Luther King House Educational Trust (A company limited by guarantee) Report and Financial Statements 31 August 2022 Charity number: 1082375 Company number: 04065581 LUTHER KING HOUSE EDUCATIONAL TRUST FINANCIAL STATEMENTS CONTENTS PAGE Report of the direclors Independent Audllors, Report to the Member5 15 Group statement of financial actlvities 19 Stalemenl of changes in reserves 20 Balance Sheets 21 Cash flow statement 22 Notes to the Financlal Statements LUTHER KING HOUSE EDUCATIONAL TRUST DIRECTORS, REPORT YEAR ENDED 31 AUGUST 2022 Luthor King House Educational Trusl Ryrt of the truste￿ for the y•ar ondlng 31 August 2022 The directors, vtho ar8 also trustees for th8 purposes of the Charities Act, present th8ir report together wllh the audited financial statements for the year endlng 31 Auwst 2022. Chairfs report Last yeai our repcyt addressed the challenges we faced In the Covith19 Global Pandemic. These challenges continued lo affect us significantly during 8 major part of the year now conc￿uded. For part of the year we continued to experience Government restrkllons {lockdownsl, and even when these were Irfted part way through th8 year in many sectors of soclely there was a reluctance to engage in face to face meetings which continued lo face us v￿th slgnrfunl challenges of operation and difficulties In ddivering learning lo our students. However, our staff team have risen to the challenge and we have emerged from a volattle year in a better sltuation than we might have imagined. Our principal Stakeholders, Northern College {URC) and Northern Baptist College have assisted us by eady payments and by loans and when we were able lo recommence OUT accommodation an conference activities post Government lockdown we were encouraged to see how our business activities recovered. During the year the major part of our educational provision was conducted on line, though some fa Io• face teaching was possible. One casually of the pandern￿ was the decision of our validating Universilles not lo hold in person Graduallon services. We declded to hold such an event for all students and alumni who graduated during the p8ndemlc but had been unable to attend an In- person Universlty event. We had a splendid occasion in the Chapel on 7 April when we were able to celebrate approprfalely those who had been awarded Certrfkales, Diplomas, Bachelor, Masters and Do¢loral degrees. During thls perl¢)d, we have conliwed our Iransttion from the programmes validated by Manchester University to programmes of the Unwersity of Durham Common Awards. We hav8 also enrolled our first cohort of students for the new Maslerfs degree In Chaplalncy work, again validated by Durham and we have been pursuing dlscussions with York St John University to help us provide a Doctorat programme. Inevltably, these programme developments entalled much extra work for our staff team, ably led by our Presldent and with the supp)rt of the academic staff of the tknn$tiluenl Colleges and our own reglstrar and library staff teams. In all this we sought to continue to fuffil our core educational objectNes with the help and SUPF)Ort of our dedicated staff and in cooperatlon ￿th our founder members, partner Colleges and the ￿der Christian communSty In the north of England. We have to note, again, the continued demands being made on us by the Office for Students. though some of the requirem8nts made of us, p8rtlcularly in providing slalisllcal infomiatlon, have caused us challenges as the parameters used by the Office for Students have been more approprfate to large publi¢-sector Universitie8 than lo small specialist h￿her educatlon Inslliutlons such as ourselves. In educational tems, de$pile the ¢hallenges and restr￿tionS created by the pandemic. we have conllnued to work wlthln the parameters of our 2018 Vision dcMJJment and lo offer a range of courses from Infomial edu¢ation through to doctoral studies. We remain dellghted that our academic team al Luther King House are hlghly regarded in the r￿d of delivering qua14ty edu¢ational experiences In the dlscipllne of theology. LUTHER KING HOUSE EDUCATIONAL TRUST DIRECTORS, REPORT At all times we have been cognisanl of advice from the Charity Commls8ion and the Office for Students. We have continued our regime of weekly review of cash flow, and the Board, through the Chair of the Finance and Monitoring Committee, has been In re￿lar contact wlh our Company Secretary to monitor the situation and consult wth our ￿ncIpal stakeholders. It is our belief, a$ we have observed the recovery of income through our Irading subsidydry during the past year, that Luther King House remains a viable concern and though we Gannot predlct any future reslrlclion lo our trading aclivilies, we have no reason, at Ihe present time, lo believe there is an Immediate challenge lo our viability. However, we remain very conscious of the recent decline In the number of students slgnlng up for our BA degree in theology. Therefore, we have continued to consult wlh our principal stakeholders lo see whal methods might be employed to increase the number of Students engaged in th15 level of study In th8 coming years. We remain fully committed to working together lo seek a sustainable long-tem future for our Important work in the north and midlands of England. In all Ihls uncertain lime we have valued the lea(iership of the P￿sIdent, Company Secretary, College Principals, the Pilncipal of Open College and Ihelr supporting staff, who have worked lo the uttemiosl lo enable us to fulfll our Cofe objeGtives in a lime of érama and uncertalnty never previously experienced by the Luther King House Educational Trust. Our hard-working Operallons Manager, Martin Cloves, retired during the year and we are dellghled lo report that our Conference Manager, Beverley Bartram, was appointed to succeed him. The Board has continued lo meet Tegularly and for the gecond part of the year we have resumed in person meetings, with facllilies for joining the meetsng by Zoom. The Finance and Monrtoring Committee have continued to meet by Zoom. There have been no ¢hanges to Board membership during thls period. The Board has been vigilant In overseeing all the actNltie$ of Luther Klng House and congratulates all the staff and our key 8dL￿allOnal partners in their continued endeavours to maintain our vlslon and hold fast lo our values and standards in a fa31-moving and challenglng environment. It remalns a pleasure for me lo chair a hard-working Board supporting the President and a quality staff team as we seek lo serve the Christian Community of the North and Midlands. K8llh G Jones Chalr LUTHER KING HOUSE EDUCATIONAL TRUST DIRECTORS, REPORT YEAR ENDED 31 AUGUST 2022 Alms and objoctlves The objects of the Trust are: The advancement of education In areas of Chrlstian falth, praclk8 and dlalogue and in particular but without limitation- The provlslon of leamlng oppjrtunltles for members of churches and other Interested partles: The sharfng of Iheologlcal resources with and among Ioc81 churches andcommunities: The preparation of persons for accredited fomis of mlnisty, The provlsion of Opp￿tunitieS for wst graduate research; The provision of an educallonal establishment together wth an¢lllary services.. and To advance education generally The vision of the Trust may ￿ summarised a$ lo provlde a leaming resource and a flexible resldenlial facility to enable the Partnership lo: Be concerned wtrth theologlcal education lo help all live responslbly and creatively In plural society-, Encourage people to Shape thelr personal communal futures through responsltle crtlzenship.. Be a centre of excellence al all levels of Ils work,. Have a parti¢ular concem for Christian mission In an urban soclety, by building an e￿Men1¢•I nehvoTk of Supp￿ and shared resources., Create communltles of learnlng, worship, justice and liberation-, Express belief In one God, one world and one people., Be open lo leaming ￿th people from a wide range of underslandirvJs, insights and commitments., Develop Inlgmational links for mutual learnlng the wodd ¢hurGh-, Integrate learning from drfferent discipllne5, f81ths, personal and r6wted exper1er￿e In hurch and political lrfe., and Engage with scriptures, past and present Chrlstian traditlons, the world Church. other falth communities and contemporary exF*rlence and Ihinklng. The facllltles at Luther King House Indude.. Study and office facllitles for the arAdemic and administrative staff of those Memb Bodies based at Luther Klng Centre" R8sidenlial accommodalh)n and $iudy fa¢ililips for students of Member Bodies asrequlred; A dlnlng room provkllng breakfasts, lunch8s and evening meals., SoGial provision Induding student kbtchen & laundry facillties and a large lounge- A learning resources facility induding tfv)oks, perfodlcals and Intemet a¢cess' and A chapel for community worship on an ecumenical basis. When the f8cllllle8 of the House are not belng fully ulillsed In pursuit of the Trust's CO￿ actlvltles. spare capaclty Is marketed lo other persons and bodl8s. Any surpluses arising from Ihls activity are r&lnve$ted in th6 Trust's o)readvitiès. The educational activilles of the Trust are now dellvered under the branding Luther Klng Centre for Theolc#Jyand Minlsty {LKClarKI this lermlnologywill be used in Ihe approprlate se¢llons of this report. LUTHER