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2020-12-31-accounts

Hereford Diocesan Board of Finance

Annual Report & Accounts 2020

Company limited by guarantee Company number 144467 Charity number 249685

Hereford Diocesan Board of Finance

Report & Accounts for the year ended 31 December 2020

Contents Page 1. Foreword by the Bishop of Hereford ......................................................................................... 3 2. Strategic aims ......................................................................................................................................... 4 3. Achievements and performance ................................................................................................... 4 4. Future plans ............................................................................................................................................ 7 5. Financial review ..................................................................................................................................... 8 6. Principal risks & uncertainties .................................................................................................... 13 7. Legal objects and responsibilities ............................................................................................. 14 8. Structure, governance and management .............................................................................. 14 9. Directors’ responsibilities .............................................................................................................. 17 10. Statement of disclosure to the auditor .................................................................................. 17 11. Reference and administrative details ...................................................................................... 18 Independent auditor’s report .............................................................................................................. 20 Statement of financial activities ........................................................................................................ 23 Income and expenditure account ...................................................................................................... 24 Balance sheet ............................................................................................................................................... 25 Cash flow statement ................................................................................................................................ 26 Notes to the accounts ............................................................................................................................. 27

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Hereford Diocesan Board of Finance

Foreword by the Bishop of Hereford For the year ended 31 December 2020

1. Foreword by the Bishop of Hereford

Dear Friends,

Welcome to this annual report which sets out so much of what has been achieved in our life together over the past year. What a year it’s been! I have spent precisely 10 days without restrictions since I’ve been here. The opportunity to get out and about has been far less than I would have wished, and I have ministered deeply to my computer!

But despite the restrictions on gathering together, there has been much to celebrate. Parishes have been hugely resourceful. Worship has gone online, but with the sensitivity to include those who can’t do that for whatever reason. The church has got out of the building, often acting as a catalyst and convener for community action. Churches have acted as food banks, visited the lonely, taken people to hospital visits and so much more. We have engaged with national issues in many ways, not least through Kina Robertshaw’s media work in the wake of the death of George Floyd and the Black Lives Matter movement.

Some of our projects have begun to show fruit despite the lockdown. We are seeing new Christians through our Intergenerational Team. The church plant at St. Peter’s Hereford is getting under way and we seem to have attracted lots of external funding. Some of this has been from the Culture Recovery Fund. More has come from the central church which has allowed us to welcome a bumper crop of curates to be ordained in 2021. It has also funded parish giving advisers who have made a real difference to our financial position, even allowing for COVID. People have responded through gift days in parishes and at the Cathedral with great generosity. Alongside this, deanery plans are taking shape in Abbeydore and Pontesbury that are reimagining rural ministry in an exciting and collaborative way.

There have been times of sadness too. We said goodbye to Michael Tavinor after a distinguished 19 years as Dean. He leaves the Cathedral in good heart. Bishop Alistair retired in April after a fruitful ministry, always calling us to the priority of evangelism and the transforming power of the scriptures. We shall miss them both. Tragically, we lost Stephen Borthwick suddenly just before Christmas. His passion for education and chairmanship of the Diocesan Board made a huge difference to the life of children in our schools.

One of my hopes for our diocese is that we increasingly use the word to describe ‘us’, not as a disembodied other. We all are the diocese: the parishes, benefices and deaneries; our schools, chaplaincies, and intergenerational workers; those who work at the diocesan office resourcing and supporting front line ministry and ensuring our affairs are administered responsibly and wisely. Each of us has a part to play as part of the body. I am hugely grateful to my colleagues in the senior staff team for their wisdom and prayerfulness. Leadership in the New Testament is always collaborative and I couldn’t ask for a better group of colleagues and support staff.

I hope you enjoy this report. As we begin to look forward to a post COVID world, I hope you will find here evidence of God at work. I hope too that will spur us to pray that we enter into all that God has for us in the future.

With best wishes,

The Rt. Revd Richard Jackson

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2020

The Trustees, who are also Directors for the purposes of company law, present their annual report, together with the audited financial statements of the company and its linked charities, for the year ended 31 December 2020.

The Directors / Trustees are one and the same and in signing as Trustees they are also signing the strategic report sections in their capacity as Directors.

This combined report satisfies the legal requirements for a Directors’ Report of a charitable company, a Strategic Report under the Companies Act 2006, and a Trustees’ Annual Report under the Charities Act 2011.

STRATEGIC REPORT

2. Strategic aims

The main role of the Hereford Diocesan Board of Finance (“HDBF”) 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 strategic priorities in the Diocese.

Bishop’s Council agreed strategic priorities to direct the activities of the Diocese over a five-year period (2015-2021). These shared priorities align with the wider mission of the Church of England:

Mission

Ministry for Mission

Resources for Mission

The trustees focus resources to achieve the following shared goals:

3. Achievements and performance

3.1 Overview

The arrival of the COVID-19 pandemic in 2020 brought huge disruption to the lives and livelihoods of countless millions of people. In the UK alone, tens of thousands of people sadly lost their lives to coronavirus, and many more were left mourning. Unsurprisingly, the Church’s established patterns of worship, ministry and outreach were interrupted or suspended, leaving some feeling anxious or isolated, and others in need. And yet the Church – its people, both lay and ordained – responded to the daily challenges of life under COVID-19 restrictions with generosity and imagination. God has not been constrained by the pandemic! The Diocese can still point to some important achievements in 2020 within its key shared priorities of Spiritual and Numerical Growth, Contributing to the Common Good, Re-imagining Ministry, and Resources for Mission – numbered 1 to 4 in the following table:

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2020

Key achievements Shared Priority areas: 1 2 3 4
Serving our local communities:COVID-19 pandemic responses included:
 migrating services, Alpha and discipleship courses, diocesan meetings, coffee
mornings and many other church-led activities online;
 pioneering new ways of providing pastoral care and support to people in need;
 using our extensive volunteer network to deliver ‘Home Safe from Hospital’
initiative in partnership with NHS and local councils, welcoming people home,
checking on their well-being, and delivering food parcels and medication;
 supporting food banks as they coped with unprecedented demand and
shielding staff members or closed venues;
 diocesan staff adapting swiftly to home working and demonstrating resilience
in delivering key services to parishes while some colleagues were furloughed.
Education:
 delivered significant improvements in performance of church schools;
 developed partnerships with schools and enhanced oversight of Diocese of
Hereford Multi-Academy Trust (DHMAT);
 supported schools to adjust to remote learning and changing circumstances
during the pandemic.
Safeguarding young people and vulnerable adults:
 completed a thorough past cases review (‘PCR2’) process on time and within
budget, achieving a positive outcome;
 trained >150 parish officers, renewed >1000 DBS checks across all deaneries.
Mission and outreach:
 extended Intergenerational Mission project into Condover, Ledbury, and
Pontesbury deaneries;
 approved project funding for St Peter’s & St James Hereford and embarked on
ambitious five year project designed to establish a city-based youth church with
close links to Hereford’s new university, the New Model Institute for
Technology & Engineering;
 commenced Holmer church plant into local housing estates;
 Bishop Richard visited 38 parishes in a prayer pilgrimage in September.
Learning and leadership:
 developed diocesan pioneer learning community to identify new ways of
being/doing church, with extensive joint working and best practice sharing;
 enabled one deanery to run a ‘Growing Leaders’ course for laity;
 supported innovative deanery pastoral plan approaches and cross-working
within deaneries.
Supporting our 400 churches:
 launched ‘Mission & Mortar’ toolkit, helping our churches to assess their future
needs and aspirations;
 achieved Parish Giving Scheme roll-out targets; 232 parishes had joined PGS
with >2,100 PGS donors by year-end;
 provided guidance on digital giving solutions;

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2020

Caring for the environment:

Financial stewardship:

3.2 The Christian presence

Clergy form a central part in the life of churches in the Diocese. In 2020, an average of 66.4 trained stipendiary clergy and 13.2 curates were deployed in the Diocese; supporting them in their ministry, training and continued development is a key priority for HDBF and represents by far its largest financial commitment. Although the HDBF does not ‘employ’ the parish clergy, it is responsible for training and paying them, and contributing to their pension fund. In turn, generous Parish Offer contributions from every Parochial Church Council (PCC) are essential in meeting these ministry costs.

3.3 Public benefit

Through carrying out the above objectives and in promoting the whole mission of the church (pastoral, evangelistic, social and ecumenical) the trustees are confident, having had regard to Charity Commission guidance, that HDBF delivers public benefit through:

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2020

4. Future plans

4.1 Looking beyond the COVID-19 pandemic

HDBF trustees are taking steps to ensure that a full range of activities across the Diocese can resume at the earliest opportunity in 2021 in accordance with UK Government guidelines. Trustees expect to work with local church leaders to focus on the following areas:

4.2 A statement by the Bishop of Hereford

“2021 will be dominated by COVID as was 2020. We hope by the summer things may be approaching a sort of normality, with public worship resuming on a more regular basis, the return of social events and opportunities for service and fund raising.

We are coming to the end of our last five year strategic plan. As this report goes to press, the next steps of our life together are being reviewed. Over the next few months we hope to put these draft plans out for reflection and response.

The national church talks increasingly of the future being a mixed ecology. I’m sure that will be true in our diocese as well. We want to see revitalised, healthy churches confident in the lifetransforming power of the gospel. We recognise that in many places we have lost touch with people under 50 and that is going to require imaginative new ways for people to belong. Our intergenerational minsters are pioneering here, with new models of church springing up in a number of places.

I am committed to keeping the numbers of our frontline clergy as high as we can. I agree with the biblical scholar who said, “The local church is the hope of the world and its future lies primarily in the hands of its leaders.” We need well trained, well-resourced and supported clergy to do what only clergy can do. But we also need lay leadership at so many levels. Mobilising, encouraging and supporting such leadership will be a key part of our strategy.

Archdeacon Fiona joined the senior staff team at Easter, and now that the team is back up to full strength I intend to work with the Archdeacons to help in the formulation of deanery mission action plans. Good plans energise people to serve, and give sense of ownership of the spiritual and missional life of the church.

Hereford Diocese may be the smallest in the Church of England but it is certainly no backwater. My prayer is that we will harness our considerable passion and missional energy to chart a future of growth and health. With God all things are possible.”

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Hereford Diocesan Board of Finance Annual report For the year ended 31 December 2020

5. Financial review

5.1 Overview

2020 proved to be a challenging year for the DBF with the COVID-19 pandemic resulting in significant falls in income. This in turn has contributed to an overall general fund deficit of £494k (including fund transfers but excluding investment gains). Although disappointing, the Trustees view the size of the deficit in the light of other assets available for use by the DBF and in particular, the Unapplied Total Return Fund which has increased by £986k over the same period.

Total income for the year amounted to £5.74m (2019: £6.87m). Excluding one-off income relating to property dilapidations, education trusts and grants, the underlying income decreased from £6.39m in 2019 to £5.74m in 2020, a fall of 10.1%.

As in previous years, parish contributions of £3.5m (2019: £3.8m) provided the primary source of income for the Diocese to pay for local stipendiary ministry and related costs. Since introducing the Parish Offer system in 2017, the DBF had seen PCCs contributing at least 99% on average of their commitment for the year. The COVID-19 pandemic and resultant closure of places of worship resulted in dwindling and, in some cases, nil cash collections and fundraising, leaving many PCCs struggling to honour their Parish Offer commitments. In the light of this unexpected situation, it is encouraging to note that the HDBF received 90.8% of the commitments made for the year, testimony to the willingness of PCCs to reach into their reserves. However, this has left many PCCs with weakened finances.

Total expenditure for the year amounted to £6.48m compared with £5.69m in 2019, an apparent increase of £0.79m, but this includes a credit in 2019 against expenditure of £830k relating to movement on the clergy pension scheme deficit payments liability. After adjusting for this credit, the movement between years is a reduction of £50k. This can be further broken down into £167k reduction in general fund arising from concerted efforts by the trustees to reduce costs, and a rise of £117k in designated and restricted fund spending to resource local ministry.

The overall deficit for the year before investment gains was £0.74m (2019: a surplus of £1.17m). Investment gains amounted to £1.4m (2019: £3.4m) and a revaluation of fixed assets, mostly clergy housing resulted in a gain of £2.92m (2019: loss of £3.72m). The net movement in funds for 2020 was a surplus of £3.62m (2019: £0.86m).

