The Church Commissioners Annual Report 2014 Report Annual Investing in the Church’s growth The Church Commissioners Annual Report 2014

The Church Commissioners Annual Report 2014 Investing in the Church’s growth

Presented to Parliament pursuant to section 12(2) of the Church Commissioners Measure 1947 COPYRIGHT © 2015 THE CHURCH COMMISSIONERS FOR ENGLAND

Any enquiries about this report should be sent to the Church Commissioners’ Secretariat at:

Church House Great Smith Street London SW1P 3AZ [email protected]

Registered Charity Number 1140097

This document is available for download at: www.churchofengland.org/about-us/structure/ churchcommissioners/annual-reports.aspx

This report is printed on paper from responsible sources Church Commissioners Annual Report 2014

FOREWORD BY THE ARCHBISHOP OF CANTERBURY

Archbishop Justin chatting with pupils at the launch of the Church of England’s anti- homophobic bullying guidance for schools in May 2014

2014 was yet another eventful year Church. There always will be matters covering a wide range of projects from for the Church of England. There is on which Anglicans feel strongly and issues of debt, homelessness, hunger constantly much to be done and the disagree deeply. We must all work to and other needs. With other Bishops work of the Church Commissioners reconcile our differences as we are in the House of Lords and elsewhere is vital in providing necessary challenged by the spirit of the age. I have also sought to contribute to financial resources. I was glad that the announcement discussions on social issues. of Libby Lane as the new Bishop of In March 2013, in support of the Stockport was met with expressions I am grateful for the support of the Quinquennial Goals of the Church of of goodwill. Commissioners for the work here at England, I announced three personal Lambeth and across every diocese in priorities for my ministry as Archbishop I have felt it important to hear from all the country as we continue to identify of Canterbury: parts of the Anglican Communion their areas of need and opportunities to strongly held views on a range of issues. promote the spiritual and numerical ––Renewal of prayer and the In 2014 I completed my visits to all growth of the Church of England. Religious Life Provinces of the Communion – a family Through the themes of generosity, ––Reconciliation of 38 self-governing churches spanning stewardship and wisdom, this report ––Evangelism and witness 165 countries, six continents and some demonstrates how the Commissioners 85 million people. Not only did I have support Christian-based projects in The new community of St Anselm, valuable exchanges everywhere but the community, how the money is based at Lambeth Palace and led by speaking and praying with the Primates invested and the importance of a Prior appointed in 2014, is to be a who lead those Provinces was a joy good governance. focal point of prayer and the Religious and encouragement. Life. My hope is that, together with As we move forward into 2015 we existing religious communities and An essential part of our engagement continue to be thankful for the work of other initiatives, it will help contribute with society is that we call people to the Commissioners and pray that with to a renewal of prayer. follow Jesus Christ as his disciples by their support we will see continued both what we say and what we do. growth and new areas of opportunity. We all recognise the existence of During 2014, along with many others I divisions not only in wider society but have been involved in the support and within the worldwide Anglican Justin Welby development of projects and actions Communion and even within our own Archbishop of Canterbury

1 CONTENTS

CONTENTS

34–66 20-22 28-30 23-25 18-25 31-33 9-17 3-5 6-7 26 27 19 8 Governance Accountability Trustees

Financial statements Financial Management Risk STEWARDSHIP – INVESTING FOR FUTURE GENERATIONS Fund strategy Fund Review Investment Responsible activity investment of Review Property performance Fund THE CHURCH COMMISSIONERS AT A GLANCE WISDOM – INVESTING ETHICALLY WITH RESPONSIBLE GOVERNANCE GENEROSITY – SUPPORTING THE CHURCH’S MINISTRY Supporting the Church’s ministry ministry Church’s the Supporting commitments strategic our Managing Commissioner Estates Church First from Overview Church Commissioners Annual 2014 Report 2 Church Commissioners Annual Report 2014

The Church Commissioners’ work supports the Church of England as a Christian presence in every community. We manage an investment fund of £6.7 billion and our ongoing responsibilities include:

––Supporting less well-endowed dioceses with ministry costs

––Providing funds to support mission activities

––Paying for bishops’ ministry and some cathedral costs

––Administering the legal framework for pastoral reorganisation and settling the future of closed church buildings

––Paying clergy pensions for service prior to 1998

––Running the national payroll for serving and retired clergy

We provide public benefit in fulfilling these responsibilities.

OUR CHURCH NETWORK: 16,000 66% church buildings (12,500 parishes) of our churches help run foodbanks 22% 12,400 of our churches provide debt or money advice clergy including 1,000 chaplains 5,700 6,600 active retired clergy licensed readers

3 Church Commissioners Annual Report 2014

The Church Commissioners’ £6.7 billion long term. Over the past 30 years investment fund is well managed and our fund has achieved an average has a significant spending capacity return of RPI+6.3% per annum. Our which we invest in our parish ministry investment policy is to hold a diversified and mission grants, including support portfolio of investments across a broad for low income dioceses. range of asset classes consistent with our ethical guidelines. After taking RETURNS account of expenditure, our fund has Our investment objective is to generate grown from £2.4 billion at the start of a total return (capital gain and income) 1995 to £6.7 billion at the end of 2014. averaging RPI+5% per annum over the

INVESTMENT PERFORMANCE

800 K E Y Church Commissioners 700 WM All Funds RPI +5% 600 Global Equities

500

400

300

200

100

0 AT A GLANCEAT 4 6 7 8 9 2 3 4 7 8 9 2 3 4 5 0 1 5 6 0 1 199 199 199 199 199 200 200 200 200 200 200 201 201 201 199 200 200 200 200 201 201

CHURCH COMMISSIONERS’ EXPENDITURE 2014 THE CHURCH COMMISSIONERS COMMISSIONERS CHURCH THE Our parish ministry and mission ministry of our archbishops, bishops, grants include support for low income and cathedrals. Other support includes dioceses, mission development funding some specific expenditure on church and Research and Development. Case buildings, national clergy payroll costs studies and examples are outlined in the and our own governance costs. Full Review. We also continue to support the details can be found in this Report.

CHURCH COMMISSIONERS’ EXPENDITURE 2014

NON PENSIONS 2014 CHARITABLE EXPENDITURE

 Pensions expenditure – £122.9m NON-PENSION KEY  Non-pensions charitable  Parish ministry and mission grants – £46.0m expenditure – £91.6m  Archbishops’ and bishops’ ministry – £32.3m  Cathedrals – £9.1m  Other expenditure – £4.2m

4 Church Commissioners Annual Report 2014

STRATEGIC DEVELOPMENT FUNDING TO SUPPORT MAJOR GROWTH AND CHANGE PROJECTS

Working with the Archbishops’ Council we have awarded £4.6 million to projects from five dioceses from the new stream of Strategic Development Funding (full details page 11).

KEY TO DIOCESES 01 Bath & Wells 33 Sodor & Man 02 Birmingham 34 Southwark 03 Blackburn 35  Southwell 04 Bristol & Nottingham 36 St Albans 05 Canterbury 25 06 Carlisle 37 St Edmundsbury 07 Chelmsford & Ipswich 38 Truro 08 Chester 13 39 Winchester 09 Chichester 06 10 Coventry 40 Worcester 11 Derby 41 York 33 12 Diocese of 41 West Yorkshire 12 and the Dales 13 Durham 03 14 Ely 24 15 Exeter 22 32 16 Gloucester 08 17 Guildford 21 11 35 18 Hereford 19 Leicester 20 20 Lichfield 26 21 Lincoln 19 22 Liverpool 02 14 28 23 London 18 10 40 24 Manchester 37 25 Newcastle 26 Norwich 36 16 07 27 Oxford 27 28 Peterborough 04 23 29 Portsmouth 30 30 Rochester 17 34 05 31 Salisbury 01 31 39

32 Sheffield 09 29 15

38 Birmingham – £1.0m towards the diocese’s Chelmsford – £0.9m Leicester – £0.8m to Liverpool – £0.9m Growing Younger funding a package of fund three Pioneer to support the strategy including interventions to achieve Development Workers to ‘Transforming nine mission Sheffield – £1.0m to a ‘turn-around’ in support and further Wigan’ project apprentices to support a project providing parishes offering the develop the diocesan rolling out a work in selected 12 to 15 Mission Partnership greatest potential, strategy on Pioneer wide-ranging parishes and 26 Development Workers, each including interim Ministry and fresh package of missioners for supporting four parishes in ministers, dedicated expressions of Church initiatives to deliver children’s and deprived areas to free up support teams and other through enabling lay growth in the families work. clergy time. back up measures. volunteer teams. deanery of Wigan.

5 THE FIRST CHURCH ESTATES COMMISSIONER not by contrivance but by achievement. achievement. by but contrivance by not is: that sense, agood In record. the from 1990s vanished now have early in the Commissioners Church the by sustained were that losses the of traces all that means This funds. similar of advance in and inflation of ahead well annum, 9.8 by %per appreciated has portfolio 1985 since that the show 30 years past the over portfolio Commissioners’ the of performance the for figures New rigidly for more than 20 years. 20 years. than more for rigidly followed been has policy This time. through terms inreal maintained be to endowment the of value enable the will as beneficiaries their to sums such distribute only should actuaries, their by advised Commissioners, the that means which equity, inter-generational of principle Irefer the to months. inrecent discussion lively of subject the been 1990s has 1980s early and late inthe difficulties Commissioners’ Church the to that contributed factors the of one coincidence, By LOOKING AHEAD THE FIRST CHURCH ESTATES COMMISSIONER Church Commissioners Annual 2014 Report 6 the Church’s financial strength. strength. financial the Church’s in increase an aby-product, as have, would outcome asuccessful addition In growth. encourage to church in the investment an as seen be should It place. in safeguards are there and parties of all understanding and agreement the with into entered is and costed fully is based, evidence are that plans to response in purpose, aclear for undertaken is envisaged, now is which version, good The over-distribution. ‘good’ and over-distribution ‘bad’ between drawn 2015. was February Adistinction in Synod General to presented paper ina explored fully were acourse such against and infavour arguments The distributions. normal their above and over funds additional provide to Commissioners the require likely would plans such However, financing initiatives. these welcome strongly Commissioners Church The future. the for Church the equip to proposals ambitious made have Archbishops, the by up Task set Now Groups, Church Commissioners Annual Report 2014

Accordingly at General Synod in As for our policy during 2015 and February, I moved a motion that invited onwards, caution is the watchword. For we members to ‘support the Commissioners’ may be living in ‘historical’ times, when in releasing additional funds to support events seem to presage a new order. changes to ‘equip the Church of England more effectively for sustainable mission’. China will soon be the largest economy Large majorities approved the motion. in the world. The civil war in Ukraine may lead to a new Cold War. At the same Synod was no doubt reassured that the time, the Eurozone is under intense Commissioners had turned in a further strain. Meanwhile deflation has satisfactory performance in 2014. arrived in many advanced countries. The total return for the portfolio was The question of whether this is 14.4%, taking the value of the endowment ‘good’ deflation or ‘bad’ deflation to £6.7 billion. We also distributed almost is as yet unanswered. £215 million to the Commissioners’ beneficiaries during the year. All these events are making and will make their influence felt on The property markets in which the the Commissioners’ portfolio, albeit Commissioners are invested were strong indirectly and sometimes with quite across the board. By the end of 2014, lengthy time lags, in ways hard to our property investments totalled just discern. In fact the Commissioners’ under £2.0 billion, nearly 30% of the investment policy was cautious portfolio. The average return in 2014 throughout 2014. was 27%, of which only 2% came from income and the rest from capital growth, The most striking example was the sale including realised gains on sales. of the Commissioners’ 64.2% stake in the Pollen Estate, which owns 43 The returns on our private equity freehold properties in the centre of investments, where, with partners we Mayfair, London. The holding attracted take holdings in company restructurings, more than 100 bidders from across the and in credit strategies, where we make world and finally realised £381 million. funds available for debt reorganisation, This compared with a 2013 book value were also satisfactory. of £231 million.

During the year we also completed In 2015 we shall go on seeking to a major step in our diversification reduce risk incrementally while, for the programme. This was our programme time being at least, leaving our current for investing in timberland on an portfolio allocations as they are, international basis. Our allocation to this eschewing dramatic changes. asset class is now nearly 4% of the portfolio. Indeed, in Britain, with the recent purchase of forests in Scotland and Wales, we are now the largest Andreas Whittam Smith private owner. The First Church Estates Commissioner

As far as equities go, there was a small advance in the United Kingdom. But US equities performed strongly and, all in all, our global equity mandates turned in a gain of 11.2%.

7 MANAGING OUR STRATEGIC COMMITMENTS billion spending on ministry and mission. and ministry on billion spending £1.4 Church’s annual the of quarters provide which around three cathedrals and dioceses parishes, from support generous the forget not must we But 1998. of end the until up service clergy’s the for pensions the provide year. the We also during services for commemoration WW1 national backdrop the were many and worship of places be growing to continue these show that statistics – latest cathedrals of work the and ministry bishops’ for support our alongside sits This churches. local by supported all hubs, foodbank and work youth to drop-ins and clubs from community, inthe make projects our difference on p11-13 studies case real the show The 16% costs. Church’s overall the of £215 almost was million, expenditure charitable our year the During issues. social justice other and homelessness poverty, national ongoing debateto the on archbishopsbishops and contributing our supporting to projects community vital alongside church ways of doing new supporting from level national and local at both impact of England’s 2014 Church the show to continued SECRETARY TO THE CHURCH COMMISSIONERS Church Commissioners Annual 2014 Report 8 Secretary to theSecretary Church Commissioners Andrew Brown administrative support provided. support administrative and financial the or achieved been have not could results financial the members, our with inpartnership whom, without staff, dedicated our thank like to would Ialso managed. are assets our way inthe leadership and wisdom offer and Church the serve to time their up give who members committee other and Commissioners to grateful I am p18. at found be to insert inanew investment ethical on position our outlines who Mason, Edward Investment, Responsible of Head anew of 2014and appointment the saw wisely invest to look to continue We also 6-7. pages on results excellent our on commentary a detailed provides Commissioner Church Estates First our Smith, Andreas Whittam above. outlined Ihave that Church the for support financial generous the provide able to are we that investments these from growth capital and income from the is it and results strong very produced has again once team investment Our

Church Commissioners Annual Report 2014

SUPPORTING THE CHURCH’S MINISTRY

THE CHURCH IS WORKING TOWARDS THREE GOALS: Archbishop of York ––advancing its spiritual and 2014 saw a major review of how the Dr John Sentamu with Dan Finn, Director of numerical growth; Church’s national funding can best the Archbishop of ––reimagining its ministry for the 21st be invested to support the Church York’s Youth Trust at century to help ensure there is a in achieving these goals. the Cottingley Youth Project (bishops’ growing and sustainable Christian funding p14) witness in every community; Children’s activities at ––contributing towards the the Burnside Centre, common good. Manchester Diocese on the highly deprived Langley Estate (see p13)

OBJECTIVES

––to manage our financial commitments

––to provide sustainable financial support to our beneficiaries

––to target resources on areas of need

––to identify and help to meet new needs

––to research and share news of effective spending

––to provide an administrative resource and skills base to the Church

9 Church Commissioners Annual Report 2014

SUPPORT FOR THE CHURCH IN 2014 (£M) KEY  Non-selective expenditure  Targeted on financial need

122.9 Clergy pensions

Parish mission 45.8 0.2 & ministry grants

32.3 Archbishops & bishops

3.5 Cathedrals 5.6

Other expenditure 4.2

Following wide consultation with The Resourcing the Future review dioceses, the Resourcing the Future has formed part of a wider Task Force has recommended removing programme of reform and renewal the current formula systems and which has also encompassed replacing them with investment focused resourcing ministerial education, on fulfilling dioceses’ strategic plans for senior leadership and talent growth, and with a strong bias towards development, and simplifying Church the poor. Half of the support made legislation. Read the Archbishops’ available from the Commissioners’ funds message on reform and renewal at for distribution to dioceses should be bit.ly/ineachgeneration earmarked for the support and

development of mission in the poorest SPENDING PLANS 2014-16

MANAGING OUR MANAGING communities and half for proactive We develop three-year spending plans investment in new growth opportunities. jointly with the Archbishops’ Council. In 2014-16 the pattern of distribution from

STRATEGIC COMMITMENTS STRATEGIC We and the Archbishops’ Council the Church’s national funding will remain approved the Task Force’s unchanged. Funding for each of the recommendations and they have also broad expenditure categories – for been welcomed by the General Synod dioceses’, bishops’ and cathedrals’ and dioceses. Attention is now focusing ministry – increased by 1% in 2014 on how the recommendations can best be from the 2013 level of spending and implemented over a transitional period. will increase by 1% again in both 2015 and 2016.

£15.0m of development funding has been earmarked in 2014-16 for which dioceses can apply to support projects which will make a significant difference to their long-term mission and financial strength.

A similar funding stream of £0.5m has been earmarked for cathedrals.

10 Church Commissioners Annual Report 2014

The work of the joint Spending Plans CHURCH GROWTH RESEARCH Task Group of the Archbishops’ Council PROGRAMME and Church Commissioners, www.churchgrowthresearch.org.uk commissioned by the Archbishops of Following the January 2014 Faith in Canterbury and York, is ongoing. In Research conference to share the key 2014, the Task Group continued to findings from the Church Growth meet with diocesan leadership teams to Research Programme, over 8,000 copies discuss their diocese’s mission and of the summary report From Anecdote financial strength, the contribution which to Evidence have been circulated and the Church’s national funding makes to presentations have been given on the their mission and financial strength and findings to a wide range of audiences, their future plans for the use of the including diocesan senior teams. national funding that they receive. STRATEGIC DEVELOPMENT The December 2014 Sheffield conference FUNDING FOR LEICESTER RESEARCH AND DEVELOPMENT looked again at the research findings and DIOCESE In 2011-13, we and the Archbishops’ showcased how a number of diocesan Council earmarked £12.0m for research teams, cathedrals, fresh expressions of and development to help the Church Church and mission agencies have Leicester diocese has been awarded understand better which parts of the reflected and acted upon them. £809,000 of Strategic Development Church are growing and why, and to Funding over five years as part of a A parish development tool seek to develop that growth. £2.1m project to expand the on the research findings – diocese’s well-established strategy of £0.7m was committed for research to www.fromevidencetoaction.org.uk developing Pioneer Ministry and fresh investigate good practice in relation to – was published in February 2015. expressions of Church. Central to the Church growth; £0.3m for strategic project is the appointment of three Further research has been commissioned planning and evaluation to help Pioneer Development Workers (from into the development of Fresh Expressions dioceses and cathedrals plan for, and l to r) Jonathan Dowman, Matt Pitt of Church and into Messy Church. analyse the effectiveness of, their use and Mads Morgan to discern, enable, of the national funding; and £2.9m STRATEGIC DEVELOPMENT FUNDING train, accompany and coach lay for developing Church growth in £15.0m of funding has been earmarked volunteer teams of licensed Pioneers. deprived areas. in 2014-16 to support major growth www.leicester.anglican.org/ and change projects in dioceses, plus shaped-by-god/ In 2014, we and the Archbishops’ a further £3.5m from the funding fresh-expressions-of-church/ Council approved the Spending Plans set aside in 2011-13 for research Task Group’s recommendations for the and development. allocation of the remaining £8.1m: The funding is being distributed in three ––£3.5m for strategic development tranches. In 2014, five dioceses – funding for dioceses (to be added to Birmingham, Chelmsford, Leicester, the £15.0m allocated for strategic Liverpool and Sheffield – were awarded development funding in 2014-16); funding totalling £4.6m under the first ––£1.8m for the development of church tranche. Information about the projects planting and new mission funded can be found at communities; bit.ly/strategicfundingannounced ––£1.5m for further research and development; Applications for the second tranche ––£1.1m for ministerial and leadership have been invited and the funding will development; be allocated in the summer of 2015. ––£0.2m for restructuring and Applications for the third tranche have redeployment of resources. been invited by autumn 2015 with funding being awarded in the summer We and the Archbishops’ Council have of 2016. delegated the detailed expenditure decisions on the research and development funding to the Spending Plans Task Group.

