sisters mercy (229943)

Charity registration number: X229943

Sisters of Mercy Sunderj. and (229943)

Annual Report and Financial Statements

for the Year Ended 31 December 2018

~hitChartered Certified Accountants dc Registered Auditors

Cotton HouseOld Hall Street

LiverpoolL3 9TX

Sisters of Mercy Snnderland (229943)

Contents for the Year Ended 31 December 2018

Reference and Administrative Details

Trustees' Report

Independent Auditors' Report

Statement of Financial Activities

2 to 10

11 to 13

14 to 15

Balance Sheet 16

Cash Flow Statement 17

Notes to the Financial Statements 18 to 28


Reference and Administrative Details

Trustees Miss J.C. Carlin

Miss P.A. Shoulder

Miss M.M. Rowntree

Miss S.C. Christon

Miss A. Gleeson (Deceased 23 January 2019)

Principal Office Convent of MercyOak LeaTunstall RoadSunderlandSR2 7JR

Charity Registration Number X229943

Solicitors Womble Bond Dickinson (UK) LLPOne TrinityBroad ChareNewcastle upon TyneNE I 2HF

Bankers and Other FinancialAdvisors

National Westminster Bank pic52 Fawcett StreetSunderlandSR1 1SB

HSBC picFore StreetHexhamNorthumberlandNE46 ILY

Barclays Bank picJenkins HouseBob Hardisty DriveBishop AucklandDL14 7TH

Investec Wealth and Investment Limited30 Gresham StreetLondonEC2V 7QN

Auditor WhitnallsChartered Certified Accountants & Registered AuditorsCotton HouseOld Hall StreetLiverpoolL3 9TX

Page I

Sisters of Mercy Sunderland (229943)

Trustees' Report for the Year Ended 31 December 2018

The trustees present the annual report together with the financial statements of the charity for the year ended 31December 2018.

Trustees

Miss J.C. Carlin

Miss P.A. Shoulder

Miss M.M. Rowntree

Miss S.C. Christon

Miss A. Gleeson (Deceased 23 January 2019)

Objectives and activities

Objects aud amis

Our objectives are set to reflect our faith and community aims. Each year the trustees review our objectives andactivities to ensure that they continue to reflect our aims. In carrying out this review, the trustees have

considered the Charity Commission's general guidance on public benefit and, in particular, its supplementarypublic guidance on the advancement of religion for the public benefit.

The Charity's objectives are the promotion of the educational, religious and other charitable work of the RomanCatholic Church in England for the benefit of the public in such a way as the trustees shall fiom time to time,with the consent of the Sister Superior, determine. Provided that if, and insofar as the trustees consider, they

may not usefully apply assets available for distribution in any one year in England then they shall apply thesame with such consent for such work elsewhere.

The Charity carries out a wide range of activities in pursuance of its charitable aims.

Public bettefit

The Charity carries out a wide range of activities hi pursuance of its charitable aims. The trustees consider that

the strategies employed to achieve the Charity's objectives for 2018 and the principal areas in which theCommunity is involved, set out below, provide benefit to the wider community in North East England, Englandas a whole, and elsewhere as the trustees see fit.

The trustees confirm that they have complied with the requirements of section 4 of the Charities Act 2011 tohave due regard to the public benefit guidance published by the Charity Commission for England and Wales.

Page 2

Sisters of Mercy Sunderiand (229943)


Achievements and performance

During the year to 31st December 2018, the Community was active in all principal areas listed above. A

summary ofkey developments is set out below:-

The Sisters in Oak Lea continue theh various ministries, working as parish sisters, parish based committee

co-ordinators, school chaplains and visitors to the elderly and others in need. Other Sisters do very valuable

work in the house, attending to visitors and callers, helping to provide food for the poor, taking communion tohomes for the elderly and conducting services there. Some are involved in adult education programmes.

The Prayer House/Catechetical Centres in both Seaham and Sunderland continued their successful work in

2018. Groups use the facilities to be spiritually refreshed. The director of the Centre in Seaham also went out to

give various courses in adult education.

As members of Mercy International Association fIVHA) the Community continues the strong links with MercyInternational in Dublin. As President of the English Federation of the Sisters of Mercy, Sister Superior is

automatically one of the board members of MIA.

The Community also continued its active involvement in several programmes aimed at assisting the poor, i.e.CAFOD and work with The Apostleship of the Sea.

Our pastoral work included one member of the Community who acted as a school chaplain at St. Anthony' sGirls' Catholic Academy.

One member of the Community continued her work in South Sudan in 2018 but will continue her work as a

coordinator based in the UK - her last visit report covering October 2018 —January 2019 is as follows—

Sr Maureen Ltmer, Mercy Beyond Borders and Diocese ofRurubek - South Sutlan

This was a very fruitful and satisfying visit where the timing coincided with graduations and end of semester

as well as a selection of new students. Accounts were settled and new ones prepaid to the end of 2019. I

travelled with a new colleague for MBB, Sr Sue Claire Buziru, She was happy to be introduced to the peopleand places that she will visit in my stead in the coming months. She will now take responsibility for theadministration of the South Sudan MBB Scholarships and organisation of Workshops. I may be invited fiom

time to time to take part in the Workshops and I would be happy to go if the time is right, but there will be no

obligation to do so.

My long-standing colleague, Ugandan Sister, Edvine Tumwesigwe, who has been ill since last year, sadly

died during my visit, on 28 December 2018, R.I.P.

