The board presents its annual report and audited consolidated financial statements for Beyond Housing for the year ended 31 March 2022.

The consolidated financial statements include the results of Beyond Housing Ltd, for the year ended 31 March 2022. They also include the results of its subsidiary companies Beyond Housing Developments Limited and Beyond Housing Sales Limited.

Principal activity

The group's principal activity is the provision and management of housing and associated services to people in housing need.

Group structure

On 31 March 2022 Beyond Housing (the 'group') comprised the following entities:

·    Beyond Housing Limited (BHL)

·    Beyond Housing Developments Limited (BHDL)

·    Beyond Housing Sales Limited (BHSL)

Beyond Housing, the parent is a:

·    Community Benefit Society (CBS) registered under the Co-operative and Community Benefit Societies Act (2014), is regulated by the Financial Conduct Authority (FCA)

·    Registered and regulated by the Regulator for Social Housing (RSH).

BHDL and BHSL are both limited companies and are wholly owned subsidiaries of Beyond Housing.

Within this report and the financial statements, the consolidated financial position is referred to as 'group' and the parent entity financial position is referred to as 'association'.

An introduction from the Chair of the Board

Once again, Beyond Housing has experienced a challenging and rewarding year and I am pleased to introduce the 2021/22 annual report and accounts.  As we emerged from the Covid-19 restrictions, the business has been able to re-focus on improving the quality of our homes, started to enhance key services, and prioritised helping customers through the continued economic challenges. In addition, we became the first housing association to secure a long-dated sustainability bond of £250m, allowing us to take advantage of the lower rates of borrowing to support our longer- term plans and strategy for Beyond Housing. 

The majority of 2021/22 was still a challenging time in terms of covid infection rates, social distancing and the impact on overall resources and I thank both customers and colleagues for working together and remaining resilient and supportive throughout.  Our overall business performance to the year end 31 March 2022, achieved a group turnover of £76.5m and operating surplus of £17.1m.  Construction delays, reducing repairs backlog from 2020 and the increases in component pricing and contracts resulted in a reduced operating margin of 20.9%

Supporting customers remains the key priority, especially given the cost-of-living crisis and inflationary pressures the country is facing. Once again, we supported customers with Universal Credit and other benefit claims, helping them to protect/increase their income and pay their rent. Beyond Housing collected 99.7% of rents and helped customers claim £1.86m of benefits. We supported 37 apprentices during the year, 10 of which took up full time employment with us. In addition, we helped 112 people into work through our dedicated employment programmes and invested circa £2m into community initiatives. 

Our commitment to new homes continues and in 2021/22 we exceeded our Homes England affordable homes programme targets, achieving 318 starts, 142 completions and claimed £2.6m of grant. A total of 142 affordable homes were completed, 117 for rent, 2 outright sale and 23 for shared ownership.  We launched our new sales brand, Viola Homes, for open market sales and contracted our first off-gas, modular development.

Alongside completing 67,000 routine repairs, we invested a further circa £8 million of capital on existing properties, including major programmes in Redcar and Scarborough. Our capital programme included installing 110 boilers, refitting 320 homes with new windows, installing 320 kitchens and 140 bathrooms, re-roofing 80 homes and completing 60 re-wires.

The launch of a new brand for our independent living services was another major milestone. Reach & Respond launched at the end of 2021 and proudly supports customers to live independently in their own homes, using assistive technology and a responder service. The service also received accreditation with the Telecare Services Quality Standards Framework.

Whilst a large proportion of colleagues continued to work remotely during 2021, we were able to complete our values programme for all c700 colleagues - allowing them to consider how to maintain an optimum mindset and live our values of accountable, considerate, collaborative, and ambitious.  The most recent overall colleague engagement survey (May 2022) shows that 78% of colleagues think Beyond Housing is a good place to work. We were pleased to be awarded a Better Health at Work award (silver) and very proud to be named in the top 100 most inclusive places to work.

