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LENCH’S TRUST

Financial Statements For year ended 31 December 2011

LENCH’S TRUST INDEX

________________________________________________________________

Trust Information

Report of the Trustees

Independent Auditors’ Report

Income and Expenditure Account

Statement of Total Recognised Surpluses and Deficits

Balance Sheet

Cash Flow Statement and Notes

Notes to the Financial Statements

LENCH’S TRUST TRUST INFORMATION ______________________________________________________________________________________________

TRUSTEES Ms K Cooper (Bailiff) Mr A Guest (Junior Bailiff) Mr L Clark Mr T Cuthbertson Ms S Davis Mr R Felton Mr C R Gillett Mr S Hossain Councillor P Smallbone (nominated 21/09/2011) Mr A Snehi (Appointed 21/09/2011) Ms T Swani Mr M Woodward REGISTERED OFFICE William Lench Court Ridgacre Road Quinton Birmingham B32 2AQ TENANT SERVICES AUTHORITY NO. A2074 REGISTERED CHARITY NO. 218633 AUDITORS Mazars LLP 45 Church Street Birmingham B3 2RT BANKERS HSBC Bank Plc 130 New Street Birmingham B2 4JU INVESTMENT ADVISORS Smith & Williamson 3rd Floor 9 Colmore Row Birmingham B3 2BJ

LENCH’S TRUST REPORT OF THE TRUSTEES ______________________________________________________________________________________________ Lench's Trust is an Almshouse Charity regulated by a scheme of the Charity Commissioners, charity registration number 218633/42. It is also a Registered Provider of Social Housing and is therefore subject to monitoring by the Tenant Services Authority (TSA). It was founded in 1525 by William Lench, a tanner, for the benefit of the Citizens of Birmingham. For some 300 years, the work of the Trust was divided between the maintenance of streets and bridges and the care of the elderly poor. With the incorporation of Birmingham in 1838 the Trustees became solely providers of Almshouses. Our policy is to provide care, according to our scheme, for people who are resident in the City, over 55 years of age and necessitous. The scheme specifies twelve Trustees of whom one is nominated by the City of Birmingham. Their duty is to provide care for our residents to meet their needs and to give consideration to other possibilities of care as finances and facilities become available. The financial policy of the Trustees is to maintain and improve the value of their endowment for the use of future generations and to make further financial resources available for the progressive expansion of the Trust's caring activities. The management of the Trust is led by a Chief Executive and a small office staff, with day to day care and Almshouse staffing carried out by our team of scheme managers. The Trustees also have a group of befrienders for each Almshouse who get to know our residents individually and play a major part with the scheme managers in offering companionship and seeking out their needs. Our capacity and occupancy on 31 December 2011 was: -

Lench’s Close Tanner’s Close Maas Road William Lench Court

Units of accommodation

Number of residents

64 24 2 63 ──── 153 ════

72 29 3 67 ──── 171 ════

All the Almshouses have units which can accommodate couples, and this is reflected in the number of residents shown. TRUSTEES The Trustees are as set out on page 1. RISK MANAGEMENT The Trustees have assessed the major risks to which the Charity is exposed, in particular those related to the operations and finances of the Charity, and are satisfied that there are systems in place to mitigate exposure to major risks. BAILIFFS REPORT FOR 2011 Operational developments The 2011 AGM on 27th April 2011 was an auspicious day for Lench’s Trust. We opened the doors of William Lench Court for this event, the first of many in this wonderful new development. On that day, too, James Lloyd, retiring after 39 years as Trustee, laid the Foundation Stone in front of over 100 friends of the Trust. Owing to the bitterly cold weather in the winter of 2010-2011, the formal handover of the building from our contractors Mansell could not happen until 11th May — although only the sharpest of eyes would have noticed that finishing touches still needed to be made at the time of the AGM. With the sale of 271 Hagley Road, our Head Office moved into William Lench Court on 3rd May, and we welcomed our first residents on 16th May. At the time of writing this Report, all the rented apartments are occupied, and there are deposits on the six remaining for shared ownership. The residents in these energy-efficient attractive almshouses have rapidly become part of a caring, lively community. This is in part due to successful partnership arrangements — Yardley Great Trust for extracare, and the Jericho Foundation for catering at Lench’s Close and now also at William Lench Court. We are pleased that these arrangements are working so well. 2

