PRELIMINARY ANNOUNCEMENT JANUARY 2008 RESULTS

S & U PLC THURSDAY 10th APRIL 2008 Providers of Consumer Credit & Motor Finance RESULTS FOR THE YEAR TO 31ST JANUARY 2008 * PRE-TAX PROFITS Â£8.6M (2007, Â£8.9M), OPERATING PROFIT Â£10.9M (Â£10.5M) AND REVENUE Â£46M (Â£43M) ACHIEVED AGAINST `MOST TURBULENT' BACKGROUND. * GEARING 74.0% - LOWEST LEVEL FOR FOUR YEARS. NET ASSETS UP TO Â£42.3M (Â£40.1M). * EARNINGS PER SHARE 51P (53P). DIVIDEND FOR YEAR 32P (SAME). * PRUDENT BORROWING PUT ON FIVE YEAR BASIS. * HOME CREDIT - CREDITABLE PERFORMANCE RESUMPTION OF GROWTH FORECAST FOR THE INDUSTRY. MAJOR OPPORTUNITIES FOR INCREASING MARKET SHARE. * MOTOR FINANCE - RECORD PROFIT AND CUSTOMER NUMBERS. INCREASING CONTRIBUTION EXPECTED. * ANTHONY COOMBS TO BE CHAIRMAN AFTER DEREK COOMBS WHO BECOMES PRESIDENT. GRAHAM COOMBS TO BE DEPUTY CHAIRMAN. * COMPANY IN A STRONG FINANCIAL POSITION - TO CONTINUE GROWTH AND STABILITY OF EARNINGS. Issued on behalf of S & U plc by Simon Preston 0207 655 0500 Enquiries: Anthony Coombs Managing Director S & U PLC Tel: 07767 687150 Date of issue: Thursday 10th April 2008 POLHILL COMMUNICATIONS TEL: 0207 655 0500 DOME HOUSE FAX: 0207 655 0501 48 ARTILLERY LANE WWW.POLHILL.COM LONDON E1 7LS Polwoods Limited Registration Number 1983318 CHAIRMAN'S STATEMENT As Chairman of S&U over the past thirty years I have been used to dealing with most of the slings and arrows commercial life and business cycles occasionally throw at us. Even so, recent gyrations in the capital and stock markets and the unfolding implications of the "credit crunch" must rank as amongst the most turbulent in my experience. Against such a background, I present a set of results which, although below my expectations of a year ago, in retrospect are both solid and stable, and which leave S&U in a strong financial position. Pre-tax profit for the year is Â£8.6m (2007: Â£8.9m) on revenues at nearly Â£46m, up 7%. The balance sheet shows assets up to Â£42.3m and gearing reduced to 74%, the lowest level for 4 years. With earnings per share at 51p (2007: 53p), I am pleased to again recommend a dividend payment of 23p per ordinary share. Home Credit The bulk of both S&U's profit and, in particular, cash flow still comes from our Home Credit operations. Here both our S&U and S D Taylor subsidiaries performed creditably; however after a period of expansion, Wilson Tupholme's profits experienced what I am confident will be a temporary set-back. Significant changes in its management and internal organisation will ensure that it is. Home Credit has been through a period of intense scrutiny by regulation and by consolidation within the industry. This presents S&U with major opportunities for increasing both our customer numbers and market share. Advantage Finance Advantage, our motor finance business which I founded nearly ten years ago, goes from strength to strength. This year's profits are a record, as are customer numbers. Credit must go not only to our people there but to their continuous investment in refining technology - improvements which can benefit the rest of the Group. As market conditions begin to favour the used, over the new, car market I am confident that Advantage will make an increasing contribution to S&U's profits. Outlook Our success in our traditional part of the consumer credit market depends entirely upon our ability to nurture and maintain customer relationships. Now, and for the past 70 years, we remain quintessentially a people business and I therefore pay tribute to our staff throughout the Group who work so hard to serve our loyal customers. It has been both a great honour and pleasure to lead them over the past three decades. Whilst retiring as your Chairman, I look forward to watching the continued progress of S&U as President. Early results this year are promising, I am therefore confident that, in the hands of my successor Anthony Coombs and his Board, S&U will continue the growth, and most important, the stability of earnings which our shareholders have come to expect. Derek M Coombs Chairman 10th April 2008 MANAGING DIRECTOR'S STATEMENT Since S&U announced its interim results in September of last year, the economy generally and the financial services sector in particular, has faced a period of severe turbulence and uncertainty. Both economic growth and consumer confidence in Britain have suffered and this is likely to persist throughout at least the next nine months. Against such a background, we announce PBT of Â£8.6m against Â£8.9m last year, a fall of just under 4%; Group revenue was Â£46m slightly up on last year. Set against the recent travails