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2022-12-31-accounts

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

Registered Number: 00239561 Charity Number: 1107827

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THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

CONTENTS Page
Chairman’s Introduction Preface
Reference and administrative details 1
Trustees’ report 3
Independent Auditors’ report 23
Consolidated statement of financial activities 26
Summary income and expenditure account 27
Consolidated balance sheet 28
Company balance sheet 29
Consolidated cash flow statement 30
Notes to the financial statements 31

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

CHAIRMAN’S INTRODUCTION

The last three years have been an enormous challenge for us all, and whilst the impact of the pandemic is still visible across the Diocese, new challenges have emerged – including inflation and the cost of living, partly resulting from the unwarranted conflict in Eastern Europe. There seem few signs of an end to these problems and as a Board there has become a need for a process of change to tackle the deficit budgets that as a Diocese we continue to face and to alleviate the pressure on parishes as much as possible. Our aim is to find a solution that is both affordable and sustainable in terms of Mission, Ministry, and Finance for future generations.

Progress has already been made. 2022 saw the first year of the new Parish Apportionment System - the Common Fund. This is very much at the heart of the Diocesan message of Generous Hope. The system encourages generosity across the Diocese and that includes transitional support from the centre. Shaping for Mission continues to assist in the reorganisation of our Pastoral Care across the communities in the Diocese as we seek to sustain our parishes whilst searching for additional forms of Ministry, Church Plants and other new initiatives to discover new disciples to enrich their hearts with the Spirit. Much more work needs to be done and we ask for those tasked with the work to be remembered in your prayers.

As we look back at 2022, after a total income of £18.188M (2021: £16.673M) the DBF as a charity sustained an operating loss of £0.226M (2021: £0.952M). In addition, the Board of Education consolidated into the Board of Finance and their £9.406M reserves were added to the DBF reserves whilst remaining ‘ring fenced’. Contributions to the Diocese from our parishes decreased year on year by £0.117M. The new Common Fund system reduced the amount requested from parishes, and whilst the receipts fell, the collection rate increased by 5%. 350 (78%) parishes paid their request in full, an increase of 47 (10%). Support of £4.153M (2021: £3.130M) from the National Church was very welcome.

The Board’s main consideration during the year was to maintain a sufficient cash flow to meet our financial obligations. This we were able to do by drawing on our reserves and through advantageous sales of surplus assets, mainly houses and some glebe land. In June 2023 a motion will be made to Diocesan Synod to implement Total Return Approach which will allow the Board to utilise some of the historical growth from our endowments to help secure the General Reserves. Whilst it will secure the future reserves position, the motion alone will not resolve the ongoing liquidity pressures and that work must continue. Within this document there is a detailed report on the action taken by the Board and its effect on our Diocesan Finances.

Despite the operating loss and the consequent cash outflow, because of revaluations and the addition of the Board of Education. the value of Total Assets increased during the year by £18.137M to a total of £195.397M, compared to an increase of £18.770M in the previous year. The policies, procedures, and strategies to maximise our reserves in a time of crisis have been remarkably successful as reflected in the results. 2023 and future years will bring different challenges with the cost-of-living crisis currently gripping the country: there can be expected to be many unknowns which will make the next few years difficult.

After almost 11 years of service, I shall retire as Chairman of LDBF at the AGM in June. It has been a period of many great and varied testing times, but it has been an honour and privilege to serve our wonderful Diocese and to be able to work with such a talented and dedicated team of colleagues, officers, and committee members. There are now some signs that the new visions that have been put in place are gradually starting to come into effect and some indications of new growth can be seen, although these are fragile and will need to be carefully nurtured.

I would like to record the Board’s grateful thanks to all those who contribute to the financial health of our Diocese. The resilience of our people, our clergy, and our diocesan staff in coping with such very difficult circumstances has been exceptional.

There is little doubt that our finances will remain under great pressure for some time ahead. Nevertheless, we are confident that they can be sustained provided that very careful financial management is maintained, based on continuing contributions from our parishes, further assistance from the central church, and an ability to continue to draw upon reserves built up so carefully in past years.

John Naylor Chairman 25 May 2023

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

REFERENCE AND ADMINISTRATIVE DETAILS

FOR THE YEAR ENDED 31 DECEMBER 2022

President The Bishop of Lichfield,
Chair Mr J T Naylor
Vice Chair The Revd Preb T Bloor **
Ex-Officio The Bishop of Shrewsbury
The Bishop of Stafford
The Bishop of Wolverhampton (Vacant from 30 April 2023)
The Bishop of Oswestry (from 02 February 2023)
The Dean of Lichfield (Vacant from 31 March 2023)
The Archdeacon of Lichfield
The Archdeacon of Salop
The Archdeacon of Stoke-upon-Trent
The Archdeacon of Walsall
The Revd Preb B Whitmore
Mr J Wilson
The Revd Preb M Metcalf
Elected The Revd M Beer (Elected May 2023)
The Revd P Cansdale
The Revd J Cody
The Revd Preb B Leathers
Mrs P Allen
Mr D Beswick (to 22 November 2022)
Mr A Charles
Mr J Clark
Dr J Fawn
Mr C Gill
Mr P Graetz
Mrs J Locke
Mr M Maclean (Elected May 2023)
Mr R Pithers
Mrs L Rawling
Mr C Randles
Mrs A Robbie (Elected May 2023)
** Non-Director/Trustee
Nominated by the Bishop None as at 31 December 2022
Co-opted Member None as at 31 December 2022
Company Registered Number 00239561
Charity Registered Number 1107827
Registered Office St Mary’s House
The Close
Lichfield
Staffordshire
WS13 7LD
Chief Executive Officer &
Company Secretary Mrs J Jones BSc FCIPD
Director of Finance Mr J R L Hill FCMA CGMA

1

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

REFERENCE AND ADMINISTRATIVE DETAILS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

Independent auditors Haysmacintyre LLP
10 Queen Street Place
London
EC4R 1AG
Bankers Lloyds Bank Plc
22 Conduit Street
Lichfield
WD13 6JS
Solicitors FBC Manby Bowdler LLP
Routh House
Hall Court
Hall Park Way
Telford
TF3 4NQ
Investment Advisors CCLA Investment Management Ltd
1 Angel Lane
London
EC4R 3AB
Canaccord Genuity
Slip House
Princes Drive
Worcester
WR1 2AB
EdenTree Investment Management Ltd
24 Monument Street
London
EC3R 8AJ
Surveyors Mr C Glenn – Internal Diocesan Surveyor
Mr S Ray – Maintenance Surveyor & Head of Property Services
Insurers Ecclesiastical Insurance Group
7 East Court
London Road
Charlton Kings
Cheltenham
GL52 6HS
Brokers: PIB Insurance Brokers
Poppleton Grange
Low Poppleton Lane
York
YO26 6GZ

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THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT

FOR THE YEAR ENDED 31 DECEMBER 2022

Trustees Annual Report 2022

The Directors, who are also Trustees for the purposes of charity, present their annual report, together with the audited financial statements, for the year ended 31 December 2022.

The directors/trustees are one and the same and in signing as trustees they are also signing the strategic report sections in their capacity as directors.

This combined report satisfies the legal requirements for:

Vision Statement

"As we follow Christ in the footsteps of St Chad, we pray that the two million people in our diocese encounter a church that is confident in the gospel, knows and loves its communities, and is excited to find God already at work in the world. We pray for a church that reflects the richness and variety of those communities. We pray for a church that partners with others in seeking the common good, working for justice as people of hope."

Legal Objects

The diocese is arranged as four Archdeaconries, in three Episcopal Areas, with a total 28 Deaneries.

The Diocese of Lichfield serves a population of approximately two million covering 1,744 square miles throughout Staffordshire, the northern half of Shropshire and much of the Black Country. The diocese has 280 benefices, 437 parishes and 569 churches.

Company Status

The Lichfield Diocesan Board of Finance was incorporated as a company on 14 May 1929 under the company number 00239561 in accordance with the Diocesan Boards of Finance Measure 1925. It is a company limited by guarantee not having share capital and registered as a charity on 25 January 2005 with the charity number 1107827.

It is governed by its Memorandum and Articles of Association as amended by Special Resolutions dated 28 April 1960, 6 February 1968, 18 June 2003, 13 March 2004 and 7[th] July 2015.

Principal Activities

The principal activity is to promote assist and advance the work of the Church of England in the Diocese of Lichfield and elsewhere, by acting as the financial executive of the Diocesan Synod. It oversees the resourcing of ministry within the diocese and the financing of the work of the various diocesan bodies (constituted under ecclesiastical statute or established voluntarily by the Bishop and Diocesan Synod), which also have the object of advancing the aims of the Church of England in the diocese and elsewhere.

There has been no change in those activities during the year.

Strategic Aims

The main role of the Board is to identify and manage the financial aspects of the provision of ministry within the Diocese so as to provide appropriate personnel and financial resources to assist the Diocesan Synod, Bishop’s Council, deaneries and parishes to further the mission and strategic priorities in the Diocese.

3

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

OBJECTIVES AND ACHIEVEMENTS FOR THE YEAR

Diocesan Vision

In May 2017 the Diocesan Bishop led the vision and strategy for the Diocese through Directions of Travel, at a launch entitled “First Steps”. It was based around “Come Follow Christ, in the footsteps of St Chad”. The mission and ministry of the Diocese will be focused around the three key areas of Discipleship, Vocation and Evangelism - following in the footsteps of the first bishop of Lichfield, St Chad.

To develop this theme and to work with parishes to enable the Diocese to have a flourishing and sustainable future the Direction of Travel Steering Group was set up as a strategic and visionary to bring all aspects of Diocesan departments together and has been collaborating with groups all over the Diocese to ensure our vision statement and three priorities are at the heart of all we do and speak.

“As we follow Christ in the footsteps of St Chad, we pray that the two million people in our diocese encounter a church that is confident in the gospel, knows and loves its communities, and is excited to find God already at work in the world. We pray for a church that reflects the richness and variety of those communities. We pray for a church that partners with others in seeking the common good, working for justice as a people of hope."

Strategic Development Funding (SDF) Project

The National Church has made available Strategic Development Funding that supports major change projects which lead to a significant difference in dioceses’ mission and financial strength. It is only available to dioceses and the projects should fit with their strategic plans. In October 2019 the Diocese received confirmation that a grant of £1.690M had been awarded for the Telford New Minster Project over a six-year period to 2025.

Telford New Minster Church is a carefully thought-out project to revive Christian life in a complex and emerging new town in the Midlands. Based in Meeting Point House in Telford town centre, the church will provide the spark for ten new Christian communities each with the simple mandate to encounter the story of Jesus for themselves. These communities will meet regularly for discipleship and mission, to pray for and build social outreach in their own areas; they will also gather in a town centre church for formation, nurture, celebration and worship. Gathered and scattered church are on an equal footing. Telford New Minster will reach young people and children through schools and youth work and some of the ten new Christian communities are youth communities. The project will also provide missional oxygen for existing churches.

The total project value is estimated at £3.986M with the Board investing £2.296M over the period to 2025. The development of the extension at Meeting Point House was completed during 2022, with the first event being Diocesan Synod in March 2022. The work continues to thrive across Telford, reaching new generations and has a worshipping community of 291 at the end of December and a regular congregation of around 70. Due to the delay created by Covid, consideration is being given to rebase the timeframe and work is now being undertaken to try and make the project sustainable by the end of 2025. This will include a contribution to the Common Fund within the formula, the project is already contributing in the region of £20,000 per annum. Continued support will be required by the Board, but this is normal in new projects.

Central Support

There are two main mechanisms to the Central Support of the Diocese. The Central Administration Team; known as CAST (Central Administration Support Teams); consisting of Governance, Communications, Safeguarding, Finance and Property. The Discipleship, Vocations and Evangelism Team; (DVE), comprises of Education, Mission, Open to All, Transforming Church and Communities and Vocations & Training.

Following the pandemic and change in the working patterns of staff both teams from March 2023 are based at the Diocesan office at St Marys House, Lichfield and the second office Three Spires has been commercially leased on a ten-year agreement.

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THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

FUTURE PLANS

Prior to the pandemic there were concerns with falling congregational numbers and income at parish level; the impact of the pandemic is now more visible and with the increase in the cost of living, these are certainly challenging times for the parishes, and in turn the Board.

It is apparent that future budgets are becoming more difficult to balance – the costs are simply rising at a quicker rate than income. The largest source of income from parish donations initially through the Parish Share and now the Common Fund has seen receipts fallen from approx. £11.00M to £9.50M. The significant fall in income has meant the Budget and future forecasting and alternative financing has had to be considered – be that through reduction in costs or looking at ways of increasing different sources of revenue.

Despite this the Board continue to support the Diocese in looking for new and alternative ways of Mission and Ministry and build on the good work and news stories around the Diocese. It is always appreciated that there is a transitional period during any change; especially with new areas of work and how this can be managed and financed. One option is further SDF bids that can help generate new churches and fresh expressions around the Diocese, including a presence in New Housing Estates and these are being explored and reported back through the Direction of Travel Steering Group and the Setting Gods People Free initiatives. The concern with short term funding is when the funding ends, does the work cease if it is not possible to be self-financing or are different approaches taken?

In order to develop these models further there is a requirement to undertake an exercise in realigning resources that are available, both in terms of human resources, material available and also financial constraints. Part of this exercise is to review each parish and look at the sustainability of the current deployment models and investment in areas around the Diocese. This whole exercise has been expedited by the COVID 19 pandemic that started in 2020; continuing into 2021 and 2022, more details are given below on page 6 on a strategic approach to the future of the Church of England in the Lichfield Diocese after the pandemic.

Resourcing the Future (Resourcing Future Ministry)

Since 2015 the Board has operated a restricted fund, with the aim and objective to build from either historical resources or surplus resources, that will be ring fenced and initially accumulate dividends to hopefully grow until the fund is required. The aim was to try and raise this fund up to £7M. Receipts into the fund have been invested either in Property or Accumulated Shares, with the emphasis on capital appreciation to try and expedite the growth of the fund. Prior to the COVID pandemic in 2020 the intention was the fund will start to support the overall Diocesan Finances through additional income into the Diocesan Budget. This would help to support the Diocesan Budget and any reductions in cash or real terms of Allocation from the National Church through the transitional period which is due to end in 2025. Once the transitional period is complete the income generated would then be available to help support the Diocesan Budget in future years – or support other areas of Mission and Ministry that is felt necessary at the time. In light of the pandemic as part of the overall management of funds through the financial challenges in the last twelve months, it was decided to allow the fund to continue to be accumulated. The intention is to now make the fund available to support management of change and any transitional period from 2023 onwards that is required.

In May 2022, Bishop’s Council considered a paper that highlights an initial use of the fund, and in light of the impact of the pandemic the capital will also be available to be utilised if and when required. It was agreed that initially the funds could be used for maintaining posts in the short term until change can occur and giving the Parish Assessors the opportunity to make proposals to assist growing churches or increased deployment some transitional period to meet their Common Fund requirements. In addition, £20,000 was allocated to each Episcopal Area to enable Deanery visions to come to fruition,

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THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

including Leadership Training, and finally funds be made available to enhance pension contributions for those clergy who were considering early retirement.

This fund has never been financed from Parish Contributions, but through asset management. The aim is that at some stage in the future it will be designed to ease the burden on parishes through share requests. Due to the nature of the fund, it was originally split across different funds and reserves; however, whilst predominantly being financed from the Pastoral Fund it is now a standalone fund. Investment Properties are Designated assets within the Board statements. Glebe (Diocesan Stipends Fund) Investment properties are Endowments and have been removed from the fund. At the year-end the fund had a total value of £4.500M (2021: £4.633M) had been invested for this fund. The Glebe Investment Properties have a value of £0.589M at the end of 2022, (2021: £0.554M)

2022
2021
Investment Properties
£0.380M
£0.357M

Investments
£2.900M
£3.595M
Cash
£1.220M
£0.681M
Total
£4.500M
£4.633M

Low Income Communities (National Church) Allocation

The new triennium of funding from the National Church commenced in January 2017. The funding allocation with transitional relief was divided into three sections of three years, and the latest triennial section is due to end at the end of 2022. The final section will commence in 2023 and will continue to 2025. Whilst additional funding and funds have been made available from the National Church, indications are the original forecasts to 2025 will remain unchanged.

