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2024-12-31-accounts

Hereford Diocesan Board of Finance

Annual Report & Accounts

2024

Company limited by guarantee Company number 144467 Charity number 249685

Hereford Diocesan Board of Finance

Report & Accounts for the year ended 31 December 2024

Contents Page 1. Foreword by the Bishop of Hereford ......................................................................................... 3 2. Legal objects and responsibilities ................................................................................................ 4 3. Organisational Structure .................................................................................................................. 5 4. Strategic aims ....................................................................................................................................... 6 5. Achievements and performance ................................................................................................... 6 6. Plans for future periods ................................................................................................................. 10 7. Financial review .................................................................................................................................. 13 8. Principal risks & uncertainties .................................................................................................... 18 9. Structure, governance and management .............................................................................. 20 10. Directors’ responsibilities .............................................................................................................. 22 11. Internal controls ................................................................................................................................ 23 12. Statement of disclosure to the auditor .................................................................................. 23 13. Reference and administrative details ...................................................................................... 24 Independent auditor’s report .............................................................................................................. 26 Statement of financial activities ........................................................................................................ 29 Income and expenditure account ...................................................................................................... 30 Balance sheet ............................................................................................................................................... 31 Cash flow statement ................................................................................................................................ 32 Notes to the accounts ............................................................................................................................. 33

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Hereford Diocesan Board of Finance

Foreword by the Bishop of Hereford For the year ended 31 December 2024

1. Foreword by the Bishop of Hereford

Dear Friends,

Welcome to the financial report and accounts for 2024.

As I write this, we have just begun our Year of Engagement following on from the encouragement of the Year of Faith. The feedback from the Year of Faith has been very positive. Many events were organised, both centrally and across the diocese in local churches. We had some fantastic outside speakers in Paul Williams and Andy Emerton from the Bible Society and Isabelle Hamley to our teaching days. Bishop’s teaching days on the Bible were well attended across the diocese. We also held a number of Questions of Faith evenings in parish churches. People came and asked all sorts of spiritual questions which Dean Sarah and I sought to answer. It is encouraging to hear how these events were a catalyst for small groups which are now continuing the conversation. I hope we will continue these this year. I am so grateful to the diocesan team for all they did to organise these events. My hope at the beginning of the year was that it would contribute to a rather nebulous but discernible raising of the spiritual temperature. My sense is that it has done that, for which we thank the Lord.

We began our three-year cycle with the Year of Prayer. Moving on to the Year of Engagement is not an excuse to stop praying! Prayer remains the central component of our diocesan strategy. We are facing serious headwinds in our call to proclaim Christ and grow disciples. Prayer is part of the spiritual filling of the sails that pushes us forward. 2025 will mark a transition in our strategy towards a more outward focus.

We are blessed with historic assets which enable our trustees to release additional funds for strategic mission initiatives in parishes, even though the diocesan income and expenditure balance remains in a large deficit. In addition, the Church Commissioners are paying for several of our support staff. A recent successful bid to the central board has allowed us to start our innovative Youth Hubs in Leominster and Bishops Castle. We continue to have good relationships with Herefordshire Council who are paying for us to work with Ukrainian guests.

However, last year Diocesan Synod passed a motion requesting the Church Commissioners to increase their grants to dioceses for parochial ministry substantially. As I write this the preparation is in hand for this motion to be brought to General Synod. Several dioceses are supporting this. Our prayer is this will enable a more sustainable financial settlement between the Commissioners and dioceses.

We want to multiply ministry, by retaining as high a number of frontline clergy as we can. To do that we need both to increase our local giving and get more resource from the centre.

There are always challenges to growing the Kingdom of God. It has always been thus in the church. But God provides for what he calls us to do. I have faith that he will continue to do that in 2025.

With best wishes,

The Rt. Revd Richard Jackson Bishop of Hereford

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2024

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 2024.

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. Legal objects and responsibilities

The Hereford Diocese Board of Finance’s (HDBF) 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 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.

Petertide ordinations

In addition, the HDBF also manages two linked charities; The Hereford Diocesan Board of Education (DBE) and the HDBF Educational Uniform Statutory Trust (UST), along with being the custodian Trustee of several smaller Trusts (more details in section 7.11).

The HDBF has the following principal statutory responsibilities: -

The strategic priorities of the charitable 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. HDBF is responsible for the custody and management of the Diocesan Synod’s financial affairs as well as those of the Diocesan Board of Education which works with church schools and academies.

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Hereford Diocesan Board of Finance Annual report For the year ended 31 December 2024

3. Organisational Structure

3.1 Geography

The Diocese of Hereford was created in 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 per the 2021 census is approximately 325,000. The largest settlement is the city of Hereford with a population of over 50,000. The other sizeable settlements are Leominster, Ludlow, Bridgnorth, and Ross-on-Wye with populations between 10,000-12,000. A significant proportion of the population live in small, scattered communities of less than 500 people.

3.2 Company status

St Peter’s Church, Rowlestone

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.

The registered office address is The Diocesan Office, The Palace, Palace Yard, Hereford HR4 9BL. Reference and administration information is given in section 13.

3.3 Company role

The main role of the HDBF is to manage and develop finances and assets to further its charitable objectives, promoting the mission and ministry of the Church of England across the Diocese of Hereford.

The 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.

The Diocese of Hereford has c. 400 open churches across 79 benefices (340 parishes), and 78 church schools.

3.4 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 heads of departments and their staff.

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2024

4. Strategic aims

Vision:

Our vision remains unchanged: “To proclaim Christ and grow disciples.”

Our Shared Strategic Aims (2023 – 2030)

Our strategy includes action for growth in prayerfulness, Christ-likeness and engagement through:

This strategic approach is reflected in five strategic aims to create:

Christening, Abbeydore Deanery

least one of our growing, healthy churches and resourcing others through training and support.

The above will be piloted through a number of initiatives. In particular, the ‘hub and spoke’ model of youth ministry in and around the market towns of Bishop’s Castle and Leominster, has been supported with Archbishops’ Council funding of £457k provided through the national Diocesan Investment Programme (DIP) from 2024-2027.

These strategic initiatives are delivered at a parish or deanery level through partnership, in a spirit of cooperation and reflect the importance of local community engagement.

5. Achievements and performance

5.1 Overview

Our most recent diocesan strategy has been in place since 2023 and builds on previous versions of it. There is a close link to the national church’s priorities and a strong emphasis on supporting initiatives that come from parish, benefice and deanery level.

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2024

5.2 Listening Findings

Throughout the events that formed the strategy we received many concerns in a variety of formats, but they broadly fell into the following categories:

  1. Finances (sustainability, giving, Parish Offer)

  2. Church Buildings (costs, use, maintenance)

  3. Congregations (numbers, age profile, young people)

  4. Clergy & Morale (tired, burnt out, some demoralised)

5.3 Themes

2024 Year of Faith event

The Diocese is determined to support the parish structure, keep churches open and maintain a Christian presence in every community but the listening events have led us to need to face the following realities (data sourced from annual Statistics for Mission or accounting records):

5.4 Key achievements

Serving our local communities:

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2024

Education:

----- Start of picture text -----
Hereford Academy pupils Year 6 Leavers’ service, Hereford Cathedral
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Safeguarding young people and vulnerable adults:

Mission and outreach:

Learning and leadership:

In 2024, we were delighted to commission:

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Petertide ordinations, Hereford Cathedral
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Supporting our 400 churches:

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2024

parenting for faith, funding for church buildings, valuing churchyards, establishing stronger links between schools and churches, ‘Living in Love & Faith’, racial and social justice conversations.

Caring for the environment:

----- Start of picture text -----
St Peter’s Church, Diddlebury
Financial stewardship:
❖ Monitored expenditure closely and kept the General Fund operating deficit before gains & losses
per the management accounts to £(0.66)m, £0.2m favourable to budget.
----- End of picture text -----

5.5 The Christian presence

Clergy form a central part in the life of churches in the Diocese. In 2024, an average of 59.6 (2023: 59.6) trained stipendiary clergy and 13.2 (2023 16.7) 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. The Diocese is also very grateful to the 29 self-supporting clergy who provide ministry across many of our communities. 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.

It remains challenging to maintain the full complement of clergy across the Diocese due to the declining pool at national level combined with a larger group of clergy retiring. This leads to some lengthy vacancies. Notwithstanding these headwinds, our clergy and lay teams continue to provide an active and vibrant Christian witness across the Diocese.

5.6 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:

St Peter’s Hub volunteers

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2024

6. Plans for future periods

6.1 2025 and beyond

Our Strategy

Our action plan sets out the specific tasks required to help us achieve our vision and goals but the following narrative indicates the range of activities that we expect to see over the course of this 5 year strategy.

The main premise of the plan accepts that the current model of ministry is not producing growth in numbers, partly because the role we are asking our clergy to do is unrealistic, and that there are not enough resources to cover what we currently have, let alone increase them. This means we need to stop trying to run faster with less.

Funding constraints mean there is a risk that we might need to reduce the number of stipendiary clergy over time, so the challenge is to secure long-term funding, whilst also increasing the number of self-supporting clergy and lay leaders and finding new ways of treasuring our church buildings – without laying additional burdens on small numbers of volunteers in our rural communities.

We will do this by:

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2024

do more mission and discipleship work and less work maintaining creaking parish structures and buildings management. We want to see a network of small groups training, praying, worshipping and learning together across the diocese.

6.2 Cultural Change

In a crisis there is a tendency to want to do and fix things. This often leads to structural or governance changes but fails to strike at the heart of the cultural transition that is required. We want to focus deeply on the following diocesan values :

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PRAYERFUL CHRISTLIKE ENGAGED
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Donkey being led through Much Wenlock church

After the ‘Year of Prayer’ in 2023, we organised a range of events in 2024 to support and encourage a ‘Year of Faith’ across the Diocese. In 2025, we turn to a ‘Year of Engagement’ as we look outwards across our communities.

