Report of the Trustee and Financial Statements FOR THE YEAR ENDED 31 MARCH 2023
## **TRUSTEES AND ADVISERS**
**Trustee**
The Keepers and Governors of the Possessions, Revenues and Goods of the Free Grammar School of John Lyon (A Charter Corporation)
**Clerk to the Trustee**
Andrew Millett
**Registered Charity No.**
237725
**Registered Address and Charity Office**
Savoy Strand 105-109 Strand, London WC2R 0AA
**Property Managing Agents**
Knight Frank LLP, 55 Baker Street, London W1U 8AN
**Bankers**
Coutts & Co, 440 Strand, London WC2R OQS
**Auditors**
PKF Littlejohn LLP, Statutory Auditor, 15 Westferry Circus, Canary Wharf, London E14 4HD
**Solicitors**
Cripps LLP, 2nd Floor 80 Victoria Street, London SW1E 5JL
**Investment Advisers**
Cambridge Associates, 80 Victoria Street, London SW1E 5JL
**Custodian**
Cazenove Capital, 1 London Wall Place, London Wall, London EC2Y 5AU
## **Principal Officers**
Chief Executive Officer Grants Director Finance and Operations Director
Dr Lynne Guyton Ms Cathryn Pender Mr Lloyd Gay
Report of the Trustee and Financial Statements March 2023
**John Lyon’s Charity gives grants to benefit children and young people up to the age of 25 who live in nine boroughs in North and West London. Since 1991, the Charity has distributed over £186 million to organisations that seek to encourage the aspirations of children and young people. It does this by supporting projects that provide opportunities for young people to participate in a wide range of activities.**
John Lyon’s Charity is one of the largest independent funders in London. In the Financial Year ending March 2023 it paid grants of £14.96 million towards work in areas including Arts & Science, Children & Families, Education & Learning, Emotional Well Being, Sport, Special Needs & Disability, Training, Youth Clubs and Youth Issues.
The Charity does not fundraise. Its funds are generated by its financial investments and property portfolios which form the Charity’s endowment.
|**CONTENTS**||
|---|---|
|**CEO MESSAGE**|**4–5**|
|**OVERVIEW OF GRANTS 2022/23**|**6–9**|
|**REPORT OF THE TRUSTEE**|**10–15**|
|**FINANCIAL REVIEW OF THE CHARITY**|**16–20**|
|**STATEMENT OF THE TRUSTEE‘S RESPONSIBILITIES**|**21**|
|**INDEPENDENT AUDITOR‘S REPORT TO THE TRUSTEE OF JLC**|**22–26**|
|**STATEMENT OF FINANCIAL ACTIVITIES**|**27**|
|**BALANCE SHEET**|**28**|
|**CASH FLOW STATEMENT**|**29**|
|**JLC‘S CHARITY NOTES TO THE FINANCIAL STATEMENTS**|**30–47**|
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## **VISION MISSION**
**VALUES OBJECTIVES**
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## **OUR VALUES**
- John Lyon’s Charity is a **collaborative** funder, working with grantees, government and trusts and foundations to ensure the needs of the Children and Young People and Education sectors are at the forefront of how we grant.
**TO TRANSFORM THE LIVES OF CHILDREN AND YOUNG PEOPLE TO LEARN, GROW & DEVELOP THROUGH EDUCATION.**
- We are an **independent** funder, we do not fundraise, and we do not bid for government contracts to provide services. We are apolitical and non-religious. This allows us to judge applications on their own merit.
- We are a **flexible** funder; we aim to be nimble in how we grant. We afford organisations with the space to think strategically, to experiment, to adjust and to have time for reflection.
- We are an **ambitious** funder and see our relationship with grantees as partnerships. Our aim is to be ambitious for the organisations we work with and aim to instil confidence in them.
## **OUR VISION**
- To transform the lives of Children and Young People to learn, grow & develop through **education**
## **OUR MISSION**
- **Education** is at the heart of John Lyon’s Charity because it enables us to have the greatest possible impact on Children and Young People in our Beneficial Area. As an independent grant-giver we champion through thought leadership and work in partnership to create systems change for the wider benefit of the Children and Young People and Education sectors.
- We are **dynamic** and passionate about who and what we fund. We also put the fun into funding by focusing on what children and young people need rather than responding to trends.
## **OUR OBJECTIVES**
- To improve the life chances of children and young people through **access** to **education** and learning they might not otherwise have had.
- To be an **inclusive** funder by providing **educational** opportunities for children and young people regardless of faith, ethnicity, gender or special need.
- To build **capacity** for the CYP and **Education** sectors and its organisations.
- To promote **collaboration** between organisations to best serve the CYP and **Education** sectors.
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## **CEO MESSAGE**
**The impact of Covid and the cost-of-living crisis is still making itself felt amongst the communities we serve in North and West London. The 15% increase in our total grant making last year to £15M is a reflection of our increased commitment to charities though both our Home-School-Community (HSC) Strategy and through discretionary cost-of-living payments to grantees. HSC was launched specifically as a long-term response to the pandemic to strategically distribute funds over six years to strengthen the resilience of the CYP sector in our Beneficial Area. HSC has allowed the Charity to test out new ways of funding in response to the challenges of austerity and Covid. Crucially, this has been in addition to our ‘usual’ grant making.**
The Children and Young People’s sector has never felt more vulnerable in terms of funding and sustainability. We have seen a **46% increase in applications** to us in one year alone, and a **75% increase** over five years. The launch of our new strategy on 1st April 2023 looks to tackle the increasing demand on our funding by streamlining and focussing our grant funds on education, increasing the number and value of grants over £40K and awarding grants for up to five years.
The Charity’s unique approach to grant making is born out of over 30 years of working with fixed parameters; the nine boroughs of the Beneficial Area (BA), and the focus of working with young people. These two requirements make the Charity different from other national or more generalist funders and guides the Charity in its thinking. The Charity’s BA forms a constituency of young people that is unique in its make-up: it has four outer London boroughs and four inner London boroughs with a mix of inner-city wealth and poverty, including the wealthiest borough in the country, but also child poverty, in areas of North Westminster/South Brent higher than inner Glasgow and Liverpool.
Very few parts of the world rival London for the sheer scale of ethnic, linguistic and religious diversity and the North West of London, that the Charity operate in, is the most diverse of all. By most measures of diversity, the London Borough of Brent is the most ethnically diverse in the UK and Harrow is the most religiously diverse borough in the country. The BA is in many ways the arrival lounge of
the country, very often the first place that new waves of migrants come. This has shaped the structure and makeup of the voluntary sector in the BA, with a much higher proportion of groups serving these communities.
For a number of years now the Trust and Foundation world has been discussing how to deliver funding _in place_ while also delivering _relational_ grant making. These are two values that the Charity has consistently held as imperative to how it operates. The Charity has developed longstanding relationships with local communities, who in turn value the Charity as a key local stakeholder and an important part of the local funding ecology. As national funders look at ways to be close to their grantees, the Charity already has strong bonds with its grantees. Hence, our mantra of undertaking ‘grant making by walking about’, boosted by the work of the Young People Foundations (YPFs), has given the Charity a recognisable brand in the sector and in the Beneficial Area.
This closeness to the groups and end users does, however, create its own challenges. For many groups, securing a grant from the Charity is the difference between survival and closure. The austerity of the last 12 years has led to a number of the groups that used to deliver services in the BA closing with the end of public funding. What is left is a sector that is primarily made up of small and medium size organisations. Over the last three years, 66% of the organisations funded by the Charity had incomes of under £1M.
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The Charity has always worked hand in hand with grantees to ensure their applications are fit for purpose. Organisations within the BA are able to cope with the shifting priorities of other Funders knowing that the Charity’s remit of place and CYP remains. This will clearly continue, but with a tighter focus on education as well. We recognise that we cannot fund every CYP group in today’s economic climate. Hence, by viewing applicants with this stricter educational lens we will concentrate on those organisations that we believe can be robust, resilient and sustainable for the sector in our BA. We won’t push organisations to expand when it’s not appropriate. But where we see opportunity, will look to build capacity for an organisation and the sector as a whole.
