The trustees present their annual report and financial statements for the year ended 31 March 2025.
The financial statements have been prepared in accordance with the accounting policies set out in note 1 to the financial statements and comply with the charity's governing document, the Companies Act 2006 the Charities and Trustee Investment (Scotland) Act 2005, the Charities Accounts (Scotland) Regulations 2006, FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Charities SORP "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)".
KCFC is established to benefit the parish of Kilfinan, with the following aims and objectives as stated in our governing document.
To manage community land and associated assets with and for the benefit of the community and the public in general as an important part of the protection and sustainable development of Scotland’s natural environment where ‘sustainable development’ means development which meets the needs of the present without compromising the ability of future generations to meet their own needs.
To promote, for the public benefit, rural regeneration, following principles of sustainable development in areas of social and economic deprivation within the community by all or any of the following means:
The provision of financial assistance, technical assistance, or business advice or consultancy in order to provide training and employment opportunities for unemployed people in cases of financial or other charitable need through help (in setting up their own business or to an existing business).
The creation of training and employment opportunities by the provision of workspace, buildings and/or land for use on favourable terms.
The provision of housing for those who are in conditions of need and improvement of housing in the public sector, or in charitable ownership provided that such power shall not extend to relieving any local authorities or other bodies of a statutory duty to provide or improve housing.
The maintenance, improvement or provision of public amenities.
The preservation of buildings or sites of historic or architectural importance.
The provision or assistance in the provision of recreational facilities for those who, by reason of their youth, age infirmity or disablement, poverty or social and economic circumstances, have need of such facilities and for the public at large.
The protection or conservation of the environment.
To advance the education of the community about its environment, culture and/or history.
Such other purposes ancillary thereto as may be necessary or desirable for the furtherance of the foregoing object.
The trustees have paid due regard to guidance issued by OSCR in deciding what activities the charity should undertake.
The year of April 2024 – March 2025 saw the emphasis shift from replanting to improving the amenity value of the Community Forest and encouraging more small businesses to establish themselves or find more suitable premises.
Community Composting
Our garden waste disposal facility is subsidised by the local authority and is a much used resource by the local community, thereby preventing their garden waste from having to be transported to council landfill sites, thus helping to reduce their carbon footprint. The composting bays have been so well-used that improved drainage and resurfacing work has been carried out which has also greatly improved access to the workshop shed.
Hot Tunnel
The hot tunnel is leased out to a local horticulturist who has been able to expand his small business. In the winter it is heated by waste wood and lit by electricity produced by the KCFC Hydro, making it a carbon neutral business.
K.A.G
The KAG Allotment group continues to be a very popular facility within KCFC. Allowing local families to have growing space in order to grow their own fruit, vegetables and flowers. They also have shared communal areas to increase the amount of produce they are able to grow.
Public Access
The most important improvement for public access has been through the successful application for grant funding to purchase the strip of land from the council across which the main access to the Community Forest lies. Regular investment has been made into the extension and upkeep of the path network, and new signage and picnic tables have been deployed across the path network by a hugely dedicated team of volunteers.
Crofts
Three new crofts have been assigned on a "good will" basis pending official allocation being made by the Crofting Commission. It is hoped the local families who have been assigned them will be able to support both woodland and local regeneration by starting their own land based micro-businesses. The diverse small woodlands that these will create helps to promote a healthy forest ecosystem in the long term.
Community Engagement
The woodworking groups are held once a week and are continuing to be very popular and give local residents the opportunity to both hone their skills or learn new ones. These woodwork groups also provide the forest with nesting boxes for bats, owls and squirrels, as well as providing signage that is used around the forest. The Forest Centre is now in use and is very popular with many bookings for a wide variety of purposes. A children's art workshop is held fortnightly in the Forest Centre.
