Notes 11 to 20

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11 Other intangible assets

Group	Computer software
	2009 £m	2008 £m
Cost
At 1 January	23.5	17.3
Additions	6.2	6.2
Disposals	(0.7)	–
At 31 December	29.0	23.5
Accumulated amortisation
At 1 January	6.4	4.7
Charged to the income statement	3.8	1.7
Disposals	(0.7)	–
At 31 December	9.5	6.4
Net book value at 31 December	19.5	17.1
Net book value at 1 January	17.1	12.6

12 Property, plant and equipment

Group	Freehold land and buildings £m	Leasehold land and buildings £m	Equipment and vehicles £m	Total £m
Cost
At 1 January 2009	4.2	0.8	67.2	72.2
Additions	–	0.1	7.1	7.2
Disposals	–	(0.2)	(4.6)	(4.8)
Disposal of business (note 10)	–	–	(0.5)	(0.5)
Acquisition of business (note 10)	–	–	0.5	0.5
At 31 December 2009	4.2	0.7	69.7	74.6
Accumulated depreciation
At 1 January 2009	1.4	0.5	41.7	43.6
Charged to the income statement	0.1	0.1	8.0	8.2
Disposals	–	(0.2)	(3.4)	(3.6)
Disposal of business (note 10)	–	–	(0.4)	(0.4)
Acquisition of business (note 10)	–	–	0.5	0.5
At 31 December 2009	1.5	0.4	46.4	48.3
Net book value at 31 December 2009	2.7	0.3	23.3	26.3
Net book value at 1 January 2009	2.8	0.3	25.5	28.6

The loss on disposal of property, plant and equipment in 2009 amounted to £0.3m (2008: £0.3m) and represented proceeds received of £0.9m (2008: £0.8m) less the net book value of disposals of £1.2m (2008: £1.1m).

Group	Freehold land and buildings £m	Leasehold land and buildings £m	Equipment and vehicles £m	Total £m
Cost
At 1 January 2008	4.2	0.9	61.0	66.1
Additions	–	0.1	8.4	8.5
Disposals	–	(0.2)	(2.2)	(2.4)
At 31 December 2008	4.2	0.8	67.2	72.2
Accumulated depreciation
At 1 January 2008	1.3	0.4	35.7	37.4
Charged to the income statement	0.1	0.2	7.2	7.5
Disposals	–	(0.1)	(1.2)	(1.3)
At 31 December 2008	1.4	0.5	41.7	43.6
Net book value at 31 December 2008	2.8	0.3	25.5	28.6
Net book value at 1 January 2008	2.9	0.5	25.3	28.7

Company	Freehold land and buildings £m	Leasehold land and buildings £m	Equipment and vehicles £m	Total £m
Cost
At 1 January 2009	4.2	0.2	2.3	6.7
Additions	–	–	0.4	0.4
Disposals	–	–	(0.7)	(0.7)
At 31 December 2009	4.2	0.2	2.0	6.4
Accumulated depreciation
At 1 January 2009	1.4	0.1	1.5	3.0
Charged to the income statement	0.1	–	0.3	0.4
Disposals	–	–	(0.6)	(0.6)
At 31 December 2009	1.5	0.1	1.2	2.8
Net book value at 31 December 2009	2.7	0.1	0.8	3.6
Net book value at 1 January 2009	2.8	0.1	0.8	3.7

The loss on disposal of property, plant and equipment in 2009 amounted to £0.1m (2008: £0.1m) and represented proceeds received of £nil (2008: £nil) less the net book value of disposals of £0.1m (2008: £0.1m).

Company	Freehold land and buildings £m	Leasehold land and buildings £m	Equipment and vehicles £m	Total £m
Cost
At 1 January 2008	4.2	0.2	2.1	6.5
Additions	–	–	0.6	0.6
Disposals	–	–	(0.4)	(0.4)
At 31 December 2008	4.2	0.2	2.3	6.7
Accumulated depreciation
At 1 January 2008	1.3	0.1	1.5	2.9
Charged to the income statement	0.1	–	0.3	0.4
Disposals	–	–	(0.3)	(0.3)
At 31 December 2008	1.4	0.1	1.5	3.0
Net book value at 31 December 2008	2.8	0.1	0.8	3.7
Net book value at 1 January 2008	2.9	0.1	0.6	3.6

13 Investment in subsidiaries

	Company
	2009 £m	2008 £m
Cost
At 1 January	402.8	389.7
Additions	3.2	13.1
At 31 December	406.0	402.8
Accumulated impairment losses
At 1 January	31.7	32.1
Credited to the income statement	–	(0.4)
At 31 December	31.7	31.7
Total cost less accumulated impairment losses at 31 December	374.3	371.1

The additions to investments in 2009 represent £3.2m in respect of options and awards over Provident Financial plc shares which had been granted/awarded to employees of subsidiary companies (2008: £2.6m). The other additions to investments in 2008 represented a further £7.0m investment in the equity of Vanquis Bank Limited and £3.5m in respect of the transfer of Direct Auto Financial Services Limited and other non-trading subsidiaries from a subsidiary undertaking.

