Notes to the financial statements

1 Accounting Policies

The financial statements have been prepared in accordance with the provisions of the Statement of Recommended Practice ‘Accounting and Reporting by Charities’ issued in October 2019 (‘SORP 2019’), the Charities (Accounts and Reports) Regulations (2008), the Charities Act (2011), the Charities Act (2022) and applicable Accounting Standards in the United Kingdom.

Additionally, the National Trust is governed by Acts of Parliament – the National Trust Acts. The National Trust Act (1971) (‘the Act’) lays down legally binding requirements and provisions that are relevant to the way the Trust prepares its annual financial statements. Accordingly, the Trust has prepared its financial statements based upon the requirements and provisions within the Act.

An important provision set out in the Act relates to the Trust’s heritage assets. The Trust considers its inalienable property and other property or personal chattels held in trust, or acquired by the Trust for preservation, to be heritage assets.

The Act permits the Trust not to include a value for these assets in the financial statements and hence to depart from the requirements of FRS 102 section 17 – Property, Plant and Equipment and the capitalisation provisions of FRS 102 section 34 – Heritage Assets. Accordingly, no amounts have been included in the Parent Charity or Consolidated Balance Sheets in respect of heritage assets. The Trust has considered this position carefully and has concluded that the inclusion of heritage assets on its balance sheet would not be appropriate, given that any value attributable to these properties would be subjective and would be more than outweighed by the obligation to maintain them in perpetuity.

The Trust has adopted the disclosure requirements set out in FRS 102 section 34. Detailed information concerning the nature, scale and significance of the Trust’s heritage asset holdings and policies for acquisition, management and care of this property are set out in Note 19.

Accounting convention

The financial statements are prepared on a going-concern basis under the historical cost convention (as modified by the revaluation of investment properties and listed investments to market value) and in accordance with applicable accounting standards in the United Kingdom, which have been consistently applied. The going-concern basis is considered appropriate due to the strength of the Trust’s balance sheet, which would allow the Trust to continue to operate in the event that there was either a significant and prolonged reduction in income or an unexpected increase in costs, or both.

Going Concern

The Trustees have reviewed a series of financial forecasts for a period extending beyond 12 months from the balance sheet date that include severe but plausible downside risks to National Trust operations, including:

Visitor flows and commercial income streams suffering activity reductions for a prolonged period beyond February 2023.

Note 1 Continued

Membership retention and recruitment of new members trending below the levels that the Trust would normally expect.
High levels of inflation extending over a year from the balance sheet date.

The Trustees have adopted the going-concern basis for the preparation of these financial statements as throughout a period of at least 12 months from the date of approving these financial statements, the forecasts reviewed by the Trustees demonstrate that the Trust has access to sufficient liquidity, unrestricted reserves and financial covenant headroom to be able to continue in operation.

Basis of consolidation

The consolidated financial statements consist of the Charity and its subsidiaries: The National Trust (Enterprises) Limited, Historic House Hotels Limited, The National Trust (Renewable Energy) Limited and Countryside Commons Limited.

The National Trust has taken advantage of the exemption available not to present a Statement of Financial Activities for the Charity. The net income of the Charity is disclosed in Note 16 to the financial statements. The turnover and expenditure of the subsidiaries are included within the Consolidated Statement of Financial Activities. The assets and liabilities of the subsidiaries are included on a line-by-line basis in the Consolidated Balance Sheet in accordance with FRS 102 section 9 – Consolidated and Separate Financial Statements. Uniform accounting policies are adopted throughout the group and any profits or losses arising on intra-group transactions are eliminated in the Consolidated Statement of Financial Activities.

Income

Income is shown within five categories in the Consolidated Statement of Financial Activities:

Income from donations and legacies
Income from charitable activities
Income from other trading activities

Income from investments
Other income

Income from donations and legacies includes appeals and gifts, legacies, operating grants and contributions. Income from charitable activities includes membership income, project grants and contributions and direct property income. Income from other trading activities includes enterprise, renewable energy and hotel income (activities undertaken by the Trust’s trading subsidiaries). Other income includes the net gains arising on the disposal of alienable operational properties.

Appeals and gifts

Appeals and gifts are recognised when the cash is received. Gift Aid thereon is accounted for on a receivable basis and is added to restricted funds or unrestricted funds as appropriate. Where the use of the income has been restricted in accordance with the donor’s wishes, appeals and gifts income is credited to an appropriate fund until it can be spent for the purpose for which it was given.

Note 1 Continued

No value is placed on heritage assets gifted to the Trust in accordance with the National Trust’s policy on heritage assets.

Legacies

Legacies are accounted for on a receivable basis. Pecuniary legacies are recognised following formal notification from the estate. Residuary legacies are recognised only when the National Trust’s interest can be measured, which is normally on grant of probate. Bequeathed properties awaiting sale are included in legacy income at their probate value when the National Trust takes ownership of the property. Where there are uncertainties surrounding the measurement of the Trust’s entitlement to an estate, or there is a prior or life interest before the legacy comes to the Trust, no income is recognised (see Note 30). No value is placed on heritage assets bequeathed to the Trust.

Grants and contributions

Grants and contributions are accounted for on a receivable basis when the National Trust has probable and measurable entitlement to the income (i.e. the conditions for its award have been satisfied). Operating grants relate to property operating activities, and project grants relate to expenditure on property projects, acquisitions and also fund property development projects (which are capitalised).