Our risk environment changed to focus more on the challenges of inflationary increases and the impact for customers, service delivery and our new home programme. In addition, we prepared for the changes in regulation, particularly those relating to building and fire safety requirements. The organisation received the Royal Society for Prevention of Accidents (RosPa) Gold Award for the ninth year running.

We very much enjoyed collaborating with our key stakeholders across Teesside and North Yorkshire, to support their overall strategic plans, and very proud to support homelessness initiatives in both regions.  In addition, we worked with Tees Valley Combined Authority and other providers to achieve a successful bid for decarbonisation funding.

In 2022/23, our priority is the overall customer experience and improving customer satisfaction. Implementing a new repairs service offer, increased self-service for customers and new technology to support better and timely communication are all key priorities. 

Plans for 2022/23 include further investment in our existing homes/places and the continuation of major regeneration works at Church Lane North in Redcar. We will continue to deliver against our plan of delivering 2,000 homes and incrementally increase our investment towards carbon zero.

I know that 2022/23 has different challenges, both politically and from a housing perspective; changes to funding, consumer regulation and the wider economic conditions will pose difficulties for customers, colleagues, and the wider business. We are already preparing for how we can mitigate or reduce the risks such challenges pose and remain committed to our strategy and the customers we serve.

As always, the Board and all colleagues at Beyond Housing, continue to strive to help our customers and communities succeed and thrive, and I am proud to recognise our achievements during 2021/22.

James D Hayward RD                     

Chair     

Overview of Beyond Housing and our 2020-2025 strategy

Beyond Housing was formed in October 2018 as the result of a merger (via transfer of engagements) between Coast & Country Housing, based in Redcar, and Yorkshire Coast Homes, based in Scarborough. We remain a G1/V1 Regulator Social Housing rated organisation.

As a registered Community Benefits Society (CBS), we have a group turnover of £76.5m, own and manage 15,113 homes across nine local authorities in the north-east/yorkshire, housing over 30,000 customers. We employ circa 700 colleagues and offer homes for rent and sale, including shared ownership.

We also undertake a wide range of activities to improve the lives of our customers, including our Independent Living Services (ILS) 'Reach and Respond' (formerly HomeCall, Lifeline and Coastcall), which support older and vulnerable people to live independently in their homes for longer.

As a business we aim to deliver on our purpose and mission. We launched a new five-year strategy in April 2020 with clear objectives and ambitions for our services, homes, place and people.

We are investing in good quality homes and services for people in housing need and for the communities we work with. This year we have achieved a lower net surplus before tax of £2.5m (£12.5m 2020/21), the decline was due to one off refinancing costs of c£7.1m and higher repairs volumes. We invested £36.8m in new homes and £33.9m revenue spend in our existing properties (routine/planned maintenance and major repairs).

Our five-year strategy

Our strategy is based on four strategic objectives:

·    Provide quality services to our customers - increase customer satisfaction, grow our ILS business and have 55% of our customers registered using our 'Me and My Home' digital services.

·    Build new homes and keep our existing home in good condition - build circa 2,000 new homes, increase customer satisfaction with the quality of our homes and repairs satisfaction and improve the Energy Performance Certificate (EPC) ratings for all our properties to EPC C or better by 2030.

·    Invest in our communities/neighborhoods to create a great place to live and work - offer the best information and advice to customers, be a leading training provider and create neighborhood's our customers are proud of.

·    A great place to work for our people - achieve Investors in People (IIP) accreditation, deliver an agile working environment, increase colleague satisfaction and improve the health and wellbeing.

We intend to target year on year improvements in our business and services. These include investing more in our homes, neighborhoods and communities through high quality repairs and planned capital programs. We intend all properties to be energy efficient by 2030 at EPC C or better. In 2021/22 we commenced our 113 home outright sale Mill Meadows development and the regeneration of Church Lane, North Estate in Eston with a budget to invest circa £16m into delivering this regeneration project. We will continue to invest in our digital infrastructure e.g., 'Me and My Home' and new Customer Resource Management (CRM) system.

