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2020-10-31-accounts

HONOURABLE ARTILLERY COMPANY

(Charity Registered in England and Wales Number 208443)

_____

Report of the Court of Assistants and Financial Statements For the year ended 31 October 2020

CONTENTS

Membership of the Court of Assistants ........................................................................................................ 1 Annual Report of the Court of Assistants..................................................................................................2-9 Independent Auditors’ Report ................................................................................................................ 10-12 Consolidated Statement of Financial Activities ......................................................................................... 13 Consolidated and Charity Balance Sheet .................................................................................................... 14 Consolidated Statement of Cash Flows ...................................................................................................... 15 Notes to the Financial Statements ........................................................................................................... 16-34

Honourable Artillery Company

The Membership of the Court of Assistants of the Company as at 31 October 2020 was:

EX-OFFICIO MEMBERS

Captain-General ...........................................................................................................Her Majesty The Queen* Colonel Commandant & President .......................... General Sir Patrick Sanders KCB CBE DSO ADC Gen Vice President ............................................................................................. Major P D C Vyvyan-Robinson TD Treasurer ....................................................................................................................................... M P Basing Esq Regimental Colonel.................................................................................... Lieutenant Colonel A D C Caie TD Commanding Officer ....................................................................................... Lieutenant Colonel J P Chorley Senior Major ............................................................................................................................. Major W H Grove Commander of the City of London Special Constabulary Detachment ........................................................................................................... Special Superintendent P M P FitzGerald Captain of the Company of Pikemen & Musketeers .................................................... Major R J Jackson TD Officer Commanding the Light Cavalry ..................................................................................... A R Willis VR

HONORARY MEMBERS*

HRH Prince Michael of Kent GCVO, Royal Honorary Colonel Field Marshal Sir John Chapple GCB CBE DL Brigadier General Joe Milano AHAC

The Lord Mayor, the Aldermen, the Recorder and Sheriffs of the City of London for the time being

TWENTY-THREE MEMBERS

(a) Appointed by the Commanding Officer : Vacant

(b) Appointed by the Court of Assistants: Lieutenant Colonel S J R Halliday TD; G R Smith Esq

(c) Elected at the General Court on 18 March 2020 (and amended where shown), in the order of votes recorded:

Major C V Marment VR (2001) Captain R M Huleatt-James TD (2010) Major General S F N Lalor CB TD (1993) Lieutenant Colonel J R Longbottom MBE QVRM Special Sergeant Dr S F Edwards (2020) VR (2002) Major D Brigden TD (2018) Major I C S Morpeth TD (1992) Major T L Davies TD (1982) Captain H R Jee (1997) E A Seabrook Esq (1991) Lieutenant T J Monger-Godfrey (2019) Major J O Leighton TD (2004) Major J A Robinson (2016) Captain H D N M Voyantzis (2007) Major S C Briggs TD (2003) Major R P Quain TD (2006) Major C O Wragg (2020) The Reverend (Major) M W Bezerra Speeks CF Captain T H Cardwell (2016) (2016) M J Cutteridge Esq (2019)

Note: The date in brackets shows the year each member was first appointed or elected to the Court.

The Principal Executive Officers of the Company are:

Chief Executive ............................................................................................................................. S D Crane OBE Court & Membership Secretary ....................................................................................... D A K Freeman LVO Finance Director (to 10 September 2020) ............................................................. A S T Elliott-Frey BSc ACA Finance Controller (from 23 November 2020) ......................................................................... S Hewett FCCA Director of Catering & Events .................................................................................................... Mrs R Kitching House Manager ............................................................................................................................H W Green Esq

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Honourable Artillery Company

Annual Report of the Court of Assistants (‘the Court’)

The Court submits its annual report and the audited financial statements of the Company for the year ended 31 October 2020. The Court has adopted the provisions of Financial Reporting Standard 102 Statement of Recommended Practice (“FRS 102 SORP”) and the Charities Act 2011 in preparing the annual report and financial statements of the Company.

REFERENCE AND ADMINISTRATIVE INFORMATION

The Honourable Artillery Company is a company incorporated by Letters Patent and registered with the Charity Commission for England and Wales under charity number 208443. The Company is administered from its principal address at: Armoury House, City Road, London EC1Y 2BQ. Details of the trustees and executive officers are shown on page 1. Particulars of the Charity’s professional advisers are shown on page 8.

STRUCTURE, GOVERNANCE AND MANAGEMENT Governing Document

The governing document of the Charity is the Letters Patent granted by His Majesty King Henry VIII on 25 August 1537.

Governing Body

The Company is governed in its civil affairs and finances by a Court of Assistants (‘the Court’), whose members are the Trustees of the Company, whose membership is set out on page 1. The Court delegates authority to committees appointed from amongst its members, to some of which certain other persons are co-opted.

Recruitment and Training of Trustees

There are nominally 32 Trustees on the Court. Two are the Vice-President and Treasurer who are Civil Chiefs, elected by the Court for two and three years respectively, helping to provide continuity to the Court. Both these positions are elected by and from within the body of the Court. Seven Trustees are ex-officio appointments. One Trustee is appointed by the Commanding Officer and up to two are appointed by the Court. Consideration of the balance of skills, expertise and experience of Trustees is an essential component in the selection of the Court appointees. Twenty Trustees are elected by the membership and the result of the ballot is declared at the Company’s Annual General Court, which is held in March each year.

Training has been offered to trustees throughout the year. In addition, each member is issued with a copy of the booklet The Essential Trustee CC3, published by the Charity Commission, to provide a source of permanent reference. Trustees are also encouraged to attend external training courses where this is considered appropriate.

Organisational Management

The Court meets ten times per year and is legally responsible for the overall management and control of the civil affairs of the Company. Detailed work is undertaken by a number of committees, comprising the Executive Committee, Property Committee, Sutling Committee, Membership & Communications Committee, Audit Committee, Sports Committee, Treasures Committee and Benevolent Fund Committee. Committee meetings are scheduled according to the amount of work involved, with additional meetings being arranged if more activity is required. The committees submit a formal report to the next following meeting of the Court and approval is sought for any decisions which are outside the terms of reference of the committee. In addition, there is a team of specialist investment advisers who meet up to four times per year to review and offer advice on the performance of the Company’s investments and property portfolio as well as the choice of Investment Portfolio Manager.

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Honourable Artillery Company

Day-to-day operation of the Company is delegated to the Chief Executive and the Company Office, who have authority to operate within the constraints of the approved budget. Quarterly Management Accounts, updated current year Forecasts, and lists of monthly payments in excess of £2,000 are reviewed by the Court, and in addition monthly Financial Status Reports and monthly Cash Balance information are reviewed by the Executive Committee. The Company’s long term Business Plan is reviewed by the Executive Committee and the Court from time to time and will be reviewed in FY2020/21. The signature of at least one Trustee is required for all payments above £15,000.

