2025-12-31-accounts

Hereford Diocesan Board of Finance

Annual Report & Accounts

2025

Company limited by guarantee Company number 144467 Charity number 249685

Hereford Diocesan Board of Finance

Report & Accounts for the year ended 31 December 2025

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. Activities and outcomes .................................................................................................................... 6 6. Plans for future periods ................................................................................................................. 11 7. Financial review .................................................................................................................................. 14 8. Principal risks & uncertainties .................................................................................................... 21 9. Structure, governance and management .............................................................................. 23 10. Directors’ responsibilities .............................................................................................................. 25 11. Internal controls ................................................................................................................................ 26 12. Statement of disclosure to the auditor .................................................................................. 26 13. Reference and administrative details ...................................................................................... 26 Independent auditor’s report .............................................................................................................. 28 Statement of financial activities ........................................................................................................ 31 Income and expenditure account ...................................................................................................... 32 Balance sheet ............................................................................................................................................... 33 Cash flow statement ................................................................................................................................ 34 Notes to the accounts ............................................................................................................................. 35

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Hereford Diocesan Board of Finance

Foreword by the Bishop of Hereford For the year ended 31 December 2025

1. Foreword by the Bishop of Hereford

Dear Friends,

Welcome to the financial report and accounts for 2025.

As I write this, we have just begun our Year of Celebration to mark the 1350[th] anniversary of the founding of the diocese by Putta in the year 676! We are looking forward to several diocesan events and many more organised by local parishes. Our last year of engagement was very positive. We had outside speakers to encourage us in our mission and local projects and activities as varied as the churches that sponsored them. Some of the activities from previous ‘years of’ continued. Prayer of course remains the foundation and faith exploration through events like our spiritual question times. I am so grateful to the diocesan team for all they did to organise these events. My hope for all these years is that they contribute to a raising of the spiritual temperature. Without that growth in confidence, they remain just activities, no more social than those organised by any other community group. In the power of the Spirit, even the smallest thing can have a huge impact.

The financial landscape remains a challenging one. 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. We are beginning to see some exciting fruit from our Youth Hubs in Leominster, Bishops Castle, and Bromyard.

At the end of 2025 our Diocesan Synod passed a follow on to our original motion in 2024 requesting the Church Commissioners increase their grants to dioceses for parochial ministry substantially. Sadly, the original motion requesting a redistribution of capital funds was not successful at General Synod. However, the amended motion, passed by a large majority expresses the will of General Synod to consider the needs of ‘ordinary’ parish ministry in their disbursements, rather than just through large project-based activities. I use the word ordinary advisedly here. Our parishes are never ordinary. They are led by dedicated, hardworking clergy and passionate lay leaders who care deeply about their churches, wanting them to flourish. I still hope we will see some movement on national funding in the next triennium to recognise this. We want to multiply ministry, by retaining as high a number of frontline clergy as we can and calling out vocations to various lay ministries. The future will be one of increasing partnership.

I believe strongly that God provides for what he calls us to do. I have faith that he will continue to do that in 2026.

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 2025

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 2025.

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:

• supporting financially or otherwise, training for ministry, clerical and lay;

• the maintenance and support of clergy and other persons connected with ministry or the work of the Church;

• the provision of pensions for ministers and their dependants in accordance with and subject to the Clergy Pensions Measures of 1961 and 2018.

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). HDBF also acts as custodian Trustee of several smaller Trusts – refer to section 7.12 for further details.

The HDBF has the following principal statutory responsibilities: -

• to hold, manage and deal with Diocesan glebe land for the benefit of the diocesan stipends fund in accordance with the Church Property Measure 2018, and to comply with the extant provisions of the Endowments and Glebe Measure 1976;

• to repair benefice houses as the Diocesan Parsonage Board under the Repair of Benefice Buildings Measure 1972;

• to manage the investments and act as custodian of assets relating to church schools under the Diocesan Boards of Education Measure 2021;

• to act as custodian of permanent endowment and real property assets relating to trusts held by Incumbents and Archdeacons and by Parochial Church Councils as Diocesan Authority under the Incumbents and Churchwardens (Trusts) Measure 1964 and the Parochial Church Councils (Powers) Measure 1956.

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 2025

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 60,000. The other sizeable settlements are Bridgnorth, Ledbury, Leominster, Ludlow, and Rosson-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

Whitchurch: St Dubricius

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 73 benefices, 344 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

For the year ended 31 December 2025

Annual report

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:

• welcoming new members and to go deeper in faith with all members ( faith/discipleship )

• expanding the number of, supporting and equipping both clergy and lay leaders ( leadership/teams )

• our congregational profile becoming younger

• ( youth/intergenerational mission )

• sustainable finance through giving and asset management ( finance )

• a clear future for every church building ( buildings )

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

Baptism at Holmer

• (i) Youth / Intergenerational Mission Hubs , each connected to at least one of our growing, healthy churches and resourcing others through training and support.

• (ii) Rural Church Missioners who will work 50% as incumbents of rural parishes and 50% to support smaller rural churches to develop clear missional plans for the future of every church community and building in the ministry area. These won’t be ‘new posts’ but recruited into existing full-time incumbencies with a renewed focus.

• (iii) A Funeral Care and bereavement service that will provide a central system for booking funerals and working with incumbents of rural parishes to develop teams which offer excellent funeral ministry.

• (iv) Ministry Area Co-ordinators

(v) 200+ lay and ordained self-supporting / volunteer leaders.

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. Activities and Outcomes

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 2025

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

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):

• Our Sunday attendance figures have declined by 30% between 2019-2023;

• Including the Cathedral there are only fourteen churches that usually get a congregation of over 50 on Sundays, whilst 250 churches have fewer than 20 people attending;

• There are very few children at most acts of worship on a Sunday: the mission statistics suggest about 400 young people are in churches across the diocese each week;

• Most of the children and young people we are in contact with are through schools and, to a lesser extent, outreach events like Messy Church;

• Outside urban centres the average Anglican is 72;

• There is an excessive reliance on clergy in many places;

• Parish Offer has not kept pace with inflation, declining by over 30% in real terms since 2019;

• The Hereford Diocesan Board of Finance is likely to have a structural operating deficit of c. £1.5 million a year for the foreseeable future unless it can grow income and reduce expenditure. Many parishes and benefices are not self-supporting in the sense that they are unable to cover the ministry costs of our stipendiary clergy and curates, with the HDBF providing the balance, supported by national church funding for lowest income communities; only 19 out of 73 benefices currently cover the cost of their vicar, and 14 benefices cover less than half;

• HDBF has seen an increase in the value of its Unapplied Total Return fund of the Diocesan Stipends (endowment) Fund to £6.4m since adopting Total Return accounting at the start of 2019. The HDBF has drawn down an average of just under £0.8m over the last 5 years from the DSF to support clergy stipends. This level of utilisation has been possible through one-off gains from the disposal of glebe land and other investments;

• There was consistent feedback from parish consultations that we have too many church buildings and often lack the capacity, energy and finances to realise their potential fully for local communities.

5.4 Key achievements

Serving our local communities – public benefit:

Social

The Diocese:

• Provided regular services, Alpha and discipleship courses, Messy Church, Synods, conferences and many other church-led activities using a hybrid in person / online approach. In addition: o 464 baptisms (2024: 426)

• 706 church funerals (2024: 734) and 247 services at crematoria (2024: 207)

• o 270 weddings (2024: 292)

• The usual array of civic services and festivals such as Christmas and Easter

• 54 faculty petitions (2024: 75) – designed to preserve the heritage of our 400 churches, 93% of which are listed

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2025

• Actively supported the running of foodbanks, FoodShare project in St Martin’s South Wye and contributed to many other social needs by supporting or providing accommodation, new housing, parish facilities, charitable activities, cafés, repair shops, post offices, community events

• Supported the effective running of 78 C of E schools

• Provided pastoral care and developing youth activities through a range of Youth Hubs in Bishop’s Castle, Leominster, and Bromyard

Food Bank, Leominster

• Provision of school chaplains in three Herefordshire secondary schools

• Provided support for vulnerable and isolated people, in particular asylum seekers and families displaced by the war in Ukraine in partnership with the local authority

• Administered grants and support for parishes (minor repairs, parish giving, net zero carbon initiatives, Historic England etc).

Environmental

In line with the national Church, the Diocese is working towards achieving Net Zero Carbon (‘NZC’) by 2030 and to support this we have:

• Retrofitted one vicarage in Hereford to be carbon neutral as one of the national Church’s demonstrator projects.

• Supported churches to become ‘demonstrator churches’

• Administered the net zero ‘Quick Wins’ grant

• Continued our programme of home improvements to reduce carbon/increase energy efficiency

• Reviewed all property to take a long-term view of houses to invest in or divest

• Maintained our commitment to ‘greening’ our investment portfolio

• Reviewed the use of our glebe land for carbon off-setting.

The NZC steering group continues to develop and drive forward a differentiated approach to support the ‘net zero by 2030’ ambition

New halo infrared heaters at Linton St Mary

within the Diocese (2020 CO2 footprint estimated to be 5,500 tonnes), with key focus areas being clergy housing and Voluntary Aided schools.

We continue to work in partnership with Gloucester and Worcester Dioceses to promote and coordinate NZC activity and knowledge-sharing.

Governance

We keep our governance under constant review, specifically in 2025 we have:

• Supported our Diocesan Multi-Academy Trusts to appoint Members, Directors and Local Governing Body members

• Supported our Church of England schools to appoint head teachers and school governors

• Replaced our DBS checking service following a data breach at the previous provider

• Implemented a new DBS checking procedure to support the new provider (‘thirtyone:eight’)

• Strengthened our own data security systems and testing

• Reviewed our privacy statements and carried out retention procedures

• Reviewed all our boards for their skills and diversity, recommending changes where appropriate.

