2021-08-31-accounts

The Royal School of Needlework Annual Report and Consolidated Financial Statements 31 August 2021 Company R8glStration Numb8r 12192 (England and Wales) Ch8rity Registration Number 312774

Contents Reports Reference and adminislralive information Report of the Council Statement of corporate governance and internal control 16 Independent auditor's report 24 Financial statements Consolidated statement of financial activities 29 Balance sheets 30 Consolidated statement of cash flows 31 Principal accounting policies 33 Notes to the financial statements 38 The Royal School of Needlework

Reference and administrative information Patron HRH The Duchess of Cornwall President HRH The Duchess of Gloueester Council Members MrAndrew Palmer- Chairman, Mrs Elizabeth Braakenburg Dyce Ms Nicola Clarke, Ms Miranda Corb - Honorary Treasurer. Prof Patsy Cullen Ms Victoria Farrow Mrs Morgan Fowles Ms Deborah Lamb Ms Eleri Lynn Ms Pip Wood Mrs Stephanie Wright" "Member of the Finance and Investment Committee Chief ExecutiVO Dr Susan Kay-williams Registered office Apartment 12A Hampton Court Palace East Molesey Surrey KT8 9AU Auditor Buzzacott LLP 130 Wood Street London EC2V 6DL Bankers Barclays Bank plc 8112 Church Street Walton on Thames Surrey KT12 2QX Investment managers JMFinn&Co 25 Coplhall Avenue London EC2R 7AH Company registration number 12192 (England and Wales) Charity registration number 312774 The Royal School of Needlework 1

Chairman's Introduction Year to 31 August 2021 When academic year 2020-21 began il was with much uncertainty across the board. Students returned lo their courses later than usual, the extra space that was needed lo accommodate people safely-distanced, meant that onsite leaching of short COLJrses was impossible and numbers had to be reduced for the Certificate and Diploma courses. All of this had a potentially serious impact on income and the Council agreed to accept a working budget for the year that was no better than had been achieved in 2019-20, potentially a loss year. However, the exceptional team at the RSN, under the leadership of the Chief Executive had other thoughts and challenged themselves lo perform better than anticipated. Through a combined approach of meeting need and offering new opportunities to people in very different time zones, the RSN team has, this year, done much lo move the organisation forward through student support, online teaching, and offering an ancillary programme that had not previously been possible. Short courses filled as quickly as they were posted on the website and many had lo be re-run and offe￿d al differenttimes lo meet demand. Responding to this unprecedented demand, the RSN introdu￿d INO year-long courses lo play to its strengths.. that of technical excellence and multiple tutors all taught to the same standard who could deliver the course. Such was the demand that one filled twice, and the other course filled four times over and extra tutors were brought in. While students had returned lo Hampton Court Palace for the Certificate and Diploma it was less feasible lo operate at the satellites, bul there was still demand. After much planning it was decided to start offering the Certificate online in January 2021. This was a very bold step, something that had not been thought possible before, but this year the team and tutors have made il work. This course is now being laughl from New Zealand lo Chile and reaching many new people. Introducing twice-monlhly talks was another relevant idea. This enabled the RSN to engage with an even wider Community, beyond those who can stitch. Fashion and textile enthusiasts, historians and students were all able to access the talks first live and later on demand, enabling the RSN to re-engage with some of its audience. In 2020 one of the highlights of the year would have been the US Summer School. While this was cancelled many North American supporters left their payments with the RSN in the hope of something being possible a bit later. While travel was not possible in summer 2021 , that did not stop the team developing the RSN'S first online International Summer School which allracled many new slilchers as well as regular RSN attendees. Finally the overall result was income exceeding expenditure and for this all the RSN team of staff and tutors are lo be congralulaled. However, as people begin lo move around more, it could be a challenge lo fill classes online so it will be a fine balancing act to continue meeting need and growing both the onsite and online aspects of the RSN'S work. Looking ahead, the next academic year will tske the RSN into its 150th anniversary. This is a tremendous achievement and il will add further momentum and energy lo the organisalion to develop new ideas, new courses and new opportunities for the future. Having survived the last eighteen months, it is even more clear how the RSN can uphold its values of qLJalily, tradition and innovation and play a major role noljusl in embroidery education and execution, but also through stitch to support mental health and wellbeing, and in the future of hand embroidery. There is much opportunity for the RSN to flourish. The Royal School of Needlework 2

Chairman's Introduction Year to 31 August 2021 This is my final year as Chair of the Royal School of Needlework.. I will step down in 2022, and the search is currently on, to find my successor. I couldn't let this moment pass without saying what an honour and 8 pleasure it has been to be a Trustee and more recently Chair of the RSN. The work that we do is quite extraordinary.. whether il be in the Studio or in the Classroom. And the passion and energy shown by all who work for and with us is inspiring. I would like lo express my thanks lo all those who have helped us - to all our Supporters, our Friends, our Tutors, and especially to Susan and her staff.. thank you for all that you have done lo ensure that we have a bright and exciting future. I wish you all the very best for the next 150 years. Andrew Palmer Chairman The Royal School of Needlework 3

Report of the Council Yearto 31 August 2021 The Members of the Council las Trusleesl, who are also the directors for the purposes of company law, present their annual report together with the audited consolidated financial statements ofThe Royal School of Needlework for the year ended 31 Augu512021. The report has been prepared in accordance with the Charib'es Act 2011 and is also the group report of the directors for the purposes of the Companies Act 2006. The reference and administrative information sel out on page 1 and the Chairman's Introduction set out on pages 2 to 3 also form part of the reporL The financial statements have been prepared in accordance with the accounting policies on pages 33 to 37 of the attached financial slatemenls, and comply with the charitable company's memorandum and articles of association, the Charities Act 2011 and 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 IFRS 1021 and comply with the Office for Students, Accounts Direction 2020121. ACTIVITIES AND ACHIEVEMENTS The values of the RSN are Quality, Tradition and Innovation all of which have been demonstrated throughout the year through teaching, the practise of Stitch in the RSN Studio and promotion. Public Benefit During 2020-21 the RSN actively promoted stitch for mental health and wellbeing and this was appreciated by long-standing and new customers around the world. This year, classes andlor talks have been enjoyed by over 2,500 people. We have received many comments from people for whom their class was their only communication with the outside world during the second lockdown and for some, even during the periods in belMeen il was their only social contact. For example a lady in France told us that she was in isolation and her lime in weekly Technical Tuesday class was the only time she fell in contact with anyone else. Since September 2020 the RSN has offered fortnightly talks. These are open to anyone for a donation and we have welcomed hundreds of people each time from diverse countries all over the world. We ￿ceIve extensive encouragement on the night and afterwards, thanking the RSN for the talks for their range and content. There has been strong feedback to continue them, which we are doing through 2021-22. The RSN is the international leader in technical hand embroidery and has currently around 40 active teachers all trained to the same standard, so we have played to our strengths to offer technical evening classes which have not previously been possible since the 1980s. This so met need that we had to pul the class on four times on the same day. The RSN is the only embroidery organisalion that has the capability of 8 team of tutors able to teach the same technique to the same standard. In particular, being online means we have made ourselves more accessible lo disabled people to participate because they do not have to overcome the transport challenges. Frances told us she only leaves the house to go lo the doctor. Through the online classes and especially the Summer School she was able to fully participate in something, regardless of her disability and to meet with other people. Others a¢kno￿edged that by not having lo pay for travel and accommodation they could take more classes. The Royal School of Needlework 4

Report of the Council Yearto 31 August 2021 ACTIVITIES AND ACHIEVEMENTS {conlinuedl Publ1¢ Beneflt Icontinuedl All of this shows that despite having no exhibitions this year, the RSN has offered a very wide range of public benefit. Teaching Short courses came to the fore this year. With ongoing lockdowns in different parts of the world and a retieenee to go out even among those not locked down, short courses provided a great opportunity for people lo do something with others, even if online. Over 900 people participated in short courses, excluding summer school and bespoke classes, with each person on average booking more than two classes. Tutors mixed the traditional with more innovative subject matter which was well re￿ived. In particular, new for this year were evening classes, something the RSN has not offered since the end of the 1980s. As the base of the short course programme were two courses which ran across the year, one monthly and one weekly. These were aimed at building students, skill levels but also about building community and laying down a reliable base of income.. Technical Tuesdays harnessed the RSN'S particular skills of the highest technical standards and a group of teachers all taught lo that same standard so three teachers ran four classes on the same day, while the monthly sampler programme was laughl by one tutor. Both of these were well received and offered a solid base lo the budgeted income. Also lockdown offered opportunities to set courses at a range of times. Take-up will be reviewed lo assist with planning going forward, atthough it will always be true to say that as soon as people start going out more, some of the times offered may become less popular. Certificate and Diploma Certificate and Diploma is the backbone of the RSN'S leaching programme in terms of number of participants from many different countries. With the lockdowns and changing rules even within the four countries of the UK the RSN needed lo find new options. Studio Director and Head of Education Anne Butcher worked hard lo redevelop the whole course so that we could effectively introduce new students lo the RSN and the course, enabling them to really understand the standards and rigour of the course. A whole new inlroduclory programme was developed comprising introduction lo the RSN, lo the course, to the first technique and lo pieces from the Collection even before the students began lo think about their project. There was then guidance on design, on framing up and sampling of basic stitches all before the students began. This extra effort has paid off and assessment of the pioneers, pieces showed that students had achieved the expected standard. This was all helped not just by the online teaching bLJt by sharing images with the tutors via WhalsApp so that the tutor could enlarge the images to check the work. The only technique which has proved more problematical online is silk shading. This is due to the differing specs of computers and screens so that a true colour representation is often difficult. After much consideration it has been decided lo test out a small range of botanicals that can be pre colour-coded at base so that we are sure that the students have the right range of shades and il will give them more confi'dence in their shading, especially at this level it is about correct technique and achieving effective blending. The Royal School of Needlework 5

