Institute of Directors

ANNUAL REPORT AND ACCOUNTS

2019

www.iod.com

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Objects of the Institute of Directors' Royal Charter

To promote for

the public benefit

high levels of

skill, knowledge,

professional

competence

and integrity

on the part of

directors, and

equivalent office

holders however

described, of

companies

and other

organisations.

To promote the

study, research

and development

of the law

and practice

of Corporate

Governance,

and to publish,

disseminate or

otherwise make

available the

useful results

of such study

or research.

To represent

the interests of

members and

of the business

community to

government

and in the public

arena, and to

encourage and

foster a climate

favourable to

entrepreneurial

activity and

wealth creation.

To advance

the interests

of members of

the Institute,

and to provide

facilities, services

and benefits for

them.

Objects of the Institute of Directors' Royal Charter | Annual Report and Accounts 2019

For further information on the IoD,

please explore our website found at:

www.iod.com

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Objects of the Institute of Directors' 2Royal Charter

Interim Chair of the Institute’s Report 4

Director General’s Report 6

2019 Overview 8

• Influence 8

• Development 12

• Connection 14

• People and Culture 16

Governance of the Institute of Directors 22

Statement of Board Responsibilities 31

Financial Review 32

Independent Auditor’s Report 34

The Accounts 36

IoD Chairs from Geographical Areas 55

IoD Premises 57

Annual Report and Accounts 2019 | Contents

“ Throughout this pandemic, the IoD community has been a powerful, positive force.”

John WatsonInterim Chair of the IoD

Contents

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Interim Chair of the Institute’s Report | Annual Report and Accounts 2019

John WatsonInterim Chair of the IoD

Interim Chair of the Institute’s Report

The IoD’s century-old Royal Charter

provides us with a mission to

create better directors, encourage

entrepreneurialism, and stand up

for good governance. As the world

comes to terms with the impact

of COVID-19, this mission is more

important than ever.

It has been immensely heartening to

see the response of our members and

the IoD team to this crisis. In challenging

circumstances, they have stepped up to

support not just the director community,

but wider society too. For this, we cannot

thank them enough.

Thousands of our members have

adapted at pace. In many cases,

they have been directly assisting the

medical response to the pandemic

– from producing hand sanitiser to

assisting front-line healthcare workers

– providing a prime example of the

positive role directors can and should

play in such circumstances. This came

on top of the contribution being made

by our public and third sector members

working in health and social care.

The IoD’s own response has been no

less swift. An online hub, gathering key

information, guidance, and peer support,

was launched in a matter of days.

Across our branch network, our teams

rapidly got to grips with digital platforms

like never before, providing directors

with a sense of community when

they needed it most. Our Professional

Development team quickly moved

courses online so that directors

could equip themselves with the vital

knowledge and skills they needed to see

their business through the challenge.

We successfully made the case to

Government for business support and

temporary changes to the UK’s corporate

governance and insolvency rules.

Throughout this pandemic, the IoD

community has been a powerful,

positive force.

The difficulties the world is experiencing

have only reinforced the importance of

our core functions as an institute. One of

these is to foster connections between

directors, and our events across the UK

and beyond have brought directors –

from organisations large and small,

from the public, private, and third

sectors – together. In 2019 these took

on a new focus around key issues such

as global trade and inclusivity.

Our Professional Development

offering grew for the fifth year running.

Hundreds of programmes were

delivered to over 5,000 delegates,

both in the UK and further afield. I would

like to personally congratulate each

and every one of our 111 new Chartered

Directors appointed over the year, a third

of whom were women. Those who have

gone before you know first-hand the

dedication and skill required to reach

our levels of accreditation and you

should, quite rightly, feel proud.

We remain a leading voice on the issues

that matter to directors, especially

this year, on good governance.

Our Policy Voice community has

continued to grow, ensuring what

we say is based, as it should be,

directly on our members’ views.

We have a long and proud history,

but to enable the IoD to continue

making a positive social impact,

we need a solid base and sustainable

long term plan. With this in mind,

one of the Board’s key focusses

last year was to improve financial

control, with management targeting

the eradication the deficit of the

previous year.

That target was more than met:

in 2019 the Institute achieved a

surplus of £752,000. This is a clear

demonstration that we can change

when we work together.

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Annual Report and Accounts 2019 | Interim Chair of the Institute’s Report

While I have no doubt that we have

further challenges ahead, compounded

by the current consequences of the

global pandemic on our staff and

operations, I am confident we can

continue to build on that work. We may

be an historic institution but we must

face up to the challenges of today

and in doing so be forward looking,

always considering the long-term

perspective. Again, we will do that

together, as one team with staff,

volunteers and members bringing

our resources together.

The Board’s long-term aspiration has

been to empower our local networks.

We have started to make good

progress with significant work put

into developing a new, streamlined

operating model that will enable the IoD

to better service members wherever

they are. Importantly, this brought

together IoD staff and volunteers from

across our networks, providing an

example of the positive collaboration

we want to continue to encourage.

The work of our dedicated and

talented volunteer members reflects

well on the enviable generosity and

capabilities of our wider membership.

We all owe you a debt of gratitude.

I would also like to express my gratitude

to our previous Chair, Charlotte Valeur

and our Joint Interim Directors General,

Anna Daroy and Edwin Morgan, for their

endeavours, particularly in progressing

these two key strands of work.

As your Interim Chair, my focus will be

on guiding us through the next few

critical months to ensure that our new

Chair has every opportunity to lead

us into a sustainable, long term future.

The reshape and recovery plan is

our best chance of preparing for the

economy to return to growth and in

doing so, ensuring the Institute is closer

and even more relevant to its members.

Empowering our branch network

will continue to be a priority. With this,

we will further strengthen our focus on

the importance of good governance,

for the benefit of organisations, but also

for the whole economy, an aim central

to our Royal Charter.

We should not be shy about highlighting

the significant benefits our accredited

courses, of which Chartered Directorship

is the pinnacle, offer directors. In its 20th

year in 2019, we saw a record number

of Chartered Directors qualify. We are

placing more emphasis on growing this

community and sharing its value to

the IoD and the UK. I would like to see

simpler pathways to achieving our high

standards and in doing so making our

leading Chartered Director accreditation

more inclusive and attainable.

So too must governance be at the

forefront of our efforts to provide

influence for members. Last year the

development of a key project, the IoD

Centre for Corporate Governance,

brought together experts from

academia and business to investigate

live governance issues. This Centre,

launched earlier this year, stands as a

powerful symbol of the central position

of the Institute and our members in

the good governance debate.

Equally, we must continually update

the Institute’s own governance,

adapting to the new expectations

of both our members and ourselves.

We are publishing pay gap figures for

gender and ethnicity, and from next

year intend to publish information on

our environmental impact.

2019 was a year of financial stabilisation,

affirming the importance our volunteer

network, and refocussing on our

core purpose.

I am delighted that last year closed with

our appointment of Jonathan Geldart

as Director General, who has taken on

the responsibility of maintaining these

objectives, albeit under circumstances

none of us would have expected.

Through the first half of 2020,

Jonathan worked tirelessly towards

fulfilling the goals of the Institute.

He is a long-time member and

steadfast supporter of the principles

that the IoD stands for: Integrity and

Enterprise. While the challenges ahead

are substantial, if we stick firm to these

principles, I am confident about

the IoD’s future as the pre-eminent

organisation for directors.

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Director General’s Report | Annual Report and Accounts 2019

Director General’s Report

Jonathan GeldartDirector General

First as a member, then as chair for

Yorkshire and the North East, I have

long been an enthusiastic advocate

of the Institute of Directors. It was

a privilege to be appointed Director

General last October.

I believe firmly in the IoD’s mission to

create better directors, and I have always

valued the work it does as a champion

of its members and the wider director

community. 2019 was no different in

this regard.

The IoD’s flagship event series, the

Director of the Year Awards, was better

than ever, showcasing some of the best

of Britain’s directors. With hundreds of

entrants from across the UK spanning

the private, public, and third sectors,

the awards campaign reached over

a million people. Yet this is just one

example of the events which, over the

course of last year, helped directors

connect with one another and discuss

topics ranging from financial strategy

to inclusivity in the workplace.

Just as prominent was our advocacy

work, speaking out on behalf of our

members on the issues that matter to

them. While Brexit, and particularly the

threat of no deal, loomed large in a year

of political tumult, we helped to secure

influence for our members across a

range of areas, including audit reform,

action on late payment, and new city

deals to promote local growth.

Our role is not just to inform

policymakers of our members’ views,

but also to ensure directors have the

information they need to adapt their

organisations to upcoming change.

Last year’s Brexit readiness campaign

was a prime example. Moving at speed,

teams from across the IoD combined

to provide guidance, webinars, events,

and content via our online hub,

visited by hundreds of thousands

of business people.

This campaign complemented our

Information and Advisory Services,

which continued to provide a valuable

service for members, dealing with

thousands more requests during the year.

The IoD doesn’t just help our members

secure their existing business, but

also enables them to take the next

step. In this regard, our Professional

Development offering continues to go

from strength to strength, growing for

the fifth year running. Thousands of

delegates attended our programmes

across the world, with thousands of

examinations delivered, generating an

overwhelmingly positive response from

delegates. The year also saw a record

number of applications for our gold

standard: Chartered Directorship.

Our purposeWhile the IoD has always had its

Royal Charter as its ‘North Star’, like all

long-standing organisations there is a

need periodically to remind ourselves

of our purpose and recapture the

spirit of the group of directors who

bonded together to form the IoD

over a hundred years ago.

To this end, throughout last year

and into 2020, we have brought

together staff and members who have

volunteered their time, working as one

team, to hone and strengthen our sense

of purpose and member proposition.

I would like to offer tremendous thanks

to all those involved for their continued

efforts on this vital piece of work.

Building upon the Institute’s Royal

Charter, and underpinned by quantitative

research, this work indicated the need

for the IoD to drill down to the essentials

of what our members want.

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Annual Report and Accounts 2019 | Director General’s Report

The IoD must reflect and cater for the

significant responsibilities that come

with the role of the director, and to

address the many ‘unknown unknowns’

that come with the position. We should

champion good governance and skilled

directorship at every turn, emphasising

the role our accredited courses,

particularly the Chartered Director

Qualification, can play in supporting

these values. In future, there is no

reason we should not expect qualified

directors to sit in every boardroom

in the UK.

To deliver on our objectives, we must

get closer to our membership, and we

must do so at a branch level. Our branches

should be empowered to provide

the services that will truly benefit their

members, underpinned by a ‘Member

First’ philosophy. This new model

will help to deliver a service for our

membership that better reflects their

needs today and tomorrow.

Financial performanceIt is crucial that this ongoing programme

of change is built upon firm foundations.

Arriving in post near the end of last

year, my first job was to continue

crucial work carried out in 2019 to

stabilise the Institute’s finances.

The Board and Interim Directors

General Edwin Morgan and Anna Daroy

deserve significant credit for their

efforts to reduce our cost base during

2019. The target they were set was to

eradicate the Institute’s 2018 deficit

and reach a surplus.

I am pleased to confirm that this

has been achieved. All told, in 2019,

the Institute generated a surplus

of £752,000.

OutlookAt this point, the injurious impact of

the coronavirus pandemic on business

hardly needs restating.

As an organisation with significant

revenue streams from hospitality,

events, co-working spaces, and face-to-

face professional development, the IoD

has not been immune to the effects of

the virus. In retrospect, it underlines the

importance of the work done in 2019 to

return the Institute to a surplus. Due to

the ongoing effects of the pandemic,

this work will need to continue.

While Covid-19 has put strain on the

economy, it has also spurred significant

innovation, both in our members’

organisations and the Institute itself.

Our teams across the regions and

nations have rapidly upskilled in

organising virtual events, enabling

thousands of directors to connect

at a time when they needed the IoD

community more than ever.

We have ensured directors can

continue to develop by launching

a suite of accredited virtual training

thanks to the tireless work of our

Professional Development team.

And our influence has helped to secure

significant support for businesses,

and legal changes that give real

breathing room for company directors.

I cannot emphasise enough how

impressed I have been by the efforts of

our staff and volunteers in the face of

this challenge. I would like to thank them

all for the work they have done during

these incredibly challenging times.

The current situation has accelerated,

not deflected us from, our work to

ready the IoD for the next 100 years.

Connect

To other directors to share

experiences and common

challenges

This is the opportunity to:

Develop

Knowledge and skills that will

help improve any organisation

Influence

Add their voice and influence

the people that matter, at a

local and national level

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2019 Overview | Annual Report and Accounts 2019

Influence

The IoD’s Royal Charter calls on

the Institute “to promote the study,

research and development of the

law and practice of corporate

governance”, and “to represent

the interests of members and

of the business community to

government and in all public fora

and to encourage and foster a

climate favourable to entrepreneurial

activity and wealth creation”.

Following these instructions, the IoD

seeks to influence politicians and

opinion formers on behalf of members,

to maintain and raise governance

standards in the UK, and to argue

for a business environment which

encourages sustainable growth.

But change does not only come

through government policy, and

we also seek to use our influence to

promote improvement in standards

of directorship and governance that

doesn’t need legislation.

Corporate governance2019 was a watershed moment in

international corporate governance

as business leaders around the world

reconsidered corporate purpose.

In the United Kingdom, the British

Academy published an influential set

of principles for purposeful business,

which called on boards of directors

to define an overarching business

purpose which articulated the

contribution of their enterprises

to society. In the United States,

the US Business Roundtable issued

a high-profile statement signed by

many leading CEOs which argued

that boards should adopt more of

a stakeholder orientation in the

governance of major companies.

