125 years of leading governanceAnnual report and financial statements 2015–16

UKRIAT annual report and financial statements 2015–16

Our mission and valuesOur mission is to champion good governance and develop the value, skills and effectiveness of company secretaries and governance professionals.

Our guiding values are: Openness, Integrity and Authority

Overview

ICSA: The Governance Institute is the professional body for governance. We have members in all sectors and are required by our Royal Charter to lead ‘effective governance and efficient administration of commerce, industry and public affairs’. With 125 years’ experience, we work with regulators and policy makers to champion high standards of governance and provide qualifications, training and guidance.

UKRIAT (United Kingdom, Republic of Ireland and Associated Territories, the Channel Islands and the Isle of Man) is one of nine divisions of the Institute of Chartered Secretaries and Administrators, an international membership body which was founded in 1891 and granted a Royal Charter in 1902.

UKRIAT, which became a division of the Institute on 20 July 2015, uses the strapline ICSA: The Governance Institute.

The management and control of the Institute’s assets and operations within UKRIAT is the responsibility of the UKRIAT Committee, which is made up of elected representatives from the UKRIAT regions. It is a Committee of the Council of the Institute.

The management and control of

the activities of the Council's other standing committees, including the Professional Standards Committee, the Institute’s association management company and the activities of the Director General are the direct responsibility of the Institute’s Council. These activities are accounted for within the Royal Charter body but, as they are controlled directly by the Council, they do not form part of these financial statements.

Unlike the Institute's other divisions (Australia, Canada, China (including Hong Kong), Malaysia, New Zealand, Singapore, South Africa and Zimbabwe), UKRIAT does not operate through an independent service company, but through the Royal Charter body.

The income, assets and liabilities of the other divisions are owned

by their local service companies and their results are reported separately and do not form part of these financial statements.

In previous years the Institute’s income, assets and liabilities derived solely from its activities in UKRIAT and therefore the financial statements covering the operations in UKRIAT were also the financial statements of the Institute, for which the UKRIAT Committee was responsible. The operations of the Institute that are controlled directly by the Institute’s Council for the year ended 30 June 2016 will be reflected within a separate comprehensive financial statement that will be made available to all members of the Institute.

This report covers the activities in UKRIAT for the 11-month period 1 August 2015 to 30 June 2016.

icsa.org.uk

1

icsa.org.uk

2 From the President

4 From the Chief Executive

5 Results

6 Highlights of the year

8 Strategy review

12 Policy and research

14 Membership

16 Qualifications

18 Software

20 UKRIAT Committee

22 Senior management team

23 Governance review

26 Principal risks and uncertainties

27 Financial review

29 Statement of the UKRIAT Committee’s responsibilities

30 Consolidated income statement

30 Consolidated statement of comprehensive income

31 Consolidated statement of financial positions

32 Consolidated statement of changes in equity

33 Consolidated statement of cash flows

34 Notes to the financial statements

53 Independent auditor's report

Annual general meeting A resolution to receive the financial statements will be put to members at the annual general meeting of the UKRIAT division of the Institute of Chartered Secretaries and Administrators to be held at 18.45 on Monday, 6 February 2017 at Saffron House, 6–10 Kirby Street, London EC1N 8TS.

AuditorMoore Stephens LLP150 Aldersgate StreetLondon EC1A 4AB

BankersLloyds Bank plc39 Threadneedle StreetLondon EC2R 8AU

Institute addressSaffron House6–10 Kirby StreetLondon EC1N 8TS

Phone: +44 (0)20 7580 4741Email: info@icsa.org.ukWebsite: icsa.org.uk

Contents

UKRIAT annual report and financial statements 2015–16

2

From the President

A new chapterI am delighted to have had the opportunity to serve as President in the year which followed the formation of the UKRIAT Division.

The year 2016 also marked 125 years since the Institute of Secretaries was founded to develop the profession of company secretary at a time when secretaries were becoming a vital cog in commerce.

The world has moved on since then and so have we. Today, we are part of a worldwide community of about 34,000 members and students in 80 countries.

The new UKRIAT division began operating in July 2015 and enables the team at Saffron House to focus fully on the programme of strategic development of the UKRIAT region and the core priorities of raising the profile and standards of governance and the recognition of the work our members do.

In February 2016, to demonstrate more clearly our purpose and commitment, we launched our new strapline, The Governance Institute, underpinned by the words from our Royal Charter to lead ‘effective governance and efficient administration of commerce, industry and public affairs’. This sends a clear message about who we are and what our members do.

A key objective remains to become a wider and more inclusive body. We have moved beyond the world of commerce and, particularly in the UK, members in the

Our focus is on establishing our reputation as the professional body for governance and on serving the needs of our members

Our new strapline The Governance Institute sends a clear message about who we are and what our members do

3

Overview

not-for-profit and public sectors form an important part of our community. There is considerable growth in the need for well-equipped individuals with the expertise to advise on and deal with governance in different contexts. We are responding to that need, for example, by introducing new sector specific governance qualifications and guidance.

PerformanceTo bring our year-end into line with the Institute's other divisions, the financial period has been shortened this year, reducing from a 12-month to an 11-month accounting period. It has been a period of mixed fortunes for the group, resulting in an operating surplus of £987,000 for the 11 months to 30 June 2016, a substantial drop from the £2,857,000 achieved in the last full year to July 2015. The operating deficit on professional activities has reduced to £620,000 for the 11 months to 30 June, against £778,000 in the same period last year and £898,000 for the full year.

However, because the software businesses are such a significant contributor to the overall performance of the group, their business conditions affect us all. At £22,930,000 for the 11 months to June 2016, combined income for the two software companies has been good, improving on the full year ending July 2015 (£22,912,000), but operating profit has dropped to £1,392,000 as a result of increased development costs and investment in additional resources to maintain BoardPad’s premium position in the market.

Total income for the professional body activity is down slightly from £4,692,000 for the 12 months to end July 2015 to £4,386,000 for the 11 months to end June 2016.

Member income is in line with the same time last year at £2,092,000 compared with £2,098,000. The full year result for 2015 was £2,307,000. There were good results from qualifications with income from students on the Chartered Secretaries Qualifying Scheme (CSQS) up by 12% against the same time last year.

Conditions have been more challenging for other key activities. Despite the strong result for our Awards, income in the training and conferences business ended the 11-month period down nearly 14% at £924,000 compared to £1,073,000 at the same time last year, and £1,157,000 at the end of July 2015. The publishing

business has also faced a more difficult period, down 11% on the same time last year and over 20% down compared with the 12 months to July 2015.

Support and outreachSupporting members and students and reinforcing the importance and value of governance and our role as The Governance Institute is an important area of focus. During the year we have increased our outreach in the UKRIAT region. We ran an inaugural conference for governance professionals in Kenya and for the first time, we held a graduation and membership ceremony in Trinidad for students and members from Barbados, Bermuda, the Cayman Islands, Jamaica, Trinidad and Tobago. This year we will continue our outreach programme throughout the UKRIAT region.

We also support members, students and other governance professionals by creating high-quality guidance for the sectors we cover. Our knowledge base – both print and digital – is growing.

We will continue to work with a number of partners,including the Law Society, the Institute of Directors andthe Next Generation NED Network to take the messageof why governance matters to new audiences. We willalso once again run the Tom Morrison Essay Prize that welaunched in 2015-16 to encourage new ways of thinkingabout governance.

Looking aheadBy positioning ourselves as the professional body for governance, we will continue to promote good governance and the value that company secretaries bring to their organisations. I am confident that the team at Saffron House, working with support from my fellow honorary officers, the UKRIAT Committee, our branches and our members, will help us achieve our goals. We have a strong governance heritage and will continue to build on it for the future.

Frank Curtiss FCIS FCMAUKRIAT President

UKRIAT annual report and financial statements 2015–16

This has been a full and exceptionally busy year of implementing change and key initiatives as we pursue our aim to position ourselves as leaders in governance.

Our new strapline – The Governance Institute – gives a clear statement of intent and the new look was rolled out in February 2016. As public awareness of the importance of governance and its role in building trust in organisations increases, we are now very well placed to push forward our agenda.

Results Generally results for the professional body have held steady, with member income little changed on last year and income from professional students slightly improved. Our flagship Awards event in December 2015 produced excellent results following its move to a bigger venue, with record numbers of guests bringing improved income and profit compared with previous years.

We have made a good start in growing additional revenue through qualifications. The new Charity Law and Governance certificate, launched in January 2016, has exceeded budget expectations and income from our International Finance and Administration (IFA) qualification, launched in January 2015, has continued to be popular. We are seeing high levels of interest in the follow-on IFA qualification which launches in January 2017.

Our peopleAs an organisation we serve a broad range of stakeholders. We value them greatly and with our new customer relationship management (CRM) system, we are able to build a more rounded picture of how best to support them.

The CRM system was fully installed in autumn 2016 and we expect to see benefits during the next financial year.

One group – the team at Saffron House – is central to everything that we do. Their views and concerns matter. In September 2015, we carried out an employee engagement survey for the first time, which included the opportunity for staff to meet and feed back to members of the UKRIAT Committee without any members of the senior management team being present. I am glad to report that the results were largely positive and we have pledged to run another survey in 2017.

The futureMy goal is to improve our profitability and ensure that our product offer is strong and relevant. Ultimately I want ICSA: The Governance Institute to become a leader in governance in the UKRIAT region. In order to do this we need to stamp our authority on the governance debate, including taking part in the corporate governance review that the UK government is undertaking. We will also continue to represent the interests of our members and stakeholders to the best of our ability. My plan is simple: to continue to put good governance and our members at the heart of all we do.

Simon Osborne FCISChief Executive

4

From the Chief ExecutiveWe must strengthen our position as the professional body for governance

My plan is simple: to continue to put good governance and our members

at the heart of all we do

5

Group operating income

Overview

Results

Group operating income

Group operating surplus

£987,000

£000

Software products and services 22,930

Professional body and other commercial 6,051

Total 28,981

£000

Members 2,092

Training, events, board evaluation 1,145

Professional qualifications 1,352

Other qualifications 685

£000

Publishing 378

Magazine 250

Other activities 149

2016 2015

Fellows 1,531 1,555

Associates 5,097 5,223

Graduates 816 826

Retirees 2,773 2,907

Life 431 478

Total 10,648 10,989

Students 2,854 2,821

Members and students

0

2,000

4,000

6,000

8,000

10,000

12,000

20162015 20162015

for the 11-month period

01/08/15 to 30/06/16

from £2,857,000 for the 12-month period

01/08/14 to 31/07/15

£28,981,000

2%4%6%

11%

22%

19%

36%

21%79%

for the 11-month period 01/08/15 to 30/06/16

UKRIAT annual report and financial statements 2015–16

6

Highlights of the year

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Celebrating success in the CaribbeanICSA holds its inaugural graduation and membership ceremony for the Western Hemisphere in Trinidad.

New venue for ICSA Awards ICSA Awards move to larger capacity venue to meet demand from governance professionals.

FT-ICSA Boardroom Bellwether

Bellwether report shows that sentiment inside UK

boardrooms is gloomy about prospects at

home and abroad.

Two new specialist governance qualifications are launchedAn Advanced Certificate in Sport Governance and Administration and a Certificate in Charity Law and Governance widen our appeal.

Kenya branch secretary opens ICSA’s first conference in Kenya Purity Kinoti opens ICSA’s inaugural conference to support governance professionals in Kenya which included talks about the changing role of the company secretary, board evaluation and ICSA Software.

Jamaica seminar highlights importance of corporate governanceChief Executive Simon Osborne and President Frank Curtiss speak at ICSA’s Jamaica seminar about the ever-changing role of the company secretary and shareholder engagement.

New President takes the helmFrank Curtiss FCIS, former Head of Corporate Governance at RPMI RAILPEN, is named UKRIAT President.

Nov

DecOct

Aug

Jan

7

Overview

BVI seminar on corporate governance ICSA develops its profile and reach across the Caribbean with inaugural ICSA BVI branch seminar.

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Welcoming ICSA: The Governance InstituteUKRIAT President Frank Curtiss cuts the cake at celebrations to welcome ICSA: The Governance Institute.

ICSA launches guidance on Market Abuse Regulation

Ireland conference looks at topics reshaping the work of the company secretary Conor Ryan chairs the annual conference in Dublin which focuses on governance, risk and leadership matters reshaping the company secretary's work after Ireland’s Companies Act 2014.

Tom Morrison Essay PrizeTwins Ruth and Rebecca Keating celebrate winning and coming second in the inaugural Tom Morrison Essay Prize.

ICSA Publishing new releases

New annual conference format proves a successThe annual conference, which moved to a new two-day format, welcomes over 600 delegates; our biggest conference to date.

Feb May

June

Mar

Apr The ICSA Charity Law and Governance Handbook

The Non-Executive Directors’ Handbook

Jersey and Guernsey open their doors to governance and compliance professionalsICSA’s annual conferences focus on the challenges faced in each jurdisdiction.

Click on each section for more detail

UKRIAT annual report and financial statements 2015–16

Advancing our aimsOur mission is to champion good governance and develop the value, skills and effectiveness of company secretaries and governance professionals. Over the year, we have focused on four principal means of achieving this: • Repositioning ICSA as

The Governance Institute• Increasing thought-leadership

output and raising our media profile

• Expanding our market reach• Expanding our key events.

A bigger platform for ICSAThe most visible change we have made to move forward in 2016 has been the introduction of the strapline The Governance Institute. This marks an important evolution in our growth and identity. As institutional and public awareness of the importance of strong governance is increasing, the new strapline demonstrates

ICSA’s contemporary relevance and communicates clearly and simply what we and our members stand for.

Thought leadership and media profileRaising our profile is critical to realising our goal of becoming known as ICSA: The Governance Institute. Building public and media recognition has been a priority for the last three years and we have made progress in increasing the amount and quality of content we produce and are publicising it more effectively.

This is paying off. This year we have substantially improved our overall media coverage, with more exposure in UK national media such as The Independent, The Guardian and The Daily Telegraph, as well as in specialist business press such as the Financial Times, CityAM, The Wall Street Journal, Forbes, Business Insider UK, Business Brief and Scotland’s Daily Business. We had excellent coverage in high-profile regional press, such as the London Evening Standard, the Sunday Business Post (Ireland), The Scotsman, Scotland on Sunday and Greater Manchester Businessweek.

To boost the amount of content we can produce we have invested

Strategy review

Raising the profile of ICSA is critical to attaining our goal

of becoming known as ICSA: The Governance Institute

Our student open evenings

teach university students and

recent graduates more about

the company secretary role and

governance

8

We promote good governance, the Institute and our members as leading experts in governance

9

Strategy

in additional resource for the Policy team. During the year we appointed two additional members to the team, including ex-Financial Reporting Council Director of Corporate Governance Chris Hodge as an adviser. We are also recruiting additional not-for-profit, education and health sector support.

