THE ELECTRICAL SAFETY COUNCIL (A Company Limited by ...

THE ELECTRICAL SAFETY COUNCIL(A Company Limited by Guarantee)

Company No. 570175Charity (England and Wales) No. 257376: (Scotland) No. SC039990

CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED 31 MARCH 2017

ICAL SAFETY COUN - - - - -- - =- _ - -

ANNUAL REPORTYEAR ENDED 31 MARCH 2017

CONTENTS

PAGE NO.

LEGAL AND ADMINISTRATIVE INFORMATION 1 - 2

CHAIRMAN'S STATEMENT 3

CHIEF EXECUTIVE OFFICER'S REVIEW 4

DIRECTORS' REPORT 5 -15

INDEPENDENT AUDITOR'S REPORT 16 - 17

CONSOLIDATED STATEMENT OF FINANCIAL 18ACTNITIES

BALANCE SHEETS 19

CONSOLIDATED STATEMENT OF CASH FLOWS 20

CHARITY STATEMENT OF CASH FLOWS 21

ACCOUNTING POLICIES 22 - 25

NOTES TO THE CONSOLIDATED FINANCIAL 25 - 39STATEMENTS

LEGAL AND ADMINISTRATIVE INFORMATION

PatronsBaroness J TongeLord Graham TopeJim Fitzpatrick MP

Board Members and ManagementB F Walker -~ ChairC J Tanswe(1 ~'D Johnson Resigned 15 September 2016W H Wright Deceased 20 May 2017D Dossett MBES BrattN McGuinessP CanningA ParkesR Gainsford OBE Resigned 15 September 2016E Taylor Resigned 8 July 2016M FitzsimonsN RattyA Ferguson ~A Chaplin Appointed 7 July 2016S Ashmore Appointed 7 July 2016A Williams Appointed 13 July 2017P Hide Appointed 13 July 2017S Bounoua Appointed 13 July 2017

Senior Staff and OfficersCharityP Buckle Chief Executive OfficerJennifer Trim Company Secretary

Trading subsidiariesM RobinsonE ClancyM SibleyD YoungA WellsW H WrightC J Tanswell

ChairChief Executive OfficerFinance DirectorDirectorDirectorNon Executive DirectorNon Executive Director

ESF Enterprises LtdESF Enterprises LtdESF Enterprises LtdESF Enterprises LtdESF Enterprises LtdESF Enterprises Ltd (to 20 May 2017)ESF Enterprises LtdESC Partnerships Ltd (to 27 April 2017)ESC Partnerships Ltd (from 15 Apri12015 to 8 July 20T6)ESC Partnerships Ltd (from 8 July 2016)ESC Partnerships Ltd (from 27 Apri12017)

E Taylor Non Executive DirectorD Dossett Non Executive DirectorS Ashmore Non Executive Director

~' Chairs Advisory Group

Registered Charity (England and Wales) No. 257376Registered Charity (Scotland) No. SC039990Registered Company No. 570175

LEGAL AND ADMINISTRATIVE INFORMATION (Continued)

Financial Management Committee

B F Walker J Trim (Secretary) P BuckleD Johnson (to 15 September 2016) W H Wright (to 20 May 2017} C J Tanswell (Chair)R Gainsford OBE (to 15 September 2016) E Taylor (to 8 July 2016)D Dossett MBE (from 17 March 2016) A Ferguson (from 15 September 2016)S Ashmore (from 15 September 2016) A Chaplin (from 15 September 2016)

Electrical Installation SafetyForum

Electrical Safety of ProductsCommittee

Campaign DevelopmentGroup

W H Wright (Chair to 20 May2017) ESCC J Tanswell ESCJ Elliott ESC (Secretary)M Allen ESCB F Walker ESCM Fitzsimons ESCA Wells Certsure LLPP Buckle ESCJ O'Neil ECA (to Jan ̀ 17)S Martin ECA (from Jan ̀ 17)P Canning ESCJ Hodge BASELM Coles IETD Forrester SELECTF Bertie NapitJMR Hagger BCAM Mullins BEAMA (to Dec ' 16)C Pugsley LFBK Smith BEAMAK Morton HSEP Smith AMOP Abreu ENAL Moody CIBSE

B F Walker (Chairman)ESCS Curtler (Secretary)ESCN Ratty ESCR Jefferis IntertekM Mullins BEAMAC J Tanswell ESCP Buckle ESCJ Hodge BASECR Harris BEISA Ferguson ESCC Heemskerk CTSIM Allen ESCW A Wright ESCP Canning ESCI Filmer BSIV Snelling BSIA Vaughan-Davies LFBA Gordon CE Compliance SolutionsD Bolton BRCS MacConnacher AMDEAC Skinner AMDEA

A Parkes ESCA Ferguson ESCA Chaplin ESCE Drackford ESC (Chair)M Allen ESCP Walshe ESCM Kirby ESCJ Haldane ESC

Nominations &Governance Committee

A Parkes (Chair) ESCB F Walker ESCA Ferguson ESCC Tanswell ESCN Ratty ESCP Buckle ESCJ Trim ESC

Bankers HSBC, 28 Borough High Street, London SEl lYB

Solicitors Bristows, 100 Victoria Embankment, London EC4Y ODH.

Auditor Moore Stephens LLP, 150 Aldersgate Street, London EC1A 4AB

Investment Managers HSBC Global Asset Management, 78 St James Street, London, SW1A 1HLCazenove Fund Management, 12 Moorgate, London EC2R 6DARathbone Investment Management Ltd, 1 Curzon Street, London W1J

Registered Office 45 Great Guildford Street, London SE1 OES

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THE ELECTRICAL SAFETY COUNCIL

CHAIRMAN'S STATEMENT 2016/17

In my final year as Chairman of Electrical Safety First, it is with great sadness I inform you of the death of BillWright, along-standing Trustee, past Chairman and committed supporter of the Charity. Bill served on theBoard for 16 years and was central to the development of the strategic direction that has positioned the Charityas a strong consumer campaigning organisation.

This year, despite there being a feeling of uncertainty around the country's political and economic stability, I ampleased to be able to report that Electrical Safety First continues. to maintain a healthy balance sheet based on itsassets and supported by the income from its trading activities.

We have also seen significant progress in our work with Government, resulting in a serious commitment acrossparties to address electrical safety issues. The announcement of a snap election inevitably meant that legislativechange to protect people in privately rented homes has been delayed but having had very positive discussionswith the Welsh and Northern Irish Assemblies, I am hopeful that the achievement of one of our maincampaigning priorities will not be far away.

As always, I would like to thank the Chief Executive and whole team at Electrical Safety First for their hardwork towards achieving our objectives, and also thanks go to the Certsure Staff and management for theirsupport. Finally, as I hand over to incoming Chair Anne Ferguson, I would like to wish her every success in herrole as the Charity continues to go from strength to strength.

Br n WalkerYChairThe Electrical Safety Council28 September 2017


CHIEF EXECUTIVE OFFICER'S REVIEW

During the last year we have made excellent progress in establishing Electrical Safety First as the expert voiceon electrical safety issues. We have regularly been asked to comment in the national media on breaking newsstories, notably around high profile electrical product recalls and safety notices. Our annual consumer surveyhas shown awareness of the Charity has almost doubled across all age groups, with the biggest increase amongst15-24 year olds, undoubtedly as a result of greater online engagement through our digital campaigns and socialmedia presence: The consumer survey also highlights areas where more work is needed and helps to identifythose target audiences that could engage better with our safety messages.

This year we took the decision to move responsibility for the management of media campaigns and publicaffairs activity fully in-house for the first time. With the establishment of a new Campaigns Committee,representatives from our Board of Trustees are working with the in-house team to identify priorities for thecoming year.

Over the past twelve months we have seen some excellent results including the proposed amendments to theHousing and Planning Act, which would make regular five-yearly electrical safety checks in the Private RentedSector (PRS) a legal requirement for landlords. This is a significant win for the Charity and our campaigningover many years. The next step is to wait for Ministerial approval and we will be monitoring this very closely.

There has been considerable media interest in the safety notice issued by Whirlpool to owners of their tumbledryers. Having repeatedly stressed that Electrical Safety First believes that consumers should not use theseproducts until they have been checked by an engineer, we welcomed Whirlpool's updated advice issued toconsumers in February, in line with this guidance. We are hoping to work with Whirlpool to try to reach thoseaffected customers who have not yet responded to the safety notice.

Electrical Safety First has lobbied hard for improvements to the product recall system, including viamembership of the new Working Group on Product Recalls and Safety —which released its report andrecommendations in April. In response to concerns around the safety of electrical products, we helped toestablish the All Party Parliamentary Group on Electrical Safety and we continue to work with MPs and keystakeholders to highlight the importance of an effective product recall system.

During the year we have worked in partnership with key stakeholders from the electrical industry as well asmanufacturers, retailers, test houses, legal professionals and other safety advocates. This work has included co-hosting events, carrying out research into consumer issues and providing information and guidance for thirdparty organisations to share via their communication channels, helping us to reach a much wider audience. Wehave also developed a range of tailored consultancy services designed to support organisations involved at anypoint in the supply chain of electrical products and appliances.

We moved into our new permanent office back in April 2016. This has enabled us to not only cut down on ourown accommodation costs, but also will provide a future income stream through renting out one floor of thebuilding.

In closing, I think it important to acknowledge the CEO of Certsure LLP and her team for their continuedsupport and of course my colleagues at Electrical Safety First for their work during the last year. My thanks alsogo to our Trustees for their ongoing guidance and support.

~..y

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Phil BuckleChief Executive Officer, The Electrical Safety Council28 September 2017

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DIRECTORS' REPORT FOR THE YEAR ENDED 31 MARCH 2017

The Directors, who are also the Trustees of the Charity, submit their annual report and the audited financialstatements for the year ended 31 March 2017. T'he Directors have adopted the provisions of the Statement ofRecommended Practice (SORP) Accounting and Reporting by Charities (revised 2015) consistent withFinancial Reporting Standard (FRS) 102 in preparing this report. The legal and administrative information onpages 1 and 2 form part of this report.

STRUCTURE, GOVERNANCE AND MANAGEMENT

The Electrical Safety Council is a company limited by guarantee and a registered Charity. The Charity isgoverned by its Articles of Association which were last amended on 9 December 2010 when changes weremade to modernize the governance of the Charity.

