23>s3St Jt l l 2.l The Institute of EconomicAffairs (A Charitable Company Limited by Guarante:e) TRUSTEES'REPORTAND FINANCIALSTATEMENTS 31 December 2011 2 2 JUN1012 Company Registration No. 755502 Registered Charity No. 235351 ll TheInstituteof EconomicAffairs TRUSTEES'REPORT Company Registration Number: 755502 Charity Registration Number: 235351 TRUSTEES Professor DR Myddelton Kevin Bell Robert Boyd Michael Fisher Michael Hintze Professor Patrick Minford Professor Mark Pennington Neil Record Professor Martin Ricketts Linda Whetstone Chairman DIRECTOR GENERAL Mark Littlewood EDITORIAL AND PROGRAMME DIRECTOR Professor Philip Booth SECRETARY CRusbridge REGISTERED OFFICE 2 Lord North Street Westminster London SWlP 3LB AUDITORS Baker Tilly UK Audit LLP Chartered Accountants The Pinnacle 170 Midsummer Boulevard Milton Keynes Bucks MK91BP BANKERS Barclays Bank plc Pall Mall Corporate Banking Centre Pall Corporate Group PO Box 15163 London SWlA 1QD Page 1 TheInstitute of EconomicAffairs TRUSTEES'REPORT The Trustees present their report together with the accounts of the Institute of Economic Affairs for the calendar year 2011. STATUS The Institute of Economic Affairs (IEA) is a charitable company limited by guarantee. The Institute was established through a trust deed in November 1955 and incorporated in 1963. It was set up under a Memorandum of Association which set out its objects and powers and gov1!rned under its Articles of Association. It is a registered charity [No. CC/235351 ]. GOVERNANCE The IEA is managed by its Director General, Mark Littlewood, who oversees an aspects of its affairs and is responsible for achieving its goals. He reports three times a year to the fun Board of Trustees and more frequently to its Finance and General Purposes Committee. Decisions about the level and mix of activities are made by the Trustees; about detailed day-to-day operations by senior staff, sometimes with advice from the Finance and General Purposes Committee. Three of the Trustees, the Chairman of the Board, the Treasurer, Robert Boyd, and the Chairman of the Finance and General Purposes Committee, Kevin Ben, together form a sub-committee which reviews the Director General's performance annuany; and they also serve as a Nominations Committee and as an Audit Committee. OBJECTIVES AND ACTMTIES The charity's main aims are to promote learning by means of research into ec:onomics and politics and to improve public understanding thereof. We try to achieve our objectives by means of the activities listed below, which include anocated costs of Administration and Research. Academic programmes: • • • • Publications Student/teacher outreach Lectures, conferences, seminars and special events Communication and distribution, including website Fundraising and subscriber support PUBLIC BENEFIT As detailed above, the charity's main aims are to promote learning by means of research into economics and politics and to improve public understanding thereof. We try to bring analysis of issues relating to political economy to the public's attention through our various academic programmes and other activities. The Trustees confirm that, in exercising their powers and fulfining their responsibilities in pursuit of the aims described above, they have paid due regard to the guidance on public benefit published by the Charity Commission. The above statements comply with the fourth commencement order of the Charities Act 2011. REVIEW OF ACHIEVEMENTS Our mission is: "To improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems." We aim to achieve our mission by undertaking the various activities listed above. Ordinary donations were some 25 per cent higher than in 2010. We are continuing to modify our way of operating in order to allow greater flexibility to respond to potential changes, both in income and in programme opportunities. Page2 ' . TheInstituteof EconomicAffairs TRUSTEES'REPORT Over the year, visits to the website (www.iea.org.uk) were up by 33% to 600,000. Three IEA publications - Sharper Taxes, Lower Taxes; UK Uncut Unravelled; and High Speed 2: the next government project disaster? - were each downloaded more than 2,000 times. We continued to expand the student/teacher outreach programme, under Dr St1eveDavies, our Director of Education. The IEA intern programme reached new highs, with a record number of students spending up to eight weeks working on research projects. The students are regularly invited to our main events and a number of special events - exposing them to the ideas of economic academics - were organised for them. One of these was Freedom Week, which we are now running jointly with th{: Adam Smith Institute and which had a record number of attendees in 2011. Our sixth-form event in Oxford was attended by 170 students (and over-subsc1ibed). The IEA State of the Economy Conference was also attended by more than 60 students and teachers. The IEA sponsors a PhD student, Kristian Niemietz. His Research Monograph: "A New Understanding of Poverty" was published in January 2011. It