Citation and commencement

1. These Regulations may be cited as the Building Societies (Accounts and Related Provisions) Regulations 1998 and shall come into force on 27th March 1998.

Interpretation

2. In these Regulations—

“the Act” means the Building Societies Act 1986;

“group” means a society and its subsidiary undertakings;

“group accounts society” means a society the directors of which are obliged by section 72E of the Act (duty to prepare group accounts) to prepare group accounts;

“particular account” means an income and expenditure account or a balance sheet ;

“subsidiary undertaking” means a subsidiary undertaking of a group accounts society with which the group accounts of the society are required by section 72E of the Act to deal;

“single accounts society” means a society which is not a group accounts society;

“society” means a building society; and

“undertaking” has the meaning given to that word in section 1161(1) of the Companies Act 2006 .

Annual accounts

3.—(1) In respect of the annual accounts of any single accounts society—

(a)every income and expenditure account shall be prepared in the format set out in Part I of Schedule 1; and

(b)every balance sheet shall be prepared in the format set out in Part I of Schedule 2; ...

(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

in each case in accordance with the relevant provisions, and every such document shall, subject to the following paragraphs of this regulation, be prepared in the order and under the headings and subheadings in the format applicable to it.

(2) In respect of the annual accounts of any group accounts society—

(a)the provisions of this regulation shall apply subject to the provisions of regulation 4, the supplementary provisions of which shall also have effect in relation to those accounts; and

(b)within those accounts—

(i)every income and expenditure account relating to the society shall be prepared in the format set out in Part I of Schedule 1;

(ii)every income and expenditure account relating to the society and its subsidiary undertakings shall be prepared on a consolidated basis in the format set out in Part II of Schedule 1;

(iii)every balance sheet relating to the society shall be prepared in the format set out in Part I of Schedule 2; and

(iv)every balance sheet relating to the society and its subsidiary undertakings shall be prepared on a consolidated basis in the format set out in Part II of Schedule 2; ...

(v). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

and in each case in accordance with the relevant provisions, and every such document shall, subject to the following paragraphs of this regulation, be prepared in the order and under the headings and subheadings in the format applicable to it.

(3) Paragraphs (1) and (2) are not to be read as—

(a)requiring the heading or subheading for any item to be distinguished by any letter or number assigned to that item in the format in which it appears;

(b)prohibiting the showing of any item in a particular account in greater detail (with or without additional subdivisions) than is required by the format for that particular account; or

(c)prohibiting the insertion of additional items, provided that their contents are not specifically covered by any of the items prescribed in the formats.

(4) Where the heading of an item in any format set out in Schedule 1 or 2 contains any wording in square brackets, that wording may be omitted if not applicable to the society.

(5) Items preceded by a lower case letter in any format set out in Schedule 1 or 2 may be combined in a society’s annual accounts for any financial year if either:

(a)their individual amounts are not material to assessing—

(i)in respect of an income and expenditure account, the income and expenditure of the society (or, as the case may be, the society and its subsidiary undertakings) for that year; and

(ii)in respect of a balance sheet, the state of affairs of the society (or, as the case may be, the society and its subsidiary undertakings) as at the end of that year; ...

(iii). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)their combination facilitates that assessment,

but where sub-paragraph (b) applies, the individual amounts of any items so combined shall be disclosed in a note to the annual accounts.

(6) Subject to paragraph (7), a heading or subheading for an item contained in any format set out in Schedule 1 or 2 shall not be included if there is no amount to be shown for that item in respect of the financial year to which the annual accounts relate (and a total need not be included if, as a result of this paragraph, it would be composed of a single item).

(7) For the purpose of comparing particular accounts with those for the preceding financial year—

(a)in respect of every item shown in a balance sheet and income and expenditure account , the corresponding amount for the preceding financial year shall be shown;

(b)where that corresponding amount is not comparable with the amount to be shown for the item in question in respect of the financial year to which the annual accounts relate, the former amount shall be adjusted and particulars of the adjustment and the reasons for it shall be disclosed in a note to the annual accounts; and

(c)paragraph (6) does not apply in any case where an amount can be shown for the item to which the heading or subheading relates in respect of the preceding financial year; in such a case that amount shall be shown under the heading or subheading required for that item.

(8) In this regulation, “the relevant provisions” means, in relation to any particular account, Part III of the Schedule in question, Parts I and II of which contain formats of that particular account.

Group accounts: supplementary provisions

4.—(1) The annual accounts of a group accounts society shall comply with the further provisions of Schedule 4 as to the form and content of the consolidated income and expenditure account, the balance sheet... and the additional information to be provided by way of notes to the accounts.

(2) Subject to the exceptions authorised or required by this regulation, all the subsidiary undertakings of the society shall be included in the consolidated income and expenditure account and the balance sheet , as required by regulation 3(2), and in the notes to the accounts in respect of the society and its subsidiary undertakings in combination, as required by regulation 5(2)(b).

(3) A subsidiary undertaking may be excluded from the requirements of paragraph (2) if compliance with those requirements is not material for the purpose of giving a true and fair view for the society and its subsidiary undertakings as a whole, of the matters set out in subsection (2) of section 72F of the Act .

(4) If a society has two or more subsidiary undertakings, they do not qualify under paragraph (3) for exclusion from the requirements of paragraph (2) if taken as a whole they are material for the purpose described in paragraph (3).

(5) A subsidiary undertaking may also be excluded from the requirements of paragraph (2) where—

(a)severe long-term restrictions substantially hinder the exercise by the society of its rights over the assets or management of the subsidiary undertaking;

(b)the information necessary for the preparation of group accounts cannot be obtained without disproportionate expense or undue delay; or

(c)the interest of the society is held exclusively with a view to subsequent resale and the subsidiary undertaking has not been previously included in the group accounts prepared by the society.

(6) The references in sub-paragraphs (a) and (c) of paragraph (5) to the rights of the society and to the interest of the society are, respectively to rights and interests held by or attributed to the society for the purposes of section 1162 of the Companies Act 2006 (parent and subsidiary undertakings) in the absence of which it would not be the parent body.

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) Each particular account which is a group account shall combine the information contained in the particular account of the society and the accounts of its subsidiary undertakings from which it is derived, adjusted so far as is necessary to consolidate those accounts.

(9) In the group accounts, the interest of the society or of any subsidiary undertaking in an associated undertaking, and the amount of income or expenditure attributable to such an interest, shall be shown by the equity method of accounting (which shall include dealing with any goodwill arising in accordance with paragraphs 8 to 10 and 12 of Schedule 7).

(10) Where an associated undertaking is itself a parent undertaking, the net assets and income or expenditure required to be taken into account by paragraph (9) are those of the parent undertaking and its subsidiary undertakings, after making any consolidation adjustments.

(11) For the purposes of paragraph (10), “parent undertaking” and “subsidiary undertaking”have the meanings attributed to those phrases by section 1162 of the Companies Act 2006 .

(12) The equity method of accounting referred to in paragraph (9) need not be applied if the amounts in question are not material for the purpose of giving a true and fair view, for the society and its subsidiary undertakings as a whole, of the matters set out in subsection (2) of section 72F of the Act .

Accounts in euro

4A.—(1)The amounts set out in the annual accounts of a society may also be shown in the same accounts translated into euro.

(2)Where amounts are shown in euro—

(a)the amounts must have been translated at the exchange rate prevailing on the balance sheet date, and

(b)that rate must be disclosed in the notes to the accounts.

Notes to annual accounts

5.—(1) The annual accounts of any single accounts society shall, subject to paragraph (5), include notes to them containing the material specified and set out in the manner specified in Schedule 5, in addition to the notes required to be included by the Act and by other provisions of these Regulations.

(2) The annual accounts of any group accounts society shall, subject to paragraph (5) and any provision in Schedule 5 which indicates otherwise, include notes to them containing—

(a)in respect of the society; and

(b)in respect of the society and those of its subsidiary undertakings not excluded from the requirements of regulation 4(2), in combination,

the material specified in Schedule 5 in addition to the notes required to be included by other provisions of these Regulations.

(3) For the purposes of paragraph (2)(b) any reference in a ... provision of Schedule 5 to a society shall be taken as a reference to the society and its subsidiary undertakings in combination.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) Paragraphs (1) and (2) are not to be read as prohibiting the disclosing of any material in the notes to the annual accounts in greater detail than is required by these Regulations.

Holdings in undertakings

6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accounting principles and rules

7. Each society shall prepare its annual accounts in accordance with the accounting principles and rules set out in Schedule 7.

Directors' report

8. Each directors' report of a society prepared under section 75 of the Act shall contain, in addition to the other matters required to be contained in it by the Act, the material specified in Schedule 8.

Annual business statement

9.—(1) Each annual business statement of a society prepared under section 74 of the Act shall, subject to paragraphs (2) and (3), contain the material specified in Schedule 9.

(2) Nothing in this regulation—

(a)requires the setting out of the material specified in Schedule 9 in any particular manner; or

(b)prohibits the inclusion, for the purpose of the giving in the annual business statement of a true representation of the matters to which that material relates, of material additional to that required to be included by this regulation.

(3) Any material required or permitted by this regulation to be contained in the annual business statement may be included instead in the notes to the annual accounts or in the directors' report and, where any such material is so included, the annual business statement shall specify where in those notes or that report that material is to be found.

(4) The material required to be contained in the annual business statement by virtue of paragraph 3 of Schedule 9 shall not be the subject of report by auditors under section 78 of the Act.

Summary financial statement

10.—(1) Subject to paragraph (2), each summary financial statement of a society prepared under section 76 of the Act shall be prepared in the order and under the headings and subheadings shown in the formats (and as directed by the notes) set out inthe relevant Part , and in accordance with the provisions of Part II, of Schedule 10, so as to contain—

(a)a statement in the prescribed form for the purposes of section 76(4) of the Act;

(b)a summary directors' report;

(c)a summary statement; and

(d)a summary of key financial ratios,

followed by the statement of the auditors' opinion required to be included by section 76(5) of the Act, and so as to give a summary account of the relevant matters.

(1A)For the purposes of paragraph (1) “the relevant Part”, for a society whose annual accounts are Building SocietiesAct accounts, is Part I, and for a society whose annual accounts are IAS accounts, is Part IA.

(2)Paragraphs (1) and (1A) are not to be read as—

(a)requiring the heading or subheading for any item to be distinguished by any letter or number assigned to that item in the format in which it appears;

(b)prohibiting the inclusion, in place of the words “THIS YEAR” and “LAST YEAR” in Sections C and D of Parts I and IA of Schedule 10, of other column headings consistent with paragraph 2 of Part II of that Schedule; or

(c)prohibiting the inclusion, for the purpose of assisting the giving in the summary financial statement of a summary account of the relevant matters, of material additional to that required to be included by this regulation.

(3) In this regulation “the relevant matters” are, in relation to a financial year of a society with which a summary financial statement deals, the financial development (during the year) and the financial position (at the end of the year) of—

(a)where section 76(2) of the Act does not apply, the society; and

(b)where section 76(2) of the Act applies, the society and its connected undertakings.

Interpretation of Schedules

11. Schedule 11 shall have effect for the interpretation of the Schedules to these Regulations.

Transitional provisions

12.—(1) Where any provision of these Regulations requires—

(a)the recording of a particular item for the entirety of a financial year, and—

(i)that financial year began before the operative date of these Regulations for a society; and

(ii)the legislation in force, or, as the case may be, the requirements applying to a society by virtue of paragraph (4) during the period beginning with the start of the financial year and ending immediately before the operative date of these Regulations for a society did not require the recording of that particular item; or

(b)the recording of a particular item as at the end of a previous financial year, and—

(i)that previous financial year ended before the operative date of these Regulations for a society; and

(ii)the legislation in force or, as the case may be, the requirements applying to a society by virtue of paragraph (4) as at the end of that previous financial year did not require the recording of that partic,.

then if the records of the society are so kept as to enable that particular item to be identified, it shall be identified and so recorded, but if the records of the society are not so kept, it shall be included on the basis of an estimate.

(2) Where under paragraph (1) an estimate is used in respect of any item, that fact shall be disclosed in a note to the accounts.

(3) In the case of acquisitions made prior to the date on which a society first prepared its annual accounts in accordance with the Building Societies (Accounts and Related Provisions) Regulations 1992(2), no amount need be included in any figure required to be disclosed under paragraph 11 of Schedule 4, or (if all relevant acquisitions were made prior to that date) no figure need be disclosed, if the information necessary to calculate the amount or figure with material accuracy is unavailable or cannot be obtained without unreasonable expense and delay, provided it is disclosed in the notes to the accounts that an amount has not been included or the figure has not been disclosed on these grounds.

(4) A society shall prepare, with respect to a financial year which ended before the operative date of these Regulations for it, such annual accounts in respect of that financial year as it would have been required to prepare had these Regulations not been made subject only to the omission of the statement of the source and application of funds from the annual accounts for a financial year which ends after 22nd March 1999 , and for the purpose of this paragraph the annual accounts shall be taken to include the annual business statement, the directors' report and the summary financial statement.

(5) A society may prepare, with respect to the first financial year ending after the operative date of these Regulations for it, a directors' report which does not contain the information described in paragraph 9(2) of Schedule 8.

(6) For the purpose of this regulation, the operative date of these Regulations for a society is the later of—

(a)the date of the coming into force of these Regulations; and

(b)the date on which the provisions of the Building Societies Act 1997 specified in Part II of the Schedule to the Building Societies Act 1997 (Commencement No. 3) Order 1997(3) have come into force in accordance with Article 2 of the Order in relation to the society.

Revocation

13.The Building Societies (Accounts and Related Provisions) Regulations 1992, the Building Societies (Accounts and Related Provisions) (Amendment) Regulations 1994(4) and the Building Societies (Accounts and Related Provisions) (Amendment) Regulations 1995(5) are hereby revoked.