5.2 Comparison to budget

A key financial indicator for HDBF is actual performance compared to budget.

In October 2019, Synod approved an overall budget deficit (based on the General fund, Diocesan Stipend fund and Pastoral fund) of £74k before investment gains & losses. The final outturn before year-end accounting adjustments was a deficit of £366k, a variance of £291k. In overall terms, this was due to the decline in Parish Offer income of £325k, but there were other costs/falls in income, notably parochial fees (£85k below budget) and clergy stipends (£84k more than budget). These were partially offset by HMRC Job Retention Scheme grants (£69k) and other operational savings during the year.

These statutory accounts show a net deficit before investment gains of £736k. The budget and statutory accounts are not prepared on the same basis and therefore a direct comparison is not helpful.

5.3 Significant Property Transactions

During the year, the DBF sold two of its three investment properties generating proceeds of £1.2m. It also sold a vicarage and small parcel of land generating proceeds of £344k.

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Hereford Diocesan Board of Finance

Annual report For the year ended 31 December 2020

5.4 Balance sheet position

The Directors consider that the balance sheet indicates that restricted and endowment funds are held in an appropriate mix of investment and current assets, given the purposes for which the funds are held.

Net assets at the balance sheet date totalled £83.1m (2019: £79.5m), although it should be noted that £78.7m (2019: £74.8m) is held in restricted and endowment funds (mainly properties used for ministry and glebe assets) which cannot be used directly for the general purposes of the HDBF. The restrictions that relate to these funds are detailed in note 33 to the accounts.

The movement in net assets of £3.6m is due largely to the fixed asset revaluation gain of £2.9m and gains on investments of £1.4m.

5.5 Review of the Statement of Financial Activities by fund

Unrestricted general fund

The unrestricted general fund is summarised in the following table. This excludes year-end adjustments made for the clergy pension liability creditor. Favourable variances are shown as positive and unfavourable shown in brackets.

Income
Parish Offer contributions
All other sources of income
Total income
Expenditure
Raising funds & charitable activities before pension adjustments
Net gains on investments and disposals of fixed assets
Transfers between funds (excluding pension movements):
From the DSF1for all investment income arising
From the HDBF Uniform Statutory Trust
Other
Total transfers between funds (excluding pension movements)
Net movement in funds as per the SOFA
General funds brought forward as at 1 January 2020
General funds carried forward as at 31 December 2020		 2020
2019
Variance
£'000
£'000
£'000
3,498
3,832
(334)
1,341
1,372
(31)
4,839
5,204
(365)
5,822
5,985
163
122
602
(480)
424
561
(137)
60
50
10
5
-
5
489
611
(122)
(372)
432
(804)
4,409
3,977
432
4,037
4,409
(372)

1DSF: Diocesan Stipend Fund

The £365k reduction in income is due largely to the decline in Parish Offer contributions. Operational savings drove the £163k reduction in expenditure, mostly arising from reduced activity levels due to COVID-19.

Designated funds

In order to encourage mission within the Diocese, the Trustees have agreed to set aside £250k annually into a designated ‘Total Return Mission Fund’. During 2020 £95k was applied to mission projects with the balance at the year-end standing at £314k (2019: £159k). As at 31 December 2020, commitments for approved projects totalled £1.3m, with future payments expected in the period 1 January 2021 to 31 December 2025.

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Hereford Diocesan Board of Finance

Annual report For the year ended 31 December 2020

Restricted funds

As set out in note 24, the HDBF administers a number of restricted funds. As at 31 December 2020, restricted funds totalled £57.6m (2019: £54.8m). These funds are not available for the general purposes of the HDBF with the exception of surpluses arising on the pastoral fund as set out in note 33. As at 31 December 2020, these surpluses, as represented by cash and net current assets, amounted to £4.8m (2019: £4.4m).

Endowment (diocesan stipends) fund

The endowment fund recorded net income of £318k (2019: 814k) before investment gains as shown in note 26. The fund is made up of two components: The Trust for Investment and the Unapplied Total Return. As at 31 December 2020, the balance on The Trust for Investment amounted to £7.5m (2019: £7.4m) and is not available for the general purposes of the HDBF. The balance on the Unapplied Total Return fund at the year-end was £13.6m (2019: £12.7m). The Unapplied Total Return fund is available to support clergy stipends.

5.6 Investment performance

Overall performance

The total value of all investments (including DSF endowment fund net current assets) at 31 December 2020 was £31.5m (2019: £29.7m) and the total return on investment was 5.9% (2019: 18.5%).

Listed investments for each fund are held with Rathbone Investment Management Ltd, with an investment mandate to generate a return from each portfolio of RPI+4%, with a balance between capital growth and income, managed with a medium risk profile. From 1 January 2019, the Main, Pastoral and Diocesan Stipends Fund portfolios were managed on a total return basis. In the year to 31 December 2020, the combined portfolios achieved a total return of 5.6% (2019: 19.2%) compared to the composite benchmark of 1.7% (2019: 17.7%), and slightly ahead of the absolute level of return required under the core investment mandate of RPI+4% (RPI Dec 2020: 1.2%).

Agricultural, commercial and industrial land and buildings (excluding school land) were valued at £6.8m at 31 December 2019 (2019: £8.1m). Rents receivable from glebe amounted to £141k (2019: £224k) – an income yield of 2.1% (2019: 2.8%). The decline in yield is due to the decision by the Board of Trustees to move away from high yielding but higher risk commercial property into equities.

5.7 Reserves policy

5.7.1 General unrestricted fund

HDBF’s core responsibilities include the payment of stipends and pension contributions for parochial clergy, the provision and maintenance of clergy housing, and the selection and training of future clergy. HDBF also employs diocesan support ministers and staff who provide guidance and expertise to parishes in a variety of ways, as well as enabling the company to meet its legal and charitable obligations. A reserves policy is necessary to ensure that, in the event of significant reduction in income, or capital losses during periods of geopolitical or economic uncertainty, HDBF will be able to meet these financial commitments as they fall due whilst avoiding the need to resort to external borrowings.

In formulating a minimum reserve policy, consideration has been given to the following:

In the light of the above, the Directors’ reserves policy is to maintain the equivalent of at least four months’ operating expenditure in cash and readily liquid assets in the general unrestricted fund.

Based on 2020 budgeted expenditure, the amount required under this policy totals £2.0m. As at 31 December 2020, the unrestricted reserves (excluding property) stood at £3.7m, which included

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Hereford Diocesan Board of Finance

For the year ended 31 December 2020

Annual report

approximately £0.6m of Parish Offer monies received in December. Although above the minimum reserve level indicated by the policy, the Directors consider this amount to be appropriate in view of future projected operating deficits. Reserve levels are monitored throughout the year and remedial action taken as and when required.

5.8 Grant making policy

The Memorandum of Association of the HDBF permits the company to make grants in pursuance of its objects, and the nature of grants made in 2020 is indicated in note 14 to the financial statements.

5.9 Going concern

Having reviewed the funding facilities available to the charity together with future projected cash flows, the trustees have an expectation that the charity has adequate resources to continue its activities for the foreseeable future. While it remains difficult to estimate with a high degree of confidence the long-term impact of the COVID-19 pandemic on the organisation, the trustees consider that that there are no material uncertainties over the charity’s financial viability in the short to medium term. Accordingly, they are satisfied it is appropriate to continue to adopt the going concern basis in preparing the financial statements.

5.10 Investment policy

The HDBF is empowered by its Memorandum of Association to invest monies not immediately required for its purposes.

The HDBF’s policy is to review regularly the assets of each fund for which it is responsible, in relation to the purposes of each fund, and to identify appropriate investment vehicles.

HDBF’s investment policies are based on two key policies:

Investment policy for long-term funds is aimed primarily at generating a sustainable income with due regard to the need for the preservation of capital value and the possible need to realise investments to meet operational needs. The glebe investments are held for the purpose of raising income to achieve the maximum contribution possible to clergy stipends on an ongoing basis. Unrestricted and restricted fund investments are invested to balance income, liquidity and the maintenance of capital.

Glebe investments are held in agricultural land, commercial and industrial land and buildings, equities and fixed interest securities.

Funds which may be needed for working capital in the short term are held as deposits with the Central Board of Finance administered by CCLA Investment Management Limited.

5.11 Total Return accounting

The law governing the use of Diocesan Endowment funds changed in 2016. Traditionally, permanent endowment funds draw income only, maintaining capital in perpetuity for the benefit of future generations. A Total Return investment approach allows the release of both income and capital gains for use by current beneficiaries. The Directors adopted Total Return accounting for the Diocesan Stipends Fund (DSF) with effect from 1 January 2019 by reference to the following:

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Hereford Diocesan Board of Finance

For the year ended 31 December 2020

Annual report

land and properties were ascertained using valuations provided in the 1995 statutory accounts discounted to 1986 by appropriate indexes.

The Directors have adopted the following policy in determining the amount to be allocated from the unapplied total return fund (UTR) each year to the general fund to be used for clergy stipends, as detailed in note 26 to the accounts:

5.12 Linked charities: HDBE and UST

The Hereford Diocesan Board of Education (HDBE) is a separate charity linked under a Charity Commission linking directive to the HDBF with effect from 1 January 2019. The HDBE is accounted for as a ‘branch’ of HDBF and included within restricted funds. The HDBE has no income/expenditure and the value of the net assets at 31 December 2020 was £nil.

On 2 December 2020 the Charity Commission granted a linking directive to link the Hereford Diocesan Board of Finance Educational Uniform Statutory Trusts Account (UST) to the Hereford Diocesan Board of Finance. The UST had formerly been accounted for as a subsidiary of the HDBF and as such group consolidated accounts were prepared for the year ended 31 December 2019. The UST is now accounted for as a ‘branch’ of HDBF and included within restricted funds. None of the assets of the UST are available for the general purposes of the HDBF.

Income arising on the UST during 2020 amounted to £55k (2019: £74k) and was attributable to investment income. Expenditure amounted to £13k (2019: £9k) and was attributable to investment management costs. The trustees of the Hereford Diocese Board of Education have the discretionary authority to make grants from UST capital to support school building projects. Grant requests arise on an infrequent basis, and no such grants were made during 2020. However, a loan of £156k was made to the Stottesdon School Trust which in turn made a grant to Stottesdon C of E Primary School as detailed in note 23. This loan has been eliminated on consolidation of HDBF branches and instead appears as a transfer between funds, net of repayments of £4k. A further transfer of £60k (2019: £50k) was made from the UST to the HDBF general fund to support the educational work of the Diocese.

The UST receives School Condition Allocations (SCA) funds annually from the Department of Education to fund school capital projects. These funds are not income of UST but rather the UST acts as agent to facilitate the projects. The funds are ring-fenced and shown as a creditor of the UST. At the year-end, the SCA creditor amounted to £647k (2019: £95k).

The summary of the assets of the UST and the analysis of the movement in UST funds are shown in notes 24 and 25 respectively.

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Hereford Diocesan Board of Finance

For the year ended 31 December 2020

Annual report

6. Principal risks & uncertainties

The Directors are responsible for the identification, mitigation and/or management of risk. To achieve this, the Board has compiled a register of all material risks together with mitigation plans and management controls to address these risks. This is subject to review by the Directors periodically with the responsibility for delivery of the mitigation strategies identified being delegated to the Diocesan Secretary.

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

6.1 Decline in church attendance

6.3 Parish Offer and cash flow

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2020

7. Legal objects and responsibilities

The Diocese of Hereford covers the county of Herefordshire, the southern part of Shropshire and a few parishes in the counties of Worcestershire, Powys and Monmouthshire. The objects of the Diocese apply across this geographic area.

The HDBF’s objects are to promote, aid, and further the religious and other charitable work of the Church of England in the Diocese of Hereford and, at the discretion of the trustees, elsewhere in the world including through:

The HDBF has the following statutory responsibilities: -

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

8. Structure, governance and management

Information on the structure of the Church of England and National Church Institutions may be found on the Church of England’s website.

Hereford Cathedral is the mother church of the Diocese and legally is constituted as a separate charity currently exempt from Charity Commission registration and supervision. Copies of its trustees’ report and financial statements may be obtained from Hereford Cathedral, 5 College Cloisters, Cathedral Close, Hereford HR1 2NG. Tel: 01432 374200.

