The Bristol Diocesan Board of Finance Limited Annual Report & Financial Statements for the year ended 31st December 2016

Transcription

1 1 The Directors Annual Report and Financial Statements for the year ended 31st December 2016 The Bristol Diocesan Board of Finance Limited Annual Report & Financial Statements for the year ended 31st December 2016 Registered Office: Hillside House, 1500 Parkway North, Stoke Gifford, Bristol BS34 8YU The Bristol Diocesan Board of Finance Limited Reg. in England: Charity , Company

2 Annual Report of the Directors for the year ended 31 December 2016 TABLE OF CONTENTS Page Number Our purpose, identity and priorities 2 Legal Objects 3 Strategic Report: Strategic aims 3 Objectives for the year 4 Activities and achievements 4 Future plans 7 Financial review 9 Principal risks and uncertainties 13 Structure and Governance 13 Trustees Responsibilities 16 Administrative details 17 Independent Auditors Report 19 Statement of Financial Activities 20 Income and Expenditure Account 21 Balance Sheet 22 Cash Flow Statement 23 Notes to the Financial Statements 24 1

3 Annual Report of the Directors for the year ended 31 December 2016 Our purpose Creating communities of wholeness with Christ at the centre. Our identity Creating connections: connecting with God connecting with each other connecting with our communities Our priorities Making disciples Growing leaders Engaging younger generations 2

4 Annual Report of the Directors for the year ended 31 December 2016 The Trustees, who are also Directors for the purposes of company law, present their annual report, together with the audited financial statements, for the year ended 31 st December The Trustees and Directors 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 The Financial Statements have been prepared in accordance with statutory requirements prevailing at 31 December 2016, with the requirements of the Charity s governing document, its Memorandum and Articles of Association, and with the Charities Statement of Recommended Practice (FRS102). Where possible, the guidance issued in the Diocesan Annual Report and Financial Statements Guide by the Diocesan Secretaries' Liaison Group has been followed. LEGAL OBJECTS The primary objective of the Bristol Diocesan Board of Finance ( the DBF ) is to promote and assist the work and purposes of the Church of England in the Diocese of Bristol. The DBF has the following statutory responsibilities: The management of glebe property and investments to generate income to support the cost of stipends arising from the Endowment and Glebe Measure 1976; The repair of benefice houses as the Diocesan Parsonage Board under the Repair of Benefice Buildings Measure 1972; The management of investments and the custodian of assets relating to church schools under the Diocesan Board of Education Measure 1991; The custodian of permanent endowment and real property assets relating to trusts held by Incumbents and Churchwardens and by Parochial Church Councils (PCCs) as Diocesan Authority under the Incumbents and Churchwardens (Trusts) Measure 1964 and the Parochial Church Councils (Powers) Measure STRATEGIC AIMS Throughout the Diocese of Bristol, the Church of England is making a significant difference to Christian witness in our communities through its ministers, parishes and church schools. The established purpose of the Diocese of Bristol, which includes all its constituent parts, is "creating communities of wholeness with Christ at the centre". In 2016, the vision of the Diocese was expressed afresh as Creating connections: connecting with God, connecting with each other and connecting with our communities. The priorities of making disciples, growing leaders and engaging younger generations have been agreed to focus parish and diocesan plans and activity. The diocesan contribution to the vision and priorities is led by the Bishop of Bristol and his Staff Team and expressed through the work of the DBF and the Diocesan Support Services under the oversight of its Board of Directors. The DBF takes a lead in: Expressing the vision of the Diocese through its leadership and communicating ways in which that vision is being embodied throughout the Diocese Strengthening relationships throughout the Diocese by connecting people, parishes and schools, sharing good practice and resources Empowering people by recruiting, developing and deploying ministers, leaders and staff in parishes, chaplaincies, schools and the Diocesan Support Services Maximising resources by stewarding the income, expenditure and assets of the DBF effectively 3

