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Sapphire SunSystems Customer Newsletter

Welcome to latest edition of the Sapphire Newsletter for SunSystems Users.  Following a very successful event in February, I am pleased to inform you that we will be holding a further SunSystems 4.3 Upgrade seminar  on Wednesday 16^th May, for those that were unable to attend that session.

SunSystems 5.3 is currently undergoing Sapphire’s internal testing process and further information on this can be found on the support site. On Tuesday 10^th July, we will be holding a seminar for SunSystems 5 Users outlining the new features and functionality in the new version, along with what is involved in the upgrade process.

In further news, I am very pleased to announce that the Sapphire SunSystems User Day will take place on Tuesday 11^th September.  This year our User Day will be held at the British Museum and I hope that you will join us on the day.  In order to help us provide the best and most useful day possible for you, we welcome your suggestions for sessions to be included on the agenda.  To submit your comments and suggestions please click here.

I am always keen find out what you think of the Sapphire newsletter, as well as any feedback you may have on Sapphire’s service to you as a whole, so please email me your thoughts at ian.caswell@sapphiresystems.co.uk.

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What can you expect from us this Year?

As always, there will be keynote sessions from both Sapphire and Infor in which you can learn more about the future of SunSystems - and what’s new at Sapphire.  Add to this the chance to meet with many of Sapphire’s support, consulting and services staff … together with many other SunSystems Users and am I sure you will agree that this event is one not to miss!

Influence the Agenda

The Agenda will be formalised on 21st May 2007 and we would welcome any ideas and suggestions you might have to make the User Day an event that is closely tailored  to the requirements of you and your team.  To contribute please submit your ideas  to us as soon as possible.

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SunSystems 4.3

SunSystems 4.3 has now completed the Sapphire New Release testing process and is available for installation and upgrade.  This version incorporates similar new functionality as will be found in the new SunSystems 5.3 release that should be available shortly, such as Integrated Security and Query Manager. (Note that the VRS reporting suite has been re evaluated and will no longer be included).  SunSystems 4.3 also incorporates an improved User Interface similar to that delivered by the Option Pack in earlier versions plus the Payment Preview and Withholding Tax functionality that can be found in the same extension.

Please refer to the New Release documentation on the support site for any considerations relating to this new release.  Further information can be found on the V4 Product Hints and Technical Hints pages.

SunSystems 5.3

The new version of SunSystems 5 is currently undergoing Sapphire’s in-house testing by the Support Team.  Once this has been completed SunSystems 5.3 will be made available for installation and upgrade at customer sites.

Further information detailing Sapphire’s new release policy and the testing process is available on the support site

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Latest Course Schedule Now Available!

We are pleased to announce that Training Course dates for April, May and June are now available from the Sapphire Training team.  Please click here to request your copy. 

The cost per delegate per course is £345 + VAT including lunch and course notes - receive 10% off when you book 3 or more people on the same course!

Design your own Vision Course on the topics of your choice for just £925 + VAT per day at your office, or £1380 + VAT at one of Sapphire's Training Centres, for up to 6 people.  Training can be given on a copy of your own data at an extra charge if required.

Tailored training for your Finance Team will facilitate the production of even better and more meaningful management reports, helping you get the most from your solution and the best return on your solution and training investment.

For information on any of our Training Courses you can call our Training Advisor Sharon Stevenson on 020 7684 2000 or email training@sapphiresystems.co.uk for more information.

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Kinetic Worldwide is a leading independently-managed outdoor media agency.  The company was launched in June 2005 by a team with years of experience in out-of-home media and currently employs over 300 people spread across 13 cities worldwide, with billings in excess of $1bn.

Part of the WWP Group, Kinetic was created by merging Portland Outdoor with Poster Publicity; and the new integrated finance team were tasked with selecting a financial accounting solution to be used across Kinetic’s global operation.  Poster Publicity had previously used Sage, but found that this was not very flexible, whereas Portland Outdoor were an existing user of SunSystems and were very happy with the solution.  As a result, the group decided to implement SunSystems throughout Kinetic.

Nick Dunton, Finance Director at Kinetic, tells us “SunSystems was the most appropriate solution for us because it has tremendous flexibility.  Plus, the capacity it has to process large volumes of transactions is definitely an important feature for us, as are the exceptional reporting capabilities.  SunSystems is a pretty robust solution and the core product is first-rate – very stable.”