The allocation is now known as Low Income Communities funding and Lichfield Diocese is one of the highest recipients of the new allocation formula. Despite being in the top five recipients the forecast shows the Lichfield Diocese will continue to receive around £2.0m per annum until 2025. The amount received will reduce slightly each year and with inflation returning with a vengeance this will result in a reduction in real terms, far greater than the lower cash receipts.

In order to help with reporting and accounting to the National Church on the allocation, from January 2022 the Board introduced the new Common Fund to replace the Parish Share formula that had itself been in place since 2013. The new Common Fund integrated the IMD (Indices of Multiple Deprivation) into the formula to replace the Property Category. It is believed this will give a fairer reflection of the deprivation across the Diocese and complies with the systems that the National Church use and favour. It must be noted that this is a measure of deprivation and not a measure of affluence, which in turn creates different challenges to parishes across the Diocese.

Financial Impact from Pandemic

As previously mentioned, the reduction in income resulted in considerable losses in 2020 through to 2022 on day-to-day activities. The Board committed to financing the deficits of up to £6M from reserves to try and alleviate the pressures on parishes. With the conflict in Eastern Europe and the Global increase in inflation, especially fuel costs and then impact on transportation costs, then the challenges have increased on parishes and congregational members. Budget forecasts were not giving any comfort and resulted in a change to the budget structure in June 2021 in creating a Unit Cost for deployment, and in turn a new apportionment system called the Common Fund to accompany the new financial strategy.

Throughout the pandemic the creation of the Finance Core Group was critical. A small group that consisted of the Diocesan Bishop, Chair and Deputy Chair of the board, the Chief Executive Officer, the Director, and Deputy Director of Finance, continue to meet fortnightly to review the Boards financial position and related matters; but priority items remain cashflow forecasts; asset management and future budget implications. The group report to the Finance and Central Services Committee and circulate a monthly report to the trustees. The Group disbanded early in 2023 and returned to the original constitution as the Budget Review Group.

6

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

It is accepted centrally that parishes are facing unprecedented challenges and all efforts are being done centrally to try and alleviate some of that pressure as much as possible with the resources and reserves that are available and those that could potentially be freed up. It is important to offer and support Mission and Ministry as much as possible across the Diocese and within the Communities that we serve; and from that it is hoped with generosity and prayer the financial challenges will ease – although the national challenges on the cost of living will make this a difficult challenge; but prayerfully hope this will lead to the heart of generosity.

A Process of Change

Before the pandemic impact in 2020 there were issues that needed to be addressed, as expenditure was rising quicker than income. The pandemic in many ways simply expediated the need for change. A paper was discussed at Bishop’s Council in May entitled a Church Post COVID-19 and within it pertained a recommendation to review over a period every post and parish on sustainability. There were five categories across all different areas as follows: -

  1. Congregational Strength

  2. Viability of church buildings, including fit for purpose in the 21[st] Century.

  3. Financial Strength

  4. Strategic Significance

  5. Missional engagement

A traffic light system is used, Red, Amber and Green, in each of the categories with an overall summary score. From this developed an approach for Deaneries to review their Mission and Ministry through Shaping for Mission.

There are three sections to the Process for Change, Generous Hope: Shaping for Mission and The Common Fund. In turn these will feed into trying to achieve an affordable and sustainable Budget.

Generous Hope

Launched in Advent 2021, Generous Hope continued as a diocesan focus in 2022. As Christians we are celebrating the generosity of God who inspires us to live generously – as individuals and churches in our communities.

The Common Fund Apportionment system, details below, is at the heart of Generous Hope and the board has been encouraged at the generosity shown by parishes to their neighbours and across the Diocese in supporting parishes in less fortunate situations than themselves. Over the advent season in 2021 the Diocese ran a Generous Hope Campaign to raise money to assist our colleagues in the Diocese of Matlosane. The success of the campaign allowed an initial donation to the Diocese of £20,000 and a similar amount will be transferred following the end of the Appeal shortly after Easter 2022.

There are many different tools parishes can use to help people give to their local church. These include parish Just Giving pages; contactless giving and Giving Direct. The Church of England website's Generous Church webpages have a range of resources and ideas to create a generous church culture including encouraging giving in a local context.

More emphasis on this area will be undertaken during 2023.

Shaping for Mission

Shaping for Mission is the process across the Diocese to strengthen our life of discipleship, vocation and evangelism while facing a significant reduction in financial income. It is working together as people of hope to make mission sustainable in helping fulfil the Diocesan vision. Shaping for Mission commenced in Autumn 2020 with meetings in each archdeaconry for rural/area deans, lay chairs and their assistants. During the Autumn, deaneries have formed Shaping for Mission teams and begun the work of reviewing their deanery.

The first phase of Shaping for Mission started in the last quarter of 2020 teams carrying out reviews of their Deanery. The second phase began in Easter 2021 when deanery teams move into the vision-setting phase. During this phase the teams will work with the wider deanery to ask questions about who and what God calls us to be and what our priorities for mission

7

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

are. In the early Autumn of 2021, each Deanery met with their Area Bishop and Archdeacon to present their Vision for the Deanery taking into consideration the work and consultations carried out over the earlier part of the year. This led to when Bishops’ Senior Staff and AMPCs (Area Mission and Pastoral Committees) began the process of translating the vision into action and aligning resources accordingly.

Work continued through the last year and will continue in 2023 as proposed Pastoral Reorganisiations are discussed, and agreements reached. The process is an integral part of the financial strategy and future budgets, both in the terms of parish deployment being financially sustainable and assisting in helping to manage the housing stock. With the difficulty in recruiting stipendiary clergy alternative forms of leadership is at the heart of the exercise. In addition, alternative ways of working across parishes, using the new Church Representation Rules to try and ease the governance on parishes.

Common Fund (Parish Share)

As previously mentioned, the formula for apportionment across the parishes changed with effect from 01 January 2022, following an overwhelming endorsement by Synod where 94% voted in favour of The Common Fund. The new system was built on the twin principles of (1) fairness in asking and (2) generosity in giving with the aim to maximise the former. The latter, generosity in giving, must be sprung from the heart that is touched by the spirit. The Area Bishops held meetings in June and July of 2022 to share their thoughts and guidance with the clergy across the Diocese.

The system includes the use of IMD for parish categories over property valuations, in line with the National Church request. The Low-Income Communities allocation will be apportioned using deprivation factors across the diocese. The new apportionment system will retain Mutual Support but at a reduced level; and is designed to assist parishes look at sustainability and encourage parishes to pay a minimum request and where possible offer additional support to other parishes across the Diocese.

The result of the new system has seen approx. 75% of the churches see a reduction in apportionment request. It was agreed that no parish would see an increase in their 2022 request, which meant that for all churches there will not have been any additional request in apportionment for three years. No apportionment system is perfect and there are some churches who will see additional challenges, but the Diocese through the Parish Assessors will work with each church to offer support and encouragement and where necessary Special Arrangements to ease the burden.

It was agreed at Diocesan Synod in November 2022 not to increase the formula apportionment given the current economic climate, however those parishes who were receiving assistance towards the formula would see an increase to try and close the gap between request and formula.

Alongside the Common Fund is the vision of Generous Hope with the Common Fund being at the heart of the Vision. The request to parishes as a minimum amount or request and parishes were encouraged to offer generosity to other parishes by contributing additional contributions. In 2022 a total of 17 parishes used the generosity option and a total of £71,753 was donated by parishes to other parishes in the Diocese.

Budget – Cost of Deployment

The new format of Budget created a Unit Cost of Deployment; and it remains a central part of reviewing costs, income and financial sustainability. In 2022 the Real Cost of Deployment was £62,187 per full time post. This figure was then reduced to a subsidised Cost of Deployment for the Common Fund formula to £56,490. The difference was financed from Board reserves to create a deficit budget. In 2023 as aforementioned the Subsidised Cost of Deployment was retained at £56,490, although the Real Cost increased to £63,588.

The concept behind the model is to bridge the gap between the Real and Subsidised costs. This was planned to be done by increasing the income or affordability at parish level and either increasing current other forms of income or creating a new income stream; or decreasing expenditure. Naturally the answer is both and to try and identify an affordable middle figurebelieved to be around £60,000.

When the model was first created in June 2021 it became clear that whilst some expenditure could be reduced; there was a danger that reductions would simply be unsustainable on the remaining resources. The concern is that the unrestricted reserves would be exhausted within a couple of years if the current size of deficit continued.

8

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

At the same time that sizeable deficits were being made, the investments and property values were increasing.

Total Return Approach

Diocesan Boards of Finance now have the powers afforded by the Charities Act 2011 (amended by Section 4 of the Trusts (Capital and Income) Act 2013) to adopt a total return approach to investment.

In simple terms this is an amendment to accounting standards that allows charitable organisations to transfer some historical capital gains from their Endowment Investments that the Charity remains a Going Concern. As the end of the above statement explains, it allows a different approach to investments and does not exist to assist with neither deficit budgets, where expenditure exceeds income, or cashflow management.

In June 2023 the Board will seek the permission of Synod to introduce a Total return Approach as this in turn will give future support from historical growth in value to be able to sustain the Budgets moving forward. In an ideal world some of the historical growth would also be used to support new Mission and Ministry streams, and this may well be possible in the future, but is the answer in the short to medium term to ensure the Board can safely continue as a Going Concern and equally continue to ease the burden on the parishes.

How would it work?

In respect of the Board, it would refer to the Diocesan Stipends Fund. This is split into three different categories, Investments, Houses, and Glebe Land.

A decision is made on each category to decide what will be deemed to be the historical cost or valuation, and that amount is then locked as the Endowment Fund. Any balance or growth will then be classified as Total Unapplied Return.

Whilst some charities will then develop a policy to restrict on the maximum that can be drawn down each year, others simply leave the policy open. In the case of the Board the second or latter option may be more practical, and the amount to be transferred each year can be managed via the various Finance Committees with recommendations to the trustees at Bishop’s Council.

This avoids setting in place policies that future generations may well be tied into and as recent experience has shown we live in changing times.

FINANCIAL REVIEW 2022

Board of Education

Under the Diocesan Board of Education Measure 2021, the Diocesan Synod exercised their powers to merge the Lichfield Diocesan Board of Education into the board. The scheme came into operation from 01 June 2022. The Board of Education shortened their year-end to 31 May 2022 and the assets and liabilities were transferred into the Board of Finance. The funds are predominantly shown as Restricted funds as the reserves are specifically to be used for Educational purposes. The one exception is an Endowment Fund – this is shown separately from the Board of Finance Endowment funds.

The transfer of funds are shown as Funds Introduced, note 6 on page 39, and are made up as follows:-

£’000 Investments 6,223 Current Assets 3,183 Total 9,406 Restricted Funds 9,251 Endowment 155

9

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

Financial Performance

Due to the continuing events experienced in the last three financial years, inevitably income has fallen sharply. Whilst there has been no sign of recovery in income; however, the reduction appears to have stabilised, and whilst the financial statements will show an increase in 2022 compared to 2021, this is purely down to the Education transfer and substantial support received from the National Church. So as in 2021 the last financial year once again resulted in a sizeable deficit on day-to-day transactions for the Board. In 2022 the Glebe Land was revalued fully for the first time in several years and despite the fall in investment values back to December 2020 levels; due to the revaluation and continued increase in property values then with the transfer of the Education reserves the Board shows a significant surplus net movement of funds.

In the previous two years there had been a specific Parish Share Support Package, of one and a half months request in 2020 and one month in 2021. In 2022 with the new Common Fund, it was agreed that no parish would see an increase in request in 2022 from 2021. This created a Common Fund transition, and in the financial statements the amount of transitional support is shown as Support. The cost in 2022 was £0.634M (2021: £0.954M).

With the introduction of the Common Fund, the actual request to parishes fell by over £1M, so it was expected that the collection rate would increase, the question was more about the cash figure. The collection rate was erratic all year; however as anticipated and with thanks particularly to the parishes, the final figures showed a collection rate of 84.76% (2021: 79.40%). However more importantly the actual cash receipts were £9.431M (2021: £9.548M).

The Trustees remain grateful to all the parishes who completed their Common Fund payments during the year, and especially to those parishes that make their contribution payments by monthly instalments, which is essential in keeping the Diocese’s need to maintain a cash flow reserve to a minimum. One of the main drivers behind the Common Fund was to try and reduce the speed in which arrears were rising and make the requests more affordable for more parishes. From this perspective it was pleasing to see in total 350 out of 448 (78%) parish paying units paid their allocation in full compared to 313 out of 447 (70%) in the previous year.

In addition to the Common Fund, there was an additional £1.010M (2021: £0.988M) that has come from parishes in way of Statutory fees from Weddings and Funerals.

The Board are fortunate to have received £4.153M in 2022 (2021: £3.130M) from the National Church in way of support. This amount was represented by, £2.045M (2021: £2.073M) Low Income Community support, whilst £0.460M (2021: £0.700M) was awarded for sustainability funding due to the loss of income being experienced in the Diocese. A further £0.278M was received in respect of Resourcing Ministerial Education (2021: £0.278M). In addition, there was support given due to the Cost of Heating and the impact it may have on parishes and subsequently Diocese. The sum was split between helping individuals with heating costs and parishes towards their heating cost. Grants were distributed initially using the Return of Parish Finance information – some parishes showed generosity in declining the offer. The remaining balance was distributed to the parishes in receipt of Low-Income Community support. The final grants were paid out in 2023. The heating support grant received was £0.729M. There was also a SDF grant for £0.611M.

Overall consolidated income, excluding the pensions adjustment and Education transfer in 2022, increased in the year to £18.226M (2021: £17.063M), whilst consolidated expenditure also increased to £18.918M (2021: £18.034M).

The Board as a consolidated charity therefore made a surplus before Net Gains on Investments of £9.072M (2021: deficit £0.971M). This figure includes the Education transfer of £9.406M.

The Board as a standalone charity made a surplus before Net Gains on Investments of £9.026M (2021: Deficit £0.952M). Unrestricted or General Funds made a deficit before Net Gains on Investments of £1.952M (2021 deficit £2.205M).

The capital values of properties continued to increase by £7.345M (2021: £11.929M), whilst investments increased by £1.722M (2021: £8.012M) in the main due to the increase in Glebe Land values of £6.119M – resulting in an overall increase in funds of the group of £18.137M (2021: £18.970M). Charity reserves increased by £17.998M (2021: £17.818M).

10

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

Significant Property Transactions

In the year the Board sold 1 property (2021:13). This raised £0.352M (2021: £4.200M) in net house proceeds. In addition, Nil investment properties were sold (2021: 0) raising £Nil in house proceeds (2021: £Nil).

In the year the Board purchased 4 properties (2021: 2) costing £1.592M (2021: £0.476M).

The current policy on purchases and sales of properties remains:

At the start of 2023 a Property Asset Review commenced. The aim of the review was not only to give due to consideration to the above, but also look at the market values and ensure that the value recorded in the Balance Sheet is accurate. The review would also identify where there is a shortage of houses in certain places in the Diocese, and also ensure those properties that are not registered with the Land Registry, normally due to Pastoral Orders, then a registration process is undertaken.

Balance sheet position

The Trustees consider that the balance sheet together with details in note 23 and note 24 shows broadly that the restricted and endowment funds are held in an appropriate mix of investment and current assets given the purposes for which the funds are held. While the net assets at the Consolidated balance sheet date totalled £195.397M (2021: £177.260M) it must be remembered that included in this total are properties, mostly in use for the ministry, and other Tangible Fixed Assets with a total value amounting to £129.488M (2021: £120.628M). Much of the remainder of the assets shown in the balance sheet are held in restricted funds and cannot necessarily be used for the general purposes of the Board. Note 24 on page 54 show the split in Asset class and by fund in more detail. Reserves which are considered to be free reserves and easily available without restriction are set out below.

