Charity registration number 1134359 (England and Wales) Charity registration number SC043751 {S¢otland) Company registration number 07130031 (England and Wales) HOUNDS FOR HEROES ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 TOGETHER WE CAN HOUNDS FOR HEROES LEGAL AND ADMINISTRATIVE INFORMATION Trustees A Parton A Ferguson JHForth P A Kelley M J Perkins H Slater AFSmith C Brook SECole H R Coltyer (Appointed 25 March 20251 (Appointed 25 February 20251 (Appointed 25 February 20251 Chair A Ferguson Vice-chair A Parton Charity Manager G Grant Charity number {England and Wales} 1134359 Charity number (Scotland) SC043751 Company number 07130031 Registered office Unit 2B Rookery Fann Buildings Ramsdean Petersfield Hampshire GU32 1 RU Auditor Moore (South) LLP City Gates 2- 4 Southgate Chichester West Sussex P019 8DJ Bankers Lloyds Bank plc 5 The Square Petersfield Hampshiie GU32 3HL HOUNDS FOR HEROES CONTENTS Page Trustees. report Independent audiloffs report 10-13 statement of finanual activities 14 Balance sheet 15 statement of cash flows 16 Notes to the financial statements 17-33 HOUNDS FOR HEROES TRUSTEES. REPORT (INCLUDING DIRECTORS. REPORT) FOR THE YEAR ENDED 31 MARCH 2025 The trustees present their annual report and financial statements for the year ended 31 March 2025. The financial slatements have been prepared in accordance with the accounting policies set oul in nole 1 to the financial statements and compty with the chanty's Artides of Associalion, the Companies Act 2006, the Charities and Trustee Investment (Scotland) Act 2005, the Charities Accounts (Scotland) Regulations 2006 {as amended) and "Accounting and Reporting by Chartties= Stalement of Recommended Practi￿ applicable to charities preparing iheir accounts in accordan￿ with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102)" (effective 1 January 2019). 1 Objectives and activities 1.1 Our Objectives Our principal objective is to enhance the qualty of life of HM Armed Forces and Emergency Services personnel who have become physically disabled through injury or illness at any time - service or non-service attributable. The Charity's Memorandum of Artides of Association allows a broad range of mechanisms by which Ihe Charity may achieve this objective, however, the Charity only came into exislence because of a remarkable life changing partnership that formed be￿een a dog and an injured seNiceman. Therefore, it remains the Charity's purpose to deliver our charitable benefit primarily through the provision of specially trained Assistance Dogs. This is Ihe raison d'etre of the Charity. The Charity can fund the whole working lrfe of our dogs up to the dog's retirement, although contributions to cost5 from Partners who are in a financial position to do so, are a￿ayS welcome. In this way the Charity can best safeguard the welfare of all our dogs throughout their working lives as well as relieve our Partners from the financial commitment of being partne￿d with an assistan￿ dog. 1.2 Our 5 Year Strategy (FY22123- FY26127) The Charity updated its 5 Year Strategic Plan for the stsrt of fiscal year FY22123. so this report covers Yr 3 of that strategy. The strategy aims to accelerate the delivery of charitable benefit, increasing the number of Partners it is able to support. balanced wilh our ability to generate income to fund Ihis rale of delivery. The Strategy continues development of the Charity. building on our solid foundations, to ensure it can meet the vision whilst mainlaining the quality of output and the character of the Charity that have become its hallmarks. Key elements of the 5 Year Strategy are as follows= The slrategic targel of acceleration of delivery of chartlable benefit is quantrfied by steadity increasing the number of puppies acquired each year to Commen￿ training from 5 puppies in Yr 1 to 24 puppies in the final year of Ihe strategic plan and for the number of eslablished new partnerships therefore lo grow by an average of 8 new partnerships per year over the 5 year strategy period. The acceleration of delivery of charitable benefit requires increased expenditure which will be met by a growth in income generated by a MO￿ significant fundraising aclivity plan, supported by expert resource as required and increased communication to key aUdien￿S. The strategic plan assumes that. as it will take lime for Ihe fundraising momentum to build, any cash deficil resulting from the imbalance belween income and expenditure in the first two years of the plan will be met by the use of unrestricted general fund5, Wlth the target that the Charity will reach a break-even position during FY24125. It is important that awareness of Ihe support the Charity provides reaches those servi￿}eX service personnel who could potentialty benefit from a partnership with an assistance dog. It is therefore a key component of the Strategy thal the Charity continues to build its relationships wilh olher military and emergency service support organisations to facilitate comrnunication and also offer mutual support to beneficiaries. The standards to which Hounds for Heroes operates are comparable to. and guided