rics.org
Contents Introduction Foreword from the President Message from the Chief Executive The year in numbers The economist’s view Corporate performance
05 06 08 09
August 2010 – July 2011 RICS membership Membership growth Group financial statement Group income statement Group balance sheet Group cashflow statement Notes to the summary financial statements Independent auditor’s statement RICS governance structure RICS management structure
10 – 21 22 23 24 25 26 27 28 29 30 31
Annual Review 2010/2011 03
Advancing standards and professionalism in land, property and construction RICS is the world’s leading professional qualification when it comes to land, property and construction. Wherever you are in the world, the designation ‘RICS’ stands for professional excellence, expertise and integrity. It’s why over 100 000 property professionals have recognised the importance of securing RICS status by becoming members. Given the close link between property markets and economic performance, people, governments, banks and commercial organisations are looking for more certainty around standards and ethics. As one of the few professions to have established arm’s length self regulation of members and firms, RICS is able to set and maintain the highest standards, whilst operating as an independent organisation in the public interest. Our strategic goals are to: •
achieve recognition of RICS standards by markets and governments
•
provide professionals with leading edge products, services and information
•
be recognised as a leader in responsible business practices
•
make RICS more agile to take advantage of new opportunities.
Our annual review provides a snapshot of our achievements and financial performance between August 2010 and July 2011 as well as some of the key issues on our agenda for the forthcoming year.
04 Annual Review 2010/2011
Foreword from the President It is my privilege to serve as the 130th RICS President during a significant point in the Institution’s 143 year history. Over the last year RICS has continued with an ambitious programme of development in both the United Kingdom and in other key worldwide markets. Our ongoing efforts have resulted in further recognition of our profession and its standards by markets and governments alike.
Among some of our most significant achievements during the last year, RICS has:
Land, property and construction are core to our social, economic and environmental welfare, and in this globalised and changing world it is crucial that we develop internationally recognised and consistent standards. In this context, my predecessor, Robert Peto FRICS, spent much of the last year emphasising the important role that RICS plays as a professional body in furthering the public interest by unifying land, property and construction professionals under a single body of ethical and technical standards. He also spent time communicating the work of RICS members who play a vital role in addressing some of the most challenging issues of the day.
• opened operations in Brazil
From sustainability and disaster management to regeneration and affordable housing, RICS members are taking a leading role in identifying solutions. As the world continues to struggle with economic challenges, rapid population growth and climate change, the task of explaining the value of RICS members to stakeholders is a rather straightforward one, albeit that many of them are learning about RICS for the first time.
• g ained recognition for our global professional standards in Russia, India and China • e nrolled some 13 000 members across Europe to our Valuer Registration Scheme which will assure compliance with our global Valuation Standards
• b een entrusted by the European Commission with managing a major project to train energy assessors • l aunched 12 new specialist training courses as part of our AssocRICS programme to support routes to professional membership around the world • b een recognised as a leading contributor to the UK legislative programme on localism and planning • b een invited by the UK Government’s Innovation and Growth Team to play a major role in construction strategy, developing standards on more issues than any other organisation. Hard work and ambition will continue to help us build recognition of RICS on the international stage. However, it is the intrinsic value of RICS, and all that it means to be a chartered professional body, which will undoubtedly act as the catalyst. Fundamentally we have a public interest role to play. This is our greatest strength, it is what gives RICS members their competitive advantage and it is the reason why we remain as relevant today as we did 143 years ago.
See Lian Ong FRICS RICS President 2011/2012
Annual Review 2010/2011 05
Message from the Chief Executive Our focus – gaining recognition for RICS standards
Fulfilling our responsibilities
Since taking over as CEO in September 2010, I have focused the organisation’s efforts to deliver on the vision set by Governing Council:
The first RICS Corporate Responsibility Report reviews our 2010/2011 engagement regarding sustainability, communities and our employees – the three pillars of our approach in being a global responsible business. The report provides an important platform to restate RICS’ Charter principles and reaffirms why and how RICS and its more than 100 000 members perform a vital role in global, national and local societies and economies.
’Be recognised in key worldwide markets as the leading body, that sets and enforces professional standards and offers access to the most sought after professional status’. During the course of the year our recognition efforts were channelled to ensure that: • t hose who employ RICS-qualified professionals value the standards they work to • t hose who shape public opinion and set policy, value the contribution of and are willing to adopt the standards developed by RICS • s ocieties and governments value the profession and its role in advancing public interest • e nd users of professional services value the standards the profession works to • f uture generations value the global relevance of the profession and the career it can offer.
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RICS became a signatory of the United Nations Global Compact in October 2010 and also signed the Cancun Communiqué in the framework of its global partnership agenda regarding sustainable development. RICS is determined to reduce its reliance on natural resources. Our Oceania office in Sydney received a 4 star rating for internal fit-outs under the Australian Green Star rating scheme. Our office in Edinburgh improved its ECP rating from G to E. Every employee is entitled to one paid day each year to take part in ‘giving something back’ activities. RICS is committed to engaging and motivating its workforce. In December 2010, RICS was awarded ‘One to Watch’ status in the Best Companies employee survey making us a good employer to work for.