The finance team undertook a review of SunSystems resellers, rather than simply going with Portland’s existing supplier, to ensure that they received the best possible support with a personalised service.  As part of the review process, the team attended an accounting & finance exhibition where they met with Sapphire.  Nick comments “Sapphire were very helpful during the initial review phases and the people that our team spoke with were excellent.”

Once the decision had been taken to partner with Sapphire and the implementation was underway, Nick observed “The team at Sapphire worked to a very logical process and were clear on the timescales involved.   The initial rollout phase took about a year in all for us to go live, which was a bit longer than we had originally anticipated, as the implementation was unfortunately disrupted due to administration involved with the merger.”

Kinetic currently has 4 sites using SunSystems and typically has 15-20 users logged in to the solution.  Nick adds “Our SunSystems solution is working very well, and it is helping to improve the way we work all the time. I am looking into perhaps changing the way that we as an organisation do our reporting and analysis.”  He goes on to say “The excellent integration links SunSystems has with other systems has been proved by our ability to integrate the solution with our bespoke billing system.  We are planning a complete global rollout of the SunSystems solution which has thus far been launched in New York with the next step being Singapore.  In addition to this, we will also be expanding our use of the solution in terms of the number of business operations we use it for.”

Speaking on working with Sapphire Nick says “We find everyone at Sapphire very pleasant to deal with and their Services Team are very good. We find that the Support Hotline in particular is excellent – and it is refreshing to speak to someone that can, 9 times out of 10, resolve any issues immediately. In fact, the Support Hotline would be one of my main reasons for recommending Sapphire to others.”

The advice Nick would give new companies looking for a financial accounting solution includes: “Planning is very important – don’t underestimate it!  It is pretty easy to use SunSystems and train new users, and I would suggest version 5 rather than version 4 as it is better in my experience.  I would also highly recommend investing in the Vision reporting tool, as the reporting and analysis it can do is just fantastic.”

Ian Caswell, Managing Director at Sapphire concludes “Global organisations require a financial accounting solution that has the flexibility to handle many different operational and statutory regimes.  SunSystems is perfectly suited to multi GAAP in addition to having multi-currency and multi-lingual functionality, making it the ideal solution for global business operations.”

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A study commissioned by the Environment Agency published late last year, reviewing the annual report and accounts of the first 100 companies to report the financial year ending March 31 2006, onwards, when the EU Accounts Modernisation Directive came into affect, found that 4 out of 5 of them fail to disclose environmental performance indicators in accordance with Government guidelines. Although there has been an increase in the level of quantified disclosures, there are still too few to make meaningful comparisons between the environmental performance of companies.  Gary Simon, Managing Editor of Financial Systems News reports:

Under the EU Directive, large private and all public companies are required to include an enhanced business review (EBR) of how relevant environmental and social issues that are material to the company have affected business performance.

The Accounts Modernisation Directive allows companies

the freedom to decide whether or not environmental issues are material to their business performance, (and thus to include analysis of these impacts in their financial reports). However, the 2006 Companies Act tightens the environmental reporting requirements of quoted companies. In the case of a quoted company the Business Review must, “to the extent necessary for an understanding of the development, performance or position of the company's business, include information about environmental matters” and include an analysis using Key Performance indicators. But the early signs are that many companies will find it extremely challenging to quantify their environmental impacts.

Eighty four percent of FTSE All-Share companies currently reporting have not yet disclosed in their annual report and accounts their environmental performance, in accordance with the Department for the Environment, Food and Rural Affairs guidelines. This is despite the fact that according to the new company reporting laws all FTSE All-Share companies producing annual report and accounts must disclose environmental key performance indicators where relevant.

The research, carried out by Trucost, is a follow up report to the environmental disclosures of FTSE All-Share companies study published by the Environment Agency in 2004 and reveals that although there has been a small increase, with 96 percent of the companies referring to some aspect of the environment in 2006 compared to 89 percent in 2004, the reporting is of low quality and little use to investors.

Although there has been an increase in the level of quantified disclosures, there are still too few to make meaningful comparisons between the environmental performance of companies. Eighty-three per cent of the companies reported on just one topic out of water, waste, and energy use and climate change. Twenty-six per cent reported on all three topics.

Environment Agency Chief Executive, Barbara Young, said, “Much of the reporting is still at a basic level, with 16% of companies making disclosures in accordance with government guidance and providing a quantitative figure. Although this figure represents an increase in the level of quantified disclosures there are still too few quantified disclosures to make meaningful comparisons between the environmental performance of companies.”

However, comparisons could be difficult to achieve in practice, given that no two companies will have the same operational, product and market variables, all of which have some influence on levels of environmental impacts. This means comparisons are likely to be highly difficult, inaccurate or meaningless. Recording trends in performance data over time that relate to business activity could be of more value to financial stakeholders in the long term.

