Company registration number: 06147572 Charlty reglstration number: 313612 WATTS GALLERY TRUST (A company limited by guarantee) ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 WATTS GALLERY TRUST (A company limited by guarantee) CONTENTS Page Reference and Administrative Details of the Charlty, its Trustees and Advlsers Trustees, Report Trustees, Responsibilities Statement Independent Audltors, Report on the Financial Statemenls Consolidated Statement of Financial Activities 3-14 15 16-19 20 Consolldated Balance Sheet 21-22 Charity Balance Sheet Consolldated Statement of Cash Flows 23-24 25 Notes to the Flnanclal Statèmènts 26-56 REFERENCE AND ADMINI Trustees Prof Company registered number 061 Charity reglstered number 313 Registered office Co Guil Surr GU Independent auditors Aze Ash God Sur GU Bankers Lloy 49 GodL>& Sur Sollcltors sto Upp Upp BA1 WATTS GALLERY TRUST (A company Ilmlted by guarantee) REFERENCE AND ADMINISTRATIVE DETAILS OF THE CHARITY, ITS TRUSTEES AND ADVISERS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2024 Investment Advisors CCLA Senator House 85 Queen Wictoria Street London EC4V 4ET Page 2 WATTS GALLERY TRL (A company Ilmlted by gu TRUSTEES, REPOR FOR THE YEAR ENDED 31 M Addltional Infomiation Additional information is avallable in the annual report www.wattsgallery.org.uklour-charityltrusteesl. Flnanclal Statements The Trustees present their reporl and the audited finan¢lal stalem 2024. The Trustees have adopted the provisions of the St "Accounting and Reporting by Charities" (FRS 102) in preparing t charity. The financial statements have been prepared in accordance with accounts and comply with the Charilies Acts of 2011 and 2022, t Arlicles of Association, and Accounting and Reporting by Ch applicable lo Charities preparing their accounts in accordance wi in the UK and Republic of Ireland IFRS 102) (effeclive 1 January" OVERVIEW: Report from the Chair and Chief Executive: We are pleased lo introduce our Trustees, Report and Financial S Preparing for the 120th anniversary of our opening on 1st April another yearf for Watts Gallery. Rather it was a year which mark the developing story of Ihls very special place. The impact on the arts sector of the challenging environment a subsequent macro-economic envlronment in Ihe UK is well do habits and revenues were further affecled by significant inorease closures necessitated by flooding and fire. However, Watts Gal managemenl team, backed by a wonderful group of hard-worki responding to Ihese difficulties and ensuring we ended the year w to underpin our aim of improved financial suslainability. Despite a year thal saw several unforeseeable challenges, il end G.F. Watts in his prime - a fitting tribute to the resilience and dete Painted in the year Watts beGame a Royal Academician, Self P taxes through the Acquisition in Lieu Scheme, administered byA We also look the opportunity to revalue our collections, last r Christie's, which has led to a £13.2m reduction in the value of t market for Victorian art. Whilst this extrapolation of the overall va sample of key collection works has created a significant shlft in Audit Committee agreed that it was an important corrective step. Watts Gallery is a very special place, but we recognise that ulP4 quality and diversity of our offer, be it our historic buildings and community activities. All of which is underpinned by the beau Landscape. Embarking on our new chapter, we are grateful the quality of su an ambitious new ten-year vision as A Creative Home for our Lo the extraordinarily pioneering vision of our founders, G F and creativily can transform lives; moving forwards everything we wi WATTS GALLERY TRUST (A company limited by guarante81 TRUSTEES. REPORT (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2024 purpose. Research has repeatedly shown the extraordinary benefits art and craft can offer lo personal wellbeing and Ihe vital role they play in supporting disadvantaged sectors In society and those struggling with mental health problems or learning dlfficullies or in prison. Art and creativity are also critical to children's development, but current timetabling pressures mean there simply isn't the room for teachers to give this the attention it deserves. Empowered by our founders, belief in 'art for all,, our new strategy seeks lo build impetus around our vision, focusing on families as well as art loving adults, with increased emphasis on creativity and a local-firsl approach as a crealive resource for our commlfnity alongside our inspiring gallery and historic venue. All of which will be rolled out in the year ahead, backed by a revitalised business planning process and our strong value commitments lo Nurturing Creativity, being an Inclusive Community and A Place to Inspire. As we look to the future, we feel parlicularly excited by the increasing focus on Mary Watts as an artist, pioneering social reformer, community champion, social entrepreneur, women's rights advocate through the suffrage movement, and partner to G F Watts. Following on from the 120th anniversary of our foundation on 1 st April 2024, the coming year also sees the 175th anniversary of Mary Watts birth- an ideal moment to reflect on Ihe relevance today of all she achieved in her lifetime. Finally, we are immensely grateful for Ihe continued support of our many loyal funders and volunteers, without whom we simply could nol do what we do. Sarah King, Chair, Board of Trustees, Watts Gallery Trust Allstair Burtenshaw, Brice Director & Chlef Executive, Watts Gallery Trust Page 4 WAThS GALLERY TRUST (A company limlted by guarantee) TRUSTEES. REPORT {CONTINUED) FOR THE YEAR ENDED 31 MARCH 2024 OUR GUIDING PRINCIPLES Who We Are Founded in 1904 as Ihe only gallery in the UK devoted to a single artist, Watts Gallery offers a unique insight into the life and work of'England's Michelangelo, George Frederic Watts and his wife Mary Selon Watts, the designer and founder of The Potters, Arts Guild at Complon. George and Mary Watts shared a vision Ihat art had the power to change society and should be available for everyone to experience and enjoy. We continue this18gacy in many ways, through our ¢olleclion and exhibitions, programming, contemporary art projects and community engagement. As a charity, we endeavour to reach and inspire all audiences, work made possible by the support of our visitors, shoppers, Friends, Patrons, donors and supporters. Our Objects To promote art for the benefit of the public by the establishment and maintenance of the Watts Art Gallery. To advan￿ the education of the public in Ihe subject of art. To preserve for the benefit of the public the Watts Art Gallery, its grounds and other buildings associated with George Frederic and Mary Watts as buildings of historic, architectural or construclional Interest. Our Vision: Our Mission: A Creative Home for our Local Community. Art for All by All. To inspire, engage and Iransfomi lives through art and creativity. Our Values.. Nurturing Creativity.. We encourag8 croativity and making for all. Inclusive We co118borate wlth our community fo welcome all to enjoy art and creativity. Community A Place to Inspire We celebrate our heritage and beautlful locafyon for all to enjoy. Core Purpose and Belief: We honour the legacy of our founders, G F and Mary Watts, and their belief that art can fransform Iiv8S. Gonlinuing our founders, belief, everything we do at Watts Gallery is founded on this social purpose. structure and Governance Structure Watts Gallery Trust was established and registered as a charity in 1905. In 2008 it was incorporated as a company limited by guarantee. Watts Gallery Trading Limlted Is a trading subsidiary wholly owned by Watts Gallery Trust. The company is controlled by its governing document and a deed of Trust and constitutes a Company, lirnited by guarantee, as defined by the Companies Act 2006. The Trust is governed by a board of Truslees who are also directors of the charity. The trustees meet at least four times a year and aro responsible for the objectives and the strategy for the charity and are in overall control of ils management and administration. Certain management and essentially all operational functions are delegated to the Director and Senior Leadership Team. Public Benefit We have set out In this report the main acllvities underlaken by the organization in order to carry out the charity's aims for the publlc benefit as sel out in its Memorandum. In doing so, we have had due regard to the public benefit guidance by the Charity Commission. Page 5 WATTS GALLERY TRUST (A company limited by guarantee) TRUSTEES. REPORT (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2024 Trustees The Trustees are recruited so that there is a balance of skills. qualifications and experience available to ensure that the Trust and its property are managed efficiently and knowledgeably. All new Trustees are given a full induction includlng a copy of the Charity Commission booklet, 'The Essential Trustee,, on the responsibilities of a Trustee and a file of essential information including policies and procedures. Each new Trustee is appointed for an initial term of four years and may then be re-elected for further periods of four years. Trustees rotate and the Chair is appointed at the first meeting in each financial year. All trustees are recruited based on specific skills, via open recruitment, based on interview with a view to besl represent our community and the range of skills and experience required. All trustees complete an annual related party Iransaction form in addition to the declaration of interests taken al every trustee meeting. On 28 September 2023, new Artlcles were approved and adopted to allow Trustees to serve for a more suitable period of lime than was previously allowed under the original Articles. Remuneration Policy Watts Gallery Trust is commilled to paying staff a fair salary that is competitive within similar sized organisations in the charitable arts sector locally and which is proportionate to the complexily and responsibilities of each role. Remuneralion levels are linked to a regular and objective system of performance appraisal and are benchmarked againsl comparable local roles. The Trustees, with recommendations from the Finan￿ Committee, approve any annual percentage increase for staff. When determining salaries under normal conditions, the Trustees take accounl of a number of factors including whether the proposed salaries are affordable wilhin planned budgets, the need to retain suitably qualified and experienced staff and the relalive responsibilities of each post. The Director of Watts Gallery Trust is also a Trustee. The Director is eligible for a bonus, which is delermined by an assessment of performance and achievement of delivery largets carried oul by the Chair and Deputy Chair of the Trustee5. This is reviewed and confirmed by the Finance Commiltee. It is our protocol that all trustees expenses be approved by the Chair of the Trustees prior to processing and payment by the charity. Investment Policy Watts Gallery Trust seeks to produce the best financial return commensurate with an acceptable level of risk. The investment objective for the reserves is to generate a return In excess of inflation over the long term whilst generating an annual income to support the ongoing aclivilies of Watts Gallery. Investment management is undertaken by CCLA on a total return basis and the performance of the portfolio is regularly reviewed by the Finance Commlttee. The trustees in appointing CCLA considered'their ESG credentials. CCL4 hold an A+ rating across all principles for responsible investment. Investment income has been reviewed as part of the financial review section of this report and this remains a valuable source of income. Risk Management The Trustees have considered the major risks lo which the charily is exposed and have reviewed those systems and