The Copyright Licensing Agency Limited (A company limited by guarantee) Report and Financial Statements Year Ended 31 March 2013
Company number 01690026
The Copyright Licensing Agency Limited Annual report and financial statements for the year ended 31 March 2013
Contents
Page: 1
Report of the directors
4
Independent auditor’s report
6
Income and expenditure account
7
Balance sheet
8
Cash flow statement
9
Notes forming part of the financial statements
Directors
M Bide T Bradley (Chairman) T Bradman A Dearling T Faber K Fitzgerald P Grubb
D Jago J R McConnachie A McCulloch A Potter G S Taylor J D C Turner I S Russell
Secretary and registered office Martin Delaney, Saffron House, 6-10 Kirby Street, London, EC1N 8TS Company number 01690026 Auditors BDO LLP, 55 Baker Street, London, W1U 7EU
The Copyright Licensing Agency Limited Report of the directors for the year ended 31 March 2013
The directors present their report together with the audited financial statements for the year ended 31 March 2013. Results The income and expenditure account is set out on page 6 and shows the result for the year. Principal activities, trading review and future developments The Copyright Licensing Agency Limited (CLA) operates as an agent for its two members, the Authors' Licensing and Collecting Society Limited and the Publishers Licensing Society Limited, and for the Design and Artists Copyright Society Limited. Details of their memberships can be found on their respective websites. The company is the representative of the owners and licensees of literary and artistic works published in the United Kingdom and Overseas for the purposes of: - negotiating licence terms and issuing licences for the photocopying, scanning and digital re-use of literary and artistic works; and - collecting and distributing licence fees, royalties and other monies to its members and other rightsholders. Licence fees received by CLA are distributed to its members and other rights holders after making provision for CLA's liabilities and expenses, on the basis of agreements between the members and other rights holders. CLA is an active member of the International Federation of Reproduction Rights Organisations and has reciprocal licensing agreements with thirty six counterparts in thirty three countries. There have been no events since the balance sheet date which materially affect the position of the company. Review of the Business The income and expenditure account is set out on page 6 and shows income of £7,872,449 (2012 £7,647,313) and a result for the year of £nil (2012 - £nil). This is in line with CLA’s agency agreements where income is intended to match operating expenses for the year. Principal risks and uncertainties CLA is not exposed to any concentration of exchange or credit risks, and monitors cash flows as part of its day to day control procedures. Directors The directors of the company during the year were: Nominated by the Authors' Licensing and Collecting Society Limited: P Grubb J R McConnachie T Faber T Bradman A Dearling D Gesua 1
The Copyright Licensing Agency Limited Report of the directors for the year ended 31 March 2013 (Continued)
Nominated by the Publishers Licensing Society Limited: A McCulloch I Russell M Millar G S Taylor A C Yeates D J G Knight D Jago
(Appointed 07 March 2013)
(Resigned 07 March 2013) (Resigned 07 March 2013)
Nominated jointly by the Authors' Licensing & Collecting Society Limited and the Publishers Licensing Society Limited and representing the Design and Artists Copyright Society Limited: A Potter Independent Chairman: T Bradley Chief Executive Officer: K Fitzgerald
Subsequent to the year end, on 10 June 2013 and 30 September 2013 respectively M Millar and D Gesua resigned as directors, and on 27 September 2013 M Bide and J D C Turner were appointed as directors.
2
The Copyright Licensing Agency Limited Report of the directors for the year ended 31 March 2013 (Continued)
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 the 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 to ensure that the financial statements comply with the Companies Act 2006. 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. Auditors All of the current directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the company’s auditors for the purposes of their audit and to establish that the auditors are aware of that information. The directors are not aware of any relevant audit information of which the auditors are unaware. BDO LLP have expressed their willingness to continue in office and a resolution to re-appoint them will be proposed at the annual general meeting in accordance with sections 455 of the Companies Act 2006.