The Charity is no longer required to convene an AGM; engagement with stakeholders and representatives ofbeneficiary groups is undertaken through a variety of channels which include media and digital campaigns toencourage safer behaviour and address product safety. The Charity continued to work the Government inWestminster and with the Welsh Assembly, Scottish Parliament and the legislation in Northern Ireland.Following the successes previously reported in Scotland and Wales, the long-term goal to ensure properties inthe private rented sector receive mandatory electrical safety checks made further excellent progress this year.The Charity work on the Westminster Housing and Planning Act led to a working group being set up to look atthe merits of having mandatory five-yearly electrical safety checks in privately rented homes. The Departmentof Communities and Local Government (DCLG) drafted a report for submission to the Housing Minister whichrecommended mandatory checks. If Ministerial approval is granted, draft regulations will be put forward fordebate in Parliament. The Charity will continue to advise the LTK Government on how they best bring forwardthese regulations and how they should be shaped. In Northern Ireland despite the current political uncertainty,the Department for Communities has stated that they will press ahead with mandatory electrical checks as soonas possible and the Charity focus has now moved to campaigning for this measure to be extended to all socialhousing in Northern Ireland. In November, the 6th annual Product Safety Conference, ̀Connecting together fora safer, smarter world', had over 200 delegates representing manufacturers, retail, importing, test houses, legal,enforcement, government and safety advocates.

Board Members are Directors for the purposes of company law, are Trustees for charity purposes and alsocomprise the Charity's Council. All new director appointments are based on selection criteria which ensure thatcollectively the Board maintains a broad range of relevant skills and experience.

No monetary value has been attributed to the work of volunteers which comprises mostly the unpaid time of theCharity's Board of Directors, although their contribution is' significant and vital to the current activities andcontinued future success of the Charity and its subsidiaries. The Electrical Industry has continued to contributewithout cost to the generation and updating of our resources which are developed to support professionals withan interest in electrical safety including Checklists and Best Practice Guides, for which the Charity is grateful.The Charity continued to use the full $40,000 monthly grant allocated by Google, with paid advertisingresponsible for over 450,000 visits to the website. Nearly 9,000 people were directed to registered electricianwebsites from the "Find an Electrician" page on the Charity website.

An induction progranune is offered to all new Trustees to ensure that they are briefed on the Charity's objects,strategy and activities. Directors are encouraged to attend relevant training seminars during the course of theyear. Training is also provided on a group basis to the Board on relevant and topical issues.

The Charity's strategy is set by the Board of Directors -the El~trical Safety Board. The Board meets fourtimes a year, plus other meetings as required. The Trustees have recently completed a review of the governancearrangements which included the commissioning of an external review and also resulted in the changing of theconstitution of a number of Charity Committees.

The Board delegates to the Charity's Executive Team the exercise of certain powers in connection with themanagement, administration and financial management of the Charity, with regular reporting on these matters tothe Board.

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DIRECTORS' REPORT FOR THE YEAR ENDED 31 MARCH 2017 (continued)

Responsibilities delegated to the Board's sub-committees are ratified through the Board of Directors. The ChiefExecutive Officer and other members of executive management attend meetings of the Board of Trustees andthe sub-committees.

The Board of ESF Enterprises Ltd comprised: anon-executive Chair, two Directors of the Charity, and threeExecutive Directors. In addition to the appointment of two Trustees to the Board, oversight was achieved by theestablishment of clear terms of reference in relation to the Trading Group's activities - alongside a scheme ofdelegated financial authority. The same scheme of oversight continued to cover ESC Partnerships Ltd who'sBoard comprises two Trustees.

Certsure LLP, the joint venture with the Electrical Contractors Association from which a wholly ownedsubsidiary of the Charity, ESC Partnerslvps Ltd, is currently entitled to 80% of the profits (this will reduce to75% on 1 April 2017) has a Management Boazd with responsibility for day to day management and control.There is equal representation on the Management Board from each partner and decisions are taken. by majorityvoting with the requirement that at least one member from each partner should be in favour. Two of therepresentatives are Trustees of the Charity and during the year the Chief Executive Officer and Head of Financeof the Charity have become Charity representatives on the Management Board, by which means oversight isachieved and regular reports are also provided to the Financial Management Committee and the full Board ofthe Charity.

The Charity's Committees in operation during the year were:

~ Electrical Safety of Products Committee

• Electrical Installation Safety Forum

• Financial Management Committee (Remuneration Committee as asub-committee)

• Nominations and Governance Committee

• Campaign Development Group

PUBLIC BENEFIT

The Directors are mindful of their duties, and have paid due regard to the guidance provided by the CharityCommission, to ensure that the Charity continues to carry out its charitable aims being the advancements ofhealth and the saving of lives with the aim of delivering public benefit activities which include:

• Dedicated campaigning activities targeted at increasing awareness and reducing risks to the generalpublic.

• Parliamentary lobbying for changes to legislation to improve electrical safety for all.

• Participation on national and international committees overseeing and developing electrical standardswhich aim to maintain and improve the safety of all users of electricity.

• Maintenance of a website including dedicated areas targeted at specific groups, providing informationand education on electrical safety. During the year, organic traffic to the website increased by 66%, andthere was also a 56%increase in the number of people accessing the site via mobile devices. During theyear the site had 2.Sm total visits; 2.im unique visitors and 3.9m page views.

• The operation of free of charge telephone and email help lines providing advice and guidance onelectrical safety matters to all member of the general public.

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STRATEGIC REVIEW

The Objectives of the Charity

The principal objective of the Charity remains the protection of users of electricity against the hazards of faulty,unsafe and otherwise defective electrical installations and products. Achievement of the charitable objective isundertaken by both the Electrical Safety Council and its Joint Venture with the Electrical Contractors'Association, Censure LLP.

The Charity's mission is the safety of all users of electricity with a specific focus on:

Improving the safety of electrical installations.

Improving the safety of electrical products.

Direct interventions and grants.

Charitable activities undertaken by the Charity's Joint Venture with the Electrical Contractors Association,Certsure LLP, which supported the Charity's safety objectives included:

Assessment, certification and registration of individuals and entities carrying out electrical work

through:

o Operation of the Approved Contractors' Scheme which is a voluntary electrical safety

self-regulating body.

o Running the Part P CPS Scheme, aself-certification scheme for providers of electrical

services and related ancillary trades to domestic dwellings under Part P of the Building

Regulations.

Distribution and retail of technical publications and certificates.

Provision of electrical training courses

Activities and.0utcomes for the Year

The Charity continued to raise awareness of safety issues through Media and Digital Campaigns. The Charityhas a presence on all of the main social media platforms and is now on Facebook, Twitter, You Tube,Instagram, Pinterest and LinkedIn. Campaigning activity has been supported by quizzes, videos and graphicsdeveloped by the in-house team who worked with an external specialist agency for more complex digitalcontent. Audience reach was extended through partnerships with respected organisations, including the Anti-Counterfeiting Group, Children's Burns Trust and the Government's Fire Kills campaign. The Charity'sModern Family campaign was featured on popular parenting website Mumsnet. Unprompted awareness of theElectrical Safety First brand has almost doubled overall, going from 5% to 9% and has actually moved from 5%to 11 % amongst the hard to reach 15-24 year old age group. Each year, campaign priorities and targetaudiences are identified through analysing the results of the annual consumer survey which tracks behaviourchange and awareness of the Charity's key aims, as identified in its five year strategy. Specific activitiesincluded:

• A Facebook campaign which led to over 6,000 people signing up to receive electrical product recallalerts. A video on Facebook Live which offered advice on spotting counterfeit electrical productsreached nearly 65,000 people.

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• Responding when as increasingly occurs, the media came to the Charity for expert comment on topicalissues. The Charity was regularly quoted in the media on the subject of the high-profile Whirlpooltumble-dryer safety notice.

• Looking at the increasing number of electrical gadgets that children and teenagers have in theirbedrooms, the Charity ran a "Modern Family" campaign focused on the risky mistakes they makecharging and using them. Research showed parents making the same mistakes and simple advice oncharging and using gadgets safely was offered. The short video produced to support the campaign wasviewed by over 350k people.

• Commemorating the 350"' anniversary of the start of the Great Fire of London, the Charity producedthree short films highlighting potential consequences of product misuse and getting distracted in thekitchen. The videos were the most successful digital campaign to date in terms of reach and interactionand were viewed by over 2.Sm people.

• Warning about the need to be vigilant to identify counterfeits in a campaign as part of Electrical FireSafety Week in November 2016. This coincided with the "Black Friday" sales and highlighted thatelectrical fakes lack important safety features, meaning they present a risk of electric shock or fire.

The Charity also raised awareness with the Electrical Industry by working closely together to ensure consumersafety:

• The Charity has developed a range of tailored consultancy services designed to support organisationsinvolved at any point in the supply chain in the retail of electrical products and appliances. The Charityteam of product safety e~:perts specialise in solving individual business needs acid advise cliciits on bestpractice procedures, ensuring the products they manufacture and retail meet relevant LTK standards,reducing the risk of them causing injury to end users.

• Hosted by the Charity, the Electrical Installation Safety Forum (EISF) was established to facilitatediscussions in the electrical industry for the purpose of taking a co-ordinated approach to developingpractical solutions on installation safety matters, including safety of low voltage electrical installationsin domestic premises; electrical installation certification and condition reporting; electrical installationrelated fires; electrical installation practice; counterfeit and non-compliant installation products andbuilding regulations.

• Also hosted by the Charity, the Wiring Regulations Advisory Group (WRAG) has continued to be anexcellent source of information for electrical installers and practitioners. The Electrical Safety Firstwebsite contains over 175 searchable questions and answers and these continue to generate over 8,000page views per month.

• The Charity has been represented at a number of events:➢ Electrical Safety First is a member of the annual symposium planning team, and in November

representatives presented at the International Consumer Product Health and Safety Organisation(ICPHSO) conference in Brussels on ̀human factors affecting the safety journey'.

➢ In April Charity staff attended an EU Commission workshop that looked at improving RAPEX —theEU system for exchange of information between member states on unsafe goods —aiming to makeinformation clearer and more accessible.

➢ In March Charity staff talked to Tech UK members about concerns and solutions associated withsafety and sustainability concerning the lifecycle of electrical products.

➢ The Charity worked in collaboration with FACT/Industry Trust to highlight the safety concerns ofthe power supply units of TV streaming boxes which are a growing problem.

➢ Charity staff presented at Certsure's NICEIC ELECSA live events on the dangers associated withcounterfeit electrical products.

