MALVERN COLLEGE

MALVERN COLLEGE (Incorporated under Royal Charter)

CHARITY COMMISSION FIRST CONTACT

0 3 JAN 2018

ACCOUNTS RECEIVED

EIGHTY- EIGHTH ANNUAL REPORT WITH

STATEMENT OF ACCOUNTS FOR THE YEAR ENDED (31st JULY 201^

Registered Charity Numben 527578)

MALVERN COLLEGE (Incorporated under Royal Charter)

89th ANNUAL REPORT OF THE COUNCIL

(The 155th since the Foundation of the College)

To be laid before the Governors of Malvem College

at their 90 th Annual General Meeting

to be held at Malvern College

on Saturday 16th June 2018

Malvern College (Incorporated under Royal Charter)

Annual report and financial statements for the year ended 31 July 2017

Contents

Reference and Administrative Information 3-5

Report ofthe Council... 6-21

Independent Auditor's Report 22-24

Group Statement of Financial Activities 25

College Statement of Financial Activities 26

Group and College Balance Sheets 27

Group Statement of Cash Flows 28

Notes to the financial statements 29-54

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Reference and Administrative Information for the year ended 31 July 2017

President and visitor

THE LORD BISHOP OF WORCESTER - The Right Rev'd Dr John Inge

Status and administration Malvern College is incorporated under Royal Charter originally granted in 1929, together with a Supplemental Charter granted in 1992. It is registered with the Charity Commission in England and Wales under charity registration number 527578. Charitable objects The primary object of the College, as stated in the Royal Charter, is: "to carry on at Malvern or elsewhere a School for Boys and Girls or for children of either sex in which they may receive a sound religious, classical, mathematical, scientific and general education in conformity with the principles and doctrines of the Church of England."

Council Nominated/elected by

Chairman R K Black Esq * Governors

Vice Chairman G E Jones Esq * Headmaster and Assistant Teachers

Treasurer C Leonard Esq * # Council

Mrs F Bridge P G Brough Esq W Burke III Esq P J Cartwright Esq Professor K J Davey OBE Miss S Duff * Mrs M Edwards-Clark * N Engert Esq Mrs C Fairchild J Foxall Esq # F Francis Esq Mrs L J Gullifer (resigned 10 December 2016) J M J Havard Esq S M Hill Esq * Professor P Jackson

Dr N Bampos Esq (resigned 26 May 2017)

A Kennedy Esq K Madden Esq P Nicholls Esq Mrs L Penrice (appointed 9 December 2017) Mrs S Raby-Smith D G Robertson Esq #

Vice-Chancellor of University of Cambridge Army Board Governors Lord Lieut, of Gloucestershire Council Council Council Governors Air Council Council Governors Governors Vice-Chancellor of University of Oxford Lord Lieut, of Herefordshire Governors Vice-Chancellor of University of Birmingham Council Council Governors Vice-Chancellor of University of Oxford Admiralty Board Council

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Reference and Administrative Information (continued)

Dr D Sandbrook Esq (appointed 10 December 2016) Dr C Stoecker Esq T Straker QC * A Trotman Esq B Walker Esq (appointed 9 December 2017)

Lord Lieut, of Worcestershire Council Governors Governors Vice-Chancellor of University of

R T H Wilson Esq (resigned 26 May 2017) Dr H Wright

Cambridge Governors Council

Secretary to Council: G Ralphs Esq

* Members of the College Management Board # Members of the Audit Committee. Mrs M J Payton, a retired local solicitor is also a member of the Audit Committee.

Atthe Eighty Ninth AGM ofthe Governors on 10 June 2017, Mr Felix Francis and Mr Jim Foxall were re-elected for a further five year term.

Constitution of the Council

Nominated Councillors: the following may each nominate one Councillor for a five year term:

The Lord Lieutenant for each of the Counties of Gloucestershire, Herefordshire and Worcestershire; The Vice-Chancellors of each of the Universities of Oxford, Cambridge and Birmingham; Each of the Boards of the Admiralty, the Army and the Royal Air Force; and The Headmaster or Headmistress and Assistant Masters and Mistresses.

Elected Councillors:

The Governors of the Corporation elect ten Councillors, usually two per year, for a five year term.

Co-opted Councillors:

The Council may appoint between six and ten Councillors for a five year term.

The above is only a summary. Full details of the Constitution are specified in the By-Laws in The Royal Charter.

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Reference and Administrative Information (continued)

Officers & key management personnel: Headmaster A R Clark Esq

Bursar & Secretary to the Council G Ralphs Esq

Senior Deputy Head RA Lister Esq (resigned 31/08/17) Mrs S Angus (appointed 01/09/17)

Deputy & Finance Bursar Mrs A Walford

Registered address and principal office: Malvern College College Road Malvern

Worcestershire WR14 3DF

Bankers:

Lloyds Banking Group PLC 48 Belle Vue Terrace Malvern Worcestershire WR14 4QG

Independent Auditor: Crowe Clark Whitehill LLP Carrick House Lypiatt Road Cheltenham

Gloucestershire GL50 2QJ

Insurance Brokers: Marsh Brokers Limited Rockwood House 9-17 Perrymount Road Haywards Heath West Sussex RH16 3DU

Lawyers: Veale Wasbrough Vizards Narrow Quay House Narrow Quay Bristol

Gloucestershire BS1 4QA

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Report of the Council for the year ended 31 July 2017

The Council present their annual report and the audited consolidated financial statements for the year ended 31 July 2017. Reference and Administrative Information is set out on pages 3 to 5 of this report. This section also provides details of Malvern College's governing document, nature of its constitution and its charitable objects.

Chairman's statement

The past year has seen the College move from strength to strength. As Chairman, I am particularly pleased to be able to report that the College was included as a case study school in the National Children's Bureau's research into character education. This underlines the benefits of Malvern's all-round education and the development of the 'Malvern Qualities' in all our pupils for their mental health and fulfilment in adult life.

On the academic front, I am delighted to report continued and strong progress in public examinations for the IB, A levels and GSCEs in 2017. The IB cohort achieved an average point score of 36.94 - Malvern's second best set of results in the past 15 years with 32% performing outstandingly, scoring 40 or more IB points, including three candidates who attained the maximum of 45. The A Level results were very pleasing with 42% A*-A grades (our third highest to date) and 71 % A*-B grades; and the GCSE results saw the Hundred achieving 57% grades A*-A with 33% at grade A*, our third highest to date. This year five pupils were offered places at Oxford and Cambridge; and 22 pupils were accepted by US and Canadian universities, including Princeton, Northwestern, John Hopkins and Columbia. 83 of the Upper Sixth secured places at their first-choice UK university, of which 57 were at Russell Group universities.

As important, however, is the College's extraordinary performance in value added - the annual analysis produced by Durham University demonstrates that the College was in the top 16% of all IB schools and in the top 30% of all A Level schools; whilst in GCSEs, our pupils' results in each of their subjects were on average 0.5 of a GCSE grade higher than predicted by their baseline tests.

This success has been made possible by a variety of initiatives including developments in tracking pupil progress, enhanced through staff training, coupled with further refinement of the use of a co-ordinated 'intervention tracker' to monitor interventions related to pupil effort and progress. Buzz (Malvern College's virtual learning environment) has been increasingly used by academic departments, including podcasts of lessons and topics to facilitate pupil review and revision. Study Skills courses have been introduced for the FY and the Remove. The menu of Enrichment courses has been expanded for A Level candidates, with increased numbers taking the Extended Project Qualification, which has helped enhance pupils' research and time-management skills. A sustained focus on increasing staff awareness of pupils with differing learning profiles has promoted exchanges between the Learning Enhancement and academic departments.

In sport, several pupils have had international representation: two cricketers, two equestrians, two fencers, five hockey and two rugby players. A number of players were chosen for Worcester Warriors in rugby and Stourport for hockey. Professional contracts have been won by four cricketers. The U18 and U16 Girls Squads all reached the National Indoor Hockey finals. In addition to a number of preparatory schools' events, including one that attracted a good number of local primary school children (The Magic of Science'), Malvern again hosted National Preparatory Schools' Cross Country Competition, its 25 t h

anniversary, attracting almost 1,000 competitors from over 80 schools throughout the country.

Further afield, the growth of Malvern internationally is of great significance to the future of the College here in the UK. Malvern College, Cairo opened in September 2016 with over 300 pupils joining in its first term and Malvern College Pre-School Hong Kong opened in September 2017, alongside our established schools in Qingdao and Chengdu in mainland China. The College now educates over 1,300 pupils in its overseas schools which will increase further when Malvern College Hong Kong opens in September 2018 and as all the schools mature.

Finally, on the financial front, during the year ending 31 July 2017, the College's income remained strong at £23,074,239 (2016: £22,476,544), with net income of £883,963 (2016: £86,482), although this result

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Report of the Council for the year ended 31 July 2017 (continued)

benefited from the revaluation of the interest rate swap of £497,958 (2016: charge £540,582) which was taken out in 2009 to hedge the College's borrowings. Cash generation has continued to be strong with earnings before interest, depreciation and asset sales of £3,060,112 (2016: £3,291,028), well ahead of budget, which has enabled the College to both reduce its indebtedness and invest for the future. Net debt at 31 July 2017 was £2.1m (2016: £3.3m) and capital expenditure for the year of £1,607,718 (2016: £1,642,069) included £860,245 spent on completion of the 2 n d All Weather Pitch and £136,486 on the Theatre Project which is scheduled to re-open in September 2018.

The College has continued to expand its provision of public benefit in a wide range of activities more fully described on pages 17 to 19.

Structure, Governance and Management

Recruitment and training of Trustees

When a Trustee vacancy arises, the criteria of skills required, availability and eligibility, as dictated by the Royal Charter, are identified and reviewed by the Nominations Committee. The College's elected Trustees are appointed following the recommendations of both the Nominations Committee and Council. Trustees are appointed to serve for a 5 year term.

New Trustees are inducted informally by fellow Council members and the Secretary to Council. All new Trustees receive an induction pack comprising Charity Commission Trustee information, DfE publications, Malvern College Annual Report and Accounts and extensive College information. Training is undertaken through attendance at Council meetings by interaction with fellow Trustees, completion of on-line safeguarding training and attendance at College organised Trustee training events. A record of training is maintained for each Trustee.

Committee structure

The College Council continues to meet once per term. A committee of Council, the Management Board, comprising six or seven Trustees, the Headmaster, the Bursar, the Senior Deputy Head, the Finance Bursar and the Headmaster of The Downs Malvern (TDM), meets once per month in term time. All major developments and decisions are presented to the College Council having first been deliberated by the Management Board. The Senior Management Team (SMT), chaired by the Headmaster meets weekly and consists ofthe Bursar, the Senior Deputy Head, the Deputy Head - Logistics, the Deputy Head - Pastoral, the Deputy Head - Academic, the Headmaster of The Downs Malvern and the Finance Bursar. This team draws on other expertise throughout the College as is needed. The Headmaster, who has overall day to day responsibility for the management of the College, consults the SMT, as appropriate, and again, as appropriate, makes recommendations through to the Management Board and ultimately to the College Council.

Adopting best practice corporate governance guidelines, a College Audit Committee was set up in January 2006 and has met twice yearly since. This committee scrutinises the College's Annual Report and Financial Statements and its financial procedures and internal controls. It oversees the relationship of the College with its external auditors. The committee formally reports to the College Council.

The remuneration of the key management personnel is discussed in detail each year by the Remuneration committee, with awareness of industry standards, and is approved by the full College Council.