LENCH’S TRUST REPORT OF THE TRUSTEES ______________________________________________________________________________________________ BAILIFFS REPORT FOR 2011 (Continued) We are also undertaking a refurbishment at Lench’s Close as well as regular maintenance on all properties. Heath Avery, the architects for William Lench Court, drew up plans and for the building work for new communal and office facilities at Lench’s Close. Our chosen contractors, Neil S Shipley will complete by the end of April 2012. We have also replaced the 30-year old boilers used for communal heating at Lench’s Close. The quinquennial survey was completed and presented to the December 2011 Board Meeting. The only major requirement was for replacement windows and frames for both Lench’s Close and Tanner’s Close. This will be done during 2012. Investment properties By the end of April 2012, we should know whether or not the Trust has sold a long lease on the St Mary’s estate. If this is forthcoming, the Trust will have the necessary funds to progress with Phase 2 of the William Lench Court development with another 34 units. Robert Powell & Co are effectively managing our other investment properties. Residents Trustee Sarah Davis instigated a Scrutiny Panel. This is a resident-led committee which will audit and monitor those of the Trust’s activities and standards related to the residents and the almshouses. Its first meeting was in June, with a second in September. This Panel has decided its first task will be to audit how the Trust communicates with the residents. During 2011 the Trust appointed Mo Sajad as our Activities Co-ordinator. Working initially with residents at William Lench Court, his remit has now widened to our other sites. There are now regular activities on all sites; for example, there is tai chi at William Lench Court and a cookery club at Moseley with computer clubs, film clubs and bingo on all sites. There are also one-off activities arranged; for example a Gentlemen versus Ladies darts match at William Lench Court, a Bonfire Night party on the backlands at Lench’s Close and celebrations for Christmas. Staff, befrienders & volunteers This year has been one of exciting change, which does not happen without much aforethought and sheer hard work by everyone involved in the Trust. I should also like to record here the Trustees’ gratitude to our staff, led by our Chief Executive, Jean-Luc Priez for their expert management of the day-to-day business of the Trust. The cheerfulness, sensitivity and effort of them all makes the Trust what it is. It is with sadness that I report the death of Kevin Boyd, our Maintenance Officer for over 12 years. He will be missed greatly; it is movingly appropriate the residents of Lench’s Close bought a bench in his memory, a reminder to us all of what he did for the Trust. Mark Boden has been appointed our new Maintenance Officer. Jean-Luc Priez and I attended the ACEVO Conference on governance issues last November. Finances Although we did not receive a full year’s income from William Lench Court we still remained in surplus for the year. Stock markets were volatile, plunging in August 2011 but recovering their losses over the remainder of the year. We managed to enjoy a small rise in the value of our investments in 2011. Cash generation has improved from our original estimates and consequently the mortgage needed to complete the funding William Lench Court was £2.5 million, down from the £4.0 million we originally envisaged. As a consequence the term of this mortgage is 15 years against our original plans of 25 years. Incorporation The Trustees agreed to incorporate the charity and this was finally approved by the Charities Commission in January 2012. The Trustees of the existing charity have become Members of the new incorporated body.

LENCH’S TRUST REPORT OF THE TRUSTEES ______________________________________________________________________________________________ BAILIFFS REPORT FOR 2011 (Continued) Strategy Review The Trust’s Five Year Strategic Review was approved by the Board in December 2011. Involving residents and employees as well as Trustees, it was the product of two workshops in October and November 2011, facilitated by an external consultant Steve Botham. Together we amended Lench’s Trust’s purpose to read thus: a charity helping older people in need to live meaningful lives in vibrant, caring and safe communities. Blue Plaque for William Lench We were delighted to welcome the Civic Society to William Lench Court on 4th August. In front of Deputy Lord Mayor Len Gregory, our oldest resident at William Lench Court, Phil Chawnor aged 98, unveiled a Blue Plaque to William Lench himself. Website The new website went live in early July 2011. Its purpose is to give a higher profile for Lench’s Trust. With blogposts and articles from a few residents as well as staff, it shows the outside world the work of the Trust and the sense of community and well-being it nurtures. Board of Trustees Having said farewell to James Lloyd on his retirement at the start of the year, we are delighted to welcome Amarjet Snehi to the Board. His investment expertise will prove invaluable to us. Len Clark, formerly a Council nominee, has now joined us in his own right. Councillor Peter Smallbone was nominated by the Council in September, but he has not been able to attend a meeting yet. The former Almshouse Committee is now renamed the Well-Being Committee to better reflect its remit and scope. Chaired by Robin Felton, it has a Residents’ Representative from each site. Tony Guest is still chair of the Finance Committee and Martin Woodward of the Personnel & Search Committee. The Trustees, along with staff and resident representatives, attended a bRAP training day on ‘Diversity”. My final words in this my first Bailiff’s Report is to thank my co-Trustees for their service to the Board. Their dedication, combined with their breadth of experience, is of immeasurable benefit to the Trust.