of the sub-prime sector these are solid results. For the third year in a row, Advantage Finance, our motor finance subsidiary produced record results in a much more challenging used car market. The S&U, home credit subsidiary, produced its second best ever profits - delivering a "shortened" loan book of better quality and remaining cash generative. S D Taylor, our North-West home credit subsidiary produced a solid result, with profit at 12% of gross sales - a rate of return the Competition Commission would hopefully not regard as excessive. The principal shortfall lay at Wilson Tupholme where profits fell by over Â£400,000. This subsidiary both under-estimated the credit risk and operational costs connected with the previous year's debt acquisitions, particularly in Scotland, and over-estimated the trading potential of the customers it had then acquired. Rigorous action has been taken to correct these problems. The business has been downsized, senior Managers have been replaced and its operations integrated into the other more productive parts of the Home Credit Business. Perhaps ironically, the regulatory environment in which our business operates has become more intrusive even as the competition for reliable customers becomes more intense. For Home Credit, this year has already seen a stricter early settlement rebate regime imposed both by the Competition Commission and the Consumer Credit Act 2006. 2008 will bring the launch of lenderscompared.org.uk a price comparison website specifically for (and financed by) the Home Credit Industry. This will be followed, in the summer, by Home Credit companies being required to report customer payment data to Credit Reference Agencies. The Competition Commission intends this to better enable customers to switch between Home Credit and other providers. Given current credit conditions and the value customers place on long-standing Home Credit relationships, the actual result could be the opposite. Our motor finance business is similarly subject to the attentions of the FSA, particularly in its oversight of added insurance products. However, these have always been tightly underwritten at Advantage and, in any event, represent a relatively small part of the company's revenue stream. In both home credit and motor finance changes in regulation impose costs - the new rebate regulations for Home Credit are an example - but also create opportunities. Consolidation will inevitably result in Home Credit and S&U will profit from that; Advantage will benefit from the fast and comprehensive service it can offer its broker network, ensuring that they treat customers fairly whilst maximising opportunities for finance and insurance commission. Operating Results Year Ended Year Ended 31st January 31st January 2008 2007 Â£m Â£m Revenue 46.0 42.8 Cost of sales (15.7) (14.1) Gross profits 30.3 28.7 Administrative expenses (19.4) (18.2) Operating profit 10.9 10.5 Interest (2.3) (1.6) Profit before Taxation 8.6 8.9 2008/2009 We therefore approach the new financial year with as much confidence as caution and have cast our budgets accordingly. Although consumer confidence, and disposable income levels, will remain muted, the small, flexible and convenient loans we offer should become increasingly attractive - especially as our target customers lose both the appetite and, in some cases, the ability to borrow large amounts elsewhere. This applies particularly to Home Credit where we are reviewing our customer-family literature, opportunities for acquiring competitors' books and representative incentives. We also see significant cross-selling potential for Home Credit from the 5,000 plus customer applications Advantage receives every month, especially since we can now accurately match these customers' profiles with those of the typical Home Credit consumer. Advantage too has refined its underwriting through an Experian based but customised profiling system. This, combined with Advantage's traditional more personalised credit control, does allow higher transaction values and slightly higher loan levels as Advantage moves into areas of the used car market vacated by non-prime lenders. Results, in terms of non-starters and later batch collections, are encouraging. Collections quality in both businesses remains stable, although in a tougher consumer credit climate, nurturing and improving customer relationships is more important than ever. A new contact Call Centre, a centralised debt management system and greater use of debit card payments are all additional tools we have introduced for this purpose. Ultimately, however, debt quality depends