**THE REPRESENTATIVE BODY OF THE CHURCH IN WALES**
**Annual Report and Accounts 2021 2021**
## **CONTENTS**
Chair’s Introduction ................................................................ 01 Objectives and Activities ......................................................... 02 Achievement and Performance .............................................. 03 Clergy Pension Scheme ......................................................... 05 Financial Review .................................................................... 06 Future Plans ............................................................................11 Governance and Management ............................................... 13 The Provincial Structure ......................................................... 15 Statement of Trustees’ Responsibilities .................................. 16 Independent Auditors’ Report ................................................. 17 Statement of Financial Activities ............................................. 20 Balance Sheet ........................................................................ 21 Cash Flow Statement ............................................................. 22 Notes to the Accounts ............................................................. 23 Ten Year Review – General Funds ......................................... 37 Reference and Administrative Information .............................. 38
## **Further copies of this report may be downloaded from the Church in Wales website:**
https://www.churchinwales.org.uk/en/publications/administration-and-business/Annual_Report_Accounts/ The Representative Body of the Church in Wales, 2 Callaghan Square, Cardiff . CF10 5BT Telephone: 029 2034 8200 E-Mail: fi nance@churchinwales.org.uk Website: www.churchinwales.org.uk Charity Registration Number 1142813
## **Front cover photographs:**
|_top left:_|_The Bishop of Bangor, Andrew John, is elected as the 14th Archbishop of Wales._|
|---|---|
|_bottom left:_|_The Archdeacon of Wrexham, John Lomas, was announced as the 10th Bishop of Swansea and Brecon._|
|_top middle:_|_Diocesan pilgrimage from Brecon to Llanddew (September 2021)._|
|_bottom middle:_|_HRH Prince Charles visiting St Davids Cathedral for the Church in Wales’ centenary service (July 2021)_.|
|_top right:_|_The Welsh leg of a 1,000 mile climate justice relay to the COP26 summit in Glasgow was launched with a_|
||_prayer breakfast at St Thomas’ Church, Swansea._|
|_middle right:_|_The Reverend Jonathan Parker with members of the Newcastle Emlyn branch of the Royal British Legion_|
||_at a celebration of the Legion’s centenary (July 2021)_.|
|_bottom right:_|_Pupils from St David’s Church in Wales Primary School, Pentwyn, took part in project which developed their_|
||_understanding about why people seek sanctuary and how we might help them. The children extended their_|
||_learning further during Refugee Week with a whole school theme of “We Cannot Walk Alone” (June 2021)._|
Printed on 100% recycled paper
The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
## **CHAIR’S INTRODUCTION**
I am very pleased to be writing this my fi rst introduction to the Representative Body’s annual report following my election as its new Chair in November 2021. I very much value the opportunity of engaging with my fellow trustees and the Representative Body staff and I am
looking forward to being part of the far-sighted plans which are being developed to further the mission and ministry of the Church in Wales. The Representative Body has been well served by my predecessor as Chair, James Turner, for whose diligence, skillful stewardship and good fi nancial sense I am extremely grateful. James served the Church in Wales with great distinction, and I wish him a very happy retirement.
2021 saw the eff ects of the COVID-19 pandemic continue and much uncertainty remain. During the fi rst half of the year the Representative Body provided an additional £4.4million in fi nancial support to dioceses to assist them in navigating the pandemic. There can be little doubt that the pandemic will cast a long shadow and as we emerge from it, the Representative Body is keen to ensure its approach to investment management and expenditure are confi gured to best suit the needs of the Church in our times, times which have inevitably changed over the last two years. Recovery from the COVID-19 pandemic has dominated everyone’s thoughts over the past few months.
In the two years leading up to my appointment much constructive work has been done by the Representative Body, Standing Committee and Bench of Bishops meeting jointly. This work has formed the backbone of a strategic plan for the Church in Wales for the next ten years which is being led by our new Archbishop. As part of this, the Representative Body has adopted a series of principles it will use to guide its approach to expenditure and budget formation, which aims to pivot expenditure plans towards stimulating growth and maximising organisational eff ectiveness.
of great assistance and allow the Representative Body to provide those resources as required. We need to take this opportunity to craft a new narrative whereby the collective strengths of the dioceses and the Representative Body come together to form a strong coalition that will focus upon enhancing and strengthening the Church in Wales. This can only be achieved if there is recognition that all independent parts are equal and that we value the clear strategic direction given by our dioceses to further mission and Christian witness.
Another signifi cant theme of work running through 2021 has been the action we need to take as a Church following the Governing Body’s decision in April 2021 to declare a climate emergency and commit the Church in Wales to being net zero in terms of our carbon footprint by 2030. The Representative Body has appointed a dedicated member of provincial staff , our Climate Change Champion, to work specifi cally on preparing the way for meeting this ambitious target and much positive work has been done. The Representative Body has fi nanced the preparation of a framework for action and adopted a Climate Change and Net Zero Policy which will guide its decisions and activities – and, in some areas, spending – to help the Church in Wales achieve its target. Relevant training for various key groups of people around the province will be provided by the Representative Body during 2022.
As I begin my time as Chair of the Representative Body, I want to provide a clear message about investment. The Representative Body must, and is willing to, invest in both the present and future of the Church in Wales to allow all our bishops, clergy and laity to fl ourish and be the people God is so clearly calling us to be.
**Professor Medwin Hughes Chair of the Representative Body**
The Representative Body is very keen to provide fi nancial support that will help our dioceses and church communities fl ourish and be alive to mission and the proclamation of the Gospel in our times. Having a provincial strategy and goals towards which fi nancial resources can be directed will be
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Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
## **OBJECTIVES AND ACTIVITIES**
##
When planning its activities for the year, the Representative Body has taken into account the Charity Commission’s guidance on public benefi t and their specifi c guidance on charities for the advancement of religion. The Representative Body provides signifi cant fi nancial support for the activities of the Church in Wales which is present in all communities throughout Wales. As such, the Representative Body’s assets (which include most church buildings and church halls) are available to the whole community. Regular worship, marriages, funerals, baptisms, pastoral care and outreach both at home and overseas are just some examples.
## Key Objectives
The Representative Body’s key objectives are:
- To manage its investments so as:
- to meet the past service liability of the Clergy Pension Scheme;
- to provide the maximum sustainable level of support for the work of bishops, dioceses, parishes and cathedrals.
- To manage the ecclesiastical and secular property vested in it for the uses and purposes of the Church in Wales.
- To support the Bench of Bishops in their oversight of the St Padarn’s Institute by employing its staff and providing fi nancial resource.
- To employ specialist staff to advise the bishops in connection with their allocated portfolios of activity.
- To provide an effi cient and professional administrative service across a wide range of functions including:
- payment of serving clergy and pensioners;
- management of trusts and other funds held provincially;
- organisation of provincial meetings of the Representative Body, Governing Body, Bench of Bishops and their committees;
- provision of guidance for the wider Church on a range of issues including safeguarding, ICT, property management and human resources;
- maintenance of databases and management information.
## Ongoing Objectives
- Maintaining Diocesan Support – To maintain fi nancial support for dioceses through the Block Grant and other provisions.
- Financial Stability – To ensure fi nancial stability with regard to the clergy and staff pension schemes.
- Fund Performance – To make investment returns that exceed agreed benchmarks.
- Safeguarding – To continue to strengthen the Church’s capacity in safeguarding as we seek to be a Safe Church.
## Additional Objectives for 2021
- To consider the funding implications of the Cathedrals Review.
- To consider the funding implications and legal considerations of the Clergy Remuneration Review.
- To instigate a project plan to digitise the Representative Body’s collection of paper records.
- To consider the provision of further fi nancial support for dioceses to mitigate the eff ects of the COVID-19 pandemic.
- To review the asset allocation within the Representative Body’s Investment Policy.
- To undertake a recruitment campaign to appoint a new Chair for the Representative Body.
## Additional Objectives for 2022
- To work with the Bench of Bishops and the Standing Committee to agree a ten-year plan for the Church in Wales which sets out its purpose, values, ambition and goals.
- To produce a ten-year funding plan to ensure that the Representative Body’s fi nancial strategy and resources are directed in support of the Church in Wales’s goals.
- To implement a new payroll and HR management system.
- To implement those recommendations of the Monmouth Enquiry and Review report which are allocated to the Representative Body and its committees for action.
- To provide training and practical support to assist all parts of the Church in Wales to engage eff ectively with the Climate Emergency.
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The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
## **ACHIEVEMENT AND PERFORMANCE**
The Representative Body made available further fi nancial assistance to the dioceses in the fi rst half of 2021 as the Church continued to come to terms with the COVID pandemic.
## Overall Financial Position
The results for the year are shown in the Statement of Financial Activities on page 20.
There was a positive movement in total net funds for 2021 of £103 million. This was primarily due to investment gains of £84 million.
After considering other recognised gains and losses, the total funds shown on the balance sheet of the Representative Body at 31 December 2021 increased from £804 million to £907 million. Further details on the investment performance are given on page 6.
## **General Funds**
Over 95% of the Representative Body’s income is generated through its investments. During 2021, the Representative Body’s investment income increased by £1.4 million, having decreased by £3.5 million in 2020 as a direct result of Covid. Expenditure increased by £898,000, having increased by £4.4 million in 2020. This was a result of additional funding provided to dioceses in both 2021 and 2020 to assist parishes in the wake of the pandemic.
The resulting net loss of £8.5 million compares to annual losses pre-Covid (as highlighted in the Ten Year Review on page 37) of around £2 million.
However, despite the turbulent few years, stock markets remained resilient and the investment portfolio produced net unrealised gains of £82 million which off set the income and expenditure loss and resulted in an overall increase in General Funds of £57 million.
## Total Assets of the Representative Body
Although it might appear from the Balance Sheet on page 21 that the Representative Body is a wealthy charity, it is of vital importance that Church members understand the nature of the Representative Body’s total funds.
The chart on page 4 explains how the Representative Body’s assets are structured.
The total assets of the Representative Body as at 31 December 2021 stood at £1,134 million.
However, as the Clergy Pension Scheme is an unfunded scheme (which means that the assets that are set aside to match the liabilities of the Scheme are not segregated from the assets of the Representative Body) the total assets include £218 million and £9 million which represent the clergy and staff pension liabilities respectively.
The net eff ect of this means that the total funds excluding the pension liabilities of the Representative Body are £907 million.
These funds are split as follows:
**----- Start of picture text -----**
£m
General Funds 533
Restricted Funds 5
Designated Funds 369
Total 907
**----- End of picture text -----**
The Restricted Funds of £4.6 million represents the value of the former St Michael’s College site, held as an endowment fund.
The Designated Funds totalling £369 million are set out in detail on page 34. However, 75% of this total comprises the cost or valuation of the parsonages, churches and church halls. These are not incomegenerating assets and refl ect the working plant of the Church. The remaining balance is specifi cally earmarked for future costs, such as the Evangelism Fund, church repairs and future pension liabilities.
This leaves the General Funds which total £533 million. It is these assets that are invested in stock exchange securities and investment property on a total returns basis to generate the income and capital returns required to ‘run’ the Representative Body. The Representative Body aims to achieve a 5.5% total return, although this may not be sustainable in the future.
