1
CABI annual report & financial statements 31 December 2011
www.cabi.org
KNOWLEDGE FOR LIFE
2
contents 3 CABI corporate directory 4 mission statement 5 report of the Board 6 financial report 9 governance and accountability statement 11 independent auditors’ report 12 statement of comprehensive income register of member countries 13 statement of financial position Australia India South Africa Bahamas Jamaicaof cash flows Sri Lanka 14 statement Bangladesh Kenya Switzerland Botswana D.P.R. Korea Tanzania 15 statement of changes in equity Brunei Darussalam Malawi Trinidad & Tobago Burundi Uganda 16 notesMalaysia to the accounts Canada Mauritius UK Overseas Territories Chile Morocco (Anguilla, Bermuda, British Virgin China Myanmar Islands, Montserrat, St. Helena) Colombia Nigeria United Kingdom Cote d’Ivoire Pakistan Vietnam Cyprus Papua New Guinea Zambia Gambia Philippines Zimbabwe Ghana Rwanda
3
CABI corporate directory
board members Mr John Ripley (Chairman) 1,2,3 Dr Trevor Nicholls2 Mr Ian Barry Mr Martin White (retired 31/12/11) Mr Andrew Bennett2 Prof Emmanuel Owusu- Bennoah2
Dr Vibha Dhawan3 Dr Lutz-Peter Berg2,4(appointed 17/02/11) Dr Gary Whitfield (retired 17/02/11) Dr Don Merino1 Mr Roland Dietz3 (appointed 01/08/11) Mr Philip Walters1 (appointed 01/08/11)
notes: 1. member of Audit Committee 2. member of Nominations and Governance Committee 3. member of Remuneration Committee 4. chair of Executive Council, ex officio
executive management team Dr Trevor Nicholls (CEO) Mr Ian Barry (Finance) Dr Joan Kelley (Global Operations) Mr Tim Walsha (Information Technology, appointed 01/01/12)
Mrs Andrea Powell (Publishing) Ms Carol McNamara (Commercial) Mr Neil Macintosh (Human Resources) Dr Dennis Rangi (International Development)
principal professional advisers CABI’s principal professional advisers include the following: principal clearing bankers: Barclays, Reading independent auditors: PricewaterhouseCoopers LLP, Reading principal solicitors: Manches, Oxford
CABI Nosworthy Way Wallingford Oxfordshire OX10 8DE
4
mission statement
CABI improves people’s lives worldwide by providing information and applying scientific expertise to solve problems in agriculture and the environment. meeting our mission
Our mission and direction are influenced by our member countries, who help guide the activities we undertake as a business and ensure we deliver services that meet real needs and demands. Our activities encompass scientific publishing, development projects, research and communication, and link science directly with rural communities. At the core of CABI’s activities are the creation, application, and dissemination of knowledge and information. CABI contributes to improving food security by helping farmers lose less of their crops to pests and diseases. Our work covers prevention, control and eradication. We have a long history of providing practical support and guidance to extension workers and farmers in developing nations. Our work covers commodity and food crops. We are committed to protecting biodiversity by controlling invasive alien species and preserving the largest collection of fungi in the world.
5
report of the Board financial report summary After a strong performance in 2010, CABI continued the momentum in 2011 with growth of 7% over the prior year in income and a 28% increase in operating surplus to £661k. The primary reason for the growth in income was in International Development where project income grew by 20% in total with income generated from the Plantwise Programme doubling to £1.8m. After growing by 8% in the previous year, total sales from Publishing were relatively flat over the prior year although within that performance there were some areas of product growth. Total expenditure increased by 7% in line with income, with some cost reductions offset by a reduction in exchange gains (included in ‘other costs/ (gains)’). Our principal profit performance measure is the operating surplus or deficit. In 2011, the operating surplus increased to £661k. This increase was due mainly due to the growth in income in International Development and the resulting improvement in the profitability of those activities. The overall good profit performance allowed us to increase pension deficit payments from a planned level of £600k to £900k. In addition there was £257k of expenditure on staff restructuring, most of which arose due to the outsourcing of the distribution and fulfilment functions in Publishing. This initiative is expected to produce cost savings and operational efficiencies to allow increased focus on product innovation in the future. The value of ‘other comprehensive income’ is likely to fluctuate widely from year to year depending on external factors such as exchange rates, bond yields, inflation rates etc. but with no realised impact on operating performance or cash. In 2011, at -£767k, the total comprehensive deficit was £452k worse than the previous year. The deterioration arose because of an increase in the actuarial losses on the defined benefit scheme in 2011. These losses are likely to increase significantly further in the future.
6
report of the Board financial report income For Publishing, in a challenging environment, 2011 was a year of consolidation after achieving 8% income growth in 2010. Although income was broadly flat on the prior year, there were significant movements in individual product areas. There was growth in excess of 5% in the core CAB Abstracts product, as well as Global Health and Compendia. Database Subsets (including combined print and online journals) however continued to decline (by 13% in 2011). Overall Book sales showed a 2% decline on the prior year with increases in sales of e-Books not quite compensating for a decline in the printed format. However, there is a strong pipeline of publications in both formats and there is therefore an expectation of modest growth in 2012. International Development income (including Plantwise) increased by over 20% and has now overtaken Publishing as CABI’s leading source of income. CABI reports its results as a single entity which includes eight regional centres in Africa, China, India, Malaysia, Pakistan, Switzerland, Trinidad and the UK. The majority of the regional centres achieved double-digit growth in 2011 with Pakistan, Malaysia and China growing most strongly. The Plantwise programme was the main driver of the increase with income almost doubling, but there were also successes in other areas such as the soil health consortium project in Africa, projects in Brunei (based out of Malaysia) and the flood relief projects in Pakistan all contributing to the strong performance. The Plantwise programme achieved its operational and financial objectives in 2011. Income doubled and targets for expanding the network of clinics have been met on time and within budget. Sixteen country schemes are operating and a total of 182 clinics have now been established. Fees from member countries decreased from the prior year but only because of the one-off increase in fee income in 2010 arising from a change of the annual membership to a calendar year. income 2007-11 28
24
20
16 ÂŁm
1% 3% 5%
2% 4% 5%
4% 3% 6%
other
member fees
42%
43%
43%
38%
1% 3% 4%
1% 4% 5%
47%
CABITAX
12
International Development (incl Plantwise)
8 49%
48%
46%
48%
45%
4
0 2007
2008
2009
2010
2011
Publishing
7
report of the Board financial report expenditure Total expenditure grew by 7% to £24.4m in 2011. This was largely due to increases in direct project costs of £1.1m which were driven by the 20% growth in project related International Development income. The other significant increase in expenditure was in ‘other costs/ (gains) where the £359k increase in costs was principally due to a reduction in the level of foreign exchange gains from an exceptional £445k in 2010, to a more moderate £161k in 2011. In Publishing, gross margins increased by a further 2% points to 69% and net profit by 1% to 37%, the result of continuing reductions in production costs. In International Development, there was significant progress towards a break-even position with a £0.5m improvement in profitability on the prior year, the result of higher income being generated from the same indirect cost base. There was fairly consistent growth in profitability of all the Regional Centres with projects being delivered across the CABI portfolio including Plantwise, Invasive Species, Commodities and Knowledge for Development. Corporate costs continue to be well controlled with no increase in expenditure on the prior year. In 2009, following discussions with the pension scheme trustees and the actuaries, we agreed a recovery plan to eliminate the deficit on the defined benefit pension scheme over a 25 year period. This was submitted to the UK Pension Regulator who has not raised any objections to the plan. The plan requires CABI to increase payments into the scheme from £200k in 2009 to £1.0m by 2015, when payments flatten off. In 2011, the strong financial performance meant that CABI was able to bring forward an increase in payments of £300k, increasing the total deficit payment in the year to £900k. A similar additional payment of £200k was made in 2010. The latest triennial revaluation of the scheme is currently taking place and the results will be available in 2012. expenditure 2007-11