Our performance Over the last 12 months, challenging economic conditions continued to prevail in many markets in which RICS operates. RICS has continued a programme of controlled investment through using our built-up reserves to invest in our future. We are modernising our technology infrastructure, enhancing our property assets, moving our services increasingly online and developing our most attractive markets, particularly Brazil, Russia, India and China as well as our largest, the United Kingdom. With this in mind, prudent financial management has been essential and I am pleased to report that for 2010/2011, RICS outperformed its approved business plan. With significantly increased worldwide reach, profile and recognition of RICS standards, the profession continued to grow despite the economic conditions. The total number of qualified members grew by over 2 000 during the year and continental Europe provided the greatest level of net new growth. We have found that in tough times standards and professionalism are in greater demand and individuals are keen to achieve a status that differentiates them in the marketplace. Recognition by employers, markets and policy makers for RICS standards grew significantly during 2010/2011. You will be able to read many examples of this in the review, but I would highlight the incorporation of our global real
estate agency and brokerage standards by the Hong Kong SAR in its best practice guidelines and the recognition of our valuation qualifications and standards by the Russian and Indian governments as acknowledgement of the fundamental role RICS and its members have to play in the world. Looking ahead In the coming year, RICS will take a strategic look at Africa and update its corporate strategy. We will concentrate on opportunities to advance the recognition of our standards with employers, opinion formers, policy makers and society as a whole. In the pursuit of our vision and continued improving performance, I feel proud to work alongside talented and dedicated staff and over 1 000 active members who make an invaluable contribution to this profession. As CEO, I will do all I can to ensure that RICS remains relevant and highly valued in markets around the world, but that we invest appropriately in the future to ensure that generations to come can say the same in 25, 50, 100 years and beyond.
Sean Tompkins RICS Chief Executive
Annual Review 2010/2011 07
The year in numbers
– Sean Tompkins became the 10th chief executive of RICS in 143 years
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– registered users on RICS Online Academy – new standards and guidance published
08 Annual Review 2010/2011
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– pathways for RICS Associate grade of membership
– RICS offices worldwide following the opening of RICS Vietnam
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e end Ye a r – RICS members signed up to the Valuer Registration Scheme
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– Euros granted to RICS by the European Commission to develop a training programme for energy-saving retrofitting of homes
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– net increase in qualified members worldwide
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– firms ‘Regulated by RICS’ across continental Europe
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– mentions of RICS in the UK media
11
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– RICS’ ranking in the top 500 UK business brands
– the number of followers of RICS’ corporate Twitter account @RICSnews
The economist’s view The year from a macro-economic perspective The past year has been one to forget. The start of 2011 promised a robust and sustained recovery. That was laid to rest with a number of shocks to the global economy. The tragedy in Japan in March, which severely disrupted supply chains around the world, was followed by political brinksmanship in the US regarding the attempt to put in place a credible medium-term strategy to bring down the national debt. Finally, the eurozone crisis has caused high volatility in the financial market since August. These events have battered confidence in the global recovery. Even emerging markets, responsible for most of the global growth in the past 12 months now seem to be losing momentum. Latin American growth has eased, on the back of Brazilian supply bottlenecks and rising interest rates. Meanwhile, emerging markets in Asia also seem to be softening albeit at a pace consistent with a soft landing with falling global demand and earlier policy tightening being the primary reasons. Developments in property markets broadly reflected the underlying economic fundamentals. Previous fears of emerging ‘bubbles’ in real estate markets in Asia and Latin America eased on the back of slowing growth in those markets and macro-prudential measures put in place to restrict the flow of credit into the property sector. This was particularly the case in China where the authorities put in place a series of measures designed to curb speculative activity. On the other hand, in many advanced economies the on-going shortfall in bank finance continued to shape the behaviour of real estate.
According to the latest RICS Global Property Survey, the outlook for the commercial real estate sector is brightest in China, Brazil and Russia, with all three markets expecting to see robust rental and capital value growth. The property sector in many emerging markets will also benefit from the now quite widespread pause in the monetary tightening cycle. Indeed Brazil has started to cut rates on the back of weakening external demand and it could be followed by other countries in due course. In advanced economies, financing from banks continues to hold back transaction levels, while the deleveraging process in both households and financial institutions’ balance sheets looks likely to continue to dampen demand in the real estate sector. Central banks will in all probability continue to further ease already loose monetary conditions, with the Bank of England’s latest round of quantitative easing unlikely to be the last. In addition, the US Federal Reserve looks set for its own ‘QE3’ in the coming months. The situation in Europe is highly fluid, with a disorderly default in Greece a very real possibility. If such an outcome were to materialise it would have widespread ramifications, straining an already vulnerable financial sector, increasing the borrowing costs of other eurozone countries and further hurting confidence. However, a more positive outcome is still a possibility if recent policy initiatives addressing the eurozone are implemented promptly and forcefully. This would help restore confidence in financial markets, and start a positive feedback loop that could trigger stronger than anticipated growth in the coming year.
The outlook for land, property and construction Emerging markets will continue to drive construction output over the coming year. Both China and Brazil are aiming to meet ambitious affordable housing targets while India, alongside a focus on a similar programme, will also continue to address the need for a much higher level of infrastructure investment.
Simon Rubinsohn RICS Chief Economist
Annual Review 2010/2011 09
August
Spotlight Launched in August, the Online Academy provides RICS members, trainees and others working in land, property and construction the opportunity to learn at their own pace through a range of information resources, e-learning material, podcasts and live, interactive web classes. Users are able to expand their knowledge, discuss current industry topics and gain continuing professional development (CPD) hours. The Online Academy
has grown rapidly since its launch and attracted 8 500 registered users from across the world by year-end.
be a truly global product with users attending online courses from over 20 different countries.
The Online Academy offers a wide range of courses to its users including elementary, professional development and technical courses.
Since the Online Academy started we have trained more than 1 700 members and non-members and have recently enhanced the portfolio by introducing web classes and distance learning courses. We are very pleased with the progress the Online Academy has made in a short period of time”.
RICS Director of Training Products Pierpaolo Franco, “The Online Academy has achieved great results since it launched. It has proven to
Other key achievements RICS is committed to promoting wider access to the profession, and contributes to the UK Government’s drive to improve social mobility. At an event at RICS headquarters Deputy Prime Minister Nick Clegg praised a number of initiatives RICS is involved in. RICS is on the Executive Group of the Gateways to the Professions Forum chaired by the UK Universities Minister; and as a founding member of the multidisciplinary alliance Professions for Good is working to produce a toolkit for employers and professional bodies to promote entrants from less advantaged backgrounds. RICS is a signatory to the Common Best Practice Code for High Quality Internships.