The IoD contributed to this debate

in a balanced way, highlighting the

contribution of a wide range of

organisational stakeholders to business

success whilst also acknowledging that

shareholders continue to play a crucial

role in effective corporate governance.

Responding to the Financial Reporting

Council’s consultation on the updated

Stewardship Code for institutional

investors, the IoD broadly welcomed

updates to the Code whilst expressing

some scepticism about the Code’s

ability to significantly reshape

the nature of board-shareholder

engagement at listed companies.

In March, we worked closely with

the Chartered Institute of Internal

Auditors to produce a report

examining the importance of internal

audit in ensuring good governance.

2019 also saw the collapse of the 178-

year old travel operator Thomas Cook.

In the IoD’s response to Parliament’s

Business Committee’s inquiry on

the matter, we posed a number of

questions concerning the disappointing

role of auditors, shareholders and the

board in failing to prevent the collapse.

Ahead of the General Election,

we issued a policy paper in which

we called for 10 policy initiatives

which were designed to reinforce

the UK’s pre-eminent position in

the global corporate governance

space. Proposals included calling on

Government to establish a new form of

company for the outsourcing industry,

“the Public Service Corporation”,

which would balance the interests

of shareholders, the workforce and

other stakeholders to a greater extent

than at present. We also called on

Government to introduce the necessary

legislation to enact Sir John Kingman’s

recommendations concerning external

audit regulation.

At the end of the year, the newly

elected Government unveiled a

number of proposals that indicated

the future direction of the UK’s

approach to corporate governance.

In line with our recommendations,

the Government indicated that it

would adopt proposals for a stronger

audit regulator and a new airline

insolvency regime. The Government

also indicated that it would strengthen

its powers to intervene in mergers and

acquisitions on grounds of national

security. We broadly welcomed these

measures whilst also warning against

the negative impact of politically-

driven interventions in legitimate

corporate transactions. In that context,

we emphasized the need to retain,

as much as possible, an open and

non-protectionist approach to business

ownership and investment in the post-

Brexit economy.

As mentioned in the Interim Chair’s

report, in 2019 we laid the groundwork

for the IoD’s Centre for Corporate

Governance, with an advisory panel

comprising significant investors,

academics and business figures.

Launched at an event with Darren

Jones MP, Chair of the House of

Commons Business, Energy and

Industrial Strategy Committee in

July 2020, the first subject the

Centre is investigating is stakeholder

governance, sustainability in

governance and the impact of emerging

technologies on governance. We believe

this initiative will further cement the

IoD’s position as the home of the

latest thinking in good governance.

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Influence at all levelsThe IoD speaks for its members not just

to UK central government, but crucially

also to the Devolved Administrations

and at local government and LEP level.

The Institute’s teams in Scotland, Wales

and Northern Ireland, as well as in the

English regions have frequent contact

with relevant political leadership,

providing valuable data, case studies

and insight into consultation processes.

Regular and frequent meetings

took place between IoD staff and

Ambassadors with cabinet ministers,

civil service and government staff

to discuss key issues of import to

businesses, and these were of particular

use where issues, such as Brexit,

may affect the whole UK, but have

greatly varied local impacts.

In addition to Policy Voice surveys,

a community which grew by 16% in 2019,

many regions ran specific surveys for

members in 2019 to gain local insights to

supplement the considerable feedback

received on a consistent basis.

Annual Report and Accounts 2019 | 2019 Overview

Policy & Media

Highlights

3,000+hits in all forms of news media in 2019

1,000+broadcast

interviews and mentions

in 2019

+16%Policy Voice community grows

All figures correct as of August 2020

100+meetings with ministers

and civil servants speaking directly to

government

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2019 Overview | Annual Report and Accounts 2019

What members told us How we responded What we achieved

By April 2019, less than half

of members had been able to

draw up Brexit contingency

plans

Alongside providing guidance

directly to members,

we consistently called for

financial support

Over £2bn funding

for Brexit readiness is

announced in August

Survey evidence and member

case studies show demand

for digital tech investment

incentives

Throughout 2019, we mount

a campaign to secure a

'Productivity Allowance'

for SMEs, in the media and

meeting officials

In December, the

Government commits

to widening existing tax

credits to achieve this

exact aim

Late payments repeatedly

emerge as a top concern in

monthly Policy Voice surveys

Engaging directly with officials

at BEIS, we put forward

recommendations to force

the issue onto board agendas

at large firms

Measures in line with

IoD proposals are

introduced in June

Extensive consultation with

members highlights the

importance of 'nuts-and-

bolts' trade promotion

IoD policy leads make the

case directly in meetings with

DIT ministers and officials

DIT launches new tool

to enable firms to

report trade barriers

Work with members and

teams across the UK

highlights desire for more

local-led policy-making

IoD Regional Growth

paper advocates more

decentralised funding and

decision-making

Government continues

focus on regional growth

agenda, announcing new

'City Deals'

IoD NI members raise fears

over post-Brexit border

issues

IoD appointed to PM’s expert

advisory panel on the Irish

border

IoD policy input helps

secure a Brexit deal that

avoids land border

Business environmentAlongside our role in promoting

governance, our Royal Charter is

equally clear that the IoD has an

obligation to make the case for

government policy to be designed

so that it helps people to establish

and to grow organisations of all types.

As a member-led institute, our priorities

in this regard are driven by the needs

and concerns of the IoD community.

Below are some of the areas in which

the IoD made an impact on behalf of

its members.

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Annual Report and Accounts 2019 | 2019 Overview

Front of 116 Pall Mall

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2019 Overview | Annual Report and Accounts 20192019 Overview | Annual Report and Accounts 2019

Development

Helping every director to progress on

their journey of honing their skills and

knowledge is at the heart of the IoD’s

mission. This can take many forms,

from our professional development

courses, to information and advice,

and physical or digital events.

Courses and qualifications2019 was our fifth consecutive

year of growth in our courses and

qualifications business – with our

footprint expanding across the UK

and overseas in partnership with

our regions, nations and international

partners. Our mission remains the

same – to champion the highest

standards of good governance and

strategic leadership through the

provision of accessible and high-quality

development opportunities for directors.

The number of Chartered Directors

qualifying grew slightly in 2019, with

111 appointed in the year. In addition,

we saw an increase in examination

take up for the Diploma in Company

Direction with strong pass rates

demonstrating the appetite for

our qualifications pathway.

Future DirectorsThe next generation will play an ever-

increasing role in driving better board

performance, sustainable business

practices, a healthier economy and fair

and equitable society. We launched our

Future Directors programme to support

succession planning and nurture the

talent pipeline. It focuses on the skills

and mindset required for directorship;

and what is required in order to make

the shift from manager to director.

Continuing Professional DevelopmentLearning doesn’t just stop when you

get to the boardroom. Arguably it is

even more vital in a position of such

responsibility and influence that

you continue to develop and grow.

To support our members and prospective

members to commit to lifelong

learning, we launched a brand new

CPD programme the ‘Professional

Director Series’ in Autumn 2019.

In just four months, 146 directors and

senior leaders attended 11 sessions,

all underpinned by our renowned

Director Competency Framework.

Digital AcademyIn addition to paid-for courses, all IoD

members have access to our Digital

Academy, on which we published a

broad range of learning content during

2019, including interviews and podcasts

with inspirational leaders across the

public, third and private sectors.

Content is mapped to our Director

Competency Framework and users can

benchmark their knowledge, skills and

mindset against the 74 standards in

the framework to support their CPD.

Information and advisory servicesA popular and highly-regarded service

among IoD members is provided

by our IAS team, providing a range

of tools to help directors improve

themselves and their organisations,

ranging from bespoke research,

advisory sessions with experts

on everything from marketing to

fundraising, and factsheets, to access

to legal and tax helplines. 2019 was a

successful year, with 4,488 information

requests completed, 903 advisory

sessions delivered and 1,350 calls

placed to the IoD legal helpline.

TheBoardroom Africa (TBRA) promotes

exceptional female talent to boards across

Africa. They break down barriers to

help organizations realise the benefits

of increased diversity on boards by

accelerating the placement of female

board directors and now boast a

membership of over 1,000 directors.

The IoD and TheBoardroom Africa have

been partnering to enable board-ready

women to complete the IoD Chartered

Director qualification since 2018, through

the “Open Doors Programme”.

In 2019 we had over 40 delegates attending

co-branded Certificate in Company

Direction programmes, which were

delivered in South Africa and Mauritius.

In November, we hosted a joint event

at 116 Pall Mall to showcase the female

leadership talent pool across the

sector as well as the value of the IoD’s

qualifications. The event was hosted by

Baroness Verma, Chair of the UN Women

UK and attended by some of the largest

private equity groups and developmental

finance institutions across Europe.

Client case study TheBoardroom Africa

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Annual Report and Accounts 2019 | 2019 OverviewAnnual Report and Accounts 2018 | 2018 OverviewAnnual Report and Accounts 2019 | 2019 Overview

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436development programmes delivered

90%of delegates would recommend IoD Professional Development to a colleague

33%of the Chartered Directors appointed in 2019 were female

3,311exams delivered

56%of our delegates were IoD members

5,000delegates attended

our programmes from across the globe

⅓of programmes

delivered internationally in 22 different

countries

1,699Chartered Directors

appointed in total and 2019

saw the highest ever number of

applications ever received

All figures correct as of August 2020

Development

Highlights

111Chartered Directors

appointed in 2019

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Connection

2019 Overview | Annual Report and Accounts 20192019 Overview | Annual Report and Accounts 2019

Bringing directors together so

that they can share experiences,

learn from and support each other

has always been a core function of

the IoD, and 2019 was no different.

The IoD worked tirelessly throughout

the UK to connect our members with

each other, and to recognise and

celebrate the incredible talent evident

in boardrooms throughout the land.

Our well-established Director of the

Year Awards were held once more

in all regions and nations, with the

number of nominations and the quality

of candidates continuing to rise year

on year. The 2019 UK finals, held in

London in November, showcased

a diverse group of winners from all

regions and nations and demonstrated

the continuing raising of the bar in

qualification, experience and creativity

of our shortlist. The Prime Minister

recorded a video for the awards,

congratulating the finalists and thanking

them for their “part in helping to make

this a bright and successful Britain”.

Conference and meeting activity

was of a very high standard yet

again with an enviable list of speakers

at prestigious conferences from

Gleneagles in Scotland, to Belfast

to London, and all points in between.

Members and non-members used these

events to engage and debate key

issues facing their businesses, and to

listen to cutting-edge presentations

from opinion-leaders on key topics

of the day.

At a more local level, our Chairs and

Ambassadors have held hundreds

of branch meetings with speakers,

activities, and behind-the-scenes

access providing great insight to

members and encouraging the sharing

of good practice. These have been held

on a regular basis and continue to prove

very popular with branch members.

Winners of the 2019 Director of the Year Awards, with event host Sir Trevor McDonald

After converting our traditional annual

convention into a more bite-size and

interactive format in 2018 with the creation

of Open House, we continued to innovate

in 2019, creating Open House on the Road,

to let members across the UK participate.

With 20 events across the UK, divided

into the themes of Global, Connected and

Inclusive Business, 1,500 members took part

in half-day sessions to learn about emerging

business trends, gain practical knowledge

and engage with their peers. A report

was produced for each of the themes,

containing policy insights, member views,

advice and support, taking the content to

a wider audience.

IoD Innovation Open House on the Road

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Annual Report and Accounts 2019 | 2019 Overview

A new way of connecting with membersIf providing connection through

events, conferences and awards

was a continuation of what the IoD

has always offered, what was different

about 2019 was the way in which our

network of director volunteers were

engaged to use their vast stores of

collective experience and knowledge

to shape the future of the IoD.

Putting members at the heart of

decision-making has long been an

ambition of the IoD’s, but 2019 was

the year that it really began in earnest.

This work will be crucial to arrest

and reverse the long-term trend in

membership, which fell to 26,442

in 2019.

Beginning with a small group of

regional chairs, working closely

with management, the IoD embarked

on a process on returning to the

fundamentals of the Royal Charter

and crafting an updated value

proposition, essential work if the

IoD is to endure and be able to

continue to pursue its mission.

Building on a belief that better directors

build a better world, and that the IoD

has an essential role to play in helping

all directors to be better, volunteers,

staff and board have come together on

the three pillars of Connect, Develop

and Influence is the essence of the

value we can offer to directors.

This is based on the insight of our

members that directors not only

carry substantial legal and financial

responsibilities, but that it can also

be lonely and overwhelming at times.

Directors need specific knowledge,

but they also need the fellowship of

their peers, and the chance to be

part of a collective voice.

The work that began last year has

taken material form in 2020 with

the ongoing reshaping of the IoD’s

structure, putting our branches

at the forefront and devolving

responsibility to communicate

with members, provide learning

and connection opportunities and

local influence. We are closer than

we have ever been to becoming

a truly member-led institute.

Director of the Year Award Finals | Image credit: Peter Nutkins photography

“ Our teams across the regions and nations have rapidly upskilled in organising virtual events.”

16 www.iod.com

People and Culture

The IoD’s team worked incredibly

hard in 2019 to achieve the financial

surplus. A number of voluntary

redundancies had been made at the

end of 2018, making the performance

of staff even more notable.

In 2019, a number of actions were

taken aimed at developing our people

and supporting individual opportunity

for growth and development.

