OpenCharities

This text was generated using OCR and may contain errors. Check the original PDF to see the document submitted to the regulator.

2023-03-31-accounts

31 March 2023

Mission, vision and values

Our Mission

To enable people to live later life well by inspiring the best care and wellbeing at every stage of later life.

Our Vision

By 2025 we will have connected our communities, realising our potential as OneMHA, to increase the reach, impact and quality of care and support we provide to people in later life.

Our Values

We nurture mind, body and spirit

We inspire the best in each other

We respect every person, treating them with dignity.

97% retirement living schemes rated good, outstanding or equivalent (100% in 2021/22)

92%

of care home residents satis�ed �ith their care (91% in 2021/22)

50 MHA Communities hubs (50 in 2021/22) AND

6,521 sta� (6,509 in 2021/22)

90% care homes rated good, outstanding or equivalent (92% in 2021/22)

£269m income (£251m in 2021/22) £273m expenditure (£233m in 2021/22)

11,481 MHA Communities members supported (11,662 in 2021/22)

18,957 older people supported (19,212 in 2021/22)

88 care homes (89 in 2021/22)

69 3,000 retirement living volunteers communities (3,200 in 2021/22) (70 in 2021/22)

2 Report and Financial Statements 31 March 2023

Contents

Contents
Board of Directors’ report 4
Strategic report 6
Objective 1 – MHA Reshaping care and later living 10
Objective 2 – MHA Connections 14
Objective 3 – MHA Enhancing later life 19
Objective 4 – MHA Fit for the future 24
Objective 5 – MHA people 26
Fundraising at MHA 30
Public bene�t 32
Financial review 34
Structure, governance and management 44
Statement of Board’s Responsibilities 48
Reference and administrative details 50
Independent auditor’s report 52
Consolidated Statement of Financial Activities 56
Statement of Financial Position 57
Consolidated Cash Flow Statement 58
Notes to the �nancial statements 59

Keeping alive the vision and innovation of our founder has never felt more important as �e mar��hat has been a re�arding, �et at times challenging, �ear�

Report and Financial Statements 31 March 2023 3

Board of Directors’ report, including strategic report

Despite this, we’ve continued to prioritise investment in our services. Following challenges in undertaking building works during Covid, this year we started a signi�cant investment programme across our estate. We also embarked on an ambitious three-year programme to upgrade our IT systems and equipment in all our homes, schemes and o�ces, improving accessibility and the e�ectiveness of our work.

2023 mar�s MHA�s 80th anniversar�� Established in 1943 b�Methodist Minister, Rev �alter Hall, the charit��s vision �as, and remains, enabling people to live later life �ell �being part of a communit�, feeling safe and secure, cared for and supported�Keeping Rev Hall�s vision and innovation alive has never felt more important, as �e mar� �hat has been a re�arding �et, at times, challenging �ear for the charit�in the current economic climate and as �e continue to build bac�post�pandemic�

Colleagues across our homes and schemes have also continued to fundraise for items to support residents living with dementia, such as HUG dolls, giant tablets and electronic pets, and more broadly to create opportunities to broaden the range of support and care we o�er. We remain hugely grateful to our benefactors and volunteers for enabling us to enhance our residents and members lives.

We’ve pushed forward with our plans to introduce digital care plans into our care homes, fundraised to make sure our residents and MHA Communities members continue to bene�t from life-enhancing services like music therapy, green care and chaplaincy, developed a blueprint for our future housing with care schemes, and introduced our MHA Active app.

Alongside this, the pro�le of MHA continues to grow with Hall Grange care home featuring in the King’s Christmas message. We were also delighted to welcome the Archbishop of Canterbury, the Rt Rev Justin Welby, to our Bradbury Grange care home in Whitstable to �lm his New Year message. Broadcast on the BBC and available online, the programme focused on social care and trailed the Archbishops of Canterbury and York’s Commission on Reimagining Care, which was published in January 2023.

All this was done against the backdrop of the cost-of-living crisis which a�ected not �ust our residents and their families, our members but also our colleagues, the bills we have to pay, and the ability of our supporters to donate their time, money and resources.

----- Start of picture text -----
4 Report and Financial Statements 31 March 2023
----- End of picture text -----

This echoed the focus of our in�uencing and lobbying activity throughout the year, to make sure our voice was heard by Government ministers, MPs in whose constituencies we have services, councils and in the media. The social care sector remains in desperate need of reform and investment, with longstanding workforce and capacity challenges only ampli�ed by the impact of the pandemic and cost of living crisis. Over the past 18 months, our energy bills alone have risen from £5m to £18m.

Finally, with our responsibility to ensure that our services remain sustainable, and that our charity is in the best possible �nancial shape, after careful consideration, we have had to make some di�cult decisions regarding a number of our services. These were announced in May 2023 and will lead to the sale of 10 of our homes and placing Auchlochan Garden Village in Scotland and its two associated care homes into administration. In addition, we announced the withdrawal from our other three retirement living schemes in Scotland. We are con�dent buyers can be found in the course of this year for these homes and schemes.

We hoped the introduction of the National Insurance levy for health and social care, would provide support, and that the Fair Cost of Care exercises being carried out by local authorities would lead to positive change, particularly to the levels of our fees from councils. But sadly, both were paused by the Government with no sign of when these reforms might happen.

In the midst of our challenges, we are proud that our regulators continue to score our services highly making MHA one of the most highly rated providers of elderly care in the country. The credit and our heartfelt thanks goes to our amazing sta� and their leaders for all their continuing e�orts to enable older people to live later life well.

With 165,000 vacancies nationally across the sector, MHA, like other providers, has continued to struggle to recruit care and nursing sta�. It made our decision to award colleagues a substantial pay uplift in line with our responsibilities as a Real Living Wage employer even more vital. Even though this is improving our recruitment and retention, the situation remains critical as we face the ongoing pressures of funding agency workers to ensure safe sta�ng and restricting the number of residents who come into some of our homes, due to sta�levels.

All this will go towards making sure we set MHA on the right course as we mark our 80th anniversary in 2023 and we get ever closer to marking our century in 2043.

�ames Reill�, Chair Sam Monaghan, Chief Executive

We continue to call for care workers to be considered skilled workers and for investment so that providers can uplift salaries to the same level as NHS healthcare assistants. We continue working to ensure that social care reform is at the top of the political agenda.

----- Start of picture text -----
�ames Reill�
----- End of picture text -----

----- Start of picture text -----
Sam Monaghan
----- End of picture text -----

Report and Financial Statements 31 March 2023 5

Strategic report

One MHA: Our Refreshed Strateg�2022�25 �Our �usiness �lan 2022�23

2023 marks MHA’s 80th anniversary. It was the vision of our founder, the Rev Walter Hall, that led to the church expressing its mission to care for and support those who are particularly vulnerable and in need, whatever their faith or background.

Today MHA serves 18,957 older people across 88 care homes, 69 retirement living communities and 50 MHA Communities hubs, supported by 6,521 sta�and 3,000 volunteers.

Our founders would be truly proud of the work MHA carries out as we mark our 80th anniversary.

MHA includes the subsidiaries MHA Auchlochan (our retirement living village in Scotland) and Methodist Homes Housing Association Ltd, our registered social landlord which provides rented accommodation at social rent. On 2 May 2023, MHA Auchlochan was placed into administration.

Our mission, vision and values hold strong and steady and continue to guide all that we do. Our refreshed strategy for 2022 to 2025 details our ob�ectives for the next few years and focuses our ob�ectives under �ve key areas.

The One MHA Strategy builds on our history of serving the needs of older people. It brings together our operational activities, connecting our care homes, retirement living and MHA Communities for greater collaboration, knowledge exchange and a stronger o�ering to the communities we operate in.

However, in doing this we �nd ourselves in a di�erent societal and political landscape than we

----- Start of picture text -----
2
1 MHA
Connections
MHA
Reshaping
Care & Later
Living
3
MHA
5 Enhancing
Later Life
MHA
People
4
MHA
Fit for the
Future
----- End of picture text -----

did at the start of 2022/23. At the beginning of the year, we were working towards the delivery of Fair Cost of Care exercises by local authorities and the promise of additional funds in years to come from the National Insurance Levy.

Sadly the Government paused work on these, despite the calls for social care reform becoming louder. In addition, we have been a�ected by the exponential rise in energy costs.

Despite this, we are pushing forward on our plans to make sure we can enable older people to live later life well within an infrastructure that can best support this.

6 Report and Financial Statements 31 March 2023

Looking forward

Looking ahead to the next �nancial year, we have published a 2023/24 Business Plan, which details our main priorities for each strategic ob�ective, which are detailed below. In addition, each section of the Strategic Review gives more information about what we will be doing in these areas.

Reshaping care and later living

�e�ning our vision for future models of Care

and Later Living, establishing new services that align with sector reforms.

Connections

Strengthening collaboration between our bene�ciaries, services, central support and partners.

Enhancing later life

In�uencing policy and enriching the experience of later life through innovative practice.

Fit for the future

�eveloping e�ective infrastructure, enabling e�cient processes to support sustainable service delivery.

�eople

Valuing, supporting and developing our people’s potential in an inclusive culture.

Report and Financial Statements 31 March 2023 7

Our OneMHA strateg�builds on our histor�of serving the needs of older people, connecting our services for greater collaboration�

----- Start of picture text -----
8 Report and Financial Statements 31 March 2023
----- End of picture text -----

Key performance indicators

�hat �e said �e �ould achieve Ho��e did
To sustain our position in the top 20 care home providers on
carehome.co.uk		 Achieved
To maintain at least 90% good or outstanding or equivalent
compliance with regulators across all services		 92%
For at least 75% of care homes and retirement living services to
achieve an internal quality assurance score of 85% and above		 77% of all services achieved or
exceeded the target of 85%
To increase our MHA Communities membership to at least
15,000 members by 2025		 11,481 members as at
31 March 2023
To maintain at least 84% employee retention 77% Retention and recruitment
of sta�has been di�cult in the
current environment
To increase employee engagement index score to at least 75% 76%
To raise at least £4 million in fundraised income, including
£600k in communities trusts and grants annually		 Total fundraised income was
£7.1 million, with £1.7m in
communities trusts and grants
To rebuild our care home occupancy to at least 85% 83% Occupancy recovery has
been hampered by the sta�ng
crisis in the social care sector
To maintain at least 90% occupancy in our retirement living 93%
To sustain central overheads below 9.2% of income in
line with budget		 9.0%

Objective 1

MHA

Reshaping care and later living

�hat �e said �e�d do

As part of the work on the blueprint, the opportunity was taken to review the management arrangement with Adlington Retirement Living as the �ve-year term contract was coming up for renewal at the end of 2022/23.

�hat �e�ve done

One of the biggest parts of MHA’s work this year was on its blueprint for the future of retirement living and our housing with care o�er.

The blueprint is built on seven principles that have been developed from lessons learnt from our schemes, engagement and feedback from our residents and good practice from across the retirement living sector.

The Board took into consideration how MHA’s retirement living service could be structured in the future and decided to hand back the management of Adlington House in Otley, Brooklands House in Sta�ord and Adlington House, Urmston over to the original developers Adlington Retirement Living. The decision was in�uenced by our aim to reduce the number of schemes we operate under management agreements and increase our focus on the retirement living with care services we o�er. This was e�ective from 1 April 2023.

The purpose of our o�er, de�ned within this blueprint, is to enable people to ‘live the life that they want to lead.’

The Government’s Social Care white paper suggests we envisage a future where society will see a move towards a reduction in residential care settings, with new services that are within the housing with care space. This is where we envisage demand will increase in the future. We are already seeing an increase in enquiries for retirement living from people with care needs.

The decision demonstrates how MHA will start to move towards more retirement living services which not only provide accommodation for older people but care to enable people to live independently within a supportive community. This will inform the next stage of work on the blueprint next year in delivering what this means for MHA.

10 Report and Financial Statements 31 March 2023

The purpose of our ne� housing �ith care blueprint is to enable people to live the life the��ant to lead�

4,782 2,694 care home residents retirement living residents (4,840 in 2021/22) (2,710 in 2021/22)

Report and Financial Statements 31 March 2023 11

192 MHA Communities service deliver�locations (175 in 2021/22)

12 Report and Financial Statements 31 March 2023

13,745 groups, clubs, activities and classes for MHA Communities members (10,620 in 2021/22)

�hat �e �ill do next

Objective 2

MHA Connections

�hat �e said �e�d do

�hat �e�ve done

Collaborative Communities pilot

MHA has been developing a new way of working called Collaborative Communities. The idea is to take care homes, retirement living schemes and MHA Communities schemes that are located in the same area and bring them together under one integrated o�ering in a shared location.

We piloted the Collaborative Communities blueprint at MHA Hafan Y Waun care home in Aberystwyth, creating an Aberystwyth MHA Communities scheme to share a site with the care home.

This co-location enabled colleagues to feel more integrated within MHA, work collaboratively with colleagues from di�erent areas of the charity and access development opportunities. Older people and their relatives are better supported in their �ourney through older life.

Activity and community coordinators are upskilled to become a One MHA Coordinator, who are then able to help residents and members in accessing activities and providing guidance on how to access more of MHA’s services. This also provides volunteers with a point of contact within the Collaborative Community.

The Later Life Hub

In response to developing and delivering a market-leading digital content platform an d online community for older people and in response to the cost of living crisis, MHA launched the Later Life Hub in October 2 0 22. The hub is an area of the MHA website w h ere people can access useful tips, information and advice on everyday matters a�ecting later life. The Later Life Hub aims to position MHA a s a credible voice for ageing and later life, whilst also increasing our online brand awareness.

As well as signposting to trusted organisa t ions, like the NHS and government websites, t h e Later Life Hub contains content generate d by

14 Report and Financial Statements 31 March 2023

sub�ect matter experts at MHA. This collaborative e�ort saw colleagues contributing expertise and ideas to create useful content, including looking after your physical, spiritual, and mental health, managing your �nances, end-of-life care, dementia and much more.

To visit the Later Life Hub, please visit ����mha�org�u��hub�

MHA Active app

In addition to the Later Life Hub, the digital content platform has progressed with MHA’s Digital Communities team developing MHA Active, an app containing a wide selection of activities and content for residents, members, and MHA colleagues to use for activities.

MHA Active aims to provide resources to keep people in later life physically and mentally active. It also enables those who live in their own homes to engage with MHA. Resources include quizzes, yoga, arts and crafts, green care, and spirituality. There is also a dementia-friendly section, which has received positive feedback from users.

Thanks to a grant from the Wolfson Foundation, MHA has been able to sta rt work on an updated version based on user feedback, whilst also paving the way for new features li ke cle arer layout, pdf activity sheets, seasonal content, and live events.

Report and Financial Statements 31 March 2023

15

Fundraising strateg�

�hat �e �ill do next

In July 2022, MHA’s Board of Trustees approved MHA’s �rst-ever Fundraising Strategy, a document that looks to formalise our recent successful fundraising activities whilst also laying out a clear path for where MHA’s fundraising is going over the next 10 years.

The strategy has built upon three pillars which set out its main aims. They are:

Rather than attempting to reinvent fundraising, the strategy aims to build and improve on some of our most successful events and initiatives, whilst also trying to reach and convert new supporters.

The strategy also introduced Charitable Giving Score Cards, which looks at the impact of our fundraising on our supporters, whilst also pulling together some case studies, to showcase MHA’s work to our stakeholders.

l$li Reportand Fthaneial Ststements 31 March 2023 17

The petition led to MHA ma�ing connections �ith several Members of �arliament� �aroness �rinton also raised our concerns during a debate on the spring budget�

Objective 3

MHA Enhancing later life

�hat �e said �e�d do

1� Sustain and build our campaign to ��care for all.

2� Enrich later life through the delivery of our specialist strategies.

3� Nurture a culture of innovation.

�hat �e�ve done

MHA�s Cost of Living petition

In February 2022, MHA launched a petition, aimed at putting the impact of the cost of living crisis in the care sector on the political agenda, by taking the voice of those who live and work in care straight to the heart of government.

The petition led to MHA making connections with several Members of Parliament. Baroness Brinton also raised our concerns during a debate on the spring budget.

Several other charities and organisations from the care sector shared our petition, including The Care Provider Alliance, The National Care Forum, The Brain Charity and Pilgrims’ Friend Society.

MHA colleagues and supporters were asked to sign an e-petition which asked the Chancellor of the Exchequer, Jeremy Hunt, to bring in further �nancial support for the care sector. The secondary purpose of the petition was to start to build a campaigner network and to build links between the campaign team and all other areas of MHA, in preparation for the launch of new campaigns over the next few years.

MHA used trusted internal communications channels and external channels like social media and email to spread the word about the petition. Overall we collected 1,147 signatures, with 703 people also opting in to hear about future campaigns, showing there is an appetite for reform in the social care sector.

Report and Financial Statements 31 March 2023 19

Specialist Strategies

Our specialist strategies aim to further enhance the care and support we deliver for older people across the UK. MHA has �ve specialist strategies which have all progressed in various ways over the last year.

