The Newcastle Diocesan Board of Finance Limited (A company limited by guarantee)
Annual Report & Financial Statements Year ended 31 December 2020
Company number 00650977 Registered charity number 247233
A large print version is available on request from
Church House St John’s Terrace North Shields NE29 6HS
E-mail: info@newcastle.anglican.org Telephone: 0191 270 4100
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT**
## **FOR THE YEAR ENDED 31 DECEMBER 2020**
|**TABLE OF CONTENTS**|Page Number|
|---|---|
|Mission Statement|3|
|Legal Objects|4|
|Strategic Report:||
|Strategic aims|4|
|Objectives|5|
|Activities and achievements in the year|5|
|Future plans|10|
|Financial review|11|
|Principal risks and uncertainties|14|
|Structure and Governance|16|
|Trustees Responsibilities|19|
|Administrative details|20|
|Independent Auditor’s Report|22|
|Statement of Financial Activities|25|
|Income and Expenditure Account|26|
|Balance Sheet|27|
|Cash Flow Statement|28|
|Notes to the Financial Statements|29|
Page 2
**ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **Mission Statement**
Our vision for _**growing church bringing hope**_ expresses a deep longing to see our worshipping communities growing in numbers, in prayer and discipleship, in serving our communities, and above all in making a difference - sharing the hope we have, which is the power of God to transform us and our world.
Page 3
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
The trustees, who are also directors for the purposes of company law, present their annual report, together with the audited financial statements, for the year ended 31 December 2020.
The directors/trustees are one and the same and in signing as trustees they are also signing the strategic report sections in their capacity as directors.
This combined report satisfies the legal requirements for:
- a Directors Report of a charitable company,
- a Strategic Report under the Companies Act 2006; and
- a Trustees Annual Report under the Charities Act 2011.
## **LEGAL OBJECTS**
The objects of the Diocese of Newcastle cover the local authorities of Northumberland, Newcastle, and North Tyneside and also small parts of County Durham and Cumbria.
The Newcastle Diocesan Board of Finance Limited (“NDBF”)’s principal object is to promote, assist and advance the work of the Church of England in the Diocese of Newcastle by acting as the financial executive of the Newcastle Diocesan Synod.
The NDBF has the following statutory responsibilities:
- i. the management of glebe property and investments to generate income to support the cost of stipends arising from the Endowment and Glebe Measure 1976; and
- ii. the repair of benefice houses as the Diocesan Parsonage Board under the Repair of Benefice Buildings Measure 1972.
The main role of the NDBF is to identify and manage the financial aspects of the provision of ministry within the Diocese so as to provide appropriate personnel and financial resources to assist the Diocesan Synod, the Bishop’s Council, deaneries and parishes to further the mission and strategic priorities throughout the Diocese of Newcastle.
The strategic priorities of the company are established by the Diocesan Synod in consultation with Deanery Synods, Parochial Church Councils, and the Bishop of Newcastle (in respect of her responsibility for the provision of the cure of souls).
## **STRATEGIC AIMS**
The strategic vision for **growing church bringing hope** was founded on the values of being generous, engaged and open in the way we follow Christ with a priority to invite others to join our pilgrimage of faith. The vision was launched at an Open Synod Forum held in Rothbury in March 2017 and is supported by five priority work streams with the following aims:
- We affirm that everything we do must be grounded in a deep prayerfulness and so we aim to create opportunities for deeper engagement with God in prayer.
- We aim to equip teams of lay people and clergy to work together for missional, spiritual and numerical growth.
Page 4
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT**
## **FOR THE YEAR ENDED 31 DECEMBER 2020**
- God calls churches to grow as they serve, worship and pray; therefore we aim to focus on the potential for numerical growth, enabling lay and ordained leadership, and encouraging local opportunities for those exploring Christian faith.
- We value the place of Newcastle city centre in the Diocese and will invest in the life of the city, engaging with civic life, seeking continued growth in areas of inherited strength, and developing fresh expressions to engage with areas of opportunity.
- We aim to recruit, train and support new ministry and mission teams in our rural parish benefices, with clergy and laity working together – in order to reshape the rural Church’s engagement with God’s mission.
## **OBJECTIVES**
The goals to support the five priority work streams were:
- **Prayer** : by 2020, 250 people across the Diocese will have taken part in a _Month of Guided Prayer_ , and 30 Prayer Guides will have been trained and resourced.
- **Growth** : by 2020, 60 parishes will have taken part in _Leading your Church into Growth_ and will have seen the fruits of that in missional, spiritual and numerical growth.
- **Impact** : by 2022, impact and attendance will have increased in 20 identified parishes (some will be parishes currently having the lowest per capita attendance, others will be those with significant potential for further growth).
- **City** : by 2020, church life in Newcastle city will be more engaged, vibrant and growing – engaging with students, city workers and the vulnerable, growing congregations and planting at least one community exploring new forms of worship.
- **Rural:** by 2022, ministry in rural multi-parish benefices will have been re-imagined, and to enable this we will have simplified structures, identified lead/focal ministers and created new teams.
Through carrying out these objectives and in promoting the whole mission of the church (pastoral, evangelistic, social and ecumenical) the trustees are confident (having had regard to Charity Commission guidance) that NDBF delivers public benefit through community engagement and supporting those in need both spiritually and physically.
## **ACTIVITIES AND ACHIEVEMENTS**
The events of the last 12 months have shown that we need to adapt quickly to a changing world that has impacted every one of us. However, before the impact of COVID-19, we had already recognised the need for **transformation** within the Diocese, to address the financial pressures of reducing income within the Diocese whilst also embodying the vision for a thriving, growing Diocese through new ministry models supported by a sustainable deployment plan. Assistance is being provided from the Strategic Capacity Fund of the National Church to develop this thinking into a funded transformation plan.
## _‘Do not remember the former things, or consider the things of old._
_I am about to do a new thing; now it springs forth, do you not perceive it?’_
Bishop Christine spoke from these verses in Isaiah about our need to reshape and reimagine ministry. Not doing more with less, but doing differently. It is a call to imagine a new normal. From our baptism onward, throughout our lives, we are summoned to witness to God’s love and to work for the coming of God’s kingdom, but our context and our challenges are changing, and changing
Page 5
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
radically. We need to adapt to meet these new challenges and work out how to worship, work and witness in this new normal. Helping us to discern how we all do this together is the task of our **Transformation** Project.
The **Transformation** Project has begun, supported by a small core team, by engaging across the Diocese to discern what are the **next steps** for our Diocese in **growing church bringing hope.** Things are still emerging, and will continue to do so as we all pray, ponder and work out where God is leading us together. But there are some things already emerging:
We have expressed our values in a new way for the road ahead of us:
1. **Open** _to God’s transforming love:_
- We want to be rooted and grounded even more in God’s love which flows outward into the world: rooted in our relationship with God, in our deepening prayer and in our growing faith which inspires our continued witnessing to that love.
_2._ **Generous** _with God’s transforming gifts:_
- We want to be even more generous with one another, sharing our gifts as the whole people of God, ordained and lay working in collaboration: generous in our attitudes, our finances and our resources.
3. **Engaged** _in God’s transforming work in the world:_
- We want to be even more engaged in serving our communities and schools, working in partnership in outreach and evangelism, in care and compassion, and in helping to tackle urgent social justice and environmental concerns, locally, nationally and globally.
As we adjust to the ‘new normal’ we are working out together, we hope these values will help shape our actions and our priorities. We are also discerning three priorities for the coming years:
## **1. Bringing Good News**
_”The Spirit of the Lord is upon me, because he has anointed me to bring good news to the poor. He has sent me to proclaim release to the captives and recovery of sight to the blind, to let the oppressed go free, to proclaim the year of the Lord’s favour.” (Luke 4.18-19)_
The Church does not just offer good advice, we bring the good news of Jesus Christ. We want to ensure all our outward facing activities as God’s people reflect the priorities of Jesus as written in Luke above. So many of the institutional pressures of finance and decline try and turn us inwards, but we pray for courage, grace and imagination to keep turning outwards in love and faith.
## **2. Growing in Christ**
_“As you therefore have received Christ Jesus the Lord, continue to live your lives in him, rooted and built up in him and established in the faith, just as you were taught, abounding in thanksgiving.” (Colossians 2.6-7)_
So often we might be tempted to think we have made it, that we have got life sorted and nothing needs to change. But we always continue to grow, in our faith and understanding of God, in our calling and vocation. We never stop following Jesus and that means we are always on the move! We pray we can offer opportunities for anyone who wants to explore and
Page 6
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT**
## **FOR THE YEAR ENDED 31 DECEMBER 2020**
nurture their faith to do so, and to see growing faith in our own lives, our households, churches and schools.
## **3. Living Faith Fully**
_“I came that they may have life, and have it abundantly.” (John 10.10)_
Jesus is about nothing less than life in all its fullness or abundance! We need to build up each other in faith, to help each other as we continue to trust in God and step out in faith. At times this will feel risky, but our faith assures us that God has given us everything we need to do this work.
What these three priorities mean for us is still being worked out, but we believe will result in transformation for us all, involving new models of parish ministry with new roles for our clergy and laity working collaboratively to more intentionally focus on the three priorities above. This isn’t about getting back to whatever used to be normal, but we are hoping to discover God’s ‘new thing’ for us. The National Church are encouraging the Diocese in this transformation and have indicated their willingness to provide financial support to help us move to a sustainable and thriving future, and we are already starting to take the first steps of our journey.
In parallel with the transformation project, work on the existing five priority work streams has progressed although to varying degrees due to COVID-19:
- **Prayer** : the aim for prayer to become the heartbeat of the Diocese has been impacted by COVID-19, but this is now opening up new opportunities to engage through digital and with the appointment of the new Bishop of Berwick this will now be integrated into our diocesan transformation project.
- **Growth** : the three planned courses to engage 60 parishes in _Leading your Church into Growth_ are now complete and the project now moves into a monitoring and learning phase, initial results are very encouraging.
- **Impact** : COVID-19 has impacted progress, but also given a time for reflection and the early work of this strand will be instrumental for the transformation project.
- **City:** The first diocesan resource church based at St Thomas’ continues to go from strength to strength. The online congregation during lockdowns has swelled to c2k with small group meetings and enquirers courses thriving. Work has now started to refurbish and reorder the church building (largely funded by the national church) which will see the church ready to invite up to 400 freshers into a welcoming space in October 2021. St Thomas’ have also been instrumental in growing a new youth community in Byker/Walker and plans are in place to launch an **Eden** Team.
- **Rural:** With the appointment of a new Archdeacon of Lindisfarne, there is now a renewed commitment to reimagine the rural Diocese through new models of mission and ministry aligned with the transformation project.
The diocesan vision of _**growing church bringing hope**_ is instrumental in promoting the whole mission of the church (pastoral, evangelistic, social and ecumenical) the trustees are confident (having had regard to Charity Commission guidance) that NDBF delivers public benefit through community engagement and supporting those in need both spiritually and physically.
Page 7
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
## **The Christian Presence**
Our licensed ministers form a central part in the life of churches in the Newcastle Diocese and carry out important roles in communities. As well as engaging in a wide variety of community and church projects, we carry out around 520 weddings, 2,150 funerals and 1,900 baptisms every year.
While the NDBF is responsible for the funding of clergy stipend costs, the national clergy payroll is administered by the Church Commissioners whom the NDBF reimburses monthly for the costs of stipendiary clergy deployed in the Diocese. Caring for the licensed clergy and lay workers in the Diocese is a priority of the NDBF and represents by far its largest financial commitment. Although the NDBF does not employ the parish clergy, it is responsible for training them, their continued development and, where applicable, resourcing their stipend, and paying into their pension fund. In 2011 terms of service were introduced in the form of Common Tenure under which all new clergy are appointed (some present clergy chose to retain their freehold). Common Tenure gives greater clarity on the rights and obligations of clergy and requires that they participate in a process of Continual Professional Development and Ministerial Development Review. It also gives clergy access to Employment Tribunals and other useful services.
For many, the clergy house represents the domestic heart of the parish, serving not only as a home but also as a base for ministry. The NDBF recognises the importance of a safe, secure and well maintained house and through the Houses & Glebe Committee it strives to continue with this work as well as carrying out programmed refurbishments and improvements, as available money allows.
