Charity number: 1147573
The HMS Victory Preservation Endowment Fund
Trustees' report and financial statements
for the year ended 31 March 2023
Page 1
The HMS Victory Preservation Endowment Fund Charity number: 1147573
Contents
Legal and administrative information .................................................................................................................. 3 Trustees’ annual report ........................................................................................................................................ 4 Structure, governance and management......................................................................................................... 4 Objectives and activities ................................................................................................................................... 4 Achievements and Performance ...................................................................................................................... 5 Subsequent Events ........................................................................................................................................... 7 Investment Policy ............................................................................................................................................. 7 Reserves Policy ................................................................................................................................................. 8 Grant Making Policies ....................................................................................................................................... 8 Related Parties.................................................................................................................................................. 8 Financial Review ............................................................................................................................................... 9 Results for the Year Ended 31 March 2023 .................................................................................................. 9 Changes in Fixed Assets ................................................................................................................................ 9 Principal Risks and Uncertainties ................................................................................................................. 9 Auditors ............................................................................................................................................................ 9 Statement of Trustees’ responsibilities .............................................................................................................. 10 Independent auditors' report to the Trustees of HMS Victory Preservation Endowment Fund ....................... 11 Statement of financial activities ......................................................................................................................... 14 Balance sheet ..................................................................................................................................................... 15 Cash flow statement ........................................................................................................................................... 16 Notes to the financial statements ...................................................................................................................... 17
Page 2
The HMS Victory Preservation Endowment Fund Charity number: 1147573
Legal and administrative information
Charity number 1147573 Business address HM Naval Base (PP66) Portsmouth Hampshire PO13 3NH Trustees Mr Keith W Morris Mr John D Dagg Mr Robert M N Norman Mr Keith Scott Accountants Compass Accountants Venture House, The Tanneries, East Street, Titchfield Hampshire PO14 4AR Auditors PKF Littlejohn LLP 15 Westferry Circus, Canary Wharf, London, E14 4HD Bankers Lloyds Bank Plc 16A High Street, Cosham, Portsmouth Hampshire PO6 3DY
Page 3
The HMS Victory Preservation Endowment Fund Charity number: 1147573
Trustees’ annual report
For the year ended 31 March 2023
The Trustees present their report and the financial statements for the year ended 31 March 2023. The Trustees have had due regard to the guidance issued by the Charity Commission on Public Benefit. The Trustees have adopted the provisions of the Statement of Recommended Practice (SORP) “Accounting and Reporting by Charities” (FRS 102) in preparing the annual report and financial statements of the charity.
The financial statements have been prepared in accordance with the accounting policies set out in notes to the accounts and comply with the charity’s governing document, applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
Structure, governance and management
The charity is governed by the Declaration of Trust dated 26 March 2012. This document imposes no restriction to prohibit the trustees from spending the entire capital of the endowment in furtherance of the objectives of the charity. The Trustees anticipate, subject to receiving acceptable grant requests, that the endowment will be fully expended by the 2027-28 financial year. They note that a sister fund, managed by the HMS Victory Preservation Company, which shares identical objectives, holds significant resources and the Company has indicated its intention to continue supporting the restoration of HMS Victory after the endowment is spent.
A formal induction process for Trustees is in place which combines all the necessary background reading material including items such as the governing document, minutes of recent meetings, the Charity Commission’s publication “The Essential Trustee: what you need to know”, and the Museum Association’s publication “Code of Ethics for Trustees”. Trustees are encouraged to visit HMS Victory and the National Museum of the Royal Navy’s Head Office in Portsmouth, to meet key members of staff and to discuss current issues.
The Trustees meet regularly, at least twice a year and more as required, to review and consider performance of invested funds with the appointed fund managers and to consider requests for grant funding from NMRN Operations (charity number: 1169061). The Trustees regularly review any potential conflicts of interest.
Objectives and activities
On 29 March 2012, the ownership of HMS Victory transferred to the HMS Victory Preservation Trust, a registered charitable trust of the HMS Victory Preservation Company (company number 7935358 and registered charity number 1146376). HMS Victory Preservation Company is a wholly owned subsidiary of the National Museum of the Royal Navy (Company number 6699696 and registered charity number 1126283) (“the National Museum”). At the same time, the Ministry of Defence transferred £25 million into a completely independent charitable trust, the Endowment Fund, for the purposes of supporting the HMS Victory Preservation Company in pursuance of their charitable objects, which are:
-
a) To preserve, restore and maintain HMS Victory , the flagship of Lord Nelson at the Battle of Trafalgar; b) To educate the public about the history of HMS Victory and the history of the Royal Navy and other matters relating to the defence of the realm;
-
c) To promote the efficiency of the armed forces by assisting recruitment and retention and fostering the esprit de corps of the men and women who are serving in the Naval Service or Auxiliaries; and
-
d) To commemorate and remember those members of the Naval Service and Auxiliaries who have died while on active service and to encourage public recognition of the sacrifice made by such persons.
