The trustees present their report and the consolidated financial statements of the charitable company and its subsidiary for the year ended 31 March 2023.
The company information forms part of this report. The financial statements comply with the charity's Memorandum and Articles of Association, the Companies Act 2006, 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)".
Principal Activity
Birnam Arts is an Arts and Community Centre supported by a Beatrix Potter exhibition, shop and a café.
The charitable purposes of Birnam Arts are:
To provide community and recreational facilities with the objective of improving the life of the members of the community in The Parish of Dunkeld and the public generally;
To encourage and promote the arts, science, heritage and culture; and
To provide training and education in the arts, science, heritage, culture and for social and personal development.
The primary objectives are to provide:
Facilities for community activities including drama, crafts and arts workshops, dance, music, recreational activities and meetings;
Facilities for art exhibitions;
A wide ranging arts programme;
A Beatrix Potter exhibition area incorporating displays and children's activities ;
A café providing meals and light refreshments;
A shop selling Beatrix Potter giftware and craft goods; and
A wide range of volunteering opportunities.
As we went into 2022/23 financial year there was a feeling of optimism helped by the previous 2 years capital investment in place from the SSE Griffin & Calliachar Community Fund and the funding for further capital investment and recruitment made available from the Adapt and Thrive Fund in 2021-22. However, as 2022/23 progressed the optimism became tempered by the fact that former key components of the business were still only slowly and fitfully building up from the post Covid effects as the year progressed.
Daily footfall into the building was still about 10-20% below 2019 which was having a serious impact on turnover for both the shop and café. Small daytime meetings with catering, which were important in the past for spreading the costs of café staff had barely returned and larger conferences and events whilst returning slowly tended to have many fewer delegates than formerly. Some of the local community organisations that regularly used Birnam Arts as their venue before Covid had ceased to exist or had gone permanently to a zoom format and others were still struggling to put on full programmes of events.
The net effect of reduced demand through the summer was compounded by the effects of inflation in relation to supplies and services. A new electricity contract had to be negotiated in August which increased from £15,000 to £45,000 for the year ahead from September. This had a significant impact on overheads because of the difficulty of recovering these increases through price rises without damaging customer demand. Fortunately our gas contract had a further two years to run.
There were also considerable pressures on catering staff costs particularly for chefs which were proving difficult to recruit and retain in a very competitive market. By September it had become apparent that the summer had not seen any significant resurgence in turnover for the café whilst costs had increased substantially and a decision was made not to replace two catering staff including a chef who had left in August. Further plans were made to reduce staff and opening times going into the winter after the October holiday period. This provided an opportunity to review the catering operation over the winter in time for next year’s spring/summer season.
One of our key arts programming staff also left in July and recruitment was delayed to enable us to obtain a clearer vision of our operating overheads and key staffing requirements from the autumn of 2022 onward. A new Arts Programmer was eventually appointed in January 2023. The staffing situation became more complicated when in early February 2023 our General Manager for 6 years left to take up another post and was followed by our Finance Officer who left at the end of April 2023. Following the resignation of the General Manager the Board took immediate steps to launch a recruitment process with the intention of initially hiring an Interim Manager to cover operational requirements whilst allowing several months to make a more in depth assessment of ongoing requirements and potential long term candidates. This process proved successful and a new permanent General Manager was appointed in July 2023. The Board also decided to review its financial management with the possibility of outsourcing financial support and in June/July 2023 brought in Johnston Carmichael to cover payroll and to manage Sage input to bring the accounts system up to date. The Board then contracted Johnson Carmichael to migrate the Sage accounts system to Xero and to provide a seconded accounting service for an interim period prior to a review in mid-2024.
During the year the organisation benefited from a number of grant allocations including £15,000 from Perth & Kinross Council in April and in December the council awarded £12,500 from its Cost of Living Fund for Birnam Arts to participate in the winter “Warm Spaces” initiative. Creative Scotland approved a grant application for £48,500 to support the arts programme to run for a year from September 2022. Birnam Arts also benefited from the post Covid “Cultural Organisational Recovery Fund” administered by Creative Scotland for the Scottish Government applied for in March 2022 with the first payment made in April 2022.