The income generated by these investments of around £15 million per annum is used to fund the Block Grant to dioceses, clergy training through St Padarn’s Institute, the bishops and the provincial offi ce. With current expenditure levels of around
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Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
£17 million, the Representative Body is running an income and expenditure defi cit of around £2 million per annum (excluding exceptional COVID support payments). As may be seen on page 37, the Representative Body’s expenditure has for many years exceeded its income, but this is off set by the capital gains. The Trustees are aware that commitment to structural expenditure which progressively erodes the capital base of the Representative Body will reduce its income and ability to fund the ministry and mission of the whole Church in years to come.
|Total Funds
of the Representative Body|£1,134 million||
|---|---|---|
|Less:
Clergy and Staf Pension
Scheme liabilities|(£227 million)||
|**Balance**|**£907 million**||
|Less: Restricted Funds|(£5 million)||
|Less: Designated Funds|(£369 million)||
|**Balance**
**– representing General Funds**|**£533 million**||
It is this £533 million that is held as investment assets and generates the returns (income and capital).
## Supporting Ministry
## **Grants to Dioceses**
The Representative Body continues to provide each diocese with a Block Grant to help with costs such as stipends, clergy pensions (current service contributions) and certain other categories of expenditure, so enabling provincial funding to be used more fl exibly by the dioceses.
In 2021 the total Block Grant was set at £6.2 million, however as a result of the COVID pandemic, it was agreed to provide the dioceses with additional fi nancial assistance of £4.4 million, which meant that the total funding that was provided to dioceses in 2021 was £10.6 million.
The Representative Body has agreed the Block Grant will be set at £2.6 million for 2022. Whilst this may look like a substantial reduction, a change in the accounting method for current service contributions to the clergy pension scheme mean that this fi gure represents a small increase.
In addition, Bishops’ costs (including their offi ce costs) are met directly by the Representative Body.
Overall the Representative Body meets over 30% of the total expenditure of the Church.
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The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
## **CLERGY PENSION SCHEME**
## Clergy Pension Scheme
The Clergy Pension Scheme is a non-contributory fi nal salary scheme and is a signifi cant benefi t for the clergy.
The Clergy Pension Provision forms part of the overall investments of the Representative Body and the long-term challenge is to ensure that pension liabilities are held as a stable proportion of the Representative Body’s total assets.
An incumbent with 40 years’ uninterrupted service, retiring in 2022 will receive a lump sum of up to £38,805 and an annual pension of £15,522. On the death of a cleric, a qualifying surviving spouse or civil partner receives 60% of the cleric’s pension, which in 2022 is £9,313 for full service.
The Clergy Pension Provision is shown in note 21 on page 33. The principal expenditure is the payment of pension benefi ts.
The membership of the Clergy Pension Scheme including the movements during the year are shown below:
**----- Start of picture text -----**
Clergy Pension Scheme Membership
Active Deferred Pensioners Total
Membership at 1 January 2021 407 234 839 1.480
Members returning to active status 1 - - 1
New entrants 21 - - 21
Leavers with deferred benefi ts (13) 13 - -
Transfers out - (1) - (1)
- -
Leavers pending a transfer decision (1) (1)
New pending members 1 - - 1
Retirements (26) (15) 54 13
Deaths (1) (1) (42) (44)
Adjustments to opening fi gures - (3) 1 (2)
Membership at 31 December 2021 389 227 852 1,468
**----- End of picture text -----**
The Clergy Pension Scheme is reviewed every three years and the results of the actuarial valuation that took place as at 31 December 2019, together with the previous three valuations are highlighted below. The new rates took eff ect from 1 January 2020. The next actuarial valuation is due to take place at 31 December 2022.
**----- Start of picture text -----**
Clergy Pension Scheme Funding
2019 2016 2013 2010
Market Value of the Representative Body’s
£719m £607m £512m £452m
General Funds
Value of Past Service Liability £196.2m £187.8m £158.9m £141.9m
Liability as a proportion of General Fund 27.3% 30.9% 31.1% 31.4%
Employer’s Current Service Contributions 36.5% 38.8% 32.7% 27.2%
**----- End of picture text -----**
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Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
## **FINANCIAL REVIEW**
## Investments increased during the year by 10%.
## Investment Policy
The power to invest all monies held by the Representative Body in trust for the Church in Wales is set out in section 20 of Chapter III of the Constitution, which gives wide ranging authority for investment.
## Investment Objectives
The objectives of the Representative Body’s investment policy are to:
- achieve a balance between sustainable levels of income and capital growth;
- optimise total returns without undue risk;
- continue to meet the Representative Body’s current to long-term liabilities and income commitments;
- operate within the constraints of the Church’s Ethical Investment Policy Statement, as set out on page 8.
Diversifi cation in a range of assets is essential to reducing risk, and therefore forms an important part of the investment strategy of the fund. The assets in which the fund is invested are regularly reviewed.
## Investment Managers
Sarasin & Partners and Newton Investment Management each manage one half of the stock exchange investment fund, under a Global Multi-Asset mandate.
Cluttons LLP manage both the investment properties and the property unit trusts.
## Overall Fund Performance
During 2021 the total value of the Representative Body’s investments increased by 10% to £824 million as shown on the Balance Sheet on page 21.
The capital value of the fund is of particular signifi cance in assessing the proportion of assets required to meet the Clergy Pension Scheme liabilities which were valued at £218 million on 31 December 2021 (2020: £222 million).
## Total Return
The total return (both income and capital growth) from the Representative Body’s fund during 2021 was 13.6%, outperforming the Teknometry comparator return of 12.1%. Over three and fi ve years the annualised returns also outperformed the comparator as highlighted in the table below.
**Representative Body Total Return v Benchmark**
**----- Start of picture text -----**
16
12 13.6 13.1
12.1
11.1
10.8
8 9.8 8.4
7.6
4
0
1 Year 3 Years 5 Years 10 Years
Representative Body Teknometry CIG Charity Fund Index
**----- End of picture text -----**
## Comparator
The performance of the Representative Body’s total investment fund, including the stock exchange investments and property investments is measured relative to the Teknometry CIG Charity Fund Universe Benchmark.
The property portfolio is measured against the MSCI Monthly Index.
## Stock Exchange Investments
The value of stock exchange securities increased over the year from £651 million to £708 million at 31 December 2021, an increase of 8.9%.
Global equities advanced as they passed the fi rst anniversary of the Covid-19 pandemic. Although fresh lockdowns were enforced across several major economies in 2021, the accelerating rollout of Covid-19 vaccination programmes, and the promising results witnessed in those countries furthest ahead in this process, were key factors that bolstered investors’ risk appetite early in the review period. By contrast, the infl uence of monetary accommodation, which had undoubtedly been a critical support for fi nancial-asset prices, took a somewhat diff erent turn as investors began to anticipate a dialling back of the exceptional levels of monetary stimulus. This contributed to a sharp rise in government bond yields over the start of 2021.
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The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
As 2021 progressed, the infl ation debate remained a high-profi le and contentious issue, with a series of elevated data points prompting many to question the narrative that this phase would be transitory. Given the inextricable linkage with the direction of monetary policy, which had been such a prominent support to asset prices since the pandemic began, this became a key factor driving sentiment.
Other challenges including the Covid-19 Delta variant, threatened to undermine global growth. Sentiment was also roiled by the Chinese government’s decision to launch fresh interventions across several sectors, the most signifi cant, in terms of market impact, being the major technology platforms. Once more, it was rising government bond yields that formed a major part of the narrative behind a sell-off at the end of September 2021.
Higher energy prices, goods shortages and wageinfl ation numbers led to the suggestion that monetary stimulus could be ‘tapered’ and interest rates moved higher. Meanwhile, late in 2021, the new Covid-19 Omicron variant initially provoked draconian responses from several governments, which, in turn, undermined risk appetite.
Over the 12-month period, US equities led the pack, delivering a +28.1% return in sterling terms. UK equities and European ex UK equities returned +18.3% and +17.4% respectively. Asia Pacifi c ex Japan equities delivered an +8.2% return, while Japanese and emerging-market equities produced a +2.5% return and +1.0% return respectively.
Corporate bonds delivered a -3.0% return in sterling terms. Gilts also fell, returning -5.2% over the 12-month period, while overseas government bonds returned -5.7%.
## Investment Property
The value of the Representative Body’s investment property portfolio decreased marginally over the year from £73.9 million to £73.6 million.
The Representative Body directly holds 10 investment properties and also holds units in 2 Property Units Trusts (PUTs).
The direct properties are independently valued at each year end and as at 31 December 2021 at £63.8 million compared to £57 million at the end of 2020, despite the sale of one property during 2021 for £1.4 million.
The PUTs investments were valued at 31 December 2021 at £9.8 million compared to £16.8 million the previous year, following the sale of the WELPUT investment for £7.2 million during the year.
The commercial property portfolio equalled or outperformed the MSCI Monthly Index over all periods as shown in the table below.
**----- Start of picture text -----**
Property Portfolio Returns
% Return
20
19.9
18
17.9
16
14
12
10
10.1
8 8.6
6 6.3 6.6 7.4 7.7
4
2
0
1 Year 3 Years 5 Years 10 Years
Representative Body MSCI Monthly Index
**----- End of picture text -----**
Asset allocation ranges and the allocation as at 31 December 2021 are shown below:
**----- Start of picture text -----**
Asset Allocation Range
Allocation at
Asset class Range
31 December 2021
UK Equities 15-40% 23%
Overseas Equities 20-70% 56%
Fixed Interest 5-25% 9%
Alternatives 0-15% 9%
Cash 0-25% 3%
**----- End of picture text -----**
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Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
## Ethical Investment Policy Statement
_The Church in Wales has had an Ethical Investment Policy for many years. Informed by the work of Churches Ethical Investment Group and supported by the Representative Body’s Investment Committee, the current policy statement was adopted by the Governing Body of the Church in Wales in April 2021._
We recognise the complexities surrounding the activities of companies in which we can invest, and reserve the right to make investment decisions on a case by case basis. We will endeavour to engage with companies which are in actual or potential breach of this policy or where concerns exist over environmental, social and governance issues before considering disinvestment.
As a Christian Church, we are tasked to co-operate with God’s active presence in the world and with proclaiming the values of the kingdom of God. This means that the Church has a particular interest in promoting all that furthers justice and peace, that enables full human fl ourishing, that honours creation and that builds creative human communities.
The Church in Wales wishes to have an investment policy that is ethical and consistent with the furtherance of our aims and objectives. We believe that it is entirely appropriate and possible to operate such a policy alongside the requirement to achieve the best returns from our investments, and to use our investments as an ethical means of contributing to the cost of ministry and mission in the Province.
Our aim is to invest in successful companies that are committed to developing their business in the interests of their shareholders, customers, local communities and employees by operating:
- Responsible employment practices;
- Conscientious corporate governance;
- Policies and practices which demonstrate a proper regard for the environment and for the well-being of the created order;
It is the policy of the Church in Wales not normally or knowingly to invest in any company:
- which derives more than 10% of turnover from a primary focus on gambling, or the production or sale of alcoholic beverages or tobacco products;
- which derives more than 5% of turnover from pornography, predatory lending activities or the proliferation of armaments;
- which derives more than 5% of turnover from the production or the extraction of fossil fuels.
The Church in Wales wishes to be a well informed and responsible investor, and to this end is represented on the Church Investors Group, which is a means of accessing research, obtaining reliable information, sharing best practice with other member organisations, and exercising combined shareholder infl uence.
A valuable relationship exists between the Investment Committee and the Church in Wales Ethical Investment Group to which the Committee refers problematic cases, and from which it receives an annual report.
- Policies sensitive to the human rights and wellbeing of individuals and communities in which they operate;
- Fair trading practices.
In its policy for investment, the Church in Wales will use its best endeavours not to be associated with companies whose products or policies confl ict with these aims or to invest in companies which:
- Are responsible for the wanton despoliation of the environment;
- Are responsible for anything that threatens peace, security and communal well-being;
- Exploit, demean, corrupt or degrade humankind, especially the poor or the fi nancially vulnerable;
- Are indiff erent to the well-being of animals.
