= fi TRAIDCRAFT Fighting poverty through trade TRAIDCRAFT EXCHANGE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 Registered charity number 1048752. Company number 03031674TRAIDCRAFT EXCHANGE fea REPORT OF THE TRUSTEES i. 4 TRacRart CONTENTS: PAGES Report of the Trustees, including: 1-18 Reference and Administrative Details 1 Overview 2-3 Structures, Principal Activities and Objectives 4-5 Traidcraft Exchange Traidcraft Ple Traidcraft Foundation Chair's Report 6 Strategic Report 7-10 Structure, Governance and Management n-7 Corporate Governance principles Board Structures Accountability and Audit Internal Control and Risk Management Remuneration Report Trustees’ Responsibilities for the Financial Statements 7-18 Auditors’ Report 19-20 Principal Accounting Policies 21-24 Statement of Financial Activities and income and Expenditure 25 Account Balance Sheet 26 Notes to the Financial Statements 27-46 The Trustees believe that it is right to account for the fulfilment of Traidcraft's mission within the context of its overall impact on stakeholders. In addition to these financial statements the Charity publishes (jointly with Traidcraft plc) an Impact and Performance Report (www.traidcraft.org.uk/impactreport).TRAIDCRAFT EXCHANGE A= REPORT OF THE TRUSTEES A TRAIDCRAFT REFERENCE AND ADMINISTRATIVE DETAILS TRAIDCRAFT BOARD MEMBERS ‘Trustees of Traidcraft Exchange Ram Gidodmal Chair Andy Biggs Chief Executive (appointed CEO May 2015, previously a Non Executive Director) Jenny Borden Liz Cotton Chair, Remuneration Committee Matt Edmundson Sarah Hughes David Neale Chair, Audit Committee Margaret Sentarnu Senior Independent Director and Foundation Director Mags Vaughan Chief Executive (resigned December 2014) Executive directors (attend Board meetings of Traidcraft Exchange) Larry Bush Marketing Director Simon Grant’ Finance Director and Company Secretary Joe Osman Sourcing Director Staff Director of Traidcraft ple (also attend Board meetings of Traidcraft Exchange) Tessa Bees AIDCRAFT. ATION TI ES Stephen Timms MP Chair Revd Dr Richard Higginson Rosemary Kempsell Revd Professor Michael Northcott David Nussbaum Liz Reynolds (resigned October 2014) None of the Executive Officers or the Staff Nominee has voting rights at the Board except for the Chief Executive, who is a Trustee. This is an exception agreed with the Charity Commission. No Trustee has an interest in any material contract, other than the Chief Executive who has an employment contract, to which the Charity is a party. PRINCIPAL PROFES: L_ ADVI: Auditors: Baker Tilly UK Audit LLP Bankers: HSBC Bank ple Principal legal advisers: Muckle LLP Traidcraft Exchange Ltd is a registered charity, number 1048752 and also a company limited by guarantee registered in England, number 03031674, Registered office: Kingsway, Gateshead, NET! ONE, UK Tel: +44 (0)191 4910591TRAIOCRAFT EXCHANGE a= REPORT OF THE TRUSTEES. 4 ‘TRAIDCRAFT ERVIEW Traidcraft is a Christian organisation dedicated to fighting poverty through trade since its foundation in 1979. Best known as a pioneer of the fair trade movement in the UK, our activities are in fact much wider, spanning the fields of trade and development and trade justice. Traidcraft believes that to achieve change we need to combine a range of activities: trading directly with producers, scaling up the learning from that activity (with a wider range of beneficiaries and a focus on local markets as well as international trade) and addressing the need for wider structural and policy change through modelling good business practices and mobilising consumers to influence government and corporate behaviour. To carry out these related activities we work through two financially and legally distinct entities - a trading company and a development charity - whose complementary activities combine to make our mission effective. Over the years we have demonstrated our ability to have impact and influence that far exceeds the scale of our activities, and have established ourselves as a global leader in making trade work for the poor. ‘The strategic framework within which we intend to operate over the period 201- 2020 is shown in the table below: ‘OUR VISION OUR GOALS ; 7 ae i Impiovedond | Gteaterdunly | Polidesend suslainable | andopporuniy | practices that Incomestorpeor! forposrnecnlerellectneedsof people | poormebale ‘OUR MISSION Troldereft ahs poverty trough tad, ploneerng, prostkng ond ‘rometing epoovches to trade thet help poor people nthe deseloplg veld tronsform thee fives OURACTIVITIES —Taldualt —Tiakdem Talo Taeratt hleves _ploneersand —_loluences._enablos more. sustainable Tnnovates , governments peopleto Impactson approaches’ and——_supporttade marginalised —“Yofairand —businestesto_justiceand producers athiesltatla—havomore—_cnvironmentat Uhroughour positive responsibilty ‘adingand Impsctson —_asour ‘suppor peorpeople customersand setviles ‘supportersTRAIDCRAFT EXCHANGE sm REPORT OF THE TRUSTEES a TRAIDCRAFT In carrying out our work we are guided by Traidcraft’s Foundation Principles, These are briefly summarised below, and may be found in full on our website. Traidcraft is a Christian response to poverty Our mission is fighting poverty through trade We respect all people and the environment We abide by and promote fair business practices + We strive to be transparent and accountable Traidcraft works with and for people of all faiths and none, recognising that as a Christian organisation we have a particular responsibility to mobilise the Christian community to work for justice. in trade, and seeking to reflect Christian values in our principles and practices. We see fair trade as a practical tool to demonstrate how trade can be carried out in ways that benefit small-scale producers, and as a means of encouraging companies to improve their sourcing practices by providing a ‘standard of excellence and enabling consumers to send powerful signals of their desire to see more ethical practices being used, However, we do not limit ourselves to seeking to promote fair trade, and seek to encourage alll trading approaches that will have a positive impact on reducing poverty.TRAIDCRAFT EXCHANGE | fe REPORT OF THE TRUSTEES a TRAIDCRAFT STRU PRINCIPAL IWITIES AND OBJ S Traidcraft works through three closely-linked entities, sharing the same values and mission. Senior management and certain other staff roles work across Traidcraft Exchange and Traidcraft pic, and the two organisations have the same non-executive directors/trustees, Both these operational arms work within the oversight and guidance of the Traidcraft Foundation. 1 ET CHAN: Traidcraft’s international development charity builds on the experience of our trading company to promote trade justice and develop approaches to trade that help small- scale farmers and enterprises work their way out of poverty. Alongside support in building sustainable and diversified businesses with better linkages to markets, we help small farmers adapt to climate change and contribute to food security through improved productivity and serving local markets. In 2015 the total income of Traidcraft Exchange amounted to £3.3 million. Its work is currently focused on two regions: East Africa and South Asia. Our regional offices in Kenya, India and:Bangladesh implement development projects in conjunction with local partner organisations, and seek to build up local expertise in trade and development. Our policy and advocacy programme influences policy-makers in the UK, the European Union and within large companies by promoting trade justice and responsible and ethical corporate practices. We also advocate use of aid for trade funding programmes in ways that will directly benefit smaller-scale producers, and seek to promote the effective development of thinking and practice within the global fair trade movement. The work of Traidcraft Exchange is supported by donations from individuals and grants from funding institutions, trusts and foundations. it does not receive funding from Traidcraft ple, which reinvests any profits to grow the scale ‘and impact of its trading activities, although from time. to time supporters and business partners fund specific producer support activities, TRAIDCRAFT PLC Traidcraft