## **HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
**TRUSTEES’ REPORT AND FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 2022**
**Company No: 00170981 Charity No: 218808 RSL No: LH478**
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **REPORT OF THE TRUSTEES**
## **(incorporating the Strategic Report)**
|Contents||
|---|---|
||Pages|
|Reference and Administration Information|2|
|Objectives and Principal Activities|3|
|Strategic Report|4 – 14|
|Corporate Governance|15 - 16|
|Statement of Trustee’s responsibilities|16 - 17|
|Independent Auditor’s Report to the Members|18 – 21|
|Statement of Total Comprehensive Income|22|
|Statement of Changes in Reserves|23|
|Statement of Financial Position|24|
|Statement of Cash Flows|25|
|Notes to the Financial Statements|26 - 46|
1
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **REPORT OF THE TRUSTEES**
**(incorporating the Strategic Report)**
## **REFERENCE AND ADMINISTRATION INFORMATION**
Charity Name Heart of England Young Men’s Christian Association Charity Registration Number 218808 Company Registration Number 00170981 Registered Social Landlord Number LH4783 Company Secretary and Chief Executive Alan Fraser resigned 1[st] June 2021 Pauline Tomlinson appointed 1[st] June 2021
## **Board of Trustees**
The Board of Trustees is composed of the following individuals:
Paul Harris - Chair Dawn Ward - Vice Chair Oenca Rona Fontaine Michael Hew Graham Cadd Arkle Leslie Bell Gabriel Imevbore Owen Everton Burke Mark Bruckshaw Gareth Clive Bunn Anne Linsey (resigned 27[th] September 2021)
**Registered Office:** Heart of England YMCA 301 Reservoir Road Erdington Birmingham England B23 6DF
**Auditors:** Cooper Parry Group Limited Cubo Birmingham Office 401 4[th] Floor Two Chamberlain Square B3 3AX
2
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **REPORT OF THE TRUSTEES**
## **(incorporating the Strategic Report)**
The Board of Trustees is pleased to present its report and audited financial statements for the year ended 31 March 2022.
The Trustees and Trustees’ Report constitute the Directors and Directors’ Report for Companies Act purposes.
## **OBJECTIVES AND PRINCIPAL ACTIVITIES**
The Objects of the Association arise from its acceptance of its founding Christian principle, the Paris Basis of 1855, incorporated into the National Statement of the Aims and Purposes of the YMCA in England & Wales as it may be amended from time to time.
Consequently, the Association is part of the Worldwide YMCA, a Christian Movement which seeks to unite those who, regarding Jesus Christ as their God and Saviour according to the Holy Scriptures, desire to be His disciples in their faith and in their life, and to associate their efforts for the extension of His Kingdom. Any difference of opinion on any other matter shall not interfere with the harmonious relations of the YMCA Movement.
Accordingly, the Objects of the Association are:
To advance the Christian faith, including by:
(a) promoting a Christian environment inspired and motivated by the life, example and teaching of Jesus Christ, where people of faith and people of none can work together for the transformation of communities; and
(b) enabling people of all ages and young people, to flourish through experiencing and responding to the love of God demonstrated by the life, example and teaching of Jesus Christ;
- To provide or assist in the provision in the interests of social welfare of facilities for recreation and other leisure time occupation for men and women with the object of improving their conditions of life;
- To provide or assist in the provision of education for people of all ages and young people, with the object of developing their physical, mental or spiritual capacities;
- To relieve or assist in the relief of people of all ages and young people, who are in conditions of need, hardship or distress because of their social, physical, emotional, spiritual or economic circumstances; and
- To provide residential accommodation, including Social Housing, for people of all ages and young people, who are in need, hardship or distress because of their social, physical, emotional, spiritual or economic circumstances.
The Association welcomes, serves and works with persons of all religious faiths and of none.
## **STRATEGIC REPORT**
## **Mission Statement**
To reflect the vision for the YMCA federation nationally to be ‘an inclusive Christian movement, transforming communities so that all young people can truly belong, contribute and thrive’, trustees have agreed that the mission of YMCA Heart of England is:
To inspire young people to discover their potential so that they can live life in all its fullness.
3
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **REPORT OF THE TRUSTEES**
## **(incorporating the Strategic Report)**
## **Achievements, performance and future developments**
The principal activities in furtherance of the Association’s charitable objectives are:
- The provision of supported accommodation with associated support services
- The provision of social housing at below-market rents
- The provision of childcare, including nursery provision and holiday play schemes
- The provision of training and other support for to enable them to secure or progress within employment
- The provision of facilities for hire by the local community and other groups
- The provision of a chaplaincy to service users, the local communities that we serve, and our staff and volunteers
- The provision of youth clubs and assorted in formal education activities for young people, including those identified as being vulnerable and/or at risk
The previous year we announced the Board decided to cease offering nursery provision and the delivery of training apprenticeship. During the year we ceased these services. In the year under review the Association managed 330 Bed spaces. These units provide much needed accommodation for formerly homeless people, many of whom are young and represent a diverse community. This is augmented by the provision of housing related support which we provide directly at our supported housing schemes (60%) and general needs (40%). Our specialist housing provides support for vulnerable groups within our society, this includes, young people, young families, those with mental health issues and those suffering domestic abuse, drug and alcohol recovery, and ex-offenders. We will continue to deliver ambitions to build more homes and provide services that meet the needs of our customers.
In addition, we operate one children’s day nursery across the Borough of Solihull and provide a range of holiday play schemes and out of school clubs. We also operate a youth services team, delivering open access and bespoke youth work programmes, predominantly in Coventry. We are aware of the challenges faced by the Association as it responds to some financial challenges created through loss of income and the impact from Covid19.
## **Chair’s Statement**
I want to start this year’s Chairs statement by firstly thanking God for His guidance and direction for us as an organisation and despite many of the challenges we have faced we acknowledge that it is often during these difficult times that we reflect and refocus and 2021 – 2022 has enabled us to do just that – reflect on our key priorities. We have planned for the future sustainability of our organisation and importantly acknowledged that ‘in our hearts we plan our course but the Lord establishes our steps’. Proverbs 19:6.
This year we have made some key decisions this included the appointment of a new CEO, and under her leadership we have restructured elements of the organisation, closed some of our services, exited contracts, dealt with contractors going into liquidation at our Northfield site, which meant we have had to seek a loan to fund what was initially a build that wouldn’t have cost us anything. We have done all this whilst dealing with and emerging from a national pandemic, and like many of us within society we have felt the impact of Covid on our staff, our volunteers, our services and our service users.
4
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **REPORT OF THE TRUSTEES**
## **(incorporating the Strategic Report)**
This meant that many of our plans to try and build a single, unified team and corporate culture and invest in future developments had to be put on hold whilst we remodelled our services to focus on a ‘Back to Basic’s’ emphasis with the key drivers being Housing and Youth and building on a solid financial infrastructure.
Whilst we have endured some significant challenges we have also seen some significant progress and we really want to celebrate some of these achievements. We have developed our strategic plan that focusses intentionally on 10 key priorities for the next 2 years, streamlined our Operations delivery so that we connect our housing offer with our youth provision. We have focussed on building safety and invested in this year’s maintenance programme. We have delivered on regulatory compliance and can confidently say that we have seen significant progress within our assets, development and health and safety areas. We have made cost savings within our corporate services by realigning our delivery to become more 21[st] century relevant. We have also commissioned a stock condition survey that now gives us a clear investment and refurbishment plan for our properties over the next 20 years. We have continued to deliver excellent accommodation support services for our residents and cemented our youth provision particularly in Coventry. We have delivered organisational wide training on Equity, Diversity and Inclusion (EDI) and adopted the EDI Charter as part of the wider federation. We have mandated organisational wide training to become a Trauma Informed Organisation and relaunched our values with a focus on the behaviours that reflect the values we stand for. We have appointed the board Safeguarding Champion and I am pleased to have taken on the role of the Equity and Diversity Champion for the board.
Our staff conference this year was slightly later than usual but we were so encouraged with the turn out to our first face to face conference in over three years with over 90% of staff in attendance. The conference created an opportunity for fine dining – with the food being provided by an ex – resident who has now established her own catering company – a fantastic achievement. It enabled us to say a huge thank you to staff who supported her to this point in her journey and in particular one of our concierge’s who was instrumental in providing guidance and support. We also celebrated those who have worked with us for a significant time through the presentation of our long service awards and we recognised others for reflecting the values in their behaviours. It was an absolute honour for example to acknowledge our longest serving member of staff – who has been with us for just shy of 30 years and all this at the age of 91 – an absolute privilege to be able to appreciate the special contribution this individual has made. It was also humbling to hear the testimonials of ex – service users and to embrace our staff members talking so passionately about what it means to them to work for YMCA Heart of England. Clearly explaining that their commitment is so much more than ‘just the day job’.
As Chair of the Board and along with the Trustees we certainly acknowledge the willingness of our staff and volunteers who go the extra mile to maintain services to our beneficiaries wherever possible and this has been truly inspiring.
In the face of many challenges, and the significant unforeseen additional costs for our Northfield build it is all the more striking that we are reporting a surplus this year. This has been clearly down to the decisions we have taken throughout the year to ensure we are sustainable and I want to thank the CEO, the Executive Leadership team and the clear steer from our trustees on coming to some key decisions which at times were extremely difficult. We also recognise the huge part that our staff team have played in this success and want to extend our sincere gratitude for the resilience and continued commitment to drive forward our plans.
We are looking forward to the next 12 months of stability for the organisation as we build on a solid foundation to continue to strive and reach out to those most in need. We want every staff member and volunteer, our beneficiaries and the communities we serve across Coventry, Birmingham and Warwickshire, to really feel the values in the way that we treat them and operate as an Association. In that regard it is especially pleasing to report that we have appointed a new Director of HR and Culture and we look forward to her starting with us as we work together to embrace a Christ like culture reflecting the values at every touch point of our organisation. We look forward to organisational development and external quality kite marks that confirm the excellent work we are doing. We look forward to capturing more of the voice of our beneficiaries, staff and service users as we focus on continuous improvement.
