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2021-07-31-accounts

Architectural Association School of Architecture Annual Report 2020–21

Architectural Association School of Architecture Annual Report 2020–21 AL

REPORTS

7 Welcome

Public Benefit Statement

Fundraising Statement Corporate Governance Statement Council and Committee Members Advisers

Auditor’s Information and Signature Page 18 Independent Auditor’s Report

FINANCIAL STATEMENTS

REPORTS ..1

Reference and administrative information

Registered office 34–36 Bedford Square London WC1B 3ES Company registration number 171402 (England and Wales) Charity registration number 311083 (England and Wales) Office for Students UKPN 10008071

Welcome

The members of the Architectural Association’s Council (the AA Council), have pleasure in submitting the report and the accounts for the year ended 31 July 2021.

The financial statements have been prepared in accordance with the accounting policies set out in the attached financial statements and comply with the charitable company’s Memorandum and Articles of Association, applicable law and regulations, 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 Statement of Recommended Practice: Accounting and Reporting for Charities (SORP) and the applicable Office for Students Accounts Direction.

The report has been prepared in accordance with Part 8 of the Charities Act 2011 and also constitutes a directors’ report as required by section 418 of the Companies Act 2006. The Governance arrangements are explained in more detail in the Governance section below.

AA School

The Architectural Association (AA) is the oldest independent School of architecture in the UK. The AA was founded in 1847 as a student-centred collective that aspired to radically transform architectural education. The outcome of this is an environment that encourages students to speculate without limitations, take risks with confidence and cultivate individual, radical research agendas that will shape the future of the architectural discipline. Today, we continue to be a school that is constantly on the move, progressively redefining the nature of architecture both in academia and in practice worldwide. As a participatory democracy, this endeavour

relies on the students to contribute continuously to the identity of the School and to critically engage with the broader cultural discourse in London and beyond.

Today, the School occupies eight Georgian houses in the centre of London, as well as a 350-acre woodland site at Hooke Park in Dorset, and an ever-expanding number of digital spaces. Quite unlike any other institution operating today, the School offers a broad range of flexible and self-directed programmes, courses and curricula that empower students and staff to challenge the accepted methods within contemporary architectural education and professional practice.

The AA is an Approved Provider registered with the Office for Students (OfS), England’s independent regulator of higher education (The OfS Register). The AA is a recognised body under the Education (Recognised Bodies) (England) Order 2020 following the authority to grant its own taught degrees (Foundation, Bachelor and Master level) by the Lords of Her Majesty’s Most Honourable Privy Council in October 2019 (The Education (Recognised Bodies) (England) Order 2020 (legislation. gov.uk), and is licenced by UK Visas and Immigration (UKVI) to sponsor student visas Register of licensed sponsors: students – GOV.UK (www.gov.uk).

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Trustees’ Report With Strategic Report

Major Developments in the Year

Students

The AA continues to offer an internationally renowned architectural education that attracts interest from potential students from all over the world. For the 2020– 21 academic year the AA saw healthy application numbers, with many programmes attracting the highest-ever level of interest from very well-qualified applicants. Through careful selection processes we were able to offer opportunities to study to an additional 54 students (up 6% on 2020). Specific programmes that exceeded their targets include the AA Interprofessional Studio (MFA/MA) and Landscape Urbanism (MArch/MSc) at our postgraduate level, and our recently-accredited Foundation and Diploma programmes, which are showing steady growth.

RIBA 2020–25 Validation

In October 2020, the Royal Institute of British Architects (RIBA) unconditionally revalidated the AA for five years. The RIBA has revalidated our Part 1, Part 2 and Part 3 programmes until 2025.

Objectives and Activities

In fulfilment of its charitable objects – to promote and afford facilities for the study of architecture for the public benefit – the AA’s membership organisation operates a school of architecture (the School) and delivers a public programme of architectural lectures, symposia, exhibitions and publications.

Financial Review

The financial statements consolidate the results of the wholly-owned subsidiary, Architectural Association Publications Limited. In summary, the total income for the year was £21.3m (2020: £20.0m) with an expenditure of £16.9m (2020: £17.7m).

The improved annual net surplus of £4.6m (2020: £2.1m) results from the higher student enrolment at the start of the academic year of 901 (2020: 847). However, the declining areas were the drop in commercial trading income from Visiting School, Catering, Bookshop, Print Centre and Digital Prototype Laboratory due to the declining footfall during the lockdowns. The AA was able to make savings in discretionary spending and reduce costs associated with commercial trading activity. The School has unavoidably high fixed costs due to its obligation to teaching staff to serve the full-time students and maintain the long-term lease obligations. During the year, additional expenditure was incurred in online teaching and learning across expanded time horizons, hardship funds and ensuring that the building and infrastructure remained safe. The net assets of the AA during the year have increased by £4.6m (2020 increase £2.1m).

Accounting Policies

The principal accounting policies adopted, judgements and key sources of estimation uncertainty for the preparation of the financial statements are laid out in the Financial Statements section of this document.

Reserves Policy

As part of the annual review process, the AA’s free reserves policy was amended during the year to mitigate the financial risk from any long-term pandemic periods. It was agreed to maintain a cash contingency sufficient to cover nine to twelve months (2020: six months) of core operational expenditure so long as economic uncertainty and the potential for unforeseen financial difficulties persist. This was estimated at £12.75m to £17m (2020: £8.9m). The cash balance for the full year as a percentage of the upper end of the range of the free reserves target for 2021 is 102% (2020: 110%). In this context, the core operational expenditure is defined as the full cost of undertaking charitable activities (ie excluding trading).

Furthermore, if there were ever a scenario where liabilities exceeded available cash, the Council believes that the fixed assets’ realisable value would cover such liabilities.

Equal Opportunities

The AA aims to create conditions that ensure staff and students are treated solely based on their merits, abilities and potential, regardless of their gender, race, religious or political beliefs, ethnic or national origin, disability, family background, age, sexual orientation or other irrelevant distinction.

Accessibility

The AA seeks to welcome and accommodate all visitors, staff and students. The Bedford Square premises are not fully accessible to wheelchair users, and due to the restrictions associated with listed buildings, resolving this issue is not possible. Despite this, the AA is committed to making arrangements that facilitate participation in AA life as inclusively as possible for all visitors, staff and students.

Future Developments

The AA is always looking into the future, with the aim to continually enhance our learning and teaching methodologies by envisioning a student experience that is unparalleled within architectural education. This included the drafting of the AA Guiding Document by the Senior Management Committee (SMT) in 2020–21: a collective expression of our principles and ethos which sets out the current arrangements and documentation for the position search and will guide the next School Director in delivering their vision for the AA.

As we embark on next year, new leadership will be a critical focus as we aim to fill the vacant role of School Director. The recruitment process will provide the new Director with a strong leadership structure, which is to be aligned with the mission as stated within the Guiding Document. In pursuit of this objective during 2020–21, a Search Committee was elected by the School Community

to undertake the search process, comprising representatives from the student, academic staff and administrative staff constituencies as well as appointees from the AA Council. An Appointments Committee of Council was convened by the AA Council to oversee the search process in fulfilment of the Council’s constitutional duties. The recruitment process is timetabled to conclude in early summer 2022 with the new School Director appointed to commence duties at the outset of the 2022–23 academic year.

