The Hawick Cashmere Company Limited - Period Ending 2014-12-31

Registration number: SC128179

The Hawick Cashmere Company Limited

Directors' Report and Abbreviated Financial Statements

for the Year Ended 31 December 2014
 

Deans Accountants And Business Advisors Ltd
Chartered Accountants and Registered Auditors
1 Melgund Place
Hawick
Borders
TD9 9HY

The Hawick Cashmere Company Limited
Contents

Company Information 1

Strategic Report 2

Directors' Report 3 to 4

Independent Auditors' Report 5

Abbreviated Profit and Loss Account 6

Abbreviated Balance Sheet 7

Cash Flow Statement 8 to 9

Notes to the Financial Statements 10 to 20

The Hawick Cashmere Company Limited
Company Information

Chairman

JA Thomson

Directors

Lord Charles Russell Sanderson of Bowden CDR Sanderson G W Scott ER Thomson M D Thomson E E S Young

Company secretary

M D Thomson

Registered office

Trinity Mills Duke Street Hawick Roxburghshire TD9 9QA

Solicitors

Wright, Johnston and Mackenzie LLP 302 St Vincent Street Glasgow Strathclyde G2 5RZ

Bankers

Bank of Scotland 50/60 Kilmarnock Road Glasgow Strathclyde G41 3NN

Auditors

Deans Accountants And Business Advisors Ltd Chartered Accountants and Registered Auditors 1 Melgund Place Hawick Borders TD9 9HY

Page 1

The Hawick Cashmere Company Limited
Strategic Report for the Year Ended 31 December 2014

The directors present their strategic report for the year ended 31 December 2014.

Business review

Fair review of the business

The manufacturing company turnover increased 5.5% during the year by £270,102 to £5,183,486. This helped to offset the expected reduction in margin during the year relating to increased cashmere yarn prices. We continue to review the company's overhead base to ensure it is as competitive as it can possibly be.

2014 saw the continuation of our Apprenticeship Training Programme as part of our investment in skilled employees for the future. The directors are confident that margins can be improved now that yarn prices have eased a little together with further cost savings.

The directors are satisfied with the Company's profitability during the year. The profit before tax totalled £160,553 (2013: £82,765).

At the end of the year, the net assets totalled £2,322,223 (2013: £2,215,725).

The company's key financial and other performance indicators during the year were as follows:

	Unit	2014	2013
Turnover	£	5,183,486	4,913,384
Turnover growth	%	6	9
Gross profit margin	%	20	21
Profit before tax	£	160,553	82,765

Principal risks and uncertainties

There are a number of risks and uncertainties which could impact the performance of the Company. The Board reviews its risk management process on a periodic basis which identifies, evaluates and prioritises risk and uncertainties and review mitigation activities.

The principal risks and uncertainties include:-

Sales/profit growth - impacted by economic conditions, consumer preferences, competitor activity, seasonality, retail expansion, cost of raw materials, general level of inflation and rising property, energy and labour costs.

People/infrastructure - impacted by reliance on key personnel, reliance on high tech machinery and technology advances.

Approved by the Board on 27 May 2015 and signed on its behalf by:

.........................................
JA Thomson
Chairman

Page 2

The Hawick Cashmere Company Limited
Directors' Report for the Year Ended 31 December 2014

The directors present their report and the abbreviated financial statements for the year ended 31 December 2014.

Directors of the company

The directors who held office during the year were as follows:

JA Thomson - Chairman

Lord Charles Russell Sanderson of Bowden

CDR Sanderson

G W Scott

ER Thomson

M D Thomson

E E S Young

Dividends

The directors recommend a final dividend payment of £nil be made in respect of the financial year ended 31 December 2014. This dividend has not been recognised as a liability in the financial statements.

Financial instruments

Objectives and policies

One of the principal risks and uncertainties impacting Company performance is financial risk. The following details the specific risks and the directors policies for managing such risks

Price risk, credit risk, liquidity risk and cash flow risk

The business' activities expose it significantly to the financial risks of changes in foreign currency exchange rates. The risk is managed by the use of foreign currency forward exchange contracts.

