THE SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED · The Society of Motor Manufacturers and...

THE SOCIETY OF MOTOR

MANUFACTURERS AND TRADERS

LIMITED

Annual Report and Financial Statements

for the year ended 31 December 2014

Registered Number: 00074359

THE SOCIETY OF MOTOR MANUFACTURERS AND TRADERS LIMITED

Page

Strategic Report for the year ending 31 December 2014 ..................................................................... 2

Directors’ Report for the year ending 31 December 2014 .................................................................. 12

Independent Auditors’ Report to the members of The Society of Motor Manufacturers and Traders Limited ................................................................................................................................................ 16

Consolidated Profit and Loss account for the year ended 31 December 2014 .................................. 18

Consolidated Statement of Total Recognised Gains and Losses as at 31 December 2014 .............. 19

Consolidated Statement of Historical Cost Profits and Losses .......................................................... 19

Reconciliation of Movements in Shareholders’ Funds ........................................................................ 19

Consolidated Balance Sheet as at 31 December 2014 ...................................................................... 20

Parent Company Balance Sheet as at 31 December 2014 ................................................................ 21

Consolidated Cash Flow Statement for the year ended 31 December 2014 ..................................... 22

Notes to the Financial Statements for the year ended 31 December 2014 ........................................ 23


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NOTICE IS HEREBY GIVEN that a General Meeting of the Members of The Society of Motor Manufacturers and Traders Limited will be held at 2680 Kings Court, Solihull Parkway, Birmingham Business Park, Birmingham, B37 7YE, on 10 July 2015 at 10.30 a.m. for the purpose of:

1. Receiving and considering the Report of the Directors and the audited consolidated Financial Statements for the year ended 31 December 2014

2. Transacting any other general business of the meeting

I therefore confirm that this meeting has been convened in accordance with the requirements of the Companies Act 2006 By Order of the Board

SB Samuels Company Secretary

Date: 8 June 2015 Note: A member entitled to attend and vote at the above meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a member of the Society. Any instrument appointing a proxy shall be in the form of a letter under the hand of a Director or Secretary of the appointing company and shall be deposited at the Society's Registered Office not less than 24 hours before the time of holding the meeting.


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Strategic Report for the year ending 31 December 2014

The Directors have pleasure in presenting their Strategic Report and the audited Financial Statements for the Group for the year ended 31 December 2014. Principal Activities The Society of Motor Manufacturers and Traders Limited (“SMMT”) is the trade association for the UK motor industry. Since 1902 it has encouraged and promoted the interests of the whole industry, in the UK and abroad. The main activities of the Society are: Position the UK motor industry as a critical contributor to the UK economy, a major employer and

source of technological innovation through all relevant communication channels Secure competitive advantage for the UK motor industry and mitigate risk by ensuring the SMMT

is the influential voice of the industry in the major policy debates and regulatory discussions Improve the efficiency and effectiveness of the organisation ensuring the smooth delivery of

essential value-added services, advice and support to the industry Strengthen the financial position of the organisation by increasing the size and diversity of

SMMT’s membership and through the development of new and existing services Develop and exploit all opportunities to grow the UK motor industry - the market, business and

products - at home and abroad. SMMT will continue to work closely with other relevant organisations to promote the strengths and values of the manufacturing, service and repair, aftermarket, supply chain and other related services of the UK industry and abroad.

Review of Business The UK automotive industry had another strong year in 2014 and the SMMT has played a key role in supporting that success. The UK industry is out-performing many of its established competitor markets in terms of retail growth, investment, competitiveness and innovation. The Automotive Council has been fundamental to that success and the SMMT has devoted considerable resources to its work in technological development, supply chain enhancement, business competitiveness and communication. This will continue in 2015 as the industry seeks to turn the Industrial Sector Strategy from an idea into reality. The SMMT has sought to ensure support for the sector transcends political party divisions. This has been essential as the country faced a General Election in 2015. Whilst the economic growth of the UK looks set to continue, the political parties have differing attitudes on issues which affect the industry, notably the severity of austerity measures, taxation and Europe. Whilst the SMMT has helped secure cross-party support for the Industrial Sector Strategy and the continuation of the Automotive Council, the organisation has a key role to play in ensuring post-election policies and regulation remain sympathetic to the sector.


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Strategic Report for the year ending 31 December 2014 (continued)

Review of Business (continued) A key risk and uncertainty is Europe. The European elections demonstrated the rise in popularity across Europe of more extremist parties and, in the UK, of UKIP with its avowed determination that the UK leave the EU. To counter the risk the SMMT engages with all parties on this issue as the position of members is clear; 92% said it was best for their business that the UK remain in Europe, albeit with a reformed agenda. The SMMT will continue to highlight the key issues and benefits of participation in Europe; the single regulatory regime, open market, movement of goods, services and people and the influence of the EU in global trade terms. However, the SMMT’s political and industrial activities in the UK will not be limited to the issue of Europe. The SMMT will continue to devote policy, economic and communications resources to maintain the UK’s competitiveness, addressing issues such as labour flexibility, business rates, energy costs and trade issues. It will undertake activities and campaigns to help attract talent into the industry, to bolster the UK supply chain, to improve skill levels and to position the UK in terms of its innovation and industrial expertise. Challenges remain, notably in terms of air quality, climate change, security and safety. The industry, through the SMMT, has a positive story to tell on each of these topics and, significantly for 2015, technological change in the form of connectivity and autonomous vehicles means the industry can be the focus of a technological leap. Making sure the UK benefits from this emerging technology is fundamental and, moreover, the SMMT’s public policy and vehicle legislation teams will ensure the UK motor industry is recognised as central to the future prosperity of the UK. Collaboration

The SMMT will continue to promote the interests of the UK automotive sector at home and abroad. In the UK, it will continue to work with other organisations where there are shared interests and, occasionally, shared threats. The UK Automotive Council will continue to be the SMMT’s focus for the strong partnership between the motor industry, government and other stakeholders. The work streams on technology, strengthening the supply chain and business environment will continue to be actively supported and promoted with SMMT and SMMT Industry Forum resources.

SMMT will continue to work with other organisations with a stake in the automotive sector including SEMTA, IMI, RMI and NFDA, the main business organisations CBI and EEF, the professional bodies IMechE, RAEng and IET, as well as the main trade associations in, and adjacent to, the UK motor industry.

SMMT will also be looking to increase its impact internationally. During 2014 Communication and International were newly shaped into one department, with a new Director who will seek to raise the profile of the UK sector at home and abroad and improve the professionalism of the services still further. The interest in the UK sector, which contrasts in history and current performance with many other European countries, remains high. We want to assure the UK’s international competitiveness whilst promoting our members’ interests abroad. For this reason, the SMMT will therefore give greater emphasis to the UK automotive sector’s impact internationally in 2015.


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Collaboration (continued)

Relations with ACEA, CLEPA and FIGIEFA are stronger than they have been for years and there is support for the UK approach to policy making for the sector which has competitiveness at its heart. SMMT also has much stronger ties with other equivalent associations, such as the VDA and CCFA in Europe and the Auto Alliance in the US. Working with these associations, the SMMT will play a significant role in shaping and influencing European policy debates and regulation. In addition, the SMMT is now a full council member of OICA and will seek to promote the UK abroad at conferences and events, supporting the “Great” campaign. Promotion

The SMMT constantly seeks to raise the profile of the industry, promoting its performance, successes and the diversity of the UK industry. To achieve this, the Communications team builds strong relations with the media and delivers a comprehensive communication programme. In 2015, this will be developed further, the team strengthened with new additions from both inside and outside the motor industry.

Part of that strategy is addressing the public challenges to the industry. Key issues in 2015 present both opportunities and risks to the SMMT and sector standing, and will invariably include the causes of any downturn to the market, production variations and environmental issues – not so much CO2 as air quality. The industry has to tell a strong story on this issue to pre-empt any anti-diesel sentiment. The industry also has other issues such as safety, security (such as keyless entry) and driver distraction. SMMT will prioritise resources towards two areas:

1. Political – with the result of the 2015 General Election settled, the industry must promote its

issues through the media to secure support. This will include the importance of the sector, an industrial strategy and, of course, Europe on which the SMMT’s position is clear.