11 Church Commissioners Annual Report 2014

DEVELOPING CHURCH GROWTH IN DEPRIVED AREAS 28 projects are currently in receipt of a grant of around £0.1m each from the £2.9m funding for developing Church growth in deprived areas, which was awarded in two tranches in 2011 and 2012. Each proposal was based on work which had already proved to be effective in terms of mission and growth in deprived areas. The funding was awarded to scale the impact of the work

across the Church. BRISTOL DIOCESE

£150,000 has been reserved for monitoring and evaluating the Rachel Hepburn is the community programme and disseminating link worker at St Michael’s, Stoke the results. Gifford in Bristol Diocese, and is funded by a grant for mission

This funding stream supports Sensing in new housing and other Salvation (Ely diocese) which works with development areas. two non-Church schools running an innovative arts project. For a week Rachel took up the role in early every month, an artist or theologian 2014 and is already embedded in takes up residence, and works with the local community, living on the schoolchildren on art skills – at the end Cheswick new housing estate and S U P P O R T I N G of the week their finished work is shown making vital links. to the public. The Revd Paul West, vicar of St Peter and St Paul, Wisbech says: Pioneer curate the Revd Jimmy THE CHURCH’S MINISTRY CHURCH’S THE “It’s inconceivable to think of Christianity Rocks said it was the grant that put without images. The incarnation of the final jigsaw piece in place in the Jesus Christ is the word made flesh, and church’s community outreach as the so that’s the starting point of everything estate is partly separated by an A that we do here. When we think about Road with few community facilities. our parish church family and a “As a team we had prayed about how dwindling, ageing congregation we look we could do more in this new around us and there’s such life and we housing area. It was unrealistic to want to build a bridge into the life of our expect people to come to the parish family… using very visual ways of existing church building, we needed communicating our faith, not inside four to go out to them.” Rachel and closed walls but taking the faith outside Jimmy and team are meeting the visually and announcing that with great community need by running lots of joy is what we’re about.” events, along with an Alpha group and informal Sunday worship. By the end of her three-year funding Rachel is planning to make the projects sustainable and run by local people.

Rachel Hepburn Community link worker

12 Church Commissioners Annual Report 2014

FUNDING FOR MISSION IN NEW HOUSING AND OTHER RESOURCING MISSION DEVELOPMENT AREAS BULLETIN In 2008-10, the Council and Commissioners allocated £7.25m to 15 Three issues of the Resourcing dioceses to support their mission in new Mission Bulletin were published on housing and other development areas. the Church Growth Research and This money is all committed and was Development website in 2014. All accounted for by the end of 2010 but, are welcome to sign up to receive owing to the economic downturn, many the Bulletin via email at developments were delayed and the www.churchgrowthrd.org.uk/ money committed will be drawn down resourcing_mission_bulletin over several years. BURNSIDE YOUTH AND COMMUNITY CENTRE An external evaluation of the use of the new housing and other development funding to date, carried out by Charities On the day that drummer Lee Rigby Evaluation Services, was completed in was killed, it was the Burnside the summer of 2014 and the findings Centre near his home in the parish were shared with dioceses in receipt of of Langley that offered shelter and the funding at a seminar in June. The hospitality to all. This 45 year old evaluation report and summary are at project of All Saints & Martyrs www.churchgrowthrd.org.uk/news/30 Church, on the highly deprived Langley Estate, still serves the PARISH MINISTRY AND MISSION community with a range of services In 2014 £46.0m was distributed to meet local needs and acts as a from our funds for parish ministry stepping stone towards support, and mission. Most of this funding training, information and guidance. was allocated in grants made through A mission development funding the Archbishops’ Council. The Council grant is supporting the work of the distributed £34.3m in block grants Centre’s children’s activities, to 25 dioceses using a formula engaging with children and young which targets the funding on the people though weekly sessions and least resourced. Dioceses usually holiday play schemes, and providing use their grant to support clergy a safe, stimulating and positive stipends, targeting it on parishes environment. A further mission least able to meet their ministry costs. development funding grant provides the salary for the coordinator’s post £6.0m was distributed to all dioceses within the Centre. The Centre’s as mission development funding. This Pre-School, for local children and funding is for dioceses to invest in new their families, was judged mission opportunities, although it may Outstanding in its most recent also be used for clergy stipends. Ofsted report. The Chair of the Dioceses report annually on their use Burnside Centre, the Revd Canon of the funding and the information Philip Miller, has said that: ‘…over is shared with the General Synod and over again we are instrumental and published on the Church of in changing lives – in helping those England website. who come to access our services to become volunteers and then to go on and find jobs for themselves.’

13 S U P P O R T I N G THE CHURCH’S MINISTRY and employ his staff. his employ and grant ministry Bishop’s the administer to law Belgian under up set company anot-for-profit and Bishop new for the inBrussels leased been have Offices from. worked and lived have Europe of Bishops previous where Gatwick near Worth at than rather diocese in his live should Innes, Robert in Europe, Dr Gibraltar of Bishop new the that Church the by taken decision the implemented 2014During Commissioners the bishops. suffragan and area their to funding level of the on decisions including needs, local to according resources manage them to enable bishops diocesan to grants Ministry Commissioners. the met by are bishops and archbishops the of costs working and office stipends, The (bishops) costs working and office staff, Support (archbishops) costs working and office staff, Support pensions (bishops) associated and Stipends pensions (archbishops) associated and Stipends female bishop. first England’s of Church the of 2014, end the becoming at Diocese) (Chester Stockport of Bishop next the as announced was Lane Libby Revd Rt The BISHOPS AND ARCHBISHOPS Church Commissioners Annual 2014 Report 14 £14.0m £3.8m £0.2m £4.9m premium over the existing valuation. existing the over premium a provide will which sold, being of process inthe now inSheffield, house gardener’s aformer of redevelopment the for permission planning obtained also inChester. We have cottage gardener’s aformer has as been let has at accommodation Unused Winchester workplace. and home bishop’s the as property the of use the compromising without be achieved can where this costs reduce order to portfolio in housing the from realise gains to continue Commissioners The Dales. the of West Yorkshire and Diocese created of the newly Bishop the a suitable house for create to undertaken house was also see and Leeds the former Ripon of adaptation remodelling and Some and Exeter. Liverpool Hereford, at houses the works to modernisation and core maintenance undertake to to the appointments prior vacant being houses of the advantage We took were appointed. 2014In bishops new of anumber and mission. work bishops’ the which facilitates appropriate accommodation provide they ensure to houses of suitability the review regularly and bishops diocesan for provider housing statutory the are Commissioners The costs of other cathedral staff. other of costs the employment support to used be discretion, Commissioners’ the at can, vacancies by caused grant the of part Any unused Oxford. except cathedrals at all canons residentiary two and Dean the of costs pension and stipend the to fund 21 Measure the of section under £5.6m to provided were amounting Grants Measure. Cathedrals the under provide grants Commissioners The BISHOPS’ HOUSES CATHEDRALS Church Commissioners Annual Report 2014

A further £3.5m of discretionary scheme being withdrawn or amended. grants were provided under section Objectors are entitled to seek 23 of the Measure. These grants are permission to appeal to the Judicial used to fund lay staff and were Committee of the Privy Council against targeted at cathedrals with the lowest a decision by the Commissioners to unrestricted income. Funding of these allow a Scheme to proceed or any core costs frees up cathedral resources aspect of the decision. There was and facilitates their mission and ministry. one such application outstanding at the end of 2013 but permission was not Jointly with the Executive Committee of subsequently granted and there the Association of English Cathedrals, were no applications made during 2014. we issued a survey to all cathedrals HOLY GROUND inviting them to share their strategic CLERGY HOUSING AND GLEBE LAND (EXETER CATHEDRAL) plans, reflect on the outcomes which The Commissioners – through the they achieved in 2011-13 and share Pastoral Committee – also have a legal The cathedral holds a monthly fresh information on future plans for role in sales and other transactions expression service – Holy Ground developing their mission and financial relating to clergy housing and glebe – for anyone who is interested in strength. A summary of the key themes land. Objections to transactions are engaging with Christian spirituality and issues which emerged in response handled in the same way as for parish in a creative way different from the was circulated to cathedrals in reorganisation cases. Objections were traditional models of church. Holy December 2014. received to six glebe sales during Ground begins with an act of 2014, two of which were overruled after contemplative and creative worship PARISH REORGANISATION consideration by the Committee, while and then offers the opportunity either The Commissioners have a legal three objections were withdrawn in the to attend a café style gathering, and advisory role in the reorganisation light of the diocesan response and one often with a guest speaker, or to of parishes and benefices. Following is still to be considered. Three glebe attend guided contemplative prayer. local consultation and approval transactions (one in 2013) involving a by the diocesan or area bishop, connected person were approved: three Holy Ground attracts 100+ proposals for reorganisation are sent clergy housing transactions (none in attendees across the age range, to the Commissioners for validation. 2013) required and were given approval with many who are new to faith or The proposals are then published as in 2014. who have become de-churched, or a draft scheme for consultation by are looking for worship that is the diocese or by the Commissioners, We also approved the release of creative and yet reflective, and it depending on the nature of the covenants in six cases (three in 2013) continues to grow and develop. One proposal. Reorganisation sometimes where the Commissioners were attendee wrote that ‘…the service includes the closure of church buildings historically a party to the sale of land, was so delicately crafted and thus – 23 of nearly 16,000 church buildings which at one time was owned by the allowed me to respond to the in use were declared closed for regular local parish priest as part of his income compassionate and gentle message. public worship during 2014 but at the or “living”. I left a particular church expression same time new churches and places of about a decade ago now…and it has worship were also opened. been a long and complicated journey! Thank you so much for Schemes to reorganise parishes providing a space where I can feel and benefices can attract objections. safe enough to respond to the The Commissioners’ Pastoral ‘spiritual’ again. I cannot tell you how Committee heard four cases during much that means to me and gives 2014 with input from objectors and me hope that the part of me I supporters. Three of these schemes thought lost may have a chance to were allowed to proceed and one recover and know peace again.’ was sent back to the bishop for further Canon Chancellor Anna Norman- consideration. Other objections Walker commented: ‘Cathedrals can were resolved without the need for a create a uniquely safe place for decision by the Commissioners, either people to find and rediscover faith by the objection being withdrawn and we are delighted that Holy after further consultation or the Ground has proved such a success.’

15 Church Commissioners Annual Report 2014

CHURCH BUILDINGS CLOSED FOR REGULAR PUBLIC WORSHIP

The Commissioners decide the future Conservation Trust was responding of church buildings closed for regular to the decline in its core funding. public worship. Our locally based specialist casework team works closely Such visits continue to inform our work with dioceses to find suitable alternative in relation to closed church buildings uses. In the minority of cases where and the context in which parishes such a use cannot be found we normally carry out their mission and care have to decide, following advice, for their buildings. between preservation of the building Where a qualifying body objects to the in the Churches Conservation Trust proposed demolition of a listed church and demolition. or an unlisted church in a conservation

CONTRIBUTION TO THE area, the Department for Communities CHURCH’S MISSION and Local Government may hold a More than £10.3m was raised in net hearing or public inquiry. Demolition of proceeds from the disposal of closed Stanley St Peter in Wakefield Diocese

church buildings and sites during the went ahead following a decision not to year, the highest amount ever achieved. hold such an inquiry, the case being the These proceeds primarily support and first such referral in over a decade. develop the ‘living church’ and also However, the Department has decided contribute in meeting the Church’s to hold an inquiry in a second case, share of funding for the Churches Birch St Peter in Chelmsford Diocese,

S U P P O R T I N G Conservation Trust. which will be the first held since 1994.

During 2014 we made 24 schemes CHURCHES CONSERVATION TRUST With the Government we co-sponsor

THE CHURCH’S MINISTRY CHURCH’S THE determining the future of closed church buildings; 16 provided for alternative the Churches Conservation Trust which uses, three for preservation by the preserves, in the interests of the nation Churches Conservation Trust and five and the Church of England, outstanding for demolition. The Church Buildings closed church buildings for which no (Uses and Disposals) Committee suitable alternative use can be found. considered objections in six cases, In July General Synod approved the deciding in five that the scheme should Payment to the Churches Conservation go ahead and in one that it should not, Trust Order 2014, providing for the with further consideration to be given to Church’s triennial share of funding the future of the building. to remain £1.36m per annum for The chart opposite shows how the 2015 to 2018 (with the possibility of future of 309 closed church buildings an additional amount capped at £0.15m, has been settled over the last ten years. depending on the level of sale proceeds achieved). While continuing to work with In June, with diocesan colleagues and the Trust in containing the financial representatives from various heritage pressures on its estate and managing bodies, the Committee visited several the flow of new vestings, we remain churches in Lichfield Diocese and two concerned at its long term in Hereford Diocese. We noted both financial sustainability. the opportunities provided by and formidable challenges faced in dealing with major urban or town centre buildings, and also how the Churches

16 Church Commissioners Annual Report 2014

All Saints Church, Bolton (left), closed in 1986,has been transformed by the Churches Conservations Trust into a vibrant new community centre.

Alternative use 2005-2009 2010-2014

Arts, crafts, music or drama 3 3 Civic, cultural or community 21 16 Educational 6 3 Light industrial 0 1 Monument 7 13 Museums 1 0 Office or shopping 15 4

Parochial or ecclesiastical 13 7 Private and school chapel 1 2 Residential 30 36 Sports 2 1 Storage 1 2 LAMBETH PALACE LIBRARY Worship by other Christian bodies 27 23 Alternative Use Sub-Total 127 111 Dr Paula Gooder and colleagues filming for the Pilgrim Course at Demolition and site disposal Lambeth Palace Library. One of the Additions to churchyards 0 5 Bibles filmed was Biblia, das ist, die Housing associations 3 3 Local authorities 2 1 gantze Heilige Schrifft Deudsch, New places of worship 4 1 Hans Lufft’s third edition of Martin Not yet decided 5 4 Luther’s translation of the complete Other community purposes 2 2 Bible, published in 1536 at Other Purchasers 15 5 Wittenberg, Germany. The title pages Demolition Sub-Total 31 21 in this copy have been coloured by hand. From the Sion College Library Preservation collection, now held in Lambeth Churches Conservation Trust 10 8 Palace Library (A13.6/L97). The Diocesan Board of Finance 1 0 Commissioners are responsible Secretary of State 0 0 for the Library’s collection. Preservation Sub-Total 11 8

Grand Total 169 140

17 Church Commissioners Annual Report 2014

R E V I E W O F INVESTMENT ACTIVITY

OBJECTIVES Left: In 2014 the Commissioners sold their 64.2% holding ––to manage the fund so as to ensure in the Pollen Estate sustainable distributions for to the Norges Bank REVIEW OF our beneficiaries Investment Management, (NBIM) in partnership with the ––to achieve a total fund return of RPI Crown Estate. Right: INVESTMENT ACTIVITY +5% per annum measured over The Connaught Estate the longterm summer festival (see p24) ––to meet performance benchmarks for individual asset classes

––to manage financial risks appropriately

––to act within our ethical investment guidelines

18 RESPONSIBLE INVESTMENT REVIEW

ETHICAL INVESTMENT EXCLUSIONS The Church Commissioners have always attached great importance to investing in a way that is consistent with Christian values. Together with the Church of England Pensions Board and CBF Church of England Funds, we sponsor the Church’s Ethical Investment Advisory Group (EIAG) to ensure that we receive When the Church Commissioners signed expert, independent advice on ethical the UN Principles for Responsible investment matters. Investment (‘PRI’) in 2010, we created an exciting opportunity to incorporate When investing directly in public into our established ethical investment equities, property or corporate debt, practice ideas from the fast-growing we apply investment exclusions to global movement that is setting the companies involved in indiscriminate standards for the responsible conduct of weaponry, conventional weaponry, institutional investment. pornography, tobacco, gambling, non-military firearms, high interest rate PRI signatories commit to integrate lending and human embryonic cloning. environmental, social and governance (‘ESG’) issues into investment analysis We are implementing a new policy on and decision-making. They pledge to be alcohol under which companies deriving active owners of investments through revenues from alcohol are only eligible for their policies and practices. The UN investment if they meet EIAG standards PRI’s intention is that responsible for responsible marketing and retailing. investment will better align investors

with the broader objectives of society. PROACTIVE ENGAGEMENT In 2014 the Commissioners stepped We actively engage with companies to up their commitment to the PRI by shift the dial on live issues. The key appointing a Head of Responsible engagement achievement in 2014 was Investment. I joined the Commissioners the successful completion of the EIAG’s having served for five years as Secretary dialogue on alcohol retail with the three to the Church of England’s Ethical major UK-listed supermarkets – Tesco, Investment Advisory Group. Sainsbury’s and Morrisons – after all three companies adopted revised Our ambition is to be at the forefront alcohol policies newly acknowledging of responsible investment practice and the potential for alcohol to cause harm, this review sets out where we are on as required by our new alcohol policy. our responsible investment journey.

Edward Mason Head of Responsible Investment ENGAGEMENT AND VOTING CASE STUDY: DRIVING In the past year, in partnership with the THE TRANSITION Ethical Investment Advisory Group, TO A LOW CARBON the Commissioners: ECONOMY

––Voted on 24,302 resolutions at In 2014 the ecumenical, UK-based 1,788 company meetings globally Church Investors Group, of which we ––Supported only 34% of UK remuneration are active members, engaged with resolutions at company AGMs 53 major British companies on the disclosure and management of their ––Held engagement meetings with carbon emissions. 58% of them 27 companies on environmental, social improved their performance as and governance issues measured by an independent ––Co-filed shareholder resolutions for NGO, CDP (formerly the Carbon the BP and Shell AGMs subsequently Disclosure Project). recommended to shareholders. The Commissioners are also part SUSTAINABILITY At 31 December 2014, £299.0 million of of a coalition of church and other the Commissioners’ investment portfolio investors that prepared shareholder (approximately 4.5%) qualified for resolutions for the BP and Shell inclusion in the Low Carbon Investment AGMs in 2015. In an unprecedented Registry maintained by the Global step, both companies announced that Investor Coalition on Climate Change: they would advise shareholders to vote for the resolutions which call for ––The Commissioners’ £253.0 million in-depth disclosures on how the sustainably certified forestry portfolio companies are responding to the strategic challenges that climate ––The Commissioners’ £29.0 million change poses to their industry. investment in two green office buildings in Singapore ––The Commissioners’ £17.0 million

RESPONSIBLE INVESTMENT REVIEW holding in the Impax Environmental Markets plc Fund.