ple is the largest dedicated fair trade company in the UK, and one of the largest fair trade organisations in the world. in 2015 the sales of Traidcraft ple products, including licenced products of £2.4 million, amounted to £14. million. It is a trading company, owned by around §,200 individual shareholders who have invested their capital in order to deliver social impact rather than to maximise their financial return,TRAIDCRAFT EXCHANGE, S= REPORT OF THE TRUSTEES 4 TRAIDCRAFT Unlike most commercial companies that sell Fairtrade-marked products, Traidcraft plc is dedicated to applying fair trade principles across its product range and focuses on sourcing from more marginalized and smaller-scale producer groups. It is notable for its track record in pioneering new approaches and sectors in fair trade. TRAIDCRAFT FOUNDATION The Traidcraft Foundation is the Founder Member of Traidcraft Exchange, and appoints the trustees of Traidcraft Exchange. It also holds the Guardian Share in Traidcraft ple, which gives a range of rights including 2 veto over appointments to the Board of Traidcraft pic. The Foundation uses these powers and the right of consultation on key strategic issues to protect and advance the vision, mission and Christian identity of Traidcraft, By engaging with the Boards and reviewing Traidcraft’s impact reports the Foundation encourages all parts of Traidcraft to carry forward its work in accordance with the Traidcraft Foundation Principles. The more detached perspective of Foundation trustees allows them to challenge the organisation to reflect on new ways of furthering its mission, A Deed of Mutual Covenant exists between the trustees of the Traidcraft Foundation, Traidcraft Exchange and Traidcraft ple. By this Deed, dated December 2002, the parties agree to uphold Traideraft's Foundation Principles, and set out how they will work in relation to each other.TRAIDCRAFT EXCHANGE A= REPORT OF THE TRUSTEES a | Maperaer AIR'S REPORT We have reported a small surplus for the year, which.means that our reserves are ina healthy position to support our charitable activity. Income was at a very similar level to 2014, with the high level of prior year legacy income replaced by a phenomenal response to’ our ‘Fair Necessities’ public fundraising appeal, which ran from January 2015 until just after the year end. Despite @ small drop in project activity and expenditure, our development projects are working with over 678,000 beneficiaries - well above our 500,000 target and 26% up on prior year. This year we have focused ‘on improving the quality and effectiveness of our partnerships and project management. As a result, most of our projects are progressing well and remain on track to deliver positive outcomes. We continue to focus on the economic empowerment of women as change agents in building sustainable enterprises and delivering a broader impact on poverty alleviation in their communities. Our policy and campaign in work continues to succeed. During the year, we launched our Justice Campaign, highlighting the need to hold UK businesses to account for human rights abuses overseas. We've had a fantastic response from our campaigners lobbying MPs and party leaders and we look forward to launching the next phase of the campaign in autumn 2015. The fundraising environment for development remains challenging, but we are confident of our ability to diversify our funding sources and to secure future project support. During the year we began to develop different models of engagement, including working alongside impact investment consortia. | would like to thank our supporters for their continued support. We are very grateful for everything you do. : Ram Gidoomal Chair 17 July 2015TRAIDCRAFT EXCHANGE A= REPORT OF THE TRUSTEES A TRAIDCRAFT STRATEGIC REPORT The main headlines from the year are summarised as follows * The number of beneficiaries reached in our current projects is 678,000. Others | will benefit indirectly from our work within particular sectors and our overarching policy and campaigning work. This exceeds our target of 500,000. * Total income for the charity decreased from £3.4 million to £33 million, a 2% decline. [£°000s [2014-15 [Incoming res: [3378 * Public donations rose by 14% year on year due to the success of our Fair Necessities appeal whilst legacy income fell from last year's record total. * The level of donations from the general public, net of costs, decreased with the big drop in legacy income and the increased in fundraising costs relating to the Fair Necessities appeal. The cost: income ratio for public fundraising decreased from 1: 5.6 to 1: 4:8, Excluding legacy income the cost to income ratio for public fundraising dropped slightly from 1:4.5 to 1: 4.4. These figures compare favourably with charity sector averages of 1: 4.0. £'000s 2012-13 2013-14 2014-15. Donations 1.221 1197 1364 Legacies 67 303 7 Total public Fundraising income 1,288 1,500, 1491 Direct Fundraising Costs 272 269 3H Net Income 41,016 1,231 1,180 activity. * Charitable expenditure was 3% down year on year following lower project £0005. 2012-13, 201314 2014-15 Charitable expenditure 2710 2752 657 2014-15 was a successful year for Programme Funding - new grants secured were close to our target. * Total restricted funds raised in 2014-15 from institutional (including statutory, charities, trusts) and major donor sources were £2.4 million against a target of £25 million. This is made up of £2.3 million from statutory sources and £100,000 from Trusts and Major Donors. * Total unrestricted funds raised from trusts and charities in 2014-15 were £149,000 against a target £25,000.TRAIDCRAFT EXCHANGE A= REPORT OF THE TRUSTEES 4 reapers 2012-13, __ 2013-14 2014-15 Restricted Income Raised (£ millions) 24m 4.2m 24m Unrestricted Income Raised (F’000s) | ___ 66. 37 ist + Our project portfolio has been implemented successfully with most projects on track to achieve their objectives. © We continued to collaborate with Traidcraft plc on a joint Producer Support and Innovation programme, and this approach is proving successful. * We started the year with reserves in a healthy position and reserves as at March 2015 remain well above the target minimum set by the Board of £507,000. £000s| 2012-13 [2013-14 | 2014-15 Unrestricted surplus/(deficit)* Gn 7 187 Unrestricted reserves - General 765 793 731 “before other recognised gains and losses (defined benefit pension scheme and exchange rate movements) The principal risks identified by the Board continue to be a decline in restricted and unrestricted donations and an increase in “match funding” required to be raised as institutional donors fund a lower proportion of the true costs of each project. Our two principal donors remain the UK government and the European Commission and so we remain vulnerable to cutbacks in aid budgets. Institutional fundraising targets funding for a few large projects and therefore income from this source tends to fluctuate greatly between financial years depends how many funding bids we win ina particular 12 month period. Our response to these risks continues to be to seek to diversify sources of funding. Further we aim to keep reserves at adequate levels to cope with short-term fluctuations in income. Other risks identified related to project implementation. One is country risk, with the four countries in which we operate in all experiencing varying degrees of insecurity which impacts project implementation. A further risk to implementing successful projects relates to the partner organisations we work with. By working with partners in country we help build their capacity, however some partners have weak financial control systems which means expenditure needs to be closely monitored. Internal contral procedures are periodically reviewed to ensure they are working correctly. Our future priorities remain to deliver growth in our scale and impact through the implementation and development of our project and policy programmes and effective fund-raising. Our aims and activities fully reflect the purposes that Traidcraft Exchange was set up to further. The trustees have referred to the guidance contained in the Charity Commission's general guidance on public