Regulation 3

SCHEDULE 1

PART IFORMAT OF SOCIETY INCOME AND EXPENDITURE ACCOUNT

1.Interest receivable and similar income

(a)(i)On loans fully secured on residential property

(ii)On other loans

(b)On debt securities

(c)On other liquid assets

(d)Other interest receivable and similar income

2.Interest payable and similar charges

(a)(i)On shares held by individuals

(ii)On other shares

(iii)On subscribed capital

(b)On deposits and other borrowings

(c)Other interest payable and similar charges

3. Net interest receivable

4. Income from investments

(a)Income from equity shares [and other variable yield securities]

(b)Income from participating interests

(c)Income from shares in subsidiary undertakings

(d)Other income from investments

5. Fees and commissions receivable

6. Fees and commissions payable

7. Net profit or loss on financial operations

8. Other operating income

9. Administrative expenses

(a)Staff costs

(i)Wages and salaries

(ii)Social security costs

(iii)Other pension costs

(b)Other administrative expenses

10. Depreciation and amortisation

11. Other operating charges

12. Provisions

(a)Provisions for bad and doubtful debts

(b)Provisions for contingent liabilities and commitments

13. Adjustments to provisions

(a)Adjustments to provisions for bad and doubtful debts

(b)Adjustments to provisions for contingent liabilities and commitments

14. Amounts written off fixed asset investments

15. Adjustments to amounts written off fixed asset investments

16. Profit or loss on ordinary activities before tax

17. Tax on profit or loss on ordinary activities

18. Profit or loss on ordinary activities after tax

19. Extraordinary income

20. Extraordinary charges

21. Extraordinary profit or loss

22. Tax on extraordinary profit or loss

23. Extraordinary profit or loss after tax

24. Other taxes not shown under the preceding items

25. Profit or loss for the financial year

PART IIFORMAT OF CONSOLIDATED INCOME AND EXPENDITURE ACCOUNT

1.Interest receivable and similar income

(a)(i)On loans fully secured on residential property

(ii)On other loans

(b)On debt securities

(c)On other liquid assets

(d)Other interest receivable and similar income

2.Interest payable and similar charges

(a)(i)On shares held by individuals

(ii)On other shares

(iii)On subscribed capital

(b)On deposits and other borrowings

(c)Other interest payable and similar charges

3. Net interest receivable

4. Income from investments

(a)Income from equity shares [and other variable yield securities]

(b)Income from associated undertakings

(c)Income from other participating interests

(d)Income from shares in unconsolidated subsidiary undertakings

(e)Other income from investments

5. Fees and commissions receivable

6. Fees and commissions payable

7. Net profit or loss on financial operations

8. Other operating income

9. Administrative expenses

(a)Staff costs

(i)Wages and salaries

(ii)Social security costs

(iii)Other pension costs

(b)Other administrative expenses

10. Depreciation and amortisation

11. Other operating charges

12. Provisions

(a)Provisions for bad and doubtful debts

(b)Provisions for contingent liabilities and commitments

13. Adjustments to provisions

(a)Adjustments to provisions for bad and doubtful debts

(b)Adjustments to provisions for contingent liabilities and commitments

14. Amounts written off fixed asset investments

15. Adjustments to amounts written off fixed asset investments

16. Profit or loss on ordinary activities before tax

17. Tax on profit or loss on ordinary activities

18. Profit or loss on ordinary activities after tax

19. Minority interests

20. Profit or loss before extraordinary items

21. Extraordinary income

22. Extraordinary charges

23. Extraordinary profit or loss

24. Tax on extraordinary profit or loss

25. Extraordinary profit or loss after tax

26. Minority interests in extraordinary profit or loss after tax

27. Other taxes not shown under the preceding items

28. Profit or loss for the financial year

PART IIIPROVISIONS APPLICABLE TO PARTS I AND II

1.—(1) Item 1(a) in each of Parts I and II shall include—

(a)all income from assets entered under Asset item B in the balance sheet in the corresponding Part of Schedule 2, however calculated; and

(b)interest receivable on—

(i)in the case of Part I, loans within Asset items C. 2 and C. 3; and

(ii)in the case of Part II, loans within Asset items C. 2 to C. 4.

(2) Item 1(b) and (c) in each of Parts I and II shall include interest, other income and profits net of losses arising from liquid assets, except to the extent that they are included in item 7 in Parts I and II in accordance with paragraph 4 of this Part and the notes to the annual accounts shall disclose the amount of profits net of losses arising from liquid assets (except for amounts included in item 7 in each of Parts I and II) and the amount of interest and other income arising from them as separate amounts unless those two amounts are separately stated under each of item 1(b) and (c) in each case.

(3) Item 1 in each Part shall include fees and commissions receivable similar in nature to interest and calculated on a time basis or by reference to the amount of the claim or liability (but not other fees and commissions receivable).

(4) Item 1 in each Part shall also include income from financial instruments, which is spread over the actual duration of the contract and similar in nature to interest.

(5) The total amount of income from fixed income securities included in item 1 in each Part shall be disclosed in a note to the accounts.

2.—(1) Items 2(a)(i) and 2(a)(ii) in each of Parts I and II shall include all charges arising, respectively, out of liabilities shown under Liability item A in the corresponding Part of Schedule 2.

(2) Item 2(b) in each Part shall include all charges arising out of liabilities shown under Liability items B, C, D and H in the corresponding Part of Schedule 2.

(3) Item 2 in each Part shall include fees and commissions payable similar in nature to interest and calculated on a time basis or by reference to the amount of the claim or liability (but not other fees and commissions payable).

(4) Item 2 in each Part shall also include charges on financial instruments which are spread over the actual duration of the contract and similar in nature to interest.

3.—(1) Item 5 in each of Parts I and II shall include income in respect of all services supplied for the account of third parties, apart from fees and commissions required to be included under “interest receivable” in item 1 in each Part, and item 6 shall include charges for the use of services of third parties, apart from fees and commissions required to be included under “interest payable”in item 2 in each Part.

(2) Any amount, apart from an appointed agency payment, which represents—

(a)fees and commissions for guarantees and loan administration;

(b)commissions and other charges and income in respect of payment transactions, account administration charges and commissions for the safe custody and administration of deeds, securities or other related documents;

(c)fees and commissions for foreign currency transactions;

(d)commissions and other charges and income in connection with insurance and pension contracts; or

(e)commissions and other charges and income for brokerage services in connection with savings and insurance contracts and loans,

and which falls within sub-paragraph (1) but would also be capable of being included within an item other than those referred to in that sub-paragraph shall be included within items 5 and 6 in Parts I and II as appropriate.

(3) Appointed agency payments shall be included within item 9(b) in each Part.

(4) For the purposes of sub-paragraphs (2) and (3), an appointed agency payment is a payment for a relevant agency function to a person who, by virtue of an appointment by a society, acts as its agent in that function, and a relevant agency function comprises action as an agent of the society for the purpose of receipt of sums in respect of shares or deposits or the making of loans or advances.

4. Item 7 in each of Parts I and II shall comprise—

(a)the net profit or net loss on transactions in securities which are not held as financial fixed assets together with amounts written off or written back as a result of the application of paragraph 16(1) in Schedule 7; and

(b)the net profit or loss on financial instruments, except in so far as that income or charge is included, in accordance with paragraphs 1(4) and 2(4), under items 1 and 2 in each of Parts I and II.

5. Item 10 in each of Parts I and II shall comprise—

(a)amortisation and other amounts written off Asset item D; and

(b)depreciation and other amounts written off Asset item E,

in the corresponding Part of Schedule 2.

6. Item 12(a) in each of Parts I and II shall comprise charges for amounts written off and for provisions made in respect of loans and advances to customers shown under Asset item B in the corresponding Part of Schedule 2.

7. Item 12(b) in each of Parts I and II shall comprise charges for provisions for contingent liabilities and commitments of a type which would, if not provided for, be shown under Memorandum items A and B in the corresponding Part of Schedule 2.

8. Item 13(a) in each of Parts I and II shall include credits from the recovery of loans and advances to customers shown under Asset item B in the corresponding Part of Schedule 2 and which have been previously written off, or were written back following earlier write offs, and from the reduction of provisions previously made with respect to such loans and advances.

9. Item 13(b) in each of Parts I and II shall comprise credits from the reduction of provisions previously made with respect to contingent liabilities and commitments.

10. Item 14 in each of Parts I and II shall comprise amounts written off in respect of transferable securities held as financial fixed assets, participating interests, and shares in subsidiary undertakings which are included in Asset items A.2 to A.4 and C in the corresponding Part of Schedule 2.

11. Item 15 in each of Parts I and II shall include amounts written back following earlier write offs and provisions in respect of transferable securities held as financial fixed assets, participating interests and subsidiary undertakings and which are included in Asset items A.2 to A.4 and C in the corresponding Part of Schedule 2.

12. In this Schedule “financial instrument” means—

(a)in relation to Parts I and II, an instrument concerning a transaction described in subsections (2) to (4) of section 9A of the Act(6) (restrictions on certain transactions); and

(b)in relation to Part II, an instrument on which interest or a dividend is capable of being received and which is not an advance, a loan or a liquid asset.

13. Where a heading in either Part I or Part II contains the wording “profit or loss”, such wording shall be replaced by “profit” or “loss” as appropriate.

Regulation 3

SCHEDULE 2

PART IFORMAT OF SOCIETY BALANCE SHEET

Assets

A. LIQUID ASSETS

1. Cash in hand and balances with the Bank of England

2. Treasury bills and other eligible bills

(a)Treasury bills and similar securities

(b)Other eligible bills

3. Loans and advances to credit institutions

(a)Repayable on demand

(b)Other loans and advances

4. Debt securities [and other fixed income securities]

(a)Issued by public bodies

(b)Issued by other borrowers

5. Other liquid assets

B. LOANS AND ADVANCES TO CUSTOMERS

1. Loans fully secured on residential property

2. Other loans

(a)Loans fully secured on land

(b)Other loans

C. INVESTMENTS

1. Equity shares [and other variable yield securities]

2. Participating interests

(a)Credit institutions

(b)Other participating interests

3. Investments in subsidiary undertakings

(a)Credit institutions

(b)Other subsidiary undertakings

4. Other investments

D. INTANGIBLE FIXED ASSETS

E. TANGIBLE FIXED ASSETS

(a)Land and buildings

(b)Plant and machinery

(c)Equipment, fixtures, fittings and vehicles

(d)Payments on account and assets in the course of construction

F. OTHER ASSETS

G. PREPAYMENTS AND ACCRUED INCOME

H. TOTAL ASSETS

Liabilities

A.SHARES

(a)Held by individuals

(b)Other shares

B. AMOUNTS OWED TO CREDIT INSTITUTIONS

(a)Repayable on demand

(b)With agreed maturity dates or periods of notice

C. AMOUNTS OWED TO OTHER CUSTOMERS

(a)Repayable on demand

(b) With agreed maturity dates or periods of notice

D. DEBT SECURITIES IN ISSUE

(a)Certificates of deposit

(b)Fixed and floating rate notes

(c)Other debt securities

E. OTHER LIABILITIES

(a)Income tax

(b)Corporation tax

(c)Other creditors

F. ACCRUALS AND DEFERRED INCOME

G.PROVISIONS FOR LIABILITIES

(a)Provisions for pensions and similar obligations

(b)Provisions for tax

(c)Other provisions

H. SUBORDINATED LIABILITIES

I. SUBSCRIBED CAPITAL

J.REVALUATION RESERVE

K. RESERVES

(a)General reserves

(b)Other reserves

L. TOTAL LIABILITIES

Memorandum items

A. CONTINGENT LIABILITIES

(a)Acceptances and endorsements

(b)Guarantees and assets pledged as collateral security

(c)Other contingent liabilities

B. COMMITMENTS

(a)Commitments arising out of sale and repurchase transactions

(b)Other commitments

PART IIFORMAT OF CONSOLIDATED BALANCE SHEET

Assets

A. LIQUID ASSETS

1. Cash in hand and balances with the Bank of England

2. Treasury bills and other eligible bills

(a)Treasury bills and similar securities

(b)Other eligible bills

3. Loans and advances to credit institutions

(a)Repayable on demand

(b)Other loans and advances

4. Debt securities [and other fixed income securities]

(a)Issued by public bodies

(b)Issued by other borrowers

5. Other liquid assets

B. LOANS AND ADVANCES TO CUSTOMERS

1. Loans fully secured on residential property

2. Other loans

(a)Loans fully secured on land

(b)Other loans

C. INVESTMENTS

1. Equity shares [and other variable yield securities]

2.Interests in associated undertakings

(a)Credit institutions

(b)Other associated undertakings

3. Other participating interests

(a)Credit institutions

(b)Other participating interests

4. Investments in unconsolidated subsidiary undertakings

(a)Credit institutions

(b)Other subsidiary undertakings

5. Other investments

D. INTANGIBLE FIXED ASSETS

E. TANGIBLE FIXED ASSETS

(a)Land and buildings

(b)Plant and machinery

(c)Equipment, fixtures, fittings and vehicles

(d)Payments on account and assets in the course of construction

F. OTHER ASSETS

G. PREPAYMENTS AND ACCRUED INCOME

H. TOTAL ASSETS

Liabilities

A.SHARES

(a)Held by individuals

(b)Other shares

B. AMOUNTS OWED TO CREDIT INSTITUTIONS

(a)Repayable on demand

(b)With agreed maturity dates or periods of notice

C. AMOUNTS OWED TO OTHER CUSTOMERS

(a)Repayable on demand

(b)With agreed maturity dates or periods of notice

D. DEBT SECURITIES IN ISSUE

(a)Certificates of deposit

(b)Fixed and floating rate notes

(c)Other debt securities

E. OTHER LIABILITIES

(a)Income tax

(b)Corporation tax

(c)Other creditors

F. ACCRUALS AND DEFERRED INCOME

G.PROVISIONS FOR LIABILITIES

(a)Provisions for pensions and similar obligations

(b)Provisions for tax

(c)Other provisions

H. SUBORDINATED LIABILITIES

I. SUBSCRIBED CAPITAL

J.REVALUATION RESERVE

K. RESERVES

(a)General reserves

(b)Other reserves

L. MINORITY INTERESTS

M. TOTAL LIABILITIES

Memorandum items

A. CONTINGENT LIABILITIES

(a)Acceptances and endorsements

(b)Guarantees and assets pledged as collateral security

(c)Other contingent liabilities

B. COMMITMENTS

(a)Commitments arising out of sale and repurchase transactions

(b)Other commitments

PART IIIPROVISIONS APPLICABLE TO PARTS I AND II

1. In respect of Asset items A.2 to A.4 and B and Liability items B to D and H, the following shall be shown either by subdivision of the relevant items or by way of notes to the accounts—

(a)in the case of such items in Part I, claims on, or liabilities to, subsidiary undertakings;

(b)in the case of such items in Part II, claims on, or liabilities to, any unconsolidated subsidiary undertakings; and

(c)in the case of such items in both Parts I and II, claims on, or liabilities to, any undertaking in which the society has a participating interest (including, in the case of a group accounts society, any associated undertaking).

2.—(1) The amount of any assets that are subordinated must be shown either as a subdivision of any relevant asset item or in the notes to the accounts; in the latter case disclosure shall be by reference to the relevant asset item or items in which the assets are included.

(2) The amounts required to be shown in respect of paragraph 1 shall be further subdivided to show the amounts of any assets or liabilities which are subordinated.