by, those determined by Assistance Dogs Intemational (ADII and are embedded as part of our heritage as what the Charity strives to maintain for our Partners. HOUNDS4-. FOR HEROES HOUNDS FOR HEROES TRUSTEES. REPORT (INCLUDING DIRECTORS. REPORT) (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2025 The govemance of the Charity shall be delivered by a team of Truslees who are unpaid volunteers. The ownership of the Charity's Strategic Plan will remain with the Trustees, and during the strategy period stralegic decisions will be made by the Trustees, with the involvement of the Charity Manager. The day-t day operational management will be conducted by the Charity's Senior Management Team. 1.3 OurAchievements and Perfomiance The ongoing dilTicult UK economic situation and an increase in global Un￿rtaInty has resulted in a far more challenging environmenl for charities to operate within than envisaged. Therefore, Hounds for Heroes has not been able to make the progress towards achieving ils strategic largets for Ihis fiscal Ihal it had planned. We aimed to deliver seven advanced dogs into partnerships in FY24125 and by the end of the fiscal had four dogs signed over into partnerships the same level of achievement as last fiscal. It is a￿ayS difficult to predict how long it will take for a potential partnership to progress from the initial matching prO￿sS through lo the signing of the full partnership agreement as the development of the relationship betsveen each dog and their Partner is individual to Ihal parlnership. One of the partnerships in FY24125 was for a successor dog for an existing Partner whose original dog had reached the end of their working life. It is always pleasing to be able to continue lo support our Parlners and know the value Ihey derive from having an assistan￿ dog aid them in their everyday lives. We acquired four puppies in FY24125, considerably below the number we were aiming to bring in due to a reduction in the availability of volunteer puppy parents. The Charity is relianl on having a pool of puppy parents who do an amazing job of supporting the Charity by providing the puppies with a loving, safe home and giving basic training for the firsl one to two years of Iheir lives. The Charity conducls regular recruitment drives to attract new puppy parents and foster parents as it is a critical factor in our ability to expand our intake of puppies and the￿fore increase delivery of charitable benefit as planned. Recruitment, and then retention. of volunteer puppy parents has become increasingty difficult over the past few years and is believed to be due to a combination of people needing to work moreAonger due to economic circumstances and also retired people wanting to have the flexibiltty to travellsupport family members and are therefore wary to take on the commitment of a young puppy. This is not a sttuation unique to Hounds for Heroes but a challenge that all assistsnce dog charities, who rely on volunteer puppy parents, are encounlering. In addition to the puppy training provided at our training centre in Ramsdean, the Charity continues to operate a puppy training hub in Portsmouth and continues to evaluate other options to extend its puppy parent catchment area. We use our training centre throughout the year for both adVan￿d dog training and the running of puppy dasses, as well as providing ongoing support to the puppy parents, with our dog trainers conducting a level of general training in extemal environments and providing One-l￿One support as required. At our training cenlre, we also hold matching sessions behveen applicants. who are ready to be partnered with a dog, and dogs who have completed their advanced training. Our regular schedule of aftercare visits with Parlners and their dogs has been delivered with the dogs and their Partners a￿ayS pleased to see our stsff in person in their home environment. Our application process remains open throughout the year and we have increased the level of our aclivity aimed at spreading awareness of what the charity does and how it can support disabled personnel who have served in eilher HM Amed Forces orlhe Emergency Services- no matter where or when Ihey served or for how long. We were delighted once again to hold our Partnership Celebration event in October '24, where we celebraled Ihe successful eslablishmenl of five Partnerships", welcoming the Partners, their dogs and the wonderful puppy parents and trainers who had played such a vital role in bringing the partnership to fruilion. It is always so rewarding for all involved to see the wonderful bond that has fomied between the Partners and their loyal companions. HOUNDS q-. FOR HEROES HOUNDS FOR HEROES TRUSTEES. REPORT (INCLUDING DIRECTORS. REPORT) (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2025 The Charity does not receive any govemment funding and therefore is totally dependenl upon the income il can raise to fund the development and delivery of its charitable benefft. As stated eadier, we intended in our stralegic plan to increase both the number of dogs in training and in partnerships which requires an annual increase in expenditure