The participation of all our students and staff is a main aspect of these aims and creating a space in which all members of our community feel that they can freely contribute is essential. To establish a culture of mutual support and respect the Council commissioned a Dignity at Work and Study review, the recommendations of which will be implemented over the course of the year and embedded in the School’s policies.

As we, and the world, emerge from the Covid-19 pandemic we are excited about the prospect of returning to our premises in Bedford Square. To do so, the School has developed a hybrid teaching and learning model that includes face-to-face tutorials combined with methods that we developed virtually over the past year including online lectures, seminars and workshops. This hybridisation will also extend to our Public Programme of events, exhibitions and lectures, which are open to the public.

The reopening of our London premises allows for the School to rethink the connections between Bedford Square and Hooke Park, with the aim to create greater continuity, both administratively and educationally, through initiatives that enhance the uniqueness of both locations.

After a year of extending our online activity for remote learning we have developed a variety of digital platforms including a Student Information System (a major project that the School has and continues to invest in to provide a sector-standard student information system), an Intranet and new external-facing website that allows for a variety of audiences, from staff and current students, members, alumni to prospective students, benefactors and collaborators, to interact with us in multiple spaces and interfaces.

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Public Benefit Statement

Status

The AA is a company limited by guarantee, incorporated on 13 November 1920, registered as a charity in England and Wales on 9 September 1963 and as an Approved Provider with the Office for Students on 18 March 2019.

Public benefit

The AA Council believe they have complied with the duty in section 4 of the Charities Act 2011 to have due regard for the public benefit as that term is understood for the purposes of the law relating to charities in England and Wales.

Education and Research

The School offers the following courses and programmes: the Foundation Course (AA Foundation Award in Architecture), the Experimental Programme (years one to three of the five-year course in architecture) leading to the award of BA(Hons) (ARB/RIBA Part 1), the Diploma Programme (years four and five of the five-year course in architecture) leading to the award of MArch and the AA Diploma (ARB/RIBA Part 2), and nine Taught Postgraduate Programmes leading to MA, MSc, PG MArch, MFA and MPhil wards. The AA is an Accredited Research Centre (ARC) of the Open University for the delivery and validation of the PhD degree. Additionally, applications are taken throughout the year for two RIBA Part 3 courses.

In addition to the full-time courses on offer at the AA, a vast array of short courses and workshops take place around the world and online throughout the year as part of the AA Visiting School, a Spring Semester Programme available to students from other universities

to experience the AA for a term, and a Summer School, which is accompanied by a dedicated series of Public Programme events. Led by notable architects, designers, critical thinkers and AA tutors from across the globe, these courses aim to generate new forms of teaching and learning, and stimulate creative minds of all ages and backgrounds.

Public Programme and Publications

The AA Public Programme is an ever-evolving collection of lectures, exhibitions, publications, workshops, symposia, open seminars, gallery talks, building visits and performances dedicated to contemporary architectural culture. Speakers and participants include emerging architects, artists, scholars and professionals in related fields. Events are free and open to the public, and bring together interdisciplinary audiences locally within the physical space of the Lecture Hall, and globally in the virtual realm of the AA YouTube channel.

AA Publications are essential to the cultural and academic production of the institution, and facilitate the development of critical architectural discourse worldwide. Produced in-house by a team of editors and graphic designers operating under the aegis of the Print Studio, the department is dedicated to the dissemination and communication of architectural writing and digital content, which includes AA Files , the School’s journal of record, the student-led AArchitecture pamphlet, a series of books and

ebooks with authors internal and external to School, as well as social media initiatives.

Environmental and Sustainability

The AA is committed to environmental sustainability. Our approach to sustainability is continually evaluated by our actions and commitments. As we emerge from the pandemic and the challenges that Brexit poses, environmental sustainability is at the forefront of the school’s commitments and our future visions and strategies will always be a major factor in all matters going forward.

We will engage with our students, who are our largest constituency within the School, and our staff to discover what is important to them and consider the risks and opportunities of their aims and ambitions. From this consultation, the School will identify ten critical environmental focuses. These areas will form the focus of our Environmental Sustainability Vision, Policy and Strategy, and the progress of this initiative will be reported on an annual basis.

As part of this we have developed an environmental policy, which is as follows:

Environmental Policy

The AA and its large community of students and staff are based at two premises, Bedford Square in London and Hooke Park in Dorset.

We believe that our School has a responsibility to care for and protect the environment in which we operate. We recognise the impact our core business can have on the environment, health and prosperity of our staff, students, visitors and on the surrounding community.

We are committed to reducing our carbon emissions through effective energy management throughout all of our buildings and will strive to continually improve our environmental performance across all of our educational and business activities. It is our policy to identify, eliminate and reduce activities that have a potential to cause an environmental impact.

The commitments outlined in the Policy are evolving and represent the importance given by the AA to managing environmental sustainability, and are to be reviewed on an annual basis and updated when necessary.

This policy statement is prominently displayed at all School premises and made available to all interested parties upon request. We will provide adequate and appropriate resources to implement this policy and will ensure it is communicated and understood.

Whilst the AA accepts the main responsibility for implementation of this policy, staff and students have a

bursaries, educational resources, named prizes and travel awards as well as specific funding for our Public Programme and staff development opportunities. In 2020–21, the AA received philanthropic income of £282,000 (2020: £236,000) through the Architectural Association Foundation. The AA applied all of this toward the AA’s scholarships and bursaries.

very important role in co-operating with those responsible for environmental safeguarding.

Value for Money

By attending the AA School, our students are making a considerable investment in their future, both in time and money. The School provides a structure that allows for a individualised and personal experience and there are a range of ways that we provide good value for money. Therefore, this will vary from person to person, based on their course of study, individual needs and interests, and the services and facilities they access.

Fundraising Arrangements

We are subject to regulation to ensure that we are behaving responsibly and fulfilling our obligations to our students through the Office for Students (OfS), as well as and the requirement to publish our financial statements.

Fundraising

AA Hardship Fund

The Student Hardship Appeal was launched in April 2020 with outreach to the wider membership and alumni community. The AA Hardship Fund (AAHF) was established to support students who made realistic and adequate financial provisions at the outset of the academic year but, due to the global pandemic, were faced with unexpected financial hardship impacting on their ability to complete studies during the 2020–21 academic year and beyond. With awards ranging from £200 to £5,000, the AAHF supports living costs and material needs to undertake the educational provision or offset tuition fees where students can no longer meet payments. The AAHF comprises funds from the School’s annual operating budget and donations received specifically as support to the stated intention of the funding provision. During the year, the AAHF helped 81 students to a total of £268,000, and applications will be taken in October 2021 for the next round of funding support within these arrangements.

Architectural Association Foundation

The Architectural Association Foundation (charity no 328455), established in 1989, supports the AA in its charitable objects by assisting in funding scholarships,

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Corporate Governance Statement

Governing documents

The charity was established under a Memorandum of Association and is governed in accordance with the object and powers set out in its governing documents, the Articles of Association and By-laws (last amended 23 March 2017).

Objects of the AA

The objects for which the AA was established are to promote and afford facilities for the study of architecture for the public benefit.