K Cooper Bailiff 25 April 2012

LENCH’S TRUST REPORT OF THE TRUSTEES ______________________________________________________________________________________________ FINANCIAL REPORT 2011 FIXED ASSETS The net book value of housing properties is £4.5m (2010 £4.9m). The decrease in value arises principally due to the sales of first tranche shared ownership units at William Lench Court and the transfer of the remaining unsold first tranche units to current assets. The increase in the value of other investments reflects the slight improvement in the market over the previous year. The Trustees consider the market value of investment properties to be significantly in excess of cost. CURRENT ASSETS Current assets increased from £0.74m to £2.8m. This is principally due to cash being received from sales of shared ownership units at William Lench Court. The balance of first tranche shared ownership units have also been transferred to current assets. CREDITORS Creditors due within one year have risen by £1.3m, this is principally due to the increase in the short term loan to fund William Lench Court which increased by £1.5m. FUNDS The Trust’s total funds at 31 December 2011 were £5.6m (2010 £5.4m). Within this figure revaluation reserves were £223k, an increase of £61k from the previous year representing the slight improvement in market conditions during the year. Other reserves have fallen from £1.3m to £674k due primarily to the release of the sinking funds as approved by the Charities Commission. RESERVES POLICY The Trustees have reviewed the Trust’s need to retain free available reserves, defined as total assets less current liabilities in the Income Fund before deducting short term housing loans and less tangible assets comprising both housing properties and other fixed assets. After designating funds primarily to meet future repair and maintenance obligations in accordance with Almshouse Association guidelines, the Trustees consider it prudent to retain funds equivalent to 6 months’ annual operating expenditure for the provision of the working capital needed to run the Trust efficiently and for unexpected contingencies. This amounts to approximately £595,000. At the year end free reserves are in excess of this amount. INCOME AND EXPENDITURE The surplus for the year was £196,149 (2010 surplus £271,903). Turnover increased by 161% compared to 2010 due principally to the receipt of income from first tranche shared ownership units of £931k. Operating costs have increased significantly due to an increase in service costs associated with William Lench Court. Interest receivable has increased because funds were received from shared ownership sales during the year. The disposal of fixed assets realised a net surplus of £106k (2010 net surplus of £7k). INVESTMENT POLICY The Trustees’ investment policy is to look for long term holdings without undue risk and for an income which will grow in real terms. GOING CONCERN Under the governance requirements, the Trustees confirm that after making enquiries they have a reasonable expectation that the Trust has adequate resources to continue in operational existence for the foreseeable future. Accordingly they continue to adopt the going concern basis in preparing the accounts.

LENCH’S TRUST REPORT OF THE TRUSTEES ______________________________________________________________________________________________ INTERNAL FINANCIAL CONTROL The Trustees have overall responsibility for the Trust's system of internal financial control, the effectiveness of which has been reviewed and reported on to the Trustees by the Finance Committee. The principal elements of the system, which is designed to recognise the specific characteristics and objectives of the Trust and the risks to which it is exposed, include:  a clearly defined structure which delegates authority, responsibility and accountability, including responsibility for internal financial control to management.  a well established budgeting and reporting function, with budgets and results reviewed at a senior level within the Trust to provide a timely and regular monitoring of financial performance;  an investment evaluation process to ensure Trustees’ approval for all major capital expenditure commitments; and  a regular review procedure carried out by the Trust of its risk exposure and of the systems of internal financial control in place to mitigate those risks, with annual reports of findings to the Trustees. Internal financial control, by its nature, provides only reasonable and not absolute assurance against material misstatement or loss. TRUSTEES RESPONSIBILITIES Registered Social Landlord legislation requires the Trustees to prepare financial statements for each financial year which give a true and fair view of the state of the Trust as at the end of the financial year and of the income and expenditure of the Trust for the year ended on that date. In preparing those financial statements, suitable accounting policies have been used, framed to the best of the Trustees’ knowledge and belief, by reference to reasonable and prudent judgements and estimates, and applied consistently. Applicable accounting standards have been followed. The Trustees are also required to indicate where the financial statements are prepared other than on the basis that the Trust is a going concern. The Trustees are responsible for ensuring that arrangements are made for keeping proper books of account with respect to the Trust's transactions and its assets and liabilities and for maintaining a satisfactory system of control over the Trust's books of account and transactions. The Trustees are also responsible for ensuring that arrangements are made to safeguard the assets of the Trust and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Approved by the Trustees on 25 April 2012 and signed on their behalf by

K Cooper Bailiff

LENCH’S TRUST INDEPENDENT AUDITORS REPORT TO THE TRUSTEES OF LENCH’S TRUST ______________________________________________________________________________________________ We have audited the financial statements of Lench’s Trust for the year ended 31 December 2011 which comprise the income and expenditure account, the balance sheet, the statement of total recognised surpluses and deficits, the cash flow statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Respective responsibilities of trustees and auditors As explained more fully in the Statement of Trustees’ responsibilities out on page 6, the Trustees are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors. This report is made solely to the Trustees, as a body, in accordance with relevant legislation. Our audit work has been undertaken so that we might state to the 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 Trust and the Trustees as a body for our audit work, for this report, or for the opinions we have formed. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the APB's web-site at www.frc.org.uk/apb/scope/private.cfm. Qualified opinion arising from non-compliance with Financial Reporting Standards As explained in note 1 to the Financial Statements, the Trust has not complied with the Statement of Standard Accounting Practice No 19 which requires that investment properties be revalued to open market value for inclusion within the balance sheet. Except for the foregoing, in our opinion:  the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the Trust's affairs as at 31 December 2011 and of its surplus for the year then ended and  the financial statements have been properly prepared in accordance with The Housing and Regeneration Act 2008 and the Accounting Requirements for Registered Social Landlords General Determination 2006. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where legislation requires us to report to you if, in our opinion:  adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or  the financial statements are not in agreement with the accounting records and returns; or  certain disclosures of directors’ remuneration specified by law are not made; or  we have not received all the information and explanations we require for our audit.