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The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
## Risk Management Policy
## Reserves Policy
The Representative Body has an extensive risk register which is overseen by the Audit and Risk Committee with regular reviews by senior management. It is formally reviewed annually by the Representative Body.
The 2021 risk register identifi es the major risks to which the organisation is exposed and the scope of such risks. The register then identifi es the controls and procedures which have been established to manage and mitigate those risks, from which there are defi ned action points, strategies and timescales to mitigate risk further.
The 2021 risk register has identifi ed the following as the most signifi cant risks:
1. Poor total returns from the Representative Body’s investments;
2. Insolvency of a diocese;
3. Accelerated decline in church attendance;
4. Suspension of public worship due to unforeseen circumstances;
5. Organisational structure of the Church in Wales no longer appropriate for the needs of the organisation;
6. Unauthorised network access;
At 31 December 2021, the Representative Body’s total funds amounted to £907 million (2020: £804 million). This includes the Restricted and Designated Funds with a combined total of £374 million.
The Restricted Funds which total £4.6 million represent an Endowment Fund in respect of the former St Michael’s College site.
The Designated Funds total £369.2 million and £278 million is in respect of the non-investment properties held by the Representative Body, represented by church ‘plant’ – churches, church halls and parsonages.
In determining the available reserves of the Representative Body, it is considered prudent to exclude the Restricted and Designated Funds, as these funds are not available to spend. The Representative Body therefore considers that the General Fund balance of £533 million (2020: £477 million) represents the reserves available.
As shown in the Balance Sheet on page 21, the Representative Body’s General Fund balance is £533 million which as shown in the table on page 4, is made up of investment assets. It is those investment assets held by the Representative Body that generate the overwhelming majority of both its income and capital gains.
7. Increasing numbers of redundant churches;
8. Cyber security breach
9. Falling clergy numbers;
10. GDPR breach;
11. Failure by any part of the Church in Wales to follow the Safeguarding Policy;
12. Increasing demands on property staff team;
13. Clergy Pension Scheme assets not ringfenced;
14. Emergence of unknown tax liabilities;
15. Continuing defi cit of the Staff Retirement Benefi t Scheme;
16. Diffi culties in recruiting suffi cient committee members with appropriate skills and experience.
The Trustees keep these risks and steps taken to mitigate them under active review.
It is therefore in the interest of the Church as a whole to carefully steward and manage its investment assets in order to maintain the current levels of income and capital gains so that the Representative Body can continue, for both this generation and generations to come, the current levels of support it provides to dioceses and parishes.
## General Funds
The amount of General Funds held by the Representative Body at 31 December 2021 totaled £533 million (2020: £477 million).
The total return expenditure policy is based on the amount of General Funds held by the Representative Body. The policy is to set spending at a level intended to provide vital funding for the Church in the short term whilst preserving the investment base to provide sustainable increases in annual expenditure into the future.
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Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
## Designated Funds
The Trustees have the power to designate general funds to be retained for an agreed purpose where this is considered to be prudent.
At 31 December 2021 Designated Funds amounted to £369 million (2020: £323 million). Details of the Designated Funds are set out on page 34. The most signifi cant fund is the Revaluation Reserve, with a balance of £244 million, and represents the diff erence between the market values assigned to noninvestment property (including parsonages, churches, church halls and sundry property) and the underlying cost. As such, the Revaluation Reserve can only be realised by the disposal of the non-investment property held by the Representative Body for the day to day work of the Church.
All designated funds are reviewed annually and returned to general funds in the event that the purpose of their designation can no longer be justifi ed.
## Restricted Funds
At 31 December 2021 Restricted Funds amounted to £4.6 million (2020: £4.6 million) held by the Representative Body, and represents the value of the former St Michael’s College site.
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The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
## **FUTURE PLANS**
An assessment of forthcoming strategic priorities for the Representative Body.
## Short to medium term issues
## **COVID-19**
Since the beginning of the pandemic in March 2020, the Trustees have been met remotely rather than in person. They have met much more frequently than their previous pattern of three times per year. During 2021, additional fi nancial support was provided to the six dioceses of £4.4 million bringing the total of additional support during the pandemic to £12.5 million.
The Representative Body’s Investment Committee worked closely with its investment managers to ensure that resources were in place to fund this large additional grant expenditure. Cashfl ow is monitored closely, and regular forecasts are produced.
During 2021, the offi ce in Cardiff remained open, subject to compliance with COVID-19 restrictions but most staff worked from home. The substantial investment in ICT made when the offi ce was relocated to Callaghan Square has made the introduction of dispersed and hybrid working relatively straight forward. The St Padarn’s Institute returned to in-person teaching during the year when this was permitted.
## **Support for the dioceses**
In addition to the exceptional grants set out above, the Representative Body continued to provide a comprehensive portfolio of services, advice and fi nancial support to the wider Church in Wales. This included maintaining Block Grant funding to dioceses (amounting to £6.2 million).
Examples of services and advice provided to dioceses:
Safeguarding casework advice and training. The team was strengthened during the year with new safeguarding appointments and the portfolio of safeguarding training resources refreshed.
People services. Several new appointments were made during the year to ensure that appropriate resource is available in support of peoplerelated matters for both clergy offi ce-holders and Representative Body employees. Additionally, work has been commissioned to refresh the suite of peoplerelated policies and procedures.
Property services – providing advice and support to the whole Church in Wales for its estate of church buildings, residential and other properties, graveyards and other land holdings.
Legal services – providing advice to Ministry / Mission areas and parishes in connection with approximately 2,500 trusts.
ICT services – new system introduced for DBS checking; introduction of Church in Wales e-mail addresses for clergy in several dioceses.
## **Clergy Remuneration**
In 2017, the Representative Body commissioned a comprehensive review of clergy remuneration arrangements. The working group which undertook the review produced a report in May 2019 which was highly detailed, incorporating complex fi nancial models and projections, and made 35 recommendations. The report also placed signifi cant emphasis on clergy well-being. In response, the Representative Body formed a small implementation group to advise it on implementation strategy. This implementation group has produced its report which has been considered by the Representative Body. Specialist legal and pensions-related advice has been sought to enable the Representative Body to make fi nal decisions. A separate group, led by the Bishop of Monmouth, is considering the recommendations in the report which relate to clergy well-being.
## **Safeguarding**
The Representative Body continues to invest in its safeguarding resource. During the year, a new Director of Safeguarding was appointed who has brought together, into one team, activities in casework, training, policy and procedure development, and relationship building with the statutory agencies and other partners.
New resources have been published during the year and governance re-organised to ensure that oversight of safeguarding has clear linkage to the Governing Body.
## **Training for Ministry**
2021 saw the launch of the Church in Wales Ministerial Development Review scheme, to ensure that all clergy across the six dioceses have an annual review. The scheme was carefully constructed to hold together a common Church in Wales core – to ensure commonality for clergy across the Church and continuity when clergy move diocese – and distinctive diocesan sections to refl ect diocesan strategies and
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Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
cultures. There was new focus on the Pioneer and Welsh-Medium Mission networks, organised by the St Padarn’s institute, to support and stimulate ministry in these important areas, and changes within the tutorial team at St Padarn’s to strengthen its expertise in Biblical studies and Welsh theology.
In 2021 St Padarn’s moved its university partner for its master’s level courses from Cardiff University to Durham University. While the partnership with Cardiff had served the Church in Wales well for many years, the Cardiff department had steadily become less interested in Christian theology, and thus the partnership with the Church more marginal to it. Durham University (ranked the fi fth best university in the world for theology in 2021) has a signifi cant focus on Christian theology and ministry, and a dedicated partnership arm (‘common awards’) to work with theological colleges.
## **Cathedrals Review**
In 2017 the Governing Body received a report from an independent review into the role, governance and resourcing of cathedrals. Since then the Constitutional requirements for cathedral governance have been updated to allow cathedrals the ability to build governance mechanisms that are more suitable to their own individual circumstances. In 2019, following further discussions about the arrangements for providing funding for the cathedrals, the Representative Body arranged for a small group of trustees to visit each of the six cathedrals to gain a detailed understanding of their local context and specifi c situations. The Representative Body received a number of updates from the group and a fi nal report with recommendations was received during 2021. Those recommendations have now been implemented in full.
## Long term issues
## **Pensions**
The actuarial valuation of the Clergy Pension Scheme at 31 December 2019 confi rmed that the Scheme is well funded and continues to represent a prudent proportion of the Representative Body’s total assets. The Representative Body will keep the Clergy Pension Scheme, including its funding and benefi ts, under active review. The next actuarial valuation of the Clergy Pension Scheme is due to take place as at 31 December 2022.
## **Climate Change**
Following the Governing Body’s Climate Emergency declaration in April 2021, the Representative Body appointed a full-time Climate Change Champion to bring focus to this vital area of work. The Representative Body completed the divestment process from all forms of fossil fuel production and supply, agreed an environmental policy and focused on the development of the Net Zero Carbon Framework of the Church in Wales, for approval at the April 2022 Governing Body.
Over the last twelve months, the Representative Body’s Property Committee developed a Net Zero Policy, the People Committee approved the Smart Working Policy for staff and Archbishop Andrew has become the fi rst bishop to switch to the use of an electric vehicle.
With an agreed net zero strategy for action with immediate steps for all levels of the Church in place, the implementation of the Governing Body’s Framework will be the focus of the Climate Change Champion engaging with all parts of the Church. Immediately, this will involve arranging a comprehensive training programme of carbon literacy for key church leaders, developing an energy footprint tool for churches and church halls and commissioning energy audits for key buildings.
The Representative Body is committed to supporting the whole Church in its response to the global climate crisis.
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The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
## **GOVERNANCE AND MANAGEMENT**
The Representative Body of the Church in Wales was created by a Charter of Incorporation on 24 April 1919 and is constituted to hold all property and investments vested in it in trust for the use and purposes of the Archbishop, Bishops, Clergy and Laity of the Church in Wales. These assets are held in order to maximise the support which can be given to the mission of the Church in parishes throughout the province.
The Representative Body comprises up to 26 members and normally meets three times a year. The membership and functions of the Representative Body are regulated by Chapter III of the Constitution of the Church in Wales.
Details of the trustees who served during the year and since the year end are set out on page 39. The relationship of the Representative Body to its committees and to the other provincial bodies of the Church in Wales is set out on page 15.
## **Membership Composition**
Trustees (other than ex-offi cio trustees) are appointed for a three-year term of membership. The Representative Body’s membership consists of:
- The Archbishop;
- The Chair of the Standing Committee of the Governing Body;
- The Chair of the Diocesan Board of Finance of each diocese;
- One cleric elected by the Diocesan Conference of each diocese;
- One lay person elected by the Diocesan Conference of each diocese;
- Up to four members nominated by the Bench of Bishops in consultation with the Standing Committee;
- Up to two members co-opted by the other members of the Representative Body.
## **Membership Eligibility**
The following are eligible to be members of the Representative Body:
- Any cleric who holds an ecclesiastical offi ce in the Church in Wales or a licence from a Welsh Diocesan Bishop who is not retired nor has reached the age of 70;
- Any lay communicant over 18 and under 75 years of age who either:
- a. resides or has resided for a period of 12 months in a Church in Wales parish; or,
- b. whose name appears in the electoral roll in a Church in Wales parish and who does not belong to a religious body which itself is not in communion with the Church in Wales.
A lay communicant may be elected a member of the Representative Body only for the diocese in which he or she either resides, holds diocesan offi ce or has his or her name on the electoral roll of a parish in such diocese. No full-time employee of the Representative Body, a Diocesan Board of Finance or any other such provincial or diocesan body within the Church in Wales shall be eligible to be a member of the Representative Body.
