Annual Review 2020
A Society dedicated to our Members Annual Review 2020
CHIEF EXECUTIVE SUMMARY
“We’ve continued to prepare I signed off last year’s summary with the following words: “we’ve continued to prepare ourselves for a new decade and enhanced capability in our people, our financial security, ourselves for a new decade systems and processes and our customer proposition”. Little did I know at that point how and enhanced capability in our severely my claims would be tested by Covid-19, but I’m very pleased to report the Society people, our financial security, has remained safe, strong and operationally resilient in the most challenging of times. systems and processes and our Many of our more senior Members will no doubt have faced much tougher external environments before I was born, but the worldwide pandemic of 2020 was the most customer proposition”. challenging in my memory. My thoughts and condolences to our Members who lost loved ones during the last year.
The first lockdown in March, over 12 months The other single biggest enabler in being able ago, meant we had to radically change to continuously offer a full range of services, operational processes to comply with the was the improved technology capacity and government instruction to only go to work capability. This was as a direct result of the if necessary. As a financial services provider investment we have made over the last two whose business activities assist the money years including IT infrastructure, employee supply, the Society was designated as an training and the addition of key personnel into “essential business”. We responded to the the technology team. This investment allowed challenge of government, the needs of our us to continue to service customer requests customers and the safety of our employees as effectively by homeworkers as office based by; reducing branch opening hours in all employees and to consequently improve many Steve Fletcher locations whilst keeping all six branches existing internal processes, forever. Chief Executive Officer accessible; creating safe branch employee “bubbles”; revising processes to make it Thanks largely to our people and technology, easier for customers to deal with us without after a difficult first half of the year which the need to visit branches; and asking all included two Bank of England base rate non-branch employees to work from home reductions, we were well placed to take wherever possible. advantage of a strong housing market in the second part of the year. We then followed As the year progressed, we continued to the strong lending performance by taking in review our processes and procedures in good levels of new deposits from existing and line with all subsequent changes to advice, new Members towards the end of the year, always prioritising adherence to government with new Fixed Rate Bonds and ISAs proving guidelines, the safety of our people and the very popular. As a result, we have managed to needs of our customers. grow our year on year deposit and mortgage balances by a very pleasing 15%. Our ability to continue operating was made possible by the flexibility, adaptability and Being at the heart of our communities is very commitment of our people who performed important to the Society. It was therefore with distinction in 2020. Like all businesses disappointing not to be able to further expand we had our share of positive Covid cases and the financial education programme in local necessary isolation periods but thankfully schools or to be as active with employee none of our colleagues were seriously ill. volunteering days, but hopefully as restrictions We also managed to keep all employees on ease during 2021 there will be more full pay throughout the year and although opportunities. However, we still managed to four employees were furloughed, they were deliver an outstanding Community Awards brought back into the Society and the event which showcased and rewarded many furlough money repaid. “local heroes”. The second “Vernon and
2 | Vernon Building Society | www.thevernon.co.uk Vernon Building Society | www.thevernon.co.uk | 3 Annual Review 2020 CHIEF EXECUTIVE SUMMARY HIGHLIGHTS OF THE YEAR Imagine Radio Toy Appeal” was also a huge within all internal and external expectations, success at Christmas and something we’re for the long-term sustainability of the keen to keep supporting. The introduction of Society and its Members. The Common charitable budgets for all our branch teams Equity Tier 1 Capital ratio (CET1) stands at Mortgage highlights also proved very popular with colleagues, a very healthy 18.3% (20.7% in 2019) and allowing them to support local good causes. our Leverage Ratio is 6.5% (7.0% in 2019) In such a difficult year we felt it more reflecting the growth in the balance sheet. £74.5m important than ever to do everything we can, At the end of the year our liquidity remains no matter how small, to show support within strong at 19.7% compared to 20.1% in 2019, in new mortgage lending the communities we serve. providing adequate flexibility to take any Community and potential growth opportunities within our We were delighted for the second year risk appetite and remaining significantly Charity highlights running to be voted “Best Savings Provider” ahead of regulatory requirements. 15.1% Community Awards 14 at the British Banking Awards. We attempt Increase in mortgage charities - £10,500 to make it a hat-trick this year where we There’s no doubt the events of 2020 have lending from 2020 have once again been nominated, in addition changed the course of the 21st century Toy Appeal - £6,000 to a nomination for Best Regional Lender. in what has been described by world Nominated Charity COVID In customer survey feedback independently economists as a “one in three hundred” year. Helped 114 first time Relief Fund - £3,000 collated by Smart Money People, we Having been able to withstand the storm and buyers are proud to score five stars for savings, improve our position during such extreme Primary school kit sponsorship mortgages and insurance. The majority of external environmental circumstances, Helping 55 people build 4 local schools the feedback suggests we are continuing to demonstrates the underlying strength of the their own home £145 raised in calendar sales for live and breathe our brand values, Personal; organisation. We look forward to building 20 students chose our Buy for Authentic; Empowering, which is of great upon this strong foundation in 2021 and Stockport Mind Uni product importance to the Leadership Team. I offer my thanks to all colleagues and Members for their support throughout 2020. 