The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 Page ANNUAL REPORT A Legal Framework.......................................................-.................................................................... Al Legal Objects A2 Publlc Beneflt.................................................................. B Strategic Report . Bl Strategic Aim5.................................................................................,...............................,...,,..,.,.. B2 Objertives for the Year.................................... B3 Activlties and A¢hievements in the Year....................................,.......,................ B4 Future Plans..............................................,...,................. B5 Flnanclal Revlew. 86 Prlncipal Risks and Uncertainties...................,,.......,..........,...,...,,,......,.............................. C Structure and Governance..............,,...............,........ Cl Summary information about the structure of the Church of England C2 Organisational and decision maklng struciure C3 Trustee recrultrnent, 5electlon and induction..........................................-......................................... 24 C4 Remuneration of key management personnel................................................................................... 25 C5 Funds held as custodlan trustee C6 Funds held on behaw of Schools and Zambian dioceses............. D Trustees, Responsibilities..........................................................................................,,................... 25 DI Trustees Responsibilitie5 for Annual Reports and Accounts............................................................ 02 Ststernent of disclosure to the a￿d￿0r$...................,....,................................................................. 26 D3 Appolntment of audltors...........,...... E Legal and Administrative Details........................................ F Members and Trustees......................,,.....-....................................................................-................ 29 Independent Auditgrf5 Report...................................................................,,.. .31 FINANCIALSTATEMENTS ststement of Flnancial Activities........,,.....,,..... Income and Expènditure Account.. Balance Sheet Cash Flow Statement..........................,..... Notes to the Flnanclal Statements.......................................... APPENDICES Appendix A Consolidated Financial Trusts. Appendix B G10s5ary of ternis...................................................................... io 12 .17 .17 .20 .23 .25 .25 .25 .26 .27 .35 -36 .37 .38 .39 .87 .89 The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 The Trustees. who are also directors forthe purposes of company law, present their annual report together with the audited financial Statements forthe year ended 31 December 2020. In signing this combined report as trustees, they are 3150 Signlng the Strategic Report section in thelr capacity as director5. The comblned report satisfies the legal requirements for the following: A Directors, Report of a charitable companv; A Strategic Report under the Companies Act 2006; A Tru5tees' Annual Report underthe Charltles Act 2011. A Legal Framework Al Legal Objects The objerts of the Bath ènd Wells Dlocesan Board of Finance {DBFI cover the Dlocese of Bath and Wells which Includesthe entire county of Somerset and a small area of Dorset. The DBF'S principal object Is to promote. assist and advance the work of the Church of England in the Dlocese of Bath and Wells by actin8 as the financlal executive of the Bath and Wells Diocesan Synod. The DBF has the following Statutory responsibilities: the management of glebe property and inve5tmentsto generate income to support the cost of stipend5 arisingfrom the Church Property Measure 2018; the repair of benefice houses as the Diocesan Parsonages Board under the Repair of Benefice Buildings Measure 1972; the management of investments and the custodian of assets relatingto church schools under the Diocesan Board of Education Measure 1991; the custodian of permanent endowment and real property assets relatin8 to trusts held by Incumbent5 and Archdeacons and by Parochial Church Councils IPCCS) as Diocesan Authorlty underthe Incumbents and Churchwardens (Trusts) Measure 1964 and the Parochial Church Counclls IPowersl Measure 1956. The strate8lc priorities of the company are established by the Diocesan Synod in communication with Deanery Synods, PCCS. and the Bishop of Bath and Wells lin respect of his responsibility for the provision of the cure of souls). To thls end, significant time and effort is committed to communication between and with these bodies, as well as wlth the church nationally, including an annual series of consultations on specific matters relating to the priorities for the forthcoming vear, taking forward any commitments arising includingthe DBF Budget. The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 AZ Public Beiiefit The Trustees are aware of the Charlty Commisslon's guldance on public benefit in Yhe Advancement of Religion for the Public Benefit. and have regard to that guidance in their administration of the charity. The DBF belleves that this report provides evidence of the publlc benefit of the chariws work in 2020. As described more fully throughout the report, the DBF provides funds to support ministers of religion in the diocese, to support education and to Support the maintenance of many bulldings includin8 parsonages and churches, many of which form an Important part of the historic fabric and architectural herlta8e of the area. The vast majority are available to the public at large and none Is restricted to members of the Church of England. The religious purposes of the Church of En8land are serious and tend to the moral and spiritual Improvement of the public or, in other words, to the cure of souls. The ministers of religion seek to advance and promote the Christian religion amongst the people of the diocese and to sustain their belief in God, in part through the provision of public religious services, open to all. and in part through bearing Christian witness. B Strategic Report 2020 has brought challenges that no-one could have anticipated. In January 2020 the coronavirus was something happening in China yet within a short space of time it radically affetted life around the globe. Churches were closed, servlces moved online and the celebrations of Ilfe events were for many postponed. scaled down or carried out via Zoom. In July, Bishop Peter announced that he had leukaemia and commenced a perlod of extended sick leave, with Bishop Ruth returning from sabbatical to take the role as acting Diotesan Bishop. The extent to which the pandemlc has Impacted the diocese's resources is shown clearly in the financial statements, the closure of church buildings led to a reductlon not only In collection plate giving but income from hiring out venues such as church halls and parish fee income for weddings and christenings. Addltionally annual fund raising events such a5 fetes, garden parties and other social events had to be cancelled and churches such as Bath Abbey. whlch have a high number of visitors suffered an immense drop in income. In order to SUPPOrt the parishes the decislon was taken to support all parishes with less than three months reserves by giving them relief of up to 50% of their calculated Parish Share shortfall for the year. Parishes requiring further assistance were able to apply for loans from the DBF. A facility of £400,000 was made available to Bath Abbey and in 2020they have called down £200.000. The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 The budget set for 2021 assumed a deftclt and sought to implement cost savlng5 to ensure a balanced budget Sn 2022. However, the second and third national lockdowns have further impatted the finances of the parlshes and the diocese as a whole and have fast-forwarded the previously slow year-on-year decline in congregations and income and have brought Into focus the need for the diocese to focus its expenditure and resources on delivering the diocesan vision in a sustainable way and discerning new ways of achieving this in a post-covld world. Bl Strategic Aims In Ilne wlth Its legal and charitable objects, the role of the DBF 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 mi55i0n and strateglc prlorStles of the diocese. Dlocesan Vlslon The diocesan vislon is expressed in the followlng words: 'In response to God's immense love for us, we seek to be God's people Ilvlng and telllng the story of Jesus.. Strate8lc Prlorities The strateglc plan has three priorities for attion: l. to place mlsslon and evangelism atthe heart of everythin8that we do 2. to align our resources towards misslon 3. to identlfy, develop and release the gifts of all our people These strategic priorities govern the Implementation of the stratebry. They provide a framework for decision maklng and planningi at diocesan level but also for archdeaconrles and deanerles. The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 B2 Objectives foi. the Year Covid has impacted all aspetts of the delivery of the strate8ic plan for 2020, Ongoing objectives include: Placlng mlnlstry and rnission at the heart of everything that we do The Pioneer Project is on schedule to Its orlglnal tlmescale of 2018 - 2025. In 2020 all pioneer posts were deployed around the diocese. The projert has also started to deliver local pioneer training at a subsidised rate in the forrn of the Church Mission Society Certificate in Pioneer Mission. Alignln8 our resources towards mission Continue to focus on thls second strategic prlority. This involved several important activities: The Common Fund Committee continuing to explore posslble changes to the Common Fund Methodolo￿ to enable further allgnment of funds to mission at the local level. A Deployment Group examining how clergy and lay ministry deployment (both paid and voluntary) might be realigned to enable ministry and mission at the local level. Ministry for Mission developing enhanced parish support and exploring how we mi8ht address Issues around the ongoing use of our buildings. In November 2019 Bishop's Council resolved to move to total return accounting on its key endowment funds, the Diocesan Stipends Fund and Stipends Augmentation Trusts. Thls decision was taken to allow the investment portfoli05 to be invested more broadly and to smooth income streams by utilising the freedoms of new legislation to recognlse both capital gains and natural Income (dlvldends and interest) as income. Further details of the impact of this decision can be found in Note 18b. The DBF relocated its offices Wlthin Wells from The Old Deanery on Cathedral Green to a more modern building, Flourish House on Cathedral Park. This deliver5 better accessiblllty, as well as much improved ￿lIltY of rneetin8 and office spaces, in addition to long-term sustalnability of running c05t5. In 2020 the rolling resource plan has been updated from 2021 to 2025. Identlfylngi developlng and releaslng the glfts of all our people Archdeaconry days (one gathering in each of the three archdeaconries of the diocese} were held. These gathered over 200 people at each venue to consider practical ways in which the Christian faith can be lived out. This event is a partner5hlp with the national Church of England project "Setting God's People Free" and is in line with our diocesan vislon and third strategic priority. The Archdeaconry days are now part of the annual plans With further days being planned. The Bath and Wells Diocesan Board ofFinance Annual Report For the year ended 31 December 2020 B.4 Activities aiid Achieveinents in the Year Common Fund In 2020 the DBF increased thecommon Fund Isurn of Parish Share contrlbL¢tlonsl byle55than 0.5% compared with the 2019 level. In light of the Impact of Covid-19 Common Fund levels wlll be reviewed over the next five years {2Q21 to 2026}; Every effort 15 being made bythe DBF to review the costs covered bythe Common Fund to ensure the Common Fund 15 5UStainable through contributions by PCCS towardsthe ministry and other costs of the diocese, A large part of the costs are stipends, pensions, staff salarles and bullding maintenance c05t5, which all increase broadly in line wrth inflation. The DBF received 87.0% of share requested from parishes (2019- 98,3%). During the year, the Common Fund Committee continued to consider reflnements to the Parish Share methodolo8yto ensure that the allocatlon Is both fair and equitable to parlshes both large and small and to parishes whose memberships are elther better placed, or less well placed. to meet the share allocatlon. Proposals for making any significant changesto the allocation methodolo8y are brou8ht to Bishop's Council and Dlocesan Synod for approval before introductlon. Finanaal Operating Outturn The planned operating outturn forthe year was break-even. The actual operating deficit was £2.4m, Included in this years accounts Is a provision against loans given to PCCS for non- recoverablllty of £0.5m. The operating deficit primarily arose from lower Common Fund recoverablllty In the year. a reduction in parochial fees, a lower level of realised galns on parsonage houses, a lower level of clergy vacancies compared to expectation and provisions put In place for doubtful debts, partially offset by job retention grants for furlou8hing staff and reduced travel and subsisten costs as a result of lockdown restrictions. The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 Ploneer Project The Pioneer Project Is a diocesan initiative to create nine new pioneer posts to catalyse pioneerlng actlvity across Somerset and to reach out to areas and communities where the church has little impact. These posts are being phased in from 2018 to 2020 and each appolntment will be for an initial five years. Those appointed will focus on areas of deprivatlon, new communities and work with young people. The pioneers wlll be open to God's missional imagination as they seek to establish new and sustainable worshipping cornmunitie5 and to act as catalysts of further pioneering artivity. Alongside this the project is identifyin& training, and 5UPPOrtin8 emerging'grass roots pioneers,: voluntary pioneers who have a vocation to mission in their local context. The DBF is receiving a total of £1.6m sUPPOrt for the project from the Church Commlssloners from 2018 to 2023 through its Strategic Development Fund, and Is matching thi5 Wlth an allocation of £1.4m from the DBF Mission Development Reserve and £Q.Im from General Funds. All the outstanding pioneer posts were filled in 2020. Increased vocatlons Including Stipendiary curacy As part of the national initlatlve to traln more clergy the DBF Is increasing the number of curate posts available over the period from 2017 to 2021. In addition. following an invitation from the bishops in 2016 for prayer for an increase in vocations, the number of people exploring their callings with the Vocatlons Team has Increased substantlally. The DBF has committed to increase the number of stipendiary curate posts. In 2020, 9 posts were filled. The DBF contlnues to plan to Invest in stipendiary curate posts. Resourcing Diocesan needs The DBF holds glebe investments for the purpose of raising income to achieve the maximum contribution possible to clergy stipends on an ongoing basis, Glebe investments are held in agricultural land, commercial and residential land and buildings and financial inve5tment5 as descrlbed In note 18. The diocese is relatively strong financially compared with many other dioceses and expects to bear a proportionately larger share of National Church costs than less well-resourced dioceses. The DBF and the parishes it serves are resourced with over 600 clerbry, either licensed or with permission to officiate, including not only stipendiary parish priests. curates and archdeacons {note 14bl but also self-supporting ministers, chaplains, ministers with a House for Duty and many retired clergy. In addition there are over 350 lay mlnlsters, elther licensed or with permission to officiate, Includlng readers, authorised lay ministers and lay chaplains. The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 Volunteers The DBF Is dependent on the huge number of people Involved in church attivities both locally and at diocesan level. The servlce provided to a community through church volunteering also has a 5i8nificant impact on people's relationship to the church, particularly at times of crlsis. Wlthln this context, the DBF 8reatly values the considerable time 8lven by all committee members and other volunteers across the diocese in pur5UIt of the mission of the DBF. Desplte the challenges of Covld there have been many success stories during 202Q. The pandemic highli8hted the need for communications to be front and centre of dI0￿San strategy and action as never before. As worshlp and admlnistration went virtual, every partlclpant became a dl8ltal communicator, prompting a rush to 'skill up, amon8 diocesan staff, clergy and the wider church community, as in all other sertors. Churches across the dlocese saw growth in online communities though not all of these were sustalned- early indications show sustained growth among churches who were most prepared, who already had slgnlficant digital expertlse among thelr own staff and had a clear strategy for growth online. Diocesan social media channels also saw slgnificant growth in 2020 and the launch of new channels, such as a podcasting channel and Instagram. Vldeo dally prayers The daily prayers Put out on the diocesan social media channÈls were chan8ed at the beginning of lockdown to be produced as a dailyvldeo, lo enable people to feel prayed for by others on a more personal level, and also to encourage a sense of the famlly nature of the diocese, showcasing the individuals who make up our diocesan family, particularly lay people and there has been a huge appreciation for this change In format. Maxlm15e reach of new channels, Includlng podcast and Instagram: The diocesan comms team launched two new channels in 2020. The podcast ha5 be8un with pioneerin8 as a means of providing long form, discursive content for those interested i pioneering. In5ta8ram ha5 continued to evolve and has been developed by MES Intern. who is experimenting with different content and has developed an Instagram speclfic comms strategy. New di8ltal channels aim to reach beyond existlng audiences, many ofwhorn are alreadv engaged in diocesan structures. to those people who are occaslonal or infrequent worshippers in our church communities, or otherwlse sympathetic to our vision and values. Li5tenin8 Project The listening project was seen as a diocesan conversation and listening exercise and took place between Ilthjune and IOthJuly 2020. The aim was.. to hear what God is saying, and to discern where God is leading, through the time of Coronavlrus, in order to inform thlnking about the future shape of mission, mlnistry and support services in the diocese. The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 Seventeen groups were created each with a facilitator- including representatives of deanery chapters Iclergyl, churchwardens, Magnificat Parishe5, lay people. youth worker5, young people in dlfferent age groups, chaplains. full-time pioneers and people with little or no current engagement with the church. The results of the exercise were discerned to be - five overarching themes whlch wlll be used to gulde communlcatlons and strategy in the future". l. A desire not to return to the way things were. 2. Sadness for what has been lost. 3. Online church is here to stay. 4. A call for the church to be authentic. 