Remuneration

A Remuneration Committee was formed in the spring of 2016. The Committee met in 2019 to review a submission drafted by the Treasurer reviewing the remuneration of the staff of Company Office. There was an external benchmarking exercise in 2019 and this exercise will be repeated in 2021 and thereafter in alternate years.

Group Structure and Relationships

The Charity has three wholly-owned non-charitable subsidiaries: HAC Enterprises Ltd and HAC Flank Companies’ Ball Ltd, both of which carry out fundraising activities for the charity; and Pencelli Ltd, which was set up to hold the assets of the Welsh Pencelli Estate situated in the Brecon Beacons. The activities and performance of the trading companies are discussed below.

Risk Management

In accordance with the Court’s Risk Management Policy paper of 20 October 2009 the Company maintains a formal risk register. This is reviewed regularly and systematically by the Court committees and the Company Office.

Risks are identified at committee level or by the Company Office. They are assessed as to their likelihood and impact, and the measures taken to mitigate the risks are listed and evaluated with judgement made on whether the mitigation actions are acceptable or whether further action is required.

There are two major risks to the Company:

OBJECTIVES, ACTIVITIES AND PUBLIC BENEFIT

The main activities in the year to meet the Company’s objectives, public benefit and the Trustees’ duty under section 17 of the Charities Act 2011 are set out below.

Charitable Objectives

The charitable objectives of the Company are defined as, ‘for military exercise and training and for the better defence of the realm’ and, to this end, it uses its freehold property at Armoury House as a base

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Honourable Artillery Company

for its military unit, a Regiment of the Army Reserve. To meet the requirements of the Charities Act 2011, the Court agreed an updated articulation of the Company’s Objectives. These are: support to the HAC Regiment and the HAC’s City of London Special Constabulary Detachment; support to the Company’s ceremonial sub-units; conservation of Company treasures; maintenance and utilisation of the Company’s estate; support for the Benevolent Fund; sustaining Company membership; and maintaining the Company’s long-term financial sustainability.

Aims and Intended Impact

To meet these objectives, the Company’s aims are: to further improve its facilities with a view to preserving the Regiment’s place in the British Army’s Order of battle by encouraging improved recruiting for and retention within all elements of the Company; to run commercial activity as necessary to ensure the Company’s long-term financial sustainability; and to conserve the Company’s estate and the Company’s treasures for posterity.

Objectives for the Year

The main objectives for the year were supporting the HAC Regiment in its recruiting and retention efforts and fulfilling the Company’s wider charitable aims, both in the immediate term and by providing for the Company’s long-term sustainability, in part through continued commercial use of its facilities. This objective has been achieved to the extent that the constraints imposed by COVID-19 have allowed.

Public Benefit

During the year the Court of Assistants has, in exercising its powers and duties, complied with the duty in section 17 of the Charities Act 2011 to have due regard to the guidance on public benefit published by the Charity Commission. In particular, it has provided public benefit in that the Company has:

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Honourable Artillery Company

made available weekly to a London Borough of Islington primary school for games and recreation.

The Outcome of the Charity’s Work

The Strategy for Achieving those Outcomes

In order to achieve our goals the charity must simultaneously maintain its estate, both in London and in Wales, such that it is available for training and ceremonial purposes, whilst at the same time using it to raise funds that can then be granted to the beneficiaries to support their work. Particularly in London, where space is at a premium, this involves judgement and constant, detailed attention to the

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Honourable Artillery Company

application of a broad strategy that sees the needs of the Regiment come first, with unused space then made available for commercial use.

Grant Making Policy

The Company makes annual grants to the Regiment for expenses, such as adventurous training and recruiting. These grants are fixed on an annual basis following discussions with the Commanding Officer. If the Commanding Officer makes additional applications for grants during the year then these are considered by the Court on an ad hoc basis and will normally be met, provided that financial circumstances allow. In some circumstances, grants are made to individuals to allow specific training to be undertaken or to support other military purposes.

The Benevolent Fund, which is disclosed as a ‘restricted’ fund of the Company, makes grants to individuals connected with the Company, in accordance with the Benevolent Fund Trust Deed.

Volunteers

The Court is grateful to those members of the Company who give freely of their time in support of the Company. In view of the wide sphere of activities in which members support the Company, evaluation of this activity has proved impracticable.

REVIEW OF ACHIEVEMENTS AND PERFORMANCE FOR THE YEAR Operational Performance of the Company

The Company has provided Armoury House, the Artillery Garden and the Pencelli Estate for the use of its Military Unit, its Special Constabulary Detachment and its ceremonial sub-units throughout the year, subject to COVID-19 regulations and precautions. It has also provided financial support to all these elements of the Company. Until March 2020 the Company was able to maintain its commercial activities both in the House and on the Artillery Garden. However, subsequent ‘Lockdowns’ and restrictions on events, both indoors and outdoors, have meant that while it was possible to run some outdoor events over the summer there was little or no activity in the House which has reduced the contribution made by commercial activities to the Company’s result for the year.

Investment Performance against Objectives

The value of Listed investments (excluding £560k of additional cash and dividends invested) decreased by £(868)k (2019: £593k increase). This broadly reflects stock market performance over the period.

FINANCIAL REVIEW AND RESULTS FOR THE YEAR

The consolidated statement of financial activities shows a net surplus for the year of £7,686k (2019: net surplus of £2,080k). The 2020 surplus includes an investment property revaluation gain of £8,773k and a decrease in the value of listed investments of £868k. The net operating deficit in 2020 was £(233)k. The 2019 surplus included income of £1,794k from an agreement with a neighbouring property redevelopment and an increase in the value of listed investments of £593k; the 2019 net operating deficit before the property development income was £(311)k .

The Company’s wholly owned subsidiaries, HAC Enterprises Ltd and HAC Flank Companies’ Ball Ltd, continued to carry out fund-raising activities for the charity, albeit that from March 2020 onwards restrictions on gatherings meant that only a very limited number of events could be held in the second half of the year. Net income from trading was £26k (2019: £659k) (see Note 6). The trading subsidiaries made Gift Aid payments to the Company totalling £26k (2019: £659k).

At 31 October 2020, the total consolidated net assets of the Company, as shown by the balance sheet, were £61,967k (2019: £54,281k). The Company has taken advantage of the specific clauses in FRS 102 SORP with regard to the treatment of assets. The net assets of the Company do not include the market

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Honourable Artillery Company

value of freehold and leasehold properties used for the Company’s charitable purposes, or the value of the Company’s military and similar artefacts acquired prior to 1 November 2005. No value has been placed upon the artefacts, as the process and costs of obtaining valuations for the items involved would be disproportionate to any public benefit that might be derived. It is considered impractical to apply conventional valuation techniques to the collections, due to their unique nature. Freehold and leasehold properties are included in the accounts at cost. However, it is not appropriate to apply conventional valuation techniques to these assets, due to the restrictive-use clauses set out in the title and lease agreements. Details of the re-building insurance values of these properties are given in Note 11a of the financial statements.

