DS13/05. Gloucester Diocesan Board of Finance Annual Report & Accounts 2012

Transcription

1 DS13/05 Gloucester Diocesan Board of Finance Annual Report & Accounts

2 Contents board of directors Rt Revd Michael Perham (President) Mary Adlard (Chair apt 13/10/12) Richard Bach (resigned 30/8/12) Revd Craig Bishop (apt 1/8/12) Revd Nicholas Bromfield (apt 12/9/12) Canon Nigel Chetwood (apt 12/9/12) Revd Skye Denno (resigned 30/8/12) Revd Mark Evans (resigned 30/8/12) Revd Deborah Foreman (apt 29/9/12) Anna Griffiths (apt 29/9/12) Dr Steve Grindrod (apt 12/9/12) Revd Canon N Heavisides (resigned 30/8/12) Very Revd Stephen Lake Anthony McFarlane Canon Ian Marsh Revd Canon Richard Mitchell Revd Canon M. Parsons (apt 12/9/12) Les Reilly Revd Jacqueline Rodwell Tom Rucker Henry Russell (apt 12/9/12) Helen Sammon (resigned 30/8/12) Ven Geoffrey Sidaway (resigned 30/6/12) Prof Jennifer Tann Revd Canon Celia Thompson (resigned 30/8/12) Ven Jackie Searle (apt 12/9/12) Revd David Smith Graham W Smith Ven Robert Springett Michael Storey (apt 24/10/12) Rt Revd John Went (resigned 11/3/13) Revd Canon John Wright (resigned 30/1/13) Board of Directors and Principal Officers... 1 Summary results...2 Directors report... 3 Report of the auditors... 9 Accounting policies Statement of financial activities Summary income & expenditure account Statement of total recognised gains & losses Balance sheet Statement of cash flows Notes to the accounts principal officers Benjamin Preece Smith Secretary solicitor Jos Moule; Diocesan Registrar Veale Wasborough Vizards Orchard Court, Orchard Lane Bristol BS1 5WS bankers Barclays Bank plc 288 Britannia Warehouse The Docks Gloucester GL1 2YJ registered office Church House College Green Gloucester GL1 2LY auditors Mazars LLP Clifton Down House, Beaufort Buildings Clifton Down, Clifton, Bristol BS8 4AN investment managers CCLA Investment Management Ltd 80 Cheapside London EC2V 6DZ Company limited by guarantee Registered number Registered charity number

3 How have we done? Highlights from this year s accounts number of stipendiary clergy funded 2012: 2011: 131 change: parish share contributions 2012: 2011: change: 5.6m 5.6m 0% general fund (ongoing) deficit for the year* 2012: 2011: change: 1.2m 0.7m +71% balance sheet value (nett assets) 2012: 2011: change: 72m 71m +1% *Calculated as nett incoming resources before gains less exceptional items 2

4 Directors report Structure, Governance and Management The Gloucester Diocesan Board of Finance (DBF) is a company limited by guarantee and a registered charity. Its governing instrument is the Memorandum and Articles of Association. Its membership comprises: The Bishop of Gloucester as president, ex-officio. Each and every member for the time being of the Diocesan Synod. Members co-opted to ensure that lay members constitute a majority of the DBF. Elections and co-options take place every three years. The current triennium runs until September The DBF, which meets five times each year, is the principal policy making body. It takes advice from its Board of Directors, constituted as the Bishop s Council, which examines issues in detail and makes recommendations. The Council also take executive action in certain matters and deals with day to day issues. The membership of the Bishop s Council is as follows: Ex-officio members: The Bishop of Gloucester The Chair of the DBF The Bishop of Tewkesbury The Dean of Gloucester The Archdeacon of Gloucester The Archdeacon of Cheltenham The Chair of the House of Clergy of the Diocesan Synod The Chair of the House of Laity of the Diocesan Synod The Chair of the Diocesan Board of Education A nominated representative of the Houses Committee A nominated representative of the Diocesan Advisory Committee Members elected by the DBF House of Clergy Two clergy members of the DBF from the Archdeaconry of Gloucester Two clergy members of the DBF from the Archdeaconry of Cheltenham One Proctor in Convocation from among the members of General Synod Members elected by the DBF House of Laity Three lay members of the DBF from the Archdeaconry of Gloucester Three lay members of the DBF from the Archdeaconry of Cheltenham One lay member from among the members of General Synod Co-opted members Up to two members may be co-opted by the Bishop s Council Nominations Up to two members may be nominated by the Bishop 3