30 years we have shaped funding of the sector significantly. We have seen that groups which are closer to the people better serve them and are better at working with and understanding the challenges that communities face.
The next two years will see further increases in our grant making as we get into the ‘heavy lifting’ phase of our HSC covid response; our HSC funds have increased from 15% of total grants given in 2021/22 to 22% last year. Our focus next year and beyond will be on ensuring that we target our funds to ensure that despite the challenges of the cost of living and the aftermath of covid we can create meaningful and life changing opportunities for children and young people.
## **Dr Lynne Guyton,**
We also recognise that we need to be mindful of the funding ecology within our BA because over the past
Chief Executive Officer
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## **OVERVIEW OF GRANTS 2022/23**
## **TOTAL GRANTS PAID £14.96M (2021/22 - £13.01M)**
## **FUNDING BY PROGRAMME AREA**
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2022/23
£14.965M
2021/22
£13.011M
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Grants to Arts & Science increased by 30%, Youth Clubs by 31% and Children & Families by 20% last year. The growth in all three of these Programme Areas can be largely explained by growth of the HomeSchool-Community Grants Programme. The Cultural Capital Fund accounts for 32% of Arts & Science spend whereas both Youth Clubs & Youth Activities and Children & Families were well represented within the Recovery, Replication and Collaboration Funds.
Arts & Science **2.311** Children & Families **1.053** Education & Learning **1.983** Emotional Wellbeing **1.281** Special Needs & Disabilities **1.124** Sport **484**
Training **401** Youth Clubs & Youth Activities **2.099** Youth Issues **668** Bursaries **1.597** Capacity Building **1.839** Restricted Grants **125**
Arts & Science **1.783**
Children & Families **874** Education & Learning **1.687** Emotional Wellbeing **1.292** Special Needs & Disabilities **944** Sport **314**
Training **401**
Youth Clubs & Youth Activities **1.603** Youth Issues **724** Bursaries **1.527** Capacity Building **1.621** Restricted Grants **63**
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## **FUNDING BY BOROUGH**
Both Ealing and Harrow saw a significant increase in spend under the HSC Grants Programme, with Harrow seeing over a 200% increase on the previous year.
**Note** : _The difference between the bursaries in the Funding by Programme Area figure above and Funding by Borough – Discretionary Bursary is because there is one older bursary which is split 50% Brent and 50% Harrow for GDST so that is allocated to the boroughs rather than discretionary._
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2022/23
£14.965M
2021/22
£13.011M
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Barnet **1.453** Brent **2.033** Camden **1.186** City of London **12** Discretionary **1.706** Discretionary – Bursary **1.560** Ealing **1.923** Hammersmith & Fulham **1.408** Harrow **1.743** Kensington & Chelsea **944** Westminster **997**
Barnet **1.362** Brent **1.972** Camden **1.130** City of London **11** Discretionary **975** Discretionary – Bursary **1.509** Ealing **1.482** Hammersmith & Fulham **1.270** Harrow **1.310** Kensington & Chelsea **785** Westminster **1.205**
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## **FUNDING BY GRANT TYPE**
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£’000 2022/23 2021/22
Schools in Partnership 648 869
Bursaries 1,597 1,527
Small Grants (below £5k) 68 67
Main Grant Fund 6,681 6,829
School Holiday Activity Fund (SHAF) 366 361
Internships 94 106
Capacity Building 1,209 1,067
Uplift (Cost of Living Payments) 847 0
Pupil Exclusion Prevention Initiative 200 200
Resilience (Covid Response) 125 0
Sub Total 11,835 11,026
Home-School-Community Funds
Cultural Capital 855 705
Recovery 1,024 556
Replication 510 224
YPF Small Grants 500 500
Collaboration 241 0
Sub Total 3,130 1,985
Total 14,965 13,011
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The Charity granted just shy of £1M in cost-of-living uplift grants to help charities that were feeling the squeeze on energy bills, rents and salaries. Grants for Capacity Building also saw an increase as we seek to cement the longevity and impact of the eight Young People Foundations in our Beneficial Area.
## **TOTAL NUMBER OF GRANT APPLICATIONS**
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2022/23 2021/22 2020/21 2019/20 2018/19
Approved 453 283 240 255 259
Declined 237 190 164 207 135
Total 690 473 404 462 394
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690 applications were received during the last financial year, and as of 31st March 2023, 453 had been approved and 237 had been declined. The number received
represents a 75% increase in applications over the past five years, demonstrating that the demand for the Charity’s funds has never been greater.
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## **GRANT PAYMENTS BY VALUE**
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Grant by size (£) 22/23 22/23 21/22 21/22 20/21 20/21 19/20 19/20
No. of £ ‘000 No. of £ ‘000 No. of £ ‘000 No. of £ ‘000
0-5,000 228 812 149 530 65 196 119 444
5,001-15,000 101 864 35 411 110 950 57 618
15,001- 40,000 275 8,384 249 7,629 275 8,062 265 7,435
Over 40,000 80 4,905 69 4,441 48 3,012 38 2,273
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The total number of grants made over £15,000 has been steadily increasing over the past five years. The cost-ofliving crisis coupled with the impact of covid has been felt across our Beneficial Area and the request for larger grants is one consequence of this.
More significantly, as we look to have greater impact, the number and value of grants over £40,000 has increased from 21% in 2019/20 to 33% last year. With the launch of our new 5-year strategy on 1st April 2023 the aim will be to continue this trend by giving larger annual grants (up to £50K for Charities and up to £60K for Schools) for up to five years.
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## **REPORT OF THE TRUSTEE**
## **1. INTRODUCTION**
The Trustee is the Corporation founded by Royal Charter granted by Queen Elizabeth I on 8th February 1572 to John Lyon, the founder of Harrow School. The Corporation is commonly known as “The Keepers and Governors of the Possessions, Revenues and Goods of the Free Grammar School of John Lyon”.
The Corporation is a separately Registered Charity (No. 310033) responsible for Harrow School and The John Lyon School. The Corporation and its subsidiaries together with John Lyon’s Charity is commonly known as the John Lyon’s Foundation.
In presenting this report for the year ended 31 March 2023 the Trustee has prepared the Financial Statements in accordance with the accounting policies set out in the notes to these financial statements and comply with the Charity’s governing document, the Charities Act 2011 and the Statement of Recommended Practice “Accounting and Reporting by Charities.”
## **2. OBJECTIVES AND ACTIVITIES**
## **A) THE OBJECTS OF THE CHARITY**
Under the Scheme (outlined in 3.a) the yearly income of the Charity is applicable for the following charitable purposes:
- **A.** the relief of the aged, disabled or poor inhabitants of the London Boroughs of Barnet, Brent, Camden, Ealing, Hammersmith & Fulham, Harrow and the Royal Borough of Kensington & Chelsea and the Cities of London and Westminster (“the inhabitants”) which together form the Charity’s Beneficial Area;
- **B.** the relief of distress and sickness among the inhabitants;
- **C.** the provision and support (with the object of improving the conditions of life for the inhabitants in the interest of social welfare) of facilities for recreation and other leisure time occupations;
- **D.** the provision and support of educational facilities for the inhabitants; and
- **E.** any other charitable purposes for the benefit of the inhabitants;
in accordance with certain rules required by the Scheme. The Rules are reviewed every three years and amendments approved by the Charity Commissioners for England and Wales. The current Rules were adopted by the Trustee on 30th November 1991 subject to amendments in 1996, 2001, 2013 (when a minor change was made to value thresholds on consultation) and 2017 (on delegation powers and consultation with each Local Authority on grant allocations and percentages of grants per borough) and 2022 (to permit transactions between the Corporation as corporate trustee of JLC and the Corporation in its own capacity).
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The Trustee has referred to the Charity Commission’s general guidance on public benefit when reviewing the Charity’s aims and objectives and in planning future activities and setting the grant making policies.
