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2021-12-31-accounts

ANNUAL REPORT AND FINANCIAL STATEMENTS

For the year ended 31 December 2021

LEICESTER DIOCESAN BOARD OF FINANCE (THE) Company number - 00227087 Registered charity number – 249100

LEICESTER DIOCESAN BOARD OF FINANCE (THE) (a company limited by guarantee not having share capital)

ANNUAL REPORT

TABLE OF CONTENTS Page
Chair’s report 3 - 4
Legal objects 5
Strategic report:
Strategic aims 6
Overall objectives for the year 6 - 7
Activities and achievements in the year 7 - 8
Future plans 8 - 9
Financial review 9 - 11
Principal risks and uncertainties 12
Structure and governance 13 - 15
Trustees’ responsibilities statement 16
Administrative details 17 - 18
Independent auditor’s report 19 - 21
Statement of Financial Activities 22
Income and Expenditure Account 23
Balance Sheet 24
Cash Flow Statement 25
Notes to the financial statements 26 - 55

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) (a company limited by guarantee not having share capital)

ANNUAL REPORT

CHAIR’S REPORT

2021 was another very challenging year as the coronavirus pandemic continued, many more people contracted the virus and the associated restrictions and lockdowns, though easing, remained in place. Churches remained for the most part closed as the year began, or open with strict limitations on numbers attending and permitted activities. Even though things began to become easier from the summer onwards, many measures to contain the spread of the virus continued throughout the year and many churchgoers were cautious about the resumption of in-person activities. Despite this, our church communities showed great initiative in caring for those most in need, supporting those who were ill and those sadly bereaved. Online worship continued to be offered, even as services in church buildings resumed.

The financial impact of the pandemic on the diocese has again been serious in 2021. Contributions from the parishes to the diocese at £4 million were down on the already-depressed level of £4.157 million in 2020, although this was offset by an increase in the diocesan share of fees for occasional services (weddings and funerals). The ability of parishes to contribute financially in the coming years remains a matter of concern.

Overall, our accounts show a deficit of £953k for the year before gains on investments and fixed asset revaluations, despite a very welcome one-off grant from the national Church of £700k to compensate for lost income in the past two years. In response, the trustees took the difficult decision to carry out a restructuring and downsizing of the central staff team, as well as imposing a temporary freeze on the filling of vacancies for clergy in the parishes.

Following an extensive consultation process lasting over 12 months, in October 2021 Diocesan Synod agreed a new framework for the diocese focussed on ‘Minster Communities’ – designated groups of parishes, fresh expressions of church, and schools brought together collectively for mission, resourced through the leadership of a diverse ministry team comprised of clergy, licensed lay ministers and headteachers. Growing Faith Ministers are part of this diverse ministry team and embody a core aim of the Minster Community framework, namely, to see many more children and young people growing in faith and exercising genuine leadership within the church. Twenty to twenty-five Minster Communities will be created across the Diocese; the number of churches and schools belonging to each one will vary considerably in different contexts. It is intended that this structure will make the most of the opportunities to live out our faith in a way that appeals to all whom we meet, and that ultimately reveals the Kingdom of God amongst us. It will also relieve the pastoral burden on parish clergy and be financially sustainable.

In addition to agreeing the new structure, we are working with Five Strategic Priorities: 1. New communities – establishing as many fresh expressions of church (including church plants) as there are inherited churches - our Strategic Development Funding (SDF) Resourcing Churches programme is one part of this priority.

  1. Intercultural communities – growing the number of UK minority ethnic ministers and intentionally learning from different cultures (our SDF funded Intercultural Worshipping Communities programme is one part of this priority).

  2. Intergenerational communities – ‘growing faith’ among children and young people through links between churches, schools and households.

  3. Eco-communities – achieving eco-diocese status and aiming for net zero emissions by 2030.

  4. Reconciling communities - to ‘live well together’ in church and society across our many divides.

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) (a company limited by guarantee not having share capital)

ANNUAL REPORT

CHAIR’S REPORT (continued)

In the face of many challenges, our people, both lay and ordained, continue to serve the people of Leicester and Leicestershire with faithfulness, commitment, and imagination. I am immensely grateful to all those, paid or volunteering, who offer themselves and their energies to the work of God in our diocese.

David Palmer Chair of Leicester Diocesan Board of Finance 21 May 2022

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) (a company limited by guarantee not having share capital)

ANNUAL REPORT

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 2021.

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:

LEGAL OBJECTS

The Objects of the Diocese of Leicester covers the entire county of Leicestershire.

The Leicester Diocesan Board of Finance (The)’s (“LDBF”) principal object is to promote, assist and advance the work of the Church of England in the Diocese of Leicester by acting as the financial executive of the Leicester Diocesan Synod.

The LDBF has the following statutory responsibilities:

The strategic priorities of the company are established by the Diocesan Synod in communication with Deanery Synods, PCCs, and the Bishop of Leicester (in respect of his responsibility for the provision of the cure of souls). To this end, significant time and effort is committed to communication between and with these bodies, as well as with the church nationally; including an annual series of consultations on specific matters relating to the priorities for the forthcoming year, taking forward the commitments arising from the Diocesan Synod including the Diocesan budget.

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) (a company limited by guarantee not having share capital)

ANNUAL REPORT

STRATEGIC REPORT

Strategic aims

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

In November 2014, the Diocesan Synod unanimously recommitted to the “Shaped by God” vision and strategy for the next 10 years, which seeks to grow the kingdom of God in depth of discipleship, number of disciples of Jesus and the loving service of the world.

The Diocese of Leicester has identified ten ‘marks of mission’ which are in effect a statement of our values. We have articulated these values in the hope that they will shape our culture (the way we do things here) and infuse all our actions:

Overall objectives for the year

In response to the above strategic priorities determined by the Diocesan Synod, several groups, including the Bishop’s Council, Bishop’s Staff and Deanery Synods, have discussed and consulted widely to agree specific objectives for this and subsequent years. These objectives are:

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) (a company limited by guarantee not having share capital)

ANNUAL REPORT

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 LDBF delivers public benefit through community engagement, resourcing education and supporting those in need both spiritually and physically.

Activities and achievements in the year

The Christian Presence

Clergy form a central part in the life of churches in the Leicester Diocese and carry out important roles in communities. As well as engaging in a wide variety of community and church projects, clergy carried out 129 weddings (including marriage blessings), 1,200 funerals and 154 baptisms during 2020 – the figures are only available one year in arrears and are substantially down on 2019 due to the Covid-19 pandemic. Whilst the LDBF is responsible for funding of clergy stipend costs, the national clergy payroll is administered by the Archbishops’ Council, a charity which the LDBF reimburses regularly for the costs of stipendiary clergy deployed in the Diocese. Caring for the 90 trained stipendiary clergy and 33 training curates we had at the end of 2021 in the diocese is a priority of the LDBF and represents by far its largest financial commitment. Although the LDBF does not employ the parish clergy, it is responsible for training them, paying them, and paying into their pension fund. New terms of service were introduced in 2011 in the form of Common Tenure under which all new clergy are appointed (some present clergy chose to retain their freehold). The new package 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 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. LDBF recognises the importance of a safe, secure and well maintained house and strives to continue with this work as well as carrying out programmed refurbishments and improvements, as available money allows.

During all interregnums, the Area Deans worked closely with the churchwardens of the relevant 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 the administrative support for the area deans being funded by LDBF.

Other related parties include :

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) (a company limited by guarantee not having share capital)

ANNUAL REPORT

Transactions with the main categories of related parties are identified in appropriate places throughout the financial statements. Where materiality of the transactions merits more detailed disclosure this is given in note 28 to the financial statements.

Volunteers

LDBF 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 LDBF greatly values the considerable time given by all the committee members across the Diocese in pursuit of the mission of the LDBF.

Future plans

A central priority within Jesus’ ministry was his calling of twelve disciples - “appointed… to be with him and to be sent out” Mark 3:15. He devoted much time to teaching and mentoring them. He sent them out to continue his work of announcing and giving signs of the kingdom.

The Diocese of Leicester has similarly chosen to focus on this priority of discipleship. Shaped by God in our lives and communities we seek the growth of His Kingdom in:

We have therefore asked our parish churches, our fresh expressions of church, our chaplaincies, and our schools to work to these priorities. Each Christian community must discern for themselves how to act on these priorities in their own context. It is not for the Board of Finance or the Bishop to dictate how individuals and communities should interpret these priorities. Rather the work of our central support staff is focused on enabling this discernment in each context and helping each community to channel their resources to these priorities. It is for the Bishop to hold each individual minister and each community to account for how they are doing this (“low control, high accountability”).

The major budget element continues to be directed towards the maintenance of a ministerial presence in every parish and the training and development of lay members of the church to support the work of the clergy.

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) (a company limited by guarantee not having share capital)

ANNUAL REPORT

We are now embarking upon a restructure of the Diocese following a review entitled ‘Shaped by God Together’ which reported to Diocesan Synod during the Autumn of 2021. We have already restructured the central diocesan structure and we are now in consultation with the Parishes regarding the set up of Minster Communities.

The ongoing objective is to be able to adequately resource diocesan needs, as determined by Synod and informed by local and national Church institutions.

Financial review

Financial Performance

Parish Contribution, the money given by parishes to the Diocese to fund its mission and ministry, is the main incoming resource for the Diocese. This decreased by £157k to £4.0m (2020: £4.16m).

The Trustees are grateful to all the parishes for their contributions during the year, and especially to those parishes that make regular contributions by instalments, which is essential in keeping the Diocese’s need to maintain a cash flow reserve to a minimum.

LDBF had a net £2.40m increase in total funds in 2021 (2020: £1.83m decrease). The 2021 result was affected by a greater increase in the value of its Glebe portfolio (£2.02m increase v £1.25m in 2020); an increase of £529k on the St Martins House (“SMH”) asset (£403k decrease in 2020) and greater realised / unrealised gains on investments (circa £1.0m higher).

Overall, the value of fixed asset investments increased; Glebe properties are £33.46m (2020: £31.89m); other investments are £7.91m (2020: £8.74m), resulting in a net increase in investment assets of £748k.

The Trustees had prepared a 2021 budget that had a significant net operational deficit. The impact of the Covid 19 pandemic has meant that there continues to be a budgeted deficit for 2022. These deficits can be offset by asset sales in the short term, via the Total Return release mechanism. We have sufficient relatively liquid assets (such as our stock market investments) to cope in the short term. It is anticipated returning to a breakeven budget by 2027. This is to be achieved by carrying out reviews of the major cost areas and implementing cost cuts over the next three years.

The Trustees are of the opinion that LDBF continues to be a going concern.

Significant Property Transactions

Land and building additions during the year (included in tangible fixed assets and investment properties) totalled £188k (2020: £157k). The majority of funds were spent improving and refurbishing the current stock of LDBF properties.

There were no new properties purchased during 2021.

Our policy continues to be:

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) (a company limited by guarantee not having share capital)

ANNUAL REPORT

Balance sheet position

The Trustees consider that the Balance Sheet together with details in note 21 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 £79.06m (2020: £76.66m) it must be remembered that included in this total are land & buildings, whose value amounted to £73.18m (2020 £72.17m). Additionally, some 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 LDBF.

Fundraising

LDBF raise funds through Parish Contribution (based on offers given by the Parishes) and via an annual Bishop’s Lent appeal. No professional fundraisers are employed in these activities. The Lent appeal is an invitation to the general public to contribute to a stated objective. No direct fundraising to individuals is undertaken.

