## **ROYAL ACADEMY TRUST** **Registered Charity No. 1067270** ## **ANNUAL REPORT AND FINANCIAL STATEMENTS** ## **FOR THE YEAR ENDED** **31 AUGUST 2021** **Royal Academy Trust Reference and Administrative Details** ## **Honorary President** HRH The Prince of Wales ## **Trustees in the financial year and at the date of signing:** Lady Myners (Chair) Robert Suss (Deputy Chair) President of The Royal Academy of Arts (Ex officio) ‐ Rebecca Salter PRA Treasurer of The Royal Academy of Arts (Ex officio) ‐ Chris Wilkinson OBE RA (retired 31 October 2020) Treasurer of The Royal Academy of Arts (Ex officio) ‐ Peter St. John (appointed 1 November 2020) Secretary & Chief Executive of The Royal Academy of Arts (Ex officio) ‐ Axel Rüger Petr Aven Stefan Bollinger (appointed 13 July 2021) Aryeh Bourkoff Varun Chandra (appointed 23 September 2020) Richard Chang Adrian Cheng Melanie Clore Lady Deighton Sir Lloyd Dorfman CBE Pesh Framjee Stephen Fry (retired 26 February 2021) Stephen Gosztony Lady Heywood Clive Humby Philip Marsden (retired 3 December 2020) Dame Carolyn Julia McCall DBE Scott Mead Batia Ofer Duru Olowu (retired 5 January 2021) Christina Ong (retired 23 September 2020) Ina Sandmann (appointed 7 September 2020) Sian Westerman Peter Williams (retired 3 December 2020) Iwan Wirth (retired 6 October 2020) Andrea Wong The Hon William Yerburgh **Emeritus and Honorary Trustees** Lord Aldington Susan Burns Sir James Butler CBE DL Sir David Cannadine FBA Sir Richard Carew Pole Bt OBE DL Sir Trevor Chinn CVO John Coombe Ambassador Edward E Elson John Entwistle OBE Michael Gee The Rt. Hon. The Earl of Gowrie HRH Princess Marie‐Chantal of Greece C. Hugh Hildesley Page: 1 **Royal Academy Trust Reference and Administrative Details** ## **Emeritus and Honorary Trustees (continued)** Anya Hindmarch CBE Susan Ho Lady Lever Sir Sydney Lipworth The Rt. Hon. The Lord Luce, GCVO DL Sir Keith Mills GBE DL Ludovic de Montille Lord Davies of Abersoch Minori Mori John Raisman CBE John A. Roberts FRIBA Sir Simon Robertson Lord Rose of Monewden Sir Evelyn de Rothschild Maryam Sachs Richard Sharp David Stileman Peter Williams (appointed 3 December 2020) ## **Executive Committee** Lady Myners (Chair) Robert Suss (Deputy Chair) Chris Wilkinson OBE RA (retired 31 October 2020) Peter St. John (appointed 1 November 2020) Axel Rüger Rebecca Salter PRA Pesh Framjee Stephen Gosztony Lady Heywood Philip Marsden (retired 3 December 2020) Peter Williams (retired 3 December 2020) ## **Investment Sub‐committee membership in the financial year and at the date of signing:** Peter Williams (Chair) (retired 18 November 2020) Stephen Gosztony (Chair) (appointed to Committee 1 September 2020; appointed as Chair 18 November 2020) Adam Bennett Richard Milliken (retired 18 November 2020) Stephen Nelson Alice Ryder (appointed 2 June 2021) Robert Suss Nigel Thomas Andrew Threadgold **Registered Office** Burlington House Piccadilly London W1J 0BD Page: 2 **Royal Academy Trust Reference and Administrative Details** ## **Advisers:** ## **Auditors** Moore Kingston Smith LLP Devonshire House 60 Goswell Road London EC1M 7AD ## **Bankers** Lloyds Bank Plc 4th Floor 25 Gresham Street London EC2V 7HN ## **Solicitors** Macfarlanes LLP 20 Cursitor Street London EC4A 1LT Withers LLP 16 Old Bailey London EC4M 7EG **Investment Managers** Partners Capital LLP 5th Floor 5 Young Street London W8 5EH Sarasin & Partners LLP Juxon House 100 St Paul's Churchyard London EC4M 8BU Evenlode Investment Management Limited The Long Barn Chalford Park Barns Oxford Road Chipping Norton Oxfordshire OX7 5QR Page: 3 ## **Royal Academy Trust Trustees’ Report For the year ended 31 August 2021** The trustees present their report and financial statements for the year ended 31 August 2021. ## **CONSTITUTION AND CHARITABLE OBJECTIVES** ## **Constitution** Royal Academy Trust (“the Charity” or “the Trust”) was established under a Trust Deed dated 11 February 1981 to serve the public benefit by providing funds for the support of The Royal Academy of Arts (“the Royal Academy”). The Trust became separately registered as a charity on 8 January 1998. The Trust Deed has been amended several times, including in June 2019, to change the name of the Trust from Royal Academy Development Trust to Royal Academy Trust and to amend term limits for appointed trustees (see below under “Governance and management”). ## **Governance and management** The Charity is governed by trustees, who are men and women of distinction from business and the wider community. The maximum number of trustees is 35 at any one point in time. The trustees consist of the President, Treasurer and the Secretary and Chief Executive of the Royal Academy, _ex officio_ , and other trustees who shall serve a three year initial term, after which they are eligible for a three year renewal term, and in exceptional circumstances further terms each of no more than three years. The trustees and officers who served during the year ended 31 August 2021 and at the date of signing are shown on pages 1 and 2 of the annual report and financial statements. The management of the funds and distributions to the Royal Academy up to £1.0m per annum has been delegated to the Charity’s Executive Committee, chaired by the Chair of the Trust. Other distributions to the Royal Academy in excess of this must be approved by the full Trustee Board. The timing and execution of such distributions may be delegated to the Charity’s Executive Committee. The trustees are responsible for approving adequate arrangements for induction and training for new trustees and to this end a programme has been arranged to include formal inductions by the Chair and by the Royal Academy General Counsel, together with an informative welcome pack and an introductory tour. Key documents and information are re-circulated to current trustees on an annual basis. The trustees have a risk management process. Risks are recorded in a Risk Register and mitigating actions implemented and monitored. The major risk for the Charity is exposure to a volatile financial market. This is mitigated by the frequent monitoring and broad spread of the funds to managed investments. This risk, along with any other is considered by the trustees and is part of the Risk Register reviewed by the Charity’s Investment Sub-committee and Executive Committee on an annual basis. The main investment portfolio is managed by the trustees, through the Investment Sub-committee, based on advice from Partners Capital LLP (“Partners Capital”). Further investment funds are held with Sarasin & Partners LLP (“Sarasin”) and Evenlode Investment Management Limited (“Evenlode”). These managers are similarly overseen by the Investment Subcommittee. The Investment Sub-committee advises the board of trustees on investment policy and risk. The Investment Sub-committee comprises trustees with investment experience and non-trustees chosen for their experience of investment management. ## **Charity Governance Code** The Charity and its trustees take good governance seriously and are aware of the Charity Governance Code, including its seven main principles. During the financial year the Charity: - Continued to provide its recently enhanced induction information to new trustees, including a “questions and answers” document, authored by the Charity’s Chair. The document provides information on: the Royal Academy’s history; its wider governance structure (as well as the Charity’s, more specifically); roles and responsibilities across the Royal Academy and how these interact with the role of the Charity and its trustees; and key challenges facing the Charity; - Arranged induction meetings for new trustees with the Secretary & Chief Executive and key members of the Senior Leadership Team of the Royal Academy, to better understand their work and the role of the Charity in the wider Royal Academy context; - Continued to review appointments and develop the constitution of the trustee Board, to comply with term limits and good governance practice. The Charity continued to work to specific policies and procedures, such as those relating to gift acceptance, which apply across the Royal Academy. Page: 4 ## **Royal Academy Trust Trustees’ Report For the year ended 31 August 2021** ## **OBJECTIVES, ACTIVITIES AND PUBLIC BENEFIT** The object of the Charity is the maintenance, development, advancement and preservation of the Royal Academy, a legally separate charity based in London, through which the