Most of what we want to see changed is best achieved by encouraging and supporting local ministry to be effective. This is about making excellent appointments to lay and ordained roles before trusting and equipping them to do their job. The strategy is mostly about creating a framework to enable the local church to flourish but recognises that there are some things that will need to be stimulated centrally due to a lack of

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2024

existing capacity or resources. There will be a need to focus on smaller, intense projects in key locations rather than trying to do everything everywhere. There will also need to be ‘pruning of the vine’ to maintain the overall health of the structure.

6.3 Bold Outcomes by 2030

To be a sustainable Diocese we would expect to see the following ‘Bold Outcomes’ by 2030:

  1. (Growing) Many of our benefices having a least one congregation with a usual attendance of over 50 in rural areas or 100 in our market towns, with a minimum of 3% of the population attending a regular form of worship.

  2. (Discipleship & wellbeing) We want worshipping communities to reflect our values, to be taught to know clearly what they believe and to feel able to share their everyday faith with others. We want to love, equip and care for our lay and ordained leaders to feel supported to carry out their calling and mission to enable a Christian presence in every community.

  3. (Sustainable) We want at least 200 new voluntary or lay leaders to be trained and commissioned to support our stipendiary clergy to increase our ministry on offer. We want 75% of benefices to be sustainable, covering ministry costs and contributing towards others.

  4. (Younger) We want to see an increased focus on children, youth and families alongside existing ministry with specific mission centres established that can support the wider diocese leading to growing ‘intergenerational’ worshipping communities of all ages.

----- Start of picture text -----
Baby in Year of Faith event
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  1. (Buildings) We want to support our PCCs by creating a practical strategy to manage our buildings. We want to see many churches providing regular active worship. We want to honour and cherish our existing, smaller congregations by providing them with more regular non-stipendiary ministry but give permission for churches to close at a PCC’s request.

  2. We want to build on our network of 78 church schools by establishing close links between school, home and church. We will develop chaplaincy support in schools and colleges.

6.4 Going concern

The trustees have reviewed the charity's financial position, particularly in light of continuing cost of living pressures, and church attendance statistical trends in the Diocese of Hereford. The trustees recognise the financial constraints faced by many small church communities and hence do not expect substantial increases in the level of Parish Offer contributions to the ‘Common Fund’ in the short term. However, having reviewed HDBF’s projected cash flows and forecasts, its annual budget and forecasts, overall level of reserves and funding facilities, its systems of financial and risk management, it is the trustees’ opinion that the charity is well placed to manage financial and operational risks successfully.

Therefore, the trustees have a reasonable expectation that the charity has adequate resources to continue in operational existence for the foreseeable future, and that there are no material uncertainties over the charity’s financial viability in the short to medium term. Accordingly, the trustees consider that it is appropriate for the charity to continue to adopt the going concern basis of accounting in preparing the annual financial statements.

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Hereford Diocesan Board of Finance

Annual report For the year ended 31 December 2024

7. Financial review

7.1 Overview

Parish ministry and mission has continued to rebound from the disruption of the COVID-19 pandemic, although overall Parish Offer contributions have continued to decline slowly.

The overall deficit for the year before investment gains and losses across all funds was £1.2m (2023: a deficit of £1.3m). This deficit, after transfers, comprises £0.17m deficit (2023: £0.47m deficit) in unrestricted funds, £0.36m deficit in restricted funds and £0.63m deficit in the endowment fund. Trustees are confident that the DBF has sufficient resources to support its strategic goals, particularly as the Unapplied Total Return within the Diocesan Stipends Fund provides flexibility to support clergy stipends over the medium term.

Total income for the year increased 5.7% to £6.2m (2023: £5.9m). Parish Offer contributions generated 53% of income (2023: 56%). In some parishes, patterns of worship and attendance had still not recovered fully compared to pre-COVID pandemic levels, resulting in lower cash collections and fundraising. Parish Offer commitments for 2024 were £3.35m (2023: £3.38m), the collection rate was 98.7% (2023: 98.1%) with actual Parish Offer receipts nudging down to £3.30m (2023: £3.33m), although this represented a 3.7% (2023: 2.9%) decline in real terms.

Total expenditure for the year rose 2.8% to £7.43m compared to £7.20m in 2023. This was due primarily to a further increase in restricted funds expenditure of £0.63m (2023: £0.40m) representing increased spending on parochial mission and ministry. General fund expenditure reduced by £0.40m (2023: reduction of £0.21m).

Net investment gains amounted to £2.29m (2023: £0.97m net gain) and a revaluation of fixed assets, mostly clergy housing, resulted in a gain of £2.88m (2023: loss of £1.8m). The overall net movement in funds for 2024 after revaluation gains was a surplus of £3.9m (2023: loss of £(2.1)m). The net cash outflow from operating activities for the year was £(2.1)m (2023: net outflow of £(1.6)m).

The Unapplied Total Return (‘UTR’) element of the Endowment fund detailed in note 26 increased by £0.8m (2023: £0.2m decrease), resulting in a UTR of £16.1m as at 31 December 2024.

The reduction in Parish Offer contributions in both nominal and real terms compared with parish ministry costs highlights the continuing level of support required from the DBF:

----- Start of picture text -----
Resourcing ministry and mission
Details from note 11 (General, Pastoral and DSF Income Fund 2024 2023 2022 2021
£'000 £'000 £'000 £'000
Funded through
Parish Offer contributions 3,302 61% 3,328 63% 3,287 69% 3,256 65%
Support for stipends from DSF endowment fund 788 15% 514 10% 312 7% 263 5%
Other diocesan support 1,269 24% 1,452 27% 1,188 25% 1,513 30%
Total Resourcing ministry and mission 5,359 5,294 4,787 5,032
----- End of picture text -----

7.2 Comparison to budget

A key financial indicator for HDBF is actual performance compared to budget (focused on Unrestricted Fund activities). In November 2023, Diocesan Synod approved a 2024 operating budget deficit for the General, Pastoral and Diocesan Stipend funds of £(1.16)m (2023: £(0.9)m deficit) before investment gains and losses. The final management accounts result before year-end accounting adjustments and transfers was a deficit of £1.02m, a positive variance of £0.14m. In overall terms, this outcome was driven by higher levels of grants along with less stipends, reduced clergy pension, as well as lower education costs.

7.3 Significant property transactions

During the year, the DBF sold two houses resulting in proceeds of £1.3m (no gain arising on disposal). There was one property purchase for £0.7m. There were no other significant property transactions.

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Hereford Diocesan Board of Finance

For the year ended 31 December 2024

Annual report

7.4 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 £95.1m (2023: £91.1m), although it should be noted that £91.2m (2023: £88.3m) was 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 £4.0m (2023: £2.1m) in the year comprised the fixed asset unrealised revaluation gains of £2.8m, operating losses of £1.2m and unrealised net investment gains of £2.3m.

7.5 Review of the Statement of Financial Activities by fund

Unrestricted General fund

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

2024 2023 Variance
Income £'000 £'000 £'000
Parish Offer contributions 3,302
3,287
(25)
All other sources of income 1,552
1,624
(72)
Total income 4,854
4,951
(97)
Expenditure
Raising funds and charitable activities before pension
adjustments (5,124) (5,432) 308
Net gains on investments and disposals of fixed assets 61
94		 (33)
Gains on revaluations of fixed assets -
-
-
Transfers between funds (excluding pension movements):
(To)/from for investment (500) (250)
(250))
From HDBF Uniform Statutory Trust 60
65
(5)
Other 417 (70) 487
Total transfers between funds (excluding pension movements) (23) (255)
232
From General to DSF: reduction in pension deficit liability -
-		 -
Net movements in funds as per SoFA (232) (642) 410
General funds brought forward as at 1 January2023 2,526
3,168
(642)
General funds carried forward as at 31 December 2024 2,294
2,526
(232)

1DSF: Diocesan Stipends Fund

Designated funds

For a number of years, Trustees have transferred £0.25m annually into a designated ‘Strategic Mission Fund’ In order to support and encourage mission initiatives within the Diocese. This was increased to £0.5m for 2024. During 2024 £0.27m (2023: £0.34m) was applied to such mission projects leaving a year-end balance of

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Hereford Diocesan Board of Finance

Annual report For the year ended 31 December 2024

£0.47m. As at 31 December 2024, commitments for approved projects totalled £1.70m (2023: £1.27m), with future payments expected in the period 1 January 2023 to 31 December 2028.

Restricted funds

As set out in note 24, the HDBF administers several restricted funds. As at 31 December 2024, restricted funds totalled £67.1m (2023: £63.8m). 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 2024 the Pastoral Fund comprised fixed asset investments and net current assets totalling £6.5m (2023: £5.6m).

Endowment (Diocesan Stipends) fund

The Endowment fund recorded net income of £0.66m (2023 £0.39m) before investment gains. The fund is made up of two components: the Trust for Investment and the Unapplied Total Return. As at 31 December 2024, the balance on the Trust for Investment amounted to £9.2m (2023: £8.9m) and is not available for the general purposes of the HDBF. The balance on the Unapplied Total Return fund at the year-end was £16.1m (2023: £15.6m). The Unapplied Total Return fund is available to support clergy stipends over the long term.

7.6 Investment policy

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

HDBF’s policy is 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. The trustees seek to manage HDBF’s assets responsibly within an acceptable level of risk in order to resource the medium to long-term strategic goals of the Diocese of Hereford.

HDBF trustees actively review the charity’s property assets to determine if any are surplus to requirements for the provision of ministry or if any additional properties are required. Surplus properties are designated as properties held for investment. Properties held for investment may be rented out, sold or developed and then sold. Proceeds from sales may be used for diocesan activities or be re-invested in appropriate investment vehicles.

