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2021-07-31-accounts

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ROYAL NORTHERN COLLEGE OF MUSIC ENDOWMENT FUND

Financial Statements

31 July 2021

CONTENTS Page
Reference and Administrative Details 1
Trustee’s Report 3
Trustee’s statement of responsibilities 6
Report of the Independent Auditor to the Trustee 7
Statement of Financial Activities 10
Balance Sheet 11
Notes to the accounts 12

ROYAL NORTHERN COLLEGE OF MUSIC ENDOWMENT FUND

REFERENCE AND ADMINISTRATIVE DETAILS

LEGAL STATUS

The Charity is a trust regulated by Schemes of the Charity Commissioners for England and Wales dated 6 October 1975, 22 October 1992 and 15 March 1999.

INVESTMENT POWERS

The charity has general power of investment in accordance with section 3 of the Trustee Act 2000.

CHARITY COMMISSION REGISTRATION Registered Number 504949

ADDRESS OF THE CHARITY 124 Oxford Road Manchester M13 9RD

TRUSTEE

Royal Northern College of Music

The Governors of the Royal Northern College of Music who were in office during the year are listed in the Royal Northern College of Music Consolidated Financial Statements for the year ended 31 July 2021 a copy of which are available at www.rncm.ac.uk.

ROYAL NORTHERN COLLEGE OF MUSIC ENDOWMENT FUND

LEGAL AND ADMINISTRATIVE DETAILS

BANKERS Royal Bank of Scotland 38 Mosley Street Manchester M2 3AZ

EXTERNAL AUDITORS Mazars LLP One St Peter’s Square Manchester M2 3DE

INVESTMENT MANAGERS Waverton 21 St James’s Square London SW1Y 4HB

SOLICITORS Mills and Reeve 8[th] Floor 1 New York Street Manchester M1 4AD

ROYAL NORTHERN COLLEGE OF MUSIC ENDOWMENT FUND

TRUSTEE’S REPORT Year ended 31 July 2021

The Trustee of the Royal Northern College of Music Endowment Fund presents its annual report and audited financial statements for the year ended 31 July 2021

STRUCTURE, GOVERNANCE AND MANAGEMENT

The Royal Northern College of Music Endowment Fund is constituted under a trust scheme dated 22 October 1992 and is a registered charity number 504949.

The College Board of Governors, the sole Trustee of the Endowment Fund, when appointing the members of its Finance and Audit Committees, has regard to ensuring that the skills and experience thus available to them is sufficient and appropriate to their terms of reference. The Board also undertakes periodic reviews of its own effectiveness, and that of its committees, in fulfilling their roles.

The Trustee confirms that it is a public benefit entity and has referred to the guidance contained in the Charity Commission’s general guidance on public benefit when reviewing the Trust’s aims and objectives and in planning future activities and setting the grant making policy for the year.

OBJECTIVE AND ACTIVITIES

The objective of the Fund is to apply its income in such ways as the Trustee considers fit for the general purposes of the Royal Northern College of Music and the Junior School at the Royal Northern College of Music and in the advancement of the education of its students and former students.

RISK MANAGEMENT

The Trustee has considered the major risks faced by the charity and believes that the principal threat to its ability to achieve its objectives lies in its ability to maintain its revenues from investments and donations.

In order to monitor this risk, regular meetings are held with the investment manager adviser and the Trustee is represented on the Board of Governors of the Associated Board of the Royal Schools of Music.

Risks for individual funds are considered within the College’s overall risk monitoring and reporting procedures, and any strategic risks identified will be contained within the College’s Risk Register, which also contains details of the controls put into place by the College in order to mitigate those risks. This register is then scored using the best practice scoring methodology, which seeks to identify particularly those risks which require further attention. The Register is formally reported to the College’s Board of Governors.

GRANT MAKING POLICY

The Trustee considers requests for assistance made by the Royal Northern College of Music and other approved grantees and, when offering support, gives preference to those projects and activities which enhance the long term standing and profile of the College.

There is no private benefit accruing either to the Trustee of the College or the members of the College who form the committee which requests assistance.