Dementia Strateg�

The Dementia Strategy has six commitments for people living with dementia and their families/ friends. The focus is on uniting people together to make sure people are not experiencing dementia in isolation.

Work this year means there is now a family advisory group which provides insight and contributes to improving dementia care at MHA. We now o�er training to help family members with supporting a person living with dementia. Finally, the dementia strategy interlinks with the other four strategies, providing guidance and support on how to make their commitments dementia-friendly.

Music Strateg�

The commitments in our Music Strategy are based on what residents, members, families and colleagues said was important to them regarding the use of, and access to, music at MHA.

Music Therapy is now delivered in our 67 dementia specialist care homes and we are partnered with Middlesex University to see whether we can launch the service in MHA Communities and residential care.

The Digital Communities team has also been working to make music therapy and guidance about music available to a much wider audience.

There has been a focus on educating colleagues about music therapy. New colleagues now learn about music therapy in their inductions.

Additionally, MHA has partnered with Purple Angels, a charity that has committed to supplying each of our homes with �ve MP3 players. We’re currently evaluating the best ways for us to implement this technology.

Spiritualit�Strateg�

MHA’s commitment to spiritual care dates back to the foundation of the charity in 1943. In our 80th year, that commitment �nds new expression in our strategy for spirituality.

We have developed a new equality impact assessment which has been implemented for chaplaincy recruitment to make sure we have chaplains with the right gifts, knowledge, and skills to serve the communities in which they serve.

Over the past year, we have implemented a programme of ‘spiritual insights’. This has involved colleagues sharing a re�ection about what spirituality means for them. These have featured people from a wide background of faiths and no faith and have enabled colleagues to hear from their peers what spirituality is and how it impacts people’s lives. Many of these insights received extensive positive feedback.

While recognising the role we all play in spiritual care, chaplains have a particular responsibility for pastoral, spiritual and religious care. In 2022 we developed and distributed new ‘Professional Practice Development’ portfolios. These folders enable chaplains to identify areas for their personal and professional development and keep an accurate record of the things that they learn.

End�of�Life Care Strateg�

The End-of-Life Care Strategy was launched in May 2021. It has continued to be supported by a dedicated team who all have a passion for supporting residents, relatives, members, and colleagues in their thinking about, talking about and planning for the best possible end-of-life care.

We aim to make end-of-life care at MHA holistic and person-centred. This includes creating comfort boxes for care home residents and exploring how music therapy can enhance people’s experience at the end of their lives.

We want to bring about a culture change at MHA where it’s ok to talk about dying. Colleagues in all areas of MHA have access to our Final Lap training, which equips colleagues with the necessary skills and con�dence to have these conversations about death.

�reen Care Strateg�

The Green Care Strategy was �nalised in early 2023 with the aim of developing wellbeing through nature for everyone at MHA. This refers to the physical, psychological, emotional, and spiritual bene�ts that we all gain from interacting with the natural world.

This strategy was developed using a coproduction approach, gaining the views of residents, members, families, and colleagues, through individual interviews, surveys and focus groups. It is also aligned with recent external academic research. The Green Care Strategy will be launched in Spring 2023.

Ethics and Research Committee

Fifteen research pro�ect applications were received between 1 April 2022 – 31 March 2023, compared to �ve the previous year.

The role of the Ethics and Research Committee (E&RC) provides strategic direction, oversight and leadership to ensure research undertaken internally or externally (including requests for partnerships and tenders) is in line with the values and mission of MHA and wider strategic ob�ectives. The committee covers speculative proposals and also makes recommendations for pieces of research which would advance the mission of MHA.

A specialist services initiative was introduced in 2022 called Journal Club, which meets every quarter to review academic papers on dementia care, music therapy, green care and spirituality for older adults. The Journal Club is open to all colleagues across MHA.

Report and Financial Statements 31 March 2023 21

Digital Care �lans

MHA has been piloting digital care plans with some of our care homes and retirement living schemes, to be �t for the future. Digital care plans have recently been made a regulatory requirement and provide evidence of good care to CQC inspectors.

�ene�ts of digital care plans include:

In the last �nancial year, we set out to select a provider for the software and settled with Nourish. Work was then undertaken to con�gure it to the needs of our colleagues.

Three care homes and a retirement living scheme were selected to be part of a pilot. Based on feedback we received on other product launches, we decided to embed the system in the pilot homes and scheme and worked to action feedback from colleagues to try and remove any �aws before we began rolling the system out to the other homes and schemes. To be thorough with the feedback, we decided to delay the full rollout to care homes, which started in June 2023.

The retirement living pilot produced di�erent results. Due to the di�ering levels of care needed at each scheme as well as the di�erent ways the scheme is run, the decision was made

to pause the rollout and extend the pilot to more schemes in the next �nancial year. This will allow us to tailor the system to the unique needs of retirement living.

�hat �e �ill do next

�e �ere delighted to �elcome the Archbishop of Canterbur�to MHA �radbur��range to record his Ne��ear message, �hich focused on social care�

Report and Financial Statements 31 March 2023 23

Objective 4

MHA Fit for the future

�hat �e said �e�d do

�hat �e�ve done Investments in MHA�s IT Infrastructure

MHA has embarked on a multi-phase update of our IT systems. The �rst phase involved bringing MHA’s IT systems and infrastructure into a more modern and �exible environment. Before this rollout began, MHA had antiquated technology, many of the applications and systems that we used were end-of-life and no longer supported, leaving us at a higher risk of cyber threats and without access to modern features.

To address this, MHA replaced over 1,300 computers, providing colleagues, homes and schemes with new laptops and desktops. We have also rationalised our servers, shutting down 44 out-of-date servers whilst launching a pro�ect to migrate the remaining servers to a cloud computing platform.

One of the most visible pro�ects the IT Team undertook was migrating colleagues from our old Exchange 2010 email system to O�ce 365.

MHA�s propert�portfolio revie�

During 2022/23 MHA’s property portfolio review looking at the long-term viability of all our services concluded. This review started in 2019 but was interrupted by the pandemic and, following its completion, has led to several di�cult decisions taken by our Board of Trustees. The review

included looking at the location and size of our care homes and retirement living schemes, their proximity to other services for older people, their �nancial viability, the quality of our buildings, and their �t with emerging trends regarding the types of care and support that older people will want in the future.

Within the outputs of the review was the decision to sell ten of our care homes as going concerns, and this will progress in 2023/24. A further decision was to place MHA Auchlochan Garden Village, our retirement living community in Scotland and its two associated care homes into the hands of administrators. The changes also mean MHA withdrawing from three other retirement living schemes in Scotland as, without Auchlochan, it would be too di�cult for MHA to continue supporting the three retirement living schemes in Scotland. This means MHA will no longer have any presence in Scotland. These di�cult decisions were announced on 2 May 2023.

Continuous improvement champions

A cohort of MHA managers were selected in 2022/23 and trained on continuous improvement techniques. Their training included the review and improvement of processes within the areas the individuals worked within so that they could bring to life the training that they were receiving. The �rst cohort is coming to the end of their training and are ready to become continuous improvement champions across the organisation.

SugarCRM

Throughout this �nancial year, MHA Communities has successfully con�gured and rolled out SugarCRM, a customer relationship management (CRM) system to manage our MHA Communities members engagement and interaction.

Before the rollout of SugarCRM, MHA Communities schemes were managing their members via paper-based assessments and several pieces of software that were unreliable or not �t for purpose. Now, schemes can use one system to provide an overview of members. The key bene�ts of the system include:

The new system was piloted with two MHA Communities schemes. Initial feedback was positive, with colleagues reporting that they spent less time on assessments and that members were less likely to be overlooked during their customer �ourney with the scheme.

Feedback has also enabled the pro�ect team to tailor the system to the needs of colleagues, adding new data �elds and features.

�hat �e �ill do next

Objective 5

MHA people

�hat �e said �e�d do

�hat �e�ve done

Recruitment and retention continue to be a high priority for MHA in making sure we have enough people to care for and support our residents and members.

The market for care workers in 2022/23 continued to be di�cult. Nationally, Skills for Care estimates there are around 165,000 vacancies in the sector overall. MHA is no exception to this and in March 2023 we had around 400 vacancies in our care homes.

One of our priorities is our nursing colleagues. They are important to us, which is why we developed and published our �rst MHA Nursing Workforce Strategy. In it, we set out our intention to be the place where the best nurses want to work and where the best nurses want to stay.

Working with and consulting our nurses, we developed commitments to:

Our people remain the lynchpin for us being able to provide our care and support services. Their hard work, dedication, compassion and empathy continues to shine through.

We recognised this hard work and dedication through our Outstanding Services and Recognition (OSCAR) Awards in which we marked the tremendous work being carried out by our colleagues across the charity.

We continue to invest in robust technologies to support tendering, contract and supplier management and will use these technologies to help in our e�orts to manage, educate and support our suppliers so that together we can drive out modern slavery from our supply chains.

MHA’s Modern Slavery and Human Tra�cking Statement can be found at: ����mha�org�u�

MHA provides competitive pay which recognises and rewards dedication. The importance of caring for and supporting older people has never been greater and we value all those working to deliver this mission.

26 Report and Financial Statements 31 March 2023

Our intention is to be the place �here the best nurses �ant to �or�and �here the best nurses �ant to sta��

This respect drives our pay principles, fundamental to which is paying at least the Real Living Wage as a minimum for all within MHA since 2018 (and since 2016 for those delivering care). The cost of living, economic circumstances and the market for roles including benchmarking with the NHS and others within the sector and beyond, informed our thinking and decision to award a 5% increase in 2022/23 and 10% for 2023/24 with an 8% rise for those earning £70,000 and above.

Pay is determined as part of the budget process where overall a�ordability is a key consideration along with our principles of rewarding our colleagues whilst balancing a�ordability of fee and service charge increases to older people and ensuring our charity is sustainable in the future.

Proposals are considered at ELT and Board and as part of our pay agreement with UNISON. All roles are included within this process, with the exception of ELT pay awards which are determined by the Nominations Committee, to avoid any con�ict of interest, but within the context of the organisational award.

We also believe that all colleagues who continue to deliver critical services to people in need, deserve greater recognition and reward. MHA continues to campaign on their behalf. We recognise that a fundamental shift in pay, conditions and career opportunities for all who

work in care is required and we continue to lobby the Government for a commitment to fair pay and terms and conditions for all who work in the care sector with fair fees from local authorities.

MHA�s gender pa�data in 2023

MHA is fully committed to equality. We pay men and women equally for the same role. Our gender pay data shows the di�erence in average pay between all men and women in the workforce.

MHA’s analysis is positive with a small gap compared to the UK generally, and we remain committed to driving equality through our EDI strategy, policies and practices every day.

Across the organisation men were paid 1.3% more than women in 2023, using a median average calculation. None of our colleagues in the organisation are paid a bonus. MHA employs signi�cantly more women than men, almost a 4.5:1 ratio which results in reasonably signi�cant �uctuations in our gender pay data.

We have a good record of commitment to equality and the development of our people. This is augmented through �ve sta�networks which help further awareness and inclusion for gender, religion, race, sexual orientation and disability. The networks host a variety of events and activities to raise awareness among colleagues and support issues relating to race, faith and belief, gender, disability and sexual orientation.

The median pay gap �gure is the most commonly used for the gender pay gap. However, no single metric will capture the full picture of what is happening at an organisation, so it is useful to look at both median and mean pay.

Female **Male ** �a��ap
Mean Pay £13�79 £14.22 3�1%
Median Pay £11�59 £12.09 1�3%
Total Sta� 5,314 1,207

�hat �e �ill do next

Fundraising at MHA

During 2022/23 all of our key fundraising ob�ectives were met:

Fundraising at MHA helps older people live later life well by speci�cally supporting the provision of our charitable endeavours such as MHA Communities, chaplaincy and music therapy.

All fundraising activities at MHA are undertaken directly by the charity, with no external party acting on our behalf. No material expenditure was incurred to raise income in the future.

MHA is signed up to the Fundraising Regulators Code of Practice and pays the levy to the regulator. We continue to undertake awareness

activities to increase the pro�le of the code among colleagues outside the fundraising team. There were no failures or breaches of the code at MHA in 2022/23.

There were no complaints directly about fundraising received in 2022/23. However, nine complaints were received regarding associated communications and speed of response. These complaints were all satisfactorily resolved, and the team has focused on improving associated processes.

We are committed to supporting vulnerable people in our fundraising and have established a fundraising for vulnerable people policy, in 2021/22 we piloted training to support this policy which was rolled out across MHA in 2022/23.

Fundraising at MHA includes the following key activities:

Our key income driver is from our Legacies income stream. We are always grateful to people who remember MHA in this special way, whatever the size of the gift.

4 Iri Iha Rèport and Finaneial Ststements 31 March 2023

Public bene�t

The MHA Board of Trustees has due regard to the Charity Commission guidance on the public bene�t requirement under the Charities Act 2011, in particular the requirement that public bene�t can no longer be presumed but must be demonstrated. We are con�dent in our role as a charity delivering services to the public and meeting the Charity Commission’s public bene�t requirements now and into the future.

For many residents, MHA will provide them with their last home. Our chaplains have a particular role in helping residents and their relatives approach their �nal years, hopefully with a sense of acceptance, peace and ful�lment.

MHA aims to support and care for people living with dementia with understanding and expertise, and we are proud of our dementia strategy. We focus on the individual needs of our residents with our person-centred approach and make sure everyone is able to lead a ful�lled and satisfying life.

MHA’s person-centred care recognises each older person as a unique individual and addresses their own spiritual and physical needs, with reassurance, care and support. Our services are open to everyone, with our care home residents being broadly split 55:45 (2021/22: 56:44) into those places which are fully self-funded and those that are partially or fully funded by the local authority or the NHS alongside our commitment to social rent tenants in retirement living.

We have further demonstrated our public bene�t throughout these �nancial statements.

Our care homes, retirement living and MHA Communities schemes all support people to develop and practise faith and spirituality as it applies to them as individuals. Our work is inspired by the Christian faith, and we welcome people from all religions, beliefs and traditions as well as those with none. We encourage residents to maintain links with their own faiths and communities should they wish to do so. We celebrate religious festivals and events from all faiths throughout the year in our homes and schemes.

Il Report and Finaneial Ststements 31 March 2023

Financial Review

The Statement of Financial Activities for the year 2022/23 shows total incoming resources of £268,825,000 (which last year was £251,089,000) a 7% increase on the previous �nancial year. This is largely a result of increased charitable activities within care homes where we have seen occupancy recovery following the Covid-19 pandemic.

MHA had a strong start to 2022/23 with promising occupancy recovery and the receipt of several signi�cant legacies. Initially, this partly o�set the exponential increase in costs that MHA experienced, with our energy costs increasing from £5m in 2021/22 to £12m in 2022/23. These are expected to further increase to £18m in 2023/24. Financial performance weakened in the latter half of the year however as the cost of living crisis began to hit harder and the social care workers crisis began to have a greater impact.

Occupancy slowed in our care homes as we were unable to recruit su�cient sta�to look after new residents, meaning we had to close many homes for periods of time to new admissions. We also experienced an increase in agency worker utilisation as we were unable to resource current resident requirements. This saw our agency worker costs rocket, costing MHA in excess of £28m during the year, more than double the total for the previous year.

Ke��erformance Indicators for the group 2022�23
Actual
£�000		 2021/22
Actual
£’000
Total income 268,825 251,089
Operatingcosts excludingexceptional costs 272,655 233,312
Exceptional costs 113,590 (309)
(De�cit)/Surplus for the year (after investment gains and losses) �117,525� 18,090
Service users, capacit� Number Number
Care homes 4,782 4,840
Number of retirement living properties 2,694 2,710
Community services members supported 11,481 11,662
Occupanc� 2022�23 2021/22
Care homes 82% 78%
Retirement living 93% 90%
Cost of fundraising to voluntary income 10% 17%

These �nancial statements include the �nancial bene�ts (although to a lesser extent than in previous years) of accessing Government and local authority funds made available to support the care sector as a result of Covid-19 mainly via the Infection Prevention Control Fund (ICF), the Rapid Testing Fund (RTF) and the Workforce Recruitment and Retention Fund (WRRF).

34 Report and Financial Statements 31 March 2023

----- Start of picture text -----
£7.1m £0.9m £0.7m £3.5m
£2.4m £211.1m £6.1m £217.8m
£10.0m £10.0m
£37.3m £34.6m Care homes
Retirement living
Auchlochan
Garden Village
Income Expenditure MHA Communities
£268.8m £272.7m
Fundraising
Other
----- End of picture text -----

A total of £1,279,000 (2022: £11,659,000) has been received during the �nancial year to support infection control, testing, visiting, sta�absences due to Covid-19 and to support the recruitment and retention of the social care workforce. We have not bene�ted this year £nil (2022: £105,000) from the furlough scheme and from the Government provision of free Protective Personal Equipment (PPE). These monies are accounted for within charitable income.