arts of design are promoted by its charitable objects, which are stated as: - The promotion of the arts of design - The education of the public in the creation, enjoyment, appreciation and understanding of the arts, through exhibitions, educational programmes, and debate by all charitable means as the members of Council may think fit. ## **Current year objectives** - To provide revenue support for the activities of the Royal Academy through an annual donation funded by the Charity’s investment funds and to support the objectives of the Royal Academy. - To provide support to the Royal Academy’s Coronavirus Emergency Support Fund fundraising initiatives to mitigate the financial impact of the Covid-19 pandemic to the Royal Academy. - To manage the growth of the Charity’s investment funds and maintain a reasonable level of risk. In setting these objectives, the trustees confirm that they comply with their duty in section 17 of the Charities Act 2011 to have regard to the guidance on public benefit published by the Charity Commission in exercising their powers and duties. ## **FINANCIAL REVIEW, ACHIEVEMENTS AND PERFORMANCE** ## **Financial review** Income for the year ended 31 August 2021 totalled £0.9m (2020: £1.2m). There were donations of £0.3m in support of Royal Academy cultural activities (2020: £0.6m). There was also £0.6m of investment income (2020: £0.6m). Net gains on investments were £8.0m (2020: £1.4m). Donations to the Royal Academy of £3.0m (2020: £2.4m) were made up of £1.0m (2020: £0.9m) in support of revenue projects and £2.0m (2020: £1.5m) in support of capital projects. The former comprises £0.9m (2020: £0.8m) as an annual donation and £0.1m (2020: £0.1m) for specific projects. £0.3m (2020: £0.3m) of the annual donation relates to designated/restricted funds, whilst £0.6m (2020: £0.5m) relates to a just under 4% distribution from unrestricted and generalpurpose endowment/restricted funds broadly in line with the target annual distribution rate of 4% set by the trustees for year ended 31 August 2020 and future financial years. During the year ended 31 August 2018, the remaining $17.2m (£13.2m) of a $23.0m pledge from a donor, who wished to remain publicly anonymous, was received; $5.8m (£4.0m) having been received in the year ended 31 August 2016. Of the £17.2m ($23.0m) received, £12.2m is being held as a permanent endowment; with £5.0m as a restricted fund to be made available to the Royal Academy when required for Phase III of the Burlington Project. Of the original donation, £9.8m of the £12.2m received in respect of the permanent endowment was invested with Sarasin and £2.0m with Troy as at 31 August 2019, with a further £0.4m invested with Sarasin in September 2019. During the previous financial year, the Investment Sub-committee decided to divest from Troy placing the balance of the investment of £2.3m (including £0.3m investment gains) with Evenlode, with a further £2.0m being divested from Sarasin and placed with Evenlode. During the current financial year, a further £2.0m was invested with Sarasin and divested from Partners Capital. The value of the Sarasin and Evenlode funds including £4.9m income to date (2020: £2.4m) was £19.1m as at 31 August 2021 (2020: £14.6m). The value of the Partners Capital investment portfolio increased by £1.9m net (2020: £0.5m) to £33.7m (2020: £31.8m), which included a drawdown of £2.0m for the Burlington Project – Phase I, described further below, and £2.0m divested and placed with Sarasin. Total investment funds across the three investment managers, including cash at bank held with Lloyds Bank Plc, increased to £52.8m (2020: £46.9m) after income, distributions, and other expenditure. Included in this amount are funds donated for the Royal Academy to be held in investments by the Charity. These funds are held by the Charity until they are required for specific projects of the Royal Academy and are invested by the Charity to provide future funding for the charitable objects of the Royal Academy. These are treated as assets of the Charity and are held for the maintenance, development, advancement, and preservation of the Royal Academy. In November 2020, the trustees approved a further £2.0m donation to the Royal Academy towards Burlington Project – Phase I cost overruns, with £1.3m duly distributed in December 2020 and the remaining £0.7m in January 2021. The Charity had previously agreed to fund up to £5.0m of cost overruns, for which £3.0m had been donated previously. It was originally anticipated that the final £2.0m donation would not be required until the year ended 31 August 2023, but because of the significant financial challenges facing the Royal Academy resulting from the Covid-19 pandemic, an earlier donation was made. Furthermore, in November 2020, the trustees pledged a further £2.0m donation to the Royal Academy, which may be drawn down over the period to 31 August 2023 as emergency support funding to mitigate the financial impact of Covid-19. Page: 5 ## **Royal Academy Trust Trustees’ Report For the year ended 31 August 2021** ## **Investments** Since November 2008, management of the Charity’s investment portfolios has operated under agreements with Partners Capital. Since June 2014, this has operated under a Discretionary Management Agreement. From November 2016 two further investment managers, Sarasin, and Troy, were engaged to initially manage the anonymous donor funds. Due to the size and nature of the endowment, the Investment Sub-committee took the opportunity to further diversify the Charity’s overall investment portfolio and its counter-party risk. In January 2020, following a review of the overall strategic asset allocation of the portfolio, the Investment Sub-committee decided to divest from Troy’s Trojan Fund, a diversified multi-asset fund, and Trojan Income Fund, a UK equity fund, in order to reinvest with an active global equity manager, Evenlode, who were appointed following a due tender process, and further rebalanced the overall asset allocation by trimming the level of investment with Sarasin and reinvesting these funds with Evenlode. The overall investment strategy is seeking to provide a reasonable level of return, while ensuring that the “real” value of the capital is maintained, such that the trustees will be able to continue similar distributions in the future. Distributions for restricted and unrestricted designated funds are in accordance with specific restrictions and distribution rates, at various rates up to 4%. The trustees have set an annual target distribution rate of 4% for unrestricted and general-purpose permanent endowment funds. To achieve this, a long-term investment objective of inflation plus 4% has been identified as appropriate. Whilst it is the intention to create an investment solution that meets this long-term objective, it is recognized that there will be periods when lower returns will be expected. The primary purpose of the Partners Capital investment portfolio is to support the long-term operating and capital needs of the Royal Academy. To this end, the overall portfolio is managed to maximise the long-term total return of the portfolio, subject to maintaining a reasonable level of risk of loss. The main investment portfolio supports the operating and capital needs of the Royal Academy through an annual spending rate, which is reviewed periodically to ensure the spending rate is sustainable over the long-term. The Trust’s objective from the Partners Capital investment portfolio is to preserve and, if possible, to enhance the purchasing power of its assets, after annual spending and all costs and expenses, over rolling three-year periods. This objective implies a minimum time-weighted net return target for the Trust more than the RA’s estimated cost inflation (estimated at 2.5%, based on forecast long run UK inflation of 2.5%) plus the spending rate (as defined above of 4% per annum). This equates to a minimum annual return of 6.5% p.a. Actual returns will need to be more than this minimum target to cover the costs of portfolio management and to provide a cushion over the longer-term. The Charity’s investment portfolio with Sarasin operates under a Discretionary Client Agreement signed in November 2016. The aim of the portfolio is to enhance the capital value over the longer term, whilst generating sufficient income to meet the Charity’s requirements, for which a “real return” of 4% per annum has been targeted. The Charity’s investments