Royal Mint Trading Fund Annual Report and Accounts 2017–18 HC 1244 Royal Mint Trading Fund Annual Report and Accounts 2017–18 Presented to Parliament pursuant to section 4(6) of the Government Trading Funds Act 1973 as amended by the Government Trading Act 1990 Ordered by the House of Commons to be printed on 23 July 2018 HC 1244 © Crown copyright 2018 This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government- licence/version/3. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. This publication is available at www.gov.uk/government/ publications. Any enquiries should be sent to The Royal Mint Limited, Llantrisant, Pontyclun, CF72 8YT or email: [email protected]. This document is also available from our website at royalmint.com ISBN 978-1-5286-0420-8 CCS 0518670552 07/18 This Annual Report has been printed on FSC accredited paper, using waterless presses and machinery powered by 100% natural and renewable energy sources. Printed on paper containing 75% recycled fibre content minimum. Printed in the UK on behalf of the Controller of Her Majesty’s Stationery Office. Contents 05 Accounting Officer’s Statement 06 Report of the Chief Executive of The Royal Mint Limited 08 Performance Report 20 Sustainability Report 24 Financial Summary 25 Key Ministerial Targets 26 The Royal Mint Advisory Committee 29 Accountability Report 29 Statement of the Accounting Officer’s Responsibilities 30 Governance Statement 35 Remuneration Report 40 Staff Report 42 The Certificate and Report of the Comptroller and Auditor General to the Houses of Parliament 44 Consolidated Income Statement 45 Statements of Comprehensive Income 46 Statements of Changes in Equity 48 Statements of Financial Position 50 Statements of Cash Flows 52 Notes to the Accounts Royal Mint Trading Fund | Annual Report and Accounts 2017–18 3 Royal Mint Trading Fund Annual Report and Accounts 2017–18 The Royal Mint Trading Fund Accounting Officer is Philip Duffy. The Royal Mint Limited Directors The Royal Mint Museum and Royal Mint Museum Services Limited Directors Peter Warry* Chairman Dr Andrew Burnett Anne Jessopp Chair Chief Executive Sir Christopher Frayling Andrew Mills Director of Circulating Coin Rear Admiral John Lippiett CB, MBE David Morgan* Sir Nick Macpherson Xenia Carr-Griffiths* Crispin Wright Amanda Rendle* Michael Clayforth-Carr* Victoria Rogers Jamie Carter* Anna Brennand Representative of the Royal Mint Trading Fund and HM Treasury as shareholder Anne Jessopp *Non-Executive Directors The Royal Mint, Llantrisant, CF72 8YT Company Secretary Email: [email protected] Christopher Inson Website: royalmint.com Website: royalmintmuseum.org.uk Executive Management Team Anne Jessopp External auditor to the Royal Mint Trading Fund Chief Executive Comptroller and Auditor General Andrew Mills External auditors to The Royal Mint Limited and Director of Circulating Coin the Royal Mint Museum Group Chris Howard PricewaterhouseCoopers LLP Director of Bullion Nicola Howell Internal auditor to The Royal Mint Limited Director of Consumer Business KPMG LLP Leighton John The Accounts of the Royal Mint Trading Fund at 31 March Director of Operations 2018, together with the Certificate and Report of the Martin McDade Comptroller and Auditor General thereon, are prepared Director of Finance pursuant to section 4 (6) of the Government Trading Funds Act 1973. In continuation of House of Commons Paper No Sarah Bradley 105 of 2016–17. Presented pursuant to Act 1973, c.63, s.4 (6). Director of HR and SHE HC 1244 Ordered by the House of Commons to be printed on 23 July 2018. 4 Royal Mint Trading Fund | Annual Report and Accounts 2017–18 Accounting Officer’s Statement As the Treasury’s Director of Enterprise and Growth, I also The Royal Mint Museum continued to make significant serve as Accounting Officer for the Royal Mint Trading Fund. progress in achieving its charitable objectives during the year. The Trading Fund has no Board or Directors, but operates Staff at The Royal Mint Experience engaged with over 10,000 as a holding company for The Royal Mint Limited, the Royal school pupils throughout the year via the Museum’s outreach Mint Museum and their subsidiaries. This report covers programmes. the operations of those two groups, and these accounts consolidate their financial statements with the Trading The Chief Executive of The Royal Mint Limited has highlighted Fund account. in her report the encouraging continued growth of the Consumer business. New product offerings clearly captured the Overall, the Royal Mint Trading Fund reported a consolidated public’s imagination, with operating profits in the Consumer net profit before tax for 2017–18 of £2.1 million (2016–17: business increasing by 43% to £18.2 million. £14.5 million). The Circulating Coin business faced a more challenging year, The Royal