• Carried out our annual review of conflicts of interests, fraud reporting and serious incidents

• Introduced new memorandums of understanding between safeguarding panels and trustees, including new incident reporting templates

• ❖ Continued to review all behaviours of staff, partners and trustees in line with our values, maintaining the highest standard of business ethics.

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2025

Education:

• ❖ Supported the creation of two further church multi-academy trusts and a large expansion to the Diocese of Hereford Multi-Academy Trust

• ❖ Strengthen the relationship between the Board of Education and the Board of Finance

• ❖ Established a resource sharing arrangement with the Diocese of Worcester for our DDE role

• ❖ Refined our strategy for helping schools to consider becoming academies.

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Hereford Academy pupils Year 6 Leavers’ service, Hereford Cathedral
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Safeguarding young people and vulnerable adults:

The team received and managed 93 new concerns during 2025. These concerns span a range of safeguarding issues and have been managed in accordance with Church of England policy and statutory guidance.

	Training provided:Course	Deliverymethod	Total number trained
	Safeguarding training	Face-to-face	128
	Permission to Officiate	Face-to-face	49
	Foundation	Online: 389	583
		Face-to-face: 194
	Basic Awareness	Online: 358	546
		Face-to-face: 188
	Domestic Abuse Awareness	Online: 255	311
		Face-to-face: 56
	Parish SafeguardingOfficer Induction	Face-to-face	68
		Total	1,685
Mission and outreach:
	❖ Supported our pioneer mission priest in Craven Arms
	❖ Improved our two new youth hubs in Leominster and Bishop’s Castle
	❖ Appointed all three ‘Rural Church Missioners’ and funded		mission co-ordinators
	❖ Commenced our Hereford City Funeral & Bereavement Care project
	❖ Developed new youth and schools chaplaincy projects in Bromyard and Ross-on-Wye
	❖ Continued to fund two chaplains at the Hereford Academy and Bishop of Hereford Bluecoat School
	❖ Provided ‘small grant’ funding to a range of parish-led projects
Learning and leadership:
	In 2025, we were delighted to commission:
	❖ 4 local ministers – now 13 in total

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2025

• ❖ 57 local worship leaders – now 150 in total

• ❖ 32 local parish volunteers – now 66 in total

• ❖ 4 local missioners – now 20 in total

• ❖ 50+ lay ministers in process – 249 total already in local ministry roles overall

• ❖ Bishop Richard continued to record a short video each week, providing biblical wisdom, insights and encouragement for everyone.

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Service for Readers and Funerals Ministers,
Hereford Cathedral
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Supporting our 400 churches:

• ❖ Offered a wide range of training courses and guidance to our churches, including safeguarding, quinquennial inspections, modern slavery, church tourism, encouraging giving and generosity, parenting for faith, funding for church buildings, valuing churchyards, establishing stronger links between schools and churches, racial and social justice conversations.

Financial stewardship:

• ❖ Monitored expenditure closely and kept the General Fund operating deficit before gains & losses per the management accounts to £(0.65)m, £0.2m favourable to budget.

• ❖ Created a medium-term financial strategy with accompanying 5-year financial forecast

• ❖ Met with all deaneries, in person, to discuss and hear concerns about resources in the church during autumn ‘roadshows’.

2025 Finance roadshow in Peterchurch

5.5 The Christian presence

Clergy form a central part in the life of churches in the Diocese. In 2025, an average of 58.9 (2024: 59.6) trained stipendiary clergy and 10.8 (2024:13.2) curates were deployed in the Diocese; supporting them in their ministry, training and continued development is a key priority for HDBF and represents by far its largest financial commitment. The Diocese is also very grateful to the 30 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:

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2025

• providing facilities for public worship, pastoral care, and spiritual, moral and intellectual development, both for members and for anyone who wishes to benefit from what the Church offers;

• ➢ The Diocese supports some 400 buildings in 344 parishes providing regular opportunities for public worship. As well as acts of worship, weddings and funerals, many of our buildings are accessed during the week for community activities.

• promoting Christian values, and service by members of local Anglican churches in and to their communities, for the benefit of individuals and society as a whole;

• Butty Van, Enchmarsh Farm

• community engagement, resourcing education (including our network of 78 schools) and supporting those in need both spiritually and physically.

6. Plans for future periods

6.1 2026 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:

• Developing a creative deployment plan that enables us to create a plan to operate the diocese on roughly 60 stipendiary clergy, supported by a great number of retired, self supporting and lay

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2025

ministers or priests. This is driven by recruitment and financial constraints. Trustees will produce the creative plan but consider even more radical solutions for ensuring effective, sustainable deployment in the event that the financial picture worsens.

• At the same time, we will increase the support and training to new and existing clergy making sure they are equipped for the future role , regularly review their work and given manageable job roles.

• We plan to submit our ‘phase two’ bid to the Church Commissioners later in 2026. We trust this will secure additional investment to enable us to expand our youth hub pilot project to two or three new areas using match funding from the Benefact Trust and our own mission funds. This should also unlock some time-limited support from the national Church and enable us to refine our approach to allocating Lowest Income Community Funding.

• We are planning to train more self-supporting ministers and lay leaders. This aims to increase the level of the ministry on offer in parishes, not reduce it. We want to release our excellent clergy to 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.

• 2026 will see us with a full complement of Rural Church Missioners who will be supported by mission co-ordinators. We see these as important roles in helping local parish churches to consider their long term future.

• HDBF has run an average annual operating deficit of £1.2m in the years 2021-2025, which is why we need to explore ways of reducing our cost base. In 2026 we will introduce a ‘Guided Offer’ for parishes and re-visit our zero-based budgeting approach to finances. We will continue our highly developed asset management strategy to increase the value of our portfolio through creative property development, investigating new uses for land, optimising our portfolio of vicarages and houses and seeking the best investment advice. This is not about ‘selling the family silver’; it is about turning the silver into something even more valuable. In our central teams we will continue to scrutinise our cost base, find new ways to do things and set the tone for an engaged, generous, prayerful and creative diocese.

• Our asset development approach has boosted our Diocesan Stipends (endowment) Fund enabling us to release more to defray the cost of clergy stipends. This has also enabled trustees to release £500,000 a year into our Diocesan Stipends (income) Fund which has in turn released funds to invest into strategic mission initiatives, new projects specifically designed to stimulate growth and match fund other funders. This targeted investment is aimed at new initiatives to grow churches and congregations in our larger population areas with the expectation that growth brings new energy, skills and money into the system that can be shared elsewhere. To date, this has funded work through the intergenerational missioners, youth work through St Peter’s and St James’ Hereford and in West Hereford, and chaplains at the two main Hereford City secondary schools, a pioneer church plant in Craven Arms, and supporting the deaneries of Kington & Weobley and Abbeydore to release the existing clergy by providing administrative assistance.

• Finally, we will consider new ways to keep our church buildings open . There is no desire or intention to see multiple closures, but it is challenging to continue to heat, light, insure and maintain over 400 buildings, with this responsibility often resting on just a few faithful members. We must find a new model and we will prioritise resources into investigating some of the emerging ideas coming forward from other dioceses and the national Church.

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Hereford Diocesan Board of Finance

Annual report For the year ended 31 December 2025

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 :

PRAYERFUL CHRISTLIKE ENGAGED

Bishop’s staff team with Racial Justice Unit colleagues

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 had a ‘Year of Engagement’ and 2026 is a ‘Year of Celebration’ marking 1350 years since the founding of the See of Hereford under Bishop Putta in 676.

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 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.

Holy Trinity: Let’s Sing Holiday Club

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2025

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.

7. Financial review

7.1 Overview

The operating environment continues to be challenging. The disruption to Parish Offer income that was experienced during the COVID 19 years has not recovered. There seem to be ongoing uncertainties and this has led to a ‘flat lining’ of Parish Offer contributions, while at the same time costs have been increasing, often above the headline inflation rate.

2025 saw another year of a significant operating deficit before investment gains and losses. (It was 2019 when an operating surplus before investment gains was last generated.) The deficit before investment gains in 2025 was £1.72m (2024: a deficit of £1.54m restated). This deficit, before transfers, comprises £0.95m deficit (2024: £0.84m deficit) in unrestricted funds, £1.11m deficit in restricted funds and a £0.34m surplus in the endowment fund. Notwithstanding this overall operating deficit, trustees remain 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 1.6% to £6.0m (2024: £5.9m restated). Parish Offer contributions generated 55% of income (2024: 56% restated). 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 contributions were £3.30m, unchanged from 2024, representing a collection rate of 98.7% against a commitment of £3.34m (2024: £3.35m), although this represented a 3.5% (2024: 3.9%) decline in real terms.

Total expenditure for the year rose 3.6% to £7.70m compared to £7.43m in 2024. This was due primarily to an increase in restricted funds expenditure of £0.26m (2024: an increase of £0.26m) representing further spending on parochial mission and ministry, particularly on the Youth Hub project. The increase in general fund expenditure in 2025 was limited to +£0.03m or +0.5% (2024: decrease of £0.03m).

Net investment gains totalled £1.19m (2024: £2.29m net gain) and a revaluation of fixed assets, mostly clergy housing, resulted in a gain of £1.10m (2024: gain of £3.23m restated). The overall net movement in funds for 2025 after revaluation gains was a surplus of £0.57m (2024: net increase of £3.97m restated). The net cash outflow from operating activities for the year was £(1.77)m (2024: net outflow of £(2.10)m).

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2025

The Unapplied Total Return (‘UTR’) element of the Endowment fund detailed in note 26 decreased by £0.1m (2024: £0.5m increase, restated), resulting in a UTR of £16.0m as at 31 December 2025.

