2021-03-31-accounts - Empowering People Inspiring Communities Limited

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Empowering People Inspiring Communities Limited Financial statements

For the year ended 31 March 2021

Charity Number: 1118644 Company Number: 3333405 Regulator of Social Housing Number: L4167

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Contents

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Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021

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Chair’s Foreword

COVID 19 must be a key thought when considering the outcomes of the last year for EPIC, COVID 19 has clearly had a profound impact on us, and has touched all of us in different ways. I am pleased to say that EPIC managed its way through the major challenges and minimised the impact to tenants. With a successful move to home working, EPIC staff were able to provide effective support to our tenants. In line with the rest of the sector, there was a direct impact on tenants as key areas of employment were forced to lockdown due to the impact of COVID 19 controls, resulting in an increase in Universal Credit claims. Being small and retaining close links with our community, we were able to keep repairs delays to a minimum, with the key issues seen as delays in component replacement due to restricted access to homes.

Performance wise it was a good year despite the impact of COVID 19, voids fell to be less than anticipated and before adjustment for the pension a health surplus of £1.26m was made. A further 12 homes for social rent were also acquired attracting grant funding of over £540k.

Following a successful bidding exercise during the year, EPIC took over the management of 169 new homes from previous landlord, Bromford. Bromford decided to undertake stock rationalisation with the aim of improving the quality of services to tenants by transfer to a “better placed” landlord, together with improving the efficiency of services through local management. I am pleased to let you know that these tenants joined EPIC in May 2021. Since the financial year end, there has been ongoing regulatory engagement from the Regulator of Social Housing, resulting in the Regulator of Social Housing placing EPIC on the grading under review listing in June 2021.

Since then the Regulator of Social Housing has undertaken a review of a number of matters and has decided on the following outcomes. In the first instance a Regulatory Judgement reflecting downgrading to Governance: G3 (non-compliant) and Viability: V2 (compliant) has been issued. In addition, a Regulatory Notice has been issued, which indicates that EPIC has failed to meet the requirements of the Home Standard due to not carrying out appropriate fire safety remedial actions when it should have, and did not complete all appropriate checks to meet its statutory Health and Safety responsibilities.

Clearly this is a very disappointing outcome to the review for EPIC, and the Board recognise that these are issues of serious regulatory concern and are determined to work with our Interim CEO, Susan Kellock, and her management team to address them as soon as is practicable.

Please be assured that tenants’ safety is our paramount concern and swift action has been taken to begin to resolve the weaknesses identified. A programme of fire alarm installation is in place to enable a simultaneous evacuation in the event of fire within any of the identified properties. In addition a programme of work has been contracted to replace the front doors of properties together with improving windows in communal areas. A further programme of loft compartmentalisation will follow in due course enabling the return to a stay put fire policy, normal policy for properties of this nature.

EPIC and it’s Board will continue to work closely with the Regulator in addressing all these matters so that we can return to a position of regulatory compliance as soon as practicably possible.

Finally, and most importantly the Board and myself recognise the challenges the EPIC staff have had and thank them for their significant efforts over the last year, it is appreciated.

Stephen Funnell

Chair

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FinancialEmpoweringStatementsPeople Inspiringfor the year Communities ended 31 LimitedMarch 2021 epi:: 1) Board Members, Executive Officers, Company Information

aeeere		CET.	Gaerne Membership	BoardMeeting	MeetingAttendance	Attendance
				Attended No.	Total No.	% attendance
S Funnell	Chair	Apr 17	ARC &OC	6	7	86%
P Lunio	Vice Chair	Sep 17	OC	7	7	100%
A Fury		Sep 12/Jun21	ARC (Chair)	2	7	29%
A Stone		Jun 16	OC	Fi	7	100%
V Robb		Sep 18/Jun21_	-	5	=	71%
L Dulson		Sep 19/Jun21i-—-		5	7	71%
A Milroy		Oct 18	OC (Chair)	7	4	100%
J Powell		Nov 20	OC	5	7	80%
R Emery		May 20	OC	7	7	100%
P Turner	Co-opted	Sep 17/May 21	-	5	7	57%
R Kent	Co-opted	Mar 20	ARC	7	7	100%
N Leggett	Co-opted	Mar 20	ARC	6	Z	86%
DMatharoo	Cece	Sep16/Nov20	ARC&OC	1	a	50%

Key: Oc Operations Committee ARC Audit and Risk Committee

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Empowering People Inspiring Communities Limited € py | J Financial Statements for the year ended 31 March 2021 = 1) Empowering Board Members, Executive Officers, Company Information

Executive Officers
Finance Director	S Kellock	Appointed 14.6.21
Interim Chief Executive	S Kellock	Appointed 15.6.21
ChiefExecutive	LGibbs	Resigned30.6.21

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Report of the Board

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The Board presents its report and the audited financial statements for the year ended 31 March 2021

Principal activities

Empowering People Inspiring Communities (EPIC) is charitable registered provider of social housing and is administered by a Board of 8 members. We are a community-based housing association managing 1,224 homes predominantly in the Bentilee area of Stoke-on-Trent. The vast majority of our homes are for general social housing residents, but we also have 20 leasehold properties. Full details of the stock and tenure is shown in Notes 3 and 4 of these financial statements. During the year EPIC successfully bid for 169 properties arising from a stock rationalisation strategy by Bromford Housing. The stock came into our ownership in May 2021. These properties, located in Stoke on Trent, provide tenure diversification through acquiring, shared ownership and supported accommodation.

Board and governance EPIC is governed by a Board of Management who provide their time and commitment on a voluntary non-remunerated basis. The Board currently comprises of 8 members; an independent Chair, a further 6 independent members, a tenant member, a local authority member in addition there are currently two co-opted members. The Board members who served during the period are shown on page 3.

Our Executive Officers are listed on page 4, they are not members of the Board. They act as an executive within the authority delegated to them by the Board, as set out in the Rules and Standing Orders. The remuneration of the Executive team, along with details of the highest paid officer, is detailed in Note 7 of these financial statements.

The Board has ultimate responsibility for the governance of the Company. The Board's central role is to direct the organisation's work, that is to determine strategic direction and policies. The Board agrees policies and make decisions on all matters that might create significant financial or other risk to the Company; or which raise material issues of principle. Management, that is the implementation of Board policies, is delegated to the paid staff.

Committee structure

Throughout the year there were two formal Committees - the Audit and Risk Committee (ARC) and Operations Committee (OC). Each Committee of the Board has clear terms of reference and report back to the Board following each of their meetings.

Following the year end, as result of our regulatory referral, it has been agreed by the Board to suspend the two formal committees on a temporary basis.

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_Meetings during the year ended 31 March 2021
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Board	9
Audit & Risk Committee	3
OperationsCommittee	3

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021

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Report of the Board

Appointment of Board members

Board members are appointed in a formal process and are formally appointed at the Annual General Meeting.

Board skills, quality & experience

Board members should collectively possess the qualities and skills to take decisions and monitor performance. Collectively the Board needs to bring experience and understanding of a broad range of topics including, but not limited to, finance, development, residents’ issues and local housing need.

Board Code of Conduct

Board members have an obligation to ensure that their private or personal interests do not influence their decisions or compromise their ability to always act in the best interests of EPIC and those who it seeks to serve. They must not use their position to obtain personal gain of any sort.

Regulatory Judgement/ Regulatory Notice

During the year circumstances arose that resulted in post year end a referral to the Regulator of Social Housing where upon EPIC was place upon the Grading Under review listing.

The final outcome of this review was published in late August 2021 and concluded the following Regulatory Judgement and Regulatory Notice:

e Regulatory Judgement

Governance G3 (non-compliant)- This judgement downgrades EPIC’s governance to a noncompliant G3 grade. This means that there are issues of serious regulatory concern but that the provider is working with us to address them.