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In North America RICS signed an agreement with The Appraisal Foundation to co-write valuation standards for the region. RICS was granted international trustee status and became the first international sponsor of The Appraisal Foundation, increasing the recognition of RICS valuation standards in the United States and Canada. The Foundation is a non-profit organisation dedicated to the promulgation of professional appraisal standards and qualifications. RICS President Robert Peto, “This is a major step toward closer collaboration among the world’s leading valuation standards organisations. Together, we continue to demonstrate that valuation is a robust profession, capable of speaking to issues with one voice, enforcing professional standards and providing consistent quality reports and services to clients”.
8 500 registered users of the Online Academy
September Spotlight RICS launched a campaign to demonstrate the important role facilities management (FM) professionals play in improving strategic business performance. With over 12 000 members operating within the FM sector, RICS is a key player in the establishment of FM as a business critical profession. Chartered surveyors are ideally placed to help businesses realise their medium and long-term targets by turning business and real estate strategies into profitable management plans for organisations through astute property management. RICS guidance covers the different disciplines within FM – from health and safety to asset management – and outlines best practice in all sectors and industries.
Other key achievements Sean Tompkins became the 10th chief executive of RICS in its history following the retirement of Louis Armstrong CBE. RICS responded to a call from the UK Communities and Local Government Minister asking for input on the future of building regulations. RICS’ response agreed with the UK Government’s initial point of view that simplification of building regulations should be the aim of any future changes. Additionally, RICS issued its consumer publication A clear guide to… Flooding. This guide informs property owners about flood risk and how it can affect the value and insurability of their property. It also provides guidance on flood resistance and flood resilience measures that can be adopted.
RICS launched its Associate (AssocRICS) grade of membership to the Indian property valuation market. AssocRICS provides entry to the profession to property valuers who may not have formal qualifications in valuation but have sufficient work experience to demonstrate their competence.
95 000
monthly circulation of Modus
RICS launched its new magazine Modus to critical acclaim in September. With a monthly circulation of 95 000, Modus is the premier global magazine for the surveying profession, showcasing the latest thinking and developments across land, property and construction. The magazine brings the latest news and views, expert advice and opinion from government, industry and other opinion formers, as well as in-depth features. Within a year of launching Modus has been shortlisted for a number of publishing industry awards.
Annual Review 2010/2011 11
October Spotlight Following a year of consultation, development and testing, RICS launched its Valuer Registration Scheme (VRS) for members undertaking valuations in accordance with RICS Valuation Standards. The scheme ensures the quality of valuations, raises the credibility of valuers, and provides clients with a clearly identifiable designation for the best regulated, qualified and experienced professionals in the field.
Eve Salomon, Chair, RICS Regulatory Board, “In introducing VRS, RICS is demonstrating its unique approach and strong commitment to high professional standards. It is an example of a professional body operating in a relatively unregulated sector delivering an active, global scheme.” By the end of the year some 13 000 members had signed up to the scheme in the UK and Europe. Rollout of the scheme to other world markets will continue in 2011/2012.
Launched against an ever increasing need for assurance during turbulent economic and financially challenging times, the scheme provides a consistency, quality and accuracy of advice provided by the valuation profession.
13 000
members signed up to the Valuer Registration Scheme
Other key achievements RICS hosted its 20th annual awards ceremony to celebrate the most inspirational projects across the land, property, construction and environment sectors. The Roundhouse Campus, Derby College in England was awarded the coveted project of the year. Chair of judges, Simon Pott FRICS, “Developing a derelict building presents obvious challenges, and the facilities available now provide an excellent resource for the city. The Roundhouse not only cherishes the historical significance of the buildings, but will also help secure the city’s future through the many generations who will be able to study there”. The Roundhouse joins a list of prestigious winners of the RICS Awards including the renovations of London’s St Pancras Station in 2009 and St Paul’s Cathedral in 2008.
12 Annual Review 2010/2011
RICS welcomed the adoption of a number of its recommendations by the Hong Kong Government to alleviate housing shortage and provide affordable housing options. One of the short-term initiatives RICS put forward was a rent-to-buy scheme which enables first-time buyers to secure new homes. David Tse FRICS, RICS Housing Task Force Chair and Governing Council member, “We are pleased to see the Hong Kong Government adopt a number of our recommendations on housing policy and urban renewal strategy, in particular the need to formulate a long-term housing vision, by suitably revising the current land supply, development and urban renewal policies, and introducing new measures”.
November Spotlight Following the successful take up of regulation of firms in the UK and Hong Kong, RICS began scoping out the feasibility of a similar offering in mainland Europe. A pilot project in the Netherlands was followed by a formal launch of the regime in November.
and regulatory advice to firms as well as practical guidance on how to improve business practices and excel in the marketplace. Awareness raising of the benefits of regulation within firms took place across a number of cities including Lisbon, Paris, Frankfurt, Budapest and Madrid.
Prior to the launch RICS’ regulatory arm in Europe focused its communication efforts towards key stakeholders in firms based in Europe, highlighting the benefits of being regulated. These included offering effective monitoring
Since launching regulation of firms in Europe over 180 firms across 23 countries in continental Europe have registered for voluntary firm-based regulation and are able to use the firms’ designation ‘Regulated by RICS’.
Martin Brühl FRICS, RICS Vice President, “Being ‘Regulated by RICS’ publicly reinforces our individual commitment as chartered surveyors to the high ethical and quality standard of RICS. As well, at organisational level, it allows us to demonstrate that we are living RICS regulation by integrating the regulatory requirements into our corporate governance.”