RELATED PARTIES AND CONNECTED CHARITIES

The Royal Northern College of Music is the sole Trustee of the Endowment Fund. One of the objectives of the Endowment Fund is to apply income, as the Trustee considers fit, for the general purpose of the College.

ROYAL NORTHERN COLLEGE OF MUSIC ENDOWMENT FUND

TRUSTEE’S REPORT Year ended 31 July 2021

ACHIEVEMENTS AND PERFORMANCE

Unrestricted income for the year ended 31 July 2021 was £451,966. Of this £409,087 was derived from legacies and donations and the balance of £42,879 arose from investments held both as part of the permanently endowed capital and unrestricted funds of the charity and bank balances held as both endowed capital and undistributed income. Gains on unrestricted investments were £237,008 and after accounting for charitable activities and legal fees of £357,461 and investment management fees of £9,456, a gain of £322,057 was added to previously accumulated surpluses.

Restricted income of £168,341 arose during the year. Of this £101,871 was derived from grants, donations and legacies which were allocated by the donor for specific purposes and the balance of £66,470 from investments and bank balances held. Gains on restricted investments were £271,534 and after accounting for charitable activities and bank charges of £159,817 and investment management fees of £10,945 a gain of £269,113 was added to previously accumulated surpluses.

Gains on endowment investments were £159,079 and after accounting for these and investment management fees of £6,374, the value of the Endowment Fund increased to £1,144,137 at 31 July 2021.

The achievements of each fund in qualitative terms are that they widen the access to the College such that we at least meet our objectives within the Office for Fair Access agreement, maintain the College’s extremely high retention and achievement rates at over 95%, and also allow for the development of world-class performers of all disciplines as well as significantly increasing employability.

GOING CONCERN

The Charity’s financial statements are prepared on a going concern basis as the Trustee is satisfied after making appropriate enquiries that, at the time of their approval, the Charity has the resources to continue in operation for the foreseeable future.

Despite the Covid-19 pandemic, the two main sources of income for the fund, donations and investment income, have not been materially impacted. The funds have minimal operating costs and with reserves of over £16m, it is entirely appropriate to adopt the going concern basis for the 2020/21 financial statements.

INVESTMENT POLICY

The investments are intended to provide an income which, together with the capital can be used to finance the running of the charity.

The Trustee recognises the risk associated with investment in mainstream financial markets and accepts this risk in return for the prospect of additional returns over longer periods of time. As such, the Trustee wishes to remain largely invested at all times, subject to cash reserves being held as part of the investment management process and to cover liabilities. The investments of the Fund should be well diversified and include a range of assets including fixed interest stocks, UK shares and overseas shares. Although capital appreciation is not a primary objective, taking one year with another both the income and the capital value of the fund should, at a minimum, increase in line with inflation.

ROYAL NORTHERN COLLEGE OF MUSIC ENDOWMENT FUND

TRUSTEE’S REPORT Year ended 31 July 2021

Both the implementation of and performance against this policy, and the extent to which it remains a reasonable aspiration, are reviewed with the investment advisor on a regular basis. Following the appointment of Waverton in March 2013 we have adopted a ‘balanced’ approach, as defined by their guidelines. Over the long term, the objective is to achieve a return of inflation plus 3%, with inflation defined as the UK Consumer Price Index (CPI). The agreed benchmark to measure shorter term performance is a composite of a ‘neutral’ position of 60% in Global Equities (MSCI AC World Index) 25% Fixed Income (12.5% Markit iBoxx Gilts Index, 12.5% Markit iBoxx £ Corporate Bond Index) and 15% Cash (1 month £ cash deposit).

The portfolio recorded a positive return during the 12 month period to 31 July 2021, rising in value by +17.5% (+17.2% Jellis Portfolio), which was well ahead of the primary objective (CPI+3%) which returned +5.0%. The portfolio outperformed its composite benchmark which returned +14.7%. The portfolio benefited from its exposure to global equities, which recovered strongly from their sharp falls in early 2020 and returned +27.0% over the year, +1.3% ahead of the MSCI index. The equity element makes up the largest proportion of the portfolio. Bond returns were also supportive, with the bond exposure rising by +1.6%, despite the comparative index declining by -0.9%. Alternative assets (property, infrastructure and gold) also recorded a positive return, rising by +6.2%.