The regulator concluded, that they lack assurance that EPIC’s governance arrangements are effective and that the board has been unable to demonstrate that it is managing its affairs with an appropriate degree of skill, independence, diligence, effectiveness, prudence and foresight. Viability V2 compliant) - The regulator’s assessment of EPIC’s compliance with the financial viability element of the Governance and Financial Viability standard is that it has the financial capacity to deal with a reasonable range of adverse scenarios but needs to manage material risks to ensure continued compliance. The rating in this area is V2 compliant.

e Regulatory Notice

At the same time as the judgement above, the regulator has published a regulatory notice stating that EPIC’s ineffective management of statutory health and safety compliance has breached the requirements of the Home Standard.

EPIC’s Board places the Health and safety of it’s tenants at the forefront of its operations and is working with the regulator to ensure the matters raised are dealt with and resolved in a timely manner.

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Report of the Board

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Internal controls assurance ee ie ea eh ee Se Os ae ee, The Board acknowledges its responsibility for the system of internal controls and for reviewing its effectiveness mindful of the objectives of, and risks facing EPIC.

The Board confirmed that there are ongoing processes for maintaining sound systems of internal controls and for managing risk. These processes have been operational during the year and were regularly reviewed by the relevant committees and the Board.

Resulting from consideration of the Regulator’s placing of EPIC on the grading under review listing the Board agreed that for an interim period that all sub-committees be suspended to allow all business to be reviewed directly by the Board.

Donations a ee

No donations were made during the year (2020: £nil).

Directors’ insurance

eeby EPIC’s Board members and officers have personal liability insurance through the organisation's company insurance. Cover was in place throughout the year and no claims were made. Provision of information to the Auditor cai ae a

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

Independent Auditor aeeSa ee Beever and Struthers were re-appointed as auditor at the Board Meeting on 7 October 2020. They have confirmed their willingness to continue in office.

Approval SS eee ee ee The report of the Board was approved by the Board on 31 August 2021 and signed on its behalf by:

Susan Kellock

Company Secretary

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Strategic Report

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What we do

EPIC were formed in 1998 following a stock transfer from Stoke-on-Trent City Council. Our overall mission is to extend the range of good quality housing choices for people on belowaverage incomes. We offer houses, flats and bungalows for rent. We also offer a number of houses through our Rent to Buy scheme, where tenants can purchase their home, after a 5- year tenancy at a discounted rent. We work closely with three local authorities and a range of other partners to ensure our housing helps meet the needs of local people.

In our first years of operation we concentrated on bringing our flats into good condition and improving their management and maintenance. In 2000 we began to expand our offering, purchasing houses in the Bentilee area. Now over a quarter of our stock is made up of familysized houses. We have a strong commitment to our local communities, and from 2005 we worked to develop the Bentilee area. 2010 onwards saw EPIC continue to grow, buying existing properties in Stoke-on-Trent, Newcastle-under-Lyme, and Staffordshire Moorlands, and bringing them up to modern standards. Our latest growth has been in 2021 with the 169 additional units purchased from Bromford in May 2022, bringing our current housing stock to around 1,400 dwellings across North Staffordshire.

Vision, Mission, Objectives and Beliefs

Our Vision

To create an agile and resilient organisation which will deliver our ambition and achieve our social purposes.

Our Mission

To deliver high quality homes and services for our customers in the most efficient ways so that we generate surpluses which secure business growth and enhance communities.

Our Key Objectives

e Growth and diversification of our housing offer. e Improving efficiency and achieving value for money. e Delivering high quality homes and services.
e Excellence in governance and future viability.

What We Believe

As a charity our values are intrinsic to how we go about doing business. We need to generate surpluses in order to deliver our services and key objectives, but to do this we make sure we act in line with our charitable ethos:

e Fairness: We treat people equally and make decisions based on facts not personal opinions. e Respect: We treat people with respect, and act with courtesy. e Understanding: We are empathetic, approachable and act professionally. e Integrity: We are honest, dependable and do what we say we will. e Teamwork: We work with our customers to ensure we deliver high quality services. We believe that using our combined strengths makes us a better organisation.
e Excellence: We take pride in what we do, help others, are precise and accurate and strive to improve services.

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Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Strategic Report Regulatory Downgrading oe eePO ee

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oe eePO ee ee Governance weaknesses compounded by a series of simultaneous material events (fire safety and stock acquisition) has resulted in a regulatory referral in June 2021. This regulatory referral was not unexpected as processes had already highlighted areas of concern.

The resulting Regulatory Judgement was published in late August 2021 stating a downgrade from G1V1(compliant) to G3(non-compliant) V2(compliant) . In addition a Regulatory Notice was published stating that EPIC’s ineffective management of statutory health and safety compliance has breached the requirements of the Home Standard.

Tenants’ safety is EPIC’s paramount concern and swift action has been taken to begin to resolve the weaknesses identified. EPIC acknowledges that these outcomes indicate that there are issues of serious regulatory concern and is working with the Regulator to address them.

Value for Money a eee I ere eee The Regulator of Social Housing Value for Money Standard and Code requires providers to report in their statutory accounts against the metrics defined by the Regulator. These metrics are defined in the ‘Value for Money Metrics’ document issued by the Regulator.

The table below details EPIC’s performance against both the Value for Money Metrics as well as the Sector Scorecard indicators.

Value forMoney Metrics ea	Value forMoney Metrics ea
; Reinvestment % This metriclooksat investment inpropertiesincludingexisting stockandnewstock. This is calculatedas apercentageofvalueoftotalproperties. New supply delivered (social housing) as a % of total stock This sets out the numberofnewsocialhousingunits thathave beenacquiredordevelopedin theyear	2019/20} . aii 3.3%	2020/21 sil 0.9%		Sector eas:; Median Median (all)	z as aaa sili 1.5% 0.7%
asaproportion oftotal units.
Gearing% Thisshows theproportion ofourborrowingcompared toourassets. A
highgearingcouldindicate thatwe have takenon toomuchborrowinghoweverlow	13.4%		14.9%	44.0%	34.5%	48.2%
gearing couldindicate thatwehave capacity toborrowmore.
EBITDA— MRI( InterestCover) Thisshowshowmuchcashthe organisation is
generating compared tointerest payments. Any resultabove100%meansthat we	681.8%		772.9%		170.0%]	199.0%}
are generatingsurplus cashoverandabove interestpayments
Headline social housing cost per unit (£) The unitcost metric assesses the headline socialhousingcostperunitasdefinedbytheRegulatorofSocialHousing	til		ee	ici	a8	sli
Operating Margin % Social Housing This is an indicator ofoperating efficiency and
business health as it measures the amount ofsurplus generatedfrom turnover on	36.1%		33.4%	25.7%	23.9%	31.7%
ourday todayactivities
Operating Margin% Overall This isan indicatorofoperating efficiency andbusiness
health as itmeasures the amountofsurplus generatedfrom turnoveronourday to	36.1%		32.9%	23.1%	20.3%	24.5%
day activities					]
Return on capital employed (ROCE) % This metric compares the operating surplus
to totalassets less current liabilities andassesses the efficient investment ofcapital	3.9%		3.6%	3.4%	3.0%	4.3%
resources
Overall our performance is strong in most areas and	where performance			is below target we
understand why this is. Our reinvestment level is in line with our		peer group but			slightly	under
the sector median, as we stopped acquisition’s in 2021	to enable us to fund a major acquisition
in 2021-22. Our Operating Margin (overall) and Operating Margin		(social housing			lettings) have
seen a reduction, but remains strong. The EBITDA MRI	interest cover		measure is a key indicator
for liquidity and investment capacity and our score is	favourable	compared to the peer				group
median. The low level of gearing is a result of low debt levels and healthy cash reserves as at 31° March 2021. Our Headline Social Housing cost per unit has seen a small rise as we continue
toinvesttomakestockimprovements,butisfavourabletoourpeers.