5. The value of the small, the relational and the unseen. Following from the initial exercise, A small scale listening project was begun via Facebook at the end of 2020 for four months. using a small advertising budget to recruit people to flll In an introductory survey. Th15 almed to recrult people beyond the reach of normal diocesan channels and retain them as a part of a focus 8roup. Around 15 people have been retained as a focus group and a flnal set of questions is due in 2021. Related Parties General Synod, Church Commlssloners and Archblshop< Councll The DBF has to comply with Measures passed by the General Synod of the Church of En8land and also makes certain annual payments to the Archbishops, Council towards the running COSt5 of the National Church. As disclosed in note 13 certain costs of the bishops, including stipends and pension contributions are borne by the Church Commissioners. PCCS The DBF Is requlred by Measure to be custodlan trustee In relatlon to certain PCC property, but has no control over PCCS, whlch are Independent registered or excepted charities. The accounts of PCCS and deaneries do not form part of these financial statements. PCCS are able to influence the decision making within the DBF and at Diocesan Synod level through representations to those bodies and through the input of their Deanery Synods. Other The Church of England Penslons Board to which the DBF pays retirement benefit contributions for stipendiary clergy and employees. It also offers schemes to provide housin8 for clergy in retirement. The Chapter of Wells Cathedral from which the DBF receives modest alms. Some diocesan events held in the Cathedral are paid for bythe DBF. The DBF provides HR and Safeguarding services to the Chapter under service level agreements. The Foundatlon of St Matthias of which three DBF employees are trustees, from which the DBF receives grants for educational service5. The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 3 1 December 2020 The Bath and Wells Muftl Academy Trust IBWMATI BWMAT leases serviced office accommodation from the DBF and the DBF provided educational services to BWMAT during the year. BWMAT occupy school bulldlngs under agreement5 Wlth the DBF. The DBF does not exercise control over these buildings and therefore they are not recognised as assets in these financial statements. 8WMAT's company name and number isThe Bath and Wells Diocesan Academies Trust (08207095). The Palace Trust, Wells, of which the Bishop of Bath and Wells is a trustee. The DBF provides HR services to the Trust under a service level agreement. Dlscretlonarytrust funds administered by employees of the DBF. DBF trustees of these trusts are as follows: The Stone Trust15 DBF trustees, l DBF employee); The HerbertTrust12 DBF Trustees): Bishop's Rib11 DBF Trusteel; Wells Clerical Charity12 DBF trustees); The Archdeaeonry of Taunton Fund lor Clergy. their Widows and Dependants11 DBF trusteel., The Wynne Willson Scholar5hlp Fund (2 DBF trustees); and The Bath Clerlcal Families Fund12 DBF tru5tees}. Except for the Bath Clerical Families Fund, management charges are pald bythe trusts to the DBF and the DBF receives an annual 8rant from the Bishop's Rib towards the worklng costs of the three Archdeacons. Transactions with the main categories of related parties are identified In approprlate places throughout the financial statements. Where materiality of the transactions merits more detailed dlsclosure this is given in note 13 to the financial statements. B4 Futiire Plans During the course of 2021 the focus of work will be the renewin& resourcin8 and reshapin8the DBF to create a structure that IS Sustainable and can achleve a long-term balanced budget. This process wlll focus on key threads of Growing Faith, Everyday Falth, Dlscernlng Ministries and the Environment and wlll reflett the vlslon of the Archbishops forthe Church of England to be "Christ centred and Jesus shaped. Simpler, humbler, boldert as well as en5urin8 resource availability to implement the Discerning Ministries programme. The work is being undertaken by a team of senior DBF staff and an Archdeacon. Dlscernlng Mlnlstrles Discernin8 Ministries is the working title for the implementation of the Deployment Report which was developed and presented to Diocesan Synod durlng 2020. The choice of title 15 to emphasi5e that deployment is only one aspect of what Is beln8 done, Discerning Ministries aims to foster an imaginative approach to ministry and to shiftthe discourse away from managing with fewer cler8ytowards discerningthe call of God in each community. Extensive consultation with Bishops Council, Area Dean5 IADs} and Lay Deans {LDs) has revealed a broad consensus and "cautious optimism" around the dlrectlon of travel. The extent to which io The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 ADs/LDs have consulted in thelr own deaneries varies. The optimism is around a more imaginative approach to ministry and the potential of focal ministry to release vocations. There is caution around the inevitable restrictions of resources and clergy numbers, and some doubts about the pool of candidates for focal ministry. The model being developed for Discernin8 Ministries 15 based on three principles." l. To work with the focal ministry approach. taking account of the shift from "one vicar per benefice" to"a focal minister in every communltv.. It therefore avolds a percentage-based formula, based as that is on a clergy workload talculation {which takes no account of focal ministry). The intention is to allow the discernment and growth of focal ministries to continue in a natural way alon85ide the mini5tryof stipendiary cler8y, who are deployed according to this model. 2. To ensure a robust framework for deployment of ministry resource1311owing financial planning) without losing the creativity and theological vision which is implicit in the focal ministry approach. 3. To provide a rigorous framework for deployment decisions, ensuring consistency and falrness across the diocese. Cornrnon Fund Review The impatts of Covid have substantially affected the income of many if not all parishes and has raised questions around the calculation of Parish Share. The Common Fund Committee has been considering approaches to the calculation of Parish Share and this work will contlnue during 2021. incorporating the levels and distribution of stipendiary clergy identified throu8h the dlscernln8 mlnlstries work and incorporating the followln8 prlnclples.. Based on concept of mutual sUPPOrt Slmple to understand and glve parfshes an understandlng of how their contributions are deployed Support and reflect the mission priorities of the diocese Intentlvlse, and not penallse, congregational growth. li The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 Bfj Fiiiancial Review Flnanclal Performance- Income and expendfture The Statement of Financial Activities ISOFAI for the year on page 35 shows total Income and endowments of £13.7m12019- £14.3ml and total expenditure of £15.9m12019- £14.5ml, resulting in net expenditure of £2.2m12019- £0.2ml. Income decreased by £0.6m. with the main fattor being reduced parish share contrlbutions offset by gains received on sale of Board properties In the period. Total expenditure increased by 1.4m with an increase in charitable artivities spend of £1.4m on support for ministry, This is mainly due to making provlslon for non-recovery of parish loans, full ministryfor mi55i0n team being in place forthe 2020 and the Pioneer pro8ramme having all posts filled. In addition, unrealised investment losse5 of £0.2m, contributed to the net decrease in total fund5 of £2.4m12019- net Increase of £4.8m). Total fund balance5 decreased from £103.6m to £101.2m Flnanclal Performance- Cash flow As shown in the reconciliation in the cash flow statement on page 38, the net expendlture of £0.4m Included repayments of loan facilities, and a reorganisation of financial investment portfolio upon the handover from Charle5 Stanleyto Brewin Dolphin as Investment Managers. The net cash expended on operational activities was £3.2m12019- £2.Iml. The DBF funded the cash requirements through reallsatlon of Investment gains and sales of houses and Glebe land. Thls resulted In an overall net cash outflow for thÈ year of £0.4m (2019- £0.Im oufflow}. 12 The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 Investment Income Agricultural, commerclal and residential land and buildings are detailed in note 18. The Trustees have set a targeted overall return (Income plus capltal growth) of 4% plus inflation. The Trustees have elected to adopt Total Return accounting on certain permanent endowment funds meanlng that there is a drawdown of 4% against the balance held as Unapplied Total Return portion of permanent endowment funds as at the balance sheet date. Grants recelved The DBF gratefully acknowledges grants received from Allchurches Trust of £131,Crf)012019- £136,000) and from The Foundation of St. Matthias totalling £s7,0￿￿2019- £63,000). The DBF also received the following grants from the Archbishops, Council: £257,CM)0 {2019- £156,000) Strateglc Development Funding towards the Pioneer Projert £511,00012019- £434,000) block grant for ordinands, training fees and expenses under the Resourclng Ministerial Education process. 13 The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 Significant Property Transactions During the year, the DBF sold and acquired a number of properties, the number of propertie5 held reduced byfour. The DBF polbcy continues to be: to replace unsuitable cler8y properties; to accommodate the changing geographical deployment of clergy wlthln the dlocese and the increased number of curate posts,. to realise development potential in some properties, thereby usin8 our resources more effectively forthe ministry of the church. Balance Sheet Posltlon The net assets at the balance sheet date totalled £101.2m12019- £103.6ml. This includes properties totalling £65.7m12019- £65.9ml, whlch are mainly used to house the stipendiary clergy. Much of the remalnder of the assets shown in the balance sheet are held In restricted and endowment funds and cannot necessarlly be used for the general purposes of the DBF. The Trustees considerthat note 25 showsthat the restricted and endowment funds are held in an approprlate mlx of investment and current assets given the purposes for which the funds are held, which are explained In note 24. The Trustees are satisfied that the DBF has adequate resources to continue to operate as a going concern and have prepared the flnanclal statements on that basis. Reserves Pollcy Free reserves The Trustees require reserves to: meet short term excesse5 Qf expenditure over income provide funds for expenditure with long lrfe horizons such as clergy housing fund recognised future 'infrastructure' and strategic policies which will require resources, such as the changing structure of ministry and the deployment of clergy. It is the DBF'S policy to maintain the readlly realisable assets in the Unrestricted General Fund at between three and six months, unrestricted expenditure. The alm Is to ensure the availability of sufficient liquid funds to enable the DBF to meet its daily commitments. At 31 December 2020 the General Fund's net assets amounted to £4.3m12019- £5.9ml. The 2020 total expenditure from Unrestricted General Fund5 was £14m and the General Fund reserve provldes for 3.7 months, expenditure12019- 5.9 months), whlch Is within the target range of three to six months noted above. 14 The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 Deslgnated reserves Tanglble Flxed Asset reserve The deslgnated tangible fixed asset reserve of £5.Im {2019- £5.9m) represents the value of unrestricted reserves whlch are invested in the DBF'S operatin8 fixed assets Iprimarily DBF offices and clergy houses) which are not readily available to be liquidated. Diocesan Loan Fund The designated Diocesan Loan fund of £lm was created in 2014 bytransfer from the General Fund reserves. It provldes loans to PCCS for major capital projects where other loan funding Is not available. Mission Development Fund In 2015 Diocesan Synod approved the creation of a de5i8nated Mission Development Fund IMDFI by transfer of £lm from the DBF unrestricted General Fund to resource the developing strategy into the future and enable applications to the National Church's Strategic Development Fund. In 2017 a further £1.2m was allocated from the unrestrltted General Fund to fund the Pioneer Project over the next 5 years. At 31 December 2020 the balance on the fund was £0.8m12019- £1.Oml. Fund for Churth Growth FCG grant funding ceased at the end of 2018. The fund balance at 31 December 2020 was £45k12019 - £54kl which Bishops Council has agreed to transfer as start-up funding to a new independent Kingdom Growth Community Fund wlth slmilar purposes. Other desl8nated reserves The Trustees may designate additional unrestricted reserves to be retained for an agreed purpose where this is considered to be prudent. At 31 December 2020 these totalled £0.2m12019- £0.27ml. These designated reserves are reviewed on an annual basis and returned to the general fund In the event that there Is no further need to retain them for the purpose of their designation. A description of each reserve together with its intended use is set out in note 24. Restricted and Endowrnent Funds As set out in note 24 the DBF holds and administers a large number of restricted and endowment funds. A5 at 31 December 2020 restricted funds totalled £1.9m12019- £2.8ml and endowment funds totalled £87,8m (2019- £86.7ml. Restricted and Endowment funds are not available for the general purp05e5 of the DBF. Grant maklng pollcy The Memorandum of Association of the DBF explicitly permits the DBF to make grants In pursuance of its objects. and the nature of grants made in 2020 is indicated in note 12. Grants are made to the National Church to cover a proportion of it5 central costs and also to cover the cost of tralning for mlnistry. Grants are paid to other connected charities and to other charitable projects which appear to the DBF to support the furtherance of the DBF'S objects. 15 The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 Investment Policy The DBF is empowered by Its Memorandum of Association to Invest monies not immediately required for its purposes. In additlon, the DBF acts as trustee of a number of trust funds, and these must be Invested in accordante with the related trusts. The DBF'5 policy is to revlew regularly the assets of each fund for which it is responsible, in relatlon to the purposes of each fund, and to identify appropriate investment vehlcles. Note 25 provides details of the assets of each fund, together with the related purposes, and note 18 summarlses the movements in investments during the year, In November 2019 the trustees pa55ed resolutions in accordance with 5ertion 104A of the Charities Act 2011 to adopt Total Return in respect the permanent endowments identified as Dlocesan Stipends Fund Capital and Stipends Au8mentation Trusts, limited to investment assets (Glebe Land holdlngs and financial investments), The trustees have determined that the historic Endowment Fund values will be indexed by the UK Consumer Prices Index (CPI) annually in future years. The inrtial annual withdrawal rate of Income will be defined as up to 4% of the total value of investments calculated on a 5 year rolling average to previou5 year end, using quarterly valuations. This will be allocated to the Income Fund annually. Any chan8e in annual withdrawal rate and any use of the Unapplied Total Return Fund over and above the annual withdrawal rate may be approved by Bishop's Council onlv after a full review by the Investments Committee and recommendatlon bythe Finance Group. Programme related Investments The DBF provldes loan finance to PCCS and related projects through two loan initiatives: CCLA backed Dlocesan Loan Scheme This scheme allows PCCS to obtaln loan finance from the DBF at low interest rates for period5 from 5-7 years to facilitate buildin8 or other projects which further the mission of the church. The DBF has received loan funding from CCLA totallin8 £lm which is available to provide these loan facilities until May 2026. Loans range from £3,IX)O to £150,000. At 31 December 2020 the total loans outstanding from parishes was £490,951 {2019- £610.0111. Dlocesan Loan Fund The DBF has designated a £lm reserve to allow further loans to be extended to PCCS where CCL4 funds are not available. These loans are repayable over variable periods and are at a low interest rate. At 31 December 2020 loan balances were £411,076 and a further £300,000 had been committed to future projects. The DBF considers that these investments asslst PCCS to achieve the mutual charitable objects of furthering the mission of the church wlthln the diocese and complement the PCCS use of grant 16 The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 funding and local fundralslng Including pledged donations which are received over a number of years. Provision Is made in the accounts for any assessed non-recoverablllty Issues. B6 Principal Risks and Uncertainties The Trustees have overall responsibility for risk management and Internal controls. Consequently, they have put in place a risk management strategy designed to ensu￿ that the principal risks to the organisation are identified and managed. The Trustees delegateto the Audlt and Rlsk Mana8ement Group IARMG} the task of ensurin8 that rlsks are identified, revlewed, managed and brought to their attention. A risk reglster is compiled and regularly updated by ARMG. The Trustees are able to revlew changes to the risk register at all meetings and the full risk reglster Is presented at least annually as part of the corporate risk management strategy. The risk re8lSter 15 continuously refined to provide a responsive tool to assist the trustees in securing Diocesan strategic goals. The register Is divided Snto two main sections, the High Risk and Critical Events register and 3 SUPPOrtin8 General Risk Register. Addltlonally, for 2020, and into 2021, a specific COVID-19 Pandemic Risk Implications Register has been constrncted and reviewed. COVID-19 Pandemlc The Covid-19 Pandemlc has meant churches, parishes and the Diocese have been forced to adapt significantly. Income streams into churches from irregular giving, rental, fundralslng and parochial fees have been severely interrupted and that in turn challenges payment of the DBF main income stream of parish share as well as the DBF share of parochial fees. Atthe same time investment portfolios have reduced in value and sales of 8lebe land and house disposals have been disrupted. The DBF main expenditure (Stipends) continues uninterrupted. Planning for and securing the financial resilience