The business' principal financial instruments comprise bank balances, bank overdrafts, trade debtors, trade creditors, loans to the business and finance lease agreements. The main purpose of these instruments is to finance the business' operations.
In respect of bank balances, the liquidity risk is managed by maintaining a balance between the continuity of funding and flexibility through the use of overdrafts at floating rates of interest. All of the business' cash balances are held in such a way that achieves a competitive rate of interest. The business makes use of money market facilities where funds are available.
Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits. The amounts presented in the balance sheet are net of allowances for doubtful debtors.
Trade creditors' liquidity risk is managed by ensuring sufficient funds are available to meet amounts due.
Loans comprise loans from financial institutions. The interest rates and monthly repayments are fixed. The business manages the liquidity risk by ensuring sufficient funds are available to meet the payments.
The business is a lessee in respect of finance leased assets. The liquidity risk in respect of these is managed by ensuring that there are sufficient funds to meet the payments.

Disclosure of information to the auditors

Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. The directors confirm that there is no relevant information that they know of and which they know the auditors are unaware of.

Reappointment of auditors

In accordance with section 485 of the Companies Act 2006, a resolution for the re-appointment of Deans Accountants And Business Advisors Ltd as auditors of the company is to be proposed at the forthcoming Annual General Meeting.

Medium-sized Provisions
 
 Items required under Schedule 7 to the Large and Medium-sized Companies and Groups (Accounts and Reports Regulations) 2008 to be disclsed in the Director's Report are set out in the Strategic Report in accordance with S414C (11) Companies Act 2006.
 

Approved by the Board on 27 May 2015 and signed on its behalf by:

Page 3

The Hawick Cashmere Company Limited
Directors' Report for the Year Ended 31 December 2014
......... continued

.........................................
JA Thomson
Chairman

Page 4

Independent Auditor's Report to The Hawick Cashmere Company Limited
Under section 449 of the Companies Act 2006
 

We have examined the abbreviated accounts set out on pages 6 to 20 together with the financial statements of The Hawick Cashmere Company Limited for the year ended 31 December 2014 prepared under section 396 of the Companies Act 2006.

This report is made solely to the company, in accordance with Section 449 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

The directors are responsible for preparing the abbreviated accounts in accordance with section 445 of the Companies Act 2006. It is our responsibility to form an independent opinion as to whether the company is entitled to deliver abbreviated accounts to the Registrar of Companies and whether the abbreviated accounts have been properly prepared in accordance with the regulations made under that section and to report our opinion to you.

Basis of opinion

We conducted our work in accordance with Bulletin 2008/4 issued by the Auditing Practices Board. In accordance with that Bulletin we have carried out the procedures we consider necessary to confirm, by reference to the financial statements, that the company is entitled to deliver abbreviated accounts and that the abbreviated accounts are properly prepared.

Opinion

In our opinion the company is entitled to deliver abbreviated accounts prepared in accordance with section 445(3) of the Companies Act 2006, and the abbreviated accounts have been properly prepared in accordance with the regulations made under that section.

......................................
David A Campbell (Senior Statutory Auditor)
For and on behalf of Deans Accountants And Business Advisors Ltd, Statutory Auditor

1 Melgund Place
Hawick
Borders
TD9 9HY

27 May 2015

The notes on pages 10 to 20 form an integral part of these financial statements.
Page 5

The Hawick Cashmere Company Limited
Abbreviated Profit and Loss Account for the Year Ended 31 December 2014

		Note			2014 £			2013 £
Turnover					5,183,486			4,913,384
Gross profit					1,106,357			1,078,906
Distribution costs					(525,074)			(525,275)
Administrative expenses					(406,227)			(454,935)
Operating profit		2			175,056			98,696
Income from other fixed asset investments					9,723			9,284
Other interest receivable and similar income		5			19,316			21,713
Interest payable and similar charges		6			(43,542)			(46,928)
Profit on ordinary activities before taxation					160,553			82,765
Tax on profit on ordinary activities		7			(11,220)			17,590
Profit for the financial year		17			149,333			100,355

Turnover and operating profit derive wholly from continuing operations.

