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2021-03-31-accounts

Midlands Arts Centre

A Company Limited by Guarantee

Trading as MAC

Annual Report & Financial Statements For The Year Ended 31 March 2021

Company No: 00718349 Charity No: 528979

Report and Financial Statements for the Year Ended 31 March 2021

Contents Page
A Snapshot of MAC 1
Chair’s Report 2
Our Purposes and Activities 5
Achievements and Performance 7
Financial review 15
Plans for Future Periods 22
Charity Reference and Administrative Details 27
Auditor’s Report 32
Consolidated Statement of Financial Activities 36
Balance Sheets 37
Consolidated Cash Flow 38
Notes to Financial Statements 40

A Snapshot of MAC 2020/21

----- Start of picture text -----
110 42 500+ 10k+
online events live-streamed views from 4 audience reach
created in partnership online events virtual film across all online
with, supported,
commissioned or and online screenings events
delivered by MAC workshops
1000+
600+
£1.1 million
10k monthly social media sales for
PR value
website posts, features, ticketed online
from media
shares and
visitors events coverage
stories
53% 2,300+ Social 150+
of bookers worksheets and Media free online
650+
chose to donate or 82k Twitter resources published
recredit the cost of their music activity packs for children & young
ticket to MAC delivered by 20k Facebook people by
MAC Makes Music to 10k Instagram MAC Makes Music
local families
150+ 127 122 213
Hidden Voices carers engaged music sessions interactions by
inc. 82 new delivered for refugee women
activity packs
delivered to female female carers female carers and girls
carers and participants by Hidden Voices
by Hidden Voices
----- End of picture text -----

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Report of The Trustees 2020/21

The Trustees are pleased to present their annual directors’ report together with the consolidated financial statements of the charity and its subsidiary for the year ending 31 March 2021 which are also prepared to meet the requirements for a directors’ report and accounts for Companies Act purposes.

The financial statements comply with the Charities Act 2011, the Companies Act 2006, the Memorandum and Articles of Association, 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 (FRS 102) (effective 1 January 2019).

Chair’s Report

The impact of COVID-19 has presented the greatest threat to the future of Midlands Arts Centre (MAC) since we first opened in 1962 and its immediate impact has been financially devastating. All the current indications are that we will have to find ways to live with the impact of COVID-19 going forward as we transition into a new future.

Despite the extraordinary challenges we have faced, we remain committed to our mission – ‘to promote innovative, creative arts activities in ways that help to establish them in people’s everyday lives’. The pandemic has raised profound societal and cultural changes leading to pertinent issues about the environment, community activism, involvement, inclusivity, wellbeing and creativity – to name but a few. We are not the same people, or organisation we were a year ago.

Since our closure on 20 March 2020 until MAC re-opened on 21 May 2021, the priority has been to adapt quickly and reallocate budgets through radical cost-cutting, furloughing and financial forecasting. We kept our site safe and secure, oversaw a rapid and smooth transition to home working at the start of lockdown and transferred our popular community activities online with great success.

Through enormous hard work and a highly committed workforce we have weathered the crisis and developed a newly revised business model operating on sources of income that depend upon us being open to the public - catering, ticketing and events hire. This is a model that has, in the past, enabled our financial independence, but now sees us critically vulnerable in the short-term and, in common with most of the cultural sector, we have made revisions and are testing our services within a new operating environment.

Whilst we begin to build up trading income, setting prudent budget targets, we are extremely grateful for the Government emergency cultural funding received. The grants have allowed us to cover critical expenditure during this crucial period, and we would like to thank colleagues at DCMS, Arts Council England, Garfield Weston Foundation, and Players of the Postcode Lottery for providing lifelines to our organisation. The Coronavirus Job Retention Scheme along with the tough decisions and actions we have taken to reduce fixed costs, meant we were able to mitigate the catastrophic reduction in revenue during the past year. Alongside formal partners we have been hugely grateful for the continued commitment of many valued individuals who signed up to MAC’s new

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membership scheme and those who deferred ticket reimbursements or offered donations.

This has been a big vote of confidence in MAC’s reputation and underpins our long-term future. We now have the means and confidence to continue to plan sensibly through this transition period, into a more positive year in 2022 as we celebrate MAC’s 60-year anniversary and welcome the terrific opportunities of the Commonwealth Games staged in Birmingham.

During the closure period, we focused on supporting priority communities, and in particular, female carers, disabled families and elders living in isolation. We reached 1000s of people in a variety of new ways, aware that many live in digital poverty, hence our need to use innovative methods to contact people other than online. We delivered ukuleles to people’s homes, invited musicians to do pop-up garden gigs and sent out art materials in food parcels – we tried to be as imaginative as possible under very challenging situations.

Where digital engagement was possible, we supplied equipment and training in order to organise workshops such as inclusive online choirs and open mic nights led by our brilliant team of music tutors. We expect to see further investments in MAC’s digital and technology plans in the forthcoming year to offer a hybrid model to diverse audiences who wish to continue accessing our online services.

Despite the pandemic, we continued our four-year successful partnership with Youth Music, with our award-winning MAC Makes Music programme that offers high quality, innovative experiences to young people across the region. Hidden Voices, funded generously by Spirit of 2012, which supports female carers of all ages to actively contribute to music activities came to an end in April 2021 as did the glorious Celebrating Age - we are determined that the participants from these popular programmes remain connected to MAC’s new creative programmes.

Crucially our broad and diverse community programme supported, wherever possible, our important freelance community of artists, musicians and production staff who normally work with us on site. We were able to offer research grants, community online work and training opportunities.

Alongside the day-to-day management of the venue, we undertook, as planned prior to lockdown, an ambitious capital programme to improve visitors’ facilities and upgrade digital resources. Despite delays with Government restrictions, we completed the building and refurbishments on time and to budget. The new facilities – pocket garden, studios, café refurbishment, upgraded outdoor theatre and digital infrastructure – put us in a much stronger financial position with services that specialise in inclusive work and wellness. We could not have achieved this successful outcome without the financial support of partners the Arts Council England, GBSLEP and Edward Cadbury Charitable Trust.

We remain confident in our future, and pursue a strong, clear strategy in line with MAC’s charitable objectives, important for us in the coming year. Undoubtedly, our resolve and stability in 2020/21 stemmed from our incredibly passionate and dedicated workforce. It was with immense sadness that we saw many staff leave MAC in the summer of 2020 as the result of the redundancy programme forced on us by the continued closure of the building and the impact of the pandemic. Since we have reopened in May 2021, many

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colleagues have returned to MAC, which is wonderful, alongside new talented staff to infuse energy and expertise across teams.

Our focus now is to ensure successful induction and training programmes for everyone. The CEO and her senior managers who have kept their eyes on the ball throughout and ensured the team is ready for the future have driven the continued successful management of MAC.

Finally, I would like to take the opportunity to thank MAC’s dedicated Board of Trustees for their expertise and insight. Their oversight and strength have been critical to supporting MAC in achieving its survival in these uncertain times. In particular, the Finance and Governance team has been diligent in its regular review and oversight of MAC’s finances during these turbulent times. We look forward to welcoming visitors back to MAC and the wealth of artistic and cultural offerings available to all.

Jonnie Turpie MBE Chair of The Trustees 28 September 2021

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Our Purposes and Activities

MAC’s principal objectives are to encourage as many people as possible to:

Mission

To promote innovative, creative arts activities in ways which help to establish them as an important part of people's lives.

Vision

Artists and their relationship with audiences are at our heart. Our programmes focus on work exploring new grounds and adopting inter-cultural and inter-disciplinary approaches across a range of art forms and the meeting points in between.

Values

MAC’s ethos is based on a set of values which inform the whole of its activities and helps to shape the organisation’s work. MAC values the following:

Public Benefit

In reviewing its objectives and planning its activities, the Trustees have considered the Charity Commission’s guidance on public benefit, including guidance on public benefit and fee charging.

The Board of MAC and its staff have continued to hold its business plan under review, honing future plans in the light of operational experience, future public investment prospects and the strategic context for its future activities.

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MAC relies on grants and the income from fees and charges to cover its operating costs. In setting the level of fees, charges and concessions, the Board gives very careful consideration to the accessibility of the centre for those on low incomes and those with particular needs.

MAC’s venue continues to enable an increasingly wide range of arts, learning and participation activities and provides a base for substantial outreach activities through touring and community engagement, especially in communities with little access to arts participation. These activities are designed to meet the interests of all, and embrace specific strands for children, young people, families and people with disabilities. MAC places a firm emphasis on equality of access and the celebration of intercultural activities in a youthful and diverse city.

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Achievements and Performance

Artistic Highlights from 2020/21

Despite the tumultuous year, MAC continued successfully to provide a range of vital services - albeit significantly reduced - to our communities across Birmingham and the West Midlands. Our priorities in the first few months of lockdown were to continue communicating to individuals, artists, organisations and agencies to assess and support as best we could. Through the year, we gained more knowledge, training and confidence to extend our work beyond the usual walls of the venue to take art directly into people’s homes.

Artistic Programme

We ceased all onsite artistic content and moved as much of our community programming online. The community producer remained in post whilst other arts colleagues were furloughed temporarily. We prioritised delivering projects to vulnerable communities and all resources and budgets remained in place. We worked closely with key stakeholders - Youth Music, Arts Council England and Spirit of 2012.

MAC Makes Music

This inclusive music programme continued to produce some outstanding, high quality, innovative experiences to young people across the region through various online platforms. These included:

Celebrating Age/Ageing Better Programme

Our projects were adapted to connect with elders through more traditional means such as letters, art packs and art materials sent to participants. Regular phone conversations and touch points were introduced, and art projects devised to reflect the experience of the pandemic. Little Earthquake Theatre Company planned activity that engaged elders

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and led to a new commission for 2021, The Stolen Year. All of which will combine with the Curator’s Club exhibition season in 2021. As a result of additional funding from DCMS for the “Loneliness Project” (designed to combat loneliness and isolation during COVID-19 times) a series of free creative workshops for residents prior to the public reopen was planned and fully attended.

My Favourite Things

A new theatre performance by Jake Oldershaw was commissioned designed to be COVID-19 safe for older people to see from the doorways or windows of their homes. “My Favourite Things” was offered to over 65’s to watch from their own home or residential setting. After the performances, audience members were invited to MAC when we reopened to a socially distanced get-together to share their experiences/stories with each other, refreshments and an opportunity to see a film or live show in MAC’s programme will follow this in autumn.

Hidden Voices/ Carers Music Fund

The female carers music programme continued with weekly groups successfully attended through zoom sessions led by Music Leaders including women from Home Group (assisted living); Mental Health; Balsall Heath Children Action team; and Resources For Autism Carers. The community programme with adult female carers used music to support well-being, self-esteem and reduce isolation/loneliness. Other sessions included:

ART Connects

We financially supported artist and activist Salma Zulfiqar, director of ART Connects to manage a series of workshops through the year and a special event to mark World Refugee Day 2020. The project supported eight workshops for migrant and refugee women and girls with 213 attendances.