School Community

The School Community comprising students, staff and Council members (with the exception only of the School Director) is a feature of and forum in the AA’s corporate governance which facilitates the School’s ethos of participatory democracy by acting as both an advisory body to the School Director and a voting body making recommendations to Council on important matters, including the future direction of the AA School.

The AA Council

The Council is the AA’s governing body. Led by the President, it is made up of Council members elected from the AA’s membership together with others appointed specifically for skills necessary to oversee the delivery of the AA’s objectives and future strategic direction. The Council includes the School Director, an elected staff member and an elected student member, ensuring all constituencies of the School are represented at the highest level of governance.

To facilitate the inclusion on the AA Council of the School Director, a staff member and a student member, the AA received Charity Commission approval in 2017 to include in its Articles of Association (Art 6(b)) a provision which permits payment to a Council member who is an AA student in receipt of assistantship, bursary or scholarship, the School Director, or an employee of the AA, provided such payment is not made to remunerate the person for duties as a Council member and that the number of people so remunerated shall not exceed three. Over the year, one member (2020: two) of Council was in receipt of such payment from the AA – an employee of the AA elected to Council. The total remuneration made to this Council member in the year was £54,855 (2020: £242,329).

Council meets at least four times a year to provide strategic oversight, monitor financial health and review key policies, initiatives, activities and plans.

Committees of Council

Council delegates authority to the following committees to consider and report on matters in their respective remits.

The Finance and Resources Committee is responsible for setting and ensuring the prudent management of annual budgets, monitoring revenue and voluntary income and/or benefit streams, ensuring prudent financial planning, and overseeing the commitment of financial resources to long-term contracts (including property

leases) and the investment of monies.

The Audit and Risk Committee is responsible for monitoring the integrity of the AA group’s financial statements, reviewing and reporting to Council on significant financial reporting issues, tracking the AA’s risk management and reporting, and overseeing key policies.

The Estates and Infrastructure Committee considers the overall strategy for the AA’s built environment and infrastructure, including any recommendation to Council for acquiring and/or disposing of property and improvements.

The Nominations and Remuneration Committee sets the remuneration of the School Director and other senior staff. The Committee is chaired by a lay member of the Council and also includes the President. In fulfilling its role in respect of remuneration, the Committee follows the Committee of University Chairs (CUC) guidance. It ensures it complies with Office for Students (OfS) guidance on senior staff remuneration that may be issued from time to time.

School Director Review and Remuneration

The Nomination and Remuneration Committee considers a wide range of evidence in assessing the remuneration proposals for those in leadership positions. These reflect the relevant aspects of the remuneration guidance set out by the CUC.

The previous School Director’s remuneration in respect of the financial year 2020 and 2021 is set out in Note 6 to these accounts.

Statement of Trustees’ Responsibilities

As the AA is constituted as a charitable company, Council members are both charity trustees and company directors. As such, Council members are responsible for preparing the trustees’ report and financial statements in accordance with applicable law and United Kingdom Accounting Standards (the United Kingdom Generally Accepted Accounting Practice).

Company law requires trustees to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the charitable company and the group, and of the income and expenditure of the group for that period. Under company law, trustees must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the charitable company, and of the income and expenditure of the group for that period.

In preparing these financial statements, trustees are required to:

Trustees are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the charitable company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the charitable company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Each of the trustees confirms that:

This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.

Trustees are responsible for the maintenance and integrity of financial information included on the AA’s website: www.aaschool.ac.uk. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Recruitment and Appointment

of Trustees

The Council recruits trustees through a variety of methods. Independent members of Council (ie members who are not employed by or studying at the AA) are either elected by from the AA’s membership or appointed directly by Council for specific skills and experience following an open recruitment process. Council appoints a student trustee who is elected by the student body and a staff member trustee who is elected by staff. The School Director (position currently vacant) is an ex officio member of Council. Independent trustees are appointed for an initial term of three years renewable by mutual agreement for an additional three-year term. The student member trustee is appointed for one term of one year but is eligible to stand for election again subject to a maximum of three terms of one year.

The process is overseen by the Nominations and Remuneration Committee, and any new appointees receive induction training to introduce them to the AA’s work and to ensure an appropriate level of understanding of governance,

Internal Control Statement

and Risk Management

The key objective of the AA’s risk management activities is to ensure policies and internal controls are in place to manage risks that could impact the AA’s ability to achieve its goals or maintain its reputation.

The Audit and Risk Committee provides impartial advice to the Council on the discharge of the Council’s responsibilities for the effectiveness of risk management, internal control and management systems, and for the economy, efficiency and effectiveness with which the AA’s activities have been discharged.

All significant risks inherent to the AA’s operations are identified, assessed and managed as part of this process. The Senior Management Team review departmental risk registers maintained by Heads of Departments, which inform the corporate risks elevated to the AA’s Risk Register.

Due to the coronavirus pandemic, the AA temporarily closed its Bedford Square premises on 20 March 2020. Teaching and assessment were transferred online, and staff worked remotely where possible. A Covid-19 risk assessment and outbreak response plan have been developed to create a safe environment and enable track and trace reporting. Access to some on-site resources have been made available where possible, with a click-andcollect Library service and a remote model-making service from the Digital Prototyping Laboratory.

The AA appointed Azets as the Internal Auditor to improve risk management, internal controls and governance processes during the year. To date, an internal audit plan has been prepared for 2021–22 and an advisory review has been completed around the Fundraising Framework.

The AA assesses the level of risk posed by each matter recorded on the Risk Register by attributing a score based on the likelihood and impact of the respective risks. Each category of risk has been assessed, recorded and factored into the respective scores. Those with the highest attributed scores are listed below as the AA’s principal risks:

  1. Not meeting the requirements and expectations of delivering a hybrid learning and teaching model

The AA has committed to undertake its learning and teaching for the new academic year 2021–22 using a mixture of face-to-face and online approaches. Despite

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the easing of lockdown restrictions, the pandemic continues, and its impact on the School is listed as a principal risk. Noteworthy related risks include: the safety of staff and students in AA buildings, student dissatisfaction with the return-to-premises experience, dissatisfaction with the online teaching and learning experience; student financial hardship that can potentially impact the School’s fee income; and staff and student mental health and wellbeing related to transitioning back to premises. To mitigate these risks, the AA has built its cash reserves to provide financial resilience during the pandemic period, continued the Student Hardship Fund and invested in additional support for the mental health and wellbeing of students and staff. The trustees believe that the AA is in a good financial position to support staff and students through 2021–22 as a going concern.

  1. IT not meeting the organisation’s requirements The risk of hacking databases and systems has increased throughout the HE sector. The AA has expanded its security around IT infrastructure, software and technology. During the year, the School invested in a cybersecurity audit, implemented two of its critical findings and will be implementing other recommendations during 2021–22. A review of IT resources is being undertaken to mitigate this risk.

  2. Interim period of leadership delays development of strategic plan

A priority of the Council for 2021–22 is to appoint a new School Director and implement supporting leadership arrangements that reflect the needs of the AA today. The new leadership will commence on the strategic plan to take the AA forward into the 2022–23 academic year and beyond.

The Council recognises that the application of risk management processes cannot eliminate all risk exposure, especially during a time of enormous change in the HE Sector.

This Internal Controls and Risk Management Statement covers the financial year to 31 July 2021 and the period to the date of approval.

