DocuSign Envelope ID: 26814B05-FED4-4EF7-B470-4C8AB1279380
REGISTERED NUMBER: 06637374 (England and Wales)
REGISTERED CHARITY NUMBER: 1127262
The David Hockney Foundation (UK)Limited
Annual Report and Financial Statements
for the Year Ended 31 December 2020
DocuSign Envelope ID: 26814B05-FED4-4EF7-B470-4C8AB1279380
The David Hockney Foundation (UK)Limited
Contents of the Annual Report and Financial Statements for the Year Ended 31 December 2020
| Page | |
|---|---|
| Company Information | 1 |
| Trustees' AnnualReport | 2 |
| Trustees' Responsibilities Statement | 5 |
| Independent Auditor's Report | 6 |
| Statement of Financial Activities | 9 |
| Balance Sheet | 10 |
| Cash Flow Statement | 11 |
| Notes to the Financial Statements | 12 |
DocuSign Envelope ID: 26814B05-FED4-4EF7-B470-4C8AB1279380
The David Hockney Foundation (UK) Limited
Company Information for the Year Ended 31 December 2020
| TRUSTEES: | E M Devaney Jones |
|---|---|
| J Goncalves De Lima | |
| J Hill | |
| D Hockney | |
| D F Juda | |
| C D Scheips | |
| J M Wilkinson | |
| SECRETARY: | Breams Secretaries Limited |
| REGISTERED OFFICE: | Floor 8 |
| 71 Queen Victoria Street | |
| London | |
| EC4V 4AY | |
| REGISTERED NUMBER: | 06637374 (England and Wales) |
| AUDITOR: | Deloitte LLP |
| Statutory Auditor | |
| 1 City Square | |
| Leeds | |
| LSI 2AL | |
| BANKERS: | Coutts & Co |
| 440 Strand | |
| London | |
| WC2R 0QS | |
| SOLICITORS: | Wedlake Bell LLP |
| 71 Queen Victoria Street | |
| London | |
| EC4V 4AY |
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DocuSign Envelope ID: 26814B05-FED4-4EF7-B470-4C8AB1279380
The David Hockney Foundation (UK) Limited
Trustees' Annual Report
for the Year Ended 31 December 2020
The Trustees (who are also directors for the purposes of company law) present their Annual Report along with the audited financial statements of the Charitable Company for the year ended 31 December 2020.
The financial statements have been prepared in accordance with the Charities Act 2011, the Companies Act 2006 and the Statement of Recommended Practice: Accounting and Reporting by Charities 2019.
The Trustees' Report has been prepared in accordance with the special provisions applicable to companies entitled to the small companies' exemption and the exemption from preparing a Strategic Report.
CHARITABLE COMPANY AND TRUSTEE DETAILS
The registered office and advisers are shown on page 1.
The Trustees who served during the year, unless otherwise stated, and up to the date of this report are shown below:
E M Devaney Jones
J P Goncalves De Lima J Hill D Hockney D F Juda C D Scheips J M Wilkinson
STRUCTURE, GOVERNANCE AND MANAGEMENT
The David Hockney Foundation (UK) Limited is a company limited by shares, company number 06637374 and a registered charity, charity number 1127262. The Company was incorporated on 3 July 2008 and its governing documents are its Memorandum and Articles of Association. It became a registered charity on 23 December 2008.
It is vested in the Trustees to run the Charitable Company in accordance with its Memorandum and Articles of Association in order to meet its charitable objectives. The number of Trustees holding office may not at any time be fewer than two and there is no maximum number of Trustees that may hold office. The shareholders may appoint additional Trustees in accordance with the procedures of the governing documents, which also set out the procedures for retiring trustees. Induction and training will be provided to new Trustees by the existing Trustees and their advisers.
The Charitable Company does not have any direct employees in the year but employees of David Hockney and other David Hockney related entities spend part of their time working for the Charitable Company and thus wage costs are recharged to it.
For the purpose of this report and accounts, David Hockney is treated as a related party in his capacity as Trustee, donor and officer of the Charitable Company. During the year, David Hockney incurred expenses on behalf of the Charitable Company which were incurred for the furtherance of the Charitable Company's objectives.
The major risks to which the Charitable Company is exposed, as identified by the Trustees are in relation to safeguarding the assets. Assets are held in secure locations to manage those risks.