benefit when reviewing our aims and objectives and in planning our future activities. In particular, the trustees have considered how planned activities will contribute to the aims and objectives they have set. We believe our work and impact are as important as ever in the fight against global poverty.TRAIDCRAFT EXCHANGE Seon REPORT OF THE TRUSTEES A i TRAIDCRAFT RESERVES POLICY The trustees consider it prudent that Traidcraft Exchange should seek to maintain unrestricted reserves at a level sufficient: a. To meet matched funding requirements. Our minimum level is that we should hold 50% of the requirement for contracts to be implemented over the next 12 months. The maximum acceptable level would be to cover 100% of matched funding required for contracts to be implemented over the next 12 months. b. To cover a minimum of three months and a maximum of four months budgeted staff, overheads and fundraising costs; c. To cover pension liabilities; a range of between @ minimum of one year's contributions and a maximum of 100% of the liability is recommended. When calculating unrestricted reserves, fixed assets and investments are excluded due to their illiquid nature. The policy and target range of reserves are monitored and reviewed annually during the budget approval process to reflect risks and changes in income, financial obligations and expenditure. The target range for general unrestricted reserves, excluding pension reserves, set for 2014/15 was £560,000 - £1,120,000, and for 2018/16 it is £507,000 - £1,031,000. At 31 March 2015 unrestricted reserves (excluding fixed assets, investments and pension deficit) reserves, stood at £670,000. We excluded the pension reserves as this is a long term liability and instead set reserves to cover a minimum of one year’s contribution into the scheme GOING CONCERN After making enquiries, the trustees have a reasonable expectation that Traidcraft Exchange has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements. In view of the pressure on fundraising, the trustees are aware of the general concern affecting the assessment of the going concern basis for all charities and have therefore taken particular care in reviewing the going concern basis. When reviewing their decision they have taken the following factors into account: . - Traidcraft Exchange prepares an annual cashflow forecast as part of its budgeting process. The cashflow forecast is monitored on a monthly basis. Cashflow projections for the year following approval of these financial statements show. that the Charity will have adequate funds to meet its liabilities as they fall due ~ As at 31 March 2015 Traidcraft Exchange has unrestricted reserves (excluding fixed asset, investments and the pension deficit), of £670,000. Our reserves policy sets the target minimum reserve level at £507,000. The trustees feel theTRAIDCRAFT EXCHANGE > REPORT OF THE TRUSTEES i) TRAIDCRAFT Charity has adequate reserves at the year end to support its ongoing operations and this view is supported by the cash flow projections, - Traideraft Exchange has set an achievable budget for the year 2015/16 and expects to post a small deficit which would reduce reserves to £605,000. This is above our minimum target level for reserves, Traidcraft Exchange has not encountered any difficulty in paying its trade creditors within agreed payment terms, CREDITOR PAYMENTS. Traidcraft’s policy is to pay invoices in accordance with terms agreed in advance with suppliers, or more quickly. Agreed payment terms are typically 30 days. Using the creditors outstanding at the year end creditor days stood at 41 days (2018: 30 days). This increase was due to one large invoice received in March which was not due for payment by 31 March 2018.TRAIDCRAFT EXCHANGE > REPORT OF THE TRUSTEES i TRAIDCRAFT STRUCTURES, GOVERNANCE AND MANAGEMENT Traidcraft Exchange's principal objectives as defined in its governance documents are: «The relief of poverty through providing training (including training in business skills) and information (including information on marketing) for producers, suppliers and trading partners in Developing Countries; * The promotion for the benefit of the public of studies in economic, political, social, technical and theological subjects to raise awareness about Issues arising from national and international trading practices and the benefits of trading fairly; *_ The promotion of other purposes that are charitable within the law of England and Wales in Developing Countries; and «+ The advancement of the Christian religion by commending that religion to persons in Developing Countries and elsewhere by pursuing the objects set out [above}. The Articles of Association of Traidcraft Exchange were updated in 2011. CORPORATE GOVERNANCE PRINCIPLES Traidcraft seeks to apply the highest standards of corporate governance. We aim to follow the UK Corporate Governance Code (a reporting ‘code for London Stock Exchange listed companies, "the Code"), compliance with this Code is voluntary rather than required. Traidcraft does not comply with the recommendation that performance related pay should form a significant proportion of the Executive Directors’ remuneration. Given ‘our values-based nature and mission, the Board does not believe that this approach would be appropriate for Traidcraft. Indeed, we believe it is important to model an organisation in which senior staff are not remunerated disproportionately to the benefits gained by other stakeholders. Directors need to stand for re-election at least once every three years. The Code requires directors of FTSES5O companies to stand for annual re-election, but Traidcraft does not consider this to be appropriate for an organisation of our size. In keeping with one of the main principles of the Code, the Board undertakes a formal annual appraisal both of its performance and that of the Chair. Structured surveys were submitted by all Board members in May 2015, and led to detailed discussions on how the Board could become more effective, 0"TRAIDCRAFT EXCHANGE REPORT OF THE TRUSTEES TRAIDCRAFT BOARD STRUCTURES Operation of the Board and Foundation Traidcraft’s Board is responsible for approving Traidcraft’s policy and strategy. It meets regularly during the year and has a schedule of matters specifically reserved to it for decision. The management team supplies the Board with appropriate and timely information and the directors are free'to seek any further information they consider necessary. Alll directors have access to advice from the Company Secretary and independent professionals at the Charity’s expense. Training is available for new directors and other directors as necessary. There are four sub-committees of the Board: the Nominations Committee, the Finance Committee, the Audit Committee and the Remuneration Committee. Board membership, attendance and interests * Board membership All directors are subject to re-election at least every three years, except the Foundation Director (who is appointed by the Traidcraft Foundation for a three year term). The Board of Traidcraft Exchange consists of seven non-executive directors, together with the chief executive. The other executive directors and the Staff Director attend all meetings, but are not trustees and therefore do not vote. Directors and trustees in office during the year are listed on page 1 * Nominations Committee Traidcraft has a Nominations Committee which identifies and proposes candidates for the Board of Traidcraft Exchange. Membership of the Nominations Committee was as follows: * Stephen Timms MP - Chair * Ram Gidoomal * Margaret Sentamu Jenny Borden was co-opted onto the Nominations Committee on a temporary basis to assist in the recruitment of a new CEO, © Board officers Margaret Sentamu has been nominated by the Board as the Senior Independent Director, and the person whom any stakeholder can contact about an issue that they do not feel able to raise with the management, Chief Executive or Chair, »TRAIDCRAFT EXCHANGE Ae REPORT OF THE TRUSTEES A TRAIDCRAFT * Changes in membership No new non-executive directors joined the Board in the year, Mags Vaughan, who was CEO, left Traidcraft in December 2014. Andy Biggs, who was previously a Non Executive Director, was appointed CEO with effect from 1* May 2015. The only change to Traidcraft Foundation trustees during the year was the sad passing of Liz Reynolds in October 2014. * Attendance AGM [Board [Finance [Audit [Remun. | Nomin Ctee |Ctee | Cte Andy Biggs vi 6/6 10/10 3/3 Jenny Borden ”_| 6/6 3/3 273 Liz Cotton al 6/6 Ee [3/3 Matt Edmundson Vv 6/6 3/3 ‘Ram Gidoomal VA 6/6 i0/i0 3B Sarah Hughes Vi é/e | David Neale vA 6/6 |. 