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MAC Online

We have gained much experience of digital platforms and our audiences have enjoyed the opportunity to invite MAC’s artists and tutors into their homes. Each art producer developed a digital strategy for their programmes that will support access and innovation going forward. If we are truly, a participatory, inclusive organisation we need to explore and invest in digital innovation especially relevant to our MAC Makes Music younger disabled audiences, those geographically based outside of Birmingham wishing to connect with cinema and L&P and those with general access issues.

We are creating two new posts - a Digital Producer in 2021 as well as an Access Producer – both important roles will continue to support inclusive practice (on site and online) and work closely across artistic programmes and audience development.

Associate Artists

During closure we kept in close contact with our Associate Artists supporting them where we could, regarding training and commissioning. MAC is very proud of our Associate programme that invites artists to have a longer-term relationship with us, with a chance to experiment with new R&D activity as individuals or with community groups and audiences, this alongside career advice and business planning. Associates include:

Manmade DanceYouth Company led by Johnny Autin, this dance club attracts an enthusiastic cohort of teen boys, whose purpose is to pursue dance opportunities that might not be readily available in school. Johnny has stayed in touch online with the participants during lockdown through online dance activities.

Little Earthquake Theatre Company, Birmingham based company founded in 2005 by Co-Directors Gareth Nicholls and Philip Holyman.

Jaivant Patel Dance is an award-winning international dancer/choreographer, cultural producer and creative consultant whose work spans queer representation of Indian dance.

Visual Arts

We spent much of 2020/21 rescheduling exhibitions and commissioning new work by artists and partners. All of our international projects needed to be pushed into 2022/23 including Aboubakar Fofana (Mali); Yaya Coulibaly (Mali); Fototala King Massassy (Mali); Adeela Suleman (Pakistan); Dipa Yasmin, Epiphania Visuals (Bangladesh); and UK based/ local artists Caroline Walker; Maxine Walker; Nilupa Yasmin; Maryam Wahid; UKBFTOG (UK Black Female Photographers); Aidan Moesby.

Transforming Narratives

Partners British Council confirmed that based on the current circumstances surrounding the pandemic, their travel advice is that international travel for work engagements remains closed until further notice. In respect to Transforming Narratives programme this is tricky but not unexpected we have rescheduled our planned exhibition with the LGBTQ+ artist collective - Epiphania Visuals based in Dhaka from 2020 into 2022 and will now reframe this as a Commonwealth contribution to the festival in 2022.

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MAC is strategically committed to working closely with South Asian audiences and artists. We wish to be recognised as a major contributor to promoting and commissioning artwork by artists of Pakistani, Indian and Bangladeshi heritage and to actively ensure we offer inclusive and exciting opportunities to residents of Birmingham from all cultural backgrounds to enjoy work about the South Asian experience.

Cinema and Screen Based Media

This year saw a seismic change within the cinema industry during which we witnessed an accelerated push towards home streaming. Our cinema producer was furloughed until December and we shut down all screening content until early 2021. We arranged four virtual screenings online. We received a grant of £10k from the British Film Institute to help bolster our reopening, which will help tremendously towards the spring programme. Film distributors have confirmed that most titles will be released later in 2021.

Performance

Like the visual arts we spent most of the year in a constant state of flux, re-scheduling and re-negotiating existing events and deals with artists and promoters based on Government restrictions, and anticipated reduction of capacity to allow for socially distanced seating plans. We endeavoured to transfer or create new content for online audiences though this was not our priority.

In Our Skin by Greg Homann

New commissioned theatre-based project continued during the pandemic. The artist was able to gather interviews with gay men living in Birmingham and Johannesburg. It is supported by The Market Theatre Lab in Johannesburg and will be part of MAC’s celebration of Commonwealth in 2022. The project invites gay men in Birmingham to participate in a voluntary confidential 90-minute interview. Transcripts of the interviews will be the basis for a new verbatim play. The aim is to create a conversation between Birmingham and Johannesburg that highlights what it is like to live as a gay man in cities today. It is led by celebrated South African-born theatre director, playwright, and academic, Greg Homann.

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Ticketing

On immediate closure in March 2020 we contacted customers by telephone who had booked for live events and courses, 53% of bookers chose to donate or recredit the cost of their ticket to MAC.

Scheduling performances remains tricky with touring companies. A key concern is not competing with ourselves, almost all performers want to reschedule in autumn and winter 2021. There is a backlog of contracted artists who we are committed to and who are dependent on us. We anticipate customers may not wish to see multiple performances in one month of comedy, dance and theatre. We continue to negotiate with companies and review the programme sensibly to balance the programme as effectively for the public as we can and to ensure financial viability. We do not know at this stage how enthusiastic or confident audiences will return to venues particularly when social distancing is fully relaxed indoors.

Spektrix

Ahead of reopening MAC has improved channels across the teams to communicate changes more effectively. The CRM system, Spektrix, has been developed to support household bookings, bubbles and pre-booking for free and digital events. We will continue to offer ‘Book with Confidence Guarantee’ – a flexible way to purchase future ticketing with refund options. Given the level of detailed audience surveying since closure, customers inform us that they are enthusiastic to return to MAC and book tickets for L&P and family shows during the summer months. We have ensured that communication between MAC and customers remains positive and informative, as we may see an over-demand in some areas of ticketing where capacity is tightly capped e.g. ceramics courses.

Pricing Policy

Our pricing policy reflects our strategy of enabling all within our community, whatever their means, to take part in our activities - to participate in learning activities and attend our events. Our exhibitions offer an opportunity for the public to view, free of charge, new works created by contemporary artists, works on loan from major collections and to see the work of leading artists of our day and to gain experience of ground-breaking art.

Overall, full ticket prices to our live performances and cinema/live event screenings range from between £5 and £22 (or up to £29 for high-profile events). To open access and to reward MAC’s loyal/early bookers, we have made a commitment that at least 10% of all our tickets are available for £10 or less, with additional concessions for under 16s and complimentary seats for companions/carers.

Tickets for MAC’s learning programme span a broad range of options, from £30-£200, according to the length and nature of the course. We offer a ‘saver’s scheme’ that allows customers to pay for their tickets in instalments to make it more convenient if budgeting. We also regularly offer free, high-quality learning activities for children, young people and families in our public and learning spaces. We fundraise to help make our activities affordable and within the reach of those most in need.

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Communications & Digital Engagement

Stay Connected and Keep Creating campaign

During the COVID-19 pandemic, we adapted our Marketing and Communications strategy and found alternative ways to reach our audiences during the physical closure of our venue. We ensured MAC stayed relevant and remained a hub of artistic exploration and learning for our loyal audience base by moving events online, creating bespoke e-comms, commissioning new work and sharing regular organisational updates.

Overview

E-newsletters, Website and Social Media

Online Activity and Engagement

Key Updates

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MAC Ticketed Online Events (Spektrix)

Audience Demographics

Press, Digital and Individual Fundraising

Capital Programme

MAC’S ambitious capital programme - planned prior to COVID-19 was completed on time by March 2021.There are some small-scale elements that remain outstanding however due to capacity issues and supplier delays there are rescheduled to be completed later in 2021/22. Major works covered three key areas of capital improvements with a view to an enhanced visitor experience:

  1. Creation of a new purpose-built studio and repurposing of existing meeting space into new ceramics studios including a pocket garden - providing lifelong learning, wellbeing and life skills for Birmingham residents through structured informal education.

  2. Refurbishment of MAC Café strengthening catering offer, capitalising on opportunities for greater financial return and giving opportunity to local artisan food suppliers in showcasing their work.

  3. Digital infrastructure development that demonstrates MAC’s ambition by providing cutting-edge new experiences for visitors and participants and enabling MAC’s internal and external workforce (staff and artists) to push Birmingham’s reputation for innovation.

In November 2020, MAC was awarded £150,500 towards MAC capital through Arts Council England’s Kickstart grant programme. The grant addressed the fundraising shortfall due to COVID-19 (cancellation of public campaign), cover the costs of an outdoor digital screen and extend the garden/outdoor amphitheatre project with additional fully accessible toilets. Greater Birmingham and Solihull Local Enterprise Partnership’s (GBSLEP) Pivot and Prosper Fund also supported the outdoor amphitheatre rejuvenation project by £35,000.

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Workforce & People

Following the decision by the Senior Management Team (SMT) along with the Finance and Governance Committee, that it was not financially viable for MAC to re-open until 2021, the need for reduction in staff costs through redundancies became necessary.

In early June 2020 core staff were offered voluntary redundancy with no obligation on either side to accept the agreement. Roles were subsequently identified at risk of redundancy, while retaining some of the skill base within the organisation. These were shared with the Finance and Governance Committee and in turn the HR Sub Committee were asked by the Finance and Governance Committee to review job roles put at risk and identify all those at risk if there was no work available while the building remained closed to the public and no income generated. The Chair met with the Consultation Forum Representatives and staff representatives in a Collective Consultation. The Collective Consultation process lasted 42 days. Variable (zero) hours staff were not at risk of redundancy and have remained as employees if they so wished. Those who had worked regularly (no breaks in service) and had more than 2 years’ length of service were offered the opportunity for voluntary redundancy.

In January 2021 the first stage of new staff structures were agreed - this is the beginning of an on-going recruitment programme that will continue into 2022. Due to the uncertainty of earned income, we anticipate that most teams will remain affected, and are operating at a reduced capacity. SMT and Team Managers review staffing regularly against the new business model. Our strength will be to operate a flexible and common sense approach through this transition period.

Diversity Statement

Beyond expressing solidarity for the Black Lives Matter campaign, we want to use this time to review our organisation’s processes from recruitment to contracting and communications to programming and audiences. We want to do better. We will start by participating in More Than A Moment pledge, the West Midlands Arts sector’s promise to take radical, bold and immediate action.

We understand that if MAC is to play a relevant and important role in Birmingham, our staff and our programmes need to be reflective and representative of the diversity within the city that we serve, responding to the interests and cultures of those who live and work here. MAC is proactive in its approach to diversity and inclusion and our Equality and Diversity Action Plan is an active tool that enables effective strategic approach and monitoring by staff and Board. At the heart of our approach is a commitment to valuing diversity, treating people with dignity and respect, eliminating discrimination and promoting social cohesion through our organisation and artistic programme.

Throughout the organisation from Board level to all staff teams we will commit financially to resources, training and opportunities to assess and meet measurable targets to ensure progress. We aim for a future where there are no barriers – perceived or real – for individuals to engage with and be a part of MAC, as a member of the workforce, board, volunteer, audience member, participant or artist.

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Financial Review

When all commercial trading ceased and MAC closed to the public on 21 March 2020, the Board of Trustees moved quickly to establish revised agile governance arrangements to respond to what was to become unpredictable, fast moving and extremely challenging circumstances, the most significant of which was to be how long the building would have to remain closed.