KING HOUSE EDUCATIONAL TRUST DIRECTORS, REPORT Publlc Benefit ststement The Trust provides unlverslty validated courses of theological edu¢allon for the benefit of anywho are arAdemically qualified, not only for those Iralning for accredited ministries in the church. Fees are harged. though these do not cover the full ¢o$l of providing the servi￿. Steps are taken to ensure the fees do not exclude the poor., bursaries are available, and the Tnjst works wihin a general envlronment of govemmenl provision designed to support poorer students and widen acces$. Brillsh residents of foreign nalionalily are charged only at the domeslio rate. The Trust has, in fact, significant number of non-lraditional learners amongst ils students, and a growlng number from minority 8thnlc groups. Through Ihe development of flexible and distributed learning, the Trust is also seeking lo overcome further barriers lo learning. The Tnjst's academic staff also contribute lo the dellvery of similar courses by other associated theological insthutions. The Tmst works with churches In equippSng them and th8lr leadership for their rdes In the community. Among those11 trains, for instance, are church related community workers, whose whol8 purpose Is community development. Those training for accredited ministries are seldom able to use their education lo advance Ihelr own material interests,. their sol& reason for entering training is to serve the needs of local congregatDns and communlties. Many do $0 in training placernents throughout their course of education. The Trust's facllllies are of benefit to a ￿de range of the public. Membership of the library is available lo all for an easily affordable annual charge. When Government restrlctions permit. a wlde variety of groups use the teaching rooms for le8rnlng and training events., the Trust makes a y)int of making its educationally equipped meeting rooms wéely available when not naeded for its own courses and does so for ¢harlties and churche5 at reduceé rates. We have complied wth the duty under the Charities Act to have regard to the public benefit guldance published by the Charity Commission. A¢hlevernents and p•rformanc• The Trust's charitable objective is the advan¢ement of educalDn in areas of Christian faith, practi¢e and dialogue and the challenge to this objective from factors outside the organlsalion continues. Both full and part time courses of study are offered at undergraduate and postgraduate levels alongside a Diploma of Higher Edu¢alion and Certrficale of Hlgher EducalK>n. Despite the ongoing challenges and disruption of Covid, Student numbers have remalned generally stable but there has been a slow decline in the number of BA students. Our studenl body continues to reflect a broad ethlcal and cultural diversity, and many do not have Engllsh as their first language. students are supported by our academi¢ staff and through the learning and resource Genlre. This latter offers 5UPPOrt through study skills and proof-reading. Since March 2020 much of the leaching and learning has been achieved through e-leaming, though from September 2021 we increased the number of in-person sessions. The use of onllne learning has provided opportunrfiies lo explore new ways of engaglng with our students, and so continues for certain sessions and programmes, and il has been the focus of our academic team lo ensure that all students are able lo lake full advantage of the resour¢es provided. LUTHER KING HOUSE EDUCATIONAL TRUST DIRECTORS, REPORT YEAR ENDED 31 AUGUST 2022 The Presldent and staff have worked har¥ lo achi8ve, as best as posslble, a sense of communlty and lo promole ¢ollaboralive working among$1 the Student community. Luther Klng Centre for Theology and Mlnistry ILKCI is reglslered In tho 'Approv8d (lee cap), Category of the Office for Students. The Trust has, perforce of the Covid-19 pandornic, been focused on 8UPPOrting students through on- line learnlng and maintaining financial vlability durlng peric#Js of lockdown. With change In govemmenl regulations we have been able lo r￿Pen our facllrtles. resume face lo face leaching and leamlng and once again provide sludenl and publlc access lo our Ilbrary resource. For a thlrd year our operation has been challenged and adversely affected by the Govemment reslriclions. This In tum has created unKiue financial pressure with the loss of signlficant revenue from Bed, Breakfast and Conferen¢e facilit￿$ in the first part of the year under review. In accordan¢e wth the decision of the Board, LKC has oblalned valldatlon wllh Durham Unlversity and Common Awards. We have also reached agreement wllh York Sl John UnNersity to partner In the dellvery of our Research programme and our Supervisors have Ltn¢Jerpn6 crfientalion ￿th York St John Unlversity to b8 able to offer Research degrees. The continuing requirements of GDPR are re¢ognlsed and embodled w5th our processes, pc4lcles and procedures. The slgnmlcant drop in our income has not allowed us to continue ￿th the upgrading of our bedroom slctk and 811 but es$ential capital projects have been shelved until our revenue stream has recovered from Govemmenl ￿$trICtIonS. The following key ed[￿at￿nal objectives were established for 2021-22, IcwJether with ind￿lor8 of how these have been mel.. Indlcalors of Achlevement All academ￿ staff have been developlng Ihelr skills In deslgning and offerlng e4eaming packages for their acad8mlc dis¢ipline. Student feedback has been ve sllive. Work on th1$ Is has recently been completed. Broaden and deepen the experignce and practKe of e-leamlng Find a partner for the LKC Research ramme To work ￿th our partner colleges In predicling student numbers for the futu￿. This wDrk contlnues but is essential a$ we seek lo ensure future viability and financial slability. We continue lo address future recNitmenl for the BA ramme. We are ¢ontinuing to look at ways In whKh we night attraGt a broader student base building on the exper1er￿e of erleamlng and further develo In our onllne leamln rèsence. Th1$ is Gomplele, and the first cohort of students an slud on th8 ramme In 2021. To broaden our Student base. The development of a new MA programme in Cha lainc studi89 LUTHER KING HOUSE EDUCATIONAL TRUST DIRECTORS. REPORT Flnanclal rovlew The Covid reslriclions affecting our Bed. Breakfast and Conference buslness in the first part of the year had a signifiGant effect upon the Group's income, bul accommodation rates improved In the second half of the year under revlew and remain strong. Our focus continues to be managlng cash flow on an almost day lo day basls. Thls apPro￿h h35 typrf￿ our finan¢lal monitoring over the past year. The Stst•ment ol Flnanclal Actlvltles for th• Group The foGU$ of concern through￿1 the year has been lo enable Luther King House Educational Trust to continue as a going concern as we emerged from lockdown and lo this end we have been in iegular discussions with our principal stakeholders, Northern Baplisl College, and the Northern College (United Reformed Church, Congregational Fedèration and Moravian Church) to provide support to ensure we ¢ould continue operating and as we began lo generate supporting income from accommodation. catering and conference servi{*$. Al the end of the year the profil (loss) before tax incurred were- Charfty Subsldiary 1£155,S701 £156,609 Resulllng in an overall profll before lax of £1,039 The bank balance al the end of the year was £170,905. R080rv•s pollcy and golng concern The total level of reserves at year*nd amounted lo £ 774,039 {2021- £778,852). The Trustees are responsible for ensuring that the charity maintains an appropriate lev81 of reseNes to meet assessed risk and lo manage cash flow. In the current uncertain dimatg, the priority has been regularfy ensuring that the TTUSt has surricient cash flow to meet obligations. Athough the Trust Seeks lo maintain suffiaent reserves lo meet 3 months, worth of njnning expenditure. currently approx.