Untitled

Measured

Momentum

Annual Report and Accounts

for the Year ended 31 January 2023

S&U Plc Annual Report and Accounts 2023

Welcome Our values

Our businesses

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 250,000 customers.

In just six years, Aspen our new

property bridging business has

transacted over £350m in

secured loans.

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:

EAMWORKT

In any business the guardians of integrity are its

people, and their common pursuit of the highest

standards.

ESPECTR

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.

NDERSTANDINGU

Valuing every customer must be grounded in a

clear understanding of their needs, wishes and

circumstances; this guides the service we offer

them.

ERVICES

This is both the product and the proof of our

understanding and respect for our customers, each

other and our neighbours.

RUTHT

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.

Respect for every

customer and always

treating customers fairly.

Making the customer

the heart of our business.

Conservative approach to

underwriting and collections

to enable sustainable growth.

Motor Finance

Hire purchase motor

finance for over 250,000

customers since 1999.

Property Bridging

Finance

Launched in early 2017

and growing steadily after

successful pilot phase.

S&U Plc Annual Report and Accounts 2023

Find us online at

www.suplc.co.uk

Strategic Report

Corporate Governance

The Accounts

Other Information

Contents

Financial highlights

Revenue (£m)

019

79.8

020

83.0

021

89.9

022

87.9

023 102.7

88.9

Average for 2 pandemic years

Basic EPS (p)

019

233.2

020

239.6

021

120.7

022

312.8

023 277.5

216.8

Average for 2 pandemic years

Profit before tax (£m)

019

34.6

020

35.1

021

18.1

022

47.0

023 41.4

32.6

Average for 2 pandemic years

Dividend Declared (p)

019

118.0

020

120.0

021

90.0

022

126.0

023 133.0

108.0

Average for 2 pandemic years

Group at a Glance 04

A1 Chairman’s Statement 05

A2 Strategic Report and Section 172

Statement 10

A2.1 Strategic Review 10

A2.2 Business Review 11

A2.3 Funding Review 12

A2.4 Principal Risks and Uncertainties 12

A3 Statements of Viability and

Going Concern 15

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

B1 Board of Directors 28

B2 Directors’ Remuneration 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’ Responsibilities Statement 51

C Independent Auditor’s Report to the

Members of S&U plc 52

D1 The Accounts

D1.1 Group Income Statement

and Statement of

Comprehensive Income 60

D1.2 Balance Sheet 61

D1.3 Statement of Changes

in Equity 62

D1.4 Cash Flow Statement 63

D2 Notes to the Accounts 64

Five Year Financial Record 89

Financial Calendar 90

Officers and Professional Advisers 91

www.suplc.co.uk ― Stock Code: SUS

Strategic Report

In this section

Group at a Glance

A1 Chairman’s Statement 05

A2 Strategic Report and Section

172 Statement 10

A2.1 Strategic Review 10

A2.2 Business Review 11

A2.3 Funding Review 12

A2.4 Principal Risks and

Uncertainties 12

A3 Statements of Viability and

Going Concern 15

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 202302

Strategic Report

www.suplc.co.uk ― Stock Code: SUS

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

motor, property bridging and specialist finance service. We

now have over 65,000 customers and over 200 loyal and

valued staff and plans for continued sustainable growth.

Group at a glance

Motor Finance Property Bridging Finance

Advantage Finance has grown into one of the most

progressive and innovative motor finance companies

in the country. As active members of the Finance and

Leasing Association (FLA), and with representation on the

FLA Board, deputy chair of the Motor Finance Division,

and chair of the Credit Risk Committee, we punch above

our weight in terms of shaping our industry.

Based in Grimsby, Advantage employs over 200 people,

and working closely with most of the UK’s motor finance

Brokers, we have provided hire purchase finance for

over 250,000 customers across our great country. We

operate within the non-prime sector and have built an

outstanding reputation and track record in terms of

service to our business partners and customers alike.

Funding is invested wisely through a hugely experienced

and skilled management team, the majority of whom

have been with the company since its inception

23 years ago.

The response to firstly the Covid-19 pandemic and

subsequently the Cost of Living crisis by Advantage

has been remarkable. Advantage has thrived as

we have focussed on modernising our business,

mitigating our market risk, and developing our

systems, processes and market appeal. We firmly

believe that despite the enormous successes of

Advantage’s past, that the true success story for

Advantage is in its future. We are stronger now than

we have ever been, and are well placed to seize

opportunities to continue the success story of our

business.”

Graham Wheeler

Chief Executive

Aspen Bridging is now entering its 7th 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 loan products that has a good reach

across the market for 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 £900,000. Aspen has

continued 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 to turn

to in the bridging market. As members of the ASTL and

FIBA along with promoting our lending propositions at key

industry events, Aspen has won its third industry award

at the Bridging and Commercial awards with a product of

the year. Aspen has continued to develop the team of 23

with highly skilled and experienced staff. During the year,

Aspen has successfully expanded the customer acquisition

channels via new broker networks, added to the dedicated

broker development team and returned, post the pandemic,

to the key industry forums and financial showcasing

events supporting continued expansion of the business.

Aspen continues on its journey towards being a significant

contributor to the future of the Group.

2022 has seen Aspen go from strength to strength with

our customer and broker relationships. In evolving

and testing new niche products we are reaching a

wider borrower audience and strengthening our

customer and broker relationships. We continue to

focus on delivering a fast, consistent and reliable

service for both new and returning customers which

is a great testament to the team. We will remain

vigilant as always, tuned in to where the bridging

and wider market is in 2023 but take quality lending

opportunities when they are there. With the talent

that we have in the Aspen team, the right product

appeal in the market and a focused determination to

succeed we believe that Aspen will continue to build a

successful bridging lending business.’’

Ed Ahrens

Managing Director

S&U Plc Annual Report and Accounts 202304

I am confident that our focus, our expertise and our

experienced team will enable us to take advantage of

the emerging opportunities that this year will bring.”

Anthony Coombs

Chairman

A1 Chairman’s Statement

I am very pleased to report that my

optimism of last year and my then “quiet

but determined confidence” in S&U’s

future has been vindicated by this year’s

excellent results. Despite the maelstrom

of a European war, political upheaval in

Britain and rising inflation, taxation and

interest rates, S&U has produced profit

before tax of £41.4m, fully 27% up on the

average of the last two pandemic years,

and the highest ‘normalised’ profit in its

over eighty-year history.

Revenue for the year was £102.7m

(2022: £87.9m) and group equity has

grown by 9% to a record £224.9m. At

31 January 2023, group total assets

reached £428m for the first time, up

by just over £100m in the year and by

nearly 40% on pre-pandemic levels. As

I predicted a year ago, S&U is indeed

“primed for a new era of profitable

growth”.

Although conscious of its wider societal

obligations, S&U’s primary obligations

are to our shareholders, our staff and

our customers. For shareholders, this

is reflected this year in basic earnings

per share this year of 277.5p, which is

22% up on the average of the past four

years. Staff numbers continue to grow;

we are proud to have Gold Investor in

People status at Advantage Finance, have

become a Real Living Wage employer and

have taken steps to ameliorate current

cost of living pressures on our staff.

Service to our customers is reflected

both in their number – a record 65,200 -

and in the longstanding relationships we

enjoy with them.

Financial Highlights**

Profit before tax (“PBT”): £41.4m (2022: £47.0m*)

Revenue: £102.7m (2022: £87.9m)

Earnings per share (“EPS”) 277.5p (2022: 312.8p*)

Group net assets: £224.9m (2022: £206.7m)

Group gearing: 85.5% (2022: 54.9%)

Group total collections: £311.9m (2022: £294.3m)

Dividend proposed: 133p per ordinary share (2022: 126p)

* The profit for 2021/2022 was enhanced by a lower than normal loan loss provision charge which reflected

the lower use of impairment provisions made in the previous Covid-affected financial year. The average

annual profit before tax in the two pandemic years to 31 January 2022 was £32.6m and earnings per share

averaged 216.8p.

** key alternative performance measurement definitions are given in note 1.13 below.

The results we are reporting are all the

more creditable given the UK’s current

economic performance and its still

gloomy, although possibly brightening,

economic outlook. UK GDP continues

to teeter on recession. There was no

growth in the fourth quarter of 2022

and, almost uniquely in Europe, the

UK economy is still smaller than it was

before the Covid pandemic. As has

been evident over the past 12 years,

productivity is feeble in the UK and is

unlikely to increase substantially since

the current government lacks a clear

and robust growth strategy. Recent

governments have vacillated between

the fiscal incontinence of last year and

the hair shirt philosophy of the current

administration. None have espoused

the regulatory, public sector and tax

simplification reforms so essential for

rebooting the economy.

Nevertheless, despite all this, S&U has

recently seen very strong demand for

its products particularly at Advantage.

Indeed, UK economic prospects may be

brightening as, although from historically

low levels, consumer confidence is

improving. Some commentators have

reduced their forecast for inflation from

18% in 2022 to just 2.8% by November.

Public finances have recently seen a

£30 billion improvement whilst the

government surplus in January alone

was £5 billion. More pragmatic voices

on the Bank of England monetary policy

committee are arguing that the declining

energy price shock and the lag effects

of recent interest rate rises might mean

current monetary policy could be more

effective in bringing down inflation

than expected.

£41.4m

Profit before tax (“PBT”)

(2022: £47.0m)

£102.7m

Revenue

(2022: £87.9m)

www.suplc.co.uk ― Stock Code: SUS

Strategic Report

The relative buoyancy of the markets

which S&U serves, coupled with

careful, experienced and watchful

underwriting has allowed us to

continue to build our customer base

and receivables books.”

Anthony Coombs

Chairman

This optimism is evident in the sectors

in which S&U operates. Despite low

consumer confidence generally, and

although still constrained by supply, the

used car market remains robust. Whilst

prices rose year on year by 11% to

mid-2022, as supply increased this rise

is now around 3% per annum. Indeed

the average price of a used car has risen

from £9,000 in 2011 to £17,600 in 2022.

Whilst not overstating current consumer

confidence, customers are reacting to

cost of living pressures pragmatically and

in ways which favour the products

S&U offers.

Thus, whilst in 2012 just 23% of used

car sales were on finance, this is now

45% (Autotrader). The number of people

searching for online finance is up 28%

on pre-pandemic levels. Although

transactions in 2022 have not yet

reached pre-Covid levels, the market

remains buoyant. This is most graphically

illustrated at Advantage where loan

applications have reached over 2.5m for

the first time this year.

These trends have enabled Advantage to

attract high-quality customers and larger

average loan sizes (£7,800 now against

£6,400 three years ago). Moreover, as

was seen in 2007–2009 in the “Great

Financial Crisis”, near prime customers

are being rationed and restricted

by “mainstream” finance providers,

enabling Advantage to attract them at

sensible rates of return.

The housing market upon which Aspen

depends both for transaction volumes

and loan security, continues to be

stronger than anticipated, despite rising

borrowing costs and the upheaval in the

money markets of last autumn. Whilst

house prices have fallen slightly over

the past six months this appears now to

be stabilising. Indeed ONS statistics for

December show annual price growth still

10% against a peak of 12% earlier in the

year. Even allowing for an average 5%

price deflation predicted for 2023, this

would imply a cumulative increase over

two years of just under 5% which further

underpins Aspen’s conservatively written

collateral. This conservatism gives S&U

the confidence to continue to invest in

Aspen’s new receivables book.

In sum, the relative buoyancy of the

markets which S&U serves, coupled

with careful, experienced and watchful

underwriting has allowed us to continue

to build our customer base and

receivables books. This has been done

in a responsible and sustainable way,

storing up future profits whilst guarding

against any further economic downturn

in an uncertain world.

Advantage Finance

(“Advantage”)

Advantage Finance, our motor finance

business proudly based in Grimsby, has

again produced near record results. Profit

before tax is at £37.2m which is not only

22% above the last two years’ Covid

average, but is the highest ‘normalised’

profit ever. Advantage’s future prospects

are grounded in a record number of new

transactions in the year at just under

24,000; net receivables have therefore

now reached over £300m for the first

time. Advantage now serves a record

65,200 customers.

Prudence and commercial logic both

dictate that Advantage use the very

significant demand for its products

to focus on excellent customers who,

buttressed by careful underwriting, good

payment headroom and responsive

customer relations, will ensure good

repayments even in more uncertain

times. Hence this year, particularly in the

second half, has seen the introduction

of slightly larger, longer term and

competitively priced loans which have

attracted near prime customers new to

Advantage, which we anticipate will have

benefits for Advantage’s already enviable

book quality.

Quality was also boosted by Advantage’s

habitually conservative Credit Committee

and its underwriting. The business has

sensibly adjusted its affordability buffers

throughout the year in line with the

rising cost of living, as well as its interest

margins to account for rising operating

and finance costs.

Nevertheless, attracting good customers

in ever larger numbers is not simply

a matter of price. It also depends on

accurately targeted marketing. Here the

Advantage team has been substantially

strengthened by new advisors, by

in-house recruitment and by a

rebranding project which, directly and

digitally, will improve every aspect of

Advantage’s communication with existing

and new customers.

A1 Chairman’s Statement

CONTINUED

S&U Plc Annual Report and Accounts 202306

IT improvements are reinforcing this.

Voice analytics, specialist vehicle

valuations, a new direct customer

repayment portal, an improved website

and a smoother e-signature onboarding

process, are just some of the initiatives

the ever restless and perfectionist

Advantage teams are working on.

Of course, the ultimate arbiter of well-

designed products and responsible credit

policies is the quality of collections and

customer satisfaction. On these two

metrics Advantage scores very highly. In

collections Advantage had an excellent

year producing live repayments at

a record £161.8m (2022: £152.7m).

Advantage’s collections as a percentage

of due reached 93.6% which beat both

budget and last year.

Moreover, on record net receivables of

nearly £307m, bad debts and voluntary

terminations were actually significantly

under budget.

On customer satisfaction, Advantage’s

ratings on Trust Pilot reached a record

4.7 out of 5.

Both these achievements are testament

to responsible underwriting, and more

particularly to Advantage’s understanding

and fair treatment of its customers and

its embracing of its duty of care to its

customers, well before it is mandated

to do so later this year by the Financial

Conduct Authority.

Whilst enjoying close links with our

Regulators, both directly and through the

Finance and Leasing Association where

Advantage’s CEO, Graham Wheeler,

plays a prominent role, Advantage does

operate in a highly – and increasingly –

regulated industry. The formal Consumer

Duty introduced later this year for all

financial services companies focuses on

actual, rather than anticipated, customer

outcomes, particularly for borrowers in

financial difficulty. Advantage is proud

of its near 25-year history of customer

service and has responded by certifying

a development plan and by embarking

upon a 41 point action list, which will

also be monitored by S&U’s internal

auditors and by its Audit Committee.

Although some may argue that the

new Consumer Duty attempts to lay on

lenders’ responsibilities for future events

inevitably beyond their control, and

which, to an extent, replicates existing

statutory duties of care to customers,

S&U endorses the Duty for ethical and

competitive reasons. Undoubtedly, those

financial firms which best communicate

their methods and products to their

customers will gain their trust, their

loyalty and their commitment – all values

intrinsic to S&U‘s Mission Statement. As I

have consistently pointed out, ultimately

good business is always good business.

As a consequence, Advantage has

always maintained regular and cordial

relations with the FCA. This year this

is particularly focused on making

sure that assessments of both credit

worthiness and affordability are robust

in an inflationary climate. Advantage

anticipated these trends by regular

reviews of its underwriting throughout

the year. Indeed, it is this monitoring

and maintaining of the subtle balance

between prudent underwriting and

competitively pricing products which has

been the bedrock of Advantage’s success

over the past 25 years.

This is also why Advantage sees the

Consumer Duty giving a significant

competitive advantage to businesses

which maintain the very high standards

of which they have been so rightly proud

over the past 25 years.

£102.7m

Group Revenue

(2022: £87.9m)

£224.9m

Group Net Assets

(2022: £206.7)

www.suplc.co.uk ― Stock Code: SUS

Strategic Report

A1 Chairman’s Statement

CONTINUED

In sum, a winning combination of a

healthy market, intelligent underwriting,

efficient processes and empathetic

customer relations have been rewarded

at Advantage by very good financial

results. They are outlined in the business

review within my strategic report below.

Finally, the credit for this outstanding

performance must go to all those who

work so hard and conscientiously at

Advantage. Whilst adapting to hybrid

working, many have inevitably faced

personal and financial challenges and

I pay tribute to them all. Particular

mention must go to a dynamic and

enthusiastic board of directors, brilliantly

led by Graham Wheeler whose talents

are recognised both at Advantage and

throughout the motor finance industry.

It is in the commitment and energy of

them all, that I place my confidence in

Advantage’s exciting and enduring future.

