The trustees present their report and the unaudited accounts of the charity for the year ended 31 March 2020.
The accounts have been prepared in accordance with the accounting policies set out in note 1 to the accounts and comply with the charity's governing document, the Companies Act 2006 and “Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102)” (as amended for accounting periods commencing from 1 January 2016)
The charitable company provides a public benefit through the promotion of urban or rural
regeneration and support for enterprise, education and employment; conservation of the environment. It also promotes physical and mental health and the relief of sickness and the promotion of sustainable development through the regeneration of the Earth Balance site.
The trustees seek to provide important local and public support for enterprise and employment through the provision of premises and land. This has been very successful with the majority of properties being occupied by tenants. In addition, the site saw an increased number of the general public visiting the site to access the natural resources available there.
The Trustees continue to work hard to listen to stakeholders in helping to deliver the charitable objects and carry out activities and this has widened from Northumberland County Council to include Northumbria NHS Foundation Trust, the local Parish Council Disabled Group, the local Special Needs School, some hard to reach sections of the local community and local residents. In particular, there continues to be an open dialogue aspect to the work of the charity which ensures that the charity develops work in line with those it serves. The Trustees have been successful in establishing positive working relationships which has provided the charity with a strong and sustainable base from which it can continue to regenerate the site.
During the year, work continued on the planning consultation process around the Health and Wellbeing Village and housing by engaging positively with the local planning consultation and review. The Health and Wellbeing Village will feature in the centre of the site, complementing the Proton Therapy Cancer Centre. We are undertaking this work sensitively with partners and at a pace suited to regenerating the site in line with our objects whilst meeting local community needs. The regeneration needed requires meeting future housing, health and social care needs and responding to the current and future needs of those accessing the site today and in the future.
The site covers an area of 116.3 Acres (47.09 Hectares) that straddles the South East Northumberland railway line to Ashington and Lynemouth, the proposed "Northumberland Line" within ten minutes of Bedlington Station . It is bordered by the A189 and has two power lines running through the site. The 'Sleekburn' runs through the site to an estuary with a salt marsh as a designated Nature Reserve and the Northumberland Shore Site of Special Scientific Interest is located 2km south-east of the site. The site plays an important part of the ecology of the local area.
The site has maintained it’s organic status via the Soil Association for another year for the soil and fishery and is home to a diverse mix of wildlife, with onsite habitat protection and enhancement.
The site features habitats that are created to support specific wildlife needs, wetland habitats that support a startling array of water birds. The site has also maintained one of the highest rated Soil Association aquaculture system for breeding of Organic Brown and Rainbow Trout.
The charity's wholly owned trading subsidiary has allowed it to carry out trading activity, managing the risk at arms length from the charity and allowing the trading company to maximise the current trading opportunities for the sites development. The trading company has two shared board members with the charity to maintain a high level of shared understanding at a strategic level and is supported by the charity to help achieve its charitable objects. The Trading Company made a small deficit during the year but continued to make significant progress in developing out the site in accordance with the charitable objects. The charity works closely with professional advisors to ensure that activities are carried out in accordance with charity law.
During the year the charity provided:
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The existing buildings and curtilage continue to be improved and the site is gradually seeing a larger number of public visitors being attracted to utilise the open public spaces, visit on site tenants and be welcomed into the community. Works have been ongoing to maintain and tidy up the site, reinstate existing landscaped areas, roads, paths and bridleways, and to progress new works to enhance the site.
The Men’s Shed group is becoming an increasingly important part of the centre site, with the members carrying out works to support other tenants and the local community. They are independent of the Earth Balance 2000 charity but continue to be encouraged in their work on the site and in the local community.
A significant achievement during the year, was the consolidation of the future relationship with development partner Engie, and the formalisation of this in an exclusivity agreement. We have worked as a team with the trading company and our legal advisors to ensure that the agreement reflects the best way forward for the local community and for the charity. We expect that the exclusivity agreement will be signed, and planning work commencing during the next financial year.