Despite the financial and staffing pressures facing Birnam Arts throughout the 2022/23 period the arts programme continued to rebuild and we saw the return of the Scottish Community Drama Association’s One Act Festival, the Neil Gow Festival and the Birnam Book Festival and we were able to host an artist in residence event and a number of successful art exhibitions as well as theatre and music events.
Birnam Arts benefits substantially from volunteer support from the local community particularly in support of the shop and Beatrix Potter Exhibition and this makes a vitally important contribution to the financial viability of Birnam Arts.
In relation to governance the Board welcomed new Board members in Pat Fairweather and Andrew Cave whilst sadly losing our Secretary Margaret Anderson who died in August 2022. The Board also began the formal process of recruiting a new Chair after the current Chair informed the Board that he intended to step down from the role by the AGM in early 2024.
The results for the year are set out in the consolidated statement of financial activities on page 13.
Reserves policy
The trustees have established a policy to maintain unrestricted funds, which are the free reserves of the group, at a level which equates to approximately 3 months unrestricted expenditure. At present the free reserves are £155,995 (2022: £302,158) which is below the target level of £166,221. Total funds amount to £1,532,129 (2022: £1,716,131) of which £1,376,134 (2022: £1,413,973) are restricted.
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.
Current strategy
Key ongoing strategies derived from the business plan for 2020 -2023 are to:
Provide a versatile, safe, welcoming and inclusive community facility;
Extend the scope of arts and heritage programming;
Promote participation in artistic and cultural activities with as wide a reach as possible (geographical and social);
To provide an environment that encourages audiences and artists to experiment and try out new ideas;
To promote the intrinsic value of artistic and cultural activities to the social and economic wellbeing of the community ;
To develop good working relationships with other cultural and community organisations across Highland Perthshire;
To provide opportunities for self-development and fulfilment for employees and volunteers in a supportive learning environment;
Widen the funding base to ensure financial stability and provide opportunities for expansion of key activities;
Improve the financial stability of Birnam Arts by ensuring the operational efficiency of the organisation and through continuously improving the profitability of Birnam I Limited;
To actively seek new Board members with the appropriate mix of skills and knowledge to ensure future governance of the organisation.
Future Strategy
Birnam Arts has recently completed its new Business Plan for the 3 year period 2023/26. The key priorities identified for the period 2023-26 are:
Improving Profitability of BI Ltd. The effects of Covid seriously destabilised the operations undertaken by BI Ltd, namely the Gift Shop, Café and commercial letting and catering functions. Disruptions to the business during Covid and the challenges in the following 2 years from increased overheads and staffing costs allied to reduced demand have led to several years where BI Ltd has failed to produce a profit to provide for gift aid to the charity Birnam Arts. The Gift Shop has recovered profitability through 2022-23 and continues to do so in 2023-24. The problem lies principally in the catering operation where demand in 2022-23 failed to build up as expected and the service had to be scaled back at the end of summer 2022. There are signs in 2023 that commercial letting and catering are returning with more conferences and private events being booked but the organisation is committed to a review of the café/catering function through the winter of 2023/24 to determine the best balance of service provision to ensure a return to profitability.
Achieving financial stability for Birnam Arts. Birnam Arts has historically raised about 95% of its revenue funding in house through the commercial activities of Birnam I Ltd and revenues from the arts programme. Recent years have demonstrated the risks to the arts and community programme of being over dependent on the performance of BI Ltd. To achieve longer term financial stability for this programme it is essential to put more resources into developing and implementing a strategy for seeking increased revenue funding support from appropriate bodies and trusts, sponsorship and effective in-house fundraising schemes.
Developing a Marketing Strategy. Marketing has been a consistent weakness of the organisation which needs to be addressed if we are to increase the number of visitors to our venue, attendances at artistic events and participation in our activities. We need to accept that an effective marketing strategy needs to be adequately resourced and funded as part of our core activities and income generation.