We have been raising awareness of our expertise and the important work our members do in international finance centres through a targeted media and publicity campaign in the Channel Islands and the Isle of Man, which resulted in major profiles of ICSA and the profession in the Isle of Man Examiner and Money Media (now Business365), as well as in the business pages of the Jersey Evening Post and Guernsey Press. The campaign also included appearances on Manx Radio, Three FM Isle of Man, BBC Radio Jersey and on Manx TV. We also had radio coverage on Ireland’s RTE and NewsTalk radio stations.

New 2-day format for annual conference in London, March 2016

£278,703 sponsorship

income

3,441people trained

by ICSA through conferences and

other events

3,400people took ICSA

qualifications

We have been highlighting our value to boards by providing training and support to non-executive directors (NEDs) and by publishing content on online resources and magazines such as NonExecutiveDirectors.com and HR Director and HR magazine.

We have also been featured in trade press including Governance, Risk & Compliance, Strategic Risk, Treasury Today, My Academy magazine, the Law Society Gazette, the Civil Society, Third Sector, Communicate magazine, Financial Director and Accountancy LIVE.

Extending market reach Expanding our portfolio of qualifications and finding new routes to market for our core qualifying scheme are key to developing the skills and effectiveness of governance professionals. We launched two new qualifications in January 2016: a Certificate in Charity Law and Governance; and an Advanced Certificate in Sport Governance and Administration.

The charity certificate supports people working in the charity sector whose roles are affected by legal

UKRIAT annual report and financial statements 2015–16

10

regulation and governance issues. The sport governance certificate was developed and marketed in partnership with the Sports and Recreation Alliance, an umbrella body for sport and recreation in the UK which represents organisations like The FA, the Rugby Football Union, British Athletics, Ramblers, British Rowing and the Exercise Movement and Dance Partnership.

Expanding our portfolio of qualifications is key to developing the skills and effectiveness of governance professionals

ICSA in the news

We also worked in partnership with the Irish Law Society on the Certificate in Company Secretarial Law and Practice in Ireland, launched in July 2015. Initial take up and feedback from students has been extremely positive.

To further extend our reach and influence in the Associated Territories, we acquired the rights to the CSIA

Company Secretarial Toolkit, a practical guide for governance professionals that covers the full spectrum of a company secretary’s duties. Trainers for the toolkit were briefed in June 2016 with a view to launching the programme with accredited partners in Barbados, Jamaica, Mauritius, St Lucia, Tanzania, and Trinidad and Tobago by the end of 2016. We are also improving access to the professional qualifying scheme by putting reseller agreements in place in Jamaica, Malta and Tanzania.

To raise awareness of the profession and routes into it, we have renewed relationships with universities in the UK through a programme of visits to law faculties and presentations to members of AGCAS, the Association of Graduate Careers Advisory Services, which has 2,800 members in over 160 institutes. We visited or engaged

11

Strategy

with a total of 106 universities and attended three AGCAS panel events in England. Follow-on activities to engage and inform students included open evenings at Saffron House; ICSA Advance, a work experience placement service; and new ICSA Insight days, taster sessions in the secretariat of leading UK companies, developed with our recruitment partner, DMJ.

Expanding key eventsOur conference, events and training programme continued to provide quality opportunities to share professional knowledge and build personal networks. Two of our high profile events were expanded to meet growing demand. The annual Awards ceremony moved to a bigger venue, the Park Lane Hilton, where a record 670 guests were entertained. The annual conference expanded into a new two-day experience allowing for a more substantial and varied programme, a bigger exhibition and more social opportunities, including a conference dinner. We welcomed 634 participants and a second two-day conference is planned for July 2017.

In addition, our seven other regional and specialist conferences attracted a total of 696 delegates and generated good media coverage.

Digital agenda Underpinning our strategic mission, we have continued to work towards ICSA becoming digital by default, with the main focus being on upgrading our website and ongoing work on managing and using data. There were some challenges around the early use of our single customer view database at the end of 2015 which have delayed some of the benefits that we had hoped for this financial period. The service has been operational since the end of October 2016 and is beginning to

Aims for 2016-17

Taking up the debate Responding to the governance agenda and staking out our position.

Increased recruitment Focus on more affiliate and CSQS registrations.

Increased retention More support for student success; improve overall member retention.

Strengthening qualifications Launch of International Finance and Administration (IFA) 5, building on success of 4 and providing transition for Diploma in Offshore Finance and Administration; CSQS review; development of academy governance qualification.

CRM delivery Achieving value and improving service.

give us tangible efficiency gains and improve the service that we offer to members and customers.We introduced a new user account for non-members to our website in May 2016 which gives access to all our free content services in one place, and had over 1,000 registrations in the first 12 weeks. This is all part of our push to raise visibility of our product offer and broaden our audience.

We have seen some promising results in our web traffic, which has risen substantially against the previous year following the introduction of a new search engine optimisation strategy.

We are also making it easier for people to register and purchase through the replacement of pdf application forms as the standard application process with online booking that makes the experience of dealing with ICSA efficient, immediate and in line with contemporary expectations of service. The aim is that all applications for qualifications and membership can be completed digitally by the end of 2016.

UKRIAT annual report and financial statements 2015–16

Policy and researchOur published output and influence with regulators and policy makers plays a central role in building our profile and credibility. It demonstrates what ICSA stands for and how governance makes a difference

The Policy and Research team supports the strategic objectives of ICSA: The Governance Institute by providing the intellectual capital - expert guidance, consultation responses and thought leadership - which demonstrates the values and expertise of ICSA and our members to employers, regulators and other stakeholders. This remained our key priority for the year.

Delivering thought-leadership content and researchTo strengthen our voice in the governance debate, we were pleased to welcome experienced policy maker Chris Hodge to the team as a policy

adviser on governance issues, and took advantage of his long experience at the Financial Reporting Council (FRC). We also welcomed Liz Bradley to strengthen our corporate activities and are recruiting an additional person to support our not-for-profit work.

Promoting governanceWe published and contributed to a number of pieces of original research during the year to engage boards and other stakeholders on key governance issues, including:

• Board appointments: In partnership with the corporate

governance team at EY we produced a report on the role of the Nomination Committee in May 2016. Sometimes portrayed as the poor relation of the main board committees, the Nomination Committee plays a pivotal role. If the board lacks the right balance, knowledge, skills and attributes, the likelihood of it operating effectively is greatly reduced.

We also contributed to the guidance on board appointments published by the Equality and Human Rights Commission.

• Corporate culture: Building strong corporate culture throughout the organisation is a key governance challenge.

In October 2015 we hosted, jointly with the Institute of Directors, an event on corporate culture and the role of the board, which was addressed by Baroness Neville-Rolfe FCIS, Minister of State at the Department for Business, Innovation and Skills.

In December, we collaborated with the Institute of Business Ethics (IBE) and with the International Corporate

12

Policy adviser Chris Hodge addressing

delegates at the annual conference in London

We support the strategic objectives of ICSA by providing the guidance, consultation responses

and thought leadership which will improve the status and recognition of ICSA

Policy and research

Governance Network (ICGN) to publish the output from a workshop on culture in business which identified some 'red flags' that might help to indicate cultural weaknesses in an organisation.

We worked with the IBE and Mazars to produce Culture by Committee, on the use of ethics and compliance committees to monitor culture, which was launched at our conference in March 2016.

We continue to work with the FRC to support their major project on corporate culture.

• FT-ICSA Boardroom Bellwether: We continued our relationship with the Financial Times to produce two editions of our half-yearly Boardroom Bellwether survey in December 2015 and May 2016. The latter attracted significant press coverage because of the interest in Brexit in the run up to the UK’s referendum on EU membership in June.

Expert guidance • Market Abuse Regulations: The team worked with the GC100, Quoted Companies Alliance (QCA), Slaughter and May and others to produce a guidance note on compliance with the Market Abuse Regulation (MAR), providing specimen dealing codes to replace the now obsolete 'Model Code' in order to reduce the duplication of dealing codes in the market. The guidance was particulary welcome as an

industry initiative to address a widely perceived gap in regulation.

• PSC Register: Peter Swabey, our Policy and Research Director, chaired a working group to develop non-statutory guidance on the implementation of the PSC Register regulations, a highly technical piece of new legislation. We produced both a detailed piece of guidance running to 90 pages and a summary version for less complex companies. This was an important piece of work addressing governance in a number of sectors and was welcome recognition by the UK government of ICSA's leading position in our field.

• Charity regulation: We developed a competency framework for trustees and submitted it to the Charities Commission, as well as drafting a trustee competency matrix on specimen trustee standards and publishing it for external comment.

We also developed a ‘theory of change’ document to demonstrate the value of a charity code of governance to potential funders.

• Multi-academy trusts: Following a consultation which ran from May to 30 June 2015, updates were made to our Academy governance maturity matrix, one of the tools that we have introduced to support governance professionals working in the academy sector, a strategic area of focus for us.

• Governance in MBA syllabi: We produced research on the syllabi of leading MBA courses which confirmed our view that too few of these include training in governance as a key part of the MBA course – worrying given the number of initiatives to rebuild trust in business.

Throughout the year, the team produced articles, blogs and commentaries for various publications including ICSA’s magazine, Governance and Compliance. We responded to 25 consultations from the UK government, regulators and other third parties as well as responding to more than 800 queries through the members’ helpline.

For the coming year, plans include further work on minute taking guidance, which launched in September 2016 following a public consultation that ran from May to June. This received a fantastic level of response, which highlights not only the importance of such a core aspect of the governance role but also the high level of interest in it from so many members of our profession. We are also planning further work on governance codes in the charity and sports sectors, work on the effectiveness of investor stewardship with the FRC Investment Association and Pensions and Lifetime Savings Association and research on tension in the boardroom and how it affects the role of the company secretary.

Key findings from the Summer 2016 Boardroom Bellwether

45% of boards had

not considered the implications of the UK leaving the EU two months before the referendum

28% of boards believe their female executive pipeline is sufficient

13

UKRIAT annual report and financial statements 2015–16

Membership

14

Following on from our 2014 membership survey, which showed that professional support is one of the services that our members value most highly, we have continued to equip members for the intricacies of their roles by developing and updating their skills and professional knowledge. We have trained 3,441 people this year through classroom-based training, online training, in-house training, continual professional development, conferences and other events. Some 3,400 people took ICSA qualifications this year.

We have supported members locally through a number of initiatives, such as an inaugural conference in Kenya in October 2015 and maiden branch seminars in Jamaica and the British Virgin Isles in October 2015 and June 2016 respectively. We also held a graduation and membership ceremony for governance professionals in Barbados, Bermuda, the Cayman Isles, Jamaica, Trinidad and Tobago which took place in Trinidad in November 2015, plus one in Dublin which recognised the achievements of graduates and members in Ireland.

Chief Executive Simon Osborne has travelled extensively to visit members as part of our outreach programme, including visits to Barbados, the British Virgin Isles, the Channel Islands, Ireland, the Isle of Man, Jamaica, Kenya, Northern Ireland, Scotland, St Lucia, Trinidad and Tobago, Uganda and Zambia. He also spoke at events organised by the Malta Financial Services Authority and the Caribbean Corporate Counsel Summit, and has spoken to business students at Kingston Business School and the London Southbank University about the importance of corporate governance. Theresa Minnie, Head of Membership and Outreach, also speaks regularly at careers events at universities and law schools in the UK as part of our drive to reach new audiences.

We are also looking to grow our membership by improving our student to member retention rate. All universities offering our accredited post-graduate courses are visited bi-annually to encourage graduates to apply for full membership.

Theresa Minnie, Head of Membership and Outreach,

speaking at ICSA's governance event in Zambia We are launching

a mentoring scheme in 2016-17 which

will benefit both members and students

Our focus is on supporting our members and in consolidating relations throughout the UKRIAT region

Membership

On the subject of our accredited post-graduation courses, a mention must be made to John Thompson FCIS, course director of the University of Ulster’s MSc in corporate governance, who received the ICSA President’s Medal at the Northern Ireland Branch Dinner in February. John was instrumental in designing and developing the course, which is also run by Marino College in Dublin, and a worthy recipient of the medal which is given for meritorious service to ICSA.

We continue to reach out to members, students and potential students not just in the United Kingdom, Channel Islands and Republic of Ireland but in our Associated Territories as well. Part of this outreach is an effort to reactivate and reinvigorate the local branches and to co-ordinate a series of continual professional development and social events over the year in each jurisdiction.

We also continue to look at how we can improve our membership offering, and are launching a mentoring scheme in 2016-17 which will be beneficial to both members and students.

Membership CommitteeThe Membership Committee, which is responsible for vetting and recommending to the UKRIAT Committee candidates to be admitted to membership or upgraded to fellowship, met three times during 2015-16.

The Committee discussed and reviewed the following topics:

• Fellowship applications

• Audit of associateship applications

• Campaign to encourage graduates to upgrade to full membership and associates to upgrade to fellowship

• Oversight of the Special Entry Examination Scheme (SEES)

• Continuing professional development, competencies and the code of professional ethics and conduct

• Annual review of the terms of reference and effectiveness of the committee to ensure it is fit for purpose.

The Committee comprises a chairman appointed by the UKRIAT Committee from amongst its own membership and a minimum of four other fellows of ICSA.

Membership during 2015– 16 was as follows:

Member name Number of meetings attended

Angela Squire (Chairman) 3/3

Bernadette Barber** 2/2

Andy Cowe 3/3

Frank Curtiss**** 0/1

Mike Eade* 0/1

Karen Jolly** 2/2

Philippa Keith* 1/1

Rachael Matzopoulos*** 0/1

Charles Pender* 0/1

Ron Rosenhead***** 0/2

David Venus** 1/2

* until 31 December 2015

** from 08 February 2016

*** from 01 April 2016

**** from 07 April 2016

***** until 31 March 2016

John Thompson FCIS, the recipient of the President’s

Medal at the ICSA Northern Ireland Branch Annual Dinner

15

UKRIAT annual report and financial statements 2015–16

This year’s new qualifications included the Advanced Certificate in Sport Governance and Administration and the Certificate in Charity Law and Governance, both of which launched in January 2016.

The Advanced Certificate in Sport Governance and Administration was developed in association with the Sports and Recreation Alliance, the umbrella body for sport recreation in the UK. It is designed for those in senior level roles in sports organisations, employed or voluntary, and in particular for individuals with responsibility for implementing

or overseeing governance arrangements with their governing boards. Other provisions for the sporting sector include a series of training sessions offered in collaboration with UK Sport.

