CILEx Annual Report & Group Accounts 2016

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CILEx ANNUAL REPORT & GROUP ACCOUNTS 31 DECEMBER 2016 COMPANY REGISTRATION NUMBER RC000850


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTICE OF ANNUAL GENERAL MEETING – 13 JULY 2017

NOTICE IS GIVEN that the ANNUAL GENERAL MEETING of The Chartered Institute of Legal Executives will be held at 3.30pm on Thursday 13 July 2017 at Novotel London Tower Bridge hotel, 10 Pepys Street, London EC3N 2NR. to transact the following business: 1 To receive the Minutes of the Annual General Meeting held on 21 July 2016. 2 The President’s Address. 3 To receive the Accounts of The Chartered Institute of Legal Executives Group for the period ended 31 December 2016, and the Reports of the Council and of the Auditors. Ordinary Resolution: To adopt the Accounts of The Chartered Institute of Legal Executives Group for the year ended 31 December 2016. 4 Any Other Business. Dated: 1 June 2017 By Order of the Council EXPLANATORY NOTES The Meeting Anyone who is registered with The Chartered Institute of Legal Executives (CILEx) may attend the Annual General Meeting and speak on the various items of business, but only Fellows are entitled to vote on the Resolutions. Voting Voting on the Resolutions will be taken on the day of the meeting unless Council decides that a postal vote should take place. The Resolutions The Council of CILEx recommends Fellows to approve the Resolutions, which are explained below. Item 3 is the Resolution to adopt the Accounts of The Chartered Institute of Legal Executives Group for the year ended 31 December 2016. The Accounts are set out in the Annual Report with the necessary Auditors’ reports. This is an Ordinary Resolution. If the resolution is approved, it will take effect at the end of the AGM on 13 July 2017. Further Information Copies of the Charter and Bye-Laws appear on CILEx’s website at www.cilex.org.uk. CILEx is incorporated by Royal Charter – Company Number RC000850

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THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

Xxx FOR THE YEAR ENDED 31 DECEMBER 2016

Contents Notice of Annual General Meeting - 13 July 2017

2

Message from the President of The Chartered Institute of Legal Executives

4

Message from the Chief Executive of The Chartered Institute of Legal Executives

5

Message from the Managing Director of CILEx Law School

6

Message from the Chief Executive of CILEx Regulation Limited

7

Officers and professional advisers

8

Report of the Council

9 to 10

Independent auditor’s report to the members of The Chartered Institute of Legal Executives

11

Consolidated statement of comprehensive income

12

Company statement of comprehensive income

13

Consolidated statement of changes in equity

14

Company statement of changes in equity

15

Consolidated statement of financial position

16

Company statement of financial position

17

Consolidated statement of cash flows

18

Company statement of cash flows

19

Notes to the consolidated financial statements

20 to 36

The Chartered Institute of Legal Executives Benevolent Fund Financial statements 2016 Statement of financial activities

37 to 38

The Chartered Institute of Legal Executives Pro Bono Trust Financial statements 2016 Statement of financial activities

39 to 40

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MESSAGE FROM THE PRESIDENT OF THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

As CILEx President, I want to reflect

to join in with feedback and ideas. I ask you to continue to be invested

on the achievements we have

in CILEx and to help shape our future so that we can see more Judicial

made since June 2016 and to pay

Appointments, more Partners, more CILEx Law Firms and more

tribute to those individuals who

members practicing independently.

have supported me during what

CILEx has been at the forefront of access to the professions and

some have come to consider to be a

equality and diversity for many years and we have achieved this

“difficult” period for CILEx but which

despite the misgivings of our colleagues from the other professions

has enabled us to place CILEx at the

about our members’ qualifications and ability to practice law. Even

forefront of reform.

today, such prejudice and ignorance continue in some areas. CILEx is working hard to improve our marketing and communications so that

No incoming President knows what to expect during their term.

employers, recruiters and our colleagues across the professions are

Although I took up post early and, despite serving most of my term

aware of both our standards and our ethos and I am hopeful that we

without a substantive CEO in place, the support of Council and in

can make significant inroads over the coming years.

particular the senior Council members and from the Group Executive at Head Office has been invaluable. This is particularly so in relation

There is much to do and as I come to the end of my term on Council

to recognising the opportunity we have to put CILEx on a sound and

I am confident that the new structure, changes to the constitution

stable footing for the future.

and reform of qualifications and member-focused services are in safe hands with our incoming President Millicent Grant and those on

CILEx is now best placed to maximise the opportunities of the future

Council who give their time freely to help develop CILEx’s strategic

of legal services and to further entrench and expand the parity our

objectives.

members now enjoy with the rest of the profession. When I first joined Council in 2005 as a Fellow, I could only practice under supervision.

I am proud to hand over an Institute that is financially secure,

Between 2005 and 2012 CILEx worked hard to achieve practice rights,

better-placed to maximise opportunities, listening to the concerns

the Royal Charter and establish CILEx Regulation as our independent

and feedback of our members and continuing to lead the sector on

regulator.

Equality & Diversity and good governance.

I am very proud to have been involved in helping to achieve these

I am also proud that CILEx continues to reach out beyond the

great strides forward but there is more to do. CILEx has a great

membership to the other professions and judiciary and continues

future. Our members have a great future too. Yes, we have had to

to help shape the debate and to deliver best practice for regulation,

learn lessons, some very difficult lessons, to get where we are today.

governance, and the consumer.

As I have travelled around the country meeting members at branch events, I know that there is great frustration and concern around

The future is bright for CILEx and our members and if we are going to

portfolios and we continue to work with CILEx Regulation to improve

thrive it will be because we thrive together – so please, join a special

access to practice rights and entity regulation to our members, but

reference group and join in; join your local branch and join in; respond

there is still a long way to go.

to our governance consultation and join in.

We are looking at improving our qualification offering and our

Many thanks to you all for your support during my Presidency.

membership services and many of you will have had an opportunity

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MESSAGE FROM THE CHIEF EXECUTIVE OF THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

Looking back

We end the year in a much stronger financial position than last

Linda Ford, CILEx chief executive

year, having seen the benefits of the restructure, review of business

officer says:

processes and a buoyant investment market. We have focused more resource focused on customer service, member support and

2016 has been a year of change

product development, ensuring we are able to deliver the new

and improvement. The early part of

strategy.

the year involved embedding our new structure at CILEx head office,

Looking ahead

reviewing our business processes

In 2017 we are looking to establish a solid, stable operating budget

and embarking on a programme

supported by longer term business planning and investment

of reform. This programme was

strategy. Our improved financial position at the end of 2016 enables

designed to ensure that we remain financially secure and can

us to make a substantial capital investment in our infrastructure,

respond to current and future challenges facing both the legal sector

updating our IT systems and modernising our business processes.

and the wider markets in which we operate.

This will enable us to deliver our future strategy and give you access to improved services and new products.

In 2016, we have established a new contact centre aimed at delivering improved customer service through initiatives, such as

We plan to launch our new strategic and business plans in mid

Twitter hashtag #CILExHelp, employer invoicing and more online

2017 and we will be consulting with members about how we plan

resources. New members can now expect to receive a welcome call

to update our qualifications to reflect the changing market and

from the customer services team and we have introduced more

the needs of employers, and on changes to the group company

contact us options for existing members including live social media

structure and supporting governance arrangements.

chats and evening clinics. We are already looking at how we can enhance our membership Our Graduation event was our most successful yet, with 105 new

package to include products and services that will support you as

Chartered Legal Executives, 168 Graduate members and 2 CILEx

you progress through your careers. A new careers and recruitment

Advocates having been recognised.

website will launch in 2017, providing access to key information, tools and support services to help you identify career opportunities,

Earlier this year, we launched our new Tech Level qualification, gained

including finding your next role, gaining promotion, becoming a

approval as an end point assessor for apprenticeships and have

partner in a firm, obtaining practice rights, establishing your own

introduced e-assessment for some of our qualifications.

entity and gaining judicial appointment.