Development of Premises and Facilities. If Birnam Arts is going to be fit for purpose in the coming 20 years then the centre will need to develop a long term capital funding strategy to address the need for effective building maintenance and renewal of the fabric and equipment. There is now a pressing need to re-evaluate the environmental standards currently met by the building in relation to new regulatory requirements and to meet efficiency levels that can help offset increasing operational overheads. To this end it is essential that in the coming year measures are taken to contract a suitable services engineer to carry out a feasibility study to identify those developments that would be appropriate to take forward for a capital funding programme.
Staffing Structure. Since 2019/20 Birnam Arts has seen considerable disruption and changes to its staff compliment with challenges to recruiting and retaining staff both during and following the Covid pandemic. With a new General Manager in place in early 2023/24 we need to assess the support structure required to deliver an effective organisation which also provides a proper basis for developing and training staff to meet the needs of the organisation.
Board Development. In recent years a number of Board members have stood down and membership has gone from 12 in 2018/19 to 8 at the beginning of 2023/24. The Board has also been notified of the intended retiral of the Chair and one other long term member in the coming months. The Board is currently going through a process to appoint a replacement Chair and recruit some new Board members. Whilst the Articles of Association allows the Board to function with a minimum of 3 members in practice it requires a wider pool of community and professional members to match the range of activities and management functions that the organisation covers in order to provide adequate guidance and support for the operational management and staff.
The company is a charitable company limited by guarantee. Permission has been granted by the Secretary of State for Trade and Industry for the word 'Limited' to be omitted.
The trustees, who are also the directors for the purpose of company law, who served during the year and up to the date of signature of the financial statements were:
The number of trustees shall not be less than three and not more than fifteen. The board of trustees may at any time elect new or additional trustees as required.
None of the trustees have any beneficial interest in the company. All of the trustees are members of the company and guarantee to contribute £1 in the event of a winding up.
The trustees hold regular meetings between each annual general meeting, set the strategy and policy of Birnam Arts, generally control and supervise the activities of the charitable company, and in particular are responsible for monitoring its financial position. The day to day operations are managed by the full time Manager, which is a salaried position and who reports to the Committee of Management.
Subsidiary
Birnam Arts is the parent of a small group.
The principal activity of the subsidiary is the retail sale of merchandise, refreshments and corporate events.
Risk Management
The trustees have a risk management strategy which comprises:
an annual review of the principal risks and uncertainties that the charity and its subsidiary Birnam I Limited face;
the establishment of policies, systems and procedures to mitigate those risks identified in the annual review; and
the implementation of procedures designed to minimise or manage any potential impact on the charity should those risks materialise.
This work has identified that financial sustainability is the major financial risk for both the charity and its subsidiary. A key element in the management of financial risk is a regular review of available liquid funds to settle debts as they fall due, regular liaison with the bank, and active management of trade debtors and creditors balances to ensure sufficient working capital by the charity and its subsidiary company.
Attention has also been focused on non-financial risk arising from fire, health and safety of artist and audience, management of performing rights and food hygiene. These risks are managed by ensuring accreditation is up to date, having robust policies and procedures in place, and regular awareness training for staff working in these operational areas.
Trustee induction and training
The trustees have considered a policy on trustee induction and training prior to new trustees being approached. This includes awareness of a trustee's responsibilities, the governing document, administrative procedures, the history and philosophical approach of the charity. A new trustee receives copies of the previous period's financial statements, minutes of the trustee's meetings and a copy of the OSCR leaflet 'Guidance for Charity Trustees - acting with care and diligence', if appropriate. Training is given to existing trustees as and when required.
Key management
The trustees comprise the board of trustees, who are the charity's directors and the senior management team comprise the key management personnel of the charity in charge of directing, controlling, running and operating the charity on a day to day basis. All trustees give their time freely and no trustee received remuneration or expenses in the year.
The pay of the senior management team is reviewed annually and normally increased in accordance with average earnings.