5 Directors report Trustees are recruited, as indicated above, through a mixture of ex-officio positions, elections and nominations. The Nominations Committee in conjunction with the Diocesan Secretary oversee membership elections. The DBF s induction and training programme for trustees was under review but owing to restructuring was not introduced in time for the start of a new triennium. The Secretary will ensure suitable training is undertaken in The DBF was assisted in its work during the year by a number of committees: the Finance Committee (Chair Mary Adlard) acts in all matters relating to the management of the DBF s finances, including setting policy, framing the budget, critically reviewing the budget to ensure value for money and monitoring financial performance; the Audit Committee (Chair Thomas Rucker) reports to the DBF on matters relating to the auditors, the annual accounts and internal controls. It also acts as the risk management group; the Glebe Committee (Chair Timothy Griffin) acts in all matters relating to the management of glebe properties and the strategic conversion of glebe assets to maximise returns; the Houses Committee (Chair Anthony McFarlane) discharges the responsibilities of the DBF in its capacity as the Diocesan Parsonages Board and acts in all matters relating to the provision and maintenance of clergy houses. The DBF is the financial custodian for the Diocese of Gloucester, which is an administrative and pastoral area within the Church of England. The DBF therefore has important relationships with the national institutions of the Church of England, specifically: The Archbishops Council, to which it pays grants based on an apportionment system for funding national training of ordinands and the activities of the various national boards and councils, as well as General Synod. The Church Commissioners, from which the DBF receives grants and which acts for tax and national insurance purposes as the pseudo-employer of diocesan clergy. The DBF pays for clergy stipends through the Church Commissioners. The Church of England Pensions Board, which provide pensions for clergy the DBF s lay staff. Locally, the DBF works with Parochial Church Councils (PCCs) which are legally independent bodies that pay contributions, based on an apportionment system, to the DBF to fund its activities. The DBF is a tenant of the Dean and Chapter of Gloucester Cathedral, from whom it rents office accommodation. The DBF manages various charities on behalf of their respective trustees, for which grants and management charges are paid, namely the Voluntary Schools Fund (VSF) and the Charity of Ann Edwards (AEC). Objectives and Activities The principal objective of the Gloucester Diocesan Board of Finance ( the DBF ), as set out in the Memorandum of Association, is to promote and assist the work, objects and purposes of the Church of England for the advancement of the Christian religion in the Diocese of Gloucester. In pursuing this objective, the DBF acts as the financial executive of and employer for the Gloucester Diocesan Synod. As such it undertakes three principle activities: It funds costs associated with the vast majority of Church of England clergy in the diocese, It is responsible for the custody and management of the synod's funds. It provides services to other organisations within the diocese, primarily PCCs and schools. 4

6 Directors report Public benefit The directors are aware of the Charity Commission s guidance on public benefit and, in particular, the supplementary guidance for charities whose aims include advancing religion and have regard to that guidance in their administration of the charity. The objectives of the Board, as set out above, is to support the work of the Church of England. The activities the Church undertakes may be classed into four categories, each of which the GDBF supports directly. Worshipping together Offering facilities and services open to all in our communities is a core activity of the Church. The Board ensures that a professional, trained minister of religion is available to every community in our diocese to take and oversee public worship. The GDBF also supports and trains unpaid and lay ministry to undertake and support this work. Sharing our Christian faith and values The Board supports the sharing of the Christian faith not only through provision of theological training and ministers of religion but also through activities such as communication of the Christian faith through regional media, the provision of officers to support the teaching of the Christian faith in schools and wider training programme. Serving the wider world The Church of England is a collection of people who, motivated by their faith, form part of the biggest volunteer network in our country. It provides youth workers and independent public figures in areas and to communities that the statutory sector may not reach. It is committed to caring for everyone in our communities, whether or not they do church. The Board supports this by providing professional support and training, ensuring stipendiary ministers are housed and paid and providing grants to organisations. Providing a visible presence in every community and parish The Board supports parish ministry through support of local parochial ministry, lay and ordained, and helping PCCs maintain and develop local church buildings through oversight of the care and maintenance of these buildings through the Faculty system, support and advice from the Diocesan Advisory Committee (DAC), ensuring any buildings which are no longer needed for regular worship are reused in the public interest and by making grants to other organisations. 5

