SOCIETY FOR ECONOMIC ANALYSIS LIMITED
DIRECTORS' REPORT AND ACCOUNTS
for the
YEAR ENDED 31ST DECEMBER 2020
REGISTERED CHARITY NO: 313715
A COMPANY LIMITED BY GUARANTEE AND REGISTERED IN ENGLAND & WALES
COMPANY REGISTERED NO: 1036458
SOCIETY FOR ECONOMIC ANALYSIS LIMITED
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DIRECTORS' REPORT INCORPORATING THE TRUSTEES' ANNUAL REPORT
YEAR ENDED 31ST DECEMBER 2020
The directors who are also the trustees of the Society for Economic Analysis Limited present their report and financial statements of the company for the year ended 31st December 2020.
The financial statements comply with the Charities Act 2011, the Companies Act 2006, the Memorandum and Articles of Association, and the Charities Statement of Recommended Practice ("Charities SORP") (applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland, FRS 102 issued in October 2019.
OBJECTIVES AND ACTIVITIES
The principal objective remains the promotion of both the production and dissemination of high quality academic research in the general area of economics, with particular emphasis on the support of younger researchers. The mechanism for this is to trade through a wholly owned subsidiary company, Review of Economic Studies Limited.
The charity furthers its charitable objectives for the purposes of public benefit through various other means set out in the achievements and performance section below. No major innovations are anticipated at the present moment in either the basic forms of support offered, or the financial arrangements which underpin them.
ACHIEVEMENTS AND PERFORMANCE
The major charitable activities have historically centred around the promotion and the financing of the RESTUD conferences known as May Meetings. These normally take place at various educational establishments in Europe. The bulk of these meetings centred around funding the travel and/or subsistence costs of newly emerging scholars in the field of Economics to give lectures to both established researchers and current doctoral students on the findings from their research. Travel costs are also paid for students and researchers who are keen to attend these seminars and share the knowledge of these scholars.
The May meetings are also used by OUP to encourage an ongoing sense of engagement with the journal amongst the speakers participating, in order to encourage them to become 'ambassadors' for the journal.
The charity also finances travel costs and venue hire for the annual meeting of trustees and members. At these meetings members present their research about the performance of the Review of Economic Studies, thus supporting the charitable aim of promoting research in economics. At these meetings the publishing strategy of the journal is also reviewed (for instance, number and type of articles) in order to ensure that the journal continued to best serve the academic community and members of the public interested in research in economics.
The charity also finances and supports the annual mentoring event for young female researchers held by the Women in Economics Committee of the European Economic Association. This event aims to support female researchers and in particular to close the gap between male and female researchers in terms of faculty representation at leading universities.
The Board also agreed to fund a North America tour on a trial basis in 2020 sending excellent Europe based candidates on a tour of the US.
For the current year however, the Covid - 19 Pandemic lockdown measures imposed by governments worldwide, especially the closure of educational establishments as well as significant travel restrictions coupled with border controls has resulted in none of the above mentioned activities taking place this year in person. The annual meeting took place online. The May meetings were delayed and the launch of the North America tour was postponed.
SOCIETY FOR ECONOMIC ANALYSIS LIMITED
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DIRECTORS' REPORT INCORPORATING THE TRUSTEES' ANNUAL REPORT
YEAR ENDED 31ST DECEMBER 2020
ACHIEVEMENTS AND PERFORMANCE - continued
Many developing countries do not have the funding to buy access to leading academic journals that are necessary for teaching and research. Under philanthropic programmes through the International Network for the Availability of Scientific Publications (INASP) initiative, the journal publisher Oxford University Press makes the Review of Economic Studies available to developing country universities via gratis or heavily discounted subscriptions, thereby promoting teaching and research in these countries.
FINANCIAL REVIEW
The results for the year ended 31st December 2020 are shown in the statement of financial activities (including the income and expenditure account) on page 11.
