my skipton agm mag 2013

skipton.co.uk

04 / What Skipton means to us10 / Inheritance – the generation game12 / Life after work20 / Notice of Annual General MeetingBack / WIN a portrait session with family or friends

IN THIS ISSUE

Special 160th anniversary AGM edition March 2013SkiptonMy

MY BUILDING SOCIETY

Society AGM

29 April 2013

Make your

voice heard

VOTEX

Celebrate with us!Skipton Building Society is

160 years old this year.

The founding values of

‘by hard work and hope’ from our original coat

of arms have served

us well. Join us as we

celebrate this rich

heritage and look

forward to our next

century-and-a-half

This year we celebrate the rich heritage which has made Skipton Building Society what it is today.

Please read on to hear from Skipton colleagues and members about what the Society means to them (pages 4&5) and discover our exciting new plans for investing in your communities (pages 6&7).

We’ll also take a trip down memory lane – charting the Society’s impressive journey since its origins in 1853, via the visionaries who made it all possible (pages 8&9).

On pages 10&11, we turn our attention from our own legacy to the subject of personal inheritance, and the varying perspectives between the generations. Two of our members share their hopes for the future, having given up work after lengthy careers, on pages 12&13.

You can read what we’ve been up to on your behalf throughout the past year (pages 14&15). On pages 16&17 we take a visual meander through the decades

which have seen the Society develop from humble beginnings into the much larger entity we are today, while always reflecting our original, mutual values. There’s also an invitation to join our Customer Panel on page 35, and a chance to win a keepsake photo shoot and prints (back page).

You can familiarise yourself with our Board on pages 18&19. Your Notice of our Annual General Meeting, on Monday, 29 April, is on pages 20&21. On pages 22&23,

you’ll find details of proposed changes to the Society’s Rules. And there’s a summary of the Society’s performance during 2012 on pages 24–34.

I hope you enjoy reading this magazine, and please do take the opportunity to vote and have your say on what comes next for Skipton.

David Cutter, Group Chief Executive

2 MY SKIPTON skipton.co.uk MY SKIPTON 3to speak to a member of our team call 0845 850 1733*

w elcome to this special, 160th

anniversary edition of your member magazine.

Group Chief Executive David Cutter by the Gateway of Skipton Castle. This hometown landmark, with the rousing Norman French motto ‘desormais’, meaning ‘henceforth’, above its entrance, inspired our logo and symbolises our history, current strength and promising future.

David & Jacqueline Collier customers of our Skipton and Crosshills branches, seen here holding their wedding picture from 48 years ago

“We got married in Staffordshire, where Jacqueline’s parents lived, but are from Cowling in North Yorkshire and have lived there all our lives.

“We’ve been saving with Skipton for many years, and have recently used some of our nest egg to buy a caravan in Pickering, which we can use for holidays throughout the year.

“We appreciate how the Society has helped us save up for the things we want over the years, and both love popping into the Skipton

and Crosshills branches, where the staff are really friendly and go out of their way to help us.”


If you’d like us to consider sharing your experience in future Society communications...

As we celebrate our 160th birthday, we discover the special relationship colleagues and customers have shared with the Society over the years…

What Skipton means to us

Lynda and Andrew Whitton with children Evan (eight – holding his Young Achievers Award), sister Maya (10) and brother Sam (five)

Lynda and Andrew Whitton from our IT department

“We love working for Skipton because we’re part of a fantastic, supportive team of people all pulling in the same direction, to serve our customers as well as we can.

“This team spirit helped us on a personal level in 2010. Our colleagues mounted a superhuman effort to help us raise £96,000, to send our son Evan to the United States for a life changing operation.

“Evan has cerebral palsy and without this treatment, which wasn’t then available in the UK (and still isn’t without funding), he would never have taken his first steps. However, he’s now achieved the amazing milestone of walking totally independently around our home, thanks to everyone’s hard work and support.

“In November 2012, Evan was chosen as ‘Youngster of the Year’ at the Yorkshire Young Achievers Awards.”

Kenneth Gradycustomer of our Cleveleys Branch

“If I’m ever passing the branch, I pop in to say hello. Since my wife Jean died in January 2012, the Skipton team have been amazing. They really look after me and make me smile all year round!

“My relationship with Cleveleys branch started over 22 years ago, when it shared a building with the café I owned, called Ten to Ten. Working next door, I always enjoyed lots of banter with the team.

“For me, that’s what makes Skipton special – it’s more than just a financial services provider, it’s full of genuine people who treat their customers as individuals.”

Brian Stott from our Business Projects team, which spearheads continuous improvements

“I have worked for Skipton for 37 years, in various roles.

“Long before that, though, my mum Muriel (inset) opened my first savings account with the Society for me. This taught me the value of money and I’ve been a member ever since. I’m now very proud to work for an organisation which encourages customers to save towards a more secure financial future, just as my mum did for me.

“One of my first roles involved reviewing old investment account application forms. Amazingly, I stumbled across the one my mum filled in for my first account, in 1958, in the process!”

Angela and David Newsome

Angela and David Newsome with parents George and Joan and triplets Laura, Emma and Ryan, now 18, all customers of Cleckheaton Branch

“Belonging to the Society is a family affair for us. When our triplets were three or four years old, we wanted to teach them about saving for the future and visited our local Skipton branch to deposit their piggy bank savings.

“However, when Ryan handed over his money and received a stamped passbook in return, he started crying, which set the other two off! I think they thought that the naughty lady behind the counter had taken their money away from them!

“Thankfully, they got the hang of it in the end and have carried on saving with the Society. I’m grateful for the personal support Skipton offers families like us with our finances.”

write to us at: My Story, Skipton Building Society, The Bailey, Skipton,

North Yorkshire, BD23 1DN


A s part of our ‘Big 160’ anniversary celebrations, we’re excited

to announce the launch of a new charitable giving programme, which is set to reward community champions across the country.

Building on the Society’s commitment to community investment, this will offer 160 grassroots organisations contributions of £500 to support their work. Each applicant will also have access to free resources to help them with things such as managing their money and marketing their charity. This will replace previous schemes such as our Community Contribution Awards and branch community donations as we re-focus our support on those who receive very little, if any, funding from elsewhere.

As a building society, we originated as a kind of club aimed at enabling people to own their own homes. We are keen to remain true to that ethos today, by empowering people who go the extra mile to make life better for local communities. We hope you’ll help us spread the word and encourage your local groups to apply.

Community allotments, recreational areas for young people and social groups for the elderly are examples of the kind of schemes which would be relevant.

All you have to do is write to us, using no more than one side of A4, and tell us:• The name of the organisation you’d like us to help;

• Your involvement with them;• What they do;• What funding (if any) they currently receive;• Most importantly: in no more than 500 words, how the donation will make a positive impact;

• Your and their contact details.

A few things to bear in mind before applying:

• Your request must be on behalf of an established community club;

• It must have its own operating account for our cheque to be paid into;

• We don’t support religious or political causes;

• You must be happy for us to promote our donation via the media, social media and Society communications.

Making a differenceSupporting your communities is something we strongly believe in, and 2012 proved to be another busy year.The Society’s giving helped pave the way for some outstanding successes during the course of 2012, as members of Molesey Boat Club netted two gold medals (in the men’s coxless four) and five bronze medals (men’s eight and men’s pair) at the London 2012 Olympic Games. We’ve sponsored Molesey since 2009 and this summer saw eight of the club’s rowers compete for their country.

We also donated a total of £120,302 via our Charitable Foundation, to 77 good causes up and down the UK, including the Eccleshill Adventure Playground (top) in Bradford and Burmantofts Senior Action in Leeds (second from top).

We gave out over 80 branch donations and Community Contribution Awards to clubs and charities based in local communities. Funding of £150 for Mowbray Community Special School in Bedale, North Yorkshire (middle), bought two micro pigs to live on the school farm and help teach the children about farm life and how to care for animals.

Other local giving during the year included £4,000 for the Craven Citizens Advice Bureau (fourth from top), which includes debt help in its range of services, and £250 for Silsden Bowling Club (bottom), to purchase new bowls to encourage more young people to join the club.

Get your club or community group involved in our ‘Big 160’

For more information about our appeal...

visit skipton.co.uk/big160 write to us at: The Big 160 Appeal, Skipton Building Society, The Bailey,

Skipton, North Yorkshire, BD23 1DN

Giving something back

A century-and-a-half ago, life in Britain was extremely hard, with an average

life expectancy of just 40. Many workers lived in tiny, poorly built terraces where squalor led to a prevalence of diseases like cholera and typhoid.

For these people, the concept of buying a home of their own was unimaginable, making the achievements of our founders, such as Samuel Farey and George Kendall, all the more remarkable.

Amidst all the flurry and fervour of the Industrial Revolution, in the mid-1800s, these exceptional people spotted an opportunity which has changed our lives today beyond recognition.