2. Connectivity – there is keen interest in the development of the connected car and what it offers society, consumers and business. SMMT will build on the SMMTConnected event to promote the developments – including those offered by autonomous driving – to ensure the vehicle is seen as fundamental to the future of mobility.

Activities will include the Commercial Vehicle Air Quality Seminar, SMMTConnected, Test days and the Annual Dinner. SMMT will also continue to produce material to inform the media.

The Automotive Council’s communications will continue to be led by the SMMT as it seeks to enhance understanding and coverage of Council objectives and activities.

The SMMT will also continue to work with government to promote career opportunities in the automotive sector through initiatives like See Inside Manufacturing and Apprenticeship week. It is essential that industry and government continue to target students, teachers, careers advisers and parents so they have a better appreciation of what the industry can offer young people of either sex and the industry can secure the next generation of talent.

The SMMT’s International department will continue to promote UK companies abroad with international events and partnerships with UKTI, AIO and BIS. It will also be working closely with AIO on sector panel group activities, securing UKTI funding and exploring ways for UK supply chain to increase business abroad.


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Promotion (continued) With the overall cuts in government funding, the amount of government funded support for SMMT trade activities is expected to be lowered but will not be confirmed by the newly elected Conservative government until June 2015. The opportunity to bid for 2015/16 funding has not yet been announced and it may be therefore that some of the planned projects do not benefit from UKTI support which would impact on participant recruitment and require a review of activities throughout the year. Despite this uncertainty, SMMT remains intent on tendering for appropriate projects and expects to be recognised as an accredited trade association with the automotive sector panel to be announced. Securing UKTI/AIO and BIS funding will enable SMEs to participate in a variety of overseas events, activities including trade shows, trade missions, scoping missions, technical seminars, networking events, presentations in number of key markets. This creates additional revenue for SMMT from sales income to event participants. A series of activities at international automotive trade exhibitions are planned for 2015 in India, Turkey, the United States, South America, the Middle East and Asia region.

Lobbying

Securing an attractive and stable business environment for the UK automotive industry in times of heightened political risk is SMMT’s top lobbying priority for 2015. The debate on the UK’s EU membership and further UK devolution, a Comprehensive Spending Round post-election and deep cuts in public spending will dominate the political year. SMMT will ensure that the Automotive Council provides stability, continues the strategic partnership between government and industry and delivers on the Industrial Sector Strategy priorities in politically uncertain times. This means advocating strong support for the Automotive Council and its agenda and securing continued long term funding for the Automotive Investment Organisation (AIO) and the Advanced Propulsion Centre (APC).

SMMT will provide a strong lobbying voice and engage across party lines in Westminster and Brussels to ensure that the UK government and the European institutions to influence policy and regulations which affect the industry and to support competitiveness and growth in the sector. SMMT’s five manifesto priorities across the manufacturing and retail side of the industry will be further developed and strongly pursued:

1. Cross-party commitment to long-term industrial strategy: Ensuring that existing

mechanisms to support ambitions for industrial strategy, such as the Automotive Council are maintained in the next Parliament and beyond.

2. Creating the right conditions for investment: Implementing policies that create an internationally competitive business environment for the automotive industry, making the UK a leading location for investment.

3. Positioning the UK as a global leader on innovation: Enhancing support measures for research and development that bolster the UK’s manufacturing base and promote investment in new technologies.

4. Supporting ultra-low emission vehicles and a strong, sustainable vehicle market: Guaranteeing funding and support for ultra-low emission vehicles and committing to a long-term, consistent and coordinated approach on vehicle taxation.

5. Maintaining a strong UK voice in Europe: The UK’s membership of the European Union is fundamental to the current and future success of the UK automotive industry. The government should ensure that the UK maintains a strong voice in Europe.


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Lobbying (continued) SMMT will also drive the discussion about the future of Vehicle Excise Duty and on key environmental issues like CO2 emissions, air quality and future fuels. The aim is that policies from London’s Ultra Low Emission Zone to European air quality measures and CO2 regulations support, rather than undermine the R&D investment and significant technological progress by industry that delivers an ever increasing range of lower and ultra low emission vehicles (ULEVs). To support lobbying with technical data and evidence, SMMT will establish in 2015 a new Technical Testing & Research programme to develop a primary evidence base that will strengthen UK industry arguments in negotiations with the UK government and its motoring agencies and the European Commission.

SMMT has a key role in developing and harmonising vehicle technical standards and regulation at international level. In 2015 SMMT will inform debates within UNECE, the EU and standardisation bodies with particular focus on connectivity, e-mobility, international type approval, and safety and security.

Uncertainty about Britain’s future membership of the EU is a significant political risk for the automotive sector. SMMT will aim to minimise it, working closely with the CBI and other business associations. It will build on SMMT’s KPMG EU report of 2014 and engage with members, policy makers and the media in the UK and Brussels to influence the debate on the economic case for EU membership and reform from the automotive industry. This will include a reception in Brussels for the new Commission in January.

UK automotive needs a strong and effective UK voice in Brussels to influence key EU policies on trade, industrial competitiveness, and environmental and technical regulation in 2015. SMMT will work closely with the UK government, the Commission, MEPs and our European sister associations (ACEA, JAMA, CLEPA, and others) to deliver British influence in Brussels across the automotive agenda. Securing a positive conclusion of the Transatlantic Trade and Investment Partnership (TTIP) between the EU and US, which will bring significant trade liberalisation and business opportunities for UK automotive, is a key priority.

Manufacturing

The UK manufacturing industry is in a strong position with increasing levels of investments being made by many manufacturers while demand for UK products remain robust given their reputation for quality, design and engineering excellence.

SMMT and the Automotive Council has been a major driving force in helping shape and implement the sector strategy. This partnership between government and industry continues to be a model of envy for many sectors and indeed other countries. Much progress has already been made in 2014 in developing the sector strategy but many issues still remain such as skills, technology, connectivity, energy and supply chain related issues. SMMT will actively contribute to the policy debates on these key issues and will ensure they are front and centre of government’s agenda as we maintain our efforts to create the right conditions for manufacturers to flourish.

During 2014, SMMT delivered an increasing number of successful events such as Open Forum and Meet the Buyer which focussed on supporting manufacturers develop and grow their operations. Over the past 12 months over 1,500 people have participated in these events and SMMT will look to repeat this in 2015 with particular emphasis on supporting SME’s and upstream suppliers.


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Manufacturing (continued) Work to improve supply chain competitiveness through the Long Term Automotive Supply Chain Competitiveness (LTASC) programme made good progress in 2014, with funding secured from AMSCI. The SMMT Industry Forum programme will look to support around 38 suppliers – Tier 1s and SME’s – develop their competitiveness through specific support with skills, R&D and capital expenditure. This is a 4 year programme which is scheduled to end in 2018.

Attracting inward investment and securing growth in the UK has been a key focus for 2014. Our close relationship with the Automotive Council, UKTI and in particular AIO has helped deliver some significant results with many suppliers winning new contracts and committing further investment in the UK. SMMT will continue to develop these relationships in 2015 and also look to work more closely on the trade agenda.

Technology and Innovation

Delivering UK business opportunities from innovation and technological change is a strategic priority for SMMT. In 2015, connectivity and autonomous driving, hydrogen and new mobility solutions will join SMMT’s strong portfolio on e-mobility.

SMMT’s key priority in 2015 is to develop its influential expertise and automotive’s central role in defining the agenda on connectivity and intelligent vehicles. SMMT will host SMMTConnected, a major UK event on connected vehicles and autonomous driving organised by the industry. The seminar and a new SMMT forum will bring together the automotive sector, government, relevant tech companies, ICT and other industries, professions and stakeholders to set out and collaborate on the agenda under the auspices of the automotive industry. SMMT will also support European and global industry discussions and initiatives on key technical, data and legal requirements for the sector to maximise its opportunities in this field.