180
firms in Europe signed up for RICS regulation
Other key achievements RICS’ work to raise awareness of the affordable housing shortage in India were commended by key stakeholders. RICS research report Making Affordable Housing Work in India was the highlight of the National Conference on Practical Solutions for the Delivery of Affordable Housing in New Delhi. Presented by the Honourable Minister of Housing and Urban Poverty Alleviation the report was debated by members of the Indian Government, industry associations, real estate experts and
lending institutions. Other key topics of the conference included successful housing policies and strategies and planning for slum redevelopment. In the bid to support a vibrant and sustainable land and property sector, RICS launched its paper Rural Vision. The paper outlined key issues and challenges facing rural areas in the UK combined with a number of recommendations to the Government on rural communities, agriculture and
land management and the use of natural resources. It set out the work RICS plans to do in the rural practice sphere which includes engaging with a number of Local Enterprise Partnerships across England to support the rural proofing of their policy objectives and examining ways to equip communities to exercise new responsibilities they may be given in the Localism Bill.
Annual Review 2010/2011 13
December Spotlight RICS Governing Council approved plans for a start-up operation in Latin America, with an initial focus on Brazil and Mexico. This followed market assessments to gauge whether RICS’ presence in the region would be suitable. Working with governments, firms, local professional bodies and universities RICS will bring professional standards and quality assurance through the regulation of those standards to a market that employs 11 000 valuers and 55 000 agents. In Brazil, the construction industry alone employs over six million people. From São Paulo to Mexico City, RICS members are active practitioners in the fields of quantity surveying and construction, planning and development, commercial property and valuation.
43
RICS offices worldwide increased to 43 Other key achievements RICS launched a Portuguese housing market survey in partnership with Confidencial ImobiliĂĄrio. The report is a monthly sentiment survey of estate agents and developers who operate in the Portuguese residential sales market. Ahead of the Assembly elections in Northern Ireland RICS launched its manifesto which focused on key issues relating to the land, property, construction and the environment. Manifestos were also issued in Wales and Scotland in advance of elections in both nations.
14 Annual Review 2010/2011
RICS published new guidance as part of its valuation standards for the capital and rental valuation of public houses, bars, restaurants and nightclubs in England and Wales. Working with members, the UK Government and industry stakeholders, the guidance followed a 16-month exercise to help ensure tenants and pubcos operate in a transparent environment with fair and sustainable rents set for all parties.
January Spotlight RICS received a European Commission grant of â‚Ź263 000 to develop a training programme for energy-saving retrofitting of homes across Europe. TRAINREBUILD brings together organisations representing the whole value chain of the building sector to provide European property owners with advice on improving energy efficiency. The project aims to increase consumer information and confidence in the environmental solutions and technologies that can play a vital role in reducing energy consumption and generating clean energy in the built environment. TRAINREBUILD is a two-year project that will advise residential property owners across Europe on how to improve the energy efficiency of their buildings. The grant is a major recognition by the European Commission of RICS as a leader in the field of sustainability in the built environment and of the professional standards and expertise of RICS members. Following receipt of the grant RICS held a workshop in Brussels for building professionals such as architects and surveyors to discuss solutions for improving the energy performance of EU housing stock, to collect feedback from practitioners and to provide input to the design of a toolkit for property owners that prioritises which measures to adopt. A training package is also being developed that will provide independent and transparent information on the measures property owners should take to retrofit their assets and how these solutions can be procured.
¤263 000
funding granted for TRAINREBUILD
Other key achievements In Russia, RICS was recognised as a lead contributor to the proposed Russian state qualification exam for self-regulated valuation experts.
An RICS conference in India on moving towards low-carbon buildings, in association with CASLE and Oxford Brooks University, was supported by the Ministry of New and Renewable Energy and the Bureau of Energy Efficiency.
RICS called for a method of attributing a financial value to water to allow individuals, investors, banks and governments to appraise and understand their resource.
Annual Review 2010/2011 15
February Spotlight Set up in the aftermath of the 2004 Asian tsunami, the RICS Disaster Management Commission (DMC) and its operational arm BuildAction uses the skills and knowledge of chartered surveyors to help reduce disaster risk and improve post-disaster recovery. DMC’s activities in the year included the promotion of better mitigation programmes following the earthquake in Japan and, after the earthquakes in New Zealand, a DMC Commissioner undertook a review mission, supported by an offer to source qualified building surveyors to assist with remedial work. Other activity included assisting the Malawi Government in its request for advice on the country’s reconstruction guidelines, co-hosting events at the
2011 UN global platform for disaster reduction, submission to the UK Government’s humanitarian response review, and reviewing global voluntary guidelines on responsible governance on land tenure for the UN’s Food and Agricultural Organisation.
100
charities assisted with their property issues by Charity Property Help
Other key achievements Sustainability runs through the core of our influencing agenda. At a global level, RICS was a signatory of the United Nations Global Compact and the Cancun Communiqué.
market attention. In Hong Kong, the Government adopted a number of recommendations from RICS’ housing initiative on the development of a sustainable housing policy.
In New York, the launch of our report Sustainability and the Dynamics of Green Building highlighted the potential for the real estate sector to contribute to a low carbon economy and create long-term value and competitiveness in the process. In the UK, RICS published an information paper that set out how the impact of urban climate change can be reduced by as much as 2.5°C by increasing the amount of green space in towns and cities.
In Europe, RICS chaired two meetings at the International Social Housing Summit in The Hague focusing on the role of housing associations, and Oceania RICS fed its views to the Australian Federal Government on its legislative plans for carbon pricing.
In India, the Honourable Minister for Housing and Urban Poverty Alleviation launched the RICS report Making Affordable Housing Work in India which generated significant
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For the full picture of RICS’ work in this area, visit rics.org/sustainability RICS is committed to giving back to communities through a range of charitable services in the UK. Charity Property Help (CPH) provides support and guidance on all property matters to UK charities and voluntary organisations.