The impairment credit in 2008 represented the reversal of prior year impairment losses in respect of the companies forming Yes Car Credit.

The directors consider the value of investments to be supported by their underlying assets.

The following are the subsidiary undertakings which, in the opinion of the directors, principally affect the profit or assets of the group. A full list of subsidiary undertakings will be annexed to the next annual return of the company to be filed with the Registrar of Companies. All subsidiaries are consolidated and are held by wholly-owned intermediate companies, except for those noted below, which are held directly by the company.

		Country of incorporation or registration	Class of capital	% holding
* Shares held directly
Consumer Credit Division	Provident Financial Management Services Limited	England	Ordinary	100 *
	Provident Personal Credit Limited	England	Ordinary	100
	Greenwood Personal Credit Limited	England	Ordinary	100
Vanquis Bank	Vanquis Bank Limited	England	Ordinary	100 *
Yes Car Credit	Direct Auto Financial Services Limited	England	Ordinary	100 *
Central	Provident Investments plc	England	Ordinary	100 *

The above companies operate principally in their country of incorporation or registration.

14 Amounts receivable from customers

Group	2009				2008
	Due within one year £m	Due in more than one year £m	Total £m		Due within one year £m	Due in more than one year £m	Total £m
Consumer Credit Division	796.9	86.9	883.8		768.4	83.7	852.1
Vanquis Bank	255.5	–	255.5		205.4	–	205.4
Yes Car Credit	–	–	–		5.8	–	5.8
Total group	1,052.4	86.9	1,139.3		979.6	83.7	1,063.3

Amounts receivable from customers are held at amortised cost and are equal to the expected future cash flows receivable discounted at the effective interest rate. The average effective interest rate fo the year ended 31 December 2009 was 100% for the Consumer Credit Division (2008: 100%), 40% for Vanquis Bank (2008: 38%) and 23% for Yes Car Credit (2008: 21%).

The average period to maturity of the amounts receivable from customers within the Consumer Credit Division is 6.2 months (2008: 6.5 months) and within Yes Car Credit is nil months (2008: 4.1 months). Within Vanquis Bank, there is no fixed term for repayment of credit card loans other than a general requirement for customers to make a monthly minimum repayment towards their outstanding balance. For the majority of customers, this is the higher of £5 or 4.5% of their outstanding balance.

The fair value of amounts receivable from customers is approximately £1.4 billion (2008: £1.3 billion). Fair value has been derived by discounting expected future cash flows (net of collection costs) at the group’s weighted average cost of capital at the balance sheet date. This value approximates to market value.

The credit quality of amounts receivable from customers is as follows:

Credit quality of amounts receivable from customers	Group
	2009 £m	2008 £m
Neither past due nor impaired	545.4	504.7
Past due but not impaired	129.5	113.8
Impaired	464.4	444.8
Total	1,139.3	1,063.3

Past due but not impaired balances all relate to home credit loans within the Consumer Credit Division. There are no accounts/loans within Vanquis Bank, Yes Car Credit or in respect of the unsecured direct repayment loans within the Consumer Credit Division which are past due but not impaired. In the home credit business of the Consumer Credit Division, past due but not impaired balances relate to loans which are contractually overdue. However, contractually overdue loans are not deemed to be impaired unless the customer has missed two or more cumulative weekly payments in the previous 12-week period since only at this point do the expected future cash flows from loans deteriorate significantly.

The following table sets out the ageing analysis of past due but not impaired balances within the home credit business of the Consumer Credit Division based on contractual arrears since the inception of the loan:

Ageing analysis of past due but not impaired balances	Group
	2009 £m	2008 £m
One week overdue	75.7	65.4
Two weeks overdue	27.4	23.4
Three weeks or more overdue	26.4	25.0
Past due but not impaired	129.5	113.8

The group holds collateral of £nil (2008: £2.3m) as security in respect of the Yes Car Credit amounts receivable from customers. In the event of default by the customer, the proceeds from disposal of the motor vehicle originally financed are used to offset amounts due from the customer.

Impairment in Vanquis Bank is deducted from the carrying value of amounts receivable from customers by the use of an allowance account. The movement in the allowance account during the year is as follows:

Vanquis Bank allowance account	Group
	2009 £m	2008 £m
At 1 January	26.4	19.9
Charge for the year	61.7	38.2
Amounts written off during the year	(57.2)	(40.9)
Amounts recovered during the year	9.1	9.2
At 31 December	40.0	26.4

Within the Consumer Credit Division and Yes Car Credit, impairments are deducted directly from amounts receivable from customers without the use of an allowance account.