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Council And Committee Members

The Council members, who were members throughout the year except where shown, were:

Council members Appointment/Resignation 20/21
Trevor Bolton
Jonathan Brierley
Yoav Caspi Resigned 1 August 2020
Mark Damazer CBE
David Edgerton Appointed 22 March 2021
Kim Frost Resigned 18 June 2021
David Gibson
Susannah Hagan Appointed 25 January 2021
Sam Jacob
Trevor Morriss
Joel Newman
Ravindren Ponniah Appointed 21 January 2021
Yael Reisner Appointed 25 January 2021
George Sawtell
Victoria Thornton OBE (President)
Catherine du Toit (Vice President)
Nick Viner
Riad Yassine Appointed 23 November 2020
The Committee members were:
Audit and Risk Committee Finance and Resources Committee
Trevor Bolton Mark Damazer
David Gibson (Chair) George Sawtell (Chair)
George Sawtell Victoria Thornton
Nick Viner
Estates and Infrastructure Committee
Joel Newman Nominations and Remuneration Committee
Trevor Morriss Kim Frost
Ravindren Ponniah Victoria Thornton
Yael Reisner Catherine du Toit
Catherine du Toit (Chair) Nick Viner (Chair)
Riad Yassine

Advisors

Statutory Auditor Buzzacott LLP 130 Wood Street London EC2V 6DL www.buzzacott.co.uk Internal Auditor Azets 45 King William Street London EC4R 9AN www.azets.co.uk Bankers HSBC 69 Pall Mall London SW1Y 5EY www.hsbc.co.uk Lloyds 25 Gresham Street London EC2V 7HN www.lloydsbank.com Solicitors Fieldfisher LLP 2 Swan Lane London EC4R 3TT www.fieldfisher.com Pinset Masons LLP 30 Crown Place London EC2A 4ES www.pinsetmasons.com

AUDITOR’S INFORMATION AND SIGNATURES

The School Director and Senior Management Team for the year were:

School Director Role vacant

Senior Management Team Holly Bowden, Company Secretary Paul Crosby, Head of Academic Resources Ryan Dillon, Head of Communications Belinda Flaherty, School Registrar Tehmina Mahmood, Head of Human Resources Salah Mirza, Head of Finance and Strategic Development Mark Morris, Head of Teaching and Learning Anita Pfauntsch, Head of Estates and Facilities Christopher Pierce, Head of Visiting School and QAA Facilitator Manijeh Verghese, Head of Public Engagement Tiger Wang, Chief Technology Officer Michael Weinstock, Chair of Academic Committee

Company Secretary Holly Bowden

The Association’s Auditor, Buzzacott LLP, is willing to continue in office and a resolution proposing their reappointment and authorising the Finance and Resources Committee to fix their remuneration will be put to the annual general meeting.

Approved by Council Members on[22nd November 202][1] and signed on their behalf by:

Victoria Thornton OBE President

Mark Morris Accountable Officer

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Independent Auditor’s report to the Members of Architectural Association (Incorporated)

Opinion

We have audited the financial statements of Architectural Association (‘the charitable company’) and its subsidiary (‘the group’) for the year ended 31 July 2021 which comprise the group statement of financial activities, the group and charity balance sheet, the group statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland (the United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

We have nothing to report in respect of the following matters in relation to which the Office for Students accounts direction 2020/21 requires us to report to you if, in our opinion:

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 group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the trustees’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the charitable company’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 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.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

• The information given in the trustees’ report, including the strategic report, for the financial year for which the financial statements are prepared, is consistent with the financial statements; and

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the charitable parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the trustees’ report, including the strategic report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

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 being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the trustees are responsible for assessing the group’s and the charitable parent company’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 group or the charitable parent company 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined

above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

We assessed the susceptibility of the charitable company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

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There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the trustees and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

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 charitable 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 charitable 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 charitable company and the charitable company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Katharine Patel, Senior Statutory Auditor Buzzacott LLP 130 Wood Street London EC2V 6DL

Date: 29 November 2021

20

FINANCIAL STATEMENTS

Group statement of financial activities (including income and expenditure account) Year ended 31 July 2021

Balance Sheets 31 July 2021

----- Start of picture text -----
Un- Un-
restricted Restricted Total 2021 restricted Restricted Total 2020
Notes funds ’000 funds ’000 ’000 funds £’000 funds £’000 £’000
Income from:
Donations and legacies 1 307 563 870 253 376 629
Investments 2 1 1 2 - 2 2
Trading activities 3 154 - 154 358 - 358
Charitable activities 4 20,250 - 20,250 18,998 - 18,998
Total income 20,712 564 21,276 19,609 378 19,987
Expenditure on:
Raising funds 3 (89) – (89) (201) - (201)
Charitable activities 5 (16,346) (435) (16,781) (17,138) (345) (17,483)
Total expenditure (16,435) (435) (16,870) (17,339) (345) (17,684)
Net income before investment losses 4,227 129 4,406 2,270 33 2,303
Investment gains (losses) 10 - 15 15 - (17) (17)
Net income for the year 7 4,277 144 4,421 2,270 16 2,286
Other recognised gains
and (losses)
Gains on revaluation of fixed assets 9 - - - 200 - 200
Actuarial gain (loss) on pension scheme 20 202 - 202 (416) - (416)
Net movement in funds 4,479 144 4,623 2,054 16 2,070
Reconciliation of funds
Total funds brought forward 15,207 1,976 17,183 13,153 1,960 15,113
Total funds carried forward 19,686 2,120 21,806 15,207 1,976 17,183
----- End of picture text -----

The statement of financial activities has been prepared on the basis that all operations are continuing. Further details of the restricted funds are given in note 18. All recognised gains and losses are included in the statement of financial activities.

----- Start of picture text -----
Group Charity
2021 2020 2021 2020
Notes ’000 £’000 ’000 £’000
Fixed assets
Freehold properties 8 2,598 2,638 2,598 2,638
Long leasehold properties 8 14,238 14,380 14,238 14,380
Other tangible assets 9 4,647 4,518 4,647 4,518
Investments 10 55 40 55 40
Investment in subsidiary 10 - - 50 50
Total fixed assets 21,538 21,576 21,588 21,626
Current assets
Stock 11 334 332 33 33
Debtors 12 954 1,180 1,202 1,468
Cash at bank and in hand 17,386 9.841 17,352 9,774
Total current assets 18,674 11,353 18,587 11,275
Current liabilities
Creditors: 13 (11,333) (8,793) (11,314) (8,780)
amounts falling due within one year
Net current assets 7,341 2,560 7,273 2,495
Total assets less current liabilities 28,879 24,136 28,861 24,121
Creditors: 14 (6,656) (6,211) (6,656) (6,211)
amounts falling due after more
than one year
Net assets excluding pension liability 22,223 17,925 22,205 17,910
Pension liability 20 (417) (742) (417) (742)
Net assets including pension liability 21,806 17,183 21,788 17,168
Funds and reserves
Restricted funds 18 2,120 1,976 2,120 1,976
Restricted funds 2,120 1,976 2,120 1,976
General fund 10,268 6,114 10,250 6,099
Pension reserve 20 (417) (742) (417) (742)
9,851 5,372 9,833 5,357
Revaluation reserve 19 9,835 9,835 9,835 9,835
Unrestricted funds 19,686 15,207 19,668 15,192
Total Funds 17 21,806 17,183 21,788 17,168
----- End of picture text -----

