Annual Report and Accounts 2017

St Andrews Trust: Scottish Charity No. SC006161 Contents

1 Contents

2 Chairmen’s Statement

3 - 7 Chief Executive’s Report

8 - 13 Trustees’ Report

14 -15 Independent Auditor’s Report

16 - 31 Accounts for the year ended 31 December 2017

16 Consolidated Statement of Financial Activities 17 Balance Sheets 18 Cash Flow Statements 19 - 31 Notes to the Accounts

32 - 35 Reference and Administrative Information

36 - 38 Unaudited Statistical Analysis

1 | Links Trust: Scottish Charity No. SC006161 Chairmen’s Statement Chief Executive’s Report for the year ended 31 December 2017 for the year ended 31 December 2017

office hub for the Links Trust adjacent to the Balgove Course and the construction of a new Eden Clubhouse. This will help us achieve consistency and deliver world-class clubhouse facilities serving all of the courses together with improved office accommodation for many of the Trust’s Euan Loudon CBE staff. The redevelopment of the Golf Academy is also under Gordon Mackenzie Steven Race Chief Executive consideration and I hope to be able to address this in future Chairman of Trustees Chairman of Links Management Committee reports.

Over the 2017 golfing season the courses were once again presented in excellent condition. Dry spells in April and May In 2017 we were delighted to welcome many hundreds This recognition was complemented with the Green We continue to work tirelessly to pursue the vision of were followed by a warm but wet summer which, although of thousands of people from all over the world, many of Apple Award for Environmental Best Practice and the Best ‘developing St Andrews Links as the most renowned public golf not top of every golfer’s wish list, did ensure good growth them arriving to fulfil a lifelong dream. Their expectations Overall Use of Social Media in the Industry complex in the world, where we deliver unique and memorable and recovery of the turf. We recognise the core product- our seven golf courses- drives every aspect of our business and are high and we are acutely aware that only the highest Awards. These were presented at the Golf Industry Show experiences for golfers to play, learn, shop and relax’. The this is reflected in our commitment to the talented workforce standards of course presentation and facilities will meet in San Antonio, Texas, where the greenkeeping team was achievements in this report demonstrate both commitment and passion to deliver outstanding levels of service to every golfer we have out on the Links and the standard of equipment and, we hope, in many cases exceed those expectations. praised for its ongoing efforts to share knowledge and at their disposal. In 2017 the expertise and skill set of our It is to the considerable credit of the entire team at expertise across the digital platforms used by the Links. and visitor who comes to the Home of Golf. The dedication and hard work of our staff drives such progress and I greatly value greenkeeping teams were supplemented by the start of the Links, working across many different disciplines, and appreciate all that they do. our long-term partnership with The Toro Company for the that in 2017 we surpassed those expectations on such In recent years we have been proud recipients of Visit provision of turf-care equipment. In this reporting period a consistent basis. The excellent standard of course 5-Star Visitor Attraction status and were In recent annual reports we have experienced a positive trend of state-of-the-art equipment was put into service on the Old, presentation, customer service and the overall experience delighted to retain this level of accreditation once again growth in rounds played as well as investment in infrastructure Eden, and Balgove Courses and over the winter were highlighted consistently and frequently through in 2017. Such accolades are not only motivational to development and this, in turn, has supported strong levels of of 2017/18 a substantial renovation of the irrigation system a combination of regular golfer feedback, surveys and receive and a vital adjunct to our ability to maintain the golf, catering and retail revenue here at St Andrews Links. on the Castle Course, utilising Toro irrigation equipment to independent benchmarking. reputation and renown of the Home of Golf but they are replace all 635 sprinkler heads, was carried out. The new Toro also indicators of critical underlying strengths which we In 2017 we may not have added to the infrastructure on the equipment combines technology, knowledge and real-time The continued commitment to improvement across the believe will continue to serve the Trust well in the future. Links, however, I am pleased to report that we have continued analysis to produce more efficient and economical results entire business is not designed solely for the benefit of the to build on our success, aided in no small part by consumer and this is an important component of our commitment to visitor but locally too, where the role of the Trust and its The Chief Executive and the senior leadership team confidence, relatively weak Sterling and more visitors to St operating in an economically and environmentally sustainable way. These levels of cooperation and innovation have signalled golf courses play an important part in the everyday life of remain focused on the vision of delivering unique and Andrews. These favourable economic conditions, and the a great start to our partnership with Toro and we look forward the town and its hinterland. We continue to work closely memorable experiences for golfers to play, learn, shop continuing affinity we see for St Andrews as a ‘must visit’ to working together closely for many years to come. with Links Ticket Holders and the several long-established and relax. Achieving this is not limited to investment in tourist destination for the global golf community, have and historic golf clubs in St Andrews to facilitate their infrastructure, equipment and our people who work with helped to ensure continued growth. As a result new records have been set in all of our core operational activities, namely access to the courses, including fixtures, competitions and the Trust at present but also ongoing work to assess our golfing, catering and merchandise income. This produced anniversaries. current capabilities and what may be required in the unprecedented cash generation in 2017, securing substantial future to ensure the Trust and St Andrews remain at the net cash balances for the Trust. This balance sheet strength In 2017 we were very pleased to receive recognition forefront of golf. is essential to provide a platform for further infrastructure by international and national bodies, not least through improvement projects in the short to medium term. the renewal of the Trust’s eco-label certification by Such a level of excellence could not be achieved without the Golf Environment Organisation (GEO). Since the sustained commitment and hard work of the entire Some of this work is already scheduled for the year ahead becoming the first Open Championship venue to staff at St Andrews Links. We would like to pay tribute to with plans underway to develop a new half-way house in the receive this accreditation in 2011 there has been a real all of them for helping to make the Home of Golf such a winter of 2018/19. This will be built on the site of the existing desire to broaden green credentials beyond the living unique and special place. toilets on the Old Course and will help with our commitment landscape. As a result, it was hugely pleasing to see to deliver a five-star experience at the Home of Golf. This that the independent report highlighted an increasingly Gordon Mackenzie Steven Race new facility will provide a better service to golfers seeking coherent and consistent approach to planning, Chairman of Trustees Chairman of Links refreshment during their round and will be close enough to the monitoring and recording sustainable practice across Management Committee New Course to enable golfers playing that course to utilise it. the business, placing St Andrews Links at the forefront This project will be followed by the delivery of a new integrated of sustainable management in the golf industry. In the 18 May 2018 past, responsibility for this work rested largely with the greenkeeping team and in 2017 we were delighted to see the verifier recognise their continued efforts but also important contributions from staff in the technical services, operations and communication departments.

2 | St Andrews Links Trust: Annual Report and Accounts 2017 3 | St Andrews Links Trust: Scottish Charity No. SC006161 Chief Executive’s Report continued for the year ended 31 December 2017

Off the course we implemented a new system in 2017 Throughout 2017 discussions took place with The R&A Group Our courses welcomed record numbers over 2017 and more to the Links to defend her title in 2018, which will be supported for the commercial sale of high season Old Course tee over a number of issues, not least the venue agreement for records fell as the Links was blessed with some exceptional for the first time with video highlights screened via our website, times for the 2018 season. This signalled a significant the Old Course to host The 150th Open in 2021. Though the golf. At the annual Alfred Dunhill Links Championship, www.standrews.com and through social media. We believe both change from our previous exclusive arrangement with date may seem some time away, the feverish response to England’s Tyrell Hatton defended his 2016 title, becoming the advent of the Ladies Gold Medal and continued success of the Compass Group, trading as Experience St Andrews the announcement has left us in no doubt that anticipation the first man to retain the prestigious prize and he did so St Rule Trophy will further energise ladies of all ages and abilities (formerly Old Course Experience). The new approach may reach unprecedented heights by the time our famous at trailblazing pace; his total of 24-under a record for who love the sport and inspire others through the dream of one was the product of years of discussion, planning and Links hosts the world’s oldest major championship for a 30th the event. Joining Hatton in the history books at the Home day competing at the Home of Golf. engagement with many commercial operators to develop time. Running in parallel with these discussions we agreed of Golf was his compatriot Ross Fisher, who achieved the and deliver an effective means of distributing a limited an extension of the lease of The Old Course Shop to SALGS; first-ever 61 recorded on the Old Course. We look forward Staging such events provides us with a great insight into the and very popular product. These new arrangements have and the appointment of that company to run the official to their return in 2018 and the undoubted buzz that will no future of the game and we are gratified to see that the reputation received much positive feedback and on behalf of the merchandise operation at future Opens, beginning in 2018 doubt surround the event in the wake of the Ryder Cup’s and renown of the St Andrews Links Trophy, presented in Trust I would like to place on record our gratitude to with The Open at , as well as a new, year round, staging in Paris. association with Allianz, continues to grow, attracting one of the all of the commercial operators, at home and abroad, Open Shop in St Andrews. This represents a significant strongest fields in amateur golf across Europe. In 2017 we were involved in these discussions for the positive manner in achievement for the team at SALGS and recognises the Earlier in the year the Links continued its long-standing delighted to herald Matthew Jordan, from Royal Liverpool Golf which they were conducted. standards of excellence which our retail operation has been commitment to providing a stage for elite amateur Club, as victor, overcoming some truly authentic Scottish links able to achieve and the esteem in which they are held within golf, providing a platform for both Local Clubs and an weather conditions and a world class field of amateur golfers. The activities of the Trust’s subsidiaries, St Andrews Links the industry. international audience. In 2017 the calendar welcomed Matthew’s victory propelled him into the Great Britain and Ireland Golf Shops Limited (SALGS) and St Andrews Links Limited the inaugural Ladies Local Clubs Gold Medal, which took team to compete against the USA in the Walker Cup at Los (SALL), made a major contribution to the Trust’s revenue place on 14 May 2017, with St Regulus Ladies’ Fiona Hastie Angeles Country Club, further demonstrating the strength of the in 2017. Merchandise sales increased by 19.4% with all winning with a score of 78 over the Old Course. The Ladies’ Links Trophy and its stature in the amateur game. We will build five shops enjoying strong sales, benefiting, in no small Gold Medal, which now mirrors its male counterpart, is on our own Walker Cup legacy too, having recently announced part, from visitor numbers, including the ever-increasing regarded as the stroke play championship of St Andrews the return of amateur golf’s premier match to the Old Course in number of non-golfing visitors coming to the Home of with only the most talented golfers locally qualifying to play. 2023 after a hiatus of nearly 50 years. It is a source of great pride Golf. There is nothing to indicate that this trend will In its first year it boasted a field of 21 competitors from the to have the Home of Golf aligned with such a fantastic contest diminish in the short to medium-term and we continue St Regulus Ladies’ Golf Club and The St Rule Club and we and I am sure many talented golfers on both sides of the Atlantic to engage and liaise with local stakeholders wherever look forward to it establishing a long and proud history at will be inspired by the prospect of competing in the match. possible to assist the wider effort in St Andrews to make the Links. the most of such opportunities. Before then we look forward to welcoming some familiar faces to Just a matter of weeks later the St Rule Trophy crowned the Links in 2018 with The presented another worthy champion when 20-year-old Clara Young by Rolex, taking place for the first time on the Old Course. The lifted the title, mirroring the accomplishments of her idol, return of some of golf’s greatest and most loved champions to fellow North Berwick member and Solheim Cup Captain the Home of Golf is a thoroughly exciting prospect. We hope it TSI debut their next golf apparel collection, Catriona Matthew, who triumphed back-to-back in the proves to be a huge success, serving as inspiration and a reminder The Open Shop opened for business in March 2018 ‘St Andrews Spring/Summer 2017 in Tokyo same event in 1993 and 1994. We hope Clara will return that one of golf’s most compelling aspects is that age proves little or no barrier to participation and enjoyment.

