The Hallé Endowment Trust
For the year ended 31 December 2022 Charity registration number: 286145
The Hallé Endowment Trust
FINANCIAL STATEMENTS 31 DECEMBER 2022
| Contents | Page |
|---|---|
| Trustees and independent advisers | 1 |
| Trustees' report | 2-7 |
| Independent Auditor’s report to the Trustees of the Hallé Endowment Trust | 8-10 |
| Statement of financial activities | 11 |
| Income and expenditure account | 12 |
| Balance sheet | 13 |
| Notes | 14-23 |
Page 1
The Hallé Endowment Trust
Trustees and independent advisers
Board of Trustees
Mr J Schultz CBE - Chair Mr J Eckersley Mr D McKeith Mr E Pysden Ms E Shepherd (appointed 10 May 2022 )
Nominated by Manchester City Council: Ms C Culley (resigned 31 October 2022) Mr T Seagrave (appointed 31 October 2022)
Bankers
The Royal Bank of Scotland plc St Ann Street Manchester M60 2SS
Solicitors
CMS LLP 1 The Avenue Spinningfields Manchester M3 3AP
Investment advisers
Cazenove Capital Liverpool House Lower Bridge Street Chester CH1 1RS
Part of: Schroder & Co Limited 2 Moorgate London EC2R 6DA
In March 2022 CCLA Investment Management were appointed as Investment Managers to replace Cazenove Capital. The transfer of assets took place in spring 2023 after this year of account.
CCLA Investment Management Limited One Angel Lane London EC4R 3AB
Auditor
Crowe U.K. LLP 3[rd] Floor The Lexicon Mount Street Manchester M2 5NT
Principal office
The Bridgewater Hall Manchester M1 5HA
Page 2
The Hallé Endowment Trust
REPORT OF THE TRUSTEES
The Trustees present their annual report and the audited financial statements for the year ended 31 December 2022, in compliance with the Trust Deed.
Reference and administrative details
The Hallé Endowment Trust (the ‘Trust’) is a registered charity, number 286145, governed by a trust deed dated 30 December 1982, as amended in a deed of consolidation and amendment dated 19 August 2021. The details of the Trustees, their advisers and other relevant information given on page 1, form part of this report.
Structure, Governance and Management
The governing body is the Board of Trustees whose members are non-executive and unpaid. All the Trustees are appointed by the Board of the Hallé Concerts Society (‘the Society’), other than one Trustee nominated by Manchester City Council. The Trustees delegate the day-to-day management and administration of the Trust’s affairs to the Executive of the Hallé Concerts Society. Appropriate induction is given to all Trustees.
Objectives and activities of the Trust
The objective and principal activity of the Trust is to maintain a capital endowment fund and to apply the annual income of that fund in perpetuity towards the education of the general public in the study, appreciation and practice of music and the allied arts by furthering and supporting the objects and work of the Society.
With effect from 1 January 2017, for the Main Fund, the Trustees have adopted the Total Return approach to investment under the powers granted in Section 4 of the Trusts (Capital and Income) Act 2013. This allows the Main Fund to be invested to optimise the overall return, no matter whether it takes the form of capital or income. The Trustees then decide how much of that overall return should be allocated to meet the current charitable objectives whilst balancing their decision with the maintenance of the long-term capital value of the Main Fund.
Following the Society’s successful application to the Arts Council’s Catalyst Endowment programme, the Hallé Endowment Trust now holds the Catalyst Endowment Fund as a separate endowment fund within its accounts, the income from which is used to support the Society’s educational activity at Hallé St Peter’s and ambitious artistic projects not funded by other funding agreements. The Arts Council have approved the Total Return approach to be applied to the Catalyst Fund from 1 January 2023; this means that for the 2023 financial year the same Total Return approach will apply for both the Main and Catalyst Funds.
Further information is provided in the Financial Review section below and in the Notes to the Accounts.
Public Benefit
The Trustees have considered the Charity Commission’s guidance on public benefit and they believe that the support provided to the Hallé Concerts Society allows the objectives above to benefit a wide section of the public. The Society’s HALLÉ CONNECT education, ensembles and outreach programmes reach 40,000 children and young people each year. Membership of the Society’s youth and children’s ensembles is free. A full review of the Society’s outreach work is given in its own statutory accounts and further details are available on the Hallé website: www.halle.co.uk. The Society’s facilities at Hallé St Peter’s and St Michael’s are enabling its education and community programme to extend to an even broader cross section of the community, and the income of the Catalyst Endowment Fund referred to below facilitates this work.
Achievements and performance
An Investment Committee (of which the Trustees are members, along with the Finance Director), established by the Hallé Concerts Society, reviews the investment strategy and performance of the Trust and all the Society’s other related entities. Working within the Investment Policy below the Investment Advisers are given investment discretion which is then reported upon by them to the Investment Committee.
Page 3
The Hallé Endowment Trust
REPORT OF THE TRUSTEES (continued)
Achievements and performance (continued)
The investment portfolio’s objective is to generate a total return of CPI+4% per annum over the long term, by definition without distinguishing between capital return and income return. This objective was 13.2% for the year ended 31 December 2022. Overall, investment performance in 2022 reflects the wider falls in investment markets experienced in the calendar year 2022.
The Main Fund saw a decrease of £457k in 2022 in investment values (2021: gain of £446k) whilst the Catalyst Fund saw a decrease in 2022 of £161k (2021: gain of £240k). When investment income is taken into account the overall return is -8.8% (2021:11.9%) for the Main Fund and -3.0% (2021:12.6%) for the Catalyst Fund.