In January 2020 there was an establishment of 100.3 full-time equivalent (FTE) posts for permanent stipendiary ministry (incumbent, priest-in-charge, team vicar and associate clergy posts) and this establishment reduced to 98.1 FTE by the end of 2020. The average vacancy rate in the year was 16.4% and of the establishment there was an average of 82 FTE in post. This figure excludes curates in training posts, chaplains and the archdeacons.
During all interregnums the relevant area dean worked closely with the churchwardens of the vacant parishes and ensured that in every case scheduled services continued and, with very few exceptions, other activities within the community continued uninterrupted. This was largely made possible by the increasing pool of both retired and self-supporting ministers in the Diocese together with support from the Archdeacons.
## **Church Buildings**
New procedures introduced by the Church of England to control the maintenance and development of its buildings are working well with parishes benefitting from the streamlining that has been introduced and the way in which permissions are sought.
There were 64 faculty full applications in the year, of which 48 (75%) were carried out via the Online Faculty System. Since the start of the COVID-19 lockdown situation 89% of applications have been carried out online. The use of the online faculty process continues to grow in popularity and significantly reduces the amount of paperwork involved in the process by all parties. Whilst other Dioceses have moved to a wholly electronic system, it is unlikely Newcastle would replicate this entirely as certain faculties cannot be dealt with via the online system (for example in 2020 there was a block of 8 identical faculties for the council for closed churchyards which could not be processed online).
Page 8
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
In addition to faculty applications there are national lists of work that can be done without a faculty. List A an incumbent can authorise, and List B an Archdeacon authorises but needs to seek advice from a Diocesan Advisory Committee (DAC) member first. In 2020 52 List B cases were processed (down from 2019 which had 72 which reflect the COVID-19 lockdown situation). List B covers more minor types of work such as like-for-like repairs.
Through our Rural Churches for All programme work has continued with local church congregations to help achieve a sustainable future for church buildings as both living places of worship and buildings that are enjoyed by local communities. Church buildings continue to be welcoming places for tourists and pilgrims and unique heritage assets.
## **Community Engagement**
Our churches are embedded in their communities and as a result have developed trusting relationships and networks, enabling churches to play an important part in responding to the challenges faced by neighbourhoods and communities today.
Over the past year Together Newcastle, setup as a joint venture between the Church Urban Fund (CUF) and the Diocese of Newcastle, has continued to develop connections and relationships with congregations across the Diocese and as a result has experienced an increase in requests to help set up activities in response to identified needs and issues.
Together Newcastle is a resource to churches, individuals and groups that are wanting to get involved in some form of community activity, as part of their mission and commitment to **growing church bringing hope** .
## **Other related parties**
The major related parties with whom the NDBF works include:
- **The Archbishops’ Council** to which the NDBF pays a donation based on an apportionment system agreed by the General Synod for funding national training of ordinands and the activities of the various national boards and councils, as well as the costs of the General Synod.
- **The Church Commissioners** , from which the NDBF receives grants and which acts on behalf of clergy with HM Revenue and Customs. The NDBF reimburses the Commissioners for the stipends of those clergy holding appointments in the Diocese of Newcastle.
- **The Church of England Pensions Board** , to which the NDBF pays retirement benefit contributions for stipendiary clergy and employees. The Pensions Board also offers schemes to provide housing for clergy in retirement **.**
- **The Newcastle Diocesan Education Board** (“NDEB”) to which it pays a donation for funding the work of the Joint Education Team which resources the activities of the NDEB.
- **The Lord Crewe’s Charity** from which the NDBF receives grants to resource activities of the NDBF which support serving clergy within the Diocese of Newcastle.
## **Volunteers**
The Diocese of Newcastle is dependent on the huge number of people involved in church activities both locally and at diocesan level. We believe that the number of active volunteers (or volunteer hours) given to the mission and ministry of the church is a key indicator of the health of a church. The service provided to a community through church volunteering also has a significant impact on people’s relationship to the church particularly at times of crisis. Within this context, the NDBF values
Page 9
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT**
## **FOR THE YEAR ENDED 31 DECEMBER 2020**
the considerable time given by all members of boards, committees and task groups across the Diocese in pursuit of the mission of the NDBF.
## **FUTURE PLANS**
In 2021 COVID-19 continues to have a significant impact on the work of the Diocese, with Church buildings remaining closed and services moving online. Despite these challenges activities will continue to be in line with supporting the five priority work streams detailed in the objectives set out on page 5.
Page 10
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT**
## **FOR THE YEAR ENDED 31 DECEMBER 2020**
## **FINANCIAL REVIEW**
## **Financial performance**
Parish Share, the money given by parishes to the Diocese to fund its mission and ministry, is the main incoming resource for the Diocese. Including the arrears received from earlier years, share decreased in cash terms by £353k compared to 2019. The total share received when expressed as a percentage of the overall share requested was 90.2% (2019: 91.7%).
The trustees are thankful to all the parishes which completed their parish share contributions during 2020. The trustees are grateful to those parishes that were able to make their parish share contributions by monthly instalments which helped the NDBF to resource the monthly financial responsibilities associated with the payment of clergy stipends and the salaries of those employed by the NDBF.
The balance on the Unrestricted Fund went up by £415k in 2020 to £3,956k. There was an overall £318k net excess of income over expenditure (within this was a decrease of £353k in parish Share contributions) and our investment in equities, held with CCLA Investment Management Ltd (CCLA), was revalued upwards by £97k.
The trustees have prepared a budget for 2021 which contains a small deficit of £81k. The target for Parish Share collection uses the 2020 parish share request as a baseline together with advice from parishes on what they felt able to offer in 2021 against this baseline. A Diocesan Contingency Fund has been set to support parishes meet any gap between their offer and the baseline figure keeping in mind the COVID-19 financial pressures that parishes will continue to face into 2021. The 2021 parish share target summarises as:
|sh|share target summarises as:||
|---|---|---|
|•|Baseline request|£4,564k|
|•|Funded by:||
||`o` Parish offers|£3,910k|
||`o` Contingency fund|£654k|
Overall the NDBF’s funds have increased in 2020 by £638k. This breaks downs as an operating surplus on unrestricted funds of £318k, net incoming resources on designated funds of £44k, net incoming resources on restricted and endowment funds of £61k, a realised gain on investments of £3k and an unrealised gain on investments of £212k.
Accounting rules require the inclusion of two items within the operating surplus on unrestricted funds which do not form part of the NDBF’s regular day-to-day operating income and expenditure. The following illustration removes the two items to help to understand the underlying operating position for 2020, which was a surplus on unrestricted funds of £33k:
Reported surplus on unrestricted & designated funds £362k _remove_ reduction in the pension liability (£330k) _remove_ balance of Lowest Income Communities Funding to be used in future years[1] (£53k) **Underlying operating deficit on unrestricted & designated funds £21k**
Included within this surplus is a one-off donation of £100k so adjusting for that would give an underlying operating deficit of **£121k.**
> 1 This is the unspent balance of monies received from the National Church which are to be used in defined areas. The balance is transferred and held in a designated fund for use in those areas in future years.
Page 11
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
## **Significant property transactions**
During 2020 there were no significant property transactions.
Our housing policy continues to be:
- to replace unsuitable properties;
- to accommodate the changing geographical deployment of clergy within the Diocese; and
- to realise development potential in some properties, thereby using our resources more effectively for the ministry of the Church.
## **Balance sheet position**
The trustees consider that the balance sheet together with details in note 18 show broadly that the restricted and endowment funds are held in an appropriate mix of investment and current assets given the purposes for which the funds are held. While the net assets at the balance sheet date totalled £25.230m (2019: £24.592m) it must be remembered that included in this total are properties, mostly in use for the ministry, whose value amounted to £18.631m (2019: £18.660m). Much of the remainder of the assets shown in the balance sheet are held in restricted funds, and cannot necessarily be used for the general purposes of the NDBF.
## **Reserves policy**
## _Free reserves_
Having considered financial risk, liquidity requirement and the timing of cash flows throughout the year, the trustees policy is to aim to maintain c.£2m in investments for future income generation (2020 actual £1.5m) with an additional 3 months expenditure (c. £1.8m) held in readily realisable assets (2020 actual £1.8m). The trustees are satisfied with reserves at the current level in line with the aims of the policy.
## _Reserves tied up in fixed assets_
The general fund comprises net assets amounting to £3,956k of which £14k is tied up in tangible fixed assets.
## _Designated funds_
The trustees may, with the approval of the board, designate additional unrestricted reserves to be retained for an agreed purpose where this is considered to be prudent. Such designated reserves are reviewed from time to time and returned to the General Fund in the event that the purpose of their designation is no longer considered to be adequate justification for their retention. A description of each reserve together with the intended use of the reserve is set out in note 19. At 31 December 2020 total designated reserves were £6.01m (2019: £5.93m).
The trustees will keep the designation of unrestricted funds under review throughout the remainder of 2021 in order to ensure funds are put to the best use, as the Diocese responds to the issues faced during the COVID-19 pandemic.
## _Restricted and endowment funds_
As set out in note 18, NDBF holds and administers a large number of restricted and endowment funds. As at 31 December 2020 restricted funds totalled £1.81m (2019: £1.73m) and endowment funds totalled £13.45m (2019: £13.39m). Neither are available for the general purposes of the NDBF.
Page 12
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
## **Going concern**
The trustees have considered the potential financial effects of the ongoing COVID-19 situation on the availability of reserves and cash and upon the going concern basis of preparation of these financial statements. At the time of writing the 2021 cashflow forecast, based on the approved budget and reporting from parishes on what they feel able to contribute in parish share during 2021, projects a fall in cash of £747k during 2021. This is being mitigated through income from sales of property. So far in 2021 one property has been sold for £421k and a further 4 properties have potential to be sold in 2021 for a total of £1.45m. The trustees are keeping under constant review the COVID-19 situation in terms of the extent and duration of the control measures and consequent impacts on general reserves. If it is forecast that general reserves will temporarily fall below the level stated in the reserves policy, management would consider whether the designation of certain unrestricted reserves remained appropriate. In more severe scenarios, where virus control measures have to be applied for a longer duration, it is possible that the Board would need to consider reducing operations in order to limit expenditure, consider utilising certain restricted reserves beyond the budgeted amount, or realising assets. The trustees are comfortable that these measures, along with the current levels of cash and short term deposits, are sufficient to allow the Diocese to continue to operate as a going concern for the foreseeable future notwithstanding the current restrictions.
## **Grant making policy**
The Memorandum of Association of the NDBF explicitly permits the NDBF to make grants in pursuance of its objects, and the nature of grants made in 2020 is indicated in note 10. Certain grants are built into the Diocesan Budget which is approved by Synod, whilst others are overseen by the Bishop’s Council, the Diocesan Finance Group and the Diocesan Mission and Pastoral Committee.
## **Investment policy**
The Memorandum and Articles of Association of the charity permit wide powers of investment. NDBF's investment policies are based on two key criteria:
- _**Ethical investment**_ - this includes ensuring that investments are held in companies which have high standards of corporate governance and act in a responsible way towards stakeholders.
- _**Long-term responsibilities**_ - the trustees are aware of their long-term responsibilities in respect of endowed funds and as a result follow a correspondingly prudent approach to investment decisions.
These policies are achieved by holding all funds with CCLA.
Investment policy for long-term funds is aimed primarily at generating a sustainable income with due regard to the need for the preservation of capital value and the possible need to realise investments to meet operational needs. The glebe investments are held for the purpose of raising income to achieve the maximum contribution possible to clergy stipends on an on-going basis. Unrestricted and restricted fund investments are invested to balance income, liquidity and the maintenance of capital.
Page 13
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
The investments held and their return during the year are set out in the following table:
## Shares in CBF Investment Fund
|Valuation at 1 Jan 2020
Dividend income %
Revaluation %
Total % return|£3,281,489|
|---|---|
||3.77%
6.55%
|
||10.32%|
**----- Start of picture text -----**
Glebe managed mainly by glebe agent
**----- End of picture text -----**
|Valuation at 1 Jan 2020
Rental income %
Revaluation %
Total % return||£1,538,267|
|---|---|---|
|||1.85%
0.00%|
|||1.85%|
## **RESPONDING TO COVID-19**
Key aspects of the diocesan response to COVID-19 during 2020 were:
- Delivery of an expenditure savings package of £390k.
- Working with the National Church to secure an allocation of £498k sustainability funding support in respect of COVID-19 losses during 2020 and 2021. This sum was received in 2020 and is held for use in 2021 and forms part of deferred income within other creditors showing in note 15.