Reserves policy

Free reserves

Having considered financial risk, liquidity requirement and the timing of cashflows throughout the year, the Trustees’ policy is to hold a minimum balance of readily realisable assets in the general fund equivalent to 3 months budgeted unrestricted expenditure for 2022. At 31 December 2021 the amount required under this policy totalled £2.58m (2020: £2.80m). General unrestricted free reserves as at 31 December 2021 totalled £6.91m (2020: £6.19m).

In the light of recent events, the Trustees plan to review and, if appropriate, amend the reserve policy.

Reserves tied up in fixed assets

The general fund has tangible fixed assets of £18.16m, investments of £1.17m and net liabilities of £12.42m.

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 on an annual basis 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 23. At 31 December 2021 total designated reserves were £0.86m (2020: £0.83m).

Restricted and endowment funds

As set out in note 23, LDBF holds and administers a large number of restricted and endowment funds. As at 31 December 2021 restricted funds totalled £1.96m (2020: £1.75m) and endowment funds totalled £69.32m (2020: £67.88m). Neither fund category is available for the general purposes of the LDBF except for the portion of the endowment fund set aside in the Total Return policy adopted on 1[st] January 2020. The balance of Unapplied Total Return as at 31 December 2021 was £15.15m (2020: £15.90m).

Grant making policy

The Memorandum of Association of the LDBF explicitly permits the LDBF to make grants in pursuance of its objects. The LDBF predominantly achieves this via the Capital and Growth funds. Grants from these funds are disclosed in note 12.

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) (a company limited by guarantee not having share capital)

ANNUAL REPORT

Investment policy

The LDBF is empowered by its Memorandum of Association to invest monies not immediately required for its purposes. In addition, the LDBF acts as trustee of a number of trust funds, and these must be invested in accordance with the related trusts. The LDBF’s policy is to review regularly the assets of each fund for which it is responsible, in relation to the purposes of each fund, and to identify appropriate investment vehicles. Note 21 provides detail of the assets of each fund, together with the related purposes, and note 16 summarises the movements in fixed asset investments during the year.

The Trustees’ investment policy is to hold investments in a balanced mix of a charity property fund with Savills Investment Management Limited (Savills) and equities with two portfolio managers (Brewin Dolphin and Charles Stanley). Both Brewin Dolphin and Charles Stanley have been instructed to apply an ethical screen to the portfolio which precludes direct investment in companies which have more than 10% of their turnover in armaments, pornography or tobacco. The investments held, and their return during the year, are set out in the following table:

Funds at 31
December Proportion Income yield Total Return
2021 of Portfolio in year in year
£'000s
Brewin Dolphin listed investments 1,730 25.7% 1.7% 10.2%
Charles Stanley listed investments 2,068 30.7% 2.3% 19.1%
Savills Investment Management
Property Fund 2,847 42.2% 3.7% 12.6%
CCLA funds 45 0.7% 2.4% 15.6%
Other investments 50 0.7% 0.0% 0.0%
-------------------- --------------------
6,740 100.0%

--------------------- --------------------

The Investment Committee regularly reviews the performance of the funds comparing their performance to benchmarks set out in the investors’ reports and hence make recommendations to the Trustees on future investment opportunities.

Overall, the income yield was 4.38% and the total return was 13.91%. The Investment Committee consider these returns to be satisfactory in the current climate.

LDBF is a member of the Church Investors Group. The Church Investors Group represents institutional investors from many mainstream Church denominations and church related charities. Its aims are to encourage the formulation of investment policies based on Christian ethical principles, to encourage responsible business practice through engagement with company managements and to share information and views on ethical matters related to investment. The CIG has 65 members, predominantly drawn from the UK and Ireland, with combined investment assets of over £25bn.

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) (a company limited by guarantee not having share capital)

ANNUAL REPORT

Principal risks and uncertainties

The Trustees are responsible for the identification, mitigation and or management of risk. To achieve this, a register of all the risks identified is maintained and, alongside it, a management and mitigation strategy formed. This is subject to review by the Trustees on an annual basis with the responsibility for delivery of the mitigation strategies identified by it, being delegated to the Diocesan Chief Executive and the Director of Finance.

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

External risk:

Operational risk:

Governance risk:

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) (a company limited by guarantee not having share capital)

ANNUAL REPORT

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 a See under the care of a Bishop who is charged with the cure of souls of all the people within that geographical area. This charge is shared with priests within benefices and parishes which are sub-divisions of the Diocese.

The National Church has a General Synod comprised of ex-officio and elected representatives from each Diocese and it agrees and lays before Parliament, Measures for the governance of the church’s affairs which, if enacted by Parliament, have the force of statute law. In addition to the General Synod, the Archbishops’ Council has a coordinating role for work authorised by the Synod; the Church Commissioners manage the historic assets of the Church of England; and the Church of England Pension Board administers the pension schemes for clergy and lay workers. Within each Diocese, overall leadership lies with the Diocesan Bishop, who exercises that input as Bishop within the Diocesan Synod. The Diocese is itself divided into 10 deaneries, each with its own Synod. 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 apply for partnership with neighbouring Dioceses.

Organisational structure

The Leicester Diocesan Board of Finance (The) (“LDBF”) is a company limited by guarantee (No. 00227087) and a registered charity (No. 249100) 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 Leicester. It was established in its present form in 1927 and is successor in title to the Leicester Diocesan Trustees.

Governance and policy of Leicester Diocesan Board of Finance (The) (“LDBF”) is the responsibility of the Trustees, who are also members of the company and trustees for the purposes of charity law. The Trustees are The Bishop of Leicester, who is the ex-officio president of LDBF, The Archdeacons of Leicester and Loughborough (also ex-officio) along with eight people elected from and by the members of Diocesan Synod every three years (with the most recent elections held in 2021), up to three members co-opted by the Board of Trustees, and up to two members nominated by the Bishop. The Chair and Vice Chair are nominated by the Bishop and approved by the Diocesan Synod every three years (with the most recent nomination and approval being in 2021). The details of Trustees who served during the year are set out on page 17.

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 Leadership Team. The Synod membership is elected every three years, the last elections having been in 2021. The Synod elects eight of the possible eighteen Trustees of the Diocesan Board of Finance. Whilst the LDBF 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 LDBF 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.

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) (a company limited by guarantee not having share capital)

ANNUAL REPORT

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 Leicester, are set by the Diocesan Synod and the LDBF. The responsibility for ensuring that these priorities and strategies are delivered is delegated to the Diocesan Chief Executive. The company meets 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 LDBF. The Trustees hold up to 6 meetings during the year.

The Bishop’s Council consists of 11 ex-officio members, including the Diocesan Bishop, the Bishop of Loughborough and the two Archdeacons, 3 clergy elected by the house of clergy from among their number and 5 lay persons elected by the members of the house of laity, a Lay Chair and an Area Dean and a maximum of 4 members co-opted by the Bishop’s Council.

The Bishop’s Council and Standing Committee meet to formulate and coordinate policies on mission, ministry and finance by:-

There are a number of Diocesan Synod committees, though not all are sub-committees of LDBF, that influence the operation of LDBF. The following are statutory committees:

Houses Committee ; which is responsible for managing and maintaining LDBF houses, including buying, repairing, maintaining and disposing of LDBF houses (including parsonages and vicarages).

Glebe Committee ; which is responsible for implementing policy and making major decisions concerning the management of Glebe property and investments for the benefit of the Diocesan Stipends Fund.

The Diocesan Mission and Pastoral Committee ; which is responsible for approving pastoral reorganisation, taking account of available clergy numbers, and making use of new patterns of ministry.

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

Leicester Diocesan Board of Patronage ; which is constituted under the provisions of the Patronage (Benefices) Measure 1986, is sole patron or joint patron of a number of benefices.

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) (a company limited by guarantee not having share capital)

ANNUAL REPORT

Closed Church Buildings Committee ; which is responsible for finding appropriate alternative uses for churches that have been declared redundant.

Vacancy in See Committee ; which is responsible for representing the Diocese in the appointment process of a Diocesan Bishop.

The Trustees, who also meet during the year as The Finance Committee , whose members are the Directors of the Company and Trustees of the Charity, are responsible for considering the financial affairs of the Diocese. The Committee reviews the management accounts and budget, the use of assets and investment policies and exercises the authority delegated to it by the Trustees in areas such as grants and loans. It also undertakes the LDBF’s responsibilities under the Parsonages Measure; the Repair of Benefice Building Measure 1972; the PCC (Powers) Measure 1956 and the Incumbents and Churchwardens (Trusts) Measure 1964 (with respect to parochial property); the Endowment and Glebe Measure 1976 (with regard to property assets); and the Pastoral Measure 2011 (with regard to redundant churches). They also advise Bishop’s Council on the financial aspects of strategic matters. They are also supported by:-

The Investment Committee (a sub-committee of the Finance Committee) ; is responsible for determining and overseeing the investment policy of LDBF.

The Audit Committee (a sub-committee of the Finance Committee) ; is responsible for assisting the Trustees in the discharge of their responsibilities for accounting policies, risk management, internal control and financial reporting, including liaison with the auditors.

Trustee recruitment, selection and induction

Trustees are given induction when first appointed. They are also informed before seeking membership and, at all other relevant times, of the role and function of the Committee. Some staff possess the title ‘Director’, but this relates to their function within the organisation and has no legal meaning within the terminology associated with the Companies Act. All Trustees are required to maintain their entry in the record of declarations of interest.

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 Chief Executive and his colleagues for the delivery of the day to day activities of the company. The Diocesan Chief Executive is given specific and general delegated authority to deliver the business of the LDBF in accordance with the policies framed by the Trustees.

Funds held as Custodian Trustee

LDBF is custodian trustee of assets held on permanent trust by virtue of the Parochial Church Councils (Powers) Measure 1956 and the Incumbents and Churchwardens (Trusts) Measure 1964 where the managing trustees are parochial church councils and others. These assets are not aggregated in the financial statements as the LDBF does not control them, and they are segregated from the LDBF’s own assets by means of a separate bank account and accounting system. Further details of financial trust assets, whose market value amounted to £2.717m at 31 December 2021 (2020: £2.495m), are available from the LDBF on request, and are summarised in note 29. Where properties are held as custodian trustee, the deeds are identified as such and held in safe custody by the LDBF’s solicitor, Stone King LLP.

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) (a company limited by guarantee not having share capital)

ANNUAL REPORT

TRUSTEES’ RESPONSIBILITIES STATEMENT

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 of LDBF for the purposes of Company Law) 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, including FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland). 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 Charitable Company and of the income and expenditure of the Charitable Company for that period. In preparing these financial statements the Trustees are required to:

The Trustees are also responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Charitable Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Trustees confirm that:

The Trustees are responsible for the maintenance and integrity of the corporate and financial information included on the Charitable Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements and other information included in Annual Reports, may differ from legislation in other jurisdictions .

APPOINTMENT OF AUDITORS

The re-appointment of Haysmacintyre LLP as auditors to LDBF will be proposed at the Annual General Meeting.

