The Steel Charitable Trust REPORT OF THE TRusfEES AND ACCOUNTS YEAR ENDED 31 IANUARY 2023 Contents Legal and Administrative Information............................................................... Report oftheTrustees................................................................................... Independent Auditor's Report.....................................................................7_10 Ststement of Financial Activities................................................... ................. li Balance Sheet..-...................................................................... ........................ 12 Statement of Cash Flows................................................................................. 13 Notes to the Account5....-..........................................................................14-20 The Steel ChArit3ble Trust ND ADM RATIVE IN TIO REGULATOR Registered with The Charity Commission in England & Wale5 (Charity Number 2723841 TRUSTEES Mrsw E Bailey- Chairman Dr M N P Brig8S MrPDay MsVSFox Mr P C Lawfordl. 211 from 1610V10231 Mr N E W Wright l. 111 umil 1610V20231 ADMINISTRA TION M51 Stanger Trust Manager info steelcharitabletrust.or INVE￿MENT MANAGEMENT {cont} Federated Hermes Investment Management 150 Cheapside London EC2V 6ET PRINCIPAL ADDRESS Suite 411 Jansel House Hitchin Road Luton Bedfordshire LU2 7XH Liontrust Asset Management PLC 2 Savoy Court London WC2R OEZ M&G Group plc 10 Fenchvrch Street London EC3M SAG WEBSITE www.steelcharitabletrust.or INDEPENDENT AUDITOR UHY Kent LLP t/a U HY Hacker Young Chartered Accountants Thames House Roman Square Sittingbourne Kent MEIO 4BJ BANKERS Bank of Scotland PLC Central Banking Branch Hobs Bank of Scotland PO Box 17235 Edinburgh EHII ITH INVESTMENT MANAGEMENT BlackRock Investment Management IUK) Limited 12 Throgmorton Avenue London Barclays Bank PLC 28 George Street Luton LUI 2AE EC2N 20L l Member of Investment Ctxnmittee 3 Member of the HurnaD Resource5 IHRI Cfxnmittee 2 MembeFof Risk and Audit C(wnmiitee The Steel Chaiitable TIu5t REPORT OF THE TRUSTEES YEAR ENDED 31 IANUARY 2023 The Trustees present their report with financial statements of The Steel Charitable Trust for the year ended 31 January 2023. The financial statements are prepared under the historical cost convention as modified to include the revaluation of investments. The format of the financlal statements has been presented to complv with the Charities Act 2011, FRS 102 ljanuary 20221 The Financial Reporting Standard applicable in the U K and Republic of Ireland and the Statement of Recommended Prartice Accounting and Reporting by Charities (second edition. effective l January 20191. The Trust is a Public Benefit Entity as defined by FRS 102. Hlstory and Oblectlves The Steel Charitable Trust, which was formed by the late Mr & Mrs W R Steel, is constituted under a Trust Deed dated IS February 1976 and is a re8lStered charity in England & Wales (number 2723841. As stated in the Deed, the object of the Trust is to pay the income and, In so far as the Trustees think fit, the capital of the Trust Fund to such charitable bodies or for such other purposes as shall be exclusively charitable as the Trustees may from time to time decide. Governance and Management The power of appointment of new and additional Trustee5 is held by the present Trustees. Mr Wright was appointed by the Settlors and is eligible to serve for life or until he either resigns or becomes ineligible. Trustees appointed Mrs 8ailey as 3 Trustee, and as Chairman, for a term expiring on 30 September 2023. The term5 of office of Mr Lawford, Ms Fox, Mr Day and Dr Bri885 expire on 30 September 2023, 31 Oecember 2027, 31 December 2027 and 30 September 2029 respectively. Trustees may put themselves forward for reappolntment when thelr term expires. When seeking new Trustees, the Trustees have placed advertisements on the Trusys website, in national newspapers, specialist publication5 and on Linkedln: a candidate shortlist has been drawn up, followed by a series of interviews. New Trustee5 are Invited initially to serve for a 12-month probationary period. This gives both a new Trustee and the Trustee5 the opportunity to evaluate their decision. On completion of the 12- month period, and with the mutual agreement of both parties, the position may be confirmed for a term of seven years (which includes the 12-month probationary periodl, which may be renewable. New Trustees are supplied with a history of the Trust, a copy of the Trust Deed. information published by the Charity Commission outlining the responsibilities of charity Trustees, several additional papers about the Trust and how it is governed and managed, and a copy of the most recent Trustees, annual report and audited accounts, Initial training for new Trustees is delivered by the