_ _ -- -- ~ :_ _ Y ~1 ~_~l ̀'L~lll~J\CAL


The charity held its sixth product safety conference in November. BBC journalist and presenter MartineCroxall chaired the event and the Minister of State for Energy and Intellectual Property, BaronessNeville-Rolfe, provided the keynote speech highlighting, amongst other things, the importance forindustry and government to tackle the growing issue of counterfeit and sub-standard electrical goodsthat threaten consumer safety and hurt legitimate businesses. The Conference covered numerous hottopics including how smart technology can improve product safety, product recall effectiveness andconsumer understanding of risk, including how manufacturers might anticipate emerging risks, andforeseeable use. The day concluded with a session on counterfeit electrical products and the need foraccurate intelligence to address the flood of fakes entering the UK.In March the Charity held a roundtable event focused on open-circuit PEN conductors, which serve asboth a protective earthing and neutral conductor. Although PEN conductors within installations havebeen prohibited for some time now, older ones still remain in, for example, the ring mains in blocks offlats. If the PEN conductor fails, this presents a shock hazard and the diverted neutral current can alsocreate a significant heat build-up, which can then lead to fire. The event drew on evidence provided bythe Health and Safety Executive and brought together all sectors of the electrical industry to discuss thesafety issues and look to developing solutions through collaborative efforts in both the distributionnetwork and in the IET Wiring Regulations.

The Charity undertook other work on product safety:

The Charity were able to help develop and influence a new British Standard for. travel adaptors (BS8546), which was published in April ?016 and for plugs and sockets (BS1363) in August 2016.The Charity repeated its investigation conducted in 2014 into a number of commercially available UKsocket outlets incorporating USB ports. This was done to ascertain if quality and safety of the productshad improved and to see if they were capable of meeting the relevant recently introduced standard. Theresearch findings are being shared with manufacturers and suppliers concerned to make them aware ofthe nature and extent of the electrical safety failures that have been identified.

The Charity continued to provide information via an effective website and other means:

• The Electrical Safety First website has continued to see a consistent increase in visitors, with a 9%risein traffic over the prior year. In 2016-17 the site had nearly 2.Sm total visits, 2.1m unique visitors and3.9m page views. Peaks in site visits coincided with campaign launches and there was also a surge invisits in when Whirlpool changed their advice on their high profile tumble dryer safety notice.Following this, the site's product recall pages had over 12k visits in one day.

• Older digital content also helped to drive traffic to the site. In September, lOk people visited the site,having seen the "Clueless Colin" film about the risks of e-cigarettes. And the highly successful "PetsHome Alone" video, about the dangers of leaving phones charging unattended, brought over 4,000people to the site in one day in June, coinciding with the release of hit film "The Secret Life of Pets" inUK cinemas.

On the website, the most popular consumer pages were:➢ Whirlpool Recall — 237,404 visitors (6.04% of total traffic)➢ RCDs Explained —155,212 (3.95%)➢ Overloading Sockets —138,171 (3.51 %)➢ Find an Electrician — 125,947 (3.20%)➢ Advice for Landlords —14,739 (2.66°/a)

The most popular technical pages were:➢ New, Re-Wired and Similar Installations (Wiring Regulations) — 76,827 (1.95% of total

traffic)➢ Best Practice Guides — 70,412 (1.79%)➢ Wiring Regulations Landing Page — 64,640 (1.64%))

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There were high numbers of downloads of information from the site:➢ Best Practice Guides (1-9) — 58,744➢ Landlords' Interim Checklist — 2,554➢ Landlords' Guide, Scotland — 1,802➢ How Safe is Your Home? —1,757➢ Electrical Safety in Privately Rented Properties in Scotland —1,060

The Charity annual consumer survey showed that during 2016-17 there has been a significant increase inawareness around some of the key campaigning issues:

There has been a drop in the number of people who say they would buy fake electrical products. Thesurvey showed just 2% would buy electrical devices like games consoles and hairdryers (3% in 2016)and 3%would buy accessories like chargers and cables (6% in 2016). 87% of LJK adults say they wouldnever knowingly buy fake goods (82% in 2016).

People are more likely to respond to recall notices for larger, more expensive items — with a high 85%saying they would return a washing machine/tumble dryer, down to 75°/a for a mobile phone charger,although this figure has risen from 69% in 2016.

The Charity held its annual drop-in event in the House of Commons in January which offered advice to MPsthat could help protect their older constituents. from house fires caused by electricity. The Charity intend tocommission a piece of research with Hampshire Fire Service which will identify the 'hot spot' areas in Englandfor electrical fires in the homes of older people, which will feed into greater campaigning work with politiciansin their constituencies.

The Charity held an event in the EU Parliament on the subject of tackling the spread of counterfeit electricalgoods across Europe, in association with Underwriters Laboratories (UL) and with Lucy Anderson MEP. Itattracted key speakers from the EU Commission and Europol. The Charity are seeking to find legislativeopportunities to tackle the issue of counterfeits across Europe.

Charitable objectives continued to be delivered through the Certsure LLP joint venture including under itsNICEIC and ELECSA brands and the number of registrants on NICEIC's Approved Contractor roll continuedto increase and topped 20,000 for the first time in its history. 2016 marked the 60th anniversary of 1VICEIC;

since its inception in 19561vICEIC has been the LTK's leading voluntary body for electrical contractors.

Certsure continued to build on its previous successful work and also rolled out several new initiatives

throughout 2016/17, including:

• As part of its commitment to protect consumers, Censure continued to work with some of the biggestnames in the home improvement sector within the Consumer Protection Alliance. Censure also workedin conjunction with the John Lewis Partnership on a new trusted homes project.

• In order to raise awareness about the need to use a registered electrician, Censure ran a series of highprofile campaigns throughout the year including its first ever 'I'V and online advert which reached inexcess of l Om viewers.

• NICEIC and ELECSA again reached contractors through successful Live events which as in prior years

had more than 1,000 attendees at the Live South and Live North Events. Regional TechTallcs also saw

record numbers attend.

• NICEIC carried on encouraging more women into the electrical industry through its Jobs for the Girlscampaign which was nominated for an award at the Women in Construction Awards 2017.

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Training

Certsure continued to offer traditional electrical based courses such as 17th edition and safe isolation,but also to expand its range of courses to reflect the changing nature of the market with courses in areassuch as smart home technology and renewable energy. It also organised a series of technical webinarswhich provided more than 1,000 contractors with the opportunity to tune into a live technical debate oraccess the recording later.Following the first year of the Apprentice of the Year competition which Certsure ran in 2015/16 andwhich attracted more than 350 young apprentices, the competition was again run in 2016/17 with over400 young apprentices applying to take part.

Online certification

• NICEIC and ELECSA continued to offer certification services, Building Regulations Schemes, productsand support to electrical contractors and many other trades within the construction industry. The onlinecertification system continues to be used by more than 15,000 unique customers.

Charitable Activities in Scotland

This year the Charity launched a new campaign, "Inequality Street' highlighting the inconsistency betweenelectrical safety standards in private and social housing and owner-occupied homes in Scotland and calling for acommon electrical safety standard for all housing in Scotland. The Charity published its maiufesto for theScottish Parliament Election and engaged with politicians from all parties on ways to reduce the number ofelectrical foes in homes with the Charity's exhibitions at the main political party conferences focusing on therange of electrical dangers which can be found in a child's bedroom. This resulted in may elected membersworking with the Charity to bring the issue to the attention of the Scottish Government through a series ofparliamentary questions. The Charity also took the opportunity of an event in Glasgow to highlight toCouncillors and members of the public the dangers of counterfeit electrical goods.

Charitable Activities in Northern Ireland

The Charity published manifestos for the two separate Assembly elections and have continued to gain crossparty political supporters and continued to establish relationships with stakeholders, including Housing Rightsand NUS USI.

Many of the Charity's campaigns and activities have a nationwide remit throughout the LTK.

Future Plans for 2017-18 include:

~ Working to ensure the Charity fulfills the aims set out in its strategy for 2015-2020 which are:

➢ We will work to make electrical installations safer

➢ We will work to make electrical products safer

➢ We will raise awareness amongst consumers on how to use their electrical installations and electricalproducts safely

We will be a sustainable and socially responsible organization

➢ We will develop our partnership work to maximise our impact in raising awareness of electrical safetyissues

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D[RECTORS' REPORT FOR THE YEAR ENDED 31 MARCH 2017 (continued)

To do this the Charity plans to be:

• Continuing to support, the development of a central electrical product recall database• Carrying on the work to improve the safety of products through their design and compliance with LTK

product standards as well as advising consumers of the risks and influencing behavior change• Continuing the development of the Charity brand to assist in promoting awareness of the Charity and its

activities• Identifying organisations that can help the Charity to leverage its key messages so that it has a louder

voice and working with partners to develop policy positions and campaign together for the benefit of theconsumer

• Building on successes to date making use of digital campaigns as a more cost effective and impactfulway of reaching target audiences

~ Continuing to press government to make 5 yearly wiring and appliance checks mandatory for all homesthroughout the UK having expanded this aim from just applying to the private rented sector.

• Continuing to raise awareness of the need to use a registered electrician when undertaking electricalwork and promote the Registered Competent Person Electrical Mark

• Continuing the work of the grant programme

Financial Position and Reserves

Overall Resudt

The Group has recorded a decrease in funds during 2016/17 of £6,468K consisting of net income of £2,932Kand a £9,400K actuarial loss on the Pension Scheme. The increase in funds for the prior year was £1,134Kboosted by a £600K actuarial gain on the Pension Scheme. The reserves at year end which are whollyunrestricted totalled £10,479K.

Gift aid of £3,258K (2016: £5,295K) has been generated by the Charity's subsidiaries. The Charity'ssubsidiaries include ESC Partnerships Ltd which is one of two members of Certsure LLP and which generatedall the 16/17 gift aid. The other member of Censure LLP is the Electrical Contractors Association Ltd which isa wholly owned subsidiary of the Electrical Contractors Association, a members association.

Income

Total income was £4,524K, the main component of which was £3,258K as a share of profits in Joint Ventures(2016: £2,812K). Other incoming resources are mainly income payable to the Charity by Censure LLP for useof its assets together with investment income.

Expenditure

Total expenditure was slightly lower than the prior year at £3,051 K (2016: £3,239K). Reflecting the on-goingcontrol kept on costs, Charitable expenditure incurred in the Charity was also slightly lower than in the prioryear at £2,206K (2016: £2,310K).

Fixed Assets

The majority of the Charity's tangible fixed assets comprise the land, buildings, furniture equipment and IT hardand software used in the Group on a daily basis. Changes in tangible fixed assets are summarised in note 10 tothe financial statements.

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IL


Pension Scheme

The pension scheme was closed to future accrual benefit on 28 February 2013 and employees who were activemembers at the closure date were offered enhanced employer contribution rates in the group's stakeholderscheme

The underlying pension deficit has increased significantly during the year as a result of a lower discount rate andhigher inflation and is now £17.1M which is an increase of £9.6M over the prior year. This deficit is calculatedunder current accounting standards and is of a long term (as well as variable) nature.

