Report & Financial Statements. 31 March 2014

Transcription

1 Report & Financial Statements 31 March

2 2 Sumitomo Corporation Europe Limited

3 Contents Report and financial statements Strategic report 2 Directors report 6 Statement of directors responsibilities in respect of the Strategic report, the Directors report and the financial statements 8 Independent auditors report to the members of Sumitomo Corporation Europe Limited 8 Profit and loss account 10 Statement of total recognised gains and losses 11 Reconciliation of movements in shareholders funds 11 Balance sheet 12 Notes to the accounts 13 Sumitomo Corporation Europe Limited 1

4 Strategic report The directors present the strategic report for the year ended 31 March. Sumitomo Corporation Europe Limited is a wholly owned subsidiary of Sumitomo Corporation Europe Holding Limited and operates as part of the group s European division. The ultimate parent company is Sumitomo Corporation, whose head office is based in Tokyo, Japan. Sumitomo Corporation is a global trading house operating throughout the world. Principal activities Sumitomo Corporation Europe Limited and its branches in Prague, Oslo, Warsaw, Baku and Milan act as an international trading house, dealing primarily as principal in steel products and in substance as an agent in machinery and electric, chemicals, petroleum, carbon and foodstuff and also providing financing and other services related to these trading activities. The company invests in companies associated with its business operations in conjunction with its parent company, Sumitomo Corporation. Apart from the below there have not been any significant changes in the company s principal activities in the year under review. 2 Sumitomo Corporation Europe Limited

5 Business review Investment The company has a 30% investment in Summit Water Limited, which in October sold 50% of its shareholding in Sumisho Osaka Gas Water UK Limited (SOGWUK) to Osaka Gas. SOGWUK is the ultimate parent of the regulated water business Sutton & East Surrey Water plc. This transaction resulted in a return of invested capital in Summit Water Limited to the company of $16,494,000. In April, the company acquired a 30% shareholding in Technologia para La Construccion y Mineria S.L. from its parent company Sumitomo Corporation Europe Holdings Limited in exchange for consideration of additional share capital of $5,662,101. Trading The company s profit and loss account for the year ended 31 March is set out on page 10. Turnover is $140,516,000 (: $198,781,000). The company primarily undertakes transactions which are in substance agency rather than principal. These transactions amounted to gross turnover of $1,156,221,000 (: $1,227,366,000) and cost of sales of $1,054,730,000 (: $1,127,617,000) which is reflected on a net basis in the reported turnover. The decrease in gross profit from $113,441,000 to $108,530,000 is mainly the result of the decrease in gross turnover. The balance sheet shows net assets of $427,510,000 (: $395,627,000). Net current liabilities have decreased to $184,588,000 (: $257,528,000) in the current year. There has been a decrease in current assets mainly due to a decrease in debtors and stocks. Current liabilities decrease is predominantly due to the decrease in the amounts owed to group companies. For detailed breakdowns of current assets and liabilities please see notes Sumitomo Corporation manages its operations in EMEA & CIS on a divisional basis. For this reason, the company s directors believe that key performance indicators for the company are not necessary or appropriate for an understanding of the development, performance or position of the business. The performance of the European division of Sumitomo Corporation, which includes this company, is discussed in the global group s Annual Report which does not form part of this report. Principal risks and uncertainties Competitive pressures in the European operating environment provide a continuing risk to the company, which could result in loss of business to its competitors. The key factor for the company in managing this risk is to maintain and enhance the close relationships with its customers and suppliers. The company continues to develop and provide innovative value added services at every stage of the supply chain. Foreign exchange risk The company transacts in a number of other currencies in addition to US Dollars. Certain exposures to fluctuations in exchange rates are managed by transactions in the forward foreign exchange markets. These derivative financial instruments are stated at fair value based on quoted market rates. Changes in the fair value of these derivative financial instruments are recognised in the income statement. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. The group does not hold or issue foreign currency derivative financial instruments for trading purposes. Further details can be found in Note 1, accounting policies for foreign currencies transactions. The company has not sought to apply hedge accounting treatment for any of its foreign exchange hedging activity in any of the periods presented. Sumitomo Corporation Europe Limited 3