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Hereford Diocesan Board of Finance

For the year ended 31 December 2020

Annual report

8.1 Organisational structure of the Diocese

8.1.1 Geography

The Diocese of Hereford was created in c.676 and covers an area of 1,660 square miles encompassing all of Herefordshire, the southern half of Shropshire and small parts of Worcestershire, Powys and Monmouthshire. The overall population is approximately 325,000, a large proportion of which live in small, scattered communities of less than 500.

8.1.2 Overview of Board and Committee structure

The HDBF has delegated to the Bishop’s Council all statutory functions under the Diocesan Boards of Finance Measure 1925, the Companies Acts and the Charities Acts as amended. Bishop’s Council has responsibility for the day-to-day business of the company which it exercises by delegation to the Diocesan Secretary, who is supported by a number of heads of departments and their staff.

Some employed staff have job titles incorporating the title ‘Director’ but they are not directors of the company for the purposes of company law.

8.2 Company status

The Hereford Diocesan Board of Finance (HDBF) is a Company set up under the Diocesan Boards of Finance Measure 1925, as amended. It was incorporated on 27 July 1916 as a charitable company (No. 144467) limited by membership guarantees and is registered with the Charity Commission (No. 249685). Its governing documents are the Memorandum and Articles of Association, as amended 22 May 1953, 11 April 1962, 21 March 1986, 23 May 1994, 25 May 2010 and 2 March 2019.

Every member of Diocesan Synod is a member of HDBF for company law purposes and has a personal liability limited to £1 under their guarantee as company members in the event of its being wound up. The Company Directors of the HDBF form the Bishop’s Council.

8.3 Trustee training

Trustees are appointed in line with the Hereford Synod / Diocesan Board of Finance Articles of Association and Standing Orders. Trustees are drawn from the membership of the Synod / Diocesan Board of Finance on a three-yearly cycle. Some trustees are appointed by virtue of their office while others are elected in line with standing orders. On appointment all trustees complete an induction

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2020

day (held every three years) and are provided with two Charity Commission publications ('Trustee Handbook' and 'The Essential Trustee - What you need to know') together with copies of the previous year’s accounts and the current year budget. New trustees are given a one-to-one briefing on the structure and organisation of the Church of England nationally, regionally and locally and given access to company policies, past papers and minutes to previous meetings. Meetings are designed to include space for trustees to be informed about key areas of business prior to decisions being made. Some ad hoc training for trustees is provided throughout the year and last year included safeguarding and the new mission and pastoral measure.

8.4 Remuneration of key management personnel

Emoluments of higher-paid employees are determined by a remuneration group consisting of four members of the Finance Committee. The terms of reference for this group was established by the Bishop’s Council and includes regular appraisals, remuneration and salary benchmarking and consequent recommendation of changes.

8.5 Directors’ insurance

Trustees’ liability insurance (for trustees in their capacity as directors) has been maintained throughout the year for the benefit of the charitable company and its trustees.

8.6 Funds held as custodian trustee

The HDBF is custodian trustee of assets held on permanent trust by virtue of the Parochial Church Councils (Powers) Measure 1956 and the Incumbents and Churchwardens (Trusts) Measure 1964 where the managing trustees are Parochial Church Councils and others. These assets are not aggregated in the financial statements as the HDBF does not control them, and they are segregated from the HDBF’s own assets by means of a separate accounting system. Further details of financial trust assets, whose market value amounted to £5.1m at 31 December 2020 (2019: £4.6m), are available from the HDBF on request.

8.7 Related parties

8.7.1 General Synod, Church Commissioners and Archbishops’ Council

HDBF has to comply with Measures passed by the General Synod of the Church of England and is required to make certain annual payments to the Archbishops’ Council based on an apportionment system to fund national training of ordinands and the activities of various national boards and councils. The stipends of the diocesan and suffragan bishops are borne by the Church Commissioners and are not reflected in the financial statements.

8.7.2 Diocese of Hereford Multi-Academy Trust (DHMAT)

HDBF works closely with this multi-academy trust (formerly known as the Bishop Anthony Education trust, created in 2013) as it seeks to foster, maintain and celebrate the Christian distinctiveness of church schools within the Diocese of Hereford.

8.7.3 Parochial Church Councils (PCCs)

HDBF is required by Parochial Church Councils (Powers) Measure 1956 to be custodian trustee in relation to PCC property, but the Company has no control over PCCs, which are independent charities. The accounts of PCCs do not form part of these financial statements. PCCs are able to influence the decision-making within HDBF and at Diocesan Synod level through representations to those bodies and through the input of their Deanery Synods.

16

Hereford Diocesan Board of Finance

For the year ended 31 December 2020

Annual report

8.7.4 Pension schemes

A money purchase scheme is available to all employees. HDBF contributes above the minimum employer contribution level required under the Pensions Act 2008. Since August 2015 all new employees have been automatically enrolled in the ‘Pension Builder 2014’ section of the Church Workers Pension Fund. The Pension Builder 2014 scheme is a hybrid scheme with a guarantee such that on reaching normal retirement age, the employee will receive, as a minimum, the contributions paid into the scheme on their behalf.

Ordained clergy are within the Church of England Funded Pensions Scheme (CEFPS).

9. Directors’ responsibilities

The Trustees (Directors) are responsible for preparing the Annual Report which incorporates the Strategic Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of the affairs of the charitable company and of the surplus or deficit of the charitable company for that period. In preparing these financial statements the Directors are required to:

The Directors are also responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the charitable company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the charitable company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the HDBF website. Legislation in England & Wales governing the preparation and dissemination of financial statements and other information included in Annual Reports may differ from legislation in other jurisdictions.

10. Statement of disclosure to the auditor

So far as the Directors are aware:

17

Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2020

11. Reference and administrative details

11.1 Administrative details

Company limited by guarantee, registration number 144467 Charity registration number 249685 Registered office: The Diocesan Office, The Palace, Palace Yard, Hereford HR4 9BL Telephone: 01432 373300 Email: diooffice@hereford.anglican.org Website: www.hereford.anglican.org

11.2 Directors

The following served as Directors and Trustees from 1 January 2020 to the date this report was approved (unless shown otherwise):

Ex officio Directors:

The Rt Revd R C Jackson, Bishop of Hereford (from 7 January 2020) – President The Rt Revd R M C Frith, Bishop of Hereford (until 1 January 2020) – President The Rt Revd A Magowan, Bishop of Ludlow (until 30 April 2020) The Ven D C Chedzey The Ven F R Gibson (from 25 April 2021) The Very Revd Michael Tavinor (until 28 February 2021) Revd Preb Simon Cawdell RAdm Philip Wilcocks Mr Stephen Borthwick (until 15 December 2020) Revd J Rogers – Chair

Elected Directors:

Revd Preb W A Buck Revd R Hulse (until 21 July 2020) Revd A P Morgan Mrs J C Beavan Major P J A Darling Mr C H E Smith – Vice-Chair Revd Preb J Davies (from 5 November 2020)

Nominated Directors:

Mr M J C Simmons (until 31 October 2020) Mrs K Askew (until 20 March 2020) Mr T N Hone Mr N A Sellar The Dowager Countess of Darnley (until 1 January 2020) Mrs S R Gittins (from 5 November 2020) Ms S J Smith (from 5 November 2020)

11.3 Principal officers

Diocesan Secretary: Mr S R Pratley Director of Finance: Mr S G P Herbert

11.4 Members of the Board

Since July 2010 membership of the Hereford Diocesan Board of Finance has, in common with many other dioceses, become co-terminus with membership of the Diocesan Synod.

18

Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2020

11.5 Agents

Solicitors / Registrar

Lee Bolton Monier-Williams (until 31 July 2020) 1 The Sanctuary Westminster London SW1P 3JT Gabbs Solicitors (from 1 August 2020) 14 Broad Street Hereford HR4 9AP

Bankers Lloyds Bank PLC 8 High Town Hereford HR1 2AE Glebe agents – agricultural Carter Jonas Canon Court North Abbey Lawn Shrewsbury SY2 5DE

Investment managers

Rathbone Brothers PLC 8 Finsbury Circus London EC2M 7AZ CCLA Investment Management Limited Senator House, 85 Queen Victoria Street London EC4V 4ET Insurance agents Ecclesiastical Insurance Office PLC Beaufort House, Brunswick Road Gloucester GL1 1JZ Glebe agents – commercial & industrial Godfrey-Payton Old Bablake Hill Street Coventry CV1 4AN

Independent auditor Haysmacintyre LLP 10 Queen Street Place London EC4R 1AG

The Directors' annual report is approved on behalf of the Board of Directors and the Strategic Report (included therein) is approved by the Board of Directors on 10 June 2021 and signed on its behalf by:

…………………………..………… ……………………………..……… Revd Jane Rogers Mr C H E Smith Chair Director 10 June 2021 10 June 2021

19

Hereford Diocesan Board of Finance

To the members of the Hereford Diocesan Board of Finance

Independent auditor’s report

Opinion

We have audited the financial statements of The Hereford Diocesan Board of Finance for the year ended 31 December 2020, which comprise the Statement of Financial Activities, the Income and Expenditure Account, the Balance Sheet, the Cash Flow Statement and the related notes, 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 2020, and of the charitable company’s net movement in funds, for the year then ended;

 have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

 have been prepared in accordance with the requirements of the 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.

Other information

The Trustees are responsible for the other information. The other information comprises the information included in the Trustees’ 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.

20

Hereford Diocesan Board of Finance

To the members of the Hereford Diocesan Board of Finance

Independent auditor’s report

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 Trustees’ Annual Report (which incorporates the Strategic Report and the Directors’ Report) 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 Trustees’ Annual Report has been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where 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

Responsibilities of Trustees for the financial statements

As explained more fully in the Trustees’ Responsibilities statement, the Trustees (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether owing 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 owing 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 charity law, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, the Charities Act 2011, payroll tax and sales tax.

21

Hereford Diocesan Board of Finance

Independent auditor’s report

To the members of the Hereford Diocesan Board of Finance

We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to the posting of inappropriate journal entries and management bias in accounting estimates and judgements. Audit procedures performed by the engagement team included:

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

Use of our report

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

…………………………..………

Lee Stokes (Senior Statutory Auditor) For and on behalf of Haysmacintyre LLP, Statutory Auditor

10 Queen Street Place, London EC4R 1AG

10 June 2021

22

Hereford Diocesan Board of Finance

Statement of financial activities

For the year ended 31 December 2020

Statement of financial activities
Income and endowments from:
Note
Donations
Parish Offer contributions
3
Archbishops' Council
4
Other donations
5
Charitable activities
6
Other trading income
7
Investment income
8
Other income
9
Total income and endowments
Expenditure on:
Raising funds
10
Charitable activities: excl. pension deficit
11
Charitable activities: remeasurement of
32
pension deficit liability
Total expenditure
Net (expenditure)/income before
investment gains
Net gains/(losses) on investments
Net (expenditure)/income
Transfers between funds
23
Other recognised gains/(losses)
Gains/(losses) on revaluation
15
of fixed assets
Net movement in funds
Funds brought forward at 1 January
Funds carried forward at 31 December		 Restricted
Endowment
Total
Total
General Designated
funds
funds
2020
2019
£'000
£'000
£'000
£'000
£'000
£'000
3,498
-
-
-
3,498
3,832
423
-
285
-
708
713
194
2
77
-
273
271
321
-
-
-
321
384
325
-
11
-
336
329
78
-
154
368
600
814
-
-
3
-
3
526
Unrestricted funds
4,839
2
530
368
5,739
6,869
94
-
40
50
184
185
5,485
76
729
-
6,290
6,340
1
-
-
-
1
(830)
5,580
76
769
50
6,475
5,695
(741)
(74)
(239)
318
(736)
1,174
122
-
248
1,064
1,434
3,412
(619)
(74)
9
1,382
698
4,586
247
183
2
(432)
-
-
-
-
2,825
95
2,920
(3,722)
(372)
109
2,836
1,045
3,618
864
4,409
202
54,767
20,072
79,450
78,586
4,037
311
57,603
21,117
83,068
79,450

All activities derive from continuing activities. The Notes on pages 27 to 59 form part of the financial statements.