## **Membership – Induction and Training**
It is the policy of the Representative Body that its members should be provided with training appropriate to their duties both as charity trustees and as members of its committees. New members are given the opportunity to attend external training events for charity trustees, and all new members are also invited to the Provincial Offi ce to meet staff and to learn more about the work of the Representative Body, the Governing Body and the Bench of Bishops.
In addition, members are off ered training tailored to meet specifi c gaps in knowledge or experience, often linked to a member’s work with the Representative Body’s committees. In the past this training has proved to be particularly benefi cial in the complex and specialised areas of investments and audit.
## **Committees**
The Representative Body has seven committees – Finance, Investment, Property, People, Audit and Risk, Training, Formation and Ministerial Development (formerly St Padarn’s Council) and the Cathedrals and Churches Commission – each with specifi c terms of reference and functions delegated by the Representative Body and reviewed every three years. The Training Formation and Ministerial Development committee was disbanded at the end of 2021.
## **Investment Committee**
The Investment Committee determines the investment strategy for approval by the Representative Body (within the overall policy objectives of the Representative Body and with advice from their appointed advisers) and recommends for the Representative Body’s approval all strategic decisions necessary to manage the investments of the Representative Body within this strategy.
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Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
## **Property Committee**
The Property Committee has responsibility for policy relating to the Representative Body’s non-investment property including churches, parsonages, burial grounds, glebe land, and bishops’ residences and the management of those properties. Its duties are wideranging and include authorising the sale and purchase of properties; developing strategies for dealing with redundant church buildings and churchyards; administering trusts, legacies and bequests; and administering grants for the repair and improvement of properties.
## **People Committee**
The People Committee is responsible for developing policies and procedures for clergy, staff and volunteers in line with good practice and the specifi c legislation that applies to each group. This includes advising the Representative Body on the level of clergy stipends and staff salaries and the terms and funding of the pension schemes for clergy and staff respectively.
## **Audit and Risk Committee**
The Audit and Risk Committee works with the Representative Body’s external auditors to ensure proper fi nancial reporting practice and compliance with charity accounting requirements. It is also responsible for monitoring the eff ectiveness of the internal audit function. It also has an important role in overseeing the risk management process and to consider the potential fi nancial exposure on safeguarding matters.
## **Cathedrals and Churches Commission**
The role of the Cathedrals and Churches Commission is to provide expert advice to diocesan courts and advisory groups on applications for major works to cathedral and church buildings as part of the in-house procedure (or faculty procedure) established by the Church in Wales as a condition of the ecclesiastical exemption from local planning controls.
##
Representative Body members are likely to serve the Church in Wales in other ways and some, in particular clergy members, receive remuneration in these other roles. The Representative Body operates a confl icts of interest policy to ensure that members’ other interests – either personal or on behalf of other organisations within the Church – do not exercise an inappropriate infl uence on the Representative Body’s own decision making. A register of members’ interests is maintained and updated regularly, and members are given the opportunity at the beginning of each meeting to declare any potential confl icts with items under consideration.
## **Fundraising**
The Representative Body does not actively fundraise but donations are gratefully received. No complaints have been received in respect of fundraising.
## **Finance Committee**
The Finance Committee was established in May 2021 and is the principal place of detailed engagement and interface between the Representative Body and its staff on matters of fi nancial strategy development; fi nancial planning and budgeting; scrutiny of un-budgeted expenditure proposals; fi nancial arrangements with the diocesan boards of fi nance; and matters relating to the staff and clergy pension schemes.
## **Training, Formation and Ministerial Development Committee**
The Training, Formation and Ministerial Development Committee was disbanded on 31 December 2021. It previously oversaw the work of St Padarn’s Institute, providing academic governance, quality assurance and enhancement, and more broadly, the oversight of training, formation and ministerial development. The Committee was accountable to the Representative Body. From 1 January 2022, the St Padarn’s Quality and Standards Panel was formed, which reports directly to the Bench of Bishops.
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The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
## **THE PROVINCIAL STRUCTURE (as at 1 January 2022)**
**----- Start of picture text -----**
Governing Representative
Be nch of Bishops
Body Body
St. Padarn’s Bench Committees
Standing
Quality and Bishops' Portfolio
Committee
Standards Panel Support
Appointments
Safeguarding Drafting Legal
and Business
Committee Sub-Committee Sub-Committee
Sub-Committee
Cathedrals &
Finance Audit & Risk People Investment Property
Churches
Committee Committee Committee Committee Committee
Commission
Ethical
Investment
Group
**----- End of picture text -----**
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Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
## **STATEMENT OF TRUSTEES’ RESPONSIBILITIES**
The trustees are responsible for preparing the Trustees’ Annual Report and the fi nancial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
The law applicable to charities in England and Wales requires the trustees to prepare fi nancial statements for each fi nancial year which give a true and fair view of the state of aff airs of the charity and of the incoming resources and application of resources of the charity for that period.
In preparing these fi nancial statements, the trustees are required to:
- select suitable accounting policies and then apply them consistently;
- observe the methods and principles in the Charities SORP;
- make judgments and estimates that are reasonable and prudent;
- state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the fi nancial statements; and
- prepare the fi nancial statements on the going concern basis unless it is inappropriate to presume that the charity will continue in business.
The trustees are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the fi nancial position of the charity and enable them to ensure that the fi nancial statements comply with the Charities Act 2011, the Charity (Accounts and Reports) Regulations 2008 and the provisions of the trust deed. They are also responsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The trustees are responsible for the maintenance and integrity of the charity and fi nancial information included on the charity’s website. Legislation in the United Kingdom governing the preparation and dissemination of fi nancial statements may diff er from legislation in other jurisdictions.
By order of the Representative Body.
## **Professor Medwin Hughes, Chair**
## **Mrs Hilary Wiseman, Deputy Chair**
30 June 2022
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The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
## **INDEPENDENT AUDITORS’ REPORT**
## **Independent Auditors’ Report to the Trustees of the Representative Body of the Church in Wales**
## **Opinion**
We have audited the fi nancial statements of the Representative Body of the Church in Wales for the year ended 31 December 2021 which comprise the Statement of Financial Activities, the Balance Sheet, the Cash Flow Statement and notes to the fi nancial statements, including a summary of signifi cant accounting policies. The fi nancial 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 fi nancial statements:
- give a true and fair view of the state of the charity’s aff airs as at 31 December 2021 and of the charity’s net movement in funds for the year then ended;
- have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
- have been prepared in accordance with the requirements of the Charities Act 2011.
## **Basis for opinion**
We have been appointed as auditor under section 144 of the Charities Act 2011 and report in accordance with the Act and relevant regulations made or having eff ect thereunder. 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 fi nancial statements section of our report. We are independent of the charity in accordance with the ethical requirements that are relevant to our audit of the fi nancial statements in the UK, including the FRC’s Ethical Standard, and we have fulfi lled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our opinion.
## **Conclusions relating to going concern**
In auditing the fi nancial statements, we have concluded that the trustees’ use of the going concern basis of accounting in the preparation of the fi nancial statements is appropriate.
Based on the work that we have performed, we have not identifi ed any material uncertainties relating to events or conditions that, individually or collectively, may cast signifi cant doubt on the charity’s ability to continue as a going concern for a period of at least twelve months from when the fi nancial statements are authorized 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 Chair’s statement. Our opinion on the fi nancial 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 fi nancial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the fi nancial 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 fi nancial 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.
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Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
## **Matters on which we are required to report by exception**
We have nothing to report in respect of the following matters in relation to which the Charities (Accounts and Reports) Regulations 2008 require us to report to you if, in our opinion:
- adequate accounting records have not been kept by the charity; or
- suffi cient accounting records have not been kept; or
- the charity fi nancial statements are not in agreement with the accounting records and returns; or
- we have not received all the information and explanations we require for our audit.
## **Responsibilities of trustees for the fi nancial statements**
As explained more fully in the Trustees’ Responsibilities Statement on page 16, the trustees are responsible for the preparation of the fi nancial statements and for being satisfi ed that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of fi nancial statements that are free from material misstatement, whether due to fraud or error.
In preparing the fi nancial statements, the trustees are responsible for assessing the charity’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 charity or to cease operations, or have no realistic alternative but to do so.
## **Auditor’s responsibilities for the audit of the fi nancial statements**
Our objectives are to obtain reasonable assurance about whether the fi nancial 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 infl uence the economic decisions of users taken on the basis of these fi nancial 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 charity and the environment in which it operates, we identifi ed that the principal risks of non-compliance with laws and regulations related to charity law applicable in England and Wales, and we considered the extent to which non-compliance might have a material eff ect on the fi nancial statements. We also considered those laws and regulations that have a direct impact on the preparation of the fi nancial statements such as the Charities Act 2011.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the fi nancial statements (including the risk of override of controls). Audit procedures performed by the engagement team included:
- Inspecting correspondence with regulators;
- Discussions with management including consideration of known or suspected instances of non-compliance with laws and regulation and fraud;
- Reviewing the controls and procedures of the charity relevant to the preparation of the fi nancial statements to ensure these were in place throughout the year, including during the COVID-19 remote working period;
- Evaluating management’s controls designed to prevent and detect irregularities;
- Identifying and testing journals, in particular journal entries posted with unusual account combinations, postings by unusual users or with unusual descriptions;
18
The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
- Challenging assumptions and judgements made by management in their critical accounting estimates in particular valuation of property assets and investment properties; and
- Reviewing the assumptions and judgements used by the professional actuary in relation to the charitable company’s pension valuations.
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 fi nancial 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 refl ected in the fi nancial 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 fi nancial 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 charity’s trustees, as a body, in accordance with section 144 of the Charities Act 2011 and regulations made under section 154 of that Act. Our audit work has been undertaken so that we might state to the charity’s trustees those matters we are required to state to them in an Auditor’s Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charity’s trustees as a body for our audit work, for this report, or for the opinions we have formed.
|**Haysmacintyre LLP**|10 Queen Street Place|
|---|---|
|Statutory Auditor|London|
|30 June 2022|EC4R 1AG|
Haysmacintyre LLP is eligible to act as an auditor in terms of section 1212 of the Companies Act 2006
19
Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
## Statement of Financial Activities
For the year ending 31 December 2021
**----- Start of picture text -----**
General Designated Restricted Total Total
Funds Funds Funds Funds Funds
2021 2021 2021 2021 2020
Notes £000 £000 £000 £000 £000
Income from:
Donations and Legacies 523 - - 523 120
Charitable Activities - 306 33 339 728
Investments 2 18,756 395 - 19,151 17,724
Other 251 - - 251 290
19,530 701 33 20,264 18,862
Expenditure on:
Raising Funds 3 3,023 - - 3,023 3,106
Charitable Activities
Support for Ministry 4 10,941 - - 10,941 8,867
Support for Dioceses and Parishes 5 12,712 1,726 - 14,438 14,751
Other Church Property 6 406 1,031 - 1,437 1,514
Other Financial Support 7 657 15 33 705 553
Communication 8 323 - - 323 358
28,062 2,772 33 30,867 29,149
-
Net Expenditure before Investment Gains (8,532) (2,071) (10,603) (10,287)
Net Gains on Investments 82,142 1,384 - 83,526 39,684
-
Net Income / (Expenditure) 73,610 (687) 72,923 29,397
Transfers between funds:
Emergency Aid Fund (200) 200 - - -
Cathedrals Funding (30) 30 - - -
Climate Change Fund (523) 523 - - -
Other Recognised Gains / (Losses):
-
(Losses) / gains on revaluation of fi xed assets (1,061) 20,511 19,450 19,529
- -
Allocation to Clergy Pension Provision (22,135) (22,135) (10,903)
- -
Transfer from / (to) Clergy Pension Provision 26,154 26,154 (12,750)
- -
Actuarial gain / (loss) on Staff Pension Scheme 6,941 6,941 (5,350)
Net Movement in Funds 56,602 46,731 - 103,333 19,923
Reconciliation of Funds:
Total Funds brought forward 476,740 322,501 4,550 803,791 783,868
Total Funds carried forward 533,342 369,232 4,550 907,124 803,791
**----- End of picture text -----**
The statement of fi nancial activities incorporates the statement of comprehensive income. All activities are continuing.
