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.
PS: Please see accompanying Comment from B4RN