The impairment charge in respect of amounts receivable from customers reflected within operating costs can be analysed as follows:

Impairment charge/(credit) on amounts receivable from customers	Group
	2009 £m	2008 £m
Consumer Credit Division	223.4	197.9
Vanquis Bank	61.7	38.2
Yes Car Credit	(1.7)	1.6
Total group	283.4	237.7

Interest income recognised on amounts receivable from customers which have been impaired can be analysed as follows:

Interest income recognised on impaired amounts receivable from customers	Group
	2009 £m	2008 £m
Consumer Credit Division	329.5	309.3
Vanquis Bank	14.8	12.0
Yes Car Credit	0.1	0.9
Total group	344.4	322.2

The currency profile of amounts receivable from customers is as follows:

Currency profile of amounts receivable from customers	Group
	2009 £m	2008 £m
Sterling	1,088.8	1,011.7
Euro	50.5	51.6
Total group	1,139.3	1,063.3

15 Financial instruments

The following table sets out the carrying value of the group’s financial assets and liabilities in accordance with the categories of financial instruments set out in IAS 39. Assets and liabilities outside the scope of IAS 39 are shown within non-financial assets/liabilities:

Group	2009
	Loans and receivables £m	Amortised cost £m	Hedging derivatives £m	Non-financial assets/liabilities £m	Total £m
Assets
Cash and cash equivalents	20.3	–	–	–	20.3
Amounts receivable from customers	1,139.3	–	–	–	1,139.3
Derivative financial instruments	–	–	12.5	–	12.5
Trade and other receivables	28.2	–	–	–	28.2
Retirement benefit asset	–	–	–	19.9	19.9
Property, plant and equipment	–	–	–	26.3	26.3
Intangible assets (including goodwill)	–	–	–	21.6	21.6
Deferred and current tax assets	–	–	–	7.7	7.7
Total assets	1,187.8	–	12.5	75.5	1,275.8
Liabilities
Bank and other borrowings	–	(890.3)	–	–	(890.3)
Derivative financial instruments	–	–	(29.1)	–	(29.1)
Trade and other payables	–	(48.0)	–	–	(48.0)
Deferred and current tax liabilities	–	–	–	(39.2)	(39.2)
Provisions	–	–	–	(0.8)	(0.8)
Total liabilities	–	(938.3)	(29.1)	(40.0)	(1,007.4)

Group	2008
	Loans and receivables £m	Amortised cost £m	Hedging derivatives £m	Non-financial assets/liabilities £m	Total £m
Assets
Cash and cash equivalents	19.5	–	–	–	19.5
Amounts receivable from customers	1,063.3	–	–	–	1,063.3
Derivative financial instruments	–	–	28.9	–	28.9
Trade and other receivables	15.1	–	–	–	15.1
Retirement benefit asset	–	–	–	50.9	50.9
Property, plant and equipment	–	–	–	28.6	28.6
Intangible assets (including goodwill)	–	–	–	20.2	20.2
Total assets	1,097.9	–	28.9	99.7	1,226.5
Liabilities
Bank and other borrowings	–	(828.5)	–	–	(828.5)
Derivative financial instruments	–	–	(20.8)	–	(20.8)
Trade and other payables	–	(64.0)	–	–	(64.0)
Deferred and current tax liabilities	–	–	–	(33.3)	(33.3)
Provisions	–	–	–	(2.0)	(2.0)
Total liabilities	–	(892.5)	(20.8)	(35.3)	(948.6)

The following table sets out the carrying value of the company’s financial assets and liabilities in accordance with the categories of financial instruments set out in IAS 39:

Company	2009
	Loans and receivables £m	Amortised cost £m	Hedging derivatives £m	Non-financial assets/liabilities £m	Total £m
Assets
Investment in subsidiaries	–	–	–	374.3	374.3
Trade and other receivables	1,339.1	–	–	–	1,339.1
Retirement benefit asset	–	–	–	6.1	6.1
Property, plant and equipment	–	–	–	3.6	3.6
Deferred and current tax assets	–	–	–	7.6	7.6
Total assets	1,339.1	–	–	391.6	1,730.7
Liabilities
Bank and other borrowings	–	(547.9)	–	–	(547.9)
Derivative financial instruments	–	–	(26.5)	–	(26.5)
Trade and other payables	–	(257.9)	–	–	(257.9)
Total liabilities	–	(805.8)	(26.5)	–	(832.3)

Company	2008
	Loans and receivables £m	Amortised cost £m	Hedging derivatives £m	Non-financial assets/liabilities £m	Total £m
Assets
Cash and cash equivalents	0.5	–	–	–	0.5
Investments in subsidiaries	–	–	–	371.1	371.1
Trade and other receivables	1,301.2	–	–	–	1,301.2
Retirement benefit asset	–	–	–	16.1	16.1
Property, plant and equipment	–	–	–	3.7	3.7
Deferred and current tax assets	–	–	–	1.3	1.3
Total assets	1,301.7	–	–	392.2	1,693.9
Liabilities
Bank and other borrowings	–	(469.2)	–	–	(469.2)
Derivative financial instruments	–	–	(20.1)	–	(20.1)
Trade and other payables	–	(247.0)	–	–	(247.0)
Deferred and current tax liabilities	–	–	–	(12.3)	(12.3)
Total liabilities	–	(716.2)	(20.1)	(12.3)	(748.6)

16 Derivative financial instruments

The group uses derivative financial instruments to hedge the interest rate risk and foreign exchange rate risk on its borrowings. The group does not enter into speculative transactions or positions.