(3) For the purposes of sub-paragraphs (1) and (2), assets or liabilities are subordinated if there is a contractual obligation to the effect that in the event of winding up or bankruptcy they are to be repaid only after the claims of other creditors have been met (other than any creditors ranking pari passu with those liabilities) whether or not a ranking has been agreed between the subordinated creditors concerned.

3.—(1) This paragraph applies to Asset item A in each of Parts I and II.

(2) There shall be included in Asset item A.1—

(a)banknotes or coinage of any country or territory;

(b)deposits with the Bank of England which may be withdrawn without notice; all other claims on central or post office banks shall be included in Asset item A.3 or B.

(3) There shall be included in Asset item A.2(a) Treasury bills and similar debt instruments issued by public bodies which are eligible for refinancing with the Bank of England. Any Treasury bills or similar debt instruments not so eligible shall be included under Asset item A.2(b).

(4) There shall be included in Asset item A.2(b) all bills that have been purchased to the extent that they are eligible for refinancing with the Bank of England other than those bills included in Asset item A.2(a).

(5) There shall be included in Asset item A.3 all deposits with, but excluding any debt securities issued or guaranteed by, any credit institution.

(a)(6) (a) Asset item A.4 shall comprise transferable debt securities issued or guaranteed by any credit institution or by other undertakings or public bodies.

(b)Debt securities issued by public bodies shall however, only be included in this item if they may not be shown under Asset item A.2.

(c)Where a society holds its own debt securities these shall not be included under this item but shall be deducted from the appropriate liabilities item.

(d)Securities bearing interest rates that vary in accordance with specific factors, for example the interest rate on the inter-bank market or on the Euromarket, shall also be regarded as debt securities to be included under this item.

(e)Fixed income securities shall be included in Asset item A.4 to the extent that they are not included in Asset item A.2.

(7) For the purposes of this paragraph—

• “deposit” means a sum of money paid on terms—

  (a)

  under which it will be repaid, with or without interest or a premium, and either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person receiving it; and

  (b)

  which are not referable to the provision of property or services or the giving of security; and,

  for the purposes of this definition, money is paid on terms which are referable to the provision of property or services or to the giving of security if, and only if—

  (i)

  it is paid by way of advance or part payment under a contract for the sale, hire or other provision of property or service, and is repayable only in the event that the property or service is not or are not in fact sold, hired or otherwise provided;

  (ii)

  it is paid by way of security for the performance of a contract or by way of security in respect of loss which may result from the non performance of a contract; or

  (iii)

  without prejudice to sub-paragraph (ii) above, it is paid by way of security for the delivery up or return of any property, whether in a particular state of repair or otherwise; and

• “Treasury bills” means bills issued by Her Majesty’s Government in the United Kingdom and Northern Ireland Treasury Bills.

4. Asset item B.1 in each of Parts I and II shall comprise all loans within the term “Y” in section 6(2) of the Act(7).

5. Asset item B.2(a) in each of Parts I and II shall comprise all loans fully secured on land within the meaning of section 6B of the Act(8) other than those included under Asset item B.1.

6.—(a) Asset item D in each of Parts I and II shall comprise—

(i)development costs;

(ii)concessions, patents, licences, trade marks and similar rights and assets;

(iii)goodwill; and

(iv)payments on account relating to intangible fixed assets.

(b)Amounts shall be included in respect of the assets mentioned in sub-paragraph (a)(ii) only if they were acquired for valuable consideration or if they were created by the society or by a subsidiary undertaking.

(c)Amounts representing goodwill shall be included only to the extent that the goodwill was acquired for valuable consideration.

(d)There shall be disclosed, in a note to the accounts the amount of any goodwill included in Asset item D in each of Parts I and II.

7. Asset item G in each of Parts I and II shall include any expenditure incurred during the financial year but relating to a subsequent financial year, together with any income which, although relating to the financial year in question, is not due until after its expiry, except that it shall not include accrued interest in respect of Asset items A and B in each of Parts I and II which accrued interest shall be included under those items.

8. Liability item A(a) in each of Parts I and II shall exclude shares held by individuals as bare trustees (or, in Scotland, simple trustees) for bodies corporate or for persons who include bodies corporate.

9. For the purpose of Liability item D in each of Parts I and II—

(a)“certificate of deposit” means a certificate relating to money deposited with the issuer which recognises an obligation to pay a stated amount to bearer or to order, with or without interest, and by the delivery of which, with or without endorsement, the right to receive that stated amount, with or without interest is transferable;

(b)“floating rate note” means a note which embodies a right, transferable to any person by delivery or by a method specified in the note, to receive a principal sum and interest at a rate which is variable at times specified in the note; and

(c)“fixed rate note” means a note which embodies a right, transferable to any person by delivery or by a method specified in the note, to receive a principal sum and interest at a rate which is fixed as specified in the note.

10. Liability item F in each of Parts I and II shall include any income relating to a subsequent financial year, together with any charges which although relating to the financial year in question, will be payable only in the course of a subsequent financial year, except that it shall not include accrued interest in respect of Liability items A to D in Parts I and II, which accrued interest shall be included under those items.

11.—(1) Liability item H in each of Parts I and II shall comprise all liabilities in respect of which there is a contractual obligation that, in the event of winding up or bankruptcy, they are to be repaid only after the claims of other creditors have been met. All subordinated liabilities shall be included, whether or not a ranking has been agreed between the subordinated creditors concerned.

(2) Any subordinated loan capital of the society shall be included in Liability item H in each of Parts I and II and in no other such Liability item, but this requirement shall not be taken to exclude the obligation to include in Liability item H in part II subordinated liabilities of subsidiary undertakings.

12. Liability item I in each of Parts I and II shall comprise deferred shares.

13.Memorandum item A in each of Parts I and II shall include all transactions whereby the society (or the society and its subsidiary undertakings in respect of Part II) has underwritten the obligations of a third party.

14.Memorandum item A(b) in each of Parts I and II shall include all guarantee obligations incurred and assets pledged as collateral on behalf of third parties by the society (or the society and its subsidiary undertakings in respect of Part II).

15.Memorandum item B in each of Parts I and II shall include every irrevocable commitment which would give rise to a credit risk to the society (or the society and its subsidiary undertakings in respect of Part II).

16.—(1) The following rules apply where a society (or the society and its subsidiary undertakings in respect of Part II) is a party to a sale and repurchase transaction.

(2) Where the society is the transferor of the assets under the transaction—

(a)the assets transferred shall, notwithstanding the transfer, be included in its balance sheet;

(b)the purchase price received by it shall be included in its balance sheet as an amount owed to the transferee; and

(c)the value of the assets transferred shall be disclosed in a note to its accounts.

(3) Where the society is the transferee of the assets under the transaction it shall not include the assets transferred in its balance sheet but the purchase price paid by it to the transferor shall be so included as an amount owed by the transferor.

17.—(1) For the purpose of this paragraph “managed funds” are funds which the society (or the society and its subsidiary undertakings in respect of Part II) administers in its own name but on behalf of others and to which it has legal title.

(2) Where claims and obligations arising in respect of managed funds fall to be treated as claims and obligations of the society (or the society and its subsidiary undertakings in the case of Part II) such claims and obligations representing managed funds are to be included in the balance sheet, with notes to the accounts disclosing the total amount included with respect to such assets and liabilities in the balance sheet and showing the amount included under each relevant balance sheet item in respect of such assets or (as the case may be) liabilities.

18.—(1) Where a society (or the society and its subsidiary undertakings in the case of Part II) is a party to a syndicated loan transaction, it shall include in the balance sheet only that part of the total loan which it has funded itself.

(2) Where a society (or the society and its subsidiary undertakings in the case of Part II) is a party to a syndicated loan transaction and has agreed to reimburse (in whole or in part) any other party to the syndicate any funds advanced by that party or any interest thereon upon the occurrence of any event including the default of the borrower, any additional liability by reason of such a guarantee shall be included as a contingent liability in Memorandum item A(b) in each of Parts I and II.

Regulation 3

SCHEDULE 3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Regulation 4

SCHEDULE 4FORM AND CONTENT OF THE ANNUAL ACCOUNTS OF A GROUP ACCOUNTS SOCIETY

General rules

1.—(1) The consolidated income and expenditure account and the consolidated balance sheet shall—

(a)incorporate in full the information contained in the individual accounts of the subsidiary undertakings included in the consolidation, subject to the adjustments authorised or required by the following provisions of this Schedule and to such other adjustments (if any) as may be appropriate in accordance with generally accepted accounting principles or practice; and

(b)comply so far as practicable with the provisions of Schedule 5 (except paragraphs 4 to 11, 13, 14(3)(b) and 35 thereof) and Schedule 7 as if the undertakings included in the consolidation were a single society.

(2) If the financial year of a subsidiary undertaking included in the consolidation does not end with that of the society, the group accounts shall be made up—

(a)from the accounts of the subsidiary undertaking for its financial year last ending before the end of the society’s financial year, provided that year ended no more than three months before that of the society; or

(b)from interim accounts prepared by the subsidiary undertaking as at the end of the parent society’s financial year.

2.—(1) Where assets and liabilities to be included in the consolidated balance sheet have been valued or otherwise determined by subsidiary undertakings according to accounting rules differing from those used in the annual accounts of a group accounts society, the values or amounts shall be adjusted so as to accord with the rules used for the annual accounts of the group accounts society.

(2) If it appears to the directors of the society that there are special reasons for departing from the requirements of sub-paragraph (1) they may do so, but particulars of any such departure, the reasons for it and its effect shall be given in a note to the accounts.

(3) The adjustments referred to in this paragraph need not be made if they are not material for the purpose of giving a true and fair view for the society and its subsidiary undertakings, as a whole of the matters set out in subsection (2) of section 72F of the Act .

3. Any differences of accounting rules as between a society’s individual accounts for a financial year and its consolidated accounts shall be disclosed in a note to the accounts and the reasons for the differences given.

4. Amounts which in the particular context of any provision of this Schedule are not material may be disregarded for the purposes of that provision.

Elimination of group transactions

5.—(1) Debts and claims between undertakings included in the consolidation, and income and expenditure relating to transactions between such undertakings, shall be eliminated in preparing the consolidated accounts.

(2) Where profits and losses resulting from transactions between undertakings included in the consolidation are included in the book value of assets, they shall be eliminated in preparing the group accounts.

(3) The elimination required by sub-paragraph (2) may be effected in proportion to the society’s interest in the shares of the undertakings.

(4) Sub-paragraphs (1) and (2) need not be complied with if the amounts concerned are not material for the purpose of giving a true and fair view for the society and its subsidiary undertakings as a whole of the matters set out in subsections (2) and (3) of section 73 of the Act.

Acquisition accounting

6.—(1) The following provisions apply where an undertaking becomes a subsidiary undertaking of the society.

(2) That event is referred to in those provisions as an “acquisition”, and references to the “undertaking acquired” shall be construed accordingly.

7. An acquisition shall be accounted for by the acquisition method of accounting, unless the conditions for accounting for it as a merger as set out in paragraph 10 of Schedule 6 to the Large and Medium–sized Companies and Groups (Accounts and Reports) Regulations 2008 are met, in which case the merger method of accounting as detailed in paragraph 11 of the said Schedule 6 shall be employed.

8.—(1) The acquisition method of accounting is set out in the following sub-paragraphs.

(2) The identifiable assets and liabilities of the undertaking acquired shall be included in the consolidated balance sheet at their fair values as at the date of acquisition.

(3) In this paragraph the “identifiable” assets or liabilities of the undertaking acquired means the assets or liabilities which are capable of being disposed of or discharged separately, without disposing of a business of the undertaking.

(4) The income and expenditure of the undertaking acquired shall be brought into the annual accounts of a group accounts society only as from the date of the acquisition.

(5) There shall be set off against the acquisition cost of the interest in the shares of the undertaking held by the society and its subsidiary undertakings the interest of the society and its subsidiary undertakings in the adjusted capital and reserves of the undertaking acquired, and for this purpose—

“the acquisition cost” means the amount of any cash consideration and the fair value of any other consideration, together with such amount (if any) in respect of fees and other expenses of the acquisition as the society may determine; and

“the adjusted capital and reserves” of the undertaking acquired means its capital and reserves at the date of the acquisition after adjusting the identifiable assets and liabilities of the undertaking to fair values as at that date.

(6) The resulting amount shall be treated, if positive, as goodwill, and if negative as a negative consolidation difference.

9.—(1) Where a group is acquired paragraph 8 applies with the adaptations set out in sub-paragraphs (2) and (3).

(2) References to shares of the undertaking acquired shall be construed as references to shares of the parent undertaking of the group.

(3) Other references to the undertaking acquired shall be construed as references to the group; and references to the assets and liabilities, income and expenditure and capital and reserves of the undertaking acquired shall be construed as references to the assets and liabilities, income and expenditure and capital and reserves of the group after making the set-offs and other adjustments required by this Schedule in the case of group accounts.

10.—(1) The following information with respect to acquisitions taking place in the financial year shall be given in a note to the accounts—

(a)the name of the undertaking acquired or, where a group was acquired, the name of the parent undertaking of that group;

(b)whether the acquisition was accounted for by the acquisition method or by the merger method of accounting.

(2) In relation to an acquisition which significantly affects the figures shown in the annual accounts of a group accounts society the following further information shall be given—

(a)the composition and fair value of the consideration for the acquisition given by the society and its subsidiary undertaking;

(b)where the acquisition method of accounting has been adopted, the book values immediately prior to the acquisition, and the fair values at the date of acquisition, of each class of assets and liabilities of the undertaking or group acquired, in tabular form, including a statement of the amount of any goodwill or negative consolidation difference arising on the acquisition, together with an explanation of any significant adjustments made; and

(c)where the merger method of accounting has been adopted, an explanation shall be given of any significant adjustments made in relation to the amounts of the assets and liabilities of the undertaking or group acquired, together with a statement of any resulting adjustment to the consolidated reserves (including the restatement of opening consolidated reserves).

(3) In ascertaining for the purposes of sub-paragraph (2)(b) and (2)(c) the book values and fair values of assets and liabilities of a group or the amount of the assets and liabilities of a group, the set-offs and other adjustments required by this Schedule in the case of the annual accounts of a group accounts society shall be made.

11.—(1) There shall be stated in a note to the accounts the cumulative amount of goodwill resulting from acquisitions in that and earlier financial years which has been written off otherwise than in the consolidated income and expenditure account for that or any earlier financial year.

(2) That figure shall be shown net of any goodwill attributable to a subsidiary undertaking disposed of prior to the balance sheet date.

12. Where during the financial year there has been a disposal of a subsidiary undertaking or group which significantly affects the figures shown in the annual accounts of a group accounts society, there shall be stated in a note to the accounts—

(a)the name of that undertaking or, as the case may be, of the parent undertaking of that group; and

(b)the extent to which the profit or loss shown in the group accounts is attributable to profit or loss of that subsidiary undertaking or group.