23

Hereford Diocesan Board of Finance

Income and expenditure account

For the year ended 31 December 2020

Income and expenditure account
Total income
Total expenditure
Operating (deficit)/surplus for the year
Net gains on investments
Net (expenditure)/income for the year
Other comprehensive income:
Revaluation of fixed assets
Net assets transferred to endowments
Total comprehensive income		 2020
2019
£'000
£'000
5,371
6,005
(6,425)
(5,645)
(1,054)
360
370
1,241
(684)
1,601
2,825
(3,657)
432
(259)
2,573
(2,315)

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.

24

Hereford Diocesan Board of Finance

Balance sheet

For the year ended 31 December 2020 Company Number: 144467

Balance sheet

Balance sheet
Unrestricted funds Restricted Endowment Total Total
General Designated funds funds 2020 2019
Note £'000 £'000 £'000 £'000 £'000 £'000
Fixed assets
Tangible assets 15 382 - 49,399 1,770 51,551 49,022
Investment property 17 - - 481 6,832 7,313 8,585
Other investments 18 3,636 74 7,032 12,073 22,815 21,127
4,018 74 56,912 20,675 81,679 78,734
Current assets
Stocks 2 - - - 2 3
Debtors:amounts falling due within one year 19 172 - 52 763 987 274
Debtors:amounts falling after one year 20 - - 12 - 12 16
Cash at bank & in hand 69 237 1,311 - 1,617 1,494
243 237 1,375 763 2,618 1,787
Creditors:amounts falling due within one year 21 (224) - (684) (265) (1,173) (773)
Net current assets/(liabilities) 19 237 691 498 1,445 1,014
Total assets less current liabilities 4,037 311 57,603 21,173 83,124 79,748
Creditors:amounts falling due after
more than one year
Pension deficit payments liability 22 - - - (56) (56) (298)
Net Assets 4,037 311 57,603 21,117 83,068 79,450
Funds
Unrestricted income fund 24 4,037 - - - 4,037 4,409
Designated funds 24 - 311 - - 311 202
Restricted income funds 24 - - 57,603 - 57,603 54,767
Endowment funds 24 - - - 21,117 21,117 20,072
Total funds 4,037 311 57,603 21,117 83,068 79,450

The financial statements were approved by the Directors of the Hereford Diocesan Board of Finance and authorised for issue on 10 June 2021 and signed on their behalf by:

……………………………………..

Revd Jane Rogers Chair 10 June 2021

25

Hereford Diocesan Board of Finance Cash flow statement

For the year ended 31 December 2020

Net cash outflow from operating activities
Cash flows from investing activities
Dividends, interest and rent from investments
Proceeds from the sale of:
Tangible fixed assets for the use of the HDBF
Fixed asset investments
Purchase of:
Tangible fixed assets for the use of the HDBF
Fixed asset investments
Net cash provided by/(used in) investing activities
Change in cash and cash equivalents in the
reporting period
Net cash funds as at 1 January
Net cash funds as at 31 December
Notes to the cash flow statement
Reconciliation of net movements in funds
to net cash flow from operating activities
Net movement in funds for the year ended
31 December
Add: depreciation & amortisation charges
Less: dividends, interest and rent from investments
(Loss)/profit on sale of functional assets
Decrease in stocks
(Increase)/decrease in debtors
Increase/(decrease) in creditors
Net cash used in operating activities		 2020
2020
2019
2019
£'000
£'000
£'000
£'000
(1,770)
(550)
600
814
284
375
7,017
2,866
(10)
(293)
(5,998)
(3,914)
1,293
(966)
123
(702)
123
(702)
1,494
2,196
1,617
1,494
(736)
1,174
10
8
(600)
(814)
107
(39)
1
-
(709)
41
157
(920)
(1,770)
(550)		 2020
2020
2019
2019
£'000
£'000
£'000
£'000
(1,770)
(550)
600
814
284
375
7,017
2,866
(10)
(293)
(5,998)
(3,914)
1,293
(966)
123
(702)
123
(702)
1,494
2,196
1,617
1,494
(736)
1,174
10
8
(600)
(814)
107
(39)
1
-
(709)
41
157
(920)
(1,770)
(550)
(702)
(702)
2,196
1,494
1,174
8
(814)
(39)
-
41
(920)
(550)

No analysis of changes in net debt is presented as the charitable company has no borrowings.

26

Hereford Diocesan Board of Finance Notes to the accounts For the year ended 31 December 2020

1. Accounting policies

1.1 General information

Hereford Diocesan Board of Finance (“HDBF”) is a charitable company limited by guarantee, incorporated in England and Wales (company registration number 144467) and registered with the Charity Commission (charity registration number 249685). The registered office address is The Diocesan Office, The Palace, Palace Yard, Hereford, HR4 9BL.

1.2 Accounting convention and basis of accounting

The financial statements have been prepared in accordance with the historical cost convention, with the exception of freehold properties, which are included at their fair value as determined under the applicable valuation method as detailed in note 1.6, and fixed asset investments, which are included at their market value at the balance sheet date. The financial statements have been prepared in accordance with the Statement of Recommended Practice for Charities (SORP (FRS 102), second edition effective 1 January 2019), the Companies Act 2006 and applicable accounting standards (FRS 102).

The HDBF meets the definition of a public benefit entity under FRS 102.

During the year the HDBF received direction from the Charity Commission that the Hereford Diocesan Board of Finance Educational Uniform Statutory Trusts Account (“the UST”) has been linked with the DBF. As set out in Note 1.15 this means that the UST is treated as a branch of HDBF and its income, expenditure, assets and liabilities are aggregated with those of HDBF and its other linked charities. The funds of the UST are presented separately within the HDBF’s restricted funds. In the prior year the HDBF presented consolidated accounts but, following the issue of the linking direction, there is no longer any requirement to prepare consolidated financial statements. The comparative figures presented in these financial statements are prepared as if the linking direction has always been in place and in effect are those from the 2019 consolidated financial statements.

1.3 Income

All income is included in the Statement of Financial Activities (SoFA) when the HDBF 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.

27

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

1.4 Expenditure

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

1.6

Tangible fixed assets and depreciation

Freehold properties

Freehold properties are recognised at cost and subsequently measured at fair value. Depreciation is not provided on buildings as any provision (annual or cumulative) would not be material due to the very long expected remaining useful economic life in each case, and because their expected residual value is not materially less than their carrying value. The HDBF has a policy of regular structural inspection, repair and maintenance, which in the case of residential properties is in accordance with the Repair of Benefices Buildings Measure 1972 and properties are therefore unlikely to deteriorate or suffer from obsolescence. In addition, disposals of properties occur well before the end of their economic lives and disposal proceeds are usually not less than their carrying value. The Trustees perform annual impairment reviews in accordance with the requirements of FRS 102 to ensure that the carrying value is not more than the recoverable amount.

Investment properties

Glebe properties which are held for investment purposes and rented out are initially recognised at cost and subsequently measured at fair value at each reporting date.

28

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2020

Parsonage houses

The HDBF has followed the requirements of FRS 102 in its accounting treatment for benefice houses (parsonages). FRS 102 requires the accounting treatment to follow the substance of arrangements rather than their strict legal form. The HDBF is formally responsible for the maintenance and repair of such properties and has some jurisdiction over their future use or potential sale if not required as a benefice house, but in the meantime legal title and the right to beneficial occupation is vested in the incumbent. The Trustees therefore consider the most suitable accounting policy is to capitalise such properties as restricted fund assets and to carry them at their estimated current market value. Revaluation gains or losses arising are reported within other recognised gains and Activities.

Other tangible fixed assets

All capital expenditure over £500 is capitalised and depreciated. Depreciation is provided in order to write off the cost (less any ultimate disposal proceeds at prices ruling at the time of the asset’s acquisition) of fixed assets over their currently expected useful economic lives on a straight line basis as follows:

as follows:
Improvements to leasehold property 8 years
Plant & equipment:
Office Fixtures and fittings 7-10 years
Computer equipment 5 years
Solar panels 20 years

Fixed asset investments

Fixed asset investments are included in the balance sheet at market value and the gain or loss taken to the Statement of Financial Activities.

Glebe land with the potential for development is valued according to its agricultural value until such a time as either outline planning permission is received or a development agreement is in place, at which point it is revalued to reflect the development value, provided this can be determined with reasonable accuracy. The costs of reports and investigations incurred with the aim of obtaining outline planning permission for housing developments on specific glebe land is initially capitalised. The accumulated costs are scrutinised by the Directors at the end of each accounting year. In cases where the Directors believe that planning permission is unlikely to be obtained, the accumulated planning costs are treated as an investment loss and taken to the Statement of Financial Activities in the year in which the decision is made.

1.7 Financial instruments

Basic financial instruments are initially recognised at transaction value and subsequently measured at amortised cost with the exception of investments which are held at fair value. Financial assets held at amortised cost comprise cash at bank and in hand, together with trade and other debtors. A specific provision is made for debts for which recoverability is in doubt. Cash at bank and in hand is defined as all cash held in instant access bank accounts and used as working capital. Financial liabilities held at amortised cost comprise all creditors except social security and other taxes and provisions.

1.8 Debtors

Trade and other debtors are recognised at the settlement amount due.

29

Hereford Diocesan Board of Finance Notes to the accounts For the year ended 31 December 2020

1.9 Creditors and provisions

Creditors and provisions are recognised where the charity has a present obligation resulting from a past event that will probably result in the transfer of funds to a third party and the amount due to settle the obligation can be measured or estimated reliably. Creditors and provisions are normally recognised at their settlement amount after allowing for any trade discounts due.

1.10 Equity share loan

The HDBF Educational Uniform Statutory Trust has one loan for which the settlement proceeds are based on the value of the equity in a property. As this constitutes a non-basic financial instrument under FRS 102 this loan has been recognised at fair value and is revalued at each reporting date. Any gains and losses arising at each year end are recognised within investment gains and losses in the SOFA.

1.11 Leases

The HDBF has entered into operating lease arrangements only for the use of certain assets, the rental for which is charged in full as expenditure in the year to which it relates. Where rent free periods are given as part of an operating lease, the impact of this rent free period is reflected in the Statement of Financial Activities over the shorter of the overall lease term or break clause where there is an expectation that this will be utilised.

1.12 Stocks

Stocks are valued at the lower of cost and net realisable value. Cost is computed on a first in first out basis. Net realisable value is based on estimated selling price less the estimated cost of disposal.

1.13 Fund balances

Fund balances are split between unrestricted, restricted and endowment funds.

As a matter of policy the Board has agreed that it should aim to achieve a capital base on the restricted pastoral fund sufficient to generate dividends and interest to meet average annual expenditure on essential property improvements.

30

Hereford Diocesan Board of Finance Notes to the accounts For the year ended 31 December 2020

1.14 Trust funds

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

1.15 Linked charities

The HDBF’s accounts aggregate the following charities linked by the Charity Commission to the HDBF. These charities are treated as a branches of the HDBF and held within restricted funds.

1.16 Going concern

Having reviewed the funding facilities available to the charity together with future projected cash flows, the trustees have an expectation that the charity has adequate resources to continue its activities for the foreseeable future. There is a high degree of uncertainty around the impact of the COVID-19 pandemic and the trustees have reflected this in the cash flow forecasts and consider that there are no material uncertainties over the charity’s financial viability. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

1.17 Accounting for open schools and related Trust property

While a Church School continues to operate as such or is leased to a Local Authority or Academy for the purposes of a County School, it and any property attached thereto is not considered to have any current value to HDBF (as part of the Hereford Diocesan Board of Finance Educational Uniform Statutory Trust).

1.18 Accounting for closed schools and related Trust property

In 1953 a Scheme was made under Section 86 of the Education Act 1944. Under the Scheme the HDBF was made the governing body of the education foundations listed in the Scheme. Until closure, the governing body was required to administer a school in accordance with the trusts subsisting when the Scheme was made. In relation to the letting of premises included in the Scheme, the Board, as governing body, is bound by the general law applicable to trustees of charitable foundations. The application of the income and capital formerly laid down by the 1953 Scheme is now governed by the Uniform Statutory Trusts.