I am in mobile and email contact with DOR Administrator, Jonathan Barsby, and all DOR departments and

parishes in South Sudan and in Nairobi, Kenya. Funds which are transferred for SS Education Irom the

Bakhita Education Fund, NatWest Account, Sunderland, or from MBB HQ in Menio Park, California, U.S.A. ,are ably administered on our behalf under supervision and strict protocol. I am not actively fundraising at the

moment but may well do so in the future and I will continue to channel funds, Irom regular donors, to the

Nairobi office.

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Mercy Beyond Borders - Supervision ofScholars and Administration ofFund

1. Catholic University of South Sudan- a. Juba-b. Wau

Meetings with all the students and Administrators/Tutors of CUotSS, Juba and WauAll tuition fees and supplementary graduation costs clearedGraduation of 10 students at Juba Campus, I in Wau on completion of 4/5 year course

2. Catholic Health Training Institute, Wau. Training of Nurses and Midwives.Meetings with all the students and the Administrators/Tutors of CHTI' All tuition fees paid in advance for 2019 for 3 continuing students and I new.' Graduation of 3 students on completion of 3 year course

Diocese ofRumbetr, Edncatlon Office, Rumbek - Advisory role siiice tire oppointnient ofMoses Ifopurot asEducation Coordbialor in 2013

Meetings with Diocesan Administrator, Fr John Mathiang, Education Officers, Moses Kopurot and RobinsonOdong, John Madier and Simon Nduati regarding ongoing projects particularly the Teacher Training Centre inCueibet after the tragic death of the Principal, Fr Victor

Mapuordit, Coniboni Mary Immaculate Hospital, Primary and Secondary Schools

Cooperation with the doctors, nurses and teachers regarding selection and follow-up of Secondary studentswishing to join the Hospital Basic Nursing Course in Mapuordit and to be considered for further training atWau, CHTI. Ongoing scholars - 17

Nairobi Admlnislratioii and Finance Office

Liaison with Administrator, Jonathan Barsby, and Finance Officers, Nancy Nyamunsi and Shadrack.

Whilst the Community continued to operate the Camtyne Residential Home in Hexham in 2018 it reviewed itsfuture involvement going forward. As our Community is aging, a decision was made to sell Carntyne so that wecould guarantee that the excellent care would continue. Through our solicitors, Womble Bond Dickinson, weengaged Resolve Care Consultancy to look at the way we operated and to recommend any changes. Weemployed an estate agent to value the property and land and separately to value the sale of Carntyne as a goingconcern. We were concerned about the welfare of our employees and our residents. The solution has been to sellCamtyne as a going concern to Elaine Reay. All employees and residents are to transfer to her care. The transferwas completed on 22 May 2019.

The Community made a number of large donations during 2018 of which the most significant were thefo1 lowing:-

- Bursary payments of f40,000 were made to students to assist them in further education and higher educationwho otherwise would not have been able to afford these courses,

- A payment of f20,000 was made to sponsor the Youth Section of our Diocesan Pilgrimage to Lourdes.

—A payment of g15,000 was made re the Diocesan Youth "Flame" event.

Page 4



- A payment of f, l 0,000 was made to the Catholic Trust towards the publication of a prayer book for prisoners.

- Payments of 813,000 in total to CAFOD, St Benedict's Hospice and Salvation Army.

-St. Anthony's Girls' Catholic Academy's school buildings and grounds were transferred to the trusteeship of the

RC Diocese of Hexham and Newcastle on 15th January 2018. The value of the land and property transferred

was 88,537,490.

Finally, it is with sadness that we have to report the death of four members of our Community since the last

report

—Sister M. Benedict (Anastasia Costello) was born in Galway and entered Oaklea Convent in 1936. She taught

in St Anthony' s, St Patrick' s, Ryhope, St Patrick's Sunderland and was Headteacher of St Mary's Hexham.

Sister was a gilled singer, musician and artist. She died on October 2nd, 2018, aged 101,having served 82 yearsas a Sister of Mercy.

- Sister M. Loreto (Rosalina Baldasera) was born in Thornley, Co Durham. She attended St Anne's Wolsinghamthen taught in St Patrick's Sunderland and was Headteacher of St Charles, Gosforth. She was a very giftedsinger. She worked with asylum seekers and parish groups especially 1st communicants. She died on November

23rd, 2018, aged 86.

- Sister M. Calasanctius (Anne Gleeson) was born in Co Limerick. She entered Oaklea in 1957, She obtained a

Science Degree at Newcastle University and taught in St Anthony' s. She was Head of Year then Deputy Head

Teacher in charge of Pastoral Care. After retirement she continued as a Governor of St Anthony's and was a

Trustee of the Community and was the Convent Sacristan. She died on January 23rd, 2019, aged 80.

- Sister M. Dolores (Ethel Marie Dolores Magee) was born in Dublin. She entered Oaklea in 1953.She qualified

as a teacher, taught in English Martyrs School, Red House, Sunderland and became Headteacher. She was giftedin music and enjoyed singing and playing, especially for Mars and School Services. On retirement, she workedin catechesis in the Diocese. She was Mother Superior of Oaklea Convent for 9 years. She died on her feastday,September 15th, 2019, aged 83.

Financial review

The end of year saw our Balance Sheet in a healthy position with total funds standing at f35,202,501, a decreaseof 810,734,317 on the previous year. Before taking into consideration realised losses and gains on ourinvestments, there was a deficit of f8,504, 130 which compares with last year's surplus of f59,656.

Policy on reserves

The Trustees have reviewed their medium term commitments (up to 5 years) and continue to acknowledge that:-

(I) There continues to be increasing financial burdens placed upon us in providing adequate care for what is an

ageing community. In addition to this, as Sisters become more fi'ail, specific areas, i.e. catering, cleaning, careand finances, are managed by employed lay stafi'with the consequential increase in budgeted costs.