of the DBF is a key risk for the Trustees to manage. Risk mitigation measures have been discussed and put in place, the most significant of which are: Focussing expendlture on essential and strategically important items Sharpened budget and cashflow management reviews and challenge Push through house and land sales where financially prudent to do so Regular two-way engagement and communications with PCCS Financial and other support for PCC'S as necessary Policies and procedures adapted to accommodate staff sickness. absence and skill loss. Asslst in the development of multl-modal approaches to worship and community 2022 Budget and ftve-year flnanclal resourclng plan Having weathered 2020 and set a manageable budget for 2021. future years requlre that the DBF achieve financial viability with a balanced budget supportin8 the strateglc activities and needs 17 The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 identified. Continued reductions in church membership will result In stralns on parish share collectlon and operating bud8ets. The Risk mitlBations include: Diocesan strategy for church growth Artive two-way engagement with PCCS on their finances. Major review of DBF costs and expenditure imperatives Diocesan Strategy The consequences of the COVID-19 pandemic through-out 2020 slowed down progress on the implementation of the strategy. A new Chief Executive was appointed and created a dedicated 8roup to work on pur5uin8 the strategic plan. In addition, a key strategic activity has been the work of the Deployment Group seeking the m05t effective and efficient use of the manpower resources avallable. The work on the Common Fund model is also important, though changes in methodology are dependent on the outcome of the Deployment Group's work and implementation has been delayed significantly because of the lockdown. More generally, Covld-19 might come to be seen as a major di5continuitythat requires, and even encourages, a fundamental reassessment of the future shape of the Church. Hlgh Risks arising froffl 2020 The maln risks Identlfied and their impact,. Steps taken to mitigate, and further steps that would reduce risk in the coming year are: Main risks- Over-complex structures and processes undermine effertive decision-makin8, and the structure of the Blshop's Council impedes Board effectiveness. Key decislons that ensure future viability will not be made or actioned In a tlmely manner. That there is a failure to become more outward-looking, to find and develop role models, clergy and lay, and to serve and strengthen relationships with the 98.5% in the wider communlty not part of the church. That there are too many generic and unmeasurable goals, and fallure to set a clear purpose. That there 15 a lack of leadershlp capaclty and sl8nlficant leadership ski115 at a critical time. Trustees lack the relevant experience, expertise, training or confidence The information flow from the organisation is incomplete and/or the terms of reference of key committees18roups are inadequate 18 The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 Mitigated by: The New CEO is leadin8 a team dedicated to pursuing a restructuring proce55 to deliver outcomes-oriented, action-oriented and timely decision making, with responslbllitles and authority made clearer. A review of Governance that focusses on effectlveness, how to make best use of the resources available and contribute actively. Recognition of need to clarify Archdeacon and Deanery roles and their relationship with the staff support provided from DBF. Committing to a balanced budget for 2022 and to financial viability as a strategic priority. RevSews/restructurin8 and cost saving decisions completed by mid- 2021. Employ project management techniques to key chan8e elements to monitor and ensure successful implementation and outcome5. Identify and develop role models, both clergy and lay, who can re-build and strengthen the relationship with the 98.5% who are not part of the Anglican communlty. Prioritise serving the community (not just the church or congre8ations}. DBF to prioritise its role as servin8 parishes and deanerles. Strengthen the scrutiny role of Trustees, supporting with skills analysis and training as appropriate. Each of these areas will be kept under review to assess whether appropriate actions have been taken over the next 12 months. Education- MAT A rnajor risk identified is the lack of resources and capacity within the education department leading to the department being potentially unable to meet its academlsation pro8ramme, Its duties to VAIVC schools and support for smaller schools around the Diocese. Mitlgated by., Fllling some addltlonal posts on a fixed term basis Re-or8ani5ing the department to focus on new duties and respon5ibilitie5 Appointment of further Chaplaincy Advisors in schools Continuous training initiatives across the local educational panorama. Development of a small school's strategy Critical Events The main risks within the control of the DBF identified as critical events are failures in safeguarding of children and vulnerable adults and disaster planning. They have a low probability of occurring but would have a major impact were they to do so. Safeguarding risks are mitigated by a robust safeguarding policy and procedures adopted by the diocese, by hlghly skilled safeguardlng officers who ensure all staff and volunteers are properly checked and trained, by hlgh quallty communlcation and by a dedicated safeguarding group who together with parlshes, review all potential safeguarding issues, including the uncovering of historlc allegations, and ensure that the statutory and reporting responsibilities are fulfilled. Disaster planning risks are mitigated through a robust IS recovery plan, data backup procedures and precautions, a bullding recovery plan, and insurance cover. 19 The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 C Sti'ucture aiid Govei"nance Cl Suinmaiy iJ)formation abolit the structure of the Church vf Englaiid The Church of England Is organlsed as two provinces; each led by an archbishop (Canterbury for the Southern Province and York forthe Northern). Each province comprises dioceses of which there are 41 in England. Each diocese In England is divided into parishes. Each parish is overseen by a parlsh priest (usually called a Vicar or Rectorl, From ancient time5 through to today, they and their bishop are Jolntly responsible for the 'cure of souls, in thelr parish. Her Majesty the Queen, who is the Supreme Governor of the Church of England, appolnts archblshops, blshops and deans of cathedrals on the advice of the Prime Mlnlster. The two archbishops and 24 senior bishops sit in the House of Lords. The Church of England is episcopally-led (there are over l(KJ blshops including diocesan bishops and assistant or suffragan bishop51. It is governed by General Synod as its le8lslatlve and deliberative body at national level, making decisions on matters of doctrine, the holding of church servlces and relations with other churches. General Synod passes measures which, if accepted by Parllament, have the effect of acts of Parliament. It is made up of three 8roups or houses of members.. the Houses of Blshops, of aer8y and of Laity, and meets in London or York at least twlce annually to consider legislation for the broader good of the thurch. The Three Natlonal Church Instltutlons The Archblshops, Council, the Church Commissioners and the Church of England Pen5ion5 Board are sometimes refÈrred to as the three Natlonal Church Institutions. The Archbishopg Council was establlshed in 1999 to to-ordlnate, promote, aid and furtherthe mission of the Church of England. Its task is to give a sense of direction to the Church of England nationally and 5UPPOrt the Church of England locally in parishes and dioceses. Its goals are: Contributlng to the Common Good,. Promotingthe spiritual and numerical 8rowth of the Church and Seeking to reimagine, reshape and re-energi5e lay and ordained ministry. The Church Commissloners manage the historic assets of the Church of En8land, spendlng most of their income on pensions for the clergy. The Stipend, housing and office costs of the Bishop of Bath and Wells are met by the Church Commissioners. In the case of the Bishop of Taunton, the stipend and office costs are met by the Church Commissioners wlth the housing costs being met by the DBF. The Church of En8land Pensions Board was established by the Church A55embly in 1926 as the Church of England's pension authorlty and to administer the penslon scheme for the cler￿. Subsequently it has been given wider powers, in respect of discretionary benefits and accommodation both for those retired from stipendiary ministry and for widow{erls of those who have served In that ministry, and to administer pension schemes for lay employees of Church of England or8ani5ations. The Pensions Board, which reports to the General Synod, is trustee of several penslon funds and charitable funds. Whilst the Church of En8land has drawn together under the Pensions Board its central responsibilities for retirement welfare, the 20 The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 Pensions Board works in close co-operation both with the Archbishops, Councll and with the Church Commi55ioners. The Cathedral The Cathedral is the mother church of the diocese and legally is constituted as a separate charity currently exempt from Charity Commission registration and supervision. For Wells Cathedral copies of its tru5tees' report and financial statements may be obtained from the Cathedral Office. Chain Gate. Cathedral Green. Wells BA5 2UE. The information about General Synod, the Church Comrni55ioner5, the Archbishops, Council and We115 Cathedral is included as background only. The financial transactions of these bodies do not form part of these financial statements. The Diocese Dlocesan Synod The statutory governing body of the diocese is the Dlocesan Synod which Is elected with representatlon across the diocese with broadly equal numbers of clergy and lay people meetln8 together with the two bishops. Elections occurred during 2018 forthe 2018 to 2021 trlennium. Its role is to.. consider matters affecting the Church of England in the diocese; act as a forum for debate of Christian opinion on matters of religious or public interest,. • advise the Bishop of Bath and Wells where requested,. deal with matters referred by General Synod; provide for the financing of the diocese. Deanery Synod A Deanery Synod has two houses, laity and clergy, and its role is to". respond to requests from General Synod- 8ive effect to the decisions made bythe Diocesan Synod; consider matters affectingthe Church of England by drawingtogether the views of the parishes within the deanery- act as a channel of communication to expre55 the views of parlshes to Diocesan Synod and thence to General Synod; raise with Diocesan Synod such matters as it considers appropriate: elect members of the deanery to the Diocesan Synod and of the diocese to General Synod. The Bishop's Councll Under the standin8 orders of the Diocesan Synod, Blshop's Councll has the following funrtions: to plan the business of the Synod, to prepare the agenda for its sessions and to circulate to members information about matters for discussion; to initiate proposals for action by the Synod and to advise it on matters of policy; to advise the Bishop of Bath and Wells on any matter; 21 The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 subject to the direttions of the Synod, to transact the buslness of the Synod when the Synod 15 not in session; subject tothe directions of the Synod, to appoint members of committees or nomlnate individuals for election to commlttees; to carry out such functions as the Synod may delegate to it. A further important funrtion of the Council is . to review and co-ordinate diocesan policy and 5trate8y and especially °Llvln8 the Story, Tellingthe Storf. Since l April 2008 the members of the Bishop's Council have also acted as: the board of directors and trustees of the DBF; the membership of the Dlocesan Misslon and Pastoral Committee, a statutory body reviewing the arrangements for pastoral supervislon and advlslng the Blshop of Bath and Wells accordlngly. Electlons occurred durlng 2018 forthe 2019 to 2021 triennium. Parochlal Churth Counal (PCC) The PCC is the elected 8overning body of an individual parish which broadly Is the smallest pastoral area in the Church of England. Typically each parish has one parish church. The PCC is made up of the incumbent or priest-in-charge as chair, the churchwardens and a number of elecied and ex officio members. Each PCC is a charity, but those with annual income below £IOO,Crf)O are currently excepted from the need to register with the Charty Commission: all others are now required to register. Except where shown, the transactions of PCCS do not form Part of these flnanclal statements. Pastoral Unlts A beneflce15 a parish or8roup of parishes served by an incumbent or priest-in-charge who typically receives a stipend and the benefit of free occupation and use of a parsonage house from the diocese for carryln8 Out splritual duties. A deanery is a group of parishes over which an area dean has oversl8ht and an archdeaconry is a group of deaneries for which an archdeacon is responsible. There are nineteen deaneries and three archdeaconrfes In the diocese. The diocese is then the principal pastoral, financial and admlnlstrative resource of the Church of England, encompassin8 the various archdeaconries under the spiritual leadership of the Blshop of Bath and Wells. The Diocese of Bath and Wells wa5 created in 909. It covers an area of 1,610 square miles and has a population of approximately 964,000. There are 560 Anglican churches in 461 parishes and 179 benefices within the diocese served by 185 average full tlme equivalent stipendiary cler8y posts, as well as curates. house-for-duty and non-stipendiary clergy, readers and lay ministers. 22 The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 Dlocesan Board of Education IDBE) The DBE is constituted under the regulations as set In the Dlocesan Board Measure 1991. The 80vernance structure forthe DBE was changed from l January 2016 to enable more effective and representational governance. DBE members include current educational practitioners, diocesan clergy and individuals Wlth skills in finance, HR, leadership and public relations: The Bishop of Bath and Wells (or a person nomlnated by hlml 2 further nominations bythe Bishop of Bath and Wells The Diocesan Director of Education 8 persons appointed with the approval of Diocesan Synod Up to 4 co-opted Members appointed by DBE members The term of office for non ex-officio appointments is three years. The DBE meets three tlmes a year In February, June and November. An additional meeting with Bishop's Councll occurs in November. Four operational sub-8roup5 of the DBE meet more regularly and 5UPPOrt the staff of the diocesan education department: Executive Support Group School Effectiveness Working Group School Organisation Working Group Children and Youn8 People Worklng Group The DBF lincorporatingthe DBEI supports 181 Church of England designated schools serving approximately 37,500 children and their families. There are an increasing number of different models of school organisation, reflecting the move to more collaborative working between schoo15. In the diocese, as well as Voluntary Aided IVAI and Voluntary Controlled IVC) schools, there are Multl Academy Trusts (MATS) with church schools in them, including the Bath and Wells Diocesan Academies Trust la separate corporate legal entity), operatin8 as the Bath and Wells Multi Academy Trust IBWMAn. BWMAT was orlglnally set up to support underperformlng church schools in economicallv disadvantaged area5 but is expanding to include good and outstanding schools in order to better facilitate school to school support. C2 Organisational and decision making structure The company, The Bath and Wells Diocesan Board of Finance IDBFI, was incorporated on 6 March 1915 as a company limited by guarantee (No. 139557} and its governing documents are its Memorandum and Articles of Association. The DBF is re8lStered with the Charity Commission (No. 2493981. The companywas formed to manage the fSnanclal affairs and hold the assets of the diocese. Its principal activity is to promote. assist and advance the work of the Church of En8land withln the Diocese of Bath and Wells. 23 The Bath and Wells Diocesan Board ofFinance Annual Report For the year ended 31 December 2020 Governance and policy of the DBF is the responsibility of the Trustees, who are dirertors of the company and trustees for the purposes of charity law, Since l April 2008 the members of the Blshop's Council (which is the Standing committee of the Dlocesan Synod) have been the Board of Directors (the Board) of the DBF. and the members of the Diocesan Synod have been the members of the DBF. Additionally, there is the Finance Group of the Bishop's Council, atting for and assisting the Board In Its more detailed work. The Board has delegated responsibility forthe day-to-day management of the companyto the Dlocesan Secretary who is supported by an Assistant Diocesan Secretary, Head of Finance and Operations, HR Manager, Head of Communications and their respective staff. The Diocesan Secretary also meets regularly wlth the three archdeacon5, and with heads of the main functions {Ministry for Mission and Education). The statutory governing body of the diocese is the Diocesan Synod, which is an elerted body with representatlon from all parts of the diocese. Its legal basis is the Synodlcal Government Measure 1969. Membership consists of exvofficio members, including the bishops and archdeacons, cler8y members elected by the houses of clergy In deanery synods, lay persons elected bythe houses of lalty in deanery synods. up to five persons who may be COvOPted by the house of clergy or the house of laity and a maximum of ten members nominated by the Bishop of Bath and Wells. The Diocesan Synod normally meets three times a year during March, July and October. C3 Triistcie i'ccruitmcnt, sL'lcction and iiiduction The Board includes.. Ex-officio Trustees Trustee5 who have been elected by Synod to serve for three years, and Trustees appointed by the Bishop of Bath and Wells for the same term. All new Trustees are 8lven an induction pack with key information about the DBF, their role as Trustees and their role as company dlrectors. All Trustees receive induction training when first appointed and receive ongoing trainin& as approprlate. 