Aspen Bridging

Aspen, our property bridging finance

business based now in expanded

office space in Solihull, has produced

a sparkling set of results. Profit before

tax is up no less than 31% to £4.46m,

a record, and net receivables have

increased by £50m to £113.9m. Whilst

transaction numbers rose by a more

modest 10% this was the result of

a deliberate move towards larger,

higher quality loans with experienced

borrowers. Thus, the average loan size

rose by 11% and average blended yields

were above budget.

The housing market against which

95% of Aspen’s collateral is secured,

is undoubtedly slowing both due to

Base Rate increases from 0.25% to

4% in the year, and also to wider cost

of living pressures. Whilst the recent

Bank of England Mortgage and Lending

Report reveals more households than

ever in Britain having significant equity

in their properties, house prices are

expected to fall an average 5% this

year, whilst transaction numbers may

reduce further. However, Aspen has

repositioned towards higher quality, less

mortgage-dependent borrowers and

towards higher value properties. This is

expected to insulate the business against

wider market fluctuations. Over the past

year Aspen has prudently increased its

interest rates, tightened further already

conservative valuations and reduced

LTVs. In mid-year the average gross LTV

for new business was 74%; it is now 66%.

This conservative approach is

also reflected in Aspen’s loan loss

provisioning charges which increased to

£1.0m this year (2022: £0.3m), although

the business only incurred one actual

loss during the year of £80,000. Each

loan underwritten in Aspen involves

secondary independent assessment and

a rigorous valuation exercise including

a physical inspection of the property by

Aspen staff – something which is rare in

the industry.

A strong loan book also depends upon

providing products which are tailored to

individual customers. Aspen is able to

provide a bespoke service to borrowers

as well as being fleet of foot in the

service it offers. Quarterly reviews of

staff productivity are held and new

products considered. For instance, this

year saw Aspen’s Bridge to Let product

win new product of the year at the

Bridging and Commercial awards. It

went on to comprise £22.8m of Aspen’s

£134m advances this year.

Aspen runs a tight ship but a growing

business requires more and properly

trained staff. Remuneration costs

therefore rose this year by 26%

compared to a 44% rise in revenue.

Staff numbers are now 21 against 18

a year ago. All new staff members are

expected to undertake CPD training and

several have now obtained RICS and

legal qualifications. Fortunately, the local

universities, particularly Aston University,

Birmingham, provide a regular supply of

highly talented and motivated individuals

from a diverse local community.

Aspen’s small team is characterised

by hard work, growing experience and

imagination and these qualities together

with a strong track record provide the

background for S&U’s investment of a

further £50m in the business this year. I

am confident that this will be reflected in

continually improving returns for

the Group.

S&U Plc Annual Report and Accounts 202308

Dividends

Whilst acknowledging our responsibilities

to wider stakeholders, S&U has always

felt a primary responsibility to its

shareholders. We fulfil this by regular

engagement, and by distributing the

rewards of the company success with

them; this implies our normal practice

of a 50% distribution of post-tax profits

in dividends. This year the vacillations of

our government over future corporation

tax rates have clouded these decisions.

Therefore, in the light of an EPS of

277.5p per share the board proposes

to recommend, subject to the approval

of our shareholders at our AGM on the

25 May 2023, a final dividend of 60p

(2022: 57p) per Ordinary Share. This final

dividend will be paid on 7 July 2023 to

shareholders on the register on 16 June

2023. This will mean that total dividends

this year will be 133p per share

(2022: 126p).

Funding and Treasury

A successful and growing business

requires significant investment.

Over the past year excellent lending

opportunities amongst good quality

customers have augmented Advantage’s

and Aspen’s natural growth: S&U has

therefore invested just under £79m in

net borrowings to finance a receivables

book which has grown by £98m. Net

group borrowings therefore now stand

at £192m. Group medium-term facilities

were increased in the autumn from

£180m to £210m and, as previously usual,

more will be arranged as the business

develops. A rapidly increased Bank Rate

has been budgeted for, not only in our

usual budgets but in our longer-term

projections. Current signs hint that such a

view might happily prove conservative.

Nevertheless S&U plans to maintain a

prudent Treasury policy. Gearing still

stands at 86% (2022:55%), well within

covenanted levels. The experience and

expertise of Chris Redford, our Group

Finance Director, and the finance teams

at Advantage and Aspen will ensure that

this remains so.

Governance and Regulation

I will not repeat my concerns of a year

ago on the importance of financial

regulation being proportionate, clear and

not inhibiting a vigorous and competitive

free enterprise system. By harnessing

the basic instincts of communities and

individuals to improve themselves and

their families, it is this free enterprise

system – not one based on state

control and intervention – which has

transformed living standards over the

entire period of S&U’s existence.

But today too often this is taken for

granted. New regulations, Codes of

Practice and “guidance” are never

ceasing. Moreover, the government

spends at least half of the country’s

resources. Taxation is at its highest level

since 1946. Such is the suspicion of the

profit motive that detailed regulation of

every customer transaction is deemed

essential both ab initio and throughout

the customer relationship.

Tragically, the gyrations and misfortunes

of the current government have done

nothing to reverse these trends. There

are three serious consequences. First

it destroys incentives - not just for the

wealthy but for the aspirational and

much maligned middle-class who find

themselves paying higher rates of tax on

the same real income.

Second, regulation can inhibit innovation.

The financial services industry,

Advantage included, needs to be careful

that this year’s mandated focus on the

new Consumer Duty regime does not

lead to postponement of new products

and innovation which would have also

benefited customers.

Third, intervention and regulation

enfeeble the economy and restricts

economic growth. Last year a further

£74bn was “invested” in the ever-

growing public sector where productivity

is both significantly less than in the

private sector, and may even in some

areas be negative. Public sector output is

still 7.4% below pre-pandemic levels. This

is a significant cause of Britain’s decades-

long decline in productivity.

On a day to day level however, S&U

and Advantage in particular continue

to enjoy positive relations with their

regulators. Advantage’s preparations for

the Consumer Duty are well advanced,

as is its Development Plan. Meanwhile,

Advantage’s industry body, the Finance

and Leasing Association upon which two

of our executives sit, continues to lobby

for a more consistent and coordinated

legislative and regulatory regime.

More broadly, S&U continues to engage

closely with the Environmental, Social

and Governance (ESG) agenda which

arguably encapsulates much of the

suspicion of free enterprise to which I

referred earlier. However, S&U is formally

adopting policies which both common

sense and our company values require of

any good citizen. These, as the relevant

sections of our strategy report show, will

concentrate in particular on targets to

minimise or mitigate our CO2 emissions.

Of course, good citizenship involves more

than just ‘green issues’. S&U has a vibrant

community and charity programme

through the KC Trust which over its 10-

year history has contributed nearly am

pounds to smaller charities, which are

reliant on their own voluntary fundraising

and mainly work with children and young

adults with both physical and learning

disabilities. Above all, we give where it

will really make a difference.

Finally, it gives me great pleasure to

welcome Ed Ahrens, managing director

of Aspen Bridging, to the S&U board. Ed

has a wealth of experience in the banking

and credit card sectors, joined us in

2015 and has since been instrumental in

creating and leading the team which is

making Aspen Bridging such a success. His

appointment is just reward for his wise

and energetic contribution to the Group.

Current Trading and Outlook

“In a world still full of uncertainty,

change and cloying pessimism, clarity

of purpose and vision is more crucial

than ever. A former Chairman of Jaguar

Motors put it succinctly: “the absolute

fundamental aim is to make money out

of satisfying customers”. Current trading

is good and I am confident that our

focus, our expertise and our experienced

team will enable us to take advantage of

the emerging opportunities that this year

will bring.”

Anthony Coombs

Chairman

6 April 2023

www.suplc.co.uk ― Stock Code: SUS

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 firstly, that the report fully

covers areas of relevant disclosure such

as on Strategy, Employees, Stakeholders,

Suppliers, Customers, Community and

Ethics and 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 have set up an ESG

committee under my chairmanship to

progress these important matters.

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 23 years

the remarkable success of Advantage

in producing competitive finance

products, lent responsibly with excellent

customer service has been reflected,

in a near perfect (two covid years

apart) record of consistently increased

annual 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 over 2m unique applications

a year and has written over 230,000

customer loans since starting trading

in 1999. The loans have an average

original term of just under 5 years. This

year the Financial Conduct Authority

produces one of the biggest overhauls of

its regulatory approach to the financial

services industry for many years. In

addition to the now aged Consumer

Credit Act, a raft of secondary legislation

and regulatory controls over the past 20

years have now all been encapsulated in

the new Consumer Duty regime.

This “paradigm shift” represents a major

part of the FCA’s 2022 – 2025 strategy

and extends the principle of consumer

protection from their initial treatment,

including underwriting, communication

and product design, to a wider

concern with “good outcomes for retail

customers”. At present these outcomes

are inevitably undefined and, given the

longevity of some finance agreements,

will be difficult to both interpret and

monitor in the future.

However, Advantage will responsibly

embrace the new Consumer Duty.

First, because it is right to do so and

second, since it will give well organised

companies like Advantage a commercial

advantage over those who are not.

The success of Advantage, our motor

financier, depends as ever upon three

fundamental strengths. First, is the

enduring reliability of the UK motor

market. Enduring does not mean

unchanging, since 2022 actually saw

used car sales fall in the UK by 13%

compared to 2021, the year the market

was bouncing back from Covid.

New car registrations in early 2022 also

restricted the used cars available for

sale. However, the market seems to be

rebounding. Used car sales so far in 2023

have increased by 8% on last year with

prices rising by 2.7% year on year so far.

Longer term, recent Auto Trader figures

recorded consumer demand for the

independence and flexibility of car

ownership unhindered by a perceived

decline in the quality of public transport,

as being the strongest for 4 years.

A2 Strategic Report

S&U Plc Annual Report and Accounts 202310

Nevertheless the used car market is not

homogeneous, The Government set

ambitious targets for a ban on the sale of

new internal combustion engine cars by

2030, to be replaced by electric vehicles

and hybrids. Although Advantage agrees

that the proportion of electric vehicles

in the UK “car parc” is expected to reach

30% by 2030, electric vehicle sales have

recently been weaker than expected.

Whilst supply has grown, used EV prices

have fallen for 5 consecutive months

as demand, concerned at the paucity

and efficiency of public charging points,

has slowed. For these reasons and for

reasons of affordability, electric vehicles

do not currently fit well with their

customer demographic, although this will

change as the used EV market evolves.

Advantage’s second strength is its

experienced, sensitive and sophisticated

under-writing. Backed by ever more

customer historical information;

Advantage uses this forensically to

analyse the likely circumstances of actual

and potential customers. This year it

has added a third Credit Reference

Agency and obtained even more granular

household information which it will be

using to improve its already sophisticated

customer affordability process.

Advantage’s third great strength is

to recognise that supplying the right

product to reach the customer at the

right time is just part of its service. It

also collects its payments responsibly.

Advantage has always regarded its

relationship with its customers as a

partnership. This involves understanding

the more sensitive and frequently

changing circumstances of those in

the non-prime sector. Whilst the UK

labour market remains strong, rising

cost of living pressures mean that well

intentioned customers occasionally

require knowledgeable assistance,

particularly should their financial buffers

reduce. Collectors at Advantage produce

excellent results by being trained

and empathetic to the needs of their

customers. Collecting and default figures

demonstrate this and underpin our

responsibility under Consumer Duty and

are integral to Advantage’s commercial

success.

Whilst lending is on a fully secured

basis, debt quality at Aspen, our

property bridging lender also relies

on the experience and reliability

of the borrower as much as on the

value of the property being financed.

Notwithstanding this, under pressure

from the cost of living and rising interest

rates the housing market in the UK has

undoubtedly slowed over the past year. A

Midland Estate Agent recently reported

that whilst in the summer of 2022 it took

12 weeks for the average house sale, that

figure is now nearer 50. National house

prices have fallen over the past 5 months

and the consensus for 2023 is a fall of

5%.

Aspen values its security properties very

conservatively and keeps gross LTV’s to

an average 70% and the business now

only considers experienced borrowers

from the top three quality bands. Such

caution is justified. Refinances are slower

and mortgage lenders are more risk

adverse; these make borrower exits more

drawn out. Aspen has therefore sensibly

allowed for slightly more subdued

lending levels for the first few months of

the year as the market stabilised.

“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

and instability 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.

An 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

Operating Results

Year ended

31 January

2023

£m

Year ended

31 January

2022

£m

Revenue

Cost of Sales – Impairment

Cost of Sales – Other

Gross Profit

Administrative Expenses

Operating Profit

Finance Costs (Net)

Profit before Taxation

Taxation (note 10 in the accounts)

Profit after Taxation

102.7

(13.9)

(23.6)

65.2

(16.3)

48.9

(7.5)

41.4

(7.7)

33.7

87.9

(4.1)

(18.8)

65.0

(14.2)

50.8

(3.8)

47.0

(9.0)

38.0

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

1.13 to the financial statements.

Advantage Motor Finance

• PBT £37.2m (2022: £43.7m and 2021:

£17.2m).

• New transactions increased to 23,922

(2022: 19,747) at £7,799 average

advance (2022: £7,138)

• Revenue up 14% to £89.8m (2022:

£78.9m)

www.suplc.co.uk ― Stock Code: SUS

Strategic Report

• Impairment at £12.9m (2022: £3.8m

and 2021: £36.0m) continued good

quality after increase and decrease of

two pandemic years

• Administrative expenses increased by

17% including increased variable and

fixed rewards for staff facing cost of

living increases

• Net receivables at yearend up 18% to

£306.8m (2022: £259.0m)

• ROCE at 15.7% (2022: 19.4% and 2021:

8.6%) (note 1.13)

Amidst the travails of UK economic

performance, Advantage again proved

the resilience of its business model

and the quality of its loan book and

customer relations by achieving a profit

before tax of £37.2m up 22% on the

average result for the two previous

years. Receivables grew strongly during

the year as the business continued

to attract high quality customers and

larger average loan sizes. Collections

continued to perform well and bad debts

and voluntary terminations were fewer

than anticipated leading to impairment

charges for the year which were also

lower than anticipated.

Alongside this excellent trading

performance, Advantage have prepared

thoroughly for the formal consumer

duty to be introduced later this year and

have made suitable changes to their

affordability buffers in line with the rising

cost of living. The business has continued

to improve its IT capabilities and has

improved its marketing which has been

bolstered by new advisers, in house

recruitment and rebranding to improve

our communication with existing and

new customers.

Aspen Property Bridging

Finance

• PBT at £4.5m (2022: £3.4m)

• 148 new transactions (2022: 135) at

£905k average gross advance (2022:

£812k)

• Revenue up 44% to £12.9m (2022:

£9.0m)

• Tightened valuations and reduced loan

to values anticipating forecast 5% house

price fall in 2023

• Net receivables at yearend up to

£113.9m (2022: £63.9m).

• Book quality good and only one actual

loss of £80,000 during year

Aspen’s sparkling set of results

benefitted from Aspen’s deliberate move

towards larger, higher quality loans with

experienced borrowers. Aspen continued

to develop their broker network and

their products during the year and were

pleased that their Bridge to let product

won new product of the year at the

Bridging and Commercial Awards.

Aspen further widened its range of

increasingly supportive and loyal brokers,

further tightened its valuation and

underwriting processes and still insists

that every property upon which Aspen

lends for security is personally visited by

a member of the team.

Aspen has also accommodated its

growing workforce by expanding into

custom designed offices next to S&U’s

Head Quarters in Solihull.

A2.3 Funding and Balance

Sheet Review

S&U has a strong balance sheet which

has facilitated the group total assets

growing during the year from £327.2m to

£428.2m to take advantage of excellent

lending opportunities. As a result,

gearing increased from 55% to 86%

which is still low for a financial services

group. S&U net group borrowings are

£192m within S&U’s medium-term

facilities in place of £210m with its

excellent, loyal and constructive banking

partners. These were augmented by

£30m in Autumn 2022. It is anticipated

that as growth trends become clearer,

in what is still a very uncertain macro-

economic climate, then these facilities

will be further augmented.

A2.4 Principal Risks and

Uncertainties

Whilst Corporate Governance guidelines,

and the loan loss provisioning insisted

upon by International Financial Reporting

Standards require macro-economic

forecasts, both Covid, the recovery

from it, current inflationary trends

and a continuing 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; in

fact growth only reached 4% that year.

For 2023 the consensus is that Britain

teeters on recession with GDP growth

for the year predicted at less than 0.5%.

Against such an uncertain background,

S&U has maintained its historically

cautious attitude in its three-year

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 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, both

of our businesses operate solely in

the UK and 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 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, mainly because loan

to value calculations are conservative,

interest is retained upfront and loan

periods average around one year.

A2 Strategic Report

CONTINUED

S&U Plc Annual Report and Accounts 202312

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

is aware of current less stable banking

markets but due to its facility maturities

and low gearing should be relatively

unaffected by this. 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. However, current interest rate

levels have prudently been expected

to continue throughout this year in our

budgeting assumptions.

A2.4.3 Legal, Regulatory and

Conduct Risk

The Group is subject to legislation

including consumer credit legislation

which contains very detailed and highly

technical requirements. To fulfil its

responsibilities in this area, 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 at Advantage 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, by

RSM and by Shoosmiths, Advantage’s

specialist lawyers.