OBJECTIVES AND ACTIVITIES
The primary objective of the Charitable Company is the furtherance of the education of the public in the appreciation of art and in particular, the creative art of today, by making art available to the public to view. In addition, the objectives include such other exclusively charitable purposes as the Trustees of the Charitable Company may in their absolute discretion determine. They may make grants of artwork.
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The David Hockney Foundation (UK) Limited
Trustees' Annual Report - continued for the Year Ended 31 December 2020
OBJECTIVES AND ACTIVITIES - Continued
The Charitable Company established an artwork collection, which it achieved entirely through gifts of artwork received from David Hockney. The Trustees confirm that they have referred to and had due regard for the guidance contained in the Charity Commission's general guidance on public benefit when reviewing the Trust's aims and objectives and in planning future activities and setting grant making policy for the year.
ACHIEVEMENTS AND PERFORMANCE
This was a difficult year to fully carry out the Charitable Company’s charitable objective as so many museums were closed for the majority of the year. The Foundation did however continue to process future loan requests and coordinate loans already out for the duration of the year with the aim of being fully prepared to resume its lending commitments as soon as museums reopened to the public. The Foundation remained fully operational and its website was regularly updated.
FINANCIAL REVIEW
The Charitable Company is funded by cash donations from David Hockney in addition to the artwork he has already donated. Although the artwork donated is of significant value, the Trustees acknowledge that as the artwork is held by them as a collection to meet the Charitable Company's objectives, any risk of fluctuation in value will have little financial impact to the Charitable Company.
The Trustees' policy is to maintain a level of reserves sufficient to provide a stable base for the Charitable Company's continuing activities. The Trustees believe that the reserves are sufficient for its current purposes and these are reviewed on a regular basis. The reserves at 31 December 2020 were $197,893k (2019: $197,850k), including fixed assets of $194,260k (2019: $194,260k).
During the year, the Charitable Company did not receive any donations of artwork (2019: $ nil).
PLANS FOR FUTURE PERIODS
The Trustees are focused on working towards increasing their charitable activities including raising awareness. In addition, the Trustees are committed to utilising their artwork collection through exhibitions and viewings.
GOING CONCERN
The Trustees have considered the level of expenditure to which the Charitable Company is committed and the timings of future cash flows arising. There were net current assets at 31 December 2020 of $3,633k (2019 - $3,590k) and total assets less liabilities are $197,893k (2019 - $197,850k). The Trustees consider that the assets held within the Charitable Company are sufficiently capable of generating income to meet such expenditure as and when required.
As a result of the inquiries made, the Trustees have a reasonable expectation that the Charitable Company has adequate resources to continue in operational existence for the foreseeable future. The Charitable Company is well placed to manage its business risks successfully despite the current uncertain economic outlook. Accordingly, the Trustees conclude that it is appropriate to prepare the Charitable Company's financial statements on the going concern basis.
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The David Hockney Foundation (UK) Limited
Trustees' Annual Report - continued
for the Year Ended 31 December 2020
AUDITOR
Each of the persons who is a Trustee at the date of approval of this Annual Report confirms that:
-
so far as the Trustees are aware, there is no relevant audit information of which the Charitable Company's auditor is unaware; and
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the Trustees have taken all the steps that they ought to have taken as a Trustee to make themselves aware of any relevant audit
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information and to establish that the Charitable Company's auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.
Deloitte LLP have expressed their willingness to continue in office as auditor and a resolution to reappoint them as auditor will be proposed at the forthcoming Annual General Meeting.
Approved and authorised by the Board of Trustees and signed on their behalf by
[ela ............................................................................... EF199B09D91by:1463... E Devaney - Trustee
29 September 2021
Date: .............................................
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The David Hockney Foundation (UK) Limited
Trustees' Responsibilities Statement
for the Year Ended 31 December 2020
The Trustees (who are also the Trustees' of The David Hockney Foundation (UK) Limited for the purposes of Company law) are responsible for preparing the Trustees' Annual Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland".
Company law requires the Trustees to prepare financial statements for each financial period which give a true and fair view of the state of affairs of the Charitable Company and the incoming resources and application of resources, including the income and expenditure of the Charitable Company for that period. In preparing those financial statements, the Trustees are required to:
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select suitable accounting policies and then apply them consistently;
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observe the methods and principles of the Charities SORP;
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make judgements and estimates that are reasonable and prudent;
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state whether UK Accounting Standards have been followed; and
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prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Charitable Company will continue in operation.