Report of the Council Yearto 31 August 2021 ACTIVITIES AND ACHIEVEMENTS {conlinuedl Certlfleate and Dlploma Icontinued) The course has been well received by students and we are now planning courses into 2022 for new starters on three lime zones, recruited through online Open Days. Meanwhile Hampton Court continued lo offer onsite classes except during the main lockdown between January and March 2021. International Summer School Vvhile the uncertainties of the pandemic linger on, the RSN recognised that il was not going to be possible for ils people- tutors or students- to travel even into the summer. So, lo give people the opportunity lo still feel like they were going to have a'holiday, the RSN established the first online International Summer School. This reached 273 people across 17 countries for anything from 2 to 6 days. Of those, some 89 were experiencing their first RSN class, some had booked for Lexington in 2020 bul as that was cancelled, this was their first actual RSN experience. The event comprised Classes, talks and receptions to try to make il as like the normal summer school experience as possible. Plus, the students not only received their kits they also received a relevant box of ancillary items lo reinforce the professionalism of RSN stitch (hoops, binding to wrap them, tissue paper and a bag lo keep work clean, pen, pencil and notebook for the details and a mug for the all-important breaks). All of this added to the event and response from customers was fantastic. l just wantgd lo Igt you know what a fantastic presentation you organized for the summer school boxesl It Was such 8 treat to see all the speci81 goodies lucked in with the project kits. Additionally, the box arrived very quickly in the US so Ive had plenty of time to read and re￿ad the directions. With such a beginning, the courses will certainly be stellarl Thanks foryour ha￿ work to make this so pleasant for n79. Donna Winn Talks and Bespoke classes Commencing in September 2020, the RSN decided to offer talks a month online, one was more about the RSN and usually given by the Chief Executive and one was more about the Collection led by contextual studies lecturer Amy Hare. In the eady days and through the winter lockdowns these reached many people, not just in this country but internationally. The highest number was over 600 people for one of the Collection lectures but audiences of 400 were not unusual. Over 1,750 people participated from a total of 35 countries including Chile, Ghana, South Africa, Russia and Singapore as well as those more usually linked to the RSN. While the webinar format meant that no-one other than the presenters could be seen, this did not stop the audience from signing in to tell us where they were from and ask questions which were answered during the presentation. As such, this created a strong community and many of the audien￿ have continued following the sessions live or via the recordings. OnTr companies began to open up, the RSN retumed lo some of its partner organisations holding one-off face lo face courses where large airy rooms existed and they have been well supported. This is something we plan to continue and expand in 2021-22. The Royal School of Needlework 6

Report of the Council Yearto 31 August 2021 ACTIVITIES AND ACHIEVEMENTS {conlinuedl Talks and Bespoke classes {continuedl All of these four areas helped the RSN lo increase its income in 2020-21. Core programmes Degree The Degree programme worked in a hybrid manner throughout the year. All students started on site although quickly second and third years were working offsite with online luilion and support. All went home during the second main lockdown but continued working. From Easter, first years returned although by then many second and third year students had abandoned their accommodation and established their studios al home so continued there until the end of the year. Through the year support for students was in excess of standard contact hours, which were already higher than for many other courses. With this support and the ability to carry on their work from home, students were motivated to achieve their best. This was something particulady noted by the Extemal Examiner. Thi5 resulted in competition wins al the Bradford Textile Competition (First, Third and Commended in the embroidery category) and the third year achieved nine first class degrees and five upper seconds. While inevitably some external projects had lo be curtailed, students did have the opportunity to participate in a project with Sheme shoes and by the end of the year a numberwere working for couture houses al their siles. Students also participated in the Hand and Lock awards resulting in Degree students achieving three third places in Textile Art and Fashion. Open Days for new students were held online and, by the end of the year, in person. These allracled the largest number of applicants ever as the course establishes its reputation. During the year the RSN also notified the University for the Creative Arts that we would be looking lo change validating partners lo Kingston University School of Art. This process will continue into 2021-22. Future Tutors As with the Degree, the Future Tutors began in class, taking over additional space when all were being laught, to achieve distancing requirements. During the January lockdown they transferred lo online classes although some adjustments were needed to the planned timetable. They mostly returned after Easter although some classes were run with students in class and at home. The two third year students worked with the Studio team to help create St Amphib8lus's shrine eanopy for Sl Albans Cathedral. Being able lo work on this large project through all stages gave them a good understanding of large-scale pieces and their challenges. The graduating students both achieved distinction and have since commenced their teaching tta￿erS for the RSN. The Future Tutors adminislralor chose to return to leaching al the end of the year and this gave the opportunity for the role to be reviewed and it was split into Course Leader and Course administrator, wth new appointments being made at the beginning of the new academic year. The Royal School of Needlework 7

Report of the Council Yearto 31 August 2021 ACTIVITIES AND ACHIEVEMENTS {conlinuedl End of year celebratlons Thanks lo the space afforded by the east Front Gardens of Hampton Court Palace the RSN was able lo hold ceremonies for our graduating Certificate, Diploma, Future Tutor and Degree students. The first three of these were held on the same day when the Palace was not open to the public. Held in the gardens we also offered a direct broadcast on Instagram Live so that students from around the world could be a part of it. This was very well received, especially if they learned they had won a prize or special commendation. For the Degree students RSN held an interim graduation on the east front lawn, inviting students, parents, and partners. Many students dressed for the part which was reciprocated by the Chief Executive. This event was very well received as it was not possible lo have a full UCA graduation due to the Covid reslriclions. These celebrations, though simple in themselves and without the usual exhibitions, really helped the students to feel a proper sense of conclusion and achievement which is so vital In helping them lo move on. RSN Studlo The main project of the Studio this year was the creation of St Amphibalus's shrine canopy for St Alban's Cathedral. Working even through lockdowns, the Studio team worked as a bubble lo achieve the work on time for the dedication of the shrine in its new location within the Cathedol. The challenges for creating this were the size of the piece and that il would be located over three melres above ground which meant using bolder techniques to stand out and give the desired effect. Now installed, the Cathedral stsff and worshippers have thanked the RSN for their work and commented on how the ple￿ glows in the light. This and the conservation of Sl Alban's shrine has started a very positive partnership and the Cathedr21 plans lo bring additional ple￿$ for cleaning and conservation over lime lo benelil from the specialist skills of the RSN Studio. Other work during the year was as varied as ever from sampler conservation to the e￿atIon of door hangers for a special event. This year il was also possible to ensure the Future Tutors received all their training within the normal academic year. Promotion Social media has been at the heart of the RSN'S promotion of its work in 2020-21. The RSN has grown its audiences significantly on Instagram, Facebook and YouTube. Marketing has used il extensively, along with selected other media lo reach new people so that one third of those participating in the International Summer School were taking their first course with the RSN. For those who already know the RSN, the monthly e-news is a major source of sales with a regular spike of interest every time it is sent out. All the income-generating parts of the RSN have benefited from the work of the marketing team helping not simply to build aUdIen￿S but also lo build community. The Royal School of Needlework

Report of the Council Yearto 31 August 2021 ACTIVITIES AND ACHIEVEMENTS {conlinuedl Retall Retsil remained online throughout the year although people could organise to click and collect if they were going to be onsite. Inevitably the frenetic buying of first lockdown abated somewhat but there were steady sales through the year. The next challenge for retail will be to open up the physical shop at the weekends when Hampton Court Palace is open and to launch the special items for the anniversary. RSN Friends The number of Friends grew over the year as more people realised that they could benefit, regardless of geography. Friends receive discounts on classes, the International Summer School, the RSN shop and on the talks. Two of the talks in December and April were also made free for Friends as a special thank you to them for supporting the RSN. Both of these events were well allended. Due lo lockdown the winter newsletter was sent by email to m051 people, except those Friends who do not have the internet. While some Friends, especially those in the US, might prefer the virtual version lo save postage, we also believe that many Friends use the physical version as a way to interest other people, passing il on to friends and family which in turn attracts a new audience, so il is planned to continue with the paper newsleller for most Friends. Special Projects During the year we brought back from fudough the team working on the RSN Stitch Bank and aimed for a revised launch date of September 2021. Prior lo the public launch the RSN held introductions lo the project for journalists so that they could promote it in preparation for launch. This proved an effective tool lo reach not only news media but also other audiences such as cumtors and historians. The RSN Stitch Bank will be an ongoing activity and will be one of the legacy projects of the 150 anniversary. IT During the year we have further developed our IT capabilities. Our IT needs were probably seen al their most complex in all aspects of the International Summer School from the challenges of offering the different packages for booking through lo offering multiple courses al the same ts'me during two weeks in July. This will be an ongoing area for development. Stafflng Over the course of the year all staff on furlough were brought back and then there was a review of needs leading lo a further reslrucluring. As a result of the income realised this year and its potential for the future, the review of needs highlighted a requirement for additional staff with specific skills who will be engaged in 2021-22 in relation to IT, fundraising, promotion, and support for the Chief Executive. These additional posts will add vital manpower to support a team who have worked extremely hard over the last 18 months, well beyond their scheduled hours. The Royal School of Needlework

Report of the Council Yearto 31 August 2021 ACTIVITIES AND ACHIEVEMENTS {conlinuedl Fundraislng declaratlon The RSN has lo raise or earn all ils income. Earned income Comes from the courses il runs as the central part of its charitable purpose. Funds are raised to support core programmes such as bursaries for Degree and Future Tutors, the core Future Tutor course and also for special projects such as the RSN Stitch Bank. During the year the RSN has undertaken one appeal lo Friends to support Student bursaries and has continued to fundraise from individuals and trusts for the RSN Stitch Bank and the Digitisation of the Collection programme. The RSN abides by the codes of the Fundraising regulator and GDPR requirements and removes from appeal mailings any person who requests this. This year the RSN received no fundraising complaints. Donors to the RSN included many of the City Livery companies.. Broderers, Dyers, Girdlers, Gold and Silver Wyre Drawers, Haberdashers and Needlemakers," and from charitable Irusls". Barbara Whatmore Foundation, Radcliffe Trust, Newby Trust, Knights of the Round Table, Sainsbury Family Charitable Trusts, Arts Society Westminster, Arts Society Greater London Area, Coals Foundation Trust and the RK Trapp Family Foundation. The largest individual donation was £50,000 from an RSN Special Supporter. The RSN is extremely grateful to all ils supporters and customers. Review of overall perfomiance The RSN team worked with passion and commitment lo achieve the exceptional income and customer satisfaction this year. This was very much driven by two imperatives". the survival of the RSN but, more than that, meeting the need of current and new supporters across the world. The RSN realised it could provide teaching of a skill that could easily be done in lockdown, creating a community and camaraderie when so many people were limited to their own four walls. Furthermore, in significantly developing the principal income generating programme, the Certificate and Diploma in Technical Hand Embroidery which is a unique course of the RSN, it has opened up this programme to the world and is now taught online in three time zones, enabling many more people to participate. Beyond this, the two weeks of the International Summer School reached new heights in terms of outreach and engagement. We had so many positive comments and will repeal this but with a number of differences in 2022. The Trustees acknowledge and recognise the achievement of the small staff team in all they have done this year to stabilise the finances and to take the RSN forward. The Royal School of Needlework 10

Report of the Council Yearto 31 August 2021 FUTURE DEVELOPMENTS The YearAhead The year 2021-22 will see the start of the RSN'S 150th anniversary. It began with the launch of the RSN Stitch Bank in September 2021, featuring the first 150 stitches. The main event of the year will be the exhibition al the Fashion and Textile Museum from April to September 2022 and many of the activities of the anniversary year will be hung around this. In the summer, the RSN will run its second International Summer School but this time will feature face lo face classes al Hampton Court Palace as well as online classes for those who Cannot travel. In this way we will keep the focus of the anniversary year as London, looking to travel Inlernalionally again for 2023. Smaller exhibitions will also be held in Ely Cathedral and in Sunbury and two pieces from the Collection will be Iravelling lo the US for an exhibition. We will also work on raising money to stsrt the Digitisation programme and as a legacy pr[￿￿8mme of the anniversary the RSN wants to establish a community-based mental health and wellbeing pr￿ramme based around stitch. The aim is to offer this lo a range of communities initially as a pilot programme lo show the opportunities that stitch can bring in terms of positive mental health and connectivity for those on their own. Behind the scenes there will be more work on IT lo enhance our capabilities, redeveloping the website and developing a stsnd-alone site for the Studio. The RSN will also begin lo consider how we might develop an MA programme and also how we re-present the Studio so that lo external people it appears a stand-alone enterprise. As a whole, the year will be an opportunity to promote the RSN across a range of platforms to reach new audiences because far from seeing it as an end, the anniversary is seen more as the launch of the next 150 years. The RSN will continue lo demonslrale its values of Quality, Tradition and Innovation through Teaching, Consetwalion and new Commissions and through Promotion. The Royal School of Needlework 11