5
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **REPORT OF THE TRUSTEES**
## **(incorporating the Strategic Report)**
We are also looking forward to putting in place governance training for our trustees who voluntarily give up their time to ensure the organisation has measures in place to mitigate risk, to impact government thinking and to secure a financially robust future so we can in turn make an impact on those we serve through the lenses of Kingdom, Social and Financial measures.
We understand that some of the targets and KPI’s that we have agreed may be challenging particularly within our housing and youth area but we have confidence that these are achievable.
Trustees are looking forward to an even more positive annual report next year and I end by simply saying ‘ thank you’.
## **Our response to Covid -19**
Throughout the financial year under review the Association has to manage the impact of the coronavirus pandemic on our operations. All of housing schemes remained open and continued to offer a secure home with access to remote support to all of our residents. Our community facilities remained closed for most of the year in response to government guidance, whilst the operation of our nurseries has been disrupted by the various lockdowns. The Board made a difficult decision to cease offering nursery provision and the delivery of training apprenticeship. We continued to deliver online support to the most vulnerable young people on our bespoke youth work programmes
We have made good use of the government’s furlough scheme throughout the year to protect affected staff but a small number of employees were sadly made redundant. Because of our actions, our underlying financial position remains secure, as highlighted in the report.
Covid-19 has impacted significantly on this reporting period, with income in our learning and community’s department significantly below our initial expectations. Our learning and community’s department lost revenue and as a result our services were ceased, some key staff made redundant. Our main income streams (approximately 87% of our total income) relate to housing services. We maintain a good waiting list and high occupancy on all our schemes. Rent payments continue to be received.
We have invested considerably in measures to protect the health and safety of our service users and employees. Where possible our employees are working from home, using enabling technology solutions and working flexibly around their domestic circumstances. For those employees unable to work from home, we have implemented both social distancing and elevated health measures in our work places, including temperature checking and additional cleaning regimes to ensure the safety of our people. We are acting compassionately and quickly where we identify that people are struggling, protecting resident income, employees’ welfare, and keeping vital services running. These measures obviously have had some costs, but have enabled us to remain operating in most areas. There were no significant outbreaks of coronavirus infections and sickness absences were no higher than normal. We recognise that not everyone will be comfortable with face-to-face meetings and events and so we have invested in technology that will allow ‘hybrid’ events with both physical and virtual attendees. And we are applying to various grant-giving bodies to secure funding for community outreach projects so that we can continue to support vulnerable young people.
In all these ways YMCA Heart of England responded well to the challenges the pandemic has posed, and we believe that the future of the Association remains secure.
## **Statement of Public Benefit**
The Trustees consider they have complied with the duty in Section 17 of the Charities Act 2011 to have due regard to public benefit guidance published by the Charity Commission.
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**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **REPORT OF THE TRUSTEES**
## **(incorporating the Strategic Report)**
In the year under review the Association worked across three main service areas which provided benefit not only to our service users but also to the wider community. We work with people from all social and ethnic backgrounds and provide services in the cities of Birmingham and Coventry and the boroughs of Solihull and Rugby, focussing on inspiring people to reach their potential.
During the year, we provided 264 bed spaces of supported accommodation each night. These properties provide supported housing to vulnerable and disadvantaged groups. We work with people to provide skills and confidence to move towards independent living and to begin contributing to the wider community. In addition, we provided 66 bed spaces of move-on general needs for people who no longer require support. These are let at below market rents.
## **Financial Review**
## **Statement of Comprehensive Income**
Overall income decreased this year by 18%. The main reason for this is largely to do with the release of £1.18m grant for the Development of Northfield in the previous year.
Operating costs remained broadly in line with 2020/21, with increased maintenance costs of £109K as we invest in our homes, enhance building safety and deliver a high service level to our customers.
Surplus on disposal of £8K relates to the disposal of our fleet of motor vehicles. The proceeds will be reinvested in replacing social assets.
Interest costs has increased by 3% compared to last year due to the increase in Bank of England base rate.
Covid-19 has materially impacted the performance of both Nurseries, reporting an operating deficit of £135K including redundancy costs of £36.7K. We are aware of the financial challenges coupled with the impact from Covid-19 and the Board made a difficult decision this year to close both nurseries. We recognise the operating environment is becoming more challenging for small providers diversifying their portfolio in this area; and recognise that economy of scale is required to scale up. Such changes mean that we are able to focus our attention and investment on being an excellent landlord
Training and Conferencing services and Cafe operating performance decreased this year by 24% and reporting an operating deficit of £190K. We have been affected by Covid-19 in particular in delivering apprenticeships. As a result the Board made a decision to cease delivering apprenticeships in this year. We understand no charity will survive or succeed without adapting and evolving to new environments as they emerge.
Other non-social housing decreased by 57% this year which relates to securing grants in the previous year.
The surplus generated for the year will continue to be re-invested into our development programme, enhancing our systems and providing excellent service all round.
## **Statement of Financial Position**
## **Growth in asset base**
The total value of housing assets increased by 1% compared to the previous year and Other assets went down by 9%. During the year the refurbishment of Magdalene Court at our Northfield site was put on hold. The contractor went into liquidation which meant we had to seek a loan to fund the development.
We continue to deliver an ambitious development programme while maintaining a resilient balance sheet.
Housing properties increased by a net of £228K which comprises of £562K additions, £335K depreciation.
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**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **REPORT OF THE TRUSTEES**
## **(incorporating the Strategic Report)**
We could not have grown our assets if it were not for the support of Homes England, Heart of England, Charity Bank and Unity Trust Bank. We would like to record our appreciation for the ongoing support.
## **Liquidity**
Our debt held has decreased by 4% (2021: 3.4%) compared to the previous year to fund this growth. The increase is higher than the increase in net book value of housing. The loan debt at year end stood £3.6m.
## **Total Reserves**
Total reserves remained in line with 2020/21.
## **Pension Costs**
Heart of England YMCA participated in a multi-employer defined benefit pension plan for employees of YMCAs in England, Scotland and Wales, which was closed to new members and accruals on 30 April 2007. The last triennial valuation of the scheme was performed at 1 May 2020. This has shown that the pension recovery needs to be extended by two years.
YMCA Heart of England deficit decreased to £245,048 from £285,493 last year.
## **Bank**
Bank balances at the year-end stood at £1.7m (2021 £2,04m) and the cash flow forecasts for 2022/23 are all positive. The bank balance at year end includes a net amount of £983K for the redevelopment of our Northfield site which is grant funded by Homes England and Heart of England. We anticipate the grant to be spent by the end of the current financial year.
## **Immediate Operating Environment**
From April 2021, we continue to ensure that the Association has strong liquidity and that committed bank facilities will remain available and that the value of charged security continues to meet loan asset cover requirements.
As part of our aspirations for a more sustainable future, YMCA HoE Strategic Plan will establish a Sustainable Finance Framework, which will set out the work being done on sustainability. It will allow YMCA HoE to attract new efficient funding that will enable the development of quality homes, the refinancing of our existing stock, and help meet the costs of renovation to enable YMCA HoE to ensure our homes are in excellent condition. We know that the impact COVID-19 will make the operating environment become more difficult. It is likely to lead to an increase in Universal Credit applications, the likelihood of the UK entering a period of recession which may increase the level of rent arrears affecting the ability to collect rent. Delays in the progression of new developments of which we have experienced with the Northfield Development. Backlog of repairs that will require additional resources to meet short term constraints. Our Boards focus has been on Liquidity during this reporting year and will continue to do so.
## **Value for Money Statement**
YMCA Heart of England is at the forefront of homeless prevention and alleviation in Birmingham, Coventry and Rugby. These activities have come under increasing pressure through the combination of funding cuts, the social housing rent reduction policy and the inevitable rise in homelessness and rough sleeping. This means our resources need to be managed efficiently so we can support as many people as possible. Our annual budget planning process includes scrutiny of each service, staffing complement and associated costs to ensure that our resources are focused on delivering the highest quality of services to our residents that we can realistically afford.
8
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **REPORT OF THE TRUSTEES**
## **(incorporating the Strategic Report)**
The same level of scrutiny is applied for our other services: nursery provision, conferencing and our youth work. Each area is monitored regularly at subcommittee level in respect of social and financial outcomes to ensure that we continue to deliver the highest quality can within the resources available. In addition, where funding is received from grant giving bodies (e.g. the Youth Investment Fund) our spending plans are subject to external scrutiny to ensure that they deliver value for money.
In the last few months the Board and Executive Leadership Team have been working on an impact framework which will measure the wider impact of our activities alongside financial outcomes, thereby ensuring we deliver fully on our mission and values and use our resources to best effect. The framework is now agreed as covering;
- Finance: utilisation, sustainability and stewardship
- Social: progression, community and influence
- Kingdom: experience, ethos and empower
This framework is being developed into a series of measures and performance indicators and we have started implementing these during this financial year.
We are reporting on the Regulator of Social Housing (RSH) Value for Money standard and accompanying code of practice. The standard requires us to publish performance against our own value for money targets and against a series of common metrics with which to measure economy, efficiency and effectiveness.
The purpose of the Value for Money approach is to:
- Continue to drive improvements in VFM within the social housing sector
- Ensure a strategic approach to delivering VFM is embedded within the business
- Encourage investing in existing homes and new housing supply
- Enhance the consistency, comparability and transparency of VFM reporting.
We set out below a comparison between this year and last on our performance. Additionally, we have compared our performance to the National Housing Federation Sector Scorecard using the median.
## **Regulatory Metrics**
|**RSH Metric**|**2021 /22**|**2020/21**|**Sector Scorecard**
**National Federation**
**(Median)**|
|---|---|---|---|
|**1. Reinvestment %**|**3.0**|**8.9**|**5.10**|
|**2. New supply delivered**|**2**|**60**|**0.00**|
|**3. Gearing %**|**9.7**|**9**|**33.82**|
|**4. EBITDA MRI interest cover %**|**330.8**|**1,753**|**215.95**|
|**5. Social housing cost per unit £**|**12,256**|**11,383**|**3,891**|
|**6A. Operating margin (social housing) %**|**0.7**|**3.1**|**25,49**|
|**6B. Operating Margin (overall) %**|**(0.2)**|**25.4**|**23.54**|
|**7. Return on Capital Employed %**|**0.5**|**7.8**|**3.10**|
9
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **REPORT OF THE TRUSTEES**
## **(incorporating the Strategic Report)**
## **1. Reinvestment %**
We recognise there is a backlog of unmet housing need and our strategy is to increase our stock each year. This year due to the impact from Covid-19 we experienced delays in the progression of new developments of which we have experienced with the Northfield Development.
