Annual Report and Accounts 2016
This section sets out the details of how the CBI operates as a business, from working with partners and suppliers, to its people policies and includes our financial position.
The CBI partners with many organisations for both its core commercial activities and policy work. All such arrangements are properly documented and managed so that expectations are both agreed and assessed. This is particularly important in the case of event sponsorships which remained at £2.0m in 2016 (2015: £2.1m). Both CBI national and regional events are run on a commercial basis but their primary objective is to further the CBI's principal role. The net income from these commercial activities - of £1.6m in 2016 (2015: £1.5m) - is used to fund the core activities. This resulted in a 5% increase in commercial contribution.
The CBI has a policy of not taking excess credit from its suppliers and has signed up to the Prompt Payment Code. It pays suppliers in accordance with terms and conditions agreed when orders are placed - the default is within 30 days of invoice date. At 31 December 2016 the CBI had 14 days purchases outstanding (2015: 27 days).
The CBI aims to create a working environment that enables our employees to enjoy their work, develop and provide the best possible service to the CBI, its members and the organisations the CBI works with.
The Board of the CBI has established a Remuneration Committee with overall responsibility for this policy and specifically the remuneration of the Director General and Executive Directors.
All members of staff have a formal induction process and then are able to access Training and Development plans and courses which are mostly specific to the CBI. Ongoing development is very much encouraged and is assessed as part of the annual Staff assessment process. The CBI spends £0.25m on Professional Development each year.
The CBI has a very open approach to recruitment of people from diverse backgrounds. The current gender profile of CBI employees at 31st December is:
We have reviewed Gender pay gap requirements in line with recommended practice, where the average salary for male employees is 11.1% higher than that for female employees. This is significantly better than the current national gender pay gap of 18%. The CBI is committed to reducing this gap, through recruitment and looking at pay discrepancies as part of the annual pay process.
CBI has reviewed the obligations of the Modern Slavery Act 2015. The CBI provides services and information to its members and other stakeholders. The HR departmenthas undertaken a high level review of existing business and supply chains as well as establishing an internal anti-slavery policy. The review confirmed that no supply chain activity had taken place.
CBI has additional policies addressing health, safety, grievances, and harassment and employee relations. These policies are continually reviewed against best practice standards and updated as necessary.
The CBI with data provided by Ecometrica has continued to apply its environmental policy which seeks to reduce the footprint of its activities where both possible and economically viable as a first priority. Total energy consumption in 2016 has reduced from 2015 as a result of a full year occupancy at Cannon Place. Total emissions have reduced by 19% on 2015, from 299 tonnes of CO2e to 265 tonnes of CO2e in 2016. The CBI continues to benefit from more efficient lighting systems which are sensory operated and heating/ventilation systems.
We have reported on all of the emission sources required under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013. These sources fall within our consolidated financial statement. We do not have responsibility for any emission sources that are not included in our consolidated statement.
The method we have used to calculate GHG emissions is the GHG Protocol Corporate Accounting and Reporting Standard (revised edition), using the location-based scope 2 calculation method, together with the latest emission factors from recognised public sources including, but not limited to, Defra, the International Energy Agency, the US Energy Information Administration, the US Environmental Protection Agency and the Intergovernmental panel on Climate Change.
The CBI is committed to a system of corporate organisation and governance appropriate for a listed company complying with the new corporate governance code wherever practicable. This is adjusted as best practice and the circumstances of the CBI dictate. The organisation and governance are described in detail on insert link.
The CBI's total income for 2016 at £23.8m was the same as the previous year. The income remained flat due to a lack of growth in the CBI membership subscription income which decrease by £0.1 million. Total expenditure for the year, at £23m, was £1.0m lower than the previous year. This resulted in an operating surplus of £0.8m an improvement of £0.9m on 2015, the retained surplus after taxation for the year was £0.7m compared with a £0.2m deficit in 2015.
The reason for the profit before tax in the current year is due to good cost control; excluding one off items costs were £0.6m lower than in 2015. One off items include strategic costs of £0.5m and a past service credit on the CBI defined benefit scheme of £0.9m.The administration expenses of £0.3m associated with the scheme have been recognised in the income statement.
Membership income for 2016 was flat when compared to 2015. The recruitment of new members was slower than expected in the first half of 2016, however there was a significant improvement in the last quarter of 2016. Total recruitment of new members for the year was £1.4m. Overall the number of members fell by 10 with a value loss of £96k. We continue to strive to provide value for money for members like any subscription based organisation, we face challenging market conditions such as mergers and takeovers of members and changes in key contacts.
Commercial income remains at £3.2m in 2016 and a reduction in commercial expenditure of 4.4% meant the overall commercial contribution for 2016 increased by £78k to £1.6m. The growth has been due to the successful cost management of existing activities.
Due to tight cost control throughout 2016 the level of overall expenditure dropped by £1.0m. When one off items such as strategic costs and a past service credit on the CBI defined benefit scheme are excluded, the reduction in expenditure was £0.6m.
The reduction was achieved through reduced payroll and professional fees, all other costs were in line with 2015 except depreciation which rose due to the continued investment in the CBI regional offices and CRM system and premise costs due to high overseas office costs as a result of the devaluation of the pound.
2016 has seen the CBI's continued commitment to invest in IT systems and infrastructure, with the refresh of the CBI Wales office and a refreshed storage and networking solution at our disaster recovery site. We continue to redevelop our Customer Relationship Management system the new re-platforming went live in April 2016. This has provided a better experience for members when they interact with the CBI. The total capital spend for 2016 was £0.4m.
Cash and short-term deposits at the year-end were £7.4m compared to £5.8m in 2015. The increase of £1.6m is as a result of increased prepaid income, £8.3m at the year-end against £7.1m in 2015, the rise relates to the excellent collection of 2017 membership subscription with a 2017 start date (£2.9m 2016, £1.7m 2015). The balances held for ring fenced projects continued to decrease in 2016. The CBI has continued with its cash investment strategy in 2016 having set up various short term deposit accounts managed by Schroders. At the end of 2016 £2m of the £7.4m was placed on deposit, the same as in 2015.
At the end of 2016 the CBI had net current liabilities of £4.7m, (2015 £4.4m) the further increase is due to the accounting for the rent free period at Cannon Place until October 2016.
At the end of 2016 the CBI had negative reserves of £2.2m including a pension deficit of £1.4m. This compared to positive reserves for £0.8m and a pension surplus of £1.1m at the end of 2015. The pension deficit is due to increased stock market volatility primarily arising from the political changes.
During 2016, the CBI continued to refresh its regional offices in a similar style to Cannon Place. In 2016, the Cardiff office was refurbished.
The last full actuarial valuation of the Plan as at 31 December 2014 was completed during 2015, resulting in an actuarial deficit of £8.8m. . The estimated actuarial deficit at 31 December 2016 has reduced from the formal valuation of £8.8m to £6.0m. During 2016 the CBI cash contributions to its defined benefit pension plan were £1.0m.
The CBI will continue to fund the plan in 2017, as agreed with the trustees in the Recovery Plan, the funding will be £1.0m per annum, which includes administrative and other costs of the plan. The CBI continues to work proactively with the trustees of the scheme to review the scheme advisers and to ensure the scheme is more proactively managed.
The Plan's accounting deficit at the end of 2016 was £1.4m on a FRS102 basis. The deficit has been recognised on the statement of financial position in accordance with FRS102 requirements.