Chairman and the Trust Manager. The Trustees meet and consult regularly throvghout the year to review the governance and strategic direction of the Trust and other matters including grant applications, Investment strategy and financial account5. In addition, the Trustees may attend meetings with grant applicants and recipients or delegate such duties to the Trust Manager. There are three standing committees. The purpose of the Investment Committee is to monitor the investments and to approve changes in the asset allocation within an agreed strategy. The purpose of the HR Comtnittee is to advise on compliance with employment law and practice. to administer the rècruitment of new Trustees, new employees and/or new external contractors as the Trustees require, and for one member of the The Steel Charitable Trust REPORT OF THE TRUSTEES continued Governance and Man enent continued Committee, with the Chairman, to undertake the annual appraisal of the Trust Manager. The purpose of the Risk and Audit Committee is to monitor the various risks to which the Trust is, or might be, exposed, to manage the mitigation of such risks and to monitor and oversee the annual audit. The Trustees delegate the day-to-day administration to the Trust Manager. The frust engages a 5elf-employed Financial Controller, who reports to the Trust Man38er. The remuneration of employees and external contractors is approvÈd by the Trustees. The Trust is a member of the Association of Charitable Foundations IACF), which represents the interests of charitable foundations and grant-making trusts in the United Kingdom. The ACF provides information on good practice and changes in the law affectin8 charities. in particular grant-making charities, and trainin8 for Trustees and charity mana8ement. Pollcies and Procedures for Grant-maklng The Trust invites applications from all parts of the Unlted Kingdom for grants through its website. Onlv applications submitted online via the website will be considered by the Trustees. Applications from Bedfordshire generally and Luton in particular are especially welcome. It is the policy of the Trustees to make grants to a wide range of charitable bodies, and partlcularly in respect of applications supporting the following five categories.. Arts and Heritage l Education l Environment l Health I Social or Economic Disadvantage The definition of the Environment category was widened in April 2022 to include measures to improve the applicant or8anisation's carbon footprint,. the applicant organisation's principal attivity must still be in the realm of one of the five funding categories. Otherwise, the Trust's grant-making policy remains unchanged. The Trust's grant-making policies, eligibility criteria and application processes are clearly stated on its website. The Trustees have regard to the Charity Commission's guidance on Charity and Public Benefit. They consider that the very full information about the frust's aims, policies and activities, in the many areas of interest that the Trust supports which are Set out in this report and on its website, demonstrate the benefit to its beneficiaries, and throu8h them to the public. that arise from carrying out those aims. The Trustees generally meet in March, June. September and December. Ahead of these meetin85, Trustees review all applications received during the previous three-month period and a shortlist of grant recommendations is created. Shortli5ted applications will have been Investigated by one or more of the Trustees,. additional administrative checks are made by the Trust Manager. At the Trustees, meetings, the shortlist is discussed and grant award decisions are taken. Payments of approved grants to successful applicants Bre generally made as soon as practical after the meeting. Unsuccessful applicants are informed accordinsly. ThÈ Steel Charitable T[￿$t Actlvlties During the year the Trust made or committed to make 100 grants totalling £1,500,000, of which 92 grants totalling £1,361,766 were made to charities registered in England & Wales. three grants totalling £51,349 were made to charities registered in Scotland, two grants totalling £31,885 was made to charities registered in Northern Ireland and three grants totalling £55.