Registered number:
Charity number:
255424
for the period ended
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Royal Exchange Theatre Company Limited
Contents
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Royal Exchange Theatre Company Limited
Reference and administrative details of the Company, its Trustees and advisers
for the period ended 31 March 2021
Patron:
HRH the Earl of Wessex
Joint Artistic Directors: Bryony Shanahan Roy Alexander Weise Executive Director : Stephen Freeman
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Royal Exchange Theatre Company Limited
Trustees' report
for the period ended 31 March 2021
The trustees present their report and the audited group and company financial statements for the year ended 31 March 2021. The trustees have adopted the provisions of the Statement of Recommended Practice (SORP) “Accounting and Reporting by Charities” (FRS 102) in preparing the annual report and financial statements of the charity. The Trustees’ Annual Report incorporates the group Directors’ Report and Strategic Report.
The financial statements have been prepared in accordance with accounting policies set out in the notes to the accounts and comply with the charity’s governing document, the Companies Act 2006, the Charities Act 2011 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 published on 16 July 2014. This report is prepared to cover the seven months ended 31 March 2021, following the change of our financial year to match the standard year end used in the arts sector. As a result of the COVID-19 pandemic much of this period was spent in a national lockdown or localised restrictions following government instruction. Our plans to re-open the theatre in the autumn of 2020 were halted, due to restrictions and the escalating local situation across Greater Manchester, and our programme was moved to the digital space. Having delivered a significant organisational restructure in late 2020, we spent this period looking to restart our programmes of live work, in a way that did not pose a significant threat to the organisation’s financial health. The Cultural Recovery Fund grant from the Department of Culture Media and Sport (DCMS) allowed us to undertake significant preparatory work and organisational change. Throughout our period of closure, engagement work continued to be delivered and we prioritised our connection with the communities of Greater Manchester. We successfully provided vital points of engagement and connection and positioned the organisation as a strong regional presence, something which will be critical to the future of the theatre. Our purposes and activities Vision We change the way people see theatre, each other and the world around them. Mission Our historic building, once the world’s biggest cotton exchange, was taken over by artists in 1976. Today we are an award- winning cultural charity that produces new theatre in-the-round, in communities, on the road and online. Exchange remains at the heart of everything we make and do. Now our currency is brand new drama and reinvigorated classics, the boldest artists and a company of highly skilled makers - all brought together in a shared imaginative endeavour to trade ideas and experiences with the people of Greater Manchester and beyond. The Exchange’s unique auditorium is powerfully democratic, a space where audiences and performers meet as equals, entering and exiting through the same doors. It is the inspiration for all we do; inviting everyone to understand the past, engage in today's big questions, collectively imagine a better future and lose themselves in the moment of a great night out. This vision is created to enable us to further our Charitable Objects which are:
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To promote and advance the arts and culture including in particular (but not exclusively) by providing (or assisting in the provision of) theatrical productions of high quality and relevance to the communities served by the Charity; and
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To promote and advance education in the arts and culture including in particular (but not exclusively) by providing (or assisting in the provision of) programmes, projects, courses, sessions or other educational activities on the subject of drama and theatre; educational and training opportunities for aspiring artists and theatre-makers; and films, books, literature, exhibitions and other materials or media on the subject of theatre and drama.
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Royal Exchange Theatre Company Limited
Public benefit
As demonstrated by these ambitions, the public and public benefit sit at the heart of all our activity. The Trustees have considered the Charity Commission’s guidance on public benefit, in developing the organisation’s objectives, planning its activities and pricing policy. Our work is also informed by the aims of our principal public funders including Arts Council England’s Let’s Create strategy and the inclusive strategies of the Greater Manchester Combined Authority (GMCA) and Manchester City Council in ensuring the widest number of people in the region have the opportunity to experience culture. As well as work in our theatre, we are increasing our reach and impact though a programme of outreach activity across the whole of Greater Manchester though the Local Exchange programme, and digital capture and distribution is taking our work, for free, to audiences across the UK and beyond, seeing a significant increase in streaming during the period. In setting the level of ticket prices and concessions, we give particular consideration to the accessibility of the Exchange to those on low incomes and with special needs. A special scheme for under 26’s provides them with access to heavily discounted tickets, our Arts Pot fund subsidises tickets, fees and travel for those most in need of assistance to see our work or participate in our programmes. During the period when the theatre was closed, the scheme was not in operation however recommenced 1 April 2021 along with “pay what you can” and we continue to offer £10 day tickets to every performance in our theatre. We have accessible performances (audio-description, SL-interpretation, captioned performances, and relaxed performances) for our theatre and studio productions. We also offer free tickets to our programme to groups and partners working with us in some of the most disadvantaged parts of our community. Access to the benefits of the theatre is made available through free entry to our building’s Great Hall (the City’s former Cotton Exchange) in which the theatre is situated. Digital performance Due to our inability to present live performance, we moved our work to the digital space, producing new work for online distribution. This provided us with the opportunity to continue engaging with audiences, whilst widening our reach and impact. All I Want for Christmas ALL I WANT FOR CHRISTMAS was a celebration of Manchester – a journey through the tower blocks of the City Centre to the terraces of Glebe Street in Leigh, discovering stories filled with hope and joy from some of the most inspiring writers, directors and performers from across the region. Inspired by anecdotes from the communities and people who breathe life into them. ALL I WANT FOR CHRISTMAS was a celebration of the everyday. The project saw us work with 50 artists, creating 25 short films which were broadcast each day of December, in effect a digital advent calendar. Working as both a free Christmas gift to our audiences and communities, but also as a way to support and engage with freelancers during such a difficult period, the artists involved were all from or based in Greater Manchester and saw professionals such as Russell T Davies and Wunmi Mosaku, work side by side with members of our Young, Elders and Local Exchange programmes, as well as early career artists. We also used this project to create new relationships with artists in Greater Manchester, which we are now developing. The last day of the advent calendar was formed in collaboration with Manchester Dance company I M Pact and saw them occupy our stage, in a reminder of what we were missing, and an invitation back to our space. The Advent Calendar was viewed some 117, 000 times across all of our social media platforms. Oh Woman To mark International Women’s Day, we commissioned six Greater Manchester based artists to make six new pieces of work under the heading OH WOMAN.