In collaboration with the National Council for Voluntary Organisations and the Charity Finance Directors’ Group, charities receive free consultation with an RICS regulated firm. During 2010/2011 CPH assisted over 100 charities and increased the number of regulated firms on its books to over 300. Our Chartered Surveyors Voluntary Service, provides property advice to those unable to afford professional help. Volunteer RICS members give advice on a range of issues through home visits, and managed over 170 referrals during the year. Each RICS employee is entitled to one paid day each year to take part in ‘giving something back’ to local communities. During the year RICS staff donated 320 hours to local schools and voluntary organisations on a range of activities.
March Spotlight As part of an increasingly international approach to standard setting, RICS published new global real estate agency and brokerage standards – the first globally applicable standards in the field. The standards provide best practice guidance for real estate agents and brokers in all world regions dealing with transactions in commercial, residential and rural property, including sales, acquisitions, leasing and letting.
With continuing globalisation and many companies now conducting crossborder real estate transactions, RICS acted on the need for a common set of global standards which apply to this area of the property profession. Key recognition milestones were achieved with the endorsement of the standards by the Estate Agents Authority of the Hong Kong Government and leading firms in Europe.
50 standards and guidance published
Other key achievements RICS published the seventh edition of the Valuation Standards (widely known as the Red Book). In addition to the global framework, for the first time an Indian version of the standards was published to provide regionally specific valuation information for that market.
look to reduce their expenditure, costefficient operating solutions will become a priority. The impact of businesses adopting cloud computing will be far reaching for the property profession, including an increased demand for technical property such as data centres.
The way property professionals advise their clients could soon change as cloud computing increasingly becomes the IT method of choice for the industry, according to a report published by RICS. As more and more businesses
Andrew Waller MRICS, “By using virtual IT systems businesses will require less floor space, as large servers are dispensed with and the smooth, reliable remote access allows a greater number of employees to work away from the office on a more regular basis.”
RICS was listed as one of the UK’s leading business-to-business brands, achieving top 100 status for the first time in the 2011 Business Superbrand listings. RICS climbed 23 places to 91 in the list.
Annual Review 2010/2011 17
April Spotlight In a move towards creating a unified professional body for the surveying profession in Ireland, the Society of Chartered Surveyors Ireland was formed following the merger between the Society of Chartered Surveyors and the Irish Auctioneers and Valuers Institute. The 4 000 strong Society will work in close partnership with RICS, as the charter awarding body, to promote the profession in Ireland. The creation of the new entity further solidifies RICS’ presence in Ireland and work is underway to further embed RICS’ high standards and regulatory framework within Ireland.
10 000 members on LinkedIn
10 000 followers of @RICSnews
The merger recognises the importance and need to create a single globally recognised chartered professional qualification and set of standards. The relationship centres on the award of the RICS/SCS qualifications that are being harmonised to ensure consistency, the delivery and promotion of universal and local professional standards, and the delivery of regulation.
Other key achievements RICS signed a Memorandum of Understanding with the China Electricity Council which affords their workforce direct entry to the Associate grade of membership. More than 30 CEC employees became RICS members as a result of the MoU. Through its dispute resolution service in Australia, RICS was made a prescribed appointer in the Northern Territory. This means that RICS’ dispute
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resolution service now operates in all Australian states and territories where security of payment legislation is enacted. RICS continued to expand its social media presence across Twitter, LinkedIn, Facebook and YouTube, opening up access to the latest news, opinion, commentary and research to members, the public, governments and NGOs. By the end of the year more than 10 000 members had signed up
to RICS groups on LinkedIn. On Twitter, the corporate account – @RICSnews – had attracted over 10 000 followers, with a retweet rate of over 99%.
May Spotlight As part of our commitment to fair access to the profession RICS, in partnership with the Chartered Surveyors Training Trust (CSTT), launched the Associate Apprenticeship Scheme. Aimed at 16–24 year olds in England the scheme counts towards RICS Associate membership and features ‘learn as you earn’ methods of studying.
CSTT is an independent charity which provides support to young people who face a barrier to beginning their surveying career. The Associate grade of RICS membership delivers a route into the profession that does not rely on obtaining a degree – the traditional method of entering the profession.
UK Deputy Prime Minister, Nick Clegg welcomed the Associate Apprenticeship Scheme and praised the initiatives RICS has in place to promote fair access to the profession.
The scheme, funded by the UK Government through the Skills Funding Agency, provides financial and educational backing to young people by finding them apprenticeships with surveying firms.
Other key achievements In response to the UK Government’s localism agenda, the independent Land and Society Commission, established by RICS, published a report on how the property industry can support local communities to take on additional powers and responsibilities under government plans for localism in England. The 24 recommendations describe a radical new basis for the relationship between the property industry and local communities to help to deliver increased and better development.
The Commission’s report set out its vision for localism and the practical, commercial and social advantages of early and direct community engagement.
lenders. The Condition Report is part of the RICS Home Surveys family, alongside the RICS HomeBuyer Report and Building Survey.
RICS introduced the RICS Condition Report to the UK residential property market. Designed to provide buyers with a clear and concise picture of the state of a property, the report contains easy to follow ‘traffic light’ ratings systems and offers details of urgent defects – the report complements the traditional mortgage valuation that is prepared for
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June Spotlight RICS led on a number of key areas to deliver the UK Government’s innovation and growth measures to help establish the UK as a world leader in sustainable construction and refurbishment. RICS welcomed the Government’s response to the Low Carbon Construction Innovation and Growth Team report, which demonstrated a willingness to work with the construction industry.
Key initiatives that RICS is taking forward include:
RICS is heavily engaged in many of the areas highlighted in the report and took the initiative on key issues, such as establishing a method for measuring embodied carbon, investigating the use of Building Information Modelling (BIM), developing the Ska Rating tool for sustainable fit-outs and working on the proposals for the Green Deal.
• h elping the Government carry out sustainable fit-outs of its office stock using the Ska Rating tool
• e stablishing a standard method of measuring embodied carbon, through our Building Cost Information Service (BCIS) • a ssessing the potential use of BIM in the construction and refurbishment process
• c ollaborating with the Government on proposals for the Green Deal to build cross-sector partnerships.