procedures lo manage those risks. The major rlsks to the charlty Include a sustained drop in admissions numbers, governmenl policies, slaff and volunteer attraction and retention, reliance on fundraising income and risks associated wlth systems and processes. The risk register is reviewed regularly by the Director and Senior Leadership Team, quarterly by Ihe Finance Committee and annually by the Trustee Board. The Truslees believe the charily has sufficient resources to Page 6 WAThS GALLERY TRUST (A company limited by guarantee) TRUSTEES, REPORT (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2024 continue operating for the foreseeable future. Reserves The Directors, Pollcy Is to aim to build up uncommitted reserves to a level equivalent to 3 - 6 months current running costs {2024 - between £694,234 and £1,388,468, 2023 - be￿een £719,569 and £1,439,138) . This is in order to safeguard and underwrite Watts Gallerfs continuing activities and meet ils Gontractual obligations in Ihe event of a reduction in income. Walts Gallery Trust holds three categories of funds; restricted funds which are donations received by Ihe charity where the purpose for which they can be used is determined by the donor (See nole 22) and endowment funds which are either expendable or permanent. While the permanent endowments consist mainly of the value of the permanent collection of art works, the expendable endowments are used primarily to generate further income to support the Gallerls costs. As at 31 March 2024 Watts Gallery Trust had consolldated total funds of £25,886,893 (2023.. £38,873,682) of which £1,190,196 were unrestricted funds, £9,071,164 were restricted funds and £15,625,533 were held in endowmenls (which includes the collection valued at £9,715,991). Breakdown of Funds by Category 45000 40000 35000 30000 25000 20000 15000 10000 5000 UnrestrictEd Festiicted Endowmenl Total 2023 • 2024 The figures referred to above are denoted in £'OOO's. The unrestricted funds are made up of £1,107,429 in freehold land, buildings and tangible assets and £82.767 of free reserves (2023.. £310.570}. This level of free reserve represents approximately 36 % of a months current operaling costs. The charity will, as a matter of urgency, consider a drawdown of some funds from its investment portfollo to cover the shortfall in unrestricted funds while pursuing other strategies to grow ils income. Page 7 WAThS GALLERY TRUST (A company Ilmited by guarantee) TRUSTEES, REPORT (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2024 Financial Review Total revenue for the year amounled to £2,586,872, compared lo £2,562,395 in the previous year, an increase of 1 % on the prior financial y&ar (FY2023). This was mainly attributed to.. Donations of £1,009,506139¥0 of total income) down 14.￿ from FY2023 (£1,177.388) FY 2024 FY 2023 £113,264 £102,848 £87,228 £85,245 £749,605 £884,755 £59.409 £104,540 Patron and Friends Gift Aid General Donations Arts Council England Trading activities of £1,295,396 (500/0 of total income) up 150/0 from FY2023 (£1,129,919) FY 2024 FY 2023 £913,275 £909,255 £244,645 £34,990 £117,131 £167,720 £20,345 £17,954 Sale of goods and services Learning events Admissions Tours of Gallery Investment income of £281,970 {110A of total income) up 11 % from £255.088 in FY2023. Income by Source Patrons & Friends • Gift Aid General Donations Arts Coun¢il Admlssions Sale of goods Investrnenl Income Learning events Tours of gallery Total expenditure for the year was £3,074,413 reflecting a 2Q/o reduction from previous FY 2023 (£3,150.402}. The major areas of expenditure were= Fundraising trading expenses Program and services expenses Support costs Page 8 WAThS GALLERY TRUST (A company limited by guarantee) TRUSTEES, REPORT (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2024 Expenditure by Category 2000 1800 1400 1200 1000 81)0 400 200 Fundraising Cost Program & servlEe costs Support Costs • 2024 * 2023 The figures referred to above are denoted in £'OOO's. The net incomelexpenditure for the year before any losses or gains on investments and transfers betwèen funds was a deficit of £487.541 compared to a deficit of £588,007 for the prior financlal year 2023. During the year there were gains on the revaluatlon of investment property of £102,046 and on the revaluation of listed investments of £568,279. This compared lo a loss on listed investments of £246,913 in the 2023 financial year. There was also a significant reduction in the value of the collections (fixed assets) as a result of an impairment of £13,169,573. This decline in value is attributed to several art market factors outside of our control such as a shift in artistic tastes and aesthetics, market saturation, changing cultural narralives and decline in institutional support for Victorian art. Despile rising costs, the organisation rernains committed to careful management of expenditure, increasing visitor numbers and average income per admisslon, and diversifying ils income streams. Looking ahead, we are planning further inveslments in strategic initiatives lo drive income growth while ensuring continued financial sustainability. A Datalled Review of the Year strategy.. The four key objectives for the yearwere.. to connect with, touch and inspire our wider community- defined as within a one-hour Iravel lime. to engage all in dynamlc, creative programming, placing contemporary artists at the heart of unlocking our artists, collections, and history. to safeguard our future by attracling l 00,000 visits to Ihe gallery (by 2032). expand our income mix, and generate enough revenue to match our ambitions, every year. to enable all to enjoy thè Watts by listening and responding to the needs of all users. To embed these ambitions, new quarterly staff and volunteer meetings were held throughout the year with the Page 9 WAThS GALLERY TRUST (A company limlted by guarantee) TRUSTEES. REPORT (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2024 purpose of placing our core strategy and values at the heart of our organisation. We also held our first Board and Senlor Leadership Tearn away day, which helped develop our new ten-year vision, three-year strategy and values, rolled out at the end of the financial year. Governance.. Sarah Klng was appointed as our new Chair of Trustees, following an open recruitmenl process via board recruitment specialists Saxton Bampfylde and Cedric Ntumba, the current Treasurer and Chair of the Finance Committee, was appointed as Deputy Chair and Chair of the Audit Committee. Julie Molloy, former Managing Director of National Gallery Ltd was invited to become commercial operations trustee and joined our Trading Company Board, and Finance Committee and trustee Matthew Holt look on the role of Chair of the Trading Company Board as well as his position as a member of the Finance Committee. This concluded our phased board transition, and il is wonderful to have our new board in plaGe. We also reviewed and enhanced our Workforce Strategy. This included salary banding recommendations, training and development plans and actions lo ensure our workforce is more representative of our community. With one exception, where specialist skills and experience were required, all board vacancies were filled by open recruitment, with a focus on local representation from wilhin our wider community. staff and Volunteers: During the year we ensured Ihat all staff had equal access to learning opporiunities, leading lo a more skilled and adaptable workforce and helping maintain a high slandard of performance across the organisalion. The number of full-lime equivalent staff dropped from 51 to 43 Ihrough natural churn, with a restructuring put in place at the start of the new financial year to align with the objectives of our new strategy. Our volunteer induction programme was further developed to embed our values and ensure a consislent welcome for all visitors from our volunteer stewards and guides. An 'always on, volunteer recruitment campaign recruited 60 new volunteers across the year, with equal opportunity forms completed by all new volunteers, and a focus on increaslng the number of young people volunteering. Marketing & Admissions.. Admissions were 14010 down on target (25,726 vs target of 29,750) with admissions income 45 % down on target {£117k vs largel of £211 k) - both decreases due to the closure of the historic galleries for fifteen weeks or 28 % of the year because of a small fire in the plant room that services the galleries. We prepared a brief for an external brand per￿ptIOn study which will be commissioned as soon as funds allow lo establish ourrenl brand awareness within a one-hour Iravel time. The study will focus on the visibility of the story of G F and Mary Walts as artists, the contemporary practicing artists we showcase today, and the thriving artists, village we support all year-round. In the meantime, Glear Key Performance Indlcators were established for monitoring brand awareness. Our focus on promoting our whole offer more effectively via our new website has proved successful thanks to close monitoring of user experience, continual lesling and the development of online content. The digital visitor journey has also been enhanced through the roll-out of our new tlckeling and customer relationship management systems. Increased online bookings following the launch of these new systems have also enabled more dynamic and targeted communications. A new social media strategy was also implernented and increased digital engagement as we looked to oplimise audience engagement with our digilal plattorms and growing digital revenues. A total of 457 visitor surveys were completed through the Audience Finder platform, with the 15-week closure of the Historic Galleries impacting on the total sample size, which was smaller than usual. At the end of the year, we successfully moved lo running the visitor survey in-house as we look lo grow our understanding of our audiences and their needs. Across the year, we achieved a Net Promoter Score of 79010 as we work towards our goal of aohieving a score of 85QA. Page 10 WATTS GALLERY TRUST IA company Ilmltad by guarantee) TRUSTEES, REPORT {CONTINUED) FOR THE YEAR ENDED 31 MARCH 2024 Community Engagement: Formal partnerships were further developed with key groups representing members of our community who would oth"erwise f8Ge barriers to creative participation or are traditionally under-served. These key strategic partners are HMP Send, Woklng Women's Support Centre, Halow Project. Surrey County Council Youth Support Service. plus a social prescrlptlon service that is self-funded by Watts Gallery Trust. We also secured Clore Duffield Foundatlon Challenge and Opportunity funding to cover the costs during this year and next year of 12 days of visits for around 700 school pupils who would otherwise not be able to visit. To enable young people to access paid opportunilies in museums and galleries we made an open call for work experience placements amongst Year 1 Os-13s which resulted in three young people working across teams for week-long placements. We also worked alongside eight olher cultural organisalions across the UK as part of the New Roules pilot programme from Engage, the leading charity for encouraging engagement and participation in the visual arts. This included hosting a month-long paid work pla￿ment for a young person facing barriers to working in the cultural sector. Our vitally important Community Forum group has also continued throughout the year, providing essential feedback and insights from members of our wider community. This has proved lo be an Incredibly useful group. and membership has been increased and diversified lo 10 people wilh participant satisfaclion monitored, including exit inlerviews conducted with any departing participants. These quarterly facilitated meetings informed our Viclorian VirtU81 Reality and Edo Pop exhibitions as well as family-friendly