In May 2021 we completed the refinancing of our business to secure longer term funding for our five-year strategy and beyond. We issued the first long dated 30-year Environmental, Social and Governance Bond (ESG) for £250m. At the time of issuing, we were five times oversubscribed in the market. Moody's issued a A2 rating at the time of issuing the bond and we retained that rating in February 2022. We drew down £165m of funding to refinancing c£130m of existing bank loans to take advantage of very low financing costs, reducing our interest finance costs and released c£30m of additional cash after break costs. We still retain £85m of funding that is un-drawn, and we are assessing a drawdown of these funds in 2022/23.

Our operating margin will improve by 2030 in line with our business plan to drive greater efficiency and cost saving to allow more investment in homes and to address zero carbon challenges. We will continue to deliver on our 2,000 new homes under our current strategy providing affordable homes across our area of operation. We will also look at those areas that may require future regeneration, higher zero carbon investment and continue to build more homes.

Corporate governance

The board comprises of nine members, made up of 56% women and 44% men. None are classed as BAME. Members can be viewed on page 1 and 8-9. Board members are drawn from a wide range of backgrounds bringing together commercial, professional and local skills, experience and knowledge.

An annual compliance assessment is undertaken by the board of its chosen code of governance. This assessment is reviewed and validated externally by independent consultants every three years (first assessment carried out in 2021/22). Accordingly, the board states Beyond Housing (the parent) are fully compliant with its adopted code of governance, the National Housing Federation (NHF) Code of Governance 2020.  The board has determined the NHF Code of Governance 2020 does not apply and therefore is not adopted by the subsidiary companies Beyond Housing Sales Ltd, and Beyond Housing Developments Ltd, on the basis the companies are not registered providers and therefore out of the scope of the Code.  The subsidiary companies continue to operate within the overarching governance framework of Beyond Housing's structure with the Beyond Housing board retaining control and oversight of the subsidiary companies.

Beyond Housing complies with the Regulator of Social Housing's (RSH) Governance and Financial Viability Standard. Self-assessments against all of the regulatory standards were undertaken during the year and no issues were noted.

An independent governance review was undertaken in the year providing assurance that governance arrangements were operating well and efficiently.  It noted the board had provided a strong self-assessment of its own effectiveness which correlated with the independent review opinion.  A number of recommendations were made as part of the review to support the delivery of Beyond Housing's future strategy and ambition which have been implemented during the financial year. The board has overall responsibility for the administration of sound corporate governance throughout the group and recognises the importance of maintaining a strong reputation for the group.

The Board met formally five times during the period 1 April 2021 and 31 March 2022 and held two strategic away days. The Board and committees have formal terms of reference which were last reviewed during 2021/22.

Audit and risk committee

The audit and risk committee are responsible for ensuring a sound system of internal control and risk management is embedded across the group. The committee exercises oversight of the internal and external audit functions. The committee met five times during the period 1 April 2021 to 31 March 2022. Board member John Williams chaired the meetings.

Governance and review committee  

The governance and review committee are responsible for board director succession planning, recruitment and selection of non-executive directors, board training and development, ensuring the appraisal and remuneration of the chief executive is carried out and for addressing any conduct or standards issues.  The committee oversees and reviews governance arrangements to ensure that best governance standards and practices are upheld, with particular oversight in relation to statutory and regulatory changes.  The committee met four times during the period 1 April 2021 to 31 March 2022. Board member Sam Hardwick chaired the meetings.

Health and safety committee  

The health and safety committee oversees the health and safety framework and management system which enhances clarity around roles, accountability and responsibility throughout the organisation, provides enhanced focus for customer, property and colleague compliance and increases visibility around performance to provide asset compliance assurance.  The committee met four times during the period 1 April 2021 to 31 March 2022. Board member Kate Abson chaired the meetings.  As part of the independent governance review in 2021/22, whilst retaining strategic oversight of the health and safety framework, board delegated operational oversight to the executive via a health and safety forum.  The health and safety committee therefore ceased on 31 March 2022.