Lee Cartwright (Senior Statutory Auditor) For and on behalf of Mazars LLP, Chartered Accountants (Statutory Auditor) 45 Church Street Birmingham B3 2RT ____________________

LENCH’S TRUST INCOME AND EXPENDITURE ACCOUNT For the year ended 31 December 2011 ______________________________________________________________________________________________

Notes

2011 £

2010 £

TURNOVER

1,908,799

733,830

Cost of sales Operating costs

2 2

OPERATING SURPLUS/(DEFICIT)

(930,500) (973,194) ─────── 5,105

(802,014) ─────── (68,184)

Capital appeal fund grants Interest receivable and other income Interest payable and similar charges Surplus on disposal of fixed assets Amounts written back to investments Release from deferred income

25 5 7 6 20 17

SURPLUS FOR THE YEAR

16,650 73,172 (103,881) 106,223 98,880 ─────── 196,149 ═══════

281,350 49,982 (11,774) 7,167 13,362 ─────── 271,903 ═══════

2011 £

2010 £

196,149

271,903

60,942 ───────

69,994 ───────

257,091 ═══════

341,897 ═══════

STATEMENT OF TOTAL RECOGNISED SURPLUSES AND DEFICITS For the year ended 31 December 2011

Surplus for the financial year Unrealised surplus on investment assets

TOTAL RECOGNISED SURPLUS RELATING TO THE YEAR

The financial statements on pages 8 to 25 were approved by the Trustees on 25 April 2012 and were signed on their behalf by: K Cooper

- Bailiff

A Guest

- Trustee

LENCH’S TRUST BALANCE SHEET AT 31 December 2011

_____________________________________________________________________________

Notes

Capital Fund £

Income Fund £

2011 Total £

2010 Total £

TANGIBLE FIXED ASSETS Housing properties - cost Social Housing Grant Depreciation

11 11 11

─────── -

11,671,760 (6,749,122) (409,935) ─────── 4,512,703

10,524,270 (5,301,816) (339,928) ─────── 4,882,526

Investment properties Investments Other fixed assets

12 13 14

412,288 1,587,897 ─────── 2,000,185 ───────

360,655 203,744 ─────── 5,077,102 ───────

412,288 1,948,552 203,744 ─────── 7,077,287 ───────

711,908 1,935,793 181,641 ─────── 7,711,868 ───────

181,599 ─────── 181,599

652,582 369,760 53,370 1,557,202 ─────── 2,632,914

652,582 551,359 53,370 1,557,202 ─────── 2,814,513

599,868 32,676 104,437 ─────── 736,981

─────── 181,599 ───────

(4,117,577) ─────── (1,484,663) ───────

(4,117,577) ─────── (1,303,064) ───────

(2,812,576) ─────── (2,075,595) ───────

2,181,784 ═══════

3,592,439 ═══════

5,774,223 ═══════

5,636,273 ═══════

─────── 138,319 2,043,465 ─────── 2,181,784 ─────── 2,181,784 ═══════

156,435 ─────── 2,677,717 84,272 674,015 ─────── 3,436,004 ─────── 3,592,439 ═══════

156,435 ─────── 2,677,717 222,591 674,015 2,043,465 ─────── 5,617,788 ─────── 5,774,223 ═══════

192,179 ─────── 1,490,699 161,649 1,258,850 2,532,896 ─────── 5,444,094 ─────── 5,636,273 ═══════

CURRENT ASSETS Stock - first tranche shared ownership properties Investments - cash deposits Debtors Cash

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

15 16

NET CURRENT ASSETS/ (LIABILITIES) TOTAL ASSETS LESS CURRENT LIABILITIES

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 18 Accumulated surplus Revaluation reserve Other reserves Permanent endowment

22 211 19 20

CAPITAL AND RESERVES

The financial statements on pages 8 to 25 were approved by the Trustees on 25 April 2012 and were signed on their behalf by: K Cooper

Bailiff

A Guest

Trustee

LENCH’S TRUST CASH FLOW STATEMENT AND NOTES For the year ended 31 December 2011

2010

2011 Notes NET CASH INFLOW FROM OPERATING ACTIVITIES

RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest received Interest paid

220,361

(203,522)

73,172 (103,881)

55,951 (11,774)

CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Purchase of housing properties Purchase of other fixed assets Capital grants and donations received Sale of housing properties Sale of other fixed assets Movement in investments

11 14 2

FINANCING Net loan principal repayments

INCREASE/(DECREASE) IN CASH

(5,812,083) (23,465) 281,350 7,731 639 ───────

(2,687,990) (210,660) 1,463,956 930,500 262,091 (57,730) ─────── (299,833) ─────── (110,181)

(5,545,828) ─────── (5,705,173)

1,514,437 ─────── 1,404,256 ═══════

2,262,761 ─────── (3,442,412) ═══════

(A) RECONCILIATION OF OPERATING SURPLUS TO NET CASH INFLOW FROM OPERATING ACTIVITIES 2011 £

2010 £

5,105 (20,694) (146,300) 267,305 (22,455) (42,582) ─────── 220,361 ═══════

(68,184) (1,969) (115,548) (87,815) 69,994 ─────── (203,522) ═══════

At 1 January 2011 £

Cash flows £

At 31 December 2011 £

704,305 (2,522,445) ─────── (1,818,140) ═══════

1,404,256 (1,514,437) ─────── (110,181) ═══════

2,108,561 (4,036,882) ─────── (1,928,321) ═══════

Operating surplus/(deficit) for the year Movement in debtors Movement in creditors Depreciation Unrealised gains/losses Movement in stock Net cash inflow from operating activities

(B)

ANALYSIS OF CHANGES IN NET FUNDS

Cash at bank & investments Housing loans At 31 December 2011

LENCH’S TRUST NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011

ACCOUNTING POLICIES The financial statements have been prepared in accordance with applicable accounting standards and comply with the Statement of Recommended Practice (SORP) "Accounting by Registered Social Landlords" published in 2008 and the Accounting Requirements for Registered Social Landlords Determination 2006. The accounts also comply, in all material respects, with charities legislation.

