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2020-07-31-accounts

Financial Statements and

Annual Review

Year ended 31 July 2020

Royal Welsh College of Music and Drama Limited

Registered Company number 06013744 Registered Charity number 1139282

Royal Welsh College of Music and Drama Limited

Coleg Brenhinol Cerdd a Drama Cymru Cyfyngedig

Financial Statements and Annual Review Year ended 31 July 2020

Registered Company number 06013744
Registered Charity number 1139282

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Contents
Reference and administrative details 3
Chair’s report 4 - 9
Trustees’ Report (incorporating Strategic report) 10 - 18
Technical Annex – Financial Statements
Independent Auditors’ report 19 - 21
Statement of Comprehensive Income and Expenditure 22
Statement of Changes in Reserves 23
Balance Sheet 24
Cash Flow 25
Notes to the financial statements 26 - 42

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Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

1. Reference and administrative details

Charity name Royal Welsh College of Music and Drama Charity number 1139282 Company number 06013744

Chairman

Mr J Derrick

Secretary

Mr W Callaway

Principal address and registered office

Castle Grounds Cathays Park Cardiff CF10 3ER

Independent auditors

External: KPMG LLP 3 Assembly Square, Britannia Quay, Cardiff, CF10 4AX

Internal: TIAA Ltd

Artillery House Fort Fareham Newgate Lane Fareham PO14 1AH

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Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

2. Chair’s report for the year ending 31 July 2020

As the Chair of the Royal Welsh College of Music and Drama Limited - the National Conservatoire of Wales - it is my privilege to provide an Annual Report of the activities of the College over the last year.

2.1. Introduction

During my third year as Chair, I was delighted to announce two new Vice Presidents of the College - Sir Ian Stoutzker CBE FRWCMD and Philip Carne MBE FRWCMD. Philip and Sir Ian have both been closely involved in the life of the College for many years as audience members, advisers and philanthropists and I look forward to working with them in their new roles as Vice Presidents. I offer my continued thanks to our President, HRH The Prince of Wales, to Lord Rowe-Beddoe of Kilgetty, our Chairman Laureate, and all my fellow Trustees for their active and committed service.

The Covid 19 pandemic had a material impact on the College this year. Along with most of the UK’s Higher Education sector the College closed its buildings to all students, staff and visitors on 20 March 2020 and remained closed until the end of the Academic year. All learning, teaching and assessment was immediately moved online and all public performances and commercial activities stopped.

Rapid work was undertaken to ensure the College’s students were able to progress either to graduation or to the next year of study. Working closely with our parent company, The University of South Wales, as our degree validating University, extensive modifications to established assessment patterns were made without abandoning the core principle of ‘fitness to practice’ that has to be fulfilled. I’m delighted to report that all our students were able to complete their degree or fulfil requirements for progression to the next year through online work and assessment. The continued lockdown restrictions across the UK meant that we weren’t able to hold our annual graduation celebration in July but the College staff are already planning to invite back this year’s graduates for a double celebration in 2021!

Although the physical lights of the College were switched off from March to July – creativity and performance continued to thrive and an impressive body of work was produced and shared online throughout this period. Some of the highlights are referenced later in this report.

Careful plans to reopen the College with a blended learning model commenced early in the Summer and I’m delighted to report that the College was open on 21 September to welcome the Class of 2020/21.

Through the year, extensive work was undertaken to complete consultation on the College’s first own Strategic Equality Plan and Equality Action Plan, this duty having previously fallen within the overarching documentation produced for the University of South Wales Group. The development was supported, in particular, by Prof. Uzo Iwobi, International Chair in Diversity and Special Advisor on Diversity to the First Minister of the Welsh Government. A focused piece was also undertaken to articulate an anti-racism action plan.

This year’s Chair’s Report tells the story of the College through the following main sections:

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Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

2.2. Key Facts about the College

Student Body

In 2019/20 the College had 817 students (2018/19: 777):

2.3. How the College uses its Resources to Generate Value

The College’s strategy was approved in 2019 and has the following strategic pillars:

The College uses the following resources to achieve these aims:

The output from the deployment of its resources ensures knowledge, experience and opportunities to perform are provided to our students in order to provide a high quality workforce to the creative

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Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

industries in Wales, the UK and internationally. The deployment of College resources enhances the employability and professionalism of our students so that our alumni successfully carry our name and reputation across the industry.

Finally, as well as providing high quality graduates to the creative industries, participation in higher education also provides wider benefits for individuals and society which have been outlined in the Department of Business Innovation and Skills (Research paper 146):-

2.4. Highlights of the Performance Programme

This year, and despite the Covid pandemic, the Creative Programme delivered over 330 performances across the College’s venues and at other locations across Wales, London and Edinburgh. In addition to its core purpose of providing a major training vehicle for students across all disciplines, the programme makes a major contribution to the cultural provision in south Wales and beyond, continuing to reach around 40,000 audience attenders. A number of highlights include those outlined below.

Autumn 2019 marked the College’s 70[th] anniversary including a special Gala performance by musicians of the David Seligman Opera School and WNO Orchestra conducted by Carlo Rizzi. We celebrated the music and theatre of the era with the Jazz Big Band’s celebration Spirit of ‘4 ’ and a new production of William Inge’s Bus Stop , as well as revealing treasures from the archives in an exhibition telling the story of the College and celebrating our alumni.

The academic programme opened with an immersive residency for first year music students with the Manchester Collective featuring Welsh violinist sisters Rakhi Singh and Simmy Singh, South African cellist Abel Selaocoe and drummer Sidiki Dembele.

The rest of the term offered a rich mix of new performance experiences including the dancers of Rambert2, appearing in partnership with Cardiff Dance Festival; London Sinfonietta’s Turning Points telling the story of minimalism; Indian slide guitarist Debashish Bahattacharya; Skye piper Brìghde Chaimbeul; a collaboration between three stars of world music with the AKA Trio; Fauré’s Requiem at St David’s Hall and a celebration of Clara Schumann’s 200[th] anniversary with Lucy Parham and Lesley Sharp. We marketed many of these performances with a ticket offer under our 20/20 Visionaries banner, which successfully encouraged audiences to try something different.

We welcomed National Theatre Wales to the Richard Burton Theatre for the first time with their poignant touring production Peggy’s Song and our own drama productions included Tom Stoppard’s Arcadia , Aaron Posner’s Stupid F***ing Bird and Patrick Marber’s Dealer’s Choice .

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Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

As part of our work to build family audiences we presented a series of events over half term including a special Halloween performance of The Mystery of the Raddlesham Mumps , Murray Lachlan Young’s eccentric ghost story for ages 7 to 107; Raymond Briggs’ The Bear and a fascinating lunchtime journey into new music and sound with the London Sinfonietta.

The Steinway International Piano Series launched in September with American pianist Simone Dinnerstein who gave a superb performance of Bach’s Goldberg Variations , and was followed in November by Barry Douglas with a programme of Russian masterworks.

The Autumn jazz programme focused on the piano as we celebrated the 90[th] anniversary of the legendary Bill Evans with Norma Winstone and Nikki Iles, welcomed New Yorker Aaron Parks back with his quartet Little Big and experienced the striking new music Kit Downes created for his latest ECM album.

The year closed in traditional style with a Christmas season of entertainment for all the family which this year includes the animated film adaptation of We’re Going On A Bear Hunt with live orchestra and a dazzling new Christmas on Broadway production.

Other events during the term included the Gould Piano Trio’s lunchtime performance of the Ghost Trio alongside a new work it has inspired by RWCMD composer Derri Lewis; and Joseph Moog’s special performance of Liszt’s piano arrangement of the Pastoral Symphony as part of the Steinway International Piano Series.

We were particularly pleased to once again host BBC Young Musician in March, and we took the opportunity to celebrate the competition’s enduring legacy by welcoming back previous winners Xhosa Cole, David Childs, Nicholas Daniel and Mark Simpson to perform and work with our students.