VOTING ON UK REMUNERATION ENGAGEMENT

2014 2014

KEY KEY  For – 34  Environment – 8  Abstain – 4  Social – 17 Against – 62 Governance – 2

In addition, the Commissioners have one After appointment, we monitor the of their largest listed equity mandates, investment practice of our managers valued at £284.0m at 31 December carefully. For public equities we have 2014, with Generation Investment started to use external data to help us to Management, which was co-founded by monitor the non-financial characteristics former US Vice-President Al Gore, and of our managers’ investment portfolios. all of whose investments must meet sustainability criteria. This represents This data comprises MSCI IVA a further 4% of the Commissioners’ (‘Intangible Value Assessment’) ratings overall investment portfolio. of environmental and social characteristics, GMI Ratings of corporate SELECTION AND MONITORING governance, and Trucost analysis of OF ASSET MANAGERS carbon footprint, viewed on While asset management is our a platform provided by a portfolio responsibility for most of our property analytics company, Style Research. portfolio, for other asset classes we use The data covers most, but not all, of external asset managers. The selection our public equities portfolio. and monitoring of external managers is therefore an essential part of how we The data indicates that, at the end of go about responsible investment. 2014, our public equity portfolio had a significant tilt towards companies with Our due diligence when selecting better social characteristics compared to external managers is thorough and its combined benchmark. There are also includes an examination of how less significant tilts towards companies non-financial issues like environmental with better governance characteristics impact and human rights are integrated and lower carbon emissions, but poorer into investment management. environmental characteristics. Recommendations made to Commissioners to invest with any We will continue to monitor our portfolio managers include analysis of their over a longer period of time, discuss the approach to responsible investment. data with our managers and report our findings annually. RESPONSIBLE INVESTMENT REVIEW

ENGAGEMENT C HUR C H C O MMI S S ION E R S P O R T F O L I O S T Y L E S K Y L I N E ™ R E P O R T

2.01

2014

0.24 -0.27 -0.49

KEY MSCI IVA MSCI IVA GMI Trucost  Environment – 8 – Environmental – Social – Governance – Carbon Footprint  Social – 17 Not significant tilt Significant tilt Very significant tilt Benchmark line Governance – 2 RESPONSIBLE INVESTMENT REVIEW – – enhance through impact collaboration: and practice best share to investors other with collaborate to us enable which initiatives investment responsible other through also but Group Investors Responsible Investment and Church for Principles UN the only through not active are Commissioners The were encouraged by the initial scores. scores. initial the by encouraged were and future the in ratings our publish to intend we but stage trial the in is still implementation of the Principles. This their for 2014 by secretariat PRI the in time first the for were assessed (PRI) Investment Responsible for Principles the to Signatories EXTERNAL ASSESSMENT EXTERNAL MEMBERSHIPS bee nests, and bird and bat boxes. bat and and bird nests, bee stacks, insect installing and wildlife promoting wildlife through planting for are Commissioners the Life, Bug and Trusts Wildlife the RSPB, as the from organisations such ecologists with Working City. the in biodiverse most the it make to Estate, Park Hyde the flagship Commissioners’ London on underway is work of A programme IN CENTRAL LONDON CENTRAL IN PROMOTING BIODIVERSITY – – the UK for sustainable financial services. services. financial for sustainable UK the in Finance, the membership network and Investment Sustainable UK change climate of account take that behaviour corporate and practices investment policies, public encourage to investors European for platform a collaborative Change, Climate Group Investors on The Institutional

Head of Responsible Investment Head of Responsible Edward Mason “OUR AMBITION good practice. forward driving and investment responsible on managers our for rating system anew launching and change climate on policy new comprehensive 2015 for a Plans adopting include decision-making. the integration of ESG intoinvestment companies, record and onsustainability for theirstrategic with engagement Church were Commissioners praised AwardsPortfolio Institutional 2015. The at the category Investment Responsible of Implementation just won theBest The Church have Commissioners LOOKING AHEAD AWARD RECOGNITION PRACTICE” INVESTMENT RESPONSIBLE FOREFRONT OF IS TO AT BE THE ‘truly inspiring’. ‘truly investment sector which was charity the in study case practice a best as Commissioners Church the of practice investment responsible and ethical the Matter, highlighted Investments Charity Why Money: with Good (ACEVO), Organisations Voluntary of Executives Chief of Association 2014 the by December In areport INVESTMENT FOR RESPONSIBLE RECOGNITIONACHIEVING

Church Commissioners Annual Report 2014

FUND STRATEGY

The Commissioners’ fund was valued at just over £6.7 billion at the end of 2014, nearly £0.6 billion higher than at the end of 2013 after charitable distributions of £215m.

This is the highest ever asset value of the Commissioners’ fund, more than £1.1 billion higher than in 2007 before the financial crisis.

The investment objective is to generate a return of inflation (RPI) +5.0% per annum, on average, over the long term. We have managed to exceed this Tom Joy, Church Commissioners’ Director of Investments, was awarded the prize for the objective over 3, 5, 10, 20 and 30 Investment Head of the Year at the Asset years and our investment performance International (aiCIO) European Innovation awards continues to be recognised by industry in 2014. awards. Over the last 30 years the fund has achieved an average return of 9.8% TOTAL RETURNS PER ANNUM (AGAINST AN INDEPENDENT COMPARATOR every year: 6.3% ahead of RPI inflation. AND COMMISSIONERS’ TARGET RETURN) KEY Meeting or exceeding our performance  Church commissioners’ fund  WM All funds Universe objective allows us to meet our pension  RPI +5% per annum obligations and to grow, in real terms, our support for the Church, balancing 9.8% 30 years the needs of both current and future 9.4% beneficiaries. 8.5% Our investment policy is to hold a 10.1% 20 years diversified portfolio of investments 7.9% across a broad range of asset classes 7.9% consistent with our ethical guidelines. 9.0% 10 years The chart (right) shows our asset 7.8% weightings at the end of 2014 and how 8.1% these have changed in recent years. In 11.5% 5 years 2014 we continued to increase our 9.4% exposure to timberland and private 8.4% credit strategies to seek higher returns 3 years and also to better diversify the portfolio. 13.3% We made timberland acquisitions in the 10.4% USA, Australia and the UK. This makes 7.5% the Commissioners the largest private 14.4% 1 year sector forestry owner in the UK, 11.7% providing roughly 5% of the UK’s 6.6% domestic wood supply. We made selective sales across our property 0% 2% 4% 6% 8% 10% 12% 14% 16% portfolio to fund these purchases.

19 Church Commissioners Annual Report 2014

FUND PERFORMANCE

The Commissioners’ fund returned a return ahead of our inflation +5% 14.4% during 2014. Our longer-term target. Within asset classes our assets numbers, which are significantly more and managers typically performed important in terms of determining our in line or ahead of their respective distributions, also remain strong. Our 3, benchmarks which also added to 5, 10, 20 and 30 year numbers are all our overall performance. ahead of both our inflation plus 5%p.a. target and the average fund as Notable performance was delivered measured by the WM All Funds Universe. in property, private credit and timber. Property, in particular, had a very strong Unlike in previous years 2014 saw risk year with selective sales, notably the assets, such as equities and property, Pollen estate, combined with continued deliver mixed results. Across the board successful asset management by the property performed strongly, as did other in-house team materially adding to less liquid private market asset classes performance. such as private equity, credit and timber. Equities were more mixed; strong in the DISTRIBUTION STRATEGY

USA, weaker in Europe and emerging We aim to meet our pension obligations markets. Perceived safe-haven assets and to maintain and, over time, grow in like UK gilts and US treasuries also real terms our other financial support for performed quite strongly as reduced the Church’s ministry and mission. We inflation pressures, in part as a result plan our spending in three-year periods in consultation with stakeholders. R E V I E W O F of the collapse in oil prices, drove yields to record low levels. Despite this mixed Expected net non-pensions distributions picture, the Commissioners delivered in 2014-2016 are £283.8m. 56%

INVESTMENT ACTIVITY good absolute and relative performance. above the level in 2002-04. This is equivalent to an average annual Performance was strong in most areas increase of 3.7%, exceeding inflation with the majority, but not all, of the over the period. Commissioners’ asset classes producing

COMMISSIONERS’ ASSET ALLOCATION (SINCE 2005)

KEY  Equities  Fixed income and cash  Alternative strategies  Property

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

0% 20% 40% 60% 80% 100%

20 Church Commissioners Annual Report 2014

ASSET RETURNS,TOTAL FUND AND BY ASSET CLASS: 1, 3, 5, 10, 20 AND 30 YEAR AVERAGES

Total returns % per annum 1 year 3 years 5 years 10 years 20 years 30 years

Commissioners' total assets 14.4 13.3 11.5 9.0 10.1 9.8 Retail Price Index + 5% 6.6 7.5 8.4 8.1 7.9 8.5 WM All Funds Universe 11.7 10.4 9.4 7.8 7.9 9.4

Commissioners’ main asset classes Global equities 11.2 16.0 11.6 9.2 8.5 8.9 UK equities 0.7 14.4 10.0 8.0 8.5 10.5 Private equity 15.8 10.6 12.3 14.3 n /a n /a Commercial property 48.3 21.9 17.6 10.2 12.1 11.9 Residential property 16.7 17.5 16.2 16.1 17.8 17.0 Rural let land 17.1 13.9 15.4 16.0 15.6 12.6 Strategic land 23.4 16.2 17.0 12.4 28.7 n /a Indirect property 18.0 10.8 12.5 7.4 12.4 n /a Value linked loans 32.7 20.2 13.4 4.4 10.0 8.6

COMMISSIONERS’ ASSET ALLOCATION NON-PENSIONS DISTRIBUTIONS (AS AT 31 DECEMBER 2014) (IN EACH THREE-YEAR PERIOD COMPARED WITH LEVEL INCREASED BY RPI) KEY KEY  UK equities – 10.9  Actual/planned distributions  Global equities – 24.0  Defensive equities – 7.4 – 2002-2004 level increased by RPI  Private equity – 3.7  Multi-asset strategies – 10.6 283.3 2014 – 2016  Timber – 3.6  Credit strategies – 4.2 261.3 2011  Commercial property – 4.7 – 2013  Residential property – 5.8 266.0 2008  Rural property – 9.6 – 2010  Strategic land – 2.3 207.8 2005  Indirect land – 4.7 – 2007

 Value linked loans – 2.1 181.9 2002  Cash and cash like assets – 6.5 – 2004 0 50 100 150 200 250 300

EQUITIES DEFENSIVE EQUITY We did not make many changes to PUBLIC EQUITIES The defensive equity portfolio either our overall equity allocation or our UK & GLOBAL comprises low volatility equity managers manager line-up in 2014. We used In 2014, the Commissioners’ equity who are expected to generate good market strength to take profits from our portfolio outperformed its benchmark, relative performance in weak markets global holdings adding to defensive returning 7.8% against 6.8% for the and to capture enough upside in periods equity where we introduced two new benchmark. Performance was helped by of positive equity market performance managers. We also added a specialist our bias towards global markets away to provide attractive returns over the smaller company manager in Brazil after from the UK. Our global mandates long run. The portfolio is made up of a a period of significant weakness in that returned 11.2% compared to only 0.7% mixture of specialist long-only and long/ market. from our UK holdings. short managers and represented around 7.4% of the portfolio at the year end. During the year the portfolio generated a return of 8.4%.

21 R E V I E W O F INVESTMENT ACTIVITY class over the next few over years. the next class asset the to allocation the expand to continue to plan we and markets equity quoted outperformed significantly has portfolio equity private our term long the year. the Over during portfolio the £51.8m totalling commitments to further 15.8% of return in2014. four We made atotal achieved funds, of way by and directly companies, inunlisted invests which portfolio, equity private The PRIVATE EQUITY     KEY KEY GLOBAL EQUITIES TOTAL RETURNS EQUITIES GLOBAL TOTAL RETURNS EQUITIES UK 0% 0% FTSE All Share All FTSE UK equities Church Commissioners’ MSCI All Country World index World Country All MSCI equities global Church Commissioners’ 0.7% 1.2% 2% 2% Church Commissioners Annual 2014 Report 4% 4% 6% 6% 7.3% 7.7% 7.8% 8.0% 22 8.5% 8.5% 8.5% 8.6% 8.7% 8.9% 8% 9.2% 8% 10.0% 10.1% 10.1% 10.5% 10.6% 11.2% 10% 10% 11.6% 11.8% of 10.6% in2014. return atotal generated strategies These growth. strong of in periods equities lag to it expect normally would we but environment external the of independent returns positive attractive generate to designed is It portfolio. 10% total around the of represents portfolio return absolute multi-asset The MULTI-ASSET 12% 12% 13.9% 14.4% 14% 14% 16.0% 16% 16% 10 years 20 years 30 years 10 years 20 years 30 years 3 years 5 years 3 years 5 years 1 year 1 year Church Commissioners Annual Report 2014

FIXED INCOME CHURCH COMMISSIONERS’ COMBINED PROPERTY RETURNS LIQUID STRATEGIES KEY Our fixed interest portfolio, which  Church Commissioners’ combined property includes investments in US high yield  UK property IPD benchmark bonds and emerging market debt, 30 years returned -0.5% in 2014. During the 12.5% year we reorganised the portfolio to 9.3% better protect against a changing 13.6% 20 years interest rate environment. We continue 9.0% to maintain a low weighting to this area, 11.1% 10 years so while the headline return was low its 6.6% impact on the wider portfolio was limited 15.9% 5 years due to the low allocation. 11.4% 3 years PRIVATE CREDIT 17.1% Our private credit portfolio was started 11.3% in 2012 to allocate capital to interesting 27.0% 1 year opportunities which could further 19.3% diversify and improve the return profile 0% 4% 8% 12% 16% 20% 24% 28% of the fixed income portfolio.

We continued to increase our allocation INVESTMENT PROPERTY RETURNS BY INDIVIDUAL CLASS 2004 in this area during 2014 making two KEY new commitments totalling £50.5m. In  IPD Portfolio – Commercial aggregate these strategies generated  Total Commissioners’ property Indirect property a combined return of 10.2% in 2014. – Rural Let Land – Residential – Strategic Land PROPERTY The property portfolio had another 50 strong year in 2014, with each part 40 of the portfolio delivering double digit 30 performance and exceeding our return target comfortably. We received two 20 IPD industry awards based on the 10

3 year and 10 year performance of 0 our investment properties. This shows the benefit of taking a truly long term -10 approach and having stewardship of -20 a well-diversified and high quality set -30 of investment property portfolios. -40

R U R A L 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014 was a busy and productive year for the Commissioners and we focused on three main areas of work, including for the future, as they will increase We also undertook a number of land making a number of strategic the options for higher value cropping purchases to support our long term investments into water resources and rotations and should help to safeguard investment strategy and these included the associated infrastructure, principally against unpredictable weather patterns. 121 acres at Carlisle, 50 acres at across two of our southern rural estates. Peterborough and 765 acres in Kent. This has involved making investments in We have successfully progressed a water abstraction licences, irrigation number of projects to release capital These important areas of work have reservoirs and field drainage, and has from the portfolio leading to some supported the investment performance provided a number of environmental selective sales, in addition to completing of our rural holdings, with the portfolio benefits as well as a welcome uplift in a number of important tenancy generating a total return of over 17% value on the estates concerned. These restructures which benefited our farm during the year. investments are also about providing tenants as well as ourselves.

23 R E V I E W O F INVESTMENT ACTIVITY turnout in the sunshine. sunshine. inthe turnout arecord with event community and family asuccessful was festival summer The cheese. European and British sourcingcheesemonger maturing and Buchanans Cheesemonger, an artisan and porcelain, handmade selling company design homeware based aSydney- Mud, merchant, wine and butcher Argentine an Abasto, including tenants new secured we Estate, the of heart retail the Village, Connaught At inhand. Gardens Sussex along railings iron of reinstatement the of phase first the with realm public the improve to We continue projects. charge service nine and flats of refurbishments 18 We completed Gardens. Sussex Court, Alleyn 10 at including flats let, to £14.0m houses and flats buying than more reinvested we and sales, and £27.0mthan extensions lease from more generated Estate Park Hyde Our Ashford. Green, Cheeseman’s at sales plot initial and inLincolnshire Hykeham North at asale Carlisle, Morton, in £13.0m, aland-swap included which of receipts capital generated the year through Key disposals Hertfordshire. in acres 50 almost Tyneside and inSouth 24 land of acres comprising in2014, completed were Two purchases term. long the for portfolio the replenish to sites land strategic of acquisition the on focus to We continued housing. affordable of element an include will and areas these in homes new needed much of delivery the see will sites Both Cambridgeshire. in Ely of edge the on houses new 800 for inprinciple, approval, a Committee and city the of edge the on houses new inWells 150 for granted was permission 23.4% year.nearly the Planning during of areturn providing portfolio with the 2014 successes, of anumber saw RESIDENTIAL STRATEGIC LAND Church Commissioners Annual 2014 Report 24 Industrial Estate, London SE22. London Estate, Industrial Green Goose the at element office the on use residential for permission planning avaluable secured We also for £10.42m Widows Scottish to Redditch Centre, £11.65m for Life Canada io the and to Swindon Trade Equity Centres, and io the We sold assets. these for demand strong seeing again estates, industrial multi-let of sales two We completed £25.0m. for lease 893 year an to subject was which Hospital Moorfields of apart of freehold the sold We also inLondon. assets prime for demand strong the reflected investors overseas and UK both from competition keen and transaction property single ever largest Commissioners’ the was This £381.0m. for Estate Crown The and Management Investment Bank Norges to Mayfair Estate, Pollen inthe interest 64.2% our sold beneficial we August In COMMERCIAL as a whole.” as a Church the of mission and ministry the support to benefit maximizing while holdings their to commitment a demonstrate to continue the Commissioners landowners and “As property responsible Deputy Surveyor Deputy Rosemarie Jones

Church Commissioners Annual Report 2014

INDIRECT establish new plantations with the The indirect property portfolio delivered intention of growing and harvesting strong performance in 2014, driven by Indian Sandalwood oil for sale to good results, in particular from our pharmaceutical and perfume carefully selected care home manufacturers. Within the UK, we investments in the UK as well as our real bought 17,000 acres of forestry spread estate investments in the USA. across 15 forests in Scotland and Wales. This makes the Commissioners We took a highly selective approach the largest private sector forestry owner in making new investments during the in the UK, providing roughly 5% of the year, making two co-investments across UK’s domestic wood supply. the portfolio. Both of these were with our USA opportunity manager, PCCP. All of our UK forests are operated to We acquired a share of an empty office the highest standards and all wood “The property portfolio had another building in Burbank, California, as well produced is fully certified as sustainable strong year in 2014, with each part as providing capital to acquire a senior to international standards. We also of the portfolio delivering double loan on a land parcel in Michigan, in established a new forest in Perthshire digit performance and exceeding our order to build new retail, residential which provided one-third of the total return target comfortably.” and senior living facilities. new forest created nationally in 2014. Joseph Cannon TIMBERLAND AND FORESTRY INFRASTRUCTURE Chief Surveyor Our timberland and forestry portfolio Infrastructure is a relatively new performed very well, delivering a 22.3% asset class for the Commissioners. total return in 2014 in what was an We monitored the market during 2014, active year for the portfolio. Since meeting a number of top tier managers. inception it has provided a yearly We have to date made one investment, return of 14%. a $50m commitment to a US energy manager who provides credit to energy In the USA we completed the acquisition companies to help finance energy of 27,000 acres of timberland in projects. We will continue to review Virginia, along with a number of smaller market opportunities over the coming acquisitions across the US South. We year, making investments in also made two Sandalwood investments a measured way. in the Northern Territory, Australia to