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) (a company limited by guarantee not having share capital)

ANNUAL REPORT

ADMINISTRATIVE DETAILS

Trustees

No Trustee had any beneficial interest in the Charitable Company during 2021. The following Trustees were in post during the year and at the date of this report:

President (ex-officio): The Right Reverend M J Snow – Lord Bishop of Leicester Chair: Mr D J Palmer (appointed 18 March 2021) Mr S G Barney (resigned 25 February 2021) Vice Chair: Mr C J Sheldon (appointed 4 December 2021) Archdeacons (ex officio): The Venerable R V Worsfold - Archdeacon of Leicester The Venerable C Wood - Archdeacon of Loughborough Elected by: Synod House of Clergy The Reverend A R Leighton The Reverend C Taylor The Reverend N Stothers (appointed 1 November 2021) Synod House of Laity Mr D B Beeson Mrs M V Wang Mr C J Sheldon (appointed Vice Chair 4 December 2021) Mrs S A L Newbury (resigned 31 October 2021) Mr J C F Roberson (resigned 31 October 2021) Bishop’s Nominees None – Two vacancies Co-opted by the Board Mr G Brown Mr D J Palmer (appointed Chair 18 March 2021) The Reverend C M Thomson (appointed 19 January 2021, resigned 31 October 2021) Senior staff and advisers Diocesan Chief Executive: Jonathan Kerry Director of Operations and Governance: Andrew Brockbank Director of Finance and Support Services: Paul Stothard (appointed 19 April 2021, resigned 31 December 2021) Jim Pullen (appointed Acting Finance Director 1 January 2021 to 16 April 2021) Registered Office: St Martins House, 7 Peacock Lane, Leicester LE1 5PZ

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) (a company limited by guarantee not having share capital)

ANNUAL REPORT

Bankers : Auditors:
Barclays Bank plc, Haysmacintyre LLP,
Dominus Way, Statutory Auditors,
Meridian Business Park, 10 Queen Street Place,
Leicester LE19 1RP London EC4R 1AG
Solicitors: Latham & Co., Anthony Collins Solicitors LLP,
Charnwood House, 134 Edmund Street,
2&4 Forest Road, Birmingham B3 2ES
Loughborough,
Leicestershire LE11 3NP
Stone King LLP,
Boundary House
91 Charterhouse Street
London EC1M 6HR
Investment Advisers: Savills Investment Management
Charles Stanley & Co. Limited,
Limited,
 25 Luke Street,
33 Margaret Street,
 London EC2A 4AR
London W1G 0JD
Brewin Dolphin,
CCLA Investment Management
1stFloor,
 Limited,
Waterfront House,
 80 Cheapside,
Waterfront Plaza,
 London EC2V 6DZ
35 Station Street,
Nottingham NG32 3DQ
Glebe Agents Andrew Granger & Co LLP, Christie & Co.,
and Valuers: 44 – 46 Forest Road, Suite 402 Bridlesmith House,
Loughborough, 38 Bridlesmith Gate,
Leicestershire LE11 3NP Nottingham NG1 2GQ
Insurance brokers: Cornerstone Business Insurance Limited,
8 Princess Road West,
Leicester LE1 6TP

In approving this Trustees’ Report, the Trustees are also approving the Strategic Report included on pages 6 - 12 within their capacity as company directors.

BY ORDER OF THE TRUSTEES D J Palmer

Chairman

J W Kerry Diocesan Chief Executive

21 May 2022

21 May 2022

Page 18

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF LEICESTER DIOCESAN BOARD OF FINANCE (THE)

Opinion

We have audited the financial statements of Leicester Diocesan Board of Finance (The) (the ‘charitable company’) for the year ended 31 December 2021, which comprise the Statement of Financial Activities, the Income and Expenditure Account, the Balance Sheet, the Cash Flow Statement, and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102; The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the ‘Auditor’s responsibilities for the audit of the financial statements section’ of our report. We are independent of the charitable company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the trustees’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the charitable company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the trustees with respect to going concern are described in the relevant sections of this report.

Other information

The trustees are responsible for the other information. The other information comprises the information included in the Trustee’s Annual Report and Chair’s Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material

Page 19

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF LEICESTER DIOCESAN BOARD OF FINANCE (THE) (Continued)

misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinion on other matters prescribed by the Companies Act 2006

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

Matter on which we are required to report by exception

In the light of the 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’ Annual Report (which incorporates the Strategic Report and the Directors’ Report).

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

Responsibilities of trustees for the financial statements

As explained more fully in the Trustees' Responsibilities Statement set out on page 16, 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 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.

Page 20

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF LEICESTER DIOCESAN BOARD OF FINANCE (THE) (Continued)

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Based on our understanding of the charitable company and the environment in which it operates, we identified that the principal risks of non-compliance with laws and regulations related to Charities Law, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as include the Companies Act 2006 and the Charities Act 2011 and consider other factors such as payroll tax.

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

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

Use of our report

This report is made solely to the charitable company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company’s members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and the charitable company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.

Steven Harper (Senior Statutory Auditor) For and on behalf of Haysmacintyre LLP, Statutory Auditor 21 May 2022

10 Queen Street Place London EC4R 1AG

Page 21

LEICESTER DIOCESAN BOARD OF FINANCE (THE) STATEMENT OF FINANCIAL ACTIVITIES For the year ended 31 December 2021

Total Total
Unrestricted funds Restricted Endowment funds funds
General Designated Funds Funds 2021 2020
Note £’000 £’000 £’000 £’000 £’000 £’000
Income and endowments (Note 30)
from
Donations
Parish contributions 2a 4,000 - - - 4,000 4,157
Archbishops’ Council 2b - - 3,665 - 3,665 2,790
Other donations 2c 5 - 4 - 9 7
Charitable activities 3 424 3 255 - 682 1,086
Other activities 4 482 - - 264 746 468
Investments 5 118 11 117 732 978 958
Other 6 783 - - 40 823 173
-------------------- ------------------ ---------------- --------------- ------------------- --------------------
Total income and
endowments 5,812 14 4,041 1,036 10,903 9,639
-------------------- ------------------ ---------------- --------------- ------------------- --------------------
Expenditure on
Raising funds 7 - - - 190 190 257
Charitable activities 8 10,235 16 316 - 10,567 10,615
Other 9 814 - - 285 1,099 1,232
-------------------- ------------------ ---------------- --------------- ------------------- --------------------
Total expenditure 11,049 16 316 475 11,856 12,104
-------------------- ------------------ ---------------- --------------- ------------------- --------------------
Net (expenditure) / income
before losses and gains on
investments (5,237) (2) 3,725 561 (953) (2,465)
Gain on investments 186 19 - 2,806 3,011 789
-------------------- ------------------ ---------------- --------------- ------------------- --------------------
Net (expenditure) / income (5,051) 17 3,725 3,367 2,058 (1,676)
Transfers between funds 14 5,430 8 (3,515) (1,923) - -
Other recognised gains:
Profit / (loss) on revaluation
of fixed assets 343 - - - 343 (152)
-------------------- ------------------ ---------------- ----------------- ---------------------- --------------------
Net movement in funds 722 25 210 1,444 2,401 (1,828)
--------------------- ------------------ ------------------ ------------------ ----------------------- ----------------------
Total funds brought forward 6,192 834 1,754 67,876 76,656 78,484
-------------------- ------------------ ------------------ ------------------ ----------------------- ----------------------
Total funds carried forward 20 6,914 859 1,964 69,320 79,057 76,656
========= ======== ========= ========= =========== ===========

All activities derive from continuing activities. The notes on pages 26 to 55 form part of the financial statements.

Page 22

LEICESTER DIOCESAN BOARD OF FINANCE (THE) INCOME AND EXPENDITURE ACCOUNT For the year ended 31 December 2021

Total Total
2021 2020
£’000 £’000
Income before losses and gains on investments 9,867 8,841
Expenditure (11,381) (11,847)
------------------- --------------------
Operating deficit for the year (1,514) (3,006)
Net profit / (loss) on investments 205 (255)
Net transfer from endowment funds 1,923 1,733
------------------- --------------------
Net income / (expenditure) for the year 614 (1,528)
Other comprehensive income:
Revaluation of fixed assets 343 (152)
------------------- --------------------
Total comprehensive income / (expenditure) 957 (1,680)
========= =========

The income and expenditure account is derived from the Statement of Financial Activities with movements in endowment funds excluded to comply with company law. All income and expenditure is derived from continuing activities. The notes on pages 26 to 55 form part of the financial statements.

Page 23

LEICESTER DIOCESAN BOARD OF FINANCE (THE) BALANCE SHEET At 31 December 2021

Company Number – 00227087
2021 2020
Note £’000 £’000 £’000 £’000
FIXED ASSETS
Tangible assets 15 38,635 39,374
Investments 16 41,373 40,625
----------------------- -----------------------
80,008 79,999
CURRENT ASSETS
Stock 39 48
Debtors 17 691 897
Cash on deposit, at bank and in hand 1,965 1,057
-------------------- --------------------
2,695 2,002
CREDITORS: amounts falling
due within one year 18 (1,083) (5,119)
-------------------- --------------------
NET CURRENT ASSETS / (LIABILITIES) 1,612 (3,117)
------------------- -------------------
TOTAL ASSETS LESS CURRENT
LIABILITIES 81,620 76,882
CREDITORS: amounts falling due
after more than one year
Pension scheme liabilities 19 (27) (190)
Loans 19 (2,500) -
Other creditors 19 (36) (36)
--------------------- ---------------------
NET ASSETS 79,057 76,656
========== ==========
FUNDS
Endowment funds
(Including investment revaluation reserve of £25,599k
(2020: £23,719k)) 69,320 67,876
Restricted income funds
(Including investment revaluation reserve of £Nil
(2020: £Nil)) 1,964 1,754
Unrestricted income funds:
General funds
(Including revaluation reserve of £625k
(2020: £125k)) 6,914 6,192
Designated funds
(Including investment revaluation reserve of £51k
(2020: £37k)) 859 834
--------------------- --------------------
TOTAL FUNDS 20 79,057 76,656
========== ==========
The Cash Flow Statement and the Notes form part of these financial statements. The financial statements were approved by
the Board of Trustees and authorised for issue on 21 May 2022 and signed on behalf of the Board by:

D J Palmer - Chairman

Page 24

LEICESTER DIOCESAN BOARD OF FINANCE (THE) CASH FLOW STATEMENT For the year ended 31 December 2021

2021 2020
£’000 £’000 £’000
 £’000
Net cash outflow from operating activities (3,518) (2,967)
Cash flows from investing activities
Dividends, interest and rent from investments 978 958
Proceeds from the sale of tangible fixed assets 1,744 534
Proceeds from the sale of fixed asset investments - shares 2,546 2,203
Proceeds from the sale of fixed asset investments - Glebe 505 51
Purchase of tangible fixed assets (271) (178)
Purchase of fixed asset investments (753) (703)
-------------------- --------------------
Net cash provided by investing activities 4,749 2,865
Cash flows from financing activities
Contributions to Clergy and Lay staff pension plans (323) (490)
-------------------- --------------------
Net cash used in financing activities (323) (490)
------------------- -------------------
Change in cash and cash equivalents in the period 908 (592)
Cash and cash equivalents at 1 January (1,443) (851)
------------------- -------------------
Cash and cash equivalents at 31 December (535) (1,443)
========== ==========
Reconciliation of net movements in funds to net cashflow
from operating activities
Net movement in funds for the year ended
31 December 2,401 (1,828)
Adjustments for:
Depreciation charges 269 201
Dividends, interest and rent from investments (978) (958)
Repayment of Parish loans 24 53
Advancement of Parish loans (6) (21)
Profit on sale of fixed assets (660) (88)
(Gain) / Loss on revaluation of fixed assets (343) 153
(Profit) / Loss on sale of fixed asset investments - shares (83) 148
Profit on sale of fixed asset investments - Glebe (35) (2)
Gain on revaluation of fixed asset investments (2,929) (939)
Decrease / (Increase) in stock 9 (5)
Decrease in debtors 183 108
Clergy & Lay pension interest and liability adjustments (99) 37
Decrease in related party loans (627) (219)
(Decrease) / Increase in creditors (644) 393
------------------ ----------------
Net cash used in operating activities (3,518) (2,967)
------------------ -----------------
Analysis of cash and cash equivalents
Cash at bank and in hand 1,801 959
Notice deposits (less than 3 months) 164 98
------------------ ----------------
1,965 1,057
Borrowings
Bank loans due within one year - (2,500)
Bank loans due after more than one year (2,500) -
------------------ -----------------
Total cash and cash equivalents (535) (1,443)
========= ========

Page 25

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2021

1. ACCOUNTING POLICIES

The financial statements have been prepared under the historical cost convention, with the exception of fixed asset investments which, in the main, are included at their market value at the balance sheet date, and certain tangible fixed assets which are included at fair value. The financial statements have been prepared in accordance with the Statement of Recommended Practice for Charities (SORP 2019), the Companies Act 2006 and applicable accounting standards (FRS 102). The financial statements have been prepared in UK sterling currency and rounded to the nearest £1,000.