Financial Review
Main Fund overview - During the year the Main Fund received donations and legacies of £nil (2021: £209), investment income of £74,986 (2021: £63,155) and short-term deposit interest of £420 (2021: £30). The reduction in income is not a cause for concern as regular donations are normally received into the Catalyst Fund rather than the Main Fund and legacy income is by its nature irregular. There was a loss on investments in 2022 of £457,184 (2021: gain of £445,766). A grant of £220,000 was made to the Society (2021: £233,000). The grant in 2022 to the Society reflects the power to distribute cumulative investment gain as well as investment income under the total return approach.
At 31 December 2022 the endowment fund of the Main Fund stood at £4,128,668 (2021: £4,766,641) and the restricted funds of the Main Fund stood at £nil (2021: £nil).
Catalyst Fund overview - the Catalyst Fund received donations and legacies of £84,596 (2021: £63,169). Investment income for the Catalyst Fund amounted to £90,907 (2021: £79,380) and short-term deposit interest of £1,679 (2021: £nil). A grant was made to the Society of £80,000 (2021: £67,000). At 31 December 2022 the endowment fund of the Catalyst Fund stood at £2,841,828 (2021: £2,918,368) and the restricted funds of the Catalyst Fund stood at £828 (2021: £1,059).
Total fund balances at the year-end were £6,971,323 (2021: £7,686,068).
Total return approach to investment
A resolution to adopt the total return approach to accounting for the Main Fund was made by the Trustees on 8 February 2018, effective from 1 January 2017. The Catalyst Fund initially remained under permanent endowment rules as it is an Arts Council based fund and subject to different arrangements from the Main Fund. A proposal to the Arts Council for the Catalyst Fund to be managed on a total return accounting basis has since been agreed in a Declaration of Trust signed 1 January 2023 and the Trustees will implement this approach for the Catalyst Fund for the financial year ending 31 December 2023.
The Trustees’ decision to move to total return was taken in order to enable increased flexibility in the financial support provided by the Endowment to the Hallé Concert Society. Under the standard rules, there can be significant variation of the income available to distribute, depending on whether investment returns are within income or capital gains, even though the overall return may be the same. The total return approach enables the focus to be on overall best return for the investment portfolio rather than focusing on investments to produce investment income. It also facilitates a more planned approach to grant making because the impact of year-to-year variation in investment income can be smoothed through the Unapplied Total Return fund (UTR). It is important to note that although the total return approach provides more flexibility, the Trustees are mindful of their legal responsibility to be evenhanded in the way that they allocate investment returns between current and future needs. The Trustees will therefore retain resources in the UTR fund for supporting the future needs of the Society and furthering the objectives of the Hallé Endowment Trust.
Further detail is provided in note 13 to the financial statements.
Page 4
The Hallé Endowment Trust
REPORT OF THE TRUSTEES (continued)
Investment Policy
The investment strategy allows the investment focus for the Main Fund to be on total investment return rather than investment income, without the restriction in place for the Catalyst Fund up to 31 December 2022 under which only investment income could be distributed to the Society. The strategy also accommodates the greater focus on income by the Catalyst Fund up to 31 December 2022 after which this focus will change to total investment return.
The target return of the investment strategy is CPI +4% per annum for both funds. For the Main Fund the objective is to maintain the real capital value of the investment portfolio above inflation whilst generating a sustainable and reliable distribution from an overall return of +4% per annum. For the Catalyst Fund the target up to 31 December 2022 was to provide income at +4% per annum and maintain the real value of the portfolio above inflation. As described above the Catalyst Fund has adopted the total return approach from January 2023 and from this point will have the same strategy as the Main Fund.
The long-term strategic asset allocation parameters and benchmarks for the portfolio during 2022 were as follows.
| Range Benchmark | |
|---|---|
| Bonds | 0%-30% 25% FTSE Brit Gov’t Fixed All Stocks Index |
| 25% BOFA ML £ Non-Gilts Index | |
| Equities (UK & international) | 50%-80% FTSE All Share Index |
| FTSE World ex UK | |
| Property and alternatives | 0%-30% IPD Monthly Property Index |
| Cash | 0%-20% UK Interbank 7 day |
There are currently no restrictions on the Trustees’ power to invest.
The Trustees believe that Environmental, Social and Governance (ESG) related risks, including climate change risks, are an important component of investment risk and that organisations that soundly manage these risks are more likely to be financially sustainable over time. The decision was taken for consideration of ESG risks to form a financially material component of our investment framework.
Accordingly, in early 2022, the trustees conducted a tender process for an investment manager providing an approach which would give a greater emphasis to ESG factors.
The tender process resulted in the appointment of CCLA Investment Management Limited (CCLA) in March 2022. The full transfer of assets took place in early 2023 after the completion of all governance, administrative and practical aspects. For this year of account therefore the investments remained under the management of Cazenove Capital who have managed our investments over recent years. The decision to move from Cazenove to CCLA was not a result of any dissatisfaction with Cazenove’s service or performance. In the Trustees’ opinion CCLA’s proposition best met the needs of the investment framework the Trustees were seeking.
We will work with CCLA to review our Investment Policy and Strategy with the overall intention of maintaining the current target return of CPI +4% aligned with a robust and transparent ESG focused approach.
Page 5
The Hallé Endowment Trust
REPORT OF THE TRUSTEES (continued)
Investment Performance
The investment performance for the year to 31 December 2022 was disappointing in terms of overall return, reflecting performance of the wider investment markets in the same period, particularly in autumn 2022 and in UK Government bonds with the impact of the mini budget.
When investment income is taken into account, the overall investment return in the year to 31 December 2022 was -8.8% for the Main Fund and -3.0% for the Catalyst. These returns compare poorly to the target return of CPI+4% which was 13.2% for the same period. It should be noted, however, that the target return of CPI+4% is an average target over the longer term and clearly this has been another exceptional year for investment markets.