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Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021

Strategic Report

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properti s£| |---|---|---| |Service charge costper unit Thismetricshows the service charge costperunit£||| |Maintenance cost per unit Thismetricshows the average maintenance costperunit||| |RentArrears
Thisshows how % of rent arrears compared to rent charged %||| |Rent Receivable Thisshowshoweffective we are atcollecting rents due %||| |Financial review
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SS|eee|| |The Statement
of Comprehensive Income for the year ended
31 March 2021 and||the| |Statement of Financial Position at 31 March 2021 are shown on pages 19 and|20. The|key| |financial highlights for EPIC are as follows:||| |e
The total comprehensive income for the year of £613,144 represents a £1,229,939 or||| |66.7% decrease from the 2020 result of £1,843,083.
This, however, masksa|a significant|| |swing
in the actuarial value of the pension scheme bearing a surplus|in 2020|but| |indicatingadeficitin2021.|||

e The surplus for the year before pension adjustments reflects a fall from £1,401,363 in 2020 to £1,258,050 in 2021, a £143,313, 10.2% fall. Note 2 Illustrates the movement in key operating areas, with no significant cost increases identified. In addition the increase of £50k in financing costs is detailed in note 5.
e Turnover of £4,657,118 (2020: £4,524,811) represents a net increase of £132,307. While the major increase reflects the annual rental increase. Taken together with some new stock coming online agreed, it has been adjusted for voids rental losses which have increased by some 62%, £16k since 2020 resulting from slower turnaround of properties due to COVID restrictions.
e Based on the statement of comprehensive income the operating surplus for the year of £1,549,629, 33.2% of turnover (2020: £1,641,936, 36.3%) represents a decrease of £92,307 on the prior year operating surplus. The decrease in operating margin is primarily as a result of an increase in operating expenditure.
e Interest and financing costs for the year to 31 March 2021 of £291,626 (2020: £242,045) represents an increase of £49,581. Drawdown of loans throughout the year in 2020 now have a full-year impact in 2021.
e The year-end cash and short term investment position has decreased during the year with a balance of £2,462,447 at 31 March 2021 (2020: £3,467,701).

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Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Strategic Report

Funding and Treasury

SEaReee eee ee

In relation to funding and Treasury activity, our sole lender is Triodos. Our principal bank providing day to day transactional support Is the Co-operative Bank PLC.

EPIC having already secured loan financing of £14 million from Triodos, of which £9 million had been drawn and was partly used to fund the existing acquisition programme. EPIC is set to raise a further £5.3 million against the exiting headroom with indicative Heads of Terms, broadly in line with our existing loan facility. Noting the additional £5.3 million required no additional security, with security being used from the existing loan in place.

This new available facility sum of £10.3 million was drawn in May 2021 to purchase the 169 properties from Bromford Housing.

Arranged facilities as at 31 March 2021 totalled £19.3 million of which (47%) £9 million were drawn. At 31.3.21, the Drawn Debt Repayment Profile is illustrated below.

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Drawn Debt Repayment Profile
= Under 1 year; 3%
® 1 to 2 years; 4%
= 2 to 5 years; 11%
= Sto 10 years; 82%
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All of the total debt drawn is at fixed interest rates.

At the year-end there were 260 units of unencumbered units of stock, subject to satisfactory gearing and interest cover providing approximate security head room of EUV £ 6.1 million, MVSH £10.8 million.

Treasury activities are controlled and monitored by the Board and are executed by the Finance Director. Cash flows are monitored and forecast regularly to minimise cash held and ensure further funds are drawn down as required. EPIC’s financial instruments comprise borrowings, cash and liquid resources, and various items such as trade debtors and trade creditors that arise directly from its operations. The main purpose of these financial instruments is to finance operations.

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Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021

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Strategic Report

Future plans, risks and uncertainties

e Previous growth plans have been set aside as the 2021 Fire safety remediation requirements have taken operational priority ensuring compliance with consumer standards and, importantly, safeguarding the health and safety of our tenants. This was highlighted as a key concern by the Regulator and extensive work is being undertaken in the identified properties, namely 43 blocks that contain six flats. While the required area of work comprising (1) Installing an upgraded fire alarm system, (2) Replacing front doors and (3) Addressing loft compartmentation issues, has been planned and prioritised, there continues to be uncertainty in three areas. (1) confirmation of costs of works and availability of trades to undertake work, (2) accessibility to the required properties, and (3) the on-going risk associated with neither a ‘stay put’ nor ‘evacuation’ policy requirements being able to be met. In mitigation, in addition to waking watch, a comprehensive fire safety management policy is in place guided and supported by fire safety experts. Tenants are fully aware of the current circumstances and are being kept up to date of matters.
e The risk of the above work plan is the level of costs, (circa £750k in 2021-22, 2022-23 £1.2m 2023-24 circa £250k), and timing which impact on the cash flow of the business. Recent capital acquisition of housing stock has reduced liquidity significantly and this requires extensive ongoing liquidity management to ensure Loan covenants are not breached.
e Recent events identified in the Regulatory referral section above have identified significant governance weaknesses at both Board and Executive level. These have been addressed with a matter of urgency and on-going support has been sourced externally.
e The above business critical matters are currently taking precedence. Notwithstanding this, the following are also being noted when reviewing the future activity: o Potential for higher than anticipated asset management costs; o Potential for lower than forecast rent receivable, due to market changes and also © implications of the fire safety works; and
o consideration of net zero carbon by 2050

The Governance and Financial Viability Standard

Based on the evidence supporting the recent Regulatory referral, grading under review listing and the subsequent re-grading to G3 V2, together with the Regulatory Notice indicating a breach in Home standard , the Board cannot confirm full compliance with the Governance and Financial Viability Standard issued by the Regulator of Social Housing.

Full details of areas non-compliance and other information can be found on Page 7. Further details on the RSH’s regulatory approach and EPIC’s regulatory judgement can be found at https://www.gov.uk/government/publications/regulatory-judgements-and-regulatory-notices

National Housing Federation Code of Governance

The Board has adopted the National Housing Federation’s “Code of governance: Promoting board excellence for housing associations (2015 edition)”. The Board met on 18" May 2021 and approved compliance with the 2015 code.

Based on the evidence supporting the recent Regulatory referral, grading under review listing and the subsequent re-grading from G1V1 to G3V2, the Board are no longer able to confirm full compliance with 2015 code. More detail and other information can be found on Page 7.

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Strategic Report

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Statement of Board members’ responsibilities

The Board is responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Registered Provider legislation requires the Board to prepare financial statements for each financial year. Under that legislation the Board have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under Housing Association legislation the Board must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the surplus or deficit of the company for that period. In preparing these financial statements, the Board is required to:

e select suitable accounting policies and then apply them consistently; e make judgments and accounting estimates that are reasonable and prudent; e state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
e prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Association will continue in business.

The Board is responsible for keeping adequate accounting records that are sufficient to show and explain the Association’s transactions and disclose with reasonable accuracy at any time the financial position of the Association and enable them to ensure that the financial statements comply with Housing Association legislation. They are also responsible for safeguarding the assets of the Association 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 corporate and financial information included on the Association’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other[jurisdictions.]

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Approved by the Board on 31 August 2021 and signed on its behalf by:

Susan Kellock

Company Secretary

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Independent Auditor’s Report

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Opinion laleke We have audited the financial statements of Empowering People Inspiring Communities Limited (the ‘company’) for the year ended 31 March 2021 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the statement of Changes in Reserves, the Statement of Cash Flows and notes to the financial statements including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice). In our opinion the financial statements: e give a true and fair view of the state of the company’s affairs as at 31 March 2021 and of its income and expenditure for the year then ended; e have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and e have been prepared in accordance with 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. Basis for opinion ere Mee, Me eB eA ee eee We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern Li il cs RD ial <M, Scala — Nati hs oe

In auditing the financial statements, we have concluded that the Board’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

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

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

Other information OS ME rn The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The Board is responsible for the other information. Our opinion on the financial 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.