Page 4
The HMS Victory Preservation Endowment Fund Charity number: 1147573
The Trustees of the HMS Victory Preservation Company have concluded that they do not have the expertise or infrastructure to preserve, restore and maintain the Ship or to present it to the public as a visitor attraction. Accordingly, the company has come to an agreement with the charitable entity, NMRN Operations (company number 9988314 and registered charity number 1169061), also a wholly owned subsidiary of the National Museum, that it will restore and maintain the Ship and present it as a visitor attraction to the public as part of its charitable activities.
Achievements and Performance
Last year the charity was pleased to report that it had made grants totalling £12.7 million in the 10 years since it was founded towards the restoration of HMS Victory to NMRN Operations and the HMS Victory Preservation Company.
This year we are able to report that we have continued to approve and make grants and have made the largest amount of grants we have ever made in one financial year totalling £8,072,648 towards work on and connected with HMS Victory, including the activities set out in this report. The largest single item was an amount of £6,160,296 to purchase a scaffold structure now very prominently covering the midships whilst detailed restoration work takes place in secure dry conditions. Once the work on the middships is complete the scaffold will be reused over the bow and stern to complete the work.
Developing the Conservation Approach:
The HMS Victory Preservation Company has resolved to approach the conservation of the Ship in accordance with those principles set out in the National Historic Ships UK publication Conserving Historic Vessels. In May 2015, the company approved the Conservation Programme Plan (CPP) for the Ship. Developed by NMRN Operations in association with subject matter experts, the purpose of the CPP is to define what conservation work is required to deliver a fully conserved HMS Victory, in an open environment and in a condition to survive for 50 years without major work beyond a programme of planned maintenance.
To support the CPP, the Conservation Management Plan (CMP) was also reviewed by both NMRN Operations and the Victory Technical Committee and updated to ensure it was future proofed and supported the planned programme. The updated CMP is due for approval by the HMS Victory Preservation Company.
Efforts in the year have concentrated in the areas of preparing the ship for plank removal. A programme of surveys and testing mandated by legislation, along with preservation of weather deck areas was completed. Work was undertaken through support of the structural support specialists to prevent movement of the ship in its current structure during this process. Repairs to the electrical system, including rolling replacement of lanthorn components and elements of the ships broadcast system were also completed within the reporting period.
Delivery of the Conservation Project Plan:
Installation of a scaffolding structure – An impressive scaffold structure was erected over the ship which allowed the conservation teams to undertake the programme of works. Scaffold interpretation work was also introduced to improve the visitor experience that offered a visual identity. The experience was named ‘Victory Live: The Big Repair’ which is a festival inspired experience that captures the essence of the ever changing nature of the conservation projects and conveys the ‘behind the scenes’ nature of the visitor experience. The structure includes a welcome foyer, branded signage, family trail that shares some of the key messages of the project and directional signage to support the visitors moving around the structure.
Page 5
The HMS Victory Preservation Endowment Fund Charity number: 1147573
Materials Trials – testing continued by the NMRN Operations Conservation Team to establish the impact of UV, water permeability and various materials for fastenings on the ship. This extensive programme of work, undertaken in partnership with Southampton University’s nc² consultancy, is enabling the project to better understand the likely degradation of materials over time, and make informed decisions as to the best choices of fixings, glues, paints and timber to be used on the project, and the levels of maintenance likely to be required going forward. The ship-side mock-up surveys progressed on a monthly basis and the results showed patterns of deterioration. This information, combined with the laboratory results from materials trials was used when selecting the materials for re-planking the ship.
Workshop Upgrades – to support the delivery of the 12-year conservation plan, upgrades to the workshops progressed and a new space was designed. The new space allows for critical quality control procedures for the production of laminating oak and for the smooth supply chain flow from the timber supplier.
Timber Procurement – to ensure a successful re-planking process, it was essential that the right suppliers were procured to deliver the quality and quantity of oak timber required. A timber framework agreement was completed during the year and materials received to date have met the required specification.
Digital Content – The NMRN conservation team captured digital footage of the project during the year, including:
-
3D drone surveys
-
3D Modelling
-
3D High resolution footage of planks
All of the content was used to publicise across websites, social media and within the Victory Live experience and can be found on the NMRN website. A specific HMS Victory Hub is to be created that will showcase the conservation project, digital footage, stories from those working on the project and will be used to further promote the conservation with external broadcasters and production teams.