In accordance with the company's articles, a resolution proposing that MMG Archbold Limited be reappointed as auditor of the company will be put at a General Meeting.
The trustees' report was approved by the Board of Trustees.
The trustees, who are also the directors of Birnam Arts 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;
- 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 are responsible for the maintenance and integrity of the charity and financial information included on the charity's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Opinion
We have audited the financial statements of Birnam Arts (the ‘charity’) for the year ended 31 March 2023 which comprise the statement of financial activities, the balance sheet, the statement of cash flows and the notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the charity in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the trustees' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Our responsibilities and the responsibilities of the trustees with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The trustees are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the trustees' Report which includes the Directors' Report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
the Trustees' Report which includes the Directors' Report has been prepared in accordance with the applicable legal requirements.
We have nothing to report in respect of the following matters in relation to which the Charities Accounts (Scotland) Regulations 2006 (as amended) require us to report to you if, in our opinion:
the information given in the financial statements is inconsistent in any material respect with the trustees' report; or
proper accounting records have not been kept; or
the financial statements are not in agreement with the accounting records; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the statement of trustees' responsibilities, the trustees, who are also the directors of the charity for the purpose of company law, are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the trustees are responsible for assessing the charity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so.
We have been appointed as auditor under section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005 and report in accordance with the Act and relevant regulations made or having effect thereunder.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
- the nature of the regulated sector, control environment and understanding of the entity including, but not restricted to, the understanding that the trustees are not remunerated, and the prevalence of fraud in the sector;
- results of our enquiries of trustees and management about their own identification and assessment of the risks of irregularities;
- any matters we identified having obtained and reviewed the Charity’s documentation of their policies and procedures relating to:
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
the matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities that may exist within the organisation for fraud and identified the greatest potential for irregularities to occur is in relation to revenue recognition. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Charity operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the Charity’s own Memorandum and Articles of Association, Companies Act 2006 and various other charity specific legislation, including The Charities and Trustee Investment (Scotland) Act 2005.
Our procedures to respond to risks identified included the following:
- reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
- enquiring of trustees and management concerning actual and potential litigation and claims;
- performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
- reading minutes available of meetings of those charged with governance;
- tested a sample of income for understatement and consideration given to revenue recognition accounting policies.
- addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or noncompliance with laws and regulations throughout the audit.
Due to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing fraud or non-compliance with laws and regulations and cannot be expected to detect all fraud and non-compliance with laws and regulations.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditors responsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the charity’s trustees, as a body, in accordance with regulation 10 of the Charities Accounts (Scotland) Regulations 2006. Our audit work has been undertaken so that we might state to the charity's trustees those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charity and the charity’s trustees as a body, for our audit work, for this report, or for the opinions we have formed.
MMG Archbold Limited is eligible for appointment as auditor of the charity by virtue of its eligibility for appointment as auditor of a company under section 1212 of the Companies Act 2006.
Income from grants and donations
Income from charitable activities
Income earned from other trading activities
Investment income
Rent received
Activities for raising funds:
Commercial trading operations
Charitable activities:
Exhibition centre, arts programme and community workshops
The statement of financial activities includes all gains and losses recognised in the year.
All income and expenditure derives from continuing activities.
The prior year Consolidated Statement of Financial Activities is provided on the next page.
Income from grants and donations
Income from charitable activities
Income earned from other trading activities
Investment income
Rent received
Activities for raising funds:
Commercial trading operations
Charitable activities:
Exhibition centre, arts programme and community workshops
The statement of financial activities includes all gains and losses recognised in the year.
All income and expenditure derives from continuing activities.
The trustees have prepared group accounts in accordance with section 398 of the Companies Act 2006 and section 138 of the Charities Act 2001. These accounts are prepared in accordance with the special provisions of Part 15 of the Companies Act relating to small companies and constitute the annual accounts required by the Companies Act 2006 and are for circulation to members of the company.
The following accounting policies have been applied in dealing with items which are considered material in relation to the charitable company and Group financial statements.