As detailed, 2022/23 has been a very di�cult year for charities and the fundraising sector, which is why we are even more grateful for the generous donations that we have received during the year of £7,112,000 (2022: £3,734,000) which have contributed towards:

During 2022/23 a review looking at the long term viability of all our services concluded; this review started in 2019 but was interrupted by the pandemic. Upon completion of the review a number of di�cult decisions were taken by our Board of Trustees.

The review looked at services through a variety of lenses such as the location and size of our care homes, their proximity to other services for older people, their �nancial viability, the quality of our buildings and their �t with the emerging trends regarding the types of care and support that older people will want in the future.

The �rst decision was to sell ten of our care homes as going concerns. The second decision was to place MHA Auchlochan Garden Village, our retirement living community in Scotland and its two associated care homes into the hands of administrators.

The changes in Scotland also include MHA withdrawing from our three Scottish retirement living schemes with a view to selling these schemes to alternative providers. These di�cult decisions were announced on 2 May 2023. These decisions have led to exceptional costs of £114,194,000 which are detailed shortly.

Despite the increase in total incoming resources and despite careful cost management MHA reached a net loss of £117,525,000 (2022: surplus £18,090,000). This net decrease in funds of £114,517,000 (2022: increase £21,247,000) is added to the total balances brought forward of £346,232,000 which re�ects non-cash items.

Despite this year’s performance we are fortunate to have a strong balance sheet, as re�ected in these statutory accounts. We have enough liquidity to support our activities for several months and, should we need more working capital, we have access to £25,000,000 of rolling credit facilities which have not yet been drawn on.

With the exception of the services noted above, the Directors consider the market value at 31 March 2023 of the freehold and leasehold land and buildings to be in excess of the costs or valuation as stated in note 13 to the �nancial statements, based on independent valuations.

Exceptional items in the current year constitute impairments on operating assets across MHA’s property portfolio of £112,378,000 re�ecting the reduction of the holding value of the sites to their anticipated net realisable values. Provisions for the disposal costs of the operating assets are held at £1,817,000. Prior year impairments have been partially reversed £103,000 and a prior year provision has also been released £500,000.

Exceptional items in the prior year constitute an impairment of MHA Richmond care home in Bexhillon-Sea, the closure of which was announced in February 2022 £1,311,000. The impairment of MHA Foxton Grange care home was also partly reversed £1,620,000 while the property was held for disposal after release of the restrictive covenant, the part reversal of the original impairment brought the holding value of the site to its anticipated net realisable value.

Reserves �olic�

The Board of Directors has carried out their annual review of the minimum level of free reserves, which should be maintained within the Group which remains at a minimum of three months operational expenditure.

Our reserves policy seeks to make sure free reserves are maintained at a level that enables MHA to manage �nancial risk, allowing us to maintain and improve the future standards of service and care o�ered to older people over the medium to long-term and ensuring that �nancial commitments can be met as they fall due.

At the end of 2022/23 total reserves were £231,715,000 (2022: £346,232,000) of which £24,253,000 (2022: £25,411,000) were restricted and endowed and were not available for the general purposes of the charity. There are no designated funds nor are there any funds in de�cit.

Total unrestricted funds at the end of 2022/23 were £207,462,000 (2022: £320,821,000) which included the net book value of �xed assets of £309,492,000 (2022: £417,437,000). Fixed assets can be excluded from the Group’s de�nition of free reserves as the Group considers the level of cash and other liquid funds as a more appropriate measure of its ability to meet its commitments and invest in the future.

Actual free reserves which MHA de�nes as cash or liquid funds were £57,651,000 (2022: £63,688,000). The Board considers that minimum free reserves of approximately £63,000,000 (2022: £53,000,000) are needed to cover such items and to enable the Group to continue to operate to meet its charitable ob�ectives.

This level of �nancial reserves equates to �ust below three months of operational expenditure which is �ust below the reserves policy requirement. Management and Board will manage reserves to remain in line with the three-month requirement during the coming �nancial year notwithstanding the intention to address the backlog of maintenance and capital expenditure works that built up during the pandemic.

36 Report and Financial Statements 31 March 2023

Our �nancial reserves provide an important �nancial bu�er in the current climate of heightened economic uncertainty. We anticipate that economic uncertainty will continue for at least the next 12 months.

Since MHA is con�dent that it can meet the required pension contributions from pro�ected future income without signi�cantly impacting on its planned level of charitable activity, it continues to calculate its free or general reserves without setting aside designated reserves to cover the pension liability.

The Directors are satis�ed that there are su�cient reserves to meet pension liabilities arising from the MHA de�ned bene�t scheme, which was closed to new entrants on 31 March 2010.

Treasur�Management �olic�

The Treasury Management Policy sets the boundaries for acceptable �nancial risks and delegates treasury decisions for managing those risks in a controlled manner.

The policy makes sure MHA is actively and regularly monitoring, measuring and managing treasury risks in a robust and consistent manner, clarifying responsibilities between the various stakeholders to ensure that adequate funds are available for ongoing operational requirements as well as for the longer-term strategic aspirations of the organisation.

The policy incorporates the di�erent types of funds held. These are:

The management of investments is delegated to the Central Finance Board of the Methodist Church. Performance of investments is reviewed annually by the Board and is �udged to be satisfactory. Investments are held in equities, �xed interest deposits and cash totalling £1,364,000 (2022: £1,469,000) at the balance sheet date.

�rincipal Funding Sources

MHA has drawn loan facilities with the Allied Irish Bank, balance at 31 March 2023, being £18,919,000 and Barclays Bank Plc, balance at 31 March 2023 being £70,000,000.

Furthermore, MHA is able to bolster funding by a £25,000,000 undrawn revolving cash facility (RCF) that we have in place with Barclays Bank. This is designed to support operational funding and liquidity requirements as required.

Methodist Homes Housing Association Ltd has a loan facility with the Nationwide Building Society with the balance at 31 March 2023 being £2,227,000 and a loan facility with Capita totalling £1,116,000 as at 31 March 2023.

Fixed asset additions of £22,256,000 were �nanced by accessing existing reserves. This expenditure enables MHA to develop existing properties to maintain existing standards and meet new standards where relevant.

As part of care home operations MHA operates 28 (28 in 2022) leased homes which have been established via sale and lease back arrangements.

�oing Concern

Financial sustainability continues to be a critical issue for the social care sector. The long shadow cast by the Covid-19 pandemic, particularly on occupancy recovery, the current social care sta�ng crisis, the energy crisis and cost of living crisis have magni�ed that risk. Unfortunately, despite our strong �nancial position at the beginning of the pandemic, MHA has not been immune to that risk.

Report and Financial Statements 31 March 2023 37

The �nancial strains as a consequence of the Covid-19 pandemic have been further exacerbated by the energy crisis, the cost of living crisis and the social care workers crisis. These combined have led to an exponential and unavoidable increase in MHAs cost base during 2022/23. Based on this experience and supported by external analysis which is forecasting a long-term occupancy issue for the sector, one of the key areas of focus for the organisation is on mitigating actions to support the ongoing �nancial sustainability of the organisation. These include:

As we move into 2023/24 MHA has undertaken signi�cant �nancial scenario and sensitivity analysis, modelling various plausible scenarios including a severe but plausible scenario. These scenarios take into account various assumptions including levels of occupancy, weekly fee levels, and the �nancial impact of the current cost of living crisis, social care workers crisis and the energy crisis. Whilst none of the scenarios modelled results in liquidity shortfalls, the budget adopted by the Board for 2023/24 does lead to covenant breaches at the speci�ed measurement dates. As such, MHA has discussed the position with the lending banks (Barclays and AIB) both of whom remain supportive, progressing covenant resets for the coming �nancial year.

MHA has existing loan facilities that include a £70,000,000 loan to March 2025 and a £25,000,000 undrawn revolving credit facility (RCF) to February 2025, both with Barclays and a £24,000,000 loan with AIB to December 2030.

Whilst ELT and the Board do not consider it likely, based on current information, if performance was to be signi�cantly adverse to our latest forecasts for a considerable period of time there could be a substantial impact on MHA’s surplus generation and cash �ows which could potentially put the organisation at risk of breaching the reset �nancial covenants on our loans. As a consequence, MHA would require further support from the banks by means of a covenant waiver or deferral. Whilst ELT believes that the Group would continue to have the support of the banks, in these circumstances there is no certainty that this would be the case.

Based on our �nancial scenario modelling and latest forecasts, ELT and the Board feel it remains appropriate to continue to prepare the �nancial statements on a going concern basis.

Ris�Management

The Board retains overall responsibility for risk management and decides the level of risk it is prepared to tolerate. The Board promotes a culture of prudence with resources.

Risk management is exercised across MHA through the functional heads of department, ELT, relevant Board Committees and the Board. Risks can surface throughout the organisation and are recorded through department risk registers, and where required (either as a result of severity or pervasiveness to the organisation) are reported through to ELT, Board Committees and Board. ELT carry out monthly reviews of key operational risks and half-yearly reviews of strategic risks for their areas, which are subsequently reviewed by the Audit and Risk committee. The Board completes six monthly reviews of strategic risk.

38 Report and Financial Statements 31 March 2023

MHA’s revised procedure for the recording and monitoring of risk was implemented in 2019/20 with regular reviews and evaluation of risk registers being embedded during subsequent years. These processes remained in place during 2022/23. Risk register reviews assess and document risk from both a strategic and operational viewpoint. MHA continues to recognise the following key strategic risks which are overseen by the Board and reviewed on an ongoing basis by the ELT.

----- Start of picture text -----
Ris� Explanation Mitigations
----- End of picture text -----
Financial
�erformance		 Ongoing poor �nancial performance
and mismanagement of �nancial
resources would signi�cantly disable
the group.		 The ELT presents the annual budget to the
Finance and Capital Expenditure Committee
who review it prior to recommending it to
the Board.
Financial performance is monitored regularly
by the ELT and reported to the Finance and
Capital Expenditure Committee for further
scrutiny.
MHA monitors performance and compliance
against the ‘Golden Rules’ a series of
�nancial KPIs which indicate the long term
�nancial health of the organisation.
MHA has a policy of maintaining cash
reserves to mitigate the risk of inadequate
working capital.
The group takes a risk averse approach to
the e�ect of interest rates on its borrowings
and has entered into the appropriate
hedging.
Reputational
Ris�		 A poor reputation can undermine
the con�dence of potential residents,
supporters and external stakeholders
such as lenders.		 Quality management is a high priority
for MHA. Safeguarding is a critical aspect
of this.
We have an internal system of risk
monitoring that focuses on key factors that
might indicate potential quality concerns
which are then investigated. Alongside there
is a programme of regular quality-focused
audits across all our regulated settings. The
Board, relevant Board Committees and ELT
are regularly appraised of the results of this
monitoring and associated actions.

----- Start of picture text -----
Ris� Explanation Mitigations
----- End of picture text -----
Our �eople The resilience and capacity of MHA’s
people was tested throughout the
Covid-19 pandemic and continues to
be tested through the current social
care workforce crisis; this continues
to exacerbate the long-standing
pressures on our workforce.		 MHA continues to pay the Real Living wage
as a minimum and has o�ered substantial
wellbeing support to the workforce through
and since the Covid-19 pandemic.
Progress against the recruitment strategy
and key indicators re�ecting performance
are monitored at ELT and Board level.
Change
Management		 There are signi�cant change pro�ects
being undertaken at MHA. If these
pro�ects are poorly managed,
operational and �nancial performance
will be adversely impacted as will the
culture of the organisation.		 MHA operates within a dynamic sector and
has adopted an integrated approach to
managing cultural, process and systems
change.
The framework that this team operates
within has been re�ned with governance
around key strategic pro�ects strengthened
by the inclusion of an Internal Audit review to
ensure bene�t realisation.
Technological
Innovation		 The increased use of innovative
technology is critical to continue
to best support our residents and
members.		 A strategic review of IT, Data and Digital
services is ongoing to ensure that MHA’s
approach to technological advances is
coordinated and �t for the future.
External
Factors		 MHA alongside other adult social care
providers continues to operate in a
challenging external environment.
Government plans to address the
longer-term future state of social care
were announced but have now been
delayed.
The social care workers crisis, energy
crisis, cost of living crisis and the long
shadow cast by Covid-19 exacerbate
an already challenging external
environment.		 MHA has sought to highlight concerns
and work alongside the UK Government
to develop meaningful solutions to these
issues.
In the absence of UK Government action,
MHA will revert to lobbying for change in the
social care arena.

Director�s Duties

The Directors of MHA, as those of all UK companies, must act in accordance with a general set of rules. These duties are detailed in section 172 of the UK Companies Act 2006 which is summarised as follows:

A Director of a company must act in the way they consider, in good faith, would be most likely to promote the success of the company for the bene�t of all its stakeholders as a whole, and in doing so, have regard (amongst other matters) to:

As part of their induction, Directors are briefed on their duties and they can access professional advice on these either through the Company Secretary or, if they �udge necessary, through independent professional advisors.

As is typical in charities and large organisations, the Directors ful�l their duties partly through a governance framework that delegates day-to-day decision-making to ELT. Further details can be found in the Governance Report on pages on pages 44 to 47.

The follo�ing summarise ho�the Directors ful�l their duties:

Our �eople

Our employees are fundamental to the delivery of our OneMHA strategy, one ob�ective of which is to be inclusive and proactive in the development of our people. We aim to be a responsible employer in our approach to the pay and bene�ts our employees receive. Communication and consultation take place with employees across the organisation and at all levels with a variety of communication and feedback tools being used to ensure that employee views are taken into account when decisions are made that are likely to impact them.

�usiness Relationships

MHA applies robust quali�cation processes for suppliers and excludes any suppliers from the tendering processes who do not comply with the legal and ethical standards which MHA demands. MHA has developed excellent relationships with suppliers in all key supply chain areas with formalised supply contracts and utilisation of technology to facilitate the tendering, contract and management of supplies.

Report and Financial Statements 31 March 2023 41

Energy and Emissions Consumption

We take our impact on the global climate seriously and in 2023/24 we will continue to develop our strategy to reduce our carbon and energy emissions. MHA are committed to year-on-year improvements in our operational energy e�ciency. As such, a register of available energy e�ciency measures has been compiled, with a view to determining and implementing these measures over the coming years in line with the strategy being implemented.

All our sites have a good level of energy awareness. This is in the use of installed e�cient equipment (such as LED lighting or modern heating boilers), optimised controls for lighting and plant rooms or the initiatives of individuals such as managers and maintenance colleagues.

Electricity is used in all services and accounts for 23% of the total energy consumption. Use is predominantly for lighting and small domestic appliances, with ma�or users varying from service to service, but including kitchen appliances, laundry and hair salons.

Natural gas consumption accounts for 75% of the total energy consumption, with most of our homes using this for heating and hot water, laundry and cooking.

Transport accounts for 2% of the total energy consumption covering the minibuses that some of our services use and a small number of company cars, as the ma�ority of employees use their own vehicles for business use. Data for this grey �eet has been derived from mileage, sourced from the expense claims of individual colleagues.

The following is a summary of the energy usage, associated emissions, energy e�ciency actions and energy performance for Methodist Homes under the government policy Streamlined Energy & Carbon Reporting (SECR). This is implemented by the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018.

Energ�
Categor�		 2022�23
Consumption
���h�		 2021�22
Consumption
���h�		 2022�23
%		 2021�22
%		 2022�23
Emissions
�tCO2e�		 2021�22
Emissions
�tCO2e�
Electricity (Scope 2) 20,330,670 23,106,950 23% 26% 3,932 4,906
Gas (Scope 1) 66,447,605 66,410,634 75% 73% 12,153 12,187
Transport (Scope 3) 1,366,672 946,807 2% 1% 320 221
Total 88,144,947 90,464,391 100% 100% 16,405 17,314

An intensity metric of kgCO2e per m2 has been applied for the annual total emissions. The methodology of the intensity metric calculations is detailed shortly. MHA operations have an intensity metric of 50.36 tCO2e (2022: 53.15 tCO2e) per gross internal area m2 for this reporting year. This represents a year-on-year reduction in the operational carbon intensity of 5.26%.

The overall consumption during 2022/23 has reduced by 3% compared to 2021/22 with energy e�ciency measures implemented over the last three years reducing electricity consumption. Transport consumption has increased again representing an expected return of business travel closer to pre pandemic levels.

42 Report and Financial Statements 31 March 2023

Measures ongoing and underta�en through 2022�23

Replaced �oilers

Emergenc�lighting

This year Methodist Homes have replaced Methodist Homes have installed emergency their boilers with more energy-e�cient boilers. lighting in some of their buildings. This is a safe at several sites. and e�cient way to protect their employees.

Measures prioritised for implementation in 2023�2024

Reporting Methodolog�

Scope 1 – consumption and emissions include direct combustion of natural gas, and fuels utilised for transportation operations, for example, company vehicle �eets.