SMMT will continue its significant role in developing the market for ultra low emission vehicles in the UK. The £3.5m ‘Go Ultra Low’ communications campaign awarded to SMMT in 2014 will be implemented in 2015, supported by government and 7 brands. SMMT will work with government to ensure that any changes to Plug-in Car Grant support do not disrupt the market in 2015. SMMT’s EV group will continue to provide the key forum for wider industry, government and stakeholder to develop the agenda and UK opportunities.

With the first commercial hydrogen vehicles entering the UK market, SMMT will support members in developing wider awareness, knowledge and market readiness for H2 vehicles and infrastructure development in the UK in 2015. Active interest in new mobility solutions, L-Cat vehicles and the changing shape of ‘cars’ are the subject of early discussion with the motorcycle industry to identify areas for collaboration and will be further explored in 2015.

SMMT’s role in providing information on the technology and innovation agenda across the whole of the automotive industry remains critical. It will increase awareness and access to resources and opportunities to collaborate, especially among SMEs and small innovative companies. SMMT will fully support and complement the activities of the Automotive Council Technology Group, the Advanced Propulsion Centre, Innovate UK, the Transport System and other Catapults, and the KTN. To play our role in the innovation landscape, we will work in partnership with these key institutions, universities and research bodies as well as EUCAR, CLEPA and ERTICO on the EU Horizon 2020 programme.


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Member Value

In 2014 SMMT once again attracted record numbers of new members. An independent survey undertaken during 2014 Q2 / Q3 confirmed the belief that many members are seeing real value from membership through the range of products and services on offer. SMMT will look to enhance its products and services portfolio and further develop communications during 2015 to ensure all members are aware and have the opportunity to utilise their membership whether they be OEMs, importers, supply chain, aftermarket or any other part of the diverse UK industry. Operations and Commercial Activities In 2014 the Finance, IT and Facilities, Automotive Information Services, Legal and Company Secretariat were brought together under the newly created Operations Director. The combination and closer collaboration will bring new synergies and efficiency to SMMT’s service performance for SMMT and members alike. Over the coming months, SMMT will initiate a series of reviews of the strategic business systems deployed across the group. This will also include a review of the framework and functionality of the various websites, CRM, ERP and accounting, run across the group. Through a combination of revision and closer coordination of underlying processes, the formulation, access to, and delivery of SMMT’s policy, communications and commercial objectives should continue to strengthen. This should also benefit the wider SMMT Membership and stakeholder activities. Good governance is imperative to facilitate the fair balance of representation in SMMT’s activities in addressing the competing Trade Sections’ demands, sector priorities and stakeholder interests. Work will continue on developing a group corporate governance framework detailing processes and procedures that ensure accountability and transparency in line with governance best practice – the UK Corporate Governance Code. For many years SMMT has led the approach amongst trade bodies on compliance. There will be no let up in 2015 with a further cycle of audit and improvements of current measures across the group, including: health & safety, anti-trust and bribery. 2015 will see a particular focus on data protection to ensure that SMMT has appropriate systems in place to discharge its responsibilities for data processing and control. SMMT has adopted practices and procedures to attain the annually audited environmental office standard ISO 14001. The adoption of this quality standard has been hugely motivational to staff, and SMMT will begin work on further standards during 2015: ISO 18001 for health and safety, ISO 27001 for IT systems and BS 11000 for collaborative working.


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Operations and Commercial Activities (continued) For several decades in partnership with the DVLA, SMMT’s Automotive Information Services have provided national vehicle registration data. During 2015 work will continue to progress a three year transition programme to a new system to be implemented in January 2016. In parallel in 2014 SMMT reviewed the collection and provision of a vehicle safety recall look up service which will be launched in the first half of 2015.

SMMT will continue to enhance and develop its European and National Type Approval service, SENTA. Following the final implementation of Type Approval to the remaining vehicle types not previously covered, a greater number of vehicles are now required to comply with type approval processes.

Another key part of the SMMT business is TS Oversight which delivered a strong performance in 2014. In 2015, activities will increase, bringing the standard in line with new ISO standards and delivering additional revenue to the organisation in line with greater focus being paid to certification audit.

Both SMMT Industry Forum and Motor Codes have separate business plans which align to that of SMMT Group. For 2015, Industry Forum will build on the success of 2014, developing new product offering and, with a stable base on long term contracts, develop new partnerships to grow the business. The business model, with both permanent and associate staff, is delivering but IF management will ensure the balance between the two is appropriate and sustainable.

Motor Codes will appoint a new Managing Director in 2015 who will be charged with reviewing the business strategy and establishing a robust path for growth. There are a number of commercial and regulatory risks and opportunities within the environment in which it operates, notably the advent of Alternative Dispute Resolution. It will continue to deliver for both the wider automotive retail industry and consumers, contributing to the business plan of the SMMT. Key Performance Indicators In order to ensure financial rigour and accountability SMMT provides some consistent measures of performance. The following metrics are reported and reviewed on a regular basis by the SMMT Executive Board. 2014 2013Number of employees and contractors 125 127Overheads per employee £88,178 £88,196Turnover per employee £157,400 £125,520Number of new members 106 106Number of events 3,436 3,560


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Principal Risks and Uncertainties There is regular discussion and review by the SMMT Senior Management team, SMMT Finance and SMMT Executive Boards of both risk and opportunities faced by the Society from which agreed actions and countermeasures are implemented, monitored and reassessed as appropriate. In broad terms and as a consequence of the SMMT’s alignment with the sectors performance principal risks may be summarised at a strategic level: Reputation: SMMT’s public integrity and compliance best practice are prerequisites to our winning and sustaining a number of government contracts at all levels in the group. The organisation’s public profile and standing also underpins the necessary trust and confidence that enables our dialogue and activities with the UK government, political parties, EU Institutions and our contact with various regulators. To address these points SMMT run a compliance programme with regular training for staff and members, as well as having processes in place to counter risks, which are periodically independently reviewed. Subscription income: SMMT’s subscription income is dependent upon the sustained relevance and performance of our services to members as well as our members’ turnover. SMMT has a dedicated membership programme and regular survey or membership as well as an active recruitment drive for new members. Over time our activities are less financially reliant upon economic challenges to subscription income. The image and profile of the Automotive Sector and products in the UK: Our corporate prosperity is closely aligned to the current and future prosperity of the Automotive Sector in the UK. Over recent years the case for a strong national manufacturing base has been accepted and championed by the main political parties to the benefit of the business environment and fiscal policies. Equally the development of autonomous vehicles has presented a significant profile and market opportunity for the sector in the UK. Good progress has also been made in further developing the activities of the Automotive Council, with consequent activities for Skills, Technology and Supply Chain improvements. SMMT has also restructured to combine the Communications and International teams to better represent the UK to overseas inward investment. SMMT staff: Staff are our principal asset and their well being and performance is key to our success. We are committed to training and developing people to reach their full potential. We have a generous training budget to support this and a newly introduced performance and development process to appropriately identify needs. We pride ourselves on our total remuneration package that includes a wide range of employee benefits and incentives designed at retaining staff. We are recognised as an Investor in People at Bronze level and are striving for Silver recognition. It is our aim to be recognised externally as a top employer.