Group financial statements
These financial statements consolidate the results of the charitable company and its wholly owned subsidiary, Birnam I Limited, on a line by line basis. A separate Statement of Financial Activities and Income and Expenditure Account for the charity has not been presented because the charity has taken advantage of the exemption afforded by section 408 of the Companies Act 2006.
Birnam Arts is a private company limited by guarantee incorporated in Scotland. The registered office is Station Road, Birnam, DUNKELD, PH8 0DS.
Status of company and liability of members
On the winding up of the charitable company every member has undertaken to contribute to the assets of the charitable company for the payment of the debts and liabilities and of the cost of winding up the charitable company, such amount as may be required not exceeding one pound. If the winding up occurs within one year of a member ceasing to be a member then the above applies for debts and liabilities of the charitable company contracted for before they cease to be a member.
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 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 or grantors 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.
Income is recognised when the charity is legally entitled to it after any performance conditions have been met, the amounts can be measured reliably, and it is probable that income will be received. The following policies are applied to particular categories of income:
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.
Legacies are recognised on receipt or otherwise if the charity has been notified of an impending distribution, the amount is known, and receipt is expected. If the amount is not known, the legacy is treated as a contingent asset.
The value of services provided by volunteers is not incorporated into these financial statements. Further details of the contributions made by volunteers can be found in the trustees' report.
Income from government and other grants whether 'capital' grants or 'revenue' grants is recognised when the charity has entitlement to the funds, any performance conditions attached to the grants have been met, it is probable that the income will be received and the amount can be measured reliably.
Grants and donations received towards capital expenditure are credited to the deferred capital grant account, thereafter being released to the statement of financial activities at the same rate as the depreciation of the assets to which the grants relate.
Income from admission fees is included in turnover in the period in which the relevant admission takes place.
Income from commercial trading activities is included in the period in which the trading subsidiary is entitled to receipt.
Interest is included when receivable by the group.
Expenditure is recognised once there is a legal or constructive obligation to transfer economic benefit to a third party, 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 classified by activity. The costs of each activity are made up of the total of direct costs and shared costs, including support costs involved in undertaking each activity. Direct costs attributable to a single activity are allocated directly to that activity. Shared costs which contribute to more than one activity and support costs which are not attributable to a single activity are apportioned between those activities on a basis consistent with the use of resources. Central staff costs are allocated on the basis of time spent, and depreciation charges are allocated on the portion of the asset’s use.
Expenditure is included in the financial statements on an accruals basis and is recognised when there is a legal obligation to make a payment to a third party. Irrecoverable VAT is charged against the category of resources expended for which it was incurred as follows:
Costs of raising funds are those incurred in attracting voluntary income, and those incurred in trading activities that raise funds.
Charitable activities include expenditure associated with both the direct costs and support costs relating to these activities.
Governance costs include those incurred in the governance of the charity and its assets and are primarily associated with constitutional and statutory requirements.
Support costs include central functions and have been allocated on a basis consistent with the use of resources.
Certain expenditure is directly attributable to specific activities and has been included in those cost categories. Certain other costs, which are attributable to more than one activity, are appointed across cost categories on the basis of an estimate of time spent on these activities within the charity's whole operations including support costs as follows:
Conference room hire - 23%
Exhibition centre, arts programme and community workshop - 72%
Governance costs - 5%
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:
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.
Expenditure of less than £500 is not capitalised.
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, comprising goods for resale and consumable raw materials, are stated at the lower of cost and estimated selling price less costs to complete and sell.
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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
The consolidated statement of financial activities includes the results of the charity's wholly owned subsidiary, Birnam I Limited, which operates the café, shop and catering operations.
The summary financial performance of the charity alone is:
Income from grants and donations
Unrestricted government grant income includes £Nil (2022: £16,571) of income received by the charity from the government under the Coronavirus Job Retention Scheme (CJRS) for the furlough of staff and £15,000 (2022: £15,000) of funding received from Perth and Kinross Council towards the business running costs associated with the delivery of the Charity's Arts and Community activities.