Scope 2 – consumption and emissions refer to indirect emissions related to the consumption of purchased electricity in day-to-day business operations.

Scope 3 – consumption and emissions cover emissions resulting from sources not directly owned by us. This relates to grey �eet (business travel undertaken in employee-owned vehicles) only.

The consumption data (including the Scope 1, 2 and 3 consumption and CO2e emissions data) has been developed and calculated using the GHG Protocol – A Corporate Accounting and Reporting Standard (World Business Council for Sustainable Development and World Resources Institute, 2004); Greenhouse Gas Protocol – Scope 2 Guidance (World Resources Institute, 2015); ISO 14064-1 and ISO 14064-2 (ISO, 2018; ISO, 2019); Environmental Reporting Guidelines: Including Streamlined Energy and Carbon Reporting Guidance (HM Government, 2019).

Government Emissions Factor Database 2022 version 1 has been used, utilising the published kWh gross calori�c value (CV) and kgCO2e emissions factors relevant for reporting period 01/04/2022 – 31/03/2023.

Estimations were undertaken to cover missing billing periods for properties directly invoiced to Methodist Homes.

These were calculated on a kWh/day pro-rata basis at meter level.

All estimations equated to 5.03% of reported consumption.

Intensity metrics have been calculated using total tCO2e �gures and the selected performance indicator agreed with Methodist Homes for the relevant reporting period:

Report and Financial Statements 31 March 2023 43

Structure, governance and management

�overning Document

Methodist Homes (MHA) is a company limited by guarantee (Companies House No. 4043124) and a registered Charity (Registered Charity No. 1083995). It is governed by its Memorandum and Articles of Association dated 31 March 2011.

Methodist Homes is the parent company of two connected charitable organisations Methodist Homes Housing Association Ltd and MHA Auchlochan Ltd.

The charitable ob�ective of the charity is �the relief of elderly people and other adults in need, particularly (but not limited to) those with mental illness or physical and/or learning disabilities by providing: care and support services; and/or accommodation; and/or any other provision, which may facilitate an improved quality of life for such persons in the United Kingdom”.

In furtherance of this ob�ective, MHA provides care to older people through care homes (including residential, dementia and nursing homes) o�ering 24-hour person-centred care and support for our residents in specially designed accommodation; retirement living settings comprising purpose-built apartments with shared areas for activities and in retirement living with care schemes the option to have additional 24-hour sta�ng to provide person-centred care and support to meet individual needs; MHA communities which are community-based schemes providing practical and social support to older people living in their own homes, promoting independence and wellbeing.

Organisational Structure

The Board consists of up to �fteen members, one of whom is nominated by the Methodist Church. Board Members decide the strategic aims of the charity and hold management to account in performing executive functions. Decisions are taken in accordance with the instructions laid down in the charity’s Delegated Authorities and related policy documents.

The Board delegates authority for day-to-day management to ELT led by the Chief Executive.

The Committees’ activities during the year were as follows.

Audit and Risk Committee

44 Report and Financial Statements 31 March 2023

Nominations Committee

Operations Committee

Finance and Expenditure Committee

The Board delegates authority for day-to-day management to ELT led by the Chief Executive. Whilst ELT may have the title of Director they are not Statutory Directors. References within this report to Directors refer to Board Members with statutory responsibilities.

Charit��overnance Code

The Charity has been reviewing and updating its governance arrangements over the last few years to bring it broadly in line with the Charity Governance Code for larger charities. To help assess our progress and to ensure best practice in our governance arrangements, in November 2022 we appointed Campbell Tickell to conduct an external governance review. The report from Campbell Tickell was received by the Board in March 2023 and con�rmed that overall our governance works well and there was particular praise in the report for the professionalism and commitment of our Board and Executive Team. The report identi�ed some areas for improvement and the Board is drawing up an action plan to address these areas. We will continue with our programme of improvements to ensure we continue to comply with the seven principles of the Code.

Election, Appointment and Training of �oard Members

Board Members are appointed by the Board through an open recruitment process led by the Nominations Committee. The process follows Charity Commission guidelines in making sure there is an appropriate range of skills, knowledge and experience among its members.

46 Report and Financial Statements 31 March 2023

The Chair is eligible to serve for one term of four years. Board Members are eligible to serve for three terms of three years. The maximum term of o�ce for any Board Member is nine years, sub�ect to re-election during that period.

The Church representative is nominated in con�unction with the Secretary of the Conference of the Methodist Church and/or their representative, and reported to the Conference of the Methodist Church.

New Board Members receive a full induction which includes our Code of Conduct, constitutional documents, Board Manual, policies and information relevant to the work of the charity. All Board Members visit services and further develop understanding of the work of the organisation as well as appropriate training. A full training programme has been implemented on a rolling basis to ensure all Directors remain up to date with all regulatory regimes that apply to the Charity’s work. Insurance has been taken to indemnify Board Members against liability for wrongful acts which was in place throughout the �nancial year.

Members who served on the Board during the year are shown in the list of o�cers on page 50.

Remuneration

The remuneration of Executive Directors and other colleagues is reviewed annually. Remuneration levels are benchmarked against the care sector and organisations of a similar size run on a not-for-pro�t basis, from time to time to ensure we retain our talent and remain competitive. Board members receive no remuneration.

�atrons

We would like to take this opportunity to thank our Patrons, former President of the Methodist Church – Baroness Kathleen Richardson of Calow, OBE, broadcaster and writer Pam Rhodes and Dame Denise Platt, current chair of the Commission for Social Care Inspection. Their support is invaluable in raising the pro�le of MHA and its work, helping us to reach out to more elderly people in need. Supporting national events and backing high pro�le appeals helps us generate essential charitable income. The time and contribution given by our Patrons is greatly appreciated.

Connected Companies

During the year to 31 March 2023 Methodist Homes worked closely with two associated charitable organisations:

Colleagues

MHA is fortunate in employing colleagues who share our values and provide an exceptional service to older people. We are careful in our recruitment and committed to retaining good colleagues through rewards, training, personal development and career opportunities, �exible bene�ts and engagement. We are grateful for the contribution and work of all colleagues, who together make a real di�erence to the lives of older people.

We have a commitment not to discriminate against any person or group on any basis which underpins our policies and actions. We are open to all and actively support those with disabilities giving full and fair consideration at recruitment and support throughout employment. MHA continues to work to re�ect the diversity of the local population.

Statement of Board’s Responsibilities

The Board Members (who are also directors of Methodist Homes for the purposes of company law) are responsible for preparing the Board of Directors’ Report, including the Strategic Report, and the �nancial statements in accordance with applicable law and regulation.

Company law requires the Directors to prepare �nancial statements for each �nancial year. Under that law, the Directors have prepared the �nancial statements in accordance with United Kingdom Accounting Standards, comprising FRS 102 �The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law (United Kingdom Generally Accepted Accounting Practice). Under company law, the Directors must not approve the �nancial statements unless they are satis�ed that they give a true and fair view of the state of the a�airs of the charitable company and the Group and of the incoming resources and application of resources, including the income and expenditure, of the charitable Group for that �nancial year.

In preparing these �nancial statements, the Directors are required to:

The Directors are responsible for keeping adequate accounting records that are su�cient to show and explain the charitable company’s transactions and disclose with reasonable accuracy at any time the �nancial position of the charitable company and the Group and enable them to ensure that the �nancial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the charitable company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the charitable company’s website. Legislation in the United Kingdom governing the preparation and dissemination of �nancial statements may di�er from legislation in other �urisdictions.

Internal Financial Controls Assurance

The Board is responsible for the Group systems of internal �nancial control. Such systems can only provide reasonable, not absolute, assurance against material misstatement or loss. The Board and ELT are reviewing the controls around key risks, which will evolve as the sector environment changes.

48 Report and Financial Statements 31 March 2023

The Board con�rms there is an ongoing process for identifying, evaluating and managing signi�cant risks to the achievement of the Group strategic ob�ectives. It has established a number of procedures, which are designed to provide e�ective internal �nancial controls:

The Board has reviewed the e�ectiveness of the system of internal control for the year ended 31 March 2023 and until the date of approval of the �nancial statements. No weaknesses were found that resulted in material losses, contingencies or uncertainties that require disclosure in the �nancial statements.

Statement as to Disclosure of Information to Auditors

In accordance with the provisions of Section 418 of the Companies Act 2006, each of the persons who are Directors of the company at the date when this report is approved con�rms that:

Independent Auditors

Crowe U.K. LLP were re-appointed during the year as MHA’s auditors. A resolution concerning their reappointment will be proposed at the Annual General Meeting.

The Board of Directors’ Report including the strategic report was approved on 24 July 2023 and signed on its behalf by

�ames Reill� Chair Epworth House Stuart Street Derby DE1 2EQ

Report and Financial Statements 31 March 2023 49

Reference and administrative details

�atrons

Baroness Kathleen Richardson of Calow, OBE

Dame Denise Platt

Pam Rhodes

�oard Term of O�ce Term of O�ce Committee Membership
Start Finish
James Reilly
Chair of the Board		 Jul 2016 Nominations Committee
Other �oard Members
HilaryCocker Jul 2014 Oct 2022 Operations & Nominations Committees
Ian Ailles Nov 2014 Finance and Capital Expenditure Committee
Andrew Cozens Aug 2015 Operations & Nominations, Hardship &
Welfare Committees
Bala Gananpragasam Aug2015 Finance and Capital Expenditure Committee
Martin Burkitt Oct 2016 Finance and Capital Expenditure Committee
Ruth Gee Apr 2019 Operations & Nominations, Hardship &
Welfare Committees
Lisa Commane Apr 2019 Finance and Capital Expenditure Committee
Janet Haugh Apr 2019 Audit and Risk,Nominations Committee
Keith Hickey Apr 2019 Audit and Risk, Hardship & Welfare
Committee
Catherine Biddle Oct 2021 Oct 2022 Finance and Capital Expenditure Committee
Denise Sanderson-Estcourt Oct 2021 Operations Committee
Anne Anketell Nov 2022 Audit and Risk,Operations Committee
Richard Vautrey Nov 2022 Operations Committee

----- Start of picture text -----
Executive Leadership Team
Name Appointed Resigned Position
----- End of picture text -----

Executive Leadership Team Executive Leadership Team Executive Leadership Team Executive Leadership Team
Name Appointed Resigned Position
Anna Marshall-Day 2006 Director of People & Communications
Rev Dr Chris Swift 2017 Director of Chaplaincy& Spirituality
Simon (known as Sam)
Monaghan		 2018 Chief Executive
MandyMottram 2018 CompanySecretary& General Counsel
Andrew White 2019 Mar 2023 Director of Property
Daniel Ryan 2019 Chief OperatingO�cer
Victoria Parkinson 2020 Director of Finance,IT & Procurement
Jonathan Mace 2022 Director of Communities

50 Report and Financial Statements 31 March 2023

Compan�Secretar�

Mandy Mottram

Registered O�ce

Methodist Homes

Epworth House Stuart Street Derby DE1 2EQ

Tel: (01332) 296200 Website: www.mha.org.uk Charity Registered Number – 1083995 Company Registered in England and Wales Number – 4043124

�rofessional Advisors

Solicitors

Capsticks Solicitors LLP 1 St George’s Road Wimbledon London W19 4DR

External Independent Auditors

Crowe U.K. LLP 55 Ludgate Hill London EC4M 7JW

Bankers – continued AIB Group (UK) Plc Podium Floor St. Helens 1 Undershaft London EC3A 8AB

Nationwide Building Society

Kings Park Road Moulton Park Northampton NN3 6NW

Bankers

Barclays Bank Plc Corporate Banking 1 Churchill Place Canary Wharf London E14 5HP

Tax Advisors Deloitte LLP Four Brindley Place Birmingham B1 2HZ

Independent Auditor’s Report to the Members and the Trustees of Methodist Homes

Opinion

We have audited the �nancial statements of Methodist Homes (‘the charitable company’) and its subsidiaries (‘the group’) for the year ended 31 March 2023 which comprise The Consolidated Statement of Financial Activities, Group and Company Balance Sheets, Consolidated Statement of Cash Flows and notes to the �nancial statements, including signi�cant accounting policies. The �nancial 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).

In our opinion the �nancia�statements�

�asis 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 �nancial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the �nancial statements in the UK, including the FRC’s Ethical Standard, and we have ful�lled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is su�cient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the �nancial statements, we have concluded that the trustees’ use of the going concern basis of accounting in the preparation of the �nancial statements is appropriate.

Based on the work we have performed, we have not identi�ed any material uncertainties relating to events or conditions that, individually or collectively, may cast signi�cant doubt on the charitable company’s or the group’s ability to continue as a going concern for a period of at least twelve months from when the �nancial statements are authorised for issue.

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

Emphasis of Matter

We draw attention to Note 10 of the �nancial statements, which highlights the impairment recognised in the year on the Methodist Homes property portfolio and the inherent uncertainty in assessing the realisable value of these assets. Our opinion is not modi�ed in respect of this matter.

52 Report and Financial Statements 31 March 2023

Other information

The trustees are responsible for the other information contained within the annual report. The other information comprises the information included in the annual report, other than the �nancial statements and our auditor’s report thereon. Our opinion on the �nancial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, 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 �nancial statements or our knowledge obtained in 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 �nancial 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.

Opinions on other matters prescribed b�the Companies Act 2006

In our opinion�based on the work undertaken in the course of our audit�

Matters on �hich �e are required to report b�exception

In light of the knowledge and understanding of the group and charitable company and their environment obtained in the course of the audit, we have not identi�ed material misstatements in the strategic report or the directors’ report included within the trustees’ report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of trustees

As explained more fully in the trustees’ responsibilities statement, the trustees (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the �nancial statements and for being satis�ed that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of �nancial statements that are free from material misstatement, whether due to fraud or error.

In preparing the �nancial statements, the trustees are responsible for assessing the charitable company’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 trustees either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so.

Report and Financial Statements 31 March 2023 53

Auditor�s responsibilities for the audit of the �nancial statements

We have been appointed under the Companies Act 2006 and report in accordance with the Acts and relevant regulations made or having e�ect thereunder.

Our ob�ectives are to obtain reasonable assurance about whether the �nancial 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 in�uence the economic decisions of users taken on the basis of these �nancial statements.

Details of the extent to which the audit was considered capable of detecting irregularities, including fraud and non-compliance with laws and regulations are set out below.

A further description of our responsibilities for the audit of the �nancial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Extent to �hich the audit �as considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We identi�ed and assessed the risks of material misstatement of the �nancial statements from irregularities, whether due to fraud or error, and discussed these between our audit team members. We then designed and performed audit procedures responsive to those risks, including obtaining audit evidence su�cient and appropriate to provide a basis for our opinion.

We obtained an understanding of the legal and regulatory frameworks within which the charitable company and group operates, focusing on those laws and regulations that have a direct e�ect on the determination of material amounts and disclosures in the �nancial statements. The laws and regulations we considered in this context were the Companies Act 2006, the Charities Act 2011, together with the Charities SORP (FRS 102). We assessed the required compliance with these laws and regulations as part of our audit procedures on the related �nancial statement items.

In addition, we considered provisions of other laws and regulations that do not have a direct e�ect on the �nancial statements but compliance with which might be fundamental to the charitable company’s and the group’s ability to operate or to avoid a material penalty. We also considered the opportunities and incentives that may exist within the charitable company and the group for fraud. The laws and regulations we considered in this context for the UK operations were, CQC Regulations for service providers and managers, taxation legislation, health and safety legislation, employment legislation and General Data Protection Regulation (GDPR).

Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Trustees and other management and inspection of regulatory and legal correspondence, if any.

We identi�ed the greatest risk of material impact on the �nancial statements from irregularities, including fraud, to be within the timing and recognition of contract income, recording the impact of CQC regulatory reviews and the override of controls by management. Our audit procedures to respond to these risks included enquiries of management and the Finance Committee about their own identi�cation and assessment of the risks of irregularities, sample testing on the posting of �ournals and income, reviewing accounting estimates for biases, reviewing regulatory correspondence with the Charity Commission, and reading regulatory reports and minutes of meetings of those charged with governance.

54 Report and Financial Statements 31 March 2023

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the �nancial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions re�ected in the �nancial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing noncompliance and cannot be expected to detect non-compliance with all laws and regulations.

Use of our report

This report is made solely to the charitable company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company’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 charitable company and the charitable company’s members as a body and the charitable company’s trustees as a body, for our audit work, for this report, or for the opinions we have formed.