Public Engagement:
The operation of HMS Victory has seen 204,859 visitors (2021-22: 143,144 visitors) and continues to be one of the most visited attractions at the Portsmouth Historic Dockyard. The improved NMRN Operations school offer has seen the return of schools visiting the ship. The introduced ‘Discovery Visits’ and ‘Discover More’ visits, which include a self-directed activity using a Discovery Chest in either the Victory Gallery or Nelson Gallery have also seen a positive increase in users.
The NMRN website was upgraded during the year which allowed ease of use for visitors to book tickets for HMS Victory.
NMRN continue to regularly meet with the Royal Navy Communications and Engagement Teams to plan priority events , including those supporting joint working, example includes the display of the Peregrine Trophy winners for the year.
Media coverage highlights included mention of the HMS Victory Conservation project and plans to open the scaffold to the public across the Daily Telegraph, BBC South News and Portsmouth news. Conservation footage is also available on the NMRN’s Facebook page, Twitter feed and Instagram.
The Nelson In his Own Words: Treasures from the Aikatrin Laskarisis Foundation display launched within the Nelson Gallery in October 2022 just ahead of Trafalgar Day. This was co-promoted alongside the Victory Live project for Trafalgar day and achieved 193 media mentions and a reach of 209,052 across online, broadcast and print.
Page 6
The HMS Victory Preservation Endowment Fund Charity number: 1147573
A joint initiative between Portsmouth City Council and PHD Operations Limited to offer free tickets to all families within the city who are entitled to Pupil Premium proved a success during the year and opened up HMS Victory to those who may not have been able to visit the ship previously.
NMRN opened its online collections service in September 2022 and a number of HMS Victory collections are available to view. Work continues to upload further collections to support with research and education for our digital visitors.
A PhD graduate was appointed in collaboration with the Mary Rose Trust during the year to support with chemical analysis to characterise oak from HMS Victory and the Mary Rose that had been subject to different conditions and conservation treatments. Looking at the various states of degradation, this information would be used to assess the effectiveness and sustainability of the conservation strategies and highlight what HMS Victory and the Mary Rose may learn from each other.
Commemoration and remembrance
HMS Victory is a key focus for remembrance of those members of the Royal Navy who have died while on active service. The Victory Gallery marks remembrance activities on the Ship by telling the story of Queen Victoria placing a wreath on the spot where Nelson fell on Trafalgar Day, 21 October. The laying of a wreath to mark Trafalgar Day as an act of remembrance continues to be an exceptionally important day in HMS Victory’s calendar. As in every year, HMS Victory hosted a ceremony led by the Second Sea Lord. This 2022 ceremony was broadcast online via the Facebook Live platform, enabling it to reach a wide, diverse audience.
Subsequent Events
The Endowment Fund expects to receive and consider further grant requests from NMRN Operations in the 2023-24 financial year, and subsequent financial years, for funding to support the HMS Victory Conservation Project Plan. Significant changes were made to the project plan during 2022 that accelerate certain project activities to enable work to be completed more quickly and to the same quality, but that will result in increased expenditure in the early years, although significantly lower total expenditure in aggregate over the life of the project. This increased rate of expenditure will have a significant impact on the Trustees’ view of the anticipated life of the Fund.
Investment Policy
The Trustees completed a review of the Investment Policy and Investment Managers at their meeting of 10 December 2021, which resulted in the Trustees resolving to hold all funds with one investment manager, Cazenove. They took into account the anticipated grant funding requests for the revised Conservation Project Plan, which indicated a high level of grant requests in the 2022-23 financial year. As a result of this approach, investments held by the other fund manager which had been sold, mainly during the 4th quarter of 2022, were retained as cash.
The current investment objective is to maintain the cash and liquidity available to meet anticipated near-term grant funding requests (defined as the next 12 months) and to invest the remaining assets in a way consistent with the expected project timeframe.
The forecast of expenditure of NMRN Operations at the date of approving this investment policy showed that the capital resources of the Endowment Fund will have been fully expended by the 2027-28 financial year. Any forecast should be treated with some caution, given the complexities of the Conservation Programme Plan and the impact of the current economic environment on both the work programme and investment performance.
Page 7
The HMS Victory Preservation Endowment Fund Charity number: 1147573
The Endowment Fund seeks to produce the best possible financial return within an acceptable level of risk. Return can be achieved by either income or capital gain, but given the duration of the fund, significant volatility in the investment portfolio is undesirable. The Endowment Fund will seek to strike a balance between equity investments, which provide the best opportunity for capital retention and growth in excess of inflation, and fixed investments such as cash and bonds, which provide lower volatility and more certain returns. The trustees have determined they have a conservative approach to risk.
