ANNUAL REPORT AND ACCOUNTS 2019
#LivingTradition OUR PURPOSE
Our purpose is to worship Almighty God, to serve all God’s people and to share the good news of Jesus Christ in our diverse urban context.
OUR MISSION
Birmingham Cathedral is a Christian Church of the Anglican Communion and the seat of the Bishop of Birmingham. As the Church of England cathedral church and a vibrant worshipping community, we serve the people and communities of the Diocese of Birmingham. We offer hospitality and welcome as a place of gathering and connection for people of all faiths and none in order to witness to God’s love for all and to serve the common good.
OUR VISION
As the cathedral church for Church of England Birmingham, we desire to be a church that is a transforming presence at the heart of the communities we seek to serve. The process of enacting our vision is guided by three strategic priorities: PRAY, SERVE, GROW.
OUR VALUES As followers of Jesus Christ, we seek to grow in faith, hope and love. As a cathedral community, our work is guided by the values of wisdom, compassion, justice, inclusion and courage. 3 FROM THE DEAN
Looking back on 2019, there is much to be thankful for – the appointment of our excellent Canon Precentor, a year of high quality and well supported services and events, the commitment of excellent colleagues and staff, the dedication of our volunteers who give so freely of their time and talents.
In July we bade fond farewells to Canon Nigel and Judy after 11 years of sterling service. Nigel certainly did not coast towards retirement as anyone who heard him preach in his final months with us or attended his farewell series of Tuesday Talks. His final service in the cathedral was attended by a whole host of friends and well-wishers who had benefitted from his ministry as Canon Missioner and previously. Nigel is much missed as a friend and colleague by the Cathedral Community, congregation members, staff and volunteers alike. We are so grateful to Nigel and Judy for their contribution and wish them every happiness for their retirement.
This year Chapter committed itself to three strategic priorities of Pray, Serve and Grow and consulted widely on a new strategic plan.
PRAY: In 2019 we enjoyed a number of special services: amongst them, a service to celebrate the 25th Anniversary of Women to the Priesthood, a Sanctuary Sunday Service and a wonderful Black History Service. This year we also held three confirmation services in the cathedral with a welcome increase in number of candidates and parishes participating in them. We enjoyed a year of wonderful musical provision throughout the year within our liturgies and at concerts such as Divine Beauty in July and a sublime Messiah in December.
SERVE: We continued to develop our service to the homeless community through our partnerships with St Basil’s and Let’s Feed Brum. Throughout the year we held a full programme of school visits and I am hugely grateful to our Education Guides and Heritage Guides for their assistance throughout the year in facilitating this. We also held a lovely Year 2 Leavers Service in partnership with the Diocesan Education Team. Other significant partnership work in 2019 involved our participation in the 550th birth anniversary of Guru Nanak Dev Ji and our commemoration of the Jallianwala Bagh massacre. It was a joy to welcome Monsignor Tim Menezes as Dean of St Chad’s Cathedral in the summer and then to accompany him to Rome in October for the Canonisation Mass of St John Henry Newman. The following week, the Cathedral Choir sang in St Chad’s at a service of Ecumenical Vespers. This is the beginning of an exciting new chapter in partnership in the Gospel together.
GROW: We were delighted to host the Birmingham Passion Play in 2019. Over three days in Holy Week, about three thousand people were present in the cathedral and Cathedral Square to witness the story at the heart of our Christian Faith, the death and resurrection of Jesus Christ. The performances were strongly appreciated by those who witnessed them and had great impact on people of faith and of none. The Very Reverend We are hopeful that the Birmingham Passion Play will return in 2021. Matt Thompson, I am also grateful to Reverend Elaine King for her Threshold Project in engaging Dean of Birmingham visitors and pilgrims at the beginning of the New Year and over the summer. The Reverend Canon Dr Josephine Houghton, FROM THE CANON PRECENTOR Canon Precentor
Following a secondment to the cathedral, I was delighted to be instituted and installed as Canon Precentor in May 2019. During the year, in addition to attempting to sustain a rich pattern of regular worship, we have welcomed and hosted a large number of special services.
I am very grateful to clergy and lay colleagues; those who serve on rotas; and everyone who has contributed in so many ways to the worshipping life of the cathedral. At the beginning of June 2019, the pastoral care team was recommissioned and it has been very good to work with the Reverend Elaine King and the pastoral care team this year.
FROM THE CHIEF EXECUTIVE
2019 was another exciting year of growth for the cathedral. We continued to build capacity in our staff and volunteer teams, delivering tours and outreach sessions to large numbers of children. Sharing our space and our faith with these groups is always a joy.
In 2019 we welcomed Ashley Wagner as Assistant Head of Music, Tracy Taylor as Events Manager, and Emma Kupsa as PA to the CEO. We also welcomed Jennie Tattersall to the team for the first nine months of the year on a fixed term contract.
Financially, we saw growth in income from events regular giving, and continued to make progress with Chapter’s ambitions for growing our working capital and financial reserves.
We began the process of preparing for a SCIE Safeguarding audit in 2020 and were pleased to formalise the position of Stef Haynes (Diocesan Safeguarding Adviser) in the role of Cathedral Safeguarding Officer.
Overall, 2019 was a year of stability and building on secure foundations in terms of finances, operations and Anna Pitt governance. At the time of writing we are working on the challenges presented by COVID-19 and how this Chief Executive ha shaped our worship and engagement. Future plans will all acknowledge our physical and digital congregations. 5 HIGHLIGHTS OF 2019
• The cathedral newsletter Upon Reflection continued to engage and inform • New Priests and Deacons were ordained on the same day in June • Hundreds of members of the homeless community received a Christmas lunch with Lets Feed Brum • Artist Jake Lever wins an Art and Christianity award for his installation of Soul Boats • Ashley Wagner was announced as the new Assistant Head of Music • The window conservation project Divine Beauty continued to raise momentum • World Aids Day was commemorated with an exhibition piece inside the cathedral • A special Evensong Service was held for the city’s business community • An exhibition marking the 550th birth anniversary of the founder of the Sikh religion, Guru Nanak Dev Ji was held inside the cathedral • Three confirmation services were held in 2019 • Local schools attended a series of Pentecost and Christingle Service • We saw a rise in carol services and events held to celebrate Advent and Christmas
• Craftspace returned to Cathedral Square to showcase new art graduates in the annual In:Site Festival
#SummerMusicClub HIGHLIGHTS OF 2019
• Dr Rowan Williams visited the cathedral to celebrate Christian Aid Week • Thousands of people observed the Passion Play being performed in the city centre, Cathedral Square and inside the cathedral • Dean of Birmingham, The Very Reverend Matt Thompson visited Rome for the Canonisation of John Henry Newman • Black History Month was commemorated with a special service inside the cathedral • The Reverend Dr Josephine Houghton was installed as the cathedral’s Canon Precentor by Bishop David • Congregation members, staff and people from across the city bid a fond farewell to the Reverend Canon Nigel Hand after he took up retirement • Nearly 1,000 people slept outside in Cathedral Square to raise funds and awareness for the homeless charity St Basil’s • The Reverend Canon Jenny Tomlinson was installed as new Archdeacon of Birmingham • Families and members of the public attended a special service to remember those affected by the Birmingham pub bombings 45 years ago • The NHS set up a weekly screening unit in Cathedral Square and tested over 350 people for Hepatitis C • Free Summer Music Clubs and music outreach sessions were held throughout the year
#ComeandSee 7 DIVINE BEAUTY
CONSERVATION PROJECT
In December 2019 we were successful in securing National Lottery Heritage Funding for the Development stage of our Divine Beauty Project.
The project will enhance the way we interpret the windows and build upon the cathedral's work with school and communities across the city.
Jane McArdle has continued throughout the year to raise the profile of the project amongst local and national interest groups.
divinebeautyproject.com #DivineBeauty
#DivineBeauty VOLUNTEERS
Volunteers are the backbone of our corporate life together, and often the first point of contact for visitors and worshippers.
The role volunteers play is integral to the smooth functioning of all our worship, events and hospitality. Visitors’ Chaplains, Education Guides, Heritage Guides, Hospitality Team and Cleaning team members ensure that Chapter’s ambition for the cathedral to be a place of warmth and welcome are always met. Our work with children is supported by our Children’s Church helpers, Choir Chaperones, and Choir Tea providers. Our Bell-ringers and Flower arrangers offer continued and excellent additions to our worship.
In terms of worship, our volunteers contribute on a daily basis to support the cathedral’s rhythm of prayer and worship; Servers Intercessors, Church Wardens, Deputy Wardens, Pastoral Care Team, Crucifers and Supporting clergy from across the diocese.
The team of volunteers (many of whom undertake numerous responsibilities) contribute thousands of hours each year. In addition to the many visible roles, we have numerous individuals who sit in a voluntary capacity on our many committees to ensure good governance, care and growth including; Cathedral Chapter, Cathedral Council, Community Committee and Fabric Advisory Committee.
#TeamCathedral
9 RELATIONSHIPS
In 2019 we developed some excellent new relationships with schools through recruitment to the choir, and through our schools’ outreach programme.
We were delighted to welcome Sikh friends for an exhibition celebrating the 500th Birthday of Guru Nanak.
We also enjoyed sharing in the celebrations with our friends at St Chad’s Cathedral for the canonisation of John Henry Newman.
We continued and strengthened our relationships with Let’s Feed Brum and St Basil’s as we partnered with them for key events in November and December.