Report of the Council Yearto 31 August 2021 FINANCIAL REVIEW Flnanclal report for the year The consolidated statement of financial activities for the year shows a nel surplus (before investment gain and losses) of £109,19512019120'. deficit of £121,680). The overall income for the year 2020121 amounted lo £2,272,430 12019120.. £1,984,354), a year on year increase of 15 %. Income from donations and legacies decreased by 100/0 to £430,171 12019120. £475,858). This includes £129,49612019120 £187,659) of grant income from the Govemment Job Retention Scheme and other Local Government grants. Donations and legacies remain an extremely important source of income, particulady for the Degree and FLJture Tutor programmes, neither of which receives any government funding, and for all new inilialives. The trading subsidiary's income of £288,112 12019120.. £278,555) increased by 3Q/o as the Studio activity started lo increase in the second half of 2020121. Income from charitable School activities amounted to £1,405,56412019120". 21,059,98812 33 /0 increase year on year due to the popularity of online learning and the International Summer School that was held in July 2021. Investment income decreased by 13/0 to £148,58312019120. £169,953). The ￿striCted fund income of £177,142 12019120". £120,822) consisted of reSoU￿S earmarked for the Degree and Future Tutor programmes, the RSN Stitch Bank and Collection and Archive Digitisation Campaigns. The increase compared with last year is mainly due lo appeals lo Friends in 2019120 being focused on unrestricted donations following the Covid- 19 pandemic. Restricted expenditure of £210,21212019120". £180,204) was incurred against the Degree and Future Tutor programmes, for the RSN Slilch Bank project and also the ongoing depreciation on the capital costs of the set-up of the new classrooms at Hampton Court Palace in 2015. Total expenditure for the year was £2, 163,235 12019120. £2, 106,0341, an increase of 3 /0. Whilst variable staff costs increased in 202012110 help deliver the charitable School aclivilies, fixed staff costs were lower as four full time posts were made redundant during 2019120 as a result of the Covid-19 pandemic. Net realised and unrealised gains on investments for the year amounted to £887,626 12019120.. £22,433 net realised and unrealised losses). At the balance sheet dale, nel assets tolalled £6,297,516 12020. £5,300,695) of which £2,711,355 12020.. £2,158,779> are unrestricted. The Royal School of Needlework has an investment of £100 12019120.. £1001 in the share capital of RSN Enterprises Limited, a wholly owned company which is incorporated in England and Wales. The net trading income ofthe company for the year amounted to a deficit of £8,572 12019120 deficit of £25,733). The Royal School of Needlework 12

Report of the Council Yearto 31 August 2021 FINANCIAL REVIEW Icontinuedl Reserves pollcy and flnanelal posltlon The Council has examined the requirements for free reserves, i.e. those unrestricted funds not invested in tangible fixed assets, designated for specific purposes or otherwise committed. During 2020121, the Council reviewed the Charity's reserves policy and updated it to be five months, total expenditure al any one lime plus the additional commitments on the licence at Hampton Court. In coming lo this conclusion, the Council considered the nature of the charity's wort( and the discretionary nature of a significant proportion of income. They decided that itwould be prudent to include the commitments in the licence in the reserves policy, given that it is such a significant part of the Charity's fixed costs. Based upon budgeted expenditure levels for 2021122, the maximum expenditure for five consecutive months plus commitments on the Hampton Court licence would be in the region of £1,629,000. The Council is of the opinion that this provides sufficient flexibility to cover temporary shortfalls in incoming resour￿$ due lo liming dIfferen￿S in income flows, adequate working capital to cover core costs and will allow the charity to cope with and respond to unforeseen emergencies whilst Specific action plans are implemented. The charity has total reserves of £6.297,51612020.. £5,300.6951. This includes endowment funds and restricted funds of £3,275,76712020: £2,808,801) and £305,57412020: £328,2951 respectively and designated funds of £610,000 12020.. £610,000). After deducting funds represented by tangible fixed assets and shareholders, funds, this leaves free reserves al 31 August 2021 of £2,057,03512020'. £1,505,472). There is currently an eX￿$S of free reserves over the target level of £1,629,000. Given the current economic uncertainly, the Council is of the opinion that the level of free reserves held is prudent at this time. The Council has continued to formally designate £610,000 towards the planned developments within the Strat￿1¢ plan 12020.. £610,000). The Council will review this designation on an ongoing basis. The funds that are designated are for future strategic projects, including the ongoing RSN Stitch Bank project and digitisation of the archive. Investment policy Under the Memorandum and Articles of Association, The Royal School of Needlework has the power to make any investments, which the Council sees fi'l. The Finance and Investment Committee keeps a close eye on investments and returns lo ensure maximum benefit for the RSN and meetings are held regularfy with the investment managers to ensure that the balan￿ of the portfolio remains appropriate particularly given political uncertainties and the ongoing potential for market volatility. The tenor ofthe investment policy remains to maintain the real value ofthe RSN funds through continued growth of the asset base, seeking lo achieve this with an appropriate balance bel￿een sustained cash flow and capital growth, to generate over the long term, defined as a period of not less than five years, a total return on capital invested that reflects the risk appetite. The Royal School of Needlework 13

Report of the Council Year to 31 August 2021

FINANCIAL REVIEW (continued)

Investment policy (continued)

During the year, the Council also considered and reaffirmed its risk appetite for the investments, which has been mandated as medium. During 2020/21, markets have continued to recover from the 23 March 2020 lows, and so by the charity’s year end of 31 August 2021 the investment portfolio had risen to £6,181,660. Over the past year the portfolio has returned +18.7% (in total return and net of fees), outperforming the 18.3% return in the 70% FTSE AllShare/30% FTSE UK Gilts benchmark. The portfolio now has a 10 year annualised return of +8.9% compared to the benchmark return of 6.8% per annum and the CPI+3% return of 4.9%.

Since 31 August 2021 the value of investments held by the RSN has fluctuated as we move between hopes for a strong global economic recovery and fears of another Covid variant and higher inflation, while the ongoing Russian invasion of Ukraine has further unsettled investors’ nerves. The overall value of the RSN’s investments decreased by 9% in the first half of 2021/22 to £5,670,471 on 1 March 2022. The Finance and Investment Committee is continuing to monitor the portfolio and its risk appetite closely by holding regular meetings with the investment managers.

STRUCTURE, GOVERNANCE AND MANAGEMENT

Constitution

The Royal School of Needlework was founded in 1872 and incorporated in England and Wales, on 16 April 1878 as a company limited by shares, the word ‘limited’ being omitted by licence of the then Board of Trade. The RSN is also registered as a charity with the Charity Commission, under the number 312774.

Council Members’ Induction and Training

On appointment, Council members are provided with the Charity Commission publication about trustees’ roles and responsibilities, are invited to come and spend a day with senior managers and their teams learning about the work of each team, and are provided with copies of the annual report, strategic plan and campaign presentation.

Council members have been provided with Charity Commission guidance on fundraising regulations. Council members are informed of training courses run by our advisors, which they may attend.

Organisational Structure and Key Management

The key management personnel of the RSN in charge of directing and controlling, running and operating the charity comprise the Council and the Chief Executive, Dr Susan KayWilliams. The Chief Executive is supported in day-to-day operations by a small senior management team and other staff. The RSN is a small organisation with at most only three levels of hierarchy but in practice, much of it operates at a more hands-on level.

The salary of the Chief Executive is set by the Council. The salaries of all staff are considered annually by the Finance and Investment Committee and approved by the Council.

The Royal School of Needlework 14

Report of the Council Yearto 31 August 2021 STRUCTURE. GOVERNANCE AND MANAGEMENT {conlinuedl As at 31 August 2021, the RSN employed eight full time and 19 part-lime management and administrative stsff and core teams of four part lime stitchers in the Studio and 17 part time tutors. In addition, there are around 20 volunteers who assist with the library, donated items, Studio Talk and Tours, marketing and data entry. Tradlng subsldlary The RSN has a wholly owned trading subsidiary RSN Enterprises Limited, a company incorporated in England and Wales with a share capital of £100. The principal activity of the company is that of undertaking the commercial and retail activities of The Royal School of Needlework. The company comprises the RSN Studio, which undertakes commissions for individuals and public bodies and a retail outlet within the premises of The Royal School of Needlework. The retail outlet also offers products for sale via its website. All taxable profits of the trading subsidiary are donated to the School under the Gift Aid scheme. During the year the company made a loss of £8,57212019120.' loss of £25,733). This report is approved by the Council on 1610212022 and signed on its behalf by.. Chairman Chief Executive The Royal School of Needlework 15

Statement of Corporate Governance and Internal Control Year to 31 August 2021 The following statement is provided lo enable readers of the annual report and financial statements of the Royal School of Needlework to obtain a beller understanding of ils governan￿ and legal slruclure. The statement covers the period from 1 September 2020 10 31 August 2021 and up to the date of the approval of the annual report and financial statements. The Royal School of Needlework endeavours lo conducts its business., Having due regard to the UK Corporate Governance Code 2018 in so far as il is applicable to the Higher Education Sector. Complying with Office for Students on-going conditions or regulations and terms of conditions of funding as well as other regulatory responsibilities. We have adopted the UK Corporate Governan￿ Code. We have reported on our Corporate Governance arrangements by drawing upon best practice available, including those aspects of the UK Corporate Governance Code that we consider relevant to the Higher Education Sector. The Trustees recognise that, as a body entrusted with both public and private funds, it has a particular duly lo obseNe the highest stsndards of corporate governance al all limes. Legal Status The Royal School of Needlework is a registered charity and a private company limited by shares. The Iruslees are the shareholders and their liability is limited to the value of shares held. The Trustees, who are also Council Members and referred to as both in this report, confim) that they have due regard for the Charity Commission's guidanee on public benefit and that the required statement appears elsewhere within these financial statements. Council and Trustees The governing body of the RSN is the Council. This comprises the Chaiman, Honorary Treasurer and up to 12 ordinary members. Members of the Council (who are also Trustees of The Royal School of Needlework for the purposes of charity lawl who served during the year and up to the dale of this report were.. The Royal School of Needlework 16

