Interim Results
S & U PLC
06 October 2005
IMMEDIATE RELEASE:
S&U PLC
Providers of Consumer Credit and Motor Finance
INTERIM RESULTS FOR THE HALF YEAR TO 31ST JULY 2005
• HALF-YEAR PROFITS £5.3m *(£5.4m) ON REVENUE £26.1m* (£25.4m) A
'COMMENDABLE ACHIEVEMENT' AGAINST FLAGGING CONSUMER DEMAND GENERALLY
• EARNINGS PER SHARE 31.5p (31.8p) - INTERIM DIVIDEND 9P (UNCHANGED)
• HOME COLLECTIONS - SLIGHT DECLINE IN PROFITS AFTER RECORD RESULTS LAST
YEAR
• MOTOR CAR FINANCE - PROFITS £1.19m (£1.18m) FURTHER INCREASE FOR YEAR
EXPECTED
• 'STEADY PROGRESS IN PROFITABILITY AND RETURNS TO SHAREHOLDERS IN YEARS
AHEAD'
*NB. Figures are restated according to new International Financial Reporting
Standards (IFRS)
Issued on behalf of S&U Plc by Simon Preston 020 7655 0500
Enquiries: Derek Coombs or Anthony Coombs
Executive Chairman Managing Director
S&U PLC S&U PLC
Tel: 020 7655 0500 Tel: 07767 687150
Date of issue: Thursday 6th October 2005
POLHILL COMMUNICATIONS TELEPHONE: 0207-655 0500
DOME HOUSE FAX: 0207-655 0501
48 ARTILLERY LANE WWW.POLHILL.COM
LONDON E1 7LS Polwoods Limited Registered In England
Registration Number 1983318
CHAIRMAN'S STATEMENT
Whilst the results for the half year ended on the 31st July 2005 show that
profits before tax are slightly down from £5.4 million last year to £5.3 million
this year, this result has to be seen against the background of flagging
consumer demand generally. So in many respects it is a commendable achievement.
Revenue totalled £26.1 million compared to £25.4 million for the comparable
period last year.
The earnings per share was 31.5p compared to 31.8p.
The traditional home collection business is responsible for the slight decline
in profits after a record result last year.
Advantage Finance, our motor car finance subsidiary, achieved profits of £1.19m
against £1.18m last year and is expected to provide a more substantial increase
for the year, which is encouraging for an operation which I launched some six
years ago.
The interim dividend is unchanged at 9p per share. This will be paid on the 11th
November 2005 to Ordinary Shareholders. The shares will go ex dividend on the
12th October 2005.
DM Coombs
Chairman
5 October 2005
MANAGING DIRECTOR'S STATEMENT
As I anticipated at our full year results, when I advised caution for this year,
the current slow-down in consumer confidence and High Street spending has been
reflected in S&U's half-year results. Profit before tax, adjusted for new
International Financial Reporting Standards, is £5.3m against £5.4m a year ago.
Whilst revenues across the Group are ahead of last year, the fall in profit
primarily derives from slightly lower consumer demand and marginally higher
levels of impairment and expenses - the latter due to investment in our motor
finance sales operation and to costs associated with the current Competition
Commission Inquiry into the home credit industry.
However, my confidence for the full year is buoyed by the trading trends
underlying these figures. Whilst first quarter sales and impairment charges were
significantly behind budget, results in the second quarter improved
significantly as consumer confidence tentatively returned. Indeed results for
the most recent period of trading confirm this, as trading particularly in our
home credit business returns close to budget.
This is not, however, to deny other challenges we face within the mature, and
even consolidating, home credit industry. These structural changes have been
evidenced in the past six months by the merger of Morses and London & Scottish
and by branch closures amongst S&U's home credit competitors. A tighter labour
market for Representatives, competition from main stream lenders and the
activities of commercial debt consolidators are constant challenges. Whilst we
have now bedded in the additional (and in reality superfluous) home credit
documentation demanded by new secondary legislation, the industry still faces
within the next six months another Consumer Credit Bill and the (hopefully
common-sense and benign) deliberations of the Competition Commission. Rarely
has any industry, as demonstrably popular with its customers as home credit,
been so unnecessarily investigated, scrutinised and generally fussed over by
Government and its consumerist satraps.
Against this background home credit new loans fell in the half-year although
recovering well over the past two months. Further, a slightly higher impairment
charge, albeit offset by improved gross margins, led to divisional profits of
£4.09m, against £4.18m last year. Improved trading performance is expected in
the second half, although much will depend on the general economic and
regulatory climate mentioned above.