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Related parties

Malvern College Enterprises Limited (MCEL)

Malvern College Enterprises Limited is the College's wholly-owned trading subsidiary and carries out non-charitable trading activities for the College. The results of MCEL are consolidated within the overall College results. Further details of MCEL's activities and performance are given in the Financial Review and Note 4 and Note 23 of the financial statements for details. A 2 n d subsidiary (Malvern College International Limited (MCIL)) was incorporated in August 2017. This company is also a wholly-owned trading subsidiary of Malvern College and the trading activities of the International Schools will be transferred to MCIL from MCEL. The Governance structure is identical to MCEL.

The Malvernian Society Limited

The Malvernian Society Limited is a company limited by guarantee that promotes the work and education at Malvern College, assists in the carrying on of a school or schools and in cases of need assists pupils in further training. The results of The Malvemian Society Limited are not consolidated with the results of Malvern College because the society is a separate charity with an independent board of directors.

From time to time, the College receives grants towards the cost of scholarships, exhibitions, bursaries and grants for specific projects from The Malvernian Society. See Note 23 of the financial statements for details.

The Downs Malvern

The Downs Malvern (TDM) is the trading name of The Downs Malvern College Prep School (TDMCP). The results of TDM are not consolidated with the results of Malvern College because the school is a separate charity with an independent board of directors. TDM is closely affiliated with the College and the College provides bursarial support to TDM but retains its independence with its own Governing Body. See Note 23 for details.

Council Members

Council members are related parties of the College. See Note 8 of the financial statements for details of applicable transactions during the year.

Risk management

The Council, as Trustees ofthe Charity, has examined the principal areas of the College's operations and considered the major risks faced in each of the risk areas by reviewing the risk register prepared by the College's SMT. It is the opinion of the Council that the charity has established resources and reviewed systems which, under normal operating conditions, should allow these risks to be mitigated to an acceptable level in its day-to-day operations.

The major risks are considered to be the occurrence of a critical IT, Health and Safety or management incident or a pupil orientated incident. These risks are recorded on the College's risk register. The Council formally reviews the risk register on an annual basis. Changes to the College's risk profile are monitored and controlled on an operational basis by the College's SMT, the Bursary Management Team and the Health and Safety Committee. These bodies report specific identified risks and the strategies for managing those risks to the College Management Board and Council. The Audit Committee also reviews the risk register and management's procedures for review of the register.

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Repo r t o f the C o u n c i l f o r the year e n d e d 31 J u l y 2017 ( con t i nued )

A ims, strategies and objectives

The College's aim is to foster breadth of education and opportunity based on the academic curriculum and pastoral care at the heart of the school, and to ensure that its pupils, of all abilities, benefit from this.

The College has the following strategic objectives, all of which complement the aim stated above:

• To provide an academic curriculum which encourages pupils to learn, challenges them to think, and fosters a desire to be the best they can be.

• To provide a secure, happy, attractive co-educational boarding environment promoting the welfare and fulfilment of all pupils, preparing them for life after leaving the College.

• To provide an environment in which pupils can reflect upon issues of existential significance, develop their understanding of the purpose and meaning of life and consider their place in the wider community with due regard to the diversity of spiritual traditions.

• To encourage creative and sporting endeavour and a sense of self and responsibility towards others within and outside the College community.

• To seek to generate substantial non-fee income from fundraising, commercial activities and franchising.

• To continue to develop the College's communications with current and potential stakeholders. • To continue to monitor, develop and improve governance, leadership and performance

management.

• To have due regard for the Public Benefit guidance issued by the Charity Commission.

The short term plans that were enacted in the year to achieve these objectives were:

• To provide and develop an appropriately broad and rigorous curriculum. • To enhance pupil well-being whilst developing awareness of safeguarding. • To enable pupils to reflect on their own and others' religious beliefs and world views. • To promote representative sport and encourage participation. • To operate throughout the year with tight control on costs and a thorough and successful pupil

recruitment strategy. • To review bursary levels and other public benefit contributions by the College continually. • To develop the marketing function and enhance marketing communications. • To provide the resources required to enable the College to meet its educational, financial, legal

and charitable objectives.

The strategies, objectives and plans are included in the College Corporate Plan. This Plan contains detailed departmental action plans which are currently being carried out by College staff. The Plan is reviewed and updated by the College Senior Management Team to ensure that the objectives are being achieved. The fundraising activities are undertaken by the Malvernian Society in conjunction with the College Development Office. The Fundraising Campaign Board also meets twice a year to discuss the progress of fundraising and future strategies and targets.

Review of the year ended 31 July 2017

a Pupil numbers b Academic matters, including careers and higher education c Chapel d Cultural matters e Sport f Other events and aspects of school life g New Staff and Staff Changes

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(a) Pupil Numbers

At the start of the Autumn Term 2016 there were 646 pupils in the school of whom 352 were boys and 294 girls. The Autumn Term 2017 started with 629 pupils in the school of whom 346 were boys and 283 girls.

(b) Academic Matters, including careers and higher education

• UK Universities This year College pupils had 5 Oxbridge offers, 3 for Cambridge, 2 for Oxford. Offers were in the following subjects: Mathematics, Architecture, Natural Sciences (Physical) at Cambridge; PPE and Chemistry at Oxford. The previous year's 7 Oxbridge candidates all achieved their required grades. 79 Russell Group University places were secured in a wide range of subjects. Among the most popular options overall were Economics, Business, PPE and other combinations involving Politics or Philosophy. Warwick, Exeter, UCL and KCL remain popular Russell Group Universities.

• Overseas Universities 29 students have gained places at International Universities. Two students have gained places at Ivy League Colleges (Columbia and Princeton). Other destinations in the US include various colleges in the University of California, New York University, Northeastern, Northwestern, Illinois, Chicago, Connecticut, Georgia Tech, George Washington, Johns Hopkins, and Boston. There has been an increase in students applying after finishing their A-Levels/IB. Students are also destined for Bocconi in Italy, IE in Spain, ECV in Paris, and Hong Kong.

There are currently over 60 of the Lower Sixth applying to the US and elsewhere abroad. This is the biggest number yet. Many of these are also applying to the UK, but want to apply elsewhere also. The reason often given for this is the result of the EU referendum - while the UK's universities are desirable in many ways, for many of our European students, the potential tuition fee escalation and the perceived attitude of British people towards the non-British are factors in this.

• Careers Careers Advice was given to pupils in FY (Foundation Year) and Remove via briefings and the Inspiring Future's 'Careers Advisor' on-line questionnaire; Careers Profiling assessments were taken by 167 Hundred and 'new' Lower Sixth pupils, with results made available for pupils and parents and discussed with careers advisors from Inspiring Futures. The annual popular and informative Careers Evening for Hundred and Sixth form pupils had 23 parents and Old Malvernians giving seminars on a range of future opportunities including law, finance, medicine, veterinary science, engineering, IT, retail, management and acting. Gap Year projects taken up by pupils include working in Malvern's schools in China, Egypt and Hong Kong (from September 2017). Degree Apprenticeships are beginning to interest pupils; and one pupil is going to flight school to learn to be a commercial pilot.

• International Baccalaureate Examination Results: July 2017 Pupils achieved a very impressive average point score of 36.94, with 23 candidates (32% of the cohort) performing outstandingly, scoring 40 or more IB points, and three achieving the distinction of achieving the maximum 45 points.

• A Level Results 2017 The Upper Sixth A Level candidates achieved very pleasing results, with 42% A*-A grades and 71% A*-B grades.

• GCSE Results 2017 This year's GCSE results saw the Hundred achieving 57% A*-A. At the top end the figure of 33% A* was very pleasing.

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• Senior Maths Challenge 15 pupils won gold awards in this year's national Senior Maths Challenge.

• Study Skills A Study Skills course was introduced for the Remove Year in September 2016, delivered through the tutor programme. The aim is to better equip pupils in the Lower School with the skills they need for success in their academic studies.

• Life Skills & Ethics In September 2016, a weekly Life Skills and Ethics lesson was introduced for the Remove.

• Curriculum Developments In September 2016, we replaced the GCSE Religious Studies short-course with a full GCSE in Religious Studies.

There has continued to be a significant increase in the take up for the Extended Project Qualification, with over 30 of the Lower Sixth choosing it.

In the Summer Term, both the Foundation Year and Remove were involved in cross-curricular projects. The Foundation Year engaged in a largely science based project but with input from English and Economics as well. The Remove focused on change from historical, geographical, economic and cultural perspectives.

• Marking & Assessment New 'Working at' grades were introduced in September 2016 for all year groups, replacing the previous quality grades that were 'Working towards' grades. The new 9-1 GCSE grades were introduced for all subjects except Science and English.

Tracking & monitoring pupil progress Further whole teaching staff training was provided in April 2017 on how to use baseline test data (MidYIS, YELLIS, Alis) and internal effort and working at grades to track and support pupil progress.

We developed further our use of a co-ordinated 'intervention tracker' to monitor interventions used to address unsatisfactory pupil effort or progress. This is now updated twice a term and communicated to staff, so that they are aware of current interventions (both sanctions and support measures).

'Buzz' (Malvern's Visual Learning Environment (VLE)) Departments increasingly have added podcasts of lessons and topics to 'Buzz' to facilitate review and revision by our pupils. From September 2016, parents have had access to most areas of 'Buzz' so that they can see the resources provided by departments and what homework has been set.

• Wheeler-Bennett Society Sixteen pupils made presentations to the Society this year, and they were, again, extremely impressive. Talks covered a wide range of topics, including Russian history, contemporary art, the war on cancer, political correctness, artificial languages, and Donald Trump.

(c) Chapel

The addresses at the two Remembrance Day services were delivered by Mrs Christine Shepherd, a lay reader at Great Malvern Priory and former member of College common room. The Bishop of Worcester, The Rt Rev'd Dr John Inge, presided at the annual Confirmation Service in January. Ash Wednesday was marked with a service including the Imposition of Ashes. Weekday Chapel has included some impressive pupil presentations, from a range of charities supported by the Houses to an excellent pair of talks by a Muslim pupil on the ways in which Islam is often misinterpreted in the West. Following improvements to the Crypt Chapel, it has been re-established as a quiet space. Planned improvements to lighting and

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sound are moving forward, and substantial investment of donated funds has been made to update and extend the set of altar frontals.

(d) Cultural Matters

Drama In the Autumn term 2016, the Upper Sixth Dramatic Society presented a theatrical version of F.Scott Fitzgerald's The Great Gatsby' and the Lower Sixth/Hundred Senior Play was a production of 'Hairspray' the musical. The Drama Scholars' play was a production of 'After Juliet' and in January, Remove dramatists presented 'The Mobile Phone Show' by Jim Cartwright. In May, the Foundation Year presented an adaptation of 'Treasure Island'.

Music There have been many musical highlights this year. The Informal and Unplugged concerts continue to produce music of extremely high quality and the two large ensemble concerts - the Christmas and Summer Concerts were, by common consent, the best in some years. Despite the Chapel Choir being quite young, particularly amongst the tenors and basses, Chapel Music has also been very well-presented and this looks very encouraging as the development of the College's musical activities continues. The various Carol services, Remembrance Sunday and Commemoration services were extremely well-received.

House Singing was, this year, adjudicated by Mr Julian McNamara (Director of Music at Downside School) and was won by a boy's house (No.2) for the first time in a good many years. No.4 came second, being the best girls' house on the night. House Music (an instrumental competition) was, for the first time, shared by two houses - No.8 and No.4. Lingzhi Yang-Zhang (No.6.1) won the category A final (adjudicated by Mr Stephen Clarke - formerly the Precentor at Radley College) playing the piano - the third time in a row that a pianist has won the competition. Lucie Fletcher (No.8) won the Unplugged category (adjudicated by Mr Martin Toher - joint founder of B-Unique Records), performing a song that she wrote specifically for the competition.

