Annual Report 2011 board of directors Rt Revd Michael Perham (President) Revd Canon John Wright (Chair) Rt Revd John Went Contents The Very Revd Stephen Lake (from June 2011) Page Ven Geoffrey Sidaway Year at a glance 4 Ven Robert Springett Richard Bach Message from Bishop Michael 5 Revd Skye Denno Revd Mark Evans Message from the Chair of the GDBF 6 Revd Canon Paul Harris (Retired March 2011) Revd Canon Neil Heavisides Achievements and activities 7 Canon Ian Marsh Our local role 7 Anthony McFarlane Revd Canon Richard Mitchell (Appointed March 2011) o Supporting clergy and discipleship 7 Revd Canon Dr Jennifer Parsons (Resigned March 2011) o Mission and Communications 8 Revd Jacqueline Rodwell Les Reilly o Securing our Church’s future 8 Tom Rucker o Caring for our communities and environment 9 Revd Helen Sammon Revd David Smith o Caring for our buildings 10 Graham W Smith o Encouraging children in Christian faith 11 Professor Jennifer Tann Revd Canon Celia Thomson The Diocese as part of the Anglican Communion 13

solicitor bankers Christopher Peak – Registrar Barclays Bank plc Performance and governance 14 Diocesan Registry 288 Britannia Warehouse 34 Brunswick Road The Docks Financial information 26 Gloucester GL1 1JJ Gloucester GL1 2YJ

auditors investment managers Mazars LLP CCLA Investment Management Ltd Clifton Down House 80 Cheapside Beaufort Buildings London EC2V 6DZ Clifton Down Clifton, Bristol BS8 4AN principal officers Dr Kevin Brown – Secretary Benjamin Preece Smith – Director of Finance

registered office Church House College Green Gloucester GL1 2LY

Company limited by guarantee Registered number 162165 Registered charity number 251234

2 YEAR AT A GLANCE

Year at a glance

How have we done? Highlights from this year’s accounts number of stipendiary clergy funded

2011 2010 change 131 131 0 parish share contributions

2011 2010 change £5.6m £5.4m +3% general fund (ongoing) deficit for the year*

2011 2010 change £715k £851k -16 % balance sheet value (nett assets)

2011 2010 change £68.6m £70.4m -3%

* Calculated as nett incoming resources before gains (£842k) less exceptional items (£127k)

4 MESSAGE FROM BISHOP MICHAEL MESSAGE FROM THE CHAIR OF THE GDBF

Message from Bishop Michael Message from the Chair of the GDBF

I recently had to sign off the accounts for one of the parishes of which I am the incumbent. I was amazed at There is so much about the Diocese of Gloucester that fills one with gratitude and gives one encouragement. how complicated charity law makes a fairly straight-forward set of accounts. I am therefore pleased at what Signs of growth in many of our churches, courageous and imaginative new ways of sharing the good news a good job has been done by our Director of Finance, and his staff, together with our auditors, in presenting and doing the work of ministry, talented staff at the centre, continuing vocations to the ordained ministry, the accounts of the Board of Finance, and especially for the excellent summary on the front page. a cathedral chapter with fresh energy, faithful and yet adventurous clergy and laity. The real summary is that the results for 2011 are better than 2010 but not as good as we had hoped and One thing, however, makes one pause and do some heart-searching. Why, among all these encouraging signs, expected. We are working to a plan to eliminate the deficit by the end of 2015. Some of the actions we have do annual accounts and budgets suggest we are living beyond our means? Will we not have to cut back on taken have borne fruit – a contribution of more than £250,000 from Good and Faithful Servant Ltd is one such, good work and reduce our contribution to the mission of God? The answer, of course, is partly that increased but there have been other items which have worked the other way. The continuing increase in pension costs, pension contributions are a huge challenge to the Church. And partly that our investments are suffering both clerical and lay, is a constant problem and we have no control over the costs of the clergy scheme. because of the economic climate. And partly because we have an expensive infra-structure across the Diocese more suited to an earlier age, one that we need to simplify and slim down to make fit for purpose. But also It is not the task of the Board of Finance to run the Diocese – it is our task to see that sufficient resources are because, whilst our levels of Christian giving through channels such as the Parish Giving Scheme are improving, provided to enable the mission of the Church in this Diocese to be carried out. Unfortunately a deficit can we are 39th out of 44 dioceses for Parish Share contribution per member. One of the lowest in the land. only be sustained for so long before that mission will be adversely affected. This means the deficit must be Places like Bradford and Liverpool have much to teach us about Christian stewardship. That is a sobering reduced now and eliminated entirely as soon as possible. statistic and a challenging one. There are two ways this can be done. Either income needs to increase or expenditure to decrease. We have My hope and prayer is that everyone who reads this report, with all its good news, will take up that challenge worked hard to improve income but the only significant source of extra income is the parishes. There is a plan in every one of our communities. It would be wonderful to add increasing financial commitment to the list of to increase the Parish Share over the next four years and most parishes are working to achieve this. If this is encouraging signs in the Diocese of Gloucester. not done the deficit will increase.

The other side is to reduce expenditure. The substantial part of our expenditure is staff salaries so this will +Michael Gloucestr: mean employing fewer people. There are two myths which need to be rebutted. The first is that there is a vast pool of under-employed people in the Diocesan offices who can easily be taken off the payroll with few, if any, ill effects. The second is that groupings of parishes under one incumbent can continue to expand without that being felt by both incumbents and parishes (my predecessor had two parishes, I came to three and have added a fourth while here and there is now talk of two more being added after I retire).

I am sure we do have to review our budgets this year and reduce our costs so that we get back on course to reduce the deficit to nil by 2015. It is important to realise that when we do this it will have an effect for both Diocesan offices and parishes, which will be felt. Sadly there are no pain free solutions.

We are not alone in facing these problems. Almost every part of our country, government, business and charitable organisations is doing the same. We have to focus on working together to ensure that we continue the mission of Christ throughout our Diocese. And to seek God’s help in all we do.

The Revd John Wright, Vicar of Tetbury and Chair, Gloucester Diocesan Board of Finance

5 6 ACHIEVEMENTS AND ACTIVITIES ACHIEVEMENTS AND ACTIVITIES

In the complex area of employment responsibilities, Communication and engagement work has continued with parishes to help them The communications guide Messages was rolled resolve issues locally and to support them out more extensively during 2011 with over 10 practically with template documents, policies and benefices looking in detail and how they can engage Directors’ Report for the year ended 31 December 2011 processes which ensure they employ people safely more effectively with their communities and putting within their unique contexts and comply with individual parish and benefice communication plans ever-changing employment law. Achievements and activities in place. The Communications Department also continued Mission and Communications to develop and manage external communications, Our local role promoting the work of the Diocese of Gloucester Supporting clergy and discipleship Engaging with our parishes and communities locally and nationally. Diocesan publications kept A major focus for work in 2011 was completing the clergy and parishes informed on local, regional and The Department of Discipleship and Ministry The Effective Ministry in Every Parish Programme first Mission-Shaped Ministry Course to be offered international news and work continued on updating in the Diocese. Run over an academic year it aims An emerging priority for 2011was the carried out a pilot in three deaneries and work and improving the Diocesan website. strengthening of discipleship amongst all the people continues to refine the project responding to the to equip participants to grow fresh expressions of of God – clergy, laity, and church congregations. expanding responsibilities of clergy. church and to help existing churches become more A major survey on Discipleship Development mission-focused. Over 20 people took part in the Securing our Church’s future throughout the Diocese confirmed the priority Plans were laid in the course of the year for a new course, both lay and ordained, and representing a Developing Ministry: Leading in a Changing Church given to discipleship and so diocesan resources variety of traditions and contexts. The Parish Giving Scheme course, for those in the early stages of a new post. were developed and strengthened. The Parish Giving Scheme (PGS) is a donation The Diocese will be joining with neighbouring As part of this work, the Diocese also has a collection system operated by the DBF on behalf of It has again been an active year for those exploring dioceses of Hereford, Worcester, Birmingham, number of designated ordained pioneer ministers our parishes. After a thorough development stage vocation of different sorts. A new Ministry Coventry and Lichfield in this provision. The first with a particular remit to grow fresh expressions it was successfully introduced to the diocese in Development Officer was appointed and in 2011, intake has been confirmed for Summer 2012. of church. Alongside support for pioneer ministry 2010. This has been built on in 2011 with growth there were 50 people exploring ordination, and fresh expressions, the work of the Diocesan right across the diocese. Last year PGS collected 22 in pre ordination training and another 57 in The successful ministry of the Church of England in Missioner has continued to be closely bound up just under £800k in donations including £155k of Initial Ministry Development (IMD). 26 were in and around Gloucestershire is only made possible with Effective Ministry in Every Parish, contributing Gift Aid. The full amount was passed “back” to pre licensing training as Readers and another 21 with the support of lay people in the Diocese. to its on-going development and delivery. parishes within 10 days, with no deductions or in Reader IMD. 59 people were trained in the These include Readers, local ministry teams, Other work has included leading a review of management charges being made. Leading Worship course in 2011, and our 55 churchwardens, treasurers, PCC members and the many volunteers who work tirelessly in their mission and ministry in the Forest South Deanery, local ministry teams were supported in a variety As well as administrative support and professional mission for God. To all these people supporting the development of Experience Easter of training events. presentation the unique benefit of this scheme is we say thank you. and Back to Church Sunday, and working with that it enables donors to agree to increase their individual parishes and benefices. During 2011 gifts annually in line with inflation. Fortunately the the Diocesan Missioner was also interim priest of vast majority of donors take up this option giving Human Resources St Aldate's, Gloucester, working with the parish on real long term security to parish finances – this January 2011 saw the introduction of renewing its links with the local community. inflationary increase on current donors alone the new Common Tenure legislation Work was also done to enable the Christian should bring in an additional £30k next year. for all clergy in the Church of counselling service Listening Post to move in to England. In the Diocese we have part of the church building, providing a much- Parishes have the option of delivering PGS through implemented the new processes needed base for its work in Gloucester. a support programme “Giving for Life”. When this and also further developed our has been done effectively parishes have reported approaches to supporting clergy 30-40% increases in giving, even in these financially through our model of pastoral, difficult times. professional, spiritual and practical advice and support.