A Section 554 Order is usually made in respect of a closed school not included in the Section 86 Scheme. This allows the Department for Education to make an Order directing the sale of closed school premises where this has not already taken place and specifies the destination of the proceeds of sale and of the assets of trusts associated with the school. Such Orders may be made in respect of a school included in the Section 86 Scheme referred to above to allow part of the assets to be used other than as originally laid down in the Scheme, such as for the setting up of a local religious education fund. In making a Section 554 Order, the Department may take into account moral as well as legal claims and it is for the Department to decide what proportion, if any, comes to the Uniform Statutory Trusts. Once an Order is made and the Trustee is able to estimate the proceeds of the sale, based on professional advice, this amount is brought into the capital fund of the UST. If the school is redundant but a Section 554 Order has not yet been made or the net realisable value is so uncertain that any quantification might be misleading, this information is shown in a note to the accounts.

31

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2020

On the occurrence of a sale under Section 86 of the Act, the property on its closure immediately becomes an asset of the trust. If the Trustee owns the property, the estimated value will be brought into the capital fund of the UST. In all other cases if the Board considers an estimate of the capital value so uncertain that any quantification might be misleading, this information is shown in a note to the accounts.

Trustees of closed schools falling within the ‘Reverter of Sites Act’ have the duty to dispose of the asset at ‘best value’ and return the proceeds to the benefactor.

2. Critical accounting judgements and estimates

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.

2.1 Critical judgements

When a Church of England school closes, the site may revert back to the original owner, otherwise it will revert to the linked charity, the HDBF Educational Uniform Statutory Trust (“HDBF UST”). If it is to revert to the HDBF UST, there is a judgement as to the point at which the property is recognised. The policy adopted by the trustees is detailed in note 1.18.

Glebe land with the potential for development is valued according to its agricultural value until such a time as either outline planning permission is received or a development agreement is in place, at which point it is revalued to reflect the development value, provided this can be determined with reasonable accuracy.

2.2 Estimation uncertainty

Houses held as tangible fixed assets and houses held for investment are valued by the in-house Diocesan surveyor. The valuation is made using professional experience, relevant indices and by reference to the sale prices of similar properties in the same area.

Land is valued by the Directors by reference to a variety of land market surveys as detailed in note 17.

The HDBF Educational Uniform Statutory Trust, a linked charity, has one loan for which the settlement proceeds are based on the value of the equity in a property. As required by FRS 102 this loan has been stated in accordance with an estimate of fair value. The HDBF makes use of the inhouse Diocesan surveyor in arriving at this fair value. The loan is repayable on the earlier of the death of the borrowers or the vacation of the related property. The property was vacated during 2020 and is currently being marketed therefore this equity share loan is measured as a proportion of the fair value at the reporting date and has not been discounted.

32

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

3. Parish Offer contributions

Unrestricted funds Unrestricted funds Restricted Endowment Total Total
General Designated funds funds 2020 2019
£'000 £'000 £'000 £'000 £'000 £'000
Current year Parish Offer committed 3,854 - -
-		 3,854 3,857
Shortfall in commitments (356) - -
-		 (356) (29)
3,498 - -
-		 3,498 3,828
Received for previous years - - -
-		 - 4
3,498 - -
-		 3,498 3,832

The Parish Offer system is based on annual commitments made by PCCs to contribute to the ‘Common Fund’ of the Diocese. Parish Offer receipts in 2020 represented 90.8% (2019: 99.3%) of the total commitments made. All Parish Offer receipts in 2019 related to the general fund.

4. Archbishops’ Council

Lowest Income Communities
funding (LiNC)
Transitional support funding
Ordinands in training
Other grant funding		 Restricted Endowment
Total
Total
General Designated
funds
funds
2020
2019
£'000
£'000
£'000
£'000
£'000
£'000
288
-
-
-
288
284
114
-
-
-
114
132
-
-
146
-
146
141
21
-
139
-
160
156
Unrestricted funds
423
285
-
708
713

The Lowest Income Communities (LInC) funding supports stipendiary ministry in the most deprived areas of the Diocese. The transitional funding is currently used to fund clergy stipends across the Diocese. In 2019 the LInC income and Transitional support funding was attributable to the general fund, the ordinands in training income was attributable to restricted funds, and other grant funding was attributable £3k to the general fund and £153k to restricted funds.

5. Other donations

Trust income and grants
Ecclesiastical insurance office
- share of profits
Donations & sundry income		 Restricted Endowment
Total
Total
General Designated
funds
funds
2020
2019
£'000
£'000
£'000
£'000
£'000
£'000
89
2
77
-
168
151
84
-
-
-
84
88
21
-
-
-
21
32
Unrestricted funds
194
2
77
-
273
271

In 2019, £22k of Trust income and grants was attributable to the general fund, £20k to designated funds and £109k to restricted funds. All other donations in 2019 were attributable to the general fund.

33

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

6. Charitable activities

6.
Charitable activities
Fees for occasional offices
Income from educational activities		 Restricted Endowment
Total
Total
General Designated
funds
funds
2020
2019
£'000
£'000
£'000
£'000
£'000
£'000
288
-
-
-
288
339
33
-
-
-
33
45
Unrestricted funds
321
-
-
-
321
384

All charitable activities related entirely to unrestricted funds in both the current and prior year.

7. Other trading income

Rental income
Other trading income		 Restricted Endowment
Total
Total
General Designated
funds
funds
2020
2019
£'000
£'000
£'000
£'000
£'000
£'000
325
-
10
-
335
327
-
-
1
-
1
2
Unrestricted funds
325
-
11
-
336
329

In 2019, £317k of the rental income was attributable to the general fund and £10k to restricted funds. All of the Other trading income in 2019 was attributable to restricted funds.

8. Investment income

Rents receivable
Interest & dividends receivable		 Restricted Endowment
Total
Total
General Designated
funds
funds
2020
2019
£'000
£'000
£'000
£'000
£'000
£'000
-
-
11
141
152
227
78
-
143
227
448
587
Unrestricted funds
78
-
154
368
600
814

£3k of the rents receivable in 2019 were attributable to restricted funds, with the remainder attributable to endowment funds. £110k of the interest & dividends receivable in 2019 were attributable to the general fund, £183k to restricted funds and £294k to endowment funds.

9. Other income

HDBF UST:
assets receivable: school houses
Redundant church costs recovered
Gain on disposal of fixed assets
Funds recognised from linked charity
Liquidated damages for dilapidations		 Restricted Endowment
Total
Total
General Designated
funds
funds
2020
2019
£'000
£'000
£'000
£'000
£'000
£'000
-
-
-
-
-
(292)
-
-
3
-
3
6
-
-
-
-
-
39
-
-
-
-
-
427
-
-
-
-
-
346
Unrestricted funds
-
-
3
-
3
526

34

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2020

In 2018, £292k of assets relating to Westbury School House were brought onto the balance sheet as Other Income. It subsequently transpired that a S.554 Order is required by the Secretary of State for Education and the assets should not be recognised by the HDBF UST until such a time as the S.554 Order has been granted. The assets, valued at £292k, were therefore reversed out of Other income in 2019. All other income in 2019 was attributable to restricted funds, with the exception of £346k of liquidated damages for dilapidations which was attributable to endowment funds.

10. Fund raising costs

10.1 Fund raising costs 2020

Land & property agents' fees
Glebe land maintenance & development
Property rental & other trading costs
Investment portfolio mgt fees
Support costs (see note 12)		 Restricted
Endowment
Total
General Designated
funds
funds
2020
£'000
£'000
£'000
£'000
£'000
55
-
1
-
56
5
-
-
-
5
1
-
10
-
11
15
-
29
50
94
Unrestricted funds
76
40
50
166
18
-
-
-
18
94
-
40
50
184

10.2 Fund raising costs 2019

10.2
Fund raising costs 2019
Land & property agents' fees
Glebe land maintenance & development
Property rental & other trading costs
Investment portfolio mgt fees
Support costs		 Restricted
Endowment
Total
General Designated
funds
funds
2019
£'000
£'000
£'000
£'000
£'000
55
-
1
-
56
4
-
-
-
4
8
-
8
-
16
14
-
28
50
92
Unrestricted funds
81
-
37
50
168
17
-
-
-
17
98
-
37
50
185

35

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

11. Charitable activities

11.1 Charitable activities excluding remeasurement of pension deficit liability 2020

Resourcing ministry and mission:
Stipends and national insurance
Clergy pension contributions
Clergy Housing
Clergy moves & interregnums
Support for ministry
Allocated support costs
Contributions to Archbishop's Council
Education
Parochial support
Grants and donations
Total expenditure on charitable		 Restricted
Endowment
Total
General Designated
funds
funds
2020
£'000
£'000
£'000
£'000
£'000
2,398
-
-
-
2,398
536
-
-
-
536
610
-
156
-
766
69
-
-
-
69
620
76
393
-
1,089
390
-
1
-
391
Unrestricted funds
4,623
76
550
-
5,249
405
-
-
-
405
273
-
156
-
429
177
-
23
-
200
7
-
-
-
7
5,485
76
729
-
6,290
activities excluding remeasurement of
pension deficit liability

11.2 Charitable activities excluding remeasurement of pension deficit liability 2019

Resourcing ministry and mission:
Stipends and national insurance
Clergy pension contributions
Clergy Housing
Clergy moves & interregnums
Support for ministry
Allocated support costs
Contributions to Archbishop's Council
Education
Parochial support
Grants and donations		 Restricted
Endowment
Total
General Designated
funds
funds
2019
£'000
£'000
£'000
£'000
£'000
2,337
-
-
-
2,337
537
-
-
-
537
599
-
87
-
686
116
-
-
-
116
846
1
587
-
1,434
361
-
1
-
362
Unrestricted funds
4,796
1
675
-
5,472
396
-
-
-
396
248
-
(2)
-
246
200
-
17
-
217
7
-
2
-
9
Total expenditure on charitable 5,647
1
692
-
6,340
activities excluding remeasurement of
pension deficit liability

36

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

12. Analysis of support costs

Restricted
Endowment
Total
Total
General
Designated
funds
funds
2020
2019
£'000
£'000
£'000
£'000
£'000
£'000
Unrestricted funds
Salary and employment costs
Property costs
Office costs
Legal and professional fees
General Synod representation
Governance costs		 350
-
-
-
350
339
42
-
-
-
42
46
64
-
1
-
65
54
86
-
-
-
86
64
3
-
-
-
3
9
20
-
-
-
20
21
565
-
1
-
566
533

All support costs in 2019 were attributable to the general fund except for £1k of office costs attributable to restricted funds.

13. Analysis of expenditure including allocation of support costs

13.1 Analysis 2020

13.1
Analysis 2020
Activities
Grant
Raising funds:
Charitable activities: excl. pension deficit:
Contributions to Archbishops' Council
Resourcing ministry and mission
Education
Parochial support
Other grants and donations
Charitable activities: pension deficit		 Undertaken
Funding of
Support
Total
Directly
Activities
Costs
2020
£'000
£'000
£'000
£'000
166
-
18
184
(9)
410
4
405
4,757
101
391
5,249
192
156
81
429
107
21
72
200
-
7
-
7
1
-
-
1
5,214
695
566
6,475

13.2 Analysis 2019

Raising funds:
Charitable activities:
Contributions to Archbishops' Council
Resourcing ministry and mission
Education
Parochial support
Other grants and donations
Charitable activites: pension deficit		 Activities
Grant
Undertaken
Funding of
Support
Total
Directly
Activities
Costs
2019
£'000
£'000
£'000
£'000
168
-
17
185
-
391
5
396
4,961
149
362
5,472
160
7
79
246
116
31
70
217
2
7
-
9
(830)
-
-
(830)
4,577
585
533
5,695

37

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2020

14. Analysis of grants made

14.1 Analysis 2020

14.
Analysis of grants made
14.1
Analysis 2020
From unrestricted funds - general fund:
National church responsibilities:
Contributions to Archbishop's Council
Grants to clergy
Ministry experience scheme
Support for Ordinands in training
PCCs for church inspection fees
Other grants
From unrestricted funds - designated funds:
To support mission and ministry
From restricted funds:
To support mission and ministry
To support school building projects		 Total
Number
Individuals
Institutions
2020
£'000
£'000
£'000
5
-
410
410
23
44
-
44
5
12
-
12
6
36
-
36
52
-
21
21
2
-
7
7
93
92
438
530
2
7
2
9
1
-
156
156
1
-
-
-
97
99
596
695

14.2 Analysis 2019

From unrestricted funds:
National church responsibilities:
Contributions to Archbishop's Council
Grants to clergy
Ministry experience scheme
Cleobury Mortimer youth project
Support for Ordinands in training
PCCs for church inspection fees
Other grants
From restricted funds:
To support mission and ministry
To support school building projects		 Total
Number
Individuals
Institutions
2019
£'000
£'000
£'000
5
-
391
391
65
61
-
61
7
14
-
14
1
-
14
14
8
48
-
48
82
-
31
31
2
-
7
7
170
123
443
566
13
-
12
12
3
-
7
7
186
123
462
585

38

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

15. Tangible fixed assets

Freehold
properties
Leasehold
property
improvements
Plant &
equipment
Total
£'000
£'000
£'000
£'000
Cost or valuation
At 1 January 2020
Additions
Disposals
Revaluation
At 31 December 2020		 48,990
53
184
49,227
-
-
10
10
(390)
-
(101)
(491)
2,920
-
-
2,920
51,520
53
93
51,666
Accumulated depreciation
At 1 January 2020
Charge for the year
Disposals
At 31 December 2020		 -
53
152
205
-
-
10
10
-
-
(100)
(100)
-
53
62
115
Net book value
At 1 January 2020 48,990
-
32
49,022
At 31 December 2020 51,520
-
31
51,551

The leasehold property held at nil book value relates to the diocesan office in Hereford, the landlord being the Church Commissioners.