- Proactive support to parishes in particular through our Generous Giving Advisers. A key success here has been the support provided to parishes to secure business support grants from the local authorities with £533k support secured across 74 parishes.
The risks presented by COVID-19 have been considered and include increased liquidity, credit and reputational risk. The Charity has business continuity plans in place that support the continued operation of business activity and has resources that can withstand temporary disruption. At this stage there is no perceived material risk to the Charity’s viability resulting from the COVID-19 outbreak.
## **PRINCIPAL RISKS AND UNCERTAINTIES**
The trustees are responsible for the identification, mitigation and management of risk. To achieve this, a register of all the risks identified is maintained and, alongside it, a management and mitigation
Page 14
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT**
## **FOR THE YEAR ENDED 31 DECEMBER 2020**
strategy formed. This is subject to review by the trustees on an annual basis with the responsibility for delivery of the mitigation strategies identified by it being delegated to the Diocesan Secretary. In 2020 the Finance Group, a sub-committee of the Bishop’s Council, reviewed the management and mitigation strategy and revised the Risk Register.
The receipt of voluntary Parish Share contributions remains the major risk to the Board’s overall performance. The trustees have put in place a framework of support, including regular communication and active management through the Finance Group, to mitigate this risk.
Page 15
**ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **STRUCTURE AND GOVERNANCE**
## **Summary Information about the structure of the Church of England**
The Church of England is the established church and HM The Queen is the Supreme Governor. It is organised into two provinces (Canterbury and York) and 42 Dioceses. Each Diocese is under the care of a Diocesan Bishop who is charged with the cure of souls of all the people within that geographical area. This charge is shared with priests within benefices and parishes which are sub-divisions of the Diocese.
The National Church has a General Synod comprised of ex-officio members and elected representations from each Diocese and it agrees, and lays before Parliament, Measures for the governance of the church’s affairs which, if enacted by Parliament, have the force of statute law. In addition to the General Synod, the Archbishops’ Council has a coordinating role for work authorised by the Synod; the Church Commissioners manage the historic assets of the Church of England; and the Church of England Pensions Board administers the pension schemes for clergy and lay workers. Within each Diocese, overall leadership lies with the Diocesan Bishop, who exercises that input as Bishop within the Diocesan Synod. The Diocese of Newcastle is divided into twelve deaneries, each with its own Synod and within each parish there is a Parochial Church Council which shares with the parish priest responsibility for the mission of the church in that place, in a similar way to that in which the Bishop shares responsibilities with the Diocesan Synod.
Whilst each Diocese is a separate legal entity, with a clear responsibility for a specific geographical area, being part of the Church of England requires and enables each Diocese to seek support from and application for partnership with neighbouring Dioceses.
## **Organisational structure**
NDBF is a company incorporated in England, limited by guarantee (No. 00650977) and a registered charity (No. 247233) governed by its Memorandum and Articles of Association.
The company’s principal activity is to promote, assist and advance the work of the Church of England within the Diocese of Newcastle. It was established in its present form in 1882.
Governance and policy of the NDBF is the responsibility of the trustees, who are also members of the company and trustees for the purposes of charity law. There are nine ex-officio trustees and six lay members and three clergy members elected from and by the members of Diocesan Synod every three years. The most recent elections were held in November 2018. The next elections are scheduled to be held in Autumn 2021. The details of trustees who served during 2020 are set out on page 20.
The Diocesan Synod, the statutory governing body of the Diocese, is an elected body drawn from across the Diocese with responsibility for setting the vision and strategy of the Diocese, guided by the Bishop’s Staff Team. The Synod membership is elected every three years, the last elections having been in July 2018. Whilst the NDBF is a separate legal entity, with clear responsibilities under both company and charity law, as well as a governing memorandum and articles of association, by virtue of the National Institutions Measure 2000 the NDBF is subject to the direction of the Synod in all its activities, unless such direction is not in accordance with the governing documents or statutory regulations.
Page 16
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
## **Decision making structure**
Corporate priorities and the overall financial strategy for the Diocese, in its primary object to promote, assist and advance the work of the Church of England within the Diocese of Newcastle are set by the Diocesan Synod, and the NDBF. The responsibility for ensuring that these priorities and strategies are delivered is delegated to the Diocesan Secretary. The members of the company meet once a year in general meeting to receive and approve the annual report and financial statements and to appoint the auditors. The Diocesan Synod each year receives and agrees the annual budget, prepared and approved by the NDBF. The trustees, meeting within the context of the Bishop’s Council & Standing Committee, hold up to seven meetings during the year to formulate and coordinate policies on mission, ministry and finance by:-
- Initiating proposals for action by the Synod and advising it on matters of policy;
- Transacting business of the Synod when it is not in session subject to the directions of the Synod and in accordance with Synod Standing Orders;
- Acting as the trustees of the NDBF;
- Planning the business of the Synod, preparing the agenda for its session, and circulating to members information about matters for discussion;
- Advising the Bishop on any matters she may refer to the committee;
- Initiating consideration of any restructuring of Synod Committees and Departments which may appear necessary and for the establishment of ad hoc review groups, their terms of reference and membership;
- Carrying out such other functions as the Synod delegates to it;
- Appointing members to committees and representatives to external bodies, subject to the direction of the Synod.
The trustees are assisted in their work by four sub-committees:-
**Finance Group** : responsible for considering the financial affairs of the Diocese. Amongst other things, it draws up draft budgets for approval by the trustees prior to submission to Diocesan Synod and monitors expenditure and income. The group comprises eight members of whom six are trustees.
**Houses & Glebe Committee** : responsible for advising on policy concerning the management of parsonage houses in each benefice of the Diocese of Newcastle, including setting the policy for buying, repairing, maintaining and disposing of all parsonage houses, team vicarages and houses owned by NDBF, together with responsibility for determining policy and making decisions concerning the management of glebe property and investments for the benefit of the Diocesan Stipends Fund of NDBF.
**Diocesan Mission & Pastoral Committee** : responsible for advising on pastoral reorganisation in the Diocese of Newcastle, taking account of available clergy numbers and making use of new patterns of ministry. The Committee also advises on the finding of appropriate alternative uses for churches closed to regular public worship.
**Diocesan Advisory Committee** : advises on matters affecting churches and places of worship in the Diocese such as granting of faculties, architecture, archaeology, art and history of places of worship, the use and care of places of worship and their contents and the care of churchyards.
Page 17
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT**
## **FOR THE YEAR ENDED 31 DECEMBER 2020**
## **Trustee recruitment, selection and induction**
The trustees are the members of the Bishop’s Council. There are ex-officio members, elected members, with elections taking place every three years, and there is provision for co-opted members. Trustees are given induction at the outset of the triennium and at other times as appropriate. They are informed about the role and function of the Bishop’s Council before seeking membership. All trustees are required to sign the code of practice and maintain their entry in the declarations of interest and loyalty.
## **Remuneration of key management personnel**
Emoluments of higher-paid employees are determined by the Bishop of Newcastle, the Chair of the Board of Finance and the Human Resources Manager with reference to appraisals and remuneration and salary benchmarking.
## **Delegation of day to day delivery**
The trustees and the sub-committees which assist them in the fulfilment of their responsibilities rely upon the Diocesan Secretary and his colleagues for the delivery of the day to day activities of the company. The Diocesan Secretary is given specific and general delegated authority to deliver the business of the NDBF in accordance with the policies framed by the trustees.
Page 18
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
## **TRUSTEES’ RESPONSIBILITIES**
The trustees are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the trustees (as directors) to prepare financial statements for each financial year. Under that law the trustees have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the trustees must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of the affairs of the NDBF and of the surplus or deficit of the NDBF for that period. In preparing these financial statements the trustees are required to:
- Select suitable accounting policies and apply them consistently;
- Observe methods and principles in the Charities SORP;
- Make judgements 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 financial statements;
- Prepare the financial statements on the going concern basis unless it is inappropriate to assume that the company will continue in operation.
The trustees are also responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the NDBF and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the NDBF 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 corporate and financial information included in the NDBF’s website. Legislation in England/Wales governing the preparation and dissemination of financial statements and other information included in Annual Reports may differ from legislation in other jurisdictions.
## **STATEMENT OF DISCLOSURE TO THE AUDITORS**
So far as the trustees are aware:
- a) there is no relevant audit information of which the charitable company’s auditors are unaware; and
- b) we have taken all the steps that we ought to have taken as trustees in order to make ourselves aware of any relevant audit information and to establish that the charitable company’s auditors are aware of that information.
## **APPOINTMENT OF AUDITORS**
The auditor is deemed to be reappointed under section 487 (2) of the Companies Act 2006 until otherwise resolved at a general meeting of the company.
Page 19
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT**
## **FOR THE YEAR ENDED 31 DECEMBER 2020**
## **ADMINISTRATIVE DETAILS**
## **Ex officio trustees**
The Bishop of Newcastle, the Right Reverend CE Hardman The Suffragan Bishop of Berwick, the Right Reverend MSA Tanner (to 14/07/20) The Suffragan Bishop of Berwick, the Right Reverend M Wroe (from 20/10/20) The Dean of Newcastle, the Very Reverend GV Miller The Archdeacon of Lindisfarne, the Venerable PJA Robinson (to 03/07/20) The Archdeacon of Lindisfarne, the Venerable DR CA Sourbut Groves (from 14/11/20) The Archdeacon of Northumberland, the Venerable M Wroe (to 19/10/20) The Chair of the Diocesan Board of Finance, Canon SR Harper The Chair of the House of Clergy, The Reverend Canon B Hurst (from 13/08/20) The Chair of the House of Laity, Canon C Wolstenholme (to 05/11/20)
The Chair of the Diocesan Mission and Pastoral Committee, the Reverend Canon PM Scott (to 20/02/20)
The Chair of the Diocesan Mission and Pastoral Committee, Mrs EA Kerry (from 04/05/20)
The Chair of the House of Clergy (The Reverend C Pickford) served to 12/08/20 and was also an employee of NDBF. The NDBF constitution does not allow employees to be a trustee therefore this individual is not included in the above list of Ex officio trustees.
## **Elected trustees**
The Reverend Canon CL Brown The Reverend PD Dobson The Reverend L Chapman Canon I McDonald-Booth Dr JC Appleby Mrs EA Chadwick Professor G Holmes (from 04/06/20) Mrs E Doran (from 07/07/20) Dr A Thick (to 01/10/20)
## **Co-opted by the Board:**
Mrs EA Kerry, the Vice Chair of the Diocesan Board of Finance (co-opted to 03/05/20)
## **Secretary:** Canon S Waddle
**Auditors:** UNW LLP, Chartered Accountants & Statutory Auditors, Citygate, St. James' Boulevard, Newcastle upon Tyne, NE1 4JE
**Bankers** : Barclays Bank plc, Barclays House, 5 Queen Ann’s Street, Quayside, Newcastle upon Tyne, NE4 9BN
**Solicitors:** Sintons, The Cube, Barrack Road, Newcastle upon Tyne, NE4 6DB
**Investment managers:** CCLA Investment Management Ltd, Senator House, 85 Queen Victoria Street, London, EC4V 4ET
Page 20
## **THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **ANNUAL REPORT**
## **FOR THE YEAR ENDED 31 DECEMBER 2020**
**Glebe agents:** Land Factor, Bywell Estate Office, Bywell, Stocksfield, NE43 7AQ **Insurers:** Ecclesiastical, Beaufort House, Brunswick Road, Gloucester, GL1 1JZ
**Registered Office:** Church House, St. John's Terrace, North Shields, NE29 6HS Telephone: 0191 270 4100
Website: www.newcastle.anglican.org Email: info@newcastle.anglican.org **Company registration number:** 00650977 **Registered charity number:** 247233
In approving this Trustees’ Report, the trustees are also approving the Strategic Report included on pages 4 – 15 within their capacity as company directors.
BY ORDER OF THE TRUSTEES
**Canon S Harper**
**Canon S Waddle**
Chair
Secretary
**23 March 2021 23 March 2021**
Page 21
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **INDEPENDENT AUDITOR’S REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
## **Independent Auditor’s Report to the members of The Newcastle Diocesan Board of Finance Limited**
## **Opinion**
We have audited the financial statements of The Newcastle Diocesan Board of Finance Limited for the year ended 31 December 2020 comprising the Statement of Financial Activities, the Income and Expenditure Account, the Balance Sheet, Statement of Cash Flows and related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
- give a true and fair view of the state of the charitable company's affairs as at 31 December 2020 and of its incoming resources and application of resources, including its income and expenditure 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 Companies Act 2006 and the Charities Act 2011.
