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2023-07-31-accounts

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THE ROYAL NORTHERN COLLEGE OF MUSIC ENDOWMENT FUND

Charity Number 504949

Financial Statements

31 July 2023

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 2023 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 No. 1 Circle Square 3 Symphony Park Manchester M1 7FS

ROYAL NORTHERN COLLEGE OF MUSIC ENDOWMENT FUND

TRUSTEE’S REPORT Year ended 31 July 2023

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 2023.

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 managers 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 2023

ACHIEVEMENTS AND PERFORMANCE

Unrestricted income for the year ended 31 July 2023 was £916,100. Of this £777,595 was derived from ABRSM distribution, legacies and donations and the balance of £138,504 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. Losses on unrestricted investments were £7,975 and after accounting for charitable activities and legal fees of £2,015,129 and investment management fees of £9,649, a loss of £1,116,654 was deducted from previously accumulated surpluses.

Restricted income of £903,281 arose during the year. Of this £759,424 was derived from grants, donations and legacies which were allocated by the donor for specific purposes and the balance of £143,858 from investments and bank balances held. Losses on restricted investments were £12,395 and after accounting for charitable activities and bank charges of £588,659 and investment management fees of £11,211 a gain of £291,016 was added to previously accumulated surpluses.

Losses on endowment investments were £5,353 and after accounting for these and investment management fees of £6,476 the value of the Endowment Fund decreased to £1,128,938 at 31 July 2023.

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 and more recent geopolitical issues and their impact on the economy and investment markets, 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 2022/23 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 2023

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), 20% Fixed Income (10% Markit iBoxx Gilts Index, 10% Markit iBoxx £ Corporate Bond Index), 18% Alternatives (9% S&P Real Assets Index (Hedged), 9% Absolute Return Index) and 2% Cash (ICE GBP SONIA 1-Month).

The portfolio recorded a positive return during the 12 month period to 31 July 2023, rising in value by +1.2% (+1.0% Jellis Portfolio) after fees. The portfolio has modestly lagged the short-term benchmark over the last 12 months, which returned +1.6% The returns in the short term have been well behind the inflation+3% measure, although this is meant to be a long-term objective. Over the long term (7-years plus) the portfolios are well ahead of the CPI+3% objective.

The period captures a very turbulent time towards the end of 2022, when global markets in all major asset classes struggled. The so-called risk-free asset class (UK government bonds or gilts) was amongst the worst, culminating in September 2022 with the failed UK budget reforms. Over the financial year gilts fell by -12.5%, although the portfolio’s bonds returned a very credible -2.4%. More recently, markets have been more settled, and equities in particular have made a reasonable recovery in 2023 through to 31 July, which has been of benefit to the portfolios given that we have maintained a reasonably high weight in favour of this asset class. The portfolio’s alternatives fell by -9.6% (as compared to the benchmark return of -0.8%), while the equities rose by +6.2% (as compared to the benchmark return of +6.8%)

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 £9,944,212 at 31 July 2023.

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 2023 amounted to £12,219,212 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.

Approved by the Trustee on 29 November 2023 and signed as authorised on their behalf by

Ravi Gupta Chair of the Board of Governors

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 members of The Royal Northern College of Music Endowment Fund

Opinion

We have audited the financial statements of The Royal Northern College of Music Endowment Fund (the ‘charity’) for the year ended 31 July 2023 which comprise 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 trustees’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

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

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

Other information

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

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

ROYAL NORTHERN COLLEGE OF MUSIC ENDOWMENT FUND

We have nothing to report in this regard.

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 trustee’s report.

We have nothing to report in respect of the following matters in relation to which the Charities (Accounts and Reports) Regulations 2008 requires us to report to you if, in our opinion:

Responsibilities of Trustees

As explained more fully in the trustees’ responsibilities statement set out on page 6, the trustees are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

Auditor’s responsibilities for the audit of the financial statements

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

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

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 industry, we considered that non-compliance with the following laws and regulations might have a material effect on the financial statements: UK tax legislation and the Charities SORP.

To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to:

ROYAL NORTHERN COLLEGE OF MUSIC ENDOWMENT FUND

We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as tax and the Charities Act 2011.

In addition, we evaluated the trustees’ and management’s incentives and opportunities for fraudulent manipulation of the financial statements, including the risk of management override of controls, and determined that the principal risks 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 revenue recognition (which we pinpointed to the cut-off assertion) and significant oneoff or unusual transactions.

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 charity’s trustees, as a body, in accordance with Part 4 of the Charities (Accounts and Reports) Regulations 2008. Our audit work has been undertaken so that we might state to the charity’s trustees those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charity and the charity’s trustees as a body, for our audit work, for this report, or for the opinions we have formed.