By order of the Board
M T Delaney Secretary 3 October 2013
3
The Copyright Licensing Agency Limited Independent Auditor’s Report
To the members of The Copyright Licensing Agency Limited We have audited the financial statements of The Copyright Licensing Agency Limited for the period ended 31 March 2013 which comprise the Income and Expenditure Account, the Balance Sheet, the Cash Flow Statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members 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 Statement of directors’ responsibilities 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 (APB’s) Ethics 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 APB’s website at www.frc.org.uk/auditscopeukprivate Opinion of 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 March 2013 and of its result for the period then ended;
•
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
•
have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on the matters 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.
4
The Copyright Licensing Agency Limited Independent Auditor’s Report (Continued)
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.
Sophia Bevan (senior statutory auditor) For and on behalf of BDO LLP, statutory auditor London United Kingdom 4 October 2013 BDO LLP is a limited liability partnership registered in England and Wales (with registration number OC305127).
5
The Copyright Licensing Agency Limited Income and expenditure account for the year ended 31 March 2013
Income Administration Charge
Note
2013 £
2012 £
11
7,872,449
7,647,313
________ Total income
________
7,872,449
Operating expenses
(7,847,381)
7,647,313
(7,647,313)
_________
_________
Result on ordinary activities before taxation
4
25,068
-
Taxation on result on ordinary activities
5
(25,068)
-
_________
_________
-
-
_________
_________
Result on ordinary activities after taxation
All amounts relate to continuing activities. All recognised gains and losses are included in the income and expenditure account. The notes on pages 9 to 18 form part of these financial statements.
6
The Copyright Licensing Agency Limited Balance sheet at 31 March 2013
Note
Fixed assets Tangible assets Current assets Debtors Cash at bank and in hand
Creditors: amounts falling due within one year
2013 £
8
Undistributed licence fees
2012 £
1,414,750
7,593,338 21,209,556 _________
8,829,925 19,883,731 _________
28,802,894
28,713,656
(8,761,273) _________
(8,122,210) _________
Net current assets Provision for liabilities and charges
2012 £
1,019,661
6
7
2013 £
20,041,621
20,591,446
9
(97,875)
(84,375)
10
(20,963,407) _________
(21,921,821) _________ (21,061,282) _________
(22,006,196) _________
Net assets
_________
_________
Members' funds
_________
_________
The financial statements were approved by the Board and authorised for issue on 3 October 2013.
K. Fitzgerald Director
The notes on pages 9 to 18 form part of these financial statements 7
The Copyright Licensing Agency Limited Cash flow statement for the year ended 31 March 2013
Net cash inflow from operating activities
Capital expenditure and financial investment Purchase of tangible fixed assets Disposal of tangible fixed assets
Increase in cash
Note
2013 £
2012 £
14
1,596,193
2,084,510
(270,368) -
6 6
15, 16
The notes on pages 9 to 18 form part of these financial statements.
8
(349,576) 250
_________
_________
1,325,825 _________
1,735,184 _________
The Copyright Licensing Agency Limited Notes forming part of the financial statements for the year ended 31 March 2013
1
Accounting policies The financial statements have been prepared under the historical cost convention and are in accordance with applicable accounting standards. The following principal accounting policies have been applied consistently: Administration charge on Account The administration charge earned by the company comprises i) an amount which the Board considers to be an appropriate level for CLA to cover its operating overheads, calculated at an agreed percentage of gross licence fees invoiced in the year, and ii) interest received on the company’s cash at bank. The difference between the administration charge collected and that required to cover the company's operating overheads is included in the balance sheet within undistributed licence fees (notes 10 and 11). As such the company is a not for profit organisation. In the first period of a new contract, the administration charge is only recognised when expenditure directly attributable to the distribution of income to the owners of rights has been incurred. Interest receivable Interest receivable represents bank interest receivable on distributable and undistributable funds and is included as a part of administration income. Therefore it is not shown separately in the income and expenditure account. Foreign currencies Foreign currency transactions are translated at the rates ruling when they occurred. Foreign currency monetary assets and liabilities are translated at the rates ruling at the balance sheet date. Any differences are taken to the income and expenditure account. Leased assets Operating lease rentals are charged to the income and expenditure account on an accruals basis. Lease incentives are capitalised and then systematically released to the income and expenditure account over the period of the lease term. Depreciation Depreciation is provided to write off the cost less estimated residual values, of all fixed assets, evenly over their expected useful lives. It is calculated at the following rates: Short leasehold improvements Furniture and equipment Computer equipment and software
-
evenly over the lease term 15% per annum 20 % to 331⁄3% per annum
Capitalised computer software projects are not depreciated until brought into use.