24 The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 C4 Remuneration of key management personnel Emoluments of higher paid employees are determined by the Conditions of Service Group. Remuneratlon Is set followSng a remuneration policy which includes regular appraisals, and remuneration and salary benchmarking. The pollcy has been approved by the Board. Details of the aggregate remuneratlon of key management personnel is shown in note 14 to the accounts. C5 Funds held as aistodiai) trustee The DBF 15 Custodian trustee of assets held on pennanent trust by virtue of the Parochlal Church Councils (Powers) Measure 1956 and the Incumbents and Churchwardens (Trusts) Measure 1964 where the mana8ing trustees are PCCS and others. These assets are not aggregated in the financial statements as the DBF does not control them, and they are segregated from the DBF'S own assets by means of a separate bank account and accounting system. Further details of financial trust assets. whose market value amounted to £11.8m at 31 December 202012019- £11.5ml, are avallable from the DBF on request, and are summarised in note 30. Where properties are held as custodian trustee, the deeds are identified as such and held in safe custody by the DBF. C6 Funds held on behalf of schools and Zambian dioceses The DBE is incorporated within the DBF and recelves contributions from governor5 of church schools within the diocese and government grants in connettion with major repair and capital projects to church schools. The DBE administers these monies a5 managing agent and makes appropriate payments to contractors for work carried out. The monies do not belongto the DBE and as such do not forrn part of these financial statements. The amount held at 31 December 2020 was £352,023 {2019- £398,126). The DBF manages UK bank accounts for the Ilnk dioceses in Zambia as managing agents. The monies do not belon8 to the DBF and as such do not form part of these financial statements. The amount held at 31 December 2020 was £52,342 (2019- £51,617}. D Trustees, Responsibilities DI Trustees, Responsibilities for Annual Reports and Accounts The Trustees are responsible for preparing the Trustees. Report, incorporating the Strategic Report, in accordance with applicable law and regulations. Company law requires the Trustees (in their capacity as directors} to prepare financlal statements for each financial year which give a true and falr view of the state of affairs of the ompany and of the net income or expendlture of the company for that year. In preparing those tlnancial statement5 the trustees are required to.. select the most suitable accounting policies and apply them conslstently; make judgements and estimates that are reasonable and prudent- 25 The Bath and Wells Diocesan Board ofFinance Annual Report For the year ended 31 December 2020 follow applicable accounting standards and the Charltles SORP IFR51021, subject to any material departures dlsclosed and explained in the financial statements; prepare the financial statements on the golng concern basis unless it is inappropriate to presume that the company will continue in buslness. The Trustees are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safe8uarding the corporate and trust assets of the company and ensuring their proper application under charity law and hence for taking reasonable steps for the prevention and detection of fraud and other irregularftles. D2 Statement of disclo%ure to the auditors The trustees have taken all the necessary steps to ensure that they are aware. as trustees, of any relevant audit information and to establish that the auditors are aware of that Information. As far as the trustees are aware, there is no relevant audit information of which the compan(s audltors are unaware, D3 Appointment of aiiditors A resolution to reappoint Haysmaclntyre LLP as auditors to the company and to authorise the Trustees to fix their remuneration wlll be proposed at the Annual General Meeting. No trustee had any beneficial interest in the company during 2020. The names of the Trustees {who a150 act as directors) who served duringthe period l January 2020 to 16 June 2021 are shown in section F. Trustees, remuneration and expenses are detailed in note 13 to the accounts. On behatf of the Board June2021 Rt Revd R Worsley Trustee l Theodoreson Chalr 26 The Bath and Wells Diocesan Board ofFinance Annual Report For the year ended 31 December 2020 E Legal and Admilli5tratfjve Details Registered Office Flourish House 2 Cathedral Avenue Wells Somer5et BA5 IFD 01749 670777 8eneral@bathwells.anglican.org vMw.bathandwells.org.uk Telephone E-mall Website Chalrs DBF Chair and Chair of the Finance Group Preb H T Musselwhite BA FKC (resigned 31 December 20201 Mr l Theodoreson FCA (Appointed l January 2021) Dr A A Palmer LLM PhD FCIB DBF Vice-chair and Chair of the Houses Commlttee DBF Vice-chair and Chair of the Conditions of Service Group Chalr of Investments Commlttee Mr l Theodoreson FCA Chair of Common Fund Committee The Venerable Dr A Youings Chair of the Audit and Risk Management Mr K Beecham Group Mrs M Lee Officers Diocesan Secretarv Preb N May MBA FCA {to 29 August 20201 Ms S Kindleysides Ifrom I September 20201 Mr P Evans BA ACIS Mrs l Taylor MA FCA DChA (to 30 April 20201 Mr M Pinnock BSC FCA {from l May 20201 Mr5 J Long Bsc MRICS Ito 31 January 20211 Mrj Millard Bsc MRICS Ilrom l March 20211 Ms R Paveley Ms E Andrews Ms G Armstrong Revd C Peer Asslstant Dlocesan Secretary Head of Finance and Operations Head of Property Services Head of Communications HR Manager Safeguarding Adviser Head of Strategic Programme Agents Solicitor and Dlocesan Re8iStrar Preb R Callaby LLB 14 Market Place Wells Somerset BA5 2RE Greenslade Taylor Hunt l Hi8h Street Chard Somer5et TA20 IQF Haysmacintyre LLP 10 Queen street Place London EC4R IAG National Westminster Bank PLC 7 High Street Wells Somer5et BA5 2AD Consultant Land Agents Auditors Bankers 27 The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 Investment Managers CCLA Investment Management Limited Senator House 85 Queen Victoria St London EC4V 4ET Brewln Dolphin Pynes Hill Woodwater Park Exeter EX2 5FD 28 The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 F Memhers and Trustee.s The members of the Bath and Wells Diocesan Synod are members of the DBF. Similarfy, members of the Bishop's Council are directors and trustees of the DBF. The Bishop's Council consists of the following members- Ex-officio the Bishop of Bath and Wells (the President), the Bishop of Taunton, the Archdeacons, the Dean of Wells, the VictrPresldents Ichairs of Diocesan Synod House of Clergy and Laity) Nominated - Up to five lay members nominated by the president, Including the Chairs of the DBF and DBE Elected - five members (two clerbry and three13yl of the three archdeaconries The Blshop's Council appoints the Finance Group with delegated powers to manage the operational financial affairs of the DBF. The followin8 served as Dlrectors and Trustees for the perlod from l January 2020 to 16 June 2021 Ex offlcio The Rt Revd P Hancock The Rt Revd R Worsley The Venerable A Gell The Venerable S Hill The Venerable Dr A Youings The Very Revd J Davies The Revd Preb J Haslam Mrs M Masters Blshop of Bath and Well< nomlnees Mr A Blackshaw Mrs M Lee Preb H T Musselwhite (to 31 December 2020) Mr l Theodoreson (from l January 20211 Dr A A Palmer Elerted Bath Archdeaconry The Revd S Buddle The Revd R Drlver Mr P Edge Mr J Loring Dr C Mason 29 The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2020 Elected (contlnuedl Wells Archdeaconry The Revd B Faulkner The Revd D MacGeoch (elerted 16 January 2020} Mr T Hind Mr C Jenkins Dr R Sage Taunton Archdeaconry The Revd M Andrew5 (elected 19 May 20201 The Revd C Ralph The Revd A Thomas (until 29 March 20201 Mrs K Cannell Mr S Grimshaw Mrs K Tucker 30 IndependentAuditor's Report to the Members of The Bath and Wells Diocesan Board of Finance For the year ended 31 December 2020 Oplnlon We have audited the financial statements of The Bath and Wells Diocesan Board of Finance for the year ended 31 December 2020 whlch comprise the Statement of Financial Artivities, the Income and Expenditure Account, the Balance Sheet, the Cash Flow Statement, and notes to the financial statements. including a summary of 5i8nificant accountin8 policies, The financial reporting framework that ha5 been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reportin8 Standard 102 The Financlal Reporting Standard applicable in the UK and Republic of Ireland (Unlted Kingdom Generally Accepted Accounting Practice). In our opinion, the financial statements: give a true and falrview of the state of the charitable companvs affairs as at 31 December 2020 and of the charitable compan¢s nel movement in funds, includin8 the income and expenditure, for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accountlng Practice; and have been prepared in accordance with the requirements of the Companles Act 2006. Basls for oplnlon We conducted our audit in accordance with International Standards on Auditing (UK) IISAS IUKI) and applicable law. Our responsibilities under those standards are further described in the Auditorfs responsibilities for the audlt 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 basls for our opinion. Concluslons relatln8 to 8olng concern In auditingthe financial 5tatement5, we have concluded that the trustees, use of the golng concern basis of accounting in the preparatlon of the flnanclal statements Is approprlate. Based on the work we have performed, we have not identified any material uncertainties relatlng to events or conditions that, individually or collectively, may cast Sl8nificant doubt on the charitable company's ability to continue as a going concern for a perlod of at least twelve months from when the financlal statements are authorised for issue. Our responsibilities and the responsibilitie5 of the trustees with respect to goln8 concern are described in the relevant sertions of thls report. 31 IndependentAuditor's Report to the Members of The Bath and Wells Diocesan Board of Finance For the year ended 31 December 2020 Other Informatlon The trustees are responsible for the other information. The other information comprises the information Included in the Annual Report. Our opinion on the financial statefflents does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express anyform of assurance conclusion thereon. In connectlon with our audit of the financial statements, our responsibility is to read the other informatlon and, in dolng 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 materlal misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other informatlon. If, based on the work we have performed, we conclude that there is a material misstatement of this other Information, we are requlred to report that fact. We have nothing to report in this regard. Opinion5 on other matters prescribed by the Companles Act 2006 In our opinion, based on the work undertaken in the course of the audit: the information given in the Annual Report {which includes the strate8lc report and the directors, report prepared for the purposes of company law) for the financial year for which the financial statements are prepared is consistent with the financial statements; and the strategic report and the directors, report Included within the Annual Report have been prepared in accordance with applicable legal requirements. Matters on whlch we are requlred to report by exception In the light of the knowledge and understanding of the charitable cornpany and its environment obtained in the course of the audlt, we have not identified material misstatement5 in the Annual Report (which incorporates the strategic report and the directors, report}. We have nothingto report In respect of the following matters In relatlon to whlch the Companies Act 2006 requires us to report to you if, in our opinlon: adequate actountln8 records have not been kept by the charltable company, or returns adequate for our audit have not been received from branches not visSted by us],' or the charitable company financial statements are not in agreement with the accountlng records and returns; or certain disclosures of trustees, remuneration speclfied by law are not made,. or we have not received all the information and explanations we require for our audlt 32 IndependentAuditor's Report to the Members of The Bath and Wells Diocesan Board of Finance For the year ended 31 December 2020 Responslbilltles of trustees for the flnancial statements As explained more fully in the trustees, responsibilities statement set out on page 25. the trustees Iwho are also the dirertors of the charitable company for the purposes of company lawl are responsible for the preparation of the financial statements and for being satisfied that they give a true and falr vlew, and for such internal control as the trustees determine is necessary to enable the preparation of financial 5tatement5 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 compan(s ability to continue as a goin8 concern, disclosing, as applicable, matter5 related to going con￿rn and uslng the golng concern basis of accountlng unless the trustees either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so. Audltorfs responsibilltles for the audlt of the flnanclal statements Our objectives are to obtain reasonable assurance about whether the financlal statements as a whole are free from material mlsstatement, 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 IUKI will always detert material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if. individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial Statements. Irregularities, including fraud, are instances of non-compllance with laws and re8ulations. We design procedures in line with our responsibilities, outlined above, to detect material mi5Statement5 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 envlronment in which it operates, we identified that the principal risks of non-compliance with laws and regulations related to the Companies Act 2006 and the Charities Act 2011 and we considered the extent to which non- compliance might have a material effect on the financial statements. We also considered other factors such as income tax. payroll tax and sales tax. We evaluated managemenvs incentive5 and opportunities for fraudulent manipulation of the financial statements Ilncluding the risk of override of controls}. and concluded that the risk was low. Audit procedures performed by the engagement team included: Discussions with management including consideration of known or susperted instances of non-compliance with laws and re8ulation and fraud; Evaluating management's controls designed to prevent and detect irregularities: Identifyin8 and testing journals. in particular journal entries posted with unusual account combinations. postings by unusual users or with unusual descriptions; and 33 IndependentAuditor's Report to the Members ofThe Bath and Wells Diocesan Board of Finance For the year ended 31 December 2020 Challenging assumptions and judgements made by management inthelrcritical accountin8 estimates 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.or8.uk/auditorsresponsibilities. This description forms part of our auditorfs report. Use of our report This report is made solely to the charitable company's members, as a body. In accordance wlth Chapter 3 of Part 16 ofthe Companies Act 20c￿. 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 respon5ibilityto anyone other than the charitable company and the charitable company's members as a body, for our audit work, forthis report, orforthe opinions we have formed. Adam Halsey Iseniorstatutory Auditor) For and on behalf of Haysmacintyre LLP, Statutory Auditors 10 Queen Street Place London EC4R 1AG Date.. 29 June 2021 34 The Bath and Wells Diocesan Board of Finance Staternent of Financial Activities For the year ended 31 December 2020 Unrestrlcted Funds Re5trlc- ted Fund5 EThdo ment Funds Total Funds 20ZO Total Funds 2019 Deslg- nated Note General £'ooo £.(X￿ eo rooo eooo £'ooo Income and endowmèntsfrom Parlsh Contributlons Other donations Chaiitsble actlvities Other activities Investments Other Income 2a 2b 9,208 252 430 427 420 124 9,21)8 1.202 432 447 1,109 1,314 10,359 893 729 338 1,415 558 942 20 89 594 1.188 Total Income and endowments 10.861 14 1.055 1,782 13,712 14,292 Expendlture on R315ing funds Charitable activities Other Expenditure Impairment of propertle5 Total expenditure 211 13,832 37 274 14,183 41 141 1,688 15.661 17 14.043 141 37 15.909 14,498 Net lexpendlturel / Income before Investment galns I Ilassesl Net 8ains I11055es1 on irniestments Net lexpendlturel I Ineome 13,1821 {127) 16331 1,745 12.1971 {2061 31 26 12691 1,476 12071 114041 3,041 2,835 (3.1511 11221 160 Transfer5 between funds 15 1,528 18721 13361 13201 Other reco£nlsed Ralns Rèmeasurement 8ain5 on defined benèfit pènsion stheme5 28 141 1641 (68 1,982 Net movement In funds (1,6271 {994) {9431 1,092 12.472} 4,817 Tot•1 funds brtsught forward Total funds carrled fonvard 5,915 8,160 2,817 86,743 103,635 98,818 24 4288 7.166 87,835 101163 103 635 All actlvlties derlve from contlnulng activities. The notes on pages 39 to 85 form part of the financial statements. 35 The Bath and Wells Diocesan Board of Finance Income and Expenditure Account For the year ended 31 December 2020 Total 2020 £'ooo Totsl 2019 Total Income 11,930 15,872 (3,9421 62 13,888 14,387 14991 694 Total expendlture Net operating expendlture for the year Net {losses)/gains on investments Net income/(expenditure) for the year (3,8801 195 Other cornprehen5ive Income: Remeasurement gain5 on defined benefit pension schemes {41 151 Total Comprehensive Income/lexpendlture) 3.884 190 The income and expenditure account is derlved from the Statement of Financial Actlvlties wlth movements in endowment funds excluded to comply with company law. All Income and expendlture Is derlved from continuing activities. 