28
24
20 9% 2% 7%
16 £m
8
other depreciation
12%
14%
facilities and maintenance
14%
18%
19%
12
7% 3% 6%
11% 2% 7%
7% 2% 7%
9% 3% 6%
production
34%
36%
36%
37%
39%
29%
30%
30%
33%
31%
direct project costs staff costs
4
0 2007
2008
2009
2010
2011
8
report of the Board financial report statement of financial position and cash flow The CABI statement of financial position has continued to strengthen with the cash balance increasing by almost £2m to £5.2m. This was due to a number of factors including the operating performance, continued good cash collection practice and an increase in the number of donors paying in advance. Fixed asset values declined slightly year on year with a relatively moderate capital investment of £439k (£410k in 2010), mainly in IT and laboratory equipment, exceeded by the depreciation charge of £643k. other developments There have been some unanticipated delays in the year in the process of gaining planning approval for the redevelopment of the Wallingford site and we will now be submitting an outline planning application in 2012. A Designated Fund was created in 2011 to allow CABI itself to co-fund projects where external funding may be unavailable or insufficient. A transfer of £150k was made to the Designated Fund at the end of the year and is available for project funding. A pension deficit of £2.2m is disclosed in the 2011 statement of financial position in accordance with the current IAS19 international accounting standards. The standard currently allows smoothing of the impact of the deficit by a mechanism referred to as the corridor method and CABI applies this methodology. From 2013 onwards, there is a change to the standard and there is no longer an option to apply the corridor method. For CABI this is likely to mean a significant increase in the liability disclosed on the face of the statement of financial position from 2013 onwards. outlook for 2012 We enter 2012 in a relatively strong financial position. In Publishing, subscription renewals continue to exceed 92% and income on hand is comparable to 2011. However, there are areas of risk, especially over the medium term. The majority of our clients rely on public funds and so any reduction in spending by governments could negatively impact Publishing sales. There are also challenges arising from potential competitors and internet technology as well as foreign exchange risk (a high proportion of our sales are US dollar denominated). For these reasons there is a very real focus on product innovation and growth to ensure that CABI can continue to meet the needs of its existing customers whilst at the same time looking to generate new business. In International Development, the relationship with our main donors continues to strengthen and consequently we have secured a significant level of funding for 2012 and a number of the larger projects are already underway, including Plantwise. The key focus in 2012 remains to ensure we fully deliver to donor expectations. Whilst there is a particular emphasis on innovation and growth, there will continue to be a focus on cost effectiveness. In International Development we plan to get to a break-even point in 2012. In Publishing and Corporate, the continuing aim of cost management is to ensure that the financial performance is protected from commercial and currency risk. This gives CABI a strong base from which to achieve our long term objectives. Further information on CABI’s activities and achievements in 2011 can be found in the ‘CABI in review’ publication.
9
report of the Board governance and accountability statement CABI is an international organization constituted under a United Nations treaty-level agreement between its member countries. Any country is entitled to join CABI and applications are made by invitation from the existing membership. The member countries have an equal role in the organisation’s governance, policies and strategic direction. The CABI Review Conference of member countries reviews CABI’s work programmes and determines its broad policies and strategies. At the meeting in London in October 2009, it agreed to amend the governance arrangements for CABI and to meet more regularly than every five years. The new meeting format will bring together members of its Executive Council as well as the Liaison Officers from each member country. The first of these new style Review Conferences was held in London in February 2011. The Executive Council, comprised of London-based representatives, from each member country, meets at least once each year to monitor CABI affairs and the implementation of the Review Conference resolutions. The Executive Council is responsible for the appointment of directors and the auditors, for the approval of annual accounts and budgets and for the conclusion of major agreements. The Executive Council has appointed a Board, principally comprised of external members, together with the CEO and CFO, to direct the development and implementation of the strategy of the organisation. The Board usually meets 4 times annually and regularly monitors the progress of the organisation, particularly its performance against budgets. The Board approves recommendations on issues which are to be put to Executive Council, in addition to the mandatory approval of accounts and annual budget. Day to day management of the organization is the responsibility of the Executive Management Team, led by the CEO. They meet formally at least monthly. Names of the members of the Executive Management Team and Board are shown in the Corporate Directory. Risk management of the organisation is the responsibility of the Executive Management Team. The process is led by the CFO and is reviewed regularly by the Executive Management Team with oversight by the Board through the Audit Committee at least once per annum. There are three sub-committees of the Board. Membership of the three committees is shown in the CABI Corporate Directory at the front of this report. The Audit Committee has responsibility for oversight of risk management and financial control procedures, including audit, and accounting policies and procedures. The Remuneration Committee has delegated authority to develop policy on executive remuneration and to set the remuneration packages of individual directors (a remuneration report has not been included as it is not required to comply with corporate governance). The Nominations and Governance Committee has delegated authority to lead the process for Board appointments and to make recommendations to the Board with respect to standards of performance. The Board is responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. In preparing these financial statements, the Board has elected to comply with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB), where appropriate for an intergovernmental organisation under the CAB International Agreement. The financial statements are required to give a true and fair view of the state of affairs of the organisation and of the profit or loss of the organisation for that period. In preparing these financial statements, the Board is required to: • • •
select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; state that the financial statements comply with IFRSs, where appropriate for an intergovernmental organisation under the CAB International Agreement, as adopted by the European Union and IFRSs issued by IASB; and
10
report of the Board governance and accountability statement •
prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the group will continue in business.