65% of Members stayed with us Customer highlights 1495 Finalist for Best Specialist pieces of feedback collected in 2020 Mortgage Provider A customer experience score of 98.4% Despite the challenging year the Society managed to improve Profit Before Tax to As ever, we Over 6,000 Members signed up to our £891k, up from £613k in 2019. The profit Savings highlights regular newsletter was significantly assisted by good cost look forward control during the year, primarily through deferring recruitment whilst the market to serving all remain subdued, and an adjustment to 244 interest income of £220k in relation to our Members, new savings Members the measurement of loans and advances to customers under the effective interest contributing to method which offset the bad debt charge of £225k which was taken as an estimate of our Stockport £35.9m the impact of Covid on payment arrears. The growth in savings Net Interest Margin was 1.81% compared to communities and balances during 2020 1.72%, excluding the change in accounting adjustment. being an employer 1,642 savings accounts opened We continued to foster a healthy relationship with our Regulators during the year and of choice. Winner of Best Savings remain focused on managing the Society Provider 2020
4 | Vernon Building Society | www.thevernon.co.uk Vernon Building Society | www.thevernon.co.uk | 5 Annual Review 2020
OUR APPRENTICES JOURNEY OUR APPRENTICES JOURNEY
“How are you enjoying your roles at “What support did you receive at the At the Vernon we have a 97-year heritage as the Vernon so far”? Vernon, to make sure you were able to a well-known employer where we always put our people and Members first. Shaun meet your study requirements”? “I have really enjoyed my time so far at the Shaun As part of our growth strategy over the Vernon. I have learnt a huge amount up to this last few years’ we set up an Apprenticeship “I still managed to set aside the required point by working across the Operations Team amount of time I needed to complete my programme to invest in the talent of our and being involved in a multitude of projects apprenticeship work by clear and regular young people. So, we teamed up with which has enhanced my hunger to develop communication with my people leaders to Damar, a local training company who is a and progress in the Society. I feel that there organise my workload”. leading national provider of apprenticeships are many great opportunities for me here”. in business and professional sectors. Callum Callum “I have received comprehensive support In 2019 we endeavoured to find 2 suitable “I am enjoying my role a lot at Vernon due to from many different colleagues during candidates, and here’s our Apprentices the personal and empowering environment in my apprenticeship. Whether it be support journey so far… which I operate. The varied range of activities in understanding the structure of the and tasks I have been involved in has led to a apprenticeship or understanding the tasks”. development in my knowledge beyond what I expected”. Joining Our Team “How did you find your experience in “Both Shaun and Callum will complete a March when Covid pandemic hit”? Business Administrator level 3 qualification in Our interview process was rigorous, our people team had the task of finding suitable March 2021”. candidates. We had a massive response and the calibre of the talent pool from Stockport Shaun and surrounding area was very high. “I was working in the Mortgage Processing After much deliberation and some fantastic presentations we could only choose Team in March and was working from home two candidates. processing all new mortgage applications that came in. Like everyone else at Vernon I was learning to adapt to living in these Our New Apprentices were Callum and Shaun! unprecedented times and it was definitely a struggle at first. I had never previously Our new starters were ready to come on board at Vernon, they had shown tenacity and great worked at home, but regular communication people skills plus a hunger and a drive for learning new skills, that caught our attention. with the team and my managers ensured that I still had all the tools I needed to do my Callum & Shaun started at the Society in November 2019 working in the Operations job effectively”. department. In conjunction with Damar where they will complete a Level 3 Business Administrator Apprenticeship. This apprenticeship gives the benefit of a real, paid job with all Callum the responsibilities that come with employment. In addition, there is a programme of training “When the country was impacted by the and assessment that is embedded within the job that develops and assesses their growing pandemic, leading to a national lockdown, competence. I experienced great support from the Society in the form of putting my workplace Regular quarterly 121’s and training with their Damar coach plus, support and development preference first. Although I chose to continue from Andrea our People Development lead, helps their skills grow. to work in the office it was nice to know that They both started working with the Mortgage Processing Team but have since moved around I had the option to work from home. to various departments across the Society to gain as much experience as possible. In March 2020, Covid 19 hit, and we asked our Apprentices how they have coped with their Another NEW Apprentice in 2020… new roles, whilst dealing with the new Covid office environment, alongside working from We see Apprenticeships as a great opportunity to help drive our business forward, so home and studying... here’s their feedback! much so we have now recruited another Apprentice, Joe, who is working in our Finance department completing his AAT Level 3 Accountancy course. Joe started working with us in 2020!