36 The Bath and Wells Diocesan Board of Finance Balance Sheet For the year ended 31 December 2020 2020 2019 £'oc(J Balancc Sheet- Coinpany No. 139557 Note Fixed Asséts Intangible assets Tangible assets Investments 16 17 67,201 41941 J9,143 67,163 43,367 110,532 Cur￿￿ Assets Stock Debtor5 Assets held for resale Cash on dep051t Cash at bank and in hand 19 2,325 2,878 150 1,171 1,541 5,745 21 21 L279 4765 Creditors- amount5 falling due within one year Net CurrentA5sets 15,0301 (265) 15,0931 652 Total Awts Le55 Current Liabilities 108A78 iii, Creditors- amounts fallin8 due after more than one year Penslon scheme liabilities 22 1&0911 11.4581 28 19J71 NetAssets ioi, 103,635 Funds Endowrnentfunds 87.835 86,743 Includlng revaluatlon reseNe of £18.542k12019- £20.383kl Restrfrted Income funds Including revaluatlon reserve of £513k12019- £376kl Unrestrirted income funds: General funds Includlng revaluatlon reserve of £204k12019- £771kl Designated funds Including revaluation reserve of £22k {2019- £22kl L874 2,817 4,288 5,915 7.166 8,IEIJ Total Fur 24 IOL163 103,635 The Cash Flow Statement and the Note5 fomi part of these flnancial statements. The financial statements were approved by the Board of Trustees and authorised for issue on ¥June 2021 and signed on behalf of the Board by: Rt Revd R Worsley Trustee Mr l Theodore50n Trustee 37 The Bath and Wells Diocesan Board of Finance Cash Flow Staternent For the year ended 31 December 2020 2020 £'ooo 2019 Net cash outflow from operatinE artivitie$ 13211 12,178} Cash Ilows from Investlng actlvltles Dividend5. interest and rent from investments Proceeds from the sale of.. Tangible fixed assets Fixed asset investments Purchase of: Tanglble flKed assets for the use of the DBF Fixed asset investments Net ¢ash provlded by investing Jrtivitie5 Cash flows from financing artivities Loans repaid by the DBF New loan5 received by the DBF Net cash provlded by ftnancln8 artivities 1,070 1.422 4.267 13,079 2,095 1.552 {3,5111 111,8591 15,8151 16501 (1,3961 11,3491 1,087 1262) (80) 4,108 4,028 Change in cash and Cash equlvalents In the year Cash and cash equlvalents at l January 1427) 2,712 1841 2,796 Cash and ush equlvalents at 31 Oecember 2.285 2,712 Reconciliation of net Income to net cash fl¢)w from o eratln activities Net expendlture belore Investment 8alns {2,1971 12061 Adjustments for: Depreciation and amortisation Investment income Fixed asset impairment charge Notional interest In present value calculation Repayment of loan5 advanced Advancement of loans 223 11,0701 60 11,4221 41 1391 398 12001 203 {3261 E-li Repayment of penslon schemes net of remeasurement costs Gain on disposal of fixed a55etS Increase in debtors Increase in credltors Decrease in grants approved but not made Increase in provisions Net ta$h ￿tfI(￿W from operatlng actlvltles 16191 11,017} {1941 1.028 {241 15431 {427 {iioi 154 11741 27 {2,1781 (3.2111 38 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 Notes to the Financial Ststements l At¢ounting Pollcles The financial statements have been prepared under the historical cost accountlng rules modified to include the revaluation of investments, and In accordance with SORP 2015, the FRS102 accounting standard and the Companies Act 2006. The DBF is a Public Benefit Entity as defined by FRSIO2. Investment properties are externally revalued every five years. Any permanent diminution is taken to the income and expenditure account forthe year; and No depreciation or amortisation is provided in respect of freehold investment properties. Thls treatment, as regards the DBF'S investment properties, may be a departure from the requirements of the Companies Act concerning depreclation of r￿ed assets. However, these properties are not held for consumption but for investment and the trustees considerthat systematic annual depreciation would be inappropriate. The accountin8 policy adopted is therefore necessary for the accounts to 8ive a true and fair view. Depreciation or amortisation is only one of the manyfactors reflected in the annual valuation and the amount which might otherwise have been shown cannot be separately identified or quantified. The Trustees assess whetherthe use of golng concern Is approprlate. i.e. whether there are anv prlnclpal uncertainties. related events or conditions that may cast significant doubt on the ability of the DBF to continue a5 a going concern. The Trustees make thls assessment in respert of a period of at least one year from the date of authorisation for issue of the financial statements and have concluded that the DBF has adequate resources to continue In operatlonal exlstence for the foreseeable future. The financial statements are prepared on a 8oln8 contern basis. The prlnclpal accountln8 polltles and Èstimation techniques are as follows. (al Income All income is included in the SOFA when the DBF 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. Parish Share is recognised as income of the year in respect of which it is receivable. Amounts undertaken to be paid by the parishes are only accrued if either payment is received by 28 February in the following year orthere has been a definite commitment to pay. Rent recelvable and parochlal fees are recognised as income of the yearto which they relate. Interest and dlvldends are reco8nised as income when recelvable, in the case of dividend5 that is when the DBF'S rlght to receive the dividends has been established li.e. when the distribution has been declared). Donatlonsi grants and legacles are recognised when receivable (except in the case of any grants with pre-conditions of entitlement specified by the donor which have not been iv. 39 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 met at the year end. These are Included as creditor5 to be carrled forward to the followln8 year). Gains on disposal of flxed assets for the DBF'S own use (i.e. non-investment B55ets} are accounted for as other income. Losses on disposal of such assets are accounted for as other expenditure. Stlpends fvnd income. The Stipends Fund Capital account is governed by the Diocesan Stlpends Fund Measure 1953. as amended, and the use of the income is restricted for cler8Y Stipends. However. the income is fully expended within the year of receipt and the legal restrictions, therefore, are satisfied. It is on this basis that the income and related expendlture are both included in the unrestrlcted column of the SOFA for the sake of greater clarity and slmpllcity in financial reportin& vi. {b) Expendlture Expenditure is included on the accruals basis and ha5 been classlfled under headings that a8gre8ate all costs related to that cate80ry. Cost5 of raisin8 funds are costs relating to the temporary renting out of parsonages and investment management costs of 8lebe and any other Investment properties. Charitable expenditure is analysed between contributions to the Archblshop5' Council, expenditure on resourcing mission and ministry in the parishes of the diocese and expenditure on education and Church of England schools in the diocese. Grants payable are charged in the year when the offer is conveyed to the recipient except in those cases where the offer is condltlonal on the recipient satisfying performance or other discretionary requirements to the satlsfaction of the DBF, such 8rants bein8 recognised as expenditure when the related conditions are fulfilled. Grants offered subjert to such conditions which have not been met at the year-end are noted as a commitment, but not accrued as expenditure. Support costs consist of central management, administration and governance costs. The amount spent on raising funds and other actlvlties 15 considered to be immaterial and all support costs are allocated to the purpose of charitable actlvlties. Costs are allocated wherever possible directly to the artivity to which they relate, but where such direct allocatlon is not possible, the remainder Is allocated primarily on the basis of head count. Pension contrlbutlons. The DBF'S staff are members of the Church Workerg Pension Fund ICWPFI and Clergy are members of the Church of England Funded Pensions Scheme ICEFPSI. The pension costs charged as resources expended representthe DBF'S contributions payable in respect of the year, in accordance wlth FRS102. Deficit funding for the pension schemes to which the DBF participates is accrued at turrent value in credltors dlstinguished between contributions fallin8 due within one year and after more than one year. Further details are given in note 28. 40 The Bath and Wells Diocesan Board ofFinance Notes to the Financial Statements For the year ended 31 December 2020 {c) Intanglble flxed assets Computer software which is separable from the operatlon of computer hardware is classrfied as intangible assets in accordance wlth FRS102 and is amortised to write off the cost (less any ultlmate dlsposal proceeds at prices rulln8 at the time of the asset'5 acquisition) of other software over their expetted useful economic lives on a straight line basis at a rate of 25% per annum. Id) Tangible fixed assels and depreclatlon Investment propertles Any properties which are held for investment purposes and rented out have been included at their fair value. A desktop valuation is carried out annually by Green51ade Taylor Hunt, with a full valuation carried out every five years. Parsonage houses The DBF has followed the requirements of FRS102, in Its accounting treatment for benefice house5 (parsonagesl. FR5102 requires the accounting treatment to follow the substance of arrangements rather than their strict legal form. The DBF Is formally responsible for the maintenance and repalr of such propertles and has some jurisdiction over their future use or potentlal sale if not required as a benefice house, but In the meantlme legal title and the right to beneficial occupation Is vested In the incumbent. The Trustees therefore consider the most sultable accountln8 policy is to capitalise such propertles at thelr cost or estimated market value at time of acquisition rf received by gift or transfer. Depreciation 15 not provided on the foregoing properties listed in {1) and lill above for the followin8 reasons: Any provision (annual or cumulatlve} would not be material due to the very long expected remalnln8 useful economic life in each case, and because their expected residual value is not materially less than their carrying value. Buildin85 are maintained in a sound condition by a continual repairs and improvements programme, the cost of which is charged to the income and expenditure account. 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 and any movements on the impairment are reflected in the SOFA. Houses flnanced by Value Llnked Loans The DBF holds an equity interest in a number of houses provided for separatÈd clergy SPOLtses financed by value linked loans from the Church Commissioners. FRS 102 require5 the revaluation of loan5 annually to reflect the current market value of the equity interest. Accordingly these houses are included at estimated market value matched bv the loan value (included in lon8 term liabilities). 41 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 Other tangible fixed assets Depreciation is provided in order to wrlte off the cost (less any ultimate disposal proceeds at prices ruling at the time of the assÈVs acqulsltlon} of other fixed assets over their expected useful economic lives on a strai8ht line basis at the followin8 rates: Leasehold Office buildings 1% per annum Solar PV Panels 4% and 5% per annum Flxtures and Fittings IO% per annum Office Equipment 20% per annum Computer Equipment 25% per annum (e) Flxed Asset Investments Fixed A55et Investments have been included on the following bases: Listed investments at their quoted bld price at the balance sheet date. Unlisted investments at their market value at the balance Sheet date. as provided by the CCLA Investment Management Limited. Investment land and property Is included at market value based on its exlstin8 Use. It isthe policy of the DBF to carry out a valuation of the investment properties everyfive years to establish market value. In the intervenin8 period the DBF adjusts the market value In the light of information available if this is material. The DBF'S professlonal agents valued 30% of the DBF'S Glebe investment land assets at 31 December 2020 and the proportionate change in value from 2019 was then applied acr055 the whole of the DBF'S Glebe portfolio to give a value for the whole portfollo at 31 December 2020. Gains and losses on disposal and revaluatlon of Investments are credited or charged to the appropriate fund in the SOFA. The Diocesan Stlpends Fund {DSFI and Stipends Capital Fund permanent endowments comprise assets including Glebe land, Ilsted financial investments and unllsted financial investments whlch must be held as capital. The Stipends Capital Fund incorporates the Stipends Augmentation Trusts {SATI fund. From 31 December 2019 the charity has operated a total return approach to the management of the Glebe land and listed and unlisted flnanclal investments representing the DSF and SAT permanent endowment funds. Uslng this approach the chaflty Is required to analyse the funds between the amount held for investment and the unapplied total return. The charity is permitted to allocated, from the unapplied total return element to income funds, such sums as the Directors see approprlate provided the Dirertors exercise their statutory duty to be even handed between present and future beneficiarles and that they maintain the unapplied total return at suth a level as to ensure it remain5 Positive after havlng due consideration to the volatility of the investment markets. Investments held by the DBF as Custodian Trustee are not included in these financial statements as assets of the DBF but are listed in note 30. In Stocks Stocks are stated at the lower of cost and net realisable value. 42 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 {gl Flnanclal Instruments All loans and borrowings which are basic financial instrument5 and; il which are due for repayment in more than one year, and ill bear interest at a rate lower than equivalent market rate, are recognised at the present value of cash recelvable / payable Ilncluding interest). The DBF discount rate of 4% is used which is the rate of return which can reasonably be expected from DBF long term investments and the effective interest rate amortisation is included in finance revenue / expenditure in the SOFA. Equity Loans are included at market value. (h) Funds The DBF'S fund5 have been grouped underthe following headin85: Unrestrlcted Funds Unrestricted funds are available for any charitable purpose of the DBF. Designated funds are a type of unrestrlcted fu nd whlch the DBF has earmarked for a partlcular purpose. There are no legally bSnding restrictions and the DBF is free to re-designate should this be appropriate. Restrlrted Funds Restricted funds are subject to specific conditions imposed by the donor, these coné itions being legally binding upon the DBF. Endowment Fund5 Permanent endowment funds are a particulartype of Restricted Fund which must be held on trust to be retained forthe benefit ofthe DBF as a capital fund. Where the DBF must permanently maintain the whole of the fund it is known as a permanent endowment. Where there is discretion to convert endowed capital into income it is known as expendable endowment. (l) Key areas of estlmates and Judgements The preparation of the financial statement5 requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilitie5 a5 at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The following judgements lapart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements: Useful economlc Ilves of flxed assets Other than investment properties and houses provided for clergy, fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual Ilves of the assets and resldual values are assessed dependlng on a number of factors including product life cycles and maintenance programmes. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values. Ba51s of non4epreclatlon of flxed assets Depreciation is not provided on Investment properties and houses held for clergy use for the reasons stated above (note Idl. 43 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 Revaluatlon of agricultural (glebe) and other land The DBF carries its agrlcultural Iglebel and other land at valuation with changes in value belng recognlsed in the SOFA. A full revaluation of agricultural land is completed every five years. In inter4ening years approxlmately 30% of the land 15 valued annually and the average adjustment percentage is then applied to the ftjll land portfolio, exduding land under offer which is valued at the offered sales value. Assumptlons underlylng the pension Ilabllltles The DBF has recognised liabilities in respect of deficit contributions to the two Church of England pension schemes in whlch It participates. The measurement of both liabilities is affected by a number of assumptions which are set out In detail in note 28, including dlscount rate5, future contribution rates and the duration of the defidt recovery period. Dlscount rates used In NPV calculatlons The Board considers an appropriate discount rate to be used In NPV calculations 15 based on the opportunity cost of income foregone from investments. Recoverability of parlsh loans The Board has considered an appropriate level of provlslon for non-recoverability of loans given to parishe5, estimating the potentlal shortfall in loan receipts or on-gDlng Common Fund payments. iv. vi. The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 Unrestrlcted Funds Restrlcted Endowment Total Total Funds Funds Funds Funds 2020 2019 eooo £'ooo General Desi8nated eo £'ooo 2a Parf$h Contributio Parish Share Current yearfs allocation Ad(fitional PayThents Arrear5 for previous years DIscretIc￿ary Parish Share rellef Shortfall in contiibutlons 10.586 10,586 10,539 20 19 {6891 17091 11991 10,359 17091 9.208 Total Parish Share receipts represent 87.0% of the allocatlon12019- 98.3%) 2b oth•r DonatSon$ Allchurthes Tntst Foundation of St Matthlas RME Orifinand5 Grant Donations,Grant5, SFonsor5hip5 & Legacie5 122 130 57 136 63 434 260 893 57 511 374 942 511 504 4202 130 252 3 Charltsble Attl￿tIes ststutory fees aThJ Cha￿aincY Inco Course fees and other 369 61 430 369 589 140 729 432 4 Oth*rAttivities Rental fjrKon￿ from cle￿V houses, schools and the Old Deanery gjpport seNices 4XZ 35 447 20 427 15 20 34 338 5 Investmentlncome Dividends receivable Interest receivable RevJluation of Equity Loan5 Notional Interest re net present value Rents receivable 372 78 li 216 672 9C6 107 39 39 171 378 594 420 1,109 1,415 6 Other Incorne Gain on disposal cé propertles Solar PV Panel FIT Income other 13 iio 1,188 1,201 427 121 io 558 124 1,314 45 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 Unrestricted Funds Restr- Endow- Total Total De51g- Icted ment Funds Funds nated Funds Funds 2020 2019 £'ow £'ooo £'ooo £'ooo £'ooo General £'ooo 7 Q)sts of ralslng funds Stockbrokerfs fees Value Llnked loans interest Interest cost & expenses: pension scheme5 Glebe Land & Clergy Houses letting CQSts 16 12 28 44 13 12 12 21 86 171 171 131 211 37 274 8 Charltable actlvltles Contrlbutlon to Archblshops, Councll Training for Ministry Natlonal Church Responsibilities Grants and provisions Misslon Agency pension contributions Retired Clergy Housing ICHARMI & Grants Poollng of ordinand candidates, costs 393 271 58 15 393 271 58 15 393 312 33 141 141 134 876 Resourcing Ministry and Mlsslon Parish Ministry: Stipends and Social Security Pension contributions Housing costs Remval, resettlement and other grants Other expenses 5,250 1,246 1,337 36 5,286 5,196 1.246 1.218 1,941 1,982 230 237 215 58 8,121 4,442 38 96 137 8,806 8,748 5,497 4.081 Support for ministry 132 923 Fund for Church Growth io iioi 14313 12,819 12,563 141 1,609 Expendlture on Educatlon Church Schools: Administration 387 466 488 13.832 141 1.688 15,661 14,183 46 The Bath and Wells Diocesan Board of Finance Notes to the Financial Ststements For the year ended 31 December 2020 Unrertricted Funds Deslg- General nated £'ofy) £'oc Restr- Endow- Total lcted ment Funds Funds Funds 2020 2019 £'ooo ¢000 eo)0 £'ooo Totsl Fund5 9 Galnslllossesl on Investment Assets Unreallsed Bains/llossesl after revaluation I'l Realised 8ains1llossesl on disposal 21 26 552 604 2,902 18211 18111 139 12691 12071 3041 I I Includes £O.Im galn in relation to the revaluation of Glebe Agricultural LaMI12019 - £0.Iml. io 31 26 10 Analysls Of Resources Expended Including Allocatlon Of Support Costs Grant Artivltles undertaken fundlng of Support Total Total Dlrertly artlvltles Costs 2020 2019 £'(K)o £'ooo £'o(M) £'o 274 Raisin8 Funds Charitable Actlvltles: Contrlbutlons to Archbishops, Council Resourcing ministry and mission Education Fixed Asset Impaimient 393 12,465 415 488 876 685 1,164 14,314 12.819 51 488 41 1215 15 909 14,498 Unrestrlcted Funds Restr- Deslg- kted General nated Funds £'ooo É'ooo £'ooo Endow- Total Total ment Funds Funds Funds 2020 2019 £'ooo £'ooo £'ooo 11 Analysls Of Support Costs Central Administration Support for Schools Govemance,. Extemal Audlt Professional Fees Diocesan and General Synod Expenses 1.135 1.135 si 984 45 51 15 17 20 18 1,215 1.073 1,162 53 47 The Bath and Wells Diocesan Board ofFinance Notes to the Financial Staternents For the year ended 31 December 2020 IZ Analysis of Grants Made Total Grants to Total Inst- 2020 2019 Indlvl- Itutlonal duals Grants No. of Grants a) Natlonal Church Responslbllltle5 From Unrestricted General funds to:_ £'ooo £'ooo £'ooo 271 271 313 393 393 394 58 33 Archbishops, Council, General Synod, etc. Training Ordinands Grants and Provisions Inter-diocesan support of Misslon Agency clergy pension contributions CHARM National Pooling adjustment 15 141 15 141 134 878 bl General Grants From Unrestrlcted General Funds to:_ Ordin3nd5 in trainin8 Somerset Churches Together Bath and West Show Tent Other Miscellaneous Grants Less grants no longer required 32 269 269 207 12 151 218 36 271 279 From Designated Funds to:. PCCS and Deaneries from the Fund for Church Growth Youth Work Other Staff Bulldin8 and re-ordering Other projerts Less grants no longer required 17) 17) From Restrlcted Funds to: Cler8y (including retired and clergy widow51 li li li io Total Grants Payable 52 282 890 1,172 1,ICrf) The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 13 Trustees And Related Partles In 2020 the trusts which are administered from the DBF'S registered office paid management charge5 of £4,496 to the DBF (2019- £4,378), The Rib Trust made a grant of £37,SOOto the Board {2019- £37,IXIO} towards the Archdeatons, working costs. The Foundatlon of St Matthias made 3 8rant to the Diocesan Board of Education of £56,000 {2019 - £57.3331 towards the work of School RE Advlsers, Resource Centre and Further Educatlon development. There were no amounts outstanding at the current or prior vear end. Trustees, Emoluments No trustee received any remuneration for services as trustee, 912019-15) were reimbursed with a total of £6,968 {2019- £18,370) for the cost of travel and subsistence incurred in the course of servlces performed as a trustee in respect of General Synod duties, duties as archdeacon or area dean. and other duties as trustees. 