Governance costs also tend to fluctuate from one year to another depending on where in Europe the September main meetings are held. The reason for changing the venue each year is to ensure wider participation from the European members. Apart from holding the AGM and Board meetings, the main focus at these meetings centres around the direction and content of future publications of the RES journal which continues to maintain its reputation as one of the top 5 journals in Economics worldwide (independent analysis captured in the Journal Impact Factor shows the RESTUD to be ranked second amongst the world's general interest journals in economics). The September meetings also include research presentations by board members followed by seminar discussion, consistent with SEAL's objective of promoting the dissemination of knowledge and frontier research in Economics.
Due to Covid - 19 lockdown measures, the September meetings were held virtually and 2020 costs were Nil.
The trading subsidiary, Review of Economic Studies Limited (RESL), has reported a profit for the year. All of the publication and distribution was through the Oxford University Press (OUP) agents. The annual report provided by the publisher Oxford University Press indicates continued expansion of the reach of the journal with higher content engagement during 2020 than in previous years. This high level of interest in the journal was supported by the annual distribution and marketing budget of approximately £13k which is used to promote the journal at conferences and via email alerts, the OUP blog, and google advertisements. As a result, the journal remains highly ranked in the Economics profession. The number of articles submitted to the journal for consideration for publication rose by 13% to over 1800 in 2020. This is one of the highest figures for leading Economics journals, confirming the status of the journal as a prime outlet for frontier research in Economics.
Revenues increased by 11% in 2020. As in 2019, the main driver of revenues was the combined subscription/consortia revenue. Submission fees were the second largest part of revenues, and increased in 2020 due to being the first full year of a fee of $150 for each new submission, or $100 for authors qualifying for a discount. Costs fell by 4% in 2020 largely due to fewer editorial handover periods when double costs are incurred. Net revenue was up by 35%, after a rise of 21% in 2019.
For 2021, OUP are budgeting for a small decrease in subscription & consortia revenue. Submission fees are expected to increase due to continued increased submissions during the pandemic. Overall revenues are expected to increase by 4% and costs are also expected to increase by 4%. Net revenue to RESL is expected to increase by 3%.
In 2018, the Board of RESL had commissioned a review the journal's performance in terms of the papers tha it receives and that it publishes. An earlier review in 2009 examined submission and publication data from 1991 to 2008. The current review analysed the same data from 2009 to 2017 and extended the analysis by examining publication and citation outcomes of papers that were rejected by RESL, and referee recommendations on accepted and rejected papers.
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DIRECTORS' REPORT INCORPORATING THE TRUSTEES' ANNUAL REPORT
YEAR ENDED 31ST DECEMBER 2020
FINANCIAL REVIEW - continued
The review concluded that the RESL directors had implemented successfully the main recommendations from the 2009 review, which was to raise the weight of applied fields in the pool of publications and submissions. The quality of REStud papers, as measured by GS citations and evaluated relative to the top five journals, has risen in applied fields such as Applied Micro Development, International, and IO, compared to the findings of the 2009 review. Since those applied fields tend to have higher average citations the rebalancing across fields has contributed to the improvement of the average citation of REStud papers relative to the other top five journals.
The review also found no significant evidence of gender bias in the REStud's editorial process.
The financial position of the journal remains healthy. In 2020 the profitability of the journal (and therefore the donation under the deed of covenant to the charity from the profits generated in the year) increased by just over £75k.
The reserves of the charitable company increased by £269,082 (2019: £318,420) during the year. This is largely attributable to the increase the gift aid donation from the trading subsidiary and zero charitable and support costs as a result of the government imposed lockdown measures and worldwide travel restrictions.
PLANS FOR THE FUTURE AND IMPACT OF COVID-19
As a result of the escalating impact of coronavirus in the UK, the board concluded that it must take urgent action to protect the charitable arm of the charity and its trading subsidiary and most importantly the health and safety and well being of all those involved with the running of the two entities during this critical period. Consequently, for 2021 the May meetings took place online, and included participants selected in 2020 and 2021. Minor expenses were incurred. The North America Tour would take place in 2021 only if international borders are open and it is considered safe. The hosts will be UCSD, The University of Chicago and UPenn. Discussions with the European Economic Association are underway for alternative ways to fund initiatives to support early career female researchers. These may include some backdated support for costs incurred in 2020 and 2021.