7B 33 Margaret Sentamu [71 6/6 7 8 Mags Vaughan iA 5/5 : ACCOUNTABILITY AND AUDIT Finance Committee The Finance Committee reviews the financial performance of Traideraft Exchange monthly, usually by teleconference, examining the management accounts in more detail than is possible at full Board meetings. Minutes are distributed to all Board members after each committee meeting, and are formally presented to the following Board meeting, Membership of the Committee is as follows: * Ram Gidoomal - Chair * Andy Biggs «Simon Grant + Charlotte Timson (attends quarterly for review of Traidcraft Exchange programme expenditure) Audit Committee and Auditors Membership of the Audit Committee is as follows: * David Neale Chair * Jenny BordenTRAIDCRAFT EXCHANGE Sem REPORT OF THE TRUSTEES i TRAIDCRAFT * Sarah Hughes (joined February 2015) * Andy Biggs (Chair until resignation in March 2015) The Audit Committee met three times during the year. All current.and previous members of the Audit Committee are non-executive directors of both companies. The terms of reference of the Committee include setting the scope and reviewing the results of the external statutory audit, The Committee also oversees the audit of the Traidcraft’s. Social Accounts, The Committee reviews the independence and objectivity of the external auditors. This includes reviewing the nature and extent of non-audit services supplied by the external auditors to Traidcraft, seeking to balance objectivity and value for money. Baker Tilly Tax and Accounting Limited carried out the audit of several grant claims made during the year which were required by institutional donors. The Committee does not believe this affects their objectivity but instead reinforces their understanding of the Charity. The audit of the financial accounts was last re-tendered in 2009. The Audit Committee and the Board reviewed responses to the tender and based on service quality, value for money and knowledge of Traidcraft, Baker Tilly UK Audit LLP were reappointed on a three year contract. At the end of that contract the Board decided to reappoint Baker Tilly and have agreed a fixed fee for a further three years ending in 2015. Baker Tilly UK Audit LLP have been Traidcraft’s auditors since the 2002/03 financial year following the transfer of business from Grant Thornton. We believe auditor independence can be adequately maintained by reviewing the independence ‘of the engagement partner on a regular basis. The audit partner last changed in 2008. The Audit Committee have agreed with Baker Tilly that a new audit partner and manager will be appointed for the 2016 audit. A resolution to reappoint Baker Tilly UK Audit LLP as auditors will be proposed to the members of the Company at the Annual General Meeting scheduled for Nl September 2015. INTERNAL CONTROL AND RISK MANAGEMENT The Board is responsible for Traidcraft’s system of internal control and for reviewing its effectiveness. Such a system is designed to manage, but not eliminate, the risk of failure to achieve Traidcraft's objectives, There are inherent limitations in any control system and accordingly even the most effective systems can only provide reasonable, and not absolute, assurance against material mis-statement or loss. Management, on’ behalf of the Board, ensures the operation and effectiveness of Traidcraft's system of internal financial controls by the following means: * Control environment - creating an organisational structure with clearly defined responsibilities for internal financial control + Operating controls - each department maintains financial controls and procedures appropriate to its own business environment conforming to ‘overall standards and guidelines.TRAIDCRAFT EXCHANGE te REPORT OF THE TRUSTEES A TRAIDCRAFT * Financial reporting ~ implementing comprehensive management reporting disciplines which involve the preparation of annual budgets by all departments. The budgets are reviewed by management and passed to the Board for approval, and financial performance against budget is monitored by the Finance Committee, with minutes and monthly management accounts tabled at Board meetings. Traidcraft does not have a formal internal audit function though the Finance Manager carries out periodic internal financial reviews of overseas offices and partners. The Board periodically reviews the need for a formal internal audit function. The current conclusion is that the scale and diversity of our operations do not require or justify the cost of establishing an internal audit function. The Board, through the Audit Committee; will keep this decision under annual review. Traidcraft has established the procedures necessary to implement the guidance issued by the Financial Reporting Council. In addressing the concept of Risk Management in this way the Board is complying with legal requirement contained in the Charities (Accounts and Reports) Regulations 2008 that ‘charity trustees give consideration to the major risks to which the charity is exposed and satisfy themselves that systems or procedures are established in order to manage those risks, The Board annually reviews and updates the Risk Register, covering all aspects of the Company's business and its operations, including management information systems. The last full review of the Register was undertaken in November 2014 Responsibility for managing the risks has been allocated within the executive team and, where appropriate, actions needed have been built into departmental action plans. The gross (before internal controls) and net (after internal controls) level of each risk are assessed through a rating scale for impact and likelihood; favourable and adverse trends are noted and the degree to which agreed control actions have been implemented is assessed. Following this review risks are rated by a traffic light system of red, amber and green, Areas currently identified as being of most concern have been included in the Trustees’ report. REMUNERATION REPORT i Remuneration Committee and Traidcraft remuneration policy Membership of Traidcraft’s Remuneration Committee is as follows: * Liz Cotton * Matt Edmundson * David Neale 6TRAIDCRAFT EXCHANGE sm REPORT OF THE TRUSTEES (| TRAIDCRAFT ‘The Remuneration Committee has responsibility for making recommendations to the Board on Traidcraft's general policy on executive directors’ remuneration and determines the specific package for individual executive directors. It carries out these aspects of Traidcraft’s remuneration policy on behalf of the Board, All members are non-executive directors, None of them has any personal financial interest in the matters to be decided, potential conflicts of interest arising from cross-directorships, or any day-to-day involvement in running the business. The Chair of the Board is usually invited to attend meetings. The Committee meets at least once per year. As well as considering conditions in Traidcraft as a whole, it uses external data to set the context for its deliberations and takes into account Traideraft's position relative to other organisations and is aware of what these are paying. It looks particularly closely at other charitable organisations in » assessing appropriate levels of remuneration for Traidcraft executives. The Committee consults the Chief Executive, considers individual performance against ‘objectives and internal relativities within the executive team and in relation to other Traidcraft staff. It has access to administrative support and professional advice from Traidcraft’s Head of Human Resources, and obtains independent professional advice from outside Traidcraft. The policy of the Board is to provide executive remuneration packages that will attract, motivate and retain directors of the calibre necessary to maintain Traidcraft’s