Refinancing task and finish group (committee)

The refinancing task and finish group had oversight for the refinancing of the business completed May 2021. The committee oversaw the proposal to raise the £250m long term Environmental Social Green (ESG) bond and to restructure existing loan arrangements with our funders Lloyds, Nationwide and Natwest. We exited high interest cost loans and replaced them with the lower cost bond and released additional cash for investment. The committee met once during the period 1 April 2021 to March 2022. Board member Peter Baren chaired the meeting.

Board and committee meetings

The table below dates all board and committee meetings.

Board and committee attendance 2021-22

        A = maximum number of meetings that could have been attended

B = number of meetings attended

* retired 23 September 2021

Viability assessment

Beyond Housing prepares a 30-year business plan 'Plan', incorporating the 2021/22 budget, treasury, asset and development plans and financial assumptions over the medium term. The long-term financial plan to demonstrate it can effectively manage its resources and ensure long term financial stability is maintained and social housing assets are safeguarded.

Beyond Housing has approved and stress tested the current plan using multi-variant analysis which tests against potential economic and business risks. The board held a stress testing workshop in September 2021 and February 2022.The results of the stress testing included considering the impact of movement in interest rates, liquidity, inflation, costs, debts, political risk, Covid 19, welfare reform, sales risk and a single/multi-variant risk scenario with mitigation plans.  The board also identified actions to mitigate against these risks (including Covid 19), quantified through the stress testing and is satisfied these mitigations would be implemented, if the need arises to protect the social housing assets and to maintain compliance with regulatory requirements.

We also completed our refinancing in 2021/22 that culminated in the issuance of a £250m ESG bond in May 2021. We drew down £165m and retained £85m whilst restructuring our existing loans with our three bank lenders.

The 30-year business plan and Financial Forecast Return (FFR) submission to the Regulator Social Housing (RSH) was approved by the board in May 2021.

Internal controls

The board acknowledges its overall responsibility for establishing and maintaining the whole system of internal control and for reviewing its effectiveness across the Group.

The board recognises that no system of internal control can provide absolute assurance or eliminate all risk. The system of internal control is designed to manage, not eliminate, risk and to provide reasonable, not absolute, assurance against material misstatement or loss. 

The process for identifying, evaluating and managing significant risks faced by the Group has been in place throughout the year ended 31 March 2022 and up to the date of the approval of these financial statements.

The board has received the Chief Executive's annual review of the effectiveness of internal control which concludes that there is sufficient evidence to confirm the operation of adequate systems of internal control and that these systems are aligned to the on-going process of managing the significant risks faced by the Group.

Key elements of the Group's internal control framework include:

·     Board approved terms of reference for board and committees

·     Strategic risk registers regularly reviewed by the senior leadership team, board and the audit and risk committee

·     Policies and procedures in place for the Group's operating activities

·     A corporate and planning process with supporting financial information, including long term business plans and annual budgets

·     An Investment Appraisal Panel and Programme Steering Group, aligning our project activity with  corporate objectives

·     A business case and appraisal framework established to support robust investment decision-making

·     Business assurance and internal audit functions (provided by PwC) tasked with maintaining and testing the Group's control environment

·     Reporting to the senior leadership team and board of key strategic performance indicators

·     Oversight by the audit and risk committee of the Group's internal control processes; and

·     An established health and safety framework.

Housing stock

Beyond Housing operates across the North-East and North Yorkshire covering nine local authorities. We currently have 15,113 homes for rent, 12 of which are managed by a third party giving us 15,101 owned units (Note 3 in the Accounts) and an additional 291 leaseholder units. A breakdown of the housing stock is:

Customer experience and outcomes

Across customer service we are proud of what we have achieved for our customers, communities and colleagues. The pandemic made for uncertain times, yet we adapted and flexed with the changes to deliver some great outcomes in the delivery of our purpose and strategic objectives.  Creating a great customer experience is a key objective and as a result the below was achieved in 2021/22:

•             Introduced a new name and brand for our three independent living services to operate under - Reach & Respond 

•             Supported 506 customers and accessed £1.83m in benefits to support customers

•             Answered 161,888 customer enquiry calls 

•             Answered 171,675 calls from customers to our independent living service Reach & Respond 

•             Joined The National Databank scheme and launched our digital inclusion project to bring free internet to low-income families 

•             Opened a customer community facility on the Church Lane North estate in Grangetown. 