49 The Bath and Wells Diocesan Board ofFinance Notes to the Financial Staternents For the year ended 31 December 2020 13 Trustees and Related Partles {contlnued) Stipends and other benefits received by trustees in respert of thelr capacltles other than tru5tee5hip, serving as ecclesiastical office holders through the Church Commissioners {at the expense of the DBF unless indicated) were: Indlvldual Offlce Holder Stipendiary package Funded by the Church Q)mmlssloners: stipend & defined benefit pension scheme Living acCow￿)datiOn & car for official use Funded by the Church Commlssioners: £37,485 stipend, car for official use Defined benefit pension scheme Funded by the DBF: Livin accommodation The Bishop of Bath And Wells The Rt Revd P Hancock £45,953 The Bishop of Taunton The Rt Revd R Worsley The Ven S Hlll The Ven A Gell The Ven DrA Youlngs £36,648 stipend Defined benefit pension scheme Living accommodation Archdeacons Revd M Andrews Revd C Ralph Revd B Faulkner Revd D MacGeoch Revd J Haslam Revd S Buddle Revd R Driver £27,087 stipend Def ined beneflt pension sche Living accommodation In total 1012019 - 101 trustees received stipend5 and pension contrlbutlons as follows.. 2020 2019 Stlpends Penslon Contribution5 299.548 105,719 405,267 295,300 103,628 398,928 The value of church provided housin8 in 2020 to the clergy and blshops cannot be estlmated. 50 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 14 Staff And Office holders 2020 £'ooo 2019 £'ooo 14a Staff Costs Staff c05ts during the year were as follows: Wages and salaries Stipends of ordained stsff members National insurance contributions Pension costs 2,336 2,081 210 186 250 231 2,796 2,503 During the year, the DBF made termination payments in respect of one member of stsff 12019- 01 totslllng £3,18612019- £0). This amount is included in stsff costs above. The average number of employees durln8 the yea r wa5.. Lay Workers Ministry for Mission Central Seryices Education No. No. 36.3 35.8 15.7 92.8 26.8 33.7 16.3 82.4 The average number of employees during the year, based upon full-ti￿* equivalents, was: (") Lay Workers Ministry for Mission Central Services Education No. No. 27.5 27.6 13.8 712 {"} Including 1.7 (2019 - 1.71 stsff whose time was recharged or funded by external or8anisation5 21,7 26.8 14.3 66.5 Of the average number of employees. 69 were based In the Diocesean office {2019- 621, 11 were based in other locations12019- 91 and 13 were based in Parishes and Deanerfes 12019- 111. Ministry for Mlssion is made up of five teams: Discipleship, Evangellsm, Mission, Training and Vocations. Central Services is made up of nine teams: Archdeacons, PAS, Communications, Facilities, Finance, HR, Property, Safeguarding, Secretariat and Strategic Programrne Management. Education is made up of three teams: Schools Organisation, Schools Effectiveness and Youth & Children. The numbers of staff whose emoluments {including benefits in klnd but excludlng pension contributions) an￿Unted to more than £60,000 were as follows: 2020 2019 £60,LKIi - £70,000 £70,CLII- £80,fy)0 Penslon contrlbutlons of £14.85612019: £14.0591 were made for these employees. 51 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 14a Staff Corts I￿ntInued) Remuneration Of Key Management Personnel Key management personnel are those deemed to be those having a￿￿rity and responsibility, delegated to them by the trustees, for planning, directing and controlling the activities of the diocese. During 2020 they were: Role Offlce Holder Diocesan Secretsry and Conwany Secretary Preb Nicholas May (to IIIC81201 CEO. Diocesan Secretary and Conyany Sec￿tsry Sharon KiNlleysldes (from OV09120} Head of finance Imo8en Taylor (to 301041201 Head of Finance and Operations Matthew PinrK)ck {from 01105nO} Head of Strateglc Programme Dlrector of Education Revd Charfie Peer Edward Gregory Head of Ministry for Mission10.2￿E} Revd Jane Chambedain Remuneration, pension contributions and exwnses for 514.2 FfEI12019 - 514.2 FfEII key nN8na8ement personnel werE a5 follow5.. 2020 £'ooo 274 33 27 2019 Salarie51 StipeNJs National Insurance contribution5 Pension Contributions 266 31 26 334 322 Expenses 52 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 14b Office holders 2020 FfE No. 20191 Office holders not employees The averdge number of stipendiary clergy holding parochial, deanery or archidiaconal posts in the diocese was- At a cost of: No.. 189 185 £'o £,￿0 Stipend5 & Housing Allowances National Insurance Contributions Apprentlceshlp Levy Penslons contributions 4,922 394 22 1,236 6.574 4,833 383 22 1,208 6,446 The changes between 2020 and 2019 of stlpendlary cler8y Is despitean average increase in vacant Posts it is offset by an increase in curates. The average level of vacancles in 2020 w35 estimated at 29.112019- 26.9}, being 13.3% of all posts12019- 14.8% of all posts). Unwe5tricted Funds Restr- Endow- Deslg- leted ment General nated Fund5 Funds £,￿x} £,0(￿ £'ooo £'o 15 Analysis Of Transfers Between Funds Parsonage houses buylsell - net proceedslcosts Restricted transfers Transfer from unrestrlcted to deslgnated funds: Transfer from Tangible Fixed Assets fund Transfer to Other Des18nated reserves Mission Development Fund Unapplied total return drawdown Management charges IFCG, Schoo15, etc.) Management charges on house sales Management charges on Glebe land sales {3311 1271 331 27 745 {745) 181 11191 86 591 li 53 33 15911 Iii} 1531 171 320 1,5Z8 872) 336 53 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 Computer Software 16 Intanglble Fixed Assets Cost At l January 2020 Additions At 31 December 2020 166 166 Amortlsatlon At l January 2020 Charge forthe year At 31 December 2020 164 165 Net book value At 31 December 2020 At 31 December 2019 Freehold/ Leasehold Solar PV Land and Panels Bulldlngs £'ow £'ooo 66,645 759 531 Office A55ets Under Equlp't Construction 17 Tangible Fixed Assets Total Cost At l January 2020 Additions £'ooo 424 1.030 585 682 68,413 2,243 Revaluation Transfer Disposals At 31 December 2020 1,267 11.974} 66A69 11,2671 120} 739 11921 1,262 12,186) 68.470 Depreciation and Impalrment Depreciation at l January 2020 Impaimient at l January 2020 Impairvnent charge for the year Depreciation charge for year Disposals At 31 December 2020 216 312 528 723 723 27 191 741 32 163 11871 222 240 1,269 Net book value At 31 December 2020 65,728 65,922 499 974 67,201 At 31 December 2019 544 112 585 67,163 54 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 2020 Z020 2019 2019 Freehokl / Leasehold Land and Buildings Freehold Benefice Property= No. No. £'o)o Parsonage hou5e5 168 41,(K)8 169 40.171 Glebe property,. Curates. houses Other houses 26 30 7,352 7,755 15,107 29 30 59 8.144 7,755 15,899 56 Corporate property: Curates. hou5e5 Other houses House5 bought with val. linked loans lat valuation) EdBinton house 563 5,555 523 281 563 5.534 756 281 23 22 29 6,922 29 7.134 Leasehold Long leasehold Total Freehold / Leasehold Land and Buildin8S 2.691 65,728 2.718 65,922 255 259 S¢hoolLand & Bulldlngs School Land & Buildin8S 121 All of the properties in the balance sheet are vested in the Board, except for benefice houses which are vested in the incufflbent. Some properties have been purchased with the help of a value-linked loan from the Church Commissioner5; when disposed of, the appropriate share of the net sale proceeds will be remitted to the Commissloners. and the related loan Ilabillty extinguished. These are stated at valuatlon. as Is the related loan liability (note 22). Of the total land and buildings at 31 December 2020, 252 propertles {£65,239k) are valued at cost or deemed cost {2019- 2551, and three properties1£523kl at valuation12019- four). Properties are subject to a five-year cycle of survey and consequent repairs are charged as expenditure. Durlng the year no buildings were impaired, where their market value wa5 estimated to be below their cost. The balance in Assets Under Construction related to improvements made to long-term leasehold buildings purchased in the prior year completed during the year. 55 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 Other AErlcultural Land & Land Property £,0￿ £'ooo £'o(x) £'ooo 639 6,716 16,070 43,367 11.859 11.859 (13,5741 (13.889) 498 14981 1641 565 7,150 14,422 41,940 Unllsted Llsted Invest- Invest- ments ments Total 2020 18? Flxed Assets Investments At l January 2020 Additions Disposals Transfers l Reclassifications Revaluation At 31 December 2020 £'ooo 19,942 13151 103 19,730 639 Cost at 31 December 2020 Cost at 31 December 2019 Not known Not known Not known Not known 4,146 13.n9 4.146 13,493 Investments comprise:_ Llsted Investments {Equitie5) UK Investments 2019 £'ooo 4.022 12.557 7,536 2.149 11,558 14.706 Non-UK InVeSt￿Ents Llsted Investments (Unit Trusts) UK Investments Llsted Investments (Flxed Interest) UK Investments Non-uk Investments 182 169 2,276 405 1,195 2.682 1,195 Llsted Investments Total 14,422 16,070 {1111 Unllsted Investments 3.251,223 Central Board of Finance of the Church of England Property Fur 5hares12019 - 4,427.5161 149,567 Central Board of Finance of the Church of England lfivestment Fund sha￿ {2019 - 115,7271 E'ooo £.￿0 4,207 4,428 2,868 2,217 3.139 COIF Charity Investment Fund Income Shares12019 - 3,1391 2,OW Central Board of Finance of the Church of England Fixed Interest Fund sha￿S12019 - 2.0001 Somerset Savings and Loans Ltd 57 53 15 15 7,150 6,716 (iv) Other Land and Property 2020 2019 £'ooo £,( 610 610 Glebe Property Other Land 29 29 639 639 56 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 18b Appllcation of the Power of Total Return on Investment5 As dlsclosed In the Investment policy of the Trustees report from 31 December 2019 the DBF adopted a total return approach to investments with re8ard to the Glebe land, listed financial investments and unllsted financial investments portfolios of the DSF and SAT permanent endowment5. The investment power of total return permits the DBF to investthe permanent endowment of the Diocesan Stipends Fund IDSFI and Stipends Augmentation Trusts ISAT} element of the Stipends Capital Fund in order to maximise total return and apply an appropriate portion of the unapplied total return IUTRI each year. Until the power is exercised to transfer a portion of the UTR to income funds, the UTR remalns part of the permanent endowment. The initial value for implementing total return for investments was determlned at 31 December 1995 and valued at £8.571m and £0.688m forthe DSF and SAT funds, respectively. This was the amount held in Glebe property and listed and unlisted financial investments at this date. The UTR was calculated as at 31 December 2019 and valued at £19.457m and £0.331m for the DSF and SAT funds, respectively. This represents the increase above Inflation of the value of these Investments slnce the Inltlal valuation, adjusted for the introduction of any new investment in the portfolios since initial valuation. Trust for Investrnenl Total Endowment £'(KJo UTR {11 Dlocesan Stlpends Fund IDSFI At tst January 2020 Base value of pem)anent endowment Unapplied Total Return Total 13.676 13,676 19.457 33,133 19,457 19,457 13.676 Mo¥ements In the rèportlng perlod Indexation of base level of Endowment Unapp15ed total ￿tuM allocated to inccme in thè yèar Additional UTR allocated for pU￿hase of property Investn*nt ￿lum.. dividends an¢J interest Investment return.. GlÈbÈ rents Invéstrn*nt retums.. Rèalisèd and vnrEalised gains and I1￿ ses) Less Investmnt management costs Total 1821 18821 11651 192 378 267 1241 316 18821 11651 192 378 267 1241 At 31st December 2020 B35e of the permanent endowment Unapplled Total Retum Total 13,758 13,758 19,141 32￿99 19,141 19,141 During the year, there was a transfer of £882K from UTR to income funds for expendlture in relation to the Diocesan Vision. in line with the Diocese Total return policy of 4% of endowed investment value plus Glebe rents. Also in the year, a transfer of £165k from UTR occurred to facilitate acquiring a new parsonage property. 57 The Bath and Wells Diocesan Board of Finance Notes to the Financial Staternents For the year ended 31 December 2020 Trust for Investmènt £'ooo Total Endowment £'o¢ UTR 111) Stlpends Au8mentatlon Tru#5 ISATI At tst January 2020 Base Wdlue of pennanent endry•W￿nt Unapplièd Total Retum Totsl 331 331 331 1.429 1,098 Movements In the repDrtln8 perfod Indexation of base level of endowment Unapplied total return allocated to income in the year InVestn￿nt return.. dividends and interest InveSt￿nt returns.. Rèalised and unreallsed gaSns and (losses) Less investmert mana8ernent tosts Total 161 1441 23 1441 41 75 1441 23 1441 41 At 31st December 2020 Base of the pernianent endmnert Unapplied Total Retum Total 1,104 1,104 256 1.361 256 256 1.104 During the year, there wa5 a transfer of £44K from UTR to income funds for expenditure in relation to the Dlocesan Vision, in line with the Diocese Total return policy of 4% of endowed Investment value. 58 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 2020 2019 19 Debtors Due within one year al Parish Share bl Central Board of Finance Deposit Fund Loans c) Loans to PCCS from Designated Fund or FCG d) Schwl Loans e) Other Loans d) Closed School Expenses and other Schix>l debtors fl Other Debtors and Prepayments gl Equity Loans 221 99 15 70 206 131 30 71 io 26 953 485 1,912 39 868 485 1,806 Due after one year b) Centr31 Board of Flnance Dewsit Fund Loans1°1 cl Loans to PCCS from Designated Fund or FCG (') d) School Loans I'l e} Other Loans 137 382 426 501 32 519 966 Total debtors 2.325 2,878 { I these armunts are ststed at net present value using a discount rate of 4% Debtors Notes: {a} Parlsh Share Parish Share debtors comprise balances of requested contribution5 Outstandlng which have been paid in full after the year end or where an arrangement to pay has been agreed. qbl Central Board of Flnance Deposit Fund loans These are loans made bythe DBF from the CBF Deposit Fund under the Church Funds Investment Measure 1958 for forward lending to parishes and are therefore shown both in Debtors and Creditors. Loans are normally provided for a period of five or ten years and are repayable by equal annual instalments. The rate of interest is equivalent to the monthly average rate declared by the CCLA CBF Deposit Fund plus 0.55%. (cl Loans to PCCS from DI0￿$an Loan Fund These are loans advanced from the £lm designated Diocesan Loan Fund repayable over various terms up to 20 years and at various interest rates. 59 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 At 31 December 2020 the total present value of balances outstanding was £200,161 and the total non-discounted value £211,076. The slgnlflcant balances were: A £400,000 loan w35 provided to Nailsea Holy Trinlty PCC on 28 October 2010 forthe purchase of the former rectory at 2 Church Lane Nailsea upon Its sale bythe DBF. The rate of interest on the loan Is 1% above the Bank of England base ratel payable annually In arrears. The term of the loan was extended In 2015 to October 2024. The loan is repayable in variable annual Instalments and the present value of the balance at 31 December 2020 was £99,223. The DBF holds a legal charge on the property, discharged upon repayment of the loan capital and accrued Interest by the PCC. ii. A £225,CM)O loan was provided to Keyn5ham PCC on 23 November 2010 for the purchase of the former rectory at l The Park, Keyn5ham upon its sale bythe DBF. The term of the loan was exiended in 2017 to the end of 2034. The rate of interest on the loan 15 2% above the Bank of England base rate, payable annually in arrears and the present value of the balance outstanding at 31 December 2020 was £65,597. The DBF holds a legal charge on the property, discharged upon repayment of the loan capital and accrued interest bythe PCC. A loan of £290,000 to the PCC of Heathfield with Cotford St Luke, provlded through a back- to-back arrangement with Natwest bank, and as such there Is a corresponding creditor Isee note 22). The rate of interest is 1% above base rate and the terni of the loan isfive years. The loan is secured using a second charge on land at Cotford St Luke and its associated assets. Thls loan had an outstanding balance of £279.342 at the year end. (dl School Loans The DBF acts as 'bankerf to school governors for capital and repalr works at voluntary aided schools. The accounts are paid by the DBF and the costs are recovered from the Department for Education, the Local Education Authority and the governors themselves for their respective liabilities. {el Other Loans This amount includes loans to individuals from restricted charitable funds and staff car loans. (fj Other Debtors and Prepayments Thls figure is made up of sundry debtors. prepayments, accrued interest and dividends, rents recoverable and expenses on closed schoolsto be recovered upon sale, and accrued bond interest. Igl Equlty Loans Equity loans are made to retired cler8y and clergy spouses to enable them to purchase property on a shared equity basls. At 31 December 2020 the value of loans advanced amounted to £485,007 in respect of three propertle5. 2020 £'ooo 2019 20 Assets held for resale Closed churches awaitlng dlsposal 150 150 The value represents an estimate of expected sales proceeds receivable. 