The Trustees are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the Charitable Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Charitable Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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Independent Auditor's Report to the Members of The David Hockney Foundation (UK) Limited
Report on the audit of the financial statements
Opinion
In our opinion, the financial statements of The David Hockney Foundation (UK) Limited (the 'Charitable Company'):
-
give a true and fair view of the state of the Charitable Company's affairs as at 31 December 2020 and of its incoming resources and application of resources, including its income and expenditure, for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice including Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland"; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
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the Statement of Financial Activities;
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the Balance Sheet;
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the Cash flow Statement; and
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the related notes 1 to 14.
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).
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 Financial Reporting Council's (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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Trustees' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the charitable company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Trustees 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 within 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 this gives rise to 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 respect of these matters.
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Independent Auditor's Report to the Members of
The David Hockney Foundation (UK) Limited - continued
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 purpose 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 preparing 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 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 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 the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC's website at: www.frc.org.uk/auditorsresponsibilities . This description forms part of our auditor's report.
Extent to which 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.
We considered the nature of the Charitable Company’s industry and its control environment, and reviewed the Charitable Company’s documentation oftheir policies and procedures relating to fraud and compliance with laws and regulations. We also enquired of management abouttheir own identification and assessment of the risks of irregularities.
We obtained an understanding of the legal and regulatory framework that the Charitable Company operates in, and identified the key laws andregulations that:
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had a direct effect on the determination of material amounts and disclosures in the financial statements. These included the UK
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Companies Act and UK Charities Act; and
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do not have a direct effect on the financial statements but compliance with which may be fundamental to the Charitable Company's ability to operate or to avoid a material penalty.
We discussed among the audit engagement team regarding the opportunities and incentives that may exist within the organisation for fraud and how and where fraud might occur in the financial statements.
As a result of performing the above, we identified the greatest potential for fraud or non-compliance with laws and regulations in the following area, and our specific procedures performed to address it are described below:
- We presume a risk of material misstatement due to fraud in revenue recognition which is related to the completeness of donation income. To address this risk, we reviewed the Trustees’ meeting minutes and a sample of expenditure records and bank statements in the year, given that donation income is recognised on the basis of expenditure.
In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
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Independent Auditor's Report to the Members of
The David Hockney Foundation (UK) Limited - continued
Extent to which the audit was considered capable of detecting irregularities, including fraud - continued
In addition to the above, our procedures to respond to the risks identified included the following:
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reviewing financial statement disclosures by testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
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performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
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enquiring of management concerning actual and potential litigation and claims, and instances of non-compliance with laws and regulations; and
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reading minutes of meetings of those charged with governance.
Report on other legal and regulatory requirements
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
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the information given in the Trustees' Report, which includes the Directors' Report prepared for the purposes of company law for the financial year for which the financial statements are prepared is consistent with the financial statements; and
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the Directors' Report included within the Trustees' Report has been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Charitable Company and its environment obtained in the course of the audit, we havenot identified any material misstatements in the Trustees' Annual Report.
Matters on which we are required to report by exception
Under the Companies Act 2006 we are required to report in respect of the following matters if, in our opinion:
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adequate accounting records have not been kept or returns adequate for our audit have not been received from branches not visited by us; or
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the financial statements are not in agreement with the accounting records and returns; or
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certain disclosures of Trustees' remuneration specified by law are not made; or
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we have not received all the information and explanations we require for our audit; or
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the Trustees were not entitled to take advantage of the small companies' exemption in preparing the Trustees' Report and from the requirement to prepare a Strategic Report.
We have nothing to report in respect of these matters.
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 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 anyone other than the Charitable Company and the Charitable Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Sarah Anderson FCCA (Senior Statutory Auditor) for and on behalf of Deloitte LLP Statutory Auditor Leeds, United Kingdom
Date: .............................................
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The David Hockney Foundation (UK) Limited
Statement of Financial Activities for the Year Ended 31 December 2020
| INCOME Donations RECONCILIATION OF FUNDS Balances brought forward at 1 January Net income for the year Note EXPENDITURE Charitable activities 4 NET INCOME FOR THE YEAR 3 Balances carried forward at 31 December |
707 197,850 43 2020 $'000 (664) 43 197,893 |
785 197,830 20 2019 $'000 (765) 20 197,850 |
|---|---|---|
There is no comprehensive income or loss other than as shown in the Statement of Financial Activities above.
