraft facilities at 31 January 2021 were £998,921 (2021: £1,294,713).

S&U plc had the following revolving credit facilities available at 31 January 2022:

– a facility for £60 million (2021: 60m) which is due for repayment in March 2024.

– a facility for £20 million (2021: £25m) which is due for repayment in March 2025.

– a facility for £50 million (2021: £25m) - £25m of which is due for repayment in March 2024 and £25m of which

is due for repayment in April 2026.

S&U plc had the following term loan facilities available at 31 January 2022:

– a facility for £50 million (2021: £25m) - £25m of which is due for repayment in March 2028 and £25m is due for

repayment in March 2029.

The bank overdraft and loans are secured under a multilateral guarantee provided by S&U plc and its operating

subsidiaries Advantage Finance Ltd and Aspen Bridging Ltd.

The Company is part of the Group overdraft facility and at 31 January 2022 was £3,147,713 overdrawn

(2021: £783,244). A maturity analysis of the above borrowings is given in note 21.

S&U Plc Annual Report and Accounts 2022

17. TRADE AND OTHER PAYABLES

Group Company

2022

£000

2021

£000

2022

£000

2021

£000

Trade creditors 641 397 151 139

Other creditors 3,706 2,366 503 66

4,347 2,763 654 205

The carrying value of trade and other payables is not materially different to the fair value.

18. DEFERRED TAX

Group

Accelerated

tax

depreciation

£000

Share based

payments

£000

Shadow

Options

£000

Total

£000

At 1 February 2020 (89) 102 81 94

Credit/(debit) to income 3 17 56 76

Credit to equity – (61) – (61)

At 31 January 2021 (86) 58 137 109

Credit/(debit) to income (47) 4 89 46

Charge to equity – (35) – (35)

At 31 January 2022 (133) 27 226 120

Company

Accelerated

tax

depreciation

£000

Share based

payments

£000

Shadow

Options

£000

Total

£000

At 1 February 2020 (13) 47 – 34

Credit to income 4 17 – 21

Charge to equity – (6) – (6)

At 31 January 2021 (9) 58 – 49

Credit to income 11 4 6 21

Charge to equity – (35) – (35)

At 31 January 2022 2 27 6 35

Shadow share options are long term share based incentive instruments which will be settled in cash when

exercised based on future share price and require achieving certain performance targets and are subject to

continued employment conditions.

The Finance Act 2016 included legislation to reduce the main rate of UK corporation tax from 20% to 19% from

1 April 2017 and to 17% from 1 April 2020. The rate reduction to 17% was subsequently reversed by the Finance

Act 2020, such that the main rate of UK corporation tax remains at 19%. The Finance Act 2021 confirms an

increase of UK corporation tax rate from 19% to 25% with effect from 1 April 2023 and this was substantively

enacted by the statement of financial position date and therefore included in these financial statements.

www.suplc.co.uk Stock Code: SUS

THE ACCOUNTS

D2 Notes to the Accounts CONTINUED

Year ended 31 January 2022

19. CALLED UP SHARE CAPITAL AND PREFERENCE SHARES

2022

£000

2021

£000

Called up, allotted and fully paid

12,145,260 Ordinary shares of 12.5p each (2021: 12,133,760) 1,518 1,517

200,000 6.0% Cumulative preference shares of £1 each 200 200

Called up share capital 1,718 1,717

The 6.0% cumulative preference shares enable the holder to receive a cumulative preferential dividend at the

rate of 6.0% on paid up capital and the right to a return of capital plus a premium of 10p per share at either a

winding up or a repayment of capital. The 6.0% cumulative preference shares do not carry voting rights so long

as the dividends are not in arrears.

The 11,500 shares issued during the year relate to issues under the Company’s historic LTIP 2010 scheme – see

also note 25.