Responsibility for managing cash flow, risk analysis and management, and continuous assessment of the financial implications of closure and the potential impact on reserves, was delegated to the Finance and Governance Committee by the Trustees, who of course continued to discharge their statutory responsibilities as ultimate decision makers.

The immediate priority was to take action to reduce costs and to access Government and other financial support, primarily from the Coronavirus Job Retention Scheme where 193 members of staff from the total workforce of 206 were “furloughed”, but also from Statutory Sick Pay Relief, the deferral of VAT payments and reductions in business rates. Arts Council England also provided Emergency COVID-19 grant. Without this action Unrestricted Reserves, which at 1 April 2020 stood at £422,291, would quickly be extinguished and the charity would be at risk of closure.

Although parts of the economy would reopen during the summer/autumn of 2020 but then have to close down again, by June 2020 scenario planning by the Senior Management Team, and endorsed by the Trustees, suggested a soft relaunch in the autumn would be too great a risk financially and operationally given the unpredictability of the pandemic and a spring 2021 reopening would be the most appropriate and sensible approach.

This meant that the equivalent of a year’s income from arts activity, which in 2020 was worth £1.5m, and the contribution to the charity from the trading company (approximately £0.4m in 2020) would be foregone and additional cost savings and income generation opportunities would be required to enable MAC to remain solvent.

In early June 2020, Trustees endorsed advice from the Senior Management Team and the Finance and Governance Committee to introduce a voluntary redundancy scheme for core staff, details of which are set out later in this report.

Also in July 2020, MAC was successful in bidding for funding from Round One of the Cultural Recovery Fund (CRF) (a Department for Culture, Media and Sport fund administered by Arts Council England) which provided financial sustainability until 30 September 2020. Sustainability funding was also received from the Garfield Weston Foundation, the Esmee Fairbairn Fast Response Scheme, People’s Postcode Lottery and the British Film Institute (BFI FAN). During the year £23,470 was received in audience donations, £8,400 from MAC’s newly developed membership scheme and £2,714 income from budget friendly online ticketed events. Arts Council England annual grant of £752,747 (£739,146 in 2020) was also paid.

MAC is extremely grateful for the generous support for all these funding sources.

During the financial year MAC received a total of £2,032,300 which can be classified as “COVID-19 support funding” (£293,332 shown in note 3 as unrestricted grants and donations and £1,738,968 shown in note 3 as restricted grants and donations). In round terms this

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offset income from arts activities and the contribution from the trading company which had been forgone.

Overall there was a relatively small increase (£40,623) in unrestricted reserves at 31 March 2021. The objective of maintaining unrestricted reserves had been achieved.

From January to March plans were developed for a gradual relaunch and recruitment to revised staffing structures took place in all departments. As well as the arts programme online, at the end of March 2021 an outdoor take-away food offer was launched from MAC’s terrace until we were able to re-open the building in May in line with Government restrictions. Although activity and footfall into the building has increased modestly from re-opening to September 2021 and further increases in the arts programme are planned for later in the year, it is extremely difficult to forecast the financial outcome. Careful and prudent financial management, including the levels of reserves required to mitigate any downturn in forecasts will, therefore, be required. Details of the revised reserves policy are set out later in this report.

Trustees are nevertheless confident that the mixture of actions taken during the pandemic, the generous financial support received from Trusts, Foundations, Government and other sources, the skill and commitment of all staff and financial prudence for the foreseeable future, will provide the financial stability and continued solvency to allow the charity to pursue its artistic aims and objectives.

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Income 2020-21
1% 1%
Trading & other income 0%
4%
Income from activities
Fundraising,
Trusts,Foundations 45%
Arts Council England
49%
Birmingham City Council
individuals & Companies
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Expenditure 2020-21

----- Start of picture text -----
1%
3%
Trading
Support costs - Arts activities
43%
Building Project
Direct costs - Arts activities
53%
Governance
0%
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Comparison to 2019-20

Income 2019-20

----- Start of picture text -----
Trading & other income
Income from activities
Fundraising,
Trusts,Foundations
Arts Council England
Birmingham City Council
individuals & Companies
----- End of picture text -----

----- Start of picture text -----
2% 1%
17%
35%
18%
27%
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Expenditure 2019-20

----- Start of picture text -----
1%
22%
Trading
Support costs - Arts activities
Building Project
53%
Direct costs - Arts activities
19%
Governance
5%
----- End of picture text -----

Above pie charts represents income and expenditure for 2020-21 and comparison to 2019-20.

Principal funding sources

The COVID-19 pandemic has had a devastating impact on MAC’s organisational finances, staffing and resources. On closure managers immediately sought to reduce expenditure where possible, including the re-negotiation of existing contracts e.g. ticketing, cleaning.

Arts Council England

MAC is a National Portfolio Organisation (NPO) within the funding programmes of Arts Council England (ACE). 2020/21 was the third year of a four-year funding agreement from 1 April 2018 to 31 March 2022.

We have submitted our updated Business Plan for 2021/22 with renewed documents against Diversity, Digital, Risk Register and Financial Budgets. This has proven to be an intensive undertaking in the lead up to reopening, however, it has been an incredibly useful exercise to undertake working across teams.

Arts Council have requested a copy of the 2022/23 Business Plan with support documents by 15 September 2021. New criteria have been introduced - ‘Investment Principles’ that feed into their 10-year strategy ‘Let’s Create’, both advocate for community co-creation, wellbeing and diversity. MAC is well placed and experienced to deliver to this guidance.

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Birmingham City Council

MAC’s final service level agreement ended on 31 March 2020. We do not receive any grant or investment from the culture or arts department of the local authority. We have a formal agreement with BCC to share income derived from Cannon Hill car parking however this is subject to capital costs for the next 24 months.

Players of the People’s Postcode Lottery

MAC has been a recipient of an annual award since 2014. The grant in the 2020 calendar year was £375,000 and the 2021 calendar year is confirmed as £350,000. The support of PPL is invaluable, and their grant agreed with them is confirmed to be allocated to artistic programme that engages social issues and community engagement.

In October 2020, MAC received £40,000 from the People’s Postcode Lottery Innovation Fund and in February 2021 it was announced that MAC would benefit from a ‘bonus’ award of an additional £350,000 towards our community programme, to be split into two instalments in July and December 2021.

Fundraising

In 2020/21 we successfully fundraised £2,231,750. Our diverse fundraising strategy focused on emergency and recovery grants. These grants enabled MAC to continue to reach out and connect with the most vulnerable communities, remain financially viable throughout the closure and invest in reopening (programme/public health and facilities) and changing audience attitudes. MAC is registered with the Fundraising Regulator and no complaints have been received to date.

Highlights Include:

Despite not being open to the public, audiences and visitors continued to support the charity and we received donations including:

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Investment Policy

In formulating an investment policy, MAC has recognised that whilst it may have surplus funds to invest, these are likely to be called upon in the short to medium term. The policy therefore is to hold investments in liquid funds so they are available to meet predicted cash-flow needs. In selecting suitable cash deposits the policy is to maximise the return and maintain low transaction costs, whilst ensuring high levels of capital security by minimising credit risk and minimising interest rate risk. Deposits and interest rates are reviewed regularly by the Finance and Governance Sub-Committee. The policy is reviewed on an annual basis.

Reserves Policy

The reserves of the charity have been divided into Restricted funds and General funds in accordance with charity legislation.

The Restricted fund represents money given to MAC for specific capital and project work within the overall aims of the organisation. The funds are analysed between capital and project, as set out in notes 15 and 16 to the accounts. Grants and donations received for capital purposes are accounted for as restricted funds and depreciation of the underlying fixed assets is charged to these funds over their lifetime. Project funds will usually be spent in full within 5 years. The balance on the long-term capital funds represents funds received from donors towards the MAC/Sampad Building Project and for the purchase of fixed assets, less the depreciation charged on an annual basis. Over time these reserves will reduce to zero as the assets are fully depreciated.

The balance on restricted funds as at 31 March 2021 of £4,377,565 includes a balance of £3,050,344 in respect of the capital redevelopment project and £1,327,221 grants and donations received in respect of specific arts projects. These grants and donations include sums from a range of supporters towards future commissions, productions, coproductions, exhibitions and events as part of MAC's longer range artistic programme.

Designated Funds

Following discussion by the Board it was agreed to increase a designated fund to £600,000 (2020: £400,000) to cover risk around getting MAC up and running again, support arts project in preparation for 60th year, promoting MAC in the Commonwealth Games and the small scale capital development project.

Unrestricted Funds

The unrestricted reserves figure of £462,914 including (£550,657) pension liability, £413,571 general funds and £600,00 of designated funds, has been reviewed by the Trustees taking into account of risk around after-effects of COVID-19. They have determined, on the basis of detailed budget and financial planning through to the end of the 2021/22 financial year and thanks to Culture Recovery funding received from Arts Council England and Garfield Weston in particular, that this level is adequate to maintain financial stability. It is recognised that significant risks remain around after-effects of the global pandemic and the economic environment. Hence, the Trustees have agreed that the level of reserves (2 months of budgeted costs) is in line with DCMS recommendation and appropriate in the short term.

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Going Concern

The Trustees have considered the effect of the ongoing disruption from the pandemic on the going concern position. They believe the charity will continue to operate for a period of at least 12 months from the date of signing these accounts, due to the strong level of funding already secured with its key partners, Arts Council England and Players of the People’s Postcode Lottery, together with grants from a number of major trusts and foundations.

While MAC was closed in 2020/21, the cost base was reduced and MAC was successful in obtaining emergency and other funding, as detailed elsewhere. At the balance sheet date, the charity held significant cash balances. The charity also has a significant level of reserves, enough of which are unrestricted and available to absorb short-term deficits, if required during the transition to more normal operating patterns.

As detailed earlier, Arts Council England has confirmed funding through until 31 March 2022. People’s Postcode Lottery funding is confirmed until December 2021 with positive indications of future funding into 2022, and Youth Music funding continues until 2022.

MAC proactively manages cash flow; for much of MAC’s income it is paid in advance or on the day. Much of our operating cost is spread evenly across the year apart from payment for capital projects.

The Trustees have considered the charitable company’s business planning in the context of known resources and have reviewed the operating basis of the group’s operations. A formal business plan for the period to March 2022 has been prepared.

These detailed financial forecasts assume that MAC remains open with activity levels increasing as the year progresses and restrictions ease. They prudently assume no contribution to the charity from the trading company. They have been considered by the Trustees and, together with the commitment from Arts Council England and People’s Postcode Lottery, allow the Trustees to be satisfied that the charitable company remains a going concern.

Principal Risks and Challenges

We are committed to sustaining a confident and skilled organisation and providing the best possible creative environment in which to develop our work at MAC , in communities and mostly on line in the past year. Our planning acknowledges the importance of investing in high-quality artistic delivery, people and infrastructure to bring the best work to the widest audience. We regularly monitor risks to enable the successful delivery of our artistic programme and use a range of self-assessment tools, external evaluation and peer review to help us ensure our work reaches our own high standards, supporting excellence whilst ensuring the widest possible participation and engagement.