13. The information required by paragraph 10, 11 or 12 need not be disclosed with respect to a subsidiary undertaking which—

(a)is established under the law of a country outside the United Kingdom; or

(b)carries on business outside the United Kingdom,

if in the opinion of the directors of the society the disclosure would be seriously prejudicial to the business of that subsidiary undertaking or to the business of the society or any of its subsidiary undertakings and the appropriate authority agrees that the information should not be disclosed.

14. For the purposes only of paragraphs 9, 10, 12 and 13, a “group” is a “parent undertaking”and its “subsidiary undertakings” as defined by section 1162 of the Companies Act 2006 , where the parent undertaking is a subsidiary undertaking of the society.

Minority interests

15.—(1) Under item 19 in Part II of Schedule 1 shall be shown the amount of any profit or loss on ordinary activities after tax attributable to shares in subsidiary undertakings included in the consolidation held by or on behalf of persons other than the society and its subsidiary undertakings.

(2) Under item 26 in Part II of Schedule 1 shall be shown the amount of any profit or loss on extraordinary activities after tax attributable to shares in subsidiary undertakings included in the consolidatiokn held by or on behalf of persons other than the society and its subsidiary undertakings.

(3) Under Liability item L in Part II of Schedule 2 shall be shown the amount of capital and reserves attributable to shares in subsidiary undertakings included in the consolidation held by or on behalf of persons other than the society and its subsidiary undertakings.

Interests in subsidiary undertakings excluded from consolidation

16. The interest of the society in subsidiary undertakings excluded from consolidation under regulation 4(5), and the amount of income or expenditure attributable to such an interest, shall be shown in the consolidated balance sheet or, as the case may be, in the consolidated income and expenditure account by the equity method of accounting (and this shall include dealing with any goodwill arising in accordance with paragraphs 8 to 10 and 12 of Schedule 7).

Foreign currency translation

17.—(1) Any difference between—

(a)the amount included in the consolidated balance sheet for the previous financial year with respect to the group’s interest in any undertaking included in the consolidation or in any associated undertaking, together with the amount of any transactions undertaken to cover any such interest; and

(b)the opening amount for the financial year in respect of the group’s interest in such undertakings and in respect of any such transactions,

arising as a result of the application of paragraph 32 of Schedule 7 may be credited to (where (a) is less than(b)), or (as the case may be) deducted from (where (a) is greater than (b)), the consolidated general reserve.

(2) Any income and expenditure of subsidiary undertakings and associated undertakings in a foreign currency may be translated for the purposes of the consolidated income and expenditure account at the average rates of exchange prevailing during the financial year.

Regulation 5

SCHEDULE 5NOTES TO ANNUAL ACCOUNTS

Accounting policies

1.—(1) There shall be stated the accounting policies (including such policies with respect to the depreciation and diminution in value of the assets of the society) adopted by the society in determining the amounts to be included in respect of items shown in the income and expenditure account and the balance sheet .

(2) It shall be stated whether the accounts have been prepared in accordance with applicable accounting standards within the meaning of section 464(1) of the Companies Act 2006 ; particulars of any material departure from these standards and the reasons for such departure shall be given.

Sums denominated in foreign currencies

2. Where any sums originally denominated in a foreign currency have been brought into account under any items shown in the balance sheet or income and expenditure account formats, the basis on which those sums have been translated into sterling shall be stated.

Employees

3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Aggregate amount of directors' remuneration etc.

4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Details of individual directors' remuneration etc.

5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Excess retirement benefits of directors and past directors

6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Compensation to directors for loss of office

7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sums paid to third parties in respect of directors' services

8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary provisions regarding directors' remuneration

9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of provisions regarding directors' remuneration

13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other income and expenditure items

14.—(1) In respect of interest receivable, the amount of interest derived from connected undertakings shall be shown separately from interest derived from other sources.

(2) In respect of interest payable, the amount payable to connected undertakings shall be shown separately.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) (a) Where any amount to be included in any of the items mentioned in sub-paragraph (b) is material, particulars shall be given of such amounts together with an explanation of their nature.

(b)The items mentioned in sub-paragraph (a) are—

(i)in Part I of Schedule 1, items 4(b) to (d), 5 to 8, 11, 19 and 20; and

(ii)in Part II of Schedule 1, items 4(b) to (e), 5 to 8, 11, 21 and 22.

(7) There shall be shown in a note, with respect to each of the items of income mentioned below and included in the income and expenditure account formats in Schedule 1, the amount of income in respect of that item attributable to each of the geographical markets in which the society has operated during the financial year—

(a)Item 1 in Parts I and II (Interest receivable and similar income)

(b)Item 4 in Parts I and II (Income from investments)

(c)Item 5 in Parts I and II (Fees and commissions receivable)

(d)Item 7 in Parts I and II (Net profit or loss on financial operations) and

(e)Item 8 in Parts I and II (Other operating income)

(8) In analysing the source of any income for the purpose of sub-paragraph (7), the directors shall have regard to the manner in which the society’s activities are organised.

(9) For the purposes of sub-paragraph (7), markets which do not differ substantially from one another shall be treated as one market.

(10) Where the directors consider that the disclosure of information required by sub-paragraph (7) would seriously prejudice the interests of the society, they need not disclose such information, but the fact that any such information has not been disclosed must be stated.

(11) Any amounts charged to the income and expenditure account and representing costs, including interest payable, incurred during the year with respect to subordinated liabilities shall be stated.

(12) Any amounts charged to the income and expenditure account and representing costs, including interest payable, incurred during the year with respect to subscribed capital, shall be stated.

(13) Where management and agency services are provided by the society to third parties that fact shall be disclosed where the scale of such services is material in the context of the society’s business as a whole.

Persons who are to be regarded as associates of a society’s auditors

15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Taxation

16.—(1) Particulars shall be given of any special circumstances which affect liability in respect of taxation of profits, income or capital gains for the financial year or liability in respect of taxation of profits, income or capital gains for succeeding financial years.

(2) The following amounts shall be stated—

(a)the amount of the charge for United Kingdom corporation tax;

(b)if that amount would have been greater but for relief from double taxation, the amount which it would have been but for such relief; and

(c)the amount of the charge for taxation imposed outside the United Kingdom on profits, income and (so far as charged to the income and expenditure account) capital gains.

(3) The amounts specified in sub-paragraph (2) shall be stated separately in respect of each of the amounts shown under items 17 and 22 in Part I of Schedule 1, and under items 17 and 24 in Part II of that Schedule.

Miscellaneous matters

17.—(1) Where any amount relating to any preceding financial years is included in any item in the income and expenditure account, the effect of that inclusion shall be stated.

(2) The effect shall be stated of any transactions that are exceptional by virtue of size or incidence although they fall within the ordinary activities of the society.

Maturity analysis

18.—(1) A society shall disclose the aggregate of each of Asset items A.3(b) and B and Liability items A, B(b) and C(b) in Parts I and II of Schedule 2, broken down into amounts repayable with remaining maturity of—

(a)not more than three months;

(b)more than three months but not more than one year;

(c)more than one year but not more than five years; and

(d)more than five years.

(2) These shall also be shown—

(a)for Asset item B in Parts I and II of Schedule 2, loans and advances on call and at short notice; and

(b)for Liability item A in Parts I and II of Schedule 2, shares repayable on demand.

(3) The aggregate of amounts classifiable in the balance sheet as Asset item A.4 and Liability item D in Parts I and II of Schedule 2 shall be shown on the basis of remaining maturity as follows—

(a)not more than one year; and

(b)more than one year.

(4) For the purposes of sub-paragraphs (1) and (2), where a loan or advance is repayable by instalments, each such instalment shall be treated as a separate amount.

Provisions for bad and doubtful debts

19.—(1) In respect of any provisions for bad and doubtful debts deducted from Asset item B in Parts I and II of Schedule 2 there shall be shown the following information, in respect of each item—

(a)the amount of the provision as at the date of the beginning of the financial year and as at the balance sheet date respectively, showing separately—

(i)specific provisions for bad and doubtful debts, and

(ii)general provisions for bad and doubtful debts.

(b)any amounts transferred to or from each of the provisions referred to in sub-paragraph (a) during the year, and

(c)the source and application respectively of any amounts so transferred.

(2) For the purposes of sub-paragraphs (1) and (2) “specific provisions” shall be any provisions determined by reference to particular loans or advances and all other provisions shall be “general provisions”.

Transferable securities

20.—(1) In respect of each of Asset items A.4 and C in Parts I and II of Schedule 2 there shall be shown the amount of transferable securities under those items, stating the amounts of those which are listed and the amount of those which are unlisted.

(2) In the case of each amount shown in respect of listed securities under sub-paragraph (1) there shall also be given the aggregate market value of the securities if it differs from the amount shown.

(3) In respect of each of Asset items A.4 and C in Parts I and II of Schedule 2 there shall be given the amounts of—

(a)transferable securities included under those items and which are held as financial fixed assets, and

(b)those transferable securities which are not so held,

together with the criteria used by the directors of the society to distinguish between those held and those not held as financial fixed assets.

Fixed assets

21.—(1) In respect of any fixed assets included in any Asset item in the balance sheet the following information shall be given—

(a)the appropriate amounts in respect of those assets as at the date of the beginning of the financial year and as at the balance sheet date respectively; and

(b)the effect on any amount included in the item, in respect of those assets, of—

(i)any determination during that year of the value to be ascribed to any of those assets on any basis mentioned in paragraph 28 of Schedule 7;

(ii)acquisitions during that year of any fixed assets;

(iii)disposals during that year of any fixed assets; and

(iv)any transfers of fixed assets to and from the item during that year.

(2) The reference in sub-paragraph (1)(a) to the appropriate amounts in respect of any fixed assets (included in an Asset item) as at any date there mentioned is a reference to amounts representing the aggregate amounts determined, as at that date, in respect of fixed assets falling to be included under that item on either of the following bases, that is to say—

(a)on the basis of cost (determined in accordance with paragraphs 22 and 23 of Schedule 7), or

(b)on any basis mentioned in paragraph 28 of Schedule 7,

(leaving out of account in either case any provisions for depreciation or diminution in value).

(3)In respect of any fixed assets included in any Asset item in the balance sheet—

(a)the cumulative amount of provisions for depreciation or diminution in value of those assets included under that item as at each date mentioned in sub-paragraph (1)(a),

(b)the amount of any such provisions made in respect of the financial year,

(c)the amount of any adjustments made in respect of any such provisions during that year in consequence of the disposal of any of those assets, and

(d)the amount of any other adjustments made in respect of any such provisions during that year,

shall be stated.

(4) Where any fixed assets of the society (other than listed investments) are included under any item shown in the society’s balance sheet at an amount determined on any basis mentioned in paragraph 28 of Schedule 7 the following information shall be given—

(a)the years (so far as they are known to the directors) in which the assets were severally valued and the several values; and

(b)in the case of assets valued during the financial year, the names of the persons who valued them, or particulars of their qualifications for doing so, and, whichever is given, the basis of valuation used.

(5) In relation to any amount which is or would but for regulation 3(5) be shown in respect of the item “land and buildings” in the balance sheet there shall be stated—

(a)how much of that amount is ascribable to land of freehold tenure and how much to land of leasehold tenure;

(b)how much of the amount ascribable to land of leasehold tenure is ascribable to land held on long lease and how much to land held on short lease; and

(c)how much of that amount is ascribable to land and buildings occupied by the society for its own activities.

(6) In any case where any goodwill which has been acquired is shown or included as an asset in the balance sheet the period chosen for writing off the consideration for that goodwill and the reasons for choosing that period shall be disclosed.

Reserves and provisions

22.—(1) Where any amount is transferred—

(a)to or from any reserves (including the revaluation reserve),

(b)to any provisions for liabilities , or

(c)from any provisions for liabilities otherwise than for the purpose for which the provisions were established,

and the reserves or provisions are shown or would but for regulation 3(5) be shown as separate items in the society’s balance sheet, the information required by the following sub-paragraph shall be given in respect of the aggregate of reserves or provisions included in items in the balance sheet to which any such transfer relates.

(2) The information required by this sub-paragraph is—

(a)the amount of the reserves or provisions as at the date of the beginning of the financial year and as at the balance sheet date respectively,

(b)any amounts transferred to or from the reserves or provisions during that year, and

(c)the source and application respectively of any amounts so transferred.

(3) Particulars shall be given of each provision included in the item “ provisions for liabilities ” in the balance sheet.

(4) The amount of the provision for deferred taxation shall be stated separately from the amount of any provision for other taxation.

Subordinated liabilities

23.—(1) The following information shall be disclosed in relation to any borrowing included in the balance sheet as subordinated liabilities and which exceeds 10 per cent. of the total for that item—

(a)its amount,

(b)the currency in which it is denominated,

(c)the rate of interest and the maturity date, or the fact that it is a borrowing for an indeterminate period,

(d)the circumstances in which early repayment may be demanded,

(e)the terms of the subordination, and

(f)the existence of any provisions whereby it may be converted into some other form of liability, and the terms of such provisions.

(2) There shall also be stated the general terms of any other borrowings included within subordinated liabilities.

Subscribed capital

24.—(1) Where subscribed capital of more than one class has been allotted, the accounting par value of each class allotted shall be disclosed.

(2) The following information shall be disclosed in relation to any class of subscribed capital included in the balance sheet and which exceeds 10 per cent. of the total for that item—

(a)its amount,

(b)the currency in which it is denominated,

(c)the rate of interest,

(d)the fact that it is borrowing for an indeterminate period, and

(e)the existence of any provisions whereby it may be converted into some other form of liability, and the terms of such provisions.

• There shall also be stated the general terms of any other amounts included within subscribed capital.

(3) If the society has allotted any subscribed capital during the year, the following information shall be given—

(a)the classes of subscribed capital allotted, and

(b)as respects each class of subscribed capital the consideration received by the society for the allotment.

Fixed cumulative interest

25. If any fixed cumulative interest on the society’s subscribed capital is in arrears there shall be stated—

(a)the amount of the arrears, and

(b)the period for which the interest or, if there is more than one class of subscribed capital, each class of interest is in arrears.

Details of assets charged

26. In relation to each Liability item and each Memorandum item in the balance sheet formats there shall be disclosed—

(a)the aggregate amount of any assets which have been charged to secure any liability or potential liability included thereunder,

(b)the aggregate amount of the liabilities or potential liabilities so secured, and

(c)an indication of the nature of the security given.

27. Particulars shall be given of any charge on the assets of the society to secure the liabilities of any other person, including, where practicable, the amount secured.

Guarantees and other financial commitments

28.—(1) There shall be stated, where practicable, the aggregate amount or estimated amount of contracts for capital expenditure, so far as not provided for in the balance sheet.