Cash Flows

The consolidated statement of cash flows shows a net outflow for 2020 of £(1,386)k (2019: £(388)k outflow). The main reasons for the outflow in 2020 were the net operating loss for the year, capital expenditure, additional cash invested in listed investments and a reduction in working capital balances; principally a reduction in deposits received for future events. Cash balances at 31 October 2020 stand at £3,208k of which £2,072k represents cash in Unrestricted funds (2019: £4,594k of which cash in Unrestricted funds was £3,408k).

Reserves Policy

The Court policy on unrestricted funds is to designate them to a particular purpose. A designated Short Term reserve is held in cash at a level equivalent to six months’ budgeted running costs. The balance of cash held was £1,194k at 31 October 2020. A designated Medium Term reserve is also held in cash at a level to provide for 5 years capital expenditure as set out in the Company’s latest capital expenditure forecast. At 31 October 2020 the balance on the Medium Term reserve was £778k. A Long Term reserve with a target of £10million has been established to meet the future needs of the HAC Regiment, and is held in a mix of cash, working capital and investments. At 31 October 2020 the balance on the Long Term reserve was £5,082k.

Investment Policy and Objectives

The Company aims to maximise total return with a balanced approach to seeking income and capital return.

Fundraising Policy

Our approach to fundraising is to seek donations from our membership and from our commercial contacts. We do not actively seek donations from the general public.

We do not use third parties to help us with fundraising. During the year we did not receive any complaints related to our fund raising activities.

FUTURE PLANS

The priorities set in the Company’s current 5 Year Plan, which was approved by the Court on 27 September 2017 and confirmed at a Court Away Day in January 2019, are to improve the support given to the HAC Regiment and the HAC Special Constabulary Detachment in terms of both financial backing and the standard of the facilities made available, to provide financial support to the City of London Academy Islington (HAC) Combined Cadet Force, and to provide financial support to the police cadets, the Company of Pikemen & Musketeers and the Light Cavalry. Specific projects include a plan to provide significant additional space and facilities for the Regiment, including better equipment storage and changing space for reserve soldiers, planning for which commenced in 2016/17, with a likely project timeframe of 3 to 5 years. A 5-year re-equipment programme for the Company of Pikemen & Musketeers, which began in 2016/17, has continued into 2019/20.

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Honourable Artillery Company

The trading outcome of HAC Enterprises Ltd for Financial Year 2020/21 is anticipated to be similar to 2019/20, with outdoor events as a focus and subject to the lifting of COVID-19 restrictions following rollout of a widespread vaccination programme. The Company will also review its activities ahead of the potential for significant expenditure to support the proposed enhanced Regimental facilities although any impact is expected to be in 2021/22 and future periods.

Statement of the Court’s Responsibilities

The Court is responsible for preparing the Annual Report of the Court of Assistants 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 and Wales requires the Court to prepare financial statements for each financial year that give a true and fair view of the state of the 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 Court is required to:

The Court is responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Charity and enable it to ensure that the financial statements comply with the Charities Act 2011, the Charity (Accounts and Reports) Regulations 2008 and the provisions of the Letters Patent dated 25 August 1537, associated Royal Warrants and Rules and Orders.

The Court is 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.

Professional Advisers

Details of professional advisers are given below:

Auditors Buzzacott LLP 130 Wood Street, London EC2V 6DL Solicitors Charles Russell Speechlys LLP 5 Fleet Place, London EC4M 7RD Boodle Hatfield LLP 240 Blackfriars Road, London SE1 8NW Bankers National Westminster Bank Plc 1 Princes Street, London EC2R 8BP Property Tandem Property Asset 27 Bream’s Building, Fetter Lane, Agents Management LLP London EC4A 1DZ Investment Cazenove Capital Management Ltd 12 Moorgate, Managers London EC2R 6DA

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Honourable Artillery Company

Auditors

Buzzacott LLP have indicated their willingness to continue in office and in accordance with the provisions of the Charities Act 2011 it is proposed that they be reappointed auditors to the charity and the group for the ensuing year.

By Order of the Court of Assistants

Date: 23 February 2021

M P Basing, Treasurer

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Honourable Artillery Company

INDEPENDENT AUDITOR’S REPORT TO THE COURT OF ASSISTANTS AND MEMBERS OF THE HONOURABLE ARTILLERY COMPANY

Opinion

We have audited the accounts of Honourable Artillery Company (the ‘parent charity’) and its subsidiaries (the ‘group’) for the year ended 31 October 2020 which comprise the group and parent charity statement of financial activities, balance sheets, statement of cash flows, the principal accounting policies and the notes to the accounts. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the accounts:

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 accounts section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the accounts 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

Other information

The trustees are responsible for the other information. The other information comprises the information included in the annual report, other than the accounts and our auditor’s report thereon. Our opinion on the accounts does not cover the other information and we do not express any form of assurance conclusion thereon.

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Honourable Artillery Company

INDEPENDENT AUDITOR’S REPORT TO THE COURT OF ASSISTANTS AND MEMBERS OF THE HONOURABLE ARTILLERY COMPANY (cont’d)

In connection with our audit of the accounts, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the accounts or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the accounts or a material misstatement of the other information. 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.

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 Act 2011 requires us to report to you if, in our opinion:

Responsibilities of trustees

As explained more fully in the trustees’ responsibilities statement, the trustees are responsible for the preparation of the accounts and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of accounts that are free from material misstatement, whether due to fraud or error.

In preparing the accounts, the trustees are responsible for assessing the group’s and the parent 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 group or the parent charity or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the accounts

Our objectives are to obtain reasonable assurance about whether the accounts 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 accounts.

A further description of our responsibilities for the audit of the accounts is located on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

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Honourable Artillery Company

INDEPENDENT AUDITOR’S REPORT TO THE COURT OF ASSISTANTS AND MEMBERS OF THE HONOURABLE ARTILLERY COMPANY (cont’d)

Use of our report

This report is made solely to the charity’s trustees, as a body, in accordance with section 144 of the Charities Act 2011 and with regulations made under section 154 of that Act. 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.