The latter part of the year has provided an opportunity to focus on

I would like to thank both the staff at head office for their hard work

improving our branch network, with a new action plan in place,

over the past year and you, as members, for your continued support

excellent attendance at our branch personnel day and an increased

for CILEx. In particular, those members who have taken the time

presence at branch events. Roadshows have allowed us to meet

and opportunity to engage with us and provide feedback which

many of you in person, and gain a much greater insight into the

will help inform our future developments. I hope that in 2017 more

issues affecting you. This has given us a better understanding of the

of you will join our Special Reference Groups, attend one of our

challenges you face and what we can do to communicate with you

roadshows and get involved in your local branch.

more effectively, improve the services and support we offer and help you embrace the full range of career opportunities available.

We will continue to build on the customer service improvements and member engagement opportunities we have introduced in

October and November have seen our Council consider its vision

2016 and so, in 2017, you can certainly expect to hear from us a lot

and strategy for the CILEx Group in what is a constantly changing

more!

environment, a more challenging market, with a need for even greater separation between the professional associations and frontline regulators. |5|


MESSAGE FROM THE MANAGING DIRECTOR OF CILEx LAW SCHOOL

CILEx Law School

this commitment by studying and passing a number of CILEx Level

For CILEx Law School (CLS) 2016

3 units.

has been a good year. Enrolments

We ensure that each member of the CLS Customer Service Team has

on our distance learning courses

first-hand experience of what it is to be a CILEx student and pass

at Level 3 and Level 6 have been

exams. It means that our students will always speak to someone

buoyant, which has helped us beat

who understands CLS’s courses from a student’s perspective,

our budget target and the previous

something few if any other educational providers can claim.

year.

Much has been said about apprenticeships, so we are proud to boast about our role in the delivery of legal apprenticeships, and

Any surplus CLS makes is put into

can confidently claim to be the biggest (and we believe the best)

the reserves for use by the CILEx

provider in England and Wales. Our success rate for apprenticeship

group for capital projects such as IT enhancements and the like. In

completions is very high, which is unsurprising given the levels of

this regard, each enrolment with CLS ensures that course fees are

support dedicated to learners.

used for the membership’s ultimate benefit. The number of employers asking CLS for help with recruiting and Our work as always is divided between core and non-core activities:

training apprentices has increased substantially in 2016, which

the former comprises CILEx courses, revision days and manuals, and

requires more colleagues to work regionally. We expect this trend

increasingly, apprenticeships.

to continue in 2017 for the benefit of both apprentices and those studying through the traditional CILEx route.

It is difficult to identify exactly why our core business did so well in

On the apprenticeship theme, we have worked in partnership

2016, but part of the reason must be CLS’s investment in learning

with City University to launch the first solicitor apprenticeship. It

facilities, such as the extensive provision of web-based materials,

complements our other work based learning routes that provide

the trialling of webinars and more staff to provide learners with

opportunities for those who cannot afford or do not want to attend

help and support by phone.

university.

To this end we have extended our Customer Service Team opening

Finally, it is important to say a few words about our non-core

hours until 6pm from Monday to Thursday. The new opening

business. This includes courses offered in partnership with De

hours have proved popular, and what started as a pilot is now a

Montfort University, City University and City & Guilds.

permanent feature of how we do business. The De Montfort University GDL and LPC courses have bucked the The reason for the extended opening hours was in response to

national trend and continue to grow, while the first cohort of our

our student survey. Again, our approval levels were excellent, with

LL.B in Legal Practice with City University have started their studies.

93.5% of our learners saying that they would recommend us to a

Completing the City University LL.B in Legal Practice enables

colleague or friend. We’re very grateful to the very many students

students to claim exemption from the whole CILEx qualification,

who responded to the survey and gave us such positive feedback.

while achieving a law degree at the same time.

One feature of our student survey was a deep appreciation of CLS’s

City & Guilds course sales are doing well too, and provide an

staff, and in particular their willingness to go out on a limb to help

excellent entry point for those who are not yet ready to commence

learners.

CILEx Level 3 study or who want to improve their skills as a legal secretary.

To do this CLS’s staff are expected to be professional and knowledgeable, which is why we are committed to staff

All in all, 2016 has been a good year, and we look forward to 2017

development. This year our Customer Service Team demonstrated

with genuine enthusiasm.

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MESSAGE FROM THE CHIEF EXECUTIVE OF CILEx REGULATION LIMITED

CILEx Regulation Limited

As part of our annual Practice Certificate Fee (PCF) setting exercise,

The CILEx Regulation Board

which is the fee that is charged to authorised persons for regulatory

decided that 2016 would be a year

costs, other regulatory activity known as permitted purposes

to consolidate and build on the

and levies for the oversight regulatory framework, we have been

things we have been doing well,

undertaking further work to determine the true cost of regulation.

sharpening our pencil on costs and focusing on the areas which are

At present, we are supported under a number of service level

relatively new to us and still need

agreements by CILEx Group Services for HR, Finance, IT, Marketing

refining as they bed in.

and Communications, Facilities and Procurement. In order to better reflect the cost of these shared services, we are including a Group

Following the introduction of a

re-charge in our 2017 budget. Further work will continue in 2017 to

number of operational improvements to our financial management

undertake unit and activity costing so that we can more accurately

and control systems, we delivered a number of significant

determine the true cost of regulation.

improvements against our 2015 outturn. Notably, the contribution to CILEx Regulation of £78,954 is a significant improvement to the

Having submitted our self-assessment of regulatory performance to

2015 contribution of £514,910. Although we incurred a slower than

the LSB, pleasingly our enforcement function received the highest

expected start to practice rights and entity regulation, our income

level of achievement compared to our peers. We are working to

of £1,233,857 is £244,803 better than 2015. This is due, in part, to

deliver against an Action Plan to either improve our regulatory

the increase in the agreed regulatory proportion of the Practising

performance or continue to meet the standards required.

Certificate Fee income. Our direct expenditure of £344,248 is £135,769 better than 2015, with the majority of activities achieving

Alongside the other legal regulators, we were asked by the LSB to

a lower spend. We recognised that we were spending a sizeable

participate in a costs transparency exercise which resulted in our

proportion of our budget on policy and governance activity, and

commitment to publish a number of core financial metrics from

so we have worked hard to drive down these costs, achieving

2017.

£104,326 reduced spend, as well as introducing more streamlined and efficient processes to deliver these services.

Looking ahead to 2017, our Chair and Board asked us to find 8% savings from the 2017 draft budget, which we delivered in our final

Our total overheads of £968,563 are £55,384 better than 2015.

budget. We expect to see improvements in our income lines arising

This is mainly due to a reduction in staff costs and an increase in

from our authorisation schemes and costs will continue to be

administration costs, which is largely due to the restructuring that

closely monitored and improved upon through a continued review

has taken place.

of our operational processes and arrangements.