•             Supported 1,211 customers with Anti-Social Behaviour (ASB) and safeguarding support 

•             4,339 hours of volunteers' time invested in community projects and services 

•             Consulted with over 1,400 customers to shape a new customer contact approach

•             Successfully embedded a new approach to handling complaints

•             Commenced the implementation of new systems to better improve the customer experience

Energy performance

We see as good practice reporting out energy consumption in line with our Environmental, Social and Governance principles. This work was undertaken by Trident Innovative Energy Experts for Beyond Housing and is summarised below till 31 March 2022.

This year we are pleased to have reduced our carbon footprint per employee by 2.8% working towards the Governments carbon neutral targets is set out in more detail in our strategic asset plan approved by our Senior Leadership Team (SLT).

We were also successful in a bid with Tees Valley Combined Authority in securing grant from the Government Social Housing Decarbonisation programme securing funds for our home insulation programme.

Value for Money

Beyond Housing consciously looks to deliver Value for Money (VfM) and will take a planned approach to the delivery of efficiencies and financial capacity gains, which provides direction for achieving VfM in order to increase investment in our existing homes and communities and to create new homes.

·     Borrowing capacity - Beyond Housing had in place £104m of Revolving Credit Facility and £85m undrawn bond funding capacity on 31 March 2022.

·     Total cost of management and maintenance of each housing unit - The target Social Housing Cost Per Unit (SHCPU) for the organisation is circa £3,000 in the medium term as the result of reductions to management costs and overheads, structural costs, efficiencies and improved procurement.

·     Delivery of new homes - Our current strategy displays our plans to build 2,000 new homes over five years.

·     Operating margin - Our operating margin reduced in the year as our maintenance costs increased as a result of higher repair volumes and increased material and subcontractor prices.

·     Development - we seek competitive tenders and test the contracts cash flow, IRR and NPV to meet investment policies.

·     Procurement - Beyond Housing has actively completed competitive tendering activities to secure long-term contracts for key business areas including voids, tools, Electrical Installation Condition Report (EICR's), windows and doors etc. A key contract has been implemented to support our in-house teams to complete routine and capital voids works. The tender was structured to attract local subcontractors and ensure that strong relationships could be built between the in-house teams and local labour providers, especially during times of national labour shortages. Savings to the value of £143k have also been achieved through key negotiations on tool purchases, our security contract renewal and rate changes. Beyond Housing has been impacted by supply chain price increases but has looked to mitigate these as much as possible across the year.

VfM indicators

Beyond Housing has included the nine regulatory VfM metrics from the RSH Technical Note guidance September 2020 sector scorecard, in its board KPIs. We benchmark our VfM indicators where appropriate against a group of comparable housing providers to help understand our performance and inform our improvement plans and targets. Performance is measured against the RSH 2020/21 Global Accounts benchmarking information, due to 2021/22 information not being available at the time of preparing the annual accounts. During 2021/22 and going forward we will benchmark our VfM indicators, to support our strategy to embed VfM into everything we do.

^NE combines average performance for the northeast region and North Yorkshire based RPs

We have used the 2020/21 financial statements for last year's figures.  Note: Our 5-year VfM targets are published separately on our web site in our 5 Year VfM Plan.

Definitions:

1.      Reinvestment % - Looks at the investment in properties (existing stock as well as new supply) as a percentage of the value of total properties held.

2.      New supply - Delivered % the new supply metric sets out the number of new social housing and non-social housing units that have been acquired in the year as a proportion of total social housing units and non-social housing units owned at period end. The table reports on two new delivered ratios. New supply delivered (social housing units). New supply delivered (non-social housing units).