This was a time of rapid change, in agriculture, the textile industry, transport, economic policy and social structures. The UK population was growing faster than ever, as the death rate fell and births increased. Diets, and therefore health, also began to improve.

The first building societies had already started to appear, with the aim of helping ordinary people – whose aspirations were growing with the country’s increasing economic wealth – to own their own homes. The first of these ‘terminating’ organisations, called Richard Kettley’s, emerged in 1775. These were based on a group of members pooling money to build homes, and ceased trading once everyone had achieved that objective.

However, these early examples were soon replaced by ‘permanent’ building societies.These were different, in that they continued indefinitely and also catered for people who didn’t want to build a home but simply wanted a safe place to deposit their savings, for a return.

Hence, our founders were inspired to form Skipton Building Society – originally called Skipton and District Permanent Benefit Building Society – in 1853.

Martin Wills, Collections and Engagement Officer for Craven Museum and Gallery in Skipton, which houses many old documents relating to the Society’s inaugural years, said:

“The determination and vision people like Kendall and Farey demonstrated shouldn’t be underestimated, and it changed the lives of people living in Skipton at the time for the better.“Not only was the ability to own one’s own home an opportunity to live in better physical conditions, it also dramatically affected people’s life aspirations in general.

“Whereas previously they had often lived in houses provided by their employers, and therefore found it difficult to move jobs, suddenly they were able to exercise personal

choice. Houses also became an investment and, as we know, still today rank among many British people’s prized possessions.”

In fact, Farey, Kendall and the handful of other self-made townsfolk who established the Society, were typical of the benevolent movement of wealthy industrialists who significantly influenced Britain’s rapid development around that time. Others included Bradford textile manufacturer Titus Salt, who created the Saltaire ‘model’ village complete with workers’ houses, hospitals, almshouses and churches. Martin added:

“Mutuals like Skipton represented the socially conscious mentality which existed back then, and the impact on people’s living conditions and expectations for their own futures was huge.“Men like Farey and Kendall had made their fortunes through the rapidly expanding industry at the time, Kendall as a timber merchant and Farey as a cotton mill owner. It was a natural impulse for them, given the spirit of the era, to want to extend their good fortune to others.”

Ironically, things have come full circle, and the ongoing global financial crisis, and its impact on society and individuals, has made such values as relevant today as they ever were.

Under their watch, the Society grew rapidly

from its modest membership of 223 with almost £3,000 in balances in 1854, to 1,185 members and closer to £50,000 in savings by 1879, moving premises periodically to accommodate its expansion, and finally inhabiting the purpose-built headquarters we have today.

The legacy of these inspirational characters lives on in Skipton, with a stained glass window in the town’s Holy Trinity Church dedicated to Kendall, and a number of local schools which resulted from their impressive contribution to education in the area.

However, nowhere does it live on more strongly than in the ethos of the Society as it is today, despite the fact that the way in which we do business has undoubtedly moved on. We now have more than 744,000 saving and borrowing members nationally, served by a network of over 100 branches and agencies, as well as online and telephone services. Our assets total almost £14bn and we own a uniquely diversified Group of successful subsidiary companies.

However, our driving force has stood the test of time and we remain dedicated to enabling people to own their own homes. Even in today’s difficult housing market, we are lending strongly. We do this by providing our savers with good value accounts, and then lending out the money they deposit with us. It is a simple and prudent equation which has proved its worth over the years, and ensured that we have remained strong and able to continue serving our members now and into the future.


The visionaries who made it all possibleThen and now

1853 2013Samuel Farey and others form the Society 1929 1931 1953 1990

The Bailey head office is built

2003

The Society’s 150th anniversary

That’s because the reality is that 49 per cent of parents aged 50 and over have already had to dip into their savings to get by. And four in 10 have been giving their children hand-outs to help them with spiralling costs such as higher education fees, driving lessons and rent payments.

The good news is that Skipton can help when it comes to forging a path through the inheritance maze, through our Skipton Financial Services Limited (SFS) business and its Diploma qualified financial planning managers located in every branch.

Gary Munroe (right) is one of them, based at our Ilkley branch. He said he witnesses people’s shyness over discussing the inheritance question all the time.

“Whatever their aspirations for their

accumulated wealth, people spend a lifetime working hard to build it, but are prepared to gamble it away by not making provisions while they are alive,” he said.

“I do understand that it’s hard to talk about no longer being around, particularly with those we love most, but I can’t stress how important it is to overcome that trepidation and get some proper plans made and recorded.

“Otherwise, people risk having their estates significantly depleted by inheritance tax they needn’t have paid, and their loved ones losing out on what they would have wanted for them.”

FACT BOXSix good reasons to plan ahead Reduce or eliminate any inheritance tax

bill, saving your family money after your death;

Ensure your estate is distributed as you would like;

Speed up the probate process;

Reduce the burden or stress on loved ones during what will already be a very difficult time;

Peace of mind that your loved ones are provided for after your death;

HM Revenue & Customs (HMRC) figures show that the Taxman’s inheritance tax income has risen by 21% since the Government froze the threshold at £325,000 in 2010. In 2009/10, £2.4bn was collected, rising to £2.72bn in 2010/11 and then £2.9bn in 2011/12. All the more reason to do what you can to minimise your bill!

E veryone has a different view about inheritance. Some people

with families may be very focused on leaving a legacy for their children and grandchildren, while some believe their offspring should stand on their own two feet and make their own way in life.

Meanwhile, others are more interested in making the most of their resources and living life to the full while they’re still around, and aren’t concerned with leaving anything behind.

Whatever your circumstances, or perspective on this important issue, failing to face up to it can store up trouble for the future. Not having

a ‘plan’ can mean your wishes aren’t honoured when the time comes.

We surveyed 2,000 people across the UK and discovered some stark contrasts between the views of different generations on inheritance, highlighting the importance of facing up to this difficult discussion point at an early stage.

The majority (75 per cent) of the grown up children, aged 20 to 35, we surveyed, told us that they expect to receive a nice little nest egg from their parents when they pass away, amounting to an average of £78,000. Based on current trends though, four in 10 of them won’t get a penny.

The children

• Specific items children hope to inherit include the family home (68 per cent) and a cash lump sum (67 per cent);

• 20 per cent have high hopes of making it onto the property ladder for the first time through their inheritance windfall.

Their parents

• 84 per cent of adults aged 50 and over think savings are better spent now, whenever their family needs a helping hand, rather than leaving a large inheritance sum;

• 95 per cent think their offspring need to take more responsibility for their own futures.

wHAT wE foUNd oUT

Make an appointment with a SFS financial planning manager...

call 0845 603 4735 or visit your local branch skipton.co.uk/branches

Inheritance – the generation game

Inheritance can be a difficult subject for families to broach.

However, not doing so can lead to worrying misunderstandings, as our recent

survey showed.


SFS offers Restricted Advice. Investments recommended as part of the Inheritance Tax planning solution may not guarantee the return of your original capital and the level of income taken from

your investments is not guaranteed and may rise and fall. The tax treatment of investments depends on your individual circumstances and may be subject to change in the future.

R uss (60) and Linda (57) are customers of our Lincoln branch. This year, they

have found themselves rather unexpectedly retired, but that’s not going to stop them enjoying the next stages of their lives. They live with their dog, Saxon, and have two grown up children aged 31 and 34. To them, life after work means...

We’ve given up work, not life!

Linda: We have lots of aspirations now that we’ve stopped working, and see it as the start of a new era in our lives, rather than an end. We have a caravan and have enjoyed great family holidays in France over the years. Now we can spend more time away touring the country and not be limited to just two weeks a year.

Russ: I know what I won’t do instead of working, and that’s spend my time watching TV! That’s alien to me and I have other ideas. I’d really like to undertake some higher education, perhaps something in English history through the Open University. I’m not sure if it’s an age thing but since I’ve got older and have travelled around the UK and France, I’ve become really interested in history!

Money, money, money...

Russ: Our preparations for when we stopped working have been in the pipeline for years. During our working lives, we never lived beyond our means, but were fortunate enough never to go without anything we needed either. We still live in our family home, so if necessary we could downsize. We also regularly review our finances, to make sure everything’s working as hard for us as possible. Skipton recently helped us make our Wills, which is something important that we’d put off doing for far too long.

Making more of our hobbies

Russ: I stopped smoking shortly before the kids were born and decided to use the money I used to spend on cigarettes, to do something for the family instead. So I saved up and bought my first SLR camera. Fast forward 35 years and I’m still snapping away. But until now I’ve had to squeeze my photography in around work, so I’m really looking forward to not having this constraint, and having more time to develop new photography skills. Who knows, I might even enter a few competitions or local exhibitions!

Life after work Taking a new direction after a busy working life is on the horizon for all of us. For members Russ and Linda Dickens, this important life stage is just around the corner. They share what it means to them and how planning ahead has helped them to cope with the unforeseen.