## **2. New supply delivered %**
The focus for the future is reinvestment in existing housing stock to ensure it is fit for purpose for the coming decades as well as increasing our housing stock to support individuals and families. We continue to see unprecedented levels of external change and all political parties believe more homes need to be built in the coming years.
We have been building a development pipeline to provide additional new build accommodation. We now have 1 scheme on site (total 27 units), with additional schemes being actively pursued as we look to maximise use of our available resources for the benefit of the wider community we serve.
## **3. Gearing %**
This represents our net debt to lenders as a percentage of the total cost of our housing properties. We have been successful in working with Homes England and other partners to keep borrowing as low as possible. Whilst this ratio remains low we understand to deliver social value we need to be financially sound and make the most of our resources to deliver the services that our customers need. We also need to provide assurance to our lenders and funders.
## **4. EBITDA MRI Interest Cover %**
This represents the level of surplus compared to the interest payable. A one-off event reported in the previous year under Other Income which materially increased the EBITDA is the reason why the percentage is extremely high in 2020/21. These events are the release of Grant for the Development of Northfield from Heart of England, the value of this is £1m we also received £21K of Government JRS income during this reporting period of which is reported in Other Income.
## **5. Headline social cost per unit**
This represents social housing costs divided by total units owned and managed. Like other providers we have spent a lot of time analysing our cost per unit. Our strategic aim is for our headline social cost per unit to reduce each year. We recognise there is more to do and our aim is to avoid spending time and money on undertaking repairs where this could have been avoided. Our Asset Management team are improving their working models to ensure they analyse and look for properties with signs of neglect and linking this to the planned maintenance schedules.
## **6A. Operating margin (social housing lettings only) %**
This represents operating surplus from social housing lettings divided by turnover from social housing lettings. The Operating margin for Social housing lettings decreased from 3.1 to 0.7 compared to the previous year this is largely to do with the release of £1.8m grant for the Development of Northfield in the previous year.
## **6B. Operating margin (overall) %**
Overall operating Margin decreased from 25.4 to 0.2 largely to do with the release of £1.8m grant for the Development of Northfield and £168K of Government JRS income in the previous year.
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**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **REPORT OF THE TRUSTEES**
## **(incorporating the Strategic Report)**
Bad debts, void loss and current tenant arrears are key performance indicators in assessing efficiency and we monitor this monthly. Our aim is to reduce costs and deliver VFM efficiencies and using all our surplus to build more homes.
## **7. Return on capital employed %**
This compares the overall operating surplus to total assets less current liabilities. The level of return is low compared to the previous year, this is due to the merger with YMCA Coventry and Warwickshire and the one-off Exceptional Income reflected in 2020/21.
## **Principal risks and uncertainties**
New, emerging and high scoring risks are monitored through a Strategic and Operational Risk Register. The Executive Directors keep the register under review to ensure it fully reflects the risks to the delivery of YMCA Heart of England operations and Strategic Plan. Designated Managers are responsible for identified risk area and the Company Secretary oversees the progress against actions to mitigate risks.
The Board has also adopted a risk appetite which sets out the nature of levels of risk YMCA Heart of England are prepared to take to achieve our strategic objectives. Performance against this is being worked, facilitated through the use of metrics to enable the Board and committees to assess whether performance remains within the risk appetite parameters.
The Chief Executive reports to the Board on the effectiveness of the internal control environment.
The following are the key strategic risks that the Board considers, and the actions that have been taken to mitigate these and strengthen controls. The Board is continuing to monitor the dynamic post -pandemic operating environment and implement further actions to ensure that the risks arising are managed appropriately and activities remain within the agreed risk appetite.
11
## **HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **REPORT OF THE TRUSTEES**
## **(incorporating the Strategic Report)**
||**Risks**|**Risk responses**|**Risk responses**|
|---|---|---|---|
||**Risks**|**Examples of controls in place**|**Actions during the year to strengthen controls**|
|**1**|Financial capacity and income collection performance limits the delivery of
growth and business transformation. Increase bank interest rates and liquidity
risk.|•
Treasury management strategy monitoring
•
Monitoring liquidity risk
•
Regular stress testing
•
Monitoring the metrics that are used for financial risk.
•
Income collection and arrears performance monitoring|•
Implementation of income maximisation strategy
•
Establishment of sustainable finance framework
•
Key Performance indicators reported to the Executive Team
monthly and Board bi monthly.
•
Business Plan and stress-testing which demonstrate ability to
withstand various economic stresses together with an increased
development programme.|
|**2**|Reputational damage due to bad publicity|•
Independent internal review of all incidents|•
Monitor and seek professional advice. Regular internal review.|
|**3**|Changes in the external funding environment e.g. Local Authority
Commissioning coming under tougher budgets, scrutiny and/or delays.|•
Monitoring roll-over time. Build good relations with
commissioners. Be proactive but maintain pricing structure
•
Better information management and tracking|•
Keep up to date with current affairs, feedback on local, regional,
and national guidance around Housing key priorities.|
|**4**|Responsibilities on becoming an Environmental and sustainably Employer
and meet the Government Environmental Policy|•
Promote responsibility for the environment and communicate
and implement policy to workforce
•
Minimise waste by reduction, re-use and recycling methods
•
Identify and provide appropriate training , advice and
information for staff and encourage them to develop new
ideas andinitiatives.|•
Implementation of training programme to all staff.
•
Comply with all relevant environmental legislation/regulation.|
|**5**|Recruitment & Retention of staff, attract and retain people with the skills and
experience required to deliver strategic plan. Avoiding the cost of not getting
it right first time|•
Independent
benchmarking
of
executive
and
senior
managers salaries. Gender pays gap data, job evaluation and
external benchmarking, monitoring of changes to staff
establishment and turnover|•
Develop of employer brand, Develop of resource strategy,
Development
of
hybrid
working
model,
management
development and coaching,.|
|**6**|Development Risk / length of time to develop schemes|•
Review current and future development projects with a view
to only spend time on developments that are most likely to
crystallise.|•
Focus on Northfield and sweating the assets|
|**7**|YMCA Heart of England does not meet its Health and Safety obligations as a
landlord, employer, developer, and provider of social care|•
Specialist team in place with subject experts embedded
across the business
•
KPI monitored by the Board and committees
•
Compliance issues monitored by the Board
•
Oversight of activity by Director of Asset and Development
•
Management Plans in place for key risk areas e.g fire,
asbestos etc.|•
Implementation of compliance modules across all asset
compliance activities.
•
Further development of the suite of KPIs
•
Rollout digitalisation of compliance process, sourcing a new
CRM software to capture the data for improved and rapid
decision making and improve productivity.|
|**8**|Increase in housing arrears due to cost of living and increase in energy prices|•
Treasury management strategy monitoring
•
Monitor on weekly basis; work with tenants and the local
authority.|•
Improve relationship with Housing Benefits team, reduce cash
payments and encourage standing orders or re-occurring
payments by credit cards.|
|**9**|Investment decisions do not give appropriate weight to competing strategic
agendas, e.g. environment, safety, growth digitalisation.|•
Strategic plan monitoring, Growth Strategy monitoring,
Regular Stress Testing, Environmental Strategy, Value for
Money Strategy|•
Mapping procurement methodology, timing of delivery and
location of new homes in the period 2022-2025. Maintaining and
understanding of the market for Land and S106 (Legal
agreements between local authorities and developers) and
investment strategy in Digitalisation|
|**10**|Resilience of IT Systems to cyber attacks|•
Operational and governance oversight of IT Strategy . Cyber
essentials accreditation to be gained, Modern security
appliances and systems to protect against cyber attack.|•
Implement additional security systems and security. Implement
regular assessment of internal controls independent from the IT
and Business Development. Audits on Data by Risk Evolves.
External Audit on IT environment.|
|**11**|Customer insight is not embedded in business design and service review
process|•
Voice of the Customer Strategy being worked on,
Independent methodology for customer satisfaction|•
Service re-structure around customer journey, New complaints
process and increased focus on early resolution and learning.
Customer satisfaction board level KPI|
12
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **REPORT OF THE TRUSTEES**
## **(incorporating the Strategic Report)**
## **Going Concern and Viability Statements**
The Covid-19 pandemic has developed rapidly in 2021. The resulting impact of the virus on the operations and measures has not impacted materially on our financial performance in 2021/22 however, measures have already been taken to minimise the impact on our ongoing viability.
In assessing viability, the Board considered several key factors, including business models, our strategy, and risk appetite. Our assessment of viability therefore continues to align with a 5-year outlook.
Given the global political and economic uncertainty resulting from the Covid-19 pandemic, coupled with the already fast-paced change taking place across the hospitality, conferencing, training and the nursery sectors we saw significant volatility and business disruption, which reduced our expected performance in these areas in 2020/21.
We have already felt the impact of lockdown within our community activities (which includes nurseries, café, conferencing, youth work and training) in 2021/22. These business areas have been stress tested throughout the year and viewed from internal and external lense. The Board made a decision to close our two remaining nurseries and cease providing training apprenticeship. Such changes mean that we are able to focus our attention and investment on being an excellent landlord.
Nevertheless, measures have already been taken to protect our liquidity and operating performance. Immediate cost reductions and mitigation measures were put in place.
Restructures of our staff team have started which will contribute to our liquidity strength. This is mainly within conferencing, training and nurseries.
The Board’s focus following Covid-19 is to place a stronger emphasis on liquidity and solvency and ensuring that the Association has adequate resources to continue in operation, meet it liabilities as they fall due, and retain sufficient available cash across all two years without breaching any loan covenant. Having reviewed revised financial forecasts prepared by officers, considering the likely impact of Covid-19 and the mitigating actions being taken, the Board has a reasonable expectation that the Association will remain financially viable.
