Annual Report and Accounts 2015

Report of the Council of Management 2015

The Council of Management presents its Report, which forms the Trustees’ Annual Report required by charity law and the Directors’ Report required by company law, and the Financial Statements for the year ended 31 December 2015.   Up to date news about the Society’s activities can be found in our journal Paddle Wheels and from our web site at www.paddlesteamers.org.

The Society is a company limited by guarantee (having no share capital), registered in England and Wales No. 2167853, and a charity registered in England and Wales (No. 298328) and in Scotland (SC037603).    The Society is governed by its Articles of Association and these set out the Society’s objects which may be summarised as to preserve in operation paddle steamers, to educate the public in their historical significance and to preserve relics and other materials associated with paddle steamers.  The Society’s principal activities are to assist in the preservation in sailing condition of the Paddle Steamers Waverley and Kingswear Castle and to maintain a collection of historical material relating to paddle steamers.

The Society provides public benefit by making grants to charities to enable them to maintain their vessels so the public may sail on them; by maintaining a collection of artefacts accessible for research purposes; by holding public meetings relating to paddle steamers; and by publishing current and historical information relating to paddle steamers.   The trustees have paid due regard to Charity Commission guidance on public benefit in deciding what activities the Society should undertake.

The Society operates both at UK and local levels, through five area Branches.   The Council of Management controls the Society and met four times in 2015 in London.   The five Branch Committees are given delegated authority over 20% of the subscription income attributed to their areas and promote the Society and organise activities locally.

The five Branches organise public meetings in winter and assist in promoting sailings and carry on fund raising in summer.  Members also participated in working parties on P.S. Waverley at Glasgow.

Branch	Venues of public meetings
Bristol Channel	Bristol and Cardiff
London and Home Counties	Central London and Southend
North of England and North Wales	York and Liverpool
Scottish	Glasgow
Wessex and Dart	Bournemouth, Dartmouth, East Cowes and Southampton

The Council of Management are the Society’s charity trustees.  There may be up to 21 members.   The methods of appointment are as follows:

Method of Appointment	Number
Members of the Society elected by postal ballot of the membership	9
One member of the Society from each Branch of the Society nominated by the member’s Branch Committee	5
The Chairman of and one other representative appointed by Waverley Steam Navigation Co Limited	2
The Chairman of and one other representative appointed by Paddle Steamer Kingswear Castle Trust Limited	2
One representative appointed by Loch Lomond Steamship Company	1
Members co-opted by Council until next AGM	2
	21

P.S. Waverley is owned on behalf of the Society by Waverley Steam Navigation Co. Ltd. (WSN) (itself a registered Scottish charity – SC005832)) and operated by Waverley Excursions Ltd., a wholly owned subsidiary of WSN.   In 2015 the Society continued its policy of providing financial support to WSN to help keep Waverley in sailing condition.   A loan of £75,000 made to WSN towards the cost of her 2014 refit was converted to a grant on 31 January 2015, funded from the 2014 accounts. To mark the fortieth anniversary of Waverley’s first sailing in preservation the Society not only made a grant of £40,000 to WSN but also launched a special appeal. The grant was to pay for three items of work in 2015: renewal of the turning gear, painting the funnels and deck repairs.  The appeal objective was to raise funds to replace Waverley’s life expired masts and for further deck repairs, both in 2016. The appeal was closed at the year-end having raised £35,638.  A grant of this sum was agreed on 12 March 2016.   In addition, the net proceeds of the Grand Draw held in 2015 of £10,423 were passed to WSN as a grant.  Finally, in December 2015 it was agreed that a bequest of £12,539 for Waverley should be passed to WSN and this was completed in 2016.

