Statements of cash flows

1. Constitution

The Scout Association is incorporated by Royal Charter and is a registered charity whose purpose is to promote the development of young people in achieving their full physical, intellectual, social and spiritual potentials, as individuals, as responsible citizens and as members of their local, national and international communities. 

2. Scope of the financial statements

These financial statements cover the activities directly controlled by The Scout Association. The activities of the Scout Councils of Northern Ireland, Scotland and Wales together with Scout Counties, Areas, Regions, Districts and Groups are not reflected in these financial statements. Those bodies are separate autonomous charities that are affiliated to The Scout Association..

3. Accounting policies

The principal accounting policies adopted, judgements and key sources of estimation uncertainty in the preparation of the financial statements are as follows: 

a. Basis of preparation of consolidated financial statements
The financial statements have been prepared in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102), and the Statement of Recommended Practice, Accounting and Reporting by Charities, applicable to charities preparing their accounts in accordance with FRS 102, known as the Charities SORP (FRS 102).

The Scout Association meets the definition of a public benefit entity under FRS 102. Assets and liabilities are initially recognised at historical cost or transaction value unless otherwise stated in the relevant accounting policy note. 

The financial statements consolidate the financial statements of The Scout Association and its subsidiary companies. The financial year end of each of the subsidiary companies is 31 March.

The Balance Sheets and Profit and Loss accounts of the subsidiaries have been consolidated on a line by line basis as required by the Statement of Recommended Practice.

On acquisition of a business, all of the assets and liabilities that exist at the date of acquisition are recorded at their fair values reflecting their condition at that time. All changes to those assets and liabilities and the resulting surpluses that that arise after acquisition are charged to the post-acquisition Statement of Financial Activities.

The financial statements are prepared on the historical cost basis with the exception of investments, which are stated at fair value.

b. Going concern
Having reviewed financial plans and cash flow forecasts, the Trustees have a reasonable expectation that the charity has adequate resources to continue operating for the foreseeable future. Accordingly, they believe that the going concern basis remains the appropriate basis on which to prepare the financial statements.

c. Recognition of income 

National membership subscriptions
Membership subscriptions are payable in advance for a year to 31 March and are recognised in the year of membership benefit. 

Legacies
Legacies are accounted for when the Association becomes entitled to them, where receipt is probable and where their value can be established with reasonable certainty. Where legacies include non-cash items these are included in income at the lower of probate value and market value at the date of receipt.

Insurance income
Insurance broking commission is recognised at the date of inception of the policy. The amount recognised is the total brokerage due to the company less an overall provision for unearned commission. Profit related commission is recognised when it can be reliably calculated and forecast to be received.

Commercial activities
Income from conference centres, sponsorship, National Scout Adventure Centres, and other income is accounted for when the Association is entitled to the income, the amount can be quantified with reasonable accuracy and the probability of receipt of the income is more likely than not.

Investment income
Dividends are accounted for on a receipts basis. Interest is accounted for on an accruals basis and includes all amounts earned up to the balance sheet date. Associated tax recoveries are included for all amounts shown as income.

Gifts in kind
Properties, investments, heritage assets, other fixed assets and any other assets or services donated to the charity are included as donated income at their estimated market value at the time of receipt.

d. Allocation of income and costs
All expenditure is accounted for on an accruals basis and is allocated as described below.

Activities for generating funds and fundraising trading: costs of goods sold and other costs.
Income and expenditure from Scout Store Limited, World Scout Shop Limited, Scout Services Limited. 

Charitable activities
This comprises income from the provision of services supporting the objects of the Association through operations including the Information Centre, insurance services, and Scouting magazine as well as the National Activity Centres. 20% of accommodation and training fees receivable at the Gilwell Conference Centre are also included under this heading, with the remaining income included in activities for generating funds. 

Charitable activities have been analysed under the following headings: – Youth programme – Development of Scouting – Adult support and training – Support and services to members The Association’s activities are largely financed by national membership subscriptions and by the surpluses generated by its trading subsidiaries rather than income from charitable activities. The activities have been classified as described in note 6. Where possible the income and costs relating to a department or cost centre are allocated in full to one of the above categories, but in practice many departments have an involvement in more than one activity. The other major allocations are set out below. 