Whilst also operating in a slowing market, Advantage Finance, our motor
subsidiary, continues to make good progress, in stark contrast to the recent
travails of its sub-prime competitors. Profits for the first half were £1.19m
against £1.18m last year on revenues impressively ahead by 8%. Collections
proved robust and almost on budget whilst the fact that applications volume is
up by no less than 35% demonstrates the quality and rigour of Advantage's
underwriting. Significant investment has been made in expanding and reorganising
the sales operation and in Compliance and Audit - the latter reflecting both
high quality future book debts and the new FSA compliance regime.
Further investment in IT has seen the much awaited completion of new systems for
home credit and more timely and flexible management information throughout the
Group. This will be invaluable in enabling us to better analyse and communicate
with our customers and in managing and motivating the staff serving them.
Indeed, this investment in information technology is already bearing fruit by
allowing us to refine our Group debt provisioning (or under IFRS) 'impairment'
policies. This not only enables us to meet IFRS standards for reporting revenue,
but also to improve our recognition of impairment. This will more accurately
reflect the risk profile of our home credit debt and improve our management of
it, especially in maximising trading opportunities with every customer.
The net effect of the change to IFRS is reflected in a £6m reduction in stated
net assets at 31st January 2005 from £41m to £35m, a change of around 15%. This
is conservative compared to our competitors and has no impact on our base
profitability, cash flows or bank financing arrangements.
The financial position of our Group will remain strong, with anticipated gearing
on the new IFRS basis at 75%, a slight increase on restated figures for last
year. This reflects further investment of £3m in our growing motor finance
business. We have also secured funding for a pilot secured second mortgage
business (Communitas) and subsequent to 31st July 2005 have put interest rate
hedging in place to cover £20m of our existing borrowing over the next 5 years.
Thus, despite a slowing economy, these longer term improvements should lay the
ground for steady progress in both profitability and returns to shareholders in
the years ahead.
Anthony Coombs
5 October 2005
INDEPENDENT REVIEW REPORT TO S & U PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 July 2005, which comprises the consolidated interim
income statement, consolidated interim balance sheet, consolidated cash flow
statement and related notes 1 to 10. We have read the other information
contained in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
This report is made solely to the company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review 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, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
polices and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
International Financial Reporting Standards
As disclosed in note 1, the next annual financial statements of the group will
be prepared in accordance with International Financial Reporting Standards
(IFRS) as adopted for use in the EU. Accordingly, the interim report has been
prepared in accordance with the recognition and measurement criteria of IFRS and
the disclosure requirements of the Listing Rules.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with International Standards on Auditing (UK and
Ireland) and therefore provides a lower level of assurance than an audit.
Accordingly, we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 July 2005.
Deloitte & Touche LLP
Chartered Accountants
Birmingham
5 October 2005
CONSOLIDATED INCOME STATEMENT
Six months ended 31 July 2005
Unaudited Six Unaudited Unaudited
months Six months Financial
ended ended year ended
31.7.05 31.7.04 31.1.05
Note £000 £000 £000
Revenue 2 26,121 25,406 50,712
Cost of Sales (11,577) (11,162) (22,965)
Gross Profit 14,544 14,244 27,747
Administrative expenses (8,422) (8,188) (16,679)
Operating profit 6,122 6,056 11,068
Finance costs (841) (691) (1,518)
Profit before taxation 2 5,281 5,365 9,550
Taxation 3 (1,586) (1,632) (2,919)
Profit for the period 3,695 3,733 6,631
Earnings per share Basic and Diluted 4 31.5p 31.8p 56.5p
Dividends per ordinary share
Paid during the period 5 22.0p 21.0p 30.0p
Proposed 5 9.0p 9.0p 22.0p
All activities and earnings per share derive from continuing operations. There
are no recognised gains and losses for the six months ended 31 July 2005 and
comparative periods other than the profit for the period and the dividends shown
above.