The trustees have decided that the RESTUD May conferences will continue to be a major charitable activity in 2022. The May meetings will be hosted by the University of Manchester, Paris School of Economics, and the New Economic School in Moscow. The Trustees will continue to make a grant approximating £5k to the Women in Economics Committee of the European Economics Association.
The coronavirus pandemic has robbed students and graduates of the chance to gain face to face and real world experiences. To this end the board is exploring ways to ensure that that virtual opportunities are both meaningful and useful.
The publishing activity of the trading subsidiary has continued albeit at an online or e-experience level.
In view of government imposed stay at home guidelines to prevent the spread of the disease and restricted travel brought resulting from flights being cancelled by airlines all of the 2020 charitable activity was halted. It is likely that 2021 will most likely suffer a similar fate until educational establishments are fully functional and it is considered safe to travel without restrictions.
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DIRECTORS' REPORT INCORPORATING THE TRUSTEES' ANNUAL REPORT
YEAR ENDED 31ST DECEMBER 2020
PLANS FOR THE FUTURE AND IMPACT OF COVID-19 - continued
The major risk still facing the charity is the continued drop in institutional and individual subscribers. In an effort to ensure that the charity's finances and activities for the future are secured, the trustees entered into dialogue with the charity commission with a view to building up an expendable endowment of £1m. The The motivation behind this view is that pressure from the national research councils for free charge 'open access' to research output in journals will lead to lower subscription income for journals. It is possible that in the future the income generated will not be sufficient to cover editorial expenditure, office administration and journal production costs. The charitable company may effectively end up having to bear the bulk of the cost of making the journal available to institutions and ultimately students in order to meet its charitable objectives. Presently it costs up to £450k per annum to review articles, publish and distribute the journal. The charity commission has left the decision to secure sufficient reserves up to the trustees as they are well informed of the issues facing the charity and its trading subsidiary as well as the longer term prospects and can therefore take a considered view having regard to all the factors.
The concerns above have since been compounded by falls in many university library budgets, which have put further pressure on subscription renewals. As a result of such concerns a decision was taken at the 2018 AGM to target free reserves from its present level of £1.5m to £2.5m.
RESERVES POLICY
As explained above, there remains continued uncertainty concerning the implications of open access publishing on subscription numbers and revenues. The trustees consider that it is important that the charity maintains sufficient free reserves (albeit covered by fixed asset investments which can be readily realised) to provide financial flexibility to cover the possibility that the trading subsidiary's subscription base could rapidly diminish. The Board considers that it is vital to protect the charity's future prospects and at the 2012 meetings it was agreed that free reserves should be sufficient to cover at least five years of direct and overhead expenditure of both the charity and its trading subsidiary (approximately £1.5m).
The policy was reviewed again at the 2018 meetings and after considerable deliberation, it was agreed that free reserves should be increased to £2.5m. The reasoning behind this increase was the increased pressure on library budgets, combined with the launch of "Plan S", which is an initiative to increase open-access science publishing. This is an initiative that calls into question future subscription revenues.
The free reserves of the charity (inclusive of revaluation gains) at the balance sheet date were in excess of of £2.190m (2019: in excess of £1.921m). Of this just over £340k (2019: £377k) is attributed to cumulative revaluation gains.
This policy will be reviewed again at the September 2021 meetings.
INVESTMENT POWERS AND POLICY
Under the Memorandum of Association, the charity has power to invest any monies of the company, not immediately required for any of its objects, in such manner or on such security as may from time to time be determined. The trustees have considered the most appropriate policy for investing funds and have found that specialised unit trusts, some of which are designed for the charity sector, meet their requirements to generate both income and capital growth. The trustees consider the income returns on investments to be satisfactory given the somewhat uncertain investment climate.
SOCIETY FOR ECONOMIC ANALYSIS LIMITED
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DIRECTORS' REPORT INCORPORATING THE TRUSTEES' ANNUAL REPORT
YEAR ENDED 31ST DECEMBER 2020
INVESTMENT POWERS AND POLICY - continued
The charity’s investments in equities showed a decrease in market value in 2020 of around £37k (2019: an increase of just over £144k). The major investment funds continue to be confronted with a more challenging operating environment as a number of geopolitical and macroeconomic events increase investor uncertainty and in turn higher volatility.