## **3. GOVERNANCE, STRUCTURE AND MANAGEMENT**
## **A) GOVERNANCE**
## **B) THE ACTIVITIES OF THE CHARITY**
John Lyon’s Charity awards grants to a wide variety of projects and initiatives that support children and young people. These Programme Areas reflect the variety of ways in which organisations seek to help children and young people either by providing them with opportunities or seeking to address specific needs directly. Grants are awarded to registered charities, state schools and organisations within the Charity’s defined Beneficial Area. The breakdown of grants by area, programme type and grant fund are shown in the previous section.
The Charity is governed by the Scheme contained in The Charities (John Lyon Road Trust) Order 1991 (SI 1991, No. 1141) as amended by a scheme dated 28 November 1996, trustee’s resolutions dated 11 January 2017 and 18 March 2017 (both made pursuant to section 280 of the Charities Act 2011), and a Scheme dated 14 November 2018; and (ii) an Order of the Charity Commission dated 14 November 2018 made under section 105 of the Charities Act 2011, and a Scheme dated 14th April 2022 (made pursuant to section 69o f the Charities Act 2011).
## **B) CHARITY MANAGEMENT**
The Charity had an average total of 16 permanent staff in the year. The day-to-day management of the Charity’s affairs is conducted through the Chief Executive Officer as the senior executive officer of the Charity reporting to the Trustee through the Charity Management Board. The senior management team includes the Grants Director and Finance and Operations Director.
## **C) STRUCTURE**
The Charity has a clear organisational reporting governance structure with Terms of Reference (ToR) documenting lines of authority and delegation. Each Committee is chaired by a member of the Corporation and is constituted by other members of the Corporation, co-opted members who give specialist advice, and the Chief Executive Officer of John Lyon’s Charity. Each Committee has ToR which set out its accountability and purpose. The ToRs are reviewed annually. Each Committee’s meetings are noted and circulated to show decision making, actions and issues.
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In accordance with the Charity Governance Code, a more robust and accountable governance structure was implemented towards the end of 2018. Good governance is fundamental to John Lyon’s Charity’s success. It enables and supports our compliance with the law and relevant regulations. It also promotes a culture where everything works towards fulfilling our vision.
The Charity has a fully functioning Charity Management Board with seven members comprising six Governors representing the Trustee and one independent member. The Charity’s search for an eighth (and independent) member should be concluded shortly.
## **Charity Management Board**
**The Corporation**
The purpose of the Board is to supervise and from time to time direct the management and administration of the Charity.
## **Grants Committee**
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Foundation Investments Foundation Philanthropy
Committee Committee
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The purpose of the Committee is to supervise and from time to time direct the management and administration of the Charity’s grant making activities.
## **Estate & Property Committee**
**Foundation Risk & Oversight Committee**
The purpose of the Committee is to supervise and from time to time direct and make decisions in connection with the management and administration of the Charity’s Property Portfolio.
## **Foundation Philanthropy Committee**
**John Lyon’s Charity Board**
**John Lyon’s Charity John Lyon’s Charity Estate Grants Committee & Property Committee**
The purpose of the Philanthropy Committee is to ensure the growth and support of collaborative charity projects and ventures across the John Lyon’s Foundation (Harrow School, The John Lyon School and John Lyon’s Charity).
## **Foundation Investments Committee**
The purpose of the Investments Committee is to take responsibility for the financial investment assets and, with the advice and assistance of the Investment Adviser, responsibility for determining the appropriate financial investments.
## **Foundation Risk and Oversight Committee**
## **John Lyon’s Charity Governance Structure**
The purpose of the Committee is take responsibility for and have oversight of all risks for each Foundation entity collectively and individually. Mitigation and reduction of risk is agreed and pursued.
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## **D) FUTURE STRATEGY**
**We recently conducted a strategic review as there are both ‘push’ and ‘pull’ factors as to why we need to take stock and think about the future strategic direction of the Charity. This will require the Charity to continue to be both proactive as well as responsive.**
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INTERNAL RATIONALE:
The Charity last completed a
strategy review in 2017/18. Since
then, the Charity has grown, the
economic landscape has changed,
and we need to ensure we have the
vision, mission and objectives that
are fit for purpose for the next five
years.
The demand for our funding is
increasing and our staff are already
stretched managing over 500
grants. We cannot fund everything
in the CYP sector.
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EXTERNAL RATIONALE:
The impact of a shrinking welfare
state caused by the effects of
austerity, Covid-19 and a Cost-
of-Living crisis is threatening the
sustainability of the CYP sector in
our Beneficial Area.
The funding landscape is changing
towards greater collaboration,
sharing of resources and research.
Our stature has increased over
the past five years, and we now
have the opportunity to cement
our place as a leader in systems
change for the sector.
There is an increasing need to
refine our focus to ensure the
biggest impact in light of the
current landscape.
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## **KEY CHANGES PROPOSED**
• A tighter **educational** focus to inform grants
• Increase in average Main Grant size from £30K p.a.
• Expansion and implementation of learning and
• Increase in average Schools in Partnership Grant
- Increase in SHAF Grant from £4K to £5K.
• As a thought leader and collaborator with
- Introduction of a Refurbishment Fund.
• Introduction of a Gateway Fund for organisations
- Streamline from eleven to four.
- Removal of Small Grants Fund
• Continue to fund a small number of 100% bursaries
- Fewer, larger, longer grants to be awarded
• Increase maximum duration for Main Grants from
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There are a number of working practices the Charity advocates that are now commonly recognised as exemplars within the T&F sector. This places the Charity as a leader and trusted friend in the sector.
- Its commitment to place-based funding offering ‘grantmaking by walking around’ is rare in the T&F world yet proven to be effective. Other funders turn to us for references on our grantees and others are now turning to place-based funding.
- Since its inception, the Charity has advocated for the importance of core costs. More than ever before, T&Fs are turning to consider funding what is vital.
The Charity has long been a proponent of investment in systems change and local infrastructure. Examples include the Charity’s approach to Emotional Wellbeing in schools (with collaboration between local schools, charities and the Local Authority), piloting new ways of working (the Excluded Programme is supporting new ways to help schools and pupils navigate without permanent exclusions) and the establishment and replication of the YPF Model which has introduced the Charity to new audiences nationwide. Establishing new programmes like these underpins the Charity’s commitment to wider community engagement and its ability to act as an advocate and to champion local community voices. We will increase our visibility amongst funder panels, grantees and government by committing to fund research and best practice in the CYP sector (e.g. Propel, Foundation Practice Rating), that gives the Charity a voice in shaping the sector for the future.
The Charity works incredibly closely with YPFs and this gives the Charity a valuable and effective platform from which to influence wider policy and further build its reputation in the sector as an innovator and ‘Thought Leader’. The role that the YPFs are playing nationally in setting the direction of both Youth Policy and local collaboration more generally is significant and it is reshaping the sector far beyond the Charity’s own Beneficial Area.
The learning and tools garnered from the process of establishing new initiatives such as the YPFs will be harnessed to support the Charity’s ambition to reinforce change in other priority areas in the CYP sector (e.g. Arts education). This is about providing capacity building for the sector.
The Charity has the privilege of a large, diverse voluntary sector within its Beneficial Area, and it has refined its grant making over the many years to reflect this. As we move forward with a new strategy our aim is to have the biggest impact possible on the CYP and Education sectors by utilising the skills and knowledge of the wider Foundation family. The next chapter for the Charity and the Foundation’s philanthropy will be exciting, meaningful and create a positive transformation for the CYP sector over the next five to ten years.
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## **FINANCIAL REVIEW OF THE CHARITY**
## **ENDOWMENT AND TOTAL RETURN POLICY**
The Charity’s endowment, which is permanent, derives from conveyances by John Lyon in 1578 and 1581 when the original land in St John’s Wood was acquired at a price of £660. It is believed that there have been no material additions to the endowment since the Charity’s foundation.
The Trustee originally adopted a total return policy to determine the level of expenditure based on the Charity Commission order made in January 2006. This has been revised in the intervening period and the current total return policy was adopted by the Trustee on 20th March 2021.