60 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 Unremrirted Funds Restrfrted Funds Endowment Funds 20 Total 21 Cash atbankand On deposit Total Cash on deposlt Cash at bank and in hand Cash held by brokerfor Investment Cash held In solldtors, cllent account 52 374 119 615 li 575 1541 177 32 328 523 1285 1712 2020 2019 £'oc 22 Credltors Due wlthln one year a} Bank loans Fund for Church Growth grants approved not yet paid Closed Church Schools Bank revolving credit facility Provlsions Other Creditors and Accruals 170 51 500 2.000 27 2.282 5,030 160 73 740 27 1,093 5,093 Due after one year al Bank loans bl Central Board of Finance Deposit Fund Loans l ) c) Value Linked Loans Fund for Church Growth grants approved r)ot yet pald {') 5,464 821 523 4,503 830 756 6,091 l } these arThJunts are stated at net present value using a discount rate of 4% Credltors Notes (a) Bank Loans The DBF took a loan with Natwest to fund the investments in PV panels in April and June 2013. Interest currently charged at 1.5% above base rate. A £200,OQM) loan was taken out wlth Natwest bank in 2016 to flnance a house purchase. The term of the loan Is 10 years, at a fixed interest rate of 2.67%. A further £170,OCX) loan was taken out with Natwest bank in 2016 to finance a house purchase. The term of the loan is 10 years, at a fixed interest rate of 3.73%. During the year, there were a number of loan agreements with Natwest bank; 61 The Bath and Wells Diocesan Board ofFinance Notes to the Financial Statements For the year ended 31 December 2020 Ploneer House mortgages. Four loan agreements are entered into in order to finance the purchase of houses for Ploneer Ministers. The terms of these agreements are each either five or six years. These loans are secured on the pioneer houses. The balance outstanding at the year end was £807,160. Flourlsh House purchase. A loan of £2,575,000 was agreed to fund the purchase of Flourish House, the new Dlocesan office building. The terms of this agreement is seven years and the interest rate is 1.53% above base rate. This loan is secured on the Old Deanery and Flourlsh House. Flourish House development. A further loan facility of £1,400,000 was agreed to fund the internal frt-out of Flourish House, with a term of two years and an interest rate of 1.8% above base rate. At the year end £1,400,orJ) of this facility had been drawn down. This loan facility is partly secured on the Old Deanery and partly unsecured. Parlsh108ns. A loan of £290,000 was agreed in order to provide an onward loan to the PCC of Heathfield wlth Cotford St Luke (see debtors note 191. The term of this loan is five vears and the interest rate is 1.65% above base rate. During the year, thls loan has had a capital repayment holiday applied to it, extendin8 the loan period for a further nine months. Thls loan15 Secured by way of a third party charge on St Luke's Centre on land at Cotford St Luke. qb) Central Board of Flnance Deposit Fund Loan This loan was made to the DBF from the Deposit Fund underthe Church Funds Investment Measure 1958 for forward lending to parishes. In 2016 £lm was loaned to the DBF for 10 years on an interest only basls to allow loan funds to be committed and avallable to be drawn by parishes when required. The present value of this loan was £820,611 at 31 December 2020. The rate of interest is equivalent to the monthly average rate declared bythe CCLA CBF Deposit Fund plus 0.55%, (c> Church Commlssloners, Value Linked Loans The loans are repayable eitherwhen the houses concerned are sold or cease to be occupied by a licensed lay worker or clergy spouse whose marriage has broken down. Interest is charged bythe Commissioners on the amount loaned Initially and borne by the DBF, the rate rising annually bv the increase In the Retail Price Index. In 2020 the interest rates charged on the loans ranged between 6.9% and 8.4%12019- 6.9% and 8.4%) The loans are represented by Freehold land and buildings {note 171. The Dlocesan Annual Report and Financial Statements Guide recommends thatthe loans should be revalued annually in Ilne with the basis adopted by the Church Commissioners. The recommendation ha5 now been adopted by the DBF and the corresponding fixed assets (see note 171 have been revalued a5 a separate identifiable asset class. 62 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 2020 £'ooo 2019 23 Financial Instruments Financial assets measured at fair value Financial assets measured at amortised cost Financial Ilabilities measured at fair value Financial liabilities measured at an￿rtised cost 22,057 23,271 1,607 756 7,184 523 8,903 Financial a55et5 measured at fair value comprise listed and unlisted investments and equity loan5. financial asset5 rrEasured at amortised cost comprise trade debtors, other debtors, other loans to parishes and other receivables. Financial liabilities measured at fair value comprise value linked loans Financial liabilities measured at amrtised cost comprise trade creditors. loans. other creditors an￿Unts held for other bodies. 63 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 At 01101120 Income £'ooo Expend- Reval. At Iture Transfers uatlon 31112120 £'ooo rooo £'ooo £'ooo 24 Summary Of Fund Movements Unrestricted Funds {al General {bl Diocesan Stipends Fund Income 5,915 10,673 114.0061 1,528 188 1411 5,915 lo￿61 114.047) 1,528 31 4.141 147 4,288 31 Deslgnated Funds It) Ta￿lble Fixed A55ets Fund Id) Loan Fund le) Fund for Church Growth If) Pastoral Care & Counselllng Scheme Ig) Mission Development Fund (h) Other Designated 5,849 1.000 54 127) 17451 5.077 {9) 45 187 176 960 121 8,160 1119) {1051 181 (1411 {8n) 14 7.166 Total Unrestrlcted Funds 14,075 lo￿75 (14.188) 656 36 11.454 Notes on Unrestrirted funds la) General Fund The General Fund reserve represents those assets held by the DBF for carrying out its general actlvitles. It provldes the assets and liquidity for the DBF to carry out its objertives, includin8 Statutory compliance, adminlstratlon of fund5 and some hou5in8. (b) Dloce5an Stlpends Fund (DSFI Income Account is governed bythe Diocesan Stipends Fund Measure 1953. Income is derived from cash and investments Ilncludln8 glebel representing the Diocesan Stipends Fund Capital Account. It Is used to augment the stlpends of Incumbents. (c) Tan8lble Flxed Assets Fund represents the value In the Balance Sheet of: Board houses kept for the purpose of hou5in8 current and future clergy; solar PV panels on clergy houses and ofPice equipment; less creditors held for the spetiflc purposes of financing these assets. (d) Diocesan Loan Fund £lm was transferred to this fund In 2014to allow parishes the possibility of applying for loan5 to assist with their capital projerts and other Initlatives. {e) The Fund for Church Growth (FCG) exists to SUPPOrt local mission and outreach in the dlocese. (fl The Pastoral Care and Coun5elling Scheme wa5 set up in 1993 to provide trained therapi5t5 and counsellors to SUPPOrt clergy and thelr famlly in the diocese. (g) The Mlsslon Development Fund exists to resource the developing strategy into the future and to enable appllcatlons to the National Church's Strategic Development Fund. (h} Other deslgnated funds tonsisting of amounts designated from the General Fund to be spent on specific projects by departments. 64 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 At 01101120 Income £'ooo Expend- Reval- At Iture Transfers uatlon 31112120 £'ooo £'ODO £'IK)D 24 Summary Of Fund Movements Icontlnued) Restrirted Funds (al Schoo15 Income Fund {bl Diocesan Pastoral Account {cl Support of clergy and dependants Idl Retired clergy funds lel Podock Wyld Trust If) Edginton Trust Igl Zambia Link Ihl Smith Bequest lil DBE Restricted G￿nts (il Abbey House Fund {kl Strategic Development Fund {11 Benefice Houses Im) Other Restricted Total Restrlcted Funds 345 59 Iiiii 15681 151 {ii} 572 13 295 299 205 218 57 {61 52 61 162 li} 131 168 267 1121 1151 258 370 37Z 38 66 1131 32 66 257 {2901 33 901 {9011 16911 (21 1,055 (1,688) {3361 46 689 2,817 26 1074 Notes on Restricted Funds: The income funds of the DBF include restricted fu￿d5 comprisingthe above unexpended balances of donations, grants and investment income held on trusts to be applied for specific purposes. (a) Schools Incorne Fund which may be used for the same purposes as the Schools Caprtal Fund (see Expendable Endowments) and may also be used for any of the following: The provision of advice, guidance and resources for the management of or education In any relevant school in the diocese. The provision of services forthe carrying of any inspection of a school in the diocese required by Part l of the School Inspertion Act 1996 To defraythe c05t of employing staff in connection with the application of income of the relevant trust assets for the above purposes The application of capital or income of the relevant trust asset5 for any purpose referred to in paragraph l of Schedule 36. By vlrtue of section 557110) of the Education Act 1996 a relevant school includes an Academy (b) Dlocesan Pastoral Account (DPA) made up from the sales or transfers of churches and par50nage houses which have become redundant under pastoral re-organisation. The purposes of the fund are laid down in Sections 93 and 94 of the Mission and Pastoral Measures 2011; the main ones being Costs incurred for the purpose of the Measure except for salaries of regular diocesan employees. 65 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 Costs of disposing or maintaining houses or churches vested in the DBF or Commissioners. For the benefrt of another diocese or transfer to the DSF Capital or Income Fund. {c} Support of Clergy and Dependants Funds are revenue funds made up of trust income and donations specifically given for the relief of cler8y, their widows and dependants. (d) Retlred aergy Fund5 to be used to provlde assistance 8enerally to retired clergy. (e) Porlock Wyld Trust being accumulated income to be used for the same purposes a5 the trust capital see Endowment Funds If) Edglnton Trust belng accumulated income to be used In the malntenance of a residence for retired clergy. 18> Zarnbla Unk includingthe Coppen bequest, whlch was given to Strengthen the Ilnk between the diocese and the five dloceses In Zambia. (h) Smfth Bequest to be used for lay mlnlstry (excludlng training for the Ministry) and In-service clergy training. (I) DBE Restricted Grants con5i5tin8 of the balance of restricted grants and donatlons to the DBE. U) The Abbey House Fund to be used to give support to both loity and cler8y to enable them to attend retreats and qulet days. (k} Strateglc Development Fundlng belng funding received from the national church. (l) Benefice Houses being funds set aside for the purchase of replacement benefice houses in Othery1£333kl and Bath Weston {£571kl. These houses have been purchased in 2020. (m) Other Restricted consisting of the balance of restricted legacies, grants and donatlons to the DBF. 66 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 At Expend- Reval. At 01101120 Income iture Transfers uatlons 31112120 £'ooo £'ooo £'ooo £'ooo £.0￿ £'ooo 24 Summary Of Fund Movements (continued) Endowment Funds EJ(pendable Endowrnent (al Par50na8e Houses Fund Ib} Schools Capltal Fund Icl Porlock Wyld TTU5t Idl Retired Clergy Funds 39,249 661 559 805 40.613 661 122 130 307 316 40,339 559 17 41,720 Permanent Endowment lel Dlocesan Stipends Fund Capltal {fl Stipends Capltal (fj General Caplta I lfj Support of Ordlnands Igl Crokat and Cowley Trusts Ihl Edglnton Trust 111 Ottr￿r Perffonent Endowment 43.496 1.562 1.141 731 82 {74} 11.0811 874 43,297 {271 1441 11,2301 1,402 50 781 39 42 164 12} 16 162 354 370 58 61 46A04 1,223 86.743 1.782 11011 (1,125) {2861 46.115 11011 (320) {2691 87,835 Total Endowment Funds All Funds 103,635 13,712 (15,977) 12071101.163 Notes on Endowment Funds: Endowment funds are held on trustto be retained for the beneflt of the charlty as a capital fund. Where the whole of the fund must be permanently maintained it is known as permanent endowment. Where there is power of discretion to convert endowed funds into income. the fund is classified as expendable endowment. Expendable Endowments (al Parsonage Houses Fund represents the value of benefice houses at the Balance Sheet date, together with the Parsonages Building funds held by the Church Commlssloners. The houses are used to provlde accommodatlon for the parochlal clergy. The diocese is not free to dispose of the houses except in accordance with the appropriate measures. There is provision for the net proceeds of sale to be applied to either the DPA or DSF capital once a di5P05al has been efferted. (b) Schools Capital Fund comprises redundant Church of England school premises, teachers, houses and associated endowments which have been vested in the DBF by Orders under the Education Act5 1944 and 1973. The use of the fund is restricted under Section 17 of the Education Act 1993. The uses include the purchase, erertion. malntenance and improvement of any school or teacherfs house in the relevant area. 67 The Bath and Wells Diocesan Board ofFinance Notes to the Financial Statements For the year ended 31 Decernber 2020 {c} Porfock Wyld Trust relates to the Parsons Hill Estate {since sold) was left to the D8F, as sole trustee. "upon trust for such charitable purposes connected with the ecclesiastical parlsh of Porlock as the Lord Blshop of Bath and We115 in hi5 absolute discretion thinks fiv,. There is no restriction on expenditure of capital. (dl Retlred Clergy Funds: Thatcher Trust is to be used for purchase lor repair/ maintenance) of accommodation for retired clergy or the widows or augmentation of income for such persons. Balance £37,840 as at 31 December 2020 {2019- £35,405). Elwell Trust IS to be used for the grant or augmentation of penslons to retired clergy at anytime beneficed In the dlocese. Balance £11,133 as at 31 December 202012019- £11,133). Edward5 Trust relates to a property which was given to the DBF In 1977, as sole trustee, to be used for the accommodation of retired clergy in the diocese. The propety was sold in 2002. A resolution was made by the DBF in April 2000 to modify the purpose of the Trust to provide for clergy housin8 8enerally. Balance £267,095 as at 31 December 2020 12019- £260,074}. Permanent Endowrnents lel Dlotesan Stipends Fund {DSF) Capltal Account represents the value of glebe property and Investments at the balance sheet date, less any inter-fund debtor or creditor. The account is governed by the Dlocesan Stlpends Fund Measure 1953 as amended by the Endowments and Glebe Measure 1976. the National Institutlons Measure 1998, and the Miscellaneous Provisions Measure 1992. Income arises from the sale of glebe assets, the transfer of parsona8e sale money, transfers from the DSF Income Account, as well as gifts, bequests and donations. The main function of the fund is to produce income for the stipends, but it may also be used for other purposes including: acquirin8 glebe property; investing in a subsidiary; developing and protecting glebe amenities,. investment; discharging loans and levies on glebe; improving parsonage houses and dischargin8 any loans made by the Church Commissioners under the Endowments and Glebe Measure 1976. (fj Stlpends Capltal, General Capftal and Support of Ordinands These funds are made up of the capital of a number of trusts which are represented by fixed a55et investments. Stipends Capital income is restrlcted and can be used only to au8ment clergy Stipends. General Capltal Income Is unrestricted and is credited to the General Fund. Support of Ordinands Fund income is restricted and can be used only to train candidates for Church of England ministry. (g) Crokat and Cowley Trusts comprised two properties which were left to the DBF for the purposes of providing accommodation for retlred clergy ofthe Church of England. One property was sold in 1997 and the other in 2001. A resolution was made by the DBF in 2001 to modifythe purposes of the trusts so as to make provision instead for assistance generally to retlred clergy. {h) Edginton Trust comprlsed a property for use as a residence for retired clergy. This was sold in 2WI and a replacement house was purchased In 2004 at Friary Close. aevedon. 68 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 li) Other". Miss S M Osborne Trust- £l,O¢XI wa5 left to the DBF, as sole trustee. to apply the income "by way of 8rant in or towards the repair of fabric of any ancient parish church of historic interest and beauty in the diocese" Balance £1,696 as at 31 December 2020 12019- £1,638) Dorothy StuckeyTrust- £2.000 was left to the DBF, as sole trustee, to apply the Income for upkeep of fabric of the parish church at Yatton or toward the maintenance of an assistant clergyman or both. Balance £20,672 as at 31 December 2020 {2019- £19,342) Mlss M A Rees-Mo88 Legacy- The legacy dates from 1935 and the income only can be Used for the asslstance of necessitous cler8y and thelr wldows and orphans. Balance £41,097 as at 31 December 2020 {2019- £38,453}. 