(2) Particulars shall be given of—

(a)any pension commitments included under any provision shown in the balance sheet, and

(b)any such commitment for which no such provision has been made,

and, where any such commitment relates wholly or partly to pensions payable to past directors of the society separate particulars shall be given of that commitment so far as it relates to such pensions.

(3)Particulars shall also be given of any other financial commitments, including contingent liabilities, which have not been provided for in the balance sheet, have not been included in the memorandum items in the balance sheet and are relevant to assessing the society’s state of affairs at the end of the financial year.

(4) Commitments within any of the preceding sub-paragraphs undertaken on behalf of or for the benefit of any subsidiary undertakings of the society shall be stated separately from the other commitments within that sub-paragraph.

(5) No disclosure need be made under sub-paragraph (3) or (4) to the extent that an amount with respect to a commitment has been included in the Memorandum items in the balance sheet.

(6) There shall be disclosed the nature and amount of any contingent liabilities and commitments included in Memorandum items A and B in Parts I and II of Schedule 2.

Memorandum items: subsidiary undertakings

29.—(1) With respect to contingent liabilities required to be included under Memorandum item A in Part I of Schedule 2, there shall be stated the amount of such contingent liabilities incurred on behalf of or for the benefit of any subsidiary undertakings.

(2) With respect to commitments required to be included under Memorandum item B in Part I of Schedule 2, there shall be stated the amount of such commitments undertaken on behalf of or for the benefit of any subsidiary undertakings.

Leasing transactions

30. The aggregate amount of all assets (other than land) leased to other persons shall be disclosed, broken down so as to show the aggregate amount included in each relevant balance sheet item.

Assets and liabilities denominated in a currency other than sterling

31.—(1) The aggregate amount, in sterling, of all assets denominated in a currency other than sterling, together with the aggregate amount, in sterling, of all liabilities so denominated, shall be disclosed.

(2) For the purposes of this paragraph, an appropriate rate of exchange prevailing at the date of the balance sheet shall be used.

Sundry assets and liabilities, prepayments and accrued income and accruals and deferred income

32. Where any amount to be included under any of Asset items F and G and Liability items E(c) and F in Parts I and II of Schedule 2 is material, particulars shall be given of each type of asset or liability included therein, including an explanation of the nature of the asset or liability and the amount included with respect to assets or liabilities of that type.

Unmatured forward transactions

33. There shall be disclosed with respect to forward transactions unmatured at the date of the balance sheet the categories of such transactions, by reference to an appropriate system of classification.

Other miscellaneous matters

34.—(1) Subject to the following sub-paragraph, in respect of every item stated in a note to the annual accounts the corresponding amount for the financial year immediately preceding that to which the accounts relate shall also be stated and where it is not reasonable to compare the corresponding amount, it shall be adjusted and particulars of the adjustment and the reasons for it shall be given.

(2) Sub-paragraph (1) does not apply in relation to any amounts stated by virtue of any of the following provisions—

(a)paragraphs 5(1), 7(1) and (2), 19, 21(1) to (4)(b), 22(1) and (2) and 35 of this Schedule,

(b)paragraph 10 of Schedule 4, and

(c)paragraphs 2, 6(3), 10, 12(4) and (5), 14(3) and (4) and 17(3) and (4) of Schedule 6.

(3) Particulars shall be given of any case where the cost of any asset is for the first time determined under paragraph 25 of Schedule 7.

Directors' loans and transactions

35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information about fair value of financial instruments

36.—(1)This paragraph applies where the amounts to be included in a society’s accounts in respect of financial instruments have been determined in accordance with paragraph 31A or 31C of Schedule 7.

(2)There shall be stated—

(a)the significant assumptions underlying the valuation models and techniques used where the fair value of the instruments has been determined in accordance with paragraph 31B(4) of that Schedule;

(b)for each category of financial instrument, the fair value of the instruments in that category and the changes in their value—

(i)included in the income and expenditure account, and

(ii)credited to or (as the case may be) debited from the fair value reserve,

in respect of instruments in that category; and

(c)for each class of derivative financial instruments, the extent and nature of the instruments, including significant terms and conditions that may affect the amount, timing and certainty of future cash flows.

(3)Where any amount is transferred to or from the fair value reserve during the financial year, there shall be stated in tabular form—

(a)the amount of the reserve as at the date of the beginning of the financial year and as at the balance sheet date respectively;

(b)the amount transferred to or from the reserve during that year; and

(c)the source and application respectively of the amounts so transferred.

Information where investment property and living animals and plants are included at fair value

37.—(1)This paragraph applies where the amounts to be included in a society’s annual accounts in respect of investment property or living animals and plants have been determined in accordance with paragraph 31D of Schedule 7.

(2)The balance sheet items affected and the basis of valuation adopted in determining the amounts of the assets in question in the case of each such item shall be disclosed in a note to the accounts.

(3)In the case of investment property, for each balance sheet item affected there shall be shown, either separately in the balance sheet or in a note to the accounts—

(a)the comparable amounts determined according to the historical cost accounting rules; or

(b)the differences between those amounts and the corresponding amounts actually shown in the balance sheet in respect of that item.

(4)In sub-paragraph (3) above, references in relation to any item to the comparable amounts determined in accordance with that sub-paragraph are references to—

(a)the aggregate amount which would be required to be shown in respect of that item if the amounts to be included in respect of all the assets covered by that item were determined according to the historical cost accounting rules; and

(b)the aggregate amount of the cumulative provisions for depreciation or diminution in value which would be permitted or required in determining those amounts according to those rules.

Related Party Transactions

38.—(1)Particulars may be given of transactions which the society has entered into with related parties, and must be given if such transactions are material and have not been concluded under normal market conditions.

(2)The particulars of transactions required to be disclosed by sub-paragraph (1) must include—

(a)the amount of such transactions,

(b)the nature of the related party relationship,

(c)other information about the transactions necessary for an understanding of the financial position of the society.

(3)Information about individual transactions may be aggregated according to their nature, except where separate information is necessary for an understanding of the effects of related party transactions on the financial position of the society.

(4)Particulars need not be given of transactions entered into between two or more members of a group, provided that any subsidiary undertaking which is a party to the transaction is wholly-owned by such a member.

(5)In this paragraph, “related party” has the same meaning as in international accounting standards.

Regulation 6

SCHEDULE 6NOTES TO ANNUAL ACCOUNTS: INFORMATION IN RESPECT OF HOLDINGS IN UNDERTAKINGS

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Regulation 7

SCHEDULE 7ACCOUNTING PRINCIPLES AND RULES

PART IACCOUNTING PRINCIPLES

1. Subject to paragraph 7, the amounts to be included in respect of all items shown in a society’s annual accounts shall be determined in accordance with the principles set out in this Part of this Schedule.

2. The society shall be presumed to be carrying on business as a going concern, and so, where group accounts are prepared, shall the society and its subsidiary undertakings.

3. Accounting policies shall be applied consistently within the same accounts and from one financial year to the next.

4.—(1) The amount of any item shall be determined on a prudent basis, and in particular—

(a)only profits realised at the date of the balance sheet shall be included in the income and expenditure account; and

(b)all liabilities ... which have arisen ... in respect of the financial year to which the accounts relate or a previous financial year shall be taken into account, including those which only become apparent between the balance sheet date and the relevant date.

(2) For the purposes of sub-paragraph (1), the relevant date is the date of signature of the balance sheet of the society on behalf of the board of directors under section 80 of the Act (signing of balance sheet and of documents).

5. Except so far as these Regulations otherwise specify, income and charges relating to the financial year to which the accounts relate shall be taken into account without regard to the date of receipt or payment.

6. In determining the aggregate amount of any item the amount of each individual asset or liability that falls to be taken into account shall be determined separately.

PART IIDEPARTURE FROM ACCOUNTING PRINCIPLES

7. If it appears to the directors of a society that there are special reasons for departing from any of the principles stated in Part I in preparing annual accounts in respect of any financial year, they may do so, but particulars of the departure, the reasons for it, and its effect shall be given in a note to the annual accounts.

PART IIIFIXED ASSETS

General rules

8.—(1) Subject to any provision for depreciation or diminution in value made in accordance with paragraph 9 or 10, the amount to be included in respect of any fixed asset shall be its cost unless it is valued in accordance with paragraph 13, 28, 31A, 31C or 31D .

(2) (a) Assets included in items D and E in Parts I and II of Schedule 2 shall be valued as fixed assets.

(b)Other assets falling to be included in the balance sheet shall be valued as fixed assets where they are intended for use on a continuing basis in the normal course of the activities of the society or of the society and its subsidiary undertakings.

9. In the case of any fixed asset which has a limited useful economic life, the amount of—

(a)the cost, or

(b)where it is estimated that any such asset will have a residual value at the end of the period of its useful economic life, its cost less that estimated residual value,

shall be reduced by provisions for depreciation calculated to write off that amount systematically over the period of the asset’s useful economic life.

10.—(1) Where a fixed asset investment of a description falling to be included under Asset item C of Parts I and II of Schedule 2, or any liquid asset held as a financial fixed asset, has diminished in value, provisions for diminution in value may be made in respect of it, and the amount to be included in respect of it may be reduced accordingly.

(2) Any such provisions as are mentioned in sub-paragraph (1) and which are not shown in the income and expenditure accounts shall be disclosed, either separately or in aggregate, in a note to the accounts, analysed according to balance sheet category.

(3) Provisions for diminution in value shall be made in respect of any fixed asset which has diminished in value if the reduction in its value is expected to be permanent (whether its useful economic life is limited or not), and the amount to be included in respect of it shall be reduced accordingly, and any such provisions which are not shown in the income and expenditure accounts shall be disclosed, either separately or in aggregate, in a note to the accounts, analysed according to balance sheet category.

(4) Where the reasons for which any provision in respect of fixed assets (whether or not it is one to which sub-paragraph (1) or (3) applies) was made have ceased to apply to any extent, that provision shall be written back to the extent that it is no longer necessary; and any amounts written back in accordance with this sub-paragraph which are not shown in the income and expenditure accounts shall be disclosed (either separately or in aggregate) in a note to the accounts.

Development costs

11.—(1) Notwithstanding that amounts representing “development costs” may be included under Asset item D in Parts I and II of Schedule 2, an amount may only be included in a society’s balance sheet in respect of development costs in accordance with generally accepted accounting principles.

(2) If any amount is included in a society’s balance sheet in respect of development costs, the following information shall be given in a note to the accounts—

(a)the period over which the amount of those costs originally capitalised is being or is to be written off, and

(b)the reasons for capitalising the development costs in question.

Goodwill

12.—(1) The application of paragraphs 8 to 10 in relation to goodwill (in any case where goodwill is treated as an asset) is subject to the following provisions of this paragraph.

(2) Subject to sub-paragraph (3), the amount of the consideration for any goodwill acquired by a society shall be reduced by provisions for amortisation calculated so as to write off that amount systematically over a period chosen by the directors of the society.

(3) The period chosen shall not exceed the useful economic life of the goodwill.

Financial fixed assets

13.—(1) Debt securities including securities held as financial fixed assets shall be included in the balance sheet at an amount equal to their maturity value plus any premium, or less any discount, on their purchase, subject to the following provisions of this paragraph and to paragraphs 31A, 31C and 31D .

(2) The amount included in the balance sheet with respect to such a security as is mentioned in sub-paragraph (1) purchased at a premium shall be reduced each financial year on a systematic basis so as to write the premium off over the period to the maturity date of the security, and the amounts written off shall be charged to the income and expenditure account for the relevant financial years.

(3) The amount included in the balance sheet with respect to such a security purchased at a discount shall be increased each financial year on a systematic basis so as to extinguish the discount over the period to the maturity date of the security, and the amounts by which the amount is increased shall be credited to the income and expenditure account for the relevant financial years.

(4) The notes to the accounts shall disclose the amounts of any unamortised premium or discount not extinguished which are included in the balance sheet by virtue of sub-paragraph (1).

(5) For the purposes of this paragraph, “premium” means any excess of the amount paid for a security over its maturity value and “discount” means any deficit of the amount paid for a security over its maturity value.

PART IVCURRENT ASSETS

14. The amount to be included in respect of Asset items A.3, A.4, B and C in Parts I and II of Schedule 2 shall be, subject to paragraphs 15, 16, 31A, 31C and 31D , their cost.

15.—(1) If the net realisable value of any current asset is lower than its cost the amount to be included in respect of that asset shall be the net realisable value.

(2) Where the reasons for which any provision for diminution in value was made in accordance with sub-paragraph (1) have ceased to apply to any extent, that provision shall be written back to the extent that it is no longer necessary.

16.

(1) Subject to paragraph 15, the amount to be included in the balance sheet in respect of transferable securities not held as financial fixed assets may be the higher of their cost or their market value at the balance sheet date.

(2) The difference between the cost of any securities included in the balance sheet at a valuation under sub-paragraph (1) and their market value shall be shown (in aggregate) in the notes to the accounts.

PART VOTHER ACCOUNTING RULES

General rules

17.—(1) Without prejudice to paragraph 3(6)(c) of Part III of Schedule 2, amounts in respect of items representing assets or income may not be set off against amounts in respect of items representing as the case may be liabilities or expenditure, or vice versa.

(2) Charges required to be included in items 12(a) and 12(b) in Parts I and II of Schedule 1 may, however, be set off against income required to be included in items 13(a) and 13(b) of Parts I and II of that Schedule and the resulting figure shown as a single item.

(3) Charges required to be included in item 14 in Parts I and II of Schedule 1 may also be set off against income required to be included in item 15 in Parts I and II of Schedule 1 and the resulting figure shown as a single item.

18.—(1) Assets shall be shown under the relevant balance sheet headings even where the society has pledged them as security for its own liabilities or for those of third parties, or has otherwise assigned them as security to third parties.

(2) A society shall not include in its balance sheet assets pledged or otherwise assigned to it as security, unless such assets are in the form of cash in the hands of the society.

19. Preliminary expenses, expenses of and commission on any issue of subscribed capital and costs of research shall not be treated as assets in a society’s balance sheet.

20. Assets acquired in the name of and on behalf of third parties shall not be shown in the balance sheet.

20A.The directors of a society shall, in determining how amounts are presented within items in the income and expenditure account and balance sheet, have regard to the substance of the reported transaction or arrangement, in accordance with generally accepted accounting principles or practice.

Excess of money owed over value received as an asset item

21.—(1) Where the amount repayable on any debt owed by a society is greater than the value of the consideration received in the transaction giving rise to the debt, the amount of the difference may be treated as an asset.

(2) Where any such amount is so treated—

(a)it shall be written off by reasonable amounts each year and must be completely written off before repayment of the debt; and

(b)if the current amount is not shown as a separate item in the society’s balance sheet it must be disclosed in a note to the accounts.