The Board are satisfied the business model and strategy is adaptable with minimum risk on liquidity and solvency if a possible exit strategy is required from our community activities. Also, scenarios have been tested to scale up operations quickly to meet a return of consumer demand.
Regular stress testing is performed on the Association and different scenarios and sensitivities have been reviewed on the Association’s projected cashflow position and financial covenant. Should these occur, mitigating actions would be required to ensure the Association remains liquid and financial viable.
These actions were identified as the Covid-19 pandemic emerged as part of the contingency planning that the Association has been undertaking which is considered both feasibility and timely to execute.
We have taken a series of steps to strengthen the Association’s liquidity and increase the resilience of the balance sheet by sweating our existing assets and please to announce in 2022/23 6 additional units will be development at Will Steel House.
We are also looking to the future. The provision of social housing has vital part to play in the government’s response to this crisis and they have already announced significant sums of money to help boost social housing supply and end rough sleeping for good. The delivery of more social housing is one of the key strategic objectives in YMCA Heart of England’s new strategic plan and we are already in discussions with local councils in our area of benefit with a view to securing some of the recently-announced government money for investment in social housing.
13
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **REPORT OF THE TRUSTEES**
## **(incorporating the Strategic Report)**
## **Reserves Policy**
The Finance Sub-Committee, on behalf of the Board of Trustees, conducts an ongoing review of the level of reserves consistent with ongoing activities of the Charity. The trustees are taking into consideration the economic environment and risks associated with the various sources of income, expenditure plans and what level of working capital is required to continue core activities. The reserve policy is considered every quarter in line with the quarterly accounts.
We use a rolling five-year forecast to model how we will fund the delivery of our strategy.
We monitor managed cash which includes all amounts available to finance the general activities net of any financing agreements. The trustees have agreed that managed operating cash outflows should exceed a minimum of three months to six months annualised forecast cash outflow.
Financial performance and forecast information is monitored monthly to assess the cash requirements of the Charity. The reserve policy is considered and monitored every quarter.
Our Reserve Policy is set to take into consideration:
- Income risk reserve to protect the charity against a fall in income levels
- Working capital reserve to provide working capital if expenditure is needed ahead of income being received
- Designated reserves set aside to meet essential future spending and unplanned emergency repairs and other expenditure.
- Level of funding for unexpected opportunities
Covid-19 has affected both demand and funding for Heart of England YMCA. The Pandemic is, at the same time, reducing our income. As we are approaching the remainder of the year with caution our Reserve Target was achieved.
||**2022**|
|---|---|
|Total Reserve|£4,884M|
|Less Capital Grant restricted for Phase 5 on Magdalene Court at our
Northfield Site|-£983K|
|LessTotal Fundsheldfor DesignatedReserves|-£380K|
|Less Revaluation Reserve|-£408K|
|**Available Reserves**|**£3,113M **|
Our Reserves measured as at 31 March 2022
||**2022**|
|---|---|
|Managed Cash outflow based on 12 months forecast to the period ending
March 2023|£5,211M|
|Divide by 12|£434k|
|||
|**Months of annualised forecast of operating cash outflows (£3,113M**
**available reserves divide by £434K)**|**7 months**|
14
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **REPORT OF THE TRUSTEES**
## **(incorporating the Strategic Report)**
## **Corporate Governance**
We are committed to the principles of Good Governance. The trustees adopt the National Housing Federation’s (NHF) 2020 code of governance to measure good governance practices as well as the Charity Governance Code.
## Delegation and control
The board regularly reviews which matters are reserved to the board and which can be delegated. It collectively exercises the powers of delegation to senior managers, committees or individual trustees, staff or volunteers. The board has not recently reviewed its delegated powers but intends to do so in the forthcoming year and is in the process of pulling together a scheme of delegation.
The board regularly considers information from other similar organisations to compare or benchmark the organisation’s performance.
At the moment salaries are the only area where we benchmark. (We co-ordinate production of a biennial YMCA salary survey.) We are currently working with YMCA colleagues across the region to produce comparative data for operational performance.
## Actively managing risks
The board retains overall responsibility for risk management and discusses and decides the level of risk it is prepared to accept for specific and combined risks.
The board regularly reviews the charity’s specific significant risks and the cumulative effect of these risks. It makes plans to mitigate and manage these risks appropriately.
The charity considers using a Governance Committee to lead the board appointment process and to make recommendations to the board.
The board reviews its own performance and that of individual trustees, including the chair. Such evaluation typically considers the board’s balance of skills, experience and knowledge, its diversity in the widest sense, how the board works together and other factors relevant to its effectiveness.
The board reviews its collective effectiveness at an annual board away day. This discipline has continued throughout the current pandemic. However, we have not previously reviewed the performance of trustees on an individual basis, this has been introduced through a robust skills and competency matrix and will be reviewed by trustees in the current financial year.
Notwithstanding this, the Association considers itself to have high standards of governance. The policies of the Charity are determined by the Board of Trustees, which meets bi-monthly. The Charity’s operations are managed by the Chief Executive, who reports to the Board of Trustees. The Charity has a system of internal controls designed to provide reasonable, but not absolute, assurance against material misstatement or loss due to fraud or error. The system includes corporate controls over income and budget comparison, proper supervision and delegation including operational and financial review procedures, limitation on the spending power of individuals and control over the Charity’s assets. The internal controls are subject to regular review and are updated to take account of organisational and operational changes. There are four sub-committees that meet bi-monthly on matters of housing, finance, development and social enterprise.
A review of governance structures was undertaken in the year under review. This has already resulted in improved performance reporting to trustees through the Association’s operational committees. In the current year it will also lead to the overhauling of the Key Performance Indicators against which officers’ performance is assessed.
15
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **REPORT OF THE TRUSTEES**
## **(incorporating the Strategic Report)**
## **Key Management and Remuneration**
There were four executive directors and one chief executive of the Association during the year under review. They were:
- Pauline Tomlinson –Chief Executive
- Fawzia Radman – Director of Finance and Corporate Services
- Daljeet Matharu – Director of Assets and Development
- Hyacinth Blackburn – Director of Housing & Youth
The Association’s policy is to review salaries annually as part of the budget setting process. This may result in a cost of living pay increase being awarded to all employees. The Association’s policy is that any amendment to the salary level of an individual employee or group of employees beyond the annual cost of living increase must be recommended by the appropriate departmental director, and authorised by the Director of Finance and Chief Executive.
The remuneration of executive directors is set by the Chief Executive, bearing in mind salaries for similar roles at comparable organisations, including other YMCAs within the region. Any amendment to the salary of an executive director beyond the annual cost of living increase must be recommended by the Chief Executive and authorised by the Treasurer and the Chair.
The remuneration of the Chief Executive is set by the Board. In considering the appropriate remuneration level they will look at salaries for comparable organisations, especially other YMCAs within the region. This is considered alongside other factors, such as the size and complexity of the Association’s operations, and the affordability of any remuneration package to the Association.
All staff and trustees are required to declare any conflict of interest that may exist (or be perceived to exist) before recommending or authorising any amendment to an employee’s remuneration.
## **STATEMENT OF TRUSTEES’ RESPONSIBILITIES**
The trustees (who are also directors of Heart of England YMCA for the purposes of company law) are responsible for preparing the Report of the Trustees (including the Strategic Report) and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
Company law requires the trustees to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Association and of its income and expenditure for that period.
In preparing these financial statements, the trustees are required to:
- select suitable accounting policies and then apply them consistently;
- observe the methods and principles in the Statement of Recommended Practice for Social Housing Providers (Housing SORP 2018);
- make judgements and estimates that are reasonable and prudent;
- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Association will continue in operation.
16
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **REPORT OF THE TRUSTEES**
## **(incorporating the Strategic Report)**
The trustees are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the Association and enable them to ensure that the financial statements comply with the Companies Act 2006, the Housing and Regeneration Act 2008 and the Accounting Direction for private registered providers of social housing in England 2019. 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.
## **DISCLOSURE OF INFORMATION TO AUDITORS**
In so far as the trustees are aware:
- there is no relevant audit information of which the Association’s auditor is unaware; and
- the trustees have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.
The trustees 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.
## **AUDITORS**
Under section 487 of the Companies Act 2006, Cooper Parry Group Limited will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is the earlier.
By order of the Board
**Paul Harris Chair and Trustee**
Date: 22nd September 2022
17
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Independent Auditor’s Report to the Members of Heart of England Young Men’s Christian Association**
## **Opinion**
We have audited the financial statements of Heart of England Young Men’s Christian Association for the year ended 31 March 2021 which comprise the Statement of Total Comprehensive Income, the Statement of Changes in Reserves, the Statement of Financial Position, 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 Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
- give a true and fair view of the state of the Association’s affairs as at 31 March 2022, and of the Association’s incoming resources and application of resources, including its income and expenditure for the year then ended;
- have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
- have been prepared in accordance with the requirements of the Companies Act 2006, the Housing and Regeneration Act 2008 and the Accounting Direction for private registered providers of social housing in England 2019.
## **Basis for opinion**
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Association in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, 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**
In auditing the financial statements, we have concluded that the trustees’ 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 Association’s ability to continue as a going concern for a period of at least 12 months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the trustees with respect to going concern are described in the relevant sections of this report.
## **Other information**
The board is responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
18
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Independent Auditor’s Report to the Members of Heart of England Young Men’s Christian Association (continued)**
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**
In our opinion, based on the work undertaken in the course of the audit:
- the information given in the Report of the Trustees (incorporating the strategic report) for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the Report of the Trustees (incorporating the strategic report) has been prepared in accordance with applicable legal requirements.
## **Matters on which we are required to report by exception**
In the light of our knowledge and understanding of the Association and its environment obtained in the course of the audit, we have not identified material misstatements in the Report of the Trustees (incorporating the strategic report).