The pension deficit impacts the Charity's short and medium term cash flows by the funding arrangementsagreed with the Pension Scheme Trustees. These comprise annual £1.25M deficit payments paid monthly toOctober 2023, however the payments due up to March 2018 were made in advance before 31 March 2015. Thenext triennial valuation is due to be undertaken as at 31 March 2017, in the meantime annual updates are beingreceived.

Outlook

The Group's financial position remains satisfactory. Although the Charity holds significant reserves theTrustees are mindful of the deficit that exists in the Pension Scheme and are balancing that with the need tosupport Certsure as its main source of funding whilst ensuring the Charity's on-going ability to deliver on itsobjectives.

Cash, Investment Policy and Returns

Helped by good investment returns over the year and the release of £1.25M of cash from Escrow, group cashand investment balances excluding joint ventures have increased to £18,339K (2016: £14,299K).

The Charity's investment policy has as its objective "to produce returns and be a vehicle for holding the agreedlevel of Charity reserves". The investment target return is once any income required has been taken to maintainand where possible enhance the real value of the portfolio without taking unnecessary risks. A total returnapproach to investment is taken i.e. generating return from income and capital gains and losses.

An investment portfolio of £11.4M of funds with a long term investment horizon is managed by three fundmanagers, Rathbones, Cazenove and HSBC. Favourable conditions in the financial markets has resulted in atotal return of £1,602K being delivered on the portfolio, comprising £1,305K of capital gains and £297K ofincome.

The investment policy is maintained under ongoing review in light of changing Group funding requirements andall portfolios are now balanced between equities, fixed interest investments, alternative investments and cashbased on an intermediate risk profile. All income generated is being paid to the Charity to fund currentspending.

The balance of the Charity's investments relate to the joint venture of Censure LLP and property, the largestportion of which is leased to Certsure LLP at market rates.

Reserves and Risk Assessment

Risk management processes are embedded in the day-to-day operations of the Charity and its trading activitieseach of which has its own risk register. Risk registers are reviewed regularly by management to ensurecompleteness and that the risk ratings and impacts remain appropriate.

13


Significant changes in the Charity's risk register are reported at the Electrical Safety Council's Board meetings.The Financial Management Committee reviews the Charity's risk register in detail and the high level riskregisters relating to the trading activities. This Committee, on behalf of the Board, conducts an annual review ofthe level of unrestricted reserves by considering the risks associated with the various income streams,expenditure plans and Balance Sheet items.

In setting the reserves target the Committee reviewed the risk registers and the systems that have beenestablished to mitigate those risks. The Committee also recognises that assets such as fixed assets are not easilyor quickly realised.

This review enables an estimate to be made of the level of reserves that will be sufficient to maintain corecharitable activities including the Charity's:

• consumer awareness and campaigning activities;• objectives to improve electrical product and installation safety;

• commitment to technical excellence; and sufficient time to re-organise and dispose of long termassets in the event of a down turn.

The agreed reserves policy is that reserves, which are defined as the charity's and its wholly owned subsidiaries'cash and investment portfolio, amounting to two years pure /discretionary charitable expenditure be maintainedafter provision for the next three years' pension deficit payments.

Charity reserves at 31 March 2017 are approaching 2.75 times this target. Note as reported in the previousyear, the Trustees decided to pay in advance before 31 March 2015, all the contributions due to the closedPension Scheme under the agreed deficit recovery plan up to March 2018. This has the effect of reducing theformal reserve target which has in tum increased the multiple of target reserves held. The Charity Trustees areare also mindful that the contributions due under the Pension Scheme recovery plan will be updated followingthe next triennial review due as at 31 March 2017 and will further considerthe longer term situatipn when theresults of the valuation are known.

The Trustees have ultimate responsibility for ensuring the activities are planned, directed and controlledalthough day to day management of the Charity is delegated to Senior Management. Trustees areunremunerated and the remuneration of the Key Management Personnel is deternuned by the RemunerationSub-committee of the Financial Management Committee who take into consideration general pay increasesawarded under the collective agreement which covers the majority of staff as well as external comparatives.

Financial Instruments

The Group's policy including Joint Ventures is to finance working capital through retained reserves and moniesreceived in advance from customers as a result of its annual fee cycle. The Group does not actively use otherfinancial instruments as part of its financial risk management. It is exposed to the usual credit risk and cashflow risk associated with selling on credit and manages this through credit control procedures. It is exposed tominimal foreign exchange risk as the customer base is mostly within the UK. The nature of the Group'sfinancial risk instruments means that they are not subject to price or liquidity risk.

The Board does not consider any other risks attaching to the use of financial instruments to be material to anassessment of its financial position or results.

Employee Training and Recruitment

The Group including Joint Ventures has an active personal development training programme to ensure that allemployees have the skills and knowledge necessary to achieve the business and personal goals. to which theyaspire. The Group is an equal opportunity employer that values diversity in its employees and it has recruitmentpolicies directed to ensure that it is open to all.

14

T - — OUNCIL


STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Directors' annual report incorporating a strategic review and thefinancial statements in accordance with applicable law and United Kingdpm Accounting Standards (UnitedKingdom Generally Accepted Accounting Practice).

Company law requires the Directors to prepare financial statements for each financial year. Under company lawthe Directors must not approve the financial statements unless they are satisfied that they give a true and fairview of the state of affairs of the Group and parent Charity and of the incoming resources and application ofresources, including its income and expenditure, of the Group for the year. In preparing those financialstatements the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• observe the methods and principles in the Charities SORP 2015 (FRS 102);

• make judgments 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 and Chanty will continue in business.

The Directors are responsible for keeping adequate and proper accounting records that are sufficient to showand explain the Charity's transactions and disclose with reasonable accuracy at any time the financial position ofthe Group and parent Charity and enable them to ensure that the financial statements comply with the Charitiesand Trustee Investment (Scotland) Act 2005, the Charities Accounts (Scotland) Regulations 2006 (as amended)and with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets ofthe Group and parent Charity and hence for taking reasonable steps for the prevention and detection of fraud andother irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial informationincluded on the Charity's website. Legislation in the United Kingdom governing the preparation anddissemination of the financial statements and other information included in annual reports may differ fromlegislation in other jurisdictions.

Directors' Awareness Statement

Each of the Directors has confirmed that so far as he is aware, there is no relevant audit information of whichthe charity's auditor is unaware, and that he has taken all the steps that he ought to have taken as a director inorder to make themselves aware of any relevant audit information and to establish that the Charity's auditor isaware of that information.

Auditor

A resolution to appoint Moore Stephens LLP as auditor will be proposed at a future Board meeting.

r~J

By order of the BoardJennifer TrimCompany Secretary28 September2Q17

15

'lU ~iN~~n~i Fi ~Fiii iGi~l fiiliJ~~~~i Yi ioi l~~iii■~i~~\7iWUiPl iM ~i~=vJii i~~u--.:. r.w~~~.:~~~r

SAFETY COUNCIL

We have audited the financial statements of The Electrical Safety Council for the year ended 31 March 2017which are set out on pages 18 to 39. The financial reporting framework that has been applied in their preparationis applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted AccountingPractice), including FRS 102, the Financial Reporting Standard applicable in the IJK and Republic of Ireland.

This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part16 of the Companies Act 2006, with Chapter 3 of Part 8 of the Charities Act 2011 and regulations made undersection 154 of that Act and with Section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005and regulations made under section 44 of that Act. Our audit work has been undertaken so that we might stateto the charitable company's members those matters we are required to state to them in an auditor's report andfor no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyoneother than the charitable company and the charitable company's members as a body, for our audit work, for thisreport, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Statement of Directors' Responsibilities set out on page 15, the directors areresponsible for the preparation of the financial statements and for being satisfied that they give a true and fairview.

We have been appointed auditor under the Companies Act 2006, section 151 of the Charities Act 2011 andsection 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005 and report in accordance withthose Acts.

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicablelaw and International Standards on Auditing (LTK and Ireland). Those standards require us to comply with theAuditing 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 financial statements is provided on the Financial Reporting Council'sweb-site at www.frc.orguk/auditscopeukprivate.

Opinion on financial statements

In our opinion the financial statements:

• give a true and fair view of the state of the group's and the parent charitable company's affairs as at 31March 2017 and of the groups incoming resources and application of resources, including its incomeand expenditure, for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted AccountingPractice; and

• have been prepared in accordance with the requirements of the Companies Act 2006, the Charities Act2011 and the Charities and Trustee Investment (Scotland) Act 2005 and regulation 8 of the CharitiesAccounts (Scotland) Regulations 2006 (as amended).

16

__ _ ~_EPENDENT~IIDITOR'~ORT TO THE MEMBERS OF THE ELECTRICAL

SAFETY COUNCIL (Continued)

Opinion on other matter prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

the information given in the Chairman's Statement, Chief Executive Officer's Review, Directors' Reportand Strategic Review for the financial year for which the financial statements are prepared is consistentwith the financial statements; and

the Directors' Report has been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the charitable group and the parent charitable company andits environment obtained in the course of the audit, we have not identified material misstatements in theChairman's Statement, Chief Executive Officer's Review, Directors' Report or Strategic Review.We have nothing to report in respect of the following matters where the Companies Act 2006, the Charities Act2011 and the Charities Accounts (Scotland) Regulations 2006 (as amended) requires us to report to you if, inour opinion:• the parent charitable company has not kept adequate and sufficient accounting records, or returns

adequate for our audit have not been received from branches not visited by us; or

• the parent charitable company financial statements are not in agreement with the accounting records andreturns; 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.