upon the quality, training and commitment of both Home Credit Representatives and motor finance collectors. Training Manuals have been upgraded, Investors in People status renewed and new monthly appraisals been made more rigorous to maintain and improve standards of customer service. Well-motivated staff, however, require well-motivated Managers. We continue to attract a number of good executives from other companies less committed to the Home Credit industry. In addition, based upon their performance, we want to encourage key executives to gain and maintain a stake in the Group in which they earn their living. We have therefore commissioned Deloitte & Touche LLP to structure a new discretionary share option plan available to key personnel throughout S&U PLC, which will be subject to your approval at this year's Annual General Meeting. It represents a major step forward in identifying the long-term aspirations of these Managers with those of your company. Group Profit, Dividend and Earnings Per Share Year Year 6 months 6 months 6 months 6 months ended ended ended ended ended ended 31.1.2008 31.1.2007 31.1.2008 31.1.2007 31.7.2007 31.7.2006 Â£m Â£m Â£m Â£m Â£m Â£m Profit before tax 8.6 8.9 4.0 4.1 4.6 4.8 Profit after tax 6.0 6.3 2.8 3.0 3.2 3.3 Earnings per share 50.8p 53.2p 23.3p 24.8p 27.5p 28.4p Dividends declared 32.0p 32.0p 23.0p 23.0p 9.0p 9.0p per share Capital Structure, Liquidity and Treasury The cash generative nature of our home-collected business and our, in retrospect, prescient decision to discontinue new Communitas second mortgages in May, has allowed S&U to invest a further Â£3m in growing Advantage Finance whist actually reducing Group gearing to 74%. Current bank borrowing is currently close to last year and, significant acquisitions notwithstanding, the organic development of the business should see net cash generation this year. Nevertheless, given current market uncertainties, as our existing term loans begin to expire we deem it prudent to strengthen our Balance Sheet by putting a tranche of our current overdraft borrowing on a longer-term five year basis. Whilst maintaining our existing bank facilities, we plan to continue this process as market conditions become more propitious. This conservative strategy gives us both a firm base and sufficient headroom for further development of the business. Conclusion As S&U approaches its 70th anniversary, it is right to reflect that all successful businesses, particularly in these financially turbulent times, depend upon consistency, continuity and committed leadership. In S&U, the existing beneficial identity of shareholder and management interests through the significant stake held by the founding Coombs family has been instrumental in providing this. I am therefore justifiably proud to pay tribute to the contribution of your retiring Chairman, Derek Coombs, for the unequalled thirty-five years service he has given the company in this role. I am equally honoured that your Board has agreed to nominate me, as Derek's successor, as your new Chairman; and to confirm the Coombs family's commitment to the company by the proposed appointment of Graham Coombs, who has over thirty years service as a Director, as Deputy Chairman. New blood will be introduced, both from within the company and from without, within the future; meanwhile these changes will reinforce the dynamic and future growth of the company whilst maintaining the continuity and precedent approach which is essential for the market in which we operate and therefore in the interests of every shareholder. It will also offer opportunities to gradually expand our shareholder base thereby improving liquidity and institutional interest in our stock, thus bringing S&U's earnings valuation more into line with the sector average. Finally, I thank my Boardroom colleagues, our excellent and loyal employees and representatives and, most of all, our thousands of customers, for their support over the past year; I look forward to exciting, challenging but profitable times ahead. Anthony M V Coombs Managing Director 10th April 2008 INCOME STATEMENT Year ended 31 January 2008 Note 2008 2007 Â£000 Â£000 Revenue 3 45,978 42,795 Cost of sales 4 (15,694) (14,146) Gross profit 30,284 28,649 Administrative expenses (19,408) (18,180) Operating profit 10,876 10,469 Finance costs 5 (2,298) (1,539) Profit before taxation 3 8,578 8,930 Taxation (2,613) (2,691) Profit for the year 5,965 6,239 Earnings per share basic and 6 50.8p 53.2p diluted Dividends per share - Proposed Final Dividend 23.0p 23.0p - Total dividend in respect of 32.0p 32.0p the year - Paid