interpretation, the role of creativity and making, the audience needs for our Clore Learning Studio, and general visitor experience and site navigation. Engagement: Much work took place during the year to significantly grow learning and engagement income as a core element of our new ten-year vision and three-year strategy. This informed a new departmental structure, combining Ihe Collectlons & Exhibitions, Learning & Engagement teams, and our Contemporary Gallery Manager post, into a new Engagement team, led by Sarah Jarvis, formerly Head of Learning & Engagement. In addition, arrtbitious new goals were built inlo the budget for the financial year ahead with new income-generating event trialled during the year. These included family days, masterclasses and the re-launch of 5-week pottery courses. A new inlernal strategic programming group, chaired by the Director and launched at the end of the previous financial year, was rolled out throughout the year with representalives from across the organisation. Its aim is to ensure ambitious seasonal programming, delivered effectively through cross-departmental collaboration, enabling the development of our programming ambitions to 2028 and beyond. This included a successful initial applicalion to Art Fund's Going Places programme which will support the development of funded community co-ourated, co-designed and Go-produced exhibitions in the period to 2030, as well as the developrnent of longer-term plpeline of audience-focused exhibitions developed in-house or in partnershlp with peer inslitutions. Highlights included exhibitions Halima C8ssell.' From the Earth, the first major exhibition by a conlemporary artist. Vlctorian Virtual Reality." Photographs from the Brian May Archive of Sl8reoscopy, and the opening of Edo Pop.. Japanese Prints 1825- 1895, featuring a new commission 'Sakura Saku, by conlemporary Japanese prinlmaker Hiroko Imada. Collections- The end of the financial year saw the completion of our five-year Collections Online programme, featuring detailed new insights from five Early Career Researchers into 160 key works by G F Watls. This cotnplex project included moving over 7,000 collection items onlo a new colleclions management SOf￿are system and making them available to view on our new Collections Online portal, which was subsequently launched on our website in April 2024 alongside a major symposium of new research on G F Watls linked lo the programme. We were dellghted that G F Watts, Self-Portrait, 1867, was gifted to the gallery in lieu of taxes thanks to Arts Council England and the Acquisition in Lieu Panel. In addition, we were able lo acquire Bo Orb, a beautiful conlemporary commission by Halima Cassell. Thanks lo the generous assistance of a supporter who has purchased Habib Hajallie's residency work, A British Hall of Fame, we have also been able to secure this Page11 **WATTS GALLERY TRUST (A company limited by guarantee)** ## **TRUSTEES' REPORT (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2024** important new work on long term loan. A major photographic portraiture composition featuring staff and volunteers was also commissioned from wet-plate collodion photographer Emma Brown to mark the 120[th] anniversary of the opening of Watts Gallery on 1st April 2024. The year also saw major loans of works from our collection to _Flowers Forever_ at Kunsthalle München in Germany, _Flower Power_ at the Musée des impressionnismes Giverny in France and _Preraffaelliti: Rinascimento Moderno at_ the Museo Civico San Domenico Forlì in Italy as part of our ambition to lend works as proactively as their conditions allow. We had hoped to launch an open tender for a Project Curator to act as artistic programme and inclusive interpretation lead ahead of the installation of a bronze cast of GF Watts’ sculptural masterpiece _Physical Energy_ in the woodlands at Limnerslease. The recruitment of this temporary post was postponed whilst we awaited planning permission of the sculpture’s installation, now received, and will be tendered in the current financial year, subject to securing appropriate funding. As part of our plan to develop an additional income stream from activities related to our collections, an informal review identified quick wins from loan fees, which have been introduced, as well as an action plan to be implemented once our new Collections Curator position, currently being advertised, is recruited. Lastly, as we prepare to celebrate the 175[th] anniversary of Mary Watts’ birth, a core aim has been to conserve and install a beautiful Well Head by Mary Watts outside the main entrance to Limnerslease. We were very pleased that after the financial year end, funding was concluded for this special project, enabling conservation to begin in August 2024, with installation scheduled for October 2024. ## Enhanced Delivery: The year-end operating budget recorded a significant improvement on original budget (£58,735 surplus versus a £163k original budget deficit target). This was principally due to close monitoring and management of unrestricted expenditure. Hence more restricted expenditure spending compared to prior year. Total income per visitor / admission was also up 17% for the year (target £77.42 vs £100.55 actual) and our cost of generating £1 of income was 3% better than target (£1.12 versus a target of £1.16). We also created new evaluation and reporting mechanisms which were rolled out through the year and a new Key Performance Indicator tracker document was implemented. In addition, the annual audience survey was reviewed continually throughout year to ensure improvements could be made immediately, where possible. Annual survey results and a six-year trend report were also shared widely across the organisation. Our new integrated customer relationship management and ticketing systems were completed and rolled out, together with staff training, during the year. Work also took place and is ongoing to ensure whole organisation buy-in to all compliance and business continuity requirements, including safety management, GDPR and safeguarding, led by the Head of Visitor Experience. As part of our plan to manage costs effectively, the procurement arrangements were reviewed including a review of biggest suppliers by value. This resulted to significant cost savings and increased efficiency. A new comprehensive procurement policy was postponed due to reduced staff capacity but will be prepared for Board approval in the year ahead. A green energy broker was also appointed to ensure strong baseline data on all utilities and improve our environmental sustainability and costs and the process of moving accounts across to green contracts is underway as they come up for renewal. To maximise investment income, an annual presentation to the Finance Committee by new fund managers CCLA was introduced in March with the Head of Finance & Resources also receiving a quarterly investment report and update from the fund managers. ## Trading Company: A major focus for the year has been to improve Trading Company profitability given inflationary cost pressures in Page 12 WATTS GALLERY TRUST (A company limited by guarantee) TRUSTEES. REPORT (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2024 recent years. Short term options were reviewed and implemented wherever possible to oplimise Trading Company margins with a 3-year strategy put in place to increase significantly increase Trading Company profitability from the coming financial year. As part of this process, business planning took place during the year to create a major venue-hlre and fllming income stream, whlch Informed Ihe recrultment of our flrst Venue Hlre & Events Officer, appointed early in the new financial year. In addition, a review with KD Fine Art to grow conlemporary gallery space look place. Contemporary Gallery exhibilions including Watts Ceramics.. Living Traditions, Re-invented.. The Art of Upcycling, Formations." Fiona Millais and LUGY Lufyens, Roots and Joumèys, In Print.. Joy and Angi8 Lewin.. Patterns of Nature showcased new and established artists, brought in new audiences and supported our charity through profils from the sale of works, which are then gifted from the Trading Company to our charity. Estate Mgslerplan- A first quinquennial, or five-year property survey was completed across the whole estate and a phased delivery plan agreed with the Property Committee. In addition lo planned preventative maintenance, the lychgate of the Grade I listed Watts Cemetery Chapel was seriously damaged during the year by a vehicle, flooding in the lea shop kitchen caused ten weeks of interruplion to the catering offer, and a small fire in the plant room closed the historic galleries for fifteen weeks and depressed admissions and associated income for 28Q/o of the year. These unexpected challenges were dealt with calmly and effectively thanks to the resilience of staff and volunteers and meant that we were able to continue to welcome visitors year-round and that our community engagement family and school programmes continued unaffected by these unforeseeable challenges. Repairs lo the plant room were largely completed during Ihe financial year with works to the kitchen and lychgate delivered in the first half of the new financial year. Fundraising.. A large-scale summer garden party lo cultivate new supporters was generously hosted on the Kenl-East Sussex borders by a supporter. In addition, a dinner was hosted in London in aid of our Artist's Studio Museum Ne￿Ork and a reception held for Ihe Ne￿Ork in Lucian Freud's former home and studio. We also held our largest us fundraising reception to date and first ticketed fundraiser - in New York, which included a keynote speech by Professor Tim Barringer, Paul Mellon Chair of the History of Art at Yale University, ahead of our 120 anniversary. Membership income for the year was 90 % againsl a targel of £152,776 due primarily to a lower than hoped for level of Exhibition Circle support. A membership review was conducted by an external consuliant and key takeaways from the review have been implernented, with a new Patron level of £2,500 introduced to bridge the gap between Gold Patrons {£1,000 annually) and Exhibition Circle members (£5,000 annually). The three core Palron levels have been renamed - Silver1£500 annually}, Gold and Platinum and a monthly newsletter for all members introduced, to keep rnembers engaged and help ensure renewal rates remain high. Looking to the future, a legacy memorial has also been scoped for installation in the ￿Metery at the Watts Chapel and further work will take place to secure permission for the inslallalion, launch a legacy video, and increase awareness of our charitable status amongst supporters and local solicitors. Visitor Experience.. A key feature of the year was the designing of the idyllic new woodland setting in Ihe grounds at Limnerslease for our bronze cast of G F Walls, monumenlal sculplure Physical Energy with landscape architects LDA. Following this an application was also submitted for planning permission, which was reGeived after the financial year-end. Work also started on reviewing the findings of the Visitor Experience Report conducted immediately pre- pandemic. Once focus groups and olher research has been completed in early 2024125, the new Visitor Experlence slralegy Will be written. Plans for improvements to signage have also been made so they can be acted on as budgets allow. To aid the focus on Visitor Experience, plans were made during the year to bring together the Operations, Visitor Services and Front of Ho(Jse teams In a new Visltor Experience team, led by Claire Griffin, formerly Head of Operations, which was launched al the start of the new financial year. Page 13 WATTS GALLERY TRUST (A company limited by guarantee) TRUSTEES. REPORT (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2024 Looking Ahead.. The new Ihree-year strategy has outlined four key ambitions for the year ahead.. 