Staff
KCFC employs one part-time member of staff who is the book-keeper. We concentrate on offering local small businesses the opportunity to tender for essential work in the forest. This has enabled us to contract out for such things as: painting and decorating, landscape maintenance, joinery, plastering, road maintenance, invasive species management, drainage and culvert work, replanting etc as well as office work and part time log splitting operatives supplying netted bags of logs to both village stores.
Forest Operations
Restocking has been ongoing, with twenty hectares of mixed broadleaf trees planted. Extensive beating up of previous replanting has also been carried out along with rhododendron and pine weevil control. The forest nursery has been completed so KCFC can be self-sufficient in growing trees for restocking the forest. The forest Nursey /Tunnel also acts as a drying facility for our own log processing separate from the sawmill that is very successful supplying seasoned logs to local shops and the wider community. Adjacent to this is a new deer-fenced community orchard and a wildlife pond. Around eight hectares of larch trees has been identified with Phytophthora ramorum and has been condemned by Scottish Forestry.
Infrastructure
Extensive maintenance works have been carried out to the hydro-electric plant and intake, and the main access road has been resurfaced. A dumper truck has been purchased to help with maintenance to the roads, paths and for general operational purposes and a log-splitter for firewood provision to the community.
Business development
Further to the rental of workshops, storage facilities, etc., a new micro-unit has been leased for a local business and the sawmill is now leased, in operation, and supplying the community with milled timber and logs.
Focus for 2025/26
With many major long-standing projects and aims now completed or near completion, the focus will be on adhering to the New Long Term Forest Plan, maintaining and improving the amenities and infrastructure of the Community Forest and supporting the existing and future local businesses using the forest as their base. With many major long-standing projects and aims now completed or near completion, the focus will be on adhering to the Long Term Forest Plan, maintaining and improving the amenities and infrastructure of the Community Forest and supporting the existing and future local businesses using the forest as their base.
The charity has a policy to build its free reserves to £100,000 in the medium term. At 31 March 2025 KCFC had total funds of £806,715, of which £609,026 are restricted funds £355,726 are unrestricted and there is a deficit on the designated fund of £158,037. Combining the unrestricted and designated funds there is a surplus on unrestricted funds of £231,234. The Trustee's note that the unrestricted funds as at the balance sheet date have continued to remain in a surplus position.
It is the policy of the charity that unrestricted funds which have not been designated for a specific use should be maintained at a level equivalent to between three and six month’s expenditure. The trustees considers that the current level of unrestricted reserves exceeds the amount necessary in the event of a significant drop in funding to continue the charity’s current activities.
The trustees have assessed the major risks to which the charity is exposed and are satisfied that systems are in place to mitigate exposure to the major risks.
The charity is an incorporated company limited by guarantee, and is governed by its Memorandum & Articles of Association. In the event of the company being wound up members are required to contribute an amount not exceeding £1 each.
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:
Appointment of Trustees is governed by the constitution of the charity. The Trustees are authorised to appoint new Trustees to fill vacancies arising through resignation or death of an existing Trustee. Up to one individual may be co-opted from Kilfinan Community Council, by written notice to Kilfinan Community Forest Company (KCFC) two days before an AGM. Kilfinan Community Council (or its successors) may appoint or remove its appointed Director at any time, by written notice two days before an AGM. Up to three individuals may be co- opted from time to time by the Board of Directors itself. A Co-opted Director (who can participate fully in and vote at all Board meetings) will serve until the next AGM after his/her co-option, at which point they can be re co-opted. A Co-opted Director can be removed from office at any time by a simple majority of the Board. The Board may from time to time fill any casual vacancy arising as a result of a retiral (or deemed retiral for any reason) of any Elected Director from or after the date of such retiral or deemed retiral until the next AGM.
There is a Register of Directors maintained, which sets out the full details of each Director as required for all registration purposes, including the date and type of appointment and the date of retiral. All of the trustees are members of the company and guarantee to contribute £1 in the event of a winding up.