Enterprise, hotels and renewable energy income

The National Trust holds 100% of the issued share capital of The National Trust (Enterprises) Limited, Historic House Hotels Limited, National Trust (Renewable Energy) Limited and Countryside Commons Limited. The turnover of The National Trust (Enterprises) Limited is recognised in the period in which a sale is made. Hotel revenue from rooms is recognised when guests make use of the booked accommodation, food and beverage sales are recognised on a daily basis as sales occur. Income from spa membership fees is recognised evenly over the period of the membership.

The income of National Trust (Renewable Energy) Limited includes hydro-electric power income which is recognised in the period in which it is generated.

Investment income

Investment income is recorded in the period in which it is earned.

Membership income

Income that is attributable to future visits that members will make to National Trust properties is deferred and released to the Consolidated Statement of Financial Activities over the period to which the membership relates. The portion of life membership subscriptions deemed to be of the nature of a gift is recognised in full in the year in which it is received, with the remainder deferred and released to income in equal instalments over the average period over which the life membership is expected to be used. Gift Aid and deed of covenant income resulting from membership is matched to the period to which it relates, as is all other income.

Note 1 Continued

Direct property income

Income reported under this heading includes charitable trading activities (catering, holidays and car parks), rents and admission fees, all of which are recognised in the period to which the income relates. Admission fees recognised as income are based on the point at which the sale is made; any pre-booked ticket income is recognised when the visit takes place.

The contribution of volunteers

In accordance with Charities SORP 2019, no amounts have been included in these financial statements to reflect the value of services provided free of charge to the National Trust by volunteers. Volunteer roles range from house guides and countryside rangers to project management and IT support.

Expenditure
All expenditure is accounted for on an accruals basis and has been classified under headings that aggregate all costs related to the category.

Depending on the nature of the related expenditure, irrecoverable VAT is either charged to the appropriate expenditure heading or it is capitalised. The Consolidated Statement of Financial Activities defines costs in two specific categories:

Raising funds
Charitable activities

Raising funds includes fundraising costs incurred in seeking voluntary contributions. Costs of charitable activities relate to the work carried out on the core purposes of managing our properties, conservation projects, acquisitions, education initiatives and membership services.

Support service costs are allocated to expenditure on raising funds and charitable activities on the basis of staff costs or on the estimated time spent by the support service if this is more appropriate. More detail is provided in Note 15.

Governance costs, included within support service costs, are those incurred in connection with the administration of the Charity, compliance with constitutional and statutory requirements and the costs of executive management and strategic governance of the Charity.

Property operating costs

Property operating costs relate to the day-to-day running costs of National Trust properties and are charged to expenditure in the year they are incurred.

Expenditure on property projects

These costs include cyclical repair work to buildings, backlog work, the costs of conservation of contents and conservation improvement work, such as restoration or improvements in land condition and biodiversity, and are charged to Resources Expended in the year they are incurred.

Recognition of liabilities

Liabilities are recognised when an obligation arises to transfer economic benefits as a result of past transactions or events.

Note 1 Continued

Pension costs

The defined benefit pension scheme, which is closed to new entrants and future accrual, provides benefits based on final pensionable salary. The costs of providing pension benefits under the defined benefit pension scheme have been recognised in accordance with FRS 102 section 34 – Retirement Benefit plans: Financial Statements.

Under FRS 102 section 34, the assets and liabilities of the pension scheme are essentially treated as assets and liabilities of the sponsoring employer – the National Trust.

The operating costs of providing retirement benefits to employees are recognised in the period in which they are earned by employees, and finance costs and other changes in the value of pension plan assets and liabilities are recognised in the period in which they arise.

Pension surpluses are recognised in the balance sheet when the Trust can demonstrate

that it has an unconditional right to a refund of excess contributions or where it has sufficient scope to reduce future contributions.

The pension costs for the Trust’s defined contribution scheme, its other money purchase schemes and the defined contribution scheme operated by Historic House Hotels Limited, are charged in the year they are incurred.

Operating leases

Rentals applicable to operating leases are charged to the Consolidated Statement of Financial Activities on a straight-line basis over the life of the lease and to the activity to which the lease charges relate: enterprise costs, hotel costs, property operating costs, internal conservation and advisory services, membership costs and support services.

Exceptional income and expenditure

The Trust discloses as exceptional any material items of income and expense that are unusual either in their incidence, size or nature. Such disclosures are made to enable the reader to better understand the Trust’s financial performance.

The items treated as exceptional are fully described in Note 8 to the financial statements.

Intangible fixed assets and amortisation

Computer software is stated at historic purchase cost less accumulated amortisation and accumulated impairment losses. Software is amortised over its estimated useful life, of between 3–7 years, on a straight-line basis.

Tangible fixed assets and depreciation

Tangible fixed assets are stated at historic purchase cost less accumulated depreciation with the exception of administrative properties. Individual assets costing less than £5,000 are written off in the year of purchase and treated as property operating costs or support services as appropriate.

Properties owned and occupied for administrative purposes are stated at cost. No material depreciation arises on the administrative properties of the Trust as the significant portion of their cost relates to land

Note 1 Continued

(which is not depreciated) and as the lives of the properties are considered so long and their residual values based on cost to be high enough to ensure that any annual depreciation is immaterial.

Property Development Projects constitute structural improvements, new buildings and associated fit-out costs incurred at National Trust properties to improve visitor and commercial infrastructure. Associated costs are capitalised and written off over their useful economic lives.