7 Directors report Financial Review Ongoing Activities The outturn for 2012 was a great disappointment. The ongoing loss on the basis previously reported (nett general fund reserves less exceptional items) was 1.2m. This has a number of causes, both underlying concerns and one-off (but not exceptional ) items. The principle cause of the high deficit in 2012 was failure to match the budgeted level of Parish Share. The budgeted parish share was 6.0m producing a budget deficit of 0.6m. The actual collection of 5.6m therefore raised the deficit expected to 1.0m. This shortfall is very disappointing as the national church has produced information on parish share which shows that Gloucester s parish share has failed to keep pace with inflation and the rates of increase being experienced more widely in the Church. Another national report shows that personal donations to parishes have been increasing substantially, significantly supported by GDBF officers. Voluntary income to PCCs within the diocese in 2006 was 9.1m, by 2010 it had increased to 12.1m, a 3m increase. Of this 3m increase only 0.2m was passed on in Parish Share. As a result of this substantial expected shortfall the Board radically adjusted its five year plan, maintaining the ultimate objective of achieving a balanced budget by 2015 but with a much greater level of ongoing cost reductions to meet this challenge. This had a significant impact of increasing in year costs to fund redundancies and restructuring. The result of this restructure has increased the overall deficit in 2012 by around 0.3m, offset only slightly by Good & Faithful Servant s (G&FS) profits for the year of 0.1m. As well as cost cutting, the Board sought to address the underlying lack of engagement with Parish Share. +Michael has led a series of presentations around the diocese to ensure the crucial link between the capacity of the DBF to fund parochial ministry and Parish Share is understood by all PCC officers in the diocese. Other Activities Cash-flow remained difficult in the year due to delayed house sales. This situation was alleviated in early Investment performance and policy The DBF maintains a review of its investments through the Finance Committee, which also monitors performance against market benchmarks and considers the adequacy of its investment mix. The Finance Committee retains the services of an independent investment advisor to ensure that it receives impartial advice. The DBF considers that investing in a range of medium-low risk funds across two fund managers serves to spread risk through diversity and uses the investment management skills of professional fund managers to achieve good performance. Investment markets in 2012 were good, however there continues to be a significant difference in income yield between the two portfolios (Rathbones being substantially lower in income yield than the historic CCLA holdings), putting some pressure on the SoFA by suppressing investment income. The investment income from the installation of panels on vicarages has helped partially redress this issue in

8 Directors report Reserves policy The policy of the DBF is to hold between 4 and 8 months of parish share plus the deficit for the year on the general fund in free reserves (i.e. for 2012 between 2.1m and 4.2m). This level is considered prudent to account for the cash flow deficit experienced each year resulting from parish share contributions being remitted irregularly during the year (whereas the DBF s expenditure is fairly constant on a month by month basis), and also to allow for unexpected occurrences. At the end of 2012, free reserves stood at 1.0m which is below the bottom end of the specified range. This is partially addressed by the sale of houses in early 2013 and ongoing cost savings but will remain under review. The high level of designated funds provides comfort that this is not a going concern issue. Plans for future periods Budget 2013 and onwards As noted above the Board has taken a radical approach to ensuring a balanced budget by This has included 327k of ongoing cost reductions, virtually all relating to support and governance services. A further 100k of cost reductions from services is planned for 2014 as well as the loss of four and a half full-time equivalent clergy posts before the end of Further cuts to the budget will be made in 2014 for 2015 if necessary. The revised parish share budget for 2013 is on target. The Board therefore anticipates a substantial reduction in the ongoing deficit in Glenfall House With great sadness the diocesan retreat house at Glenfall will close on 31 July Shortly thereafter the property will revert to the GDBF to be sold commercially. Funds from the sale will remain designated until a permanent alternative provision for retreat and spirituality support is in place. Lay pension scheme The Defined Benefit pension scheme for lay staff has an indicative deficit attributed to Gloucester DBF of 1.3m; this will be met by monthly payments against a fifteen year period until such time as the Board feels able to fund the deficit by a lump-sum payment. The DBF reluctantly made the decision to close the scheme to new members in March Glebe The current planning environment is highly favourable to development of glebe land; as a result there will be a substantial increase in the amount of actively promoted sites in 2013, with sales following in due course. Good and Faithful Servant Ltd G&FS have a good order book but due in part to the organisational restructure and departure of the Property Manager these may not materialise until

9 Directors report Risk Management The Directors confirm that the major risks, to which GDBF is exposed, as identified by the management and Directors, have been reviewed and that systems have been established to manage those risks. Directors delegated to the Audit Committee the task of ensuring that risks are reviewed. Department heads have defined the risks in their areas, reporting on the measures in place to manage and monitor such risks, implementing procedures designed to minimise any potential impact on GDBF should any of the risks materialise. Audit Committee members review the risk register and report to Bishop s Council their findings and also make recommendations as to areas for further work. Directors responsibilities in respect of the financial statements The directors are required by company law to prepare financial statements, based on applicable accounting standards, which give a true and fair view of the state of affairs of the DBF as at the end of the financial year and of the result of the year and which comply with the Companies Act The directors ensure that, in preparing the financial statements, suitable accounting policies have been used and applied consistently, and reasonable and prudent judgments and estimates have been made. The directors have a reasonable expectation that the DBF has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts. The directors are also responsible for ensuring that adequate systems of internal control are in operation, for maintaining adequate accounting records, for safeguarding the assets of the DBF and for preventing and detecting fraud and other irregularities. They are also responsible for showing that the assets are applied in accordance with charity law. Statements as to disclosure of information to auditors The directors have taken all the necessary steps to make sure that they are aware of any relevant audit information and to establish that the auditors are aware of that information. As far as the directors are aware, there is no relevant audit information of which the company's auditors are unaware. Appointment of Auditors A resolution to reappoint Mazars LLP as auditors to the Company and to authorise the Directors to fix their remuneration will be proposed at the Annual General Meeting. + Michael Gloucestr: Mary Adlard President, Gloucester DBF Chair, Gloucester DBF 8