RESERVES POLICY

It is the policy of the Trustee to seek to maintain undesignated unrestricted funds, which are the free reserves of the charity, at a level of £1,000,000 which would enable the Trustee to support the Royal Northern College of Music for a further year in the event that the revenues of the charity should decline or fail. Undesignated unrestricted funds were £10,586,952 at 31 July 2021.

The College will endeavour to meet the targets set out above over the period of the next two years both by reviewing its expenditure policies and reviewing and where necessary changing the type and mix of investment vehicles used. This will be achieved while still complying with regard to the aims and objectives of the Fund.

FUTURE DEVELOPMENTS

The accumulated unrestricted funds at 31 July 2021 amounted to £12,861,952 of which £2,275,000 is classed as designated funds and relates to the holding of the share in the Associated Board of the Royal Schools of Music. The Trustee intends further to continue to support the College’s new building projects and to provide support for selected activities of the College and for its students.

AVAILABILITY AND ADEQUACY OF ASSETS OF EACH OF THE FUNDS

In the opinion of the Trustee the assets of each fund are available and adequate to fulfil their obligations. There are no contingent liabilities or guarantees. See note 1 for an explanation of the types of fund maintained by the charity.

By Order of the Trustee

ROYAL NORTHERN COLLEGE OF MUSIC ENDOWMENT FUND

Statement of Trustee’s responsibilities in respect of the Trustee’s annual report and the financial statements

Under charity law, the Trustee is responsible for preparing a Trustee’s Annual Report and financial statements for each financial year which show a true and fair view of the state of affairs of the charity and of the excess of income over expenditure for that period. The Trustee has elected to prepare the financial statements in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102), and the Charities Act 2011.

In preparing these financial statements, generally accepted accounting practice entails that the Trustee:

The Trustee is required to act in accordance with the trust deed of the charity, within the framework of trust law. They are responsible for keeping proper accounting records, sufficient to disclose at any time, with reasonable accuracy, the financial position of the charity at that time, and to enable the Trustee to ensure that, where any statements of accounts are prepared by them under section 132(1) of the Charities Act 2011, those statements of accounts comply with the requirements of regulations under that provision. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the charity and to prevent and detect fraud and other irregularities.

The Trustee is responsible for the maintenance and integrity of the financial and other information included on the charity’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

ROYAL NORTHERN COLLEGE OF MUSIC ENDOWMENT FUND

Independent auditor’s report to the Trustee of Royal Northern College of Music Endowment Fund

Opinion

We have audited the financial statements of Royal Northern College of Music Endowment Fund (the ‘charity’) for the year ended 31 July 2021 which comprise the Statement of Financial Activities, the Balance Sheet and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the charity in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the charity's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the trustees with respect to going concern are described in the relevant sections of this report.

Other information

The trustee is responsible for the other information. The other information comprises the information included in the Trustee’s Report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

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 information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

ROYAL NORTHERN COLLEGE OF MUSIC ENDOWMENT FUND

Matters on which we are required to report by exception

In light of the knowledge and understanding of the charity and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors’ Report included within the Trustee’s Report.

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

Responsibilities of the Trustee

As explained more fully in the trustee’s responsibilities statement set out on page 6, the trustee (who is also the director of the charitable company for the purposes of company law) is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustee determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the trustee is responsible for assessing the charity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustee either intends to liquidate the charity or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. Based on our understanding of the charity and its activities, we identified that the principal risks of non-compliance with laws and regulations related to the Charities Act 2011, the Charities Statement of Recommended Practice, UK tax legislation, pensions legislation, employment regulation and health and safety regulation, anti-bribery, corruption and fraud, and money laundering, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements, such as the Companies Act 2006.

We evaluated the trustee’s and management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates, in particular in relation to use of restricted and endowment funds, and significant one-off or unusual transactions.