V"Ic9

Richard Wil is, Senior Statutory AuditorFor and on behalf of Moore Stephens LLP, Statutory Auditor

Moore Stephens LLP is eligible to act as an auditor in terms of section 1212 of the Companies Act2006

150 Aldersgate Street

London

EC 1 A 4AB

17

THE ELECTRICAL SAFETY C;vUNCIL

CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES YEAR ENDED31 MARCH 2017( incorporating Consolidated Income and Expenditure Account )

2017 2016

Note Unrestricted Trading Total TotalFuIIds Subsidiaries Fullds FUnds

£'000 £'000 £'000 £'000

INCOME FROM:

Investment Income —Investments 304 2 306 289

Investment Income —Properties 384 - 384 380

Other Trading activities -Continuing operations: - - - -

Other Trading activities -Discontinued operations: - - - 31

Other Trading activities -Share of profits in Joint12 - 3,258 3,258 ?,R 12

Ventures

Income from Charitable Activities 114 - 114 _

Other Incoming Resources 462 - 4~2 491

TOTAL INCOME ~ 1,264 3,260 4,524 4,OU3

EXPENDITURE ON:

Raising funds

Continuing trading operations: - 50 50 64

Discontinued trading operations: - 37 37 94

Investment Management Costs 37 - 37 35

Fundraising Costs 26 - 26 23

Subtotal -Raising Funds 4 63 87 150 216

Charitable Activities

Installation Safety 814 - g 14 855

Product Safety 1,283 - 1~2g3 1,343

Grants and Direct - - - 47

Research 109 - 109 65

Subtotal -Charitable activities 4 2,206 - 2.206 2,310

Other Expenditure 4 695 - 695 713

TOTAL EXPENDITCJRE 2,964 87 3,051 3,239

Net Investment Gains/(Losses) -Investments 12 1,305 - 1,305 (230)

Net Investment Gains —Property 680 (526) 154 -

NET INCOME / (EXPENDITURE) 285 2,647 2,932 534

Actuarial (Loss)/Gain on Pension Scheme 1~ (9,400) - (9,400) 600

Transfer of Gift Aid 3,258 (3,258) - -

NET MOVEMENT IN FUNDS (5,857) (611) (6,468) 1,134

Total Funds at 1 Apri12016 16,947 15,813

Total Funds at 31 March 2017 10,479 16,947

All Charitable funds are unrestricted. All recognised gains and losses are included above.

18

_ - - - - - -- ----egisfere ompany o. --


BALANCE SHEETS AS AT 31 MARCH 2017

GYoup Chari GCOup Charity

Notc 2017 2017 2016 2016

£'000 £'000 £'000 £'000

FIXED ASSETS

Tangible Assets 10 4,131 1,726 4,196 1,737

Investment Properties 11 1,922 5,004 1,768 4,324

Investments 12 11,414 11,414 10,153 10,153

Investments in Joint Ventures 12 3,258 - 2,812 -

CURRENT ASSETS

Debtors

Cash at Bank and in Hand

CURRENT LIABILITIES

Amounts Falling Due Within One Year

NET CURRENT ASSETS

TOTAL ASSETS LESS CURRENTLIABILITIES

DEFINED BENEFIT PENSIONSCHEME LIABILITY

20,725 18,144 18,929 16,214

13 419

6,925

3,413

5,205

1,800

4,146

3,030

3,617

7,344 8,618 5,946 6,647

14 490 1,146 428 988

6,84 7,472 5,518 5,659

27,579 ?5,616 24,447 21,873

17 17,100 17,100 7,500 7,500

10,479 8,516 16,947 14,373

RESERVES

UNRESTRICTED INCOME FUNDS 27,579 25,616 24,447 21,873

PENSION RESERVE 17 (17,100) (17,100) (7,500) (7,500)

TOTAL RESERVES 10,479 8,516 16,947 14,373

For the purposes of the Companies Act, net income for the year is £1,473K (2016: £764K).

Approved by the Board of Directors and authorised for issue on 28`" September 2017, and signed on their behalf

by:

B F Walker -Chairman

fL•]

-- - -- - - --EL~CTR7CAL S -

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2017

TOTALFUNDS P! YR2017 FUNDS£'000 £'000

Net cash used in operating activities (Note A)

Net cash provided by/(used in) investing activities (Note B)

Cash flows from financing activities

(2,017) (416)

4,796 (2,526)

2,779 (2,942)

Analysis of Net Funds £'000 At 1 Apr 15/16 At 31 Mar 16/17 At 31 Mar

2015 Movement 2016 Movement 2017

Cash at bank and in hand 7,088 (2,942) 4,146 2,779 b,925

CASHFLOW STATEMENT NOTES

A. Net cash used in operating activities

Net income for the reporting periodShare of profits in Joint VenturesSale of business (Note C)DepreciationDividends, interest and rents from investmentsRents from properties

(Gains)/Losses on investmentsLoss on disposal of fixed assets

FRS 102 Pension operating movementDecrease in debtors

Increase/(Decrease)in creditors

Net cash used in operating activities

B. Net cash provided by/ (used in) investing activities

Dividends, interest and rents from investments

Rents from propertiesDistributions from Joint Ventures

Sale of business (Note C)Proceeds from the sale of property, plant &equipment

Purchase of property, plant &equipment

Proceeds from the sale of investmentsPurchase of investmentsNet cash provided by /(used in) by investing activities

C. Sale of the NQA BusinessNet assets disposed of:Fixed assetsCurrent assets —excluding cashLiabilities

Gain on disposal

Satisfied by:Deferred considerationCash

2,932 534(3,258) (2,812)

62 62

(306} (289)(384) _(1,459) 230

3 1

200 300131 2,380

62 (822)

(2,017) (416)

306 289

384 -2,812 1,041

1,250 750- 5- (2,876)

1,655 1,391(1,611) (3,126)4,796 (2,526)

{1,250) (750)1,250 750

20

`— ~IID~DI~IJi~I~C~l~1~R.7:~JJr~' ~i~l~l\Ell

CHARITY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2017

TOTALFUNDS P/ YR2017 FUNDS£'000 £'000

Net cash provided by (used in) operating activities (Note A) (2,402) (91)

Net cash provided by investing activities (Note B) 3,990 1,349

1,588 1,258

Analysis of Net Funds £'000 At 1 Apr 15/16 At 31 Mar 16/17 At 31 Mar

2015 Movement 2016 Movement 2017

Cash at bank and in hand ?,359 1,258 3,617 1,588 5,205

CASHFLOW STATEMENT NOTES

A. Net cash provided by (used in) operating activities

Net income / (expenditure) for the reporting periodDepreciation

Dividends, interest and rents from investmentsRents from properties

(Gains)/Losses on investmentsFRS 102 Pension operating movement

(Increase) /Decrease in debtors

Increase / (Decrease) in creditors

Net cash provided by (used in) operating activities

B. Net cash provided by investing activities

Dividends, interest and rents from investmentsRents from properties

Gift aid from trading activities

Proceeds from the sale of property, plant &equipment

Purchase of property, plant &equipment

Proceeds from the sale of investments

Purchase of investmentsNet cash provided by investing activities

285 (2,155)11 9

(304) (285)

(384) (380)(1,985) 230

200 300

(383) 2,830

.158 (640)

(2,402) (91)

304 285

384 380

3,258 5,295

- (2,876)

1,655 1,391

(1,611) (3,126)3,990 1,349

21

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYEAR ENDED 31 MARCH 2017

1. ACCOUNTING POLICIES

(a) Basis of Accounting

The Electrical Safety Council is a company limited by guarantee (No. 570175) and a registeredCharity (England and Wales No. 257376: Scotland No. SC039990).

The financial statements are prepared in compliance with Accounting and Reporting byCharities: Statement of Recommended Practice applicable to charities preparing their accountsin accordance with the Financial Reporting Standard applicable in the UK and Republic ofIreland (FRS 102) . (effective 1 January 2015) — (Charities SORP (FRS 102)), the FinancialReporting Standard applicable in the UK and Republic of Ireland (FRS 102), the CompaniesAct 2006, and the Charities Act 2011. The Electrical Safety Council meets the definition of apublic benefit entity under FRS 102. The financial statements have been prepared on thehistorical cost basis and presented in GBP£, rounded to the nearest thousand, which is thefunctional currency of the Charity.

(b) Basis of Consolidation

The consolidated accounts include the results of the charitable company and its subsidiaries,ESF Enterprises Ltd, ESC Partnerships Ltd and Ascertiva India Private Ltd from the date ofacquisition, together with a share of the results, assets and liabilities of jointly controlled entity(joint venture) Certsure LLP using the equity method of accounting, where the investment iscarried at cost plus post-acquisition changes in the share of net assets of the joint venture, lessany provision for impairment.

As pernutted by Section 408 of the Companies Act 2006, a separate income and expenditureaccount is not presented in respect of the charitable company. The Charity's gross income forthe year was £4,521K (2016 - £6,451K) and the result was £3,543K surplus (2016 - £3,140Ksurplus).

(c) Income

Fees and other income are accounted for on the provision of the service and are exclusive ofVAT.

(d) Investment Income

Investments listed on a recognised stock exchange are included in the balance sheet at marketvalue. Unrealised gains and losses arising during the year are included in the Statement ofFinancial Activities. Investment income is the amount received by the group in the year.

(e) Basis of Expenditure Allocation

SORP 2005 requires that support costs are allocated where appropriate to direct charitableactivities. The analysis provides an understanding of the nature of the activities undertaken andthe resources expended on their provision.

(fl Operating Leases

Costs arising under operating lease agreements have been charged to the Statement of FinancialActivities as incurred.

Rental income from operating leases is recognised on a straight-line basis over the termof the relevant lease.

22

TRICAL SAFF,TY COUNCIL


1. ACCOiJNTING POLICIES (Continued)

(g) Tangible Fixed Assets and Depreciation

Tangible fixed assets are stated at historical and deemed cost less accumulated depreciation andany accumulated impairment losses. Historical cost includes expenditure that is directlyattributable to bringing the asset to the location and condition necessary for it to be capable ofoperating in the manner intended by management.

Land is not depreciated as it is deemed to have an indefinite useful life. Depreciation is chargedon other assets so as to write off the cost or valuation of assets, over their estimated useful lives,less estimated residual value, using the straight-line method on the following bases:

Capitalised software -Between 3 and 5 yearsComputer equipment -Over 3 yearsOffice equipment -Between 2 and 5 yearsFreehold building - 2% on costRefurbishment - 10% on costLeasehold improvements -Over the life of the leaseLong leasehold property -Over the life of the lease

(i) Foreign Exchange

Assets and liabilities are translated into sterling at rates ruling at the balance sheet date.Transactions in foreign currencies are translated into sterling at rates ruling on the date of thetransaction.

(j) Valuation of Fixed Asset Investments

Investments in Group undertakings are carried at historical cost, adjusted in the case of the jointventures to reflect the Group's share of the underlying results. The Council considers this to bethe most appropriate method of valuation of these holdings for the purpose of the consolidatedfinancial statements.

Financial investments are valued at mid market value at the year end.

(k) Valuation of Investment Property

Investment properties are valued at market value and three of the properties were valued at 1April 2017 by professional valuers, the value of the remaining property at 31 March 2017 hasbeen estimated by Trustees taking market conditions into account. Gains or losses arising onrevaluation are taken to the statement of financial activities. No depreciation is provided oninvestment properties.

(1) Cash and Cash Equivalents

Cash and cash equivalents in the balance sheet comprise cash at banks and short term depositswith original maturities of three months or less and that are subject to an insignificant risk ofchanges in value.