position and to ensure that it meets its various objectives. It aims to provide sufficient levels of remuneration to do this, but to avoid paying more than is necessary. Traidcraft does not believe that performance-related pay is necessary or desirable for motivating its executive team, although the Committee has the discretion to award small bonuses for exceptional performance (as is the case for other staff). Executive director remuneration The Board recognises that directors’ remuneration is of legitimate concern to shareholders and is cornmitted to following current best practice. Traidcraft operates within a competitive environment that is subject to on-going, change. Its performance depends on the individual contributions of the directors and members of staff and it believes in rewarding vision and innovation. Following a pay freeze for all staff salaries in the 2011/12 and 2012/13 financial years, the Board awarded all staff, including executive directors a cost of living increase of 1.5% with effect from I* April 2014. In addition following a full review of salaries and a benchmarking exercise staff who were being paid below their new benchmark received at least 50% of the difference between their salary (after the 1.5% cost of living Increase) and their new benchmark with effect April 2014 . The majority of the executive directors received benchmark adjustments. The average pay increment (including the 1.5% cost of living increase) awarded to executive directors in April 2014 was 3.7%. No pay increases have been awarded with effect from 1 April 2015, 16TRAIDCRAFT EXCHANGE REPORT OF THE TRUSTEES TRAIDCRAFT Executive directors are entitled to participate in the same pension arrangements as ‘other UK staff, This involves 2 percentage (7.5%) of their basic annual salary being paid by Traidcraft to the Traidcraft Group Personal Pension Scheme, Staff are required to contribute at least 3% of their salaries to the same scheme. All other benefits received by executive directors (paid holidays, sickness benefit, pension etc) are on the same basis as for all other Traidcraft staff employed in the UK. Non-Executive Trustees Non-Executive Trustees of Traidcraft Exchange receive no payment in relation to their role as Trustees of the Charity, Travelling and other expenses are reimbursed Two trustees (Jenny Borden and Andy Biggs) other than Mags Vaughan, the Chief Executive, received remuneration from the Charity during the year. Mags Vaughan's resigned in December 2014. Whilst Traidcraft sought to recruit a new CEO, Jenny Borden and Andy Biggs provided consultancy support to the Charity. Up to 31 March Jenny Borden was paid £2,640 and Andy Biggs was paid £2,016 along with expenses of £168 and £31 respectively. TRUSTEES’ RESPONSIBILITIES FOR INANCIAL STATEMENTS The following statement, which should be read in conjunction with the statement of auditors’ responsibilities set out in the auditors’ report, is made with a view to distinguishing the respective responsibilities of the Trustees and the auditors in relation to the financial statements, The Trustees (who are also. directors of Traidcraft Exchange for the purpose of company law) are responsible for preparing the Trustees’ Annual Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), Company law requires the trustees to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the charitable company and of the incoming resources and application of resources, including the incorne and expenditure, of the charitable company for that period. In preparing these financial statements, the trustees are required to: select suitable accounting policies and then apply them consistently; ‘observe the methods and principles in the Charity SORP; make judgements and estimates that are reasonable and prudent; state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and * prepare the financial statements on the going .concern basis unless it is inappropriate to presume that the charitable company will continue in business. The trustees are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the charitable companyTRAIDCRAFT EXCHANGE eon REPORT OF THE TRUSTEES | TRAIDCRAFT ‘and enable them to ensure that the financial statements comply with the Company's Act 2006, They are also responsible for safeguarding the assets of the charitable company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities, In so far as the trustees are aware: ‘* there is no relevant audit information of which the charitable company’s auditor is unaware; and «the trustees have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information. The trustees are responsible for the maintenance and integrity of the corporate and financial information included on the charitable company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. STATEMENT AS TO DISCLOSURE OF INFORMATION TQ THE AUDITORS The Trustees who were in office on the date of approval of these financial statements have confirmed, as far as they are aware, that there is no relevant audit information ‘of which the auditors are unaware. Each of the Trustees have confirmed that they have taken all the steps that they ought to have taken as Trustees in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor, AUDITORS A resolution to reappoint Baker Tilly UK Audit LLP as auditors will be proposed at the Annual General Meeting. The report of the Trustees was approved on 17" July 2015 and signed on their behalf by Ram Gidoomal Chair 8TRAIDCRAFT EXCHANGE Ae AUDITORS’ REPORT i TRAIDCRAFT INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF TRAIDCRAFT EXCHANGE FOR YEAR ENDED 31 MARCH 2015, We have audited the financial statements of Traidcraft Exchange for the year ended 31 March 2015 on pages 21 to 46, The financial reporting framework that has been applied in their preparation is applicable Iaw and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the charitable 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 charitable 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 charitable company and the charitable company's members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of trustees and auditor As explained more fully in the Statement of Trustees’ responsibilities set out on pages 17 and 18, the Trustees (who are also the directors of the company for the purposes of company law) 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) Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at www fre.ora.uk/auditscopeukprivate. Opinion on financial statements In our opinion the financial statements: = give a true and fair view of the state of the charitable company's affairs as at 31 March 2015 and of its Incoming resources and application of resources, including its income and expenditure, for the year then ended; = have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and = have been prepared in accordance with the Companies Act 2006. Opinion on other requirement of the Companies Act 2006 In our opinion the information given in the Trustees’ Report and the incorporated Strategic Report for the: financial year for which the financial statements are prepared is consistent with the financial statements,TRAIDCRAFT EXCHANGE aT AUDITORS’ REPORT TRAIDCRAFT INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF TRAIDCRAFT EXCHANGE FOR YEAR ENDED 31 MARCH 2015 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: - the charity has not kept adequate accounting records, 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 Trustees remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit CLAIRE LEECE (Senior Statutory Auditor) For and on behalf of BAKER TILLY UK AUDIT LLP, Statutory Auditor Chartered Accountants 1St James’ Gate Newcastle upon Tyne NEI 4AD 20TRAIDCRAFT EXCHANGE Ae PRINCIPAL ACCOUNTING POLICIES é TRAIDCRAFT BASIS OF PREPARATION The financial statements have been prepared in accordance with applicable United Kingdom accounting standards under the historical cost convention, with the exception of investments which are shown at market value, the Statement of Recommended Practice (SORP 2005), Accounting and Reporting by Charities and the Companies Act 2006. The Trustees have reviewed the accounting policies in accordance