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Accounts 2001/2002

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Accounts 2001/2002 Royal College of Art Accounts 2001/2002 ‘The objects of the College are to advance learning, Contents knowledge and professional competence 02 Rector’s Introduction particularly in the field of fine arts, in the 03 Treasurer's Report for the year ended 31 July 2002 principles and practice of art and design in their 04 Corporate Governance relation to industrial and commercial processes 04 Responsibilities of the Council and social developments and other subjects 05 Council Members relating thereto through teaching, research and 06 Independent Auditors' Report to the Council collaboration with industry and commerce.’ 07 Statement of Principal Accounting Policies Charter of Incorporation of the Royal College of Art, 28 July 1967 08 Audited Financial Statements for the year ended 31 July 2002 21 Administrative Matters 22 Student Admissions Visitor: HRH The Prince Philip Provost: The Earl of Snowdon Pro-Provost and Chairman of Council: Ian Hay Davison Rector and Vice-Provost: Professor Sir Christopher Frayling Royal College of Art Kensington Gore London SW7 2EU tel: +44 (0)20 7590 4444 fax: +44 (0)20 7590 4500 email: [email protected] website: www.rca.ac.uk 1 Rector’s Introduction Treasurer's Report for the year ended 31 July 2002 The Royal College of Art Accounts, together with the accompanying Rector’s Review, Scope of the Financial Statements The College has begun preliminary discussions with a major charitable trust about the possibility of occupying a building in The financial statements comprise the consolidated results of the reflect the academic and financial progress of the College over the past year. the Royal Borough of Kensington and Chelsea for teaching and, College, including its General Awards funds and Centenary possibly, student accommodation. Scholarships. The College had no operating subsidiaries during The College’s accounts show a significant but predicted deficit for the year. This is the year, although it has two dormant subsidiary companies, RCA Cash Flow due to the preliminary fees and expenses which have been incurred in order to Design Group Ltd and Lion & Unicorn Press Ltd. The College set The increase in cash resources is due to the receipt of the £1m up an exempt charity, the RCA Foundation, to deal with contribution for the Ellipse project from the Garfield Weston progress the ellipse project to RIBA Stage D – the point at which planning consent fundraising activities, in 2000. No transactions have been Foundation. The College’s operations actually generated a net can be sought. Council agreed that the College would underwrite the project to this recorded by the Foundation as yet. cash inflow of around £44,000. point; however, no further College funds will be spent on it and therefore it will Results for the Year Future Developments progress beyond Stage D only when external funding is secured. Leaving aside the The College's income and expenditure results for the year to 31st Demand for places at the College continues to outstrip the July 2002 are summarised as follows: number available by a considerable margin. However, the costs of the ellipse the College’s financial position showed a small improvement on College is constrained by space from taking many more students 2001/02 2000/01 than are currently accommodated. Our costs are rising at a more that of last year. Our operations generated a surplus of just over £170,000. But the £000s £000s rapid rate than public funding (HEFCE funding and home/EU future prospects are uncertain, and the College is already taking steps to ensure fees). It is likely therefore that the College will have to continue Income 19,339 18,258 its programme of costs reductions in future years. Other sources that its financial position can be secured in a climate of continual reductions in the Expenditure 19,167 18,131 of income will also have to be considered, including the College’s real level of public funding. Operating Surplus 172 127 policy on fees and charges. Ellipse Project Costs 740 120 Overall (Deficit)/Surplus (568) 7 Payment of Creditors I would like to thank the Heads of School, and indeed all the staff of the College at The College is fully committed to the prompt payment of its suppliers' invoices, and aims to pay in accordance with all levels for their continued efforts and commitment. Special thanks are due to the The overall deficit, which was expected, is due to preliminary contractual conditions, or where no such conditions exist, within Pro-Rector, Professor Alan Cummings, the Director of Administration, Garry fees and other expenses which have been incurred in order to 30 days of receipt of invoice or of the goods or services take the Ellipse project to the point at which planning permission concerned, if this is later. Philpott, and all the staff who have contributed to the College’s self-evaluation for