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THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

OFFICERS AND PROFESSIONAL ADVISERS FOR THE YEAR ENDED 31 DECEMBER 2016

Company Registration Number RC000850 Council M N Callan (President) M Grant (Vice-President) P R Sherwood (Deputy Vice-President) K Barrett M Bowen E Davies (Retired 21 July 2016) D J Edwards (Resigned 8 June 2016) F Edwards D Ferguson (Resigned 10 May 2016) G Findlay M Foster J Gordon-Nichols (Retired 21 July 2016) B C Hamilton-Bruce (Resigned 20 June 2016) C Jepson F Lister D McLaughlin R G Ralph W Rixon S Silver (Retired 21 July 2016) R Stevens (Appointed 21 July 2016) A Thompson (Appointed 21 July 2016) C Tickner (Appointed 21 July 2016) P M White Company Secretary K Cerski Chief Executive Officer Linda Ford Registered Office Kempston Manor Kempston Bedford MK42 7AB Current Auditor Moore Stephens LLP 150 Aldersgate Street London EC1A 4AB Bankers National Westminster Plc Bedford High St 81 High Street MK40 1NE

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THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

REPORT OF THE COUNCIL FOR THE YEAR ENDED 31 DECEMBER 2016

The Council presents their report and the financial statements of

study manuals and courses for examinations in law and performance

The Chartered Institute of Legal Executives and its subsidiaries (the

of duties as the independent regulator of its members and regulated

“Group”) for the year ended 31 December 2016. The attached report

entities.

and financial statements show the members the results of the Group activities for the year ended 31 December 2016 with comparative

In the Report of the Council in the 2015 CILEx Group Financial

figures for the year ended 31 December 2015.

Statements, it was reported that the start of entity regulation required the creation of the CILEx Compensation Fund (the “Fund”)

CONSTITUTION

and a £1,000,000 loan facility provided by CILEx. The Trustees of the

The Chartered Institute of Legal Executives (“CILEx”, “the Institute” or

Fund considered that these arrangements for consumer redress may

“the Company”) is incorporated by Royal Charter and governed by

not be sufficient in all circumstances. In response to these concerns,

the Charter and Bye-Laws which outline the internal organisation,

the Council and CILEx Regulation Limited agreed to begin work on

constitution and conduct. The Institute is the sole shareholder of

revising the arrangements to make them fully insurance-backed,

two wholly-owned subsidiary companies, which together with the

and this work is now at an advanced stage. This will remove the

Institute, form the Group.

need for the Fund and the loan facility. It is expected that the new arrangements will be in place during 2017.

COUNCIL MEMBERS AND DIRECTORS The business of the Institute is managed by the Council.

The net profit before tax for the Group for the year to 31 December 2016 is £430,984 (2015 – loss of £861,432) after charging £104,865

Council consists of not more than 19 Fellows elected as constituency

restructuring costs (2015 - £324,369).

members and 4 Fellows appointed as specialist members. The results for the year include the Group’s share of the running costs MEMBERSHIP OF THE INSTITUTE

of the Legal Services Board (LSB) as required under the Legal Services

The members of the Institute are Fellows. A Fellow is a person

Act 2007 totalling £143,754 (2015 £181,027).

admitted to membership of the Institute in accordance with the provisions of the Bye-Laws. The Council members are therefore also

The trading results for the year and the Group’s financial position at

members of the Institute.

the end of the year are shown in the attached financial statements.

PRINCIPAL ACTIVITY AND REVIEW OF THE BUSINESS

STATEMENT OF COUNCIL’S RESPONSIBILITIES

The principal activity of the Group during the year was that of being

The Council are responsible for preparing the financial statements in

the professional association and governing body for Chartered Legal

accordance with applicable law and regulations.

Executives, other legal practitioners and paralegals, provision of

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THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

REPORT OF THE COUNCIL (continued) FOR THE YEAR ENDED 31 DECEMBER 2016

The Institute is incorporated by Royal Charter and therefore is not

AUDITORS

subject to UK company law. The Council has elected to prepare

Moore Stephens LLP were appointed auditor of the Company by the

the financial statements in accordance with International Financial

Council and will be seeking the re-appointment at the Annual General

Reporting Standards and to have them audited. The Council are

Meeting.

required to ensure that financial statements are prepared for each financial year which give a true and fair view of the state of affairs and of its surplus or deficit for that period. In preparing those financial

Approved by the Council on 31 March 2017 and signed on its behalf by

statements, the Council, in accordance with best practice, is required K E Cerski

to:

Company secretary • select suitable accounting policies and then apply them consistently •m ake judgements and estimates that are reasonable and prudent • s tate whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements •e nsure that the financial statements are prepared on the going concern basis unless it is inappropriate to presume that the Group will continue in business •p rovide the external auditor with all information required in order for them to complete the audit. The Council is responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with applicable regulations. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Council is also responsible for the maintenance and integrity of the corporate and financial information included on the Group’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS In so far as the Council are aware: - there is no relevant audit information of which the Group’s auditor is unaware, and - the Council have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

President, Martin N Callan FCILEx, Vice-President, Millicent Grant LLM (Merit), FCILEx, Deputy Vice-President, Philip Sherwood FCILEx

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THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES FOR THE YEAR ENDED 31 DECEMBER 2016

We have audited the financial statements of The Chartered

statements. It also includes an assessment of the significant

Institute of Legal Executives for the year ended 31 December 2016

estimates and judgements made by the Council in preparation of

which comprise the Consolidated and Company Statement of

the financial statements, and of whether the accounting policies

Comprehensive Income, Consolidated and Company Statement

are appropriate for the Group’s and Institute’s circumstances

of Changes in Equity, Consolidated and Company Statement of

consistently applied and adequately disclosed.

Financial Position, Consolidated and Company Statement of Cash Flows and the related notes. The financial reporting framework

In addition, we read all the financial and non-financial information

that has been applied in their preparation is applicable law and

in the financial review to identify material inconsistencies with the

International Financial Reporting Standards (IFRSs) as adopted by

audited financial statements and to identify any information that is

the European Union.

apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the

Our audit work has been undertaken so that we might state to

audit. If we become aware of any apparent material misstatements

the members those matters we are required to state to them in

or inconsistencies we consider the implications for our report.

an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to

OPINION ON FINANCIAL STATEMENTS

anyone other than the Group or its members as a body, for our

In our opinion the financial statements:

audit work, for this report, or for the opinions we have formed. - give a true and fair view of the state of the company’s affairs as at 31 RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

December 2016 and of its loss for the period then ended; and

As explained more fully in the Statement of Council’s Responsibilities, set out on page 9, the Council is responsible for

- have been properly prepared in accordance with IFRSs as adopted

the preparation of the financial statements and for being satisfied

by the European Union.

that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and

MATTERS ON WHICH WE ARE REQUIRED TO

International Standards on Auditing (UK and Ireland). Those

REPORT BY EXCEPTION

standards require us to comply with the Auditing Practices Board’s

We have nothing to report in respect of the following matters where

(APB’s) Ethical Standards for Auditors.

out engagement letter requires us to report to you if, in our opinion:

SCOPE OF THE AUDIT OF THE FINANCIAL ACCOUNTS

- adequate accounting records have not been kept, or returns

An audit involves obtaining evidence about the amounts and

adequate for our audit have not been received from branches not

disclosures in the financial statements sufficient to give reasonable

visited by us; or

assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an

- the financial statements audited are not in agreement with the

assessment of: whether the accounting policies are appropriate

accounting records and returns; or

to the Group’s and the Institute’s circumstances and have been consistently applied and adequately disclosed; the reasonableness