CONSOLIDATED BALANCE SHEET
Six months ended 31 July 2005
Unaudited Unaudited Unaudited
31.7.05 31.7.04 31.1.05
Note £000 £000 £000
ASSETS
Non current assets
Property, plant and equipment 2,364 2,432 2,357
Amounts receivable from customers 6 17,080 15,297 15,994
19,444 17,729 18,351
Current assets
Inventories 111 121 91
Amounts receivable from customers 6 43,871 40,431 42,456
Trade and other receivables 681 915 717
Current income tax assets 2,093 2,207 2,234
Cash and cash equivalents 24 91 14
46,780 43,765 45,512
Total assets 66,224 61,494 63,863
LIABILITIES
Current liabilities
Bank overdrafts and loans (6,950) (5,389) (5,791)
Trade and other payables (1,284) (1,238) (1,294)
Tax liabilities (199) (190) (210)
Accruals and deferred income (1,341) (1,180) (1,233)
(9,774) (7,997) (8,528)
Non current liabilities
Bank loans (20,000) (20,000) (20,000)
Retirement benefit obligation (23) (23) (23)
Deferred tax liabilities (83) (85) (81)
Financial liabilities (650) (650) (650)
(20,756) (20,758) (20,754)
Total liabilities (30,530) (28,755) (29,282)
NET ASSETS 35,694 32,739 34,581
Equity
Called up share capital 1,467 1,467 1,467
Share premium account 2,136 2,136 2,136
Profit and loss account 32,091 29,136 30,978
Total Equity 7 35,694 32,739 34,581
There interim statements were approved by the Board of Directors on 5 October
2005.
Signed on behalf of the Board of Directors
D M COOMBS AMV COOMBS
Directors
CONSOLIDATED CASH FLOW STATEMENT
Six months ended 31 July 2005
Unaudited
Unaudited Six Unaudited Six Financial
months ended months ended year ended
31.7.05 31.7.04 31.1.05
Note £000 £000 £000
Net cash from operating activities 8 1,726 1,000 1,779
Cash flows from investing activities
Proceeds on disposal of property,plant and
equipment 50 54 133
Purchases of property, plant and equipment (343) (286) (567)
Net cash used in investing activities (293) (232) (434)
Cash flows from financing activities
Dividends paid (2,582) (2,465) (3,521)
Repayment of borrowings - (15,000) (15,000)
Issue of new borrowings - 20,000 20,000
Net cash used in financing activities (2,582) 2,535 1,479
Net (decrease)/increase in cash and bank
overdrafts (1,149) 3,303 2,824
Cash and bank overdrafts at the beginning of
the period (5,777) (8,601) (8,601)
Cash and bank overdrafts at the end of the
period (6,926) (5,298) (5,777)
Cash and bank overdrafts comprise
Cash 24 91 14
Bank overdrafts (6,950) (5,389) (5,791)
(6,926) (5,298) (5,777)
NOTES TO THE INTERIM STATEMENTS
Six months ended 31 July 2005
1. ACCOUNTING POLICIES
1.1 Basis of preparation
Prior to 2005 S&U plc has prepared its financial statements under UK
generally accepted accounting principles ('UK GAAP') but as a listed
company we are now required to prepare our consolidated financial
statements in accordance with international financial reporting standards
(IFRS) as endorsed by the European Union. The date of transition to IFRS
for S&U plc was 1st February 2004 and the group has prepared its opening
balance sheet at that date. Reconciliations between previously reported UK
GAAP results and IFRS as adopted are presented in note 9.
This interim financial report has been prepared under the historical cost
convention. The group has elected to retain the UK GAAP carrying values of
certain freehold properties (including any historic revaluations) as deemed
cost on the date of transition to IFRS. The consolidated financial
statements incorporate the financial statements of the company and all its
subsidiaries for the six months ended 31st July 2005. The financial
information contained in this interim financial report does not constitute
a set of statutory accounts and is unaudited, but subject to a review
opinion.
1.2 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 (the advance). Acceptance
fees charged to customers are included as credit charges in the calculation
and any direct transaction costs are added to the advance. Under IAS 39
credit charges on loan products continue to accrue at the EIR on all
outstanding capital balances including arrears 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.
1.3 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. Amortised cost is the amount of the customer receivable at initial
recognition less customer repayments, plus revenue earned less any
deduction for impairment.
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.
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.
1.4 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 IFRS1.
Depreciation is provided on the cost or valuation of property,plant and
equipment in order to write such cost or valuation over the expected useful
lives as follows;
Freehold Buildings 2% per annum straight line
Computers 20% per annum straight line
Fixtures and Fittings 10% per annum straight line or 20% per annum
reducing balance
Motor Vehicles 25% per annum reducing balance
1.5 Inventories
Inventories are stated at the lower of cost or net realisable value.