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Share Capital SMMT is a company limited by guarantee. Donations The Company made £206,260 of charitable donations during the year (2013: £56,000). By Order of the Board Mr S B Samuels Company Secretary 19 May 2015


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Directors’ Report for the year ending 31 December 2014

Results and Dividends The results of the SMMT for the year are set out on page 18. No dividend is permitted and it is recommended that the whole of the retained profit be added to reserves. The financial position of the Group is presented in the balance sheet. Total members’ funds at 31 December 2014 were £28,300,000 (2013: £30,943,000) comprising total fixed assets of £35,568,000 (2013: £32,885,000), Creditors due after one year of £1,575,000 (2013: £0), Provisions for liabilities of £421,000 (2013: £377,000) and net current assets of £578,000 (2013: £23,000). Future Developments In developing the Business Plan for 2015 a range of longer term goals for the organisation were identified. These include:

To maintain and grow membership across component suppliers, the broader commercial vehicle sector, the aftermarket and technology companies. SMMT will look to increase its membership to more than 750 companies by the end of 2015

To maintain and increase industry influence on economic and public policy debates. SMMT will seek to increase the resources it dedicates to high quality research

To maintain and increase the reach of SMMT's online and social media communications. SMMT will seek to create more interactive website content, and to build awareness of the automotive sector, companies and personalities

To develop new and innovative member services focused on helping to access finance, new investment, building networks and identifying business opportunities

To introduce a revised MVRIS contract by no later than January 2016 that delivers additional capability and secures substantial cost reductions for participating members

To oversee the sustainable growth of SMMT’s two wholly owned subsidiaries SMMT Industry Forum Limited and Motor Codes Limited.

Equal opportunities policy It is the SMMT's policy to employ individuals with the necessary qualifications and experience without regard to sex, marital status, race, creed, colour, age, nationality or religion. Full and fair consideration is given to applications for employment made by disabled persons, having regard to their particular aptitudes and abilities. The SMMT recognises the great importance of the contributions made by all employees and aims to keep them informed of matters affecting them as employees and on developments within the SMMT. Communication and consultation is achieved by a variety of means, both within individual operating divisions and on Group wide basis. Directors and their interests Under the terms of the Articles of Association certain members of Council are further elected to represent their Section on the SMMT Executive Board and it is the members of this committee who constitute the statutory Directors for the purposes of the Companies Act.


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Directors’ Report for the year ending 31 December 2014 (continued)

The Directors of the company who were in office during the year and up to the date of signing the Financial Statements were: Mr T.J. Abbott Mr L. Bleasdale Mr M. Breitschwerdt (resigned 07/04/14) Mr P. Crossman Ms K. Crispe (resigned 31/03/14) Mr J. Davies (appointed 01/01/14) Mr S. Egerton (appointed 01/01/14) Mr D. Evans (resigned 08/09/14) Mr J. Faulkner (resigned 17/07/14) Dr K.P. Fouquet (resigned 24/03/15) Mr L.A.C. Fuller Dr G.T. Gillespie Mr A. Gilson (resigned 30/09/14) Mr R. Hall (resigned 31/12/14) Mr M. Hawes Mr P. Hopkirk Mr G. Jones Mr H. Kirner (resigned 24/03/15) Mr N. Lee Mr A. Morgan (resigned 31/12/14) Mr T. Mȕller-Otvös (resigned 31/12/14) Mr J.M. Neill CBE Mr D.J.A. Northey Mr M. Ovenden Mr A.D. Owen OBE Mr J.A. Parsons Mr D. Petts (appointed 01/01/14) Mr P. Price (appointed 01/01/14) Mr K. Ramirez (appointed 01/01/14) Mrs P. Randall Mr S.B. Samuels Mr R. Shaw (resigned 31/12/14) Mr D. Smith (appointed 01/01/14) Mr R.G. Smith OBE (resigned 31/03/14) Mr M.P. Spencer Dr R. Speth Mr N. Stein (resigned 20/01/15) Mr M. Straughan (appointed 01/01/14) Mr T. Tozer (appointed 30/09/14) Mr A. Walker Mr A.N. Wickens (resigned 31/12/14) Mr R. Woolcock (resigned 31/12/14) Mr J. Wright


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The following Directors were appointed on 1 January 2015: Mr J. Faulkner Ms A. Useinovic Mr N. Morgan Mr M. Rosher Mr E. Vassallo Mr P. Willis Mr G. Grieve Mr M. Cartwright Mr A. Humphrey The following Directors were appointed on 20 January 2015: Mr J. King Mr R. Shaw Mr R. Rickell The following Directors were appointed on 24 March 2015: Dr S. Hoffman Going Concern The Financial Statements have been prepared on a going concern basis, which the Directors believe to be appropriate. The Directors have prepared a Business Plan which reflects the Group’s expectations for continued growth over the 2015 and 2016 periods. Based on the assumptions of this plan and the results of 2015 trading to date, the Directors consider that the company has sufficient funds for the foreseeable future to meet its liabilities as they fall due for payment. The Directors have formed a judgement at the time of approving the Financial Statements that the company has adequate resources available to continue operating and to discharge all financial obligations as they fall due for the foreseeable future from the date of approval of the Financial Statements. Directors’ Responsibilities Statement The Directors are responsible for preparing the Strategic Report, Directors Report and the Financial Statements in accordance with applicable law and regulations. Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors have prepared the Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these Financial Statements, the Directors are required to:

selected suitable accounting policies and then applied them consistently; made judgements and accounting estimates that are reasonable and prudent; and state whether applicable UK Accounting Standards have been followed, subject to any

material departures disclosed and explained in the Financial Statements.


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Directors’ Responsibilities Statement (continued) The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Directors’ and Officers’ Insurance The Group maintains cover under a qualifying third party indemnity for all Directors and Officers against liabilities which may be incurred by them whilst acting as Directors or Officers. Provision of information to Auditors So far as each of the Directors is aware at the time the report is approved: There is no relevant audit information of which the Group’s auditors are unaware, and Each of the Directors have taken all steps that they ought to have taken to make themselves

aware of any relevant audit information and to establish that the auditors are aware of that information.

Independent Auditors The auditors, PricewaterhouseCoopers LLP, have indicated their willingness to continue in office and a resolution will be proposed at the next annual general meeting for their reappointment. This report was approved by the board on 19 May 2015 and signed on its behalf. Mr M Hawes Director


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Independent Auditors’ Report to the members of The Society of Motor Manufacturers and Traders Limited

Report on the Financial Statements

Our opinion In our opinion, the Society of Motor Manufacturers and Traders Limited’s group Financial Statements and parent company Financial Statements (the Financial Statements): Give a true and fair view of the state of the group’s and of the parent company’s affairs as at

31 December 2014 and of the group’s profit and cash flows for the year then ended; Have been properly prepared in accordance with United Kingdom Generally Accepted

Accounting Practice; and Have been prepared in accordance with the requirements of the Companies Act 2006.

What we have audited The Society of Motor Manufacturers and Traders Limited’s Financial Statements, comprise: Consolidated and parent company Balance Sheets as at 31 December 2014; Consolidated Profit and Loss Account for the year then ended and consolidated Statement of

Total Recognised Gains and Losses for the year then ended; Consolidated Cash Flow Statement for the year then ended; Consolidated Statement of Historical Cost Profits and Losses The Reconciliation of Movements in Shareholder' Funds for the year then ended; and The notes to the financial statements, which include a summary of significant accounting

policies and other explanatory information.

The financial reporting framework that has been applied in the preparation of the Financial Statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). In applying the financial reporting framework, the Directors have made a number of subjective judgements, for example in respect of significant accounting estimates. In making such estimates, they have made assumptions and considered future events. Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the Financial Statements. Other matters on which we are required to report by exception Adequacy of accounting records and information and explanations received Under the Companies Act 2006 we are required to report to you if, in our opinion: We have not received all the information and explanations we require for our audit; or Adequate accounting records have not been kept by the parent company, or returns adequate

for our audit have not been received from branches not visited by us; or The parent company Financial Statements are not in agreement with the accounting records

and returns.

We have no exceptions to report arising from this responsibility. Directors’ Remuneration Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors’ remuneration specified by law are not made. We have no exceptions to report arising from this responsibility.


17

Independent auditors’ report to the members of The Society of Motor Manufacturers and Traders Limited (continued)

Responsibilities for the Financial Statements and the Audit Our responsibilities and those of the Directors As explained more fully in the Directors’ Responsibilities Statement set out on page 13, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK & Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. What an audit of Financial Statements involves We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (“ISAs (UK & Ireland)”). An audit involves obtaining evidence about the amounts and disclosures in the Financial Statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: Whether the accounting policies are appropriate to the group’s and the parent company’s

circumstances and have been consistently applied and adequately disclosed; The reasonableness of significant accounting estimates made by the Directors; and The overall presentation of the financial statements.