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The Charity continues to manage it’s finances on a stable basis, and has maintained a level of cash during the year, without needing to rely on further loans. The COVID crisis had a small impact on tenants and we expect that we will have to both offer support to tenants, as well as investigating potential support ourselves. The Trustees and General Manager have worked hard during the year to manage income and expenditure with the Trustees relying on ‘General Manager’ consultancy support to be able to deliver existing services and responsibilities at a minimal cost and long term liability to the charity.
The financial position for the period shows a deficit of income over expenditure of £19,269. This results in a balance of £178,322 on restricted funds (£180,219 in 2019), and a net deficit in respect of unrestricted funds of £168,144 (£150,772 in 2019). The cash position of £6,665 has reduced slightly upon the previous year balance of £8,697 and the Trustees will seek to increase the cash balance into the future, which will provide further resilience for the charity.
The trustees have kept abreast of the charitable company's deficient unrestricted reserves and have taken action to continue to cut costs, increase income and redress this position and at the same time maintain and improve the site and buildings. There have been a number of improvements made to the site which has reduced the cash position, however, have been necessary to the upkeep of the site. This includes updating certifications for water, electricity and general site improvements to paths and shared area.
The financial statements show an interest-free, long term loan which has been taken in accordance with Charity law as best value for the charity following a considered approach, supported by our solicitors Muckle LLP, guidance. The long term loan appears as part of the Creditors amount falling due after more than one year In addition, the Trustees have continued a further year without the need for any staffing costs, utilising consultants to meet operational need without the need for ongoing commitments.
The trustees recognise that at the year end the unrestricted reserves are deficient and that the charitable company appreciates the support of ORCA Steel DMCC. The Trustees will again set a budget for the following year to show a surplus generated through the plans in place and continue to monitor progress against budget on a monthly basis. ORCA STEEL DMCC have agreed not to demand repayment of the loan amounts outstanding to them as presented in the accounts, until the Charity is in a financial position to repay them over an agreed period. The Trustees have worked with legal advisors at each step of this process and followed any guidance provided.
The financial statements, which have been prepared in accordance with the Statement of Recommended Practice: Accounting and Reporting by Charities applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Ireland (FRS 102) and comply with the charity's governing documents
Reserves policy
It is the policy of the charitable company to aim to achieve unrestricted funds, which are the free reserves of the charitable company, that equate to approximately three months running costs within the next few years. This will provide sufficient funds to cover management, administration and support costs. The Charity is currently not able to meet this level and so we will seek to reduce and manage our limited costs and maximise income to be able to do so in future periods. The subsidiary trading company generates a profit and has plans to generate a significant profit in future periods, and so we envisage financial support to the charity will follow in 2020/21 and 2021/22, particularly with respect to reducing the outstanding liability.
Risk policy
The trustees have assessed the major risks to which the charitable company is exposed, in particular
those relating to the operations and finances of the charitable company, and are satisfied that systems are in place to mitigate our exposure to the major risks. A risk register maintains the risks and mitigations and is discussed by Trustees at each meeting.
In addition, the risks posed by trading have been mitigated further by the set up and successful full year operation of a wholly owned subsidiary trading company to separate specific risks from the charity.
Plans for future periods
Our main objective for future periods is to provide sustainable development on our site for the benefit of the local community and the protection and enhancement of the site. This work will continue into the next financial year with a new tenant joining the centre site and to complete the exclusivity agreement with development partner Engie. We look forward to welcoming Milly Performance Academy to the site in late 2020 who will be providing exercise and dance classes for the local community. The academy is a successful business, relocating from elsewhere in the county to take advantage of an excellent building and healthy outlook on the site.
The trustees look forward to engaging with the local Wildlife Trust, who are seeking a northern pilot for a national scheme called ‘Building With Nature’ which will ensure that any development work on site will meet rigorous standards and, in time we hope, accreditation.
In our partnership with Engie, we hope to bring energy generation to the fore of the next stage of the site development and in researching and delivering new and innovative ways to produce energy. Engie have an increasingly wide experience with the zero carbon agenda and so we look forward to future developments meeting zero carbon standards and playing our part in driving environmental innovation.
A recent significant announcement of the opening up of the Northumberland Railway Line means that planning will follow quickly, with our site being less than 300 metres away from Bedlington Station. This means that we can play a significant role in supporting the railway development.