The Board has constantly assessed the risks to which we may be exposed. A risk register identifies those risks and assigns specific actions and responsibilities for mitigating them. The risk management process is ongoing, and is regularly updated by the Senior Management Team and reviewed by the Board. The Board maintains a watchful eye on financial, reputational and operational risks, efficiency, streamlining operations, processes and practices, to achieve the best and fairest use of our financial

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and human resources. The business planning activities are enabling the Senior Management team and Board to make informed business decisions while understanding the risks and opportunities for the organisation and how this might affect MAC’s future plans .

Following the closure of the building to the public in March 2020, due to the COVID-19 pandemic, the Finance and Governance Committee continued to meet throughout the period on a more frequent basis to take an overview on the effectiveness of all internal controls, including financial, operational and compliance controls and risk management systems.

The internal systems are designed to meet the Company's particular needs and the risks to which we are exposed, to manage those risks and to provide reasonable assurance that mitigation plans are realistic and likely to be effective going forward. The Committee advises the Board on budgetary controls, recommends steps to ensure financial viability of the organisation, monitoring the receipt of income for both revenue and capital expenditure. The high level risks increased due to the COVID-19 pandemic and are reflected in the table below:

mac : RISK MANAGEMENT 2021

mac : RISK MANAGEMENT 2021 mac : RISK MANAGEMENT 2021
NATURE OF RISK Control Measures
FINANCIAL
1 Pandemic coronavirus COVID-19 restrictions affect
visitor numbers due to reduced capacity. This results in
reduced income and inability to pay overheads, staffing,
event fees and fixed costs.		 Detailed financial modelling of scenarios as they unfold. Monthly financial review.
Limit building opening times and staff on shift and stagger re-opening and adjust
opening hours to ensure we can meet additional requirements; manage costs against
programme and opening the building. Monitor contracts closely to be able to postpone
or cancel if necessary.
2 Impact of COIVD-19 will reduce income from ticket
sales, Trading activities and fundraising. New business
model has been developed which is untried and untested.		 Flexibility of a new and adapted Business Model to ensure viablility of the business.
Options include making full use of alternative fundraising streams to support effects
of COVID-19 e.g. ACE Emergency Response, Government Job Support Scheme.
Scenario financial planning to assess the full costs of opening MAC versus potential
income. Reviewing use of the building and outside space for more popular and
alternative activities. Promoting individual giving and membership schemes.
Continued close working relationships with grant funders and identifying new
fundraising opportunities across Charity and Trading.
3 Uncertainty in date of re-opening prior to another wave of
COVID-19, delay in the Government roadmap or incidents
of infection traced back to the premises resulting in
further mandatory closure leading to losses of income
when committed to costs.		 Cross departmental planning that allows for delay in reopen. Detailed planning of
costs. Strategies in place with staffing to lessen the financial impact on the
business. Meticulous H & S planning to prevent where at all possible an on-site
occurrence and encourage all to maintain 1m social distancing.
4 Once committed to re-opening date, budget agreed and
additonal staff recruited to manage the building safely, a
further delay would increase the baseline costs with no
income.		 Keep to the timeline through careful planning and remain as flexible as possible with
employment contracts and start dates.
5 National Stakeholders and existing funding sources
subject to pressure to divert funds to other COVID-19
affected areas resulting in low or no funding/investment
in MAC. Instability in the UK/Global economy, stock
market and employment affecting the overall propensity
and ability for trusts, corporates and individuals to
support arts charities. Competitive fundraising market.		 Remain alert to Govt, ACE and BCC briefings, constantly review and implement
advocacy strategy and activities within Culture Central. Review business plans and
budget forecasts to respond to latest intelligence on funding scenario. Work closely
with charity leaders to form productive relationships.

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----- Start of picture text -----
LEADERSHIP AND GOVERNANCE
6 COVID-19 Pandemic leading to staff shortages in key roles due to Ensure each role has short-term back-up plan ; review job descriptions to enable more
sickness,self-isolation or key staff moving on as society opens up ; the crossover between departments ; constantly review staff who are furloughed ; plan
need for change in staffing levels to undertake additional duties to ahead on staff levels required for re-opening; retain variable hours staff for flexibility
comply with social distancing in public and office spaces and unable to but offer core hours as soon as possible ; adjust opening hours to ensure we can
run full arts programme. meet additional requirements and manage costs against programme ; use agency
staff if necessary ; lateral flow testing and procedure introduced.
7 H & S: Inadequate Health and Safety procedures for the building leading Ensure appropriate professional advice used wherever necessary; Key staff are
to a potential outbreak of COVID on site and MAC is no longer a safe trained in H & S and specific training for roles as identified by current guidelines. Risk
place to visit due to COVID-19 when building re-opens. assess each role, provide PPE where applicable to ensure staff and visitor safety;
encourage staff to be tested and vaccinated with a proactive approach ; make
adjustments for social distancing or if not possible change spaces, programme
and/or procedures ; staff rotation where working remotely.
ARTISTIC
8 Lack of Artistic product due to 1. Lack of funding during COVID-19 Promote 2020 rescheduled programme, which is ready for presentation. Identify and
pandemic for artists to create new art, thus leading to less artistic focus on strategic partnerships, and be part of key networks, collaborations and co-
content to present and display. 2. Requirements of social distancing commissions. Ensure that we can offe rartists flexibility with our venue. Ensure that
measures may prevent performers working together in rehearsal and on artists can make work at different scales and over a period of time. To support seed
stage. 3. Lack of new art work or different scale of work, artforms and funding to help them develop new ideas.
opportunities thus leading to a reductive and restrictive programme of
arts
AUDIENCES
9 Audiences unwilling to return to public buildings following closure due to Continue to survey widely across audience base to ascertain concerns about reopen,
COVID-19 pandemic and social distancing restrictions resulting in much pricing and interests. Review business model to encourage audiences back to MAC
lower visitor numbers and lower audiences. based on reduced capacity; robust audience behaviour research; Control access in all
public spaces and queues; Strong messaging regarding MAC as a safe place prior
to/and when re-open. External support on PR from specialist agencies and
professionals. Targeted staff training to support audiences onsite.
TECHNOLOGY
10 Cyber-attack and Technology crime on increase in pandemic which Key policies embedded at induction and training throughout relevant teams. Ensure
endangers security of personal and company information ; disruption of key data is encrypted. Guidance sought from external bodies e.g. ICO re data
day to day business, leading to financial losses, data breach or protection; working with specialist company to review our current security and ensure
reputational damage. we are up to date with the latest technology and best practice. Cyber defence
systems, monitoring and spam filtering in place. Update switches and phone system.
BUILDING, OPERATIONS AND ENVIRONMENT
11 The ever-changing COVID-19 restrictions impact constantly on the Have a staged operational plan in place to offer a flexible structure to accommodate
operational running and service delivery adding to the day to day changes and ensure MAC follows government regulations at all times.
challenge of running a mixed use building.
12 New areas of safeguarding for children, young and vulnerable mean that Follow Government advice for working with schools and liaise with BCC Safeguarding
additional requirements for social distancing in workshops and public Department on risk assessments and working practice to ensure compliance. Provide
spaces will increase responsbility and risk of working with those groups. additional equipment PPE and staff support where required.
----- End of picture text -----

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Future Plans

At the date of signing these accounts, the UK Government’s COVID-19 restrictions have eased, and the national vaccination programme has proved successful. The good news is that on the 21 May 2021 we re-opened our doors to the public. Our decision not to reopen earlier was sensible and based on detailed financial forecasting related to charity and trading income and challenges of staff recruitment and training. MAC’s venue continues to be a major asset and to remain resilient and profitable our building must work harder for us as we go forward. The recent successful capital programme of new and updated facilities will allow MAC to remain attractive to our growing 1m visitors annually and capitalise on additional income from paid participations, event hire and catering.

To secure the future sustainability of the organisation through 2021/22 and beyond, and to build on significant successes pre-COVID-19 within the business, the Board has developed with the executive a range of measures to ensure viability across trading and charity.

The Business Plan has been updated with new commercial opportunities such as enhancing night-time economy through catering, the rejuvenation of the outdoor theatre to allow for more ambitious events, establishing a new flexible food and beverage offer with a table offer in the main cafe Kiln. All these new areas are positive but in the shortterm will need to be regularly reviewed and trialled throughout the financial year to ensure that the targets we have set remain on track.

Already we can see evidence that the demand for our work in participation - traditionally very high - is already positive with strong sales in ticketing from our termly courses for September 2021. MAC will be involved in the HAF (Holidays and Food) Scheme, a national initiative funded by DFE that helps to combat holiday hunger combined with health and fitness and cultural experiences for children and young people in order to provide free spaces for children who are eligible for free school meals, on our holiday learning and participation programme. The partnership will extend through 2021 and into 2022.

The creation of new accessible artist studios with a high standard of environmental performance will strengthen MAC’s role as a centre of excellence for participation and diversity as we continue through this transition year. Generally, across our other activities audience confidence is returning moderately well over the summer, as demonstrated in our catering, room hires and arts events, however we need to keep a keen eye on autumn and winter sales and recognise that there is hard work to do to ensure the public return in the numbers we need.

Prior to 1 October 2021, events will be pre-set at maximum social distanced capacity with flexibility to release additional seats as restrictions ease. For events taking place after 1 October events can be at full capacity.

Fundraising

Fundraising is an important part of securing a robust future. During the closure period we asserted a persuasive case for emergency funding and audience development grants raising almost £2m towards sustainability. We need to ensure relationships with

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long-term partners remain strong and identify new ones as we test and rebuild our services.

In February 2021, People’s Postcode Lottery announced that MAC would benefit from a ‘bonus’ award of an additional £350,000 towards our community programmes. This is an excellent endorsement of the strength of our outstanding work. In June we secured a £35,000 grant from the Esme Fairbairn Foundation relaunch the volunteer scheme, ‘Fertile Ground’ using gardening skills and building horticulture knowledge lead by MAC’s new Gardener-in-Residence to improve wellbeing and creative experiences for volunteers.

MAC fundraising has continued to attract significant success and during closure in 2020/21 we established a new successful membership scheme. Individual giving remains a priority with a detailed development strategy in operation.

MAC at 60

In March 2022 MAC will be celebrating our 60-year anniversary, this is an excellent time to remind the public of the value we play as a Birmingham brand to the city and their lives. Our plan is not to be complacent, we recognise that customers' behaviours may have changed and it will be a competitive environment going forward, therefore we need to tell our 'story' in fresh and exciting ways.

In order to glean more attention and reposition MAC as a destination venue for cuisine as well as hands-on arts and entertainment, we have employed two new external press and marketing companies. Big Cat, who specialise in hospitality to lead on the relaunch of MAC’s new café and restaurant Kiln, their role is to refresh perspective, support internal capacity and training and asserts the brand to new customers. East Village Communications, will lead us in to our 60 year anniversary with focus on community engagement and our inclusive ethos.