We primarily focus our work in these areas by assessing the Directors’ judgements against available evidence, forming our own judgements, and evaluating the disclosures in the Financial Statements. We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both. In addition, we read all the financial and non-financial information in the Annual Report and Financial Statements to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Neil Philpott (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Birmingham


18

Consolidated Profit and Loss account for the year ended 31 December 2014

Note 2014 2013

£’000 £’000

Turnover: Group and share of joint venture 2 19,675 15,941

Less: share of joint venture’s turnover (889) (805)

Group turnover 18,786 15,136

Staff costs (including exceptional pension costs of £1,364k (2013: £Nil)

3 (9,033) (7,198)

Depreciation and other amounts written off tangible and intangible fixed assets

5 (485) (476)

Other operating charges (10,299) (7,491)

Group operating loss 5 (1,031) (29)

Share of operating profit in joint venture 223 212

Profit on disposal of fixed assets 6 - -

Loss/(Profit) on ordinary activities before interest and investment income

(808) 183

Income from fixed asset investments 7 1,438 1,580

Interest receivable and similar income 8 526 329

Interest payable and similar charges 9 - -

Profit on ordinary activities before taxation 1,156 2,092

Tax on profit on ordinary activities 10 (278) (559)

Profit for the financial year 20 878 1,533

All amounts relate to continuing operations.

.


19

Consolidated Statement of Total Recognised Gains and Losses as at 31 December 2014

Note 2014 2013

£’000 £’000

Profit for the financial year 878 1,533

Actuarial (loss)/gain on pension scheme 22 (4,175) 401

Deferred tax on actuarial (loss)/gain 990 (80)

Unrealised (losses)/gains on investments 20 (336) 1,396

Total recognised (losses)/gains since the last financial statements

(2,643) 3,250

Consolidated statement of historical cost profits and losses

2014 2013

£’000 £’000

Profit before taxation 878 2,092

Realisation of investment revaluation gains of previous years 1,288 623

Historical cost profit for the year before taxation 2,166 2,715

Historical cost profit for the year after taxation 1,888 2,156

Reconciliation of movements in shareholders’ funds

2014 2013

£’000 £’000

Opening reserves 30,943 27,693

Total recognised gains and losses (2,643) 3,250

Closing reserves 28,300 30,943


20

Consolidated Balance Sheet as at 31 December 2014

Registered number: 00074359

Note 2014 2013

£’000 £’000

Fixed assets

Investments 14 22,697 21,332

Intangible assets 12 1,707 -

Tangible assets 13 11,164 11,553

35,568 32,885

Current assets

Debtors 15 5,145 5,839

Cash at bank and in hand 1,538 829

6,683 6,668

Creditors: amounts falling due within one year 16 (6,105) (6,645)

Net current assets 578 23

Total assets less current liabilities 36,146 32,908

Creditors: amounts falling due after more than one year 17 (1,575) -

Provisions for liabilities and charges

Deferred taxation 18 (421) (371)

Other provisions 19 - -

Net assets excluding pension liability 34,150 32,537

Pension liability 22 (5,850) (1,594)

Net assets including pension liability 28,300 30,943

Capital and reserves

Revaluation reserve 20 2,379 2,715

Profit and loss reserve 20 25,921 28,228

Total shareholders’ funds 28,300 30,943

The financial statements on pages 18 to 52 were approved by the Board of Directors on 19 May 2015 and were signed on its behalf by:

M Hawes Director


21

Parent Company Balance Sheet as at 31 December 2014

Registered number: 00074359

Note 2014 2013

£’000 £’000

Fixed assets

Investments 14 22,474 21,129

Intangible assets 12 1,707 -

Tangible assets 13 11,066 11,446

Current assets 35,247 32,575

Debtors 15 3,977 5,117

Cash at bank and in hand 1,439 1,143

5,416 6,260

Creditors: amounts falling due within one year 16 (4,792) (5,847)

Net current assets 624 413

Total assets less current liabilities 35,871 32,988

Creditors: amounts falling due after more than one year 17 (1,575) -

Provisions for liabilities

Deferred taxation 18 (419) (380)

Other provisions 19 - -

Net assets excluding pension liability 33,877 32,608

Pension liability 22 (5,850) (1,594)

Net assets including pension liability 28,027 31,014

Capital and reserves

Revaluation reserve 20 2,379 2,715

Profit and loss reserve 20 25,648 28,299

Total shareholders’ funds 28,027 31,014

The financial statements on pages 18 to 52 were approved by the Board of Directors on 19 May 2015 and were signed on its behalf by:

M Hawes Director


22

Consolidated Cash Flow Statement for the year ended 31 December 2014

Note 2014 2013

£’000 £’000

Net cash inflow/(outflow) from operating activities 23 1,004 (185)

Net cash inflow from returns on investments and servicing of finance

23c 631 581

Taxation

Corporation tax - (7)

Capital expenditure 23d (1,456) (1,848)

Cash inflow/(outflow) before financing 179 (1,459)

Financing 23e 1,575 -

Increase/(decrease) in cash 1,754 (1,459)


23

Notes to the Financial Statements for the year ended 31 December 2014

1 Accounting Policies Status The Society is a company limited by guarantee and not having a share capital. The liability of the members who constitute the Society is limited to £1 per member. Basis of preparation of Financial Statements The Financial Statements are prepared on the going concern basis, under the historical cost convention as modified by the revaluation of investments and in accordance with the Companies Act 2006 and applicable accounting standards in the United Kingdom. The principal accounting policies are set out below and have been applied consistently. Going Concern The Financial Statements have been prepared on a going concern basis, which the Directors believe to be appropriate. The Directors have formed a judgement at the time of approving the financial statements that the company has adequate resources available to continue operating and to discharge all financial obligations as they fall due for the foreseeable future from the date of approval of the financial statements. The following accounting policies have been applied in dealing with items which are considered material in relation to the company’s Financial Statements. Consolidation The consolidated Financial Statements incorporate the Financial Statements of the company and its subsidiary undertakings Motor Codes Limited and SMMT Industry Forum Limited. As a consolidated Profit and Loss account is published, a separate Profit and Loss account for the parent company is omitted from the group financial statement by virtue of section 408 of the Companies Act 2006. Joint Ventures The Commercial Vehicle Show LLP in which the group has a long term interest and shares control under a contractual arrangement is defined as a joint venture and is accounted for using the gross equity method. The period end of the limited liability partnership is 30 June. The results of the joint venture for the period 1 July to the group’s year end are excluded on the basis they are immaterial for the purpose of giving a true and fair view. Turnover Services Turnover represents the value of services provided net of valued added tax which arose predominantly in the United Kingdom. Subscriptions Subscriptions are accounted for in the period to which they relate.


24

Notes to the Financial Statements for the year ended 31 December 2014 (continued)

1 Accounting policies (continued) Tangible Assets and Depreciation Tangible assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life as follows: Long leasehold land and buildings - Over period of the lease and not exceeding 50 years Furniture, fixtures, equipment, computers - 20% to 33 1/3% straight line Intangible Assets and Amortisation Software under development which satisfies the criteria of SSAP 13 “Accounting for Research and Development” is held at cost less any impairment loss. Intangible assets in operation are stated at cost less amortisation. Amortisation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life as follows: Capitalised development costs – 20% straight line Operating Lease Agreements Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the period of the lease. Investments Long term investments are classified as fixed assets. Listed investments are stated at their mid-market value at the balance sheet date. Movements in unrealised changes in the market value are accounted for through the revaluation reserve. Unlisted investments are stated at cost. A review for impairment is undertaken when circumstances indicate that the carrying amount may have fallen below cost. Current Taxation Corporation tax payable is provided on taxable profits at the current rate. Deferred Taxation Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the Balance Sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the Balance Sheet date. Timing differences are differences between the company’s taxable profits and its results as stated in the Financial Statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the Financial Statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantially enacted by the Balance Sheet date. Deferred tax is measured on a non-discounted basis.