9
The Copyright Licensing Agency Limited Notes forming part of the financial statements for the year ended 31 March 2013 (Continued)
1
Accounting policies (Continued) Pension costs Contributions made to a defined contribution pension arrangement are charged to the income and expenditure account in the year in which they become payable. The assets of the scheme are held separately from those of the company in an independently administered fund. Deferred taxation Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that the recognition of deferred tax assets is limited to the extent that the group anticipates making sufficient taxable profits in the future to absorb the reversal of the underlying timing differences.
2
Employees 2013 £
2012 £
3,073,812 341,826 280,300 _________
2,912,635 346,512 255,657 _________
3,695,938 _________
3,514,804 _________
2013 £
2012 £
374,242 20,457 _________
351,027 19,224 _________
394,699 ________
370,251 _________
Staff costs, excluding directors, consist of: Wages and salaries Social security costs Other pension costs
The average number of employees during the year was 76 (2012 - 72).
3
Directors
Directors' emoluments Other pension contributions
There was an average of 15 directors during the year (2012 – 15).
10
The Copyright Licensing Agency Limited Notes forming part of the financial statements for the year ended 31 March 2013 (Continued)
3
Directors (Continued) The emoluments of the directors are as follows: 2013 £
2012 £
205,657 20,457 _________
196,910 19,224 _________
226,114
216,134
2,186 _________
1,686 _________
228,300
217,820
36,910 9,350 13,441 6,600 9,350 9,350 12,341 10,302 7,631 8,705 9,350 14,781 628 _______
35,000 9,109 11,788 6,430 9,109 9,109 10,716 10,716 4,707 6,430 9,109 1,731 13,395 _________
148,738
137,349
Benefits
18,289 _________
15,082 _________
Total payments to Directors
395,327 _________
370,251 _________
Chief Executive Officer Emoluments Pension contributions (to a defined contribution scheme)
Benefits
Total remuneration of highest paid Director Fees paid to Non-Executive Directors Tom Bradley (Chair) Tony Bradman Alan Dearling Toby Faber Danny Gesua Penny Grubb Dave Jago Dominic Knight James McConnachie Audrey McCulloch Mark Millar David Nott Andrew Potter Ian Russell
Benefits to the non-Executive Directors include reimbursement through the payroll for the travel and subsistence costs from their home to/from CLA, and the tax thereon.
11
The Copyright Licensing Agency Limited Notes forming part of the financial statements for the year ended 31 March 2013 (Continued)
3
Directors (Continued) The other non-Executive directors were not paid directly by CLA for their services as directors, and instead the companies they represent were paid equivalent fees.
James Evans Graham Taylor Andrew Yeates
4
2013 £
2012 £
10,381 6,050 _________
438 9,109 5,433 _________
16,431 _________
14,980 _________
2013 £
2012 £
Result on ordinary activities before and after taxation
This has been arrived at after charging: Depreciation Hire of motor vehicles Land and buildings Auditors' remuneration
- operating leases - operating leases - audit services - non-audit services Profit on disposal of tangible fixed assets
12
665,457 4,937 350,946 18,500 6,500 _________
605,127 5,265 342,890 18,500 6,500 (18) _________
The Copyright Licensing Agency Limited Notes forming part of the financial statements for the year ended 31 March 2013 (Continued)
5
Taxation a) Taxation on result on ordinary activities The tax charge on the result on ordinary activities based upon a corporation tax rate in the UK of 20% (2012 - 20%) is £25,068 (2012 - £nil). The result on ordinary activities for the year is reconciled to the current tax charge as follows;
Result on ordinary activities before taxation
Result multiplied by the standard rate of corporation tax in the UK of 20% (2012 - 20%) Effects of: Disallowed expenditure Depreciation in excess of capital allowances
2013 £
2012 £
25,068 _________
_________
5,014
-
4,664 63,833
3,826 37,174
Utilisation of tax losses
(48,443) _________
(41,000) _________
Current tax charge for the year
25,068 _________
_________
b) Deferred taxation At the balance sheet date the Company has £nil (2012 - £243,575) of carried forward tax losses, and an unrecognised deferred tax asset on these losses of £nil (2012 - £48,715). The Company also has at the balance sheet date carried forward timing differences as a result of depreciation in excess of capital allowances of £170,451 (2012 - £150,075 of timing differences as a result of capital allowances in excess of depreciation), and a corresponding unrecognised deferred tax asset on these timing differences of £39,204 (2012 – unrecognised deferred tax liability of £30,015).