Work over the winter of 2020 will see a further maintenance and development of the pond system as well as winter maintenance of shared areas and working together with Northumberland County Council to provide access and support for the investigation works on the railway line.
The trustees will continue to work with wider partners, including Northumberland County Council, Northumbria NHS Trust, the local Parish councils, the local councillors and the local community nearby, to consider how the site can best deliver sustainable development for the area. The opportunity is now timely and significant for the site, with the creation of 300 high quality jobs, investment of over £50 million and a number of other benefits to follow. The trustees and trading company will be focussed in the coming year on this development work and in bringing the site development to fruition.
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The charitable company is limited by guarantee and its governing document is its Memorandum and
Articles of Association, dated 6th October 2000 and last amended 16th April 2008.
Earth Balance 2000 ("The Charity" ) is currently a "Small Charity" (as defined in the Charity Act
2011) and below the audit threshold. It is based at West Sleekburn Farm in the heart of South East
Northumberland.
The Governing body of the charitable company are the trustees who meet regularly to decide overall
financial policy matters. The trustees meet at least quarterly to review finances and
operational matters.
The directors of the charitable company, also act as trustees of the charitable company.
The accounts show that the charitable company is now only partly reliant upon the past support of the sponsor ORCA Steel DMCC and is continuing an upward trend of stability into 2019/20, in terms of managing cash well and also in seeing a profit generated by the subsidiary trading company.
New members of the board are elected by nominating bodies during General Meetings.
The articles of association restricts members to a minimum and maximum of five which has been maintained throughout the year.
The trustees maintain a well mixed skill base of expertise and ensure that where members resign,
suitable replacement candidates are sought.
Most members are already familiar with the practical work and objectives of the charitable company
bringing their own relevant and unique skills and receive an induction upon joining.
Since the formation of the charitable company it has been a main priority for the board to maintain a viable business operation that maximised income and kept operational costs to a minimum whilst furthering the charitable aims and objectives.
The trustees, who are also the directors for the purpose of company law, and who served during the year and up to the date of signature of the financial statements were:
The trustees' r eport was approved by the Board of Trustees.
I report to the trustees on my examination of the financial statements of Earthbalance 2000 (the charity) for the year ended 31 March 2020.
As the trustees of the charity (and also its directors for the purposes of company law) you are responsible for the preparation of the financial statements in accordance with the requirements of the Companies Act 2006 (the 2006 Act).
Having satisfied myself that the financial statements of the charity are not required to be audited under Part 16 of the 2006 Act and are eligible for independent examination, I report in respect of my examination of the charity’s financial statements carried out under section 145 of the Charities Act 2011 (the 2011 Act) . In carrying out my examination I have followed all the applicable Directions given by the Charity Commission under section 145(5)(b) of the 2011 Act.
I have completed my examination. I confirm that no matters have come to my attention in connection with the examination giving me cause to believe that in any material respect:
accounting records were not kept in respect of the charity as required by section 386 of the 2006 Act; or
the financial statements do not accord with those records; or
the financial statements do not comply with the accounting requirements of section 396 of the 2006 Act other than any requirement that the accounts give a true and fair view which is not a matter considered as part of an independent examination; or
the financial statements have not been prepared in accordance with the methods and principles of the Statement of Recommended Practice for accounting and reporting by charities applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102).
I have no concerns and have come across no other matters in connection with the examination to which attention should be drawn in this report in order to enable a proper understanding of the financial statements to be reached.
Earthbalance 2000 is a private company limited by guarantee incorporated in England and Wales. The registered office is West Sleekburn Farm, Bomarsund, Bedlington, Northumberland, NE22 7AD.
The accounts have been prepared in accordance with the charity's governing document, the Companies Act 2006 and “Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102)” (as amended for accounting periods commencing from 1 January 2016). The charity is a Public Benefit Entity as defined by FRS 102.
The charity has taken advantage of the provisions in the SORP for charities applying FRS 102 Update Bulletin 1 not to prepare a Statement of Cash Flows.