- we have not received all of the information and explanations we

of significant accounting estimates made by the Council; and the

require for our audit.

overall presentation of the financial statements. Moore Stephens LLP BASIS OF OPINION

Chartered Accountants and Statutory Auditor

We conducted our audit work in accordance with International

London, United Kingdom

Standards on Auditing (UK and Ireland) issued by the Auditing 6 April 2017

Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial

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THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2016

NOTES

2016 £ 9,503,540

8,705,503

(2,594,007)

(2,601,479)

6,909,533

6,104,024

(6,645,364)

(7,130,269)

Revenue Cost of sales GROSS PROFIT Administrative expenses

2015 £

Other operating income

5

166,815

164,813

PROFIT/(LOSS) BEFORE TAX

6

430,984

(861,432)

Taxation

7

(75,258)

(34,198)

355,726

(895,630)

PROFIT/(LOSS) FOR THE YEAR OTHER COMPREHENSIVE INCOME/(EXPENSE) Net unrealised gains/(losses) on available-for-sale financial assets

484,214

(415,558)

TOTAL COMPREHENSIVE INCOME/(EXPENSE) FOR THE YEAR

839,940

(1,311,188)

All the activities of the Group are classed as continuing. The Group had no recognised gains and losses other than the results for the year set out above

The notes on pages 20 to 36 form part of these financial statements.

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THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

COMPANY STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2016

NOTES

2016 £ 4,563,418

4,318,839

(1,609,807)

(1,451,680)

2,953,611

2,867,159

(3,201,150)

(4,436,490)

Revenue Cost of sales GROSS PROFIT Administrative expenses Other operating income

5

LOSS BEFORE DIVIDENDS RECEIVED & TAX Dividends received PROFIT/(LOSS) BEFORE TAX

2015 £

6

Taxation PROFIT/(LOSS)FOR THE YEAR

238,292

250,963

(9,247)

(1,318,368)

1,997,678

-

1,988,431

(1,318,368)

(6,108)

-

1,982,323

1,318,368

43,352

(76,570)

2,025,675

(1,394,938)

OTHER COMPREHENSIVE INCOME/(EXPENSE) Net unrealised gains/(losses) on available-for-sale financial assets TOTAL COMPREHENSIVE INCOME/(EXPENSE) FOR THE YEAR

All the activities of the Company are classed as continuing. The Company had no recognised gains and losses other than the results for the year set out above

The notes on pages 20 to 36 form part of these financial statements.

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THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2016

Balance at 1 January 2015 Net losses on available-for-sale financial assets Loss for the year Balance at 31 December 2015 Net gains on available-for-sale financial assets Profit for the year Balance at 31 December 2016

Fair value reserve £

Retained funds £

Total equity £

322,672

6,881,631

7,204,303

(415,558)

-

(415,558)

-

(895,630)

(895,630)

17,395

5,703,458

5,720,853

484,214

-

484,214

-

355,726

355,726

501,609

6,059,184

6,560,793

The notes on pages 20 to 36 form part of these financial statements.

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THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2016

Balance at 1 January 2015

Fair value reserve £

Retained funds £

Total equity £

90,935

1,839,890

1,930,825

(76,570)

-

(76,570)

-

(1,318,368)

(1,318,368)

Balance at 31 December 2015

23,369

121,510

144,879

Net gains on available-for-sale financial assets

43,352

-

43,352

-

1,982,323

1,982,323

66,721

2,103,833

2,170,554

Net losses on available-for-sale financial assets Loss for the year

Profit for the year Balance at 31 December 2016

The notes on pages 20 to 36 form part of these financial statements.

| 15 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2016

Notes

2016 £

2015 £

ASSETS NON CURRENT ASSETS Property, plant and equipment

8

1,914,774

1,989,569

Intangible assets

9

126,235

195,161

Other investments

11

5,609,890

5,039,620

7,650,899

7,224,350

CURRENT ASSETS Inventories

14

10,475

6,786

Trade and other receivables

15

354,872

435,868

279,293

257,820

2,265,284

2,430,413

2,909,924

3,130,237

10,560,823

10,355,237

Prepayments Cash and cash equivalents

16

TOTAL ASSETS EQUITY RESERVES Other reserves

501,609

17,395

Retained funds

6,059,184

5,703,458

TOTAL EQUITY

6,560,793

5,720,853

47,351

49,513

2,521,035

2,936,283

1,431,644

1,648,588

NON CURRENT LIABILITIES Deferred tax payables

17

CURRENT LIABILITIES Deferred income Trade and other payables

18

TOTAL EQUITY AND LIABILITIES Approved by the Council on 31 March 2017 and signed on its behalf by M N Callan President P R Sherwood Chair, Finance & Remuneration Standing Committee

The notes on pages 20 to 36 form part of these financial statements.

| 16 |

3,952,679

4,584,871

10,560,823

10,355,237


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

COMPANY STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2016

Notes

2016 £

2015 £

ASSETS NON CURRENT ASSETS Property, plant and equipment

8

1,020,307

1,079,303

Intangible assets

9

2,198

3,801

Investments in subsidaries at cost

10

620,398

620,398

Other investments

11

1,224,677

403,170

2,867,580

2,106,672

CURRENT ASSETS Inventories

14

-

487

Trade and other receivables

15

283,879

210,168

90,268

145,243

16

1,732,489

1,441,184

2,106,636

1,797,082

4,974,216

3,903,754

Other reserves

66,721

23,369

Retained funds

2,103,833

121,510

TOTAL EQUITY

2,170,554

144,879

2,129,366

2,673,448

Prepayments Cash and cash equivalents TOTAL ASSETS EQUITY RESERVES

CURRENT LIABILITIES Deferred income Trade and other payables TOTAL EQUITY AND LIABILITIES

Approved by the Council on 31 March 2017 and signed on its behalf by M N Callan President P R Sherwood Chair, Finance & Remuneration Standing Committee Company registration number: RC000850

The notes on pages 20 to 36 form part of these financial statements.

| 17 |

674,296

1,085,427

2,803,662

3,758,875

4,974,216

3,903,754


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2016

2016 £

2015 £

430,984

(891,432)

110,788

111,619

82,123

85,273

(166,815)

(164,813)

6,683

9,522

(105,501)

(266,161)

CASH FLOW FROM OPERATING ACTIVITIES Profit/(Loss) before tax NON-CASH ADJUSTMENTS Depreciation Amortisation of other intangible non-current assets Investment income Loss on disposal of non-current assets Gain on disposal of investments Other non-cash adjustments

(10)

200

NON-CASH ADJUSTMENTS

(72,732)

(224,360)

CASH FLOWS BEFORE CHANGES IN WORKING CAPITAL

358,252

(1,085,792)

3,689

(3,440)

80,996

(165,121)

CHANGES IN WORKING CAPITAL Increase/(decrease) in inventories (Decrease)/increase in trade and other receivables

(21,473)

109,425

(Decrease)/increase in trade and other payables

(682,151)

557,622

(DECREASE)/INCREASE IN WORKING CAPITAL

(618,939)

498,486

(Increase)/decrease in prepayments

(38,569)

43,732

(299,256)

(543,574)

Payments to acquire property, plant and equipment

(36,317)

(27,738)

Payments to acquire intangible assets

(14,013)

(69,373)

(1,545,176)

(2,741,312)

1,562,617

3,471,830

201

3,660

15,075

36,883

Dividends received, classified as investing

151,740

127,930

NET CASH FLOWS FROM INVESTING ACTIVITIES

134,127

801,808

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

(165,129)