Trading Forecasting

We are aware that our Trading arm has delivered significant income to the parent Charity over the years. The budget for 2021/22 has been challenging to forecast, given there are so many external variables when we reopened on reduced capacity. We have based footfall projections on artistic programme and previous general visitor numbers on site to forecast earned income budgets for Trading.

The Trading Company will work to a budget that sees the Charity assume a prudent nil contribution at this stage, which can be later reviewed. There are risks for catering targets, however the catering model has changed significantly since 2019/20 with new food and beverage concessions across site, a refurbished café and a new, more experienced café staff management. However, recruitment and training and thus embedding catering staff has proven much slower than we anticipated with a national shortage of trained kitchen staff.

EPOS systems have been updated and can now provide a great deal more accuracy in collecting data and reporting to aid future decision making on menus and operations. Managers are confident that with the new systems in place strong income is achievable

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under both models. Monthly reviews will monitor figures carefully and budgets now have a spend-per head template against which to measure. Catering numbers will be reviewed regularly in light of any additional performances and capacity e.g. convert increased visitor numbers into revised Trading budget.

Events Hire

MAC has increasingly relied on Events Hire as an important source of earned income, promoting the distinction of our artistic programme and venue as a unique setting. When setting budgets we had anticipated that Events Hire would take longer to recover from the effects of the pandemic. However, since the reopen we have had a positive level of new bookings and are up on target going into the autumn, in particular a local college has booked spaces to the value of £35,000 at MAC for their students as their building is temporarily refurbished. We realise that there is much work to continue securing companies to use us and with the introduction of online software such as Zoom etc, we need to work harder to encourage clients to feel confident again using our onsite facilities.

We will continue to maximise creative, social and income generation opportunities throughout the premises and new café space with greater strategic push. There will be in the future a greater emphasis on pursuing cross department opportunities with ticket sales (post conference shows) and evening catering.

Artistic programme

Much of the arts programme is rescheduled from the previous year with all budgets restricted. We feared that there would be a delay in high quality live performances touring however the sector appears to be fairly buoyant and we have chosen strategically to focus resources on prioritising local talent.

Going forward MAC continues to work productively in collaboration with major partners e.g. Commonwealth Games Festival towards shared costs. All funding has been secured for the visual arts (free programme) for 2022/23 e.g. for commissions and exhibitions.

We are preparing special projects to celebrate MAC’s 60-year anniversary in 2022 and Cannon Hill Park’s 150-year anniversary in 2023 with greater focus on community participation.

Board Recruitment

Board recruitment was put on hold during the pandemic to ensure we retained the knowledge and skills of the current board members to support the organisation through closure and re-opening. Recruitment remains critical to ensure that we have an effective, diverse, knowledgeable and committed team of Trustees in place to support MAC’s sustainability.

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Reference & Administrative Information

Charity Name: Midlands Arts Centre Charity Registration Number: 528979

Company Registration Number: 00718349

Registered Office Cannon Hill Park, Birmingham B12 9QH

Bankers

HSBC Plc 130 New Street Birmingham B2 4JU

Shawbrook Bank Ltd Lutea House Warley Hill Business Park The Drive, Great Warley Brentwood Essex CM13 3BE

Auditors

Cooper Parry Group Limited Statutory Auditors Park View One Central Boulevard Blythe Valley Business Park Solihull B90 8BG

Structure, Governance &Management

During the year under review, the following individuals served on the Board of Directors:

Cllr Matt Bennett Gurdip Bhangoo Stephanie Dale Owen Dutton Daljinder Johal Sharon Lea Haseena Lockhat Mary Martin (Vice Chair) Greg Lowson (Vice Chair) Louise McCathie Linda Saunders Sue Scholes James Spencer Cllr Martin Straker-Welds Jonnie Turpie (Chair) Mike Williams

Daljinder Johal, Haseena Lockhat, Gurdip Bhangoo and James Spencer will retire by rotation and, being eligible, Daljinder Johal, Haseena Lockhat and Gurdip Bhangoo will offer themselves for re-election at the forthcoming AGM.

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Governing Document

Midlands Arts Centre (trading as MAC) is a company limited by guarantee and a registered charity. It was established on 19 March 1962 (Certificate of Incorporation on Change of Name; 5 December 1990) and its Articles of Association amended to allow for current governance arrangements on 18 November 1992 (11 to 12 Board members); on 15 November 1995 (2 to 3 Birmingham City Council nominated Board members) and on 25 September 2014 (12 to 15 Board members).

The company’s object is the promotion of, education in and appreciation of the arts. This primary charitable object is set out in its governing instrument which is its Memorandum and Articles of Association. The company’s Mission is to promote innovative, creative arts activities in ways which help to establish them as an important part of people's lives. MAC's principal objectives are to encourage as many people as possible to:

The governing body is the Board whose members are non-executive and unpaid. The Board meets regularly, retains full and effective control over the company and monitors the Executive (see below). The Board is involved in major strategic decisions and has ultimate responsibility for the conduct and financial stability of the arts centre. It seeks to support the Executive in a culture of mutual confidence and trust.

Appointment to the Board of Directors

As set out in the Articles of Association the number of members of the Board (other than those nominated by Birmingham City Council) as specified in article 31 of the Articles of Association is no less than 4 and not more than 15. Birmingham City Council may appoint up to three members of the Board. The Chair and Vice-Chair/s are elected by the Board from amongst their number. Nominees appointed by Birmingham City Council are subject to the appointment processes of those bodies and the guidelines on appointment to public office as they apply to Local Government nominees. Board members at the date of this Report are listed above as all Board members who served during the year under review.

Board Induction & Training

The Chair or Vice Chair, together with the CEO, meet with newly appointed Board members to brief them on: their role and responsibilities as a trustee as outlined the Terms of Reference; their legal obligations under charity and company law; Charity Commission guidance on public benefit; review the content of the Memorandum and Articles of Association, committee and decision-making processes, current business plans and recent financial performance of the charity. Trustees are encouraged to attend appropriate external training events where these will facilitate the undertaking of their role.

Key documentation is provided in Board inductions including, the current Business Plan and budget, the Mission Statement and artistic, educational, equal opportunities policies, the Memorandum and Articles of Association, the latest annual report and

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audited accounts and previous Board papers, to give Board members a full understanding of the organisation.

The Head of Governance and Strategic HR ensures Board members are aware of policies relevant to them and that they complete relevant paperwork, such as their declaration of interests and personal data for monitoring purposes. Board and staff structures are provided including the membership and role of sub-committees, practical information on communications, procedures and timings of meetings.

The Chair meets with all Board members individually for an annual appraisal. The annual Board Away Day provides development opportunities for the Board and identifies further development needs in order for relevant training to be scheduled.

Organisational Structure

The Board of Directors (the Trustees) meets on a regular basis. The Directors delegate the day to day running of the company to the Artistic Director/Chief Executive (CEO) who is assisted by a Senior Management Team.

During the year they were:

Deborah Kermode Chief Executive and Artistic Director Michelle Smith Strategic Operations Director Hinal Shah Head of Finance Lindsey Cook (left Oct. 20) Head of Sales and Marketing Sue Longfils Head of Governance and Strategic HR Sallyann Pennington Head of Development

The Board delegates to the CEO full control over the selection and production of all programmes and events presented at, and under the auspices of, MAC. The CEO and the other members of the Senior Management Team generally attend meetings of the Board. The Board appoints members of the Senior Management Team and determines their contracts of employment. The Board monitors the performance of the Senior Management Team and reviews the quality, effectiveness and timeliness of information provided to the Board by the Executive.

The Board has established a Finance and Governance Sub-Committee which reviews the financial performance of the company and plays a full part in strategic business planning. Financial Regulations have been established and approved by the Board of MAC. They are intended to set out the working arrangements by which the Board gives effect to its statutory financial responsibilities, and to its management powers as defined in paragraphs 41 to 43 of the Articles of Association adopted by Special Resolution on 25 September 2014. Further, they provide details of powers delegated to the CEO and managers of the company by the Board in accordance with paragraphs 55 to 56 of these Articles of Association, and to its responsibilities under paragraphs 59 to 62 of these Articles of Association relating to Accounts and Audit.

The CEO is responsible to the Board for the proper administration of the company’s financial affairs. The CEO may delegate to the Head of Finance responsibility for internal control and financial systems, day-to-day accounting and preparation of regular management accounts and budgets.

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Related Parties

MAC subscribes to or is formally a member of the following organisations, with which it co-operates in the pursuit of its charitable objectives:

The charity’s wholly owned subsidiary, Midlands Arts Centre Trading Limited, was established to manage the commercial bar and catering operation and hiring out space and facilities at MAC.

In its work MAC collaborates with a wide range of artistic and community partners.

Pay Policy for Senior Staff

The directors consider the senior management team, comprising the key management personnel of the charity, to be in charge of directing and controlling, running and operating the charity on a day-to-day basis.

The recruitment of the Chief Executive is conducted by the Chair and a panel of Board members. The appointment of members of the senior management team is conducted by the CEO and a Board member. All MAC staff pay levels are referenced to points on the scale used by the National Joint Council for Local Government Services, used by many public and third sector organisations.

Pay awards are negotiated nationally by the relevant Unions with Local Authorities employer representatives. MAC implements any salary increases thus negotiated.

Statement of Directors' Responsibilities

The directors (who are also Trustees of Midlands Arts Centre for the purpose of Charity Law) are responsible for preparing the Annual Report, including the Strategic Report, and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the charitable company and the group and of the incoming resources and application of resources, including the income and expenditure, of the charitable group for that period. In preparing these financial statements, the directors are required to:

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

In so far as the directors are aware:

The directors are 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 the financial statements may differ from legislation in other jurisdictions.

By Order of the Board

E J Turpie - MBE Chair

S Longfils Secretary

28 September 2021

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Independent Auditors' Report to the Members of Midlands Arts Centre

Opinion

We have audited the financial statements of Midlands Arts Centre (“parent charitable company”) and its subsidiary (“the group”) for the year ended 31 March 2021 which comprise the Consolidated Statement of Financial Activities, the Consolidated and Parent Charitable Company Balance Sheets, the Consolidated Statement of Cash Flows and the related notes, 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 Financial Reporting Standard 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:

have been prepared in accordance with the requirements of the Companies Act 2006 and the Charities Act 2011.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent charitable company 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 group and parent charitable company’s ability to continue as a going concern for a period of at least 12 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.

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Other Information

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

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

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:

Matters on Which We Are Required to Report by Exception

In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Trustees' Annual Report (incorporating the directors’ 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:

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Responsibilities of Trustees

As explained more fully in the Statement of Trustees' Responsibilities, the trustees are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the trustees are responsible for assessing the group’s and 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 trustees either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's Responsibilities for the Audit of the Financial Statements

We have been appointed as auditor under section 151 of the Charities Act 2011 and under the Companies Act 2006 and report in accordance with those Acts.