The Certificate in Charity Law and Governance is an introductory programme for individuals working in charities in England and Wales, particularly those with governance responsibilities or those working in roles affected by legal regulation and governance issues. It joins a growing portfolio of products and services for the not-for-profit sector.

Qualifications

16

ICSA qualified 3,400 people

in 2015-16

2015-16 saw the launch of two new ICSA qualifications, with work progressing on several more. All of these make good on our strategic aim of developing a wider range of qualifications and on our commitment to exploring opportunities in new sectors

Interest in the charity certificate in particular has exceeded expectations

17

Both qualifications are open entry, offered on a self-study basis and supported by a programme of webinars and practice tasks. Each qualification is assessed via a three-hour examination. Interest in the charity certificate in particular has exceeded expectations and the sports qualification is increasingly capturing people’s interest.

The beginning of the year also saw the first cohort of students on the Certificate in Company Secretarial Law and Practice, which is being offered in association by ICSA with the Law Society of Ireland. The new Certificate was developed in response to the arrival of the new Companies Act in Ireland and represents the start of an ongoing programme of educational development for the Irish market. Most of the students in the new Certificate's first year went on to become affiliate members of ICSA.

Work also continued through the year on the new higher level International Finance and Administration (IFA) suite which, in response to market demands, now includes new funds administration content.

Comprising three ’nested’ qualifications – an advanced certificate, subsidiary diploma and diploma – IFA Level 5 launches in January 2017 and joins the existing Level 4 suite as part of ICSA’s ongoing support for employees and employers in the international financial services sector. A series of pre-launch events in April 2016 in the Isle of Man, Guernsey and Jersey were well-attended and confirmed that interest in the new IFA qualifications is high.

Review of qualifying schemeAlongside the introduction of new qualifications, we have also made progress on the review of ICSA’s core qualifying scheme (CSQS) and on supporting students on the journey to membership. Work on the qualifying scheme has been significantly informed by a parallel project on an International Standard and qualification. That project has been a collaborative effort bringing together ICSA divisions around the globe and its findings are being fed into UKRIAT’s own thoughts on the future shape of the scheme.

This year has also seen ongoing attention paid to supporting students through all ICSA’s qualifications. This included preliminary efforts to help students complete CSQS, work which will continue through the coming year, and the development of a series of webinars and practice tasks for students on the standalone certificates.

Qualifications CommitteeThe Qualifications Committee (QC) met twice during the financial period, and the main focus of its work in the past 11 months has been to review and advise on the launch of new qualifications as described in this section, and to scrutinise and help shape the work on the qualifying scheme.

Particular projects overseen by the QC included the launch of the new charity law and sports governance certificates – qualifications which represent a significant income stream and further enhance the skills and knowledge of ICSA’s members – and the ongoing work on IFA Level 5. The QC also advised on the qualifications development programme for the next few years.

In a similar vein, the QC played a key role this year in helping to shape the structure and content of the new qualifying scheme. It also made recommendations to the Council about the review of the International Standard, against which each division's qualifying scheme is assessed, to ensure consistency and international portability.

The QC’s October meeting is combined with a meeting of the Assessment Review Panel (ARP), which meets twice a year to carry out a post-examination audit prior to release of the examination results. Both the QC and ARP have conducted an annual review of their performances.

Member name Number of meetings attended

Lesley Brownett (Chairman) 2/2

Roz Baxter (observer/adviser) 1/2

Alison Carr (observer/adviser) 1/2

Susan Hughes 1/2

Phillipa Keith 0/1

Alison Dillon Kibirige 0/2

Michael Knight (observer/adviser) 2/2

David Kyle* 1/1

Les Milliken** 0/0

Victoria Penrice 1/2

Ron Rosenhead 1/2

Angela Squire 2/2

David Venus* 1/1

*from 8 February 2016

** from 7 April 2016, but the Committee did not meet after that date, before the financial year end

Qualifications

UKRIAT annual report and financial statements 2015–16

18

Software

ICSA Software International’s entity management solution, Blueprint OneWorld, continues to dominate the entity management market, with some of the biggest organisations in the world making use of it. In the UK, 74% of the FTSE 100 and 46% of the FTSE 250 use Blueprint OneWorld products to ensure compliance and demonstrate good governance. In the USA, five of the Fortune 10 and 30 of the Fortune 100 use Blueprint OneWorld. Blueprint OneWorld’s market share in Australia, the United Arab Emirates (UAE) and mainland Europe continues to thrive with a growth strategy being implemented for Hong Kong.

ICSA Software International is fully committed to continuing the success of Blueprint OneWorld by constantly developing new solutions for the ever-changing compliance environment such as the Market Abuse Regulations and the Senior Managers Regime legislation.ICSA Boardroom Apps’ meeting and document collaboration solution, BoardPad, continues to build its market share globally. BoardPad

turns directors’ devices into digital board and meeting packs, helping company secretaries, meeting administrators and directors to operate more efficiently.

BoardPad is now entering into the maturity stage of its product life cycle, with board portals becoming the norm. With many competitors penetrating the market, BoardPad has managed to position itself as a premium product, seeing growth in Australia, mainland Europe, the UAE, Saudi Arabia, and continuing success in the United Kingdom.

BoardPad, which has 37,000 users globally, enjoys a 30% market share of the FTSE 100 and a 13% share of the Australian stock market ASX.

New product developments continue to form a key part of BoardPad’s growth strategy. The addition of BoardPad Minutes, a secure minute management module, has differentiated the product in the marketplace. BoardPad Minutes is a significant unique selling proposition for BoardPad as no other product on the market offers an integrated solution to minute taking and the secure distribution of minutes.

With the operating systems in the tablet and laptop market becoming so varied, BoardPad’s new Windows product (available on Windows 7 devices and onwards) and Android product are significant additions to its offering. These significantly increase BoardPad’s potential market share and allow it to be positioned as a flexible delivery product. Alongside other significant developments due to launch in 2017, this will help BoardPad to differentiate itself from its two main competitors and continue to grow and remain at the forefront of technology solutions for the boardroom.

No other product on the market offers an integrated solution to minute taking

and the secure distribution of minutes

ICSA owns two successful software companies – ICSA Software International Limited and ICSA Boardroom Apps Limited – producers of Blueprint One World and BoardPad

Software

Software senior management(as at the date of these financial statements)

19

74 of the FTSE 100

115of the FTSE 250

13% of the ASX 200

30% of the FTSE 100

Over

1,000 boards

37,000 users globally

Blueprint is used by: BoardPad is used by:

Jeremy LloydChief Technical Director

Mike EvansManaging Director, ICSA Software International

BoardPad year-on-year sales growth 16%Blueprint year-on-year sales growth 11%

UKRIAT annual report and financial statements 2015–16

20

UKRIAT Committee(as at the date of these financial statements)

1

4

9

12

2

5

7

10

3

6

8

11

13

Andy Cowe was a member of the Committee until 31 July 2016.

Ron Rosenhead MBE was a member of the Committee until 31 March 2016.

21

Governance

1 Frank CurtissFrank is President of the UKRIAT Committee. He was Head of Corporate Governance at RAILPEN Investments until his retirement in April 2016. Frank is the current Chairman of the Chartered Secretaries' Charitable Trust and has been a trustee of ICSA's charities since 2007.

2 David VenusDavid is International President of the Institute and Past President of the UKRIAT Committee. He qualified as a chartered secretary in 1974 and has over 40 years’ experience of company secretarial work, mostly in practice. David has been author of several books on corporate governance and other issues.

3 John HeatonJohn is Vice-President of the UKRIAT Committee and serves on the Institute’s Council. A self-employed consultant, including work for Equiniti, John previously worked for Lloyds Bank Group carrying out a number of senior management roles in operations, compliance and risk, and client relations.

4 Victoria PenriceVictoria is Vice-President of the UKRIAT Committee and Chairman of the Audit & Risk Committee. She qualified as a chartered secretary over 20 years ago, gaining significant experience in listed companies. She served on the Committee of Association of Women Chartered Secretaries (AWCS) for four years, latterly as President, and taught Company Secretarial Practice to ICSA students at London Metropolitan University. She is currently an independent consultant.

5 Charles Brown Charlie has been a member of the UKRIAT Committee since January 2015 and is also a member of ICSA’s Irish Regional Council. Company Secretary for Experian plc in Dublin since 2006, he covers corporate

governance, statutory and listing rules compliance and reporting, board support, shareholder services and corporate responsibility. Before joining Experian, he was Group Company Secretary at Standard Chartered PLC.

6 Lesley BrownettLesley has been a member of the UKRIAT Committee and its predecessor, the UK Committee, since 2011. She is Chairman of the Qualifications Committee. She was Deputy Secretary of Marks & Spencer from 2002–10. During her 30 year career at Marks & Spencer she learned the value of governance, stakeholder relations and leadership.

7 Alison Dillon KibirigeAlison has been a member of the UKRIAT Committee since January 2015. She also serves on the Institute’s Council and Professional Standards Committee. Based in Uganda, Alison runs her own global corporate governance training and consultancy business servicing Europe, Africa, the Caribbean, the Middle East and Asia.

8 Karen JollyKaren is a Director of BWCI Trust Company Limited and Group Company Secretary of the BWCI Group, for whom she has worked since 2000. An ICSA fellow since 2008, Karen is a former chairman of the ICSA Guernsey Branch Council. She has worked in fiduciary, fund and insurance sectors of the finance industry in Guernsey for more than 20 years.

9 David KyleDavid has been an Institute member since 1974 and was elected to the UKRIAT Committee in 2016. He has been Secretary and Chairman of the Sheffield Branch/Group. He lectures at Sheffield Hallam University, is a member of the Chartered Institute of Management Accountants and examines for a major accounting body.

10 Rachael MatzopoulosRachael was elected to the UKRIAT Committee in January 2016. She is currently Deputy Company Secretary at The Vitec Group plc, having previously held company secretarial roles at Lloyds Banking Group, BNP Paribas, Rexam and EY. She is a former president of the Association of Women Chartered Secretaries (AWCS).

11 Leslie MillikenLes has been an ICSA Fellow since 1997 and is a fellow of the Higher Education Academy. He has extensive experience in both private and public sectors, latterly lecturing in law and sits on both First-tier and Upper Tribunals. He is a member of ICSA qualifications committee and the Institute's Professional Standards Committee.

12 Edward NichollTed has been a member of the UKRIAT Committee since January 2013, and its predecessor, the UK Committee, from 2003 to 2009. An active member of the Court of the Worshipful Company of Chartered Secretaries and Administrators, he has over 30 years’ experience as a company secretary for large commercial companies, an international hotel chain, housing associations and a professional body.

13 Angela SquireAngela is a past president of the UK Committee and serves on the Institute’s Council. She is Chairman of the Membership Committee. She has over 30 years’ professional experience gained in finance, operations, risk, business change and project management.

UKRIAT annual report and financial statements 2015–16

22

Senior management team(as at the date of these financial statements)

Simon Osborne FCISChief ExecutiveSimon is a Fellow of ICSA and a solicitor. Before joining ICSA in 2011, Simon was a freelance governance consultant and Joint Head of ICSA Board Evaluation. He is a member of the International Corporate Governance Network; a non-executive director of Crown Business Communications Limited and MNN Holdings Limited; and deputy chairman of the Railway Benefit Fund.

William BoothProfessional Development DirectorWill oversees ICSA's events, qualifications and publishing businesses, and is responsible for the maintenance, review and development of ICSA's product base. He joined ICSA in 2000 and much of his work since then has focused around product and business development. He also previously edited ICSA's magazine.

Charis EvansBusiness Development DirectorCharis leads the marketing, sales and digital teams. She joined ICSA in 2013, previously working for publishers Collins Education and Granada Learning. She has also worked as a consultant to heritage organisations including the V&A and the Imperial War Museum, and for digital start-ups in the creative industries.

Robert Ing ACMA, CGMAFinance DirectorRobert joined ICSA in 1991 and is FD of the ICSA group, which includes the Institute and four trading subsidiaries. Previously he held a variety of financial, management and project accounting roles for the London Stock Exchange and manufacturing, mining and oil exploration sectors. He is a member of the Chartered Institute of Management Accountants.

Peter Swabey FCISPolicy and Research DirectorPeter is responsible for developing the profile of ICSA through thought leadership and lobbying campaigns, as well as being responsible for liaison with legislators and regulators. He is a member of a number of industry committees and a regular speaker on governance issues.

Governance

23

Governance review

UKRIAT is committed to reaching and maintaining the highest standards of corporate governance and in so doing supports the UK Corporate Governance Code, which is published by the Financial Reporting Council. The code is principally for listed companies, and as such, UKRIAT is not obliged or in some respects able to follow it completely. However, UKRIAT is committed to adopting best practice governance processes and therefore chooses to apply the code to its operations as far as it is applicable and appropriate for a professional body incorporated by Royal Charter.

Throughout this review, the various committee compositions shown are for the period under review. Information about the UKRIAT Commmittee members can be found on pages 20-21. Other committee members are shown on pages 23-25.

The UKRIAT CommitteeThe UKRIAT Committee is a committee set up by the Council. It manages the affairs of the Institute within UKRIAT and has responsibility for the assets, liabilities, income and expenditure of the Institute within the UKRIAT Division. The UKRIAT Committee is composed of those members of the former UK Committee whose term has not yet expired, the two most recent past presidents of the UK or UKRIAT Committee, and those elected by the members residing in UKRIAT. All UKRIAT Committee members are fellows of the Institute who reside in UKRIAT.

In autumn 2015, elections were held using the single transferable voting system for the first time. We engaged Electoral Reform Services Limited to manage the election process and to count the votes. Nine candidates stood for election to fill four vacancies in the UKRIAT Committee. The successful candidates were: David Kyle, Karen Jolly and Rachael Matzopoulos, as well as Edward Nicholl who was re-elected.

The committee met four times during 2015–16.

Member name Number of meetings attended

Frank Curtiss (Chairman) 4/4Charles Brown 3/4Lesley Brownett 3/4Andy Cowe***** 3/4Martin Green* 2/2John Heaton 3/4Karen Jolly** 2/2Philippa Keith* 1/2Alison Dillon Kibirige 3/4David Kyle** 2/2Rachael Matzopoulos** 2/2Les Milliken*** 1/1Edward Nicholl 4/4Charles Pender* 2/2Victoria Penrice 4/4Ron Rosenhead**** 3/3Angela Squire 4/4David Venus 4/4

* until 31 December 2015 ** from 1 January 2016 *** from 14 March 2016

**** until 31 March 2016 ***** until 31 July 2016

During the year the Committee discussed the following topics:

• UKRIAT’s strategic aims, objectives and annual strategic and business plan

• Investment in the Associated Territories

• The future of the Chartered Secretaries Qualifying Scheme

• The final stages to complete divisionalisation of UKRIAT

• The UKRIAT Division's group annual operating and capital expenditure budgets, and the discharge by the chief executive of the day-to-day business of UKRIAT

• Annual membership subscriptions

• Risk registers and risk management, agreeing the hierachy of all risks and their mitigation

• Elections to membership of all associates and fellows, electing 174 new members and raising 54 members to fellowship

• Approval of the annual report and audited accounts of UKRIAT.