From April 2019 the value available for expenditure has been calculated using the total return rate of 3.5%. This is reviewed by the Charity Management Board on an annual basis.
As a long-term response to the impact of Covid-19 on the Charity’s beneficial area the Trustee approved an “Agreed Additional Spend” of £22 million to be applied during the six-year period representing the financial years ending 31st March 2022 to 31st March 2028. The additional funding was approved in March 2021 and will be allocated for spending under the Charity’s “Home - School - Community” Covid 19 response strategy. The expendable amount applicable to the strategy will be determined on an annual basis by the Trustee. (i.e. without the wording regarding being added to the amount available).
In determining the initial unexpended total return, the Trustee had adopted the valuation of the Charity’s assets on 31st March 1997, which was the first occasion on which the open market value of all the Charity’s assets had been determined. The valuation was £63.8 million and the initial, unapplied total return was £176.7 million. As of 31st March 2023, the unapplied total return fund is £326 million.
In 2010 the Governors adopted the current Total Return Policy applying to all the Charity’s assets. The main purpose of adopting the Total Return policy was to provide certainty at the beginning of each financial year of the amount that is available to be spent on the Charity’s grant giving and support costs. The amount is determined by taking an average of the value of the Charity’s assets at the end of each financial year of the previous four years.
From 1st April 2017 the Trustee adopted a model which defines the circumstances which would require a spending review when the financial returns are such that the Endowment moves outside of a prescribed range of 15% either side of a core index of inflation.
## **INVESTMENT POLICY**
A formal investment policy is in place setting out the strategic asset allocation. This includes an ESG statement to which the Charity adheres and takes seriously. This takes account of the Charity’s extensive property interests and the basis for the measurement of the performance of the various asset classes. The tactical asset allocation is reviewed and revised regularly by the Foundation Investments Committee and the Charity Management Board.
The financial assets portfolio’s asset allocation should reflect the Charity’s long-term investment objectives and risk tolerances. The portfolio shall be allocated between three primary asset groupings, defined by their role in the portfolio:
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- **Growth Assets** ; comprising equities and equity-like assets (liquid and illiquid) to drive portfolio growth, support spending and maintain real value over the long term.
- **Diversifiers** ; including credit, hedge funds and other alternative assets producing returns with a low correlation to equities to reduce volatility and diversify the portfolio’s sources of economic returns.
- **Liquidity Reserves** ; comprising government bonds, high quality short-dated credit and cash to provide liquidity to meet spending and other cash requirements during periods of economic stress.
The St John’s Wood Estate, consisting principally of residential properties let on long leases, is subject to compulsory disposal of the property interests under the leasehold enfranchisement legislation. It is considered, for the time being, that it is appropriate to retain this original endowment with a view to maximising the proceeds arising under the enfranchisement legislation. In the year, total proceeds of £4.6 million have been received (2021/22 - £2.0 million). The residual value of the reversionary properties as of 31st March 2023 is £34.1 million (2021/22 - £34.5 million). The investment policy excludes these reversionary properties from the asset allocation as they are not regarded as readily disposable on the open market at a level that recognises the full potential realisable on enfranchisement.
We recognise the importance of environmental, social and corporate governance (ESG) issues in the selection and management of investments within our portfolio. Our Investments Committee asks all our fund managers to have an ESG policy in place and to incorporate an assessment of ESG into their decision-making processes. The Investments Committee also ensures that a consideration of ESG factors are a standard part of our selection process when appointing new fund managers.
## **UNDERLYING INVESTMENT PRINCIPLES**
The underlying principle of John Lyon’s Charity’s is that it should be an exemplar Foundation, existing in perpetuity with education at the heart of its cause.
The financial objective of the Charity is to at least maintain the real value of its assets whilst generating a stable and sustainable return to fund grant making.
The Charity holds assets invested in a variety of financial instruments, residential and commercial property. Both income and some capital are used to finance the grant making activities under a Total Return Policy (TRP).
The Charity takes a long-term view of its assets and this is demonstrated through the market positions it takes with regard to both financial and property investments.
Since 2002 it has been the Trustee’s policy to invest the surplus proceeds of the St John’s Wood estate in both commercial properties and in the investment portfolio, with several prime residential properties on the original estate being retained where vacant possession has been obtained.
## **OUR APPROACH TO RESPONSIBLE INVESTMENTS**
As custodians of an endowment, we endeavour to use all our assets, including investments and properties, to have the greatest possible positive impact on children and young people in our Beneficial Area.
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The investment objective of the property portfolio is to generate a level of net yield in real terms of at least 3.5% across the combined property portfolio. The investment objective is to generate a total return of inflation (CPI) plus 4% per annum over the long term, (after expenses) for the financial investment portfolio.
The Total Return on total assets (before management expenses) in the year is reflected at note 11 and is negative at –£26.5 million (2022 = £60.6 million). Total net assets are valued of £391.0 million, representing a 10.3% decrease on the previous year.
## **ASSET ALLOCATION**
**----- Start of picture text -----**
Asset Class Value at 31 Mar 23 Value at 31 Mar 22
£’000 % £’000 %
Investment Assets
Fixed Interest 25,687 7% 17,328 4%
UK Equities 17,528 5% 18,372 5%
Global Equities 74,241 19% 77,942 18%
Hedge funds/ 21,085 5% 23,432 5%
Alternatives
Unlisted investments 346 0% – –
Sterling cash 15,313 4% 22,782 5%
Other investments 7 0% 7 0%
Total Investments 154,207 40% 159,863 37%
Property Assets
Residential Estate 67,477 17% 65,162 15%
Commercial Property 122,040 31% 163,050 37%
Indirect Property Funds 5,172 1% 10,326 2%
Total Property 194,689 49% 238,538 54%
Investment Assets Totals 348,896 89% 398,401 91%
Reversionary Estate 34,100 9% 34,542 8%
Other Net Assets 8,024 2% 3,106 1%
Total Net Assets 391,020 100% 436,049 100%
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18 / Report of the Trustee and Financial Statements March 2023
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The total value of investment assets at the year-end is £159.4 million (2022 = £170.2 million), including indirect property funds, and shows a decrease in value of 6.4% on the previous year. Included in the decrease in the value of the investments assets is £5.1 million which relates to a sale of 50% of the holding in the indirect property fund which was subject to exchange of contracts at the year end with settlement being completed post year end. The debtor representing the proceeds of sale is reflected at note 12. The total return on the Investment Portfolios was £0.90 million, 0.69% (2022 = £8.96 million, 6.2%).
The Charity has continued to hold investment property assets in both residential and commercial property. The residential property portfolios have continued to perform well with minimal voids in the residential estate in the year. Commercial property has been impacted by a softening in the market and this has particularly impacted the property assets within the industrial sector.
The Charity’s residential property estate shows unrealised gains based on year end valuation of £2.3 million (2022 = profits £1.8 million). The commercial property assets showed a loss on valuation of £41.04 million (2022 = profit £33.4 million).
## **ANNUAL INCOME**
The income of the Charity derived from its assets totalled £9.54 million, from £9.54 million in 2021/22.
## **RESERVES POLICY**
The Charity has not historically maintained an unrestricted reserve because of the high level of the unapplied Total Return.
## **ANNUAL EXPENDITURE**
During 2022/23 the Charity spent £14.96 million (2022 = £13.01 million) on grants, while operational support costs related to charitable activities was £1.4 million (2022 = £1.2 million). Expenditure on raising funds was £3.1 million (2022 = £2.2 million).
## **STAFF REMUNERATION**
Staff salaries including key management personnel are reviewed annually by the CEO and Charity Management Board. A formal annual review is conducted to assess and ensure remuneration is fair and in line with that paid for similar roles in similar organisations.
The Charity is a Living Wage employer and as such is committed to ensuring staff are paid fairly with a view to retaining and attracting appropriately skilled staff to deliver the Charity’s objectives.