HDBF’s trustees have delegated some investment decisions to the Investment Advisory Group (‘IAG’), a subgroup of the Finance Committee. The IAG is advised by Rathbones and assesses the optimum strategy for investing funds taking into account the need for short term liquidity, availability of investment funds and fund managers, and risk.

The Trustees place the majority of investment funds with an authorised professional investment manager, authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. HDBF’s primary investment manager is Rathbone Investment Management Ltd (“Rathbones”). The trustees also invest with CCLA Investment Management Limited (“CCLA”), which is authorised and regulated by the Financial Conduct Authority and provides investment funds specifically designed for the Church of England.

Funds required for short term liquidity are held in a UK bank account or deposited with UK institutions with a minimum credit rating of A-, or invested in a diversified money market fund. Funds required for short term working capital are typically held as deposits with the Central Board of Finance administered by CCLA.

HDBF trustees pursue a responsible investment approach based on:

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Hereford Diocesan Board of Finance

For the year ended 31 December 2024

Annual report

In line with HDBF’s responsible investment approach, trustees seek to invest, and ensure all managers apply investment decisions, based on the guidelines of the Church of England’s Ethical Investment Advisory Group (‘EIAG’). Trustees also seek to ensure investment managers monitor companies’ ESG performance and invest in those entities that adopt high ESG standards that will underpin the long-term sustainability of their businesses.

HDBF’s policy for Rathbones is to prohibit direct investment in companies whose main business is in armaments, tobacco, gambling, alcoholic beverages, doorstep credit provision, and to prohibit direct investment in companies which derive more than 10% of their revenues from fossil fuel (oil, gas, and coal) production. This definition includes thermal and metallurgical coal.

CCLA’s portfolios already restrict direct investment in companies that generate more than 10% of their revenue from the extraction and/or refining of oil and gas. This is part of their approach to avoid investing in/profiting from companies that cause the most social and/or environmental harm. CCLA explain that this is a codification of their long-standing position that, due to the likelihood of legislation and regulation impacting negatively upon the business models of these businesses, they choose not to allocate clients’ capital to them.

HDBF’s 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, property, equities and fixed interest securities. The agricultural land is managed by professional land agents. Any surplus land with development potential is marketed for sale through the same land agents. The equities and fixed interest securities are managed by Rathbone Investment Management Ltd or CCLA Investment Management Ltd.

7.7 Investment performance

Overall performance

The total value of all investments (including DSF endowment fund net current assets) at 31 December 2024 was £33.8m (2023: £33.5m) and the total return on investment was +3.9% (2023: +2.2%).

Listed investments for each fund are held with Rathbones and CCLA. Rathbones have a mandate to generate a return from each portfolio of CPI+4%, with a balance between capital growth and income, managed with a moderately high risk profile (level 5 of 6). From 1 January 2019, the Main, Pastoral and Diocesan Stipends Fund portfolios were managed on a total return basis and UST fund portfolio managed on a total return basis from 1 January 2022. In the year to 31 December 2024, the combined Rathbones portfolios achieved a total return of +10.4% (2023: +5.8%) compared to the composite benchmark of 15.1% (2023: +11.7%). 2024 full year performance improved compared to 2023 and exceeded the CPI+4% target of +6.7%. Trustees monitor the relative performance of the portfolio over the long-term.

In 2022, trustees agreed to invest over time a sum not to exceed 10% of the value of the investment portfolio managed by Rathbones in listed private equity shares. The aim of this section of the portfolio is to achieve capital growth with a target return of CPI+5% over time. Trustees are willing to accept greater pricing volatility associated with private equity investments in return for the potential for higher returns over the long term.

Agricultural, commercial and industrial land and buildings (excluding school land) were valued at £8.0m at 31 December 2024 (2023: £7.8m). Rents receivable from glebe amounted to £123k (2023: £131k) – an income yield of 1.5% (2023: 1.7%).

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2024

7.8 Reserves policy

General unrestricted fund

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 (particularly paying Clergy Stipends and maintain Clergy property) 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’ policy is to maintain free reserves equivalent to at least four months’ operating expenditure in cash and readily liquid assets in the general unrestricted fund.

Based on 2025 budgeted expenditure, the level of free reserves that would be required under this policy totals £2.1m. As at 31 December 2024, the unrestricted reserves (excluding property) stood at £1.8m (2023: £1.9m). The free reserves figure excludes £1.0m of General fund freehold property and office equipment that could only be realised through asset disposal. It also excludes £67.0m of restricted fund and £25.3m endowment fund assets that are not available for the general purposes of the charity. Although the General fund yearend reserves figure of £1.8m is slightly below the minimum level indicated by the policy, the Directors consider this amount remains appropriate given 2025 budget and liquidity requirements. Management and trustees monitor reserve levels throughout the year and take remedial action as required.

Other funds

The HDBF maintain a number of discretionary, restricted and endowment funds. The balances are earmarked for the purposes outlined by the Trustees or Trust Deed. These are explained further in the Accounting Policy note 1.12.

7.9 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 2024 is indicated in note 14 to the financial statements.

7.10 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:

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 DSF Income (Stipends) fund to be used for clergy stipends, as detailed in note 26 to the accounts:

17

Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2024

The Trust for Investment funds as at 31 December 2024 were £9.2m, which remain ring-fenced to preserve the real value of the original permanent endowment.

7.11 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 is managed through a subcommittee of Bishop’s Council and the funds are included within restricted funds. The HDBE has no income/expenditure and the value of the net assets at 31 December 2024 was £nil (2023: £nil).

The Hereford Diocesan Board of Finance Educational Uniform Statutory Trusts Account (UST) is also a separate charity linked under a Charity Commission linking directive to the HDBF with effect from 1 January 2020. The UST is 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 2024 amounted to £84k (2023: £83k) and was attributable to investment income. Expenditure amounted to £13k (2023: £15k) and was attributable largely 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. In 2020 a loan was made from the UST to the Stottesdon School Trust, a Trust accounted for as a branch of HDBF. As at 31 December 2024, the loan stood at £128k (2023: £135k). This loan has been eliminated on consolidation of HDBF branches and repayments appear as a transfer between funds. A further transfer of £60k (2023: £65k) 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 £579k (2023: £259k).

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.

8. 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 residual risk after application of mitigating controls is considered high. These areas and the associated mitigation strategies are:

18

Hereford Diocesan Board of Finance

For the year ended 31 December 2024

Annual report

8.1 Parishes

Decline in church attendance Church attendance has not returned to pre-Covid levels. Our increasingly secular society, busy family lives, the breadth of community and sporting activities, and stretched clergy covering large rural benefices with poor transport links are among the many factors leading to fewer committed churchgoers. To address this risk the Diocese is:

Church buildings The Diocese recognises that caring for historic church buildings can impose a burden on small parishes, or become a distraction from the core mission of the church, and that church closures can reduce parish income and add to diocesan costs. Hence the Diocese is:

8.2 Clergy

Long term vacancies and difficulty in recruiting

clergy. Recognising that the national Church faces a reduction in the number of ordained ministers over the next few years due to the age profile of existing clergy and the difficulties in recruiting to rural ministry, the Diocese is exploring innovative approaches to deployment and continuing to invest in a full-time Director of Vocations and Ordinands to focus on helping (young) people to explore their call to stipendiary ministry, and encouraging all-age vocations in daily life and in church ministries;

2024 Petertide ordinations

19

Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2024

8.3 Finance

Whilst Parish Offer contributions from PCCs have remained relatively stable in cash terms over the past four years, they have declined in real terms whilst the cost of providing parish ministry and outreach has increased. In face of these pressures the Diocese has;

8.4 Leadership

The Diocese is aware that within a large geographic area with around 400 churches, there is a risk of poor communication and a disconnect within the Diocese. The HDBF is implementing a new communication strategy and policy to help mitigate this risk.

8.5 Education

The Diocese recruited a new Director of Education during 2024. Trustees consider that residual risks remain adequately controlled. However, Trustees are aware that any dip in performance of church schools or multi-academy trusts could result in some reputational or financial risk to the Diocese. The Diocesan Board of Education meets regularly to review strategy and ensure clear reporting and engagement with key stakeholders, including the Department for Education.

8.6 General geopolitical and economic uncertainties

The charity is not immune from the effects of short-term economic or stock market disruption which can depress investment returns. The charity’s discretionary fund manager may intervene to limit downside risks but the Directors remain confident that a well-balanced and diversified portfolio focussed on companies with competitive advantages, strong balance sheets, and low debt will be well-positioned to weather any near-term volatility.

9. Structure, governance and management

9.1 General

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.

9.2 Members and Trustees

The Trustees of the HDBF are Directors in accordance with the Companies Act 2006. The Directors are drawn from the Members or appointed by virtue of their office.

The 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 Diocesan Synod

20

Hereford Diocesan Board of Finance

Annual report For the year ended 31 December 2024

/ 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.

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.

9.3 Trustee training

On appointment all trustees complete an induction 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.

9.4 Code of governance

While the Trustees have not formally adopted the Charity Governance Code, the HDBF is committed at all times to maintaining the highest standards of honesty, openness and accountability. The HDBF's expectation on propriety and accountability is that Trustees, officers, line managers and employees will lead by example in ensuring adherence to rules, and that all procedures and practices are above reproach.

9.5 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 were established by the Bishop’s Council and include regular appraisals, remuneration and salary benchmarking and consequent recommendation of changes. Higher paid employees may have Director in their job title but are not Directors as defined by the Companies Act 2006.

9.6 Trustee remuneration

Trustees do not receive remuneration for their duties as Directors of the HDBF, although they may claim outof-pocket expenses necessarily incurred in carrying out their duties as a Director.

9.7 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.

9.8 Social media policy

The HDBF has adopted the Church of England’s social media guidelines. These recognise the use of social media to communicate quickly and with a wide range of individuals. However, care is needed to ensure reputations are protected and that while individuals may be acting in a personal capacity, views expressed could harm the reputation of the Diocese. The use of social media by HDBF is outlined in the External Communications Strategy (approved September 2023).