7 8 ACHIEVEMENTS AND ACTIVITIES ACHIEVEMENTS AND ACTIVITIES

2012 so far shows PGS continuing to grow, with Caring for our communities and May 2012 seeing the highest ever numbers of new Caring for our buildings environment donors in this diocese. The scheme now processes over 1,500 donations every month. The work of the DAC Reaching out to society In the Diocese we have nearly 400 churches, This success has been noted by other dioceses and The Social Responsibility Department leads 90 per cent of them are listed buildings, with 38 per the National Church. In early 2012 the scheme was on working with and building relationships cent being grade one. Maintaining these precious piloted in Winchester Diocese, with several other with other charities, church denominations buildings as places for people to encounter God is dioceses keen to look at similar pilots when the and businesses. In common with many sectors a priority. In the Diocese this work is overseen by DBF feels able to share the resource more widely. of the economy, voluntary and charitable the Diocesan Advisory Committee (DAC) which organisations suffered from a down turn offers practical help and support. Maximising our inheritance in funding during the year. Frequently the Church buildings are the responsibility of the Good and Faithful Servant (GFS) is a subsidiary of church has been looked to to fill the gaps parishes concerned, but in most cases consent the DBF. It buys redundant assets from the DBF at in provision and this is likely to continue needs to be obtained before carrying out any during 2012 with planned cuts to services alterations or significant repairs. The DAC needs market value and then seeks to make a commercial In addition, the Diocese was fortunate to be provided by country and district councils. to be consulted as part of the process of obtaining developer’s profit to support the Church’s ministry successful in its bid to the Local Energy Assessment There has been a response to those living on the necessary consent or 'faculty'. During 2011, and mission. Fund (LEAF) and received £51,000 to fund a desk- the edges of society, for instance, provision a total of 103 faculties were forwarded to the In last year’s report we indicated we believed 2011 top assessment of all churches for solar potential, of accommodation for homeless people in Registrar, a significant drop from 2010. Early would be the first year of real profit for the DBF as well undertaking thorough energy audits for 52 the Diocese has been improved with greater indications for 2012 suggest that the reduction and we are delighted that the efforts of DBF and church buildings. It is hoped that the information services being provided at Gloucestershire was a temporary one. The figure also reflects the GFS staff have resulted in a £268k nett profit being contained within the latter will enable churches Nightstopand plans for a new project, Tony’s DAC’s policy of avoiding the need for a formal made in 2011, which is over and above the market to save both energy and money. By the end of House, in Cheltenham. faculty where possible, but retaining detailed value already paid to the DBF for the sites. This summer 2012 we hope to collate the current scrutiny where this is likely to be helpful. provides a welcome boost to our shared finances ACCORD, the organisation sponsored by the energy data into a ‘benchmarking’ system with and the difficulties being experienced in parishes. Diocese to provide training and workshops the intention of reviewing these results in In addition, the DAC recommended seven cases on marriage, family issues and bereavement two years time to assess how successful the take up involving expenditure over £100,000, comprising Looking forward to 2012 there is a development continued to provide support to clergy and of recommendations from the reports have been. a total of £1.8 million worth of work. at Charlton Kings which will again mean G&FS parishes. will be looking to support the ongoing ministry of Anecdotal evidence from around the country the Diocese financially, but it is also exploring at suggests that economic pressures are causing the wider remit of what a Christian development Our environmental responsibility In the Diocese a marked slow down in certain areas, such as company should be doing and is working with Tackling climate change is a vital part of our overhaul of pipe organs. 2011 also saw some fine partners in Gloucester City on a development on responsibility as Christians. The dioceses of Bath we have nearly 400 building conservation firms going out of business, the old St Stephen’s vicarage site, which will deliver and Wells, Exeter and Gloucester joined together to churches, 90 per cent and there must be concern for continuity of the much needed social housing in an ideal location. form the South West Ecochurch scheme, offering skills on which our buildings depend. G&FS recruited a full-time dedicated project support to churches in fitting solar photovoltaic of them are listed The DAC welcomed Bishop Michael to its meeting manager in the year, and whilst not every year will (PV) panels to roofs of their buildings. During in December 2011. Members welcomed his desire be as profitable as 2011 we are confident that 2011the scheme undertook five pilot projects in buildings, with that the Committee should seek to be more G&FS is here to stay and will continue to support our Diocese. From this initial five, three installations 38 per cent being proactive and to forge closer links with parishes. the work of the DBF and the wider diocese. took place towards the end of the year and a further church has already received planning grade one priority permission, with a faculty in preparation. Only one scheme was ruled out on structural stability grounds.

9 10 ACHIEVEMENTS AND ACTIVITIES ACHIEVEMENTS AND ACTIVITIES

Our long-standing DAC Roadshows have been Inspections, training and support in schools Bicentenary Celebrations for the National Society Encouraging children in succeeded by Church Check-up days, co-ordinated and parishes A series of events were held to celebrate the Christian faith by our Churches Officer, with an emphasis on During 2011 we oversaw the inspection of 22 bicentenary and discover more about the National maintenance problems. Aimed at churchwardens It has been another busy year for the Children church schools. Of those inspected, 41 per cent Society including: a special service for Head and fabric officers, they encourage early detection and Young People’s Department. The department were graded ‘outstanding’, 45.5 per cent were teachers of Church of England Schools held at of problems and swift remedial action. supports schools and parishes in a variety of ways. graded ‘good’ and the remaining 13.5 per cent Gloucester Cathedral and six hundred children were graded satisfactory. came to Gloucester cathedral for ‘Lifepath’. Supporting the Leadership of Church of England Training for those people who work with children Two candles and a prayer book entitled ‘Prayers Housing our clergy Schools in schools and youth groups continued this year. for the World’ travelled around the Diocese visiting Working with clergy on a continual basis to keep We supported the appointment of seven new In addition to ongoing programmes several large every Church of England school returning for the our property maintained to a high standard is a top head teachers and achieved the first Voluntary events and conferences were held. “Living Values” 2011 Cathedral Leaver’s Services. priority. Controlled and Voluntary Aided School Federation a head teacher and clergy conference was attended We try to ensure that our vicarages and properties in the Diocese and launched a new mentoring by more than 120 delegates. A day event on the Resources to support schools and churches are economical, environmentally friendly and scheme. flourishing 'Messy Church' was well received. The REsource Centre, which houses a library of functionally suitable for clergy. A major project for The “Into Top Gear” conference enabled 200 approximately 15,000 resources, was well used 2011 was implementing energy efficient measures volunteers to access workshops and resources. with over 14,000 loans issued to about 500 active in our housing stock including: loft insulation in 95 For young people a second ‘Kenetic’ young leaders’ borrowers. During the year around 3,000 copies per cent of housing; changing 20 boilers; installing course was held within Cheltenham Deanery. New of Jumping Fish publications were sold to schools woodburners and; putting in secondary glazing. ways of working with children and young people and churches throughout the UK. A new resource, Several new parsonages were built, at Stratton in continue to be developed including a new Djembe Living Values, was released in October. Cirencester, Badminton and Frampton on Severn, drum set which is used as a means of promoting offering more modern property to suit the needs engagement with contemplative prayer and of ministry today. spirituality. The Diocese also partnered a successful We continue to manage the Glebe Land portfolio trip for a group of young people to Taize. and promoting it as and where appropriate to In addition the Youth Evangelism Fund has maximize its return for the Diocese and parishes. supported specific projects such as the ‘Revive’ youth event at St Andrew’s, Churchdown and young people from Anglican churches in the Forest We try to ensure Academies and the changing educational landscape of Dean have come together to share their views Continued support has been given to governors and opinions on their experience of church life, that our vicarages in navigating the new educational landscape, and to contribute ideas on the shape including hosting an academy symposium. All Saints’ and focus of future ministry within and properties Academy, Cheltenham, opened its new £24.6m their Deanery. purpose-built facilities. In addition we secured are economical, £1.5m worth of funding from the Department environmentally for Education for capital improvements at the 43 Church of England aided primary schools. friendly and functionally suitable for clergy

