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2021-03-31-accounts

Company no. 06373488 Charity no. 1122964

Luton Cultural Services Trust

Annual Report and Financial Statements

For the year ended 31 March 2021

LUTON CULTURAL SERVICES TRUST REPORT OF THE TRUSTEES FOR THE YEAR ENDED 31 MARCH 2021

Page No.
Trustees’ Report 1 - 13
Independent Auditor’s Report 14 - 17
Consolidated Statement of Financial Activities 18
Consolidated Balance Sheet 20
Consolidated Cash Flow Statement 21
Notes to the financial statements 22 - 34

Luton Cultural Services Trust

Report of the Board of Trustees for the year ended 31 March 2021

The Trustees are pleased to present their annual directors’ report together with the consolidated financial statements of the charity and its subsidiary for the year ending 31 March 2021 which are also prepared to meet the requirements for a directors’ report and accounts for Companies Act purposes.

The financial statements comply with the Charities Act 2011, the Companies Act 2006, the Memorandum and Articles of Association 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 2015).

Chair’s Report and Strategic Report

2020/21 was a difficult year for the Trust as our sites and venues remained largely closed due to the Covid-19 pandemic from late-March 2020.

We were able to open Stockwood Discovery Centre briefly from August to October and again for two weeks in December. The Hat Factory Arts Centre also opened for four weeks in October, before a second national lockdown meant the complete closure of all sites until mid-2021.

This was particularly disappointing for the Hat Factory Arts Centre, after relaunching post-refurbishment in late 2019; lock-down led to an abrupt close to the programmes and partnerships which were gaining in momentum.

The Trust’s footfall performance can be found on page 13 of this report. No KPI targets were set for 2020-21 due to the uncertainty of the pandemic.

With our sites closed for most of 2020/21 we focused on maintaining contact with our partners, artists and audiences through social media and online initiatives. There were 3 areas of focus:

  1. Promoting the Trust and keeping lines of communication open about our sites and activities and how to engage in culture digitally.

  2. Promoting our creative industry community, partnerships, museum makers and our ongoing National Portfolio Museum engagement work

  3. Promoting national initiatives and digital engagement in the Arts, Heritage, Museum, Cultural skills and Creative industries sectors

Despite the majority of our staff being on furlough, we aimed to prioritise digital engagement and communications. It was pleasing to see our customers staying engaged with our content through the lockdown periods with engagement figures remaining consistent on all areas of social media, at around 70% of normal engagement in the first half of 2020-21 and understandably dropping to 55% in the second half of the year.

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Content relating to Luton proved the most popular with excellent responses to Keep the Home Fires Burning , Hat District-related content and Made in Luton - the Vauxhall exhibition of vintage cars at Stockwood Discovery Centre.

We also trialled live streaming for the first time with Basement Live at the Hat Factory showcasing 3 local bands playing live in October 2020. In December we streamed our popular version of Dickens’ A Christmas Carol set in Wardown House. This created good social media numbers, gaining almost 20,000 views on Facebook and Twitter before the launch date. It was streamed for 3 weeks from December to January and achieved 1,187 views with £270 in online donations.

We support the careers of artists, creatives and cultural practitioners through our work and we regularly contract freelancers, commission artists and programme activities and events that support the local creative economy. The #FactoryWindow video screen at the Hat Factory Arts Centre promotes digital artist commissions on a large-screen into the public realm animating Bute Street and the town centre with creative interventions. We were able to continue this throughout 2020-21 with the work of 8 artists showcased throughout the year which included short films, animation and time-lapse videos

Despite the pandemic, the Hat District creative workspaces continued to be open for use and we managed to secure a new flagship tenant for the top floor of Hat House Creative Workspace. 2020 saw The Panama Hat Company (a hat manufacturer in the former hat factory) and IMI Solutions (an engineering design company). Work on the Hat Works creative workspace at 47 Guildford Street, a Grade II listed former hat factory, was disrupted at several points due to lockdowns but the project was completed in April 2021 with thanks to additional funding from Historic England and the National Lottery Heritage fund

We are very proud to have raised £7m of external funding towards the Hat District. This will protect important heritage buildings within the Plaiters Lea conservation area, re-energise Luton town centre and provide jobs and opportunities for local people whilst growing the creative economy.

The Hat District project is critically important to us as in the longer term it will provide sustainable income that can be re-invested back into the creative economy, arts development, skills and talent and Hat District heritage. This provides the Trust with greater financial resilience and a more stable business model. I would like to thank the capital project funders, in particular SEMLEP, National Lottery Heritage Fund, Historic England and the Architectural Heritage Fund for their financial support in the delivery of our vision and the many charitable Trusts and small grant funders who have enabled us to invest in developing high quality provision for local people and the creative industries.

Our 2020-25 business plan will continue to focus on widening community participation and ensuring our audiences mirror the diversity of Luton. This is incredibly important in driving our programmes and activities and we proudly present Black, Asian and Minority Ethnic artists and cultural leaders across our venues. We will continue to build our audiences at the Luton Library Theatre and Hat Factory Arts Centre, through our high quality arts events, programmes,

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exhibitions, workshops, performances, public art, historic site5, collections and visrtorfacilities. Through our important partnership with London Luton Airport Limited and Luton Borough Council we are able to address barriers to cultural engagement and learning by providing free Museums and subsidised access to Culture. I would like to thank London Luton Airport Limited for their donation which benefits thousands of people through our cultural activity and enables us to care for the town's museums, local history, carriage and hat collertions, heritage sites and curate free access exhibitions and events. Our two museums at Wardown House and Stockwood Discovery Centre remain free entry and where we programme ticketed activity, we aim to ensure an inclusive for all offer. Our team of staff and volunteers continue to be passionate about their work and remain committed to ensuring high quality visitor experiences. I value their creativity. loyalty. talent and positive spirit. particularly in such 3 challenging year. I would like to thank the entire team and board of trustees for their reslllence and commitment to the Trust at all times, but in particular in our current situaiion where they are skilfully and dili8ently dellverin8 through the Covid-19 pandemic. We also continue as an Arts Councll Engtand Nationt71 Portfolio Organisotion to deliver our exemplary work with volunteer5 and collections development at Wordown House Museum and Gallery and throu8h our Museum Mokers. I would like to thank the Arts Council England for our regular funding and also their ongoing advice and support and for their additional support in grants during the COVID pandemic. DCMS Culture Recovery Fundlng was also applied for and offered to the Trust to support our endeavours through COVIO-19 and help us recover more swiftly in 202112. Museum Makers engages local Communities in heritage and collection5 Wlth over IS￿ members. Museum makers are involved in the co<uration and delivery of the manyexhibitions and events including Made in Luton at Stockwood Discovery Centre in 2020. Collectively, with the support of our funder5, Staff, partners, volunteers and visriors we are proud to make important contributions to the local economv through the provision of creative opportunities, jobs, careers, professional workspace and creative industry start-ups. We also help bring funding into Luton, we regenerate run-down buildings and put them to good use and we animate venues and spaces to make them interesting and engaging for everyone. In addition, we are proud of ihe creative and cultural opportunr(ies we provide. particularly for young people, and the stepping stones we create to SUPPOrt wellbein& tultural fulfilmeni and talent and skill progression for ovr community. This is as important now ès it has ever been. Nick Gibson Chair of Trustees

Our Purposes and Activities

The objects of the Charity are as follows:

(a) The Charity has been established for the benefit of the public primarily for the community and visitors to Luton and the wider area of the East of England for not limited to the following objects.

(b) The advancement and support of education, culture, arts, heritage and history including the provision of museums, galleries, learning and information centres, archives and other related services; and/or

(c) The provision or assistance in the provision of facilities for recreation or other leisure time occupation in the interest of social welfare such facilities being provided to the public at large save that special facilities may be provided to persons who by reason of their youth, age, infirmity or disability, poverty or social or economic circumstances may have need of special facilities or services; and/or

(d) Such other charitable purposes beneficial to the public consistent with the objects above as the Directors shall in their absolute discretion determine.