Determination of cost

22.—(1) The cost of an asset shall be determined by adding to the actual price paid any expenses incidental to its acquisition.

(2) The cost of an asset constructed by the society shall be determined by adding to the purchase price of the raw materials and consumables used the amount of the costs incurred by the society which are directly attributable to the construction of that asset.

(3) In addition, there may be included in the cost of an asset constructed by the society—

(a)a reasonable proportion of the costs incurred by the society which are only indirectly attributable to the construction of that asset, but only to the extent that they relate to the period of construction; and

(b)interest on capital borrowed to finance the construction of that asset, to the extent that it accrues in respect of the period of construction,

provided, however, in a case within sub-paragraph (b), that the inclusion of the interest in determining the cost of that asset and the amount of the interest so included is disclosed in a note to the accounts.

23.—(1) Subject to the qualification mentioned below, the cost of any assets which are fungible assets (including liquid assets) may be determined by the application of any of the methods mentioned in sub-paragraph (2) in relation to any such assets of the same class, but the method chosen must be one which appears to the directors to be appropriate to the circumstances of the society.

(2) Those methods are—

(a)the method known as “first in, first out” (FIFO),

(b)the method known as “last in, first out” (LIFO),

(c)a weighted average price, and

(d)any other method similar to any of the methods mentioned above.

(3) Where in the case of any society—

(a)the cost of assets falling to be included under any item shown in the society’s balance sheet has been determined by the application of any method permitted by this paragraph, and

(b)the amount shown in respect of that item differs materially from the relevant alternative amount given below in this paragraph,

the amount of that difference shall be disclosed in a note to the accounts.

(4) Subject to sub-paragraph (5), for the purposes of sub-paragraph (3)(b), the relevant alternative amount, in relation to any item shown in a society’s balance sheet, is the amount which would have been shown in respect of that item if assets of any class included under that item at an amount determined by any method permitted by this paragraph had instead been included at their replacement cost as at the balance sheet date.

(5) The relevant alternative amount may be determined by reference to the most recent actual cost before the balance sheet date of assets of any class included under the item in question instead of by reference to their replacement cost as at that date, but only if the former appears to the directors of the society to constitute the more appropriate standard of comparison in the case of assets of that class.

(6) For the purposes of this paragraph, assets of any description shall be regarded as fungible if assets of that description are substantially indistinguishable one from another.

24. To the extent that debt securities included in a society’s balance sheet include assets valued at cost, the method of arriving at their cost shall be disclosed in the notes to the annual accounts.

Substitution of original amount where cost unknown

25. Where there is no record of the cost of any asset acquired by a society or of any price, expenses or costs relevant for determining its cost in accordance with paragraph 22, or any such record cannot be obtained without unreasonable expense or delay, its cost shall be taken for the purposes of paragraphs 8 to 16 to be the value ascribed to it in the earliest available record of its value made on or after its acquisition by the society.

PART VIALTERNATIVE ACCOUNTING RULES

26. The rules set out in paragraphs 8 to 25 of this Schedule are referred to below in this Schedule as the historical cost accounting rules.

27. Subject to paragraphs 29, 30 and 31, the amounts to be included in respect of assets of any description mentioned in paragraph 28 may be determined on any basis so mentioned.

28.—(1) Intangible fixed assets, other than goodwill, may be included at their current cost.

(2) Tangible fixed assets may be included at a market value determined as at the date of their last valuation or at their current cost.

(3) Investments of any description falling to be included under Asset items C.2 and 3 in Parts I and II of Schedule 2 and under Asset item C.4 in Part II of Schedule 2, and all other securities held as financial fixed assets may be included either—

(a)at a market value determined as at the date of their last valuation, or

(b)at a value determined on any basis which appears to the directors to be appropriate in the circumstances of the society,

but in the latter case particulars of the method of valuation adopted and of the reasons for adopting it shall be disclosed in a note to the accounts.

(4) Investments of any description not held as financial fixed assets (if not valued in accordance with paragraph 16) may be included at their current cost.

29.—(1) Where the value of any asset of a society is determined on any basis mentioned in paragraph 28, that value shall be, or (as the case may require) shall be the starting point for determining the amount to be included in respect of that asset in the society’s accounts, instead of its cost or any value previously so determined for that asset; and methods of depreciation to be used pursuant to these Regulations shall apply accordingly in relation to any such asset with the substitution for any reference to its cost of a reference to the value most recently determined for that asset on any basis mentioned in paragraph 28.

(2) The amount of any provision for depreciation required in the case of any fixed asset by paragraph 9 or 10 as it applies by virtue of sub-paragraph (1) is referred to below in this paragraph as the adjusted amount, and the amount of any provision which would be required by that paragraph in the case of that asset according to the historical cost accounting rules is referred to as the historical cost amount.

(3) Where sub-paragraph (1) applies in the case of any fixed asset the amount of any provision for depreciation in respect of that asset included in any item shown in the income and expenditure account in respect of amounts written off assets of the description in question may be the historical cost amount instead of the adjusted amount, provided that the amount of any difference between the two is shown separately in the income and expenditure account or in a note to the accounts.

30.—(1) This paragraph applies where the amounts to be included in respect of any assets of a society have been determined on any basis mentioned in paragraph 28.

(2) The items affected and the basis of valuation adopted in determining the amounts of the assets in question in the case of each such item shall be disclosed in a note to the accounts.

(3) In the case of each balance sheet item affected either—

(a)the comparable amounts determined according to the historical cost accounting rules; or

(b)the differences between those amounts and the corresponding amounts actually shown in the balance sheet in respect of that item,

shall be shown separately in the balance sheet or in a note to the accounts.

(4) In sub-paragraph (3), references in relation to any item to the comparable amounts determined as there mentioned are references to—

(a)the aggregate amount which would be required to be shown in respect of that item if the amounts to be included in respect of all the assets covered by that item were determined according to the historical cost accounting rules; and

(b)the aggregate amount of the cumulative provisions for depreciation or diminution in value which would be permitted or required in determining those amounts according to those rules.

31.—(1) With respect to any determination of the value of an asset of a society on any basis mentioned in paragraph 28, the amount of any profit or loss arising from that determination (after allowing, where appropriate, for any provisions for depreciation or diminution in value made otherwise than by reference to the value so determined and any adjustments of any such provisions made in the light of that determination) shall be credited or, as the case may be, debited to a separate reserve (referred to in these Regulations as “the revaluation reserve”).

(2) The revaluation reserve shall be reduced to the extent that the amounts standing to the credit of that reserve are no longer necessary for the purpose of the accounting policies adopted by the society, but an amount may only be transferred—

(a)from the revaluation reserve to the income and expenditure account if—

(i)the amount in question was previously charged to that account, or

(ii)it represents a realised profit, or

(b)to or from the revaluation reserve in respect of the taxation relating to any profit or loss credited or debited to the reserve.

(3) The treatment for taxation purposes of amounts credited or debited to the revaluation reserve shall be disclosed in a note to the accounts.

Part 6AValuation at Fair Value

Inclusion of financial instruments at fair value

31A.—(1)Subject to sub-paragraphs (2) to (4), financial instruments, including derivative financial instruments, may be included at fair value.

(2)Sub-paragraph (1) only applies to financial instruments which constitute liabilities if—

(a)they are held as part of a trading portfolio; ...

(b)they are derivative financial instruments; or

(c) they are financial instruments falling within sub-paragraph (3A).

(3)Unless they are financial instruments falling within sub-paragraph (3A) below, sub-paragraph (1) does not apply to—

(a)non-derivative financial instruments held to maturity;

(b)loans and receivables originated by the society or connected undertakings of the society and not held for trading purposes;

(c)interests in connected undertakings or joint ventures;

(d)equity instruments issued by the society or connected undertakings of the society;

(e)contracts for contingent consideration in a business combination; and

(f)other financial instruments with such special characteristics that the instruments, according to generally accepted accounting principles or practice, should be accounted for differently from other financial instruments.

(3A) Financial instruments which, under UK-adopted international accounting standards within the meaning of section 474(1) of the Companies Act 2006, may be included in accounts at fair value, may be so included, provided that the disclosures required by such accounting standards are made.

(4)If the fair value of a financial instrument cannot be determined reliably in accordance with paragraph 31B, sub-paragraph (1) does not apply to that financial instrument.

(5)In this paragraph, “joint venture” means an undertaking, other than a connected undertaking, which a society manages jointly with one or more undertakings.

Methods for determining fair value

31B.—(1)The fair value of a financial instrument is its value determined in accordance with this paragraph.

(2)If a reliable market can readily be identified for the financial instrument, its fair value is to be determined by reference to its market value.

(3)If a reliable market cannot readily be identified for the financial instrument but can be identified for its components or for a similar instrument, its fair value is to be determined by reference to the market value of its components or of the similar instrument.

(4)If neither sub-paragraph (2) nor (3) apply, the fair value of the financial instrument is to be a value resulting from generally accepted valuation models and techniques.

(5)Any valuation models and techniques used for the purposes of sub-paragraph (4) must ensure a reasonable approximation of the market value.

Hedged items

31C.A society may include any assets or liabilities, or identified portions of such assets or liabilities, which qualify as hedged items under a fair value hedge accounting system at the amount required under that system.

Other assets which may be included at fair value

31D.—(1)This paragraph applies to—

(a)investment property, and

(b)living animals and plants,

which under international accounting standards may be included in accounts at fair value.

(2)Such investment property and such living animals and plants may be included at fair value, provided that all such investment property, or as the case may be, all such living animals and plants are so included where their fair value can reliably be determined.

(3)In this paragraph “fair value” means fair value determined in accordance with relevant international accounting standards.

Accounting for changes in value of financial instruments

31E.—(1)This paragraph applies where a financial instrument is valued in accordance with paragraph 31A or 31C.

(2)Notwithstanding paragraph 4 in Part 1 of this Schedule, and subject to sub-paragraphs (3) and (4) below, a change in the value of the financial instrument shall be included in the income and expenditure account.

(3)Where—

(a)the financial instrument accounted for is a hedging instrument under a hedge accounting system that allows some or all of the change in value not to be shown in the income and expenditure account, or

(b)the change in value relates to an exchange difference arising on a monetary item that forms part of a society’s net investment in a foreign entity,

the amount of the change in value shall be credited to or (as the case may be) debited from a separate reserve (“the fair value reserve”).

(4)Where the instrument accounted for—

(a)is an available for sale financial asset, and

(b)is not a derivative financial instrument,

the amount of the change in value may be credited to or (as the case may be) debited from the fair value reserve.

The fair value reserve

31F.—(1)The fair value reserve shall be adjusted to the extent that the amounts shown in it are no longer necessary for the purposes of paragraph 31E(3) or (4).

(2)The treatment for taxation purposes of amounts credited or debited to the fair value reserve shall be disclosed in a note to the accounts.

PART VIIASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

32.—(1) Subject to the following sub-paragraphs, amounts to be included in respect of assets and liabilities denominated in foreign currencies shall be expressed in sterling after translation at an appropriate spot rate of exchange prevailing at the balance sheet date.

(2) An appropriate rate of exchange prevailing on the date of purchase may however be used for assets held as financial fixed assets and assets to be included under Asset items D and E in Parts I and II of Schedule 2, if they are not covered or not specifically covered in either the spot or forward currency markets.

(3) An appropriate spot rate of exchange prevailing at the balance sheet date shall be used for translating uncompleted spot exchange transactions.

(4) An appropriate forward rate of exchange prevailing at the balance sheet date shall be used for translating uncompleted forward exchange transactions.

(5) This paragraph does not apply to assets or liabilities held, or any transaction entered into, for hedging purposes, or to any assets or liabilities which are themselves hedged.

33.—(1) Subject to sub-paragraph (2), any difference between the amount to be included in respect of an asset or liability under paragraph 32 and the book value, after translation into sterling at an appropriate rate, of that asset or liability, shall be credited or, as the case may be, debited to the income and expenditure account.

(2) In the case however of assets held as financial fixed assets, of assets to be included in Asset items D and E in Parts I and II of Schedule 2, and of transactions undertaken to cover such assets, any such difference shall be deducted from or credited to the general reserve included in the balance sheet.

Regulation 8

SCHEDULE 8DIRECTORS' REPORT

Miscellaneous

1. There shall be stated the names of the persons who, at any time during the financial year, were directors of the society.

2. The directors' report shall contain—

(a)a statement of the business objectives and activities of the society and of any connected undertaking;

(b)particulars of the events during the financial year considered by the directors of the society to have an important effect on the society or any connected undertaking;

(c)particulars of any events which have occurred since the end of the financial year and which are considered by the directors of the society to have an important effect on the society or any connected undertaking; and

(d)an indication of the opinion of the directors of the society as to the developments which they consider likely to happen in the business of the society or any connected undertaking.

Land and buildings

3. If, in the case of such of the fixed assets of the society or of any subsidiary undertaking as consist in interests in land and buildings, their market value (as at the end of the financial year) differs substantially from the amount at which they are included in the balance sheet, and the difference is, in the directors' opinion, of such significance as to require that the attention of members of the society should be drawn to it, the report shall indicate the difference with such degree of precision as is practicable.

Political and charitable gifts

4.—(1) The following applies if the society or any subsidiary undertaking of the society has in the financial year given money for political purposes or charitable purposes or both.

(2) If the money given exceeded £200 in amount, there shall be contained in the directors' report for the year—

(a)in the case of each of the purposes for which the money has been given, a statement of the amount of money given for that purpose; and

(b)in the case of political purposes for which money has been given, the following particulars (so far as is applicable)—

(i)the name of each person to whom money has been given for those purposes exceeding £200 in amount and the amount of money given; and

(ii)if money exceeding £200 in amount has been given by way of donation or subscription to a political party, the identity of the party and the amount of money given.

(2A)In addition to any statement required by sub-paragraph (2), if the money has been given by way of a transfer under section 2 of the Dormant Bank and Building Society Accounts Act 2008or a transfer required by section 2A(8) of that Act, there shall be contained in the directors’ report for the year—

(a)the name of each charity to which such a transfer was made; and

(b)the amount transferred to each such charity.

(3) For the purposes of this paragraph a society or a subsidiary undertaking is to be treated as giving money for political purposes if, directly or indirectly—

(a)it gives a donation or subscription to a political party of the United Kingdom or any part of it; or

(b)it gives a donation or subscription to a person who, to the society’s knowledge (or, as the case may be, that of the subsidiary undertaking), is carrying on, or proposing to carry on, any activities which can, at the time at which the donation or subscription was given, reasonably be regarded as likely to affect public support for such a political party as is mentioned.