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
- adequate accounting records have not been kept by the Association or returns adequate for our audit have not been received from branches not visited by us; or
- the Association’s financial statements are not in agreement with the accounting records and returns; or
- certain disclosures of trustees’ remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit
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**
As explained more fully in the Statement of Trustees’ responsibilities set out on page 18, the trustees 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 is responsible for assessing the Association’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the board either intends to liquidate the Association or to cease operations, or have no realistic alternative but to do so.
19
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Independent Auditor’s Report to the Members of Heart of England Young Men’s Christian Association (continued)**
## **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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud is detailed below:
Our assessment focussed on key laws and regulations the Association has to comply with and areas of the financial statements we assessed as being more susceptible to misstatement. These key laws and regulations included but were not limited to compliance with the Housing and Regeneration Act 2008 and the Accounting Direction for private registered providers of social housing in England 2019, Charities (Protection and Social Investment) Act 2016, Companies Act 2006, Charities Act 2011, taxation legislation, data protection, anti-bribery and employment legislation.
We are not responsible for preventing irregularities. Our approach to detecting irregularities included, but was not limited to, the following:
- obtaining an understanding of the legal and regulatory framework applicable to the Association and how the association is complying with that framework, including agreement of financial statement disclosures to underlying documentation and other evidence;
- obtaining an understanding of the Association’s control environment and how the Association has applied relevant control procedures, through discussions with Trustees and other management and by performing walkthrough testing over key areas;
- obtaining an understanding of the Association’s risk assessment process, including the risk of fraud;
- reviewing meeting minutes of those charged with governance throughout the year; and
- • performing audit testing to address the risk of management override of controls, including testing journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias.
Whilst considering how our audit work addressed the detection of irregularities, we also considered the likelihood of detection based on our approach. Irregularities arising from fraud are inherently more difficult to detect than those arising from error.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
20
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Independent Auditor’s Report to the Members of Heart of England Young Men’s Christian Association (continued)**
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
## **Use of our report**
This report is made solely to the Association’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and section 137 of the Housing and Regeneration Act 2008. Our audit work has been undertaken so that we might state to the Association’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Association and the Association’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Simon Atkins FCA Senior Statutory Auditor
For and on behalf of
## **Cooper Parry Group Limited**
Statutory Auditors Cubo Birmingham Office 401 4[th] Floor Two Chamberlain Square B3 3AX
## **30 September 2022**
21
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Statement of Total Comprehensive Income for the year ended 31 March 2022**
**----- Start of picture text -----**
Note 2022 2021
Continuing Discontinued Total Continuing Discontinued Total
Activities Activities Activities Activities
£ £ £ £ £
Turnover
Underlying Operations 3 5,355,808 127,837 5,483,645 5,115,565 410,986 5,526,551
Other Income 13 21,075 - 21,075 1,180,643 - 1,180,643
5,376,883 127,837 5,504,720 6,296,208 410,986 6,707,194
Operating costs (5,085,202) (335,483) (5,420,685) (4,816,154) (391,259) (5,207,412)
Operating Surplus 5 291,681 (207,646) 84,035 1,480,054 19,727 1,499,782
Profit on disposal of property, plant & equipment (FA) 8,695 - 8,695 - - -
Write Down of Goodwill - - - - - -
Interest receivable & other income 6 - - - 190 - 190
Interest & financing costs 7 (101,014) - (101,014) (98,058) - (98,058)
Surplus/(deficit) for the year before tax 199,362 (207,646) (8,284) 1,382,186 19,727 1,401,914
Taxation - - - - - -
Surplus/ (Deficit) for the year 199,362 (207,646) (8,284) 1,382,186 19,727 1,401,914
- - - - - -
Remeasurements - Actuarial gain/ (loss) in respect of pension schemes
Total comprehensive income for the year 199,362 (207,646) (8,284) 1,382,186 19,727 1,401,914
**----- End of picture text -----**
The Financial Statements were approved by the Board on 22nd September 2022 and signed on their behalf by:
Paul Harris Chair and Trustee
Dawn Ward CBE Trustee
The accompanying notes on page 26 to 46 form part of these Financial Statements.
22
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Statement of Changes in Reserves for the year ended 31 March 2022**
**----- Start of picture text -----**
Income and Restricted Revaluation Total
expenditure Reserve reserve
reserve
£ £ £ £
Balance as at 1 April 2020 3,045,824 36,752 408,218 3,490,794
- -
Surplus / (deficit) from statement of comprehensive income 1,401,914 1,401,914
Transfer to Restricted Reserve Heart of England Community
Foundation (1,012,377) 1,012,377 - -
Balance at 31 March 2021 3,435,361 1,049,129 408,218 4,892,708
- -
Surplus / (deficit) from statement of comprehensive income (8,285) (8,285)
Movement in Restricted Reserve 66,366 (66,366) - -
- -
Write Down of Investment in subsidiary (200) (200)
Balance at 31 March 2022 3,493,242 982,763 408,218 4,884,223
**----- End of picture text -----**
The accompanying notes on page 26 to 46 form part of these Financial Statements.
23
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Statement of Financial Position**
## **At 31 March 2022**
## **Company No. 00170981**
**----- Start of picture text -----**
Note
2022 2021
£ £
Fixed Assets
Intangible assets and goodwill (Reclassified) 10 43,082 26,832
Tangible fixed assets - Housing Properties (Reclassified) 11 16,119,335 15,906,063
Tangible fixed assets - Other Fixed Assets (Reclassified) 12 1,772,672 1,963,948
17,935,089 17,896,843
Current Assets
Trade and other debtors 14 257,092 249,426
Stock - 2,436
Cash and cash equivalents 1,784,428 2,040,602
2,041,520 2,292,464
Creditors: Amounts falling due within one year 15 (1,101,884) (855,180)
Net current assets 939,636 1,437,284
Total assets less current liabilities 18,874,725 19,334,127
Creditors: Amounts falling due after more than one year 16 (13,718,580) (14,100,320)
Provisions for liabilities
Other provisions 19 (271,921) (341,100)
Total net assets 4,884,224 4,892,708
Reserves
Income and expenditure reserve 3,493,242 3,435,361
Revaluation reserve 408,218 408,218
Restricted reserve 982,763 1,049,129
Total Reserves 4,884,224 4,892,708
**----- End of picture text -----**
The Financial Statements on pages 22 to 46 were approved by the Board on 22nd September 2022 and are signed on its behalf by:
|Paul Harris|Dawn Ward CBE|
|---|---|
|Chair and Trustee|Trustee|
The accompanying notes on page 26 to 46 form part of these Financial Statements.
24
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Statement of Cash Flows**
**----- Start of picture text -----**
2022 2021
Note £ £
Net cash generated from operating activities 21 516,867 352,514
Cash flow from investing activities
Net purchase of tangible fixed assets 11 & 12 (547,082) (1,638,470)
Purchase of intangible fixed assets 10 (20,195) 1,509
-
Proceeds from sale of tangible fixed assets 30,261
Grants received - 1,082,377
Interest received - 190
(537,016) (554,394)
Cashflow from financing activities
Interest paid 7 (98,314) (95,358)
Repayments of borrowings (137,712) (135,307)
(236,026) (230,665)
Net change in cash and cash equivalents (256,176) (432,545)
Cash and cash equivalents at beginning of the year 2,040,603 2,473,148
Cash and cash equivalents at end of the year 1,784,428 2,040,603
**----- End of picture text -----**
The accompanying notes on page 26 to 46 form part of these Financial Statements.
25
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements**
## **1. Legal Status**
Heart of England YMCA is a company limited by guarantee, registered under the Companies Act 2006, an English registered social housing provider and a registered charity.
The address of the registered office is given in the information on page 2 of these financial statements.
The principal activities of Heart of England YMCA are set out in the Report of the Trustees.
Heart of England YMCA is a public benefit entity as defined by FRS 102.
## **2. Accounting policies**
## **Basis of Accounting**
The financial statements have been prepared in accordance with UK Generally Accepted Accounting Practice standards (UK GAAP) including adoption of Financial Reporting Standard 102, and the Statement of Recommended Practice for Social Housing Providers 2018, and with the Accounting Direction for Registered Providers of Social Housing in England 2019. The financial statements are also prepared under the requirements of the Housing and Regeneration Act 2008 and the Companies Act 2006.
The financial statements have been prepared on a going concern basis under the historical cost convention, modified to include certain items at fair value.
The financial statements are prepared in sterling, which is the functional currency of Heart of England YMCA, and rounded to the nearest whole £1.
## **Going Concern**
The Association’s business activities, its current financial position and factors likely to affect its future development are set out within the Report of the Trustees. The Association has in place long-term debt facilities, which provide adequate resources to finance committed reinvestment and development programmes, along with the Association’s day to day operations. The Association also has a long-term business plan which shows that it is able to service these debt facilities whilst continuing to comply with lender’s covenants.
On this basis, the Board has a reasonable expectation that the Association has adequate resources to continue in operational existence for the foreseeable future, being a period of at least twelve months after the date on which the report and Financial Statements are signed. For this reason, it continues to adopt the going concern basis in the Financial Statements.
## **Turnover**
Turnover represents rental and service charges income receivable, net of void losses in the year, revenue grants receivable from local authorities and income from social enterprise activities.
## **Other Income**
Interest receivable and investment income is accrued on a time apportioned basis by reference to the principal outstanding at the effective interest rate.
26
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **Government Grants**
Government grants include grants receivable from the Homes England, local authorities and other Government bodies.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
Government grants received for housing properties are recognised in income over the useful life of the housing property structure and, where applicable, its individual components (excluding land) under the accruals model.
Government grants relating to revenue are recognised in income over the same period as the expenditure to which they relate once reasonable assurance has been gained that Heart of England YMCA will comply with the conditions and that the funds will be received. Grants due from government organisations or received in advance are included as current assets or liabilities. Government grants received for housing properties are subordinated to the repayment of loans by agreement with the Homes England.
## **Other Grants**
Grants received from non-Government sources are recognised using the performance model. A grant which does not impose specified future performance conditions is recognised as revenue when the grant proceeds are received or receivable. A grant that imposes specified future performance-related conditions on the Company is recognised only when these conditions are met. A grant received before the revenue recognition criteria are satisfied is recognised as a liability.