Support costs
These are costs incurred directly in support of the objects of the Charity. The costs are attributed to the activities that they support. Where a department supports all the Charity’s activities the costs have been apportioned pro-rata to the staff resources directly engaged in that activity. The percentages that apply are:

Trading – 6%

Youth programme – 20%

Development of Scouting – 29%

Adult support and training – 26%

Support and services to members – 19%

Grants payable
Grants payable are included in the Statement of Financial Activities as expenditure in the period in which the award is made. Grants which have been approved by the Trustees and agreed with other organisations but which are unpaid at the year end are accrued. Grants where the beneficiary has not been informed or has to meet certain conditions before the grant is released are not accrued.

Governance costs
These are the costs associated with the governance arrangements of the Charity which relate to compliance with legal and statutory requirements of the Charity as opposed to those costs associated with fundraising. They include audit fees and the costs of Trustees’ meetings.

e. Intangible fixed
assets IT software is capitalised and written off over the term of the related contract, between 2 and 5 years. Systems Development is capitalised and once the project have completed they are written off over 5 years. Goodwill arising on acquisition of an undertaking is the difference between the fair value of the consideration paid and the fair value of the assets and liabilities acquired. It is capitalised and amortised through the Statement of Financial Activities over the Trustees’ estimate of its useful economic life which can range from 5 to 10 years. Impairment tests on the carrying value are undertaken at the end of the first full year after acquisition and in any other subsequent period if events or changes in circumstances indicate that the carrying value may not be recoverable. The cost of acquiring a brand licence is written off over the term of the related contract.

f. Heritage fixed assets
The Association maintains a heritage collection of around 250,000 items. Through an active and innovative programme of collecting, interpreting and engagement, the Heritage Collection helps create connections between members of The Scout Association, both past and present, and the wider community. The Heritage Collection is managed by the Headquarters’ Heritage Service. To ensure its ongoing representation of Scouting’s story the Heritage Service continues to collect both historical and contemporary material. New acquisitions are normally made by donation with occasional low cost purchases. New material is acquired in accordance with The Scout Association’s Collecting Policy.

Heritage assets are carried at fair value. The Association has made reference to the latest available external valuations in forming their assessment of period end fair value. Gains and losses on revaluation are recognised through ‘Other recognised gains’ in the Statement of Financial Activities.

The Association will occasionally approve the disposal of elements of the Collection, this process is carried out in accordance with the Code of Ethics and industry best practice as dictated by the Arts Council England Accreditation Standard. Disposal will be judged against the Association’s Collecting Policy. Disposal will be carried out in line with the Disposal Policy and follow the Disposal Procedure. Disposal of accessioned material only takes place with the approval of the Trustees or their designated representative. Disposal of non-accessioned items takes place with the approval of the Director of Commercial Services.

Expenditure that is in the Trustees’ view required to conserve or prevent further deterioration of individual items is recognised as expenditure when it is incurred. The Heritage Service actively seeks external funding to support the delivery of this work. 

g. Other fixed assets
Other fixed assets are stated at cost. Where land and buildings are acquired together it is assumed that the buildings represent 50% of the initial cost. Investment in systems development in support of the charity's strategy is capitalised as a tangible fixed asset. Depreciation is calculated to write off the cost of assets by equal annual amounts over their expected useful lives. Assets costing less than £1,000 are not capitalised. No depreciation is provided on freehold land. 

Depreciation rates used are:
Freehold property – 50 years, with 10 years for replacement elements

Leasehold property – the shorter of the lease period or 50 years

Furniture fittings and equipment – 4 to 5 years

Motor vehicles – 5 to 10 years Gains or losses on the disposal of fixed assets are reflected in net income/expenditure for the year shown in the Statement of Financial Activities.

Impairment reviews on fixed assets are carried out each year and any asset with a carrying value materially higher than its recoverable or useful value is written down accordingly.

Fixed assets held for investment purposes are stated at market value on the balance sheet date.

Any gains or losses on the disposal or revaluation of investment assets are as shown net gains/(losses) on investments in the Statement of Financial Activities. 

h. Investments
The Scout Association holds investments both in order to generate income for the support of charitable objectives and to provide assets to meet the need of reserves, identified in the reserves policy. Investments are stated at current market value on the balance sheet date unless there’s evidence of a different fair value.

