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2020-12-31-accounts

The RAF Benevolent Fund Housing Trust Limited

Annual Report and Financial Statements

Year ended 31 December 2020

Companies House No: 1058896 Charity Commission 264636 OSCR SC038218

The RAF Benevolent Fund Housing Trust Limited Report and Financial Statements 31 December 2020

Directors and Trustees

Air Vice-Marshal David Murray CVO OBE (Chair) (resigned 20 April 2020) Air Vice-Marshal Chris Elliot CB CBE MA BSc (Chair) (appointed 20 April 2020) Wing Commander Sarah Davis MBA MSc FCIPD (from 1 June 2020) Air Vice-Marshal Simon Dougherty MBE MSc MBBS FRCP FFOM DAvMed DObstRCOG FCMI FRAeS (until 11 May 2020) Ms Victoria Fakehinde BSc (Hons) ACMA CGMA Air Commodore Paul Hughesdon MA Mr Al Bennett (until 27 May 2021) Mr Emrys Rogers (appointed 3 August 2020)

Secretary

Air Commodore Paul Higgins

Independent Auditors

Saffery Champness LLP 71 Queen Victoria Street London EC4V 4BE

Bankers

Barclays Bank Plc, 1 Churchill Place London E14 5HP

Solicitors

Charles Russell Speechlys LLP 5 Fleet Place London EC4M 7RD HBJ Gateley Exchange Tower 19 Canning Street Edinburgh EH3 8EH

Registered office

67 Portland Place London W1B 1AR

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The RAF Benevolent Fund Housing Trust Limited Report and Financial Statements 31 December 2020

Directors’ Report

The Directors, who are also the Trustees of the charitable company, present their report and financial statements for the year ended 31 December 2020.

Principal activity

The RAF Benevolent Fund Housing Trust Limited (RAFBF Housing Trust Ltd) is a charitable company limited by guarantee and is a wholly owned subsidiary of The Royal Air Force Benevolent Fund. Its sole activity is to hold and operate properties for beneficiaries of the RAF Benevolent Fund (RAFBF). The Company is financed and controlled by The Royal Air Force Benevolent Fund and assists in the attainment of its objectives by the purchase of properties for occupation by beneficiaries. These properties are let as rentals, where the rents charged takes into account the means of beneficiaries. The Company takes responsibility for insurance, external repairs and redecorations, and the preservation of the main structures and installations. Further details of the activities and policies of the Royal Air Force Benevolent Fund and its subsidiaries are included in its Annual Report, a copy of which may be obtained by writing to the registered office at the address shown on page 1 or by accessing it at the Fund’s website www.rafbf.org.

Public benefit

As stated in the principal activity section, the RAFBF Housing Trust Ltd’s sole activity is to hold and operate properties for beneficiaries of the Royal Air Force Benevolent Fund.

Since its formation, the Royal Air Force Benevolent Fund’s objectives have been to provide relief and assistance to past and present members of the Royal Air Force and their dependants who are in need as a result of poverty, disability, sickness, infirmity, or other reasons, and to maintain the RAF War Memorial on the Victoria Embankment, London. In October 2008, the Charity’s objects were expanded to enable it to promote the efficiency of the Royal Air Force by providing support and assistance to Service personnel and their dependants with a view to enhancing their morale and wellbeing.

When reviewing the Company’s aims and objectives, and in planning future activities and policies, the Directors have given careful consideration to the Charity Commission’s general guidance on public benefit and to its supplementary guidance on public benefit and fee charging. Where a contribution is invited, for example towards the costs of occupying a residential property, the beneficiary’s means are always taken into account when assessing the appropriate value so that no member of the RAF Family is prevented from benefiting from the support of the RAFBF because they cannot afford the full cost.

2020 Review

During 2020, three properties were purchased at a cost of £0.9M and six properties were sold realising £1.5M proceeds on disposal and a net profit over the book value of £0.9M. From a welfare perspective, the three properties purchased enabled the relocation of existing Housing Trust occupants to more suitable accommodation.