Michael Speight (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 2023 Year Ended 31 July 2022
Note Unrestricted Restricted Endowment Total Unrestricted Restricted Endowment Total
Funds Funds Funds Funds Funds Funds
£ £ £ £ £ £ £ £
INCOMING RESOURCES
Incoming resources from generated funds
Voluntary Income 777,595 759,424 - 1,537,019 455,185 290,228 - 745,413
Investment Income 138,504 143,858 - 282,362 46,404 70,693 - 117,097
Total Incoming Resources 916,100 903,281 - 1,819,381 501,589 360,921 - 862,510
RESOURCES EXPENDED
Cost of generating funds
Investment management costs 9,649 11,211 6,476 27,337 10,109 11,754 6,786 28,649
Charitable activities 2 2,006,012 588,659 2,594,671 15,997 504,015 - 520,012
Governance costs -
Audit/Legal fees 8,880 8,880 6,521 - - 6,521
Bank charges 237 237 137 - - 137.02
Total Resources Expended 2,024,778 599,870 6,476 2,631,125 32,764 515,769 6,786 555,318
NET INCOMING RESOURCES FOR THE YEAR (1,108,678) 303,411 (6,476) (811,743) 468,825 (154,848) (6,786) 307,191
OTHER RECOGNISED GAINS AND LOSSES
Gains on revaluations and disposals of investments held for charity use:
Gain on sale of investments 110,826 90,254 74,386 275,466 97,648 122,919 65,541 286,107
Less: Previously accounted for as an Unrealised (gain) (140,305) (124,613) (94,172) (359,090) (105,823) (124,908) (71,028) (301,758)
Realised from investments (29,479) (34,358) (19,786) (83,623) (8,175) (1,989) (5,487) (15,651)
Unrealised from investments 21,503 21,963 14,433 57,900 13,264 8,597 8,903 30,763
TOTAL INVESTMENT GAINS (7,975) (12,395) (5,353) (25,723) 5,089 6,608 3,416 15,112
NET MOVEMENTS IN FUNDS FOR THE YEAR (1,116,654) 291,016 (11,829) (837,467) 473,914 (148,240) (3,370) 322,303
TOTAL FUNDS AT 1 AUGUST 13,335,866 2,707,634 1,140,767 17,184,266 12,861,952 2,855,874 1,144,137 16,861,963
TOTAL FUNDS AT 31 JULY 8 12,219,212 2,998,650 1,128,938 16,346,799 13,335,866 2,707,634 1,140,767 17,184,266

All amounts derive from continuing activities.

10

BALANCE SHEET
Year ended 31 July 2023
Note As at 31 July 2023 As at 31 July 2022
£ £ £ £
FIXED ASSETS
Investments
Quoted: at market value 3 4,971,109 5,017,402
Unquoted: ABRSM at historical 2,275,000 2,275,000
cost 7,246,109 7,292,402
CURRENT ASSETS
Debtors 4 2,107,682 4,077,641
Cash at bank and in hand 7,282,068 6,067,843
9,389,750 10,145,484
CURRENT LIABILITIES
Accruals 289,059 253,619
NET CURRENT ASSETS 9,100,691 9,891,865
TOTAL NET ASSETS 16,346,800 17,184,267
CAPITAL FUNDS
Endowment fund 5 1,128,938 1,140,767
INCOME FUNDS
Restricted 6 2,998,650 2,707,634
Unrestricted 7 12,219,212 13,335,866
15,217,862 16,043,500
TOTAL FUNDS 8 16,346,800 17,184,267

Approved by the Trustee on 29/11/2023 and signed as authorised on their behalf by

Chair of the Board of Governors, Ravi Gupta

Principal, Linda Merrick

11

NOTES TO THE ACCOUNTS Year ended 31 July 2022

1 ACCOUNTING POLICIES

The financial statements have been prepared to give a 'true and fair' view and have departed from the Charities (Accounts and Reports) Regulations 2008 only to the extent required to provide a true and fair view. This departure has involved following the Charities Statement of Recommended Practice (FRS 102) in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) rather than the “Accounting and Reporting by Charities: Statement of Recommended Practice Charities SORP 2005” which has since been withdrawn.

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 and the amount is quatifiable. 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.

12

NOTES TO THE ACCOUNTS Year ended 31 July 2022

1 ACCOUNTING POLICIES (continued)

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.

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 the associate, ABRSM is stated at historical cost less impairment.

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, which is considered for impairment. 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.

13

NOTES TO THE ACCOUNTS Year ended 31 July 2022

1 ACCOUNTING POLICIES (continued)

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 foreseeable future and have not identified any material uncertainties within their review. 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.

14

NOTES TO THE ACCOUNTS Year ended 31 July 2023

2 GRANTS PAYABLE

GRANTS PAYABLE
Projects and Events
- Payable to Individuals
- Payable to Institutions
RNCM Grant
RNCM Awards Fund		 Unrestricted
Restricted
Total Unrestricted
Restricted
Total
Funds
Funds
Funds
Funds
£
£
£
£
£
£
3,558
29,903
33,461
9,085
17,541
26,625
2,454
558,756
561,210
6,912
246,274
253,186
2,000,000
-
2,000,000
-
-
-
-
240,200
240,200
Year Ended 31 July 2023
Year Ended 31 July 2022
2,006,012
588,659
2,594,671
15,997
504,015
520,012

3 INVESTMENTS HELD AS FIXED ASSETS

Year Ended 31 July 2023 Year Ended 31 July 2022
£ £
Opening market value 5,017,403 5,030,770
Additions at cost 1,073,251 1,055,766
Disposals at opening market value (1,103,116) (1,346,800)
Unrealised (losses)/gains 57,900 30,763
Movement on cash (74,327) 246,904
Closing market value 4,971,110 5,017,403
Historical cost 4,094,565 3,833,353
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 2022/2023 and considers that there is no requirement to impair its investment in ABRSM.