(￿ were made to other charitable organisations in the United Kingdom, eligible under the Trust's 8rant-making policy. The Trust receive5 many more applications than it has funds to support. Only 5% of the appllcations received in 2022-23 were successful in receivin8 a grant. The Trust's website lists all the grants awarded in the turrent year and since 2019. All grant recipients are required to submit a report to the Trust, summarising the outputs, outcomes, successes and challenges of the work being funded, within a year of receiving the grant. Lutorn Matters, the initiative deslgned by the Trust to a551St organisations whose work brings significant benefits to the residents of Luton or improvements to the town, has continued and progressed as planned since its launch in 2020. Luton Matters grants have now been awarded in 311 five ¢ate8ories of the Trust's grant-making, the final two in the categories of Education and of Environment havin8 been awarded in March 2022. The Trustees are pleased with the Luton Matters pro8ramme to date and envisage it continuing for the foreseeable future. Full information about Luton Matters may be found on the Trust's website. The Trust's relationship with the Bedfordshire and Luton Community Foundation IBLCFI contlnues and a 8rant of £40,000 was awarded during the year. The Trust Manager regularly attends the Bedfordshire Funders Network meetings, facilitated by the BLCF. No fundraisin8 is undertaken, Flnanclal Revfiew The principal source of income of the Trust is from its investment portfolio. 2023 2022 Investment and other Income Funds paid to Joint Venture Overhead costs Net income Grants Inetl Reduction bn unrestricted funds 1.284,657 12.829) {89.8891 1.191,939 (1,5Tr).otKJI £ 1308.061) 1.101,429 (89,3621 1.012,067 11,184,959) 1172.8921 Overhead costs do not include investment fund managers, costs as these are deducted at source either from capital or prior to income distributions or both. Further information regarding investment managers, costs is shown in Note Sc to the Accounts. The income, overhead costs and total grants represent 2.48%, 0.17% and 2.89% of the unrestricted funds at the beginning of the year respectively12022-. 2.16%, 0. 18% and 2.32%1. On 31 January 2023, total unrestricted funds amounted 10 £48,159.316 {2022.' E51,857,4301. The Steel Charitable Trust Investment Poliry and Perfomance All investments held by the Trust have beeTr made in accordance with the powers available to the Trustees. The current inwestment policy is to follow 3 total return 5tr3tegy, the objective of which is to sustain the long- term real value of the investment fund, and hence of the real value of grants. Therefore, the majority of the portfolio is invested in global. broadly diversified funds, a consequence of which is that income may be lower than in the past. The Trust does not impose specific ethical investment constraints over and above those already contained within the investment managers, own ethical and socially responsible investment policies. The investments held on 31 January 2022 amounted to £50,535,482 and the investments held on 31 January 2023 amounted to £47,128,597. This represented a decrease in the value of the portfolio of 6.74% during the vear, compared with a rise in the FTSE All Share index of 1.52% and a fall in the MSCI World index of 8.96% The Trust's portfolio was inevitably affected by the weakness in almost all major asset classes and markets during the year. Trustees meet all the Trust's investment managers at least annually. Trustees remaln satisf led with the composition and diversification of the portfolio. Reserves Pollcy On 31 January 2023, the Trust had total funds of £48,159,31612022'. £51,857,430). The Trust's reserves policy is to ensure it maintains adequate funds to meet its commitments and to hold funds to produce income to contribute towards the payment of future grants. The Tfust does not currently hold any restricted funds and therefore all funds are treated as unrestricted reserves. Risk Management The Trustees regularly review the major strategic, financial and operational risks which the Trust faces and confirm that Systems have been established. and/or are under review, to mitl8ate those risks. As the object of the Trust is to pay 8rants to charitable bodies, the major risk facing the Trust Ss that the performance of its investments, in the form of income and changes in capital values, reduces the extent of its grant-making capacity. This risk is mitigated through the Trusys Investment policy. The COVID-19 contlngency plan, which had been prepared by the Trust Manager in March 2020, continued to be in place during 2022-23. It identifies essential processes/transa¢tions that would need to be covered should either or both the Trust Manager and the Financial Controller become seriously ill. A Trustee was assigned to each processltransaction as a back-up and trained accordingly. Trustees, Responslbllitles The Trustees are responsible for preparing the Trustees, Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards Iunited Kingdom Generally Accepted Accounting Practice). The law appllcable to charities in England and Wales requires the Trustees to prepare financial statements for each f inancial year which give a true and fair view of the state of affairs of the Trust and of the incoming resources and application of resources of the Trust for