P.S. Kingswear Castle is owned on behalf of the Society by Paddle Steamer Kingswear Castle Trust Ltd. (PSKCT), a charity registered in England and Wales as no. 299931.  Since 2013 she has been chartered on a long term basis to Dart Pleasure Craft Ltd (DPC) who are operating her on Dartmouth harbour cruises and between Dartmouth and Totnes.  DPC is a wholly owned subsidiary of Dart Valley Railway PLC and the Society has a small shareholding in the parent company.  It should be noted that although DPC, as charterer, is responsible for the bulk of maintenance, PSKCT retains the responsibility as owner to fund major renewals, such as, of the hull, boiler and main engine. For this reason the Society previously granted PSKCT £333,709 to form a long term maintenance reserve.   During 2015 PSKCT devised plans to move the main engine from P.S. Compton Castle (acquired in 2014) from the Isle of Wight to Kingswear.   These plans came to fruition in March 2016.  Paddle Steamer Kingswear Castle Trust (Trading) Ltd., which operated the steamer on the River Medway up to 2012, was dissolved on 26 January 2016.

The Society also supports financially the preservation of P.S. Maid of the Loch, which is owned by Loch Lomond Steamship Company (LLSC), which is an independent Scottish charity (SC024062).  LLSC is one of the bodies to which the Society is allied, having aims related to the preservation of large pleasure steamers, and with which close links are maintained.  In 2010 the Society pledged to contribute £50,000 to facilitate LLSC’s planned major appeal to return P.S. Maid of the Loch to service.   In 2015 £7,735 was advanced to fund consultants working on the ship’s certification requirements. At the year-end £10,165 remained available to support this activity.  On 18 August 2015 LLSC were awarded a First Stage Heritage Lottery Fund grant of £230,400 to enable complete plans and specifications for the rebuilding project to be prepared. Successful completion of this stage would pave the way for a full grant of £3.8m but this would need £1.7m of matched funding. To assist the progress of this project, it was agreed on 12 March 2016 to advance the remaining amount of £10,165 to LLSC.

The Society has a specialised Archive Collection which is currently valued at £58,296. The Collection has been accumulated over the 56 years of the Society’s existence and ranges from ship models to ship’s furniture, sailing handbills, postcards, pictures/slides and company records. To fulfil its educational role the Society is working to make its collection more accessible for research with a number of objects on loan for display purposes to appropriate museums. It is currently carrying out an audit and has rented additional premises to accommodate more sensitive items and provide better working conditions for its volunteers. A sub-committee of three Council of Management trustees has responsibility for managing the collection with one trustee dealing with the day to day running. Long and short term plans have been created and a five year budget has been approved.  The Streatfield Bequest has been assigned to partially fund this work and has been re-designated the Archive Development Fund.

New accounting standards apply to the accounts for the first time in 2015.   In addition, there are two material changes to accounting policies.  Consequently all comparative 2014 figures have been restated on a like-for-like basis.  Full details are given in the Notes to the Accounts. The Society Accounts for 2015 show a net income of £36,271 (2014: net expenditure of £40,256). At 31 December 2015 the unrestricted funds comprised the General Fund standing at £94,086 (2014: £96,724) and the Archive Development Fund at £39,014 (2014: £38,240) while the restricted funds of the Restoration and Preservation Fund (devoted to Paddle Steamers Waverley and Kingswear Castle) stood at £248,277 (2014: £205,998), of which £40,011 (2014: £15,186) was specifically for Waverley and £7,433 (2014: £6,514) specifically for Kingswear Castle.   The Society is fortunate to benefit from sometimes very substantial bequests from its members and supporters and in 2015 a total of £26,343 (2014: £8,223) was received.

The Society has no paid employees so its achievements reflect members’ voluntary efforts.    These cover a wide range of skills and are essential to the continued successful operation of the Society.  The Council of Management acknowledges gratefully all contributions great and small.

The Society’s membership stood at 2,635 at 31 December 2015 (2014: 2,769) made up as shown:

	Bristol Channel	London and Home Counties	North of England and North Wales	Scottish	Wessex and Dart	Total
Full	97	144	52	206	57	556
Senior	247	326	70	319	166	1,128
Associate	83	136	29	142	60	450
Junior	1	2	–	7	2	12
Life	74	163	30	116	70	453
Honorary	6	7	1	17	5	36
Total	508	778	182	807	360	2,635

There was a net reduction of 134 members during 2015, a fall of 4.8%.  The figure was distorted by the offer of free junior membership in 2014, as few of these members renewed in 2015.  However, the underlying reduction is still 3.8%.