£2CH)k, the current level of free reserves is calculated lo be £ 54,573 (2021 £15,920)- However, the Trust will continue lo work each year to increase the level of free res8Nes. The Trustees continue to review areas, particularfy within the accommodation area of the group, where increased efficiencies Can allow free reserves to InC￿aSe to the target level. The Colleges have expressed their Support for our current business model and their convlction that we should continue to operate wilh our Current model, whllsl engaging in tripartite conversallons to develop a strategy for ensurlng viable operallons In the medium lemi. Whilst the development ol that strategy is refined and clarthed. the stakeholders have indicated their willingness lo assist us through any temporary financial challenges on the journey to a medium term viable operation. The assistance includes facilllating deferral of interest payments on loans and loan capital on funds previously advanced for improvements to the premises al BTighlon Grove. Furthgr support has been utlllsed during the year for a line of credit which has been accessèd due lo the conlinulng loss of our Bed, Breakfast and Conferene2 business. Thls provlslon is regularly monltored and spe¢ifl¢ meetings bgtween officers of the tsvo College governing bodles and the Chair and President of Luther King Hou$e Educational Trust ensures that cash flow and the operation of Luther King hous& continues in a sustalned way. Both Colleges have issued letters of support for the Trust extending until 2026. LUTHER KING HOUSE EDUCATIONAL TRUST DIRECTORS, REPORT YEAR ENDED 31 AUGUST 2022 The Trusl finanrkns its operallons through a mixturo of relalned proflls and college loans. The management's objectives are lo retain sufficient liquid funds to enable the Company to meet its day lo day obllgalions as they fall due. This policy has ￿ntinUed lo be challenged during the year because of the Covid-19 global pandemi¢ and the Trust has had to recourse lo the governing bodies of the Iwo major constituent colleges for relief provision on loan repayTh8nl and a ￿mmItment to further loan support. The Trust makes little use of financial instrument$ other than an operational sterllng bank a¢Gount and so Its exposure lo price risk. credit risk, liquldlty rl$k and cash flow risk Is not material for the assessment of the assets, liabllities, financlal position and net IncomIn￿OUt90lng resour￿. The trustees are responsible for ensuring that the ¢harity maintains an appropriate level of reserves to meet assessed risk and lo manage cash flow. In the continuing cllmale of partial recovery from the worst effe¢ts of the global pandemic ~ lockdown$, staff shortage due to illnes5 and accommodation cancellations because of illness, the illegal Invasion of Ukraine by the Russian Federallon and the impact on energy availability and prKing, the priorlly has continued to be regularty ensurlng Ihal I Trust has sufficient cash Ilow to meet obligations. With all these factors trading remalns challenging though we work hard to maximise our room occuparKy. A slgnfflcant Income source for t￿ Trust is through the bed and breakfast business of Its subsidkqry 'Luther King Centre Conference and Accommodation Services Ltd.. This business recovered with the rdaxing of rest￿CtIOns, I￿1 the climate is still challenging with the on-golng Swdr in Ukraine. infialion and the reluctar￿e of people lo travel to ev8nls. The a¢tion tak8n in the last financial year has been necessary Icff a further year in the very challenging markg1.' Made full use of the Govemment furtough Stheme On the existing loans with the exlsth'ng stakeholder colleges the Trust negotiated afurtherlwefve month pause in repayments All non-essential capital expendlluffj was stopped Contlnuing strict monrtorlng of cash flow Stsffing hours were reviewed and where necessary reduced Conversations continue ￿th the Trustees of the Northem College aThJ the Northem Bap118t College about the provision of loans as required and wlthin awd and ¢learly defined parameters. In addltion to these actions the Trustee5 assessed several strategic optlons and concluded that the current model depending upon the subshyiary generating a reasonable level of profitability was still the mosl viable option for the future despite the current uncertainty. We note the following regardlng Ihe operation of the LKHAS subsidlary. Only a relalivdy small percentage of our business is drawn from tourism and hence less affected by the lockdown. Mancheslef is a growing clly wbth a range of entertalnments and two Premler football club5 which means that the potential for new bookings Is high We have a good Strong cadre of loyal customers and are well ￿aCed lo access the city The current model has shown a signfficanl revenue grolth over the years We have beerTr a successful venue for small conferences and again, hlstortcally, we havo 8tK)wn that we have a strong presence In this r￿Id We regular revlew staffing and a¢¢ommodalion prlces to be the m08t cost effective. Based on Ihls 8sses$ment the Trustees believe that the Trust 1$ a going concem and that we can continue for the fore$eeab18 future (a minimum iwelve months from the date of the signlng of these LUTHER KING HOUSE EDUCATIONAL TRUST DIRECTORS, REPORT accounts). In addillon, we are not aware of anything beyond that dale which might cause a major interruption. Plans for future yearn We have reviewed the staff lo mlnlmlse costs whilst continuing lo provide a good standard of servlce lo all our current and future clients. Once we have fully stabilised our income slre8m our Intention is to conllnue our bedro)m upJrades. We contSnue a strategy for the marketlng of LKC Open College that admlts students direct lo LKC rather than through one of ils constituent college5. This includes work on the website, on publlclly, and on ways of promoting the LKC brand, particularly on social media. Referenc• and admlnlstratlve detalls Charity number: Company number.. 1082375 04065581 So¢rétary and Réglstared Offl¢o: Mrs Claire McEwen. Luther King House, Brighton Grove, Ru5holme, Manchester, M14 Our advlsers: Auditors Crowe UK LLP. 3ftJ Floor, Th8 Lexicon, Mount Streot, Manchester, M2 5NT Bankers CAF Bank, 25 Kings Hill Avenue, Kings Hlll, Wesl Malling. Kent, ME19 4JQ Directors and trustees The directors of the charitable company {Ihe charlty) are its Iruslees for the purposes of charlty law. The trustees and officers servlng during the year and since the year end were as follows.. The Revd Dr Kehh G Jones The Revd Dr Andrew J Lunn (F) The Revd Dr Clara N Rushbrook IF) The Revd Charles J Nevln Revd Dr Simon J Oxley IF) The Revd Dr Rosalind M ￿bY (F) Dr Jacqueline G Hirsl Ms Erica M Dunmow The Revd Anthony Howe The Revd Jenny Mills Bishop Theo OILtwasegun Akano IF) = Directors appointed by a Founder Member according to ils rkJhls defined In the companls Artide5 of Association. 10 LUTHER KING HOUSE EDUCATIONAL TRUST DIRECTORS. REPORT YEAR ENDED 31 AUGUST 2022 K•y managomont ￿rsonnel Presldent Flnance Managerl Company Secretary Operat6ons Mana￿r Academic R8gSslrar Librarian Open College Prlnclpal The Revd Canon Graham Sparkes Mrs Claire McEwen Mi$$ Beverley 8artram Miss Clare Richardson Miss Katie Paton The Revd Dr Kim Wasey structur•, Govérnanc• and Manag•m•nt Gov•mlng Documont The Trust is a charitable company limited by guarantee and was set up on 1 September 2000. 11 is govemed by a Memorandum and Artides of Association. The charity was created to carry on and further develop the work of its two predecessor charities. the Manchester Chrfstian Inslltule (charity number 5153581 and the North8m Federation for Training In Ministry (charity Thjmber 5174961. Both these charities transferred their nel assets as al 31 August 2000 to the Trust arKI were thendissolved. The Memorandum and Artides of Assoclatlon were updated in Aprfl 2015. Every member promises, If the Charity is wound up while helshe is a member or withln 12 months after Geasing to be a member,. lo pay such amounts as Ss required up to £1 towards the costs of dissolutlon and the liabl11t￿ Incurred by th8 Charity while the ¢ontrfbulor was a memter. The concept of the Partnershlp for Theologlcal Education was born In 1997, under the umbrella of the Manchester Christian Institulg. In September 2000, the member bodles of the Partnership became fthe member bodies of the Trust. The Partnership for Theological Educati(In conllnues to b8 the operatlonal name under which the Trust carrl8S Out some of Ils edu¢allonala¢tMties. The finanrAal ba51s of the Tnjst was the agreement of the four Founts members to provide lo the Trust the land and buildiTrJs of Luther Klng House Vall￿ 8t £7￿,000 and cash totalling£5LW),000. The or￿inal land and buildings were transferred from Northem Bapti$t College to a ¢harity called the Luther Klng House Property Trust under a Charity Commission Scheme {case number 1802211 dated 27 June 21)02. Luther King House Property Trust is a separate charity from the Trust, bul the Trust is Ils only trustee. The Charity Commlssion has glven permisgion for the two charities to b8 accounted for as rf they were a single entity. Appolntment of trustees Where a vacancy arises for a dlreclor appolnted by a F￿nder Member organisalion. the organisalion concerned makes the appointment In accordance wrth its own inlernal processes. When a vacancy aflses for an independent dlre¢lor, the Board considers any gaps in it8 ¢urrent expertise and experience and In the varlous ¢onstiluen¢ies represented. It also has concem for Its gender and ethnic balarte. 