The number of unique employees (full time equivalent) was 1471

Employee engagement and recognitionDuring 2019, we developed and

implemented a number of initiatives

to enhance staff engagement.

Working with our staff we identified

and implemented our new performance

management process, Continuous

Conversations, aimed at ensuring

two-way communication between

staff and the business

The Employee Voice group was

active throughout 2019 as a key

conduit for staff.

We continued our staff survey cycle,

with 4 surveys held throughout the

year alongside our peer-to-peer

recognition system, allowing colleagues

to celebrate the great work they see

from other staff. In 2019 we continued

with the ‘Above & Beyond Award’,

our quarterly recognition of employees

– nominated by colleagues – for their

exceptional efforts and achievements

awarded at our quarterly All Staff

Meetings. 6 individuals and 2 teams

of staff received an award.

We also implemented an employee

benefits portal that has enabled us

to bring together our benefits in one

easy to use online portal.

During 2019 we enabled a number of

staff to become Mental Health First

Aiders (MHFA). Each of our MHFAs

gained a professional qualification and

we have started to roll out a number

of initiatives across the business to

help people identify their own mental

health needs and also to provide a

safe and confidential space for staff

to discuss their issues.

NOTE

1. As at August 2020

Gender composition of our employees, across our organisation1:

85Female

employees(58%)

3

9

25%

75%

Heads of

Department

62Male

employees(42%)

Female: | Male:

2019 Overview | Annual Report and Accounts 2019

2

4

33%

67%

Management Team

Values

To give staff a central role

in establishing the values

they believed the IoD and

its people should live up to,

in 2019 we ran an extensive

consultation with staff.

The resulting ‘Pillars of

Success’ are designed and

owned by staff, and are

the reference point for

everything from recruitment

to performance management,

reward, recognition and

development.

The Pillars of Success are:

• Accountability

• Adaptability

• Collaboration

• Leadership

• Respect

• Transparency

Workforce statistics

17www.iod.com

Learning and developmentThrough our online platform we

were able to offer to staff over 500

development courses covering a wide

range of subjects and skills. 100% of

our staff undertook online training

in 2019, whether for job-related

development or personal skills growth.

Individual coaching, mentoring,

team building, skills development

and professional training continue

to be developed.

A number of our people are currently

engaged in development opportunities

leading to professional qualifications

including CIPD, ACCA, MBA and,

of course, our own Certificate and

Diploma leading to Chartered IoD

status. We continue to support

our staff in gaining professional

qualifications in their chosen field.

Annual Report and Accounts 2019 | 2019 Overview

%

White British (86) | 58.0%White Other (23) | 14.8%White Irish (7) | 4.3%Asian Other (6) | 3.7%Black African (6) | 3.7%Black Caribbean (5) | 3.7% Indian (5) | 3.1%Chinese (4) | 2.5%White Asian (3) | 1.9%Bangladesh (2) | 1.9%

NOTE

1. As at August 2020

Ethnic origin1“ Designed and owned by staff, our ‘Pillars of Success’ are the reference point for what we do and how we do it”

Policy team presenting at local member event | Image credit: Peter Nutkins photography

18 www.iod.com

2019 Overview | Annual Report and Accounts 2019

Gender pay gap analysisAs an employer with fewer than 250

employees, the IoD does not fall within

the scope of legislation on gender

pay reporting, but publishes the

information below in the interests

of transparency.

The data below is based on the

‘snapshot’ dates of 5th April in 2018

and 2019, but it is worth noting

the IoD’s workforce has changed

substantially since, and this does not

represent the current position.

The mean gender pay gap fell

between 2018 and 2019 from 28%

to 12%, with the median pay gap

falling slightly from 24% to 20%.

In relatively small organisations,

the averages can be shifted significantly

by a small number of roles, and one

relevant factor between the two

dates was the departure of the (male)

Director General. At the point the 2019

snapshot was taken, the IoD had two

interim Directors General, one male

and one female.

There is a larger difference when it

comes to bonuses, with 22% of male

employees receiving a bonus in 2019,

against 3% of female employees.

There are more female than male

employees overall, and we have a

higher percentage of male employees

in our sales teams which operate with

variable pay. As mentioned in the

Development section above, sales of

our PD courses and qualifications grew

in 2019. Outside of the commission-

based departments, we operate an

IoD bonus scheme based on the

achievement of surplus targets set

by the Board. Despite achieving a

financial surplus, the large majority of

IoD employees did not receive a bonus

in 2019 as this did not trigger a pay-out

under the specific rules of the scheme.

5th April

2018

5th April

2019

Mean Gender Pay Gap (hourly pay relevant employees) 28% 11.6%

Median Gender Pay Gap (hourly pay relevant employees) 24% 20.3%

Proportion of males receiving a bonus payment 14.3% 21.7%

Proportion of females receiving a bonus payment 2.6% 3%

Mean bonus gender pay gap 61% 87%

Median bonus gender pay gap 63% 21%

Collected gender pay gap data for 5th April 2018 and 5th April 2019

Quartile Gender Numbers Percentage

2018 2019 2018 2019

Lower F 39 30 75% 73%

M 13 11 25% 27%

Lower Total 52 41 25%

Lower Middle F 32 25 61.5% 62.5%

M 20 15 38.5% 37.5%

Lower Middle Total 52 40 25%

Upper Middle F 23 20 44% 48.8%

M 29 21 56% 51.2%

Upper Middle Total 52 41 25%

Upper F 21 18 41% 45%

M 30 22 59% 55%

Upper Total 51 40 25%

Grand Total 207 162 100%

Proportion of males and females in each pay quartile (lower quartile, lower middle quartile, upper middle quartile and upper quartile)

19www.iod.com

Annual Report and Accounts 2019 | 2019 Overview

Ethnicity pay gap analysis As with the gender pay figures,

the numbers below relate to the snapshot

date of 5th April 2019 and should not be

taken as reflective of the current position.

According to the latest census (2011),

86% of residents of England and Wales

were white. The IoD’s proportion of

employees from other ethnic groups

is higher than the overall proportion.

This may in part be reflective of the

fact that the IoD’s main location for

staff is in London.

The IoD has a mean pay gap of

17.5% between white employees and

employees of other ethnicities, and a

median pay gap of 3.8%. The figures,

and the difference between the two

averages, are reflective of the higher

proportion of white employees in

the upper quartile of employees.

As this is the first year of reporting

on this basis, we do not have previous

figures against which to compare

them. Finding comparators is also

difficult. Few large companies report,

two of those who do are Barclays,

who reported a median gap of 7.6%

and mean gap of 1.5% in 2019, and ITV,

who reported a median gap of 5.8%

and a mean gap of 6.5%.

Focus for coming yearWe recognise that there is still much

to do to ensure we are doing all we

can to support and promote inclusion

and diversity across our organisation

and membership. We continue to

work closely with all stakeholders to

improve representation at all levels

and address any gaps.

In 2020 and beyond, we will continue

our activity and are committed to

making progress through a number

of interventions and actions including:

• Working groups tasked with

looking at specific actions we will

take to promote more diversity ,

particularly BAME representation,

in our membership, events, staff and

across our network of volunteers.

5th April

2019

Mean Ethnicity Pay Gap (hourly pay relevant employees) 17.5%

Median Gender Pay Gap (hourly pay relevant employees) 3.8%

Proportion of white British/Irish employees receiving a

bonus payment

7.8%

Proportion of other ethnic group employees receiving a

bonus payment

22.6%

Mean bonus ethnicity pay gap 44.4%

Median bonus ethnicity pay gap 47.2%

Collected ethnicity pay gap data for 5th April 2018 and 5th April 2019

2019 Quartile Ethnicity %

Lower White British / Irish 53.7%

Other 46.3%

Lower Middle White British / Irish 71.4%

Other 28.6%

Upper Middle White British / Irish 53.7%

Other 46.3%

Upper White British / Irish 70.7%

Other 29.3%

Proportion of White British/Irish and Other ethnic groups in each pay quartile (lower quartile, lower middle quartile, upper middle quartile and upper quartile)

• The development of a simple,

fair and transparent pay system

in which pay is determined with

reference to a job evaluation system

based on non-discriminatory factors

and independent market testing.

• Continuing to improve our talent

acquisition and development

processes to ensure we are

attracting, developing and recruiting

from a wider pool and attracting

diverse talent. All our recruiting

managers will receive inclusive-

recruitment training.

• Ensuring all of our policies and

procedures encourage inclusive ways

of working and our managers and

leaders are equipped and empowered

to own and drive inclusion.

• Developing our staff to ensure

everyone receives regular diversity

and inclusion training.

20 www.iod.com

Our Governance Structure | Annual Report and Accounts 2019

Non-Executive Chair

• Leads the Board and ensures it

operates effectively

• Maintains a culture of openness

and debate

• Ensures effective dialogue

between the Board and members

The Board

Committees of the Board and Council

Nomination committee

• Leads process for Board and Council appointments

• Ensures the completion of an annual review of the performance of governance bodies with focus on

the structure, size and composition of the Board and Council

• Ensuring that the Board and Council has a reasonable geographical distribution of members and a balance

of diversity, sector and background

Audit and Risk

Committee

• Oversees financial

reporting, internal

control, risk

management systems

and audit processes

Non–Executive Directors

• Work with and challenge

executive directors

• Provide independent, external

perspective

• Contribute a broad range of

experience and expertise

Director General and Executive

Directors

• Day-to-day management of the

business and implementation

of strategy

Remuneration

Committee

• Advises on the

compensation and

terms of employment

for senior members

of staff and executive

directors

Membership Committee

• Advises on membership,

member services

provided by the IoD

and membership

conduct matters

Accreditation and

Standards Committee

• Approves standards/

competencies required

by directors and boards

and the methods for

assessing directors

• Responsible for

independent assurance

of Chartered Director

programme

• Ensures all current

activity reflected in the

academic regulations

Approves strategy and leads the IoD to achieve long-term success

Committee of the Board

Executive Committee

Is responsible for the ongoing management of the

Institute. It considers day-to-day operational matters

for running the business and reviews performance

of the Institute and in line with the strategic plan.

The Executive Committee generally meets on a

monthly basis and is chaired by the Director General.

The Director General then reports to the Board.

• Responsible for the development and

implementation of the strategy

• The development and delivery of business plans

and budgets

• Approval of procedures and policies

• The monitoring of operating and financial performance

• Health and safety management

Our Governance Structure

21www.iod.com

Annual Report and Accounts 2019 | Our Governance Structure

Male | 62%

The Council 1

Female | 38%

NOTE

1. As at August 2020

Male | 71%

The Board1

Female | 29%

The CouncilGuardian of the constitution to make sure that the Chartered Objects are being delivered

Council

• Appoints and removes

the IoD non-executives

and determines their

independence

• Critiques and provides

opinion to the Board

on the overall progress

of the IoD

• Holds the Board to

account

• Monitors the Board’s

engagement with

membership and

stakeholders

• Appoints and removes

the senior independent

council member

Summary

Our governance structure is an

integral part of the way the Institute

of Directors delivers its Royal Charter

obligations and its strategy, supporting

effective decision-making and enabling

the right people to have access to the

right information at the right time.

We are immensely proud of the

diversity and depth of experience

contained in our Board and Council,

which are responsible for the Institute’s

strategic direction and sustainability.

22 www.iod.com

Governance of the Institute of Directors | Annual Report and Accounts 2019

Governance of the Institute

As a chartered organisation, initial

control of the Institute is vested in

the members and the Institute is

fundamentally controlled by the

Privy Council and in turn the Queen

in Council. The Institute does not have

owners and it is not subject to the

normal laws and regulations relating to

the operation of registered companies.

The Institute, however, is accountable

to the public as well as its members

and must therefore meet the public

interest test in pursuit of its objects.

The IoD is committed to a high standard

of governance and adopts best practice

recommendations as a guide to its own

governance. Our governance structure

shapes the way that information

flows throughout the Institute and we

constantly strive to improve our own

governance procedures and processes.

The relationship between the Board,

Council and committees as defined

in the Institute’s constitution are:

• The Queen in Council and Privy

Council granted the Institute its

Royal Charter and by-laws.

• The membership approve any

changes to the Royal Charter prior to

submission to the Queen in Council

and Privy Council who approve any

changes to the charter and by-laws.

• The Council is the guardian of the

constitution and considers any

changes to the constitution before

they are considered by membership.

• The Council also appoints Board

members, via the recommendations

of the Nomination Committee

(the joint committee of the Board

and Council). Council members

appointments are approved

by members at the Annual

General Meeting.

• The Board is responsible for the

overall leadership of the Institute

and for holding the executive to

account. The Board approves

the strategy and is responsible

for setting the Institute’s values,

standards, aims and objectives and

for delivering them in line with the

Charter Objects. The Board has a

number of sub-committees which

support its decision making across

the Institute. The sub-committees

of the Board are: the Audit and

Risk Committee, Remuneration

Committee, Membership Committee

and the Accreditation and Standards

Committee. There is also an

established geographic network,

which reports to Board via the

Regional Chairs.

The Institute of Directors was established in 1903 and became a body corporate under Royal Charter in 1906. The IoD’s constitution comprises the charter, by-laws and regulations. The Institute’s principal office is at 116 Pall Mall, London, SW1Y 5ED. The Board is responsible for all of the affairs of the Institute and the Council is the forum in which the Board is held directly accountable to the charter.