(2) As Sisters reach retiring age they will need retraining in new ministry, It is, therefore, prudent to set asidefunds towards potential extra costs. This requires resources for their ongoing development and personal renewal.

We have also reviewed our longer term commitments (6 to 10 years) and are satisfied that we have a suitablereserves policy in place.

Page 5



Prhrcipal funding sources

As in previous years, the four main sources of funding were investment income, bank interest, residential home

fees and covenanted Sisters' teaching pensions. This year there was a realised surplus of 815,657 (last year loss

868,727) on sales undertaken by our investment advisors. This last source is not taken into account when

budgeting as it is merely a by-product of their transposition of investments during the year and can not be relied

upon.

As reported earlier (in Achievements and Performance) our donations and grants paid amounted to f8,711,862,

all made either for the promotion of the Roman Catholic religion or the provision of education,

ntvestntent policy and objectives

The Charity has a formal investment policy which is reviewed on a regular basis.

The investment objective is the achievement of a targeted return of both income and capital growth by

investment with no more than a moderate level of risk. This is achieved by reference to four indices referred to

under the heading "Investment Performance" although our total portfolio does not fit with any of the indices or

indeed with the relevant WM Charity Index.

This policy also provides for our advisors to take account of certain ethical constraints which we have imposed.

The Community's investment powers are governed by the provisions of the Trustee Act 2000.

The Community receives advice Irom our investmeut managers, Investec Wealth & Investment Limited, who

provide us vtith quarterly valuations of the portfolio. Our Finance Manager is instructed to receive weekly (or

more frequently as events dictate) reports trom the stockbrokers and meet with them at least twice a year to

ensure that the fund is managed in accordance with our guidelines and within the ethical principles of the

Community.

Our Finance Manager reports to the Trustees on a regular basis and arranges for the stockbroker who manages

the portfolio to visit us twice during the year in order to discuss all matters relating to investment policy with the

Trustees.

The Trustees consider all advice received in meetings of the Council, although Sister Superior is empowered to

take urgent decisions alone.

The overall investment return for the year was -4.3% (2017 12.4%) compared with the benchmark's -5.67%.

Page 6



Plans for future periods

Aims and key objectives for future periods

The Charity plans to continue the activities outlined in depth above, both in 2018 and in the forthcoming years,subject to satisfactory funding arrangements.

We intend to review our existing plans to ensure that the Charity's ageing community needs, as identified in the

Reserves Policy section, are fully provided for. The health of the Community must be a continual review toensure that funds are in place to meet all health requirements.

As in previous years we have plans to make a number of charitable donations in 2019.

As noted in 'Achievements and Performance' the sale of Carntyne Residential Home was completed on 22nd

May 2019.

Structure, goveruance and management

Na*tre ofgoverning document

The Charity, known as the Sisters of Mercy Sunderland (229943), is governed by the single scheme approved bythe Charity Commission on 24th January 2008. This scheme altered or affected the trusts of the charities

formerly known as:-

SistersSistersSistersSistersSistersSistersSistersSisters

of Mercy, St. Anne's Convent WolsinghamofMercy St. Anthony's Convent (229943)of Mercy St. Joseph's Convent Gosforthof Mercy Convent of Mercy Seahamof Mercy Convent of Mercy Hexhamof Mercy St. Anthony's Secondary Schoolof Mercy Educational Trustof Mercy Ryhope Property Trust

Recruttntent and appoi»anent of tntstees

Recruitment of trustees is undertaken by a process of discernment by the Sister Superior.

The power of appointing new trustees is vested in the Sister Superior.

Page 7



Induction and training of trustees

As part of the ongoing training programme, existing and new Trustees are made aware of their responsibilitiesas Trustees of this charity. This programme mcludes:-

- An introduction to the specific objectives, scope and policies of the Charity. (All Trustees, being members ofthe Community, are aware of the overall aims and objectives of the Charity. )

- Charity Commission information on trustee responsibilities as signposted through the Commission's guide"The Essential Trustee".

- A summary of the main documents which set out the operational framework for the Charity.

—Copies of the financial position as set out in both the latest published accounts and the latest financial forecast

- Copies of the latest risk assessments.

Organisati onai structnre

The Sisters of Mercy Sunderland (229943) is an autonomous religious order which is administered by SisterSuperior for the time being, together with a Council consisting of four members of the Community and fourother trustees. Sister Superior and the Council are elected by the members of the Community for a term of threeyears, but the uustees are appointed for a term of four years. The governing documents require that the trustees,who are an unincorporated body, must be drawn fiom members of the Community.

The Chah of Trustees is the Sister Superior who is also a Foundation Governor at St. Anthony's Girls' CatholicAcademy.

The Trustees formed the Management Committee of the Camtyne Residential Home in Hexham.

As well as operating fi'om the Convent at Sunderland, the Community has established Branch Houses at Seahamand Wolsingham (both in County Durham). The Branch House at Hexham was sold in 2007, but, under theTrusteeship of the Sisters, the Carntyne Residential Home for the Elderly at Hexham continued to operate underlay management with regular visits by the Sisters until its sale in 2019.

Strategic financial decisions relating to all the Convents and the Residential Home are overseen by the Trustees,although the day-to-day management of accounts is undertaken by the Finance Manager. Mandates with theprincipal bankers are in place to the effect that any two Trustees may sign cheques. In the case of the BranchHouses and the Residential Home this authority is delegated to the respective Sisters in Charge but under theultimate authority of the Trustees.