The Choral Society, once again in conjunction with singers from Malvern St. James, performed Mozart's glorious Requiem. Teaming up with Carys Lane (soprano), Claire Williams (mezzo-soprano), James Atherton (tenor) and Henry Neil (bass) and the Malvern College Invitational Orchestra, this was a terrific performance and greatly appreciated.

The final event of the year, as ever, was the Concerto Concert, where 8 of the most advanced Sixth Form pupils presented ten performances of a concerto movement or opera aria with the Malvern College Invitational Orchestra. A varied programme ranging from Handel to Gregson and Shostakovich was a fitting way to finish off another highly-successful musical year.

Art The Art Department has had a busy and exciting year. During half term last October, 26 Fine Art and Photography students, and 4 members of staff went to New York. It was an amazing opportunity to visit some of the best museums and Art galleries in the world. This was greatly enjoyed by all concerned, and was inspiring, too. The school year ended with a big exhibition of GCSE and A level Art and A level Photography work, which was the first for many years. The department had its own Private View, and many teachers, parents, students and Governors attended. The whole department was thrilled by the lovely comments about students' work, and look forward to next year's show.

Outdoor Pursuits Once again it has been a busy and exciting year for the Outdoor Pursuits department and trips have been varied and full of adventure. This year saw the introduction of a new inter-house Canoe Polo. Pupils from 8 houses came together to compete in an inter-house canoe polo tournament in the College swimming pool. Canoe polo is growing rapidly in the college, with over 40 pupils competing in this tournament. There have been a number of trips organised in preparation for the pupils attending the expedition trips to Costa

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Rica and Borneo.

The experienced white water kayakers headed up to the Lake District over half term to take part in a white-water safety and rescue course. The pupils learnt how to keep themselves safe in a tough environment and then onto how to look after peers should they capsize. The pupils learnt a vast array of techniques for both prevention and cure when keeping themself and others safe in the water. There were also 3 pupils who took on their first Grade 4 river in North East England.

Duke of Edinburgh (DofE) Pupils continue to work towards gaining their DofE and there have been a number of practice sessions for Bronze, Silver and Gold. 6 Remove pupils took to the water to complete their DofE Bronze kayak practice expedition.

For the first time, DofE at Malvern College is now offering mountain biking for the expedition section of the award and pupils headed up the Malvern Hills on a gruelling trip. 8 Remove pupils took to the water for a weekend of canoeing, completing their practice expedition by canoe. The pupils learnt canoeing skills, the laws of the waterways, how to navigate and to operate locks; used to control water flow.

The Lower Sixth pupils made a long drive up to Fort William in Scotland to kayak from the West to East coast of the country over 4 days, completing their Gold Kayaking practice expedition.

Lecture Highlights

• In the PHSE programme, all pupils attended an address by Dr A Sigman entitled 'Managing Screen Time and Screen Dependency' and a second entitled 'The Boy in the Photograph'. The Lower School attended a lecture on 'Alcohol' the Sixth Form attended a lecture on 'Drugs'.

• The Blumenau Lecture 'Russia from Nicholas II to Putin' was given by Dr M Lynch from the University of Leicester.

• The Weatherill Society presented a talk entitled: 'Behavioural Economies', Professor Shaun Hargreaves Heap.

• Economics pupils attended a talk given by Mr Christopher Nieper entitled 'Getting started in the real world - how to make or break your career'

• The Lucretian Society hosted the following talks: 'The Antikythera Mechanism: a 2000 year-old computer', Dr M Pavlidou, Birmingham University; Medical Detection Dogs', Dr G Farrer-Brown; 'From Planck's constant to quantum mechanics', Dr F Gonnella, Birmingham University; 'Fighting fat in the liver...the silent killer you never knew you had', Prof. J W Tomlinson, Oxford University.

• The History Society hosted talks by Dr E Goodwin of Sheffield University entitled 'She-wolves of resistance: Nuns and the Reformation'; and a second talk, 'The Ottoman Empire' by Prof R Hutton.

• A series of teacher-led master-classes for the Lower School continued with 'How can we add up an infinite number of things?', given by Mr Peter Gray

• The Lower Sixth attended a talk by Elevate Education on 'Time-Management' • The FY and Remove attended a talk on 'Resilience'. • The Leadership Address was given by Mr D Coates.

(e) Sport

Athletics 27 boys and girls, across all age groups, represented the Malvern Hills District at the County Track & Field Championships; they achieved one gold, four silver, and four bronze medals. 5 pupils went on to represent Herefordshire & Worcestershire at the Mason Trophy regional athletics competition; they all competed valiantly.

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Canoe Polo 19 Pupils represented the college last year. The A's won the South-West Junior Division 2, being promoted into Division 1 for the 17-18 season.

Cricket 1 boy captained England U16 in a tour to Sri Lanka. Other highlights were: U15 Regional Finalists of ESCA 20/20 Competition, Under 14 Regional Finalists in Lord Taverners trophy 1 pupil picked for Midlands side to play in Bunbury Festival, 2 pupils picked for Worcestershire CCC (WCCC) 2nd XI and 5 for the WCCC Academy. There are 10 boys who represent Worcestershire Age group sides. The 1 s t XI have enjoyed a successful 2017 season beating St Edwards, Bromsgrove, Wellington and Kings Taunton. They also won the Chesterton Cup.

4 girls were selected for County cricket teams: 2 L6 pupils for Worcester U18,1 Remove girl for Shropshire U15s and 1 FY girl for Worcester U 15s.

Cross- Country 20 boys and girls, across all age groups, represented the Malvern Hills District at the County Cross Country Championships. 2 pupils qualified to represent Herefordshire & Worcestershire at the National Cross Country Championships. In the Ledder, the first boy back was from No. 5; he ran a time of 53 Minutes 48 Seconds and the first girl back from No.8; she ran a time of 61 Minutes 44 Seconds

Equestrian 1 Lower Sixth girl selected to ride for GB. Team of one Remove and 3 FY girls qualified for National Championships at Addington. 1 FY girl qualified individually for the National championship at Addington, won the National Championship plate at Keysoe in the 90cm and has just qualified in the 1m championship plate class at Keysoe. A Team consisting of 1 L6 boy, one Remove girl and 2 FY girls have also qualified for the 1m class at Keysoe.

Fives Boys: 1 pupil reached the semi-final ofthe National U18 Singles. 2 pupils reached semi-finals of U16 West of England Doubles. Winners ofthe National U18 Singles 2nd plate, West of England U18 plate singles, U16 plate singles.

Girls: Semi-finalists of U18 Singles and Doubles at National event. 1 pupil partnered OM to final of National Winchester Doubles.

Football This was a very short season due to the weather amongst other things. The first XI only lost one game all year. A very young squad of players all L6 or Hundred beat Marlborough, Monmouth, Sherborne along the way. Leading goal scorer was a boy from No.9.

The girls U18 XI played 7 matches won 3 lost 4. U18s reached the final of the Roma Cup in Rome. 1 girl played for the ISFA U16 National Squad. 3 girls were selected for the South-West of England ISFA squad.

Golf The College's Golf team competed in ISGA Match play - National Plate Final at Magnolia Park GC, Bucks. HMC Foursomes Regional Final at The Kendleshire GC, Bristol. Retained Worcestershire Schools Team Trophy and won Gloucestershire Schools Team Trophy. 1 U6 pupil has continued to represent the Worcestershire U18 Squad and 1 Remove pupil has represented Gloucestershire U16 Ladies Squad and also won the Gloucestershire Junior Championship Best Nett Trophy in July 2017.

Hockey 1 girl selected for England U 16s as a goalkeeper, 1 girl selected for England who played in the UK school games, 1 girl selected for Wales with another one as a trialist, 2 girls selected for the England Hockey High Performance Camp plus five girls selected for Midlands performance centre.

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U14, U16 and U18 all reached the outdoor Midlands Finals whilst the U16 and U18 reached National Finals for indoor as well. 1 girl played National League outdoor whist 2 girls played National League Indoor for club. U16s, 4 girls played National outdoor finals for club and 3 girls in the U18s played National Indoor finals for club.

Junior boys team enhanced their fixture list with the senior boys competing in the local senior boys' league. Boys U18 Indoor squad qualified for the Midlands Finals.

Netball This year Malvern College had 1 remove Regional netball representative, 3 County netballers in the FY and Remove and a record number of students attending club netball. U16's were winners at the District Tournament, whilst the U14s were runners up in their district tournament.

Rackets 20 boys and 2 girls represented the school. Queens highlights were; One Foster Cup Semi Finalist (in the singles), U15's Semi Finals (in the doubles), Girls U18 Quarterfinal (in the singles). Two girls competed in the Ladies Doubles Competition.

Rugby 1 boy represented England U18s throughout the Six Nations (man of the match v Ireland) & is touring South Africa with England U18s this summer and has signed a two-year professional contract with Worcester Warriors. 1 boy represented the Scottish Exiles u18s. 12 boys represented the Worcester Warriors in various age groups. 1 boy attended England U16s trials. The 1st XV had a successful season which was backed up by a very competitive 2nd XV which demonstrates strength in depth. The College U14s had a great season with victories over Cheltenham College, Monmouth School, Rugby School and St Edwards Oxford. This was backed up by a very competitive B team.

On the 17th July 41 Senior boys will embark on a 3-week tour to The Cook Islands & New Zealand.

Rugby Sevens Shield Winners at The Marches Sevens Silver Salver Winners at The North of England Sevens Group Winners at Rosslyn Park - highlight beating Epsom College. Tennis The College hosted four county tournaments on the Firs Courts: the U14 and U16 Boys' County Doubles and the U18 Boys' & Girls' Singles. 1 Remove boy won the Scott Cup in an exciting final, this is the ninth time in the last nine years that Malvern has won this cup. 4 FY girls reached the semi-finals of the U14 County Doubles Tournament with one pair reaching the final but finishing as runners up. 2 Remove girls reached the U16 County Doubles finals and finished runners up. 1 Remove and 1 Hundred boy paired up for the U16 County Doubles and were victorious.

(f) Other Events and Aspects of School Life

In addition to our normal programme of preparatory schools' events, the school held two very successful Magic of Science days for a total of over 230 primary and preparatory school children. Our regular series of events for prep schools has included a preparatory schools' Arts Day, a Debating Day, rugby and hockey festivals for the U11 age group, and an EIGHT8, limited overs version of a T20 tournament as well as the second equivalent tournament for girls. The 25 t h National Preparatory Schools' Cross Country Competition was larger than ever this year and involved 1,000 competitors from over 80 schools. The College also held an Aquathlon hosted by The Downs Malvern.

15



Commemoration The address at this year's Commemoration service in the Priory was given by Professor Paul Jackson (member of the College Council) Ms Anna Turney, Paralympic Athlete, gave the address at Prize-giving. Throughout the morning there were various drama presentations, musical concerts, a gun-run, a presentation by the Wheeler-Bennett Society and "art in action" for parents to see.

Parents' Forum The Parents' Forum which comprises parent representatives from each House has continued to meet with the College SMT on a termly basis to discuss a wide variety of day-to-day issues. This continues to be a very successful venture.

