2022-12-31-accounts - The Bath And Wells Diocesan Board Of Finance

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Annual Report and Accounts For the year ended December 2022

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

Page

Introduction by the Chair of the Board of Finance ....................................................................... 2 A Legal Framework........................................................................................................................ 3 A1 Legal Objects ................................................................................................................. 3 A2 Public Benefit ................................................................................................................ 4 B Strategic Report ......................................................................................................................... 4 B1 Strategic Aims ............................................................................................................... 4 B2 Key achievements in the year ....................................................................................... 5 B3 Financial Performance .................................................................................................. 6 B4 Future Plans ................................................................................................................ 11 B5 Risk Management ....................................................................................................... 12 C Structure and Governance ....................................................................................................... 12 C1 Organisation and decision making structure .............................................................. 13 C2 Trustee recruitment, selection and induction ............................................................ 13 C3 Remuneration of key management personnel ........................................................... 14 C4 Funds held as custodian trustee ................................................................................. 14 C5 Funds held on behalf of schools and Zambian dioceses ............................................ 14 D Trustees’ Responsibilities ........................................................................................................ 14 D1 Trustees’ Responsibilities for Annual Reports and Accounts ..................................... 14 D2 Statement of disclosure to the auditors..................................................................... 15 D3 Appointment of auditors ............................................................................................ 15 E Legal and Administrative Details .............................................................................................. 16 F Members and Trustees ............................................................................................................ 17 Independent Auditor’s Report .................................................................................................... 19 Statement of Financial Activities ................................................................................................ 23 Income and Expenditure Account ............................................................................................... 24 Balance Sheet .............................................................................................................................. 25 Cash Flow Statement .................................................................................................................. 26 Notes to the Financial Statements.............................................................................................. 27 Appendices ................................................................................................................................ 74 Appendix A Consolidated Financial Trusts .................................................................................. 75 Appendix B Glossary of terms ..................................................................................................... 77

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

Introduction by the Chair of the Board of Finance

2022 once again proved to be a challenging year financially for the Diocesan Board of Finance (DBF) as it was for our parishes. Many of the 466 parishes who provide over 75% of the funds required to maintain stipendiary ministry and support across our diocese are still struggling to build back their own finances post- Covid, and once again the DBF was forced to absorb a shortfall in Parish Share against the amount requested of around £1.3m. This shortfall was offset to a degree by the welcome receipt of £400k of arrears from the previous year, and we remain particularly grateful to those parishes who were able to maintain, and in some cases to increase, the amount of Parish Share they paid.

Whilst at present the DBF is able to fund these shortfalls by selling surplus clergy houses and drawing on reserves, this is not a sustainable strategy and we need, as a matter of urgency, to get back to a position whereby our income, from all sources, is sufficient to pay our outgoings. And indeed our passion is to be able to invest in growth and not just balance the books, which means we need to generate surpluses year on year. Some of this additional investment will come from the national church, but we need to play our part too.

Part of the answer comes from the savings that will arise as we reduce our stipendiary clergy numbers from 178 to 150 over the next few years (we have already achieved annual savings of £320k from the restructuring of support services in 2021) but even then our projected outturn in 2026 is a deficit of over £500k.

The immediate priority therefore is to ask all our parishes to do whatever they can to meet, in full, the amount requested by way of Parish Share. We have been working on a new methodology for calculating Parish Share which reflects better where ministry resources are deployed for a number of years, which we are reaching a conclusion. As a minimum, we are requesting updated worshipping numbers for 2024 upon which the current methodology relies, to ensure the impact of Covid on our congregations is properly reflected.

Inevitably this introduction focuses on the financial position of the DBF. The Report and Accounts is a far richer document, talking as it does about the work of the DBF in supporting ministry across our diocese. During 2022 we welcomed the arrival of Bishop Michael and look forward to taking forward the ministry of our diocese under his leadership. The real life of our diocese is the sum of everything done in our parishes, week in and week out, a bit of which is captured in our diocesan Annual Review which can be accessed at Annual Review and Accounts - Bath and Wells Diocese.

Ian Theodoreson – DBF Chair

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

A Legal Framework

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

The Diocese of Bath & Wells is one of 41 dioceses making up the Church of England. Each diocese is a separate legal entity. The Diocese of Bath & Wells provides support to the parishes in Somerset, and it is the parishes that represent the visible presence of the Church ‘on the ground’. Each parish, and Wells Cathedral too, is a separate legal entity, and therefore, although there is a pooling of financial resources into the Common Fund, their results are not presented in these financial statements

The company, The Bath and Wells Diocesan Board of Finance (DBF), 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 registered with the Charity Commission (No. 249398).

A1 Legal Objects

The DBF’s principal object is to promote, assist and advance the work of the Church of England in the Diocese of Bath and Wells by acting as the financial executive of the Bath and Wells Diocesan Synod.

The DBF has the following statutory responsibilities:

the management of glebe property and investments to generate income to support the cost of stipends arising from 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 relating to church schools under the Diocesan Board of Education Measure 1991;
the custodian of permanent endowment and real property assets relating to trusts held by Incumbents and Archdeacons and by Parochial Church Councils (PCCs) as Diocesan Authority under the Incumbents and Churchwardens (Trusts) Measure 1964 and the Parochial Church Councils (Powers) Measure 1956.

The strategic priorities of the DBF are established by the Diocesan Synod in communication with Deanery Synods, PCCs, and the Bishop of Bath and Wells (in respect of their responsibility for the provision of the cure of souls). To this end, significant time and effort is committed to communication between and with these bodies, as well as with the church nationally.

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

A2 Public Benefit

The Trustees are aware of the Charity Commission’s guidance on public benefit in “The Advancement of Religion for the Public Benefit” and have regard to that guidance in their administration of the charity. The DBF believes that this report provides evidence of the public benefit of the charity’s work in 2022.

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 buildings including parsonages and churches, many of which form an important part of the historic fabric and architectural heritage of the area. The vast majority are available to the public at large and none are restricted to members of the Church of England.

The religious purposes of the Church of England 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

B1 Strategic Aims

In line with 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 mission and strategic priorities of the diocese.

Diocesan Vision

The diocesan vision is expressed in the following words:

“ In response to God’s immense love for us, we seek to be God’s people living and telling the story of Jesus.”

Strategic Priorities

The strategic plan has three priorities for action:

to place mission and evangelism at the heart of everything that we do
to align our resources towards mission
to identify, develop and release the gifts of all our people

These strategic priorities govern the implementation of the strategy. They provide a framework for decision making and planning, at diocesan level but also for archdeaconries and deaneries.

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

B2 Key achievements in the year

2022 was a year of continued change;

Mission Support and Ministry Development

The diocese team has supported deaneries and parishes as they explore the development of shared local ministry by developing a framework for the discernment and equipping of a range of ministries, providing monthly online workshops to introduce the Enabling Ministries resources to parishes and deaneries and supporting them as they reflect on the opportunities and challenges that they face locally and the partnerships they might form.

Deaneries have been working hard on formulating plans for stipendiary deployment across their deaneries as reductions in stipendiary numbers are phased in. There has been a launch of warm spaces hubs across our diocese as a response to the increased energy costs.

The Giving and Funding Team has appointed local advisors, using the National Giving Fund, to work in the Archdeaconries, giving support to parishes seeking to resource their mission. The roll out of the Parish Giving Scheme in 2023 has been finalised to help reduce the burden on parish treasurers for managing Gift Aid claims and promote increasing the level of regular, committed giving across the diocese.

A new Deanery Leadership Handbook has launched which complements the diocesan approach to shared local ministry and will support deanery leaders as they discern the right shape of ministry for their deaneries alongside the current reduction in stipendiary posts.

Education

The diocese has implemented the new DBE Measure which will bring the work of the Education into the heart of the work of the diocese. At the same time the team returned to in-person contacts and visits to schools and parishes, enhanced by high quality online training which improves accessibility and reduces carbon footprint.

Safeguarding

Last year the safeguarding team focussed on increasing its capacity and effectiveness whilst improving our communications. This was achieved through reviewing all job descriptions in the team. A diverse team of professionals with experience in education, criminal justice as well as existing experienced staff was built from excellent recruitment campaigns. We have delivered leadership training to over 1000 people as well as developing more support for Parish Safeguarding Officers’ including a modernised website full of resources and engagement via a variety of different technological means.

Property

The DBF will conducted a strategic review of housing requirements and glebe assets across the diocese, enabling surplus assets to be identified, upon realisation of these assets it aims to reduce the pressure on DBF reserves, parishes and the Common Fund.

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

As part of the strategic intent to move towards becoming a net -zero carbon diocese by 2030, the team have ascertained the current energy and environmental performance of the majority of the housing stock. Where possible and financially viable the DBF will seek to improve energy efficiency and carbon output of the housing portfolio.

B3 Financial Performance

Financial Outturn

The operating deficit on general funds prior to investment losses and transfers was £1.3m: the impact of investment losses, actuarial movements and transfers between funds, meant the resultant drawdown on unrestricted reserves was £1.3m.

The operating deficit primarily arose from continued low levels of Common Fund receipts and a greater level of clergy posts filled than can be sustained by the Common Fund request. The diocese continues to face significant pressures in unrestricted reserve levels and ensuring it holds sufficient cash reserves to support operational activities. However, unlike many dioceses, the DBF holds a significant level of endowed funds which it can draw upon. (In 2019 The Trustees elected to adopt Total Return accounting on certain permanent endowed funds allowing it to draw down of up to 4% of the balance held as Unapplied Total Return as at the balance sheet date. In the year to 31 December 2022 this transfer amounted to £1.4 million – see note 18 to the accounts).

Income and expenditure

The Statement of Financial Activities (SOFA) for the year on page 24 shows total income including from endowments of £15.3m (2021 - £12.9m) and total expenditure of £15.2m (2021 – £15.6m), resulting in net income of £0.1m (2021 expenditure - £2.9m).

Income increased by £2.3m, with the main factors being gains on disposal of properties, increase in Parish Share contributions and rental income from clergy houses.

Total expenditure decreased by £0.5m with a decrease in charitable activities spend.

Realised and unrealised investment losses of £2.3m (2021: gains £6.5m), contributed to the net decrease in total funds of £1.8m (2021 – net increase of £3.7m). Total fund balances decreased from £104.9m to £103.1m

Parish Share

In 2022 the DBF requested the same Parish Share contributions compared with the 2021 level but requested an inflationary increase of 2% was applied. Every effort is being made by the DBF to review the costs covered by the Common Fund into which Parish Share contributions are made, to ensure the Common Fund is sustainable. A large part of the costs are stipends, pensions, staff salaries and building maintenance costs, which are all increasing broadly in line with inflation.