A special focus on Welsh musicians who are extending the boundaries of jazz and folk music included Tomos Williams’ Indo-Welsh band Khamira celebrating the music of Miles Davis; guitarist Toby Hay and friends performing music from his stunning new album for custom made 12-string guitar; and pianist Huw Warren in the very special trio Quercus with Iain Ballamy on saxophones and the legendary singer June Tabor.

In the Richard Burton Theatre, we explored the power of visual and physical storytelling with two exceptional visiting productions: Theatre Re’s ravishingly beautiful Edinburgh Festival hit, Birth and Tooth+Nail’s Hummingbird , a haunting love story set in post-War America.

The Richard Burton Company performed a challenging programme including Michael Fentiman’s new production of Simon Stephens’ powerful story of alienation, Motortown ; and John Donnelly’s radical take on Molière’s tale of deception and seduction, Tartuffe .

The final productions of the term including Così Fan Tutte directed by Martin Constantine, the NEW season, our musical theatre adaptation of Wedekind’s Spring Awakening and Music Theatre Wales’ international co-production of Philip Venables’ award winning opera Denis & Katya had to be cancelled due to the Covid-19 lockdown. We were also unable to undertake our planned north Wales residency at Galeri in Caernarfon.

Instead, we began the process of adapting to working online, setting up Atmospheres Radio as a platform for our jazz and new music output. This enabled us to present both the AmserJazzTime and Atmospheres festivals on the station and stay connected to our audiences. As part of the AmserJazzTime festival we presented a live Zoom concert from Amsterdam with Dutch band Tin Men and the Telephone whose specially developed phone app enables audiences to interact with them live, making creative choices in real time.

A planned project with International Chair for Jazz, Gilad Hekselman, which was due to take place at the end of June, happened online and culminated in a truly exceptional final AmserJazzTime radio show of new work created by students on the project.

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Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Similarly, we transformed our plans for a concert and chamber coaching by the Albion Quartet into a series of online coaching sessions for the String department. This included sessions on online presentation, passing on learning from Tamsin Waley-Cohen’s Living Room Live events, to help prepare students for their final recitals which took place online.

As the finale of an extraordinary term, new Director of Music Tim Rhys-Evans hosted twelve Lockdown Lowdown Zoom Q&A sessions for students with a diverse array of international music stars including Dame Kiri Te Kanawa, Dennis Rollins, Claron McFadden, Errollyn Wallen, Skaila Kanga, and John Wilson. These were also made available to watch online over the summer.

2.5. National Student Survey

National Student Survey (NSS) - Following last year’s significant drop in satisfaction score from 87% to 73%, the 2020 results have demonstrated a 1% improvement overall. Within this, Drama bounced back to previous levels of success (between 90% satisfaction in Stage Management to 100% satisfaction in Design). It has also been good to note improvement in the results for Student Voice and the Students’ Union across the College. Music suffered a further fall in overall satisfaction, although this was at variance with individual scores across all the other NSS themes, where improvement ranged from +2% to +18%. The College has articulated a strategic action plan to address the particular issues in Music, to complement ongoing College wide approaches to quality enhancement. This plan for Music has included fresh direction and stability for the Department with a new Director of Music, a revalidation of the BMus programme scheduled for 2020/21, and a suite of targeted measures to address huge variations in scores between discipline areas for some NSS themes.

2.6. Widening Access and Community Engagement

Following the extremely successful Benedetti Sessions in 2018, our instrumental weekends supported by the Mosawi Foundation continued in November 2019 with the Superbrass Weekend. This exceptionally versatile ensemble offered a varied and entertaining range of opportunities for people to engage in workshops, performances and free events. The weekend built strongly on the College’s profile amongst brass players and enthusiasts, particularly young people locally, as a place to hear the best brass musicians in the world, feeding into audience development for our wider programme.

Autumn 2019 also saw the establishment of On The Move, a new partnership with Hern & Crabtree which enabled 6,520 children in 27 schools to experience 38 brass and percussion concerts. Feedback from participating schools reflected impacts including increased confidence through participation in live music, fostering enthusiasm for music, enhancement of mental, physical and emotional health and a spirit of community and self-identity. These free workshops were coupled with complimentary tickets to lunchtime concerts at RWCMD and the partnership will continue with woodwind and vocal concerts in 2020/21.

In February we packed St David’s Hall with primary school children for Beethoven: Musical Superhero. Celebrating the 250[th] anniversary of Beethoven’s birth, this specially devised performance by the RWCMD Symphony Orchestra told the story of the great composer’s life and music through an entertaining mix of music, narration, puppetry and audience participation.

The College’s partnerships with BBC National Orchestra of Wales and Welsh National Opera continued to flourish, with 25 instrumental students and four conductors participating in placement schemes

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Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

and educational work. BBC NOW Ten Pieces Coaching Days provided RWCMD students with the opportunity to work with professionals coaching up to 200 school pupils in intensive orchestral projects.

In Drama our work on improving progression pathways and opening access to Higher Education continued including developing our YAS programme and partnerships with Merthyr Tydfil College and Open Door.

There were strong developments with our YPPA (Young People’s Production Arts) which delivered a free online summer school this year. This was attended by 100 participants aged 11 – 18 who signed up for activities hosted via Zoom throughout the week. The six RWCMD staff and graduates who led the specialist sessions were joined by International Chair and BAFTA nominated Lighting Designer Tim Routledge for the Backstage Careers and Drama School Q&A session. Other activities included Introductory sessions in Lighting, Sound, Stage Management, Set Design and Costume Design and feedback from participants and parents has been overwhelmingly positive.

The Pre-College department also ran a series of online activities over the summer including a First Campus-funded summer school for a small group of care-experienced young people from SE Wales. Working each Wednesday over a five-week period, activities were designed to develop young people’s confidence, wellbeing and life-skills.

2.7. Conclusion

In conclusion I just want to reflect on what’s been a steep learning journey for us all this year and I want to thank the Principal and the staff for their resilience and flexibility as they worked night and day to ensure that the provision of the education stayed at the same high level virtually as it was physically. This year has tested all of us and we will continue to evolve and develop how we teach, how we engage and how we inspire. Necessity is the mother of invention and our new way of thinking should form the basis for new opportunities for students and colleagues alike.

John Derrick Chair of Board of Governors

30 November 2020

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Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

3. Trustees’ Report

This report constitutes the Strategic Report and the Directors’ report required under the Companies Act 2006. The Directors confirm that the financial statements for the year ended 31 July 2020 have been prepared to comply with the Companies Act 2006 and the Statement of Recommended Practice (SORP): Accounting for Further and Higher Education 2019 and in accordance with applicable accounting standards.

3.1. Structure, governance and management

The Royal Welsh College of Music and Drama is a limited company and a registered charity. It is governed by its Articles of Association.

The charity’s registered address is University of South Wales, Treforest, Pontypridd, CF37 1DL and the registered number is 1139282.

The members of the Board, listed below, are the trustees of the Charity and as such have due regard to the Charity Commission’s guidance on public benefit and its supplementary guidance on the advancement of education for the public benefit.

The existing Directors and those who held office during the year and up to the date of signing the annual report and financial statements, are given below:

John Derrick (Chair) Professor Helena Gaunt (Principal - ex officio) Professor Julie Lydon (Vice Chancellor - ex officio) Nia Thomas (Student President, from 1 August 2019) Brian Weir (nominee of College Staff, resigned 31 July 2020) Lucy Hall (nominee of College Staff, appointed 8 October 2020) Jemma Terry (USW Board) Natasha Hale Manon Bonner Antoniazzi Aled Miles Mario Ferelli Roger Munnings, appointed 1 December 2019

3.2. Objectives and activities for the public benefit

Charitable Objectives

The College promotes the advancement of education and learning for the public benefit, specifically the training of performers and others in music, drama and theatre, through the provision of advanced courses of instruction, leading to the award of degrees or other appropriate qualifications. It also provides, maintains and improves performance facilities for the benefit of the local community.

Through the provision of high-quality training, the College seeks to produce graduates who are articulate and innovative in their art forms, and to provide the music and theatre industries with a highly skilled workforce, able to represent Wales on the world stage. The College makes a significant contribution to the cultural and artistic life of Wales and beyond.