The notes on pages 10 to 20 form an integral part of these financial statements.
Page 6

The Hawick Cashmere Company Limited
(Registration number: SC128179)
Abbreviated Balance Sheet at 31 December 2014

		Note			2014 £			2013 £
Fixed assets
Tangible fixed assets		8			673,351			733,422
Investments		9			50			50
					673,401			733,472
Current assets
Stocks		10			1,243,144			1,439,096
Debtors		11			2,028,992			2,054,492
Cash at bank and in hand					283,510			69,771
					3,555,646			3,563,359
Creditors: Amounts falling due within one year		12			(1,280,119)			(1,860,960)
Net current assets					2,275,527			1,702,399
Total assets less current liabilities					2,948,928			2,435,871
Creditors: Amounts falling due after more than one year		13			(536,501)			(120,956)
Provisions for liabilities		14			(90,204)			(99,190)
Net assets					2,322,223			2,215,725
Capital and reserves
Called up share capital		15			329,500			329,500
Share premium account		17			110,000			110,000
Capital redemption reserve		17			95,500			95,500
Profit and loss account		17			1,787,223			1,680,725
Shareholders' funds		18			2,322,223			2,215,725

The abbreviated accounts have been prepared in accordance with the special provisions of the Companies Act 2006 relating to medium-sized companies.

Approved by the Board on 27 May 2015 and signed on its behalf by:

.........................................
CDR Sanderson
Director

.........................................
ER Thomson
Director

The notes on pages 10 to 20 form an integral part of these financial statements.
Page 7

The Hawick Cashmere Company Limited
Cash Flow Statement for the Year Ended 31 December 2014

Reconciliation of operating profit to net cash flow from operating activities

		Note			2014 £			2013 £
Operating profit					175,056			98,696
Depreciation, amortisation and impairment charges					158,285			187,382
Profit on disposal of fixed assets					(5,000)			(6,067)
Decrease/(increase) in stocks					195,952			(36,022)
Decrease/(increase) in debtors					25,500			(100,606)
(Decrease)/increase in creditors					(100,783)			200,475
Receipt/release of government grants					(11,882)			(12,215)
Net cash inflow from operating activities					437,128			331,643

Cash flow statement

		Note			2014 £			2013 £
Net cash inflow from operating activities					437,128			331,643
Returns on investments and servicing of finance
Interest received					19,316			21,713
HP and finance lease interest					(5,257)			(7,796)
Interest paid					(38,285)			(39,132)
Dividends received					9,723			9,284
					(14,503)			(15,931)
Taxation paid					(3,064)			(7,266)
Capital expenditure and financial investment
Purchase of tangible fixed assets					(98,214)			(122,467)
Sale of tangible fixed assets					5,000			6,067
					(93,214)			(116,400)
Equity dividends paid					(42,835)			(86,970)
Net cash inflow before management of liquid resources and financing					283,512			105,076
Financing
Repayment of loans and borrowings					434,075			(73,584)
Purchase of own shares					-			(30,300)
Repayment of capital element of finance leases and HP contracts					17,036			(49,040)
					451,111			(152,924)
Increase/(decrease) in cash					734,623			(47,848)

The notes on pages 10 to 20 form an integral part of these financial statements.
Page 8

The Hawick Cashmere Company Limited
Cash Flow Statement for the Year Ended 31 December 2014......... continued

Reconciliation of net cash flow to movement in net debt

		Note			2014 £			2013 £
Increase/(decrease) in cash					734,623			(47,848)
Cash outflow from repayment of loans					(434,075)			73,584
Cash outflow from repayment of capital element of finance leases and hire purchase contracts					(17,036)			49,040
Change in net debt resulting from cash flows					283,512			74,776
Movement in net debt					283,512			74,776
Net debt at 1 January					(1,158,923)			(1,233,699)
Net debt at 31 December					(875,411)			(1,158,923)

The notes on pages 10 to 20 form an integral part of these financial statements.
Page 9

The Hawick Cashmere Company Limited
Notes to the Financial Statements for the Year Ended 31 December 2014
......... continued

1	Accounting policies

Basis of preparation

The full financial statements, from which these abbreviated accounts have been extracted, have been prepared under the historical cost convention.