As at 31 December 2020, the Board was responsible for six redundant churches. The value of these churches at this date is considered uncertain and not material and accordingly no value related to them has been included in these accounts.

The Board and benefice houses were valued by the Board as at 31 December 2020 by taking advice from the employed Diocesan Property Surveyor (MCIOB). On 31 December 2020 there was a housing stock of 121 properties (2019: 122).

Due to the length of time properties have been held by the Board and the unavailability of historical accounting records it is not possible to provide a historical cost valuation for Board and benefice houses.

16. Capital commitments

There were no capital commitments as at 31 December 2020 (2019: £nil).

39

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

17. Investments held as Fixed Assets – Investment property

Endowment funds
Land
Buildings
Restricted funds
Buildings		 As at
Change
As at
1 January
in Market
31 December
2020
Additions
Disposals
Transfers
Value
2020
£'000
£'000
£'000
£'000
£'000
£'000
6,432
10
(62)
-
(8)
6,372
1,706
-
(1,246)
-
-
460
8,138
10
(1,308)
-
(8)
6,832
447
-
-
-
34
481
Total 8,585
10
(1,308)
-
26
7,313

Endowment fund buildings at the year-end consists of one commercial property, two having been sold during the year. The remaining property has been valued informally by a local commercial property agent. Restricted fund buildings consist of houses held as investment properties. These have been valued by the Diocesan Surveyor (MCIOB) as at 31 December 2020.

The value of rural land was determined by the Directors. Due to the multiplicity of holdings and varying sizes and terms of occupation the cost of a professional valuation is deemed to be an imprudent use of charitable funds. The Directors used a variety of land market surveys to determine average land values at 31 December 2020. A discount was applied to 1986 Agricultural Holdings Act tenancies of 36% and Farm Business Tenancies of 23%. This constitutes an average yield of 1.55%. Other amenity tenancies/licences were discounted at 12.5% and vacant land was discounted at 5% to reflect the time taken to realise a value and reflect any restrictions on sale. Land for which planning permission has been received is valued according to its market value as determined by the Directors.

All glebe land is vested in and managed by the Board for the benefit of the endowment (diocesan stipends) fund in accordance with the terms of the Endowments and Glebe Measure 1976.

The historical cost of Investment property land and buildings is unknown.

18. Investments held as Fixed Assets – Other investments

Listed investments
Unrestricted general fund
Designated funds
Restricted funds
Endowment funds
Equity share loan
Restricted fund - UST
Total		 As at
Change
As at
1 January
in Market
31 December
2020
Additions
Disposals
Transfers
Value
2020
£'000
£'000
£'000
£'000
£'000
£'000
3,491
826
(803)
-
122
3,636
-
-
-
74
-
74
6,703
1,545
(1,572)
-
226
6,902
10,792
3,617
(2,660)
(74)
398
12,073
20,986
5,988
(5,035)
-
746
22,685
141
-
-
-
(11)
130
21,127
5,988
(5,035)
-
735
22,815

Listed investments are traded on London or comparable international stock exchanges.

40

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

The historical cost of listed investments held as at 31 December 2020 was £18.9m (2019: £16.9m). The historical cost of the equity share loan as at 31 December 2020 was £13,400 (2019: £13,400).

19. Debtors: due within one year

Other debtors
Prepayments & accrued income
Loan to Bishop Mascall Centre1		 2020
2019
£'000
£'000
817
172
166
98
4
4
987
274

20. Debtors: due after one year

Loan to Bishop Mascall Centre1 2020
2019
£'000
£'000
12
16

1The loan to the Bishop Mascall Centre of £15,980 (2019: £19,980) is being repaid at £4,000 per annum, with interest chargeable at the Church of England’s Central Board of Finance (CBF) rates.

21. Creditors: amounts falling due within one year

Other creditors and accruals
Taxation & Social Security
Pension deficit payments liability		 2020
2019
£'000
£'000
896
370
37
163
240
240
1,173
773

22. Creditors: amounts falling due after more than one year

Pension deficit payments liability 2020
2019
£'000
£'000
56
298

41

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

23. Analysis of transfers between funds

Unrestricted funds Unrestricted funds Restricted Endowment Total
General Designated funds funds funds
£'000 £'000 £'000 £'000 £'000
Uniform Statutory Trust to unrestricted 60 - (60) - -
General Fund to support education
From General fund to Endowment fund (242) - - 242 -
for reduction in pension deficit liability
From Endowment fund to General fund 674 - - (674) -
for stipends under Total Return (see note 26)
From General fund to the Total Return (250) 250 - - -
Mission Fund to support mission projects
From Total Return Mission fund to the - (61) 61 - -
Intergenerational Missioner fund in
respect of SDF match-funding requirements
From Mission innovation Fund to support - (5) 5 - -
the Abbeydore Mission Co-ordinator Fund
From the Mission & ministry fund to the - 4 (4) - -
Mission innovation fund to support
Ecumenical ministry in Ledbury
From the Holmer Church Plant fund to 4 (4) - - -
the General fund for manse costs
From the St Peters St James hub fund 1 (1) - - -
to the General fund for manse costs
From UST to Stottesdon School House (152)
trust in respect of loan1 152
247 183 2 (432) -

Comparatives for 2019 can be found in note 39 to these accounts.

1On 28 February, the UST made an interest free loan to the Stottesdon School House trust of £156,000 to enable the trust to make a grant to Stottesdon C of E Primary School for the building of a school hall to provide a new worship space. The loan is repayable from income arising on capital held by the trust and is expected to repaid in full within 40 years. The UST and the Stottesdon School House trust are treated as branches of HDBF and therefore inter-fund loans are eliminated. The loan of £156,000, less repayments of £4,012 has been treated as a transfer between funds.

42

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

24. Summary of assets by fund

Unrestricted funds
General fund
Designated funds:
Total Return Mission funds
Restricted funds
Pastoral fund
Mission and Ministry fund
Ordinands in training fund
Restructuring fund
Strategic development funds
Strategic capacity fund
Building strategy fund
Uniform Statutory Trust
Grant funds
Education Trusts
Endowment funds
Diocesan stipends fund
Total funds		 Tangible
Current
Net
Fixed assets Investments
Assets
Creditors
Assets
£'000
£'000
£'000
£'000
£'000
382
3,636
243
(224)
4,037
-
74
237
-
311
382
3,710
480
(224)
4,348
49,399
4,379
483
(33)
54,228
-
-
15
-
15
-
-
24
-
24
-
-
-
-
-
-
-
32
-
32
-
-
23
-
23
-
-
(1)
-
(1)
-
2,703
737
(651)
2,789
-
-
31
-
31
-
431
31
-
462
49,399
7,513
1,375
(684)
57,603
1,770
18,905
763
(321)
21,117
51,551
30,128
2,618
(1,229)
83,068

Comparatives for 2019 can be found in note 38 to these accounts.

43

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

25. Analysis of movements in funds

Balance at
1 Jan 2020
Income
Expenditure
Transfers
between
funds
Net gains
(losses) on
assets
Balance at
31 Dec 2020
£'000
£'000
£'000
£'000
£'000
£'000
Unrestricted funds
General reserve
Designated reserves:
Total Return Mission funds
Total unrestricted funds
Restricted funds
Pastoral reserve
Mission and Ministry reserve
Ordinands in training fund
Restructuring fund		 4,409
4,839
(5,580)
247
122
4,037
202
2
(76)
183
-
311
4,611
4,841
(5,656)
430
122
4,348
51,366
102
(203)
-
2,963
54,228
19
-
-
(4)
-
15
8
146
(130)
-
-
24
5
3
(8)
-
-
-
Strategic development fund 38
123
(190)
61
-
32
Strategic capacity fund
Building strategy fund
Grant funds
Education trusts
Uniform Statutory Trust
Total restricted funds
Endowment funds
Diocesan stipends fund
- Investment fund
- Unapplied Total Return
Total endowment funds
Total movement in funds		 14
53
(44)
-
-
23
2
-
(3)
-
-
(1)
8
38
(20)
5
-
31
427
10
(158)
152
31
462
2,880
55
(13)
(212)
79
2,789
54,767
530
(769)
2
3,073
57,603
7,414
-
-
59
-
7,473
12,658
368
(50)
(491)
1,159
13,644
20,072
368
(50)
(432)
1,159
21,117
79,450
5,739
(6,475)
-
4,354
83,068

Comparatives for 2019 can be found in note 40 to these accounts.

44

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

26. Endowment Fund – Total Return

26.
Endowment Fund – Total Return
At 1 January 2020
Movements in the reporting period:
Dividends and interest
Glebe land rent
Glebe commercial property rental income
Realised and unrealised gains and (losses)
Transfer from general fund for reduction in
clergy pension deficit payments liability
Less:
Investment management costs
Glebe land development costs
Indexation using CPIH: 0.8%
Unapplied Total Return allocated to income
to be used for stipends:
- Equating to dividend, interest and rents
- Equating to 0.5% of equity investments
- Additional annual transfer
Net movements in report period:
At 31 December 2020		 Trust for
Investment
Unapplied
Total Return
Total
Endowment
£'000
£'000
£'000
7,414
12,658
20,072
227
227
107
107
34
34
1,159
1159
242
242
(50)
(50)
59
(59)
-
59
1,660
1,719
(369)
(369)
(55)
(55)
(250)
(250)
-
(674)
(674)
59
986
1,045
7,473
13,644
21,117

The trustees adopted a Total Return accounting approach under the Diocesan Stipend Funds (Amendment) Measure 2016 with effect from 1 January 2019.

27. Net income for the year

Net income for the year is stated after charging:

Net income for the year is stated after charging:
2020 2019
£'000 £'000
Depreciation of tangible fixed assets 10 8
Rentals charged under operating leases 17 17
Amounts payable to external auditors for:
- statutory audit 20 21
- tax advisory services 1 2

45

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

28. Financial commitments – operating leases

Total future minimum lease payments under non-cancellable operating leases were as follows:

2020 2019
£'000 £'000
Minimum lease payments payable:
Within one year of the balance sheet date 1 2

Total future minimum lease payments receivable under non-cancellable operating leases were as follows:

2020 2019
£'000 £'000
Minimum lease payments receivable
Within one year of the balance sheet date - 92
Within two to five years of the balance sheet date - 59

29. Post balance sheet events and contingent liabilities

There were no post balance sheet events or contingent liabilities as at 31 December 2020.

30. Staff costs

Staff costs were as follows:

Gross salaries and wages
Social Security costs
Pension contributions		 2020
2019
£'000
£'000
1,166
1,169
109
107
117
126
1,392
1,402

Included in staff costs is an amount of £11,000 relating to voluntary redundancy payments (2019: £21,000).