Going Concern

The Trustees had prepared a 2021 budget that had a significant net operational deficit. There is a reduced budgeted deficit for 2022. These deficits can be offset by asset sales in the short term, via the Total Return release mechanism. We have sufficient assets (such as our Glebe investments) to cope in the short term. It is anticipated returning to a breakeven budget by 2027. Therefore, the Trustees consider that there is no material uncertainty regarding going concern.

The principal accounting policies are as follows;

a) Income

All income is included in the Statement of Financial Activities (SOFA) when the LDBF 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.

vii) Donations, other than grants, are recognised when receivable .

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.

Page 26

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

c) Tangible fixed assets and depreciation

Freehold properties

Depreciation is not provided on the majority of LDBF properties as any provision (annual or cumulative) would not be material due to the very long expected remaining useful economic life in each case, and because their expected residual value is not materially less than their carrying value. LDBF 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. 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 FRS102 to ensure that the carrying value is not more than the recoverable amount.

Depreciation is provided on Cathedral Gardens to write off the asset over a 10 year maintenance period as from April 2016.

St Martins House (SMH) and St Martins Lodge (SML)

St Martins House is valued at open market value at 31 December. SMH is divided into a fixed asset and a fixed asset investment property. 2% straight line annual depreciation on cost is provided on the fixed asset. St Martins Lodge is valued at open market value at 31 December.

Properties subject to value linked loans

There is one property which has been bought with the assistance of a value-linked loan from the Church Commissioners. The property and loan are carried at original cost. However, the Church Commissioners are entitled to be repaid the appropriate proportion of the value of the property when disposed. The appropriate proportion being the proportion of the loan supplied compared to the original cost of the property.

Investment properties

Glebe properties, which are held for investment purposes and rented out, are subject to annual revaluations and hence the properties are included at their year-end market value.

Page 27

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

1. ACCOUNTING POLICIES (continued)

Parsonage houses

LDBF has followed the requirements of FRS102 in its accounting treatment for benefice houses (parsonages). FRS102 requires the accounting treatment to follow the substance of arrangements rather than strict legal form. LDBF 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 carry them at cost.

d) Other tangible fixed assets

All capital expenditure over £500 is depreciated. 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:-

Computer equipment - 50% per annum on a straight-line basis Fixtures and fittings - 50% per annum on a straight-line basis

e) Other accounting policies

f) Fund balances

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

“Special trusts” (as defined by the Charities Act 2011) and any other trusts where the Charitable Company acts as Trustee and controls the management and use of the funds, are included in the Charitable Company’s own financial statements as charity branches. Trusts where the Charitable Company acts merely as Custodian Trustee with no control over the management of the funds are not included in the financial statements but are summarised in note 29 to the financial statements.

Page 28

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

2. DONATIONS

2a. Parish Contributions

All donations are collected from the parishes of the Diocese.

Unrestricted funds Unrestricted funds Restricted Endowment Total funds Total funds
General Designated Funds Funds 2021 2020
£’000 £’000 £’000 £’000 £’000 £’000
Current year 4,000 - - - 4,000 4,147
Receipts for previous years - - - - - 10
------------------- ----------------- ------------------ ------------------- ------------------ ---------------------
4,000 - - - 4,000 4,157
========= ======== ========= ========= ========== =========

2020 funds are all Unrestricted General Funds

2b. Archbishops’ Council

Unrestricted funds Unrestricted funds Restricted Endowment Total funds Total funds
General Designated Funds Funds 2021 2020
£’000 £’000 £’000 £’000 £’000 £’000
Stipend support - - 1,935 - 1,935 1,279
Resource churches grant - - 752 - 752 744
BAME grant - - 431 - 431 299
Ordinand grants - - 189 - 189 253
Restructuring funding - - 153 - 153 150
Strategic change grant - - 70 - 70 -
Curate grant - - 42 - 42 -
Other grants - - 63 - 63 22
Legal cost contribution - - 30 - 30 43
------------------- ----------------- ------------------ ------------------- ------------------ ------------------
- - 3,665 - 3,665 2,790
========= ======== ========= ========= ========== =========

2020 funds are all Restricted Funds

2c. Other Donations

Unrestricted funds Restricted Endowment Total funds Total funds
General Designated
 Funds Funds 2021 2020
£’000 £’000 £’000 £’000 £’000 £’000
Donations 5 - 4 - 9 7
======= ======== ======== ======= ======== =========
Unrestricted funds Restricted Endowment Total funds
General Designated Funds Funds 2020
£’000 £’000 £’000 £’000 £’000
Donations 4 - 3 - 7
======= ======== ======== ======== =========

Page 29

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

3. CHARITABLE ACTIVITIES

Unrestricted funds Unrestricted funds Restricted Endowment Total funds Total funds
General Designated Funds Funds 2021 2020
£’000 £’000 £’000 £’000 £’000 £’000
Statutory fees 276 - - - 276 152
All Churches Trust grant 135 - - - 135 133
Player Trust grant - - - - - 311
Tree of Life donations - - 77 - 77 51
Historic England grant - - 29 - 29 45
Course fees and other 4 - - - 4 5
CJRS income - - 149 - 149 379
Other 9 3 - - 12 10
------------------- ----------------- ------------------ ------------------- ------------------ ------------------
424 3 255 - 682 1,086
========= ======== ========= ========= ========== ==========
Unrestricted funds Restricted Endowment Total funds
General Designated Funds Funds 2020
£’000 £’000 £’000 £’000 £’000
Statutory fees 152 - - - 152
All Churches Trust grant 133 - - - 133
Player Trust grant - - 311 - 311
Tree of Life donations - - 51 - 51
Historic England grant - - 45 - 45
Course fees and other 5 - - - 5
CJRS income - - 379 - 379
Other 8 2 - - 10
------------------- ----------------- ------------------ ------------------- ------------------
298 2 786 - 1,086
========= ======== ========= ========= ==========

4. OTHER TRADING ACTIVITIES

Unrestricted funds Unrestricted funds Restricted Endowment Total funds Total funds
General Designated funds funds 2021 2020
£’000 £’000 £’000 £’000 £’000 £’000
Housing rental income 278 - - - 278 275
Property grants 5 - - - 5 9
SMLodge & New Street
income - - - 264 264 72
Bookshop, café and
conferencing income 199 - - - 199 112
----------------- ----------------- -------------- ------------- ------------- ------------
482 - - 264 746 468
======== ======== ======= ====== ====== ======

Page 30

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

________________

4. OTHER TRADING ACTIVITIES (continued)

Unrestricted funds Unrestricted funds Restricted Endowment Total funds
General Designated funds funds 2020
£’000 £’000 £’000 £’000 £’000
Housing rental income 275 - - - 275
Property grants 9 - - - 9
Redundant church sale - - - - -
SMLodge & New Street
income - - - 72 72
Bookshop, café and
conferencing income 112 - - - 112
----------------- ----------------- -------------- ------------- -------------
396 - - 72 468
======== ======== ======= ====== ======
5. INVESTMENT INCOME Unrestricted funds Restricted Endowment Total funds Total funds
General Designated funds funds 2021 2020
£’000 £’000 £’000 £’000 £’000 £’000
Glebe rents - - - 651 651 601
Listed securities - - - 81 81 116
Unlisted securities - 7 116 - 123 127
SMH rental income 118 - - - 118 106
Bank and other interest - 4 1 - 5 8
------------------- ----------------- ------------------ ------------------- ------------------ ------------------
118 11 117 732 978 958
========= ======== ========= ========= ========== =========
Unrestricted funds Unrestricted funds Restricted Endowment Total funds
General Designated funds funds 2020
£’000 £’000 £’000 £’000 £’000
Glebe rents - - - 601 601
Listed securities - - - 116 116
Unlisted securities - 7 120 - 127
SMH rental income 106 - - - 106
Bank and other interest 1 5 2 - 8
------------------- ----------------- ------------------ ------------------- ------------------
107 12 122 717 958
========= ======== ========= ========= ==========

Page 31

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

______________

6. OTHER INCOME
Unrestricted funds Restricted Endowment Total funds Total funds
General Designated Funds Funds 2021 2020
£’000 £’000 £’000 £’000 £’000 £’000
Gain on parsonage sales - - - - - 65
Gain on Glebe property - - - 40 40 16
sales
Gain on DBF property sales 660 - - - 660 88
Remeasurement of DBS
pension liability 114 - - - 114 -
Other income 9 - - - 9 4
------------------- ----------------- ------------------ ------------------- ------------------- ------------------
783 - - 40 823 173
========= ======== ========= ========= ========= =========
Unrestricted funds Restricted Endowment Total funds
General Designated Funds Funds 2020
£’000 £’000 £’000 £’000 £’000
Gain on parsonage sales - - - 65 65
Gain on Glebe property - - - 16 16
sales
Gain on DBF property sales 88 - - - 88
Remeasurement of DBS
pension liability - - - - -
Other income 4 - - - 4
------------------- ----------------- ------------------ ------------------- -------------------
92 - - 81 173
========= ======== ========= ========= =========
7. FUND RAISING COSTS
 Unrestricted funds Unrestricted funds Restricted Endowment Total funds Total funds
General Designated Funds Funds 2021 2020
£’000 £’000 £’000 £’000 £’000 £’000
Glebe agent’s fees - - - 50 50 47
Other Glebe costs - - - 112 112 175
Investment management fees - - - 28 28 35
------------------- ----------------- ------------------ ------------------- ------------ ------------------
- - - 190 190 257
========= ======== ========= ========= ======= =========

2020 funds are all Endowment Funds

Page 32

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

________________

8. CHARITABLE ACTIVITIES
Unrestricted funds Restricted Endowment Total funds Total funds
General Designated Funds Funds 2021 2020
£’000 £’000 £’000 £’000 £’000 £’000
8a Contributions to Archbishops’
Council
Training for Ministry 195 - - - 195 195
National Church
Responsibilities 51 - - - 51 (19)
Retired clergy housing
costs 72 - - - 72 70
------------------- ----------------- ------------------ ------------------- ------------------ ------------------
318 - - - 318 246
------------------- ----------------- ------------------ ------------------- ------------------ ------------------
2020 funds are all Unrestricted General Funds
Unrestricted funds Restricted Endowment Total funds Total funds
General Designated Funds Funds 2021 2020
£’000 £’000 £’000 £’000 £’000 £’000
8b Resourcing Mission and Ministry
Parish Ministry stipends
and National Insurance (NI) 3,765 - - - 3,765 3,931
Clergy pension contributions 950 - - - 950 805
Non clergy salaries, NI and pensions 459 - - - 459 491
Housing costs 1,190 - - - 1,190 955
Ordinand removal & resettlement
grants 271 - - - 271 341
Interregna costs 19 - - - 19 10
Resource church grants 291 - - - 291 248
Other expenses 106 - - - 106 81
Support costs 715 - - - 715 801
------------------- ----------------- ------------------ ------------------- ------------------ ------------------
7,766 - - - 7,766 7,663
------------------- ----------------- ------------------ ------------------- ------------------ ------------------