The Leavers' Ball

This was as popular as ever with well over 600 attending,

(g) New Staff & Staff Changes New Staff:

Mair Forde Andrew Howe David Kelland Peter Morton Rachael Pike Jonathan Card Linda Rickards Jessica Stirnemann Kate Garner Valentin Rivron Alessandra Sommi Cathy Kidd George Stringer Kate Taylor Christine Pritchard

Head of Spanish Teacher of Geography (one year contract) Teacher of Physics Teacher of English Teacher of Spanish Teacher of Mathematics Teacher of Biology German Language Assistant Teacher of French (one term only) French Language Assistant Italian Tutor Health & Safety Assistant Digital Marketing Officer Learning Enhancement Tutor and EAL Tutor Teacher of Art

Internal Appointments:

Rachael Pike Tom Newman Barbara Swart Chey West Stewart Vaughan David Reid Michal Hnatek Andrew Merrick Alexandra Underwood Dermot O'Keeffe Melanie Tillman Richard Coughtrie

Head of Spanish Deputy DSL Head of Lower School Director of Sport Head of Chemistry Head of Sixth Form Head of Physics Head of Biology Commercial Marketing Co-Ordinator Head of Philosophy and Religious Studies Nurse Manager DHSM No 2

16



Development

Public benefit

Malvern College has for some time undertaken a wide range of activities, both in terms of engaging with our local community and making it possible for bright young people who might otherwise not be able to afford the full fees to benefit from the College's exceptional education in the broadest sense.

The College Council confirms that they have complied with the duty in section 17 of the Charities Act 2011 to have due regard to the public benefit guidance published by the Charity Commission. The significant activities undertaken to carry out our aims for the Public Benefit and our achievements measured against those aims are provided on pages 17-19 of this report.

Fee Concessions

Bursaries

Where financial circumstances of the parents dictate, the College will award a bursary to enable a child to attend the school or see a child through to the next natural break point in his/her education. This year, significant bursary funds were awarded to meet the aims of the College Bursary Policy which are:-

• to widen pupil access to the College and ensure that a Malvern College education is provided to children from a broad spectrum of society;

• to continue the College's long tradition of providing public benefit; • to meet and if possible exceed the Charity Commission's public benefit requirements applicable

from time to time.

Information about fee assistance through bursaries is provided on the College website and is also contained within the College scholarship literature.

Bursaries are reviewed annually on the basis of a returned and completed financial circumstances form. The Bursary Committee comprising the Headmaster, Bursar, Registrar and Finance Bursar considers all bursary applications on a case by case basis.

The College also offers fee concessions for academic, sporting, musical, technology and artistic excellence in the form of Scholarships and Exhibitions. Details are provided on the College website. Fee concessions are also awarded to children whose parents are in the Armed Forces, to families with two or more children at either the College or The Downs Malvern, to children of College employees and to children of Old Malvernians, Old Ellerslie Girls, Old Hillstonians and Old Downians. The College Council reviews the levels of these concessions annually.

Other Public Benefit contributions

As part of our Community Service Programme, the College's pupils provide:

• Support in local charity shops. • Tuition in Modern Foreign Languages to local primary school children through the Language Club

at the Wyche Primary School. • Support for Reading Scheme at Welland Primary School. • Support for Worcestershire Wildlife Trust.

The College pupils are also involved in raising funds for charities. An organisation within the school, called the 'School Council', comprises 2 teachers and 15 pupils, raised and donated £21,000 for local,

17



national and international charities. The charities are chosen by the School Council and many are chosen due to direct contact between the School Council and the charity.

This year there was another very successful trip to Borneo, with 14 Lower Sixth pupils taking part in development work and with a locally based charity. This trip involved work at a primary school and also developed the pupils' leadership skills.

The Razak Science Centre has continued to have a major impact on Science teaching at the College and also on the wider community. "Magic of Science' outreach masterclassess and workshops were attended by local primary and preparatory schools. Over 230 pupils had the chance to get involved in practical science demonstrations and interactive workshop sessions held at the new centre. The College hosted 'Scientists in Malvern', commemorating TRE's (Telecommunications Research Establishment) link with the College in two events held in December and June in the Razak Science Centre.

During the year, the College buildings, theatre, All Weather Pitch, tennis courts and playing fields were made available to maintained schools, charities, members of the public and other organisations at a reduced rate or free of charge.

Specific examples of where the College is involved with the local and wider community are:-

• The College offered free crash course swimming lessons for local children as part of its Swim England teacher training courses.

• Bursaries of £7k were offered to children attending NSSO courses at the College and at The Downs.

• A local state school used the Sports Complex free of charge for weekly PE lessons and another used the Swimming Pool and Climbing Wall free of charge for outdoor pursuit training.

• y Hosted free of charge a qualifying round of the West Midlands Secondary Schools Swimming Team Relay Championships.

• Local football, rugby, cricket, gymnastics, badminton, archery, cycling, hockey, triathlon and swimming clubs and Brownies/Cubs/Sea Scouts used the Sports Complex at reduced charges.

• Reduced charges were offered to the local community to qualify as lifeguards. • Local primary schools used the sports hall free of charge for sports days (due to bad weather). • Hosted free of charge Primary School Swimming gala. • Free of charge climbing instruction to Malvern Special Families. • The junior section of the local rugby club was invited to an address by James Haskell on rugby

safety and performance. • Three A Level Revision conferences are held and charged a considerably reduced fee. • The Chamber Choir perform an external concert each term in support of a chosen charity. • The Christmas, Summer, Choral Society and Concerto Concerts were open the public and charity

collections taken. Christmas Midnight Mass and the Town Carol service are held in the College Chapel.

• The Film Orchestra (Community music making) was hosted at reduced rates. • Bonhams held a Valuation Day in aid of Midlands Air Ambulance at the College at no charge. • A College minibus was provided free of charge for use on a Christian Activity holiday. • Local Sports Clubs (Ledbury and District Swimming Club and Worcester Swimming Club) used

meeting rooms at reduced rates or free of charge. • Reduced health club membership fees was offered for the local emergency services, NHS and

local business employees. • Ladies Rounders' and Netball leagues were hosted.

18



The significant capital expenditure at the College over recent years has provided modern and extensive sporting and boarding facilities for the pupils. The facilities, whilst primarily for the College's pupils, has provided greatly increased access for the local community and surrounding schools.

Plans for future periods The College Council and Management Board formally reviews the 10 year plan annually. The main significant project plan is the refurbishment of the Rogers Theatre which is underway. The strategic aims and goals for the medium term are to provide excellent education, secure the College's long term financial strength and to enhance our national and international reputation.

Financial review

Financial statements for the year ended 31 July 2017

The revenue and expenditure results are set out in the Group Statement of Financial Activities on page 25. These results are summarised as follows:

Earnings before interest, 2017 2016 2015 2014 2013 depreciation and one-off items

£'000 £'000 £•000 £'000 £'000

College operations 2,123 2,563 2,397 2,224 2,215 Trading net income 491 243 88 236 203 Donations and other income 446 485 432 197 154 Earnings before interest, depreciation & one-off items 3,060 3,291 . 2,917 2,657 2,572

Asset Disposal Proceeds 2 4 13 6 1,682 Malvernian Society Donation - - - 2,500 -Depreciation (2,317) (2,281) (2,258) (1,974) (1,642) SWAP movement 498 (541) (257) - -Interest & SWAP Payments (412) (433) (456) (481) (541) Interest received 53 46 32 67 69

Net income 884 86 (9) 2,775 2,140

Operationally, the College continued with its good financial management with tight cost control and successful recruitment of pupils in a difficult marketplace. The professional approach of the College to fundraising and the generosity of the College family resulted in another year of substantial donations. Earnings before depreciation and interest dropped slightly when compared to the previous year but included a contribution from the trading operations that almost doubled year on year. This was a solid performance after the slight drop in pupil numbers. The College continued with its plan to renovate, repair and maintain the College campus; the main operational projects completed during the year were; alterations to the layout of Memorial Library, partial re-wire of Main Building, refurbishment of 1 & 2 Harvey Houses, provision of bathrooms in Medical Centre, refurbishment of some House 3 bathrooms and partial external refurbishment of House 9. A major refurbishment of Rogers Theatre started in June 2017 and is due for completion in June 2018.

On the balance sheet, total net assets for the group, with all land and buildings stated at cost, amount to £18.3m (2016: £17.4m). Net current assets at the end of July 2017 were £3.6m (2016: £3.4m). As a result

19



of the FRS 102, the valuation of the SWAP is reported on the balance sheet as at July 2017 and 2016 year end. The movement in the valuations, which were provided by Lloyds Banking Group PLC, are shown in the SOFA.

In May 2007, the College arranged a loan facility of £13.5m with Lloyds Banking Group PLC. The final repayment date of the loan is 20 years after the Commitment Termination date which was August 2011. A loan of £3.0m was drawn down in December 2012. This loan is being repaid over 14 years and repayment commenced in December 2013. The total combined amount of the drawdown on both facilities at the year-end was £10.2m. With cash and short term deposits of £8.1 m the net debt at the year-end was £2.1 m (2016: £3.3m). The College is fully compliant with all its banking covenants.

Investment policy The College places excess funds on deposit with Lloyds Banking Group plc. The interest earned in the year exceeded the budget for the year.

Malvern College Enterprises Limited

The College has a majority shareholding (80,899 of 80,900 shares) in its trading subsidiary which carries out non-charitable trading activities for the College. Malvern College Enterprises Limited (MCEL) will make a gift, aid payment of £502k (2016: £254k) to the College, thereby transferring all of its taxable profits to the College. The College has made an interest-bearing loan to the subsidiary, secured on the assets of the subsidiary. This amounted to £20k at the period end. The operations of MCEL continued to develop throughout the year. Significant income was generated during the year from membership and hiring of the Sports Complex, royalty income from overseas schools, an in-house guardianship service, the letting of College facilities for holiday sports camps, conferences and weddings and commission from uniform and book sales.

Reserves

Unrestricted funds are needed (a) to provide funds which can be designated to specific rebuilding and refurbishment projects to enable the charity to provide boarding accommodation that complies fully with the National Boarding Standards, and teaching accommodation that meets independent schools inspection standards and (b) to provide a financial cushion that will enable the charity to continue to function as an independent school in the event of a significant fall in pupil numbers (and thus fee income). The current level of reserves is considered to meet the identified needs.

The unrestricted College fund is £17.0m (2016: £16.5m) and the free reserves are £0.8m (2016: £0.3m). Free reserves are unrestricted funds (including designated) after deducting stocks and fixed assets net of borrowing. In the current year (and previous year (re-stated)), the unrestricted fund, and so free reserves, have been reduced by the recognition of the interest rate swap liability on the Balance Sheet under FRS 102. The level of free reserves is also low because of the College's policy of investing in the infrastructure. Several years ago, the College Council agreed to designate 10% of net income to a designated fund. The amount of this fund is £0.6m (2016: £0.6m) and is intended to help fund bursaries and infrastructure projects. In 2017/18, the refurbishment of the Rogers Theatre is the major capital investment programme.

During the development at the College over the last few years, the Trustees considered that the best use of the College's resources was on the projects identified in the Strategic/Business Plan. Several contingency measures were identified which were considered to be realistic and feasible in the event of various targets not being achieved. Various assets (land and buildings) of the College were also identified for sale to raise proceeds many of which have now been sold.

The College Council carefully and regularly monitors the College's financial performance against budget including inter alia pupil numbers (gross fee income), operating costs and capital expenditure on the capital projects - the surplus for the year ended 31 July 2017 before one-off items exceeded budget for the year.

20



The College's policy on restricted funds is to record separately donations, grants and other sources of fundraising where restrictions are imposed that are narrower than the College's overall objectives. Restricted funds are £0.6m (2016: £0.3m).

Asset cover for funds

Notes 17 and 18 to the financial statements set out an analysis of the assets attributable to the various funds and a description of the trusts. These assets are sufficient to meet the College's obligations in respect of each individual fund.

Statement of Council Members' responsibilities

The Council members are responsible for preparing the Trustees' Annual Report and the financial statements in accordance with applicable law and FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland.

The law applicable to charities in England & Wales requires the Council members to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the charity and the group and of the incoming resources and application of resources, including the income and expenditure, of the charitable group for that period. In preparing these financial statements, the Council members are required to:

• select suitable accounting policies and then apply them consistently; • observe the methods and principles in the Charities SORP; • make judgments and estimates that are reasonable and prudent; • state whether applicable UK accounting standards have been followed, subject to any material

departures disclosed and explained in the financial statements; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume

that the charity will continue in business.

