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Company Information
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Contents
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Directors' report
for the year ended 31 March 2021
The directors present their report and the Consolidated financial statements of PRI Association and its subsidiaries, together referred to as 'the group', for the year ended
The directors are responsible for preparing the Group strategic report, the Directors' report and the
consolidated
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year
. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the surplus or deficit of the group for that period.
In preparing these financial statements, the directors are required to:
∙
select suitable accounting policies for the group's financial statements and then apply them consistently;
∙
make judgements and accounting estimates that are reasonable and prudent;
∙
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business.
The surplus for the year, after taxation, amounted to £
2,611,602
(2020:
£
1,753,372
)
.
The directors who served during the year were:
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Directors' report (continued)
for the year ended 31 March 2021
This report was approved by the board and signed on its behalf.
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Group strategic report
for the year ended 31 March 2021
The Principles for Responsible Investment ('the PRI') were developed by an international group of institutional investors reflecting the increasing relevance of environmental, social and corporate governance issues (ESG) to investment practices. The process was convened by the United Nations Secretary-General.
The main activity of the PRI is the adoption of these principles into investment practice namely: 1. Incorporation of ESG issues into investment analysis and decision-making processes. 2. Active ownership. 3. Appropriate disclosure on ESG issues by the entities in which signatories invest. 4. Promotion of the acceptance and implementation of the Principles within the investment industry. 5. Working together to enhance signatory effectiveness in implementing the Principles. 6. Reporting on signatory activities and progress towards implementing the Principles. The PRI’s work is guided by the PRI’s 10-year Blueprint for Responsible Investment which may be found on the PRI website. More specifically, projects delivered during the year included: • Selection, appointment and monitoring technical guides; • Human Rights report: ‘Why and how investors should act on human rights’; • Investing with SDG outcomes: a five-part framework; • Bridging the gap: how infrastructure investors can contribute to SDG outcomes; • Guidance on COVID-19 recovery and reform; • Testing the taxonomy: insights from the PRI Taxonomy Practitioners Group (including 32 case studies); • Video: Deforestation in the Amazon: the cost for indigenous people;
∙
Private retirement systems and sustainability (in US, UK and Australian markets);
∙
Coordination of the Climate Action 100+, Net Zero Asset Owner Alliance and Investor Agenda engagement; and
∙
35 other reports and guides, 135 new blogs and 38 podcasts on ESG issues and responsible investment practices.
In addition, PRI proceeded with a comprehensive reform of the reporting framework, assessment and associated outputs. The PRI board met eleven times during the financial year and spent significant time discussing the following priorities: • Potential impacts of COVID-19 on the organisation; • The 2021-24 PRI strategy and long-term funding plan; • Reform of the PRI reporting framework; and • The ‘Driving Meaningful Data’ programme. As well as the programmatic discussions, the board reviewed the annual pay review process, annual business plan and budgets, finances, human resources, operational risks, Chair and CEO performance, digital and communications plans, and progress of the organisation in different markets. The board’s work is supported by a number of board committees.
The PRI reports a surplus of £2,611,602 (2019/20: £1,753,372) on total revenue of £21,737,915 (2019/20: £19,739,091), or 12.0% of revenue (2019/20: 8.9%). This is consistent with the general reserves and liquidity policy. The PRI’s policy is to maintain liquidity enough to meet three months operational costs.
Signatories grew to 3,829 by the year’s end, an increase of 792 from 31 March 2020. Fee income rose to £17,310,302 (2019/20: £14,223,295). Grants income also increased in 2020/21 from £1,539,692 in 2019/20 to £2,326,075.
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Group strategic report (continued)
for the year ended 31 March 2021
PRI Academy had a successful year with revenue increasing to £1,213,019 (2019/20: £736,970). PRI Enterprises Ltd, which houses the Academy, continues to operate with a surplus.
In 2020/21 expenditure rose to £18,998,304 (2018/19: £17,975,709). This represents a continuing investment in the 10 – Year Blueprint. The PRI has continued to control operational costs and implement cost savings where possible to deliver value.
The directors have assessed the major risks to which the PRI is exposed, those relating to the specific operational areas of the organisation and its finances. The risks are regularly reviewed, and the risk register monitored at each meeting of the board. The directors have not identified any significant financial or other risks that are not already monitored or controlled.