11 12 ACHIEVEMENTS AND ACTIVITIES PERFORMANCE AND GOVERNANCE

The Diocese as part of the Anglican Communion

Continuing Indaba The covenant is freely entered into and is designed At a time of division in the Anglican Community to resolve disagreements between national churches Performance and governance across the world, the Diocese is part of a pilot by helping the Anglican Communion address the project looking at deepening Christian unity. challenges of living out the principle of autonomy- Indaba is a Zulu word for a process of consensus in-communion by committing its member churches Structure, governance and management common in African countries and was used at the to mutual accountability, consultation and the The Gloucester Diocesan Board of Finance (DBF) is a company limited by guarantee and a registered charity. 2008 Lambeth Conference of Anglican Bishops. achievement of consensus. At the February 2012 Its governing instrument is the Memorandum and Articles of Association. Hoping to continue this process of consensus Diocesan Synod the Houses of Bishops, Laity and the Archbishop of Canterbury set up and funded Clergy voted against the motion. Its membership comprises: five pilot groups to deepen understanding and Women Bishops • The Bishop of Gloucester as president, ex-officio unity in Anglican communities across the world. The General Synod of the Church of England • Each and every member for the time being of the Diocesan Synod. The Diocese already has strong links with other has agreed that the episcopate should be dioceses, so formed a triangular partnership • Members co-opted to ensure that lay members constitute a majority of the DBF. open to women but there has been debate with our partner dioceses of El Camino Real in around provision for those unable to accept Elections and co-options take place every three years. The current triennium runs until September 2012. California and Western Tanganyika in Tanzania. this decision. Dioceses across the country were The DBF, which meets five times each year, is the principal policy making body. It takes advice from its Board Over 18 months representatives from the three asked to consider and vote on proposals made of Directors, constituted as the Bishop’s Council, which examines issues in detail and makes recommendations. dioceses have met to discover more about each for alternative pastoral care. At the June meeting The Council also take executive action in certain matters and deals with day to day issues. The membership other and experience life as a Christian in each of the Diocesan Synod in Gloucester members of the Bishop’s Council is as follows: others country. Meetings took place in Tanzania overwhelmingly supported the prospect of women in June, California in November and finally in bishops and also approved a proposal which Ex-officio members: Gloucestershire in February 2012. The pilot groups included provision for those uncomfortable with will report back to the Archbishop of Canterbury • The Bishop of Gloucester appointing women bishops. These votes were fed and the Anglican Consultative Council during 2012. back into the General Synod. Final approval of the • The Chair of the DBF legislation will happen in July 2012. • The Bishop of Tewkesbury

New Dean of Gloucester Cathedral • The Dean of Gloucester The Very Revd Stephen Lake was installed as the • The Archdeacon of Gloucester 37th Dean of Gloucester in June. The Dean is the • The Archdeacon of Cheltenham most senior priest in the Diocese after Bishop Michael and Bishop John and chairs the Cathedral • The Chair of the House of Clergy of the Diocesan Synod Chapter and the governing body of the Cathedral. • The Chair of the House of Laity of the Diocesan Synod

Looking to the future • The Chair of the Diocesan Board of Education In July 2012 the Diocese will welcome The • A nominated representative of the Houses Committee Archbishop of Canterbury, the Most Revd Anglican Communion Covenant Dr Rowan Williams for a three day visit. • A nominated representative of the Diocesan Advisory Committee The Anglican Communion Covenant was Called “Share the light” the visit will showcase the prompted by the division which appeared in the good work of churches in the Diocese and give an Anglican Communion following the election of opportunity for people to meet the Archbishop Gene Robinson as Bishop of New Hampshire. and find out more about the Christian Faith.

13 14 PERFORMANCE AND GOVERNANCE PERFORMANCE AND GOVERNANCE

Members elected by the DBF – House of Clergy • The Church of England Pensions Board, which provides pensions for clergy and the DBF’s lay staff.

• Two clergy members of the DBF from the Archdeaconry of Gloucester Locally, the DBF works with Parochial Church Councils (PCCs) which are legally independent bodies that pay contributions, based on an apportionment system, to the DBF to fund its activities. The DBF is a tenant of the • Two clergy members of the DBF from the Archdeaconry of Cheltenham Dean and Chapter of Gloucester Cathedral, from whom it rents office accommodation. • One Proctor in Convocation from among the members of General Synod The DBF manages various charities on behalf of their respective trustees, for which grants and management Members elected by the DBF – House of Laity charges are paid, namely the Voluntary Schools Fund (VSF) and the Charity of Ann Edwards (AEC). • Three lay members of the DBF from the Archdeaconry of Gloucester

• Three lay members of the DBF from the Archdeaconry of Cheltenham Objectives and activities • One lay member from among the members of General Synod The principal objective of the Gloucester Diocesan Board of Finance (“the DBF”), as set out in the Co-opted members Memorandum of Association, is “to promote and assist the work, objects and purposes of the Church of England for the advancement of the Christian religion in the Diocese of Gloucester”. • Up to two members may be co-opted by the Bishop’s Council In pursuing this objective, the DBF acts as the financial executive of and employer for the Gloucester Diocesan Nominations Synod. As such it undertakes three principle activities: • Up to two members may be nominated by the Bishop • It funds costs associated with the vast majority of Church of England clergy in the diocese, Trustees are recruited, as indicated above, through a mixture of ex-officio positions, elections and nominations. • It is responsible for the custody and management of the synod's funds The Nominations Committee in conjunction with the Diocesan Secretary oversee membership elections. • It provides services to other councils and committees within the diocese, primarily PCCs and schools. The DBF’s induction and training programme for trustees is currently under review, a new process will be in place for the triennium commencing in 2012.

The DBF was assisted in its work during the year by a number of committees: Public benefit

• the Finance Committee (Chair – The Reverend John Wright) acts in all matters relating to the The directors are aware of the Charity Commission’s guidance on public benefit and, in particular, the management of the DBF’s finances, including setting policy, framing the budget, critically reviewing the supplementary guidance for charities whose aims include advancing religion and have regard to that guidance in budget to ensure value for money and monitoring financial performance; their administration of the charity.

• the Audit Committee (Chair – Thomas Rucker) reports to the DBF on matters relating to the auditors, The objectives of the Board, as set out above, is to support the work of the Church of England. The activities the annual accounts and internal controls. It also acts as the risk management group; the Church undertakes may be classed into four categories, each of which the GDBF supports directly.

• the Glebe Committee (Chair – Malcolm Barlow) acts in all matters relating to the management of glebe properties and the strategic conversion of glebe assets to maximise returns; Worshipping together Offering facilities and services open to all in our communities is a core activity of the Church. The Board • the Houses Committee (Chair – Anthony McFarlane) discharges the responsibilities of the DBF in its ensures that a professional, trained minister of religion is available to every community in our diocese to take capacity as the Diocesan Parsonages Board and acts in all matters relating to the provision and and oversee public worship. The GDBF also supports and trains unpaid and lay ministry to undertake and maintenance of clergy houses. support this work. The DBF is the financial custodian for the Diocese of Gloucester, which is an administrative and pastoral area within the Church of England. The DBF therefore has important relationships with the national institutions of Sharing faith and values the Church of England, specifically: The Board supports the sharing of the Christian faith not only through provision of theological training and • The Archbishops’ Council, to which it pays grants based on an apportionment system for funding ministers of religion but also through activities such as communication of the Christian faith through regional national training of ordinands and the activities of the various national boards and councils, as well as media, the provision of officers to support the teaching of the Christian faith in schools and wider training General Synod. programme. • The Church Commissioners, from which the DBF receives grants and which acts for tax and national insurance purposes as the pseudo-employer of diocesan clergy. The DBF pays for clergy stipends through the Church Commissioners.

15 16 PERFORMANCE AND GOVERNANCE PERFORMANCE AND GOVERNANCE

Serving our community The DBF considers that investing in a range of medium-low risk funds across two fund managers serves to The Church of England is a collection of people who, motivated by their faith, form part of the biggest spread risk through diversity and uses the investment management skills of professional fund managers to volunteer network in our country. It provides youth workers and independent public figures in areas and achieve good performance.

to communities that the statutory sector may not reach. It is committed to caring for everyone in our Investment markets in 2011 were very uncertain with difficulties in both the US and the Eurozone leading communities, whether or not they “do church”. The Board supports this by providing professional support to a general fall in markets. The adjustments to the investment funds made last year have had a significant and training, ensuring stipendiary ministers are housed and paid and providing grants to organisations. impact on investment income. The £4m yielded a nett income of £50k, compared with around £200k had they remained in CCLA investment fund units. This reduction is in due to a long-term repositioning from Valuing buildings cash generative investments with limited capital growth to lower cash generating, higher capital appreciating The Board supports parishes to maintain and develop local church buildings through oversight of the care and investments. The Investment Group is of the opinion that despite this short term impact the prospects for maintenance of these buildings through the Faculty system, support and advice from the Diocesan Advisory the new portfolio are good.

