2023-03-31-accounts

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Nacro> Annual Report for the year ended 31 March 2023

Who we are 3 Our mission and our vision 4 Our values 5 Why our work is needed 6 Message from the Chair 8 Message from the CEO 10 Council members and professional advisers 11 Strategic review of the year 13 Safeguarding 16 What our people say 17 Housing performance 18 Good governance 23 Statement of internal control 28 Key risks 30 Financial narrative 32 Value for money statement 34 Reserves and liquidity policy 38 Environmental impact statement 39 Thanks and acknowledgements 41 Independent auditor’s report 44 Financial statements 49

Annual Report 2022/2023

Who we are

We believe that everyone deserves a good education, a safe and secure place to live, the right to be heard, and the chance to start again, with support from someone on their side.

We provide practical help and personalised support through our education, housing, justice, and health and wellbeing services. We work closely with people to help them build independence and to move forward to a better �� never give up on people.

But this isn’t enough on its own. We need the barriers holding people back removed, and systems we all rely on improved, to give everyone �� campaign together for meaningful changes in society.

We are Nacro and we won’t stop until everyone has the chance to succeed.

Annual Report 2022/2023

Our mission

We will work every day to give people the help they need and campaign to achieve our vision of a society where everyone has the chance to succeed.

Our vision

We want a society where everyone has the chance to succeed and the support they need to achieve their potential. Where a safe secure home, a decent education and a second chance when things go wrong are the foundations we can all build our lives on.

Annual Report 2022/2023

Our values

We are inspiring

We motivate and inspire people to reach their full potential and aspirations. We encourage people ��

We are courageous

We have bold aims which we are determined to achieve. We seize opportunities and deliver results.

We are compassionate

We are focused on people, acting with compassion and supporting each other to succeed.

We are inclusive

We value the unique contribution of all our people, combining our strengths, and achieving more together.

We are reliable

We keep our promises. We provide consistent support and we stick with people.

Annual Report 2022/2023

Why our work is needed

The cost of living crisis is impacting people across the country. Inevitably, �� UK is only likely to grow.

��

�� months or less.

Levels of homelessness continue to be high, with research from Shelter �� into homelessness, like leaving prison, it is vital to ensure that everything ��

��

Annual Report 2022/2023

The people we work with are often at a point of change. Many have struggled; growing up in care, facing homelessness, failed by the education system, or caught up in the tide of the justice system. The challenges we face shape who we are, but our past shouldn’t dictate our future.

“I missed a lot of school due to my diabetes. I lacked �� by those who’ve cared for me.”

�� guidance, enabling people to open doors that were previously closed to them. We know that with the right support and guidance people can turn their lives around and move onto a future of success.

Annual Report 2022/2023

Message from the Chair

It’s good to be back.

�� then called. That job made a profound impression that has stayed with me for the rest of my career. I learnt how the odds were stacked against the young people I worked with by poverty, unemployment, racism and education, and criminal justice systems that just saw them as a problem, never with potential. I can quote to this day what one of those young people, John, told me: “The only thing school ever taught me was that �� encouragement, practical support, and education and training tailored to �� prides itself in doing today, I hope we saw our young people’s futures, �� the young people we worked with.

�� projects across England and Wales and have found much that is familiar. I �� and organisations that continue to deny them basic social justice. I have �� of discrimination that many of the people it supports face, and is committed �� who are as skilful and committed as ever in helping those they work with overcome these challenges and realise their potential. I am very pleased �� that would create the social justice its service users are denied.

�� and dysfunctionality of so many public services impacts disproportionately on the people we support: veterans struggling to move into their own housing because they can’t pay the bills, prison leavers left stranded without the help they need to get somewhere to live, learners in our education centres who need us to provide breakfast before they start their day, young people with acute mental health needs unable to access the specialist support they need.

Annual Report 2022/2023

��

�� too. Like almost every organisation, we have faced rising costs combined with static or reducing income. We know that our funders and partners also face many of the same pressures, and we are grateful for the constructive relationships we have with them which enable us to work together to create common solutions to joint problems. We have however been better placed �� that has provided us with the resilience to get through this period. I pay ��

�� colleagues and the report describes the Board’s prime responsibility for the careful stewardship of those resources and accountabilities.

�� are not going to go away quickly, but as I hope this report shows, I believe we have the strategy, culture, people and partnerships to both strengthen �� shape the polices that might reduce those needs tomorrow. It’s a privilege to be able to play a part in doing so.

Nick Hardwick Chair

��

Simon Fell, Conservative MP for Barrow and Furness, and sponsor of the Private Members Bill to reduce Friday releases.

Annual Report 2022/2023

Message from the CEO

��

Campbell Robb

Annual Report 2022/2023

Board members and professional advisers

Trustees

�� Chair (appointed July 2022)

�� Chair (resigned July 2022)

�� (appointed as Vice Chair December 2022)

Ron Crank MBE, Vice Chair (resigned December 2022)

��

Lynn Emslie

Rt Hon Sir David Hanson

Tabitha Kassem

Farrah Malik

��

Campbell Robb

��

�� (appointed October 2022)

Rocco Zitola (resigned October 2022)

��

Walkden House �� London EC2M 4SQ

Charity number

226171

�� Housing number

��

Crowe U.K. LLP 2nd Floor �� London EC4M 7JW

Internal Auditors

BDO LLP Two Snowhill, ��

��

Devonshires Solicitors LLP

30 Finsbury Circus London EC2M 7DT

Pension consultants

XPS Pensions Group �� 1 Station Hill ��

��

Katie Martin

Victor Olisa (resigned January 2023)

Company number

Information correct at 19th July 2023.

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Bankers

Treasurer

��

�� Bank Plc Cavell House �� London WC2H 0PD

Annual Report 2022/2023

Trustee Attendance Record 2022/23

1 2 3 4	1 2 3 4	1 2 3 4	1 2 3 4	1 2 3 4
Nick Hardwick CBE1	2 of 3	–	–	–
Nigel Chapman CMG2	1 of 1	–	–	–
Andrew Billany	3 of 4	3 of 4	–	–
Ron Crank MBE3	2 of 3	2 of 3	2 of 3	2 of 2
Lynn Emslie	3 of 4	4 of 4	–	–
Anne Frost	2 of 4	3 of 4	–	–
Rt Hon Sir David Hanson	4 of 4	–	��	–
Tabitha Kassem	2 of 4	4 of 4	–	3 of 3
Farrah Malik	2 of 4	–	��	–
Katie Martin	3 of 4	–	–	0 of 3
Victor Olisa4	2 of 3	–	–	–
Neil Spence	4 of 4	–	��	–
Amanda Dickens	4 of 4	1 of 4	–	1 of 3

1 Council/Board*

2 Strategy & Performance Committee

3 ��

4 People Committee

��

2 Resigned July 2022
3 Resigned December 2022
4 Resigned January 2023

*Renamed Board in December 2022

Annual Report 2022/2023

��

1. We will increase the positive impact we have on the people we support.

We have continued developing our work in our core areas:
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�� personnel in London.
In Wales, we were successful and are now running a new homelessness service in Pembrokeshire and a community preventative service in Carmarthenshire.
Our education services continue to support young people to achieve:
90% of young people studying with us pass their GCSE English/maths.
90% of our learners would recommend us to friends or family.
��
We prioritised our commitment to listening to and involving the people we support in everything we do. Service user involvement is at the heart of our �� includes former service users, is supporting delivery teams to ensure this is embedded across all our work.
We refreshed our safeguarding policy framework and introduced improved risk management processes across all our service delivery directorates.

2. We will campaign alongside our service users for solutions to the barriers and challenges they face.

Our campaign on Friday prison releases saw success with the Government agreeing to our call. The Government have supported a Private Members’ Bill in Parliament sponsored by Simon Fell MP which will allow Prison Governors to release someone with high resettlement needs who is due for release on a Friday up to two days early.
We saw progress on a number of the calls we have been making over recent �� releases and homelessness on release, we have called for action to ensure people leave prison with valid ID and bank accounts, both critical to allow access to a range of services. Over the last year we have seen progress with ��

Annual Report 2022/2023

�� from the group focused on ways to improve work and wages in prison to better prepare people for release. We continue to make sure our policy and campaigns are informed by the people we support and we work alongside ��
�� challenge of homelessness on release from prison.