5 Annual Report of the Directors for the year ended 31 December 2016 Developing structures to support this work including those for governance, communication and management. OBJECTIVES FOR THE YEAR The following objectives were set for the year ending 31 December Promoting Creating connections and the three priorities to ministers, parishes and schools as a basis for their plans. This will include a Connected conference in April 2016, termly Connections newsletters promoting good practice and publishing a Creating Connections toolkit to enable parishes to respond effectively. 2. Developing the services offered by the Diocesan Support Services team to the wider diocese in line with its identity and priorities and making them accessible and available. 3. Developing and agreeing strategic initiatives action plans in key areas such as growing vocations, ministerial deployment, education and safeguarding. 4. Reviewing the Diocese s approach to Parish Share and agreeing proposals that significantly increase the DBF s ability to generate income to meet its objectives in 2016 and in the future. 5. Identifying a small number of pilot Mission Areas and securing additional funding from the national Church s Strategic Development Funding to enhance their effectiveness. 6. Developing and agreeing a financial plan to resource the longer term planning of the DBF. The Directors believe that all the above shows that the DBF delivers public benefit by working with ministers, parishes and schools to be a Christian witness at the centre of their communities. ACTIVITIES AND ACHIEVEMENTS IN THE YEAR Diocesan Peer Review As part of the Church of England s Renewal and Reform Programme, the Diocese of Bristol participated in Diocesan Peer Review on 29 November The purpose of peer review is to help ensure mutual accountability over how resources are being used; to facilitate shared learning between dioceses about their plans for mission, evangelism and discipleship; ultimately to strengthen a diocese s mission and finance. The Peer Review team was encouraged by the fullness and openness of the Diocese s responses, by its recognition of the challenge which it faces and by its plans to address those challenges. Achievements against objectives 1. Promoting Creating connections and the three priorities to ministers, parishes and schools. Creating connections and the diocesan priorities of making disciples, growing leaders and engaging younger generations were launched at the Connected conference in April Almost 300 ministers and leaders from across the Diocese engaged with the vision and priorities through teaching, sharing examples and prayer. A range of resources were introduced: the Creating connections toolkit that helps parishes respond, the termly Connections newsletter that gives examples of how parishes are responding and over 50 How to guides, a practical resource for parishes. As part of the Diocesan Strategic Plan (see 3 below), diocesan officers, in consultation with Diocesan Synod, have identified the key practices in church life that will help parishes make disciples, grow leaders and engage younger generations which will be spread widely in

6 Annual Report of the Directors for the year ended 31 December 2016 At the beginning, parishes completed a Creating Connections annual return that paints an accurate picture of how they are currently responding that they will build on in the years ahead. The Diocesan Peer Review observed that the Creating connections vision and priorities contain a strong plan for spiritual and numerical growth. The launch of Creating Connections and the supporting toolkit has been successful; feedback from parishes to date is positive and indicates that parishes understand how Creating connections fits into their context. 2. Developing and promoting the services offered by the Diocesan Support Services team In 2015, the DBF reorganised the Diocesan Support Services to express the Diocese s vision, strengthen relationships, empower people, maximise resources and develop structures. In 2016, the support offered was reviewed, developed and promoted through a series of brochures and bespoke communication. Over the course of 2016, 190 training events were delivered with 3,600 participants with an overall participant rating of 8 ½ out of 10. This rating was reflected in a general survey of clergy at the end of the year where over 85% were positive about training, communications and the culture of service offered by diocesan staff. Over 90% of clergy surveyed felt there had been an improvement in the quality and appropriateness of training and support in the last two years. The Diocesan Peer Review reflected that: the Diocesan Support Services have been reorganised very effectively in line with the diocese s goals and focus not on telling parishes what to do but on supporting them in delivering their own plans for mission, ministry and outreach parishes acknowledge and welcome the diocese s strong ethos of service 3. Developing and agreeing plans and strategic initiatives in key areas. Over the course of 2016, the Bishop s Council developed a Strategic Plan for to respond to the Creating connections vision and priorities. This was agreed in November and endorsed by the Diocesan Synod in December The Strategic Plan has three objectives resourcing and multiplying effective mission; optimising ministry and leadership; enhancing financial resources and several quantitative goals that reflect the objectives and priorities. These are supported by six strategic initiatives, a small number of choices that focus on priorities and achieve goals. The 2017 objectives are built around the initiatives. A visual summary of the Strategic Plan is given on page Reviewing the Diocese s approach to Parish Share In response to a Diocesan Synod motion in December 2015, the Finance Committee appointed a Parish Share Working Group to review the Diocese s approach to Parish Share and make proposals for a new approach. The Bishop s Council recommended the Working Group s proposals to Diocesan Synod and were approved by Synod in May 2016 for implementation. The proposals were based around the principles of take responsibility, be generous and have faith. Communications materials were produced in support of the approach and each parish received requests in September to make a commitment for Following a series of seminars and individual meetings with parishes, parishes made commitments of 5.42m, which equates to an increase of almost 5% or around 250k. The DBF appointed a Giving & Resources Adviser at the end of the year to support parishes in their giving and the Diocese in its approach to Parish Share. The commitments for 2017 are a positive but first step towards addressing the longer term income needs of the Diocese if it is to achieve its goals. 5. Identifying Mission Areas and successfully applying to the national Church s Strategic Development Fund. Three Mission Areas were identified in west Bristol, around Yate and North Wiltshire. These areas bring together parishes committed to developing a coordinated approach to mission across a 5