#CathedralLife FABRIC REPAIRS AND INVENTORY
We continue to operate an active cycle of preventative maintenance in the cathedral. This includes routine servicing, as well as glazing repairs, gravestone repairs and redecoration or working areas of the cathedral (office and storage spaces). In 2019 some lead repairs were done on the cupola columns which were showing ingress of water. FUTURE PLANS FOR 2020
• Appointment of Residentiary Canon • Application to Cathedral Sustainability Fund • Embark on the Development stage of Divine Beauty • Quinquennial Inspection • Contribution to national peer review process • Develop and progress ‘The Key Project’ to boost volunteer involvement and visitor engagement
• Preparation for SCIE Audit in September 2020
#ChristmasattheCathedral 11 STRUCTURE, GOVERNANCE
AND MANAGEMENT
Birmingham Cathedral is an ecclesiastical corporation. The cathedral has a charitable purpose as defined in the Cathedrals Measure 1999. As an ecclesiastical corporation the cathedral is excluded from the Charities Act 2011 and not regulated by the Charity Commissioners. However, the cathedral does qualify as a charity for taxation purposes. Whilst not being registered with the Charity Commission, Chapter has due regard for the guidance set down by the Commission regarding benefit to the general public:
.• By encouraging school children, families and older education groups to visit the cathedral for guided tours • By offering hospitality and welcome to those of all faiths and none • By working in partnership with the ecumenical community across Birmingham to offer opportunities for shared prayer and mutual flourishing
• By working in partnership with the local council, military personnel and civic dignitaries to offer shared opportunities for gathering for the common good of the communities we serve • By offering opportunities for local charities and community organisations to use Cathedral Square to raise the profile of excellent projects and support networks across the city • By engaging with inter-faith partners, parishes across the West Midlands and local schools through a strong working relationship with the Diocese • By growing our Schools Outreach Project working with local schools to provide musical opportunities • By developing links with Birmingham Museum and Art Gallery, Victorian Society and Birmingham Civic Society through our Heritage Manager raising awareness of our ‘Divine Beauty’ campaign • Birmingham Cathedral’s governing document is the Constitution and Statutes, incorporating the Cathedral Measure Act 1999. The most recent review and update of #ChristmasattheCathedral the constitution and statutes took place in 2015
• The cathedral is Mother Church to the Diocese of Birmingham, a diocese of nearly 200 parish churches. cathedral staff share office space at One Colmore Row with Diocesan colleagues and share some administrative functions (notably finance and safeguarding). This makes for effective and dynamic working relationships, and the cathedral maintaining a strong presence in the diocese
• Birmingham Cathedral Chapter is formed of both clergy and lay people, who act as fiduciaries and manage the cathedral’s affairs. The Dean and both Residentiary Canons are members, along with four members nominated by the Cathedral Congregation and appointed at Annual Parochial Church Meeting (APCM) and three Bishop’s appointments. The Chapter is chaired by the Dean or Acting Dean in Interregnum
• Body Corporate’ of the cathedral consists of Cathedral Chapter, Cathedral Council and Cathedral College of Canons. Cathedral Chapter also has a Finance & Risk Sub-Committee. 'Cathedral Chapter also has a Finance & Risk Sub-Committee, which has an independent, financially qualified, member appointed by Chapter amongst its membership. Cathedrals are run by their Chapters, which have the task of administering the affairs of the cathedral: • Chapter have chosen to send all new Chapter appointments on a residential. training course specifically for Chapter members run by the Association of English Cathedrals • Birmingham Cathedral Council meets three times a year to further and support the work of the cathedral and advise the Chapter. Membership of Cathedral Council consists of; The Dean, two nominated Chapter Members, two members of the College of Canons, three lay members representing the interests of the cathedral congregations, one area dean from a deanery within the diocese, two lay people appointed by Bishop’s Council, one person appointed by Birmingham Churches Together, a maximum of six people appointed by the Bishop. The Council is chaired by Andrew Lancaster, a lay member of Council appointed by Bishop David. Bishop David can attend and speak at the Council although he is not a member
• The College of Canons consists of the Dean and Residentiary Canons, Bishop Anne, The Venerable Simon Heathfield (Archdeacon of Aston), The Venerable Jennie Tomlinson (from September 2019) and honorary and lay canons. The College meets once a year to consider cathedral affairs. It also has the task of electing a new bishop in accordance with the Appointment of Bishops Act 1533 .
#CathedralMusic FINANCIAL REVIEW
Like many smallish ‘charitable’ organisations, the Cathedral Chapter operates on a veritable financial cliff edge for much of the time. We have fixed monthly outgoings – mostly on our staff, but our income streams are potentially erratic and certainly not regular throughout the year. We are thus susceptible to cash- flow problems, even when we are confident a year-end balance will be reached. Chapter has been seeking to mitigate this issue by providing for a contingency within the budget – but that requires us to make surpluses year-on-year, as we have no significant historical endowments to cushion us.
In 2019 we had to deal with a number of issues that illustrate the potential fragility of the financial situation. Most significantly in terms of scale, our tenants at St Philips House failed to pay their rent for over 12 months. While the money was clearly ‘owed’ and could be ‘accounted for’, it was not in the bank when other bills required to be paid! On a smaller scale, mid-way through the year there was a sudden noticeable drop in weekly congregational giving, directly linked to a delay in re-ordering our gift-aid envelopes. Happily, both situations were eventually resolved (and by December we had exceeded original targets for money on the plate.)
Also significant for us on the ‘uncertainty’ front at present is the way in which the Church Commissioners deal with funding when there are clergy vacancies. While all actual clergy costs are covered, any ‘unspent’ funding associated with a vacancy is only reimbursed at the end of each year as a voluntary grant, and receipt is not guaranteed although it is almost always given. In the past we have prudently not accounted for such funds, but are reviewing this for the current year.
In 2019 we then twice decided to refuse to accept substantial offers of income on ethical grounds. We did not run the Christmas Market again, despite having rated the 2018 experiment a success in our own terms, and having budgeted to repeat it, because the organisers wished to populate the area solely with food and drink stalls. This would have completely altered the family-centred nature of the market, and been inappropriate for the churchyard area, and we therefore pulled out. On the same grounds we refused a request from our tenants at St Philips Square to open a gin bar on the ground floor and thus pay a higher rent.
Notwithstanding these operational complications, we are pleased to be moving towards greater financial stability and are working to align our priorities in our budgeting process to the cathedral’s new 5 year strategy of Pray, Serve, Grow. We did generate a small surplus in 2019, but in addition have been successful in accessing grant funding for some particular projects which are very exciting. We are grateful to our own staff for all their hard work, keeping to budgets and making the most of what they have, and to the Diocese finance team who provide the support and technical know- how to aid Chapter in its work. Sue Davis CBE Chair, Chapter Finance and Risk Committee
#CathedralSquare FINANCIAL REVIEW
Our overall income for the year under review is £840,528 compared to £820,992 in 2018. We have been blessed to receive legacies totalling £17,900 and an additional £34,000 following the conclusion of the rent review on our commercial property St Philip’s House. Taking these factors into account, our underlying income is closer to £788,000. This is comparable to our 2018 underlying income of £786,000 once the impact of the Christmas Market and other church yard events is removed.
The Church Commissioners provide for the stipends of the Dean and the Residentiary Canons and the cathedral also receives a grant towards the cost of the lay salaries. We are immensely grateful to the Church Commissioners, All Churches Trust, and the many grant making trusts and individual donors who share our mission vision.
Overall expenditure is £846,695 compared to £821,262 in 2018. During the year, there has been a strategic investment in the capacity of the cathedral team to further our missional objectives and to support our flourishing music programme.
Chapter reports a net overall deficit position of (£6,167) for the year, before considering the net gains on the revaluation of the investment portfolio at 31 December 2019. Particularly pleasing is the net surplus of £10,326 on the unrestricted general fund before transfers are taken into consideration. This has enabled Chapter to designate £6,500 towards the creation of a Security Fund to provide match funding for a project to improve the security in and around the cathedral. Despite Brexit and other global economic and political issues the valuation of our investment portfolio has seen an increase of £557,578 as at 31 December 2019 compared to the 2018 valuation. Since the year end, a significant decrease in valuation followed Covid-19, but at the date of the latest valuation, 30 June 2020 investments had largely recovered and were valued at £4,756,641 #CathedralMusic 17 BALANCE SHEET POSITION
Chapter consider that the balance sheet, together with the notes to the financial statements show broadly that the restricted and endowment funds are held in an appropriate mix of investment and current assets given the purposes for which the funds are held.
While the net assets at the balance sheet date totalled £7,381,092 (2018: £6,802,106), it must be remembered that included in this total are property and investments that are held within the endowment fund, the capital of which cannot be spent. The endowment fund’s value amounted to £6,941,156(2018: £6,401,410). Much of the remainder of the assets shown in the balance sheet are held in restricted funds and cannot necessarily be used for the general purposes of the cathedral. FACTORS THAT MAY IMPACT ON FUTURE FINANCIAL PEFORMANCE There are a number of factors which can impact on the cathedral’s ability to meet its objectives which are outside its direct control. As is the case for all charities with historical endowment, the cathedral remains vulnerable to changes in the value and returns upon its investments. This is mitigated by employing specialist fund managers and advisors to help develop an appropriate investment policy.