25


1 Accounting policies (continued) Foreign Currency Translation Transactions denominated in foreign currencies are translated into Sterling at the rate of exchange ruling at the date of the transaction. Assets and liabilities in foreign currencies are translated into Sterling at rates of exchange ruling at the end of the financial year. All exchange differences are dealt with in the Profit and Loss account. Pension Scheme Arrangements The company makes contributions to the SMMT Pension and Death Benefit Scheme, a defined benefits scheme. The assets of the scheme are held separately from those of the Society in separate trustee administered funds. A liability is recognised in the Balance Sheet in respect of the defined benefit scheme which represents the present value of the defined benefit obligation at the Balance Sheet date less the fair value of scheme assets. The assets of the Pension Scheme are measured at current bid price. A full valuation of the liability is calculated by an independent actuary every 3 years and updated on an annual basis using the projected unit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high quality corporate bond of equivalent term and currency to the liability. The increase in the present value of the liabilities of the scheme expected to arise from employee service in the period is charged to the operating surplus. The expected return on the scheme’s assets and the increase during the period in the present value of the scheme’s liabilities, arising from the passage of time, are included in pension finance costs. Past-service costs are recognised immediately to operating surplus, unless the changes to the pension scheme are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period. Actuarial gains and losses are recognised in reserves in the year in which they arise. Deferred tax is offset to the extent that it is regarded as more likely than not that it will be recovered. The Society also operates a defined contribution agreement. Contributions payable are charged to the profit and loss account in the year they are payable. Retirement Healthcare Benefits other than Pensions The accumulated cost to the Society of contributions to the retirement healthcare costs of qualifying employees have been accrued in the Balance Sheet. Government Grants Income from Government grants is credited to the profit and loss account in the same period as the related expenditure is incurred. Where grants are received as a contribution towards the costs of fixed assets they are released to the profit and loss account over the expected useful economic lives of the related assets. Financial Instruments Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.


26


2 Turnover

2014

£’000

2013

£’000

Subscriptions 4,509 4,131

MVRIS income 4,023 4,967

Industry Forum income 4,779 2,944

Seminar and functions income 1,507 1,373

Share of income from Commercial Vehicle Show joint venture 889 805

Other income 3,968 1,721

19,675 15,941

The turnover is attributable to the principal activity of the group.

An analysis of turnover is given below:

2014

£’000

2013

£’000

UK 17,052 13,338

EU 539 598

Other 2,084 2,005

19,675 15,941


27


3 Staff Number and Costs

The average monthly number of persons employed by the group during the year was

Year ended 31

December 2014

Year ended 31

December2013

Number of employees

Number of employees

SMMT 81 80

Industry Forum 35 37

Motor Codes 9 10

125 127

Staff costs for the above persons:

2014

£’000

2013

£’000

Wages and salaries 6,199 5,894

Social security costs 722 691

Other pension costs (note 22) 1,785 342

Defined contribution pension costs 327 271

9,033 7,198

Included within Other pension costs are exceptional costs of £1,364k (2013: £Nil) relating to a revised calculation of past service costs.


28


4 Directors’ Emoluments

The directors’ aggregate emoluments, including pension contributions, in respect of qualifying services was:

Year ended 31

December 2014

Year ended 31

December 2013

£’000 £’000

Directors’ emoluments 477 231

Pension fund contributions - defined benefit scheme 15 18 - defined contribution scheme 24 1

516 250

During the year 1 Director (2013: 1) was a member of the defined benefit scheme and 1 Director (2013: 1) accrued benefits under a defined contribution scheme.

The emoluments in respect of the highest paid Director were £313,400 (2013:£126,783) and £23,690 (2013: £11,583) was paid into a personal pension plan.

5 Group operating loss

Year ended 31

December 2014

Yearended 31

December2013

£’000 £’000

Loss on ordinary activities before taxation is stated after charging/(crediting):

Audit fees

SMMT and consolidated Financial Statements 33 33 SMMT Industry Forum 12 11 Motor Codes Limited 7 6 SMMT Group 52 50

Other fees paid to Auditors for non-audit services – current year

Tax Advisory Service 37 22 Tax Compliance Service 14 13 Other Consulting Services 38 208 All other fees paid to Auditors for non-audit services 89 243

Depreciation:

Owned tangible fixed assets 485 476 Loss on disposal of fixed assets - -

Operating lease rentals:

Plant and machinery 126 135 Land and buildings 45 114


29


6 Profit on disposal of fixed assets

There were no significant disposals of fixed assets in either the current or the prior year.

7 Income from Fixed Asset Investments

Year ended 31

December 2014

Yearended 31

December2013

£’000 £’000

Dividends from listed investments 658 566

Profit on disposal of investments 780 1,014

1,438 1,580

8 Interest Receivable and similar Income

Year ended 31

December 2014

Yearended 31

December2013

£’000 £’000

Interest receivable: - Group 14 15

- Joint venture - -

Pension finance income - FRS17 512 314

526 329

9 Interest Payable and similar Charges

Year ended 31

December 2014

Yearended 31

December2013

£’000 £’000

Bank loans and overdrafts - -

Other interest payable - -

- -


30


10 Tax on profit on ordinary activities

(a) Analysis of charge in the year

Year ended 31

December 2014

Yearended 31

December2013

£’000 £’000

Corporation tax:

UK corporation tax on profits of the year - -

Adjustment in respect of prior periods (68) 23

UK Corporation tax (credit)/charge on profit/(loss) for the year (note 10b) (68) 23

Foreign tax paid - (23)

Deferred tax:

Origination and reversal of timing differences 281 417

Adjustment in respect of prior periods 16 89

Effect of changes in tax rates 49 53

Deferred tax charge/(credit) 346 559

Tax charge/(credit) on profit/(loss) on ordinary activities 278 559

(b) Factors affecting tax charge/ (credit) for the year

The current tax credit (2013: charge) assessed for the year is lower (2013: lower) than the standard rate of corporation tax in the UK of 21.49% (2013: 23.25%). The differences are explained below:


31


10 Tax on profit/ (loss) on ordinary activities (continued)

Year ended 31

December 2014

Yearended 31

December2013

£’000 £’000

Profit/(loss) on ordinary activities before tax 1,156 2,092

Profit/ (loss) on ordinary activities multiplied by effective rate of corporation tax in the UK of 21.50% (2013: 23.25%)

248 486

Effects of:

Expenses not allowable for tax purposes 90 48

Capital allowances for year in excess of depreciation (120) (63)

Dividends and distributions received (276) (327)

Tax losses utilised - -

Effect of gains 127 196

Other short term timing differences 829 (434)

Change in tax rate - -

Items charged elsewhere (reserves) (897) 93

Adjustment for profits charged at lower rate - 1

Adjustment to tax charge for prior periods (68) 23

Tax charge for the whole year (note 10(a)) (68) 23

Factors that may affect tax charges During the year, the main rate of corporation tax was reduced from 23% to 21% from 1 April 2014. In addition to the changes in rates of Corporation tax disclosed above further changes to the UK Corporation tax rates were substantively enacted as part of the Finance Bill 2014 on 17 July 2014. The main rate of corporation tax will be unified with the small companies’ rate of 20% from 1 April 2015. Deferred tax reflected in these financial statements has been provided at 20%, which was the rate substantively enacted at the balance sheet date for the period in which the deferred tax is expected to unwind.