The Board of Directors meets approximately once a month and is responsible for the charity’s strategic decision making, as well as HR and governance issues. Office Bearers are the Chair, the Vice-Chair and the Company Secretary. The Board brings diverse knowledge and experience to the organisation from business and finance, to marketing, forestry, education and construction.
As required, KCFC will seek advice through law firm MacRoberts LLP and accountancy services from Goldwells (Argyll) Ltd. Banking is conducted through the Royal Bank of Scotland and the Co-op Bank.
KCFC works with a number of strategic partners to support the business and bring value in different ways. There is the ongoing provision of valuable business advice, governance and training opportunities through which we are able to access a range of specialist advisors in sectorial, business and social enterprise fields. This has helped us grow from a grant-dependent organisation in 2010 into a more sustainable enterprise in 2025.
We also network and knowledge share with other community land ownership and woodland groups through the Community Woodlands Association (CWA), Community Land Scotland, Stirnerian and Glenan Community woodlands and have forged valuable industry connections with organizations such as Scottish Forestry, Crofting Commission, Scottish Woodlands and Tilhill. We have developed close links with Argyll & Bute Council, as well as with the Kilfinan Community Council and Tighnabruaich Development Trust to establish and address wider community priorities.
The trustees' report was approved by the Board of Trustees.
I report on the financial statements of the charity for the year ended 31 March 2025, which are set out on pages 6 to 19.
The charity’s trustees, who are also the directors of Kilfinan Community Forest Company for the purposes of company law, are responsible for the preparation of the financial statements in accordance with the terms of the Charities and Trustee Investments (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006. The trustees consider that the audit requirement of Regulation 10(1)(a) to (c) of the 2006 Accounts Regulations does not apply. It is my responsibility to examine the financial statements as required under section 44(1)(c) of the Act and to state whether particular matters have come to my attention.
My examination is carried out in accordance with Regulation 11 of the Charities Accounts (Scotland) Regulations 2006. An examination includes a review of the accounting records kept by the charity and a comparison of the financial statements presented with those records. It also includes consideration of any unusual items or disclosures in the financial statements, and seeking explanations from the trustees concerning any such matters. The procedures undertaken do not provide all the evidence that would be required in an audit, and consequently I do not express an audit opinion on the view given by the financial statements.
In connection with my examination, no matter has come to my attention:
to keep accounting records in accordance with section 44(1) (a) of the 2005 Act and Regulation 4 of the 2006 Accounts Regulations; and
to prepare financial statements which accord with the accounting records and comply with Regulation 8 of the 2006 Accounts Regulations;
to which, in my opinion, attention should be drawn in order to enable a proper understanding of the financial statements to be reached.
The statement of financial activities includes all gains and losses recognised in the year. All income and expenditure derive from continuing activities.
Kilfinan Community Forest Company is a private company limited by guarantee incorporated in Scotland. The registered office is Kilfinan Community Forest, Tighnabruaich, ARGYLL, PA21 2BD.
The financial statements have been prepared in accordance with the charity's memorandum and articles of association, the Charities and Trustee Investment (Scotland) Act 2005, the Charities Accounts (Scotland) Regulations 2006 (as amended) 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) (effective 1 January 2019)". 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 amounts 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 financial statements, 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 financial statements.
Full provision has been made at the balance sheet date for the replanting of the areas harvested and the directors propose to transfer from unrestricted reserves to the designated fund an amount each year for the next phase of replanting. The Directors consider that as the replanted biological asset matures, the impairment of the land recognised at the balance sheet date will be reversed and the impact of this will, over a period of years, result in the designated fund deficit shown at the balance sheet date being eliminated.
The Directors have also reviewed the projected trading of the Company and have concluded that there is sufficient sources of income and grant funding to enable the company to continue to meet its running costs.
Unrestricted funds are available for use at the discretion of the trustees in furtherance of their charitable objectives.