3. We will develop into a digitally inclusive organisation �� advantages that digital technology can bring.

�� brought this year, we took a strategic decision to focus on this objective at a later point in the strategy period.
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We launched a new website with improved accessibility and user �� audiences.
�� security systems.

4. We will build a sustainable future for Nacro.

We have put in place a new environmental strategy which recognises our responsibilities and commitments to protecting the environment. We also achieved the Green Dragon Environmental Standard.
�� this year. However, we have continued to prioritise investment in our people ��

Annual Report 2022/2023

Investing in our colleagues remains a priority to build our sustainability and we have increased our focus on recruitment and training. This includes continuing to roll out our new in-house leadership development programme and starting to roll out a new management development training programme.
�� colleagues, we awarded the largest pay award in many years, with the biggest percentage increases for those on lower salaries.

5. We will forge a values-led culture that supports a happy, productive and diverse workforce.

�� of need in our services, we have continued to ensure a visible focus on wellbeing. This included holding a wellbeing month to give focused time for colleagues to take a step back with their teams, and trial a number of ��
Our commitment to equality diversity and inclusion is a core theme through our strategy. We have a new EDI strategy in place with involvement and commitment at every level of Nacro from our Trustee Board, Senior �� Advisory Committee continue to lead the way in setting up forums for colleagues to come together, connect and identify areas for action, as well as driving action across the organisation. These include Diversity Action Groups on Race and Ethnicity, LGBTQ+, and Disability, as well as a new Menopause Health Group and Men’s Mental Health Group.
�� well and where we could improve. We were pleased to see progress in many �� areas which need further improvement.
We consulted on and launched a set of refreshed Nacro values. Our �� important part of our Nacro culture and identity.

Annual Report 2022/2023

��

�� by reviewing safeguarding data from our incident recording system �� Safeguarding Board.

Each service delivery directorate has an appointed Designated Safeguarding Lead. These roles support colleagues to ensure quality safeguarding interventions and outcomes are provided through local teams. Designated Safeguarding Leads are supported via a network of locally based Designated ��

�� depending on an individual’s role further training on Safeguarding Children ��

�� safeguarding incidents. The system is used to track and follow up actions �� Board maintains oversight of data held on the incident management system. �� training, procedures and practice.

During 2022/23 we streamlined and republished our Safeguarding Policy Framework and reviewed our key safeguarding procedures to ensure the relevant requirements set out in the ‘Keeping Children Safe In Education’ 2022 were taken in to account.

Annual Report 2022/2023

What our people say

�� and passionate people. My role is about as challenging and stimulating as jobs get. It is a very humbling and ��
“ I started working for Nacro 15 years ago as a support �� history, an addiction or mental health problems. We help vulnerable people as they rebuild their lives. Across all my years, the one thing that has remained the same is how rewarding this job is. It can be hard, but when you see how far someone’s come and is ready to move on and live independently, there’s nothing better.”
“ My journey with Nacro began as an apprentice at our �� I have witnessed the development of our education provision and worked my way up to Assistant Principal ��
“I didn’t see a future for myself or a life at all. All the support and the help I have from the team is incredible. They gave me an opportunity to really turn my life around. I’ve secured a tenancy for myself. My own tenancy. I went �� changed my life around.”
“My support worker helped me settle into the local area. We walked around and found where the shops were, and �� walk in on my own.”

Annual Report 2022/2023

Housing performance

We take our responsibilities as a landlord seriously. Below we set out our performance across a range of measures including property health and safety compliance, repairs as well as feedback on tenant satisfaction.

We are required to comply with regulations and monitor our performance against these. We also set our own performance measures and commit to sharing these openly with you.

In addition, in 2022/23 we have:

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Increased resources in our compliance team to maintain a good level of performance and to support the development of improved centralised monitoring systems for compliance.
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	Target	31.03.23
��	100%properties with a valid gas ��	98.1%
�� services	100%�� �� ��	98.2%
Water services	100%properties with water tank facilities have a current and valid Legionella risk assessment	100%
Fire Risk Assessment	100%�� safety risk assessment carried out in the last 12 months for our larger �� �� beyond the legal minimum which does not specify a frequency)	100%
Asbestos	100%properties have an asbestos survey	100%

Annual Report 2022/2023

Repairs*

��

	Target	April 2022 – March 2023
Emergency repairs	95%within 24 hours	97.4%
Urgent repairs	90%within 7 days	93%
Routine repairs	90%��	96.1%

��

Maintenance Budget

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�� deployed to ensure we receive best value from contractors whilst maintaining standards.

Annual Report 2022/2023

Tenant satisfaction

��

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�� their home.
�� a place to live.
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�� with.
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�� their views and acts on them.
��

�� in increased maintenance spend and high completion of works last year.

“It was tough. I’m really thankful that Nacro picked me up. It’s a very supportive living accommodation, which I think is really good thing. Being able to see a friendly face every day, to have a little chat it was a big thing. That’s what I mean by the amazing support.”

Annual Report 2022/2023

Complaints

We know how important it is to listen to feedback and are committed to �� below gives a breakdown of the complaints reported by tenants between ��

----- Start of picture text -----
Tenant complaints 76
Property condition – includes: 24
Repairs
Failure to respond
�� 20
Service received – includes: 14
Tenure management
Rent management
Support received
Reports of antisocial behaviour 18
----- End of picture text -----

We routinely review complaint responses and timeframes and are working to �� at stage 1 of our complaints response and 0 were referred to the Housing Ombudsman.

Overall, complaints were dealt with adequately with complainants either �� services to learn and ensure continuous improvements are put in place. We identify areas of improvement from the complaint information and set out �� of 2023/24.

We will continue to work with teams to improve compliance and ensure that areas are recording, acknowledging, and responding to complaints in line with policy and procedure.

In addition, we completed the required self assessment against the Housing Ombudsman’s Code of Practice, which was audited by our internal auditors BDO with a positive outcome. This is published and available on our website.

Annual Report 2022/2023

��

We have recently launched a new website with a dedicated section for tenants and service users. In this section we publish information on our performance including complaints and our self assessment against the Housing Ombudsman’s Code of Practice. We continue to consult with tenants on how we can improve our delivery and we are consulting on how they would like to receive information from us. This includes what they would like to see in the tenant section of our new website.

Annual Report 2022/2023

��

�� Leadership Team (ELT).

�� Governance. During the year the Board has assessed its compliance against �� of reporting and subsequent discussion of equality, diversity, and inclusion metrics could be introduced. Plans to deliver this are now being considered by the People Committee. The Board has used the code’s principles and recommended practice to assist in the setting of the strategic direction and culture of the organisation in order for the Charity to deliver on its charitable objectives. Plans are in place to collect and publish tenant satisfaction ��

Risk management continues to be a priority, with Board members routinely considering and discussing the Corporate Risk Register at Board meetings �� Committee, Strategy and Performance Committee, and People Committee. �� are being met. BDO LLP, our internal auditors, have increased the Finance and �� where assurance improvements can be made. Trustee Liability Insurance for individual Trustees and the Board of Trustees collectively is in place.

�� framework and risk management processes are subject to regular review �� assurance for it to discharge its responsibilities. The Committee is responsible �� are considered and actioned appropriately. The Committee receives regular updates from internal audit throughout the year on the status of work and ��

Annual Report 2022/2023

There are also a number of other regular meetings that Trustees either chair �� Board, and the Policy and Campaigns Committee.

�� further strengthening our governance.

�� During 2022/23 we invested more resources to support this through a larger team. The team is focused on delivering the key priorities of our service �� opportunities for everyone throughout the Charity from recruitment and selection, training and development, appraisal, and promotion to retirement. �� sets out how the Charity meets it’s commitments to disabled people as part of their recruitment, employment, retention, and training and career development journey with us.

�� on page 11.

�� ethically and with integrity in all its business relationships. We take steps to ensure that adequate processes and controls are in place to ensure slavery �� reviewed by the People Committee.

�� are not matched by automatic increases to our contracted income funding �� vacancies. In the immediate future, and where possible, the Charity will �� services to be adapted to meet local and commissioner needs.

�� of the UK leaving the European Union. This includes any potential impact on �� of supply chain disruption. EU nationals make up a relatively low proportion of our workforce and we therefore do not anticipate risk in this area. Overall, ��

Annual Report 2022/2023

�� does not have any known links to Russia or Belarus and does not have any direct suppliers with known links to Russia or Belarus.

��

�� in our vision, mission, and values statements.