For help plotting your financial life journey…

pop into your nearest branch or call 0845 603 4735 to make an appointment

Unforeseen circumstancesRuss: Finishing work this year wasn’t planned, but the company where I’d worked as a Manufacturing Technician for 20 years decided to close my plant. We just had to bring our preparations forward a little bit and that was that.

Linda: Psychologically, I don’t see myself as retired. People have a stereotypical view of retirement, but I think everyone’s circumstances are unique. After being made redundant when I was in my early 50s, following a long career in customer services, I took short term jobs thinking that would see me through until I could give up working at 60. It hasn’t quite worked out that way because jobs are now hard to come by, and the State pension age has increased for me. But we’ve just had to get on with things and adapt to these circumstances.

Worry freeLinda: We’ve deliberated for years over our post-work plans. Then, when Russ’s company shut down, after the initial shock we actually felt a little bit relieved that the decision on when would be the best time for him to stop working had been made for us. Now we don’t need to worry if we did the right thing, or if we could afford it, because it was taken out of our hands.

Russ: There’s more uncertainty than ever over retirement and the support which is or will be available for people at the end of their working lives. Therefore, you have to embrace change. I won’t allow myself to be worried about retiring, as many of the issues, such as the cost of living, utility bills and fuel prices, are out of my control. We’re really looking forward to getting on and enjoying it. Yes we have some concerns, who doesn’t? But our way of dealing with these is to have plans in place, review our finances regularly, seek expert guidance when we need it and try to keep any worries in perspective.

It’s never too early to start planning ahead and Skipton can offer help with everything from savings to mortgages and insurance. Because all of our branches have highly qualified financial planning managers from our Skipton Financial Services Limited (SFS) subsidiary, we can also help with investments, pensions and inheritance tax planning.


SFS offers Restricted Advice. Many of the products available from SFS are not like building society or bank deposit accounts, as the capital value and any income can rise

and fall and your capital is at risk. The tax treatment of any investments depends on your individual circumstances and may be subject to change in the future.

o ffering outstanding service tailored to your individual needs is our driving

force, and we’ve invested significantly over the past year in improvements to help us achieve this.

Our state-of-the-art new telephony system has been the biggest single service development in 2012.

This will help our Skipton Direct customer service team deal with your calls even more efficiently, not least by getting you through to the right person to address your needs as quickly as possible. Claire Davey, Head of Skipton Direct (right), said: “We all know the things we value, as customers, when

dealing with businesses over the telephone. For example, accessing British call centres and being able to speak to real people.

“We’ve reflected on our own experience and feedback from our customers, and have invested in the newtelephony system, which we believe appropriately reflects the ‘human’ approach we try to take when meeting our customers’ needs.”We’re also making the most of new technologies to help us keep you informed.

One example is the text alert service we’ve introduced for ISA transfers, where we can now send you a message to confirm that your money has arrived from your old provider into your new Skipton account.

And then there’s our ongoing branch refurbishment programme. This will ensure that the personal service-with-a-smile you value so much is backed by comfortable environments which make it easy for you to manage your finances there. Branches which have received a spruce up this year include Harrogate and Hexham, and we’re gradually introducing our new, more modern branding as we go.

Official Recognition

Our success in providing relevant products which meet your needs, supported by excellent service, was recognised with a number of prestigious industry awards during 2012.

We retained What Mortgage magazine’s ‘Best National Building Society’ award for the second year running, and were handed a ‘Five Star Service Excellence’ award by Financial Adviser magazine.

We also held on to our Customer First accreditation, which recognises organisations achieving the highest standards in customer service. In 2006, we became the first financial services organisation to achieve Customer First status, and we have kept it ever since, through a number of regular reassessments.

However, despite these various accolades, we are never complacent. We continually review the service we offer and listen to feedback, to ensure we remain the best we can possibly be for our members.

We’re still there for you when others aren’tYou may have read in the news how many financial organisations have withdrawn their advice services. Well, we’re pleased to say that this isn’t so at Skipton.The Financial Services Authority has recently implemented its Retail Distribution Review (RDR), which sets out a range of new standards advisers have to adhere to when providing advice to consumers. As a result of this far reaching new regulation, many providers have restricted their advice to high net worth clients only, or are limiting it to a small selection of their own products and services.By contrast, we recognise that the global financial crisis and ever-more-complex marketplace, mean that people need a helping hand now more than ever. Which is why we remain committed to helping our customers improve their financial wellbeing.All Skipton branches have qualified financial planning managers from our subsidiary, Skipton Financial Services Limited (SFS). Although under the new RDR rules they offer Restricted Advice, they can advise on a wide range of investment options as well as pensions and inheritance tax planning. In addition, for members who maybe don’t need to call on the expertise of SFS, we have introduced our new My Review service. Available to every member at no cost, this has helped more than 20,000 people get the best from their finances since it was launched last May.

At your service


SFS offers Restricted Advice. Many of the products available from SFS are not like building society or bank deposit accounts, as the capital value and any income can rise

and fall and your capital is at risk. The tax treatment of any investments depends on your individual circumstances and may be subject to change in the future.

223 members£2,951 assets


1853

The inaugural meeting of the Society is held in Skipton’s old town hall

2013...

2003

1854

1865

Slavery abolished in the United States

1876Alexander Graham

Bell invents the telephone

1929

New head office opened at 59 High Street 1945

Assets of £5 million

1958

The cassettetape is launched


1963


1977

Introduction of the first mass-produced personal computers

1978

The Society now has 32 branches & 75 agencies throughout the UK, with assets of £150 million

1990

Tim Berners-Lee invents the World Wide Web

The Society’s 150th anniversary

The Bailey head office is built

2000Assets of £6 billion

2008

MY BUILDING SOCIETY

Society’s 160th anniversary

We celebrate the

2012

2. Mike Ellis ChairmanMike joined the Board as Non-Executive Chairman in 2011 and also chairs the Nominations Committee. Mike was Group Finance Director at HBOS plc after serving as a Director of Halifax plc, where he held a number of senior executive positions having joined its predecessor, Halifax Building Society, in 1987. From 2005 until January 2013, he was a Non-Executive Director and Chairman of the Audit Committee at WH Smith PLC. In 2007, he was awarded the OBE for his contribution to UK financial services.

4. Marisa Cassoni Non-Executive DirectorA Chartered Accountant, Marisa joined the Board in 2012. She chairs the Audit Committee and is a member of the Nominations Committee. Marisa retired as Group Finance Director of the John Lewis Partnership in 2012. Prior to that, she held senior positions at Royal Mail, Britannic Assurance and the Prudential. Marisa is also a Non-Executive Director of GFI Group Inc.

5. Ian Cornelius Commercial Director Ian joined the Skipton Group in 2011. He became Commercial Director with responsibility for products and marketing in 2012, having previously been Commercial Director at our subsidiary Homeloan Management Limited (HML). He is a member of the Executive Committee and Chairman of our subsidiaries Amber Homeloans Limited and North Yorkshire Mortgages Limited. Ian formerly held senior roles at Virgin Money, Bradford & Bingley, Capital One and Boots.

1. David Cutter Group Chief ExecutiveDavid, a Chartered Accountant, joined the Society as Head of Audit in 1993, was appointed to the Board in 2000 and became Group Chief Executive in January 2009. He is Chairman of the Society’s Executive and Retail Credit Committees, and a member of the Asset & Liability and Board Risk Committees. Externally, he is Deputy Chairman of the Building Societies Association.

3 Noel Hutton Vice ChairmanNoel joined the Board as a Non-Executive Director in 2004. He is a member of the Nominations Committee and Chairman of the Remuneration Committee, and was appointed Vice Chairman in 2010. Prior to retiring in 2004, he was a partner in international law firm Hammonds, now Squire Sanders, where he specialised in corporate finance.

6 Robert East Non-Executive DirectorRobert joined the Board in 2011 and is a member of the Board Risk, Nominations and Remuneration Committees. Robert spent most of his career with Barclays PLC, undertaking senior roles in retail and commercial banking. He is now Chief Executive of Cattles Limited.

7. Mark Fleet Distribution DirectorMark became Managing Director of Skipton subsidiary Skipton Financial Services Limited in 2008, and then the Society’s Chief Distribution Officer and a Board Director in 2011. He oversees the Society’s distribution via the Branch network and Skipton Direct and is a member of the Executive and Conduct & Operational Risk Committees. Mark also chairs our Mortgage Services division and our three financial advice businesses. His career has spanned distribution, customer services and credit management. Prior to joining Skipton he worked in subsidiaries of Standard Chartered Bank, Lloyds TSB and Bank of Ireland.