22nd November 2021

Approved by Council Members on signed on their behalf by:

and

Victoria Thornton OBE President

Mark Morris Accountable Officer

24

25

Group statement of cash flows 31 July 2021

----- Start of picture text -----
2021 2020
Notes ’000 £’000
Cash flows from operating activities:
Net cash provided by operating activities A 8,290 3,266
Cash flows from investing activities:
Investment income 2 2
Purchase of tangible fixed assets (366) (12)
Net cash used in investing activities (364) (10)
Cash flows from financing activities:
Repayments of borrowing (324) (328)
Interest paid on borrowing (57) (84)
Net cash used in financing activities (381) (412)
Change in cash and cash equivalents in the year 7,545 2,844
Cash and cash equivalents at 1 August 2020 B 9,841 6,997
Cash and cash equivalents at 31 July 2021 B 17,386 9,841
A Reconciliation of net movement in funds
to net cash provided by operating activities 2021 2020
’000 £’000
Net movement in funds, as per the statement of financial activities 4,623 2,054
Adjustments for:
Depreciation charge 393 489
Loss on disposals 27 –
Losses (gains) on investments (15) 17
Investment income (2) (2)
Revaluation gain - 200
Actuarial (gains) losses (202) 416
Defined benefit pension scheme contributions (131) (131)
Defined benefit pension scheme interest cost 8 8
Mortgage and long-term loan interest 57 84
(Increase) / Decrease in stocks (12) 21
Decrease / (Increase) in debtors 226 (140)
Increase in creditors 3,318 625
Net cash provided by operating activities 8,290 3,641
B Analysis of cash and cash equivalents 2021 2020
’000 £’000
Cash at bank and in hand 17,386 9,841
Total cash and cash equivalents 17,386 9,841
----- End of picture text -----

Principal accounting policies 31 July 2021

Principal Accounting Policies

The principal accounting policies adopted, judgements and key sources of estimation uncertainty for the preparation of the financial statements are laid out below.

Basis of preparation

These financial statements have been prepared for the year to 31 July 2021.

The financial statements have been prepared under the historical cost convention with items recognised at cost or transaction value unless otherwise stated in the relevant accounting policies below or the notes to these financial statements.

The financial statements have been prepared in accordance with 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) (Charities SORP FRS 102), and the Companies Act 2006.

The charity constitutes a public benefit entity as defined by FRS 102. The financial statements are presented in sterling and are rounded to the nearest thousand pounds.

Critical accounting estimates and areas of judgement Preparation of the financial statements require the trustees and management to make significant judgements and estimates.

The items in the financial statements where these judgements and estimates have been made include:

Assessment of going concern The trustees have assessed whether the use of the going concern assumption is appropriate in preparing these financial statements. The trustees have made this assessment in respect for the period of one year from the date of approval of these financial statements. The trustees of the charity have concluded that there are no material uncertainties related to events or conditions that may cast significant doubt on the ability of the charity to continue as a going concern. The trustees believe that the charity will have sufficient resources to meet its liabilities as they fall due.

Basis of consolidation

The results of the Association’s wholly-owned subsidiary, Architectural Association Publications Limited have been consolidated into these financial statements on a line-byline basis.

The charity has taken advantage of the exemptions in the Companies Act not to present a separate statement of financial activities. Net income of the charity £4,623,000 (2020 net income of £2,070,000) is attributable to the Architectural Association (Incorporated).

Income recognition

Income is recognised in the period in which the group has an entitlement to the income, the amount of income can be measured reliably, and it is probable that the income will be received.

Tuition and membership fees receivable and charges for services and use of premises are accounted for in the period to which they relate. Fees received in advance under the advance fee or deposit scheme are held in the Association bank account and recorded as liabilities until either taken to income in the term when used or else refunded.

Expenditure recognition

Liabilities are recognised as expenditure as soon as there is a legal or constructive obligation committing the charity to make a payment to a third party, and it is probable that a transfer of economic benefits will be required in settlement and the amount of the obligation can be measured reliably.

Expenditure is recognised on an accruals basis, inclusive of VAT which cannot be recovered. Certain expenditure is directly attributable to specific activities and has been included in those cost categories. Certain other costs, which are attributable to more than one activity, are apportioned across cost categories based on an estimate of the proportion of time spent by staff on those activities.

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses. Certain items of fixed assets that had been revalued to fair value on or prior to the date of transition to FRS 102 (1 August 2014) are measured based on deemed cost, being the revalued amount at the date of that revaluation.

On adoption of FRS 102, the charity followed the transitional provision to retain the book value of certain classes of tangible fixed assets as a deemed cost but not to adopt a policy of revaluations of these assets in the future. Assets costing £10,000 or more are capitalised as tangible fixed assets.

Depreciation on freehold buildings is calculated on a reducing balance basis at 2% on cost/valuation for each full year of occupation. No depreciation is charged on freehold land.

26

27

Depreciation on long leasehold buildings is calculated on a reducing balance basis over the life of the lease. A review for impairment of a building is carried out if events or changes in circumstances indicate that the carrying value of the building may not be recoverable. Depreciation on owned furniture, fittings and equipment is calculated on a straight-line basis at 20% per annum.

Library books, the video collection and slide library are included at the book amounts of previous independent professional valuations, subject to reviews for impairment. No depreciation is provided on these assets. The trustees consider that this shows a true and fair view as the estimated residual value is deemed to be equal to the current use value. Costs incurred in maintaining the condition of these assets are charged to the statement of financial activities.

Assets in the course of construction are included at cost. Depreciation on these assets is not charged until they are brought into use.

Listed investments

Listed investments are stated at market value. Gains and losses on disposal and revaluation of investments are charged or credited to the statement of financial activities.

Stock

Stock is valued at the lower of cost and estimated net realisable value.

Debtors

Debtors are recognised at their settlement amount, less any provision for non-recoverability. Prepayments are valued at the amount prepaid. They have been discounted to the present value of the future cash receipt where such discounting is material.

Cash at bank and in hand

Cash at bank and in hand represents such financial statements and instruments that are available on-demand or have a maturity of fewer than three months from the date of acquisition.

Creditors and provisions

Creditors and provisions are recognised when there is an obligation at the balance sheet date as a result of a past event, and it is probable that a transfer of economic benefit will be required in settlement, and the amount of the settlement can be estimated reliably. Creditors and provisions are recognised at the amount the charity anticipates it will pay to settle the debt. They have been discounted to the present value of the future cash payment where such discounting is material.

Pension schemes

Defined benefit pension scheme

The Association operates a pension scheme providing benefits based on final pensionable pay. The assets of the scheme are held separately from those of the Association. This scheme is being accounted for under FRS 102, with the annually calculated notional surplus or deficit on the funding of the scheme shown in the financial statements as a designated fund entitled ‘pension reserve’, which is deducted from unrestricted funds in the balance sheet. Any surplus or deficit in the scheme at the year-end is shown separately on the balance sheet. Independent qualified actuaries regularly complete valuations at least every three years, and in accordance with their recommendations, annual contributions are paid to the scheme to secure the benefits set out in the rules. The trustees note that the calculated notional deficit or surplus can vary greatly from year to year depending on the assumptions made at the valuation date, but with normally little or no effect on short term cash flows. This scheme is now closed to the accrual of future benefits.