are held in the Sarasin Endowments Fund and the Sarasin Climate Active Endowments Fund; the objective of both these funds is to achieve long-term capital and income growth. Since January 2020, the Charity has invested in the Evenlode Global Income Fund, which aims to produce attractive long-term total returns, with an emphasis on income. The fund aims to grow dividend income (notwithstanding any short-term impact of Covid-19) by a conservative 6% per annum, or about 3% real in the long-term. The fund further targets capital growth (excluding dividend income referred to above) of over 6% per annum or 3% real. ## **Endowments** The Charity has four permanent endowments. These are managed by the trustees on a total return basis. This means that the funds are invested to maximise the total return on investment without regard to whether that return is in the form of income from dividends or interest or capital appreciation. The trustees decide each year how much of that return is released to restricted income funds for spending and how much is retained for investment. The allocation is made on an equitable basis to balance the need to fund annual levels of distribution and the maintenance over time of the real value of the endowment. Until transferred, the unapplied total return remains invested as part of the permanent endowment. The trustees have noted the value of the gift for each of the four permanent endowments received, since each fund was established. This provides the baseline value of the gift component of each endowment to which any subsequent gift of endowment is added. The difference between the total of the endowment fund and the value of the gift component represents the balance of unapplied total return. Having considered their obligations as outlined above, the trustees decided to make transfers from unapplied total return to restricted income funds for the year ended 31 August 2021 of £0.1m (2020: £0.1m) for the Ivor Rey scholarship fund to support the annual award to enable students of the Royal Academy Schools to visit Paris, France for the purpose of studying art, and £0.6m (2020: £0.9m) from the Paul Mellon endowment fund to support Royal Academy revenue projects, and £0.1m (2020: £0.1m) from the McAulay Scholarship Fund endowment to support students in the Royal Academy Schools. The trustees approved a further £0.3m (2020: £nil) to be distributed from the Paul Mellon restricted funds to support Royal Academy capital projects. With regard to the anonymous donor fund, investment returns will be retained in the unapplied total returns until 2022, at which point the trustees will decide on the level of distribution to support the ongoing revenue projects of the Royal Academy. In making these decisions the trustees have taken Page: 6 ## **Royal Academy Trust Trustees’ Report For the year ended 31 August 2021** account of the investment climate, the return on investment for the year, previous levels of allocations from the unapplied total returns and the income needs of the Charity. ## **Ethical Investment Policy** The Charity is committed to investing its funds in a socially responsible basis. In June 2021, the trustees approved the Charity’s Ethical Investment Policy (“the Policy”). The Policy has been developed with the intention of active promotion of investment in companies and investment funds which demonstrate policies and practices that are in line with the Charity’s values of strong ethical principles. The Policy applies to the full scope of the investments held by the Charity. The Charity believes that to accord with its values when investing its funds, regard must be made to Environmental, Social and Governance (“ESG”) issues. The Investment Sub-Committee will monitor the operation and the effectiveness of the Policy and provide the trustees with an annual update. The Charity has identified two sets of principles which accord with its values and aspirations in this area, one relating to the operations of its fund managers and the other to setting appropriate standards for all its investments. Firstly, The United Nations Principles for Responsible Investment: these six principles have been developed, inter alia, to “better align investors with the broader objectives of society”. The Charity therefore expects that its fund managers will be signatories of the UNPRI and follow its principles in the way they operate. Secondly, The United Nations Global Compact: the Charity also supports the ten principles of the United Nations Global Compact, which stem from the acceptance that, as with the Charity itself, corporate sustainability starts with an entity’s value system and a principled approach to the way it operates. This means operating in ways that, at a minimum, meet fundamental responsibilities in the areas of human rights, labour, environment, and anti-corruption. In managing its investments, the Charity therefore expects its appointed investment managers to encourage good behaviour and discourage poor behaviour through the screening of investments (using the principles above or an equivalent framework) and through the direct engagement with the companies in which they invest. In doing so, they should promote sustainability, good business ethics, good employment practices and the transition to a low carbon economy. The Charity is particularly concerned about the following ESG issues and will continue to adopt investment strategies that seek to minimise or, ideally, eliminate investments in companies with corporate behaviour leading to: environmental degradation and climate change; the manufacture of controversial weapons, including cluster munitions, landmines, biological and chemical weapons, nuclear and depleted uranium weapons; tobacco production, cultivation, and manufacture; and adult entertainment (pornography) production, distribution, retail, and ownership. Such investment strategies are not in line with the Charity’s values and may damage the Charity’s reputation and impact fundraising and so are not in the Charity’s best interest. During the financial year, the Charity made an initial investment of £2.0m in the Sarasin Climate Active Endowments Fund, with a further £3.0m invested in October 2021. ## **Future plans** The trustees continue to work closely with the President, Secretary and Chief Executive and the directors of the Royal Academy to assist with the on-going fundraising effort. The long-term objective is growing the Charity reserves to help sustain the future of the Royal Academy. The aims for the coming year ending 31 August 2022 are: - To continue to make available revenue support for the Royal Academy’s activities. ## **Related party transactions** Related party transactions are disclosed in note 20 to the financial statements. ## **Reserves policy** The Charity holds its free reserves as investment funds from which it can generate income and capital gains for the future support of the Royal Academy. The current statement of investment principles and the distribution policy recognise the objective of delivering financial support for the Royal Academy that will be sustainable for the foreseeable future. The trustees have not established a minimum or maximum level of free reserves as they wish to be able to balance the need to respond to immediate special needs of the Royal Academy and to ensure sustained support. As at 31 August 2021, the Charity held total funds of £52.3m (2020: £46.7m), of which £17.9m (2020: £16.6m) were unrestricted funds for which £11.8m (2020: £11.3m) is both unrestricted and not designated; £22.3m (2020: £19.6m) endowment funds; and £12.1m (2020: £10.5m) restricted funds. Page: 7 Trustee< Report Forthe year ended 31 August zozi nlllDRAISING The Charity h•$ a c05t d Tr151rf IA the ffinaThtial xaternents kn T￿￿10 hwestmerf fund mar￿￿r1ee5 ind 5tsft CD¥Is fpr adrnlnlsierin£ lew*5 lo ieneTrle ILW￿50n belbth ofthe Royal The CK•Tity does Mt actlvely fundrai5E and any approach to fwdratslni tske accourrt of the Code rl FLYKlrafj4w PTrctke ihe Funthabi￿ Regulator. The Royal Academy Is Wered wilh the FundraI5*¥ Re¥u4tw. annual (omplèlnts return5 tu R4ulator and wovbdes St*ements on partkLthr areas ol fundra￿1r4 11nr1￿I￿g £tyyA*rtsl rewrL ThE5E ctynpl•lNts and ststemehts Int￿de actr41tles vknlth miihi te¢hn*a* fall tht temrt tsf tr* Charity. The Rel￿atOr has apprond thLs iraniErnEntand ￿nfirrned tbatthe Ch¥ity&ntsirety*ed to Separate regstraiion w6th the HeKulatoT. The trustees art