9.9 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

21

Hereford Diocesan Board of Finance

For the year ended 31 December 2024

Annual report

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 £5.6m at 31 December 2024 (2023: £5.5m), are available from the HDBF on request.

9.10 Related parties

9.10.1 General

Under FRS102 ‘related parties’ are defined as those who can directly influence management decisions. In addition to the Board of Trustees this includes senior managers and their close relatives. All these individuals are required to make annual declarations.

9.10.2 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.

9.10.3 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.

9.10.4 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 can contribute to decision-making within HDBF and at Diocesan Synod level through representations to those bodies and through the input of their Deanery Synods.

9.10.5 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 (CWPF). 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).

10. 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:

22

Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2024

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.

11. Internal controls

Boards as custodians have a duty to manage the organisation’s resources responsibly. Under charity and other law, the Directors are responsible for ensuring funds and assets are protected, properly used and applied, and accounted for.

The Directors ensure that there is an appropriate internal controls framework to ensure the protection of funds. This includes having an Anti-Fraud, Bribery, Corruption and Malpractice Policy (incorporating “Whistleblowing”).

The controls ensure the activities of the organisation remain lawful and trustees confirm, as required by The Economic Crime and Corporate Transparency Act, that the organisation has been formed for lawful purposes.

12. Statement of disclosure to the auditor

So far as the Directors are aware:

23

Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2024

13. Reference and administrative details

13.1 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

13.2 Directors

The following served as Directors and Trustees from 1 January 2024 to the date this report was approved (unless shown otherwise):

Ex officio Directors:

The Rt Revd R C Jackson, Bishop of Hereford – President Revd C J Rogers – Chair (until 19 November 2024) Mr A C Wood – Chair (from 19 November 2024, Vice Chair until then) The Very Revd S R D Brown Revd Preb W A Buck The Ven D C Chedzey The Ven F R Gibson

Mr D Clements

Elected Directors:

Revd S Fountain Mrs J C Beavan (until 19 November 2024) Revd G S Cole

Mr N A Sellar

Mr M Teague (until 19 November 2024)

Mrs A Kingsmill-Vellacott (from 19 November 2024) Revd C Moore - Vice Chair (from 19 November 2024) Mr C Houston (from 16 January 2025)

Nominated Directors:

Mr M R Hall (until 19 November 2024) Mrs M Shuttleworth Revd G P Smith Revd G Ward (until 19 November 2024) Miss E Hill (from 16 January 2025) Mr A Teale (from 16 January 2025)

13.3 Principal officers

Diocesan Secretary: Mr S R Pratley Diocesan Director of Education: Mr A T Teale (to April 2024) Diocesan Director of Education: Mrs G Martin (from April 2024) Director of Finance: Mr S G P Herbert

24

Hereford Diocesan Board of Finance Annual report For the year ended 31 December 2024 73.4 Member5 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 ol the Diocesan Synod. 73.5 Agents Solicitors / Registrar Gabbs Solicitors 14 Broad Street Hereford HR4 9AP Investment managers Rathbones Investment Management 8 Finsbury Circus London EC2M 7AZ CCLA Investment Management Limited One Angel Lane London EC4R 3AB Bankers Lloyds Bank PLC 8 High Town Hereford NR12AE Insurance agents Ecclesiastical Insurance Office PLC Beaufort House, 8runswick Road Gloucester GLI IIZ Glebe agents- agricultural Berrys Shiretown House 41-43 Broad Street Hereford HR4 9AR Independent auditor Crowe UK LLP Round Greens Road Oldbury West Midlands B69 2DG The Directors, annual report is approved on behalf ol the Board of Directors and the Strategic Report (included ereinl is app ved by the Board of Directors on 26 June 2025 and signed on its behalf by. Director 25

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 2024, 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:

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.

26

Hereford Diocesan Board of Finance

Independent auditor’s report

To the members of the Hereford Diocesan Board of Finance

Opinions on other matters prescribed by the Companies Act 2006

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

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:

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 safeguarding vulnerable beneficiaries, health and safety, and employment (including taxation), 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 and Church of England Measures.

27

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 and revenue recognition. Audit procedures performed by the engagement team included:

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

Use of our report

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

…………………………..………

Helen Blundell LLB FCA FCIE DChA (Senior Statutory Auditor) For and on behalf of Crowe UK LLP, Statutory Auditor

Round Greens Road, Oldbury, West Midlands B69 2DG

28

Hereford Diocesan Board of Finance

Statement of financial activities

For the year ended 31 December 2024

----- Start of picture text -----
Statement of financial activities
Unrestricted funds Restricted Endowment Total Total
Income and endowments from: General Designated funds funds 2024 2023
Note £'000 £'000 £'000 £'000 £'000 £'000
Donations
Parish Offer contributions 3 3,302 - - - 3,302 3,327
Archbishops' Council 4 551 - 208 - 759 736
Other donations 5 100 48 134 - 282 200
Charitable activities 6 414 - - - 414 444
Other trading income 7 452 - 3 - 455 399
Investment income 8 35 - 230 727 992 771
Other income 9 - - 32 - 32 22
Total income and endowments 4,854 48 607 727 6,236 5,899
Expenditure on:
Raising funds 10 136 - 84 68 288 218
Charitable activities: excl. pension deficit 11 4,988 269 1,888 - 7,145 6,978
Charitable activities: remeasurement of 32 - - - - - -
pension deficit liability
Total expenditure 5,124 269 1,972 68 7,433 7,196
Net (expenditure)/income before (270) (221) (1,365) 659 (1,197) (1,297)
investment gains
Net gains/(losses) on investments 61 - 888 1,336 2,285 973
Net (expenditure)/income (209) (221) (477) 1,995 1,088 (324)
Unapplied Total Returns (UTR) allocated to
income for stipends 1,288 (1,288)
Transfers between funds 23 (23) 340 (317) - - -
Other recognised gains
Gains on revaluation of fixed assets 15 - - 2,539 102 2,641 (1,768)
Loss on disposal - - - - - (5)
Gain on disposal of schools 36 - - 237 - 237 -
Net movement in funds (232) 119 3,270 809 3,966 (2,097)
Funds brought forward at 1 January 2,526 346 63,755 24,502 91,129 93,226
Funds carried forward at 31 December 2,294 465 67,025 25,311 95,095 91,129
----- End of picture text -----

All activities derive from continuing activities. The Notes on pages 33 to 65 form part of the financial statements.

29

Hereford Diocesan Board of Finance

Income and expenditure account

For the year ended 31 December 2024

----- Start of picture text -----
|||| |---|---|---| |2024|2023| |£'000|£'000| |Total income|5,509|5,445| |Total expenditure|(7,365)|(7,137)| |Operating deficit for the year|(1,856)|(1,692)| |Net gains on investments|949|398| |Net expenditure for the year|(907)|(1,294)| |Other comprehensive income:| |Revaluation of fixed assets|2,539|(1,709)| |Overage gains|237|-| |Loss on disposal of assets|-|(5)| |Net assets transferred from endowments|-|-| |Unapplied Total Return allocated to income for stipends|1,288|764| |Total comprehensive income|3,157|(2,244)|

----- End of picture text -----

Total comprehensive income

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.

30

Hereford Diocesan Board of Finance Balance sheet For the year ended 31 December 2024 Company Number.. 144467 Uniestricted fund5 Re51riited EndowrneDt Total 2024 Totsi G￿er01 Designal lund5 funds 2023 Not• £'oTr) Fixed as5ts Tangible a55ets I￿t￿ellt property Other inve5rments 15 1.006 56.644 502 9.158 66.304 59.763 8.546 24.847 93.156 57.768 8.278 23.838 89.884 17 8,044 14,738 24,895 18 881 1.887 70 70 Current a5spts Stocks iebtors. amounts fallih9 duè withifi one year )ebtors-. arnounts falling afteT one ye31 Cash at bank & in hand 19 20 245 70 46 361 425 470 326 1.275 465 2,536 1,374 717 396 465 '.Yeditovs: arnounts fallln9 duewrfhln one yeèt 27 16001 1491 19601 Net current assets/lliabilities1 407 395 721 416 1.939 1.245 Total assets les5 Current liabilities 2,294 465 67.025 95.095 91.129 '.reditors'. 4rnounts f•lling due4ftoi morthanon• ￿Ar 22 Net Assets 2,294 465 67,025 95.095 91,129 Funds Unrestricted income lund Design3ted funds Restricted income funds Endowment funds 24 24 2,294 1294 465 67.025 25.311 2.526 346 63.755 24.502 465 67.025 Total fund5 2,294 465 67,025 95.095 91.129 ThÈ financial statements were approved by the Directors of the Hereford Diocesan Board of Finance and 2Uthorised for issue on 26 June 2025 and signed on their behalf by. Andrew Director 31

Hereford Diocesan Board of Finance

Cash flow statement

For the year ended 31 December 2024

Cash flow statement
2024
2024		 2023
2023
£'000
£'000		 £'000
£'000
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 HDBF
Fixed asset investments
Proceeds from overage gains
Purchase of:
Tangible fixed assets for the use of HDBF
Fixed asset investments
Net cash provided by investing activities
Cash flows from financing activities
Loan repaid to HDBF
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
(Increase)/Decrease in stocks
Decrease/(Increase) in debtors
Increase in creditors
Net cash used in operating activities		 (2,091)
992
1,788
7,805
237
(699)
(6,870)
2,261
-
1,162
1,374
2,536
(1,197)
14
(992)
(386)
1
76
393
(2,091)		 (1,611)
771
303
9,436
-
(864)
(9,168)
(293)
4
(1,129)
2,503
1,374
(1,297)
11
(771)
(5)
1
772
(322)
(1,611)
1,374
(1,297)
11
(771)
(5)
1
772
(322)
(1,611)

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

32

Hereford Diocesan Board of Finance Notes to the accounts For the year ended 31 December 2024

1. Accounting policies

1.1 General information

Accounting convention and basis of accounting

The financial statements have been prepared in accordance with the Statement of Recommended Practice for Charities (Charities SORP) FRS 102), (second edition effective 1 January 2019), the Companies Act 2006, Charities Act 2011, and applicable UK accounting standards (FRS 102). 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 1.5, and fixed asset investments, which are included at their market value at the balance sheet date.