23www.iod.com

Annual Report and Accounts 2019 | Governance of the Institute of Directors

The Chair of Council (and Senior

Independent Council “SICM”) is

Jean Church, MBE who was elected

in October 2019 following the

departure of Dame Joan Stringer

earlier in the year.

Role of CouncilThe Institute’s Council acts in an

oversight and advisory capacity as

guardian of the Institute, representing

the interests of its members and

holding its Board to account for the

delivery of the objects of the Institute

contained in its Royal Charter.

Council provides critique and opinion

to the Board on the overall progress

of the Institute, including monitoring

engagement with stakeholders.

Council members engage and

communicate with the Institute’s

members and ensure that their

views and interests are properly

represented and considered by the

Institute as appropriate.

In exercising its powers the Council is

bound by the Institute’s Royal Charter,

By-Laws and Member Rules and

Regulations.

Council meetingsThree to four Council meetings are

scheduled throughout the year and

Council members are required to

ensure that they allocate sufficient time

to discharge their duties effectively.

Council has met more frequently during

the past few months due to challenges

imposed on the business with the

Covid-19 outbreak. Council meetings

take place on different dates to Board

meetings. Therefore, Board members,

including the Institute Chair, are invited

to provide updates or discuss specific

matters at Council meetings.

Council has adopted a number of

mechanisms in order to enable them

to discharge their responsibility in

holding the Board to account.

Council’s ability to focus on and deliver

its constitutional purpose has been

enhanced during the past year through

the restructuring of agendas and

improving the relevance of paperwork

and contextual information, plus a

means of reporting back thus closing

loops on previous discussions.

The conduct of meetings has been

further improved so as to engender

a much more open and transparent

dialogue between the Board and

Council, or their representatives either

at, or between, meetings where issues

are raised and addressed constructively.

In this regard, a better interaction

with the Board around strategic

priorities, with particular emphasis

on the membership proposition and

engagement, has been essential.

Council is not simply a receiver of

information but also has the ability to

comment, inform and, if appropriate,

influence on behalf of the membership,

strategic choices. Council has a reserved

section on the Agenda for “items to

be recommended for consideration

by the Board”, these items then being

presented back to the Board.

At least one Council meeting is held on

the same day as the Board during the

year, and opportunities are provided

for Board and Council to interact

socially outside of the meeting room.

To further facilitate the Council’s ability

to inform, advise and communicate

with the Board an annual ‘Strategy Day’

between the two bodies is scheduled,

the first of which took place in

June 2019.

The Council agenda is set by the

SICM, in conjunction with the Institute

Secretary. Each scheduled meeting

includes a Chair of the Institute Report,

Director General Report, Financial

Report and various updates on the

activities considered by the Board

together with governance matters.

IoD Council

Ceinwen Jean Church MBEChair of Council and SICM

24 www.iod.com

Elected Council Members

Regional Council Members

Chair of Council and SICM

> Ceinwen Jean Church MBE

Members

> Brian Hall

> Roger Marsh OBE

> Aidan O’Carroll

> David Sales

> Emma Sheldon MBE

> Garry Smith

> Nick Sturge

> Paul Terrington

New Members

> Mike Blackburn (July 2019)

> David Langworth (July 2019)

> Mehrdad Mansourpour (July 2019)

> Marie McHugh (July 2019)

> Sharon O’Connor (July 2019)

> Kim Adele Platts (July 2019)

> Alex Pratt (July 2019)

> Annneliese Reinhold (July 2019)

> Graham Robb (July 2019)

Member Departures

> Garry Smith (April 2020)

International Appointed Representative

> Rick Denton

Under 25 Directly AppointedRepresentative

> Vacant

Members

> Ellen Miller

> Sarah Soar

> David Trenchard

Member Departures

> Dame Joan Stringer (June 2019)

%

Composition of the Council1

Elected Council Members | 50%Regional Council Members | 50%

NOTE

1. As at August 2020

During 2019 particular areas considered

by the Council, and discussed with

Board members, either directly or

following receipt of reports from

Senior Management and Committee

Chairs, included:

• Financial performance of the Institute

• Strategy update

• Member Value Proposition

and Value Proposition

• Change Programme

(Decentralisation/Communities

Model)

• International strategy

• Professional Development

Care is taken to ensure that information

is circulated in good time before

Council meetings, and that papers

are presented clearly and with the

appropriate level of detail to enable

the Council to discharge its duties.

The more recent months have been

particularly challenging for the

Institute due to the Covid-19 outbreak.

There has been a lot of change

particularly introduced through the

work on the revised membership

proposition and decentralisation.

Having seen a positive turnaround

of the financial position at the

end of the financial year we are

currently considering the effect

on the Institute’s revenue due to

the current crises. Council receives

frequent updates on the financial

position and strategic direction of

the Institute and, whilst remaining

seriously concerned about the financial

health of the Institute, has welcomed

the reassurances from the Board

that progress is being made in these

areas, in particular the monitoring and

control of the costs of the Institute.

Governance of the Institute of Directors | Annual Report and Accounts 2019

Council has also received detailed

updates on the progress of the Board’s

Strategy to stabilise and to transform

the fortunes of the Institute through a

revised membership proposition and

decentralising operations.

As a Council it is intended that

ongoing work to review the timely

exchange of communication between

the Board and the Council together

with planning strategic discussion days

will further strengthen the relationship

with, and oversight of, the Board.

25www.iod.com

IoD Board

The Board’s responsibility for leading

the Institute and overseeing the

governance of the organisation

continues to be supported by a

robust structure which allows for

constructive debate and challenge

by its members. This approach

enables the Directors to make

effective decisions, at the right time

and based on the right information.

Leadership As at 31st of August 2020 the Board

comprises the Interim Chair, five

other independent Non-Executive

Directors and one Executive Director.

The Institute’s rigorous and transparent

procedures for appointing new Directors

are led by the Nomination Committee.

The composition of the Board is

fundamental to its success in providing

strong and effective leadership.

Non-Executive Directors are appointed

for specified terms, usually of three

years with an option to stand for a

reappointment for a second term of

three years. The Nomination Committee

is responsible for reviewing the

composition of the Board and assessing

whether the balance of skills, experience,

knowledge and diversity is appropriate

to enable them to operate effectively.

Role of the Board The Board has reserved key decisions

and matters for its own approval,

including its core responsibilities of

setting the Institute’s strategic direction,

overseeing the delivery of the agreed

strategy, managing risk and establishing

the culture, values and standards of

the Institute as a whole. Matters below

the financial limit set by the Board are

delegated to the Management Team.

The Board culture is one of openness

and constructive debate; the Interim

Chair has a continued dialogue with

individual Directors outside formal

Board meetings to allow for open, two-

way discussion about the effectiveness

of the Board, its Committees and its

members. The Interim Chair is therefore

able to remain mindful of the views

of the individual Directors.

Annual Report and Accounts 2019 | Governance of the Institute of Directors

Division of responsibilities There is a clear written division of

responsibilities between the Interim

Chair (who is responsible for the

leadership and effectiveness of the

Board) and the Director General

(who is responsible for managing the

Institute’s business). The Board has

delegated authority for the day-to-day

management of the business to the

Director General, with specific areas

of the business being managed by the

other members of the Management

Team. The Management Team members

are involved in, or aware of, all major

activities and are therefore extremely

well placed to ensure that any decisions

align with the Institute’s agreed strategy.

Board meetings The Board agenda is set by the Interim

Chair, in conjunction with the Director

General and Institute Secretary.

Each scheduled meeting includes

a Director General Report delivered

by the Director General and a Finance

Report as well as regular updates

on the activities of various standing

Committees. Discussions also take

place on strategic proposals, legal

and governance matters.

Conflicts of interestThe Directors are required to avoid

a situation in which he or she has,

or can have, a direct or indirect

conflict with the interests of the

Institute. The Institute has established

a procedure whereby the Directors

are required to notify the Interim

Chair and the Institute Secretary of

all new outside interests and actual

or perceived conflicts of interest

that may affect them in their roles

as Directors of the IoD.

Interim Chair

> John Watson

Senior Independent Director

> Alexander Simpson

Members

> Deborah Davis

> Dr Suzy Walton

New Members

> Femi Bamisaiye (February 2019)

> Amaechi Nsofor (February 2019)

Member Departures

> Kirsty Lloyd-Jukes (March 2020)

> Charlotte Valeur (August 2020)

Board Non-Executives

New Members

> Jonathan Geldart (November 2019)

Member Departures

> Stephen Martin (January 2019)

> Louise Gulliver (May 2019)

> Edwin Morgan (October 2019)

> Anna Daroy (November 2019)

> Jim Jordan (July 2020)

Board Executive Directors

26 www.iod.com

Nomination Committee

Role and responsibilitiesThe Committee ensures integrity in

all IoD office holder appointments

by setting the overall appointment

principles and processes, carrying

out Board, Director General and

Council appointment processes and

by ensuring ongoing succession

planning. The Committee is a joint

Committee of the Board and Council.

The Committee’s principal

responsibilities remain:

• To approve the appointment

principles for all IoD office holders

and the processes by which the

principles will be delivered

• To ensure that the appointment

of all Board and Council members

delivers a balance of skills,

knowledge, experience,

diversity and a geographical

spread of members

• To annually review the effectiveness

of governance across the Institute

and to make recommendations in

regard to the structure, size and

composition of the Board and

Council (effectiveness reviews

are carried out by Board and

Council separately)

Board and Council membershipThe Committee regularly reviews the

structure, size and composition of the

Board and Council in order to ensure

it is made up of the right people with

the requisite skills and experience,

including diversity of thought and

approach, who can provide strong and

effective leadership to the business

and support delivery of the Institutes’

strategy and Charter Objects.

Succession planning The Committee is responsible for

reviewing the succession plans for the

Board and Council. The succession

plans for the Executive Directors are

prepared on immediate, medium

and long term basis while those for

Non-Executive Directors and Council

Members reflect the need to regularly

refresh the Board and Council. Such

plans take account of the tenure of

individual members. The Director

General, with the support of the Director

People and Culture, is responsible

for developing succession plans for

executives and senior management.

DiversityThe Committee, the Board and

Council continue to pay full regard

to the benefits of diversity, including

gender diversity, both when searching

for candidates for Board and Council

appointments and when the Institute

is searching for candidates for other

appointments. The Institute currently

has eight female Council members.

This represents 36% female Council

membership as at August 2020

(2018: 37%).

Governance of the Institute of Directors | Annual Report and Accounts 2019

27www.iod.com

Annual Report and Accounts 2019 | Governance of the Institute of Directors

Chair

> Ceinwen Jean Church MBE

Members

> Brian Hall

> Sarah Soar

> Nick Sturge

> Dr Suzy Walton

> John Watson

Member Departures

> Dame Joan Stringer (June 2019)

> Kirsty Lloyd-Jukes (March 2020)

> Charlotte Valeur (August 2020)

Appointment process for Board DirectorsIn the past year, the Committee

undertook a process to identify,

select and make recommendations

to the Board and Council in relation

to the appointment of a new

Director General of the Institute.

This process is set out below:

Focus for coming yearHaving overseen changes to

membership of the Board over the

last 12 months, the Committee is now

focusing its attention for the coming

months on undertaking a structured

review of the succession plans for

Council and conducting a recruitment

process for a new Chair of the Institute

as well as two Non-Executive Directors.

Search process

Under the direction of the Committee, Odgers Berndtson,

external search consultancy, was engaged to facilitate the

search process.

1

Review

Details of preferred candidates were presented to, and considered

by the Committee. Shortlisted candidates were invited to

interview by the Committee and Board and Council members

as appropriate.

2

Recruitment

The Committee considered the feedback from interviews and

made recommendations to the Board and Council as to the

appointment of Jonathan Geldart as Director General of the

Institute. The appointment was formally announced following

approval by the Council.

3

28 www.iod.com

Audit and Risk Committee (ARC)

The Audit and Risk Committee

(ARC) continues to play a key role

in overseeing the integrity of the

Institute’s financial statements

including the Annual Report and

Accounts as well as ensuring that a

sound system of internal control and

risk management is in place.

John Watson is the Chair of ARC, the

Committee continues to be composed

mainly of independent Non-Executive

Directors and Council members

with sufficient financial experience,

commercial acumen and sector

knowledge to fulfil their responsibilities.

Members of the senior management

team, including the Chief Financial

Officer, Institute Secretary, and

representatives of the external auditors

continued to attend Committee

meetings. In addition the Director

General and other key employees are

invited to attend part, or all, of specific

Committee meetings. The Committee

meets privately with external auditors

and continues to be satisfied that

neither is being unduly influenced

by management. The Committee

Chair additionally holds regular

meetings with the Director General,

Chief Financial Officer and other

members of management to obtain

a good understanding of key issues

affecting the Institute and is thereby

able to identify those matters which

require meaningful discussion at

Committee meetings.

Sub-committees of the Board

External Audit The Committee is responsible for

overseeing the relationship with the

external auditor and for considering their

terms of engagement, remuneration,

effectiveness, independence and

continued objectivity. The Committee

annually reviews the audit requirements

of the Institute, for the business and in

the context of the external environment,

placing great importance on ensuring

a high quality, effective External

Audit process.

Risk management and Internal Control In 2019 The Committee continued

its focus on Risk Management and

Internal Control. In February 2020

the external review of internal audit

and controls was concluded and the

recommendations were presented to

the Committee. The review ensured

that an independent and objective

assurance advice was provided,

designed to recommend where needed

improvements of the effectiveness

of the governance, risk management

and internal controls framework in

mitigating the key risks of the Institute.