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

As noted above, the effect of the pandemic meant the many parishes were unable to sustain their historic levels of giving and, for a second year in a row, the contribution rate fell from its historic levels of around 99%. In 2022 the DBF received 88% of share requested from parishes in year (2021 – 89% in year) a reduction of about £1.3m on pre-pandemic levels, which meant that the diocese had to subsidise an increasing level of ministry costs from its own reserves.

Grants received

The DBF gratefully acknowledges grants received from Allchurches Trust of £121,000 (2021 - £126,000) and from The Foundation of St. Matthias totalling £35,000 (2021 - £57,000). The DBF also received the following grants from the Archbishops’ Council:

£330,450 (2021 - £402,000) Strategic Development Funding towards the Pioneer Project
£401,000 (2021- £522,000) block grant for ordinands’ training fees and expenses under the Resourcing Ministerial Education process.

Balance Sheet

The net assets at the balance sheet date totalled £103.1m (2021 - £104.9m). This includes properties totalling £65.6m (2021 - £66.2m), which are mainly used to house stipendiary clergy. Much of the remainder of the assets shown in the balance sheet are held in restricted and endowment funds and cannot necessarily be used for the general purposes of the DBF. – see notes 24 and 25 to the accounts.

The Trustees are satisfied that the DBF has adequate resources to continue to operate as a going concern and have prepared the financial statements on that basis.

Reserves Policy - Free reserves

The Trustees require reserves to:

meet short term excesses of expenditure over income
provide funds for expenditure with long life horizons such as clergy housing
fund future initiatives such as the changing structure of ministry and the deployment of clergy.

It is the DBF’s policy to maintain the readily realisable assets in the Unrestricted General Fund at between three and six months’ unrestricted expenditure. The aim is to ensure the availability of sufficient liquid funds to enable the DBF to meet its daily commitments. A 31 December 2022 free reserves stood at £2.4m (2021 - £3.6m) which is around two months’ expenditure. These are budgeted to fall further in 2023 as the savings associated with the planned reduction in stipendiary clergy and associated housing begin to take effect and the diocese has once again been forced to set a deficit budget supported by disposing of assets such as investments and houses to support the operating deficit.

Designated and other reserves

The Diocese hold a number of other reserves for operational purposes which are detailed in full in note 24 of the accounts.

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

Grant making policy

The DBF makes grants in pursuance of its objects, and the nature of grants made in 2022 is set out in note 12 to the accounts.

Grants are made to the National Church to cover a proportion of its central costs and to cover the cost of training for ministry. Grants are also paid to other connected charities and charitable projects which support the furtherance of the DBF’s objects.

Investment Policy

The DBF invest monies not immediately required for its operational purposes in listed investments managed on its behalf by two separate investment managers, Brewin Dolphin and CCLA. All investments are held in accordance with the Church of England’s Ethical Investment Advisory Group’s (EIAG) guidance – the EIAG is widely held to be a leading think tank in the field of ESG (Environmental, Social and Governance) investing.

The DBF also holds glebe (property) investments in agricultural land, commercial and residential land and buildings and the rents received and the gains arising on disposal are used to help fund clergy stipends. The diocese seeks to achieve a 4% real return on all its investments which is used to fund the day-to-day operations of the diocese.

In addition, the DBF acts as trustee of a number of trust funds, and these are invested in accordance with the related trusts. Note 25 to the accounts provides details of the assets of each fund, together with the related purposes, and note 18 summarises the movements in investments during the year.

Programme related investments

The DBF provides loan finance to PCCs and related projects through two loan initiatives:

CCLA backed Diocesan Loan Scheme (closed to new applications)

This scheme allowed PCCs to obtain loan finance from the DBF at low interest rates for periods from 5-7 years to facilitate building or other projects which further the mission of the church. The DBF received loan funding from CCLA totalling £1m which is available to provide these loan facilities until May 2026. Loans range from £3,000 to £150,000. At 31 December 2022 the total loans outstanding from parishes from this scheme was £270K (2021 - £385K).

Diocesan Loan Fund

The DBF has designated a £500k reserve to allow further loans to be extended to PCCs where CCLA funds are not available. These loans are repayable over variable periods and are at a low interest rate. At 31 December 2022 loan balances outstanding, prior to bad debt provision, were £688K.

The DBF considers these investments assist PCCs to achieve the mutual charitable objects of furthering the mission of the church within the diocese and complement the PCCs use of grant funding and local fundraising including pledged donations which are received over a number of

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

years. Provision is made in the accounts for any assessed non-recoverable balances. The bad debt provision has been assigned both to the designated funds and unrestricted general funds.

People resources

The DBF and the parishes it serves are resourced with over 600 clergy, either licensed or with permission to officiate, including not only stipendiary parish priests, curates and archdeacons but also self-supporting ministers, chaplains, ministers with a House for Duty and many retired clergy. In addition, there are over 350 lay ministers, either licensed or with permission to officiate, including readers, authorised lay ministers and lay chaplains.

The DBF is dependent on the huge number of people involved in church activities both locally and at diocesan level. The service provided to a community through church volunteering also has a significant impact on people’s relationship to the church, particularly at times of crisis. Within this context, the DBF greatly values the considerable time given by all committee members and other volunteers across the diocese in pursuit of the mission of the diocese.

Related Parties

The DBF identifies the following as related parties for the purpose of reporting:

General Synod, Church Commissioners and Archbishops’ Council

The DBF has to comply with Measures passed by the General Synod of the Church of England and also makes certain annual payments to the Archbishops’ Council towards the running costs of the National Church. As disclosed in note 13 to the accounts, certain costs of the bishops, including stipends and pension contributions are borne by the Church Commissioners.

Parochial Church Councils (PCCs)

The DBF is required by Measure to be custodian trustee in relation to certain PCC property, but has no control over PCCs, which 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.

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

Other

The Church of England Pensions Board to which the DBF pays retirement benefit contributions for stipendiary clergy and employees. It also offers schemes to provide housing 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 by the DBF. The DBF provides HR and Safeguarding services to the Chapter under service level agreements.
The Foundation of St Matthias of which three DBF employees are trustees, from which the DBF receives grants for educational services.
The Bath and Wells Multi Academy Trust (BWMAT) BWMAT leases serviced office accommodation from the DBF and the DBF provided educational services to BWMAT during the year. BWMAT occupy school buildings under agreements with the DBF. The DBF does not exercise control over these buildings and therefore they are not recognised as assets in these financial statements. BWMAT’s company name and number is The Bath and Wells Diocesan Academies Trust (08207095).
The Palace Trust, Wells , of which the Bishop of Bath and Wells is a trustee.
Discretionary trust funds administered by employees of the DBF. DBF trustees of these trusts are as follows:

The Stone Trust (5 DBF trustees, 1 DBF employee); The Herbert Trust (2 DBF Trustees); Bishop’s Rib (1 DBF Trustee); Wells Clerical Charity (2 DBF trustees); The Archdeaconry of Taunton Fund for Clergy, their Widows and Dependants (1 DBF trustee); The Wynne Willson Scholarship Fund (2 DBF trustees); and The Bath Clerical Families Fund (2 DBF trustees). Except for the Bath Clerical Families Fund, management charges are paid by the trusts to the DBF and the DBF receives an annual grant from the Bishop’s Rib towards the working costs of the three Archdeacons.

Transactions with the main categories of related parties are identified in appropriate places throughout the financial statements. Where the materiality of the transactions merits more detailed disclosure is given in note 13 to the financial statements.

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

B4 Future Plans

The diocesan team will continue to support deaneries and parishes as they explore the impact of the reduction in stipendiary ministry and formulating deployment plans. Working alongside parishes and individuals to ensure ministries are enabled across our diocese.

The diocese plans to launch the Parish Giving Scheme in 2023, and providing further practical assistance in identifying and mobilising different ways for individuals to give to our parishes and churches.

All of our diocese is working on renewing and revitalizing our vision for the life and ministry of our parishes, schools and chaplaincies and plans to engage with deaneries and parishes to discuss with this longer-term work.

The diocese will launch a 3-year safeguarding strategy to focus on updating our survivor strategy, domestic abuse policy and working towards upcoming external audits through monitoring the delivering of safeguarding at parish level through our dashboards.

The diocese is aware of the continued financial difficulties and will continue to seek to obtain best returns on its assets. In property this is through maximising rental income or sale of assets, and exploring Glebe development opportunities to seek to reduce the financial pressure on the DBF reserves and the Common Fund.

Ongoing work continues on identifying the adjustments required in order to achieve net-zero carbon diocese by 2030.

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

B5 Risk Management

The Trustees have overall responsibility for risk management and internal controls and have a risk management strategy designed to ensure that the principal risks to the organisation are identified and managed. The Trustees delegate to the Audit and Risk Management Group (ARMG) the task of ensuring that risks are identified, reviewed, and brought to their attention. Risks are reviewed regularly and incorporated in the General Risk Register. Risks 'Assessed' as high are detailed in the High-Risk Register, which identifies what steps are already being taken to mitigate the risk, and what the 'Reviewed' risk will be if further steps are taken. This assists Trustees in the management of risk including the determination of risk appetite.

Principal Risks and Uncertainties arising from 2022

Sluggishness in the re-building of church life and consequential financial situation post the covid pandemic has characterised 2022.

Securing the financial resilience of the Diocese and steering it towards a sustainable financial position has demanded many mitigation activities including reliance on investment returns and property sales in addition to strong cost control.

As noted in last year’s report challenges remain with uncertainties and difficult-topredict assumptions underpinning 2023, the 2024 Budget and five-year resourcing plan. It is difficult at this stage to know therefore whether the DBF restructuring, deployment plans, or common fund proposals for example will be sufficient or whether more will be needed.

Relying on investment gains to cover operating costs is not sustainable and is anyway also unpredictable.

Principal risks include insufficient cash flow due to parish receipts not meeting budgeted levels and clergy levels not reducing to budget levels, in conjunction with a failure to develop new sources of income. Risks also include a possibly of continuing slow rebuilding of church membership and attendance with consequential difficulties of rebuilding parish reserves and funding Parish Share. This is particularly highlighted by the significant number of parishes struggling to fulfil their parish share commitments.

Mitigations in place include regular performance monitoring and readiness to take corrective action if necessary; as well as improved communication to parishes concerning the importance of Parish Share and providing greater support for parishes.

As highlighted previously, risks relating to the cost of implementing the Church of England policy of becoming carbon neutral by 2030 remain. A multi-disciplinary task force has been proposed and the property team has identified steps it needs to take, but the risk remains high until more work is done.