We produce and present year-round programmes of activity across our two theatres, museums, arts centre, gardens, and historic hat factories. We also manage the town’s heritage collections and archives. We have a collection of over two million archive and artefacts, and we hold the most extensive and complete hat and headwear collection in the UK and the Mossman carriage collection at Stockwood Discovery Centre is the largest in Europe. This includes over 1.5m local photographs and maps. We are proud to be based in Luton and we welcome thousands of regular local and regional users to our venues. We also invite the wider international community to engage with this incredibly diverse and stimulating town through our cultural offer.

We nurture our customers, audiences and team and we will engage the creativity of artists, curators, writers, performers and producers to make great new work. Through our programmes we actively promote the value of arts and culture in creating a sense of place, regeneration, wellbeing, community cohesion and in improving the quality of people’s lives. Across our programme we provide creative opportunities and activities for young people to inspire them and generate skills for life. We create transition and progression routes between formal education and successful careers to enable anyone with a skill, interest or passion in arts and culture to meet their full potential. We nurture fruitful strategic partnerships locally, nationally and internationally and we support a large following of loyal and proud customers, partners, funders, businesses, ambassadors, staff and volunteers.

How our activities deliver public benefit

The Trustees confirm that they have had regard to the Charity Commission’s guidance on Public Benefit.

The Trustees believe that the Trust meets the two key principles of public benefit as defined by law, being:

Our charitable activities focus on widening cultural engagement and participation across our free entry venues; Wardown House Museum & Gallery, Stockwood Discovery Centre, the Hat Factory Arts CentreLuton Library Theatre and the Storefront Gallery. Our activity programmes are targeted at encouraging underrepresented groups to attend and participate in arts, creative industries, education, cultural skills and learning, heritage, and museums. The table on page 13 below sets out in detail our performance and outcomes for the year.

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Our mission is ‘to connect communities through meaningful culture and creativity’ and in our revised business plan (2021-25) we clarify our six priorities as follows: 1. Widen Community Participation; 2. Develop Young people’s Skills and Talents; 3. Present Inspiring diverse Arts: 4. Grow Luton’s Creative Industry Cluster: 5. Co-curate Museum Collections and 6. Boost the Creative Economy.

Financial Review

During the year, turnover decreased by 32.32% to £4.541m (2019/20, £6.710m) due mainly to the ending of the library contract, the delivery of the Hat District Project stage 1 and to the reductions in programme and trade income resulting from closures due to the COVID 19 pandemic. These reductions in income, were partly offset by furlough income and COVID support grants received. The total resources expended decreased by 51.73% to £3.314m (2019/20, £6.866m) reflecting the effect of the ending of the library contract and of in year cost savings resulting from closures due to the pandemic.

The principal funding sources of income to the Trust itself is grants of £1,973,862 (2018/19, £3,311,219) for arts and culture. We also generate income from ticketed events, donations and rents/hire of spaces.

The requirement under FRS102 to provide for benefits accrued and the net interest cost of the defined benefit pension scheme in the Trusts SOFA has reduced the reported net income (before actuarial movements) by £421,000 (2019/20, £680,000) to a net income of £ 1,247,900 (2019/20 £156,110). In addition £46,019 (2019/20, £179,034) is held as restricted funds in respect of unspent funding received for specific projects at the year end.

The defined benefit pension deficit increased from £5,050,000 to £9,775,000 at the balance sheet date in accordance with the actuarial valuation report for FRS 102 purposes. The overall actuarial losses from the pension scheme were £ 4,314,000. This has produced a consolidated net liabilities position of £3,858,284 (2019/20, £771,103). The Trustees consider that the pension deficit is based on long term projections of future investment returns and demographic experience many years into the future and thus are unlikely to reflect the actual eventual cost of providing the pension benefits in the long term. In addition the last triennial full valuation carried out by the fund managers in March 2019 produced a funding surplus value of £2,395k. Accordingly, the Trust continues to adopt the going concern basis in preparing the financial statements.

Pricing Policy

Our pricing policy reflects our strategy of enabling free access to Museums at Wardown House Museum and Gallery and Stockwood Discovery Centre. We also provide an annual programme of free and subsidised arts and cultural activities and events where ticketed event prices range from £5 to £20 in the Luton Library theatre and Hat Factory Arts Centre. All of our museum exhibitions, collections and public art commissions are accessed freely. Since 2019/20 we have conducted a ticketing strategy called Culture for a Fiver where many of our arts events are priced at £5 to allow our audience to attend high quality arts that are affordable, particularly for the younger demographic of Luton as well as a Pay It Forward sponsorship scheme to encourage businesses to sponsor tickets for targeted groups and individuals in most need.

Investment Powers and Policy

The Trustees, having regard to the liquidity requirements of running the business, keep available funds in interest-bearing deposit accounts and seek to achieve a rate on deposit which matches or exceeds inflation as measured by the retail prices index. Due to wider economic circumstances deposit rates have been depressed and so this aim was not achieved in the year. There was nil invested funds held on deposit during the year.

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Reserves Policy and Going Concern

Reserves are needed to bridge the gap between the spending and receiving of income and to cover unplanned emergency expenditure or reductions in funding. The Trustees note that at the year-end, a total of £ 5,870,697 (2019/20, £4,089,863) is held in the general fund reserves and £ 46,019 (2019/20, £179,034) as restricted funds. The restricted funds are not available for general purposes at the end of the reporting period and the general funds are held in fixed assets properties and can only be realised through the disposal of these assets.

The Trustees consider that the ideal level of reserves as at 31[st] March 2021 would be £400,000 representing two months operational expenditure. The Trust has fallen below the level identified in the reserves policy during the period. The Trust 5 year plan includes a gradual restoration of the Trust reserves.

In accordance with their responsibilities, the Trustees have considered and concluded upon the appropriateness of the going concern basis, which has been used in the preparation of these financial statements. In making this going concern assessment, the Trustees have had regard to the matters highlighted in Note 1 section b in the accounts. After considering the uncertainties described in the note, the Trustees have a reasonable expectation that the charitable company will have sufficient resources to continue in operational existence for the foreseeable future. For these reasons, the Trust has continued to adopt the going concern basis in preparing the financial statements.

Plans for Future Periods

The Future strategy is for the Trust to re-animate its venues to pre-covid levels and return audiences and customers to engage in regular cultural experiences. Hat works will open in 2021 and will be a new resource for early stage creative industries who will be a critical pipeline of talent into the creative ecology of the Hat District. In addition the Trust will continue to grow its freehold property portfolio of buildings and assets in order to safeguard heritage, re-use redundant and neglected buildings for creative, cultural and education purposes and to generate more sustainable incomes to secure the Trust’s long-term stability. The freehold property strategy enables the Trust to maintain quality of provision commensurate with its customers’ expectations and market need. An expanded freehold property portfolio also provides the Trust with greater security of tenure and controls of use, rents and pricing into perpetuity. The Trust will also focus its resources on curating a balanced, inspiring and vibrant mix of activity which will widen use and participation at its three core sites.

Critically, the Trust will focus on creating high quality arts and cultural vibrancy at its sites which is locally relevant and nationally important. This shall build the Trust reputation and strengthen its brand values to a broader audience. Intensifying local use will be a key focus as will a strategy to welcoming customers from a wide geography; this will be led by a new Creative Programme and Audience Development Strategy and will be informed by the emerging Equity, Diversity and Inclusion strategy. . The Trust shall also focus on quality and standards, increasing productivity, economic impact, sustainability, developing new properties and partnership and increasing investment in the arts, heritage and cultural infrastructure .