(4) For the purposes of this paragraph money given for charitable purposes to a person who, when it was given, was ordinarily resident outside the United Kingdom shall be left out of account.

(5) In this paragraph, “charitable purposes” means purposes which are exclusively charitable; and, as respects Scotland, “charitable” is to be construed as if it were contained in the Income Tax Acts.

Directors' interests

5.—(1) Subject to sub-paragraphs (2) and (3), the directors' report shall state the following, with respect to each person who, at the end of the financial year, was a director of the society—

(a)whether or not he was at the end of that year interested in shares in, or debentures of, any connected undertaking of the society; and

(b)if he was so interested—

(i)the number and amount of shares in, and debentures of, each such undertaking (specifying it) in which he was then interested;

(ii)whether or not he was, at the beginning of that year (or, if he was not then a director, when he became one), interested in shares in, or debentures of, that or any other such undertaking; and

(iii)if he was, the number and amount of shares in, and debentures of, each undertaking (specifying it) in which he was interested at the beginning of the financial year or (as the case may be) when he became a director.

(2) The particulars required by sub-paragraph (1) may be given by way of notes to the society’s annual accounts in respect of the financial year, instead of being stated in the directors' report.

(3) Particulars required by sub-paragraph (1) are not required to be given in respect of directors' nominee shareholdings, held on behalf of the society.

(4) Any changes in the details disclosed under sub-paragraph (1) between the end of the year and the relevant date must be disclosed in the directors' report and any such change after that date may be so disclosed.

(5) For the purposes of sub-paragraph (4) “the relevant date” is—

(a)the date one month prior to the date of the notice of the society’s annual general meeting; or

(b)if earlier, the date on which approval, under section 80 of the Act, of components of the annual accounts is completed.

(6) In this paragraph, the interest of the spouse, civil partner , infantson or infantdaughter of a director of a society (not being himself or herself a director of the society) is to be treated as an interest of the director; and “son” includes step-son and “daughter” includes step-daughter and “infant” means, in relation to Scotland, a person under the age of 18 years.

(7) In this paragraph, any reference to an interest of a director, or any other person mentioned in sub-paragraph (6), in shares or debentures shall be interpreted in accordance with Schedule 1 to the Companies Act 2006 .

Employee information

6.—(1) This paragraph applies to the directors' report where the average number of persons employed by the society in each month during the financial year exceeded 250.

(2) For the purposes of sub-paragraph (1) the average number is the quotient derived by dividing, by the number of complete calendar months in the financial year, the number derived by ascertaining, in relation to each of those months, the number of persons who, under contracts of service, were employed in the month (whether throughout it or not) by the society, and adding up the numbers ascertained.

(3) The directors' report shall where this paragraph applies contain a statement describing such policy as the society has applied during the financial year—

(a)for giving full and fair consideration to applications for employment by the society made by disabled persons, having regard to their particular aptitudes and abilities;

(b)for continuing the employment of, and for arranging appropriate training for, employees of the society who have become disabled persons during the period when they were employed by the society; and

(c)otherwise for the training, career development and promotion of disabled persons employed by the society.

(4) The directors' report shall where this paragraph applies also contain a statement describing the action that has been taken during the financial year to introduce, maintain or develop arrangements aimed at—

(a)providing employees systematically with information on matters of concern to them as employees;

(b)consulting employees or their representatives on a regular basis so that the views of employees can be taken into account in making decisions which are likely to affect their interests;

(c)encouraging the involvement of employees in the society’s performance; and

(d)achieving a common awareness on the part of all employees of the financial and economic factors affecting the performance of the society.

(5) In this paragraph—

(a)“employment” means employment other than employment to work wholly or mainly outside the United Kingdom, and “employed” and “employee” shall be construed accordingly; and

(b)“disabled person” has the same meaning as in the Disability Discrimination Act 1995(9).

Percentages

7.—(1) The directors' report prepared by the directors of a society whose annual accounts are Building SocietiesAct accounts shall disclose, in accordance with sub-paragraph (2)—

(a)free capital as a percentage of the total of Liability items A to D in Part I or II of Schedule 2; and

(b)gross capital as a percentage of the total of Liability items A to D in Part I or II of Schedule 2.

(1A)The directors’ report prepared by the directors of a society whose annual accounts are IAS accounts shall disclose, in accordance with sub-paragraph (2)—

(a)free capital as a percentage of the total of the liability items listed in sub-paragraph (1B) as shown in the annual accounts; and

(b)gross capital as a percentage of the total of the liability items listed in sub-paragraph (1B) as shown in the annual accounts.

(1B)The liability items are shares, amounts owed to credit institutions, amounts owed to other customers, and debt securities in issue.

(2) The matters required to be disclosed by sub-paragraphs (1) and (1A) shall be disclosed—

(a)where the society is a single accounts society, in relation to the society; and

(b)where the society is a group accounts society, in relation to the society and its subsidiary undertakings.

Mortgage arrears

8.—(1) The directors' report prepared by the directors of a society whose annual accounts are Building SocietiesAct accounts shall disclose in respect of mortgage accounts of the society and of any subsidiary undertaking twelve or more months in arrears at the balance sheet date—

(a)the number of such accounts;

(b)the total amount (before any provision for bad and doubtful debts or interest in suspense) outstanding on such accounts which is included in Asset item B in Part I or II of Schedule 2; and

(c)the total amount of arrears on such accounts.

(2)The directors’ report prepared by the directors of a society whose annual accounts are IAS accounts shall disclose in respect of mortgage accounts of the society and of any subsidiary undertaking twelve or more months in arrears at the balance sheet date—

(a)the number of such accounts;

(b)the total amount (before any provision for impairment losses) outstanding on such accounts; and

(c)the total amount of arrears on such accounts.

Supplier payment policy

9.—(1) The directors' report shall state, with respect to the next following financial year—

(a)whether in respect of some or all of its suppliers it is the society’s policy to follow any code or standard on payment practice and, if so, the name of the code or standard and the place where information about, and copies of, the code or standard can be obtained,

(b)whether in respect of some or all of its suppliers it is the society’s policy—

(i)to settle the terms of payment with those suppliers when agreeing the terms of each transaction,

(ii)to ensure that those suppliers are made aware of the terms of payment, and

(iii)to abide by the terms of payment,

(c)where the society’s policy is not as mentioned in sub-paragraph (a) or (b) in respect of some or all of its suppliers, what its policy is with respect to the payment of those suppliers,

and if the society’s policy is different for different suppliers or classes of suppliers, the report shall identify the suppliers to which the different policies apply.

• In this sub-paragraph references to the society’s suppliers are references to persons who are or may become its suppliers.

(2) The report shall also state the number of days which bears to the number of days in the financial year the same proportion as

(3) For the purposes of sub-paragraphs (1) and (2) a person is a supplier of the society at any time if—

(a)at that time, he is owed an amount in respect of goods or services supplied, and

(b)that amount would be included under the heading corresponding to liability item E.4 (trade creditors) in Format 1 of the balance sheet formats set out in Part 1 of Schedule 1 to the Large and Medium–sized Companies and Groups (Accounts and Reports) Regulations 2008 if—

(i)the society’s accounts fell to be prepared as at that time,

(ii)those accounts were prepared in accordance with Schedule 1 to those Regulations , and

(iii)that Format were adopted.

(4) For the purposes of sub-paragraph (2), the aggregate of the amounts which at the end of the financial year were owed to trade creditors shall be taken to be the amounts which would be shown under the heading corresponding to liability item E.4 (trade creditors) in Format 1 of the balance sheet formats set out in Part 1 of Schedule 1 to the Large and Medium–sized Companies and Groups (Accounts and Reports) Regulations 2008 if the society’s accounts were prepared in accordance with that Schedule and that Format were adopted.

New activities

10. The directors' report shall describe any activities in which the society or any of its subsidiary undertakings has engaged during the financial year of a different nature from the activities in which it has previously engaged.

Financial risk management objectives and policies

11.The directors' report shall contain, in relation to the use of financial instruments by the society and by any subsidiary undertaking, and where material for the assessment of the society’s or (as the case may be) group’s assets, liabilities, financial position and profit or loss—

(a)the financial risk management objectives and policies of the society or (where applicable) the group, including the policy for hedging each major type of forecasted transaction for which hedge accounting is used, and

(b)the exposure of the society or (where applicable) of the group to price risk, credit risk, liquidity risk and cash flow risk.

Regulation 9

SCHEDULE 9ANNUAL BUSINESS STATEMENT

Statutory percentages

1.—(1) The annual business statement of a society shall state, as at the end of the financial year with which it deals, the following percentages—

(a)the difference between the values of X and Y as at the balance sheet date, expressed as a percentage of X, where X and Y are calculated for the purposes of section 6(1) of the Act(10) and subject to sub-paragraph (3);

(b)the limit for the percentage described in sub-paragraph (a) stated in section 6(1) of the Act;

(c)the difference between the values of X and Y as at the balance sheet date, expressed as a percentage of X, where X and Y are calculated for the purposes of section 7(1) of the Act(11); and

(d)the limit for the percentage described in sub-paragraph (c) stated in section 7(1) of the Act.

(2) The annual business statement shall include an explanation of the basis of the calculation specified in sub-paragraph (1) and of what is represented by each of the percentages and limits so specified.

(3) For the purpose of calculating the percentage required to be stated by sub-paragraph (1)(a) for a society whose annual accounts are Building SocietiesAct accounts —

(a)the liquid assets of the society and any subsidiary undertakings referred to in section 6(2)(a) of the Act are those included in the balance sheet under Asset item A; and

(b)the fixed assets of the society and any subsidiary undertakings referred to in section 6(2)(b) of the Act are those included in the balance sheet under Asset items D and E,

in Part I, or in the case of a group accounts society, Part II of Schedule 2.

(4)For the purpose of calculating the percentage required to be stated by sub-paragraph (1)(a) for a society whose annual accounts are IAS accounts, the liquid assets and fixed assets of the society and any subsidiary undertakings referred to in paragraphs (a) and (b) of section 6(2) of the Act are those included in the balance sheet.

Other percentages

2.—(1) Subject to the following provisions of this paragraph, the annual business statement of a societywhose annual accounts are Building SocietiesAct accounts shall state the following particulars in respect of the society both in relation to the financial year with which it deals and in relation to the previous financial year—

(a)as a percentage of the total of Liability items A to D in Part I or II of Schedule 2 as at the balance sheet date—

(i)the gross capital as at that date;

(ii)the free capital as at that date; and

(iii)liquid assets as of that date;

(b)the profit or loss after taxation as a percentage of the mean total assets; and

(c)management expenses as a percentage of the mean total assets.

(1A)Subject to the following provisions of this paragraph, the annual business statement of a society whose annual accounts are IAS accounts shall state the following particulars in respect of the society both in relation to the financial year with which it deals and in relation to the previous financial year—

(a)as a percentage of the total of the liability items listed in sub-paragraph (1B) as at the balance sheet date—

(i)the gross capital as at that date;

(ii)the free capital as at that date; and

(iii)liquid assets as of that date;

(b)the profit or loss after taxation as a percentage of the mean total assets; and

(c)management expenses as a percentage of the mean total assets.

(1B)the liability items are shares, amounts owed to credit institutions, amounts owed to other customers, and debt securities in issue.

(2) Where the society is a group accounts society, the particulars required to be stated by sub-paragraph (1) or (1A) in respect of the society shall be stated in respect of the society and its subsidiary undertakings, but this sub-paragraph shall not be taken to prohibit the stating in addition by a society of those particulars in respect of the society alone.

(3) Any matter required by sub-paragraph (1) to be stated as a particular in, or to be used as a factor in calculating a particular required by this paragraph to be stated in, the annual business statement and which relates to a previous financial year is required to be so stated or used for the purpose of assisting the assessment of the corresponding particular for the financial year with which the annual business statement deals and accordingly shall, where it can be derived from an amount in annual accounts adjusted in accordance with regulation 3(7)(b), be derived from that amount as so adjusted.

(4) The annual business statement shall include an explanation of what is represented by each of the particulars referred to in sub-paragraph (1) or (1A) and, where sub-paragraph (2) applies, a statement of the basis on which particulars are stated by virtue of that sub-paragraph.

(5) Subject to sub-paragraph (3), for the purposes of sub-paragraph (1) and this sub-paragraph —

(a)“management expenses” means the total of items 9 and 10 in Part I or II of Schedule 1;

(b)“mean total assets” means, in respect of a financial year, the average amount of total assets as would have been included in the balance sheet throughout that year under Asset item H in Part I or II of Schedule 2, calculated on a reasonable basis;

(c)“the profit or loss after taxation” shall be taken from item 25 in Part I or, as the case may be, item 28 in Part II of Schedule 1; and

(d)“total assets” shall be taken from Asset item H in Part I or II of Schedule 2.

(5A)For the purposes of sub-paragraph (1A)—

(a)“management expenses” means the total of the administrative expenses, depreciation and amortisation as shown in the annual accounts;

(b)“mean total assets” means, in respect of a financial year, the average amount of total assets as would have been included in the balance sheet throughout that year, calculated on a reasonable basis;

(c)“the profit or loss after taxation” shall be taken from the annual accounts; and

(d)“liquid assets” means—

(i)cash and cash equivalents;

(ii)treasury bills and similar securities;

(iii)loans and advances to credit institutions; and

(iv)debt securities and other fixed income securities.

(6) With regard to sub-paragraphs (5)(b) and (5A)(b) the basis of calculation used shall be stated in the annual business statement.

(7) In sub-paragraphs (5)(b) and (5A)(b) “reasonable” shall be interpreted in accordance with section 74(5) of the Act.

Information relating to directors and other officers

3.—(1) The annual business statement of a society shall state—

(a)in relation to each person who was, at the end of the financial year with which it deals, a director of the society—

(i)his name;

(ii)his home address or an address, other than that of the society, at which documents may be served on him;

(iii)his business occupation;

(iv)the bodies (other than the society) of which he is a director, if any;

(v)his date of birth; and

(vi)his date of appointment as director; and

(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) The annual business statement of a society shall state particulars of any arrangement entered into during the financial year with which it deals whereby—

(a)a director of the society or a person connected with him acquired, or arranged to acquire, any non-cash asset from a relevant body, or

(b)a relevant body acquired, or arranged to acquire, any non-cash asset from a director of the society or a person connected with him,

and for the purposes of this sub-paragraph “non-cash asset” and “connected with” shall be construed in accordance with Part VII (Management of Societies) of the Act, and “relevant body” means the society or any subsidiary undertaking of the society.

