Evolve Housing + Support Report and Financial Statements Year ended 31 March 2022 Company number: 4796537 Registered Charity number: 1099051 Homes England registration number.. H4400 Evolve Housing + Support Report and Financial Statements for the year ended 31 March 2022 Contents Page: Directors, Executives and Advisers Directors, Report. InclLtding Strategic Report Statement of the System of Internal Controls 12 Statement of Directors, Responsibilities Independent Audilorfs Report 16 Siatomenl of Comprehensive Income 17 Statement of Financial Activities 18 Statement of Financial Position 19 Statement of Changes in Reserves 20 Statement of Cash Flows 21 Notes forming part of the financial statements Evolve Housing + Support Directors, Executives and Advisers Directors Paul Perkin Paul Infield Rachelle Beltran Auditor BDO LLP 55 Baker Sireel London W1U 7EU Chair Vice Chair (Appointed 24 June 20211 (Resigned 24 March 20221 Diana Coman Evonne Hudson Bukky McGlynn Simon McGraih Nilavra Mukerji (Appointed 24 June 20211 (Resigned 21 March 20221 (Appointed 24 June 20211 (Resigned 21 September 20221 IResigned 7 February 2022) Sollcitors Mark Rowe Isabel Sanchez David Shrimplon Vicky Wallace Winckworth SheTwood LLP Minerva House 5 Monlague Close London SE1 9BB {Resigned 26 October 2021) Ashfords LLP Ashford House Grenadier Road Exeter EX1 3LH Cornpany Secretary Jenny Slrudwck Registered offlce 16- 20 Kingston Road South Wimbledon London, SW19 1JZ Bankers HSBC Bank plc 139A North End Croydon CRO 1TN Audit Cornmitteg Mark Rowe David Shrimplon Diana Coman Evonne Hudson Rachelle Beltran Bukky M¢Glynn Vicky Wallace Chair IResigned 7 February 20221 Interim Chair (from 8 February 20221 Sanlander UK plc 100 Ludgale Hill London EC4M 7RE (Resigned 24 March 2022} (Resigned 21 March 20221 (Resigned 26 October 20211 Leadership Team Jeremy Gray Debra Ives Jenny Slrudwick Elspelh Hayde Pamela Newrllan Chief Executive Director of Operations Director of Corporate Services Director of People and Culture Deputy Director of Qperalions Evolve Housing + Support Dlrectors, Report for the year ended 31 March 2022 STRUCTURE, GOVERNANCE AND MANAGEMENT Evolve Housing + Support I"Evolve"l is a company limited by guarantee, a registered charity and a registered social landlord. It is governed by its Articles of Associalion. The governing body of the organisation is the Board, which comprises not less than seven and not more than twelve members. Board members are elected for a three year period and may be re-elected for two further Ihree year periods. However. once we have fully adopted the new NHF Code of Governance, only one additional lerm of Ihree years will be allowed. All members of the Board give their time voluntarily and receive no benefils from the organisation. Directors, liability insurance is arranged annually. A regular appraisal exercise is carried out for Board Members by the Chair. together with an annual skills audit. Bolh ol these allow gaps in the Board lo be idenlified, lo enable largeled recruilmenl. All members are given the opportunity to receive additional training. Current customers Slt on our Customer Scrutiny Panel. which reports regulsrly lo senior colleagues and the Board. A register is kept of the interests of Board members and specrfic declarations of interest are sought al every Board meeting. The main responsibility of the Board is lo formulate the strategic plans of the organisalion along with the budget and financial monitoring. 11 receives regular reports on all aspects of the work of the organisalion and meets formally al least quarterly. Away days are held regularly with the Chief Executive and senior managers to discuss and plan future strategy based around a comprehensive business plan. The Board delegates the main day to day decisions lo the Chief Executive and the Leadership Team. The Board has established and formally consliluled the Audit Committee as a sub-commillee of the Board, with specific terms of reference and funclions delegated by the Board and with Board tnembers representing the Board'5 interest on the committee. The Chief Execulive, the DireGlor of Operations and the Director of Corporate Services normally allend all the Audit Committee meetings, as do other senior managers as appropriate. The Board confirms that the organisalion complies with the regulatory frameworks and standards issued by ils regulators the Regulator of Social Housing and the Charity Commission. In addition the organisalion has adopted the National Housing Federation's INHFI Code of Governarn￿ 2015, and is working towards adopting the updated 2020 Code. The organisalion complied with the relevant requiremenls of these frameworks. including the Governance and Viability Standard, throughout the year under review, and continues lo do so. Evolve was incorporated as a company limited by guarantee on 12 June 2003. under the name'soulh London YMCA" It was registered as a charity with the Charity Commission on 19 August 2003 and as a social landlord with the Regulator of Social Hokjsing (formerly the Homes and Communities Agency) on 11 September 2003. OBJECTIVES AND ACTIVITIES Purposes and Aims The primary objects of Evolve are.. to provide, improve and manage houses or hostels providing residential accommodation arid associated amenities, f2cililies and services for people of all ages who are In need, hardship or distress by reason of their social, physical or economic circumstances., to relieve or assist in the relief of people of 311 ages who are in need, hardship or distress by reason of their social, physical or economic circumstances. Our aim is lo help children. young people and adults who are homeless or al iisk of homele55ness lo become independent and resilienl. We believe in building on people's strengths, aspiralions and goals lo help them break the cycle of homelessness. We offer a programme of support tailored lo meet people's individual needs, including housing, employment and skills training, mentoring and counselling. We work with young parents and children al risk of exclusion to build the skills and resilience that can help prevent homelessness. Our aims fully reflects the purposes that the organisalion was sel up to further. Evolve Housing + Support Directors, Report forthe year ended 31 March 2022 Vve review our aims, objectives and activities e8ch year. This review looks al what we have achieved and the outcomes of our woik. 11 looks al the success of each key activity and the benefits they have brought lo those groups of people we are sel up lo support. The review also helps us ensure our aims, objeclives and activities remain focused on our staled purposes. We