Group personal pension scheme

Contributions payable to the group personal pension scheme are charged to the statement of financial activities in the period to which they relate.

Operating leases

Rentals payable under operating leases plus finance / Hire Purchase (HP) are charged on a straight-line basis over the term of the lease.

Taxation

The company is a registered charity and is not liable to United Kingdom income tax or corporation tax on charitable activities.

Fund Accounting

Restricted funds comprise monies raised for, or which have their use restricted to, a specific purpose, or contributions subject to donor-imposed conditions.

Unrestricted funds represent those monies which are freely available for application towards achieving any charitable purpose that falls within the charity’s charitable objects.

The revaluation reserve is shown separately to general unrestricted funds.

Pension liabilities that are considered to be very long-term are deducted from the general unrestricted funds to show the general reserves available in the short and medium-term.

Notes to the Financial Statements 31 July 2021

1 Donations and legacies

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Un-restricted Restricted Total 2021 Un-restricted Restricted Total 2020
funds ’000 funds ’000 ’000 funds £’000 funds £’000 £’000
Donations for bursaries 45 224 269 50 186 236
and scholarships
Donations for DPL project - 113 113 - 149 149
Other donations 262 226 488 203 41 244
Total 307 563 870 253 376 629
2 Income from investments
Un-restricted Restricted Total 2021 Un-restricted Restricted Total 2020
funds ’000 funds ’000 ’000 funds £’000 funds £’000 £’000
Bank Interest 1 - 1 - - -
Dividend income - 1 1 - 2 2
Total 1 1 2 - 2 2
----- End of picture text -----

All income from trading activities and the expenditure on raising funds relates to trading and is unrestricted.

4 Income from charitable activities

4
Income from charitable activities
Un-restricted
funds
’000		 Restricted
funds
’000		 Total 2021
’000		 Un-restricted
funds £’000		 Restricted
funds £’000		 Total 2020
£’000
School fees
Membership subscriptions
Print Centre
Catering income
Other donations		 19,816
170
10
1
253		 -
-
-
-
-		 19,816
170
10
1
253		 18,297
177
158
145
221		 -
-
-
-
-		 18,297
177
158
145
221
Total funds 20,250 - 20,250 18,998 - 18,998
Fee Income Analysis Un-restricted
funds
’000		 Restricted
funds
’000		 Total 2021
’000		 Un-restricted
funds£’000		 Restricted
funds£’000		 Total 2020
£’000
Fee income for taught awards
Fee income from non-qualifying
courses
Total fee income		 19,072
744
19,816		 -
-
-		 19,072
744
19,816		 17,372
925
18,297		 -
-
-		 17,372
925
18,297

28

29

30
5
Expenditure on charitable activities
Un-restricted
funds
’000
Restricted
funds
’000
Total 2021
’000
Un-restricted
funds £’000
Restricted
funds £’000
Total 2020
£’000
Cost of charitable activities
School expenses
14,883
435
15,318
15,626
345
15,971
Member services
236
-
236
194
-
194
Book and Slide Library
738
-
738
552
-
552
Print Centre
118
-
118
233
-
233
Publications and Print Studio
118
-
118
107
-
107
Exhibitions
108
-
108
52
-
52
Catering
145
-
145
374
-
374
Total
16,346
435
16,781
17,138
345
17,483
Included in school expenses above:
Total 2021
’000
Total 2020
£’000
Interest payable and similar charges
Long term loan interest
37
51
Mortgage loan interest
19
32
Hire purchase loan interest
1
1
Under Condition A (Access and participation for students from all background) Approved (fee cap)
providers are required to have in force an access and participation plan approved by OfS in accordance with HERA (2017).
This is not a requirement of our registration or our ongoing conditions of registration.
6
Staff Costs
Included in school expenses above:
Total 2021
’000
Total 2020
£’000
Wages and salaries
8,371
7,942
Social security costs
751
697
Pension costs
452
418
Total
9,574
9,057
The average number of employees for the year, including full-time equivalents (FTE), was:
2021
FTE
2021
No
2020
FTE
2020
No
Wages and salaries
81
275
69
209
Social security costs
114
130
103
125
Pension costs
3
4
3
4
Total
198
409
175
338		 6
Staff Costs (Continued)
The number of employees with emoluments (including taxable benefits but excluding employer’s national insurance and pension
contributions) within the following ranges was:
Total
2021
No
Total
2020
No
£60,001 – £70,000
4
6
£70,001 – £80,000
5
8
£80,001 – £90,000
6
2
£90,001 – £100,000
1
2
£110,001 – £120,000
1
-
£185,000 – £190,000
-
1
Contributions of £73,396 (2020: £11,322) were also made to a personal pension scheme in respect of higher-paid staff.
These contributions were in respect of 17 employees (2020:17).
The School Director’s position was vacant during the year and the comparison of remuneration against previous year was:
2021
’000
2020
£’000
Basic salary
-
189
Pension contributions
-
11
Total
-
200
31
The School Director’s basic salary as a multiple of the
median of all staff was Nil (2020: 4.2) and for total
remuneration as a multiple of the median of all staff was
Nil (2020: 4.2)
As a result of the School Director’s position being
vacated, the Senior Management Team were appointed
with effect from 14 October 2020 as the interim cover for
the School Director.
A compensation payment of £90,000 was made to
the former School Director as part of the settlement
agreement for loss of office.
The key management personnel of the charity in
charge of directing and controlling, running and operating
the charity on a day-to-day basis comprised the Council
members, the School Director (vacant) and the Senior
Management Team, as set on page 15. The total
remuneration (including taxable benefits, employer’s
national insurance and pension contributions) of the key
management personnel for the year was £1,023,000
(2020: £1,150,000).
No Council members (trustees) received any
remuneration for their duties as a trustee from the group
or charity during the year, with the exception of an
employee of the AA elected to Council. The total
remuneration made to this Council member in the year
was £54,855 (2020: £242,329). Travel and subsistence
expenses reimbursed to one member of the Council
amounted to £496 (2020: £800).