lo fund Ihe increased delivery. It is therefore importanl for the Charity to steadily grow its income, to cover our increased expenditure and to reduce our operating deficit. Our small fundraising team was increased with the addition of a Fundraising Officer part way through the year in order to expand the range of our fundraising initiatives. Due to the very difficult economic environment however, we, like many charities, found income generation came under pressure and we were not able to achieve our planned income and in fact income was down vs the prior fiscal by 8 /0. Through the hard work of the team we did still generate income of £476K from a number of sources and we are very grateful for the grants and donations made by a broad mix of institutions, corporate sponsors and individuals who have undertaken a number of challenges and activrties to generate our much needed funds. Expenditure increased by 230/0 compared to FY23124 due to a combination of inflation, increased fundraising resource and the resources required to deliver and support the planned increase in the number of dogs in training and the number of active partnerships whilst we acquired fewer puppies than we originally intended, we slill increased the number of dogs in training overall. However, cosls continued to be tightly managed and were kept below the original planned level. But despite this overall the operating deficit worsened vs last fiscal. Increasing awareness of the Charity, who and how tl helps, and how it can be supported, is one of our key priorities in order to facilitate the desired grovAh in the number of partnerships and in income generation. The Charity has an ongoing. and constanuy evolving. communications programme targeled at reaching and engaging our key target audiences. Our website. which was relaunched in March'23. is regulady updated as is all of our physical and digital collateral. We continue to promote the aims of the Charity and lo increase awareness of the support we provide, particularly through a consistent programme on social media channels- obtaining feature in other media where we can as well as attending a number of relevant events with our impacfful stand. We engage with our supporlers through publication of a quartedy Newsletter and other regular mail campaigns. In order to increase awareness of how the Charity can help physically disabled serving and veteran se￿iCe personnel, the Charity is proactively building its relationship with targel organisalions in order lo increase our applicant pipeline. The Charity's Founder has continued to deliver an Awareness Programme to increase understanding of the Charity's objectives amongst both the communities il wishes to deliver charitable benefit to. and wilh current and polential supporters. The Charity continues to use the comparison of the number of successful placements with the number of puppies that have started the training course as a key perfomiance indicator. Since commencing operations in 2011. by Ihe end of FY24125 the Charity had achieved 35 successful placements and this represents 52010 of the number of puppies that have started the training course and would have been expected to have been successfully placed with a Partner. The Charity aims to conlinue to improve performan￿ in this area by our knowledge of breeds and breeders, by increasing the awareness amongst breeders of the Charity's needs and by continuously improving our dog Iraining and partnering processes. And finally, The Trustees would like to pay tribute to the hard work and dedication of our staff and volunteers throughout this past year. 1.4 Our Focus forthe Coming Year Due to the operating challenges we experienced in fiscal 24125 and the expectalion that income generation will continue lo be under pressure. the Board of Trustees has reduced the growth objeclives for the Charity compared to the ambition set out in the 5 Year Strategic Plan but the intention is still to steadily develop in key areas. The areas of focus for FY25126 identified by the Trustees are = To continue to deliver high qualty SUPPOrt and afler-care to our existing Partners and to develop new partnerships. The number of dogs in active partnerships at the end of FY24125 was 18 and the target is to establish a further 5 new partnerships by the dose of the coming fiscal. HOUNDS q-. FOR HEROES HOUNDS FOR HEROES TRUSTEES. REPORT (INCLUDING DIRECTORS. REPORT) (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2025 Our stralegic desire is to have an ongoing, steadity InC￿a$1ng, pipeline of dogs to take through the various stages of training and placement to ensure we can deliver new partnerships in each year. Due to the shortage of available puppy parents and our focus to place our current dogs in advanced training into partnerships, we will slow down our acquisilion of puppies in Ihis fiscal aiming to welcome no more than 3 new puppies to the Hounds for Heroes team. We will continue recruitment campaigns for both our core and Portsmouth catchment areas and will investigate the development of another puppy training hub in a different area later in the fiscal. In