Buzzacott LLP Statutory Auditor 130 Wood Street London EC2V 6DL

Date:

Buzzacott LLP is eligible to act as an auditor in terms of section 1212 of the Companies Act 2006

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Honourable Artillery Company

CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES Year ended 31 October 2020

Unrestricted
Restricted
Endowment
Funds
Funds
Funds
Note
£000
£000
£000
INCOME AND ENDOWMENTS FROM:
Donations and legacies
3
1
55
-
Charitable activities:
Member subscriptions
4
310
-
-
Other income
5
-
204
-
Other trading activities
6
1,158
0
-
Investments:
Investment property income
7
1,651
-
-
Listed investments
100
63
2
Interest on cash deposits
7
2
-
__
_

Total income
17
3,227
324
2
______
______
______
EXPENDITURE ON:
Raising Funds
Trading costs
6
1,132
-
-
Investment property costs
7
323
-
-
Investment management charges
12
36
31
1
Charitable activities:
Military grants and other charitable
expenditure
8
383
283
2
Maintenance and operation of Armoury
House
9
815
-
-
Membership services and general
administration
10
774
6
-



Total expenditure
17
3,463
320
3
______
______
______
Net operating income
(236)
4
(1)
Gains/(losses) on investments
Net gain/(loss) on Listed investments
12
(525)
(331)
(12)
Investment Property revaluation gain
11c
8,773
-
-
Net income/(expenditure)
8,012
(327)
(13)
Other recognised gains/(losses)
Actuarial gains/(losses) on defined benefit
pension scheme
16
14
-
-



Net movement in funds for year
8,026
(327)
(13)
Funds brought forward at 1 November 2019
17
49,505
4,644
132


___
Funds carried forward at 31 October 2020
18
57,531
4,317
119
______
______
______		 Total
31-Oct
2020
£000
56
310
204
1,158
1,651
165
9
__
3,553
______
1,132
323
68
668
815
780
_
3,786
______
(233)
(868)
8,773
7,672
14

7,686
54,281
___
61,967
______		 Total
31-Oct
2019
£000
23
319
2,024
2,212
1,585
213
13
__
6,389
______
1,553
222
60
1,132
1,083
856
_
4,906
______
1,483
593
-
2,076
4

2,080
52,201
___
54,281
______

The Notes on pages 16 to 34 form part of these financial statements.

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Honourable Artillery Company

CONSOLIDATED & CHARITY BALANCE SHEET
31 OCTOBER 2020
Note
Fixed Assets
Tangible assets – own use
11a
Tangible assets – Light Cavalry
11b
Tangible assets – Pikemen & Musketeers
11b
Tangible assets – Heritage assets
11b
Tangible assets held as investments
11c
Intangible assets – software - own use
11d
Listed investments
12
Shareholding in subsidiaries
13
Total fixed assets
Current assets
Stocks
Debtors and prepayments
14
Short-term deposits
Cash at bank and in hand
Liabilities:
Creditors falling due within one year
15
Net current assets
Creditors falling due after more than one year
15
Total net assetsbefore pension liability
Pension scheme funding liability
16
NET ASSETS
CHARITABLE FUNDS
Unrestricted Funds:
Designated Reserves
17&18

Fixed Asset Fund
17&18
Less: Pension Reserve (liability)
16
Restricted Funds
17&18
Endowment Funds
17&18
TOTAL CHARITABLE FUNDS		 2020
Group
£000
5,149
13
-
143
45,255
73
8,106
-

__
58,739
_
6
743
2,376
832
_
3,957

(657)
__
3,300
-
_
62,039
(72)

61,967
_
7,126

50,477
(72)
___
57,531
4,317
119
___
61,967
_______		 2019
2020
2019
Group
Charity
Charity
£000
£000
£000
5,227
4,820
4,898
6
13
6
-
-
-
139
143
139
36,483
45,255
36,483
68
73
68
8,489
8,106
8,489
-
301
301
__
_
_
50,412
58,711
50,384
__
_
_
6
1
-
852
907
590
2,944
2,376
2,944
1,650
527
1,471
__
_
_
5,452
3,811
5,005
(1,497)
(483)
(1,022)
__
_
_
3,955
3,328
3,983
-
-
-
__
_
_
54,367
62,039
54,367
(86)
(72)
(86)
__
_

54,281
61,967
54,281
_
__
_
7,813
7,126
7,813
41,778
50,477
41,778
(86)
(72)
(86)
__
___
___
49,505
57,531
49,505
4,644
4,317
4,644
132
119
132
__
_
_
54,281
61,967
54,281
__
___
_______

The financial statements were approved by the Court of Assistants on 23 February 2021 and are signed on its behalf by:

Major P D C Vyvyan-Robinson, Vice-President

M P Basing Esq, Treasurer

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Honourable Artillery Company

CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED 31 OCTOBER 2020

EAR ENDED 31 OCTOBER 2020
Total Funds Total Funds
31-Oct 2020 31-Oct 2019
Note £000 £000
Cash flows from operating activities:
Net cash generated/(used) in operating activities (2,042) 567
Cash flows from investing activities:
Dividends, interest and rent from investments 1,504 1,589
Purchase of tangible and intangible assets 11a/11b/11d (291) (350)
Purchase of historical assets 11b (4) -
Purchase of investments - listed investments 12 (560) (2,088)
Disposal of investments – listed investments 12 7 80
___ ___
Net cash provided by /(used in) investing activities 656 (769)
___ ___
Cash flows from financing activities:
Repayments of borrowings - (186)
___ ____
Net cash used in financing activities - (186)
______ ______
Change in cash and cash equivalents in reporting period (1,386) (388)
Cash and cash equivalents at 1 November 2019 4,594 4,982
______ ______
Cash and cash equivalents at 31 October 2020 3,208 4,594
______ ______
2020 2019
£000 £000
Note
Reconciliation of net income/(expenditure) to net cash flow
from operating activities
Net income for the reporting period 7,672 2,076
Adjustments for:
Depreciation Charges:
Depreciation, amortisation & impairment 11a/11d 313 592
Light Cavalry and Pikemen & Musketeers depreciation 11b 41 32
Loss on the disposal of Fixed Assets 2 -
Loss/(Gain) on Listed investments 12 868 (593)
(Gain) on Investment Property Revaluation 11c (8,773)
Rents, dividends and interest from investments:
Investment property income 7 (1,651) (1,585)
Listed investments (165) (213)
Interest on cash deposits (9) (13)
Investment property costs 7 323 222
Investment management charges 12 68 60
(Increase) in stocks - (1)
Decrease/(Increase) in debtors 109 (291)
(Decrease)/Increase in creditors (840) 281
_______ _______
Net cash (used in)/ generated by operating activities (2,042) 567
_______ _______
Analysis of cash and cash equivalents
Cash in hand 832 1,650
Notice deposits (less than 3 months) 2,376 2,944
_______ _______
Total cash and cash equivalents 3,208 4,594
____ ____
At 1 November Cash Non-cash At 31 October
Reconciliation of net debt: 2019 flows changes 2020
£000 £000 £000 £000
Cash and cash equivalents 4,594 (1,386) - 3,208

15

Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 October 2020

1. Constitution and subsidiaries

The Honourable Artillery Company was incorporated by Letters Patent on 25 August 1537 and is registered as a charity (registration number 208443). The subsidiary group companies are:

-HAC Enterprises Limited (registration no. 01677400) -HAC Flank Companies’ Ball Limited (registration no. 02266408) -Pencelli Limited (registration no. 03724227)

2. Accounting Policies

Accounting convention

The charity is a public benefit entity for the purposes of FRS102 and therefore 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 Financial Reporting Standard 102 published on 16 July 2014, and the Charities Act 2011 and UK Generally Accepted Practice as it applies from 1 January 2015.