## **Basis of opinion**
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the charitable company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
## **Conclusions relating to going concern**
In auditing the financial statements, we have concluded that the trustees’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the entity's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the trustees with respect to going concern are described in the relevant sections of this report.
## **Respective responsibilities of trustees and auditor**
The trustees are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
Page 22
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **INDEPENDENT AUDITOR’S REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
We have nothing to report in this regard.
## **Opinion on other matters prescribed by the Companies Act 2006**
In our opinion, based on the work undertaken in the course of the audit, the information given in the trustees' report for which the financial statements are prepared is consistent with the financial statements, and the directors’ report included within the trustees’ report has been prepared in accordance with applicable legal requirements.
## **Matters on which we are required to report by exception**
In the light of our knowledge and understanding of the charitable company and its environment obtained in the course of the audit, we have not identified material misstatements in the trustees' report.
We have nothing to report in respect of the following matters in relation to which Companies Act 2006 requires us to report to you if, in our opinion:
- adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
- the financial statements are not in agreement with the accounting records and returns; or
- certain disclosures of trustees' remunerations specified by law not made; or
- we have not received all the information and explanations we require for our audit.
## **Responsibilities of trustees**
As explained more fully in the trustees' responsibilities statement, the trustees (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the trustees are responsible for assessing the charitable company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the charitable company's or to cease operations, or have no realistic alternative but to do so.
## **Auditor's responsibilities for the audit of the financial statements**
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud is detailed below:
We identified areas of law and regulations that could reasonably be expected to have a material effect on the financial statements from our general and sector experience and through discussions with the trustees and other management (as required by auditing standards) and from inspection of the charitable company's legal correspondence, and we discussed with the trustees and other management the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.
Firstly, the charitable company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies and charities legislation) and taxation
Page 23
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **INDEPENDENT AUDITOR’S REPORT FOR THE YEAR ENDED 31 DECEMBER 2020**
legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly the charitable company is subject to many other laws and regulations where the consequences of noncompliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect; data protection, safeguarding and certain aspects of company legislation, recognising the nature of the charitable company's activities. Auditing standards limit the required audit procedures to identify noncompliance with these laws and regulations to enquiry of the trustees and other management and inspection of regulatory and legal correspondence, if any. Through these procedures, we became aware of actual or suspected non-compliance and considered the effect as part of our procedures on the related financial statement items. The identified actual or suspected non-compliance was not sufficiently significant to our audit to result in any further disclosure within our report or the financial statements.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. **Who are we reporting to**
This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company's members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and its members, as a body, for our audit work, for this report, or for the opinions we have formed.
## **Anne Hallowell BSC DChA FCA (Senior Statutory Auditor) For and on behalf of UNW LLP, Statutory Auditor**
Newcastle upon Tyne
Date: 23 March 2021
Page 24
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **STATEMENT OF FINANCIAL ACTIVITIES FOR YEAR ENDED 31 DECEMBER 2020**
|**Note**
**Income from**
Donations
Parish contributions
2
Archbishops' Council
2
Other donations
2
Charitable activities
3
Other activities
4
Investments
5
**Total income**
**Expenditure on**
Raising funds
6
Charitable activities
7
**Total expenditure**
**Net incoming/(outgoing) resources before**
**investment gains**
Net gains/(losses) on investments
13
**Net income/(expenditure)**
Transfers between funds
**Net movement in funds**
**Reconciliation of funds**
**Total funds brought forward**
**Total funds at 31 December 2020**
18|**Unrestricted**
**Funds**
**£**
4,055,373
1,285,071
601,460
408,500
416,338
143,678|
**Restricted**
**Funds**
**£**
-
-
504,731
-
-
15,923|
**Endowment**
**Funds**
**£**
-
-
-
-
-
-|
**Total Funds**
**2020**
**£**
**4,055,373**
**1,285,071**
**1,106,191**
**408,500**
**416,338**
**159,601**|
Total Funds
2019
£
4,408,028
1,335,240
937,823
368,067
313,876
178,786|
|---|---|---|---|---|---|
||**6,910,420**|**520,654**|**-**|**7,431,074**|7,541,820|
||(62,120)
(6,485,834)|-
(447,839)|-
(12,294)|**(62,120)**
**(6,945,967)**|(143,190)
(5,971,334)|
||**(6,547,954) **|**(447,839) **|**(12,294) **|**(7,008,087) **|**(6,114,524)**|
||**362,466**
135,194
|
**72,815**
-
|**(12,294)**
79,730|**422,987**
**214,924**|
1,427,296
517,085|
||**497,660**
-|**72,815**
-|**67,436**
-|**637,911**
-|1,944,381
-|
||**497,660**
9,472,053|**72,815**
1,733,568|**67,436**
13,386,503|**637,911**
**24,592,124**|1,944,381
22,647,743|
||**9,969,713**|**1,806,383**|**13,453,939**|**25,230,035**|24,592,124|
All incoming resources and resources expended relate to continuing activities.
Page 25
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **INCOME AND EXPENDITURE ACCOUNT FOR YEAR ENDED 31 DECEMBER 2020**
||Total|Total|
|---|---|---|
||2020|2019|
||£|£|
|**Total incoming resources**|7,431,074|7,541,820|
|**Resources expended**|(6,995,793)|(6,113,270)|
||________|________|
|**Operating surplus / (deficit) for the year**|435,281|1,428,550|
|Net gains/(losses) on investments|135,193|334,388|
||________|________|
|**Net income for the year**|570,474|1,762,938|
||________|________|
|**Total comprehensive income**|570,474|1,762,938|
||________|________|
The income and expenditure account is derived from the Statement of Financial Activities with movements in endowment funds excluded to comply with company law. All income and expenditure is derived from continuing activities.
Page 26
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **BALANCE SHEET AS AT 31 DECEMBER 2020**
|**Note**
**Fixed assets**
Tangible assets
12
Investments
13
**Current assets**
Debtors
14
Investments
Cash at bank
**Creditors: amounts falling due within one**
**year**
15
**Net current assets**
**Total assets less current liabilities**
**Creditors: amounts falling due after more**
**than one year**
16
**Net assets**
**The funds of the charity:**
Endowment funds
Including revaluation reserve:
£610,263 (2019: £530,344)
Restricted income funds
Unrestricted income funds:
General funds
Including revaluation reserve:
£527,396 (2019: £430,219)
Designated funds
Including revaluation reserve:
£326,403 (2019: £288,385)
**Total funds**
18|**2020**
**£**
**18,630,575**
**4,834,680**|2019
£
18,659,844
4,819,756|
|---|---|---|
||**23,465,255**
**244,129**
**1,771,199**
**1,167,138**|23,479,600
142,187
1,065,578
1,039,932|
||**3,182,466**
**(1,170,123)**|2,247,697
(571,134)|
||**2,012,342**|1,676,563|
||**25,477,597**
**(247,563)**|25,156,163
(564,039)|
||**25,230,035**|24,592,124|
||**13,453,939**
**1,806,383**
**3,956,553**
**6,013,160**|13,386,503
1,733,568
3,540,916
5,931,137|
||**25,230,035**|24,592,125|
The notes on pages 29 to 54 form part of these financial statements. The accounts were approved by the trustees of the Board on the 23 March 2021 and are signed on their behalf by:
**Canon SR Harper Chair Company number 00650977**
Page 27
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **STATEMENT OF CASH FLOWS FOR YEAR ENDED 31 DECEMBER 2020**
|||**2020**||**2019**|
|---|---|---|---|---|
||**£**|**£**|**£**|**£**|
|**Net cash inflow from operating**|||||
|**activities**||473,226||241,562|
|**Cash flows from investing activities**|||||
|Dividends, interest and rent from investments|159,601||178,786||
|Proceeds from the sale of:|||||
|Investments|200,000|||-|
|Purchase of:|||||
|Tangible fixed assets for the use of the NDBF||-|(2,019)||
||__________||__________||
|**Net cash provided by investing**|||||
|**activities**||359,601||176,767|
|**Change in cash and cash equivalents in the**|||||
|**reporting period**||832,827||418,329|
|**Cash and cash equivalents at 1 January**||2,105,510||1,687,181|
|**Cash and cash equivalents at 31 December**||2,938,337||2,105,510|
|||||__________|
|**Reconciliation of net movements in funds to**|||||
|**net cash flow from opertating activities**|||||
|**Net movements in funds for the year ended**|||||
|**31 December**||422,987||1,427,296|
|**Adjustments for:**|||||
|Depreciation charges||29,269||41,681|
|Dividends, interest and rent from investments||(159,601)||(178,786)|
|Decrease in debtors||(101,942)||107,259|
|Increase in creditors||612,512||251,787|
|Decrease in pension liability||(330,000)||(1,407,675)|
|||__________||__________|
|**Net cash provided by/(used in) operating**|||||
|**activities**||473,226||241,562|
|**Analysis of cash and cash equivalents**|||||
|Cash in hand||1,167,138||1,039,932|
|Deposits (less than 3 months)||1,771,199||1,065,578|
|||2,938,337||2,105,510|
Page 28
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
**NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## **1 PRINCIPAL ACCOUNTING POLICIES**
The financial statements have been prepared under the historical cost convention, with the exception of freehold properties and fixed asset investments. The majority of freehold properties are shown at their 1995 valuation, based on a desk-top study carried out by a Chartered Surveyor working for Black Horse Agencies. Property additions since 1995 are shown at cost or at a lower fair value where the trustees consider that this is appropriate. Fixed asset investments are included at their market value at the balance sheet date. The financial statements have been prepared in accordance with the Statement of Recommended Practice for Charities (SORP 2015), the Companies Act 2006 and applicable accounting standards (FRS 102).
NDBF meets the definition of a public benefit entity under FRS 102.
The financial statements are prepared in sterling which is the functional currency of the charity and are rounded to the nearest £1.
The principal accounting policies and estimation techniques are as follows.
- **a) Income**
All income is included in the Statement of Financial Activities (SOFA) when the NDBF is legally entitled to them as income or capital respectively, ultimate receipt is probable and the amount to be recognised can be quantified with reasonable accuracy.
- i. **Parish Share** is recognised as income of the year in respect of which it is receivable.
- ii. **Rent** receivable is recognised as income in the period with respect to which it relates.
iii. **Interest and dividends** are recognised as income when receivable.
- iv. **Grants** received which are subject to pre-conditions for entitlement specified by the donor which have not been met at the year-end are included in deferred income within creditors to be carried forward to the following year.
- v. **Parochial fees** are recognised as income of the year to which they relate.
- vi. **Donations** other than grants are recognised when receivable **.**
- vii. **Gains on disposal of fixed assets for the NDBF’s own use** (i.e. non-investment assets) are accounted for as other incoming resources. Losses on disposal of such assets are accounted for as other expenditure.
- viii. **Stipends fund income.** The Stipends Fund Capital account is governed by the Diocesan Stipends’ Fund Measure 1953, as amended, and the use of the income is restricted for clergy stipends. However, the income is fully expended within the year of receipt and the legal restrictions, therefore, are satisfied. It is on this basis that the income and the (normally much larger) related expenditure are both included in the unrestricted column of the Statement of Financial Activities for the sake of greater clarity and simplicity in financial reporting.
## **b) Expenditure**
Expenditure is included on the accruals basis and has been classified under headings that aggregate all costs related to the Statement of Financial Activity category.
- i. **Costs of raising funds** are constrained to costs relating to the temporary renting out of parsonages and investment management costs of glebe and any other investment properties.
- ii. **Charitable expenditure** is analysed between contributions to the Archbishops’ Council, expenditure on resourcing mission and ministry in the parishes of the Diocese, and expenditure which supports the two
Page 29
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
charitable companies working alongside NDBF at Church House, i.e. the Newcastle Diocesan Education Board and Lindisfarne Regional Training Partnership.
- iii. **Grants payable** are charged in the year when the offer is conveyed to the recipient except in those cases where the offer is conditional on the recipient satisfying performance or other discretionary requirements to the satisfaction of the NDBF, such grants being recognised as expenditure when the conditions attaching are fulfilled. Grants offered subject to such conditions which have not been met at the year-end are noted as a commitment, but not accrued as expenditure.