32


11 Profit attributable to members of the parent company

2014 2013

£’000 £’000

Dealt with in the financial statements of the parent company 765 1,671

Retained by subsidiary undertaking 168 (350)

Retained by joint venture undertaking 223 212

1,156 1,533

12 Intangible Assets

The Group

Capitalised Development

Costs

£’000

Cost

At 1 January 2014 -

Additions 1,707

Disposals -

At 31 December 2014 1,707

Accumulated Amortisation

At 1 January 2014 -

Charge for the year -

Disposals -

At 31 December 2014 -

Net book Value

As at 31 December 2014 1,707

As at 31 December 2013 -


33


12 Intangible Assets (continued)

The Company

Capitalised Development

Costs

£’000

Cost

At 1 January 2014 -

Additions 1,707

Disposals -

At 31 December 2014 1,707

Accumulated Amortisation

At 1 January 2014 -

Charge for the year -

Disposals -

At 31 December 2014 -

Net book Value

As at 31 December 2014 1,707

As at 31 December 2013 -


34


13 Tangible Assets

The Group

Long

leasehold Land and buildings

Furniture, Fixtures,

Equipment and

Computers Total

£’000 £’000 £’000

Cost

At 1 January 2014 11,443 1,639 13,082

Additions - 96 96

Disposals - - -

At 31 December 2014 11,443 1,735 13,178

Accumulated Depreciation

At 1 January 2014 506 1,023 1,529

Charge for the year 189 296 485

Disposals - - -

At 31 December 2014 695 1,319 2,014

Net book Value

As at 31 December 2014 10,748 416 11,164

As at 31 December 2013 10,937 616 11,553


35


13 Tangible Assets (continued)

The Company

Long

leasehold Land and buildings

Furniture, Fixtures,

Equipment and

Computers Total

£’000 £’000 £’000

Cost

At 1 January 2014 11,443 1,273 12,716

Additions - 54 54

Transfer to subsidiary at net book value - - -

Disposals - - -

At 31 December 2014 11,443 1,327 12,770

Accumulated Depreciation

At 1 January 2014 506 764 1,270

Transfer to subsidiary at net book value - - -

Charge for the year 189 245 434

At 31 December 2014 695 1,009 1,704

Net book Value

As at 31 December 2014 10,748 318 11,066

As at 31 December 2013 10,937 509 11,446


36


14 Investments

Group2014

£’000

2013

£’000

Company 2014

£’000

2013

£’000

Investments listed on recognised stock exchange at market value

22,374 21,029 22,374 21,029

Investment in subsidiary undertaking at cost - - -

Investment in joint venture 323 303 100 100

22,697 21,332 22,474 21,129

MarketValue2014

£’000

Cost2014

£’000

Market Value 2013

£’000

Cost2013

£’000

Listed investments 21,192 18,723 20,892 18,087

Cash held for investment 1,182 1,182 137 137

22,374 19,905 21,029 18,224

2014

£’000

Market value as at 1 January 2014 20,892

Purchases at cost 8,700

Proceeds on disposals (8,844)

Realised gains on disposals 780

Unrealised loss from changes in market value (336)

Market value as at 31 December 2014 21,192


37


14 Investments (continued)

The total market value of investments of £22,374,000 (2013: £21,029,000) includes £6,435,881 (2013: £5,374,000) which were listed outside the United Kingdom and whose cost was £5,893,469 (2013: £5,132,000). All remaining investments were listed on the London Stock Exchange. Cost excludes impairment.

The Directors believe that the carrying value of the investments is supported by their underlying net assets.

Subsidiary undertaking

Shares in subsidiary undertaking represent the following holdings:

Entity Name Investment value

% Activities of Business Place of Incorporation

Motor Codes Limited £2 100 Administration and promotion of the Motor Industry Codes of Practice

England and Wales

SMMT Industry Forum Limited

£2 100 Business Improvement Activities England and Wales

Joint Venture

The company is a member in The Commercial Vehicle Show LLP and its share amounts to one third of the profit or loss. The other members are The Road Haulage Association Limited and IRTE Services Ltd. The principal activity of the Limited Liability Partnership is that of organising and running the annual Commercial Vehicle Show.

Group 2014 2013

Investment in Joint Venture £’000 £’000

Share of current assets 343 333

Share of liabilities due within one year (20) (30)

323 303

Reconciliation of Net assets £’000

Net assets at 1 January 2014 303

Amount shown within the Profit & Loss account in the year 223

Drawings during the year (203)

Net assets at 31 December 2014 323


38


15 Debtors

Group Company

2014 2013 2014 2013

£’000 £’000 £’000 £’000

Trade debtors 3,221 4,209 1,912 3,281

Amounts owed by group undertakings - - 601 691

Corporation tax 273 204 276 208

Deferred tax (note 18) - - - -

Other debtors 596 451 642 405

Prepayments and accrued income 1,055 975 546 532

5,145 5,839 3,977 5,117

16 Creditors: amounts falling due within one year

Group Company

2014 2013 2014 2013

£’000 £’000 £’000 £’000

Trade creditors 1,318 1,148 743 984

Amounts owed to subsidiary undertakings - - 4 -

Corporation Tax - - - -

Other taxation and social security 306 773 143 615

Other creditors 886 156 1,177 105

Accruals and deferred income 3,595 4,568 2,725 4,143

6,105 6,645 4,792 5,847


39


17 Creditors: amounts falling due after more than one year

Group Company

2014 2013 2014 2013

£’000 £’000 £’000 £’000

Bank loans 1,575 - 1,575 -

1,575 - 1,575 -

The bank loan has a rate of interest of 1.95% above the Bank of England base rate and is secured on our property at 71 Great Peter Street. The maturity date is 31 December 2020 with quarterly instalment payments commencing March 2016.

18 Deferred Taxation

Group Company

2014 2013 2014 2013

£’000 £’000 £’000 £’000

Asset brought forward 398 1,037 389 1,037

Movement during the year 644 (639) 655 (648)

Asset carried forward 1,042 398 1,044 389

Deferred taxation consists of the tax effect of timing differences in respect of:

Group Company

2014 2013 2014 2013

£’000 £’000 £’000 £’000

Accelerated capital allowances (452) (327) (446) (332)

Short term timing differences 7 (68) 3 (72)

Losses not yet utilised 24 24 24 24

Deferred tax (liability) (421) (371) (419) (380)

Pension Deferred tax asset 1,463 769 1,463 769

Total deferred tax asset 1,042 398 1,044 389


40

Notes to the financial statements for the year ended 31 December 2014 (continued)

18 Deferred Taxation (continued)

In accordance with FRS 19, no provision has been made for deferred tax payable on gains arising from the revaluation of listed investments to their market value at the balance sheet date. Such tax would become payable only if the investments were sold. At the year-end there were no binding agreements to that effect. The total un-provided amount is £2,458,923 (2013: £2,805,000).

The deferred tax asset not recognised in these financial statements is as follows:

Group and Company

2014 2013

£’000 £’000

FRS 17 pension liability - -

Tax losses available - -

- -

19 Other Provisions

Group and Company 2014 2013

£’000 £’000

Provision brought forward - 197

Transfer from profit and loss account - -

Provision created in the year - -

Provision utilised in the year - (100)

Provision released in the year - (97)

- -


41


20 Reserves

Group RevaluationReserve

Profit & Loss Reserve

Total

£000 £’000 £’000

At 1 January 2014 2,715 28,228 30,943

Profit for the financial year - 878 878

Actuarial gain on pension liability - (4,175) (4,175)

Deferred tax - 990 990

Unrealised loss in market value of investments (336) - (336)

At 31 December 2014 2,379 25,921 28,300

The Profit and Loss reserve is represented as follows:

2014 2013

£’000 £’000

Pension reserve (1,430) (1,430)

Profit and Loss reserve excluding pension reserve 27,351 29,658

25,921 28,228


42


20 Reserves (continued)

Company RevaluationReserve

Profit & Loss Reserve

Total

£000 £’000 £’000

At 1 January 2014 2,715 28,299 31,014

Profit for the financial year 534 534

Actuarial gain on pension liability - (4,175) (4,175)

Deferred tax - 990 990

Unrealised loss in market value of investments (336) - (336)

At 31 December 2014 2,379 25,648 28,027

The Profit and Loss reserve is represented as follows:

2014 2013

£’000 £’000

Pension reserve (1,430) (1,430)

Profit and Loss reserve excluding pension reserve 27,078 29,729

25,648 28,299


43


21 Operating Lease commitments

At 31 December the group had annual commitments under operating leases as follows:

2014 2013

Plant &Machinery

Land &Buildings

Plant & Machinery

Land & Buildings

£’000 £’000 £’000 £’000

Operating leases which expire:

Within one year 57 - 65 -

Between two and five years 167 - 170 -

In over five years - 45 - 45

224 45 235 45

22 Pension Liability

Group and Company The Society operates a pension scheme providing benefits based on career average pay. The assets of the scheme are held separately from those of the Society. FRS 17 disclosures. A full actuarial valuation was carried out at 31 December 2010. The work undertaken by the scheme actuary has been updated to 31 December 2014 by a qualified actuary, independent of the scheme’s sponsoring employer.