The Catalyst Fund’s focus on income (before the move to total return from January 2023) led to a greater allocation to UK investments. Previously this had adversely affected performance, but it has been beneficial during the past 12 months, with the energy and utility companies continuing to benefit from the political and economic situation and performing relatively well over the period.
The graph below illustrates investment performance compared to benchmark and target over the last five years. This shows that cumulatively to December 2021 the Main Endowment Fund had exceeded the CPI+4% target as well as the other relevant sector benchmarks (ARC). Over the same period the Catalyst Fund had fallen behind target because income-producing investments had not performed as well. Since December 2021 the performance of the Endowment Funds has been above that of the benchmark indices although it has understandably fallen behind the CPI+4% target due to the impact of exceptionally high rates of inflation.
The priority for the Trustees remains the longer-term performance of the investments to provide support for the Society in the future. The Trustees are confident that the investment policy provides a good basis to achieve the investment objective over the medium and longer term and to secure this outcome.
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The Hallé Endowment Trust
REPORT OF THE TRUSTEES (continued)
Reserves policy
Main Fund: the Trustees have considered their reserves policy in respect of the Unallocated Total Return Fund within the Main Endowment Fund in the light of their responsibility to adopt an even-handed approach between the current and future needs of the Society.
The Trustees consider that reserves should be maintained as protection for the Endowment Trust against a fall in the value of investments which would impact the ability of the Endowment Trust to support the Society and fulfil its objectives in future periods. On the basis of advice from Cazenove (the Endowment Trust investment managers when total return was implemented), the Trustees set the target level for this “buffer reserve” at 30% of the market value of investments and this will be reviewed at least annually. The Unallocated Total Return (UTR) Fund provides this “buffer reserve”: at 31 December 2022 the UTR stood at £1,310K which is 33% of investment value and therefore achieved the reserve target. In addition, the current level of reserves is considered reasonable to enable the Trustees to smooth the pattern of grant making to the Society in years when investment returns may be low. The indicative annual grant level to the Society from the Main Fund is £200,000 plus CPI and the UTR at this level enables the Trustees to provide assurance to the Society that the annual grant can be relied upon for planning purposes.
Catalyst Fund: The Trustees did not consider that reserves were required for the Catalyst Fund at 31 December 2022 because the amount distributable was limited to the investment income generated. This position will be reviewed during 2023 following the move to total return accounting noted above.
Fundraising Practices
The Endowment Trust’s fundraising is delegated by the Trustees to the Hallé Concerts Society Development Team which also fundraises more widely on behalf of the Hallé Concerts Society as a whole. Regular reports are received from the Development Team with assurance that fundraising activity is conducted in compliance with the Fundraising Regulator Code of Fundraising Practice and all relevant regulations. Implementation of the Society-wide fundraising strategy is mainly delivered by the in-house fundraising team with support from a professional fundraiser on bids to charitable trusts and foundations. This person does not carry out fundraising with the general public on behalf of the Hallé Concerts Society or the Endowment Trust.
The Trustees acknowledge that as part of the wider fundraising strategy of the Halle Concerts Society, there is currently little active fundraising specifically for the Halle Endowment Trust. This reflects the focus of the Society on raising funds, without restrictions, to fund core activities. The main source of funds is legacies where the gift is specifically allocated to the Trust by the donor. In the financial year to 31st December 2022 no legacies were received attributable to the Main Fund and donations and legacies of £84,596 were received for the Catalyst Fund.
Plans for future periods
The move to a total return approach to accounting and to a total return investment strategy were introduced by the Trustees in order to provide more secure and sustainable financial support to achieve the Trust’s objectives, in particular the financial support provided to the Hallé Concerts Society. Now that the Arts Council have confirmed approval for the Catalyst Fund to adopt the total return approach, the Trustees will work to optimise this flexibility for both funds from 2023.
We also look forward to our new relationship with CCLA and developing the investment strategy to reflect ESG challenges and opportunities, whilst achieving the target return.
Risk management
A risk management strategy has been implemented for the Hallé Concerts Society group, of which the Hallé Endowment Trust is a part. A review of overall financial controls is undertaken annually by the Society’s Audit Committee. The last risk review was completed in July 2023. A more detailed explanation is contained in the accounts of the Hallé Concerts Society.
Page 7
Statement of Trustees' responsibilities in respect of the Trustees' annual report and the financial statements
Under the Trust Deed of the charity and charity law, the Trustees are responsible for preparing the Trustees' Annual Report and the financial statements in accordance with applicable law and regulations. The Trustees have elected to prepare the financial statements in accordance with FRS 102 the Financial Reporting Standard applicable in the UK and Republic of Ireland.
The financial statements are required by law to give a true and fair view of the state of affairs of the charity and of the excess of income over expenditure for that period.
In preparing these financial statements, generally accepted accounting practice requires that the Trustees:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and estimates that are reasonable and prudent;
• state whether applicable UK Accounting Standards and the Statement of Recommended Practice have been followed, subject to any material departures disclosed and explained in the financial statements;
• state whether the financial statements comply with the trust deed, subject to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charity will continue in business.
The Trustees are required to act in accordance with the Trust Deed of the charity, within the framework of trust law. They are responsible for keeping proper accounting records, sufficient to disclose at any time, with reasonable accuracy, the financial position of the charity at that time, and to enable the Trustees to ensure that, where any statements of accounts are prepared by them under section 132(1) of the Charities Act 2011, those statements of accounts comply with the requirements of regulations under that provision. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the charity and to prevent and detect fraud and other irregularities.