in the year 32.0p 32.0p All activities derive from continuing operations. STATEMENT OF RECOGNISED INCOME AND EXPENSE 2008 2007 Â£000 Â£000 Profit for the year 5,965 6,239 Actuarial (loss)/gain on defined (18) 22 benefit pension scheme Total recognised income for the year 5,947 6,261 attributable to equity holders of the parent BALANCE SHEET Note 2008 2007 Â£000 Â£000 ASSETS Non current assets Property, plant and equipment 2,233 2,280 Amounts receivable from customers 7 24,784 22,495 Derivative financial instruments 9 - 93 Retirement benefit asset 40 40 Deferred tax assets - - 27,057 24,908 Current Assets Inventories 155 176 Amounts receivable from customers 7 50,110 49,526 Trade and other receivables 663 784 Cash and cash equivalents 11 5 50,939 50,491 Total Assets 77,996 75,399 LIABILITIES Current liabilities Bank overdrafts and loans (9,683) (11,647) Trade and other payables (938) (978) Tax Liabilities (1,565) (867) Accruals and deferred income (1,360) (1,223) (13,546) (14,715) Non current liabilities Bank loans (21,600) (20,000) Deferred tax liabilities (80) (130) Financial liabilities (450) (450) Derivative financial instruments 9 (37) - (22,167) (20,580) Total liabilities (35,713) (35,295) NET ASSETS 42,283 40,104 Equity Called up share capital 1,667 1,667 Share premium account 8 2,136 2,136 Profit and loss account 8 38,480 36,301 Total equity 8 42,283 40,104 Note 2008 2007 Â£000 Â£000 Net cash from operating activities 10 4,596 715 Cash flows from investing activities Proceeds on disposal of property, 91 162 plant and equipment Purchases of property, plant and (549) (666) equipment Net cash used in investing activities (458) (504) Cash flows from financing activities Dividends paid (3,768) (3,650) Issue of new borrowings 1,600 - Net (decrease)/increase in overdraft (1,964) 3,433 Net cash used in financing activities (4,132) (217) Net increase/(decrease) in cash and 6 (6) cash equivalents Cash and cash equivalents at the 5 11 beginning of period Cash and cash equivalents at the end 11 5 of period Cash and cash equivalents comprise Cash 11 5 There are no cash and cash equivalent balances which are not available for use by the group (2007 Â£nil) 1. SHAREHOLDER INFORMATION 1.1 Preliminary Announcement The figures shown for the year ended 31 January 2008 are not statutory accounts within the meaning of section 240 of the Companies Act 1985. The statutory accounts for the year ended 31 January 2008 on which the auditors have given an unqualified audit report and did not contain an adverse statement under section 237(2) or 237(3) of the Companies Act 1985 will be delivered to the Registrar of Companies after the Annual General Meeting. The figures shown for the year ended 31 January 2007 are not statutory accounts. A copy of the statutory accounts has been delivered to the Registrar of Companies, contained an unqualified audit report and did not contain an adverse statement under section 237(2) or 237(3) of the Companies Act 1985. This announcement has been agreed with the company's auditors for release. A copy of this preliminary announcement will be published on the website www.suplc.co.ukwww.suplc.co.uk. The Directors are responsible for the maintenance and integrity of the company website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements differ from legislation in other jurisdictions. 1.2 Annual General Meeting The Annual General Meeting will be held on 16th May 2008. 1.3 Dividend If approved at the Annual General Meeting a final dividend of 23.0p per Ordinary Share is proposed, payable on 6th June 2008 with a record date of 9 May 2008. 1.4 Annual Report The 2008 Annual Report and Financial Statements will be posted to shareholders in due course. Copies of this announcement are available from the Company Secretary, S & U plc, Royal House, Prince's Gate, Homer Road, Solihull, West Midlands B91 3QQ. 2. KEY ACCOUNTING POLICIES The 2008 financial statements have been prepared in accordance with applicable accounting standards and accounting policies - these key accounting policies are a subset of the full accounting policies. 2.1 Basis of preparation As a listed company we are required to prepare our consolidated financial statements in accordance with international financial reporting standards (IFRS) adopted by the European Union. The financial information included in this preliminary announcement does not include all the disclosures required for IFRS or the Companies Act 1985. IFRS 7 Financial Instruments: Disclosures and the related amendment to IAS 1 on capital disclosures have been adopted from 1 February 2007. The standard requires new disclosures and does not have any impact on the classification or valuation of financial instruments. Both the consolidated financial statements and the financial information included in this preliminary announcement have been prepared under the historical cost convention as modified by the revaluation of derivative financial instruments to fair value. 