When setting strategy and making decisions Trustees (Directors) will carefully �� employees.

�� income is generated through contracted services. The acquisition and �� relationships, as well as continuous innovation in our service design. We ��

�� impact of our activities have a positive impact on the communities we reach out to. Data on the environmental impact of our activities is captured on page 39 of this report.

�� and indirectly via the Care Quality Commission. These regulatory bodies require the organisation to establish robust governance frameworks that can ��

�� contract management arrangements in place with our largest suppliers and all of our sub contractors to help ensure our main suppliers have appropriate governance and legal compliance measures in place.

�� are committed to playing our part. We have an environmental strategy and are �� design, and innovation to make our business practices more sustainable, engaging with our stakeholders and commissioners of services.

Annual Report 2022/2023

Trustees’ responsibilities

�� Standards).

�� required to:

select suitable accounting policies and then apply them consistently; observe the methods and principles in the applicable SORP
make judgements and estimates that are reasonable and prudent
state whether applicable UK accounting standards have been followed, �� statements
�� is inappropriate to presume that the charitable company will continue in business.

The Trustees are responsible for keeping adequate accounting records that are �� Providers of Social Housing 2022. They are also responsible for safeguarding �� social housing activities and the disposition of funds and assets which are, or ��

�� ��

�� part of this, Trustees assess and stress test the availability of funding and

Annual Report 2022/2023

�� processes ensure the Board has a continual and rolling process of reviewing �� itself that the charity complies with the Regulator of Social Housing’s �� the date of this report.

�� ��

Disclosure of information to the auditor �� The Trustees have taken all necessary steps in order to make themselves �� is aware of that information.

Annual Report 2022/2023

��

�� to internal control, which is embedded within the normal management and �� the system of internal control comprises:

��

�� prioritising them in terms of potential impact and likelihood of occurrence, and identifying mitigating actions. This process is coordinated through a �� place throughout the year and up to the signing of the annual report and is reviewed regularly by the Board.

2. Monitoring and corrective action

The regular review of internal controls via line management channels and by �� Where corrective action is required, ELT provide progress reports to the ��

3. Control environment and control procedures

�� is paid to risk mitigations relating to delegated authority, segregation of duties, accounting and treasury management controls, health and safety, safeguarding, data and asset protection, and the prevention and detection of fraud. The Board, through the scheme of delegated responsibility, sets ��

Annual Report 2022/2023

�� and suppliers must comply as required with these policies.

4. Independent audit and review

The internal control framework and risk management processes are subject to regular review by an internal audit function which is responsible for �� to supply an independent and objective internal audit function. The Finance �� has received an annual review of the system of control from the Finance ��

5. Fraud reporting systems

Fraud response procedures and policy statements are reviewed and �� comprehensive review of internal control systems. The procedures establish ��

Annual Report 2022/2023

Key risks

Key risk

�� operating costs and/or balance sheet liabilities leading to the �� administration.

Risk treatment

Financial performance is monitored through monthly management accounts by management and Trustees.

Regular communication with commissioners regarding security of current income streams.

Building closer relationships with potential funders and developing new funding models.

�� in place which includes initiatives to reduce operating costs.

Strategic and business planning in place and monitoring of progress against key corporate objectives.

Death or harm caused by failure to follow internal processes and procedures, particularly in relation to health and safety and safeguarding, leading to loss of life, damaging publicity, criminal �� business.

�� to ensure arrangements for health and safety and safeguarding are monitored, with assurance being provided by the Health and Safety Committee �� Board.

�� is embedded and learning from incidents is cascaded.

Continued compliance and quality inspections take place.

Annual Report 2022/2023

Failure to embed a leadership approach that encourages �� and collective responsibility.

�� leading to increased cost, inconsistent service quality, and service delivery challenges.

The strategic plan has a clear focus on people and the charity’s ��

�� has been developed, this �� The performance of the People Strategy is overseen by the People Committee.

�� development programme is running for key managers.

�� wellbeing, equality, diversity and inclusion have been implemented.

�� leading to an inability to provide services to service users.

Robust business continuity plans are in place, these plans were actively tested during the Coronavirus pandemic.

Data and systems can be accessed securely from multiple locations.

�� sites.

Annual Report 2022/2023

Financial narrative

�� reasons why total comprehensive income has decreased from a £2.4m surplus ��

�� margins. Overall, the Housing division returned a loss of £0.3m for the year �� 2023/24, a review of service operating models will be undertaken for all ��

��

�� a negative impact on margins within this division.

��

The Total Comprehensive Income for the year amounted to a loss of £1.0m �� net liabilities of £0.7m.

Annual Report 2022/2023

The Balance Sheet shows net assets at £10.1m (2021/22 : £11.1m). This is represented by unrestricted funds of £9.9m (2021/22: £10.9m) and restricted ��

The full results for the year are shown in the Statement of Comprehensive Income and the Statement of Financial Position plus accompanying accounts ��

Annual Report 2022/2023

Value for money statement

To comply with the Regulator of Social Housing’s latest Code of Practice on value for money, as a registered provider we are required to publish our performance against a given set of key indicators which is shown below:

	�� 2022/23	�� 2021/22	Global �� 22 – Supported Housing Provider Metrics*	2022/23 Comment
1. Reinvestment %	9.1%	0.3%	6.1%	During the year the Charity prioritised the refurbishment of housing stock to ensure properties are ready to let or in a reasonable condition for hand back to the landlord.
�� delivered %	0.0%	0.0%	1.2%	�� acquire any new housing units during the year.
3. Gearing %	0.0%	0.0%	��	�� �� �� �� enter into any new loan ��
�� MRI Interest Cover %	��	��	203%	�� �� interest value recorded �� statements solely relates to accounting disclosures �� �� scheme.

Annual Report 2022/2023

----- Start of picture text -----
�� £10.34 £10.96 ��
social provision is primarily
housing cost focused on supporting
per unit tenants who typically
have high support needs
who stay in their homes
for shorter timeframes.
This increased level
of support and more
frequent letting turnover
does increase unit
operating costs.
6. Operating �� 10.0% ��
Margin stock operated at a loss
��
Housing the loss slightly increased
Letting % during the year.
B) Overall % �� 1.9% ��
division operated at a
��
year.
7. Return �� 2.9% ��
on capital ��
employed % overall value of the loss
was slightly higher than
planned and forecast at
the start of the year.
----- End of picture text -----

�� providers who own or manage at least 1,000 homes. The comparative data ��

�� vulnerable people and people leaving the criminal justice system on assured shorthold tenancies or licences. Many of the above metrics are designed to �� loan book commitments and a high level of general needs social rented homes. ��

Annual Report 2022/2023

�� believes that overall the Charity is delivering good value for money to ��

�� �� by investing more resources in service user and learner engagement �� and learner feedback to inform the development of our governance arrangements, decision making and service design to help us to continue to deliver better quality services at a reasonable price, in line with ��
Co-production – We actively engage with the people we support and our workforce, this enables us to capitalise on their ideas and innovations for �� our strategic plan.
�� During the year we have launched an Environmental Strategy and we have ��
Business development – We have increased the range of partners we work with to enable us to deliver a wider range of services to service users and �� the contracts we wanted to keep.

Annual Report 2022/2023

The Housing division and the Charity overall operated at a loss for the year. �� results. To address our ambition to raise our performance against these indicators our internal indicators to improve value for money include:

Securing better value for money from all property maintenance work that is undertaken
�� operating cost estimates
�� reduced voids or property handbacks
�� commissioner approved contract uplifts
�� delivered within the income envelopes that the Charity has to work within.

Return on assets and investments and use of reserves

�� occupancy of our owned housing stock. This includes disposing of properties �� the potential of the premises we operate from. We are continuing to �� the needs of those using our services.

Our physical asset base across the Charity is free from debt and we are able to �� investments in our infrastructure and strategic projects give us a potential yield that will ensure the Charity remains sustainable in the longer term. We assess ��

Our approach to our social and environmental responsibilities is developed ��

We have established procedures in place that support the central procurement of ICT related equipment, stationery, and furniture from single �� are achieved.

Annual Report 2022/2023

Reserves and liquidity policy

There has been a reduction of £1.0m in the overall value of the balance sheet during the year to 31 March 2023, the value of the balance sheet now stands at £10.1m.