20. FINANCIAL LIABILITIES

Preference Share Capital

2022

£000

2021

£000

Called up, allotted and fully paid

3,598,506 31.5% Cumulative preference shares of 12.5p each (2021: 3,598,506) 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 twice the capital (2 lots of 12.5p) plus a premium

of 22.5p per share on either a winding up or a repayment of capital. The rights of the holders of these shares

to dividends and returns of capital are subordinated to those of the holders of the 6.0% cumulative preference

shares. The 31.5% cumulative preference shares do not carry voting rights so long as the dividends are not

in arrears.

21. FINANCIAL INSTRUMENTS

The Group and the Company’s principal financial instruments are amounts receivable from customers, cash,

preference share capital, bank overdrafts and bank loans.

The Group and the Company’s business objectives rely on maintaining a well spread customer base of carefully

controlled quality by applying strong emphasis on good credit management, both through strict lending criteria

at the time of underwriting a new credit facility and continuous monitoring of the collection process. The motor

finance hire purchase debts are secured by the financed vehicle. All financial assets are held at amortised cost.

As at 31 January 2022 the Group’s indebtedness amounted to £113,568,000 (2021: £98,795,000) and the

Company’s indebtedness amounted to £114,147,000 (2021: £98,283,000). The Group gearing was 54.9%

(2021: 54.6%), being calculated as borrowings net of cash as a percentage of total equity. The Board is of the

view that the gearing level remains conservative, especially for a lending organisation. The table below analyses

the Group and Company assets and liabilities into relevant maturity groupings based on the remaining period at

the balance sheet date (to contractual maturity).

S&U plc has unused committed borrowing facilities at 31 January 2022 of £69.0m (2021: £32.5m). The

preference share capital financial liability of £450,000 has no maturity date and is classified as more than

five years.

The average effective interest rate on financial assets of the Group at 31 January 2022 was estimated to be

25% (2021: 27%). The average effective interest rate of financial liabilities of the Group at 31 January 2022 was

estimated to be 4% (2021: 4%). The average effective interest rate on financial liabilities of the Company at

31 January 2022 was estimated to be 4% (2021: 4%).

S&U Plc Annual Report and Accounts 2022

21. FINANCIAL INSTRUMENTS (CONTINUED)

Currency and credit risk

The Group has no material exposure to foreign currency risk. The credit risk inherent in amounts receivable

from customers is reviewed under impairment as per note 1.4. It should be noted that the credit risk at the

individual customer level is limited by strict adherence to credit control rules which are regularly reviewed. The

credit risk is also mitigated in the motor finance segment of our business by ensuring that the valuation of the

security at origination of the loan is within glasses guide and cap limits. The credit risk is also mitigated in the

bridging property finance segment of our business by ensuring that the valuation of the security at origination

of the loan is rigorously assessed and is within loan to value limits. As confirmation required under IFRS 8, no

individual customer contributes more than 10% of the revenue for the Group. Group trade and other receivables

and cash are considered to have no material credit risk as all material balances are due from highly rated banking

counterparties.

Interest rate risk

The Group’s activities expose it to the financial risks of changes in interest rates and the Group uses interest rate

derivative contracts where appropriate to hedge these exposures in bank borrowings. There are no interest rate

derivative contracts held at 31 January 2022 (2021: none held). There is considered to be no material interest

rate risk in cash, trade and other receivables, preference shares and trade and other payables.

The sensitivity analyses below have been determined based on the exposure to interest rates at the balance

sheet date. The Group has low gearing for its sector and the directors consider a 0.5% and a 1% movement

in interest rates to reflect the UK interest rate environment and to be appropriate for sensitivity analyses. For

floating rate liabilities, the analysis is prepared assuming the liability outstanding at the balance sheet date was

outstanding for the whole year.

If interest rates had been 0.5% higher/lower and all other variables were held constant, the Group’s:

• profit for the year ended 31 January 2022 would decrease/increase by £0.4million (2021: decrease/increase by

£0.4million). This is mainly attributable to the Group’s exposure on its variable rate borrowings.