Alan Tuplin is Chief Risk Officer of

Advantage 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.

This year Advantage has prepared for the

Consumer Duty regime by setting up a

small executive working party charged

with an Implementation Plan which

was agreed by the Advantage Board in

November 2022.

To comply with the Duty by the 31st July

2023, the plan must be monitored and

its outcomes managed. To this end the

plan’s operation will be overseen by a

new Consumer Experience Manager who

will ensure that it is reviewed regularly,

and upper most in the minds of all

committees throughout Advantage.

The Consumer Experience Manager will

in turn report to Alan Tuplin, Chief Risk

Officer.

Finally it is hoped that, as pointed out

in The Chairman’s Statement, that the

interpretation by the FCA of its powers

under the new duty is proportionate and

promotes innovation and enterprise.

In turn, this should recognise that the

moral and commercial interest of firms

in creating and maintaining good and

responsible long term relationships

with their customers are identical. The

bedrock for this relationship lies in the

rigour of Advantage’s underwriting.

This emphasises product design, credit

worthiness assessments which are

continually updated – particularly

during the current pressures on the

cost of living – good affordability and in

particularly Advantage’s obligation to

the small minority who are occasionally

Borrowers in Financial Difficulty. The

latter is currently rightly a focus for

the FCA.

www.suplc.co.uk ― Stock Code: SUS

Strategic Report

Advantage’s very strong record on these

matters is clearly and comprehensively

set out in the “Fair Value Assessment” of

its HP products and their value for our

customers, which will be submitted to

the FCA as part of the Consumer Duty

preparations.

Given Advantage’s compliance record

and the detailed operations above it

is to be hoped that, in turn, the FCA

will ensure an absolute consistency of

purpose and interpretation between

itself and other regulators, particularly

the Financial Ombudsman Service. Fair

and effective regulation does require co-

ordination and consistency.

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 Operational Risk

The Group is also exposed to operational

risk including the risk of not maintaining

effective internal systems, organisation

and staffing. 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, which during the year were

determined by the Audit Committee to

be operating effectively.

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 as Vice-Chairman of 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 202314

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 2023 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 2023 to consider as required if

they had 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 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 2023.

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.

A3 Statement of Viability and Going Concern

www.suplc.co.uk ― Stock Code: SUS

Strategic Report

I can’t believe I got this level

of professionalism from the

person who helped me within

this organisation. Thank you

for your friendly approach and

understanding from the team

member who helped me thank

you very much you’re a real

professional.”

CASE STUDY

Our Customers

Mr F

Mr F is a 55 year-old homeowner,

working for the government for 32 years.

Mr F currently takes home £1862 each

month.

We received an application from Mr F as

an existing customer requesting finance

for the purchase of an Audi Q5. We were

able to provide an offer of finance within

48 hours of receiving the application.

The assessment included a full appraisal

of the customer’s existing credit and a

separate affordability assessment which

confirmed the loan was affordable.

Mr F kindly took the time to review his

purchasing experience through an online

review site and was clearly happy with

the service he received from Advantage,

leaving the following comments as part

of a 5-star review:

S&U Plc Annual Report and Accounts 202316

The only thing I have to say

about Ellie and the team is

that they were very helpful,

informative, processed my

application extremely quickly

and most of all very friendly

which made things easy to

sort and I will definitely deal

with your company in the

future, many thanks”.

CASE STUDY

Mrs G

We received an application for finance

from Mrs G a homeowner of 27 years,

who works in the retail industry. Mrs G

was a previous customer of Advantage,

settling her account in August 2022

and her take home pay was £1059 per

month. Mrs G requested finance to

purchase a Citroen Berlingo van.

Mrs G’s application was subjected to

our creditworthiness and affordability

assessments resulting in an offer of

finance being provided subject to a

satisfactory review of her payslips and

work contract. We carried out the review,

then our assessment on the vehicle at

which point we were able to offer her

the finance she requested.

Mrs M agreed a price of £9588 with a

deposit of £3148 leaving the sum of

£6450 to be financed over 60 months

at a payment of £186.83, which was

considered comfortably within her

monthly budget.

We received some very positive

feedback from Mrs G, describing her

positive experience with Advantage

acknowledging the improvement in her

credit file. The following comments are

part of a 5 star review:

Our Customers

www.suplc.co.uk ― Stock Code: SUS

Strategic Report

Ellie was outstanding. So much

knowledge and extremely

easy to talk to. Makes

understanding the process

very easy. And her execution

of the finalising the deal was

exemplary. Makes you feel as

if you are talking to a mate

rather than just someone over

the phone. She’s a credit to

Advantage. Thanks very much.

Love the car.”

CASE STUDY

Mr D

We received an application for finance

through one of our broker partners for

an existing Advantage customer who was

looking to upgrade his current vehicle.

Mr D had two previous agreements with

Advantage which were paid without

fault.

Mr D was employed as a Class 1 HGV

driver and was living as a private tenant.

Mr D was looking to purchase a Vauxhall

Insignia and trading his existing vehicle.

Although we carried out our usual credit

assessment and affordability checks

and enabled him to pursue his financial

objectives by offering the full finance

required on the replacement car and the

settlement of the previous one. Mr D

was happy with the offer of finance

which allowed him to pay the instalments

over 60 months at an affordable £300

per month.

Mr D was very pleased with the

service and took the time to post a

complimentary 5-star review on an

online platform.

Our Customers

S&U Plc Annual Report and Accounts 202318

CASE STUDY

Aspen vastly exceeded

expectations regarding speed,

flexibility and responsiveness.

Very impressed all round,

we’ll certainly work with

them again.”

Borrower feedback

A last-minute change of security properties and a deadline

to refinance during postal strikes did not stop Aspen Bridging

completing a £2.1m Bridge-To-Let (BTL) loan within

three weeks.

The developer was nearing the end of their current

Development Finance deal and the client sought a bridging

solution to complete the finishing touches and sell the newly-

built detached six-bedroom house in Twickenham, London for

maximum value.

Our Customers

www.suplc.co.uk ― Stock Code: SUS

Strategic Report

CASE STUDY

Aspen Bridging has completed a £1.5m Development Exit loan

which will allow a property developer extra time to complete

their latest project.

The newbuild, which comprises of eight apartments in Windsor,

Berkshire, was substantially delayed during the Covid pandemic

and, despite best efforts, remained behind schedule.

The bridge took just 17 days from application to completion

and was over a 12-month term.

Our Customers

We found dealing with

Aspen and the underwriting

team to be a refreshingly

straightforward process. The

lender worked with us to meet

our client’s requirements, both

in providing the level of funds

needed and also comfort with

the options to exit. We were

delighted to meet our client’s

expectations; nothing was too

much trouble for Aspen and

we would happily consider

working with them again.”

Broker feedback

S&U Plc Annual Report and Accounts 202320

A4 Corporate Social Responsibility

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. 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 saw two staff members gain

MRICS and legal 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.

At Advantage in addition to regular

external management and specialist

training, significant use is made of

the Government’s apprenticeship

schemes. At present 8 staff members

are so engaged. Four at level 3 business

administration and digital support and

four member at Level 5 leadership and

Management. Last year one person

broke local records by completing every

exam and assessment with distinction!

The FCA Regulatory regime is now

centred on our duty to the Customer.

All employees within the Group are

required to demonstrate appropriate

knowledge and skills particularly in

customer facing roles. Annual appraisals

highlight areas of training needs for all

employees. Advantage Finance is also an

accredited Silver 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. We are proud to enjoy

high levels of customer satisfaction. Last

year our FIFO rating was 4.7 out of 5.

In 2022 67 out of 86 complaints were

decided by the Financial Ombudsman

Service in Advantage’s favour. In the year

to 31 January 2023 73% of complaints

which reached and were decided by

the Financial Ombudsman Service were

related to the satisfactory quality of

the vehicle (2022: 57%) 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

www.suplc.co.uk ― Stock Code: SUS

Strategic Report

charitable activities, S&U plc channels

its philanthropic activities through The

Keith Coombs Trust which this year

celebrates its 11th 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

£109,500 to these charities. In total, the

past 11 years will have seen donations of

over £1m to charity.

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.

This year S&U plans to involve more staff

within the Group in active volunteering;

Aspen are currently investigating

the development of a “volunteer”

programme with Marie Curie cancer care

both in Solihull and more widely.

Finally, S&U is pleased to announce its

support for the Tax Payers Alliance, a

non-political charitable organisation

committed to ensuring efficient and

effective government in the tax payers

interest.

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

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,

age and stated emissions of the vehicles

Advantage finances. 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 twenty years as the market

changes.

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, will

increasingly reflect our customers

environmental responsibilities.

The Company is pleased to present its

second climate change report under the

framework provided by the Task Force

on Climate Related Financial disclosures

(‘TCFD’).

A4.4a Governance

An ESG and 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,

scope 2 and scope 3 business travel

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 1, scope 2 and scope 3 business

travel emissions, which we are not at

present able to reduce to zero, S&U

plc group have for the year 1.2.22 to

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, 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. In addition this year

all staff working at Head Office will be

offered a professional Red Cross First Aid

Course.

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

S&U Plc Annual Report and Accounts 202322

31.1.23 engaged Carbon Neutral Britain

to measure, calculate and offset the

organisation’s carbon footprint. Our

group emissions for the year in scope,

1, scope 2 and scope 3 business travel

emissions are 114t CO2e as shown in the

table in A4.4d below. These emissions

have been offset with Carbon Neutral

Britain via their Woodland fund which

supports Climate Fund, Reforestation,

Deforestation Prevention and Woodland

Management Projects, with a strong

focus on having a positive impact on the

local wildlife, ecology and biodiversity.

The Group has also made progress in

identifying opportunities to manage

other indirect scope 3 emissions

associated with the loan assets we

finance for our customers. In our

motor finance business the average

CO2 emissions of the cars and vans we

finance reduced from 131CO2 g/km

last year to 129 CO2 g/km this year and

by working with customers and other

companies in our supply chain we are

looking to accelerate this reduction. We

are also monitoring the requirements of

TCFD as it is adapted to comply with the

International Sustainability Standards

Board (ISSB) who announced in October

2022 that they will require and also

provide further guidance for companies

to consistently apply these other indirect

scope 3 requirements.

In order to assess the resilience of the

Group’s strategy, we have identified 2

climate scenarios being:

1. the global temperature increase is kept

to below 2 degrees, or

2. climate change mitigation is slower and

the global temperature increases by 2

to 4 degrees.

The Group has considered the risks

relevant to each of these climate

scenarios over the short, medium and

long term, being the next year, the next

3 years and the next 5 years and beyond

respectively.

Scenario 1

The risks the Group has identified under

this climate scenario are mainly indirect

over the long term, where stricter

regulations and taxes to help keep

global temperatures lower are applied

in the UK and affect the used vehicle

and property finance products which

can be supplied to our customers and/

or our customers’ affordable use and

enjoyment of those products. The UK

Government is committed to banning

the sale of new diesel and petrol cars

from 2030 with an opt out for some

plug-in hybrids and we will continue to

monitor this commitment and associated

developments ahead of this date

alongside the availability and affordability

of used electric vehicles, in order to

refine our strategy in a sustainable way

for our customers.

Scenario 2

The risks the Group has identified under

this climate scenario include the indirect

risks over the long term mentioned for

Scenario 1 as the UK makes change but

global temperatures still rise further.

Scenario 2 also includes more medium

and long term direct risks too such as

the increased flood and weather risk to

our office buildings and to properties

financed – these risks are mitigated by

insurance and wider operational risk

is mitigated by the business continuity

plans we have in place.

The Group has assessed its strategy

as resilient for the likely risk events

arising under these two scenarios,

with a minimal expected impact on the

business.

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. Climate risk

is an emerging risk but it is not currently

considered a significant risk for the

Group.

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 and where

that is not fully possible offset them.

Solar panels on our office buildings in

Grimsby and electric company vehicles

are examples of where we have managed

to reduce energy usage this year.

A4 Corporate Social Responsibility

CONTINUED

www.suplc.co.uk ― Stock Code: SUS

Strategic Report

The Group is keen to progress further 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. The climate related risks and opportunities we have identified as

potentially having a material financial impact on the Group are as follows:

Risks with potential material

financial impact Related Opportunity Planning Horizon

1. Potential for increased UK

regulation and taxes affecting

motor vehicles and their

affordability for our loan

customers

Continue to align our products

in advance to meet evolving

customer preferences and

affordability in the light of

planned regulatory and tax

changes

Medium and Long

Term

2. Potential for increased UK

adverse weather events or

natural disasters affecting

operations and properties

Continue to maintain and

improve appropriate insurance

and business continuity

procedures

Short, Medium and

Long term

The potential financial impact of these risks and opportunities on the group would be

reflected in the potential for reduced revenue or increased expenditure.

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 2022 to 31 January 2023

Tonnes CO

Year ended

31 Jan 2023

Year ended

31 Jan 2022

Scope 1 (Direct emissions)

Combustion of fuel – Petrol & diesel used by

company cars 27 51

Gas consumption 15 21

Scope 2 (Energy indirect emissions)

Purchased electricity (location based) 37 48

Electric vehicle energy usage 5 –

Total Scope 1 and 2 84 120

Scope 3 (Other indirect emissions)

Business travel not using owned/leased vehicles 30 –

Water consumption – 1

Waste – 2

Total Scope 1,2 and 3 (business travel) 114 123

Company’s chosen intensity measurement:

Normalised tonnes scope 1, 2 and 3 CO

e per £m

turnover 1.1 1.4

For the year ending 31 January 2023

we achieved the target of below 1.8

normalised tonnes per £m turnover.

For the year ending 31 January 2024

we are targeting below 1.3 normalised

tonnes per £m turnover.

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 2022 conversion factors

within our reporting methodology. The

emissions for year ended 31.1.23 were

verified by Carbon Neutral Britain.

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.

The Directors confirm that under

listing rule 9.8.6R (8) (a) we have

included in the above report disclosures

consistent with the 2017 Final TCFD

Recommendations and Recommended

Disclosures.

S&U Plc Annual Report and Accounts 202324

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

6 April 2023

www.suplc.co.uk ― Stock Code: SUS

Strategic Report

Corporate Governance

In this section

B1 Board of Directors 28

B2 Directors’ Remuneration 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’ Responsibilities

Statement 51

C Independent Auditor’s Report

to the Members of S&U plc 52

2626 S&U Plc Annual Report and Accounts 2023

Corporate Governance

www.suplc.co.uk ― Stock Code: SUS

B1 Board of Directors

Anthony Coombs

MA (OXON)

Chairman

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. Anthony is a director and

trustee of a number of companies and

charities.

Graham Coombs

MA (OXON) MSC (LON)

Deputy Chairman

Joined S&U after graduating from London

Business School in 1976.

Jack Coombs

MA (OXON) ACA

Executive

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.

CEO Advantage Finance

Graham brings over 40 years experience

in motor finance across consumer and

business lending, much of it in a senior

leadership role. 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 fourth year of leading

its successful motor finance subsidiary

Advantage Finance. Graham also

influences the industry as a Director of

the FLA, and as the Deputy Chairman of

the FLAs’s Motor Finance Division.

CEO Aspen Bridging

Ed has been in banking and speciality

finance for over 30 years having started

his career at Abbey National and working

in senior roles for Barclays, AIB and

being a founding executive director of

Vanquis Bank. Ed joined the S&U Group

in 2014 then became Group Strategic

Development Director before leading

the development of Aspen Bridging as

Managing Director since the launch of

the business in 2017.

Group Finance Director

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 Chris was

appointed as Group Finance Director

with effect from 1 March 2004.

Graham Wheeler Ed Ahrens

Chris Redford

ACA

S&U Plc Annual Report and Accounts 20232828

Tarek Khlat MBE Graham Pedersen Jeremy Maxwell

Demetrios Markou

FCA MBE

Key

Nominations committee

Audit committee

Remuneration committee

Non-Executive

Tarek has over 25 years of experience

in financial services and he co-founded

Crossbridge Capital, where he is currently

Group CEO leading the firm’s businesses

that serve the wealth management needs

of high-net-worth clients globally. Prior

to this he held leading roles in financial

services with Credit Suisse and JP Morgan

and in journalism with CNN and Fox News.

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 Queen Elizabeth II in 2021.

RAN

Non-Executive

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.

RAN

Non-Executive

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.

RAN

Non-Executive

A Chartered Accountant with over 40

years’ experience in public practice in

Birmingham and director of many private

companies. Demetrios has extensive

commercial, professional and political

experience.

RAN

www.suplc.co.uk ― Stock Code: SUS

Corporate Governance

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.

B2.1 REPORT OF THE BOARD

TO THE SHAREHOLDERS ON

REMUNERATION POLICY

Introduction

On behalf of your Board, I am pleased

to present our Directors’ Remuneration

Report for the year ended 31 January

2023.