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Royal Exchange Theatre Company Limited
Oh Woman was a celebration of remarkable lives and quiet triumphs, of famous faces and family members, and was shared across the Theatre’s website and social media channels from Monday 8 March onwards.
OH WOMAN was a celebration of remarkable lives and quiet triumphs, of famous faces and family members, and was shared across the theatre’s website and social media channels from Monday 8 March onwards. Eliyana Evans, Nana-Kofi Kufuor, Gemma Langford, Channique Sterling-Brown, Rebecca Swarray and Becky Wilkie developed original audio experiences inspired by the extraordinary women who mean something to them. Manchester illustrator Hannah McLennan-Jones worked closely with each theatre maker. She created vibrant pieces of illustration using pen and ink drawings, which were then collaged together to create her final pieces. Sound designer Annie May Fletcher worked with three of the theatremakers to develop their pieces. Annie is a sound designer and composer for live theatre and digital media based in the North, and she trained at LAMDA. The culmination of this project was six original and vibrant audio pieces that celebrated trans artist and icon SOPHIE; a mother and sister in a celebration of Black women; an eccentric, magical and well-loved nan; Mary Seacole and our NHS heroes; Manchester based activist Chloe Cousins, and artist and muse Elizabeth Siddall. Once more, this not only provided high-quality and innovative content, but allowed us to form new relationships with these artists. We worked with Rebecca Swarray on MY WHITE BEST FRIEND NORTH in autumn 2021 and engaged Channique Sterling-Brown as a poet for our Local Exchange Festival in August. Both of these artists were previously unknown to us. OH WOMAN saw 6,457 views on Instagram and YouTube and 3,400 website page views. Education programme CHILDREN & YOUNG PEOPLE Our work for and with children and young people both in the theatre and in communities remained a priority. We continued our work developing partnerships in Local Exchange areas with schools, youth centres and organisations, as well as continuing to place importance on our children and young people programmes at the theatre. Local Exchange, our community theatre project, takes our pop-up theatre, The Den, into a different area of Greater Manchester each year. Young Company Our new Young Company began in January 2021 and continuing to August 2021, culminating in a brand new performance in the module theatre written by Zodwa Nyoni. Sixty participants joined our Young Company in January 2021 in groups of Performers, Writers and Makers (Designers, Directors and Technicians) and took part in 22 weekly sessions leading towards rehearsals for the summer production. The Young Company will also be invited to take part in an intergenerational production with the Elders Company, directed by Andy Barry. Both shows will take place in the module, our main space, handing over the space to participants and encouraging their creativity. The Young Company Collective, an open-access membership scheme for young people aged 14-21 continued to flourish through weekly one-off workshops, as well as longer half-term holiday courses and programmes. Alumni of the Young Company 2019-2020 had the opportunity to take part in a Company Three partnership production entitled When This is Over, directed by directed by Nickie Miles- Wildin, a former Regional Theatre Young Directors Scheme Associate Director. We recognise that the Young Company cohort did not manage to have a live performance opportunity at the theatre in 2020 and so we offered this group the chance to take part in Research and Development sessions from early 2021 leading to a performance in our Studio theatre in November 2021. Children’s Company The Children’s Company is for children aged 5 – 13 to take part in weekly sessions, holiday programmes and one-off drop-in workshops. Due to the impact of COVID-19 we did not begin our Children’s Company programme during this period and used the time instead to evaluate our offer and understand how we can continue to develop the programme to ensure that we are reaching the most diverse group of children possible. We hope to re-establish the Children’s Company with some taster events over the summer for families, and to reinstate the main programme of work in the Theatre from September 2021.