11 then identifies a person or persons could fill Some of those gaps. An Invitallon is Issued. Training of new dire¢tors includes the provision of a comprehensive Indu¢llon pack. The Board encourages and supports dlreclors who wsh to pursue opportunrtles Ihat wll help them fulfil thelr respon$lbllllle$ as trustees. A new protocol has been developed to o)ver the appointrnenl and Mppolnlment for all members of the Board. LUTHER KING HOUSE EDUCATIONAL TRUST DIRECTORS. REPORT Changgs to the trustee body There were changes lo the membershlp of the Trust body during the year under revlew. Trustee InduGtion and tralnlng lThJuction Is tailored for new Trustees due to the very dlfferenl needs of IndeperKlent and Foundation Trustees. Organis*ion The Board of Trustees administers Ihe Gharlly. The Board meets on at least four occasions e¥h ye¥. Responsibillly for governance remains wth the Board of Directors and ils Flnance and Monitoring Committee, which meets quarterfy and includes an intemal audit function to check on not only rinancial and ethical matters. bul also policies relating to equal opportunities. child protection and staff terms and conditions. There is a separate H8alth and Safety commlttee whlch focuses on Compliance and care ofstaff. Responsibility for day to day management Is entrusted lo the OperatH)ns committee, led by the President la full lime salaried officer). The committee includes the Principals of the three Colleges that participate in the Trust's educ8tlonal activity and provlde most of ils leaching staff. Operations focuses on imFdemenlathJn, co-ordination. staff management, staff development and deployTnenl of resources. There are aca(lemi¢ commlitees to maTrage the BA, MA and Research programmes, chalred by a member of the academic staff, and attended by the staff who leach on the programmes. sludenl fepresentalives and representatives of the Universlty of Manchesterand the University of Durham and Common Awards as appropriate. Rolat•d partles and coopgratlon wlth other oryanlsatlons The twslees do not receive remuneration in relation lo their role on the board, however the Board indudes members who are employed by member organisations and who are members of the leaching learn delivering educalaonal 3ervlces for the Charity. This aspect of their work is remunerated. A new company, Luther Klng House Conference and Accommodation Services Llmlled, was sel up on 27 July 2009. This ¢ompany is a wholly controlled subsidiary of the Trust. Its purF￿se Is to carry on the conference and a￿0MmOdation business at Luther King House and it operates under a licence granted by the Trust.11 began trading on 1 September 2009. The directors of the main Tnjsl are also direthors of the subsidiary. Th8 directors, report and the accompanying financial statements concern the combined results of the Group for the year lo 31 August 2022. Balance sheets for the Group and for the Charity are shown on page 17. Charlty Govoman In July 2018 the Board agreed to adopt the 'Charfty Governance Code. wlth addltloTral pTrnciples r&laling to HSgher Education. Whilst this had been discussed in the past and generally reflected current practice, the Board rocognised that il would be appropriate lo formally adopt the code ané put In place procedures for ils implementation and regular monitoring. This latter activity would be achleved by an annual reviaw in the Autumn at the same lime as all other policies were reviewed. The Board agreed the following affimiallons rdating lo ils staff.. 12 LUTHER KING HOUSE EDUCATIONAL TRUST DIRECTORS, REPORT YEAR ENDED 31 AUGUST 2022 accordance with applicable law and United Kingdom Accounting Standards (United Klngdom Generally Accepted Accounting PraGlicel. Company law requires the dSre¢lors lo prepare flnanclal statements for each financlal year which glve a true and fair view of the state of affalrs of the charllable company and group of the Incomlng resources and appllcallon of resources inGluding the Sncome and expenditure, of the group frff that k)eriod. In weparlng th￿ financlal statements the direct(￿ are Tequlred to: Select suitable accountlng policies and then apply Ihemeonsistenuy: Observe the methods and principles in the Charities SORP., Make judgments and estimates that are reasonable and prudent., Slate whether applicable UK Accounting Standards have ljeen followed, sublecl to any material departures disdosed and explalned in the financial stalements,. and Prepare the financial Slatements on the going concern basis unless it is inappropriate to presume that the charftable company and group wlll conllnue in business. Th8 directors are responslble for keeplng proper accountlng records that dlsclose with reasonable accuracy al any time the flnan¢lal position of the ch8rKable Company and grcmjp and enable them to ensure that the financial 8talemenls comply with th8 Companles Act 2006. They are also ￿sponSible for safegLtarding the assets of the charitable company and group and hence for tskln9 reasonable steps for the prevenllon and det8Ctlon of fraud and olherlrregularitles ststomgnl as to dlsclosure to our audttors In so far as the trustees are aware at the Ilme of approving our trustees, annual report: there is no relevant informatk)n, belng lrrf0mia￿0n needed by the auditor in conneclion with preparing thelr re￿, of the group's auditor is unaware, and the tnjslees. having made enquiries of fellow directors arKJ the group's auditor that they ought lo have individually taken, have each taken all steps that helshe is obliged lo take as a director in order lo make themselves aware of any ￿levant audit information and to establish that the audltor Is aware of that Information. Small company provlslong Thls ￿[￿rt has been prepared in accordants wth th8 speclal provlsions relating to small ¢ompanies wllhin Part 15 of the Companles Act 2006. By order of the Iruslees Kèllh G Jones 14 LUTHER KING HOUSE EDUCATIONAL TRUST DIRECTORS, REPORT That LKC affirms Ihat Ils academic staff have freedom wllhin the law.. to question and lesl received wi$dom,' and to put foThvard new ideas and ¢ontroversial cff unpopular opIn￿nS without pla¢lng themselve5 In Jeopardy of losing the jobs or privlleges they may have al LKC. That LKC affim)s ils commitment lo freedom of speech and the encouragement of debate of all kinds as long as Ihls takes place within the law and wlll take such steps as may be necessary lo secure such freedom. Fundraising The Charity had no fundralslng 8clSvitles requirlng dlsd05ure under provision of the Charities (Proleclion and ScKial Investment) Act 2016. Pay policy for sénlor staff Staff pay is agreed by the Board on recommendation of the Finan￿ Committee. R?muneralion for senlor staff is based on role, experience and perfom)ance. It Is rovlewed annually and nomially increased in accordance with average earnings. Risk Managem•nt The dire¢lors maintain a register of the major rlsks which the Trust faces, and they review this reglster regularly. Each risk is assessed for ils severity and its likelihood and for the 8ffectNeness ol the steps taken lo manage the risk. The Register is regularty revlewed by the Finance and Monitoring Committee and risk management is now a standing item on the agenda of the LKHET Board meeting5. In reviewing the Register, the directors considered the most serious risks facing the Trust, and the actions taken to mitigate them are: Failu￿ to maintain income to sustain core activities Annual budg8ls are prepared by key management personnel and comparisons to actual are carefully monitored throughout the year. Since the pandemic cash flow is monitored on daily basis and 3-year forecasts are now part of the annual budgeting Pro￿$S. There are regular reviews of slrategiG pollcies. Lack of student numbers student recruitment is monitored closely. and publlcity and mark8tlng Inillatives are ￿rrIed out. The TTU51 ensures that acadern￿ programmes are meeting the requirements of the respective Colleges and denominations. Volatile energy market The Trust's S-year gas contract will lermlnale in April 2023. We are monltoring developments carefully and wlll be working closely with engrgy brokers to obtaln the best possible deal thereafter. Loss of (x)nfidence in the quality of the accommodation and conference fa¢ililie8. Comments and feedback are regularty monllored and resFonded to as appropriate. Failure to adequately maintain and Improve the property Regular maintenanc8 and improyernent work are budgeted for and ¢arrfed out. The property Is regulady inspeeled, and necessary work is carefully prlorilised. Trustegs, rosponslbilitio$ in r•latlon to tho flnanclal statement8 The dlreclors are responsible for preparing the Dlreclors, Report and the financial statements in 13 LUTHER KING HOUSE EDUCATIONAL TRUST INDEPENDENT AUDITOR'S REPORT YEAR ENDED 31 AUGUST 2022 Oplnlon We have audlted the consolidated financial statements of Luther King House Educational Trust for the year ended 31 August 2022 which comprise the Consolidated Statement of Financial Activities, Statement of Changes In Reserves, Consolidated and Charity Balance Sheet, Consolidated Cash Flow Statement and notes to the financial stalomenls, induding signtficanl accounting policles. The financial reporting framework that has been applled in their preparation is applicable law and Unlted Kingdom Accounllng Standards. Including Financial Reporting Standard 102 The Financial Reportlng Standard appllcable in the UK and RepUt￿lC of Irdand (United Kingdom Generally Accepted Accounllng Practice). In our opinion, the flnandal statements: glve a true and falr view of the stale of the group and charitable companvs affairs as at 31 August 2022 and of the group's incomlng resources and applicatlon of resources, Including its Income and expendi￿re the year then ended; have been properly prepared in accordance with Uniled.Kingdom Generally Accepted Accounting Practice. have been prepared in accordance vAth the requirements of the Companies Act 2(Kl6. Basls for oplnlon We conducted our audit in accordance with Internallonal Starkdards on Audltlng (UK) {ISA8 IUK>I and appllcable law. Our responsibilities under those slandards are further descrfbed In the Audttorf$ responslbilttles for the audit of the flnanclal statements secllon of our reporL We are Independent of the group In accorda￿ with the ethical requlremenls that are relevant lo our audit of the flnancial slalements in the