UKRIAT regulationsThe regulations give further effect to the Royal Charter and byelaws and provide the framework through which the UKRIAT Committee works on behalf of UKRIAT members.

UKRIAT annual report and financial statements 2015–16

24

Sub-committees of the UKRIAT Committee

The Oversight CommitteeThe Oversight Committee is responsible for supervising the management and administration of UKRIAT and monitors and reports to the UKRIAT Committee on the implementation of policies, plans and budgetary performance. It also undertakes any projects delegated to it by the UKRIAT Committee. It recommends to the UKRIAT Committee the appointment of the chief executive, sets the remuneration of the chief executive and other senior employees and advises the chief executive generally on all remuneration policies and retirement and other benefits. It comprises the UKRIAT president, who is also its chairman, the immediate past president and the vice-presidents.

The Committee met six times during 2015–16.

Member name Number of meetings attended

Frank Curtiss (Chairman) 6/6John Heaton 6/6Victoria Penrice 6/6David Venus 6/6

During the year the Committee discussed the following topics:

• Finance review and year-end report

• Oversight of the objectives and targets set by the Executive Committee, including a review of the key performance indicators

• Divisionalisation of UKRIAT

• Risk management

• Review of the monthly business of UKRIAT

• Review of the subsidiary businesses.

The Audit & Risk CommitteeThe Audit & Risk Committee is responsible for monitoring the integrity of the financial statements of UKRIAT and its subsidiary companies, including: reviewing significant financial reporting issues and judgments that they contain; keeping under review the effectiveness of the group’s internal controls and risk management systems; considering and making recommendations to the UKRIAT Committee in relation to the reappointment of the group’s external auditor; reappointing the internal auditor; oversight of the internal audit function; and overseeing the selection process for external and internal auditors.

The committee met four times during 2015–16.

Member name Number of meetings attended

Victoria Penrice (Chairman) 4/4Charles Brown 3/4Frank Curtiss* 1/3Martin Green** 0/1John Heaton 4/4Rachael Matzopoulos*** 3/3Edward Nicholl 2/4 Charles Pender** 1/1

* From 7 April 2016 ** Until 31 December 2015 *** From 1 January 2016

During the year the Committee discussed the following topics:

• Monitoring the level of non-audit work undertaken by the external auditor, agreeing safeguards to the auditor's independence

• Review of the annual report and financial statements and recommending their approval to the UKRIAT Committee

• Review of the auditor's report on the outcome of the audit and consideration of any necessary actions required

• Review of the accounting policies adopted by the group

• Oversight of risk management, including the review and update of the risk register

• Oversight of the internal audit by RSM Risk Assurance Services LLP, agreeing the scope of the work to include data protection compliance and business continuity arrangements

• Accounting standards used and future accounting treatments including the adoption of FRS102

• Anti-money laundering policy, agreeing the policy and reviewing compliance.

External auditMoore Stephens LLP was appointed as UKRIAT's auditor in February 2016. The auditor was originally appointed to the Institute (as Chantrey Vellacott DFK LLP) in February 2007, and following a review by the Audit & Risk Committee during 2012, a rotation of audit partner was recommended to the UKRIAT Committee. This is the fourth year under the current lead partner.

The Audit & Risk Committee reviews the performance of the external auditor annually and remains satisfied with its effectiveness and independence. The Committee is

Governance

25

recommending the reappointment of Moore Stephens LLP at the 2017 UKRIAT annual general meeting.

The Audit & Risk Committee is also responsible for monitoring the level and nature of any non-audit services provided by the external auditor, taking into account relevant ethical guidance on the provision of such services. Non-audit services purchased in the year from Moore Stephens LLP amounted to £84,000; £31,000 was for tax advice and compliance services, and £53,000 for corporate finance advice. Having reviewed the processes in place at Moore Stephens LLP to preserve independence and maintain distance between departments, the Committee agreed that the independence of the auditor was not compromised through the level of non-audit work undertaken in the year.

The external auditor is invited to attend all meetings of the Audit & Risk Committee.

Internal auditThe Audit & Risk Committee received findings from RSM Risk Assurance Services LLP on the internal audit carried out during the year. The internal audit covered data protection compliance and business continuity arrangements. Assurances received were that the controls in place were suitably designed and consistently applied. Recommendations to improve procedures were made and implemented. This process was well received by the departments concerned who embraced the proposed changes. The internal audit programme will include single customer view, finance systems and budgetary controls, and advisory risk management training in 2016–17.

The internal auditor is invited to attend all meetings of the Audit & Risk Committee.

Risk managementThe senior management team has responsibility for designing, implementing and maintaining risk management systems in line with the risk management policy determined by the Audit & Risk Committee.

All managers are required to consider potential risks to their department and grade them by likelihood and impact. They do this using an inherent and residual scoring system and having taken into account control and mitigation processes. The results are recorded on the risk register. The Audit & Risk Committee has responsibility for ensuring that the register is regularly updated, analysing the results and subsequent action plans, and reviewing the register twice a year.

The senior management team reviews the risk register on a regular basis. The UKRIAT Committee reviews the register on an annual basis.

The Nomination CommitteeThe Nomination Committee is responsible for the nomination of UKRIAT honorary officers, identifying skills needed in UKRIAT and its Committees, and may seek candidates for co-option to the UKRIAT Committee. Its membership comprises the UKRIAT president and immediate past president and at least three other UKRIAT Committee members appointed by the UKRIAT Committee.

The Committee met three times during 2015–16.

Member name Number of meetings attended

Frank Curtiss (Chairman) 3/3Andy Cowe 2/3John Heaton 3/3Victoria Penrice* 2/2Angela Squire 3/3David Venus 3/3

* from 8 February 2016

During the year the Committee discussed the following topics:

• UKRIAT Committee election process including a detailed review of the nomination form and canvassing rules

• UKRIAT Committee and its sub-committees’ composition and attendance at meetings

• Induction programme for new UKRIAT Committee and sub-committee members

• Recommendation of the president and honorary officers.

AuditorA resolution to reappoint Moore Stephens LLP as auditor and to authorise the UKRIAT Committee to set their fees will be proposed at the 2017 annual general meeting for members in UKRIAT.

StaffUKRIAT employed 308 staff in the UK and overseas at 30 June 2016 (2015: 273). The professional body employed 65 of the total number of employees, the remainder being employed by ICSA’s software businesses.

UKRIAT annual report and financial statements 2015–16

26

The group’s risk management methodology is based on best practice and the ISO 31000 Risk Management model, which consists of monitoring and reviewing the stages of risk assessment, identification, analysis, evaluation and treatment. It aims to enable the timely identification of risks and to allow action to be taken to remove them or to reduce their impact to an acceptable level.

The UKRIAT Committee is responsible for the assessment and management of risk. The Audit & Risk Committee is responsible for the effectiveness of the group’s risk management systems. With the assistance of RSM Risk Assurance Services LLP (RSM), the Audit & Risk Committee regularly reviews the Division’s risk policy, architecture and methodology which comprise the risk management process. It is the opinion of the Audit & Risk Committee that the approach being taken is robust.

The second in a programme of internal audits by RSM was completed during the period to 30 June 2016 on data protection compliance and business continuity arrangements.

Data management systems and procedures were reviewed and developed during the period to ensure that they encompassed the guiding principles of, and adhered to, the Data Protection Act. The audit gave reasonable assurance that the controls in place are suitably designed and consistently applied. RSM made several recommendations, which are being implemented, to provide further assurance on the effectiveness of the control framework.

Business continuity arrangements were also reviewed during the period, particularly those in regard to an event causing the Division’s offices, and those of its subsidiary companies in London, to become inaccessible. Alternative workspace, IT and data recovery arrangements are in place as are the systems and procedures for their invocation and use. The audit gave reasonable assurance that the controls in place are suitably designed to manage this risk. RSM made recommendations regarding the invocation procedure and systems testing. These are being implemented and will add further assurance that this risk is controlled effectively.

Risks are identified, ranked and prioritised against a consistent overall ranking and rating system using a combination of consequences and likelihood, which determines the response required.

The principal risks identified are:

• Insufficient cash being generated by the commercial subsidiaries to fund the group’s activities. Monitoring solvency over the shorter term is achieved through monthly cash flow forecasting and review of the group’s performance.

• Business failure of the software businesses. The businesses’ operations are monitored regularly against budgets and forecasts. Product development and diversification across markets, and assessment of competitors and the needs of the market are undertaken as a priority in order to ensure that products and services continue to stimulate and satisfy demand.

• Breach of confidential client data, particularly in regard to the software businesses. Considerable resource is invested in physical, technical and administrative controls to ensure the security of client data. Both ICSA Software International Limited and ICSA BoardRoom Apps Limited comply with assurance standard ISAE 3402/SSAE 16 Type II and Quality Management System standard ISO 9001.

• The continuing decline in the number of chartered members, which makes it more difficult to reduce the deficit from professional activities. The priority is to reduce dependence on the revenue from chartered members by growing revenues from other sources such as affiliates and new qualifications.

• Failure of the Division to attract new revenue streams. Product and business development is kept under review.

• Increases in the deficit in the defined benefit pension scheme could pose a risk to future activities. The risk of an increase in the pension deficit is managed with the aid of actuarial, legal, investment and other appropriate professional advice by identifying and monitoring the funding position from actuarial and FRS102 valuations, and monitoring cash flow requirements and benefits provided. If circumstances require it, professional advice would be taken as to the options available to limit the exposure to increasing liabilities accruing under the scheme.

Principal risks and uncertainties

Financials

27

Financial reviewBackgroundThe Institute of Chartered Secretaries and Administrators’ Council designated UKRIAT a division on 20 July 2015. The UKRIAT Division is responsible for providing services and support for ICSA members and students and for running the Chartered Secretaries Qualifying Scheme (CSQS) in UKRIAT. The Division’s activities are operated from, and are accounted for, within the Royal Charter body.

In order to make the UKRIAT Division’s year-end date coincide with those of the other divisions, it was changed from 31 July to 30 June with effect from 30 June 2016.

As the responsibility for the management and control of the assets within UKRIAT is conferred by the Charter and Byelaws upon the UKRIAT Committee, it is not appropriate for the financial statements of the UKRIAT Division to be consolidated with those of the Institute.

The UKRIAT Division’s group financial statements set out in the following pages are for the eleven months ended 30 June 2016. They comprise the results, assets and liabilities of the Institute’s affairs in UKRIAT (‘UKRIAT’) and the principal subsidiaries, ICSA Software International Limited, ICSA Software North America Inc, ICSA BoardRoom Apps Limited, ICSA BoardRoom Apps North America Inc, ICSA BoardRoom Apps (HK) Limited, ICSA BoardRoom Apps GmbH, ICSA Publishing Limited and ICSA Services Limited (‘the group’).

The group’s result for the yearUnless stated otherwise, all comparisons are to the 12 months to 31 July 2015.

The group’s result to 30 June 2016 was a net surplus of £1,416,000 as shown in the consolidated income statement on page 30. This result is after crediting tax of £414,000.

Group operating income decreased to £28,981,000 from £29,582,000.

Group direct costs rose 5% to £17,006,000 from £16,167,000.

Gross contribution was £11,975,000 compared to £13,415,000 in 2015. Group administration expenses of £10,988,000 were in line with those of £10,558,000 for 2015 and the resultant operating surplus was £987,000 from £2,857,000, the majority of the decrease arising within the software businesses.

The composition of the operating surplus is shown in note 2 on page 39.

The tax credit of £414,000 comprises a credit of £650,000 in respect of the R&D tax credit within the Software businesses which is offset by a tax charge of £236,000 arising mainly within those businesses.

The result of the UK’s EU referendum decision in June contributed significantly to the fall in yields on corporate bonds, which provide the discount rate used to calculate projected cash flows in the valuation of the defined benefit pension scheme. The fall in discount rate from 3.6% to 2.9% was the main reason for the increase in the schemes' deficit from £3,455,000 to £4,498,000. Of the increase of £1,043,000, £113,000 was credited directly to the consolidated revenue statement and £1,156,000 was charged directly to reserves. The scheme does not represent a future cash call as it is funded through budgeted contributions, the level of which has been agreed with the scheme’s trustees after having taken advice from the scheme’s actuary.

The group’s net assets amounted to £2,736,000 from £2,770,000, having absorbed the actuarial loss charged directly to reserves of £1,156,000.

The UKRIAT Division The Division’s operating deficit for 11 months to 30 June 2016 was £620,000 compared to £898,000 for 12 months to 31 July 2015.

Member income at £2,092,000 for the current period is £215,000 below that of £2,307,000 to 31 July 2015 but in line with that of £2,098,000 to 30 June 2015.

Student income, comprising that from the CSQS, of £1,352,000 exceeds that of £1,317,000 for the 12 months to 31 July 2015 and that of £1,202,000 to 30 June 2015, the increases from 2015 being in examination and exemption fees. Other professional income totalling £942,000 comprises principally that from courses and other qualifications and from advertising in Governance and Compliance magazine, and compares to £1,068,000 for 2015, a reduction of £126,000. The UKRIAT Division no longer provides administrative and other support to the international institute. The reduction of £126,000 reflects the loss of the recovery of costs in supplying these services which amounted to £205,000 in 2015.

UKRIAT annual report and financial statements 2015–16

28

In addition, income from advertising in Governance and Compliance magazine reduced by £68,000. These reductions were partly offset however by an increase of £151,000 in income from other qualifications, principally from the International Finance and Administration (IFA) Level 4 qualification and the new Charity Law and Governance certificate.

Income from commercial and other activities totalled £149,000 against £132,000 in 2015 and is comprised mainly of examination services supplied to other professional associations.

Underlying direct costs, that is before crediting pension reserve and consolidation adjustments, reduced to £3,396,000 from £3,790,000. The reduction arose mainly from salaries, legal costs and costs in support of the international institute.

Administration expenses of £1,759,000 are £179,000 below those of 2015.

Subsidiaries and other commercial activitiesAn analysis of the operating surpluses and deficits of the subsidiaries is shown in note 2 on page 39. The income from commercial activities totalled £24,446,000 compared to £24,758,000 for 12 months to 31 July 2015.