Committee (DAC), ensuring any buildings which are no longer needed for regular worship are reused in the During 2011 the DBF took a decision to install PV solar panels on vicarages. By 31 December 2011 the DBF public interest and by making grants to other organisations. had invested almost £450,000. This will complement the investment portfolio with an income rich pseudo- bond. This development continued into 2012 when the first impact on income will be realised. Financial review Ongoing Activities Reserves policy The General Fund for the year shows a nett “loss” for the year of £715k before investment losses and after The policy of the DBF is to hold between 4 and 8 months of parish share plus the deficit for the year on adjusting for exceptional items. This represents a substantial improvement on 2010 (£851k) due to trading the general fund in free reserves (i.e. for 2011 between £2.1m and £4.2m). This level is considered prudent profits from Good and Faithful Servant. to account for the cash flow deficit experienced each year resulting from parish share contributions being remitted irregularly during the year (whereas the DBF’s expenditure is fairly constant on a month by month The Board however is disappointed that it has not met its budgeted deficit on £670k, despite the benefit of basis), and also to allow for unexpected occurrences. these trading profits. This is due to lower than budgeted parish share receipts, higher than budgeted housing costs and a change in investment policy to a lower-revenue portfolio which reduced investment income At the end of 2011, free reserves stood at £2.2m which is at the bottom end of the specified range. This is substantially, although on the expectation of higher total return over the coming years. expected to be addressed by asset realisation in 2012.

Other Activities Plans for future periods A very low level of asset sales in the period and continued, managed spend from restricted funds has put Budget 2012 and onwards considerable strain on cash flow. This should be addressed in 2012 when there are a number of redundant The DBF are currently acting against a five year plan for deficit reduction. Whilst the outturn for 2011 was a houses which will be marketed. significant step forward overall the initial indications for parish share 2012 combined with reduced investment income and pension issues (see below) means the DBF is actively considering further adjustments to its budget Investment performance and policy to meet the ultimate goal of deficit eradication by 2015. The DBF maintains a review of its investments through the Finance Committee, which also monitors Lay pension scheme performance against market benchmarks and considers the adequacy of its investment mix. The Finance The Defined Benefit pension scheme for lay staff has an indicative deficit attributed to Gloucester DBF of Committee retains the services of an independent investment advisor to ensure that it receives impartial £1.3m. Negotiations are underway with CEPB on settlement terms. The DBF reluctantly made the decision advice. to close the scheme to new members in March 2012. During 2010 the Committee moved £4m of non-cash investments from CBF funds (which are common

investment funds managed by CCLA Investment Management Limited) and placed them in a new mixed Good and Faithful Servant Ltd portfolio under the management of Rathbones of Bristol. A further £1m was moved in 2011 into a bond G&FS have a good year planned for 2012 and a good order book. The level of donated profits is likely to again portfolio also held by Rathbones. The remainder of non-cash investment funds at the year end remained be significant but also below that for 2011 due to a delay in projects commencing. in CBF funds.

17 18 PERFORMANCE AND GOVERNANCE PERFORMANCE AND GOVERNANCE

Risk management The Directors confirm that the major risks, to which GDBF is exposed, as identified by the management and Directors, have been reviewed and that systems have been established to manage those risks. Directors delegated to the Audit Committee the task of ensuring that risks are reviewed. Department heads have defined the risks in their areas, reporting on the measures in place to manage and monitor such risks, implementing procedures designed to minimise any potential impact on GDBF should any of the risks materialise.

Audit Committee members review the risk register and report to Bishop’s Council their findings and also make recommendations as to areas for further work.

Directors’ responsibilities in respect of the financial statements The directors are required by company law to prepare financial statements, based on applicable accounting standards, which give a true and fair view of the state of affairs of the DBF as at the end of the financial year and of the result of the year and which comply with the Companies Act 2006.

The directors ensure that, in preparing the financial statements, suitable accounting policies have been used and applied consistently, and reasonable and prudent judgments and estimates have been made. The directors have a reasonable expectation that the DBF has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts.

The directors are also responsible for ensuring that adequate systems of internal control are in operation, for maintaining adequate accounting records, for safeguarding the assets of the DBF and for preventing and detecting fraud and other irregularities.

Statements as to disclosure of information to auditors The directors have taken all the necessary steps to make sure that they are aware of any relevant audit information and to establish that the auditors are aware of that information.

As far as the directors are aware, there is no relevant audit information of which the company's auditors are unaware.

Appointment of auditors A resolution to reappoint Mazars LLP as auditors to the Company and to authorize the Directors to fix their remuneration will be proposed at the Annual General Meeting.

+ Michael Gloucestr: The Revd John Wright President, Gloucester DBF Chair, Gloucester DBF

19 20 PERFORMANCE AND GOVERNANCE PERFORMANCE AND GOVERNANCE

Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Independent Auditors’ Report to the Members of Gloucester Diocesan Board Of Finance Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us We have audited the financial statements of Gloucester Diocesan Board of Finance for the year ended 31 to report to you if, in our opinion: December 2011 which comprise the Consolidated Statement of Financial Activities, the Consolidated Summary • adequate accounting records have not been kept by the charitable parent company, or returns adequate Income and Expenditure Account Profit and Loss Account, the Consolidated Statement of Total Recognised for our audit have not been received from branches not visited by us; or Gains and Losses, the Consolidated and Charity Balance Sheets, the Consolidated Cash Flow Statement and • the charitable parent company financial statements are not in agreement with the accounting records the related notes. The financial reporting framework that has been applied in their preparation is applicable law and returns; or and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). • certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit. Respective responsibilities of directors and auditor As explained more fully in the Directors’ Responsibilities Statement set out on page 19, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and Michael Stewart (Senior Statutory Auditor) fair view. for and on behalf of Mazars LLP Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable Chartered Accountants and Statutory Auditor law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Clifton Down House Auditing Practices Board’s (APB’s) Ethical Standards for Auditors. This report is made solely to the company’s Beaufort Buildings members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has Clifton Down Clifton been undertaken so that we might state to the company’s members those matters we are required to state to Bristol them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept BS8 4AN or assume responsibility to anyone other than the company and the company’s members as a body for our Date audit work, for this report, or for the opinions we have formed.

Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the APB's web-site at www.frc.org.uk/apb/scope/private.cfm.

Opinion In our opinion the financial statements:

• give a true and fair view of the state of the group’s and the charitable parent company’s affairs as at 31 December 2011 and its incoming resources and application of resources, including its income and expenditure, for the year then ended;

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

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

21 22 PERFORMANCE AND GOVERNANCE PERFORMANCE AND GOVERNANCE

Parish Giving Scheme The Parish Giving Scheme enables individuals to make a donation to GDBF, which is restricted to a specific parish. GDBF makes a grant to the relevant parish for the full value of this gift and any related gift aid within Gloucester DBF: accounting policies ten days of receipt. for the year ended 31 December 2011 Depreciation These financial statements have been prepared in accordance with the Statement of Recommended Practice (SORP) “Accounting and Reporting by Charities” issued in March 2005, and applicable Accounting Standards Depreciation on equipment is calculated on a straight line basis at annual rates estimated to write off the assets in the United Kingdom. The principal accounting policies adopted are as follows: over their respective expected useful lives, as follows:

Basis of Accounting Office equipment 20% Telephone equipment 20%

The financial statements are prepared under thehistorical cost convention, modified to include the revaluation Computer equipment 25% Office furniture 12½% of listed investments. Hire equipment 25% Vehicles 20% The Board is a registered charity and so achievements cannot be measured by normal commercial criteria of profit and loss. Accordingly, in order to give a true and fair view, the directors have applied the provisions of section 396(5) of the Companies Act 2006 and have presented a Statement of Financial Activities instead of No depreciation is provided on clergy houses. As the remaining useful life of these assets exceeds 50 years and a Profit and Loss Account. This has been prepared in accordance with the SORP and in the opinion of the a programme of planned maintenance ensures that the residual value does not fall below the carrying value, directors better reflects the nature of the Board’s activities. any depreciation would be immaterial. An annual impairment review is carried out in accordance with FRS15 These financial statements consolidate the results of the charitable company and its wholly-owned subsidiaries and 11. on a line by line basis. A separate statement of financial activities, or income and expenditure account, for the charitable company itself is not presented because the charitable company has taken advantage of Pensions the exemptions afforded by section 408 of the Companies Act 2006 and SORP 2005. The deficit of the parent charity for the year was £1,435k (2010: surplus of £88k). The Board operates two defined benefit pension schemes for its lay staff, and contributes to the Clergy Pension Scheme (also a defined benefit scheme) for serving clergy in the diocese. Costs are assessed in accordance with actuarial advice and based on the most recent actuarial valuation of the scheme. Pension costs and Incoming resources disclosures have been reported in accordance with FRS17. Parish Share contributions by parishes are included in the financial statements when received. Donations are recognised when received. Legacies are recognised when there is reasonable certainty as to both entitlement Tangible fixed assets and amount. Grants are generally included in the financial statements when received, to ensure that there is reasonable certainty as to both entitlement and amount. However, in cases where the grant relates to a Office equipment is stated at cost less accumulated depreciation. specific project, it is recognised when the project expenditure takes place. Interest and dividends are included Clergy houses owned by the Board as corporate property are included in the financial statements at in the financial statements when received. Rental income is recognised in the period to which the rent relates. historical cost.

