Final Results

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Co-operative and Community Benefit Society registration number: RS007814

Regulator of Social Housing registration number: LH4401

Company Secretary

L Peacock

Registered office

Brook House

4 Gladstone Road

Scarborough

North Yorkshire

YO12 7BH

The board presents its annual report and audited consolidated financial statements for Beyond Housing for the year ended 31 March 2022.

The consolidated financial statements include the results of Beyond Housing Ltd, for the year ended 31 March 2022. They also include the results of its subsidiary companies Beyond Housing Developments Limited and Beyond Housing Sales Limited.

Principal activity

The group's principal activity is the provision and management of housing and associated services to people in housing need.

Group structure

On 31 March 2022 Beyond Housing (the 'group') comprised the following entities:

· Beyond Housing Limited (BHL)

· Beyond Housing Developments Limited (BHDL)

· Beyond Housing Sales Limited (BHSL)

Beyond Housing, the parent is a:

· Community Benefit Society (CBS) registered under the Co-operative and Community Benefit Societies Act (2014), is regulated by the Financial Conduct Authority (FCA)

· Registered and regulated by the Regulator for Social Housing (RSH).

BHDL and BHSL are both limited companies and are wholly owned subsidiaries of Beyond Housing.

Within this report and the financial statements, the consolidated financial position is referred to as 'group' and the parent entity financial position is referred to as 'association'.

An introduction from the Chair of the Board

Once again, Beyond Housing has experienced a challenging and rewarding year and I am pleased to introduce the 2021/22 annual report and accounts. As we emerged from the Covid-19 restrictions, the business has been able to re-focus on improving the quality of our homes, started to enhance key services, and prioritised helping customers through the continued economic challenges. In addition, we became the first housing association to secure a long-dated sustainability bond of £250m, allowing us to take advantage of the lower rates of borrowing to support our longer- term plans and strategy for Beyond Housing. 

The majority of 2021/22 was still a challenging time in terms of covid infection rates, social distancing and the impact on overall resources and I thank both customers and colleagues for working together and remaining resilient and supportive throughout. Our overall business performance to the year end 31 March 2022, achieved a group turnover of £76.5m and operating surplus of £17.1m. Construction delays, reducing repairs backlog from 2020 and the increases in component pricing and contracts resulted in a reduced operating margin of 20.9%

Supporting customers remains the key priority, especially given the cost-of-living crisis and inflationary pressures the country is facing. Once again, we supported customers with Universal Credit and other benefit claims, helping them to protect/increase their income and pay their rent. Beyond Housing collected 99.7% of rents and helped customers claim £1.86m of benefits. We supported 37 apprentices during the year, 10 of which took up full time employment with us. In addition, we helped 112 people into work through our dedicated employment programmes and invested circa £2m into community initiatives. 

Our commitment to new homes continues and in 2021/22 we exceeded our Homes England affordable homes programme targets, achieving 318 starts, 142 completions and claimed £2.6m of grant. A total of 142 affordable homes were completed, 117 for rent, 2 outright sale and 23 for shared ownership. We launched our new sales brand, Viola Homes, for open market sales and contracted our first off-gas, modular development.

Alongside completing 67,000 routine repairs, we invested a further circa £8 million of capital on existing properties, including major programmes in Redcar and Scarborough. Our capital programme included installing 110 boilers, refitting 320 homes with new windows, installing 320 kitchens and 140 bathrooms, re-roofing 80 homes and completing 60 re-wires.

The launch of a new brand for our independent living services was another major milestone. Reach & Respond launched at the end of 2021 and proudly supports customers to live independently in their own homes, using assistive technology and a responder service. The service also received accreditation with the Telecare Services Quality Standards Framework.

Whilst a large proportion of colleagues continued to work remotely during 2021, we were able to complete our values programme for all c700 colleagues - allowing them to consider how to maintain an optimum mindset and live our values of accountable, considerate, collaborative, and ambitious. The most recent overall colleague engagement survey (May 2022) shows that 78% of colleagues think Beyond Housing is a good place to work. We were pleased to be awarded a Better Health at Work award (silver) and very proud to be named in the top 100 most inclusive places to work.

Our risk environment changed to focus more on the challenges of inflationary increases and the impact for customers, service delivery and our new home programme. In addition, we prepared for the changes in regulation, particularly those relating to building and fire safety requirements. The organisation received the Royal Society for Prevention of Accidents (RosPa) Gold Award for the ninth year running.

We very much enjoyed collaborating with our key stakeholders across Teesside and North Yorkshire, to support their overall strategic plans, and very proud to support homelessness initiatives in both regions. In addition, we worked with Tees Valley Combined Authority and other providers to achieve a successful bid for decarbonisation funding.

In 2022/23, our priority is the overall customer experience and improving customer satisfaction. Implementing a new repairs service offer, increased self-service for customers and new technology to support better and timely communication are all key priorities. 

Plans for 2022/23 include further investment in our existing homes/places and the continuation of major regeneration works at Church Lane North in Redcar. We will continue to deliver against our plan of delivering 2,000 homes and incrementally increase our investment towards carbon zero.

I know that 2022/23 has different challenges, both politically and from a housing perspective; changes to funding, consumer regulation and the wider economic conditions will pose difficulties for customers, colleagues, and the wider business. We are already preparing for how we can mitigate or reduce the risks such challenges pose and remain committed to our strategy and the customers we serve.

As always, the Board and all colleagues at Beyond Housing, continue to strive to help our customers and communities succeed and thrive, and I am proud to recognise our achievements during 2021/22.

James D Hayward RD

Chair

Overview of Beyond Housing and our 2020-2025 strategy

Beyond Housing was formed in October 2018 as the result of a merger (via transfer of engagements) between Coast & Country Housing, based in Redcar, and Yorkshire Coast Homes, based in Scarborough. We remain a G1/V1 Regulator Social Housing rated organisation.

As a registered Community Benefits Society (CBS), we have a group turnover of £76.5m, own and manage 15,113 homes across nine local authorities in the north-east/yorkshire, housing over 30,000 customers. We employ circa 700 colleagues and offer homes for rent and sale, including shared ownership.

We also undertake a wide range of activities to improve the lives of our customers, including our Independent Living Services (ILS) 'Reach and Respond' (formerly HomeCall, Lifeline and Coastcall), which support older and vulnerable people to live independently in their homes for longer.

As a business we aim to deliver on our purpose and mission. We launched a new five-year strategy in April 2020 with clear objectives and ambitions for our services, homes, place and people.

We are investing in good quality homes and services for people in housing need and for the communities we work with. This year we have achieved a lower net surplus before tax of £2.5m (£12.5m 2020/21), the decline was due to one off refinancing costs of c£7.1m and higher repairs volumes. We invested £36.8m in new homes and £33.9m revenue spend in our existing properties (routine/planned maintenance and major repairs).

Our five-year strategy

Our strategy is based on four strategic objectives:

· Provide quality services to our customers - increase customer satisfaction, grow our ILS business and have 55% of our customers registered using our 'Me and My Home' digital services.

· Build new homes and keep our existing home in good condition - build circa 2,000 new homes, increase customer satisfaction with the quality of our homes and repairs satisfaction and improve the Energy Performance Certificate (EPC) ratings for all our properties to EPC C or better by 2030.