The software businessesAs in the previous years the principal sources of the group’s income and surplus were the software businesses.

The combined sales income from Blueprint and BoardPad was £22,930,000 for the 11 months to June 2016, being almost the same as that for the 12 months to 31 July 2015 of £22,912,000.

Their combined operating surplus before management charges of £1,392,000 has reduced significantly from £3,150,000. Both direct and administration costs have increased from 2015 levels. Development expenditure increased in the period, the amortisation charge increasing by almost £800,000. Also, additional resources were committed, particulary in headcount in order to meet the continuing demand and to maintain a strong order book. Despite this, year-on-year sales income continues to increase, that for Blueprint by 11% and BoardPad by 16%.

ICSA Publishing and ICSA ServicesICSA Publishing Limited produces a wide range of books and digital resources including Company Secretarial Practice Online (CSP Online). The company faced a difficult year’s

trading resulting in income reducing from £482,000 in 2015 to £378,000. However, direct costs reduced as a result and significant savings were made in administration costs resulting in an increased operating profit before management charges of £33,000 from £13,000 in 2015 see note 2. ICSA Services Limited operates the training and conference businesses and board performance evaluation. The training and conference businesses also faced a difficult year with income reducing to £924,000 from £1,157,000 in 2015. The board performance evaluation business had a better year with income at £221,000 from £186,000 in 2015.

Total direct costs of ICSA Services were reduced, but administration costs of £339,000 matched that of 2015 to produce an operating surplus before management charges of £75,000, against £309,000 in 2015.

Cash and reservesGroup reserves attributable to the parent increased to £3,152,000 from £2,870,000. Net current assets of £14,569,000 (2015: £13,100,000) included cash balances of £4,815,000, which reduced from £6,084,000 at 31 July 2015 (see the consolidated statement of cash flows on page 33). The group had no external borrowings throughout the 11 months to 30 June 2016.

Going concernCash flow forecasts for the group show that it will have positive cash flows for at least 12 months from the date of these financial statements. As the group has sufficient funds to meet its obligations as they fall due, it is therefore appropriate that these financial statements are produced on a going concern basis.

OutlookThe software businesses have the resources to continue to maintain their investment in the development of their products and services. The increases in income from the professional qualification, from the IFA Level 4 qualification and the new Charity Law and Governance certificate is encouraging and is set to continue.

Robert Ing ACMA, CGMAFinance Director

Financial review (continued)

Financials

29

Statement of the UKRIAT Committee’s responsibilities in respect of the preparation of financial statements

The membership of the UKRIAT Committee recognises its responsibility under byelaws 61.7 and 61.8 for the management and control of the assets and liabilities of the UKRIAT Division and for the preparation of its financial statements under UKRIAT Regulation 92.

UKRIAT is a division of the Institute of Chartered Secretaries and Administrators which as a body incorporated under Royal Charter is not subject to UK company law. However, the UKRIAT Committee has elected to prepare the financial statements in accordance with FRS102, The Financial Reporting Standard applicable in the UK and Republic of Ireland, as issued by the Financial Reporting Council.

The financial statements of the UKRIAT Division and the group are required to give a true and fair view of the state of affairs and of the net surplus or deficit of the Division and the group for each year. In preparing these financial statements the UKRIAT Committee is required to:

• Select suitable accounting policies and then apply them consistently

• Make judgements and accounting estimates that are reasonable and prudent

• Prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Institute and group will continue in business.

The UKRIAT Committee is responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the Division and the group. It is also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The UKRIAT Committee is responsible for the maintenance and integrity of the corporate and financial information included on the Division’s website. Legislation in the UK governing the preparation and dissemination of the financial statements and their information included in the annual reports may differ from legislation in other jurisdictions.

UKRIAT annual report and financial statements 2015–16

30

Consolidated income statement (for the period ended 30 June 2016)

11 months to 30 June 2016

Year to

31 July 2015 as restated

Notes Group Group

£000 £000

Operating income 2 28,981 29,582

Direct costs in support of professional activities 2 (3,388) (3,772)

Direct costs in support of commercial and other activities 2 (13,618) (12,395)

Gross contribution 2 11,975 13,415

Administration expenses 4 (10,988) (10,558)

Operating surplus 987 2,857

Interest receivable 15 22

Surplus on ordinary activities before taxation 1,002 2,879

Taxation credit/(charge) on ordinary activities 6 414 (143)

Surplus on ordinary activities after taxation 1,416 2,736

All activities are continuing.

Pages 34 to 52 form an integral part of these financial statements.

11 months to 30 June 2016

Year to 31 July 2015

as restated

Notes Group Group

£000 £000

Surplus on ordinary actvities after taxation 1,416 2,736

Actuarial loss on defined benefit scheme 5(c) (1,156) (1,026)

Exchange differences on re-translation of foreign subsidiaries (294) (44)

Deferred tax movement relating to actuarial (losses)/gains – (24)

Non-controlling interests 316 (292)

Total comprehensive income 282 1,350

Consolidated statement of comprehensive income(for the period ended 30 June 2016)

31

Financials

Consolidated statement of financial positions(as at 30 June 2016)

At 30 June 2016

At 31 July 2015

as restated

Group UKRIAT Group UKRIAT

Notes £000 £000 £000 £000

Fixed assets

Intangible assets 7 8,436 - 6,379 –

Tangible assets 8 938 384 1,035 434

Investments 9 – 407 – 407

9,374 791 7,414 841

Current assets

Stocks 10 75 – 73 –

Debtors 11 14,799 6,160 11,019 5,323

Cash at bank and in hand 4,815 1,036 6,084 1,512

19,689 7,196 17,176 6,835

Creditors 12 (5,120) (1,195) (4,076) (819)

Net current assets 14,569 6,001 13,100 6,016

Total net assets less current liabilities 23,943 6,792 20,514 6,857

Deferred income 13 (16,709) (2,671) (14,289) (2,930)

Total net assets before pension scheme liability 7,234 4,121 6,225 3,927

Pension scheme liability 5(a) (4,498) (4,498) (3,455) (3,455)

Total net assets including pension scheme liability 2,736 (377) 2,770 472

Accumulated reserves

Accumulated fund 3,152 (377) 2,870 472

Non-controlling interest 14 (416) – (100) –

2,736 (377) 2,770 472

Pages 34 to 52 form an integral part of these financial statements.

The financial statements were approved and authorised for issue by the UKRIAT Committee on 8 December 2016.

Victoria Penrice FCISChairman, Audit & Risk Committee

UKRIAT annual report and financial statements 2015–16

32

Consolidated statement of changes in equity(as at 30 June 2016)

Group

Accumulated Non-controlling Total reserves

fund interest

£000 £000 £000

At 1 August 2015 2,870 (100) 2,770

Surplus/(deficit) for the year 1,732 (316) 1,416

Other comprehensive expense for the year:

Net actuarial loss in year (1,156) – (1,156)

Exchange differences (294) – (294)

At 30 June 2016 3,152 (416) 2,736

UKRIAT

At 1 August 2015 472 – 472

Surplus for the year 307 – 307

Other comprehensive expense for the year:

Net actuarial loss in year (1,156) – (1,156)

At 30 June 2016 (377) – (377)

Group

Accumulated Non-controlling Total reserves

fund interest

£000 £000 £000

At 1 August 2014 1,520 (392) 1,128

Surplus for the year 2,444 292 2,736

Other comprehensive expense for the year:

Net actuarial loss in year (1,026) – (1,026)

Movement in related deferred tax asset (24) – (24)

Exchange differences (44) – (44)

At 30 June 2015 2,870 (100) 2,770

UKRIAT

At 1 August 2014 1,240 – 1,240

Surplus for the year 282 – 282

Other comprehensive expense for the year:

Net actuarial loss in year (1,026) – (1,026)

Movement in related deferred tax asset (24) – (24)

At 30 June 2015 472 – 472

Reserves at 30 June 2016

Reserves at 31 July 2015

33

Financials

Consolidated statement of cash flows(for the period ended 30 June 2016)

11 months to 30 June 2016

Year ended 31 July 2015 as restated

£000 £000 £000 £000

Cash flows from operating activities

Cash generated from operations 4,316 6,048

Tax (paid)/repaid (87) 495

Net cash generated from operating activities 4,229 6,543

Cash flows from investing activities

Purchase of intangible fixed assets (5,198) (4,453)

Purchase of tangible fixed assets (315) (607)

Interest received 15 22

Net cash used in investing activities (5,498) (5,038)

Net (decrease)/increase in cash and cash equivalents (1,269) 1,505

Cash and cash equivalents at beginning of year 6,084 4,579

Cash and cash equivalents at 30 June 4,815 6,084

Reconciliation of surplus on ordinary activities before taxation to cash generated from operations

Surplus on ordinary activities before tax 1,002 2,879

Adjustments for:

Interest receivable (15) (22)

Amortisation of development cost 3,135 2,349

Depreciation charge 411 474

Exchange differences (294) (44)

Difference between net pension expenses and cash contributions (113) (174)

Loss on disposal of tangible fixed assets – 19

Changes in:

Stocks (2) 5

Debtors (3,096) (4,655)

Creditors 868 978

Deferred income 2,420 4,239

Cash generated from operations 4,316 6,048

UKRIAT annual report and financial statements 2015–16

34

Notes to the financial statements

1 Accounting policies

a. General information

These group financial statements represent the activities of the

UKRIAT Division (UKRIAT) of the Institute of Chartered Secretaries and

Administrators (the Institute) and are presented in Pounds Sterling (GBP),

as that is the currency in which the majority of the group’s transactions

are denominated.

Accordingly, these financial statements comprise the results, assets

and liabilities of the Institute in the UK, Republic of Ireland and

Associated Territories, Channel Islands and Isle of Man (UKRIAT), and

the Institute’s principal trading subsidiaries ICSA Software International

Limited, ICSA Software North America Inc, ICSA BoardRoom Apps

Limited, ICSA BoardRoom Apps North America Inc, ICSA BoardRoom

Apps (HK) Limited, ICSA BoardRoom Apps GmbH, ICSA Publishing

Limited and ICSA Services Limited (‘the group’).

The UKRIAT Committee has managed the affairs of the Institute and its

group in UKRIAT in accordance with the requirements of the Institute’s

byelaws 61.7 and 61.8 and the UKRIAT Regulations made thereunder.

Under UKRIAT Regulation 92 the UKRIAT Committee is responsible for

producing the audited financial statements of UKRIAT.

The Institute is a United Kingdom professional body for governance. It

was granted a Royal Charter in 1902. The Institute’s address is Saffron

House, 6-10 Kirby Street, London, EC1N 8TS.

The principal accounting policies that have been applied, by all

subsidiaries, in the preparation of these consolidated financial

statements are set out below. These policies have been applied

consistently to all the periods presented, unless otherwise stated.

b. Basis of preparation

In prior periods the financial statements were prepared in accordance

with UK GAAP applicable prior to the adoption of FRS102, as issued

by the Financial Reporting Council, and referred to below as ‘previous

UK GAAP’. The entity transitioned from UK GAAP to FRS102 as at

1 August 2014. Details of how FRS102 has affected the reported

financial position and financial performance are set out in note 19.

The financial statements have been prepared under the historical cost

convention, modified to include certain items at fair value.

The preparation of financial statements in conformity with FRS102

requires the use of certain critical accounting estimates. It also requires

management to exercise its judgement in the process of applying

the accounting policies selected for use by the group. The areas

involving a higher degree of judgement or complexity, or areas where

assumptions and estimates are significant to the financial statements

are disclosed in section (v). Use of available information and

application of judgement are inherent in the formation of estimates.

Actual outcomes in the future could differ from such estimates.

c. Going concern

The financial statements have been prepared on a going concern basis.

At 30 June 2016, the group had an excess of assets over liabilities, in

other words net assets, of £2,736,000 compared with £2,770,000

in the previous period. Included within net assets is that of net

current assets of £14,569,000. This figure is a measure of the ability

of the group to meet its obligations to its creditors as they fall

due. Also included within the figure for net assets are the deferred

income balances of £16,709,000 and the pension scheme liability

of £4,498,000. The deferred income figure arises as a consequence

of the group’s income recognition policy and represents income

received in advance. As such it is not normally repayable and is shown

separately within the statement of financial position. The pension

scheme is funded by way of contributions, the amount of which

has been agreed with the scheme actuary. The cash flow forecasts

prepared by senior management show that the group will have

positive cash flows for at least 12 months from the date these financial

statements are approved. The UKRIAT Committee therefore considers

that the group has sufficient funds to meet its obligations as they

fall due and deems it appropriate that the financial statements are

produced on a going concern basis.

d. Consolidation policy

The financial statements comprise those of UKRIAT and its

subsidiaries. Subsidiaries which are directly or indirectly controlled by

the group are consolidated. Control is achieved where the UKRIAT

Committee, as the Divisional Committee for UKRIAT, has the power

to govern the financial and operating policies of an investee so as

to obtain benefits from its activities, which generally accompanies

a shareholding of more than one half of the voting rights. The

existence and effect of potential voting rights that are currently

exercisable or convertible are considered when assessing whether the

group controls another entity.

As ultimate control of the group’s subsidiary undertakings is vested

in UKRIAT, the results, assets and liabilities of these undertakings are

included in the group financial statements from the effective date of

acquisition or up to the date of disposal. These amounts are taken

from the latest audited financial statements of the undertakings

concerned which all have the same accounting reference date.

Accounting policies applied by individual subsidiaries have been

revised where necessary to ensure consistency with group policies for

consolidation purposes.

The acquisition method of accounting is used by the group when it

undertakes a business combination. The fair value of consideration

35

Financials

transferred at the acquisition date includes the fair value of assets

transferred, liabilities incurred by the owners and equity instruments

issued by the group. Consideration can include cash, contingent

consideration and options. The assets acquired and liabilities assumed

are recognised at the acquisition date at their fair value. At the

acquisition date any equity interest held prior to the acquisition date

is recognised as consideration at its fair value as at the time of the

original transaction.

Goodwill is measured as the excess of the consideration transferred

over the group’s share of the fair value of the assets acquired and

liabilities assumed. Negative goodwill (gain on bargain purchase) is

recognised in the statement of financial position. Any changes in

contingent consideration after the measurement period are recognised

as an adjustment to the cost of the acquisition.

All significant intra-group transactions and balances between group

entities are eliminated on consolidation.

e. Operating income – revenue recognition

Member subscription income is recognised in the period to which it

relates. Student examination income is recognised in the period in

which the examinations are taken. Member subscriptions and student

examination income received in advance of the period the subscription

falls due or of the period the examination is taken, are carried forward

as deferred income at the period-end.