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Royal Exchange Theatre Company Limited
Schools
Similarly, we also spent time consulting with teachers from our partner schools to ensure that our schools programme is as relevant as possible. We are committed to continuing our Associate Schools programme for education providers within our Local Exchange areas to offer them deeper access and partnership with us in the form of free tickets, workshops and the chance to perform on stage in the theatre. We continued our schools workshop offer from the summer term to offer schools the opportunity to book a Royal Exchange Theatre workshop. Work Experience Our previous work experience scheme, Behind the Scenes Work Week, offering young people the chance to experience off-stage roles within theatre, was hugely popular, and was reinstated from the new academic year to ensure we continue to be a place for learning and opportunities for young people across Greater Manchester. In the meantime, we developed our digital careers programme giving insight into jobs at the theatre and how young people can develop a career in the arts. ELDERS COMPANY During this seven-month period, we decided not to recruit for a core Elders Company, but instead focused on developing targeted work for those who are vulnerable or under-represented. As a result, we developed a Dementia Phone a Friend project that involved Elders Company graduates phoning participants living with dementia to create a poem with them over a series of weeks. This project will continue to be delivered with a range of partners over the course of the next year. We also initiated an Older Black History Month project to take place from May 2021 for 12 months. We began the project by consulting with older Black people who have previously engaged with our Elders programme to understand the barriers they face and how best to approach the project. We hope that we will deliver an outcome of the project, however we will be led by the participants. Elders Mondays drop-in sessions continued, taking place every other Monday to take part in writing, drama or script-reading workshops. The Elders Network, established in partnership with Leeds Playhouse, continued throughout the period offering both support for practitioners and participants to learn and develop their understanding of the breadth of work on offer and what other companies across the country are doing. Our Elders Company was re-established in September 2021 in the theatre, having recruited for new members over the summer. AUDIENCES & PARTICIPANT LED DEVELOPMENT During this time of reflection and evaluation, we took the opportunity to consult with our participants about what they want from our theatre and how we can be a civic space for everyone. Alongside researching our current audience demographic compared to the demographic of Greater Manchester, we established a cohort of people from across our engagement programmes to form this consultation group who join us for the next 12 months to offer their feedback, thoughts and ideas and to shape the direction of the Royal Exchange Theatre. Local Exchange In our Local Exchange areas, we continued to work with communities in Leigh, Tameside, and Cheetham Hill. Planning for the people in Leigh commenced, working towards theatre performances, employment and participation opportunities for the area. Programmed by our Leigh Ambassadors, a group of people who live, work and play in the area, we created work for the community culminating in a festival, ensuring that the festival was relevant and responded to the needs of the area. This festival was delivered in August 2021.
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Royal Exchange Theatre Company Limited
Now in our legacy year in Tameside, we finished work with Jigsaw Homes, residents of the Dukinfield estate, and children from Lyndhurst Primary School to develop a family fun day in the summer showcasing the work of the Tameside Women’s Centre, craft activity packs that have been delivered to residents, and the primary school course.
In Cheetham Hill, we developed an audio tour for residents to walk around the area listening to stories from people in the community. The tour has been available from June 2021 for groups and people from the area to celebrate the diversity within Cheetham Hill. Championing artists/artist development Despite our building being closed and our team significantly reduced, we worked hard to ensure that we were still connected to the artists in our region and were supporting them throughout this period. In collaboration with other cultural organisations in the region, we continued to run the Greater Manchester Artists Hub (GMAH). This included free mentoring, open forums to share information and provide transparency, seed commissions, project funding, support with funding bids and industry workshops. Additionally, our Joint Artistic Directors held “Town Hall” meetings with over 100 freelancers who have relationships with RET and who were feeling disconnected due to the pandemic. This was an open space to discuss the future, concerns, and opportunities, and work together to create more equitable spaces. They also held workshops with local Equity branches, universities and drama schools in the northwest, meeting cohorts of students who were having a particularly challenging time. A national Freelance Task Force was formed to articulate the needs of freelancers in our industry at this time, and Lighting Designer Louise Anderson was engaged to be a part of this. She attended weekly sessions and fed back the highlights of the discussions, in order for the theatre to recognise the most urgent needs of the workforce, and to implement best practice going forward. This informed our decision making around care for artists in our re-opening programme. Following our digital project Oh Woman, we invited all applicants (over 100) into an online meeting with our Artistic Directors, producers and engagement team. This was done to open up lines of communication, allow them to network with each other and find new collaborators, and to broker relationships and identify opportunities through our organisation. Furthermore, we offered two artists who had applied but not been successful, seed commissions to develop their ideas further with our support. From September 2020 we were joined by a Birkbeck trainee director, Maria Zemlinskaya, offering her hands on experience. She will be with us until the end of 2021 and we have designed a programme of activity that sees her working across all of our various strands. The programme includes a week of research and development to develop her own work. After collaboration with New Earth theatre company, a company making theatre led by British East and South East Asians, we recognised a lack of representation in this area in our programme and we formed the BESEA (British East and South East Asian) Writers’ group. This is made up of ten writers based in Greater Manchester, and they take part in weekly sessions run by industry leaders including Jude Christian and Kimber Lee. Our Dramaturg Suzanne Bell curates the programme and supports the group, as they are encouraged to work towards completing a new play. We were successful applicants to the Weston Jerwood Creative Bursary fund, which saw us recruit a Digital Content creator for a year. The bursary supports artists specifically facing financial/socioeconomic barriers, and after a process which saw us meeting everyone who applied, we employed Duncan Butcher.
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Royal Exchange Theatre Company Limited
We have set-up a successful partnership with Warner Brothers, which is about supporting writers, and providing them with opportunities in theatre, television and film. We were awarded £20,000 as the first part of our partnership, to deliver our inaugural DISRVPT event. DISRVPT is a programme of work designed to throw open our spaces and address the complex history of the former cotton trading hall that houses the theatre module. We have commissioned Manchester poet/performer/producer Keisha Thompson to write a poem which looks at the history of the space, asks for us to hold complexity, and invites everyone to occupy it differently now. Keisha will work with a local designer to create a year-long exhibition of the poem, that will take residency in our Great Hall. Alongside the poem, we have given Keisha a commission to develop a new play with us, and she will start forming relationships with the team at Warner Brothers, to provide her with the skills and opportunity to work in TV and film. We hope to keep developing this partnership and are currently discussing the second DISRVPT and how it can grow to help support more writers in the region.