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Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Fulfilment of Charitable Objectives

Beneficiaries :

The College has a higher education student population of just over 800 students of whom 89% are Home/EU and 11% from Overseas. Those students are the primary beneficiaries receiving high-quality training in a range of performing arts disciplines. However, beneficiaries extend to Pre-College students (from the age of four upwards) as well as employers and businesses in the creative industries sector which employ a high proportion of the College's graduates. The general public can attend over 500 public performances a year including free concerts and other educational and cultural activities in the College, such as exhibitions, masterclasses and talks.

Admissions policy:

The College seeks to recruit the most able and talented students, as well as those who exhibit exceptional potential irrespective of background. Within its undergraduate programmes demand for places is high and is normally conducted by audition interview or portfolio submission.

Public Benefit Statement

Bursaries, scholarships and funding support:

To support students who experience financial hardship, the College makes available financial support through bursaries and philanthropic donations received from external sources.

A high percentage of students enrolled on the College’s junior music and young actor programmes are in receipt of bursary support to enable them to access the College’s tuition, regardless of financial need. The College sources this bursary support from a combination of public funds, trusts, foundations, businesses and philanthropic donors.

The College operates a limited number of scholarships as a means of attracting the most gifted students and in order to achieve balanced cohorts of students to enable training in recognised core ensembles. Scholarships are offered on the basis of both excellence and need (i.e. the financial need of the applicant).

The College again had a strong year with regards to fundraising income, generating £1.85m - an increase from £1.68m in 2018/19. This was, in part, due to two major gifts received from The Mosawi Foundation and The Carne Trust. The Foyer was named the Carne Foyer in recognition of the gift from The Carne Trust, which will help to fund a number of strategic advancements over the coming period.

A special appeal was launched to grow the Student Hardship Fund in response to the growing number of requests from students experiencing financial hardship as a result of COVID 19. This Appeal raised over £50k and the fundraising campaign will continue so that financial and practical assistance can be offered to those who need it during the coming academic year.

The College would like reiterate its thanks to all members of the Connect and Friends Connect schemes as well as to the many individuals, business and charitable trusts who support scholarships, special projects, prizes and other College and student activities. A full list of - supporters can be viewed on the College website: https://www.rwcmd.ac.uk/support us/thank-you.

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Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

All fundraising activities conducted by the College are regularly reviewed to ensure they are compliant with the guidelines set out by the Fundraising Regulator in the Fundraising Code of Practice.

Widening Participation

One of the College’s main vehicle for widening participation and access is through its junior programmes of training and an extensive community engagement programme including Junior Music Conservatoire, Community Lesson Scheme and the Young Actors’ Studio in Cardiff and Pembrokeshire.

The College delivers an extensive programme of activity across Wales comprising concerts and workshops in a wide range of school and community settings as well as a series of ‘inreach’ activities delivered at the College.

Responding to the Covid 19 restrictions our YPPA (Young People’s Production Arts) group delivered a free Zoom online summer school this year which was attended by 100 participants aged 11 – 18 and the Pre-College department ran a series of online activities for a group of care-experienced young people from SE Wales.

The College continues to work closely with various arts disability groups to ensure our education and training prepares students for the diverse needs of the creative industries they will be entering on graduation.

Community Engagement

The College promotes an extensive public performance programme – this year again amounting to over 500 events with a total audience of around 40,000 to a diverse arts programme that ranged from comedy to cabaret, experimental theatre to film and a wide range of music genres.

Across the year, the College delivered a range of free events aimed at the wider Cardiff community including the weekly AmserJazztime foyer performances, tours of the building, exhibitions of theatre design and music performances and workshops delivered by students and professional theatre.

3.3. Strategic report

Principal activities

The College’s principal activity continues to be the delivery of conservatoire education and professional training.

Business review

The Covid-19 pandemic meant that the College closed its buildings to all students, staff and visitors in March 2020 and remained closed until the end of the academic year. All learning, teaching and assessment was able to continue online but all public performances and commercial activities stopped. The closure resulted in the loss of more than £300k of commercial income but this was fully mitigated by operational cost reductions over this period.

Student recruitment continues to reflect the demand for the College’s brand of quality conservatoire training. The demand for places varies between courses which are kept under constant review to ensure that they are meeting the needs of the industry and students. The final recruitment position

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Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

for 2019/20 was in line with the overall College expectations although there was a slight shift in the balance meaning that the proportion of overseas students dropped from 18% to 11%.

Attracting higher numbers of overseas students remains a key strategic priority for the but the relevant strategic changes introduced earlier in the year were materially hindered by the worldwide disruption and uncertainties caused by the Covid-19 pandemic and so the expected recovery and growth of numbers in this area is not now expected to happen before September 2021.

Headlines

Prior to the closure of the performance venues in March the College had already attracted audience attendances of just less than 40,000 from more than 330 performances – this is a fundamental aspect of the student learning experience enabling access to world class performers in a range of disciplines as well as providing an important income stream and audience for our students’ work. Since September 2020 the College has been able to resume a performance programme for students – albeit that the social distancing requirements continues to prevent external paying customers to attend.

In 2019/20, HEFCW responded to the funding recommendations of the Lord Murphy review Review of Conservatoire and Performing Arts provision. HEFCW agreed to increase its grant to the College by £1.8m - so ending up £0.56m below that £2.36m recommended in the original report. The College continues to engage in constructive dialogue with HEFCW and there may be opportunities for additional funding in future years.

The College again had a strong year regarding fundraising income, generating £1.85m - an increase from £1.68m in 2018/19.

3.4. Financial risk management

Commitment to Best Practice in Governance

The College is committed to best practice in all areas of financial risk management and corporate governance, adhering to the principles set out in The Committee of University Chairs’ (CUC’s) voluntary Higher Education Code of Governance published in December 2014.

The College’s Board of Directors is responsible for ensuring an adequate system of internal control and for reviewing its effectiveness. The system is designed to manage rather than eliminate the risk of failure to achieve business objectives and provides reasonable and not absolute assurance against material misstatement or loss.

Risk Management

The College maintains a risk management approach which considers business, operational, compliance and financial risks. The risk register is regularly reviewed by senior management, and the Company’s risk management process is consolidated into the University’s whose internal control guidance adheres to the combined code as amended by the British Universities Finance Directors’ Group.

Board of Directors and its sub committees

The Board of Directors met five times during the reporting year. In terms of audit arrangements, whilst a separate College Audit Committee has not been established, all audit reports and reviews and other information relating to the Company are formally received by the University of South Wales’s Audit Committee which meets four times per year and acts as the College Board’s Audit Committee. The 2019/20 annual report of the internal auditors was considered by both the

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Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

University’s Audit Committee and the College’s Board of Directors, who also approved the internal audit plan for 2020/21.

3.5. Financial Review

During the year the Charity had income of £15.4m (2019: £15.7m) and incurred expenditure of £15.4m (2019: £15.6m) resulting in a surplus, before gains and losses, of £0.035m (2019: £0.091m) for the year.

Net assets at 31 July 2020 were £7.8m (2019: £8.1m) reflecting the continued increase in pension provision, in respect of the LGPS scheme, which has now increased to £8.9m (2019: £8.0m).

Current assets at 31 July 2020 were £10.8m (2019: £9.2m). This large increase reflecting very tight cash management throughout the year and particularly following the introduction of the COVID-19 lockdown. HEFCW’s agreement to defer payment of a loan instalment (£0.5m) due in the year has also contributed to the healthy cash position.

3.6. Principal risks and uncertainties

Continued impact of Covid-19 restrictions

It’s already apparent that the College will continue to be impacted by the impact of the Covid-19 pandemic in 2020/21. Fewer overseas students will elect to come to the UK to study, a large proportion of the teaching programme will continue online for at least the autumn term and the College will be unable to open up performance to live audiences until 2021. So the Trustees anticipate another challenging year ahead.

Recruitment of students

The College’s strategic plan targets a modest annual growth in its current level of undergraduate and postgraduate student numbers and overseas students while ensuring the quality of students remains high. Although the College has developed detailed actions together with a system of enhanced partnerships with other institutions to support these plans the Trustees now expect that the Covid19 disruptions will hinder the planned growth in 2020/21 but remain confident that the position can be recovered in 2021/22 and subsequent years if conditions improve.