10 Audit report We have audited the financial statements of Gloucester Diocesan Board of Finance for the year ended 31 December 2012 which comprise the Group Summary Income and Expenditure Account, the Consolidated Statement of Recognised Gains and Losses, the Group and Parent Charitable Company Balance Sheets, the Group Cash Flow Statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Respective responsibilities of trustees and auditor As explained more fully in the Directors Responsibilities Statement set out on page 8, the directors (who are also the trustees of the charitable company for the purposes of charity law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. We have been appointed auditor under the Companies Act 2006 and section 151 of the Charities Act 2011 and report in accordance with those Acts. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. This report is made solely to the company s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 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. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the Financial Reporting Council s website at Opinion on the financial statements In our opinion the financial statements: give a true and fair view of the state of the group s and the parent charitable company s affairs as at 31 December 2012 and of the group s incoming resources and application of resources, including its income and expenditure, for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have been prepared in accordance with the requirements of the Companies Act 2006 and the Charities Act

11 Opinion on the other matter prescribed by the Companies Act 2006 In our opinion the information given in the Trustees Annual Report for the financial year for which the financial statements are prepared is consistent with the financial statements. 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 and the Charities Act 2011 requires us to report to you if, in our opinion: the parent charitable company has not kept adequate and sufficient accounting records, or returns adequate for our audit have not been received from branches not visited by us; or the parent 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.. I Holder (Senior Statutory Auditor) for and on behalf of Mazars LLP Chartered Accountants and Statutory Auditor Clifton Down House Beaufort Buildings Clifton Bristol BS8 4AN Date Mazars LLP is eligible to act as an auditor in terms of section 1212 of the Companies Act

12 Accounting policies These financial statements have been prepared in accordance with the Statement of Recommended Practice (SORP) Accounting and Reporting by Charities issued in March 2005, and applicable Accounting Standards in the United Kingdom. The principal accounting policies adopted are as follows: Basis of Accounting The financial statements are prepared under the historical cost convention, modified to include the revaluation of listed investments. The Board is a registered charity and so achievements cannot be measured by normal commercial criteria of profit and loss. Accordingly, in order to give a true and fair view, the directors have applied the provisions of section 396(5) of the Companies Act 2006 and have presented a Statement of Financial Activities instead of a Profit and Loss Account. This has been prepared in accordance with the SORP and in the opinion of the directors better reflects the nature of the Board s activities. These financial statements consolidate the results of the charitable company and its wholly-owned subsidiaries on a line by line basis. A separate statement of financial activities, or income and expenditure account, for the charitable company itself is not presented because the charitable company has taken advantage of the exemptions afforded by section 408 of the Companies Act 2006 and SORP The surplus of the parent charity for the year was 1,335k (2011: deficit of 1,435k). For the first time, the Ann Edwards Charity (AEC) accounts were consolidated into the accounts as the Trustees felt the changing of the AEC s charitable objectives were now wide enough to fit with the GDBF s. The prior year comparison has been restated accordingly. Incoming resources Parish Share contributions by parishes are included in the financial statements when received. Donations are recognised when received. Legacies are recognised when there is reasonable certainty as to both entitlement and amount. Grants are generally included in the financial statements when received, to ensure that there is reasonable certainty as to both entitlement and amount. However, in cases where the grant relates to a specific project, it is recognised when the project expenditure takes place. Interest and dividends are included in the financial statements when received. Rental income is recognised in the period to which the rent relates. Resources expended All expenditure is accounted for on an accruals basis and has been classified under headings that aggregate all costs related to that category. Where costs cannot be directly attributed to particular headings they have been allocated to activities on a basis consistent with the use of the resources. Overheads have been allocated to various cost headings primarily on the basis of the head count. Grants payable are charged in the year when the offer is conveyed to the recipient. Governance costs are those incurred in connection with the administration of the Board as an organisation and compliance with constitutional and statutory requirements. Parish Giving Scheme The Parish Giving Scheme enables individuals to make a donation to GDBF, which is restricted to a specific parish. GDBF makes a grant to the relevant parish for the full value of this gift and any related gift aid within ten days of receipt. 11