Reserves Policy

When forming and reviewing the reserves policy, the Board must take into consideration that the reserves fundamentally serve two purposes. Firstly, the level of retained reserves generates income that helps with additional income throughout the year, thus easing some of the burden on the parishes. Secondly, there needs to be sufficient reserves available to assist with the erratic cash flow that is experienced throughout the year. This in turn can be divided into two sections: a) liquidity or short-term reserves and b) contingency funds/going concern, to allow the Board to operate in times of crisis. The Board has considerable responsibilities including the remuneration of parochial stipendiary clergy, the upkeep of houses and the employment of full or part time staff.

The Board has identified in its risk management review that it is heavily reliant on Common Fund contributions and suspects that parishes may find it increasingly difficult to maintain the required level of payment – this will only be exacerbated by the current economic climate. It is therefore important that the DBF adopts a Reserves Policy as well as an Investment Policy that takes liquidity seriously into consideration.

11

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

Free (Unrestricted) Reserves – Liquidity

During the last financial year due to the exceptional circumstances the Board reconsidered the free reserves policy. This included significantly reducing the number of designated funds. All investments held in designated funds were transferred into unrestricted funds, along with other current assets and liabilities. It was agreed that the free reserves would also be set against Budget expenditure rather than Common Fund requests. Having considered financial risk, liquidity requirement and the timing of cash flows throughout the year, the Trustees’ policy is to hold a balance of readily realisable assets in the general fund equivalent to 3 months budget expenditure for the following year. The budget expenditure for 2023 is £16.507M; therefore, the benchmark is set at £4.127M.

Year End Position

Free reserves are calculated by taking the net figure of Unrestricted Investments plus Net Current Assets and excludes designated funds. As at 31 December 2022 this totalled £3.597M (2021: £5.474M). This equates to 2.61 (2021:3.98 months) months of budget expenditure. The trustees are satisfied with the current level of free reserves in light of the current economic climate and financial challenges facing the Board and parishes; although aware that the large majority of the reserves are in investments which may require to be sold and reduce investment income into the budget in future years. In addition, in February 2023 the trustees agreed to recommend to Diocesan Synod to introduce a Total Return Approach to boost Unrestricted reserves and assist with future budget deficits.

Reserves tied up in fixed assets

The charity’s unrestricted fund comprises net assets amounting to £4.046M (2021: £5.707M) of which £0.167M (2021: £0.234M) is tied up in tangible fixed assets. Consolidated unrestricted funds amount to £4.0469M (2021: £7.381M) of which £0.167M (2021: £1.910M) is tied up in tangible fixed assets. In the year the Unrestricted Reserves in the Subsidies were transferred to Restricted to be consistent with the treatment of the Education Funds and also in accordance with recommended practice.

Designated funds

Due to the change in reserve policies, designated funds now simply consist of DBF Occupational and Investment property including both of the Diocesan Offices. In addition, a few remaining projects funds have been retained, the funds are selfgenerating. The total Designated funds as at 31 December 2022 was £11.728M (2021: £10.968M).

Restricted and endowment funds

As set out in note 23 the Board holds and administers many restricted and endowment funds. As at 31 December 2022 the charity restricted funds totalled £115.870M (2021: £104.030M) and endowment funds totalled £61.583M (2021: £54.525M). Neither are available for the general purposes of the Board. Consolidated restricted reserves amount to £118.040M (2021: £104.386M).

Within the Restricted Fund, £82.027M (2021: £76.032M) is invested in Property required to house the clergy of the Diocese and is therefore not readily accessible. Within the Endowment Fund £31.388M (2021: £28.668M) is invested in Property required to house the clergy of the Diocese and is therefore not readily accessible. These assets are integral to delivering the Board’s mission.

12

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

Stipend Reserve

Previously there was a Stipend Reserve policy to ensure 5 months stipends were held across various designated and restricted funds. With the change in Free Reserves policy and with the availability of overdrafts with the Commissioners it was decided this reserve is no longer required.

Grant making Policy

The Memorandum of Association of the Board explicitly permits the Board to make grants in pursuance of its objects, and the nature of grants made in 2021 is indicated in note 15. Grants of up to £50,000 are considered by the Finance and Central Services Committee from budgets set aside for specific purposes. Grants over £50,000 are considered by Bishop’s Council, on recommendation by the Finance Committee.

Investment Powers

The Board is granted power to invest in suitable investments under its Memorandum and Articles of Association. As a charity, the Trustees have a duty of care to take such advice as is appropriate before investments are undertaken. This advice is sought from the Central Board of Finance (CCLA) in London, EdenTree Investment Managers and Canaccord who provide a free Nominee service. The Diocesan Investment Group considers the advice and the assets available at their discretion and then makes recommendations to the Finance and Central Services Committee.

Investment Policy

The Board’s investment policies are based on two key principles: -

Investment Policy for long-term funds is aimed primarily at generating a sustainable income, with due regard to the need for the preservation of capital value, and the possible need to realise investments to meet operational needs. The Board does not have a policy of generating income at excessive or high risk – known as ‘purchasing income’, where high returns are guaranteed at the expense of capital.

The Glebe Land Investments are held for the purpose of raising income to achieve the maximum contribution possible to clergy stipends on an ongoing basis. The Glebe Land is constantly under review, and it is anticipated prime land will be sold if it is deemed to be economically viable in obtaining a better rate of investment return.

Unrestricted and Restricted fund investments are invested to balance income, liquidity and the maintenance of capital.

In summary, the Board's overall policy is to maximise income while preserving the real value of its funds. As a member of the Christian Ethical Investment Group, the Board adheres to the principle of seeking not only good financial returns but also high ethical standards from companies which use its money.

In light of the continued low interest rates and the predictions from the City that these would only move marginally in the short term, the Diocesan Investment Group do not use deposit or Cash as part of the Investment Portfolio at the current time. This also protects the capital from inflation when it is higher than the interest base rate.

The Diocesan investment Group produced guidance notes and a revised policy in consultation with the Investment Advisers. This is reviewed annually.

13

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

Ethical Policy

CCLA’s own ethical policy adheres to the Church of England Ethical Investment Policy that is overseen by the Ethical Investment Advisory Group (EIAG). The Board endorses and follows this guidance which includes the following:

“ The use of positive ethical criteria in assessing companies is firmly incorporated within the ethical investment policy through a process of constructive engagement with business. Criteria have been identified across five broad areas as: responsible employment practices; best corporate governance practice; conscientiousness with regard to human rights ; sustainable environmental practice; sensitivity towards the communities in which business operates”

The EIAG recommends against investment in any company that derives more than 3% of revenues from the production or distribution of pornography. It recommends against investment in any company, a major part of whose business activity or focus (defined as more than 25% of group turnover) is tobacco, gambling, alcoholic drinks, high interest rate lending or human embryonic cloning. The full report can be found at www.churchofengland.org

Fossil Fuels

In the last quarter of 2022, the remaining stocks held in companies whose main business was the extraction of fossil fuels were sold. In February 2023, the trustees agreed by a wide majority to have a policy to divest from fossil fuel investments. At the same meeting it was agreed to retain selected investments in other Extraction Industries.

Benchmark

In 2022 the Benchmark on return was set at 5% plus Inflation (CPI), which equated to 15.50%. The yield in 2022 was 3.13% (2021: 3.26%), and capital return was minus 12.18% (2021: +14.03%). The outcomes represented the volatile investment markets in 2022. In total this gave a total return of minus 9.05% (2021: +17.29%) compared to the benchmark of 15.50% (2021: 9.80%).

With inflation and more volatility in the investment market, and with interest rates likely to continue to rise, the benchmark for 2023 is highly unlikely to be met and will be the main topic of conversation with the Investment Managers in July 2023.

In addition, the Board has 1,916 acres (2021: 1,916) of Glebe Land that is classified as investments. In 2022 there was a full review of the Glebe portfolio as part of the move from two management agents to one in the year. The exercise is the first real full review since 2014. The outcome is an increase in value of the Glebe Investments of £6.119M. Moving forward the reviews will be done annually with a mixture of a full review on lease negotiations and a blanket increase in intermediate years.

PRINCIPAL RISKS AND UNCERTAINTIES

The Trustees are responsible for the identification, mitigation and/or management of risk. To achieve this, a register of all the risks identified is maintained by the Risk and Audit Committee who report directly to the Finance and Central Services Committee. Each Risk is assessed and alongside it, a management and mitigation strategy formed. This is subject to review by the Trustees on an annual basis with the responsibility for delivery of the mitigation strategies identified by it, being delegated to the Risk and Audit Committee.

The risk register identifies four areas where the risk of either failure to act or the impact of the events is considered ‘high’. These areas and the associated mitigation strategies are:

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THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

Common Fund: Collection is considerably less than the Budget figure.

Safeguarding & Inclusion: Where there is an occurrence of child, vulnerable adult, or domestic abuse by someone working for or on behalf of the Church.

Communications: Adverse local or national publicity. Failure to keep pace with media developments.

Cashflow/Liquidity – the ability to meet expenditure and legal obligations.

Ensuring Policy and Finance remained joined up.

External Factors (General Synod) Living in Love and Faith

15

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

STRUCTURE AND GOVERNANCE

Summary Information about the structure of the Church of England

The Church of England is the established Church, and HM The King is the Supreme Governor. It is organised into two provinces (Canterbury and York) and 40 Dioceses. Each Diocese is a See under the care of a Bishop who is charged with the cure of souls of all the people within that geographical area. This charge is shared with priests within benefices and parishes which are sub-divisions of the Diocese.

The National Church has a General Synod comprised of ex-officio and elected representations from each Diocese and it agrees and lays before Parliament, Measures for the governance of the church’s affairs which, if enacted by Parliament, have the force of statute law. In addition to the General Synod, the Archbishops’ Council has a coordinating role for work authorised by the Synod; the Church Commissioners manage the historic assets of the Church of England; and the Church of England Pension Board administers the pension schemes for clergy and lay workers. Within each Diocese, overall leadership lies with the Diocesan Bishop, who exercises that input as Bishop within the Diocesan Synod.

The Diocese is itself is divided into twenty-eight deaneries, each with its own Synod and within each parish there is a parochial church council which shares with the parish priest responsibility for the mission of the church in that place, in a similar way to that in which the Bishop shares responsibilities with the Diocesan Synod.

Whilst each Diocese is a separate legal entity, with a clear responsibility for a specific geographical area, being part of the Church of England requires and enables each Diocese to seek support from and application for partnership with neighbouring Dioceses.

Organisation

Diocesan Governance

The Diocese is governed by the latest Standing Orders approved on 05 November 2016. Its statutory governing body is the Diocesan Synod which is elected with representation from all parts of the diocese.

Diocesan Synod

The Synod has broadly equal numbers of clergy and lay people meeting, normally three times a year, together in Diocesan Synod with the Diocesan Bishops and Archdeacons. Its role is to:

Every member of Diocesan Synod is also a member of the Lichfield Diocesan Board of Finance (‘the Board’). The members of the Standing Committee of Diocesan Synod (Bishop’s Council) comprise the Board of Trustees of the Board and under company law the Board of Directors. The Board of Directors under company law have a personal liability of £1 in the event of the Board being wound up. The membership of Diocesan Synod and therefore Bishop’s Council is part exofficio and part elected: elections are held every three years.

16

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

Decision Making Structure

----- Start of picture text -----
Diocesan Synod
Diocesan
Bishops Staff Bishops Council Mission and
Pastoral
(including Agenda Planning)
Committee
Pay and
Conditions Finance and Diocesan Area Mission Pastoral
Committee
Asset Education Advisory
Management Committee
Budget Review
Diocesan Glebe Property Trusts, Risk and Parish
Investment Operations Operations Projects, Audit Group Assessors
Group Group Group Loans and
Grants
----- End of picture text -----

17

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

Diocesan Synod has delegated the following functions to the Board of Directors/Trustees (Bishop’s Council):

The Board of Directors (Trustees) has delegated responsibility for the day-to-day management of the company to the Chief Executive Officer/Diocesan Secretary who is supported by a number of heads of departments and their staff.

Key Personnel

Key Management personnel are deemed to be those having authority and responsibility, delegated to them by the trustees, for planning, directing and controlling the activities of the diocese. During the year they were the Diocesan Secretary/Chief Executive Officer, Director of Finance, Director of Education and Director of Communications.

The policy for setting the remuneration of Key Management personnel is under the remit of the Diocesan Pay and Condition Committee and is determined by several factors including reference to similar sized charities and current recommended rates for equal posts in other Diocese and in the wider not for profit sector.

Bishop’s Council

The members of the Bishop’s Council are the Board of Trustees. Bishop’s Council consists of 12 (13 from February 2023) ex-officio members, including the Diocesan and 3 Area Bishops and the 4 Archdeacons, 4 clergy elected by the House of Clergy from among their members and 14 lay persons elected by the members of the House of Laity representing Deaneries, 1 co-opted member and a maximum of 3 members nominated by the Diocesan Bishop. In February 2023 the Bishop of Oswestry was consecrated and will take an ex-officio position on Council. To ensure the numbers remain equal across representations an additional lay post will be elected in May 2023.

Committee Structure

Agenda Planning: ensure a smooth flow of business to the Bishop’s Council and Diocesan Synod aiming for lively, focused debate and to review periodically Synod’s Standing Orders. It reports direct to Bishop’s Council.

Diocesan Mission and Pastoral Committee: r esponsible for approving pastoral reorganisation, taking into account available clergy numbers and making use of new patterns of ministry. It is responsible for assisting in making better provision for the Cure of Souls in the diocese and oversees arrangements for pastoral supervision and care. Since August 2009 this committee is also responsible for the oversight of closed churches and for overseeing finding appropriate alternative uses for church buildings, which have been declared redundant. The membership of this Committee is now the same as Bishop’s Council.

Finance and Asset Management (FAM) - oversees the day-to-day financial activity which receives regular reports on Common Fund receipts, liquidity, staffing levels and both capital and revenue expenditure. The committee also oversees the Budget process and assists in submitting the Diocesan Budget and annual financial statements to the Board of Directors (Trustees). Their terms of reference include agreeing Accounting Policy and recommend any changes to Bishop’s Council and recommend the Reserves Policies to the Bishop’s Council. In late 2021 the name of the Committee changed and is now responsible for the oversight of the Benefice Buildings and Glebe Land, so will have full management of the Diocesan Assets.

18

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

The following are sub-committees of the Finance and Asset Management Committee:

Property Operations Group: responsible for determining policy and making recommendations to FAM. The group are responsible for setting the policy for repairing and maintaining all parsonage, team vicarages and houses owned by the Board. It also makes recommendations to the Diocesan Investment Group (see below) concerning the purchase and disposal of all houses owned by the Board, as well as identifying and recommending to the Diocesan Investment Group potential development sites.

Glebe Operational Group : responsible for recommending policy and decisions concerning the management of Glebe Land to FAM. It also makes recommendations to the Diocesan Investment Group concerning the investment of land and annual returns of such investments for the benefit of the Diocesan Stipends Fund.

Budget Review Group: responsible for overseeing the construction of the Diocesan Budget and future forecasts and ensuring that there is synergy between Diocesan Strategy and Finance.

Parish Assessors Committee: responsible for the oversight of the Common Fund formula. This includes making recommendations about the management of arrears and the operation of the current Common Fund formula.

Diocesan Investment Group: responsible for overseeing all the Investments and Assets of the Board in order to ensure that the reserves of the Board are utilised efficiently and to the best benefit of the diocese, both in the short term and medium to long term. The group recommend the expected Investment Income the Board can expect each year in line with the current Diocesan Financial Strategy.