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Independent Auditor’s Report

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In connection with our audit of the financial statements our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements 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 there is a material misstatement in the financial statements or a material misstatement of the other information. 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 by the Companies Act 2006 eeSA ee eee anes em In our opinion, based on the work undertaken in the course of the audit:

e the information given in the strategic report and the Board’s report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
e the strategic report and the Board’s report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception la a i Je kin In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Board's report.

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

e adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
e the financial statements are not in agreement with the accounting records and returns; or e certain disclosures of directors’ remuneration specified by law are not made; or

;

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

In addition, we have nothing to report in respect of the following matter where the Housing and Regeneration Act 2008 requires us to report to you if, in our opinion a satisfactory system of control over transactions has not been maintained

Responsibilities of the Board a a

As explained more fully in the Board's Responsibilities Statement set out on page 12/13, the Board 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 Board determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board are responsible for assessing the 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 Board either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Independent Auditor’s Report

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Auditor’s responsibilities for the audit of the financial statements

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

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s web-site at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

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

We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.

In identifying and addressing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following: e We obtained an understanding of laws and regulations that affect the company, focusing on those that had a direct effect on the financial statements or that had a fundamental effect on its operations. Key laws and regulations that we identified included the Companies Act, the Statement of Recommended Practice for registered housing providers: Housing SORP 2018, the Housing and Regeneration Act 2008, the Accounting Direction for Private Registered Providers of Social Housing 2019, tax legislation, health and safety legislation, and employment legislation.
e We enquired of the Board and reviewed correspondence and Board meeting minutes for evidence of non-compliance with relevant laws and regulations. We also reviewed controls the Board have in place, where necessary, to ensure compliance.
e We gained an understanding of the controls that the Board have in place to prevent and detect fraud.
e We enquired of the Board about any incidences of fraud that had taken place during the accounting period.
e The risk of fraud and non-compliance with laws and regulations and fraud was discussed within the audit team and tests were planned and performed to address these risks. We identified the potential for fraud in the following areas: laws related to the construction and provision of social housing, recognising the nature of the company’s activities and the regulated nature of the company’s activities.
e We reviewed financial statements disclosures and tested to supporting documentation to assess compliance with relevant laws and regulations discussed above.

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Independent Auditor’s Report

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e We enquired of the Board about actual and potential litigation and claims.
e We performed analytical procedures to identify any unusual or unexpected relationships that might indicate risks of material misstatement due to fraud.
e In addressing the risk of fraud due to management override of internal controls we tested the appropriateness of journal entries and assessed whether the judgements made in making accounting estimates were indicative of a potential bias.

Due to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, 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 fraud or non-compliance with laws and regulations and cannot be expected to detect all fraud and non-compliance with laws and regulations.

Use of the audit report Se ee ee ee, This report is made solely to the 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 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 company and the company’s members as a body for our audit work, for this report, or for the opinions we have formed.

SS SS Sue Hutchinson (Senior Statutory Auditor) For and on behalf of Beever and Struthers Statutory Auditor St George’s House 215/219 Chester Road Manchester Mi5 4JE

Date: 22 September 2021

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Statement of Comprehensive Income

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							Year Ended 31	Year Ended 31
							March	March
							2021	2020
						Note	£	E
Turnover						1,2	4,657,118	4,524,811
Operating costs						2	(3,125,189)	(2,890,153)
Gain on disposal	of	property,	plant		and	22
equipment							17,700	7,278
Operating surplus							1,549,629	1,641,936
Interest receivable							47	1,472
Interest and financing	costs					5	(291,626)	(242,045)
Surplus before taxation							1,258,050	1,401,363
Taxation							-	“
Surplus for the year after taxation							1,258,050	1,401,363
Other comprehensive income
Actuarial (loss)/gain	in	respect	of	pension		16
scheme							(644,906)	441,720
Totalcomprehensiveincomefor			the	year			613,144	1,843,083

The results relate wholly to continuing activities and the notes on pages 23 to 41 form an integral part of these accounts

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021

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Statement of Financial Position

			As At 31	As At 31
			March 2021	March 2020
		Note	£	£
Fixed assets
Tangible fixed assets		9	40,152,279	38,793,454
Investments in subsidiary		10	1	1
			40,152,280	38,793,455
Current assets
Trade and other debtors		11	1,772,594	490,653
Investments		12	13,601	13,585
Cash and cash equivalents		12,	2,448,846	3,454,116
			4,235,041	3,958,354
Less: Creditors: amounts falling due within one
year		13	(1,197,511)	(1,047,618)
Net current assets			3,037,530	2,910,736
Total assets less current liabilities			43,189,810	41,704,191
Creditors; amounts falling due after more than one
year		14	(14,747,120)	(14,479,892)
Provisions for liabilities
Pension — defined benefit liability		16	(966,000)	(396,000)
Total net assets	:		27,476,690	26,828,299
Reserves
Revaluation reserve			9,703,346	9,825,099
Revenue reserve			17,773,344	17,003,200
TotalReserves			27,476,690	26,828,299

Company registration number 3333405.

The financial statements on pages 19 to 41, were approved and authorised for issue by the Board on 31 August 2021 and were signed on its behalf by:

S. Funnell - Chair

S.Kellock — Company Secretary

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021

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Statement of Changes in Reserves

		Revenue	Revaluation
		Reserve	Reserve	Total
		£	£	£
Balance at 31 March 2019		14,842,117	10,127,848	24,969,965
Surplus 2019/20		1,843,083	-	1,843,083
Right to Acquire Property Disposals (Reversal of Revaluation)		-	15,251	15,251
Transfer between’ reserves	(excess
depreciation)		318,000	(318,000)	=
Balance at 31 March 2020		17,003,200	9,825,099	26,828,299
Surplus 2020/21		613,144	-	613,144
Right to Acquire Property Disposals (Reversal of Revaluation)		-	35,247	35,247
Transfer between reserves
(excess depreciation)		157,000	(157,000)	-
Balanceat31March2021		17,773,344	9,703,346	27,476,690

FinancialEmpoweringStatementsPeople Inspiringfor the year Communities ended 31 LimitedMarch 2021 Statement of Cash Flows

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|||||||||||| |---|---|---|---|---|---|---|---|---|---|---| |Year|ended| |Year|ended|31|31|March| |Note|March|2021|2020| |£|E| |Net|cash|generated|from|operating|activities| |(see|below)|1,085,378|2,354,049| |Cash|flow|from|investing|activities| |Purchase|of tangible|fixed|assets|(2,229,216)|(5,354,936)| |Proceeds|from|sale|fixed|assets|90,710|172,500| |Grants|received|618,897|1,286,601| |Interest|received|47|1,472| |Cash|flow from|investing|activities|(1,519,562)|(3,894,363)| |Cash|flow|from|financing|activities| |Interest|paid|(291,626)|(242,045)| |New|secured|loans|0|4,000,000| |Repayment|of|borrowing|(279,444)|(216,415)| |Subtotal|(571,070)|3,762,585| |Net|change|in|cash|and|cash|equivalents|(1,005,254)|2,001,225| |Cash|and|cash|equivalents|at|beginning|of|the| |year|3,467,701|1,466,476| |Cash|and|cash|equivalents|at|end|of the|year|12|2,462,447|3,467,701| |Cash|flow|from|operating|activities| |Surplus|before|taxation|1,258,051|1,401,363| |Adjustments|for|non-cash|items:| |Depreciation|of tangible|fixed|assets|843,269|793,446| |Movement|in|bad|debt|provision|27,966|7,936| |Movement|in|trade|and|other|debtors|(1,309,908)|128,699| |Movement|in|trade|and|other|creditors|144,808|(63,906)| |Pension|costs|less|contributions|payable|(82,906)|(81,280)| |Adjustments|for|investing|or|financing|activities:| |Surplus|from|the|sale|of tangible|fixed|assets|(18,341)|(9,831)| |Government|grants|utilised|in|the|year|(69,140)|(62,952)| |Interest|payable|291,626|242,045| |Interest|received|(47)|(1,472)| |Net cash|generated|from|operating|activities|1,085,376|2,354,049| |At|the|At|the|End|of| |Reconciliation|of|Net|Debt|Beginning|of|Cashflows|the|Year| |the|Year| |£|£|E| |Cash|and|Cash|Equivalents|3,467,701|(1,005,254)|2,462,447| |Housing|Loans|Due|in|1|Year|(279,444)|(6,871)|(286,315)| |Housing|Loans|Due|After|I|Year|(8,355,210)|286,451|(8,068,759)| |(5,166,953)|(725,674)|(5,892,627)|