order to fund our ongoing operations and the delivery of charitable benefit an increase in income generalion, albeil al a more modest level is vilal. We will continue to develop both our breadth and depth of income streams with a particular focus on developing support from corporate organisations. This will also be supported by our markeling and communications aclivtty to raise awareness of Ihe work of the Charity, increase supporter engagement and grow our supporter base. The Board, whilst it set an aspiration in the strategic Plan for the Charity to break even in FY24125, has detemiined to delay achievement of thal target for another Iwo years. Our financial position is sufficienlly sound to support this decision. The Board will continue to monitor progress in income generation dosely and will be conducting a review of our cost base. The Charity will continue lo manage expenditure carefulty. keeping a tight control on costs and seeking efficiencies to offset cost inflation where possible. To increase awareness of who the Charity helps and Ihe support it can provide, the Charity will build its communication and relationships with relevant organisations in order to reach more potential applicants. The Board of Trustees is also undertaking a review of our current 5 Year Strategy and will develop modifications to that strategy to reflect the change in market condttions. 2 Financial review 2.1 Overview The financial performance of Hounds for Heroes for the year ended 31 March 2025 reflects a period of significant activity and development. despite continued economic challenges. The Charity continues lo be committed to training and providing assistance dogs for injured and disabled men and women of both the UK Amied Forces and Emergency Services. For FY24125, the trustees set ambitious budget goals to increase our income through the Charity's growth. Unfortunately the ambitious income targel was not met but steps continue to be taken to increase income levels in FY25126. Wrth expenditure slighdy above budget. this meant that the deficit was larger than expected. Expenditure in FY24125 rose by 23¥0 compared to FY23124. Meanwhile, all categories of income showed a reduction on the previous year, with income overall falling by 80/0. We ended FY24125 with a cash deficit and this was higher than in previous years, but the defictt was broadty in line wtth budget. aligning with Ihe Trustees, projections as we work towards a positive net posttion. The Charity has ample reserves to sustain our objectives during this period of growth. Al the end of FY24125 the Charity had total fvnds of £1,262,457. As outlined in the Charity's Reserves Policy below, the Charity has sel aside £90.402 as Restricted Reserves and £993.227 as Designated Reserves leaving a balance of £178,828 as Unrestricted General Funds. Despite the overall deficit for the year, Unrestricted General Funds have actually seen an increase of 5°A. As of FY24125, the Charity possesses the necessary asset strength to move fotward effectively and deliver the quality and volume of charitable benefrts that both Ihe Charity and our donors aspire lo achieve. At the time of this report, we remain confident in the Charity's ability to continue as a viable and ongoing concern. Hounds for Heroes has demonstrated resilien￿ and financial prudence in FY24125, successfully managing its expenditures to continue supporting ils vital mission. The trustees remain dedicated to ensuring the Charity's financial health and suslainability, allowng it to provide lrfe-changing assislance dogs to those in need. HOUNDS4.- FOR HEROES HOUNDS FOR HEROES TRUSTEES. REPORT (INCLUDING DIRECTORS. REPORT) (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2025 2.2 Reserves Policy The Charity maintains a policy of holding both Restricted and Designated Reserves. The remaining funds. not allocated lo Ihese reserves, are categorised as Unrestricted General Funds, which support the day-tfrd8y operations of the Charity. The Restricted Reserve holds restricted funds that are the balance of all the as yet unspent donations where the donor has specified the lask to be achieved by their donation. The Designaled Reserves hold unrestricted funds which the Trustees agree are required to ensure. for instan￿. the welfare of all the dogs in our care and as required to miligale against identified finanual risks such as the uncertainty of income that all charities face. 2.2.1 Restricted Reserve The Restricted Reserve has decreased from £120,518 as at the end of FY23124 to £90,402 at the end of FY24125 (note 21). When a donor specifies the task to be achieved by a donation and this is declared at the time the donation is made, then the donation is placed in the Restricted ReseNe. In most cases the task identified takes several monlhs lo complete. When a donor sponsors a dog's name, it may take more than 2 years for the sponsored dog to be placed and for the Charity to deem Ihal the specified task has been achieved. Therefo￿, the Restricted Reserve is reduced by the spend made by the Charity as it progresses the delivery of the specified tasks. In this way the value of the Restricted ReSe￿e a￿ayS reflects the spend yet to be made to achieve the outcomes specified by the donors. 