A potentially high risk exists for Education, principally because of the uncertainty surrounding an increase in the number of schools the numbers of church schools applying to join MATS, which

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

could mean that more temporary/fixed staff will have to be engaged to carry out the work; something difficult to plan for.

As ever, safeguarding remains a high-level risk to which significant resources are invested in mitigation. A new independent chair of the Diocesan Safeguarding panel has been appointed who brings extensive experience. New training programs are widely available across the Diocese and parishes.

Progress has been made in the implementation of recommendations coming out of the major review of governance structures undertaken in 2021. Further implementation work will continue during 2023 pushing forward the streamlining of decision-making within the diocese, allowing for a nimbler responsive in the face of the uncertainties.

C Structure and Governance

C1 Organisation and decision making structure

The statutory governing body of the diocese is the Diocesan Synod, which is an elected body with representation from all parts of the diocese. Its legal basis is the Synodical Government Measure 1969. Membership consists of ex-officio members, including the bishops and archdeacons, clergy members elected by the houses of clergy and lay persons elected by the houses of laity in deanery synods, up to five other persons who may be co-opted 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 and elects members to serve as trustees on the Bishops’ Council.

Since 1 April 2008 the members of the Bishop’s Council (which is the standing committee of the Diocesan Synod) have also formed the Board of Directors (the Board) of the DBF, and the members of the Diocesan Synod have been the members of the DBF. There is a Finance Group of the Bishop’s Council, which acts for and assists the Board in its more detailed work. The Board has delegated responsibility for the day-to-day management of the DBF to the Diocesan Secretary who is supported by a management team. The Diocesan Secretary also meets regularly with the three archdeacons.

C2 Trustee recruitment, selection and induction

The Board includes:

Ex-officio Trustees
Trustees 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 given an induction pack with key information about the DBF, their role as Trustees and their role as company directors. All Trustees receive induction training when first appointed and receive ongoing training, as appropriate.

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

C3 Remuneration of key management personnel

Emoluments of higher paid employees are determined by the Conditions of Service Group. Remuneration is set following a remuneration policy which includes regular appraisals, and remuneration and salary benchmarking. The policy has been approved by the Board. Details of the aggregate remuneration of key management personnel is shown in note 14 to the accounts.

C4 Funds held as custodian trustee

The DBF is custodian trustee of assets held on permanent trust by virtue of the Parochial Church Councils (Powers) Measure 1956 and the Incumbents and Churchwardens (Trusts) Measure 1964 where the managing trustees are 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 £12m at 31 December 2021 (2021 - £13.5m), are available 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.

C5 Funds held on behalf of schools and Zambian dioceses

The DBE is incorporated within the DBF and receives contributions from governors of church schools within the diocese and government grants in connection with major repair and capital projects to church schools. The DBE administers these monies as managing agent and makes appropriate payments to contractors for work carried out. The monies do not belong to the DBE and as such do not form part of these financial statements. The amount held at 31 December 2021 was £145,837 (2021 - £365,910).

The DBF manages UK bank accounts for the link dioceses in Zambia as managing agents. The monies do not belong to the DBF and as such do not form part of these financial statements. The amount held at 31 December 2022 was £15 (2021 - £10,007).

D Trustees’ Responsibilities

D1 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 financial statements for each financial year which give a true and fair view of the state of affairs of the company and of the net income or expenditure of the company for that year. In preparing those financial statements the trustees are required to:

select the most suitable accounting policies and apply them consistently;
make judgements and estimates that are reasonable and prudent;

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

follow applicable accounting standards and the Charities SORP (FRS102), subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

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 safeguarding 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 irregularities.

D2 Statement of disclosure 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 company’s auditors are unaware.

D3 Appointment of auditors

A resolution to appoint Sayer Vincent as auditors to the company and to authorise the Trustees to fix their remuneration will be proposed at the Annual General Meeting.

No trustee had any beneficial interest in the company during 2022. The names of the Trustees (who also act as directors) who served during the period 1 January 2022 to the date of approval of these accounts are shown in section F. Trustees’ remuneration and expenses are detailed in note 13 to the accounts.

The trustees declare that they have approved the trustees’ report (incorporating the strategic report) above.

Signed on behalf of the Board

Rt Revd N M R Beasley I Theodoreson Trustee Chair Date: 14 June 2023

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

E Legal and Administrative Details

Registered Office Flourish House 2 Cathedral Avenue Wells Somerset BA5 1FD Telephone 01749 670777 E-mail general@bathwells.anglican.org Website www.bathandwells.org.uk

Chairs DBF Chair and Chair of the Finance Mr I Theodoreson FCA Group DBF Vice-Chair and Chair of the Houses Dr A A Palmer LLM PhD FCIB Committee DBF Vice-Chair and Chair of the Mrs M Lee Conditions of Service Group Chair of Investments Committee Mr I Theodoreson FCA Chair of Common Fund Committee The Venerable Dr A Youings Chair of the Audit and Risk Management Mr K Beecham Group

Officers

Diocesan Secretary

Assistant Diocesan Secretary Head of Finance and Operations Head of Property Services HR Manager Safeguarding Adviser

Canon R Pearce (Interim to 16 November 2022) J Hollingsworth (from 1 January 2023) Mr P Evans BA ACIS Mr M Pinnock BSc FCA Mr J Millard BSc MRICS Ms E Andrews MSc Mr B Goodhind BSc BA DIPS

Agents Solicitor and Diocesan Registrar Consultant Land Agents

Auditors

Bankers

C Jones LLB

Greenslade Taylor Hunt 1 High Street Chard Somerset TA20 1QF Haysmacintyre LLP 10 Queen Street Place London EC4R 1AG National Westminster Bank PLC 7 High Street Wells Somerset BA5 2AD

Investment Managers

CCLA Investment Management Limited Senator House 85 Queen Victoria St London EC4V 4ET

Brewin Dolphin Pynes Hill Woodwater Park Exeter EX2 5FD

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

F Members and Trustees

The members of the Bath and Wells Diocesan Synod are members of the DBF. Similarly, 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 Vice-Presidents (Chairs 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 clergy and three lay) of the three archdeaconries

The Bishop’s Council appoints the Finance Group with delegated powers to manage the operational financial affairs of the DBF.

The following served as Directors and Trustees for the period from 1 January 2022 to 14 June 2023

Ex officio

The Rt Revd N M R Beasley (from 12 November 2022) The Rt Revd R Worsley The Venerable A Gell The Venerable S Hill The Venerable Dr A Youings The Very Revd J Davies (until 6 January 2023) The Revd Preb J Haslam Dr C Mason

Bishop of Bath and Wells’ nominees

Ms T J Khodabandehloo Mrs M Lee Dr A A Palmer The Revd C Shaw Notice (until 31 October 2022) Mr I Theodoreson

The Bath and Wells Diocesan Board of Finance Annual Report For the year ended 31 December 2022

Elected

Bath Archdeaconry

The Revd M A C Andrews (elected 1 January 2022) The Revd R Driver Mr P Edge Mr J Loring Dr E I Marshall (elected 1 January 2022)

Wells Archdeaconry

The Revd D M Keen (elected 1 January 2022) The Revd R J Miles (elected 1 January 2022) Mr R Dean (elected 1 January 2022) Mr T Hind Dr R Sage

Taunton Archdeaconry

The Revd A E Fulton (elected 1 January 2022) The Revd J B V Laurence (elected 1 January 2022) Mrs S G Bult (elected 1 January 2022) Mr S Grimshaw Mr N Tall (elected 12 September 2022)

Independent Auditor’s Report to the Members of The Bath and Wells Diocesan Board of Finance

For the year ended 31 December 2022

Opinion

We have audited the financial statements of The Bath and Wells Diocesan Board of Finance for the year ended 31 December 2022 which comprise the Statement of Financial Activities, the Income and Expenditure Account, the Balance Sheet, the Cash Flow Statement, and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

give a true and fair view of the state of the charitable company’s affairs as at 31 December 2022 and of the charitable company’s net movement in funds, including the income and expenditure, for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

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

Conclusions relating to going concern

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

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

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

Independent Auditor’s Report to the Members of The Bath and Wells Diocesan Board of Finance

For the year ended 31 December 2022

Other information

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

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

the information given in the Annual Report (which includes the strategic 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 which we are required to report by exception

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

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

adequate accounting records have not been kept by the charitable company, or returns adequate for our audit have not been received from branches not visited by us]; or
the charitable company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of trustees’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit

Independent Auditor’s Report to the Members of The Bath and Wells Diocesan Board of Finance

For the year ended 31 December 2022

Responsibilities of trustees for the financial statements

As explained more fully in the trustees’ responsibilities statement set out on page 14, the trustees (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the trustees are responsible for assessing the charitable company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

Based on our understanding of the charitable company and the environment in which it operates, we identified that the principal risks of non-compliance with laws and regulations related to 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, Church Measures and Safeguarding.

We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including 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 suspected instances of non-compliance with laws and regulation and fraud;
Evaluating management’s controls designed to prevent and detect irregularities;

Independent Auditor’s Report to the Members of The Bath and Wells Diocesan Board of Finance

For the year ended 31 December 2022

Identifying and testing journals, in particular journal entries posted with unusual account combinations, postings by unusual users or with unusual descriptions; and
Challenging assumptions and judgements made by management in their critical accounting estimates

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

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

Use of our report

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

Adam Halsey (Senior Statutory Auditor) For and on behalf of Haysmacintyre LLP, Statutory Auditors

10 Queen Street Place London EC4R 1AG

29 September 2023

The Bath and Wells Diocesan Board of Finance Statement of Financial Activities For the year ended 31 December 2022

All activities derive from continuing activities. The notes on pages 27 to 73 form part of the financial statements.