2020 funds are all Unrestricted General Funds

Unrestricted funds Unrestricted funds Restricted Endowment Total funds Total funds
General Designated Funds Funds 2021 2020
£’000 £’000 £’000 £’000 £’000 £’000
8c Support for Mission and Ministry
Salaries, NI and pension costs 1,334 - 19 - 1,353 1,244
Growth fund grants - - 83 - 83 202
Capital fund grants - - 21 - 21 110
Other grants 83 11 183 - 277 340
Redundant church costs - - 10 - 10 70
Other costs 364 5 - - 369 275
Support costs 214 - - - 214 259
------------------- ----------------- ------------------ ------------------- ------------------ ------------------
1,995 16 316 - 2,327 2,500
------------------- ----------------- ------------------ ------------------- ------------------ ------------------

Page 33

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

_______________

Unrestricted funds Unrestricted funds Restricted Endowment Total Funds
General Designated funds funds 2020
£’000 £’000 £’000 £’000 £’000
Support for Mission and Ministry
(continued)
Salaries, NI and pension costs 1,229 - 15 - 1,244
Growth fund grants - - 202 - 202
Capital fund grants - - 110 - 110
Other grants 103 11 226 - 340
Pioneer Development Worker costs 12 12
Redundant church costs - - 70 - 70
Other costs 262 1 - - 263
Support costs 259 - - - 259
------------------- ----------------- ------------------ ------------------- ------------------
1,865 12 623 - 2,500
------------------- ----------------- ------------------ ------------------- ------------------
Unrestricted funds Restricted Endowment Total funds Total funds
General Designated Funds Funds 2021 2020
£’000 £’000 £’000 £’000 £’000 £’000
8d Support for education
Support for church schools 156 - - - 156 206
------------------- ----------------- ------------------ ------------------- ------------------ ------------------
156 - - - 156 206
------------------ ----------------- ------------------ ------------------- ------------------ ------------------
2020 funds are all Unrestricted General Funds
------------------- ----------------- ------------------ ------------------- ------------------ ------------------
TOTAL CHARITABLE ACTIVITIES 2021 10,235 16 316 - 10,567 10,615
========= ======== ========= ========= ======== =========
TOTAL CHARITABLE ACTIVITIES 2020 9,980 12 623 - 10,615
========= ======== ========= ========= ========

9. OTHER EXPENDITURE

OTHER EXPENDITURE
Unrestricted funds Restricted Endowment Total fundsTotal funds
General Designated Funds Funds 20212020
£’000 £’000 £’000 £’000 £’000£’000

DBS / Clergy pension liability increase -
-		 - - -3
Interest on pension liabilities
 1
-		 - - 110
Remeasurement of Clergy pension
Liability
 14
-		 - - 1424
SMLodge & New Street expenses -
-		 - 285 285223
SMH trading and letting costs
 799
-		 - - 799972
---------------- ------------------- ------------------ ------------------- ---------------------------------
814 - - 285 1,0991,232
========= ========= ========= ========= ======== ========
2020 funds are all Unrestricted General Funds

Page 34

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

10. ANALYSIS OF EXPENDITURE INCLUDING ALLOCATION OF SUPPORT COSTS

Activities Grant
Undertaken Funding of Support Total costs Total costs
Directly Activities Costs 2021 2020
£’000 £’000 £’000 £’000 £’000
Raising funds 190 - - 190 257
Charitable activities:
Contributions to Archbishops’ Council - 318 - 318 246
Resourcing Mission and Ministry 6,728 298 715 7,741 7,663
Supporting Mission and Ministry 1,732 381 214 2,327 2,500
Support for education 156 - - 156 206
Other resources expended 1,099 - - 1,099 1,232
------------------ ------------------- ------------------ ------------------ ------------------
9,905 997 929 11,831 12,104
========= ========= ========== ========= =========
Activities Grant
Undertaken Funding of Support Total costs
Directly Activities Costs 2020
£’000 £’000 £’000 £’000
Raising funds 257 - - 257
Charitable activities:
Contributions to Archbishops’ Council - 246 - 246
Resourcing Mission and Ministry 6,484 378 801 7,663
Supporting Mission and Ministry 1,590 651 259 2,500
Support for education 206 - - 206
Other resources expended 1,232 - - 1,232
------------------ ------------------- ------------------ ------------------
9,769 1,275 1,060 12,104
========= ========= ========== =========

11. ANALYSIS OF SUPPORT COSTS

Unrestricted funds Unrestricted funds Restricted Endowment Total funds Total funds
General Designated Funds Funds 2021 2020
£’000 £’000 £’000 £’000 £’000 £’000
Central administration 774 - - - 774 895
Governance:
Registrar and Chancellor 108 - - - 108 127
Audit costs:
- External audit 27 - - - 27 26
- Other services 8 - - - 8 5
Synodical costs 12 - - - 12 7
------------------- ----------------- ------------------ ------------------- ------------------ ----------------
929 - - - 929 1,060
========= ======== ======== ========= ========= ========

2020 funds are all Unrestricted General Funds

External audit costs in 2021 were £26,700 (2020: £25,500). Other auditor service costs in 2021 were £7,801 (2020: £5,199). These amounts are inclusive of UK VAT.

Page 35

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

________________

12. ANALYSIS OF GRANTS MADE 2021 2020
Number Individuals Institutions Total Total
£’000 £’000 £’000 £’000
From unrestricted funds for national
Church responsibilities:
Contributions to Archbishops’ Council 1 - 318 318 246
------------------ ------------------- ------------------ ------------------ ------------------
From unrestricted funds:
Diocesan Board of Education support grants 2 - 156 156 205
University Chaplaincies 3 - 147 147 91
Resettlement and first appointment grants 50 129 - 129 96
Maintenance grants to Ordinands 13 119 - 119 214
St Philip’s Centre 1 - 26 26 70
Trichy – Covid 19 Appeal 1 - 25 25 -
Leicester Cathedral share of SMH surplus 1 - 25 25 25
Leicester Cathedral Ministry 1 - 24 24 -
St Peter’s Church grant for Premises Officer 1 - 11 11 11
Community Link grants 1 - 10 10 15
Ecumenical support (Churches Together) 1 - 9 9 9
Reader and Clergy training grants 20 7 - 7 4
Other grants 2 - 4 4 11
Holy Apostles project - - - - 32
------------------ ------------------- ------------------ ------------------ ------------------
Total 97 255 437 692 783
------------------ ------------------- ------------------ ------------------ ------------------
From restricted funds for various purposes
within resourcing parish ministry:
Growth fund grants 15 - 83 83 202
Capital fund grants 11 - 21 21 110
Ordinand training grants 26 170 - 170 226
JD Player interest 1 - 5 5 -
------------------ ------------------- ------------------ ------------------ ------------------
Total 53 170 109 279 538
------------------ ------------------- ------------------ ------------------ ------------------
Total 151 425 864 1,289 1,567
======== ======= ======== ======= =======

Leicester Cathedral (LCAT) are entitled to a proportion of the surpluses made by St Martins House (SMH). The amount of the payment is calculated based on SMH surpluses as follows;

LCAT was entitled to Nil (2020: Nil) for the year to 31[st] December 2021 as SMH made a deficit before capital items in the year. From 1[st] January 2020, LDBF has agreed to provide an annual grant of up to £25,000 to LCAT where the share of the SMH surplus, as calculated above, does not attain £25,000.

From 1[st] January 2022, LCAT’s entitlement to SMH surpluses is being cancelled and replaced by the payment of an annual grant of £25,000 (subject to annual review) from LDBF.

Page 36

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

_____________

13. STAFF COSTS

STAFF COSTS
2021 2020
£’000 £’000
Employee costs during the year were as follows:
Wages and salaries 1,772 2,091
National Insurance contributions 165 186
Pension costs 216 237
----------------- ------------------
2,153 2,514
========= =========
The average number of persons employed by LDBF during the year: 2021 2020
Number Number
SMH Conference Centre 28.0
41.0
Administration and financial management 8.3 9.8
Property 3.0 4.0
Discipleship, Ministry & Stewardship 36.0 36.7
Safeguarding & inclusion 5.1 5.3
Parochial lay staff 2.0 3.9
----------------- ------------------
82.4 100.7
========= =========
The average number of persons employed by LDBF during the year 2021 2020
based on full-time equivalents: Number Number
SMH Conference Centre 19.8 26.8
Administration and financial management 7.6 8.8
Property 2.0 2.3
Discipleship & Ministry, Stewardship 28.5 29.1
Safeguarding and inclusion 3.7 4.2
Parochial lay staff 1.5 2.7
------------------ -----------------
63.1 73.9
========= ========
2021 2020
Number Number
The numbers of staff whose emoluments amounted to more than £60,000 (including
benefits in kind but excluding pension contributions and NIC’s) were as follows:
£60,001 - £70,000 1 -
£70,001 - £80,000 - 1
£80,001 - £90,000 1 1
========= =======
Pension payments of £14,341 (2020: £15,101) were made for these employees.

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 2021 they were:

Diocesan Chief Executive Jonathan Kerry Director of Operations and Governance Andrew Brockbank Director of Finance and Support Services Paul Stothard

Remuneration (excluding NIC’s) and pensions for these 3 employees amounted to £192,322 (2020: £233,883).

Page 37

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

13. STAFF COSTS (continued)

Trustees’ emoluments

No Trustee received remuneration for services as a Trustee. The Trustees received travel and out of pocket expenses, totalling £3,818 (2020: £4,443) in respect of General Synod duties, duties as a Trustee and also in their diocesan role as Archdeacon or Area / Rural Dean. The majority of expenses were paid for Trustees’ diocesan roles; the amount paid for as a Trustee was insignificant.

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

Stipend Housing
The Venerable RV Worsfold Yes Yes
The Venerable C Wood Yes Yes
The Reverend C M Thomson Yes Yes
The Reverend C Taylor Yes Yes

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

The LDBF paid an average of 127 (2020: 130) stipendiary clergy as office-holders holding parochial or diocesan appointments in the Diocese, and their costs were as follows:

2021 2020
£’000 £’000
Stipends 3,785 3,798
National Insurance contributions 334 349
Pension costs 1,118 935
Housing costs 91 92
----------------- ------------------
5,328 5,174
======== =========

The annual rate of stipend, funded by the LDBF, paid to the two Archdeacons in 2021 was in the range £35,000 - £40,000 (2020: range £35,000 – £40,000) and other clergy who were Trustees were paid in the range £0 - £30,000 (2020: range: £0 – £30,000).

Page 38

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

_____________

14. ANALYSIS OF TRANSFERS BETWEEN FUNDS Unrestricted funds Unrestricted funds Restricted Endowment
General Designated Funds Funds
£’000 £’000 £’000 £’000
2021
Church Commissioners’ and Historic England grant income 3,583 - (3,583) -
UK Government grants including furlough 149 - (149) -
Glebe rental income, net of costs, used for general purposes 520 - - (520)
Stipend Glebe Unapplied Total Return transfer 1,200 - - (1,200)
General fund transfer to Growth fund (99) - 99 -
Endowment income used to fund stipends 98 - (98) -
General fund transfer to Capital fund (21) - 21 -
Restricted income used to fund retired clergy grants - 8 (8) -
Property fund transfers - - (105) 105
Endowment fund investment sale proceeds - - 308 (308)
-------------- -------------- ---------------- --------------
5,430 8 (3,515) (1,923)
======= ======= ======== ========
2020
Church Commissioners’ and Historic England grant income 2,632 - (2,632) -
UK Government grants including furlough 379 - (379) -
Glebe rental income, net of costs, used for general 460 - - (460)
purposes
Stipend Glebe Unapplied Total Return transfer 1,200 - - (1,200)
General fund transfer to Growth fund (214) - 214 -
Endowment income used to fund stipends 115 - (115) -
General fund transfer to Capital fund (110) - 110 -
Restricted income used to fund retired clergy grants - 9 (9) -
Property fund transfers - - 18 (18)
Endowment fund investment sale proceeds - - - -
-------------- -------------- ---------------- --------------
4,462 9 (2,793) (1,678)
======= ======= ======== =======

Church Commissioners’ grant income - Within restricted funds there is income received from The Archbishops’ Council of £2.09m (2020: £1.28m) to fund the payment of stipends, £752k (2020: £744k) to fund the Resource Church project, £189k (2020: £253k) to fund Ordinands, £431k (2020: £299k) to fund the BAME project, and £70k (2020: £nil) to fund The Shaped by God transition project from unrestricted funds.

