The Copyright Licensing Agency Limited (A company limited by guarantee) Report and Financial Statements Year Ended 31 March 2013 Company number 01690026
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
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
Report of the directors for the year ended 31 March 2013 (Continued) Nominated by the Publishers Licensing Society Limited: A McCulloch I Russell (Appointed 07 March 2013) M Millar G S Taylor A C Yeates (Resigned 07 March 2013) D J G Knight (Resigned 07 March 2013) D Jago 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
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
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
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
Income and expenditure account for the year ended 31 March 2013 Note Income Administration Charge 11 7,872,449 7,647,313 Total income 7,872,449 7,647,313 Operating expenses (7,847,381) (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
Balance sheet at 31 March 2013 Note 2013 2012 Fixed assets Tangible assets 6 1,019,661 1,414,750 Current assets Debtors 7 7,593,338 8,829,925 Cash at bank and in hand 21,209,556 19,883,731 28,802,894 28,713,656 Creditors: amounts falling due within one year 8 (8,761,273) (8,122,210) Net current assets 20,041,621 20,591,446 Provision for liabilities and charges 9 (97,875) (84,375) Undistributed licence fees 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
Cash flow statement for the year ended 31 March 2013 Note Net cash inflow from operating activities 14 1,596,193 2,084,510 Capital expenditure and financial investment Purchase of tangible fixed assets 6 (270,368) (349,576) Disposal of tangible fixed assets 6-250 Increase in cash 15, 16 1,325,825 1,735,184 The notes on pages 9 to 18 form part of these financial statements. 8
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 - evenly over the lease term Furniture and equipment - 15% per annum Computer equipment and software - 20 % to 33 1 3% per annum Capitalised computer software projects are not depreciated until brought into use. 9
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 Staff costs, excluding directors, consist of: Wages and salaries 3,073,812 2,912,635 Social security costs 341,826 346,512 Other pension costs 280,300 255,657 The average number of employees during the year was 76 (2012-72). 3,695,938 3,514,804 3 Directors Directors' emoluments 374,242 351,027 Other pension contributions 20,457 19,224 There was an average of 15 directors during the year (2012 15). 394,699 370,251 10
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: Chief Executive Officer Emoluments 205,657 196,910 Pension contributions (to a defined contribution scheme) 20,457 19,224 226,114 216,134 Benefits 2,186 1,686 Total remuneration of highest paid Director 228,300 217,820 Fees paid to Non-Executive Directors Tom Bradley (Chair) 36,910 35,000 Tony Bradman 9,350 9,109 Alan Dearling 13,441 11,788 Toby Faber 6,600 6,430 Danny Gesua 9,350 9,109 Penny Grubb 9,350 9,109 Dave Jago 12,341 10,716 Dominic Knight 10,302 10,716 James McConnachie 7,631 4,707 Audrey McCulloch 8,705 6,430 Mark Millar 9,350 9,109 David Nott - 1,731 Andrew Potter 14,781 13,395 Ian Russell 628-148,738 137,349 Benefits 18,289 15,082 Total payments to Directors 395,327 370,251 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
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 - 438 Graham Taylor 10,381 9,109 Andrew Yeates 6,050 5,433 16,431 14,980 4 Result on ordinary activities before and after taxation This has been arrived at after charging: Depreciation 665,457 605,127 Hire of motor vehicles - operating leases 4,937 5,265 Land and buildings - operating leases 350,946 342,890 Auditors' remuneration - audit services 18,500 18,500 - non-audit services 6,500 6,500 Profit on disposal of tangible fixed assets - (18) 12
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 25,068 - Result multiplied by the standard rate of corporation tax in the UK of 20% (2012-20%) 5,014 - Effects of: Disallowed expenditure 4,664 3,826 Depreciation in excess of capital allowances 63,833 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