Fundraising

The support of Trusts and Foundations, public funders, businesses and individuals continues to be essential to offering students new training and performance opportunities and ensuring the most talented young artists are able to afford the cost of training.

Income generation

More than 40% of budgeted income from commercial activities was lost in 2019/20 as a direct consequence of the disruption and similar losses are now forecast in 2020/21 as these disruptions are expected to continue at least until the end of 2020. The College has continued to stay in close contact with its regular commercial customers and audiences and the Trustees remain confident that this income will recover quickly and strongly once the restrictions allow.

Dividends

The Directors do not recommend the payment of a dividend in respect of the year ended 31 July 2020 (2019 – nil).

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Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

3.7. Going concern

The activities of the College, together with the factors likely to affect its future development and performance are set out in the Trustees’ report (which includes the Strategic Report). The financial position of the College, its cashflow, liquidity and borrowings are presented in the Financial Statements and accompanying Notes.

The financial statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons.

The directors have prepared cash flow forecasts for a period at least twelve months from the date of approval of these financial statements. After reviewing these forecasts the Board are of the opinion that, taking account of severe but plausible downsides, including the anticipated impact of COVID-19, the College will have sufficient funds to meet its liabilities as they fall due over the period of twelve months from the date of approval of the financial statements (the going concern assessment period). The directors have also discussed, with Barclays, amendments to certain financial performance covenants attached to the secured loan, which will enable the College to continue to operate without breaching any of these conditions. These discussions are nearing their conclusion and will be formalised into new legally binding arrangements with Barclays.

Consequently, the Board are confident that the College will have sufficient funds to continue to meet its liabilities as they fall due for at least twelve months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern.

3.8. Statement of Corporate Governance and Internal Control

The College is committed to exhibiting best practice in all aspects of corporate governance. This summary describes the manner in which the College has applied the principles set out in the UK Corporate Governance Code issued by the Financial Reporting Council in June 2010. Its purpose is to help the reader of the annual report and financial statements understand how the principles have been applied. In the opinion of the Directors, the College complies with all the provisions of the Code, in so far as they apply to the Higher Education Sector, and it has complied throughout the year ended 31 July 2020 and up to the date of signing the annual report and financial statements.

The College reviews, at least annually, the effectiveness of the internal control system.

Employees

Applications for employment by disabled persons are always fully considered, taking into account the respective aptitudes and abilities of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment with the Company continues and the appropriate training is arranged. It is the policy of the Company that the training, career development and promotion of a disabled person should, as far as possible, be identical to that of a person who does not suffer from a disability.

Consultation with employees or their representatives has been undertaken, with the aim of ensuring that their views are taken into account when decisions are made that are likely to affect their interests. Communication with all employees is undertaken through termly staff meetings and regular e-mails.

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Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Statement of Directors’ responsibilities

The Trustees (who are also Directors of The Royal Welsh College of Music and Drama Limited for the purposes of company law) are responsible for preparing the Directors’ Report (incorporating the Strategic Report) and the financial statements in accordance with applicable law and regulations.

Company law requires the Trustees to prepare financial statements for each financial year. Under that law the Trustees have prepared the charitable company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), the Companies Act 2006, the Statement of Recommended Practice – Accounting for Further and Higher Education Institutions and other relevant accounting standards. In addition, within the terms and conditions of the Financial Memorandum agreed between the charitable company and the Higher Education Funding Council for Wales and under company law the Trustees must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of the affairs of the charitable company and of the incoming resources and application of resources, including the income and expenditure, of the charitable company for that period. In preparing these financial statements, the Trustees are required to:

The Trustees took reasonable steps to meet their responsibilities in respect of:

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Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

The Directors are responsible for the maintenance and integrity of the charitable company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Statement of disclosure of information to auditors

In the case of each Director in office at the date the Directors’ Report is approved, the following applies;

(b) he/she has taken all the steps that he/she ought to have taken as a Trustee in order to make himself/herself aware of any relevant audit information and to establish that the charitable company’s auditors are aware of that information.

Directors’ indemnities

The Company purchased and maintained throughout the financial year Directors’ and Officers’ liability insurance in respect of itself and its Directors.

This was also in force at the date of approval of the annual report and financial statements.

Independent Auditors

The auditors, KPMG LLP, were appointed in May 2020 and have indicated their willingness to continue in office, and a resolution concerning their reappointment will be proposed at a future meeting of the Board.

By order of the board

W D Callaway Company Secretary

30 November 2020

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Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

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Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

TECHNICAL ANNEX - FINANCIAL STATEMENTS

Independent Auditors’ Report to the Board of Governors of the Royal Welsh College of Music and Drama Limited

Opinion

We have audited the financial statements of the Royal Welsh College of Music and Drama Limited (“the College”) for the year ended 31 July 2020 which comprise the Statement of Comprehensive Income and Expenditure, the Statement of Changes in Reserves, the Balance Sheets, the Cash Flow Statement and related notes, including the accounting policies in basis of preparation section. In our opinion the financial statements:

• give a true and fair view of the state of the College’s affairs as at 31 July 2020, and of the College’s income and expenditure, gains and losses, changes in reserves and cash flows for the year then ended; and

• have been properly prepared in accordance with UK accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, and with the 2019 Statement of Recommended Practice – Accounting for Further and Higher Education ; and

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the College in accordance with, UK ethical requirements including the FRC Ethical Standard. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

Going concern

The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the College or to cease their operations, and as they have concluded that the College’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”). We are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least a year from the date of approval of the financial statements. In our evaluation of the Directors’ conclusions, we considered the inherent risks to the College’s business model, and analysed how those risks might affect the College’s financial resources or ability to continue operations over the going concern period. We have nothing to report in these respects.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor's report is not a guarantee that the College will continue in operation.

19

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Other information

The Directors are responsible for the other information, which comprises the Strategic Review and the Report of the Governors and Corporate Governance Statement. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work:

Matters on which we are required to report by exception

Under the Companies Act 2006 we are required to report to you if, in our opinion:

We have nothing to report in these respects.

Directors’ responsibilities

As explained more fully in their statement set out on page 16 the Directors are responsible for: the preparation of the financial statements and for being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the group and College’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 they either intend to liquidate the group or the College or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities

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 our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not 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 the financial statements.

A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.

20

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

The purpose of our audit work and to whom we owe our responsibilities

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the college’s members, as a body, for our audit work, for this report, or for the opinions we have formed.

Rees Batley

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants 3 Assembly Square Britannia Quay Cardiff CF10 4AX

01 December 2020

21

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Statement of Comprehensive Income and Expenditure for the Year Ended 31 July 2020

Notes
Income
Tuition fees and education contracts
3
Funding body grants
4
Other income
5
Investment income
6
Total income before endowments and donations
Donations and endowments
7
Total income
Expenditure
Staff costs
8
Other operating expenses
Depreciation
11
Interest and other finance costs
9
Total expenditure
Surplus/(Loss) before other gains and losses
Gain/(Loss) on investments
17
Surplus/(Loss) for the year
Actuarial gain/(loss) in respect of pension schemes
23
Total comprehensive income/(expenditure) for the year
Represented by:
Endowment comprehensive income/(expenditure) for the year
Restricted comprehensive income/(expenditure) for the year
Unrestricted comprehensive income/(expenditure) for the year		 2020
2019
£'000
£'000
8,659
8,449
3,620
3,587
1,128
1,851
141
102
13,548
13,989
1,845
1,684
15,393
15,673
9,064
8,546
4,917
5,681
875
864
502
491
15,358
15,582
35
91
(148)
27
(113)
118
(192)
(1,459)
(305)
(1,341)
(155)
86
211
225
(361)
(1,652)
(305)
(1,341)

All items of income and expenditure relate to continuing activities

22

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Statement of Changes in Reserves for the year ended 31 July 2020