Software licence income is recognised upon delivery of software at

customer sites. Software consultancy income is recognised on the

basis of the services provided under contractual obligations performed

over time. Partially completed contracts at the statement of financial

position date are brought into account by reference to the value

of work performed and are included in the financial statements as

accrued income. Maintenance income is recognised evenly over the

term of the maintenance agreement and hosted services income is

recognised over the period to which the service relates.

The income from book sales is recognised upon despatch and

publications income is recognised in the period to which it relates.

Income from training courses and conferences is recognised upon the

timing of the event and all other income is recognised upon provision

of the goods or services.

Amounts received in advance of software maintenance and hosted

services income, amounts received in advance of the date the training

courses and conferences are held, and publications subscription

income received in advance of the period in which it falls due, are

carried forward as deferred income at the period-end.

Sales commissions payable in respect of deferred software

maintenance and hosted services income is carried forward as a

prepayment and included within debtors at the period-end.

Interest income is accrued on a time basis, by reference to the principal

outstanding and at the effective interest rate applicable.

f. Foreign currency

Transactions in foreign currencies are translated at rates prevailing

at the date of the transaction. Balances denominated in foreign

currencies are translated at the rate of exchange prevailing at the

statement of financial position date. Exchange differences arising

on consolidation from the retranslation of the opening net assets of

the overseas subsidiary undertakings are taken directly to reserves

and disclosed in the statement of comprehensive income. All other

exchange differences are taken to the statement of comprehensive

income.

The results of the overseas subsidiary undertakings have been

translated at an average rate for the period.

g. Taxation

Income tax expense represents the sum of the current tax and deferred

tax. The Institute’s transactions with its members are not subject to

tax. Other transactions are taxable on a basis agreed with HM Revenue

& Customs. Subsidiary companies are subject to tax on a normal basis;

the charge for current tax is based on the result for the year adjusted

for items which are non-assessable or disallowed. It is calculated using

tax rates that have been enacted or substantively enacted by the

reporting date. Current and deferred tax is recognised in the same

component of the income statement, other comprehensive income or

equity as the transaction or event that resulted in the tax expense or

income.

h. Deferred taxation

Deferred tax is the tax expected to be payable or recoverable on timing

differences between taxable profits and the total comprehensive

income as reported in the financial statements. In addition, where

there is a difference between the taxable amount of an asset (other

than goodwill) acquired in a business combination and the value at

which it is recognised, deferred tax is recognised in respect of that

difference.

Deferred tax liabilities are recognised for all timing differences and

deferred tax assets are recognised to the extent that it is probable

that they will be recovered against the reversal of deferred tax

liabilities or other future taxable profits will be available against which

timing differences can be utilised. Such assets and liabilities are not

recognised if the timing difference arises from goodwill or from the

initial recognition (other than in a business combination) of other

assets and liabilities in a transaction that affects neither taxable profit

UKRIAT annual report and financial statements 2015–16

36

nor the total comprehensive income.

The deferred tax asset arising in relation to the defined benefit pension

liability within UKRIAT is not recognised in the consolidated financial

statements. This is due to the fact that UKRIAT is only subject to tax

on management fees and other minor income streams including rental

income and bank interest. Consequently, there is no direct claim for

any staff costs, only a small proportion of the overall costs of UKRIAT

are claimed against the taxable income. Accordingly, no temporary

differences arise in UKRIAT.

Deferred tax liabilities are recognised for timing differences arising on

investments in subsidiaries, associates, and interests in joint ventures,

except where the group is able to control the reversal of the temporary

difference, and it is probable that the temporary difference will not

reverse in the foreseeable future.

The carrying amounts of deferred tax assets are reviewed at each

reporting date and reduced to the extent that it is no longer probable

that sufficient taxable profits will be available to allow all or part of the

assets to be recovered.

Deferred tax is calculated at the tax rates that been enacted, or

substantively enacted by the reporting date, and are expected to apply

in the period when the liability is settled or the asset realised. For land

and revalued investment property deferred tax is calculated on the

presumption that recovery is through sale.

A change in deferred tax assets and liabilities as a result of a change

in the tax rates or laws is recognised in profit and loss, or other

comprehensive income to the extent that it relates to items previously

recognised in other comprehensive income.

Deferred tax assets and liabilities are offset when they relate to income

taxes levied by the same taxation authority and the group intends to

settle its current tax assets and liabilities on a net basis.

i. Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated

depreciation and any recognised impairment loss. The cost model

is utilised not the fair value model. The residual values and useful

lives of property, plant and equipment are reviewed, and adjusted

if appropriate, at the end of each reporting period if there are

indicators of change. The carrying amount of an asset is written down

immediately to its recoverable amount if the asset’s carrying amount is

assessed as greater than its estimated recoverable amount.

Depreciation is provided on all property, plant and equipment and is

calculated on the straight line basis at the following per annum rates,

which are sufficient to reduce them to their estimated residual value:

Fixtures and fittings 10% to 33%

Leasehold improvements 7%

Computer equipment 15% to 33%

Motor vehicles 25%

Property, plant and equipment is depreciated from the beginning of

the month in which they were purchased.

The gain or loss arising on the disposal or retirement of an asset

is determined as the difference between the sales proceeds and

the carrying amount of the asset and is recognised in the income

statement.

j. Investments

Investments are included in the statement of financial position, less

provision where there is deemed to be a permanent impairment in

value.

k. Other intangible assets

Research expenditure is written off to the consolidated income

statement in the period in which it is incurred.

Development expenditure is written off in the same way unless the

technical, commercial and financial viability of individual projects is

such that the expenditure will derive future economic benefit. In these

circumstances, the expenditure is capitalised and amortised over a

period of up to three years, being the time the group is expected to

benefit, subject to annual impairment reviews.

Website development costs are capitalised if there is an enduring

asset whose future economic benefits generated by the website are

in excess of the amounts capitalised. Amounts capitalised will be

amortised on a straight line basis over their estimated useful lives up to

a period of three years following the final launch date of the finished

product. The carrying value of the intangible asset will be subject to

annual impairment reviews.

l. Impairment of non-financial assets

At each reporting date, the group reviews the carrying amounts of

its tangible and intangible assets, to determine whether there is any

indication that those assets have suffered an impairment loss. If any

such indication exists, the recoverable amount of the asset is estimated

in order to determine the extent of the impairment loss (if any). Where

it is not possible to estimate the recoverable amount of an individual

asset, the group estimates the recoverable amount of the cash-

generating unit to which the asset belongs.

If the recoverable amount of an asset (or cash-generating unit) is

estimated to be less than its carrying amount, the carrying amount

of the asset (cash-generating unit) is reduced to its recoverable

Notes to the financial statements (continued)

1 Accounting policies (continued)

37

Financials

amount. An impairment loss is recognised as an expense immediately,

unless the relevant asset is carried at a revalued amount, in which

case the impairment loss is treated as a revaluation decrease. Where

an impairment loss subsequently reverses (except for goodwill), the

carrying amount of the asset (cash-generating unit) is increased to the

revised estimate of its recoverable amount, but so that the increased

carrying amount does not exceed the carrying amount that would have

been determined had no impairment loss been recognised for the asset

(cash-generating unit) in prior years. A reversal of an impairment loss is

recognised as income immediately, unless the relevant asset is carried at

a revalued amount, in which case the reversal of the impairment loss is

treated as a revaluation increase.

m. Financial assets and liabilities

General

Financial instruments are recognised on the group’s statement of

financial position when the group becomes a party to the contractual

provisions of the instrument. Financial instruments are initially measured

at transaction price unless the arrangement constitutes a financing

transaction which includes transaction costs for financial instruments not

subsequently measured at fair value. Subsequent to initial recognition,

they are measured as set out below. A financing transaction is measured

at the present value of the future payments discounted at a market rate

of interest for a similar debt instrument.

Classification

Financial instruments are classified as either ‘basic’ or ‘other’ in

accordance with Chapter 11 of FRS102.

Subsequent measurement

At the end of each reporting period, debt instruments classified as basic

are measured at amortised cost using the effective interest rate method.

Investments in preference and ordinary shares classified as basic financial

instruments, and all financial instruments not classified as basic are

measured at fair value at the end of the reporting period, with the

resulting changes recognised in profit or loss. Where their fair value

cannot be reliably measured, they are recognised at cost less impairment.

Derecognition

Financial assets are derecognised when the contractual rights to the

cash flows from the asset expire, or when the group has transferred

substantially all the risks and rewards of ownership. Financial liabilities

are derecognised only once the liability has been extinguished through

discharge, cancellation or expiry.

n. Impairment of financial assets

Assets carried at cost or amortised cost

The group assesses at the end of each reporting period whether there

is objective evidence that a financial asset or group of financial assets is

impaired.

A financial asset or a group of financial assets is impaired and

impairment losses are incurred if, and only if, there is objective evidence

of impairment as a result of one or more events that occurred after the

initial recognition of the asset (a ‘loss event’) and that loss event (or

events) has an impact on the estimated future cash flows of the financial

asset or group of financial assets that can be estimated reliably.

The criteria that the group uses to determine that there is objective

evidence of an impairment loss include:

i) Significant financial difficulty of the issuer or obligor;

ii) A breach of contract, such as a default or delinquency in interest or

principal payments;

iii) The group, for economic or legal reasons relating to the borrower’s

financial difficulty, granting to the borrower a concession that the

lender would not otherwise consider;

iv) It becomes probable that the borrower will enter bankruptcy or other

financial reorganisation;

v) Observable data indicating that there is a measurable decrease in the

estimated future cash flows from a portfolio of financial assets since

the initial recognition of those assets, although the decrease cannot

yet be identified with the individual financial assets in the portfolio,

including:

a) Adverse changes in the payment status of borrowers in the

portfolio; and

b) National or local economic conditions that correlate with defaults

on the assets in the portfolio.

As an initial step the group assesses whether objective evidence of

impairment exists.

The amount of the loss is measured, in the case of assets measured at

amortised cost, as the difference between the asset’s carrying amount

and the present value of estimated future cash flows (excluding future

credit losses that have not been incurred) discounted at the financial

asset’s original effective interest rate. The carrying amount of the asset

is reduced to the present value of estimate future cash flows and the

amount of the loss is recognised in the consolidated income statement.

Where the investment has a variable interest rate, the discount rate

for measuring any impairment loss is the current effective interest rate

determined under the contract.

In the case of financial assets measured at cost, the impairment loss

will be the difference between the asset’s carrying amount and the best

estimate of the sales price that would be achieved at the reporting date.

If, in a subsequent period, the amount of the impairment loss decreases

and the decrease can be related objectively to an event occurring after

the impairment was recognised (such as an improvement in the debtor’s

credit rating), the reversal of the previously recognised impairment loss is

UKRIAT annual report and financial statements 2015–16

38

recognised in the consolidated income statement.

o. Stocks

Stocks are valued at the lower of costs and net realisable value after

making due allowance for obsolete and slow moving items.

p. Trade debtors

Trade debtors are amounts due from customers for products sold or

services performed in the ordinary course of business. Trade debtors

are recognised at the undiscounted amount of cash receivable, which is

normally the invoice price, less any allowances for doubtful debts.

q. Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and balances with

banks, and investments in money market instruments which are readily

convertible, being those with original maturities of three months or less.

Cash and cash equivalents are measured at fair value, based on the

relevant exchange rates at the reporting date.

r. Reserves

Reserves attributable to the owners of the parents consist of the revenue

account and the pension reserve. The pension reserve is utilised to

show the movement in the actuarial loss/surplus during the period in

addition to the pension scheme loss/surplus for the period, this consists

of administrative and interest costs directly attributable to the defined

benefit pension scheme. The revenue account is used for all other reserve

movements.

s. Trade creditors

Trade creditors are obligations to pay for goods or services that have

been acquired in the ordinary course of business from suppliers.

Accounts payable are classified as creditors falling due within one year if

payment is due within one year or less (or in the normal operating cycle

of the business if longer). If not, they are presented as creditors falling

due after one year.

Trade creditors are recognised at the undiscounted amount owed to the

supplier, which is normally the invoice price.

t. Employee benefits

Retirement benefit obligations

The group has both defined benefit and defined contribution plans.

A defined contribution plan is a pension plan under which the group

pays fixed contributions into a separate entity. The group has no legal

or constructive obligations to pay further contributions if the fund does

not hold sufficient assets to pay all employees the benefits relating to

employee service in the current and prior periods. A defined benefit plan

is a pension plan that is not a defined contribution plan. Typically defined

benefit plans define an amount of pension benefit that an employee will

receive on retirement, usually dependent on one or more factors such as

age, years of service with the group and compensation levels.

Under FRS102 the operating costs of providing the benefits, the service

costs, the interest cost and the expected return on assets are included in

comprehensive income in the period in which they arise. The actuarial

gains and losses from the pension scheme are recognised in other

comprehensive income. Any surplus or deficit in the defined benefit

pension scheme is shown in the statement of financial position as an

asset or liability. Actuarial valuations are obtained triennially and updated

under FRS102, Employee Benefits, at each statement of financial position

date. The retirement benefit obligation recognised in the statement of

financial position represents the present value of the defined benefit

obligation as reduced by the fair value of plan assets. Any asset resulting

from this calculation is limited to the present value of available refunds

and reductions in future contributions to the plan.

The contributions payable in providing benefits under the defined

contribution scheme are charged to the statement of comprehensive

income in the period to which they relate.

u. Leasing

Rentals payable under operating leases are charged against the

statement of comprehensive income on a straight line basis over the

lease term.

v. Estimates and judgements

The preparation of financial statements in conformity with generally

accepted accounting principles requires the use of estimates and

assumptions that affect the reported income, expenses, assets, liabilities

and disclosure of contingent assets and liabilities at the date of the

financial statements. Although these estimates are based on the

management’s best knowledge of the amounts, events or actions, actual

results ultimately may differ from those estimates.

Capitalised development costs represent a significant proportion of

the asset base of the group. Therefore the estimates and assumptions

made to determine the carrying value and related depreciation of such

costs are critical to the group’s financial position and performance. The

membership of the UKRIAT Committee recognises that although these

estimates are based on management’s best knowledge of the amounts,

events or actions, actual results ultimately may differ from those

estimates. Please refer to section (k) above for further details.

A significant area of judgement is that of the determination of the

assumptions used in calculating the net liability in the defined benefit

pension scheme. These assumptions are set out in note 5.