UK. including the FRC'S Ethical Standard, and we have fu￿111ed OLtr other ethlcal responslbiltties in accordance with these requirements. We believe that the aud￿ evldence we have obtalned is suff￿lent and approprlate lo kYovl(ie a bas18 for our oplnKIn. Concluslons r•latod to golng concem In auditing the financlal statements, ￿ have concluded th￿ the dlrectors. use of the golng concern basis of accounting in the p￿paratIon of Ihe flnancial $tal8menls Is approwlate. Based on Ihe work we have performed, we have not identrfied any material un¢ertainligs relating to events or ¢onditlons that, Indivldually C￿ collectively, may cast signtficant doubt on the charitable companls abllity lo continue as a golrvJ concem for a period of at least twelve months from when the financFal statements are aUt￿rISed for issue. Our restx)nsibilities and the respon$lbllilie$ of the dire¢t¢yS Wtth respect to going co￿eM are described In the relevant seGtions of this report. Other InfoThnation The trustees are responsible for the other Infomalion contained wlthln the annual report. The other Infomiation comprises the infornalion In¢luded In the annual report, other than the financlal $talements and our audilorfs report thereon. Our opinion on the financial slalements does Tr)t cover the olher Infomiation and, except lo the extent olh8rwlse explicitly slaled in our ￿Port, we do not express any f￿M of assurance conclusion thereon. 15 LUTHER KING HOUSE EDUCATIONAL TRUST INDEPENDENT AUDITOR'S REPORT Our responsibility is lo read the other information and, in doing so, ¢onslder whether the other information is materially inconsislenl wlh the financial slalements or our knowledge obtalned in the audit, or otherwise appears to be materially misslaled. If we idenlfy Such malerlal inconslslencles or apparent material rnisstalemenl$, we are required to determine whether thi8 glves rlse to a material misslalemenl in the financial slalemenls themselves. If, based on the work we have perfomied, we conclud8 that there is a rnalerial misslalemenl of this other informats'on, we are required to report that fact. We have nolhlng to report in this regard. Oplnlon on other matter prescribod by the Companles Acl 2006 In our opinlon based on the work undertaken In the course of our audit the Infomlalion given in the trustees, report for the financJal year for which the consolldaled financial statements are prepa￿d is consistent with the financial slatemenls., and the trustees, ￿pOrt has been prepared in accordartt with applu￿e legal requirements. Matters on vthich we aro roquir•d to report by exception In the light of the knO￿edge and understanding of the group and the charllable company and Its environment obtained in the course of the audSt, we have not Idenlrfied material misstatements in trustees, report. We have nolhiTrJ lo report In respect of the followng matters in relation to which the Companles Act 2006 requires us lo ￿port to you rf, In our oplnlon.. adequate a¢￿untIng records have not been kept by the Charitable company, or returns adequate for our audit have not been received from branches not visited by us,. or the financial stalernenls are not in agreement wlh th8 accounting ￿tOr￿S and returns., or certaln disclosures of trustees, remuneration spe¢lfied by law are not made., c we have not received all the infomialion and &xplanations we requlr8 for our audit,. or the trustees were not enliued lo prepare the financial statements in accordance wllh the small ¢omp2nies regime and take advantage of the small companies exemption In preparing the trustees report and from the requirement lo prepare a stralegiG report. Regponslbllltles of trusteos As explalned more fully in the trustees, responslbllilies statement sel out on page 13, th8 Iruslees are responsible for the preparation of the financial 51alements and for belng salisfled that they give a true and fair view, and for such inlemal control as the trustees determine is ne¢essary lo enable the preparallon of financlal slalemenls that are free from material mlsstalemenl, whether due to fraud or error. In preparing the flnanclal slalements, the trustees are responsible for assessing the ¢harilable company's abillty lo continue a8 a going concern. disdosing, as applicable, matters related to going concern and using the gThng concem b8sls of accounting unless the Iruslees either intend to Ilquidate the charitable company or lo ¢ease operations, or have no realistic altemalive but lo do so. 16 LUTHER KING HOUSE EDUCATIONAL TRUST INDEPENDENT AUDITOR'S REPORT YEAR ENDED 31 AUGUST 2022 Audltorfs responslbllltl•s forlho audit of tho flnanclal statements Our obleclive8 are to obtaSn reasonable assurance about whether the finan￿al statements as a whole are free from material misstalemenl, whether due to fraud or error, and to issue an auditor's report that indudes our opinion. ReasOnal￿e assurance is a high level of assurance, bul is not a guarantee that an audit conducted in accordan¢e with ISAS (UK) will always detect a material misstalemenl when it exists. Misstatements can arise from fraud or error and are considered material rf, individually or in the aggregate, they could reasonably be expected lo influence the er￿nOMiC deciS￿n8 of users taken ijn the basis of these financlal statements. Extonl lo whi¢h tho audit was conslderod capable of detectlng Irregularltlas, Includlng fraud rregularit￿, Induding fraud, are instances of non-cOM￿lance wllh laws and regulallon$. We Identlfied and assessed the rfsks of material misstalemgnl of the financial statements from Irregularitles. whelher due to fraud or wror, and discussed these betsyeen our audit team members. We then deslgned and performed audit procedures responslve to those rfsk8, indudlng obtalning audit evidence sufflcient and appropriate lo provide a basls for our oplnion. We obtained an understanding of the legal and regulatory frameworks wlthin which the group and charitable comparsy operates, focusing on those laws and regulalw)n$ that have a direct effect on the delerminalion of material amounts and dlsclosures in the financlal statements. The laws and r8gulations we ￿nSIdered in this context were the Companle8 Act 2006, Charfties Act 2011 and employTnenl legislalh)n. Auditing standards limit the requlred audll procedures to identify non-compliance with these laws and regulatlons lo enqulry of the truste8s and other management and inspectlon of regulatory and legal correswThJ8nce, W any. We idenlmeé Ihe grealest risk of material Impact on the financial statements from Irregularilles, Indudlng fraud. lo be the override of controls by man8gement and completeness of income. Our audlt procedures to ￿spOr￿1 to these risks induded enquirles of management about their own Identif￿atIOn and assessment of the risks of irTegularllies, sample testlng on the posllng of journals, revlewng accounting eslimales for blases, sample testing from student record documentatlon and sample lesling of accommodalK)n records to.the c4)nsolldaled financlal slalemenls. ChNOng to the inherent limltations of an audlt, there Is an unavoKlable risk that we may not have detected some materlal mlsslalemenls in the flnanclal statements, even though we have property planned and performed our audlt In accordance with auditing standards. We are not respon$lble f preventing non-tompllan¢e and tamot be expected to delect non-compllance wlth all laws and rewlallons. A further de8crlpllon of our fesFonsibllllies for the audit of the financlal statements 68 located on the Financlal Reportlng Councll'$ website at- www.frc.or .ukJaudilorsres onsibililies. Thls descriptKJn forms part of our auditor's report. 17 LUTHER KING HOUSE EDUCATIONAL TRUST INDEPENDENT AUDITOR'S REPORT Use of our report Thls report is made 501ely to the group and charitable company's members, as a body, In accordance wilh Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been unéertaken so that we might stale to the group and charitable company's members those matters we are required to slate to Ihem In an auditor's report and for no other purpose. To the fijllesl extent permitted by law, we do not accepl or assume responsibility lo anyone other than the group and charitable company and the group and charitable companls members 85 a body, for our audit work, for this report, or for the oplnions we have formed. Vi¢ky Szulisl Senior Statutory Auditor For and on behalf of Crowe U.K. LLP Statutory Auditor The Lexicon Mount Street Manchester M2 5NT 20th January 2023 18 LUTHER KING HOUSE EDUCATIONAL TRUST CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES {including Income and Expendlture account) YEAR ENDED 31 AUGUST 2022 Unr•strictod RoStri¢tod Total Funds T¢)tal Funds Note Fund$ Funds 2022 2021 Income: InGome from charitable actiwties.. Academic and housing aclivili8S 308,595 308,595 497.843 Income from other trading activities.. Cofftmercial trading operations 859,800 859,800 208.886 Investment income 16 16 Total incom• 1168411 1168411 Exponditur• Costs of raising funds Commercial trading operatlons 523,198 523,198 212.S96 Expenditure on charitable activibes.. A￿deMiC and housing activrf(ies 644,175 644,175 657.972 Total oxpondlturo 1,167,373 73 870.568 Net Incomal{expendltur¢} Woie tax and net mov•mant In funds fot tho year 9 1,039 1,039 (1642391 Tax expense 11 {5,8S2) (5.852) 