NOTES
Notes to the consolidated Financial Statements for the year ended 31 December 20071. ACCOUNTING POLICIES
Basis of preparing the financial statementsThe nature of the company’s charitable activities are such that there can be considerable unpredictable variations in the timing of cash flows. The Board of Trustees on the basis of the information available consider that the company will be able to operate and that it is appropriate to prepare the financial statements on the going concern basis.
Accounting Convention
The financial statements have been prepared under the historical cost convention, in accordance with the Financial Reporting Standard for Smaller Entities (effective June 2002) and with the Statement of Recommended Practice on Accounting and Reporting by Charities: the Charities SORP 2005.
Income
Unrestricted income received by the way of donations, subscriptions, covenants, legacies, grants and sponsorship is recorded in the financial statements when received. Restricted income is credited to the Income and Expenditure Account at the time when the related expenditure has been incurred.
Tangible fixed assets
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.
Fixtures and fittings - 15% on cost
Computer equipment - 33% on cost
StocksComputer equipment - 33% on cost
Stock is valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.
Expenditure
The irrecoverable element of VAT is included within sundry expenses. Any expenses incurred with recoverable VAT are shown net of VAT.
Fund Accounting
The charity’s general funds consist of funds which the charity may use for its purposes at its discretion. The charity’s restricted funds are those where the donor has imposed a specific restriction on the use of the funds.
Format of Income and Expenditure Account
In order to present a true and fair view of the state of affairs and results of the Association, the Trustees believe that the following departures from the statutory accounting requirements of the Companies Act 1985 are required due to the special nature of reporting requirements for charities as issued by the Accounting Standards Committee and the Charity Commissioners:
A Statement of Financial Activities has been prepared, as opposed to the statutory Profit and Loss account, which shows the sources from which the Association’s income was derived and the objects of the charity to which those resources were directed.
Allocation of costs
Where appropriate, expenditure is allocated directly to the activity cost categories on the Statement of Financial Activities. Where support costs cannot be attributed to a single activity, they are apportioned on a reasonable, justifiable and consistent basis. For employee costs, for example, an allocation is made based on the time spent by each individual employee on the various activities of the charity.
Basis of consolidation
The consolidated Statement of Financial Activities includes the financial statements of the Association and its subsidiary undertaking, made up to 31st December 2006. The results of the subsidiary have been consolidated on a line by line basis. The consolidated balance sheet includes all assets and liabilities of the Association and its subsidiary undertaking, presented on a line by line basis.
2. BRANCHES
Branches operate in the name of BackCare and raise funds using that name. Funds so raised are held in trust and accordingly all branch transactions, assets and liabilities administered by the branches themselves are required to be incorporated within the financial statements of the Association.3. NET INCOME FROM TRADING ACTIVITIES OF SUBSIDIARIES
The Charity has one wholly owned trading subsidiary which is incorporated in the UK. Back Care Trading Limited organises fundraising events, endorses commercial products, and covenants its taxable profits to BackCare, registered as National Back Pain Association. A summary of the trading company’s results is shown below.| 31.12.07 | 31.12.06 | ||
| £ | £ | ||
| Turnover | 253 | 8,139 | |
| Cost of sales | - | (1,374) | |
| Gross profit | 253 | 6,765 | |
| Royality payments to the Charity | (1,015) | (1,488) | |
| Administration | (296) | (265) | |
| Net profit/(loss) | (1,058) | 5,012 | |
| Deficit brought forward | 3,461 | (1,551) | |
| Deed of covenant to the Charity | (3,461) | - | |
| Retained in Subsidiary) | (1,058) | 3,461 | |
4. STAFF COSTS
| 31.12.07 | 31.12.06 | ||
| £ | £ | ||
| Wages and salaries | 154,476 | 170.501 | |
| Social security costs | 13,022 | 14,716 | |
| 167,498 | 185,217 | ||
The average monthly number of employees during the year was as follows:
| 31.12.07 | 31.12.06 | ||
| Full Time | 1 | 1 | |
| Part Time | 10 | 12 | |
| 11 | 13 | ||
5. OPERATING PROFIT/(LOSS)
The operating profit is stated after charging:| 31.12.07 | 31.12.06 | ||
| £ | £ | ||
| Depreciation - owned assets | 2,223 | 1,950 | |
| Auditors' remuneration | 4,000 | 4,000 | |
| Trustees' emoluments and other benefits etc. | - | - | |
6. INTEREST RECEIVABLE AND SIMILAR INCOME
| 31.12.07 | 31.12.06 | ||
| £ | £ | ||
| Deposit account interest | 14,734 | 10,779 | |
7. TAXATION
In accordance with the Income and Corporation Taxes Act 1988 the Association is exempt from UK corporation tax liabilities.8. TANGIBLE FIXED ASSETS
| Fixtures and fittings |
Computer equipment |
Totals | ||
| £ | £ | £ | ||
COST |
||||
| At 1 January 2007 | 1,613 | 8,220 | 9,833 | |
| Additions | 639 | 1,726 | 2,365 | |
| At 31 December 2007 | 2,252 | 9,946 | 12,198 | |
DEPRECIATION |
||||
| At 1 January 2007 | 1,280 | 6,339 | 7,619 | |
| Charge for year | 181 | 2,042 | 2,223 | |
| At 31 December 2007 | 1,461 | 8,381 | 9,842 | |
NET BOOK VALUE |
||||
| At 31 December 2007 | 791 | 1,565 | 2,356 | |
| At 31 December 2006 | 333 | 1,881 | 2,214 | |
9. FIXED ASSET INVESTMENTS
| Group | Company | ||||
| 31.12.07 | 31.12.06 | 31.12.07 | 31.12.06 | ||
| £ | £ | £ | £ | ||
| Investment in subsidiary | - | - | 1 | 1 | |
| - | - | 1 | 1 | ||
INTEREST IN SUBSIDIARY UNDERTAKINGS
| Name of Undertaking Back Care Trading Limited |
Registered England & Wales |
Class of Shares Ordinary |
% Holding 100% |
10. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
| Group | Company | ||||
| 31.12.07 | 31.12.06 | 31.12.07 | 31.12.06 | ||
| £ | £ | £ | £ | ||
| Trade Debtors | 18,253 | 19,947 | 18,253 | 19,947 | |
| Other Debtors | 12,539 | 18,807 | 12,539 | 18,778 | |
| Amounts owed by subsidiary undertaking | - | - | 969 | - | |
| Prepayments & accrued income | 8,443 | 8,041 | 8,443 | 8,041 | |
| 39,225 | 46,795 | 40,194 | 46,766 | ||
11. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
| Group | Company | ||||
| 31.12.07 | 31.12.06 | 31.12.07 | 31.12.06 | ||
| £ | £ | £ | £ | ||
| Trade Creditors | 9,386 | 7,059 | 9.386 | 7,059 | |
| Social security & other taxes | 3,767 | 5,872 | 3,767 | 5,872 | |
| Amounts owed to subsidiary undertaking | - | - | - | 3,477 | |
| Accruals & deferred income | 126,045 | 105,559 | 125,736 | 105,294 | |
| 139,198 | 118,490 | 138,889 | 121,702 | ||
12. COMPANY STATUS
The Association is a company limited by guarantee and, in the event of winding up each member of the Association has undertaken to contribute an amount not exceeding £1.The Association is a registered charity under the Charities Act 1993 and does not trade for profit.
13. OTHER FINANCIAL COMMITMENTS
Lease CommitmentsAt 31 December 2007 the Association had an annual commitment of £17,250 under a non-cancellable operating lease for premises, which expires in 2010.