23

CTRICAL SAP'~TY COUNCIL


ACCOiJNTING POLICIES (Continued)

(m) Pension Costs

For the Defined Benefit Scheme, the Statement of Financial Activities is charged with thecurrent service costs and the net return on assets. They are included as part of staff costs. Pastservice costs are recognised immediately in the Statement of Financial Activities. if the benefitshave vested. If the benefits have not vested immediately, the costs are recognised over theperiod until vesting occurs. The interest cost and the expected return on assets are shown inaggregate. Actuarial gains and losses are recognised immediately in the Statement of FinancialActivities.

The Defined Benefit Scheme is funded, with the assets of the scheme held in a fundadministered by the NICEIC Pension Scheme. Pension scheme assets are measured at fairmarket value and liabilities are measured on an actuarial basis using the projected unit creditmethod of valuation and discounted at a rate based on the yield of an AA rated Corporate Bond.Actuarial valuations for the purposes of FRS 102 are updated at each balance sheet date.

The resulting defined benefit asset or liability is presented separately after total assets lesscurrent liabilities on the face of the balance sheet.

The Defined Contribution Scheme is a "Group Personal Pension" whereby participatingemployees have individual contracts with an insurance company providing a range ofinvestment alternatives. Employer contributions are charged to the Statement of FinancialActivities in the year to which they relate.

(n) Financial Instruments

a. Financial assetsThe Charity's financial assets comprise basic financial instruments, being trade and otherdebtors and cash and bank balances. Trade and other debtors are measured at transaction priceless any impairment. Any impairment loss is recognised in the statement of financial activities.

The impairment loss is measured as the difference between an asset's carrying amount and bestestimate, which is an approximation of the amount that the Charity would receive for the assetif it were to be sold at the reporting date.

Financial assets are derecognised when contractual rights to the cash flows from the financialasset expire or are settled, or when substantially all the risks and rewards of ownership havebeen transferred.

b. Financial liabilitiesThe Charity's financial liabilities comprise basic financial liabilities, being trade and othercreditors. These are initially recognised at transaction price and are measured subsequently atamortised cost. Trade creditors are obligations to pay for goods or services that have beenacquired in the ordinary course of business from suppliers. Trade creditors are classified ascurrent liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Financial liabilities are derecognised when the liability is extinguished, that is when thecontractual obligation is discharged, cancelled or expires.

c. OffsettingFinancial assets and liabilities are offset and the net amount reported in the balance sheet whenthere is an enforceable right to set off the recognised amounts and there is an intention to settleon a net basis or to realise the asset and settle the liability simultaneously.

24

- -__---THE ELECTRICAL SAFETY COUNCIL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED 31 MARCH 2017

1. ACCOiJNTING POLICIES (Continued)

(o) Going Concern

The financial statements are drawn up on the going concern basis which assumes the group will

continue in operational existence for the foreseeable future. The Trustees have given due

consideration to the working capital and cash flow requirements of the group for at least 12

months from the date of signature on the accounts. The most significant areas of adjustment and

key assumptions that affect items in the accounts are to do with revaluation of investments and

the investment property in these accounts.

2. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATIONUNCERTAINTY

In the application of the Charity's accounting policies, which are described in note 1, the Trustees are

required to make judgements, estimates and assumptions which affect the amounts reported for assets and

liabilities as at the year end date and the amounts reported for income and expenditure during the year.

The estimates and associated assumptions are based on historical experience and other factors that are

considered to be relevant. However, the nature of the estimation means that actual outcomes could differ

from these estimates.

Defined benefit pension and other post-employment benefitsThe present value of the defined benefit pension and other post-employment benefit obligations depends

on a number of factors that are deternuned on an actuarial basis using a number of assumptions. The

assumptions used in determining the net cost (income) for pension and other post-employment benefits

include the discount rate. Any changes in these assumptions will have an effect on the carrying amount of

pension and other post-employment benefits.

After taking appropriate professional advice, group management determines the appropriate discount rate

at the end of each reporting period. This is the interest rate that should be used to determine the present

value of estimated future cash outflows expected to be required to settle the pension obligations. In

determining the appropriate discount rate, consideration is given to the interest rates of high-quality

corporate bonds that are denominated in the currency in which the benefits are to be paid and that have

terms to maturity approximating the terms of the related pension liability.

Other key assumptions relevant to the defined benefit pension and other post-employment benefit

obligations are based in part on current market conditions. Additional disclosures concerning these

obligations are given in note 17.

Revaluation of investment propertiesThe group carries' its investment properties at fair value, with changes in fair value being recognised in

income and expenditure. The trustees review the valuation of the properties on an annual basis and,

taking the market conditions into account, consider the values included in the accounts to be the fair value

of the properties.

3. FINANCIAL RISK MANAGEMENT

The Trustees have overall responsibility for the establishment and oversight of the Charity's risk

management framework. The financial management committee is responsible for developing and

monitoring the Charity's risk management strategy and policies. The committee reports regularly to all

Trustees on its activity. There have been no changes to the Charity's exposures and risks or methods used

to measure and manage these risks during the year. The Charity seeks to minimise these risks as detailed

below:

25

- -THE ELE TRI FAL SAFETY COUNCIL


3. FINANCIAL RISK MANAGEMENT (Continued)

Liquidity riskThe objective of the Charity in managing liquidity risk is to ensure that it can meet its financialobligations as and when they fall due. The Charity aims to meet its financial obligations throughoperating cash flows. In the event that the operating cash flows would not cover all the financialobligations the Charity has financial investments available. The Charity maintains a long term (up to fiveyears) monthly cash forecast and is currently in a position to meet its commitments and obligations asthey come due.

The Charity is significantly dependent on Certsure, its Joint Venture with the Electrical ContractorsAssociation for its income, it is currently entitled to 80% of the profits (this will reduce to 75% as of 1Apri12017). The Charity also lease three properties to Censure and receive royalty income from Censure.Censure has a Management Board with responsibility for day to day management and control. There isequal representation on the Management Board from each partner and decisions are taken by majorityvoting with the requirement that at least one member from each partner should be in favour. Two of therepresentatives are Trustees of the Charity and during 16/17 the Chief Executive Officer and FinanceDirector of the Charity have become Charity representatives on the Management Board, by which meansoversight is achieved and regular reports are also provided to the Financial Management Committee andthe full Board of the Charity.

Market riskThe Charity is exposed to market conditions affecting the size of its investment portfolio. The value isregularly monitored and investment managers are required to attend meetings of the FinancialManagement Committee at least annually. The Trustees maintain the investment policy under review.The portfolio is spread across three managers to help mitigate the risks of manager underperformance.Investments are not made for a period of under five years and cash deposits are held to manage short termrequirements rather than divesting investments.

The Charity is also exposed to the effect of market conditions on the position of the closed defined benefitpension scheme. The Trustees of the Charity and the Pension Scheme work closely together and theTrustees of the Pension Scheme are currently working on a journey plan towards self sufficiency.

The Trustees do not feel the Charity is exposed to any other significant financial risk

4. NET INCOME FROM TRADING ACTIVITY OF SUBSIDIARIES

Support costs totalling £379k (2016: £411k) have been allocated to Charitable Activities in accordancewith the level of direct spend on those activities which is considered the fairest method of apportionment.Support costs comprise the costs of Chazity premises, finance, governance and other overhead costs andare not separately identified by function.

Other costs are the costs of administration and the interest on the net defined benefit liability of thedefined benefit scheme that is closed to future accrual. These costs therefore do not contribute to thecurrent cost of charitable activities.

26

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYEAR ENDED 3l MARCH 2017

~.~~ 1►U x.~l Ilu' 1 ~t1 li I~LKIJ►Ti f5/:~►iTi►fl-1~~1:7 9T.~! IGroup

2017 ?016£'000 £'000

Bank interest 9 25Investment income 297 264

306 289

6. STAFF COSTSChari Groun

2017 2016 2017 2016£'000. £'000 £'000 £'000

Staff costsWages and salaries 901 887 901 887Agency salaries 20 1 20 1Social security costs 105 108 105 108Pension costs 101 98 101 98Healthcare plan 3 3 3 3

1,130 1,097 1,130 1,097

The average number of staff employed during the period was 20 (2016: 18).

As a Charity, Trustees who are unremunerated and receive no other benefits from employment, haveultimate responsibility for ensuring the activities are planned, directed and controlled although day to daymanagement of the Charity is delegated to senior management who are also considered to be keymanagement personnel. Total remuneration paid to key management personnel in the year was £418,968(2016: £150,384); the Trustees have determined that a wider soup of Senior Management should now beconsidered key to the Charity and so have expanded the number of staff included within this category.Details of reimbursed expenses incurred by Trustees aze set out in note 18.

7. EMOLUMENTS OF EMPLOYEES AND DIRECTORS

Employees who received employee benefits (excluding pension contributions) of greater than £60,000 fellinto the following bands. All of these employees were participating in the group personal pensionscheme:

2017 2016£60,001 to £70,000 2 1£70,001 to £80,000 1 1

£80,001 to £90,000. 2 2£90,001 to £100,000 - -£ 120,000-£ 130,000 1 1

6 6

Aggregate pension contributions paid on behalf of the above higher paid employees were £73,162 (2016:£65,861).

27


S. NET INCOMING RESOURCES 2017 2016£'000 £'000

The Group's net incoming/(outgoing) resources are stated after charging/(crediting):Audit fees

Parent 9 8Subsidiaries 5 15

Non audit fees paid to auditors 14 16Depreciation of tangible fixed assets 62 62Loss on disposal of fixed assets 3 3Operating lease charges:Land and buildings 5 118Plant, machinery and vehicles - -

Taxation - (3)

9. TAXATION

The Electrical Safety Council is a Charity with the registration number 257376. No LJK taxation istherefore due on profits, income and gains arising from the charitable activities of the company. Thesubsidiaries pay over most of their taxable profits to The Electrical Safety Council, under a Gift AidScheme. The tax charges in relation to subsidiaries are disclosed in Note 8.

10. TANGIBLE FIXED ASSETS

Group Freehold Leasehold Office &Land and Land and TT Computer

softwareTOTAL

Buildings Buildings equipment

£'000 £'000 £'000 £'000 £'000

COST

B/fwd 4,292 29 12 1 4,334

Disposals - (29) (8) - (37)

C/fwd 4,292 - 4 1 4,297

DEPRECIATION

B/fwd 102 29 7 - 138

Charge 61 - 1 - 62

Disposals - (29) (5) - (34)

C/fwd 163 - 3 - 166

NET BOOK VALUE

As at 31 March 2016 4,190 - 5 1 4,196

As at 31 March 2017 4,129 - 1 1 4,131

Land, which is not depreciated, amounting to £1,749K (2016: £1,749K) is included in net book value

28



10. TANGIBLE FIXED ASSETS (Continued)

Charity Freehold Leasehold Office & IT Computer TOTALLand and Land and equipment Software

Buildings Buildings£'000 £'000 £'000 £'OOQ £'000

COST

B/fwd

Disposals

C/fwd

DEPRECIATION

B/fwd

Charge

Disposals

C/fwd

NET BOOK VALUE

1,736 29 6 1 1,772

- (29) - - (29)

1,736 - 6 1 1,743

2 29 4 - 35

10 - 1 11

- (29) - - (29)

12 - 5 - 17

As at 31 March 2016 1,734 - 2 1 1,737

As at 31 March 2017 1,724 - 1 1 1,726

Land, which is not depreciated, amounting to £1,207K (2016: £1,207) is included in net book value.