(a)

Accounting convention The financial statements are prepared under the historical cost convention (modified to include the valuation of investments at market value).

(b)

Turnover Turnover represents residents’ contributions receivable in respect of Almshouses, other rents receivable from investment properties, proceeds from first tranche shared ownership sales and donations.

(c)

Capital fund The capital fund represents the original endowment of the Trustees together with subsequent accumulations. The capital now consists of freehold property, producing rental income, loans and investments.

(d)

Income fund All the Trust's income is accounted for through the income fund account.

(e)

Legacies By direction of the Charity Commissioners, legacies received which may be used for the general purposes of the Charity are now credited to the income fund.

(f)

Depreciation Depreciation is charged so as to write down the cost (net of social housing grant) of freehold housing properties to their estimated residual value on a straight line basis over their expected useful economic lives as follows: Freehold land

Not depreciated

Housing properties

50 years

Depreciation is calculated to write off the cost of other fixed assets on a straight line basis over their estimated useful lives. Depreciation is not charged on investment properties (see note 1j). (g)

Works to existing properties Expenditure on housing properties which results in an enhancement of the economic benefits of the property is capitalised, in accordance with the requirements of the SORP.

(h)

Social Housing Grant (SHG) and other grants Grants for capital expenditure are deducted from the cost of the fixed assets to which they relate as they become receivable. SHG is repayable or recyclable under certain circumstances, primarily following sale of a property but will normally be restricted to net proceeds of sale. Grants received in advance of the relevant expenditure are included in short-term creditors and represent amounts to be utilised in the next accounting period.

(i)

Investments Investments are stated at market value. Investment income is credited to the accounts when received, except for fixed interest securities where income is recorded on a receivable basis.

(j)

Investment properties Properties acquired prior to 31 December 1962 are stated at a nominal value of £1 with later additions at cost. No depreciation is provided on investment properties as permitted by Statement of Standard Accounting Practice (SSAP) No 19. These properties have not been revalued, contrary to SSAP 19 which requires these properties to be stated at market value in the Trust’s balance sheet. The Trustees are of the opinion that the cost of a professional valuation can not be justified. 11

LENCH’S TRUST NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011

ACCOUNTING POLICIES (CONTINUED)

(k)

Designated reserves These represent reserves set aside by the Trustees to meet future expenditure.

(l)

Restricted reserves The restricted reserve represented capital grants received to fund development costs at William Lench Court. This fund has now been fully utilised on completion of the development.

(m)

Operating leases Rentals payable under operating leases are charged on a straight-line basis over the term of the lease.

(n)

Interest charges Interest charges incurred on the financing of housing properties are capitalised up to the date of practical completion. Interest charges arising after that date are charged to the income and expenditure account.

(o)

Pensions The Trust operates defined contribution pension schemes, the costs of which are written off to the income and expenditure account on an accruals basis. The assets of the schemes are held separately from those of the Trust in independently administered funds.

LENCH’S TRUST NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011 2

TURNOVER AND OPERATING COSTS ───────────────────2011────────────────── ──────────────────2010────────────────

Turnover £

Cost of sales £

Operating costs £

Operating surplus/ (deficit) £

36,145 (1,723) 64,952 ─────── 99,374

513,989 65,540 ─────── 579,529

─────── -

(574,314) (28,035) ─────── (602,349)

(60,325) 37,505 ─────── (22,820)

(37,232)

89,924

142,584

(60,125)

82,459

5,372

11,717

─────── 1,908,799 ═══════

─────── (930,500) ═══════

(189,565) ─────── (973,194) ═══════

(189,565) ─────── 5,105 ═══════

─────── 733,830 ═══════

─────── ═══════

(139,540) ─────── (802,014) ═══════

(139,540) ─────── (68,184) ═══════

Turnover £

Cost of sales £

Operating cost £

Operating surplus/ (deficit) £

730,252 49,979 65,540 ─────── 845,771

─────── -

(694,107) (51,702) (588) ─────── (746,397)

First tranche shared ownership

930,500

(930,500)

Rents from investment properties

127,156

Income and expenditure from lettings Housing accommodation - rented - shared ownership Other housing rent

Other income and expenditure

Donations Other administrative costs Total

LENCH’S TRUST NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011

TURNOVER FROM LETTINGS

Housing contributions receivable net of voids

- rented - shared ownership

Other housing rent Total income from lettings

2011 £

2010 £

730,252 49,979 65,540 ─────── 845,771 ═══════

513,989 65,540 ─────── 579,529 ═══════

Void losses for the period were £99,611 (2010 £9,213). The reason for the significant increase is due to the lead time of properties at William Lench Court before becoming occupied.