subsequently went on to win a prestigious Templeton Freedom Award at the Atlas Research Foundation conference in New York. The IEA published or co-published eight titles in print in 2011, together with three editions of our journal, Economic Affairs. A further four titles were published in our Main Web series. Many IEA publications that were previously out of print have also been made available through our print-on-demand system. In all we published over 150 authors across our monographs, web papers and journal and our triannual student/teacher supplement reached 2,000 individuals or educational establishments across the UK. The IEA organised around 100 events in 2011, including major conferences and many lunch, dinner and evening events, including lectures, seminars, interviews, debates, book launches and other special events. Our annual Hayek Memorial Lecture was delivered by Harvard Professor Reibert Barro in July 2011 and attracted an audience of over 500. A new event, the E.G. West Lecture, was delivered by Professor James Tooley of Newcastle University. His lecture, on the profit motive in education, attracted an audience of nearly 200 people. The IEA also continued to expand its media coverage, with senior IEA staff and fellows making nearly 1,200 media appearances across print, radio and television - up 20 per cent on the previous year. In addition, more than 2,000 people now follow the IEA on Facebook and 1,300 follow us on Twitter. Our objectives are essentially long-term in nature and it remains extremely difficult to assess the extent of 'public understanding' and changes therein. We do measure the volume of many of our activities; and we aim to maintain or improve their quality. All our main publications are refereed by independent scholars and we benefit from a network of distinguished academic advisers, to whom we are most grateful. There is a formal meeting of academic advisers once a year, under the chairmanship of Professor Martin Ricketts, om: of our Managing Trustees. Continuing themes are over-regulation, much of it stemming from the Europ{:an Union; systemic problems in the welfare state, including social security, education and health services; corruption, both intellectual and financial, in public life; and other pervasive aspects of government interference. In early 2012, as this Report is being written, the UK government is still incurring enormous annual deficits. Yet appreciation of the urgent need to cut back the scope of government remains limited. Hence the IEA' s role in spreading public understanding is as important as ever. I FINANCIAL REVIEW Total incoming resources during the year were £1,020,000 and total resources expended were £1,178,000 leaving net resources expended of £158,000 of which £29,000 related to restricted projects. The net decrease in funds was £240,000, after allowing for realised and unrealised gains and losses on investments. Investment income on the Ralph Harris Fund during the year amounted to £72,000. Page3 TheInstitute of EconomicAffairs TRUSTEES' REPORT Our income mainly comprises donations from individuals, companies, foundations and personal trusts, together with revenue from sales of publications and from conferences and income from investments. We do not accept donations or grants from government. It is a feature of the modem UK scene that all too many so-called "charities" do receive much - in many cases most - of their funds from government (that is, from taxpayers). The Finance and General Purposes Committee, and the full Board of Managini~ Trustees, regularly review the amount of donations. There has been a welcome increase in the amount of donations in 2011 and we are grateful to all our donors for supporting our work. GRANT MAKING POLICY The Trustees make occasional grants to individuals to support their research and to attend conferences. These are often from restricted funds donated specifically for such purposes. From time to time grants may be made to other Institutes where the Trustees think it appropriate. All such projects are assessed by reference to our mission. INVESTMENT AND RESERVES POLICIES The Institute's educational mission has a long-term orientation, as noted above, whereas our ability to carry out our work depends on attracting annual donations in a highly competitive fund-raising environment. Accordingly the Trustees' policy is to invest conservatively, largely in equity funds, fixed interest funds and government securities. The Ralph Harris Fund is invested with a long-term time horizon. Income on investments is used to support the IEA's work. The Tr;easurer and the Finance and General Purposes Committee regularly review investment results. The Trustees' reserves policy, which is reviewed at least annually, is to maintain sufficiently liquid reserves, including designated funds, equivalent to at least six months expenditure. We believe this is adequate, under normal circumstances, to enable us to maintain operations in the event of seasonal or other possible fluctuations in donations and