· Invest in our communities/neighborhoods to create a great place to live and work - offer the best information and advice to customers, be a leading training provider and create neighborhood's our customers are proud of.

· A great place to work for our people - achieve Investors in People (IIP) accreditation, deliver an agile working environment, increase colleague satisfaction and improve the health and wellbeing.

We intend to target year on year improvements in our business and services. These include investing more in our homes, neighborhoods and communities through high quality repairs and planned capital programs. We intend all properties to be energy efficient by 2030 at EPC C or better. In 2021/22 we commenced our 113 home outright sale Mill Meadows development and the regeneration of Church Lane, North Estate in Eston with a budget to invest circa £16m into delivering this regeneration project. We will continue to invest in our digital infrastructure e.g., 'Me and My Home' and new Customer Resource Management (CRM) system.

In May 2021 we completed the refinancing of our business to secure longer term funding for our five-year strategy and beyond. We issued the first long dated 30-year Environmental, Social and Governance Bond (ESG) for £250m. At the time of issuing, we were five times oversubscribed in the market. Moody's issued a A2 rating at the time of issuing the bond and we retained that rating in February 2022. We drew down £165m of funding to refinancing c£130m of existing bank loans to take advantage of very low financing costs, reducing our interest finance costs and released c£30m of additional cash after break costs. We still retain £85m of funding that is un-drawn, and we are assessing a drawdown of these funds in 2022/23.

Our operating margin will improve by 2030 in line with our business plan to drive greater efficiency and cost saving to allow more investment in homes and to address zero carbon challenges. We will continue to deliver on our 2,000 new homes under our current strategy providing affordable homes across our area of operation. We will also look at those areas that may require future regeneration, higher zero carbon investment and continue to build more homes.

Corporate governance

The board comprises of nine members, made up of 56% women and 44% men. None are classed as BAME. Members can be viewed on page 1 and 8-9. Board members are drawn from a wide range of backgrounds bringing together commercial, professional and local skills, experience and knowledge.

An annual compliance assessment is undertaken by the board of its chosen code of governance. This assessment is reviewed and validated externally by independent consultants every three years (first assessment carried out in 2021/22). Accordingly, the board states Beyond Housing (the parent) are fully compliant with its adopted code of governance, the National Housing Federation (NHF) Code of Governance 2020. The board has determined the NHF Code of Governance 2020 does not apply and therefore is not adopted by the subsidiary companies Beyond Housing Sales Ltd, and Beyond Housing Developments Ltd, on the basis the companies are not registered providers and therefore out of the scope of the Code. The subsidiary companies continue to operate within the overarching governance framework of Beyond Housing's structure with the Beyond Housing board retaining control and oversight of the subsidiary companies.

Beyond Housing complies with the Regulator of Social Housing's (RSH) Governance and Financial Viability Standard. Self-assessments against all of the regulatory standards were undertaken during the year and no issues were noted.

An independent governance review was undertaken in the year providing assurance that governance arrangements were operating well and efficiently. It noted the board had provided a strong self-assessment of its own effectiveness which correlated with the independent review opinion. A number of recommendations were made as part of the review to support the delivery of Beyond Housing's future strategy and ambition which have been implemented during the financial year. The board has overall responsibility for the administration of sound corporate governance throughout the group and recognises the importance of maintaining a strong reputation for the group.

The Board met formally five times during the period 1 April 2021 and 31 March 2022 and held two strategic away days. The Board and committees have formal terms of reference which were last reviewed during 2021/22.

Audit and risk committee

The audit and risk committee are responsible for ensuring a sound system of internal control and risk management is embedded across the group. The committee exercises oversight of the internal and external audit functions. The committee met five times during the period 1 April 2021 to 31 March 2022. Board member John Williams chaired the meetings.

Governance and review committee

The governance and review committee are responsible for board director succession planning, recruitment and selection of non-executive directors, board training and development, ensuring the appraisal and remuneration of the chief executive is carried out and for addressing any conduct or standards issues. The committee oversees and reviews governance arrangements to ensure that best governance standards and practices are upheld, with particular oversight in relation to statutory and regulatory changes. The committee met four times during the period 1 April 2021 to 31 March 2022. Board member Sam Hardwick chaired the meetings.

Health and safety committee  

The health and safety committee oversees the health and safety framework and management system which enhances clarity around roles, accountability and responsibility throughout the organisation, provides enhanced focus for customer, property and colleague compliance and increases visibility around performance to provide asset compliance assurance. The committee met four times during the period 1 April 2021 to 31 March 2022. Board member Kate Abson chaired the meetings. As part of the independent governance review in 2021/22, whilst retaining strategic oversight of the health and safety framework, board delegated operational oversight to the executive via a health and safety forum. The health and safety committee therefore ceased on 31 March 2022.

Refinancing task and finish group (committee)

The refinancing task and finish group had oversight for the refinancing of the business completed May 2021. The committee oversaw the proposal to raise the £250m long term Environmental Social Green (ESG) bond and to restructure existing loan arrangements with our funders Lloyds, Nationwide and Natwest. We exited high interest cost loans and replaced them with the lower cost bond and released additional cash for investment. The committee met once during the period 1 April 2021 to March 2022. Board member Peter Baren chaired the meeting.

Board and committee meetings

The table below dates all board and committee meetings.

Board and committee attendance 2021-22

A = maximum number of meetings that could have been attended

B = number of meetings attended

* retired 23 September 2021

Viability assessment

Beyond Housing prepares a 30-year business plan 'Plan', incorporating the 2021/22 budget, treasury, asset and development plans and financial assumptions over the medium term. The long-term financial plan to demonstrate it can effectively manage its resources and ensure long term financial stability is maintained and social housing assets are safeguarded.

Beyond Housing has approved and stress tested the current plan using multi-variant analysis which tests against potential economic and business risks. The board held a stress testing workshop in September 2021 and February 2022.The results of the stress testing included considering the impact of movement in interest rates, liquidity, inflation, costs, debts, political risk, Covid 19, welfare reform, sales risk and a single/multi-variant risk scenario with mitigation plans. The board also identified actions to mitigate against these risks (including Covid 19), quantified through the stress testing and is satisfied these mitigations would be implemented, if the need arises to protect the social housing assets and to maintain compliance with regulatory requirements.

We also completed our refinancing in 2021/22 that culminated in the issuance of a £250m ESG bond in May 2021. We drew down £165m and retained £85m whilst restructuring our existing loans with our three bank lenders.

The 30-year business plan and Financial Forecast Return (FFR) submission to the Regulator Social Housing (RSH) was approved by the board in May 2021.

Internal controls

The board acknowledges its overall responsibility for establishing and maintaining the whole system of internal control and for reviewing its effectiveness across the Group.

The board recognises that no system of internal control can provide absolute assurance or eliminate all risk. The system of internal control is designed to manage, not eliminate, risk and to provide reasonable, not absolute, assurance against material misstatement or loss. 

The process for identifying, evaluating and managing significant risks faced by the Group has been in place throughout the year ended 31 March 2022 and up to the date of the approval of these financial statements.