Summary details of investments held at 31 July 2023 are as follows:

Bonds
UK Equities
Continental European Equities
North American Equities
Japanese Equities
Asia Pacific Equities
Alternatives
Cash & Cash Holdings		 Cost Market Value
£
£
1,006,651
973,538
199,600
266,649
463,792
483,665
1,139,479
1,726,879
337,689
433,120
85,109
145,364
593,422
673,071
268,823
268,823
4,094,565
4,971,110
15

NOTES TO THE ACCOUNTS Year ended 31 July 2023

4 DEBTORS

DEBTORS
Year Ended 31 July 2023 Year Ended 31 July 2022
Investment income, accrued interest £ £
and tax recoverable 107,682 77,641
Inter-company loan 2,000,000 4,000,000
2,107,682 4,077,641

The Intra Group Loan was partially repaid (£2m) and partially converted to a grant (£2m) post year-end. This loan is a programme-related investment recognised at historical cost. It is repayable on demand with nil interest and nil security.

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
The National Foundation for Youth Music
RNCM50 Fund/ Gala Dinner
Instrument Loan Scheme
JRNCM Bursaries
RNCM Engage/Pathfinder
PRS Foundation (Brass Band)
Dullator - JRNCM Bursary
Garfield Weston
Student Support
Pathfinder
Haworth Charitable Trust
Heritage Project
Organ Refurb
Roof Garden
Young Artists
Other
Jellis Bequest		 Balance
Investment
Balance
31-Jul-22
Income
Gains Expenditure
31-Jul-23
£
£
£
£
£
21,303
21,303
10,607
900
9,707
22,952
22,952
53,905
53,905
311,673
3,478
308,194
6,933
6,933
35,845
83,166
119,011
17,971
3,100
21,071
20,500
69,000
50,000
39,500
24,932
371,955
83,571
313,316
10,024
3,000
7,024
50,000
12,500
25,000
37,500
75,000
75,000
33,020
33,020
180,350
180,350
17,000
17,000
-
11,845
11,845
-
10,000
10,000
-
10,000
73
9,927
-
118,554
73,455
45,099
400,620
173,543
(568)
122,921
450,673
1,415,000
39,619
(11,827)
237,471
1,205,321
2,707,634
903,281
(12,395)
599,870
2,998,650

16

NOTES TO THE ACCOUNTS Year ended 31 July 2023

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.

Associated Board of the
Royal Schools of Music
General Fund
Total unrestricted funds		 Balance
Balance
31-Jul-22
Income
Gains Expenditure
31-Jul-23
£
£
£
£
£
2,275,000
-
-
-
2,275,000
11,060,866
916,100
(7,975)
2,024,778
9,944,212
13,335,866
916,100
(7,975)
2,024,778
12,219,212

8 ANALYSIS OF ASSETS AND LIABILITIES BETWEEN FUNDS

Year Ended 31 July 2023 Year Ended 31 July 2022 Year Ended 31 July 2022
Endowment Restricted Unrestricted Total Endowment Restricted Unrestricted Total
Funds Funds Funds Funds Funds Funds
£ £ £ £ £ £ £ £
Fixed Assets
Investments 1,131,466 2,153,899 3,960,744 7,246,109 1,141,692 2,174,730 3,975,979 7,292,402
Current Assets
Debtors - 24,639 2,083,043 2,107,682 - 1,404 4,076,237 4,077,641
Cash (352) 1,064,079 6,218,341 7,282,068 (352) 774,692 5,293,503 6,067,843
Current Liabilities
Creditors and
accruals (2,176) (243,967) (42,915) (289,059) (573) (243,192) (9,854) (253,619)
1,128,938 2,998,650 12,219,212 16,346,799 1,140,767 2,707,634 13,335,866 17,184,267

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. ABRSM, as an associate of the Royal Northern College of Music Endowment Fund, is a related party. £500k was received in year from ABRSM as a distribution of surpluses generated by ABRSM.

17

NOTES TO THE ACCOUNTS Year ended 31 July 2023

11 FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS
Year Ended 31 July 2023 Year Ended 31 July 2022
£ £
Financial assets
Investments measured at fair value through
income and expenditure
Investments in listed ordinary shares 3,055,677 3,186,794
Investments in common investment funds 1,915,432 1,830,609
Cash and cash equivalents 7,282,068 6,067,843
Total financial assets 12,253,178 11,085,245

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

Year Ended 31 July 2023 Year Ended 31 July 2022
£ £
Interest
Interest income 282,362 117,097
282,362 117,097
Gains
On financial assets measured at fair value
through income and expenditure (25,723) 15,112
(25,723) 15,112

18