13
The Copyright Licensing Agency Limited Notes forming part of the financial statements for the year ended 31 March 2013 (Continued)
6
Tangible assets Leasehold Furniture and Improvements equipment
Cost At 1 April 2012 Additions
At 31 March 2013
Depreciation At 1 April 2012 Provided for the year
At 31 March 2013
Net book value At 31 March 2013
At 31 March 2012
7
£
£
Computer equipment and Software £
383,724 _________
201,327 3,560 _________
3,206,377 266,808 _________
3,791,428 270,368 _________
383,724 _________
204,887 _________
3,473,185 _________
4,061,796 _________
233,590 39,165 _________
169,967 19,086 _________
1,973,121 607,206 _________
2,376,678 665,457 _________
272,755 _________
189,053 _________
2,580,327 _________
3,042,135 _________
110,969 _________
15,834 _________
892,858 _________
1,019,661 _________
150,134 _________
31,360 _________
1,233,256 _________
1,414,750 _________
2013 £
2012 £
3,929,204 2,861,554 31,129 771,451 _________
5,846,812 2,197,481 32,843 752,789 _________
7,593,338 _________
8,829,925 _________
Total £
Debtors
Trade debtors Taxation and social security Other debtors Prepayments and accrued income
All amounts shown under debtors fall due within one year.
14
The Copyright Licensing Agency Limited Notes forming part of the financial statements for the year ended 31 March 2013 (Continued)
8
Creditors: amounts falling due within one year
Trade creditors Taxation and social security Other creditors Deferred income Accruals
9
2013 £
2012 £
193,945 140,893 7,060,563 657,412 708,460 _________
185,967 106,930 6,783,751 359,375 686,187 _________
8,761,273 _________
8,122,210 _________
Provision for liabilities and charges £
At 1 April 2012 Charge for the year
84,375 13,500 _______
At 31 March 2013
97,875 ________
The provision relates to the cost of returning the leasehold property to its original condition at the end of the lease.
10
Undistributed licence fees
Undistributed licence fees Administration charge on account (note 11)
2013 £
2012 £
15,926,464 5,036,943 _________
17,243,864 4,677,957 _________
20,963,407 _________
21,921,821 _________
Undistributed licence fees are matched by amounts included in cash at bank and in hand. All amounts are due within one year.
15
The Copyright Licensing Agency Limited Notes forming part of the financial statements for the year ended 31 March 2013 (Continued)
11
Administration Charge on account 2013 £
2012 £
The administration charge on account is analysed as follows: Balance at 1 April 2011/2012 Administration charge earned from gross licence fees (note 1) Interest receivable (note 1) Administration on account distributed Transfer to income and expenditure account
4,677,957 7,842,341 389,094 (7,872,449) _________
4,291,634 7,624,110 409,526 (7,647,313) _________
Balance at 31 March 2012/2013
5,036,943 _________
4,677,957 _________
6,692,350 394,638 515,922 239,431 _________
6,435,229 305,211 605,771 277,899 _________
7,842,341 _________
7,624,110 _________
The geographical analysis is: United Kingdom USA and Canada Rest of the World Europe
The administration charge earned by the company arises from the principal activity of the company. The geographical analysis above is in respect of the charge earned in the year and not the amount shown in the income and expenditure account. This is a result of the accounting treatment of the administration charge as detailed in the accounting polices.