The accounts accompanying this report are the accounts of the charitable trusts on which the assets of theCommunity are held.

Page 8



Major risks and managenient of tiiose risks

Risk management

The major risks to which the Charity is exposed have been identified and considered. The Trustees are satisfiedthat procedures are in place to cover all aspects of risk.

Internal control risks are minunised by the implementation of procedures for authorisation of all financialtransactions. Procedures are also in place to ensure compliance with the health and safety of staff, clients andvisitors to all our premises.

Financial instruments

Objectives and policies

The charity's activities expose it to a number of financial risks including credit risk, cash flow risk and liquidityrisk. The use of financial derivatives is governed by the charity's policies approved by the board of trustees,which provide written principles on the use of financial derivatives to manage these risks. The charity does notuse derivative financial instruments for speculative purposes.

Cash flow risk

The charity's activities expose it primarily to the financial risks of changes in foreign currency exchange ratesand interest rates. The charity uses foreign exchange forward contracts and interest rate swap contracts to hedgethese exposures.Interest bearing assets and liabilities are held at fixed rate to ensure certainty of cash flows.

Credi't risk

The charity's principal financial assets are bank balances and cash, trade and other receivables, and investments.The charity's credit risk is primarily attributable to its trade receivables. The amounts presented in the balancesheet are net of allowances for doubtful receivables. An allowance for impairment is made where there is anidentified loss event which, based on previous experience, is evidence of a reduction in the recoverability of thecash flows.The credit risk on liquid funds and derivative financial instruments is limited because the counterparties arebanks with high credit-ratings assigned by international credit-rating agencies.The charity has no significant concentration of credit risk, with exposure spread over a large number ofcounterparties and customers.

Liqnidtty risk

In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and futuredevelopments, the charity uses a mixture of long-term and short-term debt finance.Further details regarding liquidity risk can be found in the Statement of accounting policies in the financialstatements.

Important events after the financial period

As reported in Achievements and Performance, Carntyne Residential Home in Hexham was sold as a goingconcern in May 2019.

Page 9



Statement of Trustees' Responsibilities

The trustees are responsible for preparing the trustees' report and the financial statements in accordance with the

United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) and

applicable law and regulations.

The law applicable to charities requires the trustees to prepare financial statements for each financial year which

give a true and fair view of the state of affairs of the charity and of the incoming resources and application ofresources of the charity for that period. In preparing these financial statements, the trustees are required to:

select suitable accounting policies and then apply them consistently;

observe the methods and principles in the Charities SORP;

make judgements and estimates that are reasonable and prudent;

state whether applicable accounting standards have been followed, subject to any material departures

disclosed and explained in the financial statements; and

prepare the financial statements on the going concern basis unless it is inappropriate to presume that thecharity wifi continue in business.

The trustees are responsible for keeping proper accounting records that disclose with reasonable accuracy at anytime the financial position of the charity and enable them to ensure that the financial statements comply with theCharities Act 2011, the applicable Charities (Accounts and Reports) Regulations, and the provisions of theconstitution. The trustees are also responsible for safeguarding the assets of the charity and hence for takingreasonable steps for the prevention and detection of fraud and other irregularities.

The annual report was approved by the trustees of the charity on ..............'.„„~„„,..c..!?L(?...).9, and signed on itsbehalf by;

yL' ('~Miss C. CarlinTrustee

Miss P.A. ShoulderTrustee

Miss M.M. RowntreeTrustee

Miss S.C. Cludston

Trustee

Page 10


Independent Auditor's Report to the Trustees of Sisters of Mercy Sunderland (229943)

OpinionWe have audited the financial statements of Sisters of Mercy Sunderland (229943) (the 'charity') for the yearended 31 December 2018, which comprise the Statement of Financial Activities, Balance Sheet, Cash FlowStatement, and Notes to the Financial Statements, including a summary of significant accounting policies. Thefinancial reporting &amework that has been applied in their preparation is United Kingdom AccountingStandards, comprising Charities SORP - FRS 102 'The Financial Reporting Standard applicable in the UK andRepublic of Ireland' and applicable law (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the charity trustees, as a body, in accordance with section 144 of the Charities Act2011 and regulations made under section 154 of that Act. Our work has been undertaken so that we might stateto the trustees those matters we are required to smte to trustees 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 thecharity and its trustees as a body, for our audit work, for this report, or for the opinions we have formed.

In our opinion the financial statements:

give a true and fair view of the state of the charity's affairs as at 31 December 2018 and of its results for theyear 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.

Basis for opinionWe conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) andapplicable law. Our responsibilities under those standards are further described in the Auditor's responsibilitiesfor the audit of the financial statements section of our report, We are independent of the charity in accordancewith the ethical requirements that are relevant to our audit of the financial statements in the UK, including theFRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our opinion.

Conclusions relating to going concernWe have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us toreport to you where:

the trustees use of the going concern basis of accounting in the preparation of the financial statements is notappropriate; or

the trustees have not disclosed in the financial statements any identified material uncertainties that may castsignificant doubt about the charity's ability to continue to adopt the going concern basis of accounting for aperiod of at least twelve months from the date when the financial statements are authorised for issue.

Other informationThe trustees are responsible for the other information. The other information comprises the information includedin the annual report, other than the financial statements and our auditor's report thereon. Our opinion on thefinancial statements does not cover the other information and, except to the extent otherwise explicitly stated inour report, we do not express any form of assurance conclusion thereon.