The Society has three reasons to hold reserves:

1. To maintain the operation of the Society, including annual and life subscriptions paid in advance.   The Council of Management has set this sum at £50,000.
2. To continue the development of its Archive Collection.  The Council of Management has designated the Archive Development Fund of £39,014 for this activity.
3. To provide for the refit or repair of P.S. Waverley should WSN not have funds to do so.   The Council of Management believes this reserve should be rebuilt to a level approaching £500,000, representing a sum equivalent to an annual refit of Waverley.  At 31 December 2016 this reserve stood at £274,764..

The Society has not adopted a formal fundraising policy.  However, its fundraising efforts, which are all volunteer-led, are largely directed towards its members.   The only material exceptions have been the sale of lottery tickets to passengers on board Waverley and the promotion of special cruises on Waverley.   New members are recruited by the use of leaflets and through the Society’s web site.

The Council of Management (the Society’s Trustees and Directors) approved this report on 12 March 2016.  They received no remuneration for their services and are listed below:     Elected Members (Up to nine)

Myra Allen

John Anderson (Secretary)

Richard Clammer (3)

Iain Dewar (Chairman)

David Haddleton

Jon Jolliffe (Appointed 11.11.15) (Membership Secretary)

Martin Longhurst (Treasurer)

Douglas McGowan (3)

Paul Semple (1)

Terry Sylvester (Resigned 15.3.15)

Branch Representatives (Up to five)

Richard Engert (Wessex and Dart)

David Green (London and Home Counties)

Angela Johnson (North of England and North Wales)

Noel Kemp (Bristol Channel)

Gordon Wilson (Scottish)

Representatives of Waverley S. N. Co. Ltd. (May appoint two trustees)

Lawrie Sinclair (1 & 2) (Appointed 1.10.14)

Representatives of P.S. Kingswear Castle Trust Ltd. (May appoint two trustees)

Jeremy Gold (3 & 4) (Vice-chairman)

John Megoran (1, 2, 3 & 4)

Representative of Loch Lomond Steamship Co. (May appoint one trustee)

John Beveridge (5)

Members co-opted by Council until next AGM (Up to two)

Nick James

Directorships of related party companies: (1) Waverley Steam Navigation Co Ltd (2) Waverley Excursions Ltd (3) PS Kingswear Castle Trust Ltd (4) PS Kingswear Castle Trust (Trading) Ltd (5) Loch Lomond Steamship Company

JOHN ANDERSON Secretary and Trustee 12 March 2016Registered Office: 17 Stockfield Close, Hazlemere, HIGH WYCOMBE, HP15 7LA