1. Attract more visitors.. create a stronger, clearer, conslstent offer with fewer, bigger themes clearly focussed on families and art lovers; relurn to our creativelcommercial roots- ensure all aclivity is funded or creates a surplus. 2. Focus on Surrey audiences- provide a customer-cenlric programme, offer, communications and community partnerships. create new income streams and programmes that respond to the needs of Surrey audiences. 3. Place Mary and George at our core.. highlight their relevance,. build our offer around their commitment to art and artisls-, simplify and strengthen what we already do. 4. Revilalise our work: embrace our values., be more collaboralive, adaptable, and effective in how we work,. enjoy our work more- beGome results focussed., belter evidence our work. simplify and strenglhen what we already do., lay the foundalion5 to address our future needs. As we reflecl on all Ihat has been achieved in a challenging climate for the arts and culture and our ambitions for the future, the Brice Director & Chief Executive, Chair and trustees would like to reiterate their thanks to the staff, volunteers and supporters who make all. the organisation's work possible. Approved by order of the members of the board of Trustees on 10 December 2024 and signed on their behalf by.. A J Burtenshaw Trustee SKKing Trustee Page 14 WATTS GALLERY TRUST {A company limited by guarantee) STATEMENT OF TRUSTEES. RESPONSIBILITIES FOR THE YEAR ENDED 31 MARCH 2024 The Trustees (who are also the directors of Watts Gallery Trust for the purposes of company law) are responsible for preparing the Trustees, Report including the Strategic Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Company law require5 the Trustee5 to prepare financial statements for each financial . Under company law, the Trustees must not approve the financial statements unless they are satisfied that they give a Ifue and fair view of the stale of affairs of the Group and the Charity and of their incoming resources and application of resources. Including their income and expenditure, for that period. In preparing these financial statements, the Trustees are required to.. select suitable accounting policies and then apply them consistently., observe the methods and principles of the Charities SORP 2019 IFRS 102)- make judgemenls and accounting estimates that are reasonable and prudent. state whether applicable UK Accounting Standards IFRS 102) have been followed, subject to any material departures disGlosed and explalned In the flnancial statements., prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business. The Trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Ihe Charity's transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Charity and enable them to ensure Ihat the financial sl8temenls comply with Ihe Companies Act 2006. They are also responsible for safeguarding the assets of the Group and the Charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. In so far as Ihe trvstees are aware.. there Is no relevant audit Information of which the charitable company's auditor is unaware., and the trustees have taken all steps Ihat they ought to have taken to make thernselves aware of any relevant audit information and to establish that the auditor is aware of that information. Page 15 wA￿s GALLERY TRUST (A company Ilmlted by guarantee) INDEPENDENT AUDITORS. REPORT TO THE MEMBERS OF WATTS GALLERY TRUST Opinion We have audlted the finanGial statements of Watts Gallery Trust (the 'charitable parent compan1} and its subsidiary (Ihe 'group') for the year ended 31 March 2024 which comprise the Consolidated Statement of Financial Activities, the Consolidated Balance Sheet, the Charity Balan￿ Sheet, the Consolidated Statement of Cash Flows and the related notes, including a summary of significant accounting policies. The financial reporting framework thal has been applied in Iheir preparation is applicable law and Uniled Kingdom Accounting standards, including Charities SORP Financial Reporting Standard 102 'The Financial Reporting Slandard applicable in the UK and Republic of Ireland, {Uniled Kingdom Generally Accepted Accounting Practice). In our opinion the financial stalemenls= glve a true and falr view of the state of the Group's and of the charllable parent companvs affairs as at 31 March 2024 and of the Group's incoming resources and application of resources, including ils 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 accordan￿ with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing {UK) IISAS {UK)l and applicable law. Our responsibilities under those standards are further described in the Auditors, responsibilities for the audit of the financial statements seclion of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requlrements. We belleve that Ihe audit evldence we have obtained Is sufflcient and appropriate to pmvide a basis for our opinion. Conclusions relating to going concern In auditing Ihe financial statements, we have concluded that the Trustees. use of the going concern basis of acoounling in the preparation of the financial statemenls is appropriate. Based on the work we have performed, we have not identified any material uncertalnties relatlng to events or conditions that, individually or collectively, may cast significant doubl on the Group's or the charitable parent companvs ability to continue as a going concern for a period of al least I￿e1ve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the Trustees with respect lo going concern are described in the relevant sections of this report. Page 16 WATTS GALLERY TRUST (A company limited by guarantee) INDEPENDENT AUDITORS. REPORT TO THE MEMBERS OF WATTS GALLERY TRUST (CONTINUED) Other infom)ation The other information comprises the informalion included in Ihe Annual Reporl other than the financial statements and our Auditors, Report Ihereon. The Trustees are responsible for the other information conlained within the Annual Report. Our opinion on the financial statements does not cover the olher information and, except to Ihe extent otherwise explicitly staled in our report, we do not express any form of assurance conclusion Ihereon. Our responsibilily is lo read the other informalion and, in doing so, consider whether Ihe olher information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears lo 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 misstalement in the financial statements themselves. If, based on the work we have performed, wè conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothlng to report in this regard. Opinlon on other matters prescrlbed by tho Companles Act 2006 In our opinlon, based on the work undertaken in the course of the audlt: the information given in the Trustees, Report for the financial year for which Ihe financial statements are prepared is consistent with the financial statements. the Trustees, Report has been prepared in accordance with applicable legal requiremenls. Matters on which we are required to report by exceptlon In the light of our knowledge and understandlng of the charitable company and its environment obtained in Ihe course of the audit, we have not identified material misstatemenls in Ihe Trustees, Report. We have nothing to report in respect of the following matters in relation to which Companies Act 2006 requires us to report to you if, in our opinion: Ihe charilable parent company has not kept adequate and sufficient accounting records. or returns adequate for our audit have not been received from branches not visited by us- or the charitable parent company financial statements are not in agreement with the accounting records and returns.. or certaln disclosures of Trustees, remuneration specified by law are not made., or we have not received all the information and explanations we require for our audit. Responsibilities of trustees As explained more fully in Ihe Trustees, Responsibilities Statement, the Trustees (who are also the directors of the charitable parent company for the purposes of company law) are responsible for the preparation of the financial statements and for being salisfied that they give a true and fair view, and for such internal control as the Trustees determine is necessary to enable the preparation of financial statements that are free from malerial mlsstatement, whether due to fraud or error. In preparing the financial slatemenls, the Trustees are responsible for assessing the Group's and the parent charitable company's ability lo continue as a golng concern, disclosing, as applicable, matters related to going concern ar)d uslng the going concern basis of accounting unless the Trustees either intend lo liquidate the Group or the charitable parent company or to cease operations, or have no realistic alternative but to do so. Page 17 WATTS GALLERY TRUST IA company limited by guarantee) INDEPENDENT AUDITORS. REPORT TO THE MEMBERS OF WArrs GALLERY TRUST (CONTINUED) Auditors, responsibilities for the audit of the financial statements Our objectlves 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 Auditors, Report that Includes our opinion. Reasonable assurance is a high level of assurance, bul is not a guarantee that an audit conducted in accordance with ISAS (UK) will always detect a material mlsstatement 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 Ihe economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audil of the financial statements is localed on the Financial Reporting Council's website at.. www.frc.org.uklauditorsresponsibilities. This description forms part of our Auditors, Report. Extent to whlch the audlt was consldered capable of detectlng Irregularlties, including fraud Irregularlties, Including fraud, are Instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, lo delect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.. Based on our understanding of the charilable parent company and industry, we identified that the physical risk of non-compliance with laws and regulations related to breaches of health and safety and employee laws and regulations. We also obtained an understanding of the legal and regulatory frameworks that the charitable parent company operates in, focusing on Ihose that had a direct effect on material figures and disclosures in Ihe flnanclal statements, the main regulations considered in this context included the UK Companies Act 2006 and the Charities Act 2011. We evaluated the incenlives and opportunities for fraud in the financial stalemenls, including, but nol limited to, the risk of overrlde of controls and designed procedures in response to these risks as follows; Enquiry of management and those charged wilh governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud., Reviewing minutes of meetings of Ihose charged with governance- Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statemenls or the operations of the Charity through enquiry and inspection., Reviewing financial statement disclosures and testing lo supporting documentalion to assess compliance with applicable laws and regulations., and Performing audit work over the risk of management bias and override of controls, including testing of journal entries and olher adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounling estimates for Indicators of potential bias. We also communicaled relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indicalions of fraud or non-compliance with laws and regulations throughout the audit. There are inherent limitations in the audit procedures described above, and the risk of not detectlng a material misslatemenl due lo fraud is higher than one resulting from error as fraudulent misstatements may involve deliberate concealment. Page 18 **WATTS GALLERY TRUST (A company limited by guarantee)** ## **INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WATTS GALLERY TRUST (CONTINUED)** ## **Use of our report** This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and its members, as a body, for our audit work, for this report, or for the opinions we have formed. ## **Debra Saunders Bsc FCA (Senior Statutory Auditor)** For and on behalf of Azets Audit Services Limited, Statutory Auditor Ashcombe Court Woolsack Way Godalming Surrey GU7 1LQ 12 December 2024 Page 19 WATTS GALLERY TRUST (A company limited by guarantee) CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES {INCORPORATING INCOME AND EXPENDITURE ACCOUNT) FOR THE YEAR ENDED 31 MARCH 2024 Unrestrlcted funds 2024 Restrlcted Endowment funds funds 2024 2024 Total funds 2024 Total funds 2023 Note Income and endowments from: Donations and legacies Other trading aclivities Investments 750,875 1,295,396 273,381 138,631 120,000 1,009,506 1,295,396 281,970 1. 