13 Depreciation Depreciation on equipment is calculated on a straight line basis at annual rates estimated to write off the assets over their respective expected useful lives, as follows: Office equipment 20% Office furniture 12½% Telephone equipment 20% Computer equipment 25% Hire equipment 25% Vehicles 20% No depreciation is provided on clergy houses. As the remaining useful life of these assets exceeds 50 years and a programme of planned maintenance ensures that the residual value does not fall below the carrying value, any depreciation would be immaterial. An annual impairment review is carried out in accordance with FRS15 and 11. Pensions The Board operates two defined benefit pension schemes for its lay staff, and contributes to the Clergy Pension Scheme (also a defined benefit scheme) for serving clergy in the diocese. Costs are assessed in accordance with actuarial advice and based on the most recent actuarial valuation of the scheme. Pension costs and disclosures have been reported in accordance with FRS17. Tangible fixed assets Office equipment is stated at cost less accumulated depreciation. Clergy houses owned by the Board as corporate property are included in the financial statements at historical cost. Clergy houses owned by benefices are included in the financial statements at a carrying value established by the directors and based on a professional valuation in December Houses acquired since that date are included at cost, and any major improvements are capitalised to the extent that the carrying value does not exceed the estimated net realisable value. Although the Board does not own these houses, it has the responsibility for maintaining them and receives any sale proceeds on disposal if the house becomes surplus under a pastoral scheme. Under FRS5 the Board considers that it has access to the benefits of these houses and also the associated risks and therefore needs to recognise them as assets in the financial statements. Solar PV panels installed on clergy houses are included within the asset value of the house. Fixed asset investments Listed investments are stated at open market value at the balance sheet date. For units held in managed funds of the Central Board of Finance this is the published bid price. Investment properties, which comprise the glebe portfolio, are stated at directors valuation. The valuation is arrived at after taking appropriate professional advice and is reviewed each year. Certain shortterm cash deposits, which are held for long term investment purposes, are included in fixed asset investments. Stock and WIP Work in progress is valued at the lower of costs and nett realisable value. Cost includes all direct expenditure and an appropriate proportion of fixed and variable overheads. Fund accounting The resources of the Board are classified according to restrictions imposed on their use by donors or by legislation, and in accordance with the SORP, as follows: Endowment funds represent money that must be permanently held as capital, and may not be spent as income. Expendable endowment may, however, be spent as income under certain circumstances. 12

14 Restricted funds may only be used for the purposes for which the money was originally gifted or bequeathed to the Board, or as expressed in the trusts under which the funds are held. Unrestricted funds are monies available for use at the discretion of the Board. The General Fund is for the day to day running of the Board, and is funded by the parish share. However, certain funds have been earmarked for particular purposes, and these are termed designated funds. Such funds are kept separate for administrative purposes but do not constitute legally separate funds. Operating leases Rental payments under operating leases are charged to the Statement of Financial Activities on a straight line basis over the term of the lease. 13

15 Consolidated statement of financial activities Incoming resources Notes (restated) Total 2012 Total General fund Designate d funds Restricted funds Endowm t funds Voluntary income: parish share contributions 1 5, ,550 5,553 church commissioners grants, donations & legacies parish giving scheme 3a - - 1,332-1, Activities for generating funds 4 1, ,526 2,226 Investment income: interest & dividends glebe rents Income from charitable activities: fees, chaplaincy & other income Other incoming resources: gain on disposal of fixed assets , Ann Edwards charity income other Total incoming resources 8, , ,513 10,959 Outgoing resources Activities for generating funds 4 1, ,016 1,691 Charitable activities: provision of clergy 6 6, ,135 7,132 management of synodical funds provision of support services 7 1, ,910 1,931 pensions liability Ann Edwards charity exp parish giving scheme grants 3a - - 1,332-1, Governance costs Exceptional item: pensions Total outgoing resources 9, , ,144 12,061 Nett (outgoing)/incoming resources (992) (169) (219) 749 (631) (1,102) Transfers between funds (231) Nett incoming resources before gains (1,223) 62 (219) 749 (631) (1,102) Gains/(losses) on investment assets ,483 1,643 (971) Realised gains (glebe disposal) Nett movement in funds (1,223) 108 (105) 2,274 1,054 (1,758) Funds brought forward at 1 Jan 12 2,186 12,158 2,301 53,964 70,609 72,367 Funds carried forward at 31 Dec ,266 2,196 56,238 71,663 70,609 14

16 Consolidated summary income & expenditure account 2012 (restated) Gross income 10,512 10,730 Total expenditure (12,144) (12,061) Nett expenditure for the year (1,632) (1,331) Net realised gains on disposal of fixed assets 1, Nett surplus/(deficit) for the year (589) (787) All of the profits and losses shown above arise from continuing operations. The summary income and expenditure account is derived from the statement of financial activities shown on page 14. Gross income represents total incoming resources of 11,513k less the gain on disposal of tangible fixed assets of 1,001k. The statement of financial activities, together with the accompanying notes provides full information on the movement of the Board s funds in the year. Full historical cost information is not available for glebe and certain benefice houses. Consolidated statement of total recognised gains & losses (restated) Nett surplus/(deficit) for the year (589) (787) Unrealised gains/(losses) on revaluation of investment assets 1,643 (971) Total recognised gains/(losses) for the year 1,054 (1,758) 15