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Reference and Administrative Details

Charity number: 1122964 Company number: 06373488 (England and Wales) Registered Office: The Hat Factory Arts Centre 65-67 Bute Street Luton LU1 2EY

Our Advisers

Auditors : Moore Kingston Smith LLP Devonshire House, 60 Goswell Rd, Barbican, London EC1M 7AD Bankers : Co-operative Bank plc 2 Alma Street Luton LU1 2PL Solicitors : Freeths LLP Routeco Office Park Davy Avenue Knowlhill Milton Keynes MK5 8HJ

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Directors and Trustees

The Trustees, who are also directors under company law, who served during the year and up to the date of this report were as follows:

Mr Mohan Ahad (Resigned 28/01/2021) Mr Clive Borthwick Mr Nicholas Gibson (Chair) Mr David Goodridge Ms Yasmin Khan Mr Geoffrey Mulgan Mr Sufian Sadiq Mr Robert Smalley Mr Andrew Strange Ms Carlota Larrea Ms Julma Begum (Appointed 09/02/2021)

Key Management Personnel

Ms Marie Kirbyshaw Chief Executive Mr Richard Clinton Director Operations & Customer Care (Resigned 05/04/2020) Ms Karen Perkins Director of Culture & Engagement (Resigned 31/01/2021) Mr Guy Smith Director of Business Performance Ms Vanessa Penzo Director of Finance & Resources/Company Secretary

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Structure, Governance and Management

Governing document

Luton Cultural Services Trust is a registered charity and a company limited by guarantee. Its governing document is the Memorandum and Articles of Association. The Board of Trustees comprises the Directors of the company.

Members of the charitable company guarantee to contribute an amount not exceeding £10 to the assets of the charitable company in the event of winding up. The total number of such guarantees at 31 March 2021 was 10.

Appointment of Trustees

As stated above, the Board of Trustees are also Directors of the Company. Directors are recruited through public advertisement, contacts of the current Board members and through business contacts of the charity. They are assessed for suitability using a skills and interests matrix and are interviewed by the Chair and Chief Executive. In normal circumstances one third of the Directors retire at each Annual General Meeting and are eligible for reappointment.

Trustee induction and training

Trustees have an induction programme comprising governance, the Trust vision and priorities, analysis of the charity’s business plan, activity programme, staffing and resources. They also take part in a programme of visits to operational sites of the Trust where they learn more about our operation and meet staff and volunteers. Trustees are able to undertake training specific to their role, attend look and see visits and participate in an in-depth away-day each year with the Chief Executive and Leadership Team to review priorities and to forward plan.

Organisation

The organisation was established under a Memorandum of Association which established the objects and powers of the organisation and is governed under its Articles of Association. The Trustees who have served during the period and those appointed before the date of this report are listed on page 8. No member of the Board or sub-committees receives any remuneration for their services as Trustees. The Board meets four times a year with additional extraordinary meetings if required. Sub-committees report quarterly to the Board and comprise the Finance sub-committee, HR sub-committee and task and finish groups which are established to consider relevant issues from time to time and report back to the Board. The Leadership (which comprises the Chief Executive and the senior staff reporting to the Chief Executive) meet every month to monitor performance, activity and operations and to review finances, policy and practice. The organisation is a charitable company limited by guarantee, incorporated on 17 September 2007 and registered as a charity on 27 February 2008.

Related Parties and Co-operation with other Organisations

Any connection between a trustee and senior manager of the charity with a production company, contracted actor, performer or exhibitor must be disclosed to the full Board of Trustees in the same way as any other contractual relationship with a related party. Details of related party transactions are shown in note 19 to the accounts.

Luton Cultural Services Trust is a member of the Museums Association, The Association of Independent Museums and The English Civic Museums Network. The Trust takes part in networking, advice, funding and strategic planning with Arts Council England, Heritage Lottery, Museums Association, Historic England, South East Midlands Local Enterprise Partnership and the Museums East of England Group.

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Pay policy for senior staff

The directors consider the Board of directors, who are the Trust’s Trustees, and the senior management team comprise the key management personnel of the charity in charge of directing and controlling, running and operating the Trust on a day to day basis. All directors give their time freely and no director received remuneration in the year. Details of directors’ expenses are disclosed in note 7 to the accounts.

The Trust adopts the NJC for Local Government pay scales for all staff, including the Chief Executive and leadership team. All posts are evaluated through the Local Authority job evaluation scheme to ensure fairness across the Trust and parity with similar Local Authority jobs. Staff pensions are provided through the Local Government Pension Scheme.

Risk management

The Trustees have examined the major strategic, business and operational risks which the charity faces and confirm that systems have been established to enable regular reports to be produced so that the necessary steps can be taken to evaluate and manage these risks. The Trust’s risk register is reviewed on a regular basis by the corporate management team and at each Board meeting.

The key risk faced by the charity remains the impact of reductions from its major funder(s) and the impact of reduced income resulting from the disruption caused by the COVID-19 pandemic. As a cultural charity, the Trust is able to take advantage of opportunities in the wider cultural environment and actively apply for funds from call on other funders such as the National Lottery, Trusts and Foundations to go alongside core funding from Arts Council England (NPO) which includes inflation and the annual donation from London Luton Airport Limited (which does not include inflation). Venue closures due to the COVID 19 pandemic resulted in a reduction in the Trust commercial and trading activities and is causing additional pressure on the Trust financial position. However, Post COVID, the charity is focusing on growing its trading and commercial activities, developing the Hat District to diversify incomes and will also be implementing sustainable practices and ongoing efficiencies.

The Company's operations expose it to limited financial risks that include employee costs, price risk, credit risk, liquidity risk and interest rate risk. Given the size of the Company, the Directors have delegated the responsibility of monitoring financial risk to a sub-committee of the Board. The policies set by the Finance sub-committee are implemented by the Company's finance department.

Employee Costs Risk: The Trust spends 56% of its budget on staff salaries and on-costs. There is a limited risk that these costs will rise ahead of inflation and above that included in our medium term financial plans. The Trust sets its salary pay scales and annual pay awards in line with the Local Authority, which are subject to the government’s public sector pay constraints.

Price Risk: The Company has a limited exposure to commodity prices particularly for utility costs, building maintenance and office costs. Strong working relationships with its principal suppliers have aided the Trust to alleviate part of this risk.

Credit Risk: The Company has limited exposure to credit risks. Most of its fees and charges are not subject to credit and those that are, are short term. Credit checks are not normally carried out on customers.

Liquidity Risk: The Trust is primarily funded through grants and donations which are usually received in advance of expenditure. The Company has suffered from cash flow challenges due to the COVID 19 pandemic but is carefully managing its funds, optimising its current operations and re-phasing its planned expansions.

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Interest Rate and Cash Flow Risk: The Charity has £1,844k of borrowing and therefore exposure to interest rate risks. Due to the current economic circumstances a significant interest rate increase is unlikely in the next year. However work is ongoing to examine the cost-benefit of fixing the interest rate in order to reduce the interest rate risk.

The reduction in the Trust’s cash reserves and the complex COVID-19 trading environment resulted in cash flow challenges which are being carefully managed.

Statement of responsibilities of the Trustees of Luton Cultural Services Trust in respect of the Trustees’ annual report and the financial statements:

The Trustees are responsible for preparing the Trustees’ Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Trustees to prepare financial statements for each financial year. Under that law they have are required to prepare the group and parent company financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland .

Under company law the Trustees must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and charitable company and of the group’s excess of income over expenditure for that period. In preparing each of the group and charitable company financial statements, the Trustees are required to:

The Trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the charitable company’s transactions and disclose with reasonable accuracy at any time the financial position of the charitable company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities.

The Trustees are responsible for the maintenance and integrity of the corporate and financial information included on the charitable company’s website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

In so far as the Trustees are aware:

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Volunteer support

Luton Cultural Services Trust benefits from the time dedicated by volunteers, including by our Trustees. These donated services have not been evaluated for inclusion in the financial statements. Our volunteers support us by working in venues, fundraising, helping with events and helping with documentation and curatorial work.

LCST Trading Ltd

Funds are contributed to the charity through our subsidiary, LCST Trading Limited and in 2020/21, arose from the sale of merchandise at our various locations, room hire, events management, weddings, café and bar sales.

LCST Trading had income of £152,990 (2019/20 £726,764) and there was no surplus on trading (2019/20 £47,183) so no donation was made to the Trust.