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:

Resourcing Parish ministry & support Total costs from note 11 (ex allocated support)
	2025 2024 2023 2022 2021 £'m £'m £'m £'m £'m
Funded through
Parish Offer contributions Support for stipends from DSF endowment fund Other diocesan support	3.30 56% 3.30 59% 3.33 62% 3.29 64% 3.26 67% 1.04 18% 0.94 17% 0.76 14% 0.74 14% 0.66 14% 1.52 26% 1.31 24% 1.27 24% 1.08 21% 0.95 19%
	5.86	5.56	5.36	5.11 4.86

7.2 Comparison to budget

A key financial indicator for HDBF is actual performance compared to budget (focused on Unrestricted Fund activities). In November 2024, Diocesan Synod approved a 2025 operating budget deficit for the General, Pastoral and Diocesan Stipend funds of £(1.73)m (2024: £(1.16)m deficit) before investment gains and losses. The final management accounts result before year-end accounting adjustments and transfers was a deficit of £1.72m, essentially in line with budget.

7.3 Prior Year Adjustments

An internal review during 2025 identified that the 2024 Accounts as reported had overstated investment income by £346k, and understated gains on disposal by £346k. The effect of these errors netted to zero, leaving total funds unchanged at £95.1m as at 31 December 2024. The comparative figures for these headings have been restated to reflect the correct position at 31 December 2024.

The table below indicates the effect of these over and under statements, with accompanying transfers:

Description	General £’000	Designated £’000	Restricted £’000	Endowment £’000	Total 2024 £’000	Total 2023 £’000
Funds b/fwd	2,294	465	67,025	25,311	95,095	91,129
Adjustments:
Income	-	-	-	(346)	(346)	-
Expenditure	346	-	(346)	-	-	-
Netgains	-	-	346	-	346	-
Transfers	(346)	-	346 (346)	346	-	-
Funds c/fwd	2,294	465	67,025	25,311	95,095	91,129

The transfers line above reflects two separate elements: first, the movement from DSF Endowment to DSF Stipends Income (restricted reserve) and second, a Restricted Fund to General Fund transfer.

7.4 Significant property transactions

During the year, the DBF sold one house resulting in proceeds of £0.57m (no gain arising on disposal). There was one purchase, the remaining 50% share of a PCC property for £0.2m. There were no other significant property transactions.

7.5 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.

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2025

Net assets at the balance sheet date totalled £95.7 (2024: £95.1m), although it should be noted that £93.3m (2024: £92.3m) 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 net increase in net assets of £0.6m in the year (2024: net increase of £4.0m) comprised the fixed asset unrealised revaluation gains of £1.1m, unrealised net investment gains of £1.2m, largely being offset by operating losses of £1.7m.

7.6 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.

	Restated
	2025 2024 Variance
Income	£'000 £'000 £'000
Parish Offer contributions	3,299 3,302 (3)
All other sources of income	1,469 1,552 (83)
Total income	4,768 4,854 (86)
Expenditure
Raising funds and charitable activities before pension adjustments	(5,420) (5,471) 51
Net gains on investments and disposals of fixed assets	22 61 (39)
Transfers between funds (excluding pension movements):
(To)/from for investment	(200) (500) 300
From HDBF Uniform Statutory Trust	65 60 5
From Designated	- 70 (70)
Other	500 694 (194)
Total transfers between funds (excluding pension movements)	365 324 41
From General to DSF: reduction in pension deficit liability	- - -
Net movements in funds as per SoFA	(265) (232) (33)
General funds brought forward as at 1 January2025	2,294 2,526 (232)
General funds carried forward as at 31 December 2025	2,029 2,294 (265)

Designated funds

From 2020-2023, trustees 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 £0.50m for 2024, although reducing back to £0.25m in 2025 as the next phases of the Youth Hub Project have been delayed. During 2025 £0.14m (2024: £0.27m) was applied to such mission projects leaving a year-end balance of £0.33m. As at 31 December 2025, commitments for approved projects totalled £1.40m (2024: £1.70m), with future payments expected between 1 January 2026 to 31 December 2030.

Restricted funds

As set out in note 24, the HDBF administers several restricted funds. As at 31 December 2025, restricted funds totalled £67.8m (2024: £67.0m). 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.

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Hereford Diocesan Board of Finance

Annual report For the year ended 31 December 2025

Endowment (Diocesan Stipends) fund

The Endowment fund recorded net income of £0.34m (2024: £0.31m, restated) before investment gains. The fund is made up of two components: the Trust for Investment and the Unapplied Total Return. As at 31 December 2025, the balance on the Trust for Investment amounted to £9.6m (2024: £9.2m) and is required to be ringfenced to preserve the real value of the underlying endowment. The balance on the Unapplied Total Return fund at the year-end was £16.0m (2024: £16.1m). The Unapplied Total Return element is available to support clergy stipends over the long term.

7.7 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 to review regularly the assets of each fund for which it is responsible, in relation to the purposes of each fund, and to identify appropriate investment vehicles. The trustees seek to manage HDBF’s assets responsibly within an acceptable level of risk 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, advised by an external investment manager, assesses the optimum strategy for investing funds considering the need for short term liquidity, suitability of particular asset classes relative to their intrinsic 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:

• Environmental, social and governance (‘ESG’) and ethical investment criteria – this includes ensuring that investments are held in companies which have high standards of corporate governance and act in a responsible way towards stakeholders;

• long-term responsibilities – Directors are aware of their long-term responsibilities in respect of endowed funds and as a result follow a correspondingly prudent approach to investment decisions.

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

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Hereford Diocesan Board of Finance

For the year ended 31 December 2025

Annual report

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.

After an extended period of weaker returns relative to benchmarks and competitors, Trustees decided during the first quarter of 2026 to sell the DBF’s remaining holdings in CCLA’s CBF Investment Fund. All remaining equity and fixed interest securities are managed by Rathbone Investment Management Ltd.

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.

7.8 Investment performance

Overall performance

The total value of all investments (including DSF endowment fund net current assets) at 31 December 2025 was £33.6m (2024: £33.4m) and the total return on investment was +1.3% (2024: +2.8% restated).

Listed investments for each fund were held with Rathbones and CCLA. Rathbones had a mandate during 2025 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 January 2026, Trustees adopted a revised strategic asset allocation for Rathbones with an accompanying increase in the target long-term return of CPI+5%. 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 2025, the combined Rathbones portfolios achieved a total return of +7.2% (2024: +8.8% restated) compared to the composite benchmark of +15.6% (2024: +15.1%). This relative underperformance was due to a range of factors including underweight positions in ‘value’ stocks and in US mega-cap technology companies, along with a lack of exposure to sectors that had performed well but did not align with Rathbones’ investment philosophy, for example retail trading, space exploration, high beta cyclicals (high volatility linked to economic expansion or downturn periods), and European defence manufacturing – this part of the market had performed strongly due to geopolitical uncertainties. Nevertheless, 2025 full year performance almost achieved the CPI+4% target of +7.4%. 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, which attracts a Rathbones risk level 6, is to achieve capital growth with a target return of CPI+5% over time. In 2025, private equity segment of the portfolio achieved a total return of +11.9%. 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. Following a £0.5m injection of funds, as at 31 December 2025 £1.9m was invested in private equity, representing 8.2% of the investment portfolio.

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2025

Agricultural, commercial and industrial land and buildings (excluding school land) were valued at £8.1m at 31 December 2025 (2024: £8.0m). The £0.1m increase was due primarily to a land purchase. Rents receivable from glebe amounted to £0.15m (2024: £0.12m) – an income yield of 1.9% (2024: 1.5%).

The underlying property investments reduced in value.

7.9 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 maintaining 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:

• Economic pressures and weaker PCC finances leading to reductions in Parish Offer;

• Inflationary pressures above expectation;

• Unavoidable increases in expenditure.

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 2026 budgeted expenditure, the level of free reserves that would be required under this policy totals £2.2m. As at 31 December 2025, the unrestricted reserves (excluding property) stood at £1.0m (2024: £1.8m). 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 £67.8m of restricted fund and £25.5m endowment fund assets that are not available for the general purposes of the charity. Although the General fund yearend reserves figure of £1.0m is less than half the minimum level indicated by the policy, the Trustees expect to realise ~£0.9m from the sale of a General Fund property asset in 2026. Therefore, the Directors consider this amount remains appropriate given 2026 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.

7.10 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 2025 is indicated in note 14 to the financial statements.

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Hereford Diocesan Board of Finance Annual report For the year ended 31 December 2025

7.11 Total Return accounting

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

• The date used for the initial value of the trust for investment was 31 December 1986.

• The initial value of the trust for investment was determined by reference to the cash, land (by acreage) and properties as detailed in the 1986 statutory accounts. Reasonable estimates for the land and properties were ascertained using valuations provided in the 1995 statutory accounts discounted to 1986 by appropriate indexes.

• CPIH was used to uplift the trust for investment giving rise to a valuation as at 1 January 2019 of £7.3m. The Unapplied Total Return (“UTR”) fund as at 1 January 2019 amounted to £9.6m.

The Directors have adopted the following policy in determining the amount to be allocated from the UTR each year to the Diocesan Stipends Income fund to be used for clergy stipends, as detailed in note 26 to the accounts:

• All income that would have been credited to the General Fund had a Total Return accounting policy not been implemented – to include dividend income, land rental income, special dividends and any other income such as dilapidations (where appropriate); plus

• An additional amount to be calculated as 0.5% of the DSF Rathbones’ investment portfolio valued as at 1 January of each respective year; plus

• An additional £250k to be released annually (£500k for three years from 2024) to the Diocesan Stipends Income fund.

• CPIH is to be used as the inflationary measure to uplift the value of the trust for investment on an annual basis.

The Trust for Investment fund valuation as at 31 December 2025 was £9.6m (2024: £9.2m), which remains ring-fenced to preserve the real value of the original permanent endowment.