Mountain Biking Centre at Llandegla, Wales – one of the 15 forests acquired in the UK by the Commissioners in December 2014. 25 GOVERNANCE – – – – – OBJECTIVES GOVERNANCE Six hold offices of state; the other 27 other the state; of offices hold Six Commissioners. 33 Church are There 12(g)note Financial Statements. the to in detailed as undertakings, subsidiary its and Commissioners the comprises “Group” Church Commissioners The 2011.Act 1140097)number the Charities under (registration Wales and in England registered acharity are Commissioners The governed. are Commissioners 1947. the how out sets Measure The Measure Commissioners Church by the in1948 body created astatutory are The Church for England Commissioners OF GOVERNORS BOARD THE AND TRUSTEES STRUCTURE – – – – – to apply ethical investment policy guidelines guidelines policy investment ethical to apply role their for resourced properly are trustees ensure to governance internal and activity aorganisational in accountable and transparent be to risk organisational manage and identify to responsibilities Commissioners’ the of administration cost-effective the ensure to Church Commissioners Annual 2014 Report Governors is Andrew Brown FRICS. Brown Andrew is Governors of Board and Commissioners Church the to Executive) (Chief Secretary body. The trustee-level the responsible recommendationspolicy for decision by develop and who research teams staff executive by served are committees and Board The &Disposals). Uses Buildings and Church Pastoral Cathedrals, & Bishoprics &Risk, (Assets, Audit committees five into organised also are the Board of members by non-Commissioners, Supplemented expertise. specific other for appointed are members other deans; cathedral the or Synod General the of Houses 13 the by these elected body. are Of making policy main Commissioners’ the Governors, of Board the up make 26 p14 and 15) and p14 forsupport cathedrals, 2014. (Commissioners’ in founded was (above) choir Girls Cathedral Canterbury first The charity for £5.0m than more raised story inspiring whose Stephenvictim Sutton cancer teenage for vigil and funeral the to host played (left) Lichfield Cathedral Church Commissioners Annual Report 2014

TRUSTEES respectively. We are very grateful to our NEW COMMISSIONERS Following a higher turnover of members new and departing members for the The appointment of two new in 2013, the Board’s composition was time and expertise that they shared with Commissioners was announced in 2014; more stable in 2014. However, we did us in service of the Church. Poppy Allonby and Graham Oldroyd are welcome two new Governors in 2014. both members of the Board of Committee memberships were also Sir Tony Baldry MP announced that he Governors and the Assets Committee steady although the Bishop of would not seek re-election to the House and Securities Group (see below). Portsmouth’s appointment to the of Commons in May 2015 and as a Dioceses Commission precluded his result ceased to be Second Church continued service on our Pastoral Estates Commissioner when Parliament Committee from which he had to resign. was dissolved. We are grateful for the Although we were sorry to lose his immense energy and wisdom of Sir Tony; excellent contribution to our work, this has helped him steer very significant we were fortunate that the Bishop legislation through Parliament and of Truro became his successor. We represent the Church’s interests with were also very pleased that the great distinction. We wish him our very Archbishops’ Council chose the Revd best and look forward to the appointment Anne Hollinghurst and Susan Pope to fill of his successor. (See Accountability vacancies on our Bishoprics & p28 for more on the work of the Second Cathedrals and Pastoral Committees Church Estates Commissioner.)

Poppy Allonby, CFA, Managing Graham Oldroyd has a portfolio of Director and portfolio manager, is a Chairman, Non-Executive Director member of the Natural Resources and Advisory Board positions in both Team within BlackRock’s EMEA the Corporate and not-for-profit Fundamental Equity Portfolio sectors. He is a Member of the Management Group. Poppy’s service Chartered Institute for Securities with the firm dates back to 2000, and Investment, a Chartered including her years with Merrill Lynch Mechanical Engineer, and a Fellow Investment Managers (MLIM), which of the Institution of Mechanical merged with BlackRock in 2006. Engineers. He was a Partner at Prior to working on the Natural private equity fund manager Resources team, Poppy was an Bridgepoint Advisers Limited until analyst on the US Equity team, June 2013. Graham holds an M.B.A. responsible for the Basic Materials, from INSEAD Business School and Utilities and Energy sectors. She graduated from Cambridge previously earned a BSc degree in University in 1983. physics from the Imperial College.

27 GOVERNANCE churchinparliament.org website: Parliament in England of Church dedicated the on available are year Tony Sir by last inthe answered questions the of Full details buildings. church listed for repairs roof for afund and Fund Repairs Cathedral Centenary WW1 the both deliver to Treasury the with negotiations Tony Sir Council, led Archbishops’ the of Division Buildings Church and Cathedral the of work the supporting By smoothly. progressed and Government by introduced was Lords of House the to bishops diocesan female first the of arrival the expedite to Bill follow-on a that ensure to worked TonySir also has Parliament. of Committee Ecclesiastical the that, to prior and, Commons of House the through passage its during Measure Women) of Ordination and (Consecration Priests and Bishops the handling of inhis been has year Tony in the past Sir of work profile high most The repair. and restoration cathedral and church and investments, banks, food unions, credit overseas, Christians persecuted and Communion Anglican the covering frequently to, most responded were 2014 questions of During range a wide matters. Church on Commons of House inthe questions of answering regular the through to Parliament Commissioners Church the of accountability statutory the maintains Commissioner Estates Church Second the of office The (pictured) MP Sir Tony Baldry Hon Rt The Commissioner Estates Church Second taken out of the figures then the number the then figures the of out taken were in 2013, services shared these if 2014 113, was compares which with 162 in Commissioners Church in the staff of number average The Services. Central England of Church NCI new the to &IT Centre Record England of Church Finance, HR, namely teams shared some of transfer the saw year The PEOPLE AND EMPLOYMENT ACCOUNTABILITY Church Commissioners Annual 2014 Report 28 the whole team as it moves into 2015. into moves it as team whole the for apriority is levels service improving and relationships Building changes. other of anumber as well November, as in Foster Hannah of arrival the with 2014 Leadership inHR achange saw LinkedIn. as such media, social England recruiting is now through actively of Church The sourcing. digital using including base, applicant our diversify to seek to taken been have 0-2. Measures inbands women 40% and NCI) in any 14% of target in2015 BME (minimum 8% declared the reach to underway is Work 38.3% 0-2 in2014. reaching in bands women with progress real been has There 2013. from a 3% decrease under just is 13.5% is BME, Ethic, which Minority and Black as themselves class who employees staff of number the NCIs the Across 2014and in 67. be been have would in2013 69 been staff of have would – – – 2014: In forms. online submit and details personal their view details, bank change documents, pay access to users enables clergy for MyView clergy. 8,000 serving to payments stipend and timely accurate ensuring for responsible are and payroll clergy the national administer Commissioners The PAYROLL – – – using an e-form. Panels Advisory onto Bishops’ ministry for candidates book can they where MyView, to up signed been have Ordinands of Directors Diocesan then; since feature new this using figures their submitted have 5,000 clergy Around online. returns HLC submit to clergy allows which feature MyView anew out rolled teams MyView and Payroll the in August 6,000; almost to increased MyView using clergy of number the Church Commissioners Annual Report 2014

Board/committee B o a r d Assets Audit & risk Bishoprics & Pastoral Church cathedrals buildings (uses & disposals) Meetings 4 6 3 6 4 5 Archbishop of Canterbury, Justin Welby The Archbishop of Canterbury chairs the Annual General Meeting. By arrangement he does not attend meetings of the Board of Governors. The Bishop of London is the Archbishop’s appointed deputy. Archbishop of York, Dr John Sentamu 1 Andreas Whittam Smith CBE, 4 5 First Estates Commissioner Sir Tony Baldry MP, Second Estates Commissioner 4 2 Andrew Mackie, Third Estates Commissioner 3 6 4 5 Bishop of Bristol, Mike Hill 2 5 Bishop of Chichester, Dr Martin Warner 2 3 Bishop of London, Dr Richard Chartres 4 Bishop of Manchester, David Walker 3 1 Bishop of Portsmouth, Chris Foster Bishop of Truro, Tim Thornton 0 of 2 Bishop of Warrington, Richard Blackburn 5 Dean of Wakefield, Jonathan Greener 4 6 4 Dean of Wells, John Clarke 2 4 Archdeacon of W/Furness, Penny Driver 2 Revd Mary Bide 6 Revd Stephen Evans 4 Revd Amanda Fairclough 4 5 Revd Anne Hollinghurst 3 Revd Simon Talbott 3 Revd Stephen Trott 2 3 Revd Canon Bob Baker 3 3 5 Revd Canon Peter Cavanagh 3 Canon Peter Bruinvels 4 5 3 Canon Betty Renshaw 6 April Alexander 4 3 4 Ian Ailles 3 Poppy Allonby 3 of 3 4 of 4 Rosemary Butler 6 Jeremy Clack 4 3 Margaret Davies 5 Stephen East 2 Julia Flack 4 Harry Hart 3 6 George Lynn 3 Sally Muggeridge 3 4 Graham Oldroyd 3 of 3 4 of 4 Simon Picken QC 3 4 Susan Pope 1 of 2 Hywel Rees-Jones 4 3 John Steel 5 Jacob Vince 4 5 Ian Watmore 4 4 Mark Woolley 4 6 John Wythe 3 6

29 GOVERNANCE (2013: salary. median the 9) times 11 and staff of member paid lowest the by (2013: earned 18) salary the times 22 is LTIP including payments staff of member highest the to paid amount The below). analysis further (see enjoy staff the of rest the as living of cost for uplift annual percentage same the expect can staff these general In NCIs. main the of each from trustees senior comprising Committee Remuneration the by overseen is and market, sector public and charity the to comparing typically place, market wider the to reference with individually set are roles these for Salaries system. evaluation job standard NCI’s the within measured readily not is role the fulfil to required set skill the as system, banding the outside sit Executives, Chief the of that including roles, senior Certain Wage. Living London the than less earns Church by the Commissioners employed member year. staff No each 1 January from effect with awarded are negotiations pay annual the of aresult as increases any and annually reviewed is pay Staff rates. market on advise to Hewitt AON of services the retain NCIs review. The annual to subject is and salaries related market of median and quartile lower the to reference by determined is which of value the applied, be may adjustment a market qualification, aprofessional hold to them requires role whose those typically skills, specialist with staff ‘bands’. certain For eight of in one placed being staff with scheme, evaluation job comprehensive a on based is which value equal of work with inposts staff all for pay of level same the ensure to designed is policy The Institutions. Church National the all across operates that policy pay unified a by covered are Commissioners the to functions provide who support Services Central England of Church for working those and Commissioners Church the in staff the all employment, of contracts separate on are who Management, inAsset involved staff than Other AND EXECUTIVE PAY EXECUTIVE AND STAFF REMUNERATION Church Commissioners Annual 2014 Report 30 the LTIPthe scheme. in participate not does Commissioners Church the to Secretary The £669,000 p51). (see in2011performance 2013 to totalling fund the to LTIPs relating received 2014 December of staff eight members 31 to year the In innature. term long also are and objectives with aligned directly are to ensure incentives seek Commissioners the method this By time. that during inpost remains recipient the if payable only are amounts full the and years, three over spread are performance fund the to inrelation payable group. Amounts Hewitt AON the of part McLagan, by provided independent data benchmarking by supported Committee Assets the on trustees comprising Committee aRemuneration by overseen is payable (LTIP) Payments Term Long the Incentive of value the and pay of level The years. five least at of period asustained over 5% plus RPI of return investment target Commissioners’ of the performance out consistent encourages which payments incentive term long of element an incorporate and specialists investment for market the reflect to designed are salaries Accordingly professionals. investment calibre high retain and attract to seeks such as and holdings, property significant including classes, asset of range inabroad investing investor institutional sophisticated and large a is Commissioners Church The above. described arrangements pay NCI general the outside sit portfolio investment Commissioners of the management inthe directly engaged Staff of the employee. the of age 18% to 8% the on from depending ranging rates contribution employer with section contribution defined the of part are subsequently employed those and basis, benefit defined a on pension accrue 2006 July before commenced employment whose those – Fund Pension Administrators Church the join to eligible are members staff All ASSET MANAGEMENT STAFF PENSIONS Church Commissioners Annual Report 2014

RISK MANAGEMENT

1. The Church Commissioners’ risk management process allows the identification, assessment and management of significant risks to the achievement of objectives. The process is supported by a risk management policy which outlines the roles and responsibilities of Commissioners, management and staff.

2. The Board of Governors reviews the risk register and risk management arrangements annually. The Board is supported by the Audit & Risk Committee, which regularly reviews the content of the risk registers and seeks assurance over the adequacy of arrangements in place to manage the risks. Operational risks, related to investment operations, are also subject to regular review by the Assets Committee.

3. Individual departments and identified risk owners are responsible for the identification, assessment and review of risks which fall in their area of responsibility. Risks are prioritised using an agreed scoring methodology and are assessed at an inherent and residual level. The risk management process is facilitated and monitored by the Audit and Risk function.

4. The management of key risks is subject independent review and assurance through the internal audit process, which reports to the Audit & Risk Committee.

5. The major inherent risks which the Board of Governors considers most significant are:

RISK KEY MANAGEMENT ACTIONS Poor long term market returns ––Disciplined evaluation driven investment process (below the level assumed by Church ––Significant portfolio diversification strategy and diversification of fund managers Commissioners’ actuaries) ––Regular review of overall portfolio asset allocation ––Conservative distributions policy ––Well resourced internal investment team ––High calibre/experienced non executive members of the Assets Committee ––External/specialist advisors utilised where appropriate

Failure to provide stable and ––Well resourced, capable investment team and diversified investment portfolio sustainable income stream for the ––Robust mechanisms to ensure stable distributions wider church via distributions ––Actuarial advice and guidance on distribution capacity ––Forward planning process to identify spending plans and identify potential issues due to investment performance

Loss of Church or societal ––Theologically grounded ethical investment policies by independent Ethical Investment confidence in the Commissioners’ Advisory Group ethical investment policy ––Commitment to the UN Principles for Responsible Investment ––Responsible Investment team which overseas implementation of ethical and responsible investment and leads communication to the Church and wider society

Responses to significant increases ––Robust arrangements to budget for, identify and assess potential increases in support costs impacts on the in support costs level of distributions ––Defined review, approval and governance arrangements to review and approve costs ––Ongoing communication with stakeholders to assist early identification of emerging costs ––Discretion over the need to meet costs to protect distributions

Significant business continuity issue ––Business continuity plans in place and elements subject to testing including individual impacting on the main office site, departmental plans personnel and IT systems ––External advice and guidance received ––Plans currently being implemented to refresh IT infrastructure, including storage and back up capabilities ––Significant operations undertaken by third parties

31 GOVERNANCE February 2015.February in Assent Royal received stages, Parliamentary the of completion after 2014 inNovember Synod and General the through passage its completed 2018 from power this of 2025 to expiry the extend to seeking legislation draft The statements). financial the 5to innote detail inmore (described on our clergy obligations pension capital spend to power limited atime We have needed. not is reserve ageneral that decided have trustees the statements) 15 innote financial detail the to in more out set is (which return total unapplied of level the considered Having basis. return atotal on expenditure charitable and income) or capital (whether returns in 2012, report and for account we obtained Commission Charity the from Order aTotal of Return terms the Under CLERGY PENSIONS ON CAPITAL SPEND TO POWER RESERVES POLICY MANAGING FINANCIAL RISK Church Commissioners Annual 2014 Report 32 were reaffirmed. were reaffirmed. plans these statements, financial the of end the towards summarised is which review, annual recent most the Following 2014-16 the throughout triennium. £94.6m of annum per distributions non-pensions net make to plan our of 2012, beneficiaries informed we of end the at as fund the of review full recent most their Following affordable. remain plans existing whether assess actuaries the .full reviews, between years In time. over distributions such grow and maintain to aim given our purposes other for spend afford to obligations how and much we can pension our meet to held be should fund our of much how of assessment adetailed out carry Robertson, Hymans actuaries, the years three Every actuaries. independent from advice to regard have to required are trustees the year each distributed is that return total unapplied of level the determining In Accounting Practice). Accepted Generally Kingdom (United Standards Accounting Kingdom United and law applicable with accordance in statements financial the and Report Trustees’ Annual the preparing for responsible are trustees The DISTRIBUTION POLICY GOVERNANCE TO TRANSPARENTCOMMITTED Church Commissioners Annual Report 2014

The law applicable to charities in The trustees are responsible for keeping England and Wales requires the trustees adequate accounting records that are to prepare financial statements for each sufficient to show and explain the financial year to give a true and fair view charity’s transactions and disclose with of the state of affairs of the charity and reasonable accuracy at any time the of the incoming resources and the financial position of the charity and application of resources of the charity enable them to ensure that the financial for that period. In preparing the financial statements comply in all material statements, the trustees are required to: respects with the Charities Act 2011. The trustees are also responsible for ––select suitable accounting policies safeguarding the assets of the charity and then apply them consistently; and hence for taking reasonable steps for the prevention and detection of ––observe the methods and principles in fraud and other irregularities. the Charities SORP; The trustees are responsible for ––make judgements and estimates that the maintenance and integrity of are reasonable and prudent; the organisational and financial ––state whether applicable accounting information included on the standards have been followed, Commissioners’ section of the subject to any material departures Church of England website. disclosed and explained in the Legislation in the United Kingdom financial statements; and governing the preparation and dissemination of financial statements ––prepare the financial statements on may differ from legislation in other the going concern basis unless it is jurisdictions. inappropriate to presume that the charity will continue in business.

33 Church Commissioners Annual Report 2014

INDEPENDENT AUDITORS’ REPORT TO THE CHURCH COMMISSIONERS

We have audited the financial statements of the Church Commissioners for England (“the Commissioners”) for the year ended 31 December 2014 which comprise the consolidated statement of financial activities, the consolidated balance sheet, the balance sheet of the Commissioners, the consolidated cash flow statement and the related notes numbered 1 to 17. 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). The accounting policy in respect of the clergy pension obligation, and the reasons why the Commissioners do not make provision for this obligation, are explained in note 1(a). This report is made solely to the Commissioners in accordance with the Church Commissioners Measure 1947 (as amended) and section 144 of the Charities Act 2011 and regulations made under section 154 of that Act. Our audit work has been undertaken so that we might state to the charity’s trustees 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 charity and the Commissioners as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of the trustees and auditor As explained more fully in the Statement of Responsibilities of the Church Commissioners, the trustees are responsible for the preparation of the financial statements which give a true and fair view. We have been appointed as auditor under section 144 of the Charities Act 2011 and report in accordance with regulations made under section 154 of that Act. 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. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group’s and the parent charity’s circumstances and have been consistently applied and FINANCIAL STATEMENTS FINANCIAL adequately disclosed; the reasonableness of significant accounting estimates made by the trustees; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the financial statements:

• give a true and fair view of the state of the group’s and the parent charity’s affairs as at 31 December 2014, and of the group’s incoming resources and application of resources, for the year then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • have been properly prepared in accordance with the requirements of the Charities Act 2011 and the Church Commissioners Measure 1947 (as amended).