�ulia �oulter

Senior Statutory Auditor For and on behalf of Crowe U.K. LLP Statutory Auditor London 26 July 2023

Report and Financial Statements 31 March 2023 55

Consolidated Statement of Financial Activities

For the �ear ended 31 March 2023

Note Unrestricted
Funds
£�000		 Restricted
Funds
£�000		 Endo�ment
Funds
£�000		 Total
2023
£�000		 Total
2022
£�000
Income and endo�ments from:
Donations and legacies 2 3,510 3,602 - 7,112 3,734
Charitable activities
Homes 217,262 1,160 - 218,422 201,344
Retirement living 39,657 251 - 39,908 43,077
MHA Communities - 2,389 - 2,389 2,706
Other 25 1 - 26 189
Total charitable activities 3/5 256,944 3,801 � 260,745 247,316
Investments 821 139 8 968 39
Total 261,275 7,542 8 268,825 251,089
Expenditure on:
Raising funds 741 - - 741 647
Charitable activities
Homes 257,579 2,151 - 259,730 188,001
Retirement living 114,588 442 - 115,030 34,889
MHA Communities (193) 6,341 - 6,148 5,116
Other 3,372 2 2 3,376 3,260
Total charitable activities 5 375,346 8,936 2 384,284 231,266
Other 6 1,220 - - 1,220 1,090
Total 4 377,307 8,936 2 386,245 233,003
Net (losses)/gains on investments - (42) (63) (105) 4
Net �loss��income �116,032� �1,436� �57� �117,525� 18,090
Transfer bet�een funds �335� 335 � � �
Other recognised �losses��gains:
Actuarial (loss) on de�ned bene�t
pension schemes		 21 (497) - - (497) (1,586)
Other–interest rate swaps gains 15 3,505 - - 3,505 4,743
Net movement in funds �113,359� �1,101� �57� �114,517� 21,247
Reconciliation of funds:
Total funds brought forward 20 320,821 24,429 982 346,232 324,985
Total funds carried for�ard 207,462 23,328 925 231,715 346,232

All activities in both years are continuing activities.

56 Report and Financial Statements 31 March 2023

Statement of Financial Position

As at 31 March 2023

Company Registered No. 4043124

Note �roup �roup Compan� Compan�
Total 2023
£�000		 Total 2022
£�000		 Total 2023
£�000		 Total 2022
£�000
Fixed assets
Intangible �xed assets 9 786 1,309 786 1,309
Tangible �xed assets 10 309,492 417,437 251,129 327,074
Investments 12 1,364 1,469 1,364 1,468
311,642 420,215 253,279 329,851
Current assets
Debtors 13 21,057 17,685 18,308 39,589
Cash at bank and in hand 68,963 75,230 49,412 61,595
Total current assets 90,020 92,915 67,720 101,184
Liabilities
Creditors: Amounts falling due within
one year		 14 (56,333) (43,924) (53,976) (41,183)
Net current assets��liabilities� 33,687 48,991 13,744 60,001
Total assets less current liabilities 345,329 469,206 267,023 389,852
Creditors: Amounts falling due after
more than one year		 15 (87,648) (92,755) (83,697) (89,004)
Provisions for liabilities 16 (25,966) (30,219) (15,672) (19,627)
Total net assets before de�ned
bene�t pension liabilit�		 231,715 346,232 167,654 281,221
De�ned bene�t pension
scheme liability		 21 - - - -
Total net assets 231,715 346,232 167,654 281,221
Funds
Endowment funds 18 925 982 925 982
Restricted income funds 19 23,328 24,429 23,288 24,389
Unrestricted income fund: General fund 20 207,462 320,821 143,441 255,850
Total Funds 20 231,715 346,232 167,654 281,221

A de�cit before gains and losses for year of £116,574,000 (2022: £17,335,000 gain) has been included within these �nancial statements for the company. The �nancial statements on pages 56 to 91 were a pp roved on behalf of the Board and authorised for issue on 24th July 2023 and signed on its behalf by:

�ames Reill� Chair

Report and Financial Statements 31 March 2023 57

Consolidated Cash Flow Statement

For the �ear ended 31st March 2023

Note 2023 2023 2022 2022
£�000 £�000 £�000 £�000
Cash �o�from operating activities:
Net cash in�o�b�operating activities 22a 13,529 15,100
Cash �o�from investing activities:
Investment income 968 39
Purchase of tangible �xed assets (22,256) (10,299)
Purchase of Intangible �xed assets (69) (965)
Purchase of Investment - (105)
Proceeds from the sale of tangible �xed assets 7,520 12,439
Net cash generated
investing activities		 �13,837� 1,109
Cash �o�from �nancing activities:
Interestpaid and similar charges (3,918) (3,373)
Repayments of borrowings (2,041) (1,912)
Net cash out�o��nancing activities �5,959� �5,285�
Net change in cash and cash equivalents �6,267� 10,924
Cash and cash equivalents at the
beginning of the�ear		 75,230 64,306
Cash and cash equivalents at the
end of the �ear		 68,963 75,230

58 Report and Financial Statements 31 March 2023

Notes to the Financial Statements

For the �ear ended 31 March 2023

1 �rincipal Accounting �olicies

Statement of Comp�iance

The �nancial statements of Methodist Homes have been prepared in compliance with United Kingdom Accounting Standards, including Financial Reporting Standard 102, ‘The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland’ (‘FRS 102’) and the Companies Act 2006.

Genera�information

Methodist Homes (MHA) is a company limited by guarantee (Companies House No. 4043124) and a registered Charity (Registered Charity No. 1083995). It is governed by Memorandum and Articles of Association dated 31 March 2011. It is domiciled and registered in the UK. The address of its registered o�ce is Methodist Homes, Epworth House, Stuart Street, Derby, DE1 2EQ.

Summary of signi�cant accounting po�icies

The principal accounting policies applied in the preparation of these �nancial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation

These �nancial statements have been prepared under the historical cost convention, with the exception of owned freehold care homes, long leasehold care homes and investments which are shown at deemed cost. They have also been prepared in accordance with the Statement of Recommended Practice �Accounting and Reporting by Charities” (Charities SORP (FRS102)) applicable to charities preparing their �nancial statements in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS102) (e�ective 1 January 2019) and the Companies Act 2006.

Due to the announcement of MHA Auchlochan (MHAA) being put into administration on the 2 May 2023, MHAA is consolidated on a non-going concern basis.

Owned freehold and leasehold care homes are valued at deemed cost as permitted by the transitional arrangements to FRS102 (adopted at 31 March 2015). The deemed cost is the historic value or market value at transition. The valuations of land and buildings for care homes were made in 2013 by Knight Frank on an existing use open market value basis, in accordance with the Statement of Assets Valuation Practice Note 4 and the Guidance Notes of the Royal Institution of Chartered Surveyors. The method used and signi�cant assumptions applied in estimating the fair values for the care homes were by reference to the ‘pro�ts method’ as this is the basis on which such properties are commonly bought or sold. In undertaking the valuation of the property, Knight Frank made an assessment on the basis of a collation and analysis of appropriate comparable transactions, together with evidence of demand within the vicinity of the sub�ect property and purchaser sentiment. Knight Frank then applied these to the properties, taking into account size, location, aspect. Other material factors, such as where planned works were due to take place creating a reduced occupancy, have been factored in.

Open Market Value is de�ned as the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

Additions to owned freehold and leasehold care homes after the date of transition are recognised at cost in accordance with the accounting policy.

Report and Financial Statements 31 March 2023 59

1 �rincipal Accounting �olicies �continued�

Basis of preparation (continued)

The Charity constitutes a public bene�t entity as de�ned by FRS102.

Going concern

The Charity’s business activities, its current �nancial position and factors likely to a�ect its future development are set out in the Board of Directors’ Report. The Charity has in place long-term debt facilities which provide adequate resources to �nance committed reinvestment and development programmes, along with the Charity’s day to day operations.

MHA has undertaken signi�cant �nancial scenario and sensitivity analysis, modelling various plausible scenarios including a severe but plausible scenario. These scenarios take into account various assumptions including levels of occupancy, weekly fee levels, and the �nancial impact of the current cost of living crisis, social care workers crisis and the energy crisis.

Whilst none of the scenarios modelled results in liquidity shortfalls, the budget adopted by the Board for 2023/24 does lead to covenant breaches at the speci�ed measurement dates.

As such, MHA has discussed the position with the lending banks (Barclays and AIB) both of whom remain supportive, progressing covenant resets for the coming �nancial year. These will be in place prior to the �rst covenant measurement date that is expected to lead to a breach.

MHA has existing loan facilities that include a £70 million loan to March 2025 and a £25 million undrawn revolving credit facility (RCF) to February 2025, both with Barclays, and a £24 million loan with AIB to December 2030.

On this basis, ELT and the Board has a reasonable expectation that the Charity has adequate resources to continue in operational existence for the foreseeable future. For this reason, it continues to adopt the going concern basis in the �nancial statements.

Basis of conso�idation

The consolidated Group �nancial statements of Methodist Homes and its subsidiary undertakings are presented using acquisition accounting on a line by line basis. Intra-Group pro�ts are eliminated on consolidation. A separate Statement of Financial Activities and Income and Expenditure Account for the company has not been presented because the company has taken advantage of the exemption a�orded by section 408 of the Companies Act 2006.

The wholly controlled subsidiaries which are consolidated are:

Methodist Homes Housing Association Ltd- Registered Provider of Social Housing

MHA Auchlochan Ltd – Charity

Due to the announcement of MHA Auchlochan (MHAA) being put into administration on the 2 May 2023, MHAA is consolidated on a non-going concern basis.

A subsidiary is an entity controlled by the Parent. The parent Charity can exercise control through trusteeship, which gives a parent Charity the ability to govern the �nancial and operating policies of the subsidiary. The above two entities are subsidiaries of Methodist Homes by means of various inter-Group agreements. Methodist Homes has the power to appoint and/or remove a ma�ority of the Trustees and thus demonstrate control.

60 Report and Financial Statements 31 March 2023

1 �rincipal Accounting �olicies �continued�

Income recognition

All income is recognised once the Charity has entitlement to the income, any performance conditions attached to the item(s) of income have been met, it is probable that the income will be received and the amount of income receivable can be measured reliably.

Income from government and other grants, whether ‘capital’ grants or ‘revenue’ grants, is recognised when the Charity has entitlement to the funds, any performance conditions attached to the grants have been met, it is probable that the income will be received and the amount can be measured reliably and is not deferred.

Donations are recognised on a cash basis as this is considered the point at which the charity has entitlement.

For legacies, entitlement is taken as the earlier of the date on which either: the Charity is aware that probate has been granted, the estate has been �nalised and noti�cation has been made by the executor(s) to the Trust that a distribution will be made, or when a distribution is received from the estate. Receipt of a legacy, in whole or in part, is only considered probable when the amount can be measured reliably and the Charity has been noti�ed of the executor’s intention to make a distribution. Where legacies have been noti�ed to the Charity or the Charity is aware of the granting of probate, and the criteria for income recognition have not been met, then the legacy is treated as a contingent asset and disclosed if material.

Interest on funds held on deposit is included when receivable and the amount can be measured reliably by the Charity; this is normally upon noti�cation of the interest paid or payable by the bank.

Charitab�e acti�ities

Fees, charges and rents – Income represents the amounts charged for occupation costs and services provided in the year, and is recognised on an accruals basis.

Retirement housing for sale – Income and expenditure represents amounts relating to individual units sold during the year on long-term leases. A sale is recognised on completion where the contract is unconditional and the risks and rewards of ownership have passed.

Transactions with a guaranteed buyback commitment are not recognised at the date of completion, but are accounted for as operating leases for the period to when it is considered probable that the property will be bought back (currently considered by the Directors to be ten years from the completion date). This principle applies irrespective of the duration of the buyback commitment.

The di�erence between the sale price and the buyback price is recognised as rental revenue on a straight-line basis over the duration of the buyback commitment. The property is initially recognised at production cost in property, plant and equipment. Depreciation expense is calculated over expected useful economic life of the property by the straight-line method, on the basis of the property’s cost less its estimated residual value, representing the anticipated resale price on the property market.

Provision is made for the expected value of the buy-back commitment in the future, discounted at the appropriate risk-free rate (being the relevant nine and �ve year government bond rates depending on the remaining expected life of the individual commitments by property). The carrying value of the provision is reassessed at each �nancial reporting period end to ad�ust for transactions during the period, changes in remaining lives of the commitments, and periodic �uctuations in the risk-free rate. The unwinding of the associated discount factor is recognised within interest payable and similar charges.

Report and Financial Statements 31 March 2023 61

1 �rincipal Accounting �olicies �continued�

Charitab�e acti�ities (continued)

provision is re-assessed at each �nancial reporting period end to ad�ust for transactions during the period, changes in remaining lives of the commitments, and periodic �uctuations in the risk free rate.

The unwinding of the associated discount factor is recognised within interest payable and similar charges.

On the buyback of a property under the guaranteed commitment by the company, any resulting gain or loss is recognised within the Operating Surplus / (De�cit) in the period, as is the release of any associated buyback provision. The remaining unwound discount is released to interest.

Expenditure recognition

Expenditure is recognised once there is a legal or constructive obligation to make a payment to a third party, it is probable that settlement will be required and the amount of the obligation can be measured reliably.

Centra�costs

All sta�employed in the central o�ce are employed by Methodist Homes, the o�ce premises are �ointly occupied and o�ce services are shared.

Within the �nancial statements of the group, these expenses are allocated on the basis of time spent on three items:

These costs relate to services provided centrally and identi�ed as wholly or mainly in support of direct charitable expenditure, together with an appropriate proportion of management and o�ce overheads.

All expenses relating to fund-raising, publicity and public relations (except the marketing of accommodation and care services) are charged to this heading. This item bears an appropriate proportion of management and o�ce overheads.

These costs relate to the corporate management of the organisation itself. They include expenses of Directors’ meetings, audit fees, o�ce costs and other corporate management costs.

A��ocation of support and go�ernance costs

Support costs have been allocated between governance costs and other support costs. Support costs are those functions that assist the work of the Charity but do not directly undertake charitable activities. Support costs include back o�ce costs, �nance, personnel and payroll. Governance costs comprise all costs involving the public accountability of the Charity and its compliance with regulation and good practice. These costs include costs related to statutory audit and legal fees together with an apportionment of overhead and support costs. These costs have been allocated between cost of raising funds and expenditure on charitable activities. The bases on which support costs have been allocated are set out in note 6.

62 Report and Financial Statements 31 March 2023

1 �rincipal Accounting �olicies �continued�

Intangib�e assets and amortisation

Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses. Amortisation is calculated, using the straight-line method, to allocate the amortisable amount of the assets to their residual values over their estimated useful lives. Intangible assets are amortised over the following useful economic lives:

Costs associated with maintaining computer software are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identi�able and unique software products controlled by the Charity are recognised as intangible assets when the following criteria are met:

Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Tangib�e �xed assets and depreciation

Land is stated at cost, except where it forms part of a revalued care home – in which case it is stated at valuation, and is not depreciated.

Freehold and long leasehold buildings include applicable overhead expenditure and capitalised interest. Interest on loans deemed to be �nancing a development is capitalised up to the date of practical completion.

All Fixed assets are stated at cost less depreciation and impairment.

Fixed assets with a cost of more than £500 are capitalised and depreciated. Improvements which enhance the future economic bene�ts of the property or extend its overall useful life are capitalised and are fully written o�over the expected useful life of the property.

The Charity has previously adopted a policy of revaluing freehold and long leasehold care homes and they were stated at their revalued amount less any subsequent depreciation and accumulated impairment losses. The Charity has at 31 March 2015 adopted the transition exemption under FRS102 paragraph 35.10(d) and elected to use the previous revaluation as deemed cost. All subsequent additions are recognised at historical cost.

Ma�or components are treated as a separate asset where they have signi�cantly di�erent patterns of consumption of economic bene�ts and are depreciated separately over their useful life.

Freehold and long leasehold buildings are depreciated over their expected useful life of forty years, or the life of the lease if shorter, on a straight-line basis. Improvements to buildings are depreciated over between �ve and forty years on a straight line basis.

Report and Financial Statements 31 March 2023 63

1 �rincipal Accounting �olicies �continued�

Tangib�e �xed assets and depreciation (continued)

Furniture, equipment and motor vehicles are depreciated over between three and twenty years on a straight line basis dependent upon their component type except for minibuses �nanced from restricted funds, which are written o�in the year of purchase.

Assets in the course of construction are stated at cost and are not depreciated until they are available for use. The assets in the course of construction are recognised where it is probable economic bene�t will �ow to the Charity and can be reliably measured.

Socia�housing grants

The group’s housing developments are �nanced wholly or partly by Social Housing or other capital grants. Section 24 of FRS102,’Government grants’ permits either the performance model or the accrual model to recognise the government grants. As required by the Housing SORP (FRS102), housing properties accounted at valuation must recognise government grants using the performance model and those accounted at cost must recognise government grants using the accrual model.

The Group accounts for its housing property at cost and recognises government grants using the performance model. Under this model in line with the Charity SORP (FRS102), grants are recognised in income through the Statement of Financial Activities on entitlement to the funds.

On disposal of an asset for which government grants were received, if there is no obligation to repay the grant, any unamortised grant remaining within liabilities in the statement of �nancial position related to such asset is derecognised as a liability and recognised as revenue in the statement of �nancial activities.