An annual review takes place to establish any permanent diminution in the value of tangible fixed assets. Depreciation has been calculated so as to write off the cost of the assets in equal annual instalments over their useful lives, not exceeding the following:

Plant and equipment 4–10 years ⁹

Motor vehicles 3–4 years
IT hardware 3–7 years
IT software 3–7 years
Fit-out costs 5–10 years
Structural improvements and new buildings 20–30 years
Renewable energy installations 10–25 years

Depreciation is first charged in the calendar month following acquisition or on the bringing into use of the asset, whichever is the later.

Heritage assets

The Trust does not capitalise heritage assets in accordance with the Act. All costs relating to the acquisition, restoration and ongoing maintenance of heritage assets are charged to Resources Expended in the year in which they are incurred.

9 Included in Property Development, Plant and Equipment in Note 19

Investments

All listed investments (including derivative-based instruments) are stated at market value at the balance sheet date. Unlisted private equity investments are measured at fair value through the Consolidated Statement of Financial Activities, using a selection of valuation methodologies depending upon the nature, facts and circumstances of the underlying holdings. As at the financial year end, the latest available quarterly valuation reports are used to value the underlying funds in the private equity portfolio. Where, following the reporting period, more up to date valuations become available, valuations are updated where this information suggests that a material valuation movement has occurred. Where immaterial, any valuation change is accounted for in the subsequent accounting period.

The movement in valuation of investments is shown in the Consolidated Statement of Financial Activities and comprises both realised and unrealised gains and losses.

Note 1 Continued

Investment properties are included at valuation on an open market, existing-use basis. Valuations are carried out on an annual basis and are mainly undertaken by the Trust’s own professionally qualified surveyors.

The investments held in the subsidiary undertakings are held at cost or at fair value at acquisition.

Cash held for reinvestment in the General Pool is shown as Investments in the Consolidated and Charity Balance Sheets (see Note 21 to the financial statements).

Interests in joint ventures

The Trust has a joint venture with the Canal & River Trust that is established through an interest in a company limited by guarantee. The group recognises its interest in the entity’s assets and liabilities using the equity method of accounting in accordance with FRS 102 section 15 ‘Investments in Joint Ventures’.

The name of the joint venture, the nature of its business and details of the interest held by the Trust are disclosed in Note 5 to these financial statements. Intra-group balances and transactions, and any unrealised gains arising from intra-group transactions with the joint venture, are eliminated in preparing the consolidated financial statements.

Stocks

Stocks are stated at the lower standard cost and net realisable value after making due provision for slow-moving and obsolete items. Stocks consist of trading stocks, building materials and other (including livestock and sundry farm stocks).

Creditors and provisions

Short-term creditors are measured at transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

The Trust assesses other obligations that may result in a liability to be paid due to events preceding the 28 February 2023. Where it is probable that a liability will need to be settled, the Trust estimates the value of the liability based on either contractual terms, assessments from advisers or experts or based on past experience of amounts incurred for similar liabilities. Any over or under provision as a result of differences between the estimated costs provided and the actual costs incurred is recognised in operating costs in the period in which it arises.

Grants

Grants are accounted for when the Trust’s entitlement to the income can be established (taking account of any performance conditions that need to be met) and when the amount of the Trust’s entitlement can be measured. Grants relating to expenditure on tangible fixed assets are credited to the Consolidated Statement of Financial Activities at the same rate as the depreciation of the assets to which the grant relates.

Note 1 Continued

The deferred element of grants is included in creditors as deferred income. Grants of a revenue nature are recognised in the Consolidated Statement of Financial Activities in the same period as the related expenditure.

Financial instruments

The charity only has financial assets and financial liabilities that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently measured at their settlement value. Other derivative-based assets included in the investment portfolio are held at their fair value.

Funds

These divide into two distinct categories: unrestricted and restricted.

Unrestricted funds

The use of these funds has not been restricted to a particular purpose by donors or their representatives. They are subdivided into the General Fund and designated funds.

General Fund

The General Fund is the working fund of the Trust and is available for use at the discretion of the Trustees in furtherance of the Charity’s objectives. Among the uses of the General Fund are the general administration of the Trust, the servicing of membership and publicity. The General Fund also provides funding for property operating and projects expenditure where properties are unable to fund project and repair work using their own reserves.

Designated funds

Designated funds are those which have been allocated by the Trustees for particular purposes. Further information on the nature and basis of the various designated funds used by the Trust is given here.

Restricted funds

Restricted income fund

These include gifts and legacies which have been given or bequeathed to the Trust to be used in accordance with the wishes of donors or their representatives. Both the capital and the income may only be applied for the purposes for which the funds were donated.

Endowment funds

Many of the properties held for preservation are supported by endowments. Endowments typically arise when donors or grant-giving bodies provide funds on the condition that they must be retained in order to generate investment income for the long-term needs of a property.

The Trust is in a unique position requiring it to commit to the perpetual upkeep and maintenance of its inalienable property and, as such, it is important that it is able to provide funds for its future as well as its current needs.

Note 1 Continued

The Trust has therefore, where it has felt it appropriate, also used its own funds to create endowments or to augment existing donor-provided endowments. The Trust makes these fund transfers after due assessment of the capital requirements of a property over the very long term.

The funds transferred to create or augment existing endowments are not considered to be legal endowments but they are accounted for as such because the intention is to retain these funds for the very long term. Augmentations to existing funds are accounted for as permanent endowments while transfers to create new funds are considered expendable. The approximate value of expendable endowments at 28 February 2023 was £28 million (2022: £28 million).

Income arising on endowment funds is generally expendable and is distributed as income to funds in order to be spent.

Judgements in applying accounting policies and key sources of estimation uncertainty

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Trust makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

(i) Useful economic lives of tangible and intangible assets

The annual depreciation and amortisation charge for assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually.