Following the review the Committee

recommended the outsourcing of the

finance function. A tender process was

initiated in Q2 selecting Equiom Group

as a preferred partner. The outsourcing

was completed in August 2020,

with the CFO exiting the organisation

on completion.

The Committee is overseeing the

progress on the work of the Management

Team on the recommendations for

the strengthening of the control

environment and improvement of

the reporting for branches.

The Committee has made

recommendations on cash flow

forecasting which has been further

strengthened during the COVID

lock down and the development of

stress testing scenarios with included

assumptions of timings of temporary

and permanent cost savings. The cash

flow forecasts, including a detailed 90

day look forward and monthly forecast

have been circulated for review on

a weekly basis by the Board since

approximately March 2020.

Role and Responsibilities

Financial Reporting – Monitoring the integrity of the Institute’s financial

statements and considering significant financial reporting issues,

judgements and estimates.

External Audit - Oversight and remuneration of the external auditor,

assessing effectiveness and making recommendations to the Board

on the appointment of the external auditor.

Internal Audit and Controls – Monitoring and reviewing the adequacy

and effectiveness of the internal financial controls and risk management

and approving the statements to be included in the annual report

concerning internal control and risk management

Risk Management - Reviewing the system of internal control and

risk management

Governance of the Institute of Directors | Annual Report and Accounts 2019

29www.iod.com

Annual Report and Accounts 2019 | Governance of the Institute of Directors

Audit and Risk

Chair

> John Watson

Members

> Aidan O’Carroll

> Amaechi Nsofor

> Ellen Miller

> David Trenchard

> Dr Suzy Walton

Member Departures

> Andrew Rinker (July 2019)

Remuneration Committee

The Remuneration Committee has

delegated responsibility for designing

and determining remuneration

for the Director General, Executive

Directors and the next level of

senior management.

During the past year the Committee

continued to be chaired by Deborah

Davis. The Committee has commenced

a full review of the Institute’s

remuneration and incentives policy.

The review includes matters such as

any pay principles applied across the

organisation, base pay, benefits, and all

incentives and aspects of financial and

non-financial reward. The outcome of

the review is due to be considered by

the Committee in November this year.

The Remuneration Committee reviews

employee remuneration and related

policies. The purpose of this review

is to ensure the reward, incentives and

conditions available to the Institute’s

employees are taken into account

when deciding the pay of executive

directors and senior management.

This enables the Remuneration

Committee to feedback to the Board

on employee reward, incentives and

conditions, and support the latter’s

monitoring of whether the Institute’s

policies and practices support

culture and strategy.

Remuneration Committee

Chair

> Deborah Davis

Members

> Femi Bamisaiye

> Dr Suzy Walton

Member Departures

> Kirsty Lloyd-Jukes (March 2020)

> Charlotte Valeur (August 2020)

The Board has delegated responsibility

for overseeing the effectiveness of the

Institute’s risk management and internal

control systems to the Committee.

During the past year the risk register

has been reviewed and a new method

and risk framework was delivered in

order to ensure a more comprehensive

approach to risk is taken across the

organisation in a consistent manner

of risk identification and assessment.

A specific method suitable for small

and medium sized businesses and

specifically relevant to Not-for-Profit

organisations was considered as the

most appropriate for the IoD.

There are risks created from the

automated interfacing of the (2016)

installation of the CRM systems to

financial ledgers. These risks include

completeness, accuracy and existence

of financial postings. To compensate,

the ARC has requested extra substantive

testing be undertaken during the external

audit process and a long term plan

developed to eliminate this specific risk.

The Institute’s whistleblowing

arrangements, which enable all staff,

including temporary and agency staff,

to report any suspected wrongdoing,

remained unchanged during the

year. These arrangements, which are

monitored by the HR Director and

General Counsel, include an independent

and confidential whistleblowing service

provided by a third party.

During the rest of the year in 2020,

the Committee will continue to focus

on the processes by which the Board

identifies, assesses, monitors, manages

and mitigates risk particularly in light

of the current financial position of the

Institute due to the Covid-19 outbreak

and uncertainty arising from the UK’s

decision to leave the EU as well as

a continued membership decline.

The Committee will also continue to

monitor key risk areas for the business,

particularly, but not limited to General

Data Privacy Regulation compliance,

cyber security and Health and Safety.

Focus for the coming yearIn 2020, the Committee will continue

to focus on the design of remuneration

policies, structures and schemes which

incorporate suitable links between

remuneration and strategy

30 www.iod.com

Accreditation and Standards Committee (ASC)

The Accreditation and Standards

Committee is chaired by Dr Suzy

Walton (non-executive director)

and members of the committee are

appointed by the board. The ASC

sets the educational competencies

and standards for directors and

boards, oversees the standards for

external accreditation providers and

maintains and protects the integrity

of the professional standards for

candidates for the principal professional

assessments conducted by and under

the auspices of the Institute. The ASC

met two times during 2019.

The ASC oversees the work of the

Assessment Committee, ultimately

responsible for the overall quality

assurance of the examinations and

assessments and supporting processes.

The Committee’s main

responsibilities remain:

• To approve the competency

framework, accredited learning

outcomes and assessment criteria.

• To approve code of conduct and

CPD requirements for professional

competency of Chartered Directors.

• To ensure the safeguarding of the

IoD’s powers to award by adherence

to the accreditation principles and

our Policies and Procedures and

to escalate any issue to Board for

resolution where integrity is not

being maintained.

Accreditation and Standards

Chair

> Dr Suzy Walton

Members

> Giorgio Bendoni

> Suzy Brain England OBE

> James Gambrell

> Carmel McKinney

> Robert Smith

> John Warden

Membership Committee

Recent changes in the leadership

of IoD membership, and a more

integrated approach to professional

development and membership,

has presented a good opportunity

to review the structure of the

Membership Committee, to ensure

it continues to deliver value to

members and the IoD executive alike.

The Committee is due to reconvene

with a refreshed membership in

due course.

Institute SecretaryThe Institute Secretary ensures the

highest standards of governance and

compliance with legal requirements and

best practice. This includes providing

support and advice to all Board, Council

and Committee members and acting

as the conduit for all communication

and engagement with them.

The role contributes to achieving the

aims of the IoD by advising on and

ensuring compliance with the laws and

good governance practices relating to

the workings of the organisation, and

with the IoD’s Constitution.

> Kristina Lewis

Institute Secretary

Governance of the Institute of Directors | Annual Report and Accounts 2019

31www.iod.com

Annual Report and Accounts 2019 | Statement of Board Responsibilities

Statement of Board Responsibilities

In preparing the financial statements,

the Board is required to:

• select suitable accounting policies

and apply them consistently

• make informed judgments and

estimates that are reasonable

and prudent

• state whether applicable United

Kingdom accounting standards

have been followed, subject to

any material departures disclosed

and explained in the financial

statements

• prepare the financial statements on

the going concern basis unless it is

inappropriate to presume that the

institute will continue in operation

The Board is responsible for keeping

adequate accounting records that

disclose with reasonable accuracy at

any time the financial position of the

Institute. The Board is also responsible

for safeguarding the assets of the

Institute and taking reasonable

steps to ensure the prevention and

detection of fraud and any other

irregularities.

Each Board member confirms that:

• so far as they are aware, there is no

relevant audit information of which

the Institute’s auditor is unaware

• they have taken all necessary steps

to ensure that they are aware of

any relevant audit information

and to establish that the Institute’s

auditor is aware of the information

The Board is responsible for the

maintenance and integrity of the

financial information included on

the Institute’s website. Practice in

the United Kingdom governing the

preparation and dissemination of

financial statements may differ from

practice in other jurisdictions.

As a body corporate established by Royal Charter, the Institute is obliged to comply with its constitution (comprising charter, by-laws and regulations). The constitution requires that the Board lays before the members, in a general meeting, financial statements for the year which give a true and fair view of the state of affairs of the Institute. The financial statements must include the surplus or deficit of the Institute for that period. The Board is also required to approve the financial statements only if they are satisfied that they give a true and fair view of the state of affairs of the Institute and of the surplus or deficit for that period.

32 www.iod.com

Financial Review | Annual Report and Accounts 2019

Financial Review

Overall Results

This year delivered a very pleasing

result given the prior year’s

performance, producing a surplus of

£752k, a turnaround on prior year of

nearly £5m. Revenue for the year was

up nearly 3% (£786k), however, during

the period the Institute received £747k

of grant income from the Department

for Business, Energy & Industrial

Strategy (‘BEIS’) Business Readiness

Fund to deliver various activities to

both members and non-members for

the purpose of giving them advice

around navigating Brexit; so like for

like revenue was flat. Total costs have

fallen by nearly 13% (£4.1m), and it is

the reduction in costs that delivered

the surplus in the period.

At 31st December 2019 the Institute's

accumulated funds stood at £4,973k

compared with £4,221k a year earlier,

an increase of £752k which reflects

the surplus for the year.

At the end of 2019, the balance of

cash and cash equivalents, including

those held as investments, increased

by £496k to £7,948k. Further details

of cash movements during the year

can be found in the Consolidated

Statement of Cash Flows.

Income

Membership Income Membership income has continued

to fall, with a reduction of £714k to

£9,536k in 2019 (down 7%); The 2018

reduction was 9%. The reduction

in income in 2019 was due to a fall

in overall membership numbers by

about 8.7%, though we continued to

witness growth during the same period

within our IoD Advance membership

proposition. Our core membership

offering continued to decline through

2019, with overall numbers down

about 9% (2018: decrease 12%).

Membership contribution decreased by

£339k to £8,001k in 2019 (down 4%),

as shown in the Analysis of Operating

Surplus by Activities disclosure note

to the financial statements (note 2).

Revenue Earning Activities Income from revenue earning activities

increased by £1,705k (12%) to £16,243k

with sales increases of over £100k

in Hospitality, Professional (Director)

Development, Director Events, and sales

decreases of over £100k in Director

Publications and Business Centre.

Professional (Director) Development

remained as the area with the highest

sales at £8,873k which was 9% up on

the prior year (2018: 12%). In the last

two years revenue from Professional

(Director) Development training has

increased by 23%.

Expenditure

Total expenditure of £26,561k was

£4,127k lower than the prior year,

and is analysed across Membership,

Revenue Earning Activities, Member

Services, Operating and Overhead

Costs and Representation and

Directorate, as shown in Analysis

of Operating Surplus by Activities.

Employment CostsEmployment costs are by far the

biggest costs incurred by the IoD.

In 2019, employment costs decreased

by £2,693k (23%) to £9,238k.

Direct and Indirect CostsThere was a decrease in direct and

indirect costs in the year as they fell

£1,310k (9%) to £13,167k. The main

increase was approximately £689k

in the delivery of the Brexit readiness

work funded through the BEIS grant

income. Costs fell across Membership

by £375k (20%), Professional (Director)

Development services, where we have

also seen an uplift in income alongside

a reduction in costs by £695k (15%),

£481k (53%) in Director Events that

was primarily related to the cost

associated with running the Open

House event in 2018, £385k (11.1%)

in Regional Services, £258k (75%) in

Member Benefits following the removal

of our airport lounges agreements,

£852k (20%) in IT, iod.com, Marketing

and New Initiatives relating to savings

in our marketing spend following a

large increase in the prior year, and

£966k (22%) in Central Administration

relating to decreased employment

and recruitment costs incurred during

the year.

33www.iod.com

Within indirect costs, during 2019

there was £900k of spend across

transformation programmes.

The programmes worked on have

resulted in a reduction in headcount

of 22%, with salary savings in the

period of £2.3m. In addition, a more

seamless and faster online joining

and renewal process for members has

been created, alongside a continuing

shift towards a new membership

proposition, underpinned by a

‘Member First’ philosophy.

The work that was undertaken through

the transformation programmes, has

helped to reduce both employment

and direct and indirect costs,

helping the organisation to deliver the

turnaround and a surplus of £752k.

Property ExpenditureOngoing property expenditure was

£110k higher in 2019, at £2,812k, primarily

due to an increase in business rates.

Capital ExpenditureCapital expenditure of £523k was

incurred during the year which

was £62k higher than in 2018.

Creditor Payment PolicyThe Institute was one of the founding

members of the Prompt Payment

Code and is a supporter and signatory

of the scheme:

www.promptpaymentcode.org.uk

For all trade creditors, it is the

Institute’s policy to agree terms of

payment with suppliers, at the start

of business, and to ensure that they

are paid in accordance with the

agreed contractual and other legal

obligations. The trade creditors

balance at 31st December 2019

represented an average payment

period of approximately 35 days

(2018: 30), based on the ratio of

the Institute’s trade creditors to the

amounts invoiced during the year.

DonationsThere were charitable donations made

during the year of £3,600 (2018: £500).

2019 also saw no political donations

(2018: £nil).

Going ConcernIn considering whether or not the

Institute should prepare the financial

statements on a going concern basis,

the Board has examined all available

information, including the effects of

the 2020 outbreak of Covid-19 on

the Institute’s operations. The Board

has reviewed the latest financial

information available, as well as

the trading and cash flow forecasts

(that have been stress tested);

including the assumptions that

underpin these. In addition, the Board

has also considered the longer term

plans of the Institute.

After reviewing the information

available, the Board considers that

the Institute has adequate resources

to continue in operational existence

and, in particular, that there are no

material uncertainties casting doubt

over the Institute's ability to continue

operating for at least a twelve month

period following the approval of this

report and accounts. (Further details

are provided within the accounting

policies which accompany the financial

statements). For this reason, the going

concern basis continues to be adopted

in preparing the financial statements.

Annual Report and Accounts 2019 | Financial Review

34 www.iod.com

Independent Auditor’s Report | Annual Report and Accounts 2019

Independent Auditor’s Report

OpinionWe have audited the non-statutory

consolidated financial statements

(“the financial statements”) of the

Institute of Directors (“the Institute”)

for the year ended 31st December 2019,

which comprise the consolidated

statement of income and retained

earnings, the consolidated balance

sheet, consolidated statement of

cash flows, and the related notes to

the financial statements, including a

summary of significant accounting

policies. The financial reporting

framework that has been applied in

their preparation is applicable law and

United Kingdom Accounting Standards,

including Financial Reporting Standard

102 ‘The Financial Reporting Standard

applicable in the UK and Republic of

Ireland’ (United Kingdom Generally

Accepted Accounting Practice).

In our opinion, the financial statements:

• give a true and fair view of the

state of the Institute’s affairs as

at 31st December 2019 and of its

income and expenditure for the

year then ended; and

• have been properly prepared in

accordance with United Kingdom

Generally Accepted Accounting

Practice.

Basis for opinionWe conducted our audit in accordance

with International Standards on Auditing

(UK) (ISAs (UK)) and applicable

law. Our responsibilities under those

standards are further described in the

Auditor’s responsibilities for the audit

of the financial statements section of

our report. We are independent of the

Institute in accordance with the ethical

requirements that are relevant to our

audit of the financial statements in the

United Kingdom, including the Financial

Reporting Council’s Ethical Standard,

and we have fulfilled our other ethical

responsibilities in accordance with

these requirements. We believe that

the audit evidence we have obtained

is sufficient and appropriate to provide

a basis for our opinion

Emphasis of matter – effects of Covid-19We draw attention to the accounting

policies referenced on pages 41 to 43.

In particular, we draw attention to the

matters included under the heading

"Assessment of Going Concern" and

the Board's conclusion that there is no

material uncertainty related to going

concern notwithstanding the impact

of the ongoing social and economic

disruption relating to the pandemic

on the Institutes's operations.

Conclusions relating to going concernWe have nothing to report in respect

of the following matters in relation

to which the ISAs (UK) require us to

report to you where:

• the Board’s use of the going

concern basis of accounting in

the preparation of the financial

statements is not appropriate; or

• the Board has not disclosed in the

financial statements any identified

material uncertainties that may cast

significant doubt about the Institute’s

ability to continue to adopt the going

concern basis of accounting for a

period of at least twelve months

from the date when the financial

statements are authorised for issue.

Other informationThe Board is responsible for the other

information. The other information

comprises the information included

in the annual report and financial

statements, other than the financial

statements and our auditor’s report

thereon. Our opinion on the financial

statements does not cover the other

information and, except to the extent

otherwise explicitly stated in our

report, we do not express any form

of assurance conclusion thereon.

In connection with our audit of the

financial statements, our responsibility

is to read the other information and,

in doing so, consider whether the

other information is materially

inconsistent with the financial

statements or our knowledge

obtained in the audit or otherwise

appears to be materially misstated.

If we identify such material

inconsistencies or apparent material

misstatements, we are required

to determine whether there is a

material misstatement in the financial

statements or a material misstatement

of the other information. If, based

on the work we have performed,

we conclude that there is a material

misstatement of this other information,

we are required to report that fact.

We have nothing to report in this regard.

35www.iod.com

Annual Report and Accounts 2019 | Independent Auditor’s Report

Opinion on other mattersIn our opinion, based on the work

undertaken in the course of the audit

the information given in the annual

report for the financial year for which

the financial statements are prepared is

consistent with the financial statements.

Matters on which we are required to report by exceptionIn the light of the knowledge and

understanding of the Institute and its

environment obtained in the course of

the audit, we have not identified material

misstatements in the annual report.

We have nothing to report in respect

of the following matters which we

are required to report to you if,

in our opinion:

• adequate accounting records have

not been kept, or returns adequate

for our audit have not been received

from branches not visited by us; or

• the financial statements are not

in agreement with the accounting

records and returns; or

• certain disclosures of directors’

remuneration are not made; or

• we have not received all the

information and explanations

we require for our audit.

Responsibilities of the BoardAs explained more fully in the

Statement of Board’s Responsibilities

within the annual report, the Board

is responsible for the preparation of

the financial statements and for being

satisfied that they give a true and fair

view, and for such internal control as

the Board determine is necessary to

enable the preparation of financial

statements that are free from material

misstatement, whether due to fraud

or error.

In preparing the financial statements,

the Board are responsible for assessing

the Institute’s ability to continue

as a going concern, disclosing, as

applicable, matters related to going

concern and using the going concern

basis of accounting unless the Board

either intend to liquidate the Institute

or to cease operations, or have no

realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statementsOur objectives are to obtain reasonable

assurance about whether the financial

statements as a whole are free from

material misstatement, whether due to

fraud or error, and to issue an Auditor’s

report that includes our opinion.

Reasonable assurance is a high level

of assurance, but is not a guarantee

that an audit conducted in accordance

with ISAs (UK) will always detect a

material misstatement when it exists.

Misstatements can arise from fraud

or error and are considered material

if, individually or in the aggregate,

they could reasonably be expected

to influence the economic decisions

of users taken on the basis of these

financial statements.

A further description of our

responsibilities for the audit of the

financial statements is located on the

Financial Reporting Council’s website at

www.frc.org.uk/auditorsresponsibilities.

This description forms part of our

Auditor’s report.

Use of our reportThese financial statements were

prepared solely for the purposes of

management of the Institute’s affairs,

and have not been prepared under

section 394 of the Companies Act

2006 and are not statutory financial

statements. Our audit work has been

undertaken so that we might state to

the Institute’s members those matters

we are required to state to them in

an auditor’s report and for no other

purpose. To the fullest extent permitted

by law, we do not accept or assume

responsibility to anyone other than the

Institute and the Institute’s members as a

body, for our audit work, for this report,

or for the opinions we have formed.

Buzzacott LLP

Chartered Accountants

130 Wood Street

London

EC2V 6DL

16th September 2020

36 www.iod.com

Consolidated Statement of Income and Retained Earnings – for the year ended 31st December 2019 |

Annual Report and Accounts 2019

Notes 2019 2018

2. INCOME £’000 £’000

Membership income 9,536 10,250

Revenue earning activities 16,243 14,538

Other trading income 1,402 1,593

Interest receivable 76 90

27,257 26,471

2. EXPENDITURE

3. Employment costs 9,238 11,931

Direct and indirect costs 13,167 14,477

Property expenditure 2,812 2,702

Loss on disposal of fixed assets - 2

Depreciation and amortisation 1,344 1,576

26,561 30,688

2. Surplus / (deficit) before taxation 696 (4,217)

5. Taxation - -

4. Surplus / (deficit) after taxation 696 (4,217)

OTHER COMPREHENSIVE INCOME

15. Closed defined benefit pension scheme adjustment 56 234

Total comprehensive profit / (loss) 752 (3,983)

RECONCILIATION OF ACCUMULATED FUNDS

Accumulated funds at 1st January 4,221 8,204

Accumulated funds at 31st December 4,973 4,221

All operations in the year and in the comparative year were continuing.

37www.iod.com

Annual Report and Accounts 2019 | Consolidated Balance Sheet – at 31st December 2019

Notes 2019 2018

FIXED ASSETS £’000 £’000

6. Tangible fixed assets 3,063 3,751

7. Intangible fixed assets 490 624

3,553 4,375

CURRENT ASSETS

8. Debtors 3,341 2,740

9. Cash at bank and in hand 7,948 7,452

11,289 10,192

CURRENT LIABILITIES

10. Creditors – amounts falling due within one year (4,590) (4,336)

11. Deferred membership income (3,983) (4,506)

Total current liabilities (8,573) (8,842)

Net currents assets 2,716 1,350

Total assets less current liabilities 6,269 5,725

38 www.iod.com

Consolidated Balance Sheet – at 31st December 2019 | Annual Report and Accounts 2019

16th September 2020 16th September 2020

Notes 2019 2018

NON CURRENT LIABILITIES £’000 £’000

11. Creditors – amounts falling due after more than one year (1,296) (1,504)

Net assets 4,973 4,221

15. Pension liability - -

Net assets including pension liability 4,973 4,221

Represented by:

Accumulated funds at 31st December 4,973 4,221

The financial statements on pages 36 to 54 were approved by the Board on 16th September 2020 and were signed on its behalf by:

John WatsonInterim Chair of the Institute

Jonathan GeldartDirector General

39www.iod.com

Annual Report and Accounts 2019 | Consolidated Statement of Cash Flows – at 31st December 2019

Notes 2019 2018

£’000 £’000

Net cash used in operating activities (note A) 942 (2,289)

Cash flows used in investing activities

Interest received 76 90

Purchase of tangible and intangible fixed assets (522) (461)

Net cash used in investing activities (446) (371)

Change in cash and cash equivalents in the year 496 (2,660)

Cash and cash equivalents at 1st January 7,452 10,112

Cash and cash equivalents at 31st December (note B) 7,948 7,452

A Reconciliation of net deficit for the year

to net cash flows from operating activities

Surplus / (deficit) for the year 696 (4,217)

Adjustments for:

Taxation charge - -

Tax paid - -

Depreciation on tangible and intangible fixed assets 1,344 1,576

Gain on disposal of fixed assets - 2

Interest receivable and similar income (76) (90)

Decrease / (increase) in debtors (601) 680

Increase in trade creditors 146 65

Decrease / (increase) in other creditors, accruals and provisions (292) 139

Decrease in multiple years’ advance membership over one year (208) (196)

Decrease in deferred membership income (523) (394)

Increase / (decrease) in other deferred income 400 (88)

Difference between pension charge and cash contributions 56 234

Net cash provided by (used in) operating activities 942 (2,289)

B Analysis of cash and cash equivalents

Cash at bank and in hand 7,948 7,452

40 www.iod.com

The Institute of Directors (the “Institute”)

is not subject to the Companies

Act 2006. However, these financial

statements have been prepared in

accordance with applicable Accounting

Standards in the United Kingdom and

incorporate the disclosures required

by the Companies Act 2006 in respect

of directors’ emoluments for a private

limited company.

The principal accounting policies

adopted, judgements and key sources

of estimation uncertainty in the

preparation of the accounts are laid

out below.

Basis of Accounting and ConsolidationThese financial statements have

been prepared for the year to

December 2019, with comparative

information provided in respect of

the year to 31st December 2018.

The financial statements comprise

the consolidated accounts of the

Institute and the net revenue and

assets of its branches. Its wholly owned

subsidiaries, The Director Publications

Limited, IoD Management Limited,

iod.com Limited, and Tomorrow’s

Directors Limited, are all dormant.

Financial statements for the Institute of

Directors alone have not been presented.

The financial statements have been

prepared under the historical cost

convention with items recognised

at cost or transaction value unless

otherwise stated in the relevant

accounting policies below or the

notes to these accounts.

The financial statements have

been prepared in accordance with

the Financial Reporting Standard

applicable in the UK and Republic

of Ireland (FRS 102).

The financial statements are presented

in sterling and are rounded to the

nearest thousand pounds.

Critical Accounting Estimates and Areas of JudgementPreparation of the accounts requires

the Board and management to make

significant judgements and estimates.

The items in the financial statements

where these judgements and

estimates have been made include:

• The assessment of the Institute

as a going concern in light of the

impact of Covid-19;

• The depreciation / amortisation

charge for the year which is based

on the estimate of the useful

economic lives attributed to

the relevant assets; and

• The provisions made in respect

of bad or doubtful debts;

Assessment of Going ConcernDuring the period from 31st December

2019 to the date that the financial

statements were approved, the

coronavirus (Covid-19) outbreak

has spread worldwide and caused

extensive disruptions to businesses

as well as economic activities globally

including the UK. We have considered

the effects of the 2020 outbreak of

Covid-19 on the Institute’s operations.

As part of the Board’s consideration

of the appropriateness of adopting

the going concern basis in preparing

the financial statements, a range of

severe scenarios have been reviewed.

The assumptions modelled are based

on the estimated potential impact of

Covid-19 restrictions and regulations,

along with our proposed responses

over the course of the next 28 months

(to 31st December 2022). These include

a range of estimated impacts primarily

based on length of time various levels

of restrictions are in place and the

severity of the consequent impact of

those restrictions on our operations.

For each of our business areas we

have sensitised revenue, profit and

cash flow impact of reduced trading

activity, using membership levels

as the key driver. The scenarios are

most sensitive to the assumptions

made for Professional Development

courses and Hospitality events that

are delivered face to face, given the

restrictions in place with regards to

the maximum number of people

who can attend an event or course.

Note 1 Accounting Policies

Notes to the Financial Statements – for the year ended 31st December 2019 | Annual Report and Accounts 2019

41www.iod.com

Annual Report and Accounts 2019 | Notes to the Financial Statements – for the year ended 31st December 2019

As Professional Development courses

have now also been converted to

virtual online delivery during Covid-19,

there is less sensitivity within this area.

We have not assumed any uplift in

any area of the business, under any

level of restrictions, for the purpose

of scenario modelling.

A key judgement applied is the likely

time period of restrictions on trading

activity in face to face delivery of

courses and events, movement

of people and social distancing.

The severe scenarios include an

assumption that restrictions will

remain in place for much of 2020,

with them only starting to loosen in

the last couple of months of 2020.