resp¢t￿ble foi prepadn8 the trpJ51ee< rrpvrt fir1￿xIal5talUnents 1na￿Drd￿Thct whh the appllcable lawand the Unlted ￿nedOM Accounti￿ Stsnd*ds Iuniiedfw￿n6ty￿￿lT Attepted *£Co￿￿nI PTrrtlcel. Ihe law applk*ble to ch•rft6es kn Enwand the tnJslee5 to wq>ue fwnual ststements for each Ilnanclal year whkh ￿vE a IruE and lalr ¥iew of the State ol the •ff•its olthe chartty and ol the lTrcomlng re5Dufw 4ttd ¥ppl*atlon of ouwee50fthe thiiity f•tth•t perlo¢Lln wepath thE5EfffjaKial $￿eMer&th•1rPJs14es ar• r•4ulredto: se￿£t5￿blE 3cuwntkngFallde5 appty thern ¢tytsitteniPr. Makeludimefits and estimaiesthat rea50nablEaNI wwjrt stste whether appliable UK ACCO￿ Stwthrd5 btÈn folo*e¢ %d4ecLto any nwt•rkl dep•rt¥res th£losed and eX￿aned theffiNnd•l Wi¢M￿ Pfepare the financial statements on the ¢orKem basis It & Inapyopriètq ID ih•t the chafftv wlll toniknue kn bu51r*55,' Observe the rneihod5 andwhKWleslnthEChxtsSORP. nnanclal posltlon af thE ch3TMy and enable them to ensyre that the f￿and11 starements compty with the Ch•ritles Act 201I the Chaiity IAc£ounts and Reports) Res￿al￿)n$ 2(KJ8 and wo¥15ion5 of the trurt deed Thry are re5por&fjble for 5afeBU3nlin8 the assets of the rharlty •nd hente for tsklw rea50Da* 5tEP5 fDr the weventlon detedon of fra￿ •nd othev trrEwlarfl*s. SD far ase/ch ofthe trustees atthe lThmethe trustee5' rwti5wLn*d1$4wxv. there Is no relvd•nr olwhlth th? authtr5 are￿a￿are.. ar#1 they have tskEn al relev** steps to h•ve taken th mke aware of any r¢lv44nt ¥ydSt Infoimatiw and to Est*bI￿htha* ihe•Akns *e•w•reolth*lnlomtloTh b￿￿1101the ## **Royal Academy Trust Independent Auditors' Report to the Trustees of Royal Academy Trust** ## **Opinion** We have audited the financial statements of the Royal Academy Trust ("the Charity") for the year ended 31 August 2021 which comprise the Statement of Financial Activities, the Balance Sheet, the Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 "The Financial Reporting Standard Applicable in the UK and Ireland" (United Kingdom Generally Accepted Accounting Practice). ## **Opinion on the financial statements** In our opinion the financial statements: - give a true and fair view of the state of the Charity’s affairs as at 31 August 2021, and of its incoming resources and application of resources for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and - have been prepared in accordance with the requirements of the Charities Act 2011. ## **Basis for opinion** We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under those standards are further described in the auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Charity in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. ## **Conclusions relating to going concern** In auditing the financial statements, we have concluded that the trustees’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Charity's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the trustees with respect to going concern are described in the relevant sections of this report. ## **Other information** The other information comprises the information included in the annual report, other than the financial statements and our auditors' report thereon. The trustees are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Page: 9 ## **Royal Academy Trust Independent Auditors' Report to the Trustees of Royal Academy Trust** ## **Other information (continued)** Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. ## **Opinions on other matters prescribed by the Charities Act 2011** In our opinion, based on the work undertaken in the course of the audit: - the information given in the trustees’ annual report for the financial year for which the financial statements are prepared is consistent with the financial statements; and - the trustees’ annual report have been prepared in accordance with applicable legal requirements. ## **Matters on which we are required to report by exception** In the light of the knowledge and understanding of the Charity and its environment obtained in the course of the audit, we have not identified material misstatements in the trustees’ annual report. We have nothing to report in respect of the following matters where the Charities Act 2011 requires us to report to you if, in our opinion: - adequate and sufficient accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or - the financial statements are not in agreement with the accounting records and returns; or - certain disclosures of trustees’ remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit. ## **Responsibilities of trustees** As explained more fully in the statement of trustees’ responsibilities set out on page 8, the trustees are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the trustees are responsible for assessing the Charity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the Charity or to cease operations, or have no realistic alternative but to do so. ## **Auditors' responsibilities for the audit of the financial statements** Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Page: 10 ## **Royal Academy Trust Independent Auditors' Report to the Trustees of Royal Academy Trust** ## **Auditors' responsibilities for the audit of the financial statements (continued)** As part of an audit in accordance with ISAs (UK) we exercise professional judgment and maintain professional scepticism throughout the audit. We also: - identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error; design and perform audit procedures responsive to those risks; and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; - obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Charity’s internal control; - • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the trustees; - conclude on the appropriateness of the trustees’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Charity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Charity to cease to continue as a going concern; - evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation; - obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit report. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. ## **Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud** Irregularities, including fraud, are instances of non‐compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. The objectives of our audit in respect of fraud are to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the Charity. Page: 11 Royal AcademyTn Inde￿ndent Auditors, Report to the Trustses of EWan•tlon as to vAot eMt•nt the was Cons1￿ capabl• of detedlnu Irregularftles, Includknz fraud l¢ortlnued) Our approath was as follows: we obtalned an understanding of the le8al and regulat￿¥ requirements applitablè to the Charity and considered that the most slgnificant are the Charitie5 Act 2011, the Charity SORP. and UK financlal reportln8 standards as issued by the Flnanoal Reportlrq c￿Jnal. we obtsined an understandlng of how the Charity complies wlth thtse requirements by dIS¢u￿[onS wlth management and those (harged with 8ovemance: we assessed the risk of materlal misstatement of the finantial statemènts. includin8 the risk of materlal mlsstatement due to fraud and how it ffli8ht occur. try hL4ding diSC￿s1onS wlth managerTrent and those charged with g0￿manCe. we inqulred of management and those tharged *ith governan￿ as to any known Or￿￿rIc•S of non compllance or suspected non-compliance with laws and ￿ul3￿Ons. based on this understandln& we desyd specific appropriate awlit proredures to Identlfy Instances of non**Net cash used in from operating activities**
14
**Cash flow from investing activities**
Dividends and interest from investments
6
Fund manager fees
8
Payments to acquire fixed asset investments
11
Proceeds from investment disposals
11
Net movement in cash held in the investment portfolio
11
**Net cash provided by investing activities**
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
**Cash and cash equivalents at the end of the year**|**2021**
**£**
**(2,461,735)**
**612,228**
**(205,148)**
**(5,581,760)**
**6,043,862**
**1,078,305**
**1,947,487**
**(514,248)**
**598,938**
**84,690**|2020
£
(1,420,466)| |---|---|---| |||618,880
(73,108)
(8,633,356)
10,297,391
(2,062,102)| |||147,705| |||(1,272,761)
