THE SALVATION ARMY UNITED KINGDOM TERRITORY

THE SALVATION ARMY TRUST (CENTRAL FUNDS)

TRUSTEE'S REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015

(CHARITY REGISTRATION NO.: 214779) (SCOTTISH CHARITY REGISTRATION NO: SC009359)

THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS)

CONTENTS

Pages Trustee's Report

1 - 32

Auditors' Report

33

Financial Statements

34 - 55

Page 1 THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) TRUSTEE’S REPORT FOR THE YEAR ENDED 31 MARCH 2015

THE SALVATION ARMY TRUST Registered charity No. 214779 and in Scotland No. SC009359 Principal Office Territorial Headquarters 101 Newington Causeway, London SE1 6BN OUR MISSION Called to be disciples of Jesus Christ, The Salvation Army exists to save souls, grow saints and serve suffering humanity. OUR VISION As disciples of Jesus Christ, we will be a Spirit-filled, radical, growing movement with a burning desire to lead people into a saving knowledge of Jesus Christ, actively serve the community and fight for social justice. OUR VALUES      

Integrity Accountability Boldness Passion Respect Compassion

THE SALVATION ARMY’S PRINCIPAL OBJECTIVES The Salvation Army’s principal objectives are the advancement of the Christian religion as professed, believed and taught by The Salvation Army and, pursuant thereto, the advancement of education, the relief of poverty and other charitable objects beneficial to society or the community of mankind as a whole. The following groups benefit from the work of The Salvation Army Trust:   

those who worship or participate in other activities at Salvation Army corps (churches) and community centres vulnerable and disadvantaged members of society, including homeless people, older and/or lonely people, children, young people and families, people dealing with issues of substance abuse the wider community of society as a whole

The Salvation Army takes a holistic approach, engaging with people’s physical, emotional and spiritual needs, offering its services without discrimination.

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FROM OUR TERRITORIAL COMMANDER I am delighted to present our Annual Report in the year which marks the 150th Anniversary of The Salvation Army founded in 1865 by William Booth. His passion and vision for seeing lives not only improved but genuinely transformed is still present in the movement he initiated. Booth was a preacher and a social activist. He believed people’s lives could be changed by embracing the message of Jesus Christ. He was also deeply aware of the dreadful poverty and desperate lifestyles afflicting so many. He was convinced that The Salvation Army should not only have an opinion about poverty, homelessness, addiction or unemployment, but should go further and take practical action to make a difference. That is why today every Salvation Army corps (church) not only holds worship services, Bible studies and prayer groups, but also has a mandate to serve the needs of its local community in whatever form those needs might present themselves, in whatever way it can, as resources allow. In this report you will discover the immense variety of work principally undertaken from our network of almost 700 corps (churches) as we engage with people’s physical, social, emotional and spiritual needs. Our officers (ministers), staff and volunteers may be involved in distributing food parcels, serving meals to older people, running parent and toddler groups, leading clubs for children and young people, visiting someone in their home or offering advice or a listening ear to a person in distress. We care for people at their point of need regardless of their ethnicity, age, gender, religion, sexuality or lifestyle. You can also read about how we support our frontline work – through resources, events, initiatives, recruitment and training – and our conviction to speak out on issues of social justice, highlighting concerns and influencing policy-makers where appropriate. I am convinced that Booth’s vision remains powerful. It speaks to me of transformation that can take place in people’s lives, of integration as the spiritual and community work complement one another, of discipleship as we look to the teachings and example of Jesus, and of effectiveness as we aim to make a lasting difference. So that you can understand the full range of The Salvation Army’s work in the United Kingdom, I would also like to point you towards our Social Work Trust Annual Report which complements this, outlining our extensive social services work. Finally, I would like to express my sincere appreciation to our army of supporters – members of the public who encourage us in the work we do, volunteers whose energy and ability enable our programmes to run smoothly and donors without whose financial support we could not accomplish all we do. Clive Adams Commissioner Territorial Commander

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MEDIUM- TO LONG-TERM STRATEGY The key elements of The Salvation Army Trust’s medium- to long-term strategy are:  providing Christian worship and proclamation of the Christian message in corps, community and social centres, outdoors and wherever people are, and facilitating opportunities for Christian worship, reflection and discipleship on a wider basis through various media, including literature, music, electronic media and personal evangelism  maintaining and extending the range of community activities operated at local corps, and seeking to establish new corps providing worship and community programmes, ethnic diversification and increased membership  reaching out to young people, especially those who are marginalised, through a specific youth sub-brand offering holistic support and mission involvement and engaging them in Christian values  reaching out to children and families, including those who are vulnerable, offering holistic support and engaging them in Christian values  influencing policy-makers through the provision of information on social issues and problems  training and equipping current and future Salvation Army officers, staff and volunteers  financially supporting The Salvation Army Social Work Trust in the provision of residential and outreach programmes for people who are homeless, vulnerable families and children, older people, victims of substance misuse, prisoners and their families, people with health issues and/or special needs and those affected by natural and man-made disasters  supporting the international mission work of The Salvation Army, including development work and providing relief to those affected by disasters overseas; and, on occasion, by releasing appropriate personnel to engage in Salvation Army work overseas  in all the above to maintain four emphases – transformation, integration, discipleship and effectiveness (TIDE) The charity’s medium- to long-term strategy is reviewed and adjusted to respond to changing needs. The Salvation Army in the United Kingdom currently has 685 corps, 549 in England, 75 in Scotland, 40 in Wales, 17 in Northern Ireland, 3 in the Channel Isles and 1 in the Isle of Man. We’re here for ADULTS AND THEIR FAMILIES Many Salvation Army corps’ midweek activities are for adults and their families. Principal Objectives for the Year Ended 31 March 2015 We said we would:  publish resources in the Women of Worth series designed for women in prison  produce a worship CD suitable for use with adults with dementia  launch Delight, an all-age worship CD  increase numbers attending the annual conference from 150 to 300 whilst attracting a younger age profile  raise £190,000, through members’ contributions, for Captivate, an International Anti-Human Trafficking project

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Achievements and Performance We:     

published volumes one and two of the Women of Worth printed resources launched Delight, an all-age worship CD of songs, music and Bible readings increased the numbers attending the annual conference from 150 to 237 raised £175,530, through members’ contributions, for Captivate published Mad Man, a basic faith-based introduction to facilitate men talking together

During the past year there has been a weekly average of almost 132,000 attendances of which 30,500 were for Sunday worship. Other attendances include:  13,543 (1,625 in Scotland) at 377 (48) parent and toddler groups  8,797 (1,307) at coffee mornings at 278 (30) centres  18,622 (1,774) at a variety of midweek worship, Bible and prayer groups, with 128 (10) people coming into Christian faith during the year * Statistics based on March/April 2015 figures Future Plans We will:  produce resources for leaders and groups, including o Inspire 5 and 6, resources focusing on men’s ministry and parent-and toddler groups o Mad Man 2, as a follow-down to Mad Man o Connect, a book of resources for leaders to cover a whole year  raise funds for Together We Rise – a project to help communities across Africa to tackle their own poverty together Jacky walked away from God when someone at her church betrayed her confidence, but then she visited Stoke Newington Salvation Army ‘When I walked into the café at the local Salvation Army, I felt so welcome. The atmosphere was brilliant — you were part of it and people were so friendly. Everyone feels like family. ‘The meetings were so inclusive – there were no set patterns and the activities we did made church fun!’

Donna was a young mum going through a difficult time ‘What stood out was the atmosphere here. It felt very homely. Just to have that friendly face and have someone say “How are you?” was special. ‘One day I broke down in tears. There was something different about this place. I asked about becoming a volunteer. My youngest child was just starting at school full time so I was at a loose end. ‘They asked me “What would you like to do?” It wasn’t about what The Salvation Army could get out of me, but how they could help me.’

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We’re here for CHILDREN We aim to make a positive difference in children’s lives, be a voice for children and children’s leaders within and beyond The Salvation Army and to resource, support and empower effective local ministry to children and their families. Principal Objectives for the Year Ended 31 March 2015 

We said we would give children a world view and the opportunity to help others through our Change4Change appeal. Children can donate their small change to support our work with trafficked children in Mchinji, Malawi.

Achievements and Performance 

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World view o The Change4Change appeal gave children a world view and an opportunity to help others. Children donated £6,852.56 from their small change to support our work with trafficked children in Mchinji, Malawi. This received strong support with significant funds raised. Inspired by this, four children visited Mchinji. Children’s participation o A children’s and youth participation day was held to ask children what they thought about The Salvation Army and what it should be and do. 20 of the 60 attendees were aged 7– 11. The proposals from their discussions will be presented to the Army’s leaders. o Over 800 attended divisional children’s camps. Resources o Godly Play, a creative and imaginative way of helping children to explore Christian faith and Bible stories, has been successfully promoted, with 124 attending introductory days and 70 attending three-day training. o A toolkit has been developed containing all the resources offered by the Children’s Ministries Unit. Training o 71 attended Soul Pursuit, our territorial training event for children’s workers. o 128 grants were provided under our Edify scheme, 76 for training and 52 for resources. o Training for children’s leaders was completely revised and re-launched resulting in a significantly increased uptake.

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Future Plans We will: 1. plan and oversee Boundless Kids programme at the International Congress. 2. organise Inspire 2015 – Territorial Guide and Scout Camp to celebrate the centenary of Guiding in The Salvation Army. 3. continue the development and investment into Godly Play. We’re here for YOUTH ALOVE is our youth expression serving young people linked to our corps (churches) and in the wider community. Principal Objectives for the Year Ended 31 March 2015 We said we would  support young people not in education, employment or training with a variety of NEET programmes  provide youth mentoring and training, promoting our existing Starfish and Essential programmes  provide and promote resources  promote youth participation by setting up a Youth Forum  promote social action by implementing an I’ll Fight Day Achievements and Performance  Our NEET (not in education, employment or training) programmes for young people included: o Project Teens – a new initiative to ensure teenage mums continue to be involved in education – was launched at three centres in South Wales, centred on Abergavenny. It aims to ensure participants remain connected to accredited education programmes. o Change social enterprise initiatives — these social enterprise initiatives were introduced in Salvation Army corps in Edinburgh, Glasgow, Perth and Blackburn, partnering with job centres and local authorities, giving young people the opportunity to start businesses  YOUTH TRAINING AND MENTORING o Starfish — this individual mentoring programme continued at Southwick, Newark and Openshaw o Essential — a year-long training and mentoring programme for youth, had 15 students  RESOURCES o To Serve — a Salvation Army membership course preparing youth for adult membership, was launched o Made To Be — a resource for girls, addressing issues of self-esteem, self-value and selfawareness, was launched and put online. It will be a helpful resource for teachers and small groups o Moving Up – helping children transition from primary to secondary school; and Think Positive – helping early- to mid-teens look at relationship values — were popular resources

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YOUTH PARTICIPATION o A Youth Forum comprising 60 young people aged 7 to 25 was set up, chaired and led by young people, with its views presented to senior leadership. This furthers our policy of increasing youth participation o Residential Summer Schools — over 900 youth attended 13 schools throughout the UK SOCIAL ACTION o I’ll Fight Day – over 750 youth from 54 corps took part in this new social action initiative in which Salvation Army young people helped their local communities

Future Plans    

Social Action o We anticipate up to 1,000 youth will be involved in the I’ll Fight Day social action initiatives, helping local communities Youth Participation o We will continue to promote our residential summer school programmes which include music, drama, creative arts and Bible studies Events o We will hold a Big Day Out event at Alton Towers in March 2016, anticipating up to 1,500 attending Issues o We will produce a resource dealing with alcohol and young people in partnership with a leading academic. This is a response to concerns raised in social media

We’re here for THE COMMUNITY We support service to the community in our 685 corps and non-residential centres, promoting its relationship with our spiritual mission. Programmes include lunch clubs, drop-ins, charity shops, cafés, night shelters, practical support and personal assistance, Christmas toy appeals and befriending. Specialist programmes include:  Early Years childcare (Ofsted registered)  financial inclusion (Debt Advice Services and Budgeting Courses)  learning disabilities (Steps into Work)  volunteering Other programmes include:  lunch clubs  cycle recycling  drop-ins  charity shops  cafés  night shelters  practical support and personal assistance  Christmas toy appeals  befriending

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Objectives for the Year Ended 31 March 2015 We said we would:  involve volunteers in leading and assisting programmes where possible  maintain and enhance the provision of nurseries, playgroups, child contact centres allowing parental access and out-of-school care with our Ofsted registered work comprising 23 nurseries and playgroups and 2 out-of-school groups  make a budgeting training course available  inaugurate debt advice services in each area of the territory, each with its own paid co-ordinator, building on the five already in existence  provide information and training on welfare reform so that those on the front line can be aware of the impact of government legislation  collect data from service users to inform our local and UK strategy  implement use of our Community Service Support Tool, which comprehensively evaluates corps community work, beyond the 77 corps currently involved Achievements and Performance We:  