Clergy houses owned by benefices are included in the financial statements at a carrying value established Resources expended by the directors and based on a professional valuation in December 2000. Houses acquired since that date All expenditure is accounted for on an accruals basis and has been classified under headings that aggregate are included at cost, and any major improvements are capitalised to the extent that the carrying value does all costs related to that category. Where costs cannot be directly attributed to particular headings they have not exceed the estimated net realisable value. Although the Board does not own these houses, it has the been allocated to activities on a basis consistent with the use of the resources. Overheads have been allocated responsibility for maintaining them and receives any sale proceeds on disposal if the house becomes surplus to various cost headings primarily on the basis of the head count. Grants payable are charged in the year under a pastoral scheme. Under FRS5 the Board considers that it has access to the benefits of these houses when the offer is conveyed to the recipient. Governance costs are those incurred in connection with the and also the associated risks and therefore needs to recognise them as assets in the financial statements. Solar administration of the Board as an organisation and compliance with constitutional and statutory requirements. PV panels installed on clergy houses are included within the asset value of the house.

23 24 PERFORMANCE AND GOVERNANCE FINANCIAL INFORMATION

Fixed asset investments Listed investments are stated at open market value at the balance sheet date. For units held in managed funds of the Central Board of Finance this is the published bid price. Investment properties, which comprise the glebe portfolio, are stated at directors’ valuation. The valuation is arrived at after taking appropriate Financial Information professional advice and is reviewed each year.

Certain short-term cash deposits, which are held for long term investment purposes, are included in fixed asset investments.

Stock and WIP Work in progress is valued at the lower of costs and nett realisable value. Cost includes all direct expenditure and an appropriate proportion of fixed and variable overheads.

Fund accounting The resources of the Board are classified according to restrictions imposed on their use by donors or by legislation, and in accordance with the SORP, as follows:

• Endowment funds represent money that must be permanently held as capital, and may not be spent as income. Expendable endowment may, however, be spent as income under certain circumstances.

• Restricted funds may only be used for the purposes for which the money was originally gifted or bequeathed to the Board, or as expressed in the trusts under which the funds are held.

• Unrestricted funds are monies available for use at the discretion of the Board. The General Fund is for the day to day running of the Board, and is funded by the parish share. However, certain funds have been earmarked for particular purposes, and these are termed designated funds. Such funds are kept separate for administrative purposes but do not constitute legally separate funds.

Operating leases Rental payments under operating leases are charged to the Statement of Financial Activities on a straight line basis over the term of the lease.

25 26 FINANCIAL INFORMATION FINANCIAL INFORMATION

Consolidated statement of financial activities Consolidated summary income & expenditure account for the year ended 31 December 2011 for the year ended 31 December 2011

2011 2010

Total Total £’000 £’000

General General fund Designated funds Restricted funds Endowment funds 2011 2010 Gross income 10,661 8,625

Notes £’000 £’000 £’000 £’000 £’000 £’000 Incoming resources Total expenditure (12,040) (10,101)

Voluntary income: Nett expenditure for the year (1,379) (1,476) parish share contributions 1 5,553 - - - 5,402 5,553 Net realised gains on disposal of fixed assets 544 1,933

church commissioners 2 26 - - - 26 65 grants, donations & legacies 3 243 350 54 - 647 652 Nett surplus/(deficit) for the year (835) 457 parish giving scheme 3a - - 796 - 796 - Activities for generating funds 4 2,103 123 - - 2,226 1,158 All of the profits and losses shown above arise from continuing operations. Investment income: The summary income and expenditure account is derived from the statement of financial activities shown on interest & dividends 5 687 39 55 - 781 827 page 27. Gross income represents total incoming resources of £10,890k less the gain on disposal of tangible glebe rents - - 70 - 70 46 fixed assets of £229k. The statement of financial activities, together with the accompanying notes provides Income from charitable activities: full information on the movement of the Board’s funds in the year. fees, chaplaincy & other income 451 - - - 451 384 Full historical cost information is not available for glebe and certain benefice houses. Other incoming resources: gain on disposal of fixed assets - - - 229 229 1,617 other 59 42 10 - 111 91

Total incoming resources 9,122 554 985 229 10,890 10,242 Consolidated statement of total recognised gains & losses Outgoing resources for the year ended 31 December 2011

Activities for generating funds 4 1,650 41 - - 1,691 890

Charitable activities: 2011 2010 provision of clergy 6 6,750 173 209 - 7,132 6,863 £’000 £’000 management of synodical funds 63 18 140 - 221 148 provision of support services 7 997 840 87 - 1,924 2,090 Nett surplus/(deficit) for the year (835) 457 parish giving scheme grants 3a - - 796 - 796 - Unrealised gains on revaluation of investment assets (968) 744 Governance costs 8 149 - - - 149 110 Exceptional item: pensions 22 116 11 - - 127 - Total recognised gains/(losses) for the year (1,803) 1,201

Total outgoing resources 9,725 1,083 1,232 - 12,040 10,101

Nett (outgoing) incoming (603) (529) (247) 229 (1,150) 141 resources

Transfers between funds 18 (239) 239 - - - -

Nett (outgoing) incoming resources (842) (290) (247) 229 (1,150) 141 before gains

14 Gains/(losses) on investment assets 34 (19) (67) (916) (968) 1,060 Realised gains (glebe disposal) 14 - - 315 315 183

Nett movement in funds (808) (309) (314) (372) (1,803) 1,201 Funds brought forward at 1 Jan 11 2,994 12,467 1,188 53,755 70,404 69,203

Funds carried forward at 31 Dec 11 17 2,186 12,158 874 53,383 68,601 70,404 18 19 27 28 FINANCIAL INFORMATION FINANCIAL INFORMATION

Gloucester Diocesan Board of Finance Reg No. 162165 Parent company balance sheet Consolidated balance sheet as at 31 December 2011 as at 31 December 2011

2011 2010

Notes £’000 £’000 2011 2010 Tangible assets 13 46,475 44,369

Notes £’000 £’000 Investments 14 19,205 21,388 Tangible assets 13 46,475 44,369 Fixed Assets 65,680 65,757 14 Investments 19,205 21,388 Fixed Assets 65,680 65,757 Debtors: amounts falling due after one year 15 234 421

Debtors: amounts falling due within one year 15 1,860 2,601 Stock and work in progress 498 660 Cash at bank and in hand 1,612 2,702 Debtors: amounts falling due after one year 15 234 21 Current Assets 3,706 5,724 15 Debtors: amounts falling due within one year 1,233 2,226 Cash at bank and in hand 1,964 3,058 Creditors: amounts falling due within one year 16 (416) (552)

Current Assets 3,929 5,965

Nett Current Assets (Current assets less creditors <1 year) 3,290 5,172

Creditors: amounts falling due within one year 16 (471) (781)

Total Assets less current liabilities (Fixed Assets plus NCA) 68,970 70,929

Nett Current Assets (Current assets less creditors <1 year) 3,458 5,184

Creditors: amounts falling due after one year 16 (537) (537)

Total Assets less current liabilities (Fixed Assets plus NCA) 69,138 70,941

Nett Assets 68,433 70,392 Creditors: amounts falling due after one year 16 (537) (537)

Nett Assets 68,601 70,404 Endowment funds 17,20 53,383 53,755 Restricted funds 17 913 1,188 Designated funds (unrestricted) 17,18 12,492 12,467 Endowment funds 17,20 53,383 53,755 General fund (unrestricted) 1,645 2,982

Restricted funds 17,19 874 1,188 Designated funds (unrestricted) 17,18 12,158 12,467 Reserves 68,433 70,392 General fund (unrestricted) 17 2,186 2,994

Approved by the Board of Directors on 25 May 2012 and signed on its behalf by Reserves 68,601 70,404

Approved by the Board of Directors on 25 May 2012 and signed on its behalf by

the Rev’d John Wright, Chairman

the Rev’d John Wright, Chairman

29 30 20 21 FINANCIAL INFORMATION FINANCIAL INFORMATION

Consolidated cash flow statement Notes to the consolidated accounts for the year ended 31 December 2011 for the year ended 31 December 2011