1.6 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 by the balance
sheet date and are expected to apply when the related deferred tax asset is
realised or the deferred tax liability is settled. Deferred tax assets are
recognised to the extent that it is probable that future taxable profit
will be available against which the temporary differences can be utilised.
1.7 Goodwill
Any goodwill which arises on future acquisitions will be capitalised. Such
goodwill will not be amortised but will be subject to annual review for
impairment and the carrying value of goodwill will be cost less accumulated
impairment losses.
1.8 Pensions
The group contributes to a defined benefit pension scheme and the defined
benefit pension liability at the balance sheet date is calculated as the
present value of the defined benefit obligation less the fair value of the
plan assets.
The group also operates several defined contribution pension schemes and
the pension charge represents the amount payable by the company for the
financial year.
1.9 Leases
Rental costs under operating leases are charged to the profit and loss
account when incurred.
2. ANALYSES OF REVENUE AND PROFIT BEFORE TAXATION
All operations are situated in the United Kingdom. Analyses by class of
business of revenue and profit before taxation are stated below:
<----- Revenue ----->
Six months Six months Financial
ended ended year ended
31.7.05 31.7.04 31.1.05
£000 £000 £000
Class of business
Consumer credit, rentals and other retail trading 21,068 20,732 41,746
Car finance 5,053 4,674 8,966
26,121 25,406 50,712
<----- Profit before taxation ----->
Six months Six months Financial
ended ended year ended
31.7.05 31.7.04 31.1.05
£000 £000 £000
Class of business
Consumer credit, rentals and other retail trading 4,092 4,180 7,485
Car finance 1,189 1,185 2,065
5,281 5,365 9,550
3. TAXATION
The actual tax charge for the period has been calculated by applying the
estimated effective tax rate for the year of 30.0% (31st July 2004 30.4%)
to the profit before taxation for the six months.
4. EARNINGS PER ORDINARY SHARE
The calculation of earnings per Ordinary share is based on profit for the
period of £3,695,000 (for the period ended 31 July 2004 - £3,733,000 and
the year ended 31 January 2005 - £6,631,000).
The number of shares used in the calculation is the average number of
shares in issue during the period of 11,737,228 (for the period ended 31
July 2004 and the year ended 31 January 2005 - 11,737,228).
Diluted earnings per share is the same as basic earnings per share as there
are no dilutive shares.
5. DIVIDENDS
The directors have declared an interim dividend of 9p per share (2004: 9p
per share). The dividend, which amounts to approximately £1,056,000 (July
2004: £1,056,000), will be paid on 11 November 2005 to shareholders on the
register at 14 October 2005. The shares will be quoted ex dividend on 12
October 2005. The interim financial information does not include this
proposed dividend as it was declared after the balance sheet date.
6. ANALYSIS OF AMOUNTS RECEIVABLE FROM CUSTOMERS
All operations are situated in the United Kingdom.
<----- Amounts Receivable ----->
Six months Six months Financial
ended ended year ended
31.7.05 31.7.04 31.1.05
£000 £000 £000
Class of business
Consumer credit, rentals and other retail trading 32,512 31,363 33,076
Car finance 28,439 24,365 25,374
60,951 55,728 58,450
Analysed as:- due within one year 43,871 40,431 42,456
- due in more than one year 17,080 15,297 15,994
60,951 55,728 58,450
7. ANALYSIS OF CHANGES IN SHAREHOLDERS' EQUITY
Six months Six months Financial
ended ended year ended
31.7.05 31.7.04 31.1.05
£000 £000 £000
Profit for the period 3,695 3,733 6,631
Dividends paid (2,582) (2,465) (3,521)
Net addition to shareholders' equity 1,113 1,268 3,110
Opening shareholders' equity 34,581 31,471 31,471
Closing shareholders' equity 35,694 32,739 34,581
8. RECONCILIATION OF PROFIT BEFORE TAX TO CASH FLOW FROM OPERATING ACTIVITIES
Six months Six months Financial
ended ended year ended
31.7.05 31.7.04 31.1.05
£000 £000 £000
Profit before taxation 5,281 5,365 9,550