2.2.2 Designated Working Life Reserve The Charity chooses lo deliver charitable benefft by funding the enlire working life of the dog. The Working Life Reserve is therefore required to ensure that this commttment may be delivered irrespect5ve of the longevty of the Charity. The Working Life Reserve reflects funds to support 2 years of costs for all dogs in service. The Trustees have agreed that the cosl per year per dog will be £5,000 I FY23124 £5,000}. The Working Life Reserve at FY24125 is £360,000 IFY 23124 £360,000). 2.2.3 Designated Operating Reserve The Charity survives through charitable donations and it is recognised that from time to time any of our sponsors may wish to redirecl their sponsorship to other worthy causes. Replacement of a major sponsor may lake more Ihan two years and so this reserve is prudent protection against the Un￿rtaInlieS of income that all charities face. The Trustees have decided to maintain the Operating Reserve to allow the Charity to fvnction at its current rate of expenditure for 18 months. The projecled indirect running cosls of the Charity for the 18 months from the start of FY25126 are £598.227. Direcl costs are already covered within the Designated Working Life Reserve. The Trustees remain mindful of the need to release part or all of this designated reseNe into unreslricted general funds should the need arise. 2.2.4 Designated Named Dog Reserve The Charity has received many donalions for the sponsorship of a dog with a specific name. The Designated Named Dog Reserve identifies where a donation that is inilially placed in Ihe restricted reserve has been spent, bul the desired outcome has not yet been achieved in respect of a successful placement of a named dog. The reserve will be released once the desired outcome has been achieved. Amounts of £239,261 (2024= £25,414} have been released from this reserve back to unrestricted general funds during the year to reflect donations received previousty where the named dog is now in seplice. The fvnd has now been fully utilised. HOUNDS q-. FOR HEROES HOUNDS FOR HEROES TRUSTEES. REPORT (INCLUDING DIRECTORS. REPORT) (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2025 2.2.5 Designated Property Mainlenance Reserve The Charity currently occupies rented premises. The use of the premises causes wear and tear and the Charity is responsible for costs of the repair and maintenance of the premises. Propety maintenance is conducted throughout the year. The Property Maintenance Reserve ￿presents monies set aside to cover these costs. The Property Maintenance Reserve has been set at £35.000 and is reviewed annual￿. 2.3 Management of Funds The Trustees continue to pay high regard to the guidance of the Charity Commission in shaping how the Charity delivers charitable benefit. The management of the Charity's funds through the allocation of Restricted and Designaled Reserves is a key aspect of the Charity's strategy and will continue to be a priority for the Trustees. 2.4 Support from Sponsors During the year the Charity has been extremely fortunate to receive support from a number of organisations including the following= Ajdro School Aquila Army Benevolent Fund Betfred Bloomberg Bruce Wake Charitable Trust Dignity Pet Crematorium Fareham Masonic Lodge Forces Trust Girdlers Company Charitable Trust Godolphin School Grocers Charity Hampshire and Isle of Wight Communty Foundation Haramead Trust HMS Viclory Johnson Vets Joint Hospital Group (South) Kennel Club Ludlow Junior School Marilyn Gillanders and Valerie National Lottery Navigator Trust Pelersfield Golf Club RAF Cranwell Red Arrows Trust Team Raleigh Veterans Foundalion Worshipful Company of Conslruclors Worshipful Company of Wheelwrights HOUNDS q-. FOR HEROES HOUNDS FOR HEROES TRUSTEES. REPORT (INCLUDING DIRECTORS. REPORT) (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2025 2.5 Pay Policy for Trustees and Slaff All Trustees give their time freety and no Trustee re￿iVed remuneration from the Charity in the year. There is no intention for this to change. Details of Trustees, expenses and related party transactions are disdosed in Note 11 to the accounts The pay of staff is reviewed annualty by the Trustees supported by the Charity Manager. Staff pay normalty is increased by a cost of living increment at the stsrt of each financial year guided by CPI and RPI in February for the prior year. Changes in salary to reflect changes in the level of responsibilty of staff members are also usually but not exdusivety timed to come into effect at the start of the financial year. 3 Risk management The Truslees have a risk management strategy which comprises: A review of Ihe principal financial risks is held at the Finance Committee meeling, and are reviewed on a regular basis. The Reserves Policy outlined earlier reflects the Per￿1ved financial risks and how the Charity has mitigated against those risks. The establishment and maintenance of a Risk Register which identrfies all material risks to the operalion of the Charity and the implementation. Plans are identified to reduce the likelihoodlimpact of the identified risks and the Trustees review the Risk Register quarterfy. 