The wider political and economic uncertainty both in the UK and worldwide continues to remain fluid and over the next few years it is expected that peaks and troughs will occur.
While it's clear that Covid - 19 will have an economic impact on companies and their underlying investments there still remains considerable uncertainty as to the extent and duration of this. The development of the coronavirus vaccine is undoubtedly positive for the equity markets even allowing for the uncertainty that will continue to prevail for some time.
This investment policy was previously reviewed in detail at the September 2018 meetings and the Board concluded that maintaining investments in a diversified portfolio made sense. The possibility of diversifying further into currencies other than GBP was discussed and implemented in 2019.
This policy will be reviewed again at the September 2021 meetings.
SOCIETY FOR ECONOMIC ANALYSIS LIMITED
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DIRECTORS' REPORT INCORPORATING THE TRUSTEES' ANNUAL REPORT
YEAR ENDED 31ST DECEMBER 2020
REFERENCE AND ADMINISTRATIVE DETAILS
GOVERNING DOCUMENT Memorandum and Articles of Association CHARITY NUMBER 313715 COMPANY NUMBER 1036458 REGISTERED OFFICE 46 Heddon Court Avenue Barnet Herts EN4 9NG INDEPENDENT EXAMINER Raj Shah & Co Chartered Accountants 46 Heddon Court Avenue Barnet Herts EN4 9NG BANKERS HSBC Bank plc 133 Regent Street London W1B 4HX SOLICITORS Freeths LLP One Colton Square Leicester LE1 1QH
DIRECTORS AND TRUSTEES
The directors of the charitable company (charity) are its trustees for the purposes of charity law and throughout this report are collectively referred to as trustees.
The trustees who served during the year were as follows:
Prof. Nagore Iriberri Prof. Mirko Julian Wiederholt Prof. Michael William Leamington Elsby Prof. Fabian Frederic Waldinger Prof. Nicola Christina Fuchs-Schuendeln Appointed on 1st February 2020 Prof. Aureo Nilo De Paula Neto Appointed on 1st January 2020 Prof. Michèle Elisabeth Tertilt Appointed on 1st January 2020 Prof. Dimitrios Vayanos Resigned on 1st January 2020 Prof. Philip Albert Kircher Resigned on 1st February 2020
Dr Catherine Mary Atterbury Thomas acted as Secretary throughout the year.
SOCIETY FOR ECONOMIC ANALYSIS LIMITED
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DIRECTORS' REPORT INCORPORATING THE TRUSTEES' ANNUAL REPORT
YEAR ENDED 31ST DECEMBER 2020
STRUCTURE, GOVERNANCE & MANAGEMENT
Governing document
The Society For Economic Analysis limited (working name "SEAL") is a company limited by guarantee, not having a share capital. It was incorporated on 29th December 1971 and its governing document comprises the Memorandum and Articles of Association. It is an educational charity.
Appointment of trustees
New trustees are appointed by a resolution of the trustees passed at a meeting of the board of Trustees.
In accordance with the Articles of Association, amended by Special Resolution in September 2013, the number of directors shall not be less than two and not more than ten.
They have the power at any time, and from time to time, to appoint any person to be a trustee either to fill a casual vacancy or as an addition to the number of trustees, but so that the total number of trustees shall not at any time exceed the number fixed in accordance with the Articles.
The recruitment of potential new trustees is discussed at trustees meetings and once a suitable candidate has been identified, he/she is invited to meet the Board. If both the new trustee and Board are satisfied, their appointment as trustee is confirmed in writing. The new trustee is given documentation relating to his or her responsibilities under charity law, a copy of the governing document and most recent annual report and accounts. There is currently no formal induction programme for new trustees but this is under consideration by the trustees.
Related parties
The charity has a 100% interest in Review of Economic Studies Limited (working name "RESL"), a company that publishes an academic economics journal. The charity is dependent on RESL for the majority of its income.
Organisation
The board of trustees administers the charity.
The trustees meet once every six months to discuss the charitable company's finances. Applications are invited from institutions involved in hosting the Review of Economic Studies May Meetings at which leading young researchers from around the world are given the opportunity to present and discuss their work with leading European economists. The May Meetings are well established and integral in promoting the dissemination of frontier knowledge in the profession and promoting interaction between academic economists. The trustees believe the May Meetings to be central to meeting the company's charitable objectives and consider applications for financial support from universities to host these meetings in disposing of the charity's income.