Statement of Corporate Governance and Internal Control Year to 31 August 2021 Council mambars IDir•ctorsl Appoint8d l Ratirad Mr Andrew P8ltner (Chairman). Mrs Elizabeth Br8akenburg Dyce Ms Nicola Clarke. Ms Miranda Corti (Honorary Treasuieil. Appointed 5 October 2021 ApFKJinted Honorary Treasurer 16 February 2022 Prof Patsy Cullen Mrs Caroline De Guitaut Retired 21 April 2021 Ms Victoria Farrow Mrs Morgan Fowles Miss Samantha Hoe-Richardson IHonorary Tre8suierl' Ms Deborah Lamb Retired 5 October 2021 Ms Eleri Lynn Ms Reena Pa5t8kia Appointed 5 October 2021 Retired 10 JanLJary 2022 Appointed 5 October 2021 Ms Pipwood Mrs Stephanie Wright. indicates members of the Finance and Investment Committee, which met four limes during the year under the chairmanship of the Honorary Treasurer. In addition to the Council there is one committee which reports to the Council.. The Finance and Investment Committee, usually meets four times a year and ensures that the finances of the RSN are well managed and accurately reported, and that the investments are handled in accordance with the agreed risk appetite. During the year working parties comprising Trustees and staff have looked at the RSN Strategic Plan and at the exhibition al the Fashion and Textile Museum in 2022. Board of Trustees. intorests The Board of Trustees are shown above and except for any instance mentioned above have served throughout the year. All Council Members al 31 August 2021 held one £10 share 12020.. one £10 share) in the capitsl of the charitsble company. The Finance Director maintains a register of financial and personal interest of the members of the Council. This can be obtained by contacting Hannah Warwick at the RSN'S registered office Isee page 11. The Royal School of Needlework 17

Statement of Corporate Governance and Internal Control Year to 31 August 2021 Statement of the Councll's responslbllltles The Council Members Iwho are also directors of The Royal School of Needlework for the purposes of company lawl are responsible for preparing the report of the Council and financial statements in accordance with applicable law and United Kingdom Accounting Standards (UK Generally Accepted Accounting Praclicel. Company law requires the Council to prepare financial statements for each financial year, which give a true and fair view of the slate of affairs of the charitable company and the group and of the income and expenditure of the group for that period. In preparing these financial slatemenls, the Council is required lo.. select suitable accounting policies and then apply them consislenlly., observe the methods and principles in Accounting and Reporting by Charities.. Statement of Recommended Practi￿ applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland IFRS 1021., make judgements and estimates that are reasonable and prudent, stste whether applicable United Kingdom Accounting Stsndards have been followed, 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 lo presume that the charity will continue in operation. The Council is 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 and the Charities Act 2011. 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 Council Members confirms that.. so far as the Council Member is aware, there is no relevant audit information of which the charitable company's auditor is unaware,. and the Council Member has taken all the steps that helshe ought to have taken as a trustee in order lo make hIMse￿1herse1f aware of any relevant audit information and lo estsblish that the charitable company's auditor is aware of that information. This confimalion is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 200S. The Council is responsible for the maintenance and integrity of the corporate and financial information included on the charitable company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The Royal School of Needlework 18

Statement of Corporate Governance and Internal Control Year to 31 August 2021 Meetlng Procedures Formal agendas, papers and reports are supplied to the Board ofTrustees in a timely manner, prior to Council meetings. Briefings are also provided on an ad hoc basis. Reports include overall financial performance of the organisation together with other information such as perfomianTr against funding targets, proposed capital expenditure, quality matters and personnel related matters such as health and safety issues. The Council met formally 6 limes in 2020121. The Royal School of Needlework has a strong and independent non-executive element and no individual or group dominates its decision-making process. The organisation considers that each of its non-executive members is independent of management and free from any business or other relationship which could materially interfere with exercise of their independent judgement. There is a clear division of responsibility in that the roles of the Chairman and Accounting Officer are separate. Appointmentto Council Council members serve a term of three years and may serve a second temi of three years before retirement. Approximately biennially, the Council members undertake a skills analysis, the Chairman and the Chief Executive review the skills available, the likely retirement dales of Council Members and the future needs of the charity in order to stsrt searching for new potential Council members. As a result of that and the resignation of the academic Trustee, the Chief Executive and Chairman undertook the search for additional Trustees during 2020-21 and three appointments were made in October 2021. Council Perfomiance The Council has made a strong contribution to the improvements made in 2020121 through the selling of challenging targets with regular scrutiny of perf0mlan￿. There is strong perfomiance management al Council meetings. The Council provides robust scrutiny and challenge. Trustees are pro-active in their oversight of the organisation and are involved in the planning and discharging of Council business. Commlttees Finanee and Investment Committee The Finance and Investment Committee is responsible to the Council of TrLJStees in discharging its responsibilities for monitoring the integrity of the RSN'S financial slalemenls, the effectiveness of financial controls with regard lo internal risk assessment, the performance and objectivity of external auditors and the performance of investments. The Royal School of Needlework 19

Statement of Corporate Governance and Internal Control Year to 31 August 2021 Commlttees Icontinuedl Finance and Investment Committee (continued) The Committee is responsible for the following.. To appoint external auditors and agree the audit fee, meet with the external auditors lo discuss the scope and nature of the audit and lo discuss the findings included within the management letterand management responses. To take the lead in reviewing the financial risks, aiming lo minimise and mitigate any that appear or will potentially impact the charity and that are within its power to affect. To satisfy itself that satisfactory arrangements are in place to manage the RSN'S investments and to monitor their performan Internal Control Scope of responsibility The Council is ultimately responsible for the organisalion's system of internal control and for reviewing its effectiveness. However, such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurdnce against material misstatement or loss. The Council has delegated the day-lo-day responsibility to the Chief Executive, as Accounting Officer, for maintaining a sound system of internal control that supports the achievement of the organisation's policies, aims and objectives, whilst safeguarding the public funds and assets. The Chief Executive is also responsible for reFX)rting to the Council any material weaknesses or breakdowns in internal control. The pU￿oSe of the system of internal control The system of internal control is designed lo manage risk to a reasonable level rather than lo eliminate all risk of failure and can only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an on-going prO￿s$ designed to identify and prioritise the risks to the achievement of organisab'on policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and lo manage them efficiently, effectively and economically. The system of internal control has been in pla￿ at the organisation for the year ended 31 August 2021 and up to the dale of approval of the annual report and fi'nancial ststements. Rlsk management The Council and senior managers have reviewed the principal financial, reputational, operational and governance risks that might impact on the organisation during the year, especially in the light of Covid and its impact and updated the risk register accordingly. The review enables the RSN lo reflect upon the impact of both internal and external changes and the longer-lerm impact they may have, ensuring that mitigation is updated to respond to the changes. While known risks can be mitigated there will always be unanticipated events of which the ongoing Covid situation has been an unwelcome example. The Royal School of Needlework 20

Statement of Corporate Governance and Internal Control Year to 31 August 2021 Rlsk management Icontinuedl The Finan￿ and Investment Committee continues lo lake the lead in reviewing the financial risks, aiming to minimise and mitigate any that appear or will potentially impact the charity and that are within its power to affect. The Council has reviewed the RSN'S internal financial controls and is satisfied that these are appropriate in minimising any risks to its funds. The top four risks that could have a negative impact on achieving the RSN'S strategic plan have been identified as.. The change of validating partner. The RSN is moving from the University of the Creative Arts IUCAI to Kingston University IKUI as the validating partner. Any delays in this prO￿sS could have a delrimenlal financial and reputational effect, so the teams on all sides are working hard lo ensure this does not happen. It is planned that current students will be taught out under the current course with UCA and new 2022 students will be on the KU validated course. The growing relianTr on IT we will miligale this by upskilling staff, updating and enhancing the website, especially for 2022 to ensure we are digitally able to meet the interest we are generating Customer confidence in attending physical classes - through the Covid period so far the RSN has managed physical classes, enabling them lo keep going, except in full lockdowns, al Hampton Court and re-opening in the other UK satellites, however the risk is going forward in terms of people's confidence in coming to class with the rise of more transmissible strains of the virus. This will be monitored on a regular basis and will be compensated where possible with additional online classes. Trying to do too much in the Anniversary year- this comes from the team's commitment to the organisation. so we will regularly review prioritising how we allocate our limited reSoU￿S during the year for impact and ROI. The Royal School of Needlework 21

Statement of Corporate Governance and Internal Control Year to 31 August 2021 Revlew of effectlveness As the Accounting Officer, the Chief Executive has responsibility for reviewng the effectiveness ofthe system of internal control. The Chief Executive review of the effectiveness of the system of internal control is informed by". the work of the external auditors", the work of the senior managers within the organisation who have responsibility for the development and maintenance of the internal control framework., and comments made by the organisalion's financial statements and regularity auditors in their management letters and other reports. There are no significant internal control weaknesses reported for the period. The senior management team receives reports setting out key performance and risk indicators and considers possible control issues brought to their attention by earfy warning mechanisms, which are embedded within the departments. The senior management team and the Finance and Investment Committee also receive regular reports, which include recommendations for improvement. The Council agenda includes a regular item for consideration of risk and control and receives reports thereon from the senior management team and the Finance and Investment Committee. The emphasis is on obtaining the relevant degree of assurance and not merely reporting by exception. At its December 2021 meeting, the Board of Trustees, carried out the annual assessment for the year ended 31 August 2021 by considering documentation from the senior management team, and taking account of events since 31 August 2020. Based on above and reports by the Chief Executive, the CoLJncil is of the opinion that the organisalion has an adequate and effective framework for governance, risk management and control to manage the achievements of the organisation's objectives for the year ended 31 August 2021 and il has fulfilled its statutory responsibility for'the effective and efficient use of resourTrs, the solvency of the institution and the safeguarding of their assets Regularity. propriety. and compliance The organisation has considered rts responsibility to notify the Office for Students of material irregularity, impropriety and non-compliance with Office for Students terms and conditions of funding. We confirm, on behalf of the organisalion, that after due enquiry and to the best of ils knowledge, the Council believes it is able to identify any material irregularity or improper use of funds by the organisalion, or material non-compliance with terms and conditions of funding under the organisations financial regulations. As part of our consideration we have had due regard lo our financial regulations. We confirm that no instances of material irregularity, impropriety or funding non-compliance have been discovered lo date. If any instances are identified after the date of this stslement these will be notified lo the Office for Students. The Royal School of Needlework 22

Statement of Corporate Governance and Internal Control Year to 31 August 2021 Golng Concem Details on Board's going concern assessment are set out on page 34. Approved by order of the Board of Trustees and signed on its behalf by.. &,_ p. Chair Chief Executive Date. 1610212022 1610212022 The Royal School of Needlework 23