The board has received the Chief Executive's annual review of the effectiveness of internal control which concludes that there is sufficient evidence to confirm the operation of adequate systems of internal control and that these systems are aligned to the on-going process of managing the significant risks faced by the Group.

Key elements of the Group's internal control framework include:

· Board approved terms of reference for board and committees

· Strategic risk registers regularly reviewed by the senior leadership team, board and the audit and risk committee

· Policies and procedures in place for the Group's operating activities

· A corporate and planning process with supporting financial information, including long term business plans and annual budgets

· An Investment Appraisal Panel and Programme Steering Group, aligning our project activity with corporate objectives

· A business case and appraisal framework established to support robust investment decision-making

· Business assurance and internal audit functions (provided by PwC) tasked with maintaining and testing the Group's control environment

· Reporting to the senior leadership team and board of key strategic performance indicators

· Oversight by the audit and risk committee of the Group's internal control processes; and

· An established health and safety framework.

Housing stock

Beyond Housing operates across the North-East and North Yorkshire covering nine local authorities. We currently have 15,113 homes for rent, 12 of which are managed by a third party giving us 15,101 owned units (Note 3 in the Accounts) and an additional 291 leaseholder units. A breakdown of the housing stock is:

Customer experience and outcomes

Across customer service we are proud of what we have achieved for our customers, communities and colleagues. The pandemic made for uncertain times, yet we adapted and flexed with the changes to deliver some great outcomes in the delivery of our purpose and strategic objectives. Creating a great customer experience is a key objective and as a result the below was achieved in 2021/22:

• Introduced a new name and brand for our three independent living services to operate under - Reach & Respond 

• Supported 506 customers and accessed £1.83m in benefits to support customers

• Answered 161,888 customer enquiry calls 

• Answered 171,675 calls from customers to our independent living service Reach & Respond 

• Joined The National Databank scheme and launched our digital inclusion project to bring free internet to low-income families 

• Opened a customer community facility on the Church Lane North estate in Grangetown. 

• Supported 1,211 customers with Anti-Social Behaviour (ASB) and safeguarding support 

• 4,339 hours of volunteers' time invested in community projects and services 

• Consulted with over 1,400 customers to shape a new customer contact approach

• Successfully embedded a new approach to handling complaints

• Commenced the implementation of new systems to better improve the customer experience

Energy performance

We see as good practice reporting out energy consumption in line with our Environmental, Social and Governance principles. This work was undertaken by Trident Innovative Energy Experts for Beyond Housing and is summarised below till 31 March 2022.

This year we are pleased to have reduced our carbon footprint per employee by 2.8% working towards the Governments carbon neutral targets is set out in more detail in our strategic asset plan approved by our Senior Leadership Team (SLT).

We were also successful in a bid with Tees Valley Combined Authority in securing grant from the Government Social Housing Decarbonisation programme securing funds for our home insulation programme.

Value for Money

Beyond Housing consciously looks to deliver Value for Money (VfM) and will take a planned approach to the delivery of efficiencies and financial capacity gains, which provides direction for achieving VfM in order to increase investment in our existing homes and communities and to create new homes.

· Borrowing capacity - Beyond Housing had in place £104m of Revolving Credit Facility and £85m undrawn bond funding capacity on 31 March 2022.

· Total cost of management and maintenance of each housing unit - The target Social Housing Cost Per Unit (SHCPU) for the organisation is circa £3,000 in the medium term as the result of reductions to management costs and overheads, structural costs, efficiencies and improved procurement.

· Delivery of new homes - Our current strategy displays our plans to build 2,000 new homes over five years.

· Operating margin - Our operating margin reduced in the year as our maintenance costs increased as a result of higher repair volumes and increased material and subcontractor prices.

· Development - we seek competitive tenders and test the contracts cash flow, IRR and NPV to meet investment policies.

· Procurement - Beyond Housing has actively completed competitive tendering activities to secure long-term contracts for key business areas including voids, tools, Electrical Installation Condition Report (EICR's), windows and doors etc. A key contract has been implemented to support our in-house teams to complete routine and capital voids works. The tender was structured to attract local subcontractors and ensure that strong relationships could be built between the in-house teams and local labour providers, especially during times of national labour shortages. Savings to the value of £143k have also been achieved through key negotiations on tool purchases, our security contract renewal and rate changes. Beyond Housing has been impacted by supply chain price increases but has looked to mitigate these as much as possible across the year.

VfM indicators

Beyond Housing has included the nine regulatory VfM metrics from the RSH Technical Note guidance September 2020 sector scorecard, in its board KPIs. We benchmark our VfM indicators where appropriate against a group of comparable housing providers to help understand our performance and inform our improvement plans and targets. Performance is measured against the RSH 2020/21 Global Accounts benchmarking information, due to 2021/22 information not being available at the time of preparing the annual accounts. During 2021/22 and going forward we will benchmark our VfM indicators, to support our strategy to embed VfM into everything we do.

^NE combines average performance for the northeast region and North Yorkshire based RPs

We have used the 2020/21 financial statements for last year's figures. Note: Our 5-year VfM targets are published separately on our web site in our 5 Year VfM Plan.

Definitions:

1. Reinvestment % - Looks at the investment in properties (existing stock as well as new supply) as a percentage of the value of total properties held.

2. New supply - Delivered % the new supply metric sets out the number of new social housing and non-social housing units that have been acquired in the year as a proportion of total social housing units and non-social housing units owned at period end. The table reports on two new delivered ratios. New supply delivered (social housing units). New supply delivered (non-social housing units).

3. Gearing % - Measures how much of the adjusted assets are made up of debt and the degree of dependence on debt finance. It is often a key indicator of growth appetite. Registered providers can be restricted by lenders' covenants and therefore may not have the ability in which to increase the loan portfolio despite showing a relatively average gearing result.

4. EBITDA - Earnings before interest, tax, depreciation, amortization, major repairs included (EBITDA MRI) interest cover measure is a key indicator for liquidity and investment capacity. It seeks to measure the level of surplus that a registered provider generates compared to interest payable; the measure avoids any distortions stemming from the depreciation charge. 

5. Headline social housing cost per unit - Assesses the total housing cost per unit as defined by the Housing Regulator. The cost measures set out in the metric are unchanged from the metric in the Regulator VfM technical note 2018. The metric now however includes lease costs.

6. Operating margin - Demonstrates the profitability of operating assets before exceptional expenses are deducted. Increasing margins are one way to demonstrate the improving financial efficiency of a business. In assessing this ratio, consideration is given to registered providers' purpose and objectives (including our social objectives). As a registered provider we report on two operating margins. Operating margin (social housing lettings only). Operating margin (overall).

7. Return on capital employed (ROCE) - This metric compares the operating surplus to total assets less current liabilities and is a common measure in the commercial sector to assess the efficient investment of capital resources. The ROCE metric would support registered providers with a wide range of capital investment programmes.

Future analysis

Based on our performance, our plans for the coming years will focus on a number of performance indicators. The Board has agreed the strategy and performance indicators for 2022/23. This includes setting approved 'rules' against key indicators to ensure the financial stability and resilience of the business.