17 Consolidated balance sheet as at 31 December 2012 Company Number Notes 2012 (restated) Tangible assets 13 47,938 47,508 Investments 14 20,844 19,689 Fixed Assets 68,782 67,197 Stock and work in progress Debtors: amounts falling due after one year Debtors: amounts falling due within one year 15 1,356 1,235 Cash at bank and in hand 2,988 2,453 Current Assets 4,660 4,420 Creditors: amounts falling due within one year 16 (575) (471) Nett Current Assets (Current assets less creditors <1 year) 4,085 3,949 Total Assets less current liabilities (Fixed Assets plus NCA) 72,867 71,146 Creditors: amounts falling due after one year 16 (1,204) (537) Nett Assets 71,663 70,609 Endowment funds 17,20 56,238 53,964 Restricted funds 17,19 2,196 2,301 Designated funds (unrestricted) 17,18 12,266 12,158 General fund (unrestricted) ,186 Reserves 71,663 70,609 Approved by the Board of Directors on 23 May 2013 and signed on its behalf by Mary Adlard, Chair 16

18 Parent company balance sheet as at 31 December 2012 Notes 2012 (restated) Tangible assets 13 46,833 46,475 Investments 14 20,334 19,205 Fixed Assets 67,167 65,680 Stock and work in progress - - Debtors: amounts falling due after one year Debtors: amounts falling due within one year 15 1, Cash at bank and in hand 1, Current Assets 4, Creditors: amounts falling due within one year 16 (556) (416) Nett Current Assets (Current assets less creditors <1 year) 3,561 3,675 Total Assets less current liabilities (Fixed Assets plus NCA) 70,728 69,355 Creditors: amounts falling due after one year 16 (1,204) (537) Nett Assets 69,524 68,818 Endowment funds 17,20 55,632 53,383 Restricted funds 17, Designated funds (unrestricted) 17,18 12,266 12,158 General fund (unrestricted) ,364 Reserves 69,524 68,818 Approved by the Board of Directors on 23 May 2013 and signed on its behalf by Mary Adlard, Chair 17

19 Consolidated cash flow statement Notes 2012 (restated) Parish Share SoFA 5,550 5,553 Other nett cash outflows 21 (6,738) (7,160) Operating activities 21 (1,188) (1,607) Dividends received Interest received Interest paid 10 (29) (21) Return on investment and servicing finance Purchase of tangible fixed assets 13 (1,585) (2,132) Sale of tangible fixed assets 13/SoFA 2, Purchase of fixed asset investments 14 (1,718) (3,435) Sale of fixed asset investments 14 2,248 4,965 Investing activities 1,059 (373) Increase/(Decrease) in cash in the year 535 (1,220) Reconciliation of nett cash flow to movement in nett funds: Cash at Bank Bal Sh 2,453 3,673 Funds as at 1 January ,453 3,673 Cash at Bank Bal Sh 2,988 2,453 Funds as at 31 December ,988 2,453 Increase/(Decrease) in cash in the year 535 (1,220) 18

20 Notes to the consolidated accounts Note 1 Parish Share Committed in 2012 (memo) Received in 2012 re 2012 Received in 2012 re prior years Gloucester City Severn Vale Forest South Wotton Stroud Cheltenham 1,036 1, ,029 1,020 North Cotswold Deanery Cirencester Tewkesbury & Winchcombe Parish Share contributions 5,603 5, ,550 5,553 Note 2 Income from the Church Commissioners Guaranteed annuities 3 - Grant re Bishop s share of registrar s retainer Church Commissioner grants rec d Note 3 Grants, donations & legacies Ecclesiastical Insurance Group grant Voluntary Schools Fund grants Landfill Tax Credit Scheme grants Other grants Donations Grants, donations & legacies

21 Notes to the consolidated accounts Note 3a Parish Giving Scheme The Parish Giving Scheme enables individuals to make a donation to the Gloucester DBF restricted to a specific parish within the Dioceses of Gloucester, Chichester or Winchester. Gloucester DBF then makes a grant for the full donation plus any relevant gift aid to the parish to which the gift is restricted. This is carried out on a monthly basis. In 2012 grants were made to a total of 115 parishes totalling 1,332k funded by donations of 1,076k and related Gift Aid of 256k. This activity is in support of the general objectives of the DBF and therefore the costs of operating the scheme are borne from general funds and part grant funded from the Dioceses of Chichester and Winchester. Note 4 Activities for generating funds Income 2012 Expenditure 2012 Nett Profit 2012 Income 2011 Expenditure 2011 Nett Profit Rental of vacant housing Other rents Property Development: G&FS 1,100 (974) 126 1,918 (1,650) 268 Educational services: Jpg. Fish 58 (42) (41) 17 Total 1,526 (1,016) 510 2,226 (1,691) 535 Note 5 Interest & dividends Income from fixed asset investments Other interest receivable and similar income Interest & dividends

22 Notes to the consolidated accounts Note 6 Provision of clergy National Church responsibilities: Training of ordinands Pooling of ordinand support costs (13) (88) Mission agencies pension contributions Diocesan responsibilities: Stipends 4,060 4,193 Housing 1,791 1,802 Selection of ordinands Diocesan training and support HFEC Grants - 9 Other costs Provision of clergy 7,135 7,132 Note 7 Provision of support services Direct costs Overheads Parish Resources Department Churches Buildings Pastoral Committee Social Responsibility Education (designated) Children and Young People (general) Youth Strategies (fixed term designated) Communications Giving Grants made payable (see below) Grant to Archbishops Council Diocesan Office* Provision of support services 1, ,910 1,931 * The administrative departments of the DBF undertake work on behalf of related organisations, such as the Diocesan Trust and Voluntary Schools Fund. Whilst this is in certain respects a direct cost of providing Services to other councils it is presented as an overhead to better reflect the nature of the cost. 21