4 Struclure. governance and management The Hounds for Heroes Charity is a company limited by guarantee, without share captlal. The Charity's goveming document is ils Artides of Association, dated 1 st April 2015. The Trustees meet regulady, currentty monthly, to review perfomiance, discuss currenl projects and how the Charity's long temi aims and objectives are being met. Presendy the Trustees collectivety act as the board of directors responsible for strategy and the delivery of governan￿. In addition, the Truslees work through sub ffj T5 * 00)r (D (JJ fo ro 73 ffj7)￿ CD 4N (g ¢D v ¢D i ￿ CY *X+ ¢x• Z (C LL HOUNDS FOR HEROES BALANCE SHEET ASAT31 MARCH 2025 2025 2024 Notes Fixed assets Intangible assets Tangible assets 14 15 9,690 27,422 12,920 2,881 37,112 15,801 Current assets Slocks Debtors Inveslments Cash at bank and in hand 16 17 18 2,923 61.163 1,104,206 146.174 2,680 106.082 1,360,741 66.518 1.314.466 1.536.021 Creditors: amounts falling due within one year 19 (89.121) (29.4941 Net current assets 1.225,345 1,506,527 Total assets less current liabilities 1.262,457 1,522,328 The funds of the charity Restricted income funds Unrestricted funds - general Unrestricled funds - designated 21 23 90,402 178,828 993,227 120,518 170,322 1,231,488 1,262,457 1,522,328 These financial statements have been prepared in accordan￿ with the provisions applicable to companies subject to the small companies regime. The financial stalements were approved by the trustees on 15 Oclober 2025 Allern PaAtwb A Parton Trustee Company registration number 07130031 (England and Wales) 15- HOUNDS FOR HEROES STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2025 2025 2024 Notes Cash flows from operating activities Cash absorbed by operations 28 (202,870) {143,494) Investing activities Purchase of langible fixed assets Movements on bank fixed term deposits treated as inveslments Investment income received (32.773) 256.535 58.764 123.801 63,067 Net cash generated from investing activities 282,526 186,868 Net cash generated from financing activities Net increase in cash and cash equivalents 79,656 43,374 Cash and cash equivalents at beginning of year 66,518 23,144 Cash and cash equivalents at end of year 146,174 66,518 16- HOUNDS FOR HEROES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2025 Accounting policies Charity infonnation Hounds for Heroes is a private charitable company limited by guarantee incorporated in England and Wales, and registered with the Charity Commission in England and Wales, and Scodand. The registered office is Unit 2B, Rookery Fami Buildings. Ramsdean. Pelersfield, Hampshire. GU32 1 RU. 1.1 Accounting convention The financial statements have been prepared in accordance with the charity's goveming document, the Companies Act 2006, Ihe Charities and Trustee Investment (Scolland) Act 2005, the Charities Accounls (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 lo charities preparing their accounts in accordan￿ wtth the Financial Reporting Slandard applicable in the UK and Republic of Ireland IFRS 102)" The charity is a Public Benefit Entity as defined by FRS 102. The financial statements are prepared in sterling, which is the functional currency of Ihe charity- Monetary amounts in these financial statements are rounded to the nearest £1. The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below. 1.2 Going concern Al the time of approving the financial statements, the trustees have a reasonable expectstion Ihal the charity has adequate resources to continue in operational existen￿ for the foreseeable future. Thus the trustees continue to adopt the going concem basis of accounting in preparing the financial statements. 1.3 Charilable funds Unreslricled funds are available for use at the discretion of the trustees in furtherance of their charitable objeclives unless Ihe funds have been designated for other purposes. Such funds may be held in order to finance both working capital and capital investment. Designaled funds comprise ftjnds which have been sel aside al the discretion of Ihe trustees for specific purposes. The purposes and uses of the designated fijnds are set out in the notes to the financial statements. Restricted funds are subject lo 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 noles lo the financial statements. 1.4 Income Cash donalions are recognised on receipt. Other donations are recognised once the charity has been nolified of the donation, unless perfo￿anCe conditions require deferral of the amount. Income tax recoverable in relation lo donations received under Gift Aid or deeds of covenant is recognised at Ihe lime of Ihe donation. Legacies are recognised on re￿Ipt or otherwise if the charity has been notified of an impending distribution, the amount is known, and receipt is expected. If the amount is not known, the legacy is treated as a contingent asset. Included within other trading activities, is income from the sale of merchandise. Income is recognised on the exchange of goods for cash. Bank interest is accounted for when receivable. Included within charitable activities income is donations re￿iVed in retum for trustees or trainers to speak at events. These speakers, fees are considered to be voluntsry and are accounted ft)r on receipt, which is usualty the date the event lakes place. 