They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets.

(ii) Stock and Work in Progress provisioning

The largest component of stock and work in progress comprises retail stock. It is necessary to consider the recoverability of the cost of this stock and the associated provisioning required. When calculating stock provisions, management considers the nature and condition of the stock, as well as applying assumptions around anticipated saleability. Stock held as raw materials – such as building materials is assessed in terms of its likely usage.

(iii) Impairment of debtors

The Trust makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, the Trust considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience.

Note 1 Continued

(iv) Defined benefit pension scheme

The company has an obligation to pay pension benefits to certain employees. The cost of these benefits and the present value of the obligation depend on a number of factors, including; life expectancy, salary increases, asset valuations and the discount rate on corporate bonds. Management estimates these factors in determining the net pension obligation in the balance sheet with support from independent external actuaries. The assumptions reflect historical experience and current trends.

(v) Valuation of investment properties

The Trust carries its investment properties at fair value, with changes in the fair value being recognised in the Statement of Financial Activities. Fair value is determined by assessing the current market value with reference to independent valuation specialists and internal RICS qualified surveyors.

(vi) Recognition of income

The Trust is required to make appropriate judgements about the certainty of its entitlement to and accuracy of measurement of legacy income. Legacies are recognised when the Trust considers that these prerequisites are met. Any bequests not fulfilling these criteria are not recognised as income.

2 Grants and Contributions

3 Membership Income

Membership in the prior year includes the benefit of a lower output VAT payable of circa £10 million (under the Government support measures applicable during the pandemic).

4 Direct Property Income

Other property income includes produce sales, room hire and amounts the Trust has charged on to third parties for costs it has incurred. Charitable trading activities are analysed further in Note 6.

5 Enterprise, Hotel and Renewable Energy Contribution

The National Trust owns 100% of the share capital of The National Trust (Enterprises) Limited, Historic House Hotels Limited and National Trust (Renewable Energy) Limited. All companies are accounted for as subsidiary undertakings, are registered in the United Kingdom and each year donate by Gift Aid to the National Trust from their surplus taxable income – subject to available distributable reserves. The National Trust also owns 100% of the share capital of Countryside Commons Limited, which does not currently generate income or incur expenditure but does hold title to common grazing rights.

The initial costs of investment in the Trust’s subsidiaries were as follows:

Note 5 Continued

The Trust also holds an interest in a dormant subsidiary, Porthdinlleyn Harbour Company in which it holds share capital of £600.

The Trust has a joint venture with the Canal & River Trust – Roundhouse Birmingham Limited – that is established through an interest in a company limited by guarantee. The interest in the joint venture relates to loans made from the National Trust to Roundhouse Birmingham Limited of £725,000 (2022: £675,000) and the Trust’s 50% share of the loss of £161,000 (2022: loss £126,000) generated by the joint venture. The share of income and expenditure of the joint venture is reported in Other Property Income in Note 4. The joint venture restored the Roundhouse, a significant piece of Birmingham’s industrial heritage.

The contribution of subsidiary companies to Trust funds was as follows:
Other activities include the contribution from film fees and the National Trust Magazine.
Countryside Commons Limited did not receive income or incur expenditure in 2022–23 or 2021–22.

6 Charitable and Other Trading Activities

Certain charitable trading activities are undertaken by the National Trust itself. The contribution from these activities was as follows:

10 Includes income from car parks. Charitable trading income is included in Direct Property Income (see Note 4); associated costs are included in Property Operating Costs.

7 Other Income

This is analysed as follows:

8 Exceptional Income

9 Expenditure

The audit fee for the Charity was £238,000 (2022: £171,000).

10 Remuneration of Trustees

No remuneration was paid to any members of the Board of Trustees. Travel and accommodation expenses were repaid to 14 individuals totalling £9,668 (2022: 14 individuals were repaid £4,155).

11 Staff Costs

Wages and salaries includes redundancy costs of £0.9 million (2022: £0.6 million).

The regular staff pension charge of £23,547,000 (2022: £23,220,000) comprises £4,167,000 (2022: £3,382,000) relating to the final salary scheme and £19,208,000 (2022: £19,662,000) relating to defined contribution schemes and £172,000 (2022: £176,000) of defined benefit contributions to the scheme operated for the staff of Historic House Hotels Limited. Payments of £308,000 (2022: £271,000) were made to the Stakeholder Scheme for seasonal staff.

The total of employers’ pension contributions includes £45,000 (2022: £59,000) paid into the National Trust group Personal Pension Plan in respect of certain members of staff who sacrificed redundancy payments for payments into their pension. During the course of the year, 483 seasonal staff (2022: 384) were transferred to the regular payroll.

Note 11 Continued

The numbers of regular employees whose pay (including redundancy) and taxable benefits¹¹ exceeded £60,000 fell within the following bands:

11 Salaries are adjusted for staff benefits received through salary sacrifice arrangements and includes regionally-based staff reporting to central functions.

Note 11 Continued

Contributions of £1,007,127 (2022: £733,131) were made in relation to 149 members of staff (2022: 118) earning in excess of £60,000 who participated in the defined contribution pension scheme. The Executive Team (10 individuals) were paid a total of £1,153,136 (2022: 9 individuals were paid £1,120,613).

The monthly average number of regular employees, including part-time employees and employees on fixed-term contracts on a full-time equivalent basis (but not including seasonal staff), is analysed as follows:

12 Includes regionally-based staff reporting to central functions.

12 Expenditure on Raising Funds and Charitable Activities

13 Enterprise costs include other renewable energy costs that do not for part of the activities of National Trust (Renewable Energy) Limited.
14 Includes staff costs and depreciation of £28,338,000 and £3,198,000 respectively.