Other metrics agreed by the board include:

· Liquidity - current ratio >1.10

· Security - 15% of all stock buffer to add to funder security valuation ratios

· Operating surplus - reliance on profits from open market sales to be limited to 20% within our business plans. By limiting reliance on profits from open market house sales, focus is on sustained financial stability

· Cash flow - holding cash and cash equivalents (loan facilities) >= 21 months operating cash requirements.

Key performance indicators measuring Value for Money (VfM)

Beyond Housing measure Key Performance Indicators (KPI's) and VfM. Beyond Housing has a dashboard system that measures a set of key performance metrics each month. Our dashboard for period 12 can be viewed on page 19.

The dashboard forms an agenda item at all board meetings; hence the board can monitor KPI performance and VfM within the organisation. Board challenge any under performance and discuss the actions set out to improve performance.

The KPI's are also discussed at the monthly performance and strategy meetings attended by executive and leadership teams. The table below shows a sample of year-end metrics (note 2021/22 still reflected the impact of Covid 19).

VfM movements

Our 2021-22 Tier 1 VfM targets and outturn

Key: M monthly measure, YTD Year to Date.

Note: throughout 2021/22 Covid 19 continued to have some impact on our metrics e.g. supply of new homes, customer satisfaction and inflation on costs and margins. Green are targets met, orange (within 5% of target) or red >5% outside target.

VfM Self-Assessment

We will publish on our web site a VfM self-statement alongside the published accounts for 2021/22.

Risk

Managing risk (page 26) is a responsibility of the board and is fundamental to the management of corporate challenges. Beyond Housing has put in place a risk management framework that identifies and plans to mitigate potential risks while exploring future opportunities. The Audit & Risk Committee undertake a more detailed review of risks that might affect the viability or reputation of Beyond Housing.

James D Hayward RD

Chair of the Board

Beyond Housing Ltd

25 August 2022

Structure and business overview - group and association

Beyond Housing, the parent organisation is a charitable organisation. It is a registered provider of affordable housing regulated by the Regulator of Social Housing.

Beyond Housing Developments Limited was originally incorporated (by a legacy organisation) to develop properties for outright sale, generating surplus for the group to reinvest. It has not been active during 2021/22. BHD will be dormant in 2022/23.

Beyond Housing Sales Limited was incorporated to carry out non-charitable open market sales activities generating surplus for the group to reinvest. It has not been active during 2021/22. In 2021/22 BHS has had new directors appointed, a business plan approved by board, on-lending facilities established and updated legal and financial structures to enable trading in 2022/23.

Financial review 2021/22

The group financial results, which have been prepared using merger accounting principles, show a group turnover of £76.5m and a surplus before tax of £2.5m. The operating surplus before tax is lower than 2021 due to higher repairs and maintenance costs in year.

Summarised Financial performance:

For the year to 31 March 2022 turnover increased by £1.4m compared to that of the prior year at £76.5m (£75.1m 2020/21). During the year our social rents increased by CPI+1% in line Government's rent policy, arrears were under budget, and we had increased shared ownership development sale proceeds.

Social housing income remains the largest proportion of our turnover from operations at 92.2% (91.4% 2010/21). Shared ownership sales represented 2.3% (3.2% 2020/21) of our turnover. Non-housing activity including our independent living service represented 3.5% (4% 2020/21).

Note: the Net Surplus before tax fell due to one off refinancing break costs of £7.2m in 2021/22.

Operating costs increased to £59.0m (£53.09m in 2020/21) as a result increased spend on social housing operating expenditure due to higher maintenance expenditure as repairs volumes increased as we began to recover from Covid 19.

The majority of our operating costs for the year is social housing lettings expenditure by the group being £55m (£48.9m 2020/21). The charts show management and planned/routine expenditure increased partly a reflection of the Covid 19 pandemic but also due to inflationary pressures. Major work spends remain the same as we invested in estate improvement expenditure. Depreciation showed no change in line with capital investment in stock and relatively flat new housing numbers.

Our operating surplus decreased to £17.2m from the £20.9m achieved in the prior year and largely reflected increased maintenance expenditure occurring due to increased repair volumes, and material/subcontractor price increases both of which are an outcome Covid 19. Our net surplus for the year at £2.5m (£12.5m 2020/21) reduced compared to 2020/21 due to the higher maintenance costs but also the incurrence of £7.2m loan breakage costs as part of the refinancing exercise completed in May 2021.

There has been an increase from £371m to £399m (7.5%) in the fixed assets housing property values due mainly to property improvements, completion of shared ownership units and housing schemes completed.

Cash held on 31 March 2022 increased to £35.8m from (£24.2m 2020/21) after the refinancing in May. No new loan drawdowns were required during the 2021/22 year.

Pension provision liabilities decreased to £26.0m from (£37.1m 2020/21) following the annual review of the North Yorkshire and Teesside Pension Funds by the actuaries. The Teeside Pension schemes had lower asset values to fund the liabilities, and these are being funded through higher employer contributions.

We met all lender covenants during the year and the net worth 'reserves' of the group increased to £118.4m (£101.9m 2020/21) due to the net surplus.

The Accounts 2021/22 also include a prior year adjustment (due to incorrect intermediate rents from a legacy organisation from 2012) and are restated. The regulator and our funders were made aware of the adjustment.

Summary loan facility per lender

Beyond Housing loan structure is set out in the table below. The debt consists of loans from four lenders: M&G (our bond custodian on behalf of investors being 59% of the portfolio), Lloyds (7% of the portfolio), Nationwide (20% of the portfolio) and Royal Bank of Scotland (RBS) (14% of the portfolio). Some £320m of the debt is term loan with an average life of 16.3 years and £104m represents Revolving Credit Facility (RCF). Undrawn facilities total £189m of which £104m is Revolving Credit Facility and £85m bond. The high proportion of RCF available provides liquidity and flexibility for Beyond Housing as it builds up its development portfolio. The group has currently sufficient liquidity for its proposed investment programme over the next 2-3 years after completing its refinancing in May 2021. The undrawn bond proceeds are subject to volatility in the gilt markets and the cash value can be less than face value. The embedded value of the debt is close to 3.94% weighted average cost of debt.

Subsidiaries

Beyond Housing Developments Limited (formerly Coast & Country Developments Ltd)

During 2021/22 no new construction opportunities for the organisation have been identified and subsequently the organisation has remained in a discontinued state. The organisation made a loss before taxation for the year ended 31 March 2022 of £1,000 (2021: loss of £6,000).

Beyond Housing Sales Limited (formerly Coast & Country Sales Ltd)

The organisation has made a loss before taxation for the year ended 31 March 2022 of £1,000 (2021: loss of £5,000) which is broadly in line with budget expectations. No sales activity occurred during the year.

Risk and assurance framework

The risk and assurance governance team at Beyond Housing work with our internal auditors, PricewaterhouseCooper (PwC), to provide a programme of audits and reviews which underpin the risk and assurance framework for the board. Our current key risks and mitigation strategies are set out below.

Risk scenarios and stress testing

Beyond Housing uses various risk scenarios to stress test the business with board and to determine where financial, operational and reputational weaknesses might occur in adverse operating conditions. This testing influences our internal procedures in mitigating risks.

The main risks faced by the group and subsidiaries are discussed by the board and executive team.