The contractual/notional amounts and the fair values of derivative financial instruments are set out below:

Group	2009				2008
	Contractual /notional amount £m	Assets £m	Liabilities £m		Contractual /notional amount £m	Assets £m	Liabilities £m
Interest rate swaps	1,361.0	–	(24.6)		1,488.5	–	(20.0)
Cross-currency swaps	164.8	12.5	(4.4)		164.8	28.9	(0.1)
Foreign exchange contracts	3.0	–	(0.1)		5.5	–	(0.7)
Total group	1,528.8	12.5	(29.1)		1,658.8	28.9	(20.8)
Analysed as
– due within one year		–	(18.4)			–	(4.7)
– due in more than one year		12.5	(10.7)			28.9	(16.1)
		12.5	(29.1)			28.9	(20.8)

Company	2009				2008
	Contractual /notional amount £m	Assets £m	Liabilities £m		Contractual /notional amount £m	Assets £m	Liabilities £m
Interest rate swaps	1,361.0	–	(24.6)		1,488.5	–	(20.0)
Cross-currency swaps	16.4	–	(1.9)		16.4	–	(0.1)
Total company	1,377.4	–	(26.5)		1,504.9	–	(20.1)
Analysed as
– due within one year		–	(17.4)			–	(4.0)
– due in more than one year		–	(9.1)			–	(16.1)
		–	(26.5)			–	(20.1)

The fair value of derivative financial instruments has been calculated by discounting contractual future cash flows using relevant market interest rate yield curves and forward foreign exchange rates prevailing at the balance sheet date.

(a) Hedging reserve movements

The movement in the hedging reserve within equity as a result of the changes in the fair value of derivative financial instruments can be summarised as follows:

	Group		Company
	2009 £m	2008 £m	2009 £m	2008 £m
Interest rate swaps	1.2	(20.0)	1.2	(20.0)
2001 cross-currency swaps	(0.3)	0.3	(0.3)	0.3
2003 cross-currency swaps	(1.6)	1.7	–	–
2004 cross-currency swaps	(0.7)	1.4	–	–
Foreign exchange contracts	0.6	(0.7)	–	–
Net (charge)/credit to the hedging reserve	(0.8)	(17.3)	0.9	(19.7)

The net (charge)/credit to the group and company hedging reserve in 2009 includes £6.8m (2008: £nil) of previously deferred losses which were recycled and reported as part of the exceptional finance cost in the year (see note 3).

Under IFRS 7, 'Financial instruments: Disclosures’, all derivative financial instruments are classed as Level 2 as they are not traded in an active market and the fair value is therefore determined through discounting future cash flows.

(b) Income statement charges

The net credit/(charge) to the income statement in the year in respect of the movement in the fair value of derivative financial instruments is as follows:

	Group		Company
	2009 £m	2008 £m	2009 £m	2008 £m
Net fair value (loss)/gain on 2004 cross-currency swaps	(0.5)	0.3	–	–
Movement in fair value of ineffective interest rate swaps	1.0	(0.7)	1.0	(0.7)
Net credit/(charge) to the income statement prior to exceptional finance cost (note 3)	0.5	(0.4)	1.0	(0.7)
Exceptional finance cost – recycling of previously deferred losses (note 3)	(6.8)	–	(6.8)	–
Net charge to the income statement	(6.3)	(0.4)	(5.8)	(0.7)

(c) Interest rate swaps

The group and company use interest rate swaps in order to manage the interest rate risk on the group’s syndicated and bilateral bank borrowings. In the year ended 31 December 2009, the group entered into various interest rate swaps which have been designated and were effective under IAS 39 as cash flow hedges at inception. The movement in the fair value of effective interest rate swaps during the year was as follows:

	Group and company
	2009 £m	2008 £m
(Liability)/asset at 1 January	(20.0)	0.7
Credited/(charged) to the hedging reserve	1.2	(20.0)
Movement in fair value of ineffective interest rate swaps credited/(charged) to the income statement	1.0	(0.7)
Exceptional finance cost – recycling of previously deferred losses (note 3)	(6.8)	–
Liability at 31 December	(24.6)	(20.0)

The weighted average interest rate and period to maturity of the interest rate swaps held by the group and company were as follows:

Group	2009				2008
	Weighted average interest rate %	Range of interest rates %	Weighted average period to maturity (years)		Weighted average interest rate %	Range of interest rates %	Weighted average period to maturity (years)
Sterling	4.2	3.1-5.2	1.2		4.4	3.2–5.2	1.9
Euro	3.8	3.8	1.7		3.8	3.8	0.6

Company	2009				2008
	Weighted average interest rate %	Range of interest rates %	Weighted average period to maturity (years)		Weighted average interest rate %	Range of interest rates %	Weighted average period to maturity (years)
Sterling	4.2	3.1-5.2	1.2		4.4	3.2–5.2	1.9
Euro	3.8	3.8	1.7		3.8	3.8	0.6

(d) Cross-currency swaps

The group and company use cross-currency swaps in order to manage the interest rate and foreign exchange rate risk arising on the group’s US private placement loan notes issued in 2001, 2003 and 2004.