6 Strategic report (continued) Where the company has identified forward foreign exchange derivative instruments within certain contracts (embedded derivatives), these have been included in the balance sheet at fair value. Fair value of these derivatives is determined by reference to quoted market rates. The value of the derivatives is reviewed on an annual basis or when the relevant contract matures. Liquidity and cash flow risk The company invests in strategic acquisitions and funds those acquisitions through borrowings. The borrowings may be short term and the risk to the company is that the lender may not renew the loan on maturity and may demand immediate payment. During the year, stable and adequate funding resources have been available to the group due to the financial strength of the ultimate parent company. The directors therefore do not expect any significant adverse impact on the group s ability to appropriate funding for its operations in future. To manage cash and liquidity the company operates a central pooling of bank balances of the majority of its subsidiary and some of its associate companies across Europe to the Head Office and occasionally draws money against its own facilities to provide funding to subsidiaries and other Sumitomo Corporation group companies. Cash and liquidity is managed in conjunction with its parent company, Sumitomo Corporation, based in Tokyo, Japan. The current economic problem has not materially affected the group s ability to raise funds in the money markets. Interest rate risk Interest rate risk is split into two different types of risk cash flow interest rate risk and fair value interest rate risk. Cash flow interest rate risk is the risk that the future cash flows of financial instruments will fluctuate because of changes in market interest rates. As the entity has variable rate inter-company loans, it is exposed to cash-flow interest rate risk. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate because of changes in market interest rates. In order to manage cash-flow interest rate risk, the company has a policy to ensure that this is constantly monitored. Recent movements in global interest rates have not materially affected the interest rates charged to the company. Every effort is made to minimise the cost to the company of interest rate charges by utilising facilities, such as competitive interest rates and foreign exchange swaps, made available by financial institutions. Credit risk The company s principal financial assets are bank balances and cash, trade and other receivables and investments. The company s credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. As part of its Risk Management control, the company takes out an insurance policy in order to limit its exposure to credit risk. 4 Sumitomo Corporation Europe Limited

7 The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The company places a high importance on risk management and in ensuring that the company s customers and vendors have a sound financial base. The current economic problems in the financial and commodity markets have not led to an increase in the bad debts incurred by the company. The company has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers. Price risk The company monitors changes in commodity prices on a continual basis to ensure that the company maintains control over its gross trading profit and inventory value. K Tamefusa Director 13 June Vintners Place 68 Upper Thames Street London EC4V 3BJ Sumitomo Corporation Europe Limited 5

8 Directors report The directors present the Directors report for the year ended 31 March. Financial instruments The company does not currently designate its foreign currency denominated debt as a hedging instrument for the purpose of hedging the translation of its foreign operations. The company is a party to a variety of foreign currency forward contracts and options in the management of its exchange rate exposures. The instruments purchased are primarily denominated in the currencies of the company s principal markets. Employees Details of the number of employees and related costs can be found in note 4 to the financial statements. The company participates in the group s policies and practices to keep employees informed on matters relevant to them as employees through regular meetings and newsletters. Employees are consulted regularly on a wide range of matters affecting their interests. The company is committed to giving full and fair consideration to applications for employment from people with disabilities and to continuing the employment of staff who become disabled and arranging appropriate training to achieve this. Dividends During the year the company paid a dividend of $52,330,000 / 35.29p per share (: $54,994,000 / 38.05p) in respect of profits achieved up to and including the year ended 31 March. Directors The directors who held office during the year and up to the date of signing are as follows: M. Nakamura (resigned 12 April ) T. Izuta (resigned 23 April ) K. Sunobe (appointed 12 April ) K. Tamefusa (appointed 23 April ) Directors indemnities The company has granted an indemnity to its directors against liability in respect of proceedings brought by third parties, subject to the conditions set out in section 234 of the U.K. Companies Act Such qualifying third party indemnity provision remains in force as at the date of approving the directors report. Political contributions The Company made no political donations during the year (: $nil). 6 Sumitomo Corporation Europe Limited