258,306

Cash and cash equivalents as at 1 January 2016

2,430,413

2,172,107

CASH AND CASH EQUIVALENTS AS AT 31 DECEMBER 2016

2,265,284

2,430,413

Tax (paid)/received NET CASH FLOWS USED IN OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES

Payments to acquire available-for-sale investments Proceeds from sale of available-for-sale investments Proceeds from sale of equipment Interest received, classified as investing

The notes on pages 20 to 36 form part of these financial statements.

| 18 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2016

2016 £

2015 £

1,982,431

(1,318,368)

56,165

59,413

2,110

1,696

CASH FLOW FROM OPERATING ACTIVITIES Profit/(Loss) before tax NON-CASH ADJUSTMENTS Depreciation Amortisation of other intangible non-current assets

(18,292)

(26,156)

(1,997,678)

-

(6,683)

4,656

Investment income Dividends from subsidiary (Gain)/loss on disposal non-current assets NON-CASH ADJUSTMENTS

(1,964,378)

39,609

18,053

(1,278,759)

CASH FLOWS BEFORE CHANGES IN WORKING CAPITAL CHANGES IN WORKING CAPITAL

487

185

(Increase)/decrease in trade and other receivables

(73,711)

125,782

(Increase)/decrease in prepayments

(54,975)

5,842

(Decrease)/increase in trade and other payables

(963,374)

710,992

(DECREASE)/INCREASE IN WORKING CAPITAL

(1,091,573)

842,801

NET CASH FLOWS FROM OPERATING ACTIVITIES

(1,073,520)

(435,958)

(3,651)

(18,754)

Decrease in inventories

CASH FLOWS FROM INVESTING ACTIVITIES Payments to acquire property, plant and equipment Payments to acquire intangible assets Payments to acquire available-for-sale investments Proceeds from sale of available-for-sale investments

(1,321)

(1,682)

(776,391)

(219,305)

130,017

924,532

201

822

18,292

2,103

Dividends received, classified as investing

1,997,678

24,053

NET CASH FLOWS FROM INVESTING ACTIVITIES

1,364,825

711,769

291,305

275,811

Cash and cash equivalents as at 1 January 2016

1,441,184

1,165,373

CASH AND CASH EQUIVALENTS AS AT 31 DECEMBER 2016

1,732,489

1,441,184

Proceeds from sale of equipment Interest received, classified as investing

NET INCREASE IN CASH AND CASH EQUIVALENTS

The notes on pages 20 to 36 form part of these financial statements.

| 19 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2016

1. AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS’S The Institute is a body incorporated by Royal Charter. The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations as adopted by the European Union. The financial statements are prepared under the historical cost convention as modified by the revaluation of investments. Basis of consolidation The consolidated group financial statements comprise the financial statements of the Chartered Institute of Legal Executives and its trading subsidiary undertakings as described in note 10. Subsidiaries are all entities over which the Group has the power to govern financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which the Group takes control. Where necessary, adjustments are made to the financial statements of the Institute and subsidiaries to bring the accounting policies used into line with those used by the Group. Inter-company transactions and balances between Group companies are eliminated. Adoption of new and revised Standards At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective. Standard/Interpretation

Title

Effective date

IFRS 9

Financial Instruments

1 January 2018

IFRS 14

Regulatory Deferral Accounts

1 January 2016

IFRS 15

Revenue from Contracts with Customers

1 January 2018

IFRS 16

Leases 1 January 2019

However, the Council does not expect that the adoption of these standards and interpretations in future periods will have a material impact on the financial statements of the Group. Critical Accounting Estimates and Judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Council makes estimates, assumptions and judgements concerning the carrying amount of assets and liabilities on a prudent basis and are satisfied with the accuracy of these estimates.

| 20 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2016

2. ACCOUNTING POLICIES

date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates

Revenue recognition

prevailing at the date when the fair value was determined.

Subscriptions income is recognised in the period to which it relates and examination fee income is recognised when the examinations to

Gains and losses arising on retranslation are included in net profit or

which they relate take place.

loss for the period, except for exchange differences arising on nonmonetary assets and liabilities where the changes in fair value are

Distance learning course revenue is recognised when the course is

recognised directly in equity.

delivered except when an element of the course is in respect of a revision session to be taken in a future accounting period in which

Pension costs

case that element of the revenue is deferred.

The Group operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those

Agency commission income is recognised on an arising basis in line

of the Group. The annual contributions payable are charged to the

with the agreements in place with the principal.

income statement.

Apprenticeship income is recognised over the duration of the

Taxation

apprenticeship.

Corporation tax arises on the Group’s chargeable gains and investment income less any charitable donations by way of gift

Interest and dividend income is accounted for on an arising basis.

aid and trading profits. Provision is made for deferred taxation to the extent that material timing differences are expected to reverse

All income is recognised net of value added tax.

in future periods. No provision for deferred taxation is included in respect of surpluses on revaluation of property and investments.

Foreign currency exchange Transactions in currencies other than the functional currency of

Segmental Reporting

the Group are recorded at the rates of exchange prevailing on the

A business segment is a group of assets and operations engaged in

dates of the transactions. At each statement of financial position

providing products and services that are subject to risks and returns

date, monetary assets and liabilities that are denominated in

that are different from those of other business segments.

foreign currencies are retranslated at the rates prevailing on that

| 21 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) AS AT 31 DECEMBER 2016

2. ACCOUNTING POLICIES (continued)

cost. Intangible assets acquired as part of a business combination are capitalised separately from goodwill if the fair value can be measured

Property, plant and equipment

reliably on initial recognition.

Items of property, plant and equipment are stated at cost of acquisition or production cost less accumulated depreciation and

The carrying value of intangible assets are reviewed for impairment on

impairment losses.

an annual basis for events or changes in circumstances that indicate that the carrying value may not be recoverable.

Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives, on the following bases:

Intangible assets are stated at cost or fair value on recognition less accumulated amortisation and any impairment in value. Amortisation

Freehold property

Fixtures and fittings IT Equipment

1% on cost

is calculated so as to write off the cost or valuation of intangible assets

10% on cost

over their estimated useful lives, on the following bases:

25% on cost Software

25% on cost

Investments Investments are recognised at cost on the trade date, and are restated

Inventories

on the reporting date at fair value. Unrealised gains and losses

Inventories are valued at the lower of cost and net realisable value.

(including those arising on translation of investments denominated in foreign currencies) are recognised directly in fair value reserves

Trade and other receivables

until the investment is disposed of or is determined to be impaired, at

Trade and other receivables are recognised by the Group and carried

which time the cumulative gain or loss previously recognised in fair

at original invoice amount less an allowance for any uncollectible or

value reserves is included in net surplus or deficit for the period.

impaired amounts.

Investments in subsidiaries are stated at cost less any impairment

An estimate for doubtful debts is made when collection of the full

deemed necessary.

amount is no longer probable. Bad debts are written off when they are identified as being unrecoverable.

Intangible assets Intangible assets acquired separately from a business are capitalised at

Other receivables are recognised at fair value.

| 22 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 DECEMBER 2016

2. ACCOUNTING POLICIES (continued)

Operating lease commitments Operating leases payments are recognised as an expense in the

Cash and cash equivalents

consolidated income statement on a straight line basis over the lease

Cash and cash equivalents comprise cash at bank and in hand and

term.

short term deposits. Short term deposits are defined as deposits with an initial maturity of three months or less, but can be drawn upon at

Other reserves

any time.

