Financial Review

In addition to grants paid, the Trustees had, as at 5 April 2007, over £10 million of forward commitments. Of these, £8.8 million had already been accounted for in the 2005 and 2006 financial years. This is in accordance with the policy that grants are recognised in the statement of financial activities when approved by the Trustees and communicated to the recipients, irrespective of the future period over which payments are to be made, and the obligations outstanding at the year end are recognised as creditors.

Reserves
The Trustees have income reserves of £17.4m. These now represent approximately half of one year’s income which will still enable the Trustees to maintain a consistent grant-making policy throughout the year, given that their main income payments in the form of Wittington dividends are received twice yearly, in February and October. The Trustees aim over the course of the next year to increase their reserves to a more comfortable level of around £20m, if necessary by realising some expendable capital to assist in meeting demand for grants.

Investment objectives
The Trustees’ investment objectives as set out in the policy statement are to preserve the absolute value of the capital, whilst maintaining its ‘real’ value. In addition to the aim of producing a total return which is not less than 3 per cent above underlying inflation on a rolling three year basis (as mentioned above), the managers are instructed to adopt a relatively conservative investment strategy investing in a balanced portfolio without geographical, currency or sector restriction, subject to the terms of a Charity Commission Order dated 19 September 2001. The Trustees have reviewed the RPI + benchmark and have concluded that it is still appropriate in the context of their overall objectives.

The Trustees do not have any ethical investment policy.

Trustees’ responsibilities for the financial statements
Charity law requires the Trustees to prepare financial statements for each financial year which give a true and fair view of the charity’s incoming resources and application of resources during the year and of its state of affairs at the end of the year. In preparing those financial statements the Trustees are required to

• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards and statements of recommended practice have been followed, subject to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charity will continue in operation.

The Trustees are responsible for keeping proper records which disclose with reasonable accuracy the financial position of the charity and enable them to ensure that the financial statements comply with the Charities Act 1993. They are also responsible for safeguarding the charity’s assets and hence taking reasonable steps for the prevention and detection of fraud and breaches of law and regulations.