The above figures include the Diocesan Director of Education (DDE), employed jointly by HDBF and DHMAT, a related party. Employment costs of the DDE are administered by DHMAT and recharged to HDBF.

46

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

The monthly average number of persons employed during the year by head count:

Support ministers / staff
Education
Diocesan officers
Diocesan administration staff
Grant funded Intergenerational Missioners
Grant funded support staff
Grant funded deanery staff		 Number
Number
Number
Number
Full-time
Part-time
Full-time
Part-time
11.2
6.2
11.5
7.6
2.0
2.0
1.6
0.8
3.0
1.0
3.0
1.0
3.0
5.0
2.0
6.0
5.0
2.0
5.0
2.2
1.0
0.2
1.0
1.0
-
1.0
-
1.0
-
2020
2019		 Number
Number
Number
Number
Full-time
Part-time
Full-time
Part-time
11.2
6.2
11.5
7.6
2.0
2.0
1.6
0.8
3.0
1.0
3.0
1.0
3.0
5.0
2.0
6.0
5.0
2.0
5.0
2.2
1.0
0.2
1.0
1.0
-
1.0
-
1.0
-
2020
2019
25.2
17.4
24.1		 19.6

The average number of persons employed during the year based on full-time equivalents:

Support ministers / staff
Education
Diocesan officers
Diocesan administration staff
Grant supported Intergenerational Missioners
Grant funded support staff
Grant funded deanery staff		 2020
2019
Number
Number
15.0
15.8
3.2
2.2
3.8
3.8
5.7
5.7
6.0
6.1
1.1
1.6
0.7
0.7
35.5
35.9

These staff numbers do not include the Archdeacon of Hereford, who is paid through the Church Commissioners.

The number of employees whose emoluments for the year exceeded £60,000 (including benefits in kind but excluding pension contributions) was as follows:

2020 2019
Number Number
£70,000 - £80,000 1 1

30.1 Remuneration of key management personnel

Key management personnel are deemed to be those having authority and responsibility, delegated to them by the trustees, for planning, directing and controlling the activities of the diocese. During 2020 they were:

Diocesan Secretary Mr S R Pratley Director of Education Mr A Teale Director of Finance Mr S G P Herbert

Remuneration (including employer’s National Insurance) and pensions for these employees amounted to £211,500 (2019: £202,300).

47

Hereford Diocesan Board of Finance Notes to the accounts For the year ended 31 December 2020

30.2 Trustees’ emoluments

No Trustee received any remuneration for services as Trustee. Four Trustees received travelling and out-ofpocket expenses totalling £2,491 (2019: £4,698 5 trustees) in respect of General Synod duties, duties as Archdeacon or Rural Dean, and other duties as Trustees.

The Church Commissioners are responsible for the stipends and housing of the diocesan and suffragan bishops (ex officio trustees). Archdeacons, parochial clergy and support ministers who are trustees of the HDBF, whether ex officio, elected, appointed or co-opted, are in receipt of a stipend, housing and training/sabbatical grants paid via the Board by virtue of their office. One trustee received a clergy study grant of £45 (2019: 2 trustees received clergy study or ministerial development grants totalling £1,100).

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

HDBF during the year:
Stipend Housing/
housing
allowance
The Ven D Chedzey Yes Yes
The Rt Revd A Magowan No Yes
Revd Preb S Cawdell Yes Yes
Revd Preb W A Buck Yes Yes
Revd R Hulse Yes Yes
Revd S Fountain Yes Yes
Revd A P Morgan Yes Yes
Preb J Davies Yes Yes

The Board also met the stipends, pensions and social security costs of an average of 81 (2019: 82) stipendiary clergy as office-holders holding parochial or diocesan appointments in the diocese, and the costs were as follows:

Stipends
National insurance contributions
including Apprenticeship levy
Pension costs - current year
- deficit reduction		 2020
2019
£'000
£'000
2,211
2,186
185
171
553
549
243
240
3,192
3,146

The stipends of the two Bishops were paid and funded by the Church Commissioners.

31. Related parties

Herefordshire Vennture, a charitable organisation of which Revd J Rogers (HDBF Chair of Trustees), Mr S Pratley (Diocesan Secretary) and Revd A Morgan (HDBF trustee) are trustees, leased office space within the HDBF St Barnabas Church property at £6,790 for the year (2019: £7,276).

The Diocese of Hereford Multi-Academy Trust (DHMAT) is a related party to HDBF by virtue of the following:

48

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

During the year, invoices net of VAT totalling £6,375 (2019: £30,717) for partnership costs were raised from HDBF to DHMAT. The balance outstanding at the end of the year was £nil (2019: £nil).

During the year, invoices net of VAT totalling £52,560 were raised from DHMAT to HDBF for salary and administration costs (2019: £nil). The balance outstanding at the year-end was £nil.

The Diocese of Hereford Educational Trust (DHET) is a related party of HDBF as detailed below. During the year there were no transactions between HDBF and DHET:

Hereford Cathedral is a related party of HDBF. Bishop’s Council select two members to sit on the Cathedral Council for a period of 5 years and The Very Revd M Tavinor, trustee of HDBF was also the Dean of Hereford Cathedral. During the year, invoices net of VAT totalling £4,500 were raised from HDBF to the Cathedral for safeguarding costs (2019: £nil). The balance outstanding at the year end was £3,485 (2019: £nil). During the year, invoices net of VAT totalling £1,474 (2019: £nil) were raised from the Cathedral to HDBF for salary and administration costs. The balance at the year end was £nil (2019: £nil)

The Ven D Chedzey, a trustee of HDBF is also Vice Chair of Trustees of the Hereford Historic Churches Trust. During the year, HDBF received a grant from the Hereford Historic Churches Trust amounting to £5,000 (2019: £5,000).

The Dowager Countess of Darnley was a director of HDBF from 1 January 2019 to 31 December 2019. The Dowager Countess of Darnley’s son, Lord Darnley, is an external director of Rathbones Brothers PLC, the investment managers for HDBF.

The Rt Revd A Magowan, a trustee during the year of HDBF, is also a trustee of CPAS, the Church Pastoral Aid Society, a mission enabling society. Total services invoiced from CPAS during 2020 amounted to £1,350 (2019: £2,424). The balance at the end of the year was £nil (2019: £nil).

Revd Preb W A Buck, a trustee of HDBF is also a trustee of St Mary’s Youth Project, a CIO charity. During 2019, a grant of £14,467 was made to the Youth Project. No grants were paid during 2020.

32. Pension commitments

32.1 Church of England Funded Pension Scheme (CEFPS)

The Hereford Diocesan Board of Finance participates in the Church of England Funded Pension Scheme for stipendiary clergy, a defined benefit pension scheme, and as at 31 December 2020 had 85 members in the scheme (2019: 86). This scheme is administered by the Church of England Pensions Board, which holds the assets of the Scheme separately from those of the Responsible Bodies.

Each participating Responsible Body in the Scheme pays contributions at a common contribution rate applied to pensionable stipends.

The Scheme is considered to be a multi-employer scheme as described in section 28 of FRS 102. This means it is not possible to attribute the Scheme’s assets and liabilities to each specific Responsible Body, and this means contributions are accounted for as if the Scheme were a defined contribution scheme. The pensions costs charged to the SoFA in the year are contributions payable towards benefits and expenses accrued in that year (2020: £555k, 2019 £549k), plus the figures highlighted in the table below as being recognised in the SoFA, giving a total charge of £556k for 2020 (2019: credit of £281k).

49

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

A valuation of the Scheme is carried out once every three years. The most recent Scheme valuation completed was carried out as at 31 December 2018. The 2018 valuation revealed a deficit of £50m, based on assets of £1,818m and a funding target of £1,868m, assessed using the following assumptions:

Following the 31 December 2018 valuation, a recovery plan was put in place until 31 December 2022 and the deficit recovery contributions (as a percentage of pensionable stipends) are as set out in the table below.

table below.
Jan 2018 to Jan 2021 to Dec
% of pensionable stipends Dec 2020 2022
Deficit repair contributions 11.9% 7.1%

As at 31 December 2018 the deficit recovery contributions under the recovery plan in force at that time were 11.9% of pensionable stipends until December 2025.

As at December 2019 and 31 December 2020 the deficit recovery contributions under the recovery plan in force were as set out in the above table.

For senior office holders, pensionable stipends are adjusted in the calculations by a multiple, as set out in the Scheme’s rules.

Section 28.11A of FRS 102 requires agreed deficit recovery payments to be recognised as a liability. The movement in the balance sheet liability over 2019 and over 2020 is set out in the table below.

2020 2019
£'000 £'000
Balance sheet liability as at 1 January
538		 1,608
Deficit contribution paid
(243)		 (240)
Interest cost (recognised in the SoFA)
5		 31
Remaining change to balance sheet liability*
(4)		 (861)
(recognised in SoFA)
Balance sheet liabilityas at 31 December
296		 538

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:

recovery payments:
December December December
2020 2019 2017
Discount rate 0.2% p.a. 1.1% p.a. 2.1% p.a.
Price inflation 3.1% p.a. 2.8% p.a. 3.1% p.a.
Increase to total pensionable payroll 1.6% p.a. 1.3% p.a. 1.6% p.a.

50

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

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

Church of England Pension Builder Scheme

Hereford Diocesan Board of Finance 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.

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.

Pension Builder Scheme

The Pension Builder Scheme of the Church Workers Pension Fund is made up of two sections, Pension Builder Classic and Pension Builder 2014, both of which are classed as defined benefit schemes. HDBF has no members in the Pension Builder Classic Scheme.

Pension Builder 2014 is a cash balance scheme that provides a lump sum that members use to provide benefits at retirement.

Pension contributions are recorded in an account for each member. This account may have bonuses added by the Board before retirement. The bonuses depend on investment experience and other factors. There is no requirement for the Board to grant any bonuses. The account, plus any bonuses declared, is payable from members’ Normal Pension Age.

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

The scheme is considered to be a multi-employer scheme as described in Section 28 of FRS 102 as it is not possible to attribute the Pension Builder Scheme’s assets and liabilities to specific employers and means 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 the contributions payable (2020: £67k, 2019: £66k).

A valuation of the Pension Builder scheme is carried out once every three years. The most recent was carried out as at 31 December 2016. A valuation as at 31 December 2019 was under way as at 31 December 2020.

For the Pension Builder 2014 section, the valuation revealed a surplus of £1.8m 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, Hereford Diocesan Board of Finance could become responsible for paying a share of that employer’s pension liabilities. The directors have assessed this risk and consider it to be minimal.

At 31 December 2020, HDBF had 32 active members (2019: 30) in the Pension Builder 2014. Contributions outstanding at the year end amounted to £nil (2019: £nil).

Hereford Diocesan Board of Finance: other staff pension arrangements

The Hereford Diocesan Board of Finance contributes to individual money purchase policies operated by pension providers chosen by individual employees. The assets of these schemes are held separately from those of the Board, being invested with third party pension and insurance companies.

Contributions to the various schemes during the year totalled £22,079 (2019: £26,364) and were charged to the Income and Expenditure Account. Contributions outstanding at the year-end amounted to £1,298 (2019: £1,549).

51

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

33. Description of funds

General fund The General Fund is the HDBF’s unrestricted undesignated fund available for any of the HDBF’s purposes without restriction. Designated funds Total Return Mission Funds This relates to monies transferred by the trustees on a fixed annual basis from the general fund to fund large mission projects that adhere to strict criteria. It is also used to provide match funding for strategic development bids. The funds are monitored by the Strategy steering group. Designated funds can be undesignated and returned to the general fund by the trustees. Endowment fund Diocesan Stipends Fund The expendable endowment (diocesan stipends) fund is an expendable endowment fund from which the Board draws income to meet part of the cost of clergy stipends. The fund was substantially affected by the provision of the Endowments and Glebe Measure 1976. From 1 April 1978, incumbent clergy received from the Church Commissioners guaranteed annuities and personal grants equal in total to the net endowment income of their respective benefices prior to that date. All other income previously attaching to a benefice including glebe income, along with income applicable to non-incumbent clergy, has been allocated to this expendable endowment (diocesan stipends) fund from that date. From 1 January 2006, all stipendiary clergy were invited to relinquish their rights to guaranteed annuities and personal grants under a policy from the Church of England. All relevant HDBF clergy have relinquished those rights. The income of the Diocesan Stipends Fund is used to support the cost of stipends. The capital is available to acquire, develop or improve glebe land & buildings at the request of the Bishop and the concurrence of the Board.