with Financial Reporting Standard No 18 - Accounting Policies, and consider them to be the most appropriate policies and estimation techniques. Traideraft Exchange has taken advantage of the exemption from preparing a cash flow statement as conferred by Financial Reporting Standard No.1 (Revised 1996) on the grounds that it qualifies as a small company under the Companies Act 2006. The principal accounting policies of the Charity have remained unchanged from the previous year. After making enquiries, the Board of Trustees has a reasonable expectation that the Charity has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements. Refer to the Trustees’ Report for further details. EUND ACCOUNTING Unrestricted funds are funds that are available for use at the discretion of the trustees in furtherance of the general objectives of the charity, Designated funds comprise unrestricted funds that have been put aside at the discretion of the trustees for a particular purpose. Restricted funds are funds which are to be used in accordance with specific restrictions imposed by donors or which have been raised by the charity for particular purposes, The aim and use of each restricted fund is set out in the notes to the financial statements. INCOMING RESOURCES All incoming resources becoming available to the charity during the year are recognised in the Statement of Financial Activities. Income is deferred where unrestricted incoming resources are received in advance of the service being provided. No incoming resources are stated net of expenditure Institutional grants, where related to performance and specific deliverables, are accounted for as the Charity earns the right to consideration by its performance Where income is received in advance of performance its recognition is deferred and included in creditors. Where entitlement occurs before income is received the incorne is accrued and included in debtors. aTRAIDCRAFT EXCHANGE Ae PRINCIPAL ACCOUNTING POLICIES A ‘TRAIDCRAFT Listed shares donated during the year are included in donations and valued at market value. Unlisted shares donated during the year are included in donations and valued at market value. Legacies are recognised as income, in the accounting period, once the Charity has been informed of the amount of a bequest and it can be measured with sufficient reliability. Investment income is recognised on a receivable basis. The total incoming resources for the year and the movement on Restricted Funds are detailed in the Statement of Financial Activities. RESOURCES EXPENDED. Expenditure is brought into the financial statements as it is incurred. Overheads (including management and administration costs) and other non-specific expenditure are allocated between charitable activities and generating funds in proportion to the number of staff employed within each area. This is shown as “overhead allocation” in the notes and apportioned on the following basis: Fundraising 35% International Programmes 33% Policy Unit 32% Costs of generating funds are those incurred in seeking voluntary income and grants from institutional sources and do not include the costs of disseminating information in support of the charitable activities. These costs include the salaries, direct expenditure and overhead costs of the staff who promote fundraising, Costs of charitable activities represent the salaries and overhead costs of staff directly working in International Programmes and the Policy Unit together with expenditure directly attributable to these activities. Governance costs are the costs associated with the governance arrangements of the Charity which relate to the general running of the Charity as opposed to those costs associated with fundraising or charitable activity. Included within this category are the costs associated with the strategic as opposed to day-to-day management of the Charity’s activities. Support costs represent the salaries of staff directly providing support to International Programmes and the Policy Unit and have been allocated accordingly, Management and administration costs (referred to as ‘Overhead allocation’) represent the costs incurred by finance, IT and human resources attributable to the management of the Charity's assets and organisational administration. Inrecoverable VAT is charged as a cost to the Statement of Financial Activities. 22TRAIDCRAFT EXCHANGE te PRINCIPAL ACCOUNTING POLICIES. A ‘TRAIDCRAFT FOREIGN CURRENCIES Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are retranslated at the rates of exchange ruling at the balance sheet date or at an agreed contractual rate, FINANCIAL INSTRUMENTS Financial instruments are classified and accounted for. according to the substance of the contractual arrangement, as either financial assets, financial liabilities or equity instruments, An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. DEPRECIATI Depreciation is calculated to write down the cost less estirnated residual value over the useful economic lives of all tangible fixed assets by the straight-line method. A full year’s depreciation is charged in the year of acquisition. Only assets costing more than £500 are capitalised. The annual charges are based on Computer equipment 25% of cost per annum Motor vehicles 20% of cost per annum Office furniture 10% of cost per annum INVESTMENTS Unlisted investments are valued by the trustees as their best estimate of market value at the year-end, CONTRIBUTION TO PENS! For the defined contribution pension scheme, the pension costs charged to the Statement of Financial Activities represent the amount of the contributions payable in respect of the accounting period. For defined ‘benefit schemes the amount charged to the Statement of Financial Activities in respect of pension costs and other post retirement benefits is the estimated regular cost of providing the benefits accrued in the year, adjusted to reflect variations from that cost. The interest cost and expected return on assets are included within other finance costs. Actuarial gains and losses arising from new valuations and from updating valuations to the balance sheet date are recognised in the Statement of Financial Activities. Defined benefit schemes are funded, with the assets held separately from the group in separate trustee administered funds. Full actuarial valuations, by a professionally qualified actuary. are obtained at least every three years, and updated to reflect current conditions at each balance sheet date, The pension scheme assets are measured at fair value. The pension scheme liabilities are measured using the projected unit method and discounted at the current rate of return on a high quality corporate bond of equivalent term and currency. A pension scheme asset is 23TRAIDCRAFT EXCHANGE Se PRINCIPAL ACCOUNTING POLICIES A TRAIDCRAFT recognised on the balance sheet only fo the extent that the surplus may be recovered by reduced future contributions or to the extent that the trustees have agreed a refund from the scheme at the balance sheet date. A pension scheme liability is recognised to the extent that the group has a legal or constructive obligation to settle the liability. The administration costs of running the closed defined contribution scheme are charged to the Statement of Financial Activities, Further details are provided in the notes to the accounts. LEASED ASSETS Traidcraft Exchange only has operating leases and the payments made under them are charged to the profit and loss account on a straight-line basis over the lease term, TAXATION Traidcraft Exchange's charitable activities fall within the exemption afforded by section 505 of the Income Corporation Taxes Act 1988. Accordingly there is no provision in these accounts. 