The trustees present their annual report and financial statements for the year ended 31 March 2023.
The financial statements have been prepared in accordance with the accounting policies set out in note 1 to the financial statements and comply with the charity's Memorandum and Articles of Association, the Charities and Trustee Investment (Scotland) Act 2005, the Charities Accounts (Scotland) Regulations 2006 (as amended) and "Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2019)".
The charity's objects are to preserve, conserve and develop Knockando Woolmill, including its historic textile plant and machinery, and its immediate surroundings and watercourses as a historic rural working woolmill, to preserve the traditional rural craft skills used in a rural woolmill by providing training in those skills and by other appropriate means and specifically through:
Promoting the heritage and historic significance of the Woolmill;
Educating the general public about the heritage and historical significance of the Woolmill;
Renovating and improving the existing mill buildings, textile plant and machinery, land and watercourses so that they may continue to function as a working rural woolmill and historical landmark; and
The wholesale and retail sale of products manufactured at the Woolmill and items incorporating products manufactured at the Woolmill.
In April 2022 the trustees, with financial and practical assistance from Historic Environment Scotland ("HES") commissioned consultants to conduct a business model review of the Trust and its wholly owned trading subsidiary Knockando Woolmill Company Limited (the "Company"). Those consultants were briefed among other things to identify potential sustainable operating models for the Trust and the Company and to undertake an an options appraisal for those models.
Th consultants' report was finalised on 7 September 2022 and in it the consultants concluded that the Company was not viable and should be closed down. They suggested several options for the Woolmill itself, all involving the Trust to a greater or lesser degree. As a result of the report the Directors of the Company resolved that the Company should cease trading on 30 September 2022, the end of the 2022 season, and that its employees should be transferred to the Trust.
During the financial year the Woolmill continued to operate as an attraction to visitors who were able to learn about the heritage and historic significance of the Woolmill.
The Visitor Centre and coffee shop opened to the public for the summer season from 10 May 2022 until the end of September that year and proved popular with visitors from near and far.
Throughout the financial year the Trust was supported by grant funding from the Organisational Support Fund of HES for which the Trustees wish to record their sincere thanks.
In addition, the work of the Trust during the financial year was supported by a substantial grant from the Garfield Weston Foundation. The trustees are extremely grateful to the Foundation for its generosity and its recognition of the importance of the Woolmill.
The Trust's principal sources of income during the financial year were grants from Historic Environment Scotland (HES) (£148,004), and the Garfield Weston Foundation (£15,000). This means the total net figure for grants received in the financial year amounted to £163,004.
In addition the Trust received donations and legacies during the financial year of £4,752.
The Company was unable to pay any rent to the Trust during the financial year up to the time it ceased trading as described above.
The Trustees are most grateful to all of its donors and volunteers without whose generous assistance the Trust would not be able to continue with all of its charitable activities.
During the year, the Trust operated a net loss of £291,946 including depreciation of £73,814 on assets owned by the Trust.
The Trust's debtors total £1,940 (FY2021/2022: £313,548) and as detailed in note 15, comprise £Nil (FY2021/2022:£296,255) owed to the Trust by the Company and other debtors of £1,940 (FY2021/2022: £17,293).
On 29 August 2023 the Trustees resolved to write off a loan of £321,813 owed by the Company to the Trust on the grounds that the Company had ceased trading as described above, was insolvent and so the loan was irrecoverable.
In addition to any amounts owed by Knockando Woolmill Company Limited, the charity also held funds on behalf of the Company. At the balance sheet date the amounts owed by the charity to the Company were transferred to funds owed to the charity. (2021/2022: £25,420).
It is the policy of the charity that cash from donations which have been made for a specific purpose such as the purchase of an identified piece of plant and machinery should be retained as a cash reserve until a suitable purchase is identified and made.
The Trust's policy on other reserves is not to make a general reserve from the income of any financial year and only to make a specific reserve from income against an identified liability (a "rainy day") which the trustees consider is reasonably likely to occur. In the Trustees' judgement no such specific reserve was required in respect of its financial year 2022/2023.
The trustees have assessed the major risks to which the charity is exposed, and are satisfied that systems are in place to mitigate exposure to the major risks.
The trustees have assessed the major risks to which the charity is exposed, and are satisfied that systems are in place to mitigate exposure to the major risks.