The financial statements have been prepared to give a ‘true and fair’ view and have departed from the Charities (Accounts and Reports) Regulations 2008 only to the extent required to provide a ‘true and fair view’. This departure has involved following the Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with Financial Reporting Standard 102 published on 16 July 2014 rather than the Accounting and Reporting by Charities: Statement of Recommended Practice effective from 1 April 2005 which has since been withdrawn.

Consolidation

The accounts of the Company include those activities of the Company which have a material effect on its financial position or results. Certain funds, in particular those of the Old Comrades’ Association, have not been included because they are not material.

The consolidated accounts include the accounts of the Company and its three subsidiaries, HAC Enterprises Ltd, HAC Flank Companies’ Ball Ltd and Pencelli Ltd. The accounts of the Company of Pikemen & Musketeers and the Light Cavalry are included as part of the Company’s accounts for the financial year. The Unconsolidated Balance Sheet of the Company is shown alongside the Consolidated Balance Sheet, in the format recommended by the FRS 102 Charities SORP.

A separate Statement of Financial Activities for the Company is not presented as permitted by the FRS 102 Charities SORP. Under the requirements of the FRS 102 Charities SORP the Company has been required to disclose the value of its unfunded pension reserve deficit.

The accounts include a Consolidated Statement of Cash Flows as required by the FRS 102 Charities SORP.

Going concern

The trustees have assessed the use of the going concern basis for preparing the accounts of the Company and its three subsidiaries. The trustees are satisfied that the going concern basis is appropriate and have referred to the approved budget for next year and the latest 5 year

16

Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 October 2020 (cont’d)

business plan and 10 year financial projections to arrive at this conclusion, and are satisfied that the Company has sufficient resources to meet its ongoing liabilities and that it can continue in operational existence for the foreseeable future. The Company therefore continues to adopt the going concern basis in preparing its financial statements.

Income and Endowments

Expenditure

17

Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 October 2020 (cont’d)

Other gains and losses

Designated and Restricted Funds

Income and expenditure related to the designated and restricted funds are included in the consolidated Statement of Financial Activities.

Tangible and intangible fixed assets for own use

Freehold and leasehold land in use by the Company at the Artillery Garden and Pencelli have been valued at cost. No value is attributed to Armoury House other than the capitalised cost of alterations. Other assets are stated at cost less depreciation, calculated on a straight line basis as follows:

Alterations to property 20/25/30/60/150 years
Plant, fixtures and equipment 10/15/20 years
Computers and other electronic equipment 3 to 5 years
Software 5 years

Tangible assets – Heritage assets

No value is attributed to the Company’s collection of memorabilia and treasures acquired prior to 1 November 2005 which are considered to be part of its heritage. Treasures acquired from 1 November 2005 have been capitalised at cost. Heritage assets are not depreciated as their useful life is considered to be indefinite. Detailed records of Heritage assets are managed by the Museum and Treasures Committee who are also responsible for the ongoing preservation.

18

Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 October 2020 (cont’d)

Access to Heritage assets is available by written request to the Museum and Treasures Committee.

Investments (including properties held as investments)

Investments are stated in the Balance Sheet at market values applying at the financial period end.

Stocks

Stocks are stated at the lower of cost and net realisable value.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Retirement benefits

It is the policy of the Company to recognise the liability for all work which has been completed and to accrue for any outstanding expenses. The financial statements show the value of the Pension Reserve Deficit in respect of unfunded pensions, which are payable directly by the Company to two past employees (see Note 16).

Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the Company's balance sheet when the Company becomes party to the contractual provisions of the instrument.

Basic financial assets

Basic financial assets, which include trade and other receivables and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.

Basic financial liabilities

Basic financial liabilities, including trade and other creditors, bank loans, and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

19

Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 October 2020 (cont’d)

Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Judgements and key sources of estimation uncertainty

In the application of the Company’s accounting policies, the trustees are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements:

a) The annual depreciation charge for property, plant and equipment is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See note 11a, 11b and 11d for the carrying amount of the property, plant and equipment and note 2 for the useful economic lives for each class of asset.

b) The Company has an obligation to pay pension benefits to certain employees. The cost of these benefits and the present value of the obligation depend on a number of factors including; life expectancy, salary increases, asset valuations and the discount rate on corporate bonds. Management estimates these factors in determining the net pension obligation in the balance sheet. The assumptions reflect historical experience and current trends. See note 16 for the disclosures relating to the defined benefit pension scheme.

c) The Group uses the valuation performed by its independent professional valuers every 3 years as the fair value of its investment properties. The valuation is based upon the key assumptions of estimated rental values and market based yields. With regard to redevelopments and refurbishments, future development costs and an appropriate discount rate are also used. In determining fair value the valuers make reference to market evidence and recent transaction prices for similar properties.

d) Details of the last valuation methodology and key assumptions are given in note 11c. Management consider the significant assumptions to the valuation of investment properties to be estimated rental values and market based yields, together with general observations as to the state of the market at the Balance Sheet date.

20

Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 October 2020 (cont’d)

3. Donations and legacies 2020 2019
£000 £000
Unrestricted Fund 1 2
Benevolent Fund 53 11
Other Restricted Funds 2 10
______ ______
Total 56 23
_ _
4. Member subscriptions 2020 2019
£000 £000
Paid by members 293 283
Tax recovered on Gift Aid subscriptions 49 65
Entrance fees 3 3
VAT payable on subscription income (35) (32)
_____ _____
Total 310 319
_ _
5. Other income 2020 2019
£000 £000
Pikemen & Musketeers income 32 70
Light Cavalry income 170 160
Development agreement income-note (i) - 1,794
Sports Levy 2 -
______ ______
Total 204 2,024
Note (i): Exceptional income received from a neighbouring property __ ____ _
under a development agreement
6. Other trading activities
2020 2020 2020 2019
Income Expenses Surplus/ Surplus/
(Deficit) (Deficit)
£000 £000 £000 £000
Sutling 921 887 34 555
Sports & grounds activities 136 137 (1) 61
Bedrooms 54 79 (25) 9
Car parking 43 - 43 4
Sale of books, ties, cards and other income 4 3 1 5
Flank Companies’ Ball - - - 54
______ ______ ______ ______
1,158 1,106 52 688
Other Expenses
Audit fees - 10 (10) (11)
Administration charge - 16 (16) (18)
______ ______ ______ ______
- 26 (26) (29)
______ ______ ______ ______
Total 1,158 1,132 26 659
______ ______ ______ ______
21

Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 October 2020 (cont’d)

7.
Investment property income and
expenditure
Income
Commercial
Residential
Other rental income
RFCA (for use of Prince Consort Rooms)
Total income
Expenditure
Management fees (including the Pencelli estate)
Cost of insurance, legal and professional fees
Maintenance and repairs
Total expenditure
8.
Military grants and other charitable expenditure
No of
Grants
2020
Grants to the Regiment and Sub Units
14
Other charitable expenditure from Unrestricted Fund
7
Vambrace impairment provision
-
_
Total grants paid from the Company’s general resources
21
Grants from the Regimental Grants Fund (not quantified)
2
Grants from the Benevolent Fund to individuals
15
Other charitable expenditure from Restricted Funds
3
Grants to Pikemen & Musketeers from the Dugdale Bequest
1