Page 11


Independent Auditor's Report to the Trustees of Sisters of Mercy Sunderland (229943)

In connection with our audit of the financial statements, our responsibility is to read the other information and,in doing so, consider whether the other information is materially inconsistent with the financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such materialinconsistencies or apparent material misstatements, we are required to determine whether there is a materialmisstatement in the financial statements or a material misstatement of the other information. If, based on thework we have performed, we conclude that there is a material misstatement of this other information, we arerequired to report that fact.

We have nothing to report in this regard.

Matters on which we are required to report by exceptionIn the light of our knowledge and understanding of the charity and its environment obtained in the course of theaudit, we have not identified material misstatements in the Trustees' Report.

We have nothing to report in respect of the following matters where the Charities Act 2011 requires us to reportto you if, in our opinion:

adequate accounting records have not been kept, or returns adequate for our audit have not been received&om branches not visited by us; or

the financial statements are not in agreement with the accounting records and returns; or

certain disclosures of trustees remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Responsibilities of trustees

As explained more fully in the [set out on page 10], the trustees are responsible for the preparation of thefinancial statements and for being satisfied that they give a true and fair view, and for such internal control asthe trustees determine is necessary to enable the preparation of financial statements that are free &om materialmisstatement, whether due to

fi

au or error.

In preparing the financial statements, the trustees are responsible for assessing the charity's ability to continue asa going concern, disclosing, as applicable, matters related to going concern and using the going concern basis ofaccounting unless the trustees either intend to liquidate the charity or to cease operations, or have no realisticalternative but to do so.

Auditor's responsibilities for the audit of the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are feefiom material misstatement, whether due to &aud or error, and to issue an auditor's report that includes ouropinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with ISAs (UK) will always detect a material misstatement when it exists, Misstatements can arise&om fi'aud or error and are considered material if, individually or in the aggregate, they could reasonably beexpected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintainprofessional scepticism throughout the audit. We also;

Identify and assess the risks of material misstatement of the financial statements, whether due to &aud orerror, design and perform audit procedures responsive to those risks, and obtain audit evidence that issufficient and appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting fiom &aud is higher than for one resulting &om error, as fraud may involve collusion,forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of thecharity's internal control.

Page 12


Independent Auditor's Report to the Trustees of Sisters of Mercy Sunderiand (229943)

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and

related disclosures made by the trustees.

Conclude on the appropriateness of the trustees use of the going concern basis of accounting and, based onthe audit evidence obtained, whether a material uncertainty exists related to events or conditions that maycast significant doubt on the charity's ability to continue as a going concern. If we conclude that a material

uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in thefinancial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are basedon the audit evidence obtained up to the date of our auditor's report. However, future events or conditions

may cause the charity to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,and whether the financial statements represent the underlying transactions and events in a manner that

achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the charity to express an opinion on the financial statements. We are responsible for the

direction, supervision and performance of the charity audit. We remain solely responsible for our audit

opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and

timing of the audit and significant audit findings, including any significant deficiencies in internal control thatwe identify during our audit.

R. Whittaker (Senior Statutory Auditor)For and on behalf of Whitnalls, Statutory AuditorCotton HouseOld Hall StreetLiverpoolL3 9TX

Date:

Page 13


Statement of Financial Activities for the Year Ended 31 December 2018

Income and Endowments from:Donations and legacies

Other trading activities

Investment income

Other income

Total Income

Unrestrictedfunds

Note

770,616

523,333

1,056,992357

2,351,298

Total2018

770,616523,333

1,056,992357

2,351,298

Expenditure on:Raising funds

Charitable activities

Total Expenditure

Net income/(expenditure) before gains/(losses) on investments

Realised gains/losses on investment assets

Unrealised gains/(losses) on investment assets

10,855,428

(8,504, 130

10,855,428)

(8,504, 130

15,657 15,657(2,245, 844) ~(2,245, 844

6 (644,754) (644,754)7 (l ~,2(0,674) ~((0,2(0,674

Net movement in funds

Reconciliation of funds

Total funds brought forward

Total funds carried forward 18

(10,734,317) (10,734,317)

45,936,818 45,936,818

35,202,501 35,202,501

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Statement of Financial Activities for the Year Ended 31 December 2018

Unrestricted Totalfunds 2017

Note fIncome and Endowments from:Donations and legacies

Other trading activities

Investment income

Other income

571,149

535,625

1,011,323

808

571,149

535,625

1,011,323808

Total Income

Expenditure on:Raising funds

Charitable activities

Total Expenditure

2, 118,905 2, 118,905

6 (636,346) (636,346)7 (1,422,903) (1,422, 903)

~(2,059,249 ~2059249)Net income/(expenditure) before gains/(losses) on investments

Realised gains/losses on investment assets

Unrealised gains/(losses) on investment assets

59,656

(68,727)2,304,683

59,656

(68,727)2,304,683

Net movement in funds

Reconciliation of funds

Total funds brought forward

Total funds carried forward

43,641,206

i 8 45,936,818

43,641,206

45,936,818

2,295,612 2,295,612

All of the charity's activities derive I'rom continuing operations during the above two periods.