Risk and Audit Committee: responsible for identifying and monitoring risk to the organisation and overseeing both internal and external audit requirements.

Pay and Conditions Committee: responsible for overseeing the working conditions and remuneration of lay staff and Central Sector Ministry.

Trusts, Projects, Loans and Grants: responsible for the award and distribution of loans and where applicable grants to parishes across the diocese in deaneries and parishes, including reviewing and analysing the effectiveness of the grant with the aims and objectives of the project and in accordance with the deanery or parish Mission Action Plan and to encourage new and/or Fresh Expressions of Christian faith. In addition, the Committee are responsible for assisting and overseeing parish project reviews as well grants to Community based projects.

In addition, there are other Statutory Committees that report directly to Diocesan Synod:

Diocesan Advisory Committee: advises on matters affecting churches and places of worship such as the granting of faculties, architecture, archaeology, art and the history of places of worship, the use and care of places of worship and their contents, and the care of churchyards.

Diocesan Board of Patronage: constituted under the provisions of the Patronage (Benefices) Measure 1986. It is sole patron or joint patron of a number of benefices.

Finally, there is a group whose role is to ensure there is cohesion and joined up thinking across the spectrum of the diocesan organisation and report directly to the Bishop’s Council:

Bishop’s Staff: a monthly meeting of Senior Staff (Bishops, Archdeacons, Dean, CEO/Diocesan Secretary and Director of Women’s Ministry), who pray together for the mission and set the vision for the diocese. The meeting considers the pastoral, disciplinary issues or special needs of parishes and decides on action to be taken. They are also responsible for ensuring the co-ordination across the areas and divisions so that policies are applied equitably across the diocese as well as remaining within the overall Stipend Budget.

19

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

Appointment of Trustees (Directors)

Trustees (and therefore Directors) are appointed by election every three years, with the exception of the ex-officio members. The current Trustees will serve until 31 July 2024. Following the Diocesan Synod elections in 2021 the new Bishop’s Council will be elected, and which members will serve until 31 July 2024.

Trustees are given induction training at the first meeting of the new triennium and receive ongoing training as appropriate. The training is tailored to the individual needs of the Trustees and may include introductions to church, company and charity law, an overview of the current programmes and plans of the diocese and an introduction to any special areas of the diocese with which they will be working (e.g. Board of Education, Parsonages Board). Trustees are encouraged to visit diocesan operations. Meetings are held around the diocese either in church buildings or at Christian Centres. Some senior staff have job titles incorporating the title Director , but they are not Directors of the Company for the purpose of company law and so therefore do not count as Charity Trustees .

Custodian Trustees

The Diocese is fortunate to have a separate legal entity in the Lichfield Diocesan Trust (see Connected Charities) to act as custodian to parish funds. There are however six trusts that have been transferred to the main Board to act as custodian. These relate to the former Moore Memorial and Tyrell Selwyn Trusts, where the income is to be used to assist financially members of the clergy. The fund is divided into four distinct funds, one allocated to each Archdeaconry. In addition, there is a trust to support Women’s Ministry and also the capital funds held to support the Diocesan Bishop’s Discretionary Fund. The total funds held in the Custodianship of the Board as at 31 December 2022 was £470,412 (2021: £534,948).

Related Parties

The Board has to comply with Measures passed by General Synod of the Church of England and is required to make certain annual payments to the Archbishops’ Council towards the running costs of the National Church. The stipends of the Diocesan and Area Bishops are borne by the Church Commissioners and are therefore not included in these financial statements.

Parochial Church Councils (PCCs)

The Diocese is required by Measure to be custodian trustee in relation to PCC Property and certain Endowment Trust funds, but the Board has no controls over PCCs, which are independent charities. The diocese has a separate charitable company called the Lichfield Diocesan Trust that operates as Custodian Trustee in these circumstances. The administration costs of the Lichfield Diocesan Trust are borne by the Board and these administration costs are shown in the financial statements. However, the accounts of PCCs and Deaneries do not form part of these financial statements.

PCCs are able to influence the decision-making within the Board of Finance and at Diocesan Synod level through representations to those bodies and through the input of their Deanery Synod.

Subsidiary Undertakings

The Board has no trading subsidiary companies as at the year-end. The Board however is the sole member of St Chads Retreats Centre, a charitable company incorporated on 4 March 2014 registered at Companies House in England and Wales under reference 08922281 and a registered charity number 1157619. The accounts for this subsidiary are consolidated in these financial statements.

The Board also the Body with total control over the Mercian Community Trust with effect from January 2017, a charitable company incorporated 24 December 2001 registered at Companies House in England and Wales under reference 04345177 and a registered charity number 1090596. The accounts for this subsidiary are consolidated in these financial statements.

20

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

Connected Charities

The Directors and Trustees of the Board consider the following to be connected charities:

Lichfield Diocesan Board of Education , a registered charitable company, which has responsibility for 205 church schools across the diocese, provides pastoral and professional support to all its schools and has a particular commitment to enhancing the quality of provision for religious education, collective worship and spiritual, moral, social and cultural development of all pupils. The Board of Education also helps to promote this work through a trading subsidiary that operates a Service Level Agreement. Only the grant paid to the Board of Education is enclosed within these financial statements.

At Diocesan Synod in March and in April 2022, it was agreed that under the Diocesan Education Measure 2021, the Board of Education will become a statutory Sub Committee of the Board with effect from 01 June 2022. The Board of Education will cease to become a separate registered Charitable Company and all assets and transactions form part of the future Board Financial Statements. The transfer was carried out on 01 June 2022 in accordance with the scheme.

Lichfield Diocesan Trust, a registered charitable company that acts as Custodian Trustee on behalf of the diocese as stated above. Only the grant given to the Trust to cover administration costs is included in the financial statements. The Diocesan Trust also operates a central Gift Aid Department to assist parishes in reclaiming Gift Aid. Again, only the costs of administering the scheme and commission received are enclosed in these financial statements.

Trustees’ Responsibilities Statement

The Trustees (who are also directors of the Lichfield Diocesan Board of Finance (Incorporated) for the purposes of company law) are responsible for preparing the Trustees’ Annual Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

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

The trustees are responsible for keeping adequate 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. 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.

21

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

TRUSTEES’ ANNUAL REPORT Continued

FOR THE YEAR ENDED 31 DECEMBER 2022

Auditors

Haysmacintyre LLP has indicated its willingness to be reappointed as Statutory Auditors.

Each of the persons who are members of board of Trustees at the time when this Trustee's annual report is approved has confirmed that:

Website

Further details on the Lichfield Diocesan Board of Finance and its programmes can be obtained from the website: www.lichfield.anglican.org. The Trustees are responsible for the maintenance and integrity of the corporate and financial information included on the charitable company’s website. Legislation in the United Kingdom governing preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Trustees Annual Report which includes the Strategic Report was approved by the Trustees on 25 May 2023 and signed on their behalf by:

Rt Revd Sarah Bullock Director/Trustee

22

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

Opinion

We have audited the financial statements of The Lichfield Diocesan Board of Finance (Incorporated) for the year ended 31 December 2022 which comprise the Consolidated Statement of Financial Activities, the Consolidated Balance Sheet and Company Balance Sheet, the Summary Income and Expenditure Account, the Consolidated Cash Flow Statement and notes to the financial statements, including a summary of 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 group 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 trustees’ 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 group'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 trustees with respect to going concern are described in the relevant sections of this report.

Other information

The trustees are responsible for the other information. The other information comprises the information included in the Trustees’ Annual Report and the Chairman’s Introduction. 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.

In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.

Opinions on other matters prescribed by the Companies Act 2006

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

23

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent charitable company and its environment obtained in the course of the audit, we have not identified material misstatements in the Trustees’ Annual Report (which incorporates the strategic report and the directors’ report).

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of trustees for the financial statements

As explained more fully in the trustees’ responsibilities statement set out on page 21, the trustees (who are also the directors of the charitable company for the purposes of company 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 trustees 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 trustees are responsible for assessing the groups and the parent 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 trustees either intend to liquidate the group or the parent charitable company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

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 extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Based on our understanding of the group and the environment in which it operates, we identified that the principal risks of non-compliance with laws and regulations related to safeguarding vulnerable beneficiaries, health and safety, and employment (including taxation), and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006 and the Charities Act 2011, and Church of England Measures.

We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to the recognition of revenue, including the cut-off of revenue at the year end. Audit procedures performed by the engagement team included:

Tailored narrative here but consider the following.

24

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

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

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. Our audit work has been undertaken so that we might state to the charitable company's members 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 and the charitable company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

Lee Stokes (Senior Statutory Auditor) 10 Queen Street Place For and on behalf of Haysmacintyre LLP, Statutory Auditors London EC4R 1AG

Date

25

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES

FOR THE YEAR ENDED 31 DECEMBER 2022

Notes
Income and endowments from:
Parish Contributions
4
Less Parish Support
Net Parish Contributions
Archbishops’ Council
5
Other donations
6
Other trading activities
8
Investments
9
Charitable activities
7
Other income
10
Total income and endowments
Expenditure on:
Raising funds
11
Charitable activities
13
Other expenditure
12
Total expenditure
Net (expenditure)/income
before investment
Gains
Net gains on investments and
Property
Net Income/(Expenditure)
Transfers between funds
17
Net movement in funds
Reconciliation of funds:
Total funds at 1 January 2022
23
Total funds at 31 December
2022**
23		 Unrestricted
Restricted
Endowment
Total
Total
Funds
Funds
Funds
Funds
Funds
2022
2022
2022
2022
2021
£’000
£’000
£’000
£’000
£’000
10,227
-
-
10,227
10,621
(634)
-
-
(634)
(954)
9,593
-
-
9,593
9,667
2,045
2,078
30
4,153
3,130
395
235
-
630
1,061
591
-
-
591
448
415
738
370
1,523
1,345
1,181
567
-
1,748
1,393
160
9,252
340
9,752
19
-------------------
----------------
--------------
-----------------
-----------------
14,380
12,870
740
27,990
17,063
------------------
----------------
---------------
-----------------
-----------------
129
25
83
237
146
16,200
2,475
3
18,678
17,731
3
-
-
3
157
--------------------
----------------
------------------
--------------------
--------------------
16,332
2,500
86
18,918
18,034
-------------------
----------------
------------------
--------------------
--------------------
(1,952)
10,370
654
9,072
(971)
466
2,065
6,534
9,065
19,941
--------------------
----------------
------------------
--------------------
--------------------
(1,486)
12,435
7,188
18,137
18,970
(1,089)
1,219
(130)
-
-
-------------------
----------------
------------------
------------------
------------------
(2,575)
13,654
7,058
18,137
18,970
18,349
104,386
54,525
177,260
158,290
-------------------
----------------
------------------
------------------
------------------
15,774
118,040
61,583
195,397
177,260
=========
========
=========
========
========

** Parish Support Package (Page 10) – this represents transitional support or relief in 2022 in respect of the change to the Common Fund system (2021: 1 months requested share to each parish to assist with the impact on local parish income due to the COVID pandemic)

All activities relate to continuing operations.

The notes on pages 31 to 64 form part of these financial statements.

A comparative Statement of Financial Activities is included at note 33.

26

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

SUMMARY INCOME AND EXPENDITURE ACCOUNT

FOR THE YEAR ENDED 31 DECEMBER 2022

2022
2022
Unrestricted
Restricted
Funds
Funds
Note
£’000
£’000
Income
14,380
12,870
Gains on investments
466
2,065
~~-------------~~
~~-------------~~
Gross income in the reporting period
14,846
14,935
Less: Total expenditure
16,332
2,500
~~-------------~~
~~-------------~~
Net income for the year before
Transfers
(1,486)
12,435
Transfers between funds
17,23
(1,089)
1,219
~~-------------~~
~~-------------~~
Net income for the year after transfers
(2,575)
13,654
~~-------------~~
~~-------------~~
Net income for the financial year
23
(2,575)
13,654
~~=======~~
~~======~~		 2022
Total
Funds
£’000
27,250
2,531
~~-------------~~
29,781
18,832
~~-------------~~
10,949
130
~~-------------~~
11,079
~~-------------~~
11,079
~~=======~~		 2021
Total
Funds
£’000
16,718
12,454
~~-------------~~
29,172
17,888
~~-------------~~
11,284
(178)
~~-------------~~
11,106
~~-------------~~
11,106
~~=======~~

The income and expenditure account is derived from the Statement of Financial Activities with movements in endowment funds excluded to comply with company law. All income and expenditure is derived from continuing activities.

The notes on pages 31 to 64 form part of these financial statements.

27

Registered Number: 0023961

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2022

Note
Fixed assets
Tangible assets
18
Investments
19
Current assets
Debtors: amounts falling due after
more than one year
20
Debtors: amounts falling due within
one year
20
Cash at bank and in hand
26
Creditors:Amounts falling due
within one year
21
Net Current Assets
Total assets less current liabilities
Creditors:amounts falling due
after more than one year
22
Net assets
Charity Funds
Endowment funds
23
Restricted funds
23
Designated funds
23
Unrestricted funds
23
Total funds		 2022
£’000
735
1,782
7,944
~~-----------------~~
10,461
(3,114)
~~----------------~~

11,728
4,046
~~----------------~~
 £’000
129,488
58,809
~~-------------~~
188,297
7,347
~~---------------~~
195,644
(247)
~~---------------~~
195,397
========
61,583
118,040
15,774
~~---------------~~
195,397
========		 2021
£’000
773
1,881
5,785
~~-----------------~~
8,439
(1,955)
~~----------------~~

10,968
7,381
~~----------------~~
 £’000
120,628
51,125
~~-------------~~
171,753
6,482
~~---------------~~
178,235
(975)
~~---------------~~
177,260
========
54,525
104,386
18,349
~~---------------~~
177,260
========

No separate SOFA has been presented for the company alone as permitted by section 408 of the Companies Act 2006. The unconsolidated surplus/(deficit) of the parent charity was £17.998M (2021: surplus £17.818M).

The financial statements were approved and authorised for issue by the Trustees on 25 May 2023 and signed on their behalf by:

Rt Revd Sarah Bullock Director/Trustee

The notes on pages 31 to 64 form part of these financial statements.

28

Registered Number: 00239561

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

COMPANY BALANCE SHEET

AS AT 31 DECEMBER 2022

Note
Fixed assets
Tangible assets
18
Investments
19
Current assets
Debtors: amounts falling due after
more than one year
20
Debtors: amounts falling due within
one year
20
Cash at bank
Creditors:Amounts falling due
within one year
21
Net Current Assets
Total assets less current liabilities
Creditors:amounts falling due
after more than one year
22
Net assets
Charity Funds
Endowment funds
Restricted funds
Designated funds
Unrestricted funds
Total funds		 2022
£’000
769
1,948
7,237
~~-----------------~~
9,954
(2,949)
~~----------------~~

11,728
4,046
~~----------------~~
 £’000
127,693
58,777
~~-------------~~
186,470
7,005
~~---------------~~
193,475
(247)
~~---------------~~
193,228
========
61,584
115,870
15,774
~~---------------~~
193,228
========		 2021
£’000
832
1,865
5,271
~~-----------------~~
7,968
(1,737)
~~----------------~~

11,028
5,636
~~----------------~~
 £’000
118,952
51,022
~~-------------~~
169,974
6,231
~~---------------~~
176,205
(975)
~~---------------~~
175,230
========
54,525
104,030
16,675
~~---------------~~
175,230
========

The financial statements were approved and authorised for issue by the Trustees on 25 May 2023 and signed on their behalf by:

Rt Revd Sarah Bullock Director/Trustee

The notes on pages 31 to 64 form part of these financial statements.