17- HOUNDS FOR HEROES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2025 Accounting policies (Continued) 1.5 Expenditure Expenditure is recognised once there is a legal or conslruclive obligation lo transfer economic benefil lo a third paty, it is probable that a transfer of economic benefits will be required in settlement, and the amount of the obligation can be measured reliably. Expenditure is classified under the following adivty headings= Costs of raising funds comprise the costs of staging fundraising events. advertising and marketing and the associated support costs. Expendilure on charitable activities includes Ihe costs of purchasing puppies, their associated costs and slaff costs in relation to training the puppies. Other expenditure relating to the Tunning of the charity is allocated to the charity's sole charitable activity- Govemance costs include expenditure in relation to constitutional and stalutory obligations including audit and statutory accounts preparation, and any reimbursable expenses of the trustees. Irrecoverable VAT is charged as a cost against the activty for which the expenditure was incurred. Support costs are those functions that assisl the work of the charity but do nol directly undertake charilable activities. Support costs include back office costs. finance. personnel and govemance costs which support the charity's activities. These costs have been allocated be￿een costs of raising funds and expenditure on charitable aclivilies. The basis on which support costs have been allocated are set out in nole 9. 1.6 Inlangible fixed assets other than goodwill Intangible assets acquired separately from a business are recognised at cost and are subsequently measured al cost less accumulated amortisation and accumulated impaimient losses. Amortisation is recognised so as to vfflte off the cost or valuation of assets less their residual values over their useful lives on the following bases.. Software 20 /0 Straight line 1.7 Tangible fixed assets Tangible fixed assets are initially measured at cost and subsequenty measured at cost or valuation, nel of depreciation and any impairment losses. Deprecialion is recognised so as lo write off the cost or valuation of assets less their residual values over Iheir useful lives on the following bases.. Planl and equipment Fixtures and frttings Motor vehides 20 % straight line 20¥0 Straight line 20 % straight line The gain or loss arising on the disposal of an asset is determined as the difference be￿een the sale proceeds and the carrying value of the asset, and is recognised in the statement of financial activities. 18- HOUNDS FOR HEROES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2025 Accounting policies (Continued) 1.8 Impaimient of fixed assets Al each reporting end date, Ihe charity reviews the carrying amounts of its tangible and inlangible assets lo determine whether there is any indication that those assels have suffered an impaimient loss. If any such indicalion exists, Ihe recoverable amount of the asset is estimated in order to delemiine the extent of the impaimient loss {rf any). 1.9 Stocks Stock is valued at the lower of cost and net realisable value. after making due allowance for obsolele and slow moving items. Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. 1.10 Cash and cash equivalents Cash and cash equivalents indude cash in hand, deposits held at call with banks, other short-temi liquid inveslments with original malurilies of Ihree months or less, and bank overdrafts. Bank overdrafts are shown within bO￿owingS in Current liabilities. 1.11 Financial instruments The charity has elected to apply the provisions of Section 11 'Basic Financial Inslrumenls. and Section 12 'Other Financial Instruments Issues, of FRS 102 to all of tls financial instruments. Financial instruments are recognised in the charity's balan￿ sheel when the charity becomes party io 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 legalty enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or lo realise the assel and setue the liability simultaneously. Basic financial assets Basic financial assets, which indude debtors and cash and bank balances, are initially measured at transaction price including Iransaction costs and are subsequently carried al 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 fijture receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised. Impairment of financial assets Financial assets, other than those held at fair value through income and expenditure, are assessed for indicalors of impairmenl al each reporting date. Financial assels are impaired where there is objective eviden￿ that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired. the impaiThent loss is the differen￿ between the carying amount and the present value of the eslimated cash