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Our key pertorTnance indicatorn ire summarised in the table below (number of customets engaging with the Trust's activities during 2020121 as com￿r0d to thtr provious yearl= For a¢tiviti¥s, plèase r¢fer to thè activities outlined in thè Chair's fyporL Servlce 2019- 2020-21 Ik} oi Tar8et oi Output Full Year Full Year Actual Target Output Q3 Target Q3 Output Q4 Target Q4 Output Target Output Arts. 32.5 0.015 o.oi Museums ** 244.2 12.6 17.5 Llbrarles* 520.9 Total 797.6.0 12.8 17.6 No footfall tary8ts ¥r• cr•at8d for 2020-21 du• to th• uncertalnty of th• CovSd-19 Sltuatlon and tha antlclpatlon of busln•s8 shutdown In oarly Aprll 2020. 'The Hat Factory Arts Contre %YdS closed during 202￿21 other than October 2020 ￿en it opened for 4 events only before another lockdown was Put in place. 'Stockwood 018covery Cèntrg vrds closed during 202￿21 other than a period of 12 week$ tset4￿n August and October 2020 and one week in December between lockdown periods. Wardown Housg Musoum was closed for the vthole of 2020-21. Libraries Service contract ended with Luton Borough Counrjl al the end of the contract period on 31ST March 2020. Audltors A resolution to re-appoint Moore Kingston Smith LLP as the charrty's audrtors vtas proFx)sed at the AGM meeb'ng held on 28 January 2021. Approved by the Board of Trustees on 14 December 2021 and signed on its behalf by Nlck Glb$on, Chalr 13

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF LUTON CULTURAL SERVICES TRUST

Opinion

We have audited the financial statements of Luton Cultural Services Trust (‘the parent charitable company’) and its subsidiary (together ‘the group’) for the year ended 31 March 2021 which comprise the Group Statement of Financial Activities, the Group Summary Income and Expenditure Account, the Group and Parent Charitable Company Balance Sheets, the Group Cash Flow Statement, and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs(UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the audit of the financial statements section of our report. We are independent of the charitable company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Materiality uncertainty relating to going concern

We draw attention to the going concern policy (note (1b)) in the financial statements. The directors, in their assessment of going concern, have identified the need for additional funding and the continued reliance of the company's overdraft facility. If the required funding is not successful or the overdraft facility is not extended beyond its expiry in February 2022, the Group will not have sufficient resources to continue in operation for the foreseeable future. This indicates the existence of a material uncertainty, which may cast significant doubt on the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The trustees are responsible for the other information contained in the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and parent charitable company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the trustees’ annual report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of trustees

As explained more fully in the trustees’ responsibilities statement, the trustees (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the trustees are responsible for assessing the group and parent charitable company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the group or parent charitable company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the charitable company.

Our approach was as follows:

16

To address the risk of fraud through management override of controls, we carried out the following work:

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

Use of our report

This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company's members those matters which we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to any party other than the charitable company and charitable company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Date:…………………………….. 20 December 2021

James Saunders FCCA DChA (Senior Statutory Auditor) for and on behalf of Moore Kingston Smith LLP, Statutory Auditor

Devonshire House 60 Goswell Road London EC1M 7AD

17

Luton Cultural Services Trust Consolidated Statement of Financial Activities (including an income and expenditure account) For the year ended 31 March 2021

Note
Income from:
Donations and legacies
3
Charitable activities
2
Other trading activities
11
Investments
4
Total Incoming Resources
Expenditure on:
Raising funds
11
Charitable activities
5
Other costs
5
Total Resources Expended
Net incoming/(outgoing) resources
before transfers
Transfers between funds
17
Net income/(expenditure)
Other gains/(losses)
Investment property impairment
10
Actuarial losses on defined
18
benefit pension scheme
Net movement in funds
Total funds brought forward
Total funds carried forward		 £
1,555,971
899,990
262,737
69
Unrestricted
Funds		 £
1,822,070
300
-
-
Restricted
Funds		 £
3,378,041
900,290
262,737
69
4,541,137
320,158
2,979,760
14,400
3,314,318
1,226,819
-
1,226,819
-
(4,314,000)
(3,087,181)
(771,103)
(3,858,284)
Total Funds
2021		 £
4,738,853
1,243,993
726,910
312
Total Funds
2020
2,718,767 1,822,370 6,710,068
320,158
2,604,265
14,400		 -
375,495
-		 679,727
6,156,775
29,676
2,938,823 375,495 6,866,178
(220,056)
1,579,890		 1,446,875
(1,579,890)		 (156,110)
-
1,359,834
-
(4,314,000)		 (133,015)
-
-		 (156,110)
(1,067,318)
2,304,000
(2,954,166)
(950,137)		 (133,015)
179,034		 1,080,572
(1,851,675)
(3,904,303) 46,019 (771,103)

18

Luton Cultural Services Trust Consolidated Statement of Financial Activities For the year ended 31 March 2020

Note
Income from:
Donations and legacies
3
Charitable activities
2
Other trading activities
11
Investments
4
Total Incoming Resources
Expenditure on:
Raising funds
11
Charitable activities
5
Other
5
Total Resources Expended
Net (outgoing)/incoming resources
before transfers
Transfers between funds
17
Net (expenditure)/income
Investment property impairment
10
Actuarial gain on
18
defined benefit pension scheme
Net movement in funds
Total funds brought forward
Total funds carried forward		 £
2,766,600
1,243,993
726,910
312
Unrestricted
Funds		 £
1,972,253
-
-
-
Restricted
Funds		 £
4,738,853
1,243,993
726,910
312
Total Funds
2020
4,737,815 1,972,253 6,710,068
679,727
5,432,422
29,676		 -
724,353
-		 679,727
6,156,775
29,676
6,141,825 724,353 6,866,178
(1,404,010)
1,610,552
206,542
(1,067,318)
2,304,000
1,443,224
(2,393,361)		 1,247,900
(1,610,552)
(362,652)
-
-
(362,652)
541,686		 (156,110)
-
(156,110)
(1,067,318)
2,304,000
1,080,572
(1,851,675)
(950,137) 179,034 (771,103)

19

Luton Cultural Services Trust Consolidated Balance Sheet As at 31 March 2021

Note
Fixed assets
Tangible fixed assets
9
Investment property
10
Current assets
Stock
12
Debtors
13
Cash at bank and in hand
Creditors:Amounts falling due
14
within one year
Net current liabilities
Creditors:amounts due after
15
one year
Net assets excluding pension
scheme liabilities
Defined benefit pension scheme liability
Net Liabilities including pension
scheme liabilities
Funds
Restricted funds
17
Unrestricted funds
General funds
17
Pension reserve
17
Total funds		 2021
2020
£
£
4,696,178
3,646,935
3,523,220
3,507,932
8,219,398
7,154,867
17,304
29,335
501,939
48,839
77,151
50,709
596,394
128,883
(1,055,310)
(1,459,289)
(458,916)
(1,330,406)
(1,843,766)
(1,555,564)
5,916,716
4,268,897
(9,775,000)
(5,040,000)
(3,858,284)
(771,103)
46,019
179,034
5,870,697
4,089,863
(9,775,000)
(5,040,000)
(3,858,284)
(771,103)
The Group		 2021
2020
£
£
4,696,178
3,646,935
3,523,220
3,507,932
8,219,398
7,154,867
17,304
29,335
501,939
48,839
77,151
50,709
596,394
128,883
(1,055,310)
(1,459,289)
(458,916)
(1,330,406)
(1,843,766)
(1,555,564)
5,916,716
4,268,897
(9,775,000)
(5,040,000)
(3,858,284)
(771,103)
46,019
179,034
5,870,697
4,089,863
(9,775,000)
(5,040,000)
(3,858,284)
(771,103)
The Group		 2021
2020
£
£
4,696,178
3,646,935
3,523,220
3,507,932
8,219,398
7,154,867
-
-
540,050
55,019
58,255
21,569
598,305
76,588
(1,000,069)
(1,406,993)
(401,764)
(1,330,405)
(1,843,766)
(1,555,564)
5,973,868
4,268,898
(9,775,000)
(5,040,000)
(3,801,132)
(771,102)
46,019
179,034
5,927,848
4,089,863
(9,775,000)
(5,040,000)
(3,801,132)
(771,103)
The Charity		 2021
2020
£
£
4,696,178
3,646,935
3,523,220
3,507,932
8,219,398
7,154,867
-
-
540,050
55,019
58,255
21,569
598,305
76,588
(1,000,069)
(1,406,993)
(401,764)
(1,330,405)
(1,843,766)
(1,555,564)
5,973,868
4,268,898
(9,775,000)
(5,040,000)
(3,801,132)
(771,102)
46,019
179,034
5,927,848
4,089,863
(9,775,000)
(5,040,000)
(3,801,132)
(771,103)
The Charity
8,219,398 7,154,867 8,219,398 7,154,867
17,304
501,939
77,151		 29,335
48,839
50,709		 -
540,050
58,255		 -
55,019
21,569
596,394 128,883 598,305 76,588
(1,055,310)
(458,916)
(1,843,766)
5,916,716
(9,775,000)		 (1,459,289)
(1,330,406)
(1,555,564)
4,268,897
(5,040,000)		 (1,000,069)
(401,764)
(1,843,766)
5,973,868
(9,775,000)		 (1,406,993)
(1,330,405)
(1,555,564)
4,268,898
(5,040,000)
(3,858,284) (771,103) (3,801,132) (771,102)
46,019
5,870,697
(9,775,000)		 179,034
4,089,863
(5,040,000)		 46,019
5,927,848
(9,775,000)		 179,034
4,089,863
(5,040,000)
(3,858,284) (771,103) (3,801,132) (771,103)