During the financial year the trustees worked closely with Historic Environment Scotland (HES) to identify a sustainable operating model for the Trust to achieve its charitable objects in relation to the Woolmill. This largely involved :
The development of an operational plan including a projected cash flow for the financial year to 31 March 2024.
Identifying sources of funding the new operational plan in addition to any funding to be considered by Historic Environment Scotland (HES), principally by achieving a blended income model which would include a number of components such as earned income through retail, tours, events, grants through the public sector and the lottery, trusts and foundations, donations and legacies.
The resulting Knockando Woolmill Trust operational plan for 2023/24 set out a refreshed vision for the Trust which looked to focus primarily on the retention and sharing of traditional skills within the historic setting of the Woolmill.
The trustees presented the final operational plan and supporting financial projections to Historic Environment Scotland (HES) in March 2023 and are pleased to report that the new approach was endorsed by Historic Environment Scotland (HES) which offered the Trust a substantial resilience grant from its Organisational Support Fund to support certain aspects of the Trust's work in the year to 31 March 2024, in partnership with other funders.
The Trust intends to achieve its more sustainable business model by developing such partnerships and adopting a blended income model which balances the opportunities to generate earned income through retail and visitors, alongside a continued focus on fundraising.
The financial year 2023/2024 will be a year of transition as skills are developed and enhanced to reflect the new model across the organisation, including the board of trustees, as well as ensuring that the heritage assets are conserved.
The continuation of the charity as a going concern depends on continued support from Historic Environment Scotland (HES), and donors.
The charity is a company limited by guarantee as defined by the Companies Act 2006 and is controlled by its governing document, namely its Memorandum and Articles of Association.
The trustees, who are also the directors for the purpose of company law, and who served during the year and up to the date of signature of the financial statements were:
The trustees have no formal procedure for identifying and recruiting additional and replacement trustees but rely on suitable candidates being identified and approached by existing trustees from time to time.
The trustees meet regularly as a board of directors of the Trust, normally once a quarter when the business of the Trust is considered and discussed. At these meetings the trustees receive operational reports from the Woolmill’s operations director and other staff.
The trustees, who are also the directors of Knockando Woolmill Trust for the purpose of company law, are responsible for preparing the Trustees' Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
Company Law requires the trustees to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the charity and of the incoming resources and application of resources, including the income and expenditure, of the charitable company for that year.
In preparing these financial statements, the trustees are required to:
- select suitable accounting policies and then apply them consistently;
- observe the methods and principles in the Charities SORP;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charity will continue in operation.
The trustees are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the charity and enable them to ensure that the financial statements comply with the Charities and Trustee Investment (Scotland) Act 2005, the Charities Accounts (Scotland) Regulations 2006 (as amended) and the Companies Act 2006. They are also responsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The trustees' report was approved by the Board of Trustees.
I report on the financial statements of the charity for the year ended 31 March 2023, which are set out on pages 6 to 17.
The charity’s trustees, who are also the directors of Knockando Woolmill Trust for the purposes of company law, are responsible for the preparation of the financial statements in accordance with the terms of the Charities and Trustee Investments (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006. The trustees consider that the audit requirement of Regulation 10(1)(a) to (c) of the 2006 Accounts Regulations does not apply. It is my responsibility to examine the financial statements as required under section 44(1)(c) of the Act and to state whether particular matters have come to my attention.
My examination is carried out in accordance with Regulation 11 of the 2006 Accounts Regulations. An examination includes a review of the accounting records kept by the charity and a comparison of the financial statements presented with those records. It also includes consideration of any unusual items or disclosures in the financial statements, and seeks explanations from the trustees concerning any such matters. The procedures undertaken do not provide all the evidence that would be required in an audit and consequently I do not express an audit opinion on the view given by the financial statements.
In connection with my examination, no matter has come to my attention:
to keep accounting records in accordance with section 44(1) (a) of the 2005 Act and Regulation 4 of the 2006 Accounts Regulations; and
to prepare financial statements which accord with the accounting records and comply with Regulation 8 of the 2006 Accounts Regulations;
to which, in my opinion, attention should be drawn in order to enable a proper understanding of the financial statements to be reached.
Charitable activity income
Charitable activity costs
The statement of financial activities includes all gains and losses recognised in the year.
All income and expenditure derive from continuing activities.
Knockando Woolmill Trust is a private company limited by guarantee incorporated in Scotland. The registered office is The Woolmills, Knockando, Aberlour, Moray, AB38 7RP.