13 Expenditure on Property Projects

These costs comprise restoration works, long-term cyclical repairs and backlog work on preservation of properties and other major projects of a conservation nature. The expenditure is analysed as follows:

14 Membership Costs

Membership recruitment and processing
These costs relate to supporter development costs and include three issues of the National Trust Magazine sent to all members, local newsletters, maintaining and processing membership details and the recruitment of new members.

Membership brand, marketing and publicity
These costs relate to brand and marketing and include publicising of the National Trust in general and of specific activities relating to visitor brand and marketing.

Membership processing includes the costs associated with the operation of the Trust’s Customer Relationship Management (CRM) system and the costs being incurred to develop the replacement system which launched in January 2023. Recruitment includes costs of recruiting new members. Other costs include staff training, occupancy costs and consumables.

The expenditure is analysed as follows:

15 Support Services

Support services have been allocated to the following areas of expenditure. The basis of allocation is either the level of staff costs or the estimated time spent by the support service if more appropriate.

16 Taxation

17 Analysis of Funds

Note 17 Continued

Explanation of transfers:
a) The Trustee board reviewed the forecast year-end reserves and agreed on targeted designations to ensure adequate funds are set aside for the Trust’s essential maintenance work for mansions and to make priority acquisitions. A total of £92 million of designations is being held for these purposes.

b) In March 2022, the Trust re-established its Property Finance Model. This permits properties to retain financial surpluses to be directed to future maintenance and conservation project work. Transfers were made from the General Fund to property reserves for this purpose. Further details are provided in the Financial Review on page 50 of the Board of Trustees report.

c) Funding transferred from the General Fund to the Fixed Asset Reserve to reflect the increase in the net book value of fixed assets funded from unrestricted sources.

d) Transfer from restricted funds to augment endowments for particular National Trust properties.

e) Transfers to support properties’ conservation and development requirements.

f) Investment losses incurred in respect of designated property reserves are made good from the General Fund.

g) Transfers to restricted funds of total return investment income arising on endowments.

The total income of the Charity was £627,716,000 (2022: £606,664,000) and its net income was £51,324,000 (2022: net income £59,830,000).

Funds exceeding 5% of the total within their respective class of funds are disclosed separately within the table above. The only other funds exceeding 5% of the total within their respective classes are the Dunham Massey Endowment Fund which amounted to £43,673,000 (2022: £44,782,000) and the Cliveden Endowment Fund of £31,056,000 (2022: £32,089,000).

18 Analysis of Net Assets by Fund

Total net assets of the Charity only were £1,583,032,000 (2022: £1,680,933,000).

19 Fixed Assets

Note 19 Continued

Assets under construction include Property Development Projects that are still in progress. No depreciation has been charged in respect of these assets.

Freehold properties are included at historical cost; the market value of these properties at 28 February 2023 was £16.4 million (2022: £15.3 million).

20 Heritage Assets

Heritage assets are defined as tangible property with historical, artistic, scientific, technological, geophysical or environmental qualities that is held and maintained principally for its contribution to knowledge and culture. The National Trust considers its inalienable properties and other properties and chattels held for preservation to fall within this definition. As explained in Note 1 these assets have been excluded from the balance sheet in accordance with the National Trust Act (1971).

Significance of our heritage assets

Many of the buildings owned by the National Trust are categorised as listed, but even those without formal grading, which relates to the significance of individual buildings, are of significance for the way in which they contribute to the character and appearance of local places.

National Trust countryside property is designated at many levels including National

Parks, AONBs (Areas of Outstanding Natural Beauty) and SSSIs (Sites of Special Scientific Interest). The Trust also owns and manages 149 registered gardens of special historic interest.

Objects in National Trust collections vary from those that are of international significance, through those of national and local significance, to the everyday items that are an essential part of the fabric and social history of places.

The Trust’s acquisition policy

The National Trust acquires historic buildings, coast and countryside in accordance with a statement of principles which requires that, inter alia:

The property must be of national importance because of its natural beauty or historic interest
Ownership by the Trust should benefit the nation
The property should normally be under threat

The property will not be acquired unless the Trust is the most appropriate owner

The Trust seeks to secure or acquire collections in the following categories:

Indigenous contents for its historic buildings
Non-indigenous but associated objects
Untied chattels to furnish its properties

The Trust’s heritage assets comprise nationally significant holdings of historic buildings, coast and countryside, and collections. The nature and scale of these holdings are as follows:

Historic buildings

The Trust protects 192 historic houses, 47 industrial monuments and mills, 11 lighthouses, 39 pubs, the sites of many factories and mines, 41 castles and chapels, 56 villages and 37 medieval barns.

The total insurance reinstatement value of our historic buildings is approximately £11.7 billion.