7 Net income for the year

9 Other tangible fixed assets (Group and Charity)

Net income for the year is stated after charging:

----- Start of picture text -----
Total Total
2021 2020
Group and charity ’000 £’000
Depreciation
Freehold buildings 41 41
Long leaseholds properties 143 142
Other tangible fixed assets 210 306
Auditor’s remuneration
Statutory audit 59 48
Other services 9 7
Operating leases 1,868 2,137
----- End of picture text -----

8 Properties (Group and Charity)

I.
Freehold land and buildings
– Hooke Park		 Land
£’000		 Buildings
£’000		 Assets under
construction
£’000		 Total
’000
Cost or deemed cost
At 1 August 2020
Additions
At 31 July 2021		 600
-
600		 2,031
-
2,031		 276
1
277		 2,907
1
2,908
Depreciation
At 1 August 2020
Charge for year		 -
-		 269
41		 -
-		 269
41
At 31 July 2021 - 310 - 310
Net book value
At 31 July 2021		 600 1,721 277 2,598
At 31 July 2020 600 1,762 276 2,638
II.
Long leaseholds properties
Group and charity		 34–36 Bedford
Square
Restricted
fund
£’000
Unrestricted
fund
£’000		 37 Bedford
Square
Unrestricted
fund
£’000		 39 Bedford
Square
Unrestricted
fund
£’000		 Total
’000
Cost or deemed cost
At 1 August 2020		 540 9,118 1,500 4,225 15,383
At 31 July 2021 540 9,118 1,500 4,225 15,383
Depreciation
At 1 August 2020
Charge for year		 44
5		 715
83		 122
13		 122
41		 1,003
142
At 31 July 2021 49 798 135 163 1,145
Net book value
At 31 July 2021		 491 8,320 1,365 4,062 14,238
At 31 July 2020 496 8,403 1,378 4,103 14,380

----- Start of picture text -----
Furniture, Library Slide and
fittings and books video
equipment Archives collection library Total
£’000 £’000 £’000 £’000 ’000
Cost or deemed cost
At 1 August 2020 3,787 280 1,301 2,409 7,777
- -
Disposals (11) (16) (27)
Additions 366 - - - 366
At 31 July 2021 4,142 280 1,285 2,409 8,116
Depreciation
At 1 August 2020 3,259 - - - 3,259
Charge for the year 210 - - - 210
At 31 July 2021 3,469 - - - 3,469
Net book value
At 31 July 2021 673 280 1,285 2,409 4,647
At 31 July 2020 528 280 1,301 2,409 4,518
----- End of picture text -----

The net book value of plant and machinery includes Nil (2020: £1,894) in respect of assets held under hire purchase agreements. The amount of depreciation charged for the year in respect of such assets amounted to £1,894 (2020: £21,664).

32

33

34
10
Investments
Listed investments
Group and charity
2021
’000
2020
£’000
Market value at 1 August 2020
40
57
Net unrealised investment gains / (losses)
15
(17)
Market value at 31 July 2021
55
40
Historical cost at 31 July 2021
6
6
The following listed investments are considered to be material within the
Association’s investment portfolio:
2021
’000
2020
£’000
JPM UK Strategy Income Fund
51
37
Investments in subsidiary undertakings
Charity
£’000
Cost at 1 August 2020 and 31 July 2021
50
The fixed-asset investment in subsidiary undertakings represent the charitable
company’s holding in its wholly-owned subsidiaries as follows:
Subsidiary undertaking
Architectural Association Publications Limited
Hooke Park Educational Trust
Principal activities
Sale and distribution of publications
Dormant
The results of Architectural Association Publications Limited (company registration number 2475416)
are summarised below:
2021
’000
2020
£’000
Turnover
225
369
Cost of sales
(90)
(194)
Gross profit
135
175
Distribution costs
(6)
(23)
Administrative expenses
(126)
(117)
Operating profit
3
35
Retained profit
3
35
Capital and reserves
66
63		 11
Stock
Group
Charity
2021
’000
2020
£’000
2021
’000
2020
£’000
Publications stock
148
170
-
-
Bookshop stock
153
129
-
-
Print Centre
6
7
6
7
Digital Prototyping Lab (DPL)
19
19
19
19
Catering
2
3
2
3
Model Workshop
2
1
2
1
Wood and Metal Workshop
4
3
4
3
334
332
33
33
12
Debtors
Group
Charity
2021
’000
2020
£’000
2021
’000
2020
£’000
Trade debtors
267
586
257
573
Other debtors
73
73
69
71
Prepayments and accrued income
614
521
614
521
Amount due from Architectural
Association Publication Limited
-
-
262
303
954
1,180
1,202
1,468
13
Creditors: Amounts falling due within one year
Group
Charity
2021
’000
2020
£’000
2021
’000
2020
£’000
Trade creditors
447
488
445
489
2021
’000
2020
£’000
Deposits from students
and fees in advance
9,466
6,717
9,466
6,717
Turnover 225
369
Other creditors and accruals
903
1,068
886
1,056
Cost of sales (90)
(194)
Mortgage loans
136
148
136
148
Gross profit 135
175
Long term loan
181
176
181
176
Distribution costs (6)
(23)
Other taxes and social security costs
200
196
200
194
Administrative expenses (126)
(117)
11,333
8,793
11,314
8,780
Operating profit 3
35
14
Creditors: Amounts falling due after more than one year
Group
Charity
2021
’000
2020
£’000
2021
’000
2020
£’000
Retained profit 3
35
Capital and reserves 66
63
34
Mortgage loans
-
136
-
136
Long term loan
1,083
1,271
1,083
1,271
Deposits from students
5,572
4,804
5,572
4,804
6,656
6,211
6,656
6,211
35

----- Start of picture text -----
Listed investments
2021 2020
Group and charity ’000 £’000
Market value at 1 August 2020 40 57
Net unrealised investment gains / (losses) 15 (17)
Market value at 31 July 2021 55 40
Historical cost at 31 July 2021 6 6
The following listed investments are considered to be material within the
Association’s investment portfolio:
2021 2020
’000 £’000
JPM UK Strategy Income Fund 51 37
Investments in subsidiary undertakings
Charity £’000
Cost at 1 August 2020 and 31 July 2021 50
----- End of picture text -----

The results of Architectural Association Publications Limited (company registration number 2475416)
are summarised below:
2021
’000		 2020
£’000
Turnover
Cost of sales		 225
(90)		 369
(194)
Gross profit
Distribution costs
Administrative expenses		 135
(6)
(126)		 175
(23)
(117)
Operating profit 3 35
Retained profit 3 35
Capital and reserves 66 63

14 Creditors: Amounts falling due after more than one year (continued)

Long term loan

Mortgages

During the year ended 31 July 1997, the Association raised funds for the purchase of the lease on the 34–36 Bedford Square premises. An element of the funding for this purchase was in the form of a mortgage secured on the property. One mortgage is repayable over 25 years from May 1997, and the interest is charged at a fixed rate of 9.44% per annum.

In December 2012, the Association had taken a £2,600,000 long-term loan to fund the initial phase of its master plan. This loan is secured over the Association’s freehold and leasehold properties and is repayable over fifteen years from January 2013 by monthly instalments of £18,338 and bullet repayment of £0.8m. The interest rate is set at 2.8% above the base rate for the term of the loan.

During the year ended 31 July 2001, the Association had raised funds for the purchase of the lease on the 37 Bedford Square premises. An element of the funding for this purchase was in the form of a mortgage secured on the property. The second mortgage is repayable over 22 years from September 2000, and interest is charged at a fixed rate of 6.88% per annum.