�� reserve holding more closely to operating activity. Contract income makes �� taken account of known and potential balance sheet liabilities arising from �� costs, an estimate of the Charity’s short term working capital commitments and overhead commitments. These factors are now used to determine �� reviewed the workings in detail and recommended that a reserves target of £9.4m is appropriate for the Charity as at 31 March 2023.

��

The Charity holds £9.9m in general reserves and £0.2m in restricted reserves.

��

�� liquid assets.

Annual Report 2022/2023

��

----- Start of picture text -----
Financial Year ��
��
��
�� Walkden House, 16–17 Devonshire Square
London EC2M 4SQ
Current Financial Year 2,911
tCO2e
Current Financial Year ��
kWh
Previous Financial Year 3,114.00
tCO2e
Previous Financial Year ��
kWh
Intensity Ratio (IR) used 42.39
Intensity Metric Current ��
Financial Year
Intensity Metric ��
Previous Financial Year
Emissions Factors Used ��
Methodology Used GHG Protocol
Emissions Scope Scope 1 & 2
Emissions Included ��
�� Some gas and electricity use has been
estimated based on previous years
��
was not available through billing.
----- End of picture text -----

Annual Report 2022/2023

----- Start of picture text -----
��
Statement ��
England and Wales.
��
residential properties. We ensure that any
new properties added to our portfolio has
a minimum EPC rating of D and have plans
��
reach that rating. We work with landlords,
agents and developers, during the leasing
and acquisition stages, to assess whether
any improvements can be made (such as
to the heating systems or insulation) to
��
core electricity contract is procured through
renewable/greener sources.
��
rising to the challenge caused by the pandemic
and our ability to adapt to new ways of
��
reduction in 2020/21, particularly in travel,
as a result of lockdowns and restrictions
and, whilst travel has recovered in 2022/23,
��
This is encouraging and demonstrates that
behaviour change is possible and can attract
��
��
its sustainability objectives, and we will seek
suitable engagement to make the step change
needed to address the climate crisis and play
our part in delivering a better future.
��
environmental vision and goals, and enables
action plans and various workstreams that
are delivering measurable environmental
improvements. We will continue to meet our
legal obligations, develop sustainable and
environmentally friendly services, and help
��
Report completed by ��
�� (EIC) Energy Intelligence Centre Limited,
completed by ��
SECR Report (EIC) Energy Intelligence Centre Limited
completed by
----- End of picture text -----

Annual Report 2022/2023

Thanks and acknowledgements

With thanks to our funders and partners including:

��

Barrow Cadbury Trust

��

Big Lottery Fund

Birmingham City Council

��

Carmarthenshire County Council/ Cyngor Sir Gaerfyrddin

��

Cleveland Police and Crime Commissioner

Clinks

Conwy County Borough Council/ Cyngor Bwrdeistref Sirol Conwy

��

Department of Health

Denbighshire County Council/ Cyngor Sir Ddinbych

Dudley Council

��

East Riding of Yorkshire Council & Two Ridings Community Foundation

��

��

��

European Social Fund

��

Forces in Mind Trust

The Forward Trust

Gwynedd Council/Cyngor Gwynedd GamCare

James Teather and Teather property Investments Ltd

��

Lincolnshire County Council

Liverpool City Council

London Borough of Lambeth

Annual Report 2022/2023

London Borough of Wandsworth London Borough of Westminster Manchester City Council Ministry of Justice MTC Ltd �� Ormiston Families �� People Plus �� Peabody Pembrokeshire County Council Resonance – Social Investment �� Shelter �� South Yorkshire CRC St Mungo’s �� Stephen Lawrence Trust �� The Bridge (East Midlands) The Privy Purse Charitable Fund The Royal British Legion Transform Foundation �� Wandsworth Borough Council �� Wolverhampton City Council �� YSS

Annual Report 2022/2023

��

Annual Report 2022/2023

Independent auditor’s report

Opinion

�� 31 March 2023 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Reserves, �� been applied in their preparation is applicable law and United Kingdom �� Financial Reporting Standard applicable in the UK and Republic of Ireland ��

��

�� and of its incoming resources and application of resources, including its ��
have been properly prepared in accordance with United Kingdom ��
have been prepared in accordance with the requirements of the Companies �� Direction for Private Registered Providers of Social Housing.

Basis for opinion

We conducted our audit in accordance with International Standards on �� accordance with these requirements. We believe that the audit evidence we ��

Conclusions relating to going concern

�� statements is appropriate.

Annual Report 2022/2023

�� uncertainties relating to events or conditions that, individually or collectively, �� 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 trustees are responsible for the other information contained within the annual report. The other information comprises the information included ��

Our responsibility is to read the other information and, in doing so, consider �� statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this �� 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 our audit:

the information given in the trustees’ report, which includes the directors’ report and the strategic report prepared for the purposes of company law, ��
the strategic report and the directors’ report included within the trustees’ report have been prepared in accordance with applicable legal requirements.

Annual Report 2022/2023

��

�� misstatements in the strategic report or the directors’ report included within the trustees’ report.

We have nothing to report in respect of the following matters in relation to ��

��
�� records and returns; or
�� made; or
�� our audit.

Responsibilities of the Trustees

�� for such internal control as the trustees determine is necessary to enable the �� whether due to fraud or error.

�� applicable, matters related to going concern and using the going concern �� cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the

��

Our objectives are to obtain reasonable assurance about whether the �� 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 ��

Annual Report 2022/2023

fraud or error and are considered material if, individually or in the aggregate, ��

�� and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, �� irregularities, including fraud is detailed below:

We obtained an understanding of the legal and regulatory frameworks within �� the required compliance with these laws and regulations as part of our audit ��

In addition, we considered provisions of other laws and regulations that do �� for the UK operations were requirements imposed by the Regulator of Social ��

�� compliance with these laws and regulations to enquiry of the Trustees and other management and inspection of regulatory and legal correspondence, if any.

�� from irregularities, including fraud, to be within the timing of recognition of income and the override of controls by management. Our audit procedures to respond to these risks included enquiries of management, internal audit �� assessment of the risks of irregularities, sample testing on the posting of journals, reviewing accounting estimates for biases, reviewing regulatory correspondence, designing audit procedures over the timing of income and reading minutes of meetings of those charged with governance.

Owing to the inherent limitations of an audit, there is an unavoidable risk �� statements, even though we have properly planned and performed our audit �� inherently limited procedures required by auditing standards would identify

47 Annual Report 2022/2023

�� detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not ��

�� 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

�� required to state to them in an auditor’s report and for no other purpose. To �� work, for this report, or for the opinions we have formed.

Julia Poulter �� For and on behalf of Crowe U.K. LLP �� London EC4M 7JW

Date: 26th July 2023

Annual Report 2022/2023

Financial statements 49

Annual Report 2022/2023

Nacro - Statement of Comprehensive Income

for the year ended 31 March 2023

Note Turnover 3 Operating expenditure 3 Operating (deficit) / surplus Equalisation of guaranteed minimum pension 19 scheme (GMP) Operating (deficit) / surplus (including GMP) (Loss) on disposal of property, plant and equipment 4 Interest and similar receivables 6 Interest and financing costs 7 (Deficit) / Surplus before tax 5 Taxation 10 (Deficit) / Surplus for the year Actuarial gain in respect of pension schemes 19 Total comprehensive income for the year	2023 ��000 68,659 (69,971) (1,312) - (1,312) (9) - (377) (1,698) - (1,698) 695 (1,003)	2022 ��000 66,817 (65,762) 1,055 - 1,055 (216) - (322) 517 - 517 1,881 2,398

All amounts relate to continuing activities.

The financial statements were approved by the Board on 19[th] July 2023 and were signed on its behalf by:

Chair

Trustee Nick Hardwick (Jul 22, 2023, 11:36am) Anne Frost (Jul 23, 2023, 9:34am)

The notes on pages 54 to 75 form part of these financial statements.

�� 2022/2023

��

Nacro Statement of Financial Position as at 31 March 2023

Note Non Current Assets Intangible assets 11 Housing properties 12 Other property, plant and equipment 13 Current Assets Debtors 14 Cash and cash equivalents Creditors: Amounts falling due within one year 15 Net current assets Total assets less current liabilities Creditors: Amounts falling due after more than one year 16 Provisions Defined benefit obligations 19 Other provisions 18 Total net assets Capital and reserves Revenue reserve Restricted reserve Total reserves	2023 £'000 203 7,055 14,501 21,759 7,621 9,927 17,548 11,073 6,475 28,234 3,783 13,631 741 10,079 9,875 204 10,079	2022 £'000 449 7,196 14,803 22,448 6,859 11,515 18,374 10,606 7,768 30,216 3,951 14,499 684 11,082 10,878 204 11,082

The financial statements were approved by the Board on 19[th] July 2023 and were signed on its behalf by:

Chair Trustee Nick Hardwick (Jul 22, 2023, 11:36am) Anne Frost (Jul 23, 2023, 9:34am)

The notes on pages 54 to 75 form part of these financial statements.