Tax paid (1,454) (1,556) (2,854)
Depreciation on plant,property and equipment 260 242 493
Loss on disposal on plant,property and eqpmt 26 32 58
Increase in amounts receivable from customers (2,501) (3,253) (5,975)
Increase in inventories (20) (16) 14
Decrease in trade and other receivables 36 (111) 87
Decrease in trade and other payables (10) (24) 32
Increase in accruals and deferred income 108 386 439
Decrease in retirement benefit obligations - (65) (65)
Cash flow from operating activities 1,726 1,000 1,779
RECONCILIATIONS BETWEEN IFRS AND UK GAAP
Income Statement Unaudited Reclassifications Revenue& Dividends Unaudited
31st July 2004 UKGaap Note 9a Impairment Note 9c IFRS
£'000 Note 9b
Revenue 17,738 7,668 25,406
Cost of sales (1,505) (9,657) (11,162)
Gross Profit 16,233 (1,989) 14,244
Administrative expenses (10,705) 2,517 (8,188)
Operating profit 5,528 528 6,056
Finance costs (614) (77) (691)
Profit before taxation 4,914 (77) 528 5,365
Taxation (1,474) (158) (1,632)
Profit for the period 3,440 (77) 370 3,733
Income Statement Audited Reclassifications Revenue& Dividends Unaudited
31st January 2005 UK Gaap Note 9a Impairment Note 9c IFRS
£'000 Note 9b
Revenue 36,363 14,349 50,712
Cost of sales (3,067) (19,898) (22,965)
Gross Profit 33,296 (5,549) 27,747
Administrative expenses (22,174) 5,495 (16,679)
Operating profit 11,122 (54) 11,068
Finance costs (1,364) (154) (1,518)
Profit before taxation 9,758 (154) (54) 9,550
Taxation (2,936) 17 (2,919)
Profit for the period 6,822 (154) (37) 6,631
9. RECONCILIATIONS BETWEEN IFRS AND UK GAAP (CONTINUED)
1st February 2004 Audited Reclassifications Revenue& Dividends Unaudited
£'000 UK Gaap Note 9a Impairment Note 9c IFRS
Note 9b
NET ASSETS
Property plant and equipment 2,474 2,474
Amounts receivable from customers 14,520 (704) 13,816
Non current assets 16,994 (704) 16,290
Inventories 105 105
Amounts receivable from customers 50,006 (11,347) 38,659
Trade and Other Receivables 804 804
Current Income tax assets 144 (53) 2,252 2,343
Cash at bank and in hand 10 10
Current assets 51,069 (53) (9,095) 41,921
Total assets 68,063 (53) (9,799) 58,211
Bank overdrafts and loans (23,611) (23,611)
Trade and other payables (3,815) 88 2,465 (1,262)
Tax liabilities (1,612) 1,363 (249)
Accruals and Deferred Income (794) (794)
Current liabilities (29,832) 88 1,363 2,465 (25,916)
Bank loans
Retirement benefit obligation (88) (88)
Deferred tax liability (86) (86)
Financial liabilities (650) (650)
Non current liabilities (824) (824)
Total liabilities (29,832) (736) 1,363 2,465 (26,740)
NET ASSETS 38,231 (789) (8,436) 2,465 31,471
Called up share capital 2,117 (650) 1,467
Share premium account 2,136 2,136
Revaluation Reserve 501 (501) -
Profit and loss account 33,477 362 (8,436) 2,465 27,868
SHAREHOLDERS' EQUITY 38,231 (789) (8,436) 2,465 31,471
9. RECONCILIATIONS BETWEEN IFRS AND UK GAAP (CONTINUED)
31st July 2004 Unaudited Reclassifications Revenue& Dividends Unaudited
£'000 UK Gaap Note 9a Impairment Note 9c IFRS
Note 9b
NET ASSETS
Property plant and equipment 2,432 2,432
Amounts receivable from customers 15,981 (684) 15,297
Non current assets 18,413 (684) 17,729
Inventories 121 121
Amounts receivable from customers 51,270 (10,839) 40,431
Trade and Other Receivables 915 915
Current Income tax assets 54 (54) 2,207 2,207
Cash at bank and in hand 91 91
Current assets 52,451 (54) (8,632) 43,765
Total assets 70,864 (54) (9,316) 61,494
Bank overdrafts and loans (5,389) (5,389)
Trade and other payables (2,317) 23 1,056 (1,238)
Tax liabilities (1,440) 1,250 (190)
Accruals and Deferred Income (1,180) (1,180)
Current liabilities (10,326) 23 1,250 1,056 (7,997)
Bank loans (20,000) (20,000)
Retirement benefit obligation (23) (23)
Deferred tax liabilities (85) (85)
Financial liability (650) (650)
Non current liabilities (20,000) (758) (20,758)
Total liabilities (30,326) (735) 1,250 1,056 (28,755)
NET ASSETS 40,538 (789) (8,066) 1,056 32,739
Called up share capital 2,117 (650) 1,467
Share premium account 2,136 2,136
Revaluation Reserve 501 (501) -
Profit and loss account 35,784 362 (8,066) 1,056 29,136