1,871,699| |||598,938| Page: 15 **Royal Academy Trust Notes to the Financial Statements** ## **For the year ended 31 August 2021** ## **1 General information** Royal Academy Trust ("the Charity") is a registered charity established to serve public benefit by providing funds for the support of The Royal Academy of Arts ("the Royal Academy"). The registered office is Burlington House, Piccadilly, London. ## **2 Summary of significant accounting policies** The financial statements have been prepared under the historical cost convention as modified by the revaluation of investments to market value and in compliance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their financial statements in accordance with the Financial Reporting Standard 102, "The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland" ("FRS 102") and the Charities Act 2011. The financial statements are prepared in sterling which is the functional currency of the Charity. Monetary amounts in these financial statements are rounded to the nearest pound. The Charity is a Public Benefit Entity as defined by FRS 102. ## **a. Basis of preparation** The financial statements have been prepared on a going concern basis. The principal accounting policies applied in the preparation of these financial statements are set out in the notes below. These policies have been consistently applied to all the years presented, unless otherwise stated. ## **b. Going concern** Notwithstanding the impact of the ongoing Covid‐19 pandemic the trustees consider that there are no material uncertainties affecting the Charity's ability to continue as a going concern for at least twelve months from the date of approval of the accounts. ## **c. Total return investment accounting** The trustees have elected to adopt the total return approach for the investment of its permanent endowments. Under this approach, the permanently endowed funds are invested to produce an investment return without regard to whether that return is in the form of income or capital appreciation; the investment return forms a component of the endowment fund called the unapplied total return. The trustees periodically determine how much of the unapplied total return is released to income for spending and how much is retained for investment. This allocation is made equitably to balance the need for income to meet current requirements and to hold funds as part of the endowment to produce investment returns for the future. ## **d. Funds structure** Where there is a legal restriction on the purpose to which a fund may be put, the fund is classified either as a restricted fund or an endowment fund. Restricted funds are those where the donor has provided for the donation to be spent in furtherance of a specified charitable purpose. Page: 16 **Royal Academy Trust Notes to the Financial Statements** **For the year ended 31 August 2021 (continued)** ## **2 Summary of significant accounting policies (continued)** ## **d. Funds structure (continued)** Endowment funds arise when the donor has expressly provided that the donation is to be invested and only the income of the fund may be spent. These funds are sub analysed between those where the trustees have the discretion to spend the capital, an expendable endowment, and those where there is no discretion to expend the capital, a permanent endowment. Those funds which are neither endowment nor restricted income funds, are unrestricted income funds which are sub analysed between designated funds where the trustees have set aside amounts to be used for specific purposes or which reflect the non‐binding wishes of donors and unrestricted funds which are used at the trustees' discretion in furtherance of the general objectives of the Charity, including the general fund which represents the Charity's reserves. The major funds held in each of these categories are disclosed in notes 15 to 17. ## **e. Income** All income is recognised once the Charity has entitlement to the resources, it is probable (more likely than not) that the resources will be received and the monetary value can be measured reliably. Investment income, including the related tax credit, and interest on bank and short‐term deposits are accounted for on a receivable basis. Donations are accounted for when received. ## **f. Legacies** Legacies are accounted for as income where there is clear entitlement; the amount can be measured reliably; and receipt is probable. Receipt is probable when: - Confirmation has been received from the representatives of the estate(s) that probate has been granted; and - The executors have established there are sufficient assets in the estate to pay the legacy; and - All conditions attached to the legacy have been fulfilled or are within the Charity's control. Measurement is based on the value listed in the will for pecuniary gifts, provided the estate has sufficient funds, and on the estate accounts for residuary gifts. ## **g. Expenditure** All expenditure is accounted for on an accruals basis and has been classified under headings that aggregate all costs related to each category of expense shown in the Statement of Financial Activities ("SOFA"). ## **h. Raising funds** The costs of raising funds are those costs attributable to generating income for the Charity. These represent the legacy manager's salary costs, investment management fees and governance costs. Governance costs are primarily concerned with constitutional and statutory requirements. Page: 17 ## **Royal Academy Trust Notes to the Financial Statements** ## **For the year ended 31 August 2021 (continued)** ## **2 Summary of significant accounting policies (continued)** ## **i. Charitable activities** Costs of charitable activities comprise the donations made to the Royal Academy. Generally, donations are accounted for when paid. However, where the Royal Academy has incurred expenditure on a major capital project on the basis of a commitment from the Charity to reimburse costs, any costs not covered by donations paid in the year are provided for. ## **j. Investments** Listed investments are stated at market value at the year end. The market value of securities is based on the bid market quotation on the relevant stock exchange and investments that are held in units are stated at the average of the unit bid and offer prices. The SOFA includes any realised or unrealised gain / loss during the year. The main form of financial risk faced by the Charity is that of volatility in equity markets and investment markets due to wider economic conditions, the attitude of investors to investment risk, and changes in sentiment concerning equities and within particular sectors or sub sectors. ## **k. Realised gains and losses** All gains and losses are taken to the SOFA as these arise. Realised gains and losses on investments are calculated as the difference between sales proceeds and opening carrying value or later purchase price. Unrealised gains and losses are calculated as the difference between the market value at the year end and opening carrying value or later purchase price. ## **l. Foreign currencies** Investment transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Assets and liabilities denominated in foreign currencies are retranslated at the rate ruling at the balance sheet date. ## **m. Financial instruments** Financial instruments are recognised in the Charity's balance sheet when it becomes party to the contractual provisions of the instrument. Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously. Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Charity after deducting all of its liabilities. ## **Basic financial assets** Basic financial assets, which include trade and other receivables and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost less any impairment. Page: 18 ## **Royal Academy Trust Notes to the Financial Statements** ## **For the year ended 31 August 2021 (continued)** ## **2 Summary of significant accounting policies (continued)** ## **m. Financial instruments (continued)** ## **Other financial assets** Other financial assets, including investments in equity instruments, are initially measured at fair value which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in the SOFA. Trade debtors, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as "debtors". Debtors are measured at amortised cost less any impairment. ## **Impairment of financial assets** Financial assets, other than those held at fair value through the SOFA, are assessed for indicators of impairment at each reporting end date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. The impairment loss is recognised in the SOFA. ## **Derecognition of financial assets** Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity. ## **Basic financial liabilities** Basic financial liabilities, including trade and other payables, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. ## **Other financial liabilities** Derivatives, including forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re‐measured at their fair value. Changes in the fair value of derivatives are recognised in the SOFA in finance costs or finance income as appropriate. Hedge accounting is not currently applied. ## **3 Critical accounting judgments and estimation uncertainty** Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. ## **a. Fair value on derivatives** Derivatives are re‐measured at fair value at the year end. Fair value at year end is determined by an independent external third party. Page: 19 ## **Royal Academy Trust Notes to the Financial Statements** ## **For the year ended 31 August 2021 (continued)** ## **4 Prior year comparatives by type of fund** |**Income and endowments from:**