Page 15


(Registration number: X229943)Balance Sheet as at 31 December 2018

Fixed assets

Tangible assets

Investments

Current assets

Debtors

Cash at bank and in hand

Creditors: Amounts fallingdue within one year

Net current assets

Net assets

Funds of the charity:

Unrestricted income funds

Unrestricted funds

Total funds

Note

12

13

14

15

18

2018

140,782

3,010,857

3, 151,639

(107,700)

35,202,501

7, 197,553

24,961,009

32, 158,562

3,043,939

35,202,501

35,202,501

2017

145,057

1,542,660

1,687,717

124,403)

45,936,818

15,976,25628,397,248

44,373,504

1,563,314

45,936,818

45,936,818

The financial statements on pages 14 to 28 were approved by the trustees, and authorised for issue on

.....~.. ......s............'. ..3 C...I...I............ and signed on their behalf by:

. Q G.& 7)w. ~-(d „~gT'

s J.C. Carlin Miss P.A. Shoulder Miss M.M. RowntreeTrustee Trustee Trustee

Miss S.C. ChristonTrustee

Page 16


Cash Flow Statement for the Year Ended 31 December 2018

2018Note f

2017

Cash flows from operating activities

Net cash (expenditure)/income

Adjustraents to cash flows from non-cash items

Depreciation and impahment

Investment income

Revaluation of investments

Loss on disposal of fixed assets held for the charity's own use

Working capital adjustments

Decrease/(increase) in debtors

Decrease in creditors

Net cash flows fiom operating activities

(10,734,317) 2,295,612

265,709 35,994

4 (],056,992) (1,011,323)

2,245,844 (2,304,683)151 736

(9779 605) (983 664)

14 4,275 (2,992)

75 ~76,763 ~7,576

(9,292,033) (994,226)

Cash flows from investing activities

Interest receivable and similar income

Purchase of tangible fixed assets

Sale of tangible fixed assets

Purchase of investments

Sale of investments

Income fiom dividends

Net cash flows fiom investing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at I January

Cash and cash equivalents at 31 December

4

12

13

2,593

(26,406)

8,539,249

(1,588,151)

2,778,546

1,054,399

10,760,230

1,468, 197

1,542,660

3,010,857

149

(18,363)2,356

(3,035,188)

2,333,732

1,011,174

293,860

(700,366)

2,243,026

1,542,660

All of the cash flows are derived fiom continuing operations during the above two periods.

Page 17


Notes to the Financial Statements for the Year Ended 31 December 2018

I Accounting policies

Statement of complianceThe financial statements have been prepared in accordance with Accounting and Reporting by Charities:Statement of Recommended Practice applicable to charities preparing their accounts in accordance with theFinancial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective I January2015) - (Charities SORP (FRS 102)), the Financial Reporting Standard applicable in the UK and Republic ofIreland (FRS 102) and the Charities Act 2011.

Basis of preparationSisters of Mercy Sunderland (229943) meets the definition of a public benefit entity under FRS 102. Assets audliabilities are initially recognised at historical cost or transaction value unless otherwise stated in the relevantaccounting policy notes.

Going concernThe trustees consider that there are no material uncertainties about the charity's ability to continue as a goingconcern.

Adjusting events after the financial periodAs reported in Achievements and Performance, Camtyne Residential Home in Hexham was sold as a goingconcern in May 2019.

Income and endowmentsVoluntary income including donations, gifts, legacies and grants that provide core funding or are of a generalnature is recognised when the charity has entitlement to the income, it is probable that the income will bereceived and the amount can be measured with sufficient reliability.

Donations and legacIes

Donations and legacies are recognised on a receivable basis when receipt is probable and the amount can bereliably measured.

Ottter trading activities

Residential care home fees receivable

Investment laconic

Interest on funds held on deposit is included when receivable and the amount can be measured reliably by thecharity; this is normally upon notification of the interest paid or payable by the bank, Dividends are recognisedonce the dividend has been declared and notification has been received of the dividend due.

ExpenditureAll expenditure is recognised once there is a legal or constructive obligation to that expenditure, it is probablesettlement is required and the amount can be measured reliably. All costs are allocated to the applicableexpenditure heading that aggregate similar costs to that category. Where costs cannot be directly attributed toparticular headings they have been allocated on a basis consistent with the use of resources, with central staffcosts allocated on the basis of time spent, and depreciation charges allocated on the portion of the asset's use.Other support costs are allocated based on the spread of staff costs.

Page 18



Ralstng ftttrds

These are costs incurred in attracting voluntary income, the management of investments and those incurred intrading activities that raise funds.

Charitable acttv tttes

Charitable expenditure comprises those costs incurred by the charity in the delivery of its activities and servicesfor its beneficiaries. It includes both costs that can be allocated directly to such activities and those costs of anindirect nature necessary to support them.

Grant provlslons

Provisions for grants are made when the intention to make a grant has been communicated to the recipient butthere is uncertainty about either the timing of the grant or the amount of grant payable.

Support costs

Support costs include central functions and have been allocated to activity cost categories on a basis consistentwith the use of resources, for example, allocating property costs by floor areas, or per capita, staff costs by thetime spent and other costs by their usage.

Governance costsThese include the costs attributable to the charity's compliance with constitutional and statutory requirements,including audit, strategic management and trustees meetings and reimbursed expenses.

TaxationThe charity is considered to pass the tests set out in Paragraph I Schedule 6 of the Finance Act 2010 and,therefore, it meets the definition of a charitable trust for UK tax purposes. Accordingly, the charity is potentiallyexempt fiom taxation in respect of income or capital gains received within categories covered by Part 10 of theIncome Taxes Act 2017 or Section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that suchincome or gains are applied exclusively to charitable purposes.

Tangible fixed assetsIndividual fixed assets costing f50.00 or more are initially recorded at cost, less any subsequent accumulateddepreciation and subsequent accumulated impairment losses.

Depreciation and amortisationDepreciation is provided on tangible fixed assets so as to write off the cost or valuation, less any estimatedresidual value, over their expected useful economic life as follows:

Fixed asset investmentsFixed asset investments, other than programme related investments, are included at market value at the balancesheet date. Realised gains and losses on investments are calculated as the difference between sales proceeds andtheir market value at the start of the year, or their subsequent cost, and are charged or credited to the Statementof Financial Activities in the period of disposal.