Subject to the above, the Endowment Fund assets can be invested widely and are expected to be diversified by asset class, by manager, and by security. Asset classes can include cash, bonds, equities, property funds, hedge funds, structured assets, private equity, commodities and any other asset class that is deemed suitable. The Trustees do not wish to invest directly in property. In making investments, the Trustees may take into consideration the fact that the Preservation Company fund, which shares the identical objectives, will not be using its capital and will be available to take up the funding needs of HMS Victory after the Endowment Fund is expended. The Trustees will agree a suitable asset allocation framework with the chosen Investment Managers
The base currency of the investment portfolio is Sterling. Investments may be made in non-sterling assets. Hedging is permitted.
The Endowment Fund shall, through the chosen Investment Managers, maintain a cash reserve to fund nearterm requirements for funding the programme of work on HMS Victory . The Investment Managers manage the Endowment Fund’s assets on a discretionary basis in line with this policy. The Investment Managers provide custody of assets and each is required to produce a quarterly valuation and performance report.
The Trustees are responsible for agreeing strategy and monitoring the investment assets, and the performance of the Investment Managers and will meet at least annually to review the portfolios, including an analysis of return, asset allocation and risk. This will include monitoring and reviewing the fees charged. No specific ethical investment restriction is placed in the Investment Managers’ remit. The trustees are content that the corporate socially responsible investment policies of the Investment Managers meets their needs.
Reserves Policy
The Trustees regularly monitor the levels of the Endowment Fund's liquid and total reserves. Due to the expected higher grant requests in the coming year, the Trustees needed to hold additional liquidity. On advice from their Investment Manager the Trustees opened a short term liquidity fund to maintain easily accessible assets sufficient to meet anticipated grant requests in the next twelve months, and to avoid selling of investments assets at a sub-optimum time in a potentially declining market. This accounts for the majority of the decline in Endowment Funds, and increase in Unrestricted Income Funds, shown in the accounts.
Grant Making Policies
The Endowment Fund exists to support the charitable objects of the HMS Victory Preservation Company. In so doing, the Endowment Fund expects to make a grant to NMRN Operations based on the budget proposed for preservation, maintenance and operation of the Ship. In addition, occasional grants may be made to fund specific projects and one-off expenditure that support the charitable objects. The Endowment Fund received and made grant funding requests totalling £8,072,648 for the preservation, maintenance and operation of HMS Victory in the year to 31 March 2023.
Related Parties
The related parties of the HMS Victory Preservation Endowment Fund are disclosed in note 14 to the accounts.
Page 8
The HMS Victory Preservation Endowment Fund Charity number: 1147573
Financial Review
Results for the Year Ended 31 March 2023
Total income from investments for the HMS Victory Preservation Endowment Fund in 2022-23 amounted to £287,081 (2021-22: £223,847).
Total expenditure for 2022-23 amounted to £8,178,158 (2021-22: £1,109,008). After net losses on midmarket valuation of investments of £464,428 (2021-22: gains of £891,581) arising from market volatility, the net movement in funds for the year was a decrease of £8,355,505 (2021-22: increase of £6,420).
The net assets as at 31 March 2023 amounted to £14,369,482 (31 March 2022: £22,724,987).
Changes in Fixed Assets
Movements in fixed asset investments are shown in note 8 to the accounts.
Principal Risks and Uncertainties
The principal risk to the Endowment Fund’s, amount available to make grants, lies in the volatility of investments in equities. Sale of these in a depressed market would lead to less monies being available to the trustees to distribute. This risk is managed by reducing the percentage of equities held and increasing the cash and fixed interest portfolio as the fund reduces in size. In addition the trustees only approve grants where the fund holds cash sufficient to meet the amount granted. This process is managed through a clearly defined investment policy; the selection of an investment manager that is fully briefed on that policy; and regular reviews of investment manager performance to confirm that the assets are in line with the policy.
Auditors
The accounts have been audited by PKF Littlejohn LLP. So far as the Trustees are aware, there is no relevant audit information of which the charity’s auditors are unaware. Trustees have taken all the steps necessary to make themselves aware of any relevant audit information and to establish that the charity’s auditors are aware of that information.
Mr Keith Morris
Date: 24 January 2024
Page 9
The HMS Victory Preservation Endowment Fund Charity number: 1147573
Statement of Trustees’ responsibilities
for the year ended 31 March 2023
The Trustees 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).
The law applicable to charities in England & Wales requires the trustees to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the charity and of the incoming resources and application of resources of the charity for that period. In preparing these financial statements, the Trustees are required to:
-
select suitable accounting policies and then apply them consistently;
-
observe the method and principles of the Charities SORP 2019 (FRS 102);
-
make judgements and estimates that are reasonable and prudent;
-
state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charity will continue in operation.