Environmental sustainability
We have continued our sector-leading role and commitment to environmental sustainability. The carbon footprint of our organisation, as reported to Arts Council England and defined by water, waste and energy, has halved since 2010. We continue to participate in and support the Manchester Arts Sustainability Team which won Manchester Culture Award for Promotion of Environmental Sustainability in 2018. The MAST network continues to lead an EU URBACT project ‘C- Change’ with Manchester City Council, which sees the very successful model shared with five other European cities. This project was completed in December 2020. Fundraising Responsibility for fundraising is delegated by RET’s trustees to the Executive team who manage the operational delivery of activity. We have a detailed fundraising plan, with targets benchmarked against Arts Council England research into performance within the sector, and we monitor progress against these targets on a regular basis. Fundraising activity and performance against target is reported quarterly to the Board by the Executive Director. We raise money in a variety of ways from three main income streams – philanthropy, corporate partnerships and grants. Our fundraised income goes to support primarily our creative learning and engagement programme, our talent development strands of work, new writing as well as contributing towards core costs. No complaints regarding fundraising were received during the year. We comply with current regulations and best practice set out by The Institute of Fundraising. The Development team works closely with the Marketing team to ensure that all communications with those registered on our database (be they active supporters or not) are compliant with the requirements of the General Data Protection Regulation (2018). Specific Direct Mail fundraising communications (such as the Members' magazine “Backstage”) are distributed on an “opt-in” basis with the way to opt out prominently positioned. Financial review and pricing policy RET Group made an unrestricted surplus of £450k in 2020/21 (2019/20 £11k). Net current assets were £1,799k as at 31 March 2021 (31 August 2020: £1,742k). Net group assets were £6,251k as at 31 March 2021 (31 August 2020: £6,117k). The COVID-19 pandemic had a significant effect on the Royal Exchange Theatre as it did on all performing arts venues across the UK. The severe financial impact of lost income from box office and commercial operations was offset by cost cutting as well as fundraising including emergency funding from Manchester City Council, Arts Council England and a large number of supporters of the theatre.
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Royal Exchange Theatre Company Limited
Going concern
We have set out below a review of our reserves position. We currently have adequate financial resources for ongoing operations, and our planning process, which includes financial projections, has taken into account the current economic climate and likely levels of funding support. The Royal Exchange Theatre places significant reliance on Arts Council (NPO) England grant funding in order to balance income and expenditure on an annual basis, and National Portfolio Organisation funding from the Arts Council is now confirmed through to March 2023. The Trustees therefore believe that the Royal Exchange Theatre will continue in operational existence for the foreseeable future and, based on future financial forecasts to March 2023, will be in a position to continue to meet its liabilities as they fall due for at least twelve months from signing these financial statements. The accounts have therefore been prepared on the basis that the charity is a going concern. Reserves policy As at the year end, our reserves policy is designed to provide available financial reserves for the following reasons;
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To absorb potential box office shortfalls;
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To cover significant unbudgeted costs (e.g. investment in new areas of artistic activity, one-off costs of organisational change);
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To ensure that we had sufficient resources for capital replacement as our likely annual capital expenditure over the next few years is expected to exceed our annual depreciation charge.
We have quantified the sums needed for each reason (box office shortfalls, significant additional costs and capital expenditure) whilst also considering that these needs are unlikely to all occur simultaneously. Overall, we believe that a figure of £800k of available reserves (defined as Unrestricted funds not already invested in fixed assets, or irrevocably committed for other purposes) should be sufficient to cover these requirements; this is equivalent to approximately 1.5 to 2 months’ expenditure in typical (non-pandemic) trading conditions.
We have in recent years made good progress in building up our reserves through careful financial management and emergency COVID-19 funding from our core funders. As at 31 March 2021, our general unrestricted reserves stood at £686k (31 August 2020: £236k). The group’s net current assets/liabilities held within general Unrestricted Funds, are shown in note 26. Directors, trustees and members The trustees of the charity are also directors of the company for the purposes of the Companies Act and are also the only members of the company. Each member undertakes to contribute £1 to the assets of the company in the event of a winding up. Trustees in office during the period were: Ben Caldwell * **(Chair) Ellen Hanlon * Nicole May ** Sally Penni Jennifer Raffle * (Chair Finance and Scrutiny Committee) Aziz Rashid ** David Roscoe (resigned 30 August 2021) Davina Shah ** (Chair People and Culture Committee) Geoffrey Shindler * Martyn Torevell * Kate Vokes (appointed 10 March 2021)
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Royal Exchange Theatre Company Limited
The Company Secretaries in office in the year were:
Stephen Freeman (appointed 4 November 2020) Barry James (resigned 4 November 2020) Appointment and induction of trustees Trustees are recruited and appointed as and when required to maintain or enhance the range of expertise of the Board. They are appointed on an initial fixed term of three years, which may be extended. This ensures that the composition of the Board is refreshed on a regular basis. Opportunities for trusteeship are advertised publicly, and all new trustees are given appropriate induction into the Royal Exchange. Diversity At the period end the board of trustees was of 55% Female and 45% Male. 9% of trustees were aged 20-34, 18% aged 35-49, 64% aged 50-64 and 9% aged 65+. Of the Board, 18% identified as deaf, disabled or having a long-term health condition, 64% as non-disabled and 18% preferred not to say. The ethnicity of trustees was made up of 18% Asian British, 9% Black British, 55% White British and 18% preferred not to say. 9% of trustees identified as bisexual, 9% gay male, 64% heterosexual and 18% prefer not to say. Our Executive, which is made up of the joint Artistic Directors and Executive Director