Balance at 1 August 2019
(Deficit)/Surplus for the year
Other comprehensive expenditure
Balance at 31 July 2020		 Endowment
Restricted
£'000
£'000
2,629
1,114
(155)
211
2,474
1,325
Income and expenditure		 Unrestricted
£'000
2,574
(170)
(192)
2,212
account		 Revaluation
reserve
Total
£'000
£'000
1,819
8,137
0
(113)
(192)
1,819
7,832

23

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Balance Sheet as at 31 July 2020

(Company Registration: 06013744)

Notes
Non-current assets
Tangible assets
11
Heritage assets
11
Other
11
Current assets
Trade and other receivables
12
Investments
13, 24
Cash and cash equivalents
24
Creditors: amounts falling
due within one year
14
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
15
Provisions
Pension provisions
16
Other provisions
16
Total net assets
Restricted Reserves
Income and expenditure reserve - endowment reserve
17
Income and expenditure reserve - restricted reserve
18
Unrestricted Reserves
Income and expenditure reserve - unrestricted
Revaluation reserve
Share Capital
Total Reserves		 Restated
2020
2019
£'000
£'000
24,917
25,369
500
500
135
0
25,552
25,869
211
234
7,884
8,069
2,742
913
10,837
9,216
(4,459)
(2,503)
6,378
6,713
31,930
32,582
(15,227)
(16,311)
(8,836)
(7,988)
(35)
(146)
7,832
8,137
2,475
2,629
1,327
1,116
2,210
2,573
1,819
1,819
7,831
8,137
1
1
7,832*
8,138

*The 2018/19 balance has been restated and further information can be found in Note 24.

The financial statements on pages 22 to 42 were approved by the Board on 30 November 2020 and signed on its behalf by:

John Derrick

Chair of Board of Governors

24

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020 Cèsh FtowSt&tement ft>rthe ye8rended iijyly 2020 Pe5tated' 2019 Mote 2020 Cash Ilowfrrthoperaknre4Kti￿tl￿s sU￿U$llLo£s1 befo￿ othergainsarnd losses 91 Adjustment fornorrt8sh ilem5 Dep￿tIatIOn Gain on Investment5 Decrea5elllncreasel in debtors Incrèase In creditors LGPS Pension costs It￿ contributions payable Capital grant income li 875 57 23 1,263 12 14, 15 17S 651 14 Adiu5tmentlor investing or hnancing8cknvitie5 Investment income 328 15851 337 short term finènong 14 Net c&sh inflovj from operAtin¢ iJ29 1.7S4 Cash IIow5 from ￿Vesti￿ad(lMtI￿s Investment inctsme Movement in Inve5tmeDts Payments made to acquire fixed asset5 Bond payment to secure lease deposi(5 141 102 11.0581 11351 16021 19641 Cash IIow5 Irom financing ortivit 13281 535 Short term tin6nong Repayments ofamounts borrowed 102 InCre￿e inc•5handcash equN•lerrts intheyeqr 1,829 t￿h and cash equp•6lents 6t be￿nThIng of the year Cash and cash equpiolents bt end of the year 19. 24 19. 24 91$ 2.742 942 913 *The 201S119 bBlance ha5 been restated and further InforTn6bon be found in Note24. R￿tated Asgt l Aug 2019 Other Changes A5•t 31 Jul 2020 Anotysi5 of chonqesin netdebt Cashflows Cash at bank and in hand Debt due Within one ¥ear Oebtdue wrfhin more thèn one year 24 913 16971 18.9611 1,829 11551 2.742 11,4571 1È,0461 16051 915 18,7451 1.674 310 16,7611 25

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Notes to the financial statements for the year ended 31 July 2020

1 Basis of Preparation

The financial statements have been prepared on a going concern basis under the historical cost convention, modified by the revaluation of endowment investments, in accordance with the Companies Act 2006, as adapted to the Statement of Recommended Practice (SORP): Accounting for Further and Higher Education 2019 and in accordance with the Financial Reporting Standards. The College is a public benefit entity and therefore has applied the relevant public benefit requirement of FRS102, the financial reporting standard applicable in the UK and Republic of Ireland (FRS 102). The principal accounting policies are set out below and have been applied consistently throughout the year.

Going Concern

The activities of the College, together with the factors likely to affect its future development and performance are set out in the Trustees’ report (which includes the Strategic Report). The financial position of the College, its cashflow, liquidity and borrowings are presented in the Financial Statements and accompanying Notes.

The financial statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons.

The directors have prepared cash flow forecasts for a period at least twelve months from the date of approval of these financial statements. After reviewing these forecasts the Board are of the opinion that, taking account of severe but plausible downsides, including the anticipated impact of COVID-19, the College will have sufficient funds to meet its liabilities as they fall due over the period of twelve months from the date of approval of the financial statements (the going concern assessment period). The directors have also discussed, with Barclays, amendments to certain financial performance covenants attached to the secured loan, which will enable the College to continue to operate without breaching any of these conditions. These discussions are nearing their conclusion and will be formalised into new legally binding arrangements with Barclays.

Consequently, the Board are confident that the College will have sufficient funds to continue to meet its liabilities as they fall due for at least twelve months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern.

2 Accounting policies

Funding

The Directors have assessed the appropriateness of the going concern basis for the purpose of the financial statements for the year ended 31 July 2020 and on the basis of a revised Financial Strategy that was agreed in June 2019 and reviewed this year, the Board is able to confirm the College’s ability to continue as a going concern. The financial statements do not include the adjustments that would be necessary if the College was unable to continue as a going concern.

26

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Income recognition

Income from tuition fees is recognised over the period in which students are studying and includes all fees chargeable to students or their sponsors. Where the amount of the tuition fee is reduced by a discount for prompt payment, income receivable is shown net of the discount.

Income from the sales of goods and services is credited to the Consolidated Statement of Comprehensive Income and Expenditure when the goods or services are supplied to the external customers or the terms of the contract have been satisfied.

Investment income is credited to the income and expenditure account on a receivable basis

Grant Funding

Government grants, including funding council block grant, are recognised in income over the periods in which the College recognises the related costs for which the grant is intended to compensate. Where part of a government grant is deferred, it is recognised as deferred income within creditors and allocated between creditors due within one year and due after more than one year as appropriate.

Donations and Endowments

Non exchange transactions without performance related conditions are donations and endowments. Donations and endowments with donor imposed restrictions are recognised in income when the College is entitled to the funds. Income is retained within the restricted reserve until such time that it is utilised in line with such restrictions. Donations with no restrictions are recognised in income when the College is entitled to the funds.

Investment income and appreciation of endowments is recorded in income in the year in which it arises and as either restricted or unrestricted income according to the terms applied to the individual endowment fund.

There are three main types of donations and endowments identified within reserves:

  1. Restricted donations – the donor has specified that the donation must be used for a particular objective

  2. Unrestricted permanent endowments – the donor has specified that the fund is to be permanently invested to generate an income stream for the general benefit of the College.

  3. Restricted permanent endowments – the donor has specified that the fund is be permanently invested to generate an income stream to be applied to a particular objective.

Capital grants

Government capital grants are recognised in income over the expected useful life of the asset under the accruals method. Other capital grants are recognised in income when the College is entitled to the funds subject to any performance conditions being met.

27

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Accounting for retirement benefits

The two principal pension schemes for the College’s staff are the Teachers’ Pension Scheme (TPS) and Rhondda Cynon Taf Pension Fund (RCTPF), a Local Government Pension Scheme (LGPS). RCTPF is a defined benefit scheme which is externally funded.

Notes to the financial statements for the year ended 31 July 2020

2 Accounting policies (continued)

It is not possible to identify each institution’s share of the underlying liabilities in relation to the TPS and hence, contributions to the scheme are accounted for as if this was a defined contribution scheme, the cost recognised within the income statement being equal to the contributions payable to the scheme for the period.

Employment Benefits

Short term employment benefit such as salaries and compensated absences are recognised as an expense in the year in which the employees render service to the College. Any unused benefits are accrued and measured as the additional amount the College expects to pay as a result of the unused entitlement.

Early Retirement Provision

The Company maintains a provision to meet pension costs arising from the additional years of service granted to certain staff taking early retirement.