Donations
Investments
**Total income**
**Expenditure on:**
Raising funds
Charitable activities
Annual donation to the Royal Academy
Other donations to the Royal Academy
Total charitable activities
**Total expenditure**
Net gains on investments
**Net income / (expenditure)**
Transfers between funds
Total funds brought forward
**Total funds carried forward**|**Total**
**funds**
**2020**
**2020**
**2020**
**2020**
**£**
**£**
**£**
**£**
626,009
16,828
‐
**642,837**
97,068
51,805
470,007
**618,880**
**Unrestricted**
**funds**
**Restricted**
**funds**
**Endowment**
**funds**| |---|---| ||723,077
68,633
470,007
**1,261,717**| ||(218,008)
‐
8,955
**(209,053)**
(401,700)
(457,236)
‐
**(858,936)**
‐
(1,524,526)
‐
**(1,524,526)**| ||(401,700)
(1,981,762)
‐
**(2,383,462)**| ||(619,708)
(1,981,762)
8,955
**(2,592,515)**| ||475,471
277,519
689,902
**1,442,892**| ||578,840
(1,635,610)
1,168,864
**112,094**
‐
950,208
(950,208)
**‐**
15,998,419
11,223,043
19,332,707
**46,554,169**| ||**16,577,259**
**10,537,641**
**19,551,363**
**46,666,263**| Page: 20 ## **Royal Academy Trust Notes to the Financial Statements** ## **For the year ended 31 August 2021 (continued)** ## **5 Income from donations and legacies** |**Income from donations and legacies**||| |---|---|---| |General*
Revenue projects:
Schools
Library and collections
Total revenue projects
Total|**Total**
**2021**
**2021**
**2021**
**2021**
**£**
**£**
**£**
**£**
287,798
‐
‐
**287,798**
35,678
‐
‐
**35,678**
‐
15,328
‐
**15,328**
35,678
15,328
‐
**51,006**
**323,476**
**15,328**
**‐**
**338,804**
**Unrestricted**
**funds**
**Restricted**
**funds**
**Endowment**
**funds**|Total
2020
£
500,081| |||125,928
16,828| |||142,756| |||642,837| * General income from donations and legacies includes £nil (2020: £357,456) received from The Friends of the Royal Academy. ## **6 Income from investments** |Listed investments
Bank interest
Total|**Total**
**2021**
**2021**
**2021**
**2021**
**£**
**£**
**£**
**£**
145,657
87,843
378,528
**612,028**
‐
‐
200
**200**
**145,657**
**87,843**
**378,728**
**612,228**
**Unrestricted**
**funds**
**Restricted**
**funds**
**Endowment**
**funds**|Total
2020
£
612,972
5,908| |---|---|---| |||618,880| ## **7 Analysis of expenditure on charitable activities** In the current year, the Charity made donations of £2,969,498 (2020: £2,383,462) to the Royal Academy, representing £2,000,000 (2020: £1,505,000) to the Burlington Project ‐ Phase I; £16,828 (2020: £19,526) for the cataloguing project; £92,500 (2020: £92,500) for the Heinz Architecture Programme; £232,257 (2020: £198,007) for the Schools; £6,410 (2020: £6,410) for the Library; and £5,000 (2020: £5,000) for the Casson Drawing Prize in the Summer Exhibition, with the balance donated in support of the general activities of the Royal Academy. Page: 21 ## **Royal Academy Trust Notes to the Financial Statements** ## **For the year ended 31 August 2021 (continued)** ## **7 Analysis of expenditure on charitable activities (continued)** |Annual donation to the Royal
Academy
Royal Academy revenue projects:
Cataloguing project
Total revenue projects
Royal Academy capital projects:
Burlington Project ‐ Phase I
Total capital projects
Total
**Analysis of expenditure on raising**
Fund manager fees / (rebate)
Staff costs
Auditors' remuneration
Bank charges
Exchange rate losses
Miscellaneous
Total|**Total**
**2021**
**2021**
**2021**
**2021**
**£**
**£**
**£**
**£**
177,329
775,341
‐
**952,670**
‐
16,828
‐
**16,828**
**‐**
**16,828**
**‐**
**16,828**
1,677,797
322,203
‐
**2,000,000**
**1,677,797**
**322,203**
**‐**
**2,000,000**
**1,855,126**
**1,114,372**
**‐**
**2,969,498**
**funds**
**Total**
**2021**
**2021**
**2021**
**2021**
**£**
**£**
**£**
**£**
200,202
‐
4,946
**205,148**
64,479
‐
‐
**64,479**
16,557
‐
‐
**16,557**
85
‐
‐
**85**
242
‐
‐
**242**
3,248
‐
‐
**3,248**
**284,812**
**‐**
**4,946**
**289,758**
**Unrestricted**
**funds**
**Restricted**
**funds**
**Endowment**
**funds**
**Unrestricted**
**funds**
**Restricted**
**funds**
**Endowment**
**funds**|Total
2020
£
858,936| |---|---|---| |||19,526| |||19,526| |||1,505,000| |||1,505,000| |||2,383,462| |||Total
2020
£
73,108
59,230
16,857
241
59,617
‐| |||209,053| ## **8 Analysis of expenditure on raising funds** ## **9 Trustees' remuneration, benefits and expenses** The Charity's trustees give their time freely and receive no remuneration for the work that they undertake as trustees. However, they can claim expenses to reimburse them for costs that they incur in fulfilling their duties. No trustee, or person related or connected by business to them, has received any remuneration from the Charity during the current or prior year. No expenses were reimbursed to trustees for travel to attend committee meetings of the Charity during the current or prior year. ## **10 Analysis of staff costs** The trustees have concluded that the Executive Committee comprise the key management personnel of the Charity. No remuneration was paid to key management personnel (2020: £nil). Page: 22 ## **Royal Academy Trust Notes to the Financial Statements** ## **For the year ended 31 August 2021 (continued)** |**10 Analysis of staff costs (continued)**
Salaries and wages
Social security costs
Employers pension contribution
Total|**2021**
**£**
**53,600**
**5,679**
**5,200**
**64,479**|2020
£
49,864
5,170
4,196| |---|---|---| |||59,230| Salary costs represent the cost of staff employed by the Royal Academy and recharged to the Charity. The average number of permanent staff engaged by the Charity in 2021 was 1 (2020: 1). ## **11 Investments** |**Movement in market value of investments**
Market value brought forward
Additions to investments at cost
Proceeds on disposal
Net gain on investments
Market value of investments at 31 August
**Market value of investments by type**
Bonds
Property
Global equities
UK equities
Hedged equities
Absolute return
Alternative investments
Liquid assets
Commodities
Total market value of investments
Cash holdings
Total
**Investments under management were:**
Partners Capital LLP
Sarasin & Partners LLP
Evenlode Investment Management Limited
Total
[Historic cost of investments £34,858,048 (2020:
£34,721,262)]|**2021**
**£**
**44,197,529**
**5,581,760**
**(6,043,862)**
**7,959,224**
**51,694,651**
**2021**
**£**
**7,364,095**
**2,718,307**
**27,723,498**
**7,681,375**
**547,972**
**3,746,749**
**1,244,507**
**594,264**
**73,884**
**51,694,651**
**1,057,923**
**52,752,574**
**33,698,234**
**13,773,641**
**5,280,699**
**52,752,574**|2020
£
44,418,672
8,633,356
(10,297,391)
1,442,892| |---|---|---| |||44,197,529| |||2020
£
7,770,356
2,387,980
23,494,511
5,188,701
424,642
3,541,877
1,005,186
327,021
57,255| |||44,197,529
2,136,228| |||46,333,757| |||31,749,433
10,294,053
4,290,271| |||46,333,757| All investments are carried at their fair value. Page: 23 ## **Royal Academy Trust Notes to the Financial Statements** ## **For the year ended 31 August 2021 (continued)** ## **11 Investments (continued)** |Sarasin Endowments Fund
Partners Capital The Master Portfolio (C) Ltd
Evenlode Global Income Fund
Partners Capital Falcon Fund (C) Ltd
Partners Capital Greyhawk Fund, LP
Partners Capital Phoenix Fund II Ltd
Partners Capital Harrier Fund (C) Ltd
Charities Property Fund (Cordea Savills)
Sarasin Climate Active Endowments Fund
Vanguard UK Inflation Linked Gilt Index Fund
**12 Debtors**
Amounts due from R.A. Enterprises Limited
Accrued income
Total
Amounts owed by related undertakings are unsecured, interest free, have
are repayable on demand.