1 Accounting policies (continued)

Notes to the financial statements (continued)

39

Financials

11 months ended 30 June 2016: 2016 2016 2016 2016 2016 2016

UKRIAT ICSA Software ICSA ICSA Consolidation Total(professional International Publishing Services and pension

body) Limited and Limited Limited reserve ICSA BoardRoom adjustments

Apps Limited group

£000 £000 £000 £000 £000 £000

Operating incomeProfessional activities

Member income 2,092 – – – – 2,092

Student income 1,352 – – – – 1,352

Other professional income 942 – – – – 942

4,386 – – – – 4,386

Commercial and other activities

Commercial activities – 22,930 378 1,145 (7) 24,446

Other activities 149 – – – – 149

149 22,930 378 1,145 (7) 24,595

Total operating income 4,535 22,930 378 1,145 (7) 28,981

Direct costs in support of professional activities (3,396) – – – 8 (3,388)

Direct costs in support of commercial and other activities – (12,736) (159) (731) 8 (13,618)

Gross contribution 1,139 10,194 219 414 9 11,975

Administration expenses (1,759) (8,802) (186) (339) 98 (10,988)

Operating (deficit)/surplus (620) 1,392 33 75 107 987

Year ended 31 July 2015 as restated: 2015 2015 2015 2015 2015 2015

UKRIAT ICSA Software ICSA ICSA Consolidation Total(professional International Publishing Services and pension

body) Limited and Limited Limited reserve ICSA BoardRoom adjustments

Apps Limited group

£000 £000 £000 £000 £000 £000

Operating incomeProfessional activities

Member income 2,307 – – – – 2,307

Student income 1,317 – – – – 1,317

Other professional income 1,068 – – – – 1,068

4,692 – – – – 4,692

Commercial and other activities

Commercial activities 29 22,912 482 1,343 (8) 24,758

Other activities 132 – – – – 132

161 22,912 482 1,343 (8) 24,890

Total operating income 4,853 22,912 482 1,343 (8) 29,582

Direct costs in support of professional activities (3,790) – – – 18 (3,772)

Direct costs in support of commercial and other activities (23) (11,484) (197) (699) 8 (12,395)

Gross contribution 1,040 11,428 285 644 18 13,415

Administration expenses (1,938) (8,278) (272) (335) 265 (10,558)

Operating (deficit)/surplus (898) 3,150 13 309 283 2,857

2 Operating income, gross contribution and operating surplus

UKRIAT annual report and financial statements 2015–16

40

2 Operating income, gross contribution and operating surplus (continued)

Operating income comprising professional activities arises in the UK.

The geographical split of revenue from commercial activities shown below is as follows: UK £13,378,000 (2015: £12,502,000), Europe £1,384,000 (2015: £1,664,000), USA £4,475,000 (2015: £4,412,000), rest of world £5,209,000 (2015: £6,180,000).

Analysis of revenue arising from commercial activities

11 months to 30 June 2016

Year ended 31 July 2015

Group Group

£000 £000

Software sales and support services 22,931 22,910

Publications 370 454

Training courses and conferences 924 1,186

Board performance evaluation 221 186

Other – 22

24,446 24,758

3 Direct costs

All items of expenditure directly attributable to the support of the profession and generation of operating income have been shown as direct costs.

4 Administration expenses

11 months to 30 June 2016

Year ended 31 July 2015 as restated

Group Group

£000 £000

Premises – net of income from tenants of £39,000 (2015: £41,000) 554 578

Finance and general administration 577 463

Office costs 319 339

Commercial activities 6,227 6,612

Support services 221 233

Amortisation of development costs 3,090 2,333

10,988 10,558

Notes to the financial statements (continued)

41

Financials

11 months to 30 June 2016 Year ended 31 July 2015

Group Group

£000 £000

Surplus on ordinary activities before taxation is stated after charging:

Amortisation of capitalised development costs 3,135 2,349

Depreciation 411 474

Loss on sale of tangible fixed assets – 19

Auditor's remuneration:

Audit fees 55 52

Tax fees 31 23

Corporate finance advice 53 17

Operating lease rentals:

Land and buildings 1,231 1,055

Equipment 62 52

Exchange (gains)/losses 181 124

Staff costs:

Salaries 13,275 13,520

Social security costs 1,492 1,317

Pension costs:

Defined benefit 307 278

Defined contribution 440 466

The average number of full-time employees during the year was: 295 261

5 Surplus on ordinary activities before taxation

Employee benefit obligationsThe Institute operates a funded defined benefit pension scheme, available to the employees of the Institute, ICSA Publishing Limited and ICSA Services Limited, whose assets are held in separate trustee administered investment funds. The Institute accounts for pension arrangements in accordance with FRS102 s.28, Employee Benefits. The pension cost is assessed in accordance with advice from an independent qualified actuary using the projected unit method. Contributions to the scheme are charged to expenditure in the period in which the benefits arise. The total pension cost, including expenses, charged in the accounts for the defined benefit pension scheme was £307,000 (2015: £278,000). The scheme was closed to new members from 1 February 2005. The last actuarial valuation was at 1 August 2014, which was based on a range of agreed assumptions. The market value of the scheme assets was £10.9 million, the funding level was 80% and the deficit in the scheme was £2,747,000.

In accordance with advice from the actuary, the employer’s contribution increased from 15% to 19.6% from 1 August 2015. In addition, a monthly contribution of £31,100 to offset the deficit in the scheme is payable over the period to 31 December 2023. The next actuarial valuation will have an effective date of 1 August 2017.

From 1 May 2005, the Institute has contributed to a stakeholder scheme which is available to the employees of the Institute, ICSA Publishing Limited and ICSA Services Limited. The Institute contributed £82,000 (2015: £97,000) during the year. Contributions owing at the year-end amounted to £16,000 (2015: £8,000). ICSA Software International Limited operates three defined contribution schemes. The assets of these schemes are held separately from those of the company in three independently administered funds. The pension cost charge represents contributions payable by the company to the funds and amounted to £358,000 (2015: £369,000). Contributions totalling £54,000 (2015: £29,000) were payable at the year-end and are included within creditors.

FRS102, the Financial Reporting Standard applicable in the UK and Republic of IrelandFRS102 changes the basis of accounting for pensions, the main changes are outlined as follows; administration (that is non-investment) expenses are recognised in the statement of comprehensive income as part of the service cost. Under FRS 17 such expenses were allowed for by way of a reduction to the expected return on assets. Under FRS 17 the expected return on the defined benefit scheme assets was recognised in the statement of comprehensive income. Under FRS102, a net interest cost, based on the net defined benefit liability is recognised in the statement of comprehensive income. The effect of the changes to the prior year comparatives has been an increase in administrative costs amounting to £136,000 and a corresponding decrease in the actuarial loss of the defined pension scheme of £136,000 recognised in other comprehensive income. In addition, there has been a comparable deferred tax adjustment in relation to the above. There has been a decrease in the tax charge on ordinary activities of £24,000 and an equivalent increase in the tax charge taken to other comprehensive income. Further analysis of the effect of FRS102 on Employee Benefits can be found in note 19.

UKRIAT annual report and financial statements 2015–16

42

5 Surplus on ordinary activities before taxation (continued)

Defined benefit pension scheme

(a) The amounts recognised in the consolidated statement of financial position are as follows:

At 30 June 2016 At 31 July 2015

Group and UKRIAT Group and UKRIAT

£000 £000

Present value of funded obligations (17,436) (15,470)

Fair value of scheme assets 12,938 12,015

Net liability (4,498) (3,455)

(b) The amounts charged to income and expenditure: 11 months to 30 June 2016

Year to 31 July 2015

as restated

Group and UKRIAT Group and UKRIAT

£000 £000

Current service cost – net of employee contribution 90 99

Scheme expenses 107 75

Total service cost 197 174

Net interest 110 104

307 278

(c) The amounts recognised in other comprehensive income: 11 months to 30 June 2016

Year to 31 July 2015

as restated

Group and UKRIAT Group and UKRIAT

£000 £000

Actuarial (loss) on liabilities (1,156) (1,026)

(d) Changes in the present value of the defined benefit obligations are as follows:

2016 2016 2015 2015

Group and UKRIAT Group and UKRIAT Group and UKRIAT Group and UKRIAT

£000 £000 £000 £000

Opening present value of defined benefit obligation 15,470 13,898

Current service cost 120 138

Interest cost 507 579

Actuarial (gains)/losses:

Experience gain – (201)

Loss on changes in assumptions 1,663 1,425

1,663 1,224

Benefits paid (324) (369)

Closing present value of defined benefit obligation 17,436 15,470

Notes to the financial statements (continued)

11 months to 30 June Year to to 31 July as restated

43

Financials

5 Surplus on ordinary activities before taxation (continued)

Defined benefit pension scheme (continued)

At 30 June 2016 At 31 July 2015

% %

Retail price inflation (RPI) 3.20 3.50

Consumer price inflation (CPI) 2.45 2.75

Increase in salaries 2.50 2.50

Rate of increase in pensions and deferred pensions 2.50 2.50

Rate used to discount scheme liabilities 2.90 3.60

The mortality assumptions adopted imply the following life expectancies (years): At 30 June 2016 At 31 July 2015

Male currently aged 65 88.30 88.50

Female currently aged 65 90.30 90.60

Male currently aged 45 90.40 90.60

Female currently aged 45 92.70 92.90

The most important assumptions underlying the present value of the scheme liabilities are the rates of interest applied to discount the estimated cash flows arising from the increases in pensionable salaries and in pensions in payment. The valuation of assets in the scheme is not affected by the actuarial assumptions because the assets are measured at fair value. For those pensions which have been secured by the purchase of annuities the fair value is measured as the amount of the related obligations.

The main financial assumptions used are as follows:

11 months to 30 June Year to 31 July

(e) Changes in the fair value of scheme assets are as follows: 2016 20162015

as restated2015

as restated

Group and UKRIAT Group and UKRIAT Group and UKRIAT Group and UKRIAT

£000 £000 £000 £000

Opening fair value of scheme assets 12,015 11,295

Interest income on assets 397 475

Actuarial gains/(losses):

Gain on asset return 507 627

Change in secured pensioner value due to mortality experience

and changes in assumptions – (429)

507 198

Contributions by employer 420 452

Employee contributions 30 39

Scheme expenses (107) (75)

Benefits paid (324) (369)

Closing fair value of scheme assets 12,938 12,015

UKRIAT annual report and financial statements 2015–16

44

6 Taxation

(a) Analysis of charge in period

The taxation credit on the surplus on ordinary activities comprises: 11 months to 30 June 2016

Year ended 31 July 2015

as restated

Group Group

£000 £000

Corporation tax payable for the current year 164 161

Foreign taxation 72 20

Adjustments in respect of prior years (580) (390)

(344) (209)

Deferred taxation:

Current year (481) 11

Under provision in respect of prior years 411 365

FRS 102 adjustments – (24)

Current year tax (credit)/charge (414) 143

Notes to the financial statements (continued)

5 Surplus on ordinary activities before taxation (continued)

The major categories of scheme assets as a percentage of total scheme assets are as follows: At 30 June 2016 At 31 July 2015

% %

Bonds 45 43

Equities 39 41

Cash 1 1

Property 15 15

100 100

The fair value of the assets of the scheme are invested as follows: At 30 June 2016 At 31 July 2015

£’000 £’000

Bonds 5,813 5,168

Equities 5,103 4,921

Cash 130 111

Property 1,892 1,815

12,938 12,015

45

Financials

7 Intangible fixed assets

Development costs:Development Website Total

costs costs

Group £000 £000 £000

Cost

At 1 August 2015 10,528 86 10,614

Additions 5,198 – 5,198

Disposals (56) – (56)

At 30 June 2016 15,670 86 15,756

Amortisation

At 1 August 2015 4,149 86 4,235

Charge for the year 3,135 – 3,135

Disposals (50) – (50)

At 30 June 2016 7,234 86 7,320

Net book value

At 30 June 2016 8,436 – 8,436

At 31 July 2015 6,379 – 6,379

6 Taxation (continued)

(b) Factors affecting the corporation tax charge for the year

The corporation tax assessed for the year is different from that at the standard rate of corporation tax in the UK of 20% (2015: 20.67%). The differences are explained below:

11 months to 30 June 2016

Year ended 31 July 2015

as restated

Group Group

£000 £000

Surplus on ordinary activities before taxation 1,002 2,879

Surplus on ordinary activities before taxation, multiplied by the standard rate of taxation in the UK of 20% (2015: 20.67%)

200 595

Effects of:

Income less expenditure not assessable for taxation purposes (74) (41)

Foreign taxation adjustments 68 1

Deferred tax asset not recognised 245 144

Tax effect of transition to FRS102 (17) –

R&D tax relief (685) (531)

Deferred Tax - difference in Tax rates 19 –

Adjustments in respect of prior periods (170) (25)

Current year tax (credit)/charge (414) 143

(c) Factors that may affect future taxation chargesThe taxation charge for future years will be affected principally by the extent to which income is not assessable to corporation tax, expenses that are not deductible for taxation purposes and R&D tax relief. A change to the UK corporation tax rate was announced in the Chancellor’s Budget on 16 March 2016. The change announced is to reduce the main rate to 17% from 1 April 2020. Changes to reduce the UK corporation tax rate to 19% from 1 April 2017 and to 18% from 1 April 2020 had already been substantively enacted on 26 October 2015. As the change to 17% had not been substantively enacted at the statement of financial position date its effect is not included in these financial statements. There are no accumulated Schedule A losses (2015: NIL).