6 | Vernon Building Society | www.thevernon.co.uk Vernon Building Society | www.thevernon.co.uk | 7 Annual Review 2020
OUR COMMUNITY AWARDS WENT DIGITAL Our Toy Appeal faced it’s biggest challenge ever! 2020 is the 9th year of the This year we had over 12,000 public votes Community Awards who voted for their chosen not-for-profit organisation. Our Marketing Manager Alex and the team certainly faced some challenges in 2020. Here’s We have donated over £90,000 how, with teamwork and determination, we overcame the obstacles of the pandemic to This years finalist’s were... ensure we could continue to support our young people across the local community, who to local community and charities would otherwise go without at Christmas! 1st Millie’s Trust £1,500 The Community Awards is one of the 2nd Seashell Trust £1,250 WHAT WERE THE CHALLENGES OF ORGANISING THE TOY APPEAL IN A PANDEMIC? highlights of the year for Vernon and the Stockport County Community 3rd £1,100 local community. This year due to COVID-19 Foundation Our Toy Appeal usually works by members of the public dropping toys and gifts off at any we couldn’t host our awards ceremony at Hatters Outreach Providing of our six local branches, however due to the pandemic, we wanted to avoid encouraging 4th £1,000 Head Office as usual. Essentials unnecessary travel to our branches in order keep our Members and the public safe. We So, we decided to do a virtual one. Our first 5th The Cherry Tree Project £850 therefore decided to host an online toy appeal fundraiser! ever digital awards ceremony! 6th Bare Necessities Toiletry Bank £750 We knew we had to keep our Toy Appeal going and with the help and support from our We received applications from 66 not-for- 7th Together Trust £750 partners, Together Trust and Imagine Radio, we managed to raise a total of £6,000! profit organisations across Stockport of 8th Signpost Stockport for Carers £600 which we selected 14 organisations who we HOW DID THE LAUNCH GO? HOW MUCH DID WE RAISE? 9th Stockport Mind £450 felt would have a long lasting impact on our We launched our toy appeal on the 14th £413 raised from money boxes in branches, Community. 10th Pure Innovations £450 November and we created a direct giving £3,712 came from the radio appeal and 11th Walthew House £450 The Community Awards Digital Ceremony page on the Together Trust website £1,875 was pledged from us. Easy Peel Studio CIC promoted on Imagine Radio, local billboards brought together our 14 finalists to share 12th £300 HOW DID THE RADIO INTERVIEW GO? their stories and discuss their ambitions for (Merseyway Workshop) and through Together Trust’s and our own Friends of High Lane and Fantastic! Alex and Lily were interviewed the future in a virtual setting, providing an 13th £300 websites and social media platforms. excellent opportunity to network and build Brookside Pards by Paul from Imagine Radio, they were Our listeners and members didn’t let us lasting relationships. The virtual ceremony 14th Stockport Pride £250 overjoyed to tell their story, the appeals down, they got right behind our cause. meant any member of the public could tune success and meeting the challenges we were Vernon’s Staff Choice Award, which awards in and make comments live on the stream. HOW DID THE CHILDREN RECEIVE faced with, such as the distribution, ordering an additional £500 of funding, went to In the end just under 1,000 people tuned in THEIR GIFTS? and wrapping of all the toys in time for Hatters Outreach Providing Essentials who to watch! Christmas. support the homeless community across Together Trust was able to transfer the money raised into gift cards and distribute A FINAL COMMENT FROM US… Wendy Hobson, from Bare Necessities Stockport. these to the heads of the Together Trust’s Toiletry Bank explained; We want to say a massive thank you to service providers, who purchased the gifts “It is refreshing to find a significant Our Annual Calendar Competition everyone who donated to the Toy Appeal for the children in time for Christmas day. local business with such a cohesive Our Calendar Competition, which calls for in 2020. The pandemic has caused huge and generous process of engaging with passionate photographers in the local area WHAT GIFTS DID THE CHILDREN RECEIVE? disruption to peoples lives but we were to capture images of their favourite places delighted to still uphold our mutual status local good causes. It was easy for us to We encouraged the children to write a wish across Stockport, received fantastic entries and support