comprised two male and one female. Two were aged between 20-34 and one 35-49. One member of the Executive identified as deaf, disabled or having a long- term health condition and two as non-disabled. The ethnicity of our Executive was made up of one Black British and two White British individuals. The sexual orientation of our Executive was made up of one heterosexual, one gay female/ lesbian and one gay male. Structure, governance and management The Royal Exchange Theatre Company Limited, whose registered office is situated at St Ann’s Square, Manchester is a charitable company limited by guarantee and governed by its Articles of Association. The Governing Body of the Royal Exchange Theatre Company is the Board whose members are non- executive and unpaid. The Board retains full and effective control of the company, with approval for all major strategic decisions and has ultimate responsibility for the conduct of the company and its financial stability. Leadership and management of the company is delegated to the Executive. The Executive is a partnership between the Joint Artistic Directors 1 Bryony Shanahan and Roy Alexander Weise and the Executive Director 1 Stephen Freeman. Each of these individuals (Bryony Shanahan, Roy Alexander Weise and Stephen Freeman) has the title of Joint Chief Executive. The Executive reports to the Board, and it is the Executive’s responsibility to ensure that the work of the company supports the vision of the company and objects of the charity and that the management of the company is efficient, effective and compliant with regulation and run in accordance with good business practice. The Board monitors the organisation’s performance, and reviews the quality, effectiveness and timeliness of all information provided to it. The Board appoints the Executive and determines the contracts of employment of its three members. Review of Executive performance, pay and remuneration is delegated to the Chair of the Board and Chair of the Finance and Scrutiny Committee. The remuneration of the staff is set by the Executive with reference to benchmarks within the theatre sector. Note 1: ‘Director’ is a traditional title for the above senior posts in our sector but these individuals are not statutory directors under the Companies Act nor are any other members of the SMT whose title includes the word ‘Director’.
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Royal Exchange Theatre Company Limited
The Board meets at least four times each year and is supported by two standing sub-committees; the Finance and Scrutiny Committee and the People and Culture Committee, both of which also meet at least quarterly. Trustees above whose names are appended with an asterisk (*) are also members of the Finance and Scrutiny Committee. Trustees above whose names are appended with a double asterisk (**) are also members of the People and Culture Committee. Both the Board and its sub-committees receive agendas and papers in advance. Terms of reference set out the key decisions which must be approved by the Board, including approval thresholds for any large or exceptional items of expenditure. The Board has access to independent professional advice should it be required, at the company’s expense.
The affairs of the group are subject to continuous external scrutiny by Arts Council England, which may attend board meetings as observer, and undertakes an annual review of our work. Similarly, the company’s other major revenue grant funder (Greater Manchester Combined Authority) also appraises the theatre’s work annually. Organisation and related parties Royal Exchange Theatre Company Limited has two subsidiary companies. Royal Exchange Theatre Trading Limited is responsible for the operation of the theatre’s bars and café/restaurant, and gift-aids profits made to its parent company. Exchange Productions Limited acts as a production company for the Royal Exchange Theatre’s productions. Royal Exchange Theatre Company Limited also has two branches: The Royal Exchange Theatre Appeal Fund, a trust which undertakes fundraising activities and uses these funds to make grants to the theatre charity, and Royal Exchange Theatre Trustees Limited, which holds the leases for the theatre’s properties. The financial climate is challenging as a result of the COVID-19 pandemic. However, with the support of Arts Council England through the Culture Recovery Fund and that of other funders and donors, RET is in a stable financial position at this time of uncertainty. Risk management The board is very alive to the major risks to which we are exposed and an extensive risk register is maintained and reviewed and systems established to mitigate those risks. We assess all risks, and quantify the likelihood of these risks occurring, and the potential impact of these risks. Key risks: - Financial and practical considerations of reopening following Covid-19. - Uncertainty regarding audience numbers and preferences after a substantial period with no main programme. - Ensuring operational effectiveness following a significant restructure. - Macroeconomic factors affecting consumer behaviour and public finances. The business modelling exercise that is currently underway, forecasting through to March 2027, will seek to address and mitigate the key areas of risk in order to provide greater sustainability and provide the necessary capacity and flexibility for the organisation to deliver on its vision and mission. Plans for future periods In July 2021 the theatre re-opened with a world premiere of Bloody Elle- a Gig Musical. This marked the beginning of a re-mobilisation and testing phase, enabling the organisation to learn how the new operating model works and to understand changed audience behaviour. Autumn/winter 2021 saw us deliver three more main stage productions, including a new version of The Mountaintop, a world premiere of the Bruntwood Prize-winning play Glee & Me and a Christmas production of The Strange Undoing of Prudencia Hart. Alongside this programme of produced work, our engagement activity had a phased migration from online to in person delivery, working with our Elders and Young Company to deliver a new intergenerational production of Wit & Wisdom and a Young Company production of The Survivors Guide both taking place on our main stage. August 2021 was Year two of the Local Exchange programme in Leigh. The Den arrived at Spinners Mill in Leigh in August 2021 for a two-week festival of work, co-curated with the Leigh Ambassadors and a cohort of new Leigh-based partners.
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Royal Exchange Theatre Company Limited
2022/2023 will see the theatre continue to test the market for work of scale on the main stage with a programme of six produced works. There is much still to learn about audience behaviour and confidence during this time, and we will continue to review and evaluate the impact of our work, understanding who is returning to the theatre and importantly, who is not. As part of this testing period we will continue to investigate and test digital versions of the work produced on the main stage to enable access for those who continue to find in-person attendance challenging.