3.      Gearing % - Measures how much of the adjusted assets are made up of debt and the degree of dependence on debt finance. It is often a key indicator of growth appetite. Registered providers can be restricted by lenders' covenants and therefore may not have the ability in which to increase the loan portfolio despite showing a relatively average gearing result.

4.      EBITDA - Earnings before interest, tax, depreciation, amortization, major repairs included (EBITDA MRI) interest cover measure is a key indicator for liquidity and investment capacity. It seeks to measure the level of surplus that a registered provider generates compared to interest payable; the measure avoids any distortions stemming from the depreciation charge. 

5.      Headline social housing cost per unit - Assesses the total housing cost per unit as defined by the Housing Regulator. The cost measures set out in the metric are unchanged from the metric in the Regulator VfM technical note 2018. The metric now however includes lease costs.

6.      Operating margin - Demonstrates the profitability of operating assets before exceptional expenses are deducted. Increasing margins are one way to demonstrate the improving financial efficiency of a business. In assessing this ratio, consideration is given to registered providers' purpose and objectives (including our social objectives). As a registered provider we report on two operating margins. Operating margin (social housing lettings only). Operating margin (overall).

7.      Return on capital employed (ROCE) - This metric compares the operating surplus to total assets less current liabilities and is a common measure in the commercial sector to assess the efficient investment of capital resources. The ROCE metric would support registered providers with a wide range of capital investment programmes.

Future analysis

Based on our performance, our plans for the coming years will focus on a number of performance indicators. The Board has agreed the strategy and performance indicators for 2022/23. This includes setting approved 'rules' against key indicators to ensure the financial stability and resilience of the business.

Other metrics agreed by the board include:

·    Liquidity - current ratio >1.10

·    Security - 15% of all stock buffer to add to funder security valuation ratios

·    Operating surplus - reliance on profits from open market sales to be limited to 20% within our business plans. By limiting reliance on profits from open market house sales, focus is on sustained financial stability

·    Cash flow - holding cash and cash equivalents (loan facilities) >= 21 months operating cash requirements.

Key performance indicators measuring Value for Money (VfM)

Beyond Housing measure Key Performance Indicators (KPI's) and VfM. Beyond Housing has a dashboard system that measures a set of key performance metrics each month. Our dashboard for period 12 can be viewed on page 19.

The dashboard forms an agenda item at all board meetings; hence the board can monitor KPI performance and VfM within the organisation. Board challenge any under performance and discuss the actions set out to improve performance.

The KPI's are also discussed at the monthly performance and strategy meetings attended by executive and leadership teams. The table below shows a sample of year-end metrics (note 2021/22 still reflected the impact of Covid 19).    

VfM movements

Our 2021-22 Tier 1 VfM targets and outturn

Key: M monthly measure, YTD Year to Date.

Note: throughout 2021/22 Covid 19 continued to have some impact on our metrics e.g. supply of new homes, customer satisfaction and inflation on costs and margins. Green are targets met, orange (within 5% of target) or red >5% outside target.

VfM Self-Assessment

We will publish on our web site a VfM self-statement alongside the published accounts for 2021/22.

Risk

Managing risk (page 26) is a responsibility of the board and is fundamental to the management of corporate challenges. Beyond Housing has put in place a risk management framework that identifies and plans to mitigate potential risks while exploring future opportunities. The Audit & Risk Committee undertake a more detailed review of risks that might affect the viability or reputation of Beyond Housing.

James D Hayward RD

Chair of the Board

Beyond Housing Ltd

25 August 2022

Structure and business overview - group and association

Beyond Housing, the parent organisation is a charitable organisation. It is a registered provider of affordable housing regulated by the Regulator of Social Housing.

Beyond Housing Developments Limited was originally incorporated (by a legacy organisation) to develop properties for outright sale, generating surplus for the group to reinvest. It has not been active during 2021/22. BHD will be dormant in 2022/23.