refer lo the Charily Commission's general guidance on public benefit when reviewing our aims and objectives and in planning our future aclivilies. In particular, the Board considers how planned activities wi15 contribute lo the aims and objectives it has sel. How our activities deliver public benefit Our main activity is the provision of supported housing and those who benefit from our services are described below. Our charitable activities focus on the support of homeless people and those al risk of homelessness, with the aim of supporting them lo éevelop the skills alldlor insight needed lo live independently. The Directors have taken due regard of the Charity Commission guidance on public bènefit and have satisfied themselves that the charitable activities undertaken by the organisalion are for the furtherance ol ils charitable purposes and satisfy the requirements of public benefit. Who uses and benefits frorn our services? Whilst our objects are not geographically litniled, our funding streams mean that the services we provide are primarily lo the residents of the London Boroughs of Croydon. Lambeth. Lewisharn, Bromley, Merton, Sullon and the Royal Borough of Kensington and Chelsea. We plan to expand these SerV￿ceS into neighbouring boroughs as opporlunilies arise. Our core client group is homeless and vulnerable people of all ages. Our accommo(Jation-based services cover a broad range of customer groups. including young people al risk. teenage parents, care leavers. young families with no recourse lo public funds. single homeless adults, people with severe and enduring mental health needs and previously excluded rough sleepers with complex needs. Acce55 to our accommodalion-based services is managed via the local authority which funds the particular service. This process ensures that our services continue directly to meet the needs of the boroughs in which we work. During the year we have continued to provide our Work and Learning Servi￿ and our Health and Wellbeing service to deliver focussed support and training lo our customers. In addition lo our residential services we also run mentoring schemes for 11 10 15 year old children under- attaining or at risk of exclusion from school and a peer support service lo support severely disadvantaged people within the community lo overcome multiple barriers lo accessing training. volunteering and employment opportunities. Fundraisin9 Charity law requires charities lo make a statement regarding fundraising activities. The legislation defines fundraising as 'soliciling or otherwise procuring money or other property for charitable purposes.. Such amounts receivable are presented in these accounts in other operating incorne. We have a Fundraising Strategy and a Stakeholder Engagement Strategy, both approved by our Board. We do not work with any professional fundraisers. nor do we use cold calling or direct mail. We are registered with the Fundraising Regulator and comply with their code of practice. The day lo day management of all income generation is delegaleé lo the executive learn who are accountable lo the Directors. We h8ve received no complaints in relation to fundraising activities in the ye3r under review. Evolve Housing + Support Dlrectors, Report for the year ènded 31 March 2022 STRATEGIC REPORT ACHIEVEMENTS AND PERFORMANCE In June 2019, the Board approved our 2019-22 Business Plan. Our strategic objective is lo inspire our team lo create positive change, reach more people and sustain our future. As 8 result of the pandemic, we were unable to progress many of our plans, and in June 2021. the Board agreed to extend the term of the current plan lo 2023. This report gives a snapshot ot the many aehievemenls and improvements in service provision for our customers during the year lo 31 March 2022. The coronavirus pandemic continued lo affect operations for the entire year, with all efforts Con￿ntrated on keeping customers and colleagues safe and maintaining the financial security of the organisalion. The Directors acknowledge that the achievements of the year were only possible through the hard work of our colleagues arkd the commitment of our partners. incluéing the London Boroughs of Croydon, Lambelh. Lewisham, Bromley. Merton, Sullon and the Royal Borough of Kensington and Chelsea, Homes England. National Lollery Community Fund. Walcot Foundation, The Mayor of London's Rough Sleepers, Innovation Fund, Sl Giles Trust, Sir Waller Sl John's Educational Charity, European Social FLJnd, Greater London Authority, London Hoslels Association and many charitable Irusls, groups and individuals also continue lo support our work. Operations Al 31 March 2022, Evolve provided 598 beds of supported housing in the Londor) Boroughs of Croydon. Lambelh, Brotnley. Sutton and Merton, and the Royal Borough of Kensington and Chelsea. The support we ollgr williiii our accommodalion-based services is funded through local authority contracts. and we work to ensure that we are meeting the needs of our customers and thp strategic needs of our commissioners. Our teams are equipped lo work with and support the most vulnerable and complex people within the communities we serve and have the flexibi5ily lo be able lo change our service offering to meet new strategic needs if required. Health and Safety Building safely (and fire safety) continues lo be a core priority in our Business Plan and day lo day work. All our buildings have regular fire safely inspections by the London Fire Brigade and have expert fire risk assessments in place. We have invested in our fire safety Work and practice in order lo prepare for the Building Safely Bill. We completed thè remediation of ¢ladding at one property during the year. The cost of this work is very significant lin excess of £2.Sml and we are taking legal action against the developer lo recover these costs. Ensuring customers and colleagues were safe during 2021-22 Much of our focus in 2021-22 was Centred around easing of pandemic restrictions and returning lo normal business activities whilst at the same lime ensuring our customers and colleagues were safe. We refined, communicated and reviewed our infection control policies. During 2021 we repealeil our individual Covid risk assessments with all colleagues by line managers having structured reviews with each of their team lo discuss the impact of C,ovid on them both al work and al home. We also introduced M8nlal Health First Alder￿¢ with over 40 of our colleagues allending accredited training which will help them to support others when they are experiencing mental health challenges. We have reviewed colleagues, sick leave policy beyond the boundaries of our