THE INTERNATIONAL COTTON ASSOCIATION LIMITED (COMPANY LIMITED BY GUARANTEE) DIRECTORS' REPORT AND FINANCIAL STATEMENTS

Transcription

1 Company Registration No (England and Wales) THE INTERNATIONAL COTTON ASSOCIATION LIMITED DIRECTORS' REPORT AND FINANCIAL STATEMENTS

2 COMPANY INFORMATION Company Registration Number Registered office President: First Vice-President: Second Vice-President: Treasurer: Ex-President: Ordinary Directors: Associate Directors: Company Secretary: 6th Floor Walker House Exchange Flags Liverpool L2 3YL M Shah J M Derossis T J Lea R J Carter A K Elbosaty R J Carter C R Iles A P Kelley J T Nicosia R H Pollard P J Reinhart N R Scott E V Tanriverdi G N Wakefield D J Welsh P Brun S C Chen M A Dada M S Ispahani P Laine A G Macdonald, OBE J A Parihar T Shimazaki P N Woo F Zhang K Hughes

3 COMPANY INFORMATION Bankers: Solicitors: Auditor: Barclays Bank plc 48B-50 Lord Street Liverpool L2 1TD Hill Dickinson LLP No 1. St Paul's Square Liverpool L3 9SJ Cowgill Holloway LLP 5th Floor Yorkshire House 18 Chapel Street Liverpool L3 9AG

4 CONTENTS Page Directors' report 1-3 Independent auditors' report 4-5 Profit and loss account 6 Balance sheet 7 Notes to the financial statements 8-14 The following pages do not form part of the statutory financial statements Detailed profit and loss statement 15 Schedule of distribution and administrative costs 16

5 DIRECTORS' REPORT The directors present their report and financial statements for the year ended 31 December Principal activities and business review The principal activity for the company is to protect and to promote the interests of its members in the international cotton trade. After taxation the surplus for the year amounted to 387,663 (2012: 286,982). The surplus has been added to reserves. We are reporting a 2% increase in turnover in the period and an increase in the pre tax surplus of 32%. The favourable increase in the surplus is principally due to the following: - additional income from arbitartion and appeals; - a favourable exchange gain of 15,548 as opposed to a prior year loss of 53,597; - continued growth in membership; - maintaining a strict control over administrative costs which have risen by 2%. - increase in bank interest received by 19,600 from 13,087 (2012) to 32,687. Financial risk management objectives and policies The company uses various financial instruments. These include cash, equity investments and other items, such as trade debtors and trade creditors that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the company's operations. The existence of these financial instruments exposes the company to a number of financial risks, which are described in more detail below. The main risks arising from the company's financial instruments are membership income, currency risk and price risk. The directors review and agree policies for managing each of these risks and they are summarised below. These policies have remained unchanged from previous years. Membership income The directors believe that the key risk for the company is the loss of membership income. The company's exposure to the loss of membership income is constantly monitored by the board of directors. Currency risk The company is exposed to translation and transaction foreign exchange risk. The company enters into hedging vehicle arrangements when they feel that the time is right to do so. Price risk The company's exposure to price risk consists mainly of movements in the value of the company's investments in shares quoted on various markets. The company employs an investment manager who works within guidelines set out by the Board. These guidelines include limits on the total investment in any one particular equity instrument and in any one sector of the market. The aim is to try to diversify away price risk, as far as possible. The directors keep under review these guidelines and review the performance of the investments and the performance of the investment manager against the guidelines set by the directors

6 DIRECTORS' REPORT (CONTINUED) Directors The following directors have held office since 1 January 2013: R J Carter M A Dada A K Elbosaty A V Esteve (Resigned 25 October 2013) A P Kelley T J Lea A G Macdonald, OBE J T Nicosia J A Parihar P J Reinhart A H Sarker (Resigned 25 October 2013) N R Scott T Shimazaki E V Tanriverdi F Zhang R H Pollard S C Chen (Appointed 25 October 2013) P R Wakefield (Resigned 25 October 2013) J M Derossis P Laine (Appointed 25 October 2013) P N Woo D J Welsh P Brun (Appointed 25 October 2013) M Shah M S Ispahani (Appointed 25 October 2013) G N Wakefield (Appointed 25 October 2013) C R Iles (Appointed 25 October 2013) - 2 -

7 DIRECTORS' REPORT (CONTINUED) Statement of directors' responsibilities The directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: - select suitable accounting policies and then apply them consistently; - make judgements and accounting estimates that are reasonable and prudent; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Statement of disclosure to auditors So far as the directors are aware, there is no relevant audit information of which the company's auditors are unaware. Additionally, the directors have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company's auditors are aware of that information. Auditors The auditors, Cowgill Holloway LLP, are deemed to be reappointed under section 487(2) of the Companies Act This report has been prepared in accordance with the special provisions relating to small companies within Part 15 of the Companies Act On behalf of the board M Shah President 20 March