Financial risk management The PRI operates in a number of jurisdictions and currencies. Such exposure gives rise to the following financial risks: Liquidity risk. The principal liquidity risk facing the PRI relates to its ability to raise enough funding to fully meet its objectives as explained within principal activities. The PRI seeks to manage financial risk by ensuring enough liquidity is available to meet foreseeable working capital requirements, contingencies and for specific strategic plans. This includes ensuring we do not fall below a minimum cash balance as set by the board. Credit risk . The PRI’s principal financial assets are cash and trade debtors. Bank balances are regarded as low risk. The principal credit risk arises, therefore, from receivables. Outstanding balances are reviewed and monitored through effective credit control procedures. Ageing of debtors and recoverability is considered and, where needed, provision is made as appropriate for slow payers. Market risk. Market risk is the risk of adverse financial impact due to changes in future cash flows of financial instruments due to fluctuations in interest rates and market prices. The most notable risk is that of falling markets and their link to the fees we charge signatories. Asset Owners and Investment Managers fees are based on assets under management. Although we cannot eliminate the downside impacts from these and other risk factors on our earnings and profitability, as part of our strategic planning activity we model business plans across a range of economic scenarios to ensure their resilience. Currency risk . The PRI is based in 16 countries [UK, USA, France, Japan, Spain, Sweden, Germany, Switzerland, China (including Hong Kong), South Africa, Columbia, Brazil, Netherlands, Australia, Luxembourg and Canada] and as a result is exposed to the effect of changes in foreign currency rates. The impact of currency fluctuations affects us because of mismatches between the currencies in which our operating costs are incurred and those in which revenues are received. Fees are billed in sterling, the currency in which most of our costs are incurred. We also have significant exposures to the US dollar and Euro and to a smaller degree other currency. Where we can find a natural currency hedge, we take this, otherwise we model exchange rate fluctuations as part of our strategic planning activity to ensure that we are resilient. Country risk . We have operations in 16 countries, some in jurisdictions where the political, economic and legal systems are less predictable than in countries with more developed institutional structures. Political or economic upheaval, inflation or changes in laws may have a material effect on our operations in these countries. We actively monitor all countries in which we operate. Regular formal and informal interaction with business partners, such as lawyers and accountancy firms, assist us in remaining abreast of changes and new developments.
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Group strategic report (continued)
for the year ended 31 March 2021
As the PRI’s transformational journey continues and we undergo significant changes to our operational environment and organisational model our principal risks evolve to reflect this. In addition to the risks we mention below we actively monitor and manage a wide range of other risks that PRI is exposed to.
IT disruption and data theft. When access to systems is denied because of a cyber-attack or a critical IT systems failure, or data compromised by theft, the operational and reputational consequences are clear. This is an ever-evolving threat which we reduce by a continued investment in IT infrastructure, data management and security. Talent, Culture & Capability . A failure to attract, develop and motivate the right talent could slow down our ability to achieve our operational and strategic objectives. Continued homeworking continues to place added pressures on our ability to do so. An ongoing programme of work to engage with staff virtually at various levels and in various formats and continuing to develop and grown our existing talent have been key priorities. Employee turnover remained low at 6% over the year. PRI response to COVID-19. A specific, global, COVID-19 Action Plan was produced last year to capture the organisational response to the virus, including business continuity, working from home arrangements, employment matters and health & safety. Supporting staff practically and emotionally has continued to be a key priority. Most of our offices remain closed or limited access globally. Longer term we aim to support staff with a phased return to our various offices and then expand the range of flexible working solutions offered. Brexit . All existing employees from EU countries have achieved settled or pre-settled status as part of the UK Governments EU settlement scheme. New sponsorship rules within the UK have created a pathway to ensure we can continue to recruit staff from within the bloc, reducing the anticipated negative impacts for our recruitment activities.
This report was approved by the board
and signed on its behalf.
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Independent auditor's report to the shareholders of PRI Association
for the year ended 31 March 2021
We have audited the financial statements of PRI Association (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2021, which comprise the Consolidated statement of comprehensive income, the Group and Company balance sheets, the Consolidated statement of cash flows, the Consolidated and company statement of changes in equity
and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards,
including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's or the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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Independent auditor's report to the shareholders of PRI Association (continued)
for the year ended 31 March 2021
The directors are responsible for the other information. The other information comprises the information included in the Directors' report and Group strategic report, other than the financial statements and our Auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙
the information given in the Group strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙
the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.
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Independent auditor's report to the shareholders of PRI Association (continued)
for the year ended 31 March 2021
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
As part of designing our audit, we determined materiality and assessed the risk of material misstatement in the financial statements, arising from irregularities, including fraud, error and non-compliance with applicable laws and regulations. We designed and performed audit procedures responsive to those risks. In particular, we looked at where the directors made subjective judgements such as making assumptions on significant accounting estimates. These procedures included, but were not limited to, obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, considering the effectiveness of the control environment and making enquiries of management. We also addressed the risk of management override of internal controls, performing procedures including testing journals and evaluating whether there was evidence of a risk of material misstatement due to fraud. We identified and assessed the design effectiveness of controls management has in place, challenged assumptions and judgements made by management, investigated any large variances from the prior year and carried out randomised substantive testing. As a result of our procedures, we did not identify any key audit matters relating to irregularities, we ensured that the financial statement disclosures agreed to underlying supporting documents and made enquiries of management as to any actual or potential litigation or claims. The primary responsibility for the prevention and detection of irregularities including fraud rests with both those charged with governance and management. There remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our Auditor's report.
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Independent auditor's report to the shareholders of PRI Association (continued)
for the year ended 31 March 2021
This report is made solely to the company's members
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 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 company and the company's members for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Statutory Auditor
130 Wood Street
EC2V 6DL
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Consolidated statement of comprehensive income
for the year ended 31 March 2021
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Consolidated statement of financial position
As at
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 7 September 2021
.