The other reserve relates to the fair value reserve which comprises the cumulative net change in the fair value of available-for-sale financial

Deferred tax

assets until the assets are derecognised or impaired.

Deferred tax is provided in full, using the statement of financial position liability method, on temporary differences arising between the tax bases of assets and liabilities and the carrying amounts in the financial statements. Deferred tax liabilities are generally recognised for all material taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than as a business combination) or other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. Deferred tax is charged or credited to the consolidated statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax is determined using the tax rates that are expected to apply in the period when the asset is realised or the liability is settled. The carrying amount of deferred tax assets is reviewed at each consolidated statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are offset when they relate to income taxed levied by the same taxation authority and the group intends to settle its current tax assets and liabilities on a net basis. Trade and other payables Trade and other payables are not interest bearing and are stated at Lord Toulson

their nominal value.

| 23 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 DECEMBER 2016

3. SEGMENT INFORMATION Year ended 31 December 2016 Membership £

Awards Regulation and Unallocated £ £

Law School

Total

£

Consolidation adj £

£

Revenue 2,981,799

1,452,867

1,362,609

3,920,908

(214,643)

9,503,540

Gross surplus

2,873,563

879,401

90,256

3,066,313

-

6,909,533

Depreciation

-

-

(56,165)

(54,623)

-

(110,788)

Amortisation

-

-

(2,110)

(80,013)

-

(82,123)

Operating Leases

-

-

(68,318)

(43,329)

-

(111,647)

Other admin expenses

-

-

(4,043,120)

(2,596,640)

298,954

(6,340,806)

Other income (including finance income)

-

-

2,314,924

148,523

(2,296,632)

166,815

Taxation

-

-

(6,108)

(69,150)

-

(75,258)

2,873,563

879,401

(1,770,641)

371,081

(1,997,678)

355,726

Non-current assets

-

-

2,867,580

5,403,717

(620,398)

7,650,899

Current assets

-

-

2,222,290

967,909

(280,275)

2,909,924

Liabilities

-

-

(2,919,315)

(1,313,673)

280,309

(3,952,679)

Equity

-

-

2,170,555

5,010,602

(620,364)

6,560,793

Sales to external customers Results

Surplus/(deficit) for the year Assets & Liabilities

| 24 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 DECEMBER 2016

3. SEGMENT INFORMATION (continued) Year ended 31 December 2015 Membership £

Awards Regulation and Unallocated £ £

Law School

Total

£

Consolidation adj £

£

Revenue 3,711,405

1,376,617

219,871

3,668,834

(271,224)

8,705,503

3,539,453

823,818

(987,075)

2,727,828

-

6,104,024

Depreciation

-

-

(59,415)

(52,204)

-

(111,619)

Amortisation

-

-

(1,696)

(83,577)

-

(85,273)

Operating Leases

-

-

(72,268)

(44,905)

-

(117,173)

Other admin expenses

-

-

(4,587,342)

(2,228,862)

-

(6,816,204)

Other income (including finance income)

-

-

26,157

138,656

-

164,813

Taxation

-

-

-

(34,198)

-

(34,198)

3,539,453

823,818

(5,681,639)

422,738

-

895,630

Non-current assets

-

-

2,106,672

5,744,019

(626,341)

7,224,350

Current assets

-

-

1,797,083

1,516,676

(182,872)

3,130,887

Liabilities

-

-

(3,758,875)

(1,058,384)

182,875

(4,634,384)

Equity

-

-

144,879

6,202,311

(626,337)

5,720,853

Sales to external customers Results Gross surplus / deficit

Surplus/deficit for the year Assets & Liabilities

The reported segments are consistent with the Group’s internal reporting for performance measurement and resource allocation. The Group does not allocate administrative expenditure to individual income streams and only report on the gross margins for those.

| 25 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 DECEMBER 2016

4. EMPLOYEE EXPENSES 2016 £

2015 £

4,073,908

4,573,655

Social security costs

401,035

417,923

Post-employment expense for defined contribution plans

423,329

327,482

Restructure costs

104,865

324,369

28,796

35,643

5,031,933

5,679,072

2016 No.

2015 No.

140

149

2016 £

2015 £

234,446

396,238

Post-employment benefits: Defined contribution

24,646

33,331

Social security costs

35,388

49,846

Benefits in kind

21,646

17,980

316,126

497,395

Wages and salaries

Other employee benefits

The average monthly number of employees during the year was made up as follows: Administration Key management compensation Wages and salaries

5. OTHER OPERATING INCOME GROUP

Interest earned on investments Dividends earned on investments Group management charges

| 26 |

COMPANY

2016 £

2015 £

2016 £

2015 £

15,075

36,883

2,435

2,103

151,740

127,930

15,857

24,053

-

-

220,000

224,807

166,815

164,813

238,292

250,963


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 DECEMBER 2016

6. PROFIT/(LOSS) BEFORE TAX Profit/(Loss) before tax is stated after charging the following: GROUP

COMPANY

2016 £

2015 £

2016 £

2015 £

Cost of inventories recognised as expenses

199,259

189,619

-

35,359

Depreciation of property, plant and equipment

110,788

111,616

56,165

59,413

82,123

85,273

2,110

1,696

10

200

-

-

111,647

117,173

60,108

65,403

38,900

36,500

18,600

18,203

2016 £

2015 £

Current tax expense

81,177

44,488

Overprovision in the prior year

(3,757)

-

Relating to origination and reversal of temporary differences

(2,162)

(10,290)

Taxation for the year

75,258

34,198

2016 £

2015 £

86,197

(174,440)

Amortisation Net foreign currency losses Operating leases Auditor’s remuneration – audit services

7. TAXATION Components of taxation

Current tax expense

Deferred tax expense

Reconciliation of tax expense to accounting profit Tax at the domestic income tax rate of 20% (2015: 20.25%) Expenses not deductable for tax purposes Non-taxable income Taxable unrealised gains/(losses) on investments Capital gains less profit on sale investments Tax losses not recognised Tax effect of other tax rates Overprovision in the prior year

| 27 |

1,299,683

1,433,091

(1,288,969)

(1,203,371)

-

(16,136)

4,277

(3,649)

(22,286)

(1,257)

113

(40)

(3,757)

-

75,258

34,198


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 DECEMBER 2016

8. PROPERTY, PLANT AND EQUIPMENT Group At 31 December 2016 Freehold property £

Fixtures and fittings £

IT Equipment £

Total £

2,039,833

778,846

69,111

2,887,790

-

25,624

10,693

36,317

Cost At 1 January 2016 Additions Disposals At 31 December 2016

(2,675)

(62,027)

(5,667)

(70,369)

2,037,158

742,443

79,137

2,853,738

462,815

401,213

34,193

898,221

(6,633)

(59,324)

(4,088)

(70,045)

Depreciation At 1 January 2016 Disposals Charge for year

19,727

74,600

16,461

110,788

475,909

416,489

46,566

938,964

At 1 January 2016

1,577,018

377,633

34,918

1,989,569

At 31 December 2016

1,561,249

325,954

32,571

1,914,774

2,041,178

965,120

195,130

3,201,428

At 31 December 2016 Net book value

At 31 December 2015 Cost At 1 January 2015 Additions

-

18,932

8,806

27,738

Disposals

(1,345)

(205,206)

(134,825)

(341,376)

2,039,833

778,846

69,111

2,887,790

443,309

523,687

147,804

1,114,800

(221)

(198,967)

(129,007)

(328,195)

