BEDFORSHIRE, ESSEX and HERTFORDSHIRE DISTRICT of the METHODIST CHURCH

BEDFORSHIRE, ESSEX and HERTFORDSHIRE DISTRICT of the METHODIST CHURCH

Year ended 31 August 2014

TRUSTEES’ ANNUAL REPORT

for the year ended

31 AUGUST 2014

EXEMPLAR

[SORP 2015 compliant]

v16.6

20160515

An example of FRS102 SORP2015 compliance

Readers may wish to refer to the Glossary of Terms appearing in the Notes to the Accounts

1Objectives and activities

In setting our objectives and planning our activities, the District Synod (under the leadership of the District Trustees) meets twice in each year, has given careful consideration to the Charity Commissioners’ general guidance on public benefit and, in particular, to its supplementary public benefit guidance on advancing our objectives and conforms to the Charities Act 2011.

Our mission is to be a powerful spiritual influence in the District and a visible expression of God’s inclusive love. We aim to achieve this by encouraging, through the Circuits and the Churches in our District, the worship, social, and outreach activities that currently exist, and by seeking new ways to extend to others the fellowship of the Church family.

2Achievements and performance

The principal purpose of the District is to act as a supporting body between Circuits and the Connexion. The District does not seek and, in large measure, does not attain direct contact with the public. The direct contact is by Churches and Circuits and it is these that the District supports in their desire to provide benefit to the public.

Under the heading Collaborative arrangements with connected charities(3.3below) there is information on how we obtained our funds. In this paragraph we show how they were spent. Themoneycollected, or available for dissipation, was used as grants to support Churches and Circuits throughout the District with their work in their local communities and to subsidise the administrative costs of the District. In 2013-14 the District paid grants out of the General Fund and the DAFthat totalled £161,210 which was more than the sum received from the levies on some of the funds held by Circuits within the District. The shortfall was made up by drawing on Districtreserves.

The policy of the trustees on grant making is to ensure that all applications can demonstrate public benefit, pass a test of sustainability, show that there is commitment from the applicant organisation (eg the District grant is a minor part of the total funding) and show imagination and creativity as well as a perceived need for that for which the grant is being applied.

The grants were of several kinds, including:

• Grants for the adaptation of buildings so that they could more easily meet the modern needs of Churches and help Churches provide services to the communityeg lunch clubs for the elderly and house-bound, activities for the homeless and refugees
• Grants which supported part time or full time youth workers attached to Circuits or Local Churches
• Grants for young people to attend conferences such as 3Generate
• Grants to individuals to help pay for the cost of studying for higher degrees

Circuits and Churches that have received grants from the District will show in their own Trustees’ Annual Reports (where these are required to be prepared)details of the outcome of the activities undertaken as a result of receiving the grant.

During the year, work has continued on developing links with the neighbouring East Anglia District, including joint training for local preachers in training. We have been pleased to support candidates for ministry and the seven probationer presbyters who serve in the District.

Familiarisation sessions have been offered for those involved in Ministerial Development Reviews, and the leadership module for creating safer space has been rolled out across the District.

For many years the District has been working with three other denominations in the east of England to make powerful recommendations to developers of new housing schemes that provision should be made for community activities, including Christian worship, either within the s106 requirements or outwith those requirements. These representations continued through 2013-14.

2.1Plans for future years

iEnsure that any local issues emanating from the Past Cases Review are dealt with sympathetically, fully and timeously

iiEnsure that all those within the District that should attend the Safeguarding Leadership Module do so

iiiSettle the claim against the former District Treasurer

ivEncourage attendance at 3Generate

vEncourage initiatives for mission in Circuits and Churches within the District

3Financial review

During the year the District received total income of £318k (2012-13: £271k) and dispersed £334k (2012-13 £316k). The resulting excess of expenditure was mitigated by an unrealised gain of £6k (2012-13: £8k) on the Rock Trust (a restricted reserve) to produce a net excess of expenditure of £9k(2012-13: £37k) and total reserves carried forward of £940k (2012-13: £950k as restated).

There were no significant events during the year save for the discovery and reporting of the misappropriation and the related receipt of the proceeds of an insurance claim settlement.

The trustees of the District have every reason to believe that the District is a going concern, principally becauseCircuits continue to meet their assessments and the District has adequate reserves to cover a shortfall in anticipated income. There are no subsidiary undertakings. Trustees do not foresee any factors that will significantly affect the financial performance or position in the next year or two.

The District continues to hold the one freehold property being the Chair’s Manse in Bishop’s Stortford.

The District has the following principal sources of funds:

• Interest on investments
• Levies on the Circuit Model Trust Funds of Circuits within the District
• Assessments on Circuits within the District

These sums are used to administer the District and to provide grants to Circuits, Churches and individuals in the District so that they may embark on or continue with projects that fulfil the mission of the District by bringing more people to Christ or by providing facilities that might enable this to happen.

During the year trustees were advised that there was a major shortfall on the Baptist Pension Scheme of which one of the part time employees of the District was a member. He was engaged to work with property developers to lobby for faith buildings in new developments in eastern England. He worked for four different denominations so that the pension shortfall of about £26k – a one-off cost - would be shared amongst those denominations. The net cost to this District was £7k. Note 8 of the Notes to the Accounts provides more detail.

Misappropriation

During the year it became apparent that a trustee had misappropriated funds from the District for his own personal use. The trustee was removed from his position as a trustee in the autumn of 2013. A civil action for recovery of some or all of the sums taken has been entered into. Further information can be found in Note 12 to these accounts.

[The following paragraph is essential for larger charities and recommended for smaller charities.]

3.1Investment Policy and Performance

To comply with Methodist Standing Orders, monies for long term investment are lodged withthe Trustees for Methodist Church Purposes(TMCP). TMCP acts as custodian trustee for all real estate held by Districts and for all large (over £20k) bequests and for the proceeds of sale of any property formerly owned by the District. These sums are invested in unitised investments or held on deposit. The investmentreturns are close to tracking the movements in the FTSE100 index. The deposit income mirrors the deposit rates available elsewhere. BEH trustees’ investment policy is aligned with that of the CFB and TMCP because these organisations take into consideration the social, environmental and ethical considerations, both negatively and positively, that make investments suitable for the Methodist Church.

Short term deposits are lodged directly with the Central Finance Board (CFB) and attract goodrates of interest.

There are no bench marks for the expected returns or appreciation on investments at TMCP and CFB. It is the District’s policy to manage the cash and investment resources of the District so that a rate ofreturn on investment – both by way of dividend and capital appreciation –is obtained at least as good as market rate considering the District’s low appetite for risk. The total return achieved on the invested funds of BEH was 13% for the year.

3.2Reserves level andpolicy

It should be noted that the unrestricted reserves have funded the purchase cost of the manse (£500k in 2006) and, as a result, the unrestricted reserves readily available total

£275k of which £151k is held in the District Advance Fund and the balance of £124k represents the year-end level of uncommitted reserves.

The District has a reserves policy covering all its unrestrictedfunds which is reviewed annually. Although grants are made annually out of the District Advance Fund (DAF), it is recognised that some grants will be paid by annual instalments and that there will be applications repeated in future years. The trustees seek to ensure that there is sufficient in the DAF to meet these anticipated requests andthe trustees nowrecognise future grants as liabilities on the Balance Sheet.

The minimum policy level of the readily available part of the General Fund is such as to pay for six months’ payroll costs and closing costs of staff redundancies, rent and other costs on leased equipment. At 31 August 2014 this sum amounted to £22.5k against actual reserves of £124k as stated above. Actual readily available reserves were thus in excess of policy at the year end by £101k. The trustees are, however, mindful that future income from the Circuit Model Trust Funds (CMTFs) is not secure and it is judged prudent to retain a buffer against this funding volatility besides the quantified need of £22.5k. Furthermore, some Circuits may find it difficult to meet their future assessments. Trustees will take into account this substantial buffer when setting the District’s budget for 2015-16. As in some previous years, if the aggregate sum collected from the CMTFs is not all given out as grants in the same year, there could be a return of levy to the Circuits. It is expected that the DAF will decrease, year on year, in the foreseeable future.

The existence of substantial reserves at District level may indicate to Circuits within the District that they do not need massive reserves themselves.

The reserves held at the end of the year were as follows:

£

Unrestricted funds

General Fund624,366

District Advance Fund151,191

775,557

Designated funds

Manse Fund 10,326

Benevolence Fund 16,649

26,975

Total unrestricted funds 802,532

Restricted funds

Rock Trust 126,049

Benevolence Fund 246

Training Fund 13,387

Community Fund -1,864

137,818

Total funds 940,350

Total undesignated and unrestricted funds624,366

Less:invested in the manse 500,000

Uncommitted reserves, readily available124,366

Trustees have agreed to reduce the level of readily available reserves gradually over the foreseeable future to £200k for the volatility buffer (in addition to the £22.5k) and to do this by not increasing the circuit assessments by the amount necessary to maintain the reserves. It is expected that there will be some call on the Manse Fund in 2014-15 to help pay for the installation of partial double glazing. In future, all benevolence payments will be charged to the Benevolence Fund until that fund is exhausted. In addition the trustees have agreed that the District Advance Fund may annually pay out more in grants than it receives in that same year from CMTF levies. The temporary year end deficit on the Community Fund is expected to be covered by further donations during the current financial year.

All funds are separately invested either with CFB or TMCP. No money is directly invested in property, securities or other forms of investment.

[The following paragraph is best practice for smaller charities and essential for larger charities.]

3.3Collaborative arrangements with connected charities

The District’s main source of funding was the assessments obtained from each Circuit within the District based on the membership and staffing levels of the Circuit and this was used to defray most of the cost of administering the District. This sum amounted to £72,802 (2012-13: £74,792).

Each year the District is allocated a sum by the London Mission Fund (LMF). In 2013-14 this amounted to £63,213 (2012-13: £58,285) which can be used to pay for or contribute to the cost of certain activities within the District. This sum is not remitted to the District and does not appear in the accounts of the District because the District acts as agent for the LMF. Instead, the Districtnominates some grant applications which can be met by the LMF and passes these to the LMF so that the LMF can pay the grant directly to the grantee. Grants were awarded to various projects around the District.

The District also obtained from each Circuit with a reserve, known as a Circuit Model Trust Fund (CMTF), a levy based on the size of the Circuits’ CMTFs at the start of the connexional year (01 September). In 2013-14 this sum was £146,496 and was credited tothe District Advance Fund.

The District holds no funds as custodian trustee. It does, however, quarterly receive from Circuits within the District the Circuits’ contributions to the Methodist Church Fund (MCF). These sums are collected as agent for the MCF and are passed to the MCF later in the same quarter. Funds received by the District as agent are not recognised as an asset in the financial statements because the funds are not within its control. No fee is earned in respect of this agency arrangement and the District incurs no cost through this arrangement.

4Trustees’ responsibilities

For each financial year ending on 31 August the Trustees are required to prepare financial statements thatgive a true and fair view of the District’s financial activities during the year and of its financial position at the end of the year. In preparing these financial statements, the Trustees must:

• select suitable accounting policies and applied them consistently using the accruals method
• make judgements and estimates that are reasonable and prudent
• follow applicable accounting standards
• prepare accounts to comply with the Charities SORP

The Trustees are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the District and enables them to ensure that the financial statements comply with the law. They are also responsible for safeguarding the assets of the District and hence taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Trustees are responsible for the maintenance and integrity of the corporate and financial information included on the District’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Training in the responsibilities of trustees is offered to all new trustees soon after their appointment.

4.1 Risk

The District is largely risk averse but, especially in making grants to entities embarking on new and imaginative initiatives, the District is prepared to underwrite considered risks.

Risks are managed by being aware of them, quantifying their impact not only in cost terms but in possible reputational or structural damage, laying them off through an insurer and minimising them by not taking them or by setting up control systems that timeously report any significant change in the risk.

5Structure, governance and management

The District is an unincorporated association and is governed by the Methodist Church Act 1976, the Deed of Union and the Model Trust Deeds of the Methodist Church and was registered with the CharityCommissioners on 1 February 2010.

5.1Structure

Circuits are the coordinating charities for local groups of Churches; Circuits pay the stipends of the ministers and employ lay staff to serve the Churches in the Circuit; most decisions are made at or ratified by the half yearly CircuitMeeting. A District is the coordinating charity for a group of contiguous Circuits and makes its decisions at the half yearly synods. The Methodist Conference meets once each year as the supreme denominational body for all MethodistChurches .

1.Overall regulatory authorityrests with the Methodist Conference.

2.The Connexional Office implements decisions made by Conference and is also responsible for the stationing of presbyters and deacons (collectively known as ministers) in individual Circuits within the District.

3.Connexional decisions are passed to the Chair of the District and the appropriate officers of the District for implementation.

4.The District passes control down to Circuit level for local implementation by the Superintendent Minister, ministerial staff and CircuitStewards, and authority is delegated to the Circuit Meeting for certain matters.