## **Taxation**
Heart of England YMCA is a registered Charity and is therefore exempt from paying corporation tax on charitable activities.
## **Value Added Tax (VAT)**
The majority of the expenditure is subject to VAT which cannot be reclaimed. Expenditure is therefore shown inclusive of VAT.
Although a large proportion of the income is exempt from VAT, the Association charges VAT on some of its income and is able to recover VAT on directly attributable costs. The Association is also able to recover part of the VAT it incurs on overhead expenditure in line with a partial exemption method agreed with HM Revenue and Customs.
The Financial Statements include VAT to the extent that it is suffered by the Association and not recoverable from HMRC. The balance of VAT payable or recoverable at the year-end is included as a current liability or a current asset.
## **Interest Payable**
Interest is capitalised on borrowings to finance the development of qualifying assets to the extent that it accrues in respect of the period of development if it represents interest on borrowings specifically financing the development programme after deduction of related grants received in advance.
Capitalised interest is amortised over the life of the underlying asset.
Other interest payable is charged to income and expenditure in the year.
## **Leases**
All leases are operating leases and the annual rentals are charged to income and expenditure on a straight-line basis over the lease term.
27
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **Employee benefits**
The costs of short-term employee benefits are recognised as a liability and an expense.
The holiday year for Heart of England YMCA runs from 1 January – 31 December. The cost of any unused entitlement at 31 March is recognised in the period in which the employee’s services are received.
The best estimate of the expenditure required to settle an obligation for termination benefits is recognised immediately as an expense when Heart of England YMCA is demonstrably committed to terminate the employment of the employee or to provide termination benefits.
## **Retirement Benefits**
## **Defined Contribution Plan**
Heart of England YMCA offers two pension schemes to all of its employees.
The People’s Pension which is our default scheme on Auto-Enrolment offering contributions made on a salary sacrifice basis. This scheme auto-enrols employees on a 2% contribution rate which is matched by Heart of England YMCA.
The YMCA Personal pension scheme. This scheme allows contributions between 3% and 8% which is also matched by Heart of England YMCA on a salary sacrifice basis.
## **Defined Benefit Plan**
Heart of England YMCA participated in a multi-employer defined benefit pension plan for employees of YMCAs in England, Scotland and Wales, which was closed to new members and accruals on 30 April 2007. Due to insufficient information, the plan's actuary has advised that it is not possible to separately identify the assets and liabilities relating to Heart of England YMCA.
As described in note 18, Heart of England YMCA has a contractual obligation to make pension deficit payments of £42,830 per annum over the period to April 2029, increasing at an annual uplift of 3%, accordingly this is shown as a liability in these accounts. The amount paid in the year was £49,000 In addition, Heart of England YMCA contributed £11,596 to the operating expenses of the Pension Plan and these costs are charged as paid.
## **Financial Assets**
## **Debtors**
Debtors which are receivable within one year and which do not constitute a financing transaction are initially measured at the transaction price. Trade debtors are subsequently measured at amortised cost, being the transaction price less any amounts settled and any impairment losses.
Where the arrangement with a trade debtor constitutes a financing transaction, the debtor is initially and subsequently measured at the present value of future payments discounted at a market rate of interest for a similar debt instrument.
A provision for impairment of debtors is established when there is objective evidence that the amounts due will not be collected according to the original terms of the contract. Impairment losses are recognised in profit or loss for the excess of the carrying value of the trade debtor over the present value of the future cash flows discounted using the original effective interest rate. Subsequent reversals of an impairment loss that objectively relate to an event occurring after the impairment loss was recognised, are recognised immediately in income or expenditure.
28
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **Financial Liabilities**
## **Trade creditors**
Trade creditors payable within one year that do not constitute a financing transaction are initially measured at the transaction price and subsequently measured at amortised cost, being the transaction price less any amounts settled.
Where the arrangement with a trade creditor constitutes a financing transaction, the creditor is initially and subsequently measured at the present value of future payments discounted at a market rate of interest for a similar instrument.
## **Borrowings**
Borrowings are initially recognised at the transaction price, including transaction costs, and subsequently measured at amortised cost using the effective interest method. Interest expense is recognised on the basis of the effective interest method and is included in interest payable and other similar charges.
## **Provisions**
The Association recognises provisions where it has an obligation at the reporting date as a result of a past event, which it is probable will result in the transfer of economic benefits and that obligation can be estimated reliably.
Provisions are measured at the best estimate of the amounts required to settle the obligation. Where the effect of the time value of money is material, the provision is based on the present value of those amounts, discounted at the pre-tax discount rate that reflects the risks specific to the liability. The unwinding of the discount is recognised within interest payable and similar charges.
## **Intangible Fixed Assets**
Intangible fixed assets are stated at cost less accumulated amortisation. Intangible assets acquired on business combinations are capitalised separately from goodwill if the fair value can be measured reliably on initial recognition. Provision is made for any impairment.
Depreciation is provided evenly on the cost of intangible fixed assets to write them down to their estimated residual values over their expected useful lives. The principal period used for intangible assets is five years.
## **Tangible Fixed Assets – Housing Properties**
Housing properties are properties for the provision of social housing and are principally properties available for rent.
Completed housing properties are stated at cost less accumulated depreciation and impairment losses.
Cost includes the cost of acquiring land and buildings, and expenditure incurred during the development period. Only the direct overhead costs including interest associated with new developments or improvements are capitalised.
Housing properties are transferred at cost to completed properties when they are ready for letting.
Works to existing properties which replace a component that has been treated separately for depreciation purposes, along with those works that enhance the economic benefits of the asset, are capitalised as improvements. Such enhancements can occur if improvements result in either:
- An increase in rental income;
- A material reduction in future maintenance costs;
- A significant extension to the life of the property.
29
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **Depreciation of Housing Properties**
Freehold land or assets under construction are not depreciated.
The Association separately identifies the major components of its housing properties and charges depreciation so as to write down the cost of each component to its estimated residual value, on a straight line basis over its estimated useful economic life.
The Association depreciates the major components of its housing properties based on the following:
|**Building Components**|**Years**|**Building Components**|**Years**|
|---|---|---|---|
|Structure|50 / 100|Central Heating|30|
|Windows|30|Boilers|15-50|
|Kitchen|20|Roof|50-70|
|Bathroom|15-30|Environmental Works|30|
## **Impairments of Fixed Assets**
An assessment is made at each reporting date of whether there are indications that a fixed asset (including housing properties) may be impaired or that an impairment loss previously recognised has fully or partially reversed. If such indications exist, the recoverable amount of the asset is estimated.
Shortfalls between the carrying value of fixed assets and their recoverable amounts, being the higher of fair value less costs to sell and value-in-use of the asset based on its service potential, are recognised as impairment losses in income and expenditure.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Reversals of impairment losses are recognised in the Statement of Comprehensive Income. On reversal of an impairment loss, the depreciation or amortisation is adjusted to allocate the asset’s revised carrying amount (less any residual value) over its remaining useful life.
## **Other Tangible Fixed Assets**
Other tangible fixed assets are initially measured at cost, net of depreciation and any impairment losses. Depreciation is provided on all tangible fixed assets, other than freehold land and investment properties, at rates calculated to write off the cost or valuation of each asset to its estimated residual value on a straight line basis over its expected useful life, as follows:
|Office Buildings|50|
|---|---|
|IT Hardware|5|
|Furniture & Office Equipment|10|
|Motor Vehicles|4|
|Office Improvements|10|
Residual value is calculated on prices prevailing at the reporting date, after estimated costs of disposal, for the asset as if it were at the age and in the condition expected at the end of its useful life.
30
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **Reserves**
## **Income and Expenditure Reserve**
Income and Expenditure Reserves are unrestricted reserves and represents surpluses generated from operating activities.
## **Designated Reserve**
These funds are those unrestricted funds which have been set aside by trustees for an essential spend or future purpose. These funds form part of unrestricted Income and Expenditure reserve. Generally, these funds cover the replacing or improvement of the charity’s assets.
## **Restricted Reserve**
Restricted Reserves are tied to a particular purpose. These funds are specified by a third party and imposes terms and conditions stipulating the funding must be spent on a particular purpose.
## **Revaluation Reserve**
A revaluation reserve is a non cash reserve and created to reflect the true value of the asset representing the deemed cost of housing properties on transition to FRS102.
## **Critical areas of judgement and accounting estimates**
In preparing these financial statements, the key judgements have been made in respect of the following:
## • **Pension Liability**
The critical underlying assumptions in relation to the estimate of the pension defined benefit scheme obligation such as rates of inflation, mortality, discount rate and salary increases. These assumptions have the ability to influence the value of the liability. These assumptions are based on the actuarial advice.
## • **Bad Debt Provision**
Assumptions between budgetary and debt provisions are assumed. These assumptions include estimation of uncertainty against future recognition of certain accounts receivable as being uncollected.
## • **Leases**
In categorising leases as finance leases or operating leases, management makes judgements as to whether significant risks and rewards of ownership have transferred to the Heart of England YMCA.
## • **Useful lives of depreciable assets**
Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technological obsolescence that may change the utility of certain software and IT equipment and changes to decent homes standards which may require more frequent replacement of key components.