At 31 December 2015 Depreciation At 1 January 2015 Disposals Charge for year

19,727

76,493

15,396

111,616

462,815

401,213

34,193

898,221

At 1 January 2015

1,597,869

441,433

47,326

2,086,628

At 31 December 2015

1,577,018

377,633

34,918

1,989,569

At 31 December 2015 Net book value

| 28 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 DECEMBER 2016

8. PROPERTY, PLANT AND EQUIPMENT (continued) Company At 31 December 2016 Freehold property £

Fixtures and fittings £

IT Equipment £

Total £

1,190,826

396,155

43,841

1,630,822

-

-

3,651

3,651

Cost At 1 January 2016 Additions Disposals

(2,675)

(62,027)

(5,667)

(70,369)

1,188,151

334,128

41,825

1,564,104

At 1 January 2016

249,039

281,198

21,282

551,519

Charge for the year

11,240

35,080

9,845

56,165

At 31 December 2016 Depreciation

Disposals

(475)

(59,324)

(4,088)

(63,887)

259,804

256,954

27,039

543,797

At 1 January 2016

941,787

114,957

22,559

1,079,303

At 31 December 2016

928,347

77,174

14,786

1,020,307

1,192,171

402,734

130,702

1,725,607

At 31 December 2016 Net book value

At 31 December 2015 Cost At 1 January 2015 Additions

-

13,637

5,117

18,754

Disposals

(1,345)

(20,216)

(91,978)

(113,539)

1,190,826

396,155

43,841

1,630,822

238,020

260,646

100,851

599,517

11,240

38,902

9,271

59,413

At 31 December 2015 Depreciation At 1 January 2015 Charge for year Disposals

(221)

(18,350)

(88,840)

(107,411)

249,039

281,198

21,282

551,519

At 1 January 2015

954,151

142,088

29,851

1,126,090

At 31 December 2015

941,787

114,957

22,559

1,079,303

At 31 December 2015 Net book value

| 29 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 DECEMBER 2016

9. INTANGIBLE ASSETS Group 31 December 2016 Software £

Total £

Cost 376,826

376,826

Additions

At 1 January 2016

14,013

14,013

Disposals

(441)

(441)

390,398

390,398

At 1 January 2016

181,665

181,665

Charge for the year

82,123

82,123

375

375

264,163

264,163

At 1 January 2016

195,161

195,161

At 31 December 2016

126,235

126,235

724,614

724,614

Additions

69,373

69,373

Disposals

(417,161)

(417,161)

376,826

376,826

At 1 January 2015

496,799

496,799

Charge for the year

85,273

85,273

(400,407)

(400,407)

181,665

181,665

At 1 January 2015

227,815

227,815

At 31 December 2015

195,161

195,161

At 31 December 2016 Amortisation

Disposals At 31 December 2016 Carrying value

31 December 2015 Cost At 1 January 2015

At 31 December 2015 Amortisation

Disposals At 31 December 2015 Carrying value

| 30 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 DECEMBER 2016

9. INTANGIBLE ASSETS (continued) Company 31 December 2016 Software £

Total £

At 1 January 2016

7,342

7,342

Additions

1,321

1,321

Disposals

(441)

(441)

At 31 December 2016

8,222

8,222

At 1 January 2016

3,541

3,541

Charge for the year

2,110

2,110

373

373

6,024

6,024

At 1 January 2016

3,801

3,801

At 31 December 2016

2,198

2,198

74,307

74,307

Additions

1,682

1,682

Disposals

(68,647)

(68,647)

7,342

7,342

At 1 January 2015

70,068

70,068

Charge for the year

1,696

1,696

(68,223)

(68,223)

3,541

3,541

At 1 January 2015

4,239

4,239

At 31 December 2015

3,801

3,801

Cost

Amortisation

Disposals At 31 December 2016 Carrying value

31 December 2015 Cost At 1 January 2015

At 31 December 2015 Amortisation

Disposals At 31 December 2015 Carrying value

| 31 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 DECEMBER 2016

10. INVESTMENTS IN SUBSIDIARIES 2016 £

2015 £

Cost at 1 January

620,398

620,398

Cost at 31 December

620,398

620,398

The Institute’s investments in 100% of the ordinary share capital of unlisted companies incorporated in the United Kingdom at the year end comprise the following: Name

Principal activity

CILEx Law School Limited

Provision of study manuals and courses for examinations in law

CILEx Regulation Limited

Independent regulator of members of the Institute

11. OTHER INVESTMENTS Group Market Value

Company

2016 £

2015 £

2016 £

2015 £

At 1 January

5,039,620

5,919,463

403,170

1,183,893

Additions

1,545,176

2,741,312

776,391

219,305

Disposals

(1,562,617)

(3,471,758)

(130,017)

(924,532)

Realised gain on disposal

103,497

266,161

9,617

54,591

Unrealised gain/(loss) on changes in market value

484,214

(415,558)

43,352

(76,570)

-

-

122,164

(53,517)

5,609,890

5,039,620

1,224,677

403,170

Transfers At 31 December

Other investments are in respect of a pooled investment fund managed by Barclays Wealth. The investment is stated at its market value in the statement of financial position and any change in market value is reflected in the fair value reserve.

| 32 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 DECEMBER 2016

12. FINANCIAL RISK MANAGEMENT

£269,978) by CILEx Law School Limited for expenditure it had incurred on the Institute’s behalf, which was also recharged at cost.

Liquidity risk is managed in the short term by ensuring that

The Institute also purchased manuals and courses for members

there are available Group reserves to cover one years’ worth of

totalling £16 (2015: £1,246) from CILEx Law School Limited.

membership income. This is in line with the Reserves policy. The Group has invested sums in a managed medium to long term

During the year the company received a loan from CILEx Law School

investment portfolio in order to protect its cash reserves

for £400,000 (2015: £450,000). Interest is charged at 0.47%. The loan was repaid in full before the year end.

Foreign currency is not deemed a high risk area for the Group. Very few transactions take place in anything other than sterling,

At the year end, amounts due to CILEx Law School Limited totalled

however, foreign currency denominated bank accounts are held in

£148,210 (2015: £178,091 due from).

order to minimise the risk of foreign exchange losses. During the year the company paid expenses of £39,432 (2015: The Group carries out regular and thorough budgeting to ensure

£54,296) on behalf of the CILEx Compensation Fund.

that both short and long term liquidity risks are managed. During the period, the Institute contributed to the operating costs 13. RELATED PARTY TRANSACTIONS

of CILEx Regulation Limited totalling £78,954 (2015: £514,910). Amount due to CILEx Regulation Limited at the year end was

Trading activities

£105,846 (2015: £1,204).

During the year the Institute received income from CILEx Law School Limited totalling £197,347 (2015: £224,807) in relation

Reimbursement of expenditure

to expenditure the Institute had incurred on its behalf and later

During the period the Institute reimbursed out of pocket expenses

recharged at cost to them. In addition the Institute sold journal

to Council members in respect of travel and other necessary

advertising and course books to CILEx Law School Limited totalling

expenses incurred in performing their council duties of £74,998

£17,258 (2015: £19,267). The Institute was charged £168,668 (2015:

(2015: £95,508).