OPERATING COSTS

Housing accommodation: Services Management Depreciation of housing properties Repairs and maintenance Total housing operating costs Other operating costs; Administration Investment properties

2011 £

2010 £

229,669 233,046 94,582 189,101 ─────── 746,398

213,239 176,087 41,993 171,030 ─────── 602,349

189,565 37,231 ─────── 973,194 ═══════

139,540 60,125 ─────── 802,014 ═══════

The 90 units in management at 31 December 2010 increased to 153 units on 27 April 2011 when the development of William Lench Court was completed.

INTEREST RECEIVABLE AND OTHER INCOME

Investment income: General funds Income funds Cyclical maintenance fund Extraordinary repairs fund Sinking funds Bank interest: General funds Other

2011 £

2010 £

44,085 282 4,598 7,170 16,053

31,172 2,261 3,365 8,703

19 965 ─────── 73,172 ═══════

1,913 2,568 ─────── 49,982 ═══════

LENCH’S TRUST NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011

SURPLUS ON DISPOSAL OF TANGIBLE FIXED ASSETS

(Deficit)/surplus on sale of quoted investments Deficit on disposal of other fixed assets Surplus on sale of office property

2011 £

2010 £

(8,422) (1,396) 116,041 ─────── 106,223 ═══════

7,167 ─────── 7,167 ═══════

2011 £

2010 £

103,881 ─────── 103,881 ═══════

5,805 5,969 ─────── 11,774 ═══════

2011 £

2010 £

102,696

51,518

7,828 42,156 ═══════

7,200 47,396 ═══════

2011 £

2010 £

243,699 20,400 13,740 ─────── 277,839 ═══════

185,651 17,206 13,094 ─────── 215,951 ═══════

Number 5 6 ─── 11 ═══

Number 3 5 ─── 8 ═══

INTEREST PAYABLE AND SIMILAR CHARGES

Bank loans not wholly repayable within five years Interest on recycled capital grant

Interest of £51,268 was capitalised in the year (2010: Nil).

SURPLUS ON ORDINARY ACTIVITIES

Surplus on ordinary activities is stated after charging: Depreciation of tangible owned fixed assets Auditors’ remuneration: In their capacity as auditors Other services

STAFF COSTS

Salaries Social security costs Other pension costs

Average number of full time equivalent persons employed during the year: Office Other site staff Total employees

LENCH’S TRUST NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011

DIRECTORS’ EMOLUMENTS 2011 £

2010 £

59,737 ═══════

57,110 ═══════

59,737 ═══════

57,110 ═══════

Completed Housing Shared properties ownership

Total £

Directors’ emoluments The emoluments of directors disclosed above (excluding pension contributions) include amounts paid to: The highest paid director

FIXED ASSETS – Housing properties

COST At 1 January 2011 Additions Transfers Disposals At 31 December 2011

10,524,270 2,687,990 (3,135,000) ─────── 10,077,260 ═══════

3,135,000 (1,540,500) ─────── 1,594,500 ═══════

10,524,270 2,687,990 (1,540,500) ─────── 11,671,760 ═══════

5,301,816 1,447,306 (783,266) ─────── 5,965,856 ═══════

783,266 ─────── 783,266 ═══════

5,301,816 1,447,306 ─────── 6,749,122 ═══════

339,928 50,182 ─────── 390,110 ═══════

19,825 ─────── 19,825 ═══════

339,928 70,007 ─────── 409,935 ═══════

3,721,294 ═══════ 4,882,526 ═══════

791,409 ═══════ ═══════

4,512,703 ═══════ 4,882,526 ═══════

2% Nil

Less: SOCIAL HOUSING GRANT At 1 January 2011 Grants received in year Transfers At 31 December 2011 DEPRECIATION At 1 January 2011 Charge for year At 31 December 2011 NET BOOK VALUE At 31 December 2011 At 31 December 2010

Depreciation rates - buildings - land All housing properties are freehold.

Total expenditure on works to existing properties amounted to £2,877,091 (2010 £5,983,113). Of this expenditure £2,687,990 (2010 £5,812,083) was capitalised in the year.

LENCH’S TRUST NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011

FIXED ASSETS – Investment properties Freehold £ COST OR NET BOOK VALUE At 1 January 2011 Capital costs written off (See note 17)

711,908 (299,620) ─────── 412,288 ═══════

At 31 December 2011

FIXED ASSETS - Investments 2011 £

2010 £

1,021,016 874,343 (445,786) ─────── 1,449,573 ═══════

1,028,217 285,003 (292,204) ─────── 1,021,016 ═══════

Capital fund Cost and net book value: At 1 January 2011 Additions Disposals At 31 December 2011

Cost

British Government fixed interest Investments

Market value 2010 2011 £ £

2011 £

2010 £

119,835 ───────

46,722 ───────

156,557 ───────

54,319 ───────

1,329,738 ─────── 1,449,573 ═══════

974,294 ─────── 1,021,016 ═══════

1,431,340 ─────── 1,587,897 ═══════

1,102,222 ─────── 1,156,541 ═══════

647,210 176,338 (547,165) ─────── 276,383 ═══════

627,286 110,512 (90,588) ─────── 647,210 ═══════

Other listed investments General fund Total capital investments

Income fund Cost and net book value: At 1 January 2011 Additions Disposals At 31 December 2011