• total equity would decrease/increase by £0.4million (2021: decrease/increase by £0.4million). 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 2022 would decrease/increase by £0.9million (2021: decrease/increase by

£0.8million). This is mainly attributable to the Group’s exposure on its variable rate borrowings.

• total equity would decrease/increase by £0.9million (2021: decrease/increase by £0.8million). This is mainly

attributable to the Group’s exposure on its variable rate borrowings.

Capital risk management

The Board of Directors assess the capital needs of the Group on an ongoing basis and approve all material

capital transactions. The Group’s objective in respect of capital risk management is to maintain a conservative

“Group Gearing” level with respect to market conditions, whilst taking account of business growth opportunities

in a capital efficient manner. “Group Gearing” is calculated as the sum of Bank Overdrafts plus Bank Loans

less Cash and Cash Equivalents divided by Total Equity. At 31 January 2022 the Group gearing level was 54.9%

(2021: 54.6%) which the directors consider to have met their objective.

Although Advantage have not sold insurance products in recent years, they are required to hold a regulatory

minimum capital figure of £5000 in this regard. Throughout the year this Company has maintained a capital base

greater than this requirement.

www.suplc.co.uk Stock Code: SUS

THE ACCOUNTS

D2 Notes to the Accounts CONTINUED

Year ended 31 January 2022

21. FINANCIAL INSTRUMENTS (CONTINUED)

Fair values of nancial assets and liabilies

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 (2021: £1.9m) but is considered more appropriate under IFRS to be included in the balance sheet

at amortised cost. Fair values which are recognised or disclosed in these financial statements are determined

in whole or in part using a valuation technique based on assumptions that are supported by prices from

observable current market transactions in the same instrument (i.e. without modification or repackaging) and

based on available observable market data. The fair value hierarchy is derived from Level 2 inputs in accordance

with IFRS13.

Liquidity risk

The Group’s liquidity risk is shown in the following tables which measure the cumulative liquidity gap.

Management review and manage the maturity of borrowing facilities appropriately. Most of the Group’s financial

assets are repayable anyway within two years which together with net gearing of just under 55% results in a

positive liquidity position.

Group

At 31 January 2022

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

than 5 years

£’000

No fixed

maturity

date

£’000

Total

£’000

Financial assets 141,301 57,566 124,048 – – 322,915

Other assets – – – – 4,314 4,314

Cash at bank and in hand – – – – – –

Total assets 141,301 57,566 124,048 – 4,314 327,229

Shareholders’ funds – – – – (206,747) (206,747)

Bank overdrafts and loans (2,568) – (61,000) (50,000) – (113,568)

Lease liabilities (174) (128) (115) - - (417)

Financial liabilities – – – (450) – (450)

Other liabilities – – – – (6,047) (6,047)

Total liabilities and

shareholders’ funds (2,742) (128) (61,115) (50,450) (212,794) (327,229)

Cumulative gap 138,559 195,997 258,930 208,480 – –

Group

At 31 January 2021

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

than 5 years

£’000

No fixed

maturity

date

£’000

Total

£’000

Financial assets 110,319 52,879 117,712 – – 280,910

Other assets – – – – 3,928 3,928

Cash at bank and in hand 1 – – – – 1

Total assets 110,320 52,879 117,712 – 3,928 284,839

Shareholders’ funds – – – – (181,029) (181,029)

Bank overdrafts and loans (1,295) (25,000) (72,500) – – (98,795)

Lease liabilities (169) (161) (221) – – (551)

Financial liabilities – – – (450) – (450)

Other liabilities – – – – (4,014) (4,014)

Total liabilities and

shareholders’ funds (1,464) (25,161) (72,721) (450) (185,043) (284,839)

Cumulative gap 108,856 136,574 181,565 181,115 – –

S&U Plc Annual Report and Accounts 2022

21. FINANCIAL INSTRUMENTS (CONTINUED)

Company

At 31 January 2022

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

than 5 years

£’000

No fixed

maturity

date

£’000

Total

£’000

Other assets – – 102,000 50,000 33,936 185,936

Cash at bank and in hand – – – – – –

Total assets – – 102,000 50,000 33,936 185,936

Shareholders’ funds – – – – (70,265) (70,265)