All income and expenditure derive from continuing activities and relate to unrestricted funds.
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The David Hockney Foundation (UK) Limited
Balance Sheet As at 31 December 2020
| 2020 | 2019 | ||
|---|---|---|---|
| Note | $'000 | $'000 | |
| FIXED ASSETS | |||
| Heritageassets | 8 | 194,260 | 194,260 |
| CURRENT ASSETS | |||
| Debtors | 9 | 3,697 | 3,639 |
| Cashat bank andin hand | 6 | 6 | |
| 3,703 | 3,645 | ||
| CREDITORS | |||
| Amounts falling due within one year | 10 | (70) | (55) |
| NET CURRENT ASSETS | 3,633 | 3,590 | |
| TOTAL ASSETS LESS CURRENT | |||
| LIABILITIES, BEING NET ASSETS | 197,893 | 197,850 | |
| FUNDS | |||
| Called up share capital | 11 | - | - |
| Unrestricted Funds | 197,893 | 197,850 | |
| 197,893 | 197,850 |
The financial statements of The David Hockney Foundation (UK) Limited registered number: 06637374, were approved and authorised by issue by the Board of Trustees on ............................................. 29 September 2021
[elaEF199B09D91by:1463...
...............................................................................
E Devaney - Trustee
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The David Hockney Foundation (UK) Limited
Cash Flow Statement
for the Year Ended 31 December 2020
| Net cash from operating activities Cash and cash equivalents at beginning of year Note Cash and cash equivalents at end of year Cash flows from operating activities Cash generatedfromoperations 12 Movement in cash and cash equivalents |
- 6 2020 $'000 6 - - |
2019 $'000 6 |
|---|---|---|
| 6 | ||
| - 6 |
||
| 6 |
Cash and cash equivalents comprise cash at bank and in hand.
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The David Hockney Foundation (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2020
1. ACCOUNTING POLICIES
Company and charitable status
The David Hockney Foundation (UK) Limited is a public benefit entity and a Charitable Company incorporated in the United Kingdom and is registered in England and Wales as a company limited by shares and having a share capital of 1 share of £1. At the date of this report, there are currently seven Trustees. The address of the registered office is given on page 1. The nature of the Charitable Company's operations and its principal activities are set out in the Trustees' Report on pages 2 and 3.
The financial statements have been prepared in accordance with the Statement of Recommended Practice Accounting and Reporting by Charities (SORP 2019), applicable UK Accounting Standards and the Companies Act 2006. The principal accounting policies adopted in the preparation of the financial statements are set out below.
Accounting convention
The financial statements are prepared under the historical cost convention and in accordance with Financial Reporting Standard 102 (FRS 102) issued by the Financial Reporting Council.
Going concern
The Trustees have considered the level of expenditure to which the Charitable Company is committed and the timings of future cashflows arising. These were net current assets at 31 December 2020 of $3,633k (2019 - $3,590k) and total assets less liabilities were $197,893k (2019 - $197,850k). The Trustees consider that the assets held within the Company are sufficiently capable of generating income to meet such expenditure when required as the Charitable Company has the ability to realise assets and/or seek donations from David Hockney and other sources if required.
As a result of the inquiries made, the Trustees have a reasonable expectation that the Charitable Company has adequate resources to continue in operational existence for the foreseeable future. The Charitable Company is well placed to manage its business risks successfully despite the current uncertain economic outlook. Accordingly, the Trustees conclude that it is appropriate to prepare the Charitable Company's financial statements on the going concern basis.
Functional currency
The majority of the Charitable Company's income and expenditure is denoted in United States dollars. Accordingly, this currency has been adopted as both functional and presentational currency.
Transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions: At the balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the prevailing rates on the balance sheet date. Exchange differences are recognised in the Balance Sheet in the period in which they arise.
Heritage assets
Heritage assets are held at deemed cost, being initial valuation at time of being gifted to the Charitable Company. The assets are considered to have indefinite useful economic lives; accordingly no depreciation is provided and the assets are reviewed annually for indication of impairment.
Income
Income comprises amounts due to the Charitable Company recognised on an accruals basis in respect of the period under review.
Gifts in kind are valued at the date received and are included as voluntary income.
Other income comprises sale of artwork, which is recognised as at the point of sale when the risks and rewards of ownership have been transferred.