S&U continues to trade well despite

a period of economic and political

chaos, unprecedented in most of our

lifetimes. A change of governments and

of economic strategy, rising inflation,

taxation and interest rates and a nascent

recession is not exactly the ideal

economic landscape for any business.

Nevertheless, trading has been very good

at Advantage, focussing on the excellent

quality of customer relationships and

the receivables which are derived from

them, together with further expansion of

Aspen, all underpin the good year for the

company during these uncertain times.

As a result Group profit before tax is

£41.4m for the year ended

31 January 2023 which is 6% up on

budget and compares to an average

during the 2 previous pandemic years of

£32.6m group profit before tax (2020/21:

£18.1m; 2021/22: £47.0m).

This year’s annual Directors’

Remuneration Report sets out how

the Remuneration Policy was applied

during the year ended 31 January

2023 and provides details of amounts

earned in respect of the year ended

31 January 2023. It also sets out how

the Remuneration Committee has

decided the Remuneration Policy will

be operated for the year commencing 1

February 2023. The Remuneration Policy

is planned to be updated at least every

3 years and was last updated in 2021

and published in full in the 2021 Annual

Report. A copy of the Remuneration

Policy can be found in the About us

Governance section on our website at

www.suplc.co.uk

2022/23 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.

Group profit before tax moved from

an average of £32.6m in the two main

pandemic years to an impressive £41.4m

this year (2020/21: £18.1m; 2021/22:

£47.0m). This result derives from good

collections and strong receivables

growth in both companies during the

year, partly offset by increased funding

costs and inflation – related overhead

increases. The Committee noted that

this result would not have been possible

without the hard work, leadership, focus

and strength of the executive team at

S&U as well as the overall resilience of

the Company. We have taken this into

account in the decisions taken regarding

salaries and bonuses, whilst at the same

time maintaining good discipline in our

policies on remuneration.

Against a backdrop of a continued

shortage of used cars, Advantage

advanced 23,922 new motor finance

agreements (2022: 19,747). As last year,

our collections team have continued to

work diligently to support customers

and overall collections performed

strongly during the year ended 31.1.23.

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 sixth year of operation, Aspen

Bridging made 148 new loan facilities

lending nearly £134m. From the 517 new

loan facilities made since its inception

in 2017, Aspen has so far received 376

repayments and of the 141 bridging

loans still live at 31.1.23 only 4 were

>60 days overdue and only 1 was in

repossession. 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”

– see definition in note 1.13), the

Remuneration Committee judged

the level at which the annual bonus

payments should be made. Group Profit

Before Tax (“PBT”) for the year increased

by 27% on the average of the 2 previous

years to £41.4m and ROCE was 13%.

This was significantly above the PBT

target level of £39.0m. Therefore, the

Remuneration Committee determined

that for the financial year 2022/23

bonuses equivalent to the maximum

target annual bonus opportunity of

£50,000 each would be awarded to

Anthony Coombs and Graham Coombs

and £50,000 to Chris Redford which

represented target performance but was

below the maximum potential annual

bonus for Chris Redford of £75,000, given

the stretch bonus target of £42.9m group

PBT was not reached.

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.

S&U Plc Annual Report and Accounts 20233030

In May 2022 Chris Redford was granted

6,000 shadow share options under the

2021 LTIP, as disclosed in last year’s

Directors Remuneration Report. The

Remuneration Committee determined

that 6,000 of these shadow share options

vested with reference to performance

during the year ended 31 January 2023

based on group PBT being above the

group PBT stretch target level for shadow

share options of £40.95m.

Graham Wheeler

The Committee have considered

Graham’s management of the Advantage

Finance team in light of the significant

challenges in consumer motor finance

arising from the political and economic

environment, and the excellent

Advantage PBT result of £37.2m for

the year ended 31 January 2023. The

Committee judged the level at which the

annual bonus payment should be made.

For the financial year 2022/23 a bonus

of £75,000 was awarded to Graham

Wheeler for achieving stretch targets.

In May 2022 Graham Wheeler was

granted 6,000 shadow share options

under the new LTIP, as disclosed in

last year’s Directors Remuneration

Report. The Remuneration Committee

determined that 6,000 of these shadow

share options vested with reference

to performance during the year ended

31 January 2023 with reference to

the underlying profit performance of

Advantage and achievement against the

stretch PBT and ROCE based targets set

for that year.

Jack Coombs

The Committee have considered Jack’s

significant contribution to the continued

growth of Aspen Bridging, including

excellent growth during the year ended

31 January 2023, helping Aspen Bridging

achieve a record profit before tax of

£4.5m. The Committee judged the level

at which the annual bonus payment

should be made. For the financial

year 2022/23 a bonus of £25,000 was

awarded to Jack Coombs.

Key remuneration decisions

and related matters for the

year ending 31 January 2024

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 and for the year ended 31 January

2023 salary increases were in the range

3.75% to 5.5% except where exceptional

circumstances merited a higher increase.

This was in line with pay review decisions

for the wider workforce during these

periods. The Remuneration Committee

has now agreed salary increases for the

year ended 31 January 2024 in the range

1.3% to 3.3% except where exceptional

circumstances merited a higher increase,

as noted below. This is below the average

increases given to the wider workforce

which averaged 9.0% in a difficult

inflationary cost of living environment for

our employees. After a review of market

comparables, and after his excellent

performance as an executive director of

our growing Aspen Bridging subsidiary,

it was decided to award Jack Coombs a

salary increase of 9% for the year ended

31 January 2024.

For the year ending 31 January 2024,

where the targets levels of performance

set are achieved, the annual bonus

has been set at £60,000 for Anthony

Coombs and Graham Coombs, £50,000

for Graham Wheeler and Chris Redford

and £30,000 for Ed Ahrens* and Jack

Coombs. Where the performance targets

set are exceeded, the Remuneration

Committee has the discretion to pay an

increased annual bonus based on stretch

performance targets to each of Graham

Wheeler, Ed Ahrens and Chris Redford

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

www.suplc.co.uk ― Stock Code: SUS

Corporate Governance

B2 Directors’ Remuneration Report

CONTINUED

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 5,000

shadow share options under the 2021

LTIP to Graham Wheeler, subject to

achieving certain stretch Advantage PBT

and ROCE targets for the year ending 31

January 2024. The Committee intends to

grant 3,000 shadow share options under

the 2021 LTIP to Ed Ahrens*, subject to

achieving certain threshold Aspen PBT

and ROCE targets for the year ending

31 January 2024.The Committee also

intends to grant 5,000 shadow share

options under the 2021 LTIP to Chris

Redford, subject to achieving certain

stretch group PBT targets for the year

ending 31 January 2024.

* Ed Ahrens was appointed a director of S&U plc

on 14 February 2023 (after the 31 January 2023

yearend).

For the year ending 31 January 2024,

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 2.7% to

£38,000 and for the senior non-executive

director increased by 2.5% to £40,000

for the year ended 31 January 2024.

Fees had previously been frozen for the

year ended 31 January 2022 at the same

level as for year ended 31 January 2021

and for the year ended 31 January 2023

had been increased by 4.2% for the

non-executive directors and 4.0% for the

senior non-executive director.

The Remuneration Committee believes

that an element of the executive

remuneration should be linked to

non-financial KPIs that align with the

Company’s purpose and long-term

strategy, particularly around the

Company’s governance structures and

environmental impact. The Company

is in the process of developing and

implementing its sustainability strategy

and the Remuneration Committee

will continue to develop clear and

measurable non-financial KPIs to be

included in executive remuneration,

factoring in externalities linked to the

overall strategy. Environmental, Social

and Governance factors have become

critical to good business practice and

are tied to the success and long term

sustainability of organisations across all

sectors. As a result, the Remuneration

Committee is considering how best

these can be incorporated, measured

and linked to the overall strategy and

purpose of the Company. Members of

the Remuneration Committee are part

of the newly formed Environmental,

Social and Governance Committee

(ESG Committee) within the Company,

whose purpose is to support the

Company’s ongoing commitment to

environmental stewardship, health and

safety, corporate social responsibility,

corporate governance and sustainability

as relevant to the company. The

Remuneration Committee, alongside

the ESG Committee, will therefore

consider how the Company can most

appropriately link an element of the

executive remuneration to such goals

in a way that is clear and measurable

going forwards to ensure executives are

incentivised to ensure the Company is

committed to achieving its long term

sustainability goals.

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 25 May 2023.

Tarek Khlat

Chairman of the Remuneration

Committee

6 April 2023

S&U Plc Annual Report and Accounts 20233232

B2.2 ANNUAL REMUNERATION

REPORT

This section covers how the

remuneration policy was implemented in

the year ending 31 January 2023. Certain

elements of the Annual Remuneration

Report are subject to audit and this has

been highlighted at the start of each

section.

Remuneration Committee

(this section 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 Remuneration

Committee

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 2023 was

£10,800. KPMG also provide taxation

compliance and advisory services to the

Group.

Attendance at meetings

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 47 of this Annual Report.

Single Figure Tables (this section is

subject to audit)

www.suplc.co.uk ― Stock Code: SUS

Corporate Governance

Single Figure Tables (this section 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 2023, together with comparative figures for the year ended 31 January 2022:

Anthony Coombs

£000

Graham Coombs

£000

Chris Redford

£000

Graham Wheeler

£000

Jack Coombs*

£000

Executive Directors 2022/23 2021/22 2022/23 2021/22 2022/23 2021/22 2022/23 2021/22 2022/23 2021/22

Salaries and fees 374 360 358 345 245 232 300 250 110 80

Allowances and

benefits 82 79 34 35 22 22 13 16 1 1

Pension Contribution 0 0 0 0 36 34 30 25 16 12

Total Fixed 456 439 392 380 303 288 343 291 127 93

Bonus 50 30 50 30 50 50 75 50 25 10

Shadow Share

Incentive 0 0 0 0 128 137 128 137 0 0

Total Variable 50 30 50 30 178 187 203 187 25 10

Total 506 469 442 410 481 475 546 478 152 103

* 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.

** Ed Ahrens was appointed a director of S&U plc on 14 February 2023 (after the 31 January 2023 yearend) and so no remuneration is shown in the single figure table.

Demetrios Markou

£000

Graham Pedersen

£000

Tarek Khlat

£000

Jeremy Maxwell*

£000

Fiann Coombs**

£000

Non-executive

Directors 2022/23 2021/22 2022/23 2021/22 2022/23 2021/22 2022/23 2021/22 2022/23 2021/22

Salaries and fees 39.0 37.5 37.0 35.5 37.0 35.5 37.0 1.4 0 11.8

Total 39.0 37.5 37.0 35.5 37.0 35.5 37.0 1.4 0 11.8

* Jeremy Maxwell was appointed a non-executive 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.

** Fiann Coombs resigned as a non-executive director of S&U plc on 20 May 2021. No remuneration was paid for 2022/23.

B2 Directors’ Remuneration Report

CONTINUED

S&U Plc Annual Report and Accounts 20233434

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 pages 30 and 31. The Remuneration

Committee determined that no part of any bonus paid for the year ended 31 January 2023 would be

deferred.

Share incentive

plans ( LTIP)

For the year ended 31 January 2023 figures for the value of nil cost options vesting in respect of

performance under the share incentive plans have been calculated as follows:

• Stretch PBT and ROCE based performance targets for the year to 31 January 2023 were met in full;

accordingly, the Remuneration Committee determined that 100% of the 6,000 LTIP shadow share options

granted to Graham Wheeler vested in respect of achieving stretch performance targets in the year to 31

January 2023 and 100% of the 6,000 shadow share options granted to Chris Redford vested in respect of

achieving stretch performance targets in the year to 31 January 2023. Both these vested shadow share

options are subject to continued employment until May 2025 and will not normally be exercisable until May

2025. 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 2023 is shown above based on the three-month average share

price to 31 January 2023 (£21.28).

In accordance with the Companies (Miscellaneous Reporting) Regulations 2018, it is estimated that 0% of

the value of the LTIP value which will vest at the end of the period closing 31 January 2023 is attributable

to share price growth over the period starting on the date of grant and ending on 31 January 2023. This is

calculated based on 2 awards totalling 12,000 potential shadow share options which were granted at a face

value at the date of grant of £278,400 (£23.20 share price) and at 31.1.23 had a face value of £247,200

(£20.60 share price).

We intend to grant further shadow share options in May 2023 based on the value of a total of 13,000 shares

in S&U. These awards will be subject to a performance period which will commence on 1 February 2023

and will end on 31 January 2024. The share price at the start of the performance period was £20.60; if the

share price were to increase by a further 50% between May 2023 and May 2026, then the share price of the

awards would have increased to £30.90, representing an increase in the face value of Graham Wheeler’s

award of £51,500, an increase in the face value of Chris Redford’s award of £51,500 and an increase in the

face value of Ed Ahrens’ award of £30,900.

For the year ending 31 January 2022 comparative figures:

5,000 shadow share options were granted to Graham Wheeler in that year of which 100% vested in respect

of achieving stretch performance targets in that year. 5,000 shadow share options were granted to Chris

Redford in that year of which 100% vested in respect of achieving stretch performance targets in that year.

www.suplc.co.uk ― Stock Code: SUS

Corporate Governance

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 2023).

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 2023, the

base salaries of the executive directors

were increased in the range 3.75%

to 5.5%, except where exceptional

circumstances merited a higher increase.

For the year ending 31 January 2024,

the Remuneration Committee has now

agreed salary increases in the range

1.3% to 3.3% except where exceptional

circumstances merited a higher increase,

as noted below. This was below the

increases given to the wider workforce.

After a review of market comparables,

and after his excellent performance as

an executive director of our growing

Aspen Bridging subsidiary, it was decided

to award Jack Coombs a salary increase

of 9% for year ended 31 January 2024.

The table below shows the base salary increases awarded for next year:

Executive director

Base salary as at

31 January 2023

£000

Base salary for year to

31 January 2024

£000

Increase

Anthony Coombs 373.5 378.5 1.3

Graham Coombs 358 363 1.3

Chris Redford 245 252.5 3.1

Graham Wheeler 300 310 3.3

Jack Coombs 110 120 9.1

Ed Ahrens* n/a 207.5 n/a

* Ed Ahrens was appointed a director of S&U plc on 14 February 2023, after the 31 January 2023 yearend, and so no remuneration is shown in the table for base salary

as at 31 January 2023.

Non-Executive 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 2.7% to £38,000 with effect from 1 February 2023. The basic senior non-executive fee was increased by 5.3% to £40,000 with

effect from 1 February 2023. 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

2021/22

£000

2022/23

£000

2023/24

£000

Basic fee 35.5 37 38

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

B2 Directors’ Remuneration Report

CONTINUED

S&U Plc Annual Report and Accounts 20233636

Annual bonus

For the year ending 31 January 2023, 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 2023 together with the Group PBT targets and details of the actual bonus earned.

Performance targets

Maximum annual bonus

opportunity year ending

31 January 2023

£000

Bonus pay-out %

of maximum

Actual bonus earned

for the year ending

31 January 2023

£000

Anthony Coombs

Group PBT target

(£39m)

50 100 50

Graham Coombs 50 100 50

Chris Redford 75 67 50

Graham Wheeler Advantage Finance PBT

and ROCE target*

100 75 75

Jack Coombs Aspen Bridging PBT

and ROCE target*

40 62 25

* 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 the achievement of target

performance levels in the year ended

31 January 2023 bonuses of £50,000

each were deemed payable to Anthony

Coombs, Graham Coombs and Chris

Redford and a bonus of £25,000 was

deemed payable to Jack Coombs.

Based on the achievement of stretch

Advantage PBT and ROCE targets, a

bonus of £75,000 was deemed payable

to Graham Wheeler. The Committee

considered the extent to which both

financial and individual performance

targets had been met in determining

these bonuses.

Annual bonus in 2023/24

For the year ending 31 January 2024,

where the threshold performance

targets set are achieved, the annual

bonus has been set at £60,000 for

Anthony Coombs and Graham Coombs,

£50,000 for Graham Wheeler and Chris

Redford and £30,000 for Ed Ahrens and

Jack Coombs. Where the target levels

of performance set are exceeded, then

based on stretch performance targets

the Remuneration Committee has the

discretion to pay an increased annual

bonus to each of Graham Wheeler,

Ed Ahrens and Chris Redford 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 and

ROCE 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 Incentives – Long

Term Incentive Plan (LTIP)

2021

Awards granted during the

period

Graham Wheeler was awarded 6,000

nil cost shadow share options under

the 2021 LTIP in May 2022 at a notional

nil exercise price, subject to achieving

specified stretch Advantage PBT and

ROCE targets for the year ended 31

January 2023.

Chris Redford was awarded 6,000 nil

cost shadow share options under the

2021 LTIP in May 2022 at a notional

nil exercise price, subject to achieving

specified stretch Group PBT targets for

the year ended 31 January 2023.

No other shadow share options were

envisaged to be granted to S&U

directors and none were granted during

the year ended 31 January 2023.