Mint Limited reported a return on average capital with weak demand for new circulating coin. This reduced employed of 13.5% (2016–17: 16.9%), comfortably satisfying operating profits in this part of the business by 59% to £5.7 the Ministerial target of 10%. The Royal Mint Limited also million. HM Treasury remains committed to the Mint for the satisfied its other Ministerial targets on UK circulating coins, UK’s new circulating coin requirements. commemorative coins, and on medals. This year’s accounts also include the costs of a potential new I would like to take the opportunity to thank the outgoing business line in precious metals that was unable to find a Royal Mint Limited Chairman Peter Warry and Chief Executive commercial partner. Against a difficult market, The Royal Mint Adam Lawrence for their leadership over the past five, has increased its market share for precious metals trading, and and seven, years respectively. This year also marked the The Royal Mint’s Board are considering how to grow this part appointment of a new Chief Executive, Anne Jessopp. She is of their business to offset costs in other areas the first female Deputy Master of the Mint in 1,100 years (the Master of the Mint being the Chancellor of the Exchequer), and I am sure she will help The Royal Mint Limited to achieve great success in the years ahead. Philip Duffy Royal Mint Trading Fund | Annual Report and Accounts 2017–18 Accounting Officer Report of the Chief Executive of The Royal Mint Limited This is my first report since taking up the role of The impact of the call for the public to return their old pounds Chief Executive and I feel privileged to have been appointed resulted in people emptying their coin stores of all denominations to lead such a world-renowned, unique British organisation. and this caused an excess supply of coins in the cash centres. The Royal Mint has an impressive history of over 1,100 years This has had a significant impact on company performance as and its longevity is due to its ability to adapt as society UK coin sales fell in the second half having a £9 million adverse changes. This was never truer than today, as we reinterpret impact on the result which was the main reason for the decrease The Royal Mint for the twenty-first century, building on our in contribution. In addition, the overseas circulating market is capabilities and the values of trust and authenticity that have extremely challenging as competitors have excess capacity which been at the heart of the organisation throughout our history. is resulting in extremely competitive pricing. These changes have meant restructuring our Circulating Coin Division and we report For the fifth year in a row we have exceeded all of our exceptional costs of £5.4 million relating to the impairment of Ministerial targets. Whilst overall revenue has decreased certain assets no longer required and the costs of staff leaving driven by the changes in the Circulating and Bullion markets, under our release scheme. we report a Company operating profit of £11.5 million (before exceptional items, IAS 39 adjustments and the pre-launch Whilst the Circulating Coin Division has been at the heart of The costs relating to RMG®) (2016–17: £16.0 million). Our Group Royal Mint through its history, I am pleased to report that we are consolidated operating profit before exceptional items and successfully developing a portfolio of complementary businesses. IAS 39 adjustments and after the pre-launch costs of RMG was I am delighted to report that our Bullion and Consumer divisions £6.5 million (2016–17: £14.4 million) and our return on capital have grown from a joint contribution of £9 million three years ago employed also remained well above our 10% Ministerial target to in excess of £20 million for the year ended 31 March 2018. at 13.5%, measured on a three-year rolling average basis, despite the challenging markets. The Consumer Division had an outstanding year, breaking all performance records and increasing their contribution to It has been widely reported in the media about changes in the operating profit by 42% to £17.9 million (before exceptional items way we use money, the adoption of contactless technology and IAS 39 adjustments). Creative innovation using iconic British and increase in digital transactions. This is not unique to the imagery has continued this year, with the Great British Coin Hunt, UK and it has resulted in challenges for our Circulating Coin Beatrix Potter range and RAF Centenary coins to name but a few. business who are reporting a contribution to operating profit This year has seen a number of royal milestones for the United of £5.7m (before exceptional items and IAS 39 adjustments) Kingdom, and our commemorative coins have been which is a reduction of 59% on the previous year.