The Bath and Wells Diocesan Board of Finance Income and Expenditure Account For the year ended 31 December 2022

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

The Bath and Wells Diocesan Board of Finance Balance Sheet For the year ended 31 December 2022

The Notes form part of these financial statements. The financial statements were approved by the Board of Trustees and authorised for issue on 14 June 2023 and signed on behalf of the Board by:

Rt Revd N M R Beasley Trustee

Mr I Theodoreson Trustee

The Bath and Wells Diocesan Board of Finance Cash Flow Statement For the year ended 31 December 2022

	2022	2021
	£’000	£'000

Cash flows from operating activities
Net cash used in operating activities	(809)	(5,412)

Cash flows from investing activities
Dividends, interest and rent from investments	1,100	955
Proceeds from the sale of:
Tangible fixed assets	3,953	2,119
Fixed asset investments	2,914	11,418
Purchase of:
Tangible/Intangible fixed assets for the use of the DBF	(1,937)	(2,023)
Fixed asset investments	(2,461)	(7,169)
Net cashprovided by investing activities	3,569	5,300
Cash flows from financing activities
Loans repaid by the DBF	(4,441)	(174)
New loans received bythe DBF	2,850	750
Net cashprovided by financing activities	(1,591)	576

Change in cash and cash equivalents in the year	1,169	464
Cash and cash equivalents at 1 January	2,749	2,285

Cash and cash equivalents at 31 December	3,918	2,749


Reconciliation of net income to net cash flow from operating activities

Net income for the reporting period (as per the Statement of	132	3,864
Financial Activities)

Adjustments for:
Investment gains	(223)	(6,542)
Depreciation and amortisation	235	239
Investment income	(1,100)	(955)
Notional interest in present value calculation	125	43
Repayment of loans advanced	148	18
Advancement of loans	(25)	(100)
Repayment of pension schemes net of remeasurement costs	(298)	(434)
Gain on disposal of fixed assets	(1,467)	(587)
Decrease in debtors	199	107
Increase/(Decrease) in creditors	1,486	(1,017)
Decrease in grants approved but not made	-	(16)
Decrease inprovisions	(21)	(31)
Net cash used in operating activities	(809)	(5,412)

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

Notes to the Financial Statements

1 Accounting Policies

The financial statements have been prepared under the historical cost accounting rules modified to include the revaluation of investments, and in accordance with SORP 2019, the FRS102 accounting standard and the Companies Act 2006. The DBF is a Public Benefit Entity as defined by FRS102.

i. Investment properties are externally revalued every five years. Any permanent diminution is taken to the income and expenditure account for the year; and
ii. No depreciation or amortisation is provided in respect of freehold investment properties.

This treatment, as regards the DBF’s investment properties, may be a departure from the requirements of the Companies Act concerning depreciation of fixed assets. However, these properties are not held for consumption but for investment and the trustees consider that systematic annual depreciation would be inappropriate. The accounting policy adopted is therefore necessary for the accounts to give a true and fair view. Depreciation or amortisation is only one of the many factors reflected in the annual valuation and the amount which might otherwise have been shown cannot be separately identified or quantified.

The Trustees assess whether the use of going concern is appropriate, i.e. whether there are any principal uncertainties, related events or conditions that may cast significant doubt on the ability of the DBF to continue as a going concern. The Trustees make this assessment in respect 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 operational existence for the foreseeable future. The financial statements are prepared on a going concern basis.

The principal accounting policies and estimation techniques are as follows.

(a) 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.

i. 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 or there has been a definite commitment to pay.
ii. Rent receivable and parochial fees are recognised as income of the year to which they relate.
iii. Interest and dividends are recognised as income when receivable, in the case of dividends that is when the DBF’s right to receive the dividends has been established (i.e. when the distribution has been declared).
iv. Donations, grants and legacies are recognised when receivable (except in the case of any grants with pre-conditions of entitlement specified by the donor which have not been

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

met at the year end. These are included as creditors to be carried forward to the following year).

v. Gains on disposal of fixed assets for the DBF’s own use (i.e. non-investment assets) are accounted for as other income. Losses on disposal of such assets are accounted for as other expenditure.
vi. Stipends fund income . The Stipends Fund Capital account is governed by the Diocesan Stipends Fund Measure 1953, as amended, and the use of the income is restricted for clergy stipends. However, the income is fully expended within the year of receipt and the legal restrictions, therefore, are satisfied. It is on this basis that the income and related expenditure are both included in the unrestricted column of the SOFA for the sake of greater clarity and simplicity in financial reporting.

(b) Expenditure

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

i. Costs of raising funds are costs relating to the temporary renting out of parsonages and investment management costs of glebe and any other investment properties.
ii. Charitable expenditure is analysed between contributions to the Archbishops’ Council, expenditure on resourcing mission and ministry in the parishes of the diocese and expenditure on education and Church of England schools in the diocese.
iii. Grants payable are charged in the year when the offer is conveyed to the recipient except in those cases where the offer is conditional on the recipient satisfying performance or other discretionary requirements to the satisfaction of the DBF, such grants being recognised as expenditure when the related conditions are fulfilled. Grants offered subject to such conditions which have not been met at the year-end are noted as a commitment, but not accrued as expenditure.
iv. Support costs consist of central management, administration and governance costs. The amount spent on raising funds and other activities is considered to be immaterial and all support costs are allocated to the purpose of charitable activities. Costs are allocated wherever possible directly to the activity to which they relate, but where such direct allocation is not possible, the remainder is allocated primarily on the basis of head count.
v. Pension contributions . The DBF's staff are members of the Church Workers’ Pension Fund (CWPF) and Clergy are members of the Church of England Funded Pensions Scheme (CEFPS). The pension costs charged as resources expended represent the DBF’s contributions payable in respect of the year, in accordance with FRS102. Deficit funding for the pension schemes to which the DBF participates is accrued at current value in creditors distinguished between contributions falling due within one year and after more than one year. Further details are given in note 28.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

(c) Intangible fixed assets

Computer software which is separable from the operation of computer hardware is classified as intangible assets in accordance with FRS102 and is amortised to write off the cost (less any ultimate disposal proceeds at prices ruling at the time of the asset’s acquisition) of other software over their expected useful economic lives on a straight-line basis at a rate of 25% per annum.

(d) Tangible fixed assets and depreciation

i. Investment properties
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 Greenslade Taylor Hunt, with a full valuation carried out every five years.
ii. Parsonage houses
The DBF has followed the requirements of FRS102, in its accounting treatment for benefice houses (parsonages). FRS102 requires the accounting treatment to follow the substance of arrangements rather than their strict legal form. The DBF is formally responsible for the maintenance and repair of such properties and has some jurisdiction over their future use or potential sale if not required as a benefice house, but in the meantime legal title and the right to beneficial occupation is vested in the incumbent. The Trustees therefore consider the most suitable accounting policy is to capitalise such properties at their cost or estimated market value at time of acquisition if received by gift or transfer.

Depreciation is not provided on the foregoing properties listed in (i) and (ii) above for the following reasons:

Any provision (annual or cumulative) would not be material due to the very long expected remaining useful economic life in each case, and because their expected residual value is not materially less than their carrying value.

Buildings 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.

iii. Houses financed by Value Linked Loans

The DBF holds an equity interest in a number of houses provided for separated clergy spouses financed by value linked loans from the Church Commissioners. FRS 102 requires the revaluation of loans annually to reflect the current market value of the equity interest. Accordingly, these houses are included at estimated market value matched by the loan value (included in long term liabilities).

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

iv. Other tangible fixed assets

Depreciation is provided in order to write off the cost (less any ultimate disposal proceeds at prices ruling at the time of the asset’s acquisition) of other fixed assets over their expected useful economic lives on a straight-line basis at the following rates: Leasehold Office buildings 1% per annum Solar PV Panels 4% and 5% per annum Fixtures and Fittings 10% per annum Office Equipment 20% per annum Computer Equipment 25% per annum

(e) Fixed Asset Investments

Fixed Asset Investments have been included on the following bases:

i. Listed investments at their quoted bid price at the balance sheet date.
ii. Unlisted investments at their market value at the balance sheet date, as provided by the CCLA Investment Management Limited.
iii. Investment land and property is included at market value based on its existing use.

It is the policy of the DBF to carry out a valuation of the investment properties every five years to establish market value. In the intervening period the DBF adjusts the market value in the light of information available if this is material. The DBF’s professional agents valued 100% of the DBF’s Glebe investment land assets at 31 December 2022.

Gains and losses on disposal and revaluation of investments are credited or charged to the appropriate fund in the SOFA.

The Diocesan Stipends Fund (DSF) and Stipends Capital Fund permanent endowments comprise assets including Glebe land, listed financial investments and unlisted financial investments which must be held as capital. The Stipends Capital Fund incorporates the Stipends Augmentation Trusts (SAT) fund. From 31 December 2019 the charity has operated a total return approach to the management of the Glebe land and listed and unlisted financial investments representing the DSF and SAT permanent endowment funds. Using this approach, the charity is required to analyse the funds between the amount held for investment and the unapplied total return. The charity is permitted to allocate, from the unapplied total return element to income funds, such sums as the Directors see appropriate provided the Directors exercise their statutory duty to be even handed between present and future beneficiaries and that they maintain the unapplied total return at such a level as to ensure it remains positive after having 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.

(f) Stocks

Stocks are stated at the lower of cost and net realisable value.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

(g) Financial Instruments

All loans and borrowings which are basic financial instruments and; i) which are due for repayment in more than one year, and ii) bear interest at a rate lower than equivalent market rate, are recognised at the present value of cash receivable / payable (including 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 funds have been grouped under the following headings:

i. Unrestricted Funds Unrestricted funds are available for any charitable purpose of the DBF. Designated funds are a type of unrestricted fund which the DBF has earmarked for a particular purpose. There are no legally binding restrictions and the DBF is free to re-designate should this be appropriate.
ii. Restricted Funds Restricted funds are subject to specific conditions imposed by the donor, these conditions being legally binding upon the DBF.
iii. Endowment Funds Permanent endowment funds are a particular type of Restricted Fund which must be held on trust to be retained for the benefit of the 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.

(i) Key areas of estimates and judgements

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as 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 (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements:

i. Useful economic lives of fixed 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 lives of the assets and residual values are assessed depending 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.
ii. Basis of non-depreciation of fixed assets Depreciation is not provided on Investment properties and houses held for clergy use for the reasons stated above (note 1d).