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## **FUTURE COMMITMENTS**
## **AUDITORS**
Commitments have been given for grants over the next three years totalling, £8.9 million in 2023/24, £4.9 million in 2024/25 and £0.74million 2025/26. A further £1.0 million has been committed in subsequent years for projects that the Charity has agreed in principle to fund on a longer-term basis, payment of which is, in each case, contingent on the stipulated conditions being met, and review of progress and authorisation by the Grants Committee. The total future commitment is indicated at note 18.
PKF Littlejohn LLP has expressed its willingness to continue in office as auditors.
………....................………………… …………..............................……………… **D Eyton A Butler**
## **RISK MANAGEMENT**
The Trustee, which is responsible for the management of risks faced by the Charity, is satisfied that the major risks identified through the risk management processes are adequately managed but recognise that systems can provide reasonable assurance, but no absolute guarantee, that all important risks are identified and appropriately managed.
For and on behalf of the Keepers and Governors of the Possessions, Revenues and Goods of the Free Grammar School of John Lyon as Trustee.
23 June 2023
In terms of protecting our assets and income from the effects of a bear market or recession, we are confident that the long-term strategic approach we take to all of our investments will mitigate any short-term falls in performance.
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## **STATEMENT OF THE TRUSTEE’S RESPONSIBILITIES**
**The Trustee is responsible for preparing the Report of the Trustee and the Financial Statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).**
The law applicable to charities in England & Wales requires the Trustee to prepare Financial Statements for each financial year which give a true and fair view of the of the Charity and of the incoming resources and application of resources of the Charity for that period. In preparing these Financial Statements, the Trustee is required to:
- select **suitable** accounting policies and then apply them consistently;
The Trustee is responsible for the maintenance and integrity of the charity and financial information included on the Charity’s website. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.
Each of the Members of the Corporation and the Chief Executive Officer has confirmed, so far as he or she is aware, that there is no relevant audit information of which the Auditors are unaware, and each Member has taken all the steps that he or she ought to have taken as a Member of the Corporation to make themselves aware of any relevant audit information and to establish that the Auditors have been made aware of that information.
- **observe** the methods and principles in the Charities SORP;
- make judgments and estimates that are **reasonable** and prudent;
- state whether **applicable** accounting standards have been followed, subject to any material departures disclosed and explained in the Financial Statements;
- prepare the Financial Statements on the going concern basis unless it is **inappropriate** to presume that the Charity will continue in business.
The Trustee is responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the Charity and enables it to ensure that the financial statements comply with the Charities Act 2011, the Charity (Accounts and Reports) Regulations 2008 and the provisions of the Scheme. It is also responsible for safeguarding the assets of the Charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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## **INDEPENDENT AUDITOR’S REPORT TO THE TRUSTEE OF JOHN LYON’S CHARITY**
## **OPINION**
We have audited the financial statements of John Lyon’s Charity (the ‘charity’) for the year ended 31 March 2023 which comprise the Statement of Financial Activities, the Balance Sheet, the Cash Flow Statement and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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:
## **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 charity 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.
- give a true and fair view of the state of the charity’s affairs as at 31 March 2023, and of its incoming resources and application of resources, including its income and expenditure, 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.
## **CONCLUSIONS RELATING TO GOING CONCERN**
In auditing the financial statements, we have concluded that the Trustee’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the charity’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Trustee with respect to going concern are described in the relevant sections of this report.
22 / Report of the Trustee and Financial Statements March 2023
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## **OTHER INFORMATION**
The other information comprises the information included in the Report of the Trustee, other than the financial statements and our auditor’s report thereon. The Trustee is responsible for the other information contained within the Report of the Trustee. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. 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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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.
## **RESPONSIBILITIES OF THE TRUSTEE**
As explained more fully in the Statement of Trustee’s Responsibilities, the Trustee is responsible for the preparation of financial statements which give a true and fair view, and for such internal control as the Trustee determines 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 Trustee is responsible for assessing the charity’s 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 Trustee either intends to liquidate the charity 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 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 Report of the Trustee; or
- sufficient accounting records have not been kept; or
- the financial statements are not in agreement with the accounting records; or
We have been appointed as auditor under section 144 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.
- we have not received all the information and explanations we require for our audit.
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Irregularities, including fraud, are instances of noncompliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
- We obtained an understanding of the charity and the sector in which it operates to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management, sector research and application of cumulative audit knowledge and experience.
- We determined the principal laws and regulations relevant to the charity in this regard to be those arising from the Charities Act 2011, Financial Reporting Standard 102, relevant property law and regulations, and relevant employee legislation.
- We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the Charity with those laws and regulations. These procedures included, but were not limited to enquiries of management, review of minutes and review of legal and regulatory correspondence.
- We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that there was potential for management bias in the valuation of investment properties. We addressed this through review of the valuation reports prepared by management’s expert, testing the accuracy and completeness of inputs to their calculation, and challenging any assumptions applied in the valuations for example by agreement to third party metrics.
- We also identified potential for management bias in the judgements made around recoverability of debtors. We addressed this through examination of post year end cash received, review of correspondence with debtors and discussion of recoverability with management.
- As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
24 / Report of the Trustee and Financial Statements March 2023
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## **USE OF OUR REPORT**
This report is made solely to the Trustee, as a corporate 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 Trustee as a body, for our audit work, for this report, or for the opinions we have formed.
.............................................................................................................................
**PKF Littlejohn LLP** 15 Westferry Circus **Statutory Auditor** Canary Wharf London E14 4HD
Date: ............................................................................. 2023 `28 July`
_PKF Littlejohn 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 of the Companies Act 2006._
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26 / Report of the Trustee and Financial Statements March 2023
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## **STATEMENT OF FINANCIAL ACTIVITIES**
**----- Start of picture text -----**
Note Restricted Unrestricted Endowment Total Total
Fund Fund Fund Funds Funds
2022/23 2021/22
£’000 £’000 £’000 £’000 £’000
Income and Endowment from:
– –
Charitable Activities 1,020 1,020 63
– –
Property Investments 2 7,148 7,148 7,537
– –
Investments 3 2,397 2,397 2,006
Other Income 4 – – – – 2,058
Total Income and Endowment 1,020 – 9,545 10,565 11,664
Expenditure on:
– –
Raising Funds 5 3,136 3,136 2,195
–
Charitable Activities 6–7 125 16,222 16,347 14,179
Total Expenditure 125 16,222 3,136 19,483 16,374
Net (Losses)/Gains on Property Investments – – (34,636) (34,636) 38,501
– –
Net (Losses)/Gains on Investments (1,475) (1,475) 10,533
Net Income/(Expenditure) 895 (16,222) (29,702) (45,029) 44,324
Transfers Between Funds 11 – 16,222 (16,222) – –
Net Movement in Funds 895 – (45,924) (45,029) 44,324
Reconciliation of Funds:
–
Total Funds Brought Forward 1 436,048 436,049 391,725
Balance at End of Year 896 – 390,124 391,020 436,049
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There are no recognised gains or losses except as shown above and all income is derived from continuing activities.
Details of the Restricted Fund income can be found at note 15C.
Comparative figures for the respective funds are set out in Note 1.
The Accounting Policies and Notes on pages 30–47 form part of these Financial Statements.
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## **BALANCE SHEET AS AT 31 MARCH 2023**
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Note 2023 2022
£’000 £’000
Fixed Assets
Tangible assets 8 31 17
Investment properties 9 223,617 262,754
Investments 10 159,379 170,189
383,027 432,960
–
Debtors: due within more than one year 12 422
Current Assets
Debtors 12 7,173 1,071
Cash at bank 4,558 6,679
11,731 7,750
Creditors: due within one year 13 (4,160) (4,661)
Net Current Assets 7,571 3,089
Net Assets 391,020 436,049
Represented by:
Endowment fund 15a 390,124 436,048
Unrestricted fund 15b – –
Restricted fund 15c 896 1
391,020 436,049
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The Trustee’s Report and these Financial Statements were approved by the Keepers and Governors of the Possessions, Revenues and Goods of the Free Grammar School of John Lyon as Trustee on 23 June 2023 and signed on the Trustee’s behalf by:
.................................................................................................................... .......................................................................................................................................