other income and/or expenditure. Some of our activities, especially publications, are programmed well in advance, and are difficult or expensive to modify at short notice. RISK REVIEW The primary risks and uncertainties to which the IEA is exposed are reputational, loss of key personnel, and financial. Reputational risk centres on the quality and integrity of the Jnstitute's research and publications and other activities. As noted above, all the IEA's major publications are peer reviewed under a system managed by the Editorial and Programme Director, Professor Philip Booth, and supervised by the Chairman of our Academic Advisory Board, Professor Martin Ricketts. The IEA maintains strict independence from commercial, party political or other interests. It does not accept commissions to perform research on behalf of others. The performance of key personnel is reviewed at least annually, either by the Director General or by a small committee of Trustees, led by the Chairman, to assess whether both the employer's and employee's objectives are being satisfied. As with any small organisation, it is not possible completely to protect against the loss of key people. Financial risks and uncertainties are largely covered by the Reserves and Investment policies noted above. The Trustees examine at least once a year the major strategic, operational and financial risks and uncertainties which the Institute faces, either at regular or special Board meetings, or through the Finance and General Purposes Committee. FUTURE PLANS The Institute intends to enhance its activities in 2012 and beyond, continuing our long-established programme of publications and conferences, focusing especially on developing our website. Our Director of Education, Dr Steve Davies, is leading and developing our outreach programme for students and teachers. Page4 TheInstituteof EconomicAffairs TRUSTEES' REPORT We recognise our need to attract new readers, listeners and viewers (and new authors). Currently our main focus for research, which we review regularly, is on the following areas related to free markets: the welfare state, the impact ofregulation (especially financial regulation) and the causes and effects of high levels of government spending. TRUSTEES The following were Trustees (who are directors for the purposes of company law) at the time of signing this report and financial statements. They all held office throughout the year 2011. Professor DR Myddelton Kevin Bell Robert Boyd Michael Fisher Michael Hintze Professor Patrick Minford Professor Mark Pennington Neil Record Professor Martin Ricketts Linda Whetstone Chairman In addition, Malcolm McAlpine was a trustee until his death in May 2011. He had been a Trustee of the IBA since 1989, and a very generous supporter of the Institute. None of the Trustees has an interest, direct or indirect, in any contract entered into by the Institute. The Trustees may from time to time, and at any time, appoint any person to be a Trustee, provided that the prescribed maximum of twelve Trustees is not exceeded. This is normally done on the recommendation of the Nominations Committee. Any Trustee so appointed shall retain office w1til the next Annual General Meeting, but will then be eligible for re-election. Thereafter Trustees retire, but may be eligible for reelection, on a three-year rotating basis. New Trustees are 'trained' mostly on the job by attending meetings of Trustees. They are provided with notes covering the institute's mission, history, organisation, governance and details of the other Trustees, together with the latest Trustees' Report and Financial Statements. Newly appointed Trustees will usually already have substantial board level or departmental management experienc,e in either the commercial or academic arena. TAXATION STATUS The charitable company is a registered charity and, as such, for taxation purposes is entitled to exemption under the Income and Corporation Taxes Act 1988. AUDITORS A resolution to reappoint Baker Tilly UK Audit LLP, Chartered Accountants, as auditors will be put to the members at the annual general meeting. This report has been prepared in accordance with the Statement of Recommended Practice: Accounting and Reporting by Charities (issued in March 2005). B~ Professor DR Myddelton Chairman 29 May2012 Page5 TheInstituteof EconomicAffairs TRUSTEES' REPORT TRUSTEES' RESPONSIBILITIES The Trustees (who are also directors of the Institute of Economic Affairs for th1~purposes of company law) are responsible for preparing the Trustees' Report and the financial state:ments in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Company law requires the Trustees to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the charitable company and of the incoming resources and application of resources, including the income and expenditure, of the charitable company for that period. In preparing those financial statements, the Trustees are required to: • select suitable accounting policies and then apply them consistently; • observe the methods