Bank overdrafts and loans (3,147) – (61,000) (50,000) – (114,147)

Financial liabilities – – – (450) – (450)

Lease liabilities (66) (17) – – – (83)

Other liabilities – – – – (991) (991)

Contingent liabilities – – – – – –

Total liabilities and

shareholders’ funds (3,213) (17) (61,000) (50,450) (71,256) (185,936)

Cumulative gap (3,213) (3,230) 37,770 37,320 – –

Company

At 31 January 2021

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

than 5 years

£’000

No fixed

maturity

date

£’000

Total

£’000

Other assets – 25,000 105,000 – 41,917 171,917

Cash at bank and in hand 1 – – – – 1

Total assets 1 25,000 105,000 – 41,917 171,918

Shareholders’ funds – – – – (72,416) (72,416)

Bank overdrafts and loans (783) (25,000) (72,500) – – (98,283)

Financial liabilities – – – (450) – (450)

Lease liabilities (63) (66) (17) – – (146)

Other liabilities – – – – (623) (623)

Contingent liabilities (511) – – – – (511)

Total liabilities and

shareholders’ funds (1,357) (25,066) (72,517) (450) (73,039) (172,429)

Cumulative gap (1,356) (1,422) 31,061 30,611 (511) (511)

The cash flows payable under financial liabilities are analysed as follows:

Group

At 31 January 2022

Repayable

on Demand

£’000

Less

than 1 year

£’000

More than

1 year but

not more

than 2 years

£’000

More than

2 years but

not more

than 5 years

£’000

than 5 years

£’000

Total

£’000

Bank overdrafts and loans 2,568 – – – – 2,568

Trade and other payables – 4,347 – – – 4,347

Tax liabilities – 926 – – – 926

Accruals and deferred income – 774 – – – 774

Borrowings – – – 61,000 50,000 111,000

Lease liabilities – 174 128 115 – 417

Financial liabilities – – – – 450 450

At 31 January 2022 2,568 6,221 128 61,115 50,450 120,482

www.suplc.co.uk Stock Code: SUS

THE ACCOUNTS

D2 Notes to the Accounts CONTINUED

Year ended 31 January 2022

21. FINANCIAL INSTRUMENTS (CONTINUED)

Group

At 31 January 2021

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

than 5 years

£’000

Total

£’000

Bank overdrafts and loans 1,295 – – – – 1,295

Trade and other payables – 2,763 – – – 2,763

Tax liabilities – 593 – – – 593

Accruals and deferred income – 658 – – – 658

Borrowings – – 25,000 72,500 – 97,500

Lease liabilities – 169 161 221 – 551

Financial liabilities – – – – 450 450

At 31 January 2021 1,295 4,183 25,161 72,721 450 103,810

Company

At 31 January 2022

Repayable

on Demand

£’000

Less

than 1 year

£’000

More than

1 year but

not more

than 2 years

£’000

More than

2 years but

not more

than 5 years

£’000

than 5 years

£’000

Total

£’000

Bank overdrafts and loans 3,147 – – – – 3,147

Trade and other payables – 654 – – – 654

Tax liabilities – 116 – – – 116

Accruals and deferred income – 221 – – – 221

Borrowings – – – 61,000 50,000 111,000

Lease liabilities – 66 17 – – 83

Financial liabilities – – – – 450 450

At 31 January 2022 3,147 1,057 17 61,000 50,450 115,671

Company

At 31 January 2021

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

than 5 years

£’000

Total

£’000

Bank overdrafts and loans 783 – – – – 783

Trade and other payables – 205 – – – 205

Tax liabilities – 212 – – – 212

Accruals and deferred income – 206 – – – 206

Borrowings – – 25,000 72,500 – 97,500

Lease liabilities – 63 66 17 – 146

Financial liabilities – – – – 450 450

At 31 January 2021 783 686 25,066 72,517 450 99,502

S&U Plc Annual Report and Accounts 2022

22. RECONCILIATION OF OPERATING PROFIT TO NET CASH FROM OPERATING ACTIVITIES

Group

2022

£000

Group

2021

£000

Company

2022

£000

Company

2021

£000

Operating Profit 50,790 21,696 7,584 10,190

Finance costs paid (3,772) (3,610) (146) (147)