There are no unful�lled conditions or other contingencies attaching to the government grants that have been recognised as income.

Cash and cash e�ui�a�ents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts.

Retirement housing stock

Unsold units of retirement housing stock and work in progress at the yearend are treated as �xed assets and are therefore valued at the lower of cost and estimated selling price less cost to complete. Cost includes capitalised interest incurred on speci�c pro�ects during the period of development and any other relevant applicable costs.

Impairment of non��nancia�assets

Where the carrying values of care/housing properties or retirement housing stock are considered to have su�ered a permanent diminution in value, the fall in value is recognised in the Statement of Financial Activities. The trigger for this would usually be an operational or �nancial review which may identify that a service can no longer ful�ll our charitable purpose. An impairment review is carried out and appropriate impairment provisions made. In assessing an asset for impairment, the recoverable amount of an asset is determined to be the higher of the fair value less costs to sell the asset and its value in use. The method used to determine the value in use of an asset will depend on whether the asset is primarily held to generate cash as a commercial return or for its service potential to the charity’s bene�ciaries. Where the service potential measurement can be reliably made, and this exceeds the carrying value of the asset, then no impairment is recognised.

64 Report and Financial Statements 31 March 2023

1 �rincipal Accounting �olicies �continued�

Fund accounting

Unrestricted funds are available to spend on activities that further any of the purposes of the Charity.

i) Restricted income funds

Restricted funds are donations which the donor has speci�ed are to be solely used for particular areas of the Charity’s work or for speci�c pro�ects being undertaken by the Charity. They represent voluntary income or grants from statutory authorities and fees and charges in MHA Communities Schemes, which have been received for purposes set out in note 19.

The application of these funds is restricted by the terms of a special appeal, the expressed wishes of the donor, the will of the testator, or the terms of the grant.

ii) Endowment funds

These represent money given for a particular purpose and are intended to be permanent with the original capital being maintained and the income and capital growth being utilised.

Pensions

The Group’s pension arrangements comprise various de�ned bene�t and de�ned contribution schemes.

Where the underlying assets and liabilities of the de�ned bene�t schemes can be separately identi�able, the Group recognises in full the schemes’ surpluses or de�cits on the Statement of Financial Position. Actuarial gains and losses for these schemes are included in the Consolidated Statement of Financial Activities.

Current and past service costs, curtailments and settlements are recognised within net incoming resources. Returns on scheme assets and interest on obligations are recognised as other �nance income or expenses.

Where it is not possible to separately identify the share of the underlying assets and liabilities of a de�ned bene�t scheme, the amount charged to the Consolidated Statement of Financial Activities represents the contributions payable in the year.

The de�ned bene�t schemes are funded, with the assets held separately from the Group in separate Trustee administered funds. Full actuarial valuations, by a professionally quali�ed actuary, are obtained at least every three years, and updated to re�ect current conditions at each Statement of Financial Position date. The pension scheme assets are measured at fair value.

The pension scheme liabilities are measured using the pro�ected unit method and discounted at the current rate of return on a high quality corporate bond of equivalent term and currency. A pension scheme asset is recognised on the Statement of Financial Position only to the extent that the surplus may be recovered by reducing future contributions or to the extent that the trustees have agreed a refund from the scheme at the Statement of Financial Position date.

A pension scheme liability is recognised to the extent the group has a legal or constructive obligation to settle the liability. For de�ned contribution schemes contributions are charged to the Consolidated Statement of Financial Activities as they become payable in accordance with the rules of the scheme.

No element of the pension scheme liability or scheme expenses relate to restricted activities of the charity.

Report and Financial Statements 31 March 2023 65

1 �rincipal Accounting �olicies �continued�

Pensions (continued)

The Charity participates in a de�ned bene�t scheme, as detailed in note 21, which was closed to new entrants on 31 March 2010. Where it is not possible in the normal course of events to identify the schemes underlying assets and liabilities belonging to individual participating employers, under accounting standards the accounting charge for the year represents the employer contributions payable. Contributions are charged to the Statement of Financial Activities as they become payable in accordance with the rules of the scheme.

Emp�oyee bene�ts

Short term bene�ts, including holiday pay and other similar non-monetary bene�ts, are recognised as an expense in the period in which the service is received.

Taxation

The group has charitable status and is therefore not sub�ect to Corporation Tax on its surplus from charitable activities.

The group is registered for VAT. Most of the group’s income (residential charges, rents and grants) is exempt for VAT purposes, which signi�cantly restricts the recovery of VAT on expenditure.

�eased assets and ob�igations

Leases are considered operating leases where the risks and rewards equivalent to ownership have not been passed to the Group. As such, the annual rentals are charged to the Statement of Financial Activities on a straight line basis over the lease term.

Rent free periods or other incentives received for entering into a lease are accounted for over the period of the lease so as to spread the bene�t received over the lease term or, if shorter, the period ending when prevailing market rentals will become payable.

The Group has taken advantage of the exemption in respect of lease incentives on leases in existence on the date of transition to FRS102 (1 April 2013) as per FRS102 para 35.10(p) and continues to credit such lease incentives to the Statement of Financial Activities over the period to the �rst review date on which the rent is ad�usted to market rates.

Critica��udgements in app�ying the accounting po�icies

The preparation of �nancial statements requires management to make �udgements, estimates and assumptions that a�ect the application of policies and reported amounts of assets and liabilities, income and expenditure. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may di�er from these estimates. The �udgements, estimates and assumptions which have a signi�cant risk of causing a material ad�ustment to the carrying amount of assets and liabilities are discussed below.

i) Provisions for liabilities

The Charity has recognised provisions for the re-purchase of properties sold as leasehold interests under guaranteed buy-back arrangements, on the basis that the timing of the re-purchase is uncertain. Additionally provisions have been recognised in relation to liabilities in respect of exceptional items. The �udgements, estimates and associated assumptions necessary to calculate these provisions are based on historical experience, professional advice and other reasonable factors.

66 Report and Financial Statements 31 March 2023

1 �rincipal Accounting �olicies �continued�

Critica��udgements in app�ying the accounting po�icies (continued)

ii) Exceptional items

Judgements are required as to whether items that are material in size, unusual or infrequent in nature should be disclosed as exceptional. By their nature, exceptional items include estimation uncertainty, mitigated by historical experience and expert professional advice.

Impairments are included within exceptional items. In the current year there are impairments relating to the MHA Auchlochan subsidiary which was placed into administration on 2 May 2023 and to other operating assets across MHA’s property portfolio. A degree of �udgment has been necessary in determining impairment values, incorporating professional and expert advice, however there remains considerable uncertainty regarding the estimation of recoverable values.

Future amendments to FRS102

The Charity will adopt any new provisions arising from future developments to FRS102 where relevant. As at the date of approval of the �nancial statements, the Directors do not consider that any current or proposed amendments will have a material impact on the reported results.

2 Donations and legacies

2023
Total
£�000		 2022
Total
£�000
Donations 1,148 572
Big Lottery Fund grant 50 76
Legacies receivable 5,914 3,086
7,112 3,734

The estimated value of legacies noti�ed but neither received nor recognised in income is £1,733,000 (2022: £3,483,000).

Report and Financial Statements 31 March 2023 67

3 Charitable activities

2023
Total
£�000		 2022
Total
£�000
Fees and charges 240,360 213,452
Rents 7,160 7,306
Grants 1,723 2,380
Government Funding 1,279 11,764
Sale of Housing 7,707 10,189
Miscellaneous property sales 2,516 2,225
260,745 247,316

Forms of government assistance from which the Charity has bene�tted amounts to £1,853,000 (2022: £12,456,000).

Included within Grants is £574,000 (2022: £692,000) relating to government grants received by our MHA Communities schemes.

Government Funding consists of £1,279,000 (2022: £11,659,000) infection control and workforce retention support and £nil (2022: £105,000) from the government Covid Job Retention Scheme.

4 Anal�sis of expenditure

Note Homes
£�000		 Retirement
living
£�000		 MHA
Communities
£�000		 Other
£�000		 2023
Total
£�000		 2022
Total
£�000
Sta�costs 116,550 15,503 4,339 12,586 148,978 140,297
Operational costs��income�:
Supplies and services 57,786 8,669 1,127 8,159 75,741 48,581
Repairs and rents 18,431 3,005 211 35 21,682 19,830
Retirement housing cost
of sales		 - 3,075 - 4 3,079 3,608
Depreciation 8,229 4,865 36 475 13,605 13,252
Amortisation 9 - - - 592 592 550
Finance (income)/charges - (963) - 1 (962) 33
Bank loan interest 3,294 770 - - 4,064 3,475
Other costs 429 357 6 2,475 3,267 2,596
Loss on disposals 1,374 15 - - 1,389 -
Exceptional items 35,498 76,776 - 1,316 113,590 (309)
Allocated costs/(income) 18,139 2,958 429 (21,526) - -
Governance costs 6 - - - 1,220 1,220 1,090
Total expenditure 2023 259,730 115,030 6,148 5,337 386,245 233,003
Total expenditure 2022 188,001 34,889 5,116 4,997 233,003

Allocated costs represent central overheads. Allocation has been performed based on an assessment of the utilisation of each function by the operating business streams.

68 Report and Financial Statements 31 March 2023

5 Summar�anal�sis of expenditure and related income for charitable activities

Note Homes
£�000		 Retirement
living
£�000		 MHA
Communities
£�000		 Other
£�000		 2023
Total
£�000		 2022
Total
£�000
Income from charitable activities
Fees and charges 214,817 24,851 669 23 240,360 213,452
Rents 32 7,129 - (1) 7,160 7,306
Grants - - 1,720 3 1,723 2,380
Government Funding 1,057 221 - 1 1,279 11,764
Sale of Housing - 7,707 - - 7,707 10,189
Miscellaneous Property
sales		 2,516 - - - 2,516 2,225
Total income 3 218,422 39,908 2,389 26 260,745 247,316
Expenditure on charitable activities
Sta�costs (116,550) (15,503) (4,339) (12,027) (148,419) (139,792)
Operational costs (89,543) (19,793) (1,380) (11,559) (122,275) (91,783)
Allocated (costs)/income (18,139) (2,958) (429) 21,526 - -
Exceptional items (35,498) (76,776) - (1,316) (113,590) 309
Total �259,730� �115,030� �6,148� �3,376� �384,284� �231,266�
Total �de�cit��surplus
from charitable
activities 2023		 �41,308� �75,122� �3,759� **3,350 ** �123,539� �
Total surplus��de�cit�
from charitable
activities 2022		 13,343 8,188 �2,410� �3,071� 16,050

Report and Financial Statements 31 March 2023 69

6 Anal�sis of governance and support costs

The Group initially identi�es the costs of its support functions. It then identi�es those costs which relate to the governance function. Having identi�ed its governance costs, the remaining support costs together with the governance costs are apportioned between the key charitable activities undertaken (see note 5) in the year. Refer to the table on the following page for the basis for apportionment and the analysis of support and governance costs.

Support Costs
£�000		 �overnance
Costs
£�000		 2023
Total
£�000		 2022
Total
£�000		 �asis of
allocation
Employment costs - 967 967 828 Sta�time
Director expenses - 2 2 7 Invoiced
events
External auditors–audit services:
Parent - 146 146 186 Governance
Subsidiaries - 32 32 30 Governance
Bank covenants - - - 5 Governance
Directors’Insurances 20 - 20 20 Cost
Other costs - 53 53 14 Governance
Total 2023 20 1,200 1,220 1,090
Total 2022 20 1,070 1,090

7 Operating lease commitments

2023
Total
£�000		 2022
Total
£�000
Operating leases
The following lease payments were made during the year in respect of operating leases:
Land and buildings 12,670 12,141
2023
Land &
�uildings
Total
£�000		 2022
Land &
�uildings
Total
£�000
At 31 March the Group and Charity had commitments under
non-cancellable operating leases as follows:
–expiring in one year or less 12,986 12,370
–expiring in one to two years 12,986 12,370
–expiring in two to �ve years 38,959 37,110
–expiring in more than �ve years 208,094 208,942
273,025 270,792

Included in the commitments above are a number of leases where the unavoidable costs of meeting the obligations under the contract exceed the economic bene�ts expected to be received under it, making these onerous leases.

70 Report and Financial Statements 31 March 2023

However, in order to recognise the present obligation under the onerous leases as a provision, in accordance with FRS102 the following criteria must be met:

At the present time due to the range of options being explored and discussed with landlords it is not possible to estimate reliably the amount required in settlement. As such this is considered a contingent liability at 31 March 2023.

8 Anal�sis of sta�costs and remuneration of �e�management personnel

2023
Number		 2022
Number
Average monthl�number emplo�ed
Care homes 4,436 4,510
Retirement living 575 604
MHA Communities 107 105
O�ce sta� 392 376
5,510 5,595

The average number of sta�employed represents the full time equivalent including sta�on zero hour contracts. The total number of sta�employed on zero hour contracts was 754 (2022: 757). The use of zero hour contracts for care sta�allows the employee the �exibility to control their work preferences. The average monthly number of employees was 6,521 (2022: 6,509).

2023
£�000		 2022
£�000
�roup sta�ng costs
Wages and salaries 134,898 127,348
Social security costs 11,293 10,203
Other pension costs
-De�ned bene�t pension costs (note 21) 170 120
-De�ned contribution pension costs 3,582 3,406
149,943 141,077

The key management personnel is comprised of the Executive Leadership Team alongside the Directors of the Charity. During the year the total remuneration received by the Executive Leadership Team was £1,231,542 (2022: £1,108,662). The employer’s pension contribution for the key management personnel sta�was £61,972 (2022: £55,652).

The key management personnel of the Group are all remunerated from the parent Charity. These comprise the Leadership Team listed on page 50 of the �nancial statements. The total employee bene�ts of the Executive Leadership Team of the Charity were £Nil (2022: £Nil).

The number of Directors who received reimbursement for the cost of travel to and from meetings was 9 (2022: 9). The cost of travel expenses reimbursed was £2,000 (2022: £2,000). During the year an insurance premium of £24,192 (2022: £20,160) was paid to indemnify Directors against liability for wrongful acts. No remuneration or bene�ts were paid during the year to any Director of the Board. 142 (2022:94) employees earned over £60,000 in the year excluding pension contribution within the following bands:

Report and Financial Statements 31 March 2023 71

8 Anal�sis of sta�costs and remuneration of �e�management personnel �continued�

2023
Number		 2022
Number
Between £60,001 and £70,000 77 56
Between £70,001 and £80,000 38 20
Between £80,001 and £90,000 14 9
Between £90,001 and £100,000 2 3
Between £100,001 and £110,000 3 -
Between £110,001 and £120,000 3 2
Between £120,001 and £130,000 2 1
Between £130,001 and £140,000 - 2
Between £140,001 and £150,000 1 -
Between £160,001 and £170,000 1 -
Between £190,001 and £200,000 - 1
Between £200,001 and £210,000 1 -

146 (2022:172) employees were members of the de�ned contribution pension scheme.

Included in sta�costs are £283,000 (2022: £224,000) of redundancy payments made to employees on termination of employment following restructures of sta�within operations and central support. Previous year costs were as a result of a restructure of sta�within the retirement living operations. Redundancy costs are accounted for on an accruals basis with no unpaid commitments carried forward at the balance sheet date.

9 Intangible Fixed Assets

�roup and Compan� Soft�are
£�000		 Total
£�000
Cost
At 1 April 2022 2,246 2,246
Additions 69 69
At 31 March 2023 2,315 2,315
Accumulated amortisation
At 1 April 2022 937 937
Amortisation charge 592 592
At 31 March 2023 1,529 1,529
Net �oo�Value
At 31 March 2023 786 786
At 31 March 2022 1,309 1,309

Amortisation charges of £592,000 have been recognised in other expenditure.

72 Report and Financial Statements 31 March 2023

10 Tangible Fixed Assets

10a Tangib�e Fixed Assets

�roup Care
homes:
Freehold
land and
buildings at
cost
£�000		 Care
homes:
Leasehold
land and
buildings at
cost
£�000		 Other:
Freehold
land and
buildings at
cost
£�000		 Other:
Leasehold
land and
buildings at
cost
£�000		 Furniture,
equipment
and vehicles
at cost
£�000		 Assets in the
course of
construction
at cost
£�000		 Total
£�000
Cost�valuation
1 April 2022 265,707 37,986 183,566 9,536 35,205 5,236 537,236
Additions during
the year		 2,194 - 3,053 - 636 16,373 22,256
Completions
during the year		 10,356 - 1,432 - 1,964 (13,752) -
Disposals during
the year		 (1,620) - (3,222) - (21) - (4,863)
31 March 2023 276,637 37,986 184,829 9,536 37,784 7,857 554,629
Accumulated depreciation�impairment
1 April 2022 49,966 9,364 35,911 2,094 22,464 - 119,799
Charge for the year 5,796 911 4,194 217 2,385 - 13,503
On disposals (17) - (516) - (10) - (543)
Impairment 20,514 14,483 75,800 - 1,581 - 112,378
31 March 2023 76,259 24,758 115,389 2,311 26,420 � 245,137
Net boo�value
31 March 2023 200,378 13,228 69,440 7,225 11,364 7,857 309,492
31 March 2022 215,741 28,622 147,655 7,442 12,741 5,236 417,437

Completions during the year relate to the reclassi�cation of assets in the course of construction upon completion of the relevant pro�ect. Any assets in the course of construction, whose nature does not meet the de�nition of capital expenditure or where the pro�ect was aborted, are taken to the Statement of Financial Activities upon pro�ect completion. The cost of such pro�ects in the year was £Nil (2022: £60,000).