In order to deliver our programmes in 2022/23, we will need to scale up our core staffing structure, enhancing it with additional posts on a fixed-term basis. This will address the capacity issues raised by our new, reduced staffing structure.
Approved by order of the members of the board of Trustees and signed on their behalf by:
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Royal Exchange Theatre Company Limited
Statement of Trustees' responsibilities
for the period ended 31 March 2021
Disclosure of information to auditors Each of the persons who are trustees at the date of approval of this report confirms that: (a) so far as the trustee is aware, there is no relevant audit information of which the company’s auditors are unaware; and (b) he/she has taken all the steps that he/she ought to have taken as a trustee to make himself/herself aware of any relevant audit information and to establish that the company’s auditors are aware of that information.
Approved by order of the members of the board of Trustees and signed on its behalf by:
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Royal Exchange Theatre Company Limited
Independent auditors' report to the Members of Royal Exchange Theatre Company Limited
We have audited the financial statements of Royal Exchange Theatre Company Limited
(the 'parent charitable company') and its subsidiaries (the 'group') for the period ended
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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
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's or the parent charitable company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Trustees with respect to going concern are described in the relevant sections of this report.
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Royal Exchange Theatre Company Limited
Independent auditors' report to the Members of Royal Exchange Theatre Company Limited (continued)
The Trustees are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditors' report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙
the information given in the Trustees' report for the financial period for which the financial statements are prepared is consistent with the financial statements.
∙
the Trustees' report has been prepared in accordance with applicable legal requirements.
In the light of our knowledge and understanding of the charitable company and its environment obtained in the course of the audit, we have not identified material misstatements in the Trustees' report.
We have nothing to report in respect of the following matters in relation to which Companies Act 2006 requires us to report to you if, in our opinion:
∙
the parent charitable company has not kept adequate and sufficient accounting records, or returns adequate for our audit have not been received from branches not visited by us; or
∙
the parent charitable company
financial statements are not in agreement with the accounting records and returns; or
∙
certain disclosures of Trustees' remuneration specified by law are not made; or
∙
we have not received all the information and explanations we require for our audit.
As explained more fully in the trustees' responsibilities statement, the Trustees (who are also the directors of the charitable company for the purposes of company law) 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.
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Royal Exchange Theatre Company Limited
Independent auditors' report to the Members of Royal Exchange Theatre Company Limited (continued)
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 auditors' 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 extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Identifying and assessing potential risks related to irregularities
In identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:
∙
The nature of the industry and sector in which the company operates; the control environment and business performance including key drivers for directors' remuneration, bonus levels and performance targets.
∙
The outcome of enquiries of local management and parent company management, including whether management was aware of any instances of non-compliance with laws and regulations, and whether management had knowledge of any actual, suspected, or alleged fraud.
∙
Supporting documentation relating to the Company's policies and procedures for:
−
Identifying, evaluating, and complying with laws and regulations
−
Detecting and responding to the risks of fraud
∙
The internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations.
∙
The outcome of discussions amongst the engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
∙
The legal and regulatory framework in which the Company operates, particularly those laws and regulations which have a direct effect on the financial statements, such as the Companies Act 2006, Charities SORP, Charities Act 2011, Charities Commission, pensions and tax legislation, or which had a fundamental effect on the operations of the Company, including General Data Protection requirements, and Anti-bribery and Corruption.
Audit response to risks identified
Our procedures to respond to the risks identified included the following:
∙
Reviewing the financial statements disclosures and testing to supporting documentation to assess compliance with the provisions of those relevant laws and regulations which have a direct effect on the financial statements.
∙
Discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud.
∙
Evaluation and testing of the operating effectiveness of management’s controls designed to prevent and detect irregularities.
∙
Enquiring of management about any actual and potential litigation and claims.
∙
Performing analytical procedures to identify any unusual or unexpected relationships which may indicate risks of material misstatement due to fraud.
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Royal Exchange Theatre Company Limited
Independent auditors' report to the Members of Royal Exchange Theatre Company Limited (continued)
We have also considered the risk of fraud through management override of controls by:
∙
Testing the appropriateness of journal entries and other adjustments.
∙
Challenging assumptions made by management in their significant accounting estimates, and assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and
∙
Evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
There are inherent limitations in the audit procedures described above, and the further removed non-compliance with laws and regulations are from the events and transactions reflected in the financial statements, the less likely we would become aware of them. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report.
This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company's members those matters we are required to state to them in an auditors' 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 charitable company and its members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditors
Lancashire Gate
21 Tiviot Dale
Stockport
SK1 1TD
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Royal Exchange Theatre Company Limited
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Royal Exchange Theatre Company Limited
The statement of financial activities includes all gains and losses recognised in the current or previous period.
There is no difference between the results for the financial years stated above and their historical cost equivalents. All incoming resources and resources expended above relate to continuing operations. The notes on pages 28 to 54 form part of these financial statements.
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Royal Exchange Theatre Company Limited
Registered number:
00927203
Consolidated balance sheet
as at 31 March 2021
The Trustees acknowledge their responsibilities for complying with the requirements of the Act with respect to accounting records and preparation of financial statements.
The financial statements were approved and authorised for issue by the Trustees and signed on their behalf by:
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Royal Exchange Theatre Company Limited
Registered number:
00927203
Company balance sheet
as at 31 March 2021
The financial statements were approved and authorised for issue by the Trustees and signed on their behalf by:
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Royal Exchange Theatre Company Limited
Consolidated statement of cash flows
for the period ended 31 March 2021
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
Royal Exchange Theatre Company Limited is a company limited by guarantee, registered number 00927203. It is incorporated in England, and the registered address is St Ann's Square, Manchester, M2 7DH.