177,388 1, 729,919 255,088 8,589 Total Income and endowments 2,319,652 138,631 128,589 2,586,872 2,562,395 Expendlture on: Raising funds Charitable activities 1,005,130 1,553,443 1,005,130 2,069,283 976,100 2,174,302 515,840 Total expenditure 2,558,573 515,840 3,074,413 3, 150,402 Net (expenditure)lincome before net (losses)Igalns on investments Net (lossesllgains on inveslments and revaluation of fixed assets (238,921) (377,209) 128,589 (487,5411 (588,007) 147,954) 234,503 112,685,797) (12,499,248) (246,913) Net movement in funds (286,875) (142,706) (12,557,208) (12,986,789) (834,920) Reconciliation of funds: Total funds brought foTward 1,477.071 (286,875) 9,213,870 28,182,741 38,873,682 1142,706) 112,557,208) 112,986,789) 3g, 708,602 (834,920) Nel movement in funds Total funds carried forward 1,190,196 9,071,164 15,625,533 25,886,893 38,873,682 All of the group's activilies derive from conlinuing operations during the above periods. The notes on pages 2610 56 form part of these financial slatemenls. Page 20 WATTS GALLERY TRUST (A company Ilmited by guarantee) REGISTERED NUMBER: 06147572 CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2024 2024 2023 Nota Fixed assets Tangible assets Heritage assets - the collection Investments 13 5,897,718 9,715,991 6,846,354 2,515,886 7. 790,452 22, 765,564 6,278,074 763,840 14 15 16 Investment property 24,975,949 37.597,930 Current assets stocks 95,325 227,877 864,805 85,585 104,499 131,803 1,202,814 284,033 Debtors 17 26 26 Cash and bank- restricted Cash and bank unrestricted 1,273,592 1,723,149 Creditors= amounts falling due wilhin one year 18 {329,315) (257,284) Net current assets 944,277 1,465,885 Total assets less current liabilities 25,920,226 39,063,815 Creditors.. amounls falling due after more than one year 19 {33,3331 (190, 133) Net assets excluding pension asset 25,886,893 38,873, 682 Total net assets 25,886,893 38,873,682 Charlty funds Endowment funds Restricted funds Unrestricted funds 21 21 21 15,625,533 9,071,164 1,190,196 28,182,741 9,213,870 1,477,07t Total funds 25,886,893 38,873, 682 The Trustees acknowledge their responsibilities for complying with the requirements of the Act with respect to accounting records and preparation of financial statements. Page 21 WAThS GALLERY TRUST (A company limited by guarantee) REGISTERED NUMBER: 06147572 CONSOLIDATED BALANCE SHEET {CONTINUEDI AS AT 31 MARCH 2024 The financial slalemenls were approved and authorised for issue by the Trustees on 10 December 2024 and signed on their behalf by.. A J Burten5haw Trustee SKKing Trustee The notes on pages 26 to 56 form part of these flnanclal statements. Page 22 WATTS GALLERY TRUST IA company limited by guarantee) REGISTERED NUMBER: 06147572 CHARITY BALANCE SHEET AS AT 31 MARCH 2024 2024 2023 Note Flxed assets Tangible assets Herilage assets - the collection Investments 13 5,847,923 9,715,991 6,846,355 2,515,886 7, 726,394 22, 765, 564 6,278,076 763,840 14 15 16 Investment property 24,926,155 37,533,874 Current assets Debtors 17 289,103 864,805 51,606 260, 757 1,202,814 192,879 Cash and bank - restricted Cash and bank - unrestricted 1,205,514 1.655,850 Creditors.. arnounls falling due within one year 18 (244,776) (179,242) Net current assets 960,738 1,476,608 Total assets less current Ilabllitles 25,886,893 39,010,482 Credilors: amounts falling due after more than one year 19 (136,800) Total net assets 25,886,893 38,873, 682 Charity funds Endowment funds Restricted funds Unrestricted funds 21 21 15,625,533 9,071,164 1,190,196 28,182,741 9,213,870 1,477.071 21 Totsl funds 25,886,893 38,873,682 The Charity's net movement in funds for the year was a deficit of £12,986,789 {2023- a deficit of£834,920). Page 23 WATTS GALLERY TRUST IA company limited by guarantee} REGISTERED NUMBER: 06147572 CHARI￿ BALANCE SHEET (CONTINUED) AS AT 31 MARCH 2024 The financial slatements were approved and authorised for issue by the Trustees on 10 December 2024 and signed on their behalf by.. A J Burtenshaw Trustee SKKing Trustee The notes on pages 26 10 56 form part of these financial statements. Page 24 WATTS GALLERY TRUST (A Company limited by guarantee) CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2024 2024 2023 Cash flows from operating activities Net cash used in operating activities (743,686) (441, 832) Cash flows from Investlng actlvltles Dividends. interests and rents from inveslments Purchase of tangible fixed assets Interest receivable and similar income 254,853 252,406 (54,741) (188,906) 27,117 2,682 Net cash provided by investing activitles 227,229 66,182 Cash flows from financlng activities Repayments Df borrowing (20,000} (20,000) Net cash used in financing activities {20,000} (20,000) Change In cash and cash equlvalents In the year Cash and cash equivalenls at the beginning of the year (536,457> (395,650) . 1,486,847 1,882,497 Cash and cash equivalents at the end of the year 950,390 1,486,847 All of the cash flows are derived from continuing operations during the above two periods. The notes on pages 26 to 56 form part of these financial statements Page 25 WATTS GALLERY TRUST {A company limited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 Accounting pollcles 1.1 Summary of significant accounting policles and key accounting estimates The princlpal accounting policies applied in the preparalion of these flnanclal statements are sel out below. These pollGies have been consistently applied to all the years presented. unless othetwise stated. 1.2 statement of compllance Watts Gallery Trust is a company limited by guarantee, incorporated in England. The registered office is Watts Gallery Trust. Down Lane, Compton, Guildford, Surrey, GU3 1DQ. The nature of the charitys operations is set out in the Report by the Trustees. The financial statements have been prepared in accordance with Accounting and Reporting by Charities.. Statement of Recommended Practice applicable to charities preparing their accoLFnts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland issued in October 2019, Ihe Flnanclal Reporting Standard applicable in the UK and Republlc of Ireland (FRS 102). the Charities Act 2011 and the Companies Act 2006. 1.3 Basls of preparation Watts Gallery Trusl meets the definition of a public benefit entily under FRS 102. Assets and liabilities are Initlally recognised al historical cost or transaction value unless otherwise staled in the relevant accounting policy notes. 1.4 Basls of consolldation The consolldated flnancial statements consolidate the financial statements of Ihe charily and its subsidiary undertaking drawn up to 31 March 2024. No Stalemenl of Financial Activities is presented for the charity as permitted by section 408 of the Companies Act 2006. For the financia5 year ending 31 March 2024 the charity generated a deficit of £286,87512023 deficit of £205,400) on unrestricled funds related to Ihe Gallery's operating activities and a deficit of £12,699,914 (2023 - deficit of £629,520) on restricted and endowment funds related to specific projects or purposes. This results in a net deficit of £12,966,789 for Ihe financial year (2023 - deficit of £834,920). A subsidiary is an entity controlled by the charity. Control is achleved where the charity has the power to govern the financial and operating policies of an enllty so as to obtain benefits from its activities. Inter-company Iransaclions, balances and unrealised gains on transactions be￿een the company and its subsidiary, which are related parties. are eliminated in full. Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the consolidated financial statements. Accounting policies of the subsidiary have been changed where necessary to ensure consistency with the policies adopted by the group. Page 26 WATTS GALLERY TRUST {A company limited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 Accounting policies (continued) 1.5 Going concern At the time of approving the financial statements, the trustees have a reasonable expectalion that the group has adequate resources to continue in operational existence for the foreseeable future. The trustees consider that there are no material uncertainties about the group's abi5ity to continue as a going concern nor any significant areas of uncertainly that affect the carrying value of assels held by the group. 1.6 Income and endowments All income is recognised once the Charity has entitlement to Ihe income, it is probable that the income will be received and the arnount of income receivable can be measured reliably. Donated goods are recognised as income, provided the above condilions are met, at Iheir estimated fair value. Voluntary donations are recognised in the perlod in which they are received. Income from trading activities is measured at the fair value of the consideralion received or re￿1Vable, excluding discounts, rebates, value added tax and other sales taxes. The point of recognition is on the dale that goods are provided to customers or the period over which seNices are provided. Investment income is recognised based on the date the group is enlilled to Ihe income. 1.7 Grants receivable A grant thal specifies performance conditions is recognised in income when the performance conditions are met. Where a granl does nol speGify Performan￿ conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability. 1.8 Donated services Donated services are included as Income at value lo the charily and as resources expended at the same value. Page 27 WATTS GALLERY TRUST (A company limited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 Accounting policies (continued) 1.9 Expenditure Expenditure is recognised once there is a legal or constructive obligation to Iransfer economic benefit to a third party, It is probable that a transfer of economic benefits will be requlred in settlement and the amount of Ihe obli9alion can be measured reliably. Expenditure is classified by activity. The costs of each activity are made up of the total of direct costs and shared cosls, including support costs involved in undertaking each activity. Direct costs attributable to a single activity are allocated direolly to that activity. Shared costs which contribute to more than one activity and support cosls which are not attributable to a single aclivity are apporlioned betwèen Ihose activities on a basis consistent with the use of resources. Central staff costs are allocated on the basis of time spent, and depreciation charges allocaled on the portion of the assel's use. Raising funds These are costs incurred in attracting voluntary income, the management of investments and those incurred in trading activities that raise funds. Charitable actlvities Charitable expenditure comprises those costs incurred by the charity in the delivery of ils activities and serviGes for its beneficiaries. It includes both costs that can be allocated directly to such aclivilies and those costs of an indirect nature necessary to support them. Support costs Support costs are allocated against the respective activity concerned. Costs are apportioned to various cost cenlres and funds based on management's best estimates of expenditure incurred for each. Expenditure on raislng funds includes all expenditure Incurred by the Group to ralse funds for ils charitable purposes and includes costs of all fundraising activities events and non-chari18ble trading. Expendilure on charitable activities is incurred on directly undertaking the activities which further the Group's objectives, as well as any associaled support costs. 