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 nonfunds
£|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**