Statement of Financial Activities for the Year ended 31 December 2015

Balance Sheet at 31 December 2015

Statement of Cash Flows

Notes to the Accounts

1. Format of Accounts and Accounting Policies:
   1. Basis of accounts: These Accounts have been prepared in line with Financial Reporting Standard 102 (FRS102) and the Charities’ Statement of Recommended Practice (SORP2015) but do not fully comply with them (see note 1b). They were prepared in accordance with applicable company and charity law. The accounts are prepared on an income and expenditure basis. The society is a public benefit entity.   Despite the departures set out in Note 1b, the Council of Management has concluded that the accounts present a true and fair view of the Society’s financial position.
   2. Departures from FRS102 & SORP 2015:
      1. Group accounts: As permitted by Section 405 of the Companies Act 2006, the Council of Management has not prepared group accounts on the grounds that as the subsidiaries are constituted as charities there are severe long-term restrictions over the assets of the subsidiaries and that disproportionate expense would be incurred in the preparation of group accounts. See note 4 for details of subsidiary undertakings’ results.  The Standards require Group Accounts.
      2. Legacies: These are recognised at the time of receipt and no allowance is made for the undistributed part of any legacies due. The Standards require inclusion in Income upon notification.
      3. Loans to Waverley Steam Navigation Co Limited (WSN): These are shown at their full value within Total Assets although a full doubtful debt provision has been made and is included in Liabilities, reflecting the fair value of the loans. The Standards require loans to be shown at their fair value which would mean neither balance would be disclosed.
   3. Changes in Accounting Policies:
      1. Adoption of FRS102 and SORP2015: These standards require the use of standard formats for the Statement of Financial Affairs and the Balance Sheet.  In addition, they require the publication of a Cash Flow Statement.   They also require the prior year’s comparative figures to be restated to the new basis and to reflect the changes in accounting policies described in this note.
      2. Life Membership Equalisation Account: Previous practice has been to credit life membership subscriptions in full in the year of receipt. A Life Membership Equalisation Account has now been created.   Subscriptions are credited to this account upon receipt and are then recognised as Income in equal instalments over 20 years.  The balance has been established by examining records from 1995.
      3. Annual Subscriptions: Previous practice was to credit annual subscriptions in full in the year of receipt.  As the subscription year runs from August to July, this income has now been apportioned between the appropriate financial years.
      4. Streatfield Bequest designated Archive Development Fund: The Council of Management has re‑designated this fund following its decision to devote the resource to the development of the conservation of and access to the Archive Collection.
   4. Membership subscriptions: The policy is described in Notes 1.c.ii & iii.
   5. Donated Heritage Assets for Archive Collection: These are recognised at their estimated market value.
   6. Stocks: Stocks of unsold goods, if any, are valued at the lower of cost or realisable value.
   7. Investments: Programme related investments are included at their nominal value or historical cost less impairment. Investments held to generate income or for their investment potential are valued at fair value.
   8. Gains/losses on investments: Gains and losses are recognised in the year they arise. Unrealised gains or losses are added to or deducted from the Fund to which the investment relates and the total is shown in the Revaluation Reserve.
   9. Grants: Liabilities arising from grant commitments made by the Society are recognised by creating a provision pending the fulfilment of conditions at which point the obligation becomes binding.
2. Heritage Assets – Archive Collection: The Society owns a collection of relics relating to paddle steamers. It was valued at market value at 31 December 2001 and is now depreciated over 20 years on a straight line basis.   Movements in 2015 may be summarised as follows:

	Donated	Purchased
	At valuation	At cost	Total
	£	£	£
Carrying amount at 1 January 2015	55,121	7,921	63,042
Additions	600	–	600
Disposals	–	–	–
Depreciation/impairment	(4,744)	(602)	(5,346)
Revaluation	–	–	–
Carrying amount at 31 December 2015	50,977	7,319	58,296

Accounting standards also require the publication of a five year summary.

Summary analysis of heritage asset transactions
	2015	2014	2013	2012	2011
	£	£	£	£	£
Purchases	–	554	432	420	1,400
Donations	600	350	11,458	6,457	5,507
Total additions	600	904	11,890	6,877	6,907
Charge for depreciation
Donated items	4,744	4,713	4,696	4,123	3,800
Purchased items	602	603	576	554	533
Total charge for depreciation	5,346	5,316	5,272	4,677	4,333

There were no disposals during the five year period.

3. Programme related investments are as follows:

	2015	2014
	£	£
Shares in Paddle Steamer Kingswear Castle Trust Limited (PSKCT)	55	55
Shares in Waverley Steam Navigation Company Limited (WSN)	51	51
Loans to WSN	117,201	192,201
Shares in Dart Valley Railway plc (DVR)	1,078	1,078
	118,385	193,385