and principles in the Charities SORP; • make judgements and estimates that are reasonable and prudent; • state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; • prepare the financial statements on the going concern basis unless it is iinappropriateto presume that the company will continue in business. The Trustees are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the charitable company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the charitable company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. In so far as the Trustees are aware: • there is no relevant audit information of which the charitable company's auditor is unaware; and • the Trustees 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. Page6 The Institute of EconomicAffairs INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE INSTITUTE OF ECONOMIC AFFAIRS For the year ended 31 December 2011 We have audited the financial statements of the Institute of Economic Affairs for the year ended 31 December 2011 on pages 8 to 19. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and the charitable company's members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of trustees and auditors As explained more fully in the Statement of Trustees' Responsibilities set out on page 7, the trustees (who are also directors for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of fmancial statements is providtd on the APB's website at www. fi:c.org.uklapb/scope/private.cfm. Opinion on financial statements In our opinion the financial statements: give a true and fair view of the state of the charitable company's affairs as at 31 December 2011 and of its incoming resources and application of resources, including its income and expenditure, for the year then ended; have been properly prepared in accordance with United Kingdom Gi~nerally Accepted Accounting Practice; have been prepared in accordance with the Companies Act 2006. Opinion on other requirement of the Companies Act 2006 In our opinion the information given in the Trustee's Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: the charity has not kept adequate accounting records, or returns adequate for our audit have not been received from branches not visited by us; or the financial statements are not in agreement with the accounting records or returns; or certain disclosures of Trustees' remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit; or the Trustees were not entitled to prepare the :financial statements in accordance with the small companies regime and take advantage of the small companies exemption in preparing the Trustees' Report. ~~l~em~s~1~~tr ~ For and on behalf of BAKER TILLY UK AUDIT LLP, Statutory Auditor Chartered Accountants The Pinnacle 170 Midsummer Boulevard Milton Keynes Bucks MK91BP \2 ;rv.J'eQ,o11- Page7 TheInstitute of EconomicAffairs STATEMENT OF FINANCIAL ACTIVITIES (INCLUDING AN INCOME AND EXPENDITURE ACCOUNT) (continued) For the year ended 31 December 2011 Notes INCOMING RESOURCES Incoming resources from generated funds Voluntary income Activities for generating funds Investment income Dividends receivable Interest receivable Incoming resources from charitable activities: Academic programme: Publications and subscriptions Events 1 Unrestricted funds £000 Restricted funds £000 Endowment fund £000 Total 2011 £000 Total 2010 £000 679 8 93 772 8 634 7 3 12 48 28 51 40 47 36 37 112 55 117 169 1,020 896 37 112 -- Total incoming resources 851 RESOURCES EXPENDED Charitable activities: Fundraising and subscriber support Academic programme: Publications Student/Teacher outreach 126 28 154 135 352 21 113 373 269 391 140 209 17 118 18 1 226 136 20 284 145 43 86 198 1,178 156 Events Communications Governance Exceptional costs 3 7 19 Total resources expended 2 980 NET (RESOURCES EXPENDED) Other recognised gains and losses: Unrealised (losses)/gains on investments Realised (losses) on disposal of investments NET MOVEMENT IN FUNDS TOTAL FUNDS BROUGHT FORWARD as previously stated Prior Year Adjustment TOTAL FUNDS BROUGHT FORWARD as restated TOTAL FUNDS CARRIED FORWARD -- --- 1,224 --- 4 (129) 9 (4) (29) (67) (11) (158) (328) (71) 224 (11) -(133) (40) (67) (240) (104) 71 2,434 4,355 4,459 2,434 4,355 16 1,850 (584) 584 13,14 1,266 655 15 -- 4,459 --1,133 All of the above results are derived from continuing activities. 615 2,367 = 4,115 4,355 == Page8 TheInstitute of EconomicAffairs BALANCE SHEET As at 31 December 2011 CompanyRegistrationNo. 