Nacro Company number 00203583.

�� 2022/2023

��

Nacro - Statement of changes in reserves for the year ended 31 March 2023

Balance as at 1 April 2022 Surplus for the year Other comprehensive income for the year Total comprehensive income for the year Balance at 31 March 2023 Balance as at 1 April 2021 Surplus for the year Other comprehensive income for the year Total comprehensive income for the year Balance at 31 March 2022	Revenue Restricted reserve reserve £'000 £'000 10,878 204 (1,698) - 695 - (1,003) - 9,875 204 Revenue Restricted reserve reserve £'000 £'000 8,480 204 517 - 1,881 - 2,398 - 10,878 204	Total £'000 11,082 (1,698) 695 (1,003) 10,079 Total £'000 8,684 517 1,881 2,398 11,082

The notes on pages 54 to 75 form part of these financial statements.

�� 2022/2023

��

Nacro - Statement of Cashflow for the year ended 31 March 2023

Note
2023
��000
Net cash generated from operating activities
20
(1,277)
Cash flows from investing activities
Purchase of housing property components
-
Purchase of other property, plant and equipment
(311)
Purchase of intangible assets
-
Proceeds from sale of housing properties
-
Interest received
-
Total cash utilised in investing activities
(311)
Net change in cash and cash equivalents
(1,588)
Cash and cash equivalents at beginning of year
11,515
Cash and cash equivalents at end of year
9,927
The notes on pages 54 to 75 form part of these financial statements.

2022
��000
1,152
(213)
(198)
(392)
223
-
(580)
572
10,943
11,515

�� 2022/2023

��

Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

1 Legal Status

Nacro is a private company limited by guarantee under the Companies Act 2006, incorporated in England and is a registered housing provider and a registered charity. The address of its registered office is as disclosed on page 11 of the annual report.

2 Accounting policies

The principal accounting policies are recognised below. They have been applied consistently throughout the year and to the preceding year.

Basis of accounting

The financial statements have been prepared under the historical cost convention on an accruals basis, modified to include certain items at fair value, in accordance with UK Generally Accepted Accounting Practice (UK GAAP) including Financial Reporting Standard 102 (FRS 102) and the Housing SORP 2018: Statement of Recommended Practice for Registered Social Housing Providers and comply with the Accounting Direction for Private Registered Providers of Social Housing. Nacro is a public benefit entity, as defined in FRS 102 and applies the relevant �a�ag�a�h� ��ef��ed �PBE� �� FRS 102.

The financial statements are presented in sterling (£).

Going Concern

Nac�� b��e�� ac��e�, �� c��e�� f��a�c�a� �� and factors likely to affect its future development are set out within the Annual Report.

The Trustees have a reasonable expectation that Nacro 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 rent and service charges receivable (net of rent and service charge losses from voids), grants from local authorities and charitable fees and donations.

Rental income is recognised on an accruals basis and recognised when the property is available for let, net of voids. Service charge income is recognised when expenditure is incurred as this is considered to be the point at which the service has been performed and the revenue recognition criteria met.

Grant income is recognised in the financial statements when the conditions for receipt of the grants have been fulfilled and Nacro becomes entitled to payment. Where a grant is received relating to a future accounting period, the Statement of Comprehensive Income shows the gross amount receivable reduced by the movement in the amount deferred to future accounting periods. Deferred grant income at the year end is included in creditors.

Charitable fees and donations are credited as income in the year in which they were receivable.

Financial instruments

Financial instruments which meet the criteria of a basic financial instrument as defined in Section 11 of FRS 102 are accounted for under an amortised historic cost model.

Basic financial instruments are recognised at amortised historical cost.

�� 2022/2023

��

Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

Debtors

Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Where deferral of payment terms has been agreed at below market rate, and where material, the balance is shown at the present value, discounted at a market rate.

Creditors

Short term trade creditors are measured at the transaction price. Other financial liabilities are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

Employee Benefits

Defined contribution scheme

Nacro participates in a defined contribution stakeholder scheme. Employer contributions payable to the scheme are charged to the Statement of Comprehensive Income during the year. Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments in the Statement of Financial Position.

Defined benefit scheme.

The Nacro Staff Benefits Plan closed to new entrants from 1 December 1998 and for future accruals from 31 March 2006. The net interest cost on the net defined benefit liability is charged to revenue and included within finance costs. Re-measurement comprising actuarial gains and losses and the return on scheme assets (excluding amounts included in net interest on the net defined benefit liability) are recognised immediately in other comprehensive income.

Defined benefit schemes are funded, with the assets of the scheme held separately from those of the company, in separate Pension Trustee administered funds. Pension scheme assets are measured at fair value and liabilities are measured on an actuarial basis using the projected unit credit method. The actuarial valuations are obtained triennially and are updated at each Statement of Financial Position date.

Housing properties

Housing properties are properties held for the provision of social housing or to otherwise provide social benefit. Housing properties are principally properties available for rent and are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes the cost of acquiring land and buildings, directly attributable development costs and interest charges incurred during the development period.

Depreciation is charged so as to write down the net book value of housing properties to their estimated residual value, on a straight line basis, over their useful economic lives. Depreciation is charged in the year of acquisition. Freehold land is not depreciated.

Major components of housing properties, which have significantly different patterns of consumption of economic benefits, are treated as separate assets and depreciated over their expected useful economic lives at the following annual rates:

Structure	80 years
Roofs	50 years
Windows	25 years
Kitchens	20 years
Bathrooms	30 years
Boilers	15 years
Heating systems	30 years
Electrics	30 years

�� 2022/2023

��

Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

Properties held on long leases are depreciated over their estimated useful economic lives or the lease duration if shorter.

Improvements

Where there are improvements to housing properties that are expected to provide incremental future benefits, these are recognised and added to the carrying amount of the property. Any works to housing properties which neither replace a component nor result in an incremental future benefit are charged as expenditure in the Statement of Comprehensive Income.

Leaseholders

Where the rights and obligations for improving a housing property reside with the leaseholder or tenant, any works to improve such properties incurred by Nacro is recharged to the leaseholder and recognised in the Statement of Comprehensive Income along with the corresponding income from the leaseholder or tenant.

Donation or acquisition of land or other asset at below market value

Where a donation of land and/or other assets is received or land and/or other assets are acquired at below market value from a government source, this is accounted for as a nonmonetary government grant. The difference between the fair value of the asset donated or acquired and the consideration paid for the asset is recognised as a government grant and included in the Statement of Financial Position as a liability.

Where Nacro receives a donation of land and/or other assets or acquires such assets below their market value from a third party that does not meet the definition of a government source as set out in the Housing SORP, then the transaction is accounted for as a non-exchange transaction. The assets acquired are recognised in the statement of financial position at fair value. The income, equivalent to the difference between any amounts paid or payable for the assets and the fair value of the assets, is recognised in the statement of comprehensive income as a donation when future performance-related conditions are met.

Assets held for sale

Assets held for sale consists of properties or other assets that are surplus to the requirement of the business and not held for use in the business.

Property assets held for sale are subject to a charity valuation by a qualified and experienced external surveyor and held at this value, any change in valuation is recognised in the Statement of Comprehensive Income.

Social Housing Grant and other Government grants

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

Grants relating to revenue are recognised in income on a systematic basis over the period in which related costs for which the grant is intended to compensate are recognised. Where a grant is receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support with no future related costs, it is recognised as revenue in the period in which it becomes receivable.

Grants due from government organisations or received in advance are included as current assets or liabilities.

�� 2022/2023

��

Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

Government grants received for housing properties are subordinated to the repayment of loans by agreement with Homes England. Government grants released on sale of a property may be repayable but are normally available to be recycled and are credited to a Recycled Capital Grant Fund and included in the statement of financial position in creditors.

Other Grants

Grants received from non-government sources are recognised as revenue using the performance model.