There is no material diff erence between the net expenditure before investment gains stated above and their historical cost equivalent.
20
The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
## Balance Sheet
As at 31 December 2021
**----- Start of picture text -----**
31 December 2021 31 December 2020
Note £000 £000 £000 £000
Fixed Assets
Non-Investment Properties 12 305,743 290,284
Tangible Assets 13 123 135
305,866 290,419
Investments
Investment Properties 14 63,825 57,040
Property Unit Trusts 15 9,823 16,832
Stock Exchange Securities 16 708,272 650,682
Funds held by Investment Managers 19,878 12,964
Money Market Deposits and Loans 17 22,667 11,732
824,465 749,250
Current Assets
Debtors 18 7,007 6,588
Cash at Bank and in Hand 1,076 1,085
8,083 7,673
Current Liabilities
Creditors: amounts falling due within one year 19 (4,504) (5,942)
Net Current Assets 3,579 1,731
Total Assets Less Current Liabilities 1,133,910 1,041,400
Long Term Liabilities
Clergy Pension Provision 21 (218,000) (222,000)
Net Assets excluding Staff Pension Liability 915,910 819,400
Defi ned Benefi t Staff Pension Liability 11 (8,786) (15,609)
Net Assets including Staff Pension Liability 907,124 803,791
Capital and Reserves
General Funds 542,128 492,349
Pension Reserve (8,786) (15,609)
533,342 476,740
Designated Funds 22 369,232 322,501
Restricted Funds 23 4,550 4,550
Total Funds 907,124 803,791
**----- End of picture text -----**
The fi nancial statements on pages 20 to 36 were approved by the Representative Body on 30 June 2022. Professor Medwin Hughes, Chair Mrs Hilary Wiseman, Deputy Chair
21
Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
## Cash Flow Statement
For the year ending 31 December 2021
**----- Start of picture text -----**
31 December 2021 31 December 2020
Note £000 £000
Reconciliation of net income to net cash provided by operating activities:
Net income 72,923 29,397
Adjustment for:
Gains on revaluation of fi xed assets 19,450 19,529
Allocations to clergy pension provision 4,019 (23,653)
Gain / (loss) on staff pension scheme 6,941 (5,350)
Depreciation of tangible assets 13 12 239
Income from investments 2 (19,151) (17,724)
Expenditure on raising funds 3 3,023 3,106
Gains on investments (83,526) (39,684)
Gains on fi xed assets 12 (18,760) (21,839)
Add:
Movement in debtors 18 (419) (280)
Movement in creditors 19 (1,438) (26)
Movement on clergy pension provision 21 (4,000) 25,800
Movement on staff pension liability 11 (6,823) 5,360
Net cash provided by operating activities (27,749) (25,125)
Statement of cash fl ows
Cash fl ows from operating activities
Net cash used in operating activities (27,749) (25,125)
Cash fl ows from investing activities
Income from investments 2 19,151 17,724
Expenditure on raising funds 3 (3,023) (3,106)
Non-investment properties: additions 12 (1,433) (1,724)
Non-investment properties: sale proceeds 12 4,734 4,911
Tangible assets: additions 13 - (12)
Investment properties: sale proceeds 14 1,420 -
Property unit trusts: additions 15 - (12)
Property unit trusts: sale proceeds 15 7,272 511
Stock exchange securities: additions 16 (151,655) (185,711)
Stock exchange securities: sale proceeds 16 168,147 176,379
Other sale proceeds 976 145
Movement in funds held by investment managers (6,914) (1,413)
Movement in money market deposits and loans 17 (10,935) 17,663
Net cash provided by investing activities 27,740 25,355
Change in cash and cash equivalents (9) 75
Cash and cash equivalents at 1 January 1,085 1,010
Cash and cash equivalents at 31 December 1,076 1,085
**----- End of picture text -----**
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The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
## Notes to the Accounts
The fi nancial statements have been prepared in accordance with the Statement of Recommended Practice (SORP 2015): Accounting and Reporting by Charities preparing their fi nancial statements in accordance with the Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland (FRS 102), issued on 16 July 2014, the Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland (FRS 102), the Charities Act 2011 and UK Generally Accepted Practice.
The Representative Body of the Church in Wales is incorporated under Royal Charter and its registered address is: 2 Callaghan Square, Cardiff , CF10 5BT.
The Representative Body of the Church in Wales constitutes a public benefi t entity as defi ned by FRS 102.
## **1. Accounting Policies**
The Representative Body of the Church in Wales (the Representative Body) holds all property and investments vested in it in trust for the use of the Archbishop, Bishops, Clergy and Laity of the Church in Wales.
The Representative Body is a registered charity, under the Charities Act 2011. The fi nancial statements have been prepared on a going concern basis and in accordance with the Statement of Recommended Practice 2015 (SORP 2015) and applicable accounting standards in the United Kingdom (FRS 102). The accounts have been prepared in pounds sterling rounded to the nearest thousand.
The principal accounting policies are set out below and have been applied consistently.
## **a. Basis of Accounting**
The fi nancial statements have been prepared in accordance with the historical cost convention as modifi ed by the annual revaluation of stock exchange securities, investment properties, property unit trusts and non-investment properties.
## **b. Income**
Rental income and interest on short term loans and deposits is accrued. Interest and dividends on stock exchange securities and proceeds from the sale of parsonages are credited on the date of receipt.
## **c. Expenditure**
- Expenditure is recognised when a liability is incurred. Costs of raising funds are those costs incurred in managing the investments.
## **d. Investments**
## _Investment Properties:_
Investment properties are valued individually at open market value in accordance with the Statement of Asset Valuation Practice and Guidance Notes of the Royal Institution of Chartered Surveyors.
## _Property Unit Trusts:_
Property unit trusts are stated at market values based on net asset value per unit at 31 December 2021. _Stock Exchange Securities:_
Stock exchange securities are stated at market values based on bid price at 31 December 2021. Securities denominated in foreign currency are converted into sterling at rates of exchange ruling at the balance sheet date. Investments sold are marked to market value at the date of sale. Consequently, the Statement of Financial Activities treats all movements as changes in the values of the investment portfolio.
## **e. Non-Investment Properties**
- The Representative Body has included parsonages, churches and church halls in the Balance Sheet at a valuation using the methodology set out below.
The Representative Body does not value the 6 cathedrals it owns, as cost information is not available and any conventional valuation techniques would lack suffi cient reliability due to the unique and historically signifi cant nature of the buildings.
The Representative Body’s Property Database confi rms that assets include 6 Cathedrals, 1,386 Churches and 1,215 Churchyards at 31 December 2021. These buildings are carefully managed and maintained to preserve them for the future. Works are controlled through the Church’s Faculty System which ensures that all maintenance and repair works are properly considered. Many of these assets are also open for public view outside of worship times. Such assets are not marketed but are occasionally sold.
The following asset classes were valued by the in-house Property Department headed by Alex Glanville, FRICS, as at 31 December 2021 and basis of the valuation is set out below:
**Parsonages, Bishops’ Houses and Sundry Provincial Property** which were owned by the Representative Body at 31 December 2007 are stated at the midpoint of the Council Tax band valuation (as at April 2005) as adjusted by house price infl ation (Nationwide House Price Index) to 31 December 2021. Such properties acquired after 31 December 2007 are stated at cost less provisions for impairment (where required) as adjusted by house price infl ation (Nationwide House Price Index) from the period of acquisition to 31 December 2021.
**Church Halls** were originally valued using evidence using sales from this type of property. They are now adjusted by the Nationwide House Price Index on an annual basis.
**The St Michael’s College site** is valued at open market value (existing use) based on a professional valuation.
23
Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
## _Accounting Policies Continued_
**Churches** were initially valued based on an assessment of the sales values achieved for such properties over a period of time. This valuation has been adjusted at the transition date using the Nationwide House Price Index. In 2021 valuations are unchanged from the previous year.
**Glebe** has historically been valued on the average price of agricultural land in Wales, based on the RICS – RAU Farmland Market Directory of land prices. However, this index is no longer available and in 2020 the Nationwide House Price Index was used. In 2021 valuations are unchanged from the previous year.
- f. **Depreciation of Other Tangible Assets**
Assets or groups of related assets are written down to zero in the year of purchase. Leasehold improvements are depreciated over the life of the lease.
Investment and non-investment properties are shown at market value and not depreciated. In the opinion of the Representative Body, the remaining useful economic life and residual values of these properties is such that depreciation is immaterial.
- g. **Heritage Assets**
A number of former church sites or ruins are owned. They are not saleable assets and are retained accordingly. No value has been included for them in the accounts.
- h. **Foreign Currency Conversion**
- Foreign currencies are converted into sterling at the rate of exchange ruling at the date of the balance sheet except for purchases and sales of securities and remittances during the year which were converted at the actual rate prevailing.
- i. **Designated and Restricted Funds**
Designated Funds represent monies made available by the Representative Body out of General Funds for the specifi c purpose designated when the fund is established. Restricted Funds are those held for specifi c restricted purposes.
- j. **Pensions of Clergy and Surviving Spouses and Civil Partners**
The Representative Body operates a pension scheme providing defi ned benefi ts based on years of service and the allocation to the Clergy Pension Provision is calculated every three years by a qualifi ed actuary and is shown as a charge in the Statement of Financial Activities so as to spread the pension cost over the normal expected service lives of the clergy in such a way that the charge is a substantially level percentage of current and expected future pensionable payroll. The scheme is accounted for under FRS 102 and an annual actuarial valuation is obtained. Any excess or shortfall between the actuarial liabilities and the Clergy Pension Provision is transferred to or from the Pension Equalisation Fund, a Designated Fund, such that the balance on the Clergy Pension Provision at the balance sheet date is based on the most up to date actuarial information.
- k.
A separate defi ned benefi t pension scheme is operated for the staff of the Representative Body. Contributions to the scheme are charged to the Statement of Financial Activities on the basis of spreading the costs over the employees’ working lives.
The scheme is accounted for under FRS 102, with the annually calculated notional surplus or defi cit on the funding of the Scheme shown in the accounts as a separate fund entitled ‘Pension Reserve’ which is deducted from General Funds in the Balance Sheet.
Details of the Staff Retirement Benefi t Scheme are given in note 11 to the fi nancial statements. l. **Taxation Status**
The Representative Body benefi ts from corporation tax exemptions available to charitable bodies. On the basis that its activities fell within its charitable purposes and its funds are applied for these purposes, no provision for corporation tax is made.
## m. **Financial Instruments**
The charity only has fi nancial assets and fi nancial liabilities of a kind that qualify as basic fi nancial instruments. Basic fi nancial instruments, including debtors and creditors are initially recognised at transaction value and subsequently measured at their settlement value. The recognition criteria for each class of fi nancial instruments is as follows:
|**Financial instrument**|**Measurement criteria (initial and subsequent)**|
|---|---|
|Cash:|Cash held, then on amortised cost|
|Debtors and loans:|Settlement amount or amount advanced then at amortised cost|
|Creditors:|Settlement amount after trade discounts then at amortised cost|
|Bank deposits:|Cash amount of deposit then at amortised cost|
|Investments:|Transaction cost then at fair value (market value of quoted investments)|
- n. **Critical Accounting Judgements and Key Sources of Estimation Uncertainty**
- In the application of the charity’s accounting policies, which are described in this note, Trustees are required to make judgements, estimates, assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may diff er from these estimates. The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision aff ects only that period, or in the period of the revision and future periods if the revision aff ects the current and future periods.