As outlined on page 24 of the trustees report, as part of the MHA’s property portfolio review, the Board have made a strategic decision about the future of a number of services. In accordance with FRS102 the plan to dispose of an asset before the previously expected date is an indicator of impairment that triggers the calculation of the asset’s recoverable amount for the purpose of determining whether the asset is impaired. The assessment of recoverable value for these properties resulted in impairment of £112,378,000 to reduce the assets carrying value to the recoverable amount. There is inherent estimation uncertainty in making this assessment due to a range of options being explored for disposal of these assets in order to preserve the charitable activities.

The prior year impairments relate to the MHA Richmond care home, announced for closure in February 2022 £1,311,000 and the reversal of the impairment of MHA Foxton Grange care home, which is being held for disposal £1,620,000.

Report and Financial Statements 31 March 2023 73

10a Tangib�e Fixed Assets (continued)

Included within our freehold land and buildings above is land of £36,547,000 (2022: £51,578,000) which is not depreciated.

Additions to freehold land and buildings include capitalised interest of £nil (2022: £Nil). The cumulative amount of capitalised interest included is £3,917,000 (2022: £3,917,000).

10b Tangib�e Fixed Assets (continued)

Compan� Care
homes:
Freehold
land and
buildings at
cost
£�000		 Care
homes:
Leasehold
land and
buildings at
cost
£�000		 Other:
Freehold
land and
buildings at
cost
£�000		 Other:
Leasehold
land and
buildings at
cost
£�000		 Furniture,
equipment
and vehicles
at cost
£�000		 Assets in the
course of
construction
at cost
£�000		 Total
£�000
Cost�valuation
1 April 2022 242,203 37,986 108,195 139 29,521 4,999 423,043
Additions during
the year		 2,182 - 1,886 - 1,163 15,348 20,579
Completions
during the year		 10,344 - 775 - 1,761 (12,880) -
Disposals during
the year		 (1,620) - (2,207) - (21) - (3,848)
31 March 2023 253,109 37,986 108,649 139 32,424 7,467 439,774
Accumulated depreciation�impairment
1 April 2022 46,769 9,364 20,876 29 18,931 - 95,969
Charge for the year 5,265 911 2,334 3 2,047 - 10,560
On disposals (17) - (451) - (10) - (478)
Impairment 14,275 14,483 52,531 - 1,305 - 82,594
31 March 2023 66,292 24,758 75,290 32 22,273 � 188,645
Net boo�value
31 March 2023 186,817 13,228 33,359 107 10,151 7,467 251,129
31 March 2022 195,434 28,622 87,319 110 10,590 4,999 327,074

Included within freehold land and buildings above is land of £31,988,000 (2022: £44,391,000) which is not depreciated.

Additions to freehold land and buildings include capitalised interest of £nil (2022: £Nil). The cumulative amount of capitalised interest included is £3,813,000 (2022: £3,813,000).

74 Report and Financial Statements 31 March 2023

11 Capital Commitments

�roup �roup Compan� Compan�
2023
£�000		 2022
£�000		 2023
£�000		 2022
£�000
Expenditure contracted, less certi�ed 1,246 2,947 980 2,893

Included within the capital commitments of the Group and Company are contracts relating to the development of sites which are executory contracts in nature as at 31 March 2023. A liability for these items has not been recorded in the �nancial statements as neither party has yet performed their obligations and the contracts are not onerous.

12 Investments ��roup and Compan�

2023
Total
£�000		 2022
Total
£�000
1 April 2022 1,469 1,360
Additions during the year - 105
Net (loss)/gain on revaluation (105) 4
31 March 2023 1,364 1,469
The securities represent:
Methodist Church Central Finance Board:
Equity fund units 410 443
Fixed interest fund units 954 1,026
31 March 2023 1,364 1,469

All investments are carried at their fair value. Investment in equities and �xed interest units are all traded in quoted public markets, primarily the London Stock Exchange. Holdings in common investment funds, unit trusts and open-ended investment companies are at the bid price. The basis of fair value for quoted investments is equivalent to the market value, using the bid price. Asset sales and purchases are recognised at the date of trade at cost (that is their transaction value).

Report and Financial Statements 31 March 2023 75

13 Debtors

�roup �roup Compan� Compan�
2023
£�000		 2022
£�000		 2023
£�000		 2022
£�000
Trade debtors 11,880 9,087 9,400 7,925
Due from group undertakings - - - 23,274
Other debtors 847 485 809 443
Prepayments and accrued income 8,330 8,113 8,099 7,947
21,057 17,685 18,308 39,589

Amounts receivable from Group undertakings comprise a formal loan of £3,500,000 (2022: £3,500,000) which is interest bearing at a rate of 1% per annum (2022: 1%) unsecured and repayable on demand, and £24,641,000 (2022: £19,774,000) recharges arising from operational activities which is not interest bearing, is unsecured and payable on demand both due from MHA Auchlochan. Following the placing of MHA Auchlochan into administration on 2nd May 2023 a full provision has been included in MHA company accounts against the outstanding loan and intercompany balance.

14 Creditors: Amounts falling due �ithin one �ear

�roup �roup Compan� Compan�
2023
£�000		 2022
£�000		 2023
£�000		 2022
£�000
Loans–principal and interest 2,031 1,900 1,777 1,649
Trade creditors 6,941 5,514 6,939 5,512
Charges and rents in advance 4,820 5,241 4,713 5,119
Deferred Income–buy-back properties 269 241 125 146
Unpaid pension contributions 894 976 879 961
Taxation and social security 5,204 5,222 5,054 5,056
Due to group undertakings - - 253 -
Other creditors 16,129 13,653 15,242 12,955
Accruals and deferred income 20,045 11,177 18,994 9,785
56,333 43,924 53,976 41,183

76 Report and Financial Statements 31 March 2023

15 Creditors: Amounts falling due after more than one �ear

----- Start of picture text -----
�roup Compan�
2023 2022 2023 2022
£�000 £�000 £�000 £�000
Derivative �nancial instruments (3,310) 195 (3,310) 195
Loans:
-
Between one and two years 2,270 2,164 2,046 1,909
-
Between three and �ve years 77,744 77,265 77,064 76,589
-
In �ve years or more 10,087 12,835 7,901 10,421
Less loan arrangement fees (132) (264) (132) (264)
89,969 92,000 86,879 88,655
Deferred Income � bu��bac�properties:
-
Between one and two years 185 143 45 52
-
Between three and �ve years 432 286 54 68
-
In �ve years or more 372 131 29 34
989 560 128 154
Total 87,648 92,755 83,697 89,004
The loans are secured on certain care home and housing properties, representing 51% of the
value of Freehold Land and Buildings (2022: 51%) with a Net Book Value of £144,069,562 (2022:
£143,356,000). The interest rates payable on these loans, plus the short-term loans of £2,031,000
(2022: £1,900,000), are as detailed below, con�rming the drawn down amounts as at 31 March 2022,
the interest rate and the respective terms.
Entit� Loan Amount Rate
Current �ear �rior �ear Current �ear �rior �ear Expir�Date
Methodist Homes Ltd £70,000,000 £70,000,000 [SONIA plus] SONIA plus April 2025
2.2% 2.2%
Methodist Homes Ltd £18,919,000 £20,700,000 [SONIA plus] SONIA plus December
0.8% 0.8% 2030
Total £88,919,000 £90,700,000
MHA Housing Association Ltd £1,184,000 £1,300,000 [Variable Rate] Variable Rate April 2033
4.55% 0.5%
MHA Housing Association Ltd £1,012,000 £1,111,000 [Variable Rate] Variable Rate May 2033
4.68% 0.5%
MHA Housing Association Ltd £31,000 £61,000 [Fixed Rate at] Fixed Rate at January 2024
4.5% 4.5%
MHA Housing Association Ltd £1,116,000 £1,124,000 [Fixed Rate at] Fixed Rate at March 2049
10.7% 10.7%
Total £3,343,000 £3,596,000
�roup Total £92,262,000 £94,296,000
----- End of picture text -----

Report and Financial Statements 31 March 2023 77

15 Creditors: Amounts falling due after more than one �ear �continued�

Of the outstanding loan balance £70,000,000 (2022: £70,000,000) relates to loans that are non-amortising.

The Company has �xed interest rates to guard against future rate movements on £70,000,000 (2022: £70,000,000) of the loan balance through an interest rate swap. The overall cost of the derivative arrangement is �xed at 4.3%. The fair value of the interest swaps as at 31st March 2023 is a £3,310,000 asset (2022: £195,000 liability) representing the cost of exiting this arrangement, which is not currently intended by the company. The recognised gain on cash �ow hedges in the year is £3,505,000 (2022: gain of £4,743,000). This re�ects the net of the fair value gain on derivatives of £7,050,000 (2022: gain of £3,545,000) and the gain recycled to bank loan interest of £167,000 (2022: losses recycled of £1,346,000). The amounts recycled to bank loan interest represent the cash paid on derivatives during the year.

16 �rovisions for liabilities

1 April 2022
£�000		 Created
on ne�
transactions
£�000		 Charge for
�ear
£�000		 Increase�
�release�in
provision
£�000		 Utilisation
of provision
£�000		 31 March
2023
£�000
�roup
Guarantee property buy-backs 29,719 1,293 (964) - (4,082) 25,966
Public Liability provision 500 - - (500) - -
30,219 1,293 �964� �500� �4,082� 25,966
Compan�
Guarantee property buy-backs 19,127 - (369) - (3,086) 15,672
Public Liability provision 500 - - (500) - -
19,627 � �369� �500� �3,086� 15,672

The guarantee property buy-backs provision arises when MHA enters into transactions to sell the leasehold interest in retirement living properties with an option (exercisable by either party) for MHA to re-purchase the leasehold at a pre-agreed amount. Buy-back commitments have been estimated to average ten years (2022: nine years). Provisions are discounted at the appropriate risk free rate. The relevant ten and �ve year government bond rates have been used depending on the remaining expected life of the individual commitments by property, these being 3.59% and 3.44% respectively (2022: 1.63% and 1.51%).

The Public Liability Provision provides for the potential costs of future Covid-19 public liability claims following the withdrawal of provision by our insurers is no longer required.

17 Share Capital

The company is limited by guarantee and has no share capital.

78 Report and Financial Statements 31 March 2023

18 Endo�ment Funds

18a Endowment funds (current year)

Movement in Funds

�roup and
Compan�		 1 April
2022
£�000		 Incoming
£�000		 Outgoing
£�000		 �Losses��
gains on
investment
assets
£�000		 Transfers
bet�een
restricted
funds
£�000		 Transfers
bet�een
restricted
and
unrestricted
funds
£�000		 31 March
2023
£�000
H D Clarke Memorial 913 7 (2) (63) - - 855
Redcroft Residential
Home		 69 1 - - - - 70
982 8 �2� �63� � � 925

18b Endowment funds (prior year)

Movement in Funds

�roup and
Compan�		 1 April
2021
£�000		 Incoming
£�000		 Outgoing
£�000		 �ains on
investment
assets
£�000		 Transfers
bet�een
restricted
funds
£�000		 Transfers
bet�een
restricted
and
unrestricted
funds
£�000		 31 March
2022
£�000
H D Clarke Memorial 944 5 (2) (34) - - 913
Redcroft Residential
Home		 69 - - - - - 69
1,013 5 �2� �34� � � 982

19 Restricted income funds

19a Restricted income funds (current year)

Movement in Funds

�roup 1 April
2022
£�000		 Incoming
£�000		 Outgoing
£�000		 �ains on
investment
assets
£�000		 Transfers
bet�een
restricted
funds
£�000		 Transfers
bet�een
restricted
and
unrestricted
funds
£�000		 31 March
2023
£�000
Care homes 14,407 2,932 (1,802) (42) - 410 15,905
Retirement living 4,757 266 (392) - - 48 4,679
Big Lottery Fund grant - 50 (50) - - - -
MHA Communities 3,150 3,837 (6,292) - - (61) 634
Amenity funds 2,115 457 (400) - - (62) 2,110
Other - - - - - - -
24,429 7,542 �8,936� �42� � 335 23,328

Report and Financial Statements 31 March 2023 79

19 Restricted income funds �continued�

19b Restricted income funds (prior year)

Movement in Funds

�roup 1 April
2021
£�000		 Incoming
£�000		 Outgoing
£�000		 �ains on
investment
assets
£�000		 Transfers
bet�een
restricted
funds
£�000		 Transfers
bet�een
restricted
and
unrestricted
funds
£�000		 31 March
2022
£�000
Care homes 14,386 11,386 (11,364) 39 - (40) 14,407
Retirement living 4,872 883 (1,017) - - 19 4,757
Big Lottery Fund grant - 76 (76) - - - -
MHA Communities 2,919 5,346 (5,040) - - (75) 3,150
Amenity funds 2,002 412 (338) - - 39 2,115
Other - - - - - - -
24,179 18,103 �17,835� 39 � �57� 24,429

19c Restricted income funds (current year)

Movement in Funds

Compan� 1 April
2022
£�000		 Incoming
£�000		 Outgoing
£�000		 �ains on
investment
assets
£�000		 Transfers
bet�een
restricted
funds
£�000		 Transfers
bet�een
restricted
and
unrestricted
funds
£�000		 31 March
2023
£�000
Care homes 14,407 2,933 (1,802) (42) - 410 15,906
Retirement living 4,757 254 (380) - - 48 4,679
Big Lottery Fund grant - 50 (50) - - - -
MHA Communities 3,151 3,837 (6,292) - - (61) 635
Amenity funds 2,074 443 (382) - - (67) 2,068
Other - - - - - - -
24,389 7,517 �8,906� �42� � 330 23,288

80 Report and Financial Statements 31 March 2023

19 Restricted income funds �continued�

19d Restricted income funds (prior year)

Movement in Funds

Compan� 1 April
2021
£�000		 Incoming
£�000		 Outgoing
£�000		 �ains on
investment
assets
£�000		 Transfers
bet�een
restricted
funds
£�000		 Transfers
bet�een
restricted
and
unrestricted
funds
£�000		 31 March
2022
£�000
Care homes 14,386 11,033 (11,011) 39 - (40) 14,407
Retirement living 4,872 782 (916) - - 19 4,757
Big Lottery Fund grant - 76 (76) - - - -
MHA Communities 2,920 5,346 (5,040) - - (75) 3,151
Amenity funds 1,950 398 (320) - - 46 2,074
Other - - - - - - -
24,128 17,635 �17,363� 39 � �50� 24,389

The care homes and retirement living funds relate to amounts donated for use and subsequently used to improve speci�c Homes or Schemes. The MHA Communities Scheme funds relate to amounts raised by local schemes to fund their day to day running costs. Amenity funds relate to amounts raised for the provision of additional bene�ts for residents and tenants within a speci�c Home or Scheme.

Big Lottery Fund Grants of £50,000 (2022: £76,000) were received in the year to support MHA Communities Schemes.

20 Net Assets b�Fund

20a Net Assets by Fund (current year)

�roup Unrestricted
Funds
£�000		 Restricted
Funds
£�000		 Endo�ment
Funds
£�000		 Total
2023
£�000
Fixed assets 294,967 16,009 666 311,642
Current assets 78,708 11,053 259 90,020
Current liabilities (52,599) (3,734) - (56,333)
Long term liabilities (113,614) - - (113,614)
Total Net Assets 207,462 23,328 925 231,715

Report and Financial Statements 31 March 2023 81

20 Net Assets b�Fund �continued�

20b Net Assets by Fund (prior year)

�roup Unrestricted
Funds
£�000		 Restricted
Funds
£�000		 Endo�ment
Funds
£�000		 Total
2022
£�000
Fixed assets 403,353 16,132 730 420,215
Current assets 81,373 11,290 252 92,915
Current liabilities (40,931) (2,993) - (43,924)
Long term liabilities (122,974) - - (122,974)
Total Net Assets 320,821 24,429 982 346,232

20c Net Assets by Fund (current year)

Compan� Unrestricted
Funds
£�000		 Restricted
Funds
£�000		 Endo�ment
Funds
£�000		 Total
2023
£�000
Fixed assets 236,604 16,009 666 253,279
Current assets 56,454 11,007 259 67,720
Current liabilities (50,248) (3,728) - (53,976)
Long term liabilities (99,369) - - (99,369)
Total Net Assets 143,441 23,288 925 167,654

20d Net Assets by Fund (prior year)

Compan� Unrestricted
Funds
£�000		 Restricted
Funds
£�000		 Endo�ment
Funds
£�000		 Total
2022
£�000
Fixed assets 312,989 16,132 730 329,851
Current assets 89,682 11,250 252 101,184
Current liabilities (38,190) (2,993) - (41,183)
Long term liabilities (108,631) - - (108,631)
Total Net Assets 255,850 24,389 982 281,221

82 Report and Financial Statements 31 March 2023

21 �ensions and Similar Obligations

A de�ned contribution scheme, Growth Plan 4, was available to all employees. The charge for the year covered 146 (2022: 172) employees. The contribution rate of MHA for the year varied between 3% and 6% depending on the employee’s contribution, which is a minimum of 5%.