The Council members are responsible for keeping adequate accounting records that are sufficient to show and explain the charity's transactions, disclose with reasonable accuracy at any time the financial position of the charity and group and enable them to ensure that the financial statements comply with the Charities Act 2011, the Charities (Accounts and Reports) Regulations 2008 and the provisions of the Charity's constitution, are also responsible for safeguarding the assets of the charity and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Independent Auditors

Crowe Clark Whitehill LLP have indicated their willingness to continue in office and a resolution concerning their reappointment will be proposed at the Annual General Meeting.

On behalf of the Council on °) bZOt ' ^U f ^ ' " T "

Robin K Black Chairman

21


Independent Auditor's report to the Trustees of Malvern College

Opinion

We have audited the financial statements of Malvern College for the year ended 31 July 2017 which comprise the Group Statement of Financial Activities, the College Statement of Financial Activities, the Group and College Balance Sheet, the Group Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

• give a true and fair view of the state of the group's and of the parent charity's affairs as at 31 July 2017 and of the group's incoming resources and application of resources, for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Charities Act 2011.

This report is made solely to the charity's trustees, as a body, in accordance with Part 4 of the Charities (Accounts and Reports) Regulations 2008. Our audit work has been undertaken so that we might state to the charity's trustees those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charity and the charity's trustees as a body, for our audit work, for this report, or for the opinions we have formed.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the trustees' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the trustees have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's or the parent charity's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

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 auditor's report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

22


Independent Auditor's report to the Trustees of Malvern College (continued)

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.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Charities (Accounts and Reports) Regulations 2008 require us to report to you if, in our opinion:

• the information given in the financial statements is inconsistent in any material respect with the trustees' report; or

• sufficient accounting records have not been kept by the parent charity; or

• the financial statements are not in agreement with the accounting records and returns; or

• we have not received all the information and explanations we require for our audit

Responsibilities of trustees

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

In preparing the financial statements, the trustees are responsible for assessing the group's and the parent charitys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

We have been appointed as auditor under section 151 of the Charities Act 2011 and report in accordance with the Act and relevant regulations made or having effect thereunder.

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

23


Independent Auditor's report to the Trustees of Malvern College (continued)

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.orq.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Crowe Clark Whitehill LLP Statutory Auditor Carrick House Lypiatt Road Cheltenham Gloucestershire GL50 2QJ

7 ~ O*.c*jo& Zo

Crowe Clark Whitehill LLP is eligible for appointment as auditor of the charity by virtue of its eligibility for appointment as auditor of a company under section 1212 ofthe Companies Act 2006.

24


Group Statement of Financial Activities for the year ended 31 July 2017

Year ended Year ended Unrestricted funds Restricted 31 July 17 31 July 16

General Designated funds Total Total

Notes £ £ £ £ £

INCOME FROM:

Charitable activities: College fees 2 18,449,754 - - 18,449,754 18,423,295 Ancillary trading income 3 1,848,112 - 767 1,848,879 1,702,723

Other 3 1,554 - - 1,554 3,702

Trading activities:

Trading income 4 1,787,045 - - 1,787,045 1,358,023 Non-ancillary trading income 3 487,251 - 500 487,751 458,308

Investments 5 52,846 - - 52,846 45,818 Donations 5,894 - 440,516 446,410 484,675

TOTAL 22,632,456 - 441,783 23,074,239 22,476,544

EXPENDITURE ON:

Raising funds:

Trading expenses 4 1,296,263 - - 1,296,263 1,115,427 Financing costs 6 411,668 - - 411,668 433,008

Charitable activities:

Provision of Education 6 20,795,574 - 141,232 20,936,806 20,287,450 Donation to TDMCP 6 43,497 - - 43,497 13,595

TOTAL 6 22,547,002 - 141,232 22,688,234 21,849,480

Net income before fair value movements on financial 85,454 - 300,551 386,005 627,064 instruments

Movement of SWAP liability 16 497,958 - - 497,958 (540,582)

Net income 583,412 - 300,551 883,963 86,482

Transfers between funds 17 (38,601) 38,601 - - -

Net movement in funds

RECONCILIATION OF FUNDS Fund balances b/f 1 August 17

544,811

16,514,240

38,601

578,992

300,551

321,411

883,963

17,414,643

86,482

17,328,161

Fund balances c/f 31 July 17 17,059,051 617,593 621,962 18,298,606 17,414,643

The notes on pages 29 to 54 form part of the financial statements.

25


College Statement of Financial Activities for the year ended 31 July 2017

Unrestricted funds Restricted Year ended

31 July 17 Year ended

31 July 16

General Designated funds Total Total

Notes £ £ £ £ £

INCOME FROM:

Charitable activities:

College fees Ancillary trading income MCEL Gift Aid

2 3 4

18,449,754 1,848,112

502,471 767

18,449,754 1,848,879

502,471

18,423,295 1,702,723

254,285

Trading activities:

Non-ancillary trading income Investments Donations Other

5

3

518,151 52,846 5,894 1,554

-

500

440,516

518,651 52,846

446,410 1,554

489,208 45,818

484,675 3,702

TOTAL 21,378,782 - 441,783 21,820,565 21,403,706

EXPENDITURE ON: Raising funds:

Financing costs Charitable activities:

Provision of Education Donation to TDMCP

414,088

20,835,743 43,497

-

141,232

414,088

20,976,975 43,497

435,428

20,327,619 13,595

TOTAL 21,293,328 - 141,232 21,434,560 20,776,642

Net income before fair value movements on financial instruments

85,454 - 300,551 386,005 627,064

Movement of SWAP liability 16 497,958 - - 497,958 (540,582)

Net income 583,412 - 300,551 883,963 86,482

Transfers between funds 17 (38,601) 38,601 - - -

Net movement in funds 544,811 38,601 300,551 883,963 86,482

RECONCILIATION OF FUNDS Fund balances b/f 1 August 16,495,494 578,992 321,411 17,395,897 17,309,415

Fund balances c/f 31 July 17,040,305 617,593 621,962 18,279,860 17,395,897


26


Group and College Balance Sheets as at 31 July 2017

Group College

2017 2016 2017 2016 Notes £ £ £ £

Fixed assets

Tangible assets 9 27,119,166 27,828,287 27,119,166 27,828,287

Investments 10 - - 90,800 90,800

Total fixed assets 27,119,166 27,828,287 27,209,966 27,919,087

Current assets

Stocks 11 91,424 95,377 87,254 90,761

Debtors 12 1,109,417 893,028 1,410,008 1,168,680

Current asset investments 4,001,800 5,001,800 4,001,800 5,001,800

Cash at bank & in hand 4,113,152 2,720,823 3,254,951 1,999,564

Total current assets 9,315,793 8,711,028 8,754,013 8,260,805

Creditors: amounts falling due within one year 13 (5,676,270) (5,340,776) (5,224,036) (5,000,099)

Net current assets 3,639,523 3,370,252 3,529,977 3,260,706

Total assets less current liabilities 30,758,689 31,198,539 30,739,943 31,179,793

Creditors', amounts falling due after more than one year

14 (12,460,083) (13,783,896) (12,460,083) (13,783,896)

Total net assets 18,298,606 17,414,643 18,279,860 17,395,897

Total funds of the charity:

Restricted income funds 17 621,962 321,411 621,962 321,411

Unrestricted income funds

College fund 17 17,040,305 16,495,494 17,040,305 16,495,494

Designated fund 17 617,593 578,992 617,593 578,992

Non-charitable trading fund 17 18,746 18,746 - -

Total unrestricted income funds 17,676,644 17,093,232 17,657,898 17,074,486

Total charity funds 18,298,606 17,414,643 18,279,860 17,395,897

The financial statements on pages 25 to 54 were approved and authorised for issue by the Council on and were signed on its behalf by: A } ' T

RK Black Chairman


27


Group Statement of Cash Flows for the year ended 31 July 2017

2017 2016

Notes £ £ £ £

Cash flows from operating activities:

Net cash provided by operating activities 20 3,130,092 3,126,558

Cash flows from investing activities:

Investment income 52,846 45,818

Payments to acquire tangible fixed assets (1,607,718) (1,642,069)

Receipts from sales of fixed assets 1,554 3,702

Net cash used in investing activities: (1,553,318) (1,592,549)

Cash flows from financing activities:

Financing costs (411,668) (433,008)

Movement on finance leases

Repayment of bank loans

(21,931)

(750,846) (21,931)

(743,724)

Net cash used in financing activities (1,184,445) (1,198,663)

Change in cash and cash equivalents in the reporting period

392,329 335,346

Cash and cash equivalents at the beginning of the reporting period

7,722,623 7,387,277

Cash and cash equivalents at the end of the reporting period

21 8,114,952 7,722,623


28


Notes to the financial statements for the year ended 31 July 2017

Charity information

Malvern College was incorporated in the United Kingdom under Royal Charter in 1929 and has no share capital. The College is registered as a charity with the Charity Commission England and Wales (registered no: 527578). Its registered and principal office is College Road, Malvern, Worcestershire, WR14 3DF.

1 Principal accounting policies

The consolidated financial statements have been prepared in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2015) - (Charities SORP (FRS 102)) and the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and the Charities Act 2011.

The College meets the definition of a public benefit entity under FRS 102.

The accounts (financial statements) have been prepared to give a 'true and fair' view and have departed from the Charities (Accounts and Reports) Regulations 2008 only to the extent required to provide a 'true and fair view'. This departure has involved following Accounting and Reporting by Charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) issued on 16 July 2014 rather than the Accounting and Reporting by Charities: Statement of Recommended Practice effective from 1 April 2005 which has since been withdrawn.

Going Concern The College Council have considered the College's ten year financial forecasts to consider its ability to meet its liabilities as they fall due. They have considered the expectations of pupil numbers, forecast operating costs and current assets and do not believe there are material uncertainties over its ability to continue as a going concern. Accordingly the accounts have been prepared on a going concern basis.

Basis of accounting The financial statements are prepared in accordance with the historical cost convention, with the exception of the derivative financial instrument held at fair value.

Basis of consolidation The Group Statement of Financial Activities, the group Balance Sheet and the consolidated Statement of Cash Flows include the financial statements of the College and its subsidiary undertaking made up to 31 July 2017, on a line-by-line basis. Intra group transactions and profits are eliminated fully on consolidation.

The College has taken advantage of the exemptions in FRS 102 from the requirements to present a charity only Statement of Cash Flows and certain disclosures about the charity's financial instruments.

Donations Donations and legacies are credited to revenue when the College has entitlement to the funds, any performance conditions attached to the item(s) of income have been met, it is probable that the income will be received and the amount can be measured reliably.

29

I


Notes to the f inancial statements for the year ended 31 July 2017 (continued)

1 Principal account ing pol icies (continued)

Fees and similar income Fees receivable and charges for services and use of premises are accounted for in the period in which the service is provided and it is probable that the income will be received. Fees receivable are stated after deducting allowances, scholarships, grants, bursaries and exhibitions allowed by the College.

Trading income Malvern College Enterprises Limited's trading income is accounted for in the period in which the income is earned. The College's ancillary and non-ancillary trading income is accounted for in the period in which the income is earned.

Other Income

Non-fee but educational income is accounted for in the period in which the income is earned.

Investment Income Bank interest earned on funds on deposit is accounted for in the period in which the investment income is earned. Advanced fees The College offers parents the opportunity to pay for tuition fees in advance in accordance with a written contract. The amount received is invested and interest is accrued to contracts. This is treated as deferred income until the pupil joins the College whereupon the fees for each college term is charged against the remaining balance and taken to income.