7.12 Linked charities: HDBE and UST

The Hereford Diocesan Board of Education (“HDBE”) is a separate charity linked under a Charity Commission linking directive to the HDBF with effect from 1 January 2019. The HDBE is accounted for as a ‘branch’ of HDBF and 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 2025 was £nil (2024: £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 2025 amounted to £90k (2024: £84k) and was attributable to investment income. Expenditure amounted to £54k (2024: £13k) and was attributable largely to award of grant plus investment management costs. HDBE trustees 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 2025, the loan stood at £122k (2024: £128k). This loan has been eliminated on consolidation of HDBF branches and repayments appear as a transfer between funds. A further transfer of £65k (2024: £60k) was made from the UST to the HDBF general fund to support the educational work of the Diocese.

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Hereford Diocesan Board of Finance

Annual report For the year ended 31 December 2025

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 £1.18m (2024: £0.58m).

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:

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:

• Encouraging parishes, benefices and deaneries to consider a Mission Action Plan with a specific remit to consider how to achieve spiritual and numerical growth;

• Develop Messy / Forest Church initiatives, youth church projects, and support new church communities;

• Develop Youth Hubs and links to schools through School Chaplains;

• Recruit Rural Church Missioners, working closely with clergy to develop teams of lay and ordained leaders to deliver worship locally in smaller rural churches.

Church buildings The Diocese recognises that caring for historic church buildings can impose a significant 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:

• Pursuing its church building strategy, which includes the roll-out of ‘Crossing the Threshold’ and ‘Mission and Mortar’ toolkits to help parishes optimise the use of their church buildings or explore Festival Church status;

• Providing expert advice and guidance to parishes through the Diocesan Advisory Committee, Church Buildings Officer, and Community Partnership and Funding Officer;

• Encouraging PCCs to reduce running costs through ‘smart purchasing’ via the Parish Buying service;

• Facilitating the distribution of Minor Repairs & Improvement grants and Net Zero Carbon ‘Quick Wins’ grants to enable more sustainable buildings;

• Helping PCCs to explore wider use of their church buildings as community assets.

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Hereford Diocesan Board of Finance

For the year ended 31 December 2025

Annual report

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:

2025 Petertide ordination retreat

• raising stipends to meet the new National Stipends Benchmark of £34,950 p.a. from April 2026;

• deploying as many stipendiary clergy as practicable within financial constraints;

• maintaining focus of supporting lay leaders, self-supporting ministers, voluntary ministers, supporting retired clergy to stay connected and growing local worship leaders as well as encouraging and recognising the vital ministry of Readers;

• promoting and developing lay ministry, by offering diverse and flexible courses for initial and continuing training for a widening variety of ministries.

8.3 Finance

Whilst Parish Offer contributions from PCCs have remained relatively stable in cash terms over the past five 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:

• implemented a Generous Giving Strategy;

• employed two Giving Advisers on a permanent basis;

• continued to promote the national Parish Giving Scheme and legacy giving;

• encouraged open conversations about generous giving, stewardship and Parish Offer;

• nurtured the growth of giving and fundraising forums in deaneries.

8.4 Leadership

The Diocese is aware that within a large geographic area with 400 churches, there is a risk of poor communication and a disconnect within the Diocese. HDBF Trustees regularly reflect on the effectiveness of the communication strategy and policy, making adjustments in approach where appropriate to help mitigate this risk.

8.5 Education

The Diocese benefits from an executive Diocesan Director of Education seconded part-time from the Diocese of Worcester, who works closely with the Diocese’s own DDE. Trustees consider that risks are adequately controlled, although they 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.

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Hereford Diocesan Board of Finance

For the year ended 31 December 2025

Annual report

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 (registration number 1205397). Copies of its trustees’ report and financial statements may be obtained from Hereford Cathedral, 5 College Cloisters, Cathedral Close, Hereford HR1 2NG. Tel: [phone].

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 / 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; in 2025, this included safeguarding and guidance on 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.

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Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2025

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. More senior 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. HDBF’s communication objectives, including via the use of social media, are included in the Strategic Communications Plan document approved by Trustees in March 2025.

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 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 £4.7m at 31 December 2025 (2024: £5.6m), 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 must 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.

24

Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2025

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 ‘cash balance’ 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.

The HDBF also makes pension contributions to the Church of England Funded Pensions Scheme (CEFPS) for all ordained stipendiary clergy serving in the Diocese of Hereford.

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:

• select suitable accounting policies and apply them consistently;

• observe the methods and principles in the Charities SORP;

• make judgements and estimates that are reasonable and prudent;

• state whether applicable United Kingdom accounting standards have been followed subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charitable company will continue in business.

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.

25

Hereford Diocesan Board of Finance

Annual report

For the year ended 31 December 2025

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:

• there is no relevant information of which the company’s auditor is unaware; and

• we have taken all the steps that we ought to have taken as Directors in order to make ourselves aware of any relevant audit information and to establish that the company’s auditor is aware of that information.

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: [phone] Email: [e-mail] Website: www.hereford.anglican.org

13.2 Directors

The following served as Directors and Trustees from 1 January 2025 to the date this report was approved (unless shown otherwise):

Ex officio Directors:

The Rt Revd R C Jackson, Bishop of Hereford – President Mr A C Wood – Chair The Very Revd S R D Brown Revd Preb W A Buck The Ven D C Chedzey The Ven F R Gibson (until 5 February 2026) The Ven S J Hustwayte (from 10 May 2026) Mr D Clements

Elected Directors:

Revd S Fountain Revd G S Cole Revd C Moore – Vice Chair Revd G P Smith (until 23 October 2025)

26

Hereford Diocesan Board of Finance Annual report For the year ended 31 December 2025 Mr N A Sellar Mrs A Kingsmill-vellacott Mr C Houston (from 16 january 20251 Nomii?oted Directors.. Mrs M Shutt5èworth Miss E Hill Ifrom 16 January 20251 Mr A Teale (from 16 January 20251 13.3 Principal officers Diocesan Secretary.. Mr S R Pratley Diocesan Director of Education.. Mrs G Martirn Director of Finance." Mr S G P Herbert 73.4 Member5 of the Board Since july 2010 membership of the Hereford Diocesan Board ol Finance has, in common wilh many other dioceses, become co-terminus with membership of the Diocesan Synod. 13.5 Agents Solicitors l Registrar Gabbs Solicitors 14 Broad Street Hereford HR4 9AP Investment managers Rathbones Investment Management 8 Fin5bury Circus London EC2M 7AZ CCLA Investment Management Limiled Oiie Angel Lane London EC4R 3AB Bankers Lloyds Bank PLC 8 High Town Hereford HRI 2AE Insurance agents Ecclesiastical Insurance Office PLC Beaufort House, 8runswick Road Gloucester GLI IJZ Glebe a9ents- agricultural Berrys Shiretown House 41-43 Broad Street Hereford HR4 9AR Independent auditor Crowe UK LLP RoLJnd Greens Road Oldbury West Midlands B69 2DG The Directors, annual report is approved on behalf of the Board of Directors and the Strategic Report lincluded rein) is approved by the Board of Directors on 25 June 2026 and signed on its behalf by.. Andr Director ood 27

Hereford Diocesan Board of Finance

Independent auditor’s report To the members of the Hereford Diocesan Board of Finance

Opinion

We have audited the financial statements of The Hereford Diocesan Board of Finance for the year ended 31 December 2025, which comprise the Statement of Financial Activities, the Income and Expenditure Account, the Balance Sheet, the Cash Flow Statement and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

• give a true and fair view of the state of the charitable company’s affairs as at 31 December 2025, and of the charitable company’s net movement in funds, for the year then ended;

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

• have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

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

Conclusions relating to going concern

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

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

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

Other information

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

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

28

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:

• the information given in the Trustees’ Annual Report (which incorporates the Strategic Report and the Directors’ Report) for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the Strategic Report and the Directors’ Report included within the Trustees’ Annual Report has been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

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

• adequate accounting records have not been kept by the charitable company or returns adequate for our audit have not been received from branches not visited by us; or

• the charitable company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of Trustees’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

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.

29

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:

• inspecting correspondence with regulators and tax authorities;

• discussions with management including consideration of known or suspected instances of noncompliance with laws and regulation and fraud;

• evaluating management’s controls designed to prevent and detect irregularities;

• identifying and testing journals; and

• challenging assumptions and judgements made by management in their critical accounting estimates.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.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

15 July 2026

30

Hereford Diocesan Board of Finance

Statement of financial activities

For the year ended 31 December 2025

----- Start of picture text -----
Statement of financial activities
Restated
Unrestricted funds Restricted Endowment Total Total
Income and endowments from: General Designated funds funds 2025 2024
Note £'000 £'000 £'000 £'000 £'000 Note
Donations
Parish Offer contributions 3 3,299 - - - 3,299 3,302
Archbishops' Council 4 488 - 352 - 840 759
Other donations 5 89 51 160 - 300 282
Charitable activities 6 390 - - - 390 414
Other trading income 7 450 - - - 450 455
Investment income 8 52 - 210 393 655 645
----- End of picture text -----

Other income 9 Total income and endowments Expenditure on: Raising funds 10 Charitable activities: excl. pension deficit 11 Charitable activities: remeasurement of 32 pension deficit liability Total expenditure Net (expenditure)/income before investment gains Net gains/(losses) on investments Net (expenditure)/income Unapplied Total Returns (UTR) allocated to income for stipends Transfers between funds 23 Other recognised gains Gains on revaluation of fixed assets 15	- - 52 - 52 32
	4,768 51 774 393 5,986 5,889
	141 - 71 49 261 288 5,279 347 1,814 - 7,440 7,145 - - - - - -
	5,420 347 1,885 49 7,701 7,433
	(652) (296) (1,111) 344 (1,715) (1,544) 22 - 280 884 1,186 2,285
	(630) (296) (831) 1,228 (529) 741 1,036 (1,036) 365 156 (521) - - - - - 1,031 40 1,071 2,641
Gain on disposal	- - - - - 347
Gain on disposal of schools 36 Net movement in funds Funds brought forward at 1 January Funds carried forward at 31 December	- - 27 - 27 237
	(265) (140) 742 232 569 3,966 2,294 465 67,025 25,311 95,095 91,129
	2,029 325 67,767 25,543 95,664 95,095

All activities derive from continuing activities. The Notes on pages 35 to 67 form part of the financial statements.