- iv. **Support costs** consist of central management, administration and governance costs. The amount spent on raising funds and other activities is considered to be immaterial and all support costs are allocated to the purpose of charitable activities. Costs are allocated wherever possible directly to the activity to which they relate, but where such direct allocation is not possible, the remainder is allocated on an approximate staff time basis.
- v. **Pension contributions** . The NDBF's staff are members of the Church Workers Pension Fund and Clergy are members of the Church of England Funded Pensions Scheme (see note 23). The pension costs charged as resources expended represent the NDBF's contributions payable in respect of the accounting period, in accordance with FRS 102. Deficit funding for the pension schemes to which NDBF participates is accrued at current value within creditors.
## **c) Going concern**
The trustees have considered the potential financial effects of the current COVID-19 situation on the availability of reserves and cash and upon the going concern basis of preparation of these financial statements. The risks presented by COVID-19 have been considered and include increased liquidity, credit and reputational risk. The Charity has business continuity plans in place that support the continued operation of business activity and has resources that can withstand temporary disruption. At this stage there is no perceived material risk to the Charity’s viability resulting from the COVID-19 outbreak. Further detail is given in the Trustees report on pages 13 & 14.
## **d) Tangible fixed assets and depreciation**
## _Freehold properties_
Depreciation is not routinely provided on buildings except in those few cases where the trustees feel that the net book value is higher than the fair value. In such cases annual depreciation is charged, on a straight line basis, at an amount equivalent to 2% of the excess of net book value over fair value. For the vast majority of properties depreciation is not regarded as a material amount due to the very long expected remaining useful economic life in each case, and because the expected residual value is not materially less than the carrying value. The NDBF has a policy of regular structural inspection, repair and maintenance, which in the case of residential properties is in accordance with the Repair of Benefices Buildings Measure 1972 and properties are therefore unlikely to deteriorate or suffer from obsolescence. In addition, disposals of properties occur well before the end of their economic lives and disposal proceeds are usually not less than their carrying value. The trustees perform annual impairment reviews in accordance with the requirements of FRS 102 to ensure that the carrying value is not more than the recoverable amount.
## _Investment properties_
Glebe properties which are held for investment purposes and rented out have been included at their fair value.
Page 30
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
**NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## _Parsonage houses_
The NDBF has followed the requirements of FRS 102, in its accounting treatment for benefice houses (parsonages). FRS 102 requires the accounting treatment to follow the substance of arrangements rather than their strict legal form. The NDBF is formally responsible for the maintenance and repair of such properties and has some jurisdiction over their future use or potential sale if not required as a benefice house, but in the meantime legal title and the right to beneficial occupation is vested in the incumbent. The trustees therefore consider the most suitable accounting policy is to capitalise such properties as expendable endowment assets and to capitalise as endowed assets at cost. Parsonage houses are not routinely revalued. Depreciation is not routinely provided on Parsonage houses except in those few cases where the trustees feel that the net book value is higher than the fair value. In such cases annual depreciation is charged, on a straight line basis, at an amount equivalent to 2% of the excess of net book value over fair value.
## **e) Other tangible fixed assets**
All capital expenditure over £1,000 on computers and other office equipment is capitalised and depreciated as follows. Depreciation is provided in order to write off the cost (less any ultimate disposal proceeds at prices ruling at the time of the asset’s acquisition) of other fixed assets over their currently expected useful economic lives at the following initial rates:-
Computers and printers 25% per annum straight line basis Equipment, fixtures and fittings 10-25% per annum straight line basis
## **f) Fixed asset investments**
Listed investments, which have been classified as fixed assets investments, are measured initially and subsequently at fair value. The statement of financial activities includes the net gains and losses arising on revaluations and disposals throughout the year.
## **g) Debtors**
Trade and other debtors are recognised at the settlement amount. Prepayments are valued at the amount prepaid net of any trade discounts due.
## **h) Cash at bank and in hand**
Cash at bank and in hand includes cash and highly liquid investments with a short maturity of three months or less from the date of acquisition or opening of the deposit or similar account.
## **i) Liabilities and provisions**
Liabilities are recognised when there is an obligation at the balance sheet date as a result of a past event, it is probable that a transfer of economic benefit will be required in settlement, and the amount of the settlement can be estimated reliably. Liabilities are recognised at the amount that the company anticipates it will pay to settle the debt or the amount it has received as advanced payments for the goods or services it must provide. Provisions are measured at the best estimate of the amounts required to settle the obligation. When the effect of the time value of money is material, the provision is based on the present value of those amounts, discounted at the pre-tax discount rate that reflects the risks specific to the liability. The unwinding of the discount is recognised within interest payable and similar charges.
## **j) Financial instruments**
The company only enters into financial instruments transactions that result in the recognition of basic debt financial assets and liabilities like trade and other accounts receivable and payable, cash and bank balances and loans to or from related parties. All such instruments are due within one year, and are measured, initially and subsequently at the transaction price.
At the end of each reporting period debt financial assets are assessed for impairment, and their carrying value reduced if necessary. Any impairment charge is recognised in the statement of financial activities.
Page 31
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
**NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## **k) Fund balances**
Fund Balances are split between unrestricted (general and designated), restricted and endowment funds.
- **Unrestricted funds** are the NDBF’s corporate funds and are freely available for any purpose within the charitable company’s objects, at the discretion of the NDBF. There are two types of unrestricted funds:
- **General funds** which the NDBF intends to use for the general purposes of the NDBF; and
- **Designated funds** set aside out of unrestricted funds by the NDBF for a purpose specified by the trustees.
- **Restricted funds** are income funds subject to conditions imposed by the donor as specific terms of trust, or else by legal measure.
- **Endowment funds** are those held on trust to be retained for the benefit of the charitable company as a capital fund. In the case of the endowment funds administered by the NDBF (Stipends Fund Capital, Parsonage Houses Fund but not the St Aidan’s Fund), there are discretionary powers to convert capital into income and, as a result, these funds are classified as expendable endowment. Endowment funds where there is no provision for expenditure of capital are classified as permanent endowment.
## **l) Estimates and judgments**
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
In preparing these financial statements the trustees do not consider there were any significant areas of judgment that were required in applying the company’s policies as set out above.
Estimates within these financial statements include depreciation and asset valuations (for example agricultural land). None of the estimates made in the preparation of these financial statements are considered to carry significant estimation uncertainty, nor to bear significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
Page 32
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
**NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## **2 DONATIONS**
## **Parish Contributions**
|**Parish share**
Current year's allocation
Shortfall
Parish contributions
Arrears for previous years
**Archbishops' Council**
Lowest Income Communities funding
Transitional funding
**Other donations**
All Churches Trust grant
Lord Crewe's Charity grant
Grants received for Inspired North East Project
Grants received for Rural Churches for Everyone Project
Church Commissioners - restructure funding
Church Commissioners - strategic capacity funding
Church Commissioners - strategic development funding
Newcastle Diocesan Society
Jesmond Holy Trinity
Durham Diocesan Board of Finance
Grants received from Government
Other|**Unrestricted**
**Funds**
**£**
4,496,184
(457,573)|
**Restricted**
**Funds**
**£**
-
-|
**Endowment**
**Funds**
**£**
-
-|
**Total Funds**
**2020**
**£**
**4,496,184**
**(457,573)**|
Total Funds
2019
£
4,807,066
(424,040)|
|---|---|---|---|---|---|
||4,038,611
16,762|-
-|-
-|**4,038,611**
**16,762**|4,383,026
25,002|
||**4,055,373**|**-**|**-**|**4,055,373**|4,408,028|
||**Unrestricted**
**Funds**
**£**
887,679
397,392|
**Restricted**
**Funds**
**£**
-
-|
**Endowment**
**Funds**
**£**
-
-|90.2%
**Total Funds**
**2020**
**£**
**887,679**
**397,392**|91.7%
Total Funds
2019
£
868,900
466,340|
||**1,285,071**|**-**|**-**|**1,285,071**|1,335,240|
||**Unrestricted**
**Funds**
**£**
120,500
74,622
-
-
81,252
82,532
-
110,200
3,555
25,934
11,122
91,743|
**Restricted**
**Funds**
**£**
-
-
-
47,789
140,355
-
241,924
-
-
-
4,021
70,642|
**Endowment**
**Funds**
**£**
-
-
-
-
-
-
-
-
-
-
-
-|
**Total Funds**
**2020**
**£**
120,500
74,622
-
47,789
221,607
82,532
241,924
110,200
3,555
25,934
15,143
162,385|
Total Funds
2019
£
120,250
100,071
81,466
7,943
243,221
31,987
145,812
31,406
42,412
-
-
133,255|
||**601,460**|**504,731 **|**-**|**1,106,191**|**937,823**|
Page 33
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
For other donations in 2019 £141,036 from Church Commissioners and £124,050 from other funders were restricted (total £265,086) with the balance of £672,737 being unrestricted.
## **3 CHARITABLE ACTIVITIES**
|**CHARITABLE ACTIVITIES**||||||
|---|---|---|---|---|---|
|Statutory fees
Chaplaincy income
Guaranteed annuities & stipend grants|**Unrestricted**
**Funds**
**£**
322,068
86,432
-|
**Restricted**
**Funds**
**£**
-
-
-|
**Endowment**
**Funds**
**£**
-
-
-|
**Total Funds**
**2020**
**£**
**322,068**
**86,432**
**-**|
Total Funds
2019
£
302,451
64,172
1,444|
||**408,500**|**-**|**-**|**408,500**|368,067|
In 2019 all income related to unrestricted funds.
## **4 OTHER TRADING ACTIVITIES**
|**OTHER TRADING ACTIVITIES**|||||
|---|---|---|---|---|
|Rental of houses
Contributions for use of Church House
Other contributions|**Unrestricted**
**Funds**
**£**
381,388
25,927
9,023|
**Restricted**
**Funds**
**Endowment**
**Funds**
**£**
**£**
- -
- -
- -
**- -**|
**Total Funds**
**2020**
**£**
**381,388**
**25,927**
**9,023**
|
Total Funds
2019
£
284,474
22,193
7,209|
||**416,338**||**416,338**|313,876|
In 2019 all income related to unrestricted funds.
## **5 INVESTMENT INCOME**
|**INVESTMENT INCOME**||||||
|---|---|---|---|---|---|
|Income from UK listed investments
Bank interest receivable
Rents from Glebe
Other rental income|**Unrestricted**
**Funds**
**£**
123,236
5,442
15,000
-|
**Restricted**
**Funds**
**£**
459
2,070
13,394
-|
**Endowment**
**Funds**
**£**
-
-
-
-|
**Total Funds**
**2020**
**£**
**123,695**
**7,512**
**28,394**
**-**|
Total Funds
2019
£
124,451
10,607
37,908
5,820|
||**143,678**|**15,923**|**-**|**159,601**|178,786|
In 2019 £905 from listed investments, £3,636 from bank interest receivable and £15,808 rents from glebe were restricted (total £20,349) with the balance of £158,437 being unrestricted.
Page 34
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## **6 FUNDRAISING COSTS**
|**Unrestricted**
**Funds**
**Restricted**
**Funds**
**Endowment**
**Funds**
**£**
**£**
**£**
Glebe costs
1,500 - -
Parsonage rental costs
60,620 - -
**62,120 - -**|
**Total Funds**
**2020**
Total Funds
2019
**£**
£
**1,500**80,490
**60,620**62,700
**62,120**143,190|
|---|---|
In 2019 all income related to unrestricted funds.