755502 Registere:dCharity No. 235351 Notes FIXED ASSETS Tangible assets Investments 8 9 2011 £000 2010 As Restated £000 636 3,386 659 3,672 4,022 CURRENT ASSETS Debtors Cash at bank and in hand 10 CREDITORS: Amounts falling due within one year 11 NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES FUNDS Endowment funds 4,331 61 118 78 90 179 168 (86) (144) 93 24 4,115 4,355 12 2,367 2,434 Restricted funds 13,15 615 655 Unrestricted funds Designated funds General funds 14,15 14 1,004 129 1,266 TOTAL FUNDS 15 4,115 4,355 The financial statements on pages 8 to 19 were approved by the Trustees and authorised for issue on 29~signed Professor DR Myddelton on it, behalf by: Trustee 29 May 2012 Page9 TheInstitute of EconomicAffairs ACCOUNTINGPOLICIES BASIS OF ACCOUNTING The financial statements have been prepared under the historical cost convention modified to include the revaluation of fixed asset investments at market value, and in accordance wi1h the Companies Act 2006 and follow the recommendations in Accounting and Reporting by Charities: Statement of Recommended Practice, issued in March 2005. The Trustees consider that there are no material uncertainties that may cast doubt upon the charity's ability to continue as a going concern and hence the financial statements have been prepared on this basis. TANGIBLE FIXED ASSETS Fixed assets are stated at historical cost. Depreciation is provided on tangible fixed assets at rates calculated to write e:achasset down evenly over its expected useful life, as follows:Freehold property Office equipment over 40 years over 3 years Expenditure of a capital nature below £1,000 is not capitalised, but charged to the Statement of Financial Activities in the year of expenditure. STOCKS AND WORK IN PROGRESS No value for accounts purposes is attributed to stocks of unsold publications. PENSION CONTRIBUTIONS The Institute operates a defined contribution scheme. Contributions are charged to the Statement of Financial Activities as incurred. INCOMING RESOURCES Income from donations is included in incoming resources when these are rece:ivable,except: • when donors specify that donations given to the charity must be used in future accounting periods, the income is deferred until those periods; • when donors impose conditions, which have to be fulfilled before the charity becomes entitled to use such income, the income is deferred and not included in incoming resources until the preconditions for use have been met. Subscription income is credited to incoming resources for the subscription pedod covered. All other income including income from investments is credited to incoming resources when receivable by the charity. RESOURCES EXPENDED All expenditure is accounted for on an accruals basis and has been classified under headings that aggregate all costs related to the category. Charitable expenditure comprises those costs incurred by the charity in the: delivery of its activities and services for its beneficiaries. It includes both costs that can be allocated directly to such activities and those costs of an indirect nature necessary to support them. Governance costs include those costs associated with meeting the constitutional and statutory requirements of the charity and include the audit fees and costs linked to the strategic management of the charity. All costs are allocated between expenditure categories on a basis designed to reflect the use of the resource. Costs relating to a particular activity are allocated directly. Support costs include central functions and have been allocated to activity cost categories on a basis consistent with the use of resources e.g. by floorspace. Staff costs have been allocated according to the time spent on each activity. Page 10 TheInstitute of EconomicAffairs ACCOUNTINGPOLICIES (continued) FOREIGN CURRENCY Assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to the statement of financial activities. RESEARCH EXPENDITURE Research expenditure is written off in the accounts as it is incurred. UNRESTRICTED FUNDS Unrestricted funds comprise those funds which the trustees are free to use for any purpose in furtherance of the charitable objectives. Designated funds are unrestricted funds for which the trustees have currently designated specific purposes. General funds are unrestricted funds for which no specific purposes have been designated. RESTRICTED FUNDS Restricted funds are those donated to the Institute for one or more specific purposes. ENDOWMENTFUND The Ralph Harris Fund is an expendable endowment fund whose use is restricted to financial support for the position of the Director General, including employment and support costs. INVESTMENTS Investments held as fixed assets comprise equities, open-ended funds, fixed intterest securities and currency and are stated at year end market value. Property is stated at the Trustees' assessment of year-end market value. No depreciation is charged on the property in accordance with SSAP 19. This departure from the requirements of the Companies Act 2006, which requires all properties to be depreciated, is, in the opinion of the Trustees, necessary for the financial statements to give a true and fair view in accordance with applicable accounting standards. Page 11 TheInstitute of EconomicAffairs NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011 1 2010 £000 93 679 96 518 20 772 634 DONATIONS (VOLUNTARY INCOME) Foundations, corporate and individuals Restricted Unrestricted Legacies 2 2011 £000 ALLOCATION OF COSTS 2011 Fundraising and subscriber support Publications Student/Teacher Outreach Events Communications Governance Direct Costs £000 Support costs £000 2011 Total £000 17 91 160 81 21 14 137 282 109 145 115 6 154 373 269 226 136 20 384 794 1,178 ALLOCATION OF SUPPORT COSTS 2011 Personnel costs Office costs Property costs Travel costs 614 90 71 19 794 Support costs have been allocated as follows: Fundraising and subscriber support Publications Student/Teacher Outreach Events Communications Governance Support costs Personnel Costs 12% 28% 25% 25% 10% 0% 19% 38% 10% 16% 16% 1% Page 12 .. TheInstituteof EconomicAffairs NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011 2 ALLOCATION OF COSTS 2010 Fundraising and subscriber support Publications Student/Teacher Outreach Events Communications Governance Exceptional costs (see note 7) Direct costs £000 Support costs £000 2010 Total £000 31 169 65 140 25 37 86 104 222 75 144 120 6 135 391 140 284 145 43 86 553 671 1,224 ALLOCATION OF SUPPORT COSTS 2010 Personnel costs Office costs Property costs Travel costs 532 67 56 16 671 Support costs have been allocated as follows: Personnel costs Fundraising and subscriber support Publications Student/Teacher Outreach 10% 25% 20% 17% 35% 9% Events Communications 35% 10% 20% 0% 1% 2011 £000 2010 £000 6 12 2 16 12 15 20 43 Governance 3 Support costs GOVERNANCE Salaries and staff costs Audit Legal and professional 18% Page 13 •. TheInstitute of EconomicAffairs NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011 4 NET (RESOURCES EXPENDED) Net (resources expended) for the year are stated after charging: Depreciation Auditor's remuneration 5 2010 £000 2011 £000 26 12 24 12 TAXATION The Institute is not liable to corporation tax on its income and gains in the current year to the extent that they are applied for charitable purposes. 6 EMPLOYEES The average monthly number of persons employed by the Institute during the year was: Office and management Staff costs for above persons: Wages and salaries, including benefits Social security costs Other pension costs Exceptional costs Termination payments The number of employees whose emoluments as defined for taxation purposes amounted to over £60,000 in the year was as follows: £60,001 - £70,000 £90,000 - £100,000 2011 No. 2010 No. 11 10 2011 £000 2010 £000 441 378 41 11 49 20 70 510 500 2011 No. 2010 No. 1 1 I I The employees earning over £60,000 participate in the company pension scheme. Contributions paid in the year in respect of these employees amounted to £5,769 (2010: £3,172). No Trustees, or persons related or connected to them, received any remuneration reimbursement of expenses from the Institute during the year. or Page 14 ,. '\ TheInstituteof EconomicAffairs NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011 7 EXCEPTIONAL COSTS 2011 £000 2010 £000 Costs relate to the tennination of the employment of members of staff in 2010. Tennination payments Recruitment / legal fees 70 16 86 8 TANGIBLE FIXED ASSETS Freehold property £000 Office equipment £000 Total £000 Cost 1 January 2011 Additions 965 69 3 1,034 3 31 December 2011 965 72 1,037 Depreciation 1 January 2011 Charged in the year 306 25 69 1 375 26 31 December 2011 331 70 401 Net book value 31 December 2011 634 2 31 December 2010 659 636 659 Page 15 \ TheInstituteof EconomicAffairs NOTES TO THE FINANCIALSTATEMENTS For the year ended 31 December 2011 9 FIXED ASSETS INVESTMENTS Equities £000 Market value at 1 January 2011 Additions Disposals Unrealised gain/(loss) 390 Fixed interest securities £000 Cash held on deposit £000 1,800 244 577 100 (50) 805 614 (733) (105) 34 1,939 661 686 100 3,386 2,032 612 686 71 3,401 1,788 561 805 71 3,441 (390) Market value at 31 December 2011 Historical cost at 31 December 2011 Historical cost at 31 December 2010 Openend funds £000 216 Property £000 100 Total £000 3,672 958 (1,173) (71) Equities and fixed interest securities are held by fund managers on behalf of the Charity. Equities include £nil (2010: £310,711) of non-UK investments. Property represents an equity share in leasehold property, and is included in the accounts at the Trustees' assessment of market value. IO DEBTORS Due within one year: Trade debtors Tax recoverable Prepayments and accrued income 11 CREDITORS: Amounts falling due within one year Trade creditors Taxation and social security Other creditors Accruals and deferred income 2011 £000 2010 £000 44 4 13 62 5 61 78 2011 £000 11 2010 £000 36 32 4 14 11 84 1 48 86 144 Deferred income has arisen as a result of 2 year subscriptions paid in advance. Amounts are released to the Statement of Financial Activities within the year to which the subscription relates. Page16 TheInstitute of EconomicAffairs NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011 12 EXPENDABLE ENDOWMENT FUND At 1 January 2011 £000 Revaluation £000 At 31 December 2011 £000 2,434 (67) 2,367 Ralph Harris Fund The Ralph Harris Fund has been established as an expendable endowment fund to endow the position of Director General of the IEA as "Director General and Ralph Harris Fellow." 