The Board confirms that it has complied with the above requirements in preparing the financial statements. The Board is responsible for ensuring that proper accounting records are kept that disclose with reasonable accuracy at any time the financial position of the organisation. It is also responsible for safeguarding the assets of the organisation and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Ian Barry, CFO 26.4.12
11
independent auditors’ report to the members of CABI We have audited the financial statements of CAB International for the year ended 31 December 2011 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Cash Flow, the Statement of Changes in Equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. respective responsibilities of directors and auditors As explained more fully in the Governance and Accountability Statement set out on page 9, the board 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. This report, including the opinions, has been prepared for and only for the organisation’s members as a body for and only for the organisation’s members as a body in accordance with article IX and X of the CAB International agreement and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. 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 organisation’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the board; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the financial report and the governance and accountability statement to identify material inconsistencies with the audited financial statements. 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 organisation’s affairs as at 31 December 2011 and of its profit and cash flows for the year then ended;. • have been properly prepared in accordance with IFRSs as adopted by the European Union; and • have been prepared in accordance with article IX and X of the CAB International Agreement.
PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Reading 4.5.12 Notes: (a) The maintenance and integrity of the CABI website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. (b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
12
statement of comprehensive income for the year ended december 2011
2011 £’000
2010 £’000
3 4
22,867 940 1,099 118 25,024
21,015 1,009 1,168 103 23,295
5 6
7,647 9,578 2,967 1,455 519 613 643 341 257 30
7,507 8,512 3,092 1,392 547 544 596 382 179 85
8(i)
(42) 356 24,364
(71) (3) 22,762
9
660 4 (3) 1 661
533 6 (21) (15) 518
13 12
(183) 0 (1,245) (1,428)
(58) 129 (904) (833)
(767)
(315)
note continuing operations income sales and project income member contributions CABITAX recovery miscellaneous income and recoveries expenditure staff costs direct project costs production facilities and maintenance sales and distribution travel depreciation and leasehold amortisation consultants, freelancers restructuring costs increase in provision for arrears of member country contributions associated company profits other costs/ (gains)
operating surplus before interest interest receivable interest payable
7 4
operating surplus for the year other comprehensive deficit cash flow hedges property revaluation gains actuarial losses on defined benefit pension schemes
total comprehensive deficit for the year
13
statement of financial position for the year ended 31 december 2011 2011 £’000
2010 £’000
7 7 7 8(i)
9,349 1,032 106 287 10,774
9,562 1,129 0 245 10,936
10
1,729
1,803
11 11 4
1,196 1,014 97
859 2,127 0
0 5,189 886 10,111
36 3,385 800 9,010
20,885
19,946
12 13
1,921 (147) 150 5,935 7,859
1,921 36 0 6,669 8,626
15
2,169 2,169
924 924
16
3,180 5 4,916 0
3,007 0 4,303 132
675 1,934 0
512 1,534 0
147 0 10,857 13,026 20,885
0 908 10,396 11,320 19,946
note assets non-current assets properties – held at revalued amounts plant and equipment – held at cost intangibles – held at cost investments accounted for using the equity method current assets inventories trade and other receivables, net of provisions: - sales debtors - sums owing by project sponsors - from member countries financial assets: - derivative financial asset - cash and equivalents other debtors
14
total assets equity and liabilities equity revaluation reserve translation reserve designated fund accumulated fund liabilities non-current liabilities financial liabilities current liabilities sales income received in advance member country contributions in advance sums held on behalf of project sponsors Bionet International Fund trade and other payables: - trade creditors - other creditors - hire purchase creditor (due within 1 year) financial liabilities - derivative financial liability - cash and cash equivalents total liabilities total equity and liabilities
17
13,15
The financial statements on pages 12 to 35 were approved by the Board on April 26th 2012 and were signed on its behalf by:
Trevor Nicholls, CEO
14
statement of cash flows for the year ended 31 december 2011 2011
2010
note
£’000
£’000
i
3,282 (3) 3,279
2,131 (21) 2,110
7
(327) (112) 4 (435)
(407) 0 6 (401)
2,844
1,709
660 643 (42) 74 679 485 791 (86) 78 3,282
533 596 (71) (222) (225) 116 1,421 (104) 87 2,131
2,345 5,189 2,844
636 2,345 1,709
cash flows from operating activities cash generated from continuing operations interest paid net cash generated from operating activities cash flows from investing activities: payments to acquire tangible fixed assets payments to acquire intangible assets interest received net cash used in investing activities net increase/(decrease) in cash and cash equivalents NOTES TO THE CASH FLOW STATEMENT (i) reconciliation of operating surplus/(deficit) to net cash inflow from operating activities operating surplus before interest depreciation charges share of associated company profits decrease/(increase) in inventories decrease/(increase) in trade and other receivables increase in trade and other payables increase in income in advance (increase) in other debtors increase in provision for restructuring
7 8(i)
(ii) movement in net cash during the year net cash at 1 January net cash at 31 December movement in net cash during the year (iii) analysis of movement in net cash
1.1.2011 £’000
cash at bank in hand and in transit bank overdrafts
ii, iii
3,385
cash flows £’000
31.12.2011
1,804 908
5,189 0
£’000
adjustment for Bionet funds
(908) (132)
132
0
net cash
2,345
2,844
5,189
15
statement of changes in equity for the year ended 31 december 2011
2011
accumulated fund £’000
designated fund £’000
cash flow hedges £’000
revaluation reserve £’000
total equity £’000
balance at 1 January 2011
6,669
0
36
1,921
8,626
total comprehensive (deficit) / income for the year
(734)
150
(183)
0
(767)
balance at 31 December 2011
5,935
150
(147)
1,921
7,859
accumulated fund £’000
designated fund £’000
cash flow hedges £’000
revaluation reserve £’000
total equity £’000
balance at 1 January 2010
7,055
0
94
1,792
8,941
total comprehensive (deficit) / income for the year
(386)
0
(58)
129
(315)
balance at 31 December 2010
6,669
0
36
1,921
8,626
2010
16
notes to the accounts for the year ended 31 december 2011 1. objectives and status of CABI CABI is dedicated to improving lives worldwide through the dissemination, application and generation of scientific knowledge in support of sustainable development with emphasis on agriculture and the management of natural resources, and with particular attention to the needs of developing countries. CABI is a treaty-level, international, inter-governmental organisation currently with 47 member countries, including five British overseas territories. Originally established to assist agricultural development in commonwealth countries, the organisation, under its former name of the Commonwealth Agricultural Bureaux, signed an agreement with the United Kingdom Government on 5 August 1982 and thereby acquired the status of an International Organisation under the Commonwealth Agricultural Bureaux (Immunities and Privileges) Order 1982 (Statutory Instrument 1982 No 1071) laid before parliament in accordance with the International Organisations Act 1981. As a result of this special status, CABI was empowered to retain for its own use tax deducted from salaries of its employees. The Board believes that this is effectively additional income from the UK government and is accordingly reported as part of income. The organisation adopted a new constitution in 1985, which gave it full international status and changed its name to CAB International from 1986. It now includes several non-commonwealth countries among its membership. The original agreement with the UK government was amended on 12 February 1999 to reflect CABI’s change of name. The organisation is owned and directed by the governments of its member countries and has to date had two principal business units: Publishing and International Development. Publishing covers international publishing in applied life sciences, including crop protection, animal science, nutrition, integrated pest management, forestry and human health, specialising in the creation and distribution of the knowledge resources demanded by applied life science communities worldwide. International Development undertakes multidisciplinary research, development and training in agriculture and the environment, for which it receives project income. A third business activity is the development of the Plantwise strategic initiative which has two principal facets, global plant clinics formerly incorporated in ID and a Knowledge Bank of plant health information. CABI operates from two sites in the UK and seven centres in Kenya, Malaysia, Pakistan, Switzerland and Trinidad and Tobago, India and China. CABI has a representation agreement with a commercial organisation based in Cambridge, MA, USA for its Publishing products. Under strategic collaboration agreements, CABI staff are also based at Centro Agronómico Tropical de Investigación y Enseñanza (CATIE) in Costa Rica and at Universidade Estadual Paulista (UNESP) in Brazil. 2. accounting policies The Board is responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. In preparing these financial statements, the Board has elected to comply with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB). The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. i.