The financial statements are prepared on a going concern basis, as set out in section 6.4 on page 12.

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

The principal accounting policies and estimation techniques are as follows;

1.2 Income recognition

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.

1.3 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.

33

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2024

1.4 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.

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

34

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

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

1.5 Investment property

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.

1.6

Financial instruments

The HDBF generally has financial assets and financial liabilities of a kind that qualify as basic 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. 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.

1.7

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.

1.8 Debtors

Trade and other debtors are recognised at the settlement amount due. A specific provision is made for debts for which recoverability is in doubt.

1.9

Cash at bank and in hand

Cash at bank and in hand includes cash and short term highly liquid investments with short term maturity.

35

Hereford Diocesan Board of Finance Notes to the accounts For the year ended 31 December 2024

1.10 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.

1.11 Operating 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 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.

1.13 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.

1.14 Linked charities

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

36

Hereford Diocesan Board of Finance Notes to the accounts For the year ended 31 December 2024

1.15 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).

1.16 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.

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. Trustees regularly evaluate the estimates and underlying assumptions, with reference to professional agents and expert reports. Revisions to accounting estimates are recognised in the period in which the estimate is revised.

2.1 Critical judgements

Closed Schools

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 1.16.

37

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2024

Development land

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.

Investment properties

Investment properties are stated at Trustees’ valuation after taking appropriate advice.

Depreciation on clergy housing

The Trustees refer to local and regional valuation data together with reports from professional advisers and the trustees’ judgement is that the residual value of freehold properties is equivalent to the carrying value and hence depreciation would not be material.

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 and commercial properties are valued by the Directors by reference to a variety of land market surveys and property indexes as detailed in note 17.

3. Parish Offer contributions

----- Start of picture text -----
Unrestricted funds Restricted Endowment Total Total
General Designated funds funds 2024 2023
£'000 £'000 £'000 £'000 £'000 £'000
Current year Parish Offer committed 3,346 - - - 3,346 3,382
Shortfall in commitments (44) - - - (44) (64)
3,302 - - - 3,302 3,318
Received for previous years - - - - - 9
3,302 - - - 3,302 3,327
----- End of picture text -----

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 2024 represented 98.7% (2023: 98.1%) of the total commitments made. All Parish Offer receipts in 2023 related to the General fund.

4. Archbishops’ Council

4.
Archbishops’ Council
Restricted
Endowment
Total
Total
General
Designated
funds
funds
2024
2023
Unrestricted funds
Lowest Income Communities
funding (LInC)
Other grant funding		 £'000
£'000
£'000
£'000
£'000
£'000
431
-
-
-
431
427
-
120
-
208
-
328
309
551
-
208
-
759
736

The Lowest Income Communities (‘LInC’) funding supports stipendiary ministry in the most deprived areas of the Diocese. In 2023 LInC funding was attributable to the General fund, other grant funding was attributable £172k to the General fund, £37k to the Designated Fund and £100k to Restricted funds.

38

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

5. Other donations

----- Start of picture text -----
Unrestricted funds Restricted Endowment Total Total
General Designated funds funds 2024 2023
£'000 £'000 £'000 £'000 £'000 £'000
Trust income and grants 4 - 126 - 130 70
PCC partnership income - 48 8 - 56 41
Historic England grant 24 24
Benefact Trust (Ecclesiastical Ins.) 58 - - - 58 67
- share of profits -
Donations & sundry income 14 - - - 14 22
100 48 134 - 282 200
----- End of picture text -----

In 2023, £4k of Trust income and grants was attributable to the General fund, £16k to Designated funds, and £50k to Restricted funds. PCC partnership income in 2023 was attributable £14k to Designated funds and £7k to Restricted funds. All other donations in 2023 were attributable to the General fund.

6. Charitable activities

----- Start of picture text -----
Unrestricted funds Restricted Endowment Total Total
General Designated funds funds 2024 2023
£'000 £'000 £'000 £'000 £'000 £'000
Fees for occasional offices 320 - - - 320 376
Income from educational activities 94 - - - 94 68
414 - - - 414 444
----- End of picture text -----

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

7. Other trading income

----- Start of picture text -----
Unrestricted funds Restricted Endowment Total Total
General Designated funds funds 2024 2023
£'000 £'000 £'000 £'000 £'000 £'000
Rental income 452 - 3 - 455 398
Other trading income (Solar Panel) - - - - - 1
452 - 3 - 455 399
----- End of picture text -----

In 2023, £380k of the rental income was attributable to the General fund and £19k to Restricted funds. All of the other trading income in 2023 was attributable to Restricted funds.

8. Investment income

----- Start of picture text -----
Unrestricted funds Restricted Endowment Total Total
General Designated funds funds 2024 2023
£'000 £'000 £'000 £'000 £'000 £'000
Rents receivable - - 17 123 140 148
Interest & dividends receivable 35 - 213 604 852 623
35 - 230 727 992 771
----- End of picture text -----

39

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

In 2023 £17k of the rents receivable were attributable to Restricted funds, with the remainder attributable to Endowment funds. £88k of the interest & dividends receivable in 2023 were attributable to the General fund, £212k to Restricted funds and £323k to Endowment funds.

9. Other income

----- Start of picture text -----
Unrestricted funds Restricted Endowment Total Total
General Designated funds funds 2024 2023
£'000 £'000 £'000 £'000 £'000 £'000
Redundant church costs recovered - - 32 - 32 22
Gain on disposal of fixed assets - - - - - -
- - 32 - 32 22
----- End of picture text -----

All other income in 2023 was attributable to Restricted funds.

10. Fund raising costs

10.1 Fund raising costs 2024

----- Start of picture text -----
Unrestricted funds Restricted Endowment Total
General Designated funds funds 2024
£'000 £'000 £'000 £'000 £'000
Land & property agents' fees 108 - 2 - 110
Glebe land maintenance & development 4 - - 2 6
ty rental & other trading costs - - 44 - 44
Investment portfolio mgt fees - - 38 66 104
112 84 68 264
Support costs (see note 12) 24 - - - 24
136 - 84 68 288
----- End of picture text -----

10.2 Fund raising costs 2023

10.2
Fund raising costs 2023
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
2023
£'000
£'000
£'000
£'000
£'000
84
-
1
-
85
5
-
-
-
5
-
-
4
-
4
13
-
32
59
104
Unrestricted funds
102
37
59
198
20
-
-
-
20
122
-
37
59
218

40

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2024

11. Charitable activities

11.1 Charitable activities excluding remeasurement of pension deficit liability 2024

11.
Charitable activities
11.1
Charitable activities excluding		 remeasurement of pension deficit liability 2024
Resourcing ministry and mission:
Stipends and national insurance
Clergy pension contributions
Clergy Housing
Clergy moves & interregnums
Support for ministry
Mission and ministry projects
Allocated support costs
Contributions to Archbishops' Council
Education
Parochial support
Grants and donations
Allocated support costs
Total expenditure on charitable		 Restricted
Endowment
Total
General Designated
funds
funds
2024
£'000
£'000
£'000
£'000
£'000
1,253
-
1,352
-
2,605
494
-
13
-
507
878
-
157
-
1,035
172
-
-
-
172
627
-
-
-
627
25
269
317
-
611
489
-
-
-
489
Unrestricted funds
3,938
269
1,839
-
6,046
409
-
-
-
409
250
-
5
-
255
169
-
44
-
213
5
-
-
-
5
217
-
-
-
217
4,988
269
1,888
-
7,145
activities excluding remeasurement of pension deficit liability

11.2 Charitable activities excluding remeasurement of pension deficit liability 2023

11.2
Charitable activities excluding		 remeasurement of pension deficit liability 2023
Resourcing ministry and mission:
Stipends and national insurance
Clergy pension contributions
Clergy Housing
Clergy moves & interregnums
Support for ministry
Mission and ministry projects
Allocated support costs
Contributions to Archbishops' Council
Education
Parochial support
Grants and donations
Allocated support costs
Total expenditure on charitable		 Restricted
Endowment
Total
General Designated
funds
funds
2023
£'000
£'000
£'000
£'000
£'000
1,715
-
901
-
2,616
529
-
-
-
529
829
-
215
-
1,044
202
-
-
-
202
616
-
112
-
728
16
338
42
-
396
407
-
-
-
407
Unrestricted funds
4,314
338
1,270
-
5,922
435
-
-
-
435
234
3
2
-
239
136
-
55
-
191
5
-
-
-
5
186
-
-
-
186
5,310
341
1,327
-
6,978
activities excluding remeasurement of pension deficit liability

41

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

12. Analysis of support costs

----- Start of picture text -----
Unrestricted funds Restricted Endowment Total Total
General Designated funds funds 2024 2023
£'000 £'000 £'000 £'000 £'000 £'000
Salary and employment costs 430 - - - 430 365
Property costs 92 - - - 92 59
Office costs 72 - 1 - 73 68
Legal and professional fees 102 - - - 102 88
General Synod representation 8 - - - 8 9
Governance costs 25 - - - 25 24
729 - 1 - 730 613
----- End of picture text -----

All support costs in 2023 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 2024

----- Start of picture text -----
Activities Grant
Undertaken Funding of Support Total
Directly Activities Costs 2024
£'000 £'000 £'000 £'000
Raising funds: 232 - 24 256
Charitable activities: excl. pension deficit:
Contributions to Archbishops' Council - 409 5 414
Resourcing ministry and mission 5,355 201 490 6,046
Education 250 5 109 364
Parochial support 153 60 102 315
Other grants and donations 1 4 - 5
Charitable activities: pension deficit - - - -
5,991 679 730 7,400
----- End of picture text -----