17.12.21

These accounts were approved and authorised for issues by the Board on ……………….. and signed on their behalf by:

……………………………………..

Nicholas Gibson Chairman

20

Luton Cultural Services Trust Consolidated Statement of Cash Flows

For the year ended 31 March 2021

Note
Net cash flow from operating activities
(a)
Cash flows from investing activities
Interest received
Interest element of finance lease repayments
Interest element of loan
Expenditure on fixed assets (including investment property)
Net cash used in investing activities
Cash flows from financing activities
Repayment of capital element of finance leases
Bank loan drawn down
Finance lease in year
Net cash inflow
(b)
Cash and cash cash equivalents at beginning of the year
Cash and cash cash equivalents at the end of the year		 2021
£
1,070,984
69
(13,215)
(38,923)
(1,280,675)		 2020
£
1,636,436
312
(11,106)
(3,416,238)
(1,332,744)
(61,798)
350,000
-		 (3,427,032)
(76,514)
1,365,000
-
288,202
26,442
50,709		 1,288,486
(502,110)
552,819
77,151 50,709

Notes to the cash flow statement

a) Reconciliation of (outgoing)/incoming resources to net cash flow from operating activities

Net (outgoing)/incoming resources before other gains/(losses)
Loss on disposal of fixed assets
Defined Benefit Scheme movements
Decrease in stock
Increase in debtors
Decrease in creditors
Depreciation
Interest paid on finance leases
Interest paid on loans
Interest received
Net cash flow from operating activities		 2021
£
1,226,819
66,907
421,000
12,031
(453,100)
(403,979)
149,237
13,215
38,923
(69)		 2020
£
(156,110)
-
680,000
14,989
251,072
660,261
175,430
11,106
(312)
1,070,984 1,636,436

Analysis of changes in net debt

Cash and cash equivalents
Loans falling due after more than one year
Finance lease obligations
Total net debt		 At 31 March
2020
50,709
(1,303,250)
(252,314)		 Cashflows
26,442
(350,000)
75,013
New finance
leases
-
-
-
-		 At 31 March
2021
77,151
(1,653,250)
(177,301)
(1,504,855) (248,545) - (1,753,400)

21

Luton Cultural Services Trust Notes to the Financial Statements For the year ended 31 March 2021

1. Accounting policies

a) Basis of preparation

The financial statements have been prepared in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102). The Charity is a public benefit entity for the purposes of FRS 102 and therefore the consolidated financial statements have been prepared in accordance with the 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 (The FRS 102 Charity SORP) including Update Bulletin 2, the Companies Act 2006 and the Charities Act 2011.

The results of the subsidiary entities are consolidated on a line by line basis. A summary of the results of the subsidiary entities is shown in Note 11. The functional currency of the charity and its subsidiaries is sterling; amounts are rounded to the nearest pound.

Luton Cultural Services Trust has taken advantage of the exemption in section 408 of the Companies Act 2006 from disclosing its individual statement of financial activities. The Charity only surplus (net movement in funds) was £1,127,900 (2020: surplus of 1,080,573).

The group accounts consolidate the accounts of Luton Cultural Services Trust and its subsidiary undertaking, LCST Trading Limited, made up to 31 March 2021. The acquisition method of accounting has been adopted.

b) Going concern

In accordance with their responsibilities the Directors have considered and concluded upon the appropriateness of the going concern basis, which has been used in the preparation of these financial statements. In making this going concern assessment, the directors have had regard to the following matters:

The directors have assumed that sufficient funding will be made available to the company in the 12 month period following the approval of these financial statements. The LLAL and Arts Council revenue funding has been confirmed and this provides £1.5m secured income for the Trust in 2022/23.

During COVID-19, an overdraft facility was put in place to help the Trust manage cash-flow and this remains in place until February 2022. It is anticipated that the facility may still be required beyond this period and so an extension will be sought. The Trust is active in seeking opportunities to fundraise and to date has been very successful.

Nevertheless, after making these enquiries, and considering the uncertainties described above, the Directors have a reasonable expectation that the charitable company will have sufficient resources to continue in operational existence for the foreseeable future. For these reasons, the charitable company has continued to adopt the going concern basis in preparing the financial statements. However the directors recognise that the outcome depends upon the positive resolution of a number of matters which indicates that there may be a material uncertainty in relation to the charitable company’s ability to continue as a going concern.

c) Income

Total incoming resources as shown in the Statement of Financial Activities is the total income of the group. All incoming resources are included in the Statement of Financial Activities when the charity is entitled to the income, the receipt is probable, and the amount can be measured reliably. The following specific policies are applied to particular categories of income:

22

ci) Voluntary income

Luton Cultural Services Trust Notes to the Financial Statements For the year ended 31 March 2021

Voluntary income is included in the Statement of Financial Activities when receivable.

cii) Grants receivable

Revenue grants are credited to the Statement of Financial Activities when the Charity has entitlement to the funds, any performance conditions attached to the grant have been met, it is probable that the income will be received and the amount can be measured reliably.

d) Allocation of costs

Central salary costs are apportioned on the basis of staff time attributable to each activity. Overhead costs are allocated to activities on a headcount basis.

e) Costs of charitable activities

The costs of each category of charitable activity are the costs directly attributable to that activity and allocated central costs.

f) Governance costs

Governance costs include all costs of compliance with constitutional and statutory requirements, including legal and audit fees and the costs of meetings.

g) Depreciation

Depreciation is provided at rates calculated to write down the cost of each asset to its estimated residual value over its expected useful life. The depreciation rates in use are as follows:

Long leasehold property improvements 10 - 50 years Plant & equipment 5 - 10 years Office furniture and equipment 5 years Computer software 3 years

Items of equipment are capitalised where the purchase price exceeds £5,000. Assets are reviewed for impairment if circumstances indicate their carrying value may exceed their net realisable value and value in use.

Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets and depreciated over the shorter of the lease term and their useful lives. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the profit and loss account so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.

Freehold property has been capitalised and included in fixed assets at cost. Depreciation has not been provided after taking into account the value of the land, the residual value of the property and the estimated useful life of the asset. The property is reviewed annually for any potential impairment.

h)[Stock]

Stock is valued at the lower of cost and net realisable value.

i) Restricted funds

Restricted funds are to be used for specified purposes as laid down by the donor. Expenditure which meets these criteria is identified to the fund, together with a fair allocation of management and support costs.

j) Unrestricted funds

Unrestricted funds are donations and other incoming resources received or generated for the charitable purposes. In accordance with FRS102, a pension reserve is included within unrestricted funds representing the defined benefit pension scheme. Designated funds are unrestricted funds of the charity which the trustees have decided at their discretion to set aside to use for a specific purpose.