13 RESTRICTED FUNDS Lord Vinson publication State of the Economy conference Freedom Week Networking Activities Earhart grant for Franklin Cudjoe Earhart grant for Kristian Niemeitz Trade Policy Research Centre Supporter Database Ralph Harris Fund (note 12) M Fund (note 16) At 1 January 2011 Prior Year Adjust -ment £000 £000 Atl January 2011 As Restated £000 10 IO 8 8 9 9 25 Income Expenditure /Realised Losses At31 December 2011 £000 £000 £000 (10) 5 1 2 25 (9) (I) (2) 4 (7) 2 6 (6) 69 (88) 6 IO IO 19 584 19 584 584 655 72 4 (71) (15) 20 573 169 (209) 615 -- 71 == Lord Vinson's donation was in support ofa publication on Self-Employmentpublished in 2011. State of the Economy conference donations cover the cost of bursary places for students. Donations were received to fund a Freedom Week conference for stude:ntsin Cambridge in the summer of 2011 and to fund networking activities during 2011. The Earhart Foundation is funding research fellowships for Franklin C:udjoeand Kristian Niemeitz. The Trade Policy Research Centre carries out research into the UK's trade policy options outside the Common Commercial Policy/Single Market Framework of the EU. A donation was received in 2011 towards developments to the supporter database planned to be carried out during 2012. The M Fund was set up to promote research into the reduction in the size of the public sector and to promote an interest in market economy policies on the part of teachers and senior pupils. Pagel? TheInstituteof EconomicAffairs NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011 14 UNRESTRICTED FUNDS At 1 January 2011 £000 Designated Funds Fixed Asset Fund MFund Dorian Fund Warren Fund Designated unrestricted funds Unrestricted general funds Prior Year Adjust -ment 659 584 At 1 January 2011 As Restated £000 Transfers £000 At31 December 2011 £000 634 (25) (584) 377 230 230 1,850 Expenditure £000 659 377 1,850 Income £000 Investment gains £000 (584) (584) 288 (4) 82 (149) (274) 16 1,266 1,266 (100) 15 835 (980) 851 (980) (4) 1,004 129 274 (4) 1,133 The Fixed Asset Fund represents donations made to the Institute currently designated and used by the Trustees for the purpose of acquiring freehold and investment property. A transfer has been made between the Fixed Asset Fund and General Fund in order to reflect the depreciation of the freehold property in the year. The Dorian Fund has been designated by the Trustees to support the costs of an education director. The Warren Fund is used by the Trustees to support major commitments extending over more than a single year and to provide working capital. 15 ANALYSIS OF NET ASSETS BETWEEN FUNDS Designated Funds £000 Fund balances at 31 December 2011 are represented by: Tangible fixed assets Investments Current assets Current liabilities Total net assets 634 370 1,004 Restricted funds £000 Endowment fund £000 56 157 ( 86) 593 2,367 129 615 General Funds £000 2 22 2,367 Total funds £000 636 3,386 179 ( 86) 4,115 Page18 TheInstitute of EconomicAffairs NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011 16 PRIOR YEAR ADWSTMENT The M Fund (previously known as the Malcolm Fund) was set up to promote research into the reduction in the size of the public sector and to promote an interest in market economy policies on the part of teachers and senior pupils. Following the death of the donor in May 2011, we reviewed the status of the M Fund and received legal advice to the effect that it should be regarded, not as a Designated Fund as heretofore, but as a Restricted Fund. A prior year adjustment has been made to reflect this which represents the reclassification of the balance of the fund at 31 December 2010 of £584,107 from unrestricted designated funds to restricted funds. 17 PENSION SCHEMES The Institute operates a defined contribution scheme and contributions to the sc:heme are made to an independent insurance company. The pension costs of the Institute's scheme amounted to £19,703 (2010: £10,733). There were no contributions outstanding at the end of either the current or preceding fmaocial years. 18 STATUS The Institute is a company limited by guarantee and has no share capital. The Institute had 10 (2010: 11) members at the year end. The Memorandum of Association provides that members are liable to contribute a sum not exceeding £ 1 each in the event of the company being wound up while they are members or within one year of ceasing to be members. Pagel9 ... TheInstituteof EconomicAffairs NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011 16 PRIOR YEAR ADJUSTMENT The M Fund (previously known as the Malcolm Fund) was set up to promote research into the reduction in the size of the public sector and to promote an interest in market ec:onomypolicies on the part of teachers and senior pupils. Following the death of the donor in May 2011, we reviewed the status of the M Fund and received legal advice to the effect that it should be regarded, not as a Designated Fund as heretofore, but as a Restricted Fund. A prior year adjustment has been made to reflect this which represents the reclassification of the balance of the fund at 31 December 2010 of £584.107 from unrestricted