23 Notes to the consolidated accounts Note 7 continued Provision of services: Grants made 2012 Detail of grants over 1,000: number 000 purpose Berkeley 3 20 CR/LT Psalms 1 14 DV Gloucester Historic Churches Trust 1 11 CR The Rock 1 7 DV Grants re Energy Audits DV Repayment 2008 Grant: Cecil Adams - (5) Grants made in the year Summary of grants made: number number Church repairs (CR) Landfill Tax Credit Scheme* (LT) Training of Ordinands^ (TofO) Development Grants (DV) Repayment 2008 Grant: Cecil Adams - - (5) - Grants made in the year * Grants made under the Landfill Tax Credit Scheme are funded entirely by matching grants received from the Gloucestershire Environmental Trust. The grants received are shown as donations in the incoming resources section of the Statement of Financial Activities. ^One off grant to WEMTC to assist training provision. 22

24 Notes to the consolidated accounts Note 8 Governance costs Diocesan Office Synod expenses Auditor s remuneration Legal and professional costs Governance costs Note 9 Items of expenditure required to be disclosed Net outgoing/incoming resources are stated after charging: Income from fixed asset investments Other interest receivable and similar income 6 8 Operating leases: Land and buildings (note 22) Operating leases: Other (note 22) 7 10 Note 10 Interest on long term loans Interest on loans wholly or partly repayable beyond 5 years All interest relates to value linked loans, being equity share loans made to the DBF by the Church Commissioners in respect of Parsonage Housing (note 6). 23

25 Notes to the consolidated accounts Note 11 Employees and office holders Costs of employees and officer holders salaries and stipends 1,419 1,413 social security costs other pension costs Employees, incl. clergy in DBF employment: 1,965 1,912 stipends 2,669 2,743 social security costs other pension costs Parochial clergy funded by the DBF: 3,830 3, Number of employees and officer holders Number number Full time Part time Employees, incl. clergy in DBF employment: Parochial clergy funded by the DBF: Employees earning between 60,001 and 70,000-1 Employees earning between 80,001 and 90, Employees earning between 170,001 and 180, Certain directors of the Board who are also clergy received benefits during the year from the Board as part of its normal charitable activity of providing a stipend and housing for clergy in the diocese. These benefits are disclosed as related party transactions in note 23 below. A voluntary redundancy process was undertaken late in 2012, the related payments of which are recorded as earnings within 2012 regardless of payment date. This significantly affects the employee earning brackets for the year 24

26 Notes to the consolidated accounts Note 12 Pensions The Gloucester DBF participates in the Church of England Funded Pensions Scheme and employs 128 members of the Scheme out of a total membership of approximately 9,000 active members. The Church of England Funded Pensions Scheme is a defined benefit scheme but the Gloucester DBF is unable to identify its share of the underlying assets & liabilities each employer in that scheme pays a common contribution rate. A valuation of the Scheme was carried out as at the 31 December This revealed a shortfall of 262m, with assets of 605m and a funding target of 867m, assessed using the following assumptions: Investment strategy: - for investments backing liabilities for pensions in payment: An allocation to gilts, increasing linearly from nil at 31 December 2009 to 2/3 by 31 December 2029, with the balance in return-seeking assets; and for investments backing liabilities prior to retirement: A 100% allocation to return-seeking assets. - Investment return: 4.4% p.a. on gilts and 5.9% p.a. on equities; - RPI inflation of 3.8% p.a. (and pension increases consistent with this); - - Increase in pensionable stipends: 3.8% p.a. Post-retirement mortality in accordance with 80% of the S1NA tables, with allowance for improvements in mortality rates from 2003 according to the medium cohort projections, and subject to a minimum annual improvement of 1.5% for males and 1.0% for females. For schemes such as the Church of England Funded Pensions Scheme, paragraph 9(b) of FRS 17 requires the Gloucester DBF to account for pension costs on the basis of contributions actually payable to the Scheme in the year. Following the results of the 2009 valuation, changes were made to benefits being built up in the Scheme from 1 January 2011 and the contribution rate was set at 38.2% of pensionable stipends (of which 14.7% is in respect of the 262m shortfall in the Scheme and 23.5% is in respect of accrual of future benefits and the day-to-day expenses of running the Scheme). Contribution rates will be reviewed at the next valuation of the Scheme, due as at 31 December Lay staff of the GDBF are included in a multi-employer Defined Benefit pension scheme operated by the Church of England Pensions Board (CEPB). During the year the CEPB received the new actuarial valuation for the lay pension scheme dated 31 December This valuation has identified an indicative liability to the GDBF of 1.3m, despite the significant improvements resulting from the last negotiation. GDBF are currently negotiating the terms and quantum of this deficit with CEPB, however in line with the ongoing treatment of the scheme no specific liability is recognised as the reasonable and consistent nature of the deficit allocation to contributing bodies cannot be conclusively affirmed. On 30 March 2012 GDBF agreed in principle to close the DB scheme to new staff and is in the process of agreeing alternative provision. The DB scheme will remain open for existing staff but with a cap on the level of contributions the GDBF will make. 25