Note 20 Continued

Coast and countryside

The National Trust protects and preserves over 781 miles (1,257 kilometres) of coastline and approximately 250,433 hectares
(618,826 acres) of land, much of outstanding natural beauty. This can be divided into let land and land in-hand:

	Area (ha)	Area (ac)
Let estate	138,518	342,278
In-hand	111,915	276,548

Classification

Trust land can be classified as follows (these categories are not mutually exclusive of one another and the categories overlap):

	Area (ha)	Area (ac)
National Trust-managed agricultural land¹⁵	15,057	37,207
Common land	48,617	120,134
Woodland	33,195	82,027
Moorland	98,922	244,442
Bodies of water	3,737	9,234
Parks and gardens	20,006	49,436

Collections

Cataloguing the Trust’s collections is a continuing process. So far just over one million objects have been recorded electronically. The data are sourced from the Trust’s Collections Management System (CMS) database and include only Trust-owned objects. The largest broad categories are as follows:

	Quantity (’000)
Books and manuscripts	301
Ceramics and glass	116
Photographs	102
Metalwork	62
Furniture	50
Textiles	67
Prints and drawings	46
Costumes and jewellery	41
Painting and sculpture	17

15 The Trust claims the Basic Payment subsidy on the majority of this land.

Note 20 Continued

The Trust continues to acquire new properties and chattels in accordance with its acquisitions policy. In the last five years, acquisitions have been made as follows:

This expenditure is shown in Acquisitions under Expenditure in the Consolidated Statement of Financial Activities. Details of amounts spent on the cyclical repair and renovation of heritage property are given in Note 13. As stated in Note 1 the Act permits the Trust not to include a value in its balance sheet for heritage assets and this includes assets received via donation.

21 Investments and Cash at Bank and in Hand

Returns from investments

The overwhelming majority of the Trust’s endowments, restricted funds and unrestricted funds are invested together in the Trust’s General Pool. (This is a ‘Common Investment Fund’, a scheme facilitated by the Charities Commission to enable the pooling of different funds.) The General Pool targets a relatively high rate of long-term return coupled with a high level of asset diversity to manage the consequent risk.

The target investment return is a ‘total return’, i.e. to be achieved from both capital growth and income. The Trust takes advantage of the total return regulations of the Charity Commission to be able to make part of the capital growth, along with all the income, earned by endowments within the General Pool available for their charitable purposes. This enables the Trustees to balance the current and future needs of the charitable beneficiaries of said endowments.

All other funds within the General Pool have access to the full total return for their charitable purposes on an on-going basis.

While the target investment return of the General Pool is a total return, only actual income earned in the form of interest and dividends is reported as investment income in the Consolidated Statement of Financial Activities (see the table above).

In the year to 28 February 2023, the movement in the value of stored-up capital growth on the Charity Commission Scheme was as follows:

	£m
Unapplied total return at 1 March 2022	339.8
Decrease in value due to capital losses in year	(29.9)
Amounts distributed to properties (total return applied in year)	(10.3)
Unapplied total return at 28 February 2023	299.6

Note 21 Continued

The Trust ensures the level of distribution of capital growth for endowments is in line with long-term investment growth assumptions. This is subject to regular review by the Trustees following advice from the Investment Committee and other external experts.

Under the total return regulations of the Charity Commission, an endowment with no unapplied total return cannot make a distribution. All the Trust's endowments included in the total return policy had a positive unapplied total return at 28 February 2023.

If the value of the General Pool fell by 0.9% from its level as at 28 February 2023, one endowment with a value of £9.2m would suffer a nil unapplied total return and would therefore be unable to make a distribution.

In total, eight endowments with a total value of £29.1m would suffer nil unapplied total returns if the General Pool fell by up to 30%. The remaining endowments with a total value of £449.4m could sustain falls greater than 30%.

It should be noted that, in determining whether an endowment has a negative unapplied total return when making an income distribution, the Trust takes into account the average value of the fund over the year in question.

Analysis of consolidated investments
Investments and working cash balances are analysed as follows:

Included within the total investments, the following asset categories contain unlisted securities as follows: UK and overseas fixed and variable interest stocks, overseas property funds and private equity funds.

The historic cost of investments held at 28 February 2023 was £1,478,000,000 (2022: £1,535,700,000).

The cash at bank and in hand represents the deposits and cash used to finance the National Trust on a day-to-day basis.

The investments held by the Charity were as stated above with the exception of cash at bank and in hand. Cash held by the Charity amounted to £1,326,000 (2022: £1,554,000).

There is no single underlying asset that represents more than 5% of total investments. The investment funds that represent more than 5% of total investments comprise: 119 legacies, approximate value £5.8 million) that had not been included in income as uncertainties exist over the measurement of the Trust’s entitlement.

Note 21 Continued

The Trust’s objective is that an eventual target allocation of 15% of General Pool, or around £225.2 million at the February 2023 valuation of the Pool, should be represented by the private assets mandate. Cambridge Associates has been set a target of outperforming the MSCI All Countries World Index in sterling terms by 3% annualised over a rolling ten-year period for this allocation. Furthermore, the Trust has an objective to have a further 10% target allocation of General Pool assets, or around £150.1 million, allocated to a private diversifier mandate, and for this Cambridge Associates has been set a target of outperforming UK Retail Price Index by 6% over a rolling ten-year period

At the year end the Trust has undrawn commitments to private equity/debt funds and private diversifiers of £145.5 million which are expected to be called at various dates between 2023 and 2025. The funds to invest in these positions will be made available from the Trust’s wider General Pool investments during the course of this period.

The carrying value of the private assets and illiquid diversifier investments represents the latest valuations of the funds at or prior to 28 February 2023 as provided by Cambridge Associates.

22 Stocks and Work in Progress

23 Debtors

The amounts owed by subsidiary undertaking The National Trust (Enterprises) Limited are secured by a floating charge over the assets of the company. Interest is charged at 2% over Barclays’ base rate on the outstanding balance. Other debtors include trade debtors, VAT recoverable and investment debtors.

24 Creditors

Note 24 Continued

The revolving credit facility funds the Trust’s seasonal working capital requirements and matures in December 2026.