The ability of the cathedral to generate other regular income sources such as event/ special service fee income, congregational giving, and donations has a significant impact on the delivery of the cathedral’s missional
objectives. These factors are managed by building close partnerships with both cathedral users and the congregation itself as lifelong #ComeandSee disciplines of Christ. #HolyWeelc
19 #FaithinFocus RESERVE POLICY
Free reserves are maintained for the following purposes: • To avoid bank borrowing if there is a temporary shortfall in income/ or a surge in expenditure • To provide for emergencies The reserves policy of the cathedral is formulated in line with recommendations of the Charity Commission of England and Wales. The basic policy statement is as follows: “The Cathedral Chapter aims to maintain the equivalent of at least 3 months operating expenditure in cash and readily liquid assets in the general unrestricted fund. This excludes all designated funds and loans. The policy is to be reviewed on an annual basis”
The position as at 31 December 2019 with a surplus on the unrestricted general fund is much improved, albeit the reserves policy is not yet achieved. This position continues to be actively pursued by Chapter through robust monitoring of unrestricted expenditure and income generation.
DESIGNATED FUNDS
The cathedral may, with the approval of Chapter, designate additional unrestricted reserves to be retained for an agreed purpose where this is considered prudent. Such designated reserves are reviewed on an annual basis and returned to the general fund in the event that the purpose of their designation is no longer considered adequate for their retention. A description of each reserve with the intended use of the reserve is set out in note 13 The most significant designated reserve is the Divine Beauty (Legacies) of £40,015. RESTRICTED AND ENDOWNMENT #TimeToDraw FUNDS
As set out in note 13 the cathedral holds and administers a number of restricted and endowment funds. As at 31 December 2019 restricted funds totalled £333,850 (2018: £323,997) and endowment funds totalled £6,941,156 (2018: £ 6,401,410). Neither are available for the general purposes of the cathedral. INVESTMENTS POWERS AND POLICY
Under the Cathedrals Measure 1999 the Chapter may invest the Cathedral’s funds in any of the following: • Land; • Funds administered for the Central Board of Finance of the Church of England by CCLA Investment Management Ltd; • Investments in which trustees may invest under the general power of investment in the Trustee Act 2000; and • The improvement or development of property belonging to the cathedral, except that endowment funds may not be used to improve or develop the cathedral itself. The cathedral’s non-property investments were held with Brewin Dolphin and CCLA during the year. Brewin Dolphin manage a portfolio on a discretionary basis, with the remaining funds within CCLA on a self-managed basis. Management of the cathedral’s investments is overseen by the Chapter’s Finance & Risk Committee, which includes members appointed for their relevant expertise and experience. The relationship with the cathedral’s investment advisors is governed by a Statement of Investment Principles. The agreed investment objective is the creation of sufficient income to enable the cathedral to carry out its purposes effectively and without interruption, the level of income to be agreed from time to time with the Chapter on the advice of the Finance & Risk Committee. A
further objective is the maintenance and long-term enhancement of the capital, and the income derived from this in real terms. Chapter are in the process of reviewing the suitability of adopting a Total Return basis to its endowment fund investments for accounting purposes. 21 PRINCIPAL RISKS AND UNCERTAINTIES
Chapter reviews the Cathedral Risk Register on a quarterly basis. Reporting to Chapter by the Finance & Risk Committee will include a consideration of risks (financial/operational/ reputational damage) which could impact seriously on the cathedral’s operation and development. The Finance & Risk Committee oversees the implementation of the recommendations arising out of this review process. This table indicates a sample of the main risks affecting the cathedral and mitigation strategies.
Area Mitigation strategies • Support from other HoDs to deliver events (Facilities) and generate events (Comms) Reliance on Events Income • Planning and targeting specific companies/organisations
• Organise for a second scanned copy to be available Lack of Inventory • Explore options for digitisation and upgrade • Regular updates/training for all staff on safe use of equipment / passwords etc Cyber Crime • Use of Dropbox for safe storage of data • Daily upload of the network
Poor Access to Roof Area and Poor • Cathedral Architect working with roofing firm to identify access requirements and advising Head of evacuation options from Bell Tower Facilities on protocol for staff access
Impact of COVID-19 on ability to deliver • Support from Church Commissioners in terms of front loading grant payments to help with cash worship, impact on key personnel, impact flow, and additional support payments. on income. • Move to live streaming of main Sunday worship – servicing a physical and digital congregation concurrently. • Move to contactless donations and parish giving to maintain income streams.
REMUNERATION OF KEY MANAGEMENT PERSONNEL
Emoluments of higher paid lay employees are determined by Chapter with reference to regular appraisals, remuneration and salary benchmarking and consequent recommendation of changes. The emoluments of cathedral clergy are set by and funded by the Church Commissioners on a national basis. GOING STATEMENT OF THE RESPONSIBILITIES CONCERN OF THE CHAPTER Chapter have overall responsibility for ensuring that the cathedral has an appropriate system of controls, financial and otherwise. The systems of internal control are designed to provide reasonable, but not absolute assurance against material At the date of signing these financial misstatement or loss. They include: statements, Chapter has considered • An annual budget approved by Chapter; the effect on the cathedral with the information available to it, and do not • Regular consideration of both financial results and other performance indicators; believe it will affect the cathedral’s • Delegation of authority and segregation of duties ability to continue to operate for the
foreseeable future. As with most organisations there will be short term practical difficulties which we have #FreeMusicForSchools addressed and are managing by remote working where possible, digital delivery of services and review of working patterns. Also, like many organisations we continue to utilise government support schemes such as the Furlough scheme However, due to the level of reserves and cash balances held and security of some of our income streams we are well placed to continue operating. See accounting policy titled Going Concern for further details.
23 #CathedralMusic DISCLOSURE OF INFORMATION
Members of Chapter who held office at the date of approval of these Financial Statements as set out above each confirm, so far as we are aware, that:
• there is no relevant audit information of which the cathedral’s auditors are unaware; and
• we have taken all the steps that we ought to have taken as members of Chapter in order to make ourselves aware of any relevant audit information and to establish that the cathedral’s auditors are aware of that information
CHAPTER’S RESPONSIBILITIES STATEMENT
Chapter are responsible for preparing the 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 cathedrals in England & Wales requires the Chapter to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the cathedral and of the incoming resources and application of resources of the cathedral for that period. In preparing these financial statements, Chapter are required to:
• select suitable accounting policies and then apply them consistently; • observe the methods and principles in the Charities SORP 2019 (FRS 102); • 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; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the cathedral will continue in operation Chapter are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the cathedral and enable them to ensure that the financial statements comply with the Cathedrals Measure 1999, the Charities (Accounts and Reports) Regulations 2008 and the provisions of the governing document. They are also responsible for safeguarding the assets of the cathedral and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Chapter are responsible for the maintenance and integrity of the corporate and financial information included on the cathedral’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 25 INDEPENDENT AUDITOR’S REPORT TO THE TRUSTEES OF BIRMINGHAM CATHEDRAL
We have audited the financial statements of Birmingham Cathedral (the ‘cathedral’) for the year ended 31 December 2019 which comprise the Statement of Financial Activities, the Balance Sheet, the Statement of Cash Flow and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
• give a true and fair view of the state of the cathedral’s affairs as at 31 December 2018, and of its 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 prepared in accordance with the requirements of Accounting and Reporting by Charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and in other respect the guidelines specified by the Church Commissioners under the power give to them by Section 27 of the Cathedrals Measure 1999.
BASIS OF OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the cathedral in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. CONCLUSION OTHER INFORMATION MATTERS ON RELATING TO GOING WHICH WE ARE REQUIRED CONCERNS TO REPORT BY EXCEPTION
We have nothing to report in respect of the Chapter are responsible for the other information. The other information comprises following matters in relation to which the ISAs the information included in the annual report, other than the financial statements (UK) require us to report to you where: and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in • Chapters’ use of the going concern basis of our report, we do not express any form of assurance conclusion thereon. accounting in the preparation of the financial statements is not appropriate; or In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is • Chapter have not disclosed in the financial materially inconsistent with the financial statements or our knowledge obtained in statements any identified material uncertainties the audit or otherwise appears to be materially misstated. If we identify such that may cast significant doubt about the material inconsistencies or apparent material misstatements, we are required to cathedral’s ability to continue to adopt the going determine whether there is a material misstatement in the concern basis of accounting for a period of at least twelve months from the date when the financial financial statements or a material misstatement of the other information. If, based statements are authorised for issue. on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
27 RESPONSIBILITIES OF MATTERS ON WHICH WE ARE CHAPTER REQUIRED TO REPORT BY . EXCEPTION As explained more fully in the Chapter’s responsibilities statement, the Chapter are responsible for the preparation of financial statements which give a true and fair view, and for such internal control as the Chapter determine is We have nothing to report in respect of the following matters where necessary to enable the preparation of financial statements the Cathedrals Measure 1999 requires us to report to you if, in our that are free from material misstatement, whether due to opinion: fraud or error. • the information given in the financial statements is inconsistent in In preparing the financial statements, the Chapter are any material respect with the annual’ report; or responsible for assessing the cathedral’s ability to continue as a going concern, disclosing, as applicable, matters related • sufficient accounting records have not been kept; or to going concern and using the going concern basis of accounting unless the Chapter either intend to liquidate • the financial statements are not in agreement with the accounting the cathedral or to cease operations, or have no realistic records; or alternative but to do so. • we have not received all the information and explanations we require for our audit.