the kids, who would have participate and you made a really good job list of toys that they wanted to receive for yet again. otherwise gone without. of creating excitement and involvement Christmas. These gifts ranged from sport throughout, ranging from the voting The calendars are sold across all our games, outdoor activities, colouring and process, the marketing and comms support branches and our front-page winner was craft materials, clothes, beauty items, books you offered and the general help along the Alison Lilley who decided that all funds and jigsaws. raised by calendar sales were to be donated way right up to the big reveal on awards It makes us incredibly happy to have played to Stockport Mind who received a donation night. To receive £750 in one fell swoop a part in putting smiles on the faces of 300 of £145. is such a boost to our finances as a grass local children, who had a happier Christmas roots organisation.” thanks to these generous donations
8 | Vernon Building Society | www.thevernon.co.uk Vernon Building Society | www.thevernon.co.uk | 9 Annual Review 2020
OUR 5 STAR MEMBER EXPERIENCE OUR DIGITAL TRANSFORMATION What do our surveyed Members say about us? From a technological viewpoint, the pandemic has significantly accelerated the need for digital transformation within Overall customer organisations. This has been seen globally, % % Value for money and as meetings move online and paper- 98.4 experience rating 95.5 based processes become electronic, it has benefitted many of the service providers, with Zoom being a prime example. % Customer service % Treated fairly Manmohan Purewal, Director of IT The Society underwent a significant IT 98.7 100 infrastructure refresh in 2019, which included the adoption of cloud-based technologies and improved the ability of our employees to work remotely. As such, we were well placed for lockdown when it came. How does Vernon compare with other top performing firm Our printed output has dropped by 75% Our New Website Coming soon... Vernon’s 2020 overall customer experience ratings? With a newly distributed workforce, our focus We continue to look for any opportunities to customer experience has been to streamline business processes utilise technology to make life easier for our rating was % % wherever possible in order to increase Members, and will be further investing in 86.6 97 efficiencies in this time, including eliminating our digital offerings over the coming year. Did you Nationwide Darlington as much paper as we can. In this regard, our This will start with a new website and will % Building Society Building Society printed output has dropped by an average of expand to cover our Online Services portal Know? 75% over the year. New processes were put in for savings, and the Mortgage Portal for 98.4 % place for the benefit of our Members, such as brokers. 96 average building society rating improved electronic ID verification and faster payment instructions being taken over the phone. Our Digital Future As the consumer focus continues to become Meetings have successfully moved online, with increasingly digital, accelerated by recent video conferencing facilities in every branch SUPPORTING OUR MEMBERS DURING THE PANDEMIC events, the Society continues to look as well as at Head Office, and secure access ahead to ways in which our offering can We have been busy behind the scenes supporting our Members to give them the for employees at home, and customers, for be enhanced to the benefit of our existing support they need... example mortgage interviews. and future Members, whilst maintaining our personal approach and ethos for which we If you have any worries about Cyber Security Update are known. We reduced our branch opening times paying your mortgage, our support The pandemic has also been an opportunity to 3 days a week - to protect our team are here to help. for cyber criminals unfortunately, with many people and Members whilst maintaining organisations having to shift quickly into a essential services. new way of working and often without the If you have any concerns contact necessary precautions. It was pleasing in We helped over 250 Members with a us using the email below; this regard that we did not have to make payment holiday when they needed it [email protected] any changes to our infrastructure and the robust controls we have in place have remained throughout. These include working We are here to support our Members... with specialist cyber security companies to safeguard our Members’ interests.