Waste is the most widely reported environmental issue with 67 percent of companies mentioning it. Climate change and energy use were mentioned by 61 percent of companies and water by 38 percent of companies. Fifteen companies disclosed CO 2 emissions in absolute levels and 37 give some figures for energy. Five companies reported on all environmental issues in quantitative terms, these were Emap PLC, Johnson Matthey PLC, Invensys PLC, Scottish Power PLC and Scottish and Southern Energy PLC. Only six companies linked environmental issues to financial performance or shareholder value.

“The growth in number of companies reporting on their environmental performance is encouraging however the results of this report show that there is still a lack of quantifiable data with which stakeholders can work,” said Barbara Young.

“As the cost of environmental impacts becomes more apparent, it is important that companies respond and produce disclosures which are useful to stakeholders in their assessment of how this cost is being managed. New business review regulations provide an opportunity for companies to report how they are responding to increasing environmental costs,” she added

Quantifying environmental related costs and benefits is useful as a one off exercise. By identifying their size and key process drivers, it generates a realisation of their financial importance. However, the real value of financial measures is when they are continuous. This makes it easier to show how environmental actions can contribute to the bottom line. Examples of financial measures include cost of environmental related capital expenditure, direct environmental related operating costs, total costs of compliance, costs of energy and raw materials, avoided costs and benefits of pollution prevention measures.

BT is an example of one company mentioned in the Environment Agency study which has used quantified environmental key performance indicators. It shows how non-financial KPIs can be used to disclose business focused and investor relevant environmental information on those impacts judged to be material to business performance.

BT's operating and financial review within its 2006 Annual Report includes a section of narrative reporting on corporate social responsibility, (CSR) issues. BT has developed 3 environmental KPIs which are published in both its voluntary OFR and the annual CSR report. These detail absolute output levels of waste and CO2 emissions for each year from 2003 to 2006. CO2 emissions are also shown as a percentage amount below their1996 baseline level and are aggregated to tonnes per £1m revenue. By showing the trend reduction over time BT demonstrate their achievement in managing these impacts. While BT does not include target reduction for CO2 emissions for 2007, this is contained in the 2006 CSR report.

BT report the same trend data for total waste generated annually and total waste recycled which meets government reporting guidelines. The company also reports recycled waste as a percentage of total waste generated. BT also details the £3.2 million income received from recycling which is offset against the £8 million cost of waste management. At 40%, this is a considerable reduction in total waste costs. Waste can often be far more costly than companies realise, especially when other non direct waste categories are added in, such as defects, residues, write-offs or shrinkage. Few companies account for the direct and opportunity costs of the management time spent dealing with these problems, or recognise that reducing waste can often provide an increase in capacity.

BT's annual report also includes details of the market opportunities of long term sustainability trends for the company, such as the growth of teleconferencing. The company discloses that commercial bids for contracts to the value of £1.3 billion, “required us to demonstrate expertise in managing these, (environmental and social) issues”.

Another company that has attempted quantified environmental reporting is the Burberry Group plc. It includes narrative details of their CSR objectives, performance and future intentions in the enhanced business review section of their 2005/6 Annual Report. The company also report on a number of CSR indicators in the Annual Report. These include absolute figures for UK energy use, and UK energy use, kilowatt hours per £1000 sales.

Burberry also detail general packaging and transit packaging use in amount, (tonnes) and normalise this data to Kg / £1000 sales. This is useful as measures of environmental impacts are not of great value in their own right, as they are influenced as much by business activity measures and economic factors as by environmental performance. Feasible measures of business activity against which environmental data can be normalised include production, turnover, profitability or value added.

The Environment Agency acknowledges that there is still confusion surrounding the legislation but in the face of increased environmental reporting and government guidance, companies will find it increasingly difficult to avoid the issue. For example, the Association of British Insurers (ABI) recently called for greater disclosure of environmental issues that could have an impact on future corporate performance within annual reports.

More generally, with environmental issues, especially global warming and climate change being reported on national press and television daily there is a broad expectation that financial stakeholders and shareholders will increasingly seek standardised methods for measuring and reporting environmental information - using quantifiable KPIs that are linked to financial information, business strategy and key business objectives.