Provisions are established and the associated costs are charged to the income and expenditure account when the College has a legal or constructive obligation. The provision relates to enhanced teachers’ unfunded pension arrangements established by the College. These are termination benefits made on a discretionary basis upon early retirement, in respect of the Teachers Pension Scheme.

Operating Leases

Costs in respect of operating leases are charged on a straight-line basis over the lease term. Any lease premiums or incentives are spread over the minimum lease term.

Tangible Fixed Assets

Tangible fixed assets are initially recorded at purchase cost, including non recoverable VAT, incidental costs of acquisition, less accumulated depreciation.

Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost, less estimated residual value of each asset, evenly over its expected useful life, as stated below. Depreciation is charged for a full year within the year that the asset becomes available for use.

All fixed assets are reviewed for indicators of impairment at each balance sheet date.

Land and buildings

Land and buildings inherited from Royal Welsh College of Music and Drama Higher Education Corporation are stated in the balance sheet at their net book value on transfer.

28

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

As at 1 August 2014 asset lives were reassessed and revised depreciation rates applied to the net book value as at that date. The original Raymond Edwards building is being depreciated over 35 years, with the additional facilities being depreciated over 50 years, which is the expected remaining useful economic life.

Notes to the financial statements for the year ended 31 July 2020

2 Accounting policies (continued)

Land has been revalued to fair value on transition to the 2015 Further and Higher Education SORP, resulting in a revaluation reserve of £1,819,000. Land, whether freehold or leasehold, is not depreciated as it is considered to have an indefinite useful life.

Long leasehold buildings are depreciated over the shorter of the lease term and expected useful life.

Buildings under construction are capitalised at cost. Interest on loans used to fund capital projects is capitalised until such projects are brought into use. No depreciation is charged, until the year in which buildings under construction are brought into use.

Fixtures, fittings and plant and machinery

Equipment costing less than de minimums of £300 per individual item, is recognised as expenditure. All other equipment is capitalised.

Capitalised equipment is stated at cost, including non recoverable VAT, and is depreciated over its expected useful life, as follows:

Fixtures and fittings - 7 years straight line Plant and machinery - between 3-10 years straight line

Heritage Assets

Heritage assets are tangible assets with an historical, artistic, scientific, technological, geophysical or environmental quality that are held and maintained principally for their contribution to knowledge and culture. Heritage assets are those assets that are intended to be preserved in trust for future generations because of their cultural, environmental and historical associations.

Heritage assets acquired since College formation have been capitalised to the balance sheet at initial cost. Donated heritage assets are recorded at estimated valuation at the date of donation unless this is not practicable, in which case the appropriate disclosures are made of the nature and the extent of these donations. In subsequent periods, heritage assets are held at cost less any identified impairment.

Information on the valuation of Heritage assets is set out in note 11.

Investments

Investments are held at fair value with movements recognised in income and expenditure.

Cash

Cash includes cash in hand and cash equivalents.

29

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash with insignificant risk of change in value.

Notes to the financial statements for the year ended 31 July 2020

2 Accounting policies (continued)

Taxation

The College is a charity registered with the Charity Commission number 1139282 and as such is a charity within the meaning of Para 1 of Schedule 6 to the Finance Act 2010. Accordingly, the College is potentially exempt from taxation in respect of income or capital gains received within categories covered by Sections 478 to 488 of the Corporation Taxes Act 2010 (CTA 2010) (formerly enacted in Section 505 of the Income and Corporation Taxes Act 1988 (ICTA) or Section 256 of the Taxation of Chargeable Gains Act 1992 to the extent that such income or gains are applied to exclusively charitable purposes. The College receives no similar exemption in respect of Value Added Tax.

Loans

Loans received that either do not accrue interest or where interest is charged at less than a market rate are considered public benefit entity concessionary loans. These loans are recognised initially at the amount of cash received and are subsequently adjusted to reflect accrued interest payable.

Reserves

Reserves are classified as restricted or unrestricted. Restricted endowment reserves include balances which, through endowment to the College, are held as a permanently restricted fund which the College must hold in perpetuity.

Other restricted reserves include balances where the donor has designated a specific purpose and therefore the College is restricted in the use of these funds.

30

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Notes to the financial statements for the year ended 31 July 2020

3
Tuition fees and education contracts
Notes
Full-time home and EU students
Full-time international students
Short Course Fees
4
Funding body grants
Recurrent grant
Higher Education Funding Council
Amortisation of Deferred Capital grant
14
5
Other income
Catering
Other capital grants
14
Other income
6
Investment income
Investment income on endowments
17
Other investment income
7
Donations and endowments
New endowments
17
Donations with restrictions
18
Unrestricted donations		 2020
2019
£'000
£'000
6,371
5,885
1,708
1,906
580
657
8,659
8,448
2020
2019
£'000
£'000
3,485
3,452
135
135
3,620
3,587
2020
2019
£'000
£'000
361
577
34
34
733
1,239
1,128
1,850
2020
2019
£'000
£'000
64
70
77
32
141
102
2020
2019
£'000
£'000
0
8
872
1,333
973
342
1,845
1,683

31

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Notes to the financial statements for the year ended 31 July 2020

2020 2019
8 Staff costs £'000 £'000
Staff Costs
Salaries 6,784 6,529
Social security costs 581 553
Other pension costs 1,699 1,463
Total 9,064 8,545
Remuneration of directors and higher paid employees
(a) Directors £'000 £'000
Salary 220 198
Benefits 2 1
Pension contributions to LGPS 34 30
256 229
In addition one director receives remuneration in their capacity as President of the Students' Union.
(b) Higher paid employees
Emoluments of the Principal: £'000 £'000
Salary 152 137
Benefits 2 1
Pension contributions to LGPS 24 21
178 159
Average full time equivalent staff numbers by major category, including senior post-holders
2020 2019
Academic 103 108
Other 84 75
187 183
Average headcount equivalent staff numbers by major category, including senior post-holders
2020 2019
Academic 241 243
Other 208 206
449 449
Remuneration of the Principal of the College expressed as
2020 2019
Basic salary as a ratio of the median basic salary of all staff 4.50 4.63
Total remuneration as a ratio of the total remuneration of all staff 4.50 4.63

Trustee expenses and related party transactions

The College's Board members are the Trustees for charitable law purposes.

No Trustee or other person related to the Charity had any personal interest in any contract or transaction entered into by the Charity during the year.

The total expenses paid to or on behalf of Board members was £170 (2019 - £402). This represents travel and subsistence expenses incurred in attending meetings.

32

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Notes to the financial statements

for the year ended 31 July 2020

9 Interest and other finance costs
Loan interest
Net charge on pension scheme (see note 23)
10 Analysis of total expenditure by activity
Academic and related expenditure
Administration and central services
Premises
Residences, catering and conferences
Other expenses
Other operating expenses include:
External auditors' remuneration in respect of audit services
External auditors' remuneration in respect of non-audit services
Operating lease rentals - other		 2020
2019
£'000
£'000
328
337
174
153
502
490
2020
2019
£'000
£'000
8,726
8,604
3,180
2,865
2,005
2,383
429
558
1,020
1,171
15,360
15,581
2020
2019
£'000
£'000
29
14
3
14
158
106

33

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Notes to the financial statements for the year ended 31 July 2020

11 Tangible Assets

Cost or valuation
At 1 August 2019
Additions
Disposals
At 31 July 2020
Consisting of:
Valuation
Cost
At 31 July 2019
Accumulated depreciation
At 1 August 2019
Charge for the year
Disposals
At 31 July 2020
Net book value
At 31 July 2020
At 31 July 2019		 Freehold Land
and Buildings
£'000
27,893
0
0
27,893
1,819
26,074
27,893
4,737
469
0
5,206
22,687
23,156		 Leasehold
Land and
Buildings
£'000
2,318
0
0
2,318
0
2,318
2,318
1,251
21
0
1,272
1,046
1,067		 Plant and
Machinery
£'000
3,713
321
0
4,034
0
4,034
4,034
3,136
253
0
3,389
645
577		 Fixtures,
Fittings and
Equipment
Total
£'000
£'000
1,454
35,377
102
423
0
0
1,556
35,800
1,819
1,556
33,982
1,556
35,801
884
10,008
132
875
0
0
1,016
10,883
540
24,917
570
25,369

Included in the net book value of fixed assets is aggregated interest capitalised of £298k (2019 - £306k).