The most signifi cant areas of judgement relate to the valuation of properties. The policies adopted in respect of the valuation of properties are set out in note 1(e).
24
The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
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2 Investment Income
Funds 2021 £000 Funds 2020 £000
- - - -
Gross income from property 3,460 3,460 3,202 3,202
Income from stock exchange securities 15,287 395 - 15,682 14,054 385 - 14,439
Interest from money market deposits and loans 9 - - 9 83 - - 83
18,756 395 - 19,151 17,339 385 - 17,724
3 Raising Funds
Funds 2021 £000 Funds 2020 £000
Stock Exchange Advisers 2,354 - - 2,354 2,145 - - 2,145
Investment Property Advisers 278 - - 278 249 - - 249
Sundry Property 139 - - 139 143 - - 143
Support Costs 252 - - 252 569 - - 569
3,023 - - 3,023 3,106 - - 3,106
Stock exchange advisers’ costs are calculated as a percentage of the underlying market value of the investments.
4 Support for Ministry
Funds 2021 £000 Funds 2020 £000
- - - -
Clergy Pension Provision (note 21) 4,575 4,575 4,153 4,153
- - - -
Ministry Training - St Padarn’s Institute 1,988 1,988 1,989 1,989
- - - - - -
Clergy Pension Contributions - Current 1,792 1,792
Bishops 942 - - 942 918 - - 918
Clergy Property
Diocesan Inspectors’ Costs 449 - - 449 444 - - 444
Episcopal Residences 62 - - 62 71 - - 71
Sundry Property Costs 5 - - 5 6 - - 6
Safeguarding 292 - - 292 153 153
Mission and Ministry 207 - - 207 199 - - 199
Sundry Clergy Benefi ts 3 - - 3 3 - - 3
Clergy Remuneration Review - - - - 15 - - 15
Support Costs 626 - - 626 916 - - 916
10,941 - - 10,941 8,867 - - 8,867
General Designated Restricted Total General Designated Restricted Total
General Designated Restricted Total General Designated Restricted Total
General Designated Restricted Total General Designated Restricted Total
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Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
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5 Support for Dioceses and Parishes
Funds 2021 £000 Funds 2020 £000
Block Grant to Dioceses 2,028 - - 2,028 3,079 - - 3,079
Additional Grant Funding to Dioceses 8,697 - - 8,697 9,324 - - 9,324
Repairs and Extensions to Churches - 325 - 325 - 220 - 220
Emergency Aid - 206 - 206 - 121 - 121
Evangelism Fund - 1,195 - 1,195 - 703 - 703
Support Costs 1,987 - - 1,987 1,304 - - 1,304
12,712 1,726 - 14,438 13,707 1,044 - 14,751
6 Other Church Property
Funds 2021 £000 Funds 2020 £000
Redundant Churches - 536 - 536 - 283 - 283
Church Sales Regulations - 461 - 461 - 632 - 632
Climate Change Fund - 34 - 34 - - - -
Other Property Costs 4 - - 4 7 - - 7
Support Costs 402 - - 402 592 - - 592
406 1,031 - 1,437 599 915 - 1,514
7 Other Financial Support
Funds 2021 £000 Funds 2020 £000
DACs and Cathedrals and Churches Commission 65 - - 65 65 - - 65
Cathedrals Funding 180 5 - 185 - - - -
Grants to Anglican and Ecumenical Bodies 146 - - 146 138 - - 138
Centenary Projects - - 33 33 43 - 16 59
Provincial Court and Tribunals 12 - - 12 7 - - 7
Other Support 76 10 - 86 69 10 - 79
Support Costs 178 - - 178 205 - - 205
657 15 33 705 527 10 - 553
8 Communications
Funds 2021 £000 Funds 2020 £000
Communications 192 - - 192 188 - - 188
Support Costs 131 - - 131 170 - - 170
323 - - 323 358 - - 358
General Designated Restricted Total General Designated Restricted Total
General Designated Restricted Total General Designated Restricted Total
General Designated Restricted Total General Designated Restricted Total
General Designated Restricted Total General Designated Restricted Total
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The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
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9 Support Costs
Funds 2021 £000
Chief Executive's Offi ce - 56 153 21 21 77 328
People Services - 90 821 - 63 - 974
Offi ce Services 34 76 247 54 24 15 450
Finance 208 152 106 65 33 - 564
Property - 75 157 185 - - 417
Legal - 29 111 52 29 6 227
Information Technology 10 148 392 25 8 33 616
252 626 1,987 402 178 131 3,576
Funds 2020 £000
Chief Executive's Offi ce - 108 74 18 61 59 320
People Services - - - - - - -
Offi ce Services 72 112 153 75 25 52 489
Finance 472 361 258 175 76 - 1,342
Property - 89 180 128 - - 397
Legal - 45 149 170 24 8 396
Information Technology 25 201 490 26 19 51 812
569 916 1,304 592 205 170 3,756
Raising Funds Support for Ministry Support for Dioceses and Parishes Other Church Property Other Financial Support Communications Total 2021
Raising Funds Support for Ministry Support for Dioceses and Parishes Other Church Property Other Financial Support Communications Total 2020
**----- End of picture text -----**
The above fi gures include audit fees of £32,950 (2020: £32,000) in respect of the audit of the Representative Body, and £5,335 (2020: £5,375) in respect of the audit of the Staff Retirement Benefi t Scheme.
The total expenditure for Human Resources of £974,000 includes an accounting adjustment under FRS 17 for the Staff Retirement Benefi t Scheme of £118,000 (2020: £10,000 included in Finance).
## **Basis of Allocation**
Support costs have been allocated on the basis of an estimated percentage allocation of staff time spent over each charitable activity.
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Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
**----- Start of picture text -----**
10 Staff Numbers and Remuneration Total Total
2021 2020
£000 £000
Staff Costs
Salaries 3,497 3,470
National Insurance Contributions 357 351
3,854 3,821
Current Service Pensions Costs (Defi ned Benefi t Scheme) 1,026 1,069
FRS 102 Pension Scheme Adjustment 118 10
Defi ned Contribution Pension Costs 121 93
Unfunded Pension Costs 23 28
5,142 5,021
**----- End of picture text -----**
The numbers of staff whose employee benefi ts* fell in the following bands were:
||**Total**
**2021**
**Number**
**Total**
**2020**
**Number**
£0 to £10,000
**11**
8
£10,001 to £20,000
**11**
11
£20,001 to £30,000
**23**
24
£30,001 to £40,000
**30**
31
£40,001 to £50,000
**11**
10
£50,001 to £60,000
**10**
10
£70,001 to £80,000
**5**
5
£110,001 to £120,000
**1**
1
**102**
100|
|---|---|
*Employee benefi ts include gross salaries and allowances but do not include employers' pension costs. Of the 102 staff employed during 2021, 7 had left prior to the end of the year.
The key management personnel consists of seven staff members, as set out on page 39 of this report. The total amount of their employee benefi ts was £636,241(2020: 6 members, £574,711).
## **Trustees**
No Trustee received any remuneration for the services they provided as a Trustee.
Fifteen (2020: fi fteen) Trustees had expenses paid or were reimbursed for expenses in the year. This covered their expenses incurred in performing their duties as Trustees. The payments were for travel, subsistence and accommodation costs and totalled £2,557 (2020: £5,123).
Two Trustees received remuneration from the Representative Body in connection with their offi ce. Until his retirement on 2 May 2021, The Most Reverend J D E Davies was an Ex Offi cio Member of the Representative Body. His remuneration was £16,816 (2020: £50,726) and pension contributions of £6,138 (2020: £18,515). A car was provided for the performance of his duties for which the cash benefi t was £2,634 (2020: £7,881).
The Most Reverend A T G John became Archbishop of Wales on 6 December 2021 and an Ex Offi cio Member of the Representative Body. His remuneration from that date was £3,613 (2020: nil) and pension contributions of £1,319 (2020: nil). A car was provided for the performance of his duties for which the cash benefi t was £143 (2020: nil).
28
The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
##
The Representative Body operates a defi ned benefi t pension scheme arrangement called ‘The Representative Body of the Church in Wales Staff Retirement Benefi t Scheme’ (the Scheme). The Scheme provides benefi ts based on fi nal salary and length of service on retirement, leaving service or death. The Scheme closed to new members on 31 March 2017.
The Scheme is subject to the Statutory Funding Objective under the Pensions Act 2004. A valuation of the Scheme is carried out every three years to determine whether the Statutory Funding Objective is met. As part of the process the Employer must agree with the trustees of the Scheme the contributions to be paid to address any shortfall against the Statutory Funding Objective and contributions to pay for future accrual of benefi ts.
A full actuarial valuation of the Scheme was carried out as at 31 March 2021 and the next valuation of the Scheme is due as at 31 March 2024. The results of the 2021 valuation have been updated by an independent qualifying actuary to 31 December 2021 allowing for cashfl ows in and out of the Scheme and changes to the assumptions over the period.
**----- Start of picture text -----**
2021 2020
£000 £000
Amounts recognised in the Balance Sheet
Fair value of assets 19,132 16,970
Present value of funded obligations (27,918) (32,579)
Defi cit in Scheme (8,786) (15,609)
Net defi ned benefi t liability (8,786) (15,609)
Amounts recognised in the Statement of Financial Activities
Current service cost 875 787
Administration cost 51 80
Interest on liabilities 456 578
Interest on assets (238) (365)
Past Service Costs - -
Total 1,144 1,080
Remeasurements over the year
(Gain) / loss on Scheme assets in excess of interest (1,811) 1,104
(Gains) / losses from changes to assumptions (3,548) 4,307
Experience gains on liabilities (250) (61)
-
Gains from changes to demographic assumptions (1,332)
Total remeasurements (6,941) 5,350
Reconciliation of assets and Defi ned Benefi t Obligation:
The change in the assets over the year was:
Fair value of assets at the beginning of the year 16,970 17,035
Interest on assets 238 365
Employer contributions 1,026 1,070
Contributions by Scheme participants 133 152
Benefi ts paid (995) (468)
Administration costs (51) (80)
Return on plan assets less interest 1,811 (1,104)
Fair value of assets at the end of the year 19,132 16,970
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29
Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
**----- Start of picture text -----**
11 Staff Defi ned Benefi ts Scheme continued 2021 2020
£000 £000
The change in the defi ned benefi t obligation over the year was:
Defi ned benefi t obligation at the beginning of the year 32,579 27,284
Current service cost 875 787
Contributions by Scheme participants 133 152
Past service costs - -
Interest cost 456 578
Benefi ts paid (995) (468)
Experience loss on liabilities (250) (61)
-
Changes to demographic assumptions (1,332)
Changes to fi nancial assumptions (3,548) 4,307
Defi ned benefi t obligation at the end of the year 27,918 32,579
Assets
**----- End of picture text -----**
The majority of the assets are invested with EdenTree Investment Management, with the remainder including some small AVC contracts invested with OneFamily and cash at bank. The actual return on the Scheme’s assets (net of expenses) over the year to the review date was a gain of £2,049,000. The assets do not include any investment in the Employer.
## **Actuarial Assumptions**
The principal assumptions used to calculate the Scheme’s liabilities include:
||**2021**
**2020**|
|---|---|
|Discount Rate|**2.00%**
1.40%|
|Inf ation assumption (RPI)|**3.45%**
3.10%|
|Salary increases|**3.15%**
2.60%|
|Limited Price Indexation pension increases (RPI Max 5%)|**3.45%**
3.05%|
|Proportion married at retirement or earlier death|**80.0%**
80.0%|
|Post retirement mortality assumption:|95% of the S3PA tables and
CMI 2020 projections with a
long-term rate of improvement
of 1.25% pa.