10 | Vernon Building Society | www.thevernon.co.uk Vernon Building Society | www.thevernon.co.uk | 11 Annual Review 2020
OUR INNOVATIVE APPROACH TO STUDENT FIRST TIME BUYERS... JudithAspin Judith joined the Society in 2016 bringing with her extensive knowledge Olly is a student and musician studying the of managing financial at the Royal Northern College of Music. risk. This knowledge He comes from Essex but found his was gained in senior spiritual home in Manchester and Meet positions in Treasury wanted to buy his own home in the city and Finance with The Cooperative Bank. in 2020. He did this using our innovative Buy for Uni mortgage and told us all Directors about his experience...
Why did you want to buy a home How was your experience with Vernon? Steve Fletcher Paula Dillon Joined the Society in Paula Joined the board in as a student? The Vernon were amazing to deal with, January 2018. Steve has January 2021. Paula was I lived in halls of residence during my first year, especially Maureen and Lucy. We had a great broad experience of a commercial real estate which cost £720 a month, and I’ve rented a amount of communication and there was leadership in financial lawyer for over three room in a shared house as a student, but it always someone at the end of the phone to talk services having worked decades and was the felt like the money was going into someone to. They went through everything and made for Clydesdale and first-ever female President else’s pocket. With your own home the money sure we understood how the mortgage works. Yorkshire Bank, Eagle of Leeds Chamber of is invested into something that’s yours and I Star, Birmingham Commerce, on whose We felt like we knew the people there and that wanted to put down roots in Manchester. It’s an Midshires, Woolwich and board she still serves. they knew us. Suzan in completions was also asset that’s going to help me make my own life Barclays Bank. in this city. amazing and really helped with chasing the solicitors. What did you buy? I now own a three-bedroom terraced house in Rusholme, Manchester, bought using Vernon’s John Hughes Jenny Quirke John joined the Board Jenny is a Chartered Buy for Uni mortgage. It’s a 20 minute walk to Parental support in April 2014 and brings Accountant with vast university and I get a lot of house for the price. Olly’s mum Nicola lives in Rayleigh, Essex significant experience experience of managing I’ve got three bedrooms and two reception and is a health and science lecturer at a of strategic planning change and financial rooms, one of which I could convert to a sixth form college in Essex. She told us: and risk management risk. Jenny has held bedroom. This is a really popular student area, to the Board having senior roles with a major and my street is full of other students. “It’s great to be able to help Olly in this way and I went into this mortgage fully held a number of senior building society and a How did you fund your new home? understanding my responsibilities. We roles within high profile high street bank. I bought the property for £150,000, using a were confident about the benefits as well financial organisations. 100% Buy for Uni mortgage from Vernon. as what it means if Olly doesn’t meet his My mum put £30,000 in a Vernon savings repayments. account – on which she earns interest – as security against the mortgage. And she’s also “We were paying his rent at uni anyway a joint mortgage holder, although the house is and were committed to doing that for Susan Jee Michael Joyce another few years, so this is actually much in my name. My repayments are £587 a month Joined the Board in Joined the Board in cheaper. And once his new tenant moves and I rent one room out for £460 plus a new December 2014 and is September 2019 having in, we won’t need to help out at all – the tenant is moving in soon, also paying £460. also Chair of the Board. held a number of senior rent will cover his mortgage. Susan is a Chartered roles managing retail How did you find out about the mortgage? “Vernon were great and their part of the Accountant and has financial services business. My mum read about the Buy for Uni mortgage process – looking at our application and extensive experience of He has an extensive in a newspaper and looked into the scheme. offering the mortgage - only took 48 managing financial and background in financial My current account is with a large bank, but hours.” strategic issues. risk management. they wouldn’t lend me what I needed. The Vernon mortgage looked ideal, so I got in touch to find out more.