29

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2021

2022 2021
Note £’000 £’000
Cash flows from operating activities
Net cash used in operating activities 25 2,115 (2,356)
----------------- -----------------
Cash flows from investing activities:
Dividends, interest and rents from investments 1,522 1,345
Proceeds from the sale of fixed assets 354 4,275
Purchase of fixed assets (2,023) (1,826)
Interest paid (3) (1)
Purchase of investments (2,873) (1,615)
Proceeds from Sale of Investments 3,130 2,624
----------------- -----------------
Net cash provided by/(used in) investing activities 107 4,802
======== ========
Cash flows from financing activities:
Repayments of borrowings (63) (52)
Cash inflows from new borrowing - -
----------------- -----------------
Net cash provided by financing activities (63) (52)
======== ========
Change in cash and cash equivalents in the year 2,159 2,394
Cash and cash equivalents brought forward 5,785 3,391
----------------- -----------------
Cash and cash equivalents carried forward 26 7,944 5,785
======== ========
Analysis of Net Funds:
01 Jan 2022 Cashflow 31 Dec 2022
£’000 £’000 £’000
Cash at bank in hand 5,785 2,159 7,944
Loans and mortgages (347) 50 (297)
----------------- ----------------- -----------------
Total 5,438 2,209 7,647
======== ======== ========

31

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

1. ACCOUNTING POLICIES

1.1 Basis of preparation of financial statements

The Lichfield Diocesan Board of Finance (Incorporated) is a charitable company incorporated in England and Wales under the Companies Act and registered as a charity with the Charity Commission in England and Wales. In the event of the charity being wound up, the liability in respect of the guarantee is limited to £1 per member of the charity. The address of the registered office is given in the reference and administration details of these financial statements. The nature of the charity's operations and principal activities are detailed in the trustees’ report.

The financial statements have been prepared in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (Second Edition effective 1 January 2019) - (Charities SORP (FRS 102)), the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and the Companies Act 2006

The Lichfield Diocesan Board of Finance (Incorporated) meets the definition of a public benefit entity under FRS 102. Assets and liabilities are initially recognised at historical cost or transaction value unless otherwise stated in the relevant accounting policy.

The Statement of Financial Activities (SOFA) and Balance Sheet consolidate the financial statements of the company and its subsidiary undertakings. The results of the subsidiaries are consolidated on a line by line basis.

1.2 Going concern

After making appropriate enquiries, the trustees have a reasonable expectation that the company has adequate albeit limited resources to continue in operational existence for the foreseeable future. It is accepted as referred to in the Trustees Annual Report; that longer term financial sustainability needs to be addressed. With significant capital growth in recent years, the Board will be considering ways oof unlocking some of the growth to ease the burden on parishes and unrestricted reserves, although there is a counter argument of living within our means and relying on historical resources. Due to the size of reserves in total they continue to adopt the going concern basis in preparing the financial statements and are satisfied that there are no material uncertainties which may impact on the ability of the company to operate as a going concern.

1.3 Company status

The company is a company limited by guarantee. The members of the company are the Trustees named on page 1. In the event of the company being wound up, the liability in respect of the guarantee is limited to £1 per member of the company.

1.4 Income

All income is included in the Statement of Financial Activities (SOFA) when the company is legally entitled to them as income or capital respectively, ultimate receipt is probable and the amount to be recognised can be quantified with reasonable accuracy.

32

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

1. ACCOUNTING POLICIES (continued)

1.5 Income (continued)

1.6 Expenditure

Expenditure is included on the accruals basis and has been classified under headings that aggregate all costs related to the Statement of Financial Activity category.

33

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

1. ACCOUNTING POLICIES (continued)

1.6 Expenditure (continued)

1.7 Tangible fixed assets and depreciation

Freehold Property

All properties, including glebe and parsonage houses, are stated at valuation, except for redundant churches that are held at a nil valuation reflecting uncertainty as to their future ownership and use. Valuations are undertaken annually as at 31 December each year by reference to values for detached houses in various areas covered by the Nationwide Building Society monthly house price index data. All properties are subject to an annual impairment review by the Director of Buildings; properties are written down to net realisable value where that is lower than carrying value.

The overall net gain or loss for the year on revaluation is shown in the Statement of Financial Activities. Included under unrestricted funds are properties that have been acquired using general funds and are represented by the designated Board Properties Fund.

Additions are at cost but subject to an annual valuation adjustment at the end of the financial year. Extensions to buildings are capitalised.

No depreciation is provided on buildings as any charge would not be material due to the very long expected useful economic life and because their expected residual value is not materially less than their carrying value. LDBF has a policy of regular repair and maintenance, which in the case of residential properties is in accordance with the Repair of Benefices Buildings Measure 1972 and properties are therefore unlikely to suffer obsolescence. In addition, disposals of properties occur well before the end of their economic lives and disposal proceeds are usually not less than their carrying value.

Sales and purchases of properties are recognised on the date of exchange of contract.

The majority of transfers occur following pastoral reorganisation. A benefice house may be transferred to diocesan glebe or general funds for disposal or to be held as a corporate property, as determined by the particular pastoral scheme. In the majority of such cases, houses are required as functional fixed assets for housing team vicars (in a team ministry) or other members licensed to a benefice and as such are held as corporate property under unrestricted designated funds.

Properties subject to value linked loans

Properties which have been bought with the assistance of value-linked loans from the Church Commissioners are stated using the value of the related loan at the balance sheet date. Each year end the respective property and loan are carried at an index linked current valuation basis.

Investment properties

Glebe properties which are held for investment purposes and rented out have been included at their fair value.

34

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

1. ACCOUNTING POLICIES (continued)

1.7 Tangible fixed assets and depreciation (continued)

Parsonage houses

Parsonage houses and glebe assets were incorporated into the financial statements for the first time as at January 1997 at an initial carrying value (ICV). All residential properties at that date, including team vicarages held as glebe, were valued by the Director of Buildings, an architect, by reference to Council Tax bandings, and to find the appropriate level within the band, to insurance rebuild value after adding 50% to the latter for land value.

Parsonage houses, also known as benefice houses, are legally vested in the incumbent. However, an incumbent is not free to dispose of the house for his/her own benefit, cannot make alterations or improvements to the property and is not responsible for maintaining the house. In spite of the complex tenure of parsonage houses, LDBF is responsible for the maintenance and insurance of the houses in the same way as for other houses and they are assets of LDBF within the FRS 102 definition as they are 'rights or other access to economic benefits controlled by an entity' and are therefore recognised as fixed assets in the balance sheet.

Tangible fixed assets are stated at cost or valuation less depreciation. Depreciation is provided at rates calculated to write off the cost or valuation of fixed assets, less their estimated residual value, over their expected useful lives on the following bases:

IT Equipment (from Jan 22) 33% straight line, depreciation charge in the year of acquisition Office equipment 20% straight line, no depreciation charge in the year of acquisition

1.8 Investments

Investments are a form of basic financial instrument and are initially recognised at their transaction value and subsequently measured at their fair value as at the balance sheet date using the closing quoted market price. The Statement of financial activities includes the net gains and losses arising on revaluation and disposals throughout the year.

1.9 Interest receivable

Interest on funds held on deposit is included when receivable and the amount can be measured reliably by the company; this is normally upon notification of the interest paid or payable by the Bank.

1.10 Glebe land

Glebe Land of almost 2,100 acres was included on the balance sheet for the first time in 1998 using an average agricultural land valuation. 1,927 acres remain at the balance sheet date. It is accepted that there are likely to be certain holdings with development potential but until such time that they are considered for disposal when the market value will be professionally ascertained, the more prudent agricultural value will be used. This land was revalued for the first time in 2007. Where planning permission has been received, the land in question is specifically revalued at a maximum of 50% of the sale value (forced sale value), subject to certain conditions agreed with the land agents. In 2022 the whole portfolio was revalued and the increase in value has been included in the financial statements.

Investment property

Properties that are identified as Investment opportunities are classified as Investment properties. These are revalued annually using Diocesan Investment Properties are revalued each year using the Nationwide Regional Quarterly Series - All Properties, Regional Quarterly Indices (West Midlands Region).

35

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

1. ACCOUNTING POLICIES (continued)

1.10 Glebe land (continued)

Redundant church property fund

The Redundant Church Property Fund which represents redundant churches vested in the Board was also included in the Balance Sheet for the first time in 1998. The properties have been professionally valued and included in the accounts at two-thirds of that value. The Board is responsible for the maintenance of these properties and any costs are borne by the Pastoral Fund.

There are also seven properties that the Board have interest in, although they have been transferred and vested in the Churches Conservation Trust (CCT). These properties are as follows: -

Addersley S Peters (except Nave and Tower) Battlefield Longford Patshull S Mary Preston Gubbals Shrewsbury S Mary Stirchley S James Wroxeter S Andrew

These are not included at any value and should any financial transaction take place in the future then the proceeds will be treated as either funds introduced or gain on sale of tangible asset depending on the circumstances of the transaction.

1.11 Financial instruments

The company only has financial assets and financial liabilities of a kind that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently measured at their settlement value with the exception of bank loans which are subsequently measured at amortised cost using the effective interest method.

1.12 Stocks

Stocks are valued at the lower of cost and net realisable value after making due allowance for obsolete and slow-moving stocks. Cost includes all direct costs and an appropriate proportion of fixed and variable overheads.

1.13 Taxation

The company is considered to pass the tests set out in Paragraph 1 Schedule 6 of the Finance Act 2010 and therefore it meets the definition of a charitable company for UK corporation tax purposes. Accordingly, the company is potentially exempt from taxation in respect of income or capital gains received within categories covered by Chapter 3 Part 11 of the Corporation Tax Act 2010 or Section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied exclusively to charitable purposes.

1.14 Fund balances

Fund Balances are split between unrestricted (general and designated), restricted and endowment funds.

General funds are unrestricted funds which are available for use at the discretion of the Trustees in furtherance of the general objectives of the company and which have not been designated for other purposes.

Designated funds comprise unrestricted funds that have been set aside by the Trustees for particular purposes. The aim and use of each designated fund is set out in the notes to the financial statements.

36

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

1. ACCOUNTING POLICIES (continued)

1.14 Fund balances (continued)

Restricted funds are funds which are to be used in accordance with specific restrictions imposed by donors or which have been raised by the company for particular purposes. The costs of raising and administering such funds are charged against the specific fund. The aim and use of each restricted fund is set out in the notes to the financial statements.

Endowment funds are those held on trust to be retained for the benefit of the charitable company as a capital fund. In the case of the endowment funds administered by the LDBF (Stipends Fund Capital, Parsonage Houses and Schools), there are discretionary powers to convert capital into income and, as a result, these funds are classified as expendable endowment. Endowment funds where there is no provision for expenditure of capital are classified as permanent endowment. ·

"Special trusts" (as defined by the Charities Act 2011) and any other trusts where the company acts as trustee and controls the management and use of the funds, are included in the company's own financial statements as charity branches. Trusts where the LDBF acts merely as custodian trustee with no control over the management of the funds are not included in the financial statements but are summarised in the notes to the financial statements.

1.15 Pensions

The company participates in the Church of England Funded Pensions Scheme for stipendiary clergy and the Defined Benefits Scheme section of Church Workers Pension Fund (CWPF) for lay staff. The pension charges are based on a full actuarial valuation dated 31 December 2018 for the Church of England Funded Pensions scheme and 31 December 2019 for Church Workers Pension Fund. The CWPF is a defined benefit pensions scheme, as required by FRS102 agreed deficit repayment plans are reflected a liability in the Balance Sheet. Further details are provided in note 29.

2. JUDGEMENT AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The preparation of the financial statements in conformity with generally accepted accounting practice requires the directors to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenditures during the reporting period. Actual results in the future could differ from those estimates. In this regard, the directors believe that the most significant areas of judgement relate to the valuation of properties.

Valuation

Given the size of the property portfolio valuation is an area of judgement. The Board use in house expertise available through the Property Department plus local agents; and the valuation methods are detailed above. Actual results of sold properties are compared to valuations to identify potential issues.

In January 2023 a Property Review and this exercise will include reviewing the book value of each property, in addition to an impairment review and whether the property is in the right location or remains fit for purpose.

37

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

3. INCOME FROM DONATIONS AND LEGACIES Total Total
2022 2021
£’000 £’000
Parish contributions 9,593 9,667
Archbishops’ Council 4,153 3,130
Other 591 1,061
----------- -----------
14,337 13,858
====== ======
4. PARISH CONTRIBUTION Total Total
2022 2021
£’000 £’000
Current year apportionment requested 11,124 12,024
Additional Voluntary Contribution 15 26
Less share written off not provided for (570) (591)
Less increase in provision for doubtful debts (342) (838)
----------- -----------
Net figure before Parish Support (page 8 & page 23) 10,227 10,621
====== ======
Provision for doubtful debts
2022 2021
£’000 £’000
Total share arrears as at 31 December 2,886 2,736
Arrears received in January (205) (81)
----------- -----------
Provision at year end 2,681 2,655
----------- -----------
Provision for doubtful debts as at
1 January 2,655 1,998
Written off in the year (316) (274)
----------- -----------
2,339 1,188
----------- -----------
Increase in provision for doubtful debts
in the year 342 838
====== ======
5. ARCHBISHOP’S COUNCIL Total Total
2022 2021
£’000 £’000
Low Income Communities 2,045 2,073
Resourcing Ministerial Education 278 278
National Cost of Heating 729 -
Sustainability Funding 460 700
Strategic Development Funding 611 79
Other 30 -
----------- -----------
4,153 3,130
====== ======

38

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

6. OTHER DONATIONS Total Total
2022 2021
£’000 £’000
All Churches Trust 226 234
Walter Stanley Trust 99 82
Other donations 126 92
Legacy 16 545
Education 68 -
St Chad’s Retreat Centre 51 35
Mercian Community Trust 44 73
----------- -----------
630 1,061
====== ======
7. CHARITABLE ACTIVITIES Total Total
2022 2021
£’000 £’000
Statutory fees 1,010 988
Chaplaincy income 141 109
Guaranteed annuities 1 1
Conferences and Related Fees 29 31
Education 116 -
Furlough Grants (Group) - 17
St Chad’s Retreat Centre 322 247
Mercian Community Trust 129 -
----------- -----------
1,748 1,393
====== ======
8. OTHER TRADING ACTIVITIES
Total Total
2022 2021
£’000 £’000
Housing income 565 391
Parish services 26 26
St Chad’s Retreat Centre - 31
----------- -----------
591 448
====== ======
9. INVESTMENT INCOME Total Total
2022 2021
£’000 £’000
Rents receivable 270 280
Dividends receivable 1,180 1,053
Interest receivable 66 9
St Chad’s Retreat Centre 1 3
Mercian Community Trust 6 -
----------- -----------
1,523 1,345
====== ======

39

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

10. OTHER INCOME

10. OTHER INCOME
Total Total
2022 2021
£’000 £’000
(Loss)/Gains on sale of assets (22) -
Pension Gains on Revaluations 358 8
Previous Years Grants Written Back 10 11
Board of Education Transfer – Funds Introduced 9,406
----------- -----------
9,752 19
====== ======
11. RAISING FUNDS Total Total
2022 2021
£’000 £’000
Agents fees 116 63
Rental costs 121 83
----------- -----------
237 146
====== ======
12. OTHER EXPENDITURE Total Total
2022 2021
£’000 £’000
Extra-ordinary costs relating to
Pensions 3 157
====== ======
13. CHARITABLE ACTIVITIES Total Total
2022 2021
£’000 £’000
Contribution to Archbishops’
Council
Training for Ministry 432 432
National Church responsibilities 301 339
Agency Pension Contributions 18 19
Retired Clergy Housing Costs 163 159
Pooling of Candidates Grants 124 113
----------- -----------
1,038 1,062
----------- -----------
Resourcing Ministry and
Mission
Parish Ministry
Stipends and related costs 7,678 7,308
Pensions 1,597 1,983
Housing costs 2,571 2,464
Removal, resettlement Grants 145 240
Other expenses 1,116 650
----------- -----------
13,107 12,645
----------- -----------