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

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below:

Our assessment focussed on key laws and regulations the group and parent charitable company has to comply with and areas of the financial statements we assessed as being more susceptible to misstatement. These key laws and regulations included but were not limited to compliance with the Companies Act 2006, Charities Act 2011, Trustee Act 2000, Charities (Protection and Social Investment) Act 2016, taxation legislation, data protection and employment legislation.

We are not responsible for preventing irregularities. Our approach to detecting irregularities included, but was not limited to, the following:

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Whilst considering how our audit work addressed the detection of irregularities, we also considered the likelihood of detection based on our approach. Irregularities arising from fraud are inherently more difficult to detect than those arising from error.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

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

Use of our Report

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

Simon Atkins FCA Senior Statutory Auditor

for and on behalf of:

Cooper Parry Group Limited

Chartered Accountants and Statutory Auditor One Central Boulevard Park View Blythe Valley Park Solihull West Midlands B90 8BG

Date: 12 October 2021

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MIDLANDS ARTS CENTRE

Consolidated Statement of Financial Activities

(including consolidated Income and Expenditure Account) for the year ended 31 March 2021

----- Start of picture text -----
Restricted Other
Notes Unrestricted building restricted 2021 2020
funds project projects Total Total
£ £ £ £ £
INCOME
Donations and legacies 2 34,627 664,983 - 699,610 550,329
Income from charitable activities
Grants, donations and other income 3 1,064,351 - 2,500,917 3,565,268 1,386,722
Arts activities 4 2,714 - - 2,714 1,405,312
Income from other trading activities
Commercial trading operations 5 4,271 - - 4,271 1,606,585
Office lettings, hire and recharges 156,233 - - 156,233 174,433
Investment income 2 21,132 - - 21,132 22,881
Total income 1,283,328 664,983 2,500,917 4,449,228 5,146,262
EXPENDITURE
Expenditure of raising funds
Commercial trading operations 6 26,268 - - 26,268 1,170,729
Expenditure on charitable activities
Small Scale Building Project Cost 15 - - - - 262,709
Arts activities 6 1,216,438 - 1,735,591 2,952,029 3,793,166
Total expenditure 1,242,706 - 1,735,591 2,978,297 5,226,604
Net income for the year 40,623 664,983 765,326 1,470,932 (80,342)
Transfers between funds - - - - -
Net movement in funds for the year 40,623 664,983 765,326 1,470,932 (80,342)
Reconciliation of funds
Total Fund brought forward 422,291 2,385,361 561,895 3,369,547 3,449,889
Total funds carried forward 462,914 3,050,344 1,327,221 4,840,479 3,369,547
----- End of picture text -----

All activities of the Group are continuing and there is no difference between the reported result for the year stated above and that on a historical cost basis.

The Group has no recognised gains and losses other than those included in the Consolidated Statement of Financial Activities.

The notes on pages 40 to 58 form part of these financial statements.

36

Midlands Arts Centre (Company No. 00718349) Balance Sheets as at 31 March 2021

----- Start of picture text -----
Consolidated Company
Notes 2021 2020 2021 2020
£ £ £ £
FIXED ASSETS
Tangible fixed assets 9 3,409,632 2,642,624 3,409,632 2,642,624
Investment in subsidiary
undertaking 10 - - 100 100
Total Fixed Assets 3,409,632 2,642,624 3,409,732 2,642,724
CURRENT ASSETS
Stocks 11 23,876 41,038 - -
Debtors 12 211,802 505,674 321,678 650,447
Cash at bank and in hand:
- unrestricted 1,120,061 845,327 980,035 721,457
- restricted – projects 1,327,221 561,895 1,327,221 561,895
- -
- restricted – capital (Small Scale) (27,709) (27,709)
- restricted – capital (lease) 2,413,070 2,413,070 2,413,070 2,413,070
Total Current Assets 5,096,030 4,339,295 5,042,004 4,319,160
LIABILITIES
Creditors falling due
within one year 13 (3,184,564) (3,096,276) (3,108,642) (3,076,241)
NET CURRENT ASSETS 1,911,466 1,243,019 1,933,362 1,242,919
TOTAL ASSETS LESS CURRENT
LIABILITIES 5,321,098 3,885,643 5,343,094 3,885,643
Pension liability 23 (480,619) (516,096) (480,619) (516,096)
NET ASSETS 4,840,479 3,369,547 4,862,475 3,369,547
Represented by:
RESTRICTED FUNDS 15 & 16 4,377,565 2,947,256 4,377,565 2,947,256
UNRESTRICTED FUNDS
General Funds 17 413,571 631,771 435,567 631,771
Designated Funds 17 600,000 400,000 600,000 400,000
Pension reserve 17 (550,657) (609,480) (550,657) (609,480)
4,840,479 3,369,547 4,862,475 3,369,547
----- End of picture text -----

The notes on page 40 to 58 form part of these financial statements.

The financial statements were approved by the Board of Directors on 28 September 2021 and signed on its behalf by:

----- Start of picture text -----
……………………………………
----- End of picture text -----

E J Turpie MBE - Chair

37

MIDLANDS ARTS CENTRE

Consolidated Cash Flow Statement for the Year Ended 31 March 2021

Notes
Reconciliation of net incoming/(outgoing) resources
to net cash flow from operating
activities
Net incoming/(outgoing) resources
Depreciation charges
9
Net interest
2
Decrease/(Increase) in stocks
11
Decrease/(Increase) in debtors
12
Increase/(Decrease) in creditors
13
Net cash inflow/(outflow) from
operating activities
CASH FLOW STATEMENT
Net cash inflow/(outflow) from
operating activities
Returns on investments and servicing of
finance
(a)
Capital expenditure
9
Increase/(Decrease) in cash
(b)		 2021
2020
£
£
1,470,932
(80,342)
71,343
71,817
(21,132)
(22,881)
17,162
(6,836)
293,874
(203,211)
52,811
(237,947)
1,884,990
(479,400)
1,884,990
(479,400)
21,132
22,881
(838,352)
(47,072)
1,067,770
(503,591)

The notes on pages 40 to 58 form part of these financial statements.

38

MIDLANDS ARTS CENTRE

Notes to the Consolidated Cash Flow Statement for the Year Ended 31 March 2021

----- Start of picture text -----
(a) Returns on investment and servicing of finance 2021 2020
£ £
Interest received 21,132 22,881
(b) Increase in cash 2021 2020
£ £
Balance at beginning of period 3,792,583 4,296,176
Net cash flow (note c) 1,067,769 (503,593)
Balance at end of period 4,860,352 3,792,583
(c) Reconciliation of net cash flow to movements in net funds
£
Increase in cash during year being change in net funds 1,067,769
Net funds at 1 April 2020 3,792,583
Net funds at 31 March 2021 4,860,352
(d) Analysis of changes in net funds At 1 April Cash At 31 March
2020 flows 2021
£ £ £
Cash at bank 3,792,583 1,067,769 4,860,352
----- End of picture text -----

39

Notes to the Financial Statements for the Year Ended 31 March 2021

1. Accounting Policies

The principal accounting policies adopted, judgement and key sources of estimation uncertainty in the preparation of the financial statements are as follows:

a Basis of preparation

Midlands Arts Centre meets the definition of a public benefit entity under FRS 102. Assets and liabilities are initially recognised at historical cost or transaction value unless otherwise stated in the relevant accounting policy note(s).

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) (effective 1 January 2019) - (Charities SORP (FRS 102)), the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and the Companies Act 2006.

The consolidated financial statements consolidate the results of the parent company and of the subsidiary on a line by line basis. A separate Statement of Financial Activities and income and expenditure account for the charitable company itself are not presented because advantage has been taken of the exemptions afforded by section 408 of the Companies Act 2006.

Income

Income from arts activities is included in incoming resources in the period in which the relevant activity takes place. Income is deferred when admission fees are received in advance of the performances or events to which they relate.

Income from donations and grants, including capital grants, is included in incoming resources when these are receivable, except as follows:

When donors specify that donations and grants, including capital grants, are for particular restricted purposes, which do not amount to pre-conditions regarding entitlement, this income is included in incoming resources of restricted funds when receivable.

Income from commercial trading operations is recognised as earned.

Investment income is included in the financial statements as and when receivable and the amounts shown include taxation recoverable thereon, where applicable.

40

d Fund accounting

Unrestricted funds are available to spend on activities that further any of the purposes of charity. Designated funds are unrestricted funds of the charity which the Trustees have decided at their discretion to set aside to use for a specific purpose.

Restricted funds are donations which the donor has specified are to be solely used for particular areas of the Trust’s work or for specific artistic projects being undertaken by the Trust.

e

Donated services

Where services are provided to the charity as a donation that would normally be purchased from suppliers, this contribution is included as an estimate based on the value of the contribution to the charity.

f

Expenditure and irrecoverable VAT

Expenditure is included in the Consolidated Statement of Financial Activities on an accruals basis, inclusive of any VAT which cannot be recovered.

Expenditure is recognised once there is a legal or constructive obligation to make a payment to a third party, it is probable that settlement will be required and the amount of the obligation can be measured reliably. Expenditure is classified under the following activity headings:

Irrecoverable VAT is charged as a cost against the activity for which the expenditure was incurred.

All costs are allocated between the expenditure categories of the Consolidated Statement of Financial Activities on a basis designed to reflect the use of the resource. Costs relating to a particular activity comprise both costs that can be allocated directly to such activities and those costs of an indirect nature necessary to support them.

g Depreciation and impairment

Buildings

Historically, amortisation has been provided on leasehold buildings with effect from 2 April 1984 to write off the expenditure over the remaining period of the lease. However, as the lease is due to be surrendered on practical completion of the new building project it has been fully impaired.

Short-term leasehold improvements and fixtures, fittings and equipment

41

Depreciation is being provided on short-term leasehold improvements and fixtures, fittings and equipment other than computers in equal annual instalments over their estimated working life of between 3 to 25 years.

Computers

Depreciation on computers is being provided in equal instalments over an estimated working life of 3 years.

Impairment

All long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. In such circumstances the charitable group estimates the future cash flows expected to result from the use of the asset and its disposal and where those are less than the carrying amount an impairment loss is recognised.

h Capital grants

Grants and donations received for capital purposes are accounted for as restricted funds and depreciation of the underlying fixed assets is charged to these funds.

i Stock

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

j

Lease rentals

Rentals on operating leases are charged in the revenue account as incurred.

k Pre-production costs

Any costs which are not able to be recycled or resold are written off and are not carried forward to match against production income.

l

Debtors

Trade and other debtors are recognised at the settlement amount due after any trade discount offered. Prepayments are valued at the amount prepaid net of any trade discounts due.

m

Creditors

Creditors and provisions are recognised where the charity has a present obligation resulting from a past event that will probably result in the transfer of funds to a third party and the amount due to settle the obligation can be measured or estimated reliably. Creditors and provisions are normally recognised at their settlement amount after allowing for any trade discounts due.

n

Pension costs

To meet the requirements of auto-enrolment of staff into a pension scheme, the company offers the NEST pension scheme.