12 | Vernon Building Society | www.thevernon.co.uk Vernon Building Society | www.thevernon.co.uk | 13 Annual Review 2020
DIRECTORS REMUNERATION DIRECTORS REMUNERATION
Remuneration Report Directors’ Emoluments for 2020
The purpose of this report is to inform Members of the current policy for the Total Directors’ emoluments of £506k (2019: £463k) are analysed as shown remuneration of the Society’s executive and non-executive directors. It provides in the table below. details of directors’ remuneration and explains the basis of its calculation. NON EXECUTIVE DIRECTORS 2020 FEES (£’000) 2019 FEES (£’000) Remuneration Committee directors’ remuneration it is appropriate to continue the scheme in its current form. The J Hughes 44 43 The Remuneration Committee comprises Society bonus scheme covers all employees. of three non-executive directors with John S Jee 30 31 Hughes as the Committee Chair and the Executive directors are employed on other Members Michael Joyce and Susan Jee. rolling six month service contracts and A Murdoch1 27 26 are Members of the Society’s defined contribution personal pension scheme, J Quirke 27 26 Executive Directors’ unless opted out. All pension costs Remuneration attributable to executive directors are fully M Joyce2 28 9 disclosed in this report. The Remuneration Committee reviews and W Gray3 - 11 recommends to the Board the policy and practice on the remuneration of executive Non-Executive Directors’ TOTAL 156 146 directors and senior managers. It seeks to Remuneration ensure that executive remuneration levels 1 Resigned as Director 31 Dec 2020 3 Resigned as Director 22 May 2019 are fair and reasonable, reflecting market Non-executive directors have contracts for 2 Appointed as Director 2 Sep 2019 comparatives from similar financial institutions services. They are remunerated solely by a and each individual’s personal development fee which reflects the time spent on Society affairs including membership of Board and contribution to the Society’s performance. EXECUTIVE INCENTIVE PENSION SALARY BENEFITS TOTAL committees, preparation for meetings and DIRECTORS SCHEME CONTRIBUTION The Remuneration Committee also ensures attendance at external seminars and training that executive remuneration policies events. They do not receive any other salary, £’000 £’000 £’000 £’000 £’000 encourage the prudent identification and pension, incentives or other benefits from effective management of the risks facing the the Society. 2020 S Fletcher 179 18 - - 197 Society and the fair treatment of its Members. 2020 J Aspin 134 12 7 - 153 The Remuneration Committee determines Advisory Note the annual incentive scheme which provides 178 non pensionable rewards linked directly to Item 6 of the Notice of the Annual General 2019 S Fletcher 178 - - - the achievement of key performance targets Meeting invites Members to receive and vote J Aspin 132 - 7 - 139 aligned to business objectives. upon this Directors’ Remuneration Report 2019 The Remuneration Committee has reviewed for the year ended 31st December 2020. the relevance and appropriateness of the executive directors’ and senior managers’ scheme in the light of the UK Corporate Governance Code and the FCA’s Remuneration Code. The Committee believes that given the prudent culture of the Society, the management structure and the low proportion of incentive remuneration to total executive
14 | Vernon Building Society | www.thevernon.co.uk Vernon Building Society | www.thevernon.co.uk | 15 Annual Review 2020
FINANCIAL SUMMARY FINANCIAL SUMMARY
FINANCIAL POSITION 2020 (£’000) 2019 (£’000) Summary Financial Statement AT THE YEAR END Assets This Summary Financial Statement is a summary of information in the audited Liquid Assets 66,569 58,638 Annual Accounts, the Directors’ Report and Annual Business Statement, all of which will be available to Members and depositors from the Vernon Building Mortgages 285,780 248,369 Society website www.thevernon.co.uk from 3 March 2021. Fixed and other assets 2,305 2,438 Summary Directors’ Report Total Assets 354,654 309,445 The requirements of the Summary Directors’ Approved by the Board of Directors Liabilities Report for the year ended 31 December on 3 March 2021. 2020 can be found within the Chief S Jee, Chair. Shares 310,133 275,906 Executive’s welcome on pages 3 and 4. The directors consider the Society has adequate J Hughes, Vice Chair. Borrowings 18,273 9,598 resources to continue in operational existence for the foreseeable future. S Fletcher, Director & Chief Executive. Other liabilities 2,671 1,070
Accordingly, the going concern basis has Reserves 23,577 22,871 continued to be adopted in preparing the Annual Report and Accounts. Total liabilities 354,654 309,445
SUMMARY OF KEY FINANCIAL RATIOS 2020 2019 RESULTS FOR THE YEAR 2020 (£’000) 2019 (£’000) Gross capital as a percentage of shares and borrowings Gross capital comprises reserves. The ratio gives an indication of the extent Net interest receivable 6,240 5,264 to which the Society is funded by retained earnings. The higher the figure the 7.18% 8.01% greater the protection for investors’ funds. Other income, expenses & (184) 103 charges Free capital as a percentage of shares and borrowings Free capital represents gross capital and provisions for collective impairment 6.80% 7.44% Administration expenses (4,940) (4,766) losses, less tangible and intangible assets as shown within the Statement of Financial Position. Provisions (225) 12 Liquid assets as a percentage of shares and borrowings The liquid assets as a percentage of shares and borrowings ratio is a measure Profit for the year 19.73% 20.05% 891 613 of the proportion of the Society’s total shares and borrowings that are matched before taxation by assets in the form of cash or are readily convertible to cash.