Final term deposits Final term deposits are deposits placed when pupils join the College which are offset against fees and disbursements due for the last term each pupil attends. All deposits are held as deferred revenue.

Grants receivable

Grants receivable are credited to the Statement of Financial Activities in the period in which they are receivable.

Expenditure All expenditure is accounted for on an accruals basis and has been classified under headings that aggregate all costs related to the category. There are no costs which cannot be directly attributed to particular headings. Termination payments Termination payments are accounted for as soon as the College is aware of the obligation to make the payment.

Bursaries, grants and allowances payable Grants from restricted funds are included as expenditure in the period for which the award is given. Bursaries and allowances from unrestricted funds towards college fees at the College are treated as a reduction in those fees.

Support costs Support costs comprise the direct costs, including staff, attributable to college activities, an appropriate apportionment of indirect costs and the schools' governance costs. These support costs are all allocated to the activities of the College in the Statement of Financial Activities depending on the type of expenditure.

The governance costs comprise the cost of external audit, the costs of Management Board and Council meetings and strategic salary costs. The strategic salary costs include the costs of preparing the statutory financial statements and the costs of senior staff involvement in the strategic management of the College.

30


Notes to the financial statements for the year ended 31 July 2017 (continued)

1 Principal accounting policies (continued)

Irrecoverable VAT Any irrecoverable VAT is charged to the Statement of Financial Activities, or capitalised as part of the cost of the related asset, where appropriate.

Foreign currencies Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities are retranslated at the rate of exchange ruling at the balance sheet date.

The functional and presentational currency of the College is considered to be GBP because that is the currency of the primary economic environment in which the College operates.

Recognition of liabilities Liabilities are recognised when an obligation arises to transfer economic benefits as a result of past transactions or events.

Fund accounting General funds are unrestricted funds which are available for use at the discretion of the Council in furtherance of the general objectives of the College and which have not been designated for other purposes.

Designated funds comprise unrestricted funds that have been set aside by the Council for particular purposes. The aim and use of each designated fund is set out in the notes to the financial statements.

Restricted funds are funds which are to be used in accordance with specific restrictions imposed by donors or which have been raised by the College for particular purposes. The cost of raising and administering such funds are charged against the specific fund. The aim and use of each restricted fund is set out in the notes to the financial statements.

Pension costs The College contributes to the Teachers' Superannuation Scheme at rates set by the Scheme Actuary and advised to the Council by the Scheme Administrator. The College contributes to one defined contribution scheme for non-teaching staff. The College also contributes to a closed defined benefit scheme. Amounts paid in relation to these Schemes are charged to the Statement of Financial Activities when they fall due. All pension costs are allocated to unrestricted funds.

Finance Leases Assets obtained under finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Finance leases are those where substantially all ofthe benefits and risks of ownership are assumed bythe Charity. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the Statement of Financial Activities so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.

Operating leases Rentals applicable to operating leases are charged to the Statement of Financial Activities on a straight-line basis over the lease terms.

31



1 Principal accounting policies (continued)

Tangible fixed assets Assets with a cost below £1,000 are not capitalised.

Land is not depreciated. Depreciation of other assets is calculated so as to write off the cost of tangible fixed assets, less their estimated residual values, over the expected useful economic lives of the assets concerned. Assets in the course of construction are not depreciated until they are brought into use. Expenditure on certain historic buildings with a net book value of £1.9m at 1 August 2006 is being written off over its estimated remaining life of 14 years. The principal annual rates, applied on a straight line basis on other assets, used for this purpose are:

Buildings 2.5-10.0

Computer equipment 25.0

Motorvehicles 25.0

Equipment and furniture 10.0-25.0

Investments Investments in subsidiary undertakings are stated at cost, but are written down to their realisable value if it is considered that there has been a permanent diminution in their value.

Stocks Stocks comprise books, stationery & food stores which are stated at the lower of cost and net realisable value.

Debtors Short term debtors are initially measured at transaction price, less any impairment. Prepayments are measured at the amount prepaid.

Cash Cash is represented by cash in hand and deposits with financial institutions.

Creditors Creditors are initially measured at the transaction price.

Basic financial instruments The College has financial assets and financial liabilities of a kind that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently measured at their settlement value.

Derivative financial instruments The College uses derivative financial instruments to reduce exposure to interest rate movements. The College does not hold or issue derivative financial instruments for speculative purposes.

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently re-measured to their fair value at each reporting date. The resulting gain or loss is recognised in the Statement of Financial Activities immediately.

32



1 Principal account ing policies (continued)

Fair value measurement The best evidence of fair value is a quoted price for an identical asset in an active market. When quoted prices are unavailable, the price of a recent transaction for an identical asset provides evidence of fair value as long as there has not been a significant change in economic circumstances or a significant lapse of time since the transaction took place. If the market is not active and recent transactions of an identical asset on their own are not a good estimate of fair value, the fair value is estimated by using a valuation technique. The value of the interest rate swap has been provided by Lloyds Bank.

JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable underthe circumstances.

The items in the financial statements where these estimates and judgements have been made include the following:

Useful economic lives of intangible and tangible assets The annual amortisation and depreciation charges for the tangible assets are sensitive to changes in the estimated useful economic lives and residual values ofthe assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See Note 9 for the tangible assets and Note 1 for the useful lives for each class of assets.

Impairment of debtors The group makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience. See Note 12 for the net carrying amount of the debtors and associated impairment provision.

SWAP liability The value of the SWAP obligation was established by Lloyds Banking Group PLC.

33

Malvern College (incorporated under Royal Charter)


2 College fees

The College's tuition fee income comprised:

Year ended 31 July 2017


£ £

Gross fees 21,424,963 21,254,299

Less: allowances, grants etc (3,064,645) (2,897,888)

18,360,318 18,356,411

Add back: Allowances paid for by restricted funds 89,436 66,884

18,449,754 18,423,295

3 Other income

Group Year ended 31

July 2017 Year ended 31

July 2016

£ £

Non-ancillary trading income

Lettings and other income 487,251 457,166

Insurance commissions - 641

Appeal income 500 501

487,751 458,308

Ancillary trading income

Music, speech and drama income 445,676 463,619

Book sales 118,084 126,664

Registration fees, trip income and other income 1,277,786 1,096,500

Grants 7,333 15,940

1,848,879 1,702,723

Other income

Gain on sale of fixed assets 1,554 3,702

34



4 Subsidiary undertaking

The College owns 80,899 of the total ordinary share capital, consisting of 80,900 ordinary shares of £0.01 each, of Malvern College Enterprises Limited (Company no: 02706656), which is engaged in the business of letting facilities at the College, involvement with overseas franchised schools, providing a guardianship service and supplying uniforms and sportswear to the College and its pupils via a third party. The remaining share is held by the Malvernian Society Ltd. The subsidiary donates most or all of its taxable profits to the College each year. Its trading results for the year to 31 July 2017, as extracted from the audited financial statements, are summarised below:

Results per Year Year subsidiary ended ended

financial Consolidation 31 July 31 July statements entries 2017 2016*

£ £ £ £

Turnover 1,787,045 1,787,045 1,358,023

Inter-group income 40,169 (40,169) - -

Cost of sales (148,111) - (148,111) (125,073)

Gross profit 1,679,103 (40,169) 1,638,934 1,232,950

Administration (1,148,152) - (1,148,152) (990,354)

Inter-group expenses (30,900) 30,900 - _

Operating profit 500,051 (9,269) 490,782 242,596

Inter-group interest receivable 3,820 (3,820) - -

Inter-group interest payable (1,400) 1,400 - _

Profit before tax and Gift Aid 502,471 (11,689) 490,782 242,596

Gift Aid (502,471) 502,471 - _

Retained profit 490,782 490,782 242,596

* After consolidation adjustments

The assets and liabilities of the subsidiary, Malvern College Enterprises Limited were:

2017 2016

£ £

Current assets 1,270,884 817,930

Creditors: amounts falling due within one year (1,161,338) (708,384)

109,546 109,546

Representing:

Share capital 809 809

Share premium 89,991 89,991

Profit and loss account 18,746 18,746

109,546 109,546

35


Notes to the f inancial statements for the year ended 31 Ju ly 2017 (continued)

5 Investment income

Group

Year ended

31 July 2017

£

Year ended

31 July 2016

£

Bank and building society interest 52,846 45,818

6 Expenditure

Group Staff costs Other costs Depreciation

Year ended

31 July 2017

Year ended

31 July 2016

£ £ £ £ £

Raising funds

Trading expenses 365,195 931,068 - 1,296,263 1,115,427

Financing costs 411,668 - 411,668 433,008

365,195 1,342,736 _ 1,707,931 1,548,435

Charitable activities

Teaching 7,335,256 2,128,750 - 9,464,006 9,072,339

Welfare 1,407,323 2,047,469 - 3,454,792 3,344,301

Premises 676,514 1,936,344 2,316,839 4,929,697 4,833,870

Support costs of schooling 2,137,510 950,034 - 3,087,544 3,029,211

School's operating costs 11,556,603 7,062,597 2,316,839 20,936,039 20,279,721

Grants, awards, prizes 767 - 767 7,729

11,556,603 7,063,364 2,316,839 20,936,806 20,287,450

Donation to TDMCP _ 43,497 _ 43,497 13,595

Total 11,921,798 8,449,597 2,316,839 22,688,234 21,849,480

Included within support costs are governance costs of £106,819 (2016: £156,868) which mainly comprise the costs of administering the charity, audit and tax fees and Council's meeting expenses.

36



7 Net income

Group Year ended Year ended

31 July 2017 31 July 2016

£ £

Net income is stated after charging/(crediting):

Depreciation

Operating lease rentals - equipment

Operating lease rentals - property

2,316,839

67,057

28,260

2,280,476

65,986

28,220

Fees payable to the College's auditor for the audit of the parent charity 19,700 19,300 and the consolidated financial statements

Fees payable to the College's auditor for the audit of the College's 3,425 3,350 subsidiary pursuant to legislation

Fees payable to the College's auditor for non-audit services 14,975 16,150

Gain on disposal of fixed assets

Finance charges on finance lease

(1,554)

3,558

(3,702)

3,558

8 Staff costs

Year ended 31 Year ended 31 July 2017 July 2016

Group

Number Number

The monthly average headcount of persons employed by the group during the year was:

Teaching

Pastoral

Domestic

Administration

Trading

150

34

72

147

16

419

156

32

73

140

15

416

37



8 Staff costs (continued)

Group


£


£

Wages and salaries 9,987,338 9,647,585

Social security costs 937,532 826,738

Pension contributions (note 19) 985,951 953,408

Apprenticeship levy 10,977 -

11,921,798 11,427,731

The number of employees whose emoluments exceeded £60,000 was:

Year ended 31 Year ended 31 Group July 2017 July 2016

Number Number

£210,001 -£220,000 1 1

£140,001 -£150,000 1 1

£90,001 -£100,000 1 1

£80,001 - £90,000 3 3

£70,001 - £80,000 2 2

£60,001 - £70,000 5 6

For those staff whose emoluments exceed £60,000 pension contributions amounting to £125,946 (2016: £125,270) were paid by the College. 7 (2016: 7) of the above staff members have benefits accruing under a defined benefit scheme and 5 (2016: 5) have benefits accruing under a money purchase scheme.

No Council members received remuneration. In the previous year, 1 Council member (G E Jones) received remuneration from the group during the year for carrying out the appraisal of the Headmaster for £1,500. 12 Council members have received reimbursements totalling £5,339 for travel expenses (2016:10 Council members received £4,746).