The financial statements are prepared in sterling , which is the functional currency of the charity. Monetary a mounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
At the time of approving the accounts, the trustees have a reasonable expectation that the charity has adequate resources to continue in operational existence for the foreseeable future. Thus the trustees' continue to adopt the going concern basis of accounting in preparing the accounts. The validity of the going concern basis is dependent upon current and future sources of funding or support being sufficient for the charitable company to continue its operations.
The trustees continue to keep the business model under careful review to ensure careful management of resources while maintaining a capacity to benefit from new opportunities. This strategy will allow the company to return to surplus and the trustees are confident in the longer term the company will generate funds to repay creditors.
The charitable company is also dependent upon the support of Orca Steel DMCC and their other group entities. The directors of Orca Steel DMCC Limited have confirmed that their respective entities will continue to support the charitable company for the foreseeable future and confirm the loan made will not be demanded for repayment within at least another 12 months.
Unrestricted funds are available for use at the discretion of the trustees in furtherance of their charitable objectives.
Restricted funds are held for use on specific purposes as determined by restrictions imposed by the funders.
Fixed assets - restricted funds
Earthbalance 2000, a company limited by guarantee, having its primary purpose to provide support and facilitate the creation of opportunities for enterprise and education that work in harmony with the environment through the demonstration of environmentally sustainable practices holds assets, partly financed by grants that can only be used for such expenditure.
Expenditure incurred on fixed assets is capitalised. The fixed asset being depreciated over their useful economic life in accordance with the charitable company's policy.
Grant and assistance received specifically to finance the expenditure is credited to a restricted fund.
Voluntary income including donations, gifts and legacies and grants that provide core funding or are of a general nature are recognised where there is entitlement, after any performance conditions have been met, the amounts can be measured reliably, and it is probable that income will be received. Such income is only deferred when:
The donor specifies that the grant or donation must only be used in future accounting periods; or
The donor has imposed conditions which must be met before the charity has unconditional entitlement.
Expenditure is recognised on an accrual basis as a liability is incurred.
Charitable expenditure comprises those costs incurred by the charity in the delivery of activities and services for its beneficiaries. It includes both costs that can be allocated directly to such activities and those costs of an indirect nature to support them.
Governance costs include those costs associated with meeting the constitutional and statutory requirements of the charity and include the examination fees and costs linked to the strategic management of the charity.
All costs are allocated between the expenditure categories of the SOFA on a basis designed to reflect the use of the resource. Costs relating to a particular activity are allocated directly, others are apportioned on an appropriate basis e.g. management time.
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
All fixed assets are initially recorded at cost.
Depreciation is calculated to write off the cost less estimated residual value , over the economic life of that asset as follows :
Fixed asset investments are initially measured at transaction price excluding transaction costs, and are subsequently measured at fair value at each reporting date. Changes in fair value are recognised in net income/(expenditure) for the year . Transaction costs are expensed as incurred.
A subsidiary is an entity controlled by the charity. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting end date, the charity reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any ) .
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in income/(expenditure for the year , unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately, unless the relevant asset is carried in at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
The charity only has financial assets and liabilities of a kind that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently measured at their settlement value.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the charity is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
In the application of the charity’s accounting policies, the trustees are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
None of the trustees (or any persons connected with them) received any remuneration during the year .
In the accounts of the subsidiary, Earth Balance 2000 Trading Company Limited, payments of £12,000 were made to directors of the subsidiary, who are also Trustees of the Charity, in respect of self employed consultancy services.
The funds of the charity include restricted funds comprising the following balances held on trust for specific purposes:
Over the past few years Orca DMCC have supported the Charity in a number of ways, including the general maintenance and improvements to buildings on site and the wider site itself. This has helped make ready the site for our planned future developments in line with our Charitable objectives. Through negotiations for the site improvement work previously mentioned in last years accounts the uplift has been agreed and has taken the liability provided in these accounts to £600,000. There are further ongoing discussions regarding the value of any additional site improvement works but the trustees do not believe these amounts are significant.
The charitable company had not contracted for any capital commitments as at 31 March 2020 (2019 - None).
There were no disclosable related party transactions during the year (2019 - none).
These financial statements are separate charity financial statements for Earthbalance 2000.
Details of the charity's subsidiaries at 31 March 2020 are as follows: