1. Accounting policies

(a) Basis of preparation

The Confederation of British Industry was set up by royal charter. These accounts have been prepared in accordance with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 – 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland' ('FRS 102'), and with the Companies Act 2006. The accounts have been prepared on the historical cost basis.

The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the CBI's accounts.

The accounts have been prepared under FRS 102 and presented in sterling and rounded to the nearest £'000.

(b) Going concern

The accounts have been drawn up on a going concern basis. Management has developed medium-term financial projections and future cash flows on the basis of the current business model and after consideration of the risks and uncertainties noted on page 34. The key assumptions relate to the retention and recruitment of members, the agreed funding requirements for the pension deficit and the ability of the CBI to continue to manage costs tightly. Management has applied sensitivities to these variables for the period to the end of July 2018, and concluded that it is reasonable to expect that the CBI will have sufficient resources to operate until at least this date, despite the negative balance sheet position. There are net liabilities of £2.2m after recognising a FRS102 pension deficit of £1.39m, with net liabilities of £0.8m before the pension liability. The increase in net current liabilities to £4.7m has been caused by the continued recognition of lease incentives for our Cannon Place head office.

The majority of the CBI's income is raised by Membership Subscriptions. If we considered there was a serious prospect that we could not raise sufficient funds to carry out our core functions, we have contingency plans in place to cover such a shortfall. In addition, our cash reserves of £7.4m provide a buffer against volatility and we will look to increase them over time.

(c) Critical accounting estimates and areas of judgement

Preparation of the accounts requires the management of the CBI to make significant judgements and estimates. The items in the accounts where these judgements and estimates have been made include:

  • Estimating the useful economic life of tangible fixed assets
  • Valuation of the pension scheme and assumptions used in the valuation.

(d) Members' subscriptions

Income from members' subscriptions is recognised as and when received and is spread over the relevant subscription period. Subscription income received relating to future years is deferred to the relevant year. Any membership income received in the month after the year end related to the previous year is treated as accrued income.

Commercial income is recognised in the month when the commercial activity takes place. Income received for events in the future is deferred until the event occurs.

(e) Capitalisation & depreciation

The CBI capitalises assets with a value of £500 or more. Depreciation is provided on assets on the basis of their cost and from the date they are brought into use on a straight line basis over their estimated useful lives, generally as follows:

  • Office furniture and equipment
    10%-33% per annum
  • Computer hardware and software
    25% per annum
  • Motor vehicles
    25% per annum
  • Plant and machinery
    5%-10% per annum
  • Leasehold improvements
    over the term of the lease or the estimated life of the asset if shorter.

(f) Leases

Regular annual rental charges and income under operating leases are charged or credited to the income and expenditure account when the amounts are incurred.

Assets acquired under finance leases are capitalised in fixed assets at the net present value of the minimum lease payments and depreciated in accordance with accounting policy (e) above. The finance charge is apportioned to accounting periods using the actuarial method.

(g) Taxation

The charge for taxation is based on the profit before tax and takes into account deferred tax.

Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for taxation and accounting purposes which have arisen but not reversed by the balance sheet date, except as otherwise required under FRS102.

(h) Foreign currency

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the year end. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the retained surplus for the year.

(i) Debtors

Debtors 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.

(j) Expenditure

Liabilities are recognised as expenditure as soon as there is a legal or constructive obligation committing the CBI 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.

(k) Cash at bank and in hand

Cash at bank and in hand represents such accounts and instruments that are available on demand or have a maturity of less than a month from the date of acquisition. Deposits for more than a month but less than one year have been disclosed as short term deposits.

(l) Creditors and provisions

Creditors 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 we anticipate we will pay to settle the debt. They have been discounted to the present value of the future cash payment where such discounting is material.

(m) Financial instruments

The CBI only has financial assets and financial liabilities of a kind that qualify as basic financial instruments and are not considered to be of a financing nature. Such financial instructments, except for investments classified as fair value through profit or loss, are initially recognised as the transaction value and subsequently measured at their settlement value.

(n) Pensions

The CBI currently provides a group pension plan and other personal pension plans to staff and makes regular payments into the schemes. All the schemes are defined contribution plans. The amounts paid by the CBI are charged to pension costs in the year.

The CBI previously operated a pension plan providing benefits based on final pensionable pay. This scheme was closed to all staff on 31st March 2012. The assets of the plan are managed by third-party investment managers and are held separately in trust. Independent professionally qualified actuaries undertake regular valuations of the plan. These inform the level of contributions paid by the CBI to fund the benefits set out in the rules of the plan.

Pension scheme assets are measured using market values. Pension scheme liabilities are measured using an attained age method and are discounted at the current rate of return on a high quality corporate bond of equivalent term and currency to the liability.

The pension scheme deficit or surplus (to the extent it is recoverable) is recognised in full. The movement in the scheme deficit/surplus is split between operating charges, finance items and, in the statement of comprehensive income.

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2. Operating result

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The CBI contributed £2k (2015: £2k) to charities in lieu of sending corporate Christmas cards.