2020 rental income of £1M remains largely unchanged, despite a declining housing stock, with the considered application of welfare principles such as ability to pay and Local Housing Allowance rates being taken into account when calculating an affordable rent.

Future plans of the Company

The Company intends to continue to hold and operate properties on behalf of the beneficiaries of the Royal Air Force Benevolent Fund for the foreseeable future. The impact of Covid-19 on

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The RAF Benevolent Fund Housing Trust Limited Report and Financial Statements 31 December 2020

the Company has been considered and is not anticipated to have a major effect on the operations of the Company.

The balance sheet remains strong with net assets of £12.6M. This includes an amount due to the RAFBF, the parent undertaking, of £11.1M. Whilst this debt is technically payable on demand the trustees of the RAFBF are committed to providing continued support to the Company. On this basis the Directors have reviewed the RAFBF Housing Trust Ltd and consider that adequate resources continue to be available to fund the activities for the foreseeable future. The Directors are of the view that the Company is a going concern.

Organisational structure and governance

The Directors of the Company shall at all times be not less than three and not more than twelve, and shall include the Controller of the Royal Air Force Benevolent Fund ex-officio, who shall be the Chair of the Board and shall also include such members of the Grants Committee of the Fund as shall from time to time be nominated by the RAFBF. The Directors may appoint any member of the Company as a director either to fill a casual vacancy or by way of addition to the Directors. Any member so appointed shall retain office only until the next AGM but will then be eligible for re-election. The business of the Company shall be managed by the Directors but may be delegated to any director and/or any employee of the Company employed in connection with the management of the affairs of the Company. In practice this is the Company Secretary, who is appointed by the Directors.

The Company has no employees and pays no emolument for the use of RAFBF staff to carry out the operational activity.

Major risks and uncertainties

A review of the major risks associated with the Housing Trust operation is carried out in conjunction with the overall risk review of the Royal Air Force Benevolent Fund.

Trustees of the RAFBF undertake a regular assessment of business risks and risk management procedures. The major risks, to which the Charity is exposed, as identified by the Trustees, have been reviewed and systems have been established to mitigate those risks. The cycle of reviews form an integral part of the risk management processes adopted by the Charity. The Royal Air Force Benevolent Fund has adopted a cascade system to manage risk with the highest-level strategic risk being reputation – both threat and opportunity. The major risks identified as having the potential to affect the reputation and subsequent successful performance of the RAFBF Housing Trust Ltd in 2020, along with mitigating actions, were:

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The RAF Benevolent Fund Housing Trust Limited Report and Financial Statements 31 December 2020

Reserves policy

As a wholly owned subsidiary of the Royal Air Force Benevolent Fund (the “parent charity”), the reserves of the RAFBF Housing Trust Ltd are considered along with the reserves of the parent charity.

Free reserves are the resources the Company has or can make available to spend for any or all of the Company’s purposes once it has met its commitments and covered its other planned expenditure. The RAFBF Housing Trust Ltd has free reserves of £0.6M as at 31 December 2020 (2019: £1.1M). This amount is represented by net current assets excluding the amount owed to the parent charity.

On the basis of the continued support from the parent charity the Directors are satisfied that this amount is sufficient to fund an on-going programme of maintenance costs for the Company’s property portfolio.

The reserves policy is reviewed each year by the parent charity as part of the annual planning process. Performance against the reserves policy is monitored during the year as part of regular financial management and is reflected as a key performance indicator at Board level. Full details of the parent charity financial position can be obtained from the Annual Report and Accounts which are available on request from 67 Portland Place, London, W1B 1AR or from www.rafbf.org.

Going concern

The Directors have given consideration to the Company reporting a net current liability position as a result of the large balance owed to the parent undertaking. However, the Company has been assured that the Royal Air Force Benevolent Fund has no intention of calling upon this debt and has received written confirmation to this effect. The Directors have also given consideration to the impact of the Covid-19 pandemic and concluded that the financial strength of the parent undertaking, despite the impact of the crisis and, in view of its own income and expenditure forecasts, the Company will be able to continue to operate for the foreseeable future. The Company therefore continues to adopt the going concern basis in preparing its financial statements.