40

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

13. CHARITABLE ACTIVITIES (continued)

Total Total
2022 2021
£’000 £’000
Support for Ministry
Support for Ministry 3,658 3,453
St Chad’s Retreat Centre 303 314
Mercian Community Trust 201 95
----------- -----------
4,162 3,862
----------- -----------
Expenditure on Education
Education 371 162
====== ======
Total 18,678 17,731
====== ======
14. ANALYSIS OF SUPPORT COSTS
Total Total
2022 2021
£’000 £’000
Central administration 1,334 1,187
Support schools 370 162
Governance
- Audit 28 25
- Registrar and chancellor 129 103
- Synodical costs 9 12
----------- -----------
1,870 1,489
====== ======
15. ANALYSIS OF EXPENDITURE INCLUDING SUPPORT COSTS
Activities Grants
Support		 Total
Undertaken 2022 2022 2022
£’000 £’000 £’000 £’000
2022
Raising funds 237 -
-		 237
Charitable activities - 1,038
-		 1,038
Resources parish summary 14,477 923
1,870		 17,270
Education 370 -
-		 370
Other 3 -
-		 3
----------- ------------
------------		 -----------
15,087 1,961
1,870		 18,918
===== =====
=====		 ======

41

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

ANALYSIS OF EXPENDITURE INCLUDING SUPPORT COSTS 2021 – Comparative

2021 – Comparative
Activities Grants Support Total
Undertaken 2021 2021 2021
£’000 £’000 £’000 £’000
2021
Raising funds 146 - - 146
Charitable activities - 1,062 - 1,062
Resources parish summary 13,537 1,481 1,489 16,507
Education 153 9 - 162
Other 157 - - 157
----------- ------------ ------------ -----------
13,993 2,552 1,489 18,034
===== ===== ===== ======
16. STAFF COSTS 2022 2021
£’000 £’000
Employee costs were as follow:
Wages and salaries 1,547 1,778
Social security costs 155 161
Other pension costs 204 211
----------- -----------
1,906 2,150
====== ======

The wages and salaries include termination costs of £Nil (2021: £150,205)

The average number of persons employed by the group during the year was as follows:

2022 2021
No. No.
Management and administration 26 29
Archdeacons and Bishop’s support staff 9 9
Central sector ministers/advisers and support staff 27 30
St Chad’s Retreat Centre 4 6
Mercian Community Trust 2 1
----------- -----------
68 75
====== ======

The number of employees whose emoluments exceeded £60,000 was:

2022 2021
No. No.
£60,000 - £70,000 1 1
£70,000 - £80,000 1 2
£80,000 - £90,000 1 1
£90,000 - £100,000 - -
£100,000 - £110,000 - -
£110,000 - £120,000 - 1
----------- -----------
3 4
====== =======

42

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

16. STAFF COSTS (continued)

Parochial stipendiary clergy are not employees of the Lichfield Diocesan Board of Finance and therefore their stipends, pensions and social security costs are not included in this note.

Remuneration of key management personnel

Key management personnel are deemed to be those having authority and responsibility, delegated to them by the trustees, for planning, directing and controlling the activities of the diocese. During 2022 they were:

Diocesan Secretary and Company Secretary Mrs J Jones
Director of Finance Mr J Hill
Director of Education Mrs C Shaw
Director of Communications Mr P Bate

Remuneration, National Insurance and pensions for these 4 (2021:5) employees amounted to £343,246 (2021: £476,510).

Trustees’ emoluments

No Trustee received any remuneration for services as Trustee, 11 trustees (2021: 7 trustees) received travelling and out of pocket expenses, totalling £19,334 (2021: £10,931) in respect of General Synod duties, duties as archdeacon or area/rural dean, and other duties as trustees.

Trustees expenses by stipend and housing detail

The following table gives details of the Trustees who were in receipt of a stipend and/or housing provided by the LDBF during the year:

Housing Stipend
The Rt. Rev. Michael Ipgrave Bishop of Lichfield No No
The Rt. Rev. Sarah Bullock Bishop of Shrewsbury Yes No
The Rt. Rev Matthew Parker Bishop of Stafford Yes No
The Rt. Rev. Clive Gregory Bishop of Wolverhampton Yes No
The Very Rev. Adrian Dorber Dean of Lichfield No No
The Ven. Dr Susan Weller Archdeacon of Lichfield No Yes
The Ven. Paul Thomas Archdeacon of Salop Yes Yes
The Ven. Dr Megan Smith Archdeacon of Stoke Yes Yes
The Ven. Julian Francis Archdeacon of Walsall No Yes
The Rev Preb Ben Whitmore Chair, House of Clergy Yes Yes
The Rev Philip. Cansdale Yes Yes
The Rev.Julia Cody Yes Yes
The Revd Canon Pat Hawkins To 07 September 2021 Yes Yes
The Revd Preb Brian Leathers Yes Yes
The Revd. Martin Rutter To 07 September 2021 Yes Yes

The LDBF is responsible for funding via the Church Commissioners stipends of licensed stipendiary clergy in the diocese, other than bishops and cathedral staff. The LDBF is also responsible for the provision of housing for stipendiary clergy in the diocese including the Area Bishops but excluding Diocesan Bishop and Cathedral staff.

In 2022 two trustee made donations to the Board, totalling £2,925. In 2021, two trustee made donations to the Board totalling £3,550.

43

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

16. STAFF COSTS (continued)

Stipends cost note

The LDBF paid an average of 256 (2020: 252) stipendiary clergy as officeholders holding parochial or diocesan appointments in the diocese, and the costs were as follows:

appointments in the diocese, and the costs were as follows:
2022 2021
£’000 £’000
Stipends 6,308 6,339
National insurance contributions 515 513
Pension costs - current year 2,014 1,953
- deficit reduction 258 447
-------------- --------------
9,095 9,252
====== ======

The stipend figure above includes Settlement Costs of £99,170 paid in 2022 (2021: Nil).

The stipends of the four Bishops were paid and funded by the Church Commissioners.

The stipends of the Diocesan Bishop and Area/Suffragen Bishops are funded by the Church Commissioners and are in the range £ 38,050 - £46,640 (2021: £37,760 - £46,640). The annual rate of stipend, funded by the LDBF, paid to Archdeacons in 2022 was in the range £37,198 - £53,848 (2021: range £36,825 - £53,395) and other clergy who were Trustees were paid in the range £27,290 – £29,702 (2021: £26,775 - £29,120). The Central Stipend Authority (CSA) has taken the decision to cease the practice of calculating a national figure for the estimated value of provided housing. Based on dashboard information provided it is estimated the value to the occupant, gross of income tax and national insurance, of church provided housing in 2022 at £15,600 (2021: £13,450).

44

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

17. ANALYSIS OF TRANSFERS BETWEEN FUNDS
2022 General
Unrestricted Designated Restricted Endowment
Funds Funds Funds Funds
£’000 £’000 £’000 £’000
Investment income towards General Costs 821 (8) (427) (386)
Education Investment Income costs - - 2 (2)
Transfer of House Sale Proceeds - - - -
Transfer to finance Share Support 30 - (30) -
Transfer of Property Classification - - - -
Transfer of Property Costs - - - -
Support costs incurred in restricted funds - - - -
Transfer re Clergy Pensions deficit payments
(258)		 - - 258
St Chads Retreat Centres (1,666) - 1,666 -
Mercian Community Trust (8) - 8 -
--------------- ---------------- -------------- -------------
(1,081) (8) 1,219 (130)
======= ======= ====== ======
ANALYSIS OF TRANSFERS BETWEEN FUNDS
2021 – Comparative General
Unrestricted Designated Restricted Endowment
Funds Funds Funds Funds
£’000 £’000 £’000 £’000
Investment income towards General Costs 745 - (417) (328)
Transfer of House Sale Proceeds** 1,467 (1,467) (77) 77
Transfer to finance Share Support - - - -
Transfer of Property Classification - - - -
Transfer of Property Costs - - - -
Support costs incurred in restricted funds - (26) 44 (18)
Transfer re Clergy Pensions deficit payments
(447)		 - - 447
Mercian Community Trust 24 - (24) -
--------------- ---------------- -------------- -------------
1,789 (1,493) (474) 178
======= ======= ====== ======

** In the year there were a significant number of DBF house sales. The DBF houses are held in a designated fund, however on sale the proceeds are transferred into unrestricted funds.

45

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

18. TANGIBLE FIXED ASSETS Freehold land Leasehold Office
land
and building and building Equipment Total
Group £’000 £’000 £’000 £’000
Cost or valuation
At 1 January 2022 119,339 1,085 980 121,404
Additions 1,636 342 45 2,023
Disposals (354) - (97) (451)
Revaluation surplus 7,345 - - 7,345
-------------- -------------- ----------- --------------
At 31 December 2022 127,966 1,427 928 130,321
-------------- -------------- ----------- --------------
Depreciation
At 1 January 2022 - 43 732 775
Charge for the year - 58 78 136
On disposals - - (78) (78)
-------------- -------------- ----------- --------------
At 31 December 2022 - 101 732 833
-------------- -------------- ----------- --------------
Net book value
At 31 December 2022 127,966 1,326 196 129,488
======= ======= ====== =======
At 31 December 2021 119,338 1,042 248 120,628
======= ======= ====== =======
Company Freehold Leasehold Office
Land and Land and Equipment Total
building building
Cost or valuation £’000 £’000 £’000 £’000
At 1 January 2022 117,675 1,085 942 119,702
Additions 1,636 342 30 2,008
Disposals (354) - (66) (420)
Revaluation surplus/(deficit) 7,242 - - 7,242
------------ ------------ ----------- --------------
At 31 December 2022 126,199 1,427 906 128,532
------------ ------------ ----------- --------------
Depreciation
At 1 January 2022 - 43 707 750
Charge for the year - 58 76 134
On disposals - - (45) (45)
------------ ------------ ----------- --------------
At 31 December 2022 - 101 738 839
------------ ------------ ----------- --------------
Net book value
At 31 December 2022 126,199 1,326 168 127,693
======== ======== ====== =======
At 31 December 2021 117,675 1,042 235 118,952
======== ======== ====== =======

46

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

19. FIXED ASSET INVESTMENTS Agricultural Residential Listed
Land property Investments Total
Group £’000 £’000 £’000 £’000
Market value
At 1 January 2022 10,029 3,408 37,688 51,125
Additions - - 2,873 2,873
Disposals - - (3,130) (3,130)
Transfers/Reclassification - 1,268 4,953 6,221
Revaluations 6,119 193 (4,592) 1,720
------------ -------------- -------------- --------------
At 31 December 2022 16,148 4,869 37,792 58,809
------------ ------------ ----------- --------------
Historical cost 3,838 935 24,544 29,317
====== ===== ====== =======
Company
Market value
At 1 January 2022 10,029 3,408 37,585 51,022
Additions - - 2,873 2,873
Disposals - - (3,068) (3,068)
Transfer (Education) - 1,268 4,953 6,221
Revaluations 6,119 193 (4,583) 1,729
------------ -------------- -------------- --------------
At 31 December 2022 16,148 4,869 37,760 58,777
------------ ------------ -------------- --------------
Historical cost 3,838 935 24,544 29,317
====== ===== ====== =======
Change in
At 1 January Transfer Market At 31
December
2022 Additions Disposals £’000 Value 2022
Group £’000 £’000 £’000 £’000 £’000
Unrestricted funds
Unlisted investments 3,084 280 (110) (36) (339) 2,879
Investment properties 248 - - - 16 264
-------------- ------------ ------------ ------------ ----------- --------------
3,332 280 (110) (36) (323) 3,143
-------------- ------------ ------------ ------------ ----------- --------------
Restricted funds
Unlisted investments 21,421 2,593 (1,014) 4,834 (2,703) 25,131
Investment properties 109 - - 1,268 (9) 1,368
-------------- ------------ ------------ ------------ ----------- --------------
21,530 2,593 (1,014) 6,102 (2,712) 26,499
-------------- ------------ ------------ ------------ ----------- --------------
Endowment funds
Unlisted investments 13,183 (2,006) 155 (1,550) 9,782
Investment Properties 3,051 - - - 186 3,237
Land investments 10,029 - - - 6,119 16,148
-------------- ------------ ------------ ------------ ----------- --------------
26,263 - (2,006) 155 4,755 29,167
-------------- ------------ ------------ ------------ ----------- --------------
======= ===== ===== ===== ====== =======
Total 51,125 2,873 (3,130) 6,221 1,720 58,809
======= ===== ===== ===== ====== =======

47

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

19. FIXED ASSETS INVESTMENTS (continued)

Change in
At 1 January Market At 31
December
2022 Additions Disposals Transfer Value 2022
Company £’000 £’000 £’000 £’000 £’000 £’000
Unrestricted funds
Unlisted investments 3,048 280 (110) - (339) 2,879
Investment properties 248 - - - 16 264
-------------- ------------ ------------ ------------ ----------- --------------
3,296 280 (110) - (323) 3,143
-------------- ------------ ------------ ------------ ----------- --------------
Restricted funds
Unlisted investments 21,354 2,593 (951) 4,798 (2,696) 25,098
Investment properties 109 - - 1,268 (9) 1,368
-------------- ------------ ------------ ------------ ----------- --------------
21,463 2,593 (951) 6,066 (2,705) 26,466
-------------- ------------ ------------ ------------ ----------- --------------
Endowment funds
Unlisted investments 13,183 (2,007) 155 (1,548) 9,783
Investment Properties 3,051 - - - 186 3,237
Land investments 10,029 - - - 6,119 16,148
-------------- ------------ ------------ ------------ ----------- --------------
26,263 - (2,007) 155 4,757 29,168
-------------- ------------ ------------ ------------ ----------- --------------
======= ===== ===== ===== ====== =======
Total 51,022 2,873 (3,068) 6,221 1,729 58,777
======= ===== ===== ===== ====== =======

20. DEBTORS
DEBTORS Group Company
2022 2021 2022
2021
£’000 £’000 £’000 £’000
Due after more than one year
Secured Charge on Property 6 6 6 6
Loans 729 767 763 826
------------ ------------ ----------- -----------
735 773 769 832
===== ===== ====== ======
Due within one year
Parish Contributions (net of provision) 102 89 102 89
Amounts owed by group undertakings - - 215 77
Assigned fees 165 142 165 142
Loans 255 276 284 302
Prepayments 448 209 448 209
Recharges 143 80 143 80
Strategic Development Fund - 79 - 79
Parish Donations Paid in Advance 180 10 180 10
Legacy 16 545 16 545
Other Debtors 473 451 395 332
----------- ----------- ----------- -----------
1,782 1,881 1,948 1,865
====== ===== ====== =======

48

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

20. DEBTORS (continued) Group Company
2022 2021 2022 2021
£’000 £’000 £’000 £’000
Loans
Due in under one year
Staff loans 16 14 16 14
Clergy loans 6 6 6 6
Cathedral 50 50 50 50
Loans to Parishes 183 206 212 232
------------ ------------ ----------- -----------
255 276 284 302
====== ====== ====== ======
Due in more than one year
Staff loans 35 38 35 38
Clergy loans 16 21 16 21
Loans to the Cathedral - 50 - 50
Loans to Parishes 678 658 712 717
------------ ------------ ----------- -----------
729 767 763 826
------------ ------------ ----------- -----------
Total 984 1,043 1,047 1,128
====== ====== ====== ======
2022
2021
£’000
£’000
Provision for doubtful debt
Parish Contributions 2,681 2,655
Diocesan Loan Fund 352 352
Sundry sales accounts 5 5
----------- -----------
3,038 3,012
====== ======

49

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

21. CREDITORS: amounts falling due Group Company Company
within one year 2022 2021 2022 2021
£’000 £’000 £’000 £’000
Loans from Church Commissioners – CCLA 50 50 50 50
Loans from Church Commissioners -
Mortgage - - - -
Payments received on account - 47 - -
Trade creditors 1,579 1,407 1,414 1,353
Amounts owed to group undertakings - - - -
Deferred Expenditure Grants 143 251 143 136
Other taxation and social security 66 86 66 86
Schools Condition Allocation 987 - 987 -
Accruals 289 114 289 112
------------ ------------ ----------- -----------
3,114 1,955 2,949 1,737
====== ====== ====== ======
22. CREDITORS: amounts falling due after Group Company
more than one year 2022 2021 2022 2021
£’000 £’000 £’000 £’000
Loans from Church Commissioners – CCLA - 50 - 50
Loans from Church Commissioners -
Mortgage - - - -
Loans from Church Commissioners – Value
Linked loans 247 247 247 247
DBS pension - 678 - 678
Deferred grants - - - -
----------- ----------- ----------- -----------
247 975 247 975
====== ====== ====== ======
Included within the above are amounts falling due as follows:
Group Company
2022 2021 2022 2021
£’000 £’000 £’000 £’000
Between one and two years
Loans from Church Commissioners – CCLA - 50 - 50
Loans from Church Commissioners -
Mortgages - - - -
----------- ----------- ----------- -----------
Between two and five years
Loans from Church Commissioners – CCLA - -
Loans from Church Commissioners -
Mortgages - - - -
----------- ----------- ----------- -----------
Over five years
Loans from Church Commissioners – CCLA - - - -
Loans from Church Commissioners -
Mortgages - - - -
======= ====== ======= =======

50

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

CCLA - value linked loans

Value-linked loans (VLLs) represent amounts advanced to the DBF for the purchase of properties on an equity sharing basis and are repayable on the disposal of the related property. As at 31st December 2021 the Board had no intention of disposing of any of those properties funded via VLLs.