Fiona Hastie winner of the inaugural Local Clubs Matthew Jordan clinched the St Andrews Links Ladies Gold Medal Trophy in association with Allianz

Tyrell Hatton prepares to defend his Alfred Dunhill Links Championship title

4 | St Andrews Links Trust: Annual Report and Accounts 2017 5 | St Andrews Links Trust: Scottish Charity No. SC006161 Chief Executive’s Report continued for the year ended 31 December 2017

In January 2018 our partnership programme expanded set up by the Scottish Government in furtherance of The Profits earned from the retail, licensing and partnership with the addition of NBC Golf Channel as our official Climate Change (Scotland) Act 2009. This project, known as activities are key components in our sustainability, helping to media partner. With this partnership, NBC Sports Dynamic Coast, assesses the long-term erosion and accretion diversify our revenue streams and mitigate risk by ensuring will lead development of new event, programming of many parts of Scotland’s coastline and seeks to identify we are not totally reliant on golf income. TSI Groove & and content opportunities for St Andrews Links. Their areas at risk of significant long-term erosion. The assessment Sports, a major Japanese company, launched the first two credentials as an international broadcaster of considerable of the coastline around St Andrews Links indicates that in new ranges of St Andrews licensed products in Japan in repute are without question and we are hugely proud and some places there has been significant accretion over the August 2017. The collections help communicate the message excited at the prospect of what we will be able to achieve past 100 years and in others there are a few localised areas and spirit of St Andrews to a new audience, establishing together. Although in its infancy we are confident that which may be at long-term risk of erosion. As part of our a tangible St Andrews Links presence in Asia. To date the over a period of time this partnership will develop into infrastructure plans we will look to work closely with the collections have been very well received, with sales exceeding something very special for St Andrews. Dynamic Coast project to consider any future work on coastal TSI’s expectations. Here in St Andrews we have stocked a protection. limited quantity of the products in our own shops and have Our role within the community is close to our hearts and been delighted with sales and visitor feedback. we are immensely proud that the town and the wider As reported more fully in the Trustees’ Report I am pleased to public benefit from the Trust’s efforts to commercialise report that with the agreement of the Scottish Government, With our other partners we staged or took part in a variety aspects of its intellectual property portfolio. Each the Trust took an active role in filling the vacancy created of events, including Callaway’s flagship European customer year St Andrews Links Limited pays a royalty to the St by the retirement of Gillian Kirkwood as a trustee in 2017. event, Kings of Distance, which saw almost 100 golfers Andrews Community Trust which applies this money The nomination process resulted in a recommendation visit St Andrews Links for a unique golf experience with towards projects of public benefit to St Andrews and being made to, and accepted by, Scottish Ministers for the Callaway team. Alongside this we also undertook an the surrounding area. In 2017, royalties of £103,133 the appointment of Alan Frizzell to the Board of Trustees. outreach programme with Allianz that saw the Old Course go accrued to the benefit of the Community Trust, bringing Having worked successfully through this process, we will now on the road; recreating the famous Road bunker at the 2017 One of the Links’ most famous bunkers went on the ‘road’ to visit the BMW the total amount given to the Community Trust since it liaise with the other appointing bodies to ensure a greater BMW International Open in Munich with free coaching and Championship in Munich was established in 2010 to more than £640,000. This is a understanding of the contemporary needs of the Links Trust tuition available from our team of PGA qualified instructors. significant sum of money which is being used to underpin and to discuss future appointing procedures. We were also grateful to our partners for providing us with important and valued work that benefits many people. unique opportunities to promote our work together whilst Alongside Gillian, our former Chairman of Trustees Richard engaging and connecting with an audience that is still to Our geographical location means we are acutely aware of Muckart also retired from the Trust in 2017. Having joined develop an affinity with the Home of Golf. our relationship with the coastline and during 2017 we the board in 2012 he became Chairman in 2014 and served participated in the National Coastal Change Assessment, the Trust with distinction, overseeing a number of important projects that will benefit St Andrews for many years to come. On behalf of the Trust, I would like to extend our sincere thanks to Richard and Gillian for their work and support.

We have enjoyed a period of strong growth in recent years, driven by our vision and values as well as innovative actions which help St Andrews, and its famous golf courses, to flourish. We do not take any of this for granted and we commit ourselves to do our level best to maintain our pre-eminent position in the hearts and minds of all golfers.

Euan Loudon CBE Chief Executive 18 May 2018

The Links celebrated the 150th anniversary of the St Andrews Ladies’ Putting Club with a commemorative bench and annual competition

Laurie Watson, Euan Loudon and Danny Campbell herald a new media partnership with the NBC Golf Channel team in Orlando, Florida

6 | St Andrews Links Trust: Annual Report and Accounts 2017 7 | St Andrews Links Trust: Scottish Charity No. SC006161 Trustees’ Report for the year ended 31 December 2017

Introduction Governance Related parties The Trustees of St Andrews Links Trust present their Day to day management of the Trust and its subsidiary Information on transactions with related parties is given in The Trustees are proud that the town and the wider Annual Report and Accounts for the year ended 31 companies is performed by a management team, headed by Note 21 to the accounts. public benefit from the Trust’s efforts to commercialise December 2017. This report is prepared in compliance a Chief Executive, which reports to the Trustees at regular its intellectual property portfolio. St Andrews Links with the Charities Accounts (Scotland) Regulations, 2006 formal meetings, the minutes of which are published. Objectives and Activities Limited pays a royalty to the St Andrews Community Trust (as amended), Financial Reporting Standard 102 (FRS102) Several committees and working parties exist to facilitate The Trust’s principal objective, as stated in the Links Act, which applies those royalties towards projects of public and the Charities SORP (FRS102) (referred to as SORP). more detailed consideration of key aspects of the Trust’s is to “hold and maintain the Links as a public park and benefit to St Andrews and the surrounding area. In operations. place of public resort and recreation for the residents of St 2017 royalties of £103,133 accrued to the benefit of the Reference and Administrative Information Andrews and others resorting thereto”. Community Trust, bringing the total amount of royalties Reference and administrative information is shown on Each of the wholly owned subsidiary companies has a Board since the Community Trust was established in 2010 to pages 32 to 35. of Directors which include a mixture of Trustees, members of St Andrews is famous worldwide, not just in golfing but more than £640,000. the management team and, where beneficial, independent also in academic and ecclesiastical circles and has a rich Structure, Governance and Management non-executive directors. The committees, working parties and history. It is widely recognised as the “Home of Golf”, During 2017 the Trust participated in the National Coastal Governing legislation and appointment of Trustees Boards report to the Trustees at their formal meetings. where the game began and largely evolved into its current Change Assessment, set up by the Scottish Government The Trust was established by the St Andrews Links Order form, is home to The Old Course- the oldest and most in furtherance of The Climate Change (Scotland) Act Confirmation Act, 1974 (the “Links Act”), a private Act of The Audit and Risk Committee is responsible for meeting famous golf course in the world- and is renowned for its 2009. Although the assessment of the coastline around Parliament. with the auditors to agree the planning for the audit, golfing connections. St Andrews Links indicated that there are a few localised reviewing the audit findings and the draft audited Annual areas which may be at long-term risk of erosion the The Links Act provides for the appointment of eight Report & Accounts and approving them for submission to Many hundreds of thousands of people all over the Trustees believe there is no medium-term risk to the Links. Trustees, three nominated by the ‘local authority’ ( Trustees. They also review the Trust’s risk register and, if world feel a strong emotional attachment to St Andrews Council), three by The R&A and one by the Scottish approved, recommend it to Trustees for adoption. and this bond raises the expectations of the thousands Achievements and Performance Government. The eighth Trustee is the Member of of visitors who flock to the town, many of them to There were several notable achievements in 2017, quite Parliament in whose constituency the Links are situated. The Finance Committee is responsible for reviewing and fulfil a lifelong dream. Their expectations are high and apart from the strong financial results which are discussed With the exception of the MP, Trustees are appointed for approving draft budgets and pricing recommendations prior the Trustees are acutely aware that only the highest in more detail below. a three year term and are eligible for reappointment at to their submission to Trustees for approval. In addition, the standards of course presentation, facilities and service will the end of that term. Committee was tasked with reviewing those risks regarded meet or exceed those expectations. The Trustees’ vision External recognition of the Trust’s efforts was received as financial risks and reporting back to the Audit & Risk is to develop St Andrews Links as the most renowned by, amongst other things, the confirmation of our 5-Star At their first meeting each year, Trustees elect a Committee whether, in their opinion, they are adequately public golf complex in the world, delivering unique and Visitor Attraction designation from VisitScotland, our chairperson and are reminded of their duties and reflected in the risk register. memorable experiences for golfers to play, learn, shop reaccreditation by the Golf Environment Group (GEO) responsibilities under the Links Act and other charities and relax. and positive reports on the courses from the Sports Turf legislation. A Governance Committee is tasked with ensuring the Trust’s Research Institute (STRI). governance practices remain appropriate for an organisation Locally, too, the Trust and the golf courses play an Trustee recruitment, induction and training of the Trust’s size and complexity. important role in the everyday life of the town. This As reported last year, the Trust entered a long-term Although Fife Council and The R&A each appoint three is recognised in the Links Act which extends certain contract with The Toro Company for the provision of Trustees and the Scottish Government appoints one it is A Remuneration Committee sets the pay and remuneration entitlements to residents of the town and to members of greenkeeping equipment. During 2017 new equipment important to stress that the Trustees are not in any way of the key management personnel having regard to various The R&A. The town is home to several long-established was put into service on the Old, Eden, Strathtyrum representatives or delegates of their appointing body. factors including the movement in RPI and CPI indices. golf clubs and the Trust works closely with those clubs and Balgove courses and over the winter of 2017/18 to facilitate their access to the courses for fixtures and a substantial renovation of the irrigation system on For the first time, and with the agreement of the Scottish As noted above, a Nomination Committee was formed in competitions. Pricing and access privileges have been the Castle Course, utilising Toro irrigation equipment, Government, the Trust took a lead role in filling the 2017. This committee will meet when required to select extended to holders of yearly tickets, the majority of was carried out. The new equipment is more efficient vacancy created by the retirement of Gillian Kirkwood. suitable candidates to fill Trustee vacancies. whom are members of these local golf clubs. and economical than the equipment it replaces which A Nomination Committee was established to agree the is consistent with the Trustees’ aim to operate in an qualities and experience required of the new trustee and A statement of the Trustees’ responsibilities in respect of the Nearly 50% of all golf on the Trust’s courses is played by economically and environmentally sustainable fashion. advertisements placed in the national press. A short list of accounts is contained in the Reference and Administrative yearly ticket holders, R&A members and residents of St applicants was prepared and interviews were conducted information on page 34. Andrews yet only a very small proportion of the Trust’s During 2017, and following extensive discussions with by the Trust’s Nomination Committee, following which income is derived from these sources. The Trust depends many commercial operators, the Trust implemented a a recommendation was made to and accepted by the Charitable purpose on visitors for the great majority of its golfing and other new system for the commercial sale of high season Old Scottish Government. This process was designed to The Trust is a registered charity and is therefore exempt from revenues and it is therefore important, for both the Trust Course tee times. ensure that the new appointee will be well placed to income and corporation taxes on its charitable activities. and the town, that the Trustees maintain an equitable play a positive role in the governance of the Trust. The Trading activities which are considered to be outwith the balance between ‘local’ and ‘visitor’ play. Trustees intend to work with the other appointing bodies Trust’s charitable purposes are carried out by subsidiary to ensure that future appointments have regard to the companies, and their profits are remitted to the Trust under The activities of the Trust’s subsidiaries, St Andrews Links specific needs of the Links Trust. Gift Aid arrangements. Golf Shops Limited (SALGS) and St Andrews Links Limited (SALL), make a major contribution to the Trust’s turnover Newly appointed Trustees participate in an induction and surplus and provide a degree of diversification from programme. They are provided with the latest Annual reliance solely on income derived from the golf courses. Report and Accounts, copies of past minutes and other Profits earned from the retail and licensing activities help background information and receive briefings on all areas to underwrite the Trust’s ability to keep yearly ticket prices of the Trust’s operations from senior management. as low as possible.