4. Programme related investments – Subsidiary undertakings:

1. The holding of shares in PSKCT, the owner of P.S. Kingswear Castle, represents 83% of shares issued. The shares are shown in the accounts at their nominal value as shareholders in the Trust cannot benefit from their holdings, as it is constituted as a charity (registered in England and Wales as no. 299931).   At 30 April 2015 the aggregate amount of its capital and reserves was £891,282 (2014 – £897,785) and its excess of expenditure over income for the year then ended was £9,139 (2014 – income over expenditure of £330,681 including £333,709 transferred from PSPS).
2. The holding of shares in WSN, the owner of P.S. Waverley, represents 65% of shares issued. The shares are shown in the accounts at their nominal value as shareholders in the Company cannot benefit from their holdings, as it is constituted as a charity (registered in Scotland as no. SC005832).   At 31 October 2014 the aggregate amount of its group capital and reserves was £3,634,694 (2013 restated – £3,708,316) and its group excess of expenditure over income for the year then ended was £73,622 (2013 restated – £609,400). A prior year adjustment of £175,448 was made in the 2013 accounts to reflect the withdrawal of Gift Aid on fares and the comparative 2013 figures were restated accordingly.
3. The Loans to WSN are interest free and are repayable on two years’ notice expiring on 31 March in any year. Advances totalling £75,000 made during 2014 were converted to grant on 31 January 2015 on production of evidence of expenditure on the fabric of P.S. Waverley.   Provision was made in the 2014 accounts to allow for this eventuality, so there is no charge in the 2015 Statement of Financial Activities. In addition, provision of £117,201 has previously been made to reflect the likelihood of repayment of the long term loan balance.
4. Other programme related investment: The shares in Dart Valley Railway plc (DVR) were donated to the Society. DVR is the ultimate holding company of Dart Pleasure Craft Limited, charterers of P.S. Kingswear Castle. They are shown at their value at the date of acquisition.

5. Other Investments held to generate income or for their investment potential consisted of a holding in Charities Official Investment Fund Income Units in both 2014 and 2015.

6. Debtors consisted of prepayments and accrued income in both 2014 and 2015.

7. Creditors: Amounts falling due within one year are made up as follows:

	2015	2014
	£	£
Trade creditors	(5,902)	(6,902)
Deferred Income	(1,258)	–
Annual subscriptions in advance	(20,764)	(20,956)
Life Membership Equalisation Account	(1,211)	(1,259)
	(29,135)	(29,117)

8. Creditors: Amounts falling due after more than one year are made up as follows:

	2015	2014
	£	£
Life Membership Equalisation Account	(11,075)	(12,285)

9. Provisions for Liabilities may be analysed as follows:

	Committed	Committed	Total	Total
	to WSN	to LLSC	2015	2014
	£	£	£	£
Carrying amount at 1 January	(75,000)	(17,900)	(92,900)	(174,090)
Loan converted to grant	75,000	–	75,000	150,000
Grant paid	–	7,735	7,735	6,190
Grant commitment made	(12,539)	–	(12,539)	(75,000)
Carrying amount at 31 December	(12,539)	(10,165)	(22,704)	(92,900)

10. Fund movements: The movements in each of the Society’s funds may be summarised as follows:

Fund name	Fund balances brought forward	Income	Expenditure	Transfers	Gains and losses	Fund balances carried forward
Restricted funds	£	£	£	£	£	£
Restoration and Preservation Fund
General	159,198	42,258	(4,200)	(22,577)	–	174,679
P.S. Waverley	15,186	64,209	(64,961)	25,577	–	40,011
P.S. Kingswear Castle	6,514	919	–	–	–	7,433
Revaluation reserve	25,100	–	–	–	1,054	26,154
Total restricted funds	205,998	107,386	(69,161)	3,000	1,054	248,277
Unrestricted funds
General Fund	96,724	70,759	(70,397)	(3,000)	–	94,086
Archive Development Fund	38,240	774	–	–	–	39,014
Archive Collection Reserve	55,121	600	(4,744)	–	–	50,977
Total unrestricted funds	190,085	72,133	(75,141)	(3,000)	–	184,077
Total Funds	396,083	179,519	(144,302)	–	1,054	432,354

Restricted Funds comprise the Restoration and Preservation Fund, which holds funds received for or allocated to P.S. Waverley and P.S. Kingswear Castle, either in general or specifically. The Revaluation Reserve represents the unrealised gain on investments allocated to the Restoration and Preservation Fund.  The Archive Development Fund (formerly the Streatfield Bequest) has been designated for the development of the conservation of and access to the Archive Collection.   The Archive Collection Reserve represents the value of donated items, after deducting accumulated depreciation.