23

k) Resources expended

Luton Cultural Services Trust Notes to the Financial Statements For the year ended 31 March 2021

Resources expended are recognised in the period in which they are incurred and include attributable VAT which cannot be recovered.

l) Costs of generating funds

The costs of generating funds relate to the costs incurred by the group and charitable company in raising funds for its charitable work.

m)[Pension costs]

The pension liabilities and assets are recorded in line with FRS102 and relate to the defined benefit scheme set out in note 18. A valuation for accounting purposes is undertaken by an independent actuary. The value of benefits accrued and the net interest costs is used to determine the pension charge in the SOFA. The change in value of assets and liabilities, changes in benefits and changes in actuarial assumptions are recognised in the SOFA within "actuarial gains/(losses) on defined benefit pension scheme".

n) Investment property

Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Investment properties are recognised initially at cost, and subsequent to development works will be adjusted to their fair value at period ends.

o) Accounting estimates and key judgements

In the application of the company’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 on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

i. Useful economic live of tangible assets

The annual depreciation charge for fixed assets is sensitive to changes in the estimated useful economic lives of the assets. The useful economic lives are reassessed annually. These are amended where necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See note 9 for the carrying value of assets and note 1g for the useful economic lives.

p) Accounting estimates and key judgements

ii. Valuation of investment property

The carrying value of the investment properties at 31 March 2021 is based on a valuation carried out in 2020 by an independent valuer who has the necessary skills and proficiency to undertake the valuation in a competent manner. The valuation was made on an open market basis and in determining the market value the valuer has drawn upon comparable market transactions in the local area. The valuation has been prepared in accordance with the Royal Institution of Chartered Surveyors (RICS) Valuation - Global Standards 2017. As a result of the outbreak of Covid-19 and uncertainty in the property sector the report included a 'material valuation uncertainty' as per VPS 3 and VPGA 10 of the RICS Red Book Global. The trustees have concluded that while a materiality valuation uncertainty exists in the report this does not impact the true and fair view of these financial statements. The trustees continue to keep the market value of the property under regular review.

24

Luton Cultural Services Trust Notes to the Financial Statements For the year ended 31 March 2021

2 Income from charitable activities

Income from charitable activities
2021 2021 2021
2020
Unrestricted Restricted Total
Total
£ £ £
£
Library related income 109 -
 1091,063,094
Museum related income (199) -
 (199) 179,409
Community Centres related income - -
 -294
Other income 900,080 300
 900,3801,196
Total 899,990 300
 900,2901,243,993

3 Donations and Legacies

3 Donations and Legacies
2021 2021 2021 2020
Unrestricted Restricted Total Total
£ £ £ £
London Luton Airport 1,554,000 - 1,554,000 2,754,000
NLHF - 826,432 826,432 -
Arts Council England - NPO museums - 245,594 245,594 249,000
Architectural Heritage - Hat Works Projec - 280,000 280,000 181,800
Historic England - Hat Works Project - 50,000 50,000 -
Linbury Trust - Hat Works Project - 50,000 50,000 -
SEMLEP - Hat Works Project - 115,000 115,000 657,000
The Steel Trust - Hat Works Project - 15,000 15,000 -
ACE - Hat Factory Redevelopment - - - 24,975
LBC - Hat Factory Redevelopment - - - 170,000
DCMS - Wolfson - - - 100,000
BID Luton - - - 63,280
Creative people and places - 174,268 174,268 308,219
HLF - Hat District Project - - - 100,000
John Apthorp Charity - - 80,750
Other Museums related - 25,777 25,777 37,600
ACE- Lace Tree project - 24,999 24,999 -
Misc Grants - Hat Works Project - 15,000 15,000 -
Visitor donations 1,971 - 1,971 12,229
1,555,971 1,822,070 3,378,041 4,738,853
4 Investment income
2021 2021 2021 2020
Unrestricted Restricted Total Total
£ £ £ £
Bank interest 69 - 69 312
69 - 69 312

25

Luton Cultural Services Trust Notes to the Financial Statements For the year ended 31 March 2021

5 Total resources expended

Total resources expended

Staff costs (Note 7)
Pension adjustment (Note 7)
Premises costs
Equipment
Library resources
Office Costs
Events, Exhibitions & Programmes
Marketing and Publicity
Legal & Professional Fees
Archive and records services
Depreciation
Bad debts
Other costs
Interest payable
Unallocated Non reclaimable VAT
Total resources expended
Support Costs
Total resources expended		 Learning
and Skills
costs
£
79,410
19,107
(4,185)
(7,503)
(3,714)
-
-
-
-
-
-
-
-
-
-		 Arts costs
£
73,895
17,780
58,084
1,477
-
8,208
21,765
-
-
-
-
-
-
-
-		 Museum
costs
£
617,683
148,618
85,498
8,880
-
3,159
7,558
-
-
-
-
-
-
-
-		 Cross-trust
projects
£
186,796
44,944
8,432
-
-
437
220,199
38,977
342
-
-
-
810
-
-		 Governance
costs
£
-
-
-
-
-
-
-
-
14,400
-
-
-
-
-
-		 Support
costs
£
791,966
190,552
22,603
12,435
-
54,610
9,574
3,466
29,599
-
149,238
-
29,185
38,923
10,952		 2021 Total
£
1,749,750
421,000
170,432
15,289
(3,714)
66,414
259,096
42,443
44,341
-
149,238
-
29,995
38,923
10,952		 2020
£
3,088,226
680,000
498,970
201,377
195,386
114,456
869,998
76,189
63,040
140,636
107,141
(81)
76,000
18,743
56,370
83,115
67,612		 181,209
147,410		 871,396
708,864		 500,937
407,503		 14,400
11,714		 1,343,103
(1,343,103)		 2,994,159
1		 6,186,451
-
150,727 328,619 1,580,260 908,440 26,114 - 2,994,160 6,186,451

26

Luton Cultural Services Trust Notes to the Financial Statements For the year ended 31 March 2021

6 Net incoming resources for the year This is stated after charging:

incoming resources for the year
is stated after charging: 2021 2020
£ £
Depreciation 149,237 175,430
Trustees' indemnity insurance 1,386
 2,502
Auditor's remuneration
- Audit fee for current year 19,000 19,000
- Overaccrual for current year - 4,450
- Other services - 6,226

No Trustees were reimbursed for expenses (2019: £nil).

7
Staff costs and numbers
Staff costs were as follows:
Salaries and wages
Social security costs
Pension contributions
Other pension costs
Redundancy and termination costs		 2021
£
1,568,671
139,619
169,990
421,000
85,451
2,384,731		 2020
£
2,636,714
207,314
563,495
680,000
10,861
4,098,384

The Trustees received £nil remuneration in the year (2020: £nil). The trustees received reimbursement for expenses totalling nil (2020: £575). 1 employee received emoluments in the range £90,001 - £101,000 in the period (2020: £90,001 - £101,000 - 1). This employee is a member of the defined benefit pension scheme. Contributions for the period for this employee were £18,467 (2020: £17,654). The total remuneration for the key management personnel, the Chief Executive and 5 directors (2020: 5 directors) totalled £324,237 (2020: £389,848).

The average number of employees (full-time equivalent) during the period was as follows:

Chief Executive, finance and administration
Marketing ,business development and trading
Libraries
Learning and Skills
Museums
Arts
Community Centres
Operations
Average total headcount		 2021
No.
10
12
0
2
16
6
-
4
50
50		 2020
No.
11
13
39
3
18
6
-
5
95
127

8 Taxation

The charity is exempt from corporation tax as all its income is charitable and is applied for charitable purposes. The charity's trading subsidiary LCST Trading Ltd donates available profits to the charity.