2.
Accounting policies
The financial statements have been prepared under the historical cost convention, in accordance with applicable accounting standards in the United Kingdom and on a going concern basis, which follows the recommendations in Charities SORP (FRS102) 2015 and in accordance with FRS102. The basis of preparation of these financial statements has taken due account of the Companies Act 2006 and Charities Act 2011.
The financial statements for the period ended 31 March 2021 are for a 7 month period. The period end changed from 31 August to 31 March and therefore the comparative amounts are not entirely comparable. The principal accounting policies of the group have remained unchanged from the previous year. The key accounting policies are set out below.
In deciding to prepare the financial statements on a going concern basis, the trustees have considered all available information about the future for a period of at least 12 months from the date of approval. The information includes financial forecasts which are underpinned by a level of guaranteed funding from key stakeholders Arts Council England and, to a lesser extent, the Greater Manchester Combined Authority. These forecasts take into account the current economic climate and likely levels of funding support. The Royal Exchange Theatre places significant reliance on Arts Council England grant funding in order to balance income and expenditure on an annual basis, and NPO funding from the Arts Council is now confirmed through to March 2023. Other funding sources are assumed in the forecasts that are not yet guaranteed but the trustees believe that there is a realistic prospect of securing them. Based on these forecasts, the trustees believe that the theatre can continue in operational existence for at least the next 12 months.
The financial statements of the charitable company incorporate those of all funds and branches as required by the Charities SORP on a line by line basis. Therefore this shows the financial affairs of the Royal Exchange Theatre Company Limited, together with its branches Royal Exchange Theatre Appeal Fund, and Royal Exchange Theatre Trustees Limited.
The group financial statements consolidate those of the charitable company and of its subsidiary undertakings drawn up to 31 March 2021 on a line by line basis. These subsidiaries are Royal Exchange Theatre Trading Limited (formerly Royal Exchange Theatre Catering Limited) and Exchange Productions Limited. All intra-group balances and transactions are eliminated on consolidation. Accounting policies are consistent throughout the group. The company has taken advantage of the exemption contained within section 408 of the Companies Act 2006 not to present its own Income and Expenditure account. The Charity has taken advantage of the paragraph 1.11 Section 1, Cash flows, of FRS 102 and as such has not shown an individual charity cash flow statement within these financial statements on the basis that it is a qualifying entity and the Consolidated Statement of Cash Flows included within these financial statements includes the Charity’s own cash flows.
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
2.
Accounting policies (continued)
The members of the charity are the trustees named on page 1. In the event of the charity being wound up, the liability in respect of the guarantee is limited to £1 per member of the charity.
Revenue grants are credited as incoming resources when they are receivable provided the conditions for receipt have been complied with, unless they relate to a specified future period, in which case they are deferred.
Grants for the purchase of fixed assets are credited to restricted incoming resources when receivable. Depreciation of the fixed assets purchased with such grants is charged against the restricted fund. Grants and related income subject to pre-conditions for use have been deferred to be released to the statement of financial activities as the pre-conditions are satisfied. Grants of a revenue nature are recognised in the Consolidated statement of financial activities in the same period as the related expenditure.
All monetary donations and gifts are included in full in the statement of financial activities when receivable, provided that there are no donor-imposed restrictions as to the timing of the related expenditure, in which case recognition is deferred until the pre-condition has been met.
Investments donated to the company during the year are included in income at the mid-market value at the date of the donation. Subsequent unrealised and realised gains or losses on the value of the investments are shown separately in the Statement of Financial Activities. Donations made under Gift Aid together with the associated income tax recoveries are credited as income when the donations are received. Donated services and facilities are included at the value to the charity where this can be quantified. No amounts are included in the financial statements for time donated by volunteers.
Income from charitable activities comprises ticket sales for performances at the Royal Exchange, co-production income in respect of Royal Exchange productions, income for Royal Exchange tours, plus ancillary and non primary purpose income and income from other artistic activities including Creative Learning and Engagement activities. Income relating to productions is deferred until the relevant performances have taken place.
Income from trading activities comprises income from catering, sponsorship and corporate membership. Membership and sponsorship income is recognised on a receivable basis.
Investment income comprises interest receivable on cash balances held in interest-bearing accounts and is recognised on an accruals basis.
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
2.
Accounting policies (continued)
Theatre tax relief represents income due from HMRC in respect of Theatre Tax Relief relating to productions that took place during the year. This income is recognised on a receivable basis.
Cost of raising funds from commercial and trading operations and donations/legacies comprises costs relating to income generated from catering, sponsorship and corporate membership.
Cost of performances comprises the costs of all Royal Exchange productions and those of visiting companies presented in the Main House, the Studio and on tour.
Costs incurred in relation to scenery materials, costumes and props and production costs for future productions are prepaid and released to the Statement of Financial Activities in the year in which the first night of the related production takes place.
Expenditure on other charitable activities consists of costs relating to other artistic activities including Creative Learning and Engagement activities, new writing, and customer services. Expenditure on ancillary and non-primary purpose trading activities is included here.
All expenditure is accounted for on an accruals basis. Provision has been made, where appropriate, for relevant expenses where a present obligation exists at the balance sheet date in accordance with the requirements of FRS 102.