12 pathways available for RICS Associate grade
Other key achievements RICS launched seven new qualification pathways, enabling those with industry experience but without a university education to develop a career in surveying. Applicants can now qualify in the fields of commercial property management, valuation, building surveying, building control, land and engineering surveying, hydrographic surveying and residential property management. The new pathways
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join quantity surveying and construction, residential survey and valuation, residential estate agency, project management and facilities management. According to research released by RICS Public Private Partnerships (PPPs) have proven to be an effective method for infrastructure projects globally over the last 10 years
– a finding in stark contrast to the generally negative opinion these ventures receive. At a time when many national governments are introducing public spending cuts, and with an estimated annual spend of US$500 trillion until 2030 needed to meet global infrastructure demands, PPPs will continue to play an essential role in redressing the infrastructure ‘investment gap’.
July Spotlight Following RICS Governing Council’s decision to move its strategic planning onto a longer term horizon by looking at potential future scenarios for RICS, we commissioned Professor John Ratcliffe FRICS to carry out the Futures project. His brief was to ‘conduct a strategic foresight exercise which explores the preferred future of RICS over the next 20 years as an international professional standards body, considering the driving forces of change it might face and the consequent need to develop and sustain a strategic policy response to secure its future’. The study drew on the views of many RICS stakeholders, gaining a substantive level of engagement and resulted in the report Just Imagine which was released in July. The results of the report are being used to help guide RICS’ long-term strategy and provide a clear steer to RICS’ threeyear rolling business plan cycle.
130 See Lian Ong became 130th RICS President
See Lian Ong becomes 130th RICS President
Professor Ratcliffe’s findings concluded that RICS must reach out globally and demonstrate the need for an interconnected set of disciplines that collectively contribute to developing a better built environment.
Other key achievements See Lian Ong FRICS was inaugurated as the 130th President of RICS – the first non-British passport holding President in the 143 year history of RICS. Malaysian-born See Lian has more than 35 years of experience spanning both the public and private sectors as a quantity surveyor.
Professions for Good is a crossprofessional initiative of which RICS is a founding member. Chaired by former RICS Chief Executive Louis Armstrong, the group represents more than one million professionals worldwide
including the legal, accountancy, property, science and engineering professions. Professions for Good launched the Best Practice Code on Internships as part of a wider campaign to improve access to the professions.
Annual Review 2010/2011 21
RICS membership Total number of RICS members and the percentage of each grade of membership by world region.
Americas
Region
Members
Asia
Region
Europe
Members
Region
Members
FRICS
771
FRICS
694
FRICS
698
MRICS
1 598
MRICS
6 193
MRICS
4 249
AssocRICS 31 Trainees
174
India
Region
Members
AssocRICS 170 Trainees
1 694
Ireland
Region
Members
AssocRICS 19 Trainees
1 502
MENEA
Region
Members
FRICS
69
FRICS
422
FRICS
396
MRICS
402
MRICS
1 696
MRICS
2 170
AssocRICS 1 Trainees
44
AssocRICS 157 Trainees
Oceania
38
AssocRICS 99 Trainees
700
UK
Total membership
Region
Members
Members
FRICS
412
FRICS
16 752
MRICS
1 564
MRICS
54 155
AssocRICS 21 Trainees
22 Annual Review 2010/2011
Region
365
AssocRICS 1 922 Trainees
12 433
FRICS MRICS AssocRICS Trainees
20 214 72 027 2 420 16 950
Membership growth RICS designations FRICS – Fellow of RICS
Five year trend in membership growth
A prestigious award – only members who are high achievers in their careers may apply to become a fellow. They will be leaders; active people who have completed unique projects or contributed to the profession. MRICS – Member of RICS For members who have undergone a period of rigorous study and training. RICS membership is only awarded to those who are prepared to maintain exemplary standards – for the public advantage.
Year end
FRICS
MRICS AssocRICS Trainees
July 2011
20 214
72 027
2 420
16 950
111 611
July 2010
20 622
69 846
2 185
16 469
109 122
July 2009
21 043
67 789
2 182
16 760
107 774
July 2008
21 415
65 351
2 252
15 971
104 989
July 2007
21 758
62 593
2 335
13 944
100 630
Total
11
10
09
08
07 07
11
10
09
08
07
AssocRICS is a non-chartered grade for technical and support staff working in the land, property and construction sectors. The entry-level grade offers members a progressive, non-graduate route to chartered status.
M RI CS
FRIC S
AssocRICS – Associate of RICS
08 09
10 11
AssocRICS
07
08 09 10
11
Tra ine es
Annual Review 2010/2011 23
Group financial statement Principal activities The principal activities of the Group include setting professional standards, including those for admission to membership, the maintenance of members’ professional competence, the regulation of standards of practice, providing information and the promotion of the profession. The Group funds its activities through an annual professional membership subscription, regulatory fees and income from commercial services such as learning events and software applications. Overall financial performance The Group is undergoing a period of prudent investment aimed at accelerating its long-term vision. As such it is prepared for a period of controlled financial deficits over the next few years before it expects to see a return on these investments and return to operating at close to break-even. The net deficit for the year was £863,000 (2010 – deficit of £1,372,000), which was better than planned. Challenging economic conditions in some markets also meant that overall RICS revenues were some £540,000 less than planned. As a result operational cost savings were made. Outside the UK, membership subscriptions grew by almost £1,000,000, this increase was primarily generated by a growth in membership of circa 2,000. Total subscription income for the Group grew from £34,115,000 in 2009/2010 to £36,580,000 in 2010/2011.