normal policy. Specifically, we paid full pay for all Covid related absence for an ei9hteen- month period, and we 8150 perfflanently increased our occupational sick pay for colleagues in their first year of employment to ensure that they do not suffer financial hardship due to staying away from work to reduce the spread of infection. Evolve Housing + Support Directors, Report for tha year ended 31 March 2022 Improving Quality In the 2021 customer survey, over811 customer satisfaction with Evolve services remained high al 86Vo. compared lo 88010 in 2020. In 2021, we began the process of becorning accredited by the Domestic Abuse HoLJsing Alliance lo improve our approach lo domestic abuse both for customers and staff. We now have customer and staff domestic abuse policies in place, and we have planned changes lo our customer case management syslem, so we can beller record and report domestic abuse cases to identify further improvements. We have been working lo improve our approach lo co-production and creating more meaningful opportunities for customers lo co-produce at Evolve. For the first year since the pandemic. we have customer auditors conducting parl of our currenl Servi￿ audits. We have developed our Co-production Strategy which details our plans lo embed co-production across the organisalion. Later this year, we aim lo increase customer involvement in policy review along with delivering co-production training to customers. We launched our Asset-based framework and best praclice How-To-Guide for staff working wtth cuslorners, these were all rolled out Ihiough a roadshow lo service staff al the start of 2022. Community Services Throughout the past year, the pandemic and its various lockdowns had a large impact on our customers and our ability lo run activities and events in the same way as pre-pandemic. We were unable to have volunteers in the same way in services, so we instead tailored our way of working lo the needs of each service, this approach has seen a gradual increase in those volunteering with us. 11 also meant that we continued to be flexible and responsive to how we delivered services from the communities team. Our work and learning programme for young people conlillued in 2021122 through a mix of unrestricted funds and a grant from the London Hostels Association which continued the programme until November 2021. In January 2022, we were successful in a conlinualion grant frorll the London Hostels Association, which will ensure funding lill September 2022. We have worked with 288 young people during 2021, with 184 of these having direct interaction with the coordinator. The other 104 young people engaged in activities 01 events that supported their work and learning goals. We have delivered an online entrepreneurship course and 12 woikshops. We have developed effective partnerships with DWPS across all boroughs and business leaders across London. In 2022. we continued lo work with lan Willard. who is funded through Ihe DWP in Croydon lo work with young people and has 44 young people engaged across 2 of our services. Our counselling programme is a swift access counselling service provided for the customers of our accommodalion-based services by volunteer counsellors. The service was financially supported by unreslricled fundraising money throughout 2021 and was embedded wilhin the Health and Wellbeing Service. The service is delivered by trainee counsellors enabling Ihem to achieve their praclice hours and full qualification. We received 147 referrals and conducted 109 assgssments within 14 days of referral being received, 77 went onlo complete counselling, with others being supported by the Psychological Wellbeing team. We continued lo deliver counselling to external Peer Circles and Thames Reach customers. Face-lo- face counselling was ieinslaled in March 2021, however many of our customers have enjoyed a mix of on- line and face lo fa￿ sessions. A total of 372 sessions were delivered during ihe year. Peer Circles, supported by the National Loltery Community Fund and ELJropean Social Fund, sUPPOrts severely di53dvanlaged people within the cownmunilies ol South London lo overcome multiple barriers lo accessing training, volunteering and employrnenl opportunities. The project is in partnership with Sl Giles Trust and has been funded until June 2022. This partnership has seen an increase in resources funded by them. These include, in addition to the coordinator, two Parl time trainees, both of whom come with lived expeTience. In 2021122 we worked with 127 customers in Ihis prog12mme and are on track lo meet our largels. The ¢onlinued pandemic meant we were unable to work with many people face-to-face and this saw a drop in numbers, especially new sign ups, however when restrictions were lifted, face to face work was restarted and Peers began coming back into the services to work with customers. Some of these peers wenl on lo volunteer within our local services. Evolve Housing + Support Directors, Report for the year ended 31 March 2022 The Health and Wellbeing pro9ramme, funded by the National Lottery Community Fund, compleled ils 3-year programme and was then funded internally by us for a 5 month period. We were then Successful in gaining a fLJrther 3-year funding grant from the National Lollery Community Fund beginning in February 2022. During the pandemic, we saw an increase in referrals for those suffering i501alion and ran groLJPS and activities where we could build the resilience and slrenglhs of our customers. Workshops began again and we adapted to deliver a range of services through on-line and face lo face methods. Many of our customers preferred on- line and Ihis saw produclivily grow and more customers seen. We worked wilh a lolal of 652 customers during the 20.18-202.1 full proSecl period. This included 631 one-lo-orie inlervenlions and 42b drop ln sessions. New ways of delivering Ih8rapy wfirA fnrmAd ind inr,liidpd I Ifiing gilming ¢?nd othnr Ip.rhnology to r01L ch CU•JlomcrJ. In 2021 we developed therapy using virtual reality and continued lo see positive outcomes Ihroughoul 2022. The Psychological Wellbeing Therapists conlinue lo be flexible lo the needs of each service during the pandemlc. The Horizons programme continued Ihroughout 2021122 and was fvnded internally through unfeslricted funds. We continued lo support young people in 3 schools in Lambelh and Lewisham who were al risk of exclusion or disengagement. We worked wilh over 100 young people through a mixture of one-lo-one Thentoring. support with examination preparation and group work. Students were supported through lockdowns and the coordinator worked with both the parents