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The RAF Benevolent Fund Housing Trust Limited Report and Financial Statements 31 December 2020

Financial review

The Statement of Financial Activities (SOFA) for the year is set out on page 11 of the financial statements and shows a surplus of £0.1M (2019: £1.1M).

Income

Income is made up of received rent, bank interest, legacy income and profit on the disposal of properties. There was a decrease in income from £2.8M in 2019 to £1.9M in 2020, which is due to a decrease in the disposal of properties and a decreased legacy income for the year .

Expenditure

Charitable expenditure increased from £1.7M in 2019 to £1.8M in 2020 and this was due to historical maintenance of works carried out on 6 properties at the start of 2020 coupled with increased cost of materials.

Tangible fixed assets

As at 31 December 2020, the Trust owned 205 properties (2019: 208). During the year, 3 properties were purchased (2019: 5) and 6 were sold (2019: 10), resulting in a net decrease of 3 properties.

Total cost of new properties was £0.9M (2019: £1.9M). Sales proceeds of properties amounted to £1.5M (2019: £2.2M) and profits on these sales were £0.9M (2019: £1.5M).

The Directors recognise that the market value of the properties which are included in the balance sheet at cost, in all probability is materially different from the net book value at £23.3M (2019: £23.6M)

Directors

The Directors during the year, and up to the date of approval of the financial statements, are as shown on page 1.

Governing Document

The objects for which the Company is established are set out in the Memorandum of Association dated 2 June 1972. The Articles of Association of the Company were approved by a written resolution by the Directors on 24 June 2003 .

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The RAF Benevolent Fund Housing Trust Limited Report and Financial Statements 31 December 2020

Statement of Directors’ responsibilities

The Directors (who are also trustees of the RAFBF Housing Trust Ltd for the purposes of charity law) are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Company law requires directors to prepare financial statements for each financial year which give a true and fair view of the state of the affairs of the charitable company and of the outgoing resources and application of resources, including the income and expenditure, of the charitable company for that period. In preparing these financial statements, the Directors are required to:

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the charitable company and enable them to ensure that the financial statements comply with the Companies Act 2006, the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006. They are also responsible for safeguarding the assets of the charitable company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In so far as the Directors are aware:

This report has been prepared in accordance with the special provisions relating to small companies within Part 15 of the Companies Act 2006.

By order of the board on 27 May 2021

Paul Higgins Secretary Date: 8 July 2021

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The RAF Benevolent Fund Housing Trust Limited Report and Financial Statements 31 December 2020

Independent auditors’ report to the members and the directors of The RAF Benevolent Fund Housing Trust Limited

Opinion

We have audited the financial statements of The RAF Benevolent Fund Housing Trust Limited for the year ended 31 December 2020 which comprise the Statement of Financial Activities, the Balance Sheet, the Statement of Cash flows 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 Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

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 charitable company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors’ 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 charitable company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

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The RAF Benevolent Fund Housing Trust Limited Report and Financial Statements 31 December 2020

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.

We have nothing to report in this regard.

Other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the charitable company and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors’ Report.

We have nothing to report in respect of the following matters where the Companies Act 2006 and the Charities Accounts (Scotland) Regulations 2006 (as amended) require us to report to you if, in our opinion:

Responsibilities of directors

As explained more fully in the Statement of Directors’ Responsibilities set out on page 6, the directors (who are also trustees of the charitable company for the purposes of charity law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the charitable company’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 directors either

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The RAF Benevolent Fund Housing Trust Limited Report and Financial Statements 31 December 2020

intend to liquidate the charitable company or to cease operations, or have no realistic alternative to do so.

Auditor’s responsibilities for the audit of the financial statements

We have been appointed as auditors under the Companies Act 2006 and under the Charities and Trustee Investment (Scotland) Act 2005 and report in accordance with regulations made under those Acts.