8 | St Andrews Links Trust: Annual Report and Accounts 2017 9 | St Andrews Links Trust: Scottish Charity No. SC006161 Trustees’ Report continued for the year ended 31 December 2017

The new arrangements, which took effect from the start Total income increased by £1,911,747 and total Despite the increased turnover in merchandising and The estimations that are required by the FRS102 valuation of high season in 2018, were implemented successfully expenses- which include substantial non-cash costs catering, the cost of goods sold and catering non-payroll tend to produce unpredictable results which can vary and, although demand for play on the Old Course is connected with the FRS102 valuation of pension scheme expenses was lower than in 2016. This is largely attributable wildly from year to year, as has been the case in the always likely to exceed the availability of tee times, liabilities (explained in more detail below) - increased to the writing down, in 2016, of the value of some retail Trust’s own accounts. Details of the assumptions used by the Trustees believe that the new system will ensure a by £2,150,816. Although Net Income, as shown on the goods held in stock. No such major adjustment was required the actuary and his estimates of assets and liabilities can fair distribution between local and visiting golfers and consolidated statement of financial activities on page 16, in 2017. The catering operation in particular experienced be found in Note 17 to the accounts. commercial users of the course. fell by £239,069 from £2,820,370 in 2016 to £2,581,301 steep increases in the cost of many ingredients, caused by a in 2017, the underlying financial performance was strong. number of factors including Brexit uncertainty, the relative In 2016 the calculation gave rise to an increase in the Throughout 2017 discussions took place with The R&A weakness of Sterling and market fluctuations. Despite theoretical liability of some £6.638 million whereas in Group over a number of issues, concluding in: a venue The increase in golfing income was modest at only 2.2%. these difficulties, the impact on catering gross margins was 2017 the same formula produced a decrease of £4.852 agreement for the 150th running of The Open, together Visitor green fee prices were not increased in 2017 and relatively small thanks to active monitoring of suppliers and million. with some other events; an extension of the lease to yearly ticket prices increased by between zero and 3.3% menus. SALGS of The Old Course Shop; and the appointment of depending on category. It is interesting to note that In addition to the balance sheet impact, the FRS102 that company to run the official merchandise operation income from visitor green fees and Old Course premiums General operating expenses increased by just under calculation also impacts on the Consolidated Statement of at future Opens, beginning with Carnoustie in 2018. remains nearly seven times as great as revenue from yearly £500,000 to £4,001,603 (2016 - £3,518,719). Several Financial Activities in the following ways. This represents a major achievement for SALGS and the tickets and The R&A annual contribution. This relationship factors contributed towards this increase, including major Trustees and the Board of SALGS look forward with highlights the Trust’s dependence on visiting golfers for expenditure on the irrigation systems on all the courses so as i) Included within payroll costs, as analysed in Note 16 excitement to developing this relationship. its continuing financial stability as well as the scale of the to improve their energy- and water-efficiency, a substantial to the accounts, is an amount intended to reflect the price advantages enjoyed by yearly ticket holders and R&A programme of building repairs in the Links Clubhouse and calculated difference between Current Service Cost, Building strong relationships with key partners is members. the greenkeeping centres, additional travel and subsistence i.e., the increase in the present value of the long-term fundamental to the success of SALL, and the global costs required to develop relationships with our overseas obligations resulting from employee service in the partner arrangement with Allianz SE continues to thrive Merchandise sales increased by 19.4% with all of the partners and licensees and increased training costs. current financial year and the amount actually paid by and develop to the mutual benefit of both parties. shops enjoying strong sales. As with golfing income, this way of employer calculations. This figure is calculated Similarly, the company continues to work closely with income is primarily derived from visitors to St Andrews. Although depreciation charges increased in 2017 this was to be £606,000 for 2017 compared to £106,000 its other partners, including Callaway, Rolex and Toro to Catering income increased by just under 6% helped by entirely attributable to the impairment charges explained in 2016 due to both an increase in the calculated maximise the benefits to all parties. strong visitor numbers and a reorganisation of the layout more fully in Note 5 to the accounts. Underlying depreciation obligation and a reduction in employer contributions of the Swilcan Restaurant early in 2017 which made it charges actually decreased as a result of switching from the as a result of scheme members retiring or leaving the In 2016 SALL entered a licensing contract with TSI Groove easier to prioritise the refreshment needs of golfers. purchase of most greenkeeping equipment to leasing it. As a Trust’s employment during 2017. & Sports, a major Japanese company. Two new ranges result of this change of approach, payments under operating of products were launched in Japan in August 2017, After falling in 2016, royalty income returned to more leases for equipment increased substantially in 2017. ii) A notional interest cost is calculated, being the earlier than originally expected, and they have been well normal levels in 2017 due to new agreements with Toro, difference between the estimated cost of financing the received, with sales exceeding TSI’s expectations. This TSI Groove & Sports and others. The construction of a new toilet block serving, primarily, long-term obligations of the scheme and the actual bodes well for the start of another important relationship. the Jubilee and New Courses together with further work to investment returns received during the year. This Total expenditure increased by just over £2 million construct on-course shelters contributed to the increase in figure is disclosed within Note 3 to the accounts and Financial Review in 2017, with virtually all of the increase being in Development Expenditure, analysed more fully in note 4 to has increased from £145,000 in 2016 to £285,000 in Presentation of the accounts Expenditure on Charitable Activities- namely the the accounts. 2017. The accounts are prepared in compliance with the operating costs of the Trust and The Castle Course St Charities SORP (FRS102). Consolidated accounts are Andrews Limited. It is important to note that £891,000 In order to gain a proper appreciation of the outcome from The triennial valuation showed an increase in the presented, with the results of the Trust and its subsidiary of these costs (2016 - £251,000) stem from the annual the Trust’s normal operations it is necessary to consider the scheme’s overall funding level to 92.9% at 31 March companies combined as if they were a single entity. Intra- calculation, in compliance with FRS102, of the Trust’s implications of the adjustment made to the Trust’s estimated 2017 (87.8% at 31 March 2014), and the actuary has group trading is eliminated from income and expenditure estimated liability in respect of the Fife Council pension liability to the Fife Council pension scheme. stated that the Trust’s portion of the scheme was 101% in the Consolidated Statement of Financial Activities and scheme. Further commentary on that adjustment is given funded (99% funded at 31 March 2014). intra-group balances are eliminated from the consolidated below. A further £292,084 of the increase is attributable To comply with accounting standards, the Trustees are balance sheet. to additional depreciation charges, explained more fully in required to commission a valuation exercise, referred to The consolidated balance sheet is considerably stronger Note 5 to the accounts. as the FRS102 valuation, from the scheme actuary. That than was the case at December 2016 although, as Commentary on the accounts valuation is prepared on an estimated basis using projected explained above, much of the improvement arises from Building on the success of 2016, further increases in Total payroll costs increased by just over £1 million, figures from the latest available triennial valuation, in this the result of the FRS102 valuation of estimated pension income were recorded in 2017 for golfing, catering and £606,000 of which is included in the £891,000 FRS102 case as at 31 March 2017, and using a prescribed formula scheme liabilities. merchandise income. Cash generation was extremely adjustment referred to above. After eliminating the for discount rates and other key elements. robust, helped by the transition to the new arrangements effect of the FRS102 adjustments from both 2016 and The other major changes during the year are the for advance reservations implemented for play in 2018. 2017, the actual increase in ‘real’ payroll costs was This treatment contrasts with the triennial valuation, which substantial increase in bank and cash balances, generated As a result the Trust ended 2017 with substantial net cash approximately £580,000, driven by a number of factors sets the contribution rates for the period between triennial in part through the increase in deferred income resulting balances having achieved a positive net cash position for including additional new roles created during the year valuation dates, and is carried out in great detail on an from the transition to new arrangements for the sale of the first time in many years in 2016. This balance sheet and the annual salary review in January. individual member basis. It is this triennial valuation which Old Course commercial tee times. strength is important as the Trustees consider plans for the trustees of the pension scheme will use in assessing the further major capital expenditure in future years. long-term health of the pension scheme as a whole.

10 | St Andrews Links Trust: Annual Report and Accounts 2017 11 | St Andrews Links Trust: Scottish Charity No. SC006161 Trustees’ Report continued for the year ended 31 December 2017

Total fixed assets reduced by just over £1.1 million The quality of the courses and facilities may also As explained more fully in Note 5 to the accounts, the during the year. This is due to a combination of factors, influence visitor numbers. The experience of the Trust’s limited lifespan of these buildings means that their including reduced capital expenditure on tangible fixed greenkeeping staff, coupled with the best available carrying value in the accounts was no longer appropriate assets as a result of the move to leasing the majority of equipment and supplies together with active training and an impairment adjustment has been made to write greenkeeping equipment, reduced expenditure in 2017 programmes, enable the Trust to set a benchmark in down their value to more accurately represent their on extending the Trust’s intellectual property portfolio course maintenance standards. Continued investment in remaining lifetime. and the continued amortisation of goodwill arising on the facilities supporting the courses is also important. consolidation. St Andrews Links Golf Shops Limited will run the official The failure of the Trust’s coastal defences is another merchandise operation at The Open beginning with the Reserves policy critical risk which is not entirely controllable by the 2018 event at Carnoustie. This is an exciting project for The Trustees wish to accumulate reserves in the form of Trustees. Parts of the Links are designated as a Site of our highly experienced retail team and we look forward to freely available funds appropriate to the Trust’s needs. Special Scientific Interest (SSSI) and there are numerous further developing our expertise in this area. Those reserves would potentially be available to cover regulatory hurdles to be surmounted before significant major unforeseen expenditure or loss of income arising engineering or protection works can take place. A St Andrews Links will continue to be the venue for several from the occurrence of any of the principal risks described monitoring programme of existing coastal defences is in leading world golfing events. In 2018 many of the world’s below or to fund the Trust’s infrastructure development place with the aim or providing early warning of potential top senior golfers will play the Old Course when it hosts plan. trouble spots. the The Senior Open Championship presented by Rolex and the Alfred Dunhill Links Championship will return for In the Trustees’ opinion an appropriate level of reserves The Trustees are of the opinion that the major risks to its 34th year. In the longer term, the venue agreement would be based on a multiple of ordinary operating which the Trust is exposed have been identified and with The R&A confirms that The Open will return to the expenditure plus a margin to allow for infrastructure evaluated and that systems are in place to manage those Old Course in 2021. developments. The Trustees have not decided on the risks and identify any new risks to which the Trust may appropriate multiple or margin as, until 2016, the Trust become exposed. had been in a net indebtedness rather than net cash positive situation. Despite the significant cash balances Plans for Future Periods shown in the December 2017 balance sheet, the Trustees The Trustees continually review the adequacy of the Gordon Mackenzie are of the opinion that current reserves are lower than Trust’s facilities and will continue to invest in them and Chairman of Trustees the long-term level they would seek to hold. The Trustees in the equipment used on the Links in pursuit of their 18 May 2018 will give consideration to setting an appropriate level of objective of delivering unique and memorable experiences reserves on an annual basis. for all.

