Annual Report & Accounts 2010

Report of the Directors

The Directors of The BSS Group plc present their annual report to the shareholders together with the financial statements of the Group for the financial year ended 31 March 2010.

Group Activities

The Group provides a comprehensive supply service for a wide range of products to industrial, commercial and domestic markets in the United Kingdom and the Ireland. The principal products relate to heating, plumbing, tools, industrial supplies, process control and pipeline equipment.

The subsidiary and associated undertakings principally affecting the profits or net assets of the Group in the year are listed in note 28 to the financial statements.

An overview of the development of the Group's businesses for the year and of future development is included in the Chairman's Statement, the Business Review and the Financial Review.

Business Review

The Company is required to set out in this report a fair review of the business of the Group during the financial year ended 31 March 2010 and of the position of the Group at the end of that financial year and a description of the principal risks and uncertainties facing the Group. The information that fulfils the requirements of the Business Review are given in the Chairman's Statement, the Business Review, Key Performance Indicators, Risks and Mitigating Strategies, Corporate Social Responsibility section and the Financial Review, which are incorporated in this report by reference.

Details of significant events since the balance sheet date are contained in note 29 to the financial statements.

Results and Dividends

The audited financial statements are set out in the accounts section.

The Group Income Statement is set out on the Consolidated Income Statement. The Group profit before tax for the year amounted to £44.2m (2009: £57.8m).

An interim dividend of £2.4m (2009: £2.4m) was paid on 6 January 2010. The Directors recommend the payment of a final dividend for the year of £7.6m (2009: £6.8m) to be paid on 30 July 2010 to shareholders on the register on 2 July 2010. This will make the total dividend for the year £10.0m (2009: £9.2m).

Share Capital

During the year the called up share capital was increased to £6,218,219 (124,364,375 shares of 5p each) as a result of the issue of 871,249 shares under the employees' share option schemes.

Movements in the Company's share capital are shown in note 19 to the financial statements. At the 2009 Annual General Meeting, shareholders renewed the Company's authority to make market purchases of up to 12,349,712 Ordinary Shares of 5p each.

No shares were purchased under this authority during the year ended 31 March 2010 and at the forthcoming Annual General Meeting, the Board will again seek shareholders' approval to renew the annual authority for the Company to make purchases of its own shares through the market.

There are no restrictions on the transfer of Ordinary Shares in the capital of the Company other than certain restrictions which may from time to time be imposed by law, for example, insider trading law. In accordance with the Listing Rules of the Financial Services Authority, certain employees are required to seek the approval of the Company to deal in its shares.

Information on the Group's share option schemes is set out in note 19 to the financial statements. Details of the Long Term Incentive Plan for key executives are set out in the Report of the Remuneration Committee.

Directors and Secretary

The members of the Board at the date of this report are shown on the Board of Directors. No Director had an interest in any other contract other than a service contract with the Company or its subsidiaries at any time during or at the end of the year. A register of Directors' conflicts has been established and Board authorisation obtained. As part of this process the members of the Board will endeavour to consider each conflict situation separately in its particular facts, consider the conflict situation in conjunction with the rest of his duties under the 2006 Act, keep records and Board minutes as to authorisations granted by Directors and the scope of any approvals given and regularly review conflict authorisation.

A Ball resigned as Executive Director on 14 October 2009. F Elkins, having been appointed on 1 December 2009, and being eligible, offers himself for election. R Harrison OBE, retires by rotation, and being eligible offers himself for re-election at the forthcoming Annual General Meeting. The Chairman, P Warry, will stand for annual re-election in line with provision A.7.2 of the Combined Code.

Directors' Indemnities

In May 2006 the Company entered into a Deed of Indemnity to the extent permitted by law with each of the Directors. The Deeds of Indemnity will be available for inspection at the Annual General Meeting.

During the year the Company maintained Directors' and Officers' liability insurance cover, as permitted by section 233 of the Companies Act 2006.

Directors' Interests and Share Options

The interests of Directors and their families in the shares of the Company and options to acquire shares are shown in the Report of the Remuneration Committee. There have been no transactions in shares by the Directors of the Company between 1 April 2010 and 25 May 2010.

No Director has a non-beneficial interest in the Company's shares.

Assets

No external valuation has been performed on land and buildings and the Directors' estimate that the fair value of land and buildings equates to its carrying value.

Creditors Payment Practice

The Group has a general policy whereby it agrees and abides by terms of payment with its suppliers.

The average number of days' credit taken by the Group at 31 March 2010 was 63 days (2009: 66 days). The Company had £nil trade creditors at 31 March 2010 (2009: £nil).

Charitable and Political Contributions

Charitable contributions amounted to £6,065 (2009: £43,098). More details of charitable donations can be found in the Corporate Social Responsibility Report.

In line with our Public Policy, there were no political contributions during the year (2009: £nil).

Acquisition of own Shares

Since June 2008, the Company no longer holds any Ordinary Shares as treasury shares.

Takeover Directive

Ordinary Shares are the Company's only class of share capital. All the shares rank pari passu. There are no special control rights in relation to the Company's shares. The rules governing the appointment and replacement of Board members and changes to the Articles of Association accord with English Company Law provisions. The Board has power to purchase its own shares and is seeking renewal of that power at the forthcoming Annual General Meeting. There are no significant agreements to which the Company is a party which take effect, alter or terminate in the event of change of control of the Company. Details of Directors' agreements providing compensation on change of control are in the Report of the Remuneration Committee. Significant shareholdings are disclosed in this report.

Employment Policy

The Group philosophy is that 'People Make Quality' and that quality of service gives competitive advantage. The recruitment, training, development and remuneration of staff reflect this philosophy. Significant staff vacancies are published throughout the Group. All employees receive regular information on the trading performance of the Group and their own particular Division by regular team briefs and presentations. The Group is an equal opportunities employer and the policy of the Group is to give disabled persons fair consideration for all vacancies for which they are suitably qualified, and having regard to their capabilities. In the event of members of staff becoming disabled every effort is made to ensure that their employment with the Group continues and that appropriate training is arranged. It is the policy of the Group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees. There is a share option scheme ('SAYE') available through which all employees may become shareholders in the Company, subject to conditions of eligibility.

We continue to invest substantially in a wide variety of training, both on and off the job, designed to meet the needs of the Group and staff at all levels.

Substantial Holdings

So far as the Company is aware, the following held shares representing 3% or more of its Ordinary Share capital at 25 May 2010.

	Number of shares	% of issued capital
Schroder Investment Management	26,694,969	21.47
BlackRock Investment Management (UK)	15,242,464	12.26
AXA Framlington	7,838,702	6.30
Aberdeen Asset Management	5,049,426	4.06
Legal & General Investment Management	4,678,794	3.76
AEGON Asset Management	3,927,791	3.16
Standard Life Investments	3,887,146	3.13

Independent Auditors

In the case of each Director in office at the date the Report of the Directors is approved:

(a) so far as the Director is aware, there is no relevant audit information of which the Company's auditors are unaware; and

(b) he has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

PricewaterhouseCoopers LLP have expressed their willingness to continue in office as Auditors of the Company, and a resolution proposing their reappointment and authorising the Directors to determine their remuneration will be proposed at the forthcoming Annual General Meeting.

Annual General Meeting

The Notice of the Annual General Meeting, which is to be held at 3.00pm on 29 July 2010, is contained in a separate circular to shareholders and contains an explanation of the items of Special Business.

By order of the Board