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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.

Identifying and assessing risks related to irregularities:

We assessed the susceptibility of the charitable company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the charitable company by discussions with directors and updating our understanding of the sector in which the charitable company operates.

Laws and regulations of direct significance in the context of the charitable company include The Companies Act 2006, the Charities and Trustee Investment (Scotland) Act 2005, the Charities Accounts (Scotland) Regulations 2006 (as amended) and guidance issued by the Charity Commission for England and Wales and the Office of the Scottish Charity Regulator.

Audit response to risks identified:

We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of financial statement disclosures. We reviewed the charitable company’s records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the charitable company’s policies and procedures for compliance with laws and regulations with members of management responsible for compliance.

During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and

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The RAF Benevolent Fund Housing Trust Limited Report and Financial Statements 31 December 2020

regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the charitable company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006, and to the charitable company’s directors as a body, in accordance with Regulation 10 of the Charities Accounts (Scotland) Regulations 2006. Our audit work has been undertaken so that we might state to the charitable company’s members and directors 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 charitable company, the charitable company’s members and directors as a body, for our audit work, for this report, or for the opinions we have formed.

Liz Hazell (Senior Statutory Auditor) for and on behalf of Saffery Champness LLP

71 Queen Victoria Street, Chartered Accountants London, EC4V 4BE

Statutory Auditors

Date:

Saffery Champness LLP is eligible to act as an auditor in terms of section 1212 of the Companies Act 2006

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The RAF Benevolent Fund Housing Trust Limited Report and Financial Statements 31 December 2020

STATEMENT OF FINANCIAL ACTIVITIES

for the year ended 31 December 2020

(incorporating income and expenditure account)

Income from:
Note
Legacies
Charitable activities
Other activities
Total income
2
Expenditure on charitable activity
3
Net income
4
Net movement in funds
Total funds brought forward
Total funds carried forward		 2020
£
8,000
974,163
876,029
1,858,192
(1,770,436)
87,756
87,756
12,596,281
12,684,037		 2019
£
286,000
987,535
1,511,640
2,785,175
(1,680,590)
1,104,585
1,104,585
11,491,696
12,596,281

All funds are unrestricted.

There are no recognised gains or losses in either period other than as disclosed above.

All incoming and outgoing resources arise from continuing activities.

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The RAF Benevolent Fund Housing Trust Limited Report and Financial Statements 31 December 2020

BALANCE SHEET

as at 31 December 2020
Note
Fixed assets
Tangible assets
7
Current assets
Debtors
8
Cash at bank and in hand
Creditors: amounts falling due within one year
9
Net current liabilities
Net assets
Unrestricted general funds		 2020
£
23,254,215
26,388
839,329
865,717
(11,435,895)
(10,570,178)
12,684,037
12,684,037		 2019
£
23,586,163
142,930
995,745
1,138,675
(12,128,557)
(10,989,882)
12,596,281
12,596,281

The notes on pages 14 to 18 form part of these financial statements.

These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies' regime.

Approved and authorised for issue by the Board on 27 May 2021 and signed on its behalf by:

Victoria Fakehinde

Director Date: 8 July 2021

Company registration number: 01058896

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31 December 2020

STATEMENT OF CASH FLOWS

For the year ended 31 December 2020

Cash flows from operating activities
Net cash inflow from operating activities
Cash flows from investing activities
Proceeds from sale of tangible fixed assets
Payments to acquire tangible fixed assets
Net cash provided by investing activities
Change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Reconciliation of net income to net cash flow from operating
activities
Net income for the year ended 31 December
Adjustments for
Depreciation charges
Profit on disposal of fixed assets
Decrease in debtors
(Decrease)/increase in creditors
Analysis of cash and cash equivalents
Current account
Analysis of changes in net debt
Current account:
As at 1 January
Movement in year
As at 31 December		 2020
£
(745,771)
1,517,123
(927,768)
589,355
(156,416)
995,745
839,329
87,756
617,273
(874,680)
116,542

(692,662)
(745,771)
839,329
995,745
(156,416)
839,329		 2019
£
680,682
2,169,673
(1,887,569)
282,104
962,786
32,959
995,745
1,104,585
782,406
(1,510,220)
40,740
263,171
680,682
995,745
32,959
962,786
995,745

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31 December 2020

Notes to the Financial Statements

For the year ended 31 December 2020

1. Accounting Policies

Accounting convention

These financial statements are prepared on a going concern basis, under the historical cost convention.