5.852 N•t InCoM￿{0X￿ndOtu￿o) (4,814) (4,814) (158,387) Ro¢ondllatlon of funds Total funds brought fokward 78.852 700.000 778,852 937.239 Total funds ¢arrled forward 74,039 TlXI,I)00 The Statemonl of finanGial ad￿llieS includes all gains arKI losses recognised In the year. Al.1r￿l￿e and gxpenditure dgriye from continuing activiti8S. The loss in the year for the Charity was £156k. 19 LUTHER KING HOUSE EDUCATIONAL TRUST STATEMENT OF CHANGES IN RESERVES Unrostrlctod Restrirtod Total Funds Funds Fund¥ 2022 Income: Balance at 1 Septemter 2020 99,353 837,886 937,239 Nel Income for the year ended 31 August 2021 Other comprehen8iV8 incomellexpense) (20,501) 1137,886) {1 $8,387) Total comprehensive incomel(expense) for the year ended 31 August 2021 {20,S011 {137,888) 1158,3871 BalanGo at 31 August 2021 Nel In¢ome for the year ended 31 Augu$t 2022 Other comyehenslve Incomellexpense) (4.813) {4,8131 Total compreh8nsive in¢omel(expense) for the year ended 31 August 2022 (4,813) {4,813) Balancg at 31 August 2022 774 039 20 LUTHER KING HOUSE EDUCATIONAL TRUST GROUP AND CHARITY BALANCE SHEETS Company No; 04065581 YEAR ENDED 31 AUGUST 2022 Group Charlty 2022 2021 2022 2021 Non-current ass•tg Deferred Tax asset Tanglble assets 11 12 5.852 1.296,966 1,340.432 1,296.966 1,340,432 Total Non (5TT,5001 Net assets 773.666 796,038 Tho funds of tho charity: Unrestricted Income fvrKIs 19 74,039 78.852 73,666 96,038 Restrlcled Income furKIs 19 700,IXM) Total ch*ity funds 774 039 778 852 038 The truste8s have prepared group accounts In acc(ffdance with sectlon 398 of the CompanSes Act 2CN)6 and sectlon 138 of the Charities Act 2011. These accounts are p￿Pared in awrdance with the special provislons of Part 15 of th8 Companies Act relating lo small Companies and constrtute the annual accounts requlred by the Companles Act 2006 and are for circulation to members of the Company. The Company has not delivered a copy of the profit and loss a(wunl to Companles H￿Se. Signed Keith &rant Trustee Approved by the trustees on The notes al pages 23 10 39 fomi part of th ones Rosalind May S•lby Trustee e acC￿nIS. 21 LUTHER KING HOUSE EDUCATIONAL TRUST CASH FLOW STATEMENT Group Note 2022 2021 Cash u8ed In operatlng actlvltlgs 23 Cash flows from Investlng activltles Interest income 18 Purchase of tangible flxed assets {6,156) Cash provlded by (US￿ In) Investing actlvltles 6,140 Cash flows from financlng actlvitiOS RepayThenl of borrowng Interest pald Loan laken out in the year (7,347> 3,115 100,0¢)O Cash used In flnan¢lng actlvltles 103,115 I￿rease (decrease) in cash and cash EquNalents in the year Cash and cash equivalents at the beginning of the year 161,745 101,99) Totsl cash and ¢ash •qulvalents at tho ond of the year 170 905 Tha charfly has tsken advantage of the exemption av8llable lo a qualrfwng entlty in FRS 102 from the requirement lo pre5enl a ¢h8rily only cash flow statement with the consolidated accounts. The notes al pages 23 to 39 form part of these aKounls. 22 LUTHER KING HOUSE EDUCATIONAL TRUST NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 AUGUST 2022 Not￿ on tho a￿ounts A¢¢ountlng Poll¢les The prlncipal accounting policies adopted, judgements and key sources of eslimallon L¢ncertainty In the preparalion of the finanoial statements are as follows.. Basis of preparotion Luther King House Educational Trust is a private company limited by guarantee, incorporated and registered as a charitable company in England (Regislered No. 1082375 (Company) & 04065581 Icharilyll. Its registered office is listed on the reference and administration page. The financial slalements have been prepared In accordance wlth Accounting and Reportlng by CharS1ies'. Slalement of Recommended Practice applicable to charities preparing Ihelr accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland IFRS 1021 (effective October 20191- Icharities SORP IFRS 1021), the Financial Reporting Standard appllcable in th& UK and Republlc of Ireland IFRS 102) and the Companles Act 2006. Luther King House Educational Trust meets the definition of a pUt￿lC benefil entity under FRS 102. Assets and liabilitie5 are initially ￿COgnised al historical w$t or Iran$acllon value unless otherwise stated in the relevant accountlng policy nolelsl. The Charity has taken advantage of the avallable exemption under s408 Companies Act and has not included a Charity only Statement of Financial A¢tiwtie3. bl Preparallon of the ac¢ounts on a golng LX)ncAn basls The Finance commlttee, on behalf of the Board, considered the work perfonned by the management In assesslng th& Trust'5 ability to continue as a going Goncem, particulady around its consideration of the impact of COVID-19 and the sleps taken to prole¢l the Trust's liquidity. The ¢ommlttee reviewed the worslwcase scenado and. combined the letters of support from the tsvo College stakeholders, conduded that there is no material uncertainty around the Trusys abilty lo c4)nlinue as a going concern, as referred to in Trustees, report. Group financial statements The finan¢lal statements consolldale the results of the charlty and Ils wholly owned trading subsldiary company, Luther Klng House Conference and Accommodallon Servlces Llmlted. A separale 61alement of financial actlvlties incorporatlng an income and expenditure account for the charity ilsell Is not presented becaus8 advantage has been taken of the exempllons undw the Companles Act d) Income and expenditure All Incoming resouT¢es are included in the Statement of Flnan¢ial Activit￿S when the Trust Is legally enllued lo the incom8 and the amount can be quantrfbed wtth reasonable ￿uracY. Most course fees are Involced al the beglnning of each a¢ademiG year and are reGolvable then. College bltxk charges are 8greed in advar￿e each year wllh the colleges. The lolal charges for the financial year are involced In September and [￿l¥ed in instalmonts through the year. other Incom818 recognised on 8 receIva￿e basls. 23 LUTHER KING HOUSE EDUCATIONAL TRUST NOTES TO THE FINANCIAL STATEMENTS Al expenditure 18 accounted for on an accruals basis and has been classrfled under headings that aggregate all co818 related lo the category. Allocatlon of expendlture Governance costs are those incurred In connection wlh publlc accountabllily and the strateglc planning process of the Trust. Governance costs represent the time spenl by employees on Ih8$e mallers. Interest recelvable Interest on fuThJs held on deposit Is Included when recelvable and the amount can bo measured reliably by the Charity.. thls is normally upon nolrficalion of the interest paid or payable by the 8ank. Fund accounllng General ftjnds are unrestrlcled funds which are available for use at th8 dlscrelton of the dlreclors In furtherance of the general objects of the Trust and which have not been deslgnated for other purposes. Designated funds comprlse unreslrlcled funds that have been set aside by the directors for partscular purposes. The aim and use of each deslgnated fund is sel out in the noles lo the financlal slalemenls. Reslricled funds are funds which are lo be used in a￿ordanCe with specific restriGlions imposed by donors or which have been raised by the Trust for particular purposes. The cost of realislng and administering all fund5 are charged agalnst the general fund. The aim and use of ea¢h restrlcted fund Is sel out in the notes lo the flnanclal slatemenls. gl VAT Irrecoverable VAT is WTitten off In the year except for where il relal8s lo capital items, in wh￿h case It Is added to the cost of additions affixed assets h} Operating leases Rentals applicable to operating leases where substantially all of the benefits and rlsks of ownership remain ￿th the lessor are charged against income on a straight-llne ba$ls over tha period of th8 lease. Tanglble fixed assets Tangible r￿ed assets are slated at ¢ost less depreciallon. De recialion Depreciation is calculated so as to write off the cost of an asset, less Ils eslimaled rosidual value, over the useful economic lrfe of that asset as follows: orfice and computer equipment 33Vo straight line Furniture, fixtures and fittings 20Vo straight line Building improvements 50/0 straight line Library development 2% straight line As the residual value of land and long leasehold buildiros is believed to be at least the Carrying value of the asset no depreciation is provided. 