Awards vesting based on

performance in respect the

year ended 31 January 2023

Details of awards vesting on

performance in respect of the year

ended 31 January 2023 have been

included in the notes to the single figure

tables on page 34.

www.suplc.co.uk ― Stock Code: SUS

Corporate Governance

Awards for 2023/24

The Committee intends to grant 5,000

nil cost shadow share options under the

2021 LTIP to Graham Wheeler, subject to

achieving certain stretch Advantage PBT

and ROCE targets for the year ending

31 January 2024. The Committee also

intends to grant 3,000 nil cost shadow

share options under the 2021 LTIP to

Ed Ahrens, subject to achieving certain

threshold group PBT and ROCE targets

for the year ending 31 January 2024. The

Committee also intends to grant 5,000

nil cost shadow share options under

the 2021 LTIP to Chris Redford, subject

to achieving certain stretch group PBT

targets for the year ending 31 January

2024.

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

2023 2024

Anthony Coombs Bonus £50,000 £60,000

Shadow share options – –

Graham Coombs Bonus £50,000 £60,000

Shadow share options – –

Chris Redford Bonus £50,000 £50,000

Shadow share options 6,000 5,000

Graham Wheeler Bonus £75,000 £50,000

Shadow share options 6,000 5,000

Jack Coombs Bonus £25,000 £30,000

Shadow share options – –

Ed Ahrens* Bonus n/a £30,000

Shadow share options n/a 3,000

* Ed Ahrens was appointed a director of S&U plc on 14 February 2023, after the 31 January 2023 yearend, and so no remuneration is shown in the table for 2023.

For the year ending 31 January 2023, 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 entitlements in 2022/23 (this section is subject to audit)

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

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 36 14.5

Graham Wheeler 30 10.0

Jack Coombs 16 15.0

B2 Directors’ Remuneration Report

CONTINUED

S&U Plc Annual Report and Accounts 20233838

Company performance – shareholder return graph (this section 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

100

200

300

400

500

600

700

800

900

30/01/2013

30/01/2014

30/01/2015

30/01/2016

30/01/2017

30/01/2018

30/01/2019

30/01/2020

30/01/2021

30/01/2022

30/01/2023

Executive Chairman Remuneration for the previous ten years (this section 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)

2023 506 100 n/a

2022 469 100 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

www.suplc.co.uk ― Stock Code: SUS

Corporate Governance

Percentage change in Executive Directors’ Remuneration (this section is not subject to audit)

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

executive directors and the wider workforce for the years ended 31 January 2023, 31 January 2022 and 31 January 2021 .

Element

Year to 31.1.23

Anthony

Coombs

Graham

Coombs

Chris

Redford

Graham

Wheeler*

Jack

Coombs

Wider

Workforce

Base salary 3.8 3.8 5.4 20.0 10.0 9.0

Allowances and benefits 3.8 (2.9) 0.0 (18.8) 0.0 n/a

Bonus 66.7 66.7 0.0 50.0 150.0 6.6

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)

* Graham Wheeler was appointed a director of S&U plc on 29 September 2020, so no comparative data is available for the year to 31.1.21.

** Jack Coombs was appointed a director of S&U plc on 14 April 2021, so no comparative data is available for the year to 31.1.21 or the year to 31.1.22.

Anthony Coombs received benefits and

allowances of £82,000 in the year ending

31 January 2023 and £79,000 in the

year ending 31 January 2022. Anthony

Coombs earned a bonus of £50,000 for

the year ending 31 January 2023 and

earned a bonus of £30,000 for the year

ending 31 January 2022.

Graham Coombs received benefits and

allowances of £34,000 in the year ending

31 January 2023 and £35,000 in the

year ending 31 January 2022. Graham

Coombs earned a bonus of £50,000 for

the year ending 31 January 2023 and

earned a bonus of £30,000 for the year

ending 31 January 2022.

Chris Redford received benefits and

allowances of £22,000 in the year ending

31 January 2023 and £22,000 in the year

ending 31 January 2022. Chris Redford

earned a bonus of £50,000 for the year

ending 31 January 2023 and earned a

bonus of £50,000 for the year ending 31

January 2022.

Graham Wheeler received benefits and

allowances of £13,000 in the year ending

31 January 2023 and £16,000 in the

year ending 31 January 2022. Graham

Wheeler earned a bonus of £75,000 for

the year ending 31 January 2023 and

earned a bonus of £50,000 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.

B2 Directors’ Remuneration Report

CONTINUED

S&U Plc Annual Report and Accounts 20234040

Relative Importance of Spend on Pay (this section 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 2022 and 31 January 2023. Given the nature of the Group’s business, the other significant outflows for the Group are loan

advances and dividends payable.

2022

2023

350

300

250

200

150

100

Wages and salaries Loan advances Dividends paid

Payments for loss of office (this section is not subject to audit) and to past directors

There were no loss of office payments made during the year ended 31 January 2023.

Statement of directors’ shareholding and share interests

The table below details the beneficial shareholdings and share interests of the directors as at 31 January 2023.

Type

Total at

31 January

2023

Anthony Coombs Shares 1,277,609

Graham Coombs Shares 1,635,457

Chris Redford Shares 16,300

Graham Wheeler Shares –

Jack Coombs Shares 1,677,147

Non-executive directors

Demetrios Markou Shares 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, holds 328,323 Ordinary Shares.

Ed Ahrens was appointed an executive director of S&U plc after the 31.1.23 yearend, on 14.2.23, and at that date he held 4,500

S&U plc ordinary shares.

There are no share options held under the old LTIP 2010 scheme – there are no direct share interests arising under the new LTIP

2021 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 2023 and the date of this report.

www.suplc.co.uk ― Stock Code: SUS

Corporate Governance

Shareholder vote on the 2022 Remuneration Report and 2021 Remuneration Policy (this section

is not subject to audit)

The table below shows the voting outcome at the 26 May 2022 AGM for the 2022 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 2022 5,578,161 93.23 405,272 6.77 5,983,433 79

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 6 April 2023 and signed on its behalf by:

Tarek Khlat

Chairman of the Remuneration Committee

6 April 2023

B2 Directors’ Remuneration Report

CONTINUED

S&U Plc Annual Report and Accounts 20234242

B3.1 AUDIT COMMITTEE

REPORT

Role and Responsibilities

The Audit Committee is a committee

of the Board of Directors, made up of

independent non-executive 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). Two members of

the audit committee also serve on

the Group’s ESG and climate change

committee.

Composition of the Committee

and Meetings

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 and generally three times a year in

conjunction with the interim and full year

financial reports issued in September

and March and an audit planning

meeting in January. 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 2023

three meetings were held including Audit

planning meetings.

Significant Matters related to

the financial statements

The significant matters and areas of

judgement considered by the Audit

Committee in relation to the January

2023 Financial Statements were as

follows:

Impairment of receivables

– Motor Finance – see also

accounting policy 1.5 on

page 65

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.

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 Recognition – Motor

Finance - see also accounting

policy 1.4 on page 64

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;

a) The work performed by management

and by Mazars as part of their external

audit, including their challenge of the

assumptions used by management; and

b) The findings in light of current trading

experience and expected future trading

experience.

The Committee also reviewed the

impairment, revenue recognition

and strong receivables growth of our

Property Bridging Finance business which

is currently less material than motor

finance. There were no issues and areas

of judgement considered significant

by the Committee in relation to Aspen

Bridging.

B3 Governance

www.suplc.co.uk ― Stock Code: SUS

Corporate Governance

Regulatory Correspondence

FRC request for information

The Company received a request for

information from the Financial Reporting

Council (FRC), who regularly review

listed company accounts, in respect of

disclosures around the net increase in

overdraft, expected credit losses and

collateral in S&U’s accounts to 31 January

2022. The company has provided further

information to the FRC and agreed to

amend a narrative comparative figure for

the net overdraft and to further enhance

disclosures in the areas of expected

credit losses and collateral in its accounts

to 31 January 2023. The company is

grateful to the FRC for its helpful and

constructive observations and the FRC

have confirmed that their review is

now closed.

An FRC review provides no assurance

that the S&U annual report was correct

in all material respects; the FRC’s role is

not to verify the information provided

but to consider compliance with

reporting requirements. Its letters are

written on the basis that the FRC (which

includes the FRC’s officers, employees

and agents) accepts no reliability for

reliance on them by the company or any

third party including but not limited to

investors and shareholders.

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 second 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 7 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

6 April 2023

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.

NARRATIVE 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

the inside front cover. Family investment

B3 Governance

CONTINUED

S&U Plc Annual Report and Accounts 20234444

and management has over the past 85

years been reflected in ambition for

growth and for new markets buttressed

by a conservative approach to risk, to

treasury 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 2023 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

consequent 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 Chief Executive 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.

In February 2023, after the end of

the financial year, Ed Ahrens the CEO

of Aspen Bridging was appointed to

the Board of S&U plc as an Executive

Director. This was considered appropriate

given his prudent and controlled

leadership of our growing property

bridging business and the wide range of

skills and experience from his banking

background which enhance the overall

Board management of the Group.

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.

Effectiveness

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

www.suplc.co.uk ― Stock Code: SUS

Corporate Governance

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. There were

no Board appointments during the

current year, but after the year end

the Nomination Committee played a

significant role in the appointment of Ed

Ahrens, an appointment which enhances

the relevant skills and experience of

the Board. 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, Jeremy Maxwell

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. Ed Ahrens was appointed

to the Board on 14 February 2023 and

offers himself for election at the next

Annual General Meeting.

The Senior Independent Director

Demetrios Markou provides a sounding

Board and objective support for the

Chairman and serves as an intermediary

for the other directors when necessary.

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 Reporting

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 10 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 56.

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.

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

B3 Governance

CONTINUED

S&U Plc Annual Report and Accounts 20234646

improvement. The Audit Committee’s

role in this area is confined to a high-

level review of the arrangements.

Relationship 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 71 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 14 women hold 33%

of senior management positions and

women hold 62% of other employee

positions and during the year no female

directors served on the Board. Currently

28 men hold 67% of senior management

positions and men hold 38% of other

employee positions and during the year

nine male directors served on the Board.

The Company had 11 employees of

which two are women and nine are men

including seven S&U plc Directors.

Board and Committee attendance

The attendance of individual directors at the regular meetings of the Board and its Committees during the year ended 31 January

2023 is shown in the table below:

Meeting Attendance Board Nominations Remuneration Audit

Number of meetings 5 1 1 3

AMV Coombs 5 1 n/a n/a

GDC Coombs 5 n/a n/a n/a

D Markou 5 1 1 3

G Pedersen 5 1 1 3

T Khlat 5 1 1 3

JP Maxwell 5 1 1 3

J EC Coombs 5 n/a n/a n/a

TG Wheeler 5 n/a n/a n/a

CH Redford 5 n/a n/a n/a

Ed Ahrens was appointed to the Board

on 14 February 2023 and therefore there

were no Board meetings during the year

ended 31 January 2023 which he could

have attended.

Remuneration

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.

Relations 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 including

the Chairman 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.

www.suplc.co.uk ― Stock Code: SUS

Corporate Governance

Mutual commitment and loyalty between

Company and its employees has under-

pinned S&U’s 85-year history. Both its

size, with currently over 190 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

2023 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 provisions 9 and 19 of

the code with its appointment of the

Chairman in 2008 and service thereafter,

“a clear rationale for the action” is also

set out above.

Graham Pedersen

Chairman of the Nominations Committee

6 April 2023

B3 Governance

CONTINUED

S&U Plc Annual Report and Accounts 20234848

The directors present their Annual

Report and the audited financial

statements for the year ended 31

January 2023 and for the period up to

the date of signing these accounts on

6 April 2023.

The names of all of the directors who

served during the year and up to the

date of signing the accounts are shown

in the directors’ biographies on pages

28 and 29. The CEO of our growing

Aspen Bridging business Ed Ahrens was

appointed to the Board on 14 February

2023 after the financial year end. Ed has

shown prudent and controlled leadership

of our growing property bridging

business and brings with him a wealth

of skills and expertise from his banking

background. All the other 9 directors

served for the full year to 31 January

2023.

No political donations were made during

the year (2022: £nil).

Dividends

Dividends of £15,546,000 (2022

£12,263,000) were paid during the year.

After the year end a second interim

dividend for the financial year of

£4,617,000 being 38.0p per ordinary

share (2022: 36.0p) was paid to

shareholders on 10 March 2023.

The directors now recommend a final

dividend, subject to shareholders

approval of 60.0p per share (2022:

57.0p). This, together with the interim

dividends totalling 73.0p per share

(2022: 69.0p) already paid, makes a total

dividend for the year of 133.0p per share

(2022: 126.0p).

Substantial shareholdings

At 6 April 2023, 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 20.

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.

Mazars LLP have expressed their

willingness to continue in office as

auditor and a resolution to reappoint

them will be proposed at the

forthcoming Annual General Meeting.

Post balance sheet events

There are no significant post balance

sheet events to report.

B4 Directors’ Report

www.suplc.co.uk ― Stock Code: SUS

Corporate Governance

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. The two matters to

report under the disclosure requirements

of the Large and Medium-sized

Companies and Groups (Report and

Accounts) Regulations 2008, are that;

1. The Board may appoint a director

during the year and until the dissolution

of the next AGM as long as the

maximum number of 10 directors is not

exceeded.

2. The Board have the power to issue

and allot up to 10% of the ordinary

share capital of the company and

to buy back up to 3,598,506 31.5%

preference shares and up to 200,000

6% preference shares of the company.

The two matters required to report

under listing rule 9.8.4R are as follows:

1. The Company has a long term incentive

scheme (LTIP 2021) with awards of

shadow share options which can only

be cash settled. Details of awards under

this scheme to directors are shown in

section B2.2.

2. Under the old long term incentive

scheme (LTIP 2010) 5,500 ordinary

shares were issued during the year as

per note 26 to the accounts. These

5,500 were the last shares which could

be issued under this LTIP 2010.

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 22.

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

6 April 2023

B4 Directors’ Report

CONTINUED

S&U Plc Annual Report and Accounts 20235050

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

parent company (the “company”) and

Group financial statements in accordance

with UK-adopted international

accounting standards. 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 and the

Group for that period. In preparing these

financial statements, the directors are

required to:

• properly select suitable accounting

policies and then apply them

consistently;

• make judgements and accounting

estimates that are reasonable and

prudent;

• state whether applicable UK-adopted

international accounting have been

followed, subject to any material

departures disclosed and explained in

the financial statements; and

• prepare the financial statements on

the going concern basis unless it is

inappropriate to presume that the

company will continue in business.

The directors are responsible for keeping

adequate accounting records that

are sufficient to show and explain the

company’s and group’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 group 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 UK-adopted

international accounting 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

6 April 2023

Chris Redford

Group Finance Director

6 April 2023

B5 Directors’ Responsibilities Statement

www.suplc.co.uk ― Stock Code: SUS

Corporate Governance

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

2023 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 2023

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

Financial Reporting Council’s (‘FRC’)

Ethical Standard as applied to listed

and public interest 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 by reviewing supporting

and contradictory evidence in relation

to these key assumptions. 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;

• 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;

• 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.

C Independent Auditor’s Report

to the Members of S&U Plc

S&U Plc Annual Report and Accounts 20235252

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.

Key Audit Matter How our scope addressed this matter

Measurement of loan impairments on loans and advances

to customers (Group and Advantage) (2023: £96.5m, 2022:

£92.1m)

Refer to note 1.4 for the accounting policy, note 1.13 for details

of the key sources of estimation uncertainty and note 15 for

relevant disclosures.

The estimation of expected credit losses (ECL) on loans and

advances to customers is complex and inherently judgemental.

The models require probabilities of default (PD), loss given

default (LGD) and exposures at default (EAD) to be determined,

as well as significant increase in credit risk (SICR) triggers,

that are altogether adjusted to take into account probability

weighted forward looking economic scenarios.

In the financial year, this has been made all the more

challenging by inflation hitting 11% and the cost of living crisis

putting additional financial pressure on household finances

and their ability to service debt. The unprecedented economic

environment is making modelling even more challenging,

resulting in the Group applying post model adjustments to its

macroeconomic scenarios.

The ECL model is most sensitive to:

• Identification of SICR and the resulting staging of loans,

• The core PD and LGD assumptions, and

• The post model adjustments.

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;

• Challenging the key assumptions of the PD, LGD and significant

increases in credit risk (SICR) and the staging applied and

forward-looking assumptions and weighting;

• Critically assessing the methodology for determining the

SICR criteria and independently test a sample of loans for

appropriateness of staging;

• Assessing the integrity of data used in the calibration of the PD

and LGD;

• Critically challenging and recalculating the post model

adjustments applied to take account of the impact of inflation

on customers’ ability to service their financing;

• Performing a stand back assessment of the resulting ECL

estimates to assess its appropriateness; and

• Assessing the adequacy of the Group’s disclosures in relation

to ECL.