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promoted volunteer involvement and also created a new post of Volunteer Development Manager we ensured the delivery of safe, compliant and quality-assured services in both Early Years and Out-of-School Ofsted-registered settings through the appointment of an Early Years Operations Manager we made a budgeting training course (Money Management) available helping people increase their resilience to financial hardship and trained 350 front line employees and volunteers to deliver it put plans in place to commence two new debt advice centres we provided training on welfare reform we collected data using our Community Service Support Tool which evaluates our community work and informs strategy Supporting our learning disabilities and special needs work we: produced a new strategy, ‘The journey to inclusion’, and guidelines on inclusion relating to learning disabilities and special needs. We also worked closely with Employment Plus to develop programmes relevant to learning disability implemented Steps to Work – an opportunity to support young people into employment and Figures 6,844 (847 in Scotland) per week attended 264 (28) luncheon clubs* 8,091 (619) per week attended our 174 (21) drop-in centres* 1,352 (76) children per week attended our 27 (3) playgroups* 88 chaplains worked in the community in settings as diverse as hospitals, schools, airports, ports, waterways, the rural community and with the Fire and Police Services

* Statistics based on March/April 2015 figures

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Future Plans

THE SALVATION ARMY TRUST (CENTRAL FUNDS) TRUSTEE’S REPORT FOR THE YEAR ENDED 31 MARCH 2015

We will:  focus on recruiting, training and supporting our many volunteers and reviewing our policies, practices and training to find the best ways to support existing and future volunteers  commence a Recycles project in Liverpool for people with a disability  create further placements for young people with disabilities through our Steps into Work programme  provide a central portfolio of Policies and Procedures to support our Early Years work  increase the support to our frontline managers through encouraging ‘best practice regional clusters’ to offer inspiration and accountability  seek further opportunities to improve our support to current Child Contact Centres across the UK – with a vision to open new centres  continue to roll out the programme for new Debt Advice Centres updating our services as legislation requires When May, a former head teacher, first retired she visited older people from her local Salvation Army church in Boscombe to offer a listening ear. Today she volunteers at the Community Project — a weekday drop-in which offers people access to a warm shower, a pool room, television and two washing machines. People can also access counselling, the Citizens Advice Bureau and other agencies. ‘We’re here for people who are homeless as well as those who are depressed or struggling with panic attacks, addictions, anyone who has a problem. It’s so worthwhile – seeing people grow, develop and overcome their problems. ‘I started volunteering at the drop-in three years ago when it first opened. It’s a fantastic place and the community feels like a family.’

Tina’s brother and sister are members of Worthing Salvation Army’s Thursday Club, which includes people with diverse needs, including learning, behavioural and social difficulties. It also provides respite for carers. ‘My brother and sister love the club. They have been attending for many years. They enjoy all the activities and socialising with their friends in a safe, caring environment. We can always be sure of a warm welcome, a friendly face and staff and volunteers who genuinely care and take interest. Thursday Club is a credit to this town and is valued by so many people with disabilities.’

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We believe in SPIRITUAL DEVELOPMENT AND PRAYER The spiritual health of The Salvation Army is essential to its life, worship and service. Principal Objectives for the Year Ended 31 March 2015 We said we would:  give renewed emphasis to discipleship and, in particular, prayer  continue to research the spiritual life of The Salvation Army and its members  produce a Prayer School DVD as a teaching resource for small groups in each of the next three years, the first focusing on personal prayer Achievements and Performance    

We continued to emphasise discipleship and prayer through increasing the number of discipleship and holiness retreats held and through having dedicated prayer teams at strategic Salvation Army events We have over 5,000 prayer intercessors and more than 1,600 are on our weekly email list Research and feedback have provided good data, provoking interest and discussion about the spiritual life of The Salvation Army We produced the first of three Prayer School DVD teaching resources

Future Plans We will:  continue to promote discipleship through retreats, training and research  re-write our discipleship and membership courses  produce the second in a series of three Prayer School DVDs We believe in MINISTRY THROUGH MUSIC Achievements and Performance In support of the musical life of The Salvation Army during the past year we:  completed, ready for publication, the music accompanying the new Salvation Army Song Book, including versions for brass band, piano and guitar  published music for brass bands of all abilities, worship bands, wind bands, senior choirs and junior choirs  produced a beginners’ book for brass players and a new series of music for contemporary music groups  saw 390 people attend our residential music events  published 44 brass band compositions, 12 brass song accompaniments and 33 songs

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Future Plans We will:  provide extensive musical support for Boundless, The Salvation Army’s international congress in London in July 2015, including arranging tours for six music groups and seven main sessions  continue to publish Christian music and support those who minister through music in The Salvation Army We believe in INTERNATIONAL DEVELOPMENT As a world-wide movement we are convinced we should actively support international development. Principal Objectives for the Year Ended 31 March 2015 We said we would: Promote three types of project through our International Development Department 1. Community Development Projects a. Anti-trafficking and gender-based violence b. Water c. Agriculture d. Income generation 2. Mission Partners We are working with The Salvation Army in Argentina, Finland, Ghana, Mozambique, Pakistan, Paraguay and Uruguay to support the infrastructure of the mission, in relation to buildings, vehicles and computers. Our members in the UK personally gave £1,098,218 towards this work. 3. Emergencies We work with the international Salvation Army, being the link agency with The Salvation Army in the UK which helps finance and resource the work. We help inform our corps and raise money. Achievements and Performance 1. Community Development Projects We continued to offer technical and financial support overseas in the focused areas and raised awareness of the same in the UK. 2. Mission Partners We continued to build our relationship with our Mission Partners, looking for ways to be mutually beneficial. 3. Emergencies The UK Salvation Army has continued to respond generously to emergency situations in countries where the infrastructure needs added support. We have also been working on building resilience into projects in order to mitigate disasters. With international programmes such as anti-human trafficking, gender-based violence and sustainable livelihood development (water, agriculture and income generation), we continue to sponsor community development by investing in specialist staff.

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Future Plans We will: 

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focus increasingly on long-term development and relationship building and less on short-term projects and process. This involves listening, understanding and serving each other, seeking opportunities to encourage reconciliation. strengthen the partnership concept with developing countries, recognising each other’s strengths, resources and values, so that there is a two-way exchange and not an unbalanced one-way financial relationship.

Telling the story to SCHOOLS AND COLLEGES We aim to support officers in their schools ministry by providing current and engaging teaching resources and advice. We create links between officers and schools and deal with enquiries from teachers and pupils. Principal Objectives for the Year Ended 31 March 2015 We said we would:    

plan a new secondary resource called ISSUES, aimed at students studying for Religious Education exams and based around the positional statements of The Salvation Army plan new teaching resources for all Key Stages based on the support The Salvation Army gave during the First World War continue updating our teaching resources to ensure relevance to current practice continue developing ways to improve communication with officers

Achievements and Performance We:     

created a new secondary resource called ISSUES, based on The Salvation Army’s views on key issues. created new primary and secondary resources based on The Salvation Army’s work during the First World War. have updated our teaching resources including A3 posters outlining different aspects of The Salvation Army and puzzle pad sheets to support primary children’s school visits to corps. sent a bi-monthly newsletter to all corps officers. frequently updated our web pages with new seasonal assemblies and stand-alone lessons.

Future Plans We will:  plan for a new information booklet about William and Catherine Booth for KS2 pupils  produce a fundraising pack for schools  continue updating our teaching resources to ensure relevance and current practice  continue developing ways to improve communication with officers

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Telling the story through PUBLISHING The Salvation Army publishes three weekly periodicals. Salvationist is principally for members, The War Cry is topical and suitable for members and the general public, and Kids Alive! is the UK’s only weekly children’s Christian comic. All three include Bible-based teaching and promote positive Christian values and are available via apps. Principal Objectives for the Year Ended 31 March 2015 

We said we would continue actively promoting all three titles and specifically Kids Alive! with churches of other denominations.

Achievements and Performance  

We increased overall sales of Kids Alive! through active promotion. Combined sales of 64,000 copies per week were achieved.

Future Plans 

We will continue to actively promote sales within and beyond The Salvation Army.

Telling the story through MEDIA Principal Objectives for the Year Ended 31 March 2015 We said we would: Aim to engage an increasing number of people via digital media, with an emphasis on a more diverse and younger audience. In order to inform, engage and involve them we planned to:  help people understand through case studies issues faced by service users  ensure our new platform for digital communication became fully operational including a new website and the ability for all corps and centres to fully engage with social media such as Facebook, Twitter, Instagram and YouTube  empower frontline workers and service users by training them how to use social media and traditional media for greatest impact  inform and engage the public so they know what The Salvation Army does and help them understand the needs and issues of service users  help corps and centres inform their communities about their work and the services they offer  provide online training to enable service users to input to our website

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Achievements and Performance    

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We used case studies effectively to help people understand service users’ issues. Our new platform for digital communication became fully operational. We trained our frontline workers in social media. We informed and engaged the public about our ongoing work with social justice, homelessness, modern slavery and families in poverty. There was evidence this changed attitudes and challenged outdated views of The Salvation Army. The Salvation Army was driving the news agenda throughout the UK with a public attitudes survey (Ipsos Mori poll) which centred on the general public’s perception and attitudes towards people who are experiencing homelessness. We helped corps and centres inform their communities about their work. We provided online training to enable service users to input to our website.

We strengthened our relationships with BBC and ITV at Media City in Salford, resulting in unprecedented coverage on radio and television including extensive coverage on BBC One Songs of Praise and Sunday morning radio. In digital and social media we have more followers and a higher level of engagement than any other church or religious organisation in the UK. Our daily spiritual thought, a Bible verse meme, is read by 30,000 people every day. Future Plans The overall aim remains to use all forms of media to reach current and new audiences to inform, inspire and engage. We will: 1. train corps and centres in digital, social and traditional media to empower them further 2. support mission by creating and developing an online ‘virtual church’ 3. increase our reach with younger audiences through social media, specialist publications and programmes 4. gain extensive media coverage for The Salvation Army’s 150th anniversary 5. influence policy-makers and raise awareness of key social justice issues Telling the story and listening to GOVERNMENT The Public Affairs Unit seeks to promote and defend the work of The Salvation Army with politicians and policy-makers in the interest of greater social justice for those whom the organisation serves. Principal Objectives for the Year Ended 31 March 2015 We said we would:  Support the front line to engage with the political process prior to the May 2015 General Election.  Raise issues of concern for the public to consider prior to voting. In particular: o Homeless people seeking permanent accommodation o Long-term unemployed seeking a sustainable job o Older people securing appropriate and affordable social care o People in poverty at risk by unsecured debt o The regulation of low-cost high-strength alcohol

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Achievements and Performance 

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Fifteen frontline briefings took place around the UK to encourage engagement with the May 2015 General Election. Resources disseminated included: o Voter registration leaflet o Guidance on candidate visits and hustings o Worship resources o Guidance on charity and electoral law o Fact sheet and manifesto analysis A video campaign disseminated by social media entitled ‘Asking Questions that Matter’ was produced for the six weeks of the campaign. It featured the stories of six people helped by The Salvation Army and showed them asking politicians the questions that mattered to them. The campaign was evaluated as the most effective charity campaign by Civil Society magazine. Significant energy went into understanding and complying with the Lobbying Act as an extension of electoral law. The Salvation Army registered with the Electoral Commission as a Third Party Campaigner and contributed to the Hodgson Review after the Election.

Future Plans We will: o respond to the programme of the Government as it affects our service users o support democratic engagement with the Welsh Assembly and Scottish Parliament elections and the EU Referendum, if called o respond to the localism agenda as it develops in England and resource the front line in their response Telling the story of our HERITAGE Achievements and Performance The Salvation Army International Heritage Centre preserves and makes available records relating to The Salvation Army and its history. It incorporates a museum, reference library and reading room. During the past year it received 1,087 remote enquiries, 285 researchers and 1,527 museum visitors and catalogued a total of 1,458 records. Future Plans We will:  extend our opening hours for The Salvation Army’s 150th anniversary in July to attract the maximum number of UK and foreign visitors  promote The Salvation Army’s heritage on a number of media platforms and work towards a series of events in the Borough of Tower Hamlets to celebrate the anniversary  continue to catalogue and appraise the archive collections and provide a high standard of public service

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Equipping through TRAINING Our William Booth Training College in London provides the base for training our officers and employees throughout the United Kingdom. Candidates Unit The Candidates Unit oversees the recruitment, selection, screening and assessment of Salvation Army officers and other full-time leaders. Principal objectives for the Year Ended 31 March 2015 

We said we would continue to promote Salvation Army officership and the development of spiritual leaders.

Achievements and Performance    

29 cadets entered the School for Officer Training in September 2014 for residential training with five others becoming distance-learning cadets. 93 delegates attended four weekends designed to help them explore their vocation and assist their spiritual development. 250 delegates attended an Exploring Leadership day which presented different options for leadership. 46 applicants underwent assessment for officer training.

Principal objectives for the year ending 31 March 2016 We will:  continue to promote Salvation Army officership and the development of spiritual leaders  re-brand the promotional materials for officership In-Service Training for Employees and Officers Principal Objectives for the Year Ended 31 March 2015 

We said we would work towards a fully integrated leadership and management development programme for 2015/16.

Achievements and Performance   

School for In-Service Training and Development (SISTAD) has helped further develop the Leadership Development Programme. Institute of Training and Occupational Learning (ITOL) have awarded registered status for our Level 4 Certificate in Advanced Managing Problem Substance Use. Level 3 Certificate in Employment Related Services was introduced.

Overall we provided over 2,635 attendances at our courses in academic year 2013-2014, including two BA (Hons) courses.

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THE SALVATION ARMY TRUST (CENTRAL FUNDS) TRUSTEE’S REPORT FOR THE YEAR ENDED 31 MARCH 2015

Principal Objectives for the Year Ended 31 March 2016 We will:  pilot a blended learning course, in which students combine online and digital forms of learning with traditional forms, with students having a greater control over time, place and pace of the learning Officer Training The School for Officer Training (SFOT) provides a two-year residential course for cadets with a distancelearning option available in some situations. Principal objectives for the Year Ended 31 March 2015 We said we would:  Further enhance the leadership development aspect of cadet training.  Maintain or increase numbers of cadets commissioned as officers. Achievements and Performance   

New study modules were developed to enhance the leadership development aspects within cadet training. 28 cadets successfully completed their training and were commissioned as officers. The DipHE course was revalidated by our partners, the University of Gloucestershire, for a fiveyear period.

William Booth College also provided almost 1,000 nights’ accommodation for those with relatives in intensive care at King’s College Hospital. This has afforded a safe and secure base from which to visit relatives whilst also offering a listening ear and prayer support. Equipping through STRATEGIC INFORMATION Principal Objectives for the Year Ended 31 March 2015 We said we would:  complete the roll-out of Wide Area Network (WAN) to all remaining locations, enabling all within our buildings to connect to the internet and other services provided  trial a new app to accurately log food parcel distribution Achievements and Performance We:  

rolled out Wide Area Network to the majority of our centres, helping our officers, employees, volunteers and service users benefit from technology trialled a new app to help the efficient administration of food parcel distribution and speedy response to those in need with 21 centres using it

Page 18 THE SALVATION ARMY UNITED KINGDOM TERRITORY

Future Plans

THE SALVATION ARMY TRUST (CENTRAL FUNDS) TRUSTEE’S REPORT FOR THE YEAR ENDED 31 MARCH 2015

We will:  continue to bring harder-to-reach locations on to our Wide Area Network providing secure ‘safe to surf’ access to address the needs of the ‘digitally excluded’ Enabled by MEMBERS AND VOLUNTEERS Members The Salvation Army has more than 26,000 soldiers, almost 9,000 adherents and 3,300 junior soldiers. A soldier is a committed Christian, aged at least 14, who has signed a statement of beliefs and promises to be a soldier of The Salvation Army. An adherent member has not made a commitment to these beliefs and promises, but recognises The Salvation Army as their church. Volunteers The Salvation Army depends on the dedicated work of thousands of volunteers for the effective operation of many of its activities. They include members and non-members who help in a wide variety of roles in corps and centres throughout the UK. Their commitment of time and energy to serve others is very much appreciated. EXTERNAL FACTORS AFFECTING OUR ACTIVITIES AND PERFORMANCE In a difficult economic climate the vulnerability of some client groups increases, particularly the homeless, families in poverty and isolated older people. This has a significant impact on the numbers of people needing support from our corps community programmes. A Financial Inclusion Manager has been appointed to review, promote and support debt advice and money management programmes and the number of debt counselling services offered in corps has increased. Many corps provide food parcels, drop in centres for homeless people and, during the coldest months, night shelters for rough sleepers funded by the local authority. GRANT-MAKING POLICY The Salvation Army Trust is not a grant making charity in the conventional sense. However it does make grants to The Salvation Army Social Work Trust and The Salvation Army International Trust with whom it works in furtherance of its charitable objectives. FINANCIAL REVIEW OF THE YEAR There has been a small decrease in income from £196.3 million to £194.2 million. The main sources of income are as follows: 2015 2014 % £m £m change Legacies 43.9 47.9 -8 Donations from the public 45.3 43.2 5 Donations from members 19.4 20.8 -7 Grants 2.1 2.8 -25 Trading income 66.5 67.2 -1 Investment income 5.9 5.2 13 Other income 11.2 9.2 22 194.3 196.3

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Voluntary income Voluntary income (legacies, donations and grants) represents 57% of the total income of the charity and has held up well. Although there has been a decrease since last year legacy income has been generally consistent over the last five years. Legacy income in 2013/14 was exceptional due to a number of high value legacies. There has been a small increase in donations from the public mainly as a result of a successful programme of appeals run by our Fundraising Department. Donations from members represents giving by Salvationists to their corps. Trading income Trading income comprises:  Corps trading activities, mainly charity shops (£17.2 million). Net trading income shows a small decrease from £8.8 million to £8.6 million.  Income of trading subsidiaries: The Salvation Army General Insurance Company (£5.2 million) and The Salvation Army Trading Company (£44.1 million). There has been a decrease in net trading income of subsidiaries: o The Salvation Army General Insurance Company £0.7 million (2014: £0.6 million) o The Salvation Army Trading Company £6.1 million (2014: £9.8 million) Other income This includes the gain on disposal of properties and VAT refunds Expenditure has increased from £166.9 million to £178.6 million 2015 £m Cost of generating voluntary income Cost of trading activities Total cost of generating funds Charitable activities: Church & evangelism programmes Community programmes International programmes Training programmes Youth & Young Peoples programmes Support of Social Work Trust Total charitable activities Governance Total expenditure

2014 £m %change

10.2 51.1 61.3

8.9 48.1 57.0

15 6

42.9 46.6 5.4 4.4

40.8 42.2 5.5 4.2

5 10 -2 5

2.4 15.2 116.9

2.3 14.4 109.4

4 5

0.4

0.5

-20

178.6

166.9

Cost of generating voluntary income This represents the costs of the Fundraising Department and direct appeal costs. There was additional investment in the Christmas 2014 Appeal.

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Church & Evangelism Programmes and Community Programmes These represent activities at Corps and Divisional Headquarters. The increase is primarily due to an increase in support costs as a result of an increased capital contribution to The Salvation Army Officers Allowance Fund to reduce the funding shortfall. Support costs have also increased due to the Fit for Mission transformation project. International Programmes This represents grants to The Salvation Army International Trust, overseas projects funded by the UK Territory and the costs of International Development Unit. Training Programmes These represent the costs of William Booth College which trains people to become Salvation Army Officers, runs education and learning programmes for employees and officers. Youth and Young People’s Programmes This represents national programmes including ALOVE, an expression of The Salvation Army for young people and young adults. The surplus for the year after the share of profits in Reliance Bank (£0.2 million) and gains on the revaluation and disposal of investments (£7.8 million) was £23.7 million. Total funds as at the year-end were as follows: 2015 £m

2014 £m

13.4

12.3

Restricted Funds: Property Fund Corps Funds Legacy reserves Trust funds Specific donations Total restricted funds

283.2 49.9 66.1 2.3 6.9 408.4

276.6 48.1 70.8 2.2 7 404.7

Unrestricted funds Non charitable trading funds Designated Funds Unrealised gains General reserve Total unrestricted funds

18.6 64.5 25.3 25.8 134.2

17.9 52.5 18.6 26.4 115.4

Total funds

556.0

532.4

Endowment Funds

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Endowment Funds The capital value is retained but the income arising is available for expenditure. Restricted Funds The property fund represents expenditure on properties used by The Salvation Army for charitable purposes. Corps Funds represent funds held by corps for use in their local area. Other restricted reserves represent funds given by donors for specific purposes. Unrestricted Funds Non charitable trading fund are profits retained in the subsidiary companies and the associate company to provide working capital. Designated funds are set aside by the directors for specific purposes principally major maintenance work on the property portfolio. Unrealised gains are book profits subject to fluctuations in the stock market. The General reserve represents funds which are freely available for the general purposes of the charity. At £25.8 million it represents approximately 5½ months unrestricted expenditure on charitable activities and is slightly above the optimum level agreed by directors FUNDRAISING Fundraising activities provide a crucial income stream to support the ongoing operations of The Salvation Army in the UK. Public and organisational generosity has continued during 2014 / 2015 to ensure a pipeline of donations for general and specific areas of expenditure. Donations from members of the public totalled £45.3 million, of which £10.3 million were restricted and £35 million were unrestricted. This represents an increase of £2.1 million overall over 2013 / 2014. Making up this overall total are various fundraising programmes and income generating activities, some of which are coordinated and managed locally, and others which are managed centrally. Local fundraising from the public is generally coordinated by Salvation Army corps (churches) and community centres, and proceeds will go to support local initiatives, community programmes and contribute to national appeals. Local fundraising includes literature sales (i.e. sales of War Cry, Kids Alive weekly papers), door-to-door collecting, street collecting, and Christmas carolling by bands and choirs. For 2014 / 2015, this totalled £6.7 million, the same level as in the previous year. This represents a significant amount of voluntary effort and engagement by the local Salvation Army centres to seek to fund our local programmes and ministry. The added benefit of local fundraising is that it helps to keep The Salvation Army in the public eye and therefore helps to raise awareness. For a charity that does very little awareness advertising, this is a valuable activity. Raised awareness also helps other national fundraising activities and ultimately legacy funding. Our nationally, or centrally coordinated fundraising includes our extensive appeals programme, appeals to charitable trusts and foundations and other fundraising activities such as challenge events (marathons etc.) and the promotion of philanthropic giving. Our appeals programme to current and new supporters generated an overall £31.2 million, which is an increase of £2 million over 2013 / 2014 and exceeded our appeals target of £28.5 million.

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The appeals programme comprises four separate activities. One strand is the vital appeals programme to our existing, loyal supporters, who continue to give generously in response to our appeal letters. This delivered a gross of £15.3 million at a cost of £1.5 million, which represents a return on investment of £10 for every £1 expended, which against the charity norm of £2.79i for every £1 expended is a significant achievement and reflects the generosity of our supporters and the efficiency of our fundraising programme. Within this, our Christmas Appeal to our supporters delivered £8.8 million, up from £7.9 million in 2013 / 2014 and over forecast by £1 million. In this appeal alone, we raised £17.57 for every £1 spent which is a remarkable achievement and reflects the sheer kindness of our loyal supporters at this time of year. Overall our supporter appeals income increased by £800,000 over 2013 / 2014, for which we are sincerely grateful. The second income stream is the annual value of donations from our band of regular givers; donors who are on monthly or other direct debit giving programmes. In 2014 / 2015, our regular-giving supporters donated £6.1 million, an increase of £400,000 over the previous year as a result of dedicated activities to encourage cash or one-off supporters to donate on a regular basis. This income stream delivered £15 for every £1 invested, which against the charity benchmark norm of £6.16 is excellent. We have seen a 22% growth in regular giving over the last three years and it has been a strategic priority to encourage our supporters to consider this form of giving as it saves costs and provides predictability. We are, as always, grateful to our loyal regular givers for their ongoing commitment. The third appeals income stream is the Christmas appeal activity aimed to recruit new supporters. Our extensive Christmas activity runs across TV, radio, online, mail, door-drops and magazine inserts. This activity delivered over 90,000 new supporters, profitably, who will go on to become valued donors in our appeals programme. We generated over £5.6 million from our Christmas Appeal, up by over £700,000 in 2013/2014, which again reflects the generosity of the public to support our community and social work. The fourth appeals income stream is Gift Aid, which on appeals donations added a further £4.1 million. We continue to benefit immensely from Gift Aid which boosts our ability to deliver our caring services. A further centralised fundraising operation is our programme of approaching charitable trusts and foundations for support for specific projects, including assistance towards refurbishment costs, rebuilding costs and equipment for our centres. In 2014 / 2015 we secured over 860 donations with a value of £1.2 million in trust grants. The Salvation Army is privileged to have a substantial base of loyal and generous supporters, and their contribution quite literally is our lifeblood. Whilst our church members’ giving sustains the church life of The Salvation Army, our supporters provide the much needed funding for our diverse and much needed social and community work across the UK, and we wish to recognise that immense contribution made by supporters in this Report. Because we are very heavily reliant on our appeals programme to help meet our annual running costs, we take forward planning seriously. As noted above, a strategic priority has been to ask supporters to consider direct debit as a valuable and predictable way of supporting us and this vein of income has been increasing year on year.

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We also invest in the promotion of gifts in Wills (legacies) to the public, our supporters and our church membership. Legacies, alongside donations, is a crucial resource from which we can draw funding for operating costs and more substantial building programmes. Our legacy promotion activity in 2014 / 2015 sensitively and in appropriate ways encouraged people to consider leaving a gift in their Will to support our work and significant number of promises of pledges were received. Legacies are vitally important to us and we express our appreciation to the families of all those who have remembered us in this way, and through In Memorial gifts As a charity that has less ‘predictable’ or regular giving income than other larger charities, and as a charity that is more reliant on spontaneous responses to appeals, the regulatory changes ahead may impact on our income negatively, and we are taking precautions to ensure we can sustain our commitment to front-line services in the most robust ways possible in the short term and seeking to increase longer term income streams such as legacies to sustain us in the future. We affirm our commitment to our donors and our supporters and regular givers, and to those who have promised us gifts in their Wills. Our supporters are precious and valuable to us; part of the wider “family” of The Salvation Army and in the wake of the events of the last year which have affected the charity sector, the upsurge of support from the public and our supporters has been heart-warming for which we are truly grateful. 1

Fundrations 2014, Centre for Inter-Firm Comparison, charity benchmark survey

GROUP COMPANIES Reliance Bank Limited The Salvation Army Trust (Central Funds) holds 49 per cent of the issued share capital of Reliance Bank Limited with the remaining 51 per cent held by The Salvation Army International Trust. Reliance Bank provides a range of banking and related services to customers principally in the UK although it also holds some deposits for overseas customers. Although the majority of the bank’s business is with The Salvation Army and its related organisations, the non-Salvation Army business has grown significantly during the year. The bank’s current strategy is to provide its customers with quality service while expanding its personal, non-personal and mortgage business through targeted selective growth. The bank has no exposure to sub-prime lending, PPI or market manipulation issues that have recently plagued the banking industry. The operating profit for the year was £508,810 (2014: £343,653). The bank continues to operate well in the challenging low base rate environment. The bank has been served well by its very risk-averse approach to business, which has helped it remain profitable in a period when financial markets have been very volatile. A total of £381,608 (2014: £257,740) was paid by way of Gift Aid to the charity shareholders, 50 per cent of which was payable to Central Funds.

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Salvation Army Trading Company Limited (SATCoL) The Salvation Army Trading Company Ltd (SATCoL) is a wholly owned subsidiary of the Salvation Army Trust (Central Funds). Its principal activities are the collection and sale of second-hand clothing donated by the public and the supply of Salvation Army publications and related materials. The year to March 2015 saw an overall operating profit of £6.5 million (2014: £10.8 million) before the deduction of Gift Aid and tax, enabling a Gift Aid payment to Central Funds of £5.4 million. In a difficult trading climate turnover fell to £44.1 million compared to £46.3 million for the previous year. Whilst clothing collection volumes increased by 9.5 per cent, export sales witnessed a decline in overall value of 7.5 per cent. The Clothing Collection Division continues to partner with a number of national retailers, clothing collection banks being jointly branded between The Salvation Army and the retailers’ chosen charities, proceeds being divided between the two parties. As a result payments totalling £2.1 million have been made to other charitable organisations. The retail high street in general continues to suffer difficult trading conditions, and whilst performance in the Retail Division showed sales increasing by 7.8 per cent, like-for-like sales saw a 2 per cent decline. In total, 199 shops were trading at the year end. In spite of current retail market conditions, management strongly advocates the ongoing expansion of the retail chain, through which new shops continue to make a profitable contribution to the business. It is anticipated that a further 20-30 shops will open during the 2015/16 financial year. Given the ongoing high street malaise, availability of retail space remains high with additional opportunity to capitalise on market conditions through premature lease renewals on more favourable terms. A feasibility study into the development of additional and more finely tuned trading formats has commenced, and subject to the results of that study, it is anticipated that pilot ‘test’ stores be rolled out during the year 2015/16. In spite of the ongoing struggle to retain local authority clothing collection sites, we anticipate that total collection locations nationwide will grow through the development of new relationships with national retail chains. Salvation Army General Insurance Corporation Limited (SAGIC) Formed in 1909, the principal activity of SAGIC is transacting property insurance in the United Kingdom, primarily for Central Funds and Social Work Funds. SAGIC also provides home and contents insurance to officers, members, supporters of The Salvation Army and individual members of the general public either direct or through its new broker network. Gross premium income from Salvation Army business was £2,967,000 (2014: £2,243,000) representing 56.7 per cent (2014: 66.7 per cent) of total written premiums. This premium increase is due to a 7 per cent property revaluation and also taking on other commercial business like Scout groups. Domestic insurance business, under the brand ‘House and Home’, increased by 77.2 per cent, producing income of £1,988,000. The UK household insurance market remains very competitive but as a result of further expansion to the broker network SAGIC has increased its number of policy-holders from 5,000 to 7,500 during the twelve months and has a target of 10,000 by 31 March 2016. Total premiums net of reinsurance were £2,097,000 (2014: £1,484,000).

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Net claims incurred were £839,000 compared to £668,000 in the previous year. Claims incurred as a percentage of net premiums is 40.0 per cent for the year and 45 per cent for 2014. Salvation Army claims payments increased by 13 per cent whilst household claims increased by 72 per cent. These increases reflect the increased business in both sectors. The total number of Salvation Army claims during the year was 326 (2014: 354). In 2014 there was a high number of flood and storm claims. The winter has been less harsh and the number of claims reflects this. The largest Salvation Army claim was for a fire at Stafford Corps. The rebuild will cost in the region of £380,000. The major categories for Salvation Army claims, as last year, were all risks, escape of water, storm, theft and glass replacement. The number of household claims received during the year increased 17.3 per cent on the previous year and this is not unexpected due to the increased number of policies. SAGIC will continue to monitor all risks claims for lost, stolen and damaged phones, iPods, iPads and laptops to ensure premium rates are maintained at a sustainable level. The profit on insurance activities was £806,000 (2014: £613,000) and the net contribution from investments is £99,000 compared with £95,000 in 2014. Operating expenses have increased and include broker commissions, increased marketing activities and insurance software support costs. The profit before tax and distribution is £905,000 (2014: £708,000) and a Gift Aid payment of £881,000 (2014: £686,000) to Central Funds has been approved by the directors. Retained profit after this payment and after taxation is £33,000 (2014: £27,000). INVESTMENT POLICY The Charity holds its investments in the Salvation Army Common Investment Funds. These funds were set up under Schedule 2 of The Salvation Army Act 1980 to act as common investment schemes for certain Salvation Army Trusts. The Salvation Army Common Investment Fund (No. 1) consists of Permanent Endowments which are restricted by the wishes of the donor. In most cases the income is to be used for restricted purposes. The Salvation Army Common Investment Fund (No. 2) is operated for those Salvation Army Trusts without permanent endowments. Both funds are managed by The Salvation Army Trustee Company. Cazenove Capital Management (formerly Schroders) manages CIF1 and 50 per cent of CIF2, whilst Sarasin and Partners LLP manage 50 per cent of CIF2. The funds are subject to The Salvation Army Act 1980 and the following guidelines:  the principal aim is to invest in a manner consistent with the promotion of the objects of The Salvation Army  investments should be made on longer term considerations rather than in the pursuit of shortterm gains  investments may be held in stocks, shares, debentures and other securities quoted on a recognised stock exchange, in government, municipal and public utility stocks and in bank deposit accounts  investments may be made in collective investment schemes, including those holding real estate assets  no direct investment may be made in unquoted securities in the UK or overseas  there will be no investment in companies which derive a material amount of their revenues (% indicated) from the following activities: o the production of alcohol (5%) o the sale, together with any production, of alcohol (10%) o the production of tobacco (5%) o the sale, together with any production, of tobacco (10%)

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the manufacture of whole weapons, weapon platforms and weapon systems (none permitted) o the manufacture or sale of strategic parts for weapons systems (10%) o the business of gambling or providing access to such businesses (5%) o the production of adult entertainment services or providing access to such services (1%) o the publication or wholesale of pornographic magazines or newspapers (1%) Investment managers are expected to exclude companies whose activities might reasonably be expected to increase poverty or act against the relief of poverty. The investment managers are required to monitor companies in the portfolios to ensure best practice in corporate governance, employment conditions and environmental sustainability o



The Funds’ benchmark and ranges of distribution are as follows: Asset Class Equities: UK Europe (ex UK) Emerging Markets Asia Pacific United States Bonds Property Cash

Benchmark Range % % 40 15 15 10 10 0 10 0 100

+/-10 +/-10 +/-10 +/-10 +/-10 +/-10 +/-10 +10

The aims and objectives of the Common Investment Funds are as follows: CIF1 Fund strategy is:  To preserve the value of the fund, adjusted for real inflation  To maintain a steady annual income stream The performance objective of the fund is to achieve an annual total return which exceeds the composite benchmark below by at least 1.25 per cent per annum, gross of fees, measured over rolling 3 year periods, commencing 1 January 2010. Asset Class UK Equities Europe (ex UK) Equities Emerging Markets Equities Asia Pacific Equities United States Equities Property

Performance Benchmark FTSE All-Share FTSE All World Developed Europe (ex UK) FTSE All World Emerging Markets FTSE All World Developed Asia Pacific S&P 500 IPD UK Property

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CIF2 The fund strategy is to aim for capital growth rather than income. The performance objective of the Fund, excluding cash and gilts under lien, is to achieve an annual total return which exceeds the composite benchmark below by at least 1.25 per cent per annum, gross of fees, measured over rolling 3 year periods commencing 1 January 2010. Asset Class UK Equities Europe (ex UK) Equities Emerging Markets Equities Asia Pacific Equities United States Equities Property Cash and gilts under lien

Performance Benchmark FTSE All-Share FTSE All World Developed Europe (ex UK) FTSE All World Emerging Markets FTSE All World Developed Asia Pacific S&P 500 IPD UK Property FTSE Gilts under 5 years

Performance for the year compared to the benchmark was as follows: CIF1 % 10.5

CIF2 % 10.5

Annual total return (gross of fees) Benchmark return 12.9 12.9 Both investment managers underperformed against the benchmark but believe that their long term strategies remain sound. In absolute terms the performance of the common investment funds for the year was as follows:

Increase in capital value of fund Average net income return

CIF1 2015 % 7.53

CIF1 2014 % 2.96

CIF2 2015 % 6.42

CIF2 2014 % 1.74

2.05

2.09

2.25

2.25

RESERVES POLICY The charity’s reserves policy focuses on the level of general reserves. The charity relies on voluntary income, donations and legacies, which by their nature are unpredictable. Voluntary income represented 54% of total unrestricted income for the year ended 31 March 2015. The charity needs reserves to ensure that the operation of its church and community programmes can continue in the event of fluctuations in voluntary income and unexpected expenditure. The directors have reviewed the main income and expenditure streams and the financial risks associated with them. They consider that the charity requires general reserves of approximately £20 million to ensure continuing operations. As at 31 March 2015 the Charity had general reserves of £25.8 million.

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STRUCTURE, GOVERNANCE AND MANAGEMENT The Salvation Army, founded in 1865 by William and Catherine Booth, is an unincorporated association with charitable objects, currently operating in 127 countries. Under Section 4(1) of The Salvation Army Act 1980, world leadership of the movement is provided by the General of The Salvation Army, assisted by officers and staff based at International Headquarters in London. The United Kingdom Territory (with the Republic of Ireland) is under the command of a Territorial Commander, appointed by the General and responsible to him/her for the day-to-day administration of Salvation Army work throughout the British Isles, including the Channel Islands, the Isle of Man and the Republic of Ireland. The Salvation Army’s property in the United Kingdom Territory is held by The Salvation Army Trustee Company, a company limited by guarantee, registered in England (No. 00259322), with its registered office at 101 Newington Causeway, London SE1 6BN. The General of The Salvation Army appoints the directors of the Trustee Company. Under Section 12(1) (a) of The Salvation Army Act 1980, as amended, The Salvation Army Trustee Company is appointed as the ordinary trustee of the trusts listed in Schedule 5 to that Act. The two main trusts under which The Salvation Army in the United Kingdom operates are:  The Salvation Army Trust (Central Funds), whose accounts are contained in this report.  The Salvation Army Social Work Trust (Social Work Funds). The governing instrument of The Salvation Army Trust is The Salvation Army Act 1980, as amended. The Salvation Army Trustee Company is the sole ordinary trustee of the charity. Connected Trusts The Salvation Army Trustee Company is the trustee of a number of connected charitable trusts which are concerned with specific aspects of the Army’s work. The Salvation Army Social Work Trust (Social Work Funds). Governing Instrument: Deed Poll dated 30 January 1891 and ancillary trusts. Registration No.215174 in England and SC037691 in Scotland. The objects of the Salvation Army Social Work Trust are promoting the charitable work of The Salvation Army in one or more of the following ways:  the relief of poverty, sickness, suffering, distress, incapacity or old age;  the advancement of education;  training in Christian and moral principles and  the assistance of those in need of protection On 19 January 2011 The Salvation Army Social Work Trust acquired control of Salvation Army Housing Association (SAHA). SAHA is registered under the Co-operative and Community Benefit Societies Act 2014 (Registration no. 15210R) and as a social landlord with the Homes and Communities Agency (Registration no. LH2429) William Booth Memorial Trust Governing Instrument: Trust Deed dated 19 September 1921 Registration number 312882 The purpose of the trust is the establishment, maintenance and operation of a college for the instruction and training of men and women for service as officers of The Salvation Army.

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Subsidiary and associated companies The following companies are beneficially owned by the Central Funds (percentage held) and donate all or part of their profits to the Central Funds:  The Salvation Army General Insurance Corporation Limited (100%)  The Salvation Army Trading Company Limited (100%)  Reliance Bank Limited (49%) Connected Company The Central Funds hold 20 per cent of the shares in William Leech (Investments) Limited, the other shares being held equally by four other charities involved in overseas missionary work. Recruitment and Appointment of Directors (Trustees) There are 16 directors, 10 by virtue of their appointments within The Salvation Army. One director is a divisional leader responsible for one of the 18 divisions into which The Salvation Army is organised, and another is a corps officer. A corps is a Salvation Army centre where Christian worship takes place and community activities are organised in response to local needs. An officer is an ordained minister of religion. There are four external non-executive directors and a fifth is due to be appointed in January 2016. The Nominations Committee recommends appointments for the non-executive directors. Each nonexecutive director brings expertise in a relevant field– property, finance and administration, investments or social services. The appointment of non-executive directors is made by the General on the recommendation of the Nominations Committee. Training and Induction of Directors The Company Secretary briefs new directors on their legal responsibilities and familiarises them with the Company’s Governance Folder and previous board minutes. The Governance Folder includes the Articles of Association of The Salvation Army Trustee Company, the Charity Commission’s Essential Trustee guidance, other key documents and policies (including the Conflicts of Interest Policy). The Company Secretary arranges at least one training session each year for directors and delivers a governance update on relevant issues at each board meeting. Organisational Structure and Decision Making The board is assisted by an audit committee and a senior management committee (Cabinet).  The audit committee consists of three external non-executive directors with a remit to review The Salvation Army’s internal and external audit arrangements and consider reports issued by internal and external auditors including the annual financial statements.  The senior management committee comprises senior Salvation Army officers. It is responsible for considering mission-related issues and making recommendations to the board. The full board meets on a monthly basis. In addition to its oversight and governance role the following matters require consideration and approval by the full board:  Annual budget  Expenditure in excess of £1.25 million  Investment policy, on the recommendation of the Investment Advisory Committee  Risk Register  The Annual Financial Statements

Page 30 THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) TRUSTEE’S REPORT FOR THE YEAR ENDED 31 MARCH 2015

Two sub-committees of the board, the Territorial Finance Board and Territorial Business Board, meet on a weekly basis. The levels of delegated authority are as follows:  Territorial Finance Board – expenditure £250,001 to £1,250,000 and all property purchases  Territorial Business Board – expenditure £25,001 to £250,000 excluding property purchases Risk Management The board continued to direct an organisation-wide risk management programme and increase scrutiny through a board Risk Management Committee chaired by a non-executive director. The committee reports to the board twice yearly. A Risk Register progress report is a standing item on the board’s agenda and the board conducts an annual risk management review. Board level risk owner reports have been integrated with operational reports presented by executive directors throughout the year. In August 2014 Cass Business School, City of London University, facilitated a one-day risk management workshop for board and senior managers to review key risks. Web-based risk management software facilitates a more inclusive approach to identifying and reporting risk. Internal financial control is a constant risk management focus. Robust internal controls are operated, including a strong corporate committee structure, authorisation procedures and a hierarchy of spending limits, and are regularly reviewed by our internal audit department. Sustained progress has been made in improving risk planning for the main operational risk management priorities. The protection of children and vulnerable adults in Salvation Army programmes remains a priority where risk management is overseen by a Territorial Safeguarding Committee including external membership. Work continued, with our advisers Bluefin, to integrate group insurance cover to achieve economies of scale, simplify administration and align terms of cover throughout the organisation and with subsidiaries. Directors’ Responsibilities The directors of the Trustee Company are required to prepare financial statements for each financial year which give a true and fair view of the state of affairs of The Salvation Army Trust and of the incoming resources and resources expended for that period. In preparing the financial statements, the directors are required to:  select suitable accounting policies and then apply them consistently  make judgments 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  observe the principles of the Charity SORP  prepare the financial statements on the going concern basis unless it is inappropriate to presume that The Salvation Army Trust will continue to operate The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of The Salvation Army Trust, and are required to ensure that the financial statements comply with The Salvation Army Act 1980, the Charities Act 2011 and The Charities and Trustees Investment (Scotland) Act 2005 and Regulations made thereunder. They are also responsible for safeguarding the assets of the trust and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Colonel David Hinton On behalf of the Directors of The Salvation Army Trustee Company 11 December 2015

Page 31 THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) TRUSTEE’S REPORT FOR THE YEAR ENDED 31 MARCH 2015

DIRECTORS The current directors of The Salvation Army Trustee Company and those who held office during the year are as follows: Commissioner Clive Adams 2 Colonel David Hinton 2,4 Lieut-Colonel Ivor Telfer 2 Lieut-Colonel Alan Read 2 Commissioner Marianne Adams 2 Mr Gerald Birkett 1,3,4 Mr Russell Chalmers 1,3 Lieut-Colonel Michael Caffull 2 Lieut-Colonel Anthony Cotterill 2 Mrs Brenda Dickens 1,3 Lieut-Colonel Marion Drew 2 Ms Caroline Emerton 2 Mr Nicholas Fagerlund 2 Lieut-Colonel Suzanne Fincham Lieut–Colonel Melvin Fincham 2 Mr Peter Gale 1 Colonel Sylvia Hinton 2 Mr Keith Manners 2 Lieut-Colonel George Pilkington 2 Mr Graham John Roper 1 Major Yvonne Rouffet Major Andrea Sawyer Mr Philip Nicolas Sourry 1,3 Major Richard Welch 2

(Chairman) (Deputy Chairman) (Managing Director resigned 1 April 2014) (Managing Director appointed 1 July 2014) (Resigned 12 December 2014) (Resigned on 10 July 2015) (Appointed 24 July 2014) (Resigned 24 July 2014) (Resigned 24 July 2014) (Appointed 11 December 2015) (Resigned 11 July 2014) (Appointed 24 July 2014)

(Appointed 13 November 2015) (Resigned 24 July 2014) (Appointed 24 July 2014) (Appointed 8 May 2015) (Resigned 3 September 2015)

1 External non-executive directors 2 Directors ex officio 3 Member of Audit Committee 4 Member of Nominations Committee The Chief Secretary, Colonel David Hinton, is responsible for the day-to-day management of the charity. The directors confirm that they have taken account of the Charity Commission’s general guidance on public benefit when reviewing the charity’s aims and objectives and planning future activities. In particular the directors consider how planned activities will contribute to the aims and objectives that have been set. Company Secretary Mr Elliot Thomas was appointed Company Secretary of The Salvation Army Trustee Company on 12 September 2014 replacing Major John Warner.

THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) TRUSTEE’S REPORT FOR THE YEAR ENDED 31 MARCH 2015

ADVISERS Bankers Reliance Bank Limited, Faith House, 23/24 Lovat Lane, London EC3R 8EB Auditors Knox Cropper, Chartered Accountants, 8/9 Well Court, London EC4M 9DN Solicitors England and Wales: Slaughter and May, 1 Bunhill Row, London EC1Y 8YY Scotland: Blackadders, 5 Rutland Square, Edinburgh EH1 2AX Investment Advisers/Managers Cazenove Capital Management, 100 Wood Street, London, EC2V 7ER Sarasin and Partners, Juxon House, 100 St Paul’s Churchyard, London EC4M 8BU

Page 32

Page 33 THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) REPORT OF THE INDEPENDENT AUDITORS TO THE SALVATION ARMY TRUSTEE COMPANY, THE MANAGING TRUSTEE We have audited the financial statements of The Salvation Army Trust (Central Funds) for the year ended 31 March 2015 which comprise the Consolidated Statement of Financial Activities, Consolidated Balance Sheet, the Consolidated Cashflow Statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the Trustees, as a body, in accordance with legislation. Our audit work has been undertaken so that we might state to the Trustees those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Charity and the Charity’s Trustee for our audit work, for this report, or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF TRUSTEES AND AUDITORS As explained more fully in the Trustees’ Responsibilities Statements the trustees are responsible for the preparation of financial statements which give a true and fair view. We have been appointed as auditor under section 144 of the Charities Act 2011 and Section 44 (1) (c) of the Charities and Trustees investment (Scotland) Act 2005 and report in accordance with regulations made under these Acts. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors. SCOPE OF AUDIT OF FINANCIAL STSTEMENTS An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the charity’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the trustees; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Trustee’s annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. OPINION ON FINANCIAL STATEMENTS In our opinion the financial statements:   

give a true and fair view of the state of The Salvation Army Trust group and parent charity’s affairs as at 31 March 2015 and of the group’s incoming resources and application of resources, for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have been prepared in accordance with the requirements of the Charities Act 2011, the Charities and Trustees Investment (Scotland) Act 2005 and Regulation 8 of the Charities Accounts (Scotland) Regulations 2006 (as amended).

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION We have nothing to report in respect of the following matters where the Charities Act 2011 and the Charity Accounts (Scotland) Regulations 2006 (as amended) requires us to report to you if, in our opinion:    

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

8/9 Well Court London EC4M 9DN

Knox Cropper Chartered Accountants Registered Auditors

11 December 2015 Knox Cropper is eligible to act as an auditor in terms of Section 1212 of the Companies Act 2006.

Page 34 THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES FOR THE YEAR ENDED 31 MARCH 2015

INCOMING RESOURCES Incoming Resources from Generated Funds Voluntary Income Legacies Donations - Public Donations - Members Grants Activities for Generating Funds Trading Income Investment Income Other Incoming Resources Gain on disposal of Property Other Income

Endowment £000

Restricted £000

UnRestricted £000

2 3

168

6,455 10,322 19,381 1,919

37,410 34,983 5

43,865 45,305 19,381 2,092

47,870 43,182 20,766 2,818

4 5

-

17,209 3,189

49,267 2,704

66,476 5,893

67,180 5,186

168

1,692 60,167

8,185 1,359 133,913

9,877 1,359 194,248

7,230 2,033 196,265

-

172 8,586 8,758

10,014 42,525 52,539

10,186 51,111 61,297

8,906 48,123 57,029

-

24,739 30,331 3,131 -

18,111 16,245 2,267 4,395 2,403

42,850 46,576 5,398 4,395 2,403

40,829 42,190 5,518 4,179 2,339

-

3,087 61,288 -

12,142 55,563 462

15,229 116,851 462

14,342 109,397 531

-

70,046

108,564

178,610

166,957

168

(9,879)

25,349

15,638

29,308

168

13,436 3,557

(13,436) 11,913

15,638

29,308

-

-

236

236

158

Notes

Total Incoming Resources RESOURCES EXPENDED Costs of generating funds Costs of Generating Voluntary Income Costs of trading activities

Charitable Activities Church and Evangelism Programmes Community Programmes International Programmes Training Programmes Youth and Young People’s Programmes Support of the Salvation Army Social Work Trust Governance

Total Resources Expended Net incoming resources/ (resources expended) before Transfers Transfer between funds NET INCOMING RESOURCES Other Recognised Gains Income from Associated Company Gains on revaluation and disposals of investments NET MOVEMENT IN FUNDS Fund balances brought forward 1 April 2014 Fund balances carried forward At 31 March 2015

4

8

9

1(g)

7 18(a)

2015 Total £000

2014 Total

£000

944

130

6,722

1,112

3,687

18,871

7,796 23,670

1,975 31,441

12,339

404,689

115,326

532,354

500,913

13,451

408,376

134,197

556,024

532,354

All recognised gains and losses are reflected in the above Statement of Financial Activities and therefore a separate Statement of Total Recognised Gains and Losses is not required. All activities reported above, in both the current and preceding years, reflect ongoing activities.

Page 35

THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2015 Notes FIXED ASSETS Intangible Fixed Assets Tangible Fixed Assets Properties Property Schemes in Progress Motor Vehicles and Equipment Investments

CURRENT ASSETS Short Term Deposits Stock Debtors Bank Balances and Cash CURRENT LIABILITIES NET CURRENT ASSETS

TOTAL FUNDS

8,680

-

-

16 16 17 18

295,915 3,900 6,494 136,079 449,985

289,559 7,302 6,318 127,994 439,853

295,086 3,900 811 133,825 433,622

288,716 7,302 631 125,863 422,512

93,029 2,862 17,846 40,013 153,750

79,417 2,848 15,989 40,666 138,920

93,029 245 18,072 26,996 138,342

79,417 213 18,044 27,189 124,863

(24,666) 129,084

(23,298) 115,622

(11,753) 126,589

(10,011) 114,852

579,069

555,475

560,211

537,364

(23,045)

(23,121)

(22,750)

(22,871)

556,024

532,354

537,461

514,493

22

13,451

12,339

13,451

12,339

23 24 25

283,161 125,215 134,197

276,624 128,065 115,326

283,161 125,215 115,634

276,624 128,065 97,465

26

556,024

532,354

537,461

514,493

19

20

21

The consolidated Balance Sheet incorporates the subsidiary and associated companies. Approved on behalf of The Salvation Army Trustee Company on 11 December 2015

_______________________________ Lieut – Colonel Alan Read Director _______________________________ Ms Caroline Emerton Director

2014 £000

7,597

TOTAL NET ASSETS FUNDS Endowment Funds Restricted Funds Property Fund Other Restricted Funds Unrestricted Funds

Trust 2015 £000

15

TOTAL ASSETS LESS CURRENT LIABILITIES LONG TERM LIABILITIES

Consolidated 2015 2014 £000 £000

THE SALVATION ARMY UNITED KINGDOM TERRITORY

Page 36

THE SALVATION ARMY TRUST (CENTRAL FUNDS) CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2015

Net Cash Inflow from Operating Activities

Notes

2015 £000

2014 £000

30(a)

11,206

21,294

5,893

5,186

(4,132)

(13,734)

12,967

12,746

(13,612)

(11,593)

(8) (653)

(125) 1,028

Net Cash Inflow from Returns on Investments Capital Expenditure and Financial Investment

30(b)

Management of Liquid Resources (Deposits) Financing (Decrease)/Increase in Cash

Reconciliation of Net Cash Flow to Movement in Net Funds at Bank (Decrease)/Increase in Cash in the Year Increase in Short Term Deposits Decrease in loans Net Funds at Bank at beginning of year Net Funds at Bank at end of year

30(c)

30(d) (653) 13,612 8 12,967 97,194 110,161

1,028 11,593 125 12,746 84,448 97,194

Page 37 THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015 1.

ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of the financial statements and which have been consistently applied (except where indicated) are set out as follows: (a)

Basis of Accounting – The financial statements have been prepared under the historical cost convention, subject to the inclusion of investments at market value and donated properties at valuation on acquisition, and are in accordance with the Statement of Recommended Practice: Accounting by Charities (issued in October 2005) and applicable accounting standards.

(b)

Income: (i)

Donations and Legacies – Donations, including the gross equivalent of those under gift aid, and legacies are brought into account in the year of receipt. Accrual is made for any material legacies outstanding at the year end where receipt is virtually certain and which can be accurately quantified.

(ii)

Investment Income – Dividends and interest are brought into account gross in the year they are due.

(iii) Profits and losses on disposal of assets are reflected in the Statement of Financial Activities in the year of disposal. (iv) Funds raised by local Corps and Divisions including trading income, are deemed to be restricted for use in the local area. (c)

Expenditure: Expenditure is charged on the accruals basis. (i)

Irrecoverable Value Added Tax is charged to the related heads of expenditure.

(ii) Resources expended:



Costs of Generating Voluntary Income consist of direct campaign appeal expenses and the running costs of the donations and fund-raising departments.



Charitable Activities consists of all expenditure relating to the objects of the charity including the costs of supporting charitable activities and projects.



Governance consists of the costs of complying with legislation including audit and legal charges, strategic planning and reorganisation.

Support costs have been apportioned to each category of expenditure based on the number of officers and employees involved in each area or on an estimate of the time spent by officers and employees on particular activities. (iii) The non-capital element of property schemes is written off in the year of completion, and a provision is made annually for schemes in progress. The capital element of such schemes not completed at the year end is carried forward in the Balance Sheet under the heading of Property Schemes in progress and is disclosed as a fixed asset.

THE SALVATION ARMY UNITED KINGDOM TERRITORY

Page 38

THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2015 (c)

Expenditure: (continued) (iv) Officers’ Pension Fund Contributions – A standard annual contribution per pension unit is made to the Fund, which is charged to the appropriate cost centre. To supplement the standard contributions, the Central Funds are charged with an additional contribution to meet the cost of expected future liabilities, and the cost of additional pensions paid for long service. (v) Employees’ Pension Fund – This is a multi employer pension fund where the assets and liabilities cannot be separately identified and therefore the amount charged in the Statement of Financial Activities represents the contribution payable during the year.

(d)

Fixed Assets: (i)

Expenditure on the acquisition or improvement of property is reflected as a fixed asset, whereas costs of repairs and renewals to property are charged to the Statement of Financial Activities.

(ii) Expenditure on the acquisition of vehicles is capitalised and expenditure on computer equipment and other office equipment which exceeds £15,000 in value (individually or for groups of related assets) is capitalised and depreciated over its economic life. (iii) Depreciation is provided on tangible fixed assets at the following rates: Motor Vehicles Office Equipment Short Leasehold Properties Freehold and Long Leasehold Properties

-

1.07% per month on cost 25% pa on cost over the term of the lease over 50 years

(iv) Goodwill arising on acquisition is amortised on a straight line basis over the estimated useful life which has been estimated to be 10 years. (e) Investments: To comply with the Statement of Recommended Practice investments are included at market value. Listed investments are valued at mid market value and unlisted investments are valued at the share of underlying net assets. (f)

Stocks: Stocks are valued at the lower of cost and net realisable value.

(g) Funds: (i)

The Property Fund represents monies already expended on the acquisition, construction and improvement of freehold and leasehold properties. Unrestricted designated funds which are applied for property purposes are categorised as restricted giving rise to a transfer during the year. (ii) The Endowment Funds are held for restricted purposes, where the income only is available to be used in accordance with the wishes of the donors. (iii) The Restricted Funds are held for restricted purposes, as specified by the donors. (iv) The Unrestricted Funds include: Designated Reserves held for particular purposes designated by The Salvation Army in the exercise of its discretionary powers; Unrealised Gains Reserve held to separate recognised gains still subject to market risk; and General Reserve representing the net assets not designated for specific purposes.

THE SALVATION ARMY UNITED KINGDOM TERRITORY

Page 39

THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2015 (h) Consolidation of Central Funds: The financial statements consolidate the results of the Corps and Divisional Headquarters which, for the purposes of compliance with the Statement of Recommended Practice, are considered to be branches, and the results of the subsidiary and associated companies, and of the subsidiary trust (William Booth Memorial Trust). Reliance Bank, which is an associated company, is consolidated using the equity basis of accounting. 2.

MEMBERS DONATIONS This represents Salvationists’ personal giving to support their local Corps (Church) and the work of The Salvation Army.

3.

GRANTS RECEIVABLE Endowments £000 Local Authority Trusts

4.

Restricted £000

168 168

1,763 156 1,919

TRADING INCOME AND EXPENDITURE Local Corps Charity Shops and similar trading activities Income Expenditure Trading Subsidiaries Income (Note 6) Expenditure (Note 6)

Unrestricted £000 5 5

2015 Total £000 1,768 324 2,092

2014 Total £000 1,692 1,126 2,818

2015 £000

2014 £000

17,209 (8,586) 8,623

17,095 (8,251) 8,844

49,267 (42,526) 6,741

50,085 (39,872) 10,213

Funds generated by Corps are retained by the Corps for use in the local area and are regarded as restricted for that geographical region.

Page 40

THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2015 5.

INVESTMENT INCOME 2015 £000 Dividends receivable Interest receivable Net rental income Income from connected company Investment Income of subsidiary companies (Note 6)

6.

2014 £000

2,550 210 2,522 371 240 5,893

2,423 317 1,712 482 252 5,186

NET INCOME FROM TRADING ACTIVITIES OF SUBSIDIARIES The Central Funds of The Salvation Army has two wholly owned trading subsidiaries which are incorporated in the UK. The Salvation Army General Insurance Corporation Limited (SAGIC.) transacts insurance business, mainly property insurance. The Salvation Army Trading Company Limited (SATCOL.) deals with the collection and recycling of second-hand clothing donated by the general public and is engaged in publishing and the supply of Salvationist materials. Both companies’ covenant, through gift aid, all or part of their profits to the Central Funds. Where profits are retained, it is for working capital needs and capital for the long-term development of the business. A summary of the trading results of the subsidiary companies for the year ended 31 March 2015 is shown below. Audited accounts of the companies have been filed with the Registrar of Companies.

Profit and Loss Account Trading Income Cost of Trading Activities : Cost of Sales Distribution Costs Operating Costs Interest Payable Other Income/(Costs) Including Taxation Total cost of Trading Activities Investment Income Net Profit Realised Gains on Investments Unrealised (Losses) on investments Net Income for the year Payable to Central Funds (Gift Aid) Retained in Subsidiary

SAGIC £000

SATCOL £000

2015 Total £000

2014 Total £000

5,157

44,110

49,267

50,085

(3,872) (548) -

(22,001) (1,358) (14,352) -

(25,873) (1,358) (14,900) -

(22,590) (1,269) (15,094) -

(405)

(395)

(919)

(38,116) 75 6,069

(42,526) 240 6,981

(39,872) 252 10,465

10 (4,410) 165 912 18

-

18

133

(16) 914

6,069

(16) 6,983

(116) 10,482

(881) 33

(5,444) 625

(6,325) 658

(7,523) 2,959

Page 41 THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2015 7.

INCOME FROM ASSOCIATED COMPANY The Central Funds hold 49% of the shares in Reliance Bank Limited, the other 51% being held by The Salvation Army International Trust. The company is engaged in banking and related financial services, and during the year the Company gift aided 75% of its operating profit equally to each of the trusts. Audited accounts have been filed with the Registrar of Companies and a summary of its trading results for the year ended 31 March 2015 is as follows: 2015 2014 £000 £000 Turnover 2,716 2,657 Share of Net Profit for the year Payable to Central Funds (Gift Aid)

236 (191)

Share of Retained Profit for the Year Share of Net Assets as at 31 March 2015 8.

CHARITABLE ACTIVITIES

Church & Evangelism Programmes Community Programmes International Programmes Training Programmes Youth & Young People Programmes Support of Salvation Army Social Work Trust

Direct Costs

45 5,363

Pension Fund Contribution

£000 34,770 38,536 1,097 3,580 1,328

£000 3,229 3,771 -

1,218 80,529

7,000

3,829 -

Support Costs (Note 10) £000 4,851 4,269 472 815 1,075

14,011 17,840

11,482

Grants £000

158 (129) 29 5,318

2015 Total £000 42,850 46,576 5,398 4,395 2,403 15,229 116,851

The Pension Fund Contribution represents lump sum deficit contributions of £7m (2014: £4m) payable to the Salvation Army Retired Officers Allowance Fund and £Nil (2014: £Nil) to the Salvation Army Employees Pension Fund. Support Costs represent the support provided by territorial headquarters. 9.

GOVERNANCE COSTS

External audit Internal audit Professional Fees Trustee expenses Support Costs allocated: Trustee indemnity insurance Apportionment of Directors’ Time

2015 £000

2014 £000

125 260 1 6

125 296 29 3

9 61 462

9 69 531

THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2015

10.

SUPPORT COSTS Finance £000

HR £000

IT £000

Property £000

Communications £000

Other £000

Legal & Secretariat £000

2015 Total £000

2014 Total £000

Fundraising

330

13

34

161

191

199

100

1,028

926

Church & Evangelism Programmes

659

874

1,259

1,085

380

397

199

4,853

4,339

Community Programmes

382

961

1,340

1,020

221

230

115

4,269

3,815

International Programmes

151

7

17

74

87

91

46

473

426

Training Programmes

198

46

118

159

114

120

60

815

725

Youth & Young People Programmes

345

14

36

169

199

208

104

1,075

970

Governance

36

-

-

-

-

9

25

70

78

2015 Total

2,101

1,915

2,804

2,668

1,192

1,254

649

12,583

11,279

2014 Total

1,925

1,362

2,509

2,908

1,014

924

637

11,279

Page 42

Page 43 THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2015

11.

PERSONNEL The average number of full time equivalent Officers and Employees was: Trust Number of Officers (FTEs) Number of Employees (FTEs) Subsidiaries Total

2015 No. 1,065 1,192 2,257 625 2,882

---------------------2015 --------------Trust Subsidiaries Total £000 £000 £000 Personnel Costs Allowances and Salaries Social Security Costs Pension Fund Contributions

45,804 3,330 14,009 63,143

10,167 762 332 11,261

55,971 4,092 14,341 74,404

2014 No. 1,058 1,221 2,279 610 2,889

2014 £000 54,632 3,929 10,958 69,519

The number of employees whose emoluments as defined for taxation purposes amounted to over £60,000 in the year was as follows: ------------------- 2015 Numbers ------------2014 Trust Subsidiaries Total Number £60,001 - £70,000 11 2 13 11 £70,001 - £80,000 2 1 3 5 £80,001 - £90,000 3 1 4 4 £90,001 - £100,000 1 1 3 £100,001 - £110,000 1 1 2 £110,001 - £120,000 1 £120,001 - £130,000 2 2 £140,001 - £150,000 1 1 1 Pension contributions of £161,635 were made in respect of these employees. The senior executive officers of the Trust are Salvation Army officers whose remuneration is included in the range set out in Note 12 below. 12.

TRUSTEES (a)

Remuneration The Board of The Salvation Army Trustee Company comprise Salvation Army officers and other directors with specialist expertise. All Salvation Army officers receive an allowance based on length of service and, as ministers of religion, are provided with furnished accommodation and a motor vehicle. The allowances received by the officers serving as directors ranged from £10,525 to £18,701 per annum and they did not receive any additional remuneration for their duties as directors. Two directors who were employees received remuneration of £79,004 and £35,801. The other directors did not receive any remuneration.

(b)

Expenses Four (2014: three) directors of The Salvation Army Trustee Company were reimbursed for travelling expenses, amounting to £5,858 (2014: £3,015).

THE SALVATION ARMY UNITED KINGDOM TERRITORY

Page 44

THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) 13.

FOR THE YEAR ENDED 31 MARCH 2015 PENSION COSTS The Salvation Army Central Funds contribute to three pension schemes in respect of its staff: (i) The Salvation Army Officers’ Pension Fund relating to Salvation Army Officers, (ii) The Salvation Army Employees’ Pension Fund for other staff. (iii) A defined contribution scheme set up to offer employees who are not members of the Salvation Army Employees’ Pension Fund the opportunity to join a pension scheme following the closure of the Employee Pension Scheme to new members with effect from 31 December 2011. (a) SALVATION ARMY RETIRED OFFICERS’ ALLOWANCE FUND Salvation Army Retired Officers’ Allowance Fund was established by The Salvation Army Act 1963 under the legal name, The Salvation Army Officers’ Pension Fund. The Salvation Army Retired Officers’ Allowance Fund was subject to a triennial actuarial review on 31 March 2013 and this was based on the following principal assumptions: Post Retirement Discount Rate Pre Retirement Discount Rate Rate of Increase in Allowances and Pensions Management Expenses Rate of Inflation

4.0% per annum 4.7% per annum 4.0% per annum 2% of the liabilities of the Fund plus 3% of the future ordinary contributions 3.5% per annum

Salvation Army Retired Officers’ Allowance Fund is a registered charity and operates on the same basis as a defined benefit scheme but the benefits are not guaranteed. A standard annual contribution per pension unit is made to the Fund, which is charged to the appropriate cost centre. The Officers' scheme is non-contributory by the officer, but a contribution per officer, at present £3,950 per annum (2014: £3,726), is made by The Salvation Army, together with occasional additional capital contributions as recommended by the actuary. The market value of the Fund's assets at the valuation date amounted to £142.52m whereas the value of past service ongoing liabilities amounted to £184.17m revealing a funding shortfall of £41.65m. A recovery plan has been agreed whereby The Salvation Army will make an annual capital contribution to the scheme of £2m, the cost of which is borne by Central Funds and increase the employer’s contribution per annum in line with increases in officers’ allowances. In addition, The Salvation Army Central Funds made an additional capital contribution during the year of £5m bringing the total capital contribution to £7m (see note 8). (b) SALVATION ARMY EMPLOYEES’ PENSION FUND The Salvation Army Employees’ Pension Fund is a funded defined benefit scheme. The Scheme is a multiemployer scheme incorporating six employers. The actuary has confirmed that it is not practical to allocate the assets and liabilities of the scheme between participating employers. In accordance with FRS 17, The Salvation Army Central Funds therefore accounts for pension costs on the dates payments to the scheme fall due with any exceptional contributions being accounted for on the same basis. The Scheme is subject to triennial actuarial valuations. The last actuarial valuation was completed, using the Projected Unit Method, at 31 March 2012. The review was based on the following assumptions:Post retirement discount rate Pre retirement discount rate Rate of salary increases Rate of pension increase On pensions accrued before 6 April 2006 On pensions accrued after 6 April 2006 Rate of increase of deferred pensions pre 6 April 2006 Rate of increase of deferred pensions Post 6 April 2006 service Management expenses Inflation - RPI - CPI Deferred Pension Increases (pre 6 April 2009) Deferred Pension increases (post 6 April 2009)

4.0% per annum 5.5% per annum 4.0% per annum 3.3% per annum 2.1% per annum 3.3% per annum 2.2% per annum 1.0% of Pensionable Salaries 3.5% per annum 3.0% per annum 3.0% per annum 2.5% per annum

THE SALVATION ARMY UNITED KINGDOM TERRITORY

Page 45

THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2015 13.

PENSION COSTS (Continued) The contribution rate payable by members increased from 6% to 7% of pensionable salaries from 1 October 2013 and from 7% to 8% of pensionable salaries from 1 October 2014. The employer’s contribution, previously 12.9% increased to 13.8% of pensionable salaries with effect from 1 April 2013. The market value of the Fund's assets on the valuation date was £93.16m; The valuation concluded that the market value of the Scheme’s assets fell short of the technical provisions (i.e. the target level of assets necessary to meet promised benefits) by £7.87m which corresponded to a funding ratio of 92%. The Trustees and employers agreed the following recovery plan to eliminate the shortfall. One off capital contributions were paid to the Scheme by certain participating employers of £4.57m prior to 31 March 2013 (Central Funds £4.14m, Social Trust £Nil - a decision having been taken that the additional capital contributions to the scheme relating to Social Trust employees will be borne by Central Funds). Central Funds’ capital contribution of £4.14m is being followed by 3 additional annual contributions of £675,674 (charged to Social Work Trust) and this commenced prior to 31 March 2013. The trustees of the Scheme, in consultation with the participating employers, decided to close the Scheme to new members with effect from 31 December 2011. New employees or existing employees who are not members of the Scheme are now invited to join a defined contribution scheme. The actuarial valuation at 31 March 2012 was updated at 31 March 2015 by a qualified independent actuary for the purpose of making the following disclosures which are made to comply with the requirements of FRS 17. The FRS 17 calculations are based on prescribed assumptions which differ from those used by the Actuary for funding purposes. The major financial assumptions made by the actuary for the update at 31 March 2015 were as follows: Discount rate 3.2% per annum Inflation (RPI) 3.2% per annum Inflation(CPI) 2.3% per annum Increased to deferred benefits during deferment: Pre 6 April 2009 Service 2.3% per annum Post 5 April 2009 Service 2.3% per annum Increases to pensions in payment 5% LPI 3.1% per annum Increases to pensions in payment 2.5% LPI 2.1% per annum Increases to salaries 3.7% per annum The assumptions make no allowance for discretionary practices as there is no recent history of any such practices. Mortality before retirement

Men: Standard Table AMC00 Women: Standard Table AFC00

Mortality in retirement

Standard SAPS S1 Series tables projected forward in line with the CMI 2014 Core Projections, assuming a long-term annual rate of improvement in mortality rates of 1.50% per annum for men and women.

Page 46 THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2015 13.

PENSION COSTS (Continued) On the basis of these assumptions the actuary concluded that the scheme’s assets and liabilities at 31 March 2015 were as follows: 2015 2014 2013 2012 2011 £000 £000 £000 £000 £000 Assets at market value (excluding net current assets) 139,023 125,595 113,803 93,153 88,654 Present value of scheme liabilities (146,709) (120,454) (112,410) (97,538) (83,363) FRS 17 scheme surplus/(deficit) (7,686) 5,141 1,393 (4,385) 5,291

14.

CHANGES IN RESOURCES AVAILABLE FOR CHARITY USE Endowment Funds £000 Net movement in funds for the year

Net (increase) in tangible fixed assets for direct charitable purposes Net Movement in Funds available for Future Activities

15.

1,112

Restricted Property Fund £000 6,537

Other Restricted Funds £000 (2,850)

(2,968)

1,112

3,569

Unrestricted Funds £000

Total Funds £000

18,169

22,968

(180)

(2,850)

17,989

(3,148)

19,820

INTANGIBLE FIXED ASSETS Goodwill Cost Balance at 1 April 2014 Written off Balance at 31 March 2015

£000 10,839 10,839

Amortisation Balance at 1 April 2014 Written off Charge for the year Balance at 31 March 2015

2,159

Net Book Value at 31 March 2015

7,596

Net Book Value at 31 March 2014

8,680

1,084 3,243

Intangible fixed assets represents the goodwill arising on acquisition, by the Trust’s subsidiary company, SATCOL, of the business operations and net assets of Kettering Textiles Limited. The goodwill is being amortised over 10 years.

THE SALVATION ARMY UNITED KINGDOM TERRITORY

Page 47

THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2015 16.

PROPERTIES

(a)

Consolidated Cost Balance at 1 April 2014 Reclassifications Additions during the year Schemes completed during the year Less: Disposals Amounts written off Balance at 31 March 2015 Accumulated Depreciation Balance at 1 April 2014 Charge for the year Less: Disposals Balance at 31 March 2015 Net Book Value at 31 March 2015 Net Book Value at 31 March 2014

(b)

Freehold £000

Long Leasehold £000

Short Leasehold £000

Total £000

Property Schemes in Progress £000

364,266 44 12,584

33,910 758

349 (44) -

398,525 13,342

7,302 5,041

4,439 381,333 (3,524)

34,668 (833)

305 (40)

4,439 416,306 (4,397)

(4,439) 7,904

377,809

33,835

265

411,909

285 3 (40) 248

108,966 8,720 (1,692) 115,994

100,602 8,025 (1,400) 107,227

8,079 692 (252) 8,519

(4,004) 3,900

-

270,582

25,316

17

295,915

3,900

263,664

25,831

64

289,559

7,302

363,329 44 12,584

33,789 758

349 (44) -

397,467 13,342

7,302 5,041

4,439 380,396 (3,524)

34,547 (833)

305 (40)

4,439 415,248 (4,397)

(4,439) 7,904

376,872

33,714

265

410,851

285 3 (40) 248

108,751 8,706 (1,692) 115,765

Trust Cost Balance at 1 April 2014 Reclassifications Additions during the year Schemes completed during the year Less: Disposals Amounts written off Balance at 31 March 2015 Accumulated Depreciation Balance at 1 April 2014 Charge for the year Less: Disposals Balance at 31 March 2015 Net Book Value at 31 March 2015 Net Book Value at 31 March 2014

100,409 8,013 (1,400) 107,022

8,057 690 (252) 8,495

(4,004) 3,900 -

269,850

25,219

17

295,086

3,900

262,920

25,732

64

288,716

7,302

Trust properties comprise primarily Corps halls, Divisional and Territorial Headquarters buildings and residential properties for active and retired officers. A small number of properties are sublet to maximise income, in some cases to subsidiary companies.

Page 48 THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2015 17.

MOTOR VEHICLES AND EQUIPMENT

(a)

Consolidated

Office Equipment £000

Total £000

Cost Balance at 1 April 2014 Additions Disposals Balance at 31 March 2015

877 121 (147) 851

14,003 1,978 (70) 15,911

14,880 2,099 (217) 16,762

Accumulated Depreciation Balance at 1 April 2014 Charge for the year Disposals Balance at 31 March 2015

435 166 (110) 491

8,127 1,704 (54) 9,777

8,562 1,870 (164) 10,268

360 442

6,134 5,876

6,494 6,318

103 103

3,033 372 3,405

3,136 372 3,508

Accumulated Depreciation Balance at 1 April 2014 Charge for the year Disposals Balance at 31 March 2015

33 11 44

2,472 181 2,653

2,505 192 2,697

Net Book Value at 31 March 2015 Net Book Value at 31 March 2014

59 70

752 561

811 631

Net Book Value at 31 March 2015 Net Book Value at 31 March 2014 (b)

Motor Vehicles £000

Trust Cost Balance at 1 April 2014 Additions Disposals Balance at 31 March 2015

Page 49 THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2015

18.

FIXED ASSET INVESTMENTS

(a)

Consolidated Market Value at 1 April 2014 Acquisitions Gains on investments Disposals Market Value at 31 March 2015 Historical Cost at 31 March 2015

(b)

Trust Market Value at 1 April 2014 Acquisitions Gains on investments Disposals Market Value at 31 March 2015 Historical Cost at 31 March 2015

Salvation Army Common Investment Funds Fund 1 Fund 2 £000 £000

Unlisted Investments

Subsidiaries Listed Investments

Total

£000

£000

£000

3,590 271 -

106,615 6,850 -

14,090 212 673 -

3,699 389 2 (312)

127,994 601 7,796 (312)

3,861

113,465

14,975

3,778

136,079

2,963

81,700

8,273

3,514

96,450

3,590 271 -

106,615 6,850 -

12,191 168 673 -

3,467 -

125,863 168 7,794 -

3,861

113,465

13,032

3,467

133,825

2,963

81,700

8,273

3,467

96,403

Unlisted Investments represent a 49% holding in Reliance Bank Limited and a 20% holding in William Leech (Investments) Limited. Reliance Bank is considered to be an associated company and is accounted for at cost in the Trust Balance Sheet and on an equity basis in the consolidated Balance Sheet. William Leech (Investments) is not considered to be an associated company and is valued in both the Trust and Consolidated Balance Sheets at share of underlying net assets. 2015 2014 £000 £000 Reliance Bank Cost of Shares 3,419 3,419 3,419 3,419 William Leech (Investments) Limited 9,611 8,770 Other 2 2 13,032 12,191 Subsidiaries are accounted for at cost in the Trust Balance Sheet. subsidiaries own listed investments. (c)

The Consolidated Balance Sheet includes the

Common Investment Funds The Salvation Army Common Investment Funds hold a wide range of investments. The principal categories of investment and the relevant percentages held at the year end were as follows: Fund 1 Fund 2 Fixed Interest Securities 0% 13% Cash 5% 2% UK Equities 35% 33% UK Property Funds 7% 7% Overseas Investments 53% 45%

Page 50 THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2015 19.

DEBTORS

Connected Salvation Army Trusts and Companies Taxation recoverable Prepayments and accrued income Other Debtors

20.

2015 £000

Trust

1,423 5,872

511 2,073

7,264 5,663

7,961 2,073

6,207 4,344 17,846

8,855 4,550 15,989

4,552 593 18,072

7,213 797 18,044

131

18

131

18

2,312 22,223 24,666

1,346 554 21,380 23,298

2,458 9,164 11,753

982 9,011 10,011

22,750 295 23,045

22,871 250 23,121

22,750 22,750

22,871 22,871

366 406

106 758

366 406

106 758

21,978 22,750

22,007 22,871

21,978 22,750

22,007 22,871

2014 £000

CURRENT LIABILITIES Loans repayable within one year (secured) Connected Salvation Army Trusts and Companies Taxation Creditors and Accruals

21.

Consolidated 2015 2014 £000 £000

LONG TERM LIABILITIES Bank Loans Other Creditors

Bank Loans Repayable by instalments Less than five years More than five years Repayable other than by instalments Less than five years More than five years

THE SALVATION ARMY UNITED KINGDOM TERRITORY

Page 51

THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2015 22.

ENDOWMENTS (Consolidated and Trust)

Balance 1 April 2014

Movement in Funds Incoming Resources & Gains

Balance 31 March 2015

Permanent Endowments

£000

£000

£000

E.S. Brant Sir James Reckitt Trust W.J. Davis Trust Other

1,733 404 891 521 3,549

130 30 69 42 271

1,863 434 960 563 3,820

8,790 12,339

841 1,112

9,631 13,451

Expendable Endowments William Leech Fund Total

The E.S. Brant Fund was formerly a separate Salvation Army Trust. Its purpose is evangelical work. The Sir James Reckitt Fund was set up in 1916 for the benefit of the work of The Salvation Army in Hull. By administrative decision, the income is allocated as to 7/8ths for Corps purposes and 1/8 th for Men’s Social Work. The W J Davis Fund was set up in 1991 to support the work of the Midnight Patrol and the annual income is transferred to the Social Trust to fund this work. The William Leech Fund was initially set up in 1955 with annual donations thereafter. It is represented by a 20% holding of shares in William Leech (Investments) Limited, with the other shares held equally by four other Christian charities. The annual income is transferred to The Salvation Army International Trust as part of the United Kingdom Territory’s contribution to the International Self Denial Fund to help fund work in developing countries.

Page 52 THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2015 23.

RESTRICTED PROPERTY FUND (Consolidated and Trust) Funding of properties for charitable purposes

Balance 1 April 2014 £000

Consolidated & Trust

276,624

Movement in Funds: Incoming Resources & Transfers Expenditure £000 £000 19,247

(12,710)

Balance 31 March 2015 £000 283,161

This represents funds already expended on the properties used by The Salvation Army in its evangelical and community work throughout the United Kingdom. 24.

OTHER RESTRICTED FUNDS (Consolidated and Trust) Balance 1 April 2014 £000 Corps funds Legacy reserves Trust funds Specific donations Consolidated & Trust

48,086 70,773 2,245 6,961 128,065

Movement in Funds: Incoming ExpendiResources ture & & Transfers Transfers £000 £000 64,125 7,428 116 4,609 76,278

(62,336) (12,078) (40) (4,674) (79,128)

Balance 31 March 2015 £000 49,875 66,123 2,321 6,896 125,215

The income funds of The Salvation Army include restricted funds comprising the above unexpended balances of donations and legacies held on trusts which can only be expended in accordance with the specific terms laid down by the donors. 25.

UNRESTRICTED FUNDS (Consolidated and Trust)

Designated Funds Unrealised Gains Reserve General Reserve Trust

2015 £000 64,520 25,296 25,818 115,634

2014 £000 52,465 18,576 26,424 97,465

Non-charitable Trading Funds Consolidated

18,563 134,197

17,861 115,326

Page 53 THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2015 25.

UNRESTRICTED FUNDS (Continued) (i) Designated Funds The Unrestricted Funds of The Salvation Army include the following designated reserves which have been set aside by the directors for specific purposes:

Property Purposes Vehicles and Equipment – Expended Territorial programmes

Balance 1 April 2014 £000

New Designations £000

38,191

8,500

561

47,252

14

-

-

14

14,260 52,465

7,700 16,200

Utilised/ Realised £000

(4,706) (4,145)

Balance 31 March 2015 £000

17,254 64,520

(ii) General Reserve This is required to fund the day to day needs of The Salvation Army. (iii) Non-Charitable Trading Funds This represents the profits retained in the trading subsidiaries and associated company to provide the working capital for their trading operations and capital for the long term development of their businesses. 26.

ANALYSIS OF GROUP NET ASSETS BETWEEN FUNDS Endowment Funds £000 Fund Balances at 31 March 2015 are Represented by Intangible assets Fixed assets Investments Current assets Current liabilities Long term liabilities Total Net Assets

13,451 13,451

Restricted Funds Property Other £000 £000

299,815 6,227 (131) (22,750) 283,161

75,340 49,875 125,215

Unrestricted Funds £000

Total Funds £000

7,597 6,494 47,288 97,648 (24,535) (295) 134,197

7,597 306,309 136,079 153,750 (24,666) (23,045) 556,024

THE SALVATION ARMY UNITED KINGDOM TERRITORY

Page 54

THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2015 27.

CAPITAL COMMITMENTS The directors are continuing the process of refurbishing and developing Salvation Army properties. At the Balance Sheet date contractual obligations entered into by the Salvation Army Central Funds in respect of property capital schemes amounted to £13,346,750 (2014: £7,893,293).

28.

FINANCIAL COMMITMENTS: As at 31 March 2015 the total annual commitments under non-cancellable operating leases on vehicles and equipment and land and buildings, as follows:

Expiring within 1 year Expiring between 2 and 5 years Expiring in over 5 years

29.

2015 Land & Vehicles & Buildings Equipment £000 £000 1,138 319 2,174 1,435 322 3,634 1,754

2014 Land & Vehicles & Buildings Equipment £000 £000 912 502 2,514 1,452 80 3,506 1,954

RELATED PARTY TRANSACTIONS The Salvation Army Central Funds supports the work of other connected Salvation Army trusts through the payment of grants and these are set out in Note 8. A grant of £3.82m was paid to The Salvation Army International Trust (2014: £4.21m) and a grant of £14.01m was paid to The Salvation Army Social Work Trust (2014: £13.44m) An overhead recharge amounting to £5.46m and a further recharge for fundraising and publicity amounting to £0.7m were charged to The Salvation Army Social Work Trust during the year, representing that trust’s share of central overhead costs which were incurred by The Salvation Army Central Funds. In addition recharges were charged to The Salvation Army Social Work Trust for hire of rooms at Corps premises. The Salvation Army Central Funds uses the banking services of Reliance Bank Limited which, as stated in Note 7, is an associated company of The Salvation Army Central Funds and is consolidated on an equity basis. At the year end The Salvation Army Central Funds held balances of £118.85m with Reliance Bank (2014: £104.66m). Interest was earned on deposit balances on a normal commercial basis. Russell Chalmers, who is a director of The Salvation Army Trustee Company, has a significant interest in a company which provided services to The Salvation Army Central Funds amounting to £1,840 (2014: £3,745). The son of Colonels David and Sylvia Hinton, who are directors of The Salvation Army Trustee Company, provided IT consultancy services to The Salvation Army Central Funds during the year amounting to £45,605: £40,183). The brother of Lieut-Colnel Mike Caffull, who is a director of The Salvation Army Trustee Company, is the managing director of Salvation Army Trading Company Ltd, SATCOL. His salary is paid by SATCOL and he had no direct transactions with The Salvation Army Trust (Central Funds). The daughter of Lieut-Colonel George Pilkington, who is a director of The Salvation Army Trustee Company, is a part time employee at the territorial headquarters at The Salvation Army Trust (Central Funds).

Page 55 THE SALVATION ARMY UNITED KINGDOM TERRITORY THE SALVATION ARMY TRUST (CENTRAL FUNDS) NOTES TO THE FINANCIAL STATEMENTS (Continued) FOR THE YEAR ENDED 31 MARCH 2015 30(a)

30(b)

30(c) 30(d)

RECONCILIATION OF NET INCOMING RESOURCES TO NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 2015 £000 £000 Net Incoming Resources 15,638 Income from Associated Company 236 Depreciation: Properties 8,720 Depreciation: Motor Vehicles and Equipment 1,870 Amortisation of Goodwill 1,084 Gain on Disposal of Properties (9,877) Investment Income (5,893) (Increase) in Stocks (14) (Increase) in Debtors (1,857) Increase/(Decrease) in Creditors 1,299 Net Cash Inflow from Operating Activities 11,206 CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Additions to Properties 13,342 Additions to Property Schemes in Progress 1,037 Additions to Motor Vehicles and Equipment 2,099 Proceeds on disposal of Properties (12,582) Proceeds on disposal of Motor Vehicles and Equipment (53) Addition to Fixed Asset Investments 289 4,132 FINANCING (Repayment) of loans for property Funding (8) ANALYSIS OF CHANGES IN NET FUNDS AT BANK At beginning of year: Cash at Bank 40,666 Liquid Resources: Short Term Deposits 79,417 Loans for property funding (22,889) 97,194 Movement in Year 12,967 At end of year: Cash at Bank 40,013 Liquid Resources – Short Term Deposits 93,029 Loans for Property Funding (22,881) 110,161

2014 £000

£000 29,308 158 8,563 1,809 1,075 (7,230) (5,186) (196) (6,926) (81) 21,294 12,394 7,684 2,063 (10,634) (45) 2,272 13,734 (125)

39,638 67,824 (23,014) 84,448 12,746 40,666 79,417 (22,889) 97,194