and teachers lo provide support. In November 2021. we ran OLJr second Career Change programme lo attract new colleagues from outside the housing sector. Eight new colleagues undertook a four-week initial training programme and began in services in December 2021. Feedback from colleagues and services has been extremely positive and we are eveloping an evaluation and conlinualion programme lo build on this success. We worked with a secondee from the government fast track scheme lo eva14Jale and develop this programme further. In late 2021. we launched the CD-produclion strategy. and this was given board approval in January 2022. We further developed the Toqelher with Tenants action plan for working with customers and the two documents are now linked with a delivery plan. FINANCIAL REVIEW The Directors present the report and financial slalemenls for the year ended 31 March 2022. The slalements are presented according lo the requirements of the Statement of Recommended Practice ISORP} Accounting by Registered Social Landlords and FRS102. The key financial results for the year are shown below. Turnover for the year amounted lo £13,168k compared with £12,81 Sk for the year ended 31 March 2021. A deficit of £2,113k was recorded for the year, compared lo a surplus of £228k in the previous ye8r. Adjusting for cladding remediation costs and legal fees in relation lo the associated liligalion. a surplus of £539k was recorded on normal operations, comparecs lo a surplus of £1,167k in the previous year. Interest payable, less receivable, was £123k for the yeai Compared with £132k for the previous year. During the year lo 31 March 2022 we continued our investment in fire safety and building m3inlen8nce. Void losses are higher than budget bul ¢onlinu8d light control over costs and a reforecasl al Ihe half year enabled us lo repriorilise expenditure and achieve a salisfaclory result on core activities for the year. During the year. we completed the cladding remediation on one of our buildings, work which was required due lo poor and unsafe inslallalion. Tolal remediation costs were £2.75m, of which £2.14m were incurred in the year under review. We are taking legal action against the developer of that building and we have incurred significant legal costs in the year1£512kl. The matter seems likely lo go to court, with a dale for the hearing in November 2023. These exceptional costs resulted in an oveiall deficit foi the year. Evolve Housing + Support Directors. Report for the year ended 31 March 2022 The coronavirus pandemic continued lo affect our operations. Whilst our primary income sources Irenl and grants for support) were largely unaffected, we continued to experience increased staff costs, as colleague absence had lo be covered wilh agency staff. Going concern We carry out stress lesling on our budget projections and prepare seven year forecasts lo mo(Jel various scenarios. Gompliance with bank covenants is monitored quarterly and reported lo the Audit Commillee. After reviewing the Annual Budget, the Business and Corporate Plans, seven-year fore¢asls, revised budgets and cash Ilow taking in to account the financial effects of the p2ndemi¢, the Board considers that Ihe organisalion has adequate resources to continue in operational existence for the foreseeable fulure. Accordingly, we continue lo adopt the going concern basis in preparing the accounts. PLANS FOR THE FUTURE Our 2019-2022 Business Plan was approved by the Board al Iheir meeting in June 2019. The plan sets out our ambition and slralegic objectives for the Ihree-year period. Al their meeting in March 2021, the BoaTd a9reed lo extend the period of the current business plan by one year, lo 2023, to acknowledge that we weTe unable lo work on some of our strategic objectives due lo the pandemic. From this plan, we developed our corporate plan for Ihe coming year. Our plan for 2021122 was agreed in March 2021. Our key objectives for the 2021122 year were= Our ongoing response lo the pandemic. with a focus on customer safety and colleague wellbeing: Our strategy and work on equality, diversty and inclusion. Cladding remediation and building safely-, To achieve these objective5. we will strive lo= Inspire our team- support colleagues to miligale Ihe impact of the pandemic on their wellbeing.. review recruitment and induction pro￿$$eS lo drive inclusivity and colleague engagemer51', Analyse information form the race dialogue lislening groups and staff survey and develop an action plan. Create positive change.. Support customers lo mitigate the effects of the pandemic., Complete remediation of cladding and plan remaining programme of major fire safely works., Complete firsl year of plan lo irnplement Psychologically Informed Environments al all services. Reach more peoplo: Inueas8 engagement rates across a wide range of social media plattorms; Continue discussions on a new development., Develop strategic partnerships. Sustain our future- Respond lo the financial impact of the pandemic through budgel8ry management Pursue cladding legal a¢lion lo a suc¢essfLJI conclusion., Improve and implement collaboration tool lo enhance new ways of working. The pandemic will have long lasting effects on our operation5. Where appropriate, we have introduced agile working policies to increase the flexibility for our colleagues lo work from various locations, including Iheir hornes. We have maintained and slrenglheneé our infe¢lion Control policies and procedures lo ensure safe environments for customers and colleagues. We have adhered lo Government guidance throughout the crisis and will Continue to adapt our operations as the situation changes. Lambelh Council have announced a major restructuring of their homele55 young people's pathway. This will have a significant effect on our operations, and as a result our long term strategy is under review. Evolve Housing + Support Directors. Report for the year ended 31 March 2022 Risk and Internal Control In order lo observe best practice and ensure that the highest form of good govemance is followed, parlicularly in relation lo the management of risk, internal auditor5 are engaged to carry out regular reviews. The Audit Committee have reviewed the internal audit arrangements and agreed lo appoint specialist providers appropriate lo the work required, wilh a view lo having regular specialist reviews. Pollcles and procedures have been put In place lo ensure good governance and these are regularly reviewed and added lo as rpqiiirpd l ikp.wi%A, rlp.txilp.d FTrrnr.p.di Irp.s r.nvp.rino all 4%pp.r.Is nf finanr.p. rellled syslpms and rewrting have been developed lo supplement the organisalion's financial