9 Disclosure of information to auditor The directors who held office at the date of approval of this directors report confirm that, so far as they are each aware, there is no relevant audit information of which the Company s auditor is unaware; and each director has taken all the steps that he ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Company s auditor is aware of that information. Auditors Pursuant to Section 487 of the Companies Act 2006, the auditor will be deemed to be reappointed and KPMG LLP will therefore continue in office. By order of the board K Tamefusa Director 13 June Vintners Place 68 Upper Thames Street London EC4V 3BJ Sumitomo Corporation Europe Limited 7

10 Statement of directors responsibilities in respect of the Strategic report, the Directors report and the financial statements The directors are responsible for preparing the Strategic Report, the Directors Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities. Independent auditors report to the members of Sumitomo Corporation Europe Limited We have audited the financial statements of Sumitomo Corporation Europe Limited for the year ended 31 March set out on pages 10 to 31. The financial reporting framework that has been applied in their preparation is applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice). This report is made solely to the company s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act Our audit work has been undertaken so that we might state to the company s members those matters we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company s members, as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditor As explained more fully in the Directors Responsibilities Statement set out on page 8, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. 8 Sumitomo Corporation Europe Limited

11 Independent auditors report to the members of Sumitomo Corporation Europe Limited (continued) Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the Financial Reporting Council s website at Opinion on financial statements In our opinion the financial statements: give a true and fair view of the state of the company s affairs as at 31 March and of its profit for the year then ended; have been properly prepared in accordance with UK Generally Accepted Accounting Practice; and have been prepared in accordance with the requirements of the Companies Act Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Strategic Report and the Directors Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or the financial statements are not in agreement with the accounting records and returns; or certain disclosures of directors remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Kevin Hall (Senior Statutory Auditor) for and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants 15 Canada Square London E14 5GL NOTE: The statutory financial statements were originally published outside this Report and Financial Statements. The page numbers used in this Report and Financial Statements are different to when the statutory financial statements were originally published. Therefore in this audit report, the numbers here have been changed merely so that the page references are consistent with the reproduction in this Report and Financial Statements. The original page numbers in the audit report on the statutory financial statements referred to pages 10 to 28. Sumitomo Corporation Europe Limited 9

12 Profit and loss account for the Year ended 31 March Note Turnover 2 140, ,781 Cost of sales (31,986) (85,340) Gross profit 108, ,441 Administrative expenses (88,460) (80,899) Other operating income 3,872 2,131 Operating profit 5 23,942 34,673 Profit/Loss on sale of fixed assets (5) 39 Income from participating interests 55,437 52,862 Profit on sale of fixed asset investment ,901 Amounts written off investments (953) (1,634) Interest receivable and similar income 6 1,330 1,791 Interest payable and similar charges 7 (1,639) (3,928) Profit on ordinary activities before taxation 78, ,704 Tax on profit on ordinary activities 8 (7,467) (9,346) Profit for the financial year 70,941 93,358 The company also undertakes transactions which in substance are agency and not principal. The value of these transactions amounted to $1,156,221,000 (: $1,227,366,000) gross turnover. The net value of these transactions is included as part of Turnover above. 10 Sumitomo Corporation Europe Limited

13 Statement of total recognised gains and losses Year ended 31 March Note Profit for the financial year 70,941 93,358 Fair value gain on available-for-sale financial instruments 11 8,178 - Foreign exchange translation differences on foreign currency net investment in branches (568) (1,212) Total recognised gains and losses for the year 78,551 92,146 Reconciliation of movements in shareholders funds Year ended 31 March Profit for the financial year 70,941 93,358 Dividends paid (52,330) (54,994) Retained profit 18,611 38,364 Increase in share capital 5,662 16,502 Foreign exchange translation differences on foreign currency net investment in branches (568) (1,212) Fair value gain on available-for-sale financial instruments 8,178 - Net increase in shareholders funds 31,883 53,654 Opening shareholders funds 395, ,973 Closing shareholders funds 427, ,627 Sumitomo Corporation Europe Limited 11