Financial stakeholders will increasingly require information on the environmental and social consequences of the economic activities of companies in which they invest. They will expect details of environmental issues judged to be material to the company's performance and will want to know about the company's intentions in the management of its significant environmental impacts, as well as how these will be measured, evaluated and reported. So environmental KPIs should be set in context and related to financial KPIs and assumptions underlying performance data should be reported, as well as the methodology used to calculate measurements.

In the past, The Accounts Modernisation Directive has allowed companies to opt out of environmental disclosure in financial reports where the company deems the issues to be immaterial. However, increasingly stringent legislation governing environmental externalities, as well as increased costs and reduced availability of environmental resources such as energy and water may very soon change this assessment of materiality. Many companies need to develop robust frameworks for collecting data about the quantity and monetary value of resource inputs, product and pollutant outputs and environmental expenditures for key business processes. The use of standardised, accurate and meaningful KPIs is fundamental to this process and with environmental reporting requirements now enshrined in UK company law it seems that few companies have room to wriggle out of their responsibility to report.

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Reprinted with kind permission from BakerTilly

Does corporate reform support competitiveness of UK business?

The change in rates may have taken the headlines but  the reality is that any benefit has, in aggregate, been off-set by the changes in capital allowances.

A major theme of the Budget changes is the continuing reform of the corporation tax base. The actual benefit to business has, in aggregate, been off-set by the changes in capital allowances. This will do little to address the concerns expressed by business of whether the UK tax system supports competitiveness. The standard rate of tax still remains higher than in a number of our competitor jurisdictions (i.e. Ireland with a rate of 12.5%) and taking all taxes faced by corporate business a much higher actual tax rate is suffered. It will, however, prove attractive to service sector businesses such as financial services and those organisations undertaking research.

It is very difficult to determine from the published data, even overall, what the precise effects of the changes may be. The reason being that the changes to capital allowances will also affect unincorporated businesses. The overall position is stated as revenue neutral. but this almost inevitably means there will be major winners and losers. The winners will be those with large profits and no capital allowances i.e. service businesses. The losers are those with low profit levels with significant capital expenditure on plant and machinery.

It is worth noting that the main changes to CT do not take effect until 2008/2009. For that year the headline is that the reduction in CT, £1.385bn for those liable at the full rate will be more than offset by the reduction in overall capital allowances (£1.49bn) although the increase in allowances for long life assets (£210m) will eliminate any net gain. The increase in the rate for smaller companies will generate a further £370m (£820m in the following year) but the extension of the 50% rate for small businesses will reduce that by £250m.

See highlights below on: 

• Corporation tax

• Landlord Energy Savings Allowances

• Enhanced tax reliefs for research and development

• Securitisation companies

• Sale and repurchase of "repos"

• Filing dates and enquiry windows

• Real Estate Investment Trusts

• Property Authorised Investment Funds

• Further consultation announced on tax relief for business expenditure on cars

• Film Taxes: non-cinema producers may opt out of the Finance Act 2006 regime

Corporation tax

The rates of corporation tax are being changed from 1 April 2008:

• the standard rate is to be reduced from 30% to 28%

• the small companies rate will be increased, starting 1 April 2007,with an increase to 20%, in stages, to 22%

• the small companies rate for ring fenced profits will remain at 19%

The effect of this is to reduce the relief available for companies with low levels of profits with effect from 1 April 2007.

Unfortunately the effect of staging the changes is also to introduce further complexity into the tax system.  For companies, not within the ring fence, whose profits exceed those of the threshold for the small company's rate (£300,000 for a stand alone company), the marginal rate will be 32.5% from April 2007, 29.75% from April 2008 and then 29.5% from April 2009.

Landlord Energy Savings Allowances:

This relief is, as noted in the pre-budget report 2006, to be extended to permit a deduction of up to £1500 per property. There a number of changes to the detail – the main one being that the relief is available per property (i.e. per dwelling) rather than per building.  These changes will apply to qualifying expenditure incurred from 6 April 2007.

Enhanced tax reliefs for research and development:

• Enhanced tax reliefs for qualifying expenditure to increase to 130% (from 125%)

• The value of the repayable tax credit will remain at broadly 24%

• For small and medium size enterprises the increase is from 150% to 175%.

• The definition of an SME is to be extended to include companies with fewer than 500 employees (currently 250). As this requires the approval of the European Commission it will take effect from a date to be agreed.

The changes are welcome and reflect the relative failure of the reliefs, introduced in 2000 and 2002, to achieve the objective of increasing R&D expenditure.  

Securitisation companies

The ability to use regulation making powers to deal with the taxation of securitisation vehicles is to be extended to a wider range of securitisation vehicles. These provisions will enable such entities to be taxed in accordance with accounting regime that applied before the introduction of International Accounting Standards.