The amounts owed to subsidiary undertaking Historic House Hotels Limited incur interest at 2% over the London inter-bank interest rate on the outstanding balance.

The portion of life membership subscriptions deemed to be of the nature of a gift is recognised in full in the year in which it is received, with the remainder deferred and released to income in equal instalments over the average period over which the life membership is expected to be used; £6.4 million was transferred to income in 2022 (2021: £6.8 million).

The long-term loan was drawn down in March 2020 at a fixed rate of 2.662% and will mature in March 2058. A further £50 million was drawn down in March 2022 at a fixed rate of 2.651% and will mature in March 2063. Repayment is at the end of the loan term.

Note 24 Continued

Consolidated deferred income is analysed as follows:

Membership income is deferred and released to the Consolidated Statement of Financial Activities (SoFA) over the period to which the membership relates. Holiday cottage deferred income relates to deposits and payments received in advance of bookings, and is released to the SoFA in the period to which it relates.

Other deferrals mainly relate to grants and sponsorship income which are released to the SoFA in the period entitlement occurs, and premiums received on the undertaking of leases and rent-free periods which are released to the SoFA over the period until the relevant contractual lease break point.

25 Financial Instruments

26 Consolidated Cash Flow

Note 21 Continued

27 The National Trust Retirement and Death Benefits Scheme

The Trust operates a funded group pension scheme, established under trust, providing defined benefits based on final salary. The National Trust Retirement and Death Benefit Scheme (‘the Scheme’) was closed to new members on 1 June 2003 and closed to future accrual on 1 April 2016. The Scheme uses the following investment managers: CQS, Legal and General Investment Management, M&G Investments, Man Risk Premia SPS, Partners Capital LLP, Schroder Investment Management Limited, Systematica, BlackRock and Stone Peak. The last funding valuation of the Scheme was carried out by a qualified actuary as at 5 April 2020 and showed a deficit of £240.4m.

The Trust is committed to making deficit elimination contributions of £13.5 million per annum (running until 2029 and rising annually at 1% over CPI).

A defined contribution scheme has been offered to regular staff from 1 June 2003. This is a Stakeholder Scheme with Legal & General. In addition to this, a subsidiary, Historic House Hotels Limited, operates a defined contribution scheme. The assets of the schemes are held separately from those of the Trust.

The results of the latest funding valuation at 5 April 2020 have been adjusted to the new balance sheet date, taking account of experience over the period since 5 April 2020, changes in market conditions, and differences in the financial and demographic assumptions. The present value of the Defined Benefit Obligation, and any past service costs, were measured using the projected unit credit method.

The actuary has valued the liability in respect of deferred pensions using consumer price inflation (CPI) as the inflation measure
from 2011 rather than retail price inflation (RPI). This was following a UK government change in the measure of price inflation for
the statutory minimum rates at which pensions must increase for defined benefit pension plans.

Note 27 Continued

The mortality assumptions have been updated and are based on standard mortality tables which allow for future mortality improvements. The assumptions are that the average life expectancy, at retirement age, of a male is currently 88 and a female 89. By 2042, this is expected to increase to 89 and 91 respectively.

Note 27 Continued

None of the Scheme assets are invested in the National Trust’s financial instruments or in property occupied by, or other assets used by, the National Trust.

Note 27 Continued

28 Financial Commitments

The Trust's total commitments for operating lease payments are due as follows:

29 Taxation

The National Trust is a registered charity and as such is entitled to certain tax exemptions on income and profits from investments, and surpluses on any trading activities carried out in furtherance of the Charity’s primary objectives, if these profits and surpluses are applied solely for charitable purposes.

The National Trust, The National Trust (Enterprises) Limited, National Trust (Renewable Energy) Limited and Historic House Hotels Limited are registered for VAT. Any irrecoverable VAT on expenditure is charged to the appropriate heading in the Consolidated Statement of Financial Activities or is capitalised as appropriate. The National Trust (Enterprises) Limited, National Trust (Renewable Energy) Limited and Historic House Hotels Limited give all of their taxable profits to the Charity (subject to available distributable reserves), normally resulting in no liability to corporation tax.

30 Legacies

At 28 February 2023, the National Trust had been notified of 106 legacies with an approximate aggregate value of £6.1 million (2022: 119 legacies, approximate value £5.8 million) that had not been included in income as uncertainties exist over the measurement of the Trust’s entitlement.

31 Long-term borrowing

In July 2019, the National Trust entered into a binding agreement to borrow £100 million to finance a programme of investment in its visitor and commercial infrastructure and its let estate. £50 million was drawn down in March 2020 at a fixed rate of 2.662% and will mature in March 2058. A further £50 million was drawn down in March 2022 at a fixed rate of 2.651% and will mature in March 2063. Repayment is at the end of the loan term.

32 Related Party Transactions

The Trust has considered the disclosure requirements of SORP 2019 and of FRS 102 section 33 – Related Party Disclosures and believes that the following related party transactions, all of which were made on an arm’s length basis, require disclosure.

Related party transactions involving Trustees are fully disclosed here. For all other individuals, only transactions in excess of £10,000 are disclosed. Other individuals are those the Trust considers to have ‘control and influence’ or are historic donors of land to the Trust. The Trust’s Audit Committee has undertaken a review of all other related party transactions disclosed by individuals considered to have control and influence within the Trust.

The contribution to the Trust’s funds by its wholly-owned subsidiaries, The National Trust (Enterprises) Limited, Historic House Hotels Limited and National Trust (Renewable Energy) Limited, are disclosed in Note 5.

There are no other related party transactions which require disclosure.