27 Notes to the consolidated accounts Note 13 Tangible Fixed Assets AEC Property Freehold Property Office Equip t Total Cost or valuation: At 1 January ,039 46, ,826 Additions 72 1, ,585 Disposals - (1,105) (298) (1,403) At 31 December ,111 46, ,008 Depreciation: At 1 January Additions Disposals - - (290) (290) At 31 December Nett book value: At 1 January ,033 46, ,508 At 31 December ,105 46, ,938 AEC Property includes Freehold Land ( 95k) and Buildings ( 1,010k), plus equipment & furniture held by the Ann Edwards Charity. The Freehold Land is held as an endowment, whilst the remaining tangible fixed assets are restricted to the purposes of the charity (shown as unrestricted in the AEC accounts). Freehold properties include Glenfall House, the diocesan retreat and conference centre, at valuation. See note 18 for details. The Board has vested in it two redundant churches. One is leased to the Methodist Church on a long lease at a peppercorn rent. The other is held pending disposal. No value is attributed to these properties. The Parent Company s tangible fixed assets match those of the Freehold Property and Office Equipment above. 26

28 Notes to the consolidated accounts Note 14 Fixed Asset Investments Properties Investm ts Cash Total 2012 Total Market value at 1 Jan ,735 15,954-19,689 21,875 Additions - 1,718-1,718 3,435 Disposals (42) (2,164) - (2,206) (4,650) Revaluation 172 1,471-1,643 (971) Market Val at 31 Dec ,865 16,979-20,844 19,689 Historic cost at 31 Dec ,953-14,953 14,659 Gains on investment assets Unrealised gains (as above) - 1,471-1,471 (971) Glebe revaluation Total investment gains 172 1,471-1,643 (656) The Investments of the parent company are 510k ( 293k cost) less than that of the consolidated group, and 1,100 greater then that of the consolidated group, both cost and market value being 100% holdings in G&FS and Jumping Fish Ltd. Of the investment portfolio 5.2m is managed by Rathbones In listed investments. Of these investments 2.6m are UK investments and 2.6m are overseas investments. No one investment is deemed material to the GDBF. All other fixed asset investments are unlisted investments and primarily represent holdings in Central Board of Finance managed funds. No historical cost is quoted for investment properties as these represent historic glebe assets brought on to the balance sheet in 1994 at valuation. The Properties above match the Parent Company s fixed asset investments along with 16,469k of the investments (total investment gain for Parent Company was 1,617k). 27

29 Notes to the consolidated accounts Note 15a Consolidated group debtors Due within one year Due after one year Prepayments and sundry debtors 1,117 1, Staff car loans Loans to parishes Due from the Church Commissioners Debtors 1,356 1, Included in debtors is an amount of 231k ( k) due from related charities. These charities are administered by staff of the Board, but the trustees are separate from the directors of the Board. Note 15b Parent company debtors Due within one year Due after one year Prepayments and sundry debtors 1,130 1, Staff car loans Loans to parishes Good & Faithful Servant Ltd Jumping Fish Ltd Due from the Church Commissioners Debtors 1,816 2, Included in debtors is an amount of 248k ( k) due from related charities. These charities are administered by staff of the Board, but the trustees are separate from the directors of the Board. 28

30 Notes to the consolidated accounts Note 16a Consolidated group creditors Due within one year Due after one year Accruals and sundry creditors Loans CBF Loan (Solar Panels) Value Linked Loans (Church Commissioners) PGS: Loans from other Dioceses Creditors , Included in 'Accruals and sundry creditors' is a total of 53,000 ( ,000) due to related charities which are administered by staff of the Board and whose trustees are also trustees of the Board. Value linked loans from the Church Commissioners are repayable on sale of the property to which they relate. Any capital profit or loss arising on sale of the property accrues to the Church Commissioners and the Board in proportion to the equity invested. Note 16b Parent company creditors Due within one year Due after one year Accruals and sundry creditors Loans CBF Loan (Solar Panels) Value Linked Loans (Church Commissioners) PGS: Loans from other Dioceses Creditors , Included in 'Accruals and sundry creditors' is a total of 53,000 ( ,000) due to related charities which are administered by staff of the Board and whose trustees are also trustees of the Board. Value linked loans from the Church Commissioners are repayable on sale of the property to which they relate. Any capital profit or loss arising on sale of the property accrues to the Church Commissioners and the Board in proportion to the equity invested. 29