Tangible fixed assets are initially recognised at cost. After recognition, under the cost model, tangible fixed assets are measured at cost less accumulated depreciation and any accumulated impairment losses. All costs incurred to bring a tangible fixed asset into its intended working condition should be included in the measurement of cost.
Depreciation is charged so as to allocate the cost of tangible fixed assets less their residual value over their estimated useful lives.
Depreciation is provided on the following bases:
Expenditure on tangible fixed assets in excess of £2,000 is capitalised.
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
2.
Accounting policies (continued)
Investments in subsidiaries are valued at cost less provision for impairment.
Mixed motive investments are measured at their fair value, or if fair value cannot be reliably measured, at cost less impairment.
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
2.
Accounting policies (continued)
The Royal Exchange Theatre Company Limited operates two defined contribution schemes. The assets of the schemes are held in separately administered funds. The pension costs charged to the Statement of Financial Activities represent the amount of contributions payable to the schemes by the charitable company in respect of the accounting period. The liability and expenses for defined contribution plans are allocated to unrestricted funds and restricted funds on the same basis as other employee-related costs.
The Charity is entitled to certain tax exemptions on income and profits from investments, and surpluses on
any trading activities carried on in furtherance of the charity's primary objectives, if these profits and surpluses are applied solely for charitable purposes.
Income is stated net of VAT where applicable. Expenditure is stated net of any recoverable VAT. Any irrecoverable VAT is recognised as a cost against the activity for which the expenditure was incurred.
Rents payable under operating leases are charged to the Statement of Financial Activities on a straight line
basis over the lease term.
Preparation of the financial statements requires management to make significant judgements and estimates that affect amounts recognised for assets and liabilities at the reporting date and the amounts of revenue and expenses incurred during the reporting period. Actual outcomes may differ from these judgements, estimates and assumptions. The judgements, estimates and assumptions that have the most significant effect on the carrying value of assets and liabilities of the charity at 31 March 2021 are discussed below.
Critical accounting estimates and assumptions:
Recoverable value of trade debtors
The recoverability of trade debtors is regularly reviewed in the light of the available economic information specific to each debtor and specific provisions are recognised for balances considered to be at risk or irrecoverable. At the year end, the value of trade debtors totalled £45,000 (31 August 2020: £37,000 ). Property, plant and equipment Management exercises judgement in estimating the useful life of property, plant and equipment. At the year end, the net book value of property, plant and equipment is £4,452,000 (31 August 2020: £5,158,000 ). Accruals and deferred income Accruals and deferred income are entered into the financial statements based on management expectations. The charity recognised accruals and deferred income at 31 March 2021 is £921,000 (31 August 2020: £1,013,000 )
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
Page 29
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
Page 30
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
Summary by fund type
Page 31
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
Summary by activity
Page 32
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
Page 33
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
A summary of the results of the company's trading subsidiaries are as follows:
Royal Exchange Theatre Trading Limited
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
Exchange Productions Limited
Page 35
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
Page 36
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
15.
Staff costs
(continued)
Page 37
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
The company has taken advantage of Section 408 of the Companies Act 2006 and not included its own income and expenditure account in these financial statements. The net incoming resources for the company (including its branches) for the year was £163,000 (
2020: net outgoing resources of £797,000
).
Page 38
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
Mixed motive investments:
The following were subsidiary undertakings of the Company:
One share of Exchange Productions Limited is held by a nominee on behalf of the Royal Exchange Theatre Company Limited.
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
Page 40
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
21.
Creditors: Amounts falling due within one year
(continued)
Page 41
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
Group statement of funds - current year
Page 42
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
Group statement of funds - prior year
Page 43
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
Restricted funds
Artistic project funds represent restricted funding and related expenditure in respect of our Creative Learning and Engagement work, new writing programmes, talent development initiatives and other artistic activities. Long term project funds represent restricted funding and related expenditure in respect of two capital projects. The Theatre refurbishment project 1997 relates to the major capital project undertaken after the IRA bomb blast in 1996 and covers ongoing depreciation in respect of this. The capital project 2013 represents funds raised and expended on the Royal Exchange's capital project, financed with the support of Arts Council England. The Local Exchange project is an ambitious and long-term programme which sees the theatre take up residency in communities across Greater Manchester, build upon existing partnerships, develop new connections and bring together people, places and artists to cement long-lasting relationships with the communities right outside our doors. Designated Funds Designated funds include funds set aside for the theatre refurbishment project and capital project 2013 referred to above. Designated funds also relate to a capital replacement fund with reference to funds previously spent on capital items which are now being depreciated. The investment fund represents funds set aside for capital items or other one-off investment expenditure which cannot be met from within the operating budget but which will provide ongoing savings or benefits for the charity.
Analysis of net assets between funds - current year
Page 44
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
Analysis of net assets between funds - prior year
Page 45
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
The group operates two defined contribution pension schemes for the benefit of its employees. The assets of the schemes are held in independently administered funds. The contributions paid by the group during the period were £31,000 (12 months ending 31 August
2020: £115,000
). At 31 March 2021, £1,000 (31 August
2020: £16,000
) was owed to the scheme.
The branches as defined by the Statement of Recommended Practice: Accounting by Charities, incorporated into the company financial statements are as follows:
Net incoming/(outgoing) Capital reserves and resources income funds
The group has purchased qualifying third party indemnity insurance for the trustees and officers of the group against liability arising for wrongful acts in relation to the group.
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Royal Exchange Theatre Company Limited
Notes to the financial statements
for the period ended 31 March 2021
Page 47
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