Heritage Assets

Heritage Assets
Cost
At 1 August 2019
At 31 July 2020		 Heritage Assets
£'000
500
500		 Total
£'000
500
500

The only large addition purchased during the year was the Foyle Opera Rara Collection for £500,000.

The College aims to maintain the condition of the collection by housing it within a designated and managed area. Items from the collection wi on public display in various temporary exhibitoins. The College is currently in the process of cataloguing the collection.

Other Assets

The College has placed a £135,000 bond payment as security against the lease of a workshop.

34

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020 Notes tothe f5ndiltitil statements fDrthe yeaT ended 31 Juty 2020 12 Tra02 •nd othu reieF¥obles 2020 2019 AmouMsfaiiin¢due within oneyear. Trade recewgble5 Otherreceivabs PrepaymenisaDd awrued Amounts due from parent underiakini JJ 12 138 91 18 211 234 18 Inve$￿t￿ts Re5t6ted' 2019 2020 Shortterrn investment in share5 Shortterni bonds anddeposrts 24 24 1.056 SJ28 2.207 5.862 8.￿9 14 Cvediior5.' ThUlltsf•llin( dueithMI Lme ye 2020 2019 Secured knan5 Un5ecured108ns ArnouDisowed to parentundertakhig QTrther Ireditof5 Trade pay1￿￿% SOC￿1 sectsnty aThdothtrtaxation payat4e Atuuals ana deferred Income 165 1,1 155 542 934 32 121 lJ47 4A59 205 131 1.422 1503 The'Arnount5 owe¥to parentundertakm¥ Inrlude5 £585.240. whKh represents a short ieTmfjnancinKtTan5a(rion, notaccruing Intere￿ and Iharwa5 repaidon 5 August 2020. Deferred1￿(the Accrnals ano deferred Income Include Dthtrincome has been deferred untl s￿11￿ pertom)ance relattd Cond￿on% ￿¥￿ been met ahd dÈlÈrred taPEial ¢rartlS. wh*h are re￿&s￿d a CO￿￿teA[ b￿￿tt¥er thev5eful Iwe50tthe related a55ets 2020 2019 Other income Deferred cap￿alerants (set notts 4 and 51 255 169 424 169 327 'The 2018119 balaKe has been restated and furtherinforrnati￿ can befound in r4ffle 24. 35

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Notes to the financial statements

for the year ended 31 July 2020

15 Creditors : amounts falling due after more than one year

Deferred income
Secured loans
Unsecured loan
Analysis of secured and unsecured loans:
Due within one year or on demand (Note 14)
Due between one and two years
Due between two and five years
Due in five years or more
Due after more than one year
Total secured and unsecured loans
Secured loan repayable by 2041
Unsecured loan repayable by 2023
Included within the total balance above is the following due in more than two years
Interest
Repayment
Term
Barclays Bank*
All tranches
5.35%
Quarterly
33 years
(to 2041)		 2020
2019
£'000
£'000
7,181
7,350
5,921
6,086
2,125
2,875
15,227
16,311
2020
2019
£'000
£'000
1,457
697
1,131
915
1,739
2,669
5,176
5,377
8,046
8,961
9,503
9,658
6,086
6,241
3,417
3,417
9,503
9,658
2020
2019
£'000
£'000
5,748
5,921

There is no charge currently registered in this regard and the Directors do not consider it likely that any charge will be required in the 12 months from the date of approval of the financial statements

16 Provisions for liabilities

At 1 August 2019
(Reduction) in year
(Reduction) in year
(see note 23)
At 31 July 2020		 Defined Benefit
Enhanced
Provision
£'000
285
(95)
0		 Pension
scheme
Total
Pension
provision
under
Provisions
FRS102
£'000
£'000
7,703
7,988
0
(95)
943
943
190 8,646
8,836

In addition, there is a provision for future dilapidation remedial works on College rented properties.

36

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Notes to the financial statements for the year ended 31 July 2020

17 Endowment Reserves

Restricted net assets relating to endowments are as follows:

Opening Balances
Capital
Accumulated income
New endowments
Investment income
Expenditure
Increase in market value of investments
Total endowment comprehensive income for the year
Closing Balances
Represented by:
Capital
Accumulated income
Analysis by type of purpose:
Scholarships and prize funds
Analysis by asset
Current asset investments
Cash and cash equivalents
18
Restricted Reserves
Reserves with restrictions are as follows:		 Restricted
permanent
endowments
Unrestricted
permanent
endowments
Year to 31
July 2020
Year to 31
July 2019
Total
Total
£'000
£'000
£'000
£'000
372
2,004
2,376
2,340
62
191
254
203		 Restricted
permanent
endowments
Unrestricted
permanent
endowments
Year to 31
July 2020
Year to 31
July 2019
Total
Total
£'000
£'000
£'000
£'000
372
2,004
2,376
2,340
62
191
254
203
434
2,195
2,630
2,543
-
-
-
8
10
54
64
70
(1)
(69)
(71)
(19)
(23)
(124)
(148)
27
(14)
(139)
(155)
86
420
2,056		 2,475
2,629
349
1,880
71
176		 2,228
2,376
247
254
420
2,056		 2,475
2,630
420
2,056		 2,476
2,629
420
2,056		 2,476
2,629
2,343
2,490
132
139
2,475
2,629
Opening Balances
New donations
Expenditure
Total restricted comprehensive income for the year
Closing Balances		 Year to 31
July 2020
Year to 31
July 2019
Total
Total
£'000
£'000
1,115
890
872
1,450
(661)
(1,225)
211
225
1,326
1,115

37

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020 Motsto thèfinancial statemÈrts 18 Re5ttirtEd ROSEV￿$ 2020 ?QL9 Totil Analystsof other reStr￿ted ￿nd$/donatI￿NS bytyp ol wrp 631 572 661 ?17 Spqcrfic proJ(t5 Oth• 173 1.450 At l A￿￿$1 2019 Il¢JlJulv 2020 £xx)o Cash ind cash equroalents 913 lJ29 IA29 2.742 l74Z 913 'The 2018119 balancè bèen restated and furthèr inforni3tK￿ bèfound ifft Notè 24. YJ Lqaobli8aTh¥n5 Total rentals payiblè undèr wrathig léases_- 2020 ?QL9 £'ooo 106 mirAmum ka5• du•.. 15 iio Latèr than l lèar and not latèr thin 5 yèars 472 922 21 Rel•ted Part AsthoColl•g wthcltycwrnd subsidiary of th• Univ•rsrty of south wa￿1.th Coll•io t&k•n •dvJntaD ofth• •A•mption containèd In FRSIO? Section 33 and has thérèfDrè nDt disclosed rransaciiOn> or ba￿￿tt￿S other vknollv Ovéned SUbs￿lar￿5 whith fomi pèry olihe Grtrup l¢r ini.tsT¢es of the Group gvalthiing )$ r¢kTd partÈsl. Thr• ir nD0t￿r￿•11td Plrtytrnnsjct￿fftsto ￿ roport•d. 22 Vh&ne PareThtUTrdertng Th• uttimat& parnt und•rtakingand contrLTrlling pèrty 15 th• Un￿r5rty ol South W•los. a High•r Edu<ation Cotporation taNishèd underthe Educotion Reforrn %ct 1988. Thè results of the Companb. hai.É bÉÈn IncorpDratÉd in thè VniveI5rtb ol Soyth Vl)ies' CQn501id?red financial Xatement5, which torms the larie5t and sm?Iiex gr?￿P for which Iht Cothpanv's f￿an<131 S1aTtmÈ￿ts ère COnStrI￿are￿. copi¢S ¢f cèn be o￿al￿t￿truM thefolltr¥hing addrÈSS-. Unibèrstyof South Wiles Rhondda Cim¢rt Tèt CF31 IDL 38

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Notes to the financial statements

for the year ended 31 July 2020

23 Pension Schemes

The College participates in two pension schemes, the Rhondda Cynon Taf Pension Funds (RCTPF), a local government pension scheme for non academic staff and the Teachers' Pension Scheme (TPS) for academic staff.