The financial statements have been prepared in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102). The Charitable Company is a public benefit entity for the purposes of FRS 102 and therefore the Charity also prepared its financial statements in accordance with the 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 (The FRS 102 Charities SORP), the Companies Act 2006, the Charities Act 2011 and Charities Accounts (Scotland) Regulations 2006 as amended by The Charities Accounts (Scotland) Amendment (No. 2) Regulations 2014.

The principal accounting policies adopted in the preparation of the financial statements are set out below.

Going concern

The Directors have assessed whether the use of the going concern basis is appropriate and have considered possible events or conditions, including the impact of the Covid-19 pandemic, that might cast significant doubt on the ability of the Company to continue as a going concern. The Directors have made this assessment for a period of at least one year from the date of approval of the financial statements.

The most significant assets included on the Company’s balance sheet are fixed assets, the purchase of which is facilitated by a loan from the parent charity, Royal Air Force Benevolent Fund (RAFBF). Amounts due to the RAFBF are unsecured, interest free, have no fixed date of repayment and are repayable on demand. The Directors have given consideration to the Company having reported a net current liability position as at 31 December 2020 as a result of the large balance owed to RAFBF. However, the trustees of the RAFBF are committed to providing continued institutional support to the Company for the foreseeable future and have provided written confirmation to the Directors of the Company to this effect.

The group is in a healthy position at 31 December 2020 with cash balances of £3.4M and net current assets of £7.4M. The Directors therefore have a reasonable expectation that the Company has access to adequate resources to continue in operational existence for the foreseeable future and continue to adopt the going concern basis in preparing financial statements.

Rental income

Rental income is accounted for on the basis of amounts received in the accounting period. In the opinion of the Directors, this policy is appropriate in view of the uncertainty over whether the rental income, which is not a contractual commitment, can be collected.

Other income

Other income consists of the net realised gain on the sale of properties (6 sold in 2020).

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31 December 2020

Fixed assets and depreciation

Fixed Assets that cost more than £5,000 are capitalised and included at cost, including any incidental expense at acquisition.

Depreciation is provided on freehold and long leasehold properties at rates calculated to write off the cost less estimated residual value, based on prices prevailing at the date of acquisition, of each asset evenly over its expected useful life as follows:

Freehold buildings - over 50 years Leasehold buildings - over the periods of the leases or 50 years, if shorter

Freehold land is not depreciated.

A full year of depreciation is charged in the year of acquisition and none in the year of disposal. The carrying values of tangible fixed assets are reviewed for impairment in periods if events or changes in circumstances indicate the carrying value may not be recoverable.

Expenditure

All resources expended relate to the one charitable activity undertaken by the Company. Property repair and renewal expenses are written off to the Statement of Financial Activities as they are incurred. The Company has no employees and pays no emolument for the use of RAFBF staff to carry out the operational activity.

Recognition of liabilities

Expenditure approved for payment but not paid are recorded as liabilities in the balance sheet. Current liabilities consist of amounts expected to be settled within 12 months from the balance sheet date.

Current liabilities include payments due to the parent undertaking which is technically payable on demand although the trustees of the RAFBF have offered assurances of their continued support to the Company in the form of interest free finance for the foreseeable future.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, and other short-term liquid investments with original maturities of three months or less.

Taxation

All the Company’s income is applied for charitable purposes and therefore the Company is exempt from Corporation Tax.

The Company is not registered for VAT and so all expenditure is shown gross.

Financial instruments

Basic financial instruments are measured at amortised cost.