The notes on pages 16 to 29 form part of these financial statements.
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Company statement of financial position
As at
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 16 to 29 form part of these financial statements.
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Consolidated statement of changes in equity
for the year ended
31 March 2021
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Company statement of changes in equity
for the year ended
31 March 2021
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Consolidated statement of cash flows
for the year ended 31 March 2021
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Notes to the financial statements
for the year ended 31 March 2021
PRI Association is a company limited by guarantee incorporated in England and Wales. Its company registration number is 07207947. The registered office and principal place of activity is 25 Camperdown Street, London, E1 8DZ.
2.
Accounting policies
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires group management to exercise judgement in applying the group's accounting policies (see note 3). The following principal accounting policies have been applied:
The consolidated financial statements present the results of the company and its subsidiaries as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Consolidated statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases. The company has taken advantage of the exemption in Section 408 of the Companies Act 2006 from presenting its individual statement of comprehensive income.
The company, as a qualifying entity, has taken advantage of the reduced disclosures for subsidiaries set out in Section 1 of FRS 102 and has elected to not prepare a Statement of cash flows.
The company has sufficient liquid resources to continue as a going concern for the foreseeable future and the directors believe the group and the company will be able to meet its liabilities as they fall due for at least twelve months from the date of approval of these financial statements.
A specific, global, COVID-19 Action Plan was produced to capture the organisational response to the virus, including business continuity, working from home arrangements, employment matters and health & safety. Supporting staff practically and emotionally has been a key priority. A phased re-opening of the office is underway, but this will be on an entirely voluntary basis. Longer term we aim to expand the range of flexible working solutions as a result of some of the positive benefits the pandemic has created. The directors do not consider this to be a cause for material uncertainty in respect of the group's or company's ability to continue as a going concern.
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Notes to the financial statements
for the year ended 31 March 2021
2.
Accounting policies (continued)
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. Amortisation is provided at rates calculated to write off the cost of intangible fixed assets, less their estimated residual value, over their expected useful lives of 4 years.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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Notes to the financial statements
for the year ended 31 March 2021
2.
Accounting policies (continued)
The group only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated statement of comprehensive income.
Functional and presentation currency
The company's functional and presentational currency is GBP. Transactions and balances Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of transactions. At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined. Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Consolidated statement of comprehensive income. On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transaction took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.
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Notes to the financial statements
for the year ended 31 March 2021
2.
Accounting policies (continued)
Defined contribution pension plan
The group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. Once the contributions have been paid the group has no further payment obligations. The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the group in independently administered funds. Provisions are charged as an expense to profit or loss in the year that the group becomes aware of the obligation, and are measured at the best estimate at the Statement of financial position date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of financial position. The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the company and the group operate and generate income.
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Notes to the financial statements
for the year ended 31 March 2021
The estimates and assumptions that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below. In preparing these financial statements, the directors have made the following judgements: Provisions A provision is recognised when the group has a present legal or constructive obligation as a result of a past event for which it is probable than an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. If the effect is material, provisions are determined by discounting the expected future cashflow at a rate that reflects the time value of money and the risks specific to the liability. Whether a present obligation is probable or not requires judgement. The nature and type of risks for these provisions differ and management's judgement is applied regarding the nature and extent of obligations in deciding if an outflow of resources is probable or not.
Analysis of turnover by country of destination:
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Notes to the financial statements
for the year ended 31 March 2021
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Notes to the financial statements
for the year ended 31 March 2021
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Notes to the financial statements
for the year ended 31 March 2021
On 3 March 2021 the government announced its intention to increase the corporation tax rate from 1 April 2023. This rate will taper from 19% for businesses for profits of less than £50,000 to 25% for businesses with profits over
£250,000. This was enacted when the finance bill passed the House of Commons in June 2021.
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Notes to the financial statements
for the year ended 31 March 2021
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Notes to the financial statements
for the year ended 31 March 2021
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Notes to the financial statements
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Notes to the financial statements
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Notes to the financial statements
for the year ended 31 March 2021
16.
Provisions (continued)
Contingency reserve
In 2020/21 the contingency reserve was transferred into the general profit and loss reserve. With strong general reserves, the directors consider that a separate contingency reserve is no longer appropriate and therefore the balance was released to the profit and loss reserve during the year. The United Nations Net-Zero Asset Owner Alliance This reserve represents the surplus specifically relating to The United Nations Net-Zero Asset Owner Alliance. This amount has been set aside from the profit and loss reserve to be put toward future Alliance activity.
The group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the group in independently administered funds.
The pension cost charge represents contributions payable by the group to the funds and amounted to £979,409 (2020: £656,308). Contributions totalling £99,837 (2020: £85,895) were payable to the pension funds at the reporting date and are included in creditors.
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Notes to the financial statements
for the year ended 31 March 2021
The company is limited by guarantee and does not have any share capital. The liability of the members in the event of the company being liquidated is limited to £1 per member.
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