Finance income received – 42 2,652 2,724

Tax paid (8,749) (6,662) (93) (14)

Depreciation on plant, property and equipment 529 520 81 86

Loss/(profit) on disposal of plant, property and equipment 13 (13) – (4)

(Increase)/decrease in amounts receivable from customers (42,005) 20,840 – –

(Increase)/decrease in trade and other receivables (633) 367 (14,622) 19,583

Increase/(decrease) in trade and other payables 1,584 (363) 449 32

Increase in accruals 116 57 15 48

Increase in cost of future share based payments 39 75 39 72

Movement in retirement benefit asset/obligations (6) (9) (6) (9)

Net cash used from operating activities (2,094) 32,940 (4,047) 32,561

23. FINANCIAL COMMITMENTS

Capital commitments

At 31 January 2022 the Group had £122,707 capital commitments contracted but not provided for (2021: £nil).

At 31 January 2022, the Company had no capital commitments contracted but not provided for (2021: £nil).

24. 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 2022 was £nil (2021: £511,469).

www.suplc.co.uk Stock Code: SUS

THE ACCOUNTS

D2 Notes to the Accounts CONTINUED

Year ended 31 January 2022

25. SHARE BASED PAYMENTS

The Company operates a Long Term Incentive Plan (LTIP 2010) and full details of the share options outstanding

during the year are shown below:

Number

Of Share

Options

2022

Number

Of Share

Options

2021

LTIP 2010

Outstanding at beginning of year 17,000 30,667

Granted during the year – 4,000

Lapsed during the year – (4,000)

Exercised during the year (11,500) (13,667)

Expired during the year – –

Outstanding at end of year 5,500 17,000

Exercisable at end of year – 5,000

All share options issued under the LTIP are exercisable at the ordinary share nominal value 12.5p.

The weighted average share price for share options exercised during the year was £23.56 (2021: £16.39).

The weighted average remaining contractual life of the outstanding share options is 2 months (2021: 5 months).

The Group recognised total share-based payment expenses for LTIP of £39,000 in the year to 31 January 2021

(2021: £75,000).

LTIP 2010 is now over 10 years old and no further grants can be made under that LTIP. Further to a review by

the Remuneration Committee a new LTIP allowing shadow share options, which can only be cash settled and

therefore do not dilute current shareholders, was approved by the AGM in May 2021(LTIP 2021).

S&U Plc Annual Report and Accounts 2022

26. RETIREMENT BENEFIT OBLIGATIONS

The Company operates a defined benefit scheme in the UK. The plan is funded by payment of contributions to

a separate trustee administered fund. The pension cost relating to the scheme is assessed in accordance with

the advice of a qualified independent actuary using the attained age method. The last formal valuation was at

31 March 2019. At that valuation it was assumed that the appropriate post retirement discount rate was 1.36%

and pension increases would be 3.6% per annum. The valuation results have been updated on the advice of a

qualified actuary to take account of the requirements of IAS19 in order to assess the liabilities of the scheme as

at 31 January 2022. 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 2023 is £nil.

The scheme is run by Trustees who are responsible for the affairs of the scheme. Trustees during the year were

Mr GDC Coombs and Mr CH Redford who are also directors of S&U plc. The scheme is closed to new members.