The Secretary is appointed by the trustees to manage the day to day operations of the charity. To facilitate effective operations, the Secretary also acts as business manager for the charity and its trading subsidiary to manage operational matters including finance.
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DIRECTORS' REPORT INCORPORATING THE TRUSTEES' ANNUAL REPORT
YEAR ENDED 31ST DECEMBER 2020
STRUCTURE, GOVERNANCE & MANAGEMENT - continued
Risk management
The trustees have a risk management strategy which comprises:
- a) an ongoing review of the risks the charity may face; b) the establishment of systems and procedures to mitigate those risks identified in the review; c) the implementation of procedures designed to minimise any potential impact on the charity should those risks materialise.
The key controls used by the trustees include:
i) an established organisational structure and formal reporting of all operations and activities affecting the charity including formal agendas and minutes of meetings held; ii) clear authorisation and approval levels; iii) engagement of external professional advisors as and when necessary.
A large proportion of the charity funds is in the form of investments. A major financial risk faced by the charity is that of volatility in equity markets and investment markets due to wider economic conditions, the attitude of investors to investment risk and changes in sentiment concerning equities within particular sectors or sub sectors.
The other significant risk factor is the ongoing decline in institutional subscriptions to all mature social science journals and the trend for libraries to switch to cheaper online only subscriptions as budgets come under pressure. These risks are being managed through the inclusion of the journal in consortia deals for which cancellations of subscriptions are known to be lower, and the creation of a new revenue stream via the introduction of the submission fee described above.
Approved by the Board of directors on 16th September 2021 and signed on its behalf by:
Dr Catherine Mary Atterbury Thomas (Company Secretary)
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INDEPENDENT EXAMINER'S REPORT TO THE TRUSTEES OF SOCIETY FOR ECONOMIC ANALYSIS LIMITED
I report to the trustees (who are also Directors for the purpose of company law) on my examination of the financial statements of Society for Economic Analysis Limited ('The charitable company') for the year ended 31st December 2020 which comprise the Statement of Financial Activities, the Balance Sheet and related notes.
This report is made solely to the charity's trustees, as a body, in accordance with section 145 of the Charities Act 2011. My work has been undertaken so that I might state to the charity's trustees those matters that I am required to state to them in this report and for no other purpose. To the fullest extent permitted by law, I do not accept or assume responsibility to anyone other than the charity and the charity's members as a body, for my work, for this report, or for the opinion I have formed.
Responsibilities and basis of report
As the trustees of charitable company you are responsible for the preparation of the financial statements in accordance with the requirements of the Companies Act 2006 (‘the 2006 Act’).
Having satisfied myself that the financial statements of the charitable company are not required to be audited under Part 16 of the Act and are eligible for independent examination, I report in respect of my examination of the charitable company’s financial statements carried out under section 145 of the Charities Act 2011 (‘the 2011 Act’) and in carrying out my examination I have followed the applicable Directions given by the Charity Commission under section 145(5)(b) of the 2011 Act
An independent examination does not involve gathering all the evidence that would be required in an audit and consequently does not cover all the matters that an auditor considers in giving their opinion on the financial statements. The planning and conduct of an audit goes beyond the limited assurances that an independent examination can provide. Consequently I express no opinion as to whether the financial statements present a ‘true and fair’ view and my report is limited to those specific matters set out in the independent examiner’s statement.
Independent examiner's statement
Since the charitable company’s and its trading subsidiary's gross income exceeded £250,000 your examiner must be a member of a body listed in section 145 of the 2011 Act. I confirm that I am qualified to undertake the examination because I am a member of ICAEW, which is one of the listed bodies.
I have completed my examination. I confirm that no material matters have come to my attention in connection with the examination giving me cause to believe that in any material respect:
-
i) accounting records were not kept in respect of the charitable company as required by section 386 of the 2006 Act; or
-
ii) the financial statements do not accord with those records; or
-
iii) the financial statements do not comply with the accounting requirements of section 396 of the 2006 Act other than any requirement that the financial statements give a ‘true and fair view' which is not a matter considered as part of an independent examination; or
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iv) the financial statements have not been prepared in accordance with the methods and principles of the Statement of Recommended Practice for accounting and reporting by charities applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102).