**Significant investment holdings as a % of total investment portfolio**
**based on market value at 31 August were:**|**2021**
**22.23%**
**11.67%**
**10.01%**
**7.29%**
**6.81%**
**5.06%**
**4.08%**
**3.94%**
**3.88%**
**1.48%**
**2021**
**£**
**28,553**
**‐**
**28,553**
no fixed date of|2020
22.22%
10.30%
9.26%
7.70%
6.15%
5.65%
4.98%
4.37%
0.00%
2.86%
2020
£
125,928
59,956| |---|---|---| |||185,884| |||repayment and| |**13 Creditors ‐ amounts falling due within one year**
Amounts due to the Royal Academy
Accruals
Total
**14 Notes to the statement of cash flows**
Net income
Adjustments for:
‐ Gains on investments
‐ Dividends and interest from investments
‐ Fund manager fees
‐ Decrease in debtors
‐ Increase in creditors
Cash flow used in operating activities|**2021**
**£**
**435,941**
**112,613**
**548,554**
**2021**
**£**
**5,651,000**
**(7,959,224)**
**(612,228)**
**205,148**
**157,331**
**96,238**
**(2,461,735)**|2020
£
391,916
60,400| |---|---|---| |||452,316| |||2020
£
112,094
(1,442,892)
(618,880)
73,108
88,672
367,432| |||(1,420,466)| Page: 24 ## **Royal Academy Trust Notes to the Financial Statements** ## **For the year ended 31 August 2021 (continued)** ## **15 Analysis of endowment funds** |The Ivor Rey scholarship fund:
a
‐ Trust for investment
‐ Unapplied total return
Paul Mellon endowment fund:
b
‐ Trust for investment
‐ Unapplied total return
Anonymous donor fund:
c
‐ Trust for investment
‐ Unapplied total return
McAulay Scholarship Fund:
d
‐ Trust for investment
‐ Unapplied total return
Total|**£**
**£**
**£**
**£**
404,400
‐
‐
**404,400**
203,156
123,501
(14,532)
**312,125**

3,039,283
‐
‐
**3,039,283**
‐
617,807
(617,807)
**‐**
12,229,042
‐
‐
**12,229,042**
2,380,423
2,422,979
‐
**4,803,402**
1,265,918
‐
‐
**1,265,918**
29,141
249,982
(25,000)
**254,123**
**Balance at**
**2020**
**Balance at**
**2021**
**Investment**
**returns less**
**fund manager**
**fees**
**Unapplied**
**total return**
**allocated to**
**income**| |---|---| ||**19,551,363**
**3,414,269**
**(657,339)**
**22,308,293**| ## **a. The Ivor Rey scholarship fund** In March 2013, £361,303 was received from the estate of Ivor Rey to establish the Ivor Rey scholarship fund which is held as a permanent endowment and is being accounted for on a total return basis. A further £43,097 was received in December 2016. The purpose of the fund is to provide an annual award from investment returns to enable students of the Royal Academy of Arts Schools ("Royal Academy Schools") to visit Paris, France for the purpose of studying art. ## **b. Paul Mellon endowment fund** The Paul Mellon endowment fund was established in 2000 by a $5,000,000 / £3,039,283 legacy from Paul Mellon. It is held as a permanent endowment and is being accounted for on a total return basis. The terms of the bequest restrict the investment returns arising from it to the general purpose of the Royal Academy. ## **c. Anonymous donor fund** A donor, whose identity is known to the Charity, but who wished to remain publicly anonymous pledged $23,000,000 in October 2015, to be paid in eight equal annual instalments from December 2015, but with the donor having the right to accelerate any one or more of such instalments. $15,333,333 (£10,000,000 based on the exchange rate at date of pledge) is to be held as a permanent endowment and is being accounted for on a total return basis, with investment returns generated being available to the Royal Academy for unrestricted revenue projects from 2022, with the remaining $7,666,667 (£5,000,000 based on the exchange rate at date of pledge) being available to the Royal Academy for a restricted capital project, Burlington Project ‐ Phase III. Two instalments were received ($5,750,000 / £3,966,198) in the period to 31 August 2017. Payment of the remaining instalments was accelerated, with the balance received during the year ended 31 August 2018. £12,229,042 ($15,000,000) is included in the endowment funds above (including a £2,229,042 realised foreign exchange gain), with £5,000,000 included in restricted funds ‐ Burlington Project III (see note 16). Page: 25 ## **Royal Academy Trust Notes to the Financial Statements** ## **For the year ended 31 August 2021 (continued)** ## **d. McAulay Scholarship Fund** A donation of $1,323,364 / £1,066,455 was received from the McAulay family in August 2020 to support two full scholarships for students at the Royal Academy Schools in perpetuity. The donor's expressed intention was for these funds to "top up" the existing fund established in 1998 to provide fees and maintenance for a student at the Royal Academy Schools. The fund is held as a permanent endowment and is being accounted for on a total return basis, with the investment return being used to fund the scholarships. |**16 **|**Analysis of restricted funds**|||||**Unapplied**|| |---|---|---|---|---|---|---|---| |||||**Income and**||**total return**|| ||||**Balance at**|**fund growth**|**Utilised in**|
**from**|**Balance at**| ||||**2020**|**in year**|**year**|**endowments**|**2021**| ||||**£**|**£**|**£**|**£**|**£**| ||Heinz Architecture fund|16.a|3,758,764|745,256|(92,500)|‐|**4,411,520**| ||Salaman‐Seelig art fund|16.b|80,349|14,910|(7,000)|‐|**88,259**| ||The Ivor Rey scholarship fund|15.a|22,481|1,616|(14,532)|14,532|**24,097**| ||Paul Mellon endowment fund|15.b|923,676|‐|(923,676)|617,807|**617,807**| ||McAulay Scholarship fund|15.d|‐|‐|(25,000)|25,000|**‐**| ||Cataloguing project|16.c|16,828|15,328|(16,828)|‐|**15,328**| ||Greenham fund|16.d|185,637|36,603|(5,570)|‐|**216,670**| ||The Starr Fellowship|16.e|1,112,655|220,343|(28,686)|‐|**1,304,312**| ||Weiss fund|16.f|19,177|3,780|(580)|‐|**22,377**| ||Burlington Project ‐ Phase III|16.g|4,418,074|945,109|‐|‐|**5,363,183**| ||Total||**10,537,641**|**1,982,945**|**(1,114,372)**|**657,339**|**12,063,553**| ## **a. Heinz Architecture fund** The Heinz Architecture fund comprises a major donation received in 1993 to support the development of the architecture programme of the Royal Academy. The trustees make a donation each year to support the costs of the programme. ## **b. Salaman‐Seelig art fund** The Salaman‐Seelig art fund was established in 2016 by a £71,550 legacy from Auriol Seelig. The purpose of the fund is to make an annual award to a 2nd year student of the Royal Academy Schools. It is anticipated that the award will be made for 12 consecutive years. ## **c. Cataloguing project** The cataloguing project was established through donations from trusts, foundations and private individuals. The purpose of the project is to catalogue the Royal Academy's collection, including conservation and the creation of a collections website, and the creation and publication of a volume on the history of the Royal Academy and its collection, which was published in 2018. ## **d. Greenham fund** The Greenham fund was established in 1992 through donations from trusts, private individuals and an auction of donated works. The purpose of the fund is to provide a three year bursary for a student of the Royal Academy Schools, selected by the Keeper of the Royal Academy Schools. ## **e. The Starr Fellowship** The Starr Fellowship was established in 1987, with subsequent donations in 1998, 1999, 2000, 2001 and 2004. The fund is used to support an annual fellowship for American nationals with a contemporary art practice with a bursary of £26,000 and to support the Royal Academy Schools general running costs that allow the fellowship to be offered. Page: 26 ## **Royal Academy Trust Notes to the Financial Statements For the year ended 31 August 2021 (continued)** ## **16 Analysis of restricted funds (continued)** - **f. Weiss fund** - The Weiss fund was established in 2005 by a donation of £10,000 from Edna Weiss. The purpose of the fund is make an annual award of £560 to a student of the Royal Academy Schools working in a figurative style. ## **g. Burlington Project ‐ Phase III** - As disclosed in note 15.c, a donor, whose identity is known to the Charity but who wished to remain publicly anonymous, donated £5,000,000 in 2018 to the Burlington Project ‐ Phase III. In both 2018 and 2019 £500,000 was donated to the Royal Academy in respect of costs incurred to date by the Royal Academy on this project, with the remaining £4,000,000 being held by the Charity until required by the Royal Academy. ## **17 Analysis of designated funds** The trustees have designated the funds detailed below out of unrestricted funds: |General
a