Previous pension schemes available to staff are now closed.

42

o Going concern

The Trustees have considered the effect of the ongoing disruption from the pandemic on the going concern position. They believe the charity will continue to operate for a period of at least 12 months from the date of signing these accounts, due to the strong level of funding already secured with its key partners, Arts Council England and Players of the People’s Postcode Lottery, together with grants from a number of major trusts and foundations.

While MAC was closed in 2020/21, the cost base was reduced and MAC was successful in obtaining emergency and other funding, as detailed elsewhere. At the balance sheet date, the charity held significant cash balances. The charity also has a significant level of reserves, enough of which are unrestricted and available to absorb short-term deficits, if required during the transition to more normal operating patterns.

As detailed in the Report of the Trustees, Arts Council England has confirmed funding through until 31 March 2022. People’s Postcode Lottery funding is confirmed until December 2021 with positive indications of future funding into 2022, and Youth Music funding continues until 2022.

The Trustees have considered the charitable company’s business planning in the context of known resources and have reviewed the operating basis of the group’s operations. A formal business plan for the period to March 2022 has been prepared.

These detailed financial forecasts assume that MAC remains open with activity levels increasing as the year progresses and restrictions ease. They prudently assume no contribution to the charity from the trading company. They have been considered by the Trustees and, together with the commitment from Arts Council England and People’s Postcode Lottery, allow the Trustees to be satisfied that the charitable company remains a going concern.

On that basis the Trustees have prepared these financial statements on a going concern basis.

43

2. Income from Donations and Legacies

----- Start of picture text -----
2021 2020
£ £
Grants, Donations and other income - unrestricted
-
People's Postcode Lottery 275,000
Pinsent Masons pro-bono fees 3,055 4,408
Eversheds pro-bono fees - 7,125
Fund raising and gift aid donations 31,572 28,796
34,627 315,329
Investment Income
Unrestricted 21,132 22,881
Restricted - -
21,132 22,881
Small Scale Capital Development - restricted
Arts Council England 269,983 -
Greater Birmingham and Solihull Local Enterprise Partnership 365,000 35,000
Saintbury Trust 30,000 -
Edward and Dorothy Cadbury Trust - 100,000
People's Postcode Lottery - 100,000
664,983 235,000
----- End of picture text -----

44

3. Incoming Resources from Charitable Activities

3.
Incoming Resources from Charitable Activities
Grants, Donations and other income - unrestricted
Arts Council England
Arts Council England - Emergency Grant
Birmingham City Council - Service level agreement
Other Income
Grants, Donations and other income - restricted
General Projects - Covid 19 support		 2021
2020
£
£
752,746
739,146
293,332
139,000
-
92,400
18,273
82,836
1,064,351
1,053,382
2021
2020
£
£
Arts Council England - Culture Recovery Funds 1 680,668
-
Job Retention Scheme
Birmingham City Council
Garfield Weston
Esmee Fairbairn Foundation
BFI
General Projects - other
Arts Council England
Spirit of 2012
National Foundation for Youth Music
Roughley Trust
Saintbury Trust
Feeney Trust
Esmee Fairbairn Foundation
People's Postcode Lottery
Greater Birmingham and Solihull Local Enterprise Partnership
Other Projects		 725,222
-
36,400
-
267,761
-
16,917
-
12,000
-
1,738,968
-
2021
2020
£
£
-
23,521
110,480
68,192
215,715
160,000
5,000
5,000
-
10,000
4,000
7,250
-
33,833
390,000
-
21,650
-
15,104
25,544
761,949
333,340
4.
Income from Arts Activities
Cinema
Learning and Participation
Visual Arts
Productions and Performances
Other Income		 2021
2020
£
£
27
336,230
102
598,450
117
20,702
2,468
308,205
-
141,725
2,714
1,405,312

Income generated from Arts Activities for 2021 and 2020 all relates to unrestricted funds.

45

5. Income Earned from Trading Operations

Turnover
Cost of sales
Gross (loss)/profit
Staff costs
Other operating costs
Transactions with parent company:
Facility fee payable
Technical and customer services support recharged
Room rental payable
Licence fees payable
Covenanted profit transferred under gift aid
Operating (loss)/profit
Tax on profit on ordinary activities
Retained in subsidiary
The assets and liabilities of the subsidiary at 31 March were:
Net current assets
Total net assets
Aggregate share capital and reserves		 2021
2020
£
£
4,271
1,632,885
(11,685)
(381,550)
(7,414)
1,251,335
-
(631,194)
(14,583)
(157,985)
-
(214,000)
-
(38,014)
-
(180,056)
-
(2,200)
-
(27,886)
(21,997)
-
-
-
(21,997)
-
(21,897)
100
(21,897)
100
(21,897)
100

46

6. Total Expenditure

Costs directly allocated to activities
Staff costs, travel and subsistence
Payments relating to artists
Materials and consumables
Communications
IT systems providing direct arts support
Administration
Small Scale Building Project Cost
Total direct costs
Premises and services costs
Building running costs
HR and administration
IT & Finance
Governance
Operations and planning
Total support costs
Total costs - 2020-21
Total costs - 2019-20
Support costs allocated to activities		 Cinema
Learning and
participation
Visual Arts
Performing Arts Other Restricted
Projects
Restricted
Building
Projects
Trading
operations
£
£
£
£
£
£
£
18,141
134,801
27,891
8,467
810,797

-
732
878
143
28,024
10,373
163,868

-
-
-
4,452
10,973
371
116,461

-
13,532
-
-
-
-
128,388

-
-
59
6,517
-
711
71,322

-
4,100
-
371
-
-
34,176

-
1,569
-
-
-
-
-

-
-
19,078
146,284
66,888
19,922
1,325,012
-
19,933
15,839
47,516
18,275
40,206
269,905

-
-
15,789
47,366
18,218
40,079
-

-
-
30,252
110,007
41,253
93,506
-
-
-
13,301
36,103
15,201
30,403
-
-
-
8,473
33,892
12,707
29,655
-
-
6,335
26,623
106,490
39,934
93,178
140,674
-
-
110,277
381,374
145,588
327,027
410,579
-
6,335
129,355
527,658
212,476
346,949
1,735,591
-
26,268
419,971
1,275,131
680,996
1,085,673
331,395
262,709
1,170,729		 2020/21 Total
£
1,000,829
203,286
145,789
128,388
82,709
36,116
0
1,597,117
391,741
121,452
275,018
95,008
91,062
406,899
1,381,180
2,978,297
-		 2019/20 Total
£
1,989,873
806,833
794,738
221,038
49,802
59,484
262,709
4,184,477
12,055
595,652
84,830
232,157
42,332
75,102
1,042,127
-
5,226,604

Support costs have been allocated to activities on a percentage linked to direct costs.

£1,735,591 (2020: £594,104) of the above costs were attributable to restricted funds. £1,242,706 (2020: £4,632,500) of the above costs were attributatble to unrestricted funds.

47

7. Charitable Expenditure

----- Start of picture text -----
Expenditure includes: 2021 2020
£ £
Auditors’ remuneration
- in respect of audit 12,005 12,893
-
- for specialist advice (all holding company) 4,893
Depreciation – owned assets 71,343 71,816
----- End of picture text -----

8. Staff Costs

Wages and salaries
Social security costs
Pension costs		 2021
2020
£
£
1,458,754
2,233,272
99,857
138,127
30,707
40,189
1,589,318
2,411,588

Redundancy amounts of £70,356 (2019 : Nil) were paid to 36 employees during the reporting year. No individual payment was above £7,000. Holiday pay of £4,183(2020: £2,029) is included in provisions. The company contributes to the Pension Scheme for Administrative and Technical Staff in the Arts, which is a national scheme of the defined benefit type. The scheme is closed to new members. The company has also established a defined contribution scheme with NEST.

company has also established a defined contribution scheme with NEST.
2021 2020
Number Number
The number of employees whose remuneration fell within the band
£60,000 to £69,999 1 1

Trustees' and key management personnel remuneration and expenses

No trustee received reimbursed expenses during the year. (2020: £172)

The total amount of employee benefits received by key management personnel is £252,363 (2020: £263,249)

Key management personnel are set out on page 26 of this report.

The average number of employees in the year was as follows:

----- Start of picture text -----
2021 2020
Number Number
Business and administration staff – Full time 21 30
Business and administration staff – Part time 40 58
Arts team – Full time 6 8
Arts team – Part time 73 74
Catering, bar and events staff 14 43
154 213
----- End of picture text -----

48

9. Tangible Fixed Assets

----- Start of picture text -----
Leasehold
Consolidated and Company land and Leasehold Fixtures
buildings Improvements and fittings Computers Total
£ £ £ £ £
Cost
At 1 April 2020 4,781,492 184,376 439,487 156,850 5,562,205
Additions - 800,485 31,985 5,882 838,352
At 31 March 2021 4,781,492 984,861 471,472 162,732 6,400,557
Depreciation
At 1 April 2020 2,368,422 81,649 365,583 103,928 2,919,582
Charge for year - 18,760 32,219 20,364 71,343
At 31 March 2021 2,368,422 100,409 397,802 124,292 2,990,925
Net book values
At 31 March 2021 2,413,070 884,452 73,670 38,440 3,409,632
At 31 March 2020 2,413,070 102,727 73,905 52,922 2,642,624
----- End of picture text -----

In 2012 and 2014 there were additions of £2,185,000 and £228,070 to leasehold land and buildings representing the amount payable under a development agreement in respect of a lease premium due on the granting of a new lease to MAC upon the final completion of the building project. A corresponding creditor has been recognised to reflect the payment due.

As the lease has not yet been signed, no depreciation has been charged on the capitalised amount.

For further details see note 21.

10. Investment in Subsidiary Undertaking

The company owns 100% of the issued share capital of Midlands Arts Centre Trading Limited, a company registered in England and Wales, and whose principal activity is the provision of catering services, event sales and hire. The results of the subsidiary undertaking are set out in note 5.

11. Stock (Consolidated Only)

49

12. Debtors

----- Start of picture text -----
Consolidated Company
2021 2020 2021 2020
£ £ £ £
Amounts falling due within one year
- -
Due from subsidiary undertaking 126,753 173,572
Other debtors 25,364 135,094 12,195 109,930
Prepayments 65,564 103,182 62,564 100,182
Accrued income 120,874 267,398 120,166 266,762
211,802 505,674 321,678 650,446
----- End of picture text -----

13. Creditors

----- Start of picture text -----
Consolidated Company
2021 2020 2021 2020
£ £ £ £
Amounts falling due within one year
Trade creditors 350,312 181,473 295,972 167,139
Taxation and social security (61,010) 55,673 (61,007) 62,900
Other creditors 2,443,471 2,448,063 2,443,471 2,448,063
Accruals 283,230 132,148 269,271 125,582
Deferred income 75,177 185,535 67,551 179,174
Pension liability 93,384 93,384 93,384 93,384
3,184,564 3,096,276 3,108,642 3,076,242
----- End of picture text -----

14. Operating Leases

50

15. Restricted Funds (Charity And Group)

----- Start of picture text -----
Small Scale
Capital
Capital Development Projects
Development Project (note 16) Total
£ £ £ £
At 1 April 2020 2,413,070 (27,709) 561,895 2,947,256
Incoming resources
Incoming resources (note 3) - 664,983 2,500,917 3,165,900
Total incoming resources - 664,983 2,500,917 3,165,900
Resources expended
Building Project costs - - - -
Arts activities - - (1,735,591) (1,735,591)
- - (1,735,591) (1,735,591)
At 31 March 2021 2,413,070 637,274 1,327,221 4,377,565
----- End of picture text -----

Small Scale Capital Development Project is ongoing.