Risk is captured on a specific software system and regularly reviewed by the senior leadership team and updated.

Key risks such as health and safety, financial stability and data security take a high priority. Significant emerging risks are also monitored (Brexit, inflation and Covid 19). Risks are analysed according to their impact and likelihood. Management is focused on higher impact and higher likelihood risks.

Brexit continues to carry risks that impact on labour, material costs, government policy and financing. There may also be risks to the wider UK economy and house prices. These risks were low and continued to be monitored by the executive team and board in 2021/22.

Inflation has increased significantly towards the end of 2021/22 and represents a risk on material and wage prices that is being managed through budgets and revised efficiencies.

Prior Period Adjustment The prior period adjustment in this year's accounts is to reclassify c486 legacy housing association intermediate rents we discovered were incorrectly classified to correct to affordable rents and a small number social. The adjustment captures the rent refund backdated and indexed for all customers effected and represents the one-off liability to correctly reset customers their rents to affordable/social from intermediate from 2012 when they were incorrectly set in a legacy organisation. The amendment has been discussed with our funders and the regulator. The prior year adjustment is represented in the accounts at Note 28.

Covid 19 continued to be a risk in 2021/22. The risks were monitored at board and at the senior leadership team with weekly monitoring of the potential risks and operational and financial impacts to the business throughout 2021/22. Due to the consequences of Covid 19 the board has evaluated and continued to stress test the business plan . Effective action plans, including increased agile working were working well to maintain customer services and business operations. Our rent arrears out turned-on budget with very little increase year on year. Voids out turned marginally above target and the business maintained very robust cashflows throughout the year. Covid 19 challenges in the market led to lower operating spend across most areas of the business expect repairs. Repairs spend was above budget due to higher inflation on material costs, escalating subcontractor spend and larger volumes of repairs as customers opened up homes to a backlog of repairs. Inflationary pressures are expected to continue, and the market remains challenging for labour, subcontractors and development opportunities though all have been assessed in setting the 2022/23 budgets. Our development and capital spend was under budget in 2021/22 due to development sites being closed with social distancing rules and supply issues delaying our own capital works. These programme of works are rolled forward and future works reprofiled out to later years.

Recent Events

The impact of the recent economic turbulence, corresponding inflation, Ukraine war, interest rate increases, and uncertainty for the supply chain has meant that the executive team and board have been reviewing revised financial plans for the next five years more frequently reflecting updated economic information to ensure Beyond Housing remains a going concern. Our Board's attention to these forecasts and liquidity levels ensured appropriate scrutiny in these difficult times. Our modelling included reductions in rent collected, higher inflation costs on the business, changes to government rent policies, significant cash requirements for changing developments or other supplier support and slowdowns in our development and sales programmes.

This additional scrutiny has delivered some excellent lessons for the organisation and has proven our financial resilience under more extreme conditions.

Statement of the responsibilities of the board for the report and financial statements

The board is responsible for preparing the report and financial statements in accordance with applicable law and regulations.

Co-operative and Community Benefit Society law and social housing legislation require the board members to prepare financial statements for each financial year in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). In preparing these financial statements, the board is required to:

· Select suitable accounting policies and then apply them consistently

· Make judgments and estimates that are reasonable and prudent

· State whether applicable UK accounting standards and current Statement of Recommended Practice (SORP) for Registered Housing Providers have been followed, subject to any material departures disclosed and explained in the financial statements

· Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and association will continue in business.

The board members are responsible for keeping adequate accounting records that are sufficient to show and explain the group and association's transactions and disclose with reasonable accuracy at any time the financial position of the group and association and enable them to ensure that the financial statements comply with the Co-operative and Community Benefit Societies Act 2014, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2022. They are also responsible for safeguarding the assets of the group and association and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The board is responsible for ensuring that the report of the board is prepared in accordance with the Statement of Recommended Practice: Accounting by registered social housing providers 2018. Financial statements are published on the group and association's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the group and association's website is the responsibility of the board members. The board members' responsibility also extends to the ongoing integrity of the financial statements contained therein.

Statement of compliance

The board has sought assurance of the group's compliance with all regulatory requirements. A key element of the Regulator for Social Housing, Governance and Financial Viability Standard is the requirement to comply with all relevant laws. The board has taken reasonable steps to seek necessary assurance. On this basis the board confirms that the group complies with the requirements of the Regulator of Social Housing Governance & Financial Viability Standard.

Auditor

A resolution to appoint BDO LLP, as auditor for 2022/23, will be put to the AGM members on 22 September 2022.

Going concern

When preparing their financial results', the board of Beyond Housing considers whether the association and the group are a going concern. The directors of the subsidiaries undertake a similar exercise. Beyond Housing has put together a budget for 2022/23 and a long-term financial plan together with the associated cash flow position and a Treasury Management Policy to maintain sufficient liquidity. The group has in place financial resources to run the organisation's day to day operations and manage known risks despite any current uncertainties in the social housing sector. It has in place long-term debt facilities which provide adequate resources to finance committed investment and medium-term development activities. The group has a long-term business plan, which shows it is able to service these debt facilities whilst continuing to comply with current lenders' covenants. The business has also carried out additional stress testing on its business plan as a result of Covid 19 and market pressures as set out on page 27 to demonstrate its continuing financial resilience. On this basis the board has prepared the 2021/22 financial statements on the going concern basis.

Disclosure of information to the auditor

The board members who were in office on the date of approval of these financial statements have confirmed, as far as they are aware, that there is no relevant audit information of which the auditor is unaware. Each of the board members have confirmed they have taken all the steps that they ought to have taken as board members in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor.

Strategic report

The board submits its report and the financial statements of Beyond Housing Limited ('the group') for the year ended 31 March 2022.

By order of the board

James D Hayward

Chair of the Board

Beyond Housing Ltd

25 August 2022

Independent auditor's report to the members of Beyond Housing Limited

Opinion on the financial statements

In our opinion:

· the financial statements give a true and fair view of the state of the Group's and of the Association's affairs as at 31 March 2022 and of the Group's and the Association's surplus for the year then ended;

· the financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

· the financial statements have been properly prepared in accordance with the Co-operative and Community Benefit Societies Act 2014, the Co-operative and Community Benefit Societies (Group Accounts) Regulations 1969, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2022.

We have audited the financial statements of Beyond Housing Limited ("the Association") and its subsidiaries ("the Group") for the year ended 31 March 2022 which comprise the Group and Association statement of comprehensive income, the Group and Association statement of financial position, the Group statement of cash flows, the Group and Association statement of changes to reserves and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remain independent of the Group and the Parent Association in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Board's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Board's assessment of the Group and the Parent Association's ability to continue to adopt the going concern basis of accounting included:

· obtaining management's assessment that supports the Board's conclusions with respect to the disclosures provided around going concern;

· considering the appropriateness of management's forecasts by testing their mechanical accuracy, assessing historical forecasting accuracy and understanding management's consideration of downside sensitivity analysis;

· obtaining an understanding of the financing facilities from the finance agreements, including the nature of the facilities, covenants and attached conditions;

· assessing the facility and covenant headroom calculations, and re-performing sensitivities on management's base case and stressed case scenarios; and

· reviewing the wording of the going concern disclosures and assessing its consistency with management's forecasts.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Association's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Board with respect to going concern are described in the relevant sections of this report.