14 Balance sheet 31 March Note Fixed assets Tangible assets 10 9,440 11,477 Investments , , , ,155 Current assets Stocks , ,557 Debtors , ,075 Derivative asset 16 2,579 18,342 Cash at bank and in hand 5,218 2, , ,971 Creditors: falling due within one year Trade creditors ,102 34,922 Amounts owed to group undertakings , ,605 Derivative liability 16 1,501 15,267 Other creditors including taxation and social security 19 20,611 17,551 Accruals and deferred income 6,759 7, , ,499 Net current liabilities (184,588) (257,528) Total assets less current liabilities 431, ,627 Creditors: falling due in more than one year 20 4,065 - Net assets 427, ,627 Capital and reserves Called up share capital , ,482 Other reserves 22 8,178 - Profit and loss account , ,145 Shareholders funds 427, ,627 These financial statements were approved by the Board of Directors on 13 June. Signed on behalf of the Board of Directors K Tamefusa Director, Company Registered Number Sumitomo Corporation Europe Limited

15 Sumitomo Corporation Europe Limited 13

16 1. Accounting policies The principal accounting policies adopted are summarised below. They have all been applied consistently throughout the current year and the preceding period. The company has taken advantage of the disclosure exemptions in FRS29: Financial Instruments Disclosures and has therefore not included such disclosures in these financial statements on the basis that these disclosures will be provided on a consolidated basis in the consolidated financial statements of the ultimate parent company, Sumitomo Corporation, which is incorporated in Japan. The company is exempt by virtue of s.401 of the Companies Act 2006 from the requirement to prepare group financial statements. These financial statements present information about the company as an individual undertaking and not about its group. Going concern The company and its subsidiaries (the Group ) manages its cash position in conjunction with its ultimate parent company, Sumitomo Corporation, based in Tokyo, Japan, and has access to group finance via bank facilities and the Medium Term Note and Euro Commercial Paper programmes operated by a wholly owned subsidiary entity of the Group. All these facilities or programmes fall due for renewal or update within the next twelve months but the directors consider that the financial strength and stability of the overall Sumitomo Corporation group means sufficient funding will be available to enable the Group to meet its liabilities for the foreseeable future. Accounting convention The financial statements are prepared on the historical cost and going concern basis except for the following: derivative financial instruments are measured at fair value in the profit and loss other investments are measured at fair value through equity. Tangible fixed assets Tangible fixed assets are stated at cost net of depreciation and any provisions for impairment. Depreciation is provided against cost in equal annual instalments over the estimated useful life of the asset. The rates of depreciation generally in use are as follows: Leasehold buildings Plant and machinery, fixtures, fittings, tools and equipment Over the period of the lease 10%-33% per annum Investments Investments are stated at cost less any provision for impairment in all cases where the ultimate holding company holds a majority stake, as the company has no control of the cash flows or the eventual selling price. All other investments including investments held as current assets are stated at fair value. Changes in fair value are recognised directly in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is included in the net profit or loss for the period. Provisions for impairment are recognised in the profit and loss account. 14 Sumitomo Corporation Europe Limited

17 1. Accounting policies (continued) Stocks Stocks are stated at cost less any provision required to reduce carrying amount to net realisable value. Cost represents invoiced price together with, as appropriate, directly related overheads. Turnover Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales related taxes. Turnover represents the gross sales value achieved by the company when acting as a principal together with commissions and service fees receivable. The factors which determine whether a transaction is recorded as gross or net include who carries the risk of inventory or credit risk; who fixes the contract price and product specification; whether there is payment of fixed commission to the company. The gross contract values where the company does not act as a principal are excluded from turnover and cost of sales to reflect the substance of these transactions. Sales of goods are recognised when goods are delivered and title has passed. Taxation Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using tax rates and laws that have been enacted by the balance sheet date. Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the company s taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements. A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax assets and liabilities are not discounted. Financial Instruments Financial assets and financial liabilities are recognised in the company s balance sheet when the company becomes a party to the contractual provisions of the instrument. Trade receivables Trade receivables, including balances held with group companies, are measured on initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in the profit and loss account when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. All transactions are recognised on their transaction date. Sumitomo Corporation Europe Limited 15