24 LUTHER KING HOUSE EDUCATIONAL TRUST NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 AUGUST 2022 sto¢k stocks consist of purchased goods for resale. Stock$ are valued at the Iov•Er cost and nel reallsable value Debtors Trade debtors are recognised al the settlement amount after any trade discounts off￿ad. Prepayments are valued at the amount prepaid nel of any trade disLyJunts due. Cash at bank and in hand Cash at bank and In hand indudes cash and short lerni highly liquid investments with a short maturity of three months or less from the date of acquisition or openlng of tho deposit or similar ac¢xJunt. CredStors Short lemi credhors ar8 measured at the transacllon prlce. Othw financial Ilabililies. Including bank loans. are measured initially al fair value, net of transactlon o)$ts, and are mea8ured subsequently al amortlsed cost using the effective interest method. Flnancial Instrument$ The Charity only enters into basic financial Instruments transactions that result In the recognition of finanokql assets and liabilities Ilke trade and olher accounts receivable and payable, loans from bank8 end other third partle8. loans lo related parties and investments in non-puttable ordinary shares. Debt Instruments (other than those wholly repayable or receivable within one year). including loans and other accounts receivable and payable. are initially measured at pr8senl value of the fijlure cash flows and sub$equenUy al amortlsed cost using the effective Interest method. Debt Instruments that are payable or receivable within one year. typically trade payables or recelvables, are measured, inltlally and subsequently, at the undlscounted amount of the cash or other consideration, expected lo be paid or received. However, rf the arrangements of a short-lerm instrument constitute a financing transaclh)n. like the payment of a trade debt deferred beyond normal business terms or finan¢ed al a rale of Interest that is not a market rale or In ¢ase of an out-right short-temi loan not at market rate, the financial asset or liability Is measured. initially, al the present value of the future cash flow dlsc(MJnted at a fflarkel rate of interest for a Similar debt Instrument and subsequently at amortised ¢osl. Financkql assets that are measured at ¢0St and amortised cost are asses8ed atthe end of each reportlng perlod for objective evlden¢e of impaimienl. If obje¢llve evidence of Impai￿ent Is found, an Impalnnenl loss Is ￿OgnIsed in the Statement of Financlal Adlvity. For flnancial assets measured at amortlsed cost, the impaiment loss is measured as the differe befv￿n an asset's Car￿ng amounl and the present value of 8sllmated cash fl¢)ws dlscounted at the asset's orfglnal effeGtlve interest rate. If a financLql asset has a variable Interest rate, the dls¢ounl rale for measuring any impaimient loss is the ¢urr8nl effective interest rate delemiined under the contract. 25 LUTHER KING HOUSE EDUCATIONAL TRUST NOTES TO THE FINANCIAL STATEMENTS For financial assets measured al enst less impairment, the impalrment loss Is MeaSu￿d as the drfference between an assel'g carrwng amount and best estimate, which is an approximation of the amount that the company would receive for th8 asset rf il were lo be sold at the balance sheet dale. Flnanclal assets and liabilities are offset, and the net amount reported In the Balance Sheet when there is an enforceable right to set off the recognlsed amounts and there Is an intention to set￿e on a nel basls or to realise the as5el and settle the liability simultaneously. Pensions The company operates a defined conlrlbution pension scheme for employees. The assets of the sGheme are held separately from those of the company. The annual ¢ontributions payable are charged to the slatement of financial acllvltle8. p) Capltalisalion Pollcy The company prepares the flnanaal statements in a¢cordance vAlh the conGept of materiality. TherefoTr, the company will capitalise costs that are greater than the following Ilmits.. indlvldually have a cost of more than £1.000, or o)Ilectively have a cost of least £1,000 where the assets are functionally inlerdependenl, have simultaneous purchase dates and are anlicipaled to have simultaneous disposal dates, and are under single mana￿181 control. Judgements In applylng accountlng pollcles and key SOUTGO$ of estimatlon un¢èrtalnty The charity makes estimales and assumptions conceming the future. The Finance Committee revlewed the worst-case scenario arsd, wmblned wlh the College letters of financial support, conduded that there is malerlal unGgrtainty arourKI the Trust's ability lo contlnue as a going concern and as such the dlsclosures in this area are appropriate. The resulting accounting estimates wll, by definllion, seldom equal the related actual results. The esllmales and assumptlons that have a SIgnrf￿anI risk of causing a material adjustment lo the carying 8mount5 of assets and liabilities within th8 nexl fln8nclal year are addressed below. {1) Useful economi¢ lives of tanglble assets The annual depreclation charge for tangible assets is sensltive to changes in the estimated useful economic Ilves and residual values of the assets, The useful economic lives and residual values are re- assessed annually. They are amended when necessary to refieGt CJj￿e￿t estimates, based on technological advancement, future investments, economic ulilisallon and the physical ¢ondltion of the assets. See note 12 for the carrying amount of the property plant and equipment and note 11 for the useful economic lives for each class of assets. 111) Impalrment of debtors Th8 Company makes an eslim8t8 of the recoverable value of trade and other debtors. When assessing impaimienl of trade and other debtors, management considers factors including the current credit rating of the debtor. the ageing profile of debtors and hislorlcal experience. See note 14 for the nel carrylng amount of debtors and associated impalrmenl provislon. Legal status of the Trust The Trust is a company limited by guarantee and has no share capital. In the event of the charity b?ing wound up, tha Ilability in respect of the guarantee Is limlled to £1 per member of the charity. The entity Is a private charitable company, Charity number 1082375. The registered office is Luther King House, Brighton Grove, Rusholme, Manchester M14 5JP. 26 LUTHER KING HOUSE EDUCATIONAL TRUST NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 AUGUST 2022 In¢orning rnsour¢88 from ¢haritablo a¢tiviti05 2022 2021 Hous• income Rent Sundry income 19,719 124 16,120 135,889 152,009 Académlc actlvlt1•8 Cdlege fees Cdlege block charges Sundry income {including grants) 201,335 72,0 248,433 72,000 25,201 288.752 345,634 Total 3a Dls¢lo8uro on Grant and Fee Incom• 2022 2021 Grant Incom• Grant Income from Ofs Grant income from other B¢)Jles Total Grant income 8,380 12,461 8.380 12,461 Fee Income Fee Income from taught awards Fee Irthme from research awards Fee 1￿me from r￿-quaIt￿ng courses 177.628 15.271 8.436 214,367 25,926 8,140 Total fee income 201,335 27 LUTHER KING HOUSE EDUCATIONAL TRUST NOTES TO THE FINANCIAL STATEMENTS Trading opgralions and Investment In trading wmpany The consolidated slalement of financlal activities ir￿lUdeS the results of the Charflys wholly controlled subsidiary. The Charity is the sole member of Luther King House Conference and Accommodation Services Ltd. (company number 6973866, registered office same as the parent Charity), a supplier of bed and breakfast and conference fa¢ilities. It pay8 almost all of its profits lo the charity by gfft aid. Summartes of the trading result and balance sheet are as follows.. Trading rasult for the year ended 31 August 2022 2022 2021 Tumover 859,800 208.686 Investment income Cost of sale5 and administralive expenses Including internal rent 01 £180,000 Proflt (Loss) before lax Tax expense Profit (loss) for the year 156611 {23,410} 17,558 Amount g￿ed to the Charity 133,201 Retained In the subsidiary Balance Sheet at 31 August 2022 Non-current assets Current assets Creditors (amounts falling due wlthin one year) 5.852 33,128 157,149 Total net asselg {Ilabillll8s} 371 Aggregale reseryes 371 {17,1871 Investment incomo Unrestrict•d Total Funds funds 2022 Total funds 2021 Bank interest receivable 16 28 LUTHER KING HOUSE EDUCATIONAL TRUST NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 AUGUST 2022 Analysls of gxpgndtturo of charltable aotlvltl8s 2022 2021 A¢ademlG and houso aGtlviti05 Staff Costs Teaching fees Universlty regi51rallon Bursarfes Books and perN)diGals Bad debts Rates and waler Light and heal Cleaning Insurance Repairs and mainlgnan¢e Telephone Office supplies and postage Photocopying rental Photocopying charges Travfjl Meetings & $urKIry xps Depreciation of flxeé assets sUpp￿t wsls {see note 71 GovemarKe Gosts (see note 8) 264,629 17,531 25,856 675 346,147 8,559 31,797 1265 5,171 (1.598) 30,395 43,167 27,343 55,954 7.266 28.204 1.210 6,373 140 1,134 753 58,961 49,623 80,664 7,950 6,739 1,109 9,949 1,033 492 638 29,758 57,754 67,789 Total acadomiG and hous• artivities ¢0sts Support costs Unrestrlcted funds Total funds 2022 Total fvnds 2021 Loan interest Bank charges Irrecoverable VAT President employment cosls Finan¢e general ts)sts 7,347 1,561 16,726 54,100 930 7,347 1,561 16,726 64,100 930 {3,115} 787 15,418 53,935 765 Total 80.664 29 LUTHER KING HOUSE EDUCATIONAL TRUST NOTES TO THE FINANCIAL STATEMENTS Governan￿ co8t8 Unrostrlctqd funds Total fund$ 2022 Total funds 2021 Audlt fees Professlonal fees Trust meetings and expenses 8,100 1,575 2,217 8,100 1,575 2,217 7.000 1,395 Total 11,892 11,892 Net Incomel(gxpgnditur•l for the year Th1$ 1$ staled after charging 2022 2021 Operatlng lease- photocopier Staff p8nsion contributions Depreciation Auditor's fees 140 50,921 49,623 1,032 56,066 57,754 Total 121852 10. Staff costs and omoluments 2022 2021 Total staff costs were as follows Wages and salarie$ Soclal security Gosts Other pension costs 495,707 38,735 449,028 34,008 56,066 539,102 NO￿ of the Trust's employees received remuneration in excess of £80,(K)O In the year12021.' £nill. Pension costs are allocated lo aclNilies in proportion lo the related staffing ¢osl¥ Incurred and are wholly charged lo unre$tricted funds. The key management p8rsonnel of the parent charity, the Trust, comprise the Trustees, the President. Academic Registrar, Librarian, Finance Managei and Open College Principal. The total ern￿oyee benefits of the management personnel of the Trust were £186,03512021.' £192,735). The key management P8rsonnel of the group ¢omprise those of the Trust and the key management personnel of ils wholly owned subsidiary Luther King House Conference and Accommodation Services Ltd. The key management personnel of LKHCAS Ltd is the Operations Manager. Tho Manager retired, and a successor tcN)k over the role during the year. Employee benefits in the role total £ 42,12312021.. £48,161 }. The employee benefits of key management personnel for the group was therefore £228.15812021.' £240,896}. 