The key assumption when modelling

the range of scenarios, is for

membership levels to be consistent

throughout the period modelled

at 20,000. Under each scenario,

mitigating actions are within

management control, can be initiated

as they relate to spend, and do not

impact the ability to deliver to our

members. These actions include

some that have already been started,

including the outsourcing of our

finance function, stopping the

publication of Director magazine,

reducing our headcount, and moving

to a model of delivering services

closer to our members.

In all scenarios modelled our cash

reserves are in line with the ranges set

out in our Reserves Policy, and satisfy

the Institute’s needs to be able to meet

its liabilities as they fall due.

December 2020 is the most sensitive

point as the modelling has assumed

that restrictions on face to face delivery

of courses and events remains in place

until 2021.

Under all of the scenarios modelled,

after taking mitigating actions as

required, our forecasts did not indicate

any possible or probable exhaustion

of cash reserves. However, to get

to this position there is a need to

remove a significant amount of the

current cost base, given the reduced

trading as a direct result of Covid-19.

A reduction in the cost base will allow

the Institute to rebuild its reserves.

On the basis of these reviews,

the Board has concluded that whilst

there may be reductions in income

and reshaping of some activity,

notwithstanding this the Board does

not believe that there are material

uncertainties related to events or

conditions that may cast significant

doubt on the ability of the Institute

to continue as a going concern.

The Board is of the opinion that the

Institute will have sufficient resources

to meet its liabilities as they fall due.

Membership IncomeAnnual membership subscriptions are

recognised as income on an accruals

basis applicable to the membership

period, and part of the subscription

applicable to the following year is

carried forward as deferred income.

In the case of multiple year membership

subscriptions, an annual allocation is

included within income for the year,

the unutilised income being carried

forward to future years.

Election fees are accounted for

on a receipts basis.

Revenue Earning ActivitiesRevenue earning activities income

consists of member services that

are recognised when the service is

provided and risks and benefits have

been transferred.

Tangible Fixed Assets Tangible fixed assets are recorded

at historic cost, together with any

incidental costs of acquisition.

Depreciation is calculated on a straight

line basis over the expected useful

economic lives of the assets concerned.

The principal annual rates used for this

purpose are:

Note 1 Accounting Policies (continued)

Leasehold

improvements

10% or the

period of

the lease if

lower

Computers,

furniture & fittings

20%

Intangible AssetsThe cost of acquired computer

software licenses is capitalised.

These costs are amortised over their

expected useful lives – up to five years.

Costs incurred on development

projects relating to the design

or improvement of systems are

recognised as intangible assets

when the recognition criteria set

out in FRS 102 is met. Capitalised

development costs are amortised

from the date available for use of

the system over their expected useful

lives – not exceeding five years.

Research expenditure is recognised

as an expense as incurred.

42 www.iod.com

Notes to the Financial Statements – for the year ended 31st December 2019 | Annual Report and Accounts 2019

Cash at Bank and In HandCash at bank and in hand represents

such accounts and instruments that

are available on demand or have a

maturity of less than three months

from the date of acquisition.

DebtorsDebtors are recognised at their

settlement amount, less any provision

for non-recoverability. Prepayments

are valued at the amount prepaid.

They have been discounted to the

present value of the future cash receipt

where such discounting is material.

Foreign CurrenciesAssets and liabilities in foreign

currencies are translated into sterling

at the rates of exchange ruling at

the balance sheet date. Transactions

in foreign currencies are translated

into sterling at the rate of exchange

ruling at the date of the transaction.

Exchange differences are taken to

the statement of income and retained

earnings in arriving at the net surplus

for the year.

Creditors and ProvisionsCreditors and provisions are recognised

when there is an obligation at the

balance sheet date as a result of a past

event, it is probable that a transfer

of economic benefit will be required

in settlement, and the amount of the

settlement can be estimated reliably.

Creditors and provisions are recognised

at the amount the charity anticipates

it will pay to settle the debt. They have

been discounted to the present value

of the future cash payment where

such discounting is material.

Note 1 Accounting Policies

ExpenditureLiabilities are recognised as expenditure

as soon as there is a legal or constructive

obligation committing the institute to

make a payment to a third party, it is

probable that a transfer of economic

benefits will be required in settlement

and the amount of the obligation can

be measured reliably. All expenditure

is accounted for on an accruals basis

and excludes recoverable VAT.

Property MaintenanceUnder the terms of the various

leases held by the Institute there is

an obligation to keep the relevant

properties in a proper state of repair

together with the rentals are charged

as incurred. In addition, and where

necessary, the Institute will set aside

a provision for expenditure required

to bring this Grade 1 listed property

back to a proper state of repair at

the end of the lease. For 116 Pall Mall,

which is held under a lease expiring

in 2043, the public areas of the building

are maintained to a standard which is

consistent with their revenue earning

potential. There are no provisions as

at the balance sheet date.

Leased AssetsRentals applicable to operating leases

where substantially all of the benefits

and risks of ownership remain with the

lessor are charged to the Consolidated

Statement of Income and Retained

Earnings on a straight-line basis over

the term of the lease.

Pension SchemeThe Institute operates both a non-

contributory defined contribution

pension scheme for benefits accruing

from 1 January 1997 and a closed

defined benefit pension scheme.

Pension costs for the defined

contribution scheme are charged

to the Consolidated Statement of

Income and Retained Earnings when

they are payable to the scheme.

For the closed defined benefit pension

scheme, finance income is credited to

the Consolidated Statement of Income.

As the scheme is in surplus, the surplus

is not carried on the balance sheet in

accordance with the requirements of

FRS 102. Accordingly, a corresponding

adjustment equivalent to the finance

income is recognised within other

comprehensive income.

43www.iod.com

Annual Report and Accounts 2019 | Notes to the Financial Statements – for the year ended 31st December 2019

Notes 2019 Income

2019 Expenditure

2019 Net

2018 Net

2. ANALYSIS OF OPERATING SURPLUS / (DEFICIT) BY ACTIVITIES

£’000 £’000 £’000 £’000

Membership income 9,536 (1,535) 8,001 8,340

Revenue earning activities

Hospitality 3,330 (2,237) 1,093 929

Director publications 233 (1,081) (848) (741)

Professional (director) development 8,873 (3,979) 4,894 3,462

Office solutions 285 (105) 180 186

Business centre 1,573 (486) 1,087 1,094

Director events 501 (422) 79 (565)

Commercial (product marketing) 701 (74) 627 503

BEIS grant income 747 (689) 58 -

16,243 (9,073) 7,170 4,868

Member services

Regional services 1,377 (3,086) (1,709) (1,898)

Information and advisory services 3 (762) (759) (834)

Member benefits - (87) (87) (345)

1,380 (3,935) (2,555) (3,077)

Policy and directorate 7 (1,122) (1,115) (1,617)

Operating and overhead costs

Property costs (excluding regions) - (2,812) (2,812) (2,702)

Loss on disposal of fixed assets - - - (2)

Depreciation - (1,344) (1,344) (1,559)

IT, iod.com, marketing and new initiatives - (3,320) (3,320) (4,172)

Central Administration 15 (3,420) (3,405) (4,386)

15 (10,896) (10,881) (12,821)

Interest receivable 76 - 76 90

Surplus / (deficit) on ordinary activities before taxation 27,257 (26,561) 696 (4,217)

44 www.iod.com

Notes 2019 2018

3. EMPLOYMENT COSTS £’000 £’000

a) The average number of employees during the year was: 160 205

b) Salaries 6,501 8,440

Social security 689 918

Pension costs – see note 15 530 686

Contracted and temporary staff 449 367

Subsistence and insurance 164 198

Redundancy, termination & ex gratia payments 476 585

Recruitment and training 129 304

Motor vehicle and travel 281 343

Death benefit 0 61

Other 19 29

9,238 11,931

c) The fees paid to the Chair totalled £20,000 during the year (2018: £6,667).

d) Emoluments paid to the 4 Director Generals (2018: 1), who were the highest paid

Directors, amounted to:

£’000 £’000

- Salary 159 437

- Payment in lieu of employer pension contribution 1 10

- Contracted and temporary staff 252 -

- Bonus - 32

- Benefits 1 17

- Pension contributions 6 -

419 496

- Redundancy, termination and ex-gratia payment 288 -

707 496

During the period, between permanent Director Generals being in place, the Institute had two Interim

Director Generals; one focused on Operations and the other on External Affairs.

Included in contracted and temporary staff above is £251,519 (2018: £nil) relating to the Interim Director General,

Operations, who was compensated on a contract basis, so not paid as salary through the payroll.

Notes to the Financial Statements – for the year ended 31st December 2019 | Annual Report and Accounts 2019

45www.iod.com

Notes 2019 2018

3. EMPLOYMENT COSTS (CONTINUED) £’000 £’000

e) Executive directors’ emoluments

Emoluments paid to the 6 executive directors (2018: 3), amounted to:

- Salary 334 623

- Payment in lieu of employer pension contribution 24 31

- Contracted and temporary staff 220 -

- Bonus - 32

- Benefits 2 18

- Pension contributions 3 -

583 704

- Redundancy, termination and ex-gratia payment 397 -

980 704

Contributions are payable under money purchase pension schemes to 4 directors (2018: 2 directors)

Included in contracted and temporary staff above is £220,079 (2018: £nil) relating to the Interim Director General,

Operations, who was compensated on a contract basis, so not paid as salary through the payroll.

f) Emoluments paid to key management £’000 £’000

10 key management including the Director General and other executive directors

(2018: 7 key management)

- Salaries 573 1,028

- Contracted and temporary staff 314 -

- Bonus - 43

- Benefits 9 32

- Pension contributions 49 70

945 1,173

- Redundancy, termination and ex-gratia payment 397 -

1,342 1,173

Included in contracted and temporary staff above is £314,399 (2018: £nil) relating to the Interim Director General,

Operations, who was compensated on a contract basis, so not paid as salary through the payroll.

Also paid in the year were two ex-gratia payment totalling £397,489 (2018: £nil).

Directors' emoluments disclosures have been prepared in compliance with Companies Act requirements

for a limited company.

Annual Report and Accounts 2019 | Notes to the Financial Statements – for the year ended 31st December 2019

46 www.iod.com

Notes 2019 2018

4. SURPLUS / (DEFICIT) AFTER TAXATION £’000 £’000

This is stated after charging:

Fees in respect of services provided by the auditor:

Statutory audit 35 35

Tax advisory services - 19

35 54

5. TAXATION £’000 £’000

Current tax:

UK corporation tax - -

Tax reconciliation:

Surplus / (deficit) on ordinary activities before taxation 696 (4,217)

Multiplied by the standard rate of UK corporation tax of 19% (2018: 19%) 132 (752)

Tax effect of: Non-taxable income (1,957) (1,948)

Expenses not-deductible for tax purposes 2,160 2,521

Movement in deferred tax not recognised 335 179

- -

Corporation tax is payable only on the Institute's externally derived sources of income. The Institute's membership activities

are outside the charge to corporation tax.

No provision for deferred taxation is required (2018 – £nil).

Factors that may affect future tax charges:

Legislation has also been enacted to reduce the corporation tax to 17% from 1st April 2020.

Notes to the Financial Statements – for the year ended 31st December 2019 | Annual Report and Accounts 2019

47www.iod.com

Notes Leasehold Improvements

Furniture & Fittings

Computer Hardware

Office Equipment

Total

6. TANGIBLE FIXED ASSETS £’000 £’000 £’000 £’000 £’000

Cost:

At 1st January 2019 4,509 2,646 489 - 7,644

Additions 140 128 2 7 277

Disposals (493) (820) (261) - (1,574)

At 31st December 2019 4,156 1,954 230 7 6,347

Depreciation:

At 1st January 2019 (2,237) (1,335) (321) - (3,893)

Charge for the year (444) (445) (76) - (965)

Disposals 514 819 241 - 1,574

At 31st December 2019 (2,167) (961) (156) - (3,284)

Net book value 2019 1,989 993 74 7 3,063

Net book value 2018 2,272 1,311 168 0 3,751

Computer Software

etc.

7. INTANGIBLE FIXED ASSETS £’000

Cost:

At 1st January 2019 1,468

Additions 246

Disposals (35)

At 31st December 2019 1,679

Amortisation:

At 1st January 2019 (844)

Charge for the year (380)

Disposals 35

At 31st December 2019 (1,189)

Net book value 2019 490

Net book value 2018 624

Annual Report and Accounts 2019 | Notes to the Financial Statements – for the year ended 31st December 2019

48 www.iod.com

Notes 2019 2018

8. DEBTORS £’000 £’000

Trade debtors 2,568 2,181

Other debtors and prepayments 558 491

VAT receivable 215 68

3,341 2,740

All debtors are due within one year.

10. CREDITORS – AMOUNTS FALLING DUE WITHIN ONE YEAR £’000 £’000

Trade creditors 1,936 1,790

Deferred non membership income 1,764 1,364

Other creditors and accruals 890 1,182

4,590 4,336

9. CASH AT BANK AND IN HAND £’000 £’000

Cash at bank and in hand 7,948 7,452

Cash at bank and in hand includes £216,083 (2017: £213,223) held in overseas branches.

11. DEFERRED MEMBERSHIP INCOME £’000 £’000

Memberships expiring within one year 3,983 4,506

Memberships expiring after more than one year 1,296 1,504

5,279 6,010

Membership subscriptions received in advance include cash received for annual memberships for which benefits are

owed to members until the expiry date of their membership. It also includes cash received for lifetime subscriptions

which are released to income over a period of eighteen years.