MHA operates a number of pension schemes;

As per para 28.38 of FRS102, where an entity participates in a de�ned bene�t plan that shares risks between entities under common control it shall obtain information about the plan as a whole measured in accordance with this FRS on the basis of assumptions that apply to the plan as a whole. If there is a contractual agreement or stated policy for charging the net de�ned bene�t cost of a de�ned bene�t plan as a whole measured in accordance with this FRS to individual group entities, the entity shall, in its individual �nancial statements, recognise the net de�ned bene�t cost of a de�ned bene�t plan so charged. If there is no such agreement or policy, the net de�ned bene�t cost of a de�ned bene�t plan shall be recognised in the individual �nancial statements of the Group entity which is legally responsible for the plan. The other Group entities shall, in their individual �nancial statements, recognise a cost equal to their contribution payable for the year. Methodist Homes is the sponsoring employer of the de�ned bene�t pension scheme and has legal responsibility for the plan. There is no contractual arrangement or stated policy for charging the net de�ned bene�t cost of the plan as a whole to individual Group entities and therefore the Company has recognised the entire net de�ned bene�t cost and the relevant net de�ned bene�t liability of the de�ned bene�t pension scheme in its individual �nancial statements.

The FRS102 disclosures below have been produced by TPT Retirement Solutions, the group actuaries using the pro�ected unit method to calculate the Scheme liabilities at 31 March 2022. No ad�ustments have been made to measure the de�ned bene�t obligation at the reporting date to their valuation.

The �nancial assumptions used to calculate the Group’s scheme liabilities are as follows:

2023
%pa		 2022
%pa		 2021
%pa		 2020
%pa
In�ation (CPI) 2.9% 3.3% 2.9% 1.7%
In�ation (RPI) 3.2% 3.6% 3.3% 2.7%
Rate of increase in salaries 0.0% 0.0% 0.0% 3.2%
Rate of increase for pensions in payment 2.3% 2.4% 2.3% 1.5%
Rate of increase for deferred pensions 3.2% 3.6% 3.3% 2.7%
Discount rate 4.9% 2.8% 2.1% 2.3%

Pensions accrued before 1 January 2000 for members who �oined the scheme before 1 November 1998 are sub�ect to guaranteed �xed increases of 5% (2022: 5%) per annum in deferment and in payment.

Report and Financial Statements 31 March 2023 83

21 �ensions and Similar Obligations �continued�

The current mortality assumptions used in the valuation of the pension liabilities were:

Life expectanc� 2023
S1�A �ear of
birth CMI21
�ith a minimum
improvement of
1�5% p�a�for males
and 1�3% p�a�for
females		 2022
S1�A �ear of
birth CMI20
�ith a minimum
improvement of
1�3% p�a�for males
and 1�3% p�a�for
females		 2021
S1�A �ear of
birth CMI19
�ith a minimum
improvement of
1�3% p�a�for males
and 1�0% p�a�for
females		 2020
S1�A �ear of
birth CMI18
�ith a minimum
improvement of
1�5% p�a�for males
and 1�3% p�a�for
females
The assumed life expectations on retirement age 65 are:
2023
�ears		 2022
�ears		 2021
�ears		 2020
�ears
�ensioner currentl�aged 65:
Male 21.5 21.7 21.4 21.9
Female 23.9 24.1 23.4 23.7
Non��ensioner currentl�aged 45:
Male 23.1 23.3 22.7 23.2
Female 25.4 25.6 24.9 24.9

The expected return on plan assets was determined by considering the expected returns available on the assets underlying the current investment portfolio. Expected yields on bonds are based on gross redemption yields at the Statement of Financial Position date, whilst the expected returns on the equity and property investments re�ect the long-term real rates of return experienced in the respective markets.

The fair value of assets in the scheme, the present value of the liabilities in the scheme and the long-term rate of return expected at the Statement of Financial Position date were:

Fair value
2023
£�000		 Fair value
2022
£�000
Equities 73 417
Government bonds 12,797 28,939
Property 6,886 9,142
Cash 580 1,442
Other 7,129 11,906
LDI 18,503 14,376
Total mar�et value of assets 45,968 66,222
Present value of scheme liabilities (42,858) (58,279)
Surplus in the scheme 3,110 7,943
E�ect of asset ceiling �3,110� �7,943�
Net pension asset��liabilit��under FRS102 � �

An asset ceiling has been applied to limit the impact of the surplus on the scheme calculated on an Accounting provision FRS102 basis in line with the advice from TPT Retirement Solutions and the pension scheme rules.

84 Report and Financial Statements 31 March 2023

21 �ensions and Similar Obligations �continued�

The last formal valuation of the scheme was performed as at 30 September 2021 by a professionally quali�ed actuary.

The actuary has con�rmed that the existing contribution level is adequate and therefore no de�cit contributions are currently being made to the scheme.

The Group works directly with TPT Retirement Solutions in relation to the multi-employer pension scheme to ensure compliance with scheme rules. Where an issue is identi�ed, the Group ensures proper understanding and investigation is carried out to meet the Group’s obligations, and where these meet the requirements of the relevant accounting standard they are appropriately accounted for.

The Group’s pension charge for the year calculated under FRS102 assumptions is included in the �nancial statements.

Ana�ysis of amounts charged to net incoming resources

2023
£�000		 2022
£�000
Current service cost - -
Expenses (170) (120)
Expected return on scheme assets 1,820 1,369
Interest on pension scheme liabilities (1,592) (1,321)
Net income��cost� 58 �72�
Interest on e�ect of asset ceiling (228) (48)
Total cost �170� �120�

Ana�ysis of amount recognised as Actuaria�gain�(�oss)

2023
£�000		 2022
£�000
Actuarial (loss) recognised in the Consolidated Statement of
Financial Activities		 (497) (1,586)
Employer contribution ad�ustment - -
�497� �1,586�
Total (charge) to Consolidated Statement of Financial Activities (667) (1,706)
Cumulative actuarial losses �13,549� �13,052�
Statement of Financial �osition impact 2023
£�000		 2022
£�000
Present value of funded obligations (42,858) (58,279)
Fair value of scheme assets 45,968 66,222
Surplus in the scheme at 31 March 3,110 7,943
E�ect of asset ceiling (3,110) (7,943)
Net pension asset��liabilit��under FRS102 � �

Report and Financial Statements 31 March 2023 85

21 �ensions and Similar Obligations �continued�

Changes in the present value of the de�ned bene�t obligation 2023
£�000		 2022
£�000
Opening de�ned bene�t obligation 58,279 63,766
Service cost - -
Interest cost 1,592 1,321
Actuarial (gains) (14,993) (5,087)
Net bene�ts paid (2,020) (1,721)
Closing de�ned bene�t obligation 42,858 58,279
Changes in fair value of plan assets
2023
£�000
2022
£�000
Opening fair value of plan assets 66,222 65,247
Interest Income 1,820 1,369
Actuarial (loss) (20,551) (259)
Contributions by employer 667 1,706
Net bene�ts paid (2,020) (1,721)
Expenses (170) (120)
Closing fair value of plan assets 45,968 66,222
Return on plan assets �18,731� 1,110

86 Report and Financial Statements 31 March 2023

22 Notes to the Cash Flo�Statement

a) Reconci�iation of net income to net cash in�ow from operating acti�ities

2023
£�000		 2022
£�000
Net income (117,525) 18,090
Unrealised losses/(gains) on investment 105 (4)
Investment income (968) (39)
Interest charge 4,064 3,475
Pro�t on sale of retirement living housing (3,200) (9,085)
Depreciation charges 13,503 13,252
Amortisation 592 550
Impairment of �xed assets 112,378 (309)
De�ned bene�t scheme pension contributions paid in the year (667) (1,706)
De�ned bene�t scheme pension cost charged in the year 170 120
Increase in debtors (3,372) (4,098)
Increase/(decrease) in creditors and provisions 8,449 (5,146)
Net cash provided b�operating activities 13,529 15,100

Movements in debtors and creditors which relate to capital and interest transactions are excluded from the movements in debtors and creditors shown.

Cash and cash equivalents amounting to £259,000 (2022: £252,000) held in endowment funds are not available for use to further charitable activities as they are held for particular purposes and are intended to be permanent.

b) Reconci�iation of net cash �ow to mo�ement in net debt

2023
£�000		 2022
£�000
(Decrease)/increase in cash and cash equivalents (6,267) 10,924
Cash movement in borrowings 2,041 5,431
Change in net funds resulting from cash �o�s �4,226� 16,355
Change in net funds resulting from non�cash �o�s �138� �3,653�
Movement in net debt
Net debt as at 1 April (18,670) (31,372)
Net debt as at 31 March �23,034� �18,670�

Report and Financial Statements 31 March 2023 87

c) i) Ana�ysis of changes in net debt (current year)

1 April 2022
£�000		 Cash �o�
£�000		 Non�cash
changes
£�000		 31 March 2023
£�000
Cash at bank and in hand 75,230 (6,267) - 68,963
Loans due within one year (1,900) 2,041 (2,170) (2,029)
Loans due after more than one year (92,000) - 2,032 (89,968)
�18,670� �4,226� �138� �23,034�

23 �roup Structure

Methodist Homes has the following subsidiary undertakings:

Methodist Homes Housing Association Ltd

Incorporation: Co-operative and Community Bene�t Societies Act 2014 Registered O�ce: Epworth House, Stuart Street, Derby, DE1 2EQ, United Kingdom Registered Number: LH2343 Principal activity: Charitable provision and management of social housing. MHA Auchlochan Ltd Incorporation: Charity Registered Number SCO40155 Company Registered Number: SC352117 Registered O�ce: Auchlochan House, New Trows Road, Lesmahagow, ML11 0JS, United Kingdom Principal activity: Charitable provision and management of residential care homes.

The two (2022: two) organisations are deemed to be subsidiaries of Methodist Homes by means of various intra-group agreements.

Methodist Homes Housing
Association Ltd		 Methodist Homes Housing
Association Ltd		 MHA Auchlochan Ltd MHA Auchlochan Ltd
2023
£�000		 2022
£�000		 2023
£�000		 2022
£�000
Assets 67,770 72,786 13,147 33,204
Liabilities (18,866) (19,817) (40,466) (36,867)
Funds 48,904 52,969 �27,319� �3,663�
Incoming resources 7,983 7,313 9,983 9,043
Resources expended (12,048) (5,418) (34,061) (9,191)
Movement in funds �4,065� 1,895 �24,078� �148�

The numbers for MHA Auchlochan include impairments made to the carrying value of assets of £24,039,00 following the decision by the MHA board to withdraw �nancial support and place the subsidiary into administration. MHA Auchlochan has therefore been included on a non going concern basis.

88 Report and Financial Statements 31 March 2023

24 Related part�transactions

The group operates a de�ned bene�t scheme where MHA is the sponsoring employer. The contribution by the group to the scheme paid during the year amounted to £667,000 (2022: £1,706,000).

During the �nancial year to 31 March 2023 no (2022: one) members of the Leadership Team and the Board had close family members residing in the company’s care homes. In both situations arrangements were established and continue to be monitored in accordance with the company’s published relatives’ policy. The policy stipulates line management oversight of all instances where MHA services are provided to relatives of Board Members and employees. The policy ensures that there is no preference given to the availability or price of MHA’s services and also ensures the safeguarding of family members and carers.

Related party transactions with Group undertakings relate to recharges arising from operational activities. Amounts receivable from Group undertakings comprise a formal loan of £3,500,000 (2022: £3,500,000) which is interest bearing at a rate of 1% per annum (2022: 1%) unsecured and repayable on demand, and £24,641,000 (2022: £19,774,000) recharges arising from operational activities which is not interest bearing, is unsecured and payable on demand. Following the placing of MHA Auchlochan into administration on 2nd May 2023 a full provision has been included in MHA company accounts against the outstanding intercompany balance.

2023
£�000		 2022
£�000
Transactions
Recharges to Group Undertakings (23,274) 7,854
Pension scheme–De�ned bene�t 667 1,706
�22,607� 9,560
2023
£�000
2022
£�000
�alances
Due from Group Undertakings - 23,274
Pension scheme–De�ned bene�t - -
� 23,274

Report and Financial Statements 31 March 2023 89

25 Statement of Financial Activities for prior �ear

Note�s� Unrestricted
Funds
�restated�
£�000		 Restricted
Funds
£�000		 Endo�ment
Funds
£�000		 2022
£�000
Income and endo�ments from:
Donations and legacies 2 225 3,509 - 3,734
Charitable activities
Homes (restated) 190,348 10,996 - 201,344
Retirement living (restated) 42,197 880 - 43,077
Live at Home - 2,706 - 2,706
Other 189 - - 189
Total charitable activities 3/5 232,734 14,582 � 247,316
Investments 22 12 5 39
Total 232,981 18,103 5 251,089
Expenditure on:
Raising funds 647 - - 647
Charitable activities
Homes (restated) 176,332 11,669 - 188,001
Retirement living (restated) 33,840 1,049 - 34,889
Live at Home - 5,116 - 5,116
Other 3,260 - - 3,260
Total charitable activities 5 213,432 17,834 � 231,266
Other 1,087 1 2 1,090
Total 4 215,166 17,835 2 233,003
Net gain/(loss) on investments (1) 39 (34) 4
Net income 17,814 307 �31� 18,090
Transfer bet�een funds 57 �57� � �
Other recognised gains��losses�:
Actuarial gains on de�ned bene�t
pension schemes		 21 (1,586) - - (1,586)
Other losses–interest rate swaps 4,743 - - 4,743
Net movement in funds 21,028 250 �31� 21,247
Reconciliation of funds:
Total funds brought forward (restated) 299,793 24,179 1,013 324,985
Total funds carried for�ard 320,821 24,429 982 346,232

90 Report and Financial Statements 31 March 2023

26 Contingent assets and liabilities

MHA have been noti�ed by the trustees of the Methodist Homes for the Aged Final Salary Pension Scheme of legal uncertainties over the way in which historic scheme bene�t changes have been applied to the scheme. The scheme Trustee’s legal advisor has carried out a review of the changes made and is now seeking direction from the high court on the interpretation of the scheme rules and documentation against the bene�t changes implemented. The Trustee has carried out a review of all schemes under its administration and concluded that the uncertainties are common amongst the ma�ority of the schemes it administers. The outcome of the high court review is not expected to be known until late 2024. The estimated impact on scheme liabilities if the court rules that the changes have not been appropriately applied is £5.4m (2022:£5.4m).

The group had no other contingent assets or liabilities at 31 March 2023 (2022: same).

27 �ost �alance Sheet Events

During 2022/23 a review looking at the long term viability of all our services concluded; this review started in 2019 but was interrupted by the pandemic. Upon completion of the review a number of di�cult decisions were taken by our Board of Trustees which were approved in late April 2023 and announced on the 2nd May 2023. The �rst decision was to sell ten of our care homes as going concerns; the second decision was to place MHAA into administration.

This has resulted in the following ad�ustment:

�roup 2023
£�000
Consolidated Statement of Financial Activities
Expenditure–Charitable activities–Exceptional Items 114,194
114,194
Consolidated Statement of Financial �osition
Tangible �xed assets 112,377
Debtors -
Creditors: amounts falling due within one year–Accruals 1,817
114,194
Compan�
2023
£�000
Consolidated Statement of Financial Activities
Expenditure–Charitable activities–Exceptional Items 112,595
112,595
Consolidated Statement of Financial �osition
Tangible �xed assets 82,593
Debtors 28,185
Creditors: amounts falling due within one year–Accruals 1,817
112,595

Report and Financial Statements 31 March 2023 91

©2023

MHA is the trading name of a group of companies.

Methodist Homes is a registered Charity in England & Wales (No.1083995) and Company limited by Guarantee (No. 4043124) with registered o�ce MHA, Epworth House, Stuart Street, Derby DE1 2EQ

MHA Auchlochan is a registered Scottish Charity (No. SC040155) and Company limited by Guarantee (No. SC352117) with registered o�ce Auchlochan House, New Trows Road, Lesmahagow, Lanarkshire ML11 0JS

01332 296200 enquiries@mha.org.uk mha.org.uk

Follo�us:

@yourMHA @yourMHA

�������������������