Our observations

Based on the audit procedures performed, we found the

resulting estimate of the loan impairment provision as of

31 January 2023 and the approach taken in respect of ECL

are consistent with the requirements of IFRS 9 and that the

judgements made were reasonable.

www.suplc.co.uk ― Stock Code: SUS

Corporate Governance

Key Audit Matter How our scope addressed this matter

Revenue recognition – Constant periodic rate of return

assessment as per IFRS 16 (Group) (2023: £102.7m, 2022:

£87.9m)

Refer to note 1.4 for the accounting policy and note 3 for

relevant disclosures.

Recognising income under IFRS 16 for leases on a constant yield

basis is a complex area that involves judgement.

The majority of revenue is system generated but to convert

that to a constant yield 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 risk of fraud through possible

manipulation of this balance.

Our audit procedures included, but were not limited to:

• Assessing the design and implementation and test the

operating effectiveness of key controls over the constant

periodic rate of return on leases;

• Testing the accuracy and completeness of data inputs such

as interest rates, outstanding loan balances and directly

attributable cost/income; and

• Reviewing 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

basis to be reasonable for the year ended 31 January 2023 and

consistent with the requirements of IFRS 16.

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 £2.1m (2022: £2.4m)

How we determined it 5% of profit before tax (PBT) (2022: 5% of 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 £1.3m (2022: £1.4m), which represents 65% (2022: 60%) of

overall materiality.

In determining the performance materiality, we considered a number of factors, including the

effectiveness of internal controls and the history of misstatements, and concluded that an

amount toward the upper end of our normal range was appropriate.

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

our audit above £62,000 (2022: £71,000) as well as misstatements below that amount that, in

our view, warranted reporting for qualitative reasons.

C Independent Auditor’s Report

to the Members of S&U Plc

CONTINUED

S&U Plc Annual Report and Accounts 20235454

Parent company materiality

Overall materiality £0.7m (2022: £0.7m)

How we determined it 1% net assets (2022: 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 £0.5m (2022: £0.4m), which represents 65% (2022: 60%) of

overall materiality.

In determining the performance materiality, we considered a number of factors, including the

effectiveness of internal controls and the history of misstatements, and concluded that an

amount toward the upper end of our normal range was appropriate.

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

our audit above £21,000 (2022: £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 Finance Limited

and Aspen Bridging Limited, 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.

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

www.suplc.co.uk ― Stock Code: SUS

Corporate Governance

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;

• 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.

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 Code 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 15;

• 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 15;

• 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

e-merging and principal risks, set out on

page 15;

• 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 the 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:

C Independent Auditor’s Report

to the Members of S&U Plc

CONTINUED

S&U Plc Annual Report and Accounts 20235656

• 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;

• Inquiring of the directors, management

and, where appropriate, those charged

with governance, as to whether the

group and the parent company are 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 IFRS 16 constant

yield revenue recognition (which we

pinpointed to the existence and accuracy

assertions as described in the “Key

audit matters” section of our report),

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

two years, covering the years ended 31

January 2022 and 31 January 2023.

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

30 Old Bailey, London, EC4M 7AU

6 April 2023

www.suplc.co.uk ― Stock Code: SUS

Corporate Governance

D2 Notes to the Accounts

CONTINUED

Year ended 31 January 2023

The Accounts

In this section

D1 D1.1 Group Income Statement

and Statement of

Comprehensive Income 60

D1.2 Balance Sheet 61

D1.3 Statement of Changes

in Equity 62

D1.4 Cash Flow Statement 63

D2 Notes to the Accounts 64

Five Year Financial Record 89

S&U Plc Annual Report and Accounts 20235858

The Accounts

59www.suplc.co.uk ― Stock Code: SUS

The Accounts

From continuing operations Notes

2023

£000

2022

£000

Revenue 3 102,714 87,889

Cost of sales 4 (23,676) (18,771)

Impairment charge 5 (13,877) (4,120)

Gross profit 65,161 64,998

Administrative expenses (16,256) (14,208)

Operating profit 7 48,905 50,790

Finance costs (net) 8 (7,495) (3,772)

Profit before taxation 2 41,410 47,018

Taxation 10 (7,692) (9,036)

Profit for the year attributable to equity holders 33,718 37,982

Earnings per share

Basic 12 277.5p 312.8p

Diluted 12 277.5p 312.7p

Statement of

Comprehensive Income

Note

Group

2023

£000

Group

2022

£000

Company

2023

£000

Company

2022

£000

Profit for the year attributable to equity holders 33,718 37,982 16,039 10,113

Actuarial loss on defined benefit pension scheme 27 (13) (6) (13) (6)

Total Comprehensive Income for the year 33,705 37,976 16,026 10,107

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 2023

S&U Plc Annual Report and Accounts 20236060

Notes

Group

2023

£000

Group

2022

£000

Company

2023

£000

Company

2022

£000

ASSETS

Non-current assets

Property, plant and equipment 13 2,616 2,455 446 199

Investments 14 – – 1 1

Amounts receivable from customers 15 219,305 181,614 – –

Trade and other receivables 16 – – 210,000 152,000

Deferred tax assets 19 110 120 15 35

222,031 184,189 210,462 152,235

Current assets

Amounts receivable from customers 15 201,405 141,301 – –

Trade and other receivables 16 1,601 1,739 57,833 33,701

Cash and cash equivalents 3,137 – – –

206,143 143,040 57,833 33,701

Total assets 428,174 327,229 268,295 185,936

LIABILITIES

Current liabilities

Bank overdrafts and loans 17 – (2,568) (273) (3,147)

Trade and other payables 18 (4,602) (4,347) (711) (654)

Current tax liabilities (888) (926) (69) (116)

Lease liabilities (166) (174) (51) (66)

Accruals (1,262) (774) (225) (221)

(6,918) (8,789) (1,329) (4,204)

Non-current liabilities

Borrowings 17 (195,500) (111,000) (195,500) (111,000)

Lease liabilities (421) (243) (292) (17)

Financial liabilities 21 (450) (450) (450) (450)

(196,371) (111,693) (196,242) (111,467)

Total liabilities (203,289) (120,482) (197,571) (115,671)

NET ASSETS 224,885 206,747 70,724 70,265

Equity

Called up share capital 20 1,719 1,718 1,719 1,718

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

Profit and loss account 220,865 202,728 66,704 66,246

Total equity 224,885 206,747 70,724 70,265

The parent company’s profit for the financial year after taxation amounted to £16,039,000 (2022: £10,113,000)

These financial statements were approved by the Board of Directors on 6 April 2023.

Signed on behalf of the Board of Directors

AMV Coombs C Redford

Chairman Group Finance Director

D1.2 Balance Sheet

AS AT 31 JANUARY 2023

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 2023

Group Notes

Called up

share capital

£000

premium

account

£000

Profit

and loss

account

£000

Total

equity

£000

At 1 February 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 20 1 – – 1

Cost of future share-based payments 26 – – 39 39

Tax charge on equity items 19 – – (35) (35)

Dividends 11 – – (12,263) (12,263)

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

Profit for year – – 33,718 33,718

Other comprehensive income for year – – (13) (13)

Total comprehensive income for year – – 33,705 33,705

Issue of new shares in year 20 1 – – 1

Cost of future share-based payments 26 – – 6 6

Tax charge on equity items 19 – – (28) (28)

Dividends 11 – – (15,546) (15,546)

At 31 January 2023 1,719 2,301 220,865 224,885

Company Notes

Called up

share capital

£000

premium

account

£000

Profit

and loss

account

£000

Total

equity

£000

At 1 February 2021 1,717 2,301 68,398 72,416

Profit for year 9 – – 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 20 1 – – 1

Cost of future share-based payments 26 – – 39 39

Tax charge on equity items 19 – – (35) (35)

Dividends 11 – – (12,263) (12,263)

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

Profit for year 9 – – 16,039 16,039

Other comprehensive income for year – – (13) (13)

Total comprehensive income for year – – 16,026 16,026

Issue of new shares in year 20 1 – – 1

Cost of future share-based payments 26 – – 6 6

Tax charge on equity items 19 – – (28) (28)

Dividends 11 – – (15,546) (15,546)

At 31 January 2023 1,719 2,301 66,704 70,724

S&U Plc Annual Report and Accounts 20236262

D1.4 Cash Flow Statement

FOR THE YEAR ENDED 31 JANUARY 2023

Notes

Group

2023

£000

Group

2022

£000

Company

2023

£000

Company

2022

£000

Net cash used in operating activities 23 (62,760) (2,094) (66,010) (4,047)

Cash flows used in investing activities

Proceeds on disposal of property, plant and equipment 166 93 88 –

Purchases of property, plant and equipment 13 (826) (377) (419) (24)

Net cash used in investing activities (660) (284) (331) (24)

Cash flows from financing activities

Dividends paid 11 (15,546) (12,263) (15,546) (12,263)

Issue of new shares 1 1 1 1

Decrease in investments in dormant companies – – – 531

Receipt of new borrowings 84,500 25,000 84,500 25,000

Repayment of borrowings – (11,500) – (11,500)

Increase/(decrease) in lease liabilities 170 (134) 260 (63)

Net (decrease)/increase in overdraft (2,568) 1,273 (2,874) 2,364

Net cash generated from financing activities 66,557 2,377 66,341 4,070

Net increase/(decrease) in cash and cash equivalents 3,137 (1) – (1)

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

Cash and cash equivalents at the end of year 3,137 – – –

Cash and cash equivalents comprise

Cash and cash in bank 3,137 – – –

There are no cash and cash equivalent balances which are not available for use by either the Group or the Company (2022: £nil).

www.suplc.co.uk ― Stock Code: SUS

The Accounts

D2 Notes to the Accounts

Year ended 31 January 2023

1. ACCOUNTING POLICIES

1.1 General Information

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 page 91 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 preparation and consolidation

As a listed Group 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 UK-adopted international

accounting standards. We have also prepared our S&U plc Company financial statements in conformity with the requirements

of the Companies Act 2006 and UK-adopted international accounting standards. Under S404 of the Companies Act 2006, the

parent company S&U plc has taken exemption from reporting its own profit and loss. 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 2023. 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 next three

years, which the directors have concluded is appropriate for the Group’s viability assessment. 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.

All companies within the Group are 100% owned and consolidated and the assets, liabilities, costs and revenues are fully

consolidated. All intercompany balances and transactions are eliminated on consolidation.

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 Financial assets and financial liabilities accounting policy

When initially recognising a financial asset it is classified into one of the following three categories based on the group’s

business model for managing that asset and the asset’s contractual cash flow characteristics:

i) Amortised cost – a financial asset is measured at amortised cost if both of the following conditions are met:

a) The asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows;

and

b) The contractual terms of the financial asset give rise on specified dates to cash flows that are payments of principal and

interest on the principal amount outstanding.

ii) Fair value through other comprehensive income – financial assets are classified and measured at fair value through other

comprehensive income if they are held in a business model whose objective is achieved by both collecting contractual cash

flows and selling financial assets.

iii) Fair value through profit or loss – any financial assets that are not held in one of the two business models mentioned are

measured at fair value through profit or loss.

The group has classified its financial assets and its financial liabilities as measured at amortised cost.

1.4 Revenue recognition

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

constant periodic rate of return on the net investment in the loans, which is akin to an effective interest rate (EIR) method.

The EIR is the rate that exactly discounts estimated future cash flows of the loan back to the present value of the advance

and hire purchase interest income is then recognised using the EIR. Acceptance fees charged to customers and any direct

transaction costs are included in the calculation of the EIR. For hire purchase agreements in Advantage Finance which are

classified as credit impaired (i.e. stage 3 assets under IFRS 9), the group recognises revenue ‘net’ of the impairment provision

to align the accounting treatment under IFRS 16 with the requirements of IFRS 9 and also with the treatment adopted for

similar assets in Aspen. Revenue starts to be recognised from the date of completion of the loan – after completion hire

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

S&U Plc Annual Report and Accounts 20236464

1. ACCOUNTING POLICIES (CONTINUED)

1.5 Impairment and measurement of amounts receivable from customers

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

initial recognition the amounts receivable from customers are subsequently measured at amortised cost.

Amortised cost includes a deduction for loan loss impairment provisions for expected credit losses (“ECL”) assessed by the

directors in accordance with the requirements of IFRS9.

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

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

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

Stage 3: Credit impaired

The directors assess whether there is objective evidence that a loan asset or group of loan assets is credit impaired and

should be classified as stage 3. A loan asset or a group of loan assets is credit impaired only if there is objective evidence of

credit impairment as a result of one or more events that occurred after the initial recognition of the loan. Objective evidence

may include evidence that a borrower or group of borrowers is experiencing financial difficulty or delinquency in repayments.

Impairment is then calculated by estimating the future cash flows for such impaired loans, discounting the flows to a present

value using the original EIR and comparing this figure with the balance sheet carrying value. All such impairments are charged

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

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

Key assumptions in ascertaining whether a loan asset or group of loan assets is credit impaired include information regarding

the probability of any account going into default (PD) and information regarding the likely eventual loss including recoveries

(LGD). These assumptions and assumptions for estimating future cash flows are based upon observed historical data and

updated to reflect current and future conditions. As required under IFRS9, all assumptions are reviewed regularly to take

account of differences between previously estimated cash flows on impaired debt and the eventual losses.

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

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

of the loan book which is Stage 1. 12-month ECL is the portion of lifetime ECL that results from default events on a financial

asset that are possible within 12 months after the reporting date.

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

included in IFRS9 stage 3. This results in more of our net receivables being in stage 3 and the associated stage 3 loan loss

provisions being higher than if we adopted a more prime customer receivables approach of 3 months or more in arrears. Our

approach of 1 month or more in contractual arrears is based on our historical 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 were therefore included in Stage 2 until they re-established a successful

post holiday payment records. There are no payment holiday customers left in stage 2 at 31 January 2023 as at that date all

such customers are either correctly classified in another stage or their agreement has finished. This is why the volume of

customers in Stage 2 decreased at 31 January 2023.

www.suplc.co.uk ― Stock Code: SUS

The Accounts

D2 Notes to the Accounts

CONTINUED

Year ended 31 January 2023

1. ACCOUNTING POLICIES (CONTINUED)

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 2023 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 1.13.

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

applied to the calculations used at 31 January 2023 and those used at 31 January 2022.

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

Bridging in accordance with IFRS9. Stage 1 expected losses are recognised on inception/initial recognition of a loan based

on the probability of a customer becoming impaired in the next 12 months. The Bridging product has a single repayment

scheduled for the end of the loan term and if a bridging loan is not granted an extension and is still outstanding 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.

1.6 Impairment of amounts owed by subsidiary companies to the parent company

These are initially recognised as the amount loaned to the subsidiary company. After initial recognition amounts owed by

subsidiary companies to the parent company are subsequently measured at amortised cost. Amortised costs includes any

deduction for loan loss impairment provisions for expected credit losses in accordance with the requirements of IFRS9.

Management consider that there is a low probability of default on these loans and there has been no significant increase

in credit risk or credit impairment since these loans were first recognised. Therefore the loans continued to be held at the

amount loaned.

1.7 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

Right to Use Assets Straight line over the normal term of the lease

Freehold Land is not depreciated.

1.8 Taxation

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.

S&U Plc Annual Report and Accounts 20236666

1. ACCOUNTING POLICIES (CONTINUED)

1.9 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.

1.10 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. The

scheme is currently in surplus but as the group has no ability to access this asset the surplus is capped at £nil. 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.

1.11 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.

1.12 Investments

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

1.13 Critical accounting judgements and key sources of estimation uncertainty

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

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

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

Critical accounting judgements

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

below), that the Directors have made in the process of applying the Company’s accounting policies and that have the most

significant effect on the amounts recognised in the financial statements.

Significant increase in credit risk for classification in Stage 2

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

being moved from Stage 1 to Stage 2. Stage 2 currently includes customers who have a good payment record but have been

identified as vulnerable by trained staff. Vulnerability can be driven by factors including health, life events, resilience or

capability. All customer facing staff are trained to help recognise characteristics of vulnerability. Stage 2 previously included

some pandemic payment holiday customers but these customers have all now had 12 months to re-establish their post

holiday payment track record and are therefore now either correctly included in another stage or their agreement has

finished.