34 34 Church Commissioners Annual Report 2014

Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Charities Act 2011 requires us to report to you if, in our opinion:

• the information given in the Trustees’ Annual Report is inconsistent in any material respect with the financial statements; or • sufficient accounting records have not been kept; or • the parent charity’s financial statements are not in agreement with the accounting records and returns; or • we have not received all the information and explanations we require for our audit.

Deloitte LLP, Chartered Accountants and Statutory Auditor London, United Kingdom 30 April 2015

Deloitte LLP is eligible to act as an auditor in terms of section 1212 of the Companies Act 2006 and consequently to act as the auditor of a registered charity.

35 35 FINANCIALFINANCIAL STATEMENTS STATEMENTS expended Governance other costs resources and Charitable activities for charitable application Net incoming resources available on provision Staff pension – scheme interest

continuing operations, none of which were acquired during the year. The incoming resources, resources expended and Total fundscarried forward Net movement in funds for the year Total other recognised gains and losses 10 Gains on investment assets Gains fixed on assets non investment Other recognised and gains losses losses and gains recognised before Net other outgoing resources Application of total return Transfers before Net transfers outgoing resources Total resources expended Cost funds of generating Resources expended Total incoming resources Other income Investment income resources Incoming THE 2014 FOR ENDED 31 DECEMBER YEAR ACTIVITIES FINANCIAL OF STATEMENT CONSOLIDATED Total funds brought Total forward funds brought Gains/(Losses) currency on foreign Pensions Scheme Transfers out of of England Church schemes (staff) pension benefit on Losses defined Church Commissioners Annual 2014 Report Church Commissioners Annual 2014 Report Notes 4, 14 11 5 9 9 6 3 2

General fund General 36 other recognised gains and losses all relate to (100.3) 36 9.)(2.)(1.) (207.8) (216.4) (122.9) (93.5) (97.8) 97.8 (4.7) (2.1) 2.5 2.5 2.5 £m – – – – – – – 3. 3. 736.6 738.3 738.3 – – 3. 3. 139.3 137.9 137.9 – – ,2. ,2. 5,503.1 6,125.3 6,125.3 – Endowment 6,739.9 (172.3) (132.2) 137.9 614.6 746.8 (34.4) (97.8) (13.8) (49.4) 88.5 14.4 (0.6) 8.5 £m – – – 6,739.9 (272.6) (132.2) (132.2) 140.4 614.6 746.8 (13.8) 4.) (42.6) (49.4) 91.0 14.4 2014 (4.7) (0.6) (2.1) Total 8.5 2.5 £m –

6,125.3 (257.5) (117.8) (117.8) 139.7 622.2 740.0 10.2 97.1 2013 (4.8) (4.8) (2.3) (0.4) (1.6) 0.4 £m – Church Commissioners Annual Report 2014

BALANCE SHEETS AS AT 31 DECEMBER 2014

Consolidated Commissioners

2014 2013 2014 2013 Notes £m £m £m £m Fixed assets Non investment fixed assets 10 109.8 105.7 109.8 105.7 Investment assets 11 6,276.0 5,771.1 6,015.1 5,540.5 Total fixed assets 6,385.8 5,876.8 6,124.9 5,646.2 Current assets Debtors 12 32.4 46.6 325.2 316.2 Short term deposits 205.7 75.7 205.7 75.7 Cash at bank and in hand 295.5 276.4 294.0 275.4 Total current assets 533.6 398.7 824.9 667.3 Liabilities Creditors: amounts falling due within one year 13 (53.7) (37.4) (84.1) (75.4) Net current assets 479.9 361.3 740.8 591.9

Net assets excluding staff pension liability 6,865.7 6,238.1 6,865.7 6,238.1 Pension liability (staff) 9 (125.8) (112.8) (125.8) (112.8) Net assets including staff pension liability 6,739.9 6,125.3 6,739.9 6,125.3 Funds of the charity Endowment 6,865.7 6,238.1 6,865.7 6,238.1 Pension liability (staff) 9 (125.8) (112.8) (125.8) (112.8) Net endowment 14 6,739.9 6,125.3 6,739.9 6,125.3 General fund 14 – – – – Total funds carried forward 6,739.9 6,125.3 6,739.9 6,125.3

By order of the Board

Andreas Whittam Smith First Church Estates Commissioner 30 April 2015

37 37 FINANCIALFINANCIAL STATEMENTS STATEMENTS Investment assets: sale proceeds Investment assets: additions Non investment fixed assets Capital expenditure and financial investment Non investment fixed assets: sale proceeds Movement in creditors Movement in debtors cashIncrease in Net cash out flow from financing resources and financing of liquid before management Cash inflow Net cash inflow relating to capital ex Net cash inflow from operating activities STATEMENT CASH FLOW Net cash inflow from operating activities Depreciation of non investment fixed assets ot Net before resources expended activities operating from Reconciliation of net outgoing resources before other gains and losses to net cash inflow THE 2014 FOR ENDED 31 DECEMBER YEAR CONSOLIDATED CASH FLOW STATEMENT Net change in term short deposits ofManagement resourcesliquid Charitable expenditure paid from Cost funds of paid generating fr Financing Transfers out of of Engla Church Cost funds of paid capitalgenerating from endowment Staff pensions lump and Charitable expenditure paid from endowment capital Staff pensions – interest charge on provision sums paid : additions om endowment om capitalendowment nd Pensions Scheme nd Pensions endowment capital her gains and losses penditure penditure and financial investment Church Commissioners Annual 2014 Report Church Commissioners Annual 2014 Report 38 38 Notes Notes ,5(2.) (121.5) (122.9) 4, 5 10 13 10 12 10 1(,0.) (1,323.6) (1,803.5) 11 12096 1,473.2 2,039.6 11 9 9 3 2. 121.5 122.9 5 5 3

(172.9) 122 (117.8) (132.2) (130.0) 307.6 237.5 4.) (42.6) (49.4) 70.1 16.3 70.1 14.2 49.4 2014 2014 (0.9) (5.5) (0.6) 4.7 2.3 4.7 0.3 £m £m

(164.5) 114.1 204.6 147.1 57.5 57.5 14.1 74.0 42.6 2013 2013 (3.0) (5.4) (2.5) (0.4) 4.8 0.7 £m £m – Church Commissioners Annual Report 2014

Reconciliation of net cash flow to movement in cash and short term deposits 2014 2013 £m £m Increase in cash in the year 4.7 114.1 Gain/(Loss) on foreign currency 14.4 (4.8) Cash movement from change in short term deposits 130.0 (74.0) Increase in net funds in the year 149.1 35.3 Net cash and short term deposits at 1 January 352.1 316.8 Net cash and short term deposits at 31 December 501.2 352.1

Analysis of movements in cash and short term deposits Cash at bank and in hand Total cash and short Sterling Foreign currency Total Short term deposits term deposits £m £m £m £m £m At 1 January 2014 141.1 135.3 276.4 75.7 352.1 Movement in cash 22.7 (18.0) 4.7 130.0 134.7 Foreign currency gain – 14.4 14.4 – 14.4 At 31 December 2014 163.8 131.7 295.5 205.7 501.2

Cash at bank funds held in interest bearing accounts repayable on demand.

39 39 FINANCIALFINANCIAL STATEMENTS STATEMENTS b Basis an of consolidation (b) preparing the annual report and accounts. foreseeable future. Accordingly, t been met. Legacies are recognised when the conditions entit for Legacies Interest on loans is recognised on the accruals basis. Loans to the firstbreak clause or the to tenants as an incentive to sign a lease is spread on timberland and infrastructure funds is recognised on Income from investment properties, shared and partnership property interests, value linked loans, income Other investment credited to income on the ex dividend date of the underlying holdings. Income is recognised Securities portfolio Incoming resources (c) financial statements. The Commissioners do not present their non-consolid joint ventures held for investment purposes The Commissioners apply the exemption in FRS 9: Associ the balance sheet. Further details are given in note 8. is share included ChECS of or in from profits losses are equal partners in Church Englandof Central Services (ChECS), a joint venture. The Commissioners’ The Commissioners, together with the Archbishops’ Council and the Church of England Pensions Board Further details about the Commissioners’ signific Accounting for subsidiary undertakings. Intra-gro year. The subsidiaries have been consolidated on statements Commissionersof the and all their subsidia The consolidated statement of financial activities (SOFA) and bal Commissionershave adequate resources and cash fl to spentbe for specific pensions purposes,the of the annual report, spending strategy, application of After considering the Commissioners’ role in fundin They comply with all applicableUnited Kingdom law and accounting standards. the revaluation of investments and properties a on ba Practice (SORP). They are also prepared in accordance The financial statements are prepared in accordanc total return and the use thereof is calculated. The Commissioners adopt a total return approach to pensions that falls due after the balance sheet date. Info Pensions Measure 1997, there is no provision in the certain pension obligations.Consistent with the on endowment to power spend Commissioners gives the amended) 1997 (as Measure Pensions The 2011. 27 January Measure 1947 (as amended) and have been regulated by The Church Commissioners Englandfor are a statutor policies Principal accounting (a) Accountingpolicies 1. THE 2014 FOR ENDED 31 DECEMBER YEAR NOTES TOTHEFINANCIALSTATEMENTS on the accruals basis.Dividends and interest, including any recoverable tax, are d subsidiary undertakings period to the first rent review. Church Commissioners Annual 2014 Report Church Commissioners Annual 2014 Report hey continue to adopt the going concern basis of accounting in . More detail is . shown More in note 12(g). Commissioners’status and their powers under the trustees have reasonable expectation that the 40 ant subsidiariesare given in note 12(g). up transactionsare eliminated on consolidation. a line by line basisaccordance in with FRS 2: g the Church’s ministry, described on pages 10-17 10-17 pages on described ministry, Church’s g the e with the Charities Statement of Recommended 40 the SOFA and its share of net assets is included in the accruals basis.The cost of concessions given ows to meet their spend investments. Note 15 explains how the unapplied balance sheets for the obligation to pay clergy sismaterially consistent the precedingwith year. a straight line basis over the shorter of the period y body established by the Church Commissioners lement, certainty of receipt and measurability have ated statements of financia total return, and the legislation to allow endowment ry undertakings made up to 31 Decembereach with the historical cost convention modified by rmation on this obligation ates and Joint Ventures (paragraph 49) to their the Charity Commission since registration on ance sheet include the financial ing commitments for the l activities in these is provided note in 5. Church Commissioners Annual Report 2014

(d) Resources expended Charitable expenditure on behalf of the Church is described in note 4. Grants payable in respect of particular periods (being the grants for parish ministry and mission support, bishops’ office and working costs and grants to cathedrals shown in note 4) are recognised when a firm commitment to pay the grant is made. Cars for the use of bishops are normally obtained under four year leases, the full cost of which is paid at commencement. The cost of such leases is spread on a straight line basis over the period of the lease. The balance of the lease payments not yet charged to expenditure is included in prepayments (note 13). Support costs are apportioned directly to the activity which they relate. Overheads are apportioned according to an activity based time split. (e) Pensions Staff As described in note 10, pension benefits arising from service up to 31 December 1999 are accounted for in accordance with FRS 17: Retirement Benefits. The Commissioners’ liability is provided for in the balance sheet and movements during the year charged to the SOFA. The liability is calculated on an annual basis by an independent qualified actuary. There are no separately held assets. The interest charge on the provision is charged to resources expended in the general fund. The actuarial gains or losses are charged to the other gains and losses in endowment. Benefits paid out are charged to the provision. Pension benefits arising from service after 31 December 1999 for staff in service as at 30 June 2006 are provided for by a defined benefit scheme administered by the Church of England Pensions Board (note 9). The scheme is considered to be a multi-employer scheme as described in FRS 17 paragraph 9(b) and consequently the amounts charged in the SOFA represent the contributions payable in the year. The Commissioners are unable to identify their share of the underlying assets and liabilities. A defined contribution scheme, administered by the Church of England Pensions Board, provides pension benefits for those staff commencing service after 30 June 2006. The contributions payable in the year are charged to the SOFA.

Clergy As described in note 5, the Commissioners are obliged to pay clergy pensions as they fall due in respect of service up to 31 December 1997. Pensions payable in the year are charged to the SOFA and as permitted by the Pensions Measure 1997, as amended, are charged to endowment. Pension benefits arising from service after 31 December 1997 are mainly provided by a defined benefit scheme administered by the Church of England Pensions Board, the Church of England Funded Pensions Scheme. This scheme is considered to be a multi-employer scheme and consequently the amounts charged in the SOFA represent the contributions payable in the year in respect of those clergy whose stipends they are responsible. The Commissioners are unable to identify their share of the underlying assets and liabilities. Where pensions are provided by a defined contribution scheme, the contributions payable in the year are charged to the SOFA.

41 41 FINANCIALFINANCIAL STATEMENTS STATEMENTS ascertaining a current cost of construction of an that certain unique buildings that ar Palace: Lambeth Non investment assets are valued as follows: Infrastructure: the Commissioners’ share of the underlying net assets. is valued at market value less the costs to deliver. the gains and losses on investments in the SOFA. At p adjusted for logging during the year. Changes in value environmental considerations. In intermediate years timb which is calculated on the timber maturity profile, the species, the geographic location and other Timberland: repayment. properties, estimated future house prices growth Value linked loans: linked Value programme more frequently.or those held directly, that is in line with International Commissioners’share of the underlying net assets. Un undert subsidiary interestsand property partnership and Shared Valuation Manual issued by the Royal Institution of Chartered Surveyors (RICS). Investment properties: net asset values. valued investments: byUnlisted reference to latest dealing pr appropriate stock exchange. Listed investments: 5 years Investment assets are valued as follows: realisation and Revaluation Estim quantified separately. investment properties as the effect of depreciation 50 years In accordance with Statement of Standard Accounti Investment assets 10 years systems IT Leasehold office improvements Administrative office Fixed asset the opening balance sheet value, on the following fixed assets: Depreciation charged is on a straight Depreciation SOFA in the year in which it incurred. is office equipment, with the exception of historic items Unless its market value is material, expenditure on hous to the SOFA in year the in which it incurred. is incurred Costs on acquiring, of expenditure Capitalisation Non investmentfixed assets Fixed assets (f) Accountingpoliciescontinued 1. THE 2014 CONTINUED FOR ENDED 31 DECEMBER YEAR NOTES TOTHEFINANCIALSTATEMENTS timberland is valued externally at least ever annually valued at the Commissioners’ Lambeth Palace is valued at £1 asthe Charities SORP, paragraph 293, recognises annually valued at portfoliolevel taki valued at market values using bid pric annually valued individually at market value in accordance with the Appraisal & improving or adding to assets are ca Church Commissioners Annual 2014 Report Church Commissioners Annual 2014 Report e integral to the activities of t line basisover the estimated useful life the of asset, calculated on ated useful life life ated useful 42 asset that has both the same service potential and and income flows and the anticipated dates of Valuation Standards (IVS), on a rolling three year Partnership timberland interests are annually valued at is reflected in the annual valuations and cannot be ng Practice 19, no depreciation is charged on 42 within the contents of see houses, ischarged in the oint felling,of the carrying of value forestry assets share of the underlying net assets. derlying assets are valued on the same bases as in the year, whether or not realised, are reported in ehold and office furniture, fixtures and fittings and erland is valued by in-house professionals at cost y three years at market value in line with IVS, ng into account indexed values of the e accordancein with the practice of the ices, valuations from he charity may present difficulties in pitalised. Other expenditure is charged akings: akings: annually valued at the reliable sources or Church Commissioners Annual Report 2014

replicates the uniqueness of the original. In such cases, the Charities SORP recognises that conventional valuation techniques may not be applicable to previously non-capitalised assets.

See houses: stated at their market value as at 31 December 2013 increased in line with the relevant regional Nationwide House Price Index. A full market valuation is carried out every five years in accordance with the Appraisal & Valuation Manual issued by RICS. No depreciation is charged as an alternative basis of valuation has been adopted.

Contents of Lambeth Palace and see houses: A full valuation of the historic contents such as works of art and furniture is carried out every ten years. The last full revaluation was at 31 December 2007. Gains or losses on the disposal and revaluation of investment assets, including the gains or losses on any related foreign currency transactions, are shown in other gains and losses in endowment capital in the SOFA. (g) Stock lending programme The Commissioners’ global custodian is authorised to enter into stock lending arrangements, whereby securities are loaned to external counterparties for a set period of time. The Commissioners receive collateral of greater value than the securities loaned from each counterparty for the duration of the loan period. Interest is received on the collateral assets held and is disclosed in note 2. Where securities are loaned at the balance sheet date, the securities loaned are included in the balance sheet as the Commissioners retain the risks and rewards of ownership of the securities and also retain the contractual rights to any cash flows relating to the securities. The value of the securities on loan at the balance sheet date is disclosed in note 12(a). (h) Derivatives The Commissioners use forward foreign currency and option contracts as part of their investment portfolio risk management, to reduce the impact of changes in foreign currency exchange rates in relation to their investment in overseas securities and shared and partnership property interests. In accordance with their investment policy, forward foreign currency and option contracts are not entered into for investment gain or trading purposes and no other derivatives are used. Contracts relating to hedged assets outstanding at the balance sheet date are translated at the forward contract rate. Option contracts are valued using a pricing model where inputs are based on market data at the balance sheet date. Realised and unrealised gains and losses arising from these contracts are charged to endowment capital in the SOFA. Contracts relating to future commitments are not included on the balance sheet. (i) Foreign currencies Assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date or, if appropriate, at the forward contract rate. Profits and losses on sales of overseas investments are translated at the rate ruling on the date of the transaction. Unrealised gains and losses on overseas investments arising on translation are included in the net gains and losses on realisation and on revaluation in endowment capital in other gains and losses in the SOFA. Income received in foreign currencies is converted into sterling and recorded at the rate ruling on the date of the conversion. If retained in foreign currencies, amounts are translated at the rate ruling on the date of the transaction. Subsequent gains or losses on conversion into sterling are included in other gains and losses in the SOFA.