The Trustees discuss the affairs of the scheme and deal with discretionary matters regarding benefits. The

trustees have employed Barclays Wealth as investment managers. S&U plc has power, under the Trust Deed

and Rules which govern the operation of the Fund, to remove Trustees from office, to accept their resignations,

and to appoint new or additional Trustees. The directors of S&U plc consider all these arrangements to be

appropriate, having noted that the scheme has been closed to new members for over 40 years, the scheme

continues to have a significant surplus and the scheme’s defined benefit obligations are not material in the

context of the group.

Disclosures made in accordance with IAS 19

A full actuarial valuation was carried out at 31 March 2019 and updated to 31 January 2022 by a qualified

independent actuary. The valuation method used was the projected unit method. The major assumptions used

by the actuary were (in nominal terms):

At year end

31 January

2022

At year end

31 January

2021

Rate of increase in salaries Na Na

Pension increases:

Pre-97 Pension

Post 97 Pension

0.0%

4.0%

0.0%

3.2%

Discount rate 2.1% 1.1%

Mortality assumption for 31 January 2022 comes from the S3PA tables with CMI-2020 1.25% long term trend and

for 31 January 2021 mortality assumption was from the S2PA tables with CMI-2019 1.25% long term trend.

The analysis of the scheme assets and the expected rate of return at the balance sheet date were as follows:

Proportion

held at

31 January

2022

Proportion

held at

31 January

2021

Equities 62% 45%

Bonds 22% 27%

Cash/Other 16% 28%

Total market value of assets 100% 100%

www.suplc.co.uk Stock Code: SUS

THE ACCOUNTS

D2 Notes to the Accounts CONTINUED

Year ended 31 January 2022

26. RETIREMENT BENEFIT OBLIGATIONS (CONTINUED)

The amount included in the balance sheet arising from the Group’s obligations in respect of its defined benefit

schemes is as follows:

Jan 22

£000

Jan 21

£000

Fair value of plan assets 1,141 1,100

Present value of defined benefit obligations (483) (536)

Surplus before restriction 658 564

Restriction on Surplus (658) (564)

Pension asset 0 0

The amount recognised in the income statements during the year

Jan 22

£000

Jan 21

£000

Current service cost – –

Interest on obligation 6 7

Expected return on plan assets (12) (16)

Expense recognised in the income statement (6) (9)

Opening net (asset) – –

Expense (6) (9)

Contributions paid – –

Actuarial loss 6 9

Closing net (asset) 0 0

The expense credit in both years is shown within administrative expenses.

Movement in present value of obligation

Jan 22

£000

Jan 21

£000

Present value of obligation at 1 February 536 538

Interest cost 6 7

Current service cost – –

Benefits paid (41) (41)

Actuarial (gain)/loss on obligation – assumptions (28) 21

Actuarial loss on obligation – experience 10 11

Present value of obligation at 31 January 483 536

Experience adjustment on scheme liabilities

Actuarial (gain)/loss as percentage of scheme liabilities 2% 2%

Movement in fair value of plan assets

Fair value of plan assets at 1 February 1,100 1,123

Expected return on plan assets 12 16

Contributions – –

Benefits paid (41) (41)

Actuarial gain on plan assets 70 2

Fair value of plan assets at 31 January 1,141 1,100

Experience adjustment on assets

Actuarial (gain)/loss as percentage of scheme assets 6% 0%

S&U Plc Annual Report and Accounts 2022

Five Year Record (Unaudited)

2018

IAS39

£000

2019

IFRS9

£000

2020

IFRS9

£000

2021

IFRS9

£000

2022

IFRS9

£000

Continuing Operations Only

Revenue 79,781 82,970 89,939 83,761 87,889

Cost of Sales (17,284) (15,751) (19,872) (14,264) (18,771)

Impairment (19,596) (16,941) (17,220) (36,705) (4,120)

Administrative Expenses (9,923) (11,177) (12,863) (11,096) (14,208)

Operating profit 32,978 39,101 39,984 21,696 50,790

Finance Costs (net) (2,818) (4,541) (4,850) (3,568) (3,772)