7 Annual Report of the Directors for the year ended 31 December 2016 wider geographical area; to focus, share and multiply mission resources and practice; and to provide a context in which new leaders and ministers can explore vocation and develop in a mission focused setting. A two stage application to the Strategic Development Fund to support Associate Ministers, consultancy and Mission Area apprentices was granted in January The learning from these varied, early Mission Areas will inform the development of future Mission Areas 6. Developing and agreeing a financial plan to resource the longer term planning of the DBF. The focused work on Parish Share and overall strategic planning meant that the DBF s Finance Committee was able only to do initial work on its financial plan. At the end of the year it commissioned a Task Group under the chairmanship of the Vice-Chair of the DBF to develop a plan to deliver the strategic objectives and goals that could be agreed in Main activities Parochial ministry At the end of 2016, 206 clergy were licensed across the 165 parishes, 105 benefices and one Bishop s Mission Order of the Diocese of Bristol. Of these clergy, 103 were stipendiary and 86 self-supporting ministers (SSMs). 24 of the total were undertaking a training curacy. Eight candidates were sponsored for ordained ministry and seven people were ordained as deacons. There were 154 Licensed Lay Ministers (LLMs). Overall deployment levels for incumbent posts remained stable but vacancy rates remained higher than normal at 10% of total. This was in part due to the effects of the recruitment freeze imposed by Synod at the end of 2015 which was lifted in May and failure to appoint to some posts. Five stipendiary incumbent posts were filled during the course of The Diocesan Peer Review affirmed that the diocese s work on vocations and on recruitment and deployment of stipendiary ministers, SSMs, Ordained Local Ministers (OLMs) and LLMs is strong, its pastoral support of clergy is highly effective, evidenced by clergy responses to national surveys, and it has significant learning to share in relation to ministry. Schools and education There are 71 Church Schools in the Diocese of Bristol supported by the Diocese s Education Team. The Education Team is led by the Diocesan Director of Education and CEO of the Diocese of Bristol Academies Trust (DBAT), the Diocese s separately incorporated Multi-Academies Trust (MAT) and consists of both DBF employees and DBAT employees. At the end of 2016, 94% of Church Schools had Good or Outstanding Ofsted judgements (2015, 87%) and 98% Good or Outstanding SIAMS inspections (2015, 100%). The Diocesan Peer Review observed that the Diocese s schools work is well regarded and there is a strong focus on encouraging and sharing learning and good practice in school-parish links. DBAT grew to 10 schools, with Ridgeway Farm, a new school, opened in September The Deanery CE Secondary and Primary Schools, Swindon will open in Safeguarding Safeguarding support and arrangements continued to develop in A part-time Safeguarding Caseworker was appointed in March and a new Diocesan Safeguarding Adviser started in December. Authority was given to recruit a part-time Training and Development Officer in people received training, 692 DBS applications were recorded and 52 new cases were recorded. The Diocese of Bristol will be independently audited by SCIE in

8 Annual Report of the Directors for the year ended 31 December 2016 FUTURE PLANS In 2017, the DBF will follow the Strategic Plan in support of Creating connections framework and the priorities of making disciples, growing leaders and engaging younger generations. Key strategies include: 1. Key practices Select, establish and spread quickly six key practices that help parishes make disciples, grow leaders, engage younger generations through diocesan training, communications, guidance. 2. Recruitment and development programme Resource recruitment and development programme to increase quality, quantity and diversity of new ministers and leaders. 3. Mission areas Establish the first three Mission Areas in west Bristol, Yate and North Wiltshire and develop plans for a city centre resourcing church in Bristol. This resourcing church will be supported by a successful Strategic Development Fund grant bid and will play a significant part resourcing mission across the city and diocese and launch in September Church schools Agree the relationship between the DBE and Church-led MATs and continue to grow the number of children in church schools, outstanding schools and levels of Christian distinctiveness. 5. Parish Share and giving Embed the new approach to Parish Share and sustain growth while supporting parishes to grow their giving income. 6. Financial plan, asset management Develop and agree a four year financial plan and begin to redeploy surplus assets to support strategic initiatives. 7