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

iii. Revaluation of agricultural (glebe) and other land

The DBF carries its agricultural (glebe) and other land at valuation with changes in value being recognised in the SOFA. A full revaluation of agricultural land is completed every five years. In intervening years approximately 30% of the land is valued annually and the average adjustment percentage is then applied to the full land portfolio, excluding land under offer which is valued at the offered sales value.
iv. Assumptions underlying the pension liabilities
The DBF has recognised liabilities in respect of deficit contributions to the two Church of England pension schemes in which it participates. The measurement of both liabilities is affected by a number of assumptions which are set out in detail in note 28, including discount rates, future contribution rates and the duration of the deficit recovery period.
v. Discount rates used in NPV calculations
The Board considers an appropriate discount rate to be used in NPV calculations is based on the opportunity cost of income foregone from investments.
vi. Recoverability of parish loans
The Board has considered an appropriate level of provision for non-recoverability of loans given to parishes, estimating the potential shortfall in loan receipts or on-going Common Fund payments.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

2a Parish Contributions Parish Share Current year’s allocation Additional Payments Arrears for previous years	Restricted Funds Endowment Funds Total Funds Total Funds General Designated 2022 2021 £’000 £’000 £’000 £’000 £’000 £’000 10,194 - - - 10,194 10,203 15 - - - 15 17 409 - - - 409 103 Unrestricted Funds
Discretionary Parish Share relief Shortfall in contributions	- - - - - (152) (1,280) - - - (1,280) (1,305)
9,338 - - - 9,338 8,866 Total Parish Share receipts represent 91.6% of the allocation (2021 – 86.9%) 2b Other Donations Allchurches Trust - 121 - - 121 126 Foundation of St Matthias - - 35 - 35 56 RME Ordinands Grant - - 401 - 401 522 SMF grant funding - - 78 - 78 105 Cost of living energy grant 309 - - - 309 - Donations,Grants, Sponsorships & Legacies 31 30 403 - 464 558 340 151 917 - 1,408 1,367 3 Charitable Activities Statutory fees and chaplaincy income 574 - - - 574 596 Course fees and other 41 - 21 - 62 50 615 - 21 - 636 646 4 Other Activities Rental income from clergy houses, schools and the Diocese office 619 - - - 619 374 Support services 178 - - - 178 84 797 - - - 797 458 5 Investment Income Dividends receivable 349 5 102 243 699 512 Interest receivable 18 - 35 - 53 35	9,338 - - - 9,338 8,866
	340 151 917 - 1,408 1,367
	574 - - - 574 596 41 - 21 - 62 50
	615 - 21 - 636 646
	619 - - - 619 374 178 - - - 178 84
	797 - - - 797 458
	349 5 102 243 699 512 18 - 35 - 53 35
Notional Interest re net present value	(125) - - - (125) (43)
Rents receivable 6 Other Income Gain on disposal of properties Solar PV Panel FiT Income Other	348 - - - 348 408
	590 5 137 243 975 912
	487 - - 1,527 2,014 478 118 - - - 118 209 - - 3 - 3 5
	605 - 3 1,527 2,135 692

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022 Unrestrictod Funds Restrv Endow- Total Total Desiz- icted ment Fund5 Funds General nated Funds Funds 2022 2021 £'cw £'ts>) £'OOO £'OOO £,( £'(JJ) 7 Costs of ralslnc funds Stockbrokerfs fees Value Linked loans interest Interest cost & expenses: pension scheme5 Glebe Land & Clergy Houses letting costs 22 li 42 66 li li 12 12 io 164 164 175 209 42 251 262 Charitable activities Contribution to Archbishops, Council Training for Ministry National Church Responsibilities Grants and provisions Mission Agency pension contributions Retired Clergy Housing ICHARMI & Grants Pooling of ordinand candidates, costs 393 393 393 274 34 240 33 33 16 16 18 148 144 149} 149) 781 31 393 894 Resourcinz Ministry and Mission Parish Ministry.. Stipends and Social Security Pension contributions Housing costs Removal, resettlement and other grants Other expenses 5,418 1,413 1.591 121 78 ,617 5,581 1,413 1.540 69 1,813 1.664 153 165 165 273 25 25 149 8,612 3.996 121 231 69 9,033 9,207 4,673 4,850 Support for ministry 133 Fund for Church Growth 12 69 13,706 14,055 12,608 254 775 Expenditure on Education Church Schools: Administration 419 419 408 13,415 254 1,168 69 14,906 15.357 34

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

Unrestricted Funds Restr- Endow- Total Total	Unrestricted Funds Restr- Endow- Total Total
Desig- icted ment Funds Funds General nated Funds Funds 2022 2021 £’000 £’000 £’000 £’000 £’000 £’000 9 Gains/(losses) on Investment Assets Unrealised gains/(losses) after revaluation () (658) (24) (164) (1,254) (2,100)* 3,323
Realised gains/(losses) on disposal	(19) - - (152) (171) 3,219
	(677) (24) (164) (1,406) (2,271) 6,542
(*) includes £0.2m gain in relation to the revaluation of Glebe Agricultural Land (2021 - £0.9m).

Unrestricted	Unrestricted	Funds	Restr-	Endow-	Total	Total
		Desig-	icted	ment	Funds	Funds
	General	nated	Funds	Funds	2022	2021
11 Analysis Of Support Costs	£’000	£’000	£’000	£’000	£’000	£’000
Central Administration	1,213	-	-	-	1,213	1,076
Support for Schools	-	-	54	-	54	48
Governance:
External Audit	21	-	1	-	22	17
nal FeeProfessional Fees	4	-	-	-	4	5
andDiocesan and General Synod Expenses	9	-	-	-	9	7
	1,247	-	55	-	1,302	1,153

Year on year movement includes an increase in interest costs of £175k and a reduction in salary costs of £110k

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022 12 Analysis of Grants Made Total Grants Total Inst- No. of o indivi- itutional Grants duals Grants £'ooo £'ooo £'o 240 275 2022 2021 a) National Church Responsibilities From Unrostrict•d G•n•ral funds to:. Archbishops. Council. General Synod, etc. Training Ordinands Grants and Provisions Inter-diocesan support of Mission Agency clergy pension contributions CHARM National Pooling adjustment 393 33 393 83 393 34 16 16 18 148 149 781 145 31 896 149 781 b) General Grants From Unrestricted General Funds to:" Ordinands in training Energy support grants Somerset Churches Together Bath and West Show Tent 34 479 354 954 268 515 354 274 628 290 From Restricted Funds to: Zambian Dioceses Clergy lincluding retired and clergy widows} 22 li 14 14 22 22 33 1,055 1,431 1.219 Total Grants Payable 529 376 36

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

13 Trustees and Related Parties

In 2022 the trusts which are administered from the DBF’s registered office paid management charges of £4,496 to the DBF (2021 - £4,496).

The Rib Trust made a grant of £37,500 to the Board (2021 - £37,500) towards the Archdeacons’ working costs. The Foundation of St Matthias made a grant to the Diocesan Board of Education of £34,500 (2021 - £56,000) towards the work of the School RE Advisers, Resource Centre and Further Education development. There were no amounts outstanding at the end of the year.

Trustees’ emoluments

No trustee received any remuneration for services as trustee, 10 trustees (2021 - 7) were reimbursed with a total of £10,967 (2021 - £8,254) for the cost of travel and subsistence incurred in the course of services performed as trustees in respect of General Synod duties, duties as archdeacon or area/rural dean, and other duties as trustees.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

13 Trustees and Related Parties (continued)

Stipends and other benefits received by trustees in respect of their capacities other than trusteeship, serving as ecclesiastical office holders through the Church Commissioners (at the expense of the DBF unless indicated) were:

----- Start of picture text -----
Office Holder Individual Stipendiary package
Funded by the Church Commissioners:
The Bishop of
stipend & defined benefit
Bath And The Rt Revd M Beasley £46,525
pension scheme
Wells
Living accommodation & car for official use
Funded by the Church Commissioners:
The Bishop of £37,955 stipend, car for official use
The Rt Revd R Worsley
Taunton Defined benefit pension scheme
Funded by the DBF: Living accommodation
The Ven S Hill ) £37,106 stipend
Archdeacons The Ven A Gell ) Defined benefit pension scheme
The Ven Dr A Youings ) Living accommodation
Revd M Andrews )
Revd C Shaw Notice )
Revd D Keen ) £27,628 stipend
Revd A Fulton ) Defined benefit pension scheme
Revd J Haslam ) Living accommodation
Revd J Laurence )
Revd R Driver )
Revd R Miles £25,770 stipend plus Housing
----- End of picture text -----

In total 11 (2021 - 11) trustees received stipends and pension contributions as follows:

Stipends	2022 2021 £ £ 307,074 301,030 105,351 107,837 412,425 408,867
Pension Contributions

The value of church provided housing in 2022 to the clergy and bishops cannot be estimated.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

14 Staff And Office holders

Staff And Office holders
14a Staff Costs Staff costs during the year were as follows: Wages and salaries National insurance contributions Pension costs	2022 2021 £'000 £'000 2,088 2,453 201 216 214 245
	2,503 2,914

During the year, the DBF made termination payments in respect of one members of staff (2021 - 9) totalling £12,099 (2021 - £63,408). This amount is included in staff costs above.

The average number of employees during the year was:	No.	No.
Lay Workers	0.2	4.6
Mission Support and Ministry Development	30.0	25.1
Non stipendiary ministry including pioneers	12.0	12.2
Other support services	28.4	32.2
Education	12.3	13.5
	82.9	87.7
The average number of employees during the year, based upon
full-time equivalents, was: (*)	No.	No.
Lay Workers	0.2	3.1
Mission Support and Ministry Development	18.7	18.1
Non stipendiary ministry including pioneers	9.0	10.4
Other support services	22.5	26.2
Education	11.7	12.1
	62.0	69.9

(*) Including 1.0 (2021 - 1.7) staff whose time was recharged or funded by external organisations

Of the average number of employees, 59 were based in the Diocesean office (2021 - 59), 13 were based in other locations (2021 - 13) and 16 were based in Parishes and Deaneries (2021 - 16).

Mission Support and Ministry Development is made up of three teams: Deanery and Parish Support, Mission Development and Ministry Training and Formation. Other support services is made up of seven teams: Communications, Facilities, Finance, HR, Property, Safeguarding and Secretariat. Education is made up of three teams: Schools Organisation, Schools Effectiveness and Growing Faith and Everyday Faith.