Critical accounting estimates and areas of judgement

In preparing financial statements it is necessary to make certain judgements, estimates and assumptions that affect the amounts recognised in the financial statements. In the view of the Directors in applying the accounting policies adopted, no judgements were required that have a significant effect on the amounts recognised in the financial statements except depreciation, nor do any estimates or assumptions made carry a significant risk of material adjustment in the next financial year.

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31 December 2020

2. Income

Legacies
Rental income
Bank interest
Profit from the disposal of properties		 2020
£
8,000
974,163
1,349
874,680
**1,858,192 **		 2019
£
286,000
987,535
1,420
1,510,220
2,785,175

3. Resources expended on charitable activities

General rates and utilities
Insurance
Repairs and renewals
Legal and survey fees
Ground rents
Lease amortisation
Property depreciation
Audit Fees
Others		 2020
£
2,959
14,001
849,493
281,644
-
15,974
601,299
4,500
566
1,770,436		 2019
£
5,390
-
643,173
241,496
7,949
181,729
600,677
-
176
1,680,590

4. Net income

The costs of administration for the year ended 31 December 2020 have, from 1 March 2020, been incurred directly by the Company whilst previously they have been borne by the Royal Air Force Benevolent Fund.

5. Directors’ remuneration

None of the Directors has received any remuneration or reimbursement of expenses from the Company. The Directors are deemed key management personnel.

6. Related party transactions

The Company maintains an inter-company balance with the RAF Benevolent Fund, its parent undertaking and the balance owed to the RAF Benevolent Fund as at 31 December 2020 was £11.1M (2019: £12.1M). The movement during the year consisted of payments by the RAF Benevolent Fund for property purchases and for property maintenance costs which was partially offset by cash transfers from the Company to the RAF Benevolent Fund at the first quarter of 2020. Most of the directors are senior executive staff at the RAF Benevolent Fund. There are no other related party transactions that require disclosure.

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31 December 2020

7. Tangible fixed assets

Cost at 1 January 2020
Additions during the year
Disposals during the year
Cost at 31 December 2020
Depreciation at 1 January 2020
Depreciation for the year
Depreciation on disposals during the year
Accumulated depreciation at 31 December 2020
Net book value:
At 31 December 2020
At 31 December 2019		 Freehold
properties
£
30,033,851
927,768
(896,658)
30,064,961
7,002,685
601,299
(254,215)
7,349,769
22,715,192
23,031,166		 Long
leasehold
properties
£
798,665
-
-
798,665
243,668
15,974
-
259,642
539,023
554,997		 Total
£
30,832,516
927,768
(896,658)
30,863,626
7,246,353
617,273
(254,215)
7,609,411
23,254,215
23,586,163

The Directors recognise that properties are recorded at historical cost less any charges for depreciation and therefore the market value could be materially different.

8. Debtors

Other debtors – Deposit on purchase of property
Accrued income -Legacy
Prepayment
Creditors:amounts falling due within one year

Trade creditors
The Royal Air Force Benevolent Fund – Gulf Trust
Interest free finance provided by the RAF Benevolent Fund		 2020
£
-
1,000
25,388
26,388
2020
£
276,328

37,180
11,122,387
11,435,895		 2019
£
45,000
86,000
11,930
142,930
2019
£
23,524
18,590
12,086,443
12,128,557

9. Creditors: amounts falling due within one year

Amounts due to group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand, however, the trustees of the Royal Air Force Benevolent Fund are committed to providing continued institutional support to the Company for the foreseeable future.

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31 December 2020

10. Parent undertaking

In the Directors’ opinion, the ultimate parent undertaking is The Royal Air Force Benevolent Fund, incorporated by Royal Charter, and registered in England and Wales (charity number 1081009) and Scotland (charity number: SC038218). Copies of its group financial statements, which include the results of the Company, are available from 67 Portland Place, London, W1B 1AR.

11. Guarantee

In the event of the Company being wound up, each director is liable to pay £1.

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