2001 and 2003 private placement loan notes

The group and company have put in place cross-currency swaps to swap the principal and fixed rate interest of the 2001 and 2003 US dollar private placement loan notes into fixed rate sterling liabilities. The maturity dates of the cross-currency swaps match the underlying loan notes (see note 21(e)). These swaps were designated and were effective under IAS 39 as cash flow hedges in the year ended 31 December 2009 and the fair value movements in the swaps and the corresponding exchange movements on the underlying loan notes have been deferred in the hedging reserve within equity.

The cross-currency swaps used to hedge the 2001 US dollar private placement loan notes have a weighted average interest rate of 7.6% (2008: 7.6%), a range of interest rates of 7.6% (2008: 7.6%) and a weighted average period to maturity of 1.4 years (2008: 2.4 years). The movement in the fair value of the swaps can be analysed as follows:

	Group and company
	2009 £m	2008 £m
Liability at 1 January	(0.1)	(17.1)
Exchange rate movements	(1.5)	16.7
(Charged)/credited to the hedging reserve	(0.3)	0.3
Liability at 31 December	(1.9)	(0.1)

The exchange rate movements reflect the movement in the year of the difference between the translation of the 2001 US dollar private placement loan notes at the year end exchange rate compared to the contracted rate. A corresponding entry is made to borrowings.

The amount (charged)/credited to the hedging reserve reflects the difference between the movement in the fair value of the cross-currency swaps and the exchange rate movements described above.

The cross-currency swaps used to hedge the 2003 US dollar private placement loan notes have a weighted average interest rate of 6.7% (2008: 6.7%), a range of interest rates of 6.6% to 6.8% (2008: 6.6% to 6.8%) and a weighted average period to maturity of 2.2 years (2008: 3.2 years). The movement in the fair value of the swaps can be analysed as follows:

	Group
	2009 £m	2008 £m
Asset/(liability) at 1 January	6.8	(16.5)
Exchange rate movements	(7.7)	21.6
(Charged)/credited to the hedging reserve	(1.6)	1.7
(Liability)/asset at 31 December	(2.5)	6.8

The exchange rate movements reflect the movement in the year of the difference between the translation of the 2003 US dollar private placement loan notes at the year end exchange rate compared to the contracted rate. A corresponding entry is made to borrowings.

The amount (charged)/credited to the hedging reserve reflects the difference between the movement in the fair value of the cross-currency swaps and the exchange rate movements described above.

2004 private placement loan notes

The group has put in place cross-currency swaps to swap the principal and fixed rate interest of the US dollar private placement loan notes issued in 2004 into floating rate sterling interest liabilities. The maturity dates of the cross-currency swaps match the underlying loan notes (see note 21(e)).

The swaps comprise both cash flow hedges and fair value hedges. The cash flow hedge portion of the swaps were designated and were effective under IAS 39 as cash flow hedges in the year and the movements in the swaps and the exchange movements in the underlying loan notes have been deferred in the hedging reserve within equity.

The fair value hedge portion of the swaps were designated and were effective under IAS 39 as fair value hedges during the year. As a result, fair value movements in the swaps were (charged)/credited to the income statement with a corresponding entry made to the underlying loan notes within borrowings for the effective portion of the swaps, leaving a net (charge)/credit within the income statement reflecting the net fair value (loss)/gain on the fair value hedge in the year.

The swaps have a range of interest rates from LIBOR + 1.58% to LIBOR + 1.63% (2008: LIBOR + 1.58% to LIBOR + 1.63%) and a weighted average period to maturity of 3.7 years (2008: 4.7 years).

The movement in the fair value of the swaps can be analysed as follows:

	Group
	2009 £m	2008 £m
Asset/(liability) at 1 January	22.1	(3.2)
Exchange rate movements	(8.4)	23.6
Net fair value (loss)/gain (charged)/credited to the income statement	(0.5)	0.3
(Charged)/credited to the hedging reserve	(0.7)	1.4
Asset at 31 December	12.5	22.1

The exchange rate movements reflect the movement in the year of the difference between the translation of the 2004 US dollar private placement loan notes at the year end exchange rate compared to the contracted rate. A corresponding entry is made to borrowings.

The amount (charged)/credited to the hedging reserve reflects the difference between the movement in the fair value of the cash flow hedge portion of the cross-currency swaps and the cash flow hedge portion of the exchange rate movements described above.

The net fair value (loss)/gain (charged)/credited to the income statement reflects the difference between the movement in the fair value of the fair value hedge portion of the cross-currency swaps and the fair value hedge portion of the exchange rate movements described above.

(e) Foreign exchange contracts

The group uses foreign exchange contracts in order to manage the foreign exchange rate risk arising from the group’s operations in the Republic of Ireland. A liability of £0.1m is held in the group balance sheet as at 31 December 2009 in respect of foreign exchange contracts (2008: liability of £0.7m).