USE OF OUR REPORT
This report is made solely to the Cathedral’s Chapter, as a body, in accordance with section 27 of the Cathedral’s Measure 1999. Our audit work has been undertaken so that we might state to the Cathedral’s Chapter 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 cathedral and the Cathedral’s Chapter as a body, for our audit work, for this report, or for the opinions we have formed.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
We have been appointed as auditor under section 27 of the Cathedrals Measure 1999 and report in accordance with regulations made under that Act. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report
COOPER PARRY GROUP LIMITED Date: 26 March 20 Chartered Accountancy, Statutory Auditors, Park View. One Central Boulevard, Blythe Valley Business Park, Solihull, West Midlands, B90 8BG
27 CHAPTER MEMBERS MEMBERS OF FABRIC CATHEDRAL ADVISORY COMMITTEE ARCHITECT The Very Reverend Matt Thompson Canon Dr Terry Slater (Chair) Kathryn Harris (from February The Reverend Canon Dr Josephine Houghton (from May 2019) 2019) Robert Kilgour The Reverend Canon Nigel Hand (until July 2019) Nick Cox Architects Richard Morriss Sandra Bailey Heyford Park House Dr Paul Spencer-Longhurst Helen Blundell (until February 2019) Camp Rd Kristina Williamson (until February 2019) Judith Whalley Upper Heyford Rita McLean Richard Brooks Bicester John Somers (until February 2019) Sue Davis OX25 5HD Mary Trumper (Secretary, not voting) Patricia Williams
Reverend Dr Sharon Prentis (from July 2019)
Tony Green (from June 2019).
AUDITORS BANKERS ARCHAEOLOGIST
Cooper Parry Group Limited The Royal Bank of Scotland PLC Richard Morriss & Associates Parkview 79/83 Colmore Row Bromlow House One Central Boulevard Birmingham Upper Bromlow Blythe Valley Park B3 2AP Minsterley Solihull Relationship Manager: Nick Dobson Shropshire B90 8BG SY5 0EA 25 MEMBERS OF FINANCE AND LEGAL ADVISORS RISK COMMITTEE • Anthony Collins Solicitors The Very Reverend Matt Thompson 134 Edmund Street Reverend Canon Nigel Hand Birmingham Sue Davis (Chair) B3 2ES Melanie Crooks • Keelys LLP, David Richardson (from February 2019 28 Dam Street Lichfield WS13 6AA
CATHEDRAL INVESTMENT COMMERCIAL ADMINISTRATOR MANAGERS PROPERTY MANAGEMENT (CHIEF EXECUTIVE) • Brewin Dolphin
9 Colmore Row CBRE Anna Pitt Birmingham 55 Temple Row B3 2BJ HEAD OF MUSIC Birmingham
B2 5LS • CCLA Investment Management Ltd David Hardie Senator House 85 Queen Victoria Street London EC2V 6DZ 29 STATEMENT OF FINANCIAL ACTIVITIES For the year ended 31 December 2019 BIRMINGHAM CATHEDRAL CHAPTER STATEMENT OF FINANCIAL ACTIVITIES For the year ended 31 December 2019
Unrestricted Funds Restricted Endowment Total Total Notes General Designated Funds Funds 2019 2018 £ £ £ £ £ £ Income & Endowments From: Donations & legacies 141,475 17,900 16,207 - 175,582 149,961 Grants in support of mission 25,000 - 314,613 - 339,613 329,928 Charges and fees arising in the course of mission 3,222 - 50 - 3,272 10,671 Trading & fundraising 51,994 - 10,374 - 62,368 96,961 Income from property & investments 252,677 - 6,456 - 259,133 233,274 Other income 560 - - - 560 197 ______Total Income 2 474,928 17,900 347,700 - 840,528 820,992 ______
Expenditure On: Raising funds 61,559 1,549 46,762 31,822 141,692 146,149 Charitable activities: Ministry 214,567 - 232,653 - 447,220 417,363 Cathedral & precincts upkeep 109,336 - 31,976 - 141,312 159,302 Education & outreach - - 1,169 - 1,169 15,629 Community, parish & congregation 76,685 - 36,005 - 112,690 80,152 Other expenditure 2,455 - 157 - 2,612 2,667 ______Total Expenditure 4 464,602 1,549 348,722 31,822 846,695 821,262
Net (outgoing)/ incoming resources before (losses)/gains 10,326 16,351 (1,022) (31,822) (6,167) (270) on investment
Net gains /(losses) on investments 5,6,7 - - 13,585 571,568 585,153 (266,443) ______Net Income/ (Expenditure) 10,326 16,351 12,563 539,746 578,986 (266,713)
Transfers between funds 13 (3,790) 6,500 (2,710) - - -
______6,536 22,851 9,853 539,746 578,986 (266,713)
Net movement in funds:
Total Funds brought forward 20 6,929 69,770 323,997 6,401,410 6,802,106 7,068,819 ______Total Funds carried forward 13,465 92,621 333,850 6,941,156 7,381,092 6,802,106 ======
31 BIRMINGHAM CATHEDRAL CHAPTER BALANCE SHEET For the year ended 31 December 2019
Unrestricted Funds Restricted Endowment Total Total Notes General Designated Funds Funds 2019 2018 £ £ £ £ £ £ Fixed Assets - Investment Assets Property 6 - - - 1,100,000 1,100,000 1,100,000 Investments 7 - - 143,874 4,634,811 4,778,685 4,221,107 ______- - 143,874 5,734,811 5,878,685 5,321,107 ______
Tangible Fixed Assets Property 8 - - - 1,165,000 1,165,000 1,165,000 Equipment 9 5,320 - 6,692 - 12,012 10,207 ______Total Fixed Assets 5,320 - 150,566 6,899,811 7,055,697 6,496,314 ______
Current Assets Debtors 11 44,626 - 1,114 39,780 85,520 70,861 Cash at bank and in hand 5,139 92,621 182,992 14,497 295,249 322,350 ______Total Current Assets 49,765 92,621 184,106 54,277 380,769 393,211
Creditors: Amounts falling due 12 (41,620) - (822) (12,932) (55,374) (87,419) within one year ______Net Current Assets 8,145 92,621 183,284 41,345 325,395 305,792 ______Total Net Assets 13,465 92,621 333,850 6,941,156 7,381,092 6,802,106 ======
The Funds of the Cathedral Endowment Funds 13 - - - 6,941,156 6,941,156 6,401,410 General Funds 13 13,465 - - - 13,465 6,929 Designated Funds 13 - 92,621 - - 92,621 69,770 Restricted Funds 13 - - 333,850 - 333,850 323,997 ______Total Funds 13,465 92,621 333,850 6,941,156 7,381,092 6,802,106 ======
The notes 1 to 20 form part of these financial statements.
BIRMINGHAM CATHEDRAL CHAPTER STATEMENT OF CASH FLOWS For the year ended 31 December 2019
Total Total 2019 2018 £ £ Cash flows from operating activities: Net cash used in operating activities (312,057) (171,884)
Cash flows from investing activities: Rents received 104,000 58,105 Investment income received 157,668 162,684 Interest & charges paid - - Purchase of property, plant & equipment (4,287) (3,015) Proceeds from the sale of investments 592,032 1,339,960 Purchase of investments (564,457) (1,694,451) ______Net cash (used in)/ provided by investing activities 284,956 (136,717)
Cash flows from financing activities: Repayments of borrowing ______Net cash provided by/(used in) financing activities - -
Change in cash & cash equivalents in the reporting period (27,101) (308,601)
Cash & cash equivalents at 1 January 322,350 630,951 ______Cash & cash equivalents at 31 December 295,249 322,350 ======
33 BIRMINGHAM CATHEDRAL CHAPTER STATEMENT OF CASH FLOWS For the year ended 31 December 2019
Reconciliation of net (expenditure)/income to net cash flow from operating activities
2019 2018 £ £ Net (expenditure)/ income for the reporting period (6,167) (270)
Adjustments for: Depreciation charges 2,482 2,710 Income added to endowment capital - - Income from property & investments (259,133) (233,274) Interest payable - - Decrease/(increase) in stocks - 1,252 Decrease/(increase) in debtors (17,194) 18,094 Increase/(decrease) in creditors (32,045) 39,604 ______(305,890 (171,614) ______Net cash used in operating activities (312,057) (171,884) ======
Analysis of cash & cash equivalents 2019 2018 £ £
Cash in hand/at bank 16,604 20,926 Cash held on deposit 278,645 301,424 ______Total cash & cash equivalents 295,249 322,350 ======
BIRMINGHAM CATHEDRAL CHAPTER STATEMENT OF CASH FLOWS For the year ended 31 December 2019
Cash and cash equivalents and net debt comprise the following balances:
At 1 Cash Other non At 31 January flows cash changes December
£ £ £ £
- Cash at bank and in hand 322,350 27,101 - 295,249
Cash held with investment - managers for reinvestment 303,451 269,656 33,795
- Total cash and cash equivalents 625,801 296,757 - 329,044
Bank loans falling due after one year - - - -
- Total net debt 625,801 296,757 - 329,044
Within cash held with investment managers for reinvestment, £33,795 (2018: £303,451) relates
to the endowment fund, which is unavailable for use until it is applied to the income fund.
Within cash at bank and in hand £14,497 (2018: £60,873) relates to the endowment fund, which
is unavailable for use until it is applied to the income fund.
35 BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
1. ACCOUNTING POLICIES
Basis of accounting
The financial statements are prepared in accordance with the provision of the December 2018 Regulations on Accounting and Reporting by English Anglican Cathedrals prepared for the Association of English Cathedrals and specified by the Church Commissioners under Section 27 of the Cathedrals Measure 1999. The December 2018 Regulations take into consideration the requirements of the Statement of Recommended Practices for Charities (SORP 2019) and applicable accounting standards (FRS102).
The Cathedral meets the definition of a public benefit entity under FRS102.
The financial statements are prepared under the historical cost convention as modified by the revaluation of investments and certain properties.
Going Concern
At the time of signing the accounts, Chapter has considered the effect of the Coronavirus on the going concern position, and consider that this does indicate that the cathedral will continue to operate for a period of at least 12 months from the date of signing these accounts due to the level of funding already secured with its principal funders (church commissioners), projections from investment managers and diversification of event income (cathedral square). At the balance sheet date the cathedral held sufficient cash balances. The charity has sufficient reserves, enough of which are unrestricted (including designated funds which could be re-purposed if required) and are sufficient to absorb short-term in-period deficits if required. Government support is utilised, where it is appropriate to do so, and since the year end the Furlough scheme has been used.
The financial forecasts prepared show that the cathedral will be able to operate within the facilities available to it.
On that basis Chapter have prepared these financial statements on a going concern basis.
The other principal accounting policies and estimation techniques are as follows:
Fund accounting:
The Chapter maintains various types of funds as follows:
Endowment funds:
Endowment funds represent grants, donations and legacies received where the donor has stipulated that the income may be used for general purposes, but the capital must be retained.
Restricted funds:
Restricted funds represent grants, donations and legacies received which are allocated by the donor for specific purposes.
Unrestricted funds:
Designated funds are amounts which have been put aside out of unrestricted funds at the discretion of the Chapter for specific purposes.
Undesignated funds represent unrestricted income which is expendable at the discretion of the Chapter in the furtherance of the objects of the Cathedral Chapter. Such funds may be held in order to finance both working capital and capital investment.
Tangible fixed assets:
In accordance with FRS 102 investments properties are carried at their fair value and this is considered by Chapter annually and the aggregate surplus or deficit is recognised in the Endowment Fund. The investment property was last professionally
BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
valued as at December 2015, the next professional valuation of the property is due at December 2020. No depreciation is provided on investment properties.
Non-investment properties relate to clergy housing. Previously these were carried at market value based on an external professional valuation every 5 years. In the interim period Chapter reviewed the carrying valuation of the properties for impairment by reference to the Nationwide House Prices Indices. Depreciation is not charged on the grounds of immateriality. Upon adoption of SORP 2015 (FRS 102) Chapter elected under the transitional rules to adopt the previous valuation of the properties as deemed cost. The properties are subject to a quinquennial maintenance programme and maintain a high residual value. In the interim period Chapter reviewed the carrying valuation of the properties for impairment by reference to the Nationwide House Prices Indices
Depreciation has been provided on office equipment in the first year. Larger items will be depreciated over the life of the asset, as assess by Chapter members. Depreciation of non- property assets is charged by equal annual instalments at rates estimated to write off their cost less any residual value over the expected useful life. For computer and office equipment this is 3 years.
The Cathedral building and the inventory as heritage assets
Under S24(1) of the Care of Cathedrals Measure 2011, Cathedrals are required to keep an inventory of items owned by the Cathedral that are of architectural, archaeological, artistic or historic interest. The Measure also issues strict guidelines about the acquisition and disposal of such assets.
No value is attributed to these assets on the balance sheet in accordance with section 6.2 of the Accounting and reporting Regulations for English Anglican Cathedrals. The Chapter have further considered the requirements of FRS 102, which postdates the Regulations and are of the opinion that the policy is compliant with this standard on the basis that information on the historical cost of the assets is not available.
The Cathedral churchyard as a heritage asset
The historic churchyard of St Philip’s is the Cathedral precinct under the Care of Cathedrals Measure 2011, and like the Cathedral building is of archaeological and historic interest. No value has been attributed in the balance sheet to the churchyard or any of the items that form part of it.
No value is attributed to these assets on the balance sheet in accordance with section 6.2 of the Accounting and reporting Regulations for English Anglican Cathedrals. The Chapter have further considered the requirements of FRS 102, which postdates the Regulations and are of the opinion that the policy is compliant with this standard on the basis that information on the historical cost of the assets is not available.
Investments
Investments are a form of basic financial instrument and are initially recognised at their transaction value and subsequently measured at their fair value at the balance sheet date using the quoted market price. The Statement of Financial Activities includes the net gains and losses arising on revaluation and disposals throughout the year. Realised gains and losses are calculated as the difference between sales proceeds and their opening carrying value or purchase value if acquired subsequent to the first day of the financial year. Realised gains and losses are calculated Realised gains or losses are recognised in the Statement of Financial Activities when investments are sold. Unrealised gains and losses are calculated as the difference between the fair value at the year end and their carrying value.
The Cathedral does not acquire put options, derivatives or other complex financial instruments. The main form of financial risk faced by the Cathedral is that of volatility in equity markets and investment markets due to wider economic conditions, the attitudes of investors to investment risk and changes in sentiment concerning equites and within particular sectors or subsectors.
Debtors
Trade and other debtors are recognised at the settlement amount due after any trade discount offered. Prepayments are valued at the amount prepaid net of any trade discounts due.
Cash at bank and in hand
37 BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
Cash at bank and cash in hand includes cash and short term highly liquid investments within a short maturity of three months or less from the date of acquisition or opening of the deposit or similar account.
Creditors and provisions
Creditors and provisions are recognised where the cathedral has a present obligation resulting from a past event that will probably result in the transfer of funds to a third party and the amount due to settle the obligation can be measured or estimated reliably. Creditors and provisions are normally recognised at their settlement amount after allowing for any trade discounts due.
Financial Instruments
The Cathedral has elected to apply the provisions of Section 11 “Basic Financial Instruments” and Section 12 “Other Financial Instruments” of FRS102 in full to all of its financial instruments. Trade debtors which are receivable within 1 year and which do not constitute a financing transaction are initially measures at the transaction price. Trade debtors are subsequently measured at amortised cost being the transaction price less any amounts settled and any impairment losses. Trade creditors payable within 1 year that do not constitute a financing transaction are initially measures at the transaction price and subsequently measures at amortised cost, being the transaction price less amounts settled.
Income
All income is recognised in the Statement of Financial Activities when the Cathedral is legally entitled to them as income or capital respectively, ultimate receipt is probable and the amount to be recognised can be quantified with reasonable accuracy. Where a claim for repayment of income tax has or will be made, such income is grossed up for the tax recoverable.
Grant income:
Grant income is recognised when the amount can be measured reliably and there is clear entitlement and certainty of receipt. Grants received which are subject to pre-conditions for entitlement or use specified by the donor which have not been met at year end are included in creditors.
Donations and legacies:
Donations and legacies are recognised when the amount can be measured reliably and there is clear entitlement and certainty of receipt.
Rent and Investment income:
Rent and investment income is accounted for when receivable.
Expenditure
Liabilities are recognised as soon as there is a legal or constructive obligation committing the Cathedral pay out resources, it is probable that settlement will be required, and the amount of the obligation can be measured reliably. Expenditure is classified under the following headings, all costs are allocated to a specific category.
Cost of Raising Funds:
These are the costs of managing the Endowment and Restricted funds in investments and properties.
Charitable Activities:
Expenditure on charitable activities includes the costs of activities undertaken to further the purposes of the Cathedral and their associated support costs as follows:
Ministry – these are the direct costs to order the worship and promote the mission of the Cathedral. These include the costs for the clergy employed by the Chapter, the costs of supporting their work across the city and diocese of Birmingham and the costs related to services, music and other Cathedral activities.
BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
Cathedral and precincts upkeep – these are the costs required to ensure the ongoing maintenance and upkeep of the Cathedral building and fabric.
Education and outreach – these include costs associated with the Cathedral education programme of activities, including staff costs and payments to other local organisations and charities.
Community, parish and congregation – these are the costs ( including staff costs) associated with supporting the cathedral’s work with its community, parish and congregation and the annual contribution to the Birmingham Diocesan Board of Finance in respect of Common Fund.
Other expenditure – this includes bank charges, provisions against slow moving stocks or trade debtors as deemed necessary in the normal course of business.
Support Costs – these consist of central management, administration and governance costs. These are costs which are incurred directly in the support of charitable activities. They are allocated to categories of expenditure on the basis of the proportion of staff time spent on each area of activity.
Value added tax
The Cathedral recovers 45% of all VAT paid, subject to the current partial exemption rules, apart from that on purchases from the gift shop where 100% is recovered. VAT is charged at full rate on all vatable sales.
Pensions
The Cathedral contributes to the Church Workers Pension Fund for lay staff. Contributions to the Church of England Funded Pension Scheme for the Cathedral clergy are fully funded by the (Section 21) grant receivable from the Church Commissioners. Both these schemes are multi-employer pension schemes.
The pension costs charged as expenditure represent the Cathedral’s contributions payable in respect of the accounting period, in accordance with FRS 102. Deficit funding for the lay worker pension scheme to which the Cathedral participates is accrued at current value in creditors distinguishing between contributions falling due within one year and after more than one year. Details of the scheme is given in note 17 to the financial statements.
Deficit funding in respect of the clergy in the Church of England Funded Pension Scheme is fully met by the Church Commissioners and hence the deficit funding liability is included in the financial statements of the Church Commissioners who have responsibility for this liability.
Critical accounting estimates and areas of judgement The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year.
Accounting estimates
The Cathedral makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
Valuation of investment property
The Cathedral carries its investment property at fair value, with changes in fair value being recognised in the Statement of Financial Activities. The Cathedral engaged independent valuation specialists to determine fair value at 31 December 2015 Some of the key assumptions used to determine the fair value of these assets are based on the valuer’s knowledge and experience of the market and values of similar properties, which could be deemed subjective.
Assumptions surrounding the church workers pension scheme The Cathedral contributes to the Church Workers Pension Fund for other staff. Although this scheme is determined to the multi-employer pension schemes, as required under FRS102, the Cathedral recognises its agreed deficit funding liabilities on its balance sheet. The key actuarial assumptions that underpin the required deficit funding contributions liability
39 BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
are based on the actuary’s knowledge and experience. Any changes in these assumptions as given in note 17 could have a significant impact on the required deficit funding contributions and resulting balance sheet liability.
Area of judgement
Non-deprecation of freehold properties
Depreciation is not provided on buildings as any provision (annual or cumulative) would not be material, due to the very long expected remaining useful life in each case, and because their expected residual values are not materially less than their carrying value. All estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
2. Income and Endowments from:
Unrestricted Funds Restricted Endowment Total Total General Designated Funds Funds 2019 2018 £ £ £ £ £ £ Donations & Legacies Congregational collections and giving 81,624 - 1,804 - 83,428 81,235 Donations 42,152 - 9,769 - 51,921 42,891 Income from appeals - - - - - 3,934 Tax recoverable under gift aid 17,699 - 634 - 18,333 19,531 Income from Friends and Local trusts - - 4,000 - 4,000 2,370 Legacies - 17,900 - - 17,900 - ______141,475 17,900 16,207 - 175,582 149,961 ======Grants in support of mission Church Commissioners - - 314,613 - 314,613 307,864 All Churches Trust 25,000 - - - 25,000 22,064 ______25,000 - 314,613 - 339,613 329,928 ======Charges & fees arising in the course of mission Facility and other fees 3,222 - 50 - 3,272 10,671 ======Trading & fundraising activities Income from lettings of Cathedral/churchyard 50,491 - 1,776 - 52,267 89,356 Gross income of the shop and other activities 1,503 - 8,598 - 10,101 7,605 ______51,994 - 10,374 - 62,368 96,961 ======
Unrestricted Funds Restricted Endowment Total Total General Designated Funds Funds 2019 2018 £ £ £ £ £ £
BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
Income from property and investments Property 104,000 - - - 104,000 58,105 Investments 148,206 - 6,352 - 154,558 174,764 Interest receivable on short term deposits 471 - 104 - 575 405 ______252,677 - 6,456 - 259,133 233,274 ======
Income Continued
Other income Other items 20 - - - 20 197 Insurance claims 540 - - - 540 - ______560 - - - 560 197 ======
3. Property Income
Nursery St Philip’s Total Total Drive House 2019 2018 £ £ £ £ Rents and Service Charges 7,859 96,141 104,000 58,105 Less: Charges (1,420) (3,046) (4,466) (4,658) ______6,439 93,095 99,534 53,447 ======
The freehold of St Philip’s House, St Philip’s Place is subject to a lease for one hundred and twenty-five years from 25 December 1979.
41 BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
4. Expenditure on:
Unrestricted Funds Restricted Endowment Total Total General Designated Funds Funds 2019 2018 £ £ £ £ £ £ Raising Funds Cost of services directly recoverable 5,397 - 210 - 5,607 12,685 Gross cost of shop and other activities 241 - - - 241 6,521 Costs of Appeals - - 17,420 - 17,420 13,304 General marketing costs 5,165 1,549 694 - 7,408 4,903 Cost of fundraising 781 - - - 781 10,975 Investment property - - - 3,046 3,046 4,200 costs Investment management costs - - - 28,776 28,776 27,124 Property Costs 1,420 - - - 1,420 458 Support costs 48,555 - 28,438 - 76,993 65,979 ______61,559 1,549 46,762 31,822 141,692 146,149 ======
Ministry Costs Clergy stipends and working expenses 3,964 - 112,934 - 116,898 113,102 Clergy housing costs 11,244 - 7,074 - 18,318 17,626 Clergy support costs 33,085 - 21,080 - 54,165 52,721 Service costs 31,656 - 23,574 - 55,230 53,594 Music costs 90,536 - 56,464 - 147,000 130,832 Support costs 44,082 - 11,527 - 55,609 49,488 ______214,567 - 232,653 - 447,220 417,363 ======
Cathedral & precincts upkeep Maintenance & interior upkeep 79,855 - 24,254 - 104,109 110,027 Cathedral insurance 20,043 - - - 20,043 21,349 Support costs 9,438 - 7,722 - 17,160 27,926 ______109,336 - 31,976 - 141,312 159,302 ======
BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
Education and Outreach Educational activities - - 1,169 - 1,169 15,629 ______- - 1,169 - 1,169 15,629 ======
Expenditure continued:
Unrestricted Funds Restricted Endowment Total Total General Designated Funds Funds 2019 2018 £ £ £ £ £ £ Community, parish & congregation Diocese 48,756 - - - 48,756 43,152 Support costs 27,929 - 36,005 - 63,934 37,000 ______76,685 - 36,005 - 112,690 80,152 ======
Other Expenditure Interest & similar charges payable 2,455 - 157 - 2,612 2,667 ______2,455 - 157 - 2,612 2,667 ======
ANALYSIS OF SUPPORT COSTS:
Unrestricted Funds Restricted Endowment Total Total General Designated Funds Funds 2019 2018 £ £ £ £ £ £ Support Costs Raising funds 48,555 - 24,739 - 73,294 65,979 Ministry 44,082 - 7,828 - 51,910 49,488 Cathedral & precincts upkeep 9,438 - 7,722 - 17,160 27,926 Community, parish & congregation 27,929 - 36,005 - 63,934 37,000 ______130,004 - 76,294 - 206,298 180,393 ======
Analysis Office rent 23,250 - - - 23,250 23,250 Office running costs 35,910 - - - 35,910 33,526 Staffing costs 60,922 - 76,294 - 137,216 113,101 Governance – Audit 8,182 - - - 8,182 8,776
43 BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
Non-audit 1,740 - - - 1,740 1,740 ______130,005 - 76,294 - 206,298 180,393 ======
5. Investment income and losses
Unrestricted Funds Restricted Endowment Total Total General Designated Funds Funds 2019 2018 £ £ £ £ £ £ Dividends receivable 148,206 - 6,352 - 154,558 174,764 Interest receivable 471 - 104 - 575 405 Property income 104,000 - - - 104,000 58,105 ______252,677 - 6,456 - 259,133 233,274 ======
Realised gains/(losses) - - - 1,342 1,342 (41,755) Unrealised (losses)/gains - - 13,585 570,226 583,811 (224,688) ______- - 13,585 571,568 585,153 (266,443) ______Total income & losses 252,677 - 20,041 571,568 844,286 (33,169) ======
6. Investment property
Unrestricted Restricted Endowment Total Funds Funds Funds Funds £ £ £ £ At valuation: 1 January 2019 and 31 December 2019 - - 1,100,000 1,100,000 ======
The Endowment Fund represents the freehold of St Philip’s House, St Philip’s Place which is subject to a lease of one hundred and twenty-five years from 25 December 1979. The investment property was professionally valued by Richard Connolly BSc MRICS and Michael Stephens MRICS of CBRE Ltd as at 31 December 2015.
7. Investments
Unrestricted Restricted Endowment Total Funds Funds Funds Funds £ £ £ £ Investments at 1 January 2019 - 133,266 4,087,841 4,221,107 Purchases - - 564,457 564,457 Sales - - (590,690) (590,690) Transfers - (2,977) 2,977 - Change in market value - 13,585 570,226 583,811
BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
______Investments at 31 December 2019 - 143,874 4,634,811 4,778,685 ======
Investments are categorised as follows: Listed investments - - 4,608,168 4,608,168 Unlisted investments - 143,874 26,643 170,517 ______- 143,874 4,634,811 4,778,685 ======
Unlisted investments consist of freely marketable shares in The Central Board of Finance Investment Funds and COIF administered by the CCLA Fund Managers. The investment transactional costs for the year were £28,776 (2018: £27,124).
8. Fixed assets - Property
Unrestricted Restricted Endowment Total Funds Total Funds Funds Funds Funds 2019 2018 £ £ £ £ At deemed costs 1 January 2019 and 31 December 2019 - - 1,165,000 1,165,000 1,165,000 - - - - ======
All fixed asset properties are freehold and used as follows:
Deemed Deemed Cost Cost 2019 2018 £ £ For Cathedral use:
38 Goodby Road 575,000 575,000 4 Nursey Drive 295,000 295,000 12 Nursery Drive 295,000 295,000 ______1,165,000 1,165,000 ======
The properties are for the use of the clergy of the Cathedral. The occupiers are provided with this accommodation rent free in order to enable them to perform their duties.
9. Fixed assets - equipment
Unrestricted Restricted Endowment Total Funds Funds Funds Funds £ £ £ £ Cost At 1 January 2019 6,984 8,995 - 15,979 Additions 4,287 - - 4,287 ______As 31 December 2019 11,271 8,995 - 20,266 ======Accumulated depreciation At 1 January 2019 3,828 1,944 - 5,772
45 BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
Depreciation charge for the year 2,123 359 - 2,482 ______At 31 December 2019 5,951 2,303 - 8,254 ======Net book value At 31 December 2019 5,320 6,692 - 12,012 ======As 31 December 2018 3,156 7,051 - 10,207 ======
10. Employees and office holders
The average monthly number of employees during the year was as follows:
2019 2018
Clergy 2 2 Vergers 6 6 Music & services 12 9 Administration 6 5 ______26 22 ======
Average number of full-time equivalent staff:
2019 2018
Clergy 2 2.5 Vergers 4 3.5 Music & services 4 4 Administration 5 4 ______15 14 ======
Employee and office holder costs during the year were as follows:
2019 2018 £ £ Salaries & Stipends 437,791 406,077 Employer’s National Insurance 29,304 32,340 Employer’s Pension Contributions 50,035 49,406 Employer’s Apprenticeship Levy 338 363 ______Total Costs 517,468 488,186 ======
No staff or clergy member was paid more than £60,000 for the year (2018: none)
Remuneration of key management personnel
BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
Key management personnel are deemed to be those having authority and responsibility delegated to them by Chapter for planning, directing and controlling the activities of the Cathedral. During 2019 they were:
The Dean The Very Reverend Matt Thompson Canon Precentor The Revd Canon Josephine Houghton – From May 2019 Canon Missioner The Revd Canon Nigel Hand – Until July 2019 Chief Executive Anna Pitt
Remuneration, pensions and expenses for these four people amounted to £161,588 (2018: £164,185)
Included within staff costs are payments to members of Chapter under the Cathedrals Measure 1999 and the Cathedral constitution. The renumeration of, and pension provision for, clerical members of the Chapter are paid in accordance with scales laid down annual by the Church Commissioners, Archbishops’ Council and the Church of England Pensions Board. No supplement to these scales is paid. These payments are set out below: Employer’s Salaries & Employer’s Employer’s Apprenticeship Stipends National Pension Levy Insurance Contributions Contributions £ £ £ £ Remuneration of members of Chapter The Very Revd Matt Thompson 36,750 3,561 12,082 172 The Revd Canon Nigel Hand 16,318 1,403 5,612 76 The Revd Canon Josephine Houghton 18,046 1,902 6,201 90 ______71,114 6,866 23,895 338 ======
The Revd Canon Nigel Hand and the Very Revd Matt Thompson were also provided with the use of a Cathedral house free of rent and council tax in furtherance of their duties. The Revd Canon Josephine Houghton was provided with a housing allowance.
No remuneration was paid to lay members of Chapter in their capacity as Chapter members.
Reimbursement of expenses incurred totalling £307 (2018: £796) were paid in total to two members of Chapter during the year. Reimbursement expenses comprised refreshments, bar stock purchases.
11. Debtors
2019 2018 £ £ Trade debtors 14,294 10,408 Other debtors 66,600 54,752 Prepayments 4,626 5,701 ______85,520 70,861 ======
12. Creditors: Amounts falling due within one year
2019 2018 £ £ Trade creditors 12,623 15,087 Other creditors (including Social Security and other taxes) 10,633 43,642 Accruals 32,118 28,690 ______55,374 87,419 ======
47 BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
13. Movements in funds
Balance Balance c/f b/f at Capital Transfers at 31.12.2019 1.1.2019 Income Expenditure movements £ £ £ £ £ £ Restricted Funds
Mission & Development Fund 5,098 39 (1,365) - - 3,772 Belliss Fund 1,083 8 - - - 1,091 Choir Tours Fund 5,414 6,347 (4,192) - - 7,569 Music Fund 2,835 4,819 - - (2,835) 4,819 St Philip’s Singers Fund 985 - - - - 985 FCM Song School 16,133 1,375 - 395 (1,375) 16,528 Flower Fund 4,118 2,451 (4,132) - 1,500 3,937 Harridine Bequest 19,849 681 - 3,738 - 24,268 St Philip’s Education - (Christchurch) Fund 53,366 1,840 (5,300) 9,939 59,845 Tercentenary Pilgrimages Fund 1,428 - - - - 1,428 The Provost’s Book Fund 3,939 30 - - - 3,969 FCM Music Trust Fund 22,531 - - - - 22,531 Howlett Bequest 3,562 42 - - - 3,604 Altar Linen Fund 300 - - - - 300 Chorister Hardship Fund 6,783 - (196) - - 6,587 Arts – Measure of Us 624 - - - - 624 Arts – Something Good 403 - - - - 403 Church Commissioners Stipends - 102,213 (102,213) - - - Church Commissioners Section 23 - 212,407 (212,407) - - - Bells Restoration Fund 57,306 - - - - 57,306 Bulbs 544 - - - - 544 Divine Beauty 15,981 10,913 (16,487) - - 10,407 Guidebooks - 2,000 (2,000) - - -
Fundraising campaign: Mission Fund 12,052 100 - - - 12,152 Music Fund 4,806 2,435 (70) - - 7,171 Music Endowment 84,857 - (360) (487) - 84,010 ______323,997 347,700 (348,722) 13,585 (2,710) 333,850 ======
BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
Movements in funds continued
Balance b/f Transfer Balance c/f At Capital between At 1.1.2019 Income Expenditure Movements Funds 31.12.2019 £ £ £ £ £ £ Designated Funds St Philip’s Singers fund 1,000 - - - - 1,000 Special Music Fund 655 - - - - 655 Divine Beauty (Legacy) 22,115 17,900 - - - 40,015 Strategic Development 8,000 - - - - 8,000 New Income Development Fund 13,000 - - - - 13,000 Civic Duties Fund 25,000 - (1,549) - - 23,451 Security Fund - - - - 6,500 6,500 ______69,770 17,900 (1,549) - 6,500 92,621 ======
Unrestricted Funds General unrestricted fund 6,929 474,928 (464,602) - (3,790) 13,465
______6,929 474,928 (464,602) - (3,790) 13,465 ======
Endowment Funds General Endowment Fund 6,401,410 - (31,822) 571,568 - 6,941,156 ______6,401,410 - (31,822) 571,568 - 6,941,156 ======
Details of inter-fund transfers in the year are as follows:
Unrestricted Funds Restricted Endowment Total General Designated Funds Funds 2019 £ £ £ £ £ Music Fund to General Fund 1 2,835 - (2,835) - - General Fund to Flower Fund 2 (1,500) - 1,500 - - FCM Song School to General Fund 3 1,375 - (1,375) - - General Fund to Security Fund 4 (6,500) 6,500 - - - ______(3,790) 6,500 (2,710) - - ======
1. This represents donations received towards the music costs of the Cathedral. 2. This represents the Cathedral’s contribution towards the flower costs for Easter and Christmas 3. This represents the dividends received towards the costs of the Cathedral’s choral scholars 4. This represents the creation of a fund to provide match funding for a Cathedral security project.
49 BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
Designated Fund Purpose St Philips Singers Fund This fund was created from a legacy received from a member of the St Philip’s Singers Special Music Fund This fund is used by the Director of Music for special events requiring additional musicians Divine Beauty Fund (Legacy) This fund is to be used towards the costs of the Divine Beauty project Strategic Development Fund This fund is to be used towards developing a strategic plan for the Cathedral New Income Development Fund This fund is to be used towards costs incurred in the pursuit of new income streams for the Cathedral Civic Duties Fund This fund is to be used towards the costs the Cathedral will incur to meet its civic duties on the death of a prominent person Security Fund This fund is to be used towards the match funding required for a grant towards improving the Cathedral’s security Restricted Fund Mission & Development Fund This fund consists of donations made by the friends and family of Simon Richmond. It is intended to be used for evangelism and /or development of the Cathedral in memory of Simon Richmond. Belliss Fund This fund was provided on the understanding that the Cathedral would keep the Belliss monument in good order Choir Tours Fund The Choir raises money from sales of compact discs, tapes, raffles, donations and other sources to fund their tours. Music Fund This fund consists of funds raised or donated in support of the Cathedral’s choirs and music. St Philips’s Singers Fund This fund comprises money raised by the St Philip’s Singers that will be used for their needs. FCM Song School These funds represent grants from Friends of the Cathedral Music which are devoted to these purposes. Flower Fund Funds received specifically towards the provision of flowers in the Cathedral. Harridine Bequest Fund A bequest received towards the cost of building a new Cathedral St Philip’s Education This fund is to support the Cathedral’s education work (Christchurch) Trust Tercentenary Pilgrimages Grants received to help towards the cost of arranging pilgrimages from all Birmingham Deanery’s to their Mother Church, The Provost’s Book Fund The Provost’s book fund represents funds provided to aid the former Provost with his research FCM Music Trust Fund This fund represents a grant from the Friends of Cathedral Music to support the proposed Birmingham Cathedral Music Trust. Howlett Bequest Fund This fund is to provide maintenance and cleaning for the Howlett family grave in Birmingham; to establish the “Seraphim” award used to promote music in the Cathedral; and to encourage links with Eastern Europe, Germany and Russia. Having discharged all our responsibilities with regard to the will the Cathedral’s only remaining duty is to keep the family grave at Yardley Cemetery in good order. Therefore £4,000 is to be kept in this fund for this purpose with the remaining funds being used towards the Cathedral music. Altar Linen Fund This comprises of a donation toward new altar linen. Chorister Hardship Fund This comprises grant received from the Friends of Cathedral Music Church Commissioners Stipends This fund comprises of the grant received from Church Commissioners to pay the clergy of the Cathedral Church Commissioners Section This fund comprises of the grant received annually from Church \commissioners 23 towards the salary costs of lay staff
BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
Arts – Measure of Us/Something Grants received towards the cost of further arts projects Good Funds Bells Restoration Fund This fund is to be used towards the restoration of the Cathedral bells and was created with a legacy received for this purpose Bulbs This fund is to be used towards the planting and maintenance of daffodil bulbs in the Cathedral grounds Guide Books This fund comprises of a donation received towards the costs of new guide books for the Cathedral Divine Beauty This fund is to be used towards the costs of the Divine Beauty project
Fundraising Campaign Mission fund Campaign donations made to support the mission objectives of the campaign Music Fund Campaign donations made to support music in the Cathedral Music Endowment Fund Capital fund for income to be used towards the music of the Cathedral
Endowment Fund General endowment fund These are historic permanent endowment funds. The Chapter can utilise the income generated from these funds towards its general charitable activities.
14. Contingent liabilities There are no known contingent liabilities at the balance sheet date
15. Capital commitments There are no capital commitments which are contracted for but not provided in the financial statements as at 31 December 2019 (2018: £nil)
16. Operating lease commitments At 31 December 2019 the Chapter had annual commitments under un-cancellable operating leases as follows:
2019 2018 £ £ Expire date Within 1 year - 1,583 Between 2 to 5 years - -
17. Pension costs
Birmingham Cathedral (DBS) participates in the Defined Benefits Scheme section of CWPF for lay staff. The Scheme is administered by the Church of England Pensions Board, which holds the assets of the schemes separately from those of the Employer and the other participating employers.
The Church Workers Pension Fund has a section known as the Defined Benefits Scheme, a deferred annuity section known as Pension Builder Classic and a cash balance section known as Pension Builder 2014.
Defined Benefits Scheme
The Defined Benefits Scheme (“DBS”) section of the Church Workers Pension Fund provides benefits for lay staff based on final pensionable salaries.
For funding purposes, DBS is divided into sub-pools in respect of each participating employer as well as a further sub-pool, known as the Life Risk Pool. The Life Risk Pool exists to share certain risks between employers, including those relating to mortality and post-retirement investment returns.
The division of the DBS into sub-pools is notional and is for the purpose of calculating ongoing contributions. They do not alter the fact that the assets of the DBS are held as a single trust fund out of which all the benefits are to be provided. From time to time, a
51 BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019 notional premium is transferred from employers’ sub-pools to the Life Risk Pool and all pensions and death benefits are paid from the Life Risk Pool.
The scheme is a multi-employer scheme as described in Section 28 of FRS 102. It is not possible to attribute DBS assets and liabilities to specific employers, since each employer, through the Life Risk Section, is exposed to actuarial risks associated with the current and former employees of other entities participating in DBS. This means that contributions are accounted for as if DBS were a defined contribution scheme. The pensions costs charged to the SoFA during the year are contributions payable towards benefits and expenses accrued in that year (2019: £nil, 2018: £nil) plus the figures in relation to the DBS deficit highlighted in the table below as being recognised in the SoFA, giving a total charge of £nil for 2019 (2018: £nil).
If, following an actuarial valuation of the Life Risk Pool, there is a surplus or deficit in the pool, further transfers may be made from the Life Risk Pool to the employers’ sub-pools, or vice versa. The amounts to be transferred (and their allocation between the sub- pools) will be settled by the Church of England Pensions Board on the advice of the Actuary.
A valuation of DBS is carried out once every three years. The most recent was carried out as at 31 December 2016. In this valuation, the Life Risk Section was shown to be in deficit by £2.6m and £2.6m was notionally transferred from the employers’ sub- pools to the Life Risk Section. This increased the Employer contributions that would otherwise have been payable. The overall deficit in DBS was £26.2m.
Following the valuation, the Employer has entered into an agreement with the Church Workers Pension Fund to pay expenses of £4,300 per year.
Section 28.11A of FRS 102 requires agreed deficit recovery payments to be recognised as a liability. The movement in the provision is set out below:
2019 2018
Balance sheet liability at 1 January 0 0
Deficit contribution paid 0 0
Interest cost (recognised in SoFA) 0 0
Remaining change to the balance sheet liability*(recognised in SoFA) 0 0
Balance sheet liability at 31 December 0 0
* Comprises change in agreed deficit recovery plan and change in discount rate between year-ends.
This liability represents the present value of the deficit contributions agreed as at the accounting date and has been valued using the following assumptions, set by reference to the duration of the deficit recovery payments:
BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
December 2019 December 2018 December 2017
Discount rate 0.00% 0.00% 0.00%
The legal structure of the scheme is such that if another employer fails, the employer could become responsible for paying a share of that employer’s pension liabilities.
The next valuation of the scheme is currently being carried out as at December 2019.
Birmingham Cathedral participates in the Pension Builder Scheme section of CWPF for lay staff. The Scheme is administered by the Church of England Pensions Board, which holds the assets of the schemes separately from those of the Employer and the other participating employers.
The Church Workers Pension Fund has a section known as the Defined Benefits Scheme, a deferred annuity section known as Pension Builder Classic and a cash balance section known as Pension Builder 2014.
Pension Builder Scheme
The Pension Builder Scheme of the Church Workers Pension Fund is made up of two sections, Pension Builder Classic and Pension Builder 2014, both of which are classed as defined benefit schemes.
Pension Builder Classic provides a pension for members for payment from retirement, accumulated from contributions paid and converted into a deferred annuity during employment based on terms set and reviewed by the Church of England Pensions Board from time to time. Bonuses may also be declared, depending upon the investment returns and other factors.
Pension Builder 2014 is a cash balance scheme that provides a lump sum that members use to provide benefits at retirement. Pension contributions are recorded in an account for each member. This account may have bonuses added by the Board before retirement. The bonuses depend on investment experience and other factors. There is no requirement for the Board to grant any bonuses. The account, plus any bonuses declared, is payable from members’ Normal Pension Age.
There is no sub-division of assets between employers in each section of the Pension Builder Scheme.
The scheme is considered to be a multi-employer scheme as described in Section 28 of FRS 102. This is because it is not possible to attribute the Pension Builder Scheme’s assets and liabilities to specific employers and that contributions are accounted for as if the Scheme were a defined contribution scheme. The pensions costs charged to the SoFA in the year are contributions payable (2019: £26,140, 2018: £23,722).
A valuation of the Pension Builder Scheme is carried out once every three years. The most recent was carried out as at 31 December 2016.
For the Pension Builder Classic section, the valuation revealed a deficit of £14.2m on the ongoing assumptions used. At the most recent annual review, the Board chose not to grant a discretionary bonus, which will have acted to improve the funding position. There is no requirement for deficit payments at the current time.
For the Pension Builder 2014 section, the valuation revealed a surplus of £1.8m on the ongoing assumptions used. There is no requirement for deficit payments at the current time.
53 BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
The legal structure of the scheme is such that if another employer fails, Birmingham Cathedral could become responsible for paying a share of that employer’s pension liabilities.
18. Related party transactions
The Cathedral shares office space with the Birmingham Diocesan Board of Finance and paid an amount of £23,250 (2018: £23,250) in respect of this.
Common fund paid to Birmingham Diocesan Board of Finance for the year ending 31 December 2019 was £48,756 (2018: £43,152).
19. Connected entity
The Friends of Birmingham Cathedral is a registered charity (number 1064150) that exists wholly for the benefit of the Cathedral but is not controlled by Chapter. Only income received from the entity is included in the Cathedral’s financial statements. The summary financial performance and position of the charity for the year is as below Relevant information about its income and assets is: 2019 2018 £ £ Gross income 131 105 Expenditure - - Amount paid to the Cathedral - 395 Funds b/fwd 13,895 14,185
20. Events after the end of the reporting period During March 2020, World stock markets took a sharp decline as a result of the impact of the Coronavirus pandemic. As at the date of signing the financial statements, stock market indices around the World have shown signs of recovery since the initial decline in the region of 25%.
It has not been possible to ascertain with accuracy the impact on the investment portfolio following the reporting date. No adjustments have been made in respect of this.
BIRMINGHAM CATHEDRAL CHAPTER NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2019
21. Prior year comparative statement of financial activities
Unrestricted Funds Restricted Endowment Total General Designated Funds Funds 2018 £ £ £ £ £ Income & Endowments From: Donations & legacies 136,963 - 12,998 - 149,961 Grants in support of mission 22,064 - 307,864 - 329,928 Charges and fees arising in the course of mission 9,816 - 855 - 10,671 Trading & fundraising 91,770 - 5,191 - 96,961 Income from property & investments 227,657 - 5,617 - 233,274 Other income 197 - - - 197 ______Total Income 488,467 - 332,525 - 820,992 ______
Expenditure On: Raising funds 68,804 - 46,021 31,324 146,149 Charitable activities: Ministry 200,925 - 216,438 - 417,363 Cathedral & precincts upkeep 108,372 - 50,930 - 159,302 Education & outreach - - 15,629 - 15,629 Community, parish & congregation 61,280 - 18,872 - 80,152 Other expenditure 2,501 - 166 - 2,667 ______Total Expenditure 441,882 - 348,056 31,324 821,262
Net (outgoing)/ incoming resources before (losses)/gains 46,585 - (15,531) (31,324) (270) on investment
Net (losses)/gains on investments - - (653) (265,790) (266,443) ______Net (Expenditure)/Income 46,585 - (16,184) (297,114) (266,713)
Transfers between funds (18,648) 19,444 (796) - -
______27,937 19,444 (16,980) (297,114) (266,713)
Net movement in funds:
Total Funds brought forward (21,008) 50,326 340,977 6,698,524 7,068,819 ______Total Funds carried forward 6,929 69,770 323,997 6,401,410 6,802,106 ======
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