38



8 Staff costs (continued)

Senior Management Team Remuneration


£


£

Senior Management Team Remuneration 662,871 655,582

The above amounts include employers' National Insurance and pension contributions. During the year, the Charity made redundancy/termination payments amounting to £14,998 (2016: £545).

Council Members One member (2016: one member) of the Council had children/grandchildren at the College in the year. One of these pupils received a scholarship which was awarded at arms' length (2016: one).

39



9 Tangible fixed assets

Group and College

Freehold land &

buildings

Computer equipment

Motor vehicles

Equipment & furniture

Assets under

construction Total

£ £ £ £ £ £

Cost

31 July 2016 39,377,929 1,994,923 321,743 1,962,243 488,145 44,144,983

Additions 252,719 114,171 18,594 180,094 1,042,140 1,607,718

Transfers 838,228 - - - (838,228) -

Disposals _ - - - - -

31 July 2017 40,468,876 2,109,094 340,337 2,142,337 692,057 45,752,701

Accumulated Depreciation

31 July 2016 13,124,784 1,451,662 288,761 1,451,489 - 16,316,696

Charge in year 1,775,909 329,624 18,057 193,249 - 2,316,839

Disposals _ - - - - -

31 July 2017 14,900,693 1,781,286 306,818 1,644,738 18,633,535

Net book values

31 July 2017 25,568,183 327,808 33,519 497,599 692,057 27,119,166

31 July 2016 26,253,145 543,261 32,982 510,754 488,145 27,828,287

The charge for the year includes £136,000 (2016: £136,000) depreciation on buildings with a cost of £1.9m which are being depreciated over 14 years from 2006/07. Previously these buildings had not been depreciated. The net book value of equipment held on finance leases for the charity was £51,172 (2016: £73,104).

Included within tangible fixed assets above are assets with a net book value of £22,797 (2016: £41,314) which meet the definition of intangible fixed assets.

40



10 Fixed asset investment

College 2017 2016 £ £_

Investment in subsidiary company 90,800 90,800

Malvern College has a majority shareholding in Malvern College Enterprises Limited (see note 4). In January 2016, 900 shares of £0.01 were issued and allotted to Malvern College. Malvern College paid £100 per share and paid £90,000 in total. The transaction generated share premium of £89,991.

11 Stocks

Group College 2017

£ 2016

£ 2017

£ 2016

£

Stationery and consumables 91,424 95,377 87,254 90,761

12 Debtors

Group College

2017 £

2016 £

2017 £

2016 £

Trade debtors 240,668 25,886 - -

Fee debtors 303,911 301,093 303,911 301,093

Amounts owed by group undertakings - - 654,212 312,815

Other debtors 224,553 84,701 131,133 84,701

Prepayments 281,698 300,013 269,195 298,150

Accrued income 58,587 181,335 51,557 171,921

1,109,417 893,028 1,410,008 1,168,680

Included in other debtors is an amount of £31,013 (2016: £29,100) which represents loans to staff, of which £21,786 (2016: £19,513) is repayable after more than one year.

Trade, fee and other debtors are stated after impairment provisions totalling £205,780 (2016: £160,577).

41

1



13 Creditors: amounts falling due within one year

Group College

2017 £

2016 £

2017 £

2016 £

Bank loan (note 14) 758,492 754,498 758,492 754,498

Trade creditors 401,923 744,188 358,286 719,517

Amounts owed to group undertakings • - 54,893 54,893

Entrance fee deposits 487,507 518,427 487,507 518,427

Advanced fees(note 15) 2,294,179 1,899,647 2,294,179 1,899,647

Taxation and social security 266,959 426,590 251,797 339,025

Other creditors 166,799 157,805 - 516

Finance lease (note 22) 21,931 21,931 21,931 21,931

Accruals 1,039,435 766,068 938,060 666,098

Deferred income 239,045 51,622 58,891 25,547

5,676,270 5,340,776 5,224,036 5,000,099

Amounts owed to group undertakings comprises a loan of £54,893 (2016: £54,893) repayable within thirty days of Malvern College Enterprises Limited notifying Malvern College of an intention to repay. Interest is repayable at a rate of the higher of (a) Lloyds Banking Group plc base lending rate plus 1.5% and (b) 7%.

14 Creditors: amounts falling due after more than one year

2017 2016

Group and College £ £

Bank Loan 9,439,008 10,193,848

SWAP obligation 1,451,253 1,949,210

Entrance fee deposits 1,435,305 1,478,005

Advanced fees(note 15) 105,275 99,715

Finance lease (note 22) 29,242 51,173

FPS Pension (note 19) - 11,945

12,460,083 13,783,896

See note 13. The College had total bank borrowings of £10,197,500 as at 31 July 2017 (2016: £10,948,346).

42



14 Creditors: amounts falling due after more than one year (continued)

In May 2007, the College arranged, with Lloyds Banking Group plc, bank borrowing consisting of a loan facility of £13,500,000. The final repayment date of the loan is 20 years after the Commitment Termination date which was August 2011 (Facility 1). A Swap transaction has also been entered into with Lloyds Banking Group plc to protect against adverse interest movements during the period of significant borrowing.

A loan of £3.0m (Facility 2) was drawn down in December 2012. This loan is being repaid over 14 years which commenced in December 2013. The bank loan % to value of secured assets is 41% (2016: 44%).

Bank loan maturity statement

Group and College

2017 2016 £ £_

Bank loan maturity analysis

In less than one year 758,492 754,498

In more than one year but not more 7 6 2 g 4 u 753 556 than two years

In more than two years but not more than five years 2,294,931 2,282,573

In more than five years 6,381,437 7,152,709

10,197,500 10,948,346

Facility 1 - the bank loan is repayable in 80 consecutive quarterly instalments which commenced on 15 November 2011. Facility 2 - the bank loan is repayable in 56 consecutive quarterly instalments which commenced on 5 December 2013.

The Swap transaction fixed the interest rate for 75% of the total borrowing at 4.44% and the interest on remaining 25% is charged at 0.5% above the bank base rate or LIBOR.

Lloyds Banking Group plc has a first charge over the freehold land and buildings of Malvern College and a first charge over Other Asset known as negative pledge dated 28/04/1982.

43



15 Advanced fees

Parents may pay to the College tuition fees in advance. Such payments may be returned, subject to specific conditions, on the receipt of one term's notice. Assuming pupils remain in the advanced fees payment scheme, payments will be applied to offset fees as follows:

Group and College 2017 2016

£ £

Within 2 to 5 years - 15,391

Within 1 to 2 years 105,275 84,324

Over one year 105,275 99,715

Within 1 year 364,389 170,214

469,664 269,929

Also included in advanced fees in creditors due within one year (note 13) are credit balances of £1,929,790 (2016: £1,729,433) within the fees ledger.

The advanced fees balance represents the accrued liability under the contracts. The capital movements during the year were:

Group and College

£ £

At1 August 2016

New contracts

Terminated contracts

Amounts accrued to contracts

505,603

4,354

269,929

Amounts utilised in payment of fees to the College

509,957

(310,222)

At 31 July 2017 469,664

:l

44



16 Financial instruments

Group College

2017 2016 2017 2016

£ £ £ £ Financial assets measured at settlement value 8,942,671 8,315,638 8,397,564 7,871,894 Financial liabilities measured at settlement value 1,659,330 1,741,165 1,402,412 1,514,128 Financial liabilities measured at amortised

cost 10,197,500 10,948,346 10,197,500 10,948,346

Financial liabilities measured at fair value 1,451,253 1,949,210 1,451,253 1,949,210

Financial assets measured at settlement value comprise cash, trade and fee debtors, other debtors (including staff loans), accrued income and amounts due from group undertakings (for College).

Financial liabilities measured at settlement value comprise trade creditors, accrued charges, other creditors, finance leases and amounts due to group undertakings (for College).

Financial liabilities measured at amortised cost comprise bank loan.

Financial liabilities measured at fair value comprise the interest rate swap.

The Group and College income, expenses, gains and losses in respect of financial instruments are summarised below:

Group & College 2017 2016

£ £_

Interest income and expense

Total interest expense for financial liabilities at settlement value 108,428 146,216

Fair value gains and losses Fair value gain/(loss) on the interest rate swap 497,958 (540,582)

Impairment losses charged to financial assets measured at settlement value in the year amounted to £20,487 (2016: £6,617).

45



17 Funds

Group and College Transfers,

At 1 August

2016 Income Expenditure

other recognised

gains/losses

At 31 July

2017

£ £ £ £ £

Restricted funds

Restricted donations 284,223 440,516 (139,965) - 584,774

2000 Appeal - 500 (500) - -

Restricted grants 37,188 767 (767) - 37,188

321,411 441,783 (141,232) _ 621,962


Designated fund 578,992 - - 38,601 617,593

College fund 16,495,494 20,845,411 (21,250,739) 950,139 17,040,305

Trading company 18,746 1,787,045 (1,296,263) (490,782) 18,746

Total General funds (excluding Designated fund) 16,514,240 22,632,456 (22,547,002) 459,357 17,059,051

Total Group unrestricted funds 17,093,232 22,632,456 (22,547,002) 497,958 17,676,644

Total funds 17,414,643 23,074,239 (22,688,234) 497,958 18,298,606

Transfers -

Designated fund - The transfer relates to 10% of net income from the College fund.

Trading Company - The profit before tax and gift aid of Malvern College Enterprises Ltd.

College fund - The transfer relates to the designated fund transfer and the trading company transfer. The positive SWAP movement for the period of £498k is also included within the College funds transfer column.

Restricted funds -

Restricted donations/grants - The balance is represented by donations and grants not yet spent which have specific restrictions imposed by donors, the majority of which relates to donations for the Rogers Theatre project.

2000 Appeal - The income is allocated to bursaries in accordance with the aims of the Appeal.

Designated Fund -

The Designated Fund represents 10% of net income to provide funds to help fund bursaries and infrastructure projects over a ten year time span.

46



17a Comparative Funds

Group and College Transfers,

At 1 August

2015 Income Expenditure

other recognised

gains/losses

At 31 July

2016

£ £ £ £ £

Restricted funds

Restricted donations 73,825 483,495 (99,847) (173,250) 284,223

2000 Appeal - 501 (501) - -

Restricted grants 118,359 7,729 (7,729) (81,171) 37,188

192,184 491,725 (108,077) (254,421) 321,411


Designated fund 516,286 - - 62,706 578,992

College fund 16,600,945 20,626,796 (20,625,976) (106,271) 16,495,494

Trading company 18,746 1,358,023 (1,115,427) (242,596) 18,746

Total General funds (excluding Designated fund) 16,619,691 21,984,819 (21,741,403) (348,867) 16,514,240

Total Group unrestricted funds 17,135,977 21,984,819 (21,741,403) (286,161) 17,093,232

Total funds 17,328,161 22,476,544 (21,849,480) (540,582) 17,414,643

Transfers -

Restricted fund - The total transfer relates to the balance of donations of completed capital projects (Science £173k and Rackets £81 k) being transferred to the College fund.

Designated fund - The transfer relates to 10% of net income from the College fund.

Trading Company - The profit before tax and gift aid of Malvern College Enterprises Ltd.

College fund - The transfer relates to the balance of the donation for the capital projects, the designated fund transfer and the trading company transfer. The negative SWAP movement for the period of £541 k is also included within the College fund transfer figure.

Restricted funds -

Restricted donations/grants - The balance is represented by donations and grants not yet spent which have specific restrictions imposed by donors, the majority of which relates to donations for the Rogers Theatre project.

2000 Appeal - The income is allocated to bursaries in accordance with the aims of the Appeal.

47



17a Comparative Funds (continued)

Designated Fund -

The Designated Fund represents 10% of net income to provide funds to help fund bursaries and infrastructure projects over a ten year time span.