The numbers of staff whose emoluments (including benefits in kind but excluding pension contributions) amounted to more than £60,000 were as follows:

		2022	2021
£60,001	- £70,000	2	2
£70,001	- £80,000	1	0
Pension	39 contributions of £22,623 (2021: £13,056) were made for these employees.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

14a Staff Costs (continued)

Remuneration Of Key Management Personnel

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

----- Start of picture text -----
Role Office Holder
Interim Diocesan Secretary
Rosemary Pearce (to 30/09/22)
and Company Secretary
Head of Finance and
Matthew Pinnock
Operations
Director of Education Edward Gregory
Head of Mission Support
and Ministry Development Revd Charlie Peer
----- End of picture text -----

Remuneration, pension contributions and expenses for 4 (3.4 FTE) (2021 - 5 (3.7 FTE)) key management personnel were as follows:

Salaries/ Stipends National Insurance contributions Pension Contributions Expenses	2022 2021 £'000 £'000 217 235 27 28 23 24
	267 285
	2 4

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022 14b OFfice holders 2022 2021 Office holders not employees The average number of stipendiary clergy holding parochial, deanery or archidiaconal posts in the diocese was: At a cost of: No. No. 186 189 Stipends & Housing Allowances National Insurance Contributions Apprenticeship Levy Pensions contributions 5,119 429 23 1,611 7.182 5,200 417 24 1,532 7,173 The number of FTE stipendiaryclerByin 2022 and 2021 has reduced partly due to the commenced reduction5 in 5tipendiary posts. The average level of vacancies in 2022 wa5 estimated at 2512021- 26), being 14.2% of all posts {2021- 12.5% of all posts). Unr•strl¢t•d Funds Rest Endow- De51g- icted G•n*ral nat•d Funds Funds £'oc#) £'OOO £'Q)D £'OOO ment 15 Analysls Of Transf•rs B•tween Funds Transfer between unrestrirted and designated funds: Transfer to Tangible Fixed Assets fund Transfer of unutilised designated loan fund Unapplied total return drawdown Net transfer par50nages tollfroml DPA account 11,3141 500 1,362 1,314 15C(>l 11.3621 593 15931 593 11,955) 314 41

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022 Computer Software 16 Intan£ible Fixed Assets Cost At l January 2022 Additions 166 At 31 December 2022 171 Amortisation At l January 2022 Charge for the year At 31 DeCeMr 2022 166 166 Net book value At 31 December 2022 At 31 December 2021 Freeholdl Leasehold Land and Solar PV Panels Office Equip't Total 17 Tanglble Fixed Assets Buildings Cost At l January 2022 ALlditions Revaluation Disposals At 31 December 2022 66.959 1.931 739 1.263 68.961 1.932 2.4821 732 L264 Depretlat]on and Impalrment Depreciation at l January 2022 Impairment at l January 2022 Impairment charge for the year Depreciation charge for year Di5P05als At 31 t)ecembÈr 2022 2T2 794 714 714 27 174 235 (31 1,74) 795 303 Net bookvalue At 31 December 2022 65.611 429 622 At 31 December 2021 66.191 467 795 67.453 42

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

----- Start of picture text -----
2022 2022 2021 2021
Freehold / Leasehold Land and Buildings No. £’000 No. £’000
Freehold
Benefice property: Parsonage houses 168 41,770 169 41,527
Glebe property: Curates’ houses 26 7,500 28 8,164
Other houses 28 7,178 28 7,178
54 14,678 56 15,342
Corporate property: Curates’ houses 2 563 2 563
Other houses 22 5,162 21 5,291
Houses bought with val. linked loans (at valuation) 3 523 3 523
Edginton house 1 281 1 281
28 6,529 27 6,658
Leasehold
Long leasehold 2 2,636 2 2,664
Total Freehold / Leasehold Land and Buildings 252 65,613 254 66,191
----- End of picture text -----

All of the properties in the balance sheet are vested in the Board, except for benefice houses which are vested in the incumbent.

Some properties have been purchased with the help of a value-linked loan from the Church Commissioners; when disposed of, the appropriate share of the net sale proceeds will be remitted to the Commissioners, and the related loan liability extinguished. These are stated at valuation, as is the related loan liability (note 22).

Of the total land and buildings at 31 December 2022, 249 properties (£65,090k) are valued at cost or deemed cost (2021 - 251), and three properties (£523k) at valuation (2021 - three).

Properties are subject to a five-year cycle of survey and consequent repairs are charged as expenditure.

During the year no buildings were impaired, where their market value was estimated to be below their cost.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022 Other Agricultural Land & Land Property £,0 £'ooo £'ooo £'o Unlisted Listed Invest- Invest- Total ments ments 2022 18a Fixed Assets Invertments At l January 2022 Additions Disposals Transfers / Reclas5ification5 Revaluation At 31 De¢ember 2022 20,288 639 7,632 15,646 44,205 2,461 2,461 {2,745I (3,085) {3401 211 18951 11,1941 11,878) 6,737 14,168 41,703 20,160 639 Cost at 31 De¢ember 2022 Cost at 31 December 2021 Not known Not known 4,146 13,810 4,146 13,918 Not known Not known Investments comprise:" Listed Investments IEquitie5) UK Investments 2021 2020 £'ooo £'oc(J 3,761 4.027 7,072 8,517 10,833 12,544 Non-UK Investments Usted Investments (Unlt Trusts) UK Investments 363 Listed Inv•stm•nts (Fixed Int&r•stl UK Investments 2,027 1,020 3,047 2,141 598 Non-uk Investments 2.739 rt•d Inv•stm•nts Total 14,168 15,646 1111) Unlisted InvÈstments 331.974 Central Board of Finance of the Church of England Investment Fund Share12021- 331,9741 £'orKJ 6,662 7.549 3,139 COIF Charity Investment Fund Income Shares12021- 3.139 2,000 Central Board of Finance of the Church of England Fixed Interest Fund Shares12021- 2,000 Somerset Savings and Loans Ltd 57 65 15 15 6,737 7,632 liv) Other Land and Prop&rty 2022 2021 £'OOD £'O 610 610 Glebe Property Other Land 29 29 639 639 44

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

18b Application of the Power of Total Return on Investments

As disclosed in the Investment policy of the Trustees report from 31 December 2019 the DBF adopted a total return approach to investments with regard to the Glebe land, listed financial investments and unlisted financial investments portfolios of the DSF and SAT permanent endowments. The investment power of total return permits the DBF to invest the permanent endowment of the Diocesan Stipends Fund (DSF) and Stipends Augmentation Trusts (SAT) element of the Stipends Capital Fund in order to maximise total return and apply an appropriate portion of the unapplied total return (UTR) each year. Until the power is exercised to transfer a portion of the UTR to income funds, the UTR remains part of the permanent endowment.

The initial value for implementing total return for investments was determined at 31 December 1995 and valued at £8.571m and £0.688m for the 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 since the initial valuation, adjusted for the introduction of any new investment in the portfolios since initial valuation.

(i) Diocesan Stipends Fund (DSF) At 1st January 2022 Base value of permanent endowment Unapplied Total Return Total Movements in the reporting period Indexation of base level of endowment Unapplied total return allocated to income in the year Additional UTR allocated for purchase of property Investment return: dividends and interest Investment return: Glebe rents Investment returns: Realised and unrealised gains and (losses) Less investment management costs Total At 31st December 2022 Base of the permanent endowment Unapplied Total Return Total	£'000 £'000 £'000 14,418 - 14,418 - 22,897 22,897 Trust for investment UTR Total Endowment
	14,418 22,897 37,315
	692 (692) - - (1,305) (1,305) - - - - (213) (213) - 348 348 - (696) (696) - 36 36
	692 (2,523) (1,831)
	15,110 - 15,110 - 20,374 20,374
	15,110 20,374 35,484

During the year, there was a transfer of £1,305K from UTR to income funds for expenditure in relation to the Diocesan Vision, in line with the Diocese Total return policy of 4% of average endowed investment value plus Glebe rents.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

----- Start of picture text -----
Trust for Total
investment UTR Endowment
(ii) Stipends Augmentation Trusts (SAT) £'000 £'000 £'000
At 1st January 2022
-
Base value of permanent endowment 1,157 1,157
Unapplied Total Return - 327 327
Total 1,157 327 1,484
Movements in the reporting period
Indexation of base level of endowment 56 (56) -
-
Unapplied total return allocated to income in the year (57) (57)
Investment return: dividends and interest - (30) (30)
-
Investment returns: Realised and unrealised gains and (losses) (108) (108)
Less investment management costs - 6 6
Total 56 (244) (188)
At 31st December 2022
-
Base of the permanent endowment 1,213 1,213
Unapplied Total Return - 83 83
Total 1,213 83 1,296
----- End of picture text -----

During the year, there was a transfer of £57K from UTR to income funds for expenditure in relation to the Diocesan Vision, in line with the Diocese Total return policy of 4% of average endowed investment value.

19 Debtors Due within one year a) Parish Share b) Central Board of Finance Deposit Fund Loans c) Loans to PCCs from Designated Fund or FCG d) School Loans e) Other Loans d) Closed School Expenses and other School debtors f) Other Debtors and Prepayments	2022 2021 £’000 £’000 393 221 66 99 15 15 74 70 2 9 59 39 541 868 485 485
g) Equity Loans
Due after one year b) Central Board of Finance Deposit Fund Loans () c) Loans to PCCs from Designated Fund or FCG () Total debtors	1,635 1,806
	97 137 306 382
	403 519

	2,038 2,325

(*) these amounts are stated at net present value using a discount rate of 4%

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

Debtors Notes:

(a) Parish Share

Parish Share debtors comprise balances of requested contributions outstanding which have been paid in full after the year end or where an arrangement to pay has been agreed.

(b) Central Board of Finance Deposit Fund loans

These are loans made by the 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%.

(c) Loans to PCCs from Diocesan Loan Fund

These are loans advanced from the £1m designated Diocesan Loan Fund repayable over various terms up to 20 years and at various interest rates.

At 31 December 2022, the significant balances were:

i. A £400,000 loan was provided to Nailsea Holy Trinity PCC on 28 October 2010 for the purchase of the former rectory at 2 Church Lane Nailsea upon its sale by the DBF. The rate of interest on the loan is 1% above the Bank of England base rate, 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 2022 was £37,778. The DBF holds a legal charge on the property, discharged upon repayment of the loan capital and accrued interest by the PCC.
ii. A £225,000 loan was provided to Keynsham PCC on 23 November 2010 for the purchase of the former rectory at 1 The Park, Keynsham upon its sale by the DBF. The term of the loan was extended in 2017 to the end of 2034. The rate of interest on the loan is 2% above the Bank of England base rate, payable annually in arrears and the present value of the balance outstanding at 31 December 2022 was £58,226. The DBF holds a legal charge on the property, discharged upon repayment of the loan capital and accrued interest by the PCC.

A loan of £290,000 to the PCC of Heathfield with Cotford St Luke, provided through a backto-back arrangement with NatWest bank, and as such there is a corresponding creditor (see note 22). The rate of interest is 1% above base rate and the term of the loan is five years. The loan is secured using a second charge on land at Cotford St Luke and its associated assets. This loan had an outstanding balance of £279,342 at the year end.

(d) School Loans

The DBF acts as ‘banker’ to school governors for capital and repair 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.

(e) Other Loans

This amount includes loans to individuals from restricted charitable funds and staff car loans.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

(f) Other Debtors and Prepayments

This figure is made up of sundry debtors, prepayments, accrued interest and dividends, rents recoverable and expenses on closed schools to be recovered upon sale, and accrued bond interest.