Key sources of estimation uncertainty

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

recognised in the financial statements are those inherent in the consumer credit markets in which we operate relating to

impairment as outlined in 1.5 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 2023

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:

Unemployment Base

Upside

(30% decrease)

Downside

(30 % increase)

Severe

(50% increase) Weighted

Weighting 50% 5% 40% 5%

Q1 2023 3.80% 2.66% 4.94% 5.70% 4.29%

Q1 2024 4.40% 3.08% 5.72% 6.60% 4.97%

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

Q1 2026 5.30% 3.71% 6.89% 7.95% 5.99%

Inflation rates were not previously been factored into the macroeconomic overlay prior to 31 January 2022 when we

included them due to the extraordinary increases forecast for the following 12 months period and the potential impact on

our customers and their repayments – high inflation and forecast inflation were still present at 31 January 2023. The Group

considers four probability-weighted scenarios in relation to inflation rate: base, upside, downside and severe scenarios as

follows:

Inflation Base

Upside

(30% decrease)

Downside

(30 % increase)

Severe

(50% increase) Weighted

Weighting 50% 5% 40% 5%

Q1 2023 9.70% 6.79% 12.61% 14.55% 10.96%

Q1 2024 3.00% 2.10% 3.90% 4.50% 3.39%

Q1 2025 1.00% 0.70% 1.30% 1.50% 1.13%

Q1 2026 0.40% 0.28% 0.52% 0.60% 0.45%

An increase by 0.5% in the weighted average unemployment rate would result in an increase in loan loss provisions by

£1,044,494. A decrease by 0.5% would result in a decrease in loan loss provisions by £1,044,494. An increase by 0.5% in the

weighted average inflation rate would result in an increase in loan loss provisions by £474,770. A decrease by 0.5% would

result in a decrease in loan loss provisions by £474,770.

Used vehicle price overlay and sensitivity for our motor finance business

Our used vehicle price overlay is based on used vehicle guide price information and the mileage and condition of each vehicle

is estimated which is uncertain. It is also based on an uncertain assumption at 31.1.23 that used car prices which increased

significantly in 2021 and 2022 will fall by 13.5%. This used vehicle price overlay has increased loan loss provisions at 31.1.23

by £6,656,000 (2022: increased provisions by £4,552,000). If used car prices were only assumed to fall by 8.5% instead, then

this would result in a decrease in loan loss provisions of £2,815,718. If used car prices were assumed to fall by 18.5% instead,

then this would result in a further increase in loan loss provisions of £2,717,750.

Expected loss sensitivity for our property bridging business

The PD/LGD expected loss impairment provision model calculations developed for our Aspen bridging business have been

based on extrapolating an inherently low volume sample of historic defaults and losses to reflect the current receivables

and current market conditions. If the probability of default were assessed to be 10% higher than these calculations then this

would result in an increase in loan loss provisions of £290,727. If the probability of default were assessed to be 10% lower

than these calculations then this would result in a decrease in loan loss provisions of £290,727.

1.14 Alternative 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)

S&U Plc Annual Report and Accounts 20236868

1. ACCOUNTING POLICIES (CONTINUED)

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

declared for the same financial year.

v) Group gearing is calculated as the sum of Bank Loans and Overdrafts 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.

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

31.1.23

£000

Year ended

31.1.22

£000

Year ended

31.1.23

£000

Year ended

31.1.22

£000

Motor finance 89,801 78,898 37,171 43,682

Property bridging finance 12,913 8,991 4,457 3,414

Central costs net of central finance income – – (218) (78)

102,714 87,889 41,410 47,018

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

Assets Liabilities

Class of business

Year ended

31.1.23

£000

Year ended

31.1.22

£000

Year ended

31.1.23

£000

Year ended

31.1.22

£000

Motor finance 311,168 262,458 (164,452) (131,012)

Property bridging finance 116,714 64,426 (109,485) (59,606)

Central 292 345 70,648 70,136

428,174 327,229 (203,289) (120,482)

Depreciation of assets for motor finance was £425,000 (2022: £427,000), for property bridging finance was £15,000 (2022:

£21,000) and for central was £85,000 (2022: £81,000). Fixed asset additions for motor finance were £394,000 (2022:

£337,000), for property bridging finance were £13,000 (2022: £16,000) and for central were £419,000 (2022: £24,000).

The net finance credit for central costs was £2,507,000 (2022: £2,506,000), for motor finance was a cost of £6,619,000 (2022:

£4,394,000) and for property bridging finance was a cost of £3,383,000 (2022: £1,884,000). The tax credit for central costs

was £58,000 (2022: £24,000), for motor finance was a tax charge of £6,901,000 (2022: £8,408,000) and for property bridging

finance was a tax charge of £848,000 (2022: £652,000).

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 2023

3. REVENUE

2023

£000

2022

£000

Interest and other income from motor finance hire purchase loans 89,801 78,898

Interest and other income from property bridging loans 12,913 8,991

Total revenue 102,714 87,889

4. COST OF SALES

2023

£000

2022

£000

Cost of sales – motor finance 21,687 17,266

Cost of sales – property bridging finance 1,989 1,505

Total Cost of sales 23,676 18,771

5. IMPAIRMENT CHARGE

2023

£000

2022

£000

Loan loss provisioning charge

Loan loss provisioning charge – motor finance 12,885 3,805

Loan loss provisioning charge – property bridging finance 992 315

Total impairment charge 13,877 4,120

Note – motor finance loan loss provisions in 2022 were lower than normal as £36.0m loan loss provisions charged during the

pandemic year ended 31.1.21 were not utilised as much as anticipated.

6. INFORMATION REGARDING EMPLOYEES

Group

2023

No.

Group

2022

No.

Company

2023

No.

Company

2022

No.

The monthly average number of persons employed by the Group

in the year was:

Motor finance 192 173 – –

Property bridging finance 21 17 – –

Central 11 10 11 10

Total Group average number of employees 224 200 11 10

The monthly average employed by the Company was 11 (2022: 10)

2023

£000

2022

£000

2023

£000

2022

£000

Staff costs during the year (including directors):

Wages and salaries 10,522 9,133 1,535 1,402

Social security costs 1,186 928 209 209

Pension costs for defined contribution scheme 456 391 38 37

Total Staff Costs 12,164 10,452 1,782 1,648

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 historical defined benefit pension plan the

details of which are contained in note 27 of these notes to the accounts.

S&U Plc Annual Report and Accounts 20237070

7. OPERATING PROFIT

2023

£000

2022

£000

Operating profit from continuing operations is after charging:

Depreciation and amortisation:

Owned and Right to` Use assets 525 529

Staff costs 12,164 10,441

Cost of future share-based payments 6 39

(Profit)/Loss on sale of fixed assets (1) 13

The analysis of auditor’s remuneration is as follows:

2023

£000

2022

£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 133 128

Total audit fees 163 158

Audit related assurance services 25 25

Other services – –

Total non-audit fees 25 25

Total 188 183

8. FINANCE COSTS (NET)

2023

£000

2022

£000

31.5% cumulative preference dividend 141 142

Lease Liabilities 12 17

Bank loan and overdraft interest payable 7,342 3,613

Total Finance Costs (net) 7,495 3,772

9. 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 £16,039,000 (2022:

£10,113,000).

www.suplc.co.uk ― Stock Code: SUS

The Accounts

D2 Notes to the Accounts

CONTINUED

Year ended 31 January 2023

10. TAX ON PROFIT BEFORE TAXATION

2023

£000

2022

£000

Continuing Operations

Corporation tax at 19.0% (2022: 19.0%) based on profit for the year 7,894 9,129

Adjustment in respect of prior years (184) (47)

7,710 9,082

Deferred tax (temporary differences – origination and reversal) (18) (46)

7,692 9,036

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.

2023

£000

2022

£000

Profit on ordinary activities before tax from continuing operations 41,410 47,018

Tax on profit on ordinary activities at standard rate of 19.0% (2021: 19.0%) 7,868 8,933

Factors affecting charge for the period:

Expenses not deductible for tax purposes 41 56

Effects of other tax rates and permanent differences (33) 94

Prior period adjustments (184) (47)

Total actual amount of tax 7,692 9,036

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.

11. DIVIDENDS

2023

£000

2022

£000

2nd Interim dividend paid for the year ended 31/1/2022 – 36.0p per Ordinary share (25.0p) 4,372 3,033

Final dividend paid for the year ended 31/1/2022– 57.0p per Ordinary share (43.0p) 6,926 5,222

1st Interim dividend paid for the year ended 31/1/2023 – 35.0p per Ordinary share (33.0p) 4,253 4,008

Total ordinary dividends paid 15,551 12,263

6% cumulative preference dividend paid March and September 12 12

Credit for unpresented dividend payments over 12 years old (17) (12)

Total dividends paid 15,546 12,263

A second interim dividend of 36.0p per ordinary share for the year ended 31 January 2023 was paid on 10 March 2023

totalling £4.6m and the directors are proposing a final dividend for the year ended 31 January 2023 of 60p per ordinary share

totalling £7.3m. The final dividend will be paid on 7 July 2023 to shareholders on the register at close of business on 16 June

2023 subject to approval by shareholders at the Annual General Meeting on Thursday 25 May 2023.

12. EARNINGS PER ORDINARY SHARE

The calculation of earnings per ordinary share (“eps”) from continuing operations is based on profit after tax of £33,718,000

(2022: £37,982,000).

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

12,149,205 (2022: 12,142,928). There are a total of nil dilutive share options in issue (2022: 5,500) and taking into account

the appropriate proportion of these dilutive options the number of shares used in the diluted eps calculation is 12,149,205

(2022: 12,145,096).

S&U Plc Annual Report and Accounts 20237272

13. PROPERTY, PLANT AND EQUIPMENT

Group

Land and

buildings

£000

Motor

vehicles

£000

Fixtures and

Fittings

£000

Right to

Use

£000

Total

£000

Cost

At 1 February 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

Additions 61 192 210 363 826

Disposals (4) (224) (17) (251) (496)

At 31 January 2023 1,886 381 1,796 885 4,948

Accumulated depreciation

At 1 February 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

Charge for the year 115 68 178 164 525

Eliminated on disposals (4) (106) (17) (229) (356)

At 31 January 2023 505 177 1,323 327 2,332

Net book value

At 31 January 2023 1,381 204 473 558 2,616

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

Included in the above is land at a cost of £22,000 (2022: £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. The total cash outflow for these leases during the year to 31.1.23 was £ 173,000 (2022: £ 190,000 ).

Company

Land and

Buildings

£000

Motor

vehicles

£000

Fixtures and

Fittings

£000

Right to

Use

£000

Total

£000

Cost

At 1 February 2021 42 79 244 251 616

Additions – – 24 – 24

Disposals – – – – –

At 31 January 2022 42 79 268 251 640

Additions – 75 1 343 419

Disposals – (101) – (251) (352)

At 31 January 2023 42 53 269 343 707

Accumulated depreciation

At 1 February 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

Charge for the year – 6 22 57 85

Eliminated on disposals – (36) – (229) (265)

At 31 January 2023 12 33 204 12 261

Net book value

At 31 January 2023 30 20 65 331 446

At 31 January 2022 30 16 86 67 199

Included in the above is land at cost of £22,000 (2022: £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. The total cash outflow for these leases during the year to 31.1.23 was £51,000 (2022: £ 68,000).

www.suplc.co.uk ― Stock Code: SUS

The Accounts

D2 Notes to the Accounts

CONTINUED

Year ended 31 January 2023

14. INVESTMENTS AND RELATED PARTY TRANSACTIONS

Company

2023

£000

2022

£000

Shares in subsidiary companies

At historical cost less impairment 1 1

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) and Cash Kangaroo Limited (08435795).

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 transactions

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 £109,500 (2022: £102,000) 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 (2022: £nil). During the year the Group obtained supplies at market rates amounting to

£4,123 (2022: £3,508) 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 £16,200,000 (2022: £10,000,000). 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 2023 the Company was owed

£267,945,745 (2022: £185,807,050) by other Group undertakings as part of an intercompany loan facility and owed £217,119

to a dormant group company (2022: £217,119). All related party transactions were settled in full when due. Key management

personnel compensation is disclosed on page 34 in the Directors Remuneration Report.

S&U Plc Annual Report and Accounts 20237474

15. AMOUNTS RECEIVABLE FROM CUSTOMERS

Group

2023

£000

2022

£000

Motor finance hire purchase 403,282 350,517

Less: Loan loss provision motor finance (96,465) (91,481)

Amounts receivable from customers motor finance 306,817 259,036

Property bridging finance loans 115,451 64,525

Less: Loan loss provision property bridging finance (1,558) (646)

Amounts receivable from customers property bridging finance 113,893 63,879

Amounts receivable from customers total 420,710 322,915

Analysis by future date due

– Due within one year 201,405 141,301

– Due in more than one year 219,305 181,614

Amounts receivable from customers 420,710 322,915

Analysis of security

Loans secured on vehicles under hire purchase agreements 302,159 254,933

Loans secured on property 113,893 63,879

Other loans not secured (motor finance where security no longer present) 4,658 4,103

Amounts receivable from customers 420,710 322,915

Analysis of overdue

Not impaired

Neither past due nor impaired 367,245 285,892

Past due up to 3 months but not impaired – –

Past due over 3 months but not impaired – –

Impaired

Past due up to 3 months 40,249 25,137

Past due over 3 months and up to 6 months 4,772 3,943

Past due over 6 months or default 8,444 7,943

Amounts receivable from customers 420,710 322,915

The credit risk inherent in amounts receivable from customers is reviewed as per note 1.5 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 473 vulnerable or

Covid impacted payment deferral customers who although not in arrears at 31.1.23 were assessed from a review of internal

data to have a significant increase in credit risk (2022: 1,688). Under IFRS9 therefore these customers although not in arrears

are included in stage 2 at 31.1.23 with an increased impairment provision.

www.suplc.co.uk ― Stock Code: SUS

The Accounts

D2 Notes to the Accounts

CONTINUED

Year ended 31 January 2023

15. AMOUNTS RECEIVABLE FROM CUSTOMERS (CONTINUED)

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

As at 31 January 2023

Stage 1:

Subject to 12

months ECL

£’000

Stage 2:

Subject to

lifetime ECL

£’000

Stage 3:

Subject to

lifetime ECL

£’000

Total

£’000

Amounts receivable (capital)

Motor finance 285,050 2,236 115,996 403,282

Property bridging finance 108,378 – 7,073 115,451

Total 393,428 2,236 123,069 518,733

Loan loss provisions

Motor finance (26,640) (662) (69,163) (96,465)

Property bridging finance (1,116) – (442) (1,558)

Total (27,756) (662) (69,605) (98,023)

Amounts receivable (net)

Motor finance 258,410 1,574 46,833 306,817

Property bridging finance 107,262 – 6,631 113,893

Total 365,672 1,574 53,464 420,710

As at 31 January 2022

Stage 1:

Subject to 12

months ECL

£’000

Stage 2:

Subject to

lifetime ECL

£’000

Stage 3:

Subject to

lifetime ECL

£’000

Total

£’000

Amounts receivable (capital)

Motor finance 240,588 7,503 102,426 350,517

Property bridging finance 63,145 – 1,380 64,525

Total 303,733 7,503 103,806 415,042

Loan loss provisions

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

Property bridging finance (446) – (200) (646)

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

Amounts receivable (net)

Motor finance 218,459 4,734 35,843 259,036

Property bridging finance 62,699 – 1,180 63,879

Total 281,158 4,734 37,023 322,915

Collateral held

Motor finance – except for loans valued at £4.658m (2022: £4.103m), where we are aware the security is no longer present,

security is held on a used vehicle for each hire purchase motor finance agreement. As stated in note 1.13 above, valuing these

used vehicles secured under our hire purchase agreements is uncertain as the condition and mileage of the used vehicle are

unknown. We estimate the trade value of collateral held at 31.1.23 for motor finance loans currently in stage 3 was £64.5m

(2022: £59.0m) – these estimated values are stated before taking into account recovery and disposal costs.

Property bridging finance – the estimated value of first charge secured properties held under our bridging loan facility

agreements at 31.1.23 is £184.7m (2022: £107.0m). This includes £13.4m estimated value of properties secured which is held

for loan agreements currently in Stage 3 (2022: £1.5m).

Advances in both our motor finance business and our property bridging business are only made with collateral security and

this is important in both these markets for the collectability of these loans – there have been no significant changes in the

quality of collateral held during the year.

S&U Plc Annual Report and Accounts 20237676

15. AMOUNTS RECEIVABLE FROM CUSTOMERS (CONTINUED)

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 2021 14,680 12,759 65,475 92,914

Net transfers and changes in credit risk restated (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

Net transfers and changes in credit risk (10,020) (1,905) (1,710) (13,635)

New loans originated 15,599 148 11,765 27,512

Total impairment charge to income statement 5,579 (1,757) 10,055 13,877

Amounts netted off revenue for stage 3 assets – – 8,893 8,893

Utilised provision on write-offs (398) (350) (16,126) (16,874)

At 31 January 2023 27,756 662 69,605 98,023

There were no significant changes in the capital carrying value of amounts receivable from customers this year which

contributed to changes in the loan loss provisions other than growth in new loans originated.