Income from charitable activities
Exhibition Centre, arts programme and Community workshops
Other income
Income earned from other trading activities
The wholly owned trading subsidiary Birnam I Limited is incorporated in the United Kingdom (company number SC216180) and pays all of its profits to the charity under the gift aid scheme. Birnam I Limited operates the shop, café, catering operations and all commercial trading operations carried on at Birnam Arts, the charitable company.
Investment income
All of the group's investment income of £305 (2022: £16) arises from money held in interest bearing deposit accounts.
Rent received
Rental income relates to income received from Perth & Kinross Council for the rental of spaces used to accommodate the library, community learning office and for participation in the public toilet Comfort Scheme.
Activities for raising funds:
Commercial trading operations
Charitable activities:
Exhibition centre, arts programme and community workshops
Conference room hire
Exhibition centre, arts programme & community workshops
Governance costs
Conference room hire
Exhibition centre, arts programme & community workshops
Governance costs
Administration
Tutors
Arts programme costs
Advertising
Maintenance costs
Utilities, rates & insurance
Charitable activities:
Exhibition centre, arts programme and community workshops
The basis of allocation is direct (2022: direct).
The average monthly number of employees during the year was:
No employee had employee benefits in excess of £60,000 per annum.
The key management personnel of the parent charity, Birnam Arts, comprise the trustees, the General Manager, the Arts Development Manager and the Finance Manager. The total employee benefits of the key management personnel of the Trust were £xxxxx (2022:£60,885).
The key management personnel of the group, comprise those of the Trust and the key management personnel of its wholly owned subsidiary Birnam I Limited, the Shop Manager. The total employee benefits of the key management personnel for the group was £xxxxx (2022:£71,735).
The charity is exempt from tax on income and gains falling within section 505 of the Taxes Act 1988 or section 252 of the Taxation of chargeable Gains Act 1992 to the extent that these are applied to its charitable objects.
The charity holds 1 share of £1 in its wholly owned trading subsidiary company Birnam I Limited, incorporated in Scotland, company number SC216180. It is the only share allotted, called up and fully paid. The activities and results of this company are summarised in note 5.
The charity operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the charity in an independently administered fund.
The charge to profit or loss in respect of defined contribution schemes was £2,360 (2022 - £3,564).
Contributions payable to the fund at the year end amounted to £Nil (2022:£1,399).
The unrestricted funds of the charity comprise the unexpended balances of donations and grants which are not subject to specific conditions by donors and grantors as to how they may be used. These include designated funds which have been set aside out of unrestricted funds by the trustees for specific purposes.
The restricted funds of the charity comprise the unexpended balances of donations and grants held on trust subject to specific conditions by donors as to how they may be used.
Capital grants are grants received by Birnam Arts to fund the building of the property and the exhibits housed therein. Incoming resources within capital grants comprises of £28,389 from Creative Scotland's Adapt & Thrive Programme and a further donation of £6,000 towards the lighting project (2021: £162,022 of funding from SSE Griffin & Calliachar Community Fund and £12,684 from Creative Scotland Cinema Fund).
In 2019/2020 Misses Barrie Charitable Trust made a donation to fund music and movement workshops at local primary schools.
CAF Foundation funding is to fund the costs of updating the Beatrix Potter exhibition.
Creative Scotland Sustaining Creative funding is to be used to fund the cost of preparing a streamlined Arts Programme.
The Gannochy Trust funding is to support the salary costs of two part-time Arts Programmers.
The CheckIn Works grant is for the purchase of personal protective equipment (PPE) due to COVID-19.
The Arts Society - Dementia Pilot is funding towards the pilot of the Arts for Dementia Sufferers programme.
At the reporting end date the charity had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
In 2023 the following transactions took place between the Trust and its wholly owned subsidiary Birnam I Limited:
The transfer under gift aid of the trading profits of Birnam I Limited to the Trust of £Nil (2022: £Nil).