Page 35
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## **7 CHARITABLE ACTIVITIES**
|**Contributions to Archbishops' Council**
Training for ministry
National church responsibilities
Grants and provisions
Mission agency pension contributions
Retired clergy housing costs (CHARM)
Pooling of ordinand candidates' costs
**Resourcing Ministry and Mission**
Parish Ministry
Stipends and national insurance
Pension contributions
Housing costs
Removal, resettlement and grants
Other expenses
Support for parish ministry
**Grants to linked charitable companies**
Newcastle Diocesan Education Board|**Unrestricted**
**Funds**
**£**
171,937
129,269
14,448
6,449
61,731
76,213|
**Restricted**
**Funds**
**£**
-
-
-
-
-
-|
**Endowment**
**Funds**
**£**
-
-
-
-
-
-|
**Total Funds**
**2020**
**£**
**171,937**
**129,269**
**14,448**
**6,449**
**61,731**
**76,213**|
Total Funds
2019
£
171,938
136,714
14,579
1,811
58,791
14,303|
|---|---|---|---|---|---|
||**460,047**|**-**|**-**|**460,047**|398,136|
||2,809,433
679,453
573,208
89,984
70,536
4,222,614
1,721,923|28,107
9,834
2,058
-
-|-
-
12,294
-
-|2,837,540
689,287
587,560
89,984
70,536|2,811,625
(307,701)
697,571
105,407
131,881|
|||39,999
407,840|12,294
-|4,274,907
2,129,763|3,438,783
2,034,415|
||**5,944,537**
|**447,839**
|**12,294**|**6,404,670**|5,473,198|
||81,250|-|-|81,250|100,000|
||**81,250**|**-**|**-**|**81,250**|100,000|
|||||||
||**6,485,834**|**447,839**|**12,294**|**6,945,967**|**5,971,334**|
£149,155 of 2019 expenditure related to restricted and £5,822,179 to unrestricted funds.
Page 36
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## **8 ANALYSIS OF EXPENDITURE INCLUDING ALLOCATION OF SUPPORT COSTS**
|Raising funds
Charitable activities:
Contributions to Archbishops' Council
Resourcing parish ministry
Grant to Newcastle Diocesan Education
Board (a related charitable company)|**Activities**
**Undertaken**
**Directly**
**£**
62,120
-
5,463,195
-|
**Grant**
**Funding of**
**Activities **
**£**
-
460,047
151,739
81,250|
**Support Costs**
**Total costs**
**2020**
**£**
**£**
-**62,120**
-**460,047**
789,736**6,404,669**
-**81,250**
**789,736 7,008,086**|
Total costs
2019
£
143,190
398,136
5,473,198
100,000|
|---|---|---|---|---|
||**5,525,315**|**693,036**||6,114,524|
## **9 ANALYSIS OF SUPPORT COSTS**
|**ANALYSIS OF SUPPORT COSTS**|||||
|---|---|---|---|---|
|**Unrestricted**
**Funds**
**£**
Central administration
670,107
Governance
External audit
19,630
Registry and other legal costs
90,724
Synodical costs
9,275
**789,736**|
**Restricted**
**Funds**
**£**
-
-
-
-|
**Endowment**
**Funds**
**£**
-
-
-
-|
**Total costs**
**2020**
**£**
**670,107**
**19,630**
**90,724**
**9,275**|
Total costs
2019
£
652,899
19,890
87,804
10,040|
||**-**|**-**|**789,736**|770,633|
Page 37
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## **10 ANALYSIS OF GRANTS MADE**
|_From unrestricted funds to support national_
_Church responsibilities_
Contributions to Archbishops' Council
_From unrestricted funds_
Support for ordinands
Newcastle Cathedral
Shepherds Dene Retreat House
Alnmouth Friary
North East Churches Acting Together
Northumbrian Industrial Mission
Together Newcastle
Continuing Ministerial Development grants
Ministry Experience Scheme grants
Other grants
_From restricted funds_
Support for ordinands
Diocesan Pastoral fund
Partners fund
_From unrestricted funds to support the_
_Diocesan Education Board_
Newcastle Diocesan Education Board
Total Grants Made|**Number**
6|**Individuals**
**£**
-|**Institutions**
**£**
460,047|**Total costs**
**2020**
**£**
460,047|
|---|---|---|---|---|
||18
1
1
1
1
1
1
39
4
2|28,198
-
-
-
-
-
-
8,476
13,200
-|18,800
3,250
4,063
1,097
3,656
1,056
15,000
3,574
-
260|46,998
3,250
4,063
1,097
3,656
1,056
15,000
12,050
13,200
260|
||69|49,874|50,756|100,630|
||18
3
1|16,085
-
-|21,824
9,000
4,200|37,909
9,000
4,200|
||22|16,085|35,024|51,109|
||1|-|81,250|81,250|
||1|-|81,250|81,250|
||||||
||98|65,959|627,077|693,036|
Page 38
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
|**Grant funding of activities in previous year**
**From unrestricted funds**
Contributions to Archbishops' Council
Contributions to Diocesan-based charities
Newcastle Diocesan Education Board
Other grants
**From restricted funds**
Other grants|2019
No. of grants
6
1
146
1|2019
£
398,136
100,000
189,243
6,600|
|---|---|---|
||154|693,979|
Page 39
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## **11 STAFF COSTS**
|**STAFF COSTS**|||||
|---|---|---|---|---|
|Employee costs during the year were as follows:
Wages and salaries
National insurance contributions
Pension costs
The average number of persons employed during the year:
Administration and financial management
Supporting ministers & chaplains
Property
Safeguarding
Resource Church
The average number of persons employed during the year based on
full-time equivalents
Administration and financial management
Supporting ministers and chaplains
Property
Safeguarding
Resource Church
The number of staff whose emoluments (including benefits in kind but
excluding pension contributions) amounted to more than £60,000 were as
follows:
£60,000 - £70,000|
|2020
£
1,050,700
90,921
95,307||2019
£
913,430
89,261
123,039|
|||1,236,928||1,125,730|
|||Number
15
20
2
3
7||Number
16
15
2
2
3|
|||47||38|
|||Number
10.3
14.9
2.0
1.6
4.4||Number
11.0
11.2
2.0
1.4
1.6|
|||33.2||27.2|
|||2020
number
1||2019
number
1|
Pension payments of £6,415 (2019:£6,384) were made for this employee.
In 2020 staff working for the Resource Church and were employed by the Newcastle Diocesan Board of Finance in lieu of the Resource Church achieving its own legal entity status.
Page 40
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
**NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
||2020|2019|
|---|---|---|
||£|£|
|Stipends|2,560,996|2,596,071|
|National insurance contributions|217,287|215,554|
|Pension costs - current year|691,758|(307,701)|
||__________|__________|
||3,470,041|2,503,924|
||__________|__________|
## **Remuneration of key management personnel**
Key management personnel are deemed to be those having authority and responsibility, delegated to them by the trustees, for planning, directing and controlling the activities of the Diocese. During 2020 they were:
Diocesan Secretary and Company Secretary Shane Waddle MSc, FCIPP Canon Director of Ministry & Mission Rob Saner-Haigh (from April 2020) Property Manager Ian D Beswick MSc, MRICS Finance Manager Philip D Ambrose BA, CPFA
Remuneration, pensions and expenses for these employees amounted to £230,389 (2019: £261,433).
## **Trustees’ emoluments**
No trustee received any remuneration for services as trustee. The trustees received travelling and out of pocket expenses totalling £4,528 and this sum was paid out to 6 trustees in respect of General Synod duties, duties as Archdeacon or Area Dean, and other duties as trustees. (In 2019 £20,519 was paid out to 4 trustees).
The following table gives details of the trustees who were in receipt of a stipend and/or housing provided by the NDBF during the year:
||**Stipend**
|**Housing**|
|---|---|---|
|The Right Revd MSA Tanner|No|Yes|
|The Venerable PJA Robinson|Yes|Yes|
|The Venerable M Wroe|Yes|Yes|
|The Venerable DR CA Sourbut Groves|Yes|Yes|
|The Revd Canon PM Scott|Yes|Yes|
|The Revd L Chapman|Yes|No|
|The Revd PD Dobson|Yes|Yes|
|The Revd Canon B Hurst|Yes|Yes|
The NDBF is responsible for funding, via the Church Commissioners, the stipends of licensed stipendiary clergy in the Diocese, other than bishops and cathedral staff. The NDBF is also responsible for the provision of housing for stipendiary clergy in the Diocese including the assistant bishop but excluding the diocesan bishop and cathedral staff.
The NDBF paid an average of 99.4 (2019: 103.7) stipendiary clergy working in the Diocese within stipendiary ministry, and the costs were as follows:
The stipends of the Diocesan Bishop and Assistant Bishop are funded by the Church Commissioners and are in the range of £37,670 - £46,180 (2019: range £36,930 - £45,270). The annual rate of stipend funded by the NDBF paid to Archdeacons in 2020 was in the range £35,400 - £37,674 (2019: range £35,400 - £37,674) and other clergy who were trustees were paid in the range £25,860 - £28,444 (2019: range £25,860 - £28,444).
Page 41
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## **12 TANGIBLE FIXED ASSETS**
|**At cost or valuation**
At 1 January 2020
Additions
**At 31 December 2020**
**Accumulated depreciation**
At 1 January 2020
Charge for the year
**At 31 December 2020**
**Net book value at 31 December 2020**
Net book value at 31 December 2019|**Property**
**Office**
**Equipment**
**£**
**£**
5,100,705 128,139
- -
**5,100,705 128,139**
600,443 108,270
14,717 6,005
**615,160 114,275**
**4,485,545 13,864**
4,500,262 19,869
**Unrestricted funds**|**Property**
**Office**
**Equipment**
**£**
**£**
5,100,705 128,139
- -
**5,100,705 128,139**
600,443 108,270
14,717 6,005
**615,160 114,275**
**4,485,545 13,864**
4,500,262 19,869
**Unrestricted funds**|
**Parsonages**
**Glebe**
**Property**
**£**
**£**
15,185,888 1,720,193
- -
**15,185,888 1,720,193**
2,459,885 306,483
8,547 -
**2,468,432 306,483**
**12,717,455 1,413,710**
12,726,003 1,413,710
**Endowment funds**|
**Parsonages**
**Glebe**
**Property**
**£**
**£**
15,185,888 1,720,193
- -
**15,185,888 1,720,193**
2,459,885 306,483
8,547 -
**2,468,432 306,483**
**12,717,455 1,413,710**
12,726,003 1,413,710
**Endowment funds**|
**TOTAL**
**£**
**22,134,925**
**-**|
|---|---|---|---|---|---|
||**5,100,705**|**128,139**|**15,185,888**||**22,134,925**|
||600,443
14,717|108,270
6,005|2,459,885
8,547|306,483
-|**3,475,081**
**29,269**|
||**615,160**|**114,275**|**2,468,432**|**306,483**|**3,504,350**|
||**4,485,545**|**13,864**|**12,717,455**
12,726,003|**1,413,710**|**18,630,575**|
||4,500,262|19,869||1,413,710|**18,659,844**|
## **Investments**
## **Properties**
These properties were purchased using either unrestricted reserves, the Pastoral Account or the Stipends Capital and Glebe Fund. Included in this category is £429k (2019:£429k) which is attributable to the Bishop Bilbrough Fund, being part of the cost of the new Church House office accommodation paid for from the proceeds of the former Church House building. The balance of the cost of Church House is held within the Mary Wilkinson Legacy Fund. The other NDBF properties are included in the NDBF Houses Fund, an unrestricted fund.
## **Parsonage houses**
Rectories and vicarages (other than team vicarages) are vested in individual benefices. However the NDBF is responsible for the maintenance and repair of all parsonage houses and carries substantially all the risks of ownership. Following a scheme for pastoral reorganisation the net proceeds of the sale of a parsonage house may be credited to the Diocesan Pastoral Account, which is recognised as an asset of the NDBF.
## **Glebe team vicarages**
Team vicarages are included as glebe but they are not held as investments. The proceeds of any sale must be credited to the Stipends Capital Account.
Page 42
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## **13 FIXED ASSET INVESTMENTS**
|**Within the United Kingdom**
At 1 January 2020
Disposals
Revaluation
**At 31 December 2020**
Cost at 31 December 2020|**Investment**
**property**
**£**
1,538,267
-
-|
**Unlisted**
**investments**
**Listed**
**investments**
**£**
**£**
- 3,281,489
- (197,152)
- 212,076
**- 3,296,413**
- 3,281,489|
**TOTAL**
**£**
**4,819,756**
**(197,152)**
**212,076**
**4,834,680**|
|---|---|---|---|
||**1,538,267**
1,450,042|||
||||
4,731,531|
## **Investment Properties**
An estimate of the value of Glebe land and properties held as investments at the end of the year is £1,538,267. This figure has been provided by the Diocesan Property Manager, Mr I Beswick MRICS.
## **Listed investments**
Listed investments are valued at middle market value at the year-end.