Unrealised gains and losses represent the movement in market values during the year and are credited orcharged to the Statement of Financial Activities based on the market value at the year end.

Page 19



Cash and cash equivalentsCash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquidinvestments that are readily convertible to a known amount of cash and are subject to an insignificant risk ofchange in value.

Fund structureUnrestricted income funds are general funds that are available for use at the trustees discretion in furtherance ofthe objectives of the charity.

Pensions and other post retirement obligationsThe charity operates a defined contribution pension scheme which is a pension plan under which fixedcontributions are paid into a pension fund and the charity has no legal or constructive obligation to pay furthercontributions even if the fund does not hold sufficient assets to pay all employees the benefits relating toemployee service in the current and prior periods.

Contributions to defined contribution plans are recognised in the Statement of Financial Activities when they aredue. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

Financial instruments

Classiji codon

Financial assets and financial liabilities are recognised when the charity becomes a party to the contractualprovisions of the instrument.

Financial liabilities and equity instruments are classified according to the substance of the contractualarrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets ofthe charity after deducting all of its liabilities.

Recognllion and nieasurernenl

All financial assets and liabilities are initially measured at transaction price (including transaction costs), exceptfor those financial assets classified as at fair value through profit or loss, which are initially measured at fairvalue (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes afinancing transaction. If an arrangement constitutes a financing transaction, the financial asset or financialliability is measured at the present value of the future payments discounted at a market rate of interest for asimilar debt instrument.

Financial assets and liabilities are only offset in the statement of financial position when, and only when thereexists a legally enforceable right to set off the recognised amounts and the charity intends either to settle on anet basis, or to realise the asset and settle the liability simultaneously.

Financial assets are derecognised when and only when a) the contractual rights to the cash flows fiom thefinancial asset expire or are settled, b) the charity transfers to another party substantially all of the risks andrewards of ownership of the financial asset, or c) the charity, despite having retained some, but not all,significant risks and rewards of ownership, has transferred control of the asset to another party.

Financial liabilities are derecognised only when the obligation specified in the contract is discharged, cancelledor expires.

Page 20



Iavesimertis

Investments in non-convertible preference shares and non-puttable ordinary or preference shares (where sharesare publicly traded or their fair value is reliably measurable) are measured at fair value through profit or loss.Where fau value cannot be measured reliably, investments are measured at cost less impairment.

Investments m subsidiaries and associates are measured at cost less impairment. For investments in subsidiariesacquired for consideration including the issue of shares qualifying for merger relief, cost is measured byreference to the nominal value of the shares issued plus fair value of other consideration. Any premium isignored.

Fair vaiae «teasaremeai

The best evidence of fair value is a quoted price for an identical asset in an active market. When quoted pricesare unavailable, the price of a recent transaction for an identical asset provides evidence of fair value as long asthere has not been a significant change in economic circumstances or a significant lapse of time since thetransaction took place. If the market is not active and recent transactions of an identical asset on their own arenot a good estimate of fair value, the fair value is estimated by using a valuation technique.

2 Income from donations and legacies

Donations and legacies;

Donations fiom individuals

Legacies

Gifis - Covenanted pensions and salaries

Unrestrictedfunds

Generalf

2,906

767,710

Total2018

2,906

767,710

Total2017

1,122

11

570,016

770,616 770,616 571,149

3 Income from other trading activities

Unrestrictedfunds

GeneralTotal2018

Total2017

Trading income;

Residential care home fees 523,333 523,333 535 625

523,333 523,333 535,625

Page 21



4 Investment income

Unrestrictedfunds

GeneralTotal2018

Total2017

Income I'rom dividends;

Income trom listed investments

Income trom other unlisted investments

Interest receivable and similar income;

Interest receivable on bank deposits

954,050

100,349

2,593

954,050

100,349

2,593

913,892

97,282

149

1,056,992 1,056,992 1,011,323

5 Other income

Other income

Unrestrictedfunds

General

357

Total2018

357

Total2017

808

Page 22



6 Expenditure on raising funds

a) Costs of trading activities

Wages and salaries

Staff NIC

Staff pensions

Staff training

Rates

Water rates

Light and heat

Insurance

Recreational facilities

Repairs and maintenance

Telephone

Household and provisions

Hire ofequipment

Printing, postage and stationery

Medical supplies

Advertising

Unrestrictedfunds

General

395,218

21,159

4,559

2,427

1,796

6,736

25,050

7,746

3,326

18,854

2,953

46,239

1,842

2,869

3,650472

Total2018

395,218

21,159

4,559

2,427

1,796

6,736

25,050

7,746

3,326

18,854

2,953

46,239

1,842

2,869

3,650472

Total2017

379,102

20,560

2,863

3,9161,710

6,834

28,328

7,418

3,058

23,357

3,457

47,963

1,203

2,305

3,241

423

544,896 544, 896 535,738

b) Investment management costs

Unrestrictedfunds

GeneralTotal2018

Total2017

Other investment management costs;

Costs of obtaining investment advice 99,858

99,858

99,858

99,858

100,608

100,608

Page 23



Costs of trading activities

Investment management costs

Direct costs

544,89699,858

Total2018

544,896

99,858

Total2017

535,738100,608

644,754 644,754 636,346

7 Expenditure on charitable activities

Charity and donations

Grant funding of activities

Allocated support costs

Governance costs

Unrestnctedfunds

General

8,671,862

40,000

17,4531,481,359

Total2018

8,671,862

40,000

17,4531,481,359

Total2017

176,970

49,000

20,5741,176,359

10,210,674 10,210,674 1,422,903

Grants paid

Charity and donations

Bank charges

Motor and travel expenses

General expenses

Legal and professional fees

Depreciation of fixtures and fittings

Depreciation of motor vehicles

Loss on disposal of fixed assets

Activityundertaken

directly

40,000

8,671,862

342

1,415

8,673

776

5,740

120387

Total2018

40,000

8,671,862

342

1,415

8,673

776

5,740

120387

Total2017

49,000

176,970345

1@89

9,208

1,130

6,426

1602,016

8,729,315 8,729,315 246,544

f10,210,674 (2017 - 81,422,903) of the above expenditure was attributable to unrestricted funds and XNit (2017- fNil) to restricted funds.