With effect from 1 January 2019 the HDBF trustees adopted a Total Return Accounting approach to the Diocesan Stipends fund. The fund is now split into two components:

Restricted

funds: Pastoral Fund

The Diocesan Pastoral Account is used to support activities within the remit of the Diocesan Mission and Pastoral Committee (DMPC) as set out in the Mission and Pastoral Measure 2011 (No.3) . This will include expenditure on any property vested by or under this Measure in the Church Commissioners or the DBF, and grants and loans for parsonage and church provision, restoration, improvement or repair.

Where the DBF is satisfied that any monies in the diocesan pastoral account are not (likely to be) required for meeting the expenses or expenditure referred to in this section it may:

52

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2020

  1. apply those monies by way of grant or loan to the provision, restoration, improvement or repair of churches and parsonage houses in the diocese, including the repair of any building closed for regular public worship vested in the Board pending the coming into operation of arrangements under a pastoral (church buildings disposal) scheme, or to other purposes of the diocese or any benefice or parish in the diocese; or

  2. apply those monies by way of grant or loan for the benefit of another diocese, either generally for those purposes or for such of those purposes as the Board may specify; or

  3. transfer those monies to the capital or income account of the diocesan stipends fund; or

  4. transfer those monies to one or more other accounts or funds held by the Board or apply or transfer them partly to such other accounts or funds and partly as provided in paragraphs (1) to (3). [Mission and Pastoral Measure 2011 section 94(4)].

Mission and Ministry Fund

Prior to 2018, the church commissioners made an annual grant to HDBF for the restricted purpose of Mission and ministry work within the Diocese. The grant income has now ceased and the fund is gradually being depleted as mission grants are awarded.

Ordinands in Training Fund

This restricted fund has arisen as a result of a change in the method of funding the training costs of ordinands. Prior to 2017, the training and residential costs were funded directly from the Central Church Ministry Division. From 1 January 2017, a block grant has been receivable by HDBF, out of which training and maintenance costs are met. Any unused funds at the end of each year can only be used to fund future training and maintenance costs.

Education Funds

These relate to two Educational trusts: St Mary’s School Trust (Bucknell School House) and Stottesdon School Foundation. Both trusts are managed by the Diocesan Board of Education. They had previously been included within custodian trustee accounts, but under the charity commission directive linking the Hereford Diocese Board of Education and HDBF in 2019, these are now included as restricted funds under branch accounting.

Restructuring grant

Monies received from Archbishops’ Council to help HDBF restructure its organisation so as to enable the transition from unrestricted funding by Archbishops’ Council to targeted provision for lowest income communities.

Strategic Development Funds

This fund relates to projects which have received funds from the Archbishops’ Council Strategic Development Fund together with any associated Parish funding and HDBF match funding. As at 31 December 2020 this fund related wholly to the ‘Intergenerational Missioner’ project employing seven intergenerational Missioners across six market towns in the Diocese. The Intergenerational Missioner project is funded 25% by local PCC contributions, 50% from Archbishops’ Council (SDF), and 25% by HDBF.

53

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2020

Strategic Capacity Fund

Monies received from the Archbishops’ Council Strategic Capacity Fund to fund the employment of a Programme Manager for three years to facilitate the implementation of projects and growth initiatives throughout the Diocese.

Other Grant Funds

Other grant funds relate to grants received from third parties by HDBF to be administered as directed.

Uniform Statutory Trust Fund

The Hereford Diocesan Board of Finance Educational Uniform Statutory Trust (UST) is a registered charity linked by the Charity Commission to HDBF of which the HDBF is the sole trustee. The principal activity of the UST is the advancement of Christian education in the Diocese. Under SORP (FRS 102), the charity is accounted for as a branch of HDBF and shown within restricted funds. The capital and income may be applied as follows:

  1. in or towards the purchase of a site for, or the erection, improvement or enlargement of, the premises of any relevant school in the area or a teacher’s house for use in connection with any relevant school in the area;

  2. for the maintenance of any relevant school in the area;

  3. the maintenance of a teacher’s house for use in connection with any relevant school in the area.

In addition, the income may be applied as follows:

  1. for the provision of advice, guidance and resources in connection with any matter related to the management of, or education provided at any relevant school in the area;

  2. the provision of services for the carrying out of any inspection of any relevant school in the area;

  3. to defray the cost of employing staff in connection with points 1. and 2. above.

34. St. Barnabas Church, Hereford

This property is owned by the Hereford Diocesan Board of Finance, and was until 30 June 2006 made available on licence to the parish of All Saints, Hereford, for the conduct of divine worship. As of 30 June 2006, the parish of All Saints Hereford no longer required the building for their parish mission and the property was therefore passed back into the complete control of the HDBF. From July 2017, the property has been leased to two charitable organisations: Vennture and Oasis Church Hereford.

35. Corporation tax

The Company is a registered charity and as such its income and gains falling within Sections 471 to 489 of the Corporation Tax Act 2010 or Section 256 of the Taxation of Chargeable Gains Act 1992 are exempt from corporation tax to the extent that they are applied to its charitable objectives.

36. Closed schools

36.1 Sarn School

Sarn School closed in August 2006 and was subject to the Reverter of Sites Act. An agreement was reached between the Trustee and the Reverter in February 2010, the net proceeds to be divided equally with any Capital Gains Tax to be met by the Trustee. A charitable scheme was established during 2017 to receive the proceeds and is held within the Custodian trustee accounts. When a S.554 Order is made the proceeds will be brought into the DBF as part of the UST fund.

54

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2020

36.2 Westbury and Hope Primary Schools

Westbury and Hope Primary Schools were closed during 2017 with pupils transferred to Worthen Primary School. Westbury Primary School was sold in March 2020. The sale proceeds will ultimately flow to the DBF as part of the UST fund via a S.554 order. However, until such a time as the S.554 Order has been awarded, the proceeds of the sale are not available to use for other Diocesan schools. The S.554 Order was still in progress as at 31 December 2020 and therefore the proceeds are held within the Custodian trustee accounts. Hope Primary School will also be sold but, as the school was built and funded by the Local Authority, proceeds from the sale of the school will flow to the Local Authority.

37. Prior year comparative SoFA

Income and endowments from:
Donations
Parish share contributions
Archbishops' Council
Other donations
Charitable activities
Other trading income
Investment income
Other income
Total income and endowments
Expenditure on:
Raising funds
Charitable activities: excl. pension deficit
Charitable activities: pension deficit
Total resources expended
Net income/(expenditure) before
investment gains
Net gains/(losses) on investments
Net income/(expenditure)
Transfers between funds
Other recognised gains (losses)
Gains/(losses) on revaluation
of fixed assets
Net movement in funds
Funds brought forward at 1 January 2019
Total funds at 31 December 2019		 Restricted
Endowment
Total funds
General
Designated
funds
funds
2019
£'000
£'000
£'000
£'000
£'000
3,832
-
-
-
3,832
419
-
294
-
713
142
20
109
-
271
384
-
-
-
384
317
-
12
-
329
110
-
186
518
814
-
-
180
346
526
Unrestricted funds
5,204
20
781
864
6,869
98
-
37
50
185
5,647
1
692
-
6,340
(830)
-
-
-
(830)
4,915
1
729
50
5,695
289
19
52
814
1,174
477
-
764
2,171
3,412
766
19
816
2,985
4,586
(459)
183
17
259
-
125
-
(3,782)
(65)
(3,722)
432
202
(2,949)
3,179
864
3,977
-
57,716
16,893
78,586
4,409
202
54,767
20,072
79,450

55

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

38. Prior year: Summary of assets by fund

Tangible
Current
Net
Fixed assets Investments
Assets
Creditors
Assets
£'000
£'000
£'000
£'000
£'000
Unrestricted funds
General fund
Designated funds:
Total Return Mission funds
Restricted funds
Pastoral fund
Mission and Ministry fund
Ordinands in training fund
Restructuring fund
Strategic development fund
Strategic capacity fund
Building strategy fund
Uniform Statutory Trust
Grant funds
Education Trusts
Endowment funds
Diocesan stipends fund
Total funds		 382
3,491
736
(200)
4,409
-
-
203
(1)
202
382
3,491
939
(201)
4,611
46,965
4,248
181
(28)
51,366
-
-
19
-
19
-
-
8
-
8
-
-
5
-
5
-
-
41
(3)
38
-
-
14
-
14
-
-
2
-
2
-
2,644
382
(146)
2,880
-
-
8
-
8
-
399
28
-
427
46,965
7,291
688
(177)
54,767
1,675
18,930
160
(693)
20,072
49,022
29,712
1,787
(1,071)
79,450

56

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

39. Prior year: Analysis of transfers between funds

Unrestricted funds Unrestricted funds Restricted Endowment Total
General Designated funds funds funds
£'000 £'000 £'000 £'000 £'000
Uniform Statutory Trust to unrestricted 50 - (50) - -
General Fund to support education
From General fund to Endowment fund (1,070) - - 1,070 -
for reduction in pension deficit liability
From Endowment fund to General fund 811 - - (811) -
for stipends under Total Return (see note 41)
From General fund to the Total Return (250) 250 - - -
Mission Fund to support mission projects
From Total Return Mission fund to the - (62) 62 - -
Intergenerational Missioner fund in
respect of SDF match-funding requirements
From Mission innovation Fund to support - (5) 5 - -
the Abbeydore Mission Co-ordinator Fund
(459) 183 17 259 -

57

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

40. Prior year: Analysis of movements in funds

Unrestricted funds
General reserve
Designated reserves:
Total Return Mission funds
Restricted funds
Pastoral reserve
Mission and Ministry reserve
Ordinands in training fund
Restructuring fund
Strategic development fund
Strategic capacity fund
Building strategy fund
Grant funds
Education trusts
Uniform statutory Trust
Total restricted funds
Endowment funds
Diocesan stipends fund
- Investment fund
- Unapplied Total Return
Total endowment funds
Total movement in funds		 Balance at
1 Jan 2019
Income
Expenditure
Transfers
between
funds
Net gains
(losses) on
assets
Balance at
31 Dec 2019
£'000
£'000
£'000
£'000
£'000
£'000
3,977
5,204
(4,915)
(459)
602
4,409
-
20
(1)
183
-
202
3,977
5,224
(4,916)
(276)
602
4,611
54,575
183
(132)
(7)
(3,253)
51,366
21
-
(2)
-
-
19
(1)
141
(132)
-
-
8
13
-
(8)
-
-
5
24
144
(191)
61
-
38
11
52
(49)
-
-
14
11
16
(25)
-
-
2
139
40
(184)
13
-
8
-
427
-
-
-
427
2,923
(222)
(6)
(50)
235
2,880
57,716
781
(729)
17
(3,018)
54,767
7,312
-
-
102
-
7,414
9,581
864
(50)
157
2,106
12,658
16,893
864
(50)
259
2,106
20,072
78,586
6,869
(5,695)
-
(310)
79,450

58

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2020

41. Prior year: Endowment Fund – Total Return

41.
Prior year: Endowment Fund – Total Return
At 1 January 2019
Movements in the reporting period:
Dividends and interest
Glebe land rent
Glebe commercial property rental income
Receipts for dilapidations
Realised and unrealised gains and (losses)
Transfer from general fund for reduction in
clergy pension deficit payments liability
Less:
Investment management costs
Glebe land development costs
Indexation using CPIH: 1.4%
Unapplied Total Return allocated to income
to be used for stipends:
- Equating to dividend, interest and rents
- Equating to 0.5% of equity investments
- Additional annual transfer
Net movements in report period:
At 31 December 2019		 Trust for
Investment
Unapplied
Total Return
Total
Endowment
£'000
£'000
£'000
7,312
9,581
16,893
294
294
114
114
110
110
347
347
2,105
2,105
1,070
1,070
(50)
(50)
102
(102)
-
102
3,888
3,990
(518)
(518)
(43)
(43)
(250)
(250)
-
(811)
(811)
102
3,077
3,179
7,414
12,658
20,072

59