43 43 FINANCIALFINANCIAL STATEMENTS STATEMENTS are given in note 5:Clergy pensions and note 10: Staffpensions. transactions are not disclosedseparately. Details abou these of details 229(d) paragraph SORP with accordance In Fund. Pension Workers and Church Fund; Church of England Pensions Board: Clergy Funded Pension Scheme; Church Administrators Pension note 8: ChECS.The Commissioners are also related The Commissioners are related to ChECS, asthey are a statements. way as other transactions and, where material, are se Charities SORP or FRS 8. Transactions and balances cathedrals and dioceses as well as at national level. The Church of England is governed by a large number of legally independent bodies in its parishes, Related parties (k) the underlying cost to which it relates. Added Tax (VAT) incurred on expenditure. The amount of In common many with other charities, the Commissio Commissioners. Foreign tax Commissioners. incurred by but do not generally pay UK Corporation tax because their The Commissioners’ subsidiaryundertakings are non-char 1992the to extent that they are a The Commissioners, as a registered charity, are exempt Taxation (j) Accountingpoliciescontinued 1. THE 2014 CONTINUED FOR ENDED 31 DECEMBER YEAR NOTES TOTHEFINANCIALSTATEMENTS within Part 11 of the Corporation Tax Act 2010 or se 2010 Act Tax Corporation the 11 Part of within Church Commissioners Annual 2014 Report Church Commissioners Annual 2014 Report pplied to their charitable purposes. subsidiaries operating overseas 44 These bodies are not related parties as defined in the 44 ners are unable to recover the majority of Value to the following pension funds, operated by the parately identified in the notes to the financial ction of 256 the Taxation with these bodies are accounted for in the same t the pension funds, incl taxation from on their partner in this joint vent VAT that cannot be recovered is included within itable subsidiaries and are subject taxation, to policy is to pay taxable profits as Gift Aid to the Aid to Gift the profits as taxable pay to policy is is charged as incurred. is it income and gains falling uding contributions uding paid, contributions of Chargeable Gains Act ure. Details are given in Church Commissioners Annual Report 2014

2. Investment income 2014 2013 £m £m Securities portfolio Listed UK equities 29.1 29.1 Listed overseas equities 28.4 25.6 Unlisted UK equities 1.0 – Unlisted overseas equities 5.0 – UK fixed interest securities 6.0 4.8 Overseas fixed interest securities 3.2 8.8 Interest on investment managers’ cash 0.6 0.3 Stock lending income 0.4 0.3 Total income from securities portfolio 73.7 68.9

Investment properties UK directly held properties 41.8 44.9 Total income from investment properties 41.8 44.9

Shared and partnership property interests Shared interests 3.0 5.7 UK partnership interests 4.3 4.9 Overseas shared and partnership property interests 0.5 0.8 Quoted overseas property funds 0.8 0.9 Total income from shared and partnership property interests 8.6 12.3

Value linked loans Value linked loans 5.4 5.4 Total income from value linked loans 5.4 5.4

Timberland UK forestry 4.6 4.1 Overseas timberland 3.8 3.7 Total income from timberland 8.4 7.8 Total investment income 137.9 139.3

3. Cost of generating funds 2014 2013 £m £m External management costs 27.1 24.0 Support costs 6.7 5.9 Other operating costs 15.6 12.7 Total cost of generating income 49.4 42.6

45 45 FINANCIALFINANCIAL STATEMENTS STATEMENTS Total charitableexpenditure Total church buildings Conservation Trust Net grant to Churches churches – funded proc from Grant to Churches Conservation Trust Total cathedrals’ ministry Lambeth Palace Total archbishops including Total bishops’ ministry in the dioceses Office and costs working Housing office and premises Stipends Bishops’ ministry in the dioceses ministry support Total parish mission and clergy parish to direct Payments funding Growth research and development Strategic development funding Mission funding dioceses Selective grants to low income Parish mission and ministry support endowment paid from pensions Clergy 4. Charitableactivities THE 2014 CONTINUED FOR ENDED 31 DECEMBER YEAR NOTES TOTHEFINANCIALSTATEMENTS (including national clergy payroll costs) payroll clergy national (including Other charitable expenditure Chancel repair liability – statutory grant Grant to Churches Conservation Trust Church buildings Grants towards staff and other costs stipends otherand purposes Sections grants 21 towards and 22 Cathedrals’ ministry Stipends Archbishops including Lambeth Palace pastoral reorganisation Support buildingschurch costs and for Lambeth Palace Library Office costs and working Housing officeand premises eeds of closed Church Commissioners Annual 2014 Report Church Commissioners Annual 2014 Report

undertaken Activities 134.7 122.9 0.2 0.2 . . . 13 1.3 1.3 – 1.3 1.2 – 0.1 0.7 2.4 8.4 . . 09 0.9 0.9 – 0.9 – – 0.9 . . 0.7 – 0.7 – – 0.7 0.2 – – 0.2 – – 0.2 . . 01 12 1.2 1.2 (0.1) 1.3 – – 1.3 . . 49 5.1 4.9 – 4.9 – – 4.9 . . . 03 39 2.9 3.9 (0.3) 4.2 0.7 – 3.5 £m . . 14 1.6 1.4 – 1.4 – – 1.4 – – 14 (.) (0.7) (1.4) (1.4) – – – – . . 01 50 5.1 5.0 (0.1) 5.1 – 5.1 – . . 09 0.1 0.9 5.9 – 6.0 0.9 – – 6.0 0.9 – – 6.0 – . . 46 – 4.6 34.4 – 34.3 4.6 – – 34.3 4.6 – – 34.3 – . . 56 5.6 5.6 – 5.6 – 5.6 – . . 22 2.2 2.2 – 2.2 2.2 – – . . 35 3.5 3.5 – 3.5 – 3.5 – 57051. 1. 15.8 16.2 – 16.2 0.5 15.7 – funding 46 77.1 45.8 15.7 Grant 1.4 1.4 9.1 5.1 £m – 46 – Support costs 4.6 2.2 1.2 £m . 02 0.5 0.2 – 0.2 – – – – – – 216.5 122.9 25. 3 46.0 Total 4.3 1.4 9.1 7.5 £m Less income (1.9) (1.4) (1.4) (0.2) (0.3) £m – – –

expenditure expenditure Total net Total 214.5 122.9 46.0 25.0 04 2013 2014 2.9 9.1 7.3 £m – 121.5 207.8 40.9 23.8 Total 3.8 0.9 9.1 7.4 £m Church Commissioners Annual Report 2014

Clergy pensions Note 5 describes clergy pensions in detail. Parish mission and ministry support Parish mission and ministry support grants were distributed to dioceses and other beneficiaries under the direction of the Archbishops’ Council, in accordance with the National Institutions Measure 1998. Details of the amounts allocated to dioceses are shown on page 65. Bishops’ ministry in the dioceses and archbishops including Lambeth Palace The Commissioners provide diocesan bishops and archbishops with an annual block grant to cover their stipend and working costs and that of their suffragan bishops. The Commissioners are responsible for providing housing and office space for the diocesan bishops and archbishops and for the maintenance of those buildings including Lambeth Palace. Cathedrals’ ministry The Cathedrals Measure 1999 enables the Commissioners to make grants to cathedrals: section 21 and 22 grants are made towards the stipend and other costs of a dean and two residentiary canons of each cathedral; section 23 grants are made towards the stipend of any clerk other than a dean or residentiary canon whose stipend is paid by the Commissioners and the salary of any lay person employed in connection with the cathedral; section 25 grants are made towards the repair of any chancel, other than that of the cathedral, which the cathedral is wholly or partly liable to repair. Church buildings The Payments to the Churches Conservation Trust Order 2011 provides for a statutory grant to be made to the Churches Conservation Trust to support the Trust’s work in preserving church buildings closed for regular worship which are of historic and archaeological interest and architectural quality. The grant is paid from a share of the proceeds arising from the sale of closed churches with the balance of the grant payable by the Commissioners. The Commissioners’ liability for chancel repairs arises from their former and current ownership of rectorial property. Support costs Support costs are costs incurred by the Commissioners for administering their charitable activities. These costs include salaries, other running costs and a share of overheads. Overheads are apportioned according to an activity based time split. 5. Clergy pensions On retirement clergy are entitled to pension benefits with the starting level of pension based on the national minimum stipend of those in active service in the preceding March. In respect of the Commissioners’ obligation, post retirement increases are in line with the retail prices index (RPI), subject to a maximum of 5% in any one year, plus any further discretionary increases determined by the Commissioners. The Church of England Pensions Scheme The Commissioners are obliged to pay pension benefits to members of the Church of England Pensions Scheme relating to years of service until 31 December 1997. As described in note 1(a), the past service obligation at 31 December 2014 is not provided for in the Commissioners’ balance sheets. The obligation has been estimated by Hymans Robertson LLP, independent qualified actuaries, in their annual review, using the projected unit method, at £1,788.6m (2013: £1,889.1m) if all benefits including post retirement increases continue to be paid in accordance with current practice. A full valuation of the obligation was carried out as at 31 December 2012 and has been rolled forward in estimating the obligation at 31 December 2014. The amount of the obligation represents 27.0% (2013: 31.4%) of the market value of the Commissioners’ assets, excluding non investment fixed assets, of £6,630.1m (2013: £6,019.6m).

47 47 FINANCIALFINANCIAL STATEMENTS STATEMENTS Total clergypensions Total benefits under the Church of England Pensions Scheme Benefits undertheChurchofEngland Pensions Rate of post retirement pension increases Prospective annual rate of return on investments estimate the value of the obligation. These assump Financial assumptions reflecting the term structure 5. Clergypensionscontinued THE 2014 CONTINUED FOR ENDED 31 DECEMBER YEAR NOTES TOTHEFINANCIALSTATEMENTS Pensions to deaconesses lay and workers licensed Benefits under the Workers Deaconesses (Pensions) and Measure Lay 1980 basis estimate best a on made were assumptions The Retail price inflation Rate of future stipend and increases in the starting pension The principal were: assumptions below. table increases. The averages of these assumptions at the a returns, future increases in the RPI, the starting leve Lump sum payments on retirement clergy to Pensions mortality tables.In respect of future improvements in In their assessments of the pensions obligation, Hym made. need to maintain intergenerational equity in the ra pension scheme. This is because of the level of a normally be included in similar of the fund and its objectives over 30 years, whic Pensions widows to and clergy children those bishops, cathedral clergy and bishops’ chaplains for whose stipends they are responsible. The Commissioners’ contributions payable to the 2015. from 1 January effect In light of thisthe contribution rate will be chang The last full valuation of the Scheme, as at 31 method of valuation. contributions the to Scheme are assessed by an indepe Each responsible body in the Scheme, including statements. The assets of the Scheme, administered by the Church of England P Pensions in respect of service after 1997 are provided by the Church of England Funded Pensions The Church England of Funded Pensions Scheme Transfers out the of Scheme amounted to The cost of pensions and benefits funded by to the July 2012 Vita Club dataset. Continuous Mortality Investigation has been used with Scheme are held separately from those of the Commissioners. calculations for determining calculations techni Church Commissioners Annual 2014 Report Church Commissioners Annual 2014 Report

£0.6m (2013: £0.4m) during the year. year. the during £0.4m) (2013: £0.6m Scheme the Commissioners during the year was: December 2012, showed an overall deficit of £293m. £293m. of deficit overall an showed 2012, December 48 ed from 38.2%to 39.9% pensionableof stipends with dioceses, paysa common contribution rate. The h did not include the margins of prudence which would sset cover provided by the endowment funds and the Scheme totalled £2.4m (2013: £2.5m) in respect of respect in £2.5m) (2013: £2.4m totalled Scheme te in which non-pension related distributions can be ensions Board, which publishes the Scheme’s financial tions tions include the prospect of interest rates and inflation have been used to l of pensions and the rate of post retirement pension 48 ans Robertson LLP have used bespoke Club Vita mortality rates the projec advanced parameters with starting rates calibrated over a time period reflec pproximate term of the obligation are shown in the ndent qualified actuary using the projected unit cal provisions an for occupational ive rate of investment tion model from the 2010 2010 from model the tion ting the long term nature 122.9 122.6 85.7 28.8 2014 2014 0.3 8.1 2.3 2.3 2.3 5.0 £m %

121.5 121.1 28.2 84.6 2013 2013 0.4 8.3 3.3 3.3 3.3 5.9 £m % Church Commissioners Annual Report 2014

Application of endowment to meet certain pension payments The Pensions Measure 1997, as amended, enables the Commissioners to spend endowment until 31 December 2018 to meet the costs of paying clergy pensions in respect of service before 1998. The Total Return Order (see note 15) does not affect this. Clergy pensions of £122.9m (2013: £121.5m) were paid from endowment. More detail about the Commissioners’ reserves policy is given on page 32. 6. Governance and other costs Governance costs comprise staff and non-staff costs relating to the general running of the Commissioners including supporting the work of their Board and committees and audit costs.

2014 2013 £m £m Governance costs 2.0 2.0 Other resources expended: restructuring costs 0.1 0.3 Total other resources expended 2.1 2.3

2014 2013 £000 £000 Audit of Church Commissioners 122 119 Audit of subsidiary undertakings 51 47 Audit-related assurance services 2 2 Total audit fees 175 168

Taxation compliance services 36 47 Taxation advisory services 205 170 Planning services (Deloitte Real Estate) 57 31 Total non-audit fees 298 248

7. Staff numbers and remuneration The Commissioners are joint employer, together with the other National Church Institutions (NCIs), of most of the staff of the NCIs. The Secretary and staff employed to manage the Commissioners’ investment assets are employed directly by the Commissioners. In addition to staff employed directly, the work of the Commissioners is supported by staff in shared service departments who provide finance, HR, communications, legal, IT and internal audit services. Since 1 April 2014 they have been employed by a separate NCI, Church of England Central Services (ChECS) (see note 8). Prior to this they had one of the three main NCIs as managing employer and their costs were shown only in the relevant NCI’s accounts. The SORP requirements are that the costs of staff employed by third parties who operate on your behalf should be disclosed in the accounts. In order to comply with the spirit of the SORP, the costs of all ChECS staff are shown in aggregate in the tables below and the prior year figures have been restated to allow a full comparison between years – the Commissioners’ share of which was £3,222,000 (2013: £3,188,000).

49 49 FINANCIALFINANCIAL STATEMENTS STATEMENTS the restructure is announced. three) individual following a restructuring, the costsof £82,000) (2013: £70,000 is costs staff in Included 0.2 ( of staff Total cost (0.1) 0.2 from third parties Recoverable 0.3 contributions 0.3 Pension Insurance costs National Salaries employed Average number was: The cost of staff for which the Commissioners are t 7. Staff numbers and remuneration continued THE 2014 CONTINUED FOR ENDED 31 DECEMBER YEAR NOTES TOTHEFINANCIALSTATEMENTS Asset management management Asset Number Number 2014 3.1 . 03 . 0.2 0.6 0.3 3.2 0.6 . 23 . . . . . 4.7 4.9 1.1 0.4 1.8 1.6 2.3 2.3 33 33 £m

Number Number 2013 .) – 0.1) 2.8 2.9 34 £m £m Church Commissioners Annual 2014 Report Church Commissioners Annual 2014 Report

Number Number 2014 2.4 2.4 34 £m Church functions functions Church and secretariat secretariat and 50 he managing employer and for ChECS (in aggregate) Number Number 50 paid by of way redundancy costs one to (2013: 2013 which are accounted for in full in the year in which 2.2 2.2 35 £m (.)( (0.4) – Church Commissioners’ own staff staff own Commissioners’ Church Local property management management Localproperty Number Number 2014 0.4 41 £m – – . . 0.5 0.5 0.1 – Number Number 2013 .)(.) (6.5) (6.8) 1.2) 1.2 68 £m – 1.3 1.4 – Number Number 2014 121 6.8 £m –

Shared services services Shared Number Number ChECS ChECS 122 2013 6.5 £m – Church Commissioners Annual Report 2014

The numbers of staff whose emoluments for the year fell in the following bands:

Church Commissioners’ own staff ChECS

Church functions Asset management and secretariat Shared services 2014 2013 2014 2013 2014 2013 Number Number Number Number Number Number £60,001 to £70,000 3 41198

£70,001 to £80,000 3 11133

£80,001 to £90,000 – 1 1 – 6 4

£90,001 to £100,000 – 2 – – – –

£110,001 to £120,000 1* – – – – –

£120,001 to £130,000 1* 1 – – 1 1

£140,001 to £150,000 1* 1 – – 1 1

£150,001 to £160,000 1* – 1** 1** – –

£190,001 to £200,000 1* – ––– –

£220,001 to £230,000 – 1 – – – –

£240,001 to £250,000 1* – ––– –

£330,001 to £340,000 – 1* – – – –

£340,001 to £350,000 1* – ––– –

£400,001 to £410,000 1* – ––– –

*Including Long Term Incentive Plan (LTIP) payment

** Secretary to the Church Commissioners (Chief Executive) All of the staff above are members of the Church Administrators Pension Fund (note 9). Of those managed directly by the Commissioners, ten (2013: eight) accrue benefits under a defined contribution scheme for which contributions for the year were £143,000 (2013: £121,000). The remaining eight (2013: seven) staff accrue benefits under a defined benefit scheme. Of those managed by ChECS, ten accrue benefits under a defined contribution scheme for which contributions for the year were £58,000. The remaining ten staff accrue benefits under a defined benefit scheme. The highest paid member of staff was the Director of Investments who earned £409,000 (2013: £334,000) including a LTIP based on the long term performance of the fund of £160,000 (2013: £91,000). Seven other members of staff received LTIPs in the year totalling £509,000 (2013: none). Further details of the Commissioners’ remuneration policy are included in the Governance Section of the Board’s report on page 30. Asset management and national Church functions The cost of the planning and management of the Commissioners' assets is included in external management costs (note 3) and for the administration of national Church functions is included in support costs (note 4). Local property management The net cost of on site management and servicing of residential blocks of flats is included in other operating costs (note 3).

51 51 FINANCIALFINANCIAL STATEMENTS STATEMENTS Human Resources Communications Office Services Records Total charitableexpenditure resources outgoing Total Total managed PBby Total managed AC by Total managed CC by Finance and resources Resources expended The table showsbelow the coststotal for shared services: the three main NCIs. The previous management a from 1 April2014. Prior to this, the responsibility The charity was registered with the Charity Commissionon 31 December 2013and started operating shared financial, legal and other services. Church of England and of other charities with a church enhance the efficiency and effectiveness of the charit the Church of England Pensions Board (PB), who are equal partners. The purpose of ChECSisto ChECS is charitablea joint venture between the Co 8. ChurchofEnglandCentral Services(ChECS) and electric scooters. Interest free loans are made for travel season ticket members of staff. 11) (2013: to 8 outstanding loans 11) 8 (2013: has 2004, in business to new closed was which mortgage scheme. These loans are included in loans In addition amountsto the shown above, the loans Staff 7. Staff numbers and remuneration continued THE 2014 CONTINUED FOR ENDED 31 DECEMBER YEAR NOTES TOTHEFINANCIALSTATEMENTS Archbishops’ Council Archbishops’ by: Met Internal Audit Legal IT Other bodies Church Commissioners Pensions Board

provided by AC/CC/PB by provided 1 Jan-31 Mar services services Mar Jan-31 1 Church Commissioners Annual 2014 Report Church Commissioners Annual 2014 Report

2.9 2.9 0.1 0.7 2.1 0.4 0.4 0.1 0.2 0.1 0.2 0.5 1.3 0.1 0.1 1.4 1.0 £m Commissioners provide loans under the staff house 52 provided by AC/CC/PB by provided rrangements continued into the new structure. 1 Apr-31 Dec services services Dec Apr-31 1 for the provision of shared services was splitbetween mmissioners (CC), the Archbishops’ Council (AC) and and (AC) Council Archbishops’ the (CC), mmissioners s and green travel loans for the purchase of bicycles 52 (note 14) at £0.2m (2013: £0.3m). The scheme, scheme, The £0.3m). (2013: £0.2m 14) at (note able national and diocesan the institutions of ethos, by facilitating the provision of cost-effective 2014 7.2 7.2 0.3 2.0 4.9 1.3 0.9 0.5 0.3 0.3 0.6 1.3 3.3 0.6 2.7 0.2 2.4 £m 10.1 10.1 Total 0.4 2.7 7.0 1.7 0.6 1.3 0.5 0.4 0.8 1.8 4.6 0.7 4.1 0.3 3.4 £m

10.0 10.0 2013 Total 0.4 2.7 6.9 0.7 1.9 0.5 1.3 0.4 0.8 1.2 4.6 0.7 4.4 0.2 3.3 £m Church Commissioners Annual Report 2014

The Commissioners’ one third share of gross incoming and outgoing resources of ChECS for the nine months to 31 December 2014 was £2,393,000. The Commissioners’ share of net assets of ChECS was £nil. As at 31 December 2014, £348,000 was owed to the Commissioners by ChECS. 9. Commissioners’ emoluments and expenses The First Commissioner is paid a salary in accordance with the Church Commissioners Measure 1947 (as amended), although he waives his entitlement to a pension. Legislative provision is made for payment of a salary to the Third Commissioner, but the Commissioners have determined that no salary should be paid. Other Commissioners have no entitlement to a salary or pension in their capacity as Commissioners.