Our audit procedures were designed to respond to those identified risks, including non-compliance with laws and regulations (irregularities) and fraud that are material to the financial statements. Our audit procedures included but were not limited to:

ROYAL NORTHERN COLLEGE OF MUSIC ENDOWMENT FUND

Our audit procedures in relation to fraud included but were not limited to:

There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of the audit report

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

DRA Bott (Senior Statutory Auditor) for and on behalf of Mazars LLP

Chartered Accountants and Statutory Auditor One St Peter’s Square Manchester M2 3DE

Date:

STATEMENT OF FINANCIAL ACTIVITIES Year Ended 31 July 2021 Year Ended 31 July 2020
Note Unrestricted Restricted Endowment Total Unrestricted Restricted Endowment Total
Funds Funds Funds Funds Funds Funds
£ £ £ £ £ £ £ £
INCOMING RESOURCES
Incoming resources from generated funds
Voluntary Income 409,087 101,871 - 510,958 258,273 318,386 - 576,659
Investment Income 42,879 66,470 - 109,350 60,161 73,480 - 133,641
Total Incoming Resources 451,966 168,341 - 620,307 318,434 391,866 - 710,300
RESOURCES EXPENDED
Cost of generating funds
Investment management costs 9,456 10,945 6,347 26,747 8,542 9,209 5,733 23,484
Charitable activities 2 351,140 159,817 - 510,957 21,600 537,882 - 559,482
Governance costs -
Audit/Legal fees 6,167 - - 6,167 5,400 - - 5,400
Bank charges 154 - - 154 115 37 - 152
Total Resources Expended 366,917 170,761 6,347 544,025 35,657 547,128 5,733 588,518
NET INCOMING RESOURCES FOR THE YEAR 85,049 (2,420) (6,347) 76,282 282,777 (155,262) (5,733) 121,782
OTHER RECOGNISED GAINS AND LOSSES
Gains on revaluations and disposals of investments held for charity use:
Gain on sale of investments 12,991 17,166 8,720 38,877 44,988 41,565 30,196 116,749
Less: Previously accounted for as an Unrealised (gain) (57,740) (69,713) (38,755) (166,207) (40,859) (50,361) (27,424) (118,644)
Realised from investments (44,749) (52,546) (30,035) (127,330) 4,129 (8,796) 2,772 (1,895)
Unrealised from investments 281,756 324,080 189,114 794,950 14,150 40,311 9,497 63,958
TOTAL INVESTMENT (LOSSES) / GAINS 237,008 271,534 159,079 667,620 18,279 31,515 12,269 62,063
NET MOVEMENTS IN FUNDS FOR THE YEAR 322,057 269,113 152,732 743,902 301,056 (123,747) 6,536 183,845
TOTAL FUNDS AT 1 AUGUST 12,539,895 2,586,761 991,405 16,118,061 12,238,839 2,710,508 984,869 15,934,216
TOTAL FUNDS AT 31 JULY 9 12,861,952 2,855,874 1,144,137 16,861,963 12,539,895 2,586,761 991,405 16,118,061

All amounts derive from continuing activities.

10

BALANCE SHEET
Year ended 31 July 2021
Note As at 31 July 2021 As at 31 July 2020
£ £ £ £
FIXED ASSETS
Investments
Quoted: at market value 3 5,030,769 4,389,699
Unquoted: ABRSM at historical 2,275,000 2,275,000
cost 7,305,769 6,664,699
CURRENT ASSETS
Debtors 4 2,014,525 2,831,273
Cash at bank and in hand 7,549,318 6,629,540
9,563,843 9,460,813
CURRENT LIABILITIES
Creditors and accruals 5 7,649 7,451
NET CURRENT ASSETS 9,556,194 9,453,362
16,861,963 16,118,061
CAPITAL FUNDS
Endowment fund 6 1,144,137 991,405
INCOME FUNDS
Restricted 2,855,874 2,586,761
Unrestricted 12,861,952 12,539,895
15,717,826 15,126,656
TOTAL FUNDS 8 16,861,963 16,118,061

The financial statements on pages 10 to 17 were approved on 23 November 2021

11

NOTES TO THE ACCOUNTS Year ended 31 July 2021

1 ACCOUNTING POLICIES

The financial statements have been prepared in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102), and the Charities Act 2011.