Beyond Housing Sales Limited was incorporated to carry out non-charitable open market sales activities generating surplus for the group to reinvest. It has not been active during 2021/22.  In 2021/22 BHS has had new directors appointed, a business plan approved by board, on-lending facilities established and updated legal and financial structures to enable trading in 2022/23.

Financial review 2021/22

The group financial results, which have been prepared using merger accounting principles, show a group turnover of £76.5m and a surplus before tax of £2.5m. The operating surplus before tax is lower than 2021 due to higher repairs and maintenance costs in year.

Summarised Financial performance:

For the year to 31 March 2022 turnover increased by £1.4m compared to that of the prior year at £76.5m (£75.1m 2020/21). During the year our social rents increased by CPI+1% in line Government's rent policy, arrears were under budget, and we had increased shared ownership development sale proceeds.

Social housing income remains the largest proportion of our turnover from operations at 92.2% (91.4% 2010/21). Shared ownership sales represented 2.3% (3.2% 2020/21) of our turnover. Non-housing activity including our independent living service represented 3.5% (4% 2020/21).

Note: the Net Surplus before tax fell due to one off refinancing break costs of £7.2m in 2021/22.

Operating costs increased to £59.0m (£53.09m in 2020/21) as a result increased spend on social housing operating expenditure due to higher maintenance expenditure as repairs volumes increased as we began to recover from Covid 19.

The majority of our operating costs for the year is social housing lettings expenditure by the group being £55m (£48.9m 2020/21). The charts show management and planned/routine expenditure increased partly a reflection of the Covid 19 pandemic but also due to inflationary pressures. Major work spends remain the same as we invested in estate improvement expenditure.  Depreciation showed no change in line with capital investment in stock and relatively flat new housing numbers.

Our operating surplus decreased to £17.2m from the £20.9m achieved in the prior year and largely reflected increased maintenance expenditure occurring due to increased repair volumes, and material/subcontractor price increases both of which are an outcome Covid 19. Our net surplus for the year at £2.5m (£12.5m 2020/21) reduced compared to 2020/21 due to the higher maintenance costs but also the incurrence of £7.2m loan breakage costs as part of the refinancing exercise completed in May 2021.

There has been an increase from £371m to £399m (7.5%) in the fixed assets housing property values due mainly to property improvements, completion of shared ownership units and housing schemes completed.

Cash held on 31 March 2022 increased to £35.8m from (£24.2m 2020/21) after the refinancing in May. No new loan drawdowns were required during the 2021/22 year.

Pension provision liabilities decreased to £26.0m from (£37.1m 2020/21) following the annual review of the North Yorkshire and Teesside Pension Funds by the actuaries. The Teeside Pension schemes had lower asset values to fund the liabilities, and these are being funded through higher employer contributions.

We met all lender covenants during the year and the net worth 'reserves' of the group increased to £118.4m (£101.9m 2020/21) due to the net surplus.

The Accounts 2021/22 also include a prior year adjustment (due to incorrect intermediate rents from a legacy organisation from 2012) and are restated. The regulator and our funders were made aware of the adjustment.

Summary loan facility per lender

Beyond Housing loan structure is set out in the table below. The debt consists of loans from four lenders: M&G (our bond custodian on behalf of investors being 59% of the portfolio), Lloyds (7% of the portfolio), Nationwide (20% of the portfolio) and Royal Bank of Scotland (RBS) (14% of the portfolio). Some £320m of the debt is term loan with an average life of 16.3 years and £104m represents Revolving Credit Facility (RCF). Undrawn facilities total £189m of which £104m is Revolving Credit Facility and £85m bond. The high proportion of RCF available provides liquidity and flexibility for Beyond Housing as it builds up its development portfolio. The group has currently sufficient liquidity for its proposed investment programme over the next 2-3 years after completing its refinancing in May 2021. The undrawn bond proceeds are subject to volatility in the gilt markets and the cash value can be less than face value. The embedded value of the debt is close to 3.94% weighted average cost of debt.