Taxation (187) (110) Profit for the year as a percentage of mean total assets Profit for the year as a percentage of mean total assets measures the Profit for the year 704 503 proportion that profit after taxation bears to the average asset balance during 0.21% 0.15% after taxation the year. The Society aims to make a sufficient profit to maintain its financial strength and stability.
Management expenses as a percentage of mean total assets The management expenses ratio measures the proportion that the Society’s management expenses bears to mean total assets. Mean total assets are 1.49% 1.56% calculated as the average of 2019 and 2020 total assets at the year end.
16 | Vernon Building Society | www.thevernon.co.uk Vernon Building Society | www.thevernon.co.uk | 17 FINANCIAL SUMMARY Independent Auditor’s statement to the Members and Depositors of Vernon Building Society
We have examined the Summary Financial Statement of Vernon Building Society set out on pages 16 to 17.
Respective responsibilities We also read the other information contained in the Annual Review and consider the of directors and auditor implications for our statement if we become The directors are responsible for preparing the aware of any apparent misstatements or Summary Financial Statement in accordance material inconsistencies with the summary with applicable United Kingdom law. financial statement. Our report on the Society’s full annual accounts describes the basis of our Our responsibility is to report to you our opinions on those annual accounts, the Annual opinion on the consistency of the Summary Business Statement and Directors’ Report. Financial Statement within the Annual Review with the full Annual Accounts, Annual Business Opinion We are here for Statement and Directors’ Report and its conformity with the relevant requirements of In our opinion the Summary Financial Section 76 of the Building Societies Act 1986 Statement is consistent with the full Annual and regulations made under it. Accounts, the Annual Business Statement and Directors’ Report of Vernon Building Society Basis of opinion for the year ended 31 December 2020 and complies with the applicable requirements of you every step of Our examination of the Summary Financial Section 76 of the Building Societies Act 1986 Statement consisted primarily of: and regulations made under it. • Agreeing the amounts included in the Summary Financial Statement to the Use of the statement corresponding items within the full annual This statement is made solely to the Society’s accounts, Annual Business Statement and the way Members and depositors as a body in Directors’ Report of the Society for the year accordance with section 76(5) of the Building ended 31 December 2020; Societies Act 1986. Our audit work has been • Checking that the format and content of the undertaken so that we might state to the Summary Financial Statement is consistent Society’s Members and depositors those with the requirements of section 76 of the matters we are required to state to them in Building Societies Act 1986 and regulations such a statement and for no other purpose. To made under it; and the fullest extent permitted by law, we do not • Considering whether information has been accept or assume responsibility to anyone other omitted which although not specifically than the Society and the Society’s Members and prescribed by section 76 of the Building depositors as a body for our audit work, for this Societies Act 1986 and regulations made statement, or for the opinions we have formed. under it, in our opinion, is necessary to ensure Mazars LLP consistency with the full annual accounts, the Statutory Auditor Annual Business Statement and Directors’ One St Peter’s Square Report of the Society for the year ended 31 Manchester December 2020. M2 3DE 3 March 2021
18 | Vernon Building Society | www.thevernon.co.uk Head Office 19 St Petersgate Stockport, Cheshire, SK1 1HF Tel: 0161 429 6262 Email: [email protected]
Bramhall Hazel Grove 12b Woodford Road 190 London Road Bramhall, Hazel Grove, Stockport, SK7 1JJ Stockport, SK7 4HF Tel: 0161 429 4312 Tel: 0161 429 4313 Email: [email protected] Email: [email protected]
Marple Poynton 1 Ridgedale Centre 87 Park Lane Marple, Poynton, Stockport, SK6 6AW Cheshire, SK12 1RD Tel: 0161 429 4316 Tel: 01625 855 830 Email: [email protected] Email: [email protected]
Reddish 4 Gorton Road, Reddish, Stockport, SK5 6AE Tel: 0161 429 4315 Email: [email protected]
www.thevernon.co.uk Telephone calls may be recorded and monitored for regulatory and training purposes to help maintain service quality. Vernon Building Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority (registration number 195475)