Stipends Glebe rental income - This income is rental income from endowment properties. The income is used to fund the payment of stipends from unrestricted funds.

Stipends Glebe Unapplied Total Return transfer – This transfer has been made from the Unapplied Total Return fund and is for general purposes. The Unapplied Total Return Fund is part of the Stipends Glebe endowment fund.

Property fund transfers – relates to £105k of capital improvements to parsonages.

Page 39

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

_________________

15. TANGIBLE FIXED ASSETS

Parsonage DBF Other
SMH houses properties equipment Total
£’000 £’000 £’000 £’000 £’000
Cost or valuation
At 1 January 2021 2,991 20,368 16,372 834 40,565
Additions - 105 58 108 271
Transfers - - - - -
Disposals - - (1,084) - (1,084)
Revaluation 264 - - - 264
------------------ ------------------ ----------------- ------------------ -------------------
At 31 December 2021 3,255 20,473 15,346 942 40,016
------------------ ------------------ ----------------- ------------------ -------------------
Depreciation
At 1 January 2021 - - 432 759 1,191
Disposals - - - - -
Charge for the year 79 - 91 99 269
Revaluation (79) - - - (79)
------------------ ------------------ ----------------- ------------------ -------------------
At 31 December 2021 - - 523 858 1,381
------------------ ------------------ ----------------- ------------------ -------------------
Net Book Value
At 31 December 2021 3,255 20,473 14,823 84 38,635
========== ========== ========= ========= =========
At 1 January 2021 2,991 20,368 15,940 75 39,374
========== ========== ========= ========= =========

All of the properties in the Balance Sheet are freehold and are vested in the LDBF. One property has been purchased with the help of a value-linked loan from the Church Commissioners. When the property is disposed, the appropriate share of the net sale proceeds will be remitted to the Commissioners, and the related loan liability extinguished. The value of the property included above is £36,323 (2020: £36,323). All properties at 31 December 2021 and 31 December 2020 are valued at cost. All property repairs are charged as expenditure.

As at 31 December 2021, St Martins House (SMH) has been valued by Andrew Granger & Co. LLP, Chartered Surveyors. The property was valued at £4,425,000 (2020: £3,975,000) on an open market basis.

£3,254,996 (2020: £2,991,316) of the SMH value was deemed to represent a fixed asset, the balance of £1,170,004 (2020: £983,684) was deemed to represent a fixed asset investment (see note 16 below). If SMH had not been revalued, the fixed asset element would have been included at its historical cost of £2,760,000 less accumulated depreciation of £407,213.

Page 40

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

16. FIXED ASSETS INVESTMENTS

FIXED ASSETS INVESTMENTS
At Change in At
1 January Market 31 December
2021 Additions Disposals Value 2021
£’000 £’000 £’000 £’000 £’000
Unrestricted funds
Listed investments - - - - -
Unlisted investments - - - - -
Other 984 - - 186 1,170
------------------ ----------------- ------------------ ------------------ ------------------
Total 984 - - 186 1,170
------------------ ----------------- ------------------ ------------------ ------------------
Unlisted investments 199 - (33) 19 185
------------------ ----------------- ------------------ ------------------ ------------------
Endowment funds
Investment properties 31,887 25 (470) 2,021 33,463
Listed investments 4,429 728 (1,805) 446 3,798
Unlisted investments 3,126 - (626) 257 2,757
------------------ ----------------- ------------------ ------------------ ------------------
39,442 753 (2,901) 2,724 40,018
------------------ ----------------- ------------------ ------------------ ------------------
Total 40,625 753 (2,934) 2,929 41,373
========= ======== ======== ======== =========

The valuation of investments at 31 December 2021 was carried out by the Board’s Investment Advisors as shown in the Administrative Details on page 18.

Included in investment properties is St Martins Lodge, which is a property purchased during 2015 costing a total of £4,475,057 (including subsequent refurbishment costs). St Martins Lodge has been developed into a high quality, 28 bed overnight accommodation facility.

As at 31 December 2021, St Martins Lodge was valued by Christie & Co. at £2,300,000 (2020: £2,140,000) on an open market basis.

Page 41

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

17. DEBTORS (continued)
2021 2020
£’000 £’000
Due within one year
Trade debtors 25 -
Parish contribution 146 212
Loans to parishes 46 46
Amounts owed by related parties 28 33
Other debtors 150 176
Prepayments and accrued income 208 324
----------------- -----------------
603 791
Due after more than one year
Loans to parishes 83 101
Value linked loan 5 5
----------------- -----------------
Total debtors 691 897
========= =========
The loans above are represented by: Due within Due after
one year one year Total
£’000 £’000 £’000
Unsecured loans
Loans to parishes 46 83 129
------------------ ----------------- -------------------
Total unsecured loans 46 83 129
------------------ ----------------- -------------------
Secured loans
Trustees of Launde Abbey - 865 865
Provision on Launde Abbey loan - (865) (865)
Value linked loan on retired clergy
housing - 5 5
------------------ ---------------- -------------------
Total secured loans -
 5 5
------------------ --------------- -------------------
------------------ ----------------- -------------------
Total loans outstanding 46 88 134
========= ========= =========

Unsecured loans

The Parish loans are generally for one off cashflow issues with varying periods of repayment and attract a commercial rate of interest, currently being 3% per annum.

Secured loans

There is a loan to the Trustees of Launde Abbey for £865,141, which has been fully provided for (which includes accrued interest). On 31[st] December 2018, an agreement was reached whereby the loan was secured as a first charge against the total value of Launde Abbey. On any disposal of Launde Abbey in its entirety, LDBF would recover the greater of 21.89% of disposal proceeds - based on the valuation of the property at 9 April 2015, being £3,950,000 - or £865,141. In the event of a part disposal, LDBF would receive £865,141 on the first part disposal and then be entitled to 21.89% of total part disposal proceeds where there are future part disposals, where the total of all part disposal proceeds exceed £865,141. Any excess of funds paid to LDBF over £865,141 is deemed to be a premium on the loan.

LDBF is the Custodian Trustee of Launde Abbey which is the Diocesan retreat house.

Page 42

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

18. CREDITORS: amounts falling due within one year 2021 2020
£’000 £’000
Trade creditors 205 242
Bank loan - 2,500
Taxation and social security 84 57
Other creditors 172 801
Accruals 221 189
Deferred income 128 165
Clergy pension scheme liabilities (see note 27) 231 398
Lay workers’ defined benefit pension scheme liabilities (see note 27) - 92
Amounts owed to related parties 42 675
----------------- ------------------
Total 1,083 5,119
======== =======
19. CREDITORS: amounts falling due after more than one year 2021 2020
£’000 £’000
Bank loan 2,500 -
Clergy pension scheme liabilities (see note 27) 27 76
Lay workers’ defined benefit pension scheme liabilities (see note 27) - 114
Church Commissioners’ value-linked loan 36 36
----------------- ------------------
Total 2,563 226
======== ========

The £2,500,000 bank loan is a revolving loan provided by Barclays Bank Plc during 2021. Interest is payable on the loan quarterly in arrears at the prevailing Bank of England base rate (which can never be less than zero) plus a margin of 2.25%. The loan has been secured on five LDBF properties and can be repaid in full, or in part (with the part amount being agreed with Barclays Bank Plc), at any time by giving 7 days’ notice. The revolving facility is due for full repayment on 20[th] September 2023.

The value-linked loan (VLL) is secured by guarantee against a property. The loan is repayable, when the property is sold, in proportion to the sale value to the original percentage of the cost of the house originally loaned. The proportion of the loan on this property is 94.74%. At 31 December 2021, the estimated value of the property was £185,600 which is itself a 15% discount to the Nationwide House Price Index. The amount repayable to the Church Commissioners based on the discounted valuation would be £175,832. At 31 December 2021 the Board had no intention of disposing of the property.

Page 43

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

20. SUMMARY OF FUND MOVEMENTS

Balances at Balances at
1 January Gains and 31 December
2021 Income Expenditure Transfers (Losses) 2021
£’000 £’000 £’000 £’000 £’000 £’000
UNRESTRICTED FUNDS
General Funds 6,192 5,812 (11,049) 5,430 529 6,914
------------------- ----------------- ------------------ ------------------- ------------------ ------------------
Designated funds
Retired Clergy Fund 163 5 (16) 8 14 174
Church Extension Fund 561 4 - - - 565
Workplace Chaplaincy Fund 2 - - - - 2
Archdeacons’
Discretionary
Fund 108 5 - - 5 118
------------------ ----------------- ------------------ ------------------- ------------------ ------------------
Total Designated Funds 834 14 (16) 8 19 859
------------------- ----------------- ------------------ ------------------- ------------------ ------------------
Total unrestricted funds 7,026 5,826 (11,065) 5,438 548 7,773
RESTRICTED FUNDS
Pastoral Fund 1,408 - (10) (105) - 1,293
Church
Commissioners’,
Historic England and other
grant income - 3,582 - (3,582) - -
UK Government grants - 149 - (149) - -
Endowment Fund 331 117 (13) 202 - 637
Growth Fund - 4 (102) 98 - -
Bishop Jeune Ordinands’ Fund 1 - - - - 1
The Alan Everitt Fund 2 - - - - 2
Diocesan Capital Fund - - (21) 21 - -
Ordinand Training Fund 12 189 (170) - - 31
CofE Stipend Trust Reserve - - - - - -
------------------ ----------------- ----------------- ------------------- ------------------ ------------------
Total Restricted Funds 1,754 4,041 (316) (3,515) - 1,964
------------------- ----------------- ------------------ ------------------- ------------------ ------------------
ENDOWMENT FUNDS
Permanent
Parsonage Houses 20,368 - - 105 - 20,473
Expendable
Stipends Glebe (see note 22) 45,941 1,036 (475) (1,720) 2,680 47,462
Other Endowment Capital 1,567 - - (308) 126 1,385
------------------ ----------------- ------------------ ------------------ ------------------ ------------------
Total Endowment Funds 67,876 1,036 (475) (1,923) 2,806 69,320
------------------- ----------------- ----------------- ------------------ ------------------ ------------------
------------------- ----------------- ------------------- ------------------ ------------------ -- ---------------
Total funds 76,656 10,903 (11,856) - 3,354 79,057
========= ======== ========= ========= ========= =========