LENCH’S TRUST NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011

FIXED ASSETS – Investments - continued Cost

Market value 2010 2011 £ £

2011 £

2010 £

32,863 68,463

32,863 47,344

32,203 73,833

33,151 50,196

─────── 101,326 ───────

59,621 ─────── 139,828 ───────

─────── 106,036 ───────

80,359 ─────── 163,706 ───────

49,508 13,792 111,757

16,727 96,105

49,439 30,808 174,372

29,957 203,658

─────── 175,057 ─────── 276,383 ═══════

394,550 ─────── 507,382 ─────── 647,210 ═══════

─────── 254,619 ─────── 360,655 ═══════

381,931 ─────── 615,546 ─────── 779,252 ═══════

2011 £

2010 £

1,668,226 596,510 (538,780) ─────── 1,725,956 ═══════

1,655,503 395,515 (382,792) ─────── 1,668,226 ═══════

British Government fixed interest Investments Cyclical maintenance fund Extraordinary repair fund Sinking fund: re loan from capital fund

Other listed investments Income fund Cyclical maintenance fund Extraordinary repair fund Sinking fund: loan from capital fund

Total income fund investment

Combined Cost and net book value: At 1 January 2011 Additions Disposals At 31 December 2011

British Government fixed interest investments Other listed investments Total investments

Cost 2010 £

2010 £

221,161 1,504,795 ─────── 1,725,956 ═══════

186,550 1,481,676 ─────── 1,668,226 ═══════

Market value 2011 £ 262,593 1,685,959 ─────── 1,948,552 ═══════

2010 £

218,025 1,717,768 ─────── 1,935,793 ═══════

LENCH’S TRUST NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011

FIXED ASSETS - Other fixed assets 2010

2011

COST At 1 January 2011 Additions Disposals At 31 December 2011

Office property £

Office equipment £

Accommodation equipment £

Motor vehicles £

Total £

196,527 (196,527) ─────── ═══════

98,777 41,088 (74,494) ─────── 65,371 ═══════

126,296 160,239 (64,829) ─────── 221,706 ═══════

9,333 ─────── 9,333 ═══════

421,600 210,660 (335,850) ─────── 296,410 ═══════

398,699 23,465 (564) ─────── 421,600 ═══════

41,698 867 (42,565) ─────── ═══════

81,174 10,921 (72,780) ─────── 19,315 ═══════

117,087 20,707 (64,637) ─────── 73,157 ═══════

194 ─────── 194 ═══════

239,959 32,689 (179,982) ─────── 92,666 ═══════

224,797 15,585 (423) ─────── 239,959 ═══════

═══════ 154,829 ═══════ 2%

46,056 ═══════ 17,607 ═══════ 20%

148,549 ═══════ 9,205 ═══════ 10% & 20%

9,139 ═══════ ═══════ 25%

203,744 ═══════ 181,641 ═══════

181,641 ═══════ 173,902 ═══════

DEPRECIATION At 1 January 2011 Depreciation for the year Disposals At 31 December 2011 NET BOOK VALUE At 31 December 2011 At 31 December 2010 Depreciation rates

LENCH’S TRUST NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011

CURRENT ASSET INVESTMENTS 2011 £

2010 £

181,599 369,344 416 ─────── 551,359 ═══════

175,609 423,846 413 ─────── 599,868 ═══════

2011 £

2010 £

20,745 29,722 2,903 ─────── 53,370 ═══════

6,013 18,312 8,351 ─────── 32,676 ═══════

2011 £

2010 £

Charities Deposit Fund and National Savings Bank Investment Account redeemable within one year and funds held by Broker pending investment. Capital fund Income fund Restricted capital appeal funds

DEBTORS

Income fund Housing contribution arrears Prepayments and other debtors Trade debtors

CREDITORS (AMOUNTS FALLING DUE WITHIN ONE YEAR)

Income fund Housing loans Trade creditors Taxation and social security Accruals and deferred income Other creditors Other interest free loan (Almshouse) Short term housing loan

32,662 32,662 23,918 181,965 4,909 12,418 51,983 32,117 7,630 3,000 3,000 2,297,604 3,847,785 ─────── ─────── 2,414,076 4,117,577 ═══════ ═══════ The short term housing loan was converted to a 15 year mortgage in January 2012. Interest is charged at a rate of 2% over base rate, subject to a minimum lending rate of 4% Capital fund Accruals and deferred income *

═══════

398,500 ═══════

Total

4,117,577 ═══════

2,812,576 ═══════

* The accruals and deferred income in 2010 represented a non-refundable deposit received in respect of the sale of land on the St Mary’s Estate. This sale was subsequently aborted, and the deposit offset against capitalised development costs incurred on St Mary’s (£299,620, note 12) and the remaining balance of £98,880 released to the income and expenditure account.

LENCH’S TRUST NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011

CREDITORS (AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR) 2011 £ Housing loans

2010 £

Income fund Mortgages: HSBC Bank Plc Other interest free loan

148,435 8,000 ─────── 156,435 ═══════

182,179 10,000 ─────── 192,179 ═══════

148,435 ─────── 148,435 ═══════ 8,000 ═══════

143,434 38,745 ─────── 182,179 ═══════ 10,000 ═══════

Amounts repayable by instalments, not wholly repayable within five years: Repayable within five years Repayable after five years

Other interest free loan

The housing loan from the Bank is secured by specific charges on the Trust’s housing properties and is repayable at varying rates of interest.