Disclosure of information to independent auditor
The Trustees who held office at the date of approval of this Trustees’ ’report confirm that, so far as they are each aware, there is no relevant audit information of which the Trust’s auditor is unaware; and each Trustee has taken all the steps that they ought to have taken as a Trustee to make themselves aware of any relevant audit information and to establish that the trust’s auditor is aware of that information.
Auditor
Crowe U.K. LLP is the appointed auditor and has indicated its willingness to continue in office.
Approved on behalf of the Trustees on
J Schultz
Page 8
Independent Auditor’s Report to the Trustees of The Hallé Endowment Trust
Opinion
We have audited the financial statements of The Hallé Endowment Trust (‘the charity’) for the year ended 31 December 2022 which comprise the Statement of financial activities, the Balance sheet, the Statement of cash flows and the related notes, 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 Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the Charity's affairs as at 31 December 2022 and of its incoming resources and application of resources, including its income and expenditure 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 Accounting and Reporting by Charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and in other respects 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 Auditor's 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 United Kingdom, including the Financial Reporting Council'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 Auditor's report thereon. The Trustees are responsible for the other information contained within the Annual report. 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. 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
Page 9
Independent Auditor’s report to the Trustees of The Hallé Endowment Trust (cont’d)
identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to 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.
Opinion on other matters
In our opinion, based on the work undertaken in the course of the audit:
- the information given in the Trustees' report for the financial year for which the financial statements are prepared is consistent with the financial statements. the Trustees' report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of our 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' report.
We have nothing to report in respect of the following matters in relation to which Charities Act 2011 requires us to report to you if, in our opinion:
-
adequate 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; or
Responsibilities of trustees
As explained more fully in the Trustees' responsibilities statement, the Trustees are responsible for the preparation of the financial statements 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.
Auditor's 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 Auditor's 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 the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Page 10
Independent Auditor’s report to the Trustees of The Hallé Endowment Trust (cont’d)
Irregularities, including fraud, are instances of noncompliance 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:
We identified and assessed the risks of material misstatement of the financial statements from irregularities, whether due to fraud or error, and discussed these between our audit team members. We then designed and performed audit procedures responsive to those risks, including obtaining audit evidence sufficient and appropriate to provide a basis for our opinion.
We obtained an understanding of the legal and regulatory frameworks within which the charity operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The laws and regulations we considered in this context were the Charities Act 2011.
Auditing standards limit the required audit procedures to identify non compliance with these laws and regulations to enquiry of the Trustees and other management and inspection of regulatory and legal correspondence, if any.
We identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be the override of controls by management and completeness of income. Our audit procedures to respond to these risks included enquiries of management about their own identification and assessment of the risks of irregularities, sample testing on the posting of journals and reviewing accounting estimates for biases. Our audit approach for income was to being our testing from source documentation such as grant agreements and donation documentation.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. We are not responsible for preventing non compliance and cannot be expected to detect non compliance with all laws and regulations.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's report.
Use of our report
This report is made solely to the Charity's trustees, as a body, in accordance with Charities Act 2011. Our audit work has been undertaken so that we might state to the Charity's trustees 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 Charity and its trustees, as a body, for our audit work, for this report, or for the opinions we have formed.
tatutory Auditor 3rd floor The Lexicon Mount Street Manchester M2 5NT
Date:
Page 11
The Hallé Endowment Trust
| Statement of financial activities | ||||||||
|---|---|---|---|---|---|---|---|---|
| for the year ended 31 December | 2022 | |||||||
| Note | 2022 | 2021 | ||||||
| Catalyst | Catalyst |
|||||||
| Restricted | Endowment | Restricted | Endowment |
Total |
Total |
|||
| Funds | Funds |
Funds | Funds | |||||
| £ | £ | £ | £ | £ | £ | |||
| Income and endowments from: | ||||||||
| Donations and legacies | ||||||||
| Donations and legacies | 3 | - | - | - | 84,596 | 84,596 | 63,378 | |
| Investments | ||||||||
| Investment income | - | 74,986 | 90,907 | - | 165,893 | 142,535 | ||
| Short-term deposit income | 420 | - | 1,679 | - | 2,099 | 30 | ||
| Total income | 420 | 74,986 | 92,586 | 84,596 | 252,588 | 205,943 | ||
| Expenditure on: | ||||||||
| Raising Funds | ||||||||
| Investment management costs | 4 | - | (18,771) | (11,394) | - | (30,165) | (29,755) | |
| Governance and support costs | 4 | (1,424) | - | (1,423) | - | (2,847) | (2,221) | |
| Depreciation | - | (16,000) | - | - | (16,000) | (16,000) | ||
| Grant to Hallé Concerts Society | 5 | (220,000) | - | (80,000) | - | (300,000) | (300,000) | |
| Total expenditure | (221,424) | (34,771) | (92,817) | - | (349,012) | (347,976) | ||
| Net (expenditure)/income and net | ||||||||
| movement in funds before gains | ||||||||
| and losses on investments | (221,004) | 40,215 | (231) | 84,596 | (96,424) | (142,033) | ||
| Other recognised gains and | ||||||||
| losses | ||||||||
| Net (losses)/gains on investments | 7 | - | (457,184) | - | (161,137) | (618,321) | 685,672 | |
| Net (expenditure)/income before | ||||||||
| transfers | (221,004) | (416,969) | (231) | (76,541) | (714,745) | 543,639 | ||
| Transfers between funds | 11 | 221,004 | (221,004) | - | - | - | - | |
| Net movement in funds | - | (637,973) | (231) | (76,541) | (714,745) | 543,639 | ||
| Fund balances brought forward at | ||||||||
| 1 January 2022 | - | 4,766,641 | 1,059 | 2,918,368 | 7,686,068 | 7,142,429 | ||
| Fund balances carried forward at | ||||||||
| 31 December 2022 | - | 4,128,668 | 828 | 2,841,827 | 6,971,323 | 7,686,068 |
The notes on pages 14-23 form part of the financial statements All of the above results are derived from continuing activities.