1.10 Taxation The Charity Is considered lo pass the tests set oul in Paragraph 1 Schedule 6 of the Finance Act 2010 and Iherefore il meets the definltion of a oharilable company for UK corporation lax purposes. Accordingly, the Charity is polenllally exempt from taxation in respect of income or capltal gains received within categories covered by Chapter 3 Part 11 of the Corporation Tax Act 2010 or Section 256 of the Taxation of Chargeable Gains Act 1992, to the exlenl that such income or gains are applied exclusively to charitable purposes. 1.11 Tangible flxed assets and depreciatlon Tangible fixed assets costing £1,000 or more are capilalised and recognised when future economic benefits are probable and the cost or value of the asset can be measured reliably. Tangible fixed assets are initially recognised at cost. After recognition, under the cost model, tangible fixed assets are measured al cost less accumulated depreciation and any accumulated impairment losses. All costs incurred to bring a tangible fixed assel into its intended working condition should be included in the measurement of cost. Page 28 WAThS GALLERY TRUST {A company Ilmlted by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 Accounting pollcies (continued) 1.11 Tanglble flxed assets and depreciation (continued) Depreciation is charged so as to allocale the cost of tangible fixed assels less their residual value over their estimated usefLFI lives, provided on Ihe following bases.. Land and buildings Plant and equipment Motor vehicles Computers, fixtures and fittings 20/0 on cost 10°/o on cost 15/oon cosl 1.12 Heritage assets Watts Gallery Trust has a collection of herllage assets which is held In support of the Gallerls prlmary objective of increaslng knowledge, understanding and appreciallon of George Frederic Watts and Mary Seton Watts. A very significant proportion of these assels are inalienable. The collection comprises of over 250 paintings and over 800 drawings by G F Watts as well as over 500 pieces of sculpture, rnany by G F Watts and the remaining plaster casts (anonymous} from his studio. There are many items of Complon pottery including pieces by Mary Watts herself. In addition, there 18 a large archive including the Rob Dickins collection of photographs. A very significant proportion of the collection is available to view via a collections management dalabase. Additions to the collectlon are made by purchase or donation. Purchases are initially recorded at cost and donations at their estimated value. Heritage assets are periodically revalued in line with insurance valuations carried out by external valuers and and based on the view of the Trustees, taking into account industry and market conditions and changes. The Trustees do not believe that obtaining more annual valuations by external valuers would warrant the utilisation of charitable resources. The herilage assets are represented by a permanent endowment fund, which has been fully invested n the collection. The assets are deemed to have an indetermlnate life and a high resldual value and therefore tho Trustees do not consider it appropriate to charge depreciation. Although the non depreciation of this asset is not in accordance with the Companies Act 2006, Ihe Trustees believe Ihat Ihis departure is necessary in order to provide a true and fair view. 1.13 Investment properties Investment property is shown at Ihe mosl recent market valualion. Any aggregale surplus or deficit arising from changes in market value is transferred to Ihe statement of financial activities. Valuations are considered periodically by the Trustees. Page 29 WATTS GALLERY TRUST (A company Ilmited by guaranlee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 Accounting policies {contlnued 1.14 Flxed asset investments Fixed asset investments are a form of financial instrument and are initially recognised at their transaction cost and subsequently measured at fair value at the Balance Sheet dale, unless the value cannot be measured reliably in which case it is measured at cost less impairment. Investment gains and losses, whether realised or unrealised, are combined and presented as 'Gainsl{Losses) on inveslmenls, in the Consolidated Statement of Financial Aclivilies. Investments in subsidiaries are valued at cost lèss provision for impairment. 1.15 stocks stocks are valued at the lower of cost and net realisable value after making due allowance for obsolete and slow-moving stocks. Cost is determlned using the first-in, first-out (FIFO} basis of valuation. 1.16 short.term debtors and credltors Debtors and creditors with no stated interest rate and receivable or payable wilhin one year are recorded at the transaction price. Any losses arising from impairment are recognised in the st81ement of financial activities. 1.17 Cash at bank and in hand Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject lo an insignificant risk of change in value. 1.18 Llabilities and provisions Creditors and provisions are recognised where the charily has a present obligalion resulting from a past event that will probably result in a transfer of funds to a third party and the amount due lo settle the obligation can be measured or estimated reliably. Creditors and provislons are normally recognised at their settlement amount after allowing for any trade discounts due. 1.19 Flnan¢ial instruments Financial assels and financial liabilities are recognlsed when the charity becomes a party to the contractual provisions of the instrument. Financial liabilities and equity instruments are classified according lo the subslance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The Group only has financial assels and financial liabililies of a kind that qualify as basic financial instruments. Basic financial instruments are inltlally recognised at Iransactlon value and subsequently measured at their settlement value with the exception of bank loans which are subsequently measured at amortised cost using the effective interest method. Page 30 WATTS GALLERY TRUST (A company limited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 Accounting policies (contlnued) 1.20 Pensions Contributions payable by the Group to an individual's personal pension scheme are charged to the statement of financial activities in the perlod to which they relale. 1.21 Fund structure Unrestricted income funds are general funds that are available for use al the trustees, discretion in furtherance of the objectives of the Group. Restricted income funds are those donated for use In a parlicular area or for specific purposes, Ihe use of which is restricted to that area or purpose. Further explanation of the nature and purpose of each fund is included In Ihe notes to the financial statements. Page 31 WATTS GALLERY TRUST (A company limited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 Critical accounting estimates and areas of judgement In the application of the charitls accounting policies, the trustees are required to make judgements, esllmales and assumptions about Ihe carrying amount of assets and liabilllies that are not readily apparent from other sources. The estimates and associaled assumptions are based on historical experience and other factors that are consldered to be relevant. Actual results may differ from Ihese estimates. The estimates and underlwng 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 Ihe revision affects both current and future periods. Key sources of estimation uncertainly The key assumptions concerning the future, and olher key source5 of estimation uncertainly at the balance sheet date, that have a significant risk of causlng a material adjustment lo the carrying amounts of assets and liabilities wilhin the next financial period, are discussed below. Depreciation of tangible fixed assets Deprecialion is based upon the expected useful economic life of assets. This requires judgements to be made by the trustees and, being an estimate, the actual useful lives of these assets may vary be￿een asset category and based on the nature of the asset. Reviews of these policies are performed annually to ensure that the depreciation methods used are appropriale for each class of tangible fixed asset. Critical areas of judgement.. The followlng judgements (apart from those involving estimales) have had Ihe most significant effect on amounts recognised in the financial statements.. Investment property Valuation of investment property is on the basis of the periodic, independent valuations of an expert. Trustees review the need for revaluation annually and prepare their own internal valuations in befween independent valualions being received. Any gains or losses following eaGh independent valuation are charged through the Statement of Financial Activities. Heritage assets Valuation of heritage assets are on the basis of the periodic, independent valuatlons of an expert. Trustees review the need for revaluation on an annual basis. Any gains or losses following each independent valuation are charged through the Stalemenl of Financial Activities. Page 32 WAThS GALLERY TRUST {A ¢ompany Ilmlted by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 Income from donalions and legacles Unrestrlcted Restricted Endowment funds funds funds 2024 2024 2024 Total funds 2024 Total funds 2023 Donations Patrons and Friends General Donalions Gift aid reclaimed Arts Council - National Portfolio Organisations Arts Council - Trust Transition Fund 113,264 550,383 87,228 113,264 749,605 87,228 102,848 884, 755 85,245 79,222 120,000 104,540 59,409 59,409 Total 2024 750,875 138,631 120,000 1,009,506 1, 177,388 £750,875 (2023 - £977,388) of the above income was allributable lo unrestricted funds, £138,631 (2023 - £200,000} to restricted funds and £120,000 to endowment funds (2023 - £nil). Income from other trading activities Income from non charitable trading actlvltles Unrestricted funds 2024 Total funds 2024 Total funds 2023 A(Imissions Tours of Gallery Sales of goods and services Learning, events and other income 117,131 20,345 913,275 244,645 117,131 20,345 913,275 244,645 167,720 17,954 909,255 34,990 Total 2024 1,295,396 1,295,396 1,729,919 All of the above income for 2024 and 2023 was atlribulable to unreslrioted funds. Page 33 WATTS GALLERY TRUST (A company limited by guarantse) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 Investment income Unrestrlcted Endowment funds funds 2024 2024 Total funds 2024 Total funds 2023 Dividends receivable from listed investments Interesl receivable Income from rents 173,991 27,117 72,273 8,589 182,580 27,117 72,273 183,216 2, 682 69,190 Total 2024 273,381 8,589 281,970 255,088 £273,381 {2023 - £246,470) of the above income was attributable to unrestricted funds and £8,589 (2023 £8,618) to endowment funds. Expenditure on raising funds Fundraising trading expenses Unrestrlcted funds 2024 Total funds 2024 Total funds 2023 Costs of trading activities Fundraising and trading Wages and salaries Fundraising and trading - Employer Nl Fundraising and trading - Employer pensions 405,924 555,794 35,678 7,734 405,924 555,794 35,678 7,734 393, 128 536,310 38,447 8,215 Total 2024 1,005,130 1,005,130 976,100 £135,029 12023: £128,562) of the above costs were in respect of fundraising and £870,101 12023: £847,538) were in respect of trading. £933,445 (2023: £968,833) of the above expenditure was attributable to unrestricted funds and £71,685 (2023: £7,267) to restricted funds. Page 34 WATTS GALLERY TRUST (A company limlted by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 Analysis of expenditure