Annual report and accounts 2009 (PDF) - Coventry Building Society

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THE DIRECTORS AND SECRETARY(continued)IAN PICKERING (54)Ian Pickering was appointed to the board as a nonexecutivedirector in 2005. He is a qualified CharteredAccountant.An experienced company director, having worked for muchof the last 20 years in the engineering industry, Ian is aformer Chief Executive of Manganese Bronze Holdings plc.Prior to this he was a director of the Dennis Group PLC.Ian is a non-executive director of Bedford Hospital NHSTrust and a member of the Council of Cranfield University.He is a member of the Auditing Practices Board of theFinancial Reporting Council.Ian is Chairman of the Society’s Audit Committee.NAILESH RAMBHAI,SECRETARY AND SOLICITOR (35)Nailesh Rambhai is a Solicitor. He joined the Society in2006, having qualified at Linklaters and then working atanother major law firm in the City of London.Nailesh is the principal legal advisor for the Society.Nailesh is a non-executive director of the Belgrade Theatrein Coventry where he is Chairman of the theatre’scommunity and education company.FIONA SMITH (51)Fiona Smith joined the board as a non-executive director in2002. Fiona is a Solicitor and has been General Counseland Company Secretary of Severn Trent plc since 2006. Shewas previously General Counsel and Company Secretary atNational Grid plc, where she worked for 15 years, and thenat Transport for London.DAVID STEWART, CHIEF EXECUTIVE (44)David Stewart is a graduate of Warwick University and aChartered Accountant, having qualified with KPMG. Hejoined the board in 2002 as Finance Director, assumedboard responsibility for the sales and marketing functionsin 2004 and was appointed Chief Executive in 2006.Prior to joining the Society, David gained financial servicesexperience at DBS Management plc where he was GroupFinance Director and then Group Chief Executive.David is a member of the Council of the Building SocietiesAssociation and of the Executive Committee of the Councilof Mortgage Lenders. He is also a member of the FinancialOmbudsman Service Steering Group and the RetailFinancial Services Forum.PHIL VAUGHAN (45)Phil Vaughan joined the Society in 2006 as Chief OperatingOfficer and was appointed to the board in 2009. He holdsresponsibility for the Society’s information systemsinfrastructure and its customer service centre including thetelephone call centre and mortgage and savings processingfunctions.Previously Phil was Finance Director for Group Operationsand Technology at Barclays Bank PLC. Phil joined theSociety from American Express where he was VicePresident for Business Management and Global Reengineering.Fiona is a trustee of the Society’s Staff SuperannuationFund.8
DIRECTORS’ REPORTBUSINESS OBJECTIVES AND ACTIVITIESThe Society’s principal objective is the provision of a range ofpersonal financial services including mortgage finance forhouse purchase and improvements, savings, investmentaccounts and insurance.The directors consider that no activities carried out during theyear were outside the powers of the Society.BUSINESS REVIEWThe Society performed strongly in 2009, achieving excellentresults for a mortgage lender in difficult economic conditions.This success was based on strong fundamentals of securefunding, the ability to attract and retain retail savings,continued operational efficiency and strong asset quality. Thisunderlying strength enabled the Society to continue lendingand in doing so achieve record mortgage market share,affirming the board’s belief that the Society has the rightbusiness model for these difficult conditions.External environmentThe financial crisis and resulting worldwide economicrecession continued to define the market environment in2009, damaging confidence and creating pressure on theoperating models of all financial organisations.At the start of the year, the UK housing market facedparticular pressures. A shortage of mortgage availability,with many lenders unable to fund their usual level of newloans, combined with the impact of the recession, broughtabout falling house prices and sales.The Government, faced with the twin imperatives of stabilisingthe financial sector, and in particular those failing banksdeemed systemically important, and lessening the impact ofthe recession, intervened on an unprecedented scale. Thesums of public money deployed to support the financialsystem resulted in a level of national debt that is likely to be akey influencer of economic policy for many years to come.The support for Royal Bank of Scotland and Lloyds BankingGroup involved a substantial investment of public funds andhave, together with ongoing responsibilities for Northern Rockand the lending arm of Bradford & Bingley, taken significantelements of the UK banking sector effectively into