President, Martin N Callan FCILEx CILEx Branch Member of the Year Award Winner, Alexis Thomas, Chair of the CILEx Cardiff & South East Wales Branch

| 33 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 DECEMBER 2016

14. INVENTORIES Group

Course books and promotional materials

Company

2016 £

2015 £

2016 £

2015 £

10,026

1,920

-

487

449

4,866

-

-

10,475

6,786

-

487

2016 £

2015 £

2016 £

2015 £

Stationery

15. TRADE AND OTHER RECEIVABLES Group

Company

354,872

435,868

115,038

206,591

VAT

-

-

20,631

3,577

Amounts due from subsidaries

-

-

148,210

-

354,872

435,868

283,879

210,168

Trade receivables

Amounts receivable from trade customers are non-interest bearing and are generally on 30 - 45 day terms. The Council considers that the carrying amount of these assets approximates their fair value.

16. CASH AND CASH EQUIVALENTS Group

Company

2016 £

2015 £

2016 £

2015 £

Cash in hand

1,523

1,298

1,000

1,002

Cash at bank

2,263,761

2,429,115

1,731,489

1,440,182

2,265,284

2,430,413

1,732,489

1,441,184

| 34 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 DECEMBER 2016

17. DEFERRED TAX Statement of financial position

Income statement

2016 £

2015 £

2016 £

2015 £

(47,351)

(49,513)

2,162

10,290

2016 £

2015 £

2016 £

2015 £

Payable to trade suppliers

121,793

130,035

67,559

110,948

Other payables

566,889

401,091

57,520

997

Social security and other taxes

167,642

219,187

72,508

85,583

Accruals

494,143

853,787

364,756

708,604

81,177

44,488

6,108

-

-

-

105,846

179,295

1,431,664

1,648,588

674,296

1,085,427

Deferred tax liabilities relating to depreciaton 18. TRADE AND OTHER PAYABLES

Group

Tax payable Amounts owed to subsidiary

Company

The Council considers that the carrying amount of these assets approximate their fair value. 19. OPERATING LEASE COMMITMENTS At 31 December the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases relating to motor vehicles which fall due as follows: 2016 £

2015 £

Less than one year

61,859

23,957

Later than one year but less than five years

63,026

76,975

124,885

100,932

| 35 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 31 DECEMBER 2016

20. CONTINGENT LIABILITY

Regulation who have suffered loss or hardship as a result of the regulated entity having misappropriated or failed to account for the

On 5 January 2015, the Institute entered into an agreement to

client’s money.

provide a draw-down loan facility of up to £1,000,000 to the CILEx Compensation Fund (‘the Fund’) for the purpose of establishing

For a claim to be considered by the Fund, it must have exhausted all

a compensation fund in accordance with the provisions of the

other means of redress, including any insurance the regulated entity

Legal Services Act 2007 (Chartered Institute of Legal Executives)

has in place. The claim will be put to the Fund’s indemnity insurance,

(Modification of Functions) Order 2014 made on 8 December 2014.

if eligible, for settlement. The cover provides for £1,000,000 per claim,

The Compensation Fund is an independent legal entity and is limited

£2,000,000 per authorised entity and £10,000,000 in the aggregate.

by guarantee. The Trustees of the Fund may call on the loan facility to pay eligible CILEx Regulation Ltd, a subsidiary of CILEx, carries out the regulation

claims that have exhausted all other means of redress, including the

of authorised entities. At the date of signing the accounts, there were

Fund’s own indemnity insurance.

8 authorised entities (2015: 2) being regulated and no claims have been received.

Work on making the compensation arrangements fully insurancebacked is at an advanced stage. This will remove the need for the Fund

The Fund is a discretionary fund of last resort and will consider eligible

and the loan facility. It is expected that the new arrangements will be

claims for compensation from clients of entities regulated by CILEx

in place during 2017.

| 36 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

BENEVOLENT FUND YEAR ENDED 31 DECEMBER 2016

CILEx

benevolent fund Registered Charity Name:

Income is generated by way of donations, gifts and from investments.

The Chartered Institute of Legal Executives Benevolent Fund

The Trustees would like to encourage more CILEx members to consider directing some of their charitable giving to the Fund

Charity registration number: 295527

to ensure that it can continue to meet calls for assistance from disadvantaged members, former members and their dependants.

Objective and Activities The primary objective of the Charity is to provide assistance to

Applications to the Fund are increasing. In 2016, payments exceeding

persons in need who are, or who have been, members of The Institute

ÂŁ4,000 were made. Applications from qualifying members are

and their families or dependants. Assistance is given by payment of

encouraged and further information can be found on the CILEx

grants or providing advice and information. Grants are made to help

website.

persons in financial difficulties due to unemployment, illness or other misfortune.

| 37 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES Benevolent Fund

STATEMENT OF FINANCIAL ACTIVITIES YEAR ENDED 31 DECEMBER 2016

Income and Expenditure Account 1 January 2016 to 31 December 2016 £ Opening balance

188,170

Income Donations-Branch and Non-members

667

Interest (Direct Reserve)

65

CILEx Member Donations

1,210

Legal Charities Garden Party

1,060 3,002

Expenditure Grants

2,066

Bank Charges

71 2,137

Closing Balance

189,034

Balance sheet as at 31 December 2016 £ Current Assets Current Account

39,540

Direct Reserves Account

148,956

Legal Charities Garden Party

2,169

Current Liabilities Amounts owing to CILEx

2,081

Closing Balance

189,034

| 38 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

Pro Bono Trust

CILEx

YEAR ENDED 31 DECEMBER 2016

Pro Bono Trust Registered Charity Name: The CILEx Pro Bono Trust

community through giving their time without charge to help others by providing work of a legal nature. Kindly sponsored by Kings Court

Charity registration number: 1145776

Trust, the winner receives a commemorative trophy, certificate, the winner’s logo and a cheque for £500 to be donated to the winner’s

Objective and Activities

choice. The winner of the 2016 medal was Christine Howard of Weil

The primary objective of the Charity is to work in partnership with

Gotshal & Manges, who donated her award to RCJ Advice Bureau

other facilitators and providers of pro bono legal services in order to

Limited. The medal was presented at the 2016 CILEx Graduation and

raise awareness and support the pro bono work of CILEx members

Admission Ceremony.

and other lawyers. The Trustees are presently working on several initiatives which Each year the CILEx Pro Bono Trust awards the CILEx Pro Bono Award

include a Pro Bono Volunteers Handbook and promotion for the CILEx

to recognise the dedication and commitment of an outstanding

Advocacy Support Scheme.

individual who, in addition to their daily work, has contributed to the

President, Martin N Callan FCILEx, and CILEx Pro Bono Award winner, Christine Howard, Chartered Legal Executives, Weil, Gotshal & Manges

| 39 |


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES Pro Bono Trust

STATEMENT OF FINANCIAL ACTIVITIES YEAR ENDED 31 DECEMBER 2016

Income and Expenditure Account 1 January 2016 to 31 December 2016 £ Opening balance

5,278

Income Interest earned

4 4

Expenditure Insurance

1,668

Bank Charges

9 1,677

Closing Balance

3,605

Balance sheet as at 31 December 2016 Current Assets Debtors

8,378

Prepayment

9,502

Total Current Assets

13,858

Current Liabilities Creditors

5,897

Closing Balance Net Current Assets

3,605

| 40 |


NOTES


NOTES


NOTES


THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES

Xxx FOR THE YEAR ENDED 31 DECEMBER 2016

For further information about CILEx qualifications contact: THE CHARTERED INSTITUTE OF LEGAL EXECUTIVES Kempston Manor, Kempston, Bedford MK42 7AB T +44 (0)1234 845777 F +44 (0)1234 840373 E membership@cilex.org.uk W www.cilexcareers.org.uk

CILEx

@CILExLawyers

vimeo.com/cilexlawyers

CILExfan

| 44 |


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