Profit before taxation 30,160 34,560 35,134 18,128 47,018

Taxation (5,746) (6,571) (6,252) (3,482) (9,036)

Profit for the year 24,414 27,989 28,882 14,646 37,982

Assets employed in all operations

Fixed assets 1,931 2,062 2,108 2,713 2,455

Amounts receivable and other assets 263,262 278,751 303,973 282,126 324,774

265,193 280,813 306,081 284,839 327,229

Liabilities (112,377) (115,446) (126,607) (103,810) (120,482)

Total equity 152,816 165,367 179,474 181,029 206,747

Earnings per Ordinary share 203.8p 233.2p 239.6p 120.7p 312.8p

Dividends declared per Ordinary share 105.0p 118.0p 120.0p 90.0p 126.0p

Group gearing 68.7% 65.3% 65.7% 54.6% 54.9%

“Group Gearing” is calculated as the sum of Bank Overdrafts plus Borrowings less Cash and Cash Equivalents divided

by Total Equity.

www.suplc.co.uk Stock Code: SUS

THE ACCOUNTS

Financial Calendar

ANNUAL GENERAL

MEETING

26 May 2022

ANNOUNCEMENT OF

RESULTS

Half year ending 31 July 2022

Year ending 31 January 2023

27 September 2022

March 2023

PAYMENT OF DIVIDENDS

6% Cumulative Preference Shares 30 September 2022 &

31 March 2023

31.5% Cumulative Preference Shares 31 July 2022 & 31 January 2023

Ordinary Shares – 2021/22 final 8 July 2022

– Ex dividend date 16 June 2022

– Record date 17 June 2022

– 2022/23 first interim November 2022

– 2022/23 second interim March 2023

ANNUAL GENERAL MEETING ARRANGEMENTS

The Annual General Meeting will take place on 26 May 2022 – further details of arrangements are contained in the

Notice of Annual General Meeting sent to shareholders and on the company website at www.suplc.co.uk

S&U Plc Annual Report and Accounts 2022

Officers and Professional Advisors

DIRECTORS

A M V Coombs MA (Oxon) (Chairman)

G D C Coombs MA (Oxon) MSc (Lon) (Deputy Chairman)

C H Redford ACA (Group Finance Director)

T G Wheeler (CEO Advantage Finance)

J E C Coombs MA (Oxon) ACA (Director)

D Markou MBE FCA (Non-executive)

G Pedersen (Non-executive)

T Khlat (Non-executive)

J P Maxwell (Non-executive)

SECRETARY

C H Redford ACA

REGISTERED OFFICE

2 Stratford Court

Cranmore Boulevard

Solihull

West Midlands

B90 4QT

Tel: 0121 705 7777

REGISTRARS

Link Group

10th Floor

Central Square

29 Wellington Street

Leeds

LS1 4DL

Shareholders can contact Link Group on:

0871 664 0300 (calls cost 10p per minute plus network costs).

BANKERS

HSBC Bank plc

130 New Street

Birmingham

B2 4JU

Natwest Bank

250 Bishopsgate

London

EC2M 4AA

FINANCIAL PUBLIC RELATIONS

Newgate Communications

14 Greville Street

London

EC1N 8SB

SOLICITORS

DLA

Victoria Square

Birmingham

B2 4DL

STOCKBROKERS

Peel Hunt LLP

100 Liverpool Street

London

EC2M 2AT

AUDITOR

Mazars LLP

Statutory Auditor

Tower Bridge House

St Katherine’s Way

London E1W 1DD

INTERNAL AUDITOR

RSM Risk Assurance Services LLP

6th Floor 25 Farringdon Street

London

EC4A 4AB

www.suplc.co.uk Stock Code: SUS

OTHER INFORMATION

S&U Plc Annual Report and Accounts 2022

2 Straord Court

Cranmore Boulevard

Shirley

Solihull

West Midlands

B90 4QT

T: 0121 705 7777

Registered in England No. 342025