8. Peter Hales Non-Executive DirectorPeter joined the Board in 2007 and is Chairman of the Board Risk Committee and a member of the Nominations Committee. Prior to that, he was Sales and Marketing Director of Norwich Union, having previously been a Director of General Accident and CGU. Peter is also a Director of Unum Limited, Chairman of Sandringham Financial Partners Limited, a Trustee of the Chartered Insurance Pensions Scheme and a member of the Advisory Board of Simply Biz plc.

9. Graham Picken Non-Executive DirectorGraham joined the Board in 2012 and is a member of the Audit, Board Risk and Nominations Committees. Graham previously worked for HSBC, where he held positions as Executive Chairman of First Direct and Chief Executive of the Forward Trust Group. Between 2005 and 2009, he was Non-Executive Director and then Chief Executive of the Derbyshire Building Society. Graham is Chairman of the FTSE listed HICL Infrastructure Company Limited.

11. Richard Twigg Group Finance DirectorRichard is a Chartered Accountant and joined the Skipton Group in 1993. He was appointed to the Board in 2002 as Group Finance Director, having been Finance Director of our subsidiaries HML and then Connells Limited. He is Chairman of the Society’s Asset & Liability Committee and a member of the Executive, Risk and Conduct & Operational Risk Committees, with additional responsibility for Skipton International Limited and the Society’s investment portfolio. Richard is also a trustee of the Society’s Charitable Foundation.

10. Peter (Nimble) Thompson Non-Executive DirectorA solicitor by profession, Nimble joined Skipton’s Board in 2009, following our merger with Scarborough Building Society. where he had been a Non-Executive Director for three years. He sits on our Remuneration, Audit and Nominations Committees. Nimble was a Senior Partner and then Deputy Chairman of Eversheds before retiring in 1999. He is Chairman of N G Bailey Limited and holds a number of other Non-Executive positions nationally.


117 3 10

4

1 2 5 869

Meet the Board

Helen Stevenson Non-Executive DirectorHelen started her professional life with Mars Inc where she spent nineteen years, culminating in her

role as European Marketing Director. She joined Lloyds TSB in 2003 as Group Marketing Director, where she was responsible for the Group brands and for the customer experience. Between 2006 and 2011 she was Chief Marketing Officer at Yell Group. She is a Non-Executive Director of St Ives PLC and Henley Business School Advisory Board.

Cheryl Black Non-Executive DirectorCheryl has spent her career in customer service and operations. Following leadership roles at Orange

and NTL, she was appointed to the Board of Scottish Water in 2002. Between 2006 and 2011, Cheryl was Customer Service Director at Telefonica O2. She is currently a Non-Executive Director at Southern Water Services Ltd, Director of Telefonica UK Pension Trustee and Non-Executive Board Adviser to EDF Energy Nuclear Generation Ltd.

Cheryl Black and Helen Stevenson were appointed to the Board with effect from 1 March 2013

This year’s Annual General Meeting (AGM) of Skipton Building Society will be held at the Skipton Building Society Principal Office, The Bailey, Skipton, North Yorkshire, BD23 1AP on Monday 29 April 2013 at 6.30pm for the following purposes:

Rule ChangesThe Board is proposing a number of changes to the Society’s Rules at this year’s AGM. Please see pages 22 and 23 for details of what we are proposing to change and why.

A copy of the document setting out the proposed amendments and a copy of the existing Rules showing the proposed changes are available on the Society’s website at skipton.co.uk/rules, or may be obtained by a member on request to the Secretary, Skipton Building Society, The Bailey, Skipton, North Yorkshire BD23 1DN.

The Board believes that these alterations will benefit the Society and its members and recommends that members vote FOR the alterations.

Voting instructionsAs a voting member, you have the right to vote on matters affecting your Society. Register your vote in any of the following ways:

OnlineJust log on to skipton.co.uk/agm or use the link on our homepage at skipton.co.uk then follow the instructions. You will need the two part security code printed on your voting form. Online voting is available 24-hours-a-day until 5pm on Tuesday 23 April 2013.

If you vote online and subsequently change your mind, you can vote again using the same two part security code. If you vote by post as well as online, then the last vote received is the one that will be counted.

By FreepostPlease complete, sign and date the voting form, then place it in the enclosed Freepost envelope and post it to arrive by 5pm on Tuesday 23 April 2013.

At a branchPlease complete, sign and date the voting form, then place it in the enclosed Freepost envelope and put it in the ballot box at any of our branches by 3pm on Friday 19 April 2013.

Attend the AGMCome to the AGM at 6.30pm on Monday 29 April 2013 at our Principal Office, The Bailey, Skipton, North Yorkshire BD23 1AP. Please also bring your passbook, share certificate or other evidence of membership to enable entry. The venue is wheelchair accessible. If you plan to attend the AGM and require a sign language interpreter, hearing loop or have any other special requirements, please let us know by Monday 15 April 2013.

Notice of 2013 Annual General Meeting

Ordinary resolutions1. To receive the Report & Accounts

2. To re-appoint KPMG Audit Plc as auditors

3. To approve the Report on Directors’ Remuneration

Elections of Directors4.1 To elect Cheryl Campbell Black 4.2 To elect Maria-Luisa Cassoni 4.3 To elect Ian Michael Cornelius 4.4 To elect Helen Claire Stevenson 4.5 To re-elect David John Cutter 4.6 To re-elect Robert David East 4.7 To re-elect Michael Henry Ellis 4.8 To re-elect Mark Russell Fleet 4.9 To re-elect Peter Robert Hales 4.10 To re-elect Charles Noel Hutton 4.11 To re-elect Graham Edward Picken 4.12 To re-elect Peter John Stuart Thompson 4.13 To re-elect Richard John Twigg

Special Resolution5. To consider and, if thought fit, to pass

the following resolution as a Special Resolution:

That the Rules of the Society be amended in the manner specified in the document produced to the meeting and initialled by the Chairman for the purposes of identification.

Notes that form part of this Notice of AGM can be found adjacent.

By order of the Board

John GibsonSecretary1 March 2013

Voting Notes1. The voting date is 23 April 2013 if you are using

the voting form or voting online, or 29 April 2013 if you vote in person at the AGM.

2. You are entitled to vote if you are at least 18 years old on the date of the AGM and are the first named account holder in our records. You must also either:

a) have had at least £100 in your savings accounts (including Permanent Interest Bearing Shares (PIBS)) on 31 December 2012 and continue to have a savings account with the Society at all times between 31 December 2012 and the voting date, or

b) have owed the Society not less than £100 on your mortgage(s) both on 31 December 2012 and on the voting date.

3. No matter how many savings or mortgage accounts you have, in any capacity, you are only entitled to one vote on each resolution.

4. You may either vote in person at the AGM or you may use the voting form to appoint a representative to attend and vote for you as you direct. You may appoint the Chairman of the Meeting or anyone else as your representative; they do not have to be a member of the Society.

5. Your representative may vote for you at the AGM on a written poll but not on a show of hands.

6. Please remember to sign the declaration on the voting form as only signed forms will be valid.

7. If you appoint a representative to vote on your behalf and your representative does not attend the AGM, your vote will not be counted.

8. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for and against the resolution.

9. Members attending the AGM in person will be required to produce their passbook, share certificate or other evidence of membership to gain entry to the AGM. Representatives will also need to produce an appropriate form of identification to gain entry to the meeting.


E very now and again, we need to review our Society Rules, to make sure they

remain in-step with the latest developments and how we do business. This is why, as you will probably have noticed, Agenda Item 5 in your Notice of AGM this year features a proposal to amend the Rules of the Society.

The last time we reviewed our Rules was in 1998 and we have decided it is time to do so again to better reflect modern working practices.

Our proposed new Rules closely reflect the wording in the Building Societies Association’s Model Rules, which were developed in consultation with the Financial Services Authority.

On page 23, we will explain the main areas

of change, with examples for each. If you would like a full copy of our existing Rules, with the proposed alterations highlighted, and a full outline of all the amendments, these are available via our website at skipton.co.uk/rules, or from the Secretary, Skipton Building Society, The Bailey, Skipton, North Yorkshire, BD23 1DN.

Our Board believes that these alterations will benefit the Society and its members, and recommends that members vote FOR the alterations.

If the Rule changes are approved at the AGM and registered by the Financial Conduct Authority, it is intended that the changes would take effect from 1 August 2013.

Electronic communications

There has been substantial growth in electronic communications affecting building societies since the Society’s Rules were last changed. This covers the full range of communications, including those relating to meetings. These amendments reflect changes to enable us to use electronic communications to send notices and documents, as well as serving notices, carrying out ballots and making and removing proxy voter appointments.

(See changes to Rule 1, Rule 32(5) to (8), Rule 36, Rule 38 and Rule 45(2) and (7)).

Other related changes

We’ve also made a number of practical amendments to cater for electronic addresses (such as email addresses), to provide us with greater flexibility to accept signatures in forms other than conventional manuscript, and to enable us to use an electronic Society seal where appropriate.