These financial statements are consolidated with the Royal Northern College of Music financial statements, a copy of which are available at www.rncm.ac.uk

Accounting convention

The financial statements are prepared under the historical cost convention as modified by the revaluation of investments to market value.

Fund accounting

The charity maintains various types of funds as follows:

Endowment funds

Endowment funds represent resources which have been made available and which the Trustee is legally required to invest or retain for the purposes of the charity.

Restricted funds

Restricted funds represent income which has been allocated by the donor for specific purposes.

Unrestricted funds

Unrestricted funds, which include the income derived from the endowment funds, represent resources which are expendable at the discretion of the Trustee in the furtherance of the objectives of the charity.

Incoming Resources

All income is recognised in the statement of financial activities when the conditions for receipt have been met and there is reasonable assurance of receipt. When a claim for repayment of income tax has been, or will be, made such income is grossed up for the tax recoverable. Where income is received relating to a future accounting period, the statement of financial activities shows the gross amount received together with the change in amount deferred to future accounting periods. Deferred income at the year end is included in creditors. The following accounting policies are applied to income.

Legacies and donations

Legacies and donations are accounted for when conditions for their receipt have been met. Material items receivable at the year end are included at an estimated value of the amount to be received. Investment income

Investment income is accounted for when receivable and includes any related tax recoverable.

Resources expended

Direct charitable expenditure

Direct charitable expenditure includes all expenditure directly related to the objectives of the charity.

Grants Payable

Grants payable are charged in the year when the offer is conveyed to the recipient except in those cases where the offer is conditional, such grants being recognised as expenditure when the conditions attaching are fulfilled. Grants offered subject to conditions which have not been met at the year end are noted as a commitment, but not accrued as expenditure. Recipients of grants payable are primarily the Royal Northern College of Music and the Junior School at the Royal Northern College of Music.

Other expenditure

Other expenditure comprises professional fees and miscellaneous expenses. The administration of the charity is undertaken by staff employed by the Royal Northern College of Music using facilities provided by that body. The value of this support has not been quantified.

12

NOTES TO THE ACCOUNTS Year ended 31 July 2021

1 ACCOUNTING POLICIES (continued)

Investments

Investments within the scope of Section 11 of FRS 102 (therefore excluding investments in subsidiaries, associates and joint ventures) are recognised initially at the transaction price (adjusted for transaction costs except in the initial measurement of financial assets and liabilities that are subsequently measured at fair value through profit and loss) unless the arrangement constitutes, in effect, a financing transaction. Subsequently, they are measured at fair value if the investment is publicly traded or their fair value can otherwise be measured reliably with the changes in fair value recognised in the statement of comprehensive income

The unquoted investment in ABRSM is stated at historical cost.

Charitable commitments

Commitments which are legally binding on the Trustee are accounted for as resources expended in the statement of financial activities. Where the promise of financial support is not binding on the Trustee, such intentions are accounted for by a transfer to a designated reserve. Activities that are to be wholly financed from future income do not form part of such designation and are disclosed in a note to the accounts.

Associated Undertaking

The unquoted investment in the Associated Board of the Royal Schools of Music (ABRSM) is valued by the Trustee at cost. The investment represents a quarter share in the charitable company.

Taxation

The Royal Northern College of Music Endowment Fund is considered to pass the tests set out in Paragraph 1 Schedule 6 Finance Act 2010 and therefore it meets the definition of a charitable trust for UK income tax purposes. Accordingly, the charity is potentially exempt from taxation in respect of income or capital gains received within categories covered by Part 10 Income Tax Act 2007 or Section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied exclusively to charitable purposes.

Key Management Personnel

In these financial statements, the Endowment Fund is considered to be a qualifying entity (for the purposes of FRS102) and has applied the exemptions available under FRS102 in respect of the key management personnel disclosure.

Cash Flow

In these financial statements, the Endowment Fund is considered to be a qualifying entity (for the purposes of FRS102) and has applied the exemptions available under FRS102 in respect of preparing a cash flow statement.

Accounting Estimates and Judgements

The Charity has not identified any accounting estimates or judgements that would significantly affect the amounts recognised in the financial statements.