There are no gains or losses other than those recognised in this statement of financial activities.
Page 12
The Hallé Endowment Trust
----- Start of picture text -----
Income and expenditure account
for the year ended 31 December 2022
Note 2022 2021
£ £ £ £
Income
Investment income receivable 90,907 79,380
Bank interest 2,099 30
93,006 79,410
Expenditure
Audit fees 4 (2,350) (1,800)
Bank charges 4 (462) (385)
Investment management 4 (11,394) (11,120)
Sundry expenses 4 (35) (36)
Catalyst grant to Hallé Concerts Society 5 (80,000) (64,000)
Main Endowment grant to Hallé Concerts
Society 5 (220,000) (233,000)
(314,241) (313,341)
Net expenditure for the period before
transfers and investment disposals (221,235) (233,931)
Transfers from endowment funds 11 221,004 234,099
Net (expenditure)/income for the year (231) 168
Excess of income over expenditure
brought forward at 1 January 2022 1,059 891
Excess of income over expenditure
carried forward at 31 December 2022 828 1,059
----- End of picture text -----
The notes on pages 14-23 form part of the financial statements.
In 2022 the investment income receivable for the Main Fund of £74,986 (2021: £63,155) is accounted for within the permanent endowment of the Main Fund, in accordance with total return accounting requirements. The permanent endowment funds are not reported within the income and expenditure account.
Page 13
The Hallé Endowment Trust
----- Start of picture text -----
Balance sheet
at 31 December 2022
Note 2022 2021
£ £ £ £
Fixed assets
Instruments 6 304,000 320,000
Investments at market value 7 6,527,395 7,146,750
Current assets
Short-term bank deposits 446,837 498,606
Debtors and Accrued income 8 8,489 33,726
455,326 532,332
Current Liabilities
Due to Hallé Concerts Society (305,558) (303,324)
Other creditors and accruals 9 (9,840) (9,690)
(315,398) (313,014)
Net current assets 139,928 219,318
Net assets 10 6,971,323 7,686,068
The funds of the charity:
Endowment fund 12 4,128,668 4,766,641
Catalyst endowment fund 12 2,841,827 2,918,368
Income funds
Restricted income funds 12 - -
Catalyst Restricted income funds 12 828 1,059
6,971,323 7,686,068
----- End of picture text -----
The notes on pages 14-23 form part of the financial statements.
The accounts on pages 14-23 were approved by the Trustees on
D McKeith
J Schultz
Page 14
The Hallé Endowment Trust
NOTES (forming part of the financial statements)
- 1 Trust activities
The Hallé Endowment Trust was established to further the education of the general public in the study, appreciation and practice of music and the allied arts by endowing, furthering and supporting the work of the Hallé Concerts Society and the Hallé Orchestra.
The Trust is a subsidiary of the Hallé Concert Society which includes the Trust in its consolidated and aggregated financial statements. The consolidated and aggregated financial statements of the Hallé Concert Society are prepared in accordance with FRS 102 and are available to the public and may be obtained from Hallé Concerts Society, The Bridgewater Hall, Manchester M1 5HA. The Hallé Endowment Trust is considered to be a qualifying entity (for the purposes of this FRS) and has applied the exemptions available under FRS 102 in respect of the following disclosure:
Cash Flow Statement and related notes:The Trust proposes to continue to adopt the reduced disclosure framework of FRS 102 in its next financial statements.
2 Accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Trust's accounts.
Basis of preparation
The financial statements have been prepared in accordance with the Charities SORP (FRS 102) Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2019), the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and the Charities Act 2011 and the Trust Deed.
The Trust constitutes a public benefit entity as defined by FRS 102.
Cash flow statement
The charity is exempt from the requirement to prepare a cash flow statement as it is a qualifying entity under FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.
Income
Donations are recognised when the charity is legally entitled to the income and the amount can be quantified with reasonable accuracy. For legacies, entitlement is the earlier of the charity being notified of an impending distribution, the grant of probate where known or the legacy being received. Receipt of a legacy, in whole or in part, is only considered probable when the amount can be measured reliably and the charity has been notified of the executor’s intention to make a distribution.
Investment income is accounted for in the period in which the Trust is entitled to receipt.
Expenditure
Expenditure is accounted for on an accruals basis.
Tangible fixed assets and depreciation
All assets costing more than £500 are capitalised and valued at historic cost. The revaluation model is applied for musical instruments. Depreciation is provided so as to write off tangible fixed assets over their expected useful lives in equal instalments as follows: Musical instruments – 25 years.
Investments
There are no restrictions on the Trust’s powers to invest. Investments are included at fair value at the balance sheet date. The SOFA includes the net gains and losses arising on valuations and disposals throughout the year.
Page 15
The Hallé Endowment Trust
NOTES (continued)
2 Accounting policies (continued) Funds structure –
The charity has two permanent endowment funds. The principal activity of the Trust is to maintain a capital endowment fund and to apply the annual income of that fund in perpetuity towards the education of the general public in the study, appreciation and practice of music and the allied arts by furthering and supporting the objects and work of the Hallé Concerts Society. The Trustees have adopted the total return approach to investment accounting for the Main Endowment Fund, under the powers granted in Section 4 of the Trusts (Capital and Income) Act 2013. This allows any increase in the value of an investment to be treated as income.
In accordance with the terms of the Trust Deed, transfers of income can be made to the Trust’s Main Fund at the discretion of the Trustees.