flows discounted al the asset's original effective interest rate. The impairment loss is recognised in net incomellexpenditurel for the year. If there is a decrease in the impaimient loss arising from an event occurring after the impairment was recognised. the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amounl would have been, had the impaimenl not previously been recognised. The impairment reversal is recognised in net incomel{expenditurel for the year. 19- HOUNDS FOR HEROES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2025 Accounting policies (Continued) Derecognition of financial assets Financial assets are derecognised only when the conlraclual righls to the cash flows from Ihe assel expire or are settled, or when the chartty transfers the financial asset and substantially all the risks and rewards of ownership to another enlity, or rf some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety lo an unrelated third party- Basic financial liabilities Basic financial liabilities, induding credrtors are lnttia1￿ recognised at transaction price unless the arrangement constilutes a financing Iransaction, vthere the debl instrument is measured al the present value of the future payments discounted at a market rate of interest. Financial liabililies dassified as payable within one year are not amortised. Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of operalions from suppliers. Amounts payable are dassified as current liabilities if payment is due wilhin one year or less. If not. they are presented as non-current liabilities. Trade credttors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method. Derecognition of financial liabilities Financial liabiltties are derecognised when the chartty's contractual obligations expire or are discharged or cancelled. 1.12 Employee benefits The cosl of any unused holiday entitlement is recognised in Ihe period in which Ihe employee's services are received. 1.13 Retirement benefits Payments to defined contribution retirement benefft schemes are charged as an expense as they fall due. 1.14 Debtors Trade and other deblors are recognised at the setuement amount due. Prepaymenls are valued at the amount prepaid. 1.15 Creditor5 Creditors and provisions are recognised where the charity has a present obligation resulting from a past event that will probably result in the Iransfer of funds to a third paty and the amounl due to settle the obligation can be measured reliably. Creditors and provisions are normally recognised at their settlement amount. Critical accounting estimates and judgements In the application of the charity's accounting poliaes. the trustees are required to make judgements, estimates and assumptions about the carying amount of assets and liabililies that are not readily apparent trom olher sources. The estimates and assouated assumptions are based on historical experience and other factors thal 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 eslimates are recognised in the period in which the estimate is revised where the revision affects only thal period, or in the period of the revision and future periods where the revision affects both currenl and fulure periods. The trustees consider that there are no material areas of judgement or estimation uncertainty- -20- c£1 ai L() * 75 W 75 * ta) (D f C J o t 7J ) o? (t) o( HOUNDS FOR HEROES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2025 Income from donations and legacies (Continued) Donated goods and services Donated seNices are included al the value to the charity, where this can be quanlified. Donaled goods and services received for which the trustees have been able to value include donations of insuran￿. vehicle repairs and re￿Ipt of a puppy. In addition to this, the trustees are very grateful for the time volunteered by individuals in running events and fundraising activities. This is invaluable support for the charity, and the trustees are nol able lo value Ihis in monetary terms. Income from charitable activities Unrestricted funds 2025 Unrestricted funds 2024 Puppies and working dogs Vet insurance refunds received 15,262 17,668 Income from other trading activities Unrestricted Unrestricted funds funds 2025 2024 Shop income other income 1,951 260 3,881 310 other trading activities 2,211 4,191 In both the current and prior year, this income is classified as unrestricted. Income from investments Unrestricted Unrestricted funds funds 2025 2024 Interesl receivable 58,764 63,067 In both the current and prior year, this income is dassified as unrestricted. -22- HOUNDS FOR HEROES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2025 Expenditure on raising funds Unrestricted Unrestricted funds funds 2025 2024 Fundraising and publicity Governance costs staging fundraising events Advertising other fundraising costs Staff costs Support costs 6,064 11,327 9,038 1,230 49,769 172,530 5,626 8,456 8,287 1,894 32,882 138,472 249,958 195,617 In both the current and prior year, costs relating to raising funds were expensed from unrestricted funds. -23- O￿lts￿￿O￿o(￿)￿ L¥ O Lfj TJ ¢Da}￿n0 rlD*NfDNfDr¢J) >* (ryJ (U O CL > c c QU)IlL)LL￿>￿_cLo