2014 2013 £000 £000 First Church Estates Commissioner Salary 58 58 National Insurance costs 7 7 Total Church Estates Commissioners’ costs 65 65

Pensions paid to former First and Third Church Estates Commissioners of £69,000 (2013: £92,000) were charged to the staff pension provision (note 10). Expenses incurred in attending Board and committee meetings and on other business of the Commissioners were reimbursed to 15 Commissioners (2013: 17). Claims amounting to £14,000 (2013: £13,000) were submitted in respect of travel and subsistence. 10. Staff pensions Staff of the Commissioners, bishops and the Church of England Pensions Board who commenced service before 1 July 2006 are entitled to pension benefits based on final pensionable pay for service up to 30 June 2010 and career average for service from 1 July 2010. Increases of pensions in payment and preserved pensions are linked to the consumer and retail prices indices. There are no other post retirement benefits. Staff who commenced service after 30 June 2006 are entitled to pensions earned from the contributions paid into a personal pension scheme by their employers and by themselves. The contribution rate payable by the Commissioners is between 8% and 18%. None of the figures below relate to these arrangements. Service before 2000 Benefits based on years of service until 31 December 1999 for staff and benefits in respect of former First and Third Church Estates Commissioners are not separately funded but are provided for in the balance sheet in accordance with FRS 17: Retirement Benefits. A full valuation of the provision was carried out as at 31 December 2012 and has been rolled forward in estimating the obligation at 31 December 2013. This provision is calculated annually using the projected unit method by Hymans Robertson LLP, independent qualified actuaries. The movements on the provision during the year were:

2014 2013 £m £m At 1 January 112.8 111.8 Pensions and lump sums paid (5.5) (5.4) Interest on provision – charged to general fund 4.7 4.8 Actuarial loss – charged to endowment capital 13.8 1.6 At 31 December 125.8 112.8

53 53 FINANCIALFINANCIAL STATEMENTS STATEMENTS (2008: £2,050,000 per annum £2,050,000 from (2008: 1 July 2010 to £2,373,000 per annum from 1July 201330to June 2025, increasing on 1 January each year by 5.0% was deemed necessary. The level of additional cont (2008: £30.2m). Despitethe increase in the Scheme de of deficit £32.4m a showed 2011 31 December at as Fund of the A full valuation of valuation. method The contributions to the Fund are assessed byin an financial statements. The assets of the Fund are Pension Fund, administered by the Church of England Pensions Board, which publishes the Fund’s Administrators Church by the provided are 2000 from 1 January from service arising for staff Benefits 2000 from Service losses: and gains experience History of to the July 2012 Vita Club dataset. Continuous Mortality Investigation has been used, with (2013: £46,000). In 2014 the Commissio the 2014 In £46,000). (2013: cost the and £210,000) (2013: of £216,000 Scheme In addition the employers are responsible making for progress. in is 2014 December 31 at as fund of the valuation A full £1,415,000). (2013: in line with general salary inflation). The Commiss Actuarial loss/(gain) tables. In of respect future impr In their assessments of the pensions payment: in pensions of of increase Rate Rate of salary increases bonds) on AA rated corporate Discount rate (annual rate of return The in principal used assumptions estimating the provision were: Actuarial loss Loss due of to assumptions change effect in financial Analysis of actuarial loss charged to endowment capital: 10. Staffpensionscontinued THE 2014 CONTINUED FOR ENDED 31 DECEMBER YEAR NOTES TOTHEFINANCIALSTATEMENTS

for service since 1 April 1997 (RPI) for service before 1 Ap ril 1997 (CPI) ovements in mortality rates, the Church Commissioners Annual 2014 Report Church Commissioners Annual 2014 Report liability, Hymans Robertson LLP us ners’share of these costs was £117,000 54 held separately from those the of Commissioners. ioners’ share of the deficit payment is£1,207,000 ributions to be made by the employers will be be will employers by the made be to ributions dependent qualified actuary using the projected unit 54 .5232326 3.1 2.6 2.3 2.3 2.25 .5434046 5.1 4.6 4.0 4.3 4.25 .5333031 3.6 3.1 3.0 3.3 3.25 2014 13.8 contributions towards the administration costsof the 2014 . . . . 5.5 4.8 4.4 4.3 3.4 30 June 2025, 30 increasing June on 2025, advanced parameters with starting rates calibrated % £m of Pension Protection Fund levies of £46,000 of £46,000 levies Fund Protection of Pension ficit no adjustment to the existing recovery plan projection model from the 2010 2013 2013 1.6 £m % ed bespoke Club Vita mortality 2012 2012 7.8 £m % 1 January each year

(2013: £153,000). £153,000). (2013: 13.8 38 1.6 13.8 2011 2014 2011 4.0 £m £m %

2010 2010 2013 (7.0)

1.6 £m £m % Church Commissioners Annual Report 2014

11. Non investment assets Lambeth Palace and IT systems Administrative offices see houses Total Leasehold Consolidated and Freehold property improvements Commissioners £m £m £m £m £m Cost or valuation Balance at 1 January 1.9 2.9 2.1 101.8 108.7 Transfers (note 12) – (2.9) – – (2.9) Additions – – – 0.9 0.9 Proceeds from disposals – – – (2.3) (2.3) Unrealised gains – – – 8.5 8.5 Balance at 31 December 1.9 – – 108.9 112.9

Accumulated depreciation Balance at 1 January (1.3) (0.2) (1.5) – (3.0) Transfers (note 12) – 0.2 – – 0.2 Charge for the year (0.1) – (0.2) – (0.3) Balance at 31 December (1.4) – (1.7) – (3.1)

Net book value Balance at 1 January 0.6 2.7 0.6 101.8 105.7 Balance at 31 December 0.5 – 0.4 108.9 109.8

The original cost of non investment fixed assets is not disclosed given the historic nature of many of the assets owned. Lambeth Palace is valued at £1 as explained in note 1(f). Other see houses were valued by Knight Frank LLP as at 31 December 2013 and are increased annually in line with the regional Nationwide housing price index. Freehold see houses are valued at £103.6m (2013: £96.5m). The contents of the see houses were valued by Gurr Johns as at 31 December 2007. All non investment assets are located in the United Kingdom.

55 55 FINANCIALFINANCIAL STATEMENTS STATEMENTS nrsrcue 2f – – – 172.5 – – 105.1 – – 49.8 – adversely affect the value of some of these non-ste – 9.5 Forward foreign currency contracts are used hedge to portfolio. investment of the 42.1%) (2013: – – – foreign currency exchange rates. Non-sterling asse The Commissioners have investments denominated in fo – 4.9 – Future commitments are disclosed in note 15. investments. – 50.0 – – 117.8 – assets 12(g) 2.1 investment 45.6 Total 12(f) – undertakings 12(e) Subsidiary Infrastructure (2.1) Timberland loans – Value linked interests – property partnership Shared and 2.2 properties Investment – portfolio Securities Commissioners 2.0 106.9 assets 12(f) investment 12(e) Total Infrastructure Timberland loans Value linked interests property partnership Shared and properties Investment portfolio Securities Consolidated 12. Investmentassets THE 2014 CONTINUED FOR ENDED 31 DECEMBER YEAR NOTES TOTHEFINANCIALSTATEMENTS The original cost of investments is not disclosed managers the to riskmanage of not achi exposures. currency of developed 95%) 95% (2013:

Notes 2d 154 . 1.)402. – 144.7 – 27.0 4.0 (12.0) 0.3 – 125.4 12(d) 144.7 – 27.0 4.0 (12.0) 0.3 – 125.4 12(d) 2b 1277 . 02(43 09104 1,427.6 – 180.4 40.9 (84.3) 20.2 2.7 1,267.7 12(b) 1,524.1 – 191.1 44.5 (95.7) 22.6 2.7 1,358.9 12(b) 2a 3542 1, – 3,504.2 12(a) 1, – 3,665.2 12(a) 2c 498 10(4.)1642. 33 258.7 3.3 22.1 156.4 (443.9) 41.0 – 479.8 12(c) 307.2 3.3 34.2 156.5 (449.5) 50.0 – 512.7 12(c)

5,771.1 5,540.5 1 January £m Church Commissioners Annual 2014 Report At Church Commissioners Annual 2014 Report (note 11) (note Transfer Transfer 2.7 2.7 eving overall performance benchmarks. £m 1. 03 16 48 255.4 – 34.8 (1.6) (0.3) 115.6 – 1,766.1 1,803.5 additions 4. 1422 1. 59 62 3,906.5 (6.2) 25.9 215.1 (1,482.2) 649.7 4,042.5 (6.2) 37.7 215.1 (1,482.1) 612.8 56 given the historic nature of many of the property Net £m ts exposed currencyto risk represented 44.3% rling assets. This currency 56 Forward contracts are also used bysome fund the risk of changes in exchange rates which might (2,022.4) (2,039.6) reign currencies and are impacted by changes in Proceeds Proceeds disposal from £m Realised 416.4 418.5 gains £m Unrealised Unrealised 314.7 322.7 hedging programme covers (losses) gains/ £m

(deficit) on (deficit) unrealised unrealised contracts contracts currency currency Realised surplus/ forward forward foreign foreign (2.9) (2.9) and £m December 6,015.1 6,276.0 At 31 £m

Church Commissioners Annual Report 2014

Outstanding contracts are included in the value of the assets covered by the currency management programme:

Consolidated and Commissioners

2014 2013 Non-sterling Outstanding Non-sterling Outstanding assets contracts Total assets contracts Total £m £m £m £m £m £m Securities portfolio 2,582.1 6.2 2,588.3 2,215.5 12.4 2,227.9 Shared and partnership property interests 200.6 1.3 201.9 185.9 2.3 188.2 Total non-sterling assets 2,782.7 7.5 2,790.2 2,401.4 14.7 2,416.1

The net surplus from operating the hedging programme was £23.2m (2013: £2.9m), after deducting fees of £1.4m (2013: £1.3m). (a) Securities portfolio Consolidated Commissioners 2014 2013 2014 2013 £m £m £m £m Quoted UK equities 1,138.4 1,166.5 1,138.4 1,166.6 Quoted overseas equities 1,749.6 1,749.1 1,749.6 1,663.8 Unquoted UK equities 141.2 79.8 141.2 45.3 Unquoted overseas equities 770.1 328.6 634.1 287.3 Quoted UK fixed interest securities 174.6 191.0 174.6 191.0 Quoted overseas fixed interest securities 58.0 147.5 58.0 147.5 Unquoted overseas fixed interest securities 10.6 2.7 10.6 2.7 Total securities 4,042.5 3,665.2 3,906.5 3,504.2

The market value of listed investments includes stock on loan of £35.5m (2013: £12.4m). (b) Investment properties Consolidated Commissioners 2014 2013 2014 2013 £m £m £m £m Freehold interests 1,504.3 1,342.5 1,407.8 1,251.3 Leasehold properties with more than 50 years to run 20.6 17.5 20.6 17.5 Total carrying value 1,524.9 1,360.0 1,428.4 1,268.8 Adjustment for concessions to tenants (see note 13) (0.8) (1.1) (0.8) (1.1) Total investment properties 1,524.1 1,358.9 1,427.6 1,267.7

The valuers of the properties were: Let and strategic land properties: Savills Commercial properties: DTZ Debenham Tie Leung Residential properties: Jones Lang LaSalle Mineral portfolio: Wardell Armstrong. All investment properties are located in the United Kingdom.

57 57 FINANCIALFINANCIAL STATEMENTS STATEMENTS Unquoted UK funds Property funds Other net assets Borrowings Timberland is valued in line with the a Total timberland Total overseas timberland Total UK forestry Directly held UK forestry (e) Timberland All value linked loans were valued by DTZ Debenham Tie Leung. price which was financed by the loan. Commissioners are entitled to a share of Value linked loans are granted for the purchase of resi Total valuelinkedloans To Church Pensions of Board England To improve provide Church and prop (d) Value loans linked and sharedinterest holders. Shared and partnershipinterests property valued are Total sharedandpartnershippropertyinterests Total partnership interests Total shared interests Properties interests Shared interests property partnership and (c) Shared 12. Investmentassetscontinued THE 2014 CONTINUED FOR ENDED 31 DECEMBER YEAR NOTES TOTHEFINANCIALSTATEMENTS Directly held Overseas timberland Partnership interests Quoted overseas funds Unquoted overseas funds erty and other for purposes erty Church Commissioners Annual 2014 Report Church Commissioners Annual 2014 Report the proceeds corresponding to the pr ccounting in policy note described 1(f).

58 dential properties. On disposalof the property, the independently by valuers appointed by the partnerships by by independently valuers the appointed 307.2 255.4 307.2 150.3 105.1 104.7 105.1 105.3 7. 6. 5. 150.1 159.2 166.6 176.2 58 45.6 25.7 2014 2014 £m £m – 268.3 – – – Consolidated Consolidated Consolidated Consolidated 512.7 106.9 281.8 230.9 (40.3) 41.3 20.0 61.3 45.6 56105.1 45.6 93.6 21.6 2013 2013 2.9 £m £m oportion of the original purchase oportion Consolidated and Commissioners Commissioners and Consolidated 258.7 105.1 144.7 258.7 105.1 112.7 73.8 25.7 32.0 2014 2014 2014 £m £m £m – – (40.3) – 268.3 – – – –

Commissioners Commissioners Commissioners Commissioners 479.8 125.4 248.9 230.9 97.6 45.6 27.8 45.6 77.2 45.6 21.6 2013 2013 2013 2.9 £m £m £m – – – Church Commissioners Annual Report 2014

(f) Infrastructure Consolidated Commissioners 2014 2013 2014 2013 £m £m £m £m Unquoted overseas funds 2.1 2.0 – – Total infrastructure 2.1 2.0 – –

Infrastructure is valued in line with the accounting policy described in note 1(f). (g) Subsidiary undertakings The Commissioners’ principal subsidiary undertakings, held to undertake property purchase, development and management and certain shared and partnership property interests and timberland investments, are:

Registered in England and Wales CC Trading Ltd, CC Lincoln Ltd, CC Projects, Cedarvale, CC Licensing, Quivercourt, Easton Tree Ltd and Weston Tree Ltd.

Registered in the US Cherry Tree Timber LLC, Arbol Tree LLC.

Registered in Australia Jarh Tree Co Pty. The Ashford Great Park Partnership, held through intermediate companies, has its principal offices at 29 Great Smith Street, London SW1P 3PS. The Commissioners also own 80% interests in Lone Rock Timber Investments MBD-Landco Limited Partnership and Lone Rock Timber Investments MBD-Logco Limited Partnership, both of which are registered in the US. These entities are not solely controlled by the Commissioners and therefore meet the definition of “joint venture” in FRS 9, but fall within the exemption for investment funds in paragraph 49 of FRS 9. The Commissioners have no associated undertakings. 13. Debtors Consolidated Commissioners 2014 2013 2014 2013 £m £m £m £m Trade debtors 5.5 7.8 4.9 7.1 Subsidiary undertakings – – 294.7 271.8 Joint venture (ChECS) 0.3 – 0.3 – Dioceses (Clergy Stipends and Diocesan Debtors Accounts) 1.7 0.8 1.7 0.8 Loans 6.3 8.7 6.3 8.7 Other debtors 3.1 2.9 1.7 2.8 Prepayments and accrued income 15.5 26.4 15.6 25.0 Total debtors 32.4 46.6 325.2 316.2

Consolidated trade debtors of £5.5m (2013: £7.8m) is after deducting a provision for bad and doubtful debts of £0.6m (2013: £0.6m). Other loans, which are interest bearing and consist of mortgages to Church bodies and staff and car loans to clergy, are reported within debtors. Of the £6.3m total (2013: £8.7m), £3.7m (2013: £7.4m) is due after one year. Other debtors include £0.5m (2013: £1.1m) relating to concessions to tenants which are amortised over the shorter of the period to the first break clause or the period to the first rent review. Accordingly, the independent valuation of investment properties is reduced by this amount.

59 59 FINANCIALFINANCIAL STATEMENTS STATEMENTS and inflated in line with RPI. the permanent diminution fund of asthe clergy pensions are paid out under the Pensions Measure 1997, SOFA. The trustees agreed the base value of the endow and becomes “applied Thetotal return”. transfer is shown in the table below and on the face of the The total return each year remains part the of endowm 2012. January 1 at of £5,237.6m value fund total the £2,202.0m. The base value and unapplied total return together with the general fund reserve made up was return total unapplied the and £3,000.4m was 2012 1 at January of endowment the level base sinc from capital, paid pensions clergy deducting transferred to the Church Commissioners in April book value of assets of the Ecclesiastical Commi fund over and above the base level of endowment. The trusteesagreed this base level should be the subsequent movements are shown in the table below. The Order requires the unapplied total return be to return basis. enable them account to and report income and capi on Commission Charity by the made was Order An 15. Transfersbetweenfunds Total creditors Accruals and deferred income Subsidiary undertakings Trade creditors Creditors 14. THE 2014 CONTINUED FOR ENDED 31 DECEMBER YEAR NOTES TOTHEFINANCIALSTATEMENTS Taxation and National Insuranc Other creditors Dioceses and other Church bodies e contributions Church Commissioners Annual 2014 Report Church Commissioners Annual 2014 Report 60 ssioners and the Queen Anne’s Bounty when they were e the Pensions Measure 1997 became effective. The The effective. became 1997 Measure Pensions the e 1948 (£155.8m), inflated in line with RPI and and RPI with line in inflated (£155.8m), 1948 19 June 2012, at the request of the trustees, to calculated at the point which the Order is made, and tal returns and charitable expenditure on a total 60 53.7 28.3 2014 9.1 0.6 7.1 8.6 The unapplied istotal return the of amount the ent fund, until it is transferred to the general fund £m – ment should be recalculated each year to reflect Consolidated Consolidated 37.4 17.7 2013 9.0 4.6 5.3 0.8 £m – 84.1 22.7 40.4 2014 8.9 7.1 4.8 0.2 £m Commissioners Commissioners 75.4 16.5 40.2 2013 8.6 4.6 5.1 0.4 £m Church Commissioners Annual Report 2014

Total Base value of Unapplied endowment General endowment total return fund fund Total funds Notes £m £m £m £m £m 1 January 2,920.9 3,204.4 6,125.3 – 6,125.3

Add investment return for the year: Income return – gross income 2 – 137.9 137.9 2.5 140.4 Income return – cost of generating funds 3 – (49.4) (49.4) – (49.4) Capital return – non investment assets 11 – 8.5 8.5 – 8.5 Capital return – investment assets 12 – 738.3 738.3 – 738.3 Capital return – foreign currency – 14.4 14.4 – 14.4 Total investment return during the year – 849.7 849.7 2.5 850.3

Less Pensions paid from capital 5 (122.9) – (122.9) – (122.9) Transfers out of capital 5 (0.6) – (0.6) – (0.6) Losses on defined benefit pension schemes (staff) 10 (13.8) – (13.8) – (13.8) Charitable expenditure: non- pensions 4 – – – (93.5) (91.6) Other expenditure 6 – – – (6.8) (6.8) Total other movements during the year (137.3) – (137.3) (100.3) (235.7) Add indexation on base value of endowment 46.7 (46.7) – – – Application of non-applied total return – (97.8) (97.8) 97.8 – 31 December 2,830.3 3,909.6 6,739.9 – 6,739.9

16. Capital commitments and contingent liabilities Capital commitments Consolidated Commissioners 2014 2013 2014 2013 Notes £m £m £m £m Securities portfolio 11(a) 214.6 160.2 159.5 141.9 Shared and partnership property interests 11(c) 53.4 63.5 38.2 36.5 Timberland 11(e) 40.8 80.4 – – Infrastructure 11(f) 27.0 27.6 – – Total capital commitments 355.8 331.7 197.7 178.4

The Commissioners have commitments to invest in private equity, private credit, real estate and timberland funds. The timing of draw downs is dependent on the fund managers acquiring underlying assets during the investment periods of the funds.