Following the Society’s successful application to the Arts Council’s Catalyst Endowment programme, the Hallé Endowment Trust is the recipient of the Catalyst Endowment Fund and holds that fund as a separate endowment fund within its accounts, the income from which will be used to support the Society’s educational activity at Hallé St Peter’s and its undertaking of more ambitious large-scale artistic projects not funded by other funding agreements.
The Catalyst Endowment Fund is held as a segregated fund, separate from the Main Fund, within the overall Hallé Endowment Trust under the terms of a Trust deed dated 29 October 2012 between the Hallé Concerts Society and the Arts Council of England. The income of the Catalyst Fund will be used to support educational activity at Hallé St Peter’s and to undertake more ambitious large-scale projects not funded by other funding agreements. During the year to 31 December 2022, the Catalyst Fund remained as a permanent endowment under the separate terms of an Arts Council agreement and therefore capital gain could not be distributed.
Preparation of accounts on a going concern basis
Taking into account the position on reserves (as explained in the Trustees’ report on page 4), the current cash balances and forecast income and expenditure flows, the Trustees have a reasonable expectation that the Trust has adequate resources to continue in operational existence for the foreseeable future. They therefore consider the going concern basis to be appropriate for the preparation of these financial statements.
Accounting estimates and judgements
In the application of the Trust’s accounting policies, which are described above, the Trustees are required to make judgements, estimates and assumptions concerning the future. The resulting estimates will, by definition, seldom equal the related actual results. The estimates and associated assumptions are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Trustees consider that there are no estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
Taxation
The Hallé Endowment Trust is considered to pass the tests set out in Paragraph 1 Schedule 6 Finance Act 2010 and therefore to meet the definition of a charitable trust for UK income tax purposes. Accordingly, the charity is potentially exempt from taxation of income or capital gains received within categories covered by Part 10 Income Tax Act 2007 or Section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied exclusively to charitable purposes.
Page 16
The Hallé Endowment Trust
NOTES (continued)
3. Donations and Legacies
| Donations Legacies |
2022 2022 2022 2021 Endowment Catalyst Total Total Funds Funds Funds Funds £ £ £ £ - 19,783 19,783 12,061 - 64,813 64,813 51,317 - 84,596 84,596 63,378 |
|---|---|
In 2021 total donations and legacies amounted to £63,378 which comprised legacies of £209 for the Endowment Fund, legacies of £51,108 and donations of £12,061 for the Catalyst Funds.
4. Investment management & governance/support costs
----- Start of picture text -----
2022 2022 2022 2022 2021
Endowment Endowment Catalyst
Funds Restricted Restricted Total Total
Funds Funds Funds Funds
£ £ £ £ £
-
Investment management 18,771 11,394 30,165 29,755
-
Governance/support costs 1,424 1,423 2,847 2,221
18,771 1,424 12,817 33,012 31,976
----- End of picture text -----
In 2021 investment management costs were allocated as follows: £19,762 was attributable to the Endowment funds and £12,213 to the Catalyst funds, totaling £31,975.
In 2021 governance and support costs were allocated as follows: £1,128 was attributable to the Endowment funds and £1,093 to the Catalyst funds.
Allocation of governance and support costs
Directly attributable costs are allocated to the restricted charitable activities of the Endowment or Catalyst endowment as incurred. Other costs are apportioned equally between the two funds.
| between the two funds. | |
|---|---|
| 2022 2022 2022 2021 |
|
| Endowment Catalyst Total Total |
|
| Funds Funds Funds Funds |
|
| £ £ £ £ |
|
| Audit fees | 1,175 1,175 2,350 1,800 |
| Bank charges | 231 231 462 385 |
| Sundryexpenses | 18 17 35 36 |
| 1,424 1,423 2,847 2,221 |
|
| Expenditure on charitable activities | |
| 2022 2022 2022 2021 |
|
| Endowment Restricted Catalyst Restricted Total Total |
|
| Funds Funds Funds Funds |
|
| £ £ £ £ |
|
| Grants to the Hallé Concerts Society |
220,000 80,000 300,000 300,000 |
5 Expenditure on charitable activities
Page 17
The Hallé Endowment Trust
NOTES (continued)
6 Fixed assets
----- Start of picture text -----
Musical
Instruments
£
Cost
At 1 January 2022 400,000
At 31 December 2022 400,000
Depreciation
At 1 January 2022 80,000
Charge for period 16,000
At 31 December 202 96,000
Net Book Value
At 31 December 2022 304,000
At 31 December 2021 320,000
----- End of picture text -----
The Hallé senior management team revalued the musical instrument to £400,000 as at 1 January 2017 by reference to the Coutts index. It was agreed that the fee for a professional valuation was not an effective use of charitable funds, particularly given the volatility of this market over recent years.
All tangible assets are used for direct charitable purposes.
Depreciation amounted to £16,000 (2021: £16,000) and is allocated to the Endowment Fund.
7 Investments
----- Start of picture text -----
Main Fund Catalyst Combined
Market Value Market Value Market Value
£ £ £
Balance at 1 January 2022 4,483,629 2,663,121 7,146,750
Net additions/(disposals) (1,212) 178 (1,034)
Change in market value (457,184) (161,137) (618,321)
Balance at 31 December 2022 4,025,233 2,502,162 6,527,395
----- End of picture text -----
Page 18
The Hallé Endowment Trust
NOTES (continued)
7 Investments (continued)
The following table shows the valuation and asset allocation of assets at 31 December 2022. The majority of holdings are in common investment funds.
| Main Fund £ % Catalyst Fund £ % Total £ |
|
|---|---|
| Asset class | |
| UK Equities | 453,951 11.3 454,848 18.2 908,799 |
| International Equities | 2,366,584 58.8 1,319,749 52.7 3,686,333 |
| BondFunds: | |
| UK Bonds | 136,232 3.4 172,677 6.9 308,909 |
| International Bonds | 230,883 5.7 187,813 7.5 418,696 |
| Multi-Asset Funds | 165,229 4.1 - 0.0 165,229 |
| Property and alternatives | 672,354 16.7 367,075 14.7 1,039,429 |
| Balance at 31 December | 4,025,233 100 2,502,162 100 6,527,395 |
| 2022 |
All investments are held at fair value. Investments in UK equity and bond funds are all pooled funds traded on quoted public markets, primarily the London Stock Exchange. Holdings in international equities are also traded on quoted public markets, Holdings in common investment funds and unit trusts are at bid price. The basis of fair value for quoted investments is equivalent to market value, using the bid price. Asset sales and purchases are recognised at the date of trade at cost (that is, their transaction price).