can be sought. The College has not yet raised the funds necessary to complete the project, although an initial donation of Pension Scheme the institutional audit by the Quality Assurance Agency. I would also like to thank £1m has been received from the Garfield Weston Foundation. The College’s pension scheme, shows a considerable deficit on However, it has not been possible to use this to defray the the Provost, Lord Snowdon, the Pro-Provost and Chairman of Council, Ian Hay its FRS 17 valuation. We have also learned that the scheme had a preliminary costs because it will have to be returned to the deficit of £1.518 million at 31 July 2001, a fact which the College Davison, and others who have served the College so well as Council Members Foundation if the project does not proceed to completion. was not aware of at the time due to an error on the part of the Therefore it is being held on deposit pending the raising of during the year. Particular thanks are due to Julian Harrison, who retired as scheme managers, who reported a surplus of £3.988 million. sufficient funds to allow construction to proceed. Council has This has created a problem which the College is taking urgent Treasurer at the end of December 2001 after 10 years’ distinguished service, and to agreed that no further expenditure on the project will be incurred steps to tackle. We are in discussions with HEFCE, national HE beyond RIBA Stage D unless external funding is found. Oliver Stocken, who took over as Treasurer and Chairman of the Finance pension providers and other interested parties to ensure that the financial interests of the College and members of the pension Committee. Most importantly I would like to thank the students of the College, in all Leaving aside the effect of the Ellipse project there has been a scheme are safeguarded. departments, for making it such an invigorating and stimulating place during the small improvement in the College’s underlying performance. Income from all sources held up well in 2001/2002, and fee Oliver Stocken income was particularly healthy, helped by a rise in the number academic year 2001/2002. Treasurer of overseas students taking up places at the College. I commend the Accounts to the Court. Investments There were no major changes in the College's investments during the year. The portfolio continues to be managed by J P Professor Sir Christopher Frayling, Rector, Royal College of Art Morgan Private Bank (formerly Fleming Private Asset Management) overseen by the College's Finance Committee. The falls in global markets in recent years have reduced the value of the College’s portfolio considerably – in 2001/2002 a loss of £353,000 was incurred, and this is shown in the Statement of Recognised Gains and Losses. During the year the College received an endowment of £3m from the Helen Hamlyn Foundation. This is intended to finance the activities of the Helen Hamlyn Research Centre for the next 10 years. It has been placed under the management of JP Morgan Private Bank, who have invested it in UK government stocks. Capital Projects The College is committed to take the Ellipse project to RIBA Stage D, which it is expected to reach shortly. This is not expected to incur costs beyond those paid and accrued in the accounts for 2001/2002. Further progress will be reviewed by Council in November, and will depend on the outcome of current fundraising efforts. 2 3 The Council has taken reasonable steps to: Members appointed by the Senate Corporate Governance Dr Jeremy Aynsley Risk Management • ensure that funds from the HEFCE are used only for the Professor Wendy Dagworthy On behalf of Council, the Audit Committee has commissioned the purposes for which they have been given and in accordance with Professor Dan Fern College’s internal auditors, Imperial College Internal Audit Financial Memorandum with the Funding Council and any other Mr Peter Hassell The College is a corporation formed by Royal Charter with Services, to review the effectiveness of the College's systems of conditions which the Funding Council may from time to time Professor Sandra Kemp charitable status, so it does not fall within the regulation of the internal control. The results were considered by management prescribe; Professor Martin Smith London Stock Exchange, but nevertheless the Council is satisfied and were summarised for review by the Audit Committee. The • ensure that there are appropriate financial and management Professor Glynn Williams that the College has, throughout the year ended 31 July 2002, Audit Committee is also responsible for the oversight of the controls in place to safeguard public funds and funds from other been in compliance with all the Code provisions set in Section 1 College's policies and procedures for Risk Management, in sources; One Student elected by the Students of the Combined Code on Corporate Governance insofar as they accordance with guidelines issued by the HEFCE.
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