9 Annual Report of the Directors for the year ended 31 December

10 Annual Report of the Directors for the year ended 31 December 2016 FINANCIAL REVIEW Financial Performance In December 2015, Diocesan Synod was presented with a 2016 Budget for the DBF, which showed a deficit of 172,000. At the time, this was judged to be an acceptable position for the year ahead, with the deficit largely representing expenditure on sustaining parochial ministry for the future. This budget was predicated on an anticipated level of Parish Share (the financial contributions made by parishes to the DBF) for 2016 of 5,408,000, based on the challenge that deaneries had been set to increase Parish Share by 5%. However, when the pledges for 2016 received from parishes were collated, the total amount of Parish Share that parishes were willing to commit amounted to 5,177,000. While the majority of parishes had committed to increasing their Parish Share in 2016, a small, but significant minority of parishes had either reduced or not increased their pledge for the year ahead. The result of this shortfall in the anticipated level of Parish Share for 2016 was to increase the projected budget deficit from 172,000 to 403,000. This was a level of deficit that the members of Diocesan Synod did not feel comfortable with and in response, passed a motion ordering the following to be brought to the next meeting in May 2016: Proposals for an alternative scheme of Parish Share A revised budget for 2016 In addition, an immediate recruitment freeze for all parochial and diocesan posts was ordered until the revised budget and Parish Share proposals could be considered. These proposals and the revised budget were duly presented to Diocesan Synod in May 2016 and the revised budget showed a deficit of 266,000, reflecting an anticipated level of Parish Share of 5,177,000. This budget was duly approved by Diocesan Synod, along with the adoption of the new approach to Parish Share and a lifting of the recruitment freeze. By the end of 2016, parishes actually gave gifts of Parish Share equating to 5,185,000 (2015: 5,168,000), but this amount included gifts towards earlier years of 28,000 (2015: 35,000). It also included additional gifts from parishes of 47,000 (2015: 60,000) made above and beyond the original pledges made. Despite this shortfall in the DBF s primary source of income, other areas of the DBF s income performed well. In terms of expenditure, the most significant area of overspend compared to the original budget was the cost of maintaining the properties managed by the DBF. This additional expenditure was largely due to the timing of improvement works and urgent works required by a number of older properties and was closely monitored by the Property Team and Finance Committee. An additional 96,000 of expenditure on property was funded from the operational budget, with 115,000 coming from the DSF Capital Fund, bringing the total contribution from that expendable endowment to 215,000 in The overall result for 2016 against the revised budget was an operational deficit of 243,000 including other funds and the various contributing factors are detailed in Table 1 (on page 10). The income and expenditure from other funds relates primarily to certain ancillary DBF funds, including the DBF Clergy Charities (so called the Clergy Society), the Educational Foundations funds and two Fresh Expressions. In 2016, the Educational Foundations funds made exceptional grants to the Diocese of Bristol Academies Trust (DBAT) amounting to 139,000 in support of DBAT s expanding operations. The Clergy Society, which provides small welfare grants to clergy on a case-bycase basis, made 17,000 more grants in 2016 than originally anticipated. Other expenditure disclosed in the SOFA (on page 20) includes 611,000 of net pension adjustments (2015: 434,000). The various components of these pension adjustments are shown in Note 10, as well as in the pension disclosures on pages 44 to 46. When added to the operating deficit of 243,000, this gives an overall figure for the total income before investments gains of 368,000 on the SOFA. 9

11 Annual Report of the Directors for the year ended 31 December 2016 TABLE Budget deficit agreed for 2016 by Diocesan Synod (May 2016) (266) INCOME Parish Share 8 Budget = 5,177k, actual = 5,185k Local Fee Income Budget = 370k, actual = 358k (12) Grants and charges / fees 73 Budget = 1,307k, actual = 1,380k Property Income (including income from glebe) 28 Budget = 258k, actual = 286k Investment income 80 Budget = 723k, actual = 803k EXPENDITURE Parochial establishment 10 Budget = 3,843k, actual = 3,833k Initial ministerial training 88 Budget = 1,076k, actual = 988k Property costs Budget = 1,297k, actual = 1,508k ( 215k funded from DSF Capital) (211) Diocesan support services (staff) 30 Budget = 1,111k, actual = 1,081k Diocesan support services (non-staff) (1) Budget = 575k, actual = 576k National church Budget = 253k, actual = 253k - Actual deficit before other funds (173) Income from other funds 91 Budget = 186k, actual = 277k Expenditure in other funds (161) Budget = 131k, actual = 292k (incl. 139k grants to DBAT) Actual deficit including other funds (243) Net adjustment in respect of pension schemes (see Note 10) 611 Total net income before investment gains (per SOFA on Page 20) 368 The other funds detailed above relate to ancillary DBF funds, including the DBF Clergy Charities, which provides small welfare grants to clergy, the Educational Foundations funds and two Fresh Expressions. 10