**D Eyton A Butler**
The Accounting Policies and Notes on pages 30–47 form part of these Financial Statements.
28 / Report of the Trustee and Financial Statements March 2023
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## **CASH FLOW STATEMENT YEAR ENDED 31 MARCH 2023**
**----- Start of picture text -----**
Note 2022/23 2021/22
£’000 £’000
Net Cash outflow from Operating Activities 21 (18,329) (7,136)
Net Cash inflow from Capital Expenditure and 22 13,811 7,527
Financial Investment Activities
Returns on Investment and Servicing of Finance 22 2,397 2,064
(Decrease)/Increase in Cash in the Period (2,121) 2,455
Cash at the beginning of the year 6,679 4,224
Movement in cash in the year (2,121) 2,455
Cash at the end of the year 4,558 6,679
**----- End of picture text -----**
The Accounting Policies and Notes on pages 30–47 form part of these Financial Statements.
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## **JOHN LYON’S CHARITY NOTES TO THE FINANCIAL STATEMENTS**
## **GENERAL INFORMATION AND BASIS OF PREPARATION**
John Lyon’s Charity is a charitable trust registered in the United Kingdom. The registered address and charity office is given in the charity information on page 2 of these financial statements. The nature of the Charity’s operations and principal activities are grant making.
The Charity constitutes a public benefit entity as defined by Financial Reporting Standards (‘FRS 102’). The 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), the Charities Act 2011 and UK General Accepted Practice as it applies from 1 January 2019.
The Financial Statements are prepared on a going concern basis under the historical cost convention, modified to include certain items at fair value. A review of the Charity’s current activity and future commitments has concluded that the Charity has enough liquid assets which can be realised to meet the rate of expenditure under the current total return policy which is itself based upon valuation. In addition, the Charity operates with a minimal cost base.
The financial statements are prepared in Sterling which is the functional currency of the Charity and rounded to the nearest £000.
The significant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented unless otherwise stated.
The 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 the Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standards applicable in the UK and Republic of Ireland (FRS 102) rather than the Accounting and reporting by Charities: Statement of recommended Practice effective from 1 April 2005 which has been withdrawn.
## **INVESTMENT PROPERTIES**
Investment Properties are stated at fair value in order to comply with the provisions of Accounting and Reporting by Charities Statement of Recommended Practice. Investment Properties which comprise the Reversionary Estate, Residential and Commercial Properties are valued annually as at the year end.
Properties have been valued individually on the basis of fair value, in accordance with RICS Valuation – Global Standards 2022 and UK National Supplement (known as “The Red Book”), incorporating the International Valuation Standards 2020.
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Fair value is considered to be market value as defined by The Red Book being: ‘The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgably, prudently and without compulsion’.
Gains and losses recognised on revaluation, and gains and losses realised on the sale of investment properties, are taken to the Endowment Fund and included in the SOFA.
No depreciation is charged on Investment Properties.
## **RENTAL INCOME**
Rental income is accounted for by reference to the due date under the lease or tenancy.
## **FIXED ASSET INVESTMENTS**
Investments are recorded at cost and are stated at fair value at the balance sheet date. The unrealised gains and losses arising as a result are included in the Statement of Financial Activities (SOFA) together with any realised gains and losses on any investments disposed of in the year.
Financial assets, including investments in equity instruments are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried, where possible, at fair value and the changes in value are recognised in the SOFA. Assets are considered for indications of impairment, with any impairment then recognised in the SOFA.
## **TANGIBLE FIXED ASSETS**
Fixed assets acquired with a value below £1,000 are evaluated for capitalisation based on the economic benefit derived in use. All other assets are capitalised. Leasehold improvements are depreciated over the term of the lease.
Office and computer equipment are depreciated at between 20% and 33% on an annual straight-line basis over the assets useful lives.
## **GRANTS**
Grants payable represent grants paid and payable in the year. Grants payable over a number of years are not recognised until the Trustee is satisfied that the stipulated conditions have been met and payment of a further instalment has been authorised on the recommendation of the Grants Committee.
## **TAXATION**
The Charity is generally exempt from direct taxation on investment income and capital gains but is subject to Value Added Tax (VAT). Unless stated otherwise relevant expenditure is shown inclusive of VAT.
## **PENSION COSTS**
Pension contributions, which are to defined contribution schemes, are charged to the SOFA in the period to which they relate.
## **OPERATING LEASES**
Rentals payable under operating leases are charged to the SOFA on a straight-line basis over the period of the lease.
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## **1. ANALYSIS OF THE STATEMENT OF FINANCIAL ACTIVITIES FOR THE YEAR ENDED 31 MARCH 2022**
**----- Start of picture text -----**
Restricted Fund Unrestricted Fund Endowment Fund Total Funds
2021/22 2021/22 2021/22 2021/22
£’000 £’000 £’000 £’000
Income and Endowment from:
– –
Charitable activities 63 63
– –
Property investments 7,537 7,537
– –
Investments 2,006 2,006
– –
Other Income 2,058 2,058
Total Income and Endowment 63 – 11,601 11,664
Expenditure on:
– –
Raising funds 2,195 2,195
–
Charitable activities 63 14,116 14,179
Total Expenditure 63 14,116 2,195 16,374
– –
Net Gains on Property 38,501 38,501
Investments
– –
Net Gains on Investments 10,533 10,533
–
Net Income/(Expenditure) (14,116) 58,440 44,324
– –
Transfers between funds 14,116 (14,116)
Net Movement in Funds – – 44,324 44,324
Reconciliation of Funds:
–
Total funds brought forward 1 391,724 391,725
Balance at end of year 1 – 436,048 436,049
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32 / Report of the Trustee and Financial Statements March 2023
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## **2. INCOME FROM PROPERTY**
**----- Start of picture text -----**
2022/23 2021/22
£’000 £’000
Residential rents 2,456 2,537
Commercial rents 4,692 5,000
Total Incoming resources from property 7,148 7,537
**----- End of picture text -----**
## **3. INCOME FROM INVESTMENTS**
**----- Start of picture text -----**
2022/23 2021/22
£’000 £’000
Investments 2,344 1,596
Bank and deposit interest 53 2
Loan interest – 408
Total Incoming resources from investments 2,397 2,006
**----- End of picture text -----**
## **4. OTHER INCOME**
**----- Start of picture text -----**
2022/23 2021/22
£’000 £’000
Dilapidations recharged – 58
Prior amounts written off now recovered – 2,000
Total other incoming resources – 2,058
**----- End of picture text -----**
## **5. EXPENDITURE ON RAISING FUNDS**
**----- Start of picture text -----**
2022/23 2021/22
£’000 £’000
Property management charges 485 399
Property repairs and other expenses 1,695 913
Total cost of generating income from property 2,180 1,312
Other management and support costs 956 883
3,136 2,195
**----- End of picture text -----**
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## **6. ANALYSIS OF CHARITABLE ACTIVITIES**
Direct charitable expenditure represents grants made under the Scheme by the Charity. The policy of the Trustee is to restrict grants to registered or exempt charities and not to make grants to individuals.
**----- Start of picture text -----**
Total Grant Support Total Grant Support
2022/23 Funded Costs 2021/22 Funded Costs
Activity Activity
£’000 £’000 £’000 £’000 £’000 £’000
Arts & Science 1,478 1,353 125 1,197 1,098 99
Children & Families 957 876 81 874 802 72
Education & Learning 1,914 1,741 173 1,650 1,513 137
Capacity Building 1,404 1,285 119 1,219 1,117 102
Emotional Wellbeing 1,016 929 87 1,207 1,107 100
Special Needs & Disability 967 885 82 850 780 70
Sport 524 479 44 631 579 52
Training 438 402 36 341 313 28
Youth Clubs and Youth Activities 1,903 1,743 160 1,692 1,553 139
Youth Issues 458 420 39 626 574 52
Bursaries 1,744 1,597 147 1,666 1,527 139
Restricted grants 125 125 – 63 63 –
12,928 11,835 1,093 12,016 11,026 990
Home – School – Community
Strategic Funds
Cultural Capital Fund 934 855 79 768 705 63
Recovery Fund 1,119 1,024 95 606 556 50
Replication Fund 557 510 47 244 224 20
– – –
Collaboration Fund 263 241 22
YPF Small Grants Fund 546 500 46 545 500 45
16,347 14,965 1,382 14,179 13,011 1,168
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34 / Report of the Trustee and Financial Statements March 2023
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## **7. SUPPORT COSTS**
The breakdown of support costs is shown in the table below. The allocation to Charitable Activities is shown in Note 6 above.