by actlvltles Aotivities undertaken dlroctly 2024 Support costs 2024 Total funds 2024 Total funds 2023 Maintaining Watts Gallery and its collection Great Sludio Project Limnerslease Project Chapel Resloration Fund Physical Energy Fund other Restricted Funds 1,461,954 87,503 2,550 15,833 96,961 224,451 30,000 60,000 30,031 30,000 30,000 1,686,405 117,503 62,550 45,864 126,961 30,000 1,848,472 121,210 32, 705 44,954 126,961 Total 2024 1,664,801 404,482 2,069,283 2, 7 74,302 £1,554,443 (2023 - £1,583,077) of Ihe above expenditure was attributable to unrestricted funds and £514,840 {2023 - £591,225) to restricted funds. Page 35 WATTS GALLERY TRUST IA company Ilmlted by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 Analysis of support costs Support cosls allocated lo charitable activities Activity undertaken dlr8ctly Activity support costs Total 2024 Total 2023 Malntaining Watts Gallery and Its Gollection Great studio Project Limnerslease Project Chapel Restoration Fund Other Restricted Project Management Physical Energy Fund 178.193 224,451 30,000 60,000 30,031 30,000 402,644 30,000 60,000 30,031 30,000 2T2,310 20,000 30,000 20,000 20,000 30,000 392,310 178,193 404,482 582,675 Governance costs Unrestricted Restricted Total 2024 Total 2023 Audit of financial slalements Accountancy, consultancy and legal fees 15,000 163 193 178,193 15,000 163 193 178,193 14,250 130 758 145,008 Olher support costs Unrestricted Restricted Total 2024 Total 2023 Project management Office expenses Telephone Insurances Travel and subsistence 180,031 52,470 180,031 123,748 16,164 71,206 120,000 39,526 18,203 64,273 71,278 16,164 71,070 8,748 167,258 136 4,587 237,224 404,482 247,302 The total value of support cosls in the filed 2023 financlal statements lotalled £294,705. It was identified that Ihese should have in fact been of a value totalling £392,310. This has been amended in the note above for Ihe comparative period. Page 36 WATTS GALLERY TRUST (A company limited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 Net movement in funds Net movement in funds is staled after charging.. 2024 2025 Audit fees Depreciation of fixed assets Operating lease charges Decrease in valuation of heritage assels (Increase)Idecrease in revaluation of listed investments {Increase)Idecrease in revalualion of Investment property 15.000 297,656 13,939 13,169,573 (568,279) (102,046) 14,250 272,126 14,591 246,913 10. Staff costs Group 2024 Group 2023 Company 2024 Company 2023 Wages and salaries Social security cosls Conlribulion to defined contrlbution pension schemes 1,440,680 112,988 1,346,490 121,061 1,006,955 88,758 926, 169 93, 829 34,862 32,829 28,640 25,972 1,588,530 1,500,380 1,124,353 1,045,970 The 2023 filed financial statements included a group staff costs expense of £1,620,380 and a company staff costs expense of £1,165,970. Upon review, these amounts were shown to be overstated. Therefore, Ihe amounls above in respect of the comparative 2023 period have been updated to £1,500,380 and £1,045,970 respectively. Page 37 WAThS GALLERY TRUST (A company Ilmlted by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 10. Staff costs (continued) The average number of persons employed by the Group during the year was as follows.. Group 2024 No. Group 2023 No. Tea shop Shop Commercial gallery Management Curatorial Learning Marketing and fundraising Finance, estates and administralion 29 23 13 11 13 16 12 11 83 81 The staff full time equivalents were 43 this year (2023.. 51). The number of employees whose employee benefits exceeded £60,000 was: Group 2024 Group 2023 In the band £60,001- £70,000 In the band £100,001- £110,000 The total employee benefits of the key management personnel of the group were £458,908 (2023 £427,550). The 2023 filed financial statements disclosed key management personnel costs of £210,264. The comparative costs in these financial statements have been updated lo reflect a more accurate representation of the key management personnel costs of the comparative year. The 2023 filed financial statemenls also disclosed no employees as having received benefits be￿een £60,001 and £70,000., this has been updated lo reflect one employee in Ihis band in the note above. Page 38 WATTS GALLERY TRUST {A company limited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 11. Trustees. remuneratlon and expenses During the year one of the trustees, A J Burtenshaw, received total remuneration of £102,838 (2023 £100,822) and employers pension contributions of £7,562 (2023.. £6.790) for the performance of his duties as chief executive of the charity. The payment of remuneration to the trustee who performs the chlef executlve role is permltted by a provision in the charily governing document, the memorandum and articles of association dated 28 September 2023. Remuneration is paid at market rale and is determined by assessment of performance and achievement of delivery targets which reviewed by the chair and deputy chair of the board of trustees and approved by the finance commlttee. Additionally, during the year expenses were reimbursed lo one Iruslee (2023 - one trustee) as follows in performance of his dulles as chief executive.. 2024 2023 Travel and subsistence Entertainment Sundry 1,648 846 6, 735 114 120 464 2,958 6,969 12. Taxation The company is a registered charity and is therefore exempt from taxallon. Tax rellef recognised in the year relates to claims submitted and received prior to the year end for Museums and Gallerles Exhibition lax relief. 13. Tanglble fixed assets Group Land and bulldlngs Plant & equlpment Total Cost or valuatlon At 1 April 2023 Additions 8,884,624 13,600 {1,650,000) 2,791,211 41,322 11,675,835 54,922 {1,650,000) Transfers to investmenl property At 31 March 2024 7,248,224 2,832,533 10,080,757 Page 39 WATTS GALLERY TRUST IA company Ilmited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 13. Tangible fixed assets {continued) Group (continued) Land and buildings Plant & equipment Total Depreciation At 1 April 2023 Charge for the year 1,436,471 139,070 2,448,912 158,586 3,885,383 297,656 At 31 March 2024 1,575,541 2,607,498 4,183,039 Net book value At 31 March 2024 5,672,683 225,035 5,897,718 Al 31 March 2023 7, 448, 153 342,299 7, 790,452 Page 40 WAThS GALLERY TRUST IA ¢ompany limited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 13. Tangible fixed assets (continued) Company Land and buildings Plant and equipment Total Cost or valuation At 1 April 2023 Addilions Transfers to investment properly 8,884,624 13,600 {1,650,000) 2,595,290 11,479,914 41,321 54,921 {1,650,0001 Al 31 March 2024 7,248,224 2,636,611 9,884,835 Depreclatlon At 1 April 2023 Charge for Ihe year 1,436,471 139,070 2,317,049 144,322 3,753,520 283,392 Al 31 March 2024 1,575,541 2,461,371 4,036,912 Net book value At 31 March 2024 5,672,683 175,240 5,847,923 At 31 March 2023 7,448,153 278,241 7, 726,394 A transfer of £1,650,000 has been reflected in relation to a property included within freehold property which the Trustees deem to be investment property as of 31 March 2024. Page 41 WAThS GALLERY TRUST (A company Ilmlted by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 14. Heritage assets Group Assets recognised at valuation Heritage assets 2024 Carrying value at 1 April 2023 Additions Revaluations 22,765,584 120,000 {13,169,573) 9,715,991 The addition in the year relates to a gift of an asset via the Governments, AC￿pIanCe in Lieu scheme, run by Arts Council England. There were no additions lo heritage assets since the year ended 31 March 2019 other than the addition above. Revaluations The valuation recognised in the prior year financial statements was based on a valuatlon prepared by Christie's in respect of the year ended 31 March 2012. Christie's have prepared a partial valuation for the year ended 31 March 2024 on a sample of the heritage assets the Charity holds. The financial statements have reflected a decrease in valuation based on the results of this valuation and on the basis that the valuation of the sample of assets selected is consistent across the whole collection of heritage assels. The Truslees consider this valuation lo show a true and fair view of the valuation of heritage assets. The Trustees will assess the valuation on an annual basis to consider whether subsequent valuation adjustments are required. Page 42 WATTS GALLERY TRUST IA company limited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 14. Heritage assets (contlnuedl Assets recognised at valuation Heritage assets 2024 Carrying value at 1 April 2023 Additions Revaluations 22,765,564 120,000 (13,169,573) 9,715,991 Page 43 WATTS GALLERY TRUST (A company limited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 15. Fixed asset investments Listed Investments Group Cost or valuation At 1 April 2023 Revaluations 6,278,075 568,279 At 31 March 2024 6,846,354 Net book value At 31 March 2024 6,846,354 At 31 MarGh 2023 6,278,075 Investments in subsidiary Llsted companles Investments Total Charity Cost or valuation At 1 April 2023 Revaluations 6,278,075 568,279 6,278,076 568,279 At 31 March 2024 6,846,354 6,846,355 Net book value At 31 March 2024 6,846,354 6,846,355 At 31 March 2023 6,278,075 6,278,076 Principal subsidiaries Watts Gallery Trading Limited is a subsidiary undertaking of Ihe Charity. Page 44 wA￿s GALLERY TRUST IA company Ilmlted by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 15. Flxed asset investments (continued) Details of undertakings Watts Gallery Trust owns 1000/0 of the shares & voting rights in Watts Gallery Trading Limited, a company incorporated in England and Wales (company registered number.. 07184982}. The prin¢lpal actlvity of Watts Gallery Trading Limited is that of a tea & glft shop. The registered office address of Watts Gallery Trading Limited 15 Down Lane, Complon, Guildford, Surrey GU3 1 DQ. The profit for the period of Walls Gallery Trading Llmited was £43,174 (2023: £61,717) and Ihe aggregate amount of capital and reserves at the end of the period was £1 12023.. £1). The profit is stated after making a distribution of profits to Watts Gallery Trust of £43,174 (2023 - £61,717). 16. Investment property Group Investment property Valuation At 1 April 2023 Revaluation Transfer frorn Tangible fixed assets 763,840 102,046 1,650,000 At 31 March 2024 2,515,886 Charlty Investment property Valuation At 1 April 2023 Revaluation Transfer from Tangible fixed assets 763,840 102,046 1,650,000 At 31 March 2024 2,515,886 The valuation recognised in the prior year financial statements was based on a valuation prepared by Batcheller Monkhouse in respect of the year ended 31 March 2011. The Trustees have prepared an internal valuation for the year ended 31 March 2024 which takes into account market conditions and estimated movements in similar property pri￿$ since the date of Ihe previous valuation. Page 45 wA￿s GALLERY TRUST (A company Ilmited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 16. Investment property (continued) The financial slatements have reflected an increase in valuation based on the findings of the Trustees. and the Trustees conslder this valualion lo show a true and fair view of the valuation of the property. The Trustees will assess the valualion on an annual basls to consider whether subsequent valuation adjustments are required. A transfer of £1,650,000 has been reflected in relation to a property included within freehold property which the Trustees deem lo be investment property as of 31 March 2024. 