13.2 Analysis 2023

13.2
Analysis 2023
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
2023
£'000
£'000
£'000
£'000
198
-
20
218
-
435
5
440
5,231
283
408
5,922
237
2
91
330
150
41
89
280
1
4
-
5
-
-
-
-
5,817
765
613
7,195

42

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2024

14. Analysis of grants made

14.1 Analysis 2024

----- Start of picture text -----
Total
Number Individuals Institutions 2024
£'000 £'000 £'000
From unrestricted funds - general fund:
National church responsibilities:
Contributions to Archbishops' Council 4 - 409 409
Grants to clergy 69 103 - 103
Support for ordinands in training 4 19 - 19
PCCs for church inspection fees 88 - 60 60
Other grants 1 - 4 4
166 122 473 595
From unrestricted funds - designated funds:
To support mission and ministry 17 - 57 57
From restricted funds:
To support mission and ministry 5 - 22 22
To support school building projects 1 - 5 5
189 122 557 679
----- End of picture text -----

14.2 Analysis 2023

From unrestricted funds:
National church responsibilities:
Contributions to Archbishops' Council
Grants to clergy
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
2023
£'000
£'000
£'000
5
-
435
435
109
143
-
143
4
33
-
33
68
-
41
41
1
-
4
4
187
176
480
656
25
-
92
92
18
1
14
15
1
-
2
2
231
177
588
765

43

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2024

15. Tangible fixed assets

----- Start of picture text -----
Leasehold
Freehold property Plant &
properties improvements equipment Total
£'000 £'000 £'000 £'000
Cost or valuation
At 1 January 2024 57,743 53 116 57,912
Additions 680 - 19 699
Disposals (1,332) - - (1,332)
Transfers - - - -
Revaluation 2,641 - - 2,641
At 31 December 2024 59,732 53 135 59,920
Accumulated depreciation
At 1 January 2024 - 53 91 144
Charge for the year - - 13 13
Disposals - - - -
At 31 December 2024 - 53 104 157
Net book value
At 1 January 2024 57,743 - 25 57,768
At 31 December 2024 59,732 - 31 59,763
----- End of picture text -----

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 2024, the Board was responsible for seven 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 was also responsible for St Barnabas Church, Hereford, and further details about this site are provided in note 34.

The Board and benefice houses were valued by the Board as at 31 December 2024 by taking advice from the employed Diocesan Property Surveyor (MCIOB). On 31 December 2024 there was a housing stock of 117 properties (2023: 118).

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 2024 (2023: £nil).

44

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

17. Investments held as Fixed Assets – Investment property

----- Start of picture text -----
As at Change As at
1 January in Market 31 December
2024 Additions Disposals Transfers Value 2024
£'000 £'000 £'000 £'000 £'000 £'000
Endowment funds
Land 7,356 23 (72) - 294 7,601
Buildings 443 - - - - 443
7,799 23 (72) - 294 8,044
Restricted funds
Buildings 479 - - - 23 502
Total 8,278 23 (72) - 317 8,546
----- End of picture text -----

Endowment fund buildings at the year-end consists of one commercial property, which has been informally valued by the Directors as at 31 December 2024.

Restricted fund buildings consist of houses held as investment properties. These have been valued by the Diocesan Surveyor (MCIOB) as at 31 December 20243.

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 2024. A discount was applied to 1986 Agricultural Holdings Act tenancies of 42.5% and Farm Business Tenancies of 10%. This constitutes an average yield of 1.47% (2023 1.3%). Other amenity tenancies/licences were discounted at 12.5% and vacant land discounted at 2.5%. 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

----- Start of picture text -----
As at Change As at
1 January in Market 31 December
2024 Additions Disposals Transfers Value 2024
£'000 £'000 £'000 £'000 £'000 £'000
Listed investments
Unrestricted general fund 829 191 (200) - 61 881
Designated funds 70 - - - - 70
Restricted funds 9,636 2,739 (4,082) - 865 9,158
Endowment funds 13,303 3,917 (3,524) - 1,042 14,738
23,838 6,847 (7,806) - 1,968 24,847
Equity share loan
Restricted fund - UST - - - - - -
Total 23,838 6,847 (7,806) - 1,968 24,847
----- End of picture text -----

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

The historical cost of listed investments held as at 31 December 2024 was £20.6m (2023: £21.65m).

45

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

19. Debtors: due within one year

19. Debtors:due within one year
2024 2023
£'000 £'000
Other debtors 120
197
Prepayments & accrued income 141
212
Loans to PCCs1 100
16
361
425
20. Debtors:due after one year
2024 2023
£'000 £'000
Loans to PCCs1 -
11

1 A loan to Stottesdon PCC of £25,000 was made in September 2022 and was fully repaid by 29 February 2024. A bridging loan of £100,000 was extended during the autumn of 2024 to Doddington PCC, repayable in full by 31 August 2025. At 31 December 2024, the balance outstanding was £100,000 (2023: £26,953 Stottesdon PCC). Loans to PCCs are chargeable with interest at the Bank of England base rate plus 1.5%.

21. Creditors: amounts falling due within one year

----- Start of picture text -----
2024 2023
£'000 £'000
Other creditors and accruals 958 535
Taxation & Social Security 2 32
Pension deficit payments liability - -
960 567
----- End of picture text -----

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

There were no amounts falling due after more than one year in either 2024 or 2023.

46

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

23. Analysis of transfers between funds

----- Start of picture text -----
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 the Strategic (500) 410 90 - -
Mission Fund to support mission projects
m Designated Fund to General Fund 70 (70) - - -
reversing 2023 transfer
Transfers to the General fund for 347 (347) - -
support of property costs
From Stottesdon School House Trust to UST 6 - -
in respect of loan (6) - -
(23) 340 (317) - -
m DSF Fund to DSF Income (Stipends) Fund - - 1,288 (1,288) -
respect of stipends in the year (see note 26)
(23) 340 971 (1,288) -
----- End of picture text -----

Comparatives for 2023 can be found in note 39 to these accounts.

24. Summary of assets by fund

Unrestricted funds
General Fund
Designated funds:
Total Return Mission funds		 Tangible
Current
Net
Fixed assets
Investments
Assets
Creditors
Assets
£'000
£'000
£'000
£'000
£'000
1,006
881
717
(310)
2,294
-
70
395
-
465
1,006
951
1,112
(310)
2,759
Restricted funds
Pastoral Fund
Ordinands in Training Fund
Strategic Capacity Fund (SCF)
Other grant funds
Uniform Statutory Trust
Education Trusts
Endowment funds
Diocesan Stipends Fund
Total funds		 56,644
6,306
213
(8)
63,155
-
-
20
-
20
-
-
20
-
20
-
-
79
(14)
65
-
2,879
941
(579)
3,241
-
475
49
-
524
56,644
9,660
1,322
(601)
67,025
2,113
22,782
465
(49)
25,311
59,763
33,393
2,899
(960)
95,095

Comparatives for 2023 can be found in note 38 to these accounts.

47

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

25. Analysis of movements in funds

Balance at
1 Jan 2024
Income
Expenditure
Transfers
between
funds
Net gains
(losses) on
assets
Balance at
31 Dec 2024
£'000
£'000
£'000
£'000
£'000
£'000
Unrestricted funds
General reserve
Designated reserves:
Total Return Mission funds
Total unrestricted funds
Restricted funds
Pastoral Fund
DSF Income (stipends) Fund
Mission and Ministry Fund
Ordinands in Training Fund
Strategic Ministry Fund - curates		 2,526
4,854
(5,124)
(23)
61
2,294
346
48
(268)
339
-
465
2,872
4,902
(5,392)
316
61
2,759
60,373
182
(249)
(347)
3,196
63,155
-
-
(1,288)
1,288
-
-
4
-
-
-
-
4
42
12
(34)
-
-
20
-
-
-
-
-
-
Strategic Development Fund 32
-
-
(32)
-
-
Strategic Capacity Fund
DIP (Youth Hubs)
Other grant funds
Education Funds
Uniform Statutory Trust
Total restricted funds		 2
31
(72)
59
-
20
-
18
(56)
38
-
-
24
265
(254)
26
-
61
505
15
(8)
(6)
18
524
2,773
84
(12)
(54)
450
3,241
63,755
607
(1,973)
972
3,664
67,025
Endowment funds
Diocesan Stipends Fund
- Investment Fund
- Unapplied Total Return
Total endowment funds
Total movement in funds		 8,920
-
-
312
-
9,232
15,582
727
(68)
(1,600)
1,438
16,079
24,502
727
(68)
(1,288)
1,438
25,311
91,129
6,236
(7,433)
-
5,163
95,095

Comparatives for 2023 can be found in note 40 to these accounts.

48

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

26. Endowment Fund – Total Return

----- Start of picture text -----
Investment Unapplied Total
Fund Total Return Endowment
£'000 £'000 £'000
At 1 January 2024 8,920 15,582 24,502
Movements in the reporting period:
Dividends and interest - 604 604
Glebe land rent - 99 99
Glebe commercial property rental income - 24 24
Realised and unrealised gains and (losses) - 1,438 1,438
Less:
Investment management costs - (65) (65)
Glebe land development costs - (3) (3)
Indexation using CPIH: 4.2% 312 (312) -
312 1,785 2,097
Unapplied Total Return allocated to incomebe used o stipends:
- Equating to dividend, interest and rents - (727) (727)
- Equating to 0.5% of equity investments - (61) (61)
- Additional annual transfer - (500) (500)
- (1,288) (1,288)
Net movements in report period: 312 497 809
At 31 December 2024 9,232 16,079 25,311
----- End of picture text -----

The trustees adopted a Total Return accounting approach under the Diocesan Stipend Funds (Amendment) Measure 2016 with effect from 1 January 2019. Comparatives for 2023 can be found in note 41.