The designated fund represents the recognition of the full future liability for the replanting of areas harvested with transfers being made annually from unrestricted funds to meet the obligations for the current phase of planned replanting work.
Restricted funds are subject to specific conditions by donors or grantors as to how they may be used. The purposes and uses of the restricted funds are set out in the notes to the financial statements.
Cash donations are recognised on receipt. Other donations are recognised once the charity has been notified of the donation, unless performance conditions require deferral of the amount. Income tax recoverable in relation to donations received under Gift Aid or deeds of covenant is recognised at the time of the donation.
Liabilities are recognised as expenditure as soon as there is a legal or constructive obligation committing the charity to that expenditure, it is probable that settlement will be required and the amount of the obligation can be measured reliably.
All expenditure is accounted for on an accrual basis. All expenses including support costs and governance costs are allocated or apportioned to the applicable expenditure headings. For more information on this attribution refer to the note below.
- Expenditure on charitable activities includes staff costs, training, insurance, sundries, fuel, equipment, postage and admin, rent, forest operation costs, utilities, depreciation, volunteer expenses and other activities undertaken to further the purposes of the charity and their associated support costs.
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the statement of financial activities.
The directors have determined the future replanting costs of the felled forest and a provision for replanting has been provided in the accounts (see note 21).
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).
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition. Items held for distribution at no or nominal consideration are measured at the lower of replacement cost and cost.
Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
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 has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the charity's balance sheet when the charity becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Basic financial liabilities, including creditors and bank loans are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of operations from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the charity’s contractual obligations expire or are discharged or cancelled.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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.
Other income comprises miscellaneous sales income totalling £1,277 and recharged electricity and insurance costs to tenants of £1,716. (2024: other income comprises insurance proceeds received totalling £3,450 with respect to storm damage incurred that year plus recharges to tenants as appropriate).
None of the trustees (or any persons connected with them) received any remuneration during the year, but two Trustees received reimbursed costs of £134 (2024: one Trustee received £1,014).
The average monthly number of employees (excluding Trustees) during the year was:
The charity is exempt from taxation on its activities because all its income is applied for charitable purposes.
A transfer of £20,156 (2024: £252,559) from unrestricted funds to designated funds reflects the costs of replanting incurred during the year.
Included within Forestry and freehold land is commercial woodland which had a fair value of £295,000 on acquisition. An impairment review has been undertaken to determine the fair value of the mature forest and a full provision has been made against this asset as at the balance sheet date. It is expected that as the commercial woodland area is replanted and the timber matures then this impairment may be wholly or partly reversed in future years.
Further details on the replanting liability is included in Note 18.
Other creditors represents the balance of provision for future replanting of the forest.
The charity operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the charity in an independently administered fund.
These are unrestricted funds which are material to the charity's activities.
The restricted funds of the charity comprise the unexpended balances of donations and grants held on trust subject to specific conditions by donors as to how they may be used.
The credit to the HIE fund represents depreciation on the Forest Centre which was overstated in previous years.
The Trustees have made full provision for the expected replanting liabilities of the Trust and have shown this as a designated fund movement and liability. In the year to 31 March 2025 the fund decreased by £20,156 to reflect the replanting liability held by the Trust at the year end of £158,037.
During the year the charity entered into the following transactions with related parties:
Goods and services were bought from the above Trustees which were based on arms length transactions and being part of the overall sustainability plan in place for the Charity to utilise as much local labor and business organisations surrounding Kilfinan Community Forest.
The following amounts were outstanding at the reporting end date:
During the year the Charity made donations to five pensioners (with a total value of £30 per head) of two bags of knotted logs. Additionally the Charity also donated logs (as raffle prizes) to Kyles Allotment Group and the Kilfinan Hall for separate events they have been running. The total value of these donations were £70 each (£140 in total).
With the aid of grant funding received from the Scottish Land Fund, the Charity purchased an access road for the forestry in May 2025.