Principal risks to the Trust’s activities During the winter of 2018/19 a new half-way house will During 2017 the Audit & Risk Committee updated the be constructed adjacent to the existing toilets on the Old Trust’s risk register and presented it to Trustees for Course. This will replace the refreshment van which has discussion and approval. been in use for many years and provide a better service to golfers seeking refreshment during their round. The Given the Trust’s dependence on visiting golfers for the facility’s proximity to the New Course will also enable majority of its income, the principal risks are connected golfers playing that course to utilise the service. with the ability to attract and accommodate sufficient visitors to generate that income. Not all of these risks can As part of a rolling ten-year infrastructure development be controlled or influenced by the Trustees. plan the Trustees, in October 2017, gave their approval for the construction of new offices, to be followed by For example, a major and prolonged disruption to air the demolition and replacement of the Eden Clubhouse, travel could have a serious impact on the number of projects which will take several years to complete. The overseas visitors to St Andrews and it is unlikely that they existing building was opened in 2000 but, such has been could be wholly replaced by domestic visitors. This risk the pace of the Trust’s development and the expectations can be offset to some extent by developing other sources of our customers, that it is now unfit for purpose and of income, e.g., royalties from the Trust’s intellectual the redevelopment, which is expected to begin towards property portfolio, but it would take considerable time to the end of 2018 with the demolition of Pilmour Lodge, do so, potentially exposing the Trust to temporary cash will deliver world-class facilities serving the golf courses flow issues. together with much improved office accommodation for many of the Trust’s staff.

12 | St Andrews Links Trust: Annual Report and Accounts 2017 13 | St Andrews Links Trust: Scottish Charity No. SC006161 Independent Auditor’s Report to the Trustees of St Andrews Links Trust for the year ended 31 December 2017

Opinion Conclusions relating to going concern Responsibilities of trustees We have audited the accounts of St Andrews Links Trust We have nothing to report in respect of the following As explained more fully in the Trustees’ responsibilities (the ‘parent charity’) and its subsidiaries (the ‘group’) for matters in relation to which the ISAs (UK) require us to statement set out on page 34 the Trustees are responsible for the year ended 31 December 2017 which comprise the report to you where: the preparation of accounts which give a true and fair view, group Statement of Financial Activities, the charity and • the Trustees’ use of the going concern basis of and for such internal control as the Trustees determine is group Balance Sheets and the charity and group cash accounting in the preparation of the accounts is not necessary to enable the preparation of accounts that are free flow statements and notes to the accounts, including appropriate; or from material misstatement, whether due to fraud or error. a summary of significant accounting policies. The • the Trustees have not disclosed in the accounts any financial reporting framework that has been applied in identified material uncertainties that may cast In preparing the accounts, the Trustees are responsible for their preparation is applicable law and United Kingdom significant doubt about the group’s or parent assessing the group’s and parent charity’s ability to continue Accounting Standards, including Financial Reporting charity’s ability to continue to adopt the going as a going concern, disclosing, as applicable, matters related Standard 102 The Financial Reporting Standard applicable concern basis of accounting for a period of at least to going concern and using the going concern basis of in the UK and Republic of Ireland (United Kingdom twelve months from the date when the accounts accounting unless the Trustees either intend to liquidate the Generally Accepted Accounting Practice). are authorised for issue. group or the parent charity or to cease operations, or have no realistic alternative but to do so. This report is made solely to the charity’s Trustees, as a Other information body, in accordance with Regulation 10 of the Charities The Trustees are responsible for the other information. Auditor’s responsibilities for the audit of the accounts Accounts (Scotland) Regulations 2006. Our audit work has The other information comprises the information We have been appointed as auditor under section 44(1)(c) of been undertaken so that we might state to the charity’s included in the Trustees’ annual report, other than the the Charities and Trustee Investment (Scotland) Act 2005 and Trustees those matters we are required to state to them in accounts and our auditor’s report thereon. Our opinion report in accordance with regulations made under that Act. an auditor’s report and for no other purpose. To the fullest on the accounts does not cover the other information extent permitted by law, we do not accept or assume and, except to the extent otherwise explicitly stated in Our objectives are to obtain reasonable assurance about responsibility to anyone other than the charity and the our report, we do not express any form of assurance whether the accounts as a whole are free from material charity’s Trustees as a body, for our audit work, for this conclusion thereon. misstatement, whether due to fraud or error, and to issue report, or for the opinions we have formed. an auditor’s report that includes our opinion. Reasonable In connection with our audit of the accounts, our assurance is a high level of assurance, but is not a guarantee In our opinion the accounts: responsibility is to read the other information and, that an audit conducted in accordance with ISAs (UK) • give a true and fair view of the state of the group’s and in doing so, consider whether the other information will always detect a material misstatement when it exists. parent charity’s affairs as at 31 December 2017, and is materially inconsistent with the accounts or our Misstatements can arise from fraud or error and are of the group’s incoming resources and application of knowledge obtained in the audit or otherwise appears considered material if, individually or in the aggregate, they resources for the year then ended; to be materially misstated. If we identify such material could reasonably be expected to influence the economic • have been properly prepared in accordance with United inconsistencies or apparent material misstatements, we decisions of users taken on the basis of these accounts. Kingdom Generally Accepted Accounting Practice; and are required to determine whether there is a material • have been prepared in accordance with the misstatement in the accounts or a material misstatement A further description of our responsibilities for the audit of requirements of the Charities and Trustee Investment of the other information. If, based on the work we the accounts is located on the Financial Reporting Council’s (Scotland) Act 2005 and regulations 6 and 8 of the have performed, we conclude that there is a material website at: www.frc.org.uk/auditorsresponsibilities. This Charities Accounts (Scotland) Regulations 2006. misstatement of this other information, we are required description forms part of our auditor’s report. to report that fact. Basis for opinion We communicate with those charged with governance We conducted our audit in accordance with International We have nothing to report in this regard. regarding, among other matters, the planned scope and Standards on Auditing (UK) (ISAs (UK)) and applicable timing of the audit and significant audit findings, including law. Our responsibilities under those standards are further Matters on which we are required to report any significant deficiencies in internal control that we identify described in the Auditor’s responsibilities for the audit of by exception during our audit the accounts section of our report. We are independent We have nothing to report in respect of the following of the group and parent charity in accordance with the matters in relation to which the Charities Accounts ethical requirements that are relevant to our audit of the (Scotland) Regulations 2006 require us to report to you if, accounts in the UK, including the FRC’s Ethical Standard, in our opinion: Henderson Loggie and we have fulfilled our other ethical responsibilities in • the information given in the accounts is inconsistent in Statutory Auditor accordance with these requirements. We believe that any material respect with the trustees’ report; or (Eligible to act as an auditor in terms of section the audit evidence we have obtained is sufficient and • proper accounting records have not been kept; or 1212 of the Companies Act 2006) appropriate to provide a basis for our opinion. • the parent charity’s accounts are not in agreement The Vision Building with the accounting records; or 20 Greenmarket • we have not received all the information and Dundee explanations we require for our audit. DD1 4QB

24 May 2018

14 | St Andrews Links Trust: Annual Report and Accounts 2017 15 | St Andrews Links Trust: Scottish Charity No. SC006161 Consolidated Statement of Financial Activities Balance Sheets for the year ended 31 December 2017 as at 31 December 2017

Consolidated Trust Only

2017 2016 2017 2016 2017 2016 INCOME Notes £ £ £ Notes £ £ £ £ INCOME FROM CHARITABLE ACTIVITIES FIXED ASSETS Golfing income 2 13,936,403 13,635,814 Tangible fixed assets 5 23,371,728 24,308,052 22,682,601 23,603,487 Catering income 2,444,876 2,310,688 Intangible fixed assets 6 2,336,208 2,417,858 - - Rents receivable 18,282 10,517 Investment in subsidiary companies 7 - - 1,150,001 2,949,666 16,399,561 15,957,019 Goodwill arising on consolidation 8 239,714 324,321 - - INCOME FROM OTHER TRADING ACTIVITIES TOTAL FIXED ASSETS 25,947,650 27,050,231 23,832,602 26,553,153 Merchandise income 6,687,008 5,600,295 Royalties 1,435,449 1,154,835 CURRENT ASSETS Other income 90,144 78,646 Stocks 1,465,216 1,481,740 177,909 149,066 8,212,601 6,833,776 Debtors- due within one year 9 525,025 511,164 2,060,621 2,217,946 Cash at bank and in hand 11,328,602 4,362,676 11,250,672 4,241,190 INVESTMENT INCOME 13,318,843 6,355,580 13,489,202 6,608,202 Bank interest 18,777 9,122 CREDITORS OTHER INCOME Amounts falling due within one year 10 1,408,594 1,460,170 2,100,419 1,889,575 Gain on disposal of fixed assets 136,849 56,124 Deferred income 11 5,928,456 3,238,499 5,528,907 2,770,866 7,337,050 4,698,669 7,629,326 4,660,441 TOTAL INCOME 24,767,788 22,856,041 NET CURRENT ASSETS 5,981,793 1,656,911 5,859,876 1,947,761 EXPENDITURE Expenditure on raising funds 6,198,353 6,165,115 TOTAL ASSETS LESS CURRENT LIABILITIES 31,929,443 28,707,142 29,692,478 28,500,914 Expenditure on charitable activities 15,988,134 13,870,556 TOTAL EXPENDITURE 3 22,186,487 20,035,671 CREDITORS DUE AFTER MORE THAN ONE YEAR 12 (250,000) (500,000) (250,000) (500,000)

NET INCOME 2,581,301 2,820,370 NET ASSETS EXCLUDING PENSION SCHEME LIABILITY 31,679,443 28,207,142 29,442,478 28,000,914 OTHER RECOGNISED GAINS / (LOSSES) Remeasurement gain / (loss) on defined PENSION SCHEME LIABILITY 17 (5,467,000) (10,319,000) (5,467,000) (10,319,000) benefit pension scheme 17 5,743,000 (6,387,000) NET ASSETS £26,212,443 £17,888,142 £23,975,478 £17,681,914 NET MOVEMENT IN FUNDS IN THE YEAR 8,324,301 (3,566,630) REPRESENTED BY RECONCILIATION OF FUNDS UNRESTRICTED RESERVES 13 26,212,443 17,888,142 23,975,478 17,681,914 Balance brought forward 17,888,142 21,454,772 £26,212,443 £17,888,142 £23,975,478 £17,681,914 BALANCE CARRIED FORWARD 13 £26,212,443 £17,888,142

All funds are unrestricted. These accounts were approved by the Trustees at their meeting on 18 May 2018 and are signed on their behalf by

Gordon Mackenzie Chairman of Trustees AUDITOR’S REPORT - Pages 14 and 15 AUDITOR’S REPORT - Pages 14 and 15 THE NOTES ON PAGES 19 TO 31 FORM PART OF THESE ACCOUNTS THE NOTES ON PAGES 19 TO 31 FORM PART OF THESE ACCOUNTS

16 | St Andrews Links Trust: Annual Report and Accounts 2017 17 | St Andrews Links Trust: Scottish Charity No. SC006161 Cash Flow Statements Notes to the Accounts for the year ended 31 December 2017 for the year ended 31 December 2017