**----- Start of picture text -----**
2022/23 2021/22
£’000 £’000
Audit fees – current year 27 26
– prior year (over)/under provision 5 4
Valuation fees – current year 30 27
– prior year (over)/under provision 6 8
Depreciation 11 8
Consultancy fees 74 38
Staff costs 791 695
Operating lease – office equipment 7 7
Other support costs 431 355
1,382 1,168
2022/23 2021/22
£’000 £’000
Staff costs
Wages and salaries 904 830
Social security costs 111 94
Pension & health care contributions 165 150
1,180 1,074
**----- End of picture text -----**
Included in the above amount is salary costs of £389,567 (2022 - £379,382) which relates to expenditure on raising funds and are reflected within other management costs in Note 5.
The Charity contributes as a minimum 15% of pensionable salary to the Pensions Trust, a defined contribution pension scheme established for the employees of voluntary organisations. All employees are members of this scheme (The Flexible Retirement Plan) for which the Charity has no residual liability.
**Average number of employees during year: 16 14**
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## **7. SUPPORT COSTS CONTINUED**
In the year, the number of employees who were entitled to emoluments of more than £60,001 was as follows:
||**2022/23**
**2021/22**|
|---|---|
||**£’000**
**£’000**|
|£70,001 - £80,000
£80,001 - £90,000
£90,001 - £100,000
£160,001 - £170,000|**1**
**–**
**2**
**1**
1
1
1
1|
The total amount of employee benefits received in the year by key management personnel, was £472,371 (2022 - £449,948). The Charity considers its key management personnel to compromise the Chief Executive Officer, Grants Director, Finance & Operations Director and the Trustee.
## **8. TANGIBLE FIXED ASSETS**
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Furniture & Equipment Total
£’000 £’000
Cost at 1 April 2022 113 113
Additions in the year 25 25
– –
Disposal in the year
At 31 March 2023 138 138
Accumulated depreciation at 1 April 2022 96 96
Depreciation charge in year 11 11
– –
Accumulated depreciation on disposal
At 31 March 2023 107 107
Net Book Value at 31 March 2023 31 31
Net Book Value at 31 March 2022 17 17
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36 / Report of the Trustee and Financial Statements March 2023
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## **9. INVESTMENT PROPERTIES**
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2023 2022
£’000 £’000
Reversionary estate 34,100 34,542
Residential properties 67,477 65,162
Commercial properties 122,040 163,050
Market value 223,617 262,754
Balance at beginning
of year 262,754 229,326
– –
Unrealised (loss)/gain
on revaluation (36,181) 37,848
Disposals at valuation (2,956) (4,420)
Balance at end of year 223,617 262,754
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The investment properties (Residential properties, Commercial properties and Reversionary Estate) were revalued as at 31 March 2023 by Cluttons LLP, Chartered Surveyors, in accordance with guidance set out in the Valuation and Appraisal Manual of the Royal Institution of Chartered Surveyors.
Properties forming the Charity’s original endowment and properties acquired prior to 31 March 1997 were not recorded in the Balance Sheet at the date of acquisition; most of these were acquired many years ago and it is not practicable to identify and disclose the original cost, which is unlikely to be material.
Disposals at valuation during the year resulted in a realised gain of £1.7 million (2021/22 – £0.8 million).
jlc.london / 37
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## **10. INVESTMENTS**
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2023 2022
£’000 £’000
Listed investments
Free (Main) Fund 146,940 151,370
Special Fund 12,093 18,819
159,033 170,189
–
Unlisted investments 346
Market value 159,379 170,189
Historical cost 150,271 157,581
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2023 2022
£’000 £’000
Balance at beginning 170,189 162,117
of year
Investment purchases 16,636 25,558
Net investment realisations (18,940) (28,752)
Unrealised gain/(loss) (1,037) 7,960
on revaluation
Net movement in cash (7,469) 3,306
held for investment
Balance at end of year 159,379 170,189
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At the year end the Charity was committed to investing $2.3M into a private equity unlisted investment through Hollyport Secondary Opportunities VIII management Ltd.
Included in listed investments is sterling cash invested and cash held for investment of £8,399,474 (2021/22 = £14,296,444) in the Special Fund and £6,914,357 (2021/22 = £8,485,702) in the Free Fund. The Special Fund is defined in the Governing Documents.
Net investment realisations resulted in realised gains of £0.44m (2021/22 = gains of £2.57m).
38 / Report of the Trustee and Financial Statements March 2023
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## **10. INVESTMENTS CONTINUED**
At 31 March 2022 the following investments accounted for more than 5% of the overall portfolio:
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2023 2022
% %
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|Children’s Investment Fund USD Class|**5.6**|6.2|
|---|---|---|
|The NT World Equity Index Feeder|**13.1**|14.0|
|Ownership Capital Global Equity|**6.9**|6.6|
|Russell Acadian Global Managed|**6.3**|7.7|
|Institutional GBP Liquidity Fund|**5.3**|13.4|
|Unite student accommodation|**6.1**|6.1|
|The Emerging World Fund|**5.2**|5.0|
|Stewart Investors Global Emerging Markets Sustainability Fund|**5.0**|5.1|
|Maj Invest Global Value|**6.7**|7.4|
|Heronbridge UK Equity Fund|**5.8**|5.3|
|Pimco income Fund|**5.6**|–|
|Jupiter UK Alpha Fund|**5.3**|5.6|
jlc.london / 39
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## **11. APPLICATION OF THE POWER OF TOTAL RETURN**
In January 2006, the Charity Commission made an order permitting the Charity to adopt total return investment powers in relation to its permanent endowment in the form of the Commission’s model order. In March 2012 the Trustee resolved that, subject to the Charity Commission’s approval, the Order be implemented with effect from 1 April 2012 on the basis that the amount applicable for charitable purposes of the Charity shall be determined by reference to the value of all the Charity’s assets. The Charity Commission’s approval was given on 12 June 2012.
The total return policy (which has been set and adopted by the Trustee in accordance with the 2006 Order) provides that the amount to be applied annually is determined by taking an average of the value of the Charity’s net assets on the last four balance sheet dates. The policy allows the Trustee to expend up to 3.5% of that rolling average on charitable activities including support costs and the cost of generating funds and governance costs.
The calculation to determine the amount available in the years to 31 March 2023 and 2024 is:
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Year ended: Net asset 4 year Expendable Expendable
Values Average Percentage of Average Amount
£‘000 £‘000 % £’000
31 March 2020 345,398 361,163 3.50 12,641
31 March 2021 391,725 367,761 3.50 12,872
31 March 2022 436,048 384,458 3.50 13,456
31 March 2023 391,113 391,071 3.50 13,687
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The amount available for the year ended 31 March 2023 was £13,456,033, and for year ending 31 March 2024 is £13,687,484.