18 Analysis of the net assets between funds

The net assets are held for the various funds as follows:

Group and College

Net assets/(liabilities) of the group's funds

Fixed assets

£

Net current assets

£

Long term liabilities

£

2017 Fund

balances

£

Restricted funds 37,188 584,774 - 621,962

General funds:

College funds 27,081,978 2,418,410 (12,460,083) 17,040,305

Designated funds - 617,593 - 617,593

Non-charitable trading funds - 18,746 - 18,746

27,119,166 3,639,523 (12,460,083) 18,298,606

18a Comparative analysis of the net assets between funds

The net assets are held for the various funds as follows:

Group and College

Net assets/(liabilities) of the group's funds

Fixed assets

£

Net current assets

£

Long term liabilities

£

2016 Fund

balances

£

Restricted funds 37,187 284,224 - 321,411

General funds:

College funds 27,791,100 2,488,290 (13,783,896) 16,495,494

Designated funds - 578,992 - 578,992

Non-charitable trading funds - 18,746 - 18,746

27,828,287 3,370,252 (13,783,896) 17,414,643

48



19 Pensions

Teachers' Pension Scheme

The College participates in the Teachers' Pension Scheme ("the TPS") for its teaching staff. The pension charge for the year includes contributions payable to the TPS of £862,564 (2016: £827,112) and at the year-end £nil (2016: £nil) was accrued in respect of contributions to this scheme.

The TPS is an unfunded multi-employer defined benefits pension scheme governed by the Teachers' Pension Scheme Regulations 2014. Members contribute on a "pay as you go" basis with contributions from members and the employer being credited to the Exchequer. Retirement and other pension benefits are paid by public funds provided by Parliament.

The employer contribution rate is set following scheme valuations undertaken by the Government Actuary's Department. The latest actuarial valuation ofthe TPS was prepared as at 31 March 2012 and the valuation report, which was published in June 2014, confirmed an employer contribution rate for the TPS of 16.4% from 1 September 2015. Employers are also required to pay a scheme administration levy of 0.08% giving a total employer contribution rate of 16.48%.

This employer rate will be payable until the outcome of the next actuarial valuation, which is due to be prepared as at 31 March 2016, with any resulting changes to the employer rate expected to take effect from 1 April 2019. This valuation will also determine the opening balance of the cost cap fund and provide an analysis of the cost cap as required by the Public Service Pensions Act 2013.

Other pension schemes

The College contributes to one other defined benefit pension schemes (details below) and one defined contribution pension schemes on behalf of its employees. The cost to the College of these schemes is £123,387 (2016: £126,297).

FPS Pension

The Federated Flexiplan No.1 ("the Plan") is a defined benefit pension scheme. It is a "last man standing scheme" which means that all participating employers are joint and severally liable for the Plan's liabilities. However, because of the non-associated multi-employer nature of the Plan, the College does not have sufficient information available (in particular to identify its share of the underlying assets and liabilities of the Plan) to use defined benefit accounting. As such and as permitted by FRS 102, it accounts for the Plan as if it were a defined contribution scheme. As a result, the amount recognised in the profit & loss represents the College's contributions payable to the Plan in respect of the accounting period.

Members of the Plan are entitled to benefits on either a "Pensions Capital" or "Target Pension" basis. Under the Pensions Capital basis, contributions paid by and in respect of members are accumulated up to retirement and then used to secure benefits for the member. Under the Target Pension basis, members receive a defined pension at retirement based on length of service in the Plan and their Pensionable Salary at date of leaving. The Plan is closed to new members and to future accrual of benefits.

Buy-Out of the Scheme Liabilities The Scheme Trustee entered a buy-in covering the full Scheme liabilities with an insurer in February 2017 and anticipates that the transition to achieve full buy-out will be finalised in the first half of 2018. When that process is completed there will be no further legal or financial obligations to the Scheme.

Recovery Plan As the Plan was in deficit at the latest actuarial valuation of the Plan as at 31 March 2015 a recovery plan was put in place. Under this recovery plan, contributions of £2,063,417 per annum are payable 1 April

49


Notes to the financial statements forthe year ended 31 July 2017 (continued)

19 Pensions (continued)

2016 to 31 March 2017 and £1,555,556 per annum are payable from 1 April 2017 to 31 March 2019.

However, the Scheme Actuary has now certified that no further contributions are required to be made in respect of the two years commencing 1 April 2017.

The College's agreed share of these contributions is £2,955 per annum from 1 April 2016. No other contributions are due from the College.

The College paid contributions of £2,497 in this accounting period (2016: £2,955).

20 Reconciliation of cash flows from operating activities

Group 2017 2016

£ £

Net income for the year 883,963 86,482

Adjustments for:

Investment income (52,846) (45,818)

Depreciation of tangible fixed assets 2,316,839 2,280,476

Financing costs 411,668 433,008

Surplus on disposal of current/fixed assets (1,554) (3,702)

Movement on SWAP liability (497,958) 540,582

Decrease in stocks 3,953 8,940

Increase in debtors (216,389) (73,319)

lncrease/(decrease) in creditors 282,416 (100,091)

Net cash provided by operating activities 3,130,092 3,126,558

50



21 Analysis of net debt

31 July Cash 31 July 2016 flow 2017

£ £ £

Net cash:

Cash on short term deposit 5,001,800 (1,000,000) 4,001,800

Cash at bank and in hand 2,720,823 1,392,329 4,113,152

7,722,623 392,329 8,114,952

Loans falling due within one year (754,498) (3,994) (758,492)

Loans falling due after one year (10,193,848) 754,840 (9,439,008)

(10,948,346) 750,846 (10,197,500)

Hire purchase leases (73,104) 21,931 (51,173)

Net debt (3,298,827) 1,165,106 (2,133,721)

All the movements from the opening to closing components above result from the cash flows of the group.

22 Commitments

Operating leases

At 31 July 2017 the group and the College had future total minimum lease payments under non-cancellable operating leases for each of the following periods:

2017 2016

Group and College Land and Land and buildings Other buildings Other

£ £ £ £

Not later than one year 26,052 66,607 26,052 67,057

Later than one year and not later than five years 76,800 101,164 57,600 166,680

Later than five years 46,553 - 84,953 1,091

149,405 167,771 168,605 234,828

51


Notes to the financial statements forthe year ended 31 July 2017 (continued)

Finance leases

At 31 July 2017 the group and the College had future minimum lease payments at the end ofthe reporting period for each of the following periods:

31 July 2017

31 July 2016

£ £

Not later than one year 21,931 21,931

Later than one year and not later than five years 29,242 51,173

51,173 73,104

Capital commitments

The group and the College had capital commitments at 31 July 2017 of £3,218,014 in respect of the Rogers Theatre project (2016: £133,589) and £nil in respect of the All Weather Pitch (2016: £768,021).

23 Related party transactions

The Malvernian Society Limited

The Malvernian Society Limited is a company limited by guarantee that promotes the work and education at the College, assists in the carrying on of a school or schools and in cases of need assists pupils in further training. A number of members of The Malvernian Society Limited's Committee are also members of Malvern College's Council.

This year, the College received £373,929 from The Malvernian Society. £301,735 was received for the refurbishment of the Rogers Theatre, £70,677 was received for Assisted Places and £1,517 was donated towards the cost of an historic Malvernian silver salver. Last year, the College received £428,991 from The Malvernian Society including £173,250 towards the Science project, £202,263 for the Rogers Theatre and £53,478 for Assisted Places and specific projects.

At the year-end, £1,300 (2016: £1,000) was due from The Malvernian Society Limited and the balance is included in debtors. The College has also contributed £124,347 to The Malvernian Society (2016: £121,530) for subscriptions for life long membership of the Society for Upper Sixth leavers.

The Malvernian Society Limited owns some of the land and buildings within the College grounds. In 2010/11, the College sold a property to the Malvernian Society Limited and leased back that property for College use. That arrangement continued in 2016/17 and the rent paid from the College to the Malvernian Society Limited in the year was £19,200 (2016: £19,200).

The results of The Malvernian Society Limited are not included in the consolidated financial statements. Whilst they are deemed to be "related" they do not meet the Charities SORP definition of "Connected" and as such their results are not presented within these financial statements.

The Downs Malvern

The Downs Malvern (TDM) is the trading name of The Downs Malvern College Prep School (TDMCP). In June 2007, the College agreed to contribute £5.5m to The Downs Malvern College Prep School. TDMCP is a separate registered charity.

A donation of £43,497 (2016: £13,595) was made by the College to TDMCP during the year in recognition

52



23 Related party t ransact ions (continued)

of the net effect of staff concessions offered to staff at the College by TDMCP and offered to staff at TDMCP by the College. A Management Fee of £90,000 (2016: £60,000) was received from TDMCP during the year for the provision of bursarial services.

Atthe end of July 2017, £1,127 was owed to TDMCP by the College (2016: £5,183 owed by TDMCP to the College).

Malvern College Enterprises Limited (MCEL)

The College invoiced £685,367 (2016: £839,304) to MCEL and MCEL invoiced £101,628 (2016: £55,731) to the College in the current year. The sales invoices from the College related to cost recharges, VAT transactions and commercial trading sales.

The College and MCEL have a licence and lease back agreement for the use of the current all-weather pitch. The College receives £40,169 for the licence fee and pays £30,900 for the lease costs.

The College has a loan from MCEL of £54,893 (2016: £54,893) and MCEL has a loan from the College of £20,000 (2016: £20,000). Interest is paid by both parties on the loans at a rate of the higher of (a) Lloyds Banking Group plc lending rate + 1.5% and (b) 7% per annum.

At the year end, excluding the loans, £128,271 (2016: £42,561) was owed by MCEL to the College and £164 (2016: £1,551) was owed by the College to MCEL.

24 Taxation

The College was a registered charity throughout the year and, as such, was not liable to corporation tax on the surplus of income over expenditure for the year, or to capital taxes on gains arising from the disposal of assets, carried out in the furtherance of the College's primary obligations.

The College and Malvern College Enterprises Limited are registered together in a VAT group. Malvern College Enterprises Limited gifts most or all its taxable profits to the College and is subject to corporation tax on any remainder of taxable profits.

25 Contingent assets

The College has a contingent asset at the end of the period of £nil (2016: £120,000) relating to repayment of professional fees.

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26 Comparative Consolidated Statement of Financial Activities

Unrestricted funds Year ended

Restricted 31 July 16 General Designated funds Total

£ £ £ £ INCOME FROM:

Charitable activities

College fees Ancillary trading income

18,423,295 1,694,994 - 7,729

18,423,295 1,702,723

Trading activities

Trading income Non-ancillary trading

Investments Donations Other

1,358,023 457,807

45,818 1,180 3,702

-501

483,495

1,358,023 458,308 45,818

484,675 3,702

TOTAL 21,984,819 - 491,725 22,476,544

EXPENDITURE ON: Raising funds

Trading expenses Financing costs

1,115,427 433,008

- - 1,115,427 433,008

Charitable Activities Provision of Education Donation to TDMCP

1,548,435

20,179,373 13,595

- 108,077

1,548,435

20,287,450 13,595

TOTAL 21,741,403 - 108,077 21,849,480

Net income before fair value movements on financial instruments

243,416 - 383,648 627,064

Movement of SWAP liability (540,582) - - (540,582)

Net income (297,166) - 383,648 86,482

Transfers between funds 191,715 62,706 (254,421) -

Net movement in funds (105,451) 62,706 129,227 86,482

RECONCILIATION OF FUNDS

Fund balances b/f 1 August 16,619,691 516,286 192,184 17,328,161

Fund balances c/f 31 July 16,514,240 578,992 321,411 17,414,643

54

Malvern College Incorporated, College Road, Malvern, Worcestershire, WR14 3DF Registered Charity Number 527578

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