24TRAIDCRAFT EXCHANGE 2 STATEMENT OF FINANCIAL ACTIVITIES é AND INCOME AND EXPENDITURE ACCOUNT Unrestricted Restricted Total Total Note Funds Funds 2015 2014 £000 £000' £000 £000 INCOMING RESOURCES Incoming resources from generated funds: Voluntary income Donations from individuals 1 1,364 - 1364 497 Legacies 127 - 17 303 Trusts and charities 1 149 - 149 35 Investment income 2] 2 2 Incoming resources from charitable activity: Grants from institutional sources 1 : 1.698 1,698 1882 Other income 2 3 3 6 9 Other finance income 5 ea - 27 - Total Incoming Resources 1.672 7013373 RESOURCES EXPENDED. Cost of generating funds Voluntary income 3 405 = 405 386 Institutional sources 3 196 - 196 250 Charitable activities International programmes 4 537 1493 2,030 2,258 Policy Unit and campaigning 4 330 297627 494 Governance 7 7 - 7 20 Total Resources Expended 5 1,790) 408 Net incoming/(outgoing) resources before other recognised gains and losses a7, (a3) 38 20 ‘Other recognised gains and losses Realised (losses)/aains a - @ 69 Unrealised (losses) (64) - (64) (26) Actuarial (losses) on defined benefit, 6 (3) + 3) G2) pension scheme Net income/(deficit) for the year 49. a) _ (40y 3 Fund balances brought forward 809 151 960 929 Fund balances carried forward at 31 wu 858 62 920 ‘960 March 2018 There are no gains or losses during the year other than the net movement in funds of £40,000 All income and expenditure relates to continuing operations, The notes on pages 27 to 46 form part of these Financial Statements. 25TRAIDCRAFT EXCHANGE A= ‘TRAIDCRAFT Company Registration Number: 3031674, Charity Registration Number 1048752. Note 2015-2015, 2014 2014 £00 fooo £000 £000 0 Fixed assets Tangible w 32 30 investments 2 29 37 Gl 67 Current assets Debtors % 382 Cash at bank and in hand 1646 2,028 Creditors: amounts falling due within one-year Creditors “770 1135 Net current assets 859 893 Total assets less current liabilities 920 960 Defined benefit pension scheme liability 6 : 920 960 Funds and reserves Restricted funds 7 62 181 Unrestricted funds ~ Designated 7 7 6 Unrestricted funds ~ General 7 731 793 Unrestricted funds - Pension Reserve 7 : : Unrestricted - Total General 731 798 Total funds and reserves 920 360 The notes on pages 27 to 46 form part of these Financial Statements, ‘The financial statements were approved by the Trustees and authorised for issue on 17 July 2015 and are signed on their behalf by: Ram Gidoomal Chair %6> TRAIDCRAFT EXCHANGE - NOTES TO THE FINANCIAL STATEMENTS i ‘TRAIDCRAFT. For the year ended 31 March 2015 INCOMING RESOURCES 2015 2015 2015-2014 Unrestricted Restricted =» Total__~—Total Funds Funds Funds Funds £000 g000 £000 £000 Donations from Individuals Regular giving 337 : 337 396 Direct mail appeals 231 - 231 162 Fair Traders 148, - 148 2 Traidcraft plé customers/shareholders m6 : 16 m3 Community events 140 : 140 97 Challenge events 5 : 5 2 Tax reclaimed through Gift Aid 13 : 153 139 Miscellaneous 234 : 234 216 1.564 : 2018 204 Split of income £000 £000 UK 2,730 2,566 Rest of World 643 862 3.373 S428 2015 2014 £000 £000 Grants from Institutional Sources Restricted Restricted Government Bodies and Multilateral Department for International Development 562 873 European Community 658 798 Icco - 33 iFAD as) 5 rusts iti Benfield Motors Charitable Trust 6 6 Big Lottery Fund 172 202 Christian Aid 6 16 Comic Relief 209 126 Isle of Man Government 3 All We Can 16 : The Brillig Charitable Trust 10 " Women's World Day of Prayer 6 : The Ceniarth Foundation : 28 ‘Anonymous : 19 Grants under £10,000 50 60 1698 7882, 27Ae TRAIDCRAFT EXCHANGE - NOTES TO THE FINANCIAL STATEMENTS A For the year ended 31 March 2015 TRAIDCRAFT INCOMING RESOURCES (CONTINUED) Trusts and Charities Grants of £10,000 or more Grants between £1,000 and £10,000 Grants under €1,000 OTHER INCOME Miscellaneous 2018 2014 £000 £000 Unrestricted Unrestricted 100 20 43 10 6 4 149 EZ] 2015 2015 2015 2014 Unrestricted Restricted Total —_Totai Funds Funds Funds Funds £000 £000 £000 £000 3 3 6 9 Ses é 2 ‘The activities giving rise to other income are all carried out in furtherance of the objects of the Charity. COSTS OF GENERATING FUNDS. Direct salaries Travel and accommodation Other direct costs Overhead allocation 2015 2015 2015 2014 unrestricted Restricted Total Total Funds Funds Funds Funds £000 £000 £000 £000 239 239 289 1 1 3 192 192 128 169 169 216 6a 601 636 The total costs of generating funds excluding allocated overheads amounted to £432,000 and represented 11% (2014: 16%) of the total value of new money raised during the financial year. £3.9 was raised during the year comprising £1.5 raised by the Public Fundraising team and £2.4 in new grants was won by the Programme Funding team. Some of the funds raised by the Programme Funding team have not yet however been recagnised in the Statement of Financial ‘Activities, These are restricted funds that can only be recognised upon implementation of the project activities they are financing. 28a Ae TRAIDCRAFT EXCHANGE ~ NOTES TO THE FINANCIAL STATEMENTS 4 Teaoeart For the year ended 31 March 2015 CRRTRBTE RETWITIES nos 208 == 2015014 ueeaiton rents tama eer foo —-€000 == 0087000 Inerrational Programmes Direct salaries 236 246 482 41 Travel and accommodation n 14 84 Dirt prosrarnmo costs 163 ite ass Overhead allocation 121 158 150, oH —qen0- aa Policy Unit and Campaigning Direct storas wes u 189 Travel and accommodation 3 9 7 Direct programme costs 37 236 40 Gvernaad accaton 25 13 88 uo a 784 867, 1790. 2,657 2.752 RESOURCES EXPENDED Deedee Hea cee Be A ott Seated Total Total £000 £000 £000 £000 £000 £000 Costs of generating funds Voluntary income 124 - 187 94 405 386 rnsttaoral sours mite 38 88280 Charitable activities International 482 74 1,316 158 2,030 2,258 Botcyamicompaigning «WSS wT Governance Seed vv Total Resources Expended 920 87 1.798 470 3,275 3,408 29fe TRAIDCRAFT EXCHANGE - NOTES TO THE FINANCIAL STATEMENTS, [| For the year ended 31 March 2015 TRAIDCRAFT RESOURCES EXPENDED (CONTINUED) ‘Total resources expended inchid the following amounts: Depreciation Operating leases + land and buildings = other Auditor's remuneration + as auditors + for other services (Grant Audits) 2018 £000 6 2014 £000 % The fees charged by the auditors can be further analysed under the following headings for services rendered: Baker Tilly UK Audit LLP: Statutory Audit Baker Tilly Tax & Accounting Limited: Grant Audits DIRECT PROGRAMME COSTS Transfers to local partners Programme running costs Consultants in-country management costs Governance Reallocated to: Charitable activities Costs of generating funds Governance GOVERNANCE, Audit fees and related costs Internal audit costs Board meetings and overseas travel Included in Audit fees is the Social Audit fee of Eni (2014: £733), 2015 £000 7 10. 7 2015 £000 928 632 144 77 7 1738 11589 192 7 1798 2015 £000 Silo ow 2014 £000 7 4 ai 2014 £000 1180 378 160 83 20 7821 1673 128 20 7821 2014 £000 12 20 30>. TRAIDCRAFT EXCHANGE - NOTES TO THE FINANCIAL STATEMENTS. 4 ‘TRAIDCRAFT For the year ended 31 March 2015 ANALYSIS OF OVERHEAD ALLOCATION, Salacien Total Total go. q 2018 2014 y af off gag ae ag q £000 £000 £000 £000 £000 £000 £000 £000 Costs of generating funds Voluntary income 58 24 zs 7 2 94 7 Institutional sources 46 18 3 6 2 75 99 Charitable activities International pragionines 97 40 6 2 3 158150 Policy Unit and Campaigning 7 33 5 n 143 138 Total Rees ueee 292 oS 7 36 10 470 504 Expended Overheads have been apportioned based on the number of full time staff equivalents in each department, Management and administration salaries include the salaries of staff working in IT (£23,000), Finance (£85,000) HR (£27,000), Public Relations and Communications (£29,000) and general management (£93,000). It also includes recruitment, relocation, training and other staff costs. Support salaries include the salaries of employees directly supporting staff working in the Policy Unit and on International Prograrnmes. Office services include rent, insurance and general office running expenses. Office machinery and, consumables includes depreciation and non-capital office furniture, fittings and equipment. Financial services include bank charges, irrecoverable VAT and membership fees and subscriptions. There is also a charge of £1,187 (2014: £1,187) for Trustees Indemnity Insurance, PR & Comms is the cost of preparing communications for the Charity and includes the cost of trips to visit projects to provide reports to our supporters. 