18 1. Accounting policies (continued) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Bank balances and cash comprise time deposits with an original term of three months or less and interest is calculated by reference to Libor. The carrying amounts represent their fair value. As such no disclosure of fair value is required. All transactions are recognised on their transaction date. Financial liabilities and equity Following the adoption of FRS 25, financial instruments issued by the Company are treated as equity (i.e. forming part of shareholders funds) only to the extent that they meet the following two conditions: a) they include no contractual obligations upon the Company to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Company; and b) where the instrument will or may be settled in the Company s own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Company s own equity instruments or is a derivative that will be settled by the Company s exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments. To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the Company s own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares. Finance payments associated with financial liabilities are dealt with as part of interest payable and similar charges. Finance payments associated with financial instruments that are classified as part of shareholders funds (see dividends policy), are dealt with as appropriations in the reconciliation of movements in shareholders funds. Bank borrowings Interest-bearing bank loans and overdrafts are recorded as the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis in the profit and loss account using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. All transactions are recognised on their transaction date. Trade payables Trade payables, including balances held with group companies, are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. All transactions are recognised on their transaction date. Equity instruments Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. 16 Sumitomo Corporation Europe Limited

19 1. Accounting policies (continued) Foreign currencies Transactions in currencies other than the entity s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Nonmonetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. The results of overseas operations with different functional currencies are translated at the average rates of exchange during the period and their balance sheets at the rates ruling at the balance sheet date. Exchange differences arising on translation of the opening net assets and the results of overseas operations are reported in the statement of total recognised gains and losses. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the profit and loss account for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity. Derivatives The company uses derivative financial instruments such as foreign exchange forward contracts and commodity swaps to hedge its risk associated with foreign exchange fluctuations and commodity price fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value, through the profit and loss account. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Pension costs The company operates a group personal pension plan and contributes on a monthly basis to the individuals personal pension plans. These contributions are charged against the profits of the year in which they become payable. Leases Rental costs under operating leases are charged to the profit and loss account in equal annual amounts over the period of the leases. Related parties As a wholly-owned subsidiary of the ultimate parent, the company has taken advantage of the disclosure exemptions in FRS8: Related Party Disclosures and therefore has not disclosed details in these financial statements of transactions with companies wholly owned within the Sumitomo Corporation group. Cash flow statement The company has not prepared a cash flow statement as allowed by FRS1: Cash Flow Statements on the basis that the ultimate parent company produces consolidated accounts, which include a cash flow statement, into which the company s accounts are fully consolidated. Sumitomo Corporation Europe Limited 17

20 2. Turnover In the opinion of the directors, it is seriously prejudicial to the interests of the company and not meaningful to give an analysis of turnover by geographical area nor is it appropriate to provide an analysis of turnover by class of business given the nature of the company s activities. The gross value of trades where the company acts as an agent during the year is $1,156,221,000 (: $1,227,366,000) with associated cost of sales of $1,054,730,000 (: $1,127,617,000). 3. Remuneration of directors The company reimburses other group companies for the provision of various services including the secondment of executives, some of whom are directors of the company. Emoluments calculated for disclosure purposes are as follows: Directors remuneration: Emoluments 1,506 2,579 Remuneration of the highest paid director (excluding pension contributions) 926 1,474 Directors do not have share options and did not receive awards during the year in the form of shares under long-term incentive schemes (: nil). Directors pension costs are borne by the ultimate parent company. 4. Staff numbers and costs Employee costs during the year (including directors): Wages and salaries 21,011 17,022 Social security costs 1,505 1,267 Other pension costs (see note 24) 1, ,618 19,194 Management charge raised by ultimate parent company in respect of employees 17,081 20,406 Average number of persons employed (including directors) analysed by category: Sales and administration No. No. 18 Sumitomo Corporation Europe Limited

21 5. Operating profit Profit on ordinary activities before taxation is after charging: Rentals under operating leases: Land and buildings 6,334 5,474 Other assets Depreciation and other amounts written off tangible fixed assets: Own assets (see note 10) 3,880 3,932 Loss on foreign exchange translation 1, Impairment of investments (see note 11) 953 1,634 Auditor s remuneration: audit of these financial statements 1, Interest receivable and similar income Interest receivable from group companies 1,004 1,460 Bank deposit interest 4 7 Interest on deferred payment sales Other short-term interest receivable and similar income ,330 1, Interest payable and similar charges Interest payable to group companies 1,609 3,842 Bank loans, overdrafts and other loans Other finance charges ,639 3,928 Sumitomo Corporation Europe Limited 19