Page 19
The Hallé Endowment Trust
NOTES (continued)
8 Other debtors and accrued income
----- Start of picture text -----
Endowment Catalyst Total Total
Funds Funds Funds Funds
2022 2022 2022 2021
£ £ £
Investment income 1,585 1,922 3,507 6,726
Legacies - - - 27,000
Income Tax Recoverable - 4,982 4,982 -
1,585 6,904 8,489 33,726
----- End of picture text -----
| 9 Other Creditors and Accruals Accruals |
2022 2021 £ £ 9,840 9,690 9,840 9,690 |
|---|---|
10 Analysis of net assets between funds
| Restricted Endowment Catalyst Catalyst Total |
|
|---|---|
| Funds Funds Restricted Funds Funds |
|
| Funds | |
| £ £ £ £ £ |
|
| Balances at 31 December 2022 | |
| represented by: | |
| Tangible assets | - 304,000 - - 304,000 |
| Investments | - 4,025,233 828 2,501,334 6,527,395 |
| Current assets | - 29,831 - 425,495 455,326 |
| Current liabilities | - (230,396) - (85,002) (315,398) |
| - 4,128,668 828 2,841,827 6,971,323 |
Analysis of net assets between funds
----- Start of picture text -----
Restricted Endowment Catalyst Catalyst Total
Funds Funds Restricted Funds Funds
Funds
£ £ £ £ £
Balances at 31 December 2021
represented by:
- - -
Tangible assets 320,000 320,000
Investments - 4,483,629 - 2,663,121 7,146,750
Current assets 242,086 (36,988) - 327,233 532,331
- -
Current liabilities (242,086) (70,927) (313,013)
- -
4,766,641 2,919,427 7,686,068
----- End of picture text -----
Page 20
The Hallé Endowment Trust
NOTES (continued)
11 Transfers from Endowment Funds
The transfer from endowment funds to restricted funds during the year represents the transfer of unapplied total return required to fund the provisional grant award to HCS less restricted funds already available. This transfer includes investment income received into the Main Endowment Fund in 2022
----- Start of picture text -----
Endowment Catalyst
Fund Fund Total
£ £ £
(221,004) - (221,004)
Statement of Funds
Transfers, At 31
At 1 January Gains and December
2022 Income Expenditure Losses 2022
£ £ £ £ £
Main endowment
Restricted funds - 420 (221,424) 221,004 -
Endowment funds 4,766,641 74,986 (34,771) (678,188) 4,128,668
Total main
endowment funds 4,766,641 75,406 (256,195) (457,184) 4,128,668
Catalyst
endowment
Catalyst restricted
funds 1,059 92,586 (92,817) - 828
Catalyst
endowment funds 2,918,368 84,596 - (161,137) 2,841,827
Total Catalyst
endowment funds 2,919,427 177,182 (92,817) (161,137) 2,842,655
Total funds 7,686,068 252,588 (349,012) (618,321) 6,971,323
----- End of picture text -----
12 Statement of Funds
As established the purpose of the Main Endowment is to maintain a capital endowment fund and to apply the annual income of that fund in perpetuity towards the education of the general public in the study, appreciation and practice of music and the allied arts by furthering and supporting the objects and work of the Hallé Concerts Society. This fund is now accounted for on a total return basis.
The purpose of the Catalyst Endowment Fund is to apply the income from the endowment to support the Society’s educational activity at Hallé St Peter’s and its undertaking of more ambitious large-scale artistic projects not funded by other funding agreements. The income and related expenditure, including grants to the Society are accounted for as restricted funds.
Page 21
The Hallé Endowment Trust
NOTES (continued)
13 Total return investment – Main Endowment
The purpose of the Main Fund, as set out in its Trust Deed, is to maintain a capital endowment fund and to apply the annual income derived from the investment of that fund in perpetuity towards the education of the general public in the study, appreciation and practice of music and the allied arts by furthering and supporting the objects and work of the Hallé Concerts Society.
With effect from 1 January 2017, the Trustees adopted the total return approach to investment for the Main Fund, under the powers granted in Section 4 of the Trusts (Capital and Income) Act 2013. A resolution to adopt the total return approach for the Main Fund was passed by the Trustees on 8 February 2018 effective from 1 January 2017. Until 31 December 2022 the Catalyst Fund remained as a capital endowment, as it is an Arts Council based fund and subject to different arrangements from the Main Fund.
The Trustees identified the value of the gifts of permanent endowment received since 1983 up until 1 January 2017. This set the baseline value of the gift component of the endowment to which any subsequent gifts of endowment are added. This is now referred to as the “original endowment” and forms the initial “Investment Fund”. The difference between the total value of endowment funds as at 1 January 2017 and the value of the gift component represents the opening balance of unapplied total return (UTR). The UTR is classed as part of the Endowment fund until it is allocated to income.
The Trustees are now empowered to invest permanently endowed funds of the Main Fund to maximise total return and to apply an appropriate portion of the Unapplied Total Return to income each year. Until the power is exercised to transfer a portion of unapplied total return to income, the Unapplied Total Return remains invested as part of the permanent endowment.