SHAREHOLDERS' EQUITY 40,538 (789) (8,066) 1,056 32,739
9. RECONCILIATIONS BETWEEN IFRS AND UK GAAP (CONTINUED)
31st January 2005 Audited Reclassify Revenue& Dividends Unaudited
£'000 UKGaap Note 9a Impairment Note 9c IFRS
Note 9b
NET ASSETS
Property plant and equipment 2,357 2,357
Amounts receivable from customers 16,758 (764) 15,994
Non current assets 19,115 (764) 18,351
Inventories 91 91
Amounts receivable from customers 53,799 (11,343) 42,456
Trade and Other Receivables 717 717
Current Income tax assets 123 (58) 2,169 2,234
Cash at bank and in hand 14 14
Current assets 54,744 (58) (9,174) 45,512
Total assets 73,859 (58) (9,938) 63,863
Bank overdrafts and loans (5,791) (5,791)
Trade and other payables (3,900) 23 2,583 (1,294)
Tax liabilities (1,674) 1,464 (210)
Accruals and Deferred Income (1,233) (1,233)
Current liabilities (12,598) 23 1,464 2,583 (8,528)
Bank loans (20,000) (20,000)
Retirement benefit obligation (23) (23)
Deferred tax liabilities (81) (81)
Financial liabilities (650) (650)
Non current liabilities (20,000) (754) (20,754)
Total liabilities (32,598) (731) 1,464 2,583 (29,282)
NET ASSETS 41,261 (789) (8,474) 2,583 34,581
Called up share capital 2,117 (650) 1,467
Share premium account 2,136 2,136
Revaluation Reserve 496 (496) -
Profit and loss account 36,512 357 (8,474) 2,583 30,978
SHAREHOLDERS' EQUITY 41,261 (789) (8,474) 2,583 34,581
9. RECONCILIATIONS BETWEEN IFRS AND UK GAAP (CONTINUED)
a) Reclassifications
The following reclassifications have been made within the income statement and
the balance sheet on transition from UK GAAP to IFRS;
- Under UK GAAP preference share capital was shown as part of the issued share
capital but under IFRS is now shown as a non current liability.
- Under UK GAAP, excess depreciation on certain revalued properties was set off
against a revaluation reserve. Under IFRS1 the group has elected to use the
revalued amounts as the deemed cost of these properties and the balance on the
revaluation reserve is transferred to accumulated profit and loss.
- Under IFRS we have reanalysed deferred tax as a non current liability.
Deferred tax at 30% has been provided on the net book value of those properties
acquired as part of a business acquisition.
b) Revenue and Impairment
Under UK GAAP credit charges were recognised on a received or receivable basis
using the sum of the digits method and acceptance fees in our car finance
business were recognised upfront. Under IFRS, credit charges and acceptance fees
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 (the advance). Under IAS 39 credit charges on loan products
continue to accrue at the EIR on all outstanding capital balances including
arrears 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 impairment charge to reflect the fact
that this additional revenue is not collectable.
Under UK GAAP, a specific reserve being the difference between the carrying
value of the debt and the expected actual cash flows was made on all debts which
are considered doubtful . Under IFRS, debts are assessed for impairment and the
impairment charge to the income statement 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.
c) Dividends
Under UK GAAP dividends declared after the date of the balance sheet were
recorded in the balance sheet as at the balance sheet date. Under IFRS,
dividends declared after the date of the balance sheet cannot be included as a
liability at the balance sheet date.
10. INTERIM REPORT
The figures for the year ended 31 January 2005 are not the group's statutory
accounts for that financial year. Those accounts which were prepared in
accordance with UK GAAP and for which the auditors to the Group have issued an
unqualified audit report which did not contain a statement under section 237(2)
or (3) of Companies Act 1985, have now been delivered to the Registrar of
Companies.
A copy of this Interim Report will be posted to all shareholders and will be
made available to the public on our website at www.suplc.co.uk and at the
Company's registered office at Royal House, Prince's Gate, Solihull, B91 3QQ.
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