## **14 DEBTORS**
|**Due within one year**
Church Commissioners: sundry debtors
Prepayments
Loans for parish buildings
Other debtors
**Due after one year**
Loans for parish buildings > 1 year|**2020**
**£**
4,065
-
24,000
211,064|2019
£
4,065
2,967
23,735
106,420|
|---|---|---|
||**239,129**|137,187|
||5,000|5,000|
||**5,000**|5,000|
||**244,129**|**142,187**|
Page 43
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## **15 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR**
|Taxation and social security
Other creditors
Accruals and deferred income
Pension liabilities
**Falling due within one year**
Included within accruals and deferred income
is deferred income
Balance at 1 January 2020
Released in the year
Deferred in the year
Carried forward at 31 December 2020|**2020**
2019
**£**
£
40,348 38,417
56,657 7,957
945,966 384,085
127,151 140,675
**1,170,123**571,134
**£**
296,828
(54,180)
643,289
885,937|
|---|---|
## **16 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR**
|Deposit held on glebe property
Pension liabilities
**Falling due after more than one year**|**2020**
**£**
3,714
243,849|2019
£
3,714
560,325|
|---|---|---|
||**247,563**|564,039|
Page 44
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## **17 SUMMARY OF FUND MOVEMENTS**
|**17**
**SUMMARY OF FUND MOVEMENTS**|||||||
|---|---|---|---|---|---|---|
|**Unrestricted Funds**
General Unrestricted Fund
**_Designated Funds:_**
Mary Wilkinson Fund
DBF Houses Fund
Bishop Bilbrough Fund
Mission Development Fund
Strategic Mission Fund
Training (Pooling) Fund
Sanderson Bequest Fund
Building Grants and Loans Fund
Allchurches Grant Fund
Clergy Expenses Fund
Lowest Income Communities Fund
Lord Crewe Fund
**Restricted Funds**
Partners Fund
New Church Building Fund
Diocesan Pastoral Fund
Winchester Project Fund
Archdeacons Fund
Training for Ordinands Fund
Botswana Donations Fund
Church House Wallsend Fund
Resourcing Ministerial Education Fund
Resource Church Fund
Rural Churches for Everyone Fund
**Endowment Funds**
Stipends Capital and Glebe Fund
Parsonages Houses Fund
St Aidan's Fund|**Balance at 1**
**Jan 2020**
**£**
3,540,916
378,563
3,846,994
737,786
22,219
299,491
60,627
2,424
103,597
224,029
10,647
244,760
-|
**Income**
**£**
5,822,558
45
-
-
-
4,579
-
-
437
120,500
-
887,679
74,622|**Expenditure**
**£**
(5,504,097)
-
(14,717)
-
-
-
-
-
132
(120,500)
-
(834,150)
(74,622)|**Transfers**
**£**
-
-
-
-
-
-
-
-
-
-
-
-
-|**Gains and**
**losses**
**£**
97,176
-
-
27,498
-
10,520
-
-
-
-
-
-
-|
**Balance at 31**
**Dec 2020**
**£**
**3,956,553**
**378,608**
**3,832,277**
**765,284**
**22,219**
**314,590**
**60,627**
**2,424**
**104,166**
**224,029**
**10,647**
**298,289**
**-**|
||**9,472,053**|**6,910,419**|**(6,547,954) **|**-**|**135,193**|**9,969,713**|
||83,532
149,333
1,210,676
8,951
55,912
122,543
9,116
5,999
11,562
75,944
-|(683)
541
62
-
689
-
125
13,394
140,355
314,361
51,810|(4,200)
-
(11,191)
-
-
-
-
(2,666)
(114,174)
(263,798)
(51,810)|-
-
-
-
-
-
-
-
-
-
-|-
-
-
-
-
-
-
-
-
-
-|**78,649**
**149,874**
**1,199,547**
**8,951**
**56,601**
**122,543**
**9,241**
**16,727**
**37,743**
**126,507**
**-**|
||**1,733,568**|**520,655**|**(447,839) **|**-**|**-**|**1,806,383**|
||3,823,127
9,498,190
65,186|-
-
-|(3,737)
(8,557)
-|-
-
-|75,247
-
4,483|**3,894,637**
**9,489,633**
**69,669**|
||**13,386,503**|**-**|**(12,294) **|**-**|**79,730**|**13,453,939**|
||**24,592,125**|**7,431,074**|**(7,008,087) **|**-**|**214,924**|**25,230,035**|
Page 45
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## **18 SUMMARY OF ASSETS BY FUND**
|**18**
**SUMMARY OF ASSETS BY FUND**||||||
|---|---|---|---|---|---|
|**Unrestricted Income Funds:**
General Unresticted Fund
**Designated Funds**
Mary Wilkinson Fund
DBF Houses Fund
Bishop Bilbrough Fund
Mission Development Fund
Strategic Mission Fund
Training (Pooling) Fund
Sanderson Bequest Fund
Building Grants and Loans Fund
The Allchurches Grant Fund
Clergy Expenses Fund
Lowest Income Communities Fund
Lord Crewe Fund
**Restricted Income Funds:**
Partners Fund
New Church Building Fund
Diocesan Pastoral Fund
Winchester Project Fund
Archdeacons Fund
Training for Ordinands Fund
Botswana Donations Fund
The Church House Wallsend Fund
Resourcing Ministerial Education Fund
Resource Church Fund
Rural Churches for Everyone Fund
**Endowment Funds:**
Stipends Capital and Glebe Fund
Parsonages Houses Fund
St Aidan's Fund
**Total Funds**|**Fixed assets**
**Tangible**
**£**
13,864
-
4,485,545
-
-
-
-
-
-
-
-
-
-|**Fixed assets**
**Investments**
**£**
1,466,403
-
-
427,370
-
163,494
-
-
-
-
-
-
-|**Current**
**assets**
**£**
2,480,000
378,608
(653,268)
337,914
22,219
151,096
60,627
2,424
104,166
224,029
10,647
298,289
-|**Long term**
**liabilities**
**£**
(3,714)
-
-
-
-
-
-
-
-
-
-
-
-|**Net assets**
**£**
**3,956,553**
**378,608**
**3,832,277**
**765,284**
**22,219**
**314,590**
**60,627**
**2,424**
**104,166**
**224,029**
**10,647**
**298,289**
**-**|
||**4,499,409**|**2,057,267**|**3,416,751**|**(3,714) **|**9,969,713**|
||-
-
-
-
-
-
-
-
-
-
-|-
-
-
-
-
-
-
-
-
-
-
**-**|78,649
149,874
1,199,547
8,951
56,601
122,543
9,241
16,727
37,743
126,507
-
|-
-
-
-
-
-
-
-
-
-
-
|**78,649**
**149,874**
**1,199,547**
**8,951**
**56,601**
**122,543**
**9,241**
**16,727**
**37,743**
**126,507**
**-**|
||**-**||~~-~~
**1,806,383**|
**-**|**1,806,383**|
||1,413,710
12,717,456
-|2,707,743
-
69,670|(226,816)
(2,983,974)
(1)|-
(243,849)
-|**3,894,637**
**9,489,633**
**69,669**|
||**14,131,166**|**2,777,413**|**(3,210,791) **|**(243,849) **|**13,453,939**|
||**18,630,575**|**4,834,680**|**2,012,344**|**(247,563) **|**25,230,035**|
Page 46
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## **Summary of assets by fund (2019 comparatives)**
|**Unrestricted Income Funds:**
General Unresticted Fund
**Designated Funds**
Mary Wilkinson Fund
DBF Houses Fund
Bishop Bilbrough Fund
Mission Development Fund
Strategic Mission Fund
Training (Pooling) Fund
Sanderson Bequest Fund
Building Grants and Loans Fund
The Allchurches Grant Fund
Clergy Expenses Fund
Lowest Income Communities Fund
**Restricted Income Funds:**
Partners Fund
New Church Building Fund
Diocesan Pastoral Fund
Winchester Project Fund
Archdeacons Fund
Training for Ordinands Fund
Botswana Fund
The Church House Wallsend Fund
Resourcing Ministerial Education Fund
Resource Church Fund
Rural Churches for Everyone Fund
**Endowment Funds:**
Stipends Capital and Glebe Fund
Parsonages Houses Fund
St Aidan's Fund
**Total Funds**|**Fixed assets**
**Tangible**
**£**
19,331
363,286
3,813,462
323,514
-
-
-
-
-
-
-
538|**Fixed assets**
**Investments**
**£**
1,569,225
-
-
399,872
-
152,975
-
-
-
-
-
-|**Current**
**assets**
**£**
1,956,074
15,277
33,532
14,400
22,219
146,516
60,627
2,424
103,597
224,029
10,647
244,222|**Long term**
**liabilities**
**£**
(3,714)
-
-
-
-
-
-
-
-
-
-
-|**Net assets**
**£**
**3,540,916**
**378,563**
**3,846,994**
**737,786**
**22,219**
**299,491**
**60,627**
**2,424**
**103,597**
**224,029**
**10,647**
**244,760**|
|---|---|---|---|---|---|
||**4,520,131**|**2,122,072**|**2,833,564**|**(3,714) **|**9,472,053**|
||-
-
-
-
-
-
-
-
-
-
-|-
-
-
-
-
-
-
-
-
-
-
**-**|83,532
149,333
1,210,676
8,951
55,912
122,543
9,116
5,999
11,562
75,944
-
|-
-
-
-
-
-
-
-
-
-
-|**83,532**
**149,333**
**1,210,676**
**8,951**
**55,912**
**122,543**
**9,116**
**5,999**
**11,562**
**75,944**
**-**|
||**-**||~~-~~
**1,733,568**|**-**|**1,733,568**|
||1,413,710
12,726,003
-|2,632,497
-
65,187|(223,080)
(2,667,488)
(1)|-
(560,325)
-|**3,823,127**
**9,498,190**
**65,186**|
||**14,139,713**|**2,697,684**|**(2,890,569) **|**(560,325) **|**13,386,503**|
||**18,659,844**|**4,819,756**|**1,676,563**|**(564,039) **|**24,592,124**|
Page 47
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
**NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## **19 DESCRIPTION OF FUNDS**
_**The General** or_ _**Unrestricted Fund**_ is available for any purpose within the objects of the Board. It is principally used for payment of stipends, national insurance, pension contributions and housing costs of clergy and licensed lay-workers in parish ministry. It also provides the assets and liquidity for the NDBF to carry out its objectives, including statutory compliance and administration of funds.
_**The Mary Wilkinson Fund**_ is a bequest fund which can be used for general purposes. It has been used to provide part of the costs for buying, modifying and fitting out Church House. In 2015 the fund was used to purchase the Church House caretaker’s bungalow from the Newcastle Diocesan Education Board.
_**The DBF Houses Fund**_ is a designated fund for holding those houses which are neither personages nor team vicarages.
_**The Bishop Bilbrough Fund**_ is a bequest which can be used for general purposes. It has been used to provide part of the costs for buying, modifying and fitting out Church House.
_**The Mission Development Fund**_ represents monies received from the Archbishops’ Council to support planned mission work in the Diocese in future years. Our final receipt into the fund was in 2016 and the fund will be wound down over the next year.
_**The Strategic Mission Fund**_ has been set up as a designated fund so that NDBF can set aside funds to enable it to bid for matched project funding from the National Church.
_**The Training** (Pooling)_ _**Fund**_ has been set up as a designated fund in order to assist the Board’s contribution to training costs which are pooled nationally across all Dioceses. Where the Diocese has higher training costs these are subsidised by Dioceses with lower training costs. The amounts are controlled by a national pooling mechanism.
_**The Sanderson Bequest Fund**_ represents the balance remaining from a sum bequeathed to the NDBF in 2009. This money has been taken out of the Unrestricted Fund and designated to resource lay participation on the Leading Your Church into Growth course (LyCiG). This is part of the Diocesan Strategic Vision for **growing church bringing hope** .
_**The Building Grants and Loans Fund**_ is a designated fund to make loans and grants to parishes to enable them to carry out work on their existing church buildings.
_**The Allchurches Grant Fund**_ is a designated fund which uses the annual grant from the Allchurches Trust to support and resource the NDBF’s ministry and activity expenditure.
_**The Clergy Expenses Fund**_ is a designated fund set up to help ensure that clergy can be reimbursed the level of expenses they are entitled to, particularly those working in more deprived areas.
_**The Lowest Income Communities Fund**_ is a designated fund representing funding from the National Church to help resource ministry in the most deprived areas of the Diocese.
_**The Lord Crewe Fund**_ is a designated fund representing funding from the Lord Crewe Charity to help clergy in need.
_**The Partners Fund**_ is a restricted fund used for making relatively small grants to community-based projects.