11. INVESTMENT PROPERTY

FREEHOLD INVESTMENT PROPERTIES CHARITY GROUP

£'000 £'000

B/fwd 4,324 1,768

Change in Market Value 680 154

C'fwd 5,004 1,922

29



12. INVESTMENTS -GROUP

Group 2017 2016£'000 £'000

Joint Ventures:At 1 Apri12016 -2,812 1,044Share of profit for the year 3,258 2,812Less: remitted to the Group (2,812) (1,044)

At 31 March 2017 3,258 2,812

Share of Joint Ventures represented by:Fixed assets 974 816Current assets 7,977 7,454Creditors (5,693) (5,458)

3,258 2,812

Other Investments 2017 2016£'000 £'000

Market value as at 1 Apri12016 9,753 8,411Purchases (at cost) 1,611 3,126Disposal proceeds (1,699) (1,554)Net investment gains/(losses) 1,305 (230)

10,970 9,753Cash balances held by investment managers 444 400

Market value at 31 March 2017 11,414 10,153

Historical cost as at 31 March 2017 9,512 9,466

Other investments are represented by:UK Equities 3,593 2,793Overseas Equities 2,320 3,238UK Bonds &Fixed Interest 1,672 1,239Global Bonds &Fixed Interest 1,002 642Hedge Funds 270 581Portfolio Funds 583 436Property 1,008 755Others 523 69Cash securities 444 400

Market value as above 11,414 10,153

Investments Total (Group) 14,672 12,965

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THE ELECTRICAL SAFETY COUNCIL r


12. INVESTMENTS (Continued)

The following investments represent over 5% of the total investment value:

Rathbones Active income &GrowthInc Fund £2,082HSBC Global Common for Growth A Income (UK equities) £760KCazenove Equity Income Trust for Charities (UK equities) £863K

Charity 2017 2016• £'000 £'000

Subsidiaries (See Note 22) - -Other Investments 11,414 10,153

Investments Total (Charity) 11,414 10,153

ESC Partnerships Ltd holds member rights in Certsure LLP.

13. DEBTORSGroup Charity Group Charity2017 2017 2016 2016£'000 £'000 £'000 £'000

Trade debtors 44 44 65 14Other debtors 1 1 32 18Prepayments 27 27 23 22Accrued income - - 4 4Amount due from subsidiary undertakings - 3,258 - 2,815Amount due from related company 83 83 157 157Social Security and Other Taxes 14 - 19 -Deferred tax - - - -Monies held in Escrow 250 - 1,250 -

419 3,413 1,550 3,030

Amounts receivable 1 — 5 yearMonies held in Escrow - - 250Total 419 ~ 3 0'iQ

14. CREDITORS Group Charit~~ Group Charity2017 2017 2016 2016£'000 £'000 £'000 £'000

Amounts falling due within one yearTrade creditors 86 78 - -Social security and other takes 63 63 51 51Amount due to subsidiary undertakings - 713 - 713Amount due to related company - - 40 -Accruals and deferred income 329 292 286 224Other creditors 12 - 51 -

490 1,146 428 988

Deferred income comprises of payments received on account and income relating to services not yetdelivered.

31



15. OPERATING LEASES

The Group has financial commitments in respect ofnon-cancellable operating leases payable as follows:2017 2016

Land and Land andbuildings Other buildines Other£'000 £'000 £'000 £'000

CharityNot later than one year 5 - 20 -Later than one and not later than five years 8 - 12 -Later than five years

Total commitment 13 - 3 2 -

GroupNot later than one year 5 - 20 1Later than one and not later than five years 8 - 12 -Later than five years - - - -

'total Commitment 13 - 32 1

Non-cancellable operating lease rentals are receivable as follows:

Charit GCOUp2017 2016 2017 2016

£'000 £'000 £'000 £'000Not later than one year 353 371 99 117Later than one and not later than five years 1,160 1,223 395 395Later than five years 290 580 99 198

Total commitment 1,803 2,174 593 710

The operating lease receivables are in respect of the investment properties held by the Charity and theGroup which are leased to third parties. Two of the properties held by the Charity are leased to CensureLLP, its joint venture for a minimum period of five years commencing 1 April 2013 on a fully tenantrepairing basis, with a rent review date that has expired. A further property is leased by the Charity toCensure for a minimum period of ten years commencing 1 April 2013 on a fully tenant repairing basiswith a rent review due on 1 Apri12018. Censure lease a portion of this property to NTS under a lease thatexpires on 28 March 2023 with a rent review due on 1 April 2018. The other property owned by theCharity is occupied by the Charity with a section that was leased to a tenant on an arrangement thatexpired in December 2016 which was extended to March 2017 when the tenant vacated. None of thetenants have any right of lease renewal after the expiry of the leases.

16. INSURANCE

Insurance costs charged to the revenue account include professional indeiruiity cover in respect of theBoard of Directors. It is not }iossible to separately identify the cost of this from the total insurancepremium for the Group.

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_...THE ELECTRICAL SAFETY COUNCIL


17. PENSION SCHEME

The Group operates. a pension scheme providing benefits based on final pensionable pay. The Schemeoperates under trust law and is managed and administered by the Trustees on behalf of themembers in accordance with the terms of the Trust Deed and Rules and relevant legislation. Theassets of the scheme are held by the Trust and are invested with Legal and General and Towers WatsonInvestment Management.

The Scheme was closed to new members with effect from 31 December 2006 and was closed to futureaccrual of benefits on 28 February 2013.

The Scheme is a funded scheme and the Trustee's funding objective is to hold assets which are atleast equal to the technical provisions, i.e. to meet the statutory funding objective. Thecontributions paid to the Scheme are agreed by the Trustee and Employer every three years, afterobtaining the actuarial advice of the Scheme Actuary. Principal factors in determining the levelof contributions include the covenant offered by the sponsor, the level of risk in the Scheme, theexpected return on the Scheme's assets and the discontinuance funding level.

The main risks to the Scheme include:• Investment returns insufficient to pay for the Scheme benefits• Significant deterioration in the Employer's covenant• Increase in the life expectancy of members• Significant changes in the market yields on high quality UKnon-government corporate bonds, which

are used to deternvne the discount rate

The most recent comprehensive actuarial valuation was carried out by the Trustee of the Schemeas at 31 March 2014 for funding monitoring purposes. The Employer has employed an actuarywho is not the Scheme Actuary to approximately update that actuarial valuation allowing fordifferences between the actuarial assumptions used by the Scheme for funding purposes andthose adopted by the Employer to measure the defined benefit obligation (DBO), as well asadjusting for benefits paid from Scheme.

As agreed following the latest formal actuarial funding valuation as at 31 March 2014, theEmployer pays £1.25 million per year into the Scheme in order to eliminate the funding deficitby 31 October 2023. In the first quarter of 2015 the Employer paid addirional contributions of£3.75 million as pre-payment for three years of future deficit contributions. In addition theEmployer meets the administration expenses of the Scheme and levies of the Pension ProtectionFund.

Scheme Asset Information Allocation Percentage Allocation Percentage31-Mar-17 31-Mar-16

Equity securities 2% 6%

Debt securities 40% 39%

Real estate/property 0% 0%

Diversified fund 56% 55%

Other 2% - 0%

Total 100% 100%

Fair value of Scheme assets (£million) 80.5 72.0

Included in the above:

Value of entity's own financial instruments 0 0

Value of property and other assets used by the Employer 0 0

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_ _ _ _THE ELECTRICAL SAFETY COUNCIL


17. PENSION SCHEME (Continued)

The figures stated are in line with the requirements of FRS 102. All figures in this note are shown in £million.

The demographic assumptions are consistent with those chosen by the Trustee for the 31 March 2014valuation. In particular, the mortality assumptions are consistent with the 2014 valuation assumptions butwith margins for prudence removed. That is, using 95% of the SAPS "S2" all pensioner retirements tablewith future improvements in longevity in line with ̀ CMI core projection model' (2013 version) subject toa long-term improvement rate of 1.25% pa.

Under the mortality rates assumed as at 31 March 2017 the implied life expectancy for a membercurrently aged 63 is 24.9 years for a male and 26.9 years for a female. The life expectancy at age 63 for amember currently aged 43 is 26.8 for males and 28.9 for females.

Defined Benefit Cost -Period Ending 31-Mar-17 31-Mar-16

A Profit &Loss (P&L)

1 Effect of emvlovee service in the current period - -

2 Net interest on net defined benefit liability/(assetl 0.2 0.3

3 Scheme introductions. chances, curtailments and settlements - -

4 Detined benefit cost recognised in P&L 0.2 0.3

5 Cost of termination benefits (I) - -

b Administration costs incurred durine the period -

7 Cost recognised in P&L 0.2 0.3

B Other Comprehensive Income (OCn

1 Actuarial (gain)lloss arising during period 18.8 (4.1)

2 Return on Scheme assets (greater)/less than discount rate (9.4) 3.5

3 Change in irrecoverable surplus (2) - -

4 Remeasurement effects recognised in OCI 9.4 (0.6)

C Total Defined Benefit Cost

1 Cost recognised in P&L 0.2 0.3

2 Remeasurement effects recognised in OCI 9.4 (0.6)

3 Defined benefit cost 9.6 (0.3)

D Assumptions Used to Determine Defined Benefit Cost (3~

1 Discount rate 3.4% 3.4°/a

2 Price inflation (RPI) 3.0% 3.1°/a

3 Price inflation (CPI) 2.0% 2.1%

4 Pension increases for in-payment benefits- RPI maximum 5% 2.8% 2.9%- RP[ maximum 2.5% 1.9% 1.9%

5 Pension increases for deferred benefits 2.0% 2.l

The fair value of assets is used to deternune the expected investment return during the year

1 Includes only termination benefits to be paid from the Plan.2 Excludes amounts inGuded in net interest/(income) on the defined benefit liability/(asset).3 These beginning of year assumptions were used to calculate the defined benefit cost recognised through P&L.