1. ACCOUNTING POLICIES i) Tangible fixed assets: tangible fixed assets are stated at Consolidated Links Trust Only a) Accounting convention: the accounts are prepared under original historic cost including, where appropriate, the historical cost convention. the cost of irrecoverable VAT. Depreciation is provided 2017 2016 2017 2016 as described more fully in note 1 k) below. Items with £ £ £ £ b) Basis of preparation of accounts: the Trust constitutes an original cost of less than £500 (excluding VAT) are Cash flows from operating activities a public benefit entity as defined by FRS102. The not capitalised unless they are part of a larger pattern of Net cash provided by operating activities (Note a. below) 7,851,747 5,460,474 7,324,913 4,683,017 accounts are prepared in accordance with the Charities expenditure. Cash flows from investing activities and Trustee Investment (Scotland) Act, 2005, the Charities Interest received on bank deposits 18,777 9,122 18,754 8,943 Accounts (Scotland) Regulations 2006 (as amended), j) Tenant’s improvements: in the Trust’s accounts, tenant’s Interest received on intra-group loan accounts - - 32,531 54,855 FRS102 and the Charities SORP (FRS102) (referred to as improvements are defined as expenditure of a capital Payments to acquire tangible fixed assets (570,052) (807,251) (397,638) (593,864) SORP). nature and with income generating potential undertaken Payments to acquire intangible fixed assets (334,617) (502,752) - - on land not owned by the Trust, for example, the Receipts from sales of tangible fixed assets 250,071 123,481 280,922 91,706 c) Basis of consolidation: the consolidated accounts consist Links Clubhouse. Where wholly-owned companies incur of St Andrews Links Trust and its subsidiary companies, expenditure of a capital nature on land and buildings Net cash used in investing activities (635,821) (1,177,400) (65,431) (438,360) St Andrews Links Limited, St Andrews Links Golf Shops not owned by them, that expenditure is also capitalised as

Limited, The Castle Course St Andrews Limited and Tom tenant’s improvements. Cash flows from financing activities Morris Limited. With the exception of golfing activities, Term loans from Royal Bank of Scotland- the gross turnover and expenditure of the subsidiary k) Depreciation: depreciation is provided on tangible fixed decrease in long-term balance - (400,000) - (400,000) companies are treated as Activities for Generating Funds assets at rates calculated to write off the cost, less R&A Foundation- within the consolidated statement of financial activities. estimated residual value, of each asset over its decrease in long-term balance (250,000) (250,000) (250,000) (250,000) Gross turnover and expenditure of The Castle Course expected useful life. Depreciation on buildings and St Andrews Limited are included within Charitable tenant’s improvements is charged from the date the Net cash used in financing activities (250,000) (650,000) (250,000) (650,000) Activities in the consolidated statement of financial underlying assets are first brought into use. Depreciation activities. The assets and liabilities of the subsidiary is charged on a straight line basis using the following Change in cash and cash equivalents during the year 6,965,926 3,633,074 7,009,482 3,594,657 companies are included on a line-by-line basis within the rates: consolidated balance sheet. • Vehicles, plant and equipment 20% Cash and cash equivalents at 1 January 4,362,676 729,602 4,241,190 646,533 • Office furniture and equipment between 20% and 33% Cash and cash equivalents at 31 December 11,328,602 4,362,676 11,250,672 4,241,190 d) Going concern: at the time of approving the accounts, • Heritable property, including alterations 2% the Trustees have a reasonable expectation that the Trust • Tenant’s improvements 2% NOTES TO THE CASH FLOW STATEMENT has adequate resources to continue in operational a. Reconciliation of net movement in funds to net existence for the foreseeable future. No depreciation is provided on freehold land or golf cash flows from operating activities courses. No depreciation is charged on assets Net incoming resources before other recognised losses 2,581,301 2,820,370 2,350,229 2,231,743 e) Turnover: turnover is stated net of Value Added Tax. under construction until such time as they are brought Add back: Depreciation charges net of gain on sale 1,256,305 1,167,455 1,037,602 963,572 into use at which point depreciation is charged at the Add back: Amortisation of intangible fixed assets 416,267 375,974 - - f) Incoming resources: income is generally recognised on a appropriate rate. Add back: Amortisation of Goodwill Arising on receivable basis where the amount is reasonably certain Consolidation 84,607 84,607 - - and there is adequate certainty of receipt, and is stated l) Intangible fixed assets: expenditure incurred to register Non-cash movements associated with FRS102 Retirement Benefits adjustments 891,000 251,000 891,000 251,000 gross of related expenditure. or protect trademarks or other intellectual properties Write off loan advanced to Tom Morris International which, in the opinion of the Trustees or the Directors of during the year - - - (4,834) g) Resources expended: expenditure is accounted for on an the company concerned, have a reasonable Deduct: Interest income shown in investing activities (18,777) (9,122) (51,285) (63,798) accruals basis probability of generating income is capitalised as Decrease / (Increase) in stocks 16,524 875,684 (28,843) 11,870 • Costs of generated funds include the expenses of non- intangible fixed assets. These assets are amortised over Decrease / (Increase) in debtors due within one year (13,861) 151,062 157,325 1,480,264 charitable trading activities a ten year period on the straight line basis. The Increase / (Decrease) in creditors and deferred income 2,638,381 (256,556) 2,968,885 (186,800) • Charitable activities comprise direct expenditure including Trustees believe that amortising intangible fixed assets Net cash inflow from operating activities 7,851,747 5,460,474 7,324,913 4,683,017 direct staff costs attributable to charitable activities over ten years is reasonable because it can take several • Governance costs include costs associated with years to negotiate agreements to generate income from b. Analysis of the balances of cash and cash equivalents as constitutional and statutory requirements registered marks. An impairment review of all shown in the balance sheet Cash in bank and on hand 11,328,602 4,362,676 11,250,672 4,241,190 • Support costs are allocated against the above categories intangible fixed assets is carried out annually at the Bank overdraft - - - - on a basis consistent with the use of resources balance sheet date. Further information on intangible 11,328,602 4,362,676 11,250,672 4,241,190 fixed assets is shown in Note 6 below. All other h) Development expenditure: expenditure on projects expenditure on trademark registrations and intellectual carried out on land not owned by the Trust is treated as properties is written off when incurred on the basis that development expenditure unless the projects have income future revenues are uncertain. earning potential, in which case expenditure is capitalised as tenant’s improvements. Capital expenditure incurred on land and buildings owned by the Trust is capitalised and included in fixed assets. AUDITOR’S REPORT - Pages 14 and 15 THE NOTES ON PAGES 19 TO 31 FORM PART OF THESE ACCOUNTS

18 | St Andrews Links Trust: Annual Report and Accounts 2017 19 | St Andrews Links Trust: Scottish Charity No. SC006161 Notes to the Accounts continued for the year ended 31 December 2017

m) Goodwill arising on consolidation: where a wholly- u) Taxation: the Trust is exempt from income and 3. ANALYSIS OF TOTAL RESOURCES EXPENDED owned company is acquired at a price in excess corporation taxes by virtue of its charitable status. The of the fair value of its underlying assets and wholly-owned companies are liable to corporation tax liabilities, the difference between that fair value but no taxation liability arose for the year ended 31 and the purchase price is treated as goodwill arising December 2017. Expenditure Expenditure Total Total on consolidation. Goodwill arising on Basis of on raising on charitable Expenditure Expenditure consolidation is amortised over ten years on a straight v) Foreign currency transactions: assets and liabilities apportionment funds activities 2017 2016 line basis from the date of acquisition. denominated in foreign currencies are translated £ £ £ £ at the rate of exchange ruling at the balance sheet Payroll costs (note 16) Usage 1,083,190 9,481,447 10,564,637 9,484,799 n) Debtors: trade and other debtors are recognised at the date. Transactions in foreign currencies are Cost of goods sold and catering settlement amount due after any trade discount recorded at the exchange rate applicable at the non-payroll expenses Usage 3,103,669 1,148,522 4,252,191 4,330,715 offered. Prepayments are valued at the amount transaction date. All differences on exchange are taken Operating expenses Usage 1,068,390 2,933,213 4,001,603 3,518,719 prepaid net of any trade discounts due. to the Statement of Financial Activities. Depreciation Usage 127,687 1,265,467 1,393,154 1,223,579 Amortisation and impairment o) Creditors and provisions: creditors and provisions are w) Pensions: retirement benefits to employees are of intangible fixed assets Usage 416,267 - 416,267 375,974 recognised where the charity has a present obligation provided primarily through the Fife Council Amortisation of Goodwill Arising resulting from a past event that will probably result superannuation scheme. This is a defined on Consolidation Usage - 84,607 84,607 84,607 in the transfer of funds to a third party and the benefit scheme which is externally funded. Note Payments under operating leases amount due to settle the obligation can be measured 17 below gives further information regarding pension land and buildings Usage 185,444 5,500 190,944 189,658 Equipment Usage - 264,548 264,548 45,573 or estimated reliably. Creditors and provisions are arrangements. Legal & professional fees Usage 200,071 71,871 271,942 297,536 normally recognised at their settlement amount after Auditor’s remuneration allowing for any trade discounts due. x) Support costs: support costs on activities for generating non-audit services Usage 1,985 4,170 6,155 9,895 funds are allocated to those activities by means of Development expenditure (note 4) Usage - 282,356 282,356 126,903 p) Grants receivable: grants receivable in respect of charges raised by the Trust to the wholly-owned Bank interest Usage - - - 23,864 capital projects are offset against the cost of the companies. The amount charged for the year Notional net interest cost on FRS102 relevant project. Depreciation is calculated on the was £247,150 (2016 - £184,250). Support costs calculation on pension scheme liability Usage - 285,000 285,000 145,000 project cost net of grants. Grants of a revenue or relating to governance are allocated on the basis VAT not recoverable (note 1 t) Usage - 149,333 149,333 154,949 non-capital nature are credited to general reserve described in Note 3 below. All other costs are Governance costs (see table below) Usage 11,650 12,100 23,750 23,900 as income when received. regarded as directly related to the delivery of the £6,198,353 £15,988,134 £22,186,487 £20,035,671

charitable activity. q) Operating leases: rentals applicable to operating leases GOVERNANCE COSTS are charged on a time basis over the lease term. y) Accounting Estimates: in the Trustees’ opinion the only Basis of Expenditure Expenditure Total Total figure in these accounts which results from a apportionment on raising on charitable Expenditure Expenditure r) Donations: donations received are credited to the significant estimate is the defined benefit pension funds activities 2017 2016 Statement of Financial Activities as received. Donations scheme liability, calculated by the pension scheme £ £ £ £ made are included within operating expenses. actuary in compliance with FRS102. The actual Auditor’s remuneration performance is unlikely to be in line with the audit work Usage 11,650 12,100 23,750 23,900 s) Stocks: stocks are valued at the lower of original actuarial valuation as a result of the valuation being £11,650 £12,100 £23,750 £23,900 invoice cost or net realisable value. based upon assumptions on future unpredictable events such as return on assets and mortality rates. t) Value Added Tax: the Trust is partially exempt for That estimate has a material impact on the accounts VAT purposes and is therefore unable to recover all of which is explained in more detail in Note 22 below. 4. DEVELOPMENT EXPENDITURE the input VAT it incurs on its purchases. Irrecoverable All development expenditure is incurred by St Andrews Links Trust. The subsidiary companies have no expenditure of this VAT relating to the purchase of fixed assets is nature. Expenditure can be analysed as follows: capitalised and written off at the same rate and over the same period as the underlying asset. 2017 2016 £ £

On-course toilets & shelters 184,390 38,838 2. ANALYSIS OF GOLFING INCOME Ecological improvements on courses 36,976 60,047 Golfing income can be analysed as follows: 2017 2016 Road and pathways improvements 23,398 3,026 £ £ Irrigation system extensions etc. - 17,152 Coastal protection works 11,590 5,000 Visitor green fees and Old Course premium 10,393,382 10,221,487 General development work 26,002 2,840 Yearly ticket revenue and annual contribution from £282,356 £126,903 The Royal and Ancient Golf Club 1,513,248 1,471,770 Other golfing income 2,029,773 1,942,557 £13,936,403 £13,635,814