 

Turnover

Turnover comprises invoiced cost of goods sold during the year, excluding Value Added Tax. The company's policy is to recognise a sale when substantively all the risks and rewards in connection with the goods have passed to the buyer.

Government grants

Government grants in respect of capital expenditure are credited to a deferred income account and are released to profit over the expected useful lives of the relevant assets by equal annual instalments. Grants of revenue nature are credited to income so as to match them with the expenditure to which they relate.

Depreciation

Depreciation is provided on tangible fixed assets so as to write off the cost or valuation, less any estimated residual value, over their expected useful economic life as follows:

Asset class	Depreciation method and rate
Land	nil
Buildings	4% straight line
Plant and machinery	15% reducing balance & 10% straight line
Fixtures and fittings	15% reducing balance & 25% straight line
Motor vehicles	25% straight line

Fixed asset investments

Fixed asset investments are stated at historical cost less provision for any diminution in value.

Stock and work in progress

Stock and work in progress are valued at the lower of cost and net realisable value, after due regard for obsolete and slow moving stocks. Net realisable value is based on selling price less anticipated costs to completion and selling costs. Cost includes all direct costs and an appropriate proportion of fixed and variable overheads.

Deferred tax

Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for taxation and accounting purposes, which have arisen but not reversed by the balance sheet date, except as required by FRS19. Deferred tax is measured at the rates that are expected to apply in the periods when the timing differences are expected to reverse, based on the tax rates and law enacted at the balance sheet date.

Foreign currency

Transactions denominated in foreign currencies are translated at the rate of exchange on the day the transaction occurs or at the contracted rate if the transaction is covered by a forward exchange contract. Assets and liabilities denominated in a foreign currency are translated at the exchange rate ruling on the balance sheet date or if appropriate at the forward contract rate.

Hire purchase and leasing

Rentals payable under operating leases are charged to the profit and loss account on a straight line basis over the lease term.

Page 10

The Hawick Cashmere Company Limited
Notes to the Financial Statements for the Year Ended 31 December 2014
......... continued

Assets held under finance leases, which are leases where substantially all the risks and rewards of ownership of the asset have passed to the company, are capitalised in the balance sheet as tangible fixed assets and are depreciated over the shorter of the lease term and their useful lives. The capital elements of future obligations under the leases are included as liabilities in the balance sheet. The interest element of the rental obligation is charged to the profit and loss account over the period of the lease and represents a constant proportion of the balance of capital repayments outstanding. Assets held under hire purchase agreements are capitalised as tangible fixed assets and are depreciated over the shorter of the lease term and their useful lives. The capital element of future finance payments is included within creditors. Finance charges are allocated to accounting periods over the length of the contract and represent a constant proportion of the balance of capital repayments outstanding.

Assets held for use in operating leases are included within freehold land and buildings in fixed assets at cost and depreciated over their useful life. Rental income from operating leases is recognised on a straight line basis over the term of the lease.

Financial instruments

Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as 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. Where shares are issued, any component that creates a financial liability of the company is presented as a liability in the balance sheet. The corresponding dividends relating to the liability component are charged as interest expense in the profit and loss account. The company uses derivative financial instruments to reduce exposure to foreign exchange risk. The company does not hold or issue derivative financial instruments for speculative purposes. For a forward exchange contract to be treated as a hedge the instrument must be related to actual foreign currency assets or liabilities or to a probable commitment. It must involve the same currency as the hedge item and must reduce the risk of foreign currency exchange movements on the company's operations. Gains and losses arising from these contracts are deferred and recognised in the profit and loss account only when the hedged transaction has itself been reflected in the company's financial statements. If an instrument ceases to be accounted for as a hedge, for example because the underlying hedged position is eliminated, the instrument is marked to market and any resulting profit or loss recognised at that time.