12
Commitments under operating leases As at 31 March 2013, the company had annual commitments under non-cancellable operating leases as set out below:
Operating leases which expire: Within One Year In Two to Five Years
2013 Land and buildings £
31,200 328,662 _________
16
2013 Other £
2012 Land and buildings £
2012 Other £
7,268 1,975 _________
328,662 _________
6,865 2,338 _________
The Copyright Licensing Agency Limited Notes forming part of the financial statements for the year ended 31 March 2013 (Continued)
13
Related party transactions The board of directors of the company comprises fifteen directors. Six directors are nominated by the Authors' Licensing and Collecting Society Limited ('ALCS'), five directors are nominated by the Publishers Licensing Society ('PLS') and one director represents the Design and Artists Copyright Society (DACS) and is nominated jointly by ALCS and PLS. In addition there are two other directors, an independent director, who is the Chairman of the Board and a director who is the Chief Executive Officer of the company. All directors are set out in the directors' report and are directors of the company that nominated them. CLA operates as an agent for ALCS, PLS and DACS. Distributions net of CLA administration charge to ALCS and PLS amounted to £20,185,279 (2012 - £20,508,045) and £34,120,058 (2012 - £32,782,702) respectively. Distributions to DACS amounted to £5,402,684 (2012 - £3,919,328). Amounts due to ALCS and PLS, and DACS at 31 March 2013 are included within undistributed licence fees (see note 10).
14
Reconciliation of operating result to net cash inflow from operating activities 2013 £
15
2012 £
Depreciation Decrease/(increase) in debtors (Decrease)/increase in undistributed funds Increase in creditors Increase in provision for liabilities Profit on disposal of fixed assets
665,457 605,127 1,236,586 (1,782,897) (933,345) 3,236,315 613,995 12,483 13,500 13,500 (18) _________ _________
Net cash inflow from operating activities
1,596,193 _________
2,084,510 _________
At 1 April 2012 £
Cash inflow £
At 31 March 2013 £
19,883,731 _________
1,325,825 _________
21,209,556 _________
Analysis of cash at bank and in hand
Cash at bank and in hand
17
The Copyright Licensing Agency Limited Notes forming part of the financial statements for the year ended 31 March 2013 (Continued)
16
Reconciliation of net cash flow to movement in net funds 2013 £
2012 £
Increase in cash Opening net funds
1,325,825 19,883,731 _________
1,735,184 18,148,547 _________
Closing net funds
21,209,556 _________
19,883,731 _________
17 Members' liabilities The company is limited by guarantee and as such has no share capital. The members of the company are ALCS and PLS whose liability is a maximum of £1 each.
18
The Copyright Licensing Agency Limited
The three pages which follow do not form part of the statutory financial statements of the company.
19
The Copyright Licensing Agency Limited Schedule of movement of undistributed licence fees for the year ended 31 March 2013
The licence fee collections for the year ended 31 March 2013 were as follows: 2013 £
2012 £
Gross fee collections
73,373,726
71,013,449
Administration charge
(7,843,042) _________
(7,624,110) _________
65,530,684
63,389,339
Undistributed licence fees brought forward
17,243,864 _______
14,393,872 _________
Fees available for distribution
82,774,548
77,783,211
(66,848,084) _________
(60,539,347) _________
15,926,464 _________
17,243,864 _________
Distributions
Undistributed licence fees carried forward
20
The Copyright Licensing Agency Limited Distributions to rights holders from licence fees for the year ended 31 March 2013
In accordance with its distributions policy, the following distributions were made to its members and other rights holders in the year ended 31 March 2013: 2013 £
2012 £
Publishers Licensing Society Authors' Licensing and Collecting Society Design and Artists Copyright Society International rights holders
34,120,058 20,185,279 5,402,684 7,140,063 _________
31,248,456 19,093,191 3,643,186 6,554,514 _________
Total distributions
66,848,084 _________
60,539,347 _________
21
The Copyright Licensing Agency Limited Expense Summary for the year ended 31 March 2013
The following costs were incurred in the year ended 31 March 2013:
Staff Related Costs Accommodation & Office Costs Legal Costs IT Costs Research & Development Communication Finance Costs Data Collection Depreciation Other Costs
22
2013 £
2012 £
4,662,603 932,934 296,493 152,421 75,796 231,883 34,892 715,841 665,457 79,061 _________
4,513,435 919,522 253,751 145,833 382,859 248,890 32,251 511,663 605,127 33,982 _________
7,847,381 _________
7,647,313 _________