regulations. The Board is responsible for safeguarding the assets of the organisalion and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Board has considered the key rssk5 facing the organisalion. Future Government's reforms to the welfare system retnain a risk lo our main revenue stream. Rental income provides the major SOLJr¢e of income lo the organisalion and our customers rely on benefits lo pay their rent. A major area of risk relates lo Supporting People funding, on which the organisalion also relies heavily, particularly with regard lo the arran9ements for competitive tendering Ihal all Local Authorities now follow. The risks inherent with this funding slream are addressed in a number of ways. We ensure that the quality of all our services is mainlained lo a very high standard and that all lender submissions are keenly priced. Good relations are maintained with local aulhorilies, and we work with Council Colleagues lo ensure the continued strategic relevance of the organisalion's services lo the Councils, ongoing strategies. In addition, colleagues ensure that the Councils are kept fully briefed on the organisalion's services and the importance of maintaining funding. We are also working to widen our income streams and thus reduce our reliance on this form of local authority funding. The organisalion's Slalement of the System of Internal Controls is set out on page 11. VALUE FOR MONEY Board acknowledgement of responsibility The Board accepts ils responsibilily for knowing how our assets are used lo further our aims and purposes. The Board and senior management team regularly review the organis31ion's development and investment slffilegies wilh the aim of ensuring that we continue lo make appropriate use of our assets in order lo achieve further growth. A key airll for the Board is lo demonslrale that we are maximising the return on our assets and inveslmenls, in line wilh our risk appelile, and achieving value for Tnoney. Value for Mongy at Evolve Our slrale9i¢ obieclives aim to deliver our charitable pvrpose. They Iherefore reflect the value we are seeking to maximise in Ihe context of value for money. To measure OLtr success, we sel key performance indicators IKPlsl 2nd largeis against our objectives. Our key strategic objectives remain unchanged and Can be summarised in one cohesive slalemenl of inlenl.. Inspire our leam lo create p051tive change, reach more people and sustain our future. Evolve Housing + Support Directors, Report forthe year Ènded 31 March 2022 Our strategic objectives and key priorities are summarised below.. Straleoic Obieclive 2021122 key priorities Respond lo the impact of the pandemic 2nd manage colleague absences Respond lo the impact of the pandemlc on customers Seek additional funding to ensure services continue uninlerruDled Measure Inspire our team KPI absence days lost lo sickness KPI Q/D of customers with slaying safe plans Funds raised increased costs KPIS Q/0 lost from voids and arreais Create positive chanoe Reach more people compared lo Sustain our future Manage void losses and arrears We reporl here on our organisalional metrics and largels and the RSH metrics as required by the Vfm standard. Median figures are taken frorn the Smaller Providers, Benchmarking Group ISPBMI data for our peer group. The peer group is comprised of 25 smalleT housing associations primarily pioviding supporte accommodation across the country. However, half the group also provide general needs housing which operates on a lower cost base and higher margins. RSH Metrlc 2019120 2020121 2021122 Actual 2021122 Target SPBM 2021122 Median £13.9 2022123 Target Headline social housing cost per unit i£'oooi EBITDA interest cover10A1 Operating Margin.. social housing lettings IO/ol Ooeralinq maroin= oroanisalion ly.) Return on ca ital em ed l°/ol Gearinq I.￿) Reinvestment o/.) New SUPDI delivered £12.3 £14.9 £14.3 £14.5 £15.2 455% 166¥0 -1128¥v 414P/o 913Q/o 445% 3.52°/o 2.19° 1.590 3.80/0 2.730A 1.730/. 1.260 -1.40/0 1.99Qkn_ -14.23¥. 2.44Yv 1.77% 1.28¥0 100/0 2Yo 14.74° 8.7701. 3.30/. 0.60% 0.360 0.290 5°/0 10.50 3.44Q/o Evolve Metric 2019120 2020121 2021122 Actual 2021122 Target SPBM 2021122 Median 2022123 Target Colleaoue absences IwDrkinq davs lost) Cuslorners with slayinq safe plans Additional funds raised l£'OOOI Voidlosses 10/0 Arrears 11.2 99.50 NIA 5.29/D 12.7 tooo £25k 3°/0 2.22% £202k 4.99/0 3.96¥D £5k 5.4.10 3.14Yo £125k 3/0 2.22 /0 NIA 6.180 Our results for the year were adversely affected by the cost of cladding remediation at one of our services. The lolal cosl of remedi21ion was £2.75m, £2.14m of which was incurred in 2021122. We are taking legal action against the developer of the building, a5 the cladding needed lo be replaced due lo faulty inslallalion. Legal ¢osls to dale are £970k, of which £497K was incurred in 2021122. Medialion has failed and a court dale has been sel for Novernber 2023. Further significant legal costs will be incurred in 2022123 and 2023124 unless a selllemenl is reached. Our headline social hoLJsing cost per unit are high, although much closer lo the peer gTOUP median, which has risen significantly this year. This reflects our hard work lo keep cost increases as low as possible, whilst maintaining the quality of our seivice5. Many of our customers have complex needs and as a specialist supported housing provider it is lo be expected th81 our service charge costs will be relatively high because of the special additional services we need lo provide, including higher staffing levels, greater security and safety equipment, elc. We continue lo spend significant sums on fire Safely work, which together with slalic funding from our commissioning partners puts pressure on our marglns. Evolve Housing + Support Directors, Report for the year ended 31 March 2022 Discussions regarding our development plans continued with a parlnei local aulhorily. However, we are unable lo progress these plans whilst the legal case is on-going. We continue lo pay down our bank loans. deliberately allowing gearing lo fall, in ordei lo increase our bO￿aW1ng capacity for future developments. More information on value for money, including details of our social value, can be found in our full Vfm review and on our websile. RF8FRVF.S POLICY The Directors believe Ihal a general re5eTve iepresenling between three and six fnonlhs. unreslricled expenditure should be maintained lo allow the organi5alion to be managed efficiently. There is a need lo match variable income with f5xed commitments and the nature of the reserves and lo provide a buffer for uninlerrupled services. This level of reserves would provide sufficientfunds for the maintenance of