Notes forming part of the financial statements for the year ended 31 March 2013 (Continued) 6 Tangible assets Leasehold Furniture and Computer Improvements equipment equipment and Software Total Cost At 1 April 2012 383,724 201,327 3,206,377 3,791,428 Additions - 3,560 266,808 270,368 At 31 March 2013 383,724 204,887 3,473,185 4,061,796 Depreciation At 1 April 2012 233,590 169,967 1,973,121 2,376,678 Provided for the year 39,165 19,086 607,206 665,457 At 31 March 2013 272,755 189,053 2,580,327 3,042,135 Net book value At 31 March 2013 110,969 15,834 892,858 1,019,661 At 31 March 2012 150,134 31,360 1,233,256 1,414,750 7 Debtors Trade debtors 3,929,204 5,846,812 Taxation and social security 2,861,554 2,197,481 Other debtors 31,129 32,843 Prepayments and accrued income 771,451 752,789 All amounts shown under debtors fall due within one year. 7,593,338 8,829,925 14
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 193,945 185,967 Taxation and social security 140,893 106,930 Other creditors 7,060,563 6,783,751 Deferred income 657,412 359,375 Accruals 708,460 686,187 8,761,273 8,122,210 9 Provision for liabilities and charges At 1 April 2012 84,375 Charge for the year 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 15,926,464 17,243,864 Administration charge on account (note 11) 5,036,943 4,677,957 Undistributed licence fees are matched by amounts included in cash at bank and in hand. All amounts are due within one year. 20,963,407 21,921,821 15
Notes forming part of the financial statements for the year ended 31 March 2013 (Continued) 11 Administration Charge on account The administration charge on account is analysed as follows: Balance at 1 April 2011/2012 4,677,957 4,291,634 Administration charge earned from gross licence fees (note 1) 7,842,341 7,624,110 Interest receivable (note 1) 389,094 409,526 Administration on account distributed - - Transfer to income and expenditure account (7,872,449) (7,647,313) Balance at 31 March 2012/2013 5,036,943 4,677,957 The geographical analysis is: United Kingdom 6,692,350 6,435,229 USA and Canada 394,638 305,211 Rest of the World 515,922 605,771 Europe 239,431 277,899 7,842,341 7,624,110 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: 2013 2012 Land and Land and buildings Other buildings Other Operating leases which expire: Within One Year 31,200 7,268-6,865 In Two to Five Years 328,662 1,975 328,662 2,338 16
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 Depreciation 665,457 605,127 Decrease/(increase) in debtors 1,236,586 (1,782,897) (Decrease)/increase in undistributed funds (933,345) 3,236,315 Increase in creditors 613,995 12,483 Increase in provision for liabilities 13,500 13,500 Profit on disposal of fixed assets - (18) Net cash inflow from operating activities 1,596,193 2,084,510 15 Analysis of cash at bank and in hand At At 1 April Cash 31 March 2012 inflow 2013 Cash at bank and in hand 19,883,731 1,325,825 21,209,556 17
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 Increase in cash 1,325,825 1,735,184 Opening net funds 19,883,731 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 three pages which follow do not form part of the statutory financial statements of the company. 19
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: 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 Distributions (66,848,084) (60,539,347) Undistributed licence fees carried forward 15,926,464 17,243,864 20
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: Publishers Licensing Society 34,120,058 31,248,456 Authors' Licensing and Collecting Society 20,185,279 19,093,191 Design and Artists Copyright Society 5,402,684 3,643,186 International rights holders 7,140,063 6,554,514 Total distributions 66,848,084 60,539,347 21
Expense Summary for the year ended 31 March 2013 The following costs were incurred in the year ended 31 March 2013: Staff Related Costs 4,662,603 4,513,435 Accommodation & Office Costs 932,934 919,522 Legal Costs 296,493 253,751 IT Costs 152,421 145,833 Research & Development 75,796 382,859 Communication 231,883 248,890 Finance Costs 34,892 32,251 Data Collection 715,841 511,663 Depreciation 665,457 605,127 Other Costs 79,061 33,982 7,847,381 7,647,313 22