8 INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF THE INTERNATIONAL COTTON ASSOCIATION LIMITED We have audited the financial statements of The International Cotton Association Limited for the year ended 31 December 2013 set out on pages 6 to 14. The financial reporting framework that has been applied in their preparation is applicable law and the Financial Reporting Standard for Smaller Entities (effective April 2008) (United Kingdom Generally Accepted Accounting Practice applicable to Smaller Entities). This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As explained more fully in the Directors' Responsibilities Statement set out on pages 1-3, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the financial statements: - give a true and fair view of the state of the company's affairs as at 31 December 2013 and of its profit for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice applicable to Smaller Entities; and - have been prepared in accordance with the requirements of the Companies Act Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements

9 INDEPENDENT AUDITORS' REPORT (CONTINUED) TO THE MEMBERS OF THE INTERNATIONAL COTTON ASSOCIATION LIMITED Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: - adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or - the financial statements are not in agreement with the accounting records and returns; or - certain disclosures of directors' remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit. - the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption in preparing the directors' report and from preparing a strategic report. John Marshall (Senior Statutory Auditor) for and on behalf of Cowgill Holloway LLP 20 March 2014 Chartered Accountants Statutory Auditor 5th Floor Yorkshire House 18 Chapel Street Liverpool L3 9AG - 5 -

10 PROFIT AND LOSS ACCOUNT Notes Turnover 1,248,703 1,223,158 Administrative expenses (930,594) (917,243) Other operating income 15,548 (53,957) Operating surplus 2 333, ,958 Investment income 3 33,950 37,281 Other interest receivable and similar income 3 32,687 13,087 Surplus on ordinary activities before taxation 400, ,326 Tax on surplus on ordinary activities 4 (12,631) (15,344) Surplus for the year , ,982 All of the activities of the company are classed as continuing There are no recognised gains and losses other than the surplus for the financial period

11 BALANCE SHEET AS AT 31 DECEMBER Notes Fixed assets Tangible assets 5 99, ,945 Investments 6 569, , , ,847 Current assets Debtors 7 222, ,509 Cash at bank and in hand 3,278,496 3,117,262 3,501,138 3,458,771 Creditors: amounts falling due within one year 8 (1,697,232) (2,045,057) Net current assets 1,803,906 1,413,714 Total assets less current liabilities 2,473,118 2,088,561 Provisions for liabilities 9 (10,884) (13,990) 2,462,234 2,074,571 Capital and reserves Income and expenditure account 11 2,462,234 2,074,571 These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime within Part 15 of the Companies Act 2006 and with the Financial Reporting Standard for Smaller Entities (effective April 2008). Approved by the Board for issue on 20 March M Shah R J Carter K Hughes President Treasurer Secretary Company Registration No

12 NOTES TO THE FINANCIAL STATEMENTS 1 Accounting policies 1.1 Accounting convention The financial statements are prepared under the historical cost convention and in accordance with the Financial Reporting Standard for Smaller Entities (effective April 2008). 1.2 Compliance with accounting standards The financial statements are prepared in accordance with applicable United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), which have been applied consistently (except as otherwise stated). 1.3 Turnover Turnover represents the amount of subscriptions due in respect of the accounting period together with fees receivable for services rendered to Members of the Association and others engaged in cotton trading, excluding VAT. 1.4 Tangible fixed assets and depreciation Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows: Leasehold improvements Computer equipment Fixtures, fittings & equipment Over the length of the lease 33% straight line 20% straight line 1.5 Leasing All leases regarded as operating leases and the payments made under them are charged to the income and expenditure account on a straight line basis over the lease term. 1.6 Investments Investments are included at cost, less any provision for permanent diminution in value. Surpluses or deficits arising from disposals of fixed asset investments are treated as part of the result from ordinary activities. 1.7 Pensions The pension costs charged against operating profits are the contributions payable to the scheme in respect of the accounting period

13 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 1 Accounting policies (continued) 1.8 Deferred taxation Deferred taxation is recognised in respect of all timing differences which have originated but not reversed at the balance sheet date. Timing differences are differences between taxable profits and the results as stated in the financial statements which arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised for tax purposes. A net deferred tax asset is regarded as recoverable and therefore recognised only when it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of underlying timing differences can be deducted. Deferred tax is not recognised when fixed assets are revalued unless by the balance sheet date there is a binding agreement to sell the revalued asset and the resulting gain or loss has been recognised in the financial statements. Neither is deferred tax recognised when fixed assets are sold and it is more likely than not that the taxable gain will be rolled over, being charged to tax only if and when the replacement assets are sold. Deferred tax is measured at the average tax rates which are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws which have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis. 1.9 Foreign currency translation Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to profit and loss account Group accounts The financial statements present information about the company as an individual undertaking and not about its group. The company and its subsidiary undertaking comprise a small-sized group. The company has therefore taken advantage of the exemptions provided by section 399 of the Companies Act 2006 not to prepare group accounts Income from investments Investment income comprises dividends declared during the accounting period and interest received on listed and unlisted investments. 2 Operating surplus Operating surplus is stated after charging: Depreciation of tangible assets 24,278 24,893 Auditors' remuneration 7,500 7,