Overview

An overview of the scope of our audit

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group's system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Board that may have represented a risk of material misstatement.

Audit work on all components was performed by BDO UK both for the purposes of group reporting and reporting on the individual financial statements.

The only significant component identified was Beyond Housing Limited (the Association) based on its size and risk characteristics.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:

Reporting threshold 

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £24k. We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.

Other information

The Board are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where we are required by the Co-operative and Community Benefit Societies Act 2014 or the Housing and Regeneration Act 2008 to report to you if, in our opinion:

· the information given in the Report of the Board for the financial year for which the financial statements are prepared is not consistent with the financial statements;

· adequate accounting records have not been kept by the Association;

· a satisfactory system of control has not been maintained over transactions;

· the Association 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.

Responsibilities of the Board

As explained more fully in the Board members responsibilities statement, the Board is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Board members determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board are responsible for assessing the Group and the Association's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board either intend to liquidate the Group or the Association or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Based on our understanding of the Group and Association and the sector in which they operate, we identified that the principal risks of non-compliance with laws and regulations related to their registration with the Regulator of Social Housing, and we considered the extent to which non-compliance might have a material effect on the Group and Association Financial Statements or their continued operation. We also considered those laws and regulations that have a direct impact on the financial statements such as compliance with the Accounting Direction for Private Registered Providers of Social Housing and tax legislation.

In addition, the Group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: data protection and health and safety legislation.

We have made an assessment of the susceptibility of the Group's financial statements to material misstatement, including how fraud may occur. In addressing the risk of fraud through management override of controls we have tested the appropriateness of journal entries and other adjustments, in particular any journals posted by senior management, privileged users or with unusual account combinations.

Our audit procedures included:

· Discussions with management and Risk Management & Audit Committee including consideration of known or suspected instances of non-compliance with laws and regulations and fraud;

· Reading minutes of meetings of those charged with governance, internal audit reports, reviewing correspondence with HMRC and the other regulators to identify any actual or potential frauds or any potential weaknesses in internal control which could result in fraud susceptibility;

· Reviewing financial statement disclosures and agreeing to supporting documentation to assess compliance with applicable laws and regulations;

· Reviewing items included in the fraud register for any potential weaknesses in internal control which could result in fraud susceptibility;

· Challenging assumptions made by management in their significant accounting estimates and judgements in particular in relation to the following:

o  Whether indicators of impairment exist

o  Recoverable amount of housing properties and properties held for sale

o  Capitalisation of development costs

o  Appropriate allocation of costs between tenure types and between first and subsequent shared ownership tranches

o  Useful economic lives of housing property components

o  Assumptions used in calculating pension liabilities

· We performed analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

· We updated our understanding of the Group's current activities, the scope of its authorisation and the effectiveness of the Group's control environment.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the members of the Association, as a body, in accordance with the Housing and Regeneration Act 2008 and the Co-operative and Community Benefit Societies Act 2014. Our audit work has been undertaken so that we might state to the Association's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Association and the members as a body, for our audit work, for this report, or for the opinions we have formed.

BDO LLP

Senior Statutory Auditor

For and on Behalf of BDO LLP, Statutory Auditor

Manchester

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

*See Note 28 - Prior Year Adjustment

The consolidated results relate wholly to continuing activities. The accompanying notes form part of these financial statements. The financial statements were authorised and approved by the Board on 25 August 2022 and were authorised for issue and signed on its behalf by:

James D Hayward Lyn Peacock John Williams

Chair of the Board Company Secretary Board Member

The notes on pages 48 to 89 form part of these financial statements.

*See Note 28 - Prior Year Adjustment

The results relate wholly to continuing activities. The accompanying notes form part of these financial statements. The financial statements were authorised and approved by the Board on 25 August 2022 and were authorised for issue and signed on its behalf by:

James D Hayward Lyn Peacock John Williams

Chair of the Board Company Secretary Board Member

The notes on pages 48 to 89 form part of these financial statements.

The financial statements were authorised and approved by the Board on 25 August 2022 and were authorised for issue and signed on its behalf by:

James D Hayward Lyn Peacock John Williams

Chair of the Board Company Secretary Board Member

The notes on pages 48 to 89 form part of these financial statements.

The financial statements were authorised and approved by the Board on 25 August 2022, and were authorised for issue and signed on its behalf by:

James D Hayward Lyn Peacock John Williams

Chair of the Board Company Secretary Board Member

The notes on pages 48 to 89 form part of these financial statements.

The notes on pages 48 to 89 form part of these financial statements.

Restricted reserves are for lift replacement and property refurbishment. The lift replacement reserve represents amounts collected from tenants living in specific blocks for the future replacement of the lift in the building(s). The property refurbishment reserve represents income received for future investment in empty properties in the local area.

The notes on pages 48 to 89 form part of these financial statements.

Restricted reserves are for lift replacement and property refurbishment. The lift replacement reserve represents amounts collected from tenants living in specific blocks for the future replacement of the lift in the building(s). The property refurbishment reserve represents income received for future investment in empty properties in the local area.

The notes on pages 48 to 89 form part of these financial statements.

1) Legal status

Beyond Housing Limited (the association) is a Community Benefit Society (CBS) incorporated in the United Kingdom, registered with the Financial Conduct Authority (FCA) as a registered society and with the Regulator Social Housing (RSH) as a registered provider.

The association's registered office and principal place of business is:

Brook House

4 Gladstone Road,

Scarborough,

North Yorkshire,

YO12 7BH

Beyond Housing Limited is a Public Benefit Entity and its principal activity is noted in the Report of the Board of Management on page 3.

Basis of accounting

The financial statements have been prepared in accordance with:

· UK Generally Accepted Accounting Practice (UK GAAP), including The Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS102); and

· The Housing SORP 2018 Statement of Recommended Practice for registered social housing providers (SORP 2018).

Disclosure exemptions

In preparing the separate financial statements of the parent Association, advantage has been taken of the following disclosure exemptions available in FRS 102:

· no cash flow statement or net debt reconciliation has been presented for the parent association

· disclosures in respect of the parent Association's financial instruments have not been presented as equivalent disclosures have been provided in respect of the group as a whole

· no disclosure has been given for the aggregate remuneration of the key management personnel of the parent Association as their remuneration is included in the totals for the group as a whole.

The financial statements comply with the Co-operative and Community Benefit Societies Act 2014, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2022. The financial statements are prepared on the historical cost basis of accounting.

The numbers in the financial statements are represented in pound sterling and rounded to the nearest thousand unless otherwise stated.

A summary of the group's more important accounting policies is set out below.

Going concern

The group's business activities, its current financial position and factors likely to affect its future development are set out within the report of the board and strategic report. Long term debt facilities are higher at 31 March 2022 compared to 31 March 2021 due to the issuance in May 2021 of our ESG public bond. The issuance was for £250m over 30 years at a coupon rate 2.125%. On refinancing £165m was drawn and £85m retained. The majority of the bond was used to refinance existing loans. The refinancing lowered overall costs of debt finance, aligned bank covenants, increased fixed debt and provided more attractive debt structures. The group also has a long-term business plan which shows that it can service these debt facilities whilst continuing to comply with lenders' covenants. The 2022 business plan has been updated and reflects the current economic circumstances experienced including higher interest, higher inflation and supply chain uncertainty. Our Board and Executive team are continually monitoring the business plan in relation to these pressures and are appropriately stress testing the business plan for deteriorating conditions including higher interest and inflation, and lower rent levels and rent collection.