The CBI makes no political contributions.

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3. Staff costs

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4. Remuneration of directors and key management personnel

The key management personnel of the CBI in charge of directing, controlling, running and operating the CBI on a day to day basis are the directors.

During the year 21 (2015: 16) of the staff included within staff costs in note 3 were called directors. Their total emoluments, including the estimated money value of non cash benefits, were £2,347k (2015: £1,935k). Of this £249k related to severance costs (2015: £165k). All but 2 (2015: 2) of the directors are members of one of the CBI's pension plans. The CBI cost of the plans for these directors was £150k (2015: £180k).

The emoluments of the executive members of the CBI Board were:

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Payments of £68k (2015: £70k) were made for money purchase pension schemes for the Director-Generals' benefit.

CBI Members serving on Committees or in other roles are not remunerated.

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5. Finance charges

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6. Taxation

(i) Analysis of taxation for the year

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(ii) Factors affecting the current tax charge for the year

The tax assessed for the year differs from that at the standard rate of corporation tax of 20% (2015: 20.25%).

The differences are explained below:

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Tax relief is available on pension plan contributions in excess of the expenditure deductible from the income statement amounting to an additional tax deduction of £1,000k (2015: £1,830k). This additional tax relief arises from funding a deficit in the plan and is accounted for in the statement of comprehensive income. The net corporation tax liability for the year is nil (2015: nil).

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7. Tangible Fixed assets

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8. Debtors and prepayments

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9. Creditors: amounts falling due within one year

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Other taxes and social security includes employer contributions of £59k (2015: £65k) to the defined contributions plans.

Other creditors and accruals includes an accrual for holiday pay of £124k (2015: £141k).

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10. Deferred tax asset

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Deferred tax is calculated at 17% (2015: 18%) being the taxation rate expected to be applicable when the timing differences reverse.

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11. Accumulated surplus/(deficit)

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12. Commitments

At 31 December the CBI had the following future minimum commitments under non-cancellable leases:

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There were capital commitments of £Nil at 31 December 2016 (2015: £Nil)

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13. Pension schemes

The CBI operates a defined benefits pension plan in the UK - the Confederation of British Industry Retirement Benefits Plan ('the Plan'). The Plan was closed to new entrants on 1 May 2009 and to further benefit accruals from the 31 March 2012. All Staff are offered membership of a group pension plan, to which the CBI contributes, or a contribution to approved personal pension plans, all of which are defined contribution arrangements. The Plan's assets are held in separate trustee administered funds.

Contributions to the Scheme are determined by the results of triennial formal actuarial valuations, the last of which was carried out as at 31 December 2014. The results of the valuation as at 31 December 2014 have been rolled forward to 31 December 2016 by a qualified actuary independent of the Company.

The Company paid £1.0m in deficit reduction contributions and to cover Plan expenses over the year to 31 December 2016. As the Scheme is closed to future accrual, there were no regular contributions in 2015. At 31 December 2016 the pension scheme had an accounting surplus of £1,385k under FRS102.


The main risks the Company is exposed to by the Scheme are:

  • Mortality risk - the assumptions adopted by the Company make allowance for future improvements in life expectancy. However, if life expectancies improve at a faster rate than assumed, this would result in greater payments from the Scheme and consequently increases in the Scheme's liabilities. The Company and the Scheme's Trustees review the mortality assumption on a regular basis to minimise the risk of using inappropriate assumptions.
  • Investment risk - the Scheme invests its assets in a portfolio of asset classes. There is residual risk that as the selected portfolio matures, there is the possibility of not being able to reinvest the assets at the assumed rates. The Scheme's Trustees review the structure of the portfolio on a regular basis to minimise these risks.
  • Inflation risk - increases to benefits in the Scheme are linked to inflation. If inflation is greater than expected, the liabilities will increase.
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Funded Status

The funded status of the Plan at the year end and the related amounts recognised on the statement of financial position, follow:

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The assumptions used to determine The Plan defined benefit obligation at end of year:

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The life expectancies are based on the S1NA light tables, with adjustments to reflect the Plan's membership. Future improvements are based on the CMI projections model with a long-term improvement of 1.5%

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The change in Plan liabilities during the year were:

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The change in Plan assets during the year were:

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Following the triennial actuarial valuation as at 31 December 2014 the CBI and the trustee agreed deficit funding of £83k a month. This funding rate commenced 1 January 2016 to eliminate the Plan deficit by 30 June 2023, the date at which the Recovery Plan ends.

The CBI paid contributions to the Plan of £1,830k in the year (2014: £1,830k), the expected contribution to the Plan in 2016 will reduce to £1,000k.

The Plan Asset Allocation at the year end was as follows:

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Deferred tax is calculated at 18% (2014: 20%) being the taxation rate expected to be applicable when the Plan deficit reverses. For the possible impact of proposed taxation rate reductions in later years see note 11.

The impact on the assets/(liabilities) of the Plan and the deficit (before consideration of deferred tax) shown in the statement of financial position of changes in the major assumptions is shown below:

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