16. Analysis of Restricted Project Funds (Charity and Group)

----- Start of picture text -----
1 April Incoming Resources 31 March
2020 resources expended 2021
£ £ £ £
National Foundation for Youth Music - 215,715 (137,161) 78,554
Youth music inclusion programme working
with children and young people in
challenging circumstances
-
Covid - 19 Support funds 1,738,968 (1,417,890) 321,078
Other Projects 561,895 546,234 (180,540) 927,589
Total 561,895 2,500,917 (1,735,591) 1,327,221
----- End of picture text -----

* Refer to note 3 for list of supporters

51

Comparison to financial year ended 31 March 2020

17. Unrestricted Funds (Group)

At 1 April 2020
Net incoming resources before transfers
Transfer of funds
At 31 March 2021		 General
Designated
Pension
Funds
Funds
Funds
Total
£
£
£
£
631,771
400,000
(609,480)
422,291
(13,260)
(4,940)
58,823
40,623
(204,940)
204,940
-
-
413,571
600,000
(550,657)
462,914
UNRESTRICTED FUNDS (Charity)
At 1 April 2020		 General
Designated
Pension
Funds
Funds
Funds
Total
£
£
£
£
631,771
400,000
(609,480)
422,291
Net incoming resources before transfers 8,736
(4,940)
58,823
62,619
Transfer of funds
At 31 March 2021		 (204,940)
204,940
-
-
435,567
600,000
(550,657)
484,910

At the year end, the designated funds are allocated £600,000 (2020: £400,000).

52

In accordance with the requirements of FRS 102 MAC has recognised a pension liability of £550,657.

Comparison to financial year ended 31 March 2020

----- Start of picture text -----
General Designated Pension
Funds Funds Funds Total
£ £ £ £
At 1 April 2019 503,294 685,526 (711,951) 476,869
-
Net incoming resources before transfers (157,049) 102,471 (54,578)
Transfer of funds 285,526 (285,526) - -
At 31 March 2020 631,771 400,000 (609,480) 422,291
----- End of picture text -----

At the year end, the designated funds are allocated £400,000 (2020: £400,000).

In accordance with the requirements of FRS 102 MAC has recognised a pension liability of £609,480.

18. Analysis of Group Net Assets Between Funds

Fund balances at 31 March 2021 are
represented by:
Fixed assets
Stock
Debtors
Cash at bank and in hand
Creditors		 Unrestricted
Funds
Consolidated
£
359,288
23,876
211,802
1,120,061
(771,493)		 Restricted
Funds
Consolidated
£
3,050,344
-
-
3,740,291
(2,413,070)		 Total
Unrestricted
Funds
Funds
Company
£
£
3,409,632
359,388
23,876
-
211,802
321,678
4,860,352
980,035
(3,184,563)
(695,572)
Provisions / Pensions (480,619) - (480,619)
(480,619)
462,914 4,377,565 4,840,479
484,910

The designated funds within unrestricted funds are represented by cash at bank.

53

Comparison to financial year ended 31 March 2020

----- Start of picture text -----
Unrestricted Restricted Total
Funds Funds Funds
£ £ £
Fund balances at 31 March 2020 are
represented by:
Fixed assets 229,554 2,413,070 2,642,624
Stock 41,038 - 41,038
Debtors 505,674 - 505,674
Cash at bank and in hand 845,327 2,947,256 3,792,583
Creditors (683,206) (2,413,070) (3,096,276)
Provisions / Pensions (516,096) - (516,096)
422,291 2,947,256 3,369,547
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The designated funds within unrestricted funds are represented by cash at bank.

19. Financial Activities of the Charitable Company

The financial activities shown in the consolidated statement of financial activities includes those of the company’s wholly owned subsidiary.

A summary of the financial activities undertaken by the parent charitable company is set out below:

Gross incoming resources
Total expenditure on charitable activities
Governance costs		 2021
2020
£
£
4,418,689
3,996,119
(2,834,699)
(3,771,421)
(91,062)
(42,332)
Net (outgoing)/incoming resources for the year 1,492,928
182,366
Total funds brought forward
Total funds carried forward
Represented by:
Unrestricted funds
Designated funds
Restricted funds
Pension funds		 3,369,547
3,449,889
4,862,475
3,632,255
435,567
631,771
600,000
400,000
4,377,565
2,947,256
(550,657)
(609,480)
4,862,475
3,369,547

20. Lease Commitments

The charitable company has a commitment to pay a peppercorn rent expiring after more than five years on the leasehold land and buildings at Cannon Hill Park.

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21. Capital Commitments and Contingent Liabilities

MAC is committed to make a contribution towards the capital development projects.

Small Scale Capital Development Project

MAC started an extensive refurbishment project in January 2020 which is was successfully completed in March 2021. There are some small-scale projects that are on-going such as the new terrace fence and changing room toilets. Project funding was secured through Arts Council England, Greater Birmingham and Solihull Local Enterprise Partnership and other trusts and foundations. Due to the after effects of the COVID-19 pandemic, project budget anticipated to be overspend. The Trustees have therefore designated £100,000 towards the project to cover these costs.

Capital Project 2010

At the date of signing the accounts, an amount of £2,413,070 has been recognised in fixed assets as a capitalised lease premium with a corresponding creditor recorded in accruals.

The charitable company is the representative member of a VAT registration group with its subsidiary company. The parent and subsidiary are jointly and severally liable for any VAT due from the representative member.

22. Tax Status

As a charitable company, Midlands Arts Centre, is exempt from tax on income and gains falling within Sections 481-489 of the Corporation Taxes Act 2010 or Section 256 of the Taxation of Chargeable Gains Act 1992 to the extent that these are applied to its charitable objects. No tax charges have arisen within the charitable company. The trading subsidiary has no profits which are subject to taxation under the provisions of the Income and Corporation Taxes Act 2010.

23. Pensions

• NEST Pension

The Company offers the NEST pension scheme to meet the requirements of auto-enrolment of staff into a pension scheme.

The company participates in the scheme, a multi-employer scheme which provides benefits to 7 non-associated participating employers. The scheme is a defined benefit scheme in the UK. It is not possible for the company to obtain sufficient information to enable it to account for the scheme as a defined benefit scheme. Therefore it accounts for the scheme as a defined contribution scheme.

The scheme is subject to the funding legislation outlined in the Pensions Act 2004 which came into force on 30 December 2005. This, together with

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documents issued by the Pensions Regulator and Technical Actuarial Standards issued by the Financial Reporting Council, set out the framework for funding defined benefit occupational pension schemes in the UK.

The scheme is classified as a 'last-man standing arrangement'. Therefore the company is potentially liable for other participating employers' obligations if those employers are unable to meet their share of the scheme deficit following withdrawal from the scheme. Participating employers are legally required to meet their share of the scheme deficit on an annuity purchase basis on withdrawal from the scheme.

A full actuarial valuation for the scheme was carried out at 31 March 2019. This valuation showed assets of £21m, liabilities of £23.2m and a deficit of £2.3m. To eliminate this funding shortfall, the participating employers have agreed to continue to pay contributions to the scheme based on their calculated share of the shortfall. The contributions of MAC are as follows:

Deficit contributions

From 1 June 2017 to 31 August 2027: £93,384 per annum

Where the scheme is in deficit and where the company has agreed to a deficit funding arrangement the company recognises a liability for this obligation. The amount recognised is the net present value of the deficit reduction contributions payable under the agreement that relates to the deficit. The present value is calculated using the discount rate detailed in these disclosures. The unwinding of the discount rate is recognised as a finance cost.

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----- Start of picture text -----
PRESENT VALUES OF PROVISION
2021 2020
Present value of provision £ £
Pension liability due in a year 93,384 93,384
Pension liability due after a year 457,273 516,096
Present value of provision 550,657 609,480
Reconciliation of opening and closing provisions
Period Ending
31 March 2021
£
Provision at start of period 609,480
Unwinding of the discount factor (interest expense) 34,561
Deficit contribution paid (70,038)
-
Remeasurements - impact of any change in assumptions
Remeasurements - amendments to the contribution schedule (23,346)
Provision at end of period 550,657
Statement of Financial Activities impact
Period Ending
31 March 2021
£
Interest expense 34,561
-
Remeasurements - impact of any change in assumptions
Remeasurements - amendments to the contribution schedule -
Contributions paid in respect of future service 23,346
-
Costs recognised in income and expenditure account
57,907
Assumptions
31 March 2021 31 March 2020
% per annum % per annum
Rate of interest 0.7% 2.4%
----- End of picture text -----

The discount rates shown above are the equivalent single discount rates which, when used to discount the future recovery plan contributions due, would give the same results as using a full AA corporate bond yield curve to discount the same recovery plan contributions.

24. Members

The charity is incorporated as a company limited by guarantee and, in accordance with the Memorandum of Association of the company, every member of the company undertakes to contribute to the assets of the company in the event of its being wound up while he is a member, or within one year after he ceases to be a member, for payment of the debts and liabilities of the company contracted before he ceases to be a member and the costs, charges and expenses of winding up, and for the adjustment of the rights of the contributories among themselves such amount as may be required, not exceeding one pound. The number of members at 31 March 2021 was 16 (2020:16).

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25. Related Party Transactions

A number of the Trustees of Midlands Arts Centre have interests in organisations which have provided support and funding to the charity in the year. The Trustees have considered the disclosure requirements of Accounting and Reporting by Charities: Statement of Recommended Practice (FRS 102) and of Financial Reporting Standard 102, and consider that the transactions requiring disclosure are as follows:

Greg Lowson, Trustee, is Managing Partner of Pinsent Masons, a firm the charity uses for the provision of legal services. Pro-bono fees donated by Pinsent Masons are disclosed in note 2 to the accounts.

Owen Dutton, Trustee, is a Senior Associate of Eversheds Sutherland, a firm the charity used in the year ending 31 March 2020 for the provision of specialist advice in relation to the Small Scale Capital Development Project. Pro-bono fees donated by Eversheds Sutherland are disclosed in note 2 to the accounts.

Transactions with the charity’s totally owned subsidiary, Midlands Arts Centre Trading Limited, are described in note 5 to the accounts and year-end balances are in note 12.

26. Ultimate Controlling Party

MAC is controlled by its Board of Trustees.

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