31
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **3a. Particulars of turnover, cost of sales, operating costs and operating surplus**
**----- Start of picture text -----**
2022
Turnover Operating expenditure Operating surplus(Deficit)
Continuing Discontinued Continuing Discontinued Continuing Discontinued
£ £ £
Social housing lettings 4,491,438 - (4,475,728) - 15,710 -
Other social housing activities
Charges for support services 240,071 - 14,896 - 254,966 -
Other social housing 57,423 - (19,639) - 37,784 -
297,494 - (4,743) - 292,751 -
Activities other than Social Housing
Amortised government grants 31,088 - - - 31,088 -
Childrens services 267,032 33,636 (296,766) (142,237) (29,734) (108,601)
Training and conferencing services and café 214,787 94,201 (307,966) (193,246) (93,179) (99,045)
Other non social housing 53,969 - - - 53,969 -
566,876 127,837 (604,732) (335,483) (37,856) (207,646)
5,355,808 127,837 (5,085,203) (335,483) 270,605 (207,646)
2021
Turnover Operating expenditure Operating surplus(Deficit)
Continuing Discontinued Continuing Discontinued Continuing Discontinued
£ £ £
Social housing lettings 4,263,565 - (4,130,419) - 133,146 -
Other social housing activities
Charges for support services 230,930 - 1,888 - 232,818 -
Other social housing 84,415 - (34,767) - 49,648 -
315,345 - (32,879) - 282,467 -
Activities other than Social Housing
Amortised government grants 31,088 - - - 31,088 -
Childrens services 224,847 155,582 (305,352) (145,951) (80,505) 9,631
Training and conferencing services and café 154,698 255,404 (347,504) (245,308) (192,806) 10,096
Other non social housing 126,023 - - - 126,023 -
536,656 410,986 (652,856) (391,259) (116,201) 19,727
5,115,565 410,986 (4,816,154) (391,259) 299,411 19,727
**----- End of picture text -----**
32
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
**3b. Particulars of income and expenditure from social housing lettings**
||**2022**|**2021**|
|---|---|---|
|Rent receivable net of identifiable service charges
Amortised government grants
**Turnover from social housing lettings**
Management
Service charge costs
Routine maintenance
Major repairs expenditure
Bad debts
Depreciation of housing properties
**Operating expenditure on social housing lettings**
**Operating surplus on social housing lettings**
**Void losses**|**General needs**
**housing**
**Total**
**£**
**£**
4,273,854
4,273,854
217,584
217,584
**4,491,438**
**4,491,438**
936,672
936,672
2,517,748
2,517,748
602,785
602,785
-
-
83,935
83,935
334,588
334,588
**4,475,728**
**4,475,728**
**15,710**
**15,710**
**(162,454)**
**(162,454)**|**Total**
**£**
4,045,981
217,584|
|||**4,263,565**|
|||922,661
2,295,679
489,704
25,599
72,921
323,855|
|||**4,130,419**|
|||**133,146**|
|||**(112,822)**|
## **4. Accommodation in management and development**
At the end of the year accommodation in management for each class of accommodation was as follows:
**----- Start of picture text -----**
2022 2021
Number Number
Social Housing
General Housing
Social Rent 214 212
Total Owned 214 212
Units managed on behalf of other organisations
General needs 116 116
Total Managed 330 328
Accomodation in development at year end 33 27
**----- End of picture text -----**
33
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **5. Operating Surplus**
**----- Start of picture text -----**
2022 2021
£ £
Release of deferred capital grant (248,672) (248,673)
Provision of Bad Debts (41,403) 74,858
Amortisation of intangible fixed assets (per note 11) 21,402 16,757
Depreciation of housing properties 334,588 323,855
Depreciation of other tangible fixed assets 169,725 127,063
Operating lease rentals:
land and buildings 459,976 461,857
vehicles and equipment 33,734 34,135
Auditors' remuneration
Fees payable to the Company's auditors for the audit of the Financial Statements 16,560 20,520
Total audit services 16,560 20,520
Tax compliance services 2,220 960
Total non-audit services 2,220 960
**----- End of picture text -----**
## **6. Interest receivable and similar income**
**----- Start of picture text -----**
2022 2021
£ £
Interest receivable and similar income - 190
- 190
**----- End of picture text -----**
34
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued**
## **7. Interest and financing costs**
**----- Start of picture text -----**
2022 2021
£ £
Net interest payable YMCA Pension Fund 8,565 10,764
Bank interest 89,749 84,594
Amortisation of issue costs 2,700 2,700
101,014 98,058
Interest payable capitalised on housing
- -
properties under construction
101,014 98,058
Capitalisation rate used to determine the
- -
finance costs capitalised during the period
**----- End of picture text -----**
## **8. Employees**
Average monthly number of employees employed in the year were:
||**2022**
**2021**|
|---|---|
|Housing and support activities
Nurseries
Maintenance
Learning & Communities
Management and administration|No.
No.
56
45
15
21
6
7
18
25
15
27
110
125|
The average monthly number of employees expressed as full-time equivalents (calculated based on standard working week of 35 hours were:
|Housing and support activities
Nurseries
Maintenance
Learning & Communities
Management and administration|2022
2021
No.
No.
53
49
10
19
4
8
10
13
10
19
87
108|
|---|---|
35
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **8. Employees (continued)**
The full-time equivalent number of staff who received remuneration (including Executive Directors) were:
Employee costs during the year were as follows:
||**2022**
**2021**|
|---|---|
|**Employee Costs:**
Wages and salaries
Social security costs
Pension costs
Life assurance costs|£
£
2,377,599
2,486,598
191,209
193,800
67,833
80,659
432
3,231
2,637,073
2,764,288|
Included in wages and salaries are redundancy costs paid in the year of £95,595 (2021 - £14,531).
## **9. Key management personnel**
The Directors are defined for the purpose of this note as the Members of the Board and Executive Directors of the Association, the latter having executive responsibility. This satisfies the definition included in the Accounting Direction for Private Registered Providers of Social Housing 2019.
The aggregate remuneration for key management personnel charged in the year is:
|Wages & Salaries
Benefits in kind
Employers NIC
Pension contributions|**2022**
**2021**
£
£
351,895
369,288
5,633
9,000
36,597
43,389
13,552
19,888
407,678
441,565|
|---|---|
Wages and Salaries includes redundancy settlement of £37,580
36
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **9. Key management personnel (continued)**
The Chief Executive is an ordinary member of the Association’s pension scheme. No enhanced or special terms apply. The Association does not make any further contribution to an individual pension arrangement for the Chief Executive.
The number of Directors to whom retirement benefits are accruing under defined benefit schemes was 1 (2021: 1)
None of the Board Members received emoluments. The emoluments of the highest paid Executive Director, the Chief Executive, are shown below:
|||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
||||||||||**2022**||||**2021**|
||||||||||£||||£|
|||||||||||||||
||||||||||69,400||||69,516|
||||||||||4,500||||4,500|
||||||||||2,217||||5,569|
||||||||||76,117||||79,585|
|||||||||||||||
## **10. Intangible Fixed Assets**
|**Cost**
At 1 April 2021
Additions
Reclassification of Assets
**At 31 March 2022**
**Amortisation**
At 1 April 2021
Charged in the year
Reclassification of Assets
**At 31 March 2022**
**Net book value**
At 31 March 2022
At 31 March 2021|**IT Software**
**Total**
**£**
**£**
116,360
116,360
20,195
20,195
21,822
21,822|
|---|---|
||**158,377**
**158,377**|
||89,528
89,528
21,402
21,402
4,365
4,365|
||**115,295**
**115,295**|
||**43,082**
**43,082**|
||26,832
26,832|
37
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **11. Fixed Assets – housing properties**
|**Cost**
At 1 April 2021
Additions
Reclassification of Assets
**At 31 March 2022**
**Depreciation and impairment**
At 1 April 2021
Depreciation charged in year
Reclassification of Assets
**At 31 March 2022**
**Net book value**
At 31 March 2022
At 31 March 2021|**Social housing**
**properties held**
**for letting**
**Social housing**
**properties held for**
**letting**
**Housing properties**
**for letting under**
**construction**
**Total housing**
**properties**
**Freehold**
**Long Leasehold**
**£**
**£**
**£**
**£**
15,508,442
630,406
1,935,807
18,074,655
67,691
-
494,480
562,170
(55,870)
-
-
(55,870)|
|---|---|
||**15,520,263**
**630,406**
**2,430,287**
**18,580,955**|
||1,981,302
187,289
-
2,168,591
320,798
13,790
-
334,588
(41,559)
-
-
(41,559)|
||**2,260,542**
**201,079**
**-**
**2,461,621**|
||**13,259,721**
**429,327**
**2,430,287**
**16,119,335**|
||13,527,140
443,117
1,935,807
15,906,064|
The existing charges held with Charity Bank are on freehold properties, 301 Reservoir Road, 200 Bunbury Road, 109 Grosvenor Road and 43 Henrietta Street. 200 Bunbury Road is also held with Heart of England Community Fund.
## **Housing properties book value net of depreciation comprises**
**Housing properties book value net of depreciation comprises**
|Freehold land and buildings
Long Leasehold land and buildings|**2022**
**2021**
**£**
**£**
15,690,007
15,462,947
429,327
443,117|
|---|---|
||**16,119,335**
**15,906,064**|
## **Expenditure on works to existing properties**
## **Expenditure on works to existing properties**
|Amounts charged to income and expenditure|**2022**
**2021**
115,738
105,569|
|---|---|
||**115,738**
**105,569**|
38
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **Note 11. Fixed Assets – housing properties (continued)**
## **Social housing assistance**
**----- Start of picture text -----**
2022 2021
£ £
Total accumulated social housing grant received or
receivable at 31 March: 7,094,570 7,094,570
Total accumulated other grant received or receivable at 31
March: 1,709,761 1,709,761
Recognised in the Statement of Comprehensive Income (819,859) (571,188)
Held as deferred Income 7,984,472 8,233,143
**----- End of picture text -----**
## **Finance costs**
**----- Start of picture text -----**
2022 2021
£ £
Aggregate amount of finance costs included in the cost of
housing properties 49,454 49,454
49,454 49,454
**----- End of picture text -----**
## **Impairment**
The Association considers individual schemes to be separate Cash Generating Units (CGU) when assessed for impairment, in accordance with the requirements of Financial Reporting 102 and SORP 2018. Where this is not possible, individual homes are considered as separate CGUs for the assessment of impairment.