Page 24



8 Analysis of governance and support costs

Governance costs

Staff costs

Wages and salaries

Social security costs

Pension costs

Audit fees

Audit and accountancy fees

Legal fees

Depreciation, amortisation and other similar costs

Other governance costs

Unrestrictedfunds

Generalf

596,977

45,779

6, 179

25,212

28,314260,000518,898

Total2018

596,977

45,779

6, 179

25,212

28,314260,000518,898

Total2017f

568,047

42,286

2,970

22,704

11,694

30,143

498,515

1,481,359 1,481,359 1,176,359

9 Trustees remuneration and expenses

No trustees, nor any persons connected with them, have received any remuneration fiom the charity during theyear.

10 Staffcosts

The aggregate payroll costs were as follows;

Staff costs during the year were:

Wages and salaries

Social security costs

Pension costs

2018f

596,977

45,7796, 179

2017f,

568,047

42,2862,970

648,935 613,303

Page 25



The monthly average number of persons (including senior management team) employed by the charity duringthe year expressed as full time equivalents was as follows:

Management staff

Administration staff

Domestic staff

Care staff

2018No

7

91635

67

2017No

7

5

1936

67

No employee received emoluments ofmore than f60,000 during the year

11 Taxation

The charity is a registered charity and is therefore exempt &om taxation.

12 Tangible fixed assets

Cost

At I January 2018Additions

Disposals

Land and Furniture and Motorbuildings equipment vehicles Total

f.

15,796,450 493,771 168,253 16,458,474

26,406 26,406~68 537499 ~9,272 ~678,364 ~R, 565, 126

At 31 December 2018 7,258,960 510,905 149,889 7,919,754

Depreciation

At I January 2018impairment

Charge for the year

Eliminated on disposals

234,825

349,883 132,335 482,218

234,825

22,018 8,866 30,884~7,8153 ~17933) ~625,726

At 31 December 2018

Net book value

At 31 December 2018

At 31 December 2017

234,825 364,086 123,290 722,201

7,024, 135 146,819 26,599 7, 197,553

15,796,450 143,888 35,918 15,976,256

13 Fixed asset investments

Other investments

2018

24,961,009

2017

28,397,248

Page 26


Notes to the Financial Statements for the Year Ended 31 December 201S

Other investments

Listedinvestments

f

Unlistedinvestments Total

Cost or Valuation

At 1 January 2018Revaluation

Additions

Disposals

At 31 December 2018

Net book value

At 31 December 2018

At 31 December 2017

25,566,838 2,830,410 28,397,248

(2,284, 140) 38,296 (2,245,844)

1,437,709 150,442 1,588, 151

~2,778,5465 (2,778,546)

21,941,861 3,019,148 24,961,009

21,941,861 3,019,148 24,961,009

25,566,838 2.830,410 28, 397,248

Significant holdings

The Trustees have set 5% of the balance sheet value as at 31 December as the threshold for reporting materialinvestments. As at 31 December 2018 the following investment was considered material.

The Charities Property Fund - The holding amounts to 6% of the balance sheet value and 8.5% of the totalportfolio.

14 Debtors

Trade debtors

Prepayments

2018f20,654

120,128

2017f42,883

102,174

140,782 145,057

15 Creditors: amounts falling due within one year

Trade creditors

Other taxation and social security

Other creditors

Accruals

2018

3,91916,227

9, 183

78,371

2017

4,221

13,001

14,56692,615

107,700 124,403

Page 27



16 Pension and other schemes

Defined contribution pension scheme

The charity operates a defined contribution pension scheme. The pension cost charge for the year represents

contributions payable by the charity to the scheme and amounted to f6, 179 (2017 - 62,970).

17 Contingent liabilities

Following the donation of St Anthony's Girls' Catholic Academy to the trusteeship of the RC Diocese of

Hexham and Newcastle, the trustees have received a request for payment of two amounts totalling f267,690

relating to capital purchases in 2015. The trustees have disputed the amounts due and, at the date of the approval

of the accounts, have requested further clarification

18 Funds

Balance at IJanuary

2018Incomingresources

f.

Resourcesexpended

Otherrecognised

gains/(losses)

Balance at31

December2018

Unrestricted funds

General 45936818 2351,298 4~10 II55 428 ~223tl 187) 352tl25 ~ I

19 Analysis of net assets between funds

Tangible fixed assets

Fixed asset investments

Current assets

Current liabilities

Unrestrictedfunds

General

7, 197,553

24,961,009

3,151,639~107,700)

Total funds

7, 197,553

24,961,009

3,151,639~)07,700)

Total net assets35,202,501 35,202,501

20 Analysis of net funds

At 1 January At 31 December

2018 Cash flow 2018

Cash at bank and in hand

Net debt

1,542,660 1,468, 197 3,010,857

1,542,660 1,468, 197 3,010,857

Page 28

sisters mercy (229943)

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