The Trustees are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the charity and enable them to ensure that the financial statements comply with the Charities Act 2011, the Charities (Accounts and Reports) Regulations 2008 and the provisions of the trust deed. They are also responsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Mr Keith Morris
Date: 24 January 2024
Page 10
The HMS Victory Preservation Endowment Fund Charity number: 1147573
Independent auditors' report to the Trustees of HMS Victory Preservation Endowment Fund
Opinion
We have audited the financial statements of the HMS Victory Preservation Endowment Fund (the ‘charity’) for the year ended 31 March 2023 which comprise the Statement of Financial Activities, the Balance Sheet, the 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 FRS 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:
-
give a true and fair view of the state of the charity’s affairs as at 31 March 2023, 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; and
-
have been prepared in accordance with the requirements of the Charities Act 2011.
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 charity 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.
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 charity’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 Trustees’ Annual Report, other than the financial statements and our auditor’s report thereon. The trustees are responsible for the other information contained within the Trustees’ Annual Report. Our opinion on the financial statements does not cover the other information and 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 this regard.
Page 11
The HMS Victory Preservation Endowment Fund Charity number: 1147573
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Charities (Accounts and Reports) Regulations 2008 require us to report to you if, in our opinion:
-
the information given in the financial statements is inconsistent in any material respect with the trustees’ report; or
-
sufficient accounting records have not been kept; or
-
the financial statements are not in agreement with the accounting records; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of trustees
As explained more fully in the Statement of Trustees Responsibilities, the trustees are responsible for the preparation of financial statements which 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 charity’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 charity or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
We have been appointed as auditor under section 144 of the Charities Act 2011 and report in accordance with the Act and relevant regulations made or having effect thereunder.
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.
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 obtained an understanding of the charity and the sector in which it operates to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management, sector research and application of cumulative audit knowledge and experience.
-
We determined the principal laws and regulations relevant to the charity in this regard to be those arising from the Charities Act 2011, Charities (Accounts and Reports) Regulations 2008, Financial Reporting Standard 102 and the Charities SORP.
-
We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the charity with those laws and regulations. These procedures included, but were not limited to enquiries of management, review of minutes and review of legal and regulatory correspondence.
-
We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that there was a potential for management bias in the allocation of support costs against charitable activity categories. We addressed this through reviewing the method used for reasonableness and re-performing the calculation to ensure it had been performed accurately in line with the stated method.
-
We also identified potential for management bias in the timing of recognition of grant expenditure. We addressed this through review of all material grant agreements and correspondence to ensure correct treatment under the Charities SORP, including consideration of the accounting period in which expenditure should be recognised.
Page 12
The HMS Victory Preservation Endowment Fund Charity number: 1147573
- As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the charity’s trustees, as a body, in accordance with Part 4 of the Charities (Accounts and Reports) Regulations 2008. Our audit work has been undertaken so that we might state to the charity’s trustees 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 charity and the charity’s trustees as a body, for our audit work, for this report, or for the opinions we have formed.
PKF Littlejohn LLP Statutory Auditor
15 Westferry Circus Canary Wharf London E14 4HD
Date: 25 January 2024
PKF Littlejohn LLP is eligible for appointment as auditor of the charity by virtue of its eligibility for appointment as auditor of a company under section 1212 of the Companies Act 2006
Page 13
The HMS Victory Preservation Endowment Fund Charity number: 1147573
Statement of financial activities For the year ended 31 March 2023
| Unrestricted | Endowment | 2023 | Unrestricted | Endowment | 2022 | ||
|---|---|---|---|---|---|---|---|
| funds | funds | Total | funds | funds |
Total | ||
| Notes | £ |
£ | £ | £ | £ | £ | |
| Income from: | |||||||
| Donations | - | - | - | 30 | - | 30 | |
| Investments | 2 | 283,317 | 3,764 | 287,081 | 179,352 | 44,465 | 223,817 |
| Total income | 283,317 | 3,764 | 287,081 | 179,382 | 44,465 | 223,847 | |
| Expenditure on: | |||||||
| Investment management costs | 3 | 4,212 | 48,969 | 53,181 | 2,466 | 50,788 |
53,254 |
| Charitable activities | 4 | 8,124,977 | - | 8,124,977 | 1,055,754 | - | 1,055,754 |
| Total expenditure | 8,129,189 | 48,969 | 8,178,158 | 1,058,220 | 50,788 | 1,109,008 | |
| Net gains/(losses) on | |||||||
| investments | 8 | - | (464,428 ) | (464,428) | - | 891,581 |
891,581 |
| Transfers between funds | 2,902 | (2,902 ) | - | 8,493,526 | (8,493,526) | - |
|
| Net movement in funds | (7,842,970) | (512,535 ) |
(8,355,505) | 7,614,688 | (7,608,268) | 6,420 | |
| Reconciliation of funds | |||||||
| Total funds brought forward | 11,422,827 | 11,302,160 | 22,724,987 | 3,808,139 | 18,910,428 | 22,718,567 | |
| Total funds carried forward | 3,579,857 | 10,789,625 | 14,369,482 | 11,422,827 | 11,302,160 | 22,724,987 |
The statement of financial activities includes all gains and losses in the year.
