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Diocese

Annual Accounts and Financial Summary 2006

The Cathedral had a good year in 2006 with income broadly matching expenditure. However, there was a deficit of £7,980 across all funds caused largely by the need to make provision for doubtful debts and some late costs incurred on the Millennium Project. Without these additional expenses, the general fund showed a healthy surplus of more than £32,600 at the year end which was attributable to better than expected income from Southwark Cathedral Enterprises and the continued careful management of resources by all Cathedral staff.  
 

There is still a need to address the deficits on the general and property funds incurred as a result of the cost of the Millennium Buildings and it is hoped that future legacies and surpluses from Southwark Cathedral Enterprises will enable this to be done in future years.

Income explained:

The total income for the Cathedral (including Enterprises and investments) was £1,464,427 in 2006 compared with £1,543,610 in 2005. The decrease in income is attributable to the lower level of grants received for special projects (in 2005 grants were received for the new Education Centre). The chart below shows where the money comes from

Compared with 2005, the proportion of income coming from Cathedral Enterprises has increased from 37% to 41% whilst voluntary income decreased both in value and as a percentage of total income from 34% to 30%. This is partly explained by a reduction in the number of donations received for special projects. There was a modest increase (0.4%) in congregational giving through planned giving schemes and collections to which can be added a further £44,460 in the amount of tax recovered under Gift Aid. This figure is slightly down on the total reclaimed in 2005 but continues to demonstrate the huge importance to Cathedral funds of giving through the scheme.
 

Overall, the analysis of income shows an increasing reliance on trading activities to meet the costs of running the Cathedral.

The grants income shown above includes £178,000 from the Church Commissioners that pays the stipends for the Dean, Sub-Dean and Canon Pastor as well as contributing to the salaries of lay staff.

The chart below shows the sources of voluntary income in 2006.

The turnover for Southwark Cathedral Enterprises was almost £600,000 in 2006 (up from £588,000 in 2005) and, with expenses and overheads 13% lower than last year, this resulted in almost £274,000 being transferred to the Cathedral as a charitable donation compared with £212,000 in 2005. The profitability of Enterprises continues to be crucial to the success of the Cathedral in delivering a balanced budget.

Expenditure explained:

The total expenditure by the Cathedral (including Enterprises) was £1,480,000 in 2006 compared with £1,515,000 in 2005. The chart below shows where the money was spent:

The largest areas of expenditure are Clergy Costs (£184,000), the cost of maintaining the Cathedral and its precincts together with major repair and restoration works (£390,000) and the cost of conference and shop sales (£323,000), the largest part of which covers staff costs and purchasing stock for the Shop. 10% of income from the planned giving scheme is given away for a variety of local, national and international charitable purposes. In 2006, this amounted to £11,700 and is included under Education and Outreach in the chart above.

The Balance Sheet explained:

A copy of the balance sheet is attached to this summary. This shows that the total assets of the Cathedral (including Southwark Cathedral Enterprises) are £3,585,155. This figure is made up of the total of endowment, restricted and unrestricted funds.

The chart below shows the status of these different funds at the year end and a comparison with the situation at the end of 2005:

The Millennium Project Fund is a restricted fund but is shown separately in this chart to highlight the fact that it is the only restricted fund in deficit. Other restricted funds have shown a modest increase.

The endowment funds consist of property owned by the Cathedral and assets such as money given for specific purposes from which an income is derived.

The property and general funds are unrestricted funds and are both in deficit at the moment.

It is important to note that the Cathedral and Millennium Buildings (potentially worth a great deal of money and insured for £36.8m) are not included in these accounts and are therefore excluded from the Endowment Funds shown in the chart above and in the balance sheet. The reason they are not included is because we follow the Church Commissioners guidelines for annual accounts that require buildings forming part of the Cathedral precinct to be specifically excluded from the balance sheet. It would be fair to say that if the value of the buildings were to be included in the balance sheet, the financial position of the Cathedral would look considerably better. In other words, the accounts do not reflect all the assets held by the Cathedral.

The General Fund:

The General Fund is the normal operating fund for the Cathedral through which the majority of income and expenditure passes (but not major project, restoration and repair work). The annual budget is set by the Finance Committee for this fund. Income for the general fund was £1,015,700 and expenditure £983,100 (these figures include the profit transferred from Enterprises but not the costs incurred in generating this profit). The charts below show where the money came from and how it was spent:

Conclusion:

The year 2006 continued the success of the previous three years in delivering a balanced budget and small surpluses. This was made possible in part by successful trading by Southwark Cathedral Enterprises and as well as a tight control of expenditure. The challenge remains to re-pay loans and build up a contingency fund equivalent to at least three months expenditure to protect the Cathedral from unexpected increases in expenditure or decreases in income. It is the aim of the Finance Committee to set aside such a fund from surpluses once loans have been re-paid. Overall the future looks bright but there is much still to do.

Matthew J. Knight

Cathedral Administrator

April 2007

Download the Financial Summary here

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