31

Hereford Diocesan Board of Finance

Income and expenditure account

For the year ended 31 December 2025

Income and expenditure account
	Restated
	2025 2024
	£'000 £'000
Total income	5,593 5,509
Total expenditure	(7,652) (7,365)
Operating deficit for the year	(2,059) (1,856)
Net gains on investments	302 949
Net expenditure for the year	(1,757) (907)
Other comprehensive income:
Revaluation of fixed assets	1,031 2,539
Gains on disposal of school sites	27 237
Loss on disposal of assets	- 347 1,036 941
Unapplied Total Return allocated to income for stipends
Total comprehensive income	337 3,157

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.

32

Hereford Diocesan 8oard of Finance Balance sheet As at 31 December 2025 Company Number.. 144467 Unrestricted funds General t5ignaled Resiricicd endowment Total 2025 £'OLX) Totèl 2024 Funds £.￿0 unds Note Flxed a55ets Tangible assèts Investment property Qthei Invesiments 1,009 57.300 500 9.086 66.886 2.153 8.759 15.217 25.529 60.462 8.659 24.938 94,059 59.763 8,546 24,847 93.156 17 18 565 70 70 1.574 Current a55ets Sloiks Debtors.. amounts tallin9 duè within ohe yea Debiof5.- awun15 falling 3lte¥ one yea Cash at bank & In hand 19 275 97 372 361 506 788 255 255 2.063 2,160 61 61 2.885 3.259 2.536 2.899 Creditors: arnountstèllillg due wthin one ye?r 21 13281 11,6541 19601 Net current assets/lliabilitie51 455 255 881 14 1,605 1.939 Totsl assets less cuyrent liabilitie5 1029 325 67.767 25.543 95,664 95.095 Creditots.. amOuts falling due oftor more than one yeor Net Assets 2,029 325 67.767 25.543 95,664 95,095 Funds Un[estr￿Cle￿ Income fund De51gnated fund5 Restrided incoine ful￿5 Endowireiit funds 24 24 1029 2.029 325 67.767 2S.543 2.294 465 67.02S 25,311 325 24 24 67.767 25.543 Total fund5 2.029 325 67.767 2S,$43 95,664 95,095 The financial statements were approved by the Directors of the Hereford Diocesan Board of Finance and thorised lor issue on 25 lune 2026 and signed on their behalf by.. Andr Director ood 33

Hereford Diocesan Board of Finance Cash flow statement

For the year ended 31 December 2025

Cash flow statement
			Restated Restated
	2025 2025		2024 2024
	£'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	(1,676) 655 703 4,898 27 (215) (4,043) 1,370 - 349 2,536 2,885 (1,715) 13 (655)		(2,106) 646 2,147 7,805 237 - - (699) (6,870) 2,620 - 1,160 1,376 2,536 (1,544) 14 (646)
				2,536
				(1,544) 14 (646)
Loss/(profit) on sale of functional assets		-		(400)
(Increase)/Decrease in stocks Decrease/(Increase) in debtors Increase in creditors Net cash used in operating activities		- (12) 693 (1,676)		1 76 393
				(2,106)

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

34

Hereford Diocesan Board of Finance Notes to the accounts For the year ended 31 December 2025

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 14.

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

The principal accounting policies and estimation techniques are set out below.

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.

• Parish Offer contributions by parishes is recognised as income in the year in which it is receivable. Parish Offer relating to the year but received between 1 January and 31 January after the year end is included within other debtors.

• Land rent is recognised as income when receivable.

• Property rental income is recognised as income in the period to which it relates.

• Interest and dividends are recognised as income when receivable.

• Grants are generally included in the financial statements when received. If the grant conditions are not met at the year-end, they are included in creditors carried forward to the following year.

• Parochial fees are recognised as income of the year to which they relate.

• Donations other than grants are recognised when receivable.

• Gains on disposal of fixed assets for the HDBF’s own use (i.e. non-investment assets) are accounted for as other income. Losses on disposal of such assets are accounted for as other expenditure.

• Diocesan Stipends Fund (“DSF”) (endowment fund). The endowment fund is governed by the Diocesan Stipends’ Fund Measure 1953, as amended, and the use of the income is restricted for clergy stipends. The investment income arising on the DSF is credited to the unapplied total return in the year in which the distribution is due.

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.

• Costs of raising funds are constrained to costs relating to the temporary renting out of parsonages, investment management costs of glebe and any other investments.

• Charitable expenditure is analysed between contributions to the Archbishops’ Council, expenditure on resourcing mission and ministry in the parishes of the Diocese, expenditure on education and Church of England schools in the Diocese and direct support for parishes and clergy.

35

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2025

• Grants payable are charged in the year when the offer is conveyed to the recipient except in those cases where the offer is conditional on the recipient satisfying performance or other discretionary requirements to the satisfaction of the HDBF, such grants being recognised as expenditure when the conditions attaching are fulfilled. Grants offered subject to such conditions which have not been met at the year-end are noted as a commitment, but not accrued as expenditure.

• Support costs consist of central management, administration and governance costs. Costs are allocated wherever possible directly to the activity to which they relate, but where such direct allocation is not possible, the remainder is allocated on an approximate staff time basis as set out in notes 12 and 13.

• Pension contributions . The HDBF's staff are members of the Church Workers Pension Fund (CWPF) and Clergy are members of the Church of England Funded Pensions Scheme (CEFPS) (see note 32). Two of the HDBF education staff are members of the Teachers’ Pension Scheme (TPS). The pension costs charged as expenditure represent the HDBF's contributions payable in respect of the accounting period, in accordance with FRS 102. Any deficit funding for the pension schemes to which HDBF participates is accrued at current value in creditors distinguished between contributions falling due within one year and after more than one year.

• Employee benefits . Short term employee benefits including holiday pay if material, are recognised as an expense in the period in which the service is received. All costs involved in terminating employee contracts are accounted for in the period to which they relate and are disclosed in aggregate in note 30.

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 £1,000 is capitalised and depreciated. Depreciation is provided to write off the cost (less any ultimate disposal proceeds at prices ruling at the time of the asset’s acquisition)

36

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2025

of fixed assets over their currently expected useful economic lives on a straight line basis 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 (SoFA).

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.

37

Hereford Diocesan Board of Finance Notes to the accounts For the year ended 31 December 2025

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 SoFA 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 (including designated), restricted, and endowment funds.

• 1.12.1 Unrestricted funds are the HDBF’s corporate funds and are freely available for any purpose within the charitable company’s objects, at the discretion of the HDBF. There are two types of unrestricted funds:

• General fund which HDBF intends to use for the general purposes of the charitable company; and

• • Designated funds set aside out of unrestricted funds by the HDBF for a purpose specified by the Trustees. Such designations may be set aside from time to time according to policy decisions.

• 1.12.2 Restricted funds are income funds subject to conditions imposed by the donor as specific terms of trust, or else by legal measure.

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.

• 1.12.3 Endowment funds are those held on trust to be retained for the benefit of the charitable company as a capital fund. In the case of the Diocesan Stipends (endowment) Fund administered by the HDBF, there are discretionary powers to convert capital into income and, as a result, these funds are classified as expendable endowment. Trustees have elected to adopt a total return accounting policy for the Diocesan Stipends Fund, and details of movements in the year are shown in note 26.

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.

• The Hereford Diocesan Board of Education (DBE) (linked charity number: 249685-1).

• The HDBF Educational Uniform Statutory Trust (UST) (linked charity number: 249685-2)

38

Hereford Diocesan Board of Finance Notes to the accounts For the year ended 31 December 2025

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.

39

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2025

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 2025 2024
£'000 £'000 £'000 £'000 £'000 £'000
Current year Parish Offer committed 3,341 - - - 3,341 3,346
Shortfall in commitments (43) - - - (43) (44)
3,298 - - - 3,298 3,302
Received for previous years 1 - - - 1 -
3,299 - - - 3,299 3,302
----- 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 2025 represented 98.7% (2024: 98.7%) of the total commitments made. All Parish Offer receipts in 2024 related to the General fund.

4. Archbishops’ Council

----- Start of picture text -----
Unrestricted funds Restricted Endowment Total Total
General Designated funds funds 2025 2024
£'000 £'000 £'000 £'000 £'000 £'000
Lowest Income Communities 442 - - - 442 431
funding (LInC) -
Transitional support funding - - - - - -
Other grant funding 46 - 352 - 398 328
488 - 352 - 840 759
----- End of picture text -----

The Lowest Income Communities (‘LInC’) funding supports stipendiary ministry in the most deprived areas of the Diocese. In 2024 LInC funding was attributable to the General fund, other grant funding was attributable £120k to the General fund, £nil to the Designated Fund and £208k to Restricted funds.

40

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

5. Other donations

----- Start of picture text -----
Unrestricted funds Restricted Endowment Total Total
General Designated funds funds 2025 2024
£'000 £'000 £'000 £'000 £'000 £'000
Trust income and grants 4 11 155 - 170 130
PCC partnership income - 38 4 - 42 56
Historic England grant 25 25 24
Benefact Trust (Ecclesiastical Ins.) 49 - - - 49 58
- share of profits
Donations & sundry income 11 2 1 - 14 14
89 51 160 - 300 282
----- End of picture text -----

In 2024, £4k of Trust income and grants was attributable to the General fund, and £126k to Restricted funds. PCC partnership income in 2024 was attributable £48k to Designated funds and £8k to Restricted funds. All other donations in 2024 were attributable to the General fund.