27

Luton Cultural Services Trust Notes to the Financial Statements For the year ended 31 March 2021

9 Tangible Fixed Assets Group and Company

Group and Charity

Group and Charity
Freehold
property
£
Cost
At 1 April 2020
1,017,748
Additions
1,192,621
Disposals
-
At 31 March 2021
2,210,369
Depreciation
At 1 April 2020
-
Eliminated on disposa
-
Charge for the year
-
At 31 March 2021
-
Net Book Value
At 31 March 2021
2,210,369
At 1 April 2020
~~1,017,748~~		 Long
leasehold
property
£
2,625,947
72,766
-
2,698,713
329,405
-
100,046
429,451
2,269,262
~~2,296,542~~		 Office
furniture &
equipment
£
180,107
-
(5,713)
174,394
163,544
3,066
166,610
7,784
~~16,563~~		 Plant &
equipment
£
823,311
(61,194)
762,117
507,229
-
46,125
553,354
208,763
~~316,082~~		 Total
£
4,647,113
1,265,387
(66,907)
5,845,593
1,000,178
-
149,237
1,149,415
4,696,178
~~3,646,935~~

10 Investments

The Group continues to develop its investment properties and will undertake an annual revaluation on completion.

Market value at 1 April
Capital additions at cost
Depreciation
Impairment during the year
Market value at 1 April		 2021
£
3,507,932
15,288
-
-
3,523,220		 2020
£
3,331,577
1,243,673
-
(1,067,318)
3,507,932

The Charity has two investments properties, Hat House and Hat Studios both of which have been externally valued by an examiner in June 2020. Development of the Hat Studios land is currently on hold and continues to be held at cost until it is brought into service at which point it will be externally valued. The valuation has been prepared in accordance with the Royal Institution of Chartered Surveyors (RICS) Valuation - Global Standards 2017. As a result of the outbreak of Covid-19 and uncertainty in the property sector the report included a 'material valuation uncertainty' as per VPS 3 and VPGA 10 of the RICS Red Book Global. See accounting policy note (1nii) for further details.

28

Luton Cultural Services Trust Notes to the Financial Statements For the year ended 31 March 2021

11 Subsidiary Undertaking

The charitable company owns the whole of the issued ordinary share capital of LCST Trading Limited, a company registered in England and Wales (Company Number 06373488). The subsidiary is used for nonprimary purpose trading activities. All activities have been consolidated on a line by line basis in the statement of financial activities. A summary of the results of the subsidiary is shown below:

External Income
Cost of sales
Gross profit
Administrative expenses
Operating profit
Interest receivable and similar income
Retained profit for the year
The Balance Sheet comprised:
Fixed assets
Current assets
Current liabilities
Creditors due after more than one year
12 Stock
2021
2020
£
£
Merchandise and Bar stock
17,304
29,335
Charitable distribution to Luton Cultural Services
Trust
Group		 2021
2020
£
£
262,643
726,764
(242,615)
(615,508)
20,028
111,256
(77,543)
(64,219)
(57,515)
47,037
94
146
-
(47,183)
(57,421)
-
-
-
70,916
99,354
(128,337)
(99,353)
-
-
(57,421)
1
2021
2020
£
£
-
-
Charity

29

Luton Cultural Services Trust Notes to the Financial Statements For the year ended 31 March 2021

13 Debtors

2021
2020
£
£
Debtors and prepayments
360,313
48,839
VAT costs
141,626
-
Amount due from subsidiary
-
-
501,939
48,839
Creditors: amounts due within 1 year
2021
2020
£
£
Bank overdraft
102,879
-
Trade creditors
649,364
910,613
Accruals and deferred income
207,965
325,070
Social security costs
33,305
161,856
Finance leases due within 1 year
61,797
61,750
1,055,310
1,459,289
Group
Group		 2021
2020
£
£
Debtors and prepayments
360,313
48,839
VAT costs
141,626
-
Amount due from subsidiary
-
-
501,939
48,839
Creditors: amounts due within 1 year
2021
2020
£
£
Bank overdraft
102,879
-
Trade creditors
649,364
910,613
Accruals and deferred income
207,965
325,070
Social security costs
33,305
161,856
Finance leases due within 1 year
61,797
61,750
1,055,310
1,459,289
Group
Group		 2021
2020
£
£
Debtors and prepayments
360,313
48,839
VAT costs
141,626
-
Amount due from subsidiary
-
-
501,939
48,839
Creditors: amounts due within 1 year
2021
2020
£
£
Bank overdraft
102,879
-
Trade creditors
649,364
910,613
Accruals and deferred income
207,965
325,070
Social security costs
33,305
161,856
Finance leases due within 1 year
61,797
61,750
1,055,310
1,459,289
Group
Group		 2021
2020
£
£
325,615
7,960
141,626
-
72,809
47,059
540,050
55,019
2021
2020
£
£
102,880
-
537,286
822,441
264,801
361,080
33,305
161,722
61,797
61,750
1,000,069
1,406,993
Charity
Charity		 2021
2020
£
£
325,615
7,960
141,626
-
72,809
47,059
540,050
55,019
2021
2020
£
£
102,880
-
537,286
822,441
264,801
361,080
33,305
161,722
61,797
61,750
1,000,069
1,406,993
Charity
Charity
1,055,310 1,459,289 1,000,069 1,406,993

14 Creditors: amounts due within 1 year

Accruals and Deferred income line includes restricted income of £116,083 which has been deferred to the 2021/22 Financial year. This comprises £98,641 of NLHF income, £7,988 of Arts Council income and £9,454 of other museum related grants.

15 Creditors: amounts due after 1 year

Finance leases due within 1 to 5 years
Bank loan		 2021
2020
£
£
128,766
190,564
1,715,000
1,365,000
1,843,766
1,555,564
Group		 2021
2020
£
£
128,766
190,564
1,715,000
1,365,000
1,843,766
1,555,564
Group		 2021
2020
£
£
128,766
190,564
1,715,000
1,365,000
1,843,766
1,555,564
Charity		 2021
2020
£
£
128,766
190,564
1,715,000
1,365,000
1,843,766
1,555,564
Charity
1,843,766 1,555,564 1,843,766 1,555,564

The bank loan was taken out in September 2019 and is repayable in instalments by March 2043. Interest of £18,743 (2019: £Nil) was charged during the year. There is a first legal charge on the freehold property of 32 Guildford Street over the bank loan.

A CIBL loan was taken out in February 2021 and is repayable in instalments by March 2024. Interest of £Nil was charged during the year. The loan is not secured.

16 Analysis of group net assets between funds

Restricted funds
Pension reserve
General funds
Total funds
Restricted funds
Pension reserve
General funds
Total funds		 Tangible fixed
assets
£
-
-
8,219,398
8,219,398
Tangible fixed
assets
£
-
-
7,028,110
7,028,110		 Pension
scheme
liability
£
-
(9,775,000)
-		 Current
asset/(liability)
£
45,720
-
(503,874)		 Long term
creditors
£
-
-
(1,843,766)		 Net assets at
31 March
2021
£
45,720
(9,775,000)
5,871,758
(9,775,000) (458,154) (1,843,766) (3,857,522)
Pension
scheme
liability
£
-
(5,040,000)
-		 Current
asset/(liability)
£
179,034
-
(1,382,683)		 Long term
creditors
£
-
-
(1,555,564)		 Net assets at
31 March
2020
£
179,034
(5,040,000)
4,089,863
(5,040,000) (1,203,649) (1,555,564) (771,103)

30

Luton Cultural Services Trust Notes to the Financial Statements For the year ended 31 March 2021

17 Movements in funds

At 1st April
2020
Restricted funds:
Arts Council England - NPO museums
37,249
Architectural Heritage - Hat Works Project
-
SEMLEP - Hat District Project
-
Linbury Trust- Hat Works Redevelopment
-
Historic England - Hat Works Redevelopment
-
NLHF - Hat Works Redevelopment
-
The Steel Trust - Hat Works Redevelopment
-
Creative people and places - ACE
55,016
Grants Misc
-
Museum Development Fund
2,551
John Apthorp Charity
80,750
ACE- Lace tree project
-
Other Museums related
3,468
Total restricted funds
179,034
Unrestricted funds:
General funds
4,089,863
Pension reserve
(5,040,000)
Total unrestricted funds
(950,137)
Total funds
(771,103)		 Incoming
resources
245,594
280,000
115,000
50,000
50,000
826,432
15,000
174,268
15,000
25,777
-
24,999
299
1,822,370
2,718,767
-
2,718,767
4,541,137		 Outgoing
resources
(112,491)
-
-
-
-
-
-
(220,027)
-
(17,977)
(24,999)
(375,495)
(2,517,823)
(421,000)
(2,938,823)
(3,314,318)		 Gain/(loss)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,314,000)
(4,314,000)
(4,314,000)		 Transfers
(133,103)
(280,000)
(115,000)
(50,000)
(50,000)
(826,432)
(15,000)
(3,336)
(15,000)
(7,800)
(80,750)
-
(3,468)
(1,579,890)
1,579,890
-
1,579,890
-		 At 31st
March 2021
37,249
-
-
-
-
-
-
5,921
-
2,551
-
-
299
46,019
5,870,697
(9,775,000)
(3,904,303)
(3,858,284)

Purposes of restricted funds

The charity's funds comprise amounts restricted to specific activities and not yet spent.