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Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Notes to the Financial Statements

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Legal Status pee eee, Empowering People Inspiring Communities Limited is incorporated under the Companies Act 2006 as a company limited by guarantee without share capital and is registered with the Regulator of Social Housing in England as a Private Registered Provider as defined by the Housing and Regeneration Act 2008 and the Charity Commission. Principle Accounting Policies e e eee SoniaeeNN 2 (a) Basis of accounting The financial statements have been prepared in accordance with applicable United Kingdom Accounting Generally Accepted Accounting Practice (UK GAAP) and the Statement of Recommended Practice for registered housing providers: Housing SORP 2018. The Association is a Public Benefit Entity and has applied the Public Benefit Entity Section of FRS102.

The financial statements comply with the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing 2019. The accounts are prepared on the historical cost basis and are presented in sterling for the year ended 31 March 2021.

The financial statements have been prepared in compliance with FRS102.

(b) Going concern The Association’s financial statements have been prepared on a going concern basis which assumes an ability to continue operating for the foreseeable future. No significant concerns have been noted and we consider it appropriate to continue to prepare the financial statements on a going concern basis. Please see the sections regarding the regulatory notice issued in August 2021 in note 27 of these accounts for further information. (c) Critical accounting judgements and key sources of estimation uncertainty The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

e Categorisation of housing properties The Association has undertaken a detailed review of the intended use of all housing properties. In determining the intended use, the Association has considered if the asset is held for social benefit or to earn commercial rentals. The Association has determined that all property is held for social benefit.
° Impairment Impairment is recognised where the carrying value of a cash generating unit exceeds the higher of the net realisable value or its value in use. The Association has identified a cash generating unit for impairment assessment purposes at a property unit level.

Reviews for impairment of housing properties are carried out when a trigger has occurred and any impairment loss in a cash generating unit is recognised by a charge to the Statement of Comprehensive Income.

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Notes to the Financial Statements Principle Accounting Policies (continued)

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e Impairment (continued) Following a trigger for impairment, impairment tests are performed based on fair value less costs to sell or a value in use calculation. The fair value less costs to sell calculation is based on available data from sales transactions in an arm’s length transaction on similar cash generating units (properties) or observable market prices less incremental costs for disposing of the properties. The value in use calculation is based on either a depreciated replacement cost or a discounted cash flow model. The depreciated replacement cost is based on available data of the cost of constructing or acquiring replacement properties to provide the same level of service potential to the Association as the existing property.

The cash flows are derived from the Long-Term Financial Plan and do not include restructuring activities that the association is not yet permitted to or significant future investments that will enhance the asset's performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash flows and the growth rate used for extrapolation purposes. Following the assessment of impairment, no impairment losses were identified in the reporting period.

e Development expenditure. The Association capitalises development expenditure in accordance with the accounting policy described on pages 21-22. Initial capitalisation of costs is based on management's judgement that the development scheme is confirmed, usually when Board approval has taken place including access to the appropriate funding. In determining whether a project is likely to cease, management monitors the development and considers if changes have occurred that result in impairment.
e Pension and other post-employment benefits Until May 2016 staff were on various schemes, depending on when they joined the organisation. This included a final salary scheme, career average earnings and defined contribution. The final salary scheme and career average earnings schemes closed in May 2016. The pension scheme offered from May 2016 being a defined contribution scheme.

The minimum contribution levels set by law effective from April 2019 are as follows: 5 % Employee contribution,3 % Employer contribution,8% Total contribution

As EPIC pays an employer contribution of 5%; employees are required to pay a reduced contribution in order to maintain/attain the minimum contribution level; up to an optional maximum of 5% per annum.

The cost of defined benefit pension plans and other post-employment benefits are determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and the long term nature of these plans, such estimates are subject to significant uncertainty. In determining the appropriate discount rate, management considers the interest rates of corporate bonds in the respective currency with at least AA rating, with extrapolated maturities corresponding to the expected duration of the defined benefit obligation. The underlying bonds are further reviewed for

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021

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Notes to the Financial Statements Principle Accounting Policies (continued) Beeeal et Nanette AR ae ee oe quality, and those having excessive credit spreads are removed from the population bonds on which the discount rate is based, on the basis that they do not represent high quality bonds. The mortality rate is based on publicly available mortality tables for the specific sector. Future salary increases and pension increases are based on expected future inflation rates for the respective sector. Further details are given in note 16.

(d) Other key sources of estimation and assumptions

e Tangible Fixed Assets Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.

(e) Turnover and revenue recognition Turnover represents rental income receivable, amortised capital grant, revenue grants from local authorities and for its investment function Homes England, and other income and are recognised in relation to the period when the goods or services have been supplied.

Rental income is recognised when the property is available for letting, net of voids.

(f) Service charges Service charge income and costs are recognised on an accruals basis. The Association operates both fixed and variable service charges on a scheme by scheme basis in full consultation with residents. Where variable service charges are used the charges will include an allowance for the surplus or deficit from prior years, with the surplus being returned to residents by a reduced charge and a deficit being recovered by a higher charge. Until these are returned or recovered they are held as creditors or debtors in the Statement of Financial Position.

Where periodic expenditure is required a provision may be built up over the years, in consultation with the residents; until these costs are incurred this liability is held in the Statement of Financial Position within long term creditors.

(g) Loan interest costs

Loan interest costs are calculated using the effective interest method of the difference between the loan amount at initial recognition and amount of maturity of the related loan.

e Loan finance issue costs These are amortised over the life of the related loan. Loans are stated in the Statement of Financial Position at the amount of the net proceeds after issue, plus increases to account for any subsequent amounts amortised. Where loans are redeemed during the year, any redemption penalty and any connected loan finance issue costs are recognised in the Statement of Comprehensive Income account in the year in which the redemption took place.

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Notes to the Financial Statements

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(h) Taxation The Association gained charitable status on 2 April 2008 and therefore its general activities fall outside the scope of the United Kingdom Taxation legislation. The Association is exempt for VAT purposes.

(i) Housing properties Tangible fixed assets are stated at deemed cost or cost, less accumulated depreciation. The Association has elected to use a previous GAAP valuation of the housing properties as deemed cost on transition to FRS102.

All properties and land are freehold. Freehold land held for development is not depreciated.

Where a housing property comprises two or more major components with substantially different useful economic lives (UELs), each component is accounted for separately and depreciated over its individual UEL. Expenditure relating to subsequent replacement or renewal of components is capitalised as incurred.

The Association depreciates freehold housing properties by component on a straight-line basis over the estimated UELs of the component categories.

UELs for identified components are as follows:

	Years
Housing Structure	100
Roof	60
Windows	25
Bathrooms	30
Kitchens	20
Boilers	L5
Heating Distribution Systems	30
Electrical Rewires	30
Solarpanels	25

Other Tangible Fixed Assets

Depreciation is charged on other tangible fixed assets on a straight-line basis over the expected economic useful lives which are as follows:

	Years
Freehold Offices	50
Office furniture	10
Office equipment	4
Tools and equipment	2
Computer equipment	2
Capitalcomputerequipment	5

The Association has elected to use a previous GAAP valuation of the freehold offices as deemed cost at transition to FRS102 in 2016,

(j) Capitalisation of interest and administration costs No interest or administration costs are capitalised. There is potential to capitalise administration costs if directly attributable to development.