Independent auditor's report Year lo 31 August 2021 Independent auditor's report to the Members of The Royal School of Needlework Opinion We have audited the financial statements of The Royal School of Needlework {Ihe 'parent charitable company'l for the year ended 31 August 2021 which comprise the consolidated Statement of financial activities, the consolidated and parent charitable company's balance sheets, the consolidated statement of cash flows, the principal accounting policies and the notes to the financial slatemenls. 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, Iuniled Kingdom Generally Accepted Accounting Practice). In our opinion, the financial ststemenls.. give a true and fair view of the stale of the group and parent charitable company's affairs as al 31 August 2021 and of the group's income and expenditure for the year then ended,. have been properly prepared in accordan￿ with United Kingdom Generally Accepted Accounting Practice., • have been prepared in accordance with the requirements of the Companies Act 2006., where applicable, funds from whatever source adMiniste￿d by the provider for specific purposes have been propedy applied to those purposes and managed in accordance with relevant legislation., • where applicable, funds provided by the Ofs and by Research England have been applied in accordance with the relevant terms and conditions", and • meet the requirements of the Office for Student's Accounts Direction 2020121. We have nothing to report in respect of the following matter in relation to which the Ofs Accounts Direction 2020121 requires us lo report to you if, in our opinion.. * the charitable company's grant and fee income, as disclosed in note 1 to these financial statements has been materially misstated. Basls for oplnlon We conducted our audit in accordance with International Standards on Auditing IUKI IISAS IUKII 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 ofthe parent charitable company in accordance with the ethical requirements that are relevant lo 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 evidenee we have obtained is sufficient and appropriate to provide a basis for our opinion. The Royal School of Needlework 24

Independent auditor's report Year lo 31 August 2021 Concluslons relatlng to golng concern In auditing the financial slatemenls, we have concluded that the Council Members, 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 group and charitable parent company's ability to continue as a going con￿rn for a period of at least ￿e1ve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the Council Members with respect to going concern are described in the relevant sections of this report. Other infonnation The Council Members are responsible for the other information. The other infomialion comprises the information included in the annual reF)Ort other than the financial statements and our audilorfs report thereon. Our opinion on the financial statements does not cover the other information and, except to the exlenl otherwise explicitly staled in our report, we do not express any form of assurance conclusion Ihereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, Consider whether the other Infomialion is materially inconsislenl with the financial statements or our knowledge obtained in the audit or otherwise appears lo be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstalemenl of the other information. If, based on the work we have performed, we conclude that there is a material misstalemenl ofthis other information, we are required lo report that fact. We have nothing to report in this r￿ard. 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 report of the Council, which is also the directors, report for the purposes of company law, for the financial year for which the fi'nancial statements are prepared is consislenl with the financial slalements., and • the report of the Council, which is also the directors, report for the purposes of company law, has been prepared in accordance with applicable legal requirements. The Royal School of Needlework 25

Independent auditor's report Year lo 31 August 2021 Matters on whlch we are requlred to report by exceptlon In the light of the knowledge and understanding of the group and parent charitable company and their environment obtained in the course of the audit, we have not identified material misstatements in the report of the Council. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us lo report lo you if, in our opinion.. • adequate accounting records have not been kept by the parent charitable company or returns adequate for our audit have not been received from branches not visited by us,. or • the charitable parent company financial statements are not in agreement with the accounting records and returns,. or rtain disclosures of Council Members, remuneration specified by law are not made., or we have not received all the information and explanations we require for our audit., or • the Council Members were not entitled to lake advantage of the small companies, exemption from the requirement to prepare a strategic report. Responsibilities of Council Members As explained more fully in the statement of the Council's responsibilities, the Council Members (who are also the directors of the charitable company for the purposes of company lawl are responsible for the preparation of the financial statements and for being satisfi'ed that they give a true and fair view, and for such internal control as the Council Members determine is necessary to enable the preparation of financial statements that are free from material misstalemenl, whether due to fraud or error. In preparing the financial statements, the Council Members are responsible for assessing the group and parent charitable 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 Council Members either intend lo liquidate the parent charitable company or lo cease opeffttions, or have no realistic altemative bul 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 misslatemenl, whether due to fraud or error, and lo 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 IUKI will always detect a material misslatemenl when il exists. Misslatemenls can arise from fraud or e￿or 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. The Royal School of Needlework 26

Independent auditor's report Year lo 31 August 2021 Audltor's responslbllltles for the audlt of the flnanclal statements Iconlinuedl Irregularities, Including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, oudined above, to detect material misstatements in respect of irregularities, including fraud. The exlenl lo which our procedures are capable of detecting Irr￿ularItie$, including fraud is detailed below.. How the audit was considered capable of detecting irregularities including fraud Our approach to identifying and assessing the risks of material misslalement in respect of Irr￿ularl11es, including fraud and non-compliance wlh laws and regulations, was as follows.. The engagement partner ensured that the engagement team collectively had the appropriate competen￿, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations., We obtained an understanding of the legal and regulatory frameworks that are applicable to the charitable company and determined that the most signrficant frameworks which are directly relevant to specific assertions in the financial statements., We focused on specific laws and regulations which we considered may have a direct material effect on the accounts. We assessed the extent of compliance with the laws and regulations identified above through making enquiries of representatives of management and the review of minutes of Council meetings. We assessed the susceptibility of the charitable company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by.. Making enquiries of where management considers there was suseeptibility lo fraud and knowledge of actual, suspected and alleged fraud., and Considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations. To address the risk of fraud through management bias and override of controls, we.. Perfomied analytical procedures lo identify any unusual or unexpected relationships., Tested and reviewed journal entries lo identify unusual transactions., Tested the authorisation of expenditure., Gained an understanding of the processes in place for the management of the charitable company's investments", and Investigated the rationale behind significant or unusual Iransaclions. The Royal School of Needlework 27

Independent auditor's report Year lo 31 August 2021 Audltor's responslbllltles for the audlt of the flnanelal statements Icontinuedl How the audit was considered capable of dgtscting irrggulariTties including fraud (continued) In response lo the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, bul were not limited lo.. Review of the minutes of meetings of those charged with governance., Enquiring of management as to actual and potential litigation and claims., and Agreeing accounts disclosures lo underlying supporting documenlalion. As a result of our procedures we did not identify any key audit matters relating to irregularities. 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<ompliance with laws and regulations lo enquiry of the trustees and other management and the inspection of regulatory and legal correspondence, if any. Material misstalemenls that arise due lo 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 stslements is located on the Financial Reporting Council's website al www.frc.org.uklauditorsresponsibililies. This description forms part of our auditor's report. Use of our report This report is made solely to the parent charitable company's Members, as a body, in accordan￿ with Chapter 3 of Part 16 of the Companies Act 2006 and the Charity's Council Members, as a body, in accordance with Section 144 of the Charities Act 2011 and with regulations made under Section 154 of that Act. Our audit work has been undertaken so that we might slate to the parent charitable company's Members and the parent charitable company's Council Members those matters we are required to state lo them in an auditorfs 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 parent charitable company, the parent charitable company's Members as a body and the parent charitable company's Council Members, as a body, for our audit work, for this report, or for the opinions we have formed. Katharine Patel, Senior Slatulory Auditor for and on behalf of Buzzacott LLP, Statutory Auditor 130 Wood Street London EC2V 6DL 16 March 2022 The Royal School of Needlework 28

Consolidated statement of financial activities (including the Incomè and Expenditure Account) Year ended 31 August 2021 2021 Totsl fund8 2020 Totsl funds Unrestricted Restricted Endowment funds funds funds In¢ome and expendlture Notes Income from: Donations and legaaes Investments Other trading a¢tivities Charitable activities School activities Total Income 253,029 148,583 288,112 177,142 430,171 148,583 288,112 475,858 169.953 278.555 1.405,564 2.095,288 1.405,564 1,059.988 2.272,430 1,984.354 177.142 ExpendItU￿ on.. Raising funds Charitable activities Costs ol sthool activities Totsl expendlture 378,821 16,209 396,030 413,376 1,574,202 1.953,023 194,003 210.212 1,768,205 1,692.658 2,163,235 2, 106.034 Net Incomellexpendlturel before Investment galns and losses 142,265 133,0701 109,195 1121,6801 Realised losses on investments Unrealised gains on investments 12091 467,175 13981 1136,5711 888,024 114,138 410,495 10,354 Net movement in funds 552,576 122,7211 466,966 996,821 1144,1131 Reconciliation of fund5'. Fund balances brought forward at I Septsmb8r 2020 2.158,779 328.295 2.808,801 S.295,875 5,439.988 Fund balances carried forward at 31 August 2021 2.711,355 305.574 3.275,767 6.292,696 5,295.875 The Royal School of Needlework 29

Balance sheets 31 August 2021 Group 2021 Charity 2021 2020 2020 Notes Fixed assets Tangible 88sets Investments 44,320 11 6.181,660 6.225,980 43.307 5,338,754 5,382.061 44,320 6.181,760 6.226,OBO 43.307 5,338.854 5,382.161 Current assets Stocks Debtors Cash at bank and in hand 12 13 66,368 137,430 488,761 692,559 71,753 133,595 417.199 622.547 25,037 215,950 467,668 708,65S 29,474 197,682 376.711 603,867 Creditors.. amounts falling due within one year Net current Iliabilitiesllassets 14 1621,0231 1655,5801 71,536 133,0331 1585,4411 1593,7941 123,214 10,073 Creditors due in more than one year Total net assets 15 148.3331 5,300,695 148,3331 5,343,901 6,297,516 6,349,295 Represented by.. Capitsl and T￿erveS Called up sh8r8 capital Capital redemption reserve 16 17 240 4,580 4,820 260 4,560 4.820 240 4,580 4,820 260 4,560 4.820 The funds of the charity.. Endowment funds Restricted fLJnds Unrestricted funds.. General fund Design8ted fund 18 3.275,767 19 305,574 2,808,801 328.295 3,275,767 305,574 2,808,801 328.295 2,101,355 610,000 6,292,696 1,548,779 610.000 5,295.875 2,153,134 610,000 6,344,475 1,591,985 610.COO 5,339.081 20 6.297,516 5,300,695 6.349,295 5,343,901 Approved by the Council of Members on 1610212022 and signed on its behalf by". &,,- p. Andrew Palmer Chairman Miranda Corti Honorary Treasurer The Royal School of Needlework." Company Regislrab'on Number 12192 The Royal School of Needlework 30

Consolidated statement of cash flows Year to 31 August 2021 2021 2020 Notes Cash flows from operatlng actlvltles: Net cash used in operating activities 158,1021 1193,3621 Cash flows from investing activities: Investment income Purchase of tangible fixed assets Pro￿ed5 frorn tre disposal of inveslrnents Purchase of investments Nèt cash provid•d by invèsting aetivitiès 148,583 169.953 113.6391 128,5711 763,930 807.633 1811,1221 1653,9321 87,752 295.083 Cash flows from financing a¢tivitie¥= Repurchase of shale capital Increase in capital redemption reserve New loan financing Repayment of loan Net cash provided by financing activities 1201 20 1201 50 50,000 150.0001 150,0001 50,030 Change in cash and cash equivalents in the year 120,3501 151,751 Cash and cash equivalents al 1 Septembei 2020 537,423 385,672 Cash and cash aquivalènts at 31 August 2021 517,073 537.423 Notes to the statement of cash flows for the year to 31 August 2021 A Reconciliation of net movement in funds to net eash used in operating activities 2021 2020 Net movement In funds las per the ststement of financlal actlvltlesl Adjustments for= Depreci8tion charge (Gainslnosses on investments Investtnent Incom8 Decrease in stocks Increase in debtois (Decreasellincrease in creditors Net cash used in operating activities 996.821 1144,1131 12,626 1887,6261 1148,5831 5.385 13,8351 132,8901 158,1021 9,899 22,433 1169,9531 4,327 116,9071 100,952 1193,3621 B Analysis of Cash and cash equivalents 2021 2020 Cash 81 bank and in h8nd Cash held by inveslrnent managers Total cash and cash equivalents 488,761 28,312 517,073 417,199 120.224 537,423 The Royal School of Needlework 31