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The David Hockney Foundation (UK) Limited
Notes to the Financial Statements - continued for the Year Ended 31 December 2020
1. ACCOUNTING POLICIES - continued
Expenditure
Expenditure is charged to the Statement of Financial Activities on an accruals basis. Expenditure is allocated as follows:
Charitable Activities:
Expenditure incurred directly in the fulfilment of the objectives of the Charitable Company including allocated overheads. Governance costs are expenditure incurred in the general running and administering the Charitable Company. These costs include audit and other costs associated with statutory requirements.
Support costs:
Support costs which include central office functions such as general management, finance, information technology and human resources are allocated across categories of expenditure. The basis of the cost allocation has been explained in note 4 to the accounts.
Taxation
The Company is a registered charity and has no liability to corporation tax on its charitable activities under the Corporation Tax Act 2010 (Chapters 2 and 3 of part ii, Section 466 onwards) or Section 256 of the Taxation for Chargeable Gains Act 1992, to the extent surpluses are applied to its charitable purposes.
Financial instruments
Financial assets and financial liabilities are recognised when the Charitable Company becomes a party to the contractual provisions of the instrument.
All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing transaction.
The Charitable Company only has financial assets or financial liabilities of a kind that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently measured at their settlement value.
Trade and other debtors are recognised at the settlement amount due. Prepayments are valued at the amount prepaid. Cash at bank and cash in hand includes cash and short term highly liquid investments with a short maturity of three months or less from the date of acquisition or opening of the deposit or similar account. Creditors and provisions are recognised where the Charitable Company has a present obligation resulting from a past event that will probably result in the transfer of funds to a third party and the amount due to settle the obligation can be measured or estimated reliably. Creditors and provisions are normally recognised at their settlement amount after allowing for any trade discounts due.
2. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Charitable Company's accounting policies, which are described in note 1, the Trustees are required to make judgements, estimates and assumptions about the carrying amounts 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.
Key sources of estimation uncertainty
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that periods, or in the period of the revision and future periods if the revision affects both current and future periods.
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The David Hockney Foundation (UK) Limited
Notes to the Financial Statements - continued for the Year Ended 31 December 2020
2. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY - continued
Critical accounting judgements
All heritage assets are capitalised and comprise artwork donated to the Charitable Company by David Hockney, one of the Charitable Company's Trustees. Records are kept by the Trustees of all pieces of artwork held by the Charitable Company.
The heritage assets initial donated valuation is treated as deemed cost. The heritage assets were assessed for impairment by Charles Scheips, curator, based on their knowledge of current values of artwork as at 31 December 2020. No adjustments for impairment were required as a result of the review of the heritage assets. The assets, consisting entirely of artwork, were assessed by the Trustees based on their knowledge of current market conditions.
3. NET INCOME FOR THE YEAR
| 2020 | 2019 | |
|---|---|---|
| $'000 | $'000 | |
| Fees payable to the Company's auditor for the audit of the | ||
| company's annualfinancial statements | 33 | 24 |
| Fees payable to the Company's auditor and its associates for the other services: | ||
| Taxation compliance services | 46 | 22 |
| Other services | 64 | 67 |
- EXPENDITURE ON CHARITABLE ACTIVITIES
| 2020 | 2019 | |
|---|---|---|
| $'000 | $'000 | |
| Support costs | ||
| Insurance | 167 | 173 |
| Staff recharge cost | 193 | 234 |
| Office costs | 21 | 19 |
| Repairs and maintenance | 4 | 12 |
| Property expenses | 6 | 4 |
| Miscellaneous | 67 | 94 |
| Governance costs (note 5) |
206 | 229 |
| 664 | 765 | |
Costs such as audit, legal and professional costs incurred in the course of managing the Charitable Company and its affairs have been allocated to governance costs (note 5). Other overheads have been allocated to charitable activities. All staff costs have been allocated to charitable activities.
5. GOVERNANCE COSTS
| 2020 | 2019 $'000 118 111 229 |
|
|---|---|---|
| $'000 | ||
| Audit & accountancy | 143 | |
| Legal & professional fees | 63 | |
| 206 | ||
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The David Hockney Foundation (UK) Limited
Notes to the Financial Statements - continued for the Year Ended 31 December 2020
6. TAXATION
The David Hockney Foundation (UK) Limited is a registered charity and has been exempted by HM Revenue & Customs from tax on income and capital gains falling within Chapter 3 of Part II to the Corporation Tax Act 2010 or section 256 of the Taxation of Chargeable Gains Act 1992 to the extent that these are applied to its charitable objectives. No tax charges have arisen in the Charitable Company.