Empowering People Inspiring Communities Limited € = i )) [ Financial Statements for the year ended 31 March 2021 com || Empowering People Notes to the Financial Statements Principle Accounting Policies (continued) iteerse - e eee (k) Property managed by other parties Where the Association carries the majority of the financial risk on property managed by other parties, income arising from the property is included in the Statement of Comprehensive Income Account.

The assets and associated liabilities are included in the Association’s Statement of Financial Position.

(1) Leasing Payments for operating leases are charged to the Statement of Comprehensive Income on a straight line basis over the term of the lease.

(m) Investments Investments held in subsidiaries are stated at cost less accumulated impairment and are included in fixed assets. Current asset investments include cash and cash equivalents invested for periods of more than 24 hours. They are recognised initially at cost and subsequently at fair value at the reporting date. Any change in valuation between reporting dates is recognised in the statement of comprehensive income.

(n) Short-term debtors and creditors Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the income statement in other operating expenses.

(0) Non-government grants Grants received from non-government sources are recognised under the performance model. If there are no specific performance requirements the grants are recognised when received or receivable. Where grant is received with specific performance requirements it is recognised as a liability until the conditions are met and then it is recognised as turnover. (p) Social housing grant and government grants Where acquisitions have been financed wholly or partly by social housing and other grants, the amount of the grant received has been included as deferred income and recognised in turnover over the estimated useful life of the associated asset structure (not land), under the accruals model.

SHG must be recycled under certain conditions, if a property is sold, or if another relevant event takes place. In these cases, the SHG can be used for projects approved by Homes England. However, SHG may have to be repaid if certain conditions are not met. If grant is not required to be recycled or repaid, any unamortised grant is recognised as Turnover. In certain circumstances, SHG may be repayable, and, in that event, is a subordinated unsecured repayable debt. (q) Non-monetary government grant On disposal of assets for which non-monetary government grants are held as liabilities in the Statement of Financial Position, the unamortised amount in creditors is derecognised and recognised as income in the Statement of Comprehensive Income. (r) Recycling of capital grant Where Social Housing Grant is recycled, as described above, the SHG is credited to a fund which appears as a creditor until used to fund the acquisition of new properties, where recycled grant is known to be repayable it is shown as a creditor within one year.

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Empowering People Inspiring Communities Limited c | 8) | | | | | « . . Financial Statements for the year ended 31 March 2021 | Empowering People, Notes to the Financial Statements Principle Accounting Policies (continued) eeSe ee a ee e e eee -e e (s) Holiday pay accrual A liability is recognised to the extent of any unused holiday pay entitlement which has accrued at the balance sheet date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the balance sheet date. (t) Retirement benefits The cost of providing retirement pensions and related benefits is charged to management expenses over the periods benefiting from the employees’ services.

The Association participates in the Social Housing Pension Scheme (‘SHPS'), a defined benefit multiemployer pension scheme administered by TPT Retirement Solutions (‘TPT’).

(u) Reserves policy The Association is able to freely utilise the revenue reserves to further its objectives. In line with our approved Business Plan, we are currently utilising our reserves for improving our existing stock. When reviewing any opportunities we need to ensure that whilst fulfilling the Association’s objectives and aims that they are also financially viable in the longer term.

(v) Financial instruments All loans held by the Association are classified as basic financial instruments in accordance with FRS 102. They are measured at transaction price plus transaction costs initially; and subsequently at amortised cost using the effective interest rate method. Loans repayable within one year are not discounted.

Financial Assets e e

e, Trade and Other Debtors

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

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

Financial Liabilities

i Trade and Other Creditors

Trade and others creditors (including accruals) payable within one year that do not constitute a financing transaction are initially measured at the transaction price less any amounts settled.

All loans held by the Association are classified as basic financial instruments in accordance with FRS102.

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021

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Notes to the Financial Statements

1	Turnover, cost of sales, operating expenditure and operating surplus	Turnover, cost of sales, operating expenditure and operating surplus	Turnover, cost of sales, operating expenditure and operating surplus	Turnover, cost of sales, operating expenditure and operating surplus
			2021
		Turnover	Cost of sales	Operating expenditure	Operating surplus
		£	£	£	£
Social housing lettings (note 2)		4,657,118	-	3,125,189	1,531,929
Activities other than social housing		-	-	-	-
Total		4,657,118	-	3,125,189	1,531,929
			2020
		Turnover	Cost of sales	Restated Operating j expenditure	oe P g surplus
		£	£	£	£
Social	housing lettings (note 2)	4,524,811	-	2,890,153	1,634,658
Activities other than social housing		=	=	-	-
Total		4,524,811	-	2,890,153	1,634,658

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Notes to the Financial Statements

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2. Turnover and operating expenditure	2. Turnover and operating expenditure
						General	General
						Needs	Needs
						2021	2020
Income						£	£
Rent receivable net of identifiable service charges						4,463,818	4,342,466
Service charges income						119,705	119,394
Net rental income						4,583,523	4,461,860
Sundry income						4,455	-
Total turnover from social housing lettings Amortised government grants (Note 15)						4,587,978 69,140	4,461,860 62,951
Turnoverfrom social	housing lettings					4,657,118	4,524,811
Operating expenditure
Management						1,554,363	1,380,445
Service charge costs						130,367	143,356
Routine maintenance						441,108	418,052
Major repairs expenditure						155,309	168,550
Bad debts						54,947	42,695
Depreciation of housing	properties (Note 6)					789,095	737,055
Operating expenditure on social housing lettings						3,125,189	2,890,153
Operating surplus from social housing lettings						1,531,929	1,634,658
Void rental losses						41,751	25,827
3 Accommodation owned, managed		and	in	development
		No. of			properties	No. of properties
		Owned			Managed	Owned	Managed
		2021			2021	2020	2020
Social Housing
Under Management at	the end of the year:
General needs housing	— Social Rent		953		-	954	-
	— Affordable Rent		173		-	165	>
— Intermediate			85			73
— Leasehold				20	-	20	=
General needs housing	- In development			5	-	13	-
		1,236			-	1,225	-

4 Accommodation managed by others EPIC owns property managed by other bodies. No of properties No of properties 2021 2020 General needs — Social Rent 8 8

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Notes to the Financial Statements

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5 Interest and financing costs
	2021	2020
	£	£
Deferred benefit pension charge	8,000	21,000
Amortisation of Loan arrangement fees	62,914	64,711
Loan interest payable	220,712	156,334
	291,626	242,045
6 Surplus on ordinary activities
	2021	2020
The operating surplus is stated after charging/(crediting):-	£	£
Annual audit of the Association’s financial statements	13,324	11,161
Fees payable to the auditor for other services to the Association:
Taxation compliance services	~	-
Operating lease rentals - Office equipment Depreciationofhousingproperties	- 744,650	3,125 737,055
Depreciation ofother fixed assets Amortisationofgrant	54,173 (69,140)	56,391 (62,951)

7 Key Management Personnel

	2021	2020
	£	E
The aggregate emoluments paid to or receivable by Directors and	388,834	368,618
the executive management team The pension contributions paid to the key management personnel The emoluments paid to the highest paid Director excluding pension	18,463 120,339	17,469 118,327
contributions

The Chief Executive is an ordinary member of the pension scheme. The pension scheme offered from May 2016 was a defined contribution scheme funded by annual contributions by the employer and employee. No enhanced or special terms apply. There are no additional pension arrangements. A contribution by EPIC of £5,730 (2020: £5,634) was paid in addition to the personal contributions of the Chief Executive.

Key Management Personnel are defined as the members of the Board (who do not receive any remuneration) and the Chief Executive, Finance Director, Operations Director, Systems Manager, Compliance Manager and Asset Manager.