The group’s foreign exchange contracts comprise forward foreign exchange contracts to buy sterling for a total notional amount of £3.0m (2008: £5.5m). These contracts have a range of maturity dates from 11 February 2010 to 12 July 2010 (2008: 11 February 2009 to 11 November 2009). These contracts were designated and were effective under IAS 39 as cash flow hedges in the year and, accordingly, the movement in fair value of £0.6m has been credited to the hedging reserve within equity (2008: charge of £0.7m).

17 Trade and other receivables

Non-current assets	Company
	2009 £m	2008 £m
Amounts owed by group undertakings	438.0	438.0

There are no amounts past due and there is no impairment provision held against amounts owed by group undertakings due for repayment in more than one year (2008: £nil). The amounts owed by group undertakings are unsecured, due for repayment in more than one year and accrue interest at rates linked to LIBOR.

Current assets	Group			Company
	2009 £m	2008 £m		2009 £m	2008 £m
Trade receivables	0.6	0.6		–	–
Other receivables	13.9	2.5		–	–
Amounts owed by group undertakings	–	–		895.1	860.8
Prepayments and accrued income	13.7	12.0		6.0	2.4
Total	28.2	15.1		901.1	863.2

There are no amounts past due in respect of trade and other receivables due in less than one year (2008: £nil). Within the company, an impairment provision of £122.1m (2008: £126.8m) is held against amounts owed by group undertakings due in less than one year representing the deficiency in the net assets of those group undertakings. The movement in the provision in the year of £4.7m has been credited to the income statement of the company (2008: charge of £3.6m).

Amounts owed by group undertakings are unsecured, repayable on demand and accrue interest at rates linked to LIBOR.

The maximum exposure to credit risk of trade and other receivables is the carrying value of each class of receivable set out above (2008: carrying value set out above). There is no collateral held in respect of trade and other receivables (2008: £nil). The fair value of trade and other receivables equates to their book value (2008: fair value equalled book value).

18 Retirement benefit asset

(a) Pension schemes – defined benefit

The group operates a defined benefit scheme; the Provident Financial Staff Pension Scheme. The scheme covers 63% of employees with company-provided pension arrangements and is of the funded, defined benefit type providing retirement benefits based on final salary. Following a full group review of pension scheme arrangements, from 1 April 2006 members were provided with a choice of paying higher member contributions to continue accruing benefits based on final salary or paying a lower member contribution and accruing benefits based on a percentage of salary which would be revalued each year.

The most recent actuarial valuation of scheme assets and the present value of the defined benefit obligation was carried out as at 1 June 2006 by a qualified independent actuary. A valuation as at 1 June 2009 is currently in progress but is not yet finalised. The valuation used for the purposes of IAS 19 'Employee benefits’ has been based on the preliminary results of the 2009 valuation updated by the actuary to take account of the requirements of IAS 19 in order to assess the liabilities of the scheme as at the balance sheet date. Scheme assets are stated at fair value as at the balance sheet date.

The net retirement benefit asset recognised in the balance sheet of the group is as follows:

	Group
	2009			2008
	£m	%		£m	%
Equities	217.4	47		177.7	43
Corporate bonds	154.3	33		121.2	30
Fixed interest gilts	37.3	8		38.2	9
Index-linked gilts	55.0	12		51.0	12
Cash and money market funds	0.6	–		22.6	6
Total fair value of scheme assets	464.6	100		410.7	100
Present value of funded defined benefit obligations	(444.7)			(359.8)
Net retirement benefit asset recognised in the balance sheet	19.9			50.9

The net retirement benefit asset recognised in the balance sheet of the company is as follows:

	Company
	2009			2008
	£m	%		£m	%
Equities	54.7	47		43.2	43
Corporate bonds	38.8	33		29.5	30
Fixed interest gilts	9.4	8		9.3	9
Index-linked gilts	13.8	12		12.4	12
Cash and money market funds	0.1	–		5.5	6
Total fair value of scheme assets	116.8	100		99.9	100
Present value of funded defined benefit obligations	(110.7)			(83.8)
Net retirement benefit asset recognised in the balance sheet	6.1			16.1

The assets and liabilities of the group’s defined benefit pension scheme have been allocated between subsidiary companies on a pro-rata basis based upon the actual employer cash contributions made by each subsidiary company.

The amounts recognised in the income statement were as follows:

	Group			Company
	2009 £m	2008 £m		2009 £m	2008 £m
Current service cost	(5.1)	(5.7)		(1.6)	(1.8)
Past service cost	(0.1)	–		–	–
Interest cost	(22.4)	(22.9)		(7.2)	(7.3)
Expected return on scheme assets	24.9	29.8		7.9	9.5
Net (charge)/credit recognised in the income statement	(2.7)	1.2		(0.9)	0.4

The net (charge)/credit recognised in the income statement of the group has been included within administrative expenses.