22 8. Tax on profit on ordinary activities (a) Current tax: Analysis of charge in year UK corporation tax on profits of the period (2,707) 958 Adjustments in respect of prior years 50 (442) ( 2,657) 516 Foreign tax 9,554 8,282 Total current tax 6,897 8,798 Deferred tax: Origination and reversal of timing differences Tax on profit on ordinary activities 7,467 9, Sumitomo Corporation Europe Limited

23 8. Tax on profit on ordinary activities (continued) b) Factors affecting tax charge for year The tax assessed for the year is lower than the standard rate of corporation tax in the UK of 23% (: 24%). The differences are explained below: Profit on ordinary activities before tax 78, ,704 Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 23% (: 24%) 18,034 24,649 Effects of: Expenses not deductible for tax purposes Capital allowances in year in excess of depreciation Movement in short term timing differences (868) (267) Loss/Profit on sale of Fixed Asset Investments (68) - Impairment in fixed asset investments Chargeable gains not subject to tax - (4,536) UK dividend income (12,750) (12,687) Withholding tax Higher rates of tax on overseas earnings 976 1,122 6,847 9,240 Adjustments to tax charge in respect of previous periods 50 (442) (c) Factors affecting the tax charge for future periods 6,897 8,798 Reductions in the UK corporation tax rate from 24% to 23% (effective from 1 April ) were substantively enacted on 26 March 2012 and 3 July 2012 respectively. Further reductions to 21% (effective from 1 April ) and 20% (effective from 1 April 2015) were substantively enacted on 2 July. This will reduce the company s future current tax charge accordingly. The deferred tax asset at 31 March has been calculated based on the rate of 21% substantively enacted at the balance sheet date. Whilst the tax rate will further reduce to 20% effective from 1 April 2015 it has not yet been possible to quantify the full anticipated effect of the announced further rate reduction, although this will further reduce the company s future tax charge and reduce the company s deferred tax asset accordingly. Sumitomo Corporation Europe Limited 21

24 9. Dividends paid Dividend paid 52,330 54, Tangible fixed assets Cost: Leasehold Improvements Plant and machinery Fixtures and fittings Total At 1 April 7, ,241 35,204 Foreign exchange translation differences Additions 1, ,837 Disposals (16) - (438) (454) At 31 March 8, ,115 36,635 Accumulated depreciation: At 1 April 4, ,161 23,727 Foreign exchange translation differences Charge for the year 1, ,400 3,880 Disposals (11) - (436) (447) At 31 March 5, ,130 27,195 Net book value: At 31 March 3, ,985 9,440 At 31 March 3, ,080 11, Sumitomo Corporation Europe Limited

25 11. Investments held as fixed assets Subsidiaries Associates Total Subsidiaries and Associates Details of movements in the year At 1 April 370, , ,581 Additions 5,662-5,662 Disposals (31,348) (16,981) (48,329) At 31 March 344, , ,914 Provisions for impairment: At 1 April 1,183 1,488 2,671 Provision for the year Disposals - (487) (487) At 31 March 2,136 1,001 3,137 Net book value: At 31 March 342, , ,777 At 31 March 369, , ,910 Total Other investments Balance brought forward 1 April 59,768 Fair value adjustment 8,178 Closing net book value 31 March 67,946 Total Investments held as fixed assets at 31 March 606,723 Total Investments held as fixed assets at 31 March 641,678 Sumitomo Corporation Europe Limited 23