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EmpoweringFinancial StatementsPeople Inspiringfor the year Communities ended 31 LimitedMarch 2021 Notes to the Financial Statements

8 Employee information
	2021	2020
	No.	No.
The average number of persons employed during the year expressed
in full time equivalents (35 hours per week) was:
Office staff	21	21
Wardens, caretakers and cleaners	al	2
Total employees	21	21
	£	£
Staff costs
Wages and salaries	774,574	732,040
Social security costs	75,521	73,170
Other pension costs (Defined benefit & defined contribution treated as
defined benefit)	46,321	43,553
Total Employee Costs	896,416	848,763
	No.	No.
Aggregate number of full-time equivalent staff whose remuneration
exceeded £60,000 in the year
£60,00ito £70,000	1	1
£80,001 to £90,000	1	-
£110,001 to £120,000	-	il
£120,001to£130,000	1	-

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Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021

Notes to the Financial Statements

9 Tangible fixed assets

		Social
	Social Housing Properties Completed £	Housing Properties Not Completed £	Land £	Freehold offices £	Office Furniture and equipment £	Total £
Cost or
valuation
At 31.3.20	44,186,088	1,244,925	26,000	109,604	527,178	46,093,795
Additions
Properties	-	1,690,953	-	~	-	1,690,953
Additions
Components	538,263	=	_	=	=	538,263
Component Replacements	(138,974)	=	=	-	-	(138,974)
Property Disposals	(37,967)	~	-	-	-	(37,967)
Transfer to
Completed At 31.3.21	2,448,837 46,996,247	(2,448,837) 487,041	- 26,000	~ 109,604	- 527,178	- 48,146,070
Depreciation
/ impairment At 31.3.20 Charge for year	6,926,386 744,650	- -	= fr	12,603 2,180	361,352 51,993	7,300,341 798,823
Components replaced	(97,533)	-	=	-	-	(97,533)
Property Disposals At 31.3.21	(7,840) 7,565,663	= -	= =	- 14,783	- 413,345	(7,840) 7,993,791
	ee
NBV 31.3.21	39,430,584	487,041	26,000	94,821	113,833	40,152,279
NBV 31.3.20	37,259,702	1,244,925	26,000	97,001	165,826	38,793,454
					2021	2020
					£	£
Components capitalised					538,263	878,133
Amounts charged to expenditure					155,309	168,550

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Notes to the Financial Statements

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Notes to the Financial Statements
10 Fixed asset investments
	2021	2020
	£	E
At 31.3.20	1	1
Additions in the year	-	-
At 31.3.21	1	1
Net book value 31,.3.21	1	1
Netbookvalue31.3.20	i	1

The Company owns 100% of the issued share capital of EPIC Regeneration Services Limited, a company incorporated in England and Wales. This Company has aggregate capital and reserves of £1 and has been dormant since incorporation.

Under the provision of section 371 of the Companies Act 2006 the Association is exempt from preparing consolidated accounts and has not done so. Therefore these accounts show information about the Association as an individual entity.

11 =©Trade and other debtors
	2021	2020
	£	E
Rent arrears Less: provision for bad debts Other debtors Prepayments and accrued income	118,354 (100,677) 97,308 1,657,609	99,153 (72,710) 81,599 382,611
Total All debtors are due within one year.	1,772,594	490,653
12 Cash and cash equivalents
	2021	2020
	£	£
Money market investments Cash atbankand in hand Total	13,601 2,448,846 2,462,447	13,585 3,454,116 3,467,701
Included in the above is £102,443 (2020:£101,848) held on trust for Leaseholders.
13 Creditors: amounts falling due within one year
	2021	2020
	£	£
Trade creditors Deferred capital grant (Note 15) Rents and service charges paid in advance Service charge balances held on behalf of leaseholders Accruals and deferred income Loans and overdrafts Other creditors	127,601 69,140 201,106 102,443 409,969 286,315 937	145,099 62,951 189,657 101,714 267,816 279,444 937
Total	1,197,511	1,047,618

Loans are secured by housing properties, see note 24.

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Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021

Notes to the Financial Statements

14
	2021	2020
	£	£
Deferred Capital Grant (Note 15)	6,586,476	6,042,908
Loans	8,068,759	8,355,210
Recycled Capital Grant Fund	91,885	81,774
Total	14,747,120	14,479,892

Loans are secured by housing properties, see note 24.

15 Deferred capital grant
	2021	2020
	£	£
At 31.3.20	6,105,859	4,867,209
Grant received in the year	618,897	1,321,601
Grant transferred Re Property Disposals	-	(20,000)
Amortised in the year	(69,140)	(62,951)
At 31.3.21	6,655,616	6,105,859
Amount due to be released in less than 1 year	69,140	62,951
Amount due to be released after 1 year	6,586,476	6,042,908
Total	6,655,616	6,105,859

16 Provision For Liabilities - Social housing pension scheme

The Association participates in the Social Housing Pension Scheme (the Scheme), a multiemployer scheme which provides benefits to some 500 non-associated employers. The Scheme is a defined benefit scheme in the UK and administered by TPT retirement Solutions.

The Scheme is subject to the funding legislation outlined in the Pensions Act 2004 which came into force on 30 December 2005. This, together with documents issued by the Pensions Regulator and Technical Actuarial Standards issued by the Financial Reporting Council, set out the framework for funding defined benefit occupational pension schemes in the UK. The last triennial valuation of the scheme for funding purposes was carried out as at 30 September 2017. This valuation revealed a deficit of £1,522m. A Recovery Plan has been put in place with the aim of removing this deficit by 30 September 2026. The SHPS Employer Committee and the SHPS Scheme Committee are preparing for the 2020 valuation. The Scheme is classified as a ‘last-man standing arrangement’. Therefore the company is potentially liable for other participating employers’ obligations if those employers are unable to meet their share of the scheme deficit following withdrawal from the Scheme. Participating employers are legally required to meet their share of the Scheme deficit on an annuity purchase basis on withdrawal from the Scheme.

For financial years ending on or after 31 March 2019, it is possible to obtain sufficient information to enable the company to account for the Scheme as a defined benefit scheme.

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021

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Notes to the Financial Statements

Fair value plan of assets , present value of defined benefit obligation and defined benefit asset/ ( liability)

	2021	2020
	£000	£'000
Fair value of plan assets Present value of defined benefit obligation (Deficit)/ surplus in plan Unrecognised surplus	3,143 4,109 (966) =	2,687 3,083 (396) =
Definedbenefit(liability)/assettoberecognised	(966)	(396)

Reconciliation of opening and closing balances of the defined benefit obligation

				2021	2020
				£’000	£'000
Defined benefit obligation at start of period Current service cost				3,083 =	3,476 =
Expenses				4	4
Interest expense				72	83
Member contributions				-	-
Actuarial losses (gains) due to scheme experience Actuarial losses (gains) due to changes in demographic assumptions				(66) 13	28 (28)
Actuarial losses (gains) due to assumptions	changes	in_	financial	1,022	(461)
Benefits paid and expenses Liabilities acquired in a business combination				(19) =	(19) =
Liabilities extinguished on settlements				-	=
Losses (gains) on curtailments				=	=
Losses (gains) due to benefit changes				-	-
Exchange rate changes				-	=
Definedbenefitobligationatendofperiod				4,109	3,083

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Notes to the Financial Statements

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Reconciliation of opening and closing balances of the fair value of plan assets