All of the above amounts relate to continuing activities.
The notes on pages 16 to 21 form an integral part of these financial statements.
Page 14
The HMS Victory Preservation Endowment Fund Charity number: 1147573
Balance sheet as at 31 March 2023
| 2023 | 2022 | ||||||
|---|---|---|---|---|---|---|---|
| Notes | £ | £ | £ | £ | |||
| Fixed assets | |||||||
| Investments | 8 | 11,078,903 | 11,393,025 | ||||
| Current assets | |||||||
| Investments | 8 | 3,349,249 | 11,227,885 | ||||
| Debtors | 9 | 6,623 | 2,844 | ||||
| Cash at bank and in hand | - | 119,189 | |||||
| Total current assets | 3,355,872 | 11,349,918 | |||||
| Creditors: amounts falling | |||||||
| due within one year | 10 | (65,293) | (17,956) | ||||
| Net current assets | 3,290,579 | 11,331,962 | |||||
| Net assets | 14,369,482 | 22,724,987 | |||||
| Funds | 11 | ||||||
| Endowment funds | 13 | 10,789,625 | 11,302,160 | ||||
| Unrestricted income funds | 12 | 3,579,857 | 11,422,827 | ||||
| Total funds | 14,369,482 | 22,724,987 |
The financial statements were approved by the Trustees and signed on their behalf by
Mr K Morris Trustee
Date: 24 January 2024
The notes on pages 16 to 21 form an integral part of these financial statements.
Page 15
The HMS Victory Preservation Endowment Fund Charity number: 1147573
Cash flow statement for the year ended 31 March 2023
| 2023 | 2022 | |
|---|---|---|
| £ | £ | |
| Cashflows from operating activities: | ||
| Net cash (outflow)/inflow from operating activities | (207,902) | (8,595,105) |
| Cash flows from investing activities: | ||
| Dividends and interest from investments | 287,081 | 223,817 |
| Purchase of investments | - | (1,854,089) |
| Disposal of investments | 1,546 | 10,301,452 |
| Movement in cash held in investments | (199,914) | (104,519) |
| Net cash provided by (used in) investing activities | 88,713 | 8,566,661 |
| Change in cash and cash equivalents in the reporting period | (119,189) | (28,444) |
| Cash and cash equivalents at 1 April 2022 | 119,189 | 147,633 |
| Total cash and cash equivalents at 31 March 2023 | - | 119,189 |
| Net (expenditure)/income for the year | (8,355,505 ) | 6,420 |
| Income from investments | (287,081) | (223,817) |
| Losses /(Gains) on investments | 464,428 | (891,581) |
| Adjustment for non-cash fees from gains/losses | 48,062 | 50,179 |
| Decrease /(Increase) in short term investments | 7,878,636 | (7,515,611) |
| (Increase)/Decrease in debtors | (3,779 ) | 1,655 |
| Increase/(Decrease) in creditors | 47,337 | (22,350) |
| Net cash (used in)/provided by operating activities | (207,902 ) | (8,595,105) |
Page 16
The HMS Victory Preservation Endowment Fund Charity number: 1147573
Notes to the financial statements
for the year ended 31 March 2023
1. Accounting policies
The principal accounting policies are summarised below. The accounting policies have been applied consistently throughout the year and the preceding year.
1.1. Charity information
The HMS Victory Preservation Endowment Fund is a registered charity, number 1147573. The business address is HM Naval Base PP66, Portsmouth, Hampshire, PO1 3NH. The HMS Victory Preservation Endowment Fund meets the definition of a public benefit entity under section 34 of FRS 102. Assets and liabilities are initially recognised at historical cost or transaction value, unless otherwise stated in the relevant accounting policy. The principal objectives of the charity are detailed in the Trustees report.
1.2. Basis of accounting
The financial statements have been prepared in accordance with 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) issued in October 2019, the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102), the Charities Act 2011 and UK Generally Accepted Practice as it applies from 1 January 2019.