Income from our investment portfolio remained broadly unchanged. Interest rates in the UK remain at a record low with marginal interest being received on short term cash deposits. Following completion of the refurbishment work of Parliament Square, Red Book revaluations were undertaken of the properties in London and Edinburgh. As a result there has been an uplift in the carrying values at the end of the financial year. RICS reserve levels continue to be maintained at a level in accordance with the reserves policy agreed by Finance Committee. Performance will continue to be closely monitored and, where possible, the investment programme maybe further advanced to bring forward the strategic ambitions set by Governing Council. The following pages show the Group Income Statement, Summary Balance Sheet, Summary Cashflow Statement, Notes to the Summary Financial Statements and a report from the Group Auditors. The pages have been extracted from the audited financial statements for the year ended 31 July 2011. The full accounts can be found in the RICS Annual Review and Financial Statements 2011.
Total income 2011 = 2010 =
24 Annual Review 2010/2011
43 136M 39 713M
Group income statement – for the year ended 31 July 2011 31 July 2011 31 July 2010 Income Expenditure Total Total Note £’000 £’000 £’000 £’000 Income Professional subscription and entry fees 40,208 (1,020) 39,188 35,653 Learning, professional development & other member services 17,676 (13,728) 3,948 4,060
43,136 39,713
57,884 (14,748) Key activities and services Creating and enforcing professional standards - (7,297) (7,297) (6,637) Gaining influence and building brand profile - (7,917) (7,917) (7,381) Regional and local service provision - (13,457) (13,457) (10,634) Technology development - (1,071) (1,071) (751) Legal and governance - (2,694) (2,694) (3,146) Technology operations - (4,673) (4,673) (4,144) Property operations and lifecycle maintenance - (2,174) (2,174) (1,911) Finance operations and ongoing compliance - (2,558) (2,558) (1,893) Depreciation and amortisation - (2,032) (2,032) (2,488) Central activities - (1,419) (1,419) (1,192) Total expenditure on key activities and services - (45,292) (45,292) (40,177) Other costs Charitable trusts and donations - (123) (123) (167) Refurbishment of property at Parliament Square, London - (329) (329) (391) Loss on foreign exchange - (14) (14) (188) Total other costs - (466) (466) (746) Operating result before exceptional item 57,884 (60,506) (2,622) (1,210) Exceptional item - - - (1,023) Operating result after exceptional item 57,884 (60,506) (2,622) (2,233) (Loss)/profit on sale of fixed assets (176) - (176) 93 Result before interest and taxation 57,708 (60,506) (2,798) (2,140) Investment income 551 - 551 587 Other interest receivable and similar income 414 - 414 264 Result before taxation 58,673 (60,506) (1,833) (1,289) Taxation credit/(charge) 970 (83) 2 Net deficit for year after taxation (863) (1,372)
All activities have arisen from continuing operations. These summary financial statements were approved by the Management Board on 8 November 2011 and were signed on its behalf by James Carter, Chairman of Management Board and Sean Tompkins, Chief Executive Officer. These summary financial statements are only a summary of the information, relating to the income statement, balance sheet and cash flow statement contained in the consolidated Annual Review and Financial Statements and are not statutory accounts. A copy of the full annual report and financial statements can be viewed online at http://www.rics.org/aboutus The full Annual Review and Financial Statements for the year ended 31 July 2011 was subject to audit and the Auditors’ report was unqualified. The full financial statements were approved by the Management Board on 8 November 2011 and were signed on its behalf by James Carter, Chairman of Management Board and Sean Tompkins, Chief Executive Officer.
Annual Review 2010/2011 25
Group balance sheet – as at 31 July 2011
Current assets July 2011
July 2010
8.72% =
1000
overall current assets from 2010 to 2011
500
Stocks
Debtors
Short term investments
Cash at bank and in hand
Note
31 July 2011 31 July 2010 £’000 £’000
Fixed assets Intangible assets 62 70 Tangible assets 26,940 24,983 Listed and unlisted investments 24,613 24,036
51,615
49,089
14,316
13,168
34,813
33,523
Current assets Stocks 391 361 Debtors 7,679 5,056 Short term investments 3,309 5,193 Cash at bank and in hand 2,937 2,558
Creditors Amounts falling due within one year (31,118) (28,734) Net current liabilities (16,802) (15,566) Total assets less current liabilities Creditors Amounts falling due after one year (1,171) (1,220) Provisions for liabilities (10) (5) Net assets before pension asset 33,632 32,298 Pension asset 3,047 877
36,679
33,175
36,679
33,175
Net assets after pension asset Reserves 2 Free reserves 34,912 31,397 2 Restricted reserves 1,767 1,778
There is no share capital since the constitution of RICS is that of a body corporate under Royal Charter.