The Trustees now decide in each year how much (if any) of the Unapplied Total Return is transferred to income funds and so available for expenditure as grants to the Society. In 2022 the Trustees made a transfer of £221,004 from the Unapplied Total Return to unrestricted income funds, enabling the making of grants to the Society of £220,000 from the Main Fund. In making this decision the Trustees have taken account of the return on investment for the year, the long term sustainability of the investment fund after considering various levels of transfer to income and the income needs of the Society.
Under the regulations (Section 4 of the Trusts (Capital and Income) Act 2013) charities have the power to add part of the UTR to the Investment Fund. The amount that can be added annually is capped and is calculated by reference to the increase in inflation and the value of the Investment Fund. The purpose of such a transfer is to maintain the real value of the Investment Fund. The Trustees have agreed that they will consider on an annual basis whether to make such a transfer and that the appropriate inflation index to use is CPI. For 2022 the trustees have agreed that such a transfer is not desirable following the fall in investment values experienced in the year.
With in-year donations to the Endowment of £0 the balance of the Investment Fund at 31 December 2022 is £2,818,451, of which £184,000 is the net book value of the Amati violin at 31 December 2022 (£120,000 original gift value). The violin is accounted for and revalued separately and shown in the following table to reconcile the overall value of the Endowment Fund.
Page 22
The Hallé Endowment Trust
NOTES (continued)
13 Total return investment – Main Endowment (continued)
| 14 | Financial instruments The investment fund and application of total return to permanent endowment funds Trust for investment £ Unapplied Total Return £ Total Endowment £ Opening value of endowment: Gift component of permanent endowment (incl. £120k instrument) 2,634,451 - 2,634,451 Unapplied total return - 1,932,190 1,932,190 Total 2,634,451 1,932,190 4,566,641 Revaluation reserve–Instrument 200,000 - 200,000 Total Endowment 1/1/2022 2,834,451 1,932,190 4,766,641 Movement in unapplied total return and endowment in the year: Gifts received - - - Investment return: dividends and interest - 74,986 74,986 Investment return: recognised and unrecognised gain - (457,184) (457,184) Investment management costs - (18,771) (18,771) Allocations of Unallocated Total Return (UTR) in the year:- Unapplied total return allocated to income - (221,004) (221,004) Unapplied total return allocated to Investment Fund - - - Net movement in the reporting period - (621,973) (621,973) Revaluation reserve–Instrument (16,000) - (16,000) Total Endowment movement inyear (16,000) (621,973) (637,973) Gift component of permanent endowment Investment Fund 2,634,451 - 2,634,451 Unapplied total return - 1,310,217 1,310,217 Total 2,634,451 1,310,217 3,944,668 Revaluation reserve–Instrument 184,000 - 184,000 Total Endowment 31/12/2022 2,818,451 1,310,217 4,128,668 |
Financial instruments The investment fund and application of total return to permanent endowment funds Trust for investment £ Unapplied Total Return £ Total Endowment £ Opening value of endowment: Gift component of permanent endowment (incl. £120k instrument) 2,634,451 - 2,634,451 Unapplied total return - 1,932,190 1,932,190 Total 2,634,451 1,932,190 4,566,641 Revaluation reserve–Instrument 200,000 - 200,000 Total Endowment 1/1/2022 2,834,451 1,932,190 4,766,641 Movement in unapplied total return and endowment in the year: Gifts received - - - Investment return: dividends and interest - 74,986 74,986 Investment return: recognised and unrecognised gain - (457,184) (457,184) Investment management costs - (18,771) (18,771) Allocations of Unallocated Total Return (UTR) in the year:- Unapplied total return allocated to income - (221,004) (221,004) Unapplied total return allocated to Investment Fund - - - Net movement in the reporting period - (621,973) (621,973) Revaluation reserve–Instrument (16,000) - (16,000) Total Endowment movement inyear (16,000) (621,973) (637,973) Gift component of permanent endowment Investment Fund 2,634,451 - 2,634,451 Unapplied total return - 1,310,217 1,310,217 Total 2,634,451 1,310,217 3,944,668 Revaluation reserve–Instrument 184,000 - 184,000 Total Endowment 31/12/2022 2,818,451 1,310,217 4,128,668 |
|---|---|---|
| 2022 2021 |
||
| Financial assets measured at amortised cost | 455,326 532,332 |
|
| Financial assets measured at fair value | 6,527,395 7,146,750 |
|
| Financial liabilities measured at amortised cost | (315,398) (313,014) |
Financial assets measured at amortised cost are cash, trade and fee debtors, staff loans and other debtors. Impairment losses charged to financial assets measured at amortised cost in the year amounted to £nil (2021: £nil).
Financial assets measured at fair value are the investments. Financial liabilities measured at amortised cost are trade creditors, other creditors and accruals.
Page 23
The Hallé Endowment Trust
NOTES (continued)
15 Remuneration of the Trustees and employees
The Trustees received no remuneration nor reimbursement of expenses and derived no financial benefit from their services to the Trust.
No staff were employed by the Trust during the year (2021: none).
16 Related Parties
The Hallé Endowment Trust is a subsidiary of the Hallé Concerts Society and is aggregated in the group accounts of the Society. The Society is a registered charity (number 223882) and a company limited by guarantee (number 62753), incorporated in the UK.
The Hallé Concerts Society’s registered office is: The Bridgewater Hall, Manchester M1 5HA and consolidated accounts can be obtained from this address.
The Trustees have taken advantage of the exemption in FRS 102 and have not disclosed related party transactions with fellow group undertakings.
There have been no individual donations by Trustees to the Hallé Endowment Trust during the year.