Gains or losses arising during the year are disclosed in the statement of financial activities and in the notes to the financial statements. 

i. Current asset investments
The funds deposited by Scout Groups in the Short Term Investment Service are held on short-term deposit with an external investment manager. These short-term deposits are not held by the Scout Association for investments purposes and are included in the balance sheet at fair value as current asset investments. Movements in these funds are shown in the notes to the financial statements. 

j. Stocks Stocks
are valued at the lower of cost and estimated net realisable value. Cost is calculated using the current purchase price method and consists of the original cost of goods without any addition for overheads.

k. Provisions
A provision is recognised in the balance sheet when the Association has an obligation as a result of a past event and it is probable that an outflow of economic benefits that can be reliably measured will be required to settle that obligation.

l. VAT
The Association is partially exempt for VAT purposes and is not able to reclaim all the VAT it pays. It is not practicable to allocate irrecoverable VAT to the expenses and assets concerned, and irrecoverable VAT is written off.

m. Leases
Significant assets held under finance leases and the related lease obligations are included at the fair value of the leased assets at the inception of the lease. Depreciation on leased assets is calculated to write off this amount on a straight-line basis over the shorter of the lease term and the useful life of the asset.

Rentals payable are apportioned between the finance charge and a reduction of the outstanding obligations.

All other leases have been treated as operating leases and the rentals written off as they are paid because of the insignificant amounts involved.

n. Pension costs
Contributions payable to The Scout Association Pension Scheme are charged to the Statement of Financial Activities so as to spread the cost of pensions over the working lives of employees in the scheme. The pension charge is calculated on the basis of actuarial advice.

The pension scheme liabilities are measured using a projected unit method and discounted at an AA sterling corporate bond rate. The pension scheme deficit is recognised in full on the balance sheet.

The current service cost and net return on the scheme’s assets and liabilities for the year is allocated across the resources expended categories in the Statement of Financial Activities. The actuarial gain on the scheme for the year is included in the gains/(losses) section of the Statement of Financial Activities.

Contributions towards personal pension policies, which are defined contribution schemes, are charged to the Statement of Financial Activities as they are incurred.

o. Financial assets
Financial assets, other than investments and derivatives, are initially measured at transaction price (including transaction costs) and subsequently held at cost, less any impairment.

p. Financial liabilities
Financial liabilities are classified according to the substance of the financial instrument’s contractual obligations, rather than the financial instrument’s legal form. Financial liabilities, excluding derivatives, are initially measured at transaction price (including transaction costs) and subsequently held at amortised cost. 

q. Forward currency contracts
The Scout Association enters into forward contracts for the purchase of currency in order to manage its exchange rate exposure relating to the World Scout Jamboree and other overseas events. Hedge contracts are measured at fair value at each reporting date.

Where there is a change in exposure at the balance sheet date, through movement in the forward exchange rate from the contract rate, that change is included in expenditure in the statement of financial activities.

r. Judgements in applying accounting policies and key sources of estimation uncertainty
In preparing these financial statements, the Trustees have made the following judgements:

The determination of whether fixed asset properties owned by the Scout Association are held for operational use, and so are classed as tangible fixed assets, or whether they are classed as investment properties.

The determination of whether or not there are indications of impairment of the Scout Association’s tangible and intangible assets, including goodwill, taking into consideration the economic viability and expected future financial performance of the asset.

The determination of appropriate provision for claims, supported by legal advice.

The determination of appropriate financial and demographic assumptions in valuing the defined benefit pension liability in line with FRS 102 requirements, supported by actuarial advice.

4. Nature of funds

All funds are identified as identified as falling into one of three categories.

Endowment funds
Endowment funds are those received to be held as capital on a total returns basis with only the income available to be spent. Subsequent gains or losses on the disposal of the underlying assets of the fund become part of the capital.

Restricted funds
Restricted funds are those received which have been earmarked for a special purpose by the donor or the terms of an appeal.

Unrestricted funds
Unrestricted funds are those received, which are not subject to any special restriction. They are divided between general funds and designated funds. Designated funds comprise amounts set aside by the Trustees to be used for particular purposes. 