Movements in the fair value of scheme assets were as follows:

	Group			Company
	2009 £m	2008 £m		2009 £m	2008 £m
Fair value of scheme assets at 1 January	410.7	465.7		99.9	117.4
Expected return on scheme assets	24.9	29.8		7.9	9.5
Actuarial movement on scheme assets	29.9	(78.9)		10.6	(24.5)
Contributions by the group/company	8.4	5.3		1.5	1.1
Section 75 contribution on disposal of subsidiary undertaking (note 10)	0.6	–		–	–
Contributions paid by scheme participants	0.6	2.5		0.2	0.8
Net benefits paid out	(10.5)	(13.7)		(3.3)	(4.4)
Fair value of scheme assets at 31 December	464.6	410.7		116.8	99.9

The expected contributions to the defined benefit pension scheme in the year ending 31 December 2010 are £9m.

Movements in the present value of the defined benefit obligation were as follows:

	Group			Company
	2009 £m	2008 £m		2009 £m	2008 £m
Defined benefit obligation at 1 January	(359.8)	(404.2)		(83.8)	(97.9)
Current service cost	(5.1)	(5.7)		(1.6)	(1.8)
Past service cost	(0.1)	–		–	–
Interest cost	(22.4)	(22.9)		(7.2)	(7.3)
Contributions paid by scheme participants	(0.6)	(2.5)		(0.2)	(0.8)
Actuarial movement on scheme liabilities	(67.2)	61.8		(21.2)	19.6
Net benefits paid out	10.5	13.7		3.3	4.4
Defined benefit obligation at 31 December	(444.7)	(359.8)		(110.7)	(83.8)

The principal actuarial assumptions used at the balance sheet date were as follows:

	Group and company
	2009 %	2008 %
Price inflation	3.60	2.90
Rate of increase in pensionable salaries	4.60	4.20
Rate of increase to pensions in payment	3.60	2.90
Discount rate	5.60	6.30
Long-term rate of return
– equities	8.05	8.15
– bonds	5.60	6.00
– fixed interest gilts	4.40	3.80
– index-linked gilts	4.40	3.80
– cash and money market funds	4.50	3.80
– overall (weighted average)	6.50	6.33

The expected return on plan assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the balance sheet date. Expected returns on equity investments reflect anticipated long-term real rates of return.

IAS 19 requires that the discount rate should be determined by reference to market yields at the balance sheet date on high quality corporate bonds and that the term of the instruments chosen should be consistent with the estimated term of the defined benefit obligations. In the UK, this is usually interpreted to mean the yield on AA-rated corporate bonds of an appropriate term. A movement of 0.1% in the discount rate would increase or decrease the retirement benefit asset by approximately £9m (2008: £8m).

The mortality assumptions used in the valuation of the defined benefit pension scheme are based on the mortality experience of self-administered pension schemes and allow for future improvements in life expectancy. The group now uses the S1PA standard tables as the basis for projecting mortality adjusted for the following factors:

• A 5% upwards adjustment to mortality rates for males and a 15% upwards adjustment for females is made in order to reflect lower life expectancies within the scheme compared to average pension schemes; and
• The projections are combined with the medium cohort improvement factors in order to predict future improvements in life expectancy, subject to an annual minimum rate of improvement of 1%.

In more simple terms, it is now assumed that members who retire in the future at age 65 will live on average for a further 23 years if they are male (2008: 22 years) and for a further 25 years if they are female (2008: 25 years). If assumed life expectancies had been one year greater for the scheme, the retirement benefit asset would have been reduced by approximately £14m (2008: £10m).

The actual return on scheme assets compared to the expected return is as follows:

	Group			Company
	2009 £m	2008 £m		2009 £m	2008 £m
Expected return on scheme assets	24.9	29.8		7.9	9.5
Actuarial movement on scheme assets	29.9	(78.9)		10.6	(24.5)
Actual return on scheme assets	54.8	(49.1)		18.5	(15.0)

Actuarial gains and losses are recognised through the statement of comprehensive income in the period in which they occur.

An analysis of the amounts recognised in the statement of comprehensive income is as follows:

	Group			Company
	2009 £m	2008 £m		2009 £m	2008 £m
Actuarial movement on scheme assets	29.9	(78.9)		10.6	(24.5)
Actuarial movement on scheme liabilities	(67.2)	61.8		(21.2)	19.6
Total loss recognised in the statement of comprehensive income in the year	(37.3)	(17.1)		(10.6)	(4.9)
Cumulative amount of losses recognised in the statement of comprehensive income	(62.8)	(25.5)		(19.6)	(9.0)

The history of the net retirement benefit asset/(liability) recognised in the balance sheet and experience adjustments for the group is as follows:

	Group
	2009 £m	2008 £m	2007 £m	2006 £m	2005 £m
Fair value of scheme assets	464.6	410.7	465.7	467.9	331.1
Present value of funded defined benefit obligation	(444.7)	(359.8)	(404.2)	(459.0)	(436.7)
Net retirement benefit asset/(liability) recognised in the balance sheet	19.9	50.9	61.5	8.9	(105.6)
Experience gains/(losses) on scheme assets
Experience
– amount (£m)	29.9	(78.9)	0.1	7.1	30.3
– percentage of scheme assets (%)	6.4	(19.2)	–	1.5	9.2
Experience gains/(losses) on scheme liabilities
– amount (£m)	10.3	–	(0.5)	(12.8)	–
– percentage of scheme liabilities (%)	2.3	–	(0.1)	(2.8)	–