Recycling of grants

Where there is a requirement to either repay or recycle a grant received for an asset that has been disposed of, a provision is included in the Statement of Financial Position to recognise this obligation as a liability. When approval is received from the funding body to use the grant for a specific development, the amount previously recognised as a provision for the recycling of the grant is reclassified as a creditor in the Statement of Financial Position.

On disposal of an asset for which government grant was received, if there is no obligation to repay the grant, any unamortised grant remaining within liabilities in the Statement of Financial Position related to this asset is recognised as a liability and recognised as revenue in the Statement of Comprehensive Income.

Impairment assessment of a cash-generating unit

Where there are indicators of impairment of tangible assets; factors taken into consideration in reaching such a decision include the economic viability and expected future performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.

Impairment of social housing properties

An assessment is made at each reporting date as to whether an indicator of impairment exists. If such an indicator exists, an impairment assessment is carried out and an estimate of the recoverable amount of the asset is made. Where the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recognised in the Statement of Comprehensive Income. The recoverable amount of an asset is the higher of its value in use and fair value less costs to sell. Where assets are held for their service potential, value in use is determined by the ��e�e�� a��e �f �he a��e�� e�a��g �e��ce ��e��a� �� he �e� a�� e��ec�ed �� be received from its disposal. Depreciated replacement cost is taken as a suitable measurement model.

An impairment loss is reversed if the reasons for the impairment loss have ceased to apply and included in the Statement of Comprehensive Income.

Other property, plant and equipment

Other property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Depreciation is charged on all non-housing property, plant and equipment, other than investment properties and freehold land so as to write down the net book value to their residual value, on a straight line basis, over their useful economic lives, as follows:

Other Freehold premises	34�60 years
Freehold premises components	4�30 years
Leasehold land and buildings	5 years
Furniture, fixtures & fittings	4 years
Other equipment	4 years
Vehicles	4�10 years
Computer hardware	2�4 years

�� 2022/2023

��

Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

Other freehold premises are treated as housing properties which have different patterns of consumption of economic benefit and treated as separate assets. The same asset lives are used as for housing properties.

Intangible assets

Intangible assets are stated at historic cost or valuation, less accumulated recognised and any provision for impairment. Amortisation is charged to operating expenditure in the Statement of Comprehensive Income. Amortisation is provided on all intangible assets at rates calculated to write off the cost or valuation of each asset on a straight-line basis over its expected useful life, as follows:

Computer software 2 � 4 years

Leases

An assessment is made at inception of an agreement that transfers the right to use assets. The assessment considers whether the arrangement is, or contains, a lease based on the substance of the arrangement.

Operating leased assets

Leases that do not transfer all the risks and rewards of ownership are classified as operating leases.

Payments under operating leases are charged to the Statement of Comprehensive Income on a straight-line basis over the period of the lease.

Provisions for liabilities

Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event; it is probable the obligation will have to be settled; and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value using a pre-tax discount rate. The unwinding of the discount is recognised as a finance cost in the Statement of Comprehensive Income in the period it arises.

Financial provision is made for the cost of annual leave accrued by employees as a result of services rendered in the current period, and which employees are entitled to carry forward and use within the next 12 months. The provision is measured at the salary cost payable for the period of absence.

Restricted reserves

Where reserves are subject to an external restriction they are separately recognised within reserves as a restricted reserve. Revenue and expenditure is included in the Statement of Comprehensive Income and a transfer is made from the general reserve to the restricted reserve.

Significant management judgements and key sources of estimation uncertainty

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the

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Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

Significant management judgements

The following are management judgements in applying the accounting policies of Nacro that have the most significant effect on the amounts recognised in the financial statements.

Impairment of social housing properties

The Trustees have to make an assessment as to whether an indicator of impairment in value of social housing properties exists. In making the judgement, management consider the detailed criteria set out in the SORP. The conclusion of the Trustees is that there are no indicators of impairment.

Estimation uncertainty

Estimates and assumptions are made concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

Provisions

Provision is made for dilapidations. The�e �� e��e �a�age�e�� be�� e��a�e �f the costs that will be incurred based on legislative and contractual requirements. In addition, the timing of the cash flows and the discount rates used to establish net present value of the �b��ga�� e��e �a�age�e�� dge�e��.

Recoverability of rent arrears

Nacro makes an estimate of the recoverable value of rent arrears. When assessing impairment of rent arrears, management consider factors including the ageing profile of the rental debtors and historical experience.

Defined benefit pension scheme

Nacro has obligations to pay pension benefits to certain employees and former employees. The cost of these benefits and the present value of the obligation depend on a number of factors, including; life expectancy, salary increases, asset valuations and the discount rate on corporate bonds. Based on advice received from Actuaries, management estimates these factors in determining the net pension obligation in the balance sheet. The assumptions reflect historical experience and current trends.

Useful lives of depreciable assets

Management reviews its estimates 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.

Termination Benefits

Redundancy costs (termination benefits) are recognised as an immediate cost and charged to the SOFA on a demonstrable commitment to termination, with provision for future redundancy costs measured at a best estimate of the expenditure that would be required to settle the obligation at the reporting date.

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��

Nacro – NOTES TO THE FINANCIAL STATEMENTS

for the year ended 31 MARCH 2023

3A Particulars of turnover, operating costs and operating surplus.

Social housing activity
Social housing lettings (Note 3B)
Other social housing activities
Charges for support services
Sub-total
Activities other than social housing
Non-social housing and related support services
Education centre provision
Justice services
Health services
Sub-total
Total
Social housing activity
Social housing lettings (Note 3B)
Other social housing activities
Charges for support services
Sub-total
Activities other than social housing
Non-social housing and related support services
Education centre provision
Justice services
Health services
Sub-total
Total

2023
Turnover
Operating
costs
Operating
surplus/
(deficit)
��000
��000
��000
6,385
(6,689)
(304)
12,075
(11,030)
1,045
18,460
(17,719)
741
26,754
(27,822)
(1,068)
13,539
(15,097)
(1,558)
4,640
(4,194)
446
5,266
(5,139)
127
50,199
(52,252)
(2,053)
68,659
(69,971)
(1,312)
2022
Turnover
Operating
costs
Operating
surplus/
(deficit)
��000
��000
��000
6,877
(7,092)
(215)
6,974
(5,624)
1,350
13,851
(12,716)
1,135
28,387
(28,003)
384
14,609
(16,221)
(1,612)
4,642
(3,701)
941
5,328
(5,121)
207
52,966
(53,046)
(80)
66,817
(65,762)
1,055

�� 2022/2023

��

Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

3B Social Housing Lettings

Income
Rents receivable net of
identifiable service charges
Service charge income
Amortised government grants
Turnover from social housing
lettings
Operating expenditure
Management
Service charge costs
Lease expenditure
Property costs
Routine maintenance
Bad debts
Depreciation of housing
properties
Expenditure from social
housing lettings
Operating deficit housing
lettings
Total void losses including
service charges

General
Needs
Housing
Supported
Housing
2023
Total
2022
Total
��000
��000
��000
��000
879
1,441
2,320
2,810
970
2,899
3,869
3,491
67
129
196
576
1,916
4,469
6,385
6,877
(818)
(1,676)
(2,494)
(2,862)
(148)
(1,024)
(1,172)
(1,420)
(500)
(964)
(1,464)
(1,638)
(161)
(91)
(252)
(856)
(286)
(728)
(1,014)
(32)
(23)
(113)
(136)
(128)
(78)
(79)
(157)
(156)
(2,014)
(4,675)
(6,689)
(7,092)
(98)
(206)
(304)
(215)
158
676
834
1,044

�� 2022/2023

��

Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

4 Gain/(Loss) on disposal of property and equipment
2023
��000
(Loss)/Gain on disposal of property and equipment
(9)
(9)
5 Surplus for the year before taxation
Surplus for the year before taxation is stated after charging/(crediting):
2023
��000
Depreciation of housing properties
141
Depreciation of other property, plant and equipment
613
Amortisation of intangible assets
237
Amortisation of Government grants
(199)
Loss on disposal of fixed assets
9
Audit fees:
- statutory audit
51
- audit-related assurance services
91
Operating lease rentals
Education Tuition Fund
12,317
(68)
6
Interest receivable
2023
��000
Bank interest receivable
-
-
7
Interest and financing costs
2023
��000
Net interest payable on defined benefit pension liability
(377)

2022
��000
(216)
(216)
2022
��000
164
686
115
(594)
216
42
48
11,806
(344)
2022
��000
-
-
2022
��000
(322)

�� 2022/2023

��

Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

8 Staff costs

Wages and salaries Social security costs Other pension costs Redundancy Costs Agency Costs	2023 ��000 22,447 2,121 662 150 3,373 28,753	2022 ��000 21,874 1,971 748 206 2,978 27,777

The number of staff who received emoluments, including pension contribution, in excess of £60,000 is as shown below:

Salary Band	2023	2022
60,000�69,999	12	10
70,000�79,999	7	6
80,000�89,999	2	1
90,000�99,999	0	1
100,000�109,999	0	0
110,000�119,999	0	1
120,000�129,999	1	0
130,000�139,999	0	0
140,000�149,999	0	0
150,000�159,999	0	0
160,000�169,999	0	1
170,000�179,999	1	0

The average full-time equivalent number of employees over the 12-month period was: (calculated based on standard working week of 40 hours)

Service delivery Management and administration	2023 655 100 755	2022 707 94 801

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Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

9 Executive remuneration Wages and salaries (including social security costs) Pension costs	2023 ��000 733 19 752	2022 ��000 684 18 702

Executive remuneration is defined as being for members of the Board, the Chief Executive and the Executive Leadership Team.