Page 44

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

20. SUMMARY OF FUND MOVEMENTS (continued)

Balances at Balances at
1 January Gains and 31 December
2020 Income Expenditure Transfers Losses 2020
£’000 £’000 £’000 £’000 £’000 £’000
UNRESTRICTED FUNDS
General Funds 8,076 5,126 (11,212) 4,606 (404) 6,192
------------------- ----------------- ------------------ ------------------- ------------------ ------------------
Designated funds
Retired Clergy Fund 161 5 (11) 9 (1) 163
Church Extension Fund 556 5 - - - 561
Workplace Chaplaincy Fund 2 - - - - 2
Archdeacons’
Discretionary
Fund 107 4 (1) - (2) 108
------------------ ----------------- ------------------ ------------------- ------------------ ------------------
Total Designated Funds 826 14 (12) 9 (3) 834
------------------- ----------------- ------------------ ------------------- ------------------ ------------------
Total unrestricted funds 8,902 5,140 (11,224) 4,615 (407) 7,026
RESTRICTED FUNDS
Pastoral Fund 1,460 - (70) 18 - 1,408
Church
Commissioners’,
Historic England and other
grant income - 2,632 - (2,632) - -
UK Government grants - 379 - (379) - -
Endowment Fund 110 290 - (69) - 331
Growth Fund - 147 (217) 70 - -
Bishop Jeune Ordinands’ Fund 1 - - - - 1
The Alan Everitt Fund 2 - - - - 2
Diocesan Capital Fund - - (110) 110 - -
Ordinand Training Fund (15) 253 (226) - - 12
CofE Stipend Trust Reserve - - - - - -
------------------ ----------------- ----------------- ------------------- ------------------ ------------------
Total Restricted Funds 1,558 3,701 (623) (2,882) - 1,754
------------------- ----------------- ------------------ ------------------- ------------------ ------------------
ENDOWMENT FUNDS
Permanent
Parsonage Houses 20,321 65 - (18) - 20,368
Expendable
Stipends Glebe (see note 22) 46,039 733 (257) (1,660) 1,086 45,941
Other Endowment Capital 1,664 - - (55) (42) 1,567
------------------ ----------------- ------------------ ------------------ ------------------ ------------------
Total Endowment Funds 68,024 798 (257) (1,733) 1,044 67,876
------------------- ----------------- ----------------- ------------------ ------------------ ------------------
------------------- ----------------- ------------------- ------------------ ------------------ -- ---------------
Total funds 78,484 9,639 (12,104) - 637 76,656
========= ======== ========= ========= ========= =========

Page 45

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

21. SUMMARY OF ASSETS BY FUND Fixed assets Net Current Total
Tangible Investments Assets / (Liabilities)
 Assets
£’000 £’000 £’000 £’000
Unrestricted funds – General 18,162 1,170 (12,418) 6,914
----------------- ------------------ ------------------- ------------------
Unrestricted - Designated
Retired Clergy / Clergy widows - 133 41 174
Church Extension Fund - - 565 565
Workplace Chaplaincy - - 2 2
Archdeacons’ Discretionary Fund - 52 66 118
----------------- ------------------ ------------------- ------------------
- 185 674 859
----------------- ------------------ ------------------- ------------------
Restricted
Pastoral Fund - - 1,293 1,293
Church Commissioners’ Fund - - - -
Endowment Funds:
Drew Trust Income Fund - - 60 60
Horwood Robinson Income Fund - - 58 58
CE Huston Income Fund - - 161 161
D Huston Income Fund - - 150 150
Clarke Income Fund - - - -
Fry Income Fund - - 4 4
Chippington Income Fund - - 31 31
Clergy Stipend Endowment - - 6 6
Income
Clergy Stipend Income - - - -
JD Player Memorial Fund - - 168 168
Diocesan Growth Fund - - - -
Bishop Jeune Ordinands’ Fund - - - -
Alan Everitt Memorial Fund - - 2 2
Diocesan Capital Fund - - - -
Ordinand Training Fund - - 31 31
CofE Stipend Trust Reserve - - - -
----------------- ------------------ ------------------- ------------------
- - 1,964 1,964
----------------- ------------------ ------------------- ------------------
Endowment
Expendable
Stipends Glebe Fund (see note 22) - 38,633 8,829 47,462
Endowment Capital Funds:
Drew Trust Investment Fund - 219 - 219
Horwood Robinson Investment Fund - 213 - 213
CE Huston Investment Fund - 644 - 644
D Huston Investment Fund - 159 - 159
Clarke Investment Fund - 1 - 1
Fry Investment Fund - 13 - 13
Chippington Investment Fund - 114 - 114
Clergy Stipend Investment Fund - 22 - 22
Permanent
Parsonage Houses Fund 20,473 - - 20,473
----------------- ------------------ ------------------- - ----------------
20,473 40,018 8,829 69,320
------------------- ------------------ ------------------- - -------------------
Total funds 38,635 41,373 (951) 79,057
========= ========= ========= ==========

Page 46

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

22. ANALYSIS OF STIPENDS GLEBE ENDOWMENT FUND

With effect from 1[st] January 2019, the company adopted a Total Return strategy to its Stipends Glebe fund. An exercise was carried out to determine the Endowment fund value and the unapplied Total Return value applicable to the Stipends Glebe Fund. In this regard, records and information, including those held at our Land Agents Andrew Granger & Co. were used to determine the initial value of the endowment, Subsequently, the official Retail Price Index (“RPI”) was used to obtain the value of the original endowment as at 1[st] January 2019; The value calculated was £29,048,439. The difference between this value and the balance sheet value, being £46,395,636, at that date was deemed to be the unapplied total return available for transfer to general funds, i.e. £17,347,197.

During 2021, there were income and investment gains in the period of £3,240,882 (2020: £1,562,083). £2,268,431 (2020: £356,234) of these gains were transferred back to the endowment capital fund as recognition of the increase in value of the endowment as measured by RPI over 2021. In addition, there were transfers out of Unapplied Return to the General Fund totalling £1,720,047 (2020: £1,659,954); of this £520,047 (2020: £459,954) was used to fund stipends. The balance as at 31 December 2021 was £15,148,286 (2020: £15,895,883).

Endowment: Unapplied Total Total
Stipends Glebe Return
£'000 £'000 £'000
As at 1 January 2021 30,045 15,896 45,941
- ------------------- - ------------------- - -------------------
Movements in the reporting period
Investment income: Glebe rents and
dividends - 996 996
Investment returns: Realised and
unrealised gains / (losses) on shares and
the Glebe portfolio - 2,721 2,721
Less: Investment management costs - (476) (476)
- ------------------- - ------------------- - -------------------
Total movements in the reporting year - 3,241 3,241
Unapplied Total Return allocated in
Income in the year - (1,720) (1,720)
Allocation to capital 2,268 (2,268) -
- ------------------- - ------------------- - -------------------
Net movements in the reporting year 2,268 (747) 1,521
- ------------------- - ------------------- - -------------------
As at 31 December 2021 32,313 15,149 47,462
========== ========== ==========

Page 47

LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

23. DESCRIPTION OF FUNDS

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

DESIGNATED FUNDS Designated funds comprise unrestricted funds that have been set aside by the Directors for particular purposes. The aim and use of each designated fund is set out in the notes below.

RESTRICTED FUNDS

Restricted funds are funds which are to be used in accordance with specific restrictions imposed by donors or which have been raised by the Charity for particular purposes. The aim and use of each restricted fund is set out in the notes below.

ENDOWMENT FUNDS

Endowment funds are funds held on trust to be retained for the Charity as capital funds. Where the whole of the fund must be permanently maintained it is known as permanent endowment. Where there is a power of discretion to convert endowed funds into income, the fund is classed as expendable endowment.

Designated funds

The Retired Clergy Fund represents funds set aside for the benefit of retired clergy and their spouses, including those widowed, divorced or separated.

The Church Extension Fund represents funds put aside over a number of years by the Board to give loans to Parochial and District Church Councils to help with extensions, improvements and repairs to church buildings.

Workplace Chaplaincy fund represents funds to support people in workplace environments by offering confidential and independent support on a range of issues.

The Archdeacons Discretionary Fund is used by the Archdeacons to pay grants to needy clergy and their families within the Diocese.

Restricted funds

The Pastoral Fund is a capital and income fund where both may be expended. It may be used for a variety of purposes except for employment costs. It is the Board’s policy to use these funds primarily for the purchase of and improvement to parsonage houses.

Prior to 2007 the balance included funds of £281,989 held by the Church Commissioners from the sale of parsonage houses which could not be released for other uses until such time as new pastoral schemes for the parishes involved had become operative and the appropriate PCC consents to the funds being released.

In 2007 these funds were released to the Diocese but had to be ring-fenced for the same reason. £286,530 including accumulated interest was received by the Diocese, a small amount of which was immediately expendable but the remainder placed in a separate fund in relation to one parish. At 31 December 2021 this fund stood at £313,309 (2020: £313,308) and is included in the Pastoral Fund balance.

Restricted Income from the Church Commissioners is received from them to support Stipends and Clergy Pension Costs. Income is transferred to the General Fund to be applied against payment of such costs.

Endowment Income Funds represent accumulated income and income arising from endowment funds that has not yet been expended.

The Diocesan Growth Fund was formerly known as the Church Commissioners’ Mission Fund and represents additional funds given to the Board by the Church Commissioners that have arisen as a result of better returns on their investment assets.

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

23. DESCRIPTION OF FUNDS (continued)

Restricted funds (continued)

The Bishop Jeune Ordinands’ Fund arose from accumulated income received from the Diocese of Peterborough arising from a fund set up by the late Bishop Jeune in 1868. It is available to be used for the benefit of Ordinands.

The Alan Everitt Memorial Fund , which commenced in 2010, is specifically for drama and dance based projects that promote the self-esteem of young people in a Christian environment.

The Diocesan Capital Fund was set up in 2013 to support churches in the Diocese with grants for capital projects.

The CofE Stipend Trust Reserve provides discretionary grants to Ordinands.

The Ordinand Training Fund provides discretionary training grants to Ordinands.

Endowment funds

The Stipends Glebe Fund represents the value of property and investments held under the Endowments and Glebe Measure 1976, invested to produce income to be applied for the augmentation of stipends.

Endowment Capital Funds are funds, the majority of which are, for the augmentation of stipends.

The Parsonage Houses Fund represents the deemed value of the parsonage houses calculated as set out in note 1c to these financial statements.

24. CAPITAL COMMITMENTS

At 31 December 2021 the LDBF had nil (2020: nil) capital expenditure commitments authorised but not contracted for, and contracted for but not yet due of nil (2020: £22,725).

25. OPERATING LEASES

Total commitments under non-cancellable operating leases are as follows:

2021 2020
£’000 £’000
Non land & buildings operating leases where the lease expires:
Within one year of the balance sheet date - 8
In the second to fifth years inclusive of the balance sheet date 14 11
More than five years from balance sheet date - -
======== ========

26. POST BALANCE SHEET EVENTS AND CONTINGENT LIABILITIES

There were no post balance sheet events or contingent liabilities.

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

27. PENSIONS

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

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

Church of England Funded Pension Scheme

With effect from 1 January 1998, diocesan clergy became members of the Church of England Funded Pensions Scheme. This defined benefit scheme provides benefits based on the National Minimum Stipend in the year before their date of retirement and provides for that part of the benefit that relates to pensionable service after 1 January 1998. Benefits are currently being accrued on the basis of half of the National Minimum Stipend being paid as the normal pension on reaching the age of 68 on completion of maximum service of 41.5 years, or 1.25 times this amount for archdeacons, plus a lump sum of three times the pension based on the previous year’s National Minimum Stipend payable from the scheme. Pensions in respect of pensionable service before 1 January 1998 will be provided for by the Church Commissioners under the previous arrangements.

LDBF participates in the Church of England Funded Pensions Scheme for stipendiary clergy, a defined benefit pension scheme. At the end of the year the Scheme was paying contributions for 136 members (2020: 141) of the scheme out of a total membership of approximately 8,500 active members. This scheme is administered by the Church of England Pensions Board which holds the assets of the schemes separately from those of the employers. Each participating employer in the scheme pays contributions at a common contribution rate applied to pensionable stipends.