95% of the PCA00 tables and
CMI 2017 projections with a
long-term rate of improvement
of 1.25% pa.|
**----- Start of picture text -----**
12 Non-investment Properties 2021 2020
£000 £000
At 1 January 290,284 271,632
Additions 1,433 1,724
Disposals (4,734) (4,911)
Net increase on revaluation 18,760 21,839
At 31 December 305,743 290,284
Comprising:
Parsonage, bishops' houses and sundry provincial property 194,366 179,316
Churches and church halls 94,801 93,024
Glebe 12,026 13,394
Operational properties 4,550 4,550
305,743 290,284
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30
The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
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13 Tangible Assets Offi ce Equipment
£000
Cost
At 1 January 660
Additions -
Write off fully depreciated asset cost (488)
At 31 December 172
Accumulated Depreciation
At 1 January 525
Charge for the Year 12
Write off fully depreciated asset cost (488)
At 31 December 49
Net Book Value
31 December 2021 123
31 December 2020 135
14 Investment Properties 2021 2020
£000 £000
At 1 January 57,040 58,905
-
Disposals (1,580)
Net increase/ (decrease) on revaluation 8,365 (1,865)
At 31 December 63,825 57,040
**----- End of picture text -----**
Investment properties were valued by Cushman & Wakefi eld at 31 December 2021 at £63,825,000 (2020: £57,040,000) in accordance with the RICS valuation – Professional Standards 2014 and FRS 102.
**----- Start of picture text -----**
15 Property Unit Trusts 2021 2020
£000 £000
At 1 January 16,832 18,245
Additions - 12
Disposals (3,996) (208)
Net decrease on revaluation (3,013) (1,217)
At 31 December 9,823 16,832
16 Stock Exchange Securities 2021 2020
£000 £000
At 1 January 650,682 598,877
Additions 151,655 185,877
Disposals (138,352) (150,496)
Net increase on revaluation 44,287 16,424
At 31 December 708,272 650,682
Historical cost at 31 December 504,343 491,040
Unrealised investment gains at 31 December 203,929 159,642
Investment gains calculated on historic basis 29,795 25,883
Listed in UK 267,805 276,091
Listed overseas 440,467 374,591
708,272 650,682
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Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
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17 Money Market Deposits and Loans 2021 2020
£000 £000
At 1 January 11,732 29,395
Advances 20,022 12,808
Repayments (9,087) (30,471)
At 31 December 22,667 11,732
Comprising:
Money Market Deposits 15,092 3,859
Clergy Housing Loans 7,389 7,620
Diocesan Loans 95 162
Curates House Loans 66 66
Churches' Mutual Credit Union 25 25
22,667 11,732
18 Debtors 2021 2020
£000 £000
Prepayments 209 170
Other debtors 2,823 3,541
Accrued income 3,975 2,877
7,007 6,588
19 Creditors: amounts falling due within one year 2021 2020
£000 £000
Taxation and National Insurance Contributions 437 454
Rents received in advance 219 287
Amounts owed to special trusts 1,297 2,471
Other creditors 1,114 1,108
Accruals 1,437 1,622
4,504 5,942
20 Diocesan Maintenance of Ministry Fund 31 December 2021 31 December 2020
£000 £000 £000 £000
Income
Diocesan Boards of Finance 11,073 11,420
Other Income 7 2
11,080 11,422
Less: Payments
Clergy Stipends 9,008 9,294
Curates Stipends 950 986
National Insurance Contributions 956 991
Vacancy Fees 22 44
Sundry expenses and other payments 144 107
11,080 11,422
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32
The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
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21 Clergy Pension Provision 31 December 2021 31 December 2020
£000 £000 £000 £000
Balance at 1 January 222,000 196,200
Current service contributions 3,756 3,853
Other Income - legacy - 314
Transfer from General Funds:
Allocation from income (note 4) 4,575 4,153
Allocation of net investment gains 22,135 10,903
30,466 19,223
Less:
Pension payments to retired clergy (4,759) (4,828)
Pension payments to surviving spouses and civil partners (1,498) (1,539)
Gratuity payments of retired clergy (1,393) (735)
Transfer Payments (371) (74)
DIS Lump Sum Payments (192) (76)
Administrative expenses (99) (115)
(8,312) (7,367)
Transfer (to) / from Pension Equalisation Fund (26,154) 13,944
Balance at 31 December 218,000 222,000
**----- End of picture text -----**
The Clergy Pension Provision was established in accordance with the advice of our actuaries, to meet liabilities for clergy and surviving spouses and civil partners’ pensions and gratuities. The actuarial valuation and basis of annual provision is reviewed every three years.
At the date of the last triennial actuarial valuation at 31 December 2019 undertaken by Quantum Advisory, the liability of the Representative Body for past service on the current funding basis was assessed using a discount rate of 2% at £196.2 million, which represented 27.3% (previously 30.9%) of total funds at that date. Based upon this valuation, the annual transfer from General Funds has comprised 27.3% of both total income and net investment gains and losses (refl ecting income on the liability for past service) and 36.5% (previously 38.8%) of total stipends being the contribution for continuing service. The provision has been adjusted to the liabilities and the balance transferred to the Pension Equalisation Fund. The key fi nancial assumptions used for the full actuarial valuation at 31 December 2019 and the interim valuations for 2020 and 2021 are set out below. The next full actuarial valuation of the Scheme is due to take place at 31 December 2022.
||**31 December**
**2021**
**2020**
**2019**
**Financial assumptions (nominal % pa)**
Discount rate
**1.8%**
1.2%
2.0%
Inf ation - RPI
**3.5%**
3.0%
3.2%
Inf ation - CPI
**2.7%**
2.2%
2.2%
Stipend increases
**3.2%**
2.7%
2.7%
Pension increases - Stipend Linked
**3.2%**
2.7%
2.7%
Pension increases - RPI up to 5% p.a.
**3.4%**
2.9%
3.1%
Deferred revaluation
**3.4%**
2.9%
3.1%
**Post retirement mortality (life expectancy, in years)**
Current pensioners age 65 – males
**21.3**
21.2
21.2
Current pensioners age 65 – females
**23.6**
23.5
23.5
Future pensioners age 65 (currently age 45) – males
**22.3**
22.3
22.2
Future pensioners age 65 (currently age 45) – females
**24.7**
24.7
24.6||
|---|---|---|
33
Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
**----- Start of picture text -----**
22 Designated Funds Balance Balance
1 January 31 December
2021 Income* Expenditure* 2021
£000 £000 £000 £000
-
Revaluation Reserve (Unrealised gains on parsonages, 228,395 15,348 243,743
churches, church halls and sundry property)
Property Reserve (Property improvements and acquisitions of 33,620 1,016 34,636
parsonages)
Church Repairs Capital Reserve (Capital fund for church repairs) 13,185 3,312 387 16,110
Church Sales Regulations (Funds available from the sale 3,154 187 460 2,881
of churches towards the cost of providing or adapting another
place of worship in the same parish)
Pension Equalisation Fund (Funds available to meet future 31,199 26,155 10 57,344
clergy pension liabilities)
-
Evangelism Fund (Funds available for dioceses to enact their 9,057 1,195 7,862
strategies on evangelism and church growth)
Climate Change Fund (Funds available to support the climate 110 522 34 598
change work of the Church in Wales, working towards net zero
carbon emissions)
Diocesan Parsonage Improvement Fund (Funds available for 2,556 4,664 2,059 5,161
improvements to parsonages and acquisitions of new parsonages)
Transformation Fund (Funds available for 2020 Vision related 24 - - 24
projects)
Repairs and Extensions to Churches (Funds available to 568 252 325 495
parishes)
Redundant Churches (Funds available to contribute to costs 374 119 537 (44)
arising in the maintenance and safety of redundant churches)
Emergency Aid (Funds available for costs arising due to 215 330 205 340
emergencies)
Cathedrals Funding (Funds available for Quinquennial - 30 5 25
Inspections)
Overseas Fund (Funds available at the discretion of the 43 13 - 56
Bishops to assist in overseas aid)
Overseas Students (Funds available to provide fi nancial 1 - - 1
assistance to overseas students)
* includes gains and losses. 322,501 51,948 5,217 369,232
22 Designated Funds (Prior Year) Balance Balance
1 January 31 December
2020 Income* Expenditure* 2020
£000 £000 £000 £000
Revaluation Reserve 212,511 15,884 - 228,395
-
Property Reserve 31,897 1,723 33,620
Church Repairs Capital Reserve 11,895 1,329 39 13,185
Church Sales Regulations 3,319 466 631 3,154
-
Pension Equalisation Fund 43,949 12,750 31,199
Evangelism Fund 9,761 - 704 9,057
Climate Change Fund - 110 - 110
Diocesan Parsonage Improvement Fund 2,178 3,074 2,696 2,556
Transformation Fund 24 - - 24
Repairs and Extensions to Churches 555 233 220 568
Redundant Churches 408 249 283 374
Emergency Aid (3) 339 121 215
Overseas Fund 40 13 10 43
Overseas Students 1 - - 1
316,535 23,420 17,454 322,501
**----- End of picture text -----**
34
The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
**----- Start of picture text -----**
23 Restricted Funds Balance Balance
1 January 31 December
2021 Income Expenditure 2021
£000 £000 £000 £000
- -
St Michael’s College Site 4,550 4,550
(Endowment Fund held for the operation of an educational
institution)
Centenary Appeal Fund - 33 33 -
(Funds available to support two specifi c projects)
4,550 33 33 4,550
23 Restricted Funds (Prior Year) Balance Balance
1 January 31 December
2020 Income Expenditure 2020
£000 £000 £000 £000
- -
St Michael’s College Site 4,550 4,550
(Endowment Fund held for the operation of an educational
institution)
Centenary Appeal Fund 3 13 16 -
(Funds available to support two specifi c projects)
4,553 13 16 4,550
**----- End of picture text -----**
## **24 Funds Held on Behalf of Others**
## **Special Trusts**
The Representative Body is the Trustee of the Church in Wales Common Investment Fund. The unit holders in the Common Investment Fund are individual funds held on behalf of benefi ciaries, where the Representative Body is the managing or custodian trustee of the funds. The aggregate value of these special trusts at 31 December 2021 was £67,172,000 (2020: £61,776,000) and was invested in stock exchange securities and the Church in Wales Common Investment Fund. The income on these funds was £1,578,000 (2020: £1,273,000) and was wholly distributed to benefi ciaries.
## **Custodian Trustee**
The Representative Body is the custodian trustee of 10 parsonages.
## **25 Related Party Transactions**
Due to the nature of the Representative Body’s operations and its membership being drawn from a wide range of clerical and lay members, it is inevitable that transactions will take place with organisations in which a member of the Representative Body may have an interest.
The most signifi cant transactions are as follows:
- The Archbishop and some stipendiary clergy are members of and in receipt of payment from the Representative Body. Payments to bishops and stipendiary clergy are based on the clergy stipends set out in the Constitution.
- The six Diocesan Boards of Finance received a Block Grant totalling £2,028,000 (2020: £3,079,000). Additional support was also provided to the dioceses in 2020 due to the impact of the Covid-19 pandemic which totalled £8,697,000 (2020: £9,324,000). Therefore the total support provided to the Diocesan Boards of Finance was £10,725,000 (2020: £12,403,000). They also have outstanding loans totalling £1,868,000 (2020: £2,136,00) which have been advanced under the Clergy Retirement Housing Loan Scheme.
