Trustees report and financial statements 2020

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION THE ROYAL SOCIETY TRUSTEES’ REPORT AND FINANCIAL STATEMENTS 58 SCIENCE SHAPING THE WORLD WE LIVE IN 59 Consolidated statement of cash flows For the year ended 31 March 2020 The principal accounting policies adopted in the preparation of these financial statements are as follows. Accounting convention The financial statements have been prepared in accordance with Financial Reporting Standard 102 – ‘The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland’ (‘FRS 102’) and with the Statement of Recommended Practice: Accounting and Reporting by Charities FRS 102 as revised in 2019 (‘the SORP 2019 2nd Edition’) together with the reporting requirements of the Charities Act 2011. The financial statements have been prepared under the historical cost convention with items recognised at cost or transaction value unless otherwise stated in the relevant accounting policy or note. The accounts have been prepared on a going concern basis. This conclusion has been reached after careful consideration of future forecasts which take into account the on-going impact of COVID-19. The Royal Society (‘the Society’) is a Public Benefit Entity as defined by FRS 102. The accounting policies have been applied consistently throughout the financial statements and the prior year. The accounts of the subsidiary Royal Society Trading Limited have been prepared on a basis other than that of the going concern basis. This basis includes, where applicable, writing the company’s assets down to net realisable value. Provisions have also been made in respect of contracts which have become onerous at the reporting date. No provision has been made for the future costs of terminating the business unless such costs were committed at the reporting date. Basis of consolidation These financial statements consolidate the results of the Royal Society and its active wholly owned subsidiaries, Royal Society Trading Limited and Royal Society (London) Ltd, on a line-by-line basis. In the consolidated financial statements uniform accounting policies have been used, with the exception of Royal Society Trading Limited. A separate statement of financial activities for the charity itself is not presented. Cash flow statement The Society meets the definition of a qualifying entity under FRS 102 and has therefore taken advantage of the disclosure exemption in relation to presentation of a cash flow statement in respect of its separate financial statements, which are presented alongside the consolidated financial statements. Critical accounting judgements and key sources of estimation uncertainty In the application of the Group’s accounting policies the Trustees are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Judgements, estimates and associated assumptions are reviewed on an ongoing basis and are based on historical experience and other factors that are considered to be relevant, including expectations of future events that are believed to be reasonable under the circumstances. Critical judgements relate to the accounting treatment of the multi- employer defined benefit scheme. Critical accounting estimates and assumptions relate to the defined benefit pension scheme. Multi-employer defined benefit scheme Certain employees participate in a multi-employer defined benefit scheme with other organisations. In the judgement of the Trustees, the Society does not have sufficient information on the plan assets and liabilities to be able to reliably account for its share of the defined benefit obligation and plan assets. In accordance with FRS 102 this is therefore accounted for as though it were a defined contribution scheme. Defined benefit pension scheme The cost of the defined benefit pension scheme and the value of the present value of the scheme liability depend on a number of factors, including assumptions about inflation, discount rates and mortality, which are taken by actuarial specialists. The valuation of the scheme is particularly sensitive to discount rate assumptions, with a 0.1% movement in the discount rate resulting in a £1.2m change in the value of the scheme liabilities. Royal Society Trading Limited During the year, the Society decided to progress with a sale of Chicheley Hall. Royal Society Trading Limited ceased to trade on the closure of Chicheley Hall on 23 March 2020 following government advice due to the COVID-19 pandemic. Subsequent to year end, De Vere Venues, the company appointed to manage the property since February 2013, gave notice on the Accounting policies For the year ended 31 March 2020 2020 2019 £’000 Notes £’000 £’000 Net cash (used in)/provided by operating activities A (13,744) 3,790 Cash flows from investing activities Investment income 2 6,851 8,051 Purchase of tangible fixed assets 15 (1,983) (629) Purchase of heritage assets 17 (20) (33) Purchase of investments 18 (31,616) (21,484) Proceeds from sale of investments 18 33,863 17,016 Net cash provided by investment activities 7,095 2,921 (Decrease)/increase in cash and cash equivalents (6,649) 6,711 Cash and cash equivalents at 1 April 11,408 4,697 Cash and cash equivalents at 31 March 4,759 11,408 A. Reconciliation of net (expenditure)/income to net cash flow from operating activities. 2020 £’000 2019 £’000 Net (expenditure)/income as per the statement of financial activities (27,699) 15,237 Adjustments for: Depreciation charges 15 1,262 1,580 Losses/(gains) on investments 18 23,774 (18,264) Investment income 2 (6,851) (8,051) Loss on the disposal of fixed assets 15 1 - Investment management fees charged to portfolio 18 1,164 1,016 Decrease/(increase) in stocks 3 (1) Decrease in debtors 19 3,088 1,535 (Decrease)/increase in creditors 20 (8,362) 10,974 Donated heritage assets 17 (40) (62) Difference between pension charge and cash contributions 25 (84) (174) Net cash (used in)/provided by operating activities (13,744) 3,790