Transactions with Trustees

i) Mr N Stace is a member of the Board of Trustees of the National Trust and Chair of Conduit Holdings Limited. During the year, the Trust used the services of The Conduit Club for events at a cost of £42,224 (2022: £nil). Mr Stace was not involved in the procurement of these services, nor in their delivery. There were no amounts outstanding as at 28 February 2023 (2022: £nil).

Mr Stace is also an employee of Barclays Bank plc with whom (as set out in the financial statements) the Trust has a number of important banking relationships. Barclays provides all the Trust’s day-to-day banking services and is a joint party to its revolving credit facility. Mr Stace is not involved in any of the decision-making relating to the Trust’s engagement with Barclays or the terms of business that the Trust has agreed with the bank.

Transactions with senior management and members of governance bodies

i) Mr H Bowell is the Trust’s Director of Land and Nature.
During the year, the Trust used the project management consultancy services of Sophie Milner (Mr Bowell’s wife) for work at Attingham Park. The cost of the services provided was £34,822 (2022: £3,190). The balance outstanding as at 28 February 2023 was £9,456 (2022: £3,190). Mr Bowell does not influence the decisions made to engage the consultancy services, which are overseen by senior management in the Midlands and East of England regions of the Trust.

ii) During the year, the Trust used the services of Agricultural Grant Solutions Limited at a cost of £42,512 (2022: £42,500). Mr G Hunt, the Trust’s Land and Estates Director, is a shareholder in Agricultural Grant Solutions Limited and the husband of its sole director.

Note 32 Continued

The decision to procure the services of Agricultural Grant Solutions is not influenced by Mr Hunt and the contract is overseen by the Trust’s Outdoors and Natural Resources Director. The balance outstanding at 28 February 2023 was £3,542 (2022: £3,542).

iii) Mr M Madgwick is the Trust’s Regional Head of the Let Estate for the South West Region. During the year, the Trust used the project management services of Mr Madgwick’s partner, Amy Jeenes, for various projects at a cost of £25,010 (2022: £nil). Mr Madgwick is not involved in the procurement of the project management services. The balance outstanding at 28 February 2023 was £4,715 (2022: £nil).

Transactions involving historic donors of land

The following transactions were entered into with individuals who have donated land and property to the Trust. These services are reviewed periodically to ensure that they present value for money for the Trust.

i) The Trust has an agreement with the Hyde Parker family at Melford Hall whereby the family manages the gardens. The cost to the Trust during the year was £10,485 (2022: £3,076). The balance outstanding at 28 February 2023 was £nil (2022: £1,802).

ii) The Trust uses the services of the St Aubyn family’s own estate and building companies: St Aubyn Estates, St Michael’s Mount Trading and Cornish Heritage Builders for work on the Mount. During the year, these companies provided services at a cost to the Trust of £2,492,018 (2022: £1,285,595). The balance outstanding at 28 February 2023 was £156,938 (2022: £93,298).

iii) Mr M D McLaren is a trustee of the Bodnant Estate Settlement, a trustee and beneficiary of Lord Aberconway’s Will Trust, a director and shareholder of Bodnant Garden Nursery Limited and Furnace Farm Limited. Mr McLaren is also a sole trader trading as Bodnant Estate and the son of Lady Aberconway. A total of £25,822 (2022: £42,374) of goods and services were supplied to the National Trust during the year by these companies. The balance outstanding at 28 February 2023 was £5,903 (2022: £4,923).

iv) The Trust has a management agreement with the Throckmorton family at Coughton Court whereby they are responsible for the daily operational management and regular maintenance of the gardens. The cost to the Trust during the year was £220,170 (2022: £195,062). The balance outstanding at 28 February 2023 was £nil (2022: £nil).

v) During the year the Trust paid rental charges and a contribution towards drainage rates at Horsey totalling £23,258 (2022: £20,242) to the Buxton family (the donors of Horsey). The balance outstanding at 28 February 2023 was £nil (2022: £nil).

Note 32 Continued

Other transactions

The following transactions were undertaken with members of the Trust’s advisory groups. None of the individuals with whom the Trust transacted had a formal management or governance role. The Trust routinely discloses these other transactions to provide additional transparency.

i) Mr J Avent is a member of the Trust’s Specialist Advice Network. During the year, the Trust used the structural and consulting engineering services of Mann Williams at a cost of £113,546 (2022: £53,663). Mr Avent is a director of Mann Williams. The balance outstanding at 28 February 2023 was £46,421 (2022: £960).

ii) Mr N Cox is a member of the Historic Environment Advisory Group. During the year, Nick Cox Architects Limited provided consultancy services to the Trust at a total cost of £134,484 (2022: £29,367).

The balance outstanding at 28 February 2023 was £10,277 (2022: £1,484).

iii) Mr J Lake is a member of the Historic Environment Group. During the year, Mr Lake provided conservation consultancy services to the Trust. The cost was £30,027 (2022: £18,642) and there were no amounts outstanding as at 28 February 2023 (2020: £nil).

iv) Mr N Pearson is a member of the Trust’s Natural Environment Group and the chair of Nicholas Pearson Associates. During the year the Trust used the consultancy services of Nicholas Pearson Associates for landscape design and management at a number of Trust properties at a total cost of £75,442 (2022: £64,186). The total balance outstanding at 28 February 2023 was £10,992 (2022: £5,196).

33 Prior Year Consolidated Statement of Financial Activities

All amounts derived from continuing operations and the National Trust had no recognised gains or losses other than those passing through the Consolidated Statement of Financial Activities. There was no material difference between the net income before transfers and the historical cost equivalents.