Contact: Bevis Ingram, 01962 847508, email [email protected]

1 Introduction

1.1 The Executive Member for Recreation and Heritage acts as Trustee for the following:

· the Allen and Curtis Museum Foundation

· the Red House Foundation

· the Flora Twort Trust

· the Tasker Trust

· the Aldershot Military Historical Trust.

1.2 In addition Mr Mark Breedon is a Trustee for the Allen and Curtis Museum Foundation. He has been sent a copy of this report.

1.3 By law, the Trustees are required to approve the annual accounts of the Trusts, which must then be sent to the Charity Commissioners, this includes the Tasker Trust and the Aldershot Military Historical Trust which do not hold any investments nor had any financial transactions during the year. The accounts for the year 2007/08 are attached at Appendix 1. These include the value of each Trust's investments at book cost. The recent market value of investments is shown, for information, in Appendix 2.

1.4 The various Trusts hold investments in a variety of managed funds, all geared to long term investment. These managed funds should spread risks, while giving access to professional investment management. The funds invested in have not been changed for a number of years as the transaction costs of selling units and reinvesting in other funds, added to the uncertainty of not finding a "better" performing fund, all militate against change. Paragraph 2, below, indicates that the performance of the equity-based funds in 2007/08 was disappointing following four successive good years. The trustees should continue to bear in mind the long-term nature of equity investment.

2. Recommendations

i) That the accounts of the Museums Trusts for 2007/08 as set out in Appendix 1 are approved.

ii) That up to £85,000 of the investments of the Red House Foundation are earmarked as match funding for a HLF lottery bid.

3. Management of the Investments

The Allen and Curtis Museum Foundation

3.1 The Foundation holds units in Charibond and Charifund.

3.2 Overall, the Allen and Curtis Foundation's income rose by £234, or 6.5% due to a good increase in income from Charifund and higher interest on cash balances.

3.3 Charibond is a fixed interest based fund, investing in UK Government bonds (gilts) and corporate bonds. It should provide a higher income than funds such as Charifund which is invested in equities and convertible stocks. As an equity-based fund, Charifund should provide capital growth and rising income over the longer term.

3.4 Charibond's income distribution remained unchanged from 2006/07 at 7.6p per share. The capital value per Charibond share fell during 2007/08, by 1.8%, from 121.3p per share in 2006/07 to 119.1p. This compared with a rise of 2.3% in Charibond's benchmark, the FTSE British Government All Stocks Index.

3.5 Charifund increased its income distribution from equities by 9.5%, from 65.0p per share in 2006/07 to 71.2p per share in 2007/08. The capital value of each Charifund share fell by 19.6% over the year, compared with a fall of 10.8% in the FTSE All Share Index. Charifund's portfolio is heavily weighted towards shares that provide a high income yield.

3.6 The higher income from interest on cash balances reflects the rise in average base rates between 2006/07 and 2007/08.

The Red House Foundation

3.7 The Red House Foundation's total income in 2007/08 rose by £266 or 5.9%, compared with 2006/07. The main sources of income are Charibond, Charinco and Allianz RCM, which accounts for the majority of the increase during the year. The balance of the increased income for the year results from interest earned on cash balances.

3.8 Charinco is another fixed interest fund. The distribution remained unchanged from 2006/07 at 10.0p per share. The capital value of each Charinco share fell by 0.3% compared with a rise of 2.3% in the FTSE British Government All Stocks Index.

3.9 The Allianz RCM UK Equity Fund aims to provide healthy capital growth over the very long term. In 2007/08 the capital value per share fell by 15.4%. This fall in value was slightly more than the fall of 10.8% in the FTSE All Share Index, and less than the Charifund holding held by the Allen Curtis Trust. Allianz pursue a more adventurous growth-based investment style, which they believe will outperform over the long term. Income distribution growth this year was 13.5% on 2006/07, a larger growth than the Charifund investment.

3.10 The Red House Foundation also holds smaller investments in three equity-based funds. The Aberdeen UK Growth Fund fell by 14.3% and the New Star Equity Trust Income units fell by 22.4%. The Aberdeen North American Unit Trust decreased in capital value by 4.7%.

Flora Twort

3.11 The Trust's investments are held in Charibond and Charinco. As explained in the previous sections, income from Charibond and Charinco remained unchanged in 2007/08. However the Trust's income for 2007/08 rose by £9 due to an increase in interest earned on cash balances. The market value of the Trust's investments fell, by an overall figure of 1.1% during 2007/08.

3 Red House Museum (Christchurch) Development Project

3.1 Last year it was reported that a bid was being prepared for Heritage Lottery Fund (HLF) funds for investment in the Red House. There has been some progress on this over the past year. And the following paragraphs outline the bid and seek approval for the Red House Foundation's funds to be used as match funding.

3.2 HCC Museums & Archives Service and its partners on the Joint Management Committee (Dorset County Council and Christchurch Borough Council) recognise that there is a need to redevelop the Red House Museum. The current permanent displays have been in place for over twenty years and although they have served the local community well they need bringing up-to-date to serve users' needs and to attract new audiences. It is the intention of the museum re-development project to rejuvenate the site, to provide improved access to all, and to increase its revenue raising potential for future sustainability.

3.3 The project will involve extensive changes to the internal layout of the Red House Museum. For instance, the ground floor of the Museum will be refurbished to accommodate the parish workhouse display, telling the early history of the museum building, and a new `History of Christchurch' gallery. A new temporary gallery will be created on the first floor, and on the second floor there will be a local resource facility which will act as a hub for local history research. There will also be a dedicated education/community space.

3.4 The project will involve extensive changes to the internal layout of the Red House Museum. Physical access to the several floors of the museum will be improved by the insertion of a passenger lift, and the entrance and reception area will be relocated to front onto the garden. Here there will also be a new shop and café, which will boost income for the museum, as will new opportunities to hire out spaces and facilities to corporate and private customers.

3.5 Working in partnership with Dorset County Council and Christchurch Borough Council Hampshire County Council Museums & Archives will submit an application to the HLF for a "Heritage" grant. Total costs for the project are currently estimated to be in the region of £700,000, of which the partners will need to provide at least 10%. Commitment of moneys now from the Red House Museum Trust Fund for the purpose of match-funding an HLF grant will enable the project to begin and underpin its success. If detailed work on developing the project can begin shortly, as planned, and our grant application to HLF is successful then it is envisaged that the `new' Red House Museum will open to the public in the summer of 2011.

3.6 Appendix 2 shows that the current valuation of the Red House Foundation's Investments is slightly over £89,000. If these Investments are cashed in, the Museum will have to forego the annual income generated; for 2007/08 this was £4,751 (as shown in appendix 1). It is recommended that approval is given for a maximum of £85,000 of the investments to be used as match funding for the HLF project.

Section 100 D - :Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report.

NB: the list excludes:

1. Published works

2. Documents which disclose exempt or confidential information as defined in the Act.

None