The financial statements have been prepared in accordance with the charity's Memorandum and Articles of Association, the Charities and Trustee Investment (Scotland) Act 2005, the Charities Accounts (Scotland) Regulations 2006 (as amended) and "Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2019)". The charity is a Public Benefit Entity as defined by FRS 102.
The charity has taken advantage of the provisions in the SORP for charities applying FRS 102 Update Bulletin 1 not to prepare a Statement of Cash Flows.
The financial statements are prepared in sterling, which is the functional currency of the charity. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
At the time of approving the financial statements, the trustees have a reasonable expectation that the charity has adequate resources to continue in operational existence for the foreseeable future. Thus the trustees continue to adopt the going concern basis of accounting in preparing the financial statements.
Unrestricted funds are available for use at the discretion of the trustees in furtherance of their charitable objectives.
Restricted funds are subject to specific conditions by donors as to how they may be used. The purposes and uses of the restricted funds are set out in the notes to the financial statements.
Cash donations are recognised on receipt. Other donations are recognised once the charity has been notified of the donation, unless performance conditions require deferral of the amount. Income tax recoverable in relation to donations received under Gift Aid or deeds of covenant is recognised at the time of the donation.
Liabilities are recognised as expenditure as soon as there is a legal or constructive obligation committing the charity to that expenditure, it is probable that a transfer of economic benefits will be required in settlement and the amount of the obligation can be measured reliably.
Expenditure is accounted for on an accruals basis and has been classified under headings that aggregate all cost related to the category. Where costs cannot be directly attributed to particular headings they have been allocated to activities on a basis consistent with the use of resources.
Grants offered subject to conditions which have not yet been met at the year end date are noted as a commitment but not accrued as expenditure.
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold land is not depreciated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the statement of financial activities.
Fixed asset investments are initially measured at transaction price excluding transaction costs, and are subsequently measured at fair value at each reporting date. Changes in fair value are recognised in net income/(expenditure) for the year. Transaction costs are expensed as incurred.
A subsidiary is an entity controlled by the charity. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting end date, the charity reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
The charity has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the charity's balance sheet when the charity becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Basic financial liabilities, including creditors and bank loans are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of operations from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the charity’s contractual obligations expire or are discharged or cancelled.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the charity is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Consolidated financial statements
The financial statements present information about the charity as an individual undertaking and not about its group as the charity and its subsidiary undertaking comprise a small sized group.
Charitable activity income
Woolmill development and conservation
Employment allowance
Charitable activity costs
Woolmill development
Woolmill development
Marketing costs
Repairs and maintenance
Heat and light
Telephone
Computer and software charges
CMT expenses
Rent and rates
Consultancy
Bank charges
Bad debts
Sundry expenses
Woolmill development
Woolmill development
Knockando Woolmill Trust aims to preserve, conserve and develop Knockando Woolmill, including its historic textile plant and machinery, and its immediate surroundings as a historic rural working woolmill.
Accountancy and independent examination
During the year there were no donations received from trustees.(2021 - Nil).
The average monthly number of employees during the year was:
The charity is exempt from tax on income and gains falling within section 505 of the Taxes Act 1988 or section 252 of the Taxationof Chargeable Gains Act 1992 to the extent that these are applied to its charitable objects.
At 30 September 2022 Knockando Woolmill Company ceased trading, therefore the investment in this company has been written down to Nil.
Knockando Woolmill Company Limited, the trading subsidiary of Knockando Woolmill Trust had obtained a loan from Social Investment Scotland of £47,264. As part of the arrangement Knockando Woolmill Trust was required to provide security by way of a guarantee to Social Investment Scotland for any amounts unpaid by Knockando Woolmill Company Limited. Social Investment Scotland has written-off this loan and released the Trust from the guarantee.
During the year the charity entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
This loan is unsecured, interest-free and has no fixed terms of repayment.
The following amounts were outstanding at the reporting end date:
Knockando Woolmill Company ceased trading at 30/9/22 and loans owed by and loans to the Knockando Woolmill Trust were amalgamated and the net amount, £321,813, owed by the Company to the charity was written off.
These financial statements are separate charity financial statements for Knockando Woolmill Trust.
Details of the charity's subsidiaries at 31 March 2023 are as follows:
Knockando Woolmill Company Limited, subsidiary of Knockando Woolmill Trust Limited, ceased trading on 30 September 2022 and any loans outstanding from the Company to the Trust were transferred to the Trust and written off.