## **26 Charitable and Capital Commitments**
At 31 December 2021 the Representative Body has committed to pay £2.567 million to the dioceses in respect of the Block Grant in 2022.
The Representative Body has a commitment under an operating lease for the rental of 2 Callaghan Square, Cardiff greater than fi ve years which totals £1.2 million (2020: £1.4 million).
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Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
**----- Start of picture text -----**
27 Stock Exchange Securities 31 December 2021
Market Value
£000 %
Fixed Interest
British Government Bonds 20,986 3.0
UK Bonds 33,502 4.7
Overseas Bonds 12,395 1.8
Total Fixed Interest 66,883 9.5
Equities
Communication Services 15,743 2.2
Consumer Goods and Services 111,167 15.7
Energy 45,599 6.4
Financials 122,167 17.2
Health Care 73,447 10.4
Industrials 90,403 12.8
Materials 36,663 5.2
Property and REITs 17,231 2.4
Technology 98,303 13.9
Total Equities 610,723 86.2
Alternative Assets 30,666 4.3
708,272 100.0
**----- End of picture text -----**
## **Top Twenty Holdings as at 31 December 2021**
||**£000**
**£000**
Microsoft Corp
19,619
Ecolab Inc
9,331
Alphabet Inc
14,687
Glaxosmithkline Plc
9,098
CME Group Inc
12,195
AIA Group Ltd
9,071
Mastercard Incorporated
11,379
BNY Mellon Global Dynamic Bond Fund
9,014
Unilever Plc
11,197
Otis Worldwide Corp
8,796
Accenture Plc
11,054
Sarasin UK Thematic Smaller Companies
8,680
Astrazeneca Plc
10,952
Abbot Laboratories
8,255
Apple Inc
10,920
Prudential Corporation Plc
7,776
RELX Plc
10,312
Sony Group Corporation
7,155
Medtronic Plc
10,308
Bank of Nova Scotia
6,845||
|---|---|---|
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The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
**----- Start of picture text -----**
2012 £000 13,471 3,925 420 17,816 (1,577) 16,239 (5,099) 11,140 642 810 - 474 397 72 6 6,430 417 58 2,352 - 11,658 (518) (218) (100) (100) (100) (518)
2013 £000 12,808 3,916 356 17,080 (1,793) 15,287 (4,800) 10,487 633 833 - 552 341 98 7 6,610 400 60 2,360 - 11,894 (1,407) (940) (100) (112) (255) (1,407)
2014 £000 13,281 3,513 293 17,087 (2,019) 15,068 (4,686) 10,382 612 839 - 496 341 132 5 6,793 375 40 2,324 500 12,457 (2,075) (1,419) (600) (55) (1) (2,075)
2015 £000 13,983 3,408 323 17,714 (1,896) 15,818 (4,919) 10,899 709 873 - 511 320 185 6 6,293 423 46 2,441 1,000 12,807 (1,908) (2,115) (100) 342 (35) (1,908)
2016 £000 14,385 3,480 308 18,173 (2,177) 15,996 (4,975) 11,021 620 926 - 511 256 209 4 6,293 488 47 2,645 1,000 12,999 (1,978) (2,026) (100) 137 11 (1,978)
2017 £000 15,795 3,565 327 19,687 (2,349) 17,338 (5,357) 11,981 710 967 - 564 189 197 5 6,293 481 86 3,107 1,000 13,599 (1,618) (1,978) (100) 461 (1) (1,618)
2018 £000 15,750 3,560 357 19,667 (2,365) 17,302 (5,346) 11,956 1,975 939 - 543 180 169 4 6,158 484 189 3,365 10,000 24,006 (12,050) (2,576) (10,100) 626 - (12,050)
2019 £000 17,008 3,670 433 21,111 (2,732) 18,379 (5,679) 12,700 2,217 990 - 520 245 182 4 6,158 599 201 3,654 - 14,770 (2,070) (1,683) (200) (187) - (2,070)
2020 £000 14,054 3,202 493 17,749 (2,537) 15,212 (4,153) 11,059 1,989 918 - 451 199 153 18 12,403 709 188 3,746 - 20,774 (9,715) (9,415) (310) 10 - (9,715)
2021 £000 15,287 3,460 784 19,531 (2,771) 16,760 (4,575) 12,185 1,988 942 1,792 454 207 292 3 10,725 1,298 192 3,459 - 21,352 (9,167) (8,532) (753) 118 - (9,167)
Income Stock Exchange Investments Property Income Other Income Total Gross Income Investment Managers' Costs Total Net Income Less: Allocation to Clergy Pension Provision Net Income after allocation to Clergy Pension Provision Expenditure Ministry Training Bishops Clergy Pension Contributions - current Clergy Property Mission and Ministry Safeguarding Sundry Clergy Benefi ts Funding to Dioceses Other Church Property and Financial Support Communications Provincial Services Evangelism Fund / Transformation Fund Total Expenditure Defi cit Reconciliation to the Statement of Financial Activities: Net expenditure before investment gains /(losses) Transfers between Funds FRS 102 Pension Scheme Adjustment Capital Gifts and Legacies Defi cit as shown above
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Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
## **REFERENCE AND ADMINISTRATIVE INFORMATION**
## Representative Body Membership
## Elected Membership
## **Chair and Deputy Chair**
Professor M Hughes _(from 18 November 2021),_ Chair
## **St Asaph**
The Very Reverend N H Williams, Dean of St Asaph
Mr J J Turner _(to 18 November 2021),_ Chair
Mrs H M Wiseman
## **Bangor**
Mrs H M Wiseman _(from 4 March 2021),_ Deputy Chair
Sir P Silk _(to 4 March 2021),_ Deputy Chair
The Reverend M J Beecroft _(from 10 September 2021),_
The Very Reverend K L Jones _(to 27 June 2021)_ , Dean of Bangor
Dr H J Parry-Smith
##
The Most Reverend A T G John _(from 6 December 2021),_ Archbishop of Wales
## **St Davids**
The Venerable P Mackness, Archdeacon of St Davids
Mrs J A P Hayward
The Most Reverend J D E Davies _(to 2 May 2021),_ Archbishop of Wales
Dr S Miller _(from 8 July 2021),_ Chair of Standing Committee
##
The Venerable M Komor, Archdeacon of Margam
Mr G I Moses
Mrs S Allin _(from 22 March 2022),_ Chair, St Asaph Diocesan Board of Finance
Mrs H R Jones _(to 9 October 2021),_ Chair, St Asaph Diocesan Board of Finance
## **Monmouth**
The Venerable J S Williams, Archdeacon of Newport
Miss P R Brown
The Right Reverend M K R Stallard _(to 5 April 2022),_ Chair, Bangor Diocesan Board of Finance
Mr N Griffi n, Chair, St Davids Diocesan Board of Finance
## **Swansea and Brecon**
The Venerable A N Jevons, Archdeacon of Brecon
Mr J M Watson
Mr M A Lawley, Chair, Llandaff Diocesan Board of Finance
Mr P E Lea, Chair, Monmouth Diocesan Board of Finance
Sir P Silk, Chair, Swansea and Brecon Diocesan Board of Finance
## **Nominated Membership**
Mr R Davies Mr P D Kennedy Mr T O S Lloyd OBE, DL, FSA (1 vacancy)
## **Co-opted Membership**
Professor M Hughes _(from 18 November 2021)_ Mr J J Turner _(from 1 January to 18 November 2021)_ Mrs J Heard
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The Representative Body of the Church in Wales **|** Annual Report and Accounts 2021
## Committee Membership
(*denotes non-RB member)
## **Investment Committee**
Mr G I Moses _(Chair and member from 4 March 2021)_ Mr J J Turner _(Chair to 4 March 2021 and member to 18 November 2021)_ Mr R Anning* Mr G Davies* Mr J G Davies* _(from 4 March 2021)_ Professor M Hughes _(from 18 November 2021)_ Mr J Fox* Mr J Minett* Mr D G Myrddin-Evans* Mr R F Page* _(to 31 March 2022)_ The Venerable I K Rees*
## **People Committee**
Mr P D Kennedy (Chair) The Right Reverend G K Cameron* The Venerable A N Jevons _(to 8 July 2021)_ Mr C W J Francis* _(to 8 July 2021)_ Mr N Griffi n Mr D B Halse* _(to 8 July 2021)_ Mrs B E Harding* _(to 21 October 2021)_ Mr J M Watson _(from 4 March 2021)_ Mrs H M Wiseman
## **Cathedrals and Churches Commission**
Mr T O S Lloyd OBE, DL, FSA (Chair) The Right Reverend J W Evans* Mr J Orbach* Mr R J Silvester* Mr P Welford*
## **Audit and Risk Committee**
Mrs J Heard _(Chair and member from 4 March 2021)_ Mr G I Moses _(Chair and member to 4 March 2021)_ The Very Reverend N H Williams _(from 4 March 2021)_ Mr V Jones* Mrs L Jones* _(to 5 October 2021)_ Mrs R Nelson* _(from 31 March 2022)_ Mr M A Lawley _(to 14 May 2021)_ Mr D Richards* _(from 31 March 2022)_ Sir P Silk _(to 4 March 2021 and from 18 November 2021)_
## **Finance Committee**
Mrs H M Wiseman (Chair) The Right Reverend M K R Stallard _(to 5 April 2022)_ The Venerable P R Mackness The Venerable J S Williams Mr M A Lawley
## **Training, Formation and Ministerial Development**
**Committee** _(Committee disbanded 31 December 2021)_ The Right Reverend C E Vann* _(Chair from 2 May 2021)_ The Most Reverend J D E Davies (Chair) _(to 2 May 2021)_ The Venerable I K Rees* _(from 20 June 2021)_ The Venerable T H A Mason* _(to 12 March 2021)_ The Reverend Chancellor P Powell* The Reverend Canon T J Hewitt* The Reverend Canon Dr R Johnson* The Reverend Canon T L Jones* _(from 24 February 2021)_ The Reverend D J F J A McClean* Miss P R Brown Mrs J A P Hayward _(from 4 March 2021)_
## Key Management Posts
## **Property Committee**
Mr R Davies (Chair) Mr C Clarke* The Very Reverend K L Jones _(to 27 June 2021)_ The Venerable A N Jevons The Venerable M Komor _(from 4 March 2021)_ The Venerable P R Mackness The Venerable N H Williams The Venerable J S Williams The Reverend M J Beecroft _(from 18 November 2021)_ Ms M Gerrard* Mr J E Jones* Mr D A Williams*
Chief Executive Head of Legal Services Head of Finance Head of Property Services Head of Communications and Technology Director of People Services Principal of St Padarn’s Institute
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Annual Report and Accounts 2021 **|** The Representative Body of the Church in Wales
## **Advisers**
## **Actuaries**
## **Independent Auditors:**
Haysmacintyre LLP 10 Queen Street Place London EC4R 1AG
Quantum Advisory Cypress House Pascal Close St Mellons Cardiff CF3 0LW
## **Bankers:**
Lloyds Bank Plc 4[th] Floor, St William House Tresillian Terrace Cardiff CF10 5BH
Atkin & Co. Nelson House Central Boulevard Blythe Valley Park Solihull B90 8BG
## **Investment Property Advisers:**
Cluttons LLP Portman House 2 Portman Street London W1H 6DU
Barnett Waddingham LLP St James’s House St James’s Square Cheltenham Gloucestershire GL50 3PR
## **Investment Advisers:**
Newton Investment Management BNY Mellon Financial Centre 160 Queen Victoria Street London EC4V 4LA
Sarasin & Partners LLP Juxon House 100 St Paul’s Churchyard London EC4M 8BU
40