12 Annual Report of the Directors for the year ended 31 December 2016 Significant Property Transactions The DBF spent 215,000 (2015: 261,000) on necessary improvements to benefice houses in the year from the Diocesan Stipends Capital Fund. The Diocesan Stipends Capital Fund is available for providing and improving benefice and glebe properties and when invested provides income for clergy stipends. Two properties were effectively purchased during the year, with one being transferred from the DBF s unrestricted assets to the assets of the Parsonage Building Fund endowment to reflect its use as a house for incumbent status clergy. No properties were sold in Balance sheet position The Directors consider that the balance sheet together with details in note 26 show broadly that the restricted and endowment funds are held in an appropriate mix of investments and current assets given the purposes for which the funds are held. While the net assets at the balance sheet date totalled 53,864,000 (2015: 51,447,000) it is worth highlighting that within this total are properties, mostly used for ministry, whose value amounted to 27,148,000 (2015: 26,951,000). Much of the remainder of the assets shown in the balance sheet are held in restricted funds, and cannot necessarily be used for the general purposes of the DBF. Reserves policy The reserves policy of the DBF applies to three distinct levels of its operations. On one level, the policy is to ensure sufficient funds are available to maintain the smooth, ongoing operations of the DBF. The management of these reserves helps the DBF to ride out daily cash flow requirements, which can be quite substantial considering that the largest item of expenditure (clergy stipends) is paid monthly but the largest income source (Parish Share) tends to come in unevenly across the year overall. On a second level, the policy is to maintain the minimum level of cash and liquid assets in order to permit the DBF to fulfil its immediate financial commitments and effect a smooth transition should a major change or disruption occur to its operations. This figure is estimated to equate to at least three months of general fund expenditure and would amount to approximately 1,970,000. At the 31 st December 2016, undesignated current assets were 1,352,000. Finally, the policy is to maintain sufficient invested reserves, in order to minimise the call made on parishes to support the work of the Diocese. The annual cost of ministry and related support costs are not wholly covered by annual Parish Share receipts in the DBF budget and a significant factor in bridging this gap is the income generated by historic reserves. The total of unrestricted funds (designated and undesignated) at 31 December 2016 amounted to 12,205,000 (as shown in note 25), of which 8,945,000 was held in marketable securities and 5,449,000 is tied up in tangible fixed assets (as shown in note 26 on page 40), which is sufficient to meet this policy. The DBF has a number of other endowment and restricted funds which are represented by investments and fixed assets. The purpose of these funds is detailed in note 27 of the financial statements. Grant making policy The DBF made a grant of 253,000 ( ,000) to the Archbishops' Council of the Church of England in 2016 as a contribution towards the costs of supporting the National Church Institutions, grants and contributions to other organisations and mission agencies' pension contributions; details of the amounts paid are shown in note 13. Bristol Diocesan Clergy Charities makes grants to diocesan clergy and their dependants, who are in conditions of need, hardship or distress; to advance the education of children of diocesan clergy; and to assist with the holiday expenses of clergy. Other grants made from time to time by the DBF are approved by the Directors in each year's budget. 11

13 Annual Report of the Directors for the year ended 31 December 2016 Loans policy The DBF advances loans to parishes largely to facilitate fabric works in support of their overall mission and ministry. Interest-free loans of up to 5,000 are made from DBF funds, with larger loans being obtained through the CBF Diocesan Loan Scheme. These are considered to be concessionary loans in accordance with Section 34 of FRS102. Investment policy The DBF has power to invest funds not immediately required for operational purposes in such concerns, securities or properties as it thinks fit. The Directors have resolved to invest such funds within the various CBF Funds, managed by CCLA Investment Management Limited, which also operates the ethical investment policy of the National Church Institutions. Investments are placed to achieve income and long-term capital growth. The Finance Committee monitors investment performance through quarterly reports from the Investment Advisers. The majority of investments are held as permanent endowments for the long-term and therefore the Directors' investment advisers continue to recommend no material change to the current investment strategy. A number of changes to the investment portfolio have taken place in the year, largely to invest the proceeds of various property sales. The investments held and their returns during the year are set out in the following table: CBF Investment Fund CBF Global Equity Fund CBF Property Fund CBF Fixed Interest Fund Funds at 31 December s Proportion of portfolio Income yield in year Total Return* in year Total Return in year of comparator 15, % 3.51% +15.9% +17.1% 4, % 4.06% +18.6% +28.2% 3, % 5.67% +2.6% +3.7% % 3.90% +10.3% +10.6% 25, % *Capital and income Connected charities The Foundation of Saint Matthias (registered charity number ) is administered from the DBF's registered office by its Clerk to the Trustees, who is an employee of the DBF. The Foundation paid a fee for these services of 25,950 in 2016 ( ,200). The Foundation made a grant to the DBF in 2016 of 50,000 towards the work of the Adviser to schools and the resource centre in the Diocese ( ,000). Further grants of 6,000 (2015-6,000) were received to fund the work of a Further Education Development Officer. As noted above, the Diocese has established The Diocese of Bristol Academies Company (DoBAC) and The Diocese of Bristol Academies Trust (DBAT), both of which are administered from the DBF's registered office by employees of both the DBF and DBAT. DBAT contributed 113,284 to the DBF in 2016 in relation to costs incurred on their behalf ( ,352). One of the DBF Directors was also a Director of DoBAC and a Trustee of DBAT. Many of the Directors are involved with charitable bodies which are potentially beneficiaries to or from the DBF and a register is kept of these involvements. The Directors are mindful of their duties as Trustees of this charity and ensure that possible conflicting interests are declared and that all decisions are reached on a proper basis. Directors None of the Directors have received any emoluments from the DBF in their capacity as Directors for services to the Board. However, included in clergy stipends are the emoluments and expense reimbursements of certain Directors who have been paid in respect of their duties as clergy. Note 14 to the accounts details transactions with the Directors during the year. As in previous years, the DBF 12