(See changes to Rule 1 and Rule 41(6)).

Meetings etc. These changes govern how many members must be present for a meeting to be ‘quorate’, when the Chairman can announce the results of a formal vote taken at a meeting, who can speak at meetings and how and in what timescales we may notify members about a meeting. We draw your specific attention to Rule 36(5) where a change will allow proxy voters to speak at general meetings.

(For other changes see Rule 33(1), Rule 34(14) and Rule 45(6)).

Directors/BoardOur provisions regarding directors and our Board are also being updated. These changes relate to the rights of our directors to delegate by power of attorney and to update how the Board delegates to committees, the impact of the Equality Act 2010 on normal retirement ages for directors, and in what circumstances a director can give up or be made to give up office.

We are also amending the Rules so that all directors will retire from office and, if appropriate, seek re-election by members annually at each AGM. The number of members that are required to support a member standing for election as a director is being increased in line with the figure applying to the Society in legislation.

(See changes to Rule 12 (4) (h), Rule 13 (1) (a) and (d), Rule 16 (3)/(4), Rule 24 and Rule 26).

Terms and conditions Since we last fully updated our Rules in 1998, we have increasingly included mortgage and savings account terms and conditions in our product literature. We have therefore shortened some of our Rules to reflect this, e.g. Rules 8(4) and 12(5).

We have also reviewed and amended some of our other terms and conditions-related provisions in light of regulatory and best practice developments. These changes clarify steps we must follow when considering closing a member’s account, notifying members of changes to their terms and conditions or considering whether or not to refuse to open a new account.

(See changes to Rule 4(7), Rule 8(4) and Rule 8(9)).

Proposed alterations to the Society’s Rules

Society Rules


The Society’s Rules old and new


Summary Financial StatementThis financial statement is a summary of information from the audited Annual Report & Accounts, which will be available to members and depositors online at www.skipton.co.uk/performance or free of charge on demand at every office of Skipton Building Society from 2 April 2013.

Summary Directors’ ReportIt is pleasing to report that we have achieved a robust and balanced performance over the past year, combining ongoing financial success with a member-centric approach to doing business.

Celebrating our impressive heritage in our 160th anniversary year, we continue to focus on meeting our members’ needs through long term good value, relevant products, and a commitment to outstanding personal service.

Continued, prudent growthIn 2012, the Society achieved steady growth in mortgage balances, retail balances and capital, as well as significantly improving profitability. Our strategy of growing steadily, while remaining focussed on meeting our members’ needs, has helped the Society to improve its performance in a difficult operating environment.

The key driver of the Group’s improved performance has been an £18.4m turnaround in our Mortgages and Savings division, returning to profitability and reporting a profit of £4.9m compared to a loss of £13.5m in 2011. This is despite a £6.1m (2011: £5.4m) contribution to the Financial Services Compensation Scheme (FSCS) within the division, as a result of continuing to pay for the banking crisis of 2008. The improvement in our net interest margin, an important driver of sustainable profitability for the business, is also encouraging, and increased to 0.61% for the full year compared to 0.52% in 2011.

Capital and liquidity are two important indicators of our financial strength, and both remain robust, as outlined below. The quality of our liquidity remains excellent, with no exposure to Greece, Ireland, Italy, Portugal or Spain.

We have maintained a strong funding base, with a high proportion of retail funding and a degree of cost effective wholesale funding to achieve a desirable blend. By the end of the year, 83.1% of our total funding was derived from retail savings balances (2011: 80.2%), covering 90.1% of our mortgage lending (2011: 91.4%). Complementing this solid retail base, we raised £475m of funding from our second securitisation in 18 months – a sign of the market’s confidence in the Society.

Arrears continue to fall, as summarised below, and are now lower than the industry average.

At the same time, impairment losses, predominantly within our Mortgages and Savings division, also fell significantly, to £12.3m, compared to £30.0m in 2011. However, Group provisions for liabilities increased to £28.7m compared to £13.5m in 2011, primarily due to total Group FSCS levies of £7.5m (2011: £5.8m), claims against surveys and valuations within our Estate Agency division of £8.4m (2011: £6.1m), provisions for commission clawbacks / rebates of £6.2m (2011: £(0.2)m), and customer compensation provisions for MPPI claims and compensation payable to customers as a result of issues identified from our review of past business within the Financial Advice division of £3.7m (2011: £2.1m).

Help for HomeownersRemaining true to this powerful founding principle, we again continued our support of borrowers during what continues to be a difficult housing market. Gross mortgage lending totalled £1.5bn for the year (2011: £1.7bn), a continued strong performance after the threefold uplift in 2011.

Financial strength• Core Tier 1 capital of 11.1% compared to 10.5% at the end of December 2011;

• Total capital also improved to 15.9% (2011: 15.5%);• Strong liquidity ratio maintained at 21.1% of shares, deposits and liabilities (31 December 2011: 24.8%);

• Only 1.30% of mortgages have arrears of more than 2.5% of the total outstanding balance (31 December 2011: 1.45%). This compares to the industry average of 1.401% (31 December 2011: 1.42%).

Profitability• Pre-tax profits of £36.4m

(2011: £22.2m), up 64%;• £13.0m improvement in our

net interest margin (2012: 0.61%, 2011: 0.52%);

• Continued strong earnings from the Estate Agency division, with profits of £36.2m (2011: £35.8m).

Our key financial highlights were as follows:

Net lending amounted to £356m, compared to £412m in 2011, as mortgage balances increased by 3.5% during the year to £10.5bn (2011: £10.1bn). Our 4.1% share of the growth in the UK mortgage market compares favourably to our natural market share of 0.8%.We achieved this by providing solutions for a wide variety of homeowners, including those unable to provide a large deposit. 91% of the Group’s gross lending is undertaken by the Society, and of this amount, 4.7% (2011: 4.5%) was to borrowers with a loan-to-value ratio of between 90% and 95%. 16.1% (2011: 19.5%) of the Society’s gross lending went towards helping 1,833 (2011: 2,648) first time buyers, and Buy-to-Let mortgages for property investors also featured strongly, at 12.9% (2011: 7.5%) of the Society’s overall lending, reflecting the increasingly important part they play in the overall health of the UK mortgage market. Our mortgage offering was independently endorsed when What Mortgage magazine gave us their ‘Best National Building Society Award’ for the second year running in 2012. We were also highly commended and commended, respectively, in the ‘Best First Time Buyer Mortgage Provider’ and ‘Best Building Society Mortgage Provider’ categories at the prestigious Moneyfacts Awards 2012. Our outstanding service was recognised with a ‘Five Star Service Award’ from Financial Adviser magazine.

Promoting SavingsWe are acutely aware that savers remain the ‘forgotten victims of the credit crunch’. Their nominal returns are severely affected by keeping the Bank of England Base Rate at 0.5%, and their real returns are impacted by inflation.UK monetary policy remains focussed on trying to stimulate growth and avoiding deflation, and the beneficiaries have been borrowers. Savers, on the other hand, continue to suffer.In recent months, their plight has been compounded by the introduction of the Funding for Lending Scheme, again aimed at stimulating the housing and mortgage markets by making more affordable credit available to borrowers.

Access to this new and cheaper source of funding has lessened the demand for retail savings and hence the rates payable to savers have declined. New mortgage rates have also fallen as funding is more available for lenders to deploy.

With the very best of intentions we must operate within our market environment, in order to manage the business responsibly in the best interests of all our members. Hence, we have also reduced our own new mortgage rates and savings rates in recent months.

We recognise that this is cold comfort for those savers who are affected, but we have endeavoured to maintain our rates at levels which continue to compare favourably with other High Street providers.

In spite of Bank Base Rate remaining at 0.5% for four years, the average savings rate paid across all of our accounts at 31 December 2012 (i.e. instant access or term accounts) was 2.56%, exactly the same figure as at 31 December 2011. Within the confines of such a low interest rate environment, and difficult market conditions, we continue to try to preserve long term saver value.

Our continued efforts to help people manage their finances responsibly, by saving, resulted in a 2% increase in our savings balances during 2012, to £9,462.4m compared to £9,280.4m at 31 December 2011.

We achieved this by listening to our members in order to provide products relevant to their needs, launching a range of new accounts including base rate tracker bonds, fixed rate bonds and regular savers, as well as a Christmas Regular Saver, enabling people to put away cash for future festive seasons instead of getting into debt to fund their celebrations.

Believing that everyone should have a tax-efficient account in their savings portfolio, another successful ISA season saw us encourage twice as many people to embark on tax free savings as we did in the same period of 2011.

1 Source: Council of Mortgage Lenders, published 14 February 2013.

Focussed on our membersThe consistent good value we offered across our savings and mortgage ranges during the year was endorsed by 528 media ‘best buy table’ mentions during the period.