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2022/23 2021/22
£’000 £’000
Expendable amount 13,456 12,872
Additional expendable amount 2,766 1,244
16,222 14,116
Transferred to Unrestricted Fund (16,222) (14,116)
Reinvested – –
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40 / Report of the Trustee and Financial Statements March 2023
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## **11. APPLICATION OF THE POWER OF TOTAL RETURN CONTINUED**
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Movements in the Total Return Fund in the Year and Application 2022/23 2021/22
of Total Return from the Endowment Fund
£’000 £’000
Opening value of endowment fund at 1 April 436,048 391,724
Less: Opening value of the fund at 31 March 1997 (63,797) (63,797)
Opening value of Total Return Funds 372,251 327,927
Add:
Investment return – income 9,638 11,601
Investment return – realised/unrealised gains (36,111) 49,034
345,778 388,562
Less:
Raising funds (3,136) (2,195)
Unapplied total return before transfers carried forward 342,642 386,367
Return applied during the year (16,222) (14,116)
Unapplied total return as at 31 March 326,420 372,251
Add: value of the fund at 31 March 1997 63,797 63,797
390,217 436,048
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## **12. DEBTORS**
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2023 2022
£’000 £’000
Amounts due from tenants and managing agents 2,152 987
Other debtors and prepayments 21 84
–
Proceed receivable on investment sale completed after year end 5,000
Due within one year 7,173 1,071
–
Due within more than one year 422
7,595 1,071
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## **13. CREDITORS:**
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2023 2022
£’000 £’000
Creditor amounts falling due within one year:
Grants payable 3,405 4,046
Other creditors and accruals 755 615
4,160 4,661
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## **14. OPERATING LEASE COMMITMENTS**
As at 31 March 2023 the total minimum payments to which The Charity is committed under non-cancellable operating leases for property and office equipment are:
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2023 2022
£’000 £’000
Due within one year 220 54
–
Due within two and not later than five years 860
Due over five years 890
1,970 9
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42 / Report of the Trustee and Financial Statements March 2023
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## **15. FUNDS**
## **A. ENDOWMENT FUND**
The capital assets of the Charity are those derived from the Founder’s original gift of land in 1578 and 1581 and represent permanent endowment, subject to the application of the Total Return policy.
## **B. UNRESTRICTED FUND**
The Unrestricted Fund represents income available for distribution in accordance with the Scheme referred to in the Report of the Trustee.
## **C. RESTRICTED FUND**
The restricted Fund represents a grant received from The City Bridge Trust to the Charity for its Recovery Fund, for the provision of grants to strengthen children & young people’s organisations in its beneficial area.
## **2022/23**
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Balance Income Expenditure Transfers Gains/ Balance
brought (losses) carried
forward forward
£’000 £’000 £’000 £’000 £’000 £’000
Endowment 436,048 9,545 (3,136) (16,222) (36,111) 390,124
Unrestricted – – (16,222) 16,222 – –
Restricted 1 1,020 (125) – – 896
436,049 10,565 (19,483) – (36,111) 391,020
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## **2021/22**
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Balance Income Expenditure Transfers Gains/ Balance
brought (losses) carried
forward forward
£’000 £’000 £’000 £’000 £’000 £’000
Endowment 391,724 11,601 (2,195) (14,116) 49,034 436,048
– – – –
Unrestricted (14,116) 14,116
– –
Restricted 1 63 (63) 1
391,725 11,664 (16,374) – 49,034 436,049
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## **16. TRANSACTIONS WITH THE TRUSTEE AND CONNECTED PERSONS**
The Charity made grants in the year to both Harrow School of £426,407 (£437,216 in 2021/22) and the John Lyon School of £556,700 (£578,985 in 2021/22) for the benefit of children resident in the Beneficial Area. Grants for bursaries enable children to attend those schools, who would not be able to do so without that financial support. These grants are aimed at providing wider access to education at the schools and are consistent with the Founder’s original intention for the application of his endowment.
Each member of the Corporation and the principal officers are required to complete a declaration of interest statement each year for the purpose of identifying and ensuring proper disclosure of such interests. In 2022/23 there have been 11 grants totalling £422,080 (2021/22 – five grants totalling £305,880) which were made to charities where one or more such persons are charity trustees. No other transactions have taken place between the Charity and the Trustee or any member of the Corporation.
Angus Goswell is a member of the Corporation and a partner in the firm Knight Frank LLP, the Charity’s property managing agents, (from 1 September 2018). Remuneration for Knight Frank’s services, based on a detailed contract of engagement, paid by the Charity are:
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2022/23 2021/22
£’000 £’000
Management fees and insurance commissions 484 394
Valuation and lease audit fees – –
Capital transaction fees 102 130
586 524
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The Charity Management Board reviews the terms of engagement of the Charity’s professional advisers annually.
No individual member of the Corporation received any expenses or other remuneration from the Charity.
44 / Report of the Trustee and Financial Statements March 2023
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## **17. ULTIMATE CONTROLLING PARTY**
The ultimate controlling party is the Keepers and Governors of the Possessions, Revenues and Goods of the Free Grammar School of John Lyon, as Trustee (registered charity No. 310033).
## **18. FUTURE COMMITMENTS**
## **GRANT COMMITMENTS**
The Charity has committed to multi-year grants including bursary support totaling £15.5 million up to 2028/29, payment of which is in each case contingent on the stipulated conditions being met, following a review of progress by the Grants Committee, and formal authorisation by the Trustee.
## **CAPITAL COMMITMENTS**
During the year the Charity committed to investing up to $2.3M into a private equity unlisted investment, Hollyport Secondary Opportunities VIII Management Ltd. At 31 March 2023 a drawdown of $0.4m had been made, leaving a remaining capital commitment of $1.9m (2022 - £nil)
## **19. CONTINGENT LIABILITIES**
The Charity is involved in a number of legal actions which are related to property assets. The costs related to these actions cannot be reasonably quantified and the outcome uncertain and therefore no provision has been made in these financial statements.
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## **20. ANALYSIS OF NET ASSETS BETWEEN FUNDS**
## **2022/23**
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Total Restricted Unrestricted Endowment
2022/23 Fund Fund Fund
£’000 £’000 £’000 £’000
Fixed assets 383,027 – 30 382,997
Debtors due in more than one year 422 – 422 –
Net Current Assets 7,571 896 (452) 7,127
391,020 896 – 390,124
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## **TOTAL 2021/22**
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Total Restricted Unrestricted Endowment
2021/22 Fund Fund Fund
£’000 £’000 £’000 £’000
–
Fixed assets 432,960 17 432,943
– – – –
Debtors due in more than one year
Other assets/liabilities 3,089 1 (17) 3,105
436,049 1 – 436,048
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46 / Report of the Trustee and Financial Statements March 2023
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## **21. RECONCILIATION OF NET INCOMING RESOURCES BEFORE GRANTS TO NET CASH INFLOW FROM OPERATING ACTIVITIES**
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2022/23 2021/22
£’000 £’000
Total income 10,565 11,664
Total expenditure before grants (4,518) (3,363)
Net incoming resources before grants 6,047 8,301
Grants from annual income (14,840) (12,948)
Grants from restricted income (125) (63)
Net outgoing resources after grants (8,918) (4,710)
Depreciation charge for the year 11 8
Increase in debtors (6,524) (2)
Increase/(Decrease) in creditors (501) (368)
Income from listed investments and deposit interest (2,397) (2,064)
Net Cash outflow from Operating Activities (18,329) (7,136)
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## **22. ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT**
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2022/23 2021/22
£’000 £’000
Capital Expenditure and Financial Investment Activities
Net proceeds from property transactions 4,649 5,240
Expenses charged to Endowment Fund (148) (167)
Sale of investments 18,502 31,325
Purchase of investments (note 10) (16,636) (25,558)
Purchase of plant and equipment (note 8) (25) (7)
– –
Sale of plant and equipment (note 8)
Decrease/(increase) in cash held for investment (note 10) 7,469 (3,306)
Net Cash Inflow from Capital Expenditure and Financial Investment Activities 13,811 7,527
Net Proceeds from Property Transactions
Freehold/lease premium proceeds 4,649 5,240
– –
Purchase of properties (note 9)
4,649 5,240
Returns on Investment and Servicing of Finance
Income from listed and unlisted investments 2,244 1,596
Deposit and other interest 53 410
Other income – 58
2,397 2,064
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48 / Report of the Trustee and Financial Statements March 2023
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WWW.JLC.LONDON
TWITTER: @JOHNLYONCHARITY
INSTAGRAM: @JOHNLYONSCHARITY
CHARITY NO. 237725
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