that period. In preparing these financial statements, the Trustees are required to.. The Steel ChaFlthble Ti¥si REPORT OF THE TRUSTEES Trustee5' Res continued continued select suitable accounting policies and apply them consistently: • observe the methods and principles in the Charities SORP: makejudgements and estimates that are reasonable and prudent,. state whether applicable accountin8 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 ur)less it is inappropriate to presume that the Trust will continue in operation. The Trustees are responsible for keepin8 proper accounting records that disclose with reasonable accuracy at any time the financial position of the Trust and enable them to ensure that the financial statements comply with the Charities Act 2011, the applicable Charitie5 IAccounts and Reports) Regulations and the provisions of the Trust Deed. They are also responsible for safeguarding the assets of the Trust and hence for takin6 reasonable steps for the prevention and detection of fraud and other irregvlarlties. The Trustees are responslble for the maintenance and integrity of the Trust and financial information included on the Trust's website. Legislation in the United Kin8dom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. So far a5 each of the Trustees is aware at the time the report is approved.. there is no relevant audit information of which the Trust's auditors are unaware,. and the Trustees have taken 311 steps that they ought to have taken to make themselves aware of any relevant audit inforrnation and to establish that the auditors are aware of that information. Plans for the Future The Trustees will continue the activities and the other matters outlined in this Report, and will keep them under revlew. Independent Audltors The Trustees re-appointed UHY Kent LLP tla UHY Hacker Youn& Chartered Accountants a5 Independent Auditors to The Steel Charitable Trust. Approved by the Trustees on 12 June 2023 and signed on their behalf by.. Wendy E 8ailey Chairrllan The Steel Ch.Iritable Trust INDEPENDENT AUDITOR'S REPORT TO THE TRUSTEES OF THE STEEL CHARITABLE TRU YEAR ENDED 31 IANUARY 2023 Opinlon We have audited the financial statements of The Steel Charitable Trust Ithe Trust'l for the year ended 31 January 2023 which comprise the Statement of financial activities, the Balance sheet, the Statement of cash f lows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kir)gdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland, Iunited Kingdom Generally Accepted Accounting Practice). The financial statements have been prepared in accordance with Accounting and Reporting by Charities preparing their accounts in accordance with the Financial Reporting Standards appllcable in the UK and Republic of Ireland IFRS 1021 in preference to the Accountin8 and Reportin8 by Charities.. Statement of Recommended Practice issued on l April 2CM)5 which is referred to in the extant regulations but has been withdrawn. This has been done in order for the accounts to provide a true and fair view in accordance with the Generally Accepted Accounting Practice effective for reportin8 periods beginnin8 on or after I January 2015. In our opinion the financial statements.. give a true and fair view of the state of the Trust's affairs as at 31 January 2023 and of it5 Incoming resources and application of resources for the year then ended. have been properly prepared in accordance with United Kingdom Generally Accepted Accountlng Practice,. and have been prepared in accordance with the requirements of the Charities Act 2011. Basls for opinion We conducted our audlt in accordance with International Standards on Auditing IUKI IISAS IUKII and applicable law. Our responsibilities under those standards are further described in the Auditors, responsibilities for the audit of the financial statements section of our report. We are independent of the Trust in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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 relatlng to going concern In auditing the financial statements, we have concluded that the Trustees, use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Based on tkTe work we have performed, we have not identified any rnateTial uncertainties relating to events or ¢onditionE that. individu3lly or rDllprtivply. may cast significant doubt on the Trust'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. The Steel Charilable Tiust INDEPENDENT AUDITOR'S REPORT continued Our responsibilities and the responsibilities of the Trustees with respect to going concern are described in the relevant section5 of this report. Other infomatlon The other information comprises the information included in the Annual report other than the financial statements and our Auditor5, report thereon. The Trustees are responsible for the other information contained within the Annual report. 