Pensions

The company operates defined contribution pension schemes and contributes to the personal pension schemes of certain employees. Contributions are recognised in the profit and loss account in the period in which they become payable in accordance with the rules of the scheme.

2	Operating profit

Operating profit is stated after charging:

		2014 £			2013 £
Auditor's remuneration - The audit of the company's annual accounts		11,190			11,190
Accounting and other advisory services		51,595			56,312
Operating leases - plant and machinery		21,019			8,655
Depreciation of owned assets		130,145			154,045
Depreciation of assets held under finance lease and hire purchase contracts		28,140			33,337
Profit on sale of tangible fixed assets		(5,000)			(6,067)
Hire purchase interest		5,257			7,796
Government grants receivable		(11,883)			(12,215)
Rent receivable		(10,000)			(10,000)
Foreign currency losses/(gains)		9,943			(8,390)

Page 11

The Hawick Cashmere Company Limited
Notes to the Financial Statements for the Year Ended 31 December 2014
......... continued

3	Particulars of employees

The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:

		2014 No.			2013 No.
Administration and support		6			6
Production		68			71
Sales		11			10
		85			87

The aggregate payroll costs were as follows:

		2014 £			2013 £
Wages and salaries		1,402,996			1,505,638
Social security costs		102,117			108,134
Staff pensions		70,731			76,903
		1,575,844			1,690,675

4	Directors' remuneration

The directors' remuneration for the year was as follows:

		2014 £			2013 £
Remuneration (including benefits in kind)		193,781			203,705
Company contributions paid to money purchase schemes		45,996			45,829

During the year the number of directors who were receiving benefits and share incentives was as follows:

		2014 No.			2013 No.
Accruing benefits under money purchase pension scheme		4			4

In respect of the highest paid director:

		2014 £			2013 £
Remuneration		55,000			67,500
Company contributions to money purchase pension schemes		9,996			9,996

Page 12

The Hawick Cashmere Company Limited
Notes to the Financial Statements for the Year Ended 31 December 2014
......... continued

5	Other interest receivable and similar income

		2014 £			2013 £
Bank interest receivable		4			10
Other interest receivable		19,312			21,703
		19,316			21,713

6	Interest payable and similar charges

		2014 £			2013 £
Interest on bank borrowings		38,285			39,132
Finance charges		5,257			7,796
		43,542			46,928

7

Taxation

Tax on profit on ordinary activities

		2014 £			2013 £
Current tax
Corporation tax charge		40,084			22,942
Adjustments in respect of previous years		(19,878)			(30,405)
UK Corporation tax		20,206			(7,463)
Deferred tax
Origination and reversal of timing differences		(8,986)			(10,127)
Total tax on profit on ordinary activities		11,220			(17,590)

Factors affecting current tax charge for the year

Tax on profit on ordinary activities for the year is lower than (2013 - lower than) the standard rate of corporation tax in the UK of 21.4% (2013 - 22.26%).

The differences are reconciled below:

		2014 £			2013 £
Profit on ordinary activities before taxation		160,553			82,765
Corporation tax at standard rate		34,358			18,423
Accelerated capital allowances		9,134			6,161
Grant amortisation		(2,140)			(2,226)
Disallowable expenses		819			415
Research and development tax credits		(19,878)			(28,179)
Dividends from UK companies		(2,080)			(2,067)
Small companies relief		(7)			10

Page 13

The Hawick Cashmere Company Limited
Notes to the Financial Statements for the Year Ended 31 December 2014
......... continued

Total current tax

20,206

(7,463)