Total grants paid
42
Pikemen & Musketeers expenditure
-
Light Cavalry expenditure
-
__
Total military grants and other charitable expenditure
42
_____		 2020
£000
955
353
343
-
__
1,651
______
37
57
229
_
323
______
No of
2020
£000
Grants
2019
342
18
7
8
34
-

_
383
26
37
-
17
15
3
3
2
1


442
45
59
-
167
-
_

668
45
__
_____
2019
£000
896
354
335
-
__
1,585
______
32
45
145

222
______
2019
£000
408
42
357

807
28
55
12
3
_
905
58
169

1,132

_

22

Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 October 2020 (cont’d)

9. Maintenance and operation of Armoury House

Staff costs, including taxes and pension contributions
(including contract and temporary staff)
Rates, water, power and heating
Cleaning and waste removal
Property maintenance and repairs
Treasures, Archives
AIB Loan financing cost
Recharges to trading subsidiaries
Total		 2020
2019
£000
£000
409
473
106
139
41
43
303
468
60
83
-
2
(104)
(125)
__
_
815
1,083

_

10. Membership services and general administration

2020 2020 2020 2020 2020 2019 2019 2019 2019 2019
£000 £000 £000 £000 £000 £000
Unrestricted Restricted Total Unrestricted Restricted Total
Funds Funds Funds Funds
Staff costs, including taxes,
pension contributions and
pensions to former employees 453 - 453 533 - 533
Employee termination payments 3 - 3 - - -
Office services, IT and
telephone 128 - 128 111 - 111
Membership administration 20 - 20 15 - 15
Insurance 87 - 87 82 - 82
Publications 59 - 59 56 - 56
Bank charges, other legal and
professional costs 39 - 39 56 - 56
Recharges to trading
subsidiaries (65) - (65) (57) - (57)
Benevolent Fund
administration costs - 6 6 - 6 6
Governance 50 - 50 53 1 54
______ ______ ____ ______ ______ ____
774 6 780 849 7 856
______ ______ ____ ______ ______ ____
Auditors’ remuneration
(excluding VAT) included in
above total:
Audit Fees 30 - 30 20 1 21
Non-audit Fees - - - 7 - 7

23

Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 October 2020 (cont’d)

11. Fixed assets

11a.
Tangible fixed assets
for own use
Freehold/
Leasehold Land
& Buildings
Furniture,
Plant and
Equipment
£000
£000
Cost
At 1 November 2019
8,495
1,739
Additions
79
136
Disposals
-
-
_
_
At 31 October 2020
8,574
1,875
_

Depreciation
At 1 November 2019
4,323
1,013
Charge for year
124
135
Disposals
-
-
Impairment-note (i)
34
-
__
_
At 31 October 2020
4,481
1,148
_
_
Net Book Value
At 31 October 2020
4,093
727
_

At 31 October 2019
4,172
726
_
__		 Charity
Total
Subsidiary
Freehold
Land
Group
Total
£000
£000
£000
10,234
329
10,563
215
-
215
-
-
-
__
_

10,449
329
10,778
__
_

5,336
-
5,336
259
-
259
-
-
-
34
-
34
_
_
__
5,629
-
5,629
__
_

4,820
329
5,149
__
_

4,898
329
5,227
__
_
__

Note (i): The Company has made an impairment provision of £34k against the carrying value of the costs incurred on Project VAMBRACE on the basis that the final asset is likely to be leased to the Regiment at a lower than market value rent.

The Company has substantial long-held historic assets which are used in the course of the Company’s activities to support the Regiment, Special Constabulary Detachment and Company membership. These comprise the land and buildings at Armoury House, together with certain military and ceremonial items and other treasured artefacts. The buildings at Armoury House were constructed principally in 1734-35, 1787, 1826-28 and 1843. Due to the age of these items, and in many cases the unique nature, reliable historical cost information is not available for these assets and could not be obtained except at disproportionate expense. In the opinion of the Court the depreciated historical costs of these items is now immaterial.

Included within the cost of freehold land and buildings are the capitalised costs of later acquisitions and alterations to the land and buildings, including £6,606k relating to the development of the Prince Consort Rooms. Buildings insurance for properties owned by the Company including Armoury House and other Investment properties (see note 11c) at 31 October 2020 is held to the value of £47,397k (insurance value). This excludes any investment properties let on a full repairing lease where the tenant has the obligation to insure. The insurance value is reviewed annually.

24

Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 October 2020 (cont’d)

11. Fixed assets, contd

11b. Tangible fixed assets, contd Pikemen &
Light Cavalry Musketeers Heritage Assets
£000 £000 £000
Cost
At 1 November 2019 43 265 139
Additions 16 35 4
Disposals (7) - -
______ ______ _____
At 31 October 2020 52 300 143
______ ______ _____
Depreciation
At 1 November 2019 37 265 -
Charge for year 6 35 -
Disposals (4) - -
______ ______ _____
At 31 October 2020 39 300 -
______ ______ _____
Net Book Value
At 31 October 2020 13 - 143
______ ______ _____
At 31 October 2019 6 - 139
______ ______ _____

Depreciation applied to the assets of the Light Cavalry is in line with their useful economic life.

Amounts spent by the Pikemen & Musketeers in the year on re-equipping have been written down in the year.

In accordance with the FRS 102 Charity SORP, treasures acquired from 1 November 2005 have been capitalised by the Company.

25

Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 October 2020 (cont’d)

11. Fixed assets, contd

11c.
Tangible fixed assets held for investment – Properties
Valuation at 1 November 2019
Revaluation
Additions

At 31 October 2020		 2020

£000

36,482
8,773
-
_

45,255

_		 2019
£000
36,482
-
-
__
36,482
____

The investment properties are professionally valued on a triennial basis and the value is informally reviewed by the trustees on an annual basis. The investment properties were last valued on an ‘open market’ basis by Farebrother, the Company’s Property agents, at 31 October 2020. Since the onset of the COVID-19 pandemic, there has been a reduction in the certainty with which property values can be inferred from historic data. The ongoing control measures arising from the pandemic have also increased the uncertainties facing some of our tenants’ businesses, which has a further consequential impact on valuations. Although the values reported above are believed to be a fair estimate, there will be a greater likelihood that actual amounts achievable would differ from these valuations than in previous periods.

11d. Intangible assets – Software for own use

Intangible assets – Software for own use
Cost
At 1 November 2019
Additions
At 31 October 2020
Amortisation
At 1 November 2019
Charge for year
At 31 October 2020
Net Book Value
At 31 October 2020
At 31 October 2019		 2020
£000
76
25
_
101

8
20
__
28
_
73
___
68
_____

26

Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 October 2020 (cont’d)

12. Listed investments



Investments at valuation – 1 November 2019
Funds added
Funds removed
Revaluation gain/(loss)
Investment management charges
Investments at market value – 31 October 2020
Investments at cost
Unrealised gains
Split of investments – 31 October 2020
UK listed investments
Overseas listed investments
Multi-Asset funds
Held as cash		 2020
2019
£000
£000
8,489
5,948
560
2,088
(7)
(80)
(868)
593
(68)
(60)
_
_
8,106
8,489
_
_
7,276
6,627
830
1,862
_
_
8,106
8,489
__
_
3,984
4,379
3,679
3,262
127
207
316
641
_
_
8,106
8,489
_
____

The Charity’s own accounts also include the investment in its subsidiaries (note 13).