20 | St Andrews Links Trust: Annual Report and Accounts 2017 21 | St Andrews Links Trust: Scottish Charity No. SC006161 Notes to the Accounts continued for the year ended 31 December 2017 6. INTANGIBLE FIXED ASSETS During the year St Andrews Links Limited incurred expenditure to acquire or develop trademarks and other intellectual 5. FIXED ASSETS properties. Where this expenditure is likely to result in the successful registration of a mark with revenue earning potential that expenditure is capitalised as an intangible fixed asset and amortised, on a straight line basis, over ten years. i) CONSOLIDATED As at 31 December each year impairment reviews are performed of all intangible fixed assets in accordance with accounting Vehicles, Office standards. If, in the opinion of the Directors or Trustees, any of the capitalised items no longer have reasonable prospects of Land and Tenant’s plant and furniture & Assets under generating future revenues, the remaining net book value of those items is written off. buildings improvements equipment equipment construction Total £ £ £ £ £ £ Following the impairment review carried out at 31 December 2017 intangible fixed assets with a net book value of £12,003 COST (2016 - £16,443) were written off. At 1 January 2017 19,520,129 6,402,207 5,154,660 4,958,106 44,585 36,079,687 Additions 24,832 14,478 281,266 234,314 15,162 570,052 Reclassifications - - - 44,585 (44,585) - The table below analyses intangible fixed assets: Disposals - - (1,255,370) (22,026) - (1,277,396) At 31 December 2017 £19,544,961 £6,416,685 £4,180,556 £5,214,979 £15,162 £35,372,343

DEPRECIATION At 1 January 2017 1,605,425 1,963,287 4,050,380 4,152,543 - 11,771,635 COST £ Charge for year 188,976 125,574 421,948 364,572 - 1,101,070 At 1 January 2017 3,943,179 Impairments (see below) 292,084 - - - - 292,084 Additions 334,617 Disposals - - (1,142,186) (21,988) - (1,164,174) Written off following impairment review as at 31 December (13,252) At 31 December 2017 £2,086,485 £2,088,861 £3,330,142 £4,495,127 £- £12,000,615 At 31 December 2017 £4,264,544

NET BOOK VALUE At 31 December 2017 £17,458,476 £4,327,824 £850,414 £719,852 £15,162 £23,371,728 AMORTISATION At 1 January 2017 1,525,321 At 31 December 2016 £17,914,704 £4,438,920 £1,104,280 £805,563 £44,585 £24,308,052 Charge for year 404,264 Written off following impairment review as at 31 December (1,249) At 31 December 2017 £1,928,336 ii) LINKS TRUST ONLY Vehicles, Office Land and Tenant’s plant and furniture & Assets under NET BOOK VALUE buildings improvements equipment equipment construction Total At 31 December 2017 £2,336,208 COST £ £ £ £ £ £ At 1 January 2017 19,520,129 6,126,521 4,079,010 3,134,615 44,585 32,904,860 At 31 December 2016 £2,417,858 Additions 24,832 14,478 176,269 166,897 15,162 397,638 Reclassifications - - - 44,585 (44,585) - Intra-group transfers - - (170,533) - - (170,533) Disposals - - (1,006,323) (22,027) - (1,028,350) At 31 December 2017 £19,544,961 £6,140,999 £3,078,423 £3,324,070 £15,162 £32,103,615 7. INVESTMENT IN SUBSIDIARY COMPANIES The table below lists the Trust’s subsidiary companies. Unless otherwise stated, the value attributed to each company DEPRECIATION in the Trust’s accounts is equal to the nominal value of the issued share capital. The results of the subsidiary companies At 1 January 2017 1,605,425 1,916,420 3,180,187 2,599,341 - 9,301,373 are included in the consolidated accounts. Any taxable profits of the companies are remitted to the Trust through Gift Charge for year 188,976 120,061 319,508 237,777 - 866,322 Aid arrangements. Impairments (see below) 292,084 - - - - 292,084 Intra-group transfers - - (120,783) - - (120,783) Note %age 2017 2016 Disposals - - (895,994) (21,988) - (917,982) owned £ £ At 31 December 2017 £2,086,485 £2,036,481 £2,482,918 £2,815,130 £- £9,421,014 Name NET BOOK VALUE St Andrews Links Limited 7. i. 100% 150,000 150,000 The Castle Course St Andrews Limited 7. ii. 100% 500,000 500,000 At 31 December 2017 £17,458,476 £4,104,518 £595,505 £508,940 £15,162 £22,682,601 St Andrews Links Golf Shops Limited 7. iii. 100% 500,000 500,000 Tom Morris Limited 7. iv. 100% 1 1,799,666 At 31 December 2016 £17,914,704 £4,210,101 £898,823 £535,274 £44,585 £23,603,487 £1,150,001 £2,949,666

Impairment adjustments: During 2017 the Trustees resolved to construct new offices on the site of Pilmour Lodge and, in the longer term, to demolish the existing Eden Clubhouse and Pilmour House and build a new clubhouse facility on that site to serve the Eden, Strathtyrum and Balgove Courses. A planning application for the demolition of Pilmour Lodge is expected to be lodged during 2018. Accordingly, Trustees decided to write down the net book value of Pilmour Lodge in these accounts to zero as at 31 December 2017, resulting in an impairment adjustment of £71,962.

It is anticipated that the existing Eden Clubhouse and Pilmour House building will be demolished after in 2021 and, accordingly, the net book value of that building will be written down to zero by 31 December 2021, on a straight line basis. This has resulted in a further impairment adjustment of £220,122 in the 2017 accounts.

22 | St Andrews Links Trust: Annual Report and Accounts 2017 23 | St Andrews Links Trust: Scottish Charity No. SC006161 Notes to the Accounts continued for the year ended 31 December 2017

8. GOODWILL ARISING ON CONSOLIDATION The following notes describe the activities of each subsidiary company. The goodwill arising on consolidation relates to the acquisition in 2010 of Tom Morris Limited and represents the difference between the estimated fair value of the company’s assets and the purchase price paid. Goodwill is being amortised over ten i. St Andrews Links Limited: The company receives royalties and other income derived from the exploitation years on a straight line basis and the following table analyses the figure in the accounts. of trademarks and other intellectual properties and bears the costs associated with protecting those intellectual properties. As at 31 December 2017 the company’s aggregate assets and liabilities were £307,508 and it reported a profit on ordinary activities of £140,716 (2016 – loss of £23,554), after paying a £ management fee of £87,000 (2016 - £97,000) and Gift Aid of £30,136 (2016 - £nil) to the Trust. Original goodwill arising on consolidation 846,063 ii. The Castle Course St Andrews Limited: The company operates an 18-hole golf course- The Castle Course. Amortisation As at December 2017 the company’s aggregate assets and liabilities were £920,905 and it reported a profit As at 1 January 2017 521,742 on ordinary activities of £13,640 (2016 - £220,773), after paying a management fee of £24,500 (2016 - Charge for the year ended 31 December 2017 84,607 £28,000) to the Trust. 606,349 Book Value as at 31 December 2017 £239,714 iii. St Andrews Links Golf Shops Limited: The company sells clothing and other memorabilia and merchandise bearing the Trust’s brands. As at 31 December 2017 the company’s aggregate assets and liabilities were Book value as at 31 December 2016 £324,321 £1,706,338 and it reported a profit on ordinary activities of £234,274 (2016 – loss of £434,243), after paying a management fee of £135,500 (2016 - £59,000) and Gift Aid of £1,418,549 (2016 - £nil) to the Trust. 9. DEBTORS iv. Tom Morris Limited: The company was acquired by the Trust in October 2010 and had been carried in Consolidated Links Trust Only the accounts at its purchase price together with additional ordinary shares subscribed for by the Trust. The ownership of the trademarks held by the company and subsequently transferred to St Andrews Links 2017 2016 2017 2016 Limited together with the removal of competing ‘Old Course’ brands from sale enabled significant increases £ £ £ £ in royalty and retail income to be achieved throughout the Group since 2010. However, as the company Trade debtors 76,126 67,223 57,934 59,914 is no longer actively trading the Trustees have decided to write down the value of the investment in the Amounts due by wholly-owned companies - - 1,813,881 2,019,117 company to a nominal £1, an impairment of £1,799,665. Prepayments 448,899 443,941 188,806 138,915 £525,025 £511,164 £2,060,621 £2,217,946 As at 31 December 2017 the company’s net assets and liabilities were £nil (2016 - net liability of £2,050) and it reported an operating profit, after paying a management fee of £150 (2016 - £250) to the Trust, of £2,050 (2016 – £27).

10. CREDITORS: Amounts falling due within one year Consolidated Links Trust Only

2017 2016 2017 2016 £ £ £ £

Trade creditors 423,068 450,633 309,138 329,318 Current portion of R&A Trust Company (No. 1) Limited loan 250,000 250,000 250,000 250,000 Amounts due to wholly-owned companies - - 936,275 760,364 Taxation and Social Security 506,092 450,294 506,092 434,195 Accruals 229,434 309,243 98,914 115,698 £1,408,594 £1,460,170 £2,100,419 £1,889,575

24 | St Andrews Links Trust: Annual Report and Accounts 2017 25 | St Andrews Links Trust: Scottish Charity No. SC006161 Notes to the Accounts continued for the year ended 31 December 2017

11. DEFERRED INCOME The following items are treated as deferred income: 15. ST ANDREWS LINKS JUNIOR GOLF ASSOCIATION i. payments received in advance to confirm reservations for play in the following year St Andrews Links Junior Golf Association (SALJGA) was set up by the Trustees in 2002 to promote the development of junior ii. the unexpired portion of yearly ticket revenues and the annual contribution from the R&A golf in St Andrews. Membership is open to any child, aged 5 to 18, residing in or attending a school in St Andrews. Members iii. tournament and championship facility fees received in advance receive coaching from both professional and trained volunteer coaches, each of whom has received specialist training in golf iv. liability in respect of unredeemed gift cards and prepaid Golf Academy lessons tuition and child protection. The Trust underwrites the costs of the SALJGA programme, although some funds are generated through membership subscriptions, events and other sponsorships. In 2017 the net cost to the Trust was £47,991 The total of deferred income on the Links Trust’s balance sheet at 31 December 2017 was £5,528,907 (2016 - £2,770,866). (2016 - £32,787). On a consolidated basis, deferred income at 31 December 2017 was £5,928,456 (2016 - £3,238,499).

12. CREDITORS DUE AFTER MORE THAN ONE YEAR 16. EMPLOYEES AND THEIR REMUNERATION Consolidated Links Trust Only The average number of employees of the Trust and its subsidiary companies during the year ended 31 December 2017 was 312 (2016 – 304) and their aggregate remuneration, including the cost of pension contributions, employers National 2017 2016 2017 2016 Insurance and benefits in kind was £10,564,637 (2016 - £9,484,799). £ £ £ £ R&A Trust Company (No. 1) Limited £250,000 £500,000 £250,000 £500,000 Payroll costs can be analysed as follows:

2017 2016 During 1994 and 1996 the Royal and Ancient Golf Club advanced interest-free loans in the aggregate amount of £1 million. £ £ These loans were subsequently assigned to R&A Trust Company (No 1) Limited and are repayable in four equal annual instalments, the last of which is due in July 2019. The instalment due for repayment in July 2019 is shown as a long term Salaries and benefits in kind 8,085,714 7,613,903 liability. Social Security costs 701,418 622,422 Contributions to Defined Benefit pension schemes 864,018 879,279 Contributions to Defined Contribution pension schemes 230,956 207,257 13. UNRESTRICTED RESERVES (RETAINED SURPLUS) Other employee benefits 76,531 55,938 Unrestricted reserves represent the aggregate of all surpluses earned by the Trust or, in the case of the consolidated balance FRS102 adjustments 606,000 106,000 sheet, the Trust and its subsidiary companies. Unrestricted reserves bear no relationship whatsoever to cash or bank facilities £10,564,637 £9,484,799 available to the Trust.