39 10 fo NOTES TO THE FINANCIAL STATEMENTS i TRAIDCRAFT TRAIDCRAFT EXCHANG! For the year ended 31 March 2015, STAFF COSTS AND RELATED EXPENDITURE 2018 2014 £000 £000 Salaries 736 790 Social security costs 55 68 Pension costs (excluding contributions to defined benefit 62 63 scheme - FRSI7) Subtotal: employment costs ass 921 Overseas salaries and staff costs 334 324 Recruitment and relocation 7 “4 Training and other staff costs 18 2 a2 One member of staff, the Chief Executive, earned an annualised salary of between £70,000 - £75,000 per annum during the year plus a pension contribution of 7.5%. This was paid by Traidcraft ple with 55% of the salary costs borne by Traidcraft Exchange. The costs of employing the senior management team, who work across both the Charity and Traidcraft ple including the executive officers, are shared between both companies in proportion to time spent. The average number of full-time equivalent employees in our UK and overseas offices during the year was: 2015 2014 No. No, International programmes, Policy Unit and support 38 28 Fundraising 7 10 Management and administration “5 6 a5 aa, TRANSACTIONS WITH TRUSTEES Mags Vaughan, the Chief Executive in the year, was paid by Traidcraft plc, with Traidcraft Exchange sharing a proportion of these costs. There are no trustees to whom retirement benefits are accruing under the defined benefit pension scheme. ‘Two trustees (Jenny Borden and Andy Biggs) other than Mags Vaughan, the Chief Executive, received remuneration from the Charity during the year. Mags Vaughan's resigned in December 2014. Whilst Traidcraft sought to recruit a new CEO, Jenny Borden end Andy Bigas provided consultancy support to the Charity. Up, to 31 March Jenny Borden was paid £2,640 and Andy Biggs was paid £2,016 along with expenses of £168 and £31 respectively. Total expenses paid to five (2014; five) of the Trustees amounted to £483 (2014: £906). These related to the costs of attendance at board and other meetings 32n 2 13 TRAIDCRAFT EXCHANGE - NOTES TO THE FINANCIAL STATEMENTS, A TRAIDCRAFT For the year ended 31 March 2015 TANGIBLE FIXED ASSETS 2015 2014 £000 £000 Furniture and equipment Cost U1 April 2014 7 160 ‘Additions a 7 Disposals (20) At 31 March 2015 17 i Depreciation At] April 2014 aa 128 Less depreciation on disposals an : Charge for year 16 8 At 31 March 2015 140, ia Net Book Value at 31 March 2015 32 30 Net Book Value at 31 March 2014 30 32 INVESTMENTS 2015 2014 £000 £000 At) April 2014 37 43 ‘Additions in the year 5 10 Disposals a @Q) Change in valuation a2) a4) Market value at 31 March 2015 29 37, Cost : The investments represent shares in Traidcraft plc which are not listed on any stock exchange and which were donated to Traidcraft Exchange by supporters. The shares were valued by the trustees as at $1 March 2015. The Trustees intend to sell these shares once their liquidity improves. Due to the illiquid nature of these shares the Trustees believe it is appropriate to classify them as a fixed asset investment DEBTORS . 2015 2014 £000 £000 VAT receivable 10 Accrued income 176 318 Other debtors 64 56 250 382 3315 ae TRAIDCRAFT EXCHANGE - NOTES TO THE FINANCIAL STATEMENTS i TRAIDCRAFT For the year ended 31 March 2015 CREDITORS: amounts falling due within one year 2015 2014 £000 £000 Supporters loans 3 3 Trade creditors 50 27 Accrued expenses and deferred income 708 1,082 Traidcraft ple s 7 Traidcraft Foundation 3 5 Other creditors 1 1 770. SS Deferred income: 2018 2014 £000 £000 Brought forward 796 288 Deferred 372 745 Released (639) (237) Carried forward 23, 736 Deferred incame is funds received from Institutional Donors that have not been spent at the year end. It will be spent on planned future project activities. The majority will be spent in 2015 © 2016. Income will be recognised as the monies are utilised, PENSIONS Closed defined benefit scheme: Until 31 March 2001 Traidcraft operated a defined benefit funded pension scheme covering the pension arrangements of employees of Traidcraft ple and Traidcraft Exchange, providing @ pension linked to final salary. This scheme is now closed but not wound-up and Traidcraft ple and Traidcraft Exchange continue to make contributions to it, working with the scheme trustees to agree appropriate contribution levels. Traidcraft plc is the principal employer within the combined Traidcraft defined benefit pension scheme and Traidcraft Exchange is the participating employer. , The triennial actuarial valuation prepared as at 1 April 2013 indicated that the scheme is approximately 74% funded against technical provisions with a deficit of £1,843,000. The agreed ongoing funding to be paid by the employer is £220,000 per annum which is intended to bring the scheme up to a fully-funded position by 31 March 2020. The total charge for the year paid by Traidcraft relating to this scheme, including administration costs, was £263,000 (2014: £265,000), This cost is divided between Traidcraft ple and Traideraft_ Exchange, according to the prevailing advice about the split of liabilities in the scheme, ‘The Charity expects to contribute £46,200 to the defined benefit pension plan in the year to 31 March 2016. 34a= TRAIDCRAFT EXCHANGE - NOTES TO THE FINANCIAL STATEMENTS A ‘TRAIDCRAFT For the year ended 31 March 2015 PENSIONS (CONTINUED) ‘The Financial Reporting Standard 17 “Retirement Benefits” (FRS 17) requires that the following further disclosure is made about the closed defined benefit pension scheme. The actuarial vaivation has been updated by the qualified scheme actuary to 31 March 2015, Assumptions used ware: Value at 31 Value at 31 Value at 31 March 2015 March 2014 March 2013, (por (per (per annum) annum) annum) Rate of increase of pensions accrued post § 1.95% 250% 215% April 1998 Rate of revaluation of deferred pensions 1.95% 2.50% 2.15% Discount rate 3.25% 4.45% 430% Inflation assumption 1.95% 250% 2.75% The amounts recagnised in the balance sheet are as follows: 2015 2014 £000 £000 Present value of funded obligations 383) (1,207) Fair value of scheme assets 383 1207 Deficit in the scheme : 7 Changes in the present value of the defined benefit obligation scheme are as follows: 2015 2014 £000 £000 Opening defined benefit obligation 1,207 1186 Interest on scheme liabilities 83 50 Actuarial losses 163 6 Benefits paid (40) (35) Closing defined benefit obligation 1,383 1207 Changes in the fair value of scheme assets are as follows: 2015 2014 £000 £000 Opening fair value of scheme assets 1,207 172 Expected return on scheme assets Expected return limited under para 67 of FRS 17 Contributions by employer Actuarial gains Change in irrecoverable surplus of FRSI7 Benefits paid Closing fair value of scheme assets RS16 TRAIDCRAFT EXCHANGE - NOTES TO THE FINANCIAL STATEMENTS i ‘TRAIDCRAFT For the year ended 31 March 2015 PENSIONS (CONTINUED) The actuarial valuation for FRSI7 showed a surplus of assets over liabilities at the accounting date of £19,000. In accordance with FRSI7 a pension scheme asset is recognised on the balance sheet only to the extent that the surplus may be recovered by reduced future contributions or to the extent that pension scheme trustees have agreed a refund from the scheme at the balance sheet date. Neither condition has been met at the balance sheet date and therefore we have not recognised the surplus. Amounts charged to the Statement of Financial Activities: 2018 2014 £000 £000 Interest on obligation (83) 60) Expected return on assets 80 61 Expected return limited under para 67 of FRS 17 : am Total operating income 27 - Amounts charged to the Statement of Financial Activities are as follows: Company Cumulative 2015-2014 2018 ~— 2014 £000 £000 £000 £000 Actuarial (loss) (73) G2) 227) 184) ‘The major categories of plan assets as a percentage of total plan assets are as follow: The assets in the old scheme and the expected rate of return were: Expected Expected rate of return Proportion of Fair rate of Proportion at assets at Value at return at of assets at Fair Value at 31Merch 31. March 31 March 31 March = 31-March 31 March. 2015 2015-2015, 2014 2014 2014 £000 £000 Equities 6.1% 66.4% 945 7.3% 17.4% 950 Bonds 2.5% 322% 459 3.8% 24.2% 297 Other 0.5% 1.4% 19 05% 2.2% 27 Value recognised limited under para 67 of FRSIZ. (40) 6d Total market value of assets 1383 2207 The overall expected long term return on plan assets is a weighted average of the expected long term returns for equity securities, debt securities and other assets. 36