The number of Executive Management in the defined contribution scheme as at the end of March 2023 was 7 (2022:6)

Remuneration of the Chief Executive

Remuneration of the Chief Executive
	2023	2022
	��000	��000
Emoluments	172	160
Pension contributions	5	5

The Chief Executive is an ordinary member of the pension scheme. No enhanced or special terms apply.

No Board member or person related or connected to them received any remuneration from Nacro during the year. During the year expenses relating to travel were reimbursed or paid on behalf of Board members amounting to £4,554 for 10 members (2022: £1,687 to 4 members).

10 Taxation status

Nacro has charitable status and its sources of income are exempt from income and corporation tax provided that they are applied for charitable purposes.

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Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

11 Intangible fixed assets

Cost At 1 April 2022 Additions Disposals As at 31 March 2023 Amortisation At 1 April 2022 Charge for the year Eliminated on disposal As at 31 March 2023 Net book value As at 31 March 2023 As at 31 March 2022 12 Housing properties Cost At 1 April 2022 Additions Disposals At 31 March 2023 Depreciation At 1 April 2022 Charge for the year Eliminated on disposals At 31 March 2023 Net book value As at 31 March 2023 As at 31 March 2022	General Needs Supported Housing ��000 ��000 263 11,134 - - - - 263 11,134 (60) (4,141) (5) (136) - - (65) (4,277) 198 6,857 203 6,993	Computer software ��000 851 - (124) 727 (402) (237) 115 (524) 203 449 Total ��000 11,397 - - 11,397 (4,201) (141) - (4,342) 7,055 7,196

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)) Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

13 Other property, plant and equipment

Cost or valuation At 1 April 2022 Additions Disposals As at 31 March 2023 Depreciation At 1 April 2022 Charge for the year Eliminated on disposal As at 31 March 2023 Net book value As at 31 March 2023 As at 31 March 2022	Freehold Long/short leasehold Equipment Motor vehicles £'000 £'000 £'000 £'000 16,796 547 1,241 178 - 228 83 - - (69) (418) - 16,796 706 906 178 (2,429) (317) (1,035) (178) (398) (83) (132) - - 69 418 - (2,827) (331) (749) (178) 13,969 375 157 - 14,367 230 206 -	Total £'000 18,762 311 (487) 18,586 (3,959) (613) 487 (4,085) 14,501 14,803

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Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

14 Debtors Amounts falling due within one year: Rent arrears Provision for bad debts Net Rent Arrears Trade debtors Other Debtors Prepayments and accrued income 15 Creditors Amounts falling due within one year: Trade creditors Corporation tax Other taxation and social security Other creditors Deferred income, grants and grants repayable Accruals SHG under 1 year deferred grant (note 17) 16 Creditors Amounts falling due after more than one year: Financial assistance - deferred grants (note 17) Financial assistance - recycled capital grant fund	2023 ��000 2,390 (450) 1,940 1,518 190 3,973 7,621 2023 ��000 2,714 - 1,026 202 2,831 4,110 190 11,073 2023 ��000 3,777 6 3,783	2022 ��000 1,833 (407) 1,426 2,252 212 2,969 6,859 2022 ��000 2,099 - 961 693 3,746 2,886 221 10,606 2022 ��000 3,945 6 3,951

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Nacro – NOTES TO THE FINANCIAL STATEMENTS

for the year ended 31 MARCH 2023

17 Financial assistance and other government grants (Deferred income grant)

Deferred income - government grants
2023
��000
As at 1 April 2022
4,166
Amortisation to Statement of Comprehensive Income
(199)
Grant addition
-
As at 31 March 2023
3,967
Amounts to be released within one year
190
Amounts due to be released in more than one year
3,777
3,967
The total value of grants received by Nacro is £8,795,258 (2022: £8,795,258).
Recycled Capital Grant Fund
2023
��000
As at 1 April 2022
6
Recycling of grant
-
As at 31 March 2023
6

2022
��000
4,579
(594)
181
4,166
221
3,945
4,166
2022
��000
6
-
6

The recycled capital grant is in respect of 2 housing property disposals in 2017/18 and is shown in note 16.

18 Provisions

18 Provisions
As at 1 April 2022 Released Increase As at 31 March 2023	Dilapidations £'000 684 (97) 154 741	Total £'000 684 (97) 154
		741

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Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

19 Retirement benefit schemes

Defined contribution scheme

Nacro operates defined contribution retirement benefit schemes for qualifying employees. The total expense charged to the Statement of Comprehensive Income in the period ended 31 March 2023 was £662,384 (2022: £748,363).

Defined benefit scheme

Characteristics and risks associated with the Plan

Nacro operates the Nacro Staff Benefits Plan ("the Plan"). The Plan provides pensions in retirement a�d dea�h be�ef�� e�be��. Pe�� be�ef�� a�e ��ed �� a �e�be�� f��a� �a�a�� a� �e��e�e�� and their length of service. Since 31 March 2006 the Plan has been closed to future accrual.

The Plan is a registered scheme under UK legislation and was contracted out of the State Second Pension until its closure.

The Plan is subject to the scheme funding requirements outlined in UK legislation.

The P�a� �a� e��ab��hed f�� 31 Ma� 1986 ��de� �� a�d �� g��e��ed b� �he P�a�� h��d definitive deed and rules dated 23 May 2011. The Pension Trustees are responsible for the operation and the governance of the Plan, including making dec �� ega�d��g �he P�a�� f��d��g and investment strategy in conjunction with the Company.

U�de� c�a��e 21 �f �he P�a�� h��d def��e deed a�d ��e� da�ed 23 Ma� 2011, �he C��a�� does not have an unconditional right to a refund of any surplus in the Plan if the Plan winds up. However, since the Plan is in deficit, and this deficit exceeds the value of future contributions due under the current recovery plan, there is no additional liability recognised on the balance sheet as a �e�� f �he P�a�� ec��e�� plan.

The Plan exposes the Company to actuarial risks such as; market (investment) risk, interest rate risk, inflation risks, currency risk and longevity risk.

The Plan does not expose the Company to any unusual Plan-specific or Company-specific risks.

No allowance has been made for any curtailment or settlement during the accounting period.

Amount, timing and uncertainty of future cashflows.

The Pension T��ee� h��d a �� f �he P�a�� a��e�� g�� a�d ��de� -linked gilts to provide ��e deg�ee �f �a�ch��g ��h �he P�a�� ab��e� (��h �he �a��e� ��d��g a degree of price ��f�a�� a�ch��g ��h �he P�a�� ab��e�).

The Plan also holds annuity contracts in respect of the majority of pensions in payment which provide protection against future changes in respect of post retirement market risk, inflation risk and longevity risk in respect of these members.

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Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

19 Retirement benefit schemes - cont

The P�a�� e��e�� a�eg� �� e�� b��ad�� 90% �f �� -annuity investments in return seeking assets and the remaining 10% in matching assets (mainly government bonds). This ��a�eg� �ef�ec�� he P�a�� ab�� f��e a�d �he Pension T��ee�� a�d C��a�� a��de �� risk.

The P�a�� -annuity investments include interest rate and inflation hedging. The Plan also holds a number of annuity policies which approximately match the majority of the pensions in payment.