8	Tangible fixed assets

		Freehold land and buildings £			Plant and machinery £			Fixtures and fittings £			Motor vehicles £			Total £
Cost or valuation
At 1 January 2014		411,763			2,280,409			285,358			18,788			2,996,318
Additions		-			77,769			5,345			15,100			98,214
Disposals		-			-			-			(18,788)			(18,788)
At 31 December 2014		411,763			2,358,178			290,703			15,100			3,075,744
Depreciation
At 1 January 2014		278,032			1,689,859			277,782			17,223			2,262,896
Charge for the year		15,271			133,053			5,879			4,082			158,285
Eliminated on disposals		-			-			-			(18,788)			(18,788)
At 31 December 2014		293,303			1,822,912			283,661			2,517			2,402,393
Net book value
At 31 December 2014		118,460			535,266			7,042			12,583			673,351
At 31 December 2013		133,731			590,550			7,576			1,565			733,422

Leased assets

Included within the net book value of tangible fixed assets is £170,715 (2013 - £163,420) in respect of assets held under finance leases and similar hire purchase contracts. Depreciation for the year on these assets was £28,140 (2013 - £33,337).

Assets Leased
 Included in Freehold Land and Buildings is £45,120 (2013 - £50,706) in respect of assets rented out under operating leases. Depreciation for the year on these assets was £5,640 (2013 - £5,640).

Freehold Land and Buildings
The gross book value of freehold land and buildings includes £381,763 (2013 - £381,763) of depreciable assets.

9	Investments held as fixed assets

		2014 £			2013 £
Other investments		50			50

Other investments

		Unlisted investments £			Total £
Cost
At 1 January 2014		50			50
At 31 December 2014		50			50
Net book value
At 31 December 2014		50			50
At 31 December 2013		50			50

Page 14

The Hawick Cashmere Company Limited
Notes to the Financial Statements for the Year Ended 31 December 2014
......... continued

Details of undertakings

Details of the investments in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking

Holding

Proportion of voting rights and shares held

Principal activity

Joint ventures
Lucien Pellat-Finet (Scotland) Limited	ordinary	50%	knitwear retail

The profit for the financial period of Lucien Pellat-Finet (Scotland) Limited was £21,786 and the aggregate amount of capital and reserves at the end of the period was £21,886.

10

Stocks

		2014 £			2013 £
Raw materials		241,094			221,748
Work in progress		238,079			385,065
Finished goods		763,971			832,283
		1,243,144			1,439,096

11

Debtors

		2014 £			2013 £
Trade debtors		1,452,204			1,385,856
Other debtors		549,226			641,700
Prepayments and accrued income		27,562			26,936
		2,028,992			2,054,492

Debtors includes £nil (2013 - £34,532) receivable after more than one year.

This can be analysed as follows:

		2014 £			2013 £
Other debtors		-			34,532
		-			34,532

Page 15

The Hawick Cashmere Company Limited
Notes to the Financial Statements for the Year Ended 31 December 2014
......... continued

12	Creditors: Amounts falling due within one year

		2014 £			2013 £
Trade creditors		438,731			516,619
Bank loans and overdrafts		594,632			1,087,484
Obligations under finance lease and hire purchase contracts		46,023			50,089
Corporation tax		40,084			22,942
Other taxes and social security		29,900			57,745
Other creditors		2,432			2,724
Accruals and deferred income		128,317			123,357
		1,280,119			1,860,960

Creditors amounts falling due within one year includes the following liabilities, on which security has been given by the company:

		2014 £			2013 £
HP Creditor		46,023			50,089
Bank overdraft		522,084			1,042,968
Bank term loans		72,548			44,516
		640,655			1,137,573

13	Creditors: Amounts falling due after more than one year

		2014 £			2013 £
Bank loans and overdrafts		440,575			34,532
Obligations under finance lease and hire purchase contracts		77,691			56,589
Accruals and deferred income		18,235			29,835
		536,501			120,956

Page 16

The Hawick Cashmere Company Limited
Notes to the Financial Statements for the Year Ended 31 December 2014
......... continued

Creditors amounts falling due after more than one year includes the following liabilities, on which security has been given by the company:

		2014 £			2013 £
HP Creditor		77,691			56,589
Bank term loans		440,575			34,532
		518,266			91,121

The bank overdrafts are repayable on demand. The bank term loans are repayable by instalments at various interest rates.