Sir Roger de Grey Memorial Fund
b
Casson Award
d
Eranda Professor
e
Cheneviére Travel Award
f
Schools Portfolio Fund
g
Patricia Turner Award
h
The Pauline Sitwell Bursary Fund
i
Maintenance Fund
j
Total|**£**
**£**
**£**
**£**
1,594,410
(52,080)
313,515
**1,855,845**
132,662
(3,529)
26,250
**155,383**
318,504
(5,000)
63,727
**377,231**
147,457
(4,430)
29,074
**172,101**
163,895
(4,920)
32,315
**191,290**
147,772
(4,440)
29,136
**172,468**
338,190
(10,150)
66,682
**394,722**
401,326
(12,040)
79,131
**468,417**
2,018,478
(80,740)
429,570
**2,367,308**
**Utilised in**
**year**
**Income and**
**fund growth**
**in year**
**Balance at**
**2020**
**Balance at**
**2021**| |---|---| ||**5,262,694**
**(177,329)**
**1,069,400**
**6,154,765**| ## **a. General** In 1998, the Charity received £1,359,212 from the Royal Academy in respect of several small trusts. These trusts represent funds donated in support of scholarships and prizes in the Royal Academy Schools; maintenance of the Royal Academy Collections; and the general purposes of the Royal Academy. The Charity Commission gave permission for these funds to be transferred to the Charity on the basis of the improvements to investment performance and administration likely to ensue. These funds have been treated as designated funds that have been set aside out of the unrestricted funds by the trustees for specific purposes. ## **b. Sir Roger de Grey Memorial Fund** The fund was launched in 1996 to establish a source of funds to provide student maintenance grants for students at two independent institutions with which Sir Roger was associated: the Royal Academy Schools and the City & Guilds of London Art School. Sir Roger was President of the Royal Academy from 1984 to 1993 and Principal of the City & Guilds from 1973 until his death in 1995. Funds totalling £80,000 were invested on the understanding that annual maintenance grants would be made to each fine art school (split evenly between them). ## **d. Casson Award** The fund was created in 2001 to establish a prize for drawing to be awarded during the Summer Exhibition with initial funds totalling £107,000. The fund was increased in 2013 and 2015 through bequests of £88,482 and £20,152 respectively received from the estate of Mrs Anne Marjorie Crosthwait. Page: 27 **Royal Academy Trust Notes to the Financial Statements** **For the year ended 31 August 2021 (continued)** ## **17 Analysis of designated funds (continued)** ## **e. Eranda Professor** The fund was created in 2001 to establish a professorship in the Royal Academy Schools. An initial donation of £120,000 from the Eranda Foundation was earmarked for investment by the Charity on the understanding that this would fund a professor in the Royal Academy Schools. Further funds of £20,000 were donated in 2012 by the Trustees of the Eranda Foundation. ## **f. Cheneviére Travel Award** The fund was launched in 2001 to establish a source of funds to provide a travel bursary for a student in the Royal Academy Schools. Funds totalling £144,000, raised by the Cheneviére family, were earmarked by the trustees and invested on the understanding that a travel award would be made each year to a student in the Royal Academy Schools. ## **g. Schools Portfolio Fund** The fund was created in 2001 to establish a source of funds providing maintenance for students at the Royal Academy Schools. ## **h. Patricia Turner Award** In November 2001 the Charity earmarked £200,000 of donations to establish a fund to provide a grant to a graduating student in 3D media. ## **i. The Pauline Sitwell Bursary Fund** In May 2012, £250,000 from Pauline Sitwell's bequest to the Royal Academy, as a whole group, was paid directly to the Charity to establish the Pauline Sitwell Bursary Fund. The purpose of the fund is to provide an annual bursary award to assist students of the Royal Academy Schools with living costs. The annual award was set at £7,500 per annum, but is subject to annual review by trustees of the Charity. ## **j. Maintenance Fund** The fund was created in 2004 to provide maintenance for students at the Royal Academy. In addition to investment income received, a total of £35,678 has been added to this fund during 2021 (2020: £125,928), arising from fundraising activities. An annual donation is made from each designated fund to the Royal Academy in line with the wishes of each fund. This will continue until each fund has been fully drawndown. |**Analysis of net assets between designated funds**
General
Sir Roger de Grey Memorial Fund
Casson Award
Eranda Professor
Cheneviére Travel Award
Schools Portfolio Fund
Patricia Turner Award
The Pauline Sitwell Bursary Fund
Maintenance Fund
Total|**Investments**
**£**
**£**
**£**
1,855,845
‐
**1,855,845**
155,383
‐
**155,383**
377,231
‐
**377,231**
172,101
‐
**172,101**
191,290
‐
**191,290**
172,468
‐
**172,468**
394,722
‐
**394,722**
468,417
‐
**468,417**
2,331,630
35,678
**2,367,308**
**Net current**
**assets**
**Total net**
**assets**| |---|---| ||**6,119,087**
**35,678**
**6,154,765**| Page: 28 ## **Royal Academy Trust Notes to the Financial Statements** ## **For the year ended 31 August 2021 (continued)** ## **18 Analysis of net assets between funds** |||| |---|---|---| |**Analysis of net assets between funds**
Endowment funds
Restricted funds
Unrestricted funds:
Designated
Other
Total|**Investments**
**£**
**£**
22,241,475
66,818
12,048,226
15,327
6,119,087
35,678
12,343,786
(553,134)
**Net current**
**assets /**
**(liabilities)**|**£**
**22,308,293**
**12,063,553**
**6,154,765**
**11,790,652**
**Total net**
**assets**| ||**52,752,574**
**(435,311)**|**52,317,263**| ## **19 Financial instruments** The financial statements include the following in respect of items held at fair value at 31 August: |Financial assets measured at amortised cost
Financial liabilities measured at amortised cost
Financial assets measured at fair value through the SOFA|**2021**
**£**
**28,553**|2020
£
185,884| |---|---|---| ||**548,554**|452,316| ||**52,752,574**|46,333,757| ## **20 Related party transactions** The Royal Academy made a donation of £15,328 to the Charity related to unspent funds from the cataloguing project (2020: £16,828). The Charity donated £2,969,498 (2020: £2,383,462) to the Royal Academy; £2,000,000 (2020: £1,505,000) towards the Burlington Project ‐ Phase I; and £969,498 (2020: £878,462) to support various campaigns and capital projects. At the year end £435,941 was outstanding and included within creditors (2020: £391,916). R.A. Enterprises Limited made a donation of £28,533 (2020: £125,978) to the Charity for future funding of the Royal Academy Schools. At the year end £28,533 (2020: £125,978) was outstanding and included within debtors. The Friends of the Royal Academy made an unrestricted donation of £nil (2020: £357,456) to the Charity to provide future funding for the Royal Academy. Page: 29