13. Subsidiary companies

The Company has three wholly-owned subsidiary companies, all registered in England:

Gift Aid arrangements have been made between HAC Enterprises Limited and HAC Flank Companies’ Ball Limited and the Company whereby these subsidiaries donate the whole of their surplus income to the Company each year. The donation from HAC Flank Companies’ Ball Limited will be transferred to the Regimental Grants Fund. The amounts owed by the subsidiaries to the Company at 31 October 2020 are shown below:

27

Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 October 2020 (cont’d)

HAC Enterprises
Ltd
£000
Fixed assets
Tangible assets for own use
-
Shares in subsidiary (see above)
1
_
Total fixed assets
1
_
Current assets
Stocks
5
Debtors
42
Owed by Company
-
Other debtors and prepayments
12
Cash at bank and in hand
296
_
Total current assets
355
_
Creditors
Trade creditors
17
Accruals and deferred income
157
Amounts owed to Company
181
Other creditors
-
_
Total creditors
355
_
Net current assets
-
__
Net assets
1
_
Share capital of subsidiary
1
_____
14.
Debtors and prepayments
Trade debtors
Sundry debtors
Prepayments and accrued income
Taxation
Amounts owed by subsidiaries (note 13)
Total		 HAC Flank
Companies’ Ball Ltd
£000
-
-
_
-
_
-
-
-
-
9
_
9
_
-
8
-
_
8
_
1
__
1
_
1
_
Group
2020
2019
£000
£000
326
427
61
49
333
348
23
28
-
-
__
_
743
852

___
Pencelli Ltd
£000
329
-
_
329
_
-
-
-
-
-
_
-
_
-
-
29
-
_
29
_
(29)
__
300
_
300
_
Charity
2020
2019
£000
£000
310
8
35
49
321
325
23
171
218
37
__
_
907
590

___

All debtors, excluding prepayments are financial instruments measured at amortised cost.

28

Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 October 2020 (cont’d)

15.
Creditors due within one year
Trade creditors
Amounts owed to subsidiaries (note 13)
Accruals
Deferred income
Taxation
Other creditors
_
Total		 Group
2020
£000
163
-
169
253
21
51
_
657
_		 2019
£000
459
-
219
688
60
71
_
1,497
_		 Charity
2020
£000
146
-
167
98
21
51
_
483
_
2019
£000
389
160
200
142
60
71
_
1,022
_

Deferred income represents income in advance for events, accommodation, room and grounds hire, rent and subscriptions.

All creditors, excluding deferred income and taxation, are financial instruments measured at amortised cost.

16. Pensions

The Company subscribes to a Group Personal Pension Scheme for those employees who have elected to join the scheme. The fund is administered on behalf of the employees by Aviva. Twentythree employees have elected to join this scheme and the cost to the Company of contributions for the year to 31 October 2020 was £72k, of which £11k related to an employee who earned above £60k per year.

One past employee (2019: Two) is in receipt of a pension payable directly by the Company and which is unfunded. At 31 October 2020 the pensions in payment had an annual cost of £10k (2019: £12k). The Company estimated the value of the unfunded future pension obligation at 31 October 2020 as £72k (2019: £86k). An average inflation rate of 2.0% and a discount rate of 0.01% have been assumed in assessing this liability. The movement in the Pension Reserve (liability) was as follows:

2020 2019
£000 £000
Opening liability at 1 November 2019 86 90
Past service cost (10) (12)
Changes in demographic and financial assumptions (4) 8
___ ___
Closing liability 31 October 2020 72 86

29

Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 October 2020 (cont’d)

17. Charitable Funds
a)Current period 1 November Income Expenditure Investment 31 October
2019 Gains/(Losses) 2020
& Transfers
£000 £000 £000 £000 £000
Unrestricted Funds:
Designated Reserves 7,813 3,227 (3,463) (451) 7,126
Fixed Asset Fund 41,778 - - 8,699 50,477
Less: Pension Reserve liability (86) - - 14 (72)
______ __ __ __ __
Total Unrestricted Funds 49,505 3,227 (3,463) 8,262 57,531
__ __ __ __ __
Restricted Funds:
Benevolent Fund 3,198 114 (53) (315) 2,944
Regimental Grants Fund 542 1 (37) - 506
Light Cavalry 170 170 (167) - 173
Pikemen & Musketeers 304 32 (59) - 277
Other Restricted Funds 430 7 (4) (16) 417
__ __ __ __ __
Total Restricted Funds 4,644 324 (320) (331) 4,317
Endowment Funds
Dugdale Bequest 132 2 (3) (12) 119
__ __ __ __ __
Total Funds 54,281 3,553 (3,786) 7,919 61,967
__ __ __ __ __
b)Prior period 1 November Income Expenditure Investment 31 October
2018 Gains/(Losses) 2019
& Transfers
£000 £000 £000 £000 £000
Unrestricted Funds:
Designated Reserves 6,057 5,903 (4,498) 351 7,813
Fixed Asset Fund 41,803 - - (25) 41,778
Less: Pension Reserve liability (90) - - 4 (86)
__ __ __ _ __
Total Unrestricted Funds 47,770 5,903 (4,498) 330 49,505
__ __ __ __ __
Restricted Funds:
Benevolent Fund 2,930 109 (87) 246 3,198
Regimental Grants Fund 514 56 (28) - 542
Light Cavalry 165 160 (155) - 170
Pikemen & Musketeers 280 70 (46) - 304
Other Restricted Funds 418 88 (88) 12 430
__ __ __ __ __
Total Restricted Funds 4,307 483 (404) 258 4,644
Endowment Funds
Dugdale Bequest 124 3 (4) 9 132
__ __ __ __ __
Total Funds 52,201 6,389 (4,906) 597 54,281
__ __ __ __ __

30

Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 October 2020 (cont’d)

Unrestricted Funds:

Designated Reserves comprises:

Short Term Reserve – This is the cash balance required to fund a minimum of 6 months running costs based on the budget for the following year. As at 31 October 2020 this reserve had a balance of £1,194k.

Medium Term Reserve – This is the cash balance required to fund the Capital Expenditure for the next 5 years as set out in the Company’s latest capital expenditure forecast and consistent with the latest 10 Year Business Plan. As at 31 October 2020 this reserve had a balance of £778k.

Long Term Reserve – This reserve has been established with a target of £10million for the future term needs of the HAC Regiment which are for additional facilities and equipment. The reserve is held in a mix of cash, working capital, and equity investments. At 31 October 2020 this reserve had a balance of £5,082k.