4.—(1) The annual business statement of a society shall state, in relation to each person who was, at the end of the financial year with which it deals, a director or the chief executive of the society, particulars of his service contract (if any) with the society including in particular—

(a)the date on which the contract was entered into;

(b)whether the contract is for a fixed term and, if so, what the term is and whether the contract is automatically renewable in any circumstances (specifying them); and

(c)whether the contract provides for termination by notice (otherwise than for breach of its terms) and, if so, what period of notice must be given by each of the parties.

(2) The annual business statement of a society shall state, in relation to each person who was, at the end of the financial year with which it deals, a director ... of the society, whether he or any member of his immediate family was at the end of that year entitled to any right to subscribe for shares in, or debentures of, any connected undertaking of the society and whether any such right was granted to, or exercised by, him or a member of his immediate family during that year.

(3) If any right of the kind mentioned in sub-paragraph (2) granted to a director ... of the society or a member of his immediate family was outstanding at the end of that year, or was granted during that year but was not outstanding at the end of it, there shall be stated in respect of each such right—

(a)the name of the body in respect of which the right was granted;

(b)the date on which the right was granted;

(c)the period during which, or the time at which, it is exercisable;

(d)the consideration for the grant (or, if there is no consideration, that fact); and

(e)a description of the shares or debentures involved and the number or amount of them, and the prices to be paid for them (or the consideration, if otherwise than in money).

(4) If any right of the kind mentioned in sub-paragraph (2) was exercised by a director ... of the society or a member of his immediate family during that year, there shall be stated in respect of each such right—

(a)the name of the body in respect of which the right was exercised (identifying the right, if more than one was exercisable in respect of that body);

(b)a description of the shares or debentures involved and the number or amount of them; and

(c)if they were registered in his name, that fact, and, if not, the name or names of the person or persons in whose name or names they were registered, together (if they were registered in the names of two persons or more) with the number or amount registered in the name of each of them.

(5) In sub-paragraphs (2), (3) and (4) a director’s ... “immediate family” means his spouse or civil partner and infantchildren but does not include a person who is himself a director ... of the society; and for this purpose “children” includes step-children, and “infant” means, in relation to Scotland, under the age of 18 years.

Regulation 10

SCHEDULE 10SUMMARY FINANCIAL STATEMENT

PART IFORMAT OF SUMMARY FINANCIAL STATEMENT (Building Societies Act accounts society)

SECTION APRESCRIBED FORM OF STATEMENT FOR THE PURPOSES OF SECTION 76(4) OF THE ACT

SECTION BSUMMARY DIRECTORS' REPORT

SECTION CFORMAT OF SUMMARY STATEMENT

SECTION DFORMAT OF SUMMARY OF KEY FINANCIAL RATIOS

PARTIAFormat of summary financial statement (IAS accounts society)

SECTIONAPrescribed form of statement for the purposes of section 76(4) of the Act

SECTIONBSummary Directors’ Report

SECTIONCFormat of Summary Statement

SECTIONDFormat of summary of key financial ratios

PART IIPROVISIONS APPLICABLE TO PART I

1. The Summary Directors' Report (which is required by section B of Part I and Part IA ) may be in any format but shall include—

(a)in the case of a single accounts society—

(i)a summary review of the business of the society during, and a commentary on its financial position at the end of, the relevant year;

(ii)a summary review of the events during the relevant year considered by the directors of the society to have an important effect on the society;

(iii)a summary review of any events which have occurred since the end of the relevant year and which are considered by the directors of the society to have an important effect on the society; and

(iv)a summary indication of the opinion of the directors of the society as to the developments considered by them to be likely to happen in the business of the society; and

(b)in the case of a group accounts society—

(i)a summary review of the business of the society and its subsidiary undertakings during, and a commentary on their financial position at the end of, the relevant year;

(ii)a summary review of the events during the relevant year considered by the directors of the society to have an important effect on the society and its subsidiary undertakings;

(iii)a summary review of any events which have occurred since the end of the relevant year and which are considered by the directors of the society to have an important effect on the society and its subsidiary undertakings; and

(iv)a summary indication of the opinion of the directors of the society as to the developments considered by them to be likely to happen in the business of the society and its subsidiary undertakings.

2. In sections C and D of Part I and Part IA “year” means “financial year”, “this year” means the relevant year, and “last year” means the financial year preceding the relevant year.

3. Any amount or percentage required to be included in section C or D of Part I or Part IA in the column headed “LAST YEAR” is required to be included for the purposes of assisting the assessment of the corresponding amount or percentage in the column headed “THIS YEAR” and accordingly shall, where it is derived from an amount in annual accounts adjusted in accordance with regulation 3(7)(b), be derived from that amount as so adjusted.

4. Sections C and D of Part I or Part IA shall all be completed—

(a)in relation to a single accounts society, in relation to the society, and

(b)in relation to a group accounts society, in relation to the society and its subsidiary undertakings.

5. Subject to paragraph 3, in section C of Part I—

(a)item 1 shall be derived from item 3 in Part I, or, as the case may be, Part II, of Schedule 1,

(b)item 2 shall be derived from items 4 to 8 and 11 in Part I, or, as the case may be, Part II, of Schedule 1,

(c)item 3 shall be derived from items 9, 10, 14 and 15 in Part I, or, as the case may be, Part II, of Schedule 1,

(d)item 4 shall be derived from items 12 and 13 in Part I, or, as the case may be, Part II, of Schedule 1,

(e)item 5 shall be derived from item 16 in Part I, or, as the case may be, Part II, of Schedule 1,

(f)item 6 shall be derived from items 17 and 24 in Part I, or, as the case may be, items 17 and 27 in Part II, of Schedule 1,

(g)item 7 shall be derived from item 19 in Part II of Schedule 1,

(h)item 8 shall be derived from item 23 in Part I, or, as the case may be, items 25 and 26 in Part II of Schedule 1,

(i)item 9 shall be derived from item 25 in Part I, or, as the case may be, item 28 in Part II, of Schedule 1,

(j)item 10 shall be derived from Asset item A in Part I, or, as the case may be, Part II, of Schedule 2,

(k)item 11 shall be derived from Asset item B.1 and B.2(a) in Part I, or, as the case may be, Part II, of Schedule 2,

(l)item 12 shall be derived from Asset item B.2(b) in Part I, or, as the case may be, Part II of Scbedule 2,

(m)item 13 shall be derived from Asset items C to G in Part I, or, as the case may be, in Part II, of Schedule 2,

(n)item 15 shall be derived from Liability item A in Part I, or, as the case may be, Part II, of Schedule 2,

(o)item 16 shall be derived from Liability items B to D in Part I, or, as the case may be, Part II, of Schedule 2,

(p)item 17 shall be derived from Liability items E to G in Part I, or, as the case may be, Part II, of Schedule 2,

(q)item 18 shall be derived from Liability item H in Part I, or, as the case may be, Part II, of Schedule 2,

(r)item 19 shall be derived from Liability item I in Part I, or, as the case may be, Part II, of Schedule 2,

(s)item 20 shall be derived from Liability item K in Part I, or, as the case may be, Part II, of Schedule 2, and

(t)item 21 shall be derived from Liability item J in Part I, or, as the case may be, items J and L in Part II, of Schedule 2.

5A.Subject to paragraph 3, the items in section C of Part IA shall be derived from the society’s annual accounts.

6. A heading for an item contained in section C of Part I or Part IA shall not be included if there is no amount to be shown for that item in respect of the relevant year or the previous financial year.

7. Subject to paragraph 3, in section D of Part I—

(a)item 1 shall be derived from the particulars required to be stated in the annual business statement by paragraph 2(1)(a)(i) of Schedule 9,

(b)item 2 shall be derived from the particulars required to be stated in the annual business statement by paragraph 2(1)(a)(iii) of Schedule 9,

(c)item 3 shall be derived from the particulars required to be stated in the annual business statement by paragraph 2(1)(b) of Schedule 9, and

(d)item 4 shall be derived from the particulars required to be stated in the annual business statement by paragraph 2(1)(c) of Schedule 9.

7A.Subject to paragraph 3, the items in section D of Part IA shall be derived from the society’s annual accounts.

8. There shall be disclosed as a note to the Summary of Key Financial Ratios, the format of which is set out in section D of Part I, the items in section C of Part I which together constitute gross capital for the purposes of item 1 of section D of that Part.

9. There shall be included as a note to the Summary of Key Financial Ratios, the format of which is set out in section D of Part I, an explanation of what each of items 1, 2, 3 and 4 in that section measures and its significance.

10. Where there are extraordinary items in the income and expenditure account for the relevant year or the previous financial year, there shall be disclosed in a note to the Summary Statement (the format of which is set out in section C of Part I) the nature of the extraordinary items in the income and expenditure account for that year.

11. In this Schedule “relevant year”, in relation to a summary financial statement of a society, means the financial year of the society with which the summary financial statement deals.

Regulation 11

SCHEDULE 11INTERPRETATION OF SCHEDULES

1. The following paragraphs apply for the purposes of the interpretation of the Schedules to these Regulations.

Balance sheet date

2. “Balance sheet date”, in relation to a balance sheet, means the date as at which the balance sheet was prepared.

Capital

3.—(1) “Gross capital” means reserves as shown in the balance sheet plus any subordinated liabilities, subscribed capital, revaluation reserves and minority interests, where applicable, as shown in the balance sheet.

(2) “Free capital” means the aggregate of gross capital and general provisions for bad and doubtful debts less intangible fixed assets and tangible fixed assets, as shown in the balance sheet.

Leases

4. In respect of leases—

“long lease” means a lease in the case of which the portion of the term for which it was granted remaining unexpired at the end of the financial year is not less than 50 years;

“short lease” means a lease which is not a long lease; and

“lease” includes an agreement for a lease.

Listed securities

5. “Listed security” means a security listed on a stock exchange in an EEA State or on any stock exchange not in an EEA State which meets the criteria established by the Financial Conduct Authority in exercise of its functions under Part 6 (official listing etc.) of the Financial Services and Markets Act 2000 and is included in a list maintained by the Financial Conduct Authority and the expression “unlisted security”shall be construed accordingly.

Loans

6. A loan is treated as falling due for repayment, and an instalment of a loan is treated as falling due for payment, on the earliest date on which the lender could require repayment or (as the case may be) payment, if he exercised all options and rights available to him.

Materiality

7. No provision of these Regulations requiring the inclusion of amounts in a particular account, or in notes to the annual accounts (other than paragraphs 4 to 11, 13, 14(3)(b) and 35 of Schedule 5), shall be taken to prohibit the disregarding of an amount which, in the particular context of that provision, is immaterial.

Participating interest

8. “Participating interest” has the meaning given to that phrase in paragraph 11 of Schedule 10 to the Large and Medium–sized Companies and Groups (Accounts and Reports) Regulations 2008 .

Provisions

9.—(1) References to provisions for depreciation or diminution in value of assets are to be taken as references to any amount written off by way of providing for depreciation or diminution in value of assets.

(2) Any reference in an income and expenditure account to the depreciation of, or amounts written off, assets of any description is to be taken as a reference to any provision for depreciation or diminution in value of assets of that description.

(3) References to provisions for liabilities are to be taken as a reference to any amount retained as reasonably necessary for the purpose of providing for any liability the nature of which is clearly defined and which is either likely to be incurred, or certain to be incurred but uncertain as to amount or as to the date on which it will arise.

Scots land tenure

10. In the application of these Regulations in Scotland, “land of freehold tenure” means land in respect of which the society (or, as the case may be, a subsidiary undertaking of the society) is the proprietor of the dominium utile or, in the case of land not held on feudal tenure, is the owner, and “land of leasehold tenure” means land of which the society (or, as the case may be, a subsidiary undertaking of the society) is the tenant under a lease.

Staff costs

11.—(1) “Social security costs” means any contribution by the society to any state social security or pension scheme, fund or arrangement.

(2) “Pension costs” includes any costs incurred by the society in respect of any pension scheme established for the purpose of providing pensions for persons currently or formerly employed by the society, any sums set aside for the future payment of pensions directly by the society to current or former employees and any pensions paid directly to such persons without having been first set aside.

(3) Any amount stated in respect of the item “social security costs” or in respect of the item “wages and salaries” in the society’s income and expenditure account shall be determined by reference to payments made or costs incurred in respect of all persons employed by the society during the financial year.

Amounts repayable

12. Only those amounts which can at any time be withdrawn without notice or for which a maturity or period of notice of twenty-four hours or one working day has been agreed shall be regarded as repayable on demand.

Financial instruments

12A.References to “derivative financial instruments” are deemed to include commodity-based contracts that give either contracting party the right to settle in cash or some other financial instrument, except where such contracts—

(a)were entered into and continue in order to meet the society’s expected purchase, sale or usage requirements;

(b)were designated for such purpose at their inception; and

(c)are expected to be settled by delivery of the commodity.

Other defintions

13. In the Schedules to these Regulations—

“credit institution” means an undertaking carrying on (whether in the United Kingdom or elsewhere) a regulated activity (within the meaning of the Financial Services and Markets Act 2000) of accepting deposits, and authorised by the competent authorities of the United Kingdom, an EEA State or any other State (the reference to accepting deposits being read with section 22 of that Act, any relevant order under that section and Schedule 2 to that Act);

“EEA State” has the meaning given by Schedule 1 to the Interpretation Act 1978;

“fair value reserve” has the meaning given by paragraph 31E of Schedule 7;

...

“fixed assets” means assets of a society which are intended for use on a continuing basis in the society’s activities, and “current assets” means assets not intended for such use;

“liquid assets” (except in paragraph 2(1A) of Schedule 9) means an asset of a society which is shown under Asset item A in Part I or II of Schedule 2;

“sale and repurchase transaction” means a transaction which involves the transfer by a credit institution or a customer (the “transferor”) to another credit institution or customer (the “transferee”) of assets subject to an agreement that the same assets will subsequently be transferred back to the transferor at a specified price on a date specified or to be specified by the transferor; but forward exchange transactions, options, transactions involving the issue of fixed income securities with a commitment to repurchase all or part of the issue before maturity or any similar transactions shall not be regarded as sale and repurchase transactions; and

“third party” means a person who is neither the society nor a connected undertaking.

14.—(1)The expressions listed in sub-paragraph (2) have the same meaning as they have in Council Directive 78/660/EC on the annual accounts of certain types of companies, as amended; and for the purposes of those expressions, it shall be assumed that a society is subject to the provisions of that Directive.

(2)“Available for sale financial asset”, “business combination”, “cash flow risk”, “commodity-based contracts”, “credit risk”, “equity instrument”, “exchange difference”, “fair value hedge accounting system”, “financial fixed asset”, “financial instrument”, “foreign entity”, “hedge accounting”, “hedge accounting system”, “hedged items”, “hedging instrument”, “held to maturity”, “held for trading purposes”, “liquidity risk”, “monetary item”, “price risk”, “receivables”, “reliable market”, and “trading portfolio”.