14 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 3 Investment income Income from fixed asset investments 33,950 37,281 Bank interest 32,687 13,087 66,637 50,368 4 Taxation Domestic current year tax U.K. corporation tax 15,737 14,712 Total current tax 15,737 14,712 Deferred tax Deferred tax charge credit current year (3,106) ,631 15,344 5 Tangible fixed assets Modification to short leasehold premises Computer equipment Fixtures, fittings & equipment Total Cost At 1 January ,910 22,906 56, ,261 Additions - 3,032-3,032 At 31 December ,910 25,938 56, ,293 Depreciation At 1 January ,968 12,824 11,524 32,316 Charge for the year 7,391 5,599 11,288 24,278 At 31 December ,359 18,423 22,812 56,594 Net book value At 31 December ,551 7,515 33,633 99,699 At 31 December ,942 10,082 44, ,

15 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 6 Fixed asset investments Listed investments Unlisted investments Total Cost At 1 January ,557 22, ,902 Additions 146, ,410 Cash movement 11,177-11,177 Disposals (141,976) - (141,976) At 31 December ,168 22, ,513 Net book value At 31 December ,168 22, ,513 At 31 December ,557 22, ,902 Market value Directors' Market value valuation At 31 December , ,020 At 31 December , ,393 Cash movement relates to the cash trading account included in the cost valuation as at 31 December Holdings of more than 20% The company holds more than 20% of the share capital of the following companies: Company Country of registration or Shares held incorporation Class % Subsidiary undertakings ICA Bremen GmbH Germany Ordinary The aggregate amount of capital and reserves and the results of these undertakings for the last relevant financial year were as follows: Capital and reserves Profit/(loss) for the year Principal activity ICA Bremen GmbH Cotton testing 77,127 29,

16 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 7 Debtors Trade debtors 112, ,977 Other debtors 17,996 7,338 Prepayments and accrued income 92,572 48, , ,509 8 Creditors: amounts falling due within one year Trade creditors 130, ,939 Corporation tax 15,343 14,712 Other taxes and social security costs 11,449 10,512 Other creditors 886,711 1,179,030 Accruals and deferred income 653, ,864 1,697,232 2,045,057 9 Provisions for liabilities Deferred tax liability Balance at 1 January ,990 Profit and loss account (3,106) Balance at 31 December ,884 The deferred tax liability is made up as follows: Accelerated capital allowances 10,884 13,

17 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 10 Pension costs Defined contribution Contributions payable by the company for the year 28,245 25, Statement of movements on profit and loss account Profit and loss account Balance at 1 January ,074,571 Surplus for the period 387,663 Balance at 31 December ,462, Financial commitments At 31 December 2013 the company was committed to making the following payments under noncancellable operating leases in the year to 31 December 2014: Operating leases which expire: Between two and five years 60,602 66,050 In over five years 7,396-67,998 66, Control No individual director is in a position to control the policies of the Association. 14 Company limited by guarantee No shareholdings are held in the company. The company is limited by guarantee

18 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 15 Related party relationships and transactions The directors who served in this period, shown in the Report of the directors on page 2, are all representatives/directors of member companies from which The International Cotton Association Limited derives its subscription income, or representatives of other segments of the industry

19 MANAGEMENT INFORMATION

20 DETAILED TRADING AND PROFIT AND LOSS ACCOUNT Turnover Membership fees 831, ,106 Tonnage fees Arbitration and appeal fees 290, ,785 Administration fees 4,000 4,000 Miscellaneous income - 1,294 Events surplus 122, ,356 1,248,703 1,223,158 Administrative expenses (930,594) (917,243) 318, ,915 Other operating income Profit (Loss) on foreign exchange 15,548 (53,957) Operating surplus 333, ,958 Other interest receivable and similar income Bank interest received 32,687 13,087 Income from investments Listed investment income received 18,339 26,383 (Deficit)/surplus on sale of investments 15,611 10,898 33,950 37,281 Surplus on ordinary activities 32.06% 400, % 302,

21 SCHEDULE OF ADMINISTRATIVE EXPENSES Administrative expenses Wages and salaries (excl. N.I.) 440, ,158 Employer's NI contributions 42,257 37,461 Staff pension costs defined contribution 28,245 25,619 Benefits 9,884 8,264 Recruitment expenses 3,420 - Training 11,733 9,574 Rent re operating leases 57,014 60,792 Rates 34,358 29,111 Insurance 6,852 5,709 Light and heat 353 9,037 Repairs and maintenance 868 1,303 Cleaning 2,745 2,881 Printing, postage and stationery 13,693 31,859 Advertising 8,571 7,490 ICA Book 18,000 10,000 Computer running costs 26,161 23,884 Telephone 14,105 10,758 Memento to President 3,661 5,017 Hire of equipment 16,717 9,497 Travelling expenses 51, ,400 Legal and professional fees 61,915 62,359 Intelligence Team 20,168 26,293 Audit fees 7,500 7,500 Bank charges 8,809 12,375 Bad and doubtful debts (3,268) 630 ICA Bremen costs 274 3,646 Sundry expenses 9,744 12,899 Subscriptions 10,570 8,834 Depreciation - Fixtures, fittings and equipment 11,288 10,794 Depreciation - Computer equipment 5,599 6,740 Depreciation - Modifications to short leasehold premises 7,391 7, , ,