7. INFORMATION REGARDING EMPLOYEES AND TRUSTEES
The Charitable Company does not have any direct employees. The staff are employed by David Hockney and other David Hockney related entities. An appropriate proportion of their salaries and associated costs is recharged to the Charitable Company which in the year was $193k (2019 - $154k). All staff members spend a portion of their time on the Charitable Company's affairs. In the reporting year there were no recharges to members of staff whose total employee benefits exceeded £60,000. (2019: total employee benefits for one member of staff were between $70,000 and $80,000). The Trustees are the only key management personnel during the year and received no remuneration. In the prior year there was one member of key management personnel with remuneration of $75,000.
8. HERITAGE ASSETS
| NET BOOK VALUE At 31 December 2020 At 31 December 2019 At 1 January 2020 and 31 December 2020 |
$'000 194,260 |
|---|---|
| 194,260 | |
| 194,260 |
All heritage assets are capitalised and compromise artwork donated to the Charitable Company by David Hockney, one of the Charitable Company’s Trustees. Detailed records are kept by the Trustees of all pieces of artwork held by the Charitable Company. The Trustees ensure the assets are held securely in suitable conditions. Access to the assets requires the consent of the trustees when they are not on public display.
The heritage assets initial donated valuation is treated as deemed cost. The heritage assets were assessed for impairment based on their knowledge of current values of artwork as at 31 December 2020. No adjustments for impairment were required as a result of the review of the heritage assets. The assets, consisting entirely of artwork, were assessed by the Trustees based on their knowledge of current market conditions.
The Charitable Company lent artworks to exhibitions held in the UK, and the United States of America. A touring exhibition of drawn portraits opened in early 2020 in London at the National Portrait Gallery, and on closing early due to Covid, travelled to the Morgan Library in New York. The Foundation approved an extension of all loans to the Morgan Library on request, to maximise public access during Covid social distancing restrictions. The loans to the 1853 Gallery at Salts Mill continued to be seen free by the public when the Galleries were able to reopen on the lifting of Covid restrictions.
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DocuSign Envelope ID: 26814B05-FED4-4EF7-B470-4C8AB1279380
The David Hockney Foundation (UK) Limited
Notes to the Financial Statements - continued for the Year Ended 31 December 2020
| 9. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 10. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Accruals 11. CALLED UP SHARE CAPITAL value: 1 Ordinary share £1 Prepayments Amounts due from parent company The David Hockney Foundation Inc Authorised, allotted, issued and fully paid: Number: Class: Nominal |
2020 3,697 2020 $'000 70 $'000 - $'000 163 3,534 2020 |
2019 $'000 105 3,534 |
|---|---|---|
| 3,639 | ||
| 2019 $'000 55 |
||
| $'000 - 2019 |
12. RECONCILIATION OF NET INCOME TO CASH GENERATED/USED BY OPERATIONS
| 2020 | 2019 $'000 20 |
|
|---|---|---|
| $'000 | ||
| Net income for the year, being operating cash flows before movement in working capital |
43 | |
| Increase in debtors | (58) | (5) |
| Increase/(decrease)in creditors | 15 | (9) |
| Cash generated by operations | - | 6 |
13. RELATED PARTY TRANSACTIONS
During the year, David Hockney, one of the Charitable Company Trustees, donated $707k to the Charitable Company (2019 - $785k).
No Trustees were remunerated for their services as Trustee during the period. In the year ended 31 December 2020, no costs were considered to be attributable to the Charitable Company in respect of recharges to the Charitable Company for governance costs (2019 - $nil).
No other Trustee or person related or connected by business to them, has received expenses from the Charitable Company during the year.
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DocuSign Envelope ID: 26814B05-FED4-4EF7-B470-4C8AB1279380
The David Hockney Foundation (UK) Limited
Notes to the Financial Statements - continued for the Year Ended 31 December 2020
14. CONTROLLING PARTY
The Charitable Company is controlled by The David Hockney Foundation Inc (company number C3151158) a public benefit corporation in the United States of America, which is also the ultimate controlling party. The Company's registered address is 2049 Century Park East, Suite 2100, Los Angeles, CA 90067. Control is exercised by The David Hockney Foundation Inc through the power to appoint or remove the majority of Trustees. This is the largest and smallest company which prepares group financial statements.
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