26 11. Investments held as fixed assets (continued) Included in fixed asset investments are the following where the company owns more than 5% interest: Name of interest Subsidiary companies % of ordinary share capital held Principal activity Country of incorporation Sumitomo Benelux S.A/N.V 100 Trading company Belgium Sumitomo Corporation Capital Europe Plc 100 Finance provider England and Wales Sumitomo Corporation España S.A 100 Trading company Spain Sumitomo Corporation Hellas S.A 100 Trading company Greece Sumitomo Deutschland GmbH 100 Trading company Germany Central Tubular Investment Company LLC 99 Intermediate holding company Russia Petroleum Services AS 80 Stock management Norway SC Mustaqbal Tubular Solutions FZCO 80 Stock management United Arab Emirates Summit Management France (SMaF) 70 Holding company France Sumisho Global Logistics Europe GmbH 60 Logistics Germany Summit Leasing Slovenia D.O.O. 60 Car Leasing Slovenia Summit Motors Ljubljana D.O.O. 60 Car dealership Slovenia Summit Motors Slovakia s.r.o. 60 Car dealership Slovakia Summit Finance Slovakia s.r.o. 60 Car finance Slovakia Summit Motors Poland Sp. Z.o.o. 60 Car dealership Poland Summit Auto Poland Sp. Z.o.o. 60 Car dealership Poland SC Motors Sweden AB 60 Car dealership Sweden Summit D&V Kft 60 Trading company Hungary Tecnologia para La Construccion y Mineria S.L. 30 Construction machinery distributor Spain 24 Sumitomo Corporation Europe Limited

27 11. Investments held as fixed assets (continued) Name of interest Associated companies % of ordinary share capital held Principal activity Country of incorporation SC Tubular and Steel Products Ltd 50 Stock Management United Arab Emirates Danrun Windservice AS 40 Windpower Energy Denmark K + S GmbH 40 Holding company Germany Summit Pharmaceuticals Europe Ltd 30 Distribution of chemicals England and Wales Summit Water Ltd 30 Holding company England and Wales Interacid Trading SA 30 Distribution of chemicals Switzerland Triton Navigation B.V. 30 Ship charter hire Netherlands Energy Power S.r.l 30 Solar Power Italy Energia Rinnovabile S.r.l 30 Solar Power Italy Summit Renewable Energy Europe 30 Holding company England and Wales Sumitomo Corporation Global Commodities Ltd 23 Commodities trading England and Wales SCMI Ltd 23 Commodities trading England and Wales Eryngium plc 20 Component suppliers to the oil industry Scotland Sumi Agro Europe Ltd 20 Distribution of chemicals England and Wales Summit Petroleum Limited 15 Oil England and Wales Other investments Lavansol 1 S.A.S 17 Solar Power France Summit Solar South Africa Limited 17 Solar Power South Africa Cabelauto - Cabos para Automóveis, SA 10 Automotive components Portugal Summit Petrochemical Trading Inc 5 Chemicals United States 12. Stocks Finished goods and goods for resale 330, ,557 The replacement cost of stock held by the company at 31 March was not significantly different from the amount at which it is stated in the balance sheet. Sumitomo Corporation Europe Limited 25

28 13. Debtors Trade debtors 102, ,539 Amounts owed by group companies: Parent company and fellow subsidiaries 32,344 90,345 Amounts owed by related companies Associates of the ultimate parent company 7,804 10,585 Other debtors 30,809 14,026 Less: due after more than one year (391) (1,082) Deferred tax asset (see note 14) 1,818 2,368 Prepayments and accrued income 13,133 4, , ,993 Total debtors Due within one year 187, ,993 Due after more than one year 391 1, , ,075 The average credit period taken on sales of goods is 59 days (: 54 days). This is calculated using the gross value of transactions for both principal and agency sales. The gross value of trades where the company acts as an agent and principal during the year is $1,195,245,000 (: $1,324,724,000). The directors consider that the carrying amount of trade and other receivables approximates their fair value. 26 Sumitomo Corporation Europe Limited

29 14. Deferred tax asset The amounts of deferred taxation provided in the accounts are: Accelerated capital allowances Others 1,334 1,819 Deferred tax asset 1,818 2,368 Asset at start of year 2,368 2,915 Deferred tax gain/(loss) in profit and loss account (570) (548) Other movements 20 1 Asset at end of year 1,818 2,368 In accordance with FRS 19: Deferred Tax, the company provides for all deferred tax liabilities in full less available deferred tax assets at 21% (: 23%). 15. Contingent Liabilities The Company has guaranteed a certain portion of loans provided by its subsidiary, Sumitomo Corporation Capital Europe Plc, to associated undertakings of the Company; the amount outstanding subject to guarantee at year-end was $300,812,000 (: $187,827,000). 16. Derivative financial instruments Derivative asset 2,579 18,342 Derivative liability (1,501) (15,267) Currency derivatives The company does not currently designate its foreign currency denominated debt as a hedging instrument for the purpose of hedging the translation of its foreign operations. The company is a party to a variety of foreign currency forward contracts and options in the management of its exchange rate exposures. The instruments purchased are primarily denominated in the currencies of the company s principal markets. Sumitomo Corporation Europe Limited 27