This scheme is considered to be a multi-employer scheme as described in Section 28 of FRS 102. This means it is not possible to attribute the Scheme’s assets and liabilities to specific employers, and this means that contributions are accounted for as if the Scheme were a defined contribution scheme. There were pension costs charged to the Statement of Financial Activities in the year of £1,117,886 (2020: £935,380) which were contributions payable towards benefits and expenses accrued in that year, plus the figures highlighted in the table on page 47 as being recognised in the Statement of Financial Activities (an overall £15,000 charge), giving a total charge of £1,132,886 for 2021 (2020: charge of £966,380).

A valuation of the Scheme is carried out once every three years. The most recent scheme valuation completed was carried out as at 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 assumptions:

Following the 31 December 2018 valuation, a recovery plan was put in place whereby recovery contributions were planned at 11.9% of pensionable stipends until December 2025. However, at 31 December 2019 and 31 December 2020, the deficit recovery contributions were set at 11.9% for 2019 and 2020 reducing to 7.1% of pensionable stipends for the period 1 January 2021 to 31 December 2022.

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 2020 and 2021 is set out in the table below.

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

27. PENSIONS (continued)

Church of England Funded Pension Scheme (continued)

2021
 2020
£’000
 £’000
Balance sheet liability as at 1 January 474 841
Contributions paid (231) (398)
Interest cost (recognised in the SOFA) 1 7
Remaining change to the balance sheet liability (recognised in SOFA) 14 24
----------------- -----------------
Balance sheet liability as at 31 December 258 474
======== ========

The remaining change to the balance sheet liability comprises changes in the agreed deficit recovery plan and changes in discount rates and assumptions between year ends.

The liability represents the present value of the deficit contributions agreed as at 31 December 2021, and has been valued using the following assumptions. In general, these are set by reference to the duration of the deficit recovery plan payments, but as at 31 December 2021, under accounting rules, the payments are not discounted since the remaining recovery plan is less then 12 months. No price inflation assumption is needed since pensionable stipends for the remainder of the recovery plan are already known.

December December December
2021 2020 2019
Discount rate (p.a.) 0.0% 0.2% 1.1%
Price inflation (p.a.) n/a
3.1%
2.8%
Increase to pensionable payroll (p.a.) -1.5% 1.6% 1.3%

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

Church Workers Pension Fund – Defined Benefits Scheme

The Defined Benefits Scheme (“DBS”) section of the CWPF provides benefits for lay staff based on final pensionable salaries.

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

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

The Scheme is a multi-employer scheme as described in Section 28 of FRS 102. It is not possible to attribute the Scheme’s assets and liabilities to specific employers, since each employer, through the Life Risk Pool, is exposed to actuarial risks associated with the current and former employees of other entities participating in the DBS. This means that contributions are accounted for as if the Scheme were a defined contribution scheme. The pension costs charged to the SOFA are the contributions payable for the year towards benefits and expenses accrued in that year being £75,967 for 2021 (2020: £67,107) offset by the reduction on the balance sheet liability of £114,000 (2020: £6,000 charge) in relation to the Scheme deficit highlighted in the table below and recognised in the SOFA giving a net credit of £38,033 for 2021 (2020: £73,107 charge).

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.

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

27. PENSIONS (continued)

Church Workers Pension Fund – Defined Benefits Scheme (continued)

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

The next actuarial valuation is due at 31 December 2022.

Following the valuation, LDBF has entered into an agreement with the CWPF to pay a contribution rate of 30.8% of pensionable salary and expenses of £7,300 per year. In addition, deficit payments of £92,154 per year have been agreed for 5 years from 1 April 2021 in respect of the shortfall in the Employer sub-pool. This obligation has been recognised as a liability within these financial statements.

Section 28.11A of FRS 102 requires agreed deficit recovery payments to be recognised as a liability. A reconciliation of the balance sheet liability is set out in the table below.

2021
 2020
£’000
 £’000
Balance sheet liability as at 1 January 206 292
Contributions paid (92) (92)
Interest cost (recognised in the SOFA) - 3
Remaining change to the balance sheet liability (recognised in the SOFA) (114) 3
----------------- -----------------
Balance sheet liability as at 31 December - 206
======== ========

The remaining change to the balance sheet liability comprises changes in the agreed recovery plan and changes in discount rates between year ends.

The balance sheet liability represents the present value of the deficit contributions agreed as at 31 December 2021, and has been valued using the following assumptions set by reference to the duration of the deficit recovery payments;

December December December
2021 2020 2019
Discount rate (p.a.) 0.0 % 0.3% 1.2%

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

Church Workers Pension Fund – Pension Builder Scheme

LDBF participates in the Pension Builder Scheme section of the Church Workers Pension Fund for lay staff. The Scheme is administered by the Church of England Pensions Board, which holds the assets of the schemes separately from those of LDBF and the other participating employers.

The Pension Builder Scheme of the Church Workers Pension Fund is made up of two sections; a deferred annuity section known as Pension Builder Classic and a cash balance section known as Pension Builder 2014 .

Both sections of the Pension Builder Scheme are classed as defined benefit schemes.

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

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

27. PENSIONS (continued)

Church Workers Pension Fund – Pension Builder Scheme (continued)

Pension Builder 2014 is a cash balance scheme that provides a lump sum which members use to provide benefits at retirement. Pension contributions are recorded in an account for each member. Discretionary bonuses may be before retirement depending on investment returns and other factors. The account, plus any bonuses declared, is payable, unreduced from age 65.

There is no subdivision of assets between employers in either section of the Pension Builder Scheme.

The Scheme is considered to be a multi-employer scheme as described in section 28 of FRS 102. This is because it is not possible to attribute the Pension Builder Scheme’s assets and liabilities to specific employers and that contributions are accounted for as if the Scheme were a defined contribution scheme. The pension costs charged to the Statement of Financial Activities in the year are the contributions payable and were £108,991 (2020: £120,462).

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

For the Pension Builder Classic section, the 2019 valuation revealed a deficit of £4.8m on the ongoing assumptions used. At the most recent annual review, the Pensions Board chose to grant a discretionary bonus of 3% following improvements in the funding position over 2021. There is no requirement for deficit payments at this time.

For the Pension Builder 2014 section, the 2019 valuation revealed a surplus of £5.5m on the ongoing assumptions used. There is no requirement for deficit payments at this time.

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

28. RELATED PARTY TRANSACTIONS

As noted in the Trustees’ Report the Board is related to the Leicester Diocesan Board of Education (LDBE), The Diocese of Leicester Academies Trust (DLAT), the University Chaplaincies at the three universities in the Diocese of Leicester, Leicester Cathedral Chapter (LCC), Launde Abbey Trustees (LAT), St Philips Centre (SPC), Bishop’s Lodge (BL), Coventry Diocesan Board of Finance (The) (CDBF), Together Leicester (ToL), and Leicester City of Sanctuary (LCOS). Details of grants made to these bodies are given in note 12 of the financial statements.

During 2021, LDBF recharged LCC £136,669 (2020: £84,573), of which £26,395 (2020: £22,368) were salaries or a stipend. Conversely, LCC recharged LDBF £24,013 being housing costs for a shared clergy resource (2020: £665).

During 2021, LDBF recharged LDBE £21,418 (2020: £94,640), of which £8,239 (2020: £79,106) were salaries. Conversely, LDBE recharged LDBF £9,199 (2020: £32,679) all of which (2020: £20,775) was interest on monies loaned.

During 2021, LAT recharged LDBF £25,924 (2020: £41,610) of which £9,526 (2020: £15,130) were salaries.

During 2021, LDBF recharged CDBF £65,768 (2020: £93,799), of which £54,323 (2020: £77,407) were salaries. Conversely, CDBF recharged LDBF £14,670 (2020: £29,263).

During 2021, SPC recharged LDBF £17,945 (2020: £41,720), of which £17,825 (2020: £41,440) were salaries and pension costs.

During 2021, LDBF recharged ToL £32,480 (2020: £39,939), of which £32,068 (2020: £38,340) were salary costs.

During 2021, LDBF recharged LCOS £53,055 (2020: £32,591), all of which (2020: £32,490) were salary costs.

There were no other related party transactions in the current or previous accounting period.

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

28. RELATED PARTY TRANSACTIONS (continued)

At the end of the year, the following amounts, all of which are included in debtors or creditors as appropriate, were receivable / payable by the Board in respect of related parties:

2021 2020
£'000 £'000
Amounts receivable / (payable) by the Board
Leicester Diocesan Board of Education (14) (658)
Coventry Diocesan Board of Finance (The) 9 (2)
Leicester Cathedral Chapter (16) 20
Launde Abbey Trustees - (2)
St Philips Centre (1) -
Leicester City of Sanctuary 5 -

29. FUNDS HELD AS CUSTODIAN TRUSTEE

The LDBF acts as Diocesan Authority or Custodian Trustee for many trust funds by virtue of the Parochial Church Councils (Powers) Measure 1956 and the Incumbents and Churchwardens (Trusts) Measure 1964, where the managing trustees are parochial church councils and others. Assets held in this way are not aggregated in these financial statements as the LDBF does not control them. The financial assets held in this way may be summarised as follows:

2021 2020
£’000 £’000
CBF Church of England Investment Fund - income shares 1,124 983
CBF Church of England Deposit Fund 771 768
Other common investment fund holdings 517 456
Direct holdings in UK equities 242 234
CBF Church of England Fixed Interest Securities Fund – income shares 48 51
Cash at bank 15 3
------------------ ------------------
Total assets held as Custodian Trustee 2,717 2,495
========= =========

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LEICESTER DIOCESAN BOARD OF FINANCE (THE) NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 31 December 2021

30. PRIOR YEAR COMPARATIVE SOFA

Unrestricted funds Unrestricted funds Restricted Endowment Total funds
General Designated Funds Funds 2020
£’000 £’000 £’000 £’000 £’000
Income and endowments from
Donations
Parish Contributions 4,157 - - - 4,157
Archbishops’ Council - - 2,790 - 2,790
Other donations 4 - 3 - 7
Charitable activities 298 2 786 - 1,086
Other activities 468 - - - 468
Investments 107 12 122 717 958
Other 92 - - 81 173
-------------------- ------------------ ---------------- --------------- --------------------
Total income and endowments 5,126 14 3,701 798 9,639
-------------------- ------------------ ---------------- --------------- --------------------
Expenditure on
Raising funds - - - 257 257
Charitable activities 9,980 12 623 - 10,615
Other 1,232 - - - 1,232
-------------------- ------------------ ---------------- --------------- --------------------
Total expenditure 11,212 12 623 257 12,104
-------------------- ------------------ ---------------- --------------- --------------------
Net (expenditure) / income
before losses and gains on
investments (6,086) 2 3,078 541 (2,465)
(loss) / Gain on investments (252) (3) - 1,044 789
-------------------- ------------------ ---------------- --------------- --------------------
Net(expenditure) / income (6,338) (1) 3,078 1,585 (1,676)
Transfers between funds 4,606 9 (2,882) (1,733) -
Loss on revaluation of
fixed assets (152) - - - (152)
-------------------- ------------------ ---------------- ----------------- --------------------
Net movement in funds (1,884) 8 196 (148) (1,828)
------------------- ------------------ --------------- ---------------- -------------------
Total funds brought forward 8,076 826 1,558 68,024 78,484
-------------------- ------------------ ------------------ ------------------ ----------------------
Total funds carried forward 6,192 834 1,754 67,876 76,656
========= ======== ========= ========= ==========

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