accounting convention The directors, having made appropriate enquiries, consider that CABI has adequate resources to continue in existence for the foreseeable future. On this assumption, CABI continues to adopt the going concern basis in preparing the financial statements.
17
notes to the accounts for the year ended 31 december 2011
The financial statements have been prepared under the historical cost convention modified to include the revaluation of freehold land and buildings and have been prepared in accordance with International Financial Reporting Standards. ii.
income recognition Income is recognised to the extent that it is probable that economic benefits will flow to the organisation and the income can be reliably measured. Income is measured at the fair value of the consideration received, excluding discounts, rebates, value added tax and other sales taxes or duty.
The following criteria must also be met before income is recognised: Income from the sale of books and other non-subscription products is recognised when the significant risks and rewards of ownership have passed to the buyer, usually on the dispatch of goods. Income for subscriptions is recognised evenly over the period of the subscription. Project income, including government grants received for project work, is recognised by reference to the stage of completion of the project at the reporting date, taking into consideration the extent to which the agreed project deliverables have been completed. Any project income received in advance of work having been completed is, to the extent that the work remains incomplete, classified as a liability at the reporting date. Any contract losses are recognised immediately. CABITAX, as referred to in note iv below, is recognised concurrently with the cost of the UK employee salaries from which it is withheld. Interest income is recognised as interest accrues (using the effective interest method – that is the rate that exactly discounts estimated future cash receipts through the expected future life of the financial instrument to the net carrying amount of the financial asset). iii.
segmental reporting CABI is not required to comply with IFRS 8, as it is not an entity whose equity or debt securities are publicly traded. However, an analysis of sales income by activity is provided.
iv.
taxation CABI’s status as an International Organisation allows it to retain tax deducted from UK employees’ salaries, known as CABITAX. It pays no income tax on surpluses. However, CABI is currently subject to normal UK legislation in respect of value added tax and national insurance taxes.
v.
research and development Research and development expenditure is charged to the income and expenditure account as incurred.
vi.
depreciation Depreciation is provided by equal annual instalments on freehold properties (excluding estimated land values) over the following periods: Wallingford UK Egham UK Delémont Switzerland
34 years from 2010 43 years from 2010 35 years from 2010
18
notes to the accounts for the year ended 31 december 2011 Other fixed assets are depreciated evenly over the estimated life of the asset, over the following periods: semi–permanent structures furniture & fittings major systems software equipment computer hardware & software motor vehicles
10 years 10 years 8 years 5 years 3-4 years 4 years
vii. foreign currencies CABI takes out forward currency contracts on its net dollar income for its Publishing business in order to minimise its exposure to foreign exchange risk by matching contracts to probable future incomes. Under IAS, these transactions are derivative financial instruments, and CABI applies the IAS 39 ‘hedging rules’ in order to minimise volatility through the statement of comprehensive income year on year. The fair values of derivative financial instruments are determined using a number of methods and assumptions based on prevailing conditions at the statement of financial position date including exchange rates at the year end. At the inception of the transaction, CABI documents the relationship between the hedging instruments and hedged item, as well as its risk management objectives and strategy for undertaking various hedging transactions. CABI also documents its assessment, both at hedge inception and on an on-going basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months, and as a current asset or liability if the remaining maturity of the hedged item is less than 12 months Other monetary assets and liabilities denominated in foreign currencies are converted at the exchange rate ruling on the last working day of the accounting year. Income received in foreign currencies is credited at the sterling amount applicable when received. Gains or losses resulting from the sale of foreign currencies are included in expenses in the financial period to which the currency receipt relates. viii. overseas assets Fixed assets held abroad are included in the statement of financial position where no conditions limiting the freedom to dispose of such assets apply. In other cases, expenditure on overseas assets is charged as other costs. ix.
fixed assets Freehold and leasehold properties are periodically revalued and any changes in value are accounted for in accordance with International Accounting Standard 16. The titles of the properties in the UK are registered in the name of CABI or the Commonwealth Agricultural Bureaux. Other fixed assets with an individual cost of more than £1,000 excluding value added tax (£500 in the case of laptop computers) are included in the statement of financial position at cost, with an appropriate deduction for depreciation. Items with an individual cost of less than £1,000 excluding value added tax (£500 in the case of laptop computers) are charged to the income and expenditure account as other costs.
19
notes to the accounts for the year ended 31 december 2011 Gains and losses on disposal of fixed assets are determined by comparing the proceeds with the carrying amount and are recognised within other costs in the statement of comprehensive income. x.
property values Property values are held at the current re-valued amount. A professional revaluation of the properties was performed in 2010.
xi.
intangible assets Intangible assets (like software development) in accordance with IAS38 will be recognised only if: i. it is probable that future economic benefits will flow to CABI from the investment. ii. the cost of the asset can be measured reliably. Intangible assets will be amortised according to the assets useful life.