49

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

27. Net income for the year

Net income for the year is stated after charging:

----- Start of picture text -----
2024 2023
£'000 £'000
Depreciation of tangible fixed assets 13 10
Rentals charged under operating leases 16 16
Amounts payable to external auditors for:
- statutory audit 24 24
- tax advisory services - -
----- End of picture text -----

28. Financial commitments – operating leases

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

----- Start of picture text -----
2024 2023
£'000 £'000
Minimum lease payments payable:
Within one year of the balance sheet date 2 2
Within two to five years of the balance sheet date 5 7
----- End of picture text -----

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

----- Start of picture text -----
2024 2023
£'000 £'000
Minimum lease payments receivable
Within one year of the balance sheet date 14 24
Within two to five years of the balance sheet date - 14
----- End of picture text -----

29. Post balance sheet events and contingent liabilities

There were no post balance sheet events or contingent liabilities as at 31 December 2024.

30. Staff costs

Staff costs were as follows:

Gross salaries and wages
Social Security costs
Pension contributions		 2024
2023
£'000
£'000
1,357
1,201
130
115
124
126
1,611
1,442

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.

50

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

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

----- Start of picture text -----
2024 2023
Number Number Number Number
Full-time Part-time Full-time Part-time
Support ministers / staff 3.8 11.0 6.0 10.2
Education 2.7 1.0 2.0 2.0
Diocesan officers 2.0 2.0 2.0 2.0
Diocesan administration staff 5.0 6.0 3.7 4.7
Grant funded Intergenerational Missioners 1.0 - 2.0 -
Grant funded support staff 3.8 6.1 1.0 3.9
Grant funded deanery staff - 1.0
18.3 26.1 16.7 23.8
----- End of picture text -----

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

Support ministers / staff
Diocesan administration staff
Diocesan officers
Total Diocese funded positions
Education
Grant supported Intergenerational Missioners
Grant funded support staff
Grant funded deanery staff
Total Grant funded positions		 2024
2023
Number
Number
11.3
11.8
8.7
6.6
3.7
3.7
23.7
22.1
3.5
4.2
1.0
2.0
5.9
3.5
1.3
0.7
8.2
6.2
35.4
32.5

These staff numbers do not include the Archdeacon of Ludlow, 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:

2023 2022
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 2024 they were:

Diocesan Secretary Director of Finance Director of Education

Mr S R Pratley Mr S G P Herbert Mr A Teale (to April 2024)

51

Hereford Diocesan Board of Finance Notes to the accounts For the year ended 31 December 2024

Director of Education Mrs G Martin (from April 2024)

Remuneration (including employer’s National Insurance) and pensions for these employees amounted to £267,060 (2023: £229,821).

30.2 Trustees’ emoluments

No Trustee received any remuneration for services as Trustee. Seven Trustees received travelling and out-ofpocket expenses totalling £4,916 (2023: £3,091 2 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 Bishop and the stipend of the Archdeacon of Ludlow (ex officio trustees). Parochial clergy, the Archdeacon of Hereford 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. No trustees received grants during 2024 (2023: Two trustees received grants totalling £2,507).

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

Stipend Housing/
housing
allowance
The Ven D Chedzey Yes Yes
Revd Preb W A Buck Yes Yes
Revd G Cole Yes Yes
Revd G Smith Yes Yes

The Board also met the stipends, pensions and social security costs of an average of 73 (2023: 80) 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		 2024
2023
£'000
£'000
2,362
2,292
212
201
-
523
549
-
-
3,097
3,042

The stipends of the Diocesan Bishop, and Archdeacon of Ludlow, were paid for and funded by the Church Commissioners.

52

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

31. Related parties

31.1 Diocese of Hereford Multi-Academy Trust (DHMAT)

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

During the year, invoices net of VAT totalling £37,458 (2023: £10,800) for partnership costs were raised from HDBF to DHMAT. The balance outstanding at the end of the year was £nil (2023: £nil).

During the year, invoices net of VAT totalling £nil (2023: £65,784) were raised from DHMAT to HDBF for salary and administration costs. The balance outstanding at the year-end was £nil (2023: £nil).

31.2 Diocese of Hereford Educational Trust (DHET)

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:

31.3 Diocesan Multi-Academy Trust

During 2024 two new Diocesan Multi-Academy Trust were formed (Orchard and SCEAT) in line with the updated Diocesan Academisation Strategy. They are related parties by virtue of appointing the following members;

The company members appoint some of the directors of the Academy Trust. The Trust will become a party of the Diocesan partnership agreement.

31.4 Hereford Cathedral

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 Dean of Hereford Cathedral is also an ex-officio Director of HDBF. During the year, invoices net of VAT totalling £nil were raised from HDBF to the Cathedral for safeguarding costs (2023: £495). The balance outstanding at the year-end was £nil (2023: £389). During the year, invoices net of VAT totalling £nil (2023: £7,635) were raised from the Cathedral to HDBF for salary and administration costs. The balance at the year-end was £nil (2023: £nil).

31.5 Hereford Historic Churches Trust

The Ven D Chedzey (an HDBF Trustee) is also Vice Chair of Trustees of the Hereford Historic Churches Trust. During 2024, HDBF received a grant from the Hereford Historic Churches Trust amounting to £5,000 (2023: £5,000). The balance at the year-end was £nil (2023: £nil).

31.6 LEAF (Locally Encouraging All to Flourish)

The Ven D Chedzey (an HDBF Trustee) is also a Trustee of LEAF – Locally Encouraging All to Flourish. During 2024, HDBF made a grant to LEAF – Locally Encouraging All to Flourish for £10,000 (2023: £5,217). The balance at the year-end was £nil (2023: £nil).

31.7 Halo Leisure

N Sellar (an HDBF Trustee) was a Trustees of Halo Leisure Services Ltd until August 2023. During 2024, HDBF paid £791 (2023: £956) to Halo Leisure Services in relation to room hire. The balance at the year-end was £nil (2023: £nil).

53

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

32. Pension commitments

32.1 Church of England Funded Pension Scheme (CEFPS)

Hereford DBF participates in the Church of England Funded Pensions Scheme for stipendiary clergy, a defined benefit pension scheme, and as at 31 December 2024 had 77 members in the scheme (2023: 81). 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.

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 Church of England Funded Pensions 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. 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, which were £523k in 2023 (2023: £565k), plus any figures arising from contributions in respect of the Scheme’s deficit (see below). The 2021 valuation showed the Scheme to be fully funded and as such in 2024, following the valuation results being agreed, the deficit contributions paid were £0 (2023: £0k).

A valuation of the Scheme is carried out once every three years. The most recent Scheme valuation completed was carried out at as 31 December 2021. The 2021 valuation revealed a surplus of £560m (HDBF share based on covenant £5.8m), based on assets of £2,720m and a funding target of £2,160m, assessed using the following assumptions:

Following finalisation of the 31 December 2021 valuation, deficit contributions ceased with effect from 1 January 2023, since the Scheme was fully funded.

The deficit recovery contributions under the recovery plan in force at each 31 December were as follows:

% ofpensionable stipends
31 December 2021 7.1% payable from January 2021 to December 2022
31 December 2022 Nil
31 December 2023 Nil
31 December 2024 Nil

An interim reduction to deficit contributions to 3.2% of pensionable stipends was made with effect from April 2022 and remained in place until December 2022.

54

Hereford Diocesan Board of Finance

For the year ended 31 December 2024

Notes to the accounts

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. However, as there are no agreed deficit recovery payments from 1 January 2023 onwards, the balance sheet liability as at 31 December 2023 and 31 December 2024 is nil. The movement in the balance sheet liability over 2023 and over 2024 is set out in the table below.

----- Start of picture text -----
2024 2023
£'000 £'000
Balance sheet liability as at 1 January - -
Deficit contribution paid - -
Interest cost (recognised in the SOFA) - -
Remaining change to the balance sheet liability - -
(recognised in SoFA)
Balance sheet liability as at 31 December - -
----- End of picture text -----*

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 failed Responsible Body’s pension liabilities.

32.2 Church of England Worker Pension Fund (CWPF) Scheme

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

CWPF has two sections:

  1. the Defined Benefits Scheme

  2. the Pension Builder Scheme, which has two subsections;

  3. a. a deferred annuity section known as Pension Builder Classic, and,

  4. b. a cash balance section known as Pension Builder 2014.

Pension Builder Scheme

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

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

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

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

The scheme is considered to be a multi-employer scheme as described in Section 28 of FRS 102. This is because it is not possible to attribute the Pension Builder Scheme’s assets and liabilities to specific employers and means that contributions are accounted for as if the Scheme were a defined contribution

55

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

scheme. The pensions costs charged to the SoFA in the year are the contributions payable (2024: £69k, 2023: £63k).

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

For the Pension Builder Classic section, the 2022 valuation revealed a surplus of £34.8m on the ongoing assumptions used. At the most recent annual review effective 1 January 2025, the Board chose to grant a discretionary bonus of 6.7% to both pensions not yet in payment and pensions in payment in respect of service prior to April 1997; and a bonus on pensions in payment in respect of post April 2006 service so that the pension increase was 2.7% (where usually it would be calculated based on inflation up to 2.5%). This followed improvements in the funding position over 2024. There is no requirement for deficit payments at the current time.

The next valuation is due as at 31 December 2025.

For the Pension Builder 2014 section, the 2022 valuation revealed a surplus of £8.5m on the ongoing assumptions used. There is no requirement for deficit payments at the current time.

The legal structure of the Scheme is such that if another employer fails, 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 2024, HDBF had 36 active members (2023: 31) in the Pension Builder 2014. Contributions outstanding at the year end amounted to £nil (2023: £nil).