6. Charitable activities

----- Start of picture text -----
Unrestricted funds Restricted Endowment Total Total
General Designated funds funds 2025 2024
£'000 £'000 £'000 £'000 £'000 £'000
Fees for occasional offices 313 - - - 313 320
Income from educational activities 77 - - - 77 94
390 - - - 390 414
----- 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 2025 2024
£'000 £'000 £'000 £'000 £'000 £'000
Rental income 450 - - - 450 455
450 - - - 450 455
----- End of picture text -----

In 2024, £452k of the rental income was attributable to the General fund and £3k to Restricted funds.

8. Investment income

----- Start of picture text -----
Restated
Unrestricted funds Restricted Endowment Total Total
General Designated funds funds 2025 2024
£'000 £'000 £'000 £'000 £'000 £'000
Rents receivable - - 22 152 174 140
Interest & dividends receivable 52 - 188 241 481 506
52 - 210 393 655 646
----- End of picture text -----

In 2024 £17k of the rents receivable were attributable to Restricted funds, with the remainder attributable to Endowment funds. £35k of the interest & dividends receivable in 2024 were attributable to the General fund, £213k to Restricted funds and £258k(restated) to Endowment funds.

41

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

9. Other income

----- Start of picture text -----
Unrestricted funds Restricted Endowment Total Total
General Designated funds funds 2025 2024
£'000 £'000 £'000 £'000 £'000 £'000
Redundant church costs recovered - - 40 - 40 32
Gain on disposal of fixed assets - - 12 - 12 -
- - 52 - 52 32
----- End of picture text -----

All other income in 2024 was attributable to Restricted funds.

10. Fund raising costs

10.1 Fund raising costs 2025

----- Start of picture text -----
Unrestricted funds Restricted Endowment Total
General Designated funds funds 2025
£'000 £'000 £'000 £'000 £'000
Land & property agents' fees 107 - 2 - 109
Glebe land maintenance & development 7 - - - 7
Property rental & other trading costs - - 41 - 41
Investment portfolio management fees 4 - 28 49 81
118 71 49 238
Support costs (see note 12) 23 - - - 23
141 - 71 49 261
----- End of picture text -----

10.2 Fund raising costs 2024

Land & property agents' fees Glebe land maintenance & development Property rental & other trading costs Investment portfolio mgt fees Support costs	Restricted Endowment Total General Designated funds funds 2024 £'000 £'000 £'000 £'000 £'000 108 - 2 - 110 4 - - 2 6 - - 44 - 44 - - 38 66 104 Unrestricted funds
	112 - 84 68 264 24 - - - 24
	136 - 84 68 288

42

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2025

11. Charitable activities

11.1 Charitable activities excluding remeasurement of pension deficit liability 2025

----- Start of picture text -----
Unrestricted funds Restricted Endowment Total
General Designated funds funds 2025
£'000 £'000 £'000 £'000 £'000
Resourcing ministry and mission:
Stipends and national insurance 1,531 - 1,085 - 2,616
Clergy pension contributions 451 - 10 - 461
Clergy Housing 958 - 184 - 1,142
Clergy moves & interregnums 152 - - - 152
Support for ministry 671 - - - 671
Mission and ministry projects 25 347 437 - 809
Allocated support costs 471 - - - 471
4,259 347 1,716 - 6,322
Contributions to Archbishops' Council 409 - - - 409
Education 235 - 40 - 275
Parochial support 160 - 58 - 218
Grants and donations 1 - - - 1
Allocated support costs 215 - - - 215
Total expenditure on charitable 5,279 347 1,814 - 7,440
activities excluding remeasurement of pension deficit liability
----- End of picture text -----

11.2 Charitable activities excluding remeasurement of pension deficit liability 2024

11.2 Charitable activities excluding	remeasurement of pension deficit liability 2024
	Restated Restated
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 1,600 - 1,005 - 2,605 494 - 13 - 507 878 - 157 - 1,035 172 - - - 172 627 - - - 627 25 269 317 - 611 489 - - - 489 Unrestricted funds
	4,285 269 1,492 - 6,046 409 - - - 409 250 - 5 - 255 169 - 44 - 213 5 - - - 5 217 - - - 217
	5,335 269 1,541 - 7,145

43

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

12. Analysis of support costs

	Restricted Endowment Total Total Unrestricted funds
	General Designated funds funds 2025 2024
Salary and employment costs Property costs Office costs Legal and professional fees General Synod representation Governance costs	£'000 £'000 £'000 £'000 £'000 £'000 415 - - - 415 430 70 - - - 70 92 86 - 1 - 87 73 101 - - - 101 102 7 - - - 7 8 28 - - - 28 25
	707 - 1 - 708 730

All support costs in 2024 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 2025

----- Start of picture text -----
Activities Grant
Undertaken Funding of Support Total
Directly Activities Costs 2025
£'000 £'000 £'000 £'000
Raising funds: 238 - 23 261
Charitable activities: excl. pension deficit:
Contributions to Archbishops' Council - 409 6 415
Resourcing ministry and mission 5,561 287 473 6,321
Education 235 40 106 381
Parochial support 168 50 101 319
Other grants and donations - 4 - 4
Charitable activities: pension deficit - - - -
6,202 790 709 7,701
----- End of picture text -----

13.2 Analysis 2024

13.2 Analysis 2024
	Activities Grant Undertaken Funding of Support Total
	Directly Activities Costs 2024
Raising funds: Charitable activities: Contributions to Archbishops' Council Resourcing ministry and mission Education Parochial support Other grants and donations Charitable activites: pension deficit	£'000 £'000 £'000 £'000 264 - 24 288 - 409 5 414 5,356 201 490 6,047 250 5 109 364 153 60 102 315 1 4 - 5 - - - -
	6,024 679 730 7,433

44

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2025

14. Analysis of grants made

14.1 Analysis 2025

----- Start of picture text -----
Total
Number Individuals Institutions 2025
£'000 £'000 £'000
From unrestricted funds - general fund:
National church responsibilities:
Contributions to Archbishops' Council 5 - 409 409
Grants to clergy 86 90 - 90
Support for ordinands in training 1 2 - 2
PCCs for church inspection fees 71 - 50 50
Other grants 1 - 4 4
164 92 463 555
From unrestricted funds - designated funds:
To support mission and ministry 17 - 47 47
From restricted funds:
To support mission and ministry 35 - 148 148
To support school building projects 1 - 40 40
217 92 698 790
----- End of picture text -----

14.2 Analysis 2024

45

Hereford Diocesan Board of Finance Notes to the accounts

For the year ended 31 December 2025

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 2025 59,732 53 135 59,920
Additions 200 - 15 215
Disposals (574) - - (574)
Transfers - - - -
Revaluation 1,071 - - 1,071
At 31 December 2025 60,429 53 150 60,632
Accumulated depreciation
At 1 January 2025 - 53 104 157
Charge for the year - - 13 13
Disposals - - - -
At 31 December 2025 - 53 117 170
Net book value
At 1 January 2025 59,732 - 31 59,763
At 31 December 2025 60,429 - 33 60,462
----- 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 2025, 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 2025 by taking advice from the employed Diocesan Property Surveyor (MCIOB). On 31 December 2025 there was a housing stock of 116 properties (2024: 117).

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 2025 (2024: £nil).

46

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

17. Investments held as Fixed Assets – Investment property

----- Start of picture text -----
As at Change As at
1 January in Market 31 December
2025 Additions Disposals Transfers Value 2025
£'000 £'000 £'000 £'000 £'000 £'000
Endowment funds
Land 7,601 234 (31) - (88) 7,716
Buildings 443 - - - - 443
8,044 234 (31) - (88) 8,159
Restricted funds
Buildings 502 - - - (2) 500
Total 8,546 234 (31) - (90) 8,659
----- 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 2025.

Restricted fund buildings consist of houses held as investment properties. These have been valued by the Diocesan Surveyor (MCIOB) as at 31 December 2025.

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 2025. 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% (2024: 1.42%). 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
2025 Additions Disposals Transfers Value 2025
£'000 £'000 £'000 £'000 £'000 £'000
Listed investments
Unrestricted general fund 881 164 (502) - 22 565
Designated funds 70 - - - - 70
Restricted funds 9,158 1,918 (2,273) - 282 9,085
Endowment funds 14,738 1,729 (2,123) - 874 15,218
24,847 3,811 (4,898) - 1,178 24,938
Equity share loan
Restricted fund - UST - - - - - -
Total 24,847 3,811 (4,898) - 1,178 24,938
----- 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 2025 was £20.3m (2024: £20.6m).

47

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

19. Debtors: due within one year

19.	Debtors:due within one year
		2025	2024
		£'000	£'000
Other	debtors	201	120
Prepayments & accrued income		171	141
Loans	to PCCs1	-	100
		372	361
20.	Debtors:due after one year
		2025	2024
		£'000	£'000
Loans	to PCCs1	-	-

1 A loan to Stottesdon PCC of £25k was made in September 2022 and was fully repaid by 29 February 2024. A bridging loan of £100k was extended during the autumn of 2024 to Doddington PCC, which was repaid in full in August 2025. At 31 December 2025, the balance outstanding was £Nil (2024: £100k). 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 -----
2025 2024
£'000 £'000
Other creditors and accruals 1,611 958
Taxation & Social Security 43 2
Pension deficit payments liability - -
1,654 960
----- 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 2025 or 2024.

48

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

23. Analysis of transfers between funds in 2025

----- 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 the Strategic (200) 156 44 - -
Mission Fund to support mission projects
From Designated Fund to General Fund - - - - -
reversing 2023 transfer
Transfers to the General fund for support of 500 (500) - -
property costs and other purposes of the Diocese
From Stottesdon School House Trust to UST 6 - -
in respect of loan (6) - -
365 156 (521) - -
From DSF Fund to DSF Income (Stipends) Fund - - 1,036 (1,036) -
in respect of stipends in the year (see note 26)
365 156 515 (1,036) -
----- End of picture text -----

Comparatives for 2024 can be found in note 39 to these accounts.