Creative People & Places-Arts Council England

Arts Council England allocated funds to support the development and increase participation in creative arts activities in Luton.

31

Luton Cultural Services Trust Notes to the Financial Statements For the year ended 31 March 2021

17 Movements in funds (continued)

NPO Museum-Arts Council England

The Arts Council England awarded Luton Culture National Portfolio Organisation status on 1st April 2019. Luton Cultures museums have now become a leader in their area with a collective responsibility to protect and develop the national arts and culture. The grant income received in the year is year 1 of a 3 year programme of funding and investment to help deliver ACE's strategic objectives.

South East Midland Local Enterprise Partnership (SEMLEP)

SEMLEP have allocated grant from the Local Growth Fund in support of the hat district capital project. A total of £3,961,000 in total has been awarded over 4 year programme.

18 Pension scheme

Luton Cultural Services Trust contributes to the Bedfordshire Pension Fund, a defined benefit pension scheme, to secure present and future pensions for its staff. For staff, employer contributions were 12.2% of pensionable salary from 1 April 2020 to 31 March 2021 (24.4% - 2020). Employee contributions were between 5.5% and 9.9% of pensionable salary dependent on salary.

The assets of the Scheme are held as part of the Bedfordshire Pension Fund. The valuation of the scheme is based on the most recent triennial funding valuation, updated by the scheme actuaries in May 2019, based on the provisions of FRS102. Investments have been valued, for this purpose, at fair value.

The principal assumptions used by the actuary to calculate the Scheme liabilities under FRS102 were as follows:


ws:
2021 2020
%pa %pa
Pension Increase rate 2.85 1.65
Rate of increase in salaries 3.85 2.65
Discount Rate 2.00 2.35

The mortality assumptions are based on standard mortality tables which allow for future mortality improvements. Although the post retirement mortality tables adopted are consistent with the previous accounting date, the mortality improvement projection has been updated to use the latest version of the Continuous Mortality Investigation’s model, CMI_2020, which was released in March 2021. This update has been made in light of the coronavirus pandemic and reflects the latest information available from the CMI. The new CMI_2020 Model introduces a “2020 weight parameter” for the mortality data in 2020 so that the exceptional mortality experienced due to the coronavirus pandemic can be incorporated without having a disproportionate impact on results. The assumptions are that a member aged 65 will live on average until age 86.9 if they are male and on average until age 89.3 if female. For a member aged 45 the assumptions are that if they attain an age of 65 they will live on average until age 87.8 if they are male and on average until 91 if female.

A building block approach is adopted in determining the expected rate of return on the scheme’s assets. Historic markets are studied and assets with high volatility are assumed to generate higher returns consistent with widely accepted capital market principles. Each different asset class is given a different expected rate of return. The overall rate of return is then derived by aggregating the expected return for each asset class over the actual asset allocation of the scheme at year end.

Asset category as a Asset category as a
percentage of plan assets
2021 2020
Equities 69% 67%
Bonds 19% 17%
Property 9% 11%
Cash 3% 4%

32

Luton Cultural Services Trust Notes to the Financial Statements For the year ended 31 March 2021

18 Pension scheme (continued)

Amounts recognised in the SOFA
Current service cost
Employer Contributions
Income interest on plan assets
Interest costs on defined benefit obligation
Administration expenses
Remeasurements:
Changes in financial assumptions
Change in demographic assumptions
Experience gain/(loss) on defined benefit obligation
Other actuarial gains/(losses) on assets
Liabilities assumed / (extinguished) on settlements
Settlement prices received / (paid)
Return on assets excluding amount included in net interest
Total amounts recognised in the SOFA
Amounts recognised in the balance sheet
Fair value of scheme assets
Present value of funded obligations
Net (liability) recognised in the balance sheet
Changes in fair value of scheme assets
Scheme assets at start of period
Interest income on plan assets
Return on assets excluding amount included in net interest
Other actuarial gains/(losses)
Administration expenses
Contributions by employer
Contributions by scheme participants
Benefits paid
Settlement prices received / (paid)
Scheme assets at end of period
Changes in present value of scheme liabilities
Scheme liabilities at start of period
Current service cost
Interest costs on defined benefit obligation
Changes in financial assumptions
Contributions by scheme participants
Actuarial (gain) / losses
Other remeasurements
Liabilities assumed / (extinguished) on settlements
Past service costs
Benefits paid
Scheme liabilities at end of period		 2021
£
(533,000)
230,000
412,000
(511,000)
(19,000)		 2020
£
(1,044,000)
595,000
511,000
(664,000)
(78,000)
(421,000) (680,000)
(8,629,000)
205,000
211,000
7,000
2,859,000
(2,123,000)
3,156,000		 3,915,000
(916,000)
1,451,000
(382,000)
-
-
(1,764,000)
(4,314,000) 2,304,000
(4,735,000) 1,624,000
£
20,930,000
(30,705,000)		 £
19,784,000
(24,824,000)
(9,775,000) (5,040,000)
2021
£
19,784,000
412,000
3,156,000
7,000
(19,000)
230,000
99,000
(616,000)
(2,123,000)		 2020
£
21,116,000
511,000
(1,764,000)
(382,000)
(78,000)
595,000
145,000
(359,000)
-
20,930,000 19,784,000
2021
£
24,824,000
475,000
511,000
8,629,000
99,000
(211,000)
(205,000)
(2,859,000)
58,000
(616,000)		 2020
£
27,780,000
868,000
664,000
(3,915,000)
145,000
(1,451,000)
916,000
-
176,000
(359,000)
30,705,000 24,824,000

33

Luton Cultural Services Trust Notes to the Financial Statements For the year ended 31 March 2021

18 Pension scheme (continued)

History of defined benefit scheme

Fair value of scheme assets
Present value of scheme liabilities
Net defined benefit liability
Experience gains/(losses)
on scheme assets
Experience gains/(losses)
on scheme liabilities		 2021
£
20,930,000
(30,705,000)		 2020
£
19,784,000
(24,824,000)
(5,040,000)
(1,764,000)
1,451,000		 2019
£
21,116,000
(27,780,000)		 2018
£
19,485,000
(25,906,000)
(9,775,000) (6,664,000) (6,421,000)
(1,764,000)
211,000		 716,000
(1,770,000)		 (353,000)
593,000

The estimated contribution for 2021/22 is £284,000.

19 Related parties

The following related party transactions were conducted at market rates and were properly disclosed in line with the charity’s internal governance procedures:

During the year the charity made no related party transactions (2020: £6,441).

20 Capital commitments

Contractual commitments for professional fees and to refurbish the Hat District properties at the year end were £100,540 (2020: £263,669).

21 Operating leases

Non-cancellable operating lease rentals payable in the year were £nil (2020: £nil). There are no contractual commitments for non-cancellable lease rentals at the year end.

22 Contingent Liabilities

The Trust has an ongoing employment tribunal case that will be heard in October 2022.

34