30 LUTHER KING HOUSE EDUCATIONAL TRUST NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 AUGUST 2022 2022 2021 Salary of President Pension of President Salary Pension 4,455 44SS Total$ 49,003 49,003 The Pre8ldent'8 baslc salary18 2.4 Ilmes the median pay of staff, where the median pay is ¢al¢ulated on a fulktlme aqulvalent basis for the salarlos paid by the provider for Its staff. The Presldenl's total remuneration is 2.6 tlmeg the M￿j6an total remuneration of staff where the medlan lolal ￿mUneratIOn 1$ calculated on a full-tlme equNal6nt bas1$ fLY the lolal remuneralN)n of Its staff. Dlrectors recelved no remuneration (2021:nll} and wer8 r8lmbursed expenses as fdlows: 2022 2021 Relmbursemenl of expenses Kellh Jones {Iravel expenses) 123 Partlculars of employee8: 2022 AdmlnlHouse No. 15 20 2021 AdmlnlHouse No. 13 15 Academlc A¢ademl¢ Full Ilme equlvalent Average Most of the lea¢hlng on the Trust's varfous ￿urse8 is provlded by employees of other bodies. 11. Taxatlon Deferred tsx a$sel$ In relatlon lo continulng operatlons were recognlsed in 2021 In respect of the followlng item because It was probable that future taxable profits would be available which the Company could ulllise. The provlslon for deferred taxalbn. whlch arose In 2021,1$ made up as follows.. 2022 2021 Timing dfflerences In respect of the year.. 5.852 (5,8521 In the current year Ihe tr￿Ing subsidiary made a profit (loss) before tax of £156,60212021.'1£23,410) 31 LUTHER KING HOUSE EDUCATIONAL TRUST NOTES TO THE FINANCIAL STATEMENTS 12, Tangiblg fixod as$ats Fixlurns Fittings Plant & Bulldlng Equipment Improvements Land and Long Lea8ehold Property Offlce and Computer Equipmant Group and charlty Total Cost At 1 September 2021 Addltions Disposals 164,740 291,330 1,367 2,276 1,312,393 4,790 700,000 2,468,463 6,167 4,884 At 31 August 2022 162 132 290,421 1317183 700,000 2 469 736 Dèproclatlon At 1 September 2021 Charge for the year On dlsposals 158,690 4,841 272,285 10,270 697.056 34.512 1,128.031 49.623 At 31 August 2022 160,923 280 279 731,568 1 172 770 Net Book V•lu• At 31 August 2022 1,209 10,142 585,615 700 000 1296.966 At 31 August 2021 6,050 615,337 700.000 1,340,432 32 LUTHER KING HOUSE EDUCATIONAL TRUST NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 AUGUST 2022 13. Stock Group Charlty 2022 2021 2022 2021 Stock 1,487 1.302 Debtors Group Charlty 2022 2021 2022 2021 Trade Debtors Amounts owed by subsrdiary Prepa￿nentS 9,739 42.210 2,822 1,878 133,201 16,339 38,761 25,463 25,002 30,284 34,741 152,380 Of the group trade debtors £ nll 12021.. £nll) wa$ due In over a year. 15. Credltors: Amounts falllng du• wlthln a y•ar Group Charity 2021 2022 2021 Traje Creditors PAYE & ￿la1 security VAT Other creditors Accruals and deferred Income College loans 20,026 8,755 43,S57 16,766 62,708 8,812 15,161 18,977 14.196 8,755 43,557 16,075 18,431 8,812 15.161 17.577 63,456 119,815 46,400 109,325 169,307 15a Deferred Income movement Grou Chari 88,201 88,201 10,OCrf) 10,OCK) Amount blf 2021 Resource5 released in the ear Resources deferred In the ar Amount clf 2022 89,663 13,504 13,504 33 LUTHER KING HOUSE EDUCATIONAL TRUST NOTES TO THE FINANCIAL STATEMENTS 16. Credltors: Amounts falling due after more than one yèar Group Charlty 2022 2021 2022 2021 College loans (i) College loan$ {11) College loans {iii) Accruals and deferred Income 410,000 67,500 100,000 410,000 67,500 100,01)0 410,000 67,500 100,000 410.OC() 67,500 100,000 577,500 577,500 577,5 577,500 e loans Induded in creditors falling due after more than one year are loan$ of.. £60,000 {2021: £60,000) and £230,000 {2021'. £230,000) from Northern Baptist College. Thi5 organisatlon is a founder member of tha Trust. The loans are repayable when the Trust has funds available, or on the dissolution of the Trust. Interest is payable at 1V• below base rale on th& £60,000 loan. An agreement Was reached in 2021 to reduce thg interest rate for the £230,000 loan to 1% above base rate. Previously the rale used had bo8n based on the Charllies AKI Foundation for Its COIF units, collared at 4% for the £230.000 loan. £70,000 (2021.. £70,000) and £67,500 12021.. £67.500} from Northern College. This organisation is founder member of the Trust. The £70,000 loan is repayable when the Trust ha$ funds available or on the dissolution of the Trust. An agreement was reached in 202110 reduce the interest rate for the £70,000 loan to 1 tslo above base rate. Previously the rale used had been based on the Charities Aid Foundation for Its COIF units, collared at 40h for the £70.(H)O loan. £50.000 (2021.. £50,000) from Unitarian Colleg8. This organisallon is a memb8r of the TnJst. The loan is repayable when the Trust has funds available or on the dissoluts'on of the Trust. Interest is Payable al 1 above base rate. 11 was previously the daily rale set by the Charities Aid Foundallon for Ils COIF units, collared al 4%. Tolal interest paid was £816 (2021.. £918). The Charity Commlssion has ¢onfirmed that It wlll be willing lo aulhorise these loans to be repaid out of the proceeds of sale of Luther King House property rf such a sale ever takes place and rf the loan$ remain oulslandin9 when it do&s. Colle Induded in ¢redltor8 falling due after more than one year Is a loan of-. £67,500 {2021.. £67,500) from Northern College. Th& oulslandlng loan was repayable by 2023 bul a deferral to 2026 was agreed in order to assist cash flow durlng the Covid-19 crisis. Interest Is payable al 2.5¥o. The orlglnal £60,000 loan Was taken lo convert offices into bedTooms. A further loan of £g),000 was taken lo convert additional offices to bedrooms. The loans will be repaid a5 follows- 2023.. 11.250 2024.. £22,500 2025: £22,500 2026.. £11,250 34 LUTHER KING HOUSE EDUCATIONAL TRUST NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 AUGUST 2022 e loans Induded in creditors falling due after more than one year are loans that were granted In 2021 a5 ernerger￿ r81ief to a cashfiow crfs18 al the helghl of the pandemic. £75,OCrf) {2021:£75,000) from Northem Cdlege. Interest is payable at 1 Yo over base rate. To181 interest pald to Northem College was £2,37012021'.£1,631) £25,OIXI12021.'£25,000) from Northem Baptist College. Interest is payable at 1% over base rale Total Interest paid to Northem 8apllst College was £4,161 12021.'£4,337) The College loans could be deemed ¢oncesslonary loans 17. Ponslon$ Al th8 year end the outstanding pensh)n commitment was £3,196 (2021.. £4,132) 18. Commltrnonts und•r operatlng leasos Al 31 August 2022 the ¢offlpany had mlnlmum lease payments of £nil. As$ots other than land And buildings 2021 Operallng leases ￿1¢h wlll be pald.. <1year 315 19. Analysls of Gharitable funds Analysls of movomOnt in unrestrfcled funds Balanca Incomlng Resourcos Transforn Fund$ 1 Soptombor 2021 resources expended 31 August 2022 General fund 78,852 1.168,411 11,173,225) 74,039 Totsl 78.852 1,168,411 1173 225 (Prior Yearl Balance 1 September 2020 In¢omlng Resour￿8 Transfers Funds resources expended 31 August 2021 General fvnd 99,353 706,329 {726,830) 78,852 Total 99,353 706 329 726,830 78,852 Nam8 of unre8trlcted fund DesGrfptlon, nature and purpose of tha fund General fund The Yree reserves, after allovAng fly deslgnated funds. 35 LUTHER KING HOUSE EDUCATIONAL TRUST NOTES TO THE FINANCIAL STATEMENTS Analy81s of movement In rostrlcted fund Balance InGornlng ResourGos Transfors Fund$ 1 S•ptombor 2021 rosourGOS gxpgndgd 31 August 2022 Property 700,000 700,000 Total 700 000 (Prior Yearl Balance 1 September 2020 Incoming r8sources Resources expended Transfers Funds 31 August 2021 Property 700,0 700,000 Property improvgmenl 137.886 1137,8861 Total 837.886 137,886 700,000 Restricted funds represent the value of assets aCqUi￿d with money given for thls specfflc purp)se including the original gift of land and buildings to the Tnjsl. In 2008, subsl8nlial improvements were made lo the buildings. The value of these have been redu¢ed each year by depreciation. However. the Board decided to allocate the remaining balance on the improvements from restricted to unreslricled reserves during 2021. An•lysis of group net assets between funds General Fund Deslgnated Fund Restrlcted Fund Tolal 2022 Tangible fixed assets other non-current assets Cash al bank and in hand Other net current asselsl{liabililies) Creditors of more than one year 596966 700,000 1,296,966 170,905 {116,3321 {577,5￿) 170,905 (116,3321 (577.5001 774.039 {Prlor Yearl General Fund Designated Fund Restrfcted Fund Totsl 2021 Tangible flxed assets Other non (184,051) R0¢0nclliatlon of funds Total funds brought forward 99,353 837.886 937,239 1,121,290 Total funds Carr1￿ forward 937 239 39