Consolidated statement of cash flows Year to 31 August 2021 C Reconciliation of net debt At1 September 2020 Cash flows At31 August 2021 Cash at bank and in hand Bank loan Total eash and eash •quivalènts 537,423 150,0001 487,423 120,3501 50,000 29,650 517,073 517,073 The Royal School of Needlework 32

Principal accounting policies Year lo 31 August 2021 General information The Royal School of Needlework is a company, limited by shares and is registered in England and Wales. The registered number is 12192 and the registered office is Apartment 12A, Hampton Court Palace, East Molesey, Surrey, KT8 9AU. The principal accounting policies adopted, judgements and key sources of estimation uncertainty in the preparation of the financial statements are laid out below. Basis of preparation These financial statements have been prepared for the year to 31 August 2021. The financial statements have been prepared under the historical cost convention with items recognised at cost or transaction value unless otherwise staled in the relevant accounting policies below or the notes to these financial stslements. The financial statements have been prepared in accordance wlh Accounting and Reporting by Charities.. Statement of Recommended Practice applicable lo charities preparing their accounts in aceordance with the Financial Reporting Standard applieable in the UK and Republic of Ireland IFRS 1021 (Charities SORP FRS 1021, the Financial Reporting Standard applicable in the UK and Republic of Ireland IFRS 102}, the Charities Act 2011 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 pound. Critical accounting estimates and areas of judgement Preparation of the financial statements requires the Council Member5 and management to make certain judgements and estimates. The items in the fi'nancial statements where these judgements and eslimales have been made Include.. stock provisions, estimating the useful economic life of tangible fixed assets and legacy recognition. In addition lo the above, the ongoing impact of the global coronavirus pandemic is being kept under review. During 2020121, the RSN has continued lo adapt its activities to offer a blended in-person and online model of leaching. However, it is not currently possible to evaluate all the potential future implications for the Charity's aclivilies, beneficiaries, funders, suppliers and the wider economy. There is a risk that estimates used in the accounts, particularly with respect to the value of listed investments (see note 111 may be subject lo a greater degree of Un￿rtaintY and volatility. As set out in these accounting policies under 'going concern" the Council has considered the impact of the pandemic on the charity and has concluded that although there May be some negative consequences, it is appropriate for the charity to continue lo prepare ils accounts on the going concern basis. The Royal School of Needlework 33

Principal accounting policies Year lo 31 August 2021 Assessment of going concern The Council has assessed whether the use of the going concern assumption is appropriate in preparing these financial statements. The Council has made this assessment in respect to a period of one year from the date of approval of these financial slatemenls. The Council has 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 coneern. The Council is of the opinion that the eharily will have sufficient resources to meet its liabilities as they fall due. The RSN currently has unrestricted reserves that are £428k in excess of the level set in ils reserves policy. Cash flow is being monitored closely and in recent years there has been no need lo liquidate Investments. The most significant areas of judgement that affect items in the financial statements are detailed above. With regard lo the next accounting period, the year ending 31 August 2022, the most significant areas that affect the carrying value of the assets held by the charity are maintaining a blended model of online and in-person classes, the level of donations and legacies, the level of investment return and the performance of the investment markets. Consolldatlon Consolidated financial statements I'group financial stalemenls") have been prepared in respect of the charity and its wholly owned subsidiary, RSN Enterprises Limited. The results of RSN Enterprises Limited have been consolidated on a line-by-line basis. A separate statement of financial activities for the charity itself is not presented because the charity has taken advantage of the exemptions afforded by the Charities SORP FRS 102. The company has also taken advantage of the exemption in the Companies Act 2006 Section 408 not to present its own slalemenl of financial activities. Net surplus of £1,005,393 12019120.. £107,750 surplus) is attributable to The Royal School of Needlework. Income recognition Income is recognised in the period in which the charity has entitlement lo the income, the amount of income can be measured reliably and it is probable that the income will be received. Income comprises donations and legacies, grants, investment income, income from trading activities and school income. Donations are recognised when the charity has confirmation of both the amount and settlement date. In the event of donations pledged but not received, the amount is accrued when the receipt is considered probable. In the event that a donation is subject to conditions that require a level of perf0mlan￿ before the charity is entitled lo the funds or where the donation is specifi'cally for a subsequent period, the income is deferred and not recognised until either those Conditions are fully met, or the fulfilment of those eondilions is wholly within the control of the charity and il is probable that those conditions will be fulfilled in the reporting period. In accordance with the Charities SORP FRS 102, volunteer time is not recognised. The Royal School of Needlework 34

Principal accounting policies Year lo 31 August 2021 Income recognition Iconlinued) Legacies a￿ included in the statement of financial activities when the charity is entitled to the legacy, the executors have established that there are SLJfficienl surplLJS assets in the eslale to pay the legacy, and any conditions allached lo the legacy are within the control of the charity. Dividends are recognised On￿ the dividend has been declared and notification has been received of the dividend due. Interest on funds held on deposit is included when receivable and the amount can be measured reliably by the charity., this is normally upon notification of the interest paid or payable by the bank. Income from school activities is accounted for on an accruals basis", where fees are received for courses commencing in the following financial period. the income is deferred to the next financial period. Expenditure recognition Liabilities are recognised as expenditure as soon as there is a legal or conslruclive obligation committing the eharily lo make a payment to a third party, it is probable that a transfer of economic benefits will be required in settlement and the amount of the obligation can be Measured reliably. All expenditure is accounted for on an accruals basis. Expenditure comprises direct costs and support costs. All expenses, including support costs, a￿ allocated or apportioned to the applicable expenditure headings. The classification between activities is as follows.. + Expenditure on raising funds includes all expenditure associated wth raising funds for the charity. This includes investment management fees, the costs of the trading subsidiary company and costs incurred in encouraging people and organisations to contribute financially to the charity. • Expenditure on charitable activities includes all costs associated with furthering the charitable purposes of the Charity through the provision of its ¢harilable activities. Such costs include the direct cost of operating the school and support costs. Allocatlon of support and governance costs Support costs represent indirect charitable expenditu￿ including governance costs. In order to carry out the primary purposes of the charity it is necessary lo provide support in the form of personnel development, financial pr0￿dUreS, provision of Offi￿ ServI￿S and equipment and a suitable working environment. Governance costs comprise the costs involving the public accountability of the charity (including audit costs) and costs in respect of ils compliance with regulation and good practice. Support costs Iwhich are predominantly staff costs for the Chief Executive and marketing and finance leamsl are apportioned between expenditure on raising funds and on charitable activities {which comprises costs of school activities) based on an estimate of the proportion of the time spent on each area. Govemance costs are all included within expenditure on charitable activities (costs of school activities). The Royal School of Needlework 35

Principal accounting policies Year lo 31 August 2021 Tangible fixed assets Depreciation is provided on all tangible fixed assets al the following annual rates calculated to write off the cost, less eslimaled residual value, of each asset evenly over ils expected useful life.. • Fixtures and fittings * Office equipment * Leasehold improvements 100/0 on cost 200/D on cost 100/0 on cost or if shorter over the remaining term of the lease Fixtures and fittings and Offi￿ equipment wlh a cost greater than £1,000 are capitalised. Heritage assets The Royal School of Needlework possesses a collection of historic embroidery, the value of which has not been included in the financial statements. as the Council does not believe that the value of ascertaining their market value would be commensurate with the associated cost. Further details are disclosed in note 10 to the financial statements. Investments Investments are included on the balance sheet at their market value at the end of the financial period. Investment income is credited lo income on an accruals basis, using dates of payment for dividends and daily accruals for interest. Realised and unrealised gains and losses are credited, or debited, lo the statement of financial activities in the year In which they arise. Stocks Stocks are slated al the lower of cost and net realisable value as follows.. Materials At purchase cost on a firsl-in, firsl-oul basis Work-in-progress, finished work and goods held for re-sale At purchase cost or at cost of direct materials and labour plus attributable overheads based on the normal level of activity Net realisable value is based on estimated selling price less further costs expected to be incurred lo completion and disposal. Debtors Debtors are recognised at their settlement amount, less any provision for non-recoverability. Prepayments are valued al the amount prepaid. They have been discounted lo 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 accounts and instruments that are available on demand or have a maturity of less than three months from the dale of acquisition. The Royal School of Needlework 36

Principal accounting policies Year lo 31 August 2021 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, it is probable that a transfer of economic benefit will be required in settlement, and the amount of the sett￿ment 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. Fund accounting The unreslricled general fund comprises those monies which may be used towards meeting the charitable objectives of the charity al the discretion of the Council. The designated fvnd comprises monies sel aside out of unrestricted funds for future projects or purposes. The reslricled funds are monies raised for, and their use restricted to, a specific purpose, or donations subject lo conditions imposed by the donor. The endowment funds comprise permanent endowments, where the capital is held indefinitely and the income is used for prizes and training for students and expendable endowments, where both the capital and income can be used for student ￿holarShIpS or the general purposes of the charity. The Royal School of Needlework 37

Notes to the financial statements Year to 31 August 2021

1 Donations and legacies

Donations and legacies
2021	Unrestricted funds £	Restricted funds £	Endowment funds £	Total 2021 £
Donations Legacies Grants Total funds	51,118 72,415 129,496	176,142 1,000 —	— — —	227,260 73,415 129,496
	253,029	177,142	—	430,171
2020	Unrestricted funds £	Restricted funds £	Endowment funds £	Total 2020 £
Donations Legacies Grants Total funds	134,527 33,010 187,659	120,662 — —	— — —	255,189 33,010 187,659
	355,196	120,662	—	475,858

2 Investment income

Investment income
2021	Unrestricted funds £	Restricted funds £	Endowment funds £	Total 2021 £
Bank and deposit interest received Income from listed investments Total funds	87 148,496	— —	— —	87 148,496
	148,583	—	—	148,583
2020	Unrestricted funds £	Restricted funds £	Endowment funds £	Total 2020 £
Bank and deposit interest received Income from listed investments Total funds	642 169,311	— —	— —	642 169,311
	169,953	—	—	169,953

3 Income from trading activities

The Royal School of Needlework has a wholly owned trading subsidiary which is incorporated in England and Wales. RSN Enterprises Limited undertakes the retail activities of The Royal School of Needlework. The company will donate any taxable profits to the charity under Gift Aid. A summary of the company’s trading results is shown below. Audited financial statements have been filed with the Registrar of Companies.