The history of the net retirement benefit asset/(liability) recognised in the balance sheet and experience adjustments for the company is as follows:

	Company
	2009 £m	2008 £m	2007 £m	2006 £m	2005 £m
Fair value of scheme assets	116.8	99.9	117.4	60.0	41.9
Present value of funded defined benefit obligation	(110.7)	(83.8)	(97.9)	(59.5)	(56.6)
Net retirement benefit asset/(liability) recognised in the balance sheet	6.1	16.1	19.5	0.5	(14.7)
Experience gains/(losses) on scheme assets
– amount (£m)	10.4	(24.5)	(3.9)	0.9	4.1
– percentage of scheme assets (%)	8.9	(24.5)	(3.3)	1.5	9.8
Experience gains/(losses) on scheme liabilities
– amount (£m)	3.3	–	(0.1)	(1.9)	–
– percentage of scheme liabilities (%)	3.0	–	(0.1)	(3.2)	–

(b) Pension schemes – defined contribution

The group operates a stakeholder pension plan into which group companies contribute a proportion of pensionable earnings of the member (typically ranging between 5.1% and 10.6%) dependent on the proportion of pensionable earnings contributed by the member through a salary sacrifice (typically ranging between 3.0% and 8.0%). The assets of the scheme are held separately from those of the group and company. The pension charge in the consolidated income statement represents contributions payable by the group in respect of the plan and amounted to £3.2m for the year ended 31 December 2009 (2008: £1.5m). Contributions made by the company amounted to £0.2m (2008: £0.1m). No contributions were payable to the fund at the year end (2008: £nil).

The group contributed £0.1m to personal pension plans in the year (2008: £0.1m).

19 Deferred tax

Deferred tax is calculated in full on temporary differences under the balance sheet liability method and is measured at 28.0%. The movement in the deferred tax asset/(liability) during the year can be analysed as follows:

Asset/(liability)	Group			Company
	2009 £m	2008 £m		2009 £m	2008 £m
At 1 January	(0.5)	(6.1)		1.3	(5.0)
(Charge)/credit to the income statement (note 5)	(2.3)	(4.1)		1.2	(0.5)
Credit on items taken directly to equity	10.6	9.7		2.8	6.8
Transfer to retained earnings	(0.1)	–		(0.1)	–
At 31 December	7.7	(0.5)		5.2	1.3

An analysis of the deferred tax asset/(liability) for the group is set out below:

Group – asset/(liability)	2009					2008
	Accelerated capital allowances £m	Other temporary differences £m	Retirement benefit asset £m	Total £m		Accelerated capital allowances £m	Other temporary differences £m	Retirement benefit asset £m	Total £m
At 1 January	(0.8)	14.6	(14.3)	(0.5)		(0.5)	9.2	(14.8)	(6.1)
Credit/(charge) to the income statement	0.3	(0.9)	(1.7)	(2.3)		(0.3)	0.5	(4.3)	(4.1)
Credit on items taken directly to equity	–	0.2	10.4	10.6		–	4.9	4.8	9.7
Transfer to retained earnings	–	(0.1)	–	(0.1)		–	–	–	–
At 31 December	(0.5)	13.8	(5.6)	7.7		(0.8)	14.6	(14.3)	(0.5)

An analysis of the deferred tax asset/(liability) for the company is set out below:

Company – asset/(liability)	2009					2008
	Accelerated capital allowances £m	Other temporary differences £m	Retirement benefit asset £m	Total £m		Accelerated capital allowances £m	Other temporary differences £m	Retirement benefit asset £m	Total £m
At 1 January	–	5.8	(4.5)	1.3		–	0.1	(5.1)	(5.0)
Credit/(charge) to the income statement	0.1	1.3	(0.2)	1.2		–	0.3	(0.8)	(0.5)
(Charge)/credit on items taken directly to equity	–	(0.2)	3.0	2.8		–	5.4	1.4	6.8
Transfer to retained earnings	–	(0.1)	–	(0.1)		–	–	–	–
At 31 December	0.1	6.8	(1.7)	5.2		–	5.8	(4.5)	1.3

Deferred tax assets have been recognised in respect of all tax losses and other temporary timing differences giving rise to deferred tax assets because it is probable that these assets will be recovered.

20 Cash and cash equivalents

	Group			Company
	2009 £m	2008 £m		2009 £m	2008 £m
Cash at bank and in hand	20.3	19.5		–	0.5

The currency profile of cash and cash equivalents is as follows:

Currency	Group			Company
	2009 £m	2008 £m		2009 £m	2008 £m
Sterling	19.9	19.4		–	0.5
Euro	0.4	0.1		–	–
Total	20.3	19.5		–	0.5

Cash and cash equivalents are non-interest bearing (2008: non-interest bearing).

The fair value of cash and cash equivalents approximates to their book value (2008: fair value approximated to book value).