Subsidiaries

Beyond Housing Developments Limited (formerly Coast & Country Developments Ltd)

During 2021/22 no new construction opportunities for the organisation have been identified and subsequently the organisation has remained in a discontinued state. The organisation made a loss before taxation for the year ended 31 March 2022 of £1,000 (2021: loss of £6,000).

Beyond Housing Sales Limited (formerly Coast & Country Sales Ltd)

The organisation has made a loss before taxation for the year ended 31 March 2022 of £1,000 (2021: loss of £5,000) which is broadly in line with budget expectations. No sales activity occurred during the year.

Risk and assurance framework

The risk and assurance governance team at Beyond Housing work with our internal auditors, PricewaterhouseCooper (PwC), to provide a programme of audits and reviews which underpin the risk and assurance framework for the board. Our current key risks and mitigation strategies are set out below.

Risk scenarios and stress testing

Beyond Housing uses various risk scenarios to stress test the business with board and to determine where financial, operational and reputational weaknesses might occur in adverse operating conditions. This testing influences our internal procedures in mitigating risks.

The main risks faced by the group and subsidiaries are discussed by the board and executive team.

Risk is captured on a specific software system and regularly reviewed by the senior leadership team and updated.

Key risks such as health and safety, financial stability and data security take a high priority. Significant emerging risks are also monitored (Brexit, inflation and Covid 19). Risks are analysed according to their impact and likelihood. Management is focused on higher impact and higher likelihood risks.

Brexit continues to carry risks that impact on labour, material costs, government policy and financing. There may also be risks to the wider UK economy and house prices. These risks were low and continued to be monitored by the executive team and board in 2021/22.

Inflation has increased significantly towards the end of 2021/22 and represents a risk on material and wage prices that is being managed through budgets and revised efficiencies.

Prior Period Adjustment The prior period adjustment in this year's accounts is to reclassify c486 legacy housing association intermediate rents we discovered were incorrectly classified to correct to affordable rents and a small number social. The adjustment captures the rent refund backdated and indexed for all customers effected and represents the one-off liability to correctly reset customers their rents to affordable/social from intermediate from 2012 when they were incorrectly set in a legacy organisation. The amendment has been discussed with our funders and the regulator. The prior year adjustment is represented in the accounts at Note 28.

Covid 19 continued to be a risk in 2021/22. The risks were monitored at board and at the senior leadership team with weekly monitoring of the potential risks and operational and financial impacts to the business throughout 2021/22. Due to the consequences of Covid 19 the board has evaluated and continued to stress test the business plan . Effective action plans, including increased agile working were working well to maintain customer services and business operations. Our rent arrears out turned-on budget with very little increase year on year. Voids out turned marginally above target and the business maintained very robust cashflows throughout the year. Covid 19 challenges in the market led to lower operating spend across most areas of the business expect repairs. Repairs spend was above budget due to higher inflation on material costs, escalating subcontractor spend and larger volumes of repairs as customers opened up homes to a backlog of repairs. Inflationary pressures are expected to continue, and the market remains challenging for labour, subcontractors and development opportunities though all have been assessed in setting the 2022/23 budgets. Our development and capital spend was under budget in 2021/22 due to development sites being closed with social distancing rules and supply issues delaying our own capital works. These programme of works are rolled forward and future works reprofiled out to later years.

Recent Events

The impact of the recent economic turbulence, corresponding inflation, Ukraine war, interest rate increases, and uncertainty for the supply chain has meant that the executive team and board have been reviewing revised financial plans for the next five years more frequently reflecting updated economic information to ensure Beyond Housing remains a going concern. Our Board's attention to these forecasts and liquidity levels ensured appropriate scrutiny in these difficult times.  Our modelling included reductions in rent collected, higher inflation costs on the business, changes to government rent policies, significant cash requirements for changing developments or other supplier support and slowdowns in our development and sales programmes.

This additional scrutiny has delivered some excellent lessons for the organisation and has proven our financial resilience under more extreme conditions.