The Royal School of Needlework 38

Notes to the financial statements Year to 31 August 2021

3 Income from trading activities (continued)

RSN Enterprises Limited – Statement of comprehensive income

Income from trading activities(continued) RSN Enterprises Limited – Statement of comprehensive income
	Total 2021 £ 292,185 (204,531) 87,654 635 (96,861) (8,572) — **(8,572) **	Total 2020 £
Turnover Cost of sales Gross profit Other operating income Administrative expenses Operating loss Gift Aid donation to The Royal School of Needlework Retained loss for the financialyear		290,210 (225,756)
		64,454 564 (90,751)
		(25,733) —
		(25,733)

In the year ended 31 August 2021, turnover includes £4,708 (2020: £12,219) of income received by RSN Enterprises Limited from the charity, which is eliminated upon consolidation.

4 Income from school activities

Income from school activities is wholly unrestricted and comprises mainly fees for the Degree programme, Certificate and Diploma programme, Future Tutors and Short Courses.

5 Expenditure on raising funds

Expenditure on raising funds
2021	Unrestricted funds £	Restricted funds £	Endowment funds £	Total 2021 £
Costs of trading subsidiary Investment managers’ fees Advertising and literature Fundraising costs Travelling & other costs Total funds	299,423 45,284 26,649 6,648 817	— — — 14,434 1,775 16,209	— — — — —	299,423 45,284 26,649 21,082 2,592
	378,821		—	395,030
2020	Unrestricted funds £			Total 2020 £
		Restricted funds £	Endowment funds £
Costs of trading subsidiary Investment managers’ fees Advertising and literature Fundraising costs Travelling & other costs Total funds	316,507 41,703 29,255 11,222 1,439	— — — 11,717 1,533 13,250	— — — — —	316,507 41,703 29,255 22,939 2,972
	400,126		—	413,376

The Royal School of Needlework 39

Notes to the financial statements Year to 31 August 2021

6 Costs of school activities

2021	Unrestricted funds £	Restricted funds £	Endowment funds £ — — — Endowment funds £ — 8,000 8,000	Total 2021 £
Staff costs Other costs Total funds	1,122,001 452,201	92,768 101,235 194,003		1,214,769 553,436
	1,574,202			1,768,205
2020	Unrestricted funds £			Total 2020 £
		Restricted funds £
Staff costs Other costs Total funds	1,140,888 376,816	84,517 82,437 166,954		1,225,405 467,253
	1,517,704			1,692,658

7 Staff costs

Staff costs
	2021 £ 1,218,456 83,465 49,039 1,350,960 1,214,769 136,191 1,350,960	2020 £ 1,240,297 84,637 53,475 1,378,409 1,225,405 153,004 1,378,409
Wages and salaries Social security costs Pension costs Staff costs by function were as follows: Cost of school activities Cost of raising funds (fundraising and trading subsidiary)

The average monthly number of employees during the year was 48 (2020: 54) and on a full time equivalent basis was 26 (2020: 29).

Redundancy costs totalling £nil were incurred in the year as a result of restructuring during the Covid-19 pandemic (2020: £15,350). The RSN has given regard to the “Guidance on decisions taken about severance payments in HEI’s” published by the Committee of University Chairs when determining severance pay.

The number of employees who earned £60,000 or more (including taxable benefits but excluding employer’s pension contributions) during the year was as follows:

	2021 — 1	2020 1 —
£90,001 - £95,000 £95,001 - £100,000

Pension contributions in respect of these employees were £4,995 (2020: £4,333).

The Royal School of Needlework 40

Notes to the financial statements Year to 31 August 2021

7 Staff costs (continued)

No Council Members received reimbursement of travelling expenses in the year (2020: none).

No remuneration was paid to the Council Members in the year (2020: none).

The key management personnel of the charity in charge of directing and controlling, running and operating the charity on a day-to-day basis comprise the Council and the Chief Executive. The total cost of the remuneration (including taxable benefits, employer's national insurance and pension contributions) of the key management personnel for the year was £116,906 (2020: £105,537).

Chief Executive Remuneration

Chief Executive Remuneration
	2021 £	2020 £
Basic salary Salary sacrifice arrangements Bonus Pension contribution Total remuneration after salarysacrifice	99,893 (3,996) — 8,991	86,657 (3,466) 3,750 7,799
	104,888	94,740

The RSN has given regard to the “Higher Education senior staff remuneration code” published by the Committee of University Chairs when determining senior staff remuneration. Staff who are part of the pension scheme operate under a salary sacrifice arrangement where they give up an amount of salary and in return the charity makes an equivalent contribution directly into their pension on their behalf.

The Chief Executive’s remuneration shown in year was considered and reviewed by the Council.

The Chief Executive’s basic salary as a multiple of the median of all staff was 2.3 (2020: 2.2)

The Chief Executive’s total remuneration as a multiple of the median of all staff was 2.3 (2020: 2.3)

8 Net (expenditure) income before investment gains and losses

These are stated after charging:

These are stated after charging:
	2021 £	2020 £
Depreciation Auditor’s remuneration . Charity audit . Trading subsidiary audit . Other services Lease expenses . Land and buildings . Other	12,626 8,955 2,088 1,696 188,222 15,460	9,898 8,872 2,705 2,983 189,224 15,260

The Royal School of Needlework 41

Notes to the financial statements Year to 31 August 2021

9	Tangible fixed assets Group and Charity	Leasehold improve- ments £	Office equipment £	Fixtures and fittings £	Total £
	Cost At 1 September 2020 Additions At 31 August 2021 Depreciation At 1 September 2020 Charge for year At 31 August 2021 Net book values At 31 August 2021 At 31 August 2020	150,509 —	97,000 13,639	70,386 —	317,895 13,639
		150,509	110,639	70,386	331,534
		150,509 —	81,516 7,700	42,563 4,926	274,588 12,626
		150,509	89,216	47,489	287,214
		—	21,423	22,897	44,320
		—	15,484	27,823	43,307

The Royal School of Needlework 42

Notes to the financial statements Year to 31 August 2021

10 Heritage assets

The RSN is rich in heritage assets comprising embroidered textiles, designs, company archives, photographs and student pieces. The RSN does not generally have the funds to acquire pieces so most of the Collection has been donated. The acquisition policy relates firstly to items that have an RSN connection, then to items of a high standard of work and/or types of work not already included in the collection.

The Collection of textiles comprises objects almost all of which have been donated to the RSN and which are mostly examples of embroidery, with some examples of lace. Whilst there are a few pieces from the 16th century, most date from the 19th and 20th centuries.

They comprise many embroidery techniques from the UK and around the world. Also included are a number of pieces worked by the RSN and its students, especially from the original Diploma course, which ran from the late 19th century until 1960, which have been given back to the RSN by the families.

The Archive comprises registers, minutes and other paperwork relating to the management of the RSN, photographs and ephemera from various events. It also contains workbooks of jobs undertaken from the 1940s onwards, some with samples, and drawings. The largest holding is of designs relating to work undertaken in the Studio.

The RSN Collection and Archive is unique and though it is only minimally catalogued, researchers are given access to specific parts of the archive if it can be identified. The Collection and Archive are made available for student research and for public exhibition.

The RSN also endeavours to offer public access to the Collection through exhibitions and study days both at Hampton Court and elsewhere. Researchers wishing to access the archive can also make appointments but with the caveat that we do not have a resident archivist or curator and most parts of the archive are not catalogued, especially the designs. The most popular requests are whether a family member worked for the RSN (until the registers are digitised this will not be possible to answer), and also in relation to the work the RSN did in therapeutic stitch during the First World War.

Heritage assets have not been capitalised in the financial statements as the Council considers that the significant costs involved in valuing the charity’s collection of historic embroidery would outweigh the benefits derived from such an exercise.

The Royal School of Needlework 43

Notes to the financial statements Year to 31 August 2021

11 Investments

Investments
	2021 £	2020 £
Listed investments and cash holdings Group total Shares in subsidiary undertaking at cost Charity total	6,181,660	5,338,754
	6,181,660 100	5,338,754 100
	6,181,760	5,338,854

The charity owns the entire issued share capital of RSN Enterprises Limited which is incorporated in England and Wales. Its registered number is 3158058 and its registered address is the same as the RSN.

	2021 £	2020 £
Aggregate share capital and reserves of RSN Enterprises Limited	(52,679)	(43,107)
**Listed investments & cash holdings **	2021 £ 5,218,530 811,122 (763,930) (398) 888,024 6,153,348 28,312 6,181,660	2020 £
Market value at 1 September Additions at cost Disposal proceeds Realised losses Unrealised gains Market value at 31 August Cash held by investment managers		5,394,664 653,932 (807,633) (136,571) 114,138
		5,218,530 120,224
		5,338,754

Listed investments held at 31 August comprised the following:

	2021 £	2020 £
Fixed interest UK equities Overseas equities and equity funds Other listed investments Listed investments at cost	814,363 2,118,989 1,732,633 1,487,363	857,095 1,805,953 1,302,806 1,252,676
	6,153,348	5,218,530
	3,861,799	3,595,554

At 31 August 2021, listed investments included the following individual holding deemed material when compared with the overall valuation of listed investments as at that date:

	Percentage %	Value £
Scottish Mortgage Investment Trust	5.8	358,336

The Royal School of Needlework 44

Notes to the financial statements Year to 31 August 2021

11 Investments (continued)

Since 31 August 2021 the value of investments held by the RSN has fluctuated as we move between hopes for a strong global economic recovery and fears of another Covid variant and higher inflation, while the ongoing Russian invasion of Ukraine has further unsettled investors’ nerves. The overall value of the RSN’s investments decreased by 9% in the first half of 2021/22 to £5,670,471 on 1 March 2022. The Finance and Investment Committee is continuing to monitor the portfolio and its risk appetite closely by holding regular meetings with the investment managers.

12 Stocks

Stocks
	Group		Charity
	2021 £	2020 £	2021 £	2020 £
Materials Finished work and goods held for resale	25,037 41,331	29,474 42,279	25,037 —	29,474 —
	66,368	71,753	25,037	29,474

13 Debtors

Debtors
	Group		Charity
	2021	2020	2021 £	2020 £
	£	£
Trade debtors Prepayments and accrued income Amounts owed by subsidiary company	12,745 124,685 —	18,619 114,976 —	4,479 121,638 89,833	8,400 100,013 89,269
	137,430	133,595	215,950	197,682

14 Creditors: amounts falling due within one year

	Group	Group	Charity	Charity
	2021	2020	2021 £	2020 £
	£	£
Bank loans Trade creditors Other taxes and social security costs Accruals and deferred income	— 32,731 44,002 544,290	1,667 82,852 31,964 539,097	— 26,470 29,076 529,895	1,667 43,767 27,563 520,797
	621,023	655,580	585,441	593,794

Deferred income (included above)

	Group	Group	Charity	Charity
	2021	2020	2021 £	2020 £
	£	£
Brought forward at 1 September Deferred in the year Released in the year Carried forward at 31 August	457,716 324,829 (289,284)	381,497 379,854 (303,635)	447,621 324,829 **(279,189) **	376,942 369,760 (299,081)
	493,261	457,716	493,261	447,621

The Royal School of Needlework 45

Notes to the financial statements Year to 31 August 2021

14 Creditors: amounts falling due within one year (continued)

Deferred income (included above)

Deferred income is fees received in advance of the course taking place and donations received for the following academic year.