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 expre55 any form of a55urance 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 mlsstatement in the financial statements themselves. If. based on the work we have performed, we conclude that there is a material misstatement of this other informatlon, we are required to report that fact. We have nothing to report in this regard. Matters on which we are requlred to report by exceptlon We have nothing to report in respect of the following matters where the Charities (Accounts and Reports) Regulations 2008 requires us to report to you if, in our opinion.. the information given in the Trustees, report is inconsistent in any material respect with the financial statements,. or sufficient accounting records have not been kept,. or the financial statements are not in a8reement with the accounting records and returns; or we have not received all the information and explanations we require for our audit. Responslbllltles of Trustees As explained more fully in the Trustees, responsibilities staternent, the Trustees are responsible for the preparation of the financial statements which give a true and fair view. and for such internal control as the Trustees determlne is necessary to enable the preparation of financial statements that are free f rom material misstatement, whether due to fraud or error. In preparin8 the financial statements. the Trustees are responslble for assessing the Trust'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 Trustees either intend to liquidate the Trust or to cease operations, or have no realistic alternative but to do so. Auditors, responslbllltles for the audit of the financial statements 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 havin8 effect thereunder. Our objectives are to obtain reasonable assurance about whether the financial statements a5 a whole are free from material misst3tement, whether due to fraud or error, and to issue an Auditors, report that includes our opinion. Reasonable assurance is a high level of 3ssur3nce, but is not a guarantee that an audit conducted in accordance with ISAS IUKI will always detect a material misstatement whpn it @yi£t£. Mi&EtatÈment. trom fraud or error and are considered material if. individu311y or in the aggregate, can &ri2e The Steel Charitable Trust INDEPENDENT AUDITOR'S REPORT they could reasonably be expected to influence the economic decisions of users taken on the basis of these fin3nci31 statements. continued Irregularities, includlng fraud, are instances of non-compliance with laws and reguSations. We design procedures in line with our responsibilities, outlined above, to detect material misstatement5 in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, includin8 fraud is detailed below.. How the oudit was considered copoble of deterting irregulorities includingfroud.. Our approach to identifying and assessin8 the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows: we identified the laws and regulations applicable to the Trust throu8h discussions with management, and from our commerclal knowledge and experience of the sector., we focused on specific laws and re8ulations which we considered may have a direct material effect on the accounts or the operations of the Trust. including the Charities Act 2011,. we assessed the extent of compliance with the laws and regulations identified above through makin8 enquiries of mana8ement and inspecting correspondence. and identified laws and regulations were communicated within the audit team and the team remained alert to instances of non-compliance throughout the audit. We assessed the susceptibility of the Tru5Ys accounts to material misstatement, including obtaining an understandlng of how fraud might occur, by: rnaking enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alle8ed fraud,. and considering the internal controls in place to mitigate risks of fraud and non-compliance with laws arid regulations. To address the risk of fraud through management bias and override of tontrols, we.. performed analytical procedures to identify any unusual or unexpected relationships,. tested journal entries to identify unusual transactions- assessed whether judgements and assumptions made in determining the accountin8 estlmates set out in the accounting policies were indicative of potential bias- and investl8ated the rationale behind significant or unusual transactions. In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to.. agreeing financial statemer)t disclosures to underlyin8 SUPPOrting documentation,. readin8 minutes of meetings of those charged ivith governance- and enquiring of management and representatives of Trustees as to actual and potentlal litigation and claims. A fiirthpr Ap