LENCH’S TRUST NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011

_________________________________________________________________________________________________________________________________ 19

OTHER RESERVES Restricted Reserve Capital appeal fund (Note 25) £ At 1 January 2011 Transfer from/(to) income and expenditure account

─────────────────────────Designated Reserves ───────────────────────────── 31 December Amenities & Sinking funds Cyclical Extraordinary 31 December contingency re: Loan from maintenance repairs 2011 2010 fund capital fund reserve reserve Total Total £ £ £ £ £ £

12,013 (12,013) ─────── At 31 December 2011 ═══════ The transfer from income and expenditure account represents:

25,147 (25,147) ─────── ═══════

559,442 (559,442) ─────── ═══════

408,084 4,597 ─────── 412,681 ═══════

254,164 7,170 ─────── 261,334 ═══════

1,258,850 (584,835) ─────── 674,015 ═══════

1,296,244 (37,394) ─────── 1,258,850 ═══════

Investment income Donations received Expenditure Specific transfer

(25,147) ─────── (25,147) ═══════

16,053 (575,495) ─────── (559,442) ═══════

4,597 ─────── 4,597 ═══════

7,170 ─────── 7,170 ═══════

27,820 (612,655) ─────── (584,835) ═══════

15,288 281,350 (551,875) 217,843 ─────── (37,394) ═══════

(12,013) ─────── (12,013) ═══════

LENCH’S TRUST NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011

_____________________________________________________________________________ 20

PERMANENT ENDOWMENT 2011 £

2010 £

2,532,896 (489,431) ─────── 2,043,465 ═══════

2,859,287 (326,391) ─────── 2,532,896 ═══════

3,366 (492,797) ─────── (489,431) ═══════

(886) 13,362 (338,867) ─────── (326,391) ═══════

Capital Fund £

Income Fund £

Total £

42,662 95,657 ─────── 138,319 ═══════

118,987 (34,715) ─────── 84,272 ═══════

161,649 60,942 ─────── 222,591 ═══════

2011 £

2010 £

1,490,699 196,149

855,011 271,903

489,431 584,835 (83,397) ─────── 2,677,717 ═══════

326,391 37,394 ─────── 1,490,699 ═══════

CAPITAL FUND At 1 January 2011 Transfer (to)/from income and expenditure account At 31 December 2011 To transfer (to)/from income and expenditure account represents: Surplus/(deficit) on sale of investments Amounts written back to investments Transfer to income fund

REVALUATION RESERVE

At 1 January 2011 Unrealised revaluation surplus on investments At 31 December 2011

In accordance with the SORP, investments have been stated at market value. 22

ACCUMULATED SURPLUS

At 1 January 2011 Surplus for the year Transfer (to) and from reserves: Capital fund Other reserves Revaluation reserve At 31 December 2011

LENCH’S TRUST NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011

_____________________________________________________________________________ 23

CAPITAL COMMITMENTS

Capital commitment authorised by the Trustees and contracted for, of which Social Housing Grant of £1.447m has been approved with the balance funded internally and through external loans.

2011 £

2010 £

═══════

3,117,000 ═══════

LEGISLATIVE PROVISIONS The Trust is an Almshouse Charity regulated by a scheme of the Charity Commissioners.

CAPITAL APPEAL FUND GRANTS 2011 £

2010 £

2,000 10,000 3,000 1,500 150 ─────── 16,650 ═══════

1,000 100,000 2,000 15,000 105,000 2,500 800 50 5,000 1,350 10,000 3,000 150 20,000 500 500 5,000 4,000 500 5,000 ─────── 281,350 ═══════

These represent capital grants to fund the costs of William Lench Court, the donors being: Trustees of Lord Austin Deceased Harborne Parish Lands Charity W G Edwards William A Cadbury Trust Michael Marsh Charitable Trust The Garfield Weston Foundation S&D Lloyd Charity The Workman Trust The Wolfson Foundation Inman Charity Trustees Ltd Mansell Donation P Hayward Mazars Charitable Trust Minor Weir & Willis Edward Cadbury Charitable Trust Kelton Charity Trust Charles Brotherton Trust The Eveson Charitable Trust WED Charitable Trust Auto start The Rowlands Trust Baron Davenports The George Henry charitable trust The Grimmitt Charitable trust

LENCH’S TRUST NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2011

_____________________________________________________________________________ 26

RELATED PARTY TRANSACTIONS Birmingham City Council has the power to nominate a maximum of 1 Trustee. Any transactions between those parties are made at arms length, on normal terms and they cannot use their position to their advantage.

POST BALANCE SHEET EVENT On the 25 April 2012, the Scheme now sealed by the Charity Commission replaces the individuals who are currently the Trustees of Lench’s Trust, with a new Charitable Company (limited by guarantee) which will from the 25 April become the sole corporate Trustee of the existing unincorporated Charity. The assets will be vested in the new company from the 25 April, but will not be owned by the company, as they comprise permanent endowment, but will be available to the company for use in pursuit of its charitable purposes.