The Bank of Scotland holds first legal charge over 2 Brewery Yard, Stow-on-the-Wold; standard security over North Shop, Spread Eagle House, Bridge Street, Kelso; standard security over factory premises at Trinity Mills, Duke Street, Hawick and a bond and floating charge over the whole of the Company's assets.

Hire purchase agreements are secured on the relevant assets.

Included in the creditors are the following amounts due after more than five years:

		2014 £			2013 £
After more than five years by instalments		257,229			-
After more than five years not by instalments		4,734			5,569
		261,963			5,569

Obligations under finance leases and HP contracts Amounts repayable:

		2014 £			2013 £
In one year or less on demand		46,023			50,089
Between one and two years		41,538			30,228
Between two and five years		36,153			26,361
		123,714			106,678

14	Provisions

		Deferred tax £			Total £
At 1 January 2014		99,190			99,190
Credited to the profit and loss account		(8,986)			(8,986)
At 31 December 2014		90,204			90,204

Page 17

The Hawick Cashmere Company Limited
Notes to the Financial Statements for the Year Ended 31 December 2014
......... continued

Analysis of deferred tax

		2014 £			2013 £
Difference between accumulated depreciation and amortisation and capital allowances		90,204			99,190
		90,204			99,190

15	Share capital

Allotted, called up and fully paid shares

	2014						2013
		No.			£			No.			£
Ordinary shares of £1 each		329,500			329,500			329,500			329,500

16

Dividends

		2014 £			2013 £
Dividends paid
Prior year final dividend paid		42,835			86,970

17

Reserves

		Share premium account £			Capital redemption reserve £			Profit and loss account £			Total £
At 1 January 2014		110,000			95,500			1,680,725			1,886,225
Profit for the year		-			-			149,333			149,333
Dividends		-			-			(42,835)			(42,835)
At 31 December 2014		110,000			95,500			1,787,223			1,992,723

18	Reconciliation of movement in shareholders' funds

		2014 £			2013 £
Profit attributable to the members of the company		149,333			100,355
Dividends		(42,835)			(86,970)
Purchase of own share capital		-			(30,300)
Net addition/(reduction) to shareholders' funds		106,498			(16,915)
Shareholders' funds at 1 January		2,215,725			2,232,640
Shareholders' funds at 31 December		2,322,223			2,215,725

Page 18

The Hawick Cashmere Company Limited
Notes to the Financial Statements for the Year Ended 31 December 2014
......... continued

19	Pension schemes

Defined contribution pension scheme

The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £70,731 (2013 - £76,903).

Contributions totalling £2,432 (2013 - £2,679) were payable to the scheme at the end of the year and are included in creditors.

20	Commitments

Operating lease commitments

As at 31 December 2014 the company had annual commitments under non-cancellable operating leases as follows:

Operating leases which expire:

		2014 £			2013 £
Land and buildings
Within two and five years		15,000			15,000
Other
Within one year		-			1,902
Within two and five years		3,142			1,560
Over five years		1,560			-
		4,702			3,462

Other commitments

At 31 December 2014, the company has entered into Forward Currency Contracts. This includes the sale of $700,000 through 6 forward currency contracts, with execute dates between January and September 2015. The average exchange rate of these contracts is 1.6017, resulting in a sale of £435,232.
 

The company has also entered into forward currency contracts to sell 800,000 euros through 5 forward currency contracts, with execute days between January and November 2015. The average exchange rate of these contracts is 1.2549, resulting in a sale of £638,196.
 

The company has also entered into forward currency contracts to sell 500,000 swiss francs through 5 forward currency contracts, with execute dates between January and November 2015. The average exchange rate of these contracts is 1.5074, resulting in a sale of £332,550.
 

The fair value of these contracts was £3,910 at 31 December 2014.
 

These contracts are not included in the Balance Sheet at fair value, in line with UK GAAP, as the company has not adopted FRS26.
 

Page 19

The Hawick Cashmere Company Limited
Notes to the Financial Statements for the Year Ended 31 December 2014
......... continued

21

Control

The company is controlled by the directors who own 84.04% of the called up share capital.

Page 20