(g) Equity Loans

Equity loans are made to retired clergy and clergy spouses to enable them to purchase property on a shared equity basis. At 31 December 2022 the value of loans advanced amounted to £485,007 in respect of three properties.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

----- Start of picture text -----
2022 2021
22 Creditors £’000 £’000
Due within one year
a) Bank loans 3,316 170
Fund for Church Growth grants approved not yet paid 35 35
Closed Church Schools 492 492
-
Bank revolving credit facility 2,750
Provisions - 21
Other Creditors and Accruals 2,710 1,224
6,553 4,692
Due after one year
a) Bank loans 3,323 5,295
b) Central Board of Finance Deposit Fund Loans () 1,022 875
c) Value Linked Loans 523 523
4,868 6,693
----- End of picture text -----*

(*) these amounts are stated at net present value using a discount rate of 4%

Creditors 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 £200,000 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 2.67%. A further £170,000 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;

Pioneer House mortgages . Four loan agreements are entered into in order to finance the purchase of houses for Pioneer 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 £728,959.
Flourish House purchase . A loan of £2,575,000 was agreed to fund the purchase of Flourish House, the new Diocesan 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 Flourish House. The balance outstanding at the year end was £2,406,814.
Flourish House development . A further loan facility of £1,400,000 was agreed to fund the internal fit-out of Flourish House, with a term of two years, which has been extended 12 months and an interest rate of 1.8% above base rate. At the year end this facility has been repaid as it was partly secured on the Old Deanery which was sold in the year.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

Parish loans . A loan of £290,000 was agreed in order to provide an onward loan to the PCC of Heathfield with Cotford St Luke (see debtors note 19). The term of this loan is five years and the interest rate is 1.65% above base rate. During the prior year, this loan has had a capital repayment holiday applied to it, extending the loan period for a further nine months. This loan is secured by way of a third party charge on St Luke’s Centre on land at Cotford St Luke. The balance outstanding at the year end was £250,613.

(b) Central Board of Finance Deposit Fund Loan

This loan was made to the DBF from the Deposit Fund under the Church Funds Investment Measure 1958 for forward lending to parishes. In 2016 £1m was loaned to the DBF for 10 years on an interest only basis to allow loan funds to be committed and available to be drawn by parishes when required. The present value of this loan was £1,022,306 at 31 December 2022. The rate of interest is equivalent to the monthly average rate declared by the CCLA CBF Deposit Fund plus 0.55%.

(c) Church Commissioners’ Value Linked Loans

The loans are repayable either when 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 by the Commissioners on the amount loaned initially and borne by the DBF, rising annually by the increase in the Retail Price Index. In 2021 the interest rates charged on the loans ranged between 2% and 6.9% (2021 - 6.9% and 8.4%) The loans are represented by Freehold land and buildings (note 17).

The Diocesan Annual Report and Financial Statements Guide recommends that the loans should be revalued annually in line with the basis adopted by the Church Commissioners. The recommendation has now been adopted by the DBF and the corresponding fixed assets (see note 17) have been revalued as a separate identifiable asset class.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

Notes on Unrestricted funds

(a) General Fund

The General Fund reserve represents those assets held by the DBF for carrying out its general activities. It provides the assets and liquidity for the DBF to carry out its objectives, including statutory compliance, administration of funds and some housing.

(b) Diocesan Stipends Fund (DSF) Income Account is governed by the Diocesan Stipends Fund Measure 1953. Income is derived from cash and investments (including glebe) representing the Diocesan Stipends Fund Capital Account. It is used to augment the stipends of incumbents.

(c) Tangible Fixed Assets Fund represents the value in the Balance Sheet of: Board houses kept for the purpose of housing current and future clergy; solar PV panels on clergy houses and office equipment; less creditors held for the specific purposes of financing these assets.

(d) Diocesan Loan Fund £1m was transferred to this fund in 2014 to allow parishes the possibility of applying for loans to assist with their capital projects and other initiatives. This fund has been reduced to £500k.

(e) The Fund for Church Growth (FCG) exists to support local mission and outreach in the diocese.

(f) The Pastoral Care and Counselling Scheme was set up in 1993 to provide trained therapists and counsellors to support clergy and their family in the diocese.

(g) The Mission Development Fund exists to resource the developing strategy into the future and to enable applications to the National Church’s Strategic Development Fund.

(h) Other designated funds consisting of amounts designated from the General Fund to be spent on specific projects by departments.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

Notes on Restricted Funds:

The income funds of the DBF include restricted funds comprising the above unexpended balances of donations, grants and investment income held on trusts to be applied for specific purposes.

(a) Schools Income Fund which may be used for the same purposes as the Schools Capital 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 for the carrying out of any inspection of a school in the diocese required by Part 1 of the School Inspection Act 1996
To defray the cost 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 assets for any purpose referred to in paragraph 1 of Schedule 36.

By virtue of section 557(10) of the Education Act 1996 a relevant school includes an Academy (b) Diocesan Pastoral Account (DPA) made up from the sales or transfers of churches and parsonage 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.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

Costs of disposing or maintaining houses or churches vested in the DBF or Commissioners.
For the benefit 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 clergy, their widows and dependants.

(d) Retired Clergy Funds to be used to provide assistance generally to retired clergy.

(e) Porlock Wyld Trust being accumulated income to be used for the same purposes as the trust capital ― see Endowment Funds

(f) Edginton Trust being accumulated income to be used in the maintenance of a residence for retired clergy.

(g) Zambia Link including the Coppen bequest, which was given to strengthen the link between the diocese and the five dioceses in Zambia.

(h) Modern Slavery Link , which was given to put towards projects which focuses on dealing with issues of modern slavery across the diocese.

(i) Smith Bequest to be used for lay ministry (excluding training for the Ministry) and in-service clergy training.

(j) DBE Restricted Grants consisting of the balance of restricted grants and donations to the DBE.

(k) The Abbey House Fund to be used to give support to both laity and clergy to enable them to attend retreats and quiet days.

(l) Strategic Development Funding being funding received from the national church.

(m) Other Restricted consisting of the balance of restricted legacies, grants and donations to the DBF.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

Notes on Endowment Funds:

Endowment funds are held on trust to be retained for the benefit of the charity 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

(a) Parsonage Houses Fund represents the value of benefice houses at the Balance Sheet date, together with the Parsonages Building funds held by the Church Commissioners. The houses are used to provide accommodation for the parochial 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 disposal has been effected. (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 Acts 1944 and 1973. The use of the fund is restricted under Section 17 of the Education Act 1993. The uses include the purchase, erection, maintenance and improvement of any school or teacher’s house in the relevant area.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

(c) Porlock Wyld Trust relates to the Parsons Hill Estate (since sold) was left to the DBF, as sole trustee, “upon trust for such charitable purposes connected with the ecclesiastical parish of Porlock as the Lord Bishop of Bath and Wells in his absolute discretion thinks fit”. There is no restriction on expenditure of capital.

(d) Retired Clergy Funds:

Thatcher Trust is to be used for purchase (or repair/ maintenance) of accommodation for retired clergy or the widows or augmentation of income for such persons. Balance £38,162 as at 31 December 2022 (2021 - £43,253).
Elwell Trust is to be used for the grant or augmentation of pensions to retired clergy at any time beneficed in the diocese. Balance £11,133 as at 31 December 2022 (2021 - £11,133).
Edwards 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 property 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 housing generally. Balance £270,224 as at 31 December 2022 (2021 - £306,279).

Permanent Endowments

(e) Diocesan Stipends Fund (DSF) Capital 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 Diocesan Stipends Fund Measure 1953 as amended by the Endowments and Glebe Measure 1976, the National Institutions Measure 1998, and the Miscellaneous Provisions Measure 1992. Income arises from the sale of glebe assets, the transfer of parsonage 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: acquiring glebe property; investing in a subsidiary; developing and protecting glebe amenities; investment; discharging loans and levies on glebe; improving parsonage houses and discharging any loans made by the Church Commissioners under the Endowments and Glebe Measure 1976.

(f) Stipends Capital, General Capital and Support of Ordinands

These funds are made up of the capital of a number of trusts which are represented by fixed asset investments.

Stipends Capital income is restricted and can be used only to augment clergy stipends.
General Capital 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 retired clergy of the Church of England. One property was sold in 1997 and the other in 2001. A resolution was made by the DBF in 2001 to modify the purposes of the trusts so as to make provision instead for assistance generally to retired clergy. (h) Edginton Trust comprised a property for use as a residence for retired clergy. This was sold in 2001 and a replacement house was purchased in 2004 at Friary Close, Clevedon.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

(i) Other :

Miss S M Osborne Trust ― £1,000 was left to the DBF, as sole trustee, to apply the income “by way of grant in or towards the repair of fabric of any ancient parish church of historic interest and beauty in the diocese”. Balance £1,371 as at 31 December 2022 (2021 - £1,584)
Dorothy Stuckey Trust ― £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 £20,847 as at 31 December 2022 (2021 - £23,629)
Miss M A Rees-Mogg Legacy ― The legacy dates from 1935 and the income only can be used for the assistance of necessitous clergy and their widows and orphans. Balance £41,447 as at 31 December 2022 (2021 - £46,977).

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022 Tang. & Intang. Invest- Oth•r Credit- Interfund ors DR I (CRI Net 24 Summary of Assets By Fund £'(x)o t(x)o £'ooo ¢(K)O £'ooo ¢IK)O Unrestrirted General Funds 5.501 2,978 16,0811 1171 2,381 Desitnated Tangible Fixed A55ets Fund Loan Fund Fund For Church Growth Pastoral Care & Counselling Scheme Mission Development Fund Other Designated Total 518n•t•d Funds Restrieted Funds Schools Income Fund Diocesan Pastoral Account Support Of Clergy And Dependants Retired Clergy Funds Porlock Wyld Trust Edginton Trust Zambia Link ModÈm Slavery link Abbey House Smith Bequest DBE Restricted Grants Other Restricted Total Restrlrted Funds 9,940 13.9341 373 127 47 47 180 181 172 579 579 3,934 119 179 610 179 610 212 152 48 33 46 79 124 57 219 181 219 63 59 32 98 63 881 32 98 322 124 507 1,475 2,106 Endowment Funds Expendable Endowment Parsonage Houses Fund Schools Capital Fund Podock Wyld Trust Retired Clergy Funds PRrmanRnt Endowrn•nt Diocesan Stipends Fund Capital Stipends Capital General Capital Support Of Ordinand5 Crokat And CowlÈy Trusts Edginton Trust Other Permanent Endowment Total Endowment Funds 41,770 41,770 661 132 320 725 132 308 1641 12 14,678 31,743 1,306 787 43 327 11,405} 45,343 1,612 787 306 158 165 157 250 1351 372 131 61 11,4051 11021 91,264 56,605 35,515 66 669 41703 6 112 652 All Funds 57

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

25 Commitments

(a) Capital Expenditure

5 Commitments a) Capital Expenditure
Contracted for, not yet completed Authorised, not yet contracted for Total Capital Commitments	2022 £’000 - - -	2021 £’000 - -
		-

(b) Loans

At 31 December 2022 the DBF had commitments to zero parishes (2020 - zero) to provide loans totalling £nil (2021 - £Nil) in relation to the CCLA Diocesan 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 funding required for the Abbey Footprint Project to be in place. This loan offer was extended until March 2019. In January 2019 the loan commitment was revised to a maximum of £100,000 with an extension to March 2022 .The loan would be repayable over 20 years with an initial 5 year interest only period, funded from the CCLA Diocesan Loan Scheme at an annual interest rate of 1% above variable bank base rate. This loan was not taken out by Bath Abbey PCC.