Going Concern

The Trustee has assessed the ability of the Charity to continue as a going concern, considering events and conditions that may cast significant doubt upon its ability to do so for the period to July 2023. Based on its appropriate enquiries the Trustee is satisfied that, at the time of their approval, the Charity has the resources to continue in operation for the foreseeable future. Consequently these accounts have been prepared on a going concern basis.

13

NOTES TO THE ACCOUNTS Year ended 31 July 2021

2 GRANTS PAYABLE

GRANTS PAYABLE
Projects and Events
RNCM Awards Fund		 Unrestricted
Restricted
Total Unrestricted
Restricted
Total
Funds
Funds
Funds
Funds
£
£
£
£
£
£
351,140
159,817
510,957
21,600
330,552
352,152
-
-
-
-
207,330
207,330
Year Ended 31 July 2021
Year Ended 31 July 2020
351,140
159,817
510,957
21,600
537,882
559,482

3 INVESTMENTS HELD AS FIXED ASSETS

Year Ended 31 July 2021 Year Ended 31 July 2020
£ £
Opening market value 4,389,699 4,351,850
Additions at cost 680,508 932,263
Disposals at opening market value (465,372) (1,297,343)
Unrealised gains 794,950 64,099
Movement on cash (369,015) 338,830
Closing market value 5,030,770 4,389,699
Historical cost 3,585,202 3,543,630
Unquoted investment
Associated Board of the Royal Schools of Music 2,275,000 2,275,000

Quoted investments are valued at market value at the year end. The unquoted investment in the Associated Board of the Royal Schools of Music (ABRSM) is valued by the Trustee at cost. The investment represents a quarter share in the charitable company. The Trustee performed an impairment review in 2020/2021 and considers that there is no requirement to impair its investment in ABRSM.

Summary details of investments held at 31 July 2021 are as follows:

Bonds
UK Equities
Continental European Equities
North American Equities
Japanese Equities
Asia Pacific Equities
Alternatives
Cash & Cash Holdings		 Cost Market Value
£
£
668,259
704,440
312,689
418,090
297,834
500,659
993,324
1,690,033
371,037
470,913
147,755
304,066
698,058
846,321
96,247
96,247
3,585,203
5,030,769

14

NOTES TO THE ACCOUNTS Year ended 31 July 2021

4 DEBTORS

DEBTORS
Year Ended 31 July 2021 Year Ended 31 July 2020
Investment income, accrued interest £ £
and tax recoverable 14,525 31,273
Inter-company loan 2,000,000 2,800,000
2,014,525 2,831,273

5 MOVEMENT IN ENDOWMENT FUNDS

Endowment funds comprise resources which have been made available and which the Trustee is legally required to invest or retain for the purposes of the charity. All endowment funds, which are represented by investments held as fixed assets and, to a limited extent, cash are permanent as the Trustee has no power to convert them into income.

Movements for the year are set out in the Statement of Financial Activities on page 10 of this document.

6 MOVEMENT IN RESTRICTED FUNDS

Restricted funds represent grants, donations and legacies received which are allocated by the donor for specific purposes. Expenditure from restricted funds is entirely related to prizes, bursaries and scholarships.

Junior Strings Project Instruments
JRNCM : Estate of Mrs K Knibbs
Foundation for Sports and Arts
Chris Rowland Masterclass
Piano Competition
Concert Hall Refurbishment Fund
The National Foundation for Youth Music
Brass Ensemble & Jazz concerts
Albert & Eugenie Frost Trust
Gala Dinner
Instrument Loan Scheme
Entrepreneurship Fund
Michael Kennedy Memorial
JRNCM Bursaries
RNCM Engage
PRS Foundation (Brass Band)
William Waterhouse Int Chair
Dullator
Garfield Weston
Student Support
Pathfinder
Other
Jellis Bequest		 Balance
Investment
Balance
31-Jul-20
Income
Gains Expenditure 31-Jul-21
£
£
£
£
£
21,303
21,303
12,407
900
11,507
22,952
22,952
53,905
53,905
400,048
400,048
1,200
450
1,650
6,933
6,933
615
615
38,096
10,000
28,096
35,845
35,845
12,046
3,300
15,346
4,514
1,000
2,000
3,514
2,381
2,381
4,500
4,500
18,932
18,932
5,024
5,000
10,024
11,344
11,344
-
28,095
28,095
-
75,000
75,000
21,488
7,800
29,288
13,450
76,000
89,450
214,345
39,667
16,891
8,674
262,229
1,582,338
35124
254,643
109,749 1,762,356
2,586,761
168,341
271,534
170,762 2,855,874