34




.4n allowance has been made for non-pensioner members to commute 25% of their pension at retirementfor tax free cash on terms that are broadly consistent with the current commutation factors. This isconsistent with the assumption used at 31 March 2016.

The proportion of member's deaths assumed to give rise to dependants' pension varies with age but istypically 93%for males and 80%for females at age 63. Male participants are assumed to be 3 years older

than their spouses and female participants are assumed to be 3 years younger than their spouses.

The employer meets the cost of administrative expenses and we have made no inclusion of these in thedisclosures.

The Projected Unit Credit Method is used to determine the present value of the DBO. Under this method,a "projected accrued benefit" is calculated based upon service as at the date of valuation. In normalcircumstances, the DBO is based upon the Scheme's benefit formula.

Net Balance Sheet Position -Period Ending 31-N1ar-17 31-Mar-16

A Development of Net Balance Sheet Position

1 Defined benefit obligation (DBOI of Scheme 97.6 79.5

2 Fair value of assets (FVAI of Scheme 80.5 72.0

3 Sumlus/(deficitl of Scheme (17.11 (7.51

4 Irrecoverable surplus (effect of asset ceiling} - -

5 Net damned henefit asseU(liahilitvl (17.11 (7.51

B Reconciliation of Net Balance Sheet Position

Net defined benefit assed(liability) at end of prior period (7.51 (7.81

2 Effect of emnlovee service in the current veriod - -

3 Net interest on net defined benefit assed(liabilitvl (0.21 10.31

4 Remeasurement effects recoenised in OCI (9.41 0.6

5 Scheme introductions, chanties, curtailments and - -

6 Em~lover contributions - -

7 Benefits paid directly by die Emnlover - -

8 Transfer payments -

9 Administration costs incurred durine the period - -

10 Acquisitions - -

11 Divestitures - -

12 Cost of termination benefits - -

13 Net defined benefit assed(liability) at end of current period (17.1) (7.5)

C Assamptions and Dates Used for Measurements(3)

1 Discount rate 2.4% 3.4%

2 Price inflation (RPII 3.3% 3.0%

3 Price inflation (CPII 2.3% 2.0%

4 Pension increases for in-payment benefits- LPl maximum 5% 3.0% 2.8%- LPI maximum 2.5% 2.0% 1.9%

5 Pension increases for deferred benefits 2.3% 2.0°/a

G Scheme participant census date 3l-Mar-14 31-Mar-14

3 These assumptions are at the end of the fiscal year

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Changes in reported benefit obligations &assets -Period Ending 31-Mar-17 31-Mar-16

A Change in Detined Benefit Obligation (DBO) (including URB)

1 DBO at end of prior period 79.5 83.5

2 Effect of employee service in the current period - -

3 Interest cost on the DBO 2.6 2-g

4 Remeasurement of the DBO 18.8 (4.1)

5 Scheme introductions, changes, curtailments and settlements - -

6 Scheme participants' contributions - -

7 Benefits paid from Scheme assets (3.3) ~z•~)

8 Benefits paid directly by the Employer - -

9 Taxes paid - -

10 Acquisitions

1 1 Divestitures - -

12 Termination benefits - -

13 DBO at eqd of current period 97.6 79.5

B Change in Scheme Assets

1 Fair value of assets at end of prior period ~2~0 ~~~~

2 Interest income on Scheme assets 2.4 2.5

3 Retum on Scheme assets greater/(less) than discount rate 9.4 (3.5)

4 Scheme introductions, changes, curtailments and settlements - -

5 Employer contributions - -

6 Scheme paRicipants' contributions - -

7 Benefits paid from Scheme assets (3.3) (2.7)

8 Administrative costs paid - -

9 Taxes paid - -

10 Acquisitions - -

11 Divestitures - -

12 Fair value of assets at end of current period 80.5 72.0

C Return on Scheme Assets

1 Total return on Scheme assets 11.8 (I.0)

The DBO is based on an update of the results of the Trustee's actuarial valuation as at 31 March 2014.Liabilities are projected to the measurement date by assuming no actuarial gains or losses in the interim,except for those assumption changes necessary to reflect the situation at the period end date andadjustments in respect of actual benefit payments and known inflation over the projection period. Theobjective of this calculation is to produce an estimate of the actuarial values required by FRS 102.

This approach introduces an element of approximation relative to the result of a hypothetical full actuarialvaluation at the measurement date. T'he advantage of this approach is that it simplifies the computationrequired. The disadvantage is that this approach is inherently less accurate than fully detailed calculationsand the loss of accuracy is difficult to quantify without carrying out the same detailed calculations.

THE ELECTRICAL SAFETY (:UUN(:IL



Circumstances where the difference between the results obtained using a projection approach rather than

a full actuarial valuation may be material include:

• where there is a long period of prof ection between the preceding actuarial valuation and the fiscal yearend;

• where there are substantial differences between the assumptions used at this fiscal year end and thepreceding actuarial valuation;

• where there are significant elements of Scheme experience which are not allowed for in the update, forea~ample membership movements such as the rates of retirement or death; and

• where the assets at the end of the fiscal year have been estimated based upon unaudited financialinformation from the Scheme's investment managers at an effective date before the fiscal year end.

The calculations are based on the assumption that no asset ceiling restrictions apply. No allowance hasbeen made in the assumptions for the future award of any discretionary benefits.

The Actuary preparing these figures has advised that the results documented are estimates based on datathat may be imperfect and on assumptions about future events. He also stated that certain Schemeprovisions may be approximated or deemed immaterial and therefore are not valued. Assumptions may

be made aUout participant data or other factors. ReasonaUle efforts were made ui this valuation to ensurethat items that are significant in the context of the actuarial liabilities or costs are treated appropriately,and not excluded or included inappropriately. The Actuary preparing the figures advised he believed thatthe use of approximations in these calculations, if any, has not resulted in a significant difference relativeto the results that would have been obtained by using more detailed calculations or more precise data.

A range of results, different from those presented in this report, could be considered reasonable. Anyrounding (or lack thereof used for displaying numbers in this report is not intended to imply a degree ofprecision, which is not a characteristic of actuarial calculations.

Future actuarial measurements may differ significantly from the current measurements presented in thisreport due to such factors as:

• Scheme experience differing from that anticipated by the economic or demographic assumptions;

• changes in economic or demographic assumptions;

• changes in Scheme provisions or applicable law; and

• significant events such as restructurings, acquisitions and divestitures.

No analysis was performed of the potential range of such future measurements.

37

- -- -- -THE ELECTRICAL SAFETY COUNCIL


18. RELATED PARTY TRANSACTIONS

The charity rents three of its buildings to Certsure LLP. The charity receives income from Certsure LLPin respect of the license agreement which allows Certsure LLP to operate the rTICEIC ApprovedContractor roll and use the 1vICEIC Brand. Certsure LLP provides support services, primarily TT,Finance, HR and Facilities to ESF Enterprises Ltd, the provision of this service is charged at cost. Aspart of its support activities (including IT, HR and facilities), Certsure LLP provided support to theCharity but the cost is not separately identified or charged.

Certsure LLP

2017 2016

£'000 £'000

Charged by ESCRent and roll (£83k outstanding at 31/3/17) 822 795Staff recharges 30

Charged to ESCReimbursable expenses 40 ~7

Charged to ESF Enterprises LtdSupport Services 0 19

The Charity has taken advantage of the exemption given by FRS 102, and has therefore not given detailsof transactions with its wholly-owned trading subsidiaries.

During the year expenses were reimbursed to ten Trustees amounting to £6,897 (2016 —nine Trusteesamounting to £8,026).

Mr McGuiness, a Trustee of the Charity, is also the Managing Director of The Electrical ContractorsAssociation of Scotland (SELECT). The office occupied by the Charity in Scotland is leased fromSELECT at an annual cost of £5,310.

19. STATUS OF COMPANY

a) The Electrical Safety Council is a Charity in England and Wales with the registration number257376. It also has Charity status in Scotland with the registration number SC039990. No LTKtaxation is due on profits, income or gains arising from the charitable activities of the company.

b) The Electrical Safety Council is registered as a company in England and Wales with the number570175 and is limited by guarantee.

20. GROUP UNDERTAKINGS

The following were the principal subsidiaries and joint ventures during the year, and have all beenincluded in the consolidated financial statements for the whole year.

Country of Parent Company's InterestSubsidiaries t& cas xse Re~~sr~at~on~ Incorporation Class of share Direct Indirect

~~~ESF Enterprises Limited (o2s~3t62~ Great Britain Ordinary 100% -

(t)JPD Group Limited ~oi~35oo9) Great Britain Ordinary - 100°l0

Ascertiva India Private Ltd India Ordinary - 100%(lndia regishation C[N U74140DL201 I FTC212769)

~2~ ESC Partnerships Ltd (os2s~26~~ Great Britain Ordinary ] 00% -

THE ELECTRICAL SAFET ~


Financial information for the year and at the year eud is shown below:

Company £'000 at 31 March 2017 £'000 for year ended 31 March 2017

Assets Liabilities Funds Turnover Expenditure Profid(Loss~

ESF Enterprises Limited 2,696 58 2,638 - 18 (18)

Ascertiva India Private Ltd _ - - _ -

ESC Partnerships Ltd 3,258 3,258 - - - -

Country of Parent Company's InterestJoint Ventures Incorporation Class of share Direct Indirect

(~~ Certsure LLP (oc3~99ts~ LTK - - 75%

Certsure LLP carries out certification and training and activities. The accounting date is the year to 3151March 2016.

During the year ended 31 March 2016 it was agreed to close the Ascertiva India Private Lunited businessand the liquidation of the business is in progress.

JPD Group Linuted was dissolved on 27 September 2016

The Charity owns the entire issued share copy of the following subsidiary undertakings (2) which areregistered in England and are dormant:

Electrical Safety Summit Ltd 8551833Electrical Industry Safety Sturunit 8551701

Plugsafe L7K Ltd 8565296

Electrical Safety First ltd 8531140

Energy Safety First Ltd 8773701

Product Safety Round Table Ltd 8821644Electrical Product Safety Round 8822216

Fire Safety First Ltd 8776272

Electrical Fire Safety First Ltd 8776489

Fire Safety First (UK) Ltd 8776490

Utilities Safety first Limited 8773777

Utility Safety first Limited 8773812

The Charity also owns indirectly, the entire issued share capital of the following subsidiary undertakings(1) which are registered in England and are dormant:

NICEIC Contractor Services Ltd 04661718

NICEIC Certification Services Ltd 04411293rTICEIC Professional Services Ltd 04411297

~ i~ Registered office: Warwick House, Houghton Hall Park, Houghton Regis, Dunstable, LUS SZX

~2~ Registered office: 45 Great Guildford Street, London, SE1 OES

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