61 61 FINANCIALFINANCIAL STATEMENTS STATEMENTS Residential service char balance sheets. The Commissioners hold monies on behalf of others. Total fundsheldon behalfof others Trust funds Residential service charges, sinking 17. Fundsheldonbehalfofothers It is not practicable to reliably estimate t any of the other joint employers. as such, have a contingent liability The Commissioners are joint employer, together with the responsible for the entire li responsible bodies, the remaining responsiblebodies, to the Church of England Funded Pensions Scheme for The Commissioners, dioceses and other Church bodies Contingent liabilities 16. Capital commitments and contingent liabilities continued THE 2014 CONTINUED FOR ENDED 31 DECEMBER YEAR NOTES TOTHEFINANCIALSTATEMENTS purposes. The total amount received was £0.1m (2013: £0.1m). £0.1m). (2013: £0.1m was received amount total The purposes. Certain other trustees are directed to pay or some a trusts. of terms the the with accordance in is applied £0.2m), (2013: £0.2m income, The Commissioners are trustees 40 of funds,main Trust funds maintenance works can be carried out. The service charges and sinking funds are paid in advance by tenants in order that property repairs and ges, sinking funds ges, an sinking funds abilities of the Scheme. funds and funds tenants’ deposits Church Commissioners Annual 2014 Report Church Commissioners Annual 2014 Report for salaries and other employment costs eventin the of a default by he quantum of the above co d tenants’ d deposits 62 ly restricted permanent endowment funds. Their ll of their income to the 62 The sumsare not included in the Commissioners’ including the Commissioners, would continue to be are bodiesthe responsible for the contributions clergy. In the event of defaults by any of the other NCIs, of most of the staff NCIsof the and, ntingent liabilities. ntingent liabilities. Commissioners for specified specified for Commissioners 15.8 2014 6.7 9.1 £m 16.2 10.6 2013 5.6 £m Church Commissioners Annual Report 2014

Professional advisors Bankers: National Westminster Bank plc Custodians: JP Morgan Chase Bank Auditors: Deloitte LLP Actuaries: Hymans Robertson LLP Solicitors: Official Solicitor to the Church Commissioners, Charles Russell, Farrer & Co, Radcliffes Le Brasseur

Money available resolution As required by the Church Commissioners Measure 1947 (as amended), at the Annual General Meeting of the Commissioners to be held on 24 June 2015, the Board of Governors will recommend that the meeting (i) receives the Annual Report and financial statements; and (ii) notes an update on the spending plans for 2014-16. At its meeting on 26 March 2015 the Assets Committee, having received updated advice from its actuarial advisors Hymans Robertson LLP (as required by the Pensions Measure 1997) which is summarised on the next page, resolved to inform the Board that the Commissioners’ expenditure plans for 2015 could be made firm.

Statement of responsibilities The trustees are responsible for preparing the Trustees’ Annual Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). The law applicable to charities in England and Wales requires the trustees to prepare financial statements for each financial year to give a true and fair view of the state of affairs of the charity and of the incoming resources and the application of resources of the charity for that period. In preparing the financial statements, the trustees are required to:

• select suitable accounting policies and then apply them consistently; • observe the methods and principles in the Charities SORP; • make judgements and estimates that are reasonable and prudent; • state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charity will continue in business. The trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the charity’s transactions and disclose with reasonable accuracy at any time the financial position of the charity and enable them to ensure that the financial statements comply in all material respects with the Charities (accounts and report) regulations 2008, the Church Commissioners measure 1947 (as amended) and the Charities Act 2011. The trustees are also responsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The trustees are responsible for the maintenance and integrity of the organisational and financial information included on the Commissioners’ section of the Church of England website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

63 63 FINANCIALFINANCIAL STATEMENTS STATEMENTS were to (i) placea value on the Commissioners’ obli annual update of this review was carried out as at review of the Commissioners’ fund and pensions obliga t formulating in Commissioners the to order assist In of their pensions obligation. for other purposes. The sums available for non-pensions and staff and provide money to support the mission and The Commissioners hold assets from which they pay p INDEPENDENT ACTUARIES’ REPORT Many occupational pension schemes have actuarial Committee. Assets Commissioners’ to the levels funds after taking into account t sustainable level of annual discretionary distribution prudence. This is done sothat the scheme has a fund 26 March 2015 Richard Crowhurst FIA, for and on behalf of Hymans Robertson LLP reassessment should take place in early 2016. reassessment of the position at three yearly intervals. We recommend that the next detailed We recommend that the Commissioners’ situation be The proposed distributions in 2015. We have been provided with details of the Commissioner We recommend that the should Commissioners (iii) Having regard to the Commissioners’ long term (ii) their to meet required were assets Commissioners’ of the £1,788.6m 2014, December As 31 at (i) The main results of our calculations were that: in payment and the actual and pros increases in the national minimum stipend (on which t Commissioners’actual investment performance, the sustainable non-pensions distributions are extremely s It beshould noted that the sums which the Commi expense of current recipients. intergenerational inequity, with the future recipients of be increased in the future by more than the planned to be included, current non-pension distributions would larger than their obligation to pay pensions, and no prudence. We consider that margins are not requir for the Commissioners were made on a “best estima in particular if the pension scheme’ position to reduce distributions if necessary beca necessary if distributions to reduce position stopped, at relatively short notice, say within a year distributions,say at least between 5% and 10%, in consequence for the Commissioners’ distributions that consider We 2014. for distributions as at 31 December 2013, we no have objection in purposes for these distributed be should £283.8m purposes other than pensions in line with the general pension obligation. heir pensions obligations; and (iii) Church Commissioners Annual 2014 Report Church Commissioners Annual 2014 Report s sponsoring employer becomes inso becomes employer s sponsoring pective longevity of pensioners. proposals are in line with the results of setour review out above. long term financial position. 64 31 December 2014. The main purposes of our review review of our purposes main The 2014. December 31 ssioners’ assets are able supportto by way of ed, as the Commissioners’ assets are significantly gations to pay pensions to pensions to pay gations to continue tosometheir pay of non-pensions further margin is necessary. objective to increase the level of their support for valuations performed using that can be paid by the 64 heir distribution policy, out we a carried detailed the to Commissioners continuing with the planned te basis” and did not include such margins of assumed average future investment return, actual use future experience turns out to be unfavourable. increases in line with earnings.This would lead to reviewed at least annually with a detailed he starting level of pension isbased) and pensions ing buffer should future events prove unfavourable, ensitive to a number of factors.These include the distributions receiving more in real terms at the ensions to retired clergy, other licensed ministers will or the put two. Commissioners in better This a tions as at 31 December 2012. Our most recent recent Our most 2012. 31 December at as tions a that form will cease,automatically or can be be reduced,be with the expectation that they could ministry of bishops, and cathedrals parishes and s’ actual distributions in 2014 and a forecast of supportare significantly affected by the extent at this level are not likely to lead to an adverse level of earnings, we advise that no more than 2014-16.In the light the of most recent review recommend maximum distribution lvent. In contrast, our calculations Commissioners their from clergy; (ii) determine a significant margins for Moreover, if margins were Church Commissioners Annual Report 2014

ANALYSIS BETWEEN DIOCESES OF THE MAIN ELEMENTS OF NET CHARITABLE EXPENDITURE (EXCLUDING CLERGY PENSIONS)

Parish mission and ministry support1

Strategy Bishops’ development Other diocesan and archbishops’ Cathedrals’ funding support ministry2 ministry Total

2014 2014 2013 2014 2013 2014 2013 2014 2013 £m £m £m £m £m £m £m £m £m Bath & Wells – 0.1 0.1 0.6 0.5 0.2 0.2 0.8 0.7 Birmingham 1.0 2.0 2.0 0.4 0.4 0.3 0.3 3.6 2.6 Blackburn – 1.0 1.0 0.5 0.6 0.3 0.3 1.8 1.9 Bristol – 0.4 0.4 0.4 0.4 0.3 0.3 1.0 1.0 Canterbury – 0.8 0.8 0.4 0.5 0.2 0.2 1.4 1.5 Carlisle – 0.7 0.7 0.5 0.4 0.3 0.3 1.5 1.4 Chelmsford 0.9 2.9 2.9 0.7 0.7 0.3 0.3 4.7 3.9 Chester – 0.2 0.2 0.5 0.5 0.2 0.2 0.9 0.9 Chichester – 0.1 0.2 0.5 0.5 0.2 0.2 0.9 0.8 Coventry – 0.1 0.1 0.4 0.4 0.2 0.2 0.7 0.7 Derby – 1.7 1.7 0.4 0.4 0.3 0.3 2.4 2.4 Durham – 2.7 2.7 0.6 0.6 0.1 0.1 3.5 3.4 Ely – 0.1 0.1 0.4 0.4 0.2 0.2 0.6 0.6 Exeter – 1.5 1.5 1.1 0.6 0.2 0.2 2.8 2.3 Gloucester3 – 0.0 0.0 0.4 0.4 0.2 0.2 0.7 0.7 Guildford3 – 0.0 0.0 0.4 0.4 0.2 0.2 0.7 0.6 Hereford – 0.5 0.5 0.4 0.4 0.2 0.2 1.1 1.1 Leicester 0.8 1.5 1.5 0.4 0.4 0.3 0.3 3.1 2.2 Lichfield – 2.0 2.2 0.6 0.6 0.2 0.2 2.8 3.0 Lincoln – 1.0 1.0 0.5 0.5 0.1 0.1 1.6 1.6 Liverpool 0.9 1.7 1.7 0.5 0.4 0.1 0.1 3.3 2.3 London – 0.4 0.3 1.2 0.9 0.1 0.1 1.8 1.3 Manchester – 2.9 2.9 0.5 0.6 0.2 0.2 3.7 3.8 Newcastle – 1.6 1.6 0.4 0.4 0.3 0.3 2.2 2.2 Norwich – 1.6 1.6 0.6 0.6 0.2 0.2 2.4 2.4 Oxford3 – 0.2 0.2 0.6 0.6 0.0 0.0 0.8 0.8 Peterborough – 0.1 0.1 0.5 0.4 0.2 0.2 0.8 0.7 Portsmouth – 0.5 0.5 0.3 0.3 0.3 0.3 1.1 1.0 Rochester – 0.2 0.2 0.4 0.4 0.2 0.2 0.8 0.9 St Albans – 0.2 0.2 0.5 0.5 0.2 0.2 0.9 0.9 St Eds & Ipswich – 0.3 0.3 0.4 0.4 0.3 0.3 0.9 0.9 Salisbury3 – 0.0 0.0 0.5 0.5 0.1 0.1 0.7 0.7 Sheffield 1.0 2.1 2.1 0.4 0.4 0.2 0.2 3.7 2.7 Sodor & Man3 – 0.0 0.0 0.2 0.2 – – 0.2 0.2 Southwark – 0.3 0.3 0.6 0.6 0.2 0.2 1.1 1.1 Southwell & Nott’m – 1.5 1.5 0.4 0.5 0.3 0.3 2.2 2.2 Truro – 0.9 0.9 0.4 0.4 0.2 0.2 1.5 1.5 Winchester – 0.1 0.2 0.6 0.6 0.1 0.1 0.9 0.9 Worcester – 0.4 0.4 0.5 0.4 0.2 0.2 1.1 1.0 York – 2.1 2.1 0.3 0.3 0.1 0.1 2.6 2.6 West Yorks & the Dales – 3.8 3.8 1.3 1.0 0.9 0.9 6.0 5.8 Europe – 0.1 – 0.5 0.4 – – 0.6 0.4 National support – 0.9 0.4 10.6 10.7 – – 11.5 11.2 Total 4.6 41.5 40.9 32.3 31.2 9.1 9.1 87.4 81.2

Due to roundings, column and row totals may appear not equal to the sums of the individual figures.

Notes: (1) Parish mission and ministry support comprises grants to dioceses by the Archbishops' Council, payments direct to dioceses and the parishes for strategic development initiative, payments direct to clergy and national support (insurance subsidies and minor grant payments). (2) Bishops' and archbishops' ministry includes grants to individual bishops towards their office and working costs, housing costs and stipends. National support includes the stipends and office and workings costs of the two archbishops, their advisors and the Provincial Episcopal Visitors, premises costs for Lambeth Palace and Lambeth Palace Library and the income from ancillary properties in all sees. (3) Gloucester, Guildford, Salisbury and Sodor & Man received parish mission and ministry support but the amount was less than £50,000. Oxford received support for cathedral ministry but the amount was less than £50,000.

65 65 FINANCIALFINANCIAL STATEMENTS STATEMENTS Ely Estate Huntingdon Estate Halsall Estate Greenchip Timber Chichester Estate CBRE Property Central Fund Europe (part Castlelake Land Opportunities Y Carlisle Estate Canterbury Estate Blackrock (partnership Asia interestIII Ashford Estate (including indirect, timberland and infrastructure) Twenty most valuable property holdings forestry and timberland). below shows largest the 20 public equity holdings and property holdings (including shared, partnership, 1.1% represents which £70.1m of 2015 January 22 2.75% range of asset classes. The largest single entity inve The Commissioners’ investment policy AS AT 31 DECEMBER 2014 LIST OFLARGER INVESTMENTS Imperial House, 15-19 Kingsway, London,WC2 The Hyde Park Estate Lendlease Retail Partnership Rochester Estate Molpus Timber MetroCentre (10% interest land) and associated 19-26 Long Acre & 28-30 Floral Stre South Lincolnshire Estate ork Estate t odn CE Qualcomm et,WC2E London, ) Church Commissioners Annual 2014 Report Church Commissioners Annual 2014 Report esi neet Royal Dutch Shell nership interest) is to hold a to is diversified hold investments portfolio across of a broad 66 stment is the Commissioners’ holding in UK Treasury 66 Vodafone Vodafone UK Treasury Bill 23 February 2015 UK Treasury Bill 5 January 2015 UK Treasury Bill 9 March 2015 Samsung Electronics HSBC KTesr .5 etme 05 51.5 UK Treasury 4.75% 7 September 2015 BP UK Treasury Bill 9 February 2015 Microsoft Llo

UK Treasury Bill 18 May 2015 AstraZeneca GlaxoSmithKline Unilever Oracle KTesr .5 2Jnay21 70.1 UK Treasury 2.75% 22 January 2015 Prudential exchange and fixed interest holdings holdings interest fixed exchange and Twenty most valua yds Banking Group the of total investment portfolio.The table ble direct stock stock direct ble 30.0 50.0 25.0 25.1 23.8 26.3 31.2 50.0 20.8 36.6 48.5 27.9 17.8 29.6 49.9 19.9 24.9 18.1 £m THE CHURCH COMMISSIONERS AND BOARD OF ASSETS COMMITTEE GOVERNORS AT APRIL 2015 Subject to any general rules made by the Board, has an exclusive The Board of Governors transacts the functions and business of the power and duty to act in all matters relating to the management of Commissioners except where, by statute or through delegation by the Commissioners’ assets the Board, these are exercised by Committees. Except State office Andreas Whittam Smith CBE Chair holders, all Church Commissioners are members of the Board of Revd Amanda Fairclough Governors. Bishop of Bristol, Mike Hill Archbishop of Canterbury, Justin Welby, Chair Canon Peter Bruinvels Archbishop of York, Dr John Sentamu Poppy Allonby Harry Hart Church Estates Commissioners appointed by: Mark Woolley Her Majesty Graham Oldroyd Andreas Whittam Smith CBE First Church Estates Commissioner John Wythe FRICS Vacancy pending General Election Second Church Estates Committee Secretary Andrew Brown FRICS Commissioner AUDIT & RISK COMMITTEE The Archbishop of Canterbury Acts in matters relating to the external auditors, the annual accounts Andrew Mackie Third Church Estates Commissioner and internal control systems Elected by the General Synod Hywel Rees-Jones Chair House Of Bishops April Alexander Bishop of London, Dr Richard Chartres Ian Ailles Bishop of Manchester, David Walker Stephen East Bishop of Bristol, Mike Hill Jeremy Clack Bishop of Chichester, Dr Martin Warner George Lynn Committee Secretary Michael Cole House Of Clergy Revd Canon Bob Baker BISHOPRICS AND CATHEDRALS COMMITTEE Revd Amanda Fairclough Acts for the Board in matters relating to episcopal and cathedral Revd Stephen Trott support House of Laity Andrew Mackie Chair April Alexander Bishop of Chichester, Dr Martin Warner Canon Peter Bruinvels Bishop of Doncaster, Peter Burrows Sally Muggeridge Dean of Wakefield, Jonathan Greener Jacob Vince MRICS Dean of Wells, John Clarke Elected by the deans Revd Anne Hollinghurst Dean of Wakefield, Jonathan Greener Revd Mary Bide Dean of Wells, John Clarke Jacob Vince MRICS Canon Elizabeth (Betty) Renshaw Nominated by: Rosemary Butler Representative of Bishops’ spouses Her Majesty Committee Secretary Paul Lewis MRTPI Harry Hart Ian Watmore PASTORAL COMMITTEE John Wythe FRICS Acts for the Board in matters relating to pastoral reorganisation, parsonages and diocesan glebe The Archbishops of Canterbury and York Simon Picken QC Andrew Mackie Chair Jeremy Clack Bishop of Manchester, David Walker Mark Woolley Bishop of Truro, Tim Thornton Dean of Wakefield, Jonathan Greener The Archbishops of Canterbury and York Canon Bob Baker After consultation with others including the Lord Mayors of the Canon Stephen Evans Cities of London and York and the Vice-Chancellors of Oxford and Ven Penny Driver Cambridge Universities Canon Peter Bruinvels Graham Oldroyd Simon Picken QC Poppy Allonby Julia Flack Hywel Rees-Jones Susan Pope State office holders Committee Secretary Paul Lewis MRTPI The First Lord of the Treasury CHURCH BUILDINGS (USES AND DISPOSALS) The Lord President of the Council COMMITTEE The Lord Chancellor Acts for the Board in matters relating to the future of church The Secretary of State for Culture, Media and Sport buildings closed for regular public worship The Speaker of the House of Commons The Speaker of the House of Lords Andrew Mackie Chairman Canon Bob Baker SECRETARY TO THE CHURCH COMMISSIONERS AND Canon Peter Cavanagh BOARD OF GOVERNORS Revd Simon Talbott Andrew Brown FRICS Revd Stephen Trott Ian Watmore April Alexander John Steel Sally Muggeridge Margaret Davies Committee Secretary Paul Lewis MRTPI The Church Commissioners Annual Report 2014 Report Annual

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