1 Note 1 1 1 1

Parish Share 2011 2010 Notes £’000 £’000 (memo)

11 1 rior years Parish Share SoFA 5,553 5,402 re p re 20 20 in Received Committed in 20 1 Received in 20 in Received 2011 2010 21 Other nett cash outflows (7,034) (8,321) £’000 £’000 £’000 £’000 £’000 Operating activities 21 (1,481) (2,919) Gloucester City 474 450 7 457 467

Severn Vale 497 495 10 505 481 Dividends received 5 577 770 Forest South 397 365 25 390 385 Interest received 5 204 57 Wotton 600 591 2 593 606 Interest paid 10 (21) (36) Stroud 751 711 7 718 732 Return on investment and servicing finance 760 791

Cheltenham 988 983 37 1,020 934 Purchase of tangible fixed assets 13 (2,132) (1,975) North Cotswold Deanery 662 648 61 709 661 Sale of tangible fixed assets 13/SoFA 229 3,635 Cirencester (Includes Fairford deanery 689 675 16 691 684 for 2010 and part year 2011) Transfer of fixed asset to current assets 13 - 250 Tewkesbury & Winchcombe 465 470 - 470 452 Purchase of fixed asset investments 14 (3,435) (4,000) Parish Share contributions 5,523 5,388 165 5,553 5,402 Sale of fixed asset investments 14 4,965 4,000

Investing activities (373) 1,910 Note 2 Decrease in cash in the year (1,094) (218) Income from the Church Commissioners 2011 2010 £’000 £’000

Temporary pension support and Mission & Ministry grant - 40 Grant re Bishop’s share of registrar’s retainer 26 25

2011 2010 Church Commissioner grants rec’d 26 65 Reconciliation of nett cash flow to movement in nett funds: £’000 £’000

Cash at Bank Bal Sh 3,058 1,276 Note 3 Deposits included in Fixed Asset Investments 14 - 2,000 Grants, donations & legacies 2011 2010 Funds as at 1 January 2011 3,058 3,276 £’000 £’000

Cash at Bank Bal Sh 1,964 3,058 Ecclesiastical Insurance Group grant 101 100 Funds as at 31 December 2011 1,964 3,058 Voluntary Schools Fund grants 274 260 Landfill Tax Credit Scheme grants 33 83 Decrease in cash in the year (1,094) (218) Other grants 182 206

Donations 57 3

Grants, donations & legacies 647 652

31 32 22 23 FINANCIAL INFORMATION FINANCIAL INFORMATION

Notes to the consolidated accounts Notes to the consolidated accounts for the year ended 31 December 2011 for the year ended 31 December 2011

Note 3a Note 6 2011 2010 Parish Giving Scheme Provision of clergy The Parish Giving Scheme enables individuals to make a donation to the Gloucester DBF £’000 £’000 restricted to a specific parish. Gloucester DBF then makes a grant for the full donation National Church responsibilities: plus any relevant gift aid to the parish to which the gift is restricted. This is carried out on a monthly basis. Training of ordinands 246 238 In 2011 grants were made to a total of 75 parishes totalling £796k funded by donations of Pooling of ordinand support costs (88) (104) £640k and related gift aid of £156k. This activity is in support of the general objectives of Mission agencies pension contributions 16 17 the DBF and therefore the costs of operating the scheme are borne from general funds. Diocesan responsibilities:

Stipends 4,193 4,269

Housing 1,823 1,570

Selection of ordinands 159 182 Note 4 Activities for generating funds Diocesan training and support 492 461 Nett Nett

1 1 Profit Profit Other costs 291 230

Income 20 1 Expenditure Income 20 10 nditure Expe 20 1 2011 20 10 2010 6,863 £’000 £’000 £’000 £’000 £’000 £’000 Provision of clergy 7,132

Rental of vacant housing 183 - 183 171 - 171 Other rents 67 - 67 44 - 44 Note 7 Direct Over- Property Development: G&FS 1,918 1,650 268 867 842 25 Provision of support services costs heads 2011 2010 Educational services: Jpg. Fish 58 41 17 76 48 28 £’000 £’000 £’000 £’000

Total 2,226 1,691 535 1,158 890 268 Parish Resources Department 5 - 5 7 Churches Buildings 122 44 166 170

Pastoral Committee 93 - 93 99

Social Responsibility 196 35 231 231 Note 5 Education (designated) 427 205 632 620 Interest & dividends 2011 2010 Children and Young People (general) 77 - 77 92 £’000 £’000 Youth Strategies (fixed term designated) 79 - 79 50

Income from fixed asset investments 652 770 Communications 110 36 146 127 Other interest receivable and similar income 129 57 Giving 81 - 81 66 Grants made payable (see below) 131 - 131 335 Interest & dividends 781 827 Grant to Archbishops’ Council 235 - 235 239 Diocesan Office* - 48 48 54

Provision of support services 1,556 368 1,924 2,090

* The administrative departments of the DBF undertake work on behalf of related organisations, such as the Diocesan Trust and Voluntary Schools Fund. Whilst this is in certain respects a “direct cost” of providing Services to other councils it is presented as an overhead to better reflect the nature of the cost. 33 34 24 25 FINANCIAL INFORMATION FINANCIAL INFORMATION

Notes to the consolidated accounts Notes to the consolidated accounts for the year ended 31 December 2011 for the year ended 31 December 2011

Note 7 continued Provision of services: Grants made 2011 Note 8 Detail of grants over £1,000: number £’000 purpose Governance costs 2011 2010 £’000 £’000 The Rock 2 44 DV Diocesan Office 31 34 Tirely 1 25 LT Synod expenses 14 16 Psalms 1 14 DV Auditor’s remuneration 16 13 Gloucester Historic Churches Trust 1 13 CR Legal and professional costs 88 47 WEMTC 1 13 T of O Viney Hill Christian Adventure Centre 1 6 DV Governance costs 149 110 Newnham 1 4 LT

Wyck Rissington 1 4 LT Western Tanganyika 1 4 DV Note 9 Weston on Avon 1 2 CR Items of expenditure required to be disclosed 2011 2010 The Big Society 1 2 DV Net outgoing/incoming resources are stated after charging: £’000 £’000 Income from fixed asset investments 63 44 Grants made in the year 12 131 Other interest receivable and similar income 8 2

Operating leases: Land and buildings 35 45

2010 2011 2011 2010 Operating leases: Other 10 8

Summary of grants made: number number £’000 £’000

Church repairs (CR) 3 2 17 13 Note 10 Landfill Tax Credit Scheme* (LT) 12 3 33 83 Interest on long term loans 2011 2010 - 1 13 - Training of Ordinands (TofO) £’000 £’000 Development Grants (DV) 12 6 68 239 Interest on loans wholly or partly repayable beyond 5 years 21 36

Grants made in the year 27 12 131 335 All interest relates to value linked loans, being equity share loans made to the DBF by the Church Commissioners in respect of Parsonage Housing (note 6). * Grants made under the Landfill Tax Credit Scheme are funded entirely by matching grants received from the Gloucestershire Environmental Trust. The grants received are shown as donations in the incoming resources section of the Statement of Financial Activities.

^One off grant to WEMTC to assist training provision.

35 36 26 27 FINANCIAL INFORMATION FINANCIAL INFORMATION

Notes to the consolidated accounts Notes to the consolidated accounts for the year ended 31 December 2011 for the year ended 31 December 2011

Note 11 Note 12 Employees and office holders Pensions 2011 2010 Costs of employees and officer holders £’000 £’000 The Gloucester DBF participates in the Church of England Funded Pensions Scheme and employs 131 members of the Scheme out of a total membership of approximately 9,000 active members. salaries and stipends 1,413 1,318 The Church of England Funded Pensions Scheme is a defined benefit scheme but the Gloucester DBF social security costs 120 105 is unable to identify its share of the underlying assets & liabilities – each employer in that scheme other pension costs 379 353 pays a common contribution rate.