Notes to the Financial Statements – for the year ended 31st December 2019 | Annual Report and Accounts 2019

49www.iod.com

13. CAPITAL COMMITMENTS

Capital commitments contracted but not provided for in the financial statements amount to £nil (2018: £96,000).

14. RELATED PARTY TRANSACTIONS

The remuneration payable to the Institute’s Chair and Directors are disclosed in note 3 to these accounts.

There were no other transactions with related parties during the year (2018: no other transactions).

Notes 2019 Property

2019 Other

2019 Total

12. LEASE COMMITMENTS £’000 £’000 £’000

At 31st December, the Institute has total future minimum lease

payments under non-cancellable operating leases as follows:

Within one year 458 11 469

After one, but within five years 1,657 0 1,657

After five years 5,948 0 5,948

8,063 11 8,074

2018 Property

2018 Other

2018 Total

£’000 £’000 £’000

Within one year 455 11 466

After one, but within five years 1,657 0 1,657

After five years 6,350 0 6,350

8,462 11 8,473

Annual Report and Accounts 2019 | Notes to the Financial Statements – for the year ended 31st December 2019

50 www.iod.com

At 31st December

2019

At 31st December

2018

At 31st December

2017

a) Balance sheet and notes

The major assumptions for FRS 102 purposes were:

Rate of increase in salaries n/a n/a n/a

Rate of increase to pensions in payment (Post 88 GMP) 1.9% 2.1% 2.1%

Rate of increase to pensions above GMP in deferment 2.2% 2.5% 2.5%

Discount rate 1.9% 2.5% 2.3%

RPI inflation assumption 3.2% 3.5% 3.5%

CPI inflation assumption 2.2% 2.5% 2.5%

No contributions were paid to the scheme during the year (2018: Nil). The amounts charged and credited to the

consolidated statement of income and retained earnings are detailed in sections b and c below; the total charge

for 2019 was £56,000 (2017: £234,000).

No lump sum contributions are due in the coming year in respect of the scheme (2019: Nil).

Notes

15. PENSION COSTS

The Institute of Directors operates both a non-contributory defined contribution pension scheme for benefits

accruing from 1st January 1997 and a closed defined benefit pension scheme. The assets of both schemes are held

separately from those of the Institute in independently administered funds. Further details of the cost of each

scheme are provided below.

Defined contribution scheme

Contributions are charged to the Consolidated Statement of Income in accordance with the rules of the scheme.

The charge associated with this scheme was £530,000 (2018: £686,000), representing the employer contributions

payable during the year.

Defined benefit scheme

With effect from 1st January 1997, this scheme became closed to new entrants and ceased to provide any further

benefit accrual to the then active members who became entitled to deferred pensions, subject to statutory

revaluation as from that date.

The last full funding valuation was carried out as at 1st January 2018. A qualified independent actuary carried out

calculations as at 31st December 2018 to obtain the amounts reported under FRS 102.

Notes to the Financial Statements – for the year ended 31st December 2019 | Annual Report and Accounts 2019

51www.iod.com

Notes Discount rate at 31st December

2019

Value at 31st

December 2019

Discount rate at 31st December

2018

Value at 31st

December 2018

Discount rate at 31st December

2017

Value at 31st

December 2017

15. PENSION COSTS (CONTINUED)

Defined benefit scheme (continued)

a) Balance sheet and notes

(continued)

£’000 £’000 £’000

Under FRS 102 the long term expected

rate of return is replaced by the discount

rate. The assets in the scheme and the

expected rates of return were:

Equities 1.9% 3,262 2.5% 2,819 2.3% 3,264

Bonds 1.9% 4,773 2.5% 4,451 2.3% 4,738

Cash 1.9% 34 2.5% 16 2.3% 54

Total market value of assets 1.9% 8,069 2.3% 7,286 2.3% 8,056

Present value of scheme liabilities 6,858 6,578 6,762

Surplus in the scheme 1,211 708 1,294

Deemed irrecoverable (1,211) (708) (1,294)

Balance sheet valuation 0 0 0

At 31st December

2019

At 31st December

2018

Reconciliation of present value of scheme liabilities: £’000 £’000

Opening defined benefit obligation (6,578) (6,762)

Past service cost 0 (170)

Administration costs (73) (92)

Interest cost (160) (152)

Remeasurement: actuarial (loss) / gain (417) 189

Benefits paid and expenses 370 409

Closing defined benefit obligation (6,858) (6,578)

Annual Report and Accounts 2019 | Notes to the Financial Statements – for the year ended 31st December 2019

52 www.iod.com

Notes At 31st December

2019

At 31st December

2018

15. PENSION COSTS (CONTINUED)

Defined benefit scheme (continued)

Reconciliation of fair value of scheme assets: £’000 £’000

Opening fair value of scheme assets 7,286 8,056

Interest income 177 180

Investment gain / (loss) 976 (541)

Benefits paid and expenses (370) (409)

Closing fair value of scheme assets 8,069 7,286

Current Year 2019

Previous Year 1 2018

Previous Year 2 2017

Previous Year 3 2016

Previous Year 4 2015

£’000 £’000 £’000 £’000 £’000

Defined benefit obligation (6,858) (6,578) (6,762) (6,866) (5,965)

Scheme assets 8,069 7,286 8,056 7,831 7,051

Surplus 1,211 708 1,294 965 1,086

Experience adjustments on scheme liabilities 4 (41) (25) (10) (30)

Experience adjustments on scheme assets

(2014: restated under FRS 102)

976 (541) 455 1,126 (127)

At 31st December

2019

At 31st December

2018

b) Analysis of amount charged to the consolidated revenue account £’000 £’000

Administration costs 73 92

Past service cost - 170

Total operating charge 73 262

At 31st December

2019

At 31st December

2018

c) Analysis of amount credited to other finance income £’000 £’000

Interest income 177 180

Less: Interest on pension scheme liabilities (160) (152)

Net return 17 28

Notes to the Financial Statements – for the year ended 31st December 2019 | Annual Report and Accounts 2019

53www.iod.com

Notes At 31st December

2019

At 31st December

2018

15. PENSION COSTS (CONTINUED)

Defined Benefit Scheme (continued)

d) Total amounts taken to other comprehensive income £’000 £’000

Remeasurement – gain / (loss)

Return on scheme assets excluding interest income

976 (541)

Remeasurement – gain / (loss)

Experience gain / (loss) arising on scheme liabilities

4 (41)

Remeasurement – (loss) / gain

Changes in financial assumptions underlying the scheme liabilities – gain / (loss)

(441) 203

Remeasurement – gain

Changes in demographic assumptions underlying the scheme liabilities – gain / (loss)

20 27

(Increase) / decrease in irrecoverable surplus (503) 586

Actuarial gain recognised in other comprehensive income 56 234

As the pension surplus is irrecoverable, the increase of £503,000 has been treated as a pension scheme

adjustment in other comprehensive income in 2019.

At 31st December

2019

At 31st December

2018

e) Movements in surplus during the year £’000 £’000

Surplus in scheme at beginning of the year 708 1,294

Movements in the year:

Other finance income (56) (234)

Actuarial gain / (loss) 559 (352)

Surplus in scheme at the end of the year 1,211 708

Annual Report and Accounts 2019 | Notes to the Financial Statements – for the year ended 31st December 2019

54 www.iod.com

1% pa

increase

1% pa

decrease

Discount rate (£829k) £1,043k

Price inflation £217k (£228k)

Notes

15. PENSION COSTS (CONTINUED)

Defined Benefit Scheme (continued)

Sensitivity to changes in assumptions:

The assumptions as to discount rate and price inflation have a significant effect on the value placed on the defined

benefit obligations. As at 31 December 2019, a 1% pa change to these assumptions would have had the following

effects on the closing defined benefit obligation:

f) Demographic Assumptions used are as follows:

31st December 2019 (Changes from 31st December 2018)

Mortality (pre and post retirement) S3PxA, CMI_2018 (2018: S2PxA, CMI_2017 (1.5%))

Proportion married 90% for men and 70% for women

Age difference Husbands 3 years older than wives

Age at retirement Normal pension age

Cash Commutation 90% of maximum cash allowance

Notes to the Financial Statements – for the year ended 31st December 2019 | Annual Report and Accounts 2019

55www.iod.com

East Midlands

Gary Headland DL

East of England

Biplab Rakshi

London

David Stringer-Lamarre

Northern Ireland

Gordon Milligan

North West

Mike Blackburn OBE

Scotland

Aidan O'Carroll

South

Faisal Khan

South West

Muir Macdonald CDir

Wales

Richard Selby

West Midlands

Brian Hall

Yorkshire and the North East

Delroy Beverley

Aberdeen

Mark McCue

Berkshire

Raj Singh

Black Country

Ian Priest

Buckinghamshire

Vacant

Cambridgeshire

Carolyn Rand

Central London

Interim Chair: Reena Dayal

Cheshire

Vacant

City of London

Alastair King

Coventry & Warwickshire

David Trevis-Smith

Cumbria

Barry Leahey

East Yorkshire

Pat Coyle

Edinburgh

Julie Ashworth

Essex

Alison Shadrack

Fife

Ian Collins

Glasgow

Craig Jamieson

Guernsey

John Clacy

IoD Chairs from Geographical Areas

Hampshire and the Isle of Wight

Vacant

Hereford and Worcester

Joanne Hodgetts

Hertfordshire

Richard McBarnet

Highlands & Islands

Donald Forsyth

Isle of Man

Jennifer Houghton

Jersey

Lisa Springate

Kent

Interim Chair: Jules Quested Williams

Lancashire

Vacant

Leicestershire & South East Midlands

Sarah Canning

Lincolnshire

Michelle Allison

Liverpool

David Wafer

Manchester

Vacant

Norfolk

Michael Harrowven

North East North

Ammar Mirza CBE

North East South

Karl Pemberton CDir

North Yorkshire

Interim Chair: Caroline Pullich

Regions and Nations County branches

Annual Report and Accounts 2019 | Governance

56 www.iod.com

IoD, Hong KongCEO: Carlye Tsui

IoD, Republic of IrelandCEO: Maura Quinn

Affiliated bodiesOverseas branches

BelgiumMark Cunningham

BermudaRochelle Simons

CyprusEvdokimos Xenophontos

FranceRobert Thompson

MaltaEdwin Ward

MonacoWilliam Easum

Nottinghamshire & Derbyshire

Natalie Gasson

Oxfordshire

Vacant

South Yorkshire

Prof Keith Jackson CDir

Suffolk

Interim Chair: John Cockburn-Evans

Surrey

Richard Maybury

Sussex

Interim Chair: Alison Russell

Tayside

Sonia Cottom

West Yorkshire

Dr Richard Smith CDir

Governance | Annual Report and Accounts 2019

57www.iod.com

Annual Report and Accounts 2019 | IoD Premises

IoD Premises

London Pall Mall 116 Pall Mall, London, SW1Y 5ED T. 0207 839 1233

Bookings and enquiries: 0207 839 1233

EastMidlands

Leicester Leicester Castle Business School, 7 Castle View, Leicester, LE1 5WH

Bookings and enquiries: 0116 250 6070

Nottingham Crowne Plaza Hotel Nottingham, Wollaton Street, Nottingham, NG1 5RH

Enquiries: 0115 848 6190

NorthWest

Manchester XYZ Building, Spinningfields, 2 Hardman Blvd, Manchester, M3 3AQ

Enquiries: 0161 806 0890

South West

Bristol The Innovation Centre at Bristol & Bath Science Park, Emersons Green, Bristol, BS16 7FR

Bookings: 0117 370 7700 Admin: 0117 328 5235

Bristol The Engine Shed, Station Approach, Temple Meads, Bristol, BS1 6QH

Bookings: 0117 903 1100

Yorkshire Leeds Old Broadcasting House, Woodhouse Lane, Leeds, LS2 9EN

Wakefield University Business Centre, 6-8 Bond Terrace, Wakefield, WF1 2HW

Halifax University Business Centre, Piece Mill, 27 Horton Street, Halifax, HX1 1QE

Bookings: 0113 243 0152

North East

Durham Mill Lane, Durham, DH1 3LB

Bookings: 0113 243 0152

NorthernIreland

Belfast Riddel Hall, 185 Stranmillis Road, Belfast, BT9 5EE

Bookings: 0289 068 3224

Scotland Edinburgh 10 Charlotte Square, Edinburgh, EH2 4DR

Bookings: 0131 556 4270

Glasgow 200 St Vincent Street, Glasgow, G2 5RQ

Bookings: 0141 222 3934 Admin: 0131 557 5488

Wales Bangor Bangor Business School, College Road, Bangor, LL57 2DG

Bookings: 0292 038 9900 Admin: 0292 038 9990

Cardiff Institute of Directors, Aberconway Building, Colum Drive, Cardiff, CF10 3EU

Bookings: 0292 038 9900 Admin: 0292 038 9990

Belgium Brussels De Warande, Zinnerstraat 1, 1000 Brussels, Belgium

Chair: Mark Cunningham (0032 2256 7530)

Isle of Man The Claremont, 18-22 Loch Promenade, Douglas, Isle of Man, IM1 2LX

Bookings: 01624 698 800

The Institute of Directors

Institute of DirectorsFor further information on this report or for a copy in large text format, please contact:

Training Events Networks Mentoring Research Influencing

The Institute Secretary’s Office

iod.com

governance@iod.com