39
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **12. Tangible Fixed Assets – Other**
|**13. Other Income**
**Cost**
At 1 April 2021
Reclassification of Assets
Additions
Disposal
**At 31 March 2022**
**Depreciation**
At 1 April 2021
Reclassification of Assets
Disposal
Charged in the year
**At 31 March 2022**
**Net book value**
At 31 March 2022
At 31 March 2021|**Freehold**
**Premises**
**Fixtures and**
**Fittings**
**£**
**£**
1,598,919
1,283,706
-
116,126
-
13,677
-
(16,412)|**ICT**
**Hardware**
**Motor**
**Vehicles**
**Total**
**£**
**£**
**£**
347,502
64,316
3,294,443
(82,077)
-
34,049
8,095
-
21,772
(2,201)
(39,814)
(58,427)|
|---|---|---|
||**1,598,919**
**1,397,097**|**271,319**
**24,502**
**3,291,837**|
||141,992
937,123
-
101,814
-
-
37,465
69,696
**179,456**
**1,108,633**|226,377
25,002
1,330,494
(64,620)
-
37,194
-
(18,248)
(18,248)
44,817
17,748
169,725
**206,574**
**24,502**
**1,519,165**|
||**1,419,463**
**288,464**|**64,746**
**-**
**1,772,672**|
||1,456,926
346,583|121,125
39,314
1,963,948|
||||
|Coronavirus job retention scheme
Heart of England Community Foundation restricted grant
**Total Other Income**||**2022**
**2021**
£
£
21,075
168,266
-
1,012,377
**21,075**
**1,180,643**|
||||
Government JRS Income is the amount received through the Furlough scheme during the year
40
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **14. Debtors**
**----- Start of picture text -----**
2022 2021
££ £
Due within one year
Rent and service charges receivable 328,637 296,806
Prepayments and accrued income 114,084 72,590
442,721 369,396
Other debtors 17,030 98,091
Less: provision for bad and doubtful debts (202,658) (218,061)
(185,628) (119,970)
257,093 249,426
15. Creditors: amounts falling due within one year
2022 2021
£ £
Bank loans (note 17) 136,369 138,112
Trade creditors 60,584 57,119
Rent and service charges received in advance 35,306 44,801
- -
Other grants received in advance
Deferred grant income 235,070 235,070
- -
Corporation Tax
Other taxation and social security 4,636 39,566
Unpaid contributions for retirement benefits 10,716 14,570
Other creditors 90,285 87,214
Credit balances on Arrears less Bad Debt Provision 14,967 83,425
Accurals and deferred income 513,951 155,303
1,101,884 855,180
**----- End of picture text -----**
41
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **16. Creditors: amounts falling due after more than one year**
|Bank loans (note 17)
Deferred grant income|**2022**
**2021**
**£**
**£**
3,449,030
3,582,099
10,269,549
10,518,221
**13,718,579**
**14,100,320**|**2022**
**2021**
**£**
**£**
3,449,030
3,582,099
10,269,549
10,518,221
**13,718,579**
**14,100,320**|
|---|---|---|
|**17.** **Debt Analysis**
**Borrowings**
**Due within one year**
Bank loans
**Due after more than one year**
Bank loans
Less: issue costs
**Total loans**||**2022**
**2021**
£
£
136,369
138,112|
|||**136,369**
**138,112**
3,499,104
3,634,872
(50,073)
(52,773)|
|||**3,449,031**
**3,582,099**|
|||**3,585,400**
**3,720,212**|
The Association has a loan facility of £4,000,000 with the Charity Bank.
The Loan is for 25 years from the date of the final drawdown and carries an interest rate of 2.25 percent above the Bank of England base rate.
The loan is secured on specific charges on freehold properties, 301 Reservoir Road, 200 Bunbury Road, 109 Grosvenor Road and 43 Henrietta Street.
Loan issue costs and fees to date are £58,788 and the loan is repayable as below:
||**2022**
**2021**|
|---|---|
|Within one year or on demand
One year or more but less than two years
Two years or more but less than five years
Five years or more
Less: amortised issue costs|£
£
136,369
138,112
139,887
142,118
443,413
446,170
2,915,802
3,046,584|
||**3,635,471**
**3,772,984**
(50,073)
(52,773)|
||**3,585,399**
**3,720,211**|
42
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **18. Pension obligations**
Heart of England YMCA participated in a contributory pension plan providing defined benefits based on final pensionable pay for employees of YMCAs in England, Scotland and Wales. The assets of the YMCA Pension Plan are held separately from those of Heart of England YMCA and at the year end these were invested in the Mercer Dynamic De-risking Solution, 63% matching portfolio and 37% in the growth portfolio and Schroder (property units only).
The most recent completed three year valuation was as at 1 May 2020. The assumptions used which have the most significant effect on the results of the valuation are those relating to the assumed rates of return on assets held before and after retirement of 2.59% and 1.09% respectively, the increase in pensions in payment of 2.99% (for RPI capped at 5% p.a.), and the average life expectancy from normal retirement age (of 65) for a current male pensioner of 22.0 years, female 24.4 years, and 23.7 years for a male pensioner, female 26.1 years, retiring in 20 years’ time. The result of the valuation showed that the actuarial value of the assets was £146.1m. This represented 79% of the benefits that had accrued to members.
The Pension Plan was closed to new members and future service accrual with effect from 30 April 2007. With the removal of the salary linkage for benefits all employed deferred members became deferred members as from 1 May 2011.
The valuation prepared as at 1 May 2020 showed that the YMCA Pension Plan had a deficit of £39 million. Heart of England YMCA has been advised that it will need to make monthly contributions of £4,367 from 1 May 2022. This amount is based on the current actuarial assumptions (as outlined above) and may vary in the future as a result of actual performance of the Pension Plan. Agreed future deficit contributions have been discounted using rate of 3% (2021: 3%) The current recovery period is 7 years commencing 1 May 2022.
|As at 31st March 2022
As at 31st March 2021|Within one year Repayable one
to two years
Two to five
years
After five
years
After more than
one year
Total
Total
**2022**
**2021**
£
£
£
£
£
£
£
43,129
45,937
155,983
-
201,920 245,048 285,493|
|---|---|
||40,445
43,129
146,759
55,161
245,048 285,493 323,375|
In addition, Heart of England YMCA may have over time liabilities in the event of the non-payment by other participating YMCAs of their share of the YMCA Pension Plan’s deficit. It is not possible currently to quantify the potential amount that Heart of England YMCA may be called upon to pay in the future.
## **19. Provisions for liabilities and charges**
**----- Start of picture text -----**
YMCA Pension Leave Pay Total
Obligation
£ £ £
At 1 April 2021 285,493 55,607 341,100
Utilised (40,445) (28,734) (69,179)
At 31 March 2022 245,048 26,873 271,921
**----- End of picture text -----**
The YMCA Pension obligation is referred to in note 18. The provision is based on the net present value of payments agreed at the year end. The provision will be adjusted following the triennial valuations in the pension scheme, either increasing or decreasing the provision with the opposite entry being shown as operating costs within income and expenditure. The unwinding of the discount is shown as a finance cost.
43
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **19. Provisions for liabilities and charges (continued)**
The leave pay provision represents holiday balances accrued as a result of services rendered in the current period and which employees are entitled to carry forward. The provision is measured as the salary cost payable for the period of absence.
## **20. Share Capital**
Heart of England YMCA Limited is a Company Limited by Guarantee. No shares have been issued.
## **21. Cash flow from operating activities**
**----- Start of picture text -----**
2022 2021
£ £
Surplus/ Deficit for the year (net of transfer to restricted reserves) (8,285) 389,537
Adjustments for non-cash items:
Depreciation of tangible fixed assets 486,065 451,172
Amortisation of intangible assets 21,402 16,757
-
Decrease/ (Increase) in stock 2,436
Decrease/ (Increase) in trade and other debtors (7,667) 121,974
(Decrease)/ Increase in trade and other creditors 248,447 (467,261)
Decrease in provisions (69,179) (8,862)
-
Gain on disposal of property, plant & equipment (8,695)
Government grants amortised in the year (248,672) (248,672)
Interest payable 101,014 98,058
Interest received - (190)
Net cash generated from operating activities 516,867 352,513
22. Capital Commitments
2022 2021
£ £
Expenditure contracted for but not provided for 3,846,617 2,467,609
Expenditure authorised by the board, but not contracted 751,500 405,501
4,598,117 2,873,110
**----- End of picture text -----**
The above commitments will be financed primarily through borrowings (£2.4M) and Grants (£1.4M) with the balance funded by reserves.
44
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **23. Contingent assets/liabilities**
The Association had no contingent assets at 31 March 2022 (2021: nil).
The Association receives capital grant from the Homes and Communities Agency which is used to fund the acquisition and development of housing properties and their components. In certain circumstances upon disposal of grant funded properties, the Association is required to recycle this grant by crediting a Recycled Capital Grant Fund.
As the timing of any future disposal is uncertain, no provision has been recognised in these Financial Statements.
## **24. Leasing commitments**
The total future minimum lease payments under non-cancellable operating leases are as set out below. Leases relate to land and buildings, aerials, vehicles and office equipment.
|||**2022**|**2022**|**2021**|
|---|---|---|---|---|
|
Within one year
Between two and five years||**£**
36,000
6,000||**£**
45,013
42,000
**87,013**|
|||**42,000**|||
||||||
|**25. Analysis of Debt**|**2021**||||
||||**Cash Flows**|**2022**|
|Long-term borrowings
Short-term borrowings|**£ 000s**
3,582
138||**£ 000s**
(133)
(2)|**£ 000s**
3,449
136|
|Lease Liabilities|68||(45)|22|
|Total Liabilities
Cash and Cash Equivalents
**Total Net Debt**|3,786
(2,040)
**1,746**||(180)
256
**76**|3,606|
|||||(1,784)|
|||||**1,823**|
## **26. Related parties**
Disclosures in relation to key management personnel are included in note 9.
Insurance has been purchased to indemnify the trustees against any neglect or default on their part. The cost to Heart of England YMCA for the year was £2,744 (2021: £1,960).
Trustees received no remuneration. Trustees were however reimbursed for travel expenses during the year to a value of £113 (2021: £25).
There were £995 other related party transactions with the Chair of Trustees. The transaction related to services received for training, recruitment and advertising costs.
45
**HEART OF ENGLAND YOUNG MEN’S CHRISTIAN ASSOCIATION (YMCA)**
## **Notes to the Financial Statements (continued)**
## **27. Post Balance Sheet Event**
During the year to 2022/23 YMCA Heart of England have secured a bank loan with Unity Trust Bank for £3.4M to fund the completion of Northfield Development and assist with refurbishment of existing housing stock.
46