14 Annual Report of the Directors for the year ended 31 December 2016 has maintained insurance cover against losses arising from claims against it for wrongful acts committed by its Directors and officers. Charitable contributions Charitable contributions have been paid as normal expenditure in the pursuance of the DBF's objects. No political contributions have been made. Taxation status The DBF is a registered charity and, as such, is able to claim certain exemptions from Corporation Tax. No provision for tax is considered necessary. PRINCIPAL RISKS AND UNCERTAINTIES The Directors, through an Audit Committee, which normally meets twice a year, have continued the process of examining the major strategic and operational risks which the DBF faces. They hold and monitor a register of the significant risks, assessing the probability of occurrence and likely impact if they were to occur. This leads to a gross risk calculation with a maximum score of nine. Regular reports will continue to be produced which give details of the associated risk mitigation strategies so that the necessary steps can be taken to reduce these risks. The risks with the highest gross risk score (6) from the most recent review, along with their associated mitigation strategies, are as follows: Insufficient levels of Parish Share Monthly monitoring of receipts, encouragement of parishes to use monthly standing orders. Introduction of new approach in Improved intelligence relating to parish finances. Informed approach to request levels. Parish Share seminars, face-to-face engagement. Appointment of Giving & Resources Adviser and development of support team. Careful control of expenditure. Prepare and implement plans for reductions in all areas of expenditure (if required). Consider budgeting for a shortfall. Ensure reserves policy takes account of this risk and makes an appropriate provision. Serious safeguarding case Reputational damage to the Church as a whole is immense. Ensure swift action taken if a situation does arise. Ensure effective safeguarding provision is available, through the diocesan safeguarding adviser, training officers and caseworkers. Ensure effective system of review of safeguarding cases and files. Scrutiny is applied by the Diocesan Safeguarding Steering Group (DSSG). Realignment in the Church of England resulting from opposing theological viewpoints Maintain efforts to bring opposing viewpoints together (e.g. ongoing shared conversations ). Awareness of US experience. STRUCTURE AND GOVERNANCE Organisational structure The DBF is governed by its Memorandum and Articles of Association, but also has to work in accordance with the requirements of the Synodical Government Measure 1969, which is regularly updated by means of its Schedule 3 'Church Representation Rules'. The Articles provide that the members of the Standing Committee (Bishop's Council) shall be the Directors. The Bishop's Council and Standing Committee are elected triennially by the houses of 13

15 Annual Report of the Directors for the year ended 31 December 2016 clergy and laity of the Diocesan Synod, in accordance with Church Representation Rules. Certain officers of the Diocese are ex officio members of the Bishop's Council and Standing Committee. The Chairman and Vice-Chairman of the Board are elected at the General Meeting next following the election of members. All members of the Diocesan Synod who are not DBF employees are entitled to be members of the company. Following its election, the Board of Directors are provided with information about their duties and responsibilities as Charity Trustees and Company Directors. This training took place in July Decision making structure The Bishop's Council and Directors met five times in All business between Directors' meetings is dealt with by the Finance Committee, which met seven times in On behalf of the Directors, the Committee deals with such matters as the annual accounts, the receipt of Parish Share and the management of the DBF's corporate property, investments and its role as Diocesan Authority for Parochial Trusts. It also deals with matters relating to the work of the Parsonages Board and the Diocesan Board of Education. It makes suggestions to the Bishop's Council about the appropriate level of stipends for the clergy and it deals, usually through the Chairman and the Remuneration Committee, with staff remuneration and conditions of service. The DBF, although a fully independent charity, is one of 42 dioceses in the Church of England, which itself is governed under the Synodical Government Measure 1969 by General Synod and the Archbishops' Council. Remuneration of key management personnel Emoluments of higher-paid employees are based on job evaluation and remuneration levels are scrutinised by the HR and Remuneration Committee, which in 2016 consisted of two Directors and three co-opted members with professional expertise. The HR and Remuneration Committee make recommendations to the Finance Committee and its terms of reference include remuneration and HR policy. Public benefit The Directors consider that they have complied with the duty in section 17 of the Charities Act 2011 to have due regard to public benefit guidance published by the Charity Commission and in particular the Commission's guidance in The Advancement of Religion for the Public Benefit; the Directors believe they have had regard to the duty in their administration of the DBF. The Directors believe that, by promoting the work of the Church of England in the Diocese of Bristol, the DBF helps to promote the whole mission of the Church (pastoral, evangelistic, social and ecumenical) more effectively, both in the Diocese as a whole and in its individual parishes, and that in doing so it provides a benefit to the public by: providing facilities for public worship, pastoral care and spiritual, moral and intellectual development, both for its members and for anyone who wishes to benefit from what the Church offers; and promoting Christian values, and service by members of the Church in and to their communities, to the benefit of individuals and society as a whole. The Directors believe that this report, taken as a whole, provides evidence that the DBF's work in 2016 furthered its charitable purposes for the public benefit. Constitution The Bristol Diocesan Board of Finance Limited (the DBF) is a company limited by guarantee registered under the Companies Act, number It is also a registered charity, number , registered in England and Wales. 14