the current activities of the organisalion in the event of a significant drop in funding and also provide lime to allow the Directors lo consider changes in activities or new sources of funding. During the year, our lolal reserves decreased from £13.273k to £11,161 k. The majority of these reserves are held as fixed assets and, as such, could not be readily converted to cash. Free reserves, defined as those which could be freely spent on our charitable objects land excluding restricted funds). amount lo £1.24m, representing approximately 1 month of expendilure12021.. £3.34m. represerbting 3 months of expendilurel. The significant expenditure on cladding remediation and legal costs, and the re5ulling loss for the year, have depleted our reserves. However. we maintain a positive cash flow and generate a surplus on undertying operating activities. PROVISION OF INFORMATION TO AUDITOR All of the current board members have taken all the steps that they ought to have taken lo make themselves aware of any information needed by the organisation's auditors for the purposes of their audit arnd lo establish that the auditors are aware of that information. The directors are not aware of any relevant audil information of which the auditors are unaware. BY ORDER OF THE BOARD The Directors, Report including the Stralegic Report was approved by the Board on 22 Seplember 2022 and signed on ils behalf by.. Jenny Slrudwick (Company Secretary} 10 Evolve Housing + Support Statement of the System of Internal Controls The Board is al the centre of governance and is responsible, in particular, for ensuring that the organisation operales effectively and achieves ils objectives. The Board acknowledges ils ultimate responsibility for ensuring that the organisalion has in place a sound system of internal controls th31 are appropriate lo the various business environments in which it operates. These controls focus on the significant risks that Ihrealen the organisalion's ability to meet ils objectives and provide reasonable assurance with respect lo.. the reliability of key information and performance indicators used within the organisalion or for publication- the maintenance of proper records-, the safeguardino of assets against unaulhorised use or disposition", 2nd the organisalion's compliance with relevant laws and regulations. The Board is confident that procedures are in place that effectively identify all risks that might prevent the organisalion achieving ils obje¢lives and which manage such risks and miligale their effects. The organisalion has managernenl arrangements, resources, skills and systems that are appropriate lo the circumstances, scale and scope of ils operations and ensure that its activities are backed by proper systems of assurance for internal control. The Board maintains a sound system of internal controls 2nd conducts annual reviews of the effectiveness of the system. The review covers the whole range of controls induding financial, operational and compliance controls and risk m8nagemenl. The key steps that the Board takes are lo= idenlifylreview the organisation's business objectives, the possible opportunities and the risks or threats lo achieving those objectives.. formlreview the organisalion's frarnework for managing the identified risks,. and identify how the Board is lo obtain assuran¢8 that the risk management polictes adopted are adequate and operating effectively. Assurance is obtained by.. the identification and evaluation of applicable risks., the design of a system of controls., and the operation of those controls. The organisation's risk management and risk idenlificalion activities provide assurance that Ihe organisalion is focusing on and addressing the key risks that threaten the attainment of the organisation's business objectives. Particular attention is paid lo how the organisalion's risk profile is changing over time. Such activities include the Leadership Team reviewing key risks al their regular meetings. Members of the Leadership Team regularly discuss these risks with service managers and their teams to ensure their full involvement in the risk management process. The Board recognises that performance indicators have an important role in assurance by allowing the Board and the Audit Committee lo assess whether the organisation is meeting its objectives. Al Board meeting5 key performance indicators are reported on regularly. Evolve Housing + Support Stalement of Directors. Responsibilitiès The Directors {who are also the trustees of Evolve Housing + Support) are responsible for preparing the slralegic report. annual report and the financial statements in accordance with applicable law and regulations. CDmpany law and social housing legislalion requires Ihe board lo prepare financial slalernenls for each financial year in accordance with United Kingdom Generally AcGepled Ac¢ounling Practice (United Kingdom Accounting Standards and applicable lawl. Under company law, Ihe Board musl not approve the financial slatemenls unless they are satisfied that they give a true and fair view of the slal8 of affairs of the organisalion and of the 5tsrplus or deflcll of the organlsallon for that period. In preparing these financial stalemenls. the Board are required lo.. select suitable accounting policies ané then apply thern consistently.. make judgements and 8ccounling eslimales that are reasonable and prudent., slate whether applicable UK Accounting Standards have been followed and the Statement of Recommended Practice.. Accounting by Registered Providers of Social Housing 2018. subject to any material departures disclosed and explained in the financial slalemenls.. and prepare the financial statements on the going concern basis unless Il is inappropriate to presume Ihal the charitable company will continue in business. The Board is responsible for keeping adequate accounting records that are sufficient lo show and explain the organisalion's Iransactions and disclose with reasonable accuracy al any lime the financial position of the organisalion and enable them lo ensure that the financial statements comply with the Companies Act 2006. the Housing and Regeneration Act 2008 and the Accounting Direction lor Private Registered Providers of Social Housing 2019. 11 is also responsible for safeguarding the assets of the organisalion and hence for taking reasonable steps for Ihe prevention and detection of fraud and other irregularities. The board members are responsible for ensuring that the report of the board is prepared in accordance with the Statement of Recommended Practice.. Accounting by registered social housing providers 2018. Financial slalemenls are published on Ihe website in accordance with legislation in the United Kingdom governing Ihe preparation and dissemination of financial slalemenls. which may vary from legislatior) in other jurisdictions. The rna1ntenan￿ and integrity of Ihe website is the responsibility of the board. Board responsibility also extends lo the ongoing integrity of the financial slalemenls contained therein. 