11. Grants All grants made were to other charities in pursuit of the Society’s object of preserving in operation paddle steamers. In general, grants are only made towards work on the fabric of the vessels supported.

12. Commitments: At 31 December 2015 there were no unprovided commitments (2014: Nil).

13. Related Party Transactions: The Society is related to the following companies because it has a significant interest through interlocking directorships, as set out in the Trustees Report.

1. Paddle Steam Kingswear Castle Trust Ltd (PSKCTL)
   1. No transactions during 2014 or 2015 or balances outstanding at 31 December in either year.
2. Waverley Steam Navigation Co Ltd (WSN)
   1. The Society had outstanding loans of £117,201 to WSN at 31 December 2015 (2014: £192,201).
   2. During 2015 the Society made grants of £67,463 (2014: £96,424) to WSN for P.S. Waverley.
3. Loch Lomond Steamship Company (LLSC)
   1. During 2015 the Society made a grant of £7,735 (2014: Nil) to LLSC for P.S. Maid of the Loch.

14. Trustee Remuneration: None of the trustees have been paid any remuneration or received any other benefits from an employment with the Society (2014 – Nil).  Gillian Anderson (wife of John Anderson, a trustee) received remuneration of £50 (2014 – £175) for clerical work on the membership records.

15. Trustee Expenses: 16 trustees received reimbursements of travel and accommodation costs incurred in the course of their duties totalling £4,277 (2014 – £3,818).

16. Staff Costs and Employee Benefits: Nil (2014 – Nil).

17. Cost of Independent Examination and Other Financial Services: Peter Walker FCCA received £1,360 for independent examination services (2014 – £1,212) and provided no other services to the Society (2014 – Nil).

Independent Examiner’s Report to the Trustees of the Paddle Steamer Preservation Society

I report on the accounts of the company for the year ended 31 December 2015, which are set out above.

Respective responsibilities of trustees and examiner

The trustees (who are also the directors of the company for the purposes of company law) are responsible for the preparation of the accounts. The trustees consider that an audit is not required for this year under section 43(2) of the Charities Act 1993 (the 1993 Act) or under Regulation 10 (1)(a) to (c) of The Charities Accounts (Scotland) Regulations 2006 (the 2006 Accounts Regulations) and that an independent examination is needed and I am qualified to undertake the examination by being a qualified member of Association of Chartered Certified Accountants.

Having satisfied myself that the charity is not subject to audit under company law and is eligible for independent examination, it is my responsibility to:

• examine the accounts under section 43 of the 1993 Act and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005 (the 2005 Act);
• to follow the procedures laid down in the general Directions given by the Charity Commission under section 43(7)(b) of the 1993 Act; and
• to state whether particular matters have come to my attention.

Basis of independent examiner’s report

My examination was carried out in accordance with the general Directions given by the Charity Commission and is in accordance with Regulation 11 of the Charities Accounts (Scotland) Regulations 2006. An examination includes a review of the accounting records kept by the charity and a comparison of the accounts presented with those records. It also includes consideration of any unusual items or disclosures in the accounts, and seeking explanations from you as trustees concerning any such matters. The procedures undertaken do not provide all the evidence that would be required in an audit and consequently no opinion is given as to whether the accounts present a ‘true and fair view’ and the report is limited to those matters set out in the statement below.

Independent examiner’s statement

In connection with my examination, no matter has come to my attention:

(1) which gives me reasonable cause to believe that in any material respect the requirements:

• to keep accounting records in accordance with section 386 of the Companies Act 2006 and section 44(1)(c) of the 2005 Act; and
• to prepare accounts which accord with the accounting records, comply with the accounting requirements of section 396 of the Companies Act 2006, section 44(1)(b) of the 2005 Act and Regulation 8 of the 2006 Accounts Regulations; and
• which are consistent with the methods and principles of the Charities’ Statement of Recommended Practice (SORP2015)

have not been met; or

(2) to which, in my opinion, attention should be drawn in order to enable a proper understanding of the accounts to be reached.

Peter Walker
Fellow of the Association of Chartered Certified Accountants
26 High Street
Barry
South Glamorgan

CF62 7EB

Date: 12 May 2016