Charitable activities have been analysed into four categories as explained in note 3.d.

Costs are allocated using the principles explained in that note. Youth programme includes the various educational activities in which members participate. Development activities are those which are focused on growing our movement. Adult support and training includes those activities which assist leaders and other adults involved in Scouts. Support and services to the movement includes those activities that help ensure the safety and safeguarding of members, which underpin the activities of Scout Groups. 

All the listed investments are classified as tier 1 in the fair value hierarchy, being quoted prices in an active market. The investments have a credit rating of at least A. The listed investments are subject to market risk, with their value changing as market prices change. The Scout Association holds listed investments in support of the reserves policy and in 2021 Scout Insurance (Guernsey) Limited held investments for the purposes of insurance activities.

The Association paid £25,015 investment management fees and commission charges to Cazenove Capital Management during the year (2021: £8,000). 

The investment property at 65 Queens Gate, Baden-Powell House was sold in August 2021 for £46 million. 

Scout Shops Limited arranged a £3m loan under the government Coronavirus Business Interruption Loan Scheme with Barclays Bank, secured by a guarantee from The Scout Association. The loan was repayable in quarterly instalments over 5 years commencing September 2021. Interest was charged at 2.3% above a floating base rate commencing in September 2021. The loan was prepaid in full in December 2021. 

The Association puts young people first and their safeguarding and safety is paramount, but with the nature of our work there are claims made against the Scout Association. Taking account of legal advice, provision is made on a best estimates basis for those claims of which the Association is aware and for which it is assessed it is probable that the Association will be liable. Such claims are covered in part by commercial insurance policies and, in relation to the Association itself in the prior year, by insurance policies issued by Scout Insurance (Guernsey) Limited. The amount receivable from insurers to the extent that provision has been made is included in debtors.

In addition it is the Association’s experience that incidents and/or claims may still be notified to the Association for events which occurred prior to 31 March 2022. Since the nature of any such incident or claim is not yet known, it is not possible for the Association to determine whether it is probable that the Association will be held liable or to estimate the amount of any consequential outflow of economic benefits. Therefore there exists an unquantifiable contingent liability in respect of such incidents and/or claims. As noted above the Association has arranged cover with commercial insurers for such claims and accordingly the Association is satisfied that any such claims that might arise would not present a significant financial risk to the Association. 

b. Endowment funds - Consolidated and the Association
Endowment funds include the 1914 Endowment Fund, the King George VI Leadership Fund and 8 (2021: 6) other funds administered by the Association.

Income from the 1914 Endowment Fund and two others is unrestricted and credited to the General Fund.

Income from two funds is restricted and income from the remaining fund is paid to an external Scouting beneficiary.

c. Restricted funds - Consolidated and the Association
The main restricted funds are shown in note 18(a), comprising national and local development funds.

Further details of the funds available, and the process of applying to them for grants, are to be found at www.scouts.org.uk/grants.

d. Designated funds - Consolidated and the Association
The fixed asset fund represents the value of the Association's tangible fixed assets, goodwill & licences, and heritage assets.

The World Scout Events Fund provides support to members attending World Scouting events, such as World Jamborees, the World Moot and the World Scout Conference.

The Capital Development Fund represents capital projects that have been approved by the Finance Committee to improve the safeguarding and operations of the charity, where the future commitment has not been incurred at the year end. 

At 31 March 2022 there was no capital expenditure authorised but not committed (2021: £nil).

21. Events occurring after the reporting period

There have been no material events occurring after the reporting period.

22. Related party transactions

During the year 15 Trustees (2021: 2 Trustees) were reimbursed £4,281 expenses (2021: £300) for travel and subsistence, incurred in their attending meetings and in the carrying out of their duties. Note 6 refers to trustee remuneration.

Transactions with the defined benefit pension scheme comprised agreed ongoing, deficit and administration payments of £617,000 (2021: £722,000) and in 2021 a one-off £2,000,000 deficit payment in accordance with the agreed deficit reduction plan.

Transactions with subsidiaries: 

23. Restatement of Systems Development

The balance sheet at 31 March 2021 has been restated to reflect the reclassification of Systems Development as Intangible Fixed Assets.