During the prior year, Bath Abbey PCC entered into a loan agreement for £400,000, to be made available in tranches of £100k. At the year end £300k 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) Operating Leases

c) Operating Leases
Payable not more than one year Payable more than one but not more than five years Total Operating Lease Commitments	2021 £’000 2 - 2	2021 £’000 3 2
		5

26 Post Balance Sheet Events and Contingent Liabilities

There were no post balance sheet events or contingent liabilities at the balance sheet date.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

27 Pension Costs

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

(a) The Church Workers’ Pension Fund (Lay Staff) – Pension Builder Scheme

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

CWPF has two sections:

the Defined Benefits Scheme
the Pension Builder Scheme, which has two subsections;
a. a deferred annuity section known as Pension Builder Classic, and,
b. a cash balance section known as Pension Builder 2014.

Pension Builder Scheme

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

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

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

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

The scheme is considered to be a multi-employer scheme as described in Section 28 of FRS 102. This is because it is not possible to attribute the Pension Builder Scheme’s assets and liabilities to specific employers and that contributions are accounted for as if the Scheme were a defined contribution scheme. The pensions costs charged to the SOFA in the year are contributions payable (2022: £223,018, 2021: £251,830).

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

For the Pension Builder Classic section, the valuation revealed a deficit of £4.8m on the ongoing

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

assumptions used. At the most recent annual review, the Board chose to grant a discretionary bonus of 10.1% following improvements in the funding position over 2022. There is no requirement for deficit payments at the current time.

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

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

(b) The Church Workers’ Pension Fund (Lay Staff) - Defined Benefits Scheme

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

Defined Benefits Scheme

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

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

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

The scheme is a multi-employer scheme as described in Section 28 of FRS 102. It is not possible to attribute DBS assets and liabilities to specific employers, since each employer, through the Life Risk Section, is exposed to actuarial risks associated with the current and former employees of other entities participating in DBS. This means that contributions are accounted for as if DBS were a defined contribution scheme. The pensions costs (credited)/charged to the SOFA during the year are contributions payable towards benefits and expenses accrued in that year (2022: £(164,000), 2021: £139,000) plus the figures in relation to the DBS deficit highlighted in the table below as being recognised in the SOFA, giving a total (credit)/charge of £(164,000) for 2022 (2021: £139,000).

If, following an actuarial valuation of the Life Risk Pool, there is a surplus or deficit in the pool, further transfers may be made from the Life Risk Pool to the employers’ sub-pools, or vice versa.

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

The amounts to be transferred (and their allocation between the sub-pools) will be settled by the Church of England Pensions Board on the advice of the Actuary.

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

The next actuarial valuation is due at 31 December 2022.

Following the 2019 valuation, the Employer has entered into an agreement with the Church Workers’ Pension Fund to pay expenses of £9,500 per year. In addition deficit payments of £102,259 per year have been agreed for 3.5 years from 1 April 2021 in respect of the shortfall in the Employer sub-pool.

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

The movement in the provision is set out below:

	2022 - £ 2021 - £
Balance sheet liability at 1 January Deficit contribution paid Interest cost (recognised in SOFA) Remaining change to the balance sheet liability*(recognised in SOFA) Balance sheet liability at 31 December	266,000 229,000 (102,000) (102,000) 3,000 1,000 (167,000) 138,000
	- 266,000

Comprises change in agreed deficit recovery plan and change in discount rate between year-ends.

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

	December 2022	December 2021	December 2020
Discount rate	0.00%	1.30%	0.30%

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

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

(c) The Church of England Funded Pensions Scheme for Clergy

The DBF participates in the Church of England Funded Pensions Scheme for stipendiary clergy, a defined benefit pension scheme. This scheme is administered by the Church of England Pensions Board, which holds the assets of the schemes separately from those of the Responsible Bodies. Each participating Responsible Body in the scheme pays contributions at a common contribution rate applied to pensionable stipends.

The scheme is considered to be a multi-employer scheme as described in Section 28 of FRS 102. This means it is not possible to attribute the Scheme’s assets and liabilities to each specific Responsible Body, and this means contributions are accounted for as if the Scheme were a defined contribution scheme. The pensions costs charged to the SOFA in the year are contributions payable towards benefits and expenses accrued in that year (2022: £1,611k, 2021: £1,511k), plus the figures highlighted in the table below as being recognised in the SOFA, giving a total charge of £1,471k for 2022 (2021: £1,505k).

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

An average discount rate of 2.7% p.a.;
RPI inflation of 3.6% p.a. (and pension increases consistent with this);
CPIH inflation in line with RPI less 0.8% pre 2030 moving to RPI with no adjustment from 2030 onwards;
Increase in pensionable stipends in line with CPIH;
Mortality in accordance with 90% of the S3NA tables, with allowance for improvements in mortality rates in line with the CMI2020 extended model with a long term annual rate of improvement of 1.5%, a smoothing parameter of 7 and an initial addition to mortality improvements of 0.5% pa and an allowance for 2020 data of 0% (i.e. w2020 = 0%).

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

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

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

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

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

	2022 £’000 2021 £’000
Balance sheet liability at 1 January Deficit contribution paid Interest cost (recognised in SOFA) Remaining change to the balance sheet liability* (recognised in SOFA) Balance sheet liability at 31 December	338 678 (198) (334) - 1 (140) (7)
	- 338

*Comprises change in agreed deficit recovery plan and change in discount rate and assumptions between year-ends.

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

December	2022	2021	2020
Discount rate	N/A	0.0% pa	0.2% pa
Price inflation	N/A	N/A	3.1% pa
Increase to total pensionable payroll	N/A	(1.5%) pa	1.6% pa

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

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022 CWPF CEFPS (d) Pension Liability Re¢on¢iliation - all s¢hemes Unr¢stri¢ted Funds Restr- DesiE- i¢t•d General nated Funds Funds Total Total £'ooo £.0 £'ooo £'cK)O £'OCrf) £'OCM) Endo 2022 2021 ment Liability at l January Deficit Contributions paid Interest cost 266 338 907 {102) {198) (300) 14361 Remeasurement Gains {167) {140) (307) 131 604 Liability at 31 December 64

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

28a Prior Year Comparative Notes – Statement of Financial Activities

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

28b Prior Year Comparative Notes – Notes 2 to 6

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

28c Prior Year Comparative Notes – Notes 7 to 8

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

28d Prior Year Comparative Notes – Notes 9 to 11

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

28e Prior Year Comparative Notes – Note 23

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

28e Prior Year Comparative Notes – Note 23 (continued)

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

28e Prior Year Comparative Notes – Note 23 (continued)

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

28f Prior Year Comparative Notes – Note 24

The Bath and Wells Diocesan Board of Finance Notes to the Financial Statements For the year ended 31 December 2022

29 Funds held as Custodian Trustee

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

The Bath and Wells Diocesan Board of Finance

Appendices

For the year ended 31 December 2022

Appendices

The following accounts and reports do not form part of the audited statutory financial statements and are included for information only.

A Consolidated Financial Trusts

B Glossary of terms

The Bath and Wells Diocesan Board of Finance Appendices For the year ended 31 December 2022

Appendix A Consolidated Financial Trusts

Signed on behalf of the DBF on 14 June 2023 by

Rt Revd N M R Beasley Trustee

Mr I Theodoreson Trustee

The Bath and Wells Diocesan Board of Finance Appendices For the year ended 31 December 2022

Financial Trusts as at 31 December 2022

The Financial Trusts comprise 500 Trusts which are required to be held by the DBF as custodian trustee although they are administered by various parishes, schools or other bodies named as beneficiaries in the relevant trust deeds. The investments relating to the trusts are held by the DBF and the income derived is paid to the beneficiaries. In addition to the trusts listed, the DBF also acts as custodian trustee for land and buildings.

Report of the Accountants

We have examined the figures set out on page 85 comprising the Balance Sheet for the Financial Trusts held as custodian trustee by the Bath and Wells Diocesan Board of Finance as at 31 December 2022.

Basis of opinion

The scope of our work was limited to checking whether the figures have been correctly extracted from the amounts recorded in the accounting records.

Opinion

In our opinion the information detailed on the attached schedule has been accurately extracted from the accounting records of the Bath and Wells Diocesan Board of Finance as at 31 December 2022.

Signed: Haysmacintyre LLP

10 Queen Street Place London EC4R 1AG

29 September 2023

The Bath and Wells Diocesan Board of Finance Appendices

For the year ended 31 December 2022

Appendix B Glossary of terms

ALM	Authorised Lay Minister
BWMAT	Bath and Wells Multi Academy Trust
CBF	Central Board of Finance (of the Church of England)
CCLA	Providers of CBF Investment products
CEPB	Church of England Pensions Board
CHARM	Church Housing Assistance for Retired Ministry
CWPF	Church Workers’ Pension Fund
DAC	Diocesan Advisory Committee
DBE	Diocesan Board of Education
DBF	Diocesan Board of Finance
DBS	Defined Benefits Scheme
DPA	Diocesan Pastoral Account
DSF	Diocesan Stipends Fund
FCG	Fund for Church Growth
FRS	Financial Reporting Standard
MAT	Multi Academy Trust
MDF	Mission Development Fund
NPV	Net Present Value
PB	Pension Builder
PCC	Parochial Church Council
PCR	Past Cases Review
RME	Resources Ministerial Education
SAT	Stipends Augmentation Trusts
SDF/SMF	Strategic Development Fund/Strategic Ministry Fund
SOFA	Statement of Financial Activities
SORP	Statement of Recommended Practice
UTR	Unapplied Total Return
VA/VC	Voluntary Aided/Voluntary Controlled

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The Bath and Wells Diocesan Board of Finance - Annual Report & Accounts 2022 A company limited by guarantee. Registered in England Number 139557. Registered Charity Number 249398.