On this basis, the board has a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future, being a period of at least twelve months after the date on which the report and financial statements are signed. For this reason, it continues to adopt the going concern basis in the financial statements.

Basis of consolidation

The consolidated financial statements present the results of Beyond Housing Limited (Association) and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

Significant judgements and estimates

Preparation of financial statements requires management to make significant judgements and estimates. The judgements and estimates which have the most significant impact on amounts recognised in the financial statements are set out below.

Judgements in applying accounting policies and key sources of estimation uncertainty

In preparing these financial statements, the key judgements have been made in respect of the following:

· The housing portfolio of the group is assessed for indicators of impairment at each balance sheet date. Where indicators of impairment are identified then a detailed assessment is undertaken to compare the carrying amount of assets or cash generating units for which impairment is indicated to their recoverable amounts. The recoverable amount is taken to be the higher of the fair value less costs to sell or value in use of an asset or cash generating unit. The assessment of value in use may involve considerations of the service potential of the asset or cash generating units concerned or the present value of future cash flows to be derived from them appropriately adjusted to account for any restrictions on their use. The group defines a cash generating unit as a single property. Where the recoverable amount of the asset or cash generating unit is lower than its carrying value an impairment is recorded through a charge to income and expenditure.

Judgements in applying accounting policies and key sources of estimation uncertainty (continued)

· Estimating the economic useful lives ("UEL") of components; management have estimated the UEL of components by liaising with the Assets team to gain their professional opinion based on

· knowledge and experience.

· The group makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the age profile of

· the debtors and historical experience. See note 16 for the net carrying amount of the debtors and associated impairment provision.

Estimation uncertainty

Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below.

Useful lives of depreciable assets

Management reviews its estimate of the useful lives of depreciable assets at each reporting date based on the expected utility of the asset. Uncertainties in these estimates relate to technological obsolescence that may change the utility of certain software and IT equipment and changes to decent homes standards which may require more frequent replacement of key components. Accumulated depreciation and impairment on housing properties on 31 March 2022 was £102m (2021: £96m).

Impairment of housing properties

In line with the accounting policy for impairment a review of the housing properties has been undertaken and management have estimated recoverable amount of properties.

Defined benefit pension assets/liabilities

The North Yorkshire Pension Fund (NYPF) and Teesside Pension Fund (TPF) defined benefit pension asset and liability estimates are based on a series of assumptions including inflation rates, mortality, discount rates and future salary increases. Variations in these assumptions may significantly impact the cost of the defined benefit pension fund's benefits and future liabilities. The funds liability on 31 March 2022 is £26.0m (2021: £37.1m). The assets allocated to the association in the funds are notional and are assumed to be invested in line with the investments of the funds for the purposes of calculating the return to be applied to those notional assets over the accounting period.

Accounting Policies: The following principal polices have been applied:

Turnover

Turnover is measured at the fair value of the consideration received or receivable. The group generates the following material income streams:

· rental income receivable (after deducting lost rent from void properties available for letting)

· first tranche sales of housing properties developed for sale

· service charges receivable

· income from Homebuy activities

· revenue grants; and

Accounting policies (continued)

· other income.

Rental income is recognised from the point where properties under development reach practical completion or otherwise become available for letting, net of any voids. Income from first tranche sales and sales of properties built for sale is recognised at the point of legal completion of the sale. The Group adopts the variable method for calculating and charging service charges to its tenants and leaseholders. Expenditure is recorded when a service is provided and charged to the relevant service charge account or to a sinking fund. Income is recorded based on the estimated amounts chargeable.

Other revenue is included at the invoiced value (excluding VAT where recoverable) of goods and services supplied in the year and grants receivable in the year.

Prior year adjustment

A prior year adjustment has been processed in these accounts reflecting the mis-classification of some properties as intermediate rent as opposed to affordable rent. Details of the prior year adjustment are disclosed in note 28.

Housing properties

Housing properties constructed or acquired (including land) on the open market since the date of transition to FRS 102 are stated at cost less depreciation and impairment (where applicable). The cost of housing land and property includes the cost of acquiring land and buildings, development costs, interest capitalised during the development period and, directly attributable administration costs.

Interest payable on borrowing which has been drawn in order to finance the relevant construction or acquisition is capitalised. Where housing properties are under construction, finance costs are only capitalised where construction is on-going and has not been interrupted or terminated.

Expenditure on major refurbishment to properties is capitalised where the works increase the net rental stream over the life of the property. An increase in the net rental stream may arise through an increase in the net rental income, a reduction in future maintenance costs, or a subsequent extension in the life of the property. All other repair and replacement expenditure is charged to the Statement of Comprehensive Income.

Housing properties under construction, excluding the estimated cost of the element of shared ownership properties expected to be sold in first tranche, are included in PPE and held at cost less any impairment, and are transferred to completed properties when ready for letting.

Gains and losses on disposals of housing properties are determined by comparing the proceeds with the carrying amount and incidental costs of sales and recognised within gain/loss on disposal of fixed assets, which is included in the operating surplus for the year.

Shared ownership properties and staircasing

Under low-cost home ownership arrangements, the Group disposes of a long lease on low-cost home ownership housing units for a share ranging between 25% and 75% of value. The Buyer has the right to purchase further proportions up to 100% based on the market valuation of the property at the time each purchase transaction is completed.

Accounting policies (continued)

Shared Ownership and staircasing properties (continued)

Low-cost home ownership properties are split proportionately between current and fixed assets based on the element relating to expected first tranche sales. The first tranche proportion is classed as a current asset and related sales proceeds included in turnover. The remaining rental element is classed as fixed assets and included in completed housing property at cost less any provision for impairment. Sales of subsequent tranches are treated as a part disposal of fixed asset property and included in operating surplus.

Properties for sale

Shared ownership first tranche sales completed properties for outright sale and property under construction are valued at the lower of cost and net realisable value. Cost comprises materials, direct labour and direct development overheads. Net realisable value is based on estimated sales price after allowing for all further costs of completion and disposal.

Depreciation of housing properties

The group separately identifies the major components of its housing properties and charges depreciation to write down the cost of each component to its estimated residual value, on a straight-line basis, over its estimated useful economic life. Land is not depreciated owing to its infinite economic life.

Assets in the course of construction are not depreciated until they are completed and ready for use to ensure that they are depreciated only in periods in which economic benefits are expected to be consumed.