16 Annual Report of the Directors for the year ended 31 December 2016 The principal office and registered office of the charity is Diocesan Office, First Floor, Hillside House, 1500 Parkway North, Stoke Gifford, Bristol, BS34 8YU. Directors and Trustees The Directors of the Board of Finance are its Trustees for the purpose of charity law and throughout this report are collectively referred to as the Directors. This report constitutes the Trustees' report for charity law purposes and the Directors' report for Companies Act purposes. Delegation of day to day delivery The names of all those who were Directors on the date the report was approved are given on page 17 of this report, as are the names of any who served as Directors from the start of the financial year. The name of the Diocesan Secretary (Chief Administrative Officer), to whom day to day management of the charity has been delegated, and the names and addresses of professional advisers are to be found on page 18. Funds held by the DBF as trustee In February 1998 the Charity Commissioners issued a scheme making the DBF the sole Trustee of the charity known as the Bristol Diocesan Clergy Charities. The accounts of this charity have been aggregated into these financial statements as they are administered by the DBF and held for specific purposes which are within the general purposes of the DBF. By virtue of the Parochial Church Councils (Powers) Measure 1956 and the Incumbents and Churchwardens (Trusts) Measure 1964, and certain Charity Commissioners schemes, the DBF is the Diocesan Authority over certain assets held on permanent trusts. These assets have not been aggregated in these financial statements, since the DBF does not control them. Separate financial statements have been prepared to account for the DBF's stewardship of these assets, and full trust accounts for each trust are the responsibility of the managing trustees in each case. Copies of the separate financial statements are available from the Secretary at the Registered Office of the DBF. Funds held on behalf of schools The Diocesan Board of Education (DBE) is incorporated within the DBF and receives contributions from governors of voluntary-aided church schools within the Diocese in connection with major repair and capital projects to church schools and also government grants in connection with the same. The DBE administers these monies as managing agent and makes appropriate payments to contractors for work carried out. The monies do not belong to the DBE and as such the receipts and payments are not treated as income and expenditure in the Statement of Financial Activities. Any monies held at the balance sheet date are treated as creditors on the balance sheet. The amount included in creditors as at 31 December 2016 is 915,000 (2015: 646,000). The income and expenditure relating to school projects not reflected in the Statement of Financial Activities amounted to 205,000 and 201,000 respectively in 2016 (2015: 232,000 and 396,000). 15

17 Annual Report of the Directors for the year ended 31 December 2016 TRUSTEES RESPONSIBILITIES The Directors are responsible for preparing the Directors' Report and 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 affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the Directors are required to: select the most suitable accounting policies and then apply them consistently; make judgments and accounting estimates that are reasonable and prudent state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 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. Statement of disclosure to Auditor So far as the Directors are aware, a) there is no relevant audit information of which the charitable company's Auditors are unaware, and b) they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the charitable company's Auditors are aware of that information. 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. 16

18 Annual Report of the Directors for the year ended 31 December 2016 ADMINISTRATIVE DETAILS Directors and Trustees The following served as Directors and Trustees from 1 January 2016 to the date this report was approved (unless shown otherwise): President: The Rt Rev M A Hill, Bishop of Bristol * Chairman: Mr A J S Lucas * Vice Chairman: Mr C W E R Buchan * The Rev Canon R W Adams The Rev K M Campion-Spall (appointed 1 January 2016) Professor D N Clarke (appointed 1 January 2016) Mr B A Finnamore * (appointed 1 January 2016) The Ven C A Froude, Archdeacon of Malmesbury & acting Archdeacon of Bristol * Canon D C Froude The Very Rev Dr D M Hoyle, Dean of Bristol The Rev Canon M D Ineson * Canon N R Orman * The Rt Rev Dr L S Rayfield, Bishop of Swindon Canon P G Robottom * * Members of Finance Committee 17