24. Summary of assets by fund as at 31 December 2025

Unrestricted funds General Fund Designated funds: Strategic Mission funds	Tangible Current Net Fixed assets Investments Assets Creditors Assets £'000 £'000 £'000 £'000 £'000 1,009 565 783 (328) 2,029 - 70 255 - 325
	1,009 635 1,038 (328) 2,354
Restricted funds Pastoral Fund Ordinands in Training Fund Strategic Capacity Fund (SCF) Youth Hubs - Pilot Other grant funds Uniform Statutory Trust Education Trusts Endowment funds Diocesan Stipends Fund Total funds	57,300 6,204 330 (67) 63,767 - - 22 - 22 - - - - - - - 47 - 47 - - 94 (34) 60 - 2,910 1,609 (1,178) 3,341 - 472 58 - 530
	57,300 9,586 2,160 (1,279) 67,767 2,153 23,376 61 (47) 25,543
	60,462 33,597 3,259 (1,654) 95,664

Comparatives for 2024 can be found in note 38 to these accounts.

49

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

25. Analysis of movements in funds

	Balance at 1 Jan 2025 Income Expenditure Transfers between funds Net gains (losses) on assets Balance at 31 Dec 2025	Balance at 1 Jan 2025 Income Expenditure Transfers between funds Net gains (losses) on assets Balance at 31 Dec 2025	Balance at 1 Jan 2025 Income Expenditure Transfers between funds Net gains (losses) on assets Balance at 31 Dec 2025
	£'000 £'000 £'000 £'000 £'000 £'000
Unrestricted funds
General reserve	2,294 4,768 (5,420) 365 22 2,029
Designated reserves:
Strategic Mission funds	465 51 (347) 156 - 325
Total unrestricted funds Restricted funds
	2,759 4,819 (5,767) 521 22 2,354
Pastoral Fund	63,155 178 (285) (500)		1,219 63,767
DSF Income (stipends) Fund	- - (1,036)	1,036 - -
Mission and Ministry Fund Ordinands in Training Fund Strategic Capacity Fund Youth Hubs (DIP and training) Other grant funds Education Funds Uniform Statutory Trust Total restricted funds	4 - - (4) - - 20 5 (3) - - 22 20 - (26) 6 - - - 180 (155) 22 - 47 61 306 (327) 20 - 60 524 15 - (6) (3) 530 3,241 90 (53) (59) 122 3,341
	67,025 774 (1,885) 515 1,338 67,767
Endowment funds Diocesan Stipends Fund - Investment Fund - Unapplied Total Return	9,232 - - 332 - 9,564 16,079 393 (49) (1,368) 924 15,979
Total endowment funds	25,311 393 (49) (1,036) 924 25,543
Total movement in funds
	95,095 5,986 (7,701) - 2,284 95,664

Comparatives for 2024 can be found in note 40 to these accounts.

50

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

26. Endowment Fund – Total Return

----- Start of picture text -----
Investment Unapplied Total
Fund Total Return Endowment
£'000 £'000 £'000
At 1 January 2025 9,232 16,079 25,311
Movements in the reporting period:
Dividends and interest - 241 241
Glebe land rent - 128 128
Glebe commercial property rental income - 24 24
Realised and unrealised gains and (losses) - 924 924
Less:
Investment management costs - (49) (49)
Indexation using CPIH: 3.6% 332 (332) -
332 936 1,268
Unapplied Total Return allocated to income
to be used for stipends:
- Equating to dividend, interest and rents - (393) (393)
- Equating to 0.5% of equity investments - (143) (143)
- Additional annual transfer - (500) (500)
- (1,036) (1,036)
Net movements in report period: 332 (100) 232
At 31 December 2025 9,564 15,979 25,543
----- 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 2024 can be found in note 41.

51

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

27. Net income for the year

Net income for the year is stated after charging:

----- Start of picture text -----
|||| |---|---|---| |2025|2024| |£'000|£'000| |Depreciation of tangible fixed assets|13|13| |Rentals charged under operating leases|16|16| |Amounts payable to external auditors for:| |- statutory audit|28|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 -----
2025 2024
£'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 3 5
----- End of picture text -----

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

----- Start of picture text -----
2025 2024
£'000 £'000
Minimum lease payments receivable
Within one year of the balance sheet date 24 14
Within two to five years of the balance sheet date 96 -
----- End of picture text -----

A ten year property lease with break clause at 4 years, exercisable in 2025, is continuing for the full 10 years.

29. Post balance sheet events and contingent liabilities

There were no post balance sheet events or contingent liabilities as at 31 December 2025.

30. Staff costs

Staff costs were as follows:

----- Start of picture text -----
2025 2024
£'000 £'000
Gross salaries and wages 1,523 1,357
Social Security costs 182 130
Pension contributions 141 124
1,846 1,611
----- End of picture text -----

The 2024 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. The 2025 figures include two posts jointly employed by Worcester Diocese Board of Finance.

52

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

During the year there were redundancy payments of £1,103 (2024: £Nil). Amounts approved but outstanding at year end were £13,324 (2024: £Nil).

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

----- Start of picture text -----
2025 2024
Number Number Number Number
Full-time Part-time Full-time Part-time
Support ministers / staff 6.3 9.5 3.8 11.0
Education 2.0 2.0 2.7 1.0
Diocesan officers 2.0 2.0 2.0 2.0
Diocesan administration staff 5.0 3.0 5.0 4.0
Grant funded Intergenerational Missioners 1.0 - 1.0 -
Grant funded support staff 11.1 3.3 2.8 6.1
Apprentice 1.0 - 1.0 -
Grant funded deanery staff - 2.0 - 2.0
-
28.4 21.8 18.3 26.1
----- 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 Apprentice Grant funded deanery staff Total Grant funded positions	2025 2024 Number Number 14.9 11.3 8.3 8.7 3.7 3.7
	26.9 23.7 3.3 3.5 1.0 1.0 13.8 5.9 1.0 0.6 0.7 0.7
	16.5 8.2
	46.7 35.4

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

The increase in staff numbers largely reflects the Youth Hub initiative, where phase 1 started in July 2024 but full establishment did not occur until early 2025.

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

2025	2024
Number	Number
£80,000 - £90,000 1	-
£70,000 - £80,000 -	1
£60,000 - £70,000 2	-

53

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

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 2025 they were:

Diocesan Secretary Mr S R Pratley Director of Finance Mr S G P Herbert Director of Education Mrs G Martin

Remuneration (including employer’s National Insurance) and pensions for these employees amounted to £289,052 (2024: £267,060).

30.2 Trustees’ emoluments

No trustee received any remuneration for their services as trustee. Seven trustees received travelling and outof-pocket expenses totalling £7,301 (2024: £4,916 for 7 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. One trustee received a grant during 2025 of £880 (2024: no trustees received grants).

No trustees received clergy resettlement grants (2024: no trustee received a resettlement grant).

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

uring the year:
	Stipend	Housing / housing allowance
The Ven D C Chedzey	Yes	Yes
Revd Preb W A Buck	Yes	Yes
Revd G Cole	Yes	Yes
Revd Dr G Smith	Yes	Yes

The Board also met the stipends, pensions and social security costs of an average of 73 (2024: 73) stipendiary clergy as office-holders holding parochial or diocesan appointments in the diocese, the costs were as follows:

Stipends National insurance contributions including Apprenticeship levy Pension costs - current year - deficit reduction	2025 2024 £'000 £'000 2,362 2,362 266 212 471 523 - -
	3,099 3,097

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:

• Mrs G Martin (Diocesan Director of Education) is also a Director of DHMAT.

• Mr S Pratley (Diocesan Secretary) is also a member of DHMAT with the power, among other things, to appoint and remove trustees.

54

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

During the year, invoices net of VAT totalling £nil (2024: £37,458) for partnership costs were raised from HDBF to DHMAT. The balance outstanding at the end of the year was £nil (2024: £nil).

During the year, invoices net of VAT totalling £nil (2024: £nil) were raised from DHMAT to HDBF for salary and administration costs. The balance outstanding at the year-end was £nil (2024: £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:

• Mrs G Martin (Diocesan Director of Education) and Mr S Pratley (Diocesan Secretary) are also directors of 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 Rt. Revd Bishop Richard (Bishop of Hereford)

• Venerable Fiona Gibson (Archdeacon of Ludlow) (Chair of DBE) (until 5 February 2026)

• Mrs G Martin (Diocesan Director of Education)

• DHET (Diocese of Hereford Education Trust) as corporate member

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 £523 were raised from HDBF to the Cathedral for safeguarding costs (2024: £nil). The balance outstanding at the year-end was £nil (2024: £nil). During the year, invoices totalling £1,525 (2024: £nil) were raised from the Cathedral to HDBF for education costs. The balance at the year-end was £nil (2024: £nil).

31.5 Herefordshire Historic Churches Trust

The Ven D Chedzey (an HDBF Trustee) is Vice Chair of Trustees of the Hereford Historic Churches Trust. The Ven F Gibson (until 5 February 2026) and Bishop Richard Jackson are also Trustees of the Herefordshire Historic Churches Trust. During 2025, HDBF received a grant from the Herefordshire Historic Churches Trust amounting to £5,000 (2024: £5,000). The balance at the year-end was £nil (2024: £nil).

31.6 Shropshire Historic Churches Trust

The Ven F Gibson (until 5 February 2026) was a trustee of the Shropshire Historic Churches Trust. During 2025 HDBF received a grant from the Shropshire Historic Churches Trust of £4,000 (2024: £4,000). The balance at the year-end was £nil (2024: £nil).

31.7 Archbishops’ Council

The Revd C Moore, a DHBF Trustee, is a member of the Archbishops’ Council Finance Forum. This is an advisory body to the Archbishops’ Council.