Teachers' Pension Scheme

TPS is a statutory contributory final salary scheme administered by the Teachers' Pensions on behalf of the Department of Education. Under the TPS, which is an unfunded scheme, employees and employers contributions are credited to the Exchequer under the arrangements governed by the Superannuation Act 1992. Every 5 years the Government Actuary's Department (GAD), using normal actuarial principles conducts an actuarial review of the TPA.

The assumptions and other data that have the most significant effect on the determination of the contributions levels are as follows:

Latest actuarial valuation

31 March 2016

Valuation of the assets at date of last valuation £196.1 million (estimated future contributions together with notional investments held at 31 March 2016).

The contribution rate increased from 16.48% to 23.68% on 1 September 2019.

Under the definitions set out in Financial Reporting Standard 102 (FRS102) the TPS is a multi-employer pension scheme. The College is unable to identify its share of the underlying assets of the scheme.

Accordingly the College has taken advantage of the exemption in FRS102 and has accounted for its contributions to the scheme as if it were a defined-contribution scheme. The College has set out the above information available on the deficit in the scheme and the implications in terms of the anticipated contributions rates.

Rhondda Cynon Taf Pension Scheme

The scheme is a defined benefit occupational pension scheme. Pre April 2014 benefits are linked to final pensionable salary and service at date of retirement (or date of leaving the scheme if earlier), post March 2014 benefits accrue on a Career Average Revalued Earnings (CARE) basis.

The scheme is valued every three years, the latest being undertaken by independent consulting actuaries, Aon Hewitt, as at 31 March 2019.

Assumptions

The financial assumptions used to calculate scheme liabilities under FRS102 are:

2020 2019
% pa % pa
Price Inflation (CPI) 2.20 2.25
Rate of increase in pensionable salaries 3.20 3.25
Discount rate/interest income on assets 1.45 2.25

At 31 March 2020, in order to reflect the impact of proposals by the UK Chancellor and the UK Statistics Authority (UKSA) to align RPI with CPIH (a variant of the Consumer Prices Index that includes an estimate of housing costs), the CPI assumption methodology was reassessed. In particular, the assumed long term gap between RPI inflation and CPI inflation was reduced from 1.1% at the prior year end to 0.6% at this year end. The impact of this change is expected to have resulted in a £0.9m increase in the Fund’s liabilities since the prior year end.

Assumptions for the current accounting period have been chosen with reference to the duration of the Employer's liabilities. This has been estimated as approximately 23.1 years.

The most significant non-financial assumption is the assumed level of longevity. The table below shows the life expectancy assumptions used in the accounting assessments based on the life expectancy of male and female members at age 65.

2020 2019
Males Females Males Females
Pensioner aged 65 21.0 23.5 21.5 23.4
Active member aged 65 21.8 24.4 22.8 24.9

39

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Notes to the financial statements for the year ended 31 July 2020

23 Pension Schemes (continued)

The assets in the scheme are valued at fair value and comprise:

Equities
Government bonds
Corporate bonds
Property
Cash
Total
Analysis of the amount shown in the balance sheet for LGPS pensions:
Scheme assets
Scheme liabilities
Deficit in the scheme – net pension liability
recorded within pension provisions (Note 16)
Current service cost
Past service and administration charges
Total operating charge		 2020
2019
£'000
£'000
9,183
8,142
1,616
1,433
1,575
1,397
1,010
895
81
72
13,465
11,939
2020
2019
£'000
£'000
13,465
11,938
(22,111)
(19,640)
(8,646)
(7,702)
2020
2019
£'000
£'000
982
777.4
13
184.1
995
961

Analysis of the amount charged to interest payable/credited to other finance income for LGPS pensions:

Interest cost
Expected return on assets
Net charge to other finance income
Payments to the Fund
Charge to Income and Expenditure Statement
Analysis of other comprehensive income for LGPS pensions:
Gains on assets
Experience gain/(loss) on liabilities
Experience gain/(loss) on liabilities (Enhanced Provision on Termination)		 2020
2019
£'000
£'000
442
453
(274)
(300)
168
153
(499)
(464)
664
650
2020
2019
£'000
£'000
803
519
(1,082)
(1,782)
88
(197)
(191)
(1,460)

40

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020

Notes to the financial statements

for the year ended 31 July 2020

23 Pension Schemes (continued)

History of experience gains and losses – LGPS pensions

2020 2019 2018 2017 2016
Difference between actual and expected return on scheme assets:
Amount (£m) 803 519 769 470 660
Experience losses/(gains) on scheme liabilities:
Amount (£m) (1,082) (1,782) 214 (1,402) (1,500)
2020 2019
£'000 £'000
Cumulative actuarial loss recognised as other comprehensive income for LGPS
Cumulative actuarial losses recognised at the start of the year 2,665 1,403
Cumulative actuarial losses recognised at the end of the year 2,945 2,665
2020 2019
£'000 £'000
Analysis of movement in deficit for LGPS pension
Deficit at beginning of year (7,701) (5,788)
Contributions or benefits paid by the College 499 464
Current service cost (982) (777)
Other finance charge (181) (338)
Actuarial gain/ (loss) recognised in other comprehensive income (279) (1,262)
Deficit at end of year (8,644) (7,701)
2020 2019
£'000 £'000
Analysis of movement in the present value of LGPS
Present value of LGPS at the start of the year 19,640 16,461
Current service cost (net of member contributions) 982 777
Interest cost 442 453
Actual member contributions (including notional contributions) 187 171
Actuarial (gain)/loss 1,082 1,782
Actual benefit payments (222) (176)
Past service costs - 172
Present value of LGPS liabilities at the end of the year 22,111 19,640
2020 2019
£'000 £'000
Analysis of movement in the fair value of scheme assets
Fair value of assets at the start of the year 11,938 10,672
Expected return on assets 274 300
Actuarial gain on assets 803 519
Actual contributions paid by College 499 464
Actual member contributions (including notional contributions) 187 171
Actual benefit payments (222) (176)
Administration expenses (13) (12)
Fair value of scheme assets at the end of the year 13,466 11,938
LGPS assets do not include any of the College’s own financial instruments, or any property
occupied by the College.
2020 2019
£'000 £'000
Actual return on Scheme assets
Expected return on Scheme assets 274 299.6
Asset gain 803 519.4
1,077 819

Estimated contributions for LGPS in the Financial Year 2020-21 is £447k assuming 95% member take up.

41

Royal Welsh College of Music and Drama Limited Financial Statements and Annual Review Year ended 31 July 2020 N￿e5 iothe financiql sI￿ementS for the year ended 31 luty 2020 24 PiioTYeaT AdjuffjneTri Durine the prepar3ts0n ofthe 2019110 accounts rt was ttlentffied thata n￿rnbEr ofvwestments ki short4erni and certJfKatesofdepDSrt with matunties Ereater than three months from the aCqu￿1￿0Th date had been ckissrfi as Cash and Cash Equ￿a￿nts at 31 luty 2019. A pritir period adju5trnent has been posted to re[la55￿lhe5e balance a5 Current Inve5rrnents. Thls adiusTmenT t)es not afftCT the overall netfures ￿ theaccowits, wrth The Impart noted ￿ thetèbks beh)W4 Year ended 31July 2019 Adiusments A5 preyiousty reported As remated Current I￿stments Shortterrn investment In 5hare5 ShortterTn bond5 Shorrrerm dep05rt5 2.207 284 1207 5,578 Cash and cosh equv#alents Shortterm bond5 Shortrerm dew5rts Cash ai bank In hand 5.578 913 913 913 15.5781 Tot•1 Balance Sheei Imp InVe￿MentS Cath ano cash equwalenTS 2,491 6.491 5.578 15.5781 913 Th￿ adjurtment also impactsthe cash and cash eQU￿a￿nts and the'movements in In¥estments' line in the ash fl(wi statemem 42