26 Annual Review 2010/2011
Group cashflow statement – as at 31 July 2011
Note
31 July 2011 31 July 2010 £’000 £’000
Net cash (outflow)/inflow from operating activities (1,582) 1,251 Returns on investments and servicing of finance Taxation (118) (10) Capital expenditure and financial investment (803) (3,605) Net cash outflow before use of liquid resources and financing (1,538) (1,514) Management of liquid resources 1,884 1,019 Increase/(decrease) in cash in the year 346 (495)
965 850
Reconciliation of net cash flow to movement in net funds Increase/(decrease) in cash in the year 346 (495) Cash outflow from decrease in liquid resources (1,884) (1,019) Changes in net funds resulting from cash flows (1,538) (1,514) Effect of foreign exchange rate changes 33 139 Movement in net funds in the year (1,505) (1,375) Net funds at 1 August 7,751 9,126
6,246
7,751
Net funds at 31 July
Returns on investments and servicing of finance July 2011
July 2010
965,000
850,000
13.53% = overall returns on investment from 2010 to 2011
Annual Review 2010/2011 27
Notes to the summary financial statements – as at 31 July 2011
1. Basis of preparation The financial statements for the year to 31 July 2011 have been prepared under the historical cost convention, as modified by the revaluation of fixed asset investments to market value at the balance sheet date. 2. Reserves Free reserves Revenue reserves £’000 At 1 August 2010 Deficit on activities after tax for the year Transferred to other reserves Transferred from other reserves Other recognised loss – recognition of deferred tax Other recognised gain – pension surplus
5,808 (863) (623) 1,050 (1,070) 1,473
At 31 July 2011
5,775
Other free reserves
Revaluation reserve
Premises reserve
£’000
Clients Money reserve
Translation reserve
Investment revaluation reserve
£’000 £’000 £’000
Total
£’000 £’000
At 1 August 2010 Revaluation surplus Retranslation Transferred from other reserves Transferred to other reserves
15,467 5,776 2,258 623 1,465 25,589 1,055 - - - 2,851 3,906 - .- - 48 - 48 - 572 51 - - 623 - (329) (700) - - (1,029)
At 31 July 2011
16,522
6,019
1,609
671
4,316
29,137
Total free reserves
34,912
Restricted reserves Member Support Service £’000 At 1 August 2010 1,117 Transferred to other reserves (21) Other reserve movements - At 31 July 2011
1,096
Other Total £’000 £’000 661 1,778 - (21) 10 10 671
1,767
Free reserves July 2011
August 2010
Total free reserves =
20, 000 15, 000 10, 000
28 Annual Review 2010/2011
In re ves va tm l re uat en se io t rv n e
Tr an s re lat se io rv n e
C M lie re on nts se e rv y e
Pr e re mis se e rv s e
Re va l re uat se io rv n e
5, 000
29 137M in July 2011 25 589M in August 2010
Independent auditor’s statement to the Governing Council of the Royal Institution of Chartered Surveyors (RICS) We have examined the summary financial statements for the year ended 31 July 2011 set out on pages 25 – 28. Respective responsibilities of the Governing Council and auditor The Governing Council is responsible for preparing the summary consolidated income statement, summary consolidated balance sheet and summary consolidated cash flow in accordance with applicable United Kingdom law. Our responsibility is to report to you our opinion on the consistency of the summary financial statements within the annual report with the full annual financial statements.
Basis of opinion We conducted our work in accordance with Bulletin 2008/3 ‘The auditors’ statement on summary financial statement in the United Kingdom’ issued by the Auditing Practices Board. Our report on the entity’s full annual financial statement describes the basis of our opinion on those financial statements and on the Annual Report. Opinion In our opinion the summary financial statement is consistent with the full annual financial statements and the Annual Report of the Royal Institution of Chartered Surveyors for the year ended 31 July 2011.
We also read the other information contained in the annual report and consider the implications for our report if we become aware of any apparent misstatements of material inconsistencies with the summary financial statement. Our report has been prepared pursuant to the requirements of the Royal Charter and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of the Royal Charter or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.
BDO LLP, Statutory Auditor Gatwick United Kingdom Date: 16 November 2011 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Annual Review 2010/2011 29
RICS governance structure RICS’ strategic direction is set by Governing Council incorporating the leadership team and member representatives from across the world. The Council, chaired by RICS’ President, is supported by a number of groups and boards, populated by around 1 000 active members, RICS staff and ‘lay’ (non) members. These include world regional boards, national councils, 17 specialist professional group boards, policy committees and boards covering membership, communications, knowledge and the arm’s length Regulatory Board.
Privy Council
Grants and awards Royal Charter
Governing Council
Regulatory Board
Management of Royal Charter obligations, setting direction and strategy
Management Board Audit Committee
Day-to-day performance and delivery of the business plan
The arm’s length Regulatory Board reports solely to Governing Council on its activities
Knowledge Board
30 Annual Review 2010/2011
World Boards
Communications Board
Membership Board
Finance Committee
Business Development Board
Remuneration Committee
RICS management structure
Leadership Team
President
See Lian Ong FRICS
(2011/2012 financial year)
President Elect
Alan Collett FRICS
Senior Vice President
Michael Newey FRICS
Vice President
Chris Fossick FRICS
Vice President
Louise Brooke-Smith FRICS
Vice President
Martin Br端hl FRICS
Honorary Secretary
Robert Mahoney FRICS
Honorary Treasurer
Bill Gater FRICS
Chief Executive Officer
Sean Tompkins
Management Board
Chair
James Carter FRICS
(2011/2012 financial year)
Vice Chair
Amanda Clack FRICS
RICS non-executive members
Richard Cotton FRICS
Mark Holden FRICS
Philip Lo FRICS
Ian Perry FRICS
Fiona Spencer-Jones MRICS
Independent non-executives
Sarah Blackburn
Penelope Francis
Dennis Heywood
Chief Executive Officer
Sean Tompkins
Executive Director of Finance Violetta Parylo and Corporate Services
Executive Team
Chief Executive Officer
Sean Tompkins
(2011/2012 financial year)
Director of Corporate Affairs
Gillian Charlesworth
Director of Regulation
Steven Gould
Executive Director of Finance and Corporate Services
Violetta Parylo
Executive Director of Developing Markets
Marcus Potter
Executive Director of Product Development
Mark Powell
Executive Director, UK
Mark Walley
Director of Human Resources and Corporate Responsibility
Sharon Wilson
Director of Professional Standards
Kenneth Creighton (from Nov 2011)
Annual Review 2010/2011 31
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In a world where more and more people, governments, banks and commercial organisations demand greater certainty of professional standards and ethics, attaining RICS status is the recognised mark of property professionalism. Over 100 000 property professionals working in the major established and emerging economies of the world have already recognised the importance of securing RICS status by becoming members. RICS is an independent professional body originally established in the UK by Royal Charter. Since 1868, RICS has been committed to setting and upholding the highest standards of excellence and integrity – providing impartial, authoritative advice on key issues affecting businesses and society. RICS is a regulator of both its individual members and firms enabling it to maintain the highest standards and providing the basis for unparalleled client confidence in the sector. RICS has a worldwide network. For further information simply contact the relevant RICS office or our Contact Centre. Europe (excluding United Kingdom and Ireland) Rue Ducale 67 1000 Brussels Belgium
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