Recognising that our members need help and advice, now more than ever, in navigating a path through the financial maze, we have underlined our commitment to supporting them. Firstly, we will continue to arrange expert financial advice through the Diploma-qualified financial planning managers within our Skipton Financial Services (SFS) subsidiary in each branch. We are doing so at a time when many providers have withdrawn their financial advice services in the wake of the Financial Services Authority’s Retail Distribution Review, have restricted their availability to only high net worth clients, or are limiting the advice they give to a small selection of their own products and services. By contrast, Skipton customers continue to have access to a wide range of investment options, as well as expertise in areas such as pensions and inheritance tax planning.

And this is not the only help we offer our members in getting the most from their finances. Last May, we introduced our new My Review service, which is available to every member at no cost and has helped more than 20,000 customers since launch. During 2012, we also ran an extensive Free Wills promotion, providing almost 9,000 single and mirror wills during the year, benefiting more than 13,000 customers.

Our commitment to offering our members outstanding personal service has also come to the fore over the past 12 months, as we have introduced a number of enhancements. Quick, online Decision in Principles, and text updates on mortgage applications and ISA transfer progress, are two examples of innovations we have made to help our borrowers and savers.

We have also continued to invest in our frontline customer service. The great work of our Skipton-based customer service team has been augmented by the installation of a new telephone system which provides a call-back option to save customers queuing and requires that they select a maximum of two options before getting through to a customer adviser who can help them. Dedicated numbers for specific queries mean that, in most cases, they get straight through to the right person.

Understanding, from member feedback, that they value face-to-face service from a strong branch network, we have refurbished 15 branches over the past year, as part of our ongoing modernisation programme.

As a mutual, owned by our members, we believe it is important to involve them in shaping the future direction of the Society. Since we introduced it in the Autumn of 2011, more than 2,800 customers have signed up to our Customer Panel, to have their say on everything from our role in our communities to products and communications. This is complemented by an extended range of customer communications, including our new My Society newsletter launched in June.

Subsidiary performanceOur group of subsidiary companies continues to make a welcome contribution to the Society’s success. Our Estate Agency division, the Connells group, provided pre-tax profits of £36.2m, compared to £35.8m in 2011. This was an impressive result given the ongoing uncertainty facing the UK housing market.

Our mortgage servicing business, Homeloan Management Limited (HML), also moved back into profit. It achieved a pre-tax profit of £0.8m, following a loss of £3.1m in 2011, having gained a number of new clients and extended several existing key relationships. However, our Financial Advice division incurred a pre-tax loss of £0.9m compared to a profit of £2.9m in 2011. While the revenue generated by these businesses increased during 2012, we have made provisions for compensation payable to customers as a result of issues identified from our review of past business.

OutlookUncertainty regarding economic growth, and the state of the Government’s finances, will continue to hang over the UK economy and dominate fiscal and monetary policy. While we are pleased with the further upturn in our performance over the past year, we are not complacent and maintain a prudent eye on further potential external shocks which could impact the Society.

However, despite such developments, we are confident we will achieve further improvement during 2013 and beyond, as the strength of our Mortgages and Savings division, in particular, continues to gain momentum.

Since the year end, we have utilised funding available from the Funding for Lending Scheme, as we continue to increase our lending to borrowers. Meanwhile, we will remain focussed on satisfying the saving and investment needs of our customers.

Group results for the year ended 31 December 2012£m

2011£m

Net interest receivable 84.2 71.2Other income and charges 403.7 375.4Profit on disposal of subsidiaries - 0.9Fair value gains 3.6 3.0Administrative expenses and provisions for liabilites (438.8) (398.3)Impairment losses (16.3) (30.0)

Profit for the year before taxation 36.4 22.2Taxation (8.8) (6.7)

Profit for the financial year 27.6 15.5Non-controlling interests 1.0 (0.1)Profit for the financial year attributable to members 28.6 15.4

Group financial position at 31 December 2012£m

2011£m

Assets Liquid assets 2,531.8 3,020.6Residential mortgages 10,070.9 9,713.8Commercial and other loans 522.6 539.0Derivative financial instruments 202.7 216.3Fixed and other assets 432.2 420.6Total assets 13,760.2 13,910.3

Liabilities and reserves Shares 9,462.4 9,280.4Borrowings 2,536.2 2,905.2Derivative financial instruments 370.8 374.4Other liabilities 235.3 210.4Subordinated liabilities 223.9 228.2Subscribed capital 96.1 95.2Non-controlling interests 1.8 2.8Reserves 833.7 813.7Total liabilities and reserves 13,760.2 13,910.3

Group statement of movement in reserves 2012£m

2011£m

Reserves at 1 January 813.7 818.0Net expense for the year not recognised in the Income Statement (8.6) (19.7)

Profit for the year 28.6 15.4Reserves at 31 December 833.7 813.7

This summary financial statement was approved by the Board of Directors on 27 February 2013 and was signed on its behalf by:

M H Ellis Chairman D J Cutter Group Chief Executive R J Twigg Group Finance Director


Summary of key financial ratios 2012%

2011%

Gross capital as a percentage of shares and borrowings 9.63 9.35

Liquid assets as a percentage of shares and borrowings 21.10 24.79

Group profit after tax for the year as a percentage of mean total assets 0.20 0.11

Group management expenses as a percentage of mean total assets 2.96 2.78

Society management expenses as a percentage of mean total assets 0.44 0.44

Gross capital represents the general reserve together with the available-for-sale reserve, cash flow hedging reserve, translation reserve, subordinated liabilities, subscribed capital and non-controlling interests, as shown in the Group Statement of Financial Position. The gross capital ratio measures the proportion which the Group’s capital bears to the Group’s liabilities to holders of shares, depositors and other providers of funds, that is, its investors.

Liquid assets represent the total of cash in hand and balances with the Bank of England, loans and advances to credit institutions and debt securities. Liquid assets are generally readily realisable, enabling the Group to meet its general liabilities during the year.

The profit ratio measures the proportion that the Group’s profit after tax for the year bears to the average of the Group’s total assets during the year. Mean total assets are calculated as the average of the 2012 and 2011 total assets as shown in the Group Statement of Financial Position. A reasonable level of profit is required each year to maintain the gross capital ratio at a suitable level to protect investors’ funds.

The management expenses ratio measures the proportion that the administrative expenses bear to the average of the mean total assets during the year.

Independent auditor’s statement to the members and depositors of Skipton Building Society We have examined the Summary Financial Statement of Skipton Building Society for the year ended 31 December 2012 set out on pages 24 to 28.

This auditor’s statement is made solely to the Society’s members, as a body, and to the Society’s depositors, as a body, in accordance with section 76 of the Building Societies Act 1986. Our work has been undertaken so that we might state to the Society’s members and depositors those matters we are required to state to them in such a statement and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Society and the Society’s members as a body and the Society’s depositors as a body, for our work, for this statement, or for the opinions we have formed.

Respective responsibilities of directors and auditor

The directors are responsible for preparing the Summary Financial Statement, in accordance with applicable United Kingdom law.

Our responsibility is to report to you our opinion on the consistency of the Summary Financial Statement with the full Annual Accounts, Annual Business Statement and Directors’ Report and its conformity with the relevant requirements of section 76 of the Building Societies Act 1986 and regulations made under it.

Basis of opinionWe conducted our work in accordance with Bulletin 2008/3 ‘The auditor’s statement on the summary financial statement in the United Kingdom’ issued by the Auditing Practices Board. Our report on the Group’s full Annual Accounts describes the basis of our opinions on those Annual Accounts, the Annual Business Statement and Directors’ Report.

Opinion on summary financial statement In our opinion the Summary Financial Statement is consistent with the full Annual Accounts, the Annual Business Statement and Directors’ Report of Skipton Building Society for the year ended 31 December 2012 and conforms with the applicable requirements of section 76 of the Building Societies Act 1986 and regulations made under it.

John Ellacott

for and on behalf of KPMG Audit Plc, Statutory Auditor

Chartered Accountants Leeds

27 February 2013


Directors’ Remuneration ReportThis report explains the Group’s policies for the remuneration of Directors and discloses the remuneration of Directors. The Board is committed to best practice in its approach to remuneration policy and this report explains how the Group applies the principles in the Corporate Governance Code relating to remuneration, insofar as they are considered appropriate to building societies. A summary of this report will be sent to all members entitled to vote at this year’s Annual General Meeting at which members will, once again, have the opportunity to vote on the report.

Remuneration Committee

The Remuneration Committee is responsible for determining, on behalf of the Board, the Group’s remuneration policy, reviewing its adequacy, effectiveness and compliance with the FSA’s Remuneration Code (the Code). The Committee specifically:

• Sets remuneration for the Chairman and the Executive Directors.

• Approves the remuneration policy for senior managers who have a material impact on the Society’s risk profile (Code Staff).

• Reviews recommendations from the Group Chief Executive for approval of the remuneration for key executives in the Group.