_**The New Church Building Fund**_ is a restricted fund used, but not frequently, for making grants and loans to parishes to enable them to acquire new church buildings.
Page 48
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
**NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
_**The Diocesan Pastoral Fund**_ includes the proceeds of redundant churches and parsonages. The purposes for which the account may be used are laid down in Section 78 of the Pastoral Measure 1983.
_**The Winchester Project Fund**_ is a restricted fund which holds the balance remaining from historic grants made to Newcastle Diocese by Winchester Diocese over a number of years.
_**The Archdeacons’ Fund**_ is a restricted fund which is spent at the discretion of the Archdeacons to help clergy who experience financial difficulties.
_**The Training for Ordinands Fund,**_ formerly the McFarlane Bequest Fund, is a restricted fund used to help provide for clergy training. A sum in excess of £100,000 was left to the NDBF in 2015. In 2019 a donation of £25,000 was received from Shirley Chamney.
_**The Botswana Fund**_ receives donations from parishes and individuals which are used to assist projects within our partner Diocese of Botswana.
_**The Wallsend Church House Fund**_ was set up when the Wallsend Church House building was recognised as a glebe asset in the NDBF accounts. At the same time, accumulated rental income was passed across to NDBF from Wallsend Parish. Rental income continues to be paid into the fund and expenditure relating to the Wallsend property is charged against the fund.
_**The Resourcing Ministerial Education Fund**_ receives Block Grants from the Archbishops’ Council for ministerial education training for the ordinands sponsored by the Diocese. The Grants may only be expended on initial ministerial education pathways which have been approved by Ministry Division at accredited Theological Education Institutions (TEIs).
_**The Resource Church Fund**_ was set up to receive donations which are contributions to the Resource Church. Funds will be transferred out to the legal body for the Resource Church once it is established.
_**The Rural Churches for Everyone Fund**_ receives grant funding for a project working with 40 churches across rural Northumberland aiming to develop a collective future of their church buildings, securing sustainable outcomes for heritage and communities.
_**The Stipends Capital and Glebe Fund**_ is governed by the Diocesan Stipends Measure 1953. The income of this endowment fund can only be used for clergy stipends but, since 1993, capital can be applied for improvements to parsonage houses.
_**The Parsonage Houses Fund**_ is an endowment fund. The balance represents the book value of the benefice houses (parsonages) in the Diocese. The fund also holds a cash balance, the proceeds from the sale of a parsonage house, and a liability which relates to the deficit on the clergy pension scheme.
_**The St Aidan’s Fund**_ is an endowment fund. The balance is held as units in the Central Board of Finance Investment Fund. Dividend income is paid into the unrestricted fund and is used for ordination training.
## **20 CONTINGENT LIABILITIES AND POST BALANCE SHEET EVENTS**
There are no contingent liabilities.
There were no post balance sheet events which have an impact on the figures within these financial statements.
Page 49
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
**NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## **21 PENSIONS**
## _**Clergy**_
Newcastle DBF participates in the Church of England Funded Pensions Scheme for stipendiary clergy, a defined benefit pension scheme. This scheme is administered by the Church of England Pensions Board, which holds the assets of the schemes separately from those of the Responsible Bodies.
Each participating Responsible Body in the scheme pays contributions at a common contribution rate applied to pensionable stipends.
The scheme is considered to be a multi-employer scheme as described in Section 28 of FRS 102. This means it is not possible to attribute the Scheme’s assets and liabilities to each specific Responsible Body, and this means contributions are accounted for as if the Scheme were a defined contribution scheme. The pensions costs charged to the SoFA in the year are contributions payable towards benefits and expenses accrued in that year (2020: £691,758, 2019: credit of £307,701), plus the figures highlighted in the table below as being recognised in the SoFA, giving a total charge of £697,758 for 2020 (2019: credit of £269,701).
A valuation of the Scheme is carried out once every three years. The most recent Scheme valuation completed was carried out at as 31 December 2018. The 2018 valuation revealed a deficit of £50m, based on assets of £1,818m and a funding target of £1,868m, assessed using the following assumption
- An average discount rate of 3.2% p.a.;
- RPI inflation of 3.4% p.a. (and pension increases consistent with this);
- Increase in pensionable stipends of 3.4% p.a.;
- Mortality in accordance with 95% of the S3NA_VL tables, with allowance for improvements in mortality rates in line with the CMI2018 extended model with a long term annual rate of improvement of 1.5%, a smoothing parameter” of 7 and an initial addition to mortality improvements of 0.5% pa.
Following the 31 December 2018 valuation, a recovery plan was put in place until 31 December 2022 and the deficit recovery contributions (as a percentage of pensionable stipends) are as set out in the table below.
|% of pensionable stipends|January 2018 to|January 2021 to|
|---|---|---|
||December 2020|December 2022|
|Deficit repair contributions|11.9%|7.1%|
As at 31 December 2018 the deficit recovery contributions under the recovery plan in force at that time were 11.9% of pensionable stipends until December 2025.
As at 31 December 2019 and 31 December 2020 the deficit recovery contributions under the recovery plan in force were as set out in the above table.
Page 50
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
**NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
For senior office holders, pensionable stipends are adjusted in the calculations by a multiple, as set out in the Scheme’s rules.
Section 28.11A of FRS 102 requires agreed deficit recovery payments to be recognised as a liability. The movement in the balance sheet liability over 2019 and over 2020 is set out in the table below.
||2020|2019|
|---|---|---|
|Balance sheet liability at 1 January|678,000|1,939,000|
|Deficit contribution paid|-306,000|-295,000|
|Interest cost (recognised in SoFA)|6,000|38,000|
|Remaining change to the balance sheet liability* (recognised in|-23,000|-1,004,000|
|SoFA)|||
|Balance sheet liability at 31 December|355,000|678,000|
* Comprises change in agreed deficit recovery plan, and change in discount rate and assumptions between year-ends.
This liability represents the present value of the deficit contributions agreed as at the accounting date and has been valued using the following assumptions set by reference to the duration of the deficit recovery payments:
||December 2020|December 2019|December 2018|
|---|---|---|---|
|Discount rate|0.2%|1.1% pa|2.1% pa|
|Price inflation|3.1%|2.8% pa|3.1% pa|
|Increase to total pensionable payroll|1.6%|1.3% pa|1.6% pa|
The legal structure of the scheme is such that if another Responsible Body fails, Newcastle DBF could become responsible for paying a share of that Responsible Body’s pension liabilities.
## _**Lay staff**_
Newcastle DBF (DBS) participates in the Defined Benefits Scheme section of CWPF for lay staff. The Scheme is administered by the Church of England Pensions Board, which holds the assets of the scheme separately from those of the Employer and the other participating employers.
The Church Workers Pension Fund has a section known as the Defined Benefits Scheme, a deferred annuity section known as Pension Builder Classic and a cash balance section known as Pension Builder 2014.
Page 51
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
**NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
## **Defined Benefits Scheme**
The Defined Benefits Scheme (“DBS”) section of the Church Workers Pension Fund provides benefits for lay staff based on final pensionable salaries.
For funding purposes, DBS is divided into sub-pools in respect of each participating employer as well as a further sub-pool, known as the Life Risk Pool. The Life Risk Pool exists to share certain risks between employers, including those relating to mortality and post-retirement investment returns.
The division of the DBS into sub-pools is notional and is for the purpose of calculating ongoing contributions. They do not alter the fact that the assets of the DBS are held as a single trust fund out of which all the benefits are to be provided. From time to time, a notional premium is transferred from employers’ sub-pools to the Life Risk Pool and all pensions and death benefits are paid from the Life Risk Pool.
The scheme is a multi-employer scheme as described in Section 28 of FRS 102. It is not possible to attribute DBS assets and liabilities to specific employers, since each employer, through the Life Risk Section, is exposed to actuarial risks associated with the current and former employees of other entities participating in DBS. This means that contributions are accounted for as if DBS were a defined contribution scheme. The pensions costs charged to the SoFA during the year are contributions payable towards benefits and expenses accrued in that year (2020: £nil, 2019: £nil) plus the figures in relation to the DBS deficit highlighted in the table below as being recognised in the SoFA, giving a total charge of £nil for 2020 (2019: £nil).
If, following an actuarial valuation of the Life Risk Pool, there is a surplus or deficit in the pool, further transfers may be made from the Life Risk Pool to the employers’ sub-pools, or vice versa. The amounts to be transferred (and their allocation between the sub-pools) will be settled by the Church of England Pensions Board on the advice of the Actuary.
A valuation of DBS is carried out once every three years. The most recently finalised was carried out as at 31 December 2016. In this valuation, the Life Risk Section was shown to be in deficit by £2.6m and £2.6m was notionally transferred from the employers’ sub-pools to the Life Risk Section. This increased the Employer contributions that would otherwise have been payable. The overall deficit in DBS was £26.2m.
A valuation as at 31 December 2019 was under way as at 31 December 2020. The contributions agreed at that valuation will be reflected in the figures disclosed in the 2021 accounts.
Following the valuation, the Employer has entered into an agreement with the Church Workers Pension Fund to pay expenses of £3,300 per year. In addition deficit payments of £7,263 per year have been agreed for 5.00 years from 1 April 2018 in respect of the shortfall in the Employer subpool. This obligation has been recognised as a liability within the Employer’s financial statements. Section 28.11A of FRS 102 requires agreed deficit recovery payments to be recognised as a liability. The movement in the provision is set out below:
Page 52
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
**NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
||2020|2019|
|---|---|---|
|Balance sheet liability at 1 January|23,000|29,000|
|Deficit contribution paid|-7,000|-7,000|
|Interest cost (recognised in SoFA)|0|0|
|Remaining change to the balance sheet liability*(recognised in SoFA)|
0|1,000|
|Balance sheet liability at 31 December|16,000|23,000|
* Comprises change in agreed deficit recovery plan and change in discount rate between year-ends.
This liability represents the present value of the deficit contributions agreed as at the accounting date and has been valued using the following assumptions, set by reference to the duration of the deficit recovery payments:
||December 2020|December 2019|December 2018|
|---|---|---|---|
|Discount rate|0.30%|1.20%|1.90%|
The legal structure of the scheme is such that if another employer fails, the employer could become responsible for paying a share of that employer’s pension liabilities.
## **Pension Builder Scheme**
Apart from the DBS referred to above, the NDBF participates in the Pension Builder Scheme (PB Classic) section of CWPF. This is a deferred annuity scheme and it is operated by the CEPB.
PB Classic provides a pension for members for payment from retirement, accumulated from contributions paid and converted into a deferred annuity during employment based on terms set and reviewed by the CEPB from time to time. Bonuses may also be declared, depending upon the investment returns and other factors.
Pension contributions are recorded in an account for each member. This account may have bonuses added by the CEPB before retirement. The bonuses depend on investment experience and other factors. There is no requirement for the CEPB to grant any bonuses. The account, plus any bonuses declared, is payable from members’ Normal Pension Age.
There is no sub-division of assets between employers in each section of the Pension Builder Scheme.
The Scheme is considered to be a multi-employer scheme as described in Section 28 of FRS 102. This is because it is not possible to attribute the Pension Builder Scheme’s assets and liabilities to specific employers and that contributions are accounted for as if the Scheme were a defined contribution scheme. During 2016 staff in this scheme were transferred across to the PB Classic defined
Page 53
**THE NEWCASTLE DIOCESAN BOARD OF FINANCE LIMITED**
## **NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2020**
contributions scheme therefore, the pensions costs charged to the SOFA in the year are contributions payable (2020: £16,000, 2019: £23,000).
## **22 RELATED PARTY TRANSACTIONS**
**----- Start of picture text -----**
Charity Income £ Expenditure £ Debtor £ Creditor £
Newcastle Diocesan Education Board
Common Trustees. NDBF provides - -
10,384 81,250
accommodation and a payroll service for
NDEB. It also pays a grant to NDEB.
Newcastle Diocesan Society
Common Trustees. NDBF receives grant - - -
110,200
income and a contribution towards costs from
NDS.
Lord Crewe's Charity
-
Common Trustee. Receipt of grants from 74,622 74,622 15,378
Charity.
Lindisfarne College of Theology
Common Trustee. NDBF provides
- -
accommodation and a payroll service for 7,269 89,540
LCoT. It also pays fpr services provided by
LCoT.
**----- End of picture text -----**
Page 54