12 Independent Auditor's Report to the Members of Evolve Housing + Support Opinion on the financial statements In our opinion, the financial slalemenls.. give a true and fair view of the slate of the Organisalion's affairs as a131 March 2022 and of the Organisalion's incoming resources and applic31ion of resources, including ils income and expenditure. for the year then ended., have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice., and have been properly prepared in accordance wilh the requirements of the Companies Act 2006, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2019. Vve have audited the financial statements of Evolve Housing + Support I'the Organisation") for the year ended 31 March 2022 which comprise the slalemenl of comprehensive income, the statement of financial aclivilies. the statement of financial position, the statement of changes in reserves, the cash flow slalemenl and notes lo the financial stalemenls, including a summary of significant a¢counling policies. The financial reporling framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 Tha Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Praclicel. Basis for opinion We conducted our audit in accordance with International Standards on Auditing IUKI I'ISAS IUKI.) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. Vve believe that the audit evidence we have obtained is suffi¢ient and appropriate lo provide a basis for our opinion. Independence We remain independenl of the Organisalion in accordance with the ethical requirements that are relevant lo our audit of the financial slalements in the UK, including the FRC'S Ethical Standard. and we have fulfilled our other ethical responsibilities in accordance with these requirements. Conclusions relating to going concern In auditing the financial slalemenls, we have concluded that the board members. use of the going concern basis of a¢counting IF) the preparation of the financial statements is appropriate. Based on the work we have performed, we have not identified any material Un￿rtaInlieS relating lo events or conditions that, individually or collectively, may cast significant doubl on the Organisalion's ability lo continue as a going concern for a period of al least twelve months from when the financial statements are aulhorised for issue. Our responsibilities and the responsibilities of the board with respect lo going concern are described in the relevant sections of this report. Othèr information The board are responsible for the other information. The other information comprises the information inclLJded in the annual report, other than the financial stalemenls and our aucjilorfs report Ihereon. Our opinion on the financial ststemenls does not cover the other information and we do not express any form of assurance conclusion Ihereon. Our responsibility is lo read the other information including the Strategic Report, Statement of Ihe Systems of Internal Controls and, in doing so, consider whether Ihe other information is materially inconsistent with the financial slalemenls or our knowledge obtained in the audit or otherwise appears lo be materially misstated. If we identify such material inconsistencies or apparent material misstatemenls, we are required lo determine whether there is a material misslalement in the financial slalements or a material misslalemenl of the other information. If, based on the work we have performed, we conclude that there is a material misslalement of this other information we are required lo reporl that fact. We have nothing lo reporl in this regard. 13 Independent Auditor's Report to the Members of Evolve Housing + Support Other Companies Act 2006 reporting In our opinion, based on the work undertaken in the course of the audit-. the information given in the Strategic report and the Directors. Report for the financial year for which the financ121 statements are prepared is consislenl with the financial slatemenls", and the Strategic report and the Directors, Reporl have been prepared in accordance with applicable legal requirements. In the liqht of the knowledqe and underslandinq of the Orqanisalion and ils environmenl obtained in the course of the audit. we have not idenlified material misstatements in the Strategic report and Ihe Directors. Report. We have nothing lo report in respect of the following mallers in relation lo which the Companies Act 2006 requires us to report lo you if, in our opinion., adequale accounting Tecords have not been kept by the Organisalion, or returns adequate for our audit have not been received from branches not visited by us,. or the Organisalion financial slalemenls are not in agreement with the accounting records and returns.. or rtain disclosures of board directors. remuneration specrfied by law are not made., or we have not received all the information and explanations we require for our audil., or Responsibilities of the Directors As explained more fully in the Directors. responsibilities statement sel out on page 12, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial s121emenls that are free from material misslatemenl. whelher due to fraud or error. In preparing the financial slalemenls, the Directors are responsible lor Jssetsbiiig Ilie Ory¢JlliSTganis8tion's audiior for the audit of the annu81 accounts 33.100 31.220 fees foT non-audil services Defined Gontribulion pension cost 178,018 181,368 10 Employees 2022 2021 Staff costs lincluding Leadership T88ml consist of: Wages and salaries Social security costs Cost of defined cOntribut￿n scheme 5,607,250 478,2S7 178,018 5.908.442 508.494 181.368 Total Staff costs 6,263,525 6.598.304 Included in staff ctssts is £19,892 redundancy costs paid.12021.. £nil l. Thp. ave.ragp nurnber of employees (including the Leadership Team) during th6 yèar, based on hg8dcounl. was as follows.. 2022 Number 2021 Number Administrdlion Housing 8nd Support Charitable projects 26 198 17$ 210 233 30 Evolve Housing + Support Note5 forming part of the financial statements for the year ended 31 March 2022 Icontinued) Diredors, and senlor execulives, remuneration The D1￿ClO[S land members of thè Board} are shown on pa9e 1. Senior executives a￿ the Chief ExecutlV8 and the Le3clership TearN as disclosed on page 1. 