The link between tax and accounting and the changes in accounting practice has created the need for close monitoring of accounting practice to ensure that the tax base is not distorted.  These changes reflect the pragmatic approach taken by HMRC to the potential impact on these commercial structures.

Sale and repurchase of "repos"

Large companies use of sale and repurchase agreements (repos) as a means of securitised financing.  The tax rules are considered to be in need of recasting to ensure that the tax treatment more faithfully follows the accounting / commercial treatment. Consultation is on-going and legislation will be introduced in the Finance Bill 2007.

Filing dates and enquiry windows

The proposals to align filing dates for CT and Companies House led to detailed discussions between HMRC and the representative bodies. In the Budget, the focus has been on the filing obligations for income tax. As regards CT the main points are:

• Mandatory online filing for all CT returns (using XBRL standard) deferred to April 2011 to enable software providers further time to develop products.

• Mandatory electronic payment of corporation tax also deferred by one year to 2011.

• Implementation of the joint filing facility between HMRC and Companies House will be in place for 2011.

• The CT enquiry window will change for returns for periods ending after 31 March 2008, for most companies. The enquiry window for those returns filed early or on time will be tied to date the return is delivered to HMRC. The necessary amendments are being introduced by this year's Finance Bill.

• The enquiry window for any return filed late, and for all returns from companies within groups that are "large" by the Companies Act definition, will not change.

Real Estate Investment Trusts

The Budget resolutions provide for the amendment of the provisions relating to Part 4 of the Finance Act 2006 which set out the detailed legislative framework for REITs (Real Estate Investment Trusts). Details were announced in the PBR in December 2006 and are primarily aimed at making it easier for new companies to come within this tax regime.

Property Authorised Investment Funds

Following the introduction of UK-REITs on 1 January 2007, the Government continues to consider the taxation of Authorised Investment Funds (AIF) investing in property.

Following discussions with a working group (comprising the Investment Management Association, HM Treasury and HM Revenue & Customs Working Group, industry and other representative bodies), the Government aims either to publish a technical paper in the summer setting out proposals for how each part of the framework will operate, or to move directly to draft regulations on which it will consult.

Further consultation announced on tax relief for business expenditure on cars

The Treasury confirmed that, following earlier consultation in March 2006, further consultation on its refined preferred option would take place (responses due by 16 May 2007). The preferred option is now as follows:

• Cars emitting CO2 under 120grams per kilometre 100% first year allowances

• Cars emitting CO2 between 121 – 165 grams per kilometre – utilise general pool for plant and machinery capital allowances

• Cars emitting CO2 above 165 grams a separate capital allowance pool at a lower rate

There is also a refined proposal for dealing with the lease rental restriction for "expensive" cars as follows:

• Abolition for all cars emitting CO2 under 165 grams per kilometre

• Uniform fixed percentage disallowance for all cars emitting CO2 over 165 grams per kilometre

These proposals are aimed at addressing businesses concern that any new proposals need to embrace administrative simplicity to reduce the cost burden for business. This further consultation is welcome as this is an area in clear need of simplification. Adopting a system that links to promoting "environmentally friendly" car purchase is in line with recent policy, although how effective the measure will prove in environmental terms is debateable

 Film Taxes: non-cinema producers may opt out of the Finance Act 2006 regime

The new film scheme rules for companies introduced by FA 2006 require every film to be treated as a separate trade. The new regime provides additional relief for production costs of those films.

The Budget change will allow producers of non-cinema films and programmes to opt out of the new regime with the result that:

• they will not qualify for the enhanced "film tax relief"; but

• they will be able to treat all productions as a single trade, taxable under normal tax rules.

Companies will only be able to make the election after the Finance Bill has become law. These changes will benefit smaller producers for whom the additional cost of treating every production as a separate trade would outweigh the benefits of film tax relief.

Opting to be treated as a "normal" trade will not offer outside investors the chance of tax savings following the restrictions on partnership losses announced in Revenue & Customs Brief 18/07, issued on 2 March 2007.  It is to be hoped that the election will be applicable to all companies' accounts affected by the FA 2006 rules and not only for the present and future periods.

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expense@work is a web-based self service application that can produce dramatic results for your organisation by reducing costs, increasing employee productivity and improving business performance.

Most organisations have hundreds, or even thousands, of personal expenses every month, including petty cash, expense returns and credit cards.  The cost of completing, authorising, reconciling, re-checking, adjusting VAT and re-keying the data is both tedious and inefficient.