15 Creditors due in more than one year

Creditors due in more than one year
	Group		Charity
	2021 £	2020 £	2021 £	2020 £
Bank loans	—	48,333	—	48,333
	—	48,333	—	48,333

Included in creditors falling due in more than one year in 2020 was a loan received on 3 July, 2020 under the Bounce Back Loan Scheme created by the UK Government in response to Covid-19. The loan was interest free if repaid within one year from the date the loan was drawn and was repaid in July 2021.

The above loan was repayable as follows:

	Group	Group	Charity	Charity
	2021	2020	2021 £	2020 £
	£	£
Within one year Within two to five years	— —	1,667 48,333	— —	1,667 48,333
	—	50,000	—	50,000

15 Share capital

Share capital
	Issued, called up and fully paid
	2021 £	2020 £
Ordinaryshares of £10 each	240	260

16 Capital redemption reserve

Capital redemption reserve
	2021 £	2020 £
458 Ordinaryshares of £10 each(2020: 456)	4,580	4,560

The Royal School of Needlework 46

Notes to the financial statements Year to 31 August 2021

17 Endowment funds

Endowment funds
2021	At 1 September 2020 £	Income £	Expenditure £	Investment gains £	At 31 August 2021 £
Victoria Adams Fund General Endowment Fund Hilda Watson Fund Charrington / Broderers Fund Wendy Hogg Fund HB Allen Fund	1,989,415 545,288 3,270 3,374 18,482 248,972	— — — — — —	— — — — — —	330,742 90,654 544 561 3,073 41,392	2,320,157 635,942 3,814 3,935 21,555 290,364
	2,808,801	—	—	466,966	3,275,767
2020			Expenditure £	Investment losses £	At 31 August 2020 £
	At 1 September 2019 £	Income £
Victoria Adams Fund General Endowment Fund Hilda Watson Fund Charrington / Broderers Fund Wendy Hogg Fund HB Allen Fund	2,004,907 547,539 3,283 3,388 19,311 250,000	— — — — — —	(7,250) — — — (750) —	(8,242) (2,251) (13) (14) (79) (1,028)	1,989,415 545,288 3,270 3,374 18,482 248,972
	2,828,428	—	(8,000)	(11,627)	2,808,801

• a) The Victoria Adams Fund is an expendable endowment fund for student scholarships and the general purposes of the charity.

• b) The General Endowment Fund provides for the training of students.

• c) The Hilda Watson Fund provides prizes for Silk Work.

• d) The Charrington / Broderers Fund provides prizes for students.

• e) The Wendy Hogg Fund is an expendable scholarship / prize fund for students.

• f) The HB Allen Fund provides support for the Future Tutor programme.

The Royal School of Needlework 47

Notes to the financial statements Year to 31 August 2021

18 Restricted funds

Restricted funds
2021	At 1 September 2020 £	Income £ Expenditure £
Janet Churm Fund Degree Building Improvements Future Tutor Programme Degree Programme Campaign HCP New Rooms Collection & Digitisation Embroider a Selfie Stitch Bank Other Restricted Legacy

2020	At 1 September 2019 £	Income £ Expenditure £	Income £ Expenditure £
Janet Churm Fund Degree Building Improvements Future Tutor Programme Degree Programme Campaign HCP New Rooms Collection & Digitisation Embroider a Selfie Stitch Bank Other Campaign Funds Other Restricted Legacy
	388,308 120,662 (180,204) (471) —		328,295

• a) The Janet Churm Fund provides support for both the Degree and Future Tutor programmes and was funded by a generous legacy from the estate of the late Mrs Janet Churm.

• b) The Degree Building Improvements Fund was established when the RSN Degree programme commenced. Expenditure relates to the depreciation on leasehold and other improvements, which were required to set up the Degree rooms at Hampton Court Palace.

• c) The Future Tutor Programme Fund specifically provides bursaries, prizes and day-today support for the Future Tutor programme and includes restricted donations and legacies from a number of donors.

• d) The Degree Programme Fund specifically provides bursaries, prizes and day-to-day support for the Degree Programme and includes restricted donations and legacies from a number of donors.

The Royal School of Needlework 48

Notes to the financial statements Year to 31 August 2021

19 Restricted funds (continued)

• e) The Campaign HCP New Rooms Fund was established to fund the improvement works and equipment required to set up additional rooms at Hampton Court Palace, which were taken on in 2015 to accommodate expansion. It was funded by donations from a wide number of RSN Friends and other donors. Expenditure includes depreciation on capital works.

• f) The RSN Collection & Digitisation Appeal includes donations from a large number of RSN Friends, supporters and other donors towards the Cataloguing and Digitisation of the RSN Archive and Collection. This project is in the planning stages and it is anticipated that it will get underway in the latter part of 2021/22.

• g) The Embroider a Selfie fund is a project to introduce stitch to young people.

• h) The Stitch Bank fund is a project that aims to digitally conserve and preserve every stitch in the world, becoming the biggest repository of stitch in the world. The first phase went live in 2021/22.

• i) Other Campaign Funds include donations from a number of donors towards the RSN Stitch Bank, Archive & Collection Digitisation, Distance Learning and General Campaign projects. The funds have now all been transferred to separate restricted project funds, as detailed above.

• j) The Other Restricted Legacy Fund relates to a legacy received in 2016/17, which will provide support for the Future Tutor Programme.

20 Designated funds

Designated funds
	At 1 September 2020	New Designations £	Utilised/ released £	At 31 August 2021 £
2021	£
Futures campaign	610,000	—	—	610,000
2020	At 1 September 2019 £	New Designations £	Utilised/ released £	At 31 August 2020 £
_Futures campaign _	_610,000 _	—	—	610,000

The Futures campaign fund comprises monies set aside for various campaign projects. During 2020/21 and 2019/20 no funds were utilised because expenditure on projects has been funded by restricted income that has been raised in current and prior years. The designated funds continue to be kept under review by the trustees so that they can be repurposed and used as and when they are needed.

The Royal School of Needlework 49

Notes to the financial statements Year to 31 August 2021

21 Analysis of net assets between funds

Group	Share- holders funds £	Restricted funds £	Un- restricted funds £	Endowment funds £	Total 2021 £
Tangible fixed assets Investments Current assets Creditors: amounts falling due within one year Creditors falling due in more than one year Total net assets	— — 4,820 — —	8,015 29,584 308,500 (40,525) —	36,305 2,876,309 379,239 (580,498) —	— 3,275,767 — — —	44,320 6,181,660 692,559 (621,023) —
	4,820	305,574	2,711,355	3,275,767	6,297,516
Group	Share- holders funds £	Restricted funds £	Un- restricted funds £	Endowment funds £	Total 2020 £
Tangible fixed assets Investments Current assets Creditors: amounts falling due within one year Creditors falling due in more than one year Total net assets	— — 4,820 — —	15,441 326,672 28,832 (42,650) —	27,866 2,203,281 588,895 (612,930) (48,333)	— 2,808,801 — — —	43,307 5,338,754 622,547 (655,580) (48,333)
	4,820	328,295	2,158,779	2,808,801	5,300,695

Charity	Share- holders funds £	Restricted funds £	Un- restricted funds £	Endowment funds £	Total 2021 £
Tangible fixed assets Investments Current assets Creditors: amounts falling due within one year Creditors falling due in more than one year Total net assets	— — 4,820 — —	8,015 29,584 308,500 (40,525) —	36,305 2,876,409 395,335 (544,916) —	— 3,275,767 — — —	44,320 6,181,760 708,655 (585,441) —
	4,820	305,574	2,763,133	3,275,767	6,349,294

Charity	Share- holders funds £	Restricted funds £	Un- restricted funds £	Endowment funds £	Total 2020 £
Tangible fixed assets Investments Current assets Creditors: amounts falling due within one year Creditors falling due in more than one year Total net assets	— — 4,820 — —	15,441 326,672 28,832 (42,650) —	27,866 2,203,381 570,216 (551,145) (48,333)	— 2,808,801 — — —	43,307 5,338,854 603,868 (593,795) (48,333)
	4,820	328,295	2,201,985	2,808,801	5,343,901

The Royal School of Needlework 50

Notes to the financial statements Year to 31 August 2021

22 Operating lease commitments

As at 31 August 2021, the group and charity had the following future minimum payments under non-cancellable licences and operating leases:

2021	Land and buildings £	Equipment £	2021 £
Operating lease payments due: within the next year between two and five years	202,209 380,817	13,836 8,538	216,045 389,355
	583,026	22,374	605,400
2020	Land and buildings £	Equipment £	2020 £
Operating lease payments due: within the next year between two and five years	187,332 183,736	14,866 22,374	202,198 206,110
	371,068	37,240	408,308

23 Related party transactions

RSN Enterprises Limited donates any profits via Gift Aid to the charity. During the year the RSN Enterprises Limited was loss making and so no donation was made (2020: £nil).

At 31 August 2021, £89,833 is due by RSN Enterprises Limited to the charity (2020: £89,269).

Council Members paid an aggregate of £2,970 (2020: £1,703) for classes and events, £190 (2020: £114) for Friends’ subscriptions at standard un-discounted rates and donations of £473 (2020: £1,451).

The Royal School of Needlework 51

Notes to the financial statements Year to 31 August 2021

24 Comparative statement of financial activities for the year ended 31 August 2020

Income and expenditure Notes	Unrestricted funds £	Restricted funds £	Endowment funds £	2020 Total funds £
Income from: Donations and legacies 1 Investments 2 Other trading activities 3 Charitable activities . School activities 4 Total income Expenditure on: Raising funds 5 Charitable activities . Costs of school activities 6 Total expenditure Net (expenditure)/income before investment gains and losses 8 Realised losses on investments 11 Unrealised gains on investments 11 Net movement in funds Reconciliation of funds: Fund balances brought forward at 1 September 2019 Fund balances carried forward at 31 August 2020	355,196 169,953 278,555 1,059,988	120,662 — — —	— — — —	475,858 169,953 278,555 1,059,988
	1,863,692	120,662	—	1,984,354
	400,126 1,517,704	13,250 166,954	— 8,000	413,376 1,692,658
	1,917,830	180,204	8,000	2,106,034
	(54,138) (62,920) 52,585	(59,542) (2,870) 2,399	(8,000) (70,781) 59,154	(121,680) (136,571) 114,138
	(64,473) 2,223,252	(60,013) 388,308	(19,627) 2,828,428	(144,113) 5,439,988
	2,158,779	328,295	2,808,801	5,295,875

The Royal School of Needlework 52