17. Debtors Group 2024 Group 2023 Company 2024 Company 2023 Due within one year Trade debtors Amounts owed by group undertakings Other debtors Prepaymenls and accrued income 11,302 8.593 8,448 71,650 208,123 882 6,833 138,OT3 112,251 3,000 215,693 882 120,210 3,000 227,877 131,803 289,103 260, 157 18. Creditors: Amounts falling due within one year Group 2024 Group 2023 Company 2024 Company 2023 Bank loans Other loans Trade creditors 20,000 136,800 32,289 55,222 20,565 64,439 20, 000 136,800 958 156,388 12,573 12,671 55, 632 123,182 12,573 11,515 31,972 Other taxation and social security Other creditors 53,560 19,027 34,431 Accruals and deferred income 329,315 25T,264 244,776 179,242 Included in other loans Is £136,800 (2023 £136,800) secured on the Charity bank account. The repayment date is 1 February 2025. No interest is charged on the loan unless the Charily fails to make any payment due under the agreement, in which case interest is charged at 7/0 from the date of non- payment to the dale of repayment. Page 46 WATTS GALLERY TRUST (A company Ilmlted by guaranteol NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 19. Creditors: Amounts falling due after more than one year Group 2024 Group 2023 Company 2024 Company 2023 Bank loans Other loans 33,333 53,333 136,800 136,800 33,333 190, 133 136,800 Included in bank loans is a £53,333 (2023 - £73,333) Coronavirus Business Interruption Loan with a nominal interest rate of 2.21°/o per annum, of which £20,000 (2023.. £20,000) is repayable within one year and £33,333 {2023-. £53,333) is repayable in more Ihan one year. The loan term is 5 years to November 2026. 20. Charity status The Charity is a company limited by guarantee and consequently does not have share capital. Page 47 WAThS GALLERY TRUST (A company Iimlted by guarante8) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 21. Statement of funds Statement of funds - current year Balance at 31 March 2024 Balance at 1 Aprll 2023 Gainsl {Losses) Income Expendlture Unrestrlcted funds Watts Gallery 1,477,071 2,319,652 12,558,573) {47,954) 1,190,196 Endowment funds Mrs M S Watts Will Trusl Watts Gallery Permanent Endowmenl Collection Catalysl Endowment G F Walls Book Fund Watts Gallery Expendable Endowment 411,206 37,393 448,599 3,192,346 22,790,776 1,065,511 3,937 295,448 3,487,794 {13,169,5731 9,741,203 89,106 1,163,206 3,937 120,000 8,589 718,965 61,829 780,794 28,182,7.41 128,589 112,685,7971 15,625,533 Restricted funds Gallery Resloration Fund Graham Robertson Trusl Fund 3,693,980 75,642 54,866 2,841,789 1,899,313 59,803 588,477 (96,961) 3,597,019 75,642 68,969 2,808,789 1,986,763 29,803 504,179 other 138,631 (124,528) (117,503) (62,550) {30,000) {84,298) Greal Studio Projecl Limnerslease Chapel Restoration Fund Physical Energy Fund 84,503 150,000 9,213,870 138,631 1515,840) 234,503 9,071,164 Total of funds 38,873,682 2,586,872 (3,074,413) (12,499,248) 25,886,893 Page 48 WATTS GALLERY TRUST (A company limited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 21. Statement of funds (Contlnuedl Statement of funds - prior year Balance at 31 March 2023 Balanc8 at l Apnl 2022 Transfers in/oul Galns/ (Losses) Income Expenditure Unrestricted funds Watts Gallery 1,6B2,471 2,353, 777 (2,679,177) 120,000 1,477,071 Endowment funds Mrs M S Walts Will Trust Watts Gallery Permanent Endowment 427,453 (16,247) 411,206 3,320,716 22,790,776 (128,370) 3,192,346 22, 790, 776 Colleclion Catalyst Endowment G F Watts Book Fund Watts Gallery Expendable Endowment 1,095,609 8,618 (38, 716) 1,065,511 3,937 3,937 745,829 (26,864) 718,965 28,384,320 8,618 (210,t97) 28.182,741 Restricted funds Gallery Resloration Fund 3,790,941 (96,961) 3, 693,980 Graham Robertson Trust Fund Other Greal Studio Project Limnerslease 75, 642 120,260 75,642 54,866 200, 000 (245,394) (20,000) 2,999, 715 1,932,018 (101,210) (2, 705) (20,000) (30,000) (36,716) 2,847,789 1,899,313 Chapel Restoration Fund 79,803 (20,000) 59,803 Page 49 WATTS GALLERY TRUST {A company limited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 21. Statement of funds (continued) Statement of funds- prior year (¢ontinuedl Balance at 31 March 2023 Balance af l April 2022 Transfers in/oul Gainsl (Losses) Income Expenditure Physical Energy Fund 643,432 (24,955) (30,000) 588,477 9,641,811 200,000 (471,225) (120,000) (36,716) 9,213,870 Total of funds 39, 708,602 2, 562,395 (3,150,402) (246,913) 38.873, 682 Page 50 WATTS GALLERY TRUST (A company limited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 22. Funds Restricted Funds Gallery Restoration fund - This fund represents the investment in Ihe restored Watts Gallery building following the Hope project. The ongoing non-cash cost is the depreciation of Ihe restored assets. Graham Robertson Trust Fund - This fund is invested in the Pottery Building. Other- These funds are for the support of the learning programmes al Watts Gallery- Artists. Village and other further development projects. These funds all consist of cash. Great studio Project and Limnerslease - These funds were established to acquire and preserve the Watts, home and studios and consist of the aoouisilion costs and investment made in Ihose properties, in addilion lo an element of cash. Chapel Restoration Fund - This fund has been established for Ihe preservation and restoration of the Watts Chapel and Cemetery. This fund consisls of cash. Physical Energy Fund This fund has been established to Site a posthumous casl of Watts, iconic sculplure Physical Energy in Compton including appropriate landscaping and interpretation. This fund currently consists of cash. Endowment funds The Collection This fund represents the value of the Watts Gallery collection of heritage assets. This is a permanent endowment fund and represents paintings and other collection items. Mrs M S Watts Will Trust Fund - This fund was set up through the will of Mary Watts and is now part of the permanent endowment which provides ongoing financial support for Ihe Watts GalleryTrust. The fund is represented by inveslments and cash and only Ihe income generated by the assets can be spent. The capital in this fund can never be spent. Watts Gallery Permanent Endowmenl Fund - This is a permanent endowment fund to generate income to help provide financial security for the Galle￿S future. The fund is represented by investments and cash and only the income generated by the assets can be spent. The capital in this fund can never be spent. Catalyst Endowmént - Thls is a permanent endowment fund which was established with the generosity of the Heritage Lottery Fund and a number of private donors. This fund generates income to help provide financial security for the Gallery's future. The fund is represented by investments and cash and only the income generated by Ihe assets can be spent. The capital in this fund can never be spent. Watts Gallery Expendable Endowmenl Fund This is an expendable endowmenl fund consisting of quoted investments and cash. The income from the fund helps to provide .financial security for the gallerls future. G F Watts Book Fund This expendable fund was established to support the Watts Gallery - Artists, Village archive and consists of quoted investments and cash. Both the capital and inGome can be spent. Page 51 WATTS GALLERY TRUST (A company limited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 23. Summary of funds Summary of funds- current year Balance at 31 March 2024 Balance at 1 April 2023 Gainsl (Losses) Income Expendlture General funds Endowmenl funds Restricted funds 1,477,071 28,182,741 9,213,870 2,319,652 128,589 138,631 (2,558,573) 147,954) 1,190,196 (12,685,797) 15,625,533 234,503 9,071,164 (515,840) 38,873,682 2,586,872 {3,074,413) 112,499,248) 25,886,893 Summary of funds . prioryear Balance al 31 March 2023 Balance al 1 April 2022 T￿nsfer8 in/oul Gain (Losses) Income Expenditure General funds Endowment funds Restricted funds 1,682,471 2,353, 777 (2, 679,177) 120,000 1,477,071 28,384,320 9,641,811 8,618 200,000 (210, 197) 28,182,741 (36, 716) 9,213,870 (471,225) (120, 000) 39, 708,602 2,562,395 (3,150,402) (246, 913) 38,873,682 Page 52 WATTS GALLERY TRUST {A company Ilmlted by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 24. Analysis of net assets between funds Analysis of net assets between funds - current period Unrestricted Restricted Endowment funds funds funds 2024 2024 2024 Total funds 2024 Tangible fixed assets Fixed assel investments Investment property Heritage assets Current assets 467,185 5,430,533 1,018,054 1,875,642 5,897,718 6,846,354 2,515,886 9,715,991 1,273,592 {329,315) (33,333) 5,828,300 640,244 9,715,991 34,885 46,357 355,319 883,388 (239,219) (136,453) {33,333) Creditors due wilhin one year Creditors due in more than one year Total 1,190,196 9,071,164 15,625,533 25,886,893 Analysis of net assets between funds - prlor perlod Unrestrioted funds 2023 Restricted Endowmenl funds funds 2023 2023 Total fvnds 2023 Tangible fixed assets Fixed asset investments 531,634 7.258,818 933,549 688,198 7, 790,452 6,278,074 763,840 22, T65,564 22, 765,564 72, 652 1,723,149 (257,264) (190, 133) 5,344,525 Investment property Heritage assets Current assets Creditors due within one year Creditors due in more than one year 75,642 1, 132,891 517,606 (209, 763) (47,501) (53,333) (136,800) Total 1,477,071 9,213,870 28, 182, 741 38,873,682 Page 53 WATTS GALLERY TRUST (A Company limited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 25. Reconclllatlon of net movement In funds to net cash flow from operating activities Group 2024 Group 2023 Net expenditure for the period {as per Statement of Financial Activities) (12,986,789) (834,920) Adjustments for: Depreciation charges (Gains)Ilosses on investments Dividends, interests and rents from investments Decreasellincreasel in stocks Decreasellincreasel in debtors Increasel{decrease) in creditors Decrease in valuation of heritage assets Non-cash donations received 297,656 (670,325) (281,970) 9,174 {96,255) (64,750) 13,169,573 (120,000) 272, t26 246,913 (255,088) (8, 936) 102,875 35, 198 Net cash used in operating activities (743,686) (441,832) 26. Analysis of cash and cash equivalents Group 2024 Gmup 2023 Cash in hand 950,390 1,486,847 Total cash and cash equivalents 950,390 1,486,847 Page 54 WATTS GALLERY TRUST {A company Ilmlted by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 27. Analysis of changes in net debt At 1 April 2023 Cash flows At 31 March 2024 Cash and bank - unrestricted Cash and bank - restricted Debt due within 1 year Debt due after 1 year 284,033 1,202,814 (20,000) (190,133) {198,448) 85,585 (338,009) 864,805 {136,800) (156,800) 156,800 (33,333) 1,276,714 (516,457) 760,257 28. Contlngent Ilabllltles The Trustees of the National Herilage Memorial Fund hold a charge, by way of legal mortgage over The Great studio, Limnerslease, as a conlinuing security for all monies, obligations and liabilities under the Grant Contracl. The Council of Ihe Borough of Guildford hold a second charge, by way of legal mortgage, over The Great Studio, Limnerslease as a continuing secLtrily for non-repayable loans recognised as donations in 2017. Surrey County Council holds a charge, by way of a legal mortgage, over the property known as Limnerslease. The charge acts as continuing security for a grant repayable under certain circumstances and was agreed as a Gondition of the donation to the Charity in 2017. 29. Operating lease commitments Al 31 March 2024 the Group and the Charity had commitments to make future minimum lease payments under non-cancellable operating leases as follows: Group 2024 Group 2023 Company 2024 Company 2023 Not later than 1 year Later than 1 year and not later than 5 years 15,276 11,185 14,591 26,461 15,276 11,185 14,591 26,461 26,461 41,052 26,461 41,052 Page 55 WATTS GALLERY TRUST IA company limited by guarantee> NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 30. Related party transactions During the year the group entered into the following relaled party transactions- Trustees and organisations in which trustees have a controlling interest Ourlng Ihe year, the Group received donations from truslees and organisatlons in which trustees have a controlling inleresl, without condilions attached, totalling £7,515 (2023 - £260,000). Al the balance sheet date the amount due lolfrom Trustees and organisations In which trustees have a controlling interest was £Nil {2023 - £Nill. Page 56