2022 2021 Leadership Team emoluments 447,691 402.988 Contribution5 to money purchase pen&on schemes 42,933 39,954 490,624 442.942 None of the members of the Board recèivèd èny emoluments from the ofganisalion12021.' nill. The total arnount payable tothe Chief Executive. who was also the highest paid dir8ctorin respect ofemolumenls. w8$ £100,780 12021- £98,450). Pension contributions of £10,07812021- £ 9.7851 were made to a money purchase scheme on his behalf. As a member of the organisation's p8rsonal pension plan, the pension enliuement of the Chief Executive is idenlioal to those of othgr mernbors. During th8 y8aT, contributions were paid inlo the organisatton's defined contribution p8nsion scheme on behalf of 6 senior executivg512021 - 61. The remuneratx)n lexeluding pension contributions) paid to staff lincluding L8adership Team) eaming over £60,000.. 2022 Number 2021 Number £60.000- £69,999 £70.000- £79,999 £80.000- £89,999 £90.000- £99,999 £100,000 - £109.999 The total of pension contributions paid on behalf members of st8ff earning over £60,000 was £38,29212021: £30,900). One ditector took unpaid sabbatir31 leave during the year. 31 Evolve Housing + Support Notes forming part of Ihe financial statèments for the year ended 31 March 2022 Icontinuedl 12 Profit on disposal of tangible fixed assets 2022 2021 Houslng Propert￿$.. Net profit on disposal Other fixed assets.. Net prDfit on disposal 1,000 192 Profit on disposal of tangible fixed assets 192 13 Development ¢osts wrltten off 2022 2021 cumul8led development costs writt8n off 6,000 In September 2020 il became clear thal, despite numerous revisions lo our plans at th8 Council's request. Ihe planning departrnent was not going lo support our plans to develop up to 60 units of affordab18 rnove on accommodation in Croydon. As a result, the accumulated cosls We￿ written off in the 2020 accounts. Further costs of £6.000 not captured in the original write off were written off in 2021. The writ&off of these costs, and the abandonment of thè plans. did not affecl our core business. 14 Interest receivable and similar income 2022 2021 Bank Interest receivable 13,982 19,904 15 Interest payable and financing costs 2022 2021 Interest payable on bank loans and overdralts Bank oharges 130,426 7,046 141,585 9.989 137.472 151,574 32 Evolve Housing + Support Notes forming part of the financial statements for the year ended 31 March 2022 (continued} 16 Tangible fixed assets- hotJ$ing properties Long Leasehold Land & Bulldlngs Freehold Land & Bulldings Tolal Land & Buildings Cosl or valualion.. At 1 April 2021 Additions Dlsposals 35,682.755 1,107.651 36.790.406 At 31 Mar¢h 2022 35,682.755 1,107.651 36,790,406 Depreo3tion.' At 1 April 2021 Charge for the year Disposals 9.005.661 857.686 473.582 17,255 9,479,243 874,941 At 31 March 2022 9.863,347 490,837 10,354,184 Net book value At 31 March 2022 25.819,408 618.814 26.436.222 Nèt book value at 31 March 2021 26,677,094 634,069 27,311,163 2022 2021 Vvorks lo properties Improvements to existing properties capit31ised Major repairs expenditure charged to Statement of coMp￿henS￿e Income 542,143 1,457,375 3.082.103 3,082,103 1.999,518 Capilal grant- Housing Properiies 20,059,486 20,059,486 Impalment The org3nisation considers £26,436.222 to represent separate cash generating units ICGU'S) when assessiTrJ for imp3irrn8nt in accordance with the requirements ol FRS102 and SORP 2018. During the year, we completed the retnoval and replacement of cladding on one of our buildings. the cost of which is included in the major rep8irs expendilure shown above. Properties held for sècurtty Property with a nel book value of £13,663,221 was pledged as security al 31 March 202212021 £14,102,131). 33 Evolve Housing + Support Notes forming part of the finan¢lal statements for the year ended 31 March 2022 Icontinuedl 17 Other tangible fixed assets Non-HousSng Freehold Land and Buildings Flxtures, fittlngs, equlpment and vehic18S Total other Fixed assgts CILs1 ￿ V￿lUdI1011 At 1 April 2021 Additions Disposals 2,816,780 1,324,293 4,141,073 At 31 March 2022 2,816.780 1,324,293 4,141,073 DepreGialion At 1 April 2021 Charge for year Disposals At 31 March 2022 515,998 39.733 1.242,654 33,885 1,758,652 73,fj18 555,731 1.276,539 1,832,270 Net book value At 31 March 2022 2,261,049 47,754 2,308,803 At 31 March 2021 2,300.782 81,639 2.382.421 18 Debtors 2022 2021 Receivable withln one year Rent and s8rvic8 charge arrears Less.. Provision for doubttul debts 992,477 1403,8531 588,624 1.126,409 1472,4051 654,004 Trade deblors Other debtors Prepayments and accrued income 46,080 186,260 249,083 270,828 116,436 74,483 1,070,047 1,115,751 19 Creditors: amounts falling due within one year 2022 2021 Loans and borrowings (Notè 211 Trade creditors T8xation and social security Other creditors Deferred capital grant (Note 201 Accruals arid deferred incoTne 546.371 989,876 121.990 183,863 401,190 1,117,974 537.960 745,826 128,263 360,380 401,190 1,018,081 3,361,264 3,191,700 The bank loans a￿ repayable in instalments over 10- 15 years. The bank loans are secured by fixed charges over the freehold properti8s at stockwell Road, Alexandra Hou58, Ingram Court, Burton-white House and Kingston Road. The loan5 bear interest at variable rates calculated al a margin above the Bas8 R8te. One loan has an interest rate of 3% fixed over the tem) of the loan. Evolve Housing + Support Notes fom)ing part of the finan¢ial statements for the year ended 31 March 2022 (continued) 20 Credltors.. amounts falllng due after more than one year 2022 2021 Loans and borrowings INole 221 Deferred capital grant INote 21 4,297,203 14,642,586 4,841,316 15,043,776 18,939,789 19.885,092 21 Deferred capital grants 2022 2021 At 1 April Grants received during the yezr Released lo income during the year 15,444,965 15.846,155 {401,190) {401.1WI At 31 March 15,043.775 15,444,965 Total value of gr8nis received 20,059,486 20.059,486 22 Loans and borrowings Maturity of debt-. 2022 2021 In one year 0118s5, or on demand In morè than one year but not more than years In more than Nvo years bul not more than five ye8rs In mor8 th8n five years 546,371 561,015 537,960 551.763 1,774,911 1,961,276 1,741,757 2,547,796 4,843,573 5,379276 23 Penslons Evolve provides a Defined Contribution Pènsion Scheme that is open lo all employees. 24 Operatlng leases The organi5ation had rninirnum leas8 paymenl5 under non-cancellable operating leases 85 set out below: Amounts payable as Lessee 2022 2021 Land and buildings Not later than 1 ye3r Within 1 2 years Wilhin 2- 5 years 82.600 47,918 52,800 31.500 8,600 91,200 132,218 25 Related party disclosures The uliimate controlling party of the organisation is the Board of Evolve Housing + Support. 35