Housing properties are split between the structure and the major components which require periodic replacement. The costs of replacement or restoration of these components are capitalised and depreciated over the determined average useful economic life on a straight-line basis as follows:

Accounting policies (continued)

Other tangible fixed assets

Depreciation is provided evenly on the cost of other tangible fixed assets to write them down to their estimated residual values over their expected useful lives. The expected useful lives for the purposes of these financial statements are:

Intangible fixed assets

Amortisation is provided evenly on the cost of intangible fixed assets to write them down to their estimated residual values over their expected useful lives. The expected useful lives for the purposes of these financial statements are:

Impairment

Reviews for indicators of impairment of housing properties are carried out on an annual basis and any impairment in an income generating unit is recognised by a charge to the Statement of Comprehensive Income. An impairment is recognised where the carrying value of an income generating unit exceeds its recoverable amount being the higher of its fair value less costs to sell and its value in use.

Government/other grants

Government grants include grants receivable from the Homes England, local authorities, and other government organisations. Government grants received for housing properties are recognised in income over the useful life of the housing property structure and, where applicable, its individual components (excluding land) under the accruals model.

Grants relating to revenue are recognised in income and expenditure over the same period as the expenditure to which they relate once reasonable assurance has been gained that the entity will comply with the conditions and that the funds will be received. This includes the Government Coronavirus Job Retention Scheme ('Furlough'). Grants due from government organisations or received in advance are included as current assets or liabilities. Government grant received for housing properties is subordinated to the repayment of loans by agreement with the Homes England. Government grants released on sale of a property may be repayable but are normally available to be recycled and are credited to a Recycled Capital Grant Fund and included in the Statement of Financial Position in creditors.

Where social housing grant (SHG) funded property is sold, the grant becomes recyclable and is transferred to a recycled capital grant fund until it is reinvested in a replacement property. If there is no requirement to recycle or repay the grant on disposal of the assets any unamortised grant remaining within creditors is released and recognised as income within the income and expenditure account.

Accounting policies (continued)

Leases

Rentals payable under operating leases are charged to the SOCI on a straight-line basis over the lease term.

Cash equivalents

Cash and cash equivalents in the Group's Consolidated Statement of Financial Position consists of cash at bank, in hand, deposits and short-term investments with an original maturity of three months or less.

Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense. The best estimate of the expenditure required to settle an obligation for termination benefits is recognised immediately as an expense when the RP is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Pension costs

The association participates in a defined benefit pension fund and operates two defined contribution schemes.

Defined contribution plans

For defined contribution schemes the amount charged to income and expenditure is the contributions payable in the year. Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments.

Defined benefit plan

The net defined benefit asset/liability represents the present value of the defined benefit obligation minus the fair value of the plan assets out of which obligations are to be settled. Any asset resulting from this calculation is limited to the present value of available refunds or reductions in future contributions to the plan. The rate used to discount the benefit obligations to their present value is based on market yields for high quality corporate bonds with terms and currencies consistent with those of the benefit obligations.

Gains or losses recognised in the profit or loss:

· The change in the net defined benefit liability arising from employee service during the year is recognised as an employee cost

· The cost of plan introductions, benefit changes, settlements and curtailments are recognised as incurred

· Net interest on the net defined benefit asset/liability comprises the interest cost on the defined benefit obligation and interest income on the plan assets, calculated by multiplying the fair value of the plan assets at the beginning of the period by the rate used to discount the benefit obligations.

Accounting policies (continued)

Gains or losses recognised in other comprehensive income:

· Actuarial gains and losses

· The difference between the interest income on the plan assets and the actual return on the plan assets.

Taxation

Current tax is recognised for the amount of income tax payable in respect of the taxable surplus for the current or past reporting periods using the tax rates and laws that have been enacted or substantively enacted by the reporting date.

Value Added Tax (VAT)

The group is partially exempt from VAT. A small proportion of VAT is reclaimed. The balance of VAT payable or recoverable at the year-end is included as a current liability or asset.

Fixed asset investments

Fixed asset investments are stated at cost and are assessed for impairment at each reporting date.

Properties held for sale

Properties held for sale represents work in progress and completed properties, including housing properties developed for transfer to other registered providers; properties developed for outright sale; and shared ownership properties. For shared ownership properties the value held as stock is the estimated cost to be sold as a first tranche. 

Stock is stated at the lower of cost and net realisable value. Cost comprises materials, direct labour, capitalised interest and direct development overheads. Net realisable value is based on estimated sales proceeds after allowing for all further costs to completion and selling costs.

An assessment of net realisable value is made at each reporting date. Where a write down is required it is immediately recognised in the statement of consolidated income.

HomeBuy

HomeBuy loans are treated as concessionary loans. They are initially recognised at the amount paid to the purchaser and reviewed annually for impairment. The associated HomeBuy grant is recognised as deferred income until the loan is redeemed.

Financial instruments

Financial assets and financial liabilities are recognised when the group become a party to the contractual provisions of the instrument and are offset only when the group currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Accounting policies (continued)

Debtors

Debtors which are receivable within one year and which do not constitute a financing transaction are initially measured at transaction price. Trade debtors and other debtors are subsequently measured at amortised cost, being the transaction price less any amounts settled and any impairment losses.

Where the arrangements with a trade debtor constitute a financing transaction, the debtor is initially and subsequently measured at the present value of future payments discounted at a market rate of interest for a similar debt instrument.

A provision for impairment of debtors is established when there is objective evidence that the amounts due will not be collected according to the original terms of the contract. Impairment losses are recognised in the profit or loss for the excess of the carrying value of the trade debtor over the present value of the future cash flows discounted using the original effective interest rate. Subsequent reversals of an impairment loss that objectively relate to an event occurring after the impairment loss was recognised, are recognised immediately in profit or loss.

Trade creditors

Trade creditors payable within one year that do not constitute a financing transaction are initially measured at the transaction price and subsequently measured at amortised cost, being the transaction price less any amounts settled.

Borrowings

Borrowings are initially recognised at the transaction price, including transaction costs, and subsequently measured at amortised cost using the effective interest method. Interest expense is recognised on the basis of the effective interest method and is included in interest payable and other similar charges. Basic financial instruments: Beyond Housing has various borrowings, all of which have been assessed and categorised as basic. The assessment of certain loans and interest rates fixes as basic financial instruments require judgement. The Association does not undertake any stand-alone hedging and does not deal in derivatives. Bonds have been classed as a "basic financial instrument" as they meet the criteria under Section 11.9 of FRS 102. Management have considered how bond and loan discount on issue should be dealt with in the financial statements and determined that these should be written off over the life of bond (30 years) using the effective interest rate method. Management have considered how bond and loan issue costs should be dealt with in the financial statements and determined that these should be written off over the life of the respective instruments in equal annual instalments.

Derecognition of financial assets and liabilities

A financial asset is derecognised only when the contractual rights to cash flows expire or are settled, or substantially all the risks and rewards of ownership are transferred to another party, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party. A financial liability (or part thereof) is derecognised when the obligation specified in the contract is discharged, cancelled or expires.

Accounting policies (continued)

Holiday pay accrual

A liability is recognised to the extent of any unused holiday pay entitlement which has accrued at the reporting date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement accrued at the reporting date.

Restricted reserve

The group has established a restricted reserve for the purposes of lift replacement and property refurbishment funding. The reserve is restricted as the funding received is for a specific use and cannot be used for other purposes identified by management.

2a) Turnover, cost of sales, operating expenditure and operating surplus

2a) Turnover, cost of sales, operating expenditure and operating surplus (continued)

2b) Income and expenditure from social housing lettings