I have no concerns and have come across no other matters in connection with the examination to which attention should be drawn in this report in order to enable a proper understanding of the financial statements to be reached.
Raj Shah & Co, Barnet, Herts EN4 9NG Date: 16th September 2021
Rajan Shah Chartered Accountant
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BALANCE SHEET AS AT 31ST DECEMBER 2020
| Notes FIXED ASSETS Investment in subsidiary 3 Investments (UK quoted) 1g & 4 CURRENTS ASSETS Debtors 5 Cash at bank CREDITORS Amounts falling due within one year 6 NET CURRENT ASSETS NET ASSETS 7 Represented by: UNRESTRICTED GENERAL FUNDS 7 Pre-incorporation surplus 7 & 14 Unrestricted income funds - including revaluation reserve of £340,165 (2019: £377,015) 7 & 14 TOTAL FUNDS |
2020 £ 100 1,556,818 1,556,918 304,451 335,454 639,905 (6,300) 633,605 2,190,523 9,963 2,180,560 2,190,523 |
2019 £ 100 1,593,668 1,593,768 222,184 126,578 348,762 (21,089) 327,673 1,921,441 9,963 1,911,478 1,921,441 |
|---|---|---|
For the year ending 31st December 2020 the company was entitled to exemption from audit under Section 477 of the Companies Act 2006 relating to small companies.
The members have not required the company to obtain an audit in accordance with section 476 of the Companies Act 2006.
The directors (trustees) acknowledge their responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements.
Approved by the Board of directors on 16th September 2021 and signed on its behalf by:
Prof. Aureo Nilo De Paula Neto (Director)
COMPANY REGISTERED NO: 1036458
The notes on pages 12 to 16 form part of these financial statements.
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STATEMENT OF FINANCIAL ACTIVITIES (including) INCOME AND EXPENDITURE ACCOUNT
YEAR ENDED 31ST DECEMBER 2020
| Notes INCOME 1d Gift Aid distribution from trading subsidiary 3 Investment income 2 TOTAL INCOME EXPENDITURE 1e Charitable expenditure Education and research - European seminars and other conferences Support costs Governance costs TOTAL EXPENDITURE NET INCOME AND NET MOVEMENT IN FUNDS FOR THE YEAR OTHER RECOGNISED GAINS AND LOSSES Realised gains on sale of investments Gain / (Deficit) on investments unrealised 4 NET MOVEMENT IN FUNDS RECONCILIATION OF FUNDS TOTAL FUNDS BROUGHT FORWARD TOTAL FUNDS CARRIED FORWARD |
UNRESTRICTED INCOME FUNDS 2020 2019 £ £ 289,654 214,626 23,704 40,078 313,358 254,704 - 48,347 - 28,131 7,426 9,761 7,426 86,239 305,932 168,465 - 5,419 (36,850) 144,536 269,082 318,420 1,921,441 1,603,021 2,190,523 1,921,441 |
|---|---|
The statement of financial activities includes all gains and losses recognised in the year
All income and expenditure derive from continuing operations
The notes on pages 12 to 16 form part of these financial statements.
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NOTES TO THE ACCOUNTS
YEAR ENDED 31ST DECEMBER 2020
1 ACCOUNTING POLICIES
The principal accounting policies adopted, judgements and key sources of estimation uncertainty in the preparation of financial statements are as follows:
a
Basis of preparation
The financial statements have been prepared in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (issued in October 2019) - (Charities SORP (FRS 102)), the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and the Companies Act 2006.
Society for Economic Analysis Limited meets the definition of a public benefit entity under FRS 102.
Assets and liabilities are initially recognised at historical cost or transaction value unless otherwise stated in the relevant accounting policy note(s).