Movements on unrestricted reserves can be analysed as follows: The numbers of employees whose pay and taxable benefits exceeded £60,000 fell within the following bands: Consolidated Trust Only

2017 2016 2017 2016 2017 2016 £ £ £ £ £60,000 - £69,999 2 1 Unrestricted reserves brought forward at 1 January 17,888,142 21,454,772 17,681,914 21,842,005 £80,000 - £89,999 2 2 Net incoming resources 8,324,301 (3,566,630) 6,293, 564 (4,160,091) £90,000 - £99,999 1 1 Unrestricted reserves carried forward at 31 December £26,212,443 £17,888,142 £23,975,478 £17,681,914 £100,000 - £109,999 1 2 £110,000 - £119,999 1 - £160,000 - £169,999 1 1 8 7 14. FINANCIAL ACTIVITIES OF ST ANDREWS LINKS TRUST (the Charity) The financial activities undertaken by St Andrews Links Trust are analysed in the following table: In 2017 and 2016 all of the employees in the above table participated in the Fife Council defined benefit pension scheme. Contributions of £66,116 (2016 - £65,010) were made to defined contribution schemes in respect of these employees. The total amount of employee benefits, including salary, benefits in kind and employer pension contributions, received by key 2017 2016 management personnel was £852,770 (2016 - £829,686). £ £

Gross incoming resources 16,336,133 14,443,788 Total expenditure on charitable activities (13,973,804) (12,200,245) Governance costs (12,100) (11,800) Net incoming resources before other recognised gains / (losses) 2,350,229 2,231,743 Remeasurement gain / (loss) on defined benefit pension scheme 5,743,000 (6,387,000) Reduction in carrying value of investment in Tom Morris Limited (1,799,665) - Provision against investment in Tom Morris International Limited - (4,834) Net incoming / (outgoing) resources after other recognised gains / (losses) 6,293,564 (4,160,091) Total funds brought forward 17,681,914 21,842,005 Total funds carried forward £23,975,478 £17,681,914

Represented by Unrestricted reserves £23,975,478 £17,681,914

26 | St Andrews Links Trust: Annual Report and Accounts 2017 27 | St Andrews Links Trust: Scottish Charity No. SC006161 Notes to the Accounts continued for the year ended 31 December 2017

17. PENSIONS The Trust provides pension benefits in two principal ways. a) Defined Contribution schemes ii) Analysis of assets and expected rates of return To meet its obligations to comply with regulations regarding workplace pensions (Automatic Enrolment) the Trust operates The estimated split of assets attributable to the Trust’s portion of the scheme, and the expected return on assets for each a compliant defined contribution scheme with NOW:Pensions. Since 1 August 2014 this scheme has been the Trust’s default category is as follows: pension provision. Trustees decided to enhance pension provision by making employer contributions based on 5% of salary 2017 2016 rather than the 1% required by law. Share of Expected Share of Expected During 2017 employer contributions of £164,839 (2016 - £142,247) were made to the NOW:Pensions scheme. Assets return Assets return

A separate defined contribution scheme is available to some staff, total contributions to which amounted to £57,823 Equities 73% 2.5% 70% 2.7% (2016 - £67,774). Bonds 14% 2.5% 15% 2.7% Property 8% 2.5% 9% 2.7% b) Defined Benefit scheme Cash 5% 2.5% 6% 2.7% The Trust is an admitted body to the Fife Council Pension Scheme, which is a funded defined benefit scheme providing benefits based on career average salaries. During the year the Trust made employers contributions to the scheme of £864,018 (2016 - £879,279). The Trustees closed this scheme to new members in August 2014. iii) Reconciliation to the balance sheet In compliance with the scheme rules, the actuary carried out a triennial valuation of the scheme as a whole, and the Trust’s The following table provides the reconciliation of funded status to the balance sheet: portion of the scheme, as at 31 March 2017. As a result of that valuation, he has set contribution rates for the three years commencing 1 April 2018. The triennial valuation showed that the overall funding rate of the scheme as a whole had As at 31st December improved from 87.8% at 31 March 2014 to 92.9% at 31 March 2017. 2017 2016 The financial year end of the Fife Council scheme is 31 March. To meet the requirements of FRS102, the Trustees £’000 £’000 commissioned a valuation from the Scheme actuary, Hymans Robertson, of the Trust’s portion of the overall scheme assets and liabilities as at 31 December 2017. That valuation was based on estimated information in some respects rather than Fair value of Scheme assets 26,271 22,406 detailed information and analysis as at 31 December 2017 and for the year then ended. The valuation impacted these Present value of funded Scheme liabilities (31,695) (32,678) accounts in the following ways; Net underfunding in funded plans (5,424) (10,272) i) a reduction in the balance sheet liability of £4,852,000 (2016 – increase of £6,638,000) Present value of unfunded liabilities (43) (47) ii) a charge of £606,000 (2016 - £106,000), included within payroll costs in Note 16, representing changes in Net liability £(5,467) £(10,319) employee service costs, and iii) a notional interest charge, included within Note 3, of £285,000 (2016 - £145,000) representing the finance cost of projected long-term pension obligations. The Trust expects to pay employer’s contributions of approximately £1,277,000 in 2018.

The following tables summarise the assumptions used by the actuary and his valuation of the Trust’s share of assets and liabilities. iv) Changes to the present value of liabilities during the year i) Financial assumptions The following table analyses the component parts of the change during the year in the present value of scheme liabilities The last actuarial valuation of the Scheme was carried out as at 31 March 2017 and the actuary prepared his valuation at attributable to the Trust: December 2017 by projecting the results of that valuation forward using approximate methods. The valuation as at 31 December 2017 used the following principal assumptions: Year ended 31st December

2017 2016 £’000 £’000 2017 2016 Opening defined benefit obligation 32,725 21,963 Pension increase rate 2.4% 2.5% Current service cost 1,475 990 Salary increase rate 2.9% 3.7% Interest cost 899 874 Expected returns on assets 2.5% 2.7% Contributions by members 265 267 Discount rate 2.5% 2.7% Remeasurement (gains) / losses (3,155) 8,972 Estimated unfunded benefits paid (5) (5) Estimated benefits paid (466) (336) Mortality assumptions are based on SAPS year of birth tables with mortality loadings applied based on membership class. Closing defined benefit obligation £31,738 £32,725

Males Females

Current Pensioners 21.2 years 23.8 years Future Pensioners 22.6 years 25.8 years

28 | St Andrews Links Trust: Annual Report and Accounts 2017 29 | St Andrews Links Trust: Scottish Charity No. SC006161 Notes to the Accounts continued for the year ended 31 December 2017 v) Changes to the fair value of assets during the year The following table analyses the component parts of the change during the year in the fair value of scheme assets 20. FUTURE CAPITAL COMMITMENTS AND PLANNED CAPITAL AND DEVELOPMENT EXPENDITURE attributable to the Trust: The following capital expenditure has been authorised or contracted for as at 31 December 2017: Year ended 31st December Consolidated Links Trust only 2017 2016 £’000 £’000 2017 2016 2017 2016 £ £ £ £ Opening fair value of assets 22,406 18,282 Estimated return on assets 3,202 3,314 a) Contracted for but not yet incurred £27,023 £110,957 - £44,585 Contributions by members 265 267 Employer contributions 864 879 b) Authorised but not yet contracted for £1,272,327 £482,633 £1,172,600 £425,655 Contributions in respect of unfunded benefits 5 5 Estimated unfunded benefits paid (5) (5) Estimated benefits paid (466) (336) 21. RELATED PARTIES Closing fair value of assets £26,271 £22,406 The Trustees are aware of the following transactions with individuals or bodies falling within the definition of related parties contained in the Charities and Trustee Investment (Scotland) Act, 2005 or which would require disclosure under the SORP.

During the year purchases of £1,201 (2016 - £804) were made, on an arms-length basis and on normal trading terms, from vi) Amounts recognised in net outgoing resources a company controlled by the spouse of Gillian Kirkwood, a Trustee. As at 31 December 2017 there was a balance due to that The following table analyses the component parts of amounts recognised in net outgoing resources: company of £365 (2016 – nil).

Year ended 31st December During the year a piece of machinery was sold to a golf club of which a Trustee, Richard Muckart, was a director for £5,000. The sale was made on an arms-length basis. 2017 2016 £’000 £’000 During 2017 a Trustee, Michael Cordner, purchased an allocation of commercial tee times for 2018. The times were allocated on an arms-length basis under the same terms and conditions as for any other third party. The total value of the payments Current service cost 1,475 990 made to the Trust in respect of these commercial tee times was £10,200. Net interest cost 285 145 Remeasurement of return on assets (2,588) (2,585) During 2017 the Trust sold goods to the value of £230 to a charitable trust of which a Trustee, Irene Morrison, is a trustee. £(828) £(1,450) The sale was made on an arms-length basis.

18. TRUSTEE REMUNERATION AND BENEFITS Trustees do not receive any remuneration, nor have any Trustees received any benefits from an employment with St Andrews 22. EFFECT OF ACCOUNTING ESTIMATES Links Trust or any of the subsidiary companies. During 2017 accommodation and subsistence expenses of £345 were To comply with the requirements of FRS102 the Trustees have commissioned the actuary to the Fife Council pension scheme reimbursed to one Trustee (2016 - nil). to carry out a valuation, following the rules set out in FRS102 of the Trust’s theoretical liability to the scheme. That calcula- As part of its overall insurance cover, the Trust has Directors and Officers Liability Insurance which provides cover for Trustees, tion depends on numerous estimates and has a material impact on these accounts. The component parts of the adjustment members of the Links Management Committee and staff. The proportion of the cost of this cover attributable to Trustees are analysed below. cannot be ascertained but is immaterial. Year ended 31st December 19. OBLIGATIONS UNDER OPERATING LEASES Amounts payable over the remaining term of non-cancellable operating leases are analysed below: 2017 2016 £’000 £’000 Land and buildings Plant & Equipment Remeasurement gain/(loss) shown in Consolidated Statement of Financial Activities 5,743 (6,387) 2017 2016 2017 2016 ii) Consolidated £ £ £ £ Estimated changes in employee service costs (see Note 16) (606) (106) Operating lease payments due- Within one year 190,944 190,944 183,739 58,959 Estimated notional interest cost of funding future scheme benefits (see Note 3) (285) (145) Between two and five years 749,586 637,003 459,851 132,658 More than five years 1,668,996 249,760 - - Decrease/(increase) in estimated pension scheme liability on the balance sheet £4,852 £(6,638) £2,609,526 £1,077,707 £643,590 £191,617

Land and buildings Plant & Equipment

2017 2016 2017 2016 i) Links Trust only £ £ £ £ Operating lease payments due- Within one year 5,500 5,500 63,855 58,959 Between two and five years 7,810 13,310 79,819 132,658 More than five years - - - - £13,310 £18,810 £143,674 £191,617

30 | St Andrews Links Trust: Annual Report and Accounts 2017 31 | St Andrews Links Trust: Scottish Charity No. SC006161 Reference and Administrative Information as at 31 December 2017