Church of England Defined Benefits Scheme (DBS)

The Charity participated in the DBS, part of the Church Workers Pension Fund until 30 September 2012, when the Charity ceased to use the scheme and transferred to the Pension Builder Scheme. Amounts outstanding represent the shortfall on the employer sub pool.

23. 2022: STATEMENT OF FUNDS

2022: STATEMENT OF FUNDS
Group Only Brought Income & Transfers Gains/ Carried
Forward Pensions Expenditure in/out (losses) Forward
£’000 £’000 £’000 £’000 £’000 £’000
Designated funds
Projects & Events 37 11 (34) - - 14
DBF Designated houses 10,931 9 (22) (8) 804 11,714
----------- ------------- ------------- -------------- ----------- -----------
10,968 20 (56) (8) 804 11,728
----------- ------------- ------------- -------------- ----------- -----------

51

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

23. 2022: STATEMENT OF FUNDS (continued)

Brought Income& Transfers Gains/ Carried
Forward Pensions Expenditure in/out (losses) Forward
£’000 £’000 £’000 £’000 £’000 £’000
General funds
General 5,707 14,360 (16,276) 593 (338) 4,046
St Chad’s Retreat Centre 1,666 - - (1,666) - -
Mercian Community Trust 8 - - (8) - -
----------- ------------- ------------- -------------- ----------- -----------
7,381 14,360 (16,276) (1,081) (338) 4,046
----------- ------------- ------------- -------------- ----------- -----------
Total unrestricted funds 18,349 14,380 (16,332) (1,089) 466 15,774
----------- ------------- ------------- -------------- ----------- -----------
Endowment funds
Diocesan Stipends Fund 54,388 382 (86) (370) 6,618 60,932
Endowment & Gift 579 16 - (16) (71) 508
Clergy pensions (442) 184 - 258 - -
Education - 158 (2) (13) 143
----------- ------------- ------------- -------------- ----------- -----------
54,525 740 (86) (130) 6,534 61,583
----------- ------------- ------------- -------------- ----------- -----------
Restricted funds
Property reserve 3,937 - - - 167 4,104
Restricted Trust Reserve 7,525 196 (10) (140) (666) 6,905
Benefice Houses 72,911 - - - 4,478 77,389
Pastoral Fund 10,410 292 (139) (283) (1,042) 9,238
Diocesan Loan Fund 2,060 6 - - - 2,066
Clergy Widows &
Orphans 1,305 35 (50) - (153) 1,137
Interior decoration scheme 537 24 (5) - (90) 466
Lent appeal 15 5 (20) - - -
Ordination 98 10 (8) - (10) 90
Parish Mission Project 61 1 - - (4) 58
Misc. Projects 153 3 (2) - - 154
Resourcing the Future 4,276 515 (223) (4) (444) 4,120
Res Ministerial Education 129 278 (255) - - 152
Direction of Travel 62 - (22) - - 40
Telford Minster (SDF) 10 652 (504) (30) - 588
Harrison Legacy Fund 545 6 - - - 551
Board of Education - 9,546 (293) 2 (262) 8,993
National Heating Grants - 729 (465) - - 264
Cresswell Care Legacy - 16 - - - 16
St Chad’s Retreat Centre 31 376 (337) 1,666 95 1,831
Mercian Community Trust 321 180 (167) 8 (4) 338
----------- ------------- ------------- -------------- ----------- -----------
104,386 12,870 (2,500) 1,219 2,065 118,040
----------- ------------- ------------- -------------- ----------- -----------
Total funds 177,260 28,080 (18,918) - 9,065 195,397
======== ======== ======= ======= ====== =======

52

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

STATEMENT OF FUNDS
2021 Comparative
Brought Income & Transfers Gains/ Carried
Forward Pensions Expenditure in/out (losses) Forward
Designated funds £’000 £’000 £’000 £’000 £’000 £’000
Projects & Events 36 7 (5) - - 37
DBF Designated houses 10,993 10 (47) (1,467) 1,442 10,931
----------- ------------- ------------- -------------- ----------- -----------
11,028 17 (52) (1,467) 1,442 10,968
----------- ------------- ------------- -------------- ----------- -----------
General funds
General 5,636 14,068 (16,510) 1,739 774 5,707
St Chad’s Retreat Centre 496 316 (309) - 1,163 1,666
Mercian Community Trust (9) - (7) 24 - 8
----------- ------------- ------------- -------------- ----------- -----------
6,123 14,384 (16,826) 1,763 1,937 7,381
----------- ------------- ------------- -------------- ----------- -----------
Total unrestricted funds 17,151 14,401 (16,878) 296 3,379 18,349
----------- ------------- ------------- -------------- ----------- -----------
Endowment funds
Diocesan Stipends Fund 47,052 321 (145) (253) 7,413 54,388
Endowment & Gift 505 16 - (16) 74 579
Clergy pensions (896) 8 (1) 447 - (442)
----------- ------------- ------------- -------------- ----------- -----------
46,661 345 (146) 178 7,487 54,525
----------- ------------- ------------- -------------- ----------- -----------
Restricted funds
Property reserve 3,613 - (12) - 336 3,937
Restricted Trust Reserve 6,662 183 (12) (135) 827 7,525
Benefice Houses 66,824 - (6) (286) 6,379 72,911
Pastoral Fund 9,472 283 (84) (314) 1,053 10,410
Diocesan Loan Fund 2,279 2 - (221) - 2,060
Clergy Widows &
Orphans 1,160 34 (52) - 163 1,305
Interior decoration scheme 426 22 (4) - 93 537
Lent appeal 1 14 - - - 15
Ordination 125 9 (3) (48) 15 98
Parish Mission Project 55 1 - - 5 61
Misc. Projects 66 14 (19) 259 (167) 153
Resourcing the Future 3,178 742 (5) (5) 366 4,276
Res Ministerial Education 87 278 (236) - - 129
Direction of Travel 130 - (68) - - 62
Telford New Minster (SDF) 9 116 (415) 300 - 10
Harrison Legacy Fund - 545 - - - 545
St Chad’s Retreat Centre 29 2 (5) - 5 31
Mercian Community Trust 362 72 (89) (24) - 321
----------- ------------- ------------- -------------- ----------- -----------
94,478 2,317 (1,010) (474) 9,075 104,386
----------- ------------- ------------- -------------- ----------- -----------
Total funds 158,290 17,063 (18,034) - 19,941 177,260
======== ======== ======= ======= ====== =======

53

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

Designated funds

1. Projects & Events

This group of funds covers unrestricted funds set aside for various projects and events within the diocese. These included, Vacancy in See contingencies, accumulated funds towards the next Lambeth Conference, Swanwick, the Chairman’s Fund (for clergy holidays) and a variety of specific areas of work that are due to either take place or be completed in later years, funded from Budget surpluses in previous years.

2.

DBF Designated Houses Fund

The fund is represented by property purchased from Unrestricted Funds, including providing housing for deserted clergy spouses. There are twelve properties in this class, of which the fund has less than 50% interest in six properties, four of which are wholly owned by the Church Commissioners via an Equity Sharing Loan. Details of the Loan Agreements are shown under Accounting Policies Section 2b.

54

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

23. STATEMENT OF FUNDS (continued)

Restricted Funds

1. Property Reserve

This fund derives from historical Pastoral Schemes, where property has been transferred to the DBF, but within it there are clauses pursuant to the relevant section of the Pastoral Measure. Consequently, any sale proceeds may be subject to various restrictions.

2. Restricted Trust Reserve

This fund originates from Trust funds, either left direct to the Board of Finance, or vested in the Diocesan Authority and wound up under the Charities Act 2011. The main purpose is to support the diocesan Budget towards stipend costs; however, some are specific to support areas of work within the Diocese or parishes.

3. Benefice Property

This fund only contains Benefice Property - Vicarages etc. for Incumbents and Team Rectors. When a property is sold, the proceeds are transferred to the Pastoral Fund. When a property is purchased, the funds are transferred from the Pastoral Fund Account back into this fund.

4. Pastoral Fund (Restricted Fund)

Under the Pastoral Measure 1983 section 78(3), dioceses are allowed to use this fund for the repair of parsonage houses and for the payment of clergy stipends. It is the Board's policy to apply the fund as follows:

5. Diocesan Loan Fund

The fund originates from the Diocesan Bishop's Million Shilling Fund at the turn of the 20th Century. The funds are made available to be loaned out to parishes to assist with the cost of church buildings. No grants are permitted from this fund, solely loans that are charged at a Variable Debit Rate of 1% above that earned on CBF Deposit. The rates and terms of the loans are governed and overseen by the Resourcing Parish Mission Committee (previously Parish Projects and Loans Committee to 31 December 2016).

6. Clergy Widows and Orphans

The fund derives from numerous legacies. Only the income can be used to support Widows and Dependent Children of deceased clergy. The income may also be used to support clergy infirmed or disabled. Initial grants are traditionally given at the time of the clergy person's death and the widows and dependents are supported further by annual Christmas grants.

7. Interior Decoration Scheme

The fund is designed to assist parishes in meeting the costs of internal decoration of either Benefice or Glebe Houses. The parishes are requested to contribute £250 per annum, and provided the money remains in the possession of the fund for 12 months, a bonus of 25% is awarded.

8. Lent Appeal

Each year the Diocesan Bishop launches his Lent Appeal across the diocese. The donations received in the year are awarded to specific areas of work specified at the time of the launch. Historically 50% of the donations are used for Local projects in the diocese and 50% to Overseas Mission.

55

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

23. STATEMENT OF FUNDS (continued)

Restricted Funds

9. Ordination Candidates Fund

This fund supports the training of Ordinands in the diocese. Each year the surplus in the fund is transferred to the Unrestricted Training Budget to assist with the costs. The donations arrive from collections at Licensing and Confirmation services and are shared between this fund and local projects once the costs of the service have been met.

10. Church Mission

The fund was created by the World Mission officer in 2001 - to help support parish overseas and mission projects. The fund gives grants to assist with projects and receives donations from participating parishes.

11. Miscellaneous Projects (Restricted)

The fund derives from donations or grants to support specific areas of work, including Evangelism & Discipleship, Newchapel Hub, Ministry @ Work and Lichfield Theological Forum.

12. Resourcing The Future (RTF)

This includes identified restricted surplus funds that are being invested to generate income to support Mission Orientated Projects in future years. The concept is the fund (including the designated RTF) will raise sufficient capital to help generate approx. £350,000 per annum with effect from January 2025. This income will be used to support Mission, potential Pension liabilities and any short-term additional deployment in future years.

13. Direction of Travel

The fund represents restricted funds from the National Church under Transitional Funding that supports four main Mission Initiatives in the Diocese as well as some miscellaneous projects or Areas of work that promote the Bishops First Steps and Direction of Travel across the Diocese under Come Follow Christ in the footsteps of St Chad.

14. Telford New Minster – SDF Bid

15. Resourcing Ministerial Education

This fund represents grants received and paid in furthering the Education in Ordinands. This new initiative which was piloted in the Diocese in the previous years is part of the strategy between the National Church and the Theological Training establishments in supporting Ordinands in Training.

16. Irene and Philip Harrison Legacy Fund

A legacy received in 2021 that is to be restricted for use in the Stoke and Leek Deaneries for purposes specified within the terms of the Will.

17. St Chads Retreat Centre

The fund represents restricted funds for Development and Mission work Shallowford House. On 01 January 2022, Dovedale House was transferred to the Mercian Community Trust, see Note 18.

56

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

18. Mercian Community Trust

The fund represents restricted funds for Projects and also the Diocesan Community Fund. The Diocesan Community Fund awards grants for communities within the Diocese that have a high level of deprivation. Also under the Mercian Community Trust is the Telford Christians Against Poverty project at Wellington All Saints. Dovedale House was transferred to the Mercian Community Trust on 01 January 2022 from St Chads Retreat Centre.

In addition to the Restricted Funds, the Board also has three Endowment Funds as follows: -

19. Board of Education

On 01 June 2022, under the Education Measure 2021, the Board of Education ceased to be a separate entity and the finances merged into the Board of Finance. The Education funds are treated as restricted as the fund can only be used for Educational Purposes. The fund also has restrictions on some of the funds for specific education purposes.

Endowment & Gift Fund

The fund originates from anonymous donations in 1955. The fund was set up as an Endowment to support the furtherance of the charitable objectives of the Board and as a result the income generated in the year is transferred to the Unrestricted Funds. Although the fund is an endowment there are terms and conditions which allow the capital to be spent in the same manner as the income. However, the Board's policy is to retain the capital in investments for the time being to generate income to support the overall work of the Board.

Diocesan Stipends Fund (Restricted)

In accordance with the Diocesan Stipends Fund Measure 1953, as amended by Section 9, 35(1) and (2), 47 (4) and schedule 8 of the Endowments and Glebe Measure 1976, and various other later Measures, the reserves in the Diocesan Stipends Fund (or Stipends Capital) must be retained, with the income made available towards meeting the cost of the clergy stipends in the year. Therefore, the income generated assists with reducing the burden on the parishes through the amount required in Parish Contributions. This fund is also used for purchasing Curates Houses and Team Vicarages, and it receives the proceeds of sales of any Glebe Land.

Clergy Pensions

The fund represents the Lichfield apportionment of the Clergy Pensions (CFPS) deficit.