Fixed Asset Fund — This has been set up to identify those funds that are not free funds. The value shown represents the net book value of tangible and intangible fixed assets, including property investments.

Restricted Funds:

Benevolent Fund — The value of this fund decreased during the current year mainly due to investment losses. Dividends received have been reinvested. The Benevolent Fund Committee actively seeks potential applicants and members are invited to bring needy cases to the HAC Trustees’ attention. Fund income currently derives from legacies and donations, and bank interest on cash balances.

Regimental Grants Fund — The purpose of this fund is to provide recruiting and retention in the Regiment and can be spent on both capital and revenue expenditures. In reviewing the longterm requirements for this fund it has been agreed that the value of this fund is to be capped at £600k. The main source of income for this fund is from interest earned on bank deposits. The value of the fund is supplemented by the profit of HAC Flank Companies’ Ball Ltd, which is Gift Aided to this fund.

Light Cavalry — The balance on this fund represents the asset value of the HAC Light Cavalry, which has been consolidated into the accounts of the HAC.

Pikemen & Musketeers — The balance on this fund represents the asset value of the Company of Pikemen & Musketeers, which has been consolidated into the accounts of the HAC.

Other Restricted Funds — The balances on these funds consist of the Gridley Will Trust, which is used by the Commanding Officer to fund annual prizes, and the Benton Bequest (‘A’ Battery Fund), used to support the cost of an annual dinner. Income for these other restricted funds derives from a combination of legacies, donations, dividends and bank interest.

Permanent Endowment Funds — The Dugdale Bequest is to be held in perpetuity, with only the annual income being used to maintain the equipment of the Company of Pikemen & Musketeers. £2k was distributed in the year (2019: £3k).

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Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 October 2019 (cont’d)

Analysis of Group net assets between Tangible and Investments Current Liabilities Total
18. Funds – 2020 Intangible Assets 2020
Fixed Assets
£000 £000 £000 £000 £000
Unrestricted Funds
Designated Reserves - 4,949 2,812 (635) 7,126
Fixed Asset Fund 50,477 - - - 50,477
Less: Pension Reserve liability - - - (72) (72)
______ ______ ______ ______ ______
Total Unrestricted Funds 50,477 4,949 2,812 (707) 57,531
______ ______ ______ ______ ______
Restricted Funds
Benevolent Fund - 2,882 62 - 2,944
Regimental Grants Fund - - 506 - 506
Light Cavalry 13 - 182 (22) 173
Pikemen & Musketeers - - 277 - 277
Other Restricted Funds 143 156 118 - 417
______ ______ ______ ______ ______
Total Restricted Funds 156 3,038 1,145 (22) 4,317
Endowment Funds
Dugdale Bequest - 119 - - 119
______ ______ ______ ______ ______
Total Funds 50,633 8,106 3,957 (729) 61,967
______ ______ ______ ______ ______

During the year, in accordance with the Cash Management Policy approved by the Court, the cash resources of the Unrestricted and Restricted funds of the Company have continued to be operated as a single pooled-cash resource. At 31 October 2020 the amount owing to Restricted Funds by the Unrestricted Funds, was £750k (2019: £790k).

Analysis of Group net assets between Tangible Investments Current Liabilities Total
Funds – 2019 Fixed Assets Assets 2019
£000 £000 £000 £000 £000
Unrestricted Funds
Designated Reserves - 5,019 4,267 (1,473) 7,813
Fixed Asset Fund 41,778 - - - 41,778
Less: Pension Reserve liability - - - (86) (86)
______ ______ ______ ______ ______
Total Unrestricted Funds 41,778 5,019 4,267 (1,559) 49,505
______ ______ ______ ______ ______
Restricted Funds
Benevolent Fund - 3,164 34 - 3,198
Regimental Grants Fund - - 542 - 542
Light Cavalry 6 - 184 (20) 170
Pikemen & Musketeers - - 308 (4) 304
Other Restricted Funds 139 174 117 - 430
______ ______ ______ ______ ______
Total Restricted Funds 145 3,338 1,185 (24) 4,644
Endowment Funds
Dugdale Bequest - 132 - - 132
______ ______ ______ ______ ______
Total Funds 41,923 8,489 5,452 (1,583) 54,281
______ ______ ______ ______ ______

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Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 October 2020 (cont’d)

**19. ** Payroll costs 2020 2019
£000 £000
HAC salaries (excl. Er’s NI, pensioners & contract staff) 913 916
HAC employer’s National Insurance 82 92
HAC emoluments (excluding pensioners & contract staff) 995 1,008
HAC Job Retention Scheme payments received (66) -
Light Cavalry salaries (excl. Er’s NI) 72 64
Light Cavalry employer’s National Insurance 5 5
Light Cavalry emoluments 77 69
Light Cavalry Job Retention Scheme payments received (7) -
Pensions paid 10 12
Total Staff Costs 1,009 1,089
2020 2019
No. No.
Average number of HAC employees (excl. contract staff and pensioners) 22 22
Average number of Light Cavalry employees 3 3
Average number of pensioners 1 2
Total Staff 26 27
Number of employees earning between £60k and £70k 1 -
Number of employees earning between £110k and £120k 1 1

The highest paid employee received employer pension scheme contributions of £10,704 (2019: £10,582).

The remuneration of the 6 (2019:7) key management personnel totalled 362,088 (2019: £360,549). Their employer pension contributions were £21,711 (2019: £22,109).

HAC Emoluments in 2020 include £16,947 of redundancy payments (2019: £Nil)

20. Capital commitments

The company had capital commitments as at 31 October 2020 totalling £nil (2019: £nil).

The company is considering a request from the Regiment to provide additional storage space and facilities. This project, if approved, will span several years. Costs incurred to date amount to £391k (2019: £357k) by way of professional fees and has been written down to £nil with an additional Impairment Provision of £34k in the current year (2019: £357k) – see note 11a (i). Further costs of £10k in 2020 (2019: £nil) have been met by a Grant from the Regimental Grants Fund and have been expensed.

33

Honourable Artillery Company

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 October 2020 (cont’d)

21. The Court and related parties

The members of the Court of Assistants are the Trustees of the Company. The Trustees were covered by indemnity insurance for the year ended 31 October 2020.

Two Trustees (2019: two), who served during the year, rent flats that are owned by the Company, one of which is subject to a regulated tenancy agreement, while the other is let at market rates.

Expenses totalling £nil (2019: £921) were claimed by Trustees.

Fees totalling £1,007 (2019: £2,437) were charged to the Company by Major Charles Marment, a Trustee, for services as Secretary to the HAC Regimental Council.

The Commanding Officer of the Regiment, Lieutenant Colonel J P Chorley, who is also a Trustee of the Company, is provided with free accommodation and also has exclusive discretion over the application of the Active Unit Grant, which is one of the 26 grants to the Regiment and Sub Units included in Note 8. The Active Unit Grant amounted to £90k for the year ended 31 October 2020 (2019: £86k).

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