Going Concern
The trustees consider that there are no material uncertainties about the charitable company's ability to continue as a going concern.
b
Fund accounting
Unrestricted funds are available to spend on activities that further any of the activities of the charitable company.
c Group accounts - Consolidation
The gross income of the charitable group is no more than the threshold for a statutory charity audit and accordingly the charitable company has taken advantage of the exemption conferred by the Charity's SORP to prepare consolidated accounts.
d Income
Gift Aid donation from the trading subsidiary is recognised where there is entitlement, certainty of receipt and the amount can be measured with reasonable certainty.
Investment income and interest are generally recognised when received.
e Expenditure and irrecoverable VAT
Expenditure is recognised once there is a legal or constructive obligation to make a payment to a third party, it is probable that settlement will be required and the amount of the obligation can be measured reliably.
Irrecoverable VAT is charged against the expenditure heading for which it was incurred.
All expenditure is accounted for on an accruals basis.
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NOTES TO THE ACCOUNTS
YEAR ENDED 31ST DECEMBER 2020
f Allocation of support and governance costs
Governance costs comprise all costs involving the public accountability of the charity and compliance with regulation and good practice. These include costs related to independent examination and legal fees together with an apportionment of overhead and support costs.
Support costs relating to charitable activities are apportioned on the basis of the trustees best estimate of the average time spent on these activities.
g Fixed asset investments
Investments are a form of basic financial instrument and are initially recognised at their transaction value and subsequently measured at their fair value at the balance sheet date using the closing quoted market price.
All gains and losses are taken to the Statement of Financial Activities as they arise. Realised gains and losses on investments are calculated as the difference between sales proceeds and their opening carrying value or their purchase price if acquired subsequent to the first day of the financial year. Unrealised gains and losses are calculated as the difference between the fair value at the year end and their carrying value. Realised and unrealised gains and losses are combined in the Statement of Financial Activities.
The main form of financial risk faced by the charity is that of volatility in equity markets and investment markets due to wider economic conditions, the attitude of investors to investment risk and changes in sentiment concerning equities within particular sectors or sub sectors.
2
| INVESTMENT INCOME Dividends and interest from listed investments |
2020 £ 23,704 |
2019 £ 40,078 |
|---|---|---|
3 INVESTMENT IN TRADING SUBSIDIARY
The Society for Economic Analysis limited owns the whole of the issued ordinary share capital of Review of Economic Studies Limited (RESL), which is incorporated in England. The trading subsidiary's year end is 31st December and its principal business is to publish an academic economics journal. The subsidiary generally Gift Aids its profits to the parent company.
The aggregate value of the capital and reserves of Review of Economic Studies Limited at 31st December 2020 was £19,496 (2019: £19,496). In the year to 31st December 2018, the company's profit after taxation was £Nil (2019: £Nil).
The trading subsidiary donates all its profit to its charitable parent company. In view of the fact that the exact amount cannot be paid until the profit has been correctly calculated, the board of RESL has resolved to pay this within nine months of the balance sheet date in accordance with HMRC guidance and relate it back to the previous year. A corporate donation of £289,654 under a deed of covenant dated 27th September 2018 was paid in September 2021 and related back to the current year. Similarly a gift aid donation of £214,626 was paid in September 2020 and related back to the year ended 31st December 2019.
The investment in RESL is included in the financial statements at cost as the trustees consider that the cost of a valuation outweighs the benefit to the users of the accounts.
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NOTES TO THE ACCOUNTS
YEAR ENDED 31ST DECEMBER 2020
----- Start of picture text -----
|||||
|---|---|---|---|
|4|FIXED ASSET QUOTED INVESTMENTS|2020|2019|
|£|£|
|Market value brought forward|1,593,668|1,069,171|
|Additions at cost|-|479,724|
|-|
|Disposal of investments|(99,763)|
|Net surplus / (deficit) on revaluation|(36,850)|144,536|
|Market value carried forward|1,556,818|1,593,668|
|Historical cost at balance sheet date|1,216,652|1,216,652|
|Investments in individual entities held at the balance sheet date by portfolio value are:|
|Charishare Common Investment Fund|477,120|511,343|
|4 / 1/8 % Index Linked Treasury Stock 2030|248,671|245,372|
|ishares FTSE 100 Exchange Traded Fund|289,057|338,127|
|ishares Core Euro Stoxx 50 Ucits ETF|256,188|248,223|
|ishares Core S&P 500 Ucits ETF Acc|285,782|250,603|
|1,556,818|1,593,668|
|5|DEBTORS|2020|2019|
|£|£|
|Amounts falling due within one year|
|Due from subsidiary undertaking|297,211|222,184|
|-|
|Prepayments and accrued income|7,240|
|304,451|222,184|
|6|CREDITORS|2020|2019|
|£|£|
|Accruals|6,300|21,089|
|7|ANALYSIS OF NET ASSETS|2020|2019|
|£|£|
|a)|The net assets comprise the following funds:|UNRESTRICTED FUNDS|
|Fixed asset investments|1,556,918|1,593,768|
|Net current assets|633,605|327,673|
|2,190,523|1,921,441|
----- End of picture text -----
b) Unrealised gains included in net assets amount to £340,165 (2019: £377,015). These relate to fixed asset quoted investments only (see note 7c below).