19 Annual Report of the Directors for the year ended 31 December 2016 (cont) Senior management and advisers Diocesan Secretary Head of Ministry Development Head of Finance Head of Governance & Property Head of Parish & External Relations Director of Education Company Secretary Registered Office Auditors Solicitors Bankers Insurers Investment Advisers Mr Oliver Home Rev Canon Derek Chedzey Mr Matthew Hall FCA Mrs Sally Moody Mr Chris Priddy Mr John Swainston Mr Oliver Home 1500 Parkway North, Stoke Gifford, Bristol, BS34 8YU. Mazars LLP 90 Victoria Street Bristol, BS1 6DP. Harris & Harris 14 Market Place, Wells, Somerset, BA5 2RE. National Westminster Bank plc 40 Queen's Road, Clifton, Bristol, BS8 1BF. Ecclesiastical Insurance Group Beaufort House, Brunswick Road, Gloucester, GL1 1JZ. CCLA Investment Management Limited Senator House, 85 Queen Victoria Street, London, EC4V 4ET. This report, which incorporates the Strategic Report, was approved by the Directors of the Bristol Diocesan Board of Finance Limited on 11 th May 2017 and signed on their behalf by Andrew Lucas Chairman 18

20 Independent Auditors' Report to the Members of The Bristol Diocesan Board of Finance Limited We have audited the financial statements of The Bristol Diocesan Board of Finance Limited for the year ended 31 December 2016 which comprise the Statement of Financial Activities, the Income and Expenditure account, the Balance Sheet, the 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), including FRS102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. Respective responsibilities of directors and auditors As explained more fully in the Trustees' Responsibilities Statement set out on page 16, the trustees (who are also the directors 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. 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 (APB's) Ethical Standards for Auditors. 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 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 charitable company's affairs as at 31 st December 2016 and of its 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 Opinion on the other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors' Report and Strategic 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 In light of the knowledge and understanding of the charity and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors Report. 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, or returns adequate for our audit have not been received from branches not visited by us; or the financial statements are not in agreement with the accounting records and returns; or certain disclosures of director remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Alistair Fraser (Senior statutory auditor) for and on behalf of Mazars LLP Chartered Accountants and Statutory Auditors Date: 90 Victoria Street Bristol BS1 6DP 19

21 Statement of Financial Activities for the year ended 31 December 2016 Unrestricted Restricted Endowment Total Total Note Undesignated Designated Funds Funds Funds Funds Funds Funds,000,000,000,000,000,000 Income and endowments from Donations 3 Parish Share contributions 5, ,185 5,168 Archbishops Council Other donations Charitable activities Other activities Investments ,224 1,182 Other Total income 7, ,290 8,367 Expenditure on Raising funds Charitable activities 9 7, ,387 8,171 Other 10 (611) (583) (429) Total expenditure 7, ,922 7,863 Net income / (expenditure) before other gains (210) Net gains in investments ,037 2,196 2,955 Net income ,564 3,459 Transfers between funds (347) Actuarial gains on pension schemes (147) (147) 33 Net movement in funds ,417 3,492 Funds brought forward 4,884 6,147 5,141 35,275 51,447 47,955 Funds carried forward 25 5,534 6,671 5,557 36,102 53,864 51,447 All activities relate to continuing activities. The notes on pages 21 to 48 form part of these financial statements. 20

22 Income and Expenditure Account for the year ended 31 December 2016,000,000 Total income 8,285 8,367 Total expenditure (7,707) (7,602) Operating surplus for the year Net gains on investments 1, Net income for the year 1, The income and expenditure account is derived from the Statement of Financial Activities with movements in endowment fund excluded to comply with company law. All income and expenditure is derived from continuing activities. 21

23 Balance Sheet as at 31 December 2016 FIXED ASSETS Note,000,000,000,000 Tangible assets ,224 27,048 Investments 19 28,215 26,019 55,439 53,067 CURRENT ASSETS Debtors ,748 1,756 Cash on deposit 22 1,684 2,295 Cash at bank and in hand ,074 4,456 CREDITORS: amounts falling due within one year 23 (941) (1,135) NET CURRENT ASSETS 3,133 3,321 TOTAL ASSETS LESS CURRENT LIABILITIES 58,572 56,388 CREDITORS: amounts falling due after more than one year 24 (4,708) (4,941) NET ASSETS 26 53,864 51,447 FUNDS 25 Endowment funds 10,588 11,799 Endowment funds revaluation reserve 25,514 23,476 36,102 35,275 Restricted funds 4,113 4,121 Restricted funds revaluation reserve 1,444 1,020 5,557 5,141 Unrestricted funds 11,592 11,619 Revaluation reserve 3,753 3,016 Unrestricted funds excluding pension liability 15,345 14,635 Pension reserve 31 (3,140) (3,604) 12,205 11,031 TOTAL FUNDS 53,864 51,447 The Cash Flow Statement and the Notes form part of these financial statements. The financial statements were approved and authorised for issue by the Directors of the Bristol Diocesan Board of Finance Limited on 11 th May 2017 and signed on their behalf by Andrew Lucas Chairman 22