The financial statements have been prepared on a going concern basis as the trustees believe that no material uncertainties exist. The trustees have considered the level of funds held and the expected level of income and expenditure for 12 months from authorising these financial statements. The budgeted income and expenditure is sufficient with the level of reserves for the charity to be able to continue as a going concern.
The financial statements are prepared under the historical cost convention, modified to include fixed asset investments at fair value. The financial statements are presented in sterling which is the functional currency of the charity. Monetary amounts in these financial statements are rounded to the nearest £.
1.3. Fund accounting
Unrestricted funds are donations and other incoming resources received or generated for general purposes.
Restricted funds are to be used for specified purposes as laid down by the donor. Expenditure which meets this criteria is identified to the fund, together with a fair allocation of overheads and support costs.
Endowment funds are funds which the donor has stated are to be held as capital and expendable over the long term.
1.4. Incoming resources
Income is recognised when the charity has entitlement to the funds, any performance conditions attached to the item(s) of income have been met, it is probable that the income will be received and the amount can be measured reliably. The following specific policies are applied to particular categories of income:
Voluntary income is received by way of grants, donations and gifts and is included in full in the statement of financial activities when receivable.
Income from investments is included in the year in which it is receivable.
Legacies are included when the charity is advised by the personal representative of an estate that payment will be made or property transferred and the amount involved can be quantified.
Page 17
The HMS Victory Preservation Endowment Fund Charity number: 1147573
Notes to the financial statements
for the year ended 31 March 2023
1.5. Grants receivable
Revenue grants are credited to incoming resources on the earlier date of when they are received or when they are receivable. If a grant of donation is subject to conditions that require a level of performance before the charity is entitled to the funds, the income is deferred and not recognised until either those conditions are fully met, or the fulfilment of those conditions is wholly within the charity’s control and it is probable those conditions will be met in the accounting period.
Grants for the purchase of fixed assets are credited to restricted incoming resources when receivable. Depreciation on the fixed assets purchased with such grants is charged against the restricted fund.
1.6. Resources expended
Expenditure is recognised on an accruals basis as a liability is incurred. Expenditure includes any VAT which cannot be fully recovered, and is reported as part of the expenditure to which it relates.
Charitable expenditure comprises those costs incurred by the charity in the delivery of its activities and services for its beneficiaries. It includes both costs that can be allocated directly to such activities and those costs of an indirect nature necessary to support them.
Support costs are those costs incurred directly in support of expenditure on the objects of the charity and include project management.
Governance costs include those costs incurred in the governance of the charity and its assets and are primarily associated with constitutional and statutory requirements.
1.7. Investments
Investments held as fixed and current assets are revalued at mid-market value at the balance sheet date and the gain or loss taken to the statement of financial activities.
2. Investment income
| Investment income | ||
|---|---|---|
| Unrestricted Endowment funds funds £ £ Income from UK listed investments 266,100 3,764 Interest income 17,217 - 283,317 3,764 |
2023 Unrestricted Endowment Total funds funds £ £ £ 269,864 179,296 37,729 17,217 56 6,736 287,081 179,352 44,465 |
2022 Total £ 217,025 6,792 |
| 223,817 |
3. Investment management costs
| Unrestricted Endowment funds funds £ £ Investment management fees 4,212 48,969 4,212 48,969 |
2023 Unrestricted Endowment Total funds funds £ £ £ 53,181 2,466 50,788 53,181 2,466 50,788 |
2022 Total £ 53,254 |
|---|---|---|
| 53,254 |
Page 18
The HMS Victory Preservation Endowment Fund Charity number: 1147573
Notes to the financial statements
for the year ended 31 March 2023
4. Costs of charitable activities - by fund type
| Unrestricted funds £ HMS Victory Preservation 8,124,977 8,124,977 Costs of charitable activities - by activity Activities undertaken directly £ HMS Victory Preservation 42,000 Grant to NMRN Operations (Charity 1169061) 7,783,648 Grant to the National Museum of the Royal Navy (Charity 1126283) 289,000 8,114,648 Governance and support costs Unrestricted funds £ Accountancy fees 1,704 Auditor remuneration 6,022 Bank charges 30 Legal & professional fees 1,356 Other governance costs 1,217 10,329 |
Unrestricted funds £ HMS Victory Preservation 8,124,977 8,124,977 Costs of charitable activities - by activity Activities undertaken directly £ HMS Victory Preservation 42,000 Grant to NMRN Operations (Charity 1169061) 7,783,648 Grant to the National Museum of the Royal Navy (Charity 1126283) 289,000 8,114,648 Governance and support costs Unrestricted funds £ Accountancy fees 1,704 Auditor remuneration 6,022 Bank charges 30 Legal & professional fees 1,356 Other governance costs 1,217 10,329 |
2023 Unrestricted Total funds £ £ 8,124,977 1,055,754 8,124,977 1,055,754 Governance and support 2023 costs Total £ £ 10,329 52,329 - 7,783,648 - 289,000 10,329 8,124,977 2023 Unrestricted Total funds £ £ 1,704 1,702 6,022 2,606 30 30 1,356 - 1,217 1,133 10,329 5,471 |
2022 Total £ 1,055,754 |
|---|---|---|---|
| 1,055,754 | |||
| 2022 Total £ 30,754 750,000 275,000 |
|||
| 1,055,754 | |||
| 2022 Total £ 1,702 2,606 30 - 1,133 5,471 |
|||
| 10,329 |
5. Costs of charitable activities - by activity
6. Governance and support costs
7. Trustees' emoluments
No Trustees received remuneration during the year (2022: Nil). No expenses have been paid to the Trustees during the year (2022: £Nil).