16. TRADE AND OTHER RECEIVABLES

Group Company

2023

£000

2022

£000

2023

£000

2022

£000

Amounts owed by subsidiary undertakings – – 267,729 185,590

Other debtors 55 300 10 11

Prepayments and accrued income 1,546 1,439 94 100

1,601 1,739 267,833 185,701

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

than £130.0m of intercompany receivables from Advantage Finance Limited (2022: £127.0m) and £80.0m of intercompany

receivables from Aspen Bridging Limited (2022: £25.0m), 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 and no amounts which are impaired or have a significant increase in credit

risk. The carrying value of trade and other receivables is not materially different to their fair value.

www.suplc.co.uk ― Stock Code: SUS

The Accounts

D2 Notes to the Accounts

CONTINUED

Year ended 31 January 2023

17. BORROWINGS INCLUDING BANK OVERDRAFTS AND LOANS

Group Company

2023

£000

2022

£000

2023

£000

2022

£000

Bank overdrafts and loans – due within one year – 2,568 273 3,147

Bank and other loans – due in more than one year 195,500 111,000 195,500 111,000

195,500 113,568 195,773 114,147

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 2023:

− a facility for £ 5 million (2022: £5m) which is subject to annual review in June 2023.

− a facility for £2 million (2022: £2m) which has no annual review date.

Total drawdowns of these overdraft facilities at 31 January 2023 were £nil (2022: £2,568,684).

S&U plc had the following revolving credit facilities available at 31 January 2023:

− a facility for £60 million (2022: £60m) which is due for repayment in March 2026.

− a facility for £20 million (2022: £20m) which is due for repayment in March 2025.

− a facility for £80 million (2022: £50m) - £25m of which is due for repayment in April 2026 and £55m of which is due for

repayment in March 2027.

S&U plc had the following term loan facilities available at 31 January 2023:

− a facility for £50 million (2022: £50m) - £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 2023 was £273,163 overdrawn (2022: £3,147,713). A

maturity analysis of the above borrowings is given in note 22.

18. TRADE AND OTHER PAYABLES

Group Company

2023

£000

2022

£000

2023

£000

2022

£000

Trade creditors 617 641 67 151

Other creditors including commissions and remuneration payable 3,985 3,706 644 503

4,602 4,347 711 654

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

S&U Plc Annual Report and Accounts 20237878

19. DEFERRED TAX

Group

Accelerated

tax

depreciation

£000

Share based

payments

£000

Shadow

Options

£000

Total

£000

At 1 February 2021 (86) 58 137 109

Credit/(debit) to income (47) 4 89 46

Credit to equity – (35) – (35)

At 31 January 2022 (133) 27 226 120

Credit/(charge) to income 24 1 (7) 18

Charge to equity – (28) – (28)

At 31 January 2023 (109) – 219 110

Company £000 £000 £000 £000

At 1 February 2021 (9) 58 – 49

Credit to income 11 4 6 21

Charge to equity – (35) – (35)

At 31 January 2022 2 27 6 35

(Charge)/credit to income (9) 1 16 8

Charge to equity – (28) – (28)

At 31 January 2023 (7) – 22 15

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 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.

20. CALLED UP SHARE CAPITAL AND PREFERENCE SHARES

2023

£000

2022

£000

Called up, allotted and fully paid

12,150,760 Ordinary shares of 12.5p each (2022: 12,145,260) 1,519 1,518

200,000 6.0% Cumulative preference shares of £1 each 200 200

Called up share capital 1,719 1,718

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 5,500 shares issued during the year relate to issues under the Company’s historic LTIP 2010 scheme – see also note 26.

www.suplc.co.uk ― Stock Code: SUS

The Accounts

D2 Notes to the Accounts

CONTINUED

Year ended 31 January 2023

21. FINANCIAL LIABILITIES

Preference Share Capital

2023

£000

2022

£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.

22. 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 2023 the Group’s indebtedness amounted to £192,363,000 (2022: £113,568,000) and the Company’s

indebtedness amounted to £195,773,000 (2022: £114,417,000). The Group gearing was 85.5% (2022: 54.9%), 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 on page 82 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 2023 of £14.5m (2022: £65.0m). 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 2023 was estimated to be 25% (2022: 25%).

The average effective interest rate of financial liabilities of the Group at 31 January 2023 was estimated to be 6% (2022: 4%).

The average effective interest rate on financial liabilities of the Company at 31 January 2023 was estimated to be 6% (2022:

4%).

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.

S&U Plc Annual Report and Accounts 20238080

22. FINANCIAL INSTRUMENTS (CONTINUED)

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 2023 (2022: 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 1% and a 2% 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 1% higher/lower and all other variables were held constant, the Group’s;

• profit for the year ended 31 January 2023 would decrease/increase by £1.3 million (2022: decrease/increase by £0.9million).

This is mainly attributable to the Group’s exposure on its variable rate borrowings.

• total equity would decrease/increase by £1.3million (2022: decrease/increase by £0.9million). This is mainly attributable to the

Group’s exposure on its variable rate borrowings.

If interest rates had been 2% higher/lower and all other variables were held constant, the Group’s;

• profit for the year ended 31 January 2023 would decrease/increase by £2.6million (2022: decrease/increase by £1.7million).

This is mainly attributable to the Group’s exposure on its variable rate borrowings.

• total equity would decrease/increase by £2.6million (2022: decrease/increase by £1.7million). 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 2023 the Group gearing level was 85.5% (2021: 54.9%) 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.

Fair values of financial assets and liabilities

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 (2022: £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.

www.suplc.co.uk ― Stock Code: SUS

The Accounts

D2 Notes to the Accounts

CONTINUED

Year ended 31 January 2023

22. FINANCIAL INSTRUMENTS (CONTINUED)

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 around 85.5% results in a positive liquidity position.

Group

At 31 January 2023

Less than

1 year

£’000

More than

1 year but

not more

than 2 years

£’000

More than

2 years but

not more

than 5 years

£’000

More than

5 years

£’000

No fixed

maturity

date

£’000

Total

£’000

Financial assets 201,405 67,476 151,829 – – 420,710

Other assets – – – – 4,327 4,327

Cash at bank and in hand 3,137 – – – – 3,137

Total assets 204,542 67,476 151,829 – 4,327 428,174

Shareholders’ funds – – – – (224,885) (224,885)

Bank overdrafts and loans – – (145,500) (50,000) – (195,500)

Lease liabilities (166) (169) (252) – – (587)

Financial liabilities – – – (450) – (450)

Other liabilities – – – – (6,752) (6,752)

Total liabilities and shareholders’

funds (166) (169) (145,752) (50,450) (231,637) (428,174)

Cumulative gap 204,376 271,683 277,760 227,310 – –

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

More 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 – –

S&U Plc Annual Report and Accounts 20238282

22. FINANCIAL INSTRUMENTS (CONTINUED)

Company

At 31 January 2023

Less than

1 year

£’000

More than

1 year but

not more

than 2 years

£’000

More than

2 years but

not more

than 5 years

£’000

More than

5 years

£’000

No fixed

maturity

date

£’000

Total

£’000

Other assets – – 160,000 50,000 58,295 268,295

Cash at bank and in hand – – – – – –

Total assets – – 160,000 50,000 58,295 268,295

Shareholders’ funds – – – – (70,724) (70,724)

Bank overdrafts and loans (273) – (145,500) (50,000) – (195,773)

Financial liabilities – – – (450) – (450)

Lease liabilities (51) (71) (221) – – (343)

Other liabilities – – – – (1,005) (1,005)

Contingent liabilities – – – – – –

Total liabilities and shareholders’

funds (324) (71) (145,721) (50,450) (71,729) (268,295)

Cumulative gap (324) (395) 13,884 13,434 – –

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

More 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 – –

www.suplc.co.uk ― Stock Code: SUS

The Accounts

D2 Notes to the Accounts

CONTINUED

Year ended 31 January 2023

22. FINANCIAL INSTRUMENTS (CONTINUED)

The cash flows payable under financial liabilities are analysed as follows:

Group

At 31 January 2023

Repayable

on Demand

£’000

Less than

1 year

£’000

More than

1 year but

not more

than 2 years

£’000

More than

2 years but

not more

than 5 years

£’000

More than

5 years

£’000

Total

£’000

Bank overdrafts and loans – – – – – –

Trade and other payables – 4,602 – – – 4,602

Tax liabilities – 888 – – – 888

Accruals and deferred income – 1,262 – – – 1,262

Borrowings – – – 145,500 50,000 195,500

Lease liabilities – 166 169 252 – 587

Financial liabilities – – – – 450 450

At 31 January 2023 – 6,918 169 145,752 50,450 203,289

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

More 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

Company

At 31 January 2023

Repayable

on Demand

£’000

Less than

1 year

£’000

More than

1 year but

not more

than 2 years

£’000

More than

2 years but

not more

than 5 years

£’000

More than

5 years

£’000

Total

£’000

Bank overdrafts and loans 273 – – – – 273

Trade and other payables – 711 – – – 711

Tax liabilities – 69 – – – 69

Accruals and deferred income – 225 – – – 225

Borrowings – – – 145,500 50,000 195,500

Lease liabilities – 51 71 221 – 343

Financial liabilities – – – – 450 450

At 31 January 2023 273 1,056 71 145,721 50,450 197,571

S&U Plc Annual Report and Accounts 20238484

22. FINANCIAL INSTRUMENTS (CONTINUED)

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

More 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

23. RECONCILIATION OF OPERATING PROFIT TO NET CASH FROM OPERATING ACTIVITIES

Group

2023

£000

Group

2022

£000

Company

2023

£000

Company

2022

£000

Operating Profit 48,905 50,790 13,475 7,584

Finance costs paid (7,495) (3,772) (142) (146)

Finance income received – – 2,648 2,652

Tax (paid)/received (7,748) (8,749) 3 (93)

Depreciation on plant, property and equipment 525 529 85 81

(Profit)/loss on disposal of plant, property and equipment (26) 13 (1) –

Increase in amounts receivable from customers (97,795) (42,005) – –

Decrease/(increase) in trade and other receivables 138 (633) (82,132) (14,622)

Increase in trade and other payables 255 1,584 57 449

Increase in accruals 488 116 4 15

Increase in cost of future share based payments 6 39 6 39

Movement in retirement benefit asset/obligations (13) (6) (13) (6)

Net cash used in operating activities (62,760) (2,094) (66,010) (4,047)

24. FINANCIAL COMMITMENTS

Capital commitments

At 31 January 2023 the Group had £nil capital commitments contracted but not provided for (2022: £122,707). At 31 January

2023, the Company had no capital commitments contracted but not provided for (2022: £nil).

25. 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 2023 was £nil (2022: £nil).

www.suplc.co.uk ― Stock Code: SUS

The Accounts

D2 Notes to the Accounts

CONTINUED

Year ended 31 January 2023

26. SHARE BASED PAYMENTS

The Company operated 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

2023

Number

Of Share

Options

2022

LTIP 2010

Outstanding at beginning of year 5,500 17,000

Granted during the year – –

Lapsed during the year – –

Exercised during the year (5,500) (11,500)

Expired during the year – –

Outstanding at end of year – 5,500

Exercisable at end of year – –

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 £24.00 (2022: £23.56).

The weighted average remaining contractual life of the outstanding share options is not applicable as there are no

outstanding share options remaining (2022: 2 months).

The Group recognised total share-based payment expenses for LTIP of £6,000 in the year to 31 January 2023 (2022: £39,000).

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).

27. 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 2022. At that valuation it was

assumed that the appropriate post retirement discount rate was 1.95% 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 2023. 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 2024 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.

S&U Plc Annual Report and Accounts 20238686

27. RETIREMENT BENEFIT OBLIGATIONS (CONTINUED)

Disclosures made in accordance with IAS 19

A full actuarial valuation was carried out at 31 March 2022 and updated to 31 January 2023 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

2023

At year end

31 January

2022

Rate of increase in salaries

Pension increases: n/a n/a

Pre-97 Pension 0.0% 0.0%

Post 97 Pension 3.1% 4.0%

Discount rate 4.2% 2.1%

Mortality assumption for 31 January 2023 comes from the S3PA tables with CMI-2021 1.25% long term trend and for 31

January 2022 mortality assumption was from the S2PA tables with CMI-2020 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

2023 £000

Proportion

held at

31 January

2022 £000

Equities 66% 62%

Bonds 21% 22%

Cash/Other 13% 16%

Total market value of assets 100% 100%

The amount included in the balance sheet arising from the Group’s obligations in respect of its defined benefit schemes is as

follows:

Jan 23

£000

Jan 22

£000

Fair value of plan assets 1,092 1,141

Present value of defined benefit obligations (342) (483)

Surplus before restriction 750 658

Restriction on Surplus (750) (658)

Pension asset 0 0

The amount recognised in the income statements during the year

Jan 23

£000

Jan 22

£000

Current service cost – –

Interest on obligation 11 6

Expected return on plan assets (24) (12)

Expense recognised in the income statement (13) (6)

Opening net (asset) – –

Expense (13) (6)

Contributions paid – –

Actuarial loss 13 6

Closing net (asset) 0 0

www.suplc.co.uk ― Stock Code: SUS

The Accounts

D2 Notes to the Accounts

CONTINUED

Year ended 31 January 2023

27. RETIREMENT BENEFIT OBLIGATIONS (CONTINUED)

The expense credit in both years is shown within administrative expenses.

Movement in present value of obligation

Jan 23

£000

Jan 22

£000

Present value of obligation at 1 February 483 536

Interest cost 10 6

Current service cost – –

Benefits paid (38) (41)

Actuarial (gain)/loss on obligation – assumptions (96) (28)

Actuarial (gain)/loss on obligation – experience (17) 10

Present value of obligation at 31 January 342 483

Experience adjustment on scheme liabilities

Actuarial (gain)/loss as percentage of scheme liabilities (33%) (4%)

Movement in fair value of plan assets

Fair value of plan assets at 1 February 1,141 1,100

Expected return on plan assets 24 12

Contributions – –

Benefits paid (38) (41)

Actuarial gain/(loss) on plan assets (35) 70

Fair value of plan assets at 31 January 1,092 1,141

Experience adjustment on assets

Actuarial (gain)/loss as percentage of scheme assets (3%) 6%

S&U Plc Annual Report and Accounts 20238888

Five Year Record (Unaudited)

2019

£000

2020

£000

2021

£000

2022

£000

2023

£000

Continuing Operations Only

Revenue 82,970 89,939 83,761 87,889 102,714

Cost of Sales (15,751) (19,872) (14,264) (18,771) (23,676)

Impairment (16,941) (17,220) (36,705) (4,120) (13,877)

Administrative Expenses (11,177) (12,863) (11,096) (14,208) (16,256)

Operating profit 39,101 39,984 21,696 50,790 48,905

Finance Costs (net) (4,541) (4,850) (3,568) (3,772) (7,495)

Profit before taxation 34,560 35,134 18,128 47,018 41,410

Taxation (6,571) (6,252) (3,482) (9,036) (7,692)

Profit for the year 27,989 28,882 14,646 37,982 33,718

Assets employed in all operations

Fixed assets 2,062 2,108 2,713 2,455 2,616

Amounts receivable and other assets 278,751 303,973 282,126 324,774 425,558

280,813 306,081 284,839 327,229 428,174

Liabilities (115,446) (126,607) (103,810) (120,482) (203,289)

Total equity 165,367 179,474 181,029 206,747 224,885

Earnings per Ordinary share 233.2p 239.6p 120.7p 312.8p 277.5p

Dividends declared per Ordinary share 118.0p 120.0p 90.0p 122.0p 133.0p

Group gearing 65.3% 65.7% 54.6% 54.9% 85.5%

“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

25 May 2023

Announcement of Results

Half year ending 31 July 2023

Year ending 31 January 2024

3 October 2023

April 2024

Payment of Dividends

6% Cumulative Preference Shares 30 September 2023 &

31 March 2024

31.5% Cumulative Preference Shares 31 July 2023 & 31 January 2024

Ordinary Shares – 2022/23 final 8 July 2023

– Ex dividend date 16 June 2023

– Record date 17 June 2023

– 2022/23 first interim November 2023

– 2022/23 second interim March 2024

Annual General Meeting Arrangements

The Annual General Meeting will take place on 25 May 2023 – 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 20239090

Officers and Professional Advisors

Directors

A M V Coombs MA (Oxon) (Chairman)

G D C Coombs MA (Oxon) MSc (Lon) (Deputy Chairman)

J E C Coombs MA (Oxon) ACA (Director)

C H Redford ACA (Group Finance Director)

T G Wheeler (CEO Advantage Finance)

E H Ahrens (CEO Aspen Bridging)

D Markou MBE FCA (Non-executive)

G Pedersen (Non-executive)

T Khlat MBE (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

SEC Newgate Communications

14 Greville Street,

London

EC1N 8 SB

Solicitors

DLA

Victoria Square

Birmingham

B2 4DL

Stockbrokers

Peel Hunt LLP

7th Floor

100 Liverpool Street

London

EC2M 2AT

Auditor

Mazars LLP

Statutory Auditor

30 Old Bailey

London

EC4M 7AU

Internal Auditor

RSM Risk Assurance Services LLP

6th Floor 25 Farringdon Street

London

EC4A 4AB

www.suplc.co.uk ― Stock Code: SUS

Other Information

2 Stratford Court

Cranmore Boulevard

Shirley

Solihull

West Midlands

B90 4QT

T: 0121 705 7777

Registered in England No. 342025

www.suplc.co.uk

S&U Plc Annual Report and Accounts 2023