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NOTES TO THE ACCOUNTS
YEAR ENDED 31ST DECEMBER 2020
- 7 ANALYSIS OF NET ASSETS - continued
| c) Reconciliation of movements in unrealised gains on fixed asset investments Unrealised gains as at 31st December 2019 Disposal adjustment - gains now realised Net gain / (loss) on revaluation at year end Unrealised gains as at 31st December 2020 8 DIRECTORS AND EMPLOYEES These comprise: Directors (Trustees) Company secretary |
2020 £ 377,015 - (36,850) 340,165 2020 Number 7 1 8 |
2019 £ 297,241 (64,762) 144,536 377,015 2019 Number 6 1 7 |
|---|---|---|
They were all involved in the management and administration of the charitable company. No salaries were paid during the year (2019: £Nil)
9 DIRECTORS' (TRUSTEES') EXPENSES
A total of £Nil (2019: £2,414) was reimbursed to Nil (2019: four) directors during the year. The payments were for travel costs incurred in attending meetings and/or charitable events sponsore by the company.
10 RELATED PARTY TRANSACTIONS
The only related party transactions during the year were with the trading subsidiary and these are as detailed in Note 3 to the financial statements. The amount owing from the trading subsidiary at balance sheet date is detailed in note 5 to the financial statements.
| 11 EXPENDITURE Reporting accountants fees Statutory filing fees Research costs Meeting and travel costs Bank charges Miscellaneous administration costs |
2020 £ 6,000 13 1,301 - 112 - 7,426 |
2019 £ 6,000 13 - 31,256 399 224 37,892 |
|---|---|---|
Reporting accountant fees, annual return filing fees, bank charges and miscellaneous administration charges are all attributed to governance costs.
10% of the meeting costs (based on the average estimate of time spent by the trustees) is attributed to governance costs. The remainder of the time is spent on charitable support costs.
SOCIETY FOR ECONOMIC ANALYSIS LIMITED
PAGE 16
NOTES TO THE ACCOUNTS
YEAR ENDED 31ST DECEMBER 2020
12 ANALYSIS OF GOVERNANCE AND SUPPORT COSTS
| CHARITABLE GOVERNANCE CHARITABLE SUPPORT SUPPORT 2020 2020 2019 £ £ £ Meeting and travel costs - 28131 Reporting accountants fees - 6000 - Statutory filing fees - 13 - Bank charges - 112 - Research costs - 1301 - Miscellaneous administration costs - - - - 7426 28131 13 ACCOUNTANTS FEES 2020 £ This is included under management and administration costs and comprises: Independent examiner (Reporting accountants) 1,800 Accountancy, taxation and other services 4,200 6,000 |
GOVERNANCE 2019 £ 3125 6000 13 399 - 224 9761 2019 £ 1,800 4,200 6,000 |
|---|---|
14 UNRESTRICTED FUNDS
The reserves represent unrestricted funds of the charitable company (comprising the income and expenditure account together with the pre-incorporation surplus).
The movement in reserves is as shown on the income and expenditure account / statement of financial activities on page 10.
The constitution of Society for Economic Analysis Limited precludes the distribution of reserves to the members.
15 CONTROLLING PARTY
The company does not have any share capital. Accordingly no individual has any control of the company. The same criteria applied to the previous year.