publicownership.Confidence in UK financial services, once seen as a worldleadingindustry, has been severely damaged and the longterm impact of regulatory attempts to prevent a potentialrecurrence are yet to be understood.The Government’s actions to reduce the impact of therecession appear to have been effective in the short term butat a cost to the public finances which may define the economyfor many years. The Bank of England Base Rate hasremained at an historically low 0.5% since March 2009 andthis attempt to stimulate spending was backed by aQuantitative Easing programme of £200 billion as the Bankattempted to improve liquidity across the market.Monetary measures were backed by fiscal policies includingthe temporary reduction of VAT to 15% and specific action toprotect a housing market that at the start of the year wasshowing significant reductions in house values and overallmarket volumes.Collectively these measures appear to have helped prevent acollapse of the housing market. Prices rose in the secondhalf of the year, though the lack of volume indicated that ashortage of supply was a major factor in this. Repossessionsin the industry were also less than initially expected as the lowinterest rate environment and proactive approach taken bymost lenders enabled more people to remain in their homes.Nevertheless, the board believes the outlook for the economyin general, and house prices in particular, remains uncertain.The lack of volume in the housing market was also a result ofthe reduction in the capability of many lenders to fundmortgages. The wholesale funding market remainedrestricted and as a consequence the retail savings marketwas very competitive and the relative cost of retail funds wasexpensive.The difficult market conditions exposed weaknesses withinthe building society sector too. 2009 was marked by thefailure of Dunfermline, the merger of Yorkshire and Chelseabuilding societies and the introduction of a new debt for equityscheme to recapitalise West Bromwich Building Society. Thelatter raised particular questions about the dilution ofmutuality amongst building societies and, overall, the futureof the sector was questioned more during 2009 than at anytime during the financial crisis. Credit ratings were reducedwith some building societies being marked down significantly.Impact on Coventry Building SocietyDespite the difficult market, the Society performed verystrongly, based on the consistent application of a simpletraditional building society model of attracting and retainingnew savings balances to support responsible lending.The Society’s strength is its ability to maintain this traditionalapproach without recourse to new or increased levels of risk.This has meant that the Society has avoided the pitfallsexperienced by some competitors which have restricted theirability to lend.9
Page 1 and 2: ANNUAL REPORT & ACCOUNTS 2009
Page 3: ChairmanDavid HardingDeputy Chairma
Page 13 and 14: Financial performanceThe Society ac
Page 15 and 16: ASSETSThe assets of the Group incre
Page 17 and 18: KEY PERFORMANCE INDICATORSNET MORTG
Page 19 and 20: Remuneration CommitteeConsisting of
Page 21 and 22: RISK MANAGEMENT REPORTPRINCIPAL RIS
Page 23 and 24: CORPORATE GOVERNANCEThe board is ac
Page 25 and 26: APPOINTMENTS TO THE BOARDThe appoin
Page 27 and 28: DIRECTORS’ REMUNERATION REPORTINT
Page 29 and 30: STATEMENT OF DIRECTORS’RESPONSIBI
Page 31 and 32: OPINIONIn our opinion:the Annual Ac
Page 33 and 34: BALANCE SHEETSas at 31 December 200
Page 35 and 36: CASH FLOW STATEMENTSfor the year en
Page 37 and 38: Improvements to IFRSThe improvement
Page 39 and 40: FINANCIAL LIABILITIESFinancial liab
Page 41 and 42: PENSION COSTSThe Society operates b
Page 43 and 44: Loan impairment and other provision
Page 45 and 46: 7. OTHER OPERATING INCOMEGroup Soci
Page 47 and 48: 11. DIRECTORS’ EMOLUMENTS (contin
Page 49 and 50: 12. PENSION SCHEME (continued)2009
Page 51 and 52: 13. IMPAIRMENT PROVISIONS ON LOANS
Page 53 and 54: 14. PROVISION FOR FSCS LEVIESAll de
Page 55 and 56:
20. DEBT SECURITIESGroup Society Gr
Page 57 and 58:
21. DERIVATIVES AND OTHER FINANCIAL
Page 59 and 60:
24. INTANGIBLE FIXED ASSETSGroup So
Page 61 and 62:
26. DEFERRED TAXDeferred tax assets
Page 63 and 64:
32. OTHER LIABILITIESGroup Society
Page 65 and 66:
38. FINANCIAL COMMITMENTSGroup Soci
Page 67 and 68:
40. FINANCIAL INSTRUMENTS (continue
Page 69 and 70:
Page 71 and 72:
Page 73 and 74:
Page 75 and 76:
41. RELATED PARTY TRANSACTIONSULTIM
Page 77 and 78:
42. NOTES TO THE CASH FLOW STATEMEN
Page 79 and 80:
2. OTHER PERCENTAGES2009 2008% %As
Page 81 and 82:
3. INFORMATION RELATING TO DIRECTOR
Page 84:
www.thecoventry.co.ukCoventry Build
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Annual report and accounts 2009 (PDF) - Coventry Building Society

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