			2021	2020
			£'000	£'000
Fair value of plan assets at start of period			2,687 2,578
Interest income				64	62
Experience on plan assets (excluding amounts included interest income) - gain (loss) Employer contributions	in		324 87		(20) 86
Member contributions				”	-
Benefits paid and expenses			(19)		(19)
Assets acquired in a business combination				-	-
Assets distributed on settlements				-	-
Exchange rate changes Fair value of plan assets at end of period			~ - 3,143 2,687
The actual return on plan assets (including any changes in share of assets) over the period					from
31 March 2020 to 31 March 2021 was £388,000
Defined benefit costs recognised in the statement ofcomprehensive				income ( SOCT)
			2021	2019
			£’000	£'000
Current service cost				-	-
Expenses Net interest expense				4 8	4 21
Losses (gains) on business combinations				-	-
Losses (gains) on settlements				-	-
Losses (gains) on curtailments				=	~
Losses (gains) due to benefit changes				=	-
Defined benefit costs recognised in Statement		of		12	25
: Comprehensive Income (SoCT)
Defined benefit costs recognised in other comprehensive income (OCT)
			2021	2020
			£7000	£'000
Experience on plan assets (excluding amounts included in net interest cost) - gain (loss)				324	20 (20)
Experience gains and losses arising on the plan liabilities - gain (loss) Effects of changes in the demographic assumptions underlying the present value of the defined benefit obligation - gain (loss) Effects ofchanges in the financial assumptions underlying the present value of the defined benefit obligation - gain (loss) Total actuarial gains and losses (before restriction due to some ofthe surplus not being recognisable) - gain (loss)			66 (13) (1,022) 645 ( )		ae 28 461 A41
Effects of changes in the amount of surplus that is not
recoverable (excluding amounts included in net interest cost)		-		-	-
gain (loss)
Total amount recognised in OtherComprehensive Income - gain(loss)			(645)		AA1

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Notes to the Financial Statements

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Assets

		2021	2020
		£7000	£'000
Global Equity		501	393
Absolute Return		173	140
Distressed Opportunities		91	52
Credit Relative Value		99	74
Alternative Risk Premia		118	188
Fund of Hedge Funds		-	2
Emerging Markets Debt		127	81
Risk Sharing		114	91.
Insurance-Linked Securities		75	83
Property		65	59
Infrastructure		210	200
Private Debt		75	54
Opportunistic Illiquid Credit		80	65
High Yield		94	-
Opportunistic Credit		86	-
Cash		-	~
Corporate Bond Fund		186	153
Liquid Credit		38	1
Long Lease Property		62	46
Secured Income		131	102
Over 15 Year Gilts		~	-
Index Linked All Stock Gilts		-	-
Liability Driven Investment		799	892
Net Current Assets 19 iBl Total assets 3,143 2,687 None of the fair values of the assets shown above include any direct investments in the employer's own financial instruments or any property occupied by, or other assets used by, the employer.
Key Assumptions		2021	2020
Discount Rate		% perannum 2.21%	% perannum 2.34%
Inflation (RPI)		3.22%	2.53%
Inflation (CPI)		2.87%	153%
Salary Growth		3.87%	2.53%
: : Allowance for commutation of pension for cash at retireroent		75% of eraser allowance	75% of wasn allowance
Themortalityassumptions	adoptedat31March2021implythefollowinglifeexpectancies:

	2021	2020
	Life	Life
	expectancy	expectancy at
	at age 65	age 65
	Years
Male retiring in 2021	21.6	21.5
Female retiring in 2021	235	23:3
Male retiring in 2041	22.9	22.9
Femaleretiringin2041	25:1	24.5

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Notes to the Financial Statements

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17 Capital commitments The table below shows the financial implications and sources of funding to deliver the signed contracts with Homes England.

	2021	2020
	£	£
Capital expenditure that has been contracted for but has not been provided for in the financial statements	10,773,433	260,810
Capital expenditure that has been authorised by the Board but has not yet been contracted for Capital commitment	- 10,773,433	3,805,000 4,065,810
EPIC expects these commitments to be financed with: Triodos loan facilities	10,300,000	2,663,000
Social housing grant (In line with spend) Internally generated resources (Revenue reserve) Total	- 473,433 10,773,433	1,142,000 260,810 4,065,810

18 Contingent liability If EPIC were to withdraw from all forms of the Social Housing Pension Scheme it has been calculated that our debt on withdrawal would be £3,316,108. We have no plans to exit from the scheme at the present time.

19 Grant and financial assistance

19 Grant and financial assistance
	2021	2020
	£	£
Total accumulated SHG received or receivable at 31 March:
Held as deferred capital grant	6,914,041	6,295,144
Total	6,914,041	6,295,144

20 Related parties EPIC Regeneration Services Limited, a company registered in England & Wales, is 100% subsidiary of the Association. EPIC Regeneration Services Limited was dormant throughout the current and previous financial year.

21 Surplus/ (deficit) on disposal One house has been sold in the current financial year under the Right to Acquire (RTA).

	2021	2020
	£	E
Sale Proceeds	90,710	172,500
Less: Associated selling fees Write offcost (NBV) Surplusondisposal	(641) (72,369) 17,770	(2,553) (162,669) 7218

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Notes to the Financial Statements

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22 Recycled capital grant fund
2021 2020
Opening £ £
balance of fund 81,774 70,000
Inputs: Grants recycled 2 46,774
Inputs/Withdrawals 10,000 (35,000)
Interest Accrued 111 -
At the end of the year 91,885 81,774
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23 Loans

At the financial year end, EPIC had drawn down all of the initial £5m loan facility and £4m of the additional facility with Triodos Bank. The loans are secured against EPIC housing’s stock, over a 25 year term, and are on a fixed interest basis.

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2021 2020
Maturity of debt £ E
In less than one year 286,315 279,444
In more than one year but less than two years 293,837 286,315
In more than two years but less than five years 928,633 904,860
In greater than five years 6,846,289 7,164,035
Total 8,355,074 8,634,654
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24 Interest rate risk and exposure

As at 31° March 202021 the following amounts were drawdown and had been fixed on 20" March 2020: Facility 1 - £4,533,576.98 - 2.553% - Fixed until 20/03/2030 Facility 2. - £3,821,496.49 - 2.653% - Fixed until 20/03/2030 Combined - £8,355,073.47

EPIC Treasury Management & Investment Policy sets out that when looking at any aspect of interest rate exposure, it is important to remember that overall interest rate risk management is about reducing risk and increasing certainty. It is not about best guessing or predicting the way interest rates will move. Following a review of the fixed rates available both loan facilities 1 & 2 with the Triodos Bank for £5m and £4m respectively were fixed for a period of 10 years on the 20 March 2020.

: |

Any sensitivity analysis will be applied to all variable rate borrowing and to any fixed term borrowing after its maturity date, using market forecast rates.

The Board must approve the use of hedging instruments subject to the Rules of the Association and the regulators guidelines/approval. In such cases a hedging strategy must be prepared and appended to the Treasury Management & Investment Policy, which must state the type of instruments to be used, the value limits, the counterparties involved and the periods for which they will be in place.

The additional drawdown of £10.3m undertaken in April 2021 was also fixed for a period of 10 years as outlined in the section covering post balance sheet events. Facility 3 - £5,000,000 - 2.779% - Fixed until 21/04/2031 Facility 4 - £5,300,000 - 2.879% - Fixed until 21/04/2031 (Interest only until April 2026)

Empowering People Inspiring Communities Limited Financial Statements for the year ended 31 March 2021 Notes to the Financial Statements

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25 Post balance sheet events

Purchase of Housing Stock

On the 10 May 2021, EPIC completed the purchase of 169 units and 1 satellite office from the Bromford Housing Group. The deposit of £1.19m was paid on 21 March 2021, and was accounted for within prepayments as at the year ended 31 March 2021.

The payment for the remaining balance of the purchase costs, of £10.7m, was paid on 7 May 2021. This was part funded by a drawdown of £5m, which was part of the initial loan facility with Triodos Bank, and an additional £5.3m loan facility, also with Triodos Bank. The facility of £5m was fixed at a rate of 2.779%, and the facility of £5.3m was fixed at a rate of 2.879%, both fixed rates end on 21 April 2031.

Regulatory Downgrade

On the 21 June 2021, post year end, EPIC was placed on the Regulator of Social Housing's Grading under review listing . Following this review, in August 2021 the Regulator Judgement was issued reflecting a downgrading of the Governance and Viability rating from GiVi( compliant) to G3 ( non- compliant) V2 ( compliant). In addition a regulatory notice was also issued in which the Regulator concluded that EPIC has failed to meet the requirements of the Home Standard.