Employees, incl. clergy in DBF employment: 1,912 1,776 A valuation of the Scheme was carried out as at 31 December 2009. This revealed a shortfall of £262m, with assets of £605m and a funding target of £867m, assessed using the following assumptions: stipends 2,743 2,789

social security costs 235 170 other pension costs 980 1,144 • An investment strategy: For investments backing liabilities for pensions in payment, an allocation to gilts, Parochial clergy funded by the DBF: 4,103 3,958 increasing linearly from nil at 31 December 2009 to 2/3 by 31 December 2029, with the balance in return-seeking assets. For investments backing liabilities prior to retirement an alternative strategy of 100%

2011 2010 allocation to return-seeking assets. • Investment return: 4.4% p.a. on gilts and 5.9% p.a. on equities; Number of employees and officer holders number number • RPI inflation of 3.8% p.a. (and pension increases consistent with this); Full time 34 32 • Increase in pensionable stipends: 3.8% p.a. Part time 28 28 • Post-retirement mortality in accordance with 80% of the S1NA tables, with allowance Employees, incl. clergy in DBF employment: 62 60 for future improvements according to the “medium cohort” projections, and subject to a minimum annual improvement in mortality rates of 1.5% for males and 1.0% for

females. Parochial clergy funded by the DBF: 131 131

Employees earning between £60,001 and £70,000 1 1 For schemes such as the Church of England Funded Pensions Scheme, paragraph 9(b) of FRS 17 requires the Gloucester DBF to account for pension costs on the basis of contributions actually payable to the Scheme in the year. Certain directors of the Board who are also clergy received benefits during the year from the Board as part of its normal charitable activity of providing a stipend and housing for clergy in the diocese. Following the valuation of the Scheme as at 31 December 2009, and some agreed changes to These benefits are disclosed as related party transactions in note 24 below. benefits, the contribution rate for Gloucester DBF has been set at 38.2% with effect from 1

January 2011.

The next valuation of the Scheme will be due as at 31 December 2012.

37 38 28 29 FINANCIAL INFORMATION FINANCIAL INFORMATION

Notes to the consolidated accounts Notes to the consolidated accounts for the year ended 31 December 2011 for the year ended 31 December 2011

Note 14 Total Total Note 13 Fixed Asset Investments Properties Investm’ts Cash 2011 2010 Tangible Fixed Assets Freehold Office Property Equip’t Total £’000 £’000 £’000 £’000 £’000 Cost or valuation: £’000 £’000 £’000 Market value at 1 Jan 2010 3,384 18,004 - 21,388 22,328 Additions 351 3,084 - 3,435 4,000 At 1 January 2011 44,318 337 44,655 Disposals - (4,650) - (4,650) (6,000) Additions 2,128 4 2,132 Gains/(losses) - (968) - (968) 1,060 Disposals - - -

Transfers - - - Market Val at 31 Dec 2011 3,735 15,470 - 19,205 21,388

At 31 December 2011 46,446 341 46,787 Historic cost at 31 Dec 2011 - 14,659 - 14,659 14,550

Depreciation: Gains on investment assets At 1 January 2011 - 286 286 Unrealised gains (as above) - (968) - (968) 1,060 Additions - 26 26 Gains realised on disposal 315 - - 315 -

Disposals - - - Total investment gains 315 (968) - 653 1,060

At 31 December 2011 - 312 312 The Investments of the parent company are £1,100 greater than that of the consolidated group, both cost and market value, being 100% holdings in Good and Faithful Servant Ltd and Jumping Fish Ltd. Nett book value: Both investments are in ordinary share capital and both companies are registered in England and Wales. As at 31 December 2011 the nett assets of Jumping Fish were £1,000 and G&FS had nett liabilities of £100,000 caused At 1 January 2011 44,318 51 44,369 by tax treatment, which is under review. A summary income and expenditure for the year for each is included

in Note 4.

At 31 December 2011 46,446 29 46,475 Of the investment portfolio £4,873,000 is managed by Rathbones in listed investments. Of these investments £2,808,000 are UK investments and £2,065,000 are overseas investments. No one investment is deemed material to the GDBF. Tangible Fixed Assets are the same for both the parent company and the consolidated group. On consolidation there is a gain on a house built by G&FS of £183k. The open market value of this house is All other fixed asset investments are unlisted investments, and primarily represent holdings in Central Board of considered by the directors (under professional advice) to be at or in excess of the carrying value. Finance managed funds. Freehold properties include Glenfall House, the diocesan retreat and conference centre, at valuation. See note 18 for details. No historical cost is quoted for investment properties as these represent historic glebe assets brought on to the balance sheet in 1994 at valuation. The Board has vested in it two redundant churches. One is leased to the Methodist Church on a long lease at a peppercorn rent. The other is held pending disposal. No value is attributed to these properties.

39 40 30 31 FINANCIAL INFORMATION FINANCIAL INFORMATION

Notes to the consolidated accounts Notes to the consolidated accounts for the year ended 31 December 2011 for the year ended 31 December 2011

Note 15a Note 16a Due within one year Due after one year Due within one year Due after one year Consolidated group debtors Consolidated group creditors

2011 2010 2011 2010 2011 2010 2011 2010 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Prepayments and sundry debtors 1,165 1,482 - - Accruals and sundry creditors 411 523 - - Amounts recoverable on contracts - 367 - - Amounts owing on long term contracts - 87 - - Staff car loans 3 4 4 7 Deferred income on contracts - 110 - - Loans to parishes 34 295 230 14 Loans 60 60 - - Due from the Church Commissioners 31 78 - - Value Linked Loans (Church Commissioners) - - 537 537 Grants payable - 1 - - Debtors 1,233 2,226 234 21 Creditors 471 781 537 537 Included in debtors is an amount of £256k (2010 - £313k) due from related charities. These charities are administered by staff of the Board, but the trustees are separate from the directors of the Board. Included in 'Accruals and sundry creditors' is a total of £52,000 (2010 - £52,000) due to related charities which are administered by staff of the Board and whose trustees are also trustees of the Board.

Value linked loans from the Church Commissioners are repayable on sale of the property to which they relate. Any capital profit or loss arising on sale of the property accrues to the Church Commissioners and the Board in proportion to the equity invested. Note 15b Due within one year Due after one year Parent company debtors

2011 2010 2011 2010 Note 16b Due within one year Due after one year £’000 £’000 £’000 £’000 Parent company creditors

2011 2010 2011 2010 Prepayments and sundry debtors 1,162 1,472 - - £’000 £’000 £’000 £’000

Staff car loans 3 4 4 7

Loans to parishes 34 295 230 14 Accruals and sundry creditors 356 491 - - Good & Faithful Servant Ltd 613 721 - 400 Loans 60 60 - - Jumping Fish Ltd 17 31 - - Value Linked Loans (Church Commissioners) - - 537 537 Due from the Church Commissioners 31 78 - - Grants payable - 1 - -

Debtors 1,860 2,601 234 421 Creditors 416 552 537 537

Included in debtors is an amount of £256k (2010 - £313k) due from related charities. These charities are Included in 'Accruals and sundry creditors' is a total of £52,000 (2010 - £52,000) due to related charities which administered by staff of the Board, but the trustees are separate from the directors of the Board. are administered by staff of the Board and whose trustees are also trustees of the Board.

Value linked loans from the Church Commissioners are repayable on sale of the property to which they relate. Any capital profit or loss arising on sale of the property accrues to the Church Commissioners and the Board in proportion to the equity invested.

41 42 32 33 FINANCIAL INFORMATION FINANCIAL INFORMATION

Notes to the consolidated accounts Notes to the consolidated accounts for the year ended 31 December 2011 for the year ended 31 December 2011

(continued) Note 17

Note 17

Analysis of nett assets by fund Analysis of nett assets by fund: fund

Summary Detail - Tangible Tangible Assets Fixed Asset Fixed Investments Current Assets Creditors Inter Indebtedness General Funds Designated Funds Restricted Funds Endowment Funds Total Total Funds at 31 Dec 2011 are represented by: £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Tangible fixed assets 23 11,709 - 34,743 46,475 General Fund 23 - 2,324 (454) 293 2,186 Fixed asset investments - 1,005 1,224 16,976 19,205 Current assets 2,324 788 505 312 3,929 Development 5 1,005 788 - (697) 1,101 Creditors (454) (537) (17) - (1,008) Albright general 1,200 - - - - 1,200 Inter-fund indebtedness 293 (807) (838) 1,352 - Houses capital 10,333 - - (537) (911) 8,885 Curates’ Housing Fund - - - - 802 802 2,186 12,158 874 53,383 Total Funds at 31 Dec 2011 68,601 Education 1 - - - (1) - Viney Hill 170 - - - - 170 Funds include the following unrealised gains on investments: Designated Funds 11,709 1,005 788 (537) (807) 12,158 Unrealised gains at 1 Jan 2011 1,416 79 269 3,022 4,786 Nett gains on revaluation in the year 34 (19) (67) (916) (968) Housing for elderly clergy - 28 34 - 43 105

Ordination training - 124 - - 32 156 Unrealised gains at 31 Dec 2011 1,450 60 202 2,106 3,818 Diocesan Pastoral Fund - 813 415 - (680) 548 Inter-fund indebtedness arises as a result of transactions relating to certain funds being effected through the Stratton Davis - 226 18 - (9) 235 General Fund. Such indebtedness is settled periodically, usually by cash transfer. Other restricted funds - 33 38 (17) (224) (170)

Restricted Funds - 1,224 505 (17) (838) 874

Pensions & assistance 17 88 - - - 105 Benefice Property 33,439 - - - (1,485) 31,954 Diocesan Stipends Fund - 13,422 - - 2,799 16,221 Glebe Property 1,287 3,466 312 - 38 5,103 Endowment Funds 34,743 16,796 312 - 1,352 53,383

Total Funds at 31 Dec 2011 46,475 19,205 3,929 (1,008) - 68,601

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Notes to the consolidated accounts Notes to the consolidated accounts for the year ended 31 December 2011 for the year ended 31 December 2011

Note 18

1

1 Note 19

1

Designated funds 1

Restricted funds /(losses)

/(losses) assets on Transfers Incoming Incoming Resources Resources Expended Nett gains Balance at Balance 20 31 Jan Balance at 31 Dec 1 assets on Transfers Incoming Incoming Resources Resources Expended Nett gains Balance at Balance 20 31 Jan Balance at 31 D ec 1 £’000 £’000 £’000 £’000 £’000 £’000

£’000 £’000 £’000 £’000 £’000 £’000

Development Fund 1,347 32 (259) (19) - 1,101 Housing for elderly clergy 110 4 (10) 1 - 105 Albright Bequest 1,200 - - - - 1,200 Ordination training 162 - - (6) - 156 Houses Capital 8,885 - - - - 8,885 Diocesan pastoral fund 764 68 (234) (50) - 548 Curates’ Housing Fund 865 77 (140) - - 802 Stratton Davis fund 249 12 (15) (11) - 235 Education - 445 (684) - 239 - Parish Giving Scheme - 796 (796) - - - Viney Hill development 170 - - - - 170

Other (97) 105 (177) (1) - (170)

Total Funds at 31 Dec 2011 12,467 554 (1,083) (19) 239 12,158 Total Funds at 31 Dec 2011 1,188 985 (1,232) (67) - 874 Unrestricted funds are monies available for use at the discretion of the Board. The General Fund is for the day to day running of the Board, and is funded by the parish share. However, certain funds have been earmarked Restricted funds may only be used for the purposes for which the money was originally gifted or bequeathed for particular purposes, and these are termed designated funds. Such funds are kept separate for administrative to the Board. purposes but do not constitute legally separate funds. The Housing for Elderly Clergy Fund derives from various bequests and is used to give assistance to retired The Development Fund has been designated to make a fund available to finance mission initiatives approved by clergy of the diocese in difficulty with their housing requirements. Bishop’s Council. The Ordination Training Fund derives from various bequests, principally from the late Mrs. M Harries. The Albright Bequest represents monies bequeathed by Miss Albright. From this bequest two loans were made The income is used to fund ordination training. to Glenfall House Trust (GHT) secured on the freehold of Glenfall House which is owned by the GHT. The directors are of the opinion that the terms of these loans are such that the ultimate benefits and liabilities of The Diocesan Pastoral Fund is derived principally from the proceeds of sale of surplus parsonage houses as a ownership of Glenfall House remains with the Board with a right to use the house granted to the GHT. Glenfall result of pastoral reorganisations under the Pastoral Measure 1983. Under the Measure, the Fund must be used House has therefore been recognised as an asset of the Board of Finance in accordance with FRS5. It is included firstly in connection with expenses relating to pastoral schemes and redundant churches. To the extent that it is in the balance sheet at £1.2m based on a valuation carried out in 2000 by a qualified chartered surveyor. considered that any remaining funds are not required, or are not likely to be required, for these purposes, then the funds may be applied to any general purpose of the Board. Periodically, excess funds are allocated to The Houses Capital Fund represents the cost, less outstanding loans, of houses owned by the Board to provide designated funds. accommodation for assistant curates and team vicars. The Stratton Davis Fund arises from a bequest received in 2001 from the estate of the late Mr. David Stratton The Curate’s Housing Fund was established in 2009 using proceeds from the sale of curate’s housing to fund Davis. The terms of the settlement are that the fund may be used for the repair or restoration of churches and housing allowances for curates to enable them to purchase their own house and thereby make better provision their fixtures and fittings in the diocese. The Board has decided initially to use the income to make an annual for their retirement. grant to the Gloucestershire Historic Churches Trust.

The Education Fund brings together the Education work undertaken by GDBF in one column with income specific to that activity, primarily from the Voluntary Schools Fund and St Matthias Trust. The transfer to the General Fund at the year end is the portion of this work funded by the general fund, and by extension Parish Share.

The Viney Hill Fund relates to a property owned by GDBF, but used by Viney Hill Adventure Centre for charitable purposes consistent with those of the GDBF.

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Notes to the consolidated accounts Notes to the consolidated accounts for the year ended 31 December 2011 for the year ended 31 December 2011

Note 20 Note 21 1

1

Endowment funds Statement of consolidated cash flow: 2011 2010

/(losses) £’000 £’000 assets on Transfers Incoming Incoming Resources Resources Expended Nett gains Balance at Balance 20 31 Jan Balance at 31 Dec 1 Nett incoming/(outgoing) resources for the year (1,150) 141 £’000 £’000 £’000 £’000 £’000 £’000 Depreciation 26 33

Decrease in stock 162 137 Pensions & assistance 106 - - (1) - 105 Decrease/(Increase) in debtors and prepayments 780 (1,080) Benefice property 31,934 229 - - (229) 31,954 (Decrease)/Increase in creditors and accruals (310) 258 Diocesan stipends fund 16,907 - - (915) 229 16,221 Investment income and interest paid (760) (791) Glebe property 4,788 - - 315 - 5,103 Surplus on disposal of tangible fixed assets (229) (1,617)

53,755 229 - (601) - Total Funds at 31 Dec 2011 53,383 Cash outflow from operating activities (1,481) (2,919)

Permanent endowment funds represent money that must be permanently held as capital, and may not be spent as income. Expendable endowment funds represent money that must be held as capital, but may be expended when certain conditions are satisfied. Note 22 Exceptional item The Pensions & Assistance Fund is permanent endowment represented by a house used to provide accommodation for retired clergy, and a cash balance arising from the sale of a second house. Pensions liability The Benefice Property Fund represents the value of benefice houses. These houses are owned by benefices, but are recognised as assets by the Board under FRS5 – see Accounting Policy f on page 13 for details. The fund is The Board resolved its treatment of the 2008 actuarial valuation of its lay staff pension scheme in classified as expendable endowment as under certain conditions the value of the houses may be realised and the the year. In this regard a charge was made for retrospective pension service higher than previous proceeds used as income. estimated. Given the size of this adjustment and its relative distortion on the ongoing comparison of financial performance the Board has disclosed the item as an exceptional item. The Diocesan Stipends Fund (DSF) represents ancient endowments and other gifts and legacies. The Fund is governed principally by the Diocesan Stipends Funds Measure 1953 and the Endowment and Glebe Measure 1976, as amended. The Fund is mainly invested in CBF managed funds. Income generated from the Fund must be used to fund stipends. The Fund is expendable under certain circumstances. Note 23 Financial Commitments: Operating Leases Glebe property represents glebe land previously held by incumbents but transferred to the Board under the 2010 Endowment and Glebe Measure 1976. Income derived from rents must be used to fund stipends. Proceeds of 2011 sale of glebe land must be transferred to the DSF. Annual commitments in respect of operating leases £’000 £’000 which expire within one year 1 3 which expire between two and five years 9 5

Operating leases; equipment 10 8

which expire within one year 1 - which expire between two and five years 9 11 Which expire after five years 25 34

Operating leases; property 35 45

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Notes to the consolidated accounts for the year ended 31 December 2011

Note 24 Related Party Transactions

Management Charges During the year, GDBF made a management charge of £7,188 (2010 - £7,047) to the Charity of Ann Edwards, a registered charity of which the Board is sole corporate trustee. The charge is in respect of costs incurred by the Board in providing administration services to the charity. The Board is entitled to recover these costs under the provisions of the governing instrument of the charity.

Payments to Trustee Directors Certain directors are also holders of ecclesiastical office and receive a stipend, pension and accommodation to enable them to meet the duties of their office and not their duties as trustees. Stipends payable were in the range £22,970 to £32,454 for 2011. Pension contributions are as for the Church of England Funded Pension Scheme outlined in note 12. The number of directors receiving these stipends and benefits was 9 (2010 -13). In addition two directors received reimbursement of expenses in connection with their ecclesiastical office. Directors’ expenses for 2011 and 2010 were less than £1,000.

Note 25 Lay Pension Scheme GDBF participates in the Church of England Defined Benefits Scheme (DBS), part of the Churchworkers Pension Fund. GDBF is unable to identify its share of the underlying assets and liabilities as each employer is exposed to actuarial risks associated with the current and former employees of other entities participating in the DBS. A valuation of the fund is being carried out as at 31 December 2010 and the contribution rate was revised from 1 April 2012 to 31.2%. As at 31 December 2011 GDBF had 42 active and 20 deferred members in the fund. During the year GDBF agreed amendments to the scheme and finalised payments to the Church of England Pensions Board (CEPB) in regard of accrued contributions. To the extent to which these relate to prior years the Board has disclosed the payments as exceptional to ensure greater consistency of comparison of expenditure.

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