• Agrees the design and overall targets for any short or long term variable pay schemes applicable to senior executives and Code Staff.

The Committee has established clear remuneration principles which reflect both the requirements of the Society and the Code. These principles, which are reviewed annually, apply Group-wide, setting appropriate standards with regard to remuneration governance, risk management, variable pay structures (and the link to performance) and Code Staff remuneration. The Committee receives an annual report from the Chief Conduct Risk Officer and Secretary on the implications of the remuneration policies within the Group on risk management and compliance with the principles.

The terms of reference of the Remuneration Committee are available, on request, from the Secretary.

The Remuneration Committee met 10 times during 2012. In discharging its duties, the Committee reviews and takes into account independently produced data in relation to similar financial services organisations. Independent remuneration consultants advising the Committee have no other connection with the Group.

The Committee currently comprises three Non-Executive Directors, Messrs Hutton (Chairman), Thompson and East. The Chairman, Group Chief Executive, Chief Conduct Risk Officer and Secretary and Chief Human Resources Officer regularly attend by invitation and external advisers are invited to attend meetings as and when appropriate.

In addition to its annual responsibilities, the Committee has been involved during 2012 in the following areas:

• Review and approval of medium and long term incentive schemes for Operational Board members in group subsidiaries.

• Review of total remuneration for the Society’s Executive team with particular emphasis on balancing reward for short term objectives with a long term focus on sustainable profit and member value.

• Approval of design changes to the Society’s Senior Leadership Team annual bonus scheme.

• Updating of Executive service contracts.

The Non-Executive Directors’ Remuneration Committee, which comprises Messrs Ellis (Chairman), Cutter and Twigg, determines the level of the other Non-Executive Directors’ fees.

Remuneration policy

In establishing, implementing and maintaining the remuneration policy, the Committee applies the Group’s remuneration principles. The general principles set out the Committee’s standards with regard to remuneration, governance, risk management, and the link to performance.

In addition to the general principles listed below, the Committee sets out requirements for the operation of variable pay, setting appropriate rules and limits around bonus and incentive payments. Further requirements on deferral and performance adjustment apply specifically to Code Staff. The principles were last reviewed in Q4 2012 to reflect the FSA’s guidance consultation on the approach to sales incentives.

General principles

1. A total rewards approach to remuneration is taken which encompasses the key elements deployed to attract, engage and retain employees, namely: compensation (base and variable), benefits and the ‘work experience’. The ‘work experience’ includes but is not restricted to culture / environment, work / life balance, career development and recognition.

2. Remuneration throughout the Skipton Group encourages a high level of stewardship and corporate governance.

3. Remuneration policies, procedures and practices reflect sound, effective risk management and do not encourage risk taking which falls outside any of the stated Board Risk Appetites or the scope of Board policies.

4. Remuneration practices are reviewed at least annually by the Risk function to ensure they do not encourage inappropriate risk taking behaviour or present conflicts of interest which may result in unfair outcomes for our customers.

5. Remuneration is to be competitive and sufficient to secure and retain the services of talented individuals from other companies or mutual organisations with the key skills, knowledge and expertise necessary to run group businesses effectively, recognising the diverse nature of the Group and the nature of its stakeholders.

6. Remuneration recognises the appropriate level of business and individual performance which will create a strong and sustainable Group for the benefit of our members and customers, now and in the future.

7. Where remuneration is performance related, it will be based on the assessment of the individual / team, the business unit and overall Group performance (if appropriate). In assessing individual performance, a balance of financial and non-financial criteria will be taken into account.

8. Remuneration arrangements are transparent, consistent and fair, reflecting individual responsibilities and performance. Base compensation will reflect the core role and responsibilities of the individual whereas variable compensation will reflect the achievement of agreed targets, or objectives which are over and above business as usual activities.

9. All employees will be rewarded fairly, regardless of race, colour, creed, ethnic or national origin,

marital status, disability, age, gender, gender reassignment, sexual orientation, political opinion, religion, trade union or non trade union membership.

10. Remuneration arrangements are cost effective and straightforward to understand, communicate and administer.

Executive Directors’ remuneration

The Board’s policy is designed to ensure that Executive Directors’ remuneration reflects performance and enables the Group to attract, retain and motivate a sufficient number of high calibre individuals to lead and direct the organisation and deliver continually improving business performance.

Our approach to Executive Directors’ remuneration is as follows:

Basic salary – basic salary reflects the size of the role and responsibilities, individual performance (assessed annually) and the skills / experience of the individual. The Society uses a recognised job evaluation mechanism to determine the relative size of roles.

In setting appropriate salary levels, the Committee takes into account data for similar positions in comparable organisations. The data is independently commissioned and the Society aims to position Executives competitively within this reference group.

Annual Variable Pay – the Executive Directors participate in the Senior Leadership Incentive Scheme (the Incentive Scheme) which is a non-pensionable performance incentive scheme designed to reward the achievement of objectives across a balance of financial and non financial objectives. These are reviewed each year and set by the Committee. In setting target and maximum payments, the Committee considers both the market position and the risk appetite of the Society and sets these levels accordingly.

Currently, annual bonus under the Incentive Scheme is the only variable pay element although this is under review, with proposals for a Long Term Scheme being considered for 2013.

Pensions – the Executive Directors receive contributions payable into defined contribution pension arrangements, or a cash equivalent.

Benefits – include the provision of a car or car allowance and private medical insurance.


Non-Executive Directors

Fees£000

2012Committee

Fees£000

Total £000

Fees £000

2011Committee

Fees£000

Total£000

Mr M H Ellis (Chairman) (note 1) 155 - 155 94 - 94

Mr A I Findlay (resigned 24 May 2011) - - - 28 - 28

Mr C N Hutton (Vice Chairman) (note 2) 48 4 52 48 4 52

Ms M L Cassoni (note 3) 18 1 19 - - -

Mr R D East (note 4) 41 - 41 4 - 4

Mr P R Hales (note 5) 41 8 49 40 5 45

Ms A B E Kinney (note 6) 34 7 41 40 8 48

Mr G Picken (note 7) 41 - 41 - - -

Mr P J S Thompson 41 - 41 40 - 40

Mr W R Worsley (retired 3 May 2011) - - - 13 - 13

419 20 439 307 17 324

Notes

1. Mr Ellis was appointed Chairman on 24 May 2011, replacing Mr Findlay who resigned from the Board on the same date.

2. Mr Hutton is also Chairman of the Remuneration Committee.

3. Ms Cassoni was appointed a Director on 31 July 2012, and was appointed Chairman of the Audit Committee on 31 October 2012.

4. Mr East was appointed a Director on 29 November 2011.

5. Mr Hales is the Chairman of the Board Risk Committee.

6. Ms Kinney resigned as a Director and as Chairman of the Audit Committee on 31 October 2012.

7. Mr Picken was appointed a Director on 17 January 2012.

comparable data from similar financial services organisations. Additional fees are paid to those Non-Executive Directors who undertake additional duties and responsibilities, including chairmanship of Board committees.

Non-Executive Directors only receive fees and do not participate in any performance pay scheme, nor do they receive pension or other benefits. The Non-Executive Remuneration Committee increased the Non-Executive Directors’ basic annual fee from £40,000 to £42,000 from 1 July 2012, the first increase since July 2007.

The Chairman’s fees are reviewed and approved by the Remuneration Committee. Mr Ellis’ fee was set following comparison with market data at £155,000 per annum when he joined the Board as Chairman on 24 May 2011, and has not been increased since.

Service contracts

The Executive Directors are employed on rolling service contracts which can be terminated by either the Society or the Director giving one year’s notice. Unless notice to terminate is given by either party, the contracts continue automatically. Non-Executive Directors do not have service contracts.

2012 Executive Directors’ Remuneration review

Basic salary

In 2011, following an external benchmarking survey of executive remuneration in comparable financial services organisations, the Committee agreed to increase the basic salaries of the Group Chief Executive and Group Finance Director to £352,000 and £275,000 respectively with effect from 1 April 2011. Mr Fleet’s basic salary, following his appointment to the Board as Distribution Director on 6 December 2011, was set at £230,000 and Mr Cornelius’ basic salary, following his appointment to the Board as Commercial Director on 11 June 2012, was set at £210,000 based on comparable market data.

There has been no subsequent increase to the Executive Directors’ basic salaries.

Variable pay

The Incentive Scheme was introduced in 2011 and therefore ended its first year of operation in December 2011 with payment made in March 2012.

In reviewing the operation of the Incentive Scheme for 2012, a number of changes were made in the following areas:

• Profit – Group profit was retained as a performance target but Society profit was replaced with Mortgages and Savings profit to reflect a broader focus. Individual profit targets were removed from the Incentive Scheme and reflected more appropriately in personal objectives.