31.8 The Bishop of Hereford’s Bluecoat School (“BHBS”) Trust

The BHBS Trust is a related party through the Diocesan Secretary being a trustee of the charity. During the year, the Trust awarded a £3,000 grant to the Lifelink Chaplain project working closely with the School.

55

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

32. Pension commitments

32.1 Church of England Funded Pension Scheme (CEFPS)

Hereford DBF participates in the Church of England Funded Pension Scheme for stipendiary clergy, a defined benefit pension scheme, and as at 31 December 2025 had 73 members in the scheme (2024: 77). 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 £471k in 2025 (2024: £523k), plus any figures arising from contributions in respect of the Scheme’s deficit (see below).

A valuation of the Scheme is carried out once every three years. The 2021 valuation showed the Scheme was fully funded. The most recent Scheme valuation was carried out at as 31 December 2024 and also showed the Scheme to be fully funded; as a result, in 2025 the deficit contributions paid were £nil (2024 £nil).

The December 2024 valuation revealed a surplus of £560m (HDBF share based on covenant £5.8m), based on assets of £2,720m and a funding target of £2,010m, assessed using the following assumptions:

• An average discount rate of 6.0% p.a.;

• RPI inflation of 3.4% p.a. (and pension increases consistent with this);

• CPIH inflation in line with RPI less 0.7% pre 2030 moving to RPI with no adjustment from 2030 onwards;

• Increase in pensionable stipends in line with CPIH;

• Mortality in accordance with 90% of the S3NA_L tables, with allowance for improvements in mortality rates from 2017 in line with the CMI2023 extended model with a long-term annual rate of improvement of 1.5%, a smoothing parameter of 7, an initial addition to mortality improvements of 0.5% pa and an allowance for 2020 and 2021 data of 20% (i.e. w = 20%).

The 2024 valuation reflects the benefit improvements that the General Synod agreed in principle in July 2025 (and confirmed in February 2026).

Section 28.11A of FRS 102 requires agreed deficit recovery payments to be recognised as a liability. However, as there were no deficit recovery payments from 1 January 2023 onwards, the balance sheet liability as at 31 December 2024 and 31 December 2025 is nil.

The movement in the balance sheet liability over 2024 and 2025 is set out in the table below.

	2025	2024
Balance sheet liability at 1 January	0	0
Deficit contribution paid	0	0
Interest cost (recognised in SoFA)	0	0
Remaining charge to the balance sheet liability* (recognised in SoFA)	0	0
Balance sheet liabilityat 31 December	0	0

56

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

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

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 scheme. The pensions costs charged to the SoFA in the year are the contributions payable (2025: £90k, 2024: £69k).

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 2026, the Board chose to grant a discretionary bonus of 10% 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 1997 service so that the pension increase was also 10% (where usually it would be calculated based on inflation up to annual cap of 5% for pensions in payment prior to April 2006 and 2.5% for pensions in payment in respect of service post April 2006). This followed improvements in the funding position over 2025. There is no requirement for deficit payments at the current time.

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

The Church of England Pensions Board has agreed that some employers could use assets in the DBS of the CWPF in lieu of contributions to Pension Builder Classic and/or Pension Builder 2014.

57

Hereford Diocesan Board of Finance

For the year ended 31 December 2025

Notes to the accounts

The next valuation is being carried out as at 31 December 2025.

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 2025, HDBF had 45 active members (2024: 36) in the Pension Builder 2014. Contributions outstanding at the year end amounted to £nil (2024: £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 £29,546 (2024: £28,646) and were charged to the Income and Expenditure Account. Contributions outstanding at the year-end amounted to £nil (2024: £1,547).

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 make contributions, as a percentage of salary – these contributions are credited to HM Treasury. Retirement and other pension benefits are paid by public funds provided by the UK 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, 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:

• Employer contribution rate set at 26.68% of pensionable pay (including 0.08% administration levy). This is an increase of 5% in employer contributions and the cost control result is such that no change in member benefits is needed.

• Total Scheme liabilities (pensions currently in payment and the estimated cost of future benefits) for service to the effective date of £262,000 million and the notional assets (estimated future contributions together with the notional investments held at the valuation date) of £222,200 million, giving a notional past service deficit of £39,800 million.

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 made pension contributions to the TPS in the year ended 31 December 2025 of £21,713 (2024: £15,431).

58

Hereford Diocesan Board of Finance Notes to the accounts For the year ended 31 December 2025

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.

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:

• Investment Fund (or Trust for Investment): this represents the original value of the endowment uplifted each year by an inflationary measure;

• Unapplied Total Return : this represents the amount of the Diocesan Stipends Fund over and above the value of the Trust for Investment. The amount approved for application in the year is transferred to the Diocesan Stipends Income Fund.

Restricted funds:

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

59

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

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. The last payments were made in 2024.

Ordinands in Training Fund

This restricted fund has arisen as a result of a change in the method of funding the training costs of ordinands. Prior to 2017, the training and residential costs were funded directly from the 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. This funding was fully utilised during 2024.

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

60

Hereford Diocesan Board of Finance Notes to the accounts For the year ended 31 December 2025

2024-2027. The project started in July 2024, with the Hubs becoming operational from October 2024 and at full establishment in January 2025.

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.

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: Venture, 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. The planning issues were not fully resolved during 2025. However, the purchaser remains committed to the purchase. 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.

61

Hereford Diocesan Board of Finance

Notes to the accounts For the year ended 31 December 2025

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.

62

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

37. Prior year comparative SoFA: year ended 31 December 2024

Income and endowments from: Donations Parish Offer 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 Gains on disposal of property Gains on disposal of school sites Net movement in funds Funds brought forward at 1 January 2024 Total funds at 31 December 2024	Restated Restated Restated Restated Restricted Endowment Total funds General Designated funds funds 2024 £'000 £'000 £'000 £'000 £'000 3,302 - - - 3,302 551 - 208 - 759 100 48 134 - 282 414 - - - 414 452 - 3 - 455 35 - 230 380 645 - - 32 - 32 Unrestricted funds
	4,854 48 607 380 5,889
	136 - 84 68 288 5,335 269 1,541 - 7,145 - - - - -
	5,471 269 1,625 68 7,433
	(617) (221) (1,018) 312 (1,544) 61 - 888 1,336 2,285
	(556) (221) (130) 1,648 741 - - 941 (941) - 324 340 (664) - - - - 2,539 102 2,641 - - 347 - 347 - - 237 - 237
	(232) 119 3,270 809 3,966
	2,526 346 63,755 24,502 91,129
	2,294 465 67,025 25,311 95,095

63

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

38. Prior year: Summary of assets by fund as at 31 December 2024

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

64

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

39. Prior year: Analysis of transfers between funds: year ended 31 December 2024

----- Start of picture text -----
Restated Restated Restated
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
Transfers to the General fund from 70 (70) - - -
Designated Grants (reverse 2023 transfer)
Transfers to the General fund for 694 (694) -
support of property costs
From UST to Stottesdon School House - 6 6
trust in respect of loan (6) (6)
324 340 (664) - -
From DSF Income fund to General
Fund in respect of stipends in the year -
(see note 26) 941 (941)
324 340 277 (941) -
----- End of picture text -----

65

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

40. Prior year: Analysis of movements in funds: year ended 31 December 2024

----- Start of picture text -----
Restated Restated Restated Restated
Net gains
Balance at Transfers (losses) on Balance at
1 Jan 2024 Income Expenditure between funds assets 31 Dec 2024
£'000 £'000 £'000 £'000 £'000 £'000
Unrestricted funds
General reserve 2,526 4,854 (5,471) 324 61 2,294
Designated reserves:
Strategic Mission funds 346 48 (268) 339 - 465
Total unrestricted funds 2,872 4,902 (5,739) 663 61 2,759
Restricted funds
Pastoral Fund 60,373 182 (249) (694) 3,543 63,155
DSF (Stipends) Income Fund - - (941) 941 - -
-
Mission and Ministry Fund 4 - - - - 4
Ordinands in Training Fund 42 12 (34) - - 20
Strategic Development Fund 32 - - (32) - -
Strategic Capacity Fund 2 31 (72) 59 - 20
Other grant funds - 18 (56) 38 - -
24 265 (254) 26 - 61
Education Funds 505 15 (8) (6) 18 524
Uniform Statutory Trust 2,773 84 (12) (54) 450 3,241
Total restricted funds 63,755 607 (1,626) 278 4,011 67,025
Endowment funds
Diocesan Stipends Fund
- Investment Fund 8,920 - - 312 - 9,232
- Unapplied Total Return 15,582 380 (68) (1,253) 1,438 16,079
Total endowment funds 24,502 380 (68) (941) 1,438 25,311
Total movement in funds 91,129 5,889 (7,433) - 5,510 95,095
----- End of picture text -----

66

Hereford Diocesan Board of Finance

Notes to the accounts

For the year ended 31 December 2025

41. Prior year: Endowment Fund – Total Return: year ended 31 December 2024

41. Prior year: Endowment Fund – Total Return:	year ended 31 December 2024
At 1 January 2024 Movements in the reporting period:	Restated Investment Fund Unapplied Total Return Total Endowment £'000 £'000 £'000 8,920 15,582 24,502
Dividends and interest	- 257 257
Glebe land rent Glebe commercial property rental income Trust income Realised and unrealised gains and (losses) Less: Investment management costs Glebe development costs Indexation using CPIH: 3.5% Unapplied Total Return allocated to income to be used for stipends:	- 99 99 - 24 24 - - - - 1,438 1,438 - (65) (65) (3) (3) 312 (312) -
	312 1,438 1,750
- Equating to dividend, interest and rents	- (380) (380)
- Equating to 0.5% of equity investments - Additional annual transfer Net movements in report period: At 31 December 2024	- (61) (61) - (500) (500)
	- (941) (941) 312 497 809
	9,232 16,079 25,311

67