24. 2022: GROUP ANALYSIS OF NET ASSETS BETWEEN FUNDS

2022
Unrestricted Restricted Endowment Total
Funds Funds Funds Funds
£’000 £’000 £’000 £’000
Tangible fixed assets 14,201 83,899 31,388 129,488
Fixed asset investments 3,143 26,498 29,168 58,809
Debtors due after more
than 1 year 56 679 - 735
Current assets (328) 9,026 1,028 9,726
Creditors due within one
Year (1,051) (2,062) (1) (3,114)
Creditors due in more than
one year (247) - - (247)
---------------- ------------- ------------- --------------
15,774 118,040 61,583 195,397
======== ======== ======= =======

57

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

24. 2021: GROUP ANALYSIS OF NET ASSETS BETWEEN FUNDS

2021
Unrestricted Restricted Endowment Total
Funds Funds Funds Funds
£’000 £’000 £’000 £’000
Tangible fixed assets 14,810 77,150 28,668 120,628
Fixed asset investments 3,334 21,531 26,260 51,125
Debtors due after more
than 1 year 115 658 - 773
Current assets 2,078 5,546 40 7,664
Creditors due within one
Year (1,435) (499) (1) (1,935)
Creditors due in more than
one year (553) - (442) (995)
---------------- ------------- ------------- --------------
18,349 104,386 54,525 177,260
======== ======== ======= =======
25. RECONCILIATION OF NET MOVEMENT IN FUNDS TO NET 2022 2021
CASH FLOW FROM OPERATING ACTIVITIES £’000 £’000
Net income for the year (as per Statement of financial activities) 18,137 18,970
Adjustment for:
Depreciation charges 58 130
Dividends, interest and rents from investments (1,522) (1,345)
Gains/(Losses) on investments (9,064) (19,941)
Education Cash & Equivalents (6,083) -
Loss/(profit) on the sale of fixed assets 22 -
Decrease/(Increase) in debtors 136 83
Increase/(decrease) in creditors 431 (253)
-------------- --------------
Net cash used in operating activities 2,115 (2,356)
======= =======
26. ANALYSIS OF GROUP CASH AND CASH EQUIVALENTS 2022 2021
£’000 £’000
Cash in hand 7,944 5,785
-------------- -------------
7,944 5,785
======= ======

27. RELATED PARTY TRANSACTIONS

In respect of St Chads Retreat Centres, the Charity uses the centres on an occasional basis for continuing work activities. The amounts are minimal and paid for at normal commercial rates. However, there are three loans from the Board to St Chads Retreat Centres totalling £59,147 as at 31 December 2022. There are no transactions between the Board and the Mercian Community Trust. There were no other related party transactions in the current year or the previous year.

58

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

28. CAPITAL COMMITMENTS

On 31 December 2022 – the Group and Company had no capital commitment. In 2021 there was the completion of the Leasehold at Meeting Point House for the New Telford Minster. The commitment as at the end of 2021 year was £0.405M.

29. PENSION COMMITMENTS

The Lichfield Diocesan Board of Finance participates in two pension schemes administered by the Church of England Pensions Board, which holds the assets of the schemes separately from those of the DBF and the other participating employers. One of these is the Church of England Funded Pensions Scheme for stipendiary clergy. The other is the Church Workers Pension Fund. The Church Workers Pension Fund has a section known as the Defined Benefits Scheme, a deferred annuity section known as Pension Builder Classic and a cash balance section known as Pension Builder 2014.

These schemes are multi-employer last man standing defined benefit pension schemes for which the DBF is unable to identify its share of the underlying assets and liabilities as each employer is exposed to actuarial risks associated with the current and former employees of other entities participating in the scheme. For multi-employer schemes where this is the case, paragraph 28.11 of FRS102 requires the DBF to account for pension costs on the basis of contributions actually payable to the scheme in the year and, where contributions are affected by a surplus or deficit in the scheme, to disclose information about the surplus or deficit and the implications of the surplus or deficit for the DBF. A valuation of each scheme is carried out once every three years.

Church of England Funded Pensions Scheme (CEFPS)

Lichfield Diocesan Board of Finance participates in the Church of England Funded Pensions Scheme for stipendiary clergy, a defined benefit pension scheme. This scheme is administered by the Church of England Pensions Board, which holds the assets of the schemes separately from those of the Responsible Bodies.

Each participating employer in the scheme pays contributions at a common contribution rate applied to pensionable stipends. The scheme is considered to be a multi-employer scheme as described in Section 28 of FRS 102. This means it is not possible to attribute the Scheme's assets and liabilities to specific employers and that contributions are accounted for as if the Scheme were a defined contribution scheme. The pensions costs charged to the SoFA in the year are contributions payable towards benefits and expenses accrued in that year 2022: £2.014M (2021: £1.953M), plus the figures highlighted in the table below as being recognised in the SoFA, giving a total charge of £2.272M for 2022 (2021: £2.400M).

A valuation of the Scheme is carried out once every three years. The most recent Scheme valuation completed was carried out at 31 December 2021. The 2021 valuation revealed a surplus of £560M, based on assets of £2,720M and a funding target of £2,160M, assessed using the following assumptions:

59

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

29. PENSIONS COMMITMENT (continued) Church of England Funded Pensions Scheme (CEFPS) (continued)

Following the 31 December 2018 valuation, a deficit recovery plan was put in place until 31 December 2022 and the deficit recovery contributions (as a percentage of pensionable stipends) were as set out in the table below. An interim reduction to deficit contributions to 3.2% of pensionable stipends was made with effect from 1 April 2022. Following finalisation of the 31 December 2021 valuation, deficit contributions ceased with effect from 1 January 2023, since the Scheme was in surplus.

As at 31 December 2020 and 31 December 2021 the deficit recovery contributions under the recovery plan in force were as set out in the table below. For senior office holders, pensionable stipends are adjusted in the calculations by a multiple, as set out in the Scheme’s rules.

% of pensionable stipends 1 January 2018 to 1 January 2021 to
31 December 2020 31 December 2022
Deficit repair contributions 11.9% 7.1%

Section 28.11A of FRS 102 requires agreed deficit recovery payments to be recognised as a liability. However, as there are no agreed deficit recovery payments from 1 January 2023 onwards, the balance sheet liability as at 31 December 2022 is nil. The movement in the balance sheet liability over 2021 and over 2022 is set out in the table below.

2022 2021
£’000 £’000
Balance sheet liability at 1 January 442,000 896,000
Deficit contribution paid (258,000) (447,000)
Interest cost (recognised in SOFA) - 1,000
Remaining change to the balance sheet liability* (recognised in (SOFA) (184,000) (8,000)
-------------- --------------
Balance sheet liability at 31 December - 442,000
======= =======

This liability represents the present value of the deficit contributions agreed as at the accounting date and has been valued using the following assumptions. No assumptions are needed for December 2022 as there are no agreed deficit recovery payments going forward. No price inflation assumption was needed for December 2021 since pensionable stipends for the remainder of the recovery plan were already known.

December 2022 December 2021 December 2020
Discount rate n/a 0.0% 0.2%
Price inflation n/a n/a 3.1%
Increase to total pensionable payroll n/a -1.5% 1.6%

The legal structure of the scheme is such that if another employer fails, the employer could become responsible for paying.

60

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

29. PENSIONS COMMITMENT (continued)

Lichfield DBF (DBS) participates in the Defined Benefits Scheme section of CWPF for lay staff. The Scheme is administered by the Church of England Pensions Board, which holds the assets of the schemes separately from those of the Employer and the other participating employers.

The Church Workers Pension Fund has a section known as the Defined Benefits Scheme, a deferred annuity section known as Pension Builder Classic and a cash balance section known as Pension Builder 2014 .

Defined Benefits Scheme

The Defined Benefits Scheme ("DBS") section of the Church Workers Pension Fund provides benefits for lay staff based on final pensionable salaries.

For funding purposes, the DBS is divided into sub-pools in respect of each participating employer as well as a further sub-pool, known as the Life Risk Pool. The Life Risk Pool exists to share certain risks between employers, including those relating to mortality and post-retirement investment returns.

The division of the DBS into sub-pools is notional and is for the purpose of calculating ongoing contributions. They do not alter the fact that the assets of the DBS are held as a single trust fund out of which all the benefits are to be provided. From time to time, a notional premium is transferred from employers' sub-pools to the Life Risk Pool and all pensions and death benefits are paid from the Life Risk Pool.

The scheme is a multi-employer scheme as described in Section 28 of FRS 102. It is not possible to attribute DBS assets and liabilities to specific employers, since each employer, through the Life Risk Section, is exposed to actuarial risks associated with the current and former employees of other entities participating in DBS. This means that contributions are accounted for as if DBS were a defined contribution scheme. The pensions costs charged to the SoFA during the year are contributions payable towards benefits and expenses accrued in that year (2022: £Nil, 2021: £Nil) plus the figures in relation to the DBS deficit highlighted in the table below as being recognised in the SoFA, giving a total charge of £65,000 for 2022 (2021: £65,000 ).

If, following an actuarial valuation of the Life Risk Pool, there is a surplus or deficit in the pool, further transfers may be made from the Life Risk Pool to the employers’ sub-pools, or vice versa. The amounts to be transferred (and their allocation between the sub-pools) will be settled by the Church of England Pensions Board on the advice of the Actuary.

A valuation of DBS is carried out once every three years. The most recent was carried out as at 31 December 2019. In this valuation, the Life Risk Section was shown to be in deficit by £7.7M and £7.7M was notionally transferred from the employers’ sub-pools to the Life Risk Section. This increased the Employer contributions that would otherwise have been payable. The overall deficit in DBS was £11.3M.

The next actuarial valuation is due at 31 December 2022.

Following the valuation, the Employer has entered into an agreement with the Church Workers Pension Fund to pay expenses of £16,000 per year. In addition, deficit payments of £65,378 per year have been agreed for 4.50 years from 1 April 2021 in respect of the shortfall in the Employer sub-pool. This obligation has been recognised as a liability within the Employer’s financial statements.

Due to the improvements in the projected funding position of the Fund, the Church of England Pensions Board agreed that deficit contributions should cease with effect from 31 December 2022 for employers whose pools were estimated to be materially in surplus. As a result, there is no obligation recognised as a liability within the Employer's financial statements as at 31 December 2022. A liability has been recognised at earlier dates.

The movement in the provision is set out below:

61

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

29. PENSION COMMITMENTS (continued) Defined Benefits Scheme - continued

2022 2021
£’000 £’000
Balance sheet liability at 1 January 237,000 146,000
Deficit contribution paid (65,000) (65,000)
Interest cost (recognised in SOFA) 3,000 -
Remaining change to the balance sheet liability* (recognised in (SOFA) (175,000) 156,000
-------------- --------------
Balance sheet liability at 31 December - 237,000
======= =======

This liability represents the present value of the deficit contributions agreed as at the accounting date and has been valued using the following assumptions, set by reference to the duration of the deficit recovery payments:

December 2022 December 2021 December 2020
Discount rate 0.00% pa 1.40% pa 0.30% pa

The legal structure of the scheme is such that if another employer fails, the employer could become responsible for paying a share of that employer’s pension liabilities.

Pension Builder Scheme

The Pension Builder Scheme of the Church Workers Pension Fund is made up of two sections, Pension Builder Classic and Pension Builder 2014, both of which are classed as defined benefit schemes.

Pension Builder Classic provides a pension for members for payment from retirement, accumulated from contributions paid and converted into a deferred annuity during employment based on terms set and reviewed by the Church of England Pensions Board from time to time. Bonuses may also be declared, depending upon the investment returns and other factors.

Pension Builder 2014 is a cash balance scheme that provides a lump sum that members use to provide benefits at retirement. Pension contributions are recorded in an account for each member. This account may have bonuses added by the Board before retirement. The bonuses depend on investment experience and other factors. There is no requirement for the Board to grant any bonuses. The account, plus any bonuses declared, is payable from members’ Normal Pension Age.

There is no sub-division of assets between employers in each section of the Pension Builder Scheme.

The scheme is considered to be a multi-employer scheme as described in Section 28 of FRS 102. This is because it is not possible to attribute the Pension Builder Scheme’s assets and liabilities to specific employers and that contributions are accounted for as if the Scheme were a defined contribution scheme. The pensions costs charged to the SoFA in the year are contributions payable (2022: £237,179, 2021: £267,341).

A valuation of the Pension Builder Scheme is carried out once every three years. The most recent was carried out as at 31 December 2019. A next valuation is due 31 December 2022.

For the Pension Builder Classic section, the valuation revealed a deficit of £4.8M on the ongoing assumptions used. At the most recent annual review, the Board chose to grant a discretionary bonus of 10.1% following improvements in the funding position over 2022. There is no requirement for deficit payments at the current time.

62

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

29. PENSION COMMITMENTS (continued) Pension Builder Scheme (Continued)

For the Pension Builder 2014 section, the valuation revealed a surplus of £5.5m on the ongoing assumptions used. There is no requirement for deficit payments at the current time.

The legal structure of the scheme is such that if another employer fails, EMPLOYER could become responsible for paying a share of the failed employer’s pension liabilities.

30. OPERATING LEASE COMMITMENTS

The group had no Operating Leases as at the end of 31 December 2022. There were none as at 31 December 2021. All operating equipment is purchased and depreciated in line with the policies set out in note 1.7.

31. SUBSIDIARY

SUBSIDIARY
Percentage
Company name Country Holding Description
St Chad’s Retreat Centre England and Wales 100 Operation of Dovedale House and
Company number: 08922281 Shallowford House
A summary of the financial activities undertaken by the subsidiary is set out below.
2022 2021
£’000 £’000
Income 376 318
Expenditure (337) (314)
Net gains/(losses) on investments 95 1,171
-------------- --------------
Net income 134 1,175
-------------- --------------
Balance sheet 2022 2021
£’000 £’000
Tangible fixed assets 1,784 1,677
Investments - 103
Current assets 320 184
Creditors: amounts falling due within one (240) (203)
year
Creditors: amounts falling due in more (33) (59)
than one year
-------------- --------------
Net assets 1,831 1,702
====== ======
Restricted funds 1,831 36
Unrestricted funds - 1,666
-------------- --------------
Total funds 1,831 1,702
====== ======

63

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED)

(A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

31 SUBSIDIARY
Percentage
Company Name: Country Holding Description
Mercian Community Trust England and Wales 100 Overseeing Community
Company Number 04345177 Projects in the Diocese

A summary of the financial activities undertaken by the subsidiary is set out below.

2022 2021
£’000 £’000
Income 180 72
Expenditure (165) (95)
(4)
Net gains/(losses) on investments - -
-------------- --------------
Net income 11 (23)
-------------- --------------
Balance sheet 2022 2021
£’000 £’000
Tangible fixed assets 11 -
Investments 33 -
Current assets 548 369
Creditors: amounts falling due within one year (254) (41)
Creditors: amounts falling due in more than one year - -
-------------- --------------
Net assets 338 328
====== ======
Restricted funds 338 320
Unrestricted funds - 8
-------------- --------------
Total funds 338 328
====== ======

64

THE LICHFIELD DIOCESAN BOARD OF FINANCE (INCORPORATED) (A company limited by guarantee)

NOTES TO THE FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

32. FINANCIAL 2022 2021
INSTRUMENTS
£’000 £’000
Financial assets measured at fair value 37,792 37,688
Financial liabilities measured at fair value - 678
Financial assets measured at amortised cost 10,350 6,662
Financial liabilities measured at amortised cost 3,048 1,855

33. COMPARATIVE STATEMENT OF FINANCIAL ACTIVITIES (31 DECEMBER 2021)

Income and endowments from:
Parish Contributions
Less Parish Support
Net Parish Contributions
Archbishops’ Council
Other donations
Other trading activities
Investments
Charitable activities
Other income
Total income and endowments
Expenditure on:
Raising funds
Charitable activities
Other expenditure
Total expenditure
Net (expenditure)/income before
investment
Gains
Net gains on investments and
Property
Net Income/(Expenditure)**
Gain on Pension Adjustments
Transfers between funds
Net movement in funds		 Unrestricted
Restricted
Endowment
Total
Funds
Funds
Funds
Funds
2021
2021
2021
2021
£’000
£’000
£’000
£’000
10,621
-
-
10,621
(954)
-
-
(954)
9,667
-
-
9,667
2,073
1,057
-
3,130
386
675
-
1,061
448
-
-
448
434
574
337
1,345
1,393
-
-
1,393
-
11
8
19
-------------------
----------------
--------------
-----------------
14,401
2,317
345
17,063
------------------
----------------
---------------
-----------------
88
8
50
146
16,634
1,002
95
17,731
156
-
1
157
--------------------
----------------
------------------
--------------------
16,878
1,010
146
18,034
-------------------
----------------
------------------
--------------------
(2,477)
1,307
199
(971)
3,379
9,075
7,487
19,941
--------------------
----------------
------------------
--------------------
902
10,382
7,686
18,970
-
-
-
-
296
(474)
178
-
-------------------
----------------
------------------
------------------

65