44


22 Pension Liability (continued) The major assumptions used by the actuary were:

2014 2013

% %

Inflation assumption 2.15 and 3.35 2.2 and 3.4

Discount rate 3.65 4.40

Expected rate of salary increases 3.65 3.70

Pensions increase rate; RPI capped at 5% pa 3.20 3.25

CPI capped at 2.5% pa - 1.85

Commutation of pension lump sumps 75 75

The current mortality assumptions include sufficient allowance for future improvements in mortality rates and they are:

2014 2013

Years Years

Prior to retirement AXC001 AXC001

After retirement S1PXA2 S1PXA2

In accordance with recent legislation changes relating to the use of CPI rather than RPI, the actuary has made an allowance for this statutory revaluation of pension in excess of the GMP (Guaranteed Minimum Pension) in deferment, but not in respect of any other benefits.


45


22 Pension Liability (continued)

The assets and liabilities in the scheme and the expected rate of return were:

2014 2013

Long-termrate ofreturn

expected

Value Long-term rate of return

expected

Value

% £’000 % £’000

Equities N/A 21,821 7.85 20,189

Bonds – UK gilts N/A 6,437 3.60 5,401

Bonds – other N/A 9,956 4.82 9,217

Cash N/A 273 0.50 470

Total market value of assets 3.65 38,487 6.18 35,277

Present value of scheme liabilities (45,800) (37,640)

Deficit in the scheme (7,313) (2,363)

Related deferred tax asset 1,463 769

Net pension liability (5,850) (1,594)

The expected return on scheme assets was determined by considering the expected returns available on the assets underlying the current investment portfolio. Expected yields on bonds are based on gross redemption yields at the balance sheet date whilst the expected returns on the equity and property investments reflect the long-term real rates of return experienced in the respective markets.

Analysis of the amount charged to operating profit/ (loss):

2014 2013

£’000 £’000

Current service cost 421 342

Past service cost 1,364 -

Total operating charge 1,785 342


46



Analysis of the finance income

2014 2013

£’000 £’000

Expected return on pension scheme assets 2,162 1,876

Interest on pension scheme liabilities (1,650) (1,562)

Pension finance income 512 314

Analysis of the amount recognised in Statement of Total Recognised Gains and Losses

Currentyear

Cumulative

2014 2013 2014 2013

£’000 £’000 £’000 £’000

Actuarial gain/(loss) (4,175) 401 (10,239) (6,064)

The actual return on the scheme assets was £3,796,000 (2013: £3,363,000).

Movement in deficit during the year:

2014 2013

£’000 £’000

Deficit in scheme at start of year (2,363) (3,180)

Current service cost (421) (342)

Contributions 498 444

Finance income 512 314

Past service costs (1,364) -

Actuarial gain/(loss) (4,175) 401

Deficit in scheme at the end of the year (7,313) (2,363)


47



During the year the contribution rate was 7% for all employees. The contribution for the group was 12.7% on average.

The contribution rate to be paid by the employer to the scheme for the period ended 31 December 2015 is 12.3%.

The estimated contributions to be paid in the year ended 31 December 2015 are £481,000.

Reconciliation of opening and closing balances of the present value of the scheme liabilities

2014 2013

£’000 £’000

Scheme liabilities at start of year 37,640 35,611

Current service cost 421 342

Past service cost 1,364 -

Interest cost 1,650 1,562

Contributions by scheme participants 164 188

Actuarial losses 5,809 1,086

Benefits paid and death in service insurance premium (1,248) (1,149)

Scheme liabilities at end of year 45,800 37,640

Reconciliation of opening and closing balances of the fair value of Scheme assets

2014 2013

£’000 £’000

Fair value of Scheme assets at start of year 35,277 32,431

Expected return on scheme assets 2,162 1,876

Actuarial gains 1,634 1,487

Contributions by employer 498 444

Contributions by scheme participants 164 188

Benefits paid and death in service insurance premium (1,248) (1,149)

Scheme assets at end of year 38,487 35,277


48



Amounts for the current and previous four years:

31 December 2014 2013 2012 2011 2010

£’000 £’000 £’000 £’000 £’000

Present value of the Scheme liabilities

45,800 37,640 35,611 31,304 30,275

Fair value of the Scheme assets

38,487 35,277 32,431 29,528 25,508

Deficit (7,313) (2,363) (3,180) (1,776) (4,767)

Experience adjustments on Scheme liabilities:

Amount 160 238 (173) 128 673

Percentage of scheme assets 0.4% 0.7% -0.5% 0.4% 2.6%

Experience adjustment on scheme assets

1,634 1,487 1,140 (1,060) 1,511

Percentage of Scheme assets 4.2% 4.2% 3.5% -3.6% 5.9%

Total amount recognised in statement of total recognised gains and losses:

Amount (4,175) 401 (1,586) (1,256) 61

Percentage of scheme liabilities

9.1% 1.1% -4.5% -4.0% 0.2%


49


23 Reconciliation of operating profit to net cash (outflow)/inflow from operating activities

2014 2013

£’000 £’000

Operating loss (1,031) (29)

Depreciation and other amounts written off tangible assets and investments

485 476

Pension costs less contributions 1,287 (102)

Decrease/(Increase) in debtors 824 (508)

(Decrease)/Increase in creditors (561) 175

Decrease in provisions - (197)

Net cash inflow/(outflow) from operating activities 1,004 (185)

(a) Reconciliation of net cash flow to movements in net funds

2014 2013

£’000 £’000

Increase/(Decrease) in cash in the year 1,754 (1,459)

Bank loan (1,575) -

179 (1,459)

Net funds at beginning of year 966 2,425

Net funds at end of year 1,145 966


50


23 Reconciliation of operating profit to net cash (outflow)/inflow from operating activities (continued)

(b) Analysis of changes in net/ (debt)/funds

At 1January

2014

Cash Flow At 31 December

2014

£’000 £’000 £’000

Cash held for investment 137 1,045 1,182

Cash at bank 829 709 1,538

966 1,754 2,720

Bank loan due within one year - (1,575) (1,575)

Total 966 179 1,145

(c) Returns on investments and servicing of finance

2014 2013

£’000 £’000

Interest received 14 15

Interest paid - -

Dividends received 617 566

Total 631 581


51


23 Reconciliation of operating loss to net cash (outflow)/inflow from operating activities (continued)

(d) Capital expenditure

2014 2013

£’000 £’000

Drawings from joint venture 203 160

Purchase of tangible fixed assets (96) (998)

Purchase of intangible fixed assets (1,707) -

Proceeds of disposal of fixed assets - -

Purchase of fixed asset investments (8,700) (9,291)

Proceeds on disposal of fixed asset investments 8,844 8,281

(1,456) (1,848)

(e) Financing

2014 2013

£’000 £’000

Bank loan raised 1,575 -

24 Related Party Transactions

During the current and prior year the only related party transactions that arose related to transactions within the Group.

It is considered that membership subscription fees are not related party transactions as the appointment of a member company on the Board of Directors does not give any single Director control over the Group (appointment to the Board is an option available to all members).

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