1. Trustees 2. Links Management Committee The following persons served as Trustees during the year. The appointing body for each Trustee is noted below, The following persons served on the Links Management Committee during the year. The appointing body for each member is as are the Committees that each Trustee has served on. noted below. Committee posts held Richard D Muckart (Chairman) The Royal and Ancient Golf Club (Retired 31 December 2017) A, G, R, N Steven G Race (Chairman) Fife Council Michael C Cordner The Royal and Ancient Golf Club F Lesley Backhouse Fife Council (Appointed 5 October 2017) Stephen Gethins MP for North East Fife (see below) David A Comb The Royal and Ancient Golf Club Gillian G Kirkwood The Scottish Government (Retired 31 December 2017) Prof. J Stewart Forsyth The Royal and Ancient Golf Club James Leishman Fife Council Ian M Marshall The Royal and Ancient Golf Club Donald F Macgregor Fife Council (Retired 3 May 2017) A Barry Millar Fife Council (Retired 31 December 2017) Gordon D Mackenzie The Royal and Ancient Golf Club F, G, R, N Dorothea Morrison Fife Council (Retired 3 May 2017) Irene Morrison Fife Council A, G, N Brian Thompson Fife Council Ann Verner Fife Council (Appointed 15 June 2017) A Alison O White The Royal and Ancient Golf Club Donald Macgregor did not stand at the Local Government elections held on 4 May 2017 and Key to Committee posts: Following the Local Government elections on 4 May 2017, the Trust was notified that Fife Council had terminated the Fife Council terminated his appointment as a Trustee at that time. Fife Council appointed Ann A - Audit & Risk appointment of Dorothea Morrison to the LMC. Fife Council advised the Trust on 5 October 2017 that she had been replaced Verner to replace him. F - Finance by Lesley Backhouse to serve the remainder of Dorothea Morrison’s term. G - Governance Parliament was suspended on 2 May 2017 in preparation for the General election held on 8 R - Remuneration On 31 December Ian Marshall, Barry Millar, Professor Stewart Forsyth and Lesley Backhouse reached the end of their terms of June 2017. Accordingly, Stephen Gethins ceased to be a Trustee on that date but resumed his N - Nomination office. Ian Marshall, Professor Stewart Forsyth and Lesley Backhouse were reappointed to serve a further term and Barry Millar trusteeship upon re-election as MP for the North East Fife constituency. was replaced by James Lindsay. On 31 December 2017 Richard Muckart, Gillian Kirkwood and Irene Morrison reached the end At the first Links Management Committee meeting of 2018 Steven Race was re-elected Chairman of the Committee. of their terms of appointment. Irene Morrison was reappointed to serve a further term, Richard Muckart was replaced by Mark Dobell and Gillian Kirkwood by Alan Frizzell.

At the first Trustees’ Meeting of 2018 Gordon Mackenzie was elected Chairman of Trustees.

Professor Stewart Forsyth

Stephen Gethins

Lesley Backhouse

James Lindsay (Back Row; L-R) David Comb, Brian Thomson, Barry Millar and Ian Marshall (Front Row; L-R) Dorothea Morrison, Steven Race (Chairman) and Alison White

(Back Row: L-R) Michael Cordner, Alan Frizzell, Jim Leishman and Mark Dobell (Front Row: L-R) Irene Morrison, Gordon Mackenzie (Chairman) and Ann Verner (Inset above right): Stephen Gethins

32 | St Andrews Links Trust: Annual Report and Accounts 2017 33 | St Andrews Links Trust: Scottish Charity No. SC006161 Reference and Administrative Information continued as at 31 December 2017

3. Address of Administrative Offices 9. Organisation Chart- key management personnel The Trust’s offices are located at: Pilmour House The day-to-day management of the Trust is carried out by a full-time management team. The members of that team, and St Andrews their principal areas of responsibility, are shown below. Fife, KY16 9SF Telephone 01334 466666 Website www.standrews.com

4. Auditors Chief Executive The Trust’s auditors are: Henderson Loggie Euan Loudon The Vision Building 20 Greenmarket Dundee, DD1 4QB

5. Bankers The Trust’s bankers are: Royal Bank of Scotland plc Director of Director of Director of Director of Commercial 113-115 South Street Operations Finance Greenkeeping Golf Director St Andrews Fife, KY16 9QB Ewen Bowman Euan MacGregor Gordon Moir John Grant Danny Campbell

6. Lawyers • Food and Beverage • Accounting • Greenkeepers • Reservations • Retail operations The Trust’s lawyers are: Thorntons Law LLP Operations & reporting Kinburn Castle • Workshop & stores • Golfers’ assistants & • Partnerships, St Andrews • Reception • Information Caddie department licensing and brand Fife, KY16 9DR technology • Environmental management • Facilities & property initiatives and • Golf Academy, 7. Charity Registration Number maintenance • Human resources conservation Practice Centre • Management of St Andrews Links Trust is a registered Scottish charity. The registered charity number is SC006161. & Custom Fitting Intellectual Properties • Training & 8. Statement of Trustees’ responsibilities in respect of the Financial Statements Development • Junior Golf • Communications The Trustees are responsible for preparing the Trustees’ Annual Report and the accounts in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). • Tournaments • Digital and Championships marketing The law applicable to charities in Scotland requires the Trustees to prepare accounts for each financial year which give a true and fair view of the state of affairs of the Trust and the group and of the incoming resources and application of resources of the charity and the group for that period. In preparing these accounts, the Trustees are required to:

• select suitable accounting policies and then apply them consistently;

• observe the methods and principles in the Charities SORP 2015 (FRS102);

• make judgements and estimates that are reasonable and prudent;

• state whether applicable accounting standards have been followed, subject to any material departures disclosed, and explained in the accounts; and

• prepare the accounts on the going concern basis unless it is inappropriate to presume that the charity will continue in operations.

The Trustees are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the charity and enable them to ensure that the accounts comply with the Charities and Trustee Investment (Scotland) Act 2005, the Charities Accounts (Scotland) Regulations 2006 (as amended) and the provisions of the St Andrews Links Order Confirmation Act, 1974. They are also responsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Trustees are responsible for the maintenance and integrity of the charity and financial information included on the charity’s website. Legislation in the United Kingdom governing the preparation and dissemination of accounts may differ from legislation in other jurisdictions.

34 | St Andrews Links Trust: Annual Report and Accounts 2017 35 | St Andrews Links Trust: Scottish Charity No. SC006161 Unaudited Statistical Analysis prepared from consolidated financial statements

Five year analysis of Consolidated Statement of Financial Activities Five year Balance Sheet summary

2017 2016 2015 2014 2013 2017 2016 2015 2014 2013 £ £ £ £ £ £ £ £ £ £ INCOME FIXED ASSETS Golfing income 13,936,403 13,635,814 11,524,094 11,949,818 11,168,438 Tangible fixed assets 23,371,728 24,308,052 24,791,738 25,259,987 24,973,851 Catering income 2,444,876 2,310,688 2,197,657 2,072,139 1,971,555 Intangible assets 2,336,208 2,417,858 2,291,079 2,259,047 2,263,964 Merchandise income 6,687,008 5,600,295 5,126,582 4,845,269 4,573,084 Goodwill arising on consolidation 239,714 324,321 408,928 493,535 578,142 Royalties 1,435,449 1,154,835 1,566,782 1,323,382 1,290,265 TOTAL FIXED ASSETS 25,947,650 27,050,231 27,491,745 28,012,569 27,815,957 Other non-golfing income 90,144 78,646 134,831 71,281 83,500 Gain on disposal of fixed assets 136,849 56,124 40,560 85,950 121,003 CURRENT ASSETS Rents receivable 18,282 10,517 8,174 7,729 7,672 Stock 1,465,216 1,481,740 2,357,424 2,463,366 1,789,488 Interest receivable 18,777 9,122 1,210 863 4,832 Debtors 525,025 511,164 662,226 780,609 798,644 24,767,788 22,856,041 20,599,890 20,356,431 19,220,349 Cash at bank and in hand 11,328,602 4,362,676 729,602 72,296 303,833 13,318,843 6,355,580 3,749,252 3,316,271 2,891,965 EXPENDITURE Payroll 10,564,637 9,484,799 9,467,692 9,145,598 8,071,542 CURRENT LIABILITIES Catering non-payroll costs and goods Bank term loan-current repayments - - 520,000 640,000 640,000 for resale 4,252,191 4,330,715 3,631,231 3,426,696 3,244,353 Creditors 1,408,594 1,460,170 1,395,842 2,479,133 2,579,241 General expenses 4,463,250 3,763,845 4,058,825 4,387,705 4,582,307 Deferred income 5,928,456 3,238,499 3,039,383 2,308,594 2,526,074 Depreciation 1,393,154 1,223,579 1,256,282 1,287,954 1,153,871 7,337,050 4,698,669 4,955,225 5,427,727 5,745,315 Loss on disposal of fixed assets - - - 56,621 - Amortisation of intangible assets 416,267 375,974 322,490 305,974 198,346 NET CURRENT LIABILITIES 5,981,793 1,656,911 (1,205,973) (2,111,456) (2,853,350) Amortisation of goodwill arising on consolidation 84,607 84,607 84,607 84,607 84,607 LONG-TERM LIABILITIES (250,000) (500,000) (1,150,000) (2,420,000) (2,760,000) Legal & professional fees 271,942 297,536 178,864 198,960 218,523 Audit fees 23,750 23,900 27,250 27,300 24,050 PENSION SCHEME LIABILITY (5,467,000) (10,319,000) (3,681,000) (5,677,000) (3,366,000) Bad debts written off - - - 10,204 8,658 Interest payable - 23,864 82,326 132,700 153,334 NET ASSETS £26,212,443 £17,888,142 £21,454,772 £17,804,113 £18,836,607 Notional net interest cost on FRS102 calculation on pension scheme liability 285,000 145,000 213,000 160,000 - REPRESENTED BY:- Development expenditure 282,356 126,903 134,753 89,872 272,208 Unrestricted reserve 26,212,443 17,888,142 21,454,772 17,804,088 18,836,582 Irrecoverable VAT 149,333 154,949 149,886 142,734 143,214 Minority interest - - - 25 25 Total revenue account expenditure 22,186,487 20,035,671 19,607,206 19,456,925 18,155,013 TOTAL RESERVES £26,212,443 £17,888,142 £21,454,772 £17,804,113 £18,836,607 Net incoming resources before other recognised gains / (losses) £2,581,301 £2,820,370 £992,684 £899,506 £1,065,336

OTHER GAINS / (LOSSES) Net incoming resources before other recognised gains/(losses) 2,581,301 2,820,370 992,684 899,506 1,065,336

Other recognised gains/(losses) remeasurement (loss)/gain on defined benefit pension scheme 5,743,000 (6,387,000) 2,658,000 (1,932,000) (106,000)

RETAINED SURPLUS / (DEFICIT) £8,324,301 £(3,566,630) £3,650,684 £(1,032,494) £959,336

36 | St Andrews Links Trust: Annual Report and Accounts 2017 37 | St Andrews Links Trust: Scottish Charity No. SC006161 Unaudited Statistical Analysis continued Analysis of rounds played on the Trust’s 18-hole golf courses

2017 All Play The total number of rounds played on the Trust’s 18-hole courses was 228,700- a new record albeit only some 800 rounds higher than was recorded in 2016. Old

Castle Play by yearly ticket holders and R&A members accounted for 47% of this play New (2016 – 47.8%) and visitors 53%

Jubilee (2016 – 52.2%).

Eden The split of play between the courses was remarkably consistent between 2016 and Strathtyrum 2017 with any variations, either for visitor or local play being less than 1%.

Unsurprisingly, the Old Course carries 2017 Local Play the greatest proportion of total play and it is, by a considerable margin, the most popular course for visitor play. Old

Castle There is a significant concentration of local play on the Eden and Strathtyrum New courses.

Jubilee The proportion of visitor play on the

Eden Castle Course is substantially higher than the proportion of local play. The Castle Strathtyrum Course has become well-established as a ‘must play’ course for many visiting golfers and, in addition to providing significant green fee income, the popularity of the course has created more 2017 Visitor Play availability for local play on the New and Jubilee courses.

Old

Castle

New

Jubilee

Eden

Strathtyrum

38 | St Andrews Links Trust: Annual Report and Accounts 2017 39 | St Andrews Links Trust: Scottish Charity No. SC006161 40 | St Andrews Links Trust: Annual Report and Accounts 2017 St Andrews Links Trust Pilmour House • St Andrews • Fife • KY16 9SF • Scotland T: +44 (0)1334 466666 E: [email protected] Scottish Charity no. SC006161 standrews.com