2.2 Revenue recognition Credit charges are recognised in the income statement for all loans and receivables measured at amortised cost using the effective interest rate method (EIR). The EIR is the rate that exactly discounts estimated future cash flows of the loan back to the present value of the advance. Acceptance fees charged to customers and any direct transaction cost are included in the calculation of the EIR. Under IAS 39 credit charges on loan products continue to accrue at the EIR on all impaired capital balances throughout the life of the agreement irrespective of the terms of the loan and whether the customer is actually being charged arrears interest. This is referred to as the gross up adjustment to revenue and is offset by a corresponding gross up adjustment to the loan loss provisioning charge to reflect the fact that this additional revenue is not collectable. Commission received from third party insurers for brokering the sale of insurance products, for which the group does not bear any underlying insurance risk is recognised and credited to the income statement when the brokerage service has been provided. Sales of goods are recognised in the income statement when the product has been supplied. 2.3 Amounts receivable from customers All customer receivables are initially recognised at the amount loaned to the customer plus direct transaction costs. After initial recognition the amounts receivable from customers are subsequently measured at amortised cost. The directors assess on an ongoing basis whether there is objective evidence that a loan asset or group of loan assets is impaired and requires a deduction for impairment. A loan asset or a group of loan assets is impaired only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the loan. Objective evidence may include evidence that a borrower or group of borrowers is experiencing financial difficulty, default or delinquency in repayments. Impairment is then calculated by estimating the future cash flows for such impaired loans, discounting the flows to a present value using the original EIR and comparing this figure with the balance sheet carrying value. All such impairments are charged to the income statement. Key assumptions in ascertaining whether a loan asset or group of loan assets is impaired include information regarding the probability of any account going into default and information regarding the likely eventual loss including recoveries. These assumptions and assumptions for estimating future cash flows are based upon observed historical data and updated as management considers appropriate to reflect current and future conditions. All assumptions are reviewed regularly to take account of differences between previously estimated cash flows on impaired debt and the eventual losses. 2.4 Derivative financial instruments The group's activities expose it to the financial risks of changes in interest rates and the group uses interest rate derivative contracts to hedge these exposures. The group does not use derivative financial instruments for speculative purposes. The use of financial derivatives is governed by the group's policies approved by the board of directors which provides written principles on the use of financial derivatives. Changes in the fair value of derivative financial instruments that are designated effective as hedges of future cash flows are directly recognised in equity and the ineffective portion is recognised immediately in the income statement. If the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of and asset or liability then at the time the asset or liability is recognised the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of an asset or liability, amounts deferred in equity are recognised in the income statement in the same period in which the hedged item affects profit or loss. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the income statement as they arise. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised or no longer qualifies for hedge accounting. At that time any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur the net cumulative gain or loss is recognised in equity is transferred to net profit or loss for the period. Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of host contracts and the host contracts are not carried at fair value with gains or losses reported in the income statement. 3. SEGMENTAL ANALYSIS Analyses by class of business of revenue and profit before taxation are stated below: <- Revenue -> <- Profit before taxation -> Class of business Year Year Year Year ended ended ended ended 31.1.08 31.1.07 31.1.08 31.1.07 Â£000 Â£000 Â£000 Â£000 Consumer credit, rentals and 33,120 31,120 5,965 6,618 other retail trading Car finance 12,858 11,675 2,613 2,312 45,978 42,795 8,578 8,930 Analyses by class of business of assets and liabilities are stated below: <- Assets -> <- Liabilities -> Class of business Year Year Year Year ended ended ended ended 31.1.08 31.1.07 31.1.08 31.1.07 Â£000 Â£000 Â£000 Â£000 Consumer credit, rentals and 41,774 43,233 (4,148) (6,913) other retail trading Car finance 36,222 32,166 (31,565) (28,382) 77,996 75,399 (35,713) (35,295) Depreciation of assets for consumer credit was Â£410,000 (2007: Â£398,000) and for car finance was Â£68,000 (2007: Â£80,000) Fixed asset additions for consumer credit were Â£602,000 (2007: Â£586,000) and for car finance were Â£64,000 (2007: Â£80,000). The assets and liabilities of the parent company are classified as consumer credit, rentals and other retail trading. No geographical analysis is presented because all operations are situated in the United Kingdom. 4. COST OF SALES 2008 2007 Â£000 Â£000 Loan loss provisioning charge - consumer credit, 7,822 6,337 rentals and other retail trading Loan loss provisioning charge - car finance 4,087 4,105 Total loan loss provisioning charge 11,909 10,442 Other cost of sales 3,785 3,704 15,694 14,146 5. FINANCE COSTS 2008 2007 Â£000 Â£000 31.5% cumulative preference dividend 142 142 Bank loan and overdraft 2,027 1,585 Loss/(profit) on financial derivative 130 (112) instrument Other interest payable 7 5 Interest payable and similar charges 2,306 1,620 Interest receivable (8) (81) 2,298 1,539 6. EARNINGS PER ORDINARY SHARE The calculation of earnings per Ordinary share is based on profit after tax of Â£5,965,000 (2007 -Â£6,239,000). The number of shares used in the calculation is the average number of shares in issue during the year of 11,737,228 (2007 - 11,737,228). There are no dilutive shares. 7. AMOUNTS RECEIVABLE FROM CUSTOMERS 2008 2007 Â£000 Â£000 Consumer credit, 55,412 55,622 rentals and other retail trading Car finance hire 46,365 40,894 purchase 101,777 96,516 Less: Loan loss (16,452) (15,459) provision consumer credit Less: Loan loss (10,431) (9,036) provision car finance Amounts receivable 74,894 72,021 from customers Analysed as - due within one year 50,110 49,526 - due in more than one 24,784 22,495 year 74,894 72,021 8. SHAREHOLDERS' FUNDS AND STATEMENT OF CHANGES IN EQUITY Called up Share Profit Total Share Premium and Loss Equity Capital Account Account Â£000 Â£000 Â£000 Â£000 At 1 February 2006 1,667 2,136 33,690 37,493 Actuarial gain on pension - - 22 22 Profit for year - - 6,239 6,239 Dividends - - (3,650) (3,650) At 1 February 2007 1,667 2,136 36,301 40,104 Actuarial gain on pension - - (18) (18) Profit for year - - 5,965 5,965 Dividends - - (3,768) (3,768) At 31 January 2008 1,667 2,136 38,480 42,283 9. DERIVATIVE FINANCIAL INSTRUMENTS The group's activities expose it to the financial risks of changes in interest rates and the group uses interest rate derivative contracts to hedge these exposures in accordance with the accounting policy noted in 1.12 above. A 5 year hedge contract on Â£20m of the group's borrowings was entered into on 20th September 2005. The fair value of this contract at 31st January 2008 was estimated to be a liability of Â£37,000 (2007: asset of Â£93,000). The contract is designated as a cash flow hedge. The debit of Â£130,000 (2007: credit of Â£ 112,000) has been included within finance costs for the year (note 5). 10. RECONCILIATION OF OPERATING PROFIT TO NET CASH FROM OPERATING ACTIVITIES 2008 2007 Â£000 Â£000 Operating Profit 10,876 10,469 Finance costs paid (2,176) (1,732) Finance income received 8 81 Tax paid (1,965) (438) Depreciation on plant,property and 478 478 equipment Loss on disposal of plant, property and 27 29 equipment (Increase) in amounts receivable from (2,873) (7,839) customers Decrease/(increase) in inventories 21 (95) Decrease/(increase) in trade and other 121 (165) receivables (Decrease) /increase in trade and other (40) 25 payables Increase/(decrease) in accruals and 137 (80) deferred income (Decrease) in retirement benefit (18) (18) obligations Net cash from operating activities 4,596 715

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