69 The Bath and Wells Diocesan Board of Finance Notes to the Financial Staternents For the year ended 31 December 2020 Tang. & Intang. Invest- other Fixed Assets ments Assets Credit- Interfund ors DR / ICRI N¢t A55etS 25 Summary Of Assets By Fund £'ooo £'fyx) £'Th)o É'ooo £'Th)o £'ooo Unrestrl¢ted General Funds 3,370 2.474 1,494 62 Deslgnated Tangible Fixed Assets Fund Loan Fund Fund For chU￿h Growth Pastoral Care & Counselling Scherr Mission Development Fund Other Designated Total Desl8nated Funds Restricted Fund$ Sch(M)Is Income Fund Diocesan Pastoral Account Support Of Clergy And Dependants Retired Clergy Funds Podock Wyld Trwst Edginton Trust Zombia Link Abbey House Smith Bequest DBE Restricted Grants Other Restricted Total Re5trlrted Funds 10,804 {5.7271 5,077 1,0 754 246 97 1521 178 1,460 187 16111 10,804 139Z 97 716 447 235 45 18681 295 69 23 1421 151 218 52 32 36 36 28 278 124 1201 12) 66 53 32 26 204 1181 258 66 372 32 319 28 54 1,191 1121 899 124 1.874 Endowment Fund5 Expendable Endowment Parsonage Houses Fund Schools Capltal Fund Porlock Wyld Trust Retired Clergy FLtnds Permanent Endowmènt Diocesan Stipends Fund Capitsl Stipends Capital Generdl Capital Supportof Ordinands Crokat And CO￿eY Trusts Edginton Tfust Other Pennanent Endowment Total Endowment Funds 41,009 24 661 121 14181 40,613 661 130 316 130 305 12 15,107 31,756 1.481 781 42 156 213 61 56,273 34,9Z5 1,004 272 35 14,3331 1237) 495 123 43,297 1,402 781 162 370 61 157 206 All Fund5 67 201 41941 4 766 12,745 101.163 70 The Bath and Wells Diocesan Board ofFinance Notes to the Financial Statements For the year ended 31 December 2020 26 Commitments {a) Capital Expenditure 2020 £'ooo 2019 £'ooo 1,161 1,327 2,488 Contratted for, not yet completed Authorised, not yet contracted for Total Capital CommltmentS The prior year, capital expenditure contracted for, not yet completed Comprises amounts contracted for the remaining refurbishment of Flourish House, the Diocesan office1£638kl plus the purchase of a clergy house for which contracts were exchanged priorto year end1£523kl. The prior year, capital expenditure authorlsed, not yet contracted for comprises the purchase of three cler8y houses l£1,292kl plus authorised spend on the refurbishment of Flourish House 1£35kl. (b) Loan5 At 31 December 2020 the DBF had commitmentsto zero parishes (2019- zero) to provide loans totalling £nil12019- £Nill in relation to the CCLA Dlocesan Loan Scheme. In March 2016 the DBF approved a loan of £340,000 to Bath Abbey PCC from the Diocesan loan Fund. The loan is contingent upon the remaining loan fundlng requlred for the Abbey Footprint Project to be In place. Thls loan offer was extended until March 2019. In January 2019 the loan commitment was revised to a maximum of £IOO.000 with an extension to March 2022 .The loan would be repayable over 20 years with an Snitlal 5 year Interest only perlod, funded from the CCLA Dlocesan Loan Scheme at an annual interest rate of 1% above variable bank base rate. During the year, Bath Abbey PCC entered into a loan agreement for £400,000, to be made available in tranches of £IOOk. At the year end £200k has been drawn down. The loan is repayable from the first anniversary of the drawdown and interest is being charged on the loan of 2% above variable bank base rate. (c) Operatln8 Leases 2020 £'ooo 2019 £'ooo Payable not more than one year Payable more than one but not more than five years Total Operatlng Lease Commltrnents li 27 Post Balance Sheet Events and Contlngent Uabllltles There were no post balance sheet Èvents or contingent liabilities at the balance sheet date. 71 The Bath and Wells Diocesan Board of Finance Notes to the Financial Ststements For the year ended 31 December 2020 28 Penslon Costs The Church Workers Pension Fund has a section known as the Defined Benefits Scheme, a deferred annuity section known as PensSon Bullder Classic and a cash balance section known as Pension Builder 2014. (a) The Church Workers. Pension Fund {Lay Staffl- Pension Builder Stheme The DBF participates in the Pension Builder Scheme section of CWPF for lay staff. The Scheme is administered bythè Church of England Pensions Board. which holds the assets of the schemes separately from those of the Employer and the other particlpatln8 employers. The Pension Builder Scheme of the Church Worker5, Pension Fund is made up of two sections, Pension Builder Classic and Pension Builder 2014, both of which are cla55ed 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 durlng employment based on terms set and revlewed by the Church of England Pensions Board from time to time. Bonuses may also be declared, depending upon the Investment returns and other factors. Pension Builder 2014 is a cash balance scheme that provides a lump sum that members use to provide benefits at retirement. Pension contributions are recorded in an account for each member. This account may have bonuse5 added by the Board before retirement. The bonuses depend on investment experience and other factors. There 15 no requirement forthe Board to grant any bonuses. The account, plus any bonuses declared, is payable from members, Normal Penslon Age. There is no sub-division of a55ets between employers In each sectlon of the Pension Builder Scheme. The scheme Is considered to be a multi-employer scheme as descrlbed In Sectlon 28 of FRS 102. This is betause It Is not posslble to attribute the Pension Builder Scheme's assets and Ilabllltles to specific employers and that contributlons are accounted for as If the Scheme were a defined contribution scheme. The pensions costs charged to the SOFA In the year are contributions payable12020: £248,989, 2019: £219,945). A valuatlon of the Pension Builder Scheme is carried out once every three years. The most recent wa5 carried out as at 31 December 2016. A valuation as at 31 December 2019 was under way as at 31 December 2020. For the Pension Builder Classlc sectlon, the valuation revealed a deficit of £14.2m on the ongolng assumptions used. At the most recent annual review, the Board chose not to grant discretionary bonus, which will have acted to improve the funding position. There Is no requirement for deficit payments at the current time. 72 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 For the Pension Builder 2014 section. the valuation revealed a surplus of £1.8m on the on8olng assumptions used. There is no requirement for deficlt payments at the current time. The legal structure of the scheme is such that if another employer fai15, the DBF could become responsible for paying a share of that employerfs pension liabilities. Ib) The Chur¢h Workers, Pension Fund (Lay Staff) - Deflned Benefits Scheme The DBF participates In the Deflned Benefits Scheme section of CWPF for lay staff. The Scheme is administered by the Church of England Pensions Board, which holds the assets of the schemes separately from those of the Employer and the other participating employer5. 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 5ectlon known as Pension Builder 2014. Deflned Benefrts Scheme The Deflned Benefits Scheme I"DBS"} section of the Church Workers, Pension Fund provides benefits for lay staff based on final pensionable salaries. For fundinE purposes, DBS is divided into sub-pools in respect of each participating employer as well as a further sub-pool, known as the Life Risk Pool. The Life Risk Pool exist5 to share certain risks be￿een employers, including those relating to mortality and post-retirement investment returns. The division of the DBS into SUl￿pOOlS is notional and is for the purpose of calculating ongoing contrlbutlons. They do not alter the fact that the assets of the DBS are held as a single trust fvnd out of which all the benefits are to be provided. From time to time, a notional premium is transferred from employers. sub-pools to the Life Risk Pool and all pensions and death benefits are paid from the Life Risk Pool. The scheme is a multi-employer scheme as described in Section 28 of FRS 102. It is not possible to attribute DBS assets and liabilitie5 to specific employer5, since each employer, through the Llfe Rlsk Settlon, Is exposed to actuarlal rlsks assoclated wlth the current and former employees of other entities participating in DBS. Thi5 rneans that contributions are accounted for as if DBS were a defined contribution Scheme. The pensions Costs charged to the SOFA durlngthe year are contrlbutlons payable towards benefits and expenses accrued In that year12020: £7,0(MJ, 2019.. £12,000) plus the figures in relation to the DBS deficit highlighted in the table below as being recognised in the SOFA, giving a total charge of £7,000 for 202012019: £12,(M)O). If, following an actuarial valuation of the Life Risk Pool, there is a surplus or deficit in the pool, furthertransfers may be made from the Llfe Risk Pool to the employers, sub-pools, or vice versa. The amounts to be transferred land their allocation between the sub-poo151 will be settled by the Church of England Pensions Board on the advice of the Actuary. 73 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 A valuation of DBS is carrled out once every three years. The Most recently finalised was carried out as at 31 December 2016. In this valuation, the Life Rlsk Sertion was shown to be In deficit by £2.6m and £2.6m was notionallytransferred from the employers. sub-pools to the Life Risk Section. This increased the Employer contributions that would othelwise have been payable. The overall deficit in DBS was £26.2m. A valuation as at 31 December 2019 was under way as at 31 December 2020. The tontributlons agreed at that valuation will be reflected in the figures disclosed in the 2021 accounts. Following the valuation, the Employer has entered into an agreement with the Church Workers, Penslon Fund to pay expenses of £8,600 per year. In addition deficit payments of £102,259 per year have been agreed for 5 years from l April 2018 in respect of the shortfall in the Employer sub-pool. This obligation has been recognised as a Ilablllty within the Employer's financial statements. Section 28.IIA of FRS 102 requires agreed deflcSt recovery payments to be recognised as a Ilabillty. The movement in the provision is set out below: 2020-£ 2019-£ Balance sheet liabilty at l January Deficit contribution paid Interest cost Ireco8nised in SOFA} Remaining change to the balance sheet liability'{reco8nised in SOFA) Balance sheet liability at 31 December 229,000 325.000 * Comprises change in agreed deflclt recovery plan and change in discount rate between year-ends. 325,000 414,000 1103,000) 1101,O(KJI 3,000 7,000 4,LKIO 5,000 This liability represents the present value of the deficit contributions agreed as at the accounting date and has been valued using the following assumptlons, set by reference to the duration of the deficlt recovery payments: December 2020 December 2019 December 2018 Discount rate 0.30% 1.20% 1.90% The legal structure of the scheme is such that If another employer fails, the employer could become responsible for paylng a share of that employer's pension liabilities. (c) The Church of England Funded Penslons Scheme for Clergy The DBF participates in the Church of England Funded Penslons Scheme for stipendiary cler￿, defined benefit pension scheme. Thls scheme Is adminlstered by the Church of En8land Pensions Board, which holds the assets of the schemes separately from those of the Responsible Bodies. 74 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 Each partlclpating Responsible Body in the scheme pays contributions at a common contribution rate applied to pensionable stipends. The scheme Is considered to be a multi-employerscheme as described in Section 28 of FRS 102. Thls means it is not possible to attribute the Scheme'5 a￿et5 and liabilities to each specific Responsible Body, and this means contrlbutlons are accounted for as if the Scheme were a defined contribution scheme. The pensions costs charged to the SOFA in the year are contributions payable towards benefrts and expenses accrued in that year12020: £1.246k, 2019: £1,218kl, plus the figures hlghllghted in the table below as being recognised in the SOFA, giving a total charge of £1,320k for 202012019: credit £709kl. A valuation of the Scheme Is carrled out once every three years. The most recent Scheme valuation completed was carried out at as 31 December 2018. The 2018 valuatlon revealed a deficit of £50m, based on assets of £1,818m and a fundln8tar8et of £1,868m, assessed using the following assumption An average discount rate of 3.2% p.a., RPI inflation of 3.4% p.a. (and pension increases consistent with this); Increase in pensionable stipends of 3.4% p.a., Mortality in accordance with 95% of the S3NA VLtables, with allowance for improvements in mortality rates in line with the CM12018 extended model with a long term annual rate of improvement of 1.5%. a smoothing pafameterf of 7 and an initial addition to mortality improvernents of 0.5% pa. Followingthe 31 December 2018 valuation, a recovery plan was Put in place until 31 December 2022 and the deficit recovery contributions las a percentage of pensionable stlpends) are as set out in the table below, % of pensionable stipends January 2018 to December 2020 11.9% January 2021 to December 2022 7.1% Deficit repair contributions As at 31 December 2018 the deficit recovery contributions under the recovery plan In force at that time were 11.YA of pensionable stipends until December 2025. As at 31 December 2019 and 31 December 2020 the deficit recovery contributions under the recovery plan in force were as set out in the above table. For senior offlce holders, pensionable stipends are adjusted in the calculations by a multiple, as set out in the Scheme's rules. 75 The Bath and Wells Diocesan Board ofFinance Notes to the Financial Statements For the year ended 31 December 2020 Settlon 28.IIA of FRS 102 requires agreed deficit recovery payments to be recognised as a liability. The movement In the balance sheet Ilablllty over 2019 and over 2020 is Set out in the table below. 2020 £,￿0 1,133 2019 £'ooo 3,569 Balance sheet liability at l January Deficit contribution paid Interest Cost Irecognised in SOFA} Remalnln8 change to the balance sheet liability. Irecognised in SOFA) Balance sheet liability at 31 December Comprises change in agreed deficit recovery plan and change In dlscount rate and assumptions between year-ends. 1529} io 15191 70 11,9871 1,133 678 Thls liabillty represents the present value of the deficit contributions a8reed as at the accounting date and has been valued using the following assumptions set by reference to the duration of the deficit recovery payments: December 2020 Z019 2018 Discount rate 0.2% pa l.l% pa 2,1% pa Price inflation 3.1% pa 2.8% pa 3.1% pa Increase to total penslonable payroll 1.6% pa 1.3% pa 1.6% pa The legal structure of the schÈmÈ is such that if another Responsible Body fails, the DBF could become responsible for paylng a share of that Responsible Bodvs penslon liabilities. CWPF (d) Penslon Llablllty Reconclliatlon all schemes Unrestricted Funds Restr- Endow- 2020 2019 Desig- Icted ment General nated Funds Funds Total Totsl É'OOO £'O(M) £'O(￿ £'(M)o £'ooo £'ocJ) CEFPS Llablllty at l January Deficit Contrfbutions paid Interest cost 325 {1031 1,133 1,458 3,983 15291 {632) 16201 io 13 68 {1,9911 907 1,458 Remeasurement Gains 64 Llablllty at 31 December 229 678 76 The Bath and Wells Diocesan Board of Finance Notes to the Financial Staternents For the year ended 31 December 2020 29a Prlor Year Comparative Notes- Statement of Financial Actlvltle5 Lknre5tricted Restslt- ted Fund5 Endow- ment Funds Tolal Funds 2019 Tctal Fund5 Desig- nated £*oo 2018 Note General £•DO £*oo rooD £'ooo Income and endowments from Dorraticns Parlsh CcntrikyJlioTh hbishq)s' ￿rtI1 othpJ thnaticns Charitstle aCti￿tIeS Other arti¥itles IrNestments other Ir£cme 24 10,359 IOA59 10,201 30 702 713 327 2b 123 727 313 17 753 893 729 338 25 1,256 152 152 IA15 558 1.429 I,oio Totsl incomeand endowmeTrt5 12,930 24 934 404 14292 14412 Fxpend*uwe on Ralslrg funjs Charit?Ne aotivitie5 ImFAirmert & prcpÉrtbes 199 12,378 70 274 261 14183 13,931 41 314 205 1,600 17 41 Total ewendlture Net income l (e)penditu rel before Investment gain $1 (105se Net gains / (1055es l on investmffrts 205 111 14A98 14,506 353 ts81) (671) 293 12061 (94) 524 32 138 2,347 31141 12,410) Net incomel (e>pgndithTe) 877 (149) ￿33? 2.640 2135 (2,504) Tran sfefs between fund5 15 109 (301} 1,288 (1,096) other recoznised gain5 ftemea$ur￿ert galns on defined benefit per6ity) scFkn)es 28 (51 1,987 1982 165 Net movemeTht ITh funds 755 3531 4*17 (2,339) 2,062 83,212 98m8 101,157 Totslfund5 brought foThMrd 4,934 8,610 Totslfunds ¢aThied forvrdrd 24 60 17 86.743 103 35 98,818 77 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 29b Prlor Year Comparative Notes- Notes 2 to 6 Unr•strict¢d Funds Restrlc. Endow. Total Total Delig- ted mont Funds Funds General nated Funds Funds 2019 2018 rooo ¢Mo £'ooo Yooo vooo £'ooo 2a Parlsh Contribution5 Partsh Share Cur￿nt year's allocatlon Additional Payments Arrears f or previous year5 Shortfall In contributions 10,539 19 10.589 10,282 16 (1991 1100) 10359 10,201 Total Parish Share recelpts represent 98.3% of the allocation (2018 - 99.2%) 2b other Donation5 Allchurches Tn45t Foundation of St M*thias RME Ordin•nds Grant DonatIons,Gr￿￿S, Sponsorships & Legacie5 119 17 136 63 141 56 247 258 702 63 434 256 123 17 993 3 Charitsble At*Kiitie5 Statutory fees and ehaplalncy income Course fees other 589 138 589 140 729 602 iii 713 4 Othei Artlvltles Rental Income from clerg¥ houses, schools and tk Old Deanery Support services 299 304 286 41 327 14 313 20 5 Investment In(ome Di¥ldends recdvable Interest receirdble Notional Interest re net present volue Rents recelvaE4e 759 95 (71 409 140 12 956 98 (7) (15) 409 390 IA15 1,429 162 6 OtherlD¢ome Galn on disposgl of propertles Solar PV Panel FIT Income other 23 121 404 427 886 113 li i.oio 152 78 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 29c Prior Year Comparatlve Notes- Notes 7 to 8 Jnrestrfcted Fund.. Restr- Endow. TDt¥l Total Desig- i¢t¢d ment Funds Funds Gentral nJttd Funds Funds 2019 2018 £Tho rooo rooo eow £'ooo £'ooo 7 Costs of raising fundi Stockbroker'5 fees Value ￿. nked loans Interest Interest cost & expenses: pension schemes Glebe Land & aergy Houses lettlng costs 39 13 44 67 13 16 70 64 131 117 199 70 274 261 Charitable actlvities Contribution to Archbishops. Councll Tralnlng for Ministry National Church Responsibilities Grants and pro¥i51ons Mlssion Agency pension contributlons Retired aergy Housing (CHARM) & Grants Pooling of ordinand candidates, cost5 393 312 33 382 304 33 312 33 134 134 128 12 863 B76 Resourcing Mlnistry and Mission Parlsh Minlstry,, Stipends and Social Security Pension contributions Housing costs Removal, resettlement and other 8rants Other Éxpenses 5,136 1,218 1,336 60 5.196 5,240 1.218 1,242 1,982 1,713 646 208 215 251 90 7.988 3,099 47 760 767 187 132 8,748 8,608 4.081 3,707 Support for mlnistry 215 Fund for Church Growth io 205 1.527 (10) 236 12.819 12,551 11.087 Expenditur• on Educitipn Church School s, Administratlon 415 73 517 12A78 205 1fi00 14.183 13,931 79 The Bath and Wells Diocesan Board of Finance Notes to the Financial Ststements For the year ended 31 December 2020 29d Prlor Year Comparative Notes- Notes 9 to 11 Lknr¢>trlrttd Funds $tr. Endow- Total T¢*al Ict•d ment Fund$ Funds Funds Fundj 2019 2018 £'(MJo £,1￿ £'ooo £'ooo G•n•ral £'(w r( nated 9 &lbFsI(loswJ) on Inv•5tmqnt A55*ts Unrnalised gainslllossesl after revol￿ti¢￿ I I Realised iain$/llos$8sl on disposal 140 2,185 (2.7171 121 162 139 307 138 2.347 3.041 (2AIO 120 524 32 I'l includes £O.Im gain in Trlation to the revaluation of Gl*bp A8ricultural Land12018 - £0.4ml. 10 Analysls Of Reswrce5 Expended hcludlns Allocatlon Of Support Costs Grant Actlvltle5 undertaken fvndlng of Support Total Total Dlrectly artlvltles Costs 2019 2018 £000 TO￿ £'ooo £'coo 274 261 Raising FuTrJs Charttable Activitles.. Contributions to ATrrhbishoFS' Councll Resourcing Thinistry a nd rni55ton Education Flxed Asset Imp31rment 274 393 483 616 1,028 12,819 12,552 45 517 41 314 I￿99 L073 14098 14,X76 876 11,175 443 41 14326 Unr¢rtrlcttd Funds Rostr. Desig" Icted General nated Fundi £'ooo £￿ rooo Endow. Total Total ment Funds Funds Funds 2019 2018 £'ooo £too £'ooo 11 Analysls OF Support Costs Central Adm Inistratlon Support for Schools GovÈmance'. External Audit Professi onal Fees Olocesan and General Synod Expenses 984 954 43 45 45 18 17 18 I￿26 li 1.073 1, 029 47 80 The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2020 29e Prlor Year Comparatlve Notes- Note 24 At oUou19 Incomo £'aoo £'ooD Expend. Reval- iture Tr*nrf•rx u•tion 311W £￿00 £'ooo ¢wo £'ooo 24 Summary Of Fund Mov4m•nti Unrestrfcttd Funds la) General Ib) Dloce5an StSpend5 Fund Income 4,934 11,943 (11,590) 987 1987) 4.934 12.930 ¢12￿77} 109 519 5.915 109 519 5?15 Designated F￿d$ (c) Tangible Fixed Assets Fund (d) Loan Fund (e) Fund for thurth Growth (f ) Pastoral Care & Counselling Scheme (g) Mission Development Fund (h) Other Deslgnated 6,122 1,000 45 (273) 5M49 io (6) (209) (i) 143 32 176 1,250 50 8￿10 17 (98) 71 pos) poi) 121 24 32 8.160 Total Unrostrf¢tod Funds IS￿44 12.954 {12,782) (192) SSI I4￿7$ 81 The Bath and Wells Diocesan Board ofFinance Notes to the Financial Statements For the year ended 31 December 2020 29e Prfor Year Comparatlve Notes- Note 24 {contlnued) Expend. Reval- At iture Transfers uation 3y12119 £'ooo £'ooo £'ooo £'ooD OVOll19 Incom¢ gooo E'mo 24 Summary 01 Fund Movements