15

NOTES TO THE ACCOUNTS Year ended 31 July 2021

7 MOVEMENT IN UNRESTRICTED FUNDS

The Trustee has designated part of the general funds as separate funds representing the amount invested by the Fund in the Associated Board of the Royal Schools of Music.

Balance Balance
31-Jul-20 Income **Gains ** Expenditure 31-Jul-21
£ £ £ £ £
Associated Board of the
Royal Schools of Music 2,275,000 - - - 2,275,000
General Fund 10,264,895 451,966 237,008 366,917 10,586,952
Total unrestricted funds 12,539,895 451,966 237,008 366,917 12,861,952
ANALYSIS OF ASSETS AND LIABILITIES BETWEEN FUNDS
Year Ended 31 July 2021 Year Ended 31 July 2020
Endowment Restricted Unrestricted Total Endowment Restricted Unrestricted Total
Funds Funds Funds Funds Funds Funds
£ £ £ £ £ £ £ £
Fixed Assets
Investments 1,145,023 2,179,805 3,980,941 7,305,769 992,243 1,919,137 3,753,319 6,664,699
Current Assets
Debtors - 702 2,013,823 2,014,525 - 6,626 2,824,647 2,831,273
Cash (352) 676,287 6,873,383 7,549,318 (352) 661,839 5,968,053 6,629,540
Current Liabilities
Creditors and
accruals (534) (920) (6,195) (7,649) (486) (841) (6,124) (7,451)
1,144,137 2,855,874 12,861,952 16,861,963 991,405 2,586,761 12,539,895 16,118,061

8 ANALYSIS OF ASSETS AND LIABILITIES BETWEEN FUNDS

9 TAXATION

The Royal Northern College of Music Endowment Fund, as a registered charity, is exempt from taxation on its income and gains falling within Section 505 of the Taxes Act 1988 or Section 256 of the Taxation of Chargeable Gains Act 1992 to the extent that they are applied to its charitable objectives. No tax charge has arisen in the year.

10 RELATED PARTY TRANSACTIONS AND CONNECTED CHARITIES

The Royal Northern College of Music is the sole Trustee of the Endowment Fund. One of the objectives of the Endowment Fund is to apply income, as the trustee considers fit, for the general purpose of the College.

16

NOTES TO THE ACCOUNTS Year ended 31 July 2021

11 FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENTS
Year Ended 31 July 2021
Year Ended 31 July 2020
£
£
Financial assets
Investments measured at fair value through
income and expenditure
Investments in listed ordinary shares
3,383,760
2,580,124
Investments in common investment funds
1,647,009
1,809,575
Cash and cash equivalents
7,549,318
6,629,540
Total financial assets
12,580,087
11,019,239
£
3,383,760
1,647,009
7,549,318
12,580,087		 £
2,580,124
1,809,575
6,629,540
11,019,239

Income, expenditure, gains and losses in respect of financial instruments are summarised below:

Year Ended 31 July 2021
Year Ended 31 July 2020
£
£
Interest
Interest income
109,350
133,641
109,350
133,641
Gains
On financial assets measured at fair value
through income and expenditure
667,620
62,063
667,620
62,063		 Year Ended 31 July 2021
Year Ended 31 July 2020
£
£
Interest
Interest income
109,350
133,641
109,350
133,641
Gains
On financial assets measured at fair value
through income and expenditure
667,620
62,063
667,620
62,063		 Year Ended 31 July 2021
Year Ended 31 July 2020
£
£
Interest
Interest income
109,350
133,641
109,350
133,641
Gains
On financial assets measured at fair value
through income and expenditure
667,620
62,063
667,620
62,063
£
109,350
109,350
667,620
667,620		 £
133,641
133,641
62,063
62,063

17