UKRIAT annual report and financial statements 2015–16

46

Leasehold Computer Total

improvements equipment

and fixtures/

fittings

UKRIAT £000 £000 £000

Cost

At 1 August 2015 453 187 640

Additions 3 15 18

Disposals – – –

At 30 June 2016 456 202 658

Depreciation

At 1 August 2015 93 113 206

Charge for the year 31 37 68

Disposals – – –

At 30 June 2016 124 150 274

Net book value

At 30 June 2016 332 52 384

At 31 July 2015 360 74 434

Notes to the financial statements (continued)

8 Tangible fixed assets

Leasehold Computer Total

improvements equipment

and fixtures/

fittings

Group £000 £000 £000

Cost

At 1 August 2015 1,075 1,993 3,068

Additions 33 282 315

Disposals – (2) (2)

At 30 June 2016 1,108 2,273 3,381

Depreciation

At 1 August 2015 514 1,519 2,033

Charge for the year 94 317 411

Disposals – (1) (1)

At 30 June 2016 608 1,835 2,443

Net book value

At 30 June 2016 500 438 938

At 31 July 2015 561 474 1,035

47

Financials

The subsidiary undertakings of ICSA were:

% of equity % of equity

Name Principal activity At 30 June 2016 At 31 July 2015

ICSA Software International Limited Software development, sales and support services 100 100

ICSA BoardRoom Apps Limited Software development, sales and support services 60 60

ICSA Publishing Limited Publishing and professional education services 100 100

ICSA Services Limited Board performance evaluation and education services 100 100

ICSA Software North America Inc. Software sales and support services 100 100

ICSA BoardRoom Apps North America Inc. Software sales and support services 60 60

ICSA BoardRoom Apps (HK) Limited Software sales and support services 60 60

ICSA BoardRoom Apps GmbH Software sales and support services 60 60

ICSA BoardRoom Solutions Limited* Dormant 100 100

ICSA Distance Learning Limited Dormant 100 100

ICSA Information & Training Limited** Dormant 100 100

ICSA Recruitment Limited Dormant 100 100

ICSA Software Limited Dormant 100 100

ICSA Corporate Services Limited Dormant 100 100

Incorporated Secretaries Association Limited Dormant 100 100

COACT Limited Dormant 100 100

Software Solutions (UK) Limited Dormant 100 100

ICSA Nominees Limited Dormant n/a n/a

The Governance Institute Dormant n/a n/a

Investors in Governance Limited Dormant 100 100

UKRIAT Nominees Limited Dormant 100 100

*Name changed to ICSA Board Evaluation Limited on 15 December 2016

** Name changed to CSPONLINE Limited on 15 December 2016

All subsidiary undertakings are owned directly by ICSA (and managed by the UKRIAT Committee) except for ICSA Software North America Inc, which is owned by ICSA Software International Limited and ICSA BoardRoom Apps Limited in which each of the executive directors holds 20% of the issued share capital. ICSA BoardRoom Apps North America Inc., ICSA BoardRoom Apps (HK) Limited and ICSA BoardRoom Apps GmbH are owned directly by ICSA BoardRoom Apps Limited. All subsidiary undertakings are incorporated in the UK, except ICSA Software North America Inc and ICSA BoardRoom Apps Inc. which are incorporated in the USA, ICSA BoardRoom Apps (HK) Limited which is incorporated in Hong Kong, and ICSA BoardRoom Apps GmbH which is incorporated in Germany.

9 Fixed asset investments

ICSA shareholdings

UKRIAT £000

Cost

At 1 August 2015 and 30 June 2016 458

Amount provided

At 1 August 2015 and 30 June 2016 51

Net book value

At 30 June 2016 407

At 31 July 2015 407

UKRIAT annual report and financial statements 2015–16

48

10 Stocks

At 30 June 2016 At 31 July 2015

Group UKRIAT Group UKRIAT

£000 £000 £000 £000

Work in progress 15 – 1 –

Miscellaneous stocks 60 – 72 –

75 – 73 –

11 Debtors

At 30 June 2016 At 31 July 2015

as restated

Group UKRIAT Group UKRIAT

(Amounts falling due within one year) £000 £000 £000 £000

Trade debtors 11,350 2,216 8,699 2,035

Amounts due from group undertakings – 3,631 – 3,002

Other debtors 651 50 536 59

Deferred tax 528 – 458 –

Corporation tax 622 – 8 –

Prepayments and accrued income 1,648 263 1,318 227

14,799 6,160 11,019 5,323

The deferred tax asset includes trading losses accumulated in subsidiary undertakings to be utilised against expected trading profits arising in the foreseeable future. This amount is not expected to be recoverable within the next 12 months.

12 Creditors

At 30 June 2016 At 31 July 2015

as restated

Group UKRIAT Group UKRIAT

(Amounts falling due within one year) £000 £000 £000 £000

Trade creditors 1,124 191 1,019 166

Amounts due to group undertakings – – – 64

Other creditors 308 19 206 4

Corporation tax 246 12 70 7

Other taxes and social security costs 933 109 883 87

Accruals 2,509 864 1,898 491

5,120 1,195 4,076 819

13 Deferred income

Deferred income represents member and student subscriptions and student examination income received in advance of the year the subscription falls due, or of the year the examination is taken, amounts received in advance in respect of software maintenance agreements and hosted services, amounts received in advance of the date of training courses and conferences and publications income received in advance of the year it falls due. As these sums are not expected to be repaid in the normal course of business, they have been shown separately on the face of the statement of financial position, and will be released to revenue in the next financial year.

Notes to the financial statements (continued)

49

Financials

14 Non-controlling interest

2016 2015

Group and ICSA £000 £000

At 1 August 2015 100 392

Statement of comprehensive income 316 (292)

At 30 June 2016 416 100

15 Operating annual lease commitmentsAt the end of the year the Institute had total commitments under non-cancellable operating leases which expire as follows:

At 30 June 2016 At 31 July 2015

Group UKRIAT Group UKRIAT

£000 £000 £000 £000

Leases of land and buildings

Not later than 1 year 978 488 1156 448

Within 2 to 5 years 2,748 2,241 2,523 2,241

Later than 5 years 2,913 2,913 3,324 3,324

Leases of equipment

Not later than 1 year 64 64 58 58

Within 2 to 5 years 120 120 127 127

16 Capital commitmentsThere were no capital commitments contracted for at 30 June 2016 (at 31 July 2015: nil).

17 Key management remunerationThe aggregate remuneration of key management personnel for the 11 months to 30 June 2016 was £2,684,000 (2015: £3,013,000) comprised as follows:

11 months to 30 June 2016 Year ended 31 July 2015

Group Group

£000 £000

UKRIAT, ICSA Services Limited and ICSA Publishing Limited

Remuneration including social security contributions. 700 689

Number of key management personnel 7 6

During the year two of the seven individuals noted above (2015: 2) served as unpaid non-executive directors of ICSA Software International Limited and ICSA BoardRoom Apps Limited.

ICSA Software International Limited and ICSA BoardRoom Apps Limited

Remuneration including social security contributions. 1,984 2,324

Number of key management personnel - remunerated 3 3

Number of key management personnel - not remunerated 2 2

The key management personel of ICSA Software Limited and ICSA BoardRoom Apps Limited comprised the members of their respective boards. There were five directors in the period (2015: 5). The same individuals comprised the boards of both companies. Two directors received remuneration including pension contributions and profit share entitlement in respect of ICSA Software International Limited. There were three non-executive directors, two of whom received no remuneration (2015:3).

UKRIAT annual report and financial statements 2015–16

50

Group and UKRIAT Group and UKRIAT

Transactions Amount owing Transactions Amount owing

11 months to 30 June 2016 at 30 June Year to 31 July 2015 at 31 July

Members of UKRIAT Committee: £000 £000 £000 £000

Examination services:

R A Cowe 2 – 2 –

L Milliken 5 1 – –

7 1 2 –

Training services:

L Young – – 13 –

– – 13 –

In 2015 the services of Ms Young were invoiced from Lorraine Young Limited and comprised £3,000 in respect of writing technical articles for the Institute’s magazine and £10,000 in respect of training services supplied to ICSA Services Limited for which expenses of £1,000 were paid.

Fees of £26,000 were payable to Mr Simon Osborne (2015: £24,000) in relation to the provision of services to clients of ICSA Services Limited. Mr Osborne received no expenses during the year (2015: nil).

The costs of the Council The costs of the Institute’s association management company, the costs of the Council and of the Professional Standards Committee meetings, and those of the Institute's Director General were shared between the overseas divisions and UKRIAT in proportion to the numbers of members and students living in each geographical area at the start of each period. For this purpose three students are taken to equal one member. Each overseas division’s share is paid on its behalf by the third party independent service company or local society set up in its divisional territory. UKRIAT did not recharge any costs to the overseas divisions during the 11 months to 30 June 2016 (2015: £212,000).

Notes to the financial statements (continued)

18 Related party transactions

ICSA BoardRoom Apps LimitedICSA BoardRoom Apps Limited is deemed a related party as it is under common control. M Evans and J Lloyd, directors of ICSA Software International Limited, are also both the executive directors and shareholders in ICSA BoardRoom Apps Limited.

During the year, ICSA Software International Limited and its subsidiary ICSA Software North America Inc. provided office space and staff resources to ICSA BoardRoom Apps Limited at normal market price and entered into transactions in the ordinary course of business with ICSA BoardRoom Apps Limited, ICSA BoardRoom Apps North America Inc, ICSA BoardRoom Apps (HK) Limited and ICSA BoardRoom Apps (GmbH) as follows:

Sales and Purchases Amounts Amounts

recharges to from owed to owed from

related party related party related party related party

£000 £000 £000 £000

ICSA BoardRoom Apps Limited 8,016 1,121 – 6,108

ICSA BoardRoom Apps North America Inc. 354 – – 295

ICSA BoardRoom Apps (HK) Limited 27 157 – 70

ICSA BoardRoom Apps (GmbH) 18 43 – 20

The UKRIAT Committee and staffDuring the year the following members of the UKRIAT Committee charged or earned fees in respect of examination and training services and associated expenses to the group as follows:

Financials

51

19 Transition to FRS102

This is the first period that the UKRIAT Division has presented its accounts under Financial Reporting Standard 102 (FRS102) issued by the Financial Reporting Council. The following disclosures are required in the year of transition. The last financial statements under previous UK GAAP were for the year ended 31 July 2015 and the date of transition to FRS102 was therefore 1 August 2014.

The transition to FRS102 has resulted in a number of changes in the entity’s accounting policies compared to those used when applying previous UK GAAP. These are listed below.

The entity has made a number of choices with regard to the transition to FRS102. These are also listed below.

The following explanatory notes to the consolidated financial statements describe the differences between the equity and profit or loss presented under the previous UK GAAP and the newly presented amounts under FRS102 for the reporting period ended at 31 July 2015 (ie comparative information), as well as the equity presented in the opening statement of financial position (ie at 1 August 2014). It also describes the changes in accounting policies made on first-time adoption of FRS102.

In the table below equity determined in accordance with the FRS102 is reconciled to equity determined in accordance with previous UK GAAP at both 1 August 2014 (the date of transition to FRS102) and 31 July 2015.

£000

Reconciliation of Group reserves as at 1 August 2014

Group reserves at 1 August 2014 under previous UK GAAP 1,692

Increase in administration costs in relation to holiday pay accrual (172)

Group reserves at 1 August 2014 under FRS102 1,520

Reconciliation of group total comprehensive income for the year ended 31 July 2015

Total Comprehensive Income for the year under UK GAAP 1,375

Increase in other finance costs – from defined pension scheme in relation to pension financing cost (32)

Increase in administrative costs in relation to pension financing cost (104)

Decrease in actuarial loss in other comprehensive income in relation to pension financing cost 136

Adjustment to account for deferred tax in relation to the above through other comprehensive income (24)

Adjustment to account for deferred tax in relation to the above through income statement 24

Increase in administration costs in relation to holiday pay accrual (25)

Total Comprehensive Income for the year under FRS102 1,350

Group reserves at 31 July 2015 under FRS102 2,870

Reconciliation of UKRIAT reserves as at 1 August 2014

Company reserves at 1 August 2014 under previous UK GAAP 1,274

Increase in administration costs in relation to holiday pay accrual (17)

UKRIAT reserves at 1 August 2014 under FRS102 1,257

Reconciliation of UKRIAT total comprehensive income for the year ended 31 July 2015

Total Comprehensive Income for the year under UK GAAP (780)

Increase in other finance costs – from defined pension scheme in relation to pension financing cost (32)

Increase in administrative costs in relation to pension financing cost (104)

Decrease in actuarial loss in other comprehensive income in relation to pension financing cost 136

Adjustment to account for deferred tax in relation to the above through other comprehensive income (24)

Adjustment to account for deferred tax in relation to the above through income statement 24

Increase in administration costs in relation to holiday pay accrual (5)

Total Comprehensive Income for the year under FRS102 (785)

UKRIAT reserves at 31 July 2015 under FRS102 472

UKRIAT annual report and financial statements 2015–16

52

Notes to the financial statements (continued)

The following were changes in accounting policies arising from the transition to FRS102:1. Pension: There is a presentational change under FRS102 whereby net interest on the net defined benefit liability is presented in the profit and

loss account using the liability discount rate. Under previous UK GAAP the interest on the expected return on net assets was calculated using the expected asset return discount rate. This has no impact on reserves but affects the allocation of interest between the income statement and other comprehensive income.

2. Holiday pay accrual: The group now accrues for any unused holiday at the period end. This had not been recognised previously under UK GAAP.

3. Unpaid deferred income: Under FRS102, recognition of an asset or liability is required if it is probable that future economic benefit will follow to or from the reporting entity and the item has a value that can be measured reliably. Consequently unpaid deferred income in relation to subscription fees will remain within the accounts and no longer be removed (as under previous UK GAAP) as it is probable that future economic benefit will follow.

The following were choices made by the entity arising from the transition to FRS102:1. Fixed assets: The cost model was chosen to value all fixed assets as opposed to the fair value model.

2. Business combinations: The entity chose not to apply the new standard to business combinations entered into prior to the transition date.

3. Lease incentives: The entity chose not to apply the new standard to lease incentives entered into prior to the transition date.

4. Deferred tax: A deferred tax asset was not recognised on the defined benefit pension scheme liability as ICSA are not subject to corporation tax on this, consequently no temporary differences have arisen.

19 Transition to FRS102 (continued)

icsa.org.uk

53

We have audited the group financial statements of the UKRIAT Division of the Institute of Chartered Secretaries and Administrators for the period ended 30 June 2016 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated and UKRIAT Statements of Financial Position, the Consolidated and UKRIAT Statements of Changes in Equity, the Consolidated Cash Flow Statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom accounting standards (United Kingdom Generally Accepted Accounting Practice) including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’.

This report is made solely to the members of the UKRIAT Division as a body. Our audit work has been undertaken so that we might state to the members of the UKRIAT Division 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 members of the UKRIAT Division as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of UKRIAT Committee and auditorAs explained more fully in the statement of the UKRIAT Committee’s responsibilities, the UKRIAT Committee is 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 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.

Scope of the audit of the financial statementsA description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s web-site at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statementsIn our opinion the financial statements:

• give a true and fair view of the state of affairs of the group and the UKRIAT affairs as at 30 June 2016 and of the consolidated net surplus for the period then ended; and

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice.

Matters on which we are required to report by exception We have nothing to report in respect of the following matters where our engagement letter 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

• we have not received all the information and explanations we require for our audit.

Moore Stephens LLPChartered Accountants and Statutory AuditorLondon, United Kingdom20 December 2016

Independent auditor’s reportto the members of the UKRIAT Division of the Institute of Chartered Secretaries and Administrators

ICSASaffron House6–10 Kirby StreetLondon EC1N 8TS

Phone: 020 7580 4741Email: info@icsa.org.ukWeb: icsa.org.uk

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ICSA supports governance professionals at all levels with:

• A portfolio of respected professional qualifications

• Authoritative publications and technical guidance

• Breakfast briefings, training courses and national conferences

• CPD and networking events

• Research and advice

• Board evaluation services

• Market-leading entity management and board portal software