32.3 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 £28,646 (2023: £26,630) and were charged to the Income and Expenditure Account. Contributions outstanding at the year-end amounted to £1,547 (2023: £nil).

32.4 Hereford Diocesan Board of Finance: Teachers’ Pension Scheme

The Hereford Diocesan Board of Finance participates in the Teachers’ Pension Scheme (“TPS”) (England and Wales).

The TPS is a statutory, contributory, defined benefit scheme, governed by the Teachers’ Pension Scheme Regulations 2014.

The scheme is an unfunded scheme to which both the member and employee makes contributions, as a percentage of salary – these contributions are credited to the Exchequer. Retirement and other pension benefits are paid by public funds provided by Parliament.

Valuation of the Teachers’ Pension Scheme

The Government Actuary, using normal actuarial principles, conducts a formal actuarial review of the TPS in accordance with the Public Service Pensions (Valuations and Employer Cost Cap) Directions 2014 published by HM Treasury every 4 years. The aim of the review is to ensure scheme costs are recognised and managed appropriately and the review specifies the level of future contributions.

Actuarial scheme valuations are dependent on assumptions about the value of future costs, design of benefits and many other factors. The latest actuarial valuation of the TPS was carried out as at 31 March 2020. The valuation report was published by the Department for Education on 27 October 2023, with the SCAPE rate,

56

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

set by HMT, applying a notional investment return based on 1.7% above the rate of CPI. The key element of the valuation outcome are:

The result of this valuation was implemented from 1 April 2024. The next valuation result is due to be implemented from 1 April 2028.

The Hereford DBF paid pension costs to TPS in the year amounting to £15,431 (2023 - £nil).

A copy of the most recent actuarial valuation report for the TPS is available from the Government website[1] .

Under the definitions set out in FRS 102, the TPS is an unfunded multi-employer pension scheme. The Diocese is unable to identify its share of the underlying assets and liabilities of the plan. Accordingly, the HDBF has taken advantage of the exemption in FRS 102 and has accounted for its contributions to the scheme as if it were a defined contribution scheme. The Diocese has set out above the information available on the scheme.

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 Strategic Mission Fund

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.

1 https://www.gov.uk/government/publications/2020-valuation-teachers-pension-scheme-england-and-wales

57

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2024

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:

Diocesan Stipends Income Fund

The DSF income fund is used to defray the costs of clergy stipends and other expenditure permitted by the Diocesan Stipends Fund.

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:

  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

58

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2024

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 Church of England’s 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.

Strategic Capacity Fund

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

Diocesan Investment Programme (“DIP”) Funding

The Archbishops’ Council awarded HDBF a grant of £457,630 in March 2024 for a pilot hub and spoke model of Youth Ministry project in Bishop’s Castle and Leominster over 3 years 2024-2027. Although the project started in July 2024, the Hubs were not operational until October 2024.

Other Grant Funds

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

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.

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.

59

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2024

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. From June 2006, the parish of All Saints no longer required the building for their parish mission and the property vested in the HDBF. From July 2017, the property was leased to two charitable organisations: Vennture, and Oasis Church Hereford. In 2022, following discussions with the lessees, DBF trustees decided to put the site on the open market for sale. The DBF received multiple expressions of interest for the site and signed a ‘heads of terms’ agreement with one bidder. As the Church Commissioners remain responsible for the small consecrated portion of the site, they undertook a consultation process seeking public feedback on the proposed sale of the site. After considering the representations received, the Commissioners concluded that the proposed sale could proceed. The HDBF and the purchaser signed a conditional contract for sale on 25 April 2024, which is subject to a successful planning application for future use of the site. In the meantime, the Directors have valued the property at the purchaser’s bid price less fees, and this is figure included within the freehold properties total shown in note 15.

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. A S.554 Order was made in 2024 and the £101k proceeds have been brought into the DBF as part of the UST fund.

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 held within the Custodian trustee accounts ultimately flow to the DBF as part of the UST fund via a S.554 order effective 23 May 2023. Hope Primary School was sold in 2024 and the share of proceeds totalling £136k were received in 2024 and now form part of the UST fund.

60

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

37. Prior year comparative SoFA: year ended 31 December 2023

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)
Unapplied Total Returns allocated to income for
stipends
Transfers between funds
Other recognised gains (losses)
Gains/(losses) on revaluation
of fixed assets
Loss on disposal
Overage gains
Net movement in funds
Funds brought forward at 1 January 2022
Total funds at 31 December 2022		 Restricted
Endowment
Total funds
General
Designated
funds
funds
2023
£'000
£'000
£'000
£'000
£'000
3,327
-
-
-
3,327
599
37
100
-
736
113
30
57
-
200
444
-
-
-
444
380
-
19
-
399
88
-
229
454
771
-
-
22
-
22
Unrestricted funds
4,951
67
427
454
5,899
122
-
37
59
218
5,310
341
1,327
-
6,978
-
-
-
-
-
5,432
341
1,364
59
7,196
(481)
(274)
(937)
395
(1,297)
94
-
304
575
973
(387)
(274)
(633)
970
(324)
764
(764)
-
(255)
274
(19)
-
-
-
-
(1,709)
(59)
(1,768)
(5)
-
(5)
-
-
-
(642)
-
(1,602)
147
(2,097)
3,168
346
65,357
24,355
93,226
2,526
346
63,755
24,502
91,129

61

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

38. Prior year: Summary of assets by fund as at 31 December 2023

----- Start of picture text -----
Tangible Current Net
Fixed assets Investments Assets Creditors Assets
£'000 £'000 £'000 £'000 £'000
Unrestricted funds
General fund 999 829 939 (241) 2,526
Designated funds:
Total Return Mission funds - 70 276 - 346
999 899 1,215 (241) 2,872
Restricted funds
Pastoral Fund 54,759 7,063 (1,437) (12) 60,373
Mission and Ministry Fund - - 4 - 4
Strategic Ministry Fund - curates - - - - -
Ordinands in Training Fund - - 42 - 42
Strategic Development Fund - - 32 - 32
Strategic Capacity Fund - - 2 - 2
Other grant funds - - 31 (7) 24
Uniform Statutory Trust - 2,594 439 (260) 2,773
Education funds - 458 47 - 505
54,759 10,115 (840) (279) 63,755
Endowment funds
Diocesan stipends fund 2,010 21,102 1,437 (47) 24,502
Total funds 57,768 32,116 1,812 (567) 91,129
----- End of picture text -----

62

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

39. Prior year: Analysis of transfers between funds: year ended 31 December 2023

----- Start of picture text -----
Unrestricted funds Restricted Endowment Total
General Designated funds funds funds
£'000 £'000 £'000 £'000 £'000
Uniform Statutory Trust to unrestricted 65 - (65) - -
General Fund to support education
From General fund to Endowment fund - - - - -
for reduction in pension deficit liability
From Endowment fund to General fund - - - - -
for stipends under Total Return (see note 26)
From General fund to the Strategic (250) 204 46 - -
Mission Fund to support mission projects
From Total Return Mission fund to the - - - - -
Intergenerational Missioner fund in
respect of SDF match-funding requirements
Transfers to the General fund for (70) 70 - - -
Designated Grants
From Pastoral fund to General fund - - -
in respect of St Barnabas flat
From the Brampton Abbotts fund to the - - - -
Pastoral fund to clear fund surplus
From UST to Stottesdon School House - 6 6
trust in respect of loan (6) (6)
(255) 274 (19) - -
From DSF Income fund to General Fund in
-
respect of stipends in the year (see note 26) 764 (764)
(255) 274 745 (764) -
----- End of picture text -----

63

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

40. Prior year: Analysis of movements in funds: year ended 31 December 2023

----- Start of picture text -----
Net gains
Balance at Transfers (losses) on Balance at
1 Jan 2023 Income Expenditure between funds assets 31 Dec 2023
£'000 £'000 £'000 £'000 £'000 £'000
Unrestricted funds
General reserve 3,168 4,951 (5,432) (255) 94 2,526
Designated reserves:
Total Return Mission funds 346 67 (341) 274 - 346
Total unrestricted funds 3,514 5,018 (5,773) 19 94 2,872
Restricted funds
Pastoral Fund 61,977 174 (296) - (1,482) 60,373
DSF Income (stipends) Fund - - (764) 764 - -
-
Mission and Ministry Fund 4 - - - - 4
Ordinands in Training Fund 61 85 (104) - - 42
Strategic Ministry Fund - curates - - - - - -
Strategic Development Fund 57 - (25) - - 32
Strategic Capacity FundOther grant funds 70(1) 684 (133)(28) 2719 - 242
Education Funds 511 13 - (6) (13) 505
Uniform Statutory Trust 2,678 83 (14) (59) 85 2,773
Total restricted funds 65,357 427 (1,364) 745 (1,410) 63,755
Endowment funds
Diocesan Stipends Fund
- Investment Fund 8,560 - - 360 - 8,920
- Unapplied Total Return 15,795 454 (59) (1,124) 516 15,582
Total endowment funds 24,355 454 (59) (764) 516 24,502
Total movement in funds 93,226 5,899 (7,196) - (800) 91,129
----- End of picture text -----

64

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2024

41. Prior year: Endowment Fund – Total Return: year ended 31 December 2023

At 1 January 2023
Movements in the reporting period:
Dividends and interest
Glebe land rent
Glebe commercial property rental income
Trust income
Realised and unrealised gains and (losses)
Less:
Investment management costs
Indexation using CPIH: 4.2%
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 2023		 Investment
Fund
Unapplied
Total Return
Total
Endowment
£'000
£'000
£'000
8,560
15,795
24,355
-
323
323
-
107
107
-
24
24
-
-
-
-
516
516
-
(59)
(59)
-
360
(360)
-
360
551
911
-
(454)
(454)
-
(60)
(60)
-
(250)
(250)
-
(764)
(764)
360
(213)
147
8,920
15,582
24,502

65