Page 19
The HMS Victory Preservation Endowment Fund Charity number: 1147573
Notes to the financial statements
for the year ended 31 March 2023
8. Fixed asset investments
| Valuation At 1 April 2022 Additions Disposals Gains and losses before management fees Less management fees deducted Net increase in investment market value ) At 31 March 2023 Cash held in investments At 1 April 2022 Net movement in the year At 31 March 2023 Total investment value at 1 April 2022 Total investment value at 31 March 2023 Historical cost as at 31 March 2023 Historical cost as at 31 March 2022 |
Listed investments Total £ £ 11,246,087 11,246,087 - - (1,546) (1,546) (464,428) (48,062) (512,490) (512,490) 10,732,051 10,732,051 146,938 199,914 346,852 11,393,025 11,078,903 16,774,220 16,574,306 |
|---|---|
The investment portfolio also includes £3,349,249 (2022: £11,227,885) of short-term low-volatility variable net asset value money-market funds.
9. Debtors
| Other debtors Prepayments 10. Creditors: amounts falling due within one year Other creditors Accruals and deferred income |
2023 £ 6,315 308 6,623 2023 £ 11,360 53,933 65,293 |
2022 £ 2,551 293 |
|---|---|---|
| 2,844 | ||
| 2022 £ 4,726 13,230 |
||
| 17,956 |
Page 20
The HMS Victory Preservation Endowment Fund Charity number: 1147573
Notes to the financial statements
for the year ended 31 March 2023
11. Analysis of net assets between funds
| Unrestricted funds £ Fund balances at 31 March 2023 as represented by: Investment assets 346,852 Current assets 3,284,506 Current liabilities (51,501) 3,579,857 |
Endowment funds £ 10,732,051 71,366 (13,792) 10,789,625 |
2023 Total funds £ 11,078,903 3,355,872 (65,293) 14,369,482 |
|---|---|---|
| Unrestricted funds £ Fund balances at 31 March 2022 as represented by: Investment assets - Current assets 11,349,918 Current liabilities 72,909 11,422,827 |
Endowment funds £ 11,393,025 - (90,865) 11,302,160 |
2022 Total funds £ 11,393,025 11,349,918 (17,956) 22,724,987 |
|---|---|---|
12. Unrestricted funds
| Unrestricted Funds Unrestricted Funds |
At 1 April Incoming Outgoing 2022 resources resources £ £ £ 11,422,827 283,317 (8,129,189) At 1 April Incoming Outgoing 2021 resources resources £ £ £ 3,808,139 179,382 (1,058,220) |
Gains and losses £ - Gains and losses £ - |
Transfer between Funds £ 2,902 Transfer between Funds £ 8,493,526 |
At 31 March 2023 £ 3,579,857 |
|---|---|---|---|---|
| At 31 March 2022 £ 11,422,827 |
Page 21
The HMS Victory Preservation Endowment Fund Charity number: 1147573
Notes to the financial statements for the year ended 31 March 2023
13. Endowment funds
| Endowment Funds Endowment Funds |
At 1 April Incoming 2022 resources £ £ 11,302,160 3,764 At 1 April Incoming 2021 resources £ £ 18,910,428 44,465 |
Outgoing resources £ (48,969) Outgoing resources £ (50,788) |
Gains and losses £ (464,428 ) Gains and losses £ 891,581 |
Transfer between Funds £ (2,902) Transfer between Funds £ (8,493,526) |
At 31 March 2023 £ 10,789,625 |
|---|---|---|---|---|---|
| At 31 March 2022 £ 11,302,160 |
14. Related party transactions
There were no related party transactions during the period.
Page 22