Analysis of debt maturity (Group and Charity)

----- Start of picture text -----
Amounts payable for mortgage and 2021 2020
long-term loans ’000 £’000
Between one and two years 187 317
Between two and five years 599 580
In five years or more 297 510
1,083 1,407
In one year or less 317 324
1,400 1,731
----- End of picture text -----

15 Lease commitments (Group and Charity)

The group has total commitments in respect of non-cancellable operating leases for land and building falling due as follows:

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|||| |---|---|---| |2021|2020| |’000|£’000| |Within one year|1,894|1,897| |Between two and five years|7,575|7,575| |Between five and ten years|6,997|8,249| |16,466|17,721|

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16 Capital commitments (Group and Charity)

The group has no commitments in respect of capital projects falling due (2020–none)

17 Analysis of net assets by funds (Group)

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General and
revaluation
reserves Restricted 2021 Total
£’000 funds £’000 funds ’000
Freehold properties 2,598 - 2,598
Long leasehold properties 12,347 1,891 14,238
Other tangible fixed assets 4,648 - 4,648
Investments - 55 55
Net current assets 7,166 175 7,340
Creditors due after more (6,656) - (6,656)
than one year
-
Pension liability (417) (417)
19,686 2,121 21,806
Analysis of net assets by funds (Group – Comparatives) General and
revaluation
reserves Restricted 2020 Total
£’000 funds £’000 funds ’000
Freehold properties 2,638 - 2,638
Long leasehold properties 12,607 1,773 14,380
Other tangible fixed assets 4,518 - 4,518
Investments - 40 40
Net current assets 2,397 163 2,560
Creditors due after more (6,211) - (6,211)
than one year
-
Pension liability (742) (742)
15,207 1,976 17,183
Analysis of net assets by funds (Charity) General and
revaluation
reserves Restricted 2021 Total
£’000 funds £’000 funds ’000
Freehold properties 2,598 - 2,598
Long leasehold properties 12,347 1,891 14,238
Other tangible fixed assets 4,648 - 4,648
Investments - 55 55
Investment in subsidiary 50 - 50
Net current assets 7,097 175 7,272
Creditors due after more (6,656) - (6,656)
than one year
-
Pension liability (417) (417)
19,667 2,121 21,788
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37

18 Restricted funds (Group and Charity)

19 Revaluation reserve (Group Charity)

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At 1 August Income Expenditure Investment At 31 July
2020 £’000 £’000 £’000 gains £’000 2021 ’000
John Dennys Memorial Fund 84 - - - 84
Long Leasehold Fund 511 - - - 511
Hooke Park Fund 170 - - - 170
AA Foundation (DPL Fund) 1,098 113 - - 1,211
Miscellaneous School Activities Fund 113 452 (436) 15 144
Total restricted funds 1,976 565 (436) 15 2,120
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’000
Balance as at 1 August 2020 9,835
Balance at 31 July 2021 9,835
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20 Pension schemes

Restricted funds (Group and Charity – Comparatives)

At 1 August
2020 £’000		 Income
£’000		 Expenditure
£’000		 Investment
losses £’000		 At 31 July
2021
’000
John Dennys Memorial Fund
Long Leasehold Fund
Hooke Park Fund
AA Foundation (DPL Fund)
Miscellaneous School Activities Fund		 84
511
170
1,098
97		 -
-
-
-
378		 -
-
-
-
(345)		 -
-
-
-
(17)		 84
511
170
1,098
113
Total restricted funds 1,960 378 (345) (17) 1,976

Defined benefit pension scheme

The Association operates a defined benefit scheme, which is closed to any future service accrual, The Architectural Association (Incorporated) Staff Retirements Benefits Plan.

The contributions are determined based on triennial valuations by a qualified actuary using the defined accrued benefit method. The total pension cost amounted to £130,596 (2020: £130,596).

The most recent triennial valuation was as at 31 July 2018 and showed the market value of the scheme’s assets was £3,565,000 and that the ongoing funding level was 79%. The assumptions which have the most significant effect on the results of the triennial valuation are as follows:

The next triennial valuation will be at 31 July 2021 and will be completed in 2022.

Further details of restricted funds are as follows:

The following information is based upon a full actuarial valuation of the scheme at 31 July 2018, updated to 31 July 2021 by a qualified independent actuary using the FRS 102 guidelines.

Employee benefit obligations

The amounts recognised in the balance sheet are as follows:

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2021 2020
’000 £’000
Present value of funded obligations 4,907 5,001
The fair value of scheme assets (4,490) (4,259)
Deficit in scheme 417 742
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39

20 Pension schemes (continued)

Defined benefit scheme (continued)

20 Pension schemes (continued)

The major categories of plan assets as a percentage of total plan assets are as follows

The amounts recognised in the statement of financial activities are as follows:

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2021 2020
’000 £’000
Interest on pension plan obligations 64 89
Return on plan assets (56) (81)
Total interest expense 8 8
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The changes in the pension deficit are as follows:

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|||| |---|---|---| |2021|2020| |’000|£’000| |Opening pension deficit|(742)|(449)| |Net interest|(8)|(8)| |Actuarial loss|202|(416)| |Employer contributions|131|131| |Closing pension deficit|(417)|(742)|

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2021% 2020%
Gilts 22% 27%
Property 5% 5%
Cash 2% 1%
Diversified Growth Fund 71% 67%
100% 100%
Principal actuarial assumptions at the balance sheet date (expressed as weighted averages):
2021% 2020%
Discount rate 1.5% 1.3%
Rate of increase of pensions in payment 2.7% 2.2%
Rate of increase of pensions in deferment 2.7% 2.2%
Inflation assumption 3.2% 2.7%
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Group personal pension scheme

Changes in the present value of the defined benefit obligation are as follows:

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|||| |---|---|---| |2021|2020| |’000|£’000| |Opening defined benefit obligation|5,001|4,319| |Interest cost|64|89| |Actuarial (gain) / loss|(50)|701| |Benefits paid|(108)|(108)| |Closing pension deficit|4,907|5,001|

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Changes in the fair value of plan assets are as follows:

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|||| |---|---|---| |2021|2020| |’000|£’000| |Opening fair value of plan assets|4,259|3,870| |Return on assets|56|81| |Actuarial gain|152|285| |Employer contributions|131|131| |Benefits paid|(108)|(108)| |Closing fair value of plan assets|4,490|4,259|

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With effect from 1 August 2007, the Association opened a Group Personal Pension Scheme with Scottish Widows which transferred to Aegon in 2012. The employer’s contribution rates vary depending upon the employees’ length of service. The pension cost charge amounted to £109,940 (2020 – £109,286) representing the Association’s contributions payable for the year.

As from 1 April 2014, an Auto Enrolment Pension Scheme had commenced with Aegon. The pension cost charge this year amounted to £341,959 (2020 £308,467) representing the Association’s contributions payable for the year.

21 Limited by guarantee

The guarantees of its registered members limit the charitable company’s liability. Each registered member has agreed to accept a liability not exceeding £1 should the company be wound up. At 31 July 2021, the total of such guarantees amounted to £18 (2020 £18).

22 Related party transactions

During the year, the charity provided services of £119,000 (2020: £113,000) and purchased goods and services totalling £136,000 (2020: £123,000) from Architectural Association Publications Limited, a wholly-owned subsidiary.

During the year, the charity received a grant to help fund the studies of individuals through bursaries and scholarships of £282,000 (2020: £236,000) from the Architectural Association Foundation, a charity registered in England and Wales (Charity Number 328455).

The Association expects to contribute £131,000 to the plan in 2022.

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41

Architectural Association Annual Report 2020–21

Architectural Association 36 Bedford Square London WC1B 3ES T +44 (0)20 7887 4000

Architectural Association (Inc), Registered Charity No 311083 Company limited by guarantee Registered in England No 171402 Registered Office as above

All photos courtesy AA Photo Library and Digital Photo Studio unless otherwise stated Edited and designed by AA Communications Studio