30 16. Derivative financial instruments (continued) At the balance sheet date, total fair value amount of outstanding forward foreign exchange contracts that the company has committed are as below. Forward foreign currency contracts (103) (142) The notional value of the forward foreign currency contracts is: Buy 000 s CZK - 3,711 EUR 23,209 3,026 HUF - 25,000 JPY 21,922 1,536 NOK 98,124 - USD 4,234 48,252 Sell 000 s The fair value is calculated using the rates obtained from Bloomberg on the last trading day of the year. Commodity derivatives The company is a party to a variety of commodity contracts and derivatives entered into for market trading purposes. These contracts are held at fair value, being the difference between the contract value and the notional index for the commodity. At the balance sheet date, total fair value amount of outstanding commodity market contracts that the company has committed are as below. Commodity contracts 1,076 2, Trade creditors Trade creditors 100,102 34, Sumitomo Corporation Europe Limited

31 18. Amounts owed to group undertakings Parent company and fellow subsidiaries 581, ,919 Related companies , ,605 For note 17 and 18, trade creditors and amounts owed to group undertakings principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 44 days (: 39 days). This is calculated on gross cost of sales. The gross value of cost of sales where the company acts as principal and an agent during the year is $1,089,611,000 (: $1,213,566,000). The directors consider that the carrying amount of trade creditors approximates to their fair value. 19. Other creditors including taxation and social security Corporation tax 9,629 13,442 Other taxation and social security costs Other creditors 10,496 3,180 Provision ,611 17, Creditor falling due in more than one year Accruals and deferred income 4,065 - Sumitomo Corporation Europe Limited 29

32 21. Called up share capital Called up, allotted and fully paid: 148,269,966 (: 144,530,902) ordinary shares of 1 each 267, ,482 During the year the Company issued 3,739,064 1 ordinary shares for a consideration of 30% shares in Technologia para La Construccion y Mineria S.L. This has been recorded at $5,662,000 being the prevailing rate at date of issue. The nominal value of the company s 1 shares translated at the closing rate at 31 March is $246,842,805 (: $218,864,590). 22. Movement in reserves Other reserves Profit & loss Total Balance brought forward - 134, ,145 Exchange gain - (568) (568) Profit retained for year - 70,941 70,941 Fair value adjustment on other investments 8,178-8,178 Dividend paid - (52,330) (52,330) Balance carried forward 8, , , Lease commitments The company has the following annual commitments under non-cancellable operating leases: Leases which expire: Land and buildings Other Land and buildings Other Within one year ,728 - Within two to five years 2, , More than five years 3, Sumitomo Corporation Europe Limited

33 24. Pension schemes A group personal pension plan is in operation in which the company contributes on a monthly basis to the individuals personal pension plans. The total cost of retirement benefits paid by the company to the defined contribution scheme was $1,102,016 (: $904,562). 25. Ultimate parent company The company is wholly owned by Sumitomo Corporation Europe Holding Limited, a company incorporated in the United Kingdom. Sumitomo Corporation Europe Holding Limited is a wholly-owned subsidiary of Summit Global Management II BV, which in turn is a wholly-owned subsidiary of Sumitomo Corporation, incorporated in Japan. Sumitomo Corporation heads the largest and smallest group in which Sumitomo Corporation Europe Limited is a member for which group accounts are prepared. The group accounts for Sumitomo Corporation are available at 8-11 Harumi, 1-chome, Chuo-ku, Tokyo, Japan. Sumitomo Corporation Europe Limited 31

34 This page is intentionally blank 32 Sumitomo Corporation Europe Limited

35

36 Vintners Place 68 Upper Thames Street London EC4V 3BJ Tel: +44(0)