• Common Team KPIs were set for all participants, taking into account a balance of conduct prudential risk factors. The team KPIs reflect people, customers, conduct, and financial strength and process measures.

The Incentive Scheme is capped in line with market practice and provides an appropriate balance between base and variable pay. The Incentive Scheme rules include the requirement to defer over three years a portion of the amount earned by any individual if the total amount earned by that individual is greater than £500,000, or the amount earned under the Incentive Scheme is more than 33% of his or her total remuneration.

The Remuneration Committee may reduce or withdraw the payment of a deferred amount in certain circumstances and has the power to

reduce or cancel payments due under the Incentive Scheme if it believes in extreme circumstances that the payments are not appropriate. In 2012, the Committee exercised its discretion and reduced the bonuses of Executive Committee members by 10% as a result of conduct risk issues within the Financial Advice division.

Under the terms of the Incentive Scheme and based on the results of the business and their individual performance, the Executive Directors are entitled to the following annual performance payments for 2012, expressed as a percentage of their basic salary: Mr Cutter 51.4% (2011: 15.0%); Mr Twigg 45.8% (2011: 10.1%); Mr Fleet 47.8% (2011: 17.5%) and Mr Cornelius 50.4% (2011: not applicable).

Long term incentive plan

As part of the review of Executive remuneration, the Committee has been considering the introduction of a long term incentive plan for senior executives in common with many other banking and financial services organisations. This was supported by the benchmarking exercise carried out during the year which concluded that the total remuneration of some Executives is below market largely (but not exclusively) due to the absence of a long term incentive plan. The Committee’s aim in introducing a long term incentive plan is to:

• Align reward to the achievement of long term sustainable profit and member interests.

• Provide an appropriate balance between short and long term objectives in the reward package.

• Provide market competitive reward packages which support retention and high performance of key Executives.

The Society intends to implement such a scheme during 2013. The scheme will apply to approximately 13 senior executives. It is intended that, over time, the balance between short and long term incentives will become equal by transferring variable pay from the short term scheme into the long term scheme. This will ensure an appropriate balance in the overall remuneration.

Non-Executive Directors’ remuneration

Non-Executive Directors’ fees (excluding those of the Chairman) are reviewed annually by the Non-Executive Remuneration Committee with recommendations made to the Board. The reviews are based on the responsibilities and time commitments required for Board and Board sub-committee meetings and also reflect


Directors’ emoluments

we’re always looking for ways to

improve our service and product range, to help us provide the best solutions for you. To do this we use a range of different tools including our Customer Panel, which comprises a group of people from around the country who are invited to give feedback and comment on topics relating to the Society. This could be anything from new product ranges to the style of our marketing material.

We’re currently looking for more customers to join the panel and help us with our research. Most of our research is conducted online, with an average of around eight to 10 email surveys for each member over the course of a year. However, you are also welcome to join the panel to take part in postal, telephone or face-to-face research, which

we carry out at least twice a year.

The great thing is we’ll only invite you to take part in surveys we feel are relevant to you and you can decide if you want to answer or not, so you’ll never feel under

pressure. We will also keep you updated on the panel and the outcome of research

through a quarterly email update or annual newsletter.

Becoming a member is easy. To become an online member simply visit skipton.co.uk/joincustomerpanel and fill in the short form. Alternatively, you can send your

details to Customer Panel, Customer Insight, Skipton Building Society,

The Bailey, Skipton, BD23 1DN. Please include your name, address, date of birth, phone number (if you are happy to be

contacted by phone) and email address (if you are happy to be

contacted by email).

Over

2,800 customers have already joined

the panel

Share your views on the things that

matter to you

Become a member of our Customer Panel

Please note you may, on occasion, be contacted by an external research company, on our behalf. Terms and conditions apply, please see skipton.co.uk/joincustomerpanel for full details.

2012

Salary£000

Annual Performance

Pay £000

Benefits(1)

£000

Sub total£000

Increase in accrued

pension£000

Pension scheme

contributions £000

Total£000

Mr D J Cutter 352 181 16 549 4 70 623

Mr I D Cornelius (note 2) 123 62 7 192 - 10 202Mr M R Fleet 230 110 26 366 - 18 384

Mr R J Twigg 275 126 12 413 4 55 472

980 479 61 1,520 8 153 1,681

2011

Salary£000

Annual Performance

Pay £000

Benefits(1)

£000

Sub total

£000

Increase in accrued

pension£000

Pension scheme

contributions £000

Total£000

Mr D J Cutter 344 53 15 412 1 69 482

Mr M R Fleet (note 3) 16 2 2 20 - 1 21

Mr R J Twigg 269 28 12 309 1 54 364

629 83 29 741 2 124 867

Notes

1. Benefits comprise the provision of a car or car allowance, and private medical insurance contributions.

2. £72,000 (2011: £nil) of Mr Cutter’s annual performance pay was deferred under the rules of the scheme.

3. Mr Cornelius was appointed as an Executive Director on 11 June 2012 and the above table includes his remuneration, annual performance pay and benefits as a Director of the Society from that date.

4. Mr Fleet was appointed as an Executive Director on 6 December 2011 and the above table includes his remuneration, annual performance pay and benefits as a Director of the Society from that date.

Executive Directors


Prize Draw Terms & ConditionsOne entry per person. No purchase is necessary. Travel costs are not included in the prize. You will automatically be entered into the draw if you provide Skipton Building Society (SBS) with your contact details on or before 31 May 2013. The draw will take place on 3 June 2013 and will be conducted by the Marketing Manager. The draw is not open to persons aged under 18, or employees or agents of SBS and other companies in the SBS Group, their families or any other person connected with the draw. The winner will be notified by telephone, email or post no later than 14 June 2013. The winner must contact SBS to confirm acceptance of the prize within 21 days of notification. The winner will be notified how they can collect their prize. In the event of non-acceptance within the specified period, or if the person is not contactable, SBS reserves the right to reallocate the prize awarded to the next randomly drawn valid entry. There is no cash or other alternative to the prize stated and the prize is not transferable. No correspondence will be entered into. Winners may be required to submit valid identification before receiving their prize. SBS will not be liable for any failure of receipt of entries, and takes no responsibility for any entries that are lost, delayed, illegible, corrupted, damaged, incomplete or otherwise invalid. SBS reserves the right to substitute a prize of equal value in the event that circumstances beyond our control make this unavoidable. SBS expressly disclaims any and all warranties, whether expressed or implied relating to the prize including any warranties as to the merchantability or satisfactory quality or fitness for a particular purpose. The name and county of the winner will be available by sending a SAE to the address provided above after the draw date. By entering you will be deemed to have accepted these terms and conditions and be bound by them. SBS will be the data controller responsible for the safe keeping of your data, which will be used for the administration of the prize draw. Your data will also be used to provide details of selected products and services if you have indicated above that you are happy to be contacted.

To receive regular updates on the latest products and services, to be contacted about your insurance needs when the time is right and for your chance to win, simply complete and return the form below before 31 May 2013 and we will enter you into a free prize draw. Alternatively, you can enter online at skipton.co.uk/portrait.

Email address Title Forename Surname Postcode Skipton Building Society (SBS) would occasionally like to contact you with details of products, services and other promotions which may be of interest to you. By providing your details, you are consenting to receive such communications by email, unless you have indicated your objection by ticking this box.

Your renewal monthsBy providing the information below you consent to SBS using it to contact you about your insurance deal.Car insurance renewal month Home insurance renewal month You can return your complete entry form to any branch, or send it to:Family Portrait Prize Draw, Skipton Building Society, Marketing Department, FREEPOST, Skipton, North Yorkshire, BD23 1YA

Skipton Building Society is a member of the Building Societies Association and the Financial Ombudsman Service. Authorised and regulated by the Financial Services Authority under registration number 153706 for accepting deposits, advising on and arranging mortgages and insurance. Skipton Financial Services Limited offers Restricted advice and is authorised and regulated by the Financial Services Authority (FSA) under register number 100013 and is a wholly owned subsidiary of Skipton Building Society. *To help maintain service and quality, some telephone calls may be recorded and monitored.

pRIzE dRAw

ENTEr bY 31 MAY 2013

Win one of four family and friends portrait experiences – and capture your own memories

PRIZE DRAW ONLY OPEN FOR THOSE AGED 18 OR OVER. Office use only A/C

MY BUILDING SOCIETY

Principal Office, The Bailey, Skipton, North Yorkshire BD23 1DN Telephone: 0845 850 1700*skipton.co.uk

Package includes:

• A one hour group photography session with a national portrait company;

• A viewing appointment showcasing the images from your session;

• One 8”x6” framed portrait of your choice;

• £100 voucher to spend on another framed portrait or photography session;

• Supplier’s own terms and conditions will apply.

We can provide documents in large print, Braille or audio cassette or CD if you need them. Please speak to a member of our team on 0845 850 1733 to find out more.

my skipton agm mag 2013

Documents