The last scheme funding valuation of the Plan was as at 31 March 2020 (��he 20 20 �a��a��) a�d revealed a funding deficit of £16.0m. Under the current schedule of contributions, the Company has agreed to pay deficit reduction contributions. These deficit reduction contributions are set out in the payment schedule agreed as part of each tri-annual valuation. The expenses of running the Plan, as well as statutory levies, are to be met directly by the Company.

The Company has paid £550,000 in deficit reduction contributions in respect of the current accounting period.

The liabilities of the Plan are based on the current value of expected benefit payment cash-flows to members of the Plan over the next 50 years. The average duration of the liabilities is approximately 14 years.

The value of the liabilities at the reporting date have been estimated by updating the results of the 2020 valuation to allow for the passage of time, benefits paid out of the Plan and changes in actuarial assumptions over the period from 31 March 2020 to 31 March 2023. Allowance has also been made for actual inflation experience and known transfers out and trivial commutations over the period. Such an approach is common for the purposes of accounting disclosures. It is not expected that these projections will be materially different from a summation of individual calculations at the accounting date, although there may be some discrepancy between the actual liabilities for the Plan at the accounting date and those included in the disclosures.

Principal Actuarial Assumptions

A full actuarial valuation of the Plan was carried out as at 31 March 2020 and has been updated to 31 March 2023 by a qualified actuary. The major assumptions used by the actuary were (in nominal terms) as follows

terms) as follows
	2023	2022
Discount rate	4.75%	2.65%
Inflation assumption (RPI)	3.35%	4.05%
Inflation assumption (CPI)	2.85%	3.15%
Future revaluation of pensions in deferment	2.85%	3.15%
Pension increases in payment (liabilities) :
CPI max 5%	2.80%	3.05%
CPI max 3%	2.40%	2.45%
CPI max 2.5%	2.15%	2.15%
Pension increases in payment (insured asset) :
RPI max 5%	3.25%	3.80%
RPI max 3%	2.60%	2.75%
RPI max 2.5%	2.30%	2.35%

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Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

19 Retirement benefit schemes - cont

Assumed life expectancies on retirement at age 65

Retiring today�Females Retiring today�Males Retiring in 20 years: Females Retiring in 20 years: Males The assets in the plan were Equity, property and other Gilts and other government debt Annuities Cash and net current assets Fair value of Plan assets The actual return on assets over the period was: Present value of funded obligations Fair value of Plan assets Deficit in funded scheme Present value of unfunded obligations Unrecognised actuarial gains / (losses) (Irrecoverable surplus) Net liability in Statement of Financial Position	2023 23.3 20.9 24.4 21.8 2023 ��000 23,833 1,590 6,839 494 32,756 (11,229) (46,387) 32,756 (13,631) - - - (13,631)	2022 22.9 20.4 24.1 21.3 2022 ��000 21,211 14,206 8,148 2,714
		46,279
		(393) (60,778) 46,279
		(14,499)
		- - -
		(14,499)

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Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

19 Retirement benefit schemes - cont

Reconciliation of opening and closing balances of the present value of the deferred benefit obligation

benefit obligation
	2023	2022
	��000	��000
Benefit obligation at beginning of year	60,778	65,536
Plan administration cost	-	-
Interest cost	1,573	1,251
Contributions by plan participants	-	-
Actuarial (gains) / losses	(13,120)	(3,203)
Benefits paid	(2,844)	(2,806)
Past service cost	-	-
Benefit obligation at end of year	46,387	60,778
Reconciliation of opening and closing balances of the fair value of Plan assets
	2023	2022
	��000	��000
Fair value of Plan assets at beginning of year	46,279	48,578
Interest income on Plan assets	1,196	929
Return on assets, excluding interest income	(12,425)	(1,322)
Contributions by employer	550	900
Contributions by Plan participants	-	-
Benefits paid	(2,844)	(2,806)
Plan administration cost	-	-
Fair value of Plan assets at end of year	32,756	46,279
The amounts recognised in Statement of Comprehensive
Income
	2023	2022
	��000	��000
Service cost - including current and past service costs and	-	-
Settlements
Plan administrative costs	-	-
Net interest on the net defined liability	377	322
	377	322

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Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

19 Retirement benefit schemes - cont

Remeasurement of the net defined benefit liability (asset) shown in the Statement of Comprehensive Income

Comprehensive Income
Actuarial (gains) / losses on the liabilities Return on assets, excluding interest income Total remeasurement of the net defined liability (asset) Estimation of next period's profit or loss Service cost - including current and past service costs and settlements Plan administrative costs Net interest on the net defined liability Total expense	2023 ��000 (13,120) 12,425 (695) 2024 ��000 - - 631 631	2022 ��000 (3,203) 1,322
		(1,881)

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Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

20 Cashflow from operating activities (Deficit) / Surplus for the year Adjustment for non-cash items: Depreciation of housing properties Depreciation of other property, plant and equipment Amortisation of intangible assets Loss on disposal of assets (Increase) / Decrease in debtors Increase / (Decrease) in creditors Increase / (Decrease) in provisions Intangible asset prior periods corrections Pension costs less contributions payable Accrued pension payment Amortisation of SHG Interest payable Net cash generated from operating activities	2023 ��000 (1,698) 141 613 237 9 (762) 467 57 - (550) 31 (199) 377 (1,277)	2022 ��000 517 164 686 115 216 (1,259) 1,726 59 - (900) 100 (594) 322 1,152

21 Capital commitments

There were no capital commitments at the year-end (2022: £112k).

22 Leasing Commitments

Total future minimum lease payments under non-cancellable operating leases are as follows:

Leases expiring:- - within one year - between one and five years - after five years	2023 ��000 4,088 3,159 2,186 9,433	2022 ��000 1,369 1,605 3,823 6,797

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Nacro – NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 MARCH 2023

23 Financial assets and liabilities

Financial assets

Financial assets measured at undiscounted amount receivable Bank deposits Total	2023 ��000 3,648 9,927 13,575	2022 ��000 3,890 11,515 15,405

Financial Instruments on which no interest is earned include short-term debtors. No investments were held by the company during the year. No interest or gains are recognised on financial assets recognised at undiscounted amounts receivable.

Financial liabilities	2023	2022
	��000	��000
Financial liabilities measured at undiscounted amount payable	2,916	2,792

The company's financial liabilities are sterling denominated. There is no exposure to interest rate risk.

24 Accommodation in management and development

Owned units Units under management Total units	2023 225 2,000 2,225	2022 225 2,145 2,370

Within the total units, 608 units met the regulated definition of social housing (2022 - 647) and 1,617 units were outside the regulated definition (2022 - 1,723).

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Contents

Who we are

Our mission

Our vision

Our values

We are inspiring

We are courageous

We are compassionate

We are inclusive

We are reliable

Why our work is needed

Message from the Chair

It’s good to be back.

��������������������������������������������������

Message from the CEO

Campbell Robb

Board members and professional advisers

Trustees

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Charity number

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Internal Auditors

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Pension consultants

Bankers

Treasurer

Trustee Attendance Record 2022/23

3 ��������������������������

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1. We will increase the positive impact we have on the people we support.

2. We will campaign alongside our service users for solutions to the barriers and challenges they face.

3. We will develop into a digitally inclusive organisation ���������������������������������������������������� advantages that digital technology can bring.

4. We will build a sustainable future for Nacro.

5. We will forge a values-led culture that supports a happy, productive and diverse workforce.

������������

What our people say

Housing performance

Repairs*

Maintenance Budget

Tenant satisfaction

Complaints

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Trustees’ responsibilities

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2. Monitoring and corrective action

3. Control environment and control procedures

4. Independent audit and review

5. Fraud reporting systems

Key risks

Risk treatment

Financial narrative

Value for money statement

Return on assets and investments and use of reserves

Reserves and liquidity policy

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Thanks and acknowledgements

Independent auditor’s report

Opinion

Basis for opinion

Conclusions relating to going concern

Other information

Opinions on other matters prescribed by the Companies Act 2006

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Responsibilities of the Trustees

Auditor’s responsibilities for the audit of the

Use of our report

Nacro - Statement of Comprehensive Income

for the year ended 31 March 2023

Nacro Statement of Financial Position as at 31 March 2023

Nacro - Statement of changes in reserves for the year ended 31 March 2023

Nacro - Statement of Cashflow for the year ended 31 March 2023

1 Legal Status

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3. We will develop into a digitally inclusive organisation �� advantages that digital technology can bring.

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