B4RN 2016 Accounts

I have reported my views of the B4RN accounts each year for the last four years. This year is no exception.  Here is my analysis.  Also; B4RN have been kind enough to provide their response, which is included as the first Comment to this post:

B4RN held it’s AGM on the 01 November 2016, having published their Annual Report and Financial Statement for the year ending 31 March 2016, on the FCA website on the 29 September 2016.

These show that on an Income of £357,708 they made a loss for the year of £225,263.  In addition, due to a change in accounting policies, they have “restated” the 2015 loss, which was £47,368, as a loss of £122,106.  The cumulative loss, since the Company foundation, is £565,011.

In 2016 B4RN’s Auditors have recognised that £83,206 declared as assets in 2015 should have been Cost of Sales. This reduces the depreciation for 2015 by £14,721.

They have also recognised that this should have been applied in prior years and as a result has devalued the assets for 2012 to 2014 by £60,249.  As a result, the Net Asset Value for the year end 2015 is reduced by £134,987.

In my view these changes in accounting policy are positive.  The one negative aspect of the accounts continues to be the low level of income from users of the service, and the commensurate build up of losses.

This year income increased £144,398 to £367,708.  However, when the cost of sales are taken from this the funds left to cover overheads are insufficient. Overheads have increased from £172.099 to £459,819.

In previous years B4RN have always included a page in their accounts which detailed exactly the source of their income and provided a detailed breakdown of their overhead costs.  This page is omitted from the accounts for this year.

Monica Lee, who is Director & Secretary has very kindly provided me with some of this missing information.

B4RN had 1,690 connections at 2016.  Income from connections over all prior years totalled £54,350, which equates to 362 connections.  As a result, I calculate that the value of connections made in 2016 would have been £199,200 (1,328 connections) and the service fees £155,958 with Income from other sources £2,550

Monica tells me that in the year to November 2016 a further 605 connections have been made with an additional 705 anticipated in the balance of the 2017 financial year.  This would suggest Connection fees in the order of £196,500 for 2017.

Estimating service income is more difficult because it depends on how many months the connection covers.  However, the customers from 2016 should generate £608,400.  Assuming the customers to Nov 2016 are connected for half a year they should generate £108,900.  It would be safest to assume that the connections between Nov and March will not have time to provide any service income.  This suggests that the Income for 2017 could be £913,800.  The COS for the connections in 2016 was £77,034.  You could assume therefore that the COS for the 1,310 connections in 2017 would be a further £70,000, leaving a balance of £843,800 to cover overheads and profit.

Last year the overhead was £459,819.  As there is no breakdown for this figure it is impossible to estimate what the coming year will bring.  If these figures are correct then the future looks much brighter than the past.  But it pays to remember that the B4RN Business Plan forecast Income from trading between 2012 and 2016 of £2,378,000 and it has only been £546,945.  In addition to Share capital of £2,138,989 the Company is in receipt of loans from members reported as £1,476,575, which will need to be repaid at some time, so the path ahead is still steep.

John Keegan

PS: Please see accompanying Comment from B4RN

3 thoughts on “B4RN 2016 Accounts”

  1. 1. The analysis given does not recognise the financial nature of a start-up service company. Initial investment is needed to develop the infrastructure, and income from service fees comes later.

    2. Of the income of £ 357,708 included in the accounts for 2015/16, £ 355,158 came from service and connection fees. The cumulative number of connections which generated this income stood at 1690 on 31st March 2016. The number of connections now stands at 2295 (as at 6th November 2016) and as a result of work currently being undertaken is expected to reach 3000 by 31st March 2017. Based on these figures, our projection for the company’s income for 2016/17 is £ 720,000. 2016/17 is expected to be the first year in which the company will record an operating profit. The depreciation rate used in the accounts for the fibre network was changed from a 10 year write down cycle to 25 years in order to bring us into line with telecoms industry practice. Of course, the actual life of fibre is much longer than 25 years.

    3. In accordance with our community ethos, no Director receives any pay for their Directorship. Their time, and the responsibility they carry, is given freely. Some of the Directors are also members of staff, and hence are on the normal staff payroll. Accounting practice requires that this element of the payroll is recorded separately as “Directors’ remuneration”.

    4. B4RN is a true community based organisation which offers outstanding world-class service, of which the volunteers, shareholders and staff feel, justifiably, very proud. Financially, the company is in robust good health.

    Monica Lee.
    Director & Company Secretary.

  2. It is good to have an explanation of the accounts, but the real value of B4RN is in the actual network we have all built, its value will last a long time, and repay a millionfold the effort and money put into it. From a tiny acorn. We have built a network of people, hundreds of them working for the community, for the family, for future generations, going where telcos fear to tread, and doing it for no payment, and doing it cheerfully and getting fit too. The grannies and granddads have done the lion’s share of the work, and they have been truly awesome. People of grit, we thank you all.

    1. Many thanks for that Chris.
      My concern has only ever been financial stability and integrity, so as to ensure a continuing service. If the information Monica provided pans out then this year should see a turnaround.

      However, I have received reports that some people are experiencing slower speeds on B4RN than they did on BT. They have been told that this is because of their particular property, Wi-Fi location and/or PC etc.

      You and I know that is not true because the same conditions would impact BT. It is true however that if a PC cannot keep up, or the server to which it is connected is throttled then 1GB is meaningless and probably the location of the B4RN hub is marginally less advantageous than where the BT one was.

      As to your volunteers. One can take nothing away from the sterling work they have done digging their way around the Lune Valley. More power to their spades.
      John Keegan.

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