xii. investments CABI uses the equity method, in accordance with IAS 27 and 28, to report its share of its associate company, Conidia. This is an undertaking over which CABI has significant influence but not control, generally indicated by a share of between 20% and 50% of the voting rights. In the statement of financial position, CABI’s share of the equity at 31 December 2011 is shown as ‘investments accounted for using the equity method’. In the statement of comprehensive income, CABI’s share of Conidia’s trading profit for 2011 is shown as ‘associated company profits’. CABI’s share of profit from the associate represents its share of profit after tax. xiii. inventories and work in progress Stocks of books are valued at the lower of cost or net realisable value. No value is included for publications more than three years old. The book stock is provided against monthly on a straight line basis over three years from the month of publication. Work in progress on projects is valued at the lower of cost and the amount realisable from the donor. xiv. trade and other receivables Trade receivables are recognised and carried at the lower of their original invoiced value and recoverable amount. Provision is made where there is objective evidence that the organisation will not be able to recover balances in full. Balances are written off when the probability of recovery is assessed as remote. xv. cash and cash equivalents Cash and short term deposits in the statement of financial position comprise cash at banks and in hand and short term deposits with an original maturity date of three months or less. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above net of outstanding bank overdrafts. xvi. impairment of assets CABI assesses at each year-end whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the organisation makes an estimate of the asset's recoverable amount. Recoverable amount is the higher of an asset's or cash generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses of continuing operations are
20
notes to the accounts for the year ended 31 december 2011 recognised in the statement of comprehensive income in those expense categories consistent with the function of the impaired asset. xvii. finance and operating leases Assets held under finance leases, which transfer to CABI substantially all the risks and benefits incidental to ownership of the leased asset, are capitalised at the inception of the lease and included in property, plant and equipment at the fair value of the leased assets or, if lower, the present value of the minimum lease payments, as determined at the inception of the lease. The obligations relating to finance leases, net of finance charges in respect of future years, are recognised as liabilities. Lease payments are apportioned between the reduction of the lease liability and finance charges in the statement of comprehensive income so as to achieve a constant rate of interest on the remaining balance of the liability. Assets held under finance leases are depreciated over the shorter of the estimated useful life of the asset and the lease term. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases and rentals payable are charged in the statement of comprehensive income on a straight line basis over the lease term. xviii. interest bearing loans and borrowings All loans and borrowings are initially recognised at fair value less directly attributable transaction costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses arising on the repurchase, settlement or otherwise cancellation of liabilities are recognised respectively in finance income and expense. All borrowing costs are charged to the statement of comprehensive income. xix. net debt Net debt comprises cash and cash equivalents, bank loans and obligations under finance leases and hire purchase contracts. xx. trade and other payable Trade and other payables are measured at amortised cost using the effective interest method. xxi. de-recognition of financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, such that the difference in the respective carrying amounts together with any costs or fees incurred are recognised in finance income and expense. xxii. pensions Full information on pensions and pension accounting policies are shown in note 19. xxiii. designated fund A designated fund has been created to allow CABI to co-fund projects. Transfers in and out of the fund are approved by the Executive Management Team.
21
notes to the accounts for the year ended 31 december 2011 3. sales and project income Sales and project income comprised:
database products books other publishing total international development (excluding plantwise clinics) plantwise
2011 £’000
2010 £’000
7,816 1,619 1,792 11,227 9,844
7,818 1,753 1,711 11,282 8,877
1,796 22,867
856 21,015
The income figures shown above are net of value added tax but inclusive of discounts allowed to customers.
22
notes to the accounts for the year ended 31 december 2011 4. member country contributions Following decisions of the review conferences held in August 1990 and in October 2009, CABI established provisions for arrears of member country contributions. The total provision as at 31 December 2011 now stands at £1,187k (2010: £1,157k). An analysis of member contributions for the year and total post-1991 arrears are shown below:
Anguilla Australia Bahamas Bangladesh Bermuda Botswana Brunei Burundi Canada Chile China Colombia Cote d’Ivoire Cyprus Gambia Ghana Grenada Guyana Hungary (withdrew 07/07/00) India Indonesia (withdrew 12/10/01) Jamaica Kenya DPR Korea Malawi Malaysia Mauritius Montserrat Morocco (withdrew 14/10/10) Myanmar Netherlands Nigeria Pakistan Papua New Guinea Philippines Rwanda Sierra Leone Solomon Islands South Africa Sri Lanka St Helena Switzerland Tanzania Trinidad and Tobago Uganda United Kingdom Vietnam Virgin Islands Zambia Zimbabwe Provisions Total
gross balance at 31.12.11 £ 0 0 0 7,115 5,468 0 13,000 28,000 0 0 0 0 0 0 113,987 111,307 5,000 68,614 19,464 78,084 3,962 5,000 0 5,000 40,421 0 0 0 6,750 2,326 91,881 325,148 10,000 5,000 0 5,000 141,475 25,000 0 0 500 0 62,078 5,000 59,857 0 0 0 14,000 25,000
arrears to 1991 fully provided £ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 49,796 101,307 0 46,614 0 0 0 0 0 0 0 0 0 0 0 0 0 202,442 0 0 0 0 77,991 0 0 0 0 0 51,967 0 59,857 0 0 0 0 0
1,283,437
589,974
net balance at 31.12.11 £ 0 0 0 7,115 5,468 0 13,000 28,000 0 0 0 0 0 0 64,191 10,000 5,000 22,000 19,464 78,084 3,962 5,000 0 5,000 40,421 0 0 0 6,750 2,326 91,881 122,706 10,000 5,000 0 5,000 63,484 25,000 0 0 500 0 10,111 5,000 0 0 0 0 14,000 25,000 (596,582) 96,881
contributions in statement of comprehensive income 2010 2011 £ £ 500 533 75,000 91,735 5,000 5,750 5,000 5,750 3,000 3,617 5,000 5,750 5,000 5,750 5,000 5,750 115,000 142,880 7,500 9,008 115,000 139,977 5,000 5,983 5,000 5,750 5,000 5,750 5,000 5,750 5,000 5,750 5,000 0 5,000 5,750 0 0 20,000 24,214 0 0 5,000 5,750 5,000 5,750 5,000 5,000 5,000 5,750 7,500 9,279 5,000 5,750 500 533 0 750 5,000 5,750 97,544 0 5,000 5,750 5,000 5,750 5,000 5,750 5,000 5,750 5,000 0 5,000 5,750 5,000 5,750 12,500 15,216 5,000 5,750 500 533 50,000 61,388 5,000 5,750 5,000 5,750 5,000 5,750 275,000 337,203 5,000 5,750 500 533 5,000 5,750 5,000 5,750 940,044
1,009,382
23
notes to the accounts for the year ended 31 december 2011 5. staff costs The total staff costs charged in the statement of comprehensive income for the year ended 31 December comprised: 2010 2011 £’000 £’000 staff salaries & bonus 10,360 10,380 social security payments 737 735 pension contributions 2,097 1,612 associated staff costs 224 243 recoveries to direct project costs (4,645) (4,261) recoveries to production costs (1,126) (1,202) 7,507 7,647 The total costs of employing CABI's staff for 2011 amounted to £11,116k (2010: £11,283k) which comprises gross salary payments to staff, employer's state social security contributions and employer's pension contributions but excluding pension deficit payments. The average number of employees for 2011 was 345 (2010: 357) giving an average employment cost of £32k (2010: £32k). UK defined benefit pension contributions amount to £1,254k (2010: £1,068k) which together with the £1,245k disclosed in other comprehensive income (2010: £904k) makes up the £2,499k (2010: £1,972k) of items in the statement of comprehensive income (see note 19). 6. direct project costs Direct project costs comprised: 2011 £’000 4,645 4,933 9,578
staff costs other direct costs 7. property, plant and equipment, intangibles land and buildings – freehold and long leasehold £’000 cost or valuation at 1 January 2011 10,422 additions (5) disposals 0 at 31 December 2011 10,417
2010 £’000 4,261 4,251 8,512
plant and equipment
intangibles (i)
total
£’000
£’000
£’000
6,999 332 (2,747) 4,584
0 112 0 112
17,421 439 (2,747) 15,113
accumulated depreciation at 1 January 2011 provided in year disposal adjustments at 31 December 2011
860 208 0 1,068
5,870 429 (2,747) 3,552
0 6 0 6
6,730 643 (2,747) 4,626
NBV at 31 December 2011 NBV at 31 December 2010
9,349 9,562
1,032 1,129
106 0
10,487 10,690
24
notes to the accounts for the year ended 31 december 2011 Included in plant and equipment are assets held under finance leases with a net book value of £0k (Nil) (2010: £11k)
cost accumulated depreciation net book value
2011 £’000 74 (74) 0
2010 £’000 74 (63) 11
(i) CABI invested £112k on software development of the Knowledge Bank for Plantwise (2010:£nil). 8. related parties i. Conidia Bioscience Limited During 2000, CABI signed an agreement with Emtek Global Services Limited (Emtek) to establish and operate a jointly owned company (Conidia Bioscience Limited) to develop and market a rapid fuel test kit to detect fungus in fuel. The company was incorporated in the UK on 31 March 2000 under the Companies Act 1985 as a private limited company. On 7 October 2005 a new shareholder agreement was signed under which Aldwych Bioscience Limited (a company registered in Jersey) and Biomedica Medizinprodukte GmbH (a company registered in Austria) became shareholders in Conidia. CABI, Emtek and Aldwych each own 30% of the equity of Conidia with Biomedica owning the remaining 10%. The overall direction and management of Conidia is the responsibility of the Board. Each shareholder with not less than 25% of the issued shares has the right to appoint one director of the company. At 31 December 2008 there were six directors, each with a vote. Joan Kelley and Trevor Nicholls were the directors appointed by CABI, and they share a vote. In 2011 Conidia made a profit of £140k (2010: £234k), CABI's share of which was £42k (2010: £71k): this is included as associated company profits in the statement of comprehensive income, and the investment in Conidia in the statement of financial position is £287k (2010: £245k). Conidia’s income in 2011 was £1,117k (2010: £1,172k), assets were £1,570k (2010: £1,255k) and liabilities were £600k (2010: £422k) During 2011, the value of sales invoices raised by CABI to Conidia was £109k, and the debt outstanding at 31 December 2011 was £52k (2010: £33k) ii.
the CABI Trust and CABI Inc In March 2000, The CABI Trust was established in the UK as an irrevocable charitable trust to further certain charitable activities of CABI. In July 2000, CABI Inc. was established in the state of Delaware, USA. It was set up as a non-profit organisation to operate exclusively for charitable, scientific and educational purposes within the meaning of section 501 (c) (3) of the Internal Income Code of 1986. In 2011 CABI received £nil (2010: £nil) from CABI Trust and £nil (2010: £nil) from CABI Inc.
iii.
International Food Information Service (IFIS) CABI is, together with two other organisations, a member governor of IFIS which has provided an information service on food science and technology since 1968. IFIS is registered in the UK as a company limited by guarantee (No. 3507902), and was incorporated in 1998. As a registered educational charity, IFIS has a mission to advance public education and knowledge in the field of
25
notes to the accounts for the year ended 31 december 2011 food science and technology and human nutrition. The board of governors comprises six trustees, one from each of the three governing member organisations, and three independent trustees. IFIS is a participating employer of the CABI Superannuation Scheme. During 2011 IFIS paid CABI £nil (2010: £nil) towards the costs incurred by CABI in the administration of the Superannuation Scheme. iv.
key management compensation Key management includes board members (executive and non-executive). The compensation paid to key management is shown below:
salaries and other short- term employee benefits other long-term benefits total
2011 £’000 506,197 24,440 530,637
2010 £’000 421,636 26,436 448,072
9. operating surplus Operating surplus is stated after charging/ (crediting):
write down of book stock to net realisable value bad debts written off or provided for audit fees foreign currency gains depreciation on: - owned assets - leased assets
2011 £’000 82 130 48 (161)
2010 £’000 173 82 36 (445)
632 11
579 17
2011 £’000
2010 £’000
423 13 436 1,293 1,729
436 44 480 1,323 1,803
10. inventories Inventories comprised: books - finished goods - work in progress projects – work in progress
11. trade and other receivables Trade and other receivables are analysed below between sales debtors and sums owing by project sponsors. Receivables from member countries are shown separately under note 4. As at 31 December 2011 receivables from sales debtors of £21k (2010: £4k) were impaired. The amount of the provision was £21k as of 31 December 2011 (2010: £4k). The individually impaired receivables mainly relate to publishing customers where part of the balance due may be in dispute. A portion of the receivables is expected to be recovered. The ageing of these receivables is as follows:
26
notes to the accounts for the year ended 31 december 2011
up to 3 months 3 to 6 months over 6 months
2011 £’000 18 0 3 21
2010 £’000 0 1 3 4
As of 31 December 2011, trade receivables from sales of £1,196k (2010: £859k) were not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows:
up to 3 months 3 to 6 months over 6 months
of which amounts not yet due
2011 £’000 1,040 26 130 1,196
2010 £’000 844 15 0 859
804
808
As of 31 December 2011 £120k (2010: £115k) of sums owing by project sponsors were impaired. The amount of the provision was £120k as of 31 December 2011 (2010: £115k). Some of these balances have historically taken a long time to collect during which some of the claim may be disallowed due to loss or lack of adequate documentation for the claim. The ageing of these receivables is as follows: up to 3 months 3 to 6 months over 6 months
2011 £’000 0 0 120 120
2010 £’000 57 10 48 115
As of 31 December 2011 £1,014k (2010: £2,127k) of sums owing by project sponsors were not impaired. These relate to donors whose claim processes may be considerably long and time consuming but for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows:
up to 3 months 3 to 6 months over 6 months
2011 £’000 573 156 285 1,014
2010 £’000 1,952 90 85 2,127
27
notes to the accounts for the year ended 31 december 2011 The carrying amounts of the group's trade and other receivables are denominated in the following currencies: 2011 £’000 1,116 241 197 656 2,210
UK Pounds US Dollars Euros other currencies
2010 £’000 1,382 262 61 1,281 2,986
Movements on the group provision for impairment of trade receivables are as follows:
at 1 January provision for receivables impairment unused amounts reversed at 31 December
2011 £’000 119 0 22 141
2010 £’000 136 0 (17) 119
total
12. revaluation reserve
at 1 January 2011 revaluation (decreases) / increase at 31 December 2011
Wallingford Freehold £’000
Egham Freehold £’000
Delémont Freehold £’000
£’000
567 0 567
618 0 618
736 0 736
1,921 0 1,921
13. financial risk management objectives and policies CABI's financial risk management objective is to reduce the financial risks and exposures facing the business with respect to changes in foreign exchange rates. To achieve this CABI undertakes an active hedging policy, including the use of derivatives (forward rate agreements), which are entered into under policies approved and monitored by the Board. These transactions are only undertaken to reduce the exposures arising from underlying commercial transactions and at no time are transactions undertaken for speculative reasons. foreign currency risk A large part of CABI's business is transacted in US dollars. The principal commercial currency of CABI is £ sterling. CABI seeks to manage currency exposure wherever possible. In each country where CABI has a corporate operation, income generated and costs incurred are primarily denominated in the relevant local currency, so providing a natural currency hedge. CABI's exposure to foreign exchange gain/loss against the US dollar is managed to a large extent by the use of forward contracts to sell dollars. The policy is to sell forward 50%-100% of the next 12 months expected net dollar receipts on a rolling annual basis. The value of these contracts at 31 December 2011 is shown below and represents approximately 68% (2010: 60%) of projected dollar sales for the next 12
28
notes to the accounts for the year ended 31 december 2011 months. Creditor payments made in US dollars represent approximately a further 30% (2010: 25%) of projected dollar sales. The second most significant foreign currency for CABI is the Euro. These were sold during the year on the spot market with little material impact on exchange gain or losses. interest rate risk CABI has both interest bearing assets and interest bearing liabilities. CABI does not employ financial instruments to mitigate interest risk. credit risk CABI has no significant concentrations of credit risk. CABI has implemented policies that require appropriate credit checks on potential customers before sales commence. liquidity risk CABI has interest bearing assets but ready access to funds. This, together with a strong cash position and lack of debt, means that liquidity risk is low. recognised fair value of derivative financial instruments Asset value is the contracted sterling value to be received on the sale of dollars in the following year, and liability is the sterling value of those dollar contracts converted at the forward spot rate prevailing at the end of the accounting period. 2011 – value of outstanding forward foreign exchange contracts – US$6.5m £’000 assets all current 4,042
£’000 liabilities (4,189)
£’000 net (147)
2010 – value of outstanding forward foreign exchange contracts – US$5.0m £’000 assets all current 3,235
£’000 liabilities (3,199)
£’000 net 36
hedging instruments A hedging relationship is classified as effective when the value of the hedging item moves between 80% and 125% of each movement in the hedged item. All hedging relationships having been tested using statistical methods were effective at the reporting date. Forward foreign exchange contracts which are open at 31 December 2011 maturity date 31.01.2012 31.03.2012 31.05.2012 29.06.2012 28.09.2012 28.12.2012 total
dollar value $’000 1,000 2,000 500 1,000 1,000 1,000 6,500
exchange rate 1.6253 1.6247 1.6063 1.6057 1.6057 1.5650
sterling value £’000 615 1,231 311 623 623 639 4,042
29
notes to the accounts for the year ended 31 december 2011 These forward exchange contracts and corresponding foreign currency receipts will mature within twelve months of the year end. Movements in the fair value of these forward exchange contracts are recognised as cash flow hedges in the hedging reserve within equity. These amounts are then transferred to operating surplus/deficit when the forecast amounts are received at various dates between one and twelve months after the year end date. There was no material ineffectiveness of these hedges recorded as of the reporting date. 14. cash and cash equivalents i. cash and bank balances CABI held or administered cash at bank, in hand and in transit as follows: 2011 £’000 2,698 2,491 0 5,189
CABI CABI Development Fund (CDF) Bionet International
2010 £’000 2,644 609 132 3,385
ii. bank borrowings At 31 December 2011 CABI utilised the following facilities provided by Barclays Bank PLC: • • •
short term sterling overdraft facilities up to a gross limit of £9m and a net limit of £nil (2010 £2.7m) CABI no longer requires an overdraft facility. Any unauthorised overdraft will be charged at 29.5% per annum. in addition, Barclays provides a spot and forward exchange transactions (SFET) facility of up to £15m with a settlement risk of £3.5m
All of the above are secured by a first legal charge over the freehold property at Egham. 15. financial liabilities note non-current: pension scheme liability
current: hedging liability bank overdrafts
19
2011 £’000
2010 £’000
2,169 2,169
924 924
147 0 147
0 908 908
16. sales income received in advance This comprises advance payments for issues of CABI journals, CAB Abstracts and other products where the supply takes place in future accounting years, amounting to £3,180k (2010: £3,007k).
30
notes to the accounts for the year ended 31 december 2011 17. Bionet International Fund For the future, CABI will continue to provide a limited level of support for Bionet Loop and secretariat activities, but will no longer maintain any separate funds for Bionet. With the completion of the last round of funding from the Swiss Agency for Development and Cooperation (SDC) in August 2011 the Bionet International Fund within the CABI statement of financial position was wound up. A summary statement of all Bionet Fund transactions in 2011 is included below. At 31 December 2011, the Bionet cash balance has reduced to £0 (Nil) (2010: £132k).
balance brought forward income to Bionet: donations from SDC donations from SwedBio (Swedish International Biodiversity Programme) donations from EU/total foundation donations from Simul International interest expenditure: Bionet activities
2011 £’000
2010 £’000
132
308
126 101
123 72
15 3 0 245
0 0 5 200
(377) 0
(376) 132
18. CABI Development Fund (CDF) Following a decision of the review conference held in August 1990, CABI established a partnership facility, now renamed the CABI Development Fund (CDF), in 1991. Member countries make donations to the CDF to fund various projects to benefit developing countries. At 31 December 2011, the balance of the CDF bank accounts amounting to £2,491k (2010: £609k) had been consolidated into CABI's statement of financial position as cash at bank. A summary of income and expenditure for the year, together with balances in the statement of financial position, is shown below. In 2009 it was agreed to include contributions to the Global Plant Clinic activity (now contained within Plantwise) within this fund statement. Funding for development of Plantwise knowledge bank and clinics has therefore been included.
31
notes to the accounts for the year ended 31 december 2011 income and expenditure account for year ended December 2011
balance brought forward from 2010 income: donor income received during 2011 Australia: ACIAR (A$750,630) UK: DFID China (US$100,000) Switzerland (CHF250,000): SDC rollout programme SDC Other total income expenditure 2011: plantwise knowledge bank plantwise clinics: SDC rollout programme clinics rollout programme knowledge for development projects commodity projects: principally coffee, cocoa and oil palm invasive species projects knowledge management projects other total expenditure balance carried forward represented by: cash at bank less amounts due to CABI for CDF projects
CDF £’000 59
Plantwise £’000 206
Total £’000 265
323 270 61
156 1,030 0
479 1,300 61
0 422
438 696
438 1,118
1,076
2,320
3,396
399 455 943 275 251 156 102 40 824
1,797
2,621 1,040 2,491 (1,451) 1,040
32
notes to the accounts for the year ended 31 december 2011 19. pension arrangements pension scheme The CAB International Pension Scheme (“the Scheme”) is a hybrid scheme. Benefits are accrued in the defined contribution section for joiners after August 2007 and in respect of salaries in excess of the £30,000 cap for defined benefit members. During 2011, CABI made total contributions to the defined contribution section of £222k (including £22k of expenses) to the Scheme. The rest of this pension disclosure relates purely to the defined benefit section of the Scheme. CABI participates in the funded defined benefit section of the Scheme, the assets of which are held in a separate trustee administered fund. Separate accounts are prepared for this fund and audited by Barber Harrison & Platt. International Food Information Service (IFIS) is a Participating Employer and contributes to the Scheme on the same terms as CABI. IFIS incorporates its pension transactions in its own accounts. Actuarial valuations of the assets and liabilities of the Scheme are carried out at least once every three years by external actuaries to determine the financial position of the Scheme. A full valuation in accordance with section 224 of the Pensions Act 2004 was carried out as at 31 December 2008 by Pope Anderson LLP. At that date the market value of the Scheme's assets, excluding investments held by AVC providers, was £51.3m. The value of the Scheme's liabilities exceeded the value of the assets by £28.1m. The assets provided a level of cover of 65% of the liabilities. The valuation was based on the Attained Age method of funding to assess the accrued funding position of the Scheme and to derive the employer contribution levels. For the purpose of CABI’s accounts the Scheme’s 31 December 2008 valuation results were rolled forward to 31 December 2011 by the Scheme actuary. The pension liabilities were recalculated on the IAS19 basis using the projected unit method. CABI has been paying contributions in accordance with the schedule of contributions. The actuarial gains and losses recognised in the year is determined using the 10% corridor approach as permitted in the IAS19 standard. From 2013, the international accounting standard no longer allows the use of the corridor method with the consequence that the full value of the net asset or liability will then be disclosed in the statement of financial position. The net liability as at 31 December 2011 was calculated by the Scheme Actuary at £44.3m. All assets disclosed for purposes of IAS19 are bid values. As for the previous year’s accounting disclosures, we have included an estimate of expenses (death in service cost and administration expenses) within the service cost. An estimate of 3.5% of capped pensionable salaries has been used. We believe that this estimate of expenses accurately reflects the cost of running the scheme. It is worth noting that our assumption for expected return on assets is net of investment fees, and hence no further allowance has been made for investment expenses.
33
notes to the accounts for the year ended 31 december 2011 IAS 19: Retirement Benefit Schemes - Defined Benefit Schemes The principal actuarial assumptions used were as follows: i.
assumptions 2011 4.70% 3.10% 4.10% 3.10% 6.40% SAPS CMI1.0 % 25.00%
discount rate inflation salary increase future LPI pension increases expected return on assets mortality (base table) mortality (future improvements) commutation at retirement
2010 5.40% 3.30% 4.30% 3.30% 7.60% SAPS CMI 0.5% 0.00%
The life expectancies relating to the UK mortality assumptions quoted above are detailed in the table below: 2011 SAPS CMI 1.0% 26.5 28.0 29.0 30.6
life expectancy of a male currently aged 60 life expectancy of a male aged 60 in 20 years life expectancy of a female currently aged 60 life expectancy of a female aged 60 in 20 years
2010 SAPS CMI 0.5% 25.6 26.2 27.7 28.6
The expected return for cash holdings has been based on the long term gilt yields of 3.0%. For the targeted return funds each investment manager has an objective to outperform cash by a fixed amount each year. For the overall expected return assumption, we have taken a weighted average of these objectives (net of expenses) and incorporated the long term cash assumption of 3.0% per annum. The 2009 assumption had been based on a single investment manager’s objective of outperforming inflation by 5.0% (net of expenses). ii.
assets expected rate of return 2011
asset split
market value
2011
targeted return cash and other
6.4% 3.0%
99.2% 0.8%
2011 £’000 53,953 449
total market value of scheme assets
6.4%
100%
54,402
expected rate of return 2010
asset split
market value
2010
7.6% 4.2%
99.3% 0.7%
2010 £’000 55,096 369
7.6%
100%
55,465
The plan assets do not include any of CABI’s own financial instruments, nor any property occupied by, or other assets used by, CABI.
34
notes to the accounts for the year ended 31 december 2011 iii. results The amounts recognised in the statement of comprehensive income are as follows: 2011 £’000 current service cost 379 interest cost 4,713 expected return on assets (4,144) actuarial losses recognised in the period 1,551 total 2,499
2010 £’000 318 4,781 (4,531) 1,404 1,972
Changes in the present value of the defined benefit obligation, with the comparative disclosures from the previous year-end position, are as follows:
opening defined benefit obligation current service cost interest cost actuarial losses expenses contributions by scheme participants benefits paid closing defined benefit obligation
2011 £’000 (88,504) (379) (4,713) (7,916) 143 (476) 3,156 (98,689)
2010 £’000 (83,631) (318) (4,781) (2,411) 149 (500) 2,988 (88,504)
Changes in the fair value of scheme assets, again with the comparative disclosures from the previous year-end position, are as follows: 2010 2011 £’000 £’000 opening fair value of scheme assets 53,992 55,465 expected return 4,144 4,531 contributions by employer 1,254 1,268 contributions by scheme participants 476 500 expenses (143) (149) benefits paid (3,156) (2,988) actuarial losses (3,638) (1,689) closing fair value of plan assets 55,465 54,402 The amounts recognised in the statement of financial position arising from CABI’s obligations in respect of its defined benefit schemes are as follows:
opening (liability) / asset items in statement of comprehensive income. contributions to scheme by employer closing net (liability) / asset
2011 £’000 (924) (2,499) 1,254 (2,169)
2010 £’000 (220) (1,972) 1,268 (924)
35
notes to the accounts for the year ended 31 december 2011 CABI expects to contribute approximately £1.1m to its defined benefit plan in 2012. This includes an allowance for estimated expenses and insurance premiums during the year. iv.
history of gains / losses
benefit obligation scheme assets deficit experience gains on liabilities experience gains on assets
2011 £’000 (98,689) 54,402 (44,287)
2010 £’000 (88,504) 55,465 (33,039)
2009 £’000 (83,631) 53,992 (29,639)
2008 £’000 (59,536) 47,735 (11,801)
2007 £’000 (64,004) 56,588 (7,416)
0 (3,638)
0 (1,689)
(4,320) 4,914
0 (11,426)
(88) (231)
20. capital expenditure commitments Capital expenditure commitments outstanding at 31 December 2011 amount to £nil (2010: £nil). 21. provisions A provision of £257k has been made for restructuring (2010: £179k) related primarily to the outsourcing of fulfilment and distribution to Marston Book Services Ltd. 22